AXR AMREP Corp

 

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):            April 10, 2015              

  

AMREP CORPORATION

(Exact name of Registrant as specified in its charter)

 

Oklahoma	1-4702	59-0936128
(State or other jurisdiction of	(Commission File	(IRS Employer
incorporation)	Number)	Identification No.)

 

300 Alexander Park, Suite 204, Princeton, New Jersey	08540
(Address of principal executive offices)	(Zip Code)

 

Registrant's telephone number, including area code:  (609) 716-8200

 

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 (see General Instruction A.2. below):

 

¨	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))

 

Item 1.01 Entry into a Material Definitive Agreement.

 

On April 10, 2015, Kable Staffing Resources LLC (“Seller”), an indirect wholly-owned subsidiary of AMREP Corporation (“AMREP”), entered into an asset purchase agreement (the “Asset Purchase Agreement”) with TSJ Staffing, LLC (“Buyer”). The closing of the transactions contemplated by the Asset Purchase Agreement occurred on April 10, 2015 (the “Closing Date”).

 

Asset Purchase Agreement. Pursuant to the Asset Purchase Agreement, Buyer (1) acquired from Seller all of Seller’s assets, other than cash, accounts receivables and certain other assets of Seller as of the Closing Date, and (2) assumed all of Seller’s obligations and liabilities relating to or arising out of Seller’s office lease and Seller’s post-closing obligations and liabilities with respect to the purchased assets. The Asset Purchase Agreement provided standard representations, warranties, covenants and indemnities.

 

Buyer paid Seller $250,000, all of which was paid in cash on the Closing Date. In connection with the transaction, Seller retained its cash, accounts receivables, accounts payable and accrued expenses as of the Closing Date. As of February 28, 2015, Seller had approximately $940,000 of cash, $1,213,000 of accounts receivable and $421,000 of accounts payable and accrued expenses.

 

As a result of the transaction, AMREP expects to recognize a pre-tax gain on its financial statements in the fourth quarter of fiscal year 2015, which it estimates will be approximately $250,000 less any transaction expenses.

 

PNC Credit Facility. In addition, on April 10, 2015, Seller, Palm Coast Data Holdco, Inc., Palm Coast Data LLC and FulCircle Media, LLC, each an indirect subsidiary of AMREP, entered into the sixth amendment (the “Sixth Amendment”) to the Revolving Credit and Security Agreement, dated as of May 13, 2010 (the “PNC Credit Facility”), with PNC Bank, National Association (“PNC”), as agent and lender. The Sixth Amendment provided PNC’s consent to the Asset Purchase Agreement (and the related agreements and transactions), removed Seller as a borrower under the PNC Credit Facility, released the collateral of Seller that was pledged as security for the obligations under the PNC Credit Facility, reduced the maximum loan amount available under the PNC Credit Facility from $7.5 million to $5.0 million and extended the expiration date of the PNC Credit Facility from May 12, 2015 to August 12, 2015. No other material terms of the PNC Credit Facility changed in connection with the Sixth Amendment.

 

The foregoing description of the Asset Purchase Agreement and Sixth Amendment are summaries only and are qualified in all respects by the provisions of such documents, copies of which are attached hereto as Exhibits 10.1 and 10.2 and are incorporated herein by reference.

 

Item 2.01 Completion of Acquisition or Disposition of Assets.

 

The information in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.01.

 

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information in Item 1.01 of this Current Report on Form 8-K regarding the Sixth Amendment to the PNC Credit Facility is incorporated by reference into this Item 2.03.

  

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit Number		Description
10.1		Asset Purchase Agreement, dated as of April 10, 2015, between TSJ Staffing, LLC and Kable Staffing Resources LLC.
10.2		Sixth Amendment, dated as of April 10, 2015, to the Revolving Credit and Security Agreement, dated as of May 13, 2010, among Kable Staffing Resources LLC, Palm Coast Data Holdco, Inc., Palm Coast Data LLC and FulCircle Media, LLC and PNC Bank, National Association, as agent and lender.

 

  

SIGNATURES

 

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

 

	AMREP Corporation
Date: April 10, 2015	By:	/s/ Christopher V. Vitale
		Name: Christopher V. Vitale
		Title: Executive Vice President

 

  

EXHIBIT INDEX 

 

 

Exhibit Number		Description
10.1		Asset Purchase Agreement, dated as of April 10, 2015, between TSJ Staffing, LLC and Kable Staffing Resources LLC.
10.2		Sixth Amendment, dated as of April 10, 2015, to the Revolving Credit and Security Agreement, dated as of May 13, 2010, among Kable Staffing Resources LLC, Palm Coast Data Holdco, Inc., Palm Coast Data LLC and FulCircle Media, LLC and PNC Bank, National Association, as agent and lender.

   

 

 

Exhibit 10.1

 

Execution Copy

 

ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT (“Agreement”), dated April 10, 2015 (the “Closing Date”), is entered into by and between: (a) TSJ STAFFING, LLC, an Ohio limited liability company (“Buyer”) and (b) KABLE STAFFING RESOURCES LLC, a Delaware limited liability company (“Seller”). Buyer and Seller are sometimes collectively referred to as the “Parties” and each, individually, as a “Party”.

 

RECITALS:

 

WHEREAS, on the terms and conditions of this Agreement, Seller desires to sell, assign, and transfer, and Buyer desires to purchase, all of the Assets (as defined below) which are used by Seller in the operation of its employment staffing business (the “Business”); and

 

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which is acknowledged, the Parties, intending to be legally bound, agree and covenant as follows:

 

1.          Assets. Subject to the terms and conditions hereof, at the Closing (as defined in Section 6), Seller shall sell, assign, transfer, and deliver to Buyer, and Buyer shall purchase from Seller: (a) all of the owned and leased equipment, properties, machines, furniture, agreements (including, without limitation, customer agreements, telecommunications agreements, computer hardware or software agreements, payroll services agreements, etc.), inventory, trade names, software, licenses, web sites, domain names, and other assets of Seller, including, without limitation, to the extent applicable, Seller’s customer list and the goodwill of the Business and (b) all of Seller’s right, title and interest to the names “Kable Staffing” and “Kable Staffing Resources” and all derivations thereof (all of the foregoing items referenced in (a) and (b) being the “Assets”). Notwithstanding the foregoing sentence, the Assets shall not include the Excluded Assets. “Excluded Assets” mean the corporate seals, charter documents, minute books, stock books, tax returns, books of account or other records having to do with the corporate organization of Seller, the rights that accrue or will accrue to Seller under this Agreement or any agreements contemplated hereby, Seller’s cash and cash equivalents on hand and cash and cash equivalents in bank, checking or other accounts, worker’s compensation deposits (if any) and any refund with respect to worker’s compensation premiums for periods on or prior to the Closing Date, accounts receivables for services rendered on or prior to the Closing Date (“Seller’s Accounts Receivables”), and all credits, prepaid expenses, deferred charges, advance payments, security deposits, tax assets, tax returns of Seller and all books and records related thereto, insurance policies and proceeds and rights thereunder, personnel records, all claims with respect to debtors or debtors-in-possession subject to proceedings under the United States Bankruptcy Code and intercompany amounts.

