Exhibit 10.1

CREDIT AGREEMENT

between

HIE RETAIL, LLC,

a Hawaii limited liability company,

as Borrower

and

BANK OF HAWAII,

together with the financial institutions

listed in Schedule I hereto,

as Lenders

and

BANK OF HAWAII,

as Administrative and Collateral Agent

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SECTION I.

 

INTERPRETATION

     2   

1.01

 

Definitions

     2   

1.02

 

GAAP

     18   

1.03

 

Headings

     18   

1.04

 

Plural Terms

     18   

1.05

 

Time

     18   

1.06

 

Governing Law

     19   

1.07

 

Construction

     19   

1.08

 

Entire Agreement

     19   

1.09

 

Calculation of Interest and Fees

     19   

1.10

 

Other Interpretive Provisions

     19   

SECTION II.

 

CREDIT FACILITIES

     20   

2.01

 

Revolving Credit Facility

     20   

2.02

 

Letter of Credit Facility

     23   

2.03

 

Term Loan Facility

     27   

2.04

 

Additional Commitment Reductions, Etc.

     30   

2.05

 

Fees

     31   

2.06

 

Prepayments

     32   

2.07

 

Other Payment Terms

     34   

2.08

 

Notes and Interest Account

     35   

2.09

 

Loan Funding, Etc.

     35   

2.10

 

Pro Rata Treatment

     36   

2.11

 

Change of Circumstances

     37   

2.12

 

Taxes on Payments

     40   

2.13

 

Funding Loss Indemnification

     41   

2.14

 

Replacement of Affected Lenders and Defaulting Lenders

     41   

2.15

 

Security

     42   

SECTION III.

 

CONDITIONS PRECEDENT

     43   

3.01

 

Initial Conditions Precedent

     43   

3.02

 

Conditions Precedent to Each Credit Event

     44   

SECTION IV.

 

REPRESENTATIONS AND WARRANTIES

     44   

4.01

 

Borrower’s Representations and Warranties

     44   

4.02

 

Reaffirmation

     48   

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SECTION V.

 

COVENANTS

     49   

5.01

 

Affirmative Covenants

     49   

5.02

 

Negative Covenants

     52   

5.03

 

Financial Covenants

     58   

SECTION VI.

 

DEFAULT

     58   

6.01

 

Events of Default

     58   

6.02

 

Cure Right

     60   

6.03

 

Remedies

     61   

SECTION VII.

 

AGENTS AND RELATIONS AMONG LENDERS

     61   

7.01

 

Appointment, Powers and Immunities

     61   

7.02

 

Reliance by Agent

     62   

7.03

 

Defaults

     62   

7.04

 

Indemnification

     62   

7.05

 

Non Reliance

     62   

7.06

 

Resignation of Agent

     63   

7.07

 

Authorization

     63   

7.08

 

Agent in Its Individual Capacity

     63   

SECTION VIII.

 

MISCELLANEOUS

     64   

8.01

 

Notices

     64   

8.02

 

Expenses

     64   

8.03

 

Indemnification

     65   

8.04

 

Waivers; Amendments

     65   

8.05

 

Successors and Assigns

     66   

8.06

 

Setoff; Security Interest

     70   

8.07

 

No Third Party Rights

     70   

8.08

 

Partial Invalidity

     70   

8.09

 

Jury Trial

     70   

8.10

 

Counterparts

     71   

8.11

 

Confidentiality

     71   

8.12

 

ERISA

     71   

8.13

 

Securities Laws

     71   

 

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT, dated as of November 14, 2013, is entered into by and
among:

(1) HIE RETAIL, LLC, a Hawaii limited liability company (“Borrower”);

(2) Each of the financial institutions from time to time listed in Schedule I
hereto, as amended from time to time (such financial institutions to be referred
to herein collectively as the “Lenders”); and

(3) BANK OF HAWAII, a Hawaii banking corporation, as administrative agent for
the Lenders and as collateral agent for the Lenders (“Agent”).

RECITALS

A. Borrower is a wholly owned Subsidiary of Hawaii Pacific Energy, LLC, a
Delaware limited liability company (“Holdings”).

B. Holdings entered into that certain Membership Interest Purchase Agreement
dated June 17, 2013, by and among Tesoro Corporation (“Seller”), Tesoro Hawaii,
LLC, a Hawaii limited liability company, now known as Hawaii Independent Energy,
LLC (“HIE”) and Holdings under which Holdings acquired all of the issued and
outstanding membership interests of Tesoro Hawaii, LLC effective at 12:01 am on
September 25, 2013 (the “MIPA Closing”).

C. HIE’s assets and properties include retail fuel dispensing stations,
convenience stores, alcohol and liquor licenses, inventory, refined products for
sale to retail consumers, operating permits, leases, all of the issued and
outstanding capital stock of Smiley’s Super Service, Inc., a Hawaii corporation
(“Smiley’s”), and other liabilities, obligations, property and operations which
comprise its retail gasoline station and convenience store business commonly
known as Tesoro, 2 Go Tesoro, Tesoro Express and other similar names
(collectively, the “Retail Business”).

