BV BrightView Holdings Inc

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT 

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): August 28, 2023 

 

 

BrightView Holdings, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware		001-38579		46-4190788
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

980 Jolly Road

Blue Bell, Pennsylvania 19422

(484) 567-7204

(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)

 

 

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

 

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

 

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

 

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

 

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

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class		Trading Symbol (s)		Name of exchange on which registered
Common Stock, $0.01 par value		BV		New York Stock Exchange

 

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

 

Emerging growth company ¨

 

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

 

 

Item 1.01.  Entry into a Material Definitive Agreement.

 

Issuance and Sale of Series A Convertible Preferred Stock

 

On August 28, 2023 (the “Closing Date”), BrightView Holdings, Inc. (the “Company”) entered into an Investment Agreement (the “Investment Agreement”) with each of Birch Equity Holdings, LP, a Delaware limited partnership, and Birch-OR Equity Holdings, LLC, a Delaware limited liability company (together, the “Investors”), pursuant to which the Company issued and sold, in a private placement, an aggregate of 500,000 shares of the Company’s Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), for an aggregate purchase price of $500 million (the “Issuance”).

 

The Company will use 90% of the proceeds of the Issuance to prepay the outstanding principal amount of the Company’s debt under its Credit Agreement, dated as of December 18, 2013, by and among the Company, its subsidiary BrightView Landscapes, LLC and the lenders or other financial institutions or entities from time to time party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, as amended, within fifteen days of the Closing Date.

 

Designation of Series A Preferred Stock

 

The Series A Preferred Stock ranks senior to the shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. The Series A Preferred Stock initially has a liquidation preference of $1,000 per share. Holders of the Series A Preferred Stock are entitled to a dividend at the rate of 7.0% per annum (the “Dividend”), compounding quarterly, paid in kind or paid in cash, at the Company’s election. For any quarter in which the Company elects not to pay the Dividend in cash, such Dividend will become part of the liquidation preference of each such share of Series A Preferred Stock (“Compounded Dividends”), as set forth in the Certificate of Designations, which was filed with the Secretary of State of the State of Delaware on the Closing Date, designating the Series A Preferred Stock (the “Certificate of Designations”).

 

Conversion Rights

 

The Series A Preferred Stock is convertible, in whole or in part, at the option of the holders upon the later of (i) the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) and (ii) the twentieth (20^th) calendar day following the mailing of the Information Statement (as defined below) to the holders of Common Stock (the “Conversion/Voting Condition”) into shares of Common Stock at an initial conversion price of approximately $9.44 per share of Series A Preferred Stock (the “Initial Conversion Price”) and an initial conversion rate of 105.9322 shares of Common Stock per share of Series A Preferred Stock, subject to certain anti-dilution adjustments as set forth in the Certificate of Designations; provided that if by the date that is six (6) months after the Closing Date, the applicable waiting period under the HSR Act has not expired or twenty (20) calendar days have not passed since the mailing of the Information Statement (as defined below) to the holders of Common Stock, then from and after the date that is six (6) months after the Closing Date, (x) if the applicable waiting period under the HSR Act has not expired, the Conversion/Voting Condition shall be deemed satisfied with respect to the exercise by a holder of any conversion rights that is below the applicable threshold requiring clearance under the HSR Act and (y) if the applicable waiting period under the HSR Act has expired, but twenty (20) calendar days have not passed since the mailing of the Information Statement to the holders of Common Stock, the Conversion/Voting Condition shall be deemed satisfied with respect to the exercise by a holder of any conversion rights that would result in the holder holding up to 25% of the then issued and outstanding Common Stock.

 

So long as a shelf registration statement on Form S-3 with respect to the Common Stock into which the Series A Convertible Preferred is convertible is in effect, at any time after the third anniversary of the Closing Date, if (i) the volume weighted average price of the Common Stock exceeds 200% of the Initial Conversion Price, as may be adjusted pursuant to the Certificate of Designations (the “Mandatory Conversion Price”), for at least twenty (20) trading days in any period of thirty (30) consecutive trading days and (ii) either (x) the volume weighted average price per share of Common Stock is greater than the Mandatory Conversion Price on the trading day immediately prior to the date the Company sends the applicable notice of mandatory conversion or (y) the Company has not filed a press release or report under the Securities Exchange Act of 1934, as amended, between the last trading day in such thirty (30) day trading period where the volume weighted average price per share of Common Stock is greater than the Mandatory Conversion Price and the date the Company sends the applicable notice of mandatory conversion, then the Company may elect to convert all or any portion of the Series A Preferred Stock into the relevant number of shares of Common Stock.

 

 

Notwithstanding the foregoing, pursuant to the terms of the Certificate of Designations, in no event shall the Series A Preferred Stock be convertible into Common Stock in a manner that would result in the Investors, their permitted transferees and affiliates holding more than 49% (together with any shares of Common Stock otherwise held by the Investors, permitted transferees and their affiliates) of the then issued and outstanding Common Stock (the “Conversion Limitation”).

 

Voting and Consent Rights

 

Under the Certificate of Designations, following the satisfaction of the Conversion/Voting Condition, holders of the Series A Preferred Stock will be entitled to vote with the holders of the Common Stock on an as-converted basis (subject to the Conversion Limitation); provided that notwithstanding the foregoing, if by the date that is six (6) months after the Closing Date, the applicable waiting period under the HSR Act has not expired or twenty (20) days have not passed since the mailing of the Information Statement to the holders of record of Common Stock on the Record Date, then from and after the date that is six (6) months after the Closing Date, (i) if the applicable waiting period under the HSR Act has not expired, the Conversion/Voting Condition shall be deemed satisfied with respect to the exercise by a holder of any as-converted voting rights that is below the applicable threshold requiring clearance under the HSR Act and (ii) if the applicable waiting period under the HSR Act has expired but twenty (20) days have not passed since the mailing of this Information Statement to the holders of record of Common Stock on the Record Date, the Conversion/Voting Condition shall be deemed satisfied with respect to the exercise by a holder of Series A Preferred Stock of any as-converted voting rights that would result in such holder having voting rights up to 25% of the then issued and outstanding Common Stock. Holders of the Series A Preferred Stock will be entitled to a separate class vote with respect to, among other things, amendments to the Company’s organizational documents that have an adverse effect on the Series A Preferred Stock, authorizations or issuances by the Company of securities that are senior to, or equal in priority with, the Series A Preferred Stock, increases or decreases in the number of authorized shares of Series A Preferred Stock after the Issuance, certain mergers or consolidations of the Company and certain restricted acquisitions.

 

Redemption Rights

 

At any time following the fourth (4^th) anniversary of the Closing Date, the Company may redeem some or all of the Series A Preferred Stock for a per share amount in cash equal to the greater of: (1) (i) the sum of (x) the then current liquidation preference thereof, plus (y) all accrued and unpaid dividends, multiplied by (ii) (A) 105% if the redemption occurs at any time on or after the fourth (4^th) anniversary of the Closing Date and prior to the fifth (5^th) anniversary of the Closing Date, (B) 103% if the redemption occurs at any time on or after the fifth (5^th) anniversary of the Closing Date and prior to the sixth (6^th) anniversary of the Closing Date, and (C) 100% if the redemption occurs at any time on or after the sixth (6^th) anniversary of the Closing Date and (2) the arithmetic average of the volume weighted price per share of Common Stock for each of the ten (10) consecutive full trading days ending on, and including the trading days immediately preceding the redemption date, of the Common Stock into which such Series A Preferred Stock could be converted (without regard to any limitations on conversions set forth in the Certificate of Designations).

 

Change of Control

 

Upon certain change of control events involving the Company, the holders of the Series A Preferred Stock may, at such holder’s election, convert all or a portion of its shares of Series A Preferred Stock into Common Stock at the then-current conversion price; provided that if a holder does not make such election with respect to all of its shares of Series A Preferred Stock, the Company shall redeem such of Series A Preferred Stock not so converted at a purchase price per share of Series A Preferred Stock equal to the greater of (x)  (A) the then-current liquidation preference thereof plus (B) all accrued and unpaid dividends and (y) the amount of cash and the fair market value of any other property that the holder would have received if such holder had converted such share of Series A Preferred Stock into Common Stock immediately prior to such change of control event.

 

 

Governance Rights

 

Pursuant to the Investment Agreement, the Company has also agreed to increase the size of its board of directors (the “Board”) in order to elect, as of the Closing Date, two (2) individuals designated by the Investors (the “Designees”) to the Board for a term expiring at the Company’s 2024 annual meeting of stockholders. For so long as the Investors or their respective affiliates beneficially own at least 60% of the shares of Series A Preferred Stock purchased in the Issuance (or underlying shares of Common Stock to be issued on conversion of the Series A Preferred Stock), the Investors will have the right to designate two Designees for election to the Board. After the Investors cease to beneficially own at least 60% of the shares of Series A Preferred Stock purchased in the Issuance (or underlying shares of Common Stock to be issued on conversion of the Series A Preferred Stock), the Investors will have the right to designate one Designee for election to the Board. The Investors shall no longer be entitled to designate any Designees for election to the Board after the Investors cease to own at least 20% of the shares of Series A Preferred Stock purchased in the Issuance (or underlying shares of Common Stock to be issued on conversion of the Series A Preferred Stock). The Company’s obligation to have any Designee elected to the Board or to nominate any Designee shall in each case be subject to the qualifications set forth in the Investment Agreement. The Information contained in Item 5.02 with respect to the initial two Designees is incorporated herein by reference.

 

Standstill and Transfer Restrictions

 

Pursuant to the Investment Agreement, the Investors will be subject to certain standstill restrictions, including that the Investors will be restricted from acquiring additional equity securities of the Company, until the later of six months after which the Investors or their respective affiliates no longer collectively own at least 10% of the Series A Preferred Stock (or underlying Common Stock to be issued on conversion of the Series A Preferred Stock) acquired by them on the Closing Date. Subject to certain exceptions, the Investors will also be restricted from transferring the Series A Preferred Stock or any shares of Common Stock issued on conversion of the Series A Preferred Stock until the twelve (12) month anniversary of the Closing Date (the “Lock-Up Period”).

 

The foregoing descriptions of the Series A Preferred Stock, Certificate of Designations and Investment Agreement do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the Certificate of Designations and Investment Agreement filed as Exhibit 3.1 and 10.1, respectively, to this Current Report on Form 8-K, and incorporated herein by reference.

 

The Investment Agreement has been filed as Exhibit 10.1 to this Current Report on Form 8-K to provide investors and securityholders with information regarding its terms and conditions. It is not intended to provide any other information about the Investors or the Company. The Investment Agreement contains representations, warranties, and covenants of the parties thereto made to and solely for the benefit of each other, and such representations, warranties, and covenants may be subject to materiality and other qualifiers applicable to the contracting parties that differ from those that may be viewed as material to investors. The assertions embodied in those representations, warranties, and covenants are qualified by information in a confidential disclosure letter that the Company delivered in connection with the execution of the Investment Agreement and were made as of the date of the Investment Agreement, except those made as of a specified date. Accordingly, investors and securityholders should not rely on the representations, warranties, and covenants as characterizations of the actual state of facts. Moreover, information concerning the subject matter of the representations, warranties, and covenants may change after the date of the Investment Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.

 

Registration Rights Agreement

 

On the Closing Date, in connection with the Issuance, the Company and the Investors entered into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which the Company has agreed to provide to the Investors and each other holder party thereto from time to time (each a “Holder”), following the Lock-Up Period, certain customary registration rights with respect to each Holder’s shares of Series A Preferred Stock and shares of Common Stock issued in connection with any future conversion of such Holder’s shares of Series A Preferred Stock (together, the “Registrable Securities”).

 

 

Under the Registration Rights Agreement, the Company is required, no later than the expiration of the Lock-Up Period to file a shelf registration statement on Form S-3 covering the resale of all Registrable Securities, and to use reasonable best efforts to have the shelf registration statement declared effective and to maintain the effectiveness of such shelf registration statement. The Holders have the right to request up to three underwritten take-downs, with anticipated gross proceeds equal to at least $75 million per underwritten take-down, off of the shelf registration statement during any 365-day period (subject to certain cut-back priorities) and the Holders have the right to request unlimited non-underwritten take-downs. Additionally, the Registration Rights Agreement grants each Holder customary demand and “piggyback” registration rights for Registrable Securities. The Registration Rights Agreement permits the Company to postpone the filing or use of a registration statement for a period not to exceed 75 days (such period, a “Postponement Period”) if the filing or continued use of the registration statement would, in the good faith judgment of the Board (after consultation with external legal counsel) (i) require the Company to disclose material non-public information that, in the Company’s good faith judgment (after consultation with external legal counsel), the Company has a bona fide business purpose for not disclosing publicly or (ii) materially interfere with any material proposed acquisition, disposition, financing, reorganization, recapitalization or similar transaction involving the Company or any of its subsidiaries then under consideration. There will not be more than one Postponement Period in any 180-day period.

 

The foregoing description of the Registration Rights Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Registration Rights Agreement filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.

 

Waiver of Rights under the Stockholders Agreement

 

On August 28, 2023, in connection with the Issuance, the KKR Stockholder delivered a waiver letter to the Company (the “KKR Waiver of Rights Letter”) in which the KKR Stockholder waived all of its consent rights under the stockholders agreement, dated as of June 27, 2018, between the Company, the KKR Stockholder and the other parties thereto from time to time (as amended, the “Stockholders Agreement”) and its right to appoint more than two directors to the Board thereunder.

 

The foregoing description of the KKR Waiver of Rights Letter does not purport to be complete and is subject to, and qualified in its entirety by, reference to the full text of the KKR Waiver of Rights Letter filed as Exhibit 4.1 to this Current Report on Form 8-K and incorporated herein by reference.

 

Item 3.02.  Unregistered Sales of Equity Securities

 

The information contained in Item 1.01 with respect to the Investment Agreement and Certificate of Designations is incorporated herein by reference. Initially, a maximum of 52,966,100 shares of Common Stock may be issued upon conversion of the Series A Preferred Stock, based on the initial conversion rate of 105.9322 shares of Common Stock per share of Series A Preferred Stock, which is subject to adjustment as set forth in the Certificate of Designations.

 

The Issuance is exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Investors represented to the Company that each of them is an “accredited investor” as defined in Rule 501 of the Securities Act and that the Series A Preferred Stock is being acquired for investment purposes and not with a view to, or for sale in connection with, any distribution thereof.

 

Item 3.03.  Material Modification to Rights of Security Holders

 

The information contained in Item 1.01 with respect to the Investment Agreement, Certificate of Designations, Registration Rights Agreement, and KKR Waiver of Rights Letter and in Item 5.03 with respect to the Certificate of Designations is incorporated herein by reference.

 

 

Item 5.02.  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers.

 

Pursuant to the Investment Agreement, on August 28, 2023, the Board increased the size of the Board to ten (10) directors and Joshua D. Goldman and Kurtis T. Barker, individuals designated by the Investors under the terms of the Investment Agreement, were appointed to the Board, effective immediately following the Issuance. Messrs. Goldman and Barker will each serve for a term expiring at the 2024 annual meeting of the Company’s stockholders and until their successors are duly elected and qualified. Additionally, effective immediately following the Issuance, Mr. Goldman was appointed to the Compensation Committee of the Board and Mr. Barker was appointed to the Nominating and Corporate Governance Committee of the Board (the “N&CG Committee”) and Frank Lopez and Paul E. Raether were removed from the N&CG Committee. Messrs. Goldman and Barker will not receive any compensation for their service on the Board other than reimbursement from the Company for their reasonable out-of-pocket expenses incurred in connection with performing their respective duties as a member of the Board and any committee thereof. There are no transactions in which Mr. Goldman or Mr. Barker has an interest requiring disclosure under Item 404(a) of Regulation S-K.

 

In connection with the Issuance, the Company entered into indemnification agreements with Messrs. Goldman and Barker and will enter into new indemnification agreements with our other directors and certain officers after the Closing Date, the form of which is filed as Exhibit 10.3 to this Current Report on Form 8-K (the “Form Director Indemnification Agreement”). These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. The indemnification provided under the indemnification agreements will not be exclusive of any other indemnity rights. These indemnification agreements, when entered into, will supersede any indemnification agreements previously entered into by us and any such individuals.

 

The foregoing description of the Form Director Indemnification Agreement does not purport to be complete and is subject to, and qualified in its entirety by, reference to the full text of the Form Director Indemnification Agreement filed as Exhibit 10.3 to this Current Report on Form 8-K and incorporated herein by reference.

 

The information contained in Item 1.01 with respect to the Investment Agreement is incorporated herein by reference.

 

Item 5.03.  Amendments to Articles of Incorporation or Bylaws

 

Certificate of Designations Designating the Series A Preferred Stock

 

On August 28, 2023, the Company filed with the Secretary of State of the State of Delaware the Certificate of Designations establishing the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions of the shares of Series A Preferred Stock. The Certificate of Designations became effective upon filing.

 

The information contained in Item 1.01 with respect to the Series A Preferred Stock and the Certificate of Designations is incorporated herein by reference. The foregoing description of the terms of the Series A Preferred Stock, the Certificate of Designations and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Certificate of Designations filed as Exhibit 3.1 to this Current Report on Form 8-K and incorporated herein by reference.

 

Item 5.07.  Submission of Matters to a Vote of Security Holders

 

The Issuance, the Certificate of Designations, and the issuance of shares of Common Stock upon conversion of the Series A Preferred Stock were approved by the Board on August 25, 2023. Section 312.03(d) of the New York Stock Exchange Listed Company Manual (the “NYSE Rule”) requires stockholder approval for transactions that the New York Stock Exchange (the “NYSE”) considers a “change of control.” While the NYSE Rule does not define “change of control,” based on discussions with the staff of the NYSE, we believe that the initial Issuance may not be considered a “change of control” but that one could be triggered in the event that the Company elects to pay dividends as Compounded Dividends rather than in cash. Accordingly, prior to the Issuance, the Company sought and obtained the approval of the KKR Stockholder for the Issuance and the terms and conditions of the Series A Preferred Stock, including the payment Compounded Dividends following the initial Issuance and the issuance of our Common Stock upon conversion of the Series A Preferred Stock (collectively, the “Transactions”). On August 25, 2023 (the “Record Date”), the KKR Stockholder was the beneficial owner of 54.2% of our issued and outstanding Common Stock and acted by written consent in lieu of a special meeting of stockholders to approve the Transactions, in accordance with the Company’s Third Amended and Restated Certificate of Incorporation (the “Shareholder Consent”).

 

 

The Company intends to prepare and file a preliminary and definitive Schedule 14C Information Statement (the “Information Statement”) with the Securities and Exchange Commission regarding the Shareholder Consent. For the purposes of the NYSE Rule, the Series A Preferred Stock will not be permitted to convert into Common Stock or vote on an as-converted basis with the Common Stock until such date that is at least twenty (20) calendar days after the Information Statement is mailed to stockholders of record as of the Record Date , subject to certain exceptions as described in the Certificate of Designations that would not require stockholder approval under the NYSE Rule. This Current Report on Form 8-K shall not constitute a solicitation of a proxy or consent with respect to the Issuance.

 

Item 7.01.  Regulation FD Disclosure

 

On August 28, 2023, the Company issued a press release (the “Press Release”) relating to the completion of the transactions contemplated by the Investment Agreement. A copy of the Press Release is furnished herewith as Exhibit 99.1 to this Current Report on Form 8 K.

 

This information is furnished pursuant to Item 7.01 of Form 8-K. The information in this Item 7.01 and in Exhibit 99.1 hereto shall not be treated as filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. The furnishing of the information in this Item 7.01 is not intended to, and does not constitute a representation that such furnishing is required by Regulation FD or that the information in this Item 7.01 is material information that is not otherwise publicly available.

 

 

Item 9.01.  Financial Statements and Exhibits.

 

(d) Exhibits. The following exhibits are filed herewith:

 

Exhibit Number		Description
3.1		Certificate of Designations of Series A Convertible Preferred Stock
4.1		KKR Waiver of Rights Letter, dated as of August 28, 2023, delivered by KKR BrightView Aggregator L.P.
10.1		Investment Agreement, dated as of August 28, 2023, by and among BrightView Holdings, Inc., Birch Equity Holdings, LP and Birch-OR Equity Holdings, LLC
10.2		Registration Rights Agreement, dated as of August 28, 2023, by and among BrightView Holdings, Inc., Birch Equity Holdings, LP and Birch-OR Equity Holdings, LLC
10.3		Form of Director Indemnification Agreement
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

The following exhibit is furnished herewith:

 

Exhibit Number		Description
99.1		Press Release issued by BrightView Holdings, Inc. on August 28, 2023

 

 

SIGNATURES

 

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

 

	BrightView Holdings, Inc.
Date: August 28, 2023	By:	/s/ Jonathan M. Gottsegen
	Name:	Jonathan M. Gottsegen
	Title:	Executive Vice President, Chief Legal Officer and Corporate Secretary

 

Exhibit 3.1

 

CERTIFICATE OF DESIGNATIONS OF

 

SERIES A CONVERTIBLE PREFERRED STOCK,

 

PAR VALUE $0.01,

 

OF

 

BRIGHTVIEW HOLDINGS, INC.

 

Pursuant to Section 151 of the Delaware General Corporation Law (as amended, supplemented or restated from time to time, the “DGCL”), BRIGHTVIEW HOLDINGS, INC., a corporation organized and existing under the laws of the State of Delaware (the “Company”), in accordance with the provisions of Section 103 of the DGCL, DOES HEREBY CERTIFY:

 

That, the Third Amended and Restated Certificate of Incorporation of the Company, as filed with the Secretary of State of the State of Delaware (as amended, the “Certificate of Incorporation”), authorizes the issuance of 550,000,000 shares of capital stock, consisting of 500,000,000 shares of common stock, par value $0.01 per share (the “Common Stock”) and 50,000,000 shares of undesignated preferred stock, par value $0.01 per share (“Preferred Stock”);

 

That, subject to the Certificate of Incorporation, the board of directors of the Company (the “Board”) is authorized to provide by resolution or resolutions, out of the unissued shares of Preferred Stock, for one or more series of Preferred Stock and, with respect to each such series, to fix without further stockholder approval, the designations and the powers, including voting powers, if any, preferences and relative, participating, optional or other special rights, if any, and qualifications, limitations or restrictions thereof, of any series of Preferred Stock, and to fix the number of shares constituting any such series.

 

That, pursuant to the authority conferred upon the Board by the Certificate of Incorporation, the Board adopted the following resolution designating a new series of Preferred Stock as “Series A Convertible Preferred Stock”:

 

RESOLVED, that, pursuant to the authority vested in the Board in accordance with the provisions of Article IV of the Certificate of Incorporation and the provisions of Section 151 of the DGCL, a series of Preferred Stock of the Company is hereby authorized, and the number of shares to be included in such series, and voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions of the shares of Preferred Stock included in such series, shall be as follows:

 

SECTION 1.     Designation and Number of Shares. The shares of such series of Preferred Stock shall be designated as “Series A Convertible Preferred Stock” (the “Series A Preferred Stock”). The number of authorized shares constituting the Series A Preferred Stock shall be 500,000. Subject to Section 13(c)(iii), that number from time to time may be increased or decreased (but not below the number of shares of Series A Preferred Stock then outstanding) by further resolution duly adopted by the Board, or any duly authorized committee thereof and by the filing of a certificate pursuant to the provisions of the DGCL stating that such increase or decrease, as applicable, has been so authorized. The Company shall not have the authority to issue fractional shares of Series A Preferred Stock.

 

 

SECTION 2.     Ranking. The Series A Preferred Stock will rank, with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company:

 

(a)            on a parity basis with each other class or series of Capital Stock of the Company hereafter authorized, the terms of which expressly provide that such class or series ranks on a parity basis with the Series A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (such Capital Stock, “Parity Stock”);

 

(b)            junior to each other class or series of Capital Stock of the Company hereafter authorized, the terms of which expressly provide that such class or series ranks senior to the Series A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (such Capital Stock, “Senior Stock”); and

 

(c)            senior to the Common Stock and each other class or series of Capital Stock of the Company now existing or hereafter authorized, the terms of which do not expressly provide that such class or series ranks on a parity basis with or senior to the Series A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (such Capital Stock, “Junior Stock”).

 

SECTION 3.     Definitions. As used herein for all purposes of this Certificate of Designations:

 

“20% Beneficial Ownership Requirement” means that the Investor Parties beneficially own shares of Series A Preferred Stock and/or shares of Common Stock that were issued upon the conversion of such Series A Preferred Stock that, collectively, represent in the aggregate and on an as converted basis, at least 20% of the number (to be adjusted proportionately for stock dividends, stock splits and combinations, and similar transactions that occur after the Original Issuance Date) of shares of Common Stock that were beneficially owned by the Investor Parties, on an as converted basis (but disregarding any limitations on conversion), as of the Original Issuance Date as a result of the Investor Parties’ acquisition of 500,000 shares of Series A Preferred Stock.

 

“60% Beneficial Ownership Requirement” means that Investor Parties beneficially own shares of Series A Preferred Stock and/or shares of Common Stock that were issued upon the conversion of such Series A Preferred Stock that, collectively, represent in the aggregate and on an as converted basis, at least 60% of the number (to be adjusted proportionately for stock dividends, stock splits and combinations, and similar transactions that occur after the Original Issuance Date) of shares of Common Stock that were beneficially owned by the Investor Parties, on an as converted basis (but disregarding any limitations on conversion), as of the Original Issuance Date as a result of the Investor Parties’ acquisition of 500,000 shares of Series A Preferred Stock.

 

 

“Accrued Dividends” means, as of any date, with respect to any share of Series A Preferred Stock, all Dividends that have accrued on such share pursuant to Section 4(b), whether or not declared, but that have not, as of such date, been paid, but excluding any Compounded Dividends that have been added to the Liquidation Preference of such share (but, for the avoidance of doubt, including, without duplication, all Dividends that have accrued on any Compounded Dividends that have theretofore been added to the Liquidation Preference).

 

“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person; provided, however, (i) that the Company and its Subsidiaries shall not be deemed to be Affiliates of any Investor Party or any of its Affiliates, (ii) portfolio companies (as such term is customarily used among institutional investors) in which any Investor Party or any of its Affiliates has an investment (whether as debt or equity) shall not be deemed an Affiliate of such Investor Party and (iii) the Excluded Sponsor Parties shall not be deemed to be Affiliates of any Investor Party, the Company or any of the Company’s Subsidiaries. For this purpose, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise.

 

Any Person shall be deemed to “beneficially own,” to have “beneficial ownership” of, or to be “beneficially owning” any securities (which securities shall also be deemed “beneficially owned” by such Person) that such Person is deemed to “beneficially own” within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act; provided that any Person shall be deemed to beneficially own any securities that such Person has the right to acquire, whether or not such right is exercisable, within sixty (60) days or thereafter (including assuming conversion of all Series A Preferred Stock, if any, owned by such Person to Common Stock).

 

“Board” has the meaning set forth in the recitals above.

 

“Business Day” means any weekday that is not a day on which banking institutions in New York, New York are authorized or required by law, regulation or executive order to be closed.

 

“Bylaws” means the Amended and Restated Bylaws of the Company, as amended and as may be amended from time to time.

 

“Capital Stock” means, with respect to any Person, any and all shares of, interests in, rights to purchase, warrants to purchase, options for, participations in or other equivalents of or interests in (however designated) stock issued by such Person.

 

“Cash Dividend” has the meaning set forth in Section 4(c).

 

“Certificate of Designations” means this Certificate of Designations relating to the Series A Preferred Stock, as it may be amended from time to time.

 

“Certificate of Incorporation” has the meaning set forth in the recitals above.

 

 

“Change of Control” means the occurrence of one of the following, whether in a single transaction or a series of related transactions:

 

(a)            any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the Company, its wholly-owned Subsidiaries and the employee benefit plans of the Company and its wholly-owned Subsidiaries, files a Schedule TO or any other schedule, form or report under the Exchange Act disclosing or with respect to whom it otherwise becomes known (through public disclosure or otherwise) to the Company that such person or group has become the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a majority of the total voting power of the Voting Stock of the Company, other than as a result of a transaction in which (1) the holders of securities that represented 100% of the Voting Stock of the Company immediately prior to such transaction are substantially the same as the holders of securities that represent a majority of the Voting Stock of the surviving Person or its Parent Entity immediately following such transaction and (2) the holders of securities that represented 100% of the Voting Stock of the Company immediately prior to such transaction own directly or indirectly Voting Stock of the surviving Person or its Parent Entity in substantially the same proportion to each other as immediately prior to such transaction;

 

(b)            the merger or consolidation of the Company with or into another Person or the merger of another Person with or into the Company, or the sale, transfer or lease of all or substantially all of the assets of the Company (determined on a consolidated basis) to another Person, or any recapitalization, reclassification or other transaction in which all or substantially all of the Common Stock is exchanged for or converted into cash, securities or other property, other than a transaction following which (1) in the case of a merger or consolidation transaction, holders of securities that represented 100% of the Voting Stock of the Company immediately prior to such transaction own directly or indirectly (in substantially the same proportion to each other as immediately prior to such transaction, other than changes in proportionality as a result of any cash/stock election provided under the terms of the definitive agreement regarding such transaction) at least a majority of the voting power of the Voting Stock of the surviving Person or Parent Entity in such merger or consolidation transaction immediately after such transaction, and (2) in the case of a sale, transfer or lease of all or substantially all of the assets of the Company, other than to a Subsidiary or a Person that becomes a Subsidiary of the Company; or

 

(c)            shares of Common Stock or shares of any other Capital Stock of the Company into which the Series A Preferred Stock is convertible are not listed for trading on any United States national securities exchange or cease to be traded in contemplation of a de-listing (other than as a result of a transaction described in clause (b) above).

 

“Change of Control Effective Date” has the meaning set forth in Section 9(b).

 

“Change of Control Purchase Date” means, with respect to each share of Series A Preferred Stock, (i) in the case of a conversion pursuant to Section 9(a), the date on which the Company issues the shares of Common Stock upon conversion of such share and (ii) in the case of a Change of Control Redemption, the date on which the Company makes the payment in full of the Change of Control Redemption Price for such share to the Holder thereof or to the Transfer Agent, irrevocably, for the benefit of such Holder.

 

 

“Change of Control Redemption” has the meaning set forth in Section 9(a).

 

“Change of Control Redemption Price” has the meaning set forth in Section 9(a).

 

“Common Stock” has the meaning set forth in the recitals above.

 

“Covered Repurchase” has the meaning set forth in Section 11(a)(iii).

 

“close of business” means 5:00 p.m. (New York City time).

 

“Closing Price” of the Common Stock on any date of determination means the closing sale price or, if no closing sale price is reported, the last reported sale price, per share of Common Stock on the NYSE on such date. If the Common Stock is not traded on the NYSE on any date of determination, the Closing Price of the Common Stock on such date of determination means the closing sale price per share of Common Stock as reported in the composite transactions for the principal United States securities exchange or automated quotation system on which the Common Stock is so listed or quoted, or, if no closing sale price is reported, the last reported sale price per share of Common stock on the principal United States securities exchange or automated quotation system on which the Common Stock is so listed or quoted, or if the Common Stock is not so listed or quoted on a United States securities exchange or automated quotation system, the last quoted bid price per share of Common Stock in the over-the-counter market as reported by OTC Markets Group Inc. or any similar organization, or, if that bid price is not available, the market price per share of Common Stock on that date as determined by an Independent Financial Advisor retained by the Company for such purpose.

 

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

 

“Common Stock” has the meaning set forth in the recitals above.

 

“Company” has the meaning set forth in the recitals above.

 

“Company Charter Documents” has the meaning set forth in the Investment Agreement.

 

“Company Disclosure Letter” has the meaning set forth in the Investment Agreement.

 

“Company Redemption Right” has the meaning set forth in Section 10(a)(i).

 

“Compounded Dividend Record Date” has the meaning set forth in Section 4(d).

 

“Compounded Dividend Ratio” has the meaning set forth in Section 4(c).

 

“Compounded Dividends” has the meaning set forth in Section 4(c).

 

“Constituent Person” has the meaning set forth in Section 12(a).

 

“Conversion Agent” means the Transfer Agent acting in its capacity as conversion agent for the Series A Preferred Stock, and its successors and assigns.

 

“Conversion Date” has the meaning set forth in Section 8(a).

 

 

“Conversion Notice” has the meaning set forth in Section 8(a)(i).

 

“Conversion Price” means, for each share of Series A Preferred Stock, a dollar amount equal to $1,000 divided by the Conversion Rate.

 

“Conversion Rate” means, for each share of Series A Preferred Stock, 105.9322 shares of Common Stock, subject to adjustment as set forth herein.

 

“Current Market Price” per share of Common Stock, as of any date of determination, means the arithmetic average of the VWAP per share of Common Stock for each of the ten (10) consecutive full Trading Days ending on, and including, the Trading Day immediately preceding such day, appropriately adjusted to take into account the occurrence during such period of any event described in Section 11.

 

“DGCL” has the meaning set forth in the recitals above.

 

“Director Qualification Requirements” means all of the following (i) that the election of any Investor Director must not cause the Company to violate any applicable law or rule of any securities exchange or other trading facility on which any of the Company’s securities are then listed or qualified for trading requiring that a majority of the Company’s directors be independent; provided that in no event shall such Investor Director’s relationship with the Investor Parties or their Affiliates (or any other actual or potential lack of independence resulting therefrom) nor the ownership by the Investor Parties of any shares of Class A Preferred Stock or shares of Common Stock issuable upon conversion thereof, in and of itself, be considered to disqualify such Investor Director from being a member of the Board; (ii) no Investor Director shall be eligible to serve on the Board if he or she has been involved in any of the events enumerated under Item 2(d) of Schedule 13D under the Exchange Act or Item 401(f) of Regulation S-K under the Securities Act or is subject to any judgment prohibiting service as a director of any public company; and (iii) the Investor Director has provided the following to the Company: (1) all information requested by the Company that is required to be or is customarily disclosed for directors, candidates for directors and their respective Affiliates and representatives in a proxy statement or other filings in accordance with applicable law, any stock exchange rules or listing standards or the Company Charter Documents or corporate governance guidelines, in each case, relating to the Investor Director’s election as a director of the Company or the Company’s operations in the ordinary course of business; (2) all information reasonably requested by the Company in connection with assessing eligibility, independence and other criteria applicable to directors or satisfying compliance and legal or regulatory obligations, in each case, relating to the Investor Director’s election, as applicable, as a director of the Company or the Company’s operations in the ordinary course of business; and (3) an undertaking in writing by the Investor Director: (x) to be subject to, bound by and duly comply with the code of conduct in the form agreed upon by the other directors of the Company, provided that no such code of conduct shall restrict any transfer of securities by the Investor Parties or their Affiliates (other than with respect to the Investor Director solely in his or her individual capacity) except as provided in the Investment Agreement, impose confidentiality obligations on the Investor Director other those in the in the Investment Agreement or as mandatorily applicable under applicable law, or impose any share ownership requirement for the Investor Director; and (y) to waive notice of and recuse himself or herself from any meetings, deliberations or discussion of the Board or any committee thereof regarding any transactions involving the Investor Parties.

 

 

“Distributed Property” has the meaning set forth in Section 11(a)(iv).

 

“Distribution Transaction” means any distribution of any shares of capital stock or other interests of a Subsidiary of the Company to holders of Common Stock (whether by means of a spin-off, split-off, redemption, reclassification, exchange, stock dividend, share distribution, rights offering or similar transaction), where such shares or interests are listed on a United States securities exchange or quoted on an automated quotation system.

 

“Dividend Accrual Date” means March 31, June 30, September 30 and December 31 of each year; provided that if any such Dividend Accrual Date is not a Business Day, then any applicable Dividend payable in cash on such Dividend Accrual Date in accordance with the terms hereof and the procedures applicable to the payment of cash Dividends shall be payable on the next Business Day immediately following such Dividend Accrual Date, without any interest.

 

“Dividend Accrual Period” means in respect of any share of Series A Preferred Stock the period from and including the Issuance Date of such share to but excluding the next Dividend Accrual Date and, subsequently, in each case the period from and including any Dividend Accrual Date to but excluding the next Dividend Accrual Date.

 

“Dividend Rate” means 7.0% per annum.

 

“Dividend Record Date” has the meaning set forth in Section 4(d).

 

“Dividends” has the meaning set forth in Section 4(a).

 

“Ex-Dividend Date” means, with respect to an issuance, dividend or distribution on the Common Stock, the first date on which shares of Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive such issuance, dividend or distribution (including pursuant to due bills or similar arrangements required by the relevant stock exchange). For the avoidance of doubt, any alternative trading convention on the applicable exchange or market in respect of the Common Stock under a separate ticker symbol or CUSIP number will not be considered “regular way” for this purpose.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Exchange Property” has the meaning set forth in Section 12(a).

 

“Excluded Sponsor Parties” has the meaning set forth in the Investment Agreement.

 

“Expiration Date” has the meaning set forth in Section 11(a)(iii).

 

“Fair Market Value” means, with respect to any security or other property, the fair market value of such security or other property as reasonably determined in good faith by the Board, or an authorized committee thereof, (i) after consultation with an Independent Financial Advisor, as to any security or other property with a Fair Market Value of less than $50,000,000, or (ii) otherwise using an Independent Financial Advisor to provide a valuation opinion.

 

“First Fall-Away of Investor Board Rights” means the first day on which the 60% Beneficial Ownership Requirement is no longer satisfied.

 

 

“Holder” means a Person in whose name the shares of the Series A Preferred Stock are registered, which Person shall be treated by the Company, Transfer Agent, Registrar, paying agent and Conversion Agent as the absolute owner of the shares of Series A Preferred Stock for the purpose of making payment and settling conversions and for all other purposes; provided that, to the fullest extent permitted by law, no Person that has received by transfer shares of Series A Preferred Stock in violation of the Investment Agreement shall be a Holder, and the Transfer Agent, Registrar, paying agent and Conversion Agent, as applicable, shall not, unless directed otherwise by the Company, recognize any such Person as a Holder, and the Person in whose name the shares of the Series A Preferred Stock were registered immediately prior to such transfer shall remain the Holder of such shares.

 

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

 

“Implied Quarterly Dividend Amount” means, with respect to any share of Series A Preferred Stock, as of any date, the product of (a) the Liquidation Preference of such share on the first day of the applicable Dividend Accrual Period (or in the case of the first Dividend Accrual Period for such share, as of the Issuance Date of such share) multiplied by (b) one fourth of the Dividend Rate.

 

“Independent Financial Advisor” means an accounting, appraisal, investment banking firm or consultant of nationally recognized standing; provided, however, that such firm or consultant is not an Affiliate of the Company.

 

“Initial Change of Control Notice” has the meaning set forth in Section 9(b).

 

“Investment Agreement” means that certain Investment Agreement between the Company and the Investors dated as of August 28, 2023, as it may be amended, supplemented or otherwise modified from time to time, with respect to certain terms and conditions concerning, among other things, the rights of and restrictions on the Holders.

 

“Investors” has the meaning set forth in the Investment Agreement.

 

“Investor Parties” means the Investors and each Permitted Transferee of the Investors to whom shares of Series A Preferred Stock or Common Stock are transferred pursuant to Section 4.07(b)(i) of the Investment Agreement.

 

“Issuance Date” means, with respect to any share of Series A Preferred Stock, the date of original issuance of such share.

 

“Junior Stock” has the meaning set forth in Section 2(c).

 

“Liquidation Preference” means, with respect to any share of Series A Preferred Stock, as of any date, $1,000 per share, as may be increased for any Compounded Dividends, from time to time.

 

“Mandatory Conversion” has the meaning set forth in Section 7(a).

 

“Mandatory Conversion Date” has the meaning set forth in Section 7(a).

 

 

“Mandatory Conversion Price” means 200% of the Conversion Price (as such Conversion Price may be adjusted pursuant to the provisions of Section 11(a)). The Mandatory Conversion Price shall initially be $18.88.

 

“Market Disruption Event” means any of the following events:

 

(a)            any suspension of, or limitation imposed on, trading of the Common Stock by any exchange or quotation system on which the Closing Price is determined pursuant to the definition of the term “Closing Price” (the “Relevant Exchange”) during the one-hour period prior to the close of trading for the regular trading session on the Relevant Exchange (or for purposes of determining the VWAP per share of Common Stock, any period or periods aggregating one half-hour or longer during the regular trading session on the relevant day) and whether by reason of movements in price exceeding limits permitted by the Relevant Exchange as to securities generally, or otherwise relating to the Common Stock or options contracts relating to the Common Stock on the Relevant Exchange; or

 

(b)            any event that disrupts or impairs (as determined by the Company in its reasonable discretion) the ability of market participants during the one-hour period prior to the close of trading for the regular trading session on the Relevant Exchange (or for purposes of determining the VWAP per share of Common Stock, any period or periods aggregating one half-hour or longer during the regular trading session on the relevant day) in general to effect transactions in, or obtain market values for, the Common Stock on the Relevant Exchange or to effect transactions in, or obtain market values for, options contracts relating to the Common Stock on the Relevant Exchange.

 

“Notice of Company Redemption” has the meaning set forth in Section 10(a)(ii).

 

“Notice of Mandatory Conversion” has the meaning set forth in Section 7(b).

 

“NYSE” means the New York Stock Exchange.

 

“Officer’s Certificate” means a certificate signed by the Chief Executive Officer, the Chief Financial Officer, the Secretary, or any President or Vice President of the Company (whether or not designated by a number or numbers or word or words added before or after the title “President” or “Vice President”).

 

“Original Issuance Date” means the Closing Date, as defined in the Investment Agreement.

 

“Parent Entity” means, with respect to any Person, any other Person of which such first Person is a direct or indirect wholly owned Subsidiary.

 

“Parity Stock” has the meaning set forth in Section 2(a).

 

“Permitted Transferee” has the meaning set forth in the Investment Agreement.

 

“Person” means any individual, corporation, estate, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or any other entity.

 

 

“Preferred Stock” has the meaning set forth in the recitals above.

 

“Record Date” means, with respect to any dividend, distribution or other transaction or event in which holders of Common Stock, other Junior Stock or Parity Stock, as applicable, have the right to receive any cash, securities or other property or in which Common Stock, other Junior Stock or Parity Stock, as applicable, is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of Common Stock, other Junior Stock or Parity Stock, as applicable, entitled to receive such cash, securities or other property (whether such date is fixed by the Board or by statute, contract or otherwise).

 

“Redemption” has the meaning set forth in Section 10(a)(i).

 

“Redemption Date” means, with respect to each share of Series A Preferred Stock, the date on which the Company makes the payment in full of the Redemption Price for each such share either to the Holder of such share or to the Transfer Agent, irrevocably, for the benefit of such Holder.

 

“Redemption Price” has the meaning set forth in Section 10(a)(i).

 

“Registrar” means the Transfer Agent acting in its capacity as registrar for the Series A Preferred Stock, and its successors and assigns.

 

“Relevant Exchange” has the meaning set forth in the definition of the term “Market Disruption Event.”

 

“Reorganization Event” has the meaning set forth in Section 12(a).

 

“Required Number of Shares” has the meaning set forth in Section 9(g).

