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): January 7, 2019 (December 31, 2018)

 

 

ARMSTRONG FLOORING, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-37589		47-4303305
(State or other jurisdiction of incorporation )		(Commission File No.)		(IRS Employer Identification No.)
2500 Columbia Avenue P.O. Box 3025 Lancaster, Pennsylvania				17603
(Address of principal executive offices)				(Zip code)

Registrant’s telephone number, including area code: (717) 672-9611

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

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

 

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

 

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

 

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

 

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§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

On December 31, 2018 (the “Closing Date”), Armstrong Flooring, Inc. (the “Company”) completed the previously announced sale of its wood flooring business (the “Transaction”) to AHF Holding, Inc. (formerly known as Tarzan Holdco, Inc.), a Delaware corporation and an affiliate of American Industrial Partners (the “Purchaser”). The Transaction was completed pursuant to the terms of the November 14, 2018 Stock Purchase Agreement (the “Stock Purchase Agreement”) between the Company and the Purchaser.

In connection with the consummation of the Transaction, on the Closing Date, the Company entered into the definitive material agreements described below.

Transition Services Agreement

The Company entered into a Transition Services Agreement (the “Transition Services Agreement”) between the Company and the Purchaser, pursuant to which the Company will provide transitional services in areas including human resources, customer service, operations, finance and IT. In addition, the Company and the Purchaser may mutually agree on additional services to be provided. In consideration for the services, the Purchaser will pay the Company monthly fees that vary based on the scope of services provided and a $3,000,000 administrative fee to the Company. The Purchaser will reimburse the Company for the Company’s out-of-pocket costs and expenses in connection with providing the services. The IT services provided to the Purchaser will be for a maximum of fourteen (14) months, with the option for the Purchaser to extend for an additional four (4) month period. Other services provided by the Company will last for periods between two (2) and nine (9) months. The Transition Services Agreement is subject to termination under certain circumstances, including (i) the Company may terminate the Transition Services Agreement or suspend performance of its obligations for the Purchaser’s failure of payment, subject to a 30-day cure period; (ii) the Purchaser may terminate the TSA in its entirety or for any specific service for convenience upon 30-days’ written notice to the Company, or as otherwise set forth on the schedule of services (attached to the Transition Services Agreement) provided that certain services, such as IT, may only be terminated in bundles; and (iii) either party may terminate the Transition Services Agreement for material breaches or defaults, subject to a 30-day cure period.

Intellectual Property Agreement

The Company entered into an Intellectual Property Agreement (the “IP Agreement”) among the Company, AFI Licensing LLC (together with the Company, “AFI Licensing”), the Purchaser and Armstrong Hardwood Flooring Company (“AHFC”), pursuant to which (i) AFI Licensing assigned to AHFC its right, title and interest in and to certain intellectual property used or held for use exclusively in the design, development, manufacture, advertising, sourcing, distribution and sale of solid hardwood and engineered wood flooring products by or for AHFC (the “Company Field”); (ii) AFI Licensing granted AHFC a perpetual, non-exclusive, royalty-free license in and to certain copyrights, know-how and patents used or held for use in the Company Field during the five (5) years prior to the effective date of the Transition Services Agreement; (iii) AFI Licensing granted AHFC a non-exclusive, royalty-free, non-sublicensable, non-assignable license in and to certain trademarks; and (iv) AHFC granted the Company a perpetual, non-exclusive, royalty-free license in and to certain copyrights, know-how and patents for activities conducted by AFI Licensing or its affiliates (other than the Company Field).

Sublease

The Company also entered into a Sublease (the “Sublease”) between the Company and AHFC, pursuant to which AHFC will lease certain premises located at the Company’s office campus located at 2500 Columbia Avenue, Lancaster, Pennsylvania 17603. As consideration for use of the premises, AHFC will make monthly gross rent installments, inclusive of taxes and overhead costs. AHFC may sublease the premises through March 30, 2021 with the option to terminate the Sublease any time after six (6) months from the effective date of the Sublease with 30-days’ prior notice. Upon such termination, AHFC will pay a termination fee of $2,500,000.

New Company Credit Facility

On December 31, 2018, the Company entered into a credit agreement (the “Credit Agreement”), by and among the Company, as borrower, the guarantors named therein, the lenders party thereto and Bank of America, N.A., as administrative agent for the lenders thereunder.

The Credit Agreement provides the Company with a $150 million secured credit facility (the “Credit Facility”), consisting of a $75 million revolving facility and a $75 million term loan facility. The revolving facility includes a $25 million sublimit for the issuance of letters of credit and a $15 million sublimit for swing line loans. The Credit Facility is scheduled to mature on December 31, 2023. The Credit Agreement provides for an uncommitted accordion feature that allows the Company to request an increase in the revolving facility or the term loan facility in an aggregate amount not to exceed $25 million.

Borrowings under the Credit Facility will bear interest at a rate per annum equal to, at the Company’s option, a base rate or a Eurodollar rate equal to the London interbank offered rate (“LIBOR”) for the relevant interest period, plus, in each case, an applicable margin determined in accordance with the provisions of the Credit Agreement. The base rate will be the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate of Bank of America, N.A., and (c) one month LIBOR plus 1.00%. The applicable margin for borrowings under the Credit Facility will be determined based on the Company’s Consolidated Net Leverage Ratio (as defined in the Credit Agreement) and will range from 0.50% to 1.25% with respect to base rate borrowings and 1.50% to 2.25% with respect to Eurodollar rate borrowings. In addition to paying interest on outstanding principal under the Credit Agreement, the Company will pay a commitment fee to the lenders under the Credit Facility with respect to the unutilized revolving commitments thereunder at a rate ranging from 0.15% to 0.30% depending on the Company’s Consolidated Net Leverage Ratio.

If at any time the aggregate amount of outstanding revolving loans under the Credit Facility exceeds the commitment amount, the Company will be required to repay such excess on demand. The Company must also use cash proceeds from certain dispositions, equity and debt issuances and extraordinary events to prepay outstanding loans under the Credit Facility, subject to specified exceptions. The Company may voluntarily prepay outstanding loans under the Credit Facility without premium or penalty other than customary “breakage” costs with respect to Eurodollar loans.

All obligations under the Credit Agreement are guaranteed by each of the Company’s wholly owned domestic subsidiaries that individually, or together with its subsidiaries, has assets of more than $1 million. All obligations under the Credit Agreement, and guarantees of those obligations, are secured by all of the present and future assets of the Company and the guarantors, subject to certain exceptions and exclusions as set forth in the Credit Agreement and other security and collateral documents.

The Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict the Company’s ability and the ability of its subsidiaries to create liens, to undertake fundamental changes, to incur debt, to sell or dispose of assets, to make investments, to make restricted payments such as dividends, distributions or equity repurchases, to change the nature of their businesses, to enter into transactions with affiliates and to enter into certain burdensome agreements.

In addition, the Credit Agreement requires the Company to comply with certain financial covenants calculated for the Company and its subsidiaries on a consolidated basis. Specifically, the Credit Agreement requires that the Company and its subsidiaries not:

 

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Permit the Consolidated Net Leverage Ratio (as defined in the Credit Agreement) at any time to be greater than 3.00 to 1.00; and

 

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Permit the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) at any time to be less than 1.25 to 1.00.

The Credit Agreement also contains customary affirmative covenants and events of default, including a cross-default provision in respect of any other indebtedness that has an aggregate principal amount exceeding $15 million.

The foregoing summaries of the Transition Services Agreement, the IP Agreement, the Sublease and the Credit Agreement do not purport to be complete and are subject to and qualified in their entirety by reference to the Transition Services Agreement, the IP Agreement, the Sublease and the Credit Agreement, copies of which are filed as Exhibits 10.1, 10.2, 10.3 and 10.4 hereto and are incorporated herein by reference.

Item 1.02

Termination of a Material Definitive Agreement

The Credit Agreement, dated as of April 1, 2016, among the Company and Armstrong Hardwood Flooring Company, as Borrowers, certain subsidiaries of the Company identified therein, as the Guarantors, Bank of America, N.A., as Administrative Agent and Collateral Agent, the other lenders party thereto, JPMorgan Chase Bank, N.A. and SunTrust Robinson Humphrey, Inc., as Co-Syndication Agents, and Bank of America, N.A., JPMorgan Chase Bank, N.A. and SunTrust Robinson Humphrey, Inc. as Joint Lead Arrangers and Joint Book Managers was terminated on December 31, 2018 in connection with the Company’s entry into the Credit Agreement and Credit Facility described in Item 1.01 of this Form 8-K under the heading “New Company Credit Facility.”

 

Item 2.01

Completion of Acquisition or Disposition of Assets

On the Closing Date, the Transaction was consummated by means of the sale of all of the issued and outstanding shares of Armstrong Wood Products, Inc., a Delaware corporation, including its direct and indirect wholly owned subsidiaries, AHFC and HomerWood Hardwood Flooring Company, a Delaware corporation, to the Purchaser. Pursuant to the Stock Purchase Agreement, consideration for the sale was $100 million, subject to customary adjustments. The Company received proceeds from the Transaction of approximately $90 million, net of closing costs, transaction fees and taxes. The Transaction is subject to a customary post-closing working capital adjustment process. Additional information regarding the Transaction is provided in the Current Report on Form 8-K filed by the Company on November 15, 2018.

 

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information set forth under Item 1.01 of this Form 8-K under the heading “New Company Credit Facility” is incorporated herein by reference.

 

Item 7.01

Regulation FD Disclosure

The Company has disclosed additional financial information regarding the Company and the effects of the Transaction and the Company’s cost optimization program in the investor relations section of the Company’s website at www.armstrongflooring.com.

The information in this Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. The furnishing of this report is not intended to constitute a determination by the Company that the information is material or that the dissemination of the information is required by Regulation FD.

 

Item 9.01

Financial Statements and Exhibits

(b) Pro forma financial information

Unaudited pro forma condensed consolidated financial information of the Company to give effect to the Transaction is included in Exhibit 99.1 filed herewith and is incorporated herein by reference. The unaudited pro forma condensed consolidated financial information has been prepared for comparative purposes only and does not purport to be indicative of the future results of operations or financial condition of the Company.

(d) Exhibits

 

Exhibit No.		Description
10.1		Transition Services Agreement, dated as of December 31, 2018, by and between Armstrong Flooring, Inc. and AHF Holding, Inc.
10.2		Intellectual Property Agreement, dated as of December 31, 2018, by and among Armstrong Flooring, Inc., AFI Licensing LLC, AHF Holding, Inc. and Armstrong Hardwood Flooring Company.
10.3		Sublease, dated as of December 31, 2018, by and between Armstrong Flooring, Inc. and Armstrong Hardwood Flooring Company.
10.4		Credit Agreement, dated December  31, 2018, by and among Armstrong Flooring, Inc., as borrower, the guarantors named therein, the lenders party thereto and Bank of America, N.A., as administrative agent for the lenders thereunder.
99.1		Pro forma financial information of Armstrong Flooring, Inc.

SIGNATURE

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

 

Date: January 7, 2019

Exhibit 10.1

Execution Version

TRANSITION SERVICES AGREEMENT

THIS TRANSITION SERVICES AGREEMENT (this “Agreement”) is entered into as of this 31st day of December, 2018, by and between Armstrong Flooring, Inc., a Delaware corporation (“Seller”), and Tarzan Holdco, Inc., a Delaware corporation (“Buyer”).

WHEREAS, Arizona and Buyer have entered into that certain Stock Purchase Agreement, dated as of November 14, 2018 (the “Purchase Agreement”), pursuant to which Buyer has agreed to purchase and acquire from Seller, and Seller has agreed to sell and transfer to Buyer, all of Seller’s right, title and interest in and to Armstrong Wood Products, Inc., a Delaware corporation (the “Company”), Armstrong Hardwood Flooring Company, a Tennessee corporation, and HomerWood Hardwood Flooring Company, a Delaware corporation (collectively, the “Company Subsidiaries”), by way of a purchase by Buyer of all of the issued and outstanding shares of common stock of the Company, all upon the terms and subject to the conditions set forth in the Purchase Agreement; and

WHEREAS, in connection with the consummation of the transactions contemplated by the Purchase Agreement, Buyer and Seller have agreed to enter into this Agreement at the Closing, all upon the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

SECTION 1

DEFINITIONS

1.1    Definitions. For the purposes of this Agreement, the following terms shall have the meanings set forth below:

“Additional Service” shall have the meaning set forth in Section 2.1(b).

“Affiliate” means any partnership, joint venture, corporation or other entity that, as to a Party or other Person, as applicable, Controls, is Controlled by or is under the common Control with such Party or other Person, as applicable.

“Agreement” shall mean this Agreement, including the schedules attached hereto, as the same may be amended by the Parties from time to time.

“Bundled Service” means those Services identified on Schedule A as being part of a bundled package of Services.

“Control” means, with respect to any entity, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities (or other ownership interest), by contract or otherwise.

“Dispute” has the meaning set forth in Section 2.6.

“Force Majeure” shall have the meaning set forth in Section 7.2.

“Losses and Expenses” shall have the meaning set forth in Section 6.3(a).

“Overdue Statement” shall have the meaning set forth in Section 3.2.

“Parties” shall mean Buyer and Seller.

“Payment Default” shall have the meaning set forth in Section 3.2.

“Person” means an individual, corporation, limited or general partnership, limited liability partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization, other entity or group (as defined in Section 13(d) of the Exchange Act), or the foreign equivalent of any of the foregoing.

“Required Licenses” shall have the meaning set forth in Section 3.4.

“Service” or “Services” shall mean only those services provided by Seller or its Subsidiaries pursuant to and in accordance with Section 2.1.

“Service Fee” shall have the meaning set forth in Section 3.1.

“Service Manager” shall have the meaning set forth in Section 2.5.

“Service Period” shall have the meaning set forth in Section 4.1.

“Subsidiary” means any Person in which Seller, directly or indirectly through Subsidiaries or otherwise, beneficially owns more than fifty percent (50%) of either the equity interests in, or otherwise Controls, such Person.

“Tax Authorities” shall have the meaning set forth in Section 3.3.

All other capitalized terms used and not otherwise defined herein will have the respective meanings ascribed to such terms in the Purchase Agreement.

SECTION 2

PROVISION OF SERVICES

2.1    Provision of Services.

(a)    Subject to and in accordance with this Section 2.1, Seller shall, or shall cause its Subsidiaries to, provide to the Company and the Company Subsidiaries those services set forth on Schedule A and such other Services as may from time to time be agreed between the Parties in writing and added to Schedule A as set forth in Section 2.1(b) below. All of the Services shall be provided in accordance with the terms, limitations and conditions set forth herein and on Schedule A.

 

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(b)    During the Term, Buyer may request any internal or external resources, services or systems (any such resource, service or system, an “Additional Service”) previously provided to the Business by the Seller or its Affiliates that is reasonably necessary for the ongoing operation of the Business in substantially the same manner that it was conducted by Seller and/or its Affiliates prior to the Closing. Seller will use commercially reasonable efforts to provide or cause to be provided all Additional Services to the Company or Company Subsidiaries, and Buyer and Seller will negotiate in good faith to determine mutually agreeable terms on which such Additional Services would be provided to Buyer, taking into account the scope of services, duration, methodology used to establish pricing and other terms for the Services hereunder. Schedule A may be amended at any time by mutually agreed upon amendment of this Agreement to add Additional Services. For purposes of this Agreement, “Additional Services” shall be considered “Services”.

(c)    Unless otherwise agreed by the Parties, the Services shall be performed by Seller or its Subsidiaries for the Company and the Company Subsidiaries in a manner that is substantially the same as the manner and level of support in which such Services are generally performed by Seller and its Subsidiaries for the Company and the Company Subsidiaries as of immediately prior to the Closing, and the Company and the Company Subsidiaries shall use such Services for substantially the same purposes and in substantially the same manner as the Company and the Company Subsidiaries are using such Services since as of immediately prior to the Closing unless otherwise mutually agreed by the Parties. The Parties do not intend this Agreement to change, in any material respect, the type, quantity, quality, timeliness or manner of performance of any Services from those provided prior to the Closing.

(d)    The Parties agree that, other than the incurrence of costs to provide Services that will be reimbursed by Buyer, the Company and the Company Subsidiaries as part of the fees payable hereunder, neither Seller nor its Subsidiaries shall be required to use their respective funds or to otherwise pay for any goods or services purchased or required by any of the Company and the Company Subsidiaries from third parties or for any other payment obligation of any of the Company and the Company Subsidiaries. For the avoidance of doubt, the Parties acknowledge and agree that if and to the extent Seller elects to retain a third party to provide a Service to the Company or any of the Company Subsidiaries that was previously provided by Seller or its Subsidiaries, Seller shall bear and be solely responsible for any incremental costs and expenses of such third party in providing such Service to the Company or the Company Subsidiaries (it being understood that the agreed upon fees for the relevant Services shall still be payable by Buyer).

(e)    Buyer understands that certain Services are provided as of the date hereof and may be provided to it by Seller or its Subsidiaries in accordance with this Section 2.1(e) pursuant to agreements between Seller or its Subsidiaries and various third parties. To the extent not prohibited by such third party, Seller will coordinate the provision of Services by the third party to Buyer (including, where necessary, obtaining the consent of such third party, at Buyer’s sole cost and expense and in consultation with Buyer) and Buyer will reasonably cooperate with any third party providing Services on behalf of Seller in order to facilitate the provision and receipt of such Services.

 

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2.2    Use of Services. Seller shall be required to provide the Services only to the Company and the Company Subsidiaries in connection with the conduct by the Company and the Company Subsidiaries of their respective businesses in the ordinary course. Neither the Company nor any of the Company Subsidiaries may resell any of the Services to any Person whatsoever or permit the use of the Services by any Person other than in connection with the conduct of the business of the Company and the Company Subsidiaries in the ordinary course.

2.3    Disclaimer of Warranty. BUYER ACKNOWLEDGES THAT SELLER IS PROVIDING THE SERVICES AS AN ACCOMMODATION TO BUYER’S TRANSITION FOLLOWING THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THE PURCHASE AGREEMENT. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER DISCLAIMS ALL REPRESENTATIONS, WARRANTIES AND GUARANTEES WITH RESPECT TO THE SERVICES, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS AN UNDERTAKING BY SELLER TO ENSURE OR INCREASE THE COMPANY’S OR COMPANY SUBSIDIARIES’ SALES OR PROFITS OR OTHERWISE TO GUARANTEE THE BUSINESS SUCCESS OF THE COMPANY OR ANY COMPANY SUBSIDIARY OR AN ASSUMPTION BY SELLER OF ANY FINANCIAL OBLIGATIONS OF THE COMPANY AND THE COMPANY SUBSIDIARIES.