 

2.          Purchase Price; No Assumption of Liabilities or Obligations. In consideration for the

Assets, Buyer agrees to pay Seller Two Hundred Fifty Thousand Dollars ($250,000) (the “Purchase Price”). The Purchase Price shall be payable in immediately available funds at Closing. The Purchase Price shall be allocated as follows: (a) $0 to tangible personal property and (b) $250,000 to goodwill. Except as otherwise expressly provided herein, Buyer is not assuming any liabilities or obligations of Seller, whether contractual or otherwise, and Seller will satisfy and perform its own liabilities and obligations. Notwithstanding the foregoing sentence, Buyer shall, at Closing assume and discharge or perform when due all of the Assumed Liabilities. “Assumed Liabilities” means all of Seller’s obligations and liabilities relating to or arising out of Seller’s Office Lease or Seller’s post-closing obligations and liabilities with respect to the Assets. “Seller’s Office Lease” means that certain Shopping Center Lease, dated June 4, 2013, between R&B Investment Company, as Landlord, and Seller, as Tenant, a complete copy of which including all amendments and modifications is attached as Exhibit A. On the Closing Date, Buyer shall pay Seller an additional One Thousand Five Hundred Dollars ($1,500) in exchange for Seller assigning its right to the deposit held by the landlord pursuant to the Seller’s Office Lease. On the Closing Date, or as promptly as practicable following the Closing Date, but in no event later than 30 days thereafter, the personal property taxes, water, gas, electricity and other utilities, telecommunications fees, software license and maintenance fees, local business or other license fees or taxes, and other similar periodic charges payable with respect to the Assets or the Business shall be prorated between Buyer and Seller effective as of the Closing Date. To the extent practicable, utility meter readings shall be determined as of the Closing Date.

 

 

3.          Representations, Warranties and Covenants of Seller. Seller hereby represents, warrants, and covenants to Buyer as follows:

 

(a)          Organization. Seller is a limited liability company duly organized, validly existing and in good standing under the laws of State of Delaware. Seller is duly qualified to transact business in the State of Ohio.

 

(b)          Authority. The execution, delivery and performance of this Agreement and all agreements contemplated hereby have been duly authorized by all necessary action on the part of Seller and the person executing this Agreement on behalf of Seller is duly authorized to do so.

 

(c)          No Restrictions.  Neither the execution and delivery of this Agreement by Seller, nor the consummation of the transactions contemplated hereby will violate any: (i) order, ruling, judgment or decree of any court or agency of government having jurisdiction over Seller; or (ii) Seller’s organizational documents.

 

(d)          Title. Other than the lien on the Assets of PNC Bank, N.A., to be released at Closing, Seller has good and marketable title to, and has sole possession and control of, each of the Assets, free and clear of all mortgages, liens, pledges, charges, restrictions, interests, defects of title, claims or rights of others or other encumbrances, and, at the Closing, Seller shall transfer the same to Buyer free and clear of all mortgages, liens, pledges, charges, restrictions, interests, defects of title, claims or rights of others or other encumbrances.

 

(e)          Employees. Except with respect to an Executive Incentive Compensation Program, dated September 2, 2014, with Margot McDonald, Seller is not a party to any employment agreement, collective bargaining agreement, pension agreement or other agreement which provides benefits to or for or otherwise relating to any of its employees. Except for the Retirement Plan for Employees of AMREP Corporation, as amended and restated, and the defined contribution plan, health plans and welfare benefit plans maintained by Seller and its affiliates, Seller does not maintain or contribute to any employee benefit plan (as defined in the Employer Retirement Income Security Act of 1974, or as amended (“ERISA”). Exhibit B contains a true and correct list of all employees of Seller (other than temporary employees), and the salary and wages and payable to each.

 

(f)          Financial Statements. Attached as Exhibit C are the following financial statements of Seller: (i) income and expense statement for calendar years 2012, 2013, and 2014 and fiscal year to date through January 31, 2015, (ii) February 28, 2015 Balance Sheet of Seller, and (iv) list of accounts payable of Seller as of February 28, 2015 (collectively, together with an additional financial information as is provided to Buyer, the “Financial Statements”). The Financial Statements have been prepared in accordance with generally accepted accounting principles, consistently applied in accordance with past practices, and accurately and fairly present in all material respects the financial condition of Seller as of their respective dates, subject in the case of the unaudited financial statements to normal year-end adjustments and the absence of footnotes and similar presentation items therein.

 

 

(g)          Proprietary Rights.  To Sellers’ Knowledge, Exhibit D contains a complete and accurate list of all web sites, domain names, trade names, trade marks, service marks, copyrights and patents, and applications therefor and licenses thereof, owned or used by Seller (the “Proprietary Rights”). To Sellers’ Knowledge, there is no reason why all rights, title and interests in and to the Proprietary Rights would conflict with, violate or infringe the rights of others. “Seller’s Knowledge” or any similar phrase means the current actual knowledge of Seller’s board of managers as set forth in any documentation in such persons’ possession prior to the Closing Date and not requiring any inquiry or investigation.

 

(h)         Litigation.  To Seller’s Knowledge and other than the Hutchinson Litigation, there is no claim, action, suit or legal or administrative, arbitration or proceeding before any judicial, governmental or regulatory authority pending or threatened against Seller.  “Hutchinson Litigation” means the case captioned “Steve Hutchinson v. Kable Staffing Resources LLC”, case number A1500017, pending in Hamilton County, Ohio.  Unless Buyer prevents Seller from controlling all decisions of the defendant in the Hutchinson Litigation, including the decision on whether to settle or litigate the case (subject to the Settlement Parameters), how to defend the case and the selection of counsel to defend Seller in the case: (i) Seller shall be responsible for up to $10,000 of the fees and costs of the counsel representing Seller in such case after all available insurance and indemnities, if any, have been exhausted and (ii) Buyer shall promptly reimburse Seller for any fees and costs of the counsel representing Seller in excess of $10,000.  “Settlement Parameters” mean that Buyer has consented to any settlement in excess of $15,000 and that Buyer’s consent to any settlement equal to or less than $15,000 shall not be required.  If Seller settles the Hutchinson Litigation not in compliance with the Settlement Parameters, Seller shall be responsible for any settlement amounts in excess of $15,000.  If, as a result of any action or inaction of Buyer, Seller is not able to control all decisions of the defendant in the Hutchinson Litigation, including the decision on whether to settle or litigate the case (subject to the Settlement Parameters), how to defend the case and the selection of counsel to defend Seller in the case, Buyer shall promptly reimburse Seller for any amounts incurred by Seller in the Hutchinson Litigation.

 

(i)          Compliance. To Seller’s Knowledge, Seller is not in violation of any federal, state, or local statute, law, regulation, rule, ordinance, code, order, license, or permit which is a material violation or which would have a material adverse effect on the business prospects or financial condition of the Business.