 

“Second Fall-Away of Investor Board Rights” means the first day on which the 20% Beneficial Ownership Requirement is no longer satisfied.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Senior Stock” has the meaning set forth in Section 2(b).

 

“Series A Preferred Stock” has the meaning set forth in Section 1.

 

“Subsidiary”, when used with respect to any Person, means any corporation, limited liability company, partnership, association, trust or other entity of which (i) securities or other ownership interests representing more than 50% of the ordinary voting power (or, in the case of a partnership, more than 50% of the general partnership interests) or (ii) sufficient voting rights to elect at least a majority of the board of directors or other governing body are, as of such date, owned by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.

 

“Trading Day” means a Business Day on which the Relevant Exchange is scheduled to be open for business and on which there has not occurred a Market Disruption Event.

 

 

“Trading Period” has the meaning set forth in Section 7(a).

 

“Transfer Agent” means the Person acting as Transfer Agent, Registrar and paying agent and Conversion Agent for the Series A Preferred Stock, and its successors and assigns. The Transfer Agent initially shall be Equiniti Trust Company, LLC.

 

“Trigger Event” has the meaning set forth in Section 11(a)(vii).

 

“Voting Condition” means the later of (i) the expiration of the applicable waiting period under the HSR Act, and (ii) the twentieth (20th) calendar day following the mailing of the Information Statement (as defined in the Investment Agreement) to the holders of Common Stock; provided that notwithstanding the foregoing, if by the date that is six (6) months after the Issuance Date clause (i) or (ii) has not been satisfied, then from and after the date that is six (6) months after the Issuance Date, (1) if clause (i) is not satisfied, the Voting Condition shall be deemed satisfied with respect to the exercise by a Holder of any conversion and/or as-converted voting rights that is below the applicable threshold requiring clearance under the HSR Act and (2) if clause (i) has been satisfied but clause (ii) has not been satisfied, the Voting Condition shall be deemed satisfied with respect to the exercise by a Holder of any conversion and/or as-converted voting rights that would result in the Holder holding up to 25% of the then issued and outstanding Common Stock or having voting rights up to 25% of the then issued and outstanding Common Stock (and thus, for the avoidance of doubt, if by the date that is six (6) months after the Issuance Date clause (ii) has not been satisfied, the Voting Condition shall not be applicable to the to the extent the number of shares to be converted and / or voted is below the lower of (x) the applicable threshold requiring clearance under the HSR Act (to the extent such clearance has not yet been obtained) and (y) 25% of the then issued and outstanding Common Stock).

 

“Voting Stock” means (i) with respect to the Company, the Common Stock, the Series A Preferred Stock (subject to the limitations set forth herein) and any other Capital Stock of the Company having the right to vote generally in any election of directors of the Board and (ii) with respect to any other Person, all Capital Stock of such Person having the right to vote generally in any election of directors of the board of directors of such Person or other similar governing body.

 

“VWAP” per share of Common Stock on any Trading Day means the per share volume-weighted average price as displayed under the heading Bloomberg VWAP on Bloomberg (or, if Bloomberg ceases to publish such price, any successor service reasonably chosen by the Company) page “BV <equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from the open of trading on the relevant Trading Day until the close of trading of the primary trading session on such Trading Day (or if such volume-weighted average price is unavailable, the market price of one share of Common Stock on such Trading Day determined, using a volume-weighted average method, by an Independent Financial Advisor retained for such purpose by the Company).

 

 

SECTION 4.     Dividends. (a) Holders shall be entitled to receive dividends of the type and in the amount determined as set forth in this Section 4 (such dividends, “Dividends”).

 

(b)            Accrual of Dividends. Dividends on each share of Series A Preferred Stock (i) shall accrue on a daily basis from and including the Issuance Date of such share, whether or not declared and whether or not the Company has assets legally available to make payment thereof, at a rate equal to the Dividend Rate as further specified below and (ii) shall be payable in cash quarterly in arrears, if, as and when authorized by the Board, or any duly authorized committee thereof, and declared by the Company, to the extent not prohibited by law, on each Dividend Accrual Date, commencing on the first Dividend Accrual Date following the Issuance Date of such share (and if not declared to be paid in cash by the Company on such Dividend Accrual Date, such Dividends shall be treated as provided in this Section 4). The amount of Dividends accruing with respect to any share of Series A Preferred Stock for any day shall be determined by dividing (x) the Implied Quarterly Dividend Amount as of such day by (y) the actual number of days in the Dividend Accrual Period in which such day falls; provided that if during any Dividend Accrual Period any Compounded Dividends in respect of one or more prior Dividend Accrual Periods are paid in cash, then after the date of such payment the amount of Dividends accruing with respect to any share of Series A Preferred Stock for any day shall be determined by dividing (x) the Implied Quarterly Dividend Amount (recalculated to take into account such payment of Compounded Dividends) by (y) the actual number of days in such Dividend Accrual Period. The amount of Dividends accruing with respect to any share of Series A Preferred Stock for any Dividend Accrual Period shall equal the sum of the daily Dividend amounts accrued in accordance with the prior sentence of this Section 4(b) with respect to such share during such Dividend Accrual Period. For the avoidance of doubt, for any share of Series A Preferred Stock with an Issuance Date that is not a Dividend Accrual Date, the amount of Dividends payable with respect to the initial Dividend Accrual Period for such share shall equal the product of (A) the daily accrual determined as specified in the prior sentence, assuming a full Dividend Accrual Period in accordance with the definition of such term, and (B) the number of days from and including such Issuance Date to but excluding the next Dividend Accrual Date.

 

(c)            Payment of Dividend. With respect to any Dividend Accrual Date, the Company may pay, to the extent permitted by applicable law, in its sole discretion, Dividends on each share of Series A Preferred Stock in cash (a “Cash Dividend”), if, as and when authorized by the Board, or any duly authorized committee thereof; provided that Cash Dividend payments shall be aggregated per Holder and shall be made to the nearest cent (with $.005 being rounded upward). With respect to any Dividend Accrual Date for which the Company does not for any reason (including because payment of any such Cash Dividends are prohibited by law) pay in cash all Dividends that accumulated during the relevant Dividend Accrual Period, any such accumulated and unpaid Dividends on a share of the Series A Preferred Stock (“Compounded Dividends”) will (whether or not earned or declared) be added to the Liquidation Preference of such share of the Series A Preferred Stock as of such Dividend Accrual Date. Any Compounded Dividends that remain unpaid as of any determination date shall increase the Liquidation Preference in accordance with the definition of “Liquidation Preference.” With respect to any Dividend Accrual Date where the Company does not pay in cash all Dividends that accumulated during the relevant Dividend Accrual Period, the proportion of any Compounded Dividend to Dividend in respect of any Holder with respect to such Dividend Accrual Period (the “Compounded Dividend Ratio”) shall be the same as the Compounded Dividend Ratio for such Dividend Accrual Period with respect to each Dividend paid to each other Holder that is entitled to a Dividend on such Dividend Accrual Date. Compounded Dividends in respect of any prior Dividend Accrual Periods may be paid in cash on any date (whether or not such date is a Dividend Accrual Date) if, as and when authorized by the Board, or any duly authorized committee thereof as declared by the Company and any such payment will reduce, on a dollar-for-dollar basis, the Liquidation Preference in respect of the Series A Preferred Stock as of when such payment is made; provided that the Company may not pay in cash any Accrued Dividends or Compounded Dividends with respect to a share of Series A Preferred Stock after a Conversion Notice has been delivered to the Conversion Agent hereunder in respect of such share. Notwithstanding anything herein to the contrary, no Dividend may be declared unless paid in cash (it being understood that no Dividends may be declared in paid-in-securities or otherwise “in kind”).

 

 

(d)            Record Date. The record date for the cash payment of Dividends that are declared and paid on any relevant Dividend Accrual Date will be the close of business on the fifteenth (15th) day of the calendar month which contains the relevant Dividend Accrual Date (each, a “Dividend Record Date”), and the record date for any cash payment of any Compounded Dividends that were not declared and paid in cash on any relevant Dividend Accrual Date will be the close of business on the date that is established by the Board, or a duly authorized committee thereof, which will not be more than forty-five (45) days prior to the date on which such Dividends are paid in cash (each, a “Compounded Dividend Record Date”), in each case whether or not such day is a Business Day.

 

(e)            Participating Dividends. Subject to the provisions of this Section 4, dividends or distributions may be authorized by the Board, or any duly authorized committee thereof, and declared and paid by the Company, or any duly authorized committee thereof, on any Junior Stock and Parity Stock from time to time (a “Common Dividend”); provided that at the time of such authorization, the Board or such committee authorizes an equivalent dividend or distribution on the Series A Preferred Stock (a “Participating Dividend”) such that (1) the Record Date and the payment date for such Participating Dividend occur on the same respective date as the Record Date and payment date for such Common Dividend and (2) the kind and amount of consideration payable per share of Series A Preferred Stock in such Participating Dividend is the same kind and amount of consideration that would be payable in the Common Dividend in respect of a number of shares of Common Stock that would be issuable upon conversion of a share of Series A Preferred Stock (pursuant to Section 6 without regard to any of the limitations on convertibility contained therein) immediately prior to the Record Date for such Common Dividend.

 

(f)            Conversion Following a Record Date. If the Conversion Date for any shares of Series A Preferred Stock is prior to a Dividend Record Date or a Compounded Dividend Record Date, the Holder of such shares will not be entitled to any dividend in respect of such Dividend Record Date or Compounded Dividend Record Date, as applicable, other than Accrued Dividends and through the inclusion of Compounded Dividends in the Liquidation Preference as of the Conversion Date in the calculation under Section 6(a) or Section 7(a), as applicable. Subject to the last sentence of Section 4(c), if the Conversion Date for any shares of Series A Preferred Stock is on or after a Dividend Record Date or a Compounded Dividend Record Date but prior to the corresponding payment date for such dividend, the Holder of such shares as of such Dividend Record Date or Compounded Dividend Record Date, as applicable, shall be entitled to receive such dividend, notwithstanding the conversion of such shares prior to the applicable Dividend Accrual Date; provided that the amount of such Dividend or Compounded Dividend shall not be included for the purpose of determining the amount of Accrued Dividends or the Liquidation Preference under Section 6(a) or Section 7(a), as applicable, with respect to such Conversion Date.

 

 

SECTION 5.     Liquidation Rights. (a) Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the Holders shall be entitled, out of assets legally available therefor, before any distribution or payment out of the assets of the Company may be made to or set aside for the holders of any Junior Stock, and subject to the rights of the holders of any Senior Stock or Parity Stock and the rights of the Company’s existing and future creditors, to receive in full a liquidating distribution in cash and in the amount per share of Series A Preferred Stock equal to the greater of (i) the sum of (A) the Liquidation Preference plus (B) the Accrued Dividends with respect to such share of Series A Preferred Stock as of the date of such distribution and (ii) the amount such Holders would have received had such Holders, immediately prior to such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, converted such shares of Series A Preferred Stock into Common Stock (pursuant to Section 6 without regard to any of the limitations on convertibility contained therein). Holders shall not be entitled to any further payments in the event of any such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company other than what is expressly provided for in this Section 5 and will have no right or claim to any of the Company’s remaining assets.

 

(b)            Partial Payment. If in connection with any distribution described in Section 5(a) above, the assets of the Company or proceeds therefrom are not sufficient to pay in full the aggregate liquidating distributions required to be paid pursuant to Section 5(a) to all Holders and the liquidating distributions payable to all holders of any Parity Stock, the amounts distributed to the Holders and to the holders of all such Parity Stock shall be paid pro rata in accordance with the respective aggregate liquidating distributions to which they would otherwise be entitled if all amounts payable thereon were paid in full.

 

(c)            Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 5, the sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property and assets of the Company shall not be deemed a voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, nor shall the merger, consolidation, statutory exchange or any other business combination transaction of the Company into or with any other Person or the merger, consolidation, statutory exchange or any other business combination transaction of any other Person into or with the Company be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.

 

SECTION 6.     Right of the Holders to Convert. (a) From and after the satisfaction (or to the extent of the inapplicability) of the Voting Condition, each Holder shall have the right, at such Holder’s option, subject to the conversion procedures set forth in Section 8, to convert each share of such Holder’s Series A Preferred Stock at any time into (i) the number of shares of Common Stock equal to the quotient of (A) (subject to the proviso in Section 4(f)) the sum of the Liquidation Preference and the Accrued Dividends with respect to such share of Series A Preferred Stock as of the applicable Conversion Date divided by (B) the Conversion Price as of the applicable Conversion Date plus (ii) cash in lieu of fractional shares as set out in Section 11(h). The right of conversion may be exercised as to all or any portion of such Holder’s Series A Preferred Stock from time to time; provided that, in each case, no right of conversion may be exercised by a Holder in respect of fewer than 1,000 shares of Series A Preferred Stock (unless such conversion relates to all shares of Series A Preferred Stock held by such Holder). Notwithstanding the foregoing or anything to the contrary herein, in no event shall the Series A Preferred Stock (i) be convertible into Common Stock in a manner that would result in the Investor Parties and their Affiliates holding more than 49% (together with any shares of Common Stock held by the Investor Parties and their Affiliates) of the then issued and outstanding Common Stock, or (ii) have voting rights in excess of 49% (together with any shares of Common Stock held by the Investor Parties and their Affiliates) of the then issued and outstanding Common Stock, on an as-converted basis (such limitations, the “Conversion Limitation”). To the extent the Conversion Limitation on voting is applicable, each Holders’ voting rights will be cut back on a pro rata basis in order to comply with such Conversion Limitation. For the avoidance of doubt, the Conversion Limitation shall not apply to, or otherwise affect the consideration payable to Holders in connection with a Change of Control, liquidation or dissolution or similar transaction involving the Company.

 

 

(b)            The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of the Series A Preferred Stock, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the shares of Series A Preferred Stock then outstanding. Any shares of Common Stock issued upon conversion of Series A Preferred Stock shall be duly authorized, validly issued, fully paid and nonassessable.

 

SECTION 7.     Mandatory Conversion by the Company. (a) So long as a Shelf Registration Statement (as defined in the Registration Rights Agreement) is in effect, at any time after the three (3) year anniversary of the Original Issuance Date, if (i) the VWAP per share of Common Stock was greater than the Mandatory Conversion Price for at least twenty (20) Trading Days in any period of thirty (30) consecutive Trading Days (such thirty (30) consecutive Trading Day period, the “Trading Period”), and (ii) either (x) the VWAP per share of Common Stock is greater than the Mandatory Conversion Price on the Trading Day immediately prior to the date the Company sends the applicable Notice of Mandatory Conversion referred to in Section 7(b) below or (y) the Company has not filed a press release or Exchange Act report between the last Trading Day in the Trading Period where the VWAP per share of Common Stock is greater than the Mandatory Conversion Price and the date the Company sends the applicable Notice of Mandatory Conversion referred to in Section 7(b) below, then the Company may elect to convert (a “Mandatory Conversion”) all or any portion of the outstanding shares of Series A Preferred Stock into shares of Common Stock together, if applicable, with cash in lieu of any fraction share of Common Stock (the date of any Mandatory Conversion pursuant to this Section 7(a), the “Mandatory Conversion Date”). In the case of a Mandatory Conversion of any share of Series A Preferred Stock, such share shall be converted into (i) the number of shares of Common Stock equal to the quotient of (A) (subject to the proviso in Section 4(f)) the sum of the Liquidation Preference and the Accrued Dividends with respect to such share of Series A Preferred Stock as of the Mandatory Conversion Date divided by (B) the Conversion Price of such share in effect as of the Mandatory Conversion Date plus (ii) cash in lieu of fractional shares as set out in Section 11(h).

 

 

(b)            Notice of Mandatory Conversion. If the Company elects to effect a Mandatory Conversion, the Company shall, within ten (10) Business Days following the completion of the applicable thirty (30) day Trading Period referred to in Section 7(a) above, provide notice of the Mandatory Conversion to each Holder (such notice, a “Notice of Mandatory Conversion”). For the avoidance of doubt, a Notice of Mandatory Conversion does not limit a Holder’s right to convert on a Conversion Date prior to the Mandatory Conversion Date. The Mandatory Conversion Date selected by the Company shall be no less than ten (10) Business Days and no more than twenty (20) Business Days after the date on which the Company provides the Notice of Mandatory Conversion to the Holders. The Notice of Mandatory Conversion shall state, as appropriate:

 

(i)            the Mandatory Conversion Date selected by the Company; and

 

(ii)            the Conversion Rate as expected to be in effect on the Mandatory Conversion Date, the number of shares Series A Preferred Stock to be converted from such Holder, the number of shares of Common Stock to be issued to such Holder upon conversion of each such share of Series A Preferred Stock and the Liquidation Preference and amount of Accrued Dividends expected as of the Mandatory Conversion Date.

 

(c)            Partial Mandatory Conversion. In the event that the Mandatory Conversion is exercised with respect to shares of Series A Preferred Stock representing less than all the shares of Series A Preferred Stock outstanding at such time, the shares to be converted shall be converted by the Company on a pro rata basis based on the then-outstanding shares of Series A Preferred Stock. If fewer than all the shares of Series A Preferred Stock represented by any certificate are converted, new certificates shall be issued representing the shares of Series A Preferred Stock that remain outstanding without charge to the Holder thereof, to the extent applicable.

 

SECTION 8.     Conversion Procedures and Effect of Conversion. (a) Conversion Procedure. A Holder must do each of the following in order to convert shares of Series A Preferred Stock pursuant to this Section 8(a):

 

(i)            in the case of a conversion pursuant to Section 6(a), complete and manually sign the conversion notice provided by the Conversion Agent (the “Conversion Notice”), and deliver such notice to the Conversion Agent; provided that a Conversion Notice may be conditional on the completion of a Change of Control or other corporate transaction;

 

(ii)            deliver to the Conversion Agent the certificate or certificates (if any) representing the shares of Series A Preferred Stock to be converted;

 

(iii)           if required, furnish appropriate endorsements and transfer documents; and

 

(iv)           if required, pay any stock transfer, documentary, stamp or similar taxes not payable by the Company pursuant to Section 20.

 

The “Conversion Date” means (A) with respect to conversion of any shares of Series A Preferred Stock at the option of any Holder pursuant to Section 6(a), the date on which such Holder complies with the procedures in this Section 8(a) (including the satisfaction of any conditions to conversion set forth in the Conversion Notice) and (B) with respect to Mandatory Conversion pursuant to Section 7(a), the Mandatory Conversion Date.

 

 

(b)            Effect of Conversion. Effective immediately prior to the close of business on the Conversion Date applicable to any shares of Series A Preferred Stock, Dividends shall no longer accrue or be declared on any such shares of Series A Preferred Stock, and such shares of Series A Preferred Stock shall cease to be outstanding.

 

(c)            Record Holder of Underlying Securities as of Conversion Date. The Person or Persons entitled to receive the Common Stock and, to the extent applicable, cash, securities or other property issuable upon conversion of Series A Preferred Stock on a Conversion Date shall be treated for all purposes as the record holder(s) of such shares of Common Stock and/or cash, securities or other property as of the close of business on such Conversion Date. As promptly as practicable on or after the Conversion Date and, if applicable, compliance by the applicable Holder with the relevant procedures contained in Section 8(a) (and in any event no later than three (3) Trading Days thereafter; provided however that, if a written notice from the Holder in accordance with Section 8(a)(i) specifies a date of delivery for any shares of Common Stock, such shares shall be delivered on the date so specified, which shall be no earlier than the second (2nd) Business Day immediately following the date of such notice and no later than the seventh (7th) Business Day thereafter), the Company shall issue the number of whole shares of Common Stock issuable upon conversion (and deliver payment of cash in lieu of fractional shares as set out in Section 11(h)) and, to the extent applicable, any cash, securities or other property issuable thereon. Such delivery of shares of Common Stock, securities or other property shall be made by book-entry or, at the request of the Holder, by delivering a notice to the Conversion Agent, through the facilities of The Depository Trust Company or in certificated form. Any such certificate or certificates shall be delivered by the Company to the appropriate Holder on a book-entry basis, through the facilities of The Depository Trust Company, or by mailing certificates evidencing the shares to the Holders, in each case at their respective addresses as set forth in the Conversion Notice (in the case of a conversion pursuant to Section 6(a)) or in the records of the Company or as set forth in a notice from the Holder to the Conversion Agent, as applicable (in the case of a Mandatory Conversion). In the event that a Holder shall not by written notice designate the name in which shares of Common Stock (and payments of cash in lieu of fractional shares) and, to the extent applicable, cash, securities or other property to be delivered upon conversion of shares of Series A Preferred Stock should be registered or paid, or the manner in which such shares, cash, securities or other property should be delivered, the Company shall be entitled to register and deliver such shares, securities or other property, and make such payment, in the name of the Holder and in the manner shown on the records of the Company. Notwithstanding anything to the contrary in this Section 8, if (i) as of the date of conversion at least twelve (12) months have passed since the Issuance Date, and (ii) a Holder certifies to the Company that as of the date of conversion it is not an Affiliate and has not been an Affiliate of the Company within the preceding three (3) months and otherwise satisfies the conditions set forth in Rule 144 for securities held by non-affiliates, if any, then the Company will issue the shares of Common Stock issuable to such Holder upon conversion through the facilities of The Depository Trust Company with an unrestricted CUSIP.

 

 

(d)            Status of Converted or Reacquired Shares. Shares of Series A Preferred Stock converted in accordance with this Certificate of Designations, or otherwise acquired by the Company in any manner whatsoever, shall be retired promptly after the conversion or acquisition thereof and shall not be reissued as shares of such series. All such shares shall, upon their retirement and any filing required by the DGCL, become authorized but unissued shares of Preferred Stock, without designation as to series until such shares are once more designated as part of a particular series by the Board pursuant to the provisions of the Certificate of Incorporation.

 

(e)            Partial Conversion. In case any certificate for shares of Series A Preferred Stock shall be surrendered for partial conversion, the Company shall, at its expense, execute and deliver to or upon the written order of the Holder of the certificate so surrendered a new certificate for the shares of Series A Preferred Stock not converted.

 

(f)            Depository Procedures. Notwithstanding anything to the contrary in this Section 8, the only requirements to convert shares of Series A Preferred Stock that are held through the facilities of The Depository Trust Company is to comply with the rules and procedures of The Depository Trust Company applicable to such conversion.

 

SECTION 9.     Change of Control. (a) Holder Rights Upon Change of Control. Upon the occurrence of a Change of Control, each Holder of outstanding shares of Series A Preferred Stock may, at such Holder’s election, effective as of immediately prior to the Change of Control, convert all or a portion of its shares of Series A Preferred Stock pursuant to Section 6(a), provided that if the Holder does not make such an election with respect to all of its shares of Series A Preferred Stock, the Company shall redeem (the “Change of Control Redemption”) all of such Holder’s shares of Series A Preferred Stock that have not been so converted at a purchase price per share of Series A Preferred Stock, payable in cash, equal to the greater of (A) the sum of (x) the Liquidation Preference of such share of Series A Preferred Stock, plus (y) the Accrued Dividends in respect of such share of Series A Preferred Stock as of the applicable Change of Control Purchase Date and (B) the amount of cash and the Fair Market Value of any other property that the Holder would have received if such Holder had converted such share of Series A Preferred Stock into Common Stock immediately prior to the Change of Control (without regard to any limitations on conversions set forth in this Certificate of Designations) (the greater of (A) and (B), the “Change of Control Redemption Price”); provided that the Company shall only be required to pay the Change of Control Redemption Price to the extent such purchase can be made out of funds legally available therefor in accordance with Section 9(g).

 

(b)            Initial Change of Control Notice. On or before the twentieth (20th) Business Day prior to the effective date of a Change of Control (the “Change of Control Effective Date”) (or, if later, promptly after the Company discovers that a Change of Control may occur), a written notice (the “Initial Change of Control Notice”) shall be sent by or on behalf of the Company to the Holders as they appear in the records of the Company, which notice shall contain (i) the date on which the Change of Control is anticipated to be effected (or, if applicable, the date on which a Schedule TO or other schedule, form or report disclosing a Change of Control was filed), (ii) a description of the material terms and conditions of the Change of Control and (iii) the then applicable Conversion Rate. No later than ten (10) Business Days prior to the Change of Control Effective Date as set forth in the Initial Change of Control Notice (or, if the Change of Control has already occurred as provided in the Initial Change of Control Notice, promptly, but no later than the tenth (10^th) Business Day following receipt thereof), any Holder that desires to exercise its rights pursuant to Section 9(a) shall notify the Company in writing thereof and shall specify (x) whether such Holder is electing to exercise its right to convert all or a portion of its shares of Series A Preferred Stock pursuant to Section 9(a), and (y) the number of shares of Series A Preferred Stock subject thereto.

 

 

(c)            Final Change of Control Redemption Notice. Within two (2) days prior to the Change of Control Effective Date (or if the Company discovers later than such date that a Change of Control has occurred, promptly following the date of such discovery), a final written notice shall be sent by or on behalf of the Company to the Holders as they appear in the records of the Company on the Business Day immediately prior to the date such notice is sent, which notice shall contain:

 

(i)            a statement setting forth in reasonable detail the calculation of the Change of Control Redemption Price with respect to such Holder;

 

(ii)            the Change of Control Purchase Date, which shall be no later than 60 days after such notice is sent; provided, that a reasonable amount of time shall be provided between delivery of such notice and the Change of Control Purchase Date to allow such Holder to comply with the instructions delivered pursuant to Section 9(c)(iii) below; and

 

(iii)           the instructions a Holder must follow to receive the Change of Control Redemption Price in connection with such Change of Control.

 

(d)            Change of Control Redemption Procedure. To receive the Change of Control Redemption Price, a Holder must surrender to the Transfer Agent in accordance with the instructions delivered pursuant to Section 9(c)(iii), the certificates representing the shares of Series A Preferred Stock to be repurchased by the Company or lost stock affidavits therefor, to the extent applicable.

 

(e)            Delivery upon Change of Control Redemption. Upon a Change of Control Redemption, subject to Section 9(g) and Section 9(j) below, the Company (or its successor) shall deliver or cause to be delivered to the Holder by wire transfer of immediately available funds, the Change of Control Redemption Price for such Holder’s shares of Series A Preferred Stock.

 

(f)            Treatment of Shares. Until a share of Series A Preferred Stock is redeemed by the payment or deposit in full of the applicable Change of Control Redemption Price as provided in Section 9(i), such share of Series A Preferred Stock will remain outstanding and will be entitled to all of the powers, designations, preferences and other rights provided herein; provided that no such shares of Series A Preferred Stock may be converted into shares of Common Stock following the Change of Control Effective Date.

 

(g)            Sufficient Funds. If the Company shall not have sufficient funds legally available under the DGCL to redeem all shares of Series A Preferred Stock required under Section 9(a) (the “Required Number of Shares”), the Company shall (i) redeem, pro rata among the Holders (for the avoidance of doubt, other than any shares that have been converted into Common Stock in accordance with Section 9(a)), a number of shares of Series A Preferred Stock with an aggregate Change of Control Redemption Price equal to the amount legally available for the purchase of shares of Series A Preferred Stock under the DGCL and (ii) purchase any shares of Series A Preferred Stock not purchased because of the foregoing limitations at the applicable Change of Control Redemption Price as soon as practicable after the Company is able to make such purchase out of assets legally available for the purchase of such share of Series A Preferred Stock (and such shares of Series A Preferred Stock not so redeemed will remain outstanding for all purposes (including, for the avoidance of doubt, the accrual of Dividends) under this Certificate of Designations). The inability of the Company (or its successor) to make a purchase payment for any reason shall not relieve the Company (or its successor) from its obligation to effect any required purchase when, as and if permitted by applicable law. Notwithstanding the foregoing, in the event of a Change of Control Redemption pursuant to this Section 9 at a time when the Company is restricted or prohibited (contractually or otherwise) from redeeming some or all of the Series A Preferred Stock subject to the Change of Control Redemption, the Company will use its commercially reasonable efforts to obtain the requisite consents to remove or obtain an exception or waiver to such restrictions or prohibition. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to comply with its obligations under this Section 9.

 

 

(h)            Change of Control Agreements. The Company shall not enter into any agreement for a transaction constituting a Change of Control unless (i) such agreement provides for or does not interfere with or prevent (as applicable) the exercise by the Holders of their Change of Control Redemption right in a manner that is consistent with and gives effect to this Section 9, and (ii) the acquiring or surviving Person in such Change of Control represents or covenants, in form and substance reasonably satisfactory to the Board acting in good faith, that at the closing of such Change of Control that such Person shall have sufficient funds (which may include, without limitation, cash and cash equivalents on the Company’s balance sheet, the proceeds of any debt or equity financing, available lines of credit or uncalled capital commitments) to consummate such Change of Control and the payment of the Change of Control Redemption Price in respect of shares of Series A Preferred Stock that have not been converted into Common Stock prior to the Change of Control Effective Date pursuant to Section 6, Section 7 or this Section 9, as applicable.

 

(i)            With respect to any share of Series A Preferred Stock to be redeemed by the Company pursuant to the Change of Control Redemption and which has been redeemed in accordance with the provisions of this Section 9, or for which the Company has irrevocably deposited an amount equal to the Change of Control Redemption Price in respect of such share with the Transfer Agent, (i) Dividends shall cease to accrue on such share, (ii) such share shall no longer be deemed outstanding and (iii) all rights with respect to such share shall cease and terminate other than the rights of the Holder thereof to receive the Change of Control Redemption Price therefor.

 

(j)            Notwithstanding anything to the contrary contained in this Section 9, in the event of a Change of Control Redemption, the Company shall only pay the Change of Control Redemption Price in cash required above after paying in full in cash all obligations of the Company and its subsidiaries under any credit agreement, indenture or similar agreement evidencing indebtedness for borrowed money (including the termination of all commitments to lend, to the extent required by such credit agreement, indenture or similar agreement), which requires prior payment of the obligations thereunder (and termination of commitments thereunder, if applicable) as a condition to the payment of such Change of Control Redemption Price in cash.

 

 

SECTION 10.   Redemption. (a) Redemption at the Option of the Company.

 

(i)            At any time on or after the four (4)-year anniversary of the Original Issuance Date, the Company shall have the right (the “Company Redemption Right”) to redeem (a “Redemption”), ratably, in whole (or, so long as the Company reasonably determines in good faith (taking into account solely the Holders’ ownership of the Series A Preferred Shares and ownership of any Common Stock received in connection with the conversion of such Series A Preferred Shares) that such partial redemption of Series A Preferred Stock will be treated as a sale or exchange for United States federal income tax purposes pursuant to Section 302(b) of the Code, in part), the shares of Series A Preferred Stock of any Holder outstanding at such time at a redemption price per share of Series A Preferred Stock equal to the following: (A) if the applicable Redemption Date is on or after the four (4)-year anniversary of the Original Issuance Date and before the five (5)-year anniversary of the Original Issuance Date, the greater of (1) the product of (x) the sum of (I) the Liquidation Preference of such share of Series A Preferred Stock to be redeemed, plus (II) the Accrued Dividends in respect of such share of Series A Preferred Stock to be redeemed as of such Redemption Date, multiplied by (y) 105% and (2) the Current Market Price as of such Redemption Date of the Common Stock into which such shares of Series A Preferred Stock could be converted on an as converted basis (without regard to any limitations on conversions set forth in this Certificate of Designations); (B) if the applicable Redemption Date is on or after the five (5)-year anniversary of the Original Issuance Date and before the six (6)-year anniversary of the Original Issuance Date, the greater of (1) the product of (x) the sum of (I) the Liquidation Preference of such share of Series A Preferred Stock to be redeemed, plus (II) the Accrued Dividends in respect of such share of Series A Preferred Stock to be redeemed as of such Redemption Date, multiplied by (y) 103% and (2) the Current Market Price as of such Redemption Date of the Common Stock into which such shares of Series A Preferred Stock could be converted on an as converted basis (without regard to any limitations on conversions set forth in this Certificate of Designations); and (C) if the applicable Redemption Date is on or after the sixth (6^th) anniversary of the Original Issuance Date, the greater of (1) the product of (x) the sum of (I) the Liquidation Preference of such share of Series A Preferred Stock to be redeemed, plus (II) the Accrued Dividends in respect of such share of Series A Preferred Stock to be redeemed as of such Redemption Date, multiplied by (y) 100% and (2) the Current Market Price as of such Redemption Date of the Common Stock into which such shares of Series A Preferred Stock could be converted on an as converted basis (without regard to any limitations on conversions set forth in this Certificate of Designations) (such price, the “Redemption Price”). Notwithstanding the foregoing, the Company will not exercise the Company Redemption Right, or otherwise send a Notice of Company Redemption, in respect of the redemption of any Series A Preferred Stock pursuant to this Section 10 unless the Company has sufficient funds legally available to fully pay the Redemption Price in respect of all shares of Series A Preferred Stock called for redemption. The Redemption Price shall be payable in cash. If fewer than all of the shares of Series A Preferred Stock then outstanding are to be redeemed pursuant to this Section 10(a), then such redemption shall occur on a pro rata basis with respect to all Holders based on the total number of shares of Series A Preferred Stock then held by such Holder relative to the total number of shares of Series A Preferred Stock then outstanding.

 

 

(ii)            To exercise the Company Redemption Right pursuant to this Section 10(a), the Company shall deliver written notice thereof (a “Notice of Company Redemption”) to the Holders and the Transfer Agent at least ten (10) days prior to the Redemption Date designated therein for such redemption. The Notice of Company Redemption shall contain instructions whereby Holders will surrender to the Transfer Agent certificates (if any) representing all shares of Series A Preferred Stock specified in the Notice of Company Redemption to be redeemed by the Company. The Company shall deliver or cause to be delivered to each Holder that has complied with the instructions set forth in such Notice of Company Redemption, cash by wire transfer in an amount equal to the Redemption Price of the shares of Series A Preferred Stock in respect of which such Holder has complied with such instructions in accordance herewith.

 

(iii)           For the avoidance of doubt, prior to any Redemption, each Holder of outstanding shares of Series A Preferred Stock may, at such Holder’s election, effective prior to such Redemption on a date designated by the Holder, convert all or a portion of its shares of Series A Preferred Stock pursuant to Section 6(a).

 

(iv)           The Company shall not exercise the Company Redemption Right, or otherwise send a Notice of Company Redemption, in respect of the Redemption of any Series A Preferred Stock pursuant to this Section 10 unless (x) a Shelf Registration Statement (as defined in the Registration Rights Agreement) is in effect covering the shares of Common Stock into which such shares of Series A Preferred Stock would be converted (without regard to any limitations on conversion), and (y) either (A) the Conversion Limitation does not apply to the Series A Preferred Stock subject to such redemption or (B) to the extent the Conversion Limitation does apply to the Series A Preferred Stock subject to such Redemption, the amount of Series A Preferred Stock subject to such Redemption is up to the amount of Series A Preferred Stock that would not be convertible into Common Stock as a result of the Conversion Limitation (with the remainder being converted into Common Stock if so elected by the Holder pursuant to clause (iii) above).

 

(b)            Effect of Redemption. With respect to any share of Series A Preferred Stock specified to be redeemed by the Company pursuant to the Company Redemption Right and which has been redeemed in accordance with the provisions of this Section 10, or for which the Company has irrevocably deposited an amount equal to the Redemption Price in respect of such share with the Transfer Agent, then (i) Dividends shall cease to accrue on such share, (ii) such share shall no longer be deemed outstanding and (iii) all rights with respect to such share shall cease and terminate (other than the right to receive such Redemption Price to the extent not paid).

 

(c)            Partial Redemption. In the event that the Company Redemption Right is exercised with respect to shares of Series A Preferred Stock representing less than all the shares of Series A Preferred Stock held by a Holder, upon such Redemption and following such Holder’s surrender to the Transfer Agent of certificates (if any) representing such shares of Series A Preferred Stock specified to be redeemed by the Company, the Company shall execute and the Transfer Agent shall countersign and deliver to such Holder, at the expense of the Company, a certificate representing the shares of Series A Preferred Stock held by the Holder as to which a Company Redemption Right was not exercised (or book-entry interests representing such shares).

 

 

SECTION 11.   Anti-Dilution Adjustments. (a) Adjustments. The Conversion Rate will be subject to adjustment, without duplication, upon the occurrence of the following events, except that the Company shall not make any adjustment to the Conversion Rate if Holders of the Series A Preferred Stock participate, at the same time and upon the same terms as holders of Common Stock and solely as a result of holding shares of Series A Preferred Stock, in any transaction described in this Section 11(a), without having to convert their Series A Preferred Stock, as if they held a number of shares of Common Stock equal to the number of shares of Common Stock into which the shares of Series A Preferred Stock held by such Holder are convertible pursuant to Section 6 (determined without regard to any of the limitations on convertibility contained therein):

 

(i)            The issuance of Common Stock as a dividend or distribution to all or substantially all holders of Common Stock, or a subdivision or combination of Common Stock or a reclassification of Common Stock into a greater or lesser number of shares of Common Stock, in which event the Conversion Rate shall be adjusted based on the following formula:

 

CR₁ = CR₀ x (OS₁ / OS₀)

 

CR₀     =     the Conversion Rate in effect immediately prior to the close of business on (i) the Record Date for such dividend or distribution, or (ii) the effective date of such subdivision, combination or reclassification

 

CR₁     =     the new Conversion Rate in effect immediately after the close of business on (i) the Record Date for such dividend or distribution, or (ii) the effective date of such subdivision, combination or reclassification

 

OS₀     =     the number of shares of Common Stock outstanding immediately prior to the close of business on (i) the Record Date for such dividend or distribution or (ii) the effective date of such subdivision, combination or reclassification, in each case without giving effect to such dividend, distribution, subdivision, combination or reclassification, as applicable

 

OS₁     =     the number of shares of Common Stock that would be outstanding immediately after, and solely as a result of, the completion of such dividend, distribution, subdivision, combination or reclassification, as applicable

 

Any adjustment made pursuant to this clause (i) shall be effective immediately after the close of business on the Record Date for such dividend or distribution, or the effective date of such subdivision, combination or reclassification. If any such event is announced or declared but does not occur, the Conversion Rate shall be readjusted, effective as of the date the Board announces that such event shall not occur, to the Conversion Rate that would then be in effect if such event had not been declared.

 

 

(ii)            The dividend, distribution or other issuance to all or substantially all holders of Common Stock of rights (other than rights, options or warrants distributed in connection with a stockholder rights plan (in which event the provisions of Section 11(a)(vii) shall apply)), options or warrants entitling them to subscribe for or purchase shares of Common Stock for a period expiring forty-five (45) days or less from the date of issuance thereof, at a price per share that is less than the Current Market Price as of the Ex-Dividend Date for such issuance, in which event the Conversion Rate will be increased based on the following formula:

 

CR₁ = CR₀ x [(OS₀+X) / (OS₀+Y)]

 

CR₀ = the Conversion Rate in effect immediately prior to the close of business on the Record Date for such dividend, distribution or issuance

 

CR₁ = the new Conversion Rate in effect immediately following the close of business on the Record Date for such dividend, distribution or issuance

 

OS₀ = the number of shares of Common Stock outstanding immediately prior to the close of business on the Record Date for such dividend, distribution or issuance

 

X = the total number of shares of Common Stock issuable pursuant to such rights, options or warrants

 

Y = the number of shares of Common Stock equal to the aggregate price payable to exercise such rights, options or warrants divided by the Current Market Price as of the Ex-Dividend Date for such dividend, distribution or issuance.

 

For purposes of this clause (ii), in determining whether any rights, options or warrants entitle the holders to purchase the Common Stock at a price per share that is less than the Current Market Price as of the Ex-Dividend Date for such dividend, distribution or issuance, there shall be taken into account any consideration the Company receives for such rights, options or warrants, and any amount payable on exercise thereof, with the value of such consideration, if other than cash, to be the Fair Market Value thereof.

 

Any adjustment made pursuant to this clause (ii) shall become effective immediately following the close of business on the Record Date for such dividend, distribution or issuance. In the event that such rights, options or warrants are not so issued, the Conversion Rate shall be readjusted, effective as of the date the Board publicly announces its decision not to issue such rights, options or warrants, to the Conversion Rate that would then be in effect if such dividend, distribution or issuance had not been declared. To the extent that such rights, options or warrants are not exercised prior to their expiration or shares of Common Stock are otherwise not delivered pursuant to such rights, options or warrants upon the exercise of such rights, options or warrants, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the adjustments made upon the dividend, distribution or issuance of such rights, options or warrants been made on the basis of the delivery of only the number of shares of Common Stock actually delivered.

 

 

(iii)           The Company or one or more of its Subsidiaries purchases Common Stock pursuant to a tender offer or exchange offer (other than an exchange offer that constitutes a Distribution Transaction subject to Section 11(a)(v)) by the Company or a Subsidiary of the Company for all or any portion of the Common Stock, or otherwise acquires Common Stock (except (1) in an open market purchase in compliance with Rule 10b-18 promulgated under the Exchange Act, (2) through an “accelerated share repurchase” on customary terms or (3) in connection with tax withholding upon vesting or settlement of options, restricted stock units, performance share units or other similar equity awards or upon forfeiture or cashless exercise of options or other equity awards (a “Covered Repurchase”), if the cash and value of any other consideration included in the payment per share of Common Stock validly tendered, exchanged or otherwise acquired through a Covered Repurchase exceeds the arithmetic average of the VWAP per share of Common Stock for each of the ten (10) consecutive full Trading Days commencing on, and including, the Trading Day next succeeding the last day on which tenders or exchanges may be made pursuant to such tender or exchange offer (as it may be amended) or shares of Common Stock are otherwise acquired through a Covered Repurchase (the “Expiration Date”), in which event the Conversion Rate shall be increased based on the following formula:

 

CR₁ = CR₀ x [(FMV + (SP₁ x OS₁)) / (SP₁ x OS₀)]

 

CR₀     =     the Conversion Rate in effect immediately prior to the close of business on the Expiration Date

 

CR₁     =     the new Conversion Rate in effect immediately after the close of business on the Expiration Date

 

FMV    =     the Fair Market Value, on the Expiration Date, of all cash and any other consideration paid or payable for all shares validly tendered or exchanged and not withdrawn, or otherwise acquired through a Covered Repurchase, as of the Expiration Date

 

OS₀     =     the number of shares of Common Stock outstanding immediately prior to the last time tenders or exchanges may be made pursuant to such tender or exchange offer (including the shares to be purchased in such tender or exchange offer) or shares are otherwise acquired through a Covered Repurchase

 

OS₁     =     the number of shares of Common Stock outstanding immediately after the last time tenders or exchanges may be made pursuant to such tender or exchange offer (after giving effect to the purchase of shares in such tender or exchange offer) or shares are otherwise acquired through a Covered Repurchase

 

SP₁     =     the arithmetic average of the VWAP per share of Common Stock for each of the ten (10) consecutive full Trading Days commencing on, and including, the Trading Day next succeeding the Expiration Date

 

 

Such adjustment shall become effective immediately after the close of business on the Expiration Date. If an adjustment to the Conversion Rate is required under this Section 11(a)(iii), delivery of any additional shares of Common Stock that may be deliverable upon conversion as a result of an adjustment required under this Section 11(a)(iii) shall be delayed to the extent necessary in order to complete the calculations provided for in this Section 11(a)(iii).