2.4    Personnel.

(a)    Subject to the limitations set forth herein, Seller shall furnish all Seller personnel reasonably necessary to provide the Services; provided, however, that Seller may, subject to the prior written consent of Buyer (which shall not be unreasonably withheld, conditioned or delayed), engage one or more third-party service providers or consultants to provide the Services. Seller may, upon prior written consent of Buyer (which shall not be unreasonably withheld, conditioned or delayed), remove and replace any such personnel at any time, and such personnel of Seller will be under the direction, control and supervision of Seller. Nothing in this Agreement is intended to transfer the employment of employees engaged in the provision of any Service from one Party to another.

(b)    The personnel dedicated to the provision of Services are set forth on Schedule B (the “TSA Employees”). At the end of each Service Period, Buyer may, but shall not be required to, cause the Company or any applicable Company Subsidiary to offer employment to the TSA Employees who have rendered the Services during the applicable Service Period; provided, however, that in the event that Buyer or the Company or Company Subsidiary fails to extend an offer of employment to a TSA Employee consistent with the provisions of Section 6.6 of the Purchase Agreement, or (solely with respect to a Canadian employee) if the offer triggers severance for the TSA Employee, Buyer, the Company and the applicable Company Subsidiary shall promptly, but in no event later than thirty (30) days, reimburse Seller for any such severance and other termination obligations paid or provided to such TSA Employee with respect to severance that is triggered or occurs during the period within thirty (30) days after the termination, in accordance with Schedule A, of the Services under this Agreement that such employee renders.

 

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2.5    Service Managers. Seller and Buyer will each designate a service manager (with respect to a Party, such Party’s “Service Manager”), who will be directly responsible for coordinating and managing the delivery or receipt of the Services and who will have the authority to act on such Party’s behalf with respect to matters relating to this Agreement. The Service Managers will also discuss progress in the transition of the Services hereunder and may establish a mutually acceptable set of procedures, including frequency of meetings and reporting, and other mutually acceptable, reasonable structures for their cooperation and the cooperation of the Parties in the execution of their obligations pursuant to this Agreement. Unless otherwise agreed to by the Parties, all communications relating to this Agreement and the Services shall be directed to the Service Managers. With respect to matters relating to the Services or under this Agreement requiring dispute resolution, the Parties and their respective Service Managers will follow the dispute resolution process outlined in Section 2.6. The Parties’ initial Service Managers will be Jennifer Zimmerman for the Buyer, and John Bassett, for the Seller. Seller and Buyer may, in their sole discretion, replace their respective Service Manager from time to time with a substitute manager upon written notice to the other Party.

2.6    Dispute Resolution. The Parties agree that any dispute arising out of or relating to this Agreement (a “Dispute”) shall be first submitted for resolution to the Service Managers. If the Service Managers fail to resolve a Dispute within a reasonable time following its submission to the Service Managers, but in no event more than ten (10) Business Days, then, at the request of either Party, such Dispute shall be submitted to a senior officer of each of the Parties, and such senior officers shall attempt in good faith to resolve the Dispute. If such senior officers cannot resolve the Dispute in such manner within a reasonable time, but in no event more than twenty (20) Business Days, then either Party may pursue litigation or other available means of resolving the Dispute. The Parties agree to follow the procedures set forth in this Section 2.6. prior to initiation of any legal proceedings with respect to any Dispute. The Parties agree that all discussions, negotiations and other information exchanged between the Parties during the foregoing escalation proceedings shall be without prejudice to the legal position of a Party in any subsequent litigation or arbitration proceeding. During the pendency of any Dispute, each Party shall, unless directed otherwise by the other Party, continue to perform its respective obligations under this Agreement while such Dispute is being resolved; provided that this Section 2.6 shall not operate or be construed as extending the Term or prohibiting or delaying a Party’s exercise of any right it may have hereunder to terminate this Agreement or suspend performance as to all or any part of the Services in accordance with the terms of this Agreement.

SECTION 3

PAYMENT; WARRANTY; TAXES

3.1    Fee and Payment. The fees and other charges payable by Buyer in consideration for the Services hereunder are set forth on Schedule A (each, a “Service Fee”). In addition to, but without duplication of, the Service Fees set forth on Schedule A hereto, Buyer shall (a) pay Seller an administration fee in the amount of three million dollars ($3,000,000), payable in twelve (12) equal monthly installments of two hundred fifty thousand dollars ($250,000), payable on the first Business Day of each month commencing in January 2019 through and including December 2019, and (b) reimburse Seller for all out-of-pocket costs and expenses incurred by Seller in connection with providing the Services hereunder (which, for the avoidance of doubt, shall exclude overhead and payroll expenses). Seller shall invoice Buyer on a monthly

 

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basis in arrears in accordance with Schedule A for all Services it provided during such month and Buyer shall make payment to Seller within thirty (30) days of receipt of such invoice. Such invoices shall generally identify the Services provided, by area, during the applicable month and specify the Service fee applicable to each such Service area so identified. During the ten (10) Business Day period following Buyer’s receipt of the applicable invoice for the Services, Buyer shall be entitled to review such invoice and discuss with Seller any questions or issues it has with respect to such invoice, and if the Buyer has a bona fide disagreement with any charge thereunder, then Buyer shall send written notice to the Seller specifying in reasonable detail the reason for such disagreement and Buyer and Seller will negotiate in good faith to promptly resolve any such disagreement in accordance with Section 2.6. The Service Fees payable for the Services set forth on Schedule A are based on certain assumptions acknowledged and agreed to by the Parties regarding the underlying costs of providing the Services, including the current and anticipated costs attributable to the provision of any such Services. If events occur that cause a material change in the underlying costs of providing the Services (either increasing or decreasing such costs), then Seller and Buyer hereby agree to re-negotiate in good faith the pricing provisions of Schedule A in order to adjust the Service Fees that Buyer will be required to pay going forward for the continued provision of the Services.

3.2    Payment Default. A payment default (each a “Payment Default”) shall be deemed to occur if the applicable statement (for purposes of this Section 3.2, the “Overdue Statement”) is not paid in full, in cash (including any disputed amounts as further described below) by 11:59 p.m. Eastern Time on the 30^th day after delivery of the invoice described in Section 3.1. Upon a Payment Default, Buyer shall be responsible for late charges for each month (or pro rated for any portion thereof in which the Overdue Statement is paid) the Overdue Statement is overdue, calculated as (A) the lesser of (i) 10% or (ii) the maximum rate allowed by applicable law (the “Late Payment Interest Rate”), multiplied by (B) the amount due in the Overdue Statement. Notwithstanding anything to the contrary set forth in this Agreement, Buyer shall not be entitled to withhold or setoff any amount of any fee or other amount payable hereunder as a disputed amount or for any other reason. Notwithstanding the foregoing, if any bona fide disagreement with respect to any invoiced charge is ultimately resolved as a refund to the Buyer, such refund shall bear interest from the date the disputed charge was paid to Seller at a rate per annum equal to the Late Payment Interest Rate

3.3    Taxes. In addition to the fee required to be paid by Buyer to Seller for the Services provided hereunder, Buyer shall pay all sales or use taxes properly assessed with respect to the receipt or use of the Services. The applicable sales and use taxes shall be indicated by the Seller separately on all of the Seller’s invoices. Buyer shall remit to the appropriate tax authorities (the “Tax Authorities”) any taxes required to be withheld by law from any fees payable to Seller hereunder. Buyer shall submit to Seller evidence of payment of any such withholding tax to the Tax Authorities. In the event that Seller receives any credit, deduction or refund of such withholding tax from the Tax Authorities, it shall (a) promptly provide a copy of the certificate from the Tax Authorities showing the receipt of such credit, deduction or refund and (b) provide Buyer a credit for such amount against future monthly fees payable by Buyer to Seller. The Parties shall cooperate with each other to minimize any applicable sales and use taxes and each shall provide the other with any reasonable certificates or documents which are useful for such purpose.

 

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3.4    Certain Software License Fees. Upon Buyer’s request, Seller will use commercially reasonable efforts to obtain all software licenses required hereunder for Seller’s and its Subsidiaries’ performance of the Services, including, without limitation, with respect to the networks and systems in the Business’ data center and disaster recovery center and continued support of the Business during the term of this Agreement or of any Service hereunder (“Required Licenses”). Notwithstanding anything to the contrary in this Agreement and the Purchase Agreement and without regard to any limitation of liability, Buyer shall pay all transfer, re-licensing, consent or termination fees or expenses associated with obtaining all Required Licenses; provided, however, that Seller shall consult with Buyer before seeking any Required License including with respect to the cost of such Required License and shall obtain such Required License only with Buyer’s consent.

SECTION 4

TERM; TERMINATION

4.1    Term. This Agreement shall commence on the date hereof and shall terminate upon completion of the Services hereunder or the earlier termination of this Agreement in accordance with its terms (such period, the “Term”). Schedule A hereto sets forth the term or estimated completion date, as applicable, for each of the Services to be provided hereunder (each, a “Service Period”) and any extension of the term or estimated completion date, as applicable, that Buyer may elect with respect to certain Services. Seller shall not have any obligation to provide any Service after the “maximum duration” period set forth on Schedule A, but, subject to the terms and limitation set forth on Schedule A, including any “escalator” costs contemplated, will consider in good faith any reasonable request by Buyer to extend the term of any Service that Buyer has, after using commercially reasonable efforts, been unable to replace on or before the end of the term or expected completion date (included any extension thereof set forth on Schedule A) of such Service.

4.2    Termination.

(a)    Seller may terminate this Agreement or suspend performance of its obligations hereunder upon written notice to Buyer if Buyer fails to pay any invoice sent to Buyer pursuant to Section 3.1 within thirty (30) days of its receipt of such invoice, and Buyer thereafter fails to make such payment within thirty (30) days after Buyer receives a written request from Seller that such payment be made.

(b)    Buyer may terminate this Agreement in its entirety, or any specific Service, for convenience upon written notice to Seller, provided that (i) such notice is provided to Seller at least thirty (30) days, or such other period as may be set forth on Schedule A, prior to the effective date of termination and in no event shall any Service be terminated before the expiration of the applicable minimum Service period set forth on Schedule A, and (ii) if Buyer elects to terminate any Service that is identified in Schedule A as a Bundled Service, Buyer terminates at the same time all of such dependent Services or Services that are part of such Bundled Service. In the event that, after good faith negotiations, the Parties mutually agree that Buyer may terminate some, but not all, of the Services within a bundle as set forth on Schedule A, then upon such termination, any adjustment in Service Fees for such bundle shall be as

 

7

mutually agreed in writing by the Parties to account for the costs of performance of Services avoided by Seller as a result of such partial termination.

(c)    Either Party may terminate this Agreement upon written notice having immediate effect if the other Party materially breaches or materially defaults on any provision of this Agreement and, if curable, fails to cure such breach or default within thirty (30) days after receipt of a written notice from the non-breaching Party specifying in reasonable detail the alleged material breach or default and requesting such breach or default be cured.

(d)    Either Party may terminate this Agreement upon written notice having immediate effect in the event that the other Party (i) files for bankruptcy, (ii) becomes or is declared insolvent or is the subject of any proceedings (that is not dismissed within sixty (60) days) related to its liquidation, insolvency or the appointment of a receiver or similar officer, (iii) makes an assignment for the benefit of all or substantially all of its creditors, (iv) takes any corporate action for its winding-up, dissolution or administration or (v) enters into an agreement for the extension or readjustment of substantially all of its obligations or if it suffers any foreign equivalent to any of the foregoing.

(e)    This Agreement may be terminated by the mutual written agreement of the Parties.

(f)    This Agreement itself shall automatically terminate upon the expiration of the Term or the termination of the last Service to be provided hereunder.

(g)    If there is any default by Seller hereunder, Buyer may terminate this Agreement and recover any fees paid in advance for any Services not performed.

4.3    Effect of Termination. Sections 3.3, 4.3, 5.2, Section 6 and Section 7 shall survive any termination of this Agreement. In addition, to the extent not paid in full prior to the termination of this Agreement, the Administrative Fee and any unreimbursed fees and expenses shall become due and payable in full upon any termination of this Agreement other than a termination by Buyer pursuant to Section 4.2(c), in which case the Administration Fee or any portion thereof shall no longer be due or payable, and provided that only the installment of the Administrative Fee that is due and unpaid as of the date of such termination, together with any unreimbursed fees and expenses, shall be payable upon a termination by Buyer pursuant to Section 7.2, and any remaining installments of the Administration Fee shall no longer be due or payable.

SECTION 5

CERTAIN OTHER COVENANTS

5.1    Access. Buyer shall, and shall cause the Company and the Company Subsidiaries to, make available on a timely basis to Seller, its Subsidiaries and any third parties pursuant to Section 2.1(e) all information reasonably requested by Seller to enable it to provide the Services. Buyer shall, and shall cause the Company and each Company Subsidiary to, give Seller, its Subsidiaries and any third parties pursuant to Section 2.1(e), at no cost to Seller, reasonable access, during regular business hours and at such other times as are reasonably required, to the premises of the Company and the Company Subsidiaries for the purposes of providing the

 

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Services. As reasonably requested by Buyer, Seller shall use commercially reasonable efforts to assist the Company or any Company Subsidiary in transitioning off of any applicable Services by answering basic questions.

5.2    Title to Data. Buyer acknowledges that neither Buyer, the Company nor any Company Subsidiary will acquire any right, title or interest (including any license rights or rights of use) in any firmware or software, and any licenses therefor which are owned by Seller or its Subsidiaries, by reason of Seller’s provision of the Services under this Agreement. Seller may retain a copy of any or all data of the Company and the Company Subsidiaries relating to this Agreement following the termination of this Agreement for archival purposes and to be used to fulfill any of Seller’s legal obligations. If Buyer or any of its Affiliates (including the Company and the Company Subsidiaries after the Closing Date) is given or gains access, including unintentional or accidental access, to Seller’s or any of its Affiliates’ computer or electronic systems or data storage, in connection with Seller’s rendering of the Services, Buyer shall limit such access and use solely to the use of the Services and will not attempt to access such computer system, electronic files, software or other electronic services other than as allowed and necessary for the use of the Services. Buyer shall (i) limit such access to the employees of Buyer with an express requirement to have such access in connection with this Agreement, and (ii) follow all reasonable security rules and procedures of Seller for use of Seller’s electronic resources (provided that Seller has informed Buyer of such rules and procedures and all changes thereto). All use of identification numbers and passwords disclosed, unintentional or otherwise, to Buyer or its Affiliates (including the Company and the Company Subsidiaries after the Closing Date) and any information obtained by Buyer or its Affiliates (including the Company and the Company Subsidiaries after the Closing Date), regardless of the means, as a result of Buyer access to, and use of, Seller’s computer and electronic storage systems shall not be disclosed or used by Buyer, the Company or the Company Subsidiaries except in connection with the Services provided hereunder.

5.3    Compliance with Laws. Each of Buyer and Seller shall comply in all material respects with any and all applicable laws in respect of the conduct of its obligations under this Agreement.

5.4    Software and Software Licenses. If and to the extent requested by Buyer, Seller shall use commercially reasonable efforts to assist Buyer in its efforts to obtain licenses (or other appropriate rights) to use, duplicate and distribute, as necessary, certain computer software necessary for Seller or its Subsidiaries to provide, or the Company or the Company Subsidiaries to receive, Services; provided, however, that, Seller shall not be required to pay any fees or other payments, incur any obligations (including obligations to make any payments or expend any funds), assume any liability, or offer or grant any accommodation or concession (financial or otherwise) to enable Buyer to obtain any such license or rights; provided further that Seller shall not be required to seek broader rights or more favorable terms for Buyer than those applicable to Seller, the Company or the Company Subsidiaries, as the case may be, prior to the date hereof or as may be applicable to Buyer from time to time hereafter. The Parties acknowledge and agree that there can be no assurance that Seller’s efforts will be successful or that Seller will be able to obtain such licenses in a timely manner, or rights on acceptable terms or at all and, where Seller enjoys rights under any enterprise, site or similar license grant, the Parties acknowledge that such

 

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license typically precludes partial transfers or assignments or operation of a service bureau on behalf of unaffiliated entities.

5.5    Records and Audits. In a manner consistent with Seller’s record retention policy and applicable Law, Seller shall, and shall cause its subsidiaries to, maintain detailed books and records of the Services provided hereunder and reasonable supporting documentation of the costs on which the fees charged to Buyer hereunder have been based. Buyer shall have the right, at its sole cost and expense (subject to the last sentence of this Section 5.5), to have the applicable books and records of Seller (i) reviewed by Buyer from time to time during the Term, and/or (ii) audited by a nationally recognized independent certified public accountant, mutually selected by the Parties, under appropriate confidentiality provisions, for the purpose of verifying the accuracy of all fees and out-of-pocket cost calculations under this Agreement; provided, that any such audit shall be conducted no more than twice and shall be conducted, in each case, upon at least thirty (30) days’ advance notice; provided, further, that no review or audit shall be conducted outside of normal business hours or in a manner that interferes unreasonably with Seller’s business. The results of any such audit shall be binding on the Parties absent manifest error, and shall be delivered in writing to each Party. Any underpayment or overbilling determined by such audit shall promptly be paid by Buyer or refunded by Seller, as applicable, plus interest at a rate of simple interest per annum equal to the Late Payment Interest Rate, from the date of any such underpayment or overbilling. Notwithstanding the foregoing, in the event that Buyer elects to exercise its right to conduct an audit pursuant to this Section 5.5 prior to the end of the Term, Buyer shall be required to reimburse Seller for all reasonable and direct costs and expenses incurred by Seller in connection with any such audit unless it is determined that there was an overbilling in an amount equal to or greater than one hundred fifty thousand dollars ($150,000) in the aggregate by Seller, in which case Seller shall be required to reimburse Buyer for all reasonable and direct costs and expenses associated with such audit.

SECTION 6

LIABILITIES

6.1    Consequential and Other Damages. Seller shall be not liable to Buyer, whether in contract, tort (including negligence and strict liability), or otherwise, for any special, indirect, incidental or consequential damages (other than to the extent reasonably foreseeable) whatsoever (including, to the extent such damages may be limited by contract under applicable law, punitive damages), which in any way arise out of, relate to, or are a consequence of, its performance or nonperformance hereunder, or the provision of or failure to provide any Service hereunder, including but not limited to loss of profits (provided, however, that any such damages paid with respect to a claim made by a third party shall be considered direct damages).