 

(j)          Tax Matters. Seller has filed all federal, state, and local tax returns required to be filed by Seller, and have paid in full or made adequate provision by the establishment of reserves for all taxes which have become due or will become due with respect to any period or partial period ending on or before the Closing Date. All such tax returns are true, complete, and accurate in all material respects, and there is no tax deficiency proposed or threatened against Seller. To Seller’s Knowledge, there are no investigations being conducted with respect to any taxes or tax returns of Seller. To Seller’s Knowledge, there are no tax liens that affect any of the Assets, and to Seller’s Knowledge, there are no federal, state, local, or foreign tax audits, administrative proceedings, or court proceedings currently being conducted with regard to any taxes or tax returns of Seller.

 

4.          Representations, Warranties and Covenants of Buyer. Buyer hereby represents, warrants, and covenants to Seller as follows:

 

(a)          Organization. Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of State of Ohio.

 

(b)          Authority. Buyer has all requisite limited liability company power and authority to enter into the Agreement and all agreements contemplated hereby, to perform its obligations thereunder and to consummate the transactions contemplated thereby. The execution, delivery and performance of this Agreement and all agreements contemplated hereby have been duly authorized by all necessary action on the part of Buyer. The Agreement and all agreements contemplated hereby have been duly executed and delivered by Buyer and constitute the valid, binding and enforceable obligation of Buyer, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally and general principles of equity.

 

 

(c)          Restrictions. Neither the execution and delivery of this Agreement by Buyer, nor the consummation of the transactions contemplated hereby, will violate any: (i) order, ruling, judgment or decree of any court or agency of government having jurisdiction over Buyer; or (ii) Buyer’s organizational documents or any other document or instrument to which Buyer is a party or by which Buyer is bound.

 

(d)         Acknowledgements Regarding the Business. Buyer understands and acknowledges the following:

 

(A)         the Business and Seller’s affiliates have certain shared services and assets (which are not included in the Assets), including without limitation insurance, information technology, employee benefit plans and a line of credit, all of which will cease to be available to the Business as of the date of this Agreement and all of which the Business will need to address following the Closing Date;

 

(B)         certain agreements to which Seller is a party may contain provisions requiring the consent of the counterparty in connection with the sale of the Business contemplated by this Agreement, the absence of such consent may be a default under such agreements allowing the counterparty to terminate such agreement and Seller has no obligation to obtain any such consent; and

 

(C)         the employees of the Business, including its management team, are integral to the operation of the Business, and such employees are not subject to any non-solicitation or non-competition agreements in favor of Seller.

 

(e)        By reason of its or its management’s business or financial experience, Buyer has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement. Buyer has had an opportunity to discuss the business, management and financial affairs of the Business with Seller, it affiliates and their respective representatives and has had the opportunity to review the operations, assets and liabilities, and facilities of the Business. Buyer has also had the opportunity to ask questions of and receive answers from Seller and its affiliates and its management regarding the operations, business, prospects and condition (financial or otherwise) of the Business. Buyer has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the transactions contemplated by this Agreement, and is consummating this Agreement and the actions contemplated hereby with a full understanding of all of the terms, conditions and risks and willingly accepts, adopts and assumes those terms, conditions and risks subject to the terms of this Agreement and all agreements contemplated hereby. Buyer has made its own decision to consummate the transaction based on its own independent review and consultations with such investment, legal, tax, accounting and other advisers as it deemed necessary and upon the terms of this Agreement and all agreements contemplated hereby. Buyer has made its own decision concerning the transaction without reliance on any representation or warranty of, or advice from, Seller except as set forth in this Agreement.

 

(f)      No Knowledge of Misrepresentations or Omissions. Buyer does not have any knowledge that any of the representations and warranties of Seller made in this Agreement are not true and correct.

 

 

5.          Tax Matters. Buyer and Seller shall, and shall each cause its affiliates to, provide to the other such cooperation and information, as and to the extent reasonably requested, in connection with the filing of any tax return, amended tax return or claim for refund, determining liability for taxes or a right to refund of taxes, or in conducting any audit, litigation or other proceeding with respect to taxes. Buyer shall pay all Transfer Taxes arising out of or in connection with the transactions effected pursuant to this Agreement, and shall indemnify and defend each Seller Indemnified Person (defined below), and hold each Seller Indemnified Person harmless, with respect to such Transfer Taxes. Buyer shall file all necessary documentation and tax returns with respect to such Transfer Taxes. “Transfer Taxes” means all federal, state, local or foreign or other excise, sales, use, value added, transfer (including real property transfer or gains), stamp, documentary, filing, recordation and other similar taxes and fees that may be imposed or assessed as a result of the transaction contemplated by this Agreement or any agreements contemplated hereby, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties. Seller and Buyer agree to waive compliance with Article 6 (Bulk Sales) of the Uniform Commercial Code as adopted in each of the jurisdictions in which any of the Assets are located to the extent that such Article is applicable to the transactions contemplated hereby.

 

6.          Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall, subject to the terms hereof, take place at the offices of Strauss & Troy LPA in Covington, Kentucky on the date of this Agreement (the “Closing Date”). The Parties intend that the Closing will occur by exchange of executed pdf signature pages, with original signature pages to be promptly delivered to the other Party. In any event, in addition to their other obligations under this Agreement, the Parties agree as follows:

 

(a)          Buyer’s Closing Obligations. On the Closing Date, Buyer shall at Closing:

 

(i)          deliver to Seller the cash portion of the Purchase Price in immediately available funds;

 

(ii)         execute and deliver two (2) originals of the Bill of Sale and Assignment and Assumption of Lease attached hereto as Exhibit E (the “Conveyance Agreement”) ;

 

(iii)        deliver evidence of Buyer’s organization and good standing and authorization to complete the transaction.

 

(b)          Seller’s Closing Obligations. On the Closing Date, Seller shall at Closing:

 

(i)     execute and deliver two (2) originals of the Conveyance Agreement; and

 

(ii)         deliver evidence of Seller’s organization and good standing and authorization to complete the transaction evidenced by this Agreement.

 

7.          Employees. Buyer acknowledges and agrees that Seller will terminate the employment of all of Seller’s employees as of the Closing Date. Buyer shall use its commercially reasonable efforts to return to Seller all of RSA tokens used by employees in the Business.

 

8.          Further Assurances. If, at any time after the Closing, any assignments, assurances, or any other actions or things are necessary or desirable to vest, perfect, or confirm of record Buyer’s right, title, or interest in the Assets acquired by Buyer hereunder, or otherwise to carry out this Agreement, Seller shall execute and deliver, upon request, all such assignments or assurances, and shall take and do all such other actions and things as may be necessary or desirable to vest, perfect, or confirm Buyer’s right title, and interest in such Assets. The provisions of this Section 9 shall survive indefinitely survive Closing.

 

 

9.          Post-Closing Covenants.

 

(a)          Buyer shall, or cause one of its affiliates to, subject to the specific direction and oversight of Seller and its affiliates, process the payroll (including payment of taxes therefor) for employees of Seller through the Closing Date. Seller shall promptly reimburse Buyer for the payroll (and tax) amounts paid pursuant to the prior sentence (e.g., if Buyer pays the payroll pursuant to the prior sentence on April 17, 2015, Seller shall reimburse Buyer such amounts no later than April 20, 2015).