 

In the event that the Company or any of its Subsidiaries is obligated to purchase Common Stock pursuant to any such tender offer, exchange offer or other commitment to acquire shares of Common Stock through a Covered Repurchase but is permanently prevented by applicable law from effecting any such purchases, or all such purchases are rescinded, then the Conversion Rate shall be readjusted to be the Conversion Rate that would have been then in effect if such tender offer, exchange offer or Covered Repurchase had not been made.

 

(iv)            The Company shall, by dividend or otherwise, distribute to all or substantially all holders of its Common Stock (other than for cash in lieu of fractional shares), shares of any class of its Capital Stock, evidences of its indebtedness, assets, other property or securities, but excluding (A) dividends or distributions referred to in Section 11(a)(i) or Section 11(a)(ii) hereof, (B) Distribution Transactions as to which Section 11(a)(v) shall apply, (C) dividends or distributions paid exclusively in cash as to which Section 11(a)(vi) shall apply and (D) rights, options or warrants distributed in connection with a stockholder rights plan as to which Section 11(a)(vii) shall apply (any of such shares of its Capital Stock, indebtedness, assets or property that are not so excluded are hereinafter called the “Distributed Property”), then, in each such case the Conversion Rate shall be increased based on the following formula:

 

CR₁ = CR₀ x [SP₀ / (SP₀ - FMV)]

 

CR₀     =     the Conversion Rate in effect immediately prior to the close of business on the Record Date for such dividend or distribution

 

CR₁     =     the new Conversion Rate in effect immediately after the close of business on the Record Date for such dividend or distribution

 

SP₀      =     the Current Market Price as of the Ex-Dividend Date for such dividend or distribution

 

FMV     =     the Fair Market Value of the portion of Distributed Property distributed with respect to each outstanding share of Common Stock on the Record Date for such dividend or distribution; provided that, if FMV is equal or greater than SP₀, then in lieu of the foregoing adjustment, the Company shall distribute to each holder of Series A Preferred Stock on the date the applicable Distributed Property is distributed to holders of Common Stock, but without requiring such holder to convert its shares of Series A Preferred Stock, the amount of Distributed Property such holder would have received had such holder owned, on such Record Date, a number of shares of Common Stock equal to the number of shares of Common Stock into which the shares of Series A Preferred Stock held by such Holder as of such Record Date could be converted (without regard to any limitations on conversions set forth in this Certificate of Designations)

 

 

Any adjustment made pursuant to this clause (iv) shall be effective immediately after the close of business on the Record Date for such dividend or distribution. If any such dividend or distribution is declared but does not occur, the Conversion Rate shall be readjusted, effective as of the date the Board announces that such dividend or distribution shall not occur, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

 

(v)            The Company effects a Distribution Transaction, in which case the Conversion Rate in effect immediately prior to the effective date of the Distribution Transaction shall be increased based on the following formula:

 

CR₁ = CR₀ x [(FMV + MP₀) / MP₀]

 

CR₀     =     the Conversion Rate in effect immediately prior to the close of business on the effective date of the Distribution Transaction

 

CR₁     =     the new Conversion Rate in effect immediately after the close of business on the effective date of the Distribution Transaction

 

FMV    =     the arithmetic average of the volume-weighted average prices for a share of the capital stock or other interest distributed to holders of Common Stock on the principal United States securities exchange or automated quotation system on which such capital stock or other interest trades, as reported by Bloomberg (or, if Bloomberg ceases to publish such price, any successor service chosen by the Company) in respect of the period from the open of trading on the relevant Trading Day until the close of trading on such Trading Day (or if such volume-weighted average price is unavailable, the market price of one share of such capital stock or other interest on such Trading Day determined, using a volume-weighted average method, by an Independent Financial Advisor retained for such purpose by the Company), for each of the ten consecutive full Trading Days commencing with, and including, the effective date of the Distribution Transaction

 

MP₀     =     the arithmetic average of the VWAP per share of Common Stock for each of the ten (10) consecutive full Trading Days commencing on, and including, the Ex-Dividend Date of the Distribution Transaction

 

Such adjustment shall become effective immediately following the close of business on the effective date of the Distribution Transaction. If an adjustment to the Conversion Rate is required under this Section 11(a)(v), delivery of any additional shares of Common Stock that may be deliverable upon conversion as a result of an adjustment required under this Section 11(a)(v) shall be delayed to the extent necessary in order to complete the calculations provided for in this Section 11(a)(v).

 

 

(vi)            The Company makes a cash dividend or distribution to all or substantially all holders of the Common Stock, the Conversion Rate shall be increased based on the following formula:

 

CR₁ = CR₀ x [SP₀ / (SP₀ – C)]

 

CR₀ = the Conversion Rate in effect immediately prior to the close of business on the Record Date for such dividend or distribution

 

CR₁ = the new Conversion Rate in effect immediately after the close of business on the Record Date for such dividend or distribution

 

SP₀ = the Closing Price as of the Ex-Dividend Date for such dividend or distribution

 

C = the amount in cash per share of Common Stock the Company distributes to all or substantially all holders of its Common Stock; provided that, if C is equal or greater than SP₀, then in lieu of the foregoing adjustment, the Company shall pay to each holder of Series A Preferred Stock on the date the applicable cash dividend or distribution is made to holders of Common Stock, but without requiring such holder to convert its shares of Series A Preferred Stock, the amount of cash such holder would have received had such holder owned, on such Record Date, a number of shares of Common Stock equal to the number of shares of Common Stock into which the shares of Series A Preferred Stock held by such Holder as of such Record Date could be converted (without regard to any limitations on conversions set forth in this Certificate of Designations)

 

Any adjustment made pursuant to this clause (vi) shall be effective immediately after the close of business on the Record Date for such dividend or distribution. If any dividend or distribution is declared but not paid, the Conversion Rate shall be readjusted, effective as of the date the Board announces that such dividend or distribution will not be paid, to the Conversion Rate that would then be in effect if such had dividend or distribution not been declared.

 

(vii)          If the Company has a stockholder rights plan in effect with respect to the Common Stock on any Conversion Date, upon conversion of any shares of the Series A Preferred Stock, Holders of such shares will receive, in addition to the applicable number of shares of Common Stock, the rights under such rights plan relating to such Common Stock, unless, prior to such Conversion Date, the rights have (i) become exercisable or (ii) separated from the shares of Common Stock (the first of such events to occur, a “Trigger Event”), in which case, the Conversion Rate will be adjusted, effective automatically at the time of such Trigger Event, as if the Company had made a distribution of such rights to all holders of Common Stock as described in Section 11(a)(ii) (without giving effect to the forty-five (45) day limit on the exercisability of rights, options or warrants ordinarily subject to such Section 11(a)(ii)), subject to appropriate readjustment in the event of the expiration, termination or redemption of such rights prior to the exercise, deemed exercise or exchange thereof. Notwithstanding the foregoing, to the extent any such stockholder rights are exchanged by the Company for shares of Common Stock or other property or securities, the Conversion Rate shall be appropriately readjusted as if such stockholder rights had not been issued, but the Company had instead issued such shares of Common Stock or other property or securities as a dividend or distribution of shares of Common Stock pursuant to Section 11(a)(i) or Section 11(a)(iv), as applicable.

 

 

To the extent that such rights are not exercised prior to their expiration, termination or redemption, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the adjustments made upon the occurrence of the Trigger Event been made on the basis of the issuance of, and the receipt of the exercise price with respect to, only the number of shares of Common Stock actually issued pursuant to such rights.

 

Notwithstanding anything to the contrary in this Section 11(a)(vii), no adjustment shall be required to be made to the Conversion Rate with respect to any Holder which is, or is an “affiliate” or “associate” of, an “acquiring person” under such stockholder rights plan or with respect to any direct or indirect transferee of such Holder who receives Series A Preferred Stock in such transfer after the time such Holder becomes, or its affiliate or associate becomes, such an “acquiring person.”

 

(b)            Calculation of Adjustments. All adjustments to the Conversion Rate shall be calculated by the Company to the nearest 1/10,000th of one share of Common Stock (or if there is not a nearest 1/10,000th of a share, to the next lower 1/10,000th of a share). No adjustment to the Conversion Rate will be required unless such adjustment would require an increase or decrease of at least one percent of the Conversion Rate; provided, however, that any such adjustment that is not required to be made will be carried forward and taken into account in any subsequent adjustment; provided, further that any such adjustment of less than one percent that has not been made will be made upon any Conversion Date or Redemption or repurchase date.

 

(c)            When No Adjustment Required. (i) Except as otherwise provided in this Section 11, the Conversion Rate will not be adjusted for the issuance of Common Stock or any securities convertible into or exchangeable for Common Stock or carrying the right to purchase any of the foregoing, or for the repurchase of Common Stock.

 

(i)            Except as otherwise provided in this Section 11, the Conversion Rate will not be adjusted as a result of the issuance of, the distribution of separate certificates representing, the exercise or redemption of, or the termination or invalidation of, rights pursuant to any stockholder rights plans.

 

(ii)            No adjustment to the Conversion Rate will be made:

 

(A)     upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the Company and the investment of additional optional amounts in Common Stock under any plan in which purchases are made at market prices on the date or dates of purchase, without discount, and whether or not the Company bears the ordinary costs of administration and operation of the plan, including brokerage commissions;

 

 

(B)     upon the issuance of any shares of Common Stock or options or rights to purchase such shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of its Subsidiaries or of any employee agreements or arrangements or programs, including, without limitation, the Company’s 2018 Omnibus Incentive Plan;

 

(C)     upon the issuance of any shares of Common Stock pursuant to any option, warrant, right, or exercisable, exchangeable or convertible security, including the Series A Preferred Stock; or

 

(D)     for a change in the par value of the Common Stock.

 

(d)            Successive Adjustments. After an adjustment to the Conversion Rate under this Section 11, any subsequent event requiring an adjustment under this Section 11 shall cause an adjustment to each such Conversion Rate as so adjusted.

 

(e)            Multiple Adjustments. For the avoidance of doubt, if an event occurs that would trigger an adjustment to the Conversion Rate pursuant to this Section 11 under more than one subsection hereof, such event, to the extent fully taken into account in a single adjustment, shall not result in multiple adjustments hereunder; provided, however, that if more than one subsection of this Section 11 is applicable to a single event, the subsection shall be applied that produces the largest adjustment.

 

(f)            Notice of Adjustments. Whenever the Conversion Rate is adjusted as provided under this Section 11, the Company shall as soon as reasonably practicable following the occurrence of an event that requires such adjustment (or if the Company is not aware of such occurrence, as soon as reasonably practicable after becoming so aware):

 

(i)            compute the adjusted applicable Conversion Rate in accordance with this Section 11 and prepare and transmit to the Conversion Agent an Officer’s Certificate setting forth the applicable Conversion Rate, the method of calculation thereof, and the facts requiring such adjustment and upon which such adjustment is based; and

 

(ii)            provide a written notice to the Holders of the occurrence of such event and a statement in reasonable detail setting forth the method by which the adjustment to the applicable Conversion Rate was determined and setting forth the adjusted applicable Conversion Rate.

 

(g)            Conversion Agent. The Conversion Agent shall not at any time be under any duty or responsibility to any Holder to determine whether any facts exist that may require any adjustment of the Conversion Rate or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed in making the same. The Conversion Agent shall be fully authorized and protected in relying on any Officer’s Certificate delivered pursuant to this Section 11(g) and any adjustment contained therein and the Conversion Agent shall not be deemed to have knowledge of any adjustment unless and until it has received such certificate. The Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, that may at the time be issued or delivered with respect to any Series A Preferred Stock and the Conversion Agent makes no representation with respect thereto. The Conversion Agent shall not be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock pursuant to the conversion of Series A Preferred Stock or to comply with any of the duties, responsibilities or covenants of the Company contained in this Section 11.

 

 

(h)            Fractional Shares. No fractional shares of Common Stock will be delivered to the Holders upon conversion. In lieu of fractional shares otherwise issuable, the Holders will be entitled to receive, at the Company’s sole discretion, either (i) an amount in cash equal to the fraction of a share of Common Stock multiplied by the Closing Price of the Common Stock on the Trading Day immediately preceding the applicable Conversion Date or (ii) (to the extent permitted by law and applicable stock exchange rules) one additional whole share of Common Stock. In order to determine whether the number of shares of Common Stock to be delivered to a Holder upon the conversion of such Holder’s shares of Series A Preferred Stock will include a fractional share, such determination shall be based on the aggregate number of shares of Series A Preferred Stock of such Holder that are being converted and/or issued on any single Conversion Date or Change of Control Purchase Date.

 

SECTION 12.     Adjustment for Reorganization Events. (a) Reorganization Events. In the event of:

 

(i)            any reclassification, statutory exchange, merger, consolidation or other similar business combination of the Company with or into another Person, in each case, pursuant to which the Common Stock is changed or converted into, or exchanged for, cash, securities or other property of the Company or another Person;

 

(ii)            any sale, transfer, lease or conveyance to another Person of all or a majority of the property and assets of the Company, in each case pursuant to which the Common Stock is converted into cash, securities or other property; or

 

(iii)           any statutory exchange of securities of the Company with another Person (other than in connection with a merger or acquisition) or reclassification, recapitalization or reorganization of the Common Stock into other securities;

 

other than, in each case, any such transaction that constitutes a Change of Control, with respect to which, for the avoidance of doubt, the provisions of Section 9 shall apply (each of which is referred to as a “Reorganization Event”), each share of Series A Preferred Stock outstanding immediately prior to such Reorganization Event will, without the consent of the Holders and subject to Section 12(d) and Section 13(c), remain outstanding but shall become convertible into, out of funds legally available therefor, the number, kind and amount of securities, cash and other property (the “Exchange Property”) (without any interest on such Exchange Property and without any right to dividends or distribution on such Exchange Property which have a record date that is prior to the applicable Conversion Date) that the Holder of such share of Series A Preferred Stock would have received in such Reorganization Event had such Holder converted its shares of Series A Preferred Stock into the applicable number of shares of Common Stock immediately prior to the effective date of the Reorganization Event using the Conversion Rate applicable immediately prior to the effective time of the Reorganization Event and the Liquidation Preference and Accrued Dividends applicable at the time of such subsequent conversion; provided that the foregoing shall not apply if such Holder is a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be (any such Person, a “Constituent Person”), or an Affiliate of a Constituent Person, to the extent such Reorganization Event provides for different treatment of Common Stock held by such Constituent Persons or such Affiliate thereof. If the kind or amount of securities, cash and other property receivable upon such Reorganization Event is not the same for each share of Common Stock held immediately prior to such Reorganization Event by a Person (other than a Constituent Person or an Affiliate thereof), then for the purpose of this Section 12(a), the kind and amount of securities, cash and other property receivable upon conversion following such Reorganization Event will be deemed to be the weighted average of the types and amounts of consideration received by the holders of Common Stock. Following a Reorganization Event, subsequent adjustments to the Conversion Rate will be made pursuant to Section 11 in a manner consistent with this Section 12.

 

 

(b)            Successive Reorganization Events. The above provisions of this Section 12 shall similarly apply to successive Reorganization Events and the provisions of Section 11 shall apply to any shares of Capital Stock received by the holders of the Common Stock in any such Reorganization Event.

 

(c)            Reorganization Event Notice. The Company (or any successor) shall, no less than thirty (30) days prior to the anticipated effective date of any Reorganization Event, provide written notice to the Holders of such occurrence of such event and of the kind and amount of the cash, securities or other property that constitutes the Exchange Property. Failure to deliver such notice shall not affect the operation of this Section 12.

 

(d)            Reorganization Event Agreements. The Company shall not enter into any agreement for a transaction constituting a Reorganization Event unless (i) such agreement provides for or does not interfere with or prevent (as applicable) conversion of the Series A Preferred Stock into the Exchange Property in a manner that is consistent with and gives effect to this Section 12, and (ii) to the extent that the Company is not the surviving corporation in such Reorganization Event or will be dissolved in connection with such Reorganization Event, proper provision shall be made in the agreements governing such Reorganization Event for the conversion of the Series A Preferred Stock into Exchange Property (including, if applicable, Capital Stock of the Person surviving such Reorganization Event or such other continuing entity in such Reorganization Event).

 

SECTION 13.    Voting Rights. (a)  General. Except as provided in Sections 13(b) and 13(c), from and after the satisfaction (or to the extent of the inapplicability) of the Voting Condition, Holders of shares of Series A Preferred Stock shall be entitled to vote as a single class with the holders of the Common Stock and the holders of any other class or series of Capital Stock of the Company then entitled to vote with the Common Stock on all matters submitted to a vote of the holders of Common Stock (and, if applicable, holders of any other class or series of Capital Stock of the Company). Each Holder shall be entitled to the number of votes equal to the product of (i) the largest number of whole shares of Common Stock into which all shares of Series A Preferred Stock could be converted pursuant to Section 6 (subject to the limitations on conversion set forth therein) multiplied by (ii) a fraction the numerator of which is the number of shares of Series A Preferred Stock held by such Holder and the denominator of which is the aggregate number of issued and outstanding shares of Series A Preferred Stock, in each case, at and calculated as of the record date for the determination of stockholders entitled to vote or consent on such matters or, if no such record date is established, at and as of the date such vote or consent is taken or any written consent of stockholders is first executed. The Holders shall be entitled to notice of any meeting of holders of Common Stock in accordance with the Certificate of Incorporation and Bylaws of the Company.

 

 

(b)            Right to Designate Investor Directors. For so long as the Investor Parties are Holders of any shares of Series A Preferred Stock, the Investor Parties, voting exclusively as a single class, will have the right to elect (i) two (2) directors, so long as the 60% Beneficial Ownership Requirement is satisfied, and (ii) one (1) director, so long as the 20% Beneficial Ownership Requirement is satisfied (each such director, an “Investor Director”) to serve on the Board; provided, that the election of any Investor Director must satisfy the Director Qualification Requirements. The Investor Directors will be elected at each annual or meeting (or action by written consent) of the Company’s stockholders solely by the Holders of shares of Series A Preferred Stock, voting exclusively as a single class, for so long as the 60% Beneficial Ownership Requirement or 20% Beneficial Ownership Requirement, as applicable, is satisfied, except that the initial Investor Directors shall be appointed by the Board in connection with the initial issuance of Series A Preferred Stock and will be Joshua Goldman and Kurt Barker. Upon the occurrence of the First Fall-Away of Investor Board Rights, (i) at the request of a majority of the directors then in office or the Chairman of the Board, one of the Investor Directors shall resign immediately from the Board and any committee thereof or (ii) if no such request is made, such Investor Director shall continue to serve until his or her term expires at the next annual meeting of stockholders of the Company (unless such Investor Director otherwise elects to resign). Upon the occurrence of the Second Fall-Away of Investor Board Rights, (i) at the request of a majority of the directors then in office or the Chairman of the Board, the remaining Investor Directors shall resign immediately from the Board and any committee thereof or (ii) if no such request is made, such Investor Director shall continue to serve until his or her term expires at the next annual meeting of stockholders of the Company. For the avoidance of doubt, the rights of the Investor Parties pursuant to this Section 13(b) are personal to the Investor Parties and shall not be exercised by any transferee other than a Permitted Transferee of an Investor.

 

(i)            Committee Rights. Until the occurrence of the Second Fall-Away of Investor Board Rights, the Investor Parties shall have the right to designate one (1) Investor Director to each committee of the Board to the extent permitted by the applicable independence or other requirements applicable to such committee(s).

 

(ii)            Removal of the Investor Directors. At any time, an Investor Director may be removed either (1) to the extent such removal is required by applicable law or the Certificate of Incorporation in effect on the date hereof; or (2) with or without cause by the affirmative vote of the Investor Parties, voting exclusively as a single class (which vote may be taken by written consent in lieu of a meeting). Except as set forth in the foregoing clause (1) the Board shall not remove the Investor Director from his or her directorship.

 

 

(iii)            Filling Vacancies of the Investor Directors. At all times when the Investor Parties have the right to elect Investor Directors, a vacancy in the office of any Investor Director may be filled, subject to the Director Qualification Requirements, by the remaining Investor Director or, if there is no remaining Investor Director, by the affirmative vote of the Investor Parties, voting exclusively as a single class (which vote may be taken by written consent in lieu of a meeting).

 

(iv)            Company Cooperation. The Company and the Board shall take all necessary corporate action, to the fullest extent permitted by applicable law (including with respect to fiduciary duties under Delaware Law), to (x) enable the election of the Investor Directors, whether by increasing the size of the Board or otherwise, and (y) designate the persons specified by the Holders as Investor Directors, to fill such newly created vacancies or to fill any other existing vacancies.

 

(v)            Compensation; Indemnity. The Investor Directors shall (1) not be entitled to any compensation from the Company in connection with their services as directors on the Board and (2) shall be entitled to reimbursement from the Company for their reasonable out-of-pocket expenses incurred by them in connection with performing their respective duties as a member of the Board (or any committee thereof), including the reasonable out-of-pocket expenses incurred by such person for attending meetings of the Board (or any committee thereof), or in connection with their service on the board or other similar governing body of any Subsidiary of the Company (or any committee thereof) to the same extent as the Company provides such reimbursement to other members of the Board. The Company shall indemnify the Investor Directors and provide the Investor Directors with director and officer insurance to the same extent as it indemnifies and provides such insurance to other members of the Board, pursuant to the Company Charter Documents, the DGCL or otherwise. The Company acknowledges and agrees that it (1) is the indemnitor of first resort (i.e., its obligations to the Investor Director are primary and any obligation of the Investor Parties or their Affiliates to advance expenses or to provide indemnification for the same expenses or liabilities incurred by the Investor Director are secondary) and (2) shall be required to advance the amount of expenses incurred by the Investor Director and shall be liable for the amount of all expenses and liabilities incurred by the Investor Director, in each case, to the same extent as it advances expenses and is liable for such expenses and liabilities and indemnifies and provides such insurance with respect to other members of the Board, pursuant to the Company Charter Documents, the DGCL or otherwise, without regard to any rights the Investor Director may have against any Investor Parties or their Affiliates.

 

(c)            Adverse Changes. The affirmative vote or consent of the Holders of at least a majority of the shares of Series A Preferred Stock outstanding at such time, voting together as a separate class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, will be necessary for effecting or validating any of the following actions, whether or not such approval is required pursuant to the DGCL:

 

(i)            any amendment, alteration or repeal (whether by merger, consolidation or otherwise) of any provision of the Certificate of Incorporation (including this Certificate of Designations) or Bylaws that would have an adverse effect on the rights, preferences, privileges or voting power of the Series A Preferred Stock or the Holder thereof;

 

 

(ii)            any amendment or alteration (whether by merger, consolidation or otherwise) of, or any supplement (whether by a certificate of designations or otherwise) to, the Certificate of Incorporation or any provision thereof, or any other action to authorize or create, or increase the number of authorized or issued shares of, or any securities convertible into shares of, or reclassify any security into, or issue, any Parity Stock or Senior Stock or any other class or series of Capital Stock of the Company (i) ranking senior to, or on a parity basis with, the Series A Preferred Stock as to dividend rights or rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company or (ii) with which the Series A Preferred Stock does not participate in any dividends or distributions ratably determined on an “as converted to common stock” basis;

 

(iii)           any increase or decrease in the authorized number of shares of Series A Preferred Stock;

 

(iv)           any merger or consolidation of the Company with any other Person other than (x) a Change of Control or (y) a transaction in which the Series A Preferred Stock remains outstanding or is converted into shares of the surviving Person or its Parent Entity with rights, preferences, privileges and voting power that are not materially less favorable than the Series A Convertible Preferred; and

 

(v)            any acquisition (whether by merger, consolidation or otherwise) of a business or entity set forth on Section 13(c) of the Company Disclosure Letter, until the three (3) year anniversary of the Original Issuance Date.

 

provided, however, (A) that, with respect to the occurrence of any of the events set forth in clause (i) above, so long as (1) the Series A Preferred Stock remains outstanding with the terms thereof materially unchanged, or (2) the holders of the Series A Preferred Stock receive equity securities with rights, preferences, privileges and voting power substantially the same as those of the Series A Preferred Stock, then the occurrence of such event shall not be deemed to adversely affect such rights, preferences, privileges or voting power of the Series A Preferred Stock, and in such case such holders shall not have any voting rights with respect to the occurrence of any of the events set forth in clause (i) above and (B) that the authorization or creation of, or the increase in the number of authorized or issued shares of, or any securities convertible into shares of, or the reclassification of any security (other than the Series A Preferred Stock) into, or the issuance of, Junior Stock will not require the consent of the holders of the Series A Preferred Stock.

 

For purposes of this Section 13, the filing in accordance with applicable law of a certificate of designations or any similar document setting forth or changing the designations, powers, preferences, rights, qualifications, limitations and restrictions of any class or series of stock of the Company shall be deemed an amendment to the Certificate of Incorporation.

 

(d)            Each Holder of Series A Preferred Stock will have one vote per share on any matter on which Holders of Series A Preferred Stock are entitled to vote separately as a class, whether at a meeting or by written consent.

 

 

(e)            The affirmative vote or consent of the Holders of a majority of the shares of Series A Preferred Stock outstanding at such time, voting together as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, will be sufficient to waive or amend the provisions of Section 9(h) of this Certificate of Designations, and any amendment or waiver of any of the provisions of Section 9(h) approved by such percentage of the Holders shall be binding on all of the Holders.

 

(f)            For the avoidance of doubt and notwithstanding anything to the contrary in the Certificate of Incorporation or Bylaws of the Company, the Holders of Series A Preferred Stock shall have the exclusive consent and voting rights set forth in Sections 13(b) and 13(c) and may take action or consent to any action with respect to such rights without a meeting by delivering a consent in writing or by electronic transmission of the Holders of the Series A Preferred Stock entitled to cast not less than the minimum number of votes that would be necessary to authorize, take or consent to such action at a meeting of stockholders.

 

(g)            Notwithstanding anything to the contrary in any other agreement or at law or in equity, that, to the maximum extent permitted by law, when the Holders of Series A Preferred Stock take any action under this Certificate of Designations to give or withhold their consent, the Holders shall have no duty (fiduciary or other) to consider the interests of the Company or the other stockholders of the Company and may act exclusively in their own interest; provided, however, that the foregoing shall in no way affect the obligations to comply with the provisions of this Certificate of Designations. For the avoidance of doubt, the foregoing sentence shall not limit or otherwise affect the fiduciary duties of the Investor Director.

 

SECTION 14.   Preemptive Rights. Except for the right to participate in any issuance of new equity securities by the Company as set forth in the Investment Agreement, the Holders shall not have any preemptive rights.

 

SECTION 15.   Term. Except as expressly provided in this Certificate of Designations, the shares of Series A Preferred Stock shall not be redeemable or otherwise mature and the term of the Series A Preferred Stock shall be perpetual.

 

SECTION 16.    Creation of Capital Stock. Subject to Section 13(c)(ii) and Section 13(c)(iii), the Board, or any duly authorized committee thereof, without the vote of the Holders, may authorize and issue additional shares of Capital Stock of the Company.

 

SECTION 17.    No Sinking Fund. Shares of Series A Preferred Stock shall not be subject to or entitled to the operation of a retirement or sinking fund.

 

SECTION 18.   Transfer Agent, Conversion Agent, Registrar and Paying Agent. The duly appointed Transfer Agent, Conversion Agent, Registrar and paying agent for the Series A Preferred Stock shall be Equiniti Trust Company, LLC. The Company may, in its sole discretion, appoint any other Person to serve as Transfer Agent, Conversion Agent, Registrar or paying agent for the Series A Preferred Stock and thereafter may remove or replace Equiniti Trust Company, LLC or such other Person at any time. Upon any such appointment or removal, the Company shall send notice thereof to the Holders.

 

SECTION 19.   Replacement Certificates. (a) Mutilated, Destroyed, Stolen and Lost Certificates. If physical certificates evidencing the Series A Preferred Stock are issued, the Company shall replace any mutilated certificate at the Holder’s expense upon surrender of that certificate to the Transfer Agent. The Company shall replace certificates that become destroyed, stolen or lost at the Holder’s expense upon delivery to the Company and the Transfer Agent of satisfactory evidence that the certificate has been destroyed, stolen or lost, together with any indemnity that may be required by the Transfer Agent and the Company.

 

 

(b)            Certificates Following Conversion. If physical certificates representing the Series A Preferred Stock are issued, the Company shall not be required to issue replacement certificates representing shares of Series A Preferred Stock on or after the Conversion Date applicable to such shares (except if any certificate for shares of Series A Preferred Stock shall be surrendered for partial conversion, the Company shall, at its expense, execute and deliver to or upon the written order of the Holder of the certificate so surrendered a new certificate for the shares of Series A Preferred Stock not converted). In place of the delivery of a replacement certificate following the applicable Conversion Date, the Transfer Agent, upon receipt of the satisfactory evidence and indemnity described in clause (a) above, shall deliver certificates representing the shares of Common Stock issuable upon conversion of such shares of Series A Preferred Stock formerly evidenced by the physical certificate.

 

SECTION 20.   Taxes. The Company shall pay any and all stock transfer, documentary, stamp and similar taxes that may be payable in respect of any issuance or delivery of shares of Series A Preferred Stock or shares of Common Stock or other securities issued on account of Series A Preferred Stock pursuant hereto or certificates representing such shares or securities. However, in the case of conversion of Series A Preferred Stock, the Company shall not be required to pay any such tax that may be payable in respect of any transfer involved in the issuance or delivery of shares of Series A Preferred Stock, shares of Common Stock or other securities to a beneficial owner other than the beneficial owner of the Series A Preferred Stock immediately prior to such conversion, and shall not be required to make any such issuance, delivery or payment unless and until the Person otherwise entitled to such issuance, delivery or payment has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid or is not payable.

 

SECTION 21.   Notices. All notices referred to herein shall be in writing and, unless otherwise specified herein, all notices hereunder shall be deemed to have been given upon the earlier of receipt thereof or three (3) Business Days after the mailing thereof if sent by registered or certified mail with postage prepaid, or by private courier service addressed: (i) if to the Company, to its office at 980 Jolly Road, Blue Bell, PA 19422 (Attention: Chief Financial Officer), (ii) if to any Holder, to such Holder at the address of such Holder as listed in the stock record books of the Company (which may include the records of the Transfer Agent) or (iii) to such other address as the Company or any such Holder, as the case may be, shall have designated by notice similarly given.

 

SECTION 22.   Facts Ascertainable. When the terms of this Certificate of Designations refers to a specific agreement or other document to determine the meaning or operation of a provision hereof, the Secretary of the Company shall maintain a copy of such agreement or document at the principal executive offices of the Company and a copy thereof shall be provided free of charge to any Holder who makes a request therefor. The Secretary of the Company shall also maintain a written record of the Issuance Date, the number of shares of Series A Preferred Stock issued to a Holder and the date of each such issuance, and shall furnish such written record free of charge to any Holder who makes a request therefor.

 

 

SECTION 23.    Waiver. Notwithstanding any provision in this Certificate of Designations to the contrary, any provision contained herein and any right of the Holders of Series A Preferred Stock granted hereunder may be waived as to all shares of Series A Preferred Stock (and the Holders thereof) upon the vote or written consent of the Holders of a majority of the shares of Series A Preferred Stock then outstanding.

 

SECTION 24.   Severability. If any term of the Series A Preferred Stock set forth herein is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other terms set forth herein which can be given effect without the invalid, unlawful or unenforceable term will, nevertheless, remain in full force and effect, and no term herein set forth will be deemed dependent upon any other such term unless so expressed herein.

 

SECTION 25.   Business Opportunities. To the fullest extent permitted by Section 122(17) of the DGCL (or any successor provision) and except as may be otherwise expressly agreed in writing by the Company and the Investor Parties, the Company, on behalf of itself and its Subsidiaries, renounces any interest or expectancy of the Company and its Subsidiaries in, or in being offered an opportunity to participate in, business opportunities, that are from time to time presented to the Investor Parties or any of their respective officers, representatives, directors, agents, stockholders, members, partners, Affiliates, Subsidiaries (other than the Company and its Subsidiaries), or any of their respective designees on the Company’s Board and/or any of their respective representatives who, from time to time, may act as officers of the Company, even if the opportunity is one that the Company or its Subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so, and no such person shall be liable to the Company or any of its Subsidiaries for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such person pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to the Company or its Subsidiaries unless, in the case of any such person who is a director or officer of the Company, such business opportunity is expressly offered to such director or officer in writing solely in his or her capacity as a director or officer of the Company. Any Person purchasing or otherwise acquiring any interest in any shares of Capital Stock of the Company shall be deemed to have notice of and consented to the provisions of this Section 25. Neither the alteration, amendment or repeal of this Section 25, nor the adoption of any provision of the Certificate of Incorporation or this Certificate of Designations inconsistent with this Section 25, nor, to the fullest extent permitted by Delaware law, any modification of law, shall eliminate or reduce the effect of this Section 25 in respect of any business opportunity first identified or any other matter occurring, or any cause of action, suit or claim that, but for this Section 25, would accrue or arise, prior to such alteration, amendment, repeal, adoption or modification. If any provision or provisions of this Section 25 shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (a) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Section 25 (including, without limitation, each portion of any paragraph of this Section 25 containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (b) to the fullest extent possible, the provisions of this Section 25 (including, without limitation, each such portion of any paragraph of this Section 25 containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Company to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Company to the fullest extent permitted by law. This Section 25 shall not limit any protections or defenses available to, or indemnification or advancement rights of, any director, officer, employee or agent of the Company under the Certificate of Incorporation, the Bylaws, any other agreement between the Company and such director, officer, employee or agent or applicable law.

 

 

SECTION 26.   Rule 144A Matters. If the Company is not subject to Section 13 or 15(d) of the Exchange Act at any time when any Series A Preferred Stock or shares of Common Stock underlying Series A Preferred Stock are outstanding and constitute “restricted securities” (as defined in Rule 144 under the Securities Act), then the Company (or its successor) will promptly provide, upon written request, to any registered holder, beneficial owner or prospective purchaser of Series A Preferred Stock or underlying Common Stock, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act to facilitate the resale of such Series A Preferred Stock or underlying Common Stock pursuant to Rule 144A. The Company (or its successor) will take such further action as any such registered holder or beneficial owner may reasonably request to enable such registered holder or beneficial owner, as applicable, to sell such Series A Preferred Stock or underlying Common Stock pursuant to Rule 144A.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to be executed this 28 day of August, 2023.

 

	BRIGHTVIEW HOLDINGS, INC.
	By:	/s/ James Abrahamson
	Name:	James Abrahamson
	Title:	President & Chief Executive Officer

 

[Signature Page to Certificate of Designations]

 

 

Exhibit 4.1

 

August 28, 2023

 

BrightView Holdings, Inc.

980 Jolly Road

Blue Bell, PA 19422

 

Ladies and Gentlemen:

 

Reference is made to (i) that certain Stockholders Agreement by and between BrightView Holdings, Inc. (the “Company”) and KKR BrightView Aggregator L.P. (“Stockholder”) and the other parties thereto from time to time, dated as of June 27, 2018 as amended from time to time (the “Stockholders Agreement”), and (ii) that certain Investment Agreement by and between the Company and Birch Equity Holdings, LP, dated as of the date hereof (the “Investment Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Investment Agreement.

 

Stockholder hereby irrevocably waives all consent rights under Section 2.3(b) of the Stockholders Agreement. Stockholder hereby irrevocably waives its rights to appoint more than two directors under Section 2.1(b) of the Stockholders Agreement.

 

In addition, Stockholder hereby agrees for so long as the Investor Parties are subject to the restrictions of Section 4.07(c) of the Investment Agreement, that it will not knowingly (after reasonable inquiry), directly or indirectly (without the prior written consent of the Board), transfer any shares of common stock of the Company to any Activist Shareholders or Direct Competitor; provided, that these restrictions shall not apply to transfers into the public market pursuant to a bona fide, broadly distributed underwritten public offering, in each case made pursuant to a registration rights agreement or through a bona fide sale without registration effectuated pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

 

Further, Stockholder hereby agrees to be subject to the obligations of the Investor Parties set forth in Sections 4.03 and 4.04 of the Investment Agreement is if it was a party thereto. Such obligations of the Investor Parties shall apply mutatis mutandis to Stockholder.

 

Stockholder hereby acknowledges and agrees that the Company is and shall be an express third party beneficiary of this letter (and, for the avoidance of doubt, shall be entitled to enforce directly the obligations of Stockholder pursuant to this letter).

 

This letter is governed by and construed in accordance with the laws of the State of Delaware and may not be amended or modified except by a written instrument executed by Stockholder and the Company.

 

[signature page follows]

 

 

	Very truly yours,
	KKR BRIGHTVIEW Aggregator L.P.
	By:	/s/ Paul Raether
	Name:	Paul Raether
	Title:	Vice President

 

[Signature Page to Waiver of Rights Letter]

 

 

 

Exhibit 10.1

 

 

 

INVESTMENT AGREEMENT

 

by and among

 

BrightView Holdings, Inc.,

 

Birch Equity Holdings, LP

 

and

 

Birch-OR Equity Holdings, LLC

 

Dated as of August 28, 2023

 

 

 

 

TABLE OF CONTENTS

 

PAGE

 

Article I
Purchase and Sale
Section 1.01	Purchase and Sale	1
Article II
Representations and Warranties of the Company
Section 2.01	Organization; Standing	3
Section 2.02	Capitalization	3
Section 2.03	Authority; Noncontravention	4
Section 2.04	Governmental Approvals	5
Section 2.05	Company SEC Documents; Undisclosed Liabilities	6
Section 2.06	Absence of Certain Changes	7
Section 2.07	Legal Proceedings	7
Section 2.08	Compliance with Laws; Permits	7
Section 2.09	Tax Matters	9
Section 2.10	No Rights Agreement; Anti-Takeover Provisions	9
Section 2.11	Brokers and Other Advisors	10
Section 2.12	Sale of Securities	10
Section 2.13	Listing and Maintenance Requirements	10
Section 2.14	Status of Securities	10
Section 2.15	Certain Material Indebtedness	11
Section 2.16	Investment Company Status	11
Section 2.17	Ability to Pay Dividends	11
Section 2.18	Labor	11
Section 2.19	Company Plans	11
Section 2.20	Rule 144A Matters	12
Section 2.21	No Other Company Representations or Warranties	12
Section 2.22	No Other Investor Representations or Warranties	13
Article III
Representations and Warranties of Each Investor
Section 3.01	Organization; Standing	13
Section 3.02	Authority; Noncontravention	14
Section 3.03	Governmental Approvals	14
Section 3.04	Ownership of Company Stock	14
Section 3.05	Brokers and Other Advisors	14

 

 

Section 3.06	Non-Reliance on Company Estimates, Projections, Forecasts, Forward-Looking Statements and Business Plans	15
Section 3.07	Purchase for Investment	15
Section 3.08	No Other Investor Representations or Warranties	16
Section 3.09	No Other Company Representations or Warranties	16
Article IV
Additional Agreements
Section 4.01	Reasonable Best Efforts; Filings	16
Section 4.02	Corporate Actions	17
Section 4.03	Public Disclosure	18
Section 4.04	Confidentiality	19
Section 4.05	NYSE Listing of Shares	20
Section 4.06	Standstill	20
Section 4.07	Transfer Restrictions	21
Section 4.08	Legend	23
Section 4.09	Election of Directors	24
Section 4.10	Voting	27
Section 4.11	Tax Matters	28
Section 4.12	Use of Proceeds	29
Section 4.13	Sponsor	29
Section 4.14	Information Rights	30
Section 4.15	Financing Cooperation	31
Section 4.16	Preemptive Rights	32
Section 4.17	Available Registration Statement	34
Section 4.18	Section 16 Matters	35
Section 4.19	Stockholder Approval; Information Statement	35
Article V
Miscellaneous
Section 5.01	Survival	37
Section 5.02	Amendments; Waivers	37
Section 5.03	Extension of Time, Waiver, Etc.	37
Section 5.04	Assignment	37
Section 5.05	Counterparts	38
Section 5.06	Entire Agreement; No Third Party Beneficiaries; No Recourse	38
Section 5.07	Governing Law; Jurisdiction	39
Section 5.08	Specific Enforcement	39
Section 5.09	WAIVER OF JURY TRIAL	40
Section 5.10	Notices	40
Section 5.11	Severability	41
Section 5.12	Expenses	41
Section 5.13	Interpretation	42

 

 

Section 5.14	Investor Representative	43
Article VI
Definitions
Section 6.01	Definitions	43

 

 

INVESTMENT AGREEMENT, dated as of August 28, 2023 (this “Agreement”), by and among BrightView Holdings, Inc., a Delaware corporation (the “Company”), Birch Equity Holdings, LP, a Delaware limited partnership (“Birch Holdings”), and Birch-OR Equity Holdings, LLC, a Delaware limited liability company (“Birch-OR Holdings”, and each of Birch Holdings and Birch-OR Holdings, an “Investor”, together the “Investors”).

 

WHEREAS, the Company desires to issue, sell and deliver to the Investors, and the Investors desire to collectively purchase and acquire from the Company, an aggregate of 500,000 shares of the Company’s Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), having the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof specified in the Certificate of Designations, attached hereto as Exhibit A, to be filed by the Company in connection with the execution and delivery of this Agreement (the “Certificate of Designations”);

 

WHEREAS, prior to the execution and delivery of this Agreement, KKR has delivered to the Company the Stockholder Written Consent; and

 

WHEREAS, in connection with the execution and delivery of this Agreement, the Company and the Investors are entering into the Registration Rights Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained in this Agreement, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

 

Article I

 

Purchase and Sale

 

Section 1.01           Purchase and Sale.

 

(a)           The closing of the transactions contemplated hereunder (the “Closing”) shall occur at 10:00 a.m. (New York City time) on the date of this Agreement (the “Closing Date”), and shall be conducted remotely via the electronic exchange of documents and signatures. The Depository Trust Company (“DTC”) will act as securities depositary for the Series A Preferred Stock.

 

(b)           At the Closing:

 

(i)            the Company shall file the Certificate of Designations with the Secretary of State of the State of Delaware;

 

(ii)           upon effectiveness of the Certificate of Designations, each Investor shall purchase and acquire from the Company (the “Purchase”), and the Company shall issue, sell and deliver to (x) Birch Holdings an aggregate amount of 165,962 shares of Series A Preferred Stock and (y) Birch-OR an aggregate amount of 334,038 shares of Series A Preferred Stock (the shares of Series A Preferred Stock referenced in clauses (x) and (y), together, the “Acquired Shares”) for a purchase price of $500,000,000 (such aggregate purchase price, the “Purchase Price”) to be paid by wire transfer of immediately available funds to a bank account previously designated by the Company;

 

 

(iii)          the Company shall deliver to the Investors:

 

(A)           each Investor’s portion of the Acquired Shares free and clear of Liens, except restrictions imposed by the Certificate of Designations, the Securities Act and any applicable securities Laws,

 

(B)           evidence of the issuance of the Acquired Shares to each Investor, as applicable, in accordance with the following procedures: (i) each Investor will direct an eligible DTC participant to submit a DWAC deposit instruction (the “DWAC Deposit”) to the Company’s transfer agent, for the such Investor’s applicable portion of the Acquired Shares that such Investor is entitled to receive, (ii) the Company will issue the Acquired Shares and direct its transfer agent to deliver, by acceptance of the DWAC Deposit therefor, such Acquired Shares to DTC account specified by each Investor, as applicable,

 

(C)           the Registration Rights Agreement, duly executed by the Company,

 

(D)           the Waiver of Rights Letter, duly executed by KKR BrightView Aggregator L.P. (“KKR”),

 

(E)           duly executed D&O Indemnification Agreements in respect of each Investor Director, and

 

(iv)          the Investors shall deliver to the Company the Registration Rights Agreement, duly executed by each Investor.