6.2    Limitation of Liability. NOTWITHSTANDING THE FORUM IN WHICH ANY CLAIM OR ACTION MAY BE BROUGHT OR ASSERTED OR THE NATURE OF ANY SUCH CLAIM OR ACTION, IN NO EVENT SHALL SELLER BE LIABLE IN RESPECT OF ANY SERVICES RENDERED HEREUNDER BY ANY DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF SELLER OR ITS AFFILIATES, EXCEPT TO THE EXTENT SUCH LIABILITY ARISES FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY SUCH PERSON OR IF SUCH CLAIM OR ACTION ARISES UNDER SECTION 6.3(b), AND IN NO EVENT SHALL ANY DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF

 

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SELLER OR ITS AFFILIATES HAVE ANY PERSONAL LIABILITY TO BUYER IN RESPECT OF ANY SERVICES RENDERED HEREUNDER. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE AGGREGATE LIABILITY OF SELLER TO BUYER IN RESPECT OF THE SERVICES PROVIDED HEREUNDER, OR OTHERWISE IN CONNECTION WITH THIS AGREEMENT, SHALL BE LIMITED TO (A) REIMBURSEMENT OF THE FEES PAID BY BUYER IN RESPECT OF THE SERVICES THAT CAUSE BUYER TO SUFFER LOSSES AND EXPENSES SUBJECT TO INDEMNIFICATION HEREUNDER, PLUS (B) AN AGGREGATE AMOUNT NOT TO EXCEED $2,000,000. The Parties agree that this provision limiting remedies and liquidating damages is reasonable under the circumstances and Buyer acknowledges that Seller and its Affiliates (including each such entity’s respective directors, officers, employees and agents) shall have no other financial liability to Buyer, the Company or the Company Subsidiaries whatsoever.

6.3    Indemnification. Subject to the limitations set forth in this Agreement (including, for the avoidance of any doubt, Section 6.1 and Section 6.2):

(a)    Buyer shall indemnify, defend and hold harmless Seller, its Subsidiaries and their respective officers, directors, employees or agents from and against any and all liabilities, claims, damages, losses and expenses (including, but not limited to, court costs and reasonable attorneys’ fees) of any kind or nature (“Losses and Expenses”), related to, arising out of or in connection with any third-party claim relating to (i) Buyer’s failure to comply with its obligations hereunder or (ii) an allegation that any activity of Buyer, the Company or the Company Subsidiaries has resulted in the infringement of (or that any resource or process owned or used by Buyer, the Company or the Company Subsidiaries infringes) or violation of any contractual or other right, including the patent, copyright, trademark, trade secret, moral rights, or any other intellectual property rights of any third party; provided, however, Seller shall not be indemnified for any Losses and Expenses to the extent those Losses and Expenses resulted from the fraud, bad faith or willful misconduct of Seller or its Subsidiaries.

(b)    Seller shall indemnify, defend and hold harmless Buyer, the Company, the Company Subsidiaries and their respective officers, directors, employees or agents from and against any and all Losses and Expenses related to, arising out of or in connection with any third-party claim relating to Seller’s failure to fulfill its obligations hereunder; and provided, further, Buyer shall not be indemnified for any Losses and Expenses to the extent those Losses and Expenses resulted from the fraud, bad faith or willful misconduct of Buyer, the Company or any Company Subsidiary.

SECTION 7

MISCELLANEOUS

7.1    Notices. All notices hereunder shall be in writing and shall be deemed to have been given if given in accordance with Section 10.1 of the Purchase Agreement.

7.2    Force Majeure. No Party hereto (or any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement so long as and to the extent that performance of its obligations or attempts

 

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to cure any breach are made impossible or impracticable due to any act of God, fire, natural disaster, act of terror, act of government, shortage of materials or supplies after the date hereof or any other cause beyond the reasonable control of such Party (a “Force Majeure”); provided, however, that (i) such Party (or such Person) shall have informed the other Party and shall have exercised commercially reasonable efforts to minimize the effect of Force Majeure on its obligations; and (ii) the nature, quality and standard of care that such Party (or such Person) shall provide in delivering a Service after a Force Majeure shall be substantially the same as the nature, quality and standard of care that such Party (or such Person) provides to its Affiliates and its other business components with respect to such Service. In the event of an occurrence of a Force Majeure, the Party whose performance is affected thereby shall give notice of suspension as soon as reasonably practicable to the other stating the date and extent of such suspension and the cause thereof, and such Party shall resume the performance of such obligations as soon as reasonably practicable after the removal of the cause. During the period of a Force Majeure, Buyer shall be entitled to seek an alternative service provider with respect to any or all of the affected Services and shall be entitled to permanently terminate any or all such Services (and shall be relieved of the obligation to pay Service Charges for such Services(s) throughout the duration of such Force Majeure) if a Force Majeure shall continue to exist for more than 15 consecutive days, it being understood that Buyer shall not be required to provide any advance notice of such termination to Seller.

7.3    Independent Contractors. Seller and its Subsidiaries shall operate as, and have the status of, independent contractors and no Party shall act as or be a partner, co-venturer or employee of the other Party. Unless specifically authorized to do so in writing, neither Party shall have any right or authority to assume or create any obligations or to make any representations or warranties on behalf of the other Party, whether express or implied, or to bind the other Party in any respect whatsoever.

7.4    Amendment; Waivers. No amendment, modification or discharge of this Agreement, and no waiver hereunder, shall be valid or binding unless set forth in writing and duly executed by the Party against whom enforcement of the amendment, modification, discharge or waiver is sought. Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the Party granting such waiver in any other respect or at any other time. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

7.5    Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, directly or indirectly, by any Party hereto without the prior written consent of the other Party hereto; provided, however, that either Party shall be permitted (a) to assign its rights under this Agreement in connection with a sale of all or substantially all of such Party’s assets, (b) to undergo a change of control so long as the resulting, surviving or transferee Person assumes all of the obligations of the relevant party thereto by operation of law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party or (c) in the case of Buyer, to pledge or assign its rights hereunder to its debt financing sources or an agent thereof as collateral security in connection with any debt financing.

 

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7.6    Sections and Headings. The sections and headings contained in this Agreement are for convenience only, are not intended to define, limit, expand or describe the scope or intent of any clause or provision of this Agreement and shall not affect the meaning or interpretation of this Agreement.

7.7    Entire Agreement. This Agreement, together with all exhibits and schedules attached hereto, constitutes the entire agreement and understanding of the Parties and supersedes all prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof.

7.8    Counterparts. This Agreement may be executed in any number of counterparts, including by means of email, each of which when executed shall be deemed to be an original of this Agreement and all of which taken together shall constitute one and the same agreement.

7.9    Governing Law.

(a)    This Agreement shall be governed by the laws of the State of Delaware, its rules of conflict of laws notwithstanding. Each Party hereby agrees and consents to be subject to the jurisdiction of the Court of Chancery of the State of Delaware in and for New Castle County, or if the Court of Chancery lacks jurisdiction over such dispute, in any state or federal court having jurisdiction over the matter situated in New Castle County, Delaware, in any Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby. Each Party hereby irrevocably consents to the service of any and all process in any such suit, action or proceeding by the delivery of such process to such Party at the address and in the manner provided in Section 10.1 of the Purchase Agreement. Each of the Parties hereto irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the Court of Chancery of the State of Delaware in and for New Castle County, or if the Court of Chancery lacks jurisdiction over such dispute, in any state or federal court having jurisdiction over the matter situated in New Castle County, Delaware, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

(b)    EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY

 

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MAKES THIS WAIVER VOLUNTARILY AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.9.

7.10    No Third-Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of each Party hereto and its respective successors and permitted assigns. Except as provided in Section 6.3 with respect to indemnification, nothing in this Agreement, express or implied, shall confer on any person other than the parties hereto, and their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, including any third-party beneficiary rights.

7.11    Errors and Omissions. Inadvertent delays, errors or omissions that occur in connection with the performance of this Agreement or the transactions contemplated hereby shall not constitute a breach of this Agreement provided that any such delay, error or omission is corrected as promptly as commercially practicable after discovery; provided, however, that this Section 7.11 shall not apply with respect to, as applicable, (a) any failure to pay any amount due and payable by Buyer in accordance with Section 3, (b) Buyer’s indemnification obligations as set forth in Section 6.3(a), and (c) Seller’s indemnification obligations as set forth in Section 6.3(b).

7.12    Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and if the rights or obligations of the Parties under this Agreement will not be materially and adversely affected thereby, (a) such provision will be fully severable; (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof; (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom; and (d) in lieu of such illegal, invalid, or unenforceable provisions, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible.

7.13    Specific Performance. Each Party acknowledges that money damages would be both incalculable and an insufficient remedy for any breach of this Agreement by such Party and that any such breach would cause Buyer, on the one hand, and Seller, on the other hand, irreparable harm. Accordingly, each Party hereto also agrees that, in the event of any breach or threatened breach of the provisions of this Agreement by such Party, Buyer, on the one hand, and Seller, on the other hand, shall be entitled to equitable relief without the requirement of posting a bond or other security, including in the form of injunctions and orders for specific performance. Any and all remedies herein expressly conferred upon a Party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy. Each of Seller, on the one hand, and Buyer, on the other hand, hereby agrees not to raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches or threatened breaches of this Agreement by Seller or Buyer, as applicable, and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of Seller or Buyer, as applicable, under this Agreement.

 

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[Signature page follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Transition Services Agreement as of the date first written above.

 

 

[Signature Page to Transition Services Agreement]

Exhibit 10.2

Execution Version

INTELLECTUAL PROPERTY AGREEMENT

This INTELLECTUAL PROPERTY AGREEMENT (this “Agreement”), dated as of December 31, 2018 (the “Effective Date”) is entered into by and between Armstrong Flooring, Inc., a Delaware corporation (“Seller”) and AFI Licensing LLC, a Delaware limited liability company (“Licensing” and together with Seller, “Arizona”) and AHF Holding, Inc. (formerly known as Tarzan HoldCo, Inc.), a Delaware corporation (“Buyer”) and Armstrong Hardwood Flooring Company, a Tennessee corporation (the “Company” and together with Buyer the “Buyer Entities”) (each of Arizona on the one hand and the Buyer Entities on the other hand, a “Party” and collectively, the “Parties”).

WHEREAS, Seller and Buyer have entered into that certain Stock Purchase Agreement, dated November 14, 2018 (the “Stock Purchase Agreement”); WHEREAS, pursuant to the Stock Purchase Agreement, Seller has agreed to sell and transfer, and Buyer has agreed to purchase and acquire, all of Seller’s right, title and interest in and to Armstrong Wood Products, Inc., a Delaware corporation (“AWP”) and its Subsidiaries, the Company and HomerWood Hardwood Flooring Company, a Delaware corporation (“HHFC,” and together with the Company, the “Company Subsidiaries” and together with AWP, the “Company Entities” and each a “Company Entity”) by way of a purchase by Buyer and sale by Seller of the Shares, all upon the terms and condition set forth therein;

WHEREAS, Arizona owns certain Copyrights, Know-How, Patents and Trademarks which may be used in the Company Field, and in connection with the transactions contemplated by the Stock Purchase Agreement the Company desires to acquire all of Arizona’s right, title and interest in and to such Intellectual Property used exclusively in the Company Field, and obtain a license from Arizona to use other such Intellectual Property on the terms and subject to the conditions set forth herein;

WHEREAS, Seller is signatory to the Trademark License Agreement pursuant to which Seller obtains a license to the Arizona Licensed Trademarks;

WHEREAS, the Company desires to obtain a sublicense to use the Arizona Licensed Trademarks in the Company Field;

WHEREAS, Arizona has obtained consent from all counterparties to the Trademark License Agreement to grant to the Company the sublicenses to the Arizona Licensed Trademarks included in this Agreement; and

WHEREAS, the Company Entities own certain Copyrights and Know-How which may be used in the Arizona Field, and in connection with the transactions contemplated by the Stock Purchase Agreement, Arizona desires to obtain a license from the Company Entities to use such Intellectual Property on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1.	DEFINITIONS AND INTERPRETATION

 

1.1	Certain Definitions. As used herein, capitalized terms have the meaning ascribed to them herein, including the following terms have the meanings set forth below. Capitalized terms that are not defined in this Agreement shall have the meaning set forth in the Stock Purchase Agreement.

 

(a)

“Arizona Assigned Copyrights” means all Copyrights, whether registered or unregistered, owned by Licensing or Seller as of the Effective Date and used or held for use exclusively in the Company Field as of November 14, 2018 (the “SPA Signing Date”) and/or as of the Effective Date.

 

(b)

“Arizona Assigned Internet Domain Names” means the Internet domain names set forth on Schedule 1.1(b) and all other Internet domain names owned by Licensing or Seller as of the Effective Date and used or held for use exclusively in the Company Field as of the SPA Signing Date and/or as of the Effective Date (other than any Internet domain names that include any Arizona Licensed Trademarks).

 

(c)

“Arizona Assigned IP” means the Arizona Assigned Copyrights, Arizona Assigned Internet Domain Names, Arizona Assigned Know-How, Arizona Assigned Patents and Arizona Assigned Trademarks.

 

(d)

“Arizona Assigned Know-How” means all Know-How owned by Licensing or Seller as of the Effective Date and used or held for use exclusively in the Company Field as of the SPA Signing Date and/or as of the Effective Date.

 

(e)

“Arizona Assigned Patents” means the Patents set forth on Schedule 1.1(e) and all other Patents owned by Licensing or Seller and used or held for use exclusively in the Company Field as of the SPA Signing Date and/or as of the Effective Date.

 

(f)

“Arizona Assigned Trademarks” means the Trademarks set forth on Schedule 1.1(f) and all other Trademarks owned by Licensing or Seller as of the Effective Date and used or held for use exclusively in the in the Company Field as of the SPA Signing Date and/or as of the Effective Date (other than, for clarity any Arizona Licensed Trademarks).

 

(g)

“Arizona Domain Names” means the Internet domain names set forth on Schedule 1.1(g).

 

(h)

“Arizona Field” means all activities conducted by Arizona or its Affiliates, other than the Company Field.

 

(i)

“Arizona Licensed Copyrights” means all Copyrights owned by Licensing or Seller or their respective Affiliates, as of the Effective Date and used or held for use in the Company Field during the five (5) years prior to the Effective Date (other than the Arizona Assigned Copyrights).

 

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(j)

“Arizona Licensed IP” means the Arizona Licensed Copyrights, the Arizona Licensed Know-How, the Arizona Licensed Patents, the Arizona Licensed Trademarks, the Diamond Licensed Trademarks and the Phase-Out Marks.

 

(k)

“Arizona Licensed Know-How” means all Know-How owned by Licensing or Seller or their respective Affiliates, as of the Effective Date and used or held for use in the Company Field during the five (5) years prior to the Effective Date (other than the Arizona Assigned Know-How).

 

(l)

“Arizona Licensed Patents” means the Patents set forth on Schedule 1.1(l) and all other Patents owned by Licensing or Seller or their respective Affiliates as of the Effective Date and used or held for use in the Company Field during the five (5) years prior to the Effective Date (other than the Arizona Assigned Patents).

 

(m)

“Arizona Licensed Trademarks” means the Trademarks set forth on Schedule 1.1(m).

 

(n)

“Arizona Trademark License Term” means the period commencing on the Effective Date and ending twenty-four (24) months thereafter.

 

(o)

“Company Field” means the design, development, manufacture, marketing, promotion, advertising, sourcing, distribution and sale of solid hardwood and engineered wood flooring products by or for any Company Entity.

 

(p)

“Company Licensed Copyrights” means all Copyrights and registrations and applications for any of the foregoing owned by any Company Entity as of the Effective Date and used or held for use in the Arizona Field as of the Effective Date.

 

(q)

“Company Licensed IP” means the Company Licensed Copyrights, the Company Licensed Know-How and the Company Licensed Patents.

 

(r)

“Company Licensed Know-How” means all Know-How owned by any Company Entity as of the Effective Date and used or held for use in the Arizona Field as of the Effective Date.

 

(s)

“Company Licensed Patents” means the Patents set forth on Schedule 1.1(s).

 

(t)

“Copyrights” means copyrights (whether registered or unregistered) including applications for copyright (excluding, for clarity, Trademarks).

 

(u)

“Diamond Licensed Trademarks” means the Trademarks set forth on Schedule 1.1(u).

 

(v)

“Diamond Product” means the design, development, manufacture, marketing, promotion, advertising, sourcing, distribution and sale of the solid hardwood flooring product by any Company Entity as conducted under the Diamond Licensed Trademarks by any Company Entity prior to the Effective Date

 

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(including the composition of coating used with respect to such solid hardwood flooring product).

 

(w)

“Diamond Trademark License Term” means the period commencing on the Effective Date and ending eighteen (18) months thereafter.

 

(x)

“Know-How” means trade secrets, and other confidential and proprietary information, inventions, processes, formulas and methodologies.

 

(y)

“Licensed IP” means the Arizona Licensed IP and the Company Licensed IP.

 

(z)

“Licensed Copyrights” means the Arizona Licensed Copyrights and the Company Licensed Copyrights.

 

(aa)

“Licensed Know-How” means the Arizona Licensed Know-How and the Company Licensed Know-How.

 

(bb)

“Licensed Trademarks” means the Arizona Licensed Trademarks, the Diamond Licensed Trademarks and the Phase-Out Marks.

 

(cc)

“Patents” means patent rights, including patents, patent applications, and all related continuations, continuations-in-part, divisionals, renewals, reissues, re-examinations, substitutions, and extensions thereof, and applications for any of the foregoing.

 

(dd)

“Proceeding” means any proceeding, claim, suit or action arising out of, or in connection with, this Agreement or its subject matter (including its validity, formation at issue, effect, interpretation, performance or termination), howsoever arising.

 

(ee)

“Seller Licensed Trademarks” means the Arizona Licensed Trademarks and the Diamond Licensed Trademarks.

 

(ff)

“Third Party” means any Person other than Arizona, the Company, and their respective Affiliates.

 

(gg)

“Trademarks” means any trademarks, service marks, trade names, trade dress, and other similar designations of source or origin, and registrations and applications for any of the foregoing.

 

(hh)

“Trademark License Agreement” means the Trademark License Agreement by and between Armstrong World Industries, Inc., AWI Licensing LLC and Armstrong Flooring, Inc, dated as of April 1, 2016 and attached hereto as Exhibit A.

 

4

1.2	Interpretation. Section 10.5 and 10.14 of the Stock Purchase Agreement shall apply hereto, mutatis mutandis.

 

1.3	Company Actions. In respect of any action herein required to be undertaken by any of the Company Entities, or to be omitted by any of the Company Entities, the Buyer Entities shall cause the applicable Company Entity to so undertake or omit to undertake, as applicable, such action.