 

(b)          For a period of eighteen (18) months following the Closing Date, Buyer shall provide, or cause one of its affiliates to provide, to Seller and its affiliates, subject to the specific direction and oversight of Seller and its affiliates, with continued assistance and support in the preparation of financial statements for Seller and its affiliates, including providing information requested by Seller and its affiliates or their internal and external auditors. Buyer shall not be required to incur new expenses with any third parties in order to provide the services to Seller and its affiliates under this Section 9(b).

 

(c)          Buyer shall assume all responsibility for, and shall comply with all requirements related to, tax reporting for employees of Seller with respect to activities during calendar year 2015 (including, without limitation, production, mailing, filing and reporting of Form W-2, Wage and Tax Statement, Form W- 3, Transmittal of Income and Tax Statements, Form 941, Employer’s Quarterly Federal Tax Return, Form W-4, Employee’s Withholding Allowance Certificate and Form W-5, Earned Income Credit Advance Payment Certificate). Buyer shall provide Seller with prompt written notice of actions taken by Buyer pursuant to this paragraph.

 

(d)          Accounts Receivable. Buyer and Seller shall cooperate in determining the final amount of Seller’s Accounts Receivables by customer of the Business. Buyer shall use its commercially reasonable efforts to collect, on behalf of Seller, all of Seller’s Accounts Receivables from the applicable customers of the Business, and Buyer shall promptly remit all such collected amounts to Seller. If any customer of the Business owes both Seller and Buyer based on invoices provided to such customer, any amounts collected by Buyer from such customer shall (i) first be applied to Seller’s Accounts Receivables with an invoice date on or after February 9, 2015 and be promptly remitted to Seller, (ii) then, if the customer had specifically identified how such payment was to be applied to Seller’s Accounts Receivables or to accounts receivables for services rendered by Buyer after the Closing Date, such amounts shall be applied and remitted as instructed by the customer, (iii) then be applied to accounts receivables for services rendered by Buyer after the Closing Date and (iv) then be applied to any remaining Seller’s Accounts Receivables and be promptly remitted to Seller. Notwithstanding the foregoing, if a customer specifically and reasonably disputes an invoice with respect to a Seller’s Accounts Receivable, Buyer shall inform Seller of such dispute, Buyer shall promptly provide Seller with all information and documentation supporting or related to such invoice and Buyer shall not be obligated to remit amounts collected from such customer with respect to such invoice until the dispute has been resolved. At the request of Seller, Buyer shall promptly provide Seller with all information and documentation supporting or related to any Seller’s Accounts Receivables. Buyer shall have no obligation to sue any customer as part of its commercially reasonable efforts to collect Seller’s Accounts Receivables. Buyer shall have no liability to Seller for failure to collect the Seller’s Accounts Receivables except as provided in this Section 9(d). Buyer shall not be required to incur new expenses with any third parties in order to provide the services to Seller under this Section 9(d).

 

(e)          Buyer shall provide, or cause one or more of its affiliates to provide, the services contemplated by this Section 9 with the same degree of skill, attention and care as it exercises in performing the same or similar services for itself and its affiliates and in the manner and at a level of service generally consistent with that provided by the Business to Seller and its affiliates immediately preceding the Closing Date. The Parties agree that the provision of the services contemplated by this Section 9 is included as part of the consideration exchanged between the Parties in connection with the transaction contemplated by this Agreement and no amounts are to be paid by Seller to Buyer for the provision of such services.

 

 

10.         Indemnification.

 

(a)          Obligation to Indemnify by Seller. Seller agrees to indemnify, defend, and hold harmless Buyer from and against any Losses (as defined below) relating to, based upon, arising out of, or otherwise in respect of (1) any falsity or breach of any representation or warranty or breach of any covenant or agreement made or to be performed by Seller pursuant to this Agreement or any document or agreement executed in connection herewith; (2) any liability of Seller that is imposed on Buyer, except for Assumed Liabilities or any other liabilities of Seller which are expressly assumed in writing by Buyer; and (3) any liability of Seller arising or related to the period prior to the Closing with respect to any of its employees. As used in this Agreement, “Loss” or “Losses” means any and all claims, actions, suits, proceedings, demands, assessments, judgments, losses, remedial action requirements, costs, expenses, deficiencies, damages, fines, penalties, liabilities, or expenses for which indemnification is being sought (including, but not limited to, reasonable attorneys’ fees) after giving effect to offsetting recoveries or related proceeds actually received from insurance policies or similar arrangements or from third parties. This obligation to indemnify shall continue for twelve (12) months from the Closing Date; provided, however, that any claim which is made within such twelve (12) month period may be pursued to completion.

 

(b)          Notwithstanding anything to the contrary in this Agreement or any agreements contemplated hereby, Buyer shall not be entitled to recover pursuant to this Section 10 for any Losses except to the extent that the aggregate amount of any such Losses indemnifiable hereunder exceeds $20,000, at which point, Seller will be obligated to indemnify Buyer for all such Losses in excess of the $20,000 and up to an aggregate amount equal to $100,000, subject to the other clauses of this Section 10. Notwithstanding anything to the contrary in this Agreement or any agreements contemplated hereby:

 

(i)          (I) IN NO EVENT SHALL SELLER, ITS AFFILIATES, ANY OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR ADVISORS OF SELLER OR ITS AFFILIATES OR ANY OTHER PERSON BE LIABLE UNDER THIS AGREEMENT OR ANY AGREEMENTS CONTEMPLATED HEREBY OR OTHERWISE TO BUYER, ITS AFFILIATES, ANY OTHER MEMBER, MANAGER, DIRECTOR, OFFICER, EMPLOYEE, AGENT OR REPRESENTATIVE OF BUYER OR ITS AFFILIATES OR ANY THIRD PARTY FOR (A) ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, STATUTORY, EXEMPLARY, SPECIAL OR PUNITIVE DAMAGES, INCLUDING ANY DAMAGES FOR BUSINESS INTERRUPTION, DIMINUTION IN VALUE OR LOSS OF USE, DATA, REVENUE OR PROFIT, WHETHER ARISING OUT OF BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, OR (B) ANY INDEMNIFICATION CLAIM THAT ARISES (DIRECTLY OR INDIRECTLY) FROM ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, STATUTORY, EXEMPLARY, SPECIAL OR PUNITIVE DAMAGES, INCLUDING ANY DAMAGES FOR BUSINESS INTERRUPTION, DIMINUTION IN VALUE OR LOSS OF USE, DATA, REVENUE OR PROFIT, WHETHER ARISING OUT OF BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, IN EACH CASE OF CLAUSE (A) AND CLAUSE (B) REGARDLESS OF WHETHER SUCH DAMAGES WERE FORESEEABLE AND WHETHER OR NOT SELLER, ITS AFFILIATES, ANY OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR ADVISORS OF SELLER OR ITS AFFILIATES OR ANY OTHER PERSON HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND NOTWITHSTANDING THE FAILURE OF ANY AGREED OR OTHER REMEDY OF ITS ESSENTIAL PURPOSE OR (II) THE LIABILITY OF SELLER, ITS AFFILIATES, ANY OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR ADVISORS OF SELLER OR ITS AFFILIATES OR ANY OTHER PERSON ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION AGREEMENTS OR OTHERWISE TO BUYER, ITS AFFILIATES, ANY OTHER MEMBER, MANAGER, DIRECTOR, OFFICER, EMPLOYEE, AGENT OR REPRESENTATIVE OF BUYER OR ITS AFFILIATES OR ANY THIRD PARTY, WHETHER ARISING OUT OF OR RELATED TO BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE SHALL BE LIMITED TO DIRECT PROVABLE DAMAGES ONLY.