 

 

Article II

 

Representations and Warranties of the Company

 

The Company represents and warrants to the Investors as of the date of this Agreement (except to the extent made only as of a specified date, in which case such representation and warranty is made as of such date) that, except as (A) set forth in the confidential disclosure letter delivered by the Company to the Investors prior to the execution of this Agreement (the “Company Disclosure Letter”) (it being understood that any information, item or matter set forth on one section or subsection of the Company Disclosure Letter shall only be deemed disclosure with respect to, and shall only be deemed to apply to and qualify, the section or subsection of this Agreement to which it corresponds in number and each other section or subsection of this Agreement to the extent that it is reasonably apparent on its face that such information, item or matter is relevant to such other section or subsection) or (B) disclosed in any report, schedule, form, statement or other document (including exhibits) filed with, or furnished to, the SEC (and publicly available) after October 1, 2022 and prior to the date of this Agreement (collectively clauses (B) and (C), the “Filed SEC Documents”), other than any risk factor disclosures in any such Filed SEC Document contained in the “Risk Factors” section or any forward-looking statements within the meaning of the Securities Act or the Exchange Act thereof (it being acknowledged that nothing disclosed in the Filed SEC Documents shall be deemed to qualify or modify the representations and warranties set forth in Section 2.01(a), Section 2.02, Section 2.03, Section 2.10 and Section 2.11):

 

Section 2.01           Organization; Standing.

 

(a)           The Company is a corporation duly organized and validly existing under the Laws of the State of Delaware, is in good standing and has all requisite corporate power and corporate authority necessary to carry on its business as it is now being conducted, except (other than with respect to the Company’s due organization and valid existence) as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company is duly licensed or qualified to do business and is in good standing (where such concept is recognized under applicable Law) in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. True and complete copies of the Company Charter Documents are included in the Filed SEC Documents.

 

(b)           Each of the Company’s Subsidiaries is duly organized, validly existing and in good standing (where such concept is recognized under applicable Law) under the Laws of the jurisdiction of its organization, except where the failure to be so organized, existing and in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each of the Company’s Subsidiaries is duly licensed or qualified to do business and is in good standing (where such concept is recognized under applicable Law) in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 2.02           Capitalization.

 

(a)           The authorized capital stock of the Company consists of 500,000,000 shares of Common Stock and 50,000,000 shares of preferred stock, par value $0.01 per share (“Company Preferred Stock”). At the close of business on June 30, 2023 (the “Capitalization Date”), (i) 93,400,000 shares of Common Stock were issued and outstanding, including no Company RSAs and 220,708 Company PSAs (assuming maximum achievement of all applicable performance conditions), (ii) 4,557,328 shares of Common Stock were reserved and available for future issuance pursuant to the Company Stock Plans, of which amount (A) 4,758,191 shares of Common Stock were subject to outstanding Company Stock Options, (B) 1,393,627 shares of Common Stock were subject to outstanding Company Performance Stock Options, (C) 3,544,328 Company RSUs were outstanding and (D) 512,101 Company PSUs were outstanding (assuming target achievement of all applicable performance conditions), (iii) 519,237 shares of Common Stock were reserved and available for future purchase under the Brightview 2018 Employee Stock Purchase Plan and (iv) no shares of Company Preferred Stock were issued or outstanding.

 

 

(b)           Except as described in this Section 2.02, there are (i) no outstanding shares of capital stock of, or other equity or voting interests of any character in, the Company as of the date hereof other than shares that have become outstanding after the Capitalization Date which were reserved for issuance as of the Capitalization Date as set forth in Section 2.02(a), (ii) no outstanding securities of the Company convertible into or exercisable or exchangeable for shares of capital stock of, or other equity or voting interests of any character in, the Company, (iii) no outstanding obligations, options, warrants, rights, pledges, calls, puts, phantom equity, premptive rights, or other rights, commitments, agreements or arrangements of any character to acquire from the Company, or that obligate the Company to issue or grant, any capital stock of, or other equity or voting interests (or voting debt) in, or equity or equity-based awards with respect to, or any securities convertible into or exercisable or exchangeable for shares of capital stock of, or other equity or voting interests (or voting debt) in, the Company other than obligations to issue Common Stock pursuant to the settlement or exercise of (as applicable) Company RSUs, Company PSUs, Company Stock Options or Company Performance Stock Options outstanding as of the date hereof, (iv) no obligations of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock of, or other equity or voting interests (or voting debt) in, the Company (the items in clauses (i), (ii), (iii) and (iv) being referred to collectively as “Company Securities”) and (v) no other obligations by the Company or any of its Subsidiaries to make any payments based on the price or value of any Company Securities. There are no outstanding agreements of any kind which obligate the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Company Securities (other than pursuant to the cashless exercise, if permitted, of Company Stock Options or Company Performance Stock Options or the forfeiture or withholding of Taxes, if permitted, with respect to Company Stock Options, Company Performance Stock Options, Company RSAs, Company PSAs, Company RSUs or Company PSUs), or obligate the Company to grant, extend or enter into any such agreements relating to any Company Securities, including any agreements granting any preemptive rights, subscription rights, anti-dilutive rights, rights of first refusal or similar rights with respect to any Company Securities. None of the Company or any Subsidiary of the Company is a party to any stockholders’ agreement, voting trust agreement, registration rights agreement or other similar agreement or understanding relating to any Company Securities or any other agreement relating to the disposition, voting or dividends with respect to any Company Securities. All outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and were not issued in violation of any purchase option, call option, right of first refusal, subscription right, preemptive or similar rights of a third Person, the Company Charter Documents or any agreement to which the Company is a party. All of the outstanding shares of capital stock or equity interests of the Company’s Subsidiaries have been duly authorized, validly issued, fully paid and non-assessable and none of such capital stock or equity interests are subject to or were issued in violation of any applicable Laws and are not subject to and have not been issued in violation of any stockholders agreement, proxy, voting trust or similar agreement, or any preemptive rights, rights of first refusal or similar rights of any Person, except as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole.

 

Section 2.03           Authority; Noncontravention.

 

(a)           as in subsection 2.02](a)  The Company has all necessary corporate power and corporate authority to execute and deliver this Agreement and the other Transaction Documents and to perform its obligations hereunder and thereunder and to consummate the Transactions. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents, and the consummation by it of the Transactions, have been duly authorized by the Board and no other corporate action on the part of the Company is necessary to authorize the execution, delivery and performance by the Company of this Agreement and the other Transaction Documents and the consummation by it of the Transactions. This Agreement and the other Transaction Documents have been duly executed and delivered by the Company and, assuming due authorization, execution and delivery hereof or thereof, as applicable, by the Investors, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar Laws of general application affecting or relating to the enforcement of creditors’ rights generally and (ii) is subject to general principles of equity, whether considered in a proceeding at law or in equity (the “Bankruptcy and Equity Exception”).

 

 

(b)           Neither the execution and delivery of this Agreement or the other Transaction Documents by the Company, nor the consummation by the Company of the Transactions, nor performance or compliance by the Company with any of the terms or provisions hereof or thereof, will (i) conflict with or violate any provision of (A) the Company Charter Documents or (B) the similar organizational documents of any of the Company’s Subsidiaries or (ii) assuming that the authorizations, consents and approvals referred to in Section 2.04 are obtained and the filings referred to in Section 2.04 are made and any waiting periods thereunder have terminated or expired, (A) violate any Law or Judgment applicable to the Company or any of its Subsidiaries or (B) violate or constitute a default (or constitute an event which, with notice or lapse of time or both, would violate or constitute a default) under, result in the termination of or a right of termination or cancellation under, result in the loss of any benefit or require a payment or incur a penalty under, any of the terms or provisions of any loan or credit agreement, indenture, debenture, note, bond, mortgage, deed of trust, lease, sublease, license, contract or other agreement (each, a “Contract”) to which the Company or any of its Subsidiaries is a party or by which it is bound or accelerate the Company’s or, if applicable, any of its Subsidiaries’ obligations under any such Contract, except, in the case of clause (ii), as would not, individually or in the aggregate, have or reasonably be expected to have, a Material Adverse Effect.

 

Section 2.04           Governmental Approvals. Except for (a) the filing of the Certificate of Designations with the Secretary of State of the State of Delaware, (b) filings required under, and compliance with other applicable requirements of, the HSR Act to permit the conversion of the Acquired Shares, (c) the filing of the Information Statement with the SEC and any amendments or supplements thereto and (d) compliance with any applicable state securities or blue sky laws, no consent or approval of, or filing, license, permit or authorization, declaration or registration with, any Governmental Authority is necessary for the execution and delivery of this Agreement and the other Transaction Documents by the Company, the performance by the Company of its obligations hereunder and thereunder and the consummation by the Company of the Transactions, other than such other consents, approvals, filings, licenses, permits or authorizations, declarations or registrations that, if not obtained, made or given, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

 

Section 2.05           Company SEC Documents; Undisclosed Liabilities.

 

(a)           The Company has filed with the SEC, on a timely basis, all required reports, schedules, forms, statements and other documents required to be filed by the Company with the SEC pursuant to the Exchange Act since October 1, 2021 (collectively, the “Company SEC Documents”). As of their respective SEC filing dates, the Company SEC Documents complied in all material respects with the requirements of the Securities Act, the Exchange Act or the Sarbanes-Oxley Act of 2002 (and the regulations promulgated thereunder), as the case may be, applicable to such Company SEC Documents, and none of the Company SEC Documents as of such respective dates (or, if amended prior to the date of this Agreement, the date of the filing of such amendment, with respect to the disclosures that are amended) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

 

(b)           The consolidated financial statements of the Company and its Subsidiaries (including all related notes or schedules) included or incorporated by reference in the Company SEC Documents complied as to form, as of their respective dates of filing with the SEC, in all material respects with the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP (except, in the case of unaudited quarterly statements, as permitted by Form 10-Q of the SEC or other rules and regulations of the SEC) applied on a consistent basis during the periods involved (except (i) as may be indicated in the notes thereto or (ii) as permitted by Regulation S-X) and present fairly, in all material respects, the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods shown (subject, in the case of unaudited quarterly financial statements, to normal year-end adjustments, which are not reasonably expected to be materially adverse individually or in the aggregate to the Company and its Subsidiaries, taken as a whole).

 

(c)           Neither the Company nor any of its Subsidiaries has any liabilities of any nature (whether accrued, absolute, contingent or otherwise) that would be required under GAAP, to be reflected on a consolidated balance sheet of the Company (including the notes thereto) except liabilities (i) reflected or reserved against in the balance sheet (or the notes thereto) of the Company and its Subsidiaries as of June 30, 2023 (the “Balance Sheet Date”) included in the Filed SEC Documents, (ii) incurred after the Balance Sheet Date in the ordinary course of business and that do not arise from any material breach of a Contract, (iii) as expressly contemplated by this Agreement or otherwise incurred in connection with the Transactions, (iv) that have been discharged or paid prior to the date of this Agreement or (v) as would not, individually or in the aggregate, have had or reasonably be expected to have, a Material Adverse Eeffect.

 

(d)           The Company has established and maintains, and at all times since October 1, 2021 has maintained, disclosure controls and procedures and a system of internal controls over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act relating to the Company and its consolidated Subsidiaries sufficient to provide reasonable assurance that (a) transactions are executed in accordance with Company management’s general or specific authorization, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP, consistently applied, and to maintain accountability for assets, (c) access to assets is permitted only in accordance with Company management’s general or specific authorization and (d) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. There are no “significant deficiencies” or “material weaknesses” (as defined by the Public Company Accounting Oversight Board) in the design or operation of the Company’s internal controls over and procedures relating to financial reporting which would reasonably be expected to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial data, in each case which has not been subsequently remediated. Since October 1, 2021, there has not been any fraud, whether or not material, that involves management or other employees of the Company or any of its Subsidiaries who have a significant role in the Company’s internal controls over financial reporting. As of the date of this Agreement, to the Knowledge of the Company, there is no reason that its outside auditors and its chief executive officer and chief financial officer will not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, without qualification, when next due.

 

 

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

 

Section 2.06           Absence of Certain Changes. (a) Since the Balance Sheet Date through the date of this Agreement, except for the execution and performance of this Agreement and any other agreements contemplated hereby and the discussions, negotiations and transactions related hereto, the business of the Company and its Subsidiaries has been carried on and conducted in all material respects in the ordinary course of business, and (b) since the Balance Sheet Date, there has not been any Material Adverse Effect or any event, change or occurrence that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 2.07           Legal Proceedings. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, there is no (a) pending or, to the Knowledge of the Company, threatened legal, regulatory or administrative proceeding, suit, proceedings, disputes, audit, investigation (of which the Company has Knowledge), arbitration or action (an “Action”) against the Company or any of its Subsidiaries or against or related to any Company Plan, or (b) outstanding order, judgment, injunction, ruling, writ or decree of any Governmental Authority (“Judgments”) imposed upon the Company or any of its Subsidiaries or any of their respective assets, in each case, by or before any Governmental Authority.

 

Section 2.08           Compliance with Laws; Permits.

 

(a)           The Company and each of its Subsidiaries are and since October 1, 2021 have been, in compliance with all local, state and federal laws, common law, statutes, ordinances, codes, rules or regulations or other similar requirement enacted, adopted, promulgated, or applied by any Governmental Authority (“Laws”) or Judgments, in each case, that are applicable to the Company or any of its Subsidiaries or any Company Plan, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company and each of its Subsidiaries hold all licenses, franchises, permits, certificates, approvals and authorizations from Governmental Authorities (“Permits”) necessary for the lawful conduct of their respective businesses, except where the failure to hold the same would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

 

(b)           The Company, each of its Subsidiaries, and each of their officers, directors, employees and, to the Company’s Knowledge, agents acting on their behalf is, and for the last five years has been, in compliance in all material respects with (1) the Foreign Corrupt Practices Act of 1977 and any rules and regulations promulgated thereunder, (2) the United Kingdom Bribery Act, (3) anti-bribery legislation promulgated by the European Union and implemented by its member states, (4) legislation adopted in furtherance of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and (5) any other Laws applicable to the Company and its Subsidiaries that address the prevention of corruption, bribery, terrorism or money laundering (the “Anti-Corruption Laws”). None of the Company, any of its Subsidiaries or any director, officer, or, to the Knowledge of the Company, any agent, employee, or other person associated with or acting on behalf of the Company or its Subsidiaries has within the last five years (i) made, offered, promised or authorized any unlawful contribution, gift, entertainment or other unlawful expense; (ii) made, offered, promised or authorized any direct or indirect unlawful payment; or (iii) violated or is in violation of any provision of any Anti-Corruption Laws.

 

(c)           The Company, each of its Subsidiaries, and to the Company’s Knowledge, each of their respective officers, directors, employees and, to the Company’s Knowledge, agents acting on their behalf is, and for the last five years has been, in material compliance with Anti-Money Laundering Laws and Export Control Laws.

 

(d)           The Company, each of its Subsidiaries, and each of their officers, directors, employees and, to the Company’s Knowledge, agents acting on their behalf is, and, for the last five years has been, in compliance with all Laws or other financial restrictions administered by the Office of Foreign Assets Control of the United States Treasury Department (“OFAC”), including OFAC’s Specially Designated Nationals and Blocked Persons List, the U.S. Department of State, and sanctions administered by the United Nations Security Council, the European Union, HM Treasury, or other relevant sanctions authority (collectively, “Sanctions”). None of the Company, any of its Subsidiaries, or any director, officer, or to the Company’s knowledge, agent, or employee of the Company or any of its Subsidiaries is currently the subject or the target of any Sanctions, nor is the Company or any of its Subsidiaries located, organized or resident in a country or territory that is the subject or target of Sanctions, including, without limitation, Cuba, Iran, North Korea, Syria, the so-called Donetsk People’s Republic, so-called Luhansk People’s Republic and the Crimea, Kherson, and Zaporizhzhia regions of Ukraine, nor has the Company or any of its Subsidiaries engaged in any dealings or transactions with or for the benefit of any person located, organized, or ordinarily resident in any such country, in each case directly or indirectly, including through agents or other persons acting on its behalf. The Company will not use the proceeds from the Transactions (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, or (ii) to fund or facilitate any activities of or business with any person, or in any country or territory, that, at the time of such funding, is the subject or the target of Sanctions. The Company and its Subsidiaries have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, compliance with all applicable Anti-Corruption Laws and Sanctions. No action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Subsidiaries with respect to Anti-Corruption Laws or Sanctions is pending or, to the Knowledge of the Company, threatened.

 

 

(e)           Neither the Company nor any of its Subsidiaries is party to any actual or threatened legal proceedings or outstanding enforcement action relating to any breach or suspected breach of Anti-Corruption Laws, Anti-Money Laundering Laws, Sanctions or Export Control Laws

 

Section 2.09           Tax Matters. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect: (a) the Company and each of its Subsidiaries has prepared (or caused to be prepared) and timely filed (taking into account valid extensions of time within which to file) all Tax Returns required to be filed by it, and all such filed Tax Returns (taking into account all amendments thereto) are true, complete and accurate, (b) all Taxes owed by the Company and each of its Subsidiaries that are due (whether or not shown on any Tax Return) have been timely paid, except for Taxes that are being contested in good faith by appropriate proceedings and that have been adequately reserved against in accordance with GAAP and which would not (if such proceedings are determined in a manner adverse to the Company and its Subsidiaries) result in a Material Adverse Effect, (c) no examination or audit of any Tax Return relating to any Taxes of the Company or any of its Subsidiaries or with respect to any Taxes due from the Company or any of its Subsidiaries by any Governmental Authority is currently in progress or threatened in writing, (d) none of the Company or any of its Subsidiaries has liability for Taxes of any other Person (other than the Company and its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign Law), as a transferee or successor, or by contract (other than a custmoary commercial contract the principal purpose of which is not Tax matters), (e) none of the Company or any of its Subsidiaries has engaged in any “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(2), (f) the Company and each of its Subsidiaries has withheld or collected from each payment made to any Person the amount of all Taxes required to be withheld or collected therefrom and has paid the same to the appropriate taxing authorities in accordance with applicable law, and (g) no claim has been made by a taxing authority in any jurisdiction where the Company or any of its Subsidiaries does not file a particular type of Tax Return or pay a particular type of Tax that the Company or such Subsidiary is or may be required to file such type of Tax Return or pay such type of Tax.

 

Section 2.10           No Rights Agreement; Anti-Takeover Provisions.

 

(a)           Neither the Company nor any of its Subsidiaries is party to a stockholder rights agreement, “poison pill” or similar anti-takeover agreement or plan.

 

 

(b)           The Board has taken all necessary actions to ensure that no restrictions included in any “control share acquisition,” “fair price,” “moratorium,” “business combination” or other state anti-takeover Law (including Section 203 of the DGCL) is applicable to the Transactions, including the Company’s issuance of shares of Common Stock upon conversion of the Series A Preferred Stock and any issuance pursuant toSection 4.16.

 

Section 2.11           Brokers and Other Advisors. Other than fees payable in accordance with Section 5.12 and except as set forth on Section 2.11 of the Company Disclosure Letter, no broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission, or the reimbursement of expenses in connection therewith, in connection with the Transactions based upon arrangements made by or on behalf of the Company or any of its Subsidiaries.

 

Section 2.12           Sale of Securities. Assuming the accuracy of the representations and warranties set forth in Section 3.07, the offer, sale and issuance of the shares of Series A Preferred Stock pursuant to this Agreement is exempt from the registration and prospectus delivery requirements of the Securities Act and the rules and regulations thereunder. Without limiting the foregoing, neither the Company nor any other Person authorized by the Company to act on its behalf, has engaged in a general solicitation or general advertising (within the meaning of Regulation D of the Securities Act) of investors with respect to offers or sales of Series A Preferred Stock, and neither the Company nor any Person acting on its behalf has made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the offering or issuance of Series A Preferred Stock under this Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act that would result in none of Regulation D or any other applicable exemption from registration under the Securities Act to be available, nor will the Company take any action or steps that would cause the offering or issuance of Series A Preferred Stock under this Agreement to be integrated with other offerings by the Company for the purposes of the Securities Act that would result in none of Regulation D or any other applicable exemptions from registration under the Securities Act to be available.

 

Section 2.13           Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and listed on the NYSE, and the Company has taken no action designed to, or which to the Knowledge of the Company is reasonably likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from the NYSE, nor has the Company received any notification that the SEC or the NYSE is contemplating terminating such registration or listing. The Company is in compliance in all material respects with the listing and listing maintenance requirements of the NYSE applicable to it for the continued trading of its Common Stock on the NYSE.

 

Section 2.14           Status of Securities. The Acquired Shares are (and the shares of Common Stock issuable upon conversion of any of the Acquired Shares and any accrued and compounded dividends with respect thereto will be, when issued) duly authorized by all necessary corporate action on the part of the Company, validly issued, fully paid and nonassessable and issued in compliance with all applicable federal and state securities Laws and will not be subject to preemptive rights of any other stockholder of the Company, and will be free and clear of all Liens, except restrictions imposed by the Certificate of Designations and any applicable securities Laws and this Agreement. The respective rights, preferences, privileges, and restrictions of the Series A Preferred Stock and the Common Stock are as stated in the Company Charter Documents (including the Certificate of Designations) or as otherwise provided by applicable Law. As of the Closing, the Acquired Shares and the shares of Common Stock initially issuable upon conversion of the Acquired Shares if such conversion were to occur immediately following Closing have been duly reserved for issuance.

 

 

Section 2.15           Certain Material Indebtedness. The Company and its Subsidiaries are not in material breach of, or material default or material violation under the Existing Credit Agreement, its other material indebtedness or any agreement relating to such material indebtedness.

 

Section 2.16           Investment Company Status. Neither the Company nor any of its Subsidiaries is, and immediately after the sale of the Acquired Shares hereunder, none of the Company nor any of its Subsidiaries will be, required to be registered as an “investment company” under the Investment Company Act of 1940, as amended.

 

Section 2.17           Ability to Pay Dividends. Except with respect to the covenants contained in the Existing Credit Agreement, the Company is not party to any material Contract, and is not subject to any provision in the Company Charter Documents or resolutions of the Board that, in each case, by its terms prohibits or prevents the Company from paying dividends in form and the amounts contemplated by the Certificate of Designations.

 

Section 2.18           Labor. Except as set forth on Section 2.18 of the Company Disclosure Letter, and as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (a) the Company and each of its Subsidiaries is, and for the past three years has been, in compliance with all applicable Laws regarding employment and/or labor, including applicable Laws regarding wages, hours, immigration, authorization to work, background checks, classification of exempt employees, classification of independent contractors, leaves of absences, time off work, discrimination, harassment, retaliation, reasonable accommodations, mass layoffs, plant closings, and/or workers compensation; (b) the Company and its Subsidiaries are not subject or party to any collective bargaining agreements or other agreements with any unions, works councils or other labor-related organizations, and are not negotiating or under an obligation to negotiate any such agreements; and (c) there are no, and for the past three years there have been no, labor strikes, work stoppages, slowdowns, material grievances or unfair labor practice charges, or other labor disruptions.

 

Section 2.19           Company Plans. Except as disclosed on Section 2.19 of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries has any material liability or obligation, whether absolute or contingent, with respect to, and no Company Plan is, (i) a multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA) (a “Multiemployer Plan”), (ii) a multiple employer plan (within the meaning of Section 4063 of ERISA), (iii) a “multiple employer welfare arrangement” (within the meaning of Section 3(40) of ERISA) or (iv) a plan that is covered by Title IV of ERISA or subject to Section 412 or 430 of the Code or Section 302 or 303 of ERISA. None of the Company or any of its Subsidiaries has any obligation to provide post-employment or retirement welfare benefits to any current or former employee of the Company or any of its Subsidiaries (or dependent thereof), other than for continuation coverage under Section 4980(B)(f) of the Code or applicable Law. With respect to each Multiemployer Plan, except as would not , individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (I) no withdrawal liability, within the meaning of Section 4201 of ERISA, has been or is reasonably expected to be incurred by any Company or any of its ERISA Affiliates, and (II) the Company and its Subsidiaries have timely satisfied all of their obligations thereto in full.  Substantially all of the employees of the Company or its Subsidiaries with respect to whom the Company or any of its Subsidiaries has an obligation to contribute to a Multiemployer Plan performs work in the building and construction industry pursuant to Section 4203(b) and Section 4208(d)(1) of ERISA and, to the Company’s Knowledge, each Multiemployer Plan primarily covers employees in the building and construction industry or has been amended to provide that Section 4203(b) of ERISA applies to the Company or its Subsidiaries. The consummation of the Transactions, either alone or in combination with any other event, will not, in any material respect, (x) result in any material payment or benefit becoming due or payable, or required to be provided, to any individual who currently provides, or formerly provided, services to the Company or any of its Subsidiaries under any Company Plan; (y) result in any change in the type, amount or value of compensation or benefits due or payable to any individual who currently provides, or formerly provided, services to the Company or any of its Subsidiaries under any Company Plan or accelerate the time of payment, vesting or funding of any such benefit or compensation under any Company Plan; or (z) result in any amount failing to be deductible by reason of Section 280G of the Code.

 

 

Section 2.20           Rule 144A Matters. When issued pursuant to this Agreement, the Series A Preferred Stock will not be of the same class as securities are listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted on a U.S. automated inter-dealer quotation system. The Acquired Shares will be issued through the facilities of DTC and identified by a Rule 144A CUSIP.

 

Section 2.21           No Other Company Representations or Warranties. Except for the representations and warranties made by the Company in this Article II (as modified by the Company Disclosure Letter) and in any certificate or other document delivered in connection with this Agreement, neither the Company nor any other Person acting on its behalf makes any other express or implied representation or warranty with respect to the Series A Preferred Stock, Common Stock, the Company or any of its Subsidiaries or their respective businesses, operations, properties, assets, liabilities, condition (financial or otherwise) or prospects, notwithstanding the delivery or disclosure to the Investors or their Representatives of any documentation, forecasts or other information with respect to any one or more of the foregoing, and the Investors acknowledge the foregoing. In particular, and without limiting the generality of the foregoing, except for the representations and warranties made by the Company in this Article II (as modified by the Company Disclosure Letter) and in any certificate or other document delivered in connection with this Agreement, neither the Company nor any other Person makes or has made any express or implied representation or warranty to the Investors or their Representatives with respect to (a) any financial projection, forecast, estimate, budget or prospect information relating to the Company, any of its Subsidiaries or their respective businesses or (b) any oral or written information presented to the Investors or their Representatives in the course of its due diligence investigation of the Company, the negotiation of this Agreement or the course of the Transactions or any other transactions or potential transactions involving the Company and the Investors.

 

 

Section 2.22           No Other Investor Representations or Warranties. Except for the representations and warranties expressly set forth in Article III and in any certificate or other document delivered in connection with this Agreement, the Company hereby acknowledges that neither Investor nor any other Person, (a) has made or is making any other express or implied representation or warranty with respect to the Investors or any of their Subsidiaries or their respective businesses, operations, assets, liabilities, condition (financial or otherwise) or prospects, including with respect to any information provided or made available to the Company or any of its Representatives or any information developed by the Company or any of its Representatives or (b) will have or be subject to any liability or indemnification obligation to the Company resulting from the delivery, dissemination or any other distribution to the Company or any of its Representatives, or the use by the Company or any of its Representatives, of any information, documents, estimates, projections, forecasts or other forward-looking information, business plans or other material developed by or provided or made available to the Company or any of its Representatives, including in due diligence materials, in anticipation or contemplation of any of the Transactions or any other transactions or potential transactions involving the Company and the Investors. The Company, on behalf of itself and on behalf of its respective Affiliates, expressly waives any such claim relating to the foregoing matters.

 

Article III

 

Representations and Warranties of Each Investor

 

Each Investor represents and warrants to the Company, as of the date of this Agreement (except to the extent made only as of a specified date, in which case such representation and warranty is made as of such date):

 

Section 3.01           Organization; Standing. Each Investor is a Delaware limited partnership or limited liability company, as appliacble, duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization and each Investor has all requisite power and authority necessary to carry on its business as it is now being conducted and, except (other than with respect to such Investor’s due organization and valid existence) as would not, individually or in the aggregate, reasonably be expected to have an Investor Material Adverse Effect. Each Investor is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have an Investor Material Adverse Effect.

 

 

Section 3.02           Authority; Noncontravention.

 

(a)           Each Investor has all necessary power and authority to execute and deliver this Agreement and the other Transaction Documents, to perform its obligations hereunder and thereunder and to consummate the Transactions. The execution, delivery and performance by each Investor of this Agreement and the other Transaction Documents and the consummation by each Investor of the Transactions have been duly authorized and approved by all necessary action on the part of each Investor, and no further action, approval or authorization by any of its stockholders, partners, members or other equity owners, as the case may be, is necessary to authorize the execution, delivery and performance by each Investor of this Agreement and the other Transaction Documents and the consummation by each Investor of the Transactions. This Agreement and the other Transaction Documents have been duly executed and delivered by each Investor and, assuming due authorization, execution and delivery hereof or thereof, as applicable, by the Company, constitutes a legal, valid and binding obligation of each Investor, enforceable against it in accordance with its terms, subject to the Bankruptcy and Equity Exception. (b)           Neither the execution and delivery of this Agreement or the other Transaction Documents by each Investor, nor the consummation of the Transactions by each Investor, nor performance or compliance by each Investor with any of the terms or provisions hereof or thereof, will (i) conflict with or violate any provision of the certificate or articles of incorporation, bylaws or other comparable charter or organizational documents of each Investor or (ii) assuming that the authorizations, consents and approvals referred to in Section 3.03 are obtained and the filings referred to in Section 3.03 are made and any waiting periods with respect to such filings have terminated or expired, (x) violate any Law or Judgment applicable to either Investor or any of their Subsidiaries or (y) violate or constitute a default (or constitute an event which, with notice or lapse of time or both, would violate or constitute a default) under any of the terms, conditions or provisions of any Contract to which either Investor or any of their Subsidiaries is a party or accelerate either Investor’s or any of its Subsidiaries’, if applicable, obligations under any such Contract, except, in the case of clause (ii), as would not, individually or in the aggregate, reasonably be expected to have an Investor Material Adverse Effect.

 

Section 3.03           Governmental Approvals. Except for (a) the filing by the Company of the Certificate of Designations with the Secretary of State of the State of Delaware, (b) filings required under, and compliance with other applicable requirements of, the HSR Act, and (c) filings required under Section 13(d) and Section 16 of the Exchange Act, no consent or approval of, or filing, license, permit or authorization, declaration or registration with, any Governmental Authority is necessary for the execution and delivery of this Agreement and the other Transaction Documents by the Investors, the performance by the Investors of their obligations hereunder and thereunder and the consummation by the Investors of the Transactions, other than such other consents, approvals, filings, licenses, permits, authorizations, declarations or registrations that, if not obtained, made or given, would not, individually or in the aggregate, reasonably be expected to have an Investor Material Adverse Effect.

 

Section 3.04           Ownership of Company Stock. Neither Investor nor any funds advised by the Sponsor owns any Common Stock.

 

Section 3.05           Brokers and Other Advisors. No broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission, or the reimbursement of expenses in connection therewith, in connection with the Transactions based upon arrangements made by or on behalf of either Investor or any of their Affiliates, except for Persons, if any, whose fees and expenses will be paid by the Investors (or pursuant to the expense reimbursement provisions hereof).

 

 

Section 3.06           Non-Reliance on Company Estimates, Projections, Forecasts, Forward-Looking Statements and Business Plans. In connection with the due diligence investigation of the Company by each Investor and its Representatives, each Investor and its Representatives have received and may continue to receive from the Company and its Representatives certain estimates, projections, forecasts and other forward-looking information, as well as certain business plan information containing such information, regarding the Company and its Subsidiaries and their businesses and operations. Each Investor hereby acknowledges that there are uncertainties inherent in attempting to make such estimates, projections, forecasts and other forward-looking statements, as well as in such business plans, with which each Investor is familiar, that each Investor is making its own evaluation of the adequacy and accuracy of all estimates, projections, forecasts and other forward-looking information, as well as such business plans, so furnished to each Investor (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, forward-looking information or business plans), and that except for the representations and warranties made by the Company in Article II of this Agreement (as modified by the Company Disclosure Letter) and in any certificate or other document delivered in connection with this Agreement, neither Investor will have any claim against the Company and its Subsidiaries, or any of their respective Representatives with respect thereto, except with respect to Fraud.

 

Section 3.07           Purchase for Investment. Each Investor acknowledges that the Series A Preferred Stock and the Common Stock issuable upon the conversion of the Series A Preferred Stock have not been registered under the Securities Act or under any state or other applicable securities Laws. Each Investor (a) acknowledges that it is acquiring the Series A Preferred Stock and the Common Stock issuable upon the conversion of the Series A Preferred Stock pursuant to an exemption from registration under the Securities Act solely for investment with no intention to distribute any of the foregoing to any Person, (b) will not sell, transfer or otherwise dispose of any Series A Preferred Stock and the Common Stock issuable upon the conversion of the Series A Preferred Stock, except in compliance with this Agreement and the registration requirements or exemption provisions of the Securities Act and any other applicable securities Laws, (c) has such knowledge and experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of its investment in the Series A Preferred Stock and the Common Stock issuable upon the conversion of the Series A Preferred Stock and of making an informed investment decision, (d) is an “accredited investor” (as that term is defined by Rule 501 of the Securities Act), and (e) (i) has been furnished with or has had access to all the information that it considers necessary or appropriate to make an informed investment decision with respect to the Series A Preferred Stock and the Common Stock issuable upon the conversion of the Series A Preferred Stock, (ii) has had an opportunity to discuss with the Company and its Representatives the intended business and financial affairs of the Company and to obtain information necessary to verify any information furnished to it or to which it had access and (iii) can bear the economic risk of (x) an investment in the Series A Preferred Stock and the Common Stock issuable upon the conversion of the Series A Preferred Stock indefinitely and (y) a total loss in respect of such investment. Each Investor has such knowledge and experience in business and financial matters so as to enable it to understand and evaluate the risks of, and form an investment decision with respect to its investment in, the Series A Preferred Stock and the Common Stock issuable upon the conversion of the Series A Preferred Stock and to protect its own interest in connection with such investment under the terms of this Agreement.

 

 

Section 3.08           No Other Investor Representations or Warranties. Except for the representations and warranties made by each Investor in this Article III and in any certificate or other document delivered in connection with this Agreement, neither Investor nor any other Person acting on its behalf makes any other express or implied representation or warranty with respect to either Investor or any of their Subsidiaries or their respective businesses, operations, properties, assets, liabilities, condition (financial or otherwise) or prospects, notwithstanding the delivery or disclosure to the Company or its Representatives of any documentation, forecasts or other information with respect to any one or more of the foregoing, and the Company acknowledges the foregoing. In particular, and without limiting the generality of the foregoing, except for the representations and warranties made by each Investor in this Article III and in any certificate or other document delivered in connection with this Agreement, neither Investor nor any other Person makes or has made any express or implied representation or warranty to the Company or its Representatives with respect to (a) any financial projection, forecast, estimate, budget or prospect information relating to either Investor, any of its Subsidiaries or their respective businesses or (b) any oral or written information presented to the Company or its Representatives in the course of the negotiation of this Agreement or the course of the Transactions or any other transactions or potential transactions involving either Investor and the Company.

 

Section 3.09           No Other Company Representations or Warranties. Except for the representations and warranties expressly set forth in Article II (as modified by the Company Disclosure Letter) and in any certificate or other document delivered in connection with this Agreement, each Investor hereby acknowledges that neither the Company nor any of its Subsidiaries, nor any other Person, (a) has made or is making any other express or implied representation or warranty with respect to the Series A Preferred Stock, the Common Stock, the Company or any of its Subsidiaries or their respective businesses, operations, assets, liabilities, condition (financial or otherwise) or prospects, including with respect to any information provided or made available to either Investor or any of their Representatives or Affiliates or any information developed by either Investor or any of their Representatives or Affiliates and none of the Investors, or their Affiliates or any of its or their Representatives has relied, is relying, or will rely on any other representations, warranties, or other statements, or the accuracy or completnes thereof, or (b) will have or be subject to any liability or indemnification obligation to either Investor resulting from the delivery, dissemination or any other distribution to either Investor or any of their Representatives or Affiliates, or the use by either Investor or any of its Representatives or Affiliates, of any information, documents, estimates, projections, forecasts or other forward-looking information, business plans or other material developed by or provided or made available to either Investor or any of their Representatives or Affiliates, including in due diligence materials, or management presentations (formal or informal), in anticipation or contemplation of any of the Transactions and each Investor, on behalf of itself and on behalf of their respective Affiliates, expressly waives any such claim relating to the foregoing matters.

 

Article IV

 

Additional Agreements

 

Section 4.01           Reasonable Best Efforts; Filings.

 

(a)          The Company and the Investor Parties shall, and shall cause their Affiliates to, (i) make an appropriate filing of a Notification and Report Form (“HSR Form”) pursuant to the HSR Act with respect to the Transactions as promptly as reasonably practicable following the date of this Agreement, and (ii) supply as promptly as reasonably practicable any additional information and documentary material that may be requested pursuant to the HSR Act and use reasonable best efforts to promptly take any and all steps necessary to avoid or eliminate each and every impediment and obtain all consents that may be required pursuant to the HSR Act. Notwithstanding anything to the contrary in this Section 4.01, nothing in this Section 4.01 or this Agreement shall require or obligate any Investor Party to, and the Company shall not, without prior written consent of the Investor Parties, agree, propose, commit to, or effect, or otherwise be required, by consent decree, hold separate, or otherwise, any sale, divestiture, hold separate, or any other action otherwise limiting the freedom of action in any respect with respect to any businesses, products, rights, services, licenses, assets, or interest therein, of (i) the Investors or any Affiliate including the Sponsor and their respective Affiliates and any investment funds or investment vehicles affiliated with, or managed or advised by, the Sponsor or any portfolio company (as such term is commonly understood in the private equity industry) or investment of the Sponsor, or the (ii) Company or any its Affiliates or subsidiaries.

 

 

(b)           Each of the Company and the Investor Parties shall, and shall cause their Affiliates to, use their respective reasonable best efforts to (i) cooperate in all respects with the other party in connection with any filing or submission with a Governmental Authority in connection with the Transactions and in connection with any investigation or other inquiry by or before a Governmental Authority relating to the Transactions, including any proceeding initiated by a private person, (ii) keep the other party informed in all material respects and on a reasonably timely basis of any material or substantive communication received by the Company, the Investor Parties or their Affiliates, as the case may be, from or given by the Company, the Investor Parties or their Affiliates, as the case may be, to the Federal Trade Commission (“FTC”), the Department of Justice (“DOJ”) or any other Governmental Authority and of any material or substantive communication received or given in connection with any proceeding by a private Person, in each case regarding the Transactions, (iii) subject to applicable Laws relating to the exchange of information, and to the extent reasonably practicable, consult with the other party with respect to information relating to such party and its respective Subsidiaries, as the case may be, that appears in any filing made with, or written materials submitted to, any third Person or any Governmental Authority in connection with the Transactions, other than “4(c) and 4(d) documents” as that term is used in the rules and regulations under the HSR Act and other confidential information contained in the HSR Form and (iv) to the extent permitted by the FTC, the DOJ or such other applicable Governmental Authority or other Person, give the other party the opportunity to attend and participate in meetings and conferences with the FTC, DOJ, or any other applicable Governmental Authority. Any documents or other materials provided pursuant to this Section 4.01(b) may be redacted or withheld as necessary to address reasonable privilege or confidentiality concerns, and to remove references concerning the valuation of the Company or other competitively sensitive material, and the Parties may, as each deems advisable, reasonably designate any material provided under this Section 4.01(b) as “outside counsel only material”.

 

Section 4.02           Corporate Actions.

 

(a)           At any time that any Series A Preferred Stock is outstanding, the Company shall:

 

(i)            from time to time take all lawful action within its control to cause the authorized capital stock of the Company to include a sufficient number of authorized but unissued shares of Common Stock to satisfy the conversion requirements of all shares of the Series A Preferred Stock then outstanding, and to reserve such shares of Common Stock for such purpose; and

 

 

(ii)           not effect any voluntary deregistration under the Exchange Act or any voluntary delisting of the Common Stock from the NYSE other than in connection with a Change of Control (as defined in the Certificate of Designations) pursuant to which the Company agrees to satisfy, or will otherwise cause the satisfaction, in full of its obligations under Section 9 of the Certificate of Designations or is otherwise consistent with the terms set forth in Section 9 of the Certificate of Designations.

 

(b)           The Company shall not adopt any stockholder rights agreement, “poison pill” or similar anti-takeover agreement or plan that prohibits the Investor Parties from taking any of the actions permitted by this Agreement, including Section 4.06(a), or the Certificate of Designations.

 

Section 4.03           Public Disclosure. The Investor Parties and the Company shall, and shall cause their respective Affiliates to, consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements with respect to the Transaction Documents or the Transactions, and shall not, and shall cause their respective Affiliates not to, issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable Law, Judgment, court process or the rules and regulations of any national securities exchange or national securities quotation system; provided that the initial announcement with respect to the Transaction Documents or the Transactions shall be mutually agreed between the Investors and the Company. Notwithstanding the forgoing, this Section 4.03 shall not apply to any press release or other public statement made by the Company or the Investor Parties (a) which does not contain any information relating to the Transactions that has not been previously announced or made public in accordance with the terms of this Agreement or (b) is made in the ordinary course of business and does not relate specifically to the Transaction Documents (including the signing thereof) or the Transactions. Notwithstanding anything to the contrary in this Agreement or the Confidentiality Agreement, in no event shall either this Section 4.03 or any provision of the Confidentiality Agreement limit disclosure by any Investor Party and their respective Affiliates of ordinary course communications regarding this Agreement and the Transactions to its existing or prospective general and limited partners, equityholders, members, managers and investors of any Affiliates of such Person who are subject to a confidentiality obligation with respect thereto, including disclosing information about the Transactions on their websites in the ordinary course of business consistent with past practice.