 

2.	ASSIGNMENT OF ARIZONA ASSIGNED IP

 

2.1	Assignment. Arizona agrees to assign and hereby assigns its entire right, title and interest in and to the Arizona Assigned IP to the Company.

 

2.2

Recordation of Assignment. Arizona will reasonably cooperate with the Company to obtain, record, and perfect title to, and provide all necessary evidence of the Company’s ownership of, the Arizona Assigned IP, including the execution of (i) a Patent Assignment in the form of the attached Exhibit B, and (ii) a Trademark Assignment in the form of the attached Exhibit C.

 

3.	GRANT OF COPYRIGHT LICENSE

 

3.1	Arizona Copyright Grant. Subject to the terms and conditions of this Agreement, Arizona hereby grants to the Company a perpetual, non-exclusive, royalty-free license in, to and under the Arizona Licensed Copyrights for use in the Company Field throughout the world.

 

3.2	Company Copyright Grant. Subject to the terms and conditions of this Agreement, the Company hereby grants to Seller a perpetual, non-exclusive, royalty-free license in, to and under the Company Licensed Copyrights for use in the Arizona Field throughout the world.

 

4.	GRANT OF KNOW-HOW LICENSE

 

4.1	Arizona Know-How Grant. Subject to the terms and conditions of this Agreement, Arizona hereby grants to the Company a perpetual, non-exclusive, royalty-free license in, to and under the Arizona Licensed Know-How for use in the Company Field throughout the world.

 

4.2	Company Know-How Grant. Subject to the terms and conditions of this Agreement, the Company hereby grants to Seller a perpetual, non-exclusive, royalty-free license in, to and under the Company Licensed Know-How for use in the Arizona Field throughout the world.

 

5.	GRANT OF PATENT LICENSE

 

5.1	Arizona Patent Grant. Subject to the terms and conditions of this Agreement, Arizona hereby grants to the Company a perpetual, non-exclusive, royalty-free license in, to and under the Arizona Licensed Patents for use in the Company Field throughout the world.

 

5

5.2	Company Patent Grant. Subject to the terms and conditions of this Agreement, the Company hereby grants to Seller a perpetual, non-exclusive, royalty-free license in, to and under the Company Licensed Patents for use in the Arizona Field throughout the world.

 

6.	GRANT OF TRADEMARK LICENSE

 

6.1

Arizona Licensed Trademark Grant. Subject to the terms and conditions of this Agreement, Arizona hereby grants to the Company a limited, non-exclusive, royalty-free, non-sublicensable (except as set forth in Section 7.1), non-assignable license in, to and under the Arizona Licensed Trademarks for the Arizona Trademark License Term for use in the Company Field throughout the world only in the form and manner that such Arizona Licensed Trademarks are used in the Business as of the Closing, provided that the Company shall use commercially reasonable efforts to present the Arizona Licensed Trademarks in the form set forth on Schedule 6.1.

 

6.2

Diamond Licensed Trademark Grant. Subject to the terms and conditions of this Agreement, Arizona hereby grants to the Company a limited, non-exclusive, royalty-free, non-sublicensable (except as set forth in Section 7.1), non-assignable (except as set forth in Section 13.2) license in, to and under the Diamond Licensed Trademarks for the Diamond Trademark License Term for use with respect to the Diamond Product throughout the world only in the form and manner set forth on Schedule 6.2.

 

6.3

Quality Control. The Buyer Entities acknowledge the importance of Arizona’s exercise of quality control over the use of the Seller Licensed Trademarks to preserve the continued integrity and validity of the Seller Licensed Trademarks and to protect the value and goodwill associated with the Seller Licensed Trademarks, and accordingly:

 

(a)

The Company shall ensure that all goods and services provided by the Company, under or in association with any of the Seller Licensed Trademarks, shall (i) be substantially the same as or greater than the quality of goods and services provided under such Seller Licensed Trademarks immediately prior to the Effective Date and (ii) not be associated with any goods or services, including any activities, that are reasonably likely to have an adverse effect on (A) the image or reputation of any of the Seller Licensed Trademarks or (B) Seller’s right, title or interest in and to, any of the Arizona Licensed Trademarks.

 

(b)

The Company shall not tarnish or bring into disrepute the reputation of or goodwill associated with the Seller Licensed Trademarks or Arizona.

 

(c)

The Company shall use the Seller Licensed Trademarks at all times in compliance with all applicable Laws.

 

(d)

The Company shall include trademark and other notices in connection with the use of the Seller Licensed Trademarks as reasonably requested by Arizona from time to time.

 

6

(e)

The Company shall upon Arizona’s reasonable request from time to time, supply to Arizona representative samples and/or written descriptions, as appropriate, of uses made by the Company of the Seller Licensed Trademarks.

 

(f)

The Buyer Entities acknowledge that this license grant does not include, and the Company shall receive no rights under this Agreement or the Stock Purchase Agreement, to use any Trademark that is confusingly similar to or derivative of a Seller Licensed Trademark (other than the Seller Licensed Trademarks themselves as expressly authorized hereunder).

 

6.4

Trademark License Agreement. In addition to the obligations set forth in Section 6.3, and notwithstanding any other provision of this Agreement, the Company shall comply with all obligations applicable to Arizona and its Affiliates under the Trademark License Agreement including, for the avoidance of doubt, any obligations with respect to reporting Complaints (as defined in the Trademark License Agreement), which reports the Company shall provide to Arizona, and quality control and standards, and Licensor Competitors (as defined in the Trademark License Agreement), and neither Party shall undertake any act that would constitute a breach or a basis for termination under the Trademark License Agreement.

 

6.5

Trade Names. The Company shall not create or use any corporate or trade names that include the Arizona Licensed Trademarks, other than those in existence immediately prior to the Effective Date. No later than thirty (30) days following the Closing, each of AWP and the Company shall change its respective corporate name and trade name and cause its organizational documents to be amended to remove any reference to “Armstrong.”

 

6.6

With respect to any Trademarks notified to the Company in writing after the Effective Date that are used as of the Effective Date in the Company Field and are not (i) owned by any Company Entity, (ii) Arizona Assigned Trademarks, or (iii) Seller Licensed Trademarks (the “Phase-Out Marks”) in each case (i)-(iii) the Company shall have a period of twenty-four (24) months from the date of notification to phase out all use. Any use by the Company of any of the Phase-Out Marks as permitted in this Section 6.6, is subject to its use of the Phase-Out Marks in a form and manner and with standards of quality consistent with that in effect for the Phase-Out Marks as of the Effective Date.

 

6.7

Domain Names. Subject to the terms and conditions of this Agreement, the license set forth in Section 6.1 shall include the right of the Company to use the Arizona Domain Names solely in connection with the applicable Arizona Licensed Trademarks in the Company Field during the Arizona Trademark License Term, in the ordinary course of business in a manner generally consistent with the past practice of Arizona in the Company Field. The Company shall not have the right to register any domain name or social media addresses (or any similar or successor identifiers) containing Arizona Licensed Trademarks.

 

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7.	INTELLECTUAL PROPERTY RIGHTS

 

7.1

Sublicenses. Arizona may sublicense the licenses granted herein to its Affiliates and Third Parties in the ordinary course of business in support of its and its Affiliates’ business, but not for the independent use of Third Parties, and the Company may sublicense the licenses granted herein to Third Parties, its Subsidiaries, AWP, controlled Affiliates, or any holding company that is a direct or indirect parent of the Company in the ordinary course of business in support of its and its Subsidiaries’ or controlled Affiliates’ business, but not for the independent use of Third Parties (each such Affiliate, Third Party, AWP or Subsidiary, a “Sublicensee”). Each Party shall ensure that any sublicense that it grants to a Sublicensee does not conflict with this Agreement. For clarity, granting a sublicense shall not relieve the Parties of any obligations hereunder and each Party shall cause each of its Sublicensees to comply, and shall remain responsible for such Sublicensees’ compliance, with all terms and conditions hereof applicable to the Parties. At the request of a licensing Party, the other Party shall provide to the licensing Party a list of all Sublicensees and otherwise reasonably cooperate with the licensing Party in connection with Sublicensees’ compliance with this Agreement.

 

7.2	Reservation of Rights. Except as expressly provided in the Stock Purchase Agreement or herein, each Party reserves its and its Affiliates’ rights in and to all Intellectual Property (including with respect to the use, registration and licensing thereof).

 

8.

OWNERSHIP

 

8.1

Ownership of Arizona Licensed IP. The Buyer Entities acknowledge and agree that (a) Arizona and its Affiliates own the Arizona Licensed IP (other than the Arizona Licensed Trademarks), (b) AWI Licensing LLC owns the Arizona Licensed Trademarks, (b) neither the Company, nor its Affiliates or its Sublicensees, will acquire any ownership rights in the Arizona Licensed IP, and (c) the Company shall not represent or make any claim that it has an ownership interest in any Arizona Licensed IP. Without limitation to the foregoing, the Company shall not file applications to register any Arizona Licensed IP or assist any person in doing the same, or contest, challenge, or otherwise take any action adverse to Arizona’s and its Affiliates’ ownership of or rights in and to the Arizona Licensed IP, or assist any person in doing the same.

 

8.2

Ownership of Company Licensed IP. Arizona acknowledges and agrees that (a) the Company and its Affiliates own the Company Licensed IP, (b) neither Arizona, nor its Affiliates or its Sublicensees, will acquire any ownership rights in the Company Licensed IP, and (c) Arizona shall not represent or make any claim that it has an ownership interest in any Company Licensed IP. Without limitation to the foregoing, Arizona shall not file applications to register any Company Licensed IP or assist any person in doing the same, or contest, challenge, or otherwise take any action adverse to the Company’s and its Affiliates’ ownership of or rights in and to the Company Licensed IP, or assist any person in doing the same.

 

8

9.	PROSECUTION, MAINTENANCE AND ENFORCEMENT

 

9.1

Responsibility and Cooperation. As between the Parties, Arizona, with respect to the Arizona Licensed IP, and the Buyer Entities, with respect to the Company Licensed IP, shall have the right (but not the obligation) for filing, prosecuting, and maintaining all Arizona Licensed IP and Company Licensed IP, respectively, in the licensing Party’s name. For the avoidance of doubt, in case either such Party files any new Intellectual Property registration to the extent covering the Licensed IP, such new Intellectual Property registration shall automatically become Licensed IP. However, and for the further avoidance of doubt, the aforementioned shall not apply to new Intellectual Property created by a licensee Party or its Sublicensees separately and independently from the Licensed IP, for example in case of separate and independent technical enhancements or advancements. The Parties shall reasonably consult and coordinate with each other at the other Party’s request with respect to the matters set forth in this Section 9.1.

 

9.2	No Additional Obligations. This Agreement shall not obligate either Party to disclose to the other Party, or maintain, register, prosecute, pay for, enforce, or otherwise manage any Intellectual Property except as expressly set forth herein.

 

9.3

Enforcement. As between the Parties, Arizona, with respect to the Arizona Licensed IP, and the Company or Buyer, with respect to the Company Licensed IP, shall have the right (but not the obligation) to elect to bring a Proceeding or enter into settlement discussions regarding, or otherwise seek to resolve, any infringement, misappropriation, or other violation, or allegations of invalidity or unenforceability, of the Licensed IP. In the event that Arizona declines to institute any Proceedings against third-party infringers or violators of any Arizona Licensed Patents, regarding activities that would fall within the Company Field if conducted by the Company, within forty-five (45) days after being notified or becoming aware of such infringing conduct, the Company or Buyer shall have the right to institute any Proceedings against such third-party infringers or violators. In the event that the Company or Buyer elects to institute such Proceedings, Arizona will reasonably cooperate with the Company or Buyer in such Proceedings, and the Company or Buyer shall reimburse Arizona for all reasonable costs and fees incurred by Arizona as a result of such cooperation. Such cooperation by Arizona will include joining such Proceeding as a party, if deemed necessary by the Company or Buyer. In the event that Arizona elects to bring a Proceeding against any alleged infringer of the Arizona Licensed Trademarks and seeks the cooperation of the Licensor of the Trademark License Agreement in such Proceeding, Arizona will take reasonable steps to assist the Company or Buyer in requesting the cooperation of the Licensor of the Trademark License Agreement, and pursuing an infringement claim against such alleged infringer. The Company or Buyer, as applicable, shall retain all benefits, recoveries, injunctions or other value derived from such Proceedings instituted by such Party.

 

10.	INDEMNIFICATION

 

10.1	Indemnification. Each Party (the “Indemnifying Party”) agrees to indemnify, defend and hold harmless the other Party and its Affiliates and their respective employees,

 

9

directors, officers, agents and successors (collectively, the “Indemnified Parties”) from and against any and all losses (including all costs, liabilities (including present and future damages), claims and expenses) incurred or suffered by any of the Indemnified Parties, to the extent arising out of, relating to or resulting from (a) a breach by the Indemnifying Party of this Agreement; or (b) any gross negligence or willful misconduct of the Indemnifying Party in connection with this Agreement.

 

11.	DISCLAIMERS

 

11.1

Disclaimer. Each Party hereby acknowledges that, except to the extent expressly set forth in this Agreement, the Stock Purchase Agreement, the Transition Services Agreement or the Confidentiality Agreement, neither Party nor any of its Affiliates has made any representation or warranty, expressed or implied, including any representation or warranty regarding the validity, enforceability, or scope of the Licensed IP, noninfringement, merchantability or fitness for a particular purpose.

 

12.

TERM

 

12.1	Term and Termination.

 

(a)

Unless earlier terminated pursuant to the provisions hereof, the term of this Agreement and the licenses and other grants of rights (and related obligations) under this Agreement shall (i) with respect to the Arizona Licensed Trademarks, be for the Arizona Trademark License Term, (ii) with respect to the Diamond Licensed Trademarks, be for the Diamond Trademark License Term, (iii) with respect to the Phase-Out Marks, be for the term set forth in Section 6.6, and (iv) with respect to Copyrights, Know-How and Patents, be in perpetuity.

 

(b)

Either Party may terminate this Agreement if the other Party materially breaches this Agreement and fails to remedy such breach within thirty (30) days’ written notice thereof; provided, however, that if the material breach of this Agreement by the breaching Party is limited to the Licensed Copyrights, Licensed Know-How, the Arizona Licensed Patents, or the Licensed Trademarks, the non-breaching Party shall be entitled to termination solely with respect to the affected part of the license (i.e., in such case, the non-breaching Party may terminate this Agreement with respect to the Licensed Copyrights or the Licensed Know-How or the Arizona Licensed Patents or the Licensed Trademarks, as applicable).

 

12.2	Effect of Termination.

 

(a)

Effect of Termination. Upon termination of this Agreement, each licensee Party shall and shall cause all of its Sublicensees to cease all use of the Licensed IP that is subject to such termination (excluding for clarity (a) any Arizona Licensed Patents, Licensed Copyrights or Licensed Trademarks that are expired, invalid or abandoned or (b) any Licensed Know-How that no longer constitutes confidential information).

 

10

(b)

Survival. The following provisions of this Agreement, together with all other provisions of this Agreement that expressly specify that they survive, shall survive expiration or termination of this Agreement, in part or in its entirety: Sections 8, 10, 11, 12.2(a) and 13.

 

13.	MISCELLANEOUS

 

13.1

Entire Agreement. This Agreement (together with the Schedules attached hereto), the Stock Purchase Agreement, the Transition Services Agreement and the Confidentiality Agreement constitute the entire agreement of the Parties hereto and supersede all prior negotiations, correspondence, agreements and undertakings, both written and oral, between or among the Parties, or any of them, with respect to the subject matter hereof. It shall be expressly understood that the Stock Purchase Agreement shall govern the transactions contemplated thereby as a whole and that this Agreement shall not be construed as an amendment or variation of the Stock Purchase Agreement but rather shall be complemented by and interpreted in light of the Stock Purchase Agreement. In the event that any provision of this Agreement is inconsistent with, conflicts with or contradicts any term of the Stock Purchase Agreement, the terms of the Stock Purchase Agreement will prevail.

 

13.2

Assignment. Except as otherwise provided in this Agreement, including under Section 7.1, neither this Agreement nor any of the rights, interests or obligations of any Party under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise, by either Party without the prior written consent of the other Party; provided, however, that (a) either Party may assign any of the foregoing in connection with the sale or other transfer of the applicable business or assets of such Party or its Affiliates to which this Agreement relates (except that neither of the Buyer Entities may assign any such rights, interests or obligations with respect to the Arizona Licensed Trademarks); (b) Arizona may assign any of the foregoing to one or more of its Affiliates and (c) the Company and Buyer may assign any of the foregoing to one or more of its Subsidiaries, controlled Affiliates, AWP, or any holding company that is a direct or indirect parent of the Company; provided that in each case (b) and (c), no assignment shall relieve the assigning Party of any of its obligations under this Agreement unless agreed to by the non-assigning Party. Any assignment or other disposition in violation of the preceding sentence shall be void.

 

13.3

Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given (i) on the date delivered, if delivered personally, (ii) on the third (3rd) Business Day after being mailed by registered or certified mail (postage prepaid, return receipt requested), or (iii) on the next Business Day after being sent by reputable overnight courier (delivery prepaid), in each case, to the parties at the following addresses, or on the date sent and confirmed by electronic transmission or confirmatory return email to the telecopier number or email address specified below (or at such other address, telecopier number or email address for a Party as shall be specified by notice given in accordance with this Section 13.3):

(a)     If to Buyer:

 

11

c/o American Industrial Partners

450 Lexington Avenue, 40th Floor

Attention:         General Counsel and Richard Hoffman

Email:               notices@americanindustrial.com

richard@americanindustrial.com

with a copy to:

Baker Botts L.L.P.

1299 Pennsylvania Avenue, NW

Washington, D.C. 20004

Attention:         Terrance L. Bessey

Brendan O. Dignan

Email:              terrance.bessey@bakerbotts.com

brendan.dignan@bakerbotts.com

(b)     If to Arizona:

Armstrong Flooring, Inc.