D. To facilitate the transfer of the Retail Business to Borrower, after the
Closing Date (i) HIE shall retain all of its right, title and interest to the
capital stock of Smiley’s, all alcohol and liquor inventory, various licenses
and permits (including but not limited to alcohol and liquor licenses and
permits), and certain other assets and properties until such time as they can be
lawfully conveyed and transferred to Borrower in accordance with Governmental
Rule, and (ii) upon Borrower’s acquisition of the Retail Business (other than as
described in preceding clause (i)), Borrower and HIE will enter into that
certain Management Services and Employment Service Agreement (as amended,
restated or supplemented, the “MSA”) whereby HIE will assist with and provide
certain management services and employment services necessary to the ongoing
operation of the Retail Business by Borrower.

F. The Lenders are willing to provide such credit facilities upon the terms and
subject to the conditions set forth herein.

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AGREEMENT

NOW, THEREFORE, in consideration of the above Recitals and the mutual covenants
herein contained, the parties hereto hereby agree as follows:

 

SECTION I. INTERPRETATION

1.01 Definitions. Unless otherwise indicated in this Agreement or any other
Credit Document, each term set forth below, when used in this Agreement or any
other Credit Document, shall have the respective meaning given to that term
below or in the provision of this Agreement or other Credit Document referenced
below:

“Acquired Assets” shall mean the assets and properties which comprise the Retail
Business.

“Acquisition” shall mean the acquisition of the Retail Business by Borrower as
described in the Recitals.

“Affected Lender” shall mean any Lender which has given notice to Borrower
(which notice has not been rescinded) of (a) any obligation by Borrower to pay
any amount pursuant to Subparagraph 2.11(c), Subparagraph 2.11(d) or
Subparagraph 2.12(a) or (b) the occurrence of any circumstances of the nature
described in Subparagraph 2.11(b).

“Affiliate” shall mean, with respect to any Person, (a) in the case of any such
Person which is a partnership or limited liability company, any partner or
member in such partnership or limited liability company, respectively, (b) any
other Person which is directly or indirectly controlled by, controls or is under
common control with such Person or one or more of the Persons referred to in the
preceding clause (a), (c) any other Person who is an officer, director, trustee
or employee of, or partner in, such Person or any Person referred to in the
preceding clauses (a) and (b), (d) any other Person who is a member of the
immediate family of such Person or of any Person referred to in the preceding
clauses (a) through (c), and (e) any other Person that is a trust solely for the
benefit of one or more Persons referred to in clause (d) and of which such
Person is sole trustee; provided, however, in no event shall Agent or any Lender
or any of their respective Affiliates be an Affiliate of Borrower. For purposes
of this definition, “control” (including with correlative meanings, the terms
“controlling”, “controlled by” and “under common control with”) means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities or by contract or otherwise. The Affiliates of a
Person shall include any officer or director of such Person. In no event shall
the Agent or any Lender be deemed to be an Affiliate of the Borrower.

 

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“Agent” shall have the meaning given to that term in clause (3) of the
introductory paragraph hereof.

“Agreement” shall mean this Credit Agreement.

“Applicable Lending Office” shall mean, with respect to any Lender,
(a) initially, its office designated as such in Schedule I (or, in the case of
any Lender which becomes a Lender by an assignment pursuant to Subparagraph
8.05(c), its office designated as such in the applicable Assignment Agreement)
and (b) subsequently, such other office or offices as such Lender may designate
to Agent as the office at which such Lender’s Loans will thereafter be
maintained and for the account of which all payments of principal of, and
interest on, such Lender’s Loans will thereafter be made.

“Applicable Margin” shall mean, with respect to any Revolving Loan or Term Loan
Portion at any time, the per annum margin which is determined pursuant to the
Pricing Grid and added to the Base Rate or LIBOR Rate, as the case may be, for
such Loan or Portion; provided, however, that each Applicable Margin determined
pursuant to the Pricing Grid shall be increased by two percent (2%) on the date
an Event of Default occurs and shall continue at such increased rate during the
continuance of such Event of Default.

“Assignee Lender” shall have the meaning given to that term in
Subparagraph 8.06(c).

“Assignment” shall have the meaning given to that term in Subparagraph 8.06(c).

“Assignment Agreement” shall have the meaning given to that term in
Subparagraph 8.06(c).

“Assignment Effective Date” shall have, with respect to each Assignment
Agreement, the meaning set forth therein.

“Assignor Lender” shall have the meaning given to that term in
Subparagraph 8.06(c).

“Base Rate” shall mean the primary interest rate established from time to time
in good faith by Agent in the ordinary course of business and with due
consideration of the money market, and published in intrabank circular letters
or memoranda for the guidance of loan officers in processing of its loans which
float with the Base Rate.

“Base Rate Loan” shall mean, at any time, a Revolving Loan which then bears
interest as provided in clause (i) of Subparagraph 2.01(c).

“Base Rate Portion” shall mean, at any time, any portion of the Term Loan
Borrowing or any portion of any Term Loan which then bears interest at a