 

 

Section 4.04           Confidentiality. During such time as the Investor Designees are serving on the Board of Directors and for a period of one year thereafter, the Investor Parties will, and will cause their Affiliates and Representatives who actually receive Confidential Information to, keep confidential any information (including oral, written and electronic information) concerning the Company, its Subsidiaries or its Affiliates that may be furnished to any Investor Party, its Affiliates or its or their respective Representatives by or on behalf of the Company or any of its Representatives pursuant to this Agreement, including any such information provided pursuant to Section 4.14 of this Agreement (“Confidential Information”) and to use the Confidential Information solely for the purposes of monitoring, administering or managing the Investor Parties’ investment in the Company made pursuant to this Agreement; provided that Confidential Information will not include information that (a) was or becomes available to the public other than as a result of a breach of any confidentiality obligation in this Agreement by any Investor Party or its Affiliates or their respective Representatives, (b) was or becomes available to any Investor Party or its Affiliates or their respective Representatives from a source other than the Company or its Representatives; provided that such source is reasonably believed by such Investor Party or its Affiliates not to be subject to an obligation of confidentiality (whether by agreement or otherwise), (c) at the time of disclosure is already in the possession of an Investor Party or its Affiliates or their respective Representatives from a source other than the Company or any of its Subsidiaries or any of their respective Representatives or (d) was independently developed by any Investor Party or its Affiliates or their respective Representatives without reference to, incorporation of, or other use of any Confidential Information; provided that an Investor Party may (A) disclose Confidential Information (i) to its attorneys, accountants, consultants and financial and other professional advisors to the extent necessary to obtain their services in connection with its investment in the Company, (ii) to any prospective purchaser of Acquired Shares from such Investor Party or prospective financing sources in connection with the syndicated and marketing of any Permitted Loan, in each case, as long as such prospective purchaser or lender, as applicable, agrees to be bound by similar confidentiality or non-disclosure terms as are contained in this Agreement (with the Company as an express third party beneficiary of such agreement), (iii) to any Affiliate, partner, member, limited partners, prospective partners or related investment fund of such Investor Parties and their Affiliates and their respective directors, officers, employees, consultants, financing sources and representatives, in each case in the ordinary course of business (provided that the recipients of such confidential information are directed to abide by the confidentiality and non-disclosure obligations contained herein), (iv) as may be reasonably determined by such Investor Party to be necessary in connection with such Investor Party’s enforcement of its rights in connection with this Agreement or its investment in the Company, or (v) as may otherwise be required by law or legal, judicial or regulatory process and (B) use Confidential Information retained in the unaided memory of such Persons for any valid business purpose (but subject to the confidentiality obligations herein); and provided, further, that (x) any breach of the confidentiality and use terms herein by any Person to whom such Investor Party may disclose confidential information pursuant to clauses (i) and (iii) of the preceding proviso shall be attributable to such Investor Party for purposes of determining such Investor Party’s compliance with this Section 4.04, except those who have entered into a separate confidentiality or non-disclosure agreement or obligation with the Company and (y) that such Investor Party takes commercially reasonable steps (at the Company’s sole expense) to minimize the extent of any required disclosure described in clause (v) of the preceding proviso. The confidentiality letter agreement, dated May 31, 2023, by and between One Rock Capital Management, LLC and the Company (the “Confidentiality Agreement”) shall terminate simultaneously with the Closing.

 

 

Section 4.05           NYSE Listing of Shares. The Company shall as promptly as practicable following the date of this Agreement cause the aggregate number of shares of Common Stock issuable upon the conversion of the Acquired Shares to be approved for listing on the NYSE. From time to time following the Closing Date, the Company shall cause the number of shares of Common Stock issuable upon conversion of the then outstanding shares of Series A Preferred Stock and any accrued and unpaid dividends thereon to be approved for listing on the NYSE.

 

Section 4.06           Standstill. The Investor Parties agree that until the date that is six (6) months after the date that the 10% Beneficial Ownership Requirement is no longer satisfied (the “Standstill Expiration Date”), without the prior written approval of the Board, the Investor Parties will not, directly or indirectly, and will cause their Affiliates not to:

 

(a)           acquire, offer or seek to acquire, agree to acquire or make a proposal to acquire, by purchase or otherwise, any equity securities or direct or indirect rights to acquire any equity securities of the Company, any securities convertible into or exchangeable for any such equity securities, any options or other derivative securities or contracts or instruments in any way related to the price of shares of Common Stock;

 

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

 

(c)           make any public announcement with respect to, or offer, seek, propose or indicate an interest in (in each case with or without conditions), any merger, consolidation, business combination, tender or exchange offer, recapitalization, reorganization or purchase of more than 50% of the assets, properties or securities of the Company or any Subsidiary of the Company, or any other extraordinary transaction involving the Company or any Subsidiary of the Company or any of their respective securities, or enter into any discussions, negotiations, arrangements, understandings or agreements (whether written or oral) with any other Person regarding any of the foregoing;

 

(d)           other than with respect to any Investor Director acting in his or her capacity as a member of the Board, otherwise act, alone or in concert with others, to seek to control or influence, in any manner, the management, board of directors or policies of the Company or any of its Subsidiaries;

 

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

 

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

 

(g)           take any action that would require the Company to make a public announcement regarding the possibility of a transaction or any of the events described in this Section 4.06;

 

 

(h)           enter into any agreements, arrangements or understandings with any third party (including security holders of the Company, but excluding, for the avoidance of doubt, any Investor Parties) with respect to any of the foregoing, including forming, joining or in any way participating in a “group” (as defined in Section 13(d)(3) of the Exchange Act) with any third party in connection with any of the foregoing;

 

(i)            request the Company or any of its Representatives, directly or indirectly, to amend or waive any provision of this Section 4.06; provided that this clause shall not prohibit the Investor Parties from making a confidential request to the Company seeking an amendment or waiver of the provisions of this Section 4.06, which the Company may accept or reject in its sole discretion, so long as any such request is made in a manner that does not require public disclosure thereof by any Person; or

 

(j)            contest the validity of this Section 4.06 or make, initiate, take or participate in any demand, Action (legal or otherwise) or proposal to amend, waive or terminate any provision of this Section 4.06; provided, however, that nothing in this Section 4.06 will limit (1) the Investor Parties’ ability to vote (subject to Section 4.10), Transfer or Hedge (subject to Section 4.07), convert shares of Series A Preferred Stock into Common Stock (subject to Section 6 of the Certificate of Designations), limit or restrict any transfer pursuant to a Permitted Loan or any foreclosure thereunder or transfer in lieu of a foreclosure thereunder, privately make and submit to the Company and/or the Board any proposal that is intended by the Investor Parties to be made and submitted on a non-publicly disclosed or announced basis (and would not reasonably be expect to require public disclosure by any Person), participate in rights offerings made by the Company to all holders of its Common Stock, receive any dividends or similar distributions with respect to any securities of the Company held by the Investor Parties, tender shares of Common Stock or Series A Preferred Stock into any tender or exchange offer (subject to Section 4.07), effect an adjustment to the Conversion Rate pursuant to the Certificate of Designations or otherwise exercise rights under its Common Stock or Series A Preferred Stock that are not the subject of this Section 4.06 or (2) the ability of the Investor Director to vote or otherwise exercise his or her legal duties or otherwise act in his or her capacity as a member of the Board.

 

Section 4.07           Transfer Restrictions.

 

(a)           Except as otherwise permitted in this Agreement, including Section 4.07(b), until the expiration of the Lock-Up Period, the Investor Parties will not (i) Transfer any Series A Preferred Stock or any Common Stock issued upon conversion of the Series A Preferred Stock or (ii) make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a short sale of or the purpose of which is to offset the loss which results from a decline in the market price of, any shares of Series A Preferred Stock or Common Stock, or otherwise establish or increase, directly or indirectly, a put equivalent position, as defined in Rule 16a-1(h) under the Exchange Act, with respect to the any of the Series A Preferred Stock or Common Stock or any other capital stock of the Company (any such action, a “Hedge”).

 

(b)           Notwithstanding Section 4.07(a), the Investor Parties shall be permitted to Transfer any portion or all of their Series A Preferred Stock or Common Stock issued upon conversion of the Series A Preferred Stock at any time under the following circumstances:

 

 

(i)            Transfers to any Permitted Transferees, but only if the transferee agrees in writing prior to such Transfer for the express benefit of the Company (in form and substance reasonably satisfactory to the Company and with a copy thereof to be furnished to the Company) to be bound by the terms of this Agreement and if the transferee and the transferor agree for the express benefit of the Company that the transferee shall Transfer the Series A Preferred Stock or Common Stock so Transferred back to the transferor at or before such time as the transferee ceases to be a Permitted Transferee of the transferor;

 

(ii)           Transfers pursuant to a merger, tender offer or exchange offer or other business combination, acquisition of assets or similar transaction or any change of control transaction involving the Company or any Subsidiary that, in each case, is approved by the Board;

 

(iii)          Transfers pursuant to a tender offer or exchange offer that is (A) for less than all of the outstanding shares of Common Stock of the Company or (B) part of a two-step transaction in which a tender offer is followed by a second step merger, in which the consideration to be received in the first step of such transaction is not identical to the amount or form of consideration to be received in the second step merger;

 

(iv)          Transfers to the Company or any of its Subsidiaries or that have been approved in writing by the Board;

 

(v)           Transfers after commencement by the Company or a significant subsidiary (as such term is defined in Rule 12b-2 under the Exchange Act) of the Company of bankruptcy, insolvency or other similar proceedings; and

 

(vi)          Transfers in connection with a total return swap or bona fide loan or other financing arrangement, in each case entered into with a nationally recognized financial institution, including a pledge to such a financial institution to secure a bona fide debt financing and any foreclosure by such financial institution or transfer to such financial institution in lieu of foreclosure and subsequent sale of the securities (each, a “Permitted Loan”), as long as such financial institution agrees with the relevant Investor Party (with the Company as an express third party beneficiary of such agreement) that following such foreclosure or in connection with such transfer it shall not directly or indirectly Transfer (other than pursuant to a broadly distributed offering or a sale effected through a broker-dealer) such foreclosed or transferred, as the case may be, Series A Preferred Stock or Common Stock to a Direct Competitor or Activist Shareholder without the Company’s consent (such agreement by the relevant financial institution, the “Foreclosure Limitations”) (it being understood that a list of Direct Competitors and Activist Shareholders shall be set forth in any issuer agreement entered into at the time of the Permitted Loan or as otherwise agreed between the Company, the relevant Investor Party and/or the relevant financial institution(s), as the case may be). Any Permitted Loan entered into by an Investor Party or its Affiliates shall be with one or more financial institutions reasonably acceptable to the Company and, except as specified above, nothing contained in this Agreement or the Registration Rights Agreement shall prohibit or otherwise restrict the ability of any lender (or its securities’ affiliate) or collateral agent to foreclose upon, or accept a transfer in lieu of foreclosure, and sell, dispose of or otherwise transfer the Series A Preferred Stock and/or shares of Common Stock issued upon conversion of Series A Preferred Stock (including shares of Common Stock received upon conversion of the Series A Preferred Stock following foreclosure or transfer in lieu of foreclosure on a Permitted Loan) mortgaged, hypothecated and/or pledged to secure the obligations of the borrower following an event of default under a Permitted Loan. Subject to the preceding provisions of this clause (vi), in the event that any lender or other creditor under a Permitted Loan transaction (including any agent or trustee on their behalf) or any affiliate of the foregoing exercises any rights or remedies in respect of the Series A Preferred Stock or the shares of Common Stock issuable or issued upon conversion of the Series A Preferred Stock or any other collateral for any Permitted Loan, no lender, creditor, agent or trustee on their behalf or affiliate of any of the foregoing (other than, for the avoidance of doubt, an Investor Party or its Affiliates) shall be entitled to any rights or have any obligations or be subject to any transfer restrictions or limitations hereunder except and to the extent for those expressly provided for in Registration Rights Agreement.

 

 

(c)           Notwithstanding Section 4.07(a) and (b), the Investor Parties will not at any time knowingly (after reasonable inquiry), directly or indirectly (without the prior written consent of the Board), Transfer any Series A Preferred Stock or Common Stock issued upon conversion of the Series A Preferred Stock to any Activist Shareholders or Direct Competitor; provided, that (i) these restrictions shall not apply to Transfers into the public market pursuant to a bona fide, broadly distributed underwritten public offering, in each case made pursuant to the Registration Rights Agreement or through a bona fide sale without registration effectuated pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and (ii) in lieu of the foregoing, in connection with a Transfer of shares of Series A Preferred Stock or Common Stock issued upon conversion of the Series A Preferred Stock in connection with any foreclosure or exercise of remedies under a Permitted Loan, only the Foreclosure Limitations shall be applicable.

 

The Investor Parties shall not be deemed to have breached their obligations under Section 4.07(c) as it relates to Activist Shareholders or Direct Competitor with respect to the Transfer of Series A Preferred Stock or the Common Stock issued upon conversion of the Series A Preferred Stock to any Person so long as the Investor Parties act in good faith, based on generally available public information and the advice of its financial advisors, to determine whether such person is an Activist Shareholder or Direct Competitor.

 

(d)           Notwithstanding anything to the contrary in this Agreement, the Series A Preferred Stock may only be sold, exchanged or otherwise transferred to a Person that complies with the Tax Form Requirements.

 

(e)           Any attempted Transfer in violation of this Section 4.07 shall be null and void ab initio.

 

Section 4.08           Legend.

 

(a)             All certificates or other instruments representing the Series A Preferred Stock or Common Stock issued upon conversion of the Series A Preferred Stock will bear a legend substantially to the following effect:

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE, AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT THAT IS EFFECTIVE UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS; OR (B) PURSUANT TO AN EXEMPTION FROM , OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS.

 

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER RESTRICTIONS SET FORTH IN AN INVESTMENT AGREEMENT, DATED AS OF AUGUST 28, 2023, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE ISSUER.

 

(b)           (i) Upon request of the applicable Investor Party, upon receipt by the Company of an opinion of counsel reasonably satisfactory to the Company to the effect that such legend is no longer required under the Securities Act and applicable state securities Laws, the Company shall promptly cause the first paragraph of the legend to be removed from any certificate for Series A Preferred Stock or Common Stock to be Transferred in accordance with the terms of this Agreement and (ii) the second paragraph of the legend shall be removed upon the expiration of such transfer restrictions set forth in this Agreement.

 

Section 4.09           Election of Directors.

 

(a)           Effective as of the Closing, the Company will increase the size of the Board in order to elect or appoint two (2) Investor Directors to the Board to serve for a term expiring at the next annual meeting of the Company’s stockholders and until their successors are duly elected and qualified, pursuant to Section 13(b) of the Certificate of Designations. Notwithstanding anything to the contrary herein or in the Certificate of Designations, the provisions of Section 4.09(b) through (k) shall apply following such time that either the Investor Parties no longer hold any shares of Series A Preferred Stock.

 

(b)           Following the Closing, the Investor Parties shall have the right, but not the obligation, to nominate to the Board (i) two (2) Investor Designees, so long as the 60% Beneficial Ownership Requirement is satisfied and (ii) one (1) Investor Designee, so long as the 20% Beneficial Ownership Requirement is satisfied.

 

(c)           Upon the occurrence of the First Fall-Away of Investors Board Rights, (i) at the request of a majority of the Directors then in office or the Chairman of the Board, one of the Investor Directors shall resign immediately from the Board and any committee thereof, or the Investor Parties shall take all action necessary to remove such Investor Director from the Board and any committee thereof or (ii) if no such request is made, such Investor Director shall continue to serve until his or her term expires at the next annual meeting of stockholders of the Company (unless such Investor Director otherwise elects to resign). Upon the occurrence of the Second Fall-Away of Investors Board Rights, (i) at the request of a majority of the Directors then in office or the Chairman of the Board, the remaining Investor Directors shall resign immediately from the Board and any committee thereof, or the Investor Parties shall take all action necessary to remove such Investor Director from the Board and any committee thereof or (ii) if no such request is made, such Investor Director shall continue to serve until his or her term expires at the next annual meeting of stockholders of the Company.

 

 

(d)           Following the Closing and until the occurrence of the Second Fall-Away of Investors Board Rights, the Company agrees, to the fullest extent permitted by applicable Law (including with respect to fiduciary duties under Delaware Law), to include the Investor Designee(s) designated by the Investor Parties in accordance with this Section 4.09 in the slate of nominees recommended by the Board for election at any meeting of the Company’s stockholders called for the purpose of electing Directors and to use its best efforts to cause the election of each such Investor Designee(s) to the Board, including nominating each such individuals to be elected as a Director as provided herein, recommending such individual’s election and soliciting proxies or consents in favor thereof. Without the prior written consent of the Investor Parties, so long as the Investor Parties are entitled to designate an Investor Designee for election to the Board in accordance with this Section 4.09, the Board shall not remove the Investor Director from his or her directorship (except as required by Law, the Certificate of Designations or the Company Charter Documents in effect as of the date hereof).

 

(e)           Following the Closing and until the occurrence of the Second Fall-Away of Investors Board Rights, in the event that the Investor Parties have nominated less than the total number of Investor Designees that the Investor Parties are entitled to nominate pursuant to Section 4.09(b), then the Investor Parties shall have the right, at any time, to nominate such additional Investor Designee(s) to which it is entitled, in which case, the Company and the Directors shall take all necessary corporate action, to the fullest extent permitted by applicable Law (including with respect to fiduciary duties under Delaware Law), to (x) enable the Investor Parties to nominate and effect the election or appointment of such Investor Designee, whether by increasing the size of the Board or otherwise, and (y) designate such Investor Designees, to fill such newly created vacancies or to fill any other existing vacancies.

 

(f)           Following the Closing and until the occurrence of the Second Fall-Away of Investors Board Rights, in the event that a vacancy on the Board is created at any time by the death, disability, retirement, resignation or removal (with or without cause and other than resignation pursuant to Section 4.09(c)) of any Investor Director, then the Investor Parties, if the Investor Parties are entitled to nominate a director pursuant to this Section 4.09, may designate an Investor Designee to replace such Investor Director and, subject to Section 4.09(i) and any applicable provisions of the DGCL, the remaining Directors and the Company shall, to the fullest extent permitted by applicable Law (including with respect to fiduciary duties under Delaware Law), cause the vacancy on the Board created thereby to be filled by such Investor Designee as soon as possible, and the Company hereby agrees to take, to the fullest extent permitted by applicable Law (including with respect to fiduciary duties under Delaware Law), at any time and from time to time, all actions necessary to accomplish the same.

 

(g)           Following the Closing and until the occurrence of the Second Fall-Away of Investors Board Rights, the Investor Parties shall have the right to designate one Investor Director to each committee of the Board to the extent permitted by the applicable independence or other requirements applicable to such committee(s).

 

 

(h)           The parties hereto agree that the Investor Directors shall (i) not be entitled to any compensation from the Company in connection with their services as Directors and (ii) shall be entitled to reimbursement from the Company for their reasonable out-of-pocket expenses incurred by them in connection with performing their respective duties as a member of the Board (or any committee thereof), including the reasonable out-of-pocket expenses incurred by such person for attending meetings of the Board (or any committee thereof), or in connection with their service on the board or other similar governing body of any Subsidiary of the Company (or any committee thereof) to the same extent as the Company provides such reimbursement to other members of the Board.

 

(i)            The Company’s obligations to have any Investor Designee elected to the Board or nominate any Investor Designee for election as a director at any meeting of the Company’s stockholders pursuant to this Section 4.09, as applicable, shall in each case be subject to such Investor Designee not causing the Company to violate any applicable Law or rule of any securities exchange or other trading facility on which any of the Company’s securities are then listed or qualified for trading requiring that a majority of the Company’s directors be independent; provided that in no event shall such Investor Designee’s relationship with the Investor Parties or their Affiliates (or any other actual or potential lack of independence resulting therefrom) nor the ownership by the Investor Parties of any shares of Class A Preferred Stock or shares of Common Stock issuable upon conversion thereof, in and of itself, be considered to disqualify such Investor Designee from being a member of the Board pursuant to this Section 4.09. The Investor Parties will cause each Investor Designee to make himself or herself reasonably available for interviews and to consent to such reference and background checks or other investigations as the Board may reasonably request to determine the Investor Designee’s eligibility and qualification to serve as a director of the Company. No Investor Designee shall be eligible to serve on the Board if he or she has been involved in any of the events enumerated under Item 2(d) of Schedule 13D under the Exchange Act or Item 401(f) of Regulation S-K under the Securities Act or is subject to any Judgment prohibiting service as a director of any public company. As a condition to any Investor Designee’s election to the Board or nomination for election as a director of the Company at any meeting of the Company’s stockholders, the Investor Parties and the Investor Designee must provide to the Company:

 

(i)            all information requested by the Company that is required to be or is customarily disclosed for directors, candidates for directors and their respective Affiliates and Representatives in a proxy statement or other filings in accordance with applicable Law, any stock exchange rules or listing standards or the Company Charter Documents or corporate governance guidelines, in each case, relating to the Investor Designee’s election as a director of the Company or the Company’s operations in the ordinary course of business;

 

(ii)           all information reasonably requested by the Company in connection with assessing eligibility, independence and other criteria applicable to directors or satisfying compliance and legal or regulatory obligations, in each case, relating to the Investor Designee’s nomination or election, as applicable, as a director of the Company or the Company’s operations in the ordinary course of business;

 

 

(iii)           an undertaking in writing by the Investor Designee:

 

a.           to be subject to, bound by and duly comply with the code of conduct in the form agreed upon by the other directors of the Company, provided that no such code of conduct shall restrict any transfer of securities by the Investor Parties or their Affiliates (other than with respect to the Investor Director solely in his or her individual capacity) except as provided herein, impose confidentiality obligations on the Investor Director other than Section 4.04 or as mandatorily applicable under applicable Law, or impose any share ownership requirement for the Investor Director; and

 

b.           to waive notice of and recuse himself or herself from any meetings, deliberations or discussion of the Board or any committee thereof regarding any Transaction Document, the Transactions or any other transactions involving Sponsor.

 

(j)            The Company shall indemnify the Investor Directors and provide the Investor Directors with director and officer insurance to the same extent as it indemnifies and provides such insurance to other members of the Board, pursuant to the Company Charter Documents, the DGCL or otherwise. The Company acknowledges and agrees that it (1) is the indemnitor of first resort (i.e., its obligations to the Investor Director are primary and any obligation of the Investor Parties or their Affiliates to advance expenses or to provide indemnification for the same expenses or liabilities incurred by the Investor Director are secondary) and (2) shall be required to advance the amount of expenses incurred by the Investor Director and shall be liable for the amount of all expenses and liabilities incurred by the Investor Director, in each case, to the same extent as it advances expenses and is liable for such expenses and liabilities with respect to other members of the Board, pursuant to the Company Charter Documents, the DGCL or otherwise, without regard to any rights the Investor Director may have against any Investor Parties or their Affiliates.

 

(k)            The rights of the Investor Parties pursuant to this Section 4.09 are personal to the Investor Parties and shall not be exercised by any Transferee other than a Permitted Transferee of the Investors.

 

Section 4.10           Voting. From and after the satisfaction (or to the extent of the inapplicability) of the Voting Condition:

 

(a)           At each meeting of the stockholders of the Company and at every postponement or adjournment thereof, the Investor Parties shall, and shall cause the Investor Parties to, take such action as may be required so that all of the shares of Series A Preferred Stock and Common Stock beneficially owned, directly or indirectly, by the Investor Parties and entitled to vote at such meeting of stockholders are voted (i) in favor of the Company’s proposal for ratification of the appointment of the Company’s independent registered public accounting firm and (ii) in favor of any proposal approved by the Investor Directors; provided that no Investor Party shall be under any obligation to vote in the same manner as recommended by the Board or in any other manner, other than in the Investor Parties’ sole discretion, with respect to any other matter, including the approval (or non-approval) or adoption (or non-adoption) of, or other proposal directly related to, any merger or other business combination transaction involving the Company, the sale of all or substantially all of the assets of the Company and its Subsidiaries or any other change of control transaction involving the Company; and

 

 

(b)           The Investors shall, and shall (to the extent necessary to comply with this Section 4.10) cause the Investor Parties to, be present, in person or by proxy, at all meetings of the stockholders of the Company so that all shares of Series A Preferred Stock or Common Stock beneficially owned by the Investors or the Investor Parties may be counted for the purposes of determining the presence of a quorum and voted in accordance with Section 4.10(a) at such meetings (including at any adjournments or postponements thereof).

 

(c)           The provisions of Section 4.10(a) and Section 4.10(b) shall not apply to the exclusive consent and voting rights of the holders of Series A Preferred Stock set forth in Section 13(b) of the Certificate of Designations.

 

Section 4.11           Tax Matters.

 

(a)            The Company and its paying agent (and any other applicable withholding agent) shall be entitled to deduct and withhold Taxes on all payments and distributions (and deemed distributions) on the Series A Preferred Stock to the extent required by applicable Law. To the extent that any amounts are so deducted or withheld and remitted to the appropriate governmental authority, such deducted or withheld amounts shall be treated for purposes of the Series A Preferred Stock as having been paid to the applicable holders in respect of which such deduction or withholding was made.

 

(b)           Promptly following the date of this Agreement or, in the case of a Permitted Transferee, the date such Permitted Transferee first acquires any Series A Preferred Stock, the Investors or such Permitted Transferee, as applicable, shall deliver to the Company or its paying agent a duly executed, accurate and properly completed Internal Revenue Service (“IRS”) Form W-9 or an appropriate IRS Form W-8 certifying that it is entitled to a complete exemption from deduction or withholding of U.S. federal income taxes on U.S.-source dividends, as applicable (such forms, the “Tax Form Requirements”). Promptly following the date of this Agreement or, in the case of a Permitted Transferee, the date such Permitted Transferee first acquires any Common Stock issued upon conversion of the Series A Preferred Stock the Investors or such Permitted Transferee, as applicable, shall deliver to the Company or its paying agent a duly executed, accurate and properly completed Internal Revenue Service Form W-9 or an appropriate IRS Form W-8. If the information on any such form provided by an Investor Party changes, or any such form becomes obsolete, expired or inaccurate on any respect, or upon the Company’s reasonable request, the Investor Party shall provide the Company with an updated version of such form.

 

(c)           Notwithstanding anything herein to the contrary, the Investor Parties and the Company intend (i) to treat the Series A Preferred Stock (based on its terms as set forth in the Certificate of Designations) as stock that is not “preferred stock” within the meaning of Section 305 of the Code and applicable Treasury Regulations for United States federal income Tax and withholding Tax purposes, (ii) to not treat the accrual of any accrued but unpaid dividends as a dividend for United States federal income tax purposes unless and until such dividends are declared and paid in cash, and (iii) that to the maximum extent permitted by applicable Law any redemption of the Series A Preferred Stock will be treated as a sale or exchange for United States federal income tax purpose pursuant to Section 302(b) of the Code. The Investor Parties and the Company shall not take any action inconsistent with the forgoing and will complete their tax reporting and withholding obligations in a manner consistent therewith, in each case except as otherwise required by a change in Law or a contrary “determination” (as defined in Section 1313(a) of the Code).

 

 

(d)           The Company shall pay any and all documentary, stamp and similar issue or transfer Tax due on (x) the issue of the Series A Preferred Stock and (y) the issue of shares of Common Stock upon conversion of the Series A Preferred Stock. However, in the case of conversion of Series A Preferred Stock, the Company shall not be required to pay any Tax or duty that may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock or Series A Preferred Stock to a beneficial owner other than the beneficial owner of the Series A Preferred Stock immediately prior to such conversion, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Company the amount of any such Tax or duty, or has established to the reasonable satisfaction of the Company that such Tax or duty has been paid or is not applicable.

 

(e)           At the written request of an Investor Party, in connection with a direct or indirect transfer of Series A Preferred Stock (or equity interests in the Company issued in exchange therefor) or any other reasonable request, the Company will use commercially reasonable efforts to determine whether it is a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code and to provide a certification described in Treasury Regulation Section 1.1445-5(b)(4)(iii).

 

Section 4.12           Use of Proceeds. The Company shall use the proceeds from the issuance and sale of the Acquired Shares for working capital and general corporate purposes; provided, that at least 90% of such proceeds shall be used to prepay outstanding principal amount of the Company’s debt under its Existing Credit Agreement within fifteen days of Closing.

 

Section 4.13           Sponsor.

 

(a)           Notwithstanding anything to the contrary set forth in this Agreement, none of the terms or provisions of this Agreement (including, for the avoidance of doubt, Section 4.06 and Section 4.07) shall in any way limit the activities of Sponsor or any of its Affiliates (collectively, the “Sponsor Group”), other than the Investor Parties, in their businesses distinct from the corporate private equity business of Sponsor (the “Excluded Sponsor Parties”), so long as (i) no such Excluded Sponsor Party or any of its Representatives is acting on behalf of or at the direction of any Investor Party with respect to any matter that otherwise would violate any term or provision of this Agreement and (ii) no Confidential Information is made directly available to any Excluded Sponsor Party or any of its Representatives who are not involved in the corporate private equity business of Sponsor by or on behalf of any Investor Party or any of their Representatives, except with respect to any such Representative who is (x) compliance personnel for compliance purposes and (y) non-compliance personnel of Sponsor who are directors or officers of, or function in a similar oversight role at, such Affiliate as long as Confidential Information is not otherwise disclosed to such Affiliate.

 

 

(b)           The Investors and the Company agree and acknowledge that, subject to applicable Law and Section 4.04 herein, each Investor Director designated by the Investor Parties or elected by the holders of Series A Preferred Stock may share Confidential Information about the Company and its Subsidiaries with such Sponsor Group subject to adequate procedures being maintained to prevent such information being used in connection with the purchase or sale of securities of the Company in violation of applicable Law.

 

(c)           The Investor Parties and the Company hereby agree, notwithstanding anything to the contrary in any other agreement or at Law or in equity, that, to the maximum extent permitted by Law, when the Investor Parties takes any action under this Agreement to give or withhold their consent, the Investor Parties shall have no duty (fiduciary or other) to consider the interests of the Company or the other stockholders of the Company and may act exclusively in their own interest; provided, however, that the foregoing shall in no way affect the obligations of the parties hereto to comply with the provisions of this Agreement. For the avoidance of doubt, the foregoing sentence shall not limit or otherwise affect the fiduciary duties of the Investor Director or Investor Designee.

 

Section 4.14           Information Rights. Following the Closing and so long as the 20% Beneficial Ownership Requirement is satisfied, in order to facilitate (i) the Investor Parties’ compliance with legal and regulatory requirements applicable to the beneficial ownership by the Investor Parties and its Affiliates of equity securities of the Company and (ii) the Investor Representative’s oversight of the Investor Parties’ investment in the Company, the Company agrees to provide each of the Investor Parties and the Investor Representative with the following:

 

(a)           at reasonable times and upon reasonable prior notice to the Company, access and opportunity to review the books and records of the Company or any of its Subsidiaries and to discuss the affairs, finances and condition of the Company or any of its Subsidiaries with the officers of the Company or any such Subsidiary; provided, however, that the Company shall not be required to disclose any privileged information of the Company so long as the Company has used its best efforts to provide such information to the Investor Parties and the Investor Representative without the loss of any such privilege and notified the Investor Parties and the Investor Representative that such information has not been provided;

 

(b)           at the request of the Investor Parties or the Investor Representative, as applicable, to the extent otherwise prepared by the Company, operating and capital expenditure budgets and periodic information packages relating to the operations and cash flows of the Company and its Subsidiaries; provided, however, that the Company shall not be required to disclose any privileged information of the Company so long as the Company has used its best efforts to enter into an arrangement pursuant to which it may provide such information the Investor Parties and the Investor Representative without the loss of any such privilege; and

 

(c)           at the Investor Parties’ and the Investor Representative’s request, such other reports and information as may be reasonably requested by the Investor Parties and the Investor Representative; provided, however, that the Company shall not be required to disclose any privileged information of the Company so long as the Company has used its best efforts to enter into an arrangement pursuant to which it may provide such information the Investor Parties and the Investor Representative without the loss of any such privilege.

 

 

Section 4.15           Financing Cooperation. If requested by the Investor Parties, the Company will provide the following cooperation in connection with the Investor Parties obtaining any Permitted Loan: (i) entering into an issuer agreement (an “Issuer Agreement”) with each lender in customary form in connection with such transactions (which agreement may include, without limitation, agreements and obligations of the Company relating to procedures and specified time periods for effecting transfers and/or conversions upon foreclosure, agreements to not hinder or delay exercises of remedies on foreclosure, acknowledgements regarding corporate policy, if applicable, certain acknowledgements regarding securities law status of the pledge arrangements and a specified list of Competitors and Activist Shareholders) and subject to the consent of the Company (which will not be unreasonably withheld or delayed), with such changes thereto as are requested by such lender and customary for similar financings, (ii) using commercially reasonable efforts to (A) remove any restrictive legends on certificates representing pledged Series A Preferred Stock or Common Stock issued upon conversion of Series A Preferred Stock and depositing such pledged Series A Preferred Stock or Common Stock issued upon conversion of Series A Preferred Stock in book entry form on the books of DTC when eligible to do so (and providing any necessary indemnities to the transfer agent in connection therewith) or (B) without limiting the generality of clause (A), if such Series A Preferred Stock is eligible for resale under Rule 144A, depositing such pledged Series A Preferred Stock (to the extent not already deposited) in book entry form on the books of DTC or other depository with customary restrictive legends, (iii) if so requested by such lender or counterparty, as applicable, re-registering the pledged Series A Preferred Stock or Common Stock issued upon conversion of Series A Preferred Stock in the name of the relevant lender, counterparty, custodian or similar party to a Permitted Loan, with respect to Permitted Loans solely as securities intermediary and only to the extent an Investor Party or its Affiliates continues to beneficially own such pledged Series A Preferred Stock or Common Stock issued upon conversion of Series A Preferred Stock, (iv) entering into customary triparty agreements with each lender and the Investor Parties relating to the delivery of the Series A Preferred Stock or Common Stock issued upon conversion of Series A Preferred Stock to the relevant lender for crediting to the relevant collateral accounts upon funding of the loan and payment of the purchase price including a right for such lender as a third party beneficiary of the Company’s obligations under hereunder to issue the Series A Preferred Stock or Common Stock issued upon conversion of Series A Preferred Stock upon payment of the purchase therefor in accordance with the terms of this Agreement and (v) such other cooperation and assistance as the Investor Parties may reasonably request (which cooperation and assistance, for the avoidance of doubt, shall not include any requirements that the Company deliver information, compliance certificates or any other materials typically provided by borrowers to lenders) that will not unreasonably disrupt the operation of the Company’s business. For the avoidance of doubt, the Acquired Shares will initially be issued through the facilities of DTC. Anything in the preceding sentence to the contrary notwithstanding, the Company’s obligation to deliver an Issuer Agreement is conditioned on the Investors certifying to the Company in writing that (A) the loan agreement with respect to which the Issuer Agreement is being delivered constitutes a Permitted Loan being entered into in accordance with this Agreement, the Investors have pledged the Series A Preferred Stock and/or the underlying shares of Common Stock as collateral to the lenders under such Permitted Loan and that the execution of such Permitted Loan and the terms thereof do not violate the terms of this Agreement, (B) to the extent applicable, whether the registration rights under the Registration Rights Agreement are being assigned to the lenders under that Permitted Loan and (C) the Investor Parties acknowledge and agree that the Company will be relying on such certificate when entering into the Issuer Agreement and any inaccuracy in such certificate will be deemed a breach of this Agreement. The Investor Parties acknowledge and agree that the statements and agreements of the Company in an Issuer Agreement are solely for the benefit of the applicable lenders party thereto and that in any dispute between the Company and the Investor Parties under this Agreement the Investor Parties shall not be entitled to use the statements and agreements of the Company in an Issuer Agreement against the Company.

 

 

Section 4.16           Preemptive Rights.

 

(a)           From and after the Closing and so long as the 60% Beneficial Ownership Requirement is satisfied, if the Company makes any public or non-public offering of any capital stock of, or other equity or voting interests in, or equity-linked securities of, the Company or any securities that are convertible or exchangeable into (or exercisable for) capital stock of, or other equity or voting interests in, or equity-linked securities of, the Company (collectively “Equity Securities”)), including, for the purposes of this Section 4.16, warrants, options or other such rights (any such security, a “New Security”) (other than (1) issuances of Equity Securities to directors, officers, employees, consultants or other agents of the Company, (2) issuances of Equity Securities pursuant to an employee stock option plan, management incentive plan, restricted stock plan, stock purchase plan or stock ownership plan or similar benefit plan, program or agreement, (3) issuances made as consideration for any acquisition (by sale, merger in which the Company is the surviving corporation, or otherwise) by the Company of equity in, or assets of, another Person, business unit, division or business, (4) issuances of any securities issued as a result of a stock split, stock dividend, reclassification or reorganization or similar event, (5) the issuances of shares of equity securities in connection with a bona fide strategic partnership or commercial arrangement with a Person that is not an Affiliate of the Company or any of its Subsidiaries (other than (x) any such strategic partnership or commercial arrangement with a private equity firm or similar financial institution or (y) an issuance the primary purpose of which is the provision of financing), (6) securities issued pursuant to the conversion, exercise or exchange of Series A Preferred Stock issued to the Investor Parties and (7) shares of a Subsidiary of the Company issued to the Company or a wholly owned Subsidiary of the Company) the Investors and each Investor Party to which either Investor later Transfers any shares of Series A Preferred Stock or Common Stock issued upon conversion of Series A Preferred Stock shall be afforded the opportunity to acquire from the Company such Investor Party’s Preemptive Rights Portion of such New Securities for the same price as that offered to the other purchasers of such New Securities; provided, that the Investor Parties shall not be entitled to acquire any New Securities pursuant to this Section 4.16 to the extent the issuance of such New Securities to the Investor Parties would require approval of the stockholders of the Company as a result of any such Investor Party’s status, if applicable, as an Affiliate of the Company or pursuant to the rules and listing standards of the NYSE (including NYSE Listed Company Manual Section 312.03(b)-(d)), in which case the Company may consummate the proposed issuance of New Securities to other Persons prior to obtaining approval of the stockholders of the Company (subject to compliance by the Company with Section 4.16(f) below).

 

 

(b)           Subject to the foregoing proviso in Section 4.16(a), the amount of New Securities that each Investor Party shall be entitled to purchase in the aggregate shall be determined by multiplying (1) the total number of such offered shares of New Securities by (2) a fraction, the numerator of which is the number of shares of shares Acquired Shares and/or shares of Common Stock issued upon conversion of Acquired Shares (in the aggregate and on an as converted basis) held by such Investor Party, as of such date, and the denominator of which is the aggregate number of shares of Common Stock held by all stockholders of the Company (on an as converted basis) outstanding as of such date (the “Preemptive Rights Portion”).

 

(c)           If the Company proposes to offer New Securities, it shall give the Investor Parties written notice of its intention, describing the anticipated price (or range of anticipated prices), anticipated amount of New Securities and other material terms and timing upon which the Company proposes to offer the same (including, in the case of a registered public offering and to the extent possible, a copy of the prospectus included in the registration statement filed with respect to such offering) at least seven (7) Business Days prior to such issuance (or, in the case of a registered public offering, at least seven (7) Business Days prior to the commencement of such registered public offering) (provided that, to the extent the terms of such offering cannot reasonably be provided seven (7) Business Days prior to such issuance, notice of such terms may be given as promptly as reasonably practicable but in any event prior to such issuance). The Company may provide such notice to the Investor Parties on a confidential basis prior to public disclosure of such offering. Other than in the case of a registered public offering, an Investor Parties may notify the Company in writing at any time on or prior to the second business day immediately preceding the date of such issuance (or, if notice of all such terms has not been given prior to the second Business Day immediately preceding the date of such issuance, at any time prior to such issuance) whether such Investor Party will exercise such preemptive rights and as to the amount of New Securities such Investor Party desires to purchase, up to the maximum amount calculated pursuant to Section 4.16(b). In the case of a registered public offering, any Investor Party shall notify the Company in writing at any time prior to the second Business Day immediately preceding the date of commencement of such registered public offering (or, if notice of all such terms has not been given prior to the second Business Day immediately preceding the date of commencement of such registered public offering, at any time prior to the date of commencement of such registered public offering) whether such Investor Party will exercise such preemptive rights and as to the amount of New Securities such Investor Party desires to purchase, up to the maximum amount calculated pursuant to Section 4.16(b). Such notice to the Company shall constitute a binding commitment by such Investor Party to purchase the amount of New Securities so specified at the price and other terms set forth in the Company’s notice to it. Subject to receipt of the requisite notice of such issuance by the Company, the failure of such Investor Party to respond prior to the time a response is required pursuant to this Section 4.16(c) shall be deemed to be a waiver of such Investor Party’s purchase rights under this Section 4.16 only with respect to the offering described in the applicable notice.

 

(d)           Each Investor Party shall purchase the New Securities that it has elected to purchase under this Section 4.16 concurrently with the related issuance of such New Securities by the Company (subject to the receipt of any required approvals from any Governmental Authority to consummate such purchase by such Investor Party); provided, that if such related issuance is prior to the twentieth (20th) Business Day following the date on which such Investor Party has notified the Company that it has elected to purchase New Securities pursuant to this Section 4.16, then each Investor Party shall purchase such New Securities within twenty (20) business days following the date of the related issuance. If the proposed issuance by the Company of securities which gave rise to the exercise by the Investor Parties of its preemptive rights pursuant to this Section 4.16 shall be terminated or abandoned by the Company without the issuance of any New Securities, then the purchase rights of the Investor Parties pursuant to this Section 4.16 shall also terminate as to such proposed issuance by the Company (but not any subsequent or future issuance), and any funds in respect thereof paid to the Company by the Investor Parties in respect thereof shall be promptly refunded in full.

 

 

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

 

(f)           In the event that the Investor Parties are not entitled to acquire any New Securities pursuant to this Section 4.16 because such issuance would require the Company to obtain stockholder approval in respect of the issuance of such New Securities to the Investor Parties as a result of any such Investor Party’s status, if applicable, as an Affiliate of the Company or pursuant to the rules and listing standards of the NYSE (including NYSE Listed Company Manual Section 312.03(c)), the Company shall, upon the Investors’ reasonable request delivered to the Company in writing within seven (7) Business Days following its receipt of the written notice of such issuance to such Investor Party pursuant to Section 4.16(c), at such Investor Party’s election, (i) waive the restrictions set forth in Section 4.16 solely to the extent necessary to permit such Investor Party to acquire such number of New Securities equivalent to its Preemptive Rights Portion of such issuance such Investor Party would have been entitled to purchase had it been entitled to acquire such New Securities pursuant to Section 4.16(a)-(c); (ii) consider and discuss in good faith modifications proposed by such Investor Party to the terms and conditions of such portion of the New Securities which would otherwise be issued to such Investor Party such that the Company would not be required to obtain stockholder approval in respect of the issuance of such New Securities as so modified; and/or (iii) solely to the extent that stockholder approval is required in connection with the issuance of New Securities to Persons other than the Investor Parties, use reasonable best efforts to seek stockholder approval in respect of the issuance of any New Securities to the Investor Parties.

 

(g)           The election by any Investor Party to not exercise its subscription rights under this Section 4.16 in any one instance shall not affect its right as to any subsequent proposed issuance.

 

(h)           The Company and the Investor Parties shall cooperate in good faith to facilitate the exercise of the Investor Parties’ rights pursuant to this Section 4.16, including using reasonable best efforts to secure any required approvals or consents.

 

Section 4.17           Available Registration Statement. The Company will not effect a Mandatory Conversion (as defined in the Certificate of Designations) if any Investor Party holds or would hold upon such Mandatory Conversion (or any earlier conversion following the dates of the Notice of Mandatory Conversion (as defined in the Certificate of Designations)) shares of Common Stock that are Registrable Securities unless as of the date of Notice of Mandatory Conversion and as of the Mandatory Conversion Date (as defined in the Certificate of Designations) there is an Available Registration Statement covering resale of such shares of Common Stock by the Investor Parties.