 

 

(ii)         BUYER ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY AGREEMENTS CONTEMPLATED HEREBY, NO SELLER INDEMNIFIED PERSON MAKES ANY COVENANTS, AGREEMENTS, REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING (I) WITH RESPECT TO THE BUSINESS, ITS OPERATIONS, ASSETS AND LIABILITIES OR THE TRANSACTIONS CONTEMPLATED HEREBY OR (II) AS TO THE ACCURACY OR COMPLETENESS OF ANY INFORMATION REGARDING THE BUSINESS FURNISHED OR MADE AVAILABLE TO BUYER AND THEIR REPRESENTATIVES. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGE THAT THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. NONE OF SELLER, ITS AFFILIATES, ANY OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR ADVISORS OF SELLER OR ITS AFFILIATES OR ANY OTHER PERSON SHALL HAVE OR BE SUBJECT TO ANY LIABILITY TO BUYER OR ANY OTHER PERSON WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF ANY INFORMATION, DOCUMENTS OR MATERIALS FURNISHED OR MADE AVAILABLE TO BUYER OR ANY OTHER PERSON BY SELLER, ITS AFFILIATES OR ANY OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR ADVISORS OF SELLER OR ITS AFFILIATES.

 

(iii)        The amount which Seller is required to pay to, for or on behalf of Buyer pursuant to this Section 10 shall be adjusted (including, retroactively) by any insurance proceeds and any indemnity, contribution or other similar payment actually recovered by or on behalf of Buyer, its affiliates or any other member, manager, director, officer, employee, agent or representative of Buyer or its affiliates in reduction of the related indemnifiable Loss. Buyer agrees to use its commercially reasonable efforts to pursue and collect on any recovery with respect to any indemnifiable Loss available under any insurance policies. If Buyer shall have received from Seller or Seller shall have had paid on its behalf a payment in respect of a Loss indemnified under this Section 10 and Buyer, its affiliates or any other member, manager, director, officer, employee, agent or representative of Buyer or its affiliates shall subsequently receive insurance proceeds or other payment in respect of such Loss, then Buyer shall pay to Seller the amount of such insurance proceeds or other payment or, if lesser, the amount of the original payment made by Seller to or on behalf of Buyer in respect of such Loss. To the extent that Buyer is entitled to indemnification pursuant to this Section 10, Seller shall be entitled to exercise, and shall be subrogated to, any rights and remedies (including rights of indemnity, rights of contribution and other rights of recovery) that Buyer, its affiliates or any other member, manager, director, officer, employee, agent or representative of Buyer or its affiliates may have to insurance policies or similar contracts with respect to which such person or entity is a beneficiary. Buyer shall take such actions as Seller may reasonably request for the purpose of enabling Seller to perfect or exercise the right of subrogation under this paragraph.

 

(iv)        The amount of any indemnity provided in Section 10 shall be reduced (but not below zero) by the amount of any actual net reduction in cash payments for taxes realized by Buyer, its affiliates or any other member, manager, director, officer, employee, agent or representative of Buyer or its affiliates as a result of the Losses giving rise to such indemnity claim. If the indemnity amount is paid prior to Buyer realizing any actual reduction in cash payments for Taxes in connection with the Losses giving rise to such payment, and Buyer, its affiliates or any other member, manager, director, officer, employee, agent or representative of Buyer or its affiliates subsequently realizes such actual reduction in cash payments for Taxes, then Buyer shall pay the amount of such actual reduction in cash payments for Taxes (but not in excess of the indemnification payment or payments paid by Seller with respect to such Losses) to Seller.

 

  

(v)         Buyer, its affiliates and any other member, manager, director, officer, employee, agent or representative of Buyer or its affiliates acknowledge and agree that its sole and exclusive rights and remedies with respect to any and all matters arising out of, relating to or connected with this Agreement, any other agreement contemplated hereby, the Business or its respective assets and liabilities, any of Seller or any of its affiliates or their respective assets and liabilities or the transactions contemplated by this Agreement or any other agreement contemplated hereby shall be pursuant to the indemnification provisions set forth in this Section 10. In furtherance of the foregoing, Buyer (on behalf of itself, its affiliates and any other member, manager, director, officer, employee, agent or representative of Buyer or its affiliates) hereby waives, from and after the Closing Date, any and all rights, remedies, claims and causes of action with respect to the foregoing except pursuant to the indemnification provisions set forth in this Section 10.

 

(vi)        No fact, event, misrepresentation or occurrence that, in the absence of this paragraph, would constitute a liability to be indemnified pursuant to Section 10 shall be deemed to constitute a liability to be indemnified pursuant to Section 10 for which Buyer would be entitled to be indemnified pursuant to Section 10 if Buyer, its affiliates or any other member, manager, director, officer, employee, agent or representative of Buyer or its affiliates has knowledge of such fact, event, misrepresentation or occurrence on or prior to the Closing Date.

 

(vii)       Buyer agrees that, for so long as Buyer has any right of indemnification under Section 10, it will not, and agrees to use its commercially reasonable efforts to ensure that its affiliates or any other member, manager, director, officer, employee, agent or representative of Buyer or its affiliates do not, voluntarily or by discretionary action, accelerate the timing, or increase the cost, of any obligation of Seller under Section 10 (any such voluntary or discretionary action, a “Prohibited Action”); provided, however that “Prohibited Action” shall not be deemed to include any action which in the written opinion of Buyer’s legal counsel is required to be taken in order to be in compliance with applicable law. Notwithstanding anything to the contrary in this Agreement, Seller shall not be obligated to indemnify Buyer for any Loss arising out of or by reason of or in connection with or due to any Prohibited Action.

 

(viii)      No Losses of Buyer shall be determined or increased based on any multiple of any financial measure (including earnings, sales or other benchmarks) that might have been used by Buyer in the valuation of the Business.