2500 Columbia Avenue, PO Box 3025

Lancaster, PA 17604

Attention:         Christopher S. Parisi

Email:               csparisi@armstrongflooring.com

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

4 Times Square

New York, NY 10036

Attention:         Eric L. Cochran

Steven J. Daniels

Email:               eric.cochran@skadden.com

steven.daniels@skadden.com

 

13.4

Specific Performance. Each Party hereto acknowledges that money damages would be both incalculable and an insufficient remedy for any breach of this Agreement by such Party and that any such breach would cause Arizona, on the one hand, and the Buyer Entities, on the other hand, irreparable harm. Accordingly, each Party hereto also agrees that, in the event of any breach or threatened breach of the provisions of this Agreement by such Party, Arizona, on the one hand, and the Buyer Entities, on the other hand, shall be entitled to equitable relief without the requirement of posting a bond or other security, including in the form of injunctions and orders for specific performance. Any and all remedies herein expressly conferred upon a Party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy. Arizona, on the one hand, and Buyer Entities, on the other hand, hereby agree not to raise any objections to the availability of the equitable remedy of specific

 

12

performance to prevent or restrain breaches or threatened breaches of this Agreement by the Buyer Entities or Arizona, as applicable, and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of the Buyer Entities or Arizona, as applicable, under this Agreement.

 

13.5	Governing Law; Jurisdiction; Waiver of Jury Trial.

 

(a)

This Agreement shall be governed by the laws of the State of Delaware, its rules of conflict of laws notwithstanding. Each Party hereby agrees and consents to be subject to the jurisdiction of the Court of Chancery of the State of Delaware in and for New Castle County, or if the Court of Chancery lacks jurisdiction over such dispute, in any state or federal court having jurisdiction over the matter situated in New Castle County, Delaware, in any Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby. Each Party hereby irrevocably consents to the service of any and all process in any such Action by the delivery of such process to such Party at the address and in the manner provided in Section 13.3 hereof. Each of the Parties hereto irrevocably and unconditionally waives any objection to the laying of venue of any Proceeding arising out of this Agreement or the transactions contemplated hereby in the Court of Chancery of the State of Delaware in and for New Castle County, or if the Court of Chancery lacks jurisdiction over such dispute, in any state or federal court having jurisdiction over the matter situated in New Castle County, Delaware, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Proceeding brought in any such court has been brought in an inconvenient forum.

 

(b)

EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.5(b).

 

13

13.6

Severability. If any term or other provision of this Agreement, or any portion thereof, is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms and provisions of this Agreement, or the remaining portion thereof, shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any such term or other provision, or any portion thereof, 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 in an acceptable manner to the end that the transactions contemplated hereby are consummated to the fullest extent possible.

 

13.7

Counterparts. This Agreement may be executed in any number of counterparts, including by means of email in portable document format (.pdf), each of which when executed shall be deemed to be an original copy of this Agreement and all of which taken together shall constitute one and the same agreement.

[Remainder of page intentionally left blank]

 

14

IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first written above.

 

 

[Signature Page to IP Agreement]

Schedule 1.1(b) – Arizona Assigned Internet Domain Names

 

Domain Name		Expiration date		Owner
amish-handscraped.com		13-Apr-2019		Armstrong Flooring, Inc. (“AFI”)
amishhandscraped.com		13-Apr-2019		AFI
bruce.adult		28-Apr-2019		AFI
bruce.biz		26-Mar-2019		AFI
bruce.com		21-Jan-2019		AFI
bruce.dpml.pub		29-Oct-2019		AFI
bruce.dpmlblock		29-Oct-2019		AFI
bruce.info		10-Aug-2019		AFI
bruce.porn		28-Apr-2019		AFI
bruce.xxx		01-Dec-2021		AFI
brucebuilder.com		02-Mar-2019		AFI
brucecontractor.com		02-Mar-2019		AFI
brucedealer.com		02-Mar-2019		AFI
brucedistributor.com		02-Mar-2019		AFI
brucefloors.com		04-Aug-2019		AFI
brucehardwoodfloors.com		11-Apr-2019		AFI
brucehome.com		02-Mar-2019		AFI
brucelaminate.com		30-Dec-2018		AFI
bruceremodeler.com		02-Mar-2019		AFI
bruceretailer.com		02-Mar-2019		AFI
brucesucks.com		25-Oct-2018		AFI
brucesucks.info		22-Sep-2019		AFI
capellaflooringcompany.com		12-Nov-2018		AFI
capellafloors.com		27-Oct-2018		AFI
forestglenhardwood.com		13-Sep-2019		AFI
handscraped-hardwood.com		13-Apr-2019		AFI
handscrapedhardwoodflooring.com		13-Sep-2019		AFI
handscrapedwoodfloor.com		05-Sep-2019		AFI
handscrapehardwoodfloor.com		05-Sep-2019		AFI
handscrapehardwoodflooring.com		05-Sep-2019		AFI
handscrapehardwoodfloors.com		05-Sep-2019		AFI
handscrapewoodfloor.com		05-Sep-2019		AFI
handscrapewoodflooring.com		05-Sep-2019		AFI
handscrapewoodfloors.com		05-Sep-2019		AFI
hardwood-flooring.asia		26-Mar-2019		AFI
hartco.biz		18-Nov-2018		AFI
hartco.info		10-Aug-2019		AFI
hartcodistributor.com		02-Mar-2019		AFI
hartcoflooring.com		24-May-2019		AFI

Domain Name		Expiration date		Owner
hartcoflooringcompany.com		18-Jun-2019		AFI
hartcohome.com		02-Mar-2019		AFI
homerwood.com		14-Sep-2019		AFI
lifetimeluxuryhardwood.com		14-Jun-2019		AFI
lockandfold.com		20-Nov-2018		AFI
luxuryhardwood.com		20-Dec-2018		AFI
mybruce.com		25-Jul-2019		AFI
mybruce.net		25-Jul-2019		AFI
myhartco.com		25-Jul-2019		AFI
myhartco.net		25-Jul-2019		AFI
myrobbins.com		25-Jul-2019		AFI
myrobbins.net		25-Jul-2019		AFI
powerofparagon.com		15-Jun-2019		AFI
premium-hardwood.com		13-Apr-2019		AFI
robbins-home.com		02-Mar-2019		AFI
robbins.biz		26-Mar-2019		AFI
robbins.com		13-Sep-2019		AFI
robbins.info		10-Aug-2019		AFI
robbinsflooring.com		21-Nov-2018		AFI
robbinsflooring.info		22-Sep-2019		AFI
robbinsfloors.com		14-Sep-2019		AFI
robbinsfloors.net		17-Apr-2019		AFI
robbinshardwoodflooring.com		26-Sep-2019		AFI
robbinshighperformance.com		18-Oct-2018		AFI
smokedhardwood.com		30-Apr-2019		AFI
smokedhardwoodfloor.com		30-Apr-2019		AFI
smokedhardwoodflooring.com		30-Apr-2019		AFI
smokedhardwoodfloors.com		30-Apr-2019		AFI
softscrapedhardwoodfloor.com		05-Sep-2019		AFI
softscrapedhardwoodflooring.com		05-Sep-2019		AFI
softscrapedhardwoodfloors.com		05-Sep-2019		AFI
softscrapedwoodfloor.com		05-Sep-2019		AFI
softscrapedwoodflooring.com		05-Sep-2019		AFI
softscrapedwoodfloors.com		05-Sep-2019		AFI
softscrapehardwoodfloor.com		05-Sep-2019		AFI
softscrapehardwoodflooring.com		05-Sep-2019		AFI
softscrapehardwoodfloors.com		05-Sep-2019		AFI
softscrapewoodfloor.com		05-Sep-2019		AFI
softscrapewoodflooring.com		05-Sep-2019		AFI
softscrapewoodfloors.com		05-Sep-2019		AFI

Domain Name		Expiration date		Owner
tmortan.com		07-Sep-2019		AFI
tmorten.com		07-Sep-2019		AFI
tmortin.com		07-Sep-2019		AFI
tmorton-flooring.com		17-Mar-2019		AFI
tmorton-floors.com		17-Mar-2019		AFI
tmorton-hardwood-flooring.com		17-Mar-2019		AFI
tmorton-hardwood-floors.com		17-Mar-2019		AFI
tmorton-hardwood.com		17-Mar-2019		AFI
tmorton-wood-flooring.com		17-Mar-2019		AFI
tmorton-wood-floors.com		17-Mar-2019		AFI
tmorton.asia		20-Mar-2019		AFI
tmorton.com		17-Mar-2019		AFI
tmorton.org		17-Mar-2019		AFI
tmortonandco.com		17-Mar-2019		AFI
tmortonco.com		17-Mar-2019		AFI
wwwbruce.com		01-Mar-2019		AFI
wwwhartco.com		17-Jan-2019		AFI
wwwrobbins.com		17-Jan-2019		AFI

Schedule 1.1(e) – Arizona Assigned Patents

 

Country		App. Status		App. Number		Filing Date		Patent Number		Issue Date
US		Granted		10/459,977		12-Jun-03		7381474		3-Jun-08
AU		Granted		2004304906		22-Nov-04		2004304906		28-Oct-10
CN		Granted		200480039516		22-Nov-04		ZL200480039516.1		2-Jan-13
DE		Granted		6020040309575		22-Nov-04		1944158		11-Feb-17
EP		Granted		8007063.4		22-Nov-04		1944158		5-Jan-11
FR		Granted		8007063.4		22-Nov-04		1944158		5-Jan-11
GB		Granted		8007063.4		22-Nov-04		1944158		5-Jan-11
US		Granted		10/727,749		4-Dec-03		7,261,947		28-Aug-07
US		Granted		11/901,361		17-Sep-07		8,287,971		16-Oct-12
US		Granted		13/611,028		12-Sep-12		8,399,075		19-Mar-13
US		Granted		12/825,448		29-Jun-10		8801505		12-Aug-14
US		Granted		14/458,103		12-Aug-14		10,072,427		11-Sep-18
AU		Granted		2014240948		28-Mar-14		2014240948		20-Oct-16
EP		Published		14722915.7		28-Mar-14
AU		Granted		2013246000		10-Apr-13		2013246000		26-Nov-15
CA		Granted		2,869,667		10-Apr-13		2869667		19-Dec-17
CN		Granted		201380018751		10-Apr-13		2512525		9-Jun-17
EP		Published		13718698.7		10-Apr-13
US		Granted		13/442,960		10-Apr-13		9434087		6-Sep-16
AU		Granted		2013246002		10-Apr-13		2013246002		17-Dec-15
CA		Granted		2,869,752		10-Apr-13		2869752		3-Jan-17
CN		Granted		201380018754		10-Apr-13		104245258		3-May-17
US		Granted		13/442,966		10-Apr-12		9,108,335		18-Aug-15
CN		Granted		201410046641		10-Feb-14		103978829		12-Apr-17
EP		Granted		14154551.7		10-Feb-14		EP2764965		21-Sep-16
US		Granted		14/176,299		10-Feb-14		9701040		11-Jul-17
AU		Granted		2014240951		28-Mar-14		2014240951		30-Jun-16
AU		Granted		2013270463		10-Dec-13		2013270463		26-Nov-15
CN		Granted		201310674310		11-Dec-13		103866947		4-Jan-17
AU		Granted		2014274549		10-Dec-14		2014274549		15-Oct-15
CA		Granted		2,873,571		8-Dec-14		2873571		27-Mar-18
CN		Published		201407560485		10-Dec-14
AU		Pending		2016287834		5-Jul-16
CN		Published		2016800338922		5-Jul-16

Country		App. Status		App. Number		Filing Date		Patent Number		Issue Date
EP		Published		16818951.2		5-Jul-16
TW		Published		20160120286		28-Jun-16
WO		Published		PCT/US16/40942		5-Jul-16
CN		Published		201510954585		17-Dec-15
EP		Published		15201544.2		21-Dec-15
US		Published		14/970,662		16-Dec-15
AU		Pending		2016380976		20-Dec-16
CN		Published		20168078711		20-Dec-16
EP		Pending		16882368		20-Dec-16
US		Published		14/980,263		28-Dec-15
WO		Published		PCT/US2016/067690		20-Dec-16
AU		Pending		2016380975		20-Dec-16
CN		Published		201680078712		20-Dec-16
EP		Pending		16882368		20-Dec-16
US		Published		14/980,313		28-Dec-15
WO		Published		PCT/US2016/067688		20-Dec-16
WO		Published		PCT/US2017/055068		5-Oct-17
US		Published		15902327		22-Feb-18
WO		Published		PCT/US18/19186		22-Feb-18
US		Granted		09/478,016		5-Jan-00		6164351		26-Dec-00
US		Granted		11/390,679		28-Mar-06		7537841		26-May-09
US		Granted		09/175,661		20-Oct-98		6148884		21-Nov-00
US		Granted		09/303,176		30-Apr-99		6156402		5-Dec-00
US		Granted		09/241,878		2-Feb-99		6194078		27-Feb-01
US		Pending		62/611953		29-Dec-17
US		Expired		62/404,413		5-Oct-16
US		Expired		62/462,609		23/Feb-17
US		Abandoned		09/903,549		13-Jul-01
US		Abandoned		14/828,598		18-Aug-15
US		Expired		62/187,925		2-Jul-15
US		Granted		12/425,560		17-Apr-09		8,357,752		22-Jan-13
US		Granted		13/741,770		15-Jan-13		8,617,654		31-Dec-13
AU		Granted		2014274559		10-Dec-14		2014274559		24-Mar-16
EP		Published		14199378.2		19-Dec-14
CN		Published		2015109813242		23-Dec-15
EP		Published		15202406.3		23-Dec-15
US		Granted		14/580,347		23-Dec-14		9,567,755		14-Feb-17

Country		App. Status		App. Number		Filing Date		Patent Number		Issue Date
US		Pending		15/724,391		5-Oct-17

Schedule 1.1(f) – Arizona Assigned Trademarks

 

Country

Trademark

Status

App. Number

App. Date

Reg. Number

Reg. Date

US

AMERICAN SCRAPE

Registered

85616030

3-May-12

4481771

11-Feb-14

CA

ARTISAN COLLECTIVE

Pending

1817435

10-Jan-17

US

ARTISAN COLLECTIVE

CLTM

CA

ARTISTIC TIMBERS

Registered

1670991

2-Apr-14

TMA967273

31-Mar-17

US

ARTISTIC TIMBERS

CLTM

US

BIRCH RUN

Registered

85/931,142

14-May-13

4,524,637

6-May-14

CA

BIRCH RUN

Registered

1,636,822

25-Jul-13

TMA905398

4-Jun-15

US

BRISTOL TRAIL

Registered

86919986

25-Feb-16

5423957

13-Mar-18

CA

BRISTOL TRAIL

Published

1769733

26-Feb-16

Country

Trademark

Status

App. Number

App. Date

Reg. Number

Reg. Date

US

BRUSHED IMPRESSIONS

Registered

86906683

12-Feb-16

5183009

11-Apr-17

CA

BRUSHED IMPRESSIONS

Published

1768050

16-Feb-16

CA

CAPELLA

Published

1789784

4-Jul-16

US

DUNDEE

Registered

86274578

7-May-14

4649247

2-Dec-14

US

EVERGUARD

Registered

86084365

7-Oct-13

4654066

9-Dec-14

US

FARMINGTON

Registered

86920079

25-Feb-16

5423958

13-Mar-18

CA

FARMINGTON

Published

1769729

26-Feb-16

US

FOREST GLEN

Registered

86084354

7-Oct-13

4633917

4-Nov-14

CA

FOREST GLEN

Registered

1769732

26-Feb-16

961263

27-Jan-17

Country

Trademark

Status

App. Number

App. Date

Reg. Number

Reg. Date

CA

FORGED HERITAGE

Published

1,752,076

26-Oct-15

CA

Hydropel

Pending

1917541

30-Aug-18

US

Hydropel

Pending

88148020

9-Oct-18

US

LOCK&FOLD

Registered

76656450

13-Mar-06

3200208

23-Jan-07

US

MIDTOWN

Registered

85736605

24-Sep-12

4401628

10-Sep-13

US

MILLWORK SQUARE

Registered

86906649

12-Feb-16

5183008

11-Apr-17

CA

MILLWORK SQUARE

Published

1768051

16-Feb-16

CA

ORIGINAL RUSTICS

Published

1791791

18-Jul-16

US

ORIGINAL RUSTICS

CLTM

Country

Trademark

Status

App. Number

App. Date

Reg. Number

Reg. Date

US

PARAGON

CLTM

CA

PARAGON

CLTM

US

PRIME HARVEST

Registered

86/285,289

19-May-14

4,742,207

26-May-15

CA

PRIME HARVEST

Registered

1,677,599

20-May-14

TMA906580

17-Jun-15

US

RIGHT EVERY TIME

Published

87261852

8-Dec-16

US

RUSTIC RESTORATIONS

Published

87215879

26-Oct-16

5520272

17-Jul-18

CA

RUSTIC RESTORATIONS

Pending

1806462

26-Oct-16

US

SDF

Pending

‘87947440

4-Jun-18

CA

SDF

Pending

1902212

1-Jun-18

Country

Trademark

Status

App. Number

App. Date

Reg. Number

Reg. Date

US

SIGNATURE SCRAPE

Registered

86920111

25-Feb-16

5187924

18-Apr-17

CA

SIGNATURE SCRAPE

Published

1769731

26-Feb-16

CA

SIGNATURE SOFT SCRAPE

Published

1769730

26-Feb-16

US

TimberBlock

Published

87839322

19-Mar-18

CA

TimberBlock

Pending

1889001

20-Mar-18

US

TIMBERBRUSHED

Registered

87105110

15-Jul-16

5267454

15-Aug-17

US

TIMBERCUTS

Registered

87295586

10-Jan-17

5371502

2-Jan-18

CA

TIMBERCUTS

Pending

1817434

10-Jan-17

US

TIMBERLAND

Registered

76496979

13-Mar-03

2923877

1-Feb-05

Country

Trademark

Status

App. Number

App. Date

Reg. Number

Reg. Date

CA

TRANQUIL WOODS

Published

1790828

11-Jul-16

US

TRANQUIL WOODS

CLTM

US

TruTop

Published

87870541

10-Apr-18

CA

TruTop

Pending

1892873

10-Apr-18

CA

VINTAGE FARMHOUSE

Published

1790827

11-Jul-16

US

WEAR MASTER

Registered

74/329383

9-Nov-92

1834641

3-May-94

CN

WEAR MASTER

Registered

4819937

5-Aug-05

4819937

CA

OPAL CREEK

Registered

1738695

23-Jul-15

1002365

08-Aug-18

US

OPAL CREEK

Registered

CLTM

Schedule 1.1(g) – Arizona Domain Names

 

Domain Name		Expiration date		Owner
armstrongwoodproducts.com		19-Dec-2018		AFI

Schedule 1.1(l) - Arizona Licensed Patents

 