 

 

Section 4.18           Section 16 Matters. If the Company becomes a party to a consolidation, merger or other similar transaction, or if the Company proposes to take or omit to take any other action under Section 4.16 (including granting to the Investor Parties or their respective Affiliates the right to participate in any issuance of securities) or otherwise or if there is any event or circumstance that may result in the Investor Parties, their respective Affiliates and/or the Investor Director (which term, for purposes of this Section 4.18, shall also include the term “Investor Director” as defined in the Certificate of Designations) being deemed to have made a disposition or acquisition of equity securities of the Company or derivatives thereof for purposes of Section 16 of the Exchange Act (including the purchase by the Investor Parties of any securities under Section 4.16), and if the Investor Director is serving on the Board at such time or has served on the Board during the preceding six (6) months (i) the Board or a committee thereof composed solely of two or more “non-employee directors” as defined in Rule 16b-3 of the Exchange Act will pre-approve such acquisition or disposition of equity securities of the Company or derivatives thereof for the express purpose of exempting the Investor Parties’, their respective Affiliates’ and the Investor Director’s interests (for the Investors and/or their respective Affiliates, to the extent such persons may be deemed to be “directors by deputization”) in such transaction from Section 16(b) of the Exchange Act pursuant to Rule 16b-3 thereunder and (ii) if the transaction involves (A) a merger or consolidation to which the Company is a party and the Common Stock is, in whole or in part, converted into or exchanged for equity securities of a different issuer, (B) a potential acquisition or deemed acquisition, or disposition or deemed disposition, by the Investor Parties, the Investors’ Affiliates, and/or the Investor Director of equity securities of such other issuer or derivatives thereof and (C) an Affiliate or other designee of the Investor Parties or their Affiliates will serve on the board of directors (or its equivalent) of such other issuer pursuant to the terms of an agreement to which the Company is a party (or if the Investor Parties notify the Company of such service a reasonable time in advance of the closing of such transactions), then if the Company requires that the other issuer pre-approve any acquisition of equity securities or derivatives thereof for the express purpose of exempting the interests of any director or officer of the Company or any of its subsidiaries in such transactions from Section 16(b) of the Exchange Act pursuant to Rule 16b-3 thereunder, the Company shall require that such other issuer pre-approve any such acquisitions of equity securities or derivatives thereof for the express purpose of exempting the interests of the Investor Parties’, their respective Affiliates’ and the Investor Director (for the Investor Parties and/or their respective Affiliates, to the extent such persons may be deemed to be “directors by deputization” of such other issuer) in such transactions from Section 16(b) of the Exchange Act pursuant to Rule 16b-3 thereunder.

 

Section 4.19           Stockholder Approval; Information Statement.

 

(a)           Prior to the execution of this Agreement, holders of a majority of the issued and outstanding shares of Common Stock duly executed and delivered to the Company in accordance with Section 228 of the DGCL a written consent (the “Stockholder Written Consent”) in compliance with NYSE Rule 312.03(d) approving (i) the issuance of the Acquired Shares to the Investor Parties, including the compounding dividends thereon in accordance with the Certificate of Designations and (ii) the issuance of shares of Common Stock in connection with any future conversion of the Acquired Shares (and any compounded dividends thereon) in accordance with the Certificate of Designations. Substantially concurrently with the execution of this Agreement, the Company shall provide the Investors with a copy of such Stockholder Written Consent.

 

 

(b)           The Company shall promptly (and in any event within ten (10) Business Days) prepare and file with the SEC a written preliminary information statement required by Rule 14c-2 under the Exchange Act containing the information specified in Schedule 14C under the Exchange Act concerning the Stockholder Written Consent (the “Information Statement”), including notice of the action taken by the Stockholder Written Consent required by Section 228(e) of the DGCL. The Company shall cause the Information Statement (x) to comply with the requirements of applicable Law (including any rules of the SEC) and (y) to not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading, except that, with respect to this clause (y) the Company shall have no such obligation with respect to statements made therein based on information supplied by the Investors or their Affiliates expressly for inclusion or incorporation by reference therein. The Company shall promptly notify the Investors of the receipt of all comments of the SEC with respect to the Information Statement and of any request by the SEC for any amendment or supplement thereto or for additional information and shall promptly provide to the Investors copies of all written correspondence between the Company and/or any of its Representatives and the SEC with respect to the Information Statement. The Company shall use reasonable best efforts to as promptly as reasonably practicable provide responses to the SEC with respect to all comments received on the Information Statement, if applicable, by the SEC, and to cause the Information Statement to be mailed to the Company’s stockholders as promptly as reasonably practicable and in accordance with the following sentence. As promptly as reasonably practicable after the preliminary Information Statement has been cleared by the SEC or promptly after ten (10) calendar days have passed since the date of filing of the preliminary Information Statement with the SEC without notice from the SEC of its intent to review the preliminary Information Statement, the Company shall file with the SEC the Information Statement in definitive form as contemplated by Rule 14c-2 under the Exchange Act substantially in the form previously cleared or filed with the SEC, as the case may be, and mail a copy of the Information Statement to Company’s stockholders of record in accordance with Sections 228(e) of the DGCL. Prior to filing or mailing the preliminary or definitive Information Statement (or any amendment or supplement thereto) or responding to any comments of the SEC (or the staff of the SEC) with respect thereto, the Company shall provide the Investors a reasonable opportunity to review and to propose comments on such document or response and shall, in good faith, consider the reasonable comments of the Investors.

 

(c)           The Investors shall reasonably cooperate with the Company in connection with the preparation and filing of the Information Statement. The Investors and their Affiliates shall furnish to the Company all information concerning the Investors and their Affiliates as the Company may reasonably request in connection with the Information Statement. Each Investor agrees, as to itself and its Affiliates, that none of the information supplied or to be supplied by it to the Company specifically for inclusion or incorporation by reference in the Information Statement will when filed with the SEC and at the time it is mailed to holders of Company Common Stock, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

 

 

Article V

 

Miscellaneous

 

Section 5.01           Survival. All of the covenants or other agreements of the parties contained in this Agreement that by their terms are to be performed following the Closing shall survive the Closing until fully performed or fulfilled, unless and to the extent that non-compliance with such covenants or agreements is waived in writing by the party entitled to such performance. Except for the warranties and representations contained in Section 2.01, Section 2.02, Section 2.03(a), Section 2.10, Section 2.11, Section 2.12, Section 2.13, Section 2.14, Section 3.01, Section 3.02(a) and Section 3.06, which shall survive until the sixth (6th) anniversary of the Closing Date, the representations and warranties made herein shall survive for one (1) year following the Closing Date and shall then expire; provided that nothing herein shall relieve any party of liability for any inaccuracy or breach of such representation or warranty to the extent that any good faith allegation of such inaccuracy or breach is made in writing prior to such expiration by a Person entitled to make such claim pursuant to the terms and conditions of this Agreement. For the avoidance of doubt, claims may be made with respect to the breach of any representation, warranty or covenant until the applicable survival period therefor as described above expires.

 

Section 5.02           Amendments; Waivers. Subject to compliance with applicable Law, this Agreement may be amended or supplemented in any and all respects only by written agreement of the parties hereto.

 

Section 5.03           Extension of Time, Waiver, Etc. The Company and the Investors may, subject to applicable Law and pursuant to a written instrument delivered by such party, (a) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered pursuant hereto, (b) extend the time for the performance of any of the obligations or acts of the other party or (c) waive compliance by the other party with any of the agreements contained herein applicable to such party or, except as otherwise provided herein, waive any of such party’s conditions. Notwithstanding the foregoing, no failure or delay by the Company or an Investor Party in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right hereunder. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party.

 

Section 5.04           Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation of Law or otherwise, by any of the parties hereto without the prior written consent of the other party hereto; provided, however, that except as otherwise set forth herein, (a) except as otherwise set forth herein, the Investors or any Investor Party may assign its rights, interests and obligations under this Agreement, in whole or in part, to one or more Permitted Transferees, or as otherwise contemplated in Section 4.07 and (b) in the event of such assignment, the assignee shall agree in writing to be bound by the provisions of this Agreement, including the rights, interests and obligations so assigned; provided that no such assignment will relieve any Investor Party of its obligations hereunder prior to the Closing; provided, further, that no party hereto shall assign any of its obligations hereunder with the primary intent of avoiding, circumventing or eliminating such party’s obligations hereunder. Subject to the immediately preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and permitted assigns.

 

 

Section 5.05           Counterparts. This Agreement may be executed in one or more counterparts (including by facsimile or electronic mail), each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties hereto.

 

Section 5.06           Entire Agreement; No Third Party Beneficiaries; No Recourse.

 

(a)          This Agreement, including the Company Disclosure Letter and all other Transaction Documents, constitutes the entire agreement, and supersedes all other prior agreements and understandings, both written and oral, among the parties and their Affiliates, or any of them, with respect to the subject matter hereof and thereof.

 

(b)           No provision of this Agreement shall confer upon any Person other than the parties hereto and their permitted assigns any rights or remedies hereunder, except that the Non-Recourse Parties shall be third party beneficiaries of this Section 5.06(b). This Agreement may only be enforced against, and any claims or causes of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may only be made against the entities that are expressly identified as parties hereto, including entities that become parties hereto after the date of this Agreement or that agree in writing for the benefit of the Company to be bound by the terms of this Agreement applicable to the Investor Parties, and no former, current or future equityholders, controlling persons, directors, officers, employees, general or limited partner, member, manager, advisor, agents, successors, assigns or Affiliates of any party hereto or any former, current or future equityholder, controlling person, director, officer, employee, general or limited partner, member, manager, advisor, agent successors, assigns or Affiliate of any of the foregoing (each, a “Non-Recourse Party”) shall have any liability for any obligations or liabilities of the parties to this Agreement or for any claim (whether in tort, contract or otherwise) based on, in respect of, or by reason of, the transactions contemplated hereby or in respect of any representations (whether written or oral) made or alleged to be made in connection herewith, and no personal liability shall attach to, be imposed upon or otherwise be incurred by the Non-Recourse Parties through the Investors or otherwise, whether by or through attempted piercing of the corporate (or partnership or limited liability company) veil, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute, regulation or applicable Law, or otherwise, except for the Company’s rights against Sponsor under the Confidentiality Agreement in accordance with its terms. Without limiting the rights of any party against the other parties hereto, in no event shall any party or any of its Affiliates seek to enforce this Agreement against, make any claims for breach of this Agreement against, or seek to recover monetary damages from, any Non-Recourse Party.

 

 

Section 5.07           Governing Law; Jurisdiction.

 

(a)          This Agreement and all matters, claims or Actions (whether at law, in equity, in Contract, in tort or otherwise) based upon, arising out of or relating to this Agreement or the negotiation, execution or performance of this Agreement, shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed entirely within that State, regardless of the laws that might otherwise govern under any applicable conflict of Laws principles.

 

(b)           All Actions arising out of or relating to this Agreement shall be heard and determined in the Chancery Court of the State of Delaware (or, if the Chancery Court of the State of Delaware declines to accept jurisdiction over any Action, any state or federal court within the State of Delaware) and the parties hereto hereby irrevocably submit to the exclusive jurisdiction and venue of such courts in any such Action and irrevocably waive the defense of an inconvenient forum or lack of jurisdiction to the maintenance of any such Action. The consents to jurisdiction and venue set forth in this Section 5.07 shall not constitute general consents to service of process in the State of Delaware and shall have no effect for any purpose except as provided in this paragraph and shall not be deemed to confer rights on any Person other than the parties hereto. Each party hereto agrees that service of process upon such party in any Action arising out of or relating to this Agreement shall be effective if notice is given by overnight courier at the address set forth in Section 5.10 of this Agreement. The parties hereto agree that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law; provided that nothing in the foregoing shall restrict any party’s rights to seek any post-judgment relief regarding, or any appeal from, a final trial court judgment.

 

Section 5.08           Specific Enforcement. The parties hereto agree that irreparable damage for which monetary relief, even if available, would not be an adequate remedy, would occur in the event that any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached, including if the parties hereto fail to take any action required of them hereunder to cause the Closing to occur. The parties acknowledge and agree that (a) the parties shall be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions hereof to be funded and the Purchase to be consummated on the terms and subject to the conditions set forth in this Agreement) in the courts described in Section 5.07 without proof of damages or otherwise (in each case, subject to the terms and conditions of this Section 5.08), this being in addition to any other remedy to which they are entitled under this Agreement and (b) the right of specific enforcement is an integral part of the Transactions and without that right, neither the Company nor the Investors would have entered into this Agreement. The parties hereto agree not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to Law or inequitable for any reason, and agree not to assert that a remedy of monetary damages would provide an adequate remedy or that the parties otherwise have an adequate remedy at law. The parties hereto acknowledge and agree that any party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 5.08 shall not be required to provide any bond or other security in connection with any such order or injunction.

 

 

Section 5.09           WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ACTION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH WAIVER VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 5.09.

 

Section 5.10           Notices. All notices, requests and other communications to any party hereunder shall be in writing and shall be deemed given if delivered personally, emailed (which is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses:

 

(a)  If to the Company, to it at:

 

BrightView Holdings, Inc.

980 Jolly Road

Blue Bell, PA 19422
Attention: Jonathan Gottsegen

 

Email: Jonathan.Gottsegen@brightview.com

 

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

Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
Attention:

Ravi Purushotham
Johanna Mayer

 

Email:

 

rpurushotham@stblaw.com
johanna.mayer@stblaw.com

 

 

(b)  If to the Investors or any Investor Party at:

 

c/o One Rock Capital Management, LLC

45 Rockefeller Plaza, 39^th Floor

New York, NY 10111

Attention: Tony Lee; Scott Spielvogel; Josh Goldman

Facsimile: (212) 605-6099

Email: tlee@onerockcapital.com; sspielvogel@onerockcapital.com; jgoldman@onerockcapital.com

 

With copies (which shall not constitute notice) to:

 

Latham & Watkins LLP

1271 Avenue of the Americas

New York, New York 10020

Attention: Alexander B. Johnson and Javier Stark

Facsimile: (212) 751-4864

Email: alex.johnson@lw.com and javier.stark@lw.com

 

or such other address or email address as such party may hereafter specify by like notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of actual receipt by the recipient thereof if received prior to 5:00 p.m. local time in the place of receipt and such day is a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.

 

Section 5.11           Severability. If any term, condition or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other terms, provisions and conditions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term, condition or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable Law.

 

Section 5.12           Expenses. The Investor Parties shall be entitled to receive reimbursement for all reasonable and documented out-of-pocket costs and expenses of the Investor Parties, including fees and disbursements of counsel, financial advisors and accountants, incurred through the Closing in connection with this Agreement and the Transactions that are invoiced to the Company promptly following the Closing Date, up to a maximum amount of $2,000,000 in the aggregate. Investor Parties shall reimburse the Company and its Subsidiaries for (i) all reasonable and documented out-of-pocket costs and expenses of the Company, including fees and disbursements of counsel, incurred in connection with issuing the Acquired Shares or underlying Common Stock through the facilities of DTC or facilitating the resale of the Acquired Securities or underlying Common Stock pursuant to Rule 144A, up to a maximum amount of $250,000 in the aggregate and (ii) for 50% of any fees payable by the Company or any of its Subsidiaries to any lenders under the Existing Credit Agreement in connection with entering into the seventh (7^th) amendment thereto, the maximum amount of which fees were disclosed to the Investor Parties prior to the date hereof. Except as otherwise expressly provided herein, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such costs and expenses.

 

 

Section 5.13           Interpretation. (a) When a reference is made in this Agreement to an Article, a Section, Exhibit or Schedule, such reference shall be to an Article of, a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement unless the context requires otherwise. The terms “or”, “any” and “either” are not exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. The words “made available to the Investors” and words of similar import refer to documents delivered in Person or electronically to an Investor Party or its Representatives in each case no later than one (1) Business Day prior to the date of this Agreement. All accounting terms used and not defined herein shall have the respective meanings given to them under GAAP. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. Unless otherwise specifically indicated, all references to “dollars” or “$” shall refer to the lawful money of the United States. References to a Person are also to its permitted assigns and successors. When calculating the period of time between which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded (and unless, otherwise required by Law, if the last day of such period is not a Business Day, the period in question shall end on the next succeeding Business Day).

 

(b)           The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party hereto by virtue of the authorship of any provision of this Agreement.

 

 

Section 5.14           Investor Representative. Each Investor Party hereby consents to and authorizes (a) the appointment of Birch-OR Holdings as the Investor Representative hereunder (the “Investor Representative”) and as the attorney-in-fact for and on behalf of such Investor Party, and (b) the taking by the Investor Representative of any and all actions and the making of any decisions required or permitted by, or with respect to, this Agreement and the Transactions, including (i) the exercise of the power to agree to execute any consents under this Agreement and (ii) to take all actions necessary in the judgment of the Investor Representative for the accomplishment of the foregoing and all of the other terms, conditions and limitations of this Agreement and the Transactions. Each Investor Party shall be bound by the actions taken by the Investor Representative exercising the rights granted to it by this Agreement, and the Company shall be entitled to rely on any such action or decision of the Investor Representative. If the Investor Representative shall resign or otherwise be unable to fulfill its responsibilities hereunder, the Investor Parties shall appoint a new Investor Representative as soon as reasonably practicable by written consent of holders of a majority of the then outstanding Series A Preferred Stock and/or shares of Common Stock that were issued upon conversion of shares of Series A Preferred Stock beneficially owned by the Investors or Investor Parties that are successors or assigns of the Investors by sending notice and a copy of the duly executed written consent appointing such new Investor Representative to the Company.

 

Article VI

 

Definitions

 

Section 6.01           Definitions.

 

(a)           As used in this Agreement (including the recitals hereto), the following terms shall have the following meanings:

 

“10% Beneficial Ownership Requirement” means that the Investor Parties beneficially own shares of Series A Preferred Stock and/or shares of Common Stock that were issued upon the conversion of such Series A Preferred Stock that, collectively, represent in the aggregate and on an as converted basis, at least 10% of the number (to be adjusted proportionately for stock dividends, stock splits and combinations, and similar transactions that occur after the Closing) of shares of Common Stock that were beneficially owned by the Investor Parties, on an as converted basis (but disregarding any limitations on conversion), as of the Closing as a result of the Investor Parties’ acquisition of 500,000 shares of Series A Preferred Stock.

 

“20% Beneficial Ownership Requirement” means that the Investor Parties beneficially own shares of Series A Preferred Stock and/or shares of Common Stock that were issued upon the conversion of such Series A Preferred Stock that, collectively, represent in the aggregate and on an as converted basis, at least 20% of the number (to be adjusted proportionately for stock dividends, stock splits and combinations, and similar transactions that occur after the Closing) of shares of Common Stock that were beneficially owned by the Investor Parties, on an as converted basis (but disregarding any limitations on conversion), as of the Closing as a result of the Investor Parties’ acquisition of 500,000 shares of Series A Preferred Stock.

 

“60% Beneficial Ownership Requirement” means that the Investor Parties beneficially own shares of Series A Preferred Stock and/or shares of Common Stock that were issued upon the conversion of such Series A Preferred Stock that, collectively, represent in the aggregate and on an as converted basis, at least 60% of the number (to be adjusted proportionately for stock dividends, stock splits and combinations, and similar transactions that occur after the Closing) of shares of Common Stock that were beneficially owned by the Investor Parties, on an as converted basis (but disregarding any limitations on conversion), as of the Closing as a result of the Investor Parties’ acquisition of 500,000 shares of Series A Preferred Stock.

 

 

“Activist Shareholder” means, as of any date of determination, a Person (other than the Investors and their Affiliates) that has, directly or indirectly through its Affiliates, whether individually or as a member of a “group” (as defined in Section 13(d)(3) of the Exchange Act), within the three-year period immediately preceding such date of determination (i) called or publicly sought to call a meeting of the stockholders or other equityholders of any Person not publicly approved (at the time of the first such action) by the board of directors or similar governing body of such Person, (ii) publicly initiated any proposal for action by stockholders or other equityholders of any Person initially publicly opposed by the board of directors or similar governing body of such Person, (iii) publicly sought election to, or to place a director or representative on, the board of directors or similar governing body of a Person, or publicly sought the removal of a director or other representative from such board of directors or similar governing body, in each case which election or removal was not recommended or approved publicly (at the time such election or removal is first sought) by the board of directors or governing body of such Person or (iv) publicly disclosed any intention, plan or arrangement to do any of the foregoing.

 

“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person; provided, however, (i) that the Company and its Subsidiaries, on the one hand, and any Investor Party or any of its Affiliates, on the other hand, shall not be deemed to be Affiliates, (ii) “portfolio companies” (as such term is customarily used among institutional investors) in which any Investor Party or any of its Affiliates has an investment (whether as debt or equity) shall not be deemed an Affiliate of such Investor Party and (iii) the Excluded Sponsor Parties shall not be deemed to be Affiliates of any Investor Party, the Company or any of the Company’s Subsidiaries. For this purpose, “control” (including its correlative meanings, “controlling”, “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, by Contract or otherwise.

 

“Anti-Money Laundering Laws” means anti-money laundering-related laws, regulations, and codes of practice applicable to the Company and its Subsidiaries and their operations from time to time, including without limitation the EU Anti-Money Laundering Directives and any laws, decrees, administrative orders, circulars, or instructions implementing or interpreting the same.

 

“as converted basis” means (i) with respect to the outstanding shares of Common Stock as of any date, all outstanding shares of Common Stock calculated on a basis in which all shares of Common Stock issuable upon conversion of the outstanding shares of Series A Preferred Stock (at the Conversion Rate in effect on such date as set forth in the Certificate of Designations) are assumed to be outstanding as of such date and (ii) with respect to any outstanding shares of Series A Preferred Stock as of any date, the number of shares of Common Stock issuable upon conversion of such shares of Series A Preferred Stock on such date (at the Conversion Rate in effect on such date as set forth in the Certificate of Designations).

 

 

“Available Registration Statement” shall mean, with respect to a Registration Statement as of a date, that (i) as of such date such Registration Statement is effective for an offering to be made on a delayed or continuous basis, there is no stop order with respect thereto and the Company reasonably believes that such Registration Statement will be continuously available for the resale of Registrable Securities for the next ten (10) Business Days and (ii) as of such date and continuously for the next ten (10) Business Days, (a) there is not in effect a Postponement Period or Quarterly Blackout Period (as each such term is defined in the Registration Rights Agreement) and (b) the Investor Parties are not restricted by the holdback provision of Section 10(a) of the Registration Rights Agreement or any related “lock-up” agreement.

 

Any Person shall be deemed to “beneficially own”, to have “beneficial ownership” of, or to be “beneficially owning” any securities (which securities shall also be deemed “beneficially owned” by such Person) that such Person is deemed to “beneficially own” within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act; provided that any Person shall be deemed to beneficially own any securities that such Person has the right to acquire, whether or not such right is exercisable immediately (including assuming conversion of all Series A Preferred Stock, if any, owned by such Person to Common Stock).

 

“Birch Holdings” has the meaning set forth in the Preamble.

 

“Birch-OR Holdings” has the meaning set forth in the Preamble.

 

“Board” means the Board of Directors of the Company.

 

“Business Day” means any day except a Saturday, a Sunday or other day on which the SEC or banks in the City of New York are authorized or required by Law to be closed with respect to the provision of “essential services” (as defined by any applicable Governmental Authority from time to time).

 

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

 

“Common Stock” means the common stock, par value $0.01 per share, of the Company.

 

“Company Charter Documents” means the Company’s certificate of incorporation and bylaws, each as amended to the date of this Agreement, and shall include the Certificate of Designations, as filed with the Secretary of State of the State of Delaware.

 

“Company Plan” means each plan, program, policy, agreement or other arrangement covering current or former employees, directors or consultants, that is (i) an employee welfare plan within the meaning of Section 3(1) of ERISA, (ii) an employee pension benefit plan within the meaning of Section 3(2) of ERISA, other than any plan which is a “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA), (iii) a stock option, stock purchase, stock appreciation right or other stock-based agreement, program or plan, (iv) an individual employment, consulting, severance, retention or other similar agreement or (v) a bonus, incentive, deferred compensation, profit-sharing, retirement, post-retirement, vacation, severance or termination pay, benefit or fringe-benefit plan, program, policy, agreement or other arrangement, in each case that is sponsored, maintained or contributed to by the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is obligated to contribute to or has or may have any liability, whether absolute or contingent, other than any plan, program, policy, agreement or arrangement sponsored and administered by a Governmental Authority.

 

 

“Company Performance Stock Option” means an option to purchase shares of Common Stock that was granted subject to performance-based vesting conditions.

 

“Company PSA” means an unvested restricted share of Common Stock that was granted subject to performance-based vesting conditions.

 

“Company PSU” means a restricted stock unit with respect to Common Stock that was granted subject to performance-based vesting conditions.

 

“Company RSA” means an unvested restricted share of Common Stock, other than a Company PSA.

 

“Company RSU” means a restricted stock unit with respect to Common Stock, other than a Company PSU.

 

“Company Stock Option” means an option to purchase shares of Common Stock, other than a Company Performance Stock Option.

 

“Company Stock Plans” means the Company’s 2018 Employee Stock Purchase Plan and the Company’s 2018 Omnibus Incentive Plan, in each case as amended from time to time.

 

“Conversion Rate” has the meaning set forth in the Certificate of Designations.

 

“DGCL” means the Delaware General Corporation Law, as amended, supplemented or restated from time to time.

 

“Direct Competitor” means (i) any Person that is primarily engaged in any business that directly or indirectly competes with the business of the Company or any of its Subsidiaries of providing landscape and snow and ice services to customers throughout the United States and abroad, including landscape and sports turf design, construction, maintenance, and enhancement, tree care, water management and irrigation, and snow and ice removal and management or (ii) any Person that owns and controls any Person referenced in the foregoing clause (i).

 

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

 

 

“ERISA Affiliate” means any Person or trade or business (whether or not incorporated) that is, or has been within the last six (6) years, treated as a single employer with the Company or any of its Subsidiaries under Section 414 of the Code or Section 4001 of ERISA.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Existing Credit Agreement” means the Credit Agreement, dated as of December 18, 2013, by and among the Company, BrightView Landscapes, LLC and the lenders or other financial institutions or entities from time to time party thereto and JPMorgan Chase Bank, N.A., as successor Administrative Agent and Collateral Agent, as amended.

 

“Export Control Laws” means the EC Regulation 428/2009 and the implementing laws and regulations of the EU member states; the U.S. Export Administration Act, U.S. Export Administration Regulations, U.S. Arms Export Control Act, U.S. International Traffic in Arms Regulations, and their respective implementing rules and regulations; the U.K. Export Control Act 2002 (as amended and extended by the Export Control Order 2008) and its implementing rules and regulations; and other similar export control laws or restrictions applicable to the Company, its Subsidiaries and their respective operations from time to time.

 

“First Fall-Away of Investors Board Rights” means the first day on which the 60% Beneficial Ownership Requirement is no longer satisfied.

 

“Fraud” means actual, not constructive, common law fraud (under the laws of the State of Delaware) in the making of the representations and warranties expressly given in this Agreement.

 

“GAAP” means generally accepted accounting principles, as in effect in the United States from time to time.

 

“Governmental Authority” means any government, court, regulatory or administrative agency, commission, arbitrator or authority or other legislative, executive or judicial governmental official or entity (in each case including any self-regulatory organization), whether federal, state or local, domestic, foreign or multinational.

 

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

 

“HSR Associate” has the meaning set forth in 16 CFR 801.1(d)(2).

 

“Investor” has the meaning set forth in the Preamble. Any reference to any action by the Investor Parties in this Agreement that requires an instrument in writing signed by the Investor Parties shall require an instrument in writing signed by each Investor, so long as they are the sole Investor Parties, or each of the Investor Parties; provided that an instrument in writing signed by the Investor Representative shall be deemed to be an instrument in writing signed by each of the Investor Parties.

 

 

“Investor Designees” means the individuals designated in writing by the Investor Parties and reasonably acceptable to the Board (and the Nominating and Corporate Governance Committee of the Board) to be elected or nominated by the Company for election to the Board pursuant to Section 4.09; provided, that any employee of Sponsor with the title of ”Partner” or employee or independent contractor with the title of “Operating Partner” will be deemed reasonably acceptable to the Board (and the Nominating and Corporate Governance Committee of the Board).

 

“Investor Director” means a member of the Board who was elected to the Board as an Investor Designee.

 

“Investor Material Adverse Effect” means any effect, change, event or occurrence that, individually or in the aggregate, would or would reasonably be expected to, prevent, materially delay, interfere with, hinder or impair (i) the consummation by the Investors of any of the Transactions or (ii) the compliance by the Investors with their obligations under this Agreement.

 

“Investor Parties” means the Investors and each Permitted Transferee of each Investor to whom shares of Series A Preferred Stock or Common Stock issued upon conversion of shares of Series A Preferred Stock are transferred pursuant to Section 4.07(b)(i).

 

“Knowledge” means, with respect to the Company, the actual knowledge of the individuals listed on Section 1.01 of the Company Disclosure Letter, after reasonable inquiry of an officer or employee of the Company that has primary responsibility for such matter.

 

“Liens” means any mortgage, pledge, lien, charge, encumbrance, security interest or other restriction of any kind or nature, whether based on common law, statute or contract.

 

“Lock-Up Period” means the period commencing on the Closing Date and ending on the twelve-month anniversary of the Closing Date.

 

“Material Adverse Effect” means any effect, change, event or circumstance that, individually or in the aggregate, has had, or would reasonably be expected to (i) have a material adverse effect on the business, assets, properties, financial condition or results of operation of the Company and its Subsidiaries, taken as a whole; provided, however, that any changes or events resulting from the following items shall not be considered when determining whether a Material Adverse Effect has occurred: (a) changes in economic, political, regulatory, financial or capital market conditions generally or in the industries in which the Company and its Subsidiaries operate, (b) any acts of war, sabotage, terrorist activities or changes imposed by a Governmental Authority associated with national security, (c) effects of epidemics, pandemics or disease outbreaks (including the COVID-19 virus) or weather or meteorological events, (d) any change of Law, accounting standards, regulatory policy or industry standards after the date of this Agreement, (e) the announcement, execution or delivery of this Agreement or the consummation of the Transactions (it being understood that this clause (e) shall not apply to a breach of any representation or warranty set forth in Section 3.01 or Section 3.03), (f) any actions taken by, or at the written request of, the Investors or the Investor Parties and (g) any failure by the Company to meet projections or forecasts or revenue or earnings predictions for any period (but, for the purposes of clarity, not the underlying cause of such failure), except, solely with respect to clauses (a), (b), (c) and (d), to the extent the Company and its Subsidiaries, taken as a whole, are materially and disproportionately affected thereby relative to other participants in the industry or industries in which the Company and its Subsidiaries operate (in which case only the incremental material and disproportionate effect or effects may be taken into account in determining whether there has been a Material Adverse Effect) or (ii) prevent or materially delay, interfere with, hinder or impair (a) the consummation by the Company or its Subsidiaries of any of the Transactions on a timely basis or (b) the compliance by the Company or its Subsidiaries with its respective obligations under this Agreement.

 

 

“NYSE” means the New York Stock Exchange.

 

“Permitted Transferee” means with respect to an Investor (i) an Affiliate (other than any “portfolio company” described below) of such Investor, (ii) any successor entity, or (iii) any investment fund, vehicle, holding company or similar entity for separately managed accounts with respect to which a member of the Sponsor Group serves as a general partner, managing member, manager or advisor, or any successor entity of the Persons described in this clause (iii); provided, however, that in no event shall (i) the Company or any of its Subsidiaries, (ii) any “portfolio company” (as such term is customarily used among institutional investors) of any Person or any entity controlled by any portfolio company of any Person or (iii) any Prohibited Transferee (whether or not an Affiliate of either Investor) constitute a “Permitted Transferee”.

 

“Person” means any individual, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof, any other form of entity or any group comprised of two or more of the foregoing.

 

“Prohibited Transferee” means (i) any Direct Competitor and (ii) any Activist Shareholder.

 

“Registrable Securities” has the meaning set forth in the Registration Rights Agreement.

 

“Registration Rights Agreement” means that certain Registration Rights Agreement to be entered into by the Company and the Investors on the Closing Date, set forth as Exhibit B hereto, as it may be amended, supplemented or otherwise modified.

 

“Registration Statement” has the meaning set forth in the Registration Rights Agreement.

 

“Representatives” means, with respect to any Person, its officers, directors, principals, partners, managers, members, employees, consultants, agents, financial advisors, investment bankers, attorneys, accountants, other advisors and other representatives.

 

“SEC” means the Securities and Exchange Commission.

 

“Second Fall-Away of Investors Board Rights” means the first day on which the 20% Beneficial Ownership Requirement is no longer satisfied.

 

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Sponsor” means One Rock Capital Partners, LLC.

 

“Subsidiary” means with respect to any entity, (i) any corporation of which a majority of the securities entitled to vote generally in the election of directors thereof, at the time as of which any determination is being made, are owned by such entity, either directly or indirectly, and (ii) any joint venture, general or limited partnership, limited liability company or other legal entity in which such entity is the record or beneficial owner, directly or indirectly, of a majority of the voting interests or the general partner.

 

“Tax” or “Taxes” mean all taxes, imposts, levies, duties, deductions, withholdings (including backup withholding), assessments, fees or other like assessments or charges, in each case in the nature of a tax, imposed by a Governmental Authority, together with all interest, penalties and additions imposed with respect to such amounts.

 

“Tax Return” means any report, return, information return, filing, claim for refund or other information filed or required to be filed with a Governmental Authority in connection with Taxes, including any schedules or attachments thereto, and any amendments to any of the foregoing.

 

“Transaction Documents” means this Agreement, the Certificate of Designations, the Registration Rights Agreement, and all other documents, certificates or agreements executed in connection with the transactions contemplated by this Agreement, the Certificate of Designations, and the Registration Rights Agreement.

 

“Transactions” means the Purchase and the other transactions expressly contemplated by this Agreement and the other Transaction Documents, including the exercise by any Investor Party of the right to convert Acquired Shares into shares of Common Stock.

 

“Transfer” means, directly or indirectly, to sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition of, any shares of equity securities beneficially owned by a Person or any interest in any shares of equity securities beneficially owned by a Person; provided, however, that, notwithstanding anything to the contrary in this Agreement, a Transfer shall not include (i) the conversion of one or more shares of Series A Preferred Stock into shares of Common Stock pursuant to the Certificate of Designations, (ii) the redemption or other acquisition of Common Stock or Series A Preferred Stock by the Company, (iii) the direct or indirect transfer of any limited partnership interests or other equity interests in an Investor Party (or any direct or indirect parent entity of such Investor Party) (provided that if any transferor or transferee referred to in this clause (iii) ceases to be controlled (directly or indirectly) by the Person (directly or indirectly) controlling such Person immediately prior to such transfer, such event shall be deemed to constitute a “Transfer”) or (iv) any Hedge. In the event that any Person that is a corporation, partnership, limited liability company or other legal entity (other than an individual, trust or estate) ceases to be controlled by the Person controlling such Person or a Permitted Transferee thereof, such event shall be deemed to constitute a “Transfer” subject to the restrictions on Transfer contained or referenced herein.

 

 

“Voting Condition” has the meaning set forth in the Certificate of Designations.

 

(b)           In addition to the terms defined in Section 6.01(a), the following terms have the meanings assigned thereto in the Sections set forth below:

 

Term	Section
Acquired Shares	Section 1.01(b)(ii)
Action	Section 2.07
Agreement	Preamble
Balance Sheet Date	Section 2.05(c)
Bankruptcy and Equity Exception	Section 2.03(a)
Capitalization Date	Section 2.02(a)
Certificate of Designations	Preamble
Closing	Section 1.01(a)
Closing Date	Section 1.01(a)
Company	Preamble
Company Disclosure Letter	Article II
Company Preferred Stock	Section 2.02(a)
Company SEC Documents	Section 2.05(a)
Company Securities	Section 2.02(b)
Confidential Information	Section 4.04
Confidentiality Agreement	Section 4.04
Contract	Section 2.03(b)
DOJ	Section 4.01(b)
Excluded Sponsor Parties	Section 4.13(a)
Filed SEC Documents	Article II
Foreclosure Limitations	Section 4.07(b)(vi)
FTC	Section 4.01(b)
Hedge	Section 4.07(a)
HSR Form	Section 4.01(a)
Information Statement	Section 4.19
IRS	Section 4.11
Issuer Agreement	Section 4.15
Judgments	Section 2.07
KKR Stockholder Approval	Recitals
Laws	Section 2.08(a)
Multiemployer Plan	Section 2.19
Non-Recourse Party	Section 5.06(b)
OFAC	Section 2.08(c)
Permitted Loan	Section 4.07(b)(vi)
Permits	Section 2.08(a)
Purchase	Section 1.01(b)(ii)

 

 

Purchase Price	Section 1.01(b)(ii)
Sponsor Group	Section 4.13(a)
Standstill Expiration Date	Section 4.06
Tax Requirement Form	Section 4.11

 

[Remainders of page intentionally left blank]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written.

 

	Brightview holdings, inc.:
	By:	/s/ James Abrahamson
		Name:	James Abrahamson
		Title:	President and Chief Executive Officer

 

[Signature Page to Investment Agreement]

 

 

	BIRCH Equity Holdings, lp:
	By: Birch Equity Holdings GP LLC
	Its:  General Partner
	By: ORCP GP Professionals, LLC
	Its: Sole Member
	By:	/s/ Tony W. Lee
		Name:	Tony W. Lee
		Title:	Secretary and Treasurer
	BIRCH-OR Equity HOLDINGS, LLC:
	By:	/s/ Tony W. Lee
		Name:	Tony W. Lee
		Title:	Secretary and Treasurer

 

 

Exhibit A

 

Certificate of Designations

 

[Certificate of Designations to be provided separately]

 

 

Exhibit B

 

Registration Rights Agreement

 

[Registration Rights Agreement to be provided separately]

 

 

Exhibit 10.2

 

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT, dated as of August 28, 2023 (the “Agreement”), by and among BrightView Holdings, Inc., a Delaware corporation (the “Company”), and the Investors (as defined below). The Investors and any other party that may become a party hereto pursuant to Section 10(c) are referred to collectively as the “Stockholders” and individually each as a “Stockholder.”

 

RECITALS

 

WHEREAS, the Company and the Investors are parties to the Investment Agreement, dated as of August 28, 2023 (as amended from time to time, the “Investment Agreement”), pursuant to which the Company is selling to the Investors, and the Investors are purchasing from the Company, an aggregate of 500,000 shares of Series A Preferred Stock (the “Series A Preferred Stock”), which is convertible into shares of Common Stock;

 

WHEREAS, as a condition to the obligations of the Company and the Investors under the Investment Agreement, the Company and the Investors are entering into this Agreement for the purpose of granting certain registration and other rights to the Stockholders.

 

NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual promises hereinafter set forth, the parties hereto agree as follows:

 

AGREEMENT

 

1.             Definitions. As used in this Agreement, the following capitalized terms shall have the following respective meanings:

 

“Adverse Disclosure” means public disclosure of material non-public information that, in the good faith judgment of the Company (after consultation with external legal counsel): (i) would be required to be made in any Registration Statement or report filed with the SEC by the Company so that such registration statement would not contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading; (ii) would not be required to be made at such time but for the filing, effectiveness or continued use of such Registration Statement; and (iii) the Company has a bona fide business purpose for not disclosing publicly.

 

“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person. For this purpose, “control” (including its correlative meanings, “controlling”, “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.

 

“as converted basis” means (i) with respect to the outstanding shares of Common Stock as of any date, all outstanding shares of Common Stock calculated on a basis in which all shares of Common Stock issuable upon conversion of the outstanding shares of Series A Preferred Stock (at the Conversion Rate in effect on such date as set forth in the Certificate of Designations) are assumed to be outstanding as of such date and (ii) with respect to any outstanding shares of Series A Preferred Stock as of any date, the number of shares of Common Stock issuable upon conversion of such shares of Series A Preferred Stock on such date (at the Conversion Rate in effect on such date as set forth in the Certificate of Designations).

 

 

“Business Day” or “business day” means any day except a Saturday, a Sunday or other day on which the SEC or banks in the City of New York are authorized or required by law to be closed.

 

“Certificate of Designations” means the Certificate of Designations setting forth voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions of the Series A Preferred Stock, dated as of the date hereof.

 

“Charitable Gifting Event” means any transfer by a Holder of Registrable Securities, or any subsequent transfer by such Holder’s members, partners or other employees, in connection with a bona fide gift to any Charitable Organization made in connection with sales of Registrable Securities by a Holder pursuant to an effective registration statement.

 

“Charitable Organization” means a charitable organization as described by Section 501(c)(3) of the Internal Revenue Code of 1986, as in effect from time to time.

 

“Common Stock” means all shares currently or hereafter existing of the Company’s common stock, par value $0.01 per share.

 

“Conversion Rate” has the meaning set forth in the Certificate of Designations.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor statute thereto and the rules and regulations of the SEC promulgated thereunder.

 

“FINRA” means the Financial Industry Regulatory Authority, Inc.

 

“Holdback Period” means the period commencing on the date of an underwriters’ request (which shall be no earlier than four Business Days prior to the expected “pricing” of the related underwritten offering) and continuing for not more than 90 calendar days after the date of the final prospectus (or final prospectus supplement if the offering is made pursuant to a shelf registration), pursuant to which such underwritten offering shall be made, or such lesser period as is required by such underwriters (which shall also apply equally to all Holders).

 

“Holder” means any Stockholder holding Registrable Securities.

 

“Investors” has the meaning set forth in the Investment Agreement, together with its successors and assigns.

 

“KKR” means KKR BrightView Aggregator L.P. and each of its Permitted Transferees (as defined in the Second Amended and Restated Limited Partnership Agreement of BrightView Parent L.P., as amended).

 

“Lock-Up Period” has the meaning set forth in the Investment Agreement.

 

 

“NYSE” means the New York Stock Exchange.

 

“Person” means any individual, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivisions thereof or any group comprised of two or more of the foregoing.

 

“Prospectus” means the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such prospectus.

 

“register”, “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement or the automatic effectiveness of such registration statement, as applicable.

 

“Registrable Securities” means, as of any date of determination, any shares of Series A Preferred Stock issued pursuant to the Investment Agreement and any shares of Common Stock issued pursuant to the conversion of any shares of Series A Preferred Stock, and any other securities issued or issuable with respect to any such shares of Common Stock or Series A Preferred Stock by way of share split, share dividend, distribution, recapitalization, merger, exchange, replacement or similar event or otherwise.

 

As to any particular Registrable Securities, once issued, such securities shall cease to be Registrable Securities when (i) they are sold pursuant to an effective Registration Statement under the Securities Act, (ii) they are sold pursuant to Rule 144 (or other exemption from registration under the Securities Act following which such securities cease to be a “restricted security” within the meaning of Rule 144), (iii) in the case of any shares of Common Stock held by a Holder, all shares of Common Stock held by such Holder, on an as converted basis, constitute less than 1% of all outstanding shares of Common Stock and may be sold by such Holder pursuant to, and in accordance with, subsection (b)(1) of Rule 144 without any limitations as to volume, manner of sale, availability of current public information or notice, (iv) they shall have ceased to be outstanding or (v) they have been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned to the transferee of the securities.