 

(c)          Obligation to Indemnify by Buyer. Buyer agrees to indemnify, defend, and hold harmless Seller, its affiliates and the members, managers, directors, officers, employees, agents and representatives of Seller or its affiliates (collectively, the “Seller Indemnified Parties”) from and against any Losses relating to, based upon, arising out of, or otherwise in respect of (1) any falsity or breach of any representation or warranty or breach of any covenant or agreement made or to be performed by Buyer pursuant to this Agreement or any document or agreement executed in connection herewith; (2) Buyer, its affiliates and any other member, manager, director, officer, employee, agent or representative of Buyer or its affiliates or any of the business or operations of Buyer or its affiliates, including without limitation the Business (except as specifically enumerated in Section 10(a) as an item for which Seller will indemnify Buyer); (3) any taxes (including, without limitation, fees, assessments and penalties) incurred by, imposed on or assessed against the Business on or after the Closing Date (except as specifically enumerated in Section 10(a) as an item for which Seller will indemnify Buyer); and (4) Assumed Liabilities.

 

11.         [Intentionally Omitted].

 

 

12.         Non-Competition and Non Solicitation Covenants of Seller. Seller agree that from and after the Closing Date and until April 10, 2018, Seller will not, directly or indirectly, engage in (whether as an employee, consultant, proprietor, partner, director or otherwise), or have any ownership interest in, or participate in the financing, operation, management or control of, any person, firm, corporation or business that engages in a Restricted Business (as defined below) in a Restricted Territory (as defined below). It is agreed that passive ownership of no more than five percent (5%) of the outstanding voting or profits interest of any publicly held entity or business shall not constitute a violation of this provision. “Restricted Business” shall mean any temporary staffing business. “Restricted Territory” shall mean the area encompassed by a circle, the center point of which is Fountain Square in Cincinnati, Ohio and the radius of which is one hundred fifty (150) miles. Seller further agree that from and after the Closing Date and until April 10, 2018, Seller will not solicit, recruit, hire, encourage or take any other action which is intended to induce any employee of Buyer to terminate his or her employment with Buyer (other than through or as a result of the placement or sponsorship of a general advertisement for employment not specifically targeted at any employees of Buyer). The provisions of this Section 12 shall survive the Closing of the transactions evidenced by this Agreement until April 10, 2018.

 

13.         Miscellaneous.

 

(a)          Commissions. Each of the Parties hereto represents and warrants that there are no claims for finder’s fees or brokerage commissions in connection with the transactions contemplated by this Agreement.

 

(b)          Expenses. Seller and Buyer shall separately bear their costs and expenses (including, without limitation, attorney’s fees) incurred pursuant to this Agreement in connection with all things required to be done by them hereby, except as expressly provided herein.

 

(c)          Assignability; Parties in Interest. No Party to this Agreement shall assign, transfer, or otherwise dispose of any of its rights, duties, or obligations hereunder without the prior written consent of the other Party hereto, and any attempted assignment without such prior written consent shall be void ab initio. Except as limited by the foregoing, all the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the Parties hereto and their respective heirs, successors, permitted assigns, and legal or personal representatives.

 

(d)          Entire Agreement; Amendments. This Agreement, including, without limitation, any Exhibits, lists, schedules, and other documents and writings referred to herein or delivered pursuant hereto, all of which form a part hereof, contains the entire understanding of the Parties with respect to its subject matter. It merges and supersedes all prior and/or contemporaneous agreements and understandings between the Parties, written or oral, with respect to its subject matter and there are no restrictions, agreements, promises, warranties, covenants, or undertakings between the Parties with respect to the subject matter hereof other than those expressly set forth herein. This Agreement may be amended only by a written instrument duly executed by all Parties or their respective heirs, successors, permitted assigns, or legal or personal representatives.

 

(e)          Headings. The section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement will refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless the context expressly provides otherwise, any approval, determination, election or authorization required to be obtained from a Party shall be at such Party’s sole discretion. The word “or” is not exclusive. All terms used herein with initial capital letters have the meanings ascribed to them herein and all terms defined in this Agreement will have such defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term.

 

 

(f)          Severability. In the event that any provision of this Agreement, or the application thereof to any person or circumstance, is held by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, or the application of the invalid, illegal, or unenforceable provision to any other person or circumstance, and this Agreement shall then be construed as if such invalid, illegal, or unenforceable provision had not been contained in this Agreement, but only to the extent of such invalidity, illegality, or unenforceability.

 

(g)          Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be given in writing by personal delivery, by recognized overnight delivery service or by e-mail transmission, and shall be deemed to be duly given and received on the date of delivery to the respective addresses or emails below. Notices shall be sent to the Parties and their attorneys at the following addresses or to such other address as any Party may have furnished to the others in writing in accordance herewith:

 

	(i)		To Seller:
					Kable Staffing Resources LLC
					c/o AMREP Corporation
					300 Alexander Park, Suite 204
					Princeton, New Jersey 08540
					Attn: Christopher Vitale, Esq.
					Tel: (609) 716-8211
					E-Mail: cvitale@amrepcorp.com
	(ii)		Mandatory Copy to:
					Kable Staffing Resources LLC
					c/o AMREP Corporation
					300 Alexander Park, Suite 204
					Princeton, New Jersey 08540
					Attn: Chief Financial Officer
	(iii)		To Buyer:		TSJ Staffing, LLC
					4412 Carver Woods Drive, Suite 200
					Cincinnati, Ohio 45242
					Attn: S. Joshua Guttman
					Tel: (513) 312-3002
					E-Mail: jguttman@tsjnews.com
	(iv)		Mandatory Copy to:		Strauss & Troy LPA
					50 East RiverCenter Blvd.
					Suite 1400
					Covington, Kentucky 41011
					Attn: Andrew R. Giannella, Esq.
					Tel: (513) 309-7460
					E-Mail: argiannella@strausstroy.com

 

Any Party may change his or its notice address by providing written notice to the other Parties as set forth above. Attorneys for the Parties are permitted to give notice on behalf of their clients.

 

 

(h)          Governing Law. This Agreement shall be governed by and construed in accordance with the internal substantive laws of the State of Ohio, without giving effect to any choice of law or conflict of laws rules or provisions (whether of the State of Ohio or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Ohio. Each Party irrevocably submits to the exclusive jurisdiction of the federal or state courts located in Cincinnati, Ohio for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each Party further agrees that service of any process, summons, notice or document by U.S. registered mail to such Party’s respective address set forth in the “Notices” section hereof shall be effective service of process for any action, suit or proceeding with respect to any matters to which it has submitted to jurisdiction in this Section. Each Party 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 federal or state courts located in Cincinnati, Ohio, 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. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

 

(i)          Counterparts. This Agreement may be executed simultaneously in one or more counterparts, with the same effect as if the signatories executing the several counterparts had executed one counterpart. All such executed counterparts shall together constitute one and the same instrument.

 

(j)          Waivers. The Parties may, by written agreement: (i) extend the time for the performance of any of the obligations or other acts of the Parties, (ii) waive any inaccuracies in the representations contained in this Agreement or in any document delivered pursuant to this Agreement, and (iii) waive compliance with or modify any of the covenants contained in this Agreement and waive or modify performance of any of the obligations of any of the Parties.

 

(k)          Survival. Except as otherwise expressly provided in this Agreement, the representations, warranties, and covenants of the Parties set forth in this Agreement shall survive the closing or termination of this Agreement for a period of twelve (12) months (the “Survival Period”); provided, however, that if either Party timely makes a claim during the applicable Survival Period (either twelve (12) months or such other period of time expressly provided in this Agreement), such Party shall be entitled to pursue such claim through its final resolution.