COUNTRY		APP NO.		FILING DATE		PATENT NUMBER		ISSUE DATE
AU		2009241803		30-Apr-09		2009241803		26-Sep-13
AU		2013231111		19-Sep-13		2013231111		7-Jan-16
CN		200980120494		30-Apr-09
DE		60 2009 024 610.0		30-Apr-09		2 286 018
EP		9739191.6		30-Apr-09		2286018		11-Jun-14
EP		13192693.3		30-Apr-09		2703461		31-Aug-16
FR		9739191.6		30-Apr-09		2 286 018		11-Jun-14
GB		9739191.6		30-Apr-09		2 286 018		11-Jun-14
US		12/432,845		30-Apr-09		8,420,710		16-Apr-13
US		14/700,669		30-Apr-15
BE		10770074.2		29-Nov-11		2 424 911		23-Mar-16
DE		DE 60 2010 031 448.0		29-Nov-11		2 424 911		23-Mar-16
EP		10770074.2		29-Nov-11		2 424 911		23-Mar-16
FR		10770074.2		29-Nov-11		2 424 911		23-Mar-16
GB		10770074.2		29-Nov-11		2 424 911		23-Mar-16
NL		10770074.2		29-Nov-11		2 424 911		23-Mar-16
US		12/799,700		30-Apr-10
US		14/140,206		24-Dec-13
AU		2012286867		26-Jul-12		2012286867		4-Feb-16
CN		2012800367594		26-Jul-12		2094039		1-Jun-16
DE		12751639.1		26-Jul-12		EP2736977		20-May-15
EP		12751639.1		26-Jul-12		EP2736977		20-May-15
GB		12751639.1		26-Jul-12		EP2736977		20-May-15
AU		2013222106		25-Feb-13		2013222106		25-Feb-13
EP		13707792.1		25-Feb-13
US		14/380,432		22-Aug-14		9540825		10-Jan-17
AU		2013308554		30-Aug-13		2013308554		28-Apr-16
CN		201380046030		4-Mar-15		2789549		23-Jan-18
EP		13770989.5		30-Mar-15		EP2890749		16-May-18
US		14/423,186		23-Feb-15
AU		2014207438		8-Jul-15		2014207438		9-Feb-17
EP		14702412.9		14-Aug-15
US		14/760,080		9-Jul-15
AU		2014207441		8-Jul-15		2014207441		10-Nov-16
CN		2014800055962		15-Jul-15		2581656		11-Aug-17
EP		14703007.6		14-Aug-15

COUNTRY		APP NO.		FILING DATE		PATENT NUMBER		ISSUE DATE
US		14/760,060		9-Jul-15
AU		2015227440		16-Sep-15		2015227440		30-Mar-17
CN		2015105859497		23-Dec-14		3045520		24-Aug-18
EP		15198373.1		8-Dec-15
US		14/580,312		23-Dec-14		9650792		16-May-17
EP		1151281		12-Jul-00		1072659		13-Oct-04
US		10/062,616		31-Jan-02		6572932		3-Jun-03
US		10/060,487		30-Jan-02		6911263		28-Jun-05
AU		2016243556		6-Nov-17
CN		2016800223098		16-Oct-17
EP		16719581.7		14-Nov-17
TW		105110285		31-Mar-16		624366		21-May-18
US		14/678,163		3-Apr-15
WO		PCT/US16/24457		28-Mar-16
AU		2016243132		6-Nov-17
CN		2016800229978		20-Oct-17
EP		16718052		14-Nov-17
US		15564161		3-Oct-17
WO		PCT/US16/24462		28-Mar-16
US		62/142,611		3-Apr-15
AU		2016243552		6-Nov-17
CN		2016800226325		18-Oct-17
EP		16719580.9		14-Nov-17
US		14/678,183		3-Apr-15
WO		PCT/US16/24451		28-Mar-16
AU		2016357732		18-Apr-18
CN		2016800648806		7-May-18
EP		16866982.8		14-Jun-18
US		15776637		16-May-18
WO		PCT/US2016/062133		16-Nov-16
WO		PCT/US2017/055060		5-Oct-17
WO		PCT/US2017/055047		4-Oct-17
WO		PCT/US2017/055077		4-Oct-17
WO		PCT/US2017/055089		5-Oct-17
WO		PCT/US2017/055044		5-Oct-17
WO		PCT/US2017/055033		4-Oct-17
US		14/721,724		26-May-15		9468314		18-Oct-16

Schedule 1.1(m) – Arizona Licensed Trademarks

ARMSTRONG

 

Schedule 1.1(s) - Company Licensed Patents

 

Country		App. Status		App. Number		Filing Date		Patent Number		Issue Date
US		Granted		12/425,560		17-Apr-09		8,357,752		22-Jan-13
US		Granted		13/741,770		15-Jan-13		8,617,654		31-Dec-13
CN		Published		2015109813242		23-Dec-15
EP		Published		15202406.3		23-Dec-15
US		Granted		14/580,347		23-Dec-14		9,567,755		14-Feb-17
US		Pending		15/724,391		5-Oct-17

Schedule 1.1(u) – Diamond Licensed Trademarks

DIAMOND 10

 

Schedule 6.1 – Presentation of Arizona Licensed Trademarks

Armstrong Logo Usage:

 

1.

Logo Colors: The Armstrong logo can appear only in black, white or 100% Tungsten. If reversed out white, it should be on a dark background color. The entire mark must be the same color. The Armstrong logo cannot be used alone.

 

 

 

2.

Logo Size: The minimum logo size is 1” or 25mm. In digital formats, the minimum width is 100 pixels at 72 dpi.

 

3.

Clear Space: If the business unit identifier is used below the logo, the clear space is 1⁄2 the diameter of the Armstrong ring on the top, right side and left side and the width of the stem in in the lower case “r” on the bottom.

 

If the business unit identifier is used above the logo, the clear space is ¹⁄₂ the diameter of the Armstrong ring on the right side, left side and bottom and the width of the stem of the lower case “r” on the top.

 

 

a.

There is no clear space defined below the business unit identifier if used below the logo and no clear space defined above the business unit identifier if used above the logo.

 

b.

If the business unit identifier is two lines, the clear space definition applies to the top most line, if used above, or bottom most line, if used below the Armstrong logo.

 

4.

Font: The Armstrong logo is considered art and the font type, spacing, bold, cannot be modified.

 

 

5.

Logo Background: The logo should never be used on a busy background or one that does not provide enough contrast.

 

6.

Logo Direction: The logo can be used on an angle or vertically but must read left to right and top to bottom

 

 

7.

Circle A: The Circle A can never be used as a separate graphic element.

 

Notice:

 

1.

The trademark should always be distinguishable from surrounding text – at a minimum, the trademark notice (TM or ®) should be used at least the first time in the text. After first instance, mark should appear with some other distinguishing feature (e.g., different font, all caps, and/or different color) from the surrounding text.

 

2.

Must include notice of AWI Licensing LLC’s ownership of the trademark within the credit notice of the product, product documentation, or other product communication. (E.g., Armstrong and the Armstrong Logo are registered trademarks of AWI Licensing LLC.

Schedule 6.2 – Presentation of Diamond Licensed Trademarks

Diamond 10® Technology trademark and logo usage:

 

1.	When using Diamond 10® Technology in sentences to identify goods or services:

 

a.

Always mark with ® (required for first usage on page)

 

b.

Always add a space between Diamond and 10.

 

c.

Always keep the entire mark together.

 

2.

Use of Diamond 10® or the Diamond 10® logo must include notice of AFI Licensing LLC’s ownership of the trademark within the credit notice of the product, product documentation, or other product communication. (E.g., Diamond 10 and the Diamond 10 Technology logo are registered trademarks of AFI Licensing LLC.)

 

3.	Logo Colors: Can appear only in White or 4 Color Process comprised of Morado, Tungsten and Black. If reversed out White, use only on dark background color for contrast.

 

 

COLORS

 

4.

Logo Size: A general guideline for the maximum width of the logo in any application should be the equivalent to 20% of the width of the shortest side. Exceptions may be made for signage and promotional materials. The minimum logo size is 1” or 25mm. In digital formats, the minimum width is 100 pixels at 72 dpi.

 

5.	Clear Space: The size of the clear space around the logo is determined by the size of the circle of the capital height of the word diamond.

 

 

6.	Font: The Diamond 10 Technology logo is considered art and the font type, spacing, bold, cannot be modified.

 

 

7.	Logo Background: The logo should never be used on a busy background or one that does not provide enough contrast.

Exhibit A – Trademark License Agreement

Attached.

Exhibit B – Form of Patent Assignment

FORM OF PATENT ASSIGNMENT

This PATENT ASSIGNMENT (the “Assignment”), dated as of December 31, 2018 (the “Effective Date”), is by and between Armstrong Flooring, Inc., a Delaware corporation (“Seller”) and AFI Licensing LLC, a Delaware limited liability company (“Licensing” and together with Seller, “Assignor”) and Armstrong Hardwood Flooring Company, a Tennessee corporation (the “Company” or “Assignee”) (each of Assignor and Assignee, a “Party” and collectively, the “Parties”). All capitalized terms used, but not defined herein, shall have the meanings ascribed to such terms in the Intellectual Property Agreement (defined herein below).

WHEREAS, Seller and AHF Holding, Inc. (formerly known as Tarzan Holdco, Inc.), a Delaware corporation (“Buyer”) have entered into that certain Stock Purchase Agreement, dated November 14, 2018 (the “SPA”) and Seller, Buyer and the Company have entered into that certain Intellectual Property Agreement, dated December 31, 2018 (the “Intellectual Property Agreement”);

WHEREAS, pursuant to the SPA, the Seller has agreed to sell and transfer, and the Buyer has agreed to purchase and acquire, all of Seller’s right, title and interest in and to Armstrong Wood Products, Inc. and the Company Subsidiaries (including the Company) by way of a purchase by Buyer and sale by Seller of the Shares, all upon the terms and condition set forth therein; and

WHEREAS, pursuant to the Intellectual Property Agreement, Assignor has agreed to sell, convey, assign, and transfer to Assignee all of Assignor’s right, title, and interest in and to the patent applications and registrations set forth on Schedule A hereto (collectively, the “Assigned Patents”).

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:

1.    Conveyance. Assignor does hereby irrevocably sell, convey, grant, set over, assign and transfer to Assignee, without reservation of any rights, title or interest, all of Assignor’s right, title and interest in and to the Assigned Patents, all rights corresponding to the Assigned Patents throughout the world, and all continuations, continuations-in-part, divisions or renewals thereof, all patents that may be granted therefrom, all reissues, re-exams, or extensions of such patents, and in and to any applications that have been or shall be filed in any country, and all patents or utility models of countries that may be granted therefrom, for its own use and enjoyment, and for the use and enjoyment of any of Assignee’s successors and assigns, as the

same would have been held and enjoyed by Assignor if this Assignment had not been made, together with any and all claims or causes of infringement thereof that may have accrued prior to the effective date of this Assignment, together with the right to bring suit for and/or initiate any proceeding to collect any and all damages arising from said claims or causes of action. Assignee hereby accepts such assignment, transfer and conveyance.

2.    Recordation. Assignor hereby authorizes and requests the Commissioner of Patents and Trademarks and any other applicable governmental entity or registrar (including any applicable foreign or international office or registrar), to record Assignee as the owner of the Assigned Patents, and to issue any and all Assigned Patents to Assignee, as assignee of Assignor’s entire right, title and interest in, to, and under the same. Assignee shall have the right to record this Assignment with all applicable governmental authorities and registrars so as to perfect its ownership of the Assigned Patents.

3.    Further Assistance. Upon Assignee’s reasonable request and at Assignee’s sole cost and expense, Assignor shall (i) provide any further assistance reasonably necessary to effect the assignment of all rights, title and interest in and to the Assigned Patents to Assignee, including, but not limited to, the execution of any further documents and instruments, and (ii) take such other actions as are reasonably necessary to document the aforesaid assignment and transfer to Assignee.

4.    No Modification. Nothing contained in this Assignment is intended to or shall be deemed to modify, alter, amend or otherwise change any of the rights or obligations of Assignor and Assignee and their respective Affiliates under the SPA or the Intellectual Property Agreement.

5.    Successors and Assigns. This Assignment shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and permitted assigns.

6.    Counterparts. This Assignment may be executed in any number of counterparts, including by means of email in portable document format (.pdf), each of which when executed shall be deemed to be an original copy of this Assignment and all of which taken together shall constitute one and the same agreement.

7.    Descriptive Headings. The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Assignment.

8.    Governing Law. This Assignment shall be governed by the laws of the State of Delaware, its rules of conflict of laws notwithstanding. Each Party hereby agrees and consents to be subject to the jurisdiction of the Court of Chancery of the State of Delaware in and for New Castle County, or if the Court of Chancery lacks jurisdiction over such dispute, in any

state or federal court having jurisdiction over the matter situated in New Castle County, Delaware, in any Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Assignment or the transactions contemplated hereby.

9.    Severability. If any term or other provision of this Assignment, or any portion thereof, is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms and provisions of this Assignment, or the remaining portion thereof, shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any such term or other provision, or any portion thereof, is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Assignment so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are consummated to the fullest extent possible.

10.    Authority. Each Party hereby represents that its undersigned representative is authorized and legally competent to execute this Assignment as a binding and enforceable agreement.

[Signature Page Follows]

IN WITNESS WHEREOF, the Parties have caused this Assignment to be executed as of the date above first written by their duly authorized representatives.

 

SCHEDULE A TO PATENT ASSIGNMENT

Exhibit C – Form of Trademark Assignment

FORM OF TRADEMARK ASSIGNMENT

This TRADEMARK ASSIGNMENT (the “Assignment”), dated as of December 31, 2018 (the “Effective Date”), is by and between Armstrong Flooring, Inc., a Delaware corporation (“Seller”) and AFI Licensing LLC, a Delaware limited liability company (“Licensing” and together with Seller, “Assignor”) and Armstrong Hardwood Flooring Company, a Tennessee corporation (the “Company” or “Assignee”) (each of Assignor and Assignee, a “Party” and collectively, the “Parties”). All capitalized terms used, but not defined herein, shall have the meanings ascribed to such terms in the Intellectual Property Agreement (defined herein below).

WHEREAS, Seller and AHF Holding, Inc. (formerly known as Tarzan Holdco, Inc.), a Delaware corporation (“Buyer”) have entered into that certain Stock Purchase Agreement, dated November 14, 2018 (the “SPA”) and Seller, Buyer and the Company have entered into that certain Intellectual Property Agreement, dated December 31, 2018 (the “Intellectual Property Agreement”);

WHEREAS, pursuant to the SPA, the Seller has agreed to sell and transfer, and the Buyer has agreed to purchase and acquire, all of Seller’s right, title and interest in and to the Company and the Company Subsidiaries (including the Company) by way of a purchase by Buyer and sale by Seller of the Shares, all upon the terms and condition set forth therein; and

WHEREAS, pursuant to the Intellectual Property Agreement, Assignor has agreed to sell, convey, assign, and transfer to Assignee all of Assignor’s right, title, and interest in and to the trademarks applications and registrations set forth on Schedule A hereto (collectively, the “Assigned Marks”).

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:

11.    Conveyance. Assignor does hereby irrevocably sell, convey, grant, set over, assign and transfer to Assignee, without reservation of any rights, title or interest, all of Assignor’s worldwide and universal rights, title and interest in and to the Assigned Marks, including, but not limited to, the applications and registrations therefor which are identified in Schedule A attached hereto, together with the goodwill of the business symbolized by such Assigned Marks, the same to be held and enjoyed by Assignee, for its own use and enjoyment, and for the use and enjoyment of any of Assignee’s successors and assigns, as the same would have been held and enjoyed by Assignor if this Assignment had not been made, including, but not limited to, all common-law rights of Assignor in and/or to the Assigned Marks, and

Assignor’s right to sue for all claims, demands and/or causes of action, both at law and in equity, that Assignor may have on account of any infringement, claim of unfair competitions, likelihood of confusion or dilution of the Assigned Marks or any other claim or cause of action related to the Assigned Marks prior to and following the effective date of this Assignment. Assignor further assigns to Assignee the right to sue and recover damages and/or profits for claims of past, present and/or future infringement, unfair competition, dilution, or any other violation or unlawful act relating to the Assigned Marks, if any. Assignee hereby accepts such grant, assignment, transfer and conveyance.

12.    Recordation. Assignor hereby authorizes and requests the Commissioner of Patents and Trademarks and any other applicable governmental entity or registrar (including any applicable foreign or international office or registrar), to record Assignee as the owner of the Assigned Marks, and to issue any and all Assigned Marks to Assignee, as assignee of Assignor’s entire right, title and interest in, to, and under the same. Assignee shall have the right to record this Assignment with all applicable governmental authorities and registrars so as to perfect its ownership of the Assigned Marks.

13.    Further Assistance. Upon Assignee’s reasonable request and at Assignee’s sole cost and expense, Assignor shall (i) provide any further assistance reasonably necessary to effect the assignment of all rights, title and interest in and to the Assigned Marks to Assignee, including, but not limited to, the execution of any further documents and instruments, and (ii) take such other actions as are reasonably necessary to document the aforesaid assignment and transfer to Assignee.

14.    No Modification. Nothing contained in this Assignment is intended to or shall be deemed to modify, alter, amend or otherwise change any of the rights or obligations of Assignor and Assignee and their respective Affiliates under the SPA or the Intellectual Property Agreement.

15.    Successors and Assigns. This Assignment shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and permitted assigns.

16.    Counterparts. This Assignment may be executed in any number of counterparts, including by means of email in portable document format (.pdf), each of which when executed shall be deemed to be an original copy of this Assignment and all of which taken together shall constitute one and the same agreement.

17.    Descriptive Headings. The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Assignment.

18.    Governing Law. This Assignment shall be governed by the laws of the State of Delaware, its rules of conflict of laws notwithstanding. Each Party hereby agrees and consents to be subject to the jurisdiction of the Court of Chancery of the State of Delaware in and for New Castle County, or if the Court of Chancery lacks jurisdiction over such dispute, in any state or federal court having jurisdiction over the matter situated in New Castle County, Delaware, in any Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Assignment or the transactions contemplated hereby.

19.    Authority. Each Party hereby represents that its undersigned representative is authorized and legally competent to execute this Assignment as a binding and enforceable agreement.

20.    Severability. If any term or other provision of this Assignment, or any portion thereof, is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms and provisions of this Assignment, or the remaining portion thereof, shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any such term or other provision, or any portion thereof, is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Assignment so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are consummated to the fullest extent possible.

[Signature Page Follows]

IN WITNESS WHEREOF, the Parties have caused this Assignment to be executed as of the date above first written by their duly authorized representatives.