 

“Registration Statement” means any registration statement of the Company filed with the SEC under the Securities Act which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

 

“Rule 144” means Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.

 

 

“SEC” means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act or the Exchange Act.

 

“Securities Act” means the Securities Act of 1933, as amended, and any successor statute thereto and the rules and regulations of the SEC promulgated thereunder.

 

2.             Incidental Registrations.

 

(a)             Right to Include Registrable Securities. If, following the expiration of the Lock-Up Period, the Company proposes to register its Common Stock under the Securities Act (other than pursuant to a Registration Statement filed by the Company on Form S-4 or S-8, or any successor or other forms promulgated for similar purposes or filed solely in connection with an exchange offer or any employee benefit or dividend reinvestment plan), whether or not for sale for its own account, in a manner which would permit registration of Registrable Securities for sale to the public under the Securities Act, it will, at each such time, give prompt written notice to all Holders of Registrable Securities of its intention to do so and of such Holders’ rights under this Section 2. Upon the written request of any such Holder made within seven calendar days after the receipt of any such notice (which request shall specify the Registrable Securities intended to be disposed of by such Holder), the Company will use its reasonable best efforts to effect the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register by the Holders thereof, to the extent required to permit the disposition of the Registrable Securities so to be registered; provided that (i) if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the Registration Statement filed in connection with such registration, the Company shall determine for any reason not to proceed with the proposed registration of the securities to be sold thereunder, the Company may, at its election, give written notice of such determination to each Holder of Registrable Securities and, thereupon, shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the registration expenses pursuant to Section 7 hereof in connection therewith), without prejudice to the rights of the Holders of Registrable Securities to request that such registration be effected as a registration under Section 3, and (ii) if such registration involves an underwritten offering, all Holders of Registrable Securities requesting to be included in the Company’s registration and to participate in the underwritten offering must sell their Registrable Securities to the underwriters selected by the Company on the same terms and conditions as apply to the Company, with such differences, including any with respect to indemnification and liability, as are customary in combined primary and secondary offerings by the Company and such Holders. If a registration requested pursuant to this Section 2(a) involves an underwritten public offering, any Holder of Registrable Securities requesting to be included in such registration may elect, in writing at least two business days prior to the effective date of the Registration Statement filed in connection with such registration or, in the case of a takedown from a Shelf Registration Statement, prior to the launch of such takedown, not to register such securities in connection with such registration. The Company shall not be required to maintain the effectiveness of the Registration Statement for a registration requested pursuant to this Section 2(a) beyond the earlier to occur of (i) 180 calendar days after the effective date thereof and (ii) consummation of the distribution by the Holders of the Registrable Securities included in such Registration Statement. Any Holder of Registrable Securities who has elected to sell Registrable Securities in an offering pursuant to this Section 2 shall be permitted to withdraw from such registration by written notice to the Company if the price to the public at which the Registrable Securities are proposed to be sold will be less than 90% of the average closing price of the class of stock being sold in the offering during the 10 trading days preceding the date on which the notice of such offering was given pursuant to this Section 2(a).

 

 

(b)             Priority in Incidental Registrations. The Company shall use reasonable efforts to cause the managing underwriter or underwriters of a proposed underwritten offering to permit Holders of Registrable Securities who have requested to include Registrable Securities in such offering to include in such offering all Registrable Securities so requested to be included on the same terms and conditions as any other shares of capital stock, if any, of the Company included in the offering. Notwithstanding the foregoing, but subject in all respects to Section 4, if the managing underwriter or underwriters of such underwritten offering have informed the Company in writing that it is their good faith opinion that the total amount of securities that are intended to be included in such offering is such as to adversely affect the success of such offering (including adversely affect the per-share offering price), then the amount of securities to be offered shall be reduced to the amount recommended by such managing underwriter or underwriters in its or their good faith opinion, which will be allocated in the following order of priority: (i) first, the securities to be proposed to be sold by the Company for its own account, (ii) second, the Registrable Securities of the Investors, (iii) third, the Registrable Securities of the Holders other than the Investors that have requested to participate in such underwritten offering, allocated pro rata among such Holders on the basis of the percentage of the Registrable Securities requested to be included in such underwritten offering by such Holders and (iv) fourth, for the account of any other holders of Common Stock that have requested to be included in such underwritten offering as a result of registration rights or otherwise.

 

3.             Registration on Request.

 

(a)             Request by the Demand Party. Subject to the following paragraphs of this Section 3(a), each Holder shall have the right, by delivering a written notice to the Company, to require the Company to register, at any time following the expiration of the Lock-Up Period and pursuant to the terms of this Agreement, under and in accordance with the provisions of the Securities Act, the number of Registrable Securities of such Holder requested to be so registered pursuant to the terms of this Agreement (any such written notice, a “Demand Notice,” any such registration, a “Demand Registration” and any such Holder, a “Demand Party”); provided, however, that a Demand Notice may only be made if the sale of the Registrable Securities requested to be registered by such Holder is reasonably expected to result in aggregate gross cash proceeds in excess of $75,000,000 (without regard to any underwriting discount or commission); provided, further, that the Company shall not be obligated to file a registration statement relating to any registration request under this Section 3(a), (i) to the extent such Registrable Securities have already been registered pursuant to another Registration Statement including a Shelf Registration Statement, (ii) within the period (the “Quarterly Blackout Period”) commencing 14 calendar days prior to and ending two calendar days following the Company’s scheduled earnings release for any fiscal quarter or year (or such shorter period as may be specified by the Company’s insider trading policy as applicable to Company employees generally) or (iii) within a period of 75 calendar days after the effective date of any other registration statement relating to any registration request under this Section 3(a); provided, further, that nothing in this Section 3(a) or elsewhere herein shall be construed as limiting the frequency by which a Holder may effect a Shelf Underwritten Offering or Non-Underwritten Shelf Take-Down pursuant to Section 3(f). Following receipt of a Demand Notice for a Demand Registration in accordance with this Section 3(a), the Company shall use its reasonable best efforts to file a Registration Statement as promptly as practicable within 10 calendar days and shall use its reasonable best efforts to cause such Registration Statement to become effective under the Securities Act as promptly as practicable after the filing thereof.

 

 

No Demand Registration shall be deemed to have occurred for purposes of this Section 3 if (i) the Registration Statement relating thereto (x) does not become effective, (y) is not maintained effective for the period required pursuant to this Section 3 or (z) the offering of the Registrable Securities pursuant to such Registration Statement is subject to a stop order, injunction, or similar order or requirement of the SEC during such period, in which case, such requesting Holder of Registrable Securities shall be entitled to an additional Demand Registration in lieu thereof, (ii) more than 90% of the Registrable Securities requested by the Demand Party to be included in the registration are not so included pursuant to Section 3(b) or (iii) in the case of a Demand Registration for an underwritten offering, the conditions to closing specified in any underwriting agreement, purchase agreement or similar agreement entered into in connection with the registration relating to such request are not satisfied (other than as a result of a material default or breach thereunder by such Demand Party) or otherwise waived by such Demand Party; provided that the Company’s obligation to pay the registration expenses pursuant to Section 7 hereof in connection therewith shall still apply.

 

Subject in all respects to Section 4, as promptly as practicable within two calendar days after receipt by the Company of a Demand Notice in accordance with this Section 3(a), the Company shall give written notice (the “Demand Follow-up Notice”) of such Demand Notice to all other Holders of Registrable Securities and shall, subject to the provisions of Section 3(b) hereof, include in such registration all Registrable Securities with respect to which the Company received written requests for inclusion therein within five calendar days after such Demand Follow-up Notice is given by the Company to such Holders, provided that the Company shall not provide a Demand Follow-up Notice to any other Holder of Registrable Securities or holder of the Company’s equity securities in the case of a sale of Registrable Securities by either Investor to one or several purchasers pursuant to a Shelf Underwritten Offering by means of a bought deal, a block trade or a similar transaction that is an underwritten offering (a “Block Sale”).

 

All requests made pursuant to this Section 3 will specify the number of Registrable Securities to be registered and the intended methods of disposition thereof.

 

The Company shall be required to maintain the effectiveness of the Registration Statement with respect to any Demand Registration for a period of at least 180 calendar days after the effective date thereof or such shorter period during which all Registrable Securities included in such Registration Statement have actually been sold; provided, however, that such period shall be extended for a period of time equal to the period the Holder of Registrable Securities refrains from selling any securities included in such Registration Statement at the request of the Company or an underwriter of the Company pursuant to the provisions of this Agreement.

 

 

(b)             Priority on Demand Registration. Subject in all respects to Section 4, if any of the Registrable Securities registered pursuant to a Demand Registration are to be sold in a firm commitment underwritten offering, and the managing underwriter or underwriters advise the Holders of such securities in writing that in its or their good faith opinion the total number or dollar amount of Registrable Securities proposed to be sold in such offering is such as to adversely affect the success of such offering (including, without limitation, securities proposed to be included by other holders of securities entitled to include securities in such Registration Statement pursuant to incidental or piggyback registration rights), then there shall be included in such firm commitment underwritten offering the number or dollar amount of Registrable Securities that in the good faith opinion of such managing underwriter or underwriters can be sold without adversely affecting such offering, and such number of Registrable Securities shall be allocated as follows, unless the underwriter or underwriters require a different allocation:

 

(i)             first, to the Investors until all Registrable Securities requested for registration by the Investors have been included in such registration;

 

(ii)             second, to any Holders (other than the Investors) requesting such Demand Registration (whether pursuant to a Demand Notice or pursuant to incidental or piggyback registration rights) among such Holders pro rata on the basis of the percentage of Registrable Securities owned by each such Holder relative to the number of Registrable Securities owned by all such Holders;

 

(iii)            third, the securities for which inclusion in such Demand Registration, as the case may be, was requested by any other holders of Common Stock as a result of registration rights or otherwise; and

 

(iv)            fourth, the securities for which inclusion in such Demand Registration was requested by the Company.

 

(c)             Cancellation of a Demand Registration. Each Demand Party and the Holders of a majority of the Registrable Securities which are to be registered in a particular offering pursuant to this Section 3 shall have the right, prior to the effectiveness of the Registration Statement, to notify the Company that it or they, as the case may be, has or have determined that such Registration Statement be abandoned or withdrawn, in which event the Company shall abandon or withdraw such registration statement. Any Holder who has elected to sell Registrable Securities in an underwritten offering pursuant to this Section 3 (including the Demand Party of such Demand Registration) shall be permitted to withdraw from such registration by written notice to the Company if the price to the public at which the Registrable Securities are proposed to be sold will be less than 90% of the average closing price of the class of stock being sold in the offering during the 10 trading days preceding the date on which the Demand Notice of such offering was given pursuant to Section 3(a).

 

 

(d)             Postponements in Requested Registrations. If the Company shall at any time furnish to the Holders a certificate signed by its chairman of the board, chief executive officer or president stating that the filing of a Registration Statement or conducting a Shelf Underwritten Offering or Non-Underwritten Shelf Take-Down would, in the good faith judgment of the Board of Directors of the Company (after consultation with external legal counsel), (i) require the Company to make an Adverse Disclosure or (ii) materially interfere with any material proposed acquisition, disposition, financing, reorganization, recapitalization or similar transaction involving the Company or any of its subsidiaries then under consideration, the Company may postpone the filing (but not the preparation) of a Registration Statement or the commencement of a Shelf Underwritten Offering, as applicable, required by this Section 3 until such circumstance is no longer continuing but not to exceed 75 days (such period, a “Postponement Period”); provided that the Company shall at all times in good faith use its commercially reasonable best efforts to cause any Registration Statement required by this Section 3 to be filed as soon as possible or any Shelf Underwritten Offering to be conducted as soon as possible, as applicable; provided, further, that the Company shall not be permitted to commence a Postponement Period pursuant to this Section 3(d) more than once in any 180-day period. The Company shall promptly give the Holders requesting registration thereof or that delivered a Take-Down Notice, as applicable, pursuant to this Section 3 written notice of any postponement made in accordance with the preceding sentence.

 

(e)             Shelf Registration Statement.

 

(i)             The Company shall file with the SEC a shelf Registration Statement (on Form S-3 to the extent permissible) (a “Shelf Registration Statement”) covering the resale of all Registrable Securities, and shall use reasonable best efforts to cause such registration statement to become effective no later than the expiration of the Lock-Up Period. Upon effectiveness of the Shelf Registration Statement, the Company shall use its reasonable best efforts to keep such Shelf Registration Statement effective with the SEC at all times and to re-file such Shelf Registration Statement upon its expiration, and subject to Sections 3(f) and (g), to cooperate in any shelf take-down, whether or not underwritten, by amending or supplementing the Prospectus related to such Shelf Registration Statement as may be reasonably requested by the Holders of Registrable Securities or as otherwise required, until such time as all Registrable Securities that could be sold in such Shelf Registration Statement have been sold or are no longer outstanding.

 

(ii)              To the extent that the Company becomes ineligible to use Form S-3, the Company shall file a “shelf” registration statement on Form S-1 registering the Registrable Securities for resale not later than 30 calendar days after the date of such ineligibility and use its reasonable best efforts to have such registration statement declared effective as promptly as practicable.

 

 

(f)             Shelf Take Downs. At any time that a Shelf Registration Statement covering Registrable Securities pursuant to Section 2 or Section 3 is effective, the Investors may deliver a written notice to the Company (a “Take-Down Notice”) stating that it intends to effect an underwritten offering (a “Shelf Underwritten Offering”) or other non-underwritten sale (a “Non-Underwritten Shelf Take-Down”) of all or part of its Registrable Securities included by it on the Shelf Registration Statement, then, the Company shall amend or supplement the Shelf Registration Statement as may be necessary in order to enable such Registrable Securities to be distributed pursuant to the Shelf Underwritten Offering (taking into account the inclusion of Registrable Securities by any other holders pursuant to Section 3(b)) or Non-Underwritten Shelf Take-Down; provided, however, that the Holders of Registrable Securities may not, without the Company’s prior written consent, (i) launch a Shelf Underwritten Offering the anticipated gross cash proceeds of which shall be less than $75,000,000 (unless the Holders are proposing to sell all of their remaining Registrable Securities), (ii) launch more than three Shelf Underwritten Offerings at the request of the Holders within any 365-day period or (iii) launch a Shelf Underwritten Offering within the Quarterly Blackout Period. The Investors shall be entitled to deliver an unlimited number of Take-Down Notices to effect a Non-Underwritten Shelf Take-Down with respect to the Registrable Securities held by it in addition to the other registration rights provided in Section 2 and this Section 3. In connection with any Shelf Underwritten Offering but subject in all respects to Section 4:

 

(i)             the Company shall also as promptly as practicable within two (2) business days deliver the Take-Down Notice to all other Holders with Registrable Securities included on such Shelf Registration Statement and permit each Holder to include its Registrable Securities included on the Shelf Registration Statement in the Shelf Underwritten Offering if such Holder notifies the Company (who shall notify the Investors) within two business days after delivery of the Take-Down Notice to such Holder, provided that the Company shall not provide a Take-Down Notice to any other Holder of Registrable Securities or holder of the Company’s equity securities in the case of a Block Sale by the Investors; and

 

(ii)             in the event that the underwriter advises the Company (who shall notify the Investors) in its good faith opinion that the total number or dollar amount of Registrable Securities proposed to be sold in such offering is such as to adversely affect the success of such offering (including an adverse effect on the per-share offering price), the underwriter may limit the number of shares which would otherwise be included in such Shelf Underwritten Offering in the same manner as described in Section 3(b) with respect to a limitation of shares to be included in a registration.

 

(g)             Selection of Underwriters. If a requested registration pursuant to this Section 3 involves an underwritten offering, the investment banker(s) and manager(s) and lead investment banker(s) and manager(s) to administer the offering shall be chosen by the Demand Party, provided that if a Holder other than an Investor is the Demand Party, the investment banker(s) and manager(s) and lead investment banker(s) and manager(s) to administer the offering shall be chosen by such Investor; provided, further, that if a Holder other than the Demand Party will sell at least 50% of the Registrable Securities proposed to be sold in such offering and an Investor is not participating in such offering, the investment banker(s) and manager(s) and lead investment banker(s) and manager(s) shall be chosen by such other Holder (such other Holder, if any, the “Lead Holder”), in each case subject to the approval of the Company (not to be unreasonably delayed or withheld); provided, further, that each of the Investors and the Company acknowledges and agrees that KKR Capital Markets LLC (or any related entity through which it conducts business) shall serve as an underwriter for any underwritten offering, if KKR Capital Markets LLC (or any related entity through which it conducts business) agrees to act as such. If the offering is underwritten, the right of any Holder to registration pursuant to this Section 3 will be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting (unless otherwise agreed by the Demand Party), and each such Holder will (together with the Company and the other Holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting (including pursuant to the terms of any over-allotment or “green shoe” option requested by the managing underwriter(s)); provided that (x) no Holder shall be required to sell more than the number of Registrable Securities that such Holder has requested the Company to include in any registration and (y) if any Holder disapproves of the terms of the underwriting, such Holder may elect to withdraw prior to launching the applicable underwritten offering by written notice to the Company, the managing underwriter or underwriters and, in connection with an underwritten registration pursuant to this Section 3, the Demand Party.

 

 

4.             Allocation in Certain Underwritten Offerings. Notwithstanding any provisions herein to the contrary, if any of the Registrable Securities registered pursuant to Section 2 or 3 hereof are proposed to be sold by the Investors or any other Holder in a firm commitment underwritten offering, and KKR is participating in such offering pursuant to registration rights separately granted to it by the Company, then the number of shares of Common Stock permitted to be sold by KKR and the Investors shall be allocated as follows:

 

(a)             Prior to the third anniversary of the date of this Agreement, and subject to the Investors’ obligations under its Lock-Up Agreement,

 

  (i)             if the volume weighted average trading price of the Common Stock for the five trading days prior to the expected launch of the proposed offering (the “Five-Day VWAP”) is below $13.00 (subject to proportionate adjustment for stock dividends, stock splits and combinations and similar transactions occurring after the date of this Agreement), KKR shall have a priority participation right to include all shares of Common Stock requested to be sold by it prior to the inclusion of securities requested to be sold by the Investors;

 

  (ii)            if the Five-Day VWAP is between $13.00 and $17.00 (subject to proportionate adjustment for stock dividends, stock splits and combinations and similar transactions occurring after the date of this Agreement), KKR shall have a priority participation right to include 75.0% of the shares of Common Stock requested to be sold by it, with the Investors retaining a priority participation right to include Registrable Securities with respect to the remaining 25.0%; and

 

  (iii)           if the Five-Day VWAP is above $17.00 (subject to proportionate adjustment for stock dividends, stock splits and combinations and similar transactions occurring after the date of this Agreement), each of KKR and the Investors shall have a right to participate in such underwritten offering on a pro rata basis based upon the number of shares of Common Stock held by each (on an as converted basis) immediately prior to such offering.

 

(b)             On or following the third anniversary of the date of this Agreement, each of KKR and the Investors shall have a right to participate in such underwritten offering to the same extent specified in Section 4(a)(iii) above. For the avoidance of doubt, the Investors will have the right to participate in underwritten sales by KKR in accordance with Section 2 hereof, subject to the terms of Section 2 and this Section 4.

 

 

5.             Registration Procedures. If and whenever the Company is required to use its reasonable best efforts to effect the registration of any Registrable Securities under the Securities Act as provided in Section 2 and Section 3 hereof, the Company shall effect such registration to permit the sale of such Registrable Securities in accordance with the intended method or methods of disposition thereof, and pursuant thereto the Company shall cooperate in the sale of the securities and shall, as expeditiously as possible:

 

(a)             prepare and file, in each case as promptly as practicable, with the SEC a Registration Statement or Registration Statements on such form as shall be available for the sale of the Registrable Securities by the Holders thereof or by the Company in accordance with the intended method or methods of distribution thereof, make all required filings with FINRA and use its reasonable best efforts to cause such Registration Statement to become effective as soon as practicable and to remain effective as provided herein; provided, however, that before filing a Registration Statement or Prospectus or any amendments or supplements thereto (including any free writing prospectuses under Rule 433 under the Securities Act (each a “Free Writing Prospectus”) and including such documents that would be incorporated or deemed to be incorporated therein by reference), the Company shall furnish or otherwise make available to the Holders of the Registrable Securities covered by such Registration Statement, their counsel and the managing underwriters, if any, copies of all such documents proposed to be filed, which documents will be subject to the reasonable review and comment of such counsel, and such other documents reasonably requested by such counsel, including any comment letter from the SEC, and, if requested by such counsel, provide such counsel reasonable opportunity to participate in the preparation of such Registration Statement and each Prospectus included therein and such other opportunities to conduct a reasonable investigation within the meaning of the Securities Act, including reasonable access to the Company’s books and records, officers, accountants and other advisors. The Company shall not file any such Registration Statement or Prospectus or any amendments or supplements thereto (including any Free Writing Prospectuses and including such documents that, upon filing, would be incorporated or deemed to be incorporated by reference therein) with respect to a Demand Registration to which the Demand Party, the Holders of a majority of the Registrable Securities covered by such Registration Statement, or their counsel, or the managing underwriters, if any, shall reasonably object, in writing, on a timely basis, unless, in the opinion of the Company, such filing is necessary to comply with applicable law;

 

(b)             subject to Section 3(e), prepare and file with the SEC such amendments, post-effective amendments and supplements to each Registration Statement and the Prospectus used in connection therewith and such Free Writing Prospectuses and Exchange Act reports as may be necessary to keep such Registration Statement continuously effective during the period provided herein and comply in all material respects with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Registration Statement; and cause the related Prospectus to be supplemented by any Prospectus supplement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of the Registrable Securities covered by such Registration Statement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act, in each case, until such time as all of such securities have been disposed of in accordance with the intended method or methods of disposition by the seller or sellers thereof set forth in such Registration Statement;

 

 

(c)             notify each selling Holder of Registrable Securities, its counsel and the managing underwriters, if any, promptly, and (if requested by any such Person) confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment or any Free Writing Prospectus has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC or any other federal or state governmental authority for amendments or supplements to a Registration Statement or related Prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) if at any time the Company has reason to believe that the representations and warranties of the Company contained in any agreement (including any underwriting agreement) contemplated by Section 5(n) below cease to be true and correct, (v) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose, and (vi) of the happening of any event that makes any statement made in such Registration Statement, related Prospectus, Free Writing Prospectus, amendment or supplement thereto or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in such Registration Statement, Prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, not misleading, and that in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading (which notice shall notify the selling Holders only of the occurrence of such an event and shall provide no additional information regarding such event to the extent such information would constitute material non-public information);

 

(d)             use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction at the earliest date reasonably practical;

 

(e)             if requested by the managing underwriters, if any, the Demand Party with respect to the offering or the Holders of a majority of the then-issued and outstanding Registrable Securities being sold in connection with an underwritten offering, promptly include in a Prospectus supplement or post-effective amendment such information as the managing underwriters, if any, or such Demand Party or Holders, as the case may be, may reasonably request in order to permit the intended method of distribution of such Registrable Securities and make all required filings of such Prospectus supplement or such post-effective amendment as soon as practicable after the Company has received such request; provided, however, that the Company shall not be required to take any actions under this Section 5(e) that are not, in the opinion of counsel for the Company, in compliance with applicable law;

 

(f)             deliver to each selling Holder of Registrable Securities, its counsel, and the underwriters, if any, without charge, as many copies of the Prospectus or Prospectuses (including each form of Prospectus) and each amendment, supplement or post-effective amendment thereto as such Persons may reasonably request from time to time in connection with the distribution of the Registrable Securities; and the Company, subject to the last paragraph of this Section 5, hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders of Registrable Securities and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any such amendment or supplement thereto;

 

 

(g)             prior to any public offering of Registrable Securities, use its reasonable best efforts to register or qualify or cooperate with the selling Holders of Registrable Securities, the underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or “Blue Sky” laws of such jurisdictions within the United States as any seller or underwriter reasonably requests in writing and to keep each such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective and to take any other action that may be necessary or advisable to enable such Holders of Registrable Securities to consummate the disposition of such Registrable Securities in such jurisdiction in accordance with the intended method or methods of disposition thereof; provided, however, that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it is not then so required to qualify but for this paragraph (g) or (ii) take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject (other than service of process in connection with such registration or qualification or any sale of Registrable Securities in connection therewith);

 

(h)             cooperate with the selling Holders of Registrable Securities and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates (not bearing any legends) representing Registrable Securities to be sold after receiving written representations from each Holder of such Registrable Securities that the Registrable Securities represented by the certificates so delivered by such Holder will be transferred in accordance with the Registration Statement, and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters, if any, or Holders may request;

 

(i)              use its reasonable best efforts to cause the Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities within the United States as may be necessary in light of the business or operations of the Company to enable the seller or sellers thereof or the managing underwriters, if any, to consummate the disposition of such Registrable Securities, in accordance with the intended method or methods thereof, except as may be required solely as a consequence of the nature of such selling Holder’s business, in which case the Company will cooperate in all reasonable respects with the filing of such Registration Statement and the granting of such approvals, as may be necessary to enable the seller or sellers thereof or the underwriters, if any, to consummate the disposition of such Registrable Securities in accordance with the intended method or methods thereof;

 

(j)             upon the occurrence of any event contemplated by Section 5(c)(vi) above, promptly prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

 

 

(k)             prior to the effective date of the Registration Statement relating to the Registrable Securities, provide a CUSIP number for the Registrable Securities;

 

(l)              provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such Registration Statement from and after a date not later than the effective date of such Registration Statement (and in connection therewith, if reasonably required by the Company’s transfer agent, the Company will cause an opinion of counsel as to the effectiveness of the Registration Statement to be delivered to such transfer agent, together with any other authorizations, certificates and directions reasonably required by the transfer agent which authorize and direct the transfer agent to issue such Registrable Securities without any legend upon sale by the Holder or the underwriter or managing underwriter of an underwritten offering of Registrable Securities, if any, of such Registrable Securities under the Registration Statement);

 

(m)             use its reasonable best efforts to cause all shares of Registrable Securities covered by such Registration Statement to be listed on the NYSE or other national securities exchange on which the Common Stock is then listed, prior to the effectiveness of such Registration Statement (or, if no Common Stock issued by the Company is then listed on any securities exchange, use its reasonable best efforts to cause such Registrable Securities to be so listed on the NYSE or NASDAQ, as determined by the Company);

 

(n)             enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings) and take all such other actions reasonably requested by the Demand Party or the Holders of a majority of the Registrable Securities being sold in connection therewith (including those reasonably requested by the managing underwriters, if any) to expedite or facilitate the disposition of such Registrable Securities, and in such connection, whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration, (i) make such representations and warranties to the Holders of such Registrable Securities and the underwriters, if any, with respect to the business of the Company and its subsidiaries, and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings, and, if true, confirm the same if and when requested, (ii) use its reasonable best efforts to furnish to the selling Holders and the underwriters, if any, opinions of outside counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any), addressed to each of the underwriters, if any, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such counsel and underwriters, (iii) use its reasonable best efforts to obtain “cold comfort” letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement) who have certified the financial statements included in such Registration Statement, addressed to each selling Holder of Registrable Securities (unless such accountants shall be prohibited from so addressing such letters by applicable standards of the accounting profession) and each of the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in “cold comfort” letters in connection with underwritten offerings, (iv) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures substantially to the effect set forth in Section 6 hereof with respect to all parties to be indemnified pursuant to said Section except as otherwise agreed by the Holders and (v) deliver such documents and certificates as may be reasonably requested by the Demand Party, the Holders of a majority of the Registrable Securities being sold pursuant to such Registration Statement, its or their counsel or the managing underwriters, if any, to evidence the continued validity of the representations and warranties made pursuant to Section 5(n)(i) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. The Company shall satisfy the requirements of this Section 5(n) in connection with each sale of such Registrable Securities in accordance with the intended method or methods of disposition thereof;

 

(o)             make available for inspection by a representative of the selling Holders of Registrable Securities, any underwriter participating in any such disposition of Registrable Securities, if any, and any attorneys or accountants retained by such selling Holders or underwriter, at the offices where normally kept, during reasonable business hours, all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries, and cause the officers, directors and employees of the Company and its subsidiaries to supply all information in each case reasonably requested by any such representative, underwriter, attorney or accountant in connection with such Registration Statement; provided, however, that any information that is not generally publicly available at the time of delivery of such information shall be kept confidential by such Persons unless (i) disclosure of such information is required by court or administrative order, (ii) disclosure of such information, in the opinion of counsel to such Person, is required by law or applicable legal process, or (iii) such information becomes generally available to the public other than as a result of a disclosure or failure to safeguard by such Person. In the case of a proposed disclosure pursuant to (i) or (ii) above, such Person shall be required to give the Company written notice of the proposed disclosure prior to such disclosure and, if requested by the Company, assist the Company in seeking to prevent or limit the proposed disclosure. Without limiting the foregoing, no such information shall be used by such Person as the basis for any market transactions in securities of the Company or its subsidiaries in violation of law;

 

(p)             cause its officers, including its executive officers, to use their reasonable best efforts to support the marketing of the Registrable Securities covered by the Registration Statement (including, without limitation, participation in “road shows” and other customary marketing activities) taking into account the Company’s business needs;

 

(q)            cooperate with each seller of Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA;

 

(r)             otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement, which earnings statement will satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; and

 

 

(s)            cooperate with the Holders of Registrable Securities subject to the Registration Statement and with the underwriter(s) or agent participating in the distribution, if any, to facilitate any Charitable Gifting Event and to prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to permit any such recipient Charitable Organization to sell in the underwritten offering if it so elects.

 

The Company may require each Holder of Registrable Securities as to which any registration is being effected to furnish to the Company in writing such information required in connection with such registration regarding such seller and the distribution of such Registrable Securities as the Company may, from time to time, reasonably request in writing and the Company may exclude from such registration the Registrable Securities of any Holder who unreasonably fails to furnish such information within a reasonable time after receiving such request.

 

The Company agrees not to file or make any amendment to any Registration Statement with respect to any Registrable Securities, or any amendment of or supplement to the Prospectus or any Free Writing Prospectus used in connection therewith, that refers to any Holder of Registrable Securities covered thereby by name, or otherwise identifies such Holder as the holder of any securities of the Company, without the consent of such Holder, such consent not to be unreasonably withheld or delayed, unless and to the extent such disclosure is required by law.

 

If the Company files any Shelf Registration Statement for the benefit of the holders of any of its securities other than the Holders of Registrable Securities, the Company agrees that it shall use its reasonable best efforts to include in such registration statement such disclosures as may be required by Rule 430B under the Securities Act (referring to the unnamed selling security holders in a generic manner by identifying the initial offering of the securities to the Holders) in order to ensure that such Holders may be added to such Shelf Registration Statement at a later time through the filing of a Prospectus supplement rather than a post-effective amendment.

 

The Company will not expressly name or identify any Holder as an “underwriter” in any Registration Statement or related document without such Holder’s prior written consent; provided, however, that nothing in this sentence will require the consent of any Holder in connection with the inclusion in any Registration Statement or related document of customary language, without specifically naming any Holder, that selling securityholders may in certain circumstances be considered to be underwriters under federal securities laws.

 

Notwithstanding any provision hereof to the contrary, to the extent that any pro rata or other allocation or reduction of Registrable Securities is required pursuant to Sections 2(b), 3(b), 3(f)(ii), 4(a), 4(b) or any other section herein, (i) all Registrable Securities transferred by a Holder of Registrable Securities to a Charitable Organization in connection with an underwritten offering for which such pro rata or other allocation is required shall be included in the number of Registrable Securities deemed to be held by each Holder of Registrable Securities (or deemed to be included in such Holder’s request for inclusion of Registrable Securities) for purposes of calculating such Holder’s pro rata allocation or reduction in such underwritten offering and (ii) the number of Registrable Securities that a Holder is otherwise entitled to include in such underwritten offering shall be reduced by the number of Registrable Securities transferred by such Holder to a Charitable Organization in connection with such underwritten offering.

 

Each Holder of Registrable Securities agrees if such Holder has Registrable Securities covered by such Registration Statement that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 5(c)(i), 5(c)(ii) 5(c)(iv), 5(c)(v) or 5(c)(vi) hereof, such Holder will forthwith discontinue disposition of such Registrable Securities pursuant to such Registration Statement or Prospectus until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 5(j) hereof, or until it is advised in writing by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus; provided, however, that the time periods under Section 3 with respect to the length of time that the effectiveness of a Registration Statement must be maintained shall automatically be extended by the amount of time the Holder is required to discontinue disposition of such securities. For the avoidance of doubt, nothing in the previous sentence will prohibit or restrict any Holder from selling or transferring Registrable Securities other than pursuant to a Registration Statement or Prospectus (including pursuant to Rule 144) subject to compliance by such Holder with applicable securities laws in connection with such sale or transfer.

 

 

6.             Indemnification.

 

(a)             Indemnification by the Company. The Company shall, without limitation as to time, indemnify and hold harmless, to the fullest extent permitted by law, each Holder of Registrable Securities whose Registrable Securities are or were covered by a Registration Statement or Prospectus, the officers, directors, partners, members, managers, shareholders, accountants, attorneys, agents and employees of each of them, each Person who controls each such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, members, managers, shareholders, accountants, attorneys, agents and employees of each such controlling person, each underwriter, if any, and each Person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) such underwriter (each such person being referred to herein as a “Covered Person”), from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, costs of preparation and reasonable attorneys’ fees and any legal or other fees or expenses incurred by such party in connection with any investigation or proceeding), expenses, judgments, fines, penalties, charges and amounts paid in settlement (collectively, “Losses”), as incurred, arising out of or based upon any untrue statement (or alleged untrue statement) of a material fact contained in any Prospectus, offering circular, or other document (including any related Registration Statement, notification, or the like or Free Writing Prospectus or any amendment thereof or supplement thereto or any document incorporated by reference therein) incident to any such registration, qualification, or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation thereunder applicable to the Company and (without limitation of the preceding portions of this Section 6(a)) will reimburse each such Covered Person for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such Loss, provided that the Company will not be liable in any such case to the extent that any such Loss arises out of or is based on any untrue statement or omission by such Covered Person related to such Covered Person or its Affiliates (other than the Company or any of its subsidiaries), but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement, Prospectus, offering circular, Free Writing Prospectus or any amendment thereof or supplement thereto, or any document incorporated by reference therein, or other document in reliance upon and in conformity with written information furnished to the Company by such Covered Person with respect to such Covered Person for use therein. It is agreed that the indemnity agreement contained in this Section 6(a) shall not apply to amounts paid in settlement of any such Loss or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably delayed or withheld), provided that notwithstanding the foregoing, the indemnity agreement contained in this Section 6(a) shall apply to amounts paid in settlement of any Loss or action even if such settlement is effected without the consent of the Company if the Company does not timely reply to a request for its consent. For the avoidance of doubt, a person (and its officers, directors, partners, members, managers, shareholders, accountants, attorneys, agents, employees and control persons as described above) that ceases to be a Holder will be entitled to indemnification in connection with Losses incurred as described above in such person’s capacity as a Holder.

 

 

(b)            Indemnification by Holder of Registrable Securities. The Company may require, as a condition to including any Registrable Securities in any Registration Statement filed in accordance with Section 5 hereof, that the Company shall have received an undertaking reasonably satisfactory to it from the participating Holder of such Registrable Securities to indemnify, to the fullest extent permitted by law, severally and not jointly with any other Holders of Registrable Securities, the Company, its directors and officers and each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), from and against all Losses arising out of or based on any untrue statement of a material fact contained in any such Registration Statement, Prospectus, Free Writing Prospectus, offering circular, or other document, or any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will (without limitation of the foregoing portions of this Section 6(b)) reimburse the Company, such directors, officers and controlling persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such Loss, in each case to the extent, but only to the extent, that such untrue statement or omission is made in such Registration Statement, Prospectus, Free Writing Prospectus, offering circular, or other document in reliance upon and in conformity with written information furnished to the Company by such Holder with respect to such Holder for inclusion in such Registration Statement, Prospectus, offering circular or other document; provided, however, that the obligations of such Holder hereunder shall not apply to amounts paid in settlement of any such Losses (or actions in respect thereof) if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld); and provided, further, that the liability of such Holder of Registrable Securities shall be individual, not joint and several, for each Holder of Registrable Securities and shall be limited to the net proceeds received by such selling Holder from the sale of Registrable Securities covered by such Registration Statement, Prospectus, offering circular or other document containing such untrue statement (or alleged untrue statement) or omission (or alleged omission) (less the aggregate amount of any damages which such Holder has otherwise been required to pay in respect of such Loss or any substantially similar Loss arising from the sale of such Registrable Securities).

 

 

(c)             Conduct of Indemnification Proceedings. If any Person shall be entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall give prompt notice to the party from which such indemnity is sought (the “Indemnifying Party”) of any claim or of the commencement of any proceeding with respect to which such Indemnified Party seeks indemnification or contribution pursuant hereto; provided, however, that the delay or failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party from any obligation or liability except to the extent that the Indemnifying Party has been materially prejudiced by such delay or failure. The Indemnifying Party shall have the right, exercisable by giving written notice to an Indemnified Party promptly after the receipt of written notice from such Indemnified Party of such claim or proceeding, to, unless in the Indemnified Party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, assume, at the Indemnifying Party’s expense, the defense of any such claim or proceeding, with counsel reasonably satisfactory to such Indemnified Party; provided, however, that an Indemnified Party shall have the right to employ separate counsel in any such claim or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless: (i) the Indemnifying Party agrees to pay such fees and expenses; or (ii) the Indemnifying Party fails promptly to assume, or in the event of a conflict of interest cannot assume, the defense of such claim or proceeding or fails to employ counsel reasonably satisfactory to such Indemnified Party; in which case the Indemnified Party shall have the right to employ counsel and to assume the defense of such claim or proceeding at the Indemnifying Party’s expense; provided, further, however, that the Indemnifying Party shall not, in connection with any one such claim or proceeding or separate but substantially similar or related claims or proceedings in the same jurisdiction, arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one firm of attorneys (together with appropriate local counsel) at any time for all of the Indemnified Parties, or for fees and expenses that are not reasonable. Whether or not such defense is assumed by the Indemnifying Party, such Indemnifying Party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably delayed or withheld). Without the prior written consent of the Indemnified Party, the Indemnifying Party shall not consent to entry of any judgment or enter into any settlement that (x) does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release, in form and substance reasonably satisfactory to the Indemnified Party, from all liability in respect of such claim or litigation for which such Indemnified Party would be entitled to indemnification hereunder or (y) involves the imposition of equitable remedies or the imposition of any obligations on the Indemnified Party or adversely affects such Indemnified Party other than as a result of financial obligations for which such Indemnified Party would be entitled to indemnification hereunder.

 

(d)             Contribution. If the indemnification provided for in this Section 6 is unavailable to an Indemnified Party in respect of any Losses (other than in accordance with its terms), then each applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party, on the one hand, and such Indemnified Party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party, on the one hand, and Indemnified Party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made (or omitted) by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent any such action, statement or omission.

 

 

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 6(d), an Indemnifying Party that is a selling Holder of Registrable Securities shall not be required to contribute any amount in excess of the net proceeds to such Holder from the Registrable Securities sold pursuant to the Registration Statement which gives rise to such obligation to contribute (less the aggregate amount of any damages which the Holder has otherwise been required to pay in respect of such Loss or any substantially similar Loss arising from the sale of such Registrable Securities). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. No selling Holder shall be liable for contribution under this Section 6(d), except under such circumstances as such selling Holder would have been liable for indemnification under this Section 6 if such indemnification were enforceable under applicable law.

 

Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten offering are more favorable to the Holders than the foregoing provisions, the provisions in the underwriting agreement shall control.

 

The obligations of any Holder to provide contribution pursuant to this Section 6(d) are several and not joint.

 

(e)             Deemed Underwriter. To the extent that any of the Holders of Registrable Securities is, or would be expected to be, deemed to be an underwriter of Registrable Securities pursuant to any SEC comments or policies or any court of law or otherwise, the Company agrees that (i) the indemnification and contribution provisions contained in this Section 6 shall be applicable to the benefit of such Holder in its role as deemed underwriter in addition to its capacity as a Holder (so long as the amount for which any other Holder is or becomes responsible does not exceed the amount for which such Holder would be responsible if the Holder were not deemed to be an underwriter of Registrable Securities) and (ii) such Holder and its representatives shall be entitled to conduct the due diligence which would normally be conducted in connection with an offering of securities registered under the Securities Act, including receipt of customary opinions and comfort letters.

 

(f)             Other Indemnification. Indemnification similar to that specified in the preceding provisions of this Section 6 (with appropriate modifications) shall be given by the Company and each seller of Registrable Securities with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act.

 

(g)             Non-Exclusivity. The obligations of the parties under this Section 6 shall be in addition to any liability which any party may otherwise have to any other party.

 

 

7.             Registration Expenses. All reasonable fees and expenses incident to the performance of or compliance with this Agreement by the Company (including, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the SEC, NYSE, FINRA or the National Association of Securities Dealers, Inc. and (B) of compliance with securities or Blue Sky laws, including, without limitation, any fees and disbursements of counsel for the underwriters in connection with Blue Sky qualifications of the Registrable Securities pursuant to Section 5(h)), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing Prospectuses if the printing of Prospectuses is requested by the managing underwriters, if any, the Demand Party or by the Holders of a majority of the Registrable Securities included in any Registration Statement), (iii) messenger, telephone and delivery expenses of the Company, (iv) fees and disbursements of counsel for the Company, (v) expenses of the Company incurred in connection with any road show, (vi) fees and disbursements of all independent certified public accountants referred to in Section 5(o) hereof (including, without limitation, the expenses of any “cold comfort” letters required by this Agreement) and any other persons, including special experts retained by the Company and (vii) fees and disbursements of one counsel for the Holders of Registrable Securities whose shares are included in a Registration Statement (which counsel shall be selected as set forth in Section 9)) shall be borne by the Company whether or not any Registration Statement is filed or becomes effective. In addition, the Company shall pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit, the fees and expenses incurred in connection with the listing of the securities to be registered on the NYSE or such other national securities exchange on which the Common Stock is listed and rating agency fees and the fees and expenses of any Person, including special experts, retained by the Company.

 

The Company shall not be required to pay (i) fees and disbursements of any counsel retained by any Holder of Registrable Securities or by any underwriter (except as set forth in this Section 7 and in Section 9 or pursuant to the underwriting agreement entered into in connection with such offering), (ii) any underwriter’s fees (including discounts, commissions or fees of underwriters, selling brokers, dealer managers or similar securities industry professionals) relating to the distribution of the Registrable Securities (other than with respect to Registrable Securities sold by the Company), or (iii) any other expenses of the Holders of Registrable Securities not specifically required to be paid by the Company pursuant to the first paragraph of this Section 7.