 

(l)          Borrower consent to Lender or its affiliates publicly disclosing the APA, including by filing such documents with the Securities and Exchange Commission or the New York Stock Exchange.

 

[SIGNATURE PAGE FOLLOWS]

 

 

The Parties hereto have caused this Agreement to be executed by and through their duly authorized representative as of the day and year first written above.

 

	Buyer:
	TSJ STAFFING, LLC, an Ohio limited liability company
	By: Gate West Coast Ventures, LLC, its sole member

 

	By:	/s/ S. Joshua Guttman
		Name: S. Joshua Guttman
		Title: Authorized Manager

 

	Seller:
	KABLE STAFFING RESOURCES LLC, a Delaware limited liability company

 

	By:		/s/ Christopher V. Vitale
			Name: Christopher V. Vitale
			Title: President and Chief Executive Officer

 

 

Exhibit 10.2

 

SIXTH AMENDMENT TO

REVOLVING CREDIT AND SECURITY AGREEMENT

 

This Sixth Amendment to Revolving Credit and Security Agreement (the “Amendment”) is made as of this 10^th day of April, 2015 by and among Palm Coast Data Holdco, Inc., a corporation organized under the laws of the State of Delaware (“Palm Holding”), Kable Staffing Resources LLC, a limited liability company organized under the laws of the State of Delaware (“Kable Staffing”), Palm Coast Data LLC, a limited liability company organized under the laws of the State of Delaware (“Palm Coast”), and Fulcircle Media, LLC, a Delaware limited liability company (“FulCircle” and, together with Palm Holding, Kable Staffing, Palm Coast, and any other Person joined as a borrower to the Loan Agreement (as defined below) from time to time, collectively, the “Borrowers”, and each a “Borrower”), the financial institutions which are now or which hereafter become a party to the Loan Agreement (collectively, the “Lenders” and each individually a “Lender”) and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as agent for Lenders (PNC, in such capacity, the “Agent”) and as a Lender.

 

BACKGROUND

 

A.           On May 13, 2010, Borrowers and PNC as a Lender and Agent entered into that certain Revolving Credit and Security Agreement (as same has been or may be amended, restated, modified, renewed, extended, replaced or substituted from time to time, including, without limitation, as amended by certain modifications and/or waivers contained in that certain (i) Consent Letter dated September 27, 2010, (ii) Consent Letter dated December 29, 2011, (iii) Waiver and Amendment dated July 18, 2012, (iv) First Amendment to Revolving Credit and Security Agreement dated as of October 1, 2012, (v) Second Amendment and Joinder to Revolving Credit and Security Agreement dated as of December 31, 2012, (vi) Third Amendment to Revolving Credit and Security Agreement dated as of March 29, 2013, (v) Fourth Amendment to Revolving Credit and Security Agreement dated as of June 11, 2014, and (vi) Fifth Amendment to Revolving Credit and Security Agreement dated as of February 9, 2015, the “Loan Agreement”) to reflect certain financing arrangements between the parties thereto. The Loan Agreement and all other documents executed in connection therewith to the date hereof are collectively referred to as the “Existing Financing Agreements.” All capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Loan Agreement.

 

B.           Borrowers have informed Agent and Lenders that Borrowers intend to enter into an Asset Purchase Agreement dated as of even date herewith (the “Purchase Agreement”) with TSJ Staffing, LLC, as buyer (“Buyer”) and Kable Staffing, as seller, in which Buyer will acquire the Assets (as defined therein) which are used by Kable Staffing in the operation of its temporary staffing business for consideration that includes a purchase price equal to $250,000 in cash (collectively, the “Sale”).

 

C.           Borrowers have requested that Agent and Lenders (i) consent to the Sale, (ii) remove Kable Staffing as a Borrower under the Loan Agreement and other Existing Financing Agreements, and (iii) modify certain definitions, terms and conditions in the Loan Agreement, and Agent and Lenders are willing to do so on the terms and conditions hereafter set forth.

 

 

NOW THEREFORE, with the foregoing background hereinafter deemed incorporated by reference herein and made part hereof, the parties hereto, intending to be legally bound, promise and agree as follows:

 

Section 1              Consent.

 

(a)          In reliance upon the documentation and information provided to Agent in connection with the Sale, and notwithstanding anything to the contrary contained in the Loan Agreement, including without limitation Sections 4.3, 7.1(b), and 10.15 of the Loan Agreement, or any other Existing Financing Agreement, upon the Effective Date, Agent and Lenders hereby consent to the Sale. Upon the effectiveness of this Amendment, Kable Staffing shall be removed as a Borrower under the Loan Agreement and other Existing Financing Agreements, and Palm Coast, Palm Holding, and FulCircle shall remain as Borrowers under the Loan Agreement and other Existing Financing Agreements.

 

(b)          This consent shall be effective only as to the items set forth in the preceding paragraph. This consent shall not be deemed to constitute a consent to the breach by Borrowers of any covenants or agreements contained in any Existing Financing Agreement with respect to any other transaction or matter. Borrowers agree that the consent set forth in the preceding paragraph (a) shall be limited to the precise meaning of the words as written therein and shall not be deemed (i) to be a consent to, or any waiver or modification of, any other term or condition of any Existing Financing Agreement, or (ii) to prejudice any right or remedy that Agent or Lenders may now have or may in the future have under or in connection with any Existing Financing Agreement other than with respect to the matters for which the consent in the preceding paragraph (a) has been provided. Other than as described in this Amendment, the consent described in the preceding paragraph (a) shall not alter, affect, release or prejudice in any way any Obligations under the Existing Financing Agreements. This consent shall not be construed as establishing a course of conduct on the part of Agent or Lenders upon which the Borrowers may rely at any time in the future. Borrowers expressly waive any right to assert any claim to such effect at any time.

 

Section 2              Amendments to Loan Agreement

 

(a)           Definitions. On the Effective Date, the following definitions contained in Section 1.2 of the Loan Agreement shall be amended and restated in their entirety as follows:

 

“Maximum Loan Amount” shall mean $5,000,000.

 

“Maximum Revolving Advance Amount” shall mean $5,000,000.

 

(b)          Term. On the Effective Date, Section 13.1 of the Loan Agreement shall be amended and restated in its entirety as follows:

 

13.1         Term. This Agreement, which shall inure to the benefit of and shall be binding upon the respective successors and permitted assigns of each Borrower, Agent and each Lender, shall become effective on the date hereof and shall continue in full force and effect until August 12, 2015 (the “Term”) unless sooner terminated as herein provided. Borrowers may terminate this Agreement at any time upon sixty (60) days’ prior written notice upon payment in full of the Obligations. In the event the Obligations are prepaid in full prior to the expiration of the Term and this Agreement is terminated, Borrowers shall pay to Agent for the benefit of Lenders an early termination fee in an amount equal to one percent (1%) of the Maximum Loan Amount.