 

SCHEDULE A TO TRADEMARK ASSIGNMENT

Exhibit 10.3

Execution Version

SUBLEASE

between

ARMSTRONG FLOORING, INC.

as Sublandlord

and

ARMSTRONG HARDWOOD FLOORING COMPANY

as Subtenant

for premises located at:

2500 Columbia Avenue, Lancaster, Pennsylvania

December 31, 2018

SUBLEASE

This Sublease (this “Sublease”) , dated as of December 31, 2018, between ARMSTRONG FLOORING, INC., a Delaware corporation (“Sublandlord”), having an address at 2500 Columbia Avenue, Building 701, Lancaster, PA 17603, and Armstrong Hardwood Flooring Company (“Subtenant”), having an address at c/o American Industrial Partners, 450 Lexington Avenue, 40th Floor, New York, NY 10017.

W I T N E S S E T H:

WHEREAS, Sublandlord and an affiliate of Subtenant are parties to (i) that certain Stock Purchase Agreement (the “SPA”) dated as of November 14, 2018, and (ii) that certain Transition Services Agreement dated as of December 31, 2018 (collectively, the “Related Transaction Agreements”);

WHEREAS, Sublandlord has entered into a lease, dated as of April 1, 2016, between Armstrong World Industries, Inc. (“Master Landlord”), as landlord, and Sublandlord, as tenant (the “Master Lease”) for certain premises described in the Master Lease (the “Premises”) and located at the Buildings as defined therein;

WHEREAS, in connection with the consummation of the transactions contemplated by the Related Transaction Agreements, Subtenant desires to sublease from Sublandlord a portion of the Premises, the exact size and location of which will be determined in accordance with Section 2(A) below (the “Demised Premises”), and Sublandlord desires to sublease the Demised Premises to Subtenant upon the terms and conditions hereinafter set forth;

WHEREAS, this Sublease required the consent of Master Landlord in accordance with Article 14 of the Master Lease (the “Consent”), and such Consent was obtained on or prior to the date hereof.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties agree as follows:

1.    Defined Terms. Unless specifically defined or otherwise provided herein, all capitalized terms used in this Sublease which are defined in the Master Lease shall be deemed to have the respective meanings set forth in the Master Lease.

2.    Demised Premises; Demise and Term.

A.    As of the Commencement Date, the Demised Premises shall be deemed to be composed of those portions of the Premises currently occupied by the Subtenant and its

 

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employees in connection with the conduct of the Business (as defined in the SPA), in a manner consistent with the conduct thereof prior to the Commencement Date (the “Current Business Premises”). From and after the Commencement Date, Sublandlord and Subtenant shall work together, in good faith, to determine if the Current Business Premises shall continue to be the Demised Premises or if Subtenant shall be required to relocate and consolidate the Demised Premises into Building 2 (1^st and 2^nd floors) and Building 402 (2^nd floor), or to one or more other Buildings at the Premises reasonably acceptable to the parties. In the event the parties, each acting in good faith, fail to agree upon such determination on or prior to March 31, 2019, then the Demised Premises shall be deemed to mean all of the space located on the 1^st and 2^nd floors of Building 2 and the 2^nd floor of Building 402, and Subtenant shall promptly relocate its employees and Business operations into such space. Within ten (10) days after the exact size and location of the Demised Premises have been determined in accordance with the foregoing provisions, the parties shall attach a description of the Demised Premises as so determined as Exhibit A hereto without further amendment to this Sublease.

B.    For and during the Sublease Term, as defined and established below, Sublandlord leases to Subtenant the Demised Premises. The leasing of the Demised Premises by Subtenant shall include the right of Subtenant (a) to access and use the Common Areas in common with the other tenants in the Buildings and (b) to use all furniture, fixtures, equipment, improvements and betterments owned or leased by Master Landlord or Sublandlord and which, at any time during the Sublease Term, are attached to or installed in the Demised Premises, all subject to such restrictions, rules, regulations and security arrangements as are provided for in the Master Lease.

C.    The term of this Sublease shall commence on the date hereof (the “Commencement Date”) and expire on the day which is one day preceding the Expiration Date of the Master Lease (the “Sublease Expiration Date”; the period from the Commencement Date through the Sublease Expiration Date, the “Sublease Term”), unless sooner cancelled or otherwise terminated as hereinafter provided.

D.    Notwithstanding the provisions of Section 2(C) above, Subtenant shall have the unilateral right to terminate this Sublease to be effective at any time following the sixth (6)-month anniversary of the Commencement Date, upon thirty (30) days prior written notice to Sublandlord and upon the payment to Sublandlord of a fee (the “Termination Fee”) in the amount of $2,500,000.00, which Termination Fee shall be in full and final settlement of all amounts, duties and obligations of Subtenant to Sublandlord hereunder (subject, however, to any surviving obligations or liabilities of Subtenant pursuant to Section 13(C), Section 14(A) and Section 20 hereof). For the avoidance of doubt, the parties expressly confirm, acknowledge and agree that the Termination Fee shall only be due and payable in connection with the exercise of Subtenant’s unilateral right to terminate the Sublease in accordance with this Section 2(D) and

 

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shall in no event be due or payable in connection with the expiration or early termination of this Sublease pursuant to any other provision of this Sublease or any provision of the Master Lease.

3.    Use. Subtenant may use the Demised Premises for the Permitted Uses and uses incidental thereto subject to the provisions of the Master Lease, and for no other purpose.

4.    Gross Rent.

A.    Subtenant shall pay to Sublandlord, without notice or demand, in lawful money of the United States, at the address set forth above or at such other address as Sublandlord may by notice designate (provided such designation is made at least ten (10) Business Days prior to the effective date of such address change), monthly gross rent in equal installments of $208,334.00 (the “Gross Rent”) as follows:

Gross Rent shall be payable in advance on the first day of each month during said term, without any set off or deduction whatsoever (except as otherwise expressly provided in Section 7 hereof), except that Subtenant shall pay the first monthly installment of Gross Rent on the Commencement Date. In the event the Commencement Date is other than the first day of a calendar month, or in the event the Sublease Term expires or is terminated on other than the last day of a calendar month, (i) Gross Rent for such partial month(s) shall be prorated on a per diem basis, (ii) the prorated Gross Rent for the partial month in which the Commencement Date occurs, together with the Gross Rent for the first full calendar month during the Sublease Term, shall be paid on the Commencement Date, and (iii) the portion of the Gross Rent paid in excess of the prorated Gross Rent due with respect to the partial month in which any such expiration or termination occurs, shall be promptly refunded by Sublandlord to Subtenant, provided Subtenant is not then in default hereunder beyond the expiration of any applicable notice and/or cure period.

B.    This Sublease is intended to be a “gross” sublease, and Subtenant’s payment of Gross Rent shall constitute the full and complete consideration due and payable to Sublandlord in connection the leasing of the Demised Premises, the other rights and benefits granted to Subtenant hereunder, and for the provision of all services (including, without limitation, heat, ventilating and air conditioning, utilities, repairs, restoration, alterations, cleaning, elevator service, hot and cold water and light bulb replacement) to the Demised Premises, as contemplated by Article 8 of the Master Lease, it being agreed that Sublandlord shall use commercially reasonable efforts to cause the Master Landlord to furnish, all such services to the Demised Premises for no charge in addition to Gross Rent. For the avoidance of doubt, the parties expressly acknowledge and agree that Subtenant shall have no liability or obligation to pay or reimburse Sublandlord for any Additional Rent, Taxes, Operating Expenses, or any other rent or additional rent otherwise payable by Sublandlord under the Master Lease, and the provisions of Article 5 of the Master Lease shall not be applicable hereto.

 

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C.    If Subtenant shall fail to make any payment of Gross Rent for more than five (5) days after the same is due and payable, Subtenant shall pay a late payment charge of $.05 for each $1.00 which remains unpaid to compensate Sublandlord for additional expenses in processing such late payment. In addition, if Subtenant fails to pay any Gross Rent when due, Subtenant shall pay interest thereon from the date due until the date paid at an annual rate equal to the Prime Rate plus one percent (1%) per annum but not in excess of the maximum amount permitted by law to be charged to Subtenant, and such interest shall be deemed to be additional rent hereunder.

D.    If any check of Subtenant shall be returned for insufficient funds, there shall be an additional charge to Subtenant of $150.00 and, thereafter, at the request of Sublandlord, Subtenant shall make all payments required hereunder by certified or official bank check only.

E.    The Gross Rent and any other charges expressly required by the terms of this Sublease (e.g., late charges, default interest, attorney’s fees, costs relating to obtaining Master Landlord’s approval) are collectively referred to herein as the “rent”.

5.    Sublease Subject to Master Lease.

A.    A true and complete copy of the Master Lease is annexed hereto and, except as otherwise provided in Section 6 below, is made a part hereof as Exhibit B.

B.    This Sublease is subject and subordinate to all of the terms, covenants and conditions of the Master Lease and to the matters to which the Master Lease is or shall be subordinate. In the event of any termination, re-entry, or dispossession by Master Landlord under the Master Lease, Master Landlord may, at its option, take over all of the right, title and interest of Sublandlord under this Sublease, and Subtenant shall, at Master Landlord’s option, attorn to Master Landlord subject to the conditions and exceptions set forth in Section 14.4(b) of the Master Lease.

C.    Notwithstanding anything to the contrary contained in this Sublease, Subtenant does not have any rights in respect of the Demised Premises greater than Sublandlord’s rights under the Master Lease.

6.    Incorporation by Reference. All of the terms, covenants and conditions contained in the Master Lease are incorporated by reference into this Sublease, except where inconsistent with or modified by the terms of this Sublease, and are also subject, without limitation, to the following specific exceptions and/or modifications:

A.    Notwithstanding anything to the contrary contained herein, (i) the following provisions of the Master Lease are not incorporated into, and shall not be applicable to, this

 

5

Sublease but shall continue in full force and effect as between Sublandlord and Master Landlord in the Master Lease: Section 1.1., Section 1.2, Article 3, Article 5, Article 6, Section 14.5, Section 14.6, Section 14.7, Section 25.1, Article 35, Article 40, Section 41.10, Exhibit F-1, Exhibit F-2, Exhibit F-3, Exhibit G and Schedule 40.2; (ii) all references in the Master Lease to “Licensed Space”, “Additional Rent”, “Taxes”, “Operating Expenses”, “Tenant’s Proportionate Share” and any of the other terms specifically defined in Article 5 or Article 40 shall not be incorporated into this Sublease for any reason.

B.    With respect to the provisions of the Master Lease which are incorporated herein, wherever used in such provisions of the Master Lease, the words “Landlord” and “Tenant”, or words of similar import, shall be construed to mean, respectively, “Sublandlord” and “Subtenant”; provided, however, that the word “Landlord” in the Master Lease shall be construed to mean both “Sublandlord” and “Master Landlord” in those Sections of the Master Lease providing for indemnification by Tenant and insurance coverage required by Tenant; the word “Landlord” in the Master Lease shall be construed to mean only Master Landlord in those Sections of the Master Lease providing for Landlord’s services, Building construction and repairs, removal of Building violations, operation of the Buildings, Landlord’s insurance and the like (subject, however, to the provisions of this Sublease); the word “Lease”, or words of similar import, shall be construed to mean this “Sublease”; the words “Minimum Rent”, “minimum or base rent,” “monthly rate”, “Rent”, “rent” or words of similar import, shall be construed to mean only the monthly Gross Rent payable in accordance with Section 4(A) hereof, together with any other charges expressly required by the terms of this Sublease (e.g., late charges, default interest, attorney’s fees, costs relating to obtaining Master Landlord’s approval), and shall in no event be deemed a reference to the amounts payable under Article 3 or Article 5 of the Master Lease; the word “Premises” shall be construed to mean only the Demised Premises as defined in this Sublease; the words “Tenant’s Property” shall be construed to mean “Subtenant’s Property;” the words “term”, “Term” or “Initial Term”, “Commencement Date” or “Possession Date”, and “Expiration Date”, or words of similar import, shall be construed to mean, respectively, the “Sublease Term”, the “Commencement Date” and “Sublease Expiration Date”, as applicable and as set forth in Section 2(C) hereof, and shall in no event be deemed to be a reference to any terms set forth in Article 1 of the Master Lease; and the word “Initial Notice” shall mean any notice of Dispute sent by Sublandlord or Subtenant.

C.    To the extent possible, the provisions of the Master Lease which are incorporated by reference into this Sublease as provided above shall be construed as consistent with and complementary to the other provisions of this Sublease, but in the event of any inconsistency, the provisions of this Sublease shall control.

D.    Whenever the approval or consent of Sublandlord is required under any provision of the Master Lease or this Sublease, Subtenant acknowledges and agrees that the prior written

 

6

approval or consent of Master Landlord may also be required. In such event, promptly following Sublandlord’s receipt of Subtenant’s request for such approval or consent, Sublandlord shall use commercially reasonable efforts to obtain from Master Landlord its approval or consent to the relevant matter, and any reasonable costs or expenses incurred by Sublandlord in requesting or obtaining Master Landlord’s consent shall be deemed to be additional rent and shall be paid by Subtenant within thirty (30) days after receipt of Sublandlord’s invoice (accompanied by reasonably sufficient supporting documentation) therefor. Whenever Sublandlord has agreed that a required approval or consent shall not be unreasonably withheld or delayed (whether in this Sublease or pursuant to any provision of the Master Lease incorporated herein) Sublandlord may withhold its approval or consent and/or it shall be deemed reasonable for Sublandlord to withhold or delay its approval or consent if Master Landlord shall have delayed or refused to give any approval or consent which may be requested of it related to the same matter, so long as Sublandlord exercised commercially reasonable efforts to obtain such approval or consent from Master Landlord in accordance with the provisions hereof.

7.    Performance by Master Landlord. Subtenant acknowledges that Master Landlord (and not Sublandlord) is responsible for the services and obligations specified in the Master Lease to be provided or performed by Master Landlord thereunder, including, without limitation, heat, ventilating and air conditioning, utilities, repairs, restoration, alterations, cleaning, elevator service, hot and cold water and light bulb replacement, including any of Master Landlord’s repair obligations pursuant to Article 8 of the Master Lease. If Master Landlord shall default or delay in the performance or observance of any of its agreements or obligations under the Master Lease (including, but not limited to, any obligation to perform or furnish any work, services or utilities at or to the Demised Premises or the Premises), Sublandlord agrees that it will, upon written request from Subtenant, make demand upon Master Landlord to perform its obligations under the Master Lease; provided, however, that Sublandlord will have no obligation to take any legal action to enforce the Master Lease. Notwithstanding the foregoing, Sublandlord shall not be liable to Subtenant for the consequences of any default, failure or delay on the part of Master Landlord, except to the extent that the Master Lease provides abatement, set off, self-help or other rights in connection therewith, in which case Subtenant shall have similar rights against Sublandlord as a result thereof, provided that Subtenant is not in default hereunder beyond the expiration of any applicable notice and/or cure period. In furtherance of the foregoing, Subtenant does, to the extent permitted by law, and so long as Sublandlord complies with its obligations under this Section 7, except for the willful misconduct or gross negligence of Sublandlord, hereby waive any cause of action and any right to bring an action against Sublandlord by reason of any act or omission of Master Landlord under the Master Lease. Notwithstanding the foregoing, if, as a result of Master Landlord’s failure to provide the services or perform the repair obligations contemplated by Article 8 of the Master Lease, it becomes reasonably impracticable for Subtenant to occupy the Demised Premises for the Permitted Uses in accordance with Section 2, and such failure continues for a

 

7

period in excess of five (5) consecutive Business Days, then, provided Subtenant upon the occurrence of such failure gave Sublandlord written notice thereof describing such failure, Subtenant shall receive a full abatement of all Gross Rent due under this Sublease, which abatement shall be retroactive to date it first became reasonably impracticable for Subtenant to occupy the Demised Premises for the Permitted Uses in accordance with Section 2, and shall continue until the date it again becomes reasonably practical for Subtenant to resume the operation its business therein.

8.    Condition of Demised Premises. Subtenant is leasing and accepts the Demised Premises in its current “AS IS” condition on the Commencement Date, reasonable wear and tear excepted. Without limiting the generality of the foregoing, Sublandlord shall have no obligation to make, supply or perform any alterations, services, material, fixtures, equipment, or decorations to the Demised Premises. In entering into this Sublease, Subtenant has relied solely on such investigations, examinations, and inspections as Subtenant has chosen to make and Subtenant acknowledges that Sublandlord has afforded Subtenant the opportunity for full and complete investigations, examinations, and inspections.

9.    Fire or Casualty; Insurance.

A.    If the Demised Premises shall be damaged by fire or other casualty, Subtenant agrees that it shall not be the obligation of Sublandlord to repair, restore or rebuild the Demised Premises (except to the extent expressly provided to the contrary in Article 8 or Article 12 of the Master Lease) and Subtenant shall look solely to Master Landlord to repair, restore or rebuild the same in accordance with the applicable provisions of the Master Lease. Except to the extent such restoration is Sublandlord’s obligation under Article 8 or Article 12 of the Master Lease, Sublandlord shall not be responsible for restoration nor for any inconvenience or annoyance to Subtenant or injury to Subtenant’s business resulting in any way from such damage or any repair or restoration. If, as a result of any such casualty, the Master Lease grants rights to Sublandlord, Subtenant shall be entitled to the exercise of, or, at Subtenant’s request, Sublandlord will exercise on Subtenant’s behalf, all such rights as they relate to the Demised Premises and to all services and repairs which Master Landlord is and may be obligated to furnish the Demised Premises or Sublandlord with respect to the Demised Premises pursuant to the terms of the Master Lease. Subtenant understands and acknowledges that Sublandlord will not carry insurance of any kind on any goods, furniture or furnishings owned by Subtenant or on any trade or other fixtures, equipment, other items of moveable personal property, improvements, installations or appurtenances owned and removable by Subtenant (collectively, the “Subtenant’s Property”), and that neither Sublandlord nor Master Landlord shall be obligated to repair any damage thereto or replace same.

 

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B.    To the extent applicable to the Demised Premises or Subtenant’s use thereof, Subtenant shall comply with all insurance, release and waiver of subrogation requirements imposed upon Sublandlord as “Tenant” under the Master Lease, including, without limitation, such requirements set forth in Article 31 of the Master Lease as incorporated herein. All such insurance shall name Sublandlord as an additional insured, in addition to the other entities which are required to be named as additional insureds pursuant to the Master Lease. On or prior to the Commencement Date, Subtenant shall deliver to Sublandlord a certificate of insurance as evidence of such insurance coverage and evidence of waivers of subrogation required to be carried hereunder (collectively, the “Required Policies”). Evidence of each renewal or replacement of all such Required Policies shall be delivered by Subtenant to Sublandlord prior to the scheduled expiration date of the Required Policies.