 

8.             Rule 144. The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Demand Party, make publicly available such information so long as necessary to permit sales of Registrable Securities pursuant to Rule 144), and it will take such further action as any Holder of Registrable Securities (or, if the Company is not required to file reports as provided above, any Demand Party) may reasonably request, all to the extent required from time to time to enable such Holder to sell shares of Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder of Registrable Securities, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements and, if not, the specific requirements with which it did not so comply. Notwithstanding anything contained in this Section 8, the Company may deregister under Section 12 of the Exchange Act if it then is permitted to do so pursuant to the Exchange Act and the rules and regulations thereunder.

 

 

9.             Selection of Counsel. In connection with any registration of Registrable Securities pursuant to Section 2 or 3 hereof, if an Investor is participating in such registration pursuant to Section 2 or 3 hereof, such Investor may select one counsel to represent it and all other Holders participating in such registration, and if an Investor is not participating in such registration pursuant to Section 2 or 3 hereof, the Holders (other than the Investors) of a majority of the Registrable Securities covered by any such registration may select one counsel to represent such other Holders of Registrable Securities covered by such registration; provided, however, that in the event that the counsel selected as provided above is also acting as counsel to the Company in connection with such registration, the Holders shall be entitled to select one additional counsel at the Company’s expense to represent all Holders.

 

10.           Miscellaneous.

 

(a)             Holdback Agreement. In consideration for the Company agreeing to its obligations under this Agreement, each Holder agrees in connection with any underwritten offering of the Company’s securities with respect to which the Company has complied with its obligations under Section 2 or Section 3 of this Agreement, as applicable (whether or not such Holder is participating in such offering) upon the reasonable request of the underwriters managing any such underwritten offering, not to effect (other than pursuant to such offering) any public sale or distribution of Registrable Securities, including, but not limited to, any sale pursuant to Rule 144, or make any short sale of, grant any option for the purchase of, or otherwise dispose of any Registrable Securities, any other equity securities of the Company or any securities convertible into or exchangeable or exercisable for any equity securities of the Company, in each case without the prior written consent of such underwriters and subject to customary exceptions, during the Holdback Period; provided that nothing herein will prevent (i) any Holder that is a partnership or corporation from making a transfer to an Affiliate that is otherwise in compliance with applicable securities laws, (ii) any pledge of Registrable Securities by a Holder in connection with a Permitted Loan (as defined in the Investment Agreement) or (iii) any foreclosure in connection with a Permitted Loan (as defined in the Investment Agreement) or transfer in lieu of a foreclosure thereunder, in each case that is otherwise in compliance with applicable securities laws. Notwithstanding the foregoing, any discretionary waiver or termination of this holdback provision by such underwriters with respect to any of the Holders shall apply to the other Holders as well, pro rata based upon the number of shares subject to such obligations.

 

If any registration pursuant to Section 3 of this Agreement shall be in connection with any underwritten public offering, if reasonably requested by the managing underwriter or underwriters, the Company will not effect any public sale or distribution of any common equity (or securities convertible into or exchangeable or exercisable for common equity) (other than a registration statement (i) on Form S-4, Form S-8 or any successor forms thereto or (ii) filed solely in connection with an exchange offer or any employee benefit or dividend reinvestment plan) for its own account, during the Holdback Period.

 

(b)             Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given without the written consent of each of the Company and the Holders of a majority of the Registrable Securities; provided, however, that (x) any amendment, modification, supplement, waiver or consent to departures from the provisions of this Agreement that would subject a Stockholder to adverse differential treatment relative to the other Stockholders shall require the agreement of the differentially treated Stockholder and (y) any amendment, modification, supplement, waiver or consent to departures from the provisions of this Agreement that would be adverse to a right specifically granted to a specific Stockholder herein (but not to other Stockholders) shall require the agreement of that Stockholder. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by Holders of at least a majority of the Registrable Securities being sold by such Holders pursuant to such Registration Statement. The parties to this agreement acknowledge and agree that (i) KKR shall be a third party beneficiary to this Agreement and that any amendment to the provisions set forth in Section 4 hereof or this sentence of this Section 10(b) shall require the prior written consent of KKR in addition to the required consent of the parties specified above, and (ii) the provisions in this Agreement supersede any conflicting provisions in any other applicable agreement(s) between KKR and the Company.

 

 

(c)             Successors, Assigns and Transferees. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. The provisions of this Agreement which are for the benefit of the parties hereto other than the Company may be transferred or assigned to any Person in connection with a Transfer (as defined in the Investment Agreement) of Series A Preferred Stock or Common Stock issued upon conversion of the Series A Preferred Stock to such Person in a Transfer permitted by Section 4.07(b)(i) of the Investment Agreement; provided, however, that (i) prior written notice of such assignment of rights is given to the Company and (ii) such transferee agrees in writing to be bound by, and subject to, this Agreement as a “Holder” pursuant to a written instrument in form and substance reasonably acceptable to the Company. Except as provided in Section 6 with respect to an Indemnified Party, nothing expressed or mentioned in this Agreement is intended or shall be construed to give any Person other than the parties hereto and their respective successors and permitted assigns any legal or equitable right, remedy or claim under, or in respect of this Agreement or any provision herein contained.

 

(d)             Notices. All notices, requests and other communications to any party hereunder shall be in writing and shall be deemed given if delivered personally, emailed (which is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses:

 

If to the Company, to:

 

BrightView Holdings, Inc.

980 Jolly Road

Blue Bell, PA 19422

Attention:

Jonathan Gottsegen

Email:

Jonathan.Gottsegen@brightview.com

 

 

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

 

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017

Attention:

Ravi Purushotham

Johanna Mayer

Email:

rpurushotham@stblaw.com

johanna.mayer@stblaw.com

 

If to the Investors, to:

 

c/o One Rock Capital Management, LLC

45 Rockefeller Plaza, 39th Floor

New York, NY 10111

Attention:

Tony Lee; Scott Spielvogel; Josh Goldman

Facsimile:

(212) 605-6099

Email:

tlee@onerockcapital.com; sspielvogel@onerockcapital.com; jgoldman@onerockcapital.com

With copies (which shall not constitute notice) to:

 

Latham & Watkins LLP

1271 Avenue of the Americas

New York, New York 10020

Attention:

Alexander B. Johnson and Javier Stark

Facsimile:

(212) 751-4864

Email:

alex.johnson@lw.com and javier.stark@lw.com

 

or such other address or email address as such party may hereafter specify by like notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of actual receipt by the recipient thereof if received prior to 5:00 p.m. local time in the place of receipt and such day is a business day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding business day in the place of receipt.

 

(e)             Descriptive Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of terms contained herein.

 

(f)             Severability. If any term, condition or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms, provisions and conditions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term, condition or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law.

 

 

(g)             Counterparts. This Agreement may be executed in one or more counterparts (including by facsimile or electronic mail), each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties hereto.

 

(h)             Governing Law; Submission to Jurisdiction. This Agreement and all legal or administrative proceedings, suits, investigations, arbitrations or actions (“Actions”) (whether at law, in equity, in contract, in tort or otherwise) based upon, arising out of or relating to this Agreement or the negotiation, execution or performance of this Agreement, shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed entirely within that State, regardless of the laws that might otherwise govern under any applicable conflict of laws principles.

 

All Actions arising out of or relating to this Agreement shall be heard and determined in the Chancery Court of the State of Delaware (or, if the Chancery Court of the State of Delaware declines to accept jurisdiction over any Action, any state or federal court within the State of Delaware) and the parties hereto hereby irrevocably submit to the exclusive jurisdiction and venue of such courts in any such Action and irrevocably waive the defense of an inconvenient forum or lack of jurisdiction to the maintenance of any such Action. The consents to jurisdiction and venue set forth in this Section 10(h) shall not constitute general consents to service of process in the State of Delaware and shall have no effect for any purpose except as provided in this paragraph and shall not be deemed to confer rights on any Person other than the parties hereto. Each party hereto agrees that service of process upon such party in any Action arising out of or relating to this Agreement shall be effective if notice is given by overnight courier at the address set forth in Section 10(d) of this Agreement. The parties hereto agree that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable law; provided that nothing in the foregoing shall restrict any party’s rights to seek any post-judgment relief regarding, or any appeal from, a final trial court judgment.

 

(i)              Specific Performance. Each party hereto acknowledges that money damages would not be an adequate remedy in the event that any of the covenants or agreements in this Agreement are not performed in accordance with its terms, and it is therefore agreed that in addition to and without limiting any other remedy or right it may have, the non-breaching party will have the right to an injunction, temporary restraining order or other equitable relief in any court of competent jurisdiction enjoining any such breach and enforcing specifically the terms and provisions hereof.

 

(j)              Further Assurances. At any time or from time to time after the date hereof, the parties agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder.

 

 

(k)             Termination. The provisions of this Agreement (other than Section 6 and Section 7) shall terminate upon the earliest to occur of (i) its termination by the written agreement of all parties hereto or their respective successors in interest, (ii) the date on which all shares of Common Stock have ceased to be Registrable Securities and (iii) the dissolution, liquidation or winding up of the Company. Nothing herein shall relieve any party from any liability for the breach of any of the agreements set forth in this Agreement.

 

(l)               No Inconsistent Agreements; Most Favored Nations. The Company shall not hereafter enter into any agreement with respect to its securities that is inconsistent with or violates the rights granted to the Holders of Registrable Securities in this Agreement. In the event that the Company desires to enter into any agreement with any Person, including any holder or prospective holder of any securities of the Company, giving or granting any registration (or related) rights the terms of which are more favorable than or senior to the registration or other rights granted to the Holders of Registrable Securities hereunder, then (i) the Company shall provide prior written notice thereof to the Holders of Registrable Securities and (ii) upon execution by the Company of such other agreement, the terms and conditions of this Agreement shall be, without any further action by the Holders or the Company, automatically amended and modified in an economically and legally equivalent manner such that the Holders shall receive the benefit of the more favorable terms and/or conditions (as the case may be) set forth in such other agreement, provided that upon written notice to the Company at any time, any Holder may elect not to accept the benefit of any such amended or modified term or condition, in which event the term or condition contained in this Agreement shall apply to such Holder as it was in effect immediately prior to such amendment or modification as if such amendment or modification never occurred with respect to such Holder.

 

 

IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or caused this Agreement to be duly executed on its behalf as of the date first written above.

 

	BRIGHTVIEW HOLDINGS, INC.
	By:	/s/ James Abrahamson
	Name:	James Abrahamson
	Title:	President and Chief Executive Officer

 

[Signature Page to Registration Rights Agreement]

 

 

	BIRCH EQUITY HOLDINGS, LP
	By:	Birch Equity Holdings GP LLC
	Its:	General Partner
	By:	ORCP GP Professionals, LLC
	Its:	Sole Member
	By:	/s/ Tony W. Lee
		Name:	Tony W. Lee
		Title:	Managing Member

 

	BIRCH-OR EQUITY HOLDINGS, LLC
	By:	/s/ Tony W. Lee
		Name:	Tony W. Lee
		Title:	Secretary and Treasurer

 

[Signature Page to Registration Rights Agreement]

 

 

The undersigned hereby acknowledges and agrees to the provisions set forth in Section 4 and Section 10(b) of the foregoing Registration Rights Agreement as of the date first written above.

 

	KKR BRIGHTVIEW AGGREGATOR L.P.
	By:	KKR BrightView Aggregator GP LLC,
		as general partner
	By:	/s/ Paul Raether
		Name:	Paul Raether
		Title:	Vice President

 

[Signature Page to Registration Rights Agreement]

 

 

Exhibit 10.3

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement is effective as of _________, 20[●] (this “Agreement”) and is between BrightView Holdings, Inc., a Delaware corporation (the “Company”), and the undersigned director/officer of the Company (“Indemnitee”).

 

Background       

 

The Company believes that, in order to attract and retain highly competent persons to serve as directors or in other capacities, including as officers, it must provide such persons with adequate protection through indemnification against the risks of claims and actions against them arising out of their services to and activities on behalf of the Company.

 

The Company desires and has requested Indemnitee to serve or to continue to serve as a director and/or officer of the Company and, in order to induce the Indemnitee to serve in such capacity, the Company is willing to grant the Indemnitee the rights to indemnification and advancement of expenses provided for herein. Indemnitee is willing to so serve or continue to serve on the basis that such rights to indemnification and advancement of expenses be provided.

 

The parties by this Agreement desire to set forth their agreement regarding indemnification and the advancement of expenses, it being understood that this Agreement is a supplement to, and in furtherance of, the rights of Indemnitee to indemnification and/or advancement of expenses under the General Corporation Law of the State of Delaware (as the same may be amended from time to time, the “DGCL”), the certificate of incorporation of the Company (as the same may be amended and/or restated from time to time, the “Certificate of Incorporation”), the bylaws of the Company (as the same may be amended and/or restated from time to time, the “Bylaws”), vote of stockholders or disinterested directors or otherwise, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

 

In consideration of Indemnitee’s service to the Company and the covenants and agreements set forth below, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

Section 1. Indemnification.

 

To the fullest extent permitted by the DGCL:

 

(a) The Company shall indemnify Indemnitee if Indemnitee was or is made or is threatened to be made a party to, or is otherwise involved in, as a witness or otherwise, any threatened, pending or completed action, suit or proceeding (brought in the right of the Company or otherwise), whether civil, criminal, administrative or investigative and whether formal or informal, including appeals, by reason of the fact that Indemnitee is or was or has agreed to serve as a director, officer, employee or agent of the Company, or is or was serving or has agreed to serve at the request of the Company as a director, officer, employee or agent (which, for purposes hereof, shall include a trustee, fiduciary, partner or manager or similar capacity) of another corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of any action alleged to have been taken or omitted in any such capacity, in each case whether or not serving in such capacity at the time any liability or other amounts incurred for which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement is incurred.

 

(b) The indemnification provided by this Section 1 shall be from and against all loss and liability suffered and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with such action, suit or proceeding, including any appeals or any claim, issue, or matter therein.

 

 

(c) If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of expenses incurred, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled. The parties agree that for purposes of determining such portion of the total expenses to which Indemnitee is entitled under this Section 1(c), such allocation as is certified by affidavit of Indemnitee’s counsel shall be presumed conclusively as a reasonable allocation.

 

(d) The parties hereto intend that this Agreement shall provide to the fullest extent permitted by law for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the Certificate of Incorporation, the Bylaws, vote of its stockholders or disinterested directors or applicable law.

 

Section 2. Advance Payment of Expenses. Notwithstanding any provision of this Agreement to the contrary (other than Section 3(e)), to the fullest extent permitted by the DGCL, expenses (including attorneys’ fees) incurred by or on the part of Indemnitee in connection with (including appearing at, participating in or defending) any action, suit or proceeding or in connection with an enforcement action (which shall be governed by Section 3(e)), shall be paid by the Company in advance of the final disposition of such action, suit or proceeding within 20 days after receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time. The Indemnitee hereby undertakes to repay any amounts advanced (without interest) to the extent that it is ultimately determined that Indemnitee is not entitled under this Agreement to be indemnified by the Company in respect thereof. No other form of undertaking shall be required of Indemnitee other than the execution of this Agreement. This Section 2 shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 6(a).

 

Section 3. Procedure for Indemnification; Notification of Claim.

 

(a) Promptly after receipt by Indemnitee of notice of the commencement of any action, suit or proceeding, Indemnitee shall, if a claim in respect thereof is to be made against the Company hereunder, notify the Company in writing of the commencement thereof. The failure to promptly notify the Company of the commencement of the action, suit or proceeding, or of Indemnitee’s request for indemnification, will not relieve the Company from any liability that it may have to Indemnitee hereunder or otherwise than under this Agreement, and any delay in so notifying the Company shall not constitute a waiver by Indemnitee of any rights under this Agreement. To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request therefor including such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to enable the Company to determine whether and to what extent Indemnitee is entitled to indemnification.

 

(b) With respect to any action, suit or proceeding of which the Company is so notified as provided in this Agreement, the Company shall be entitled to participate in such action, suit or proceeding at its own expense.

 

(c) Upon written request by Indemnitee for indemnification pursuant to this Section 3, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel selected in the manner provided in Section 3(h) in a written opinion to the Board of Directors of the Company, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by a majority vote of the disinterested directors, even though less than a quorum of the Board of Directors of the Company, (B) by a committee of disinterested directors designated by a majority vote of the disinterested directors, even though less than a quorum of the Board of Directors of the Company, or (C) if there are no such disinterested directors or, if such disinterested directors so direct, by Independent Counsel selected in the manner provided in Section 3(h) in a written opinion to the Board of Directors of the Company, a copy of which shall be delivered to Indemnitee. Any costs or expenses (including attorneys’ fees) incurred by Indemnitee in cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. The Company promptly will advise Indemnitee in writing with respect to any determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied.

 

 

(d) Except as otherwise provided in this Section 3(d), the determination whether to grant Indemnitee’s indemnification request shall be made promptly and in any event within 60 days following the Company’s receipt of a request for indemnification in accordance with Section 3(a). If the person, persons or entity empowered or selected to make the determination with respect to entitlement to indemnification determines that Indemnitee is entitled to such indemnification, the Company will make payment to Indemnitee of the indemnifiable amount within such 60 day period. If the determination of whether to grant Indemnitee’s indemnification request shall not have been made within such 60 day period, the requisite determination of entitlement to indemnification shall, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under the DGCL; provided, however, that such 60 day period may be extended for a reasonable time, not to exceed an additional 30 days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto.

 

(e) In the event that (i) a determination is made in accordance with this Section 3 that Indemnitee is not entitled to indemnification under this Agreement, (ii) the Company denies a request for indemnification, in whole or in part, or fails to respond to a request for indemnification or a determination of entitlement to indemnification is not made within 60 days following receipt of a request for indemnification, (iii) payment of indemnification is not made within such 60 day period, (iv) advancement of expenses is not timely made in accordance with Section 2 or this Section 3(e), or (v) the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to Indemnitee hereunder, Indemnitee shall be entitled to an adjudication in any court of competent jurisdiction of his or her entitlement to such indemnification or advancement of expenses. The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding commenced pursuant to this Section 3(e) that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement. In the event that a determination shall have been made in accordance with this Section 3 that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 3(e) shall be conducted in all respects as a de novo trial on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding commenced pursuant to this Section 3(e) the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advancement of expenses, as the case may be. If a determination shall have been made pursuant to this Section 3 that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 3(e), absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under the DGCL. The Company shall, to the fullest extent permitted by law, indemnify Indemnitee against any and all expenses and, if requested by Indemnitee, shall (within 10 days after receipt by the Company of a written request therefor) advance, to the extent not prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advancement of expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company if, in the case of indemnification, Indemnitee is wholly successful on the underlying claims; if Indemnitee is not wholly successful on the underlying claims, then such indemnification shall be only to the extent Indemnitee is successful on such underlying claims or otherwise as permitted by law, whichever is greater.

 

(f) Indemnitee shall be presumed to be entitled to indemnification under this Agreement upon submission of a request therefor in accordance with this Section 3. The Company shall, to the fullest extent not prohibited by law, have the burden of proof in overcoming such presumption, and such presumption shall be used as a basis for a determination of entitlement to indemnification unless the Company overcomes such presumption by clear and convincing evidence. The termination of any action, suit or proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal action, suit or proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful. The knowledge and/or actions, or failure to act, of any other director, officer, trustee, partner, managing member, fiduciary, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

 

 

(g) For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the directors or officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser, financial advisor or other expert selected with reasonable care by or on behalf of the Enterprise. The provisions of this Section 3(g) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the applicable standard of conduct for determining whether Indemnitee is entitled to indemnification.

 

(h) If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board of Directors of the Company, and the Company shall give written notice to Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors of the Company, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within 10 days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 3(i). Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Delaware Court (as defined below) has determined that such objection is without merit. If, within 20 days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 3(a) hereof and the final disposition of the action, suit or proceeding, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Delaware Court for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by such court or by such other person as such court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under this Agreement. Upon the due commencement of any judicial proceeding pursuant to Section 3(e) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

 

(i) For purposes of this Section 3, the following terms shall mean:

 

(i) “Independent Counsel” shall mean a law firm, or a member of a law firm, that is selected as provided herein and is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (A) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (B) any other party to the action, suit or proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

 

(ii) A “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

 

(A) Any Person, other than the Sponsors (as defined below), is or becomes, after the date hereof, the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing 15% or more of the combined voting power of the Company’s then outstanding securities unless the change in relative Beneficial Ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors;

 

(B) During any period of 2 consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board of Directors of the Company, any director appointed by either Sponsor pursuant to any agreements between the Company and the Sponsors and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in this definition) whose election by the Board of Directors of the Company or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board of Directors of the Company;

 

(C) The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the Surviving Entity) more than 50% of the combined voting power of the voting securities of the Surviving Entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such Surviving Entity;

 

(D) The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and

 

(E) There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

 

For purposes of this definition, the following terms shall have the following meanings:

 

(A)       “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

 

(B)       “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

(C)       “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

 

 

(D)       “Sponsors” shall mean any affiliates of Kohlberg Kravis Roberts & Co. L.P. and any affiliates of One Rock Capital Partners, LLC.

 

(E)       “Surviving Entity” shall mean the surviving entity in a merger or consolidation or any entity that controls, directly or indirectly, such surviving entity.

 

Section 4. Insurance and Subrogation.

 

(a) The Company shall use its commercially reasonable efforts to purchase and maintain a policy or policies of insurance with reputable insurance companies with A.M. Best ratings of “A” or better (or, if A.M. Best does not rate the insurance company, an equivalent rating by an equivalent licensed insurance rating organization or agency), providing Indemnitee with coverage for any liability asserted against, and incurred by, Indemnitee or on Indemnitee’s behalf by reason of the fact that Indemnitee is or was or has agreed to serve as a director, officer, employee or agent of the Company, or is or was serving or has agreed to serve at the request of the Company as a director, officer, employee or agent (which, for purposes hereof, shall include a trustee, fiduciary, partner or manager or similar capacity) of another corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise, or arising out of Indemnitee’s status as such, whether or not the Company would have the power to indemnify Indemnitee against such liability under the provisions of this Agreement. Such insurance policies shall have coverage terms and policy limits at least as favorable to Indemnitee as the insurance coverage provided to any other director or officer of the Company. If the Company has such insurance in effect at the time the Company receives from Indemnitee any notice of the commencement of an action, suit or proceeding, the Company shall give prompt notice of the commencement of such action, suit or proceeding to the insurers in accordance with the procedures set forth in the policy. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policy.

 

(b) Subject to Section 10(b), in the event of any payment by the Company under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee with respect to any insurance policy. Indemnitee shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights in accordance with the terms of such insurance policy. The Company shall pay or reimburse all expenses actually and reasonably incurred by Indemnitee in connection with such subrogation.

 

(c) Subject to Section 10(b), the Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder (including, but not limited to, judgments, fines and amounts paid in settlement, and ERISA excise taxes or penalties) if and to the extent that Indemnitee has otherwise actually received payment of such amounts under this Agreement or any insurance policy, contract, agreement or otherwise.

 

Section 5. Certain Definitions. For purposes of this Agreement, the following definitions shall apply:

 

(a) The term “action, suit or proceeding” shall be broadly construed and shall include, without limitation, the investigation, preparation, prosecution, defense, settlement, arbitration and appeal of, and the giving of testimony or other participation in, any threatened, pending or completed claim, counterclaim, cross claim, action, suit, arbitration, mediation, investigation, inquiry, administrative hearing, alternative dispute mechanism, appeal or other proceeding, whether civil, criminal, administrative, legislative or investigative, whether formal or informal.

 

 

(b) The term “by reason of the fact that Indemnitee is or was or has agreed to serve as a director, officer, employee or agent of the Company, or is or was serving or has agreed to serve at the request of the Company as a director, officer, employee or agent (which, for purposes hereof, shall include a trustee, partner or manager or similar capacity) of another corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise” shall be broadly construed and shall include, without limitation, any actual or alleged act or omission to act.

 

(c) The term “expenses” shall be broadly construed and shall include, without limitation, all direct and indirect costs of any type or nature whatsoever (including, without limitation, all attorneys’ fees, retainers and related disbursements, fees of experts and other professionals, witness fees, appeal bonds, other out-of-pocket costs, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement and reasonable compensation for time spent by Indemnitee for which Indemnitee is not otherwise compensated by the Company or any third party), actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with either the investigation, preparation, prosecution, defense, settlement, arbitration, or appeal of, and the giving of testimony or other participation in an action, suit or proceeding or establishing or enforcing a right to indemnification under this Agreement or otherwise incurred in connection with a claim that is indemnifiable hereunder. Without limitation of the foregoing, expenses shall also include any expenses incurred to support claims for advancement or indemnification under this Agreement, including preparing and forwarding statements or providing other supporting documentation and information to the Company.

 

(d) The term “Enterprise” shall mean the Company and any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee, is or was serving or has agreed to serve at the request of the Company as a director, officer, employee or agent (which, for purposes hereof, shall include a trustee, fiduciary, partner or manager or similar capacity).

 

(e)The term “judgments, fines and amounts paid in settlement” shall be broadly construed and shall include, without limitation, all direct and indirect payments of any type or nature whatsoever, as well as any penalties or excise taxes assessed on a person with respect to an employee benefit plan.

 

Section 6. Limitation on Indemnification. Notwithstanding any other provision herein to the contrary, the Company shall not be obligated pursuant to this Agreement:

 

(a) Claims Initiated by Indemnitee. To indemnify or advance expenses to Indemnitee with respect to an action, suit or proceeding (or part thereof), however denominated, initiated by Indemnitee, other than (i) an action, suit or proceeding brought to establish or enforce a right to indemnification or advancement of expenses under this Agreement (which shall be governed by the provisions of Section 3(e) of this Agreement) (ii) an action, suit or proceeding (or part thereof) that was authorized or consented to by the Board of Directors of the Company, it being understood and agreed that, for the avoidance of doubt, such authorization or consent shall not be required in connection with any compulsory counterclaim brought by Indemnitee in response to an action, suit or proceeding otherwise indemnifiable under this Agreement.

 

(b) Actions Based on Federal Statutes Regarding Profit Recovery and Return of Bonus Payments. To indemnify Indemnitee on account of (i) any suit in which judgment is rendered against Indemnitee for disgorgement of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or similar provisions of state statutory or common law or (ii) any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act).

 

(c) Prohibited by Law. To indemnify Indemnitee in any circumstance where such indemnification has been determined by a final (not interlocutory) judgment or other adjudication of a court or arbitration or administrative body of competent jurisdiction as to which there is no further right or option of appeal or the time within which an appeal must be filed has expired without such filing to be prohibited by law.

 

 

Section 7. Duration. This Agreement shall continue until and terminate upon the later of: (a) 10 years after the date that Indemnitee shall have ceased to serve as a director, officer, employee or agent of the Company or at the request of the Company as a director, officer, employee, agent (which, for purposes hereof, shall include a trustee, fiduciary, partner or manager or similar capacity) of another corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise or (b) 1 year after the final termination of any action, suit or proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 3(e) of this Agreement relating thereto. The indemnification and advancement of expenses rights provided by or granted pursuant to this Agreement shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or of any other Enterprise, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

 

Section 8. Certain Settlement Provisions. The Company shall have no obligation to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any action, suit or proceeding without the Company’s prior written consent. The Company shall not settle any action, suit or proceeding in any manner that would impose any fine or other obligation on Indemnitee without Indemnitee’s prior written consent. Neither the Company nor Indemnitee will unreasonably withhold his, her, its or their consent to any proposed settlement.

 

Section 9. Savings Clause. If any provision or provisions (or portion thereof) of this Agreement shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify Indemnitee if Indemnitee was or is made or is threatened to be made a party or is otherwise involved in any threatened, pending or completed action, suit or proceeding (brought in the right of the Company or otherwise), whether civil, criminal, administrative or investigative and whether formal or informal, including appeals, by reason of the fact that Indemnitee is or was or has agreed to serve as a director, officer, employee or agent of the Company, or is or was serving or has agreed to serve at the request of the Company as a director, officer, employee or agent (which, for purposes hereof, shall include a trustee, partner or manager or similar capacity) of another corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, from and against all loss and liability suffered and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement reasonably incurred by or on behalf of Indemnitee in connection with such action, suit or proceeding, including any appeals, to the fullest extent permitted by any applicable portion of this Agreement that shall not have been invalidated.

 

Section 10. Contribution/Jointly Indemnifiable Claims.

 

(a) In order to provide for just and equitable contribution in circumstances in which the indemnification provided for herein is held by a court of competent jurisdiction to be unavailable to Indemnitee in whole or in part, it is agreed that, in such event, the Company shall, to the fullest extent permitted by the DGCL, contribute to the payment of all of Indemnitee’s loss and liability suffered and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement reasonably incurred by or on behalf of Indemnitee in connection with any action, suit or proceeding, including any appeals, in an amount that is just and equitable in the circumstances; provided that, without limiting the generality of the foregoing, such contribution shall not be required where such holding by the court is due to any limitation on indemnification set forth in Section 4(c), 6 or 8.

 

 

(b) Given that certain jointly indemnifiable claims may arise due to the service of the Indemnitee as a director and/or officer of the Company at the request of the Indemnitee-related entities, the Company acknowledges and agrees that the Company shall be fully and primarily responsible for the payment to the Indemnitee in respect of indemnification or advancement of expenses in connection with any such jointly indemnifiable claim, pursuant to and in accordance with the terms of this Agreement, irrespective of any right of recovery the Indemnitee may have from the Indemnitee-related entities. Under no circumstance shall the Company be entitled to any right of subrogation against or contribution by the Indemnitee-related entities and no right of advancement, indemnification or recovery the Indemnitee may have from the Indemnitee-related entities shall reduce or otherwise alter the rights of the Indemnitee or the obligations of the Company hereunder. In the event that any of the Indemnitee-related entities shall make any payment to the Indemnitee in respect of indemnification or advancement of expenses with respect to any jointly indemnifiable claim, the Indemnitee-related entity making such payment shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee against the Company, and Indemnitee shall execute all papers reasonably required and shall do all things that may be reasonably necessary to secure such rights, including the execution of such documents as may be necessary to enable the Indemnitee-related entities effectively to bring suit to enforce such rights. The Company and Indemnitee agree that each of the Indemnitee-related entities shall be third-party beneficiaries with respect to this Section 10(b), entitled to enforce this Section 10(b) as though each such Indemnitee-related entity were a party to this Agreement. For purposes of this Section 10(b), the following terms shall have the following meanings:

 

(i) The term “Indemnitee-related entities” means any corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise (other than the Company or any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise Indemnitee has agreed, on behalf of the Company or at the Company’s request, to serve as a director, officer, employee or agent and which service is covered by the indemnity described in this Agreement) from whom an Indemnitee may be entitled to indemnification or advancement of expenses with respect to which, in whole or in part, the Company may also have an indemnification or advancement obligation (other than as a result of obligations under an insurance policy).

 

(ii) The term “jointly indemnifiable claims” shall be broadly construed and shall include, without limitation, any action, suit or proceeding for which the Indemnitee shall be entitled to indemnification or advancement of expenses from both the Indemnitee-related entities and the Company pursuant to the DGCL, any agreement or the certificate of incorporation, bylaws, partnership agreement, operating agreement, certificate of formation, certificate of limited partnership or comparable organizational documents of the Company or the Indemnitee-related entities, as applicable.

 

Section 11. Form and Delivery of Communications. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered by hand, upon receipt by the party to whom said notice or other communication shall have been directed, (b) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, (c) mailed by reputable overnight courier, one day after deposit with such courier and with written verification of receipt, or (d) sent by email or facsimile transmission, with receipt of oral or written confirmation that such transmission has been received. Notice to the Company shall be directed to BrightView Holdings, Inc., Executive Vice President, Chief Legal Officer and Corporate Secretary, by email at: Jonathan.Gottsegen@brightview.com or by telephone at: (484) 567-7220. Notice to Indemnitee shall be directed to Indemnitee’s contact information on file with the Company’s Corporate Secretary or its Human Resources Department or such other address as Indemnitee shall provide to the Company.

 

Section 12. Nonexclusivity. The provisions for indemnification and advancement of expenses set forth in this Agreement shall not be deemed exclusive of any other rights which Indemnitee may have under any provision of law, in any court in which a proceeding is brought, the Certificate of Incorporation or the Bylaws, other agreements or otherwise, and Indemnitee’s rights hereunder shall inure to the benefit of the heirs, executors and administrators of Indemnitee. No amendment or alteration of the Certificate of Incorporation or Bylaws or any other agreement shall adversely affect the rights provided to Indemnitee under this Agreement.

 

Section 13. No Construction as Employment Agreement. Nothing contained herein shall be construed as giving Indemnitee any right to be retained as a director of the Company or in the employ of the Company. For the avoidance of doubt, the indemnification and advancement of expenses provided under this Agreement shall continue as to the Indemnitee even though he or she may have ceased to be a director, officer, employee or agent of the Company or of any other Enterprise.

 

 

Section 14. Interpretation of Agreement. It is understood that the parties hereto intend this Agreement to be interpreted and enforced so as to provide indemnification to Indemnitee to the fullest extent now or hereafter permitted by the DGCL.

 

Section 15. Entire Agreement. This Agreement and the documents expressly referred to herein constitute the entire agreement between the parties hereto with respect to the matters covered hereby, and any other prior or contemporaneous oral or written understandings or agreements with respect to the matters covered hereby are expressly superseded by this Agreement; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate of Incorporation, the Bylaws and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

 

Section 16. Modification and Waiver. No supplement, modification, waiver or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. For the avoidance of doubt, this Agreement may not be terminated by the Company except as provided in Section 7 of this Agreement.

 

Section 17. Successor and Assigns. All of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and their respective successors, assigns, heirs, executors, administrators and legal representatives. The Company shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of such Indemnitor, by written agreement in form and substance reasonably satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

Section 18. Service of Process and Venue. The Company and Indemnitee hereby irrevocably and unconditionally (a) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (b) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (c) appoint, to the extent such party is not otherwise subject to service of process in the State of Delaware, irrevocably Corporation Service Company, 251 Little Falls Drive, Wilmington, Delaware 19808, as such party’s agent in the State of Delaware for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (d) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (e) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

 

Section 19. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. If a court of competent jurisdiction shall make a final determination that the provisions of the law of any state other than Delaware govern indemnification by the Company of Indemnitee, then the indemnification provided under this Agreement shall in all instances be enforceable to the fullest extent permitted under such law, notwithstanding any provision of this Agreement to the contrary.

 

 

Section 20. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument, notwithstanding that both parties are not signatories to the original or same counterpart. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement or any document to be signed in connection with this Agreement shall be deemed to include electronic signatures, deliveries 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, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, and the parties hereto consent to conduct the transactions contemplated hereunder by electronic means. This Agreement, to the extent signed and delivered by means of a email transmission, shall be treated in all manner and respects as an original agreement and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.

 

Section 21. Headings and Section References. The section and subsection headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Section references are to this Agreement unless otherwise specified.

 

 

This Indemnification Agreement has been duly executed and delivered to be effective as of the date stated above.

 

	BRIGHTVIEW HOLDINGS, INC.
	By
	Name:
	Title:

 

[Signature Page to Indemnification Agreement]

 

 

	INDEMNITEE:
	Name:

 

[Signature Page to Indemnification Agreement]

 

 

Exhibit 99.1

 

NEWS RELEASE For Immediate Release

 

 

BrightView Appoints Dale A. Asplund as Chief Executive Officer and

Announces $500 Million Strategic Investment from One Rock Capital Partners

 

Asplund also Named to Board of Directors

 

One Rock Operating Partner Kurtis Barker and One Rock Partner Joshua Goldman

Appointed to Board

 

Investment Proceeds to Reduce Leverage and Accelerate Growth

 

BLUE BELL, PA, August 28, 2023 -- BrightView Holdings, Inc. (“BrightView” or the “Company”) (NYSE: BV), the leading commercial landscaping services company in the United States, today announced that its Board of Directors has appointed Dale A. Asplund, 55, as President and Chief Executive Officer, effective October 1, 2023. In conjunction with his appointment as CEO, Asplund will also join the BrightView board as a director as of that date. In addition, BrightView today announced that an affiliate of One Rock Capital Partners, LLC (“One Rock”), a value-oriented, operationally focused private equity firm, has made a $500 million strategic investment in the Company in the form of convertible preferred stock.

 

CEO Appointment

 

A respected and successful business executive, Asplund’s appointment follows a thorough search process, conducted by the Board over the last number of months in consultation with a leading search firm, with the mandate to appoint a next-generation leader who is capable of driving transformative growth at BrightView. Asplund succeeds Interim President and CEO Jim Abrahamson. Abrahamson, who has served as a BrightView independent director since 2015, will remain as a member of the Board.

 

Asplund brings 25 years of extensive operational, service provider, and publicly traded company expertise to BrightView from United Rentals, Inc., the world’s largest equipment rental company. Most recently, as Executive Vice President and Chief Operating Officer, a position he was appointed to in 2019, Asplund served on the executive leadership team with company-wide responsibility for operations and employee safety. Asplund, who joined United Rentals in 1998, has held strategic leadership roles encompassing business services, shared services, supply chain, fleet management, and information technology. Earlier in his career, Asplund worked for United Waste Systems, Inc.

 

“We are excited to welcome Dale to the BrightView team. Dale is an outstanding leader whose proven operational excellence and exceptional strategic capabilities make him an ideal choice for our next CEO,” said Paul E. Raether, Chairman of the Board of Directors. “As BrightView continues its transformational journey, the Board looks forward to working with Dale to deliver long-term growth and value for shareholders and is grateful to Jim for leading the Company through this transition period and his continued involvement in BrightView.”

 

 

“I am excited to lead this great company and talented team into its next phase of growth and performance,” said Asplund. “BrightView has firmly established itself as the industry leader in commercial landscaping. I look forward to collaborating with the Board, senior management, and dedicated team members to build upon their success. Underscoring my confidence in the Company’s future, in the coming weeks, I plan to make a personal investment of approximately $5 million in BrightView shares.”

 

Today’s announcement follows the Company’s recent fiscal third quarter earnings report, highlighted by solid revenue growth, continued margin progression, and significant cash flow improvement. Project Accelerate, the Company’s cost containment initiative, has been materially expanded and is transitioning into the implementation phase – now identified as Project Liberty, with the intent of driving continued growth in revenue, profitability, and margin expansion.

 

One Rock Investment

 

As part of its strategic initiatives to accelerate operational excellence, grow the business, and strengthen its balance sheet, BrightView has received an investment from One Rock in the form of $500 million newly-issued shares of convertible preferred stock. BrightView will use 90% of the proceeds from the investment to pay down debt, helping to significantly de-lever the Company’s balance sheet to 3.1x net debt to LTM Adjusted EBITDA and position it for transformative growth under Asplund’s new leadership. Remaining funds from the new investment, coupled with increased free cash flow due to lower interest expense, are expected to provide BrightView with the flexibility to pursue acquisitions of complementary landscape businesses and other accretive initiatives. BrightView’s existing shareholders are not selling any shares in connection with the transaction.

 

“We believe this investment from One Rock is a strong vote of confidence in BrightView’s strategy and continued efforts to increase growth and profitability,” said Raether. “We look forward to partnering with One Rock and leveraging their operational expertise, including extensive experience in the landscaping industry, as we continue to drive BrightView’s future success.”

 

“One Rock’s investment approach is centered on our capacity to deliver a broad range of operational and strategic resources to portfolio companies that are anchored by the expertise of One Rock’s team of Operating Partners,” said Joshua Goldman, Partner at One Rock. “We expect that our prior experience providing strategic and hands-on operational improvements to the businesses we’ve owned in the business and environmental services sectors will be additive to BrightView’s and Dale’s vision to generate returns for shareholders.”

 

Following receipt of HSR approval and certain other requirements, the preferred stock will be convertible, into shares of BrightView common stock at a conversion price of $9.44 per share and will vote together with the Company’s common stock on all matters brought to shareholders on an as-converted basis. The preferred stock has a 7% annual dividend, compounded quarterly, which will be payable in cash or in kind at BrightView’s option.

 

In connection with this transaction, One Rock Operating Partner, Kurtis Barker, and One Rock Partner, Joshua Goldman, have been appointed as new directors to BrightView’s board. Upon their appointment and that of Asplund, the Board will be comprised of 10 directors.

 

 

KKR BrightView Aggregator L.P., the current majority stockholder of BrightView, has approved the One Rock investment transaction and, in connection with it, has agreed to waive certain of its contractual rights, including the right to appoint more than two members of the Board and to approve certain significant BrightView actions. BrightView will be filing with the SEC and mailing an information statement to its stockholders with further information regarding the transaction.

 

Houlihan Lokey Capital, Inc. served as financial advisor to BrightView’s Board of Directors and Simpson Thacher & Bartlett LLP served as legal advisor. Mizuho Securities USA LLC served as financial advisor and Latham & Watkins LLP served as legal advisor to One Rock on the transaction.

 

About BrightView

 

BrightView (NYSE: BV), the nation’s largest commercial landscaper, proudly designs, creates, and maintains the best landscapes on Earth and provides the most efficient and comprehensive snow and ice removal services. With a dependable service commitment, BrightView brings brilliant landscapes to life at premier properties across the United States, including business parks and corporate offices, homeowners' associations, healthcare facilities, educational institutions, retail centers, resorts and theme parks, municipalities, golf courses, and sports venues. BrightView also serves as the Official Field Consultant to Major League Baseball. Through industry-leading best practices and sustainable solutions, BrightView is invested in taking care of our team members, engaging our clients, inspiring our communities, and preserving our planet. Visit www.BrightView.com and connect with us on Twitter, Facebook, and LinkedIn.

 

About One Rock

 

One Rock makes investments in companies with potential for growth and operational improvement using a rigorous approach that utilizes highly experienced Operating Partners to identify, acquire, and enhance businesses in select industries. The involvement of these Operating Partners affords One Rock the ability to conduct due diligence and consummate acquisitions and investments in all types of situations, regardless of complexity. One Rock strives to work collaboratively with company management and its Operating Partners, including on a comprehensive business plan focused on growing the enterprise and its profitability to enhance long-term value. For more information, visit www.onerockcapital.com.

 

Forward Looking Statements

 

This press release includes certain disclosures which contain “forward-looking statements.” Forward-looking statements are based on BrightView’s current expectations and assumptions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements can be found under the caption “Risk Factors” in our most recent annual report on Form 10-K filed with the SEC, as such risk factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website on www.sec.gov. Any forward-looking statement in this release speaks only as of the date of this release. BrightView undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

 

 

Source: BrightView Landscapes

 

Contact Information:

BrightView:

Investor Relations

IR@BrightView.com

 

News Media

David Freireich, Vice President of Communications & Public Affairs

(484) 567-7244

David.Freireich@BrightView.com

 

One Rock:

Julia Cohen

Pro-onerock@prosek.com

 

###

 

 

v3.23.2

Cover	Aug. 28, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 28, 2023
Current Fiscal Year End Date	--09-30
Entity File Number	001-38579
Entity Registrant Name	BrightView Holdings, Inc.
Entity Central Index Key	0001734713
Entity Tax Identification Number	46-4190788
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	980 Jolly Road
Entity Address, City or Town	Blue Bell
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19422
City Area Code	484
Local Phone Number	567-7204
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	BV
Security Exchange Name	NYSE
Entity Emerging Growth Company	false

---