 

 

Section 3              Representations, Warranties and Covenants of Borrowers. Each Borrower hereby represents and warrants to and covenants with the Agent and the Lenders that:

 

(a)          such Borrower reaffirms all representations and warranties made to Agent and Lenders under the Loan Agreement and all of the other Existing Financing Agreements and confirms that after giving effect to this Amendment all are true and correct in all material respects as of the date hereof (except to the extent any such representations and warranties specifically relate to a specific date, in which case such representations and warranties were true and correct in all material respects on and as of such other specific date);

 

(b)          from and after the Effective Date, such Borrower reaffirms all of the covenants contained in the Loan Agreement (as amended hereby), covenants to abide thereby until all Advances, Obligations and other liabilities of Borrowers to Agent and Lenders under the Loan Agreement of whatever nature and whenever incurred, are satisfied and/or released by Agent and Lenders;

 

(c)          no Default or Event of Default has occurred and is continuing under any of the Existing Financing Agreements;

 

(d)          such Borrower has the authority and legal right to execute, deliver and carry out the terms of this Amendment and the A&R Note, that such actions were duly authorized by all necessary limited liability company or corporate action, as applicable, and that the officer executing this Amendment on its behalf was similarly authorized and empowered, and that this Amendment does not contravene any provisions of its certificate of incorporation or formation, operating agreement, bylaws, or other formation documents, as applicable, or of any material contract or agreement to which it is a party or by which any of its properties are bound;

 

(e)          this Amendment, the A&R Note, and all assignments, instruments, documents, and agreements executed and delivered in connection herewith, are valid, binding and enforceable in accordance with their respective terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally; and

 

(f)          all intercompany balances payable to Kable Staffing from any other Borrower have been offset, released, or paid in full, and all Advances relating to Kable Staffing, have been paid in full.

 

Section 4             Conditions Precedent/Effectiveness Conditions. This Amendment shall be effective upon the date of satisfaction of all of the following conditions precedent (the “Effective Date”) (all documents to be in form and substance reasonably satisfactory to Agent and Agent’s counsel):

 

(a)          Agent shall have received this Amendment fully executed by the Borrowers;

 

 

(b)          Agent shall have received an Amended and Restated Revolving Credit Note in the original principal amount of $5,000,000, executed by Palm Coast, FulCircle, and Palm Holding in favor of PNC (the “A&R Note”);

 

(c)          Payment by Borrowers to Agent, in immediately available funds of an amendment fee in an amount equal to $5,000, which amendment fee shall be fully earned by Agent and non-refundable upon the effectiveness of this Amendment;

 

(d)          Agent shall have received fully executed copies of the Purchase Agreement and related documents, instruments, and agreements;

 

(e)          Agent shall have received an amended and restated version of the ARIC Note in which the maturity date under such note is extended to a date which is not less than ninety (90) days beyond the end of the Term;

 

(f)          Borrowers shall have provided evidence satisfactory to Agent that all intercompany balances payable to Kable Staffing from any other Borrower have been offset, released, or paid in full, and all Advances relating to Kable Staffing, have been paid in full;

 

(g)          All documents, instruments and information required to be delivered hereunder shall be in form and substance reasonably satisfactory to Agent and Agent’s counsel;

 

(h)          Agent shall have received such other documents as Agent or counsel to Agent may reasonably request; and

 

(i)          No Default or Event of Default shall have occurred and be continuing, both prior and after giving effect to the terms of this Amendment.

  

Section 5              Further Assurances. Each Borrower hereby agrees to take all such actions and to execute and/or deliver to Agent and Lenders all such documents, assignments, financing statements and other documents, as Agent and Lenders may reasonably require from time to time, to effectuate and implement the purposes of this Amendment.

 

Section 6             Payment of Expenses. Borrowers shall pay or reimburse Agent and Lenders for their reasonable attorneys’ fees and expenses in connection with the preparation, negotiation and execution of this Amendment and the documents provided for herein or related hereto.

 

Section 7             Reaffirmation of Loan Agreement. Except as modified by the terms hereof, all of the terms and conditions of the Loan Agreement, as amended, and all other Existing Financing Agreements are hereby reaffirmed and shall continue in full force and effect as therein written.

 

Section 8              Reaffirmation of Subordination Agreement. By execution of this Amendment, ARIC hereby acknowledges the terms of this Amendment and confirms that the terms and conditions of the Amended and Restated Subordination Agreement dated as of October 1, 2012, as amended, restated, supplemented, or modified from time to time, are hereby reaffirmed and shall continue in full force and effect as therein written.

 

Section 9             Security Interest. As security for the payment and performance of the Obligations, and satisfaction by the Borrowers of all covenants and undertakings contained in the Loan Agreement and the other Existing Financing Agreements, each of Palm Coast, FulCircle, and Palm Holding reconfirms the prior grant of the security interest in and first priority, perfected lien in favor of Agent for its benefit and the ratable benefit of each Lender, upon and to, all of its right, title and interest in and to the Collateral, whether now owned or hereafter acquired, created or arising and wherever located.

 

 

Section 10       Confirmation of Indebtedness. Borrowers confirm and acknowledge that as of April 9, 2015, Borrowers were indebted to Lenders for the Advances under the Loan Agreement without any deduction, defense, setoff, claim or counterclaim, of any nature, in the aggregate principal amount of $0 due on account of Revolving Advances, and $0 on account of undrawn Letters of Credit, plus all fees, costs and expenses incurred to date in connection with the Loan Agreement and the Other Documents.

 

Section 11          Miscellaneous

 

(a)          Third Party Rights. No rights are intended to be created hereunder for the benefit of any third party donee, creditor, or incidental beneficiary.

 

(b)          Headings. The headings of any paragraph of this Amendment are for convenience only and shall not be used to interpret any provision hereof.

 

(c)          Modifications. No modification hereof or any agreement referred to herein shall be binding or enforceable unless in writing and signed on behalf of the party against whom enforcement is sought.

 

(d)          Governing Law. The terms and conditions of this Amendment shall be governed by the laws of the Commonwealth of Pennsylvania without regard to provisions of conflicts of law.

 

(e)          Counterparts. This Amendment may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any signature delivered by a party by facsimile or pdf transmission shall be deemed to be an original signature hereto.

 

  

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered by their duly authorized officers as of the date first above written.

 

PALM COAST DATA HOLDCO, INC.
PALM COAST DATA LLC
FULCIRCLE MEDIA, LLC
KABLE STAFFING RESOURCES LLC

  

By:		/s/ Peter M. Pizza
Name:		Peter M. Pizza
Title:		Vice President

 

SUBORDINATED LENDER:

 

American Republic Investment Co.

 

By:		/s/ Peter M. Pizza
Name:		Peter M. Pizza
Title:		Vice President

 

[SIGNATURE PAGE TO SIXTH AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT]

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		PNC BANK, NATIONAL ASSOCIATION,
		as Lender and as Agent

 

	By:			/s/ Jacqueline MacKenzie
	Name:			Jacqueline MacKenzie
	Title:			Vice President

 

[SIGNATURE PAGE TO SIXTH AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT]

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