10.    Assignment and Subletting.

A.    Subtenant shall not (i) assign, sell, mortgage, encumber, pledge, or in any manner transfer this Sublease or any interest therein, nor permit any of the foregoing to occur involuntarily, by operation of law, or otherwise, or (ii) sub-sublet the Demised Premises or any part or parts thereof, grant any concession or license, nor otherwise permit use or occupancy of all or any part of the Demised Premises by any person or entity other than Subtenant, or any entity which controls, is controlled by, or is under common control with Subtenant, without, in each of the foregoing instances, the prior written consent of Master Landlord and the prior written consent of Sublandlord (which prior written consent of Sublandlord shall not be unreasonably withheld, conditioned or delayed); provided, however, in no event may Subtenant sublet the Demised Premises in part.

B.    Subtenant acknowledges and agrees that any amounts due to Master Landlord for attorneys’ fees in connection with Subtenant’s request for approval of or consent to any assignment of this Sublease or sub-subletting of all or any portion of the Demised Premises shall be paid by Subtenant to Sublandlord, as additional rent, within thirty (30) days after receipt of Sublandlord’s invoice (accompanied by reasonably sufficient supporting documentation) therefor.

C.    The making of any assignment, transfer, mortgage, pledge or other encumbrance or sub-subletting, in whole or in part, and whether or not in violation of the provisions of this Sublease, shall not operate to relieve or release Subtenant from its obligations under this Sublease and, notwithstanding any such assignment, transfer, mortgage, pledge, encumbrance or sub-subletting, Subtenant shall be liable for the payment of all rent and for the due performance of all the covenants, agreements, terms and provisions of this Sublease to the full end of the Sublease Term in accordance with the terms and provisions hereof. Each and every assignee, whether as assignee or as successor in interest of Subtenant or as assignee or successor in interest

 

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of any assignee, shall immediately be and become and remain liable jointly and severally with Subtenant and with each other for the payment of all rent and for the due performance of all the covenants, agreements, terms and provisions of this Sublease on the part of Subtenant to be paid and performed to the full end of the Sublease Term in accordance with the terms and provisions hereof.

D.    Any consent by Sublandlord that may hereafter be given to any act of assignment, transfer, mortgage, pledge, encumbrance or sub-subletting shall be held to apply only to the specific transaction thereby approved. Such consent shall not be construed as a waiver of the duty of Subtenant or its successors or assignees to obtain from Sublandlord and the necessity of the parties to obtain from Master Landlord a consent to any other subsequent assignment, transfer, mortgage, pledge, encumbrance or sub-subletting or as a modification or limitation of the rights of Sublandlord with respect to the foregoing covenants by Subtenant.

11.    Alterations.

A.    Subtenant shall make no alterations, installations, additions or improvements (collectively, “Alterations”) in or to the Demised Premises of any nature without Sublandlord’s prior consent, which consent shall be in Sublandlord’s sole discretion. The foregoing notwithstanding, Sublandlord’s consent shall not be required for (i) mere decorative Alterations (e.g., painting, carpeting and floor and wall coverings) or (ii) installations which are customary for an office tenant, provided such Alterations are non-structural and do not affect any of the mechanical or utility systems of the Buildings or any other space occupied by Sublandlord. If the Master Lease requires the consent of Master Landlord for an Alteration, Subtenant shall not make such Alteration without the consent of Master Landlord (and Sublandlord agrees to pursue such consent, if requested by Subtenant, in accordance with the provisions of Section 6(D) hereof). All Alterations made by Subtenant to the Demised Premises shall be made in accordance with Legal Requirements and the provisions of the Master Lease, including the Rules and Regulations promulgated thereunder. Subtenant shall cooperate with Master Landlord and Sublandlord with respect to the scheduling of Subtenant’s Alterations. Any failure of Subtenant to complete Subtenant’s initial Alterations for occupancy of the Demised Premises shall not result in postponement of the commencement of payment of rent under this Sublease.

B.    Subtenant shall perform all of its Alterations, including the initial Alterations to prepare the Demised Premises for Subtenant’s occupancy (if any), at Subtenant’s sole cost and expense in accordance with and subject to the provisions of Article 7 of the Master Lease.

C.    Subtenant shall provide to Sublandlord and Master Landlord all plans prepared or required in connection with Subtenant’s Alterations, or if no plans are so required, drawings and/or a description of the work.

 

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D.    Except as provided in Article 7 and Article 36 of the Master Lease, all of Subtenant’s Property shall be and at all times remain the property of Subtenant and nothing contained herein shall be construed as prohibiting Subtenant from removing same from the Demised Premises.

E.    Subject to Section 8.1 of the Master Lease, Subtenant shall, throughout the term of this Sublease, take good care of the Demised Premises, the fixtures and equipment therein and any Subtenant Alterations, and at Subtenant’s sole cost and expense, make all repairs thereto as and when needed to preserve them in good working order and condition, reasonable wear and tear, obsolescence and damage from the elements, fire or other casualty, excepted.

12.    Representations and Warranties.

A.    Subtenant hereby represents and warrants to Sublandlord that the person signing this Sublease on behalf of Subtenant has the full right and authority to execute this Sublease on behalf of Subtenant, and that this Sublease constitutes a valid and binding obligation of Subtenant enforceable against Subtenant in accordance with its terms. Sublandlord hereby represents and warrants to Subtenant that the person signing this Sublease on behalf of Sublandlord has the full right and authority to execute this Sublease on behalf of Sublandlord, and that this Sublease constitutes a valid and binding obligation of Sublandlord enforceable against Sublandlord in accordance with its terms.

B.    Sublandlord hereby represents and warrants that (i) Sublandlord is the sole holder of the interest of the tenant under the Master Lease; (ii) the Master Lease is in full force and effect and, to the best of Sublandlord’s knowledge, Master Landlord is not in default thereunder; and (iii) Sublandlord, to the best of its knowledge, is not in material default, and has received no notice that it is in default, under the Master Lease.

13.    Subtenant’s and Sublandlord’s Additional Covenants. Subtenant and Sublandlord, as applicable, also covenants as follows:

A.    Subtenant hereby assumes and agrees to perform and comply with all of the terms, covenants and conditions of the Master Lease (except as otherwise provided in Section 6) on the part of the tenant thereunder to be performed and observed, with respect to the Demised Premises and Subtenant’s use of the Common Areas during the Sublease Term, other than as expressly set forth in this Sublease.

B.    Subtenant will not do or cause to be done or suffer or permit any act or thing to be done or suffered which would or might constitute a default under the Master Lease or cause the Master Lease or the rights of Sublandlord, as tenant thereunder, to be terminated or which would or might cause Sublandlord to become liable for any damages, costs, claims or penalties or

 

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would or might increase the fixed rent, additional rent or other charges or obligations of Sublandlord, as tenant under the Master Lease, or would or might adversely affect or reduce any of Sublandlord’s rights or benefits under the Master Lease.

C.    Subtenant shall defend, indemnify and hold Sublandlord harmless from and against any and all claims, actions, liabilities, losses, damages, costs and expenses (including, without limitation, reasonable attorneys’ fees and disbursements) (“Losses”) arising from the use or occupancy by Subtenant of the Demised Premises or the Buildings or from any work or thing done or any condition created by or any other act or omission of Subtenant or its employees, agents, contractors, visitors or licensees (each a “Subtenant Party”), in or about the Demised Premises or any other part of the Buildings, or from any breach of its obligations under this Sublease, including, without limitation, any Losses resulting from Subtenant’s failure to surrender possession of the Demised Premises on the Sublease Expiration Date in accordance with the terms of this Sublease. The provisions of this Section 13(C) shall survive the expiration or earlier termination of this Sublease.

D.    Sublandlord shall perform and comply with all of the terms, covenants and conditions of the Master Lease on its part to be performed and observed, other than to the extent that any failure to perform shall have resulted from any default by Subtenant hereunder, and Sublandlord will not do or cause to be done or suffer or permit any act or thing to be done or suffered which would cause the Master Lease to be terminated, amended or modified so as to adversely affect the rights or benefits of Subtenant under this Sublease or its derivative rights and benefits under the Master Lease, and Sublandlord will not do or cause to be done or suffer or permit any act or thing to be done or suffered which causes Subtenant to become liable for any damages, costs, claims or penalties.

E.    Sublandlord shall defend, indemnify and hold Subtenant harmless from and against any and all Losses arising from the use or occupancy by Sublandlord of the space demised under the Master Lease (other than the Demised Premises) or from any work or thing done or any condition created by or any other act or omission of Sublandlord or its employees, agents, contractors, visitors or licensees, in or about the Demised Premises or any other part of the Buildings, in each case, resulting from any breach of Sublandlord’s obligations under the Master Lease or this Sublease; provided, however, that the foregoing indemnity shall not apply to any Losses resulting from (i) any action or failure to act by Master Landlord or (ii) the acts of any Subtenant Party. The provisions of this Section 13(E) shall survive the expiration or earlier termination of this Sublease.

F.    Sublandlord and Subtenant each promptly shall furnish to the other copies of any notices of default given by Master Landlord to Sublandlord or Subtenant, and any notices of default sent by Sublandlord to Master Landlord, as the case may be.

 

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14.    Hazardous Substances.

A.    Subtenant acknowledges and expressly agrees to comply with the provisions in Article 38 of the Master Lease, and Subtenant shall indemnify and hold Master Landlord and Sublandlord harmless from and against any claims, demands, losses, liabilities, penalties and damages arising out of, or in any way connected with the installation, placement, storage or release of Hazardous Materials used or installed by Subtenant, Subtenant’s employees, contractors or agents upon the Demised Premises in violation of the terms of this Sublease or the Master Lease. If Subtenant, or its employees, contractors or agents install, use, store or place Hazardous Materials in the Demised Premises, Subtenant shall be obligated to remove and dispose of said Hazardous Materials in compliance with all Legal Requirements. This covenant shall survive the expiration or earlier termination of this Sublease.

B.    Sublandlord acknowledges and expressly agrees to comply with the provisions in Article 38 of the Master Lease, and Sublandlord shall indemnify and hold Subtenant harmless from and against any claims, demands, losses, liabilities, penalties and damages arising out of, or in any way connected with the installation, placement, storage or release of Hazardous Materials used or installed by Sublandlord, Sublandlord’s employees, contractors or agents upon the Demised Premises or any other space demised to Sublandlord under the Master Lease in violation of the terms of this Sublease or the Master Lease. This covenant shall survive the expiration or earlier termination of this Sublease.

15.    Remedies. If Subtenant defaults in the performance of any of the terms, covenants or conditions of this Sublease or the Master Lease (to the extent incorporated herein) beyond any applicable notice and cure period, Sublandlord shall be entitled to exercise any and all of the rights and remedies to which it is entitled at law or in equity, and also any and all of the rights and remedies specifically provided for in the Master Lease with the same force and effect as if herein specifically set forth in full, and wherever in the Master Lease rights and remedies are given to Master Landlord, the same shall be deemed to refer to Sublandlord.

16.    Broker. Sublandlord and Subtenant each represent and warrant to the other that it dealt with no broker, finder or agent in connection with this Sublease. Each of Sublandlord and Subtenant shall indemnify, defend, protect and hold the other party harmless from and against any and all losses, liabilities, damages, claims, judgments, fines, suits, demands, costs, interest and expenses of any kind or nature, including, without limitation, reasonable attorneys’ fees and disbursements, which the indemnified party may incur by reason of any claim of or liability to any broker, finder or like agent arising out of any dealings claimed to have occurred between the indemnifying party and the claimant in connection with this Sublease, or arising from a breach by such party of any representation and warranty set forth in this Section 16.

 

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17.    Notices. All notices, requests, claims, demands or other communications under this Sublease (collectively, “Notices” or “notices”) shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 17):

 

If to Sublandlord, to:

Armstrong Flooring, Inc.

Building 701

2500 Columbia Avenue

Lancaster, PA 17603

Attention: General Counsel

Email:

With a copy to:

Armstrong Flooring, Inc.

P.O. Box 3025

Lancaster, PA 17604

Attention: General Counsel

Email:

If to Subtenant, to:

Richard Hoffman

c/o American Industrial Partners

450 Lexington Avenue, 40th Floor

New York, NY 10017

Attention:         General Counsel and Richard Hoffman

Email:               notices@americanindustrial.com

richard@americanindustrial.com

Any party may, by notice to the other party, change the address to which such notices are to be given. A notice given by counsel for Sublandlord or Subtenant shall be deemed a valid notice if addressed and sent in accordance with the provisions of this Section 17. Each of the parties hereto waives personal or any other service other than as provided for in this Section 17. Notwithstanding the foregoing, either party hereto may give the other party facsimile, email or

 

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oral notice of the need of emergency repairs. Sublandlord’s rent bills, invoices and related documentation may be delivered by Sublandlord via ordinary United States mail.

18.    Quiet Enjoyment. Provided that Subtenant is not in default hereunder beyond the expiration of any applicable notice and/or cure period, Subtenant may peaceably and quietly enjoy the Demised Premises, subject to the Master Lease and all matters to which the Master Lease is subject, the rights of any superior mortgagee or superior lessor and the terms and conditions of this Sublease.

19.    Termination of Master Lease. Subject to the provisions of Section 5(B) hereof, in the event of and upon the termination or cancellation of the Master Lease pursuant to any of the provisions thereof, this Sublease shall automatically expire and terminate and shall be of no further force and effect, and Subtenant shall forthwith quit, surrender and vacate the Demised Premises without prejudice however, to Sublandlord’s rights and remedies against Subtenant under the provisions hereof in effect prior to such termination, and any rent owing shall be paid up to the date of such termination and, provided Subtenant is not otherwise in default hereunder beyond the expiration of any applicable notice and/or cure period, any payments of rent made by Subtenant which were on account of any period subsequent to such date shall be returned to Subtenant and Subtenant shall have no claim against Sublandlord of any kind whatsoever.

20.    Surrender. Upon the expiration or other termination of this Sublease, Subtenant shall quit and surrender the Demised Premises, broom clean, in good order and condition, ordinary wear and tear and damage by fire or other casualty or condemnation excepted, vacant and free of all of the Subtenant’s Property and otherwise in accordance with the terms and conditions of this Sublease and the Master Lease. Subtenant’s obligations under this provision shall survive the expiration or earlier termination of this Sublease.

21.    No Waiver. The failure of either party to insist upon the strict performance or observance of any obligation of the other party under this Sublease or to exercise any right or other remedy under or with respect to this Sublease shall not be construed as a waiver or relinquishment for the future of that obligation, right or other remedy of either party. Sublandlord’s receipt and acceptance of any rent, or acceptance of performance by Sublandlord of any obligation, with knowledge of Subtenant’s breach or default under this Sublease, shall not be construed as a waiver of that breach or default. No waiver by either party of any provision of this Sublease shall be deemed to have been made unless specifically expressed in a writing signed by the waiving party.

22.    No Oral Change. This Sublease cannot be changed orally or in any manner other than by a written agreement executed by both parties.

 

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23.    Successors and Assigns. Except as may be otherwise specifically provided in this Sublease, the provisions of this Sublease shall extend to, bind and inure to the benefit of the parties hereto and their respective personal representatives, heirs, successors and permitted assigns. In the event of any assignment or transfer of Sublandlord’s interest in the Master Lease, Sublandlord shall be released and discharged from all covenants, conditions and agreements of Sublandlord under this Sublease arising from and after the effective date of such assignment or transfer, provided, however, that such covenants, conditions and agreements arising from and after the effective date of such assignment or transfer shall be deemed to be assumed by and to be binding upon such assignee or transferor.

24.    Interpretation. This Sublease shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania without giving effort to the principles of conflicts of law.

25.    Severability. If any provision of this Sublease or the application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, the remainder of this Sublease and the application of that provision to other persons or circumstances shall not be affected but rather shall be enforced to the fullest extent permitted by law.

26.    Headings. The captions, headings and titles contained in this Sublease, if any, are solely for convenience of reference and shall not affect its interpretation.

27.    Execution and Delivery. The submission to Subtenant of this Sublease shall not constitute an option or offer for the subleasing of the Demised Premises, and the execution and/or delivery of this Sublease by Subtenant shall have no binding force or effect on Sublandlord unless and until Sublandlord and Subtenant shall have (i) executed this Sublease, and (ii) delivered a fully-executed counterpart to each other.

28.    Counterparts. This Sublease may be executed in one or more counterparts, each of which shall constitute an original hereof and all of which, taken together, shall constitute one and the same instrument.

29.    Miscellaneous.

A.    Except with respect to actions to be taken by Subtenant for which shorter or other time limits are specifically set forth in this Sublease, which time limits shall control for the purposes of this Sublease, the time limits provided in those portions of the Master Lease that are incorporated herein for the giving or making of any Notice by the tenant thereunder to Master Landlord, the holder of any leasehold mortgage or any other party, or for the performance of any act, condition or covenant by the tenant thereunder, or for the exercise of any right, remedy or option by the tenant thereunder, are changed for the purpose of incorporation into this Sublease,

 

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by shortening the same in each instance by (i) fifteen (15) days with respect to all such periods of sixty (60) or more days, (ii) seven (7) days with respect to all such periods of thirty (30) or more days but less than sixty (60) days, (iii) five (5) days with respect to all such periods of twenty (20) or more days but less than thirty (30) days and (iv) three (3) days with respect to all such periods of less than twenty (20) days, provided, however, that in no event shall any such period be shortened to less than three (3) Business Days, so that any Notice may be given or made, or any act, condition or covenant performed, or any right, remedy or option hereunder exercised, by Sublandlord within the time limit relating thereto contained in the Master Lease.

B.    Except with respect to actions to be taken by Sublandlord for which longer time or other limits are specifically set forth in this Sublease, which time limits shall control for the purposes of this Sublease, the time limits provided in those portions of the Master Lease that are incorporated herein for the giving or making of any Notice by Master Landlord, for the performance of any act, covenant or condition by Master Landlord, or for the exercise of any right, remedy or option by Master Landlord thereunder are changed for the purpose of incorporation into this Sublease, by lengthening the same in each instance by (i) fifteen (15) days with respect to all such periods of sixty (60) or more days, (ii) seven (7) days with respect to all such periods of thirty (30) or more days but less than sixty (60) days, (iii) five (5) days with respect to all such periods of twenty (20) or more days but less than thirty (30) days and (iv) three (3) days with respect to all such periods of less than twenty (20) days so that any Notice may be given, any act, condition or covenant performed or any right, remedy or option exercised, by Sublandlord within the number of days respectively set forth above, after the time limits relating thereto contained in the Master Lease.

 

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IN WITNESS WHEREOF, Sublandlord and Subtenant have executed and delivered this Sublease as of the date first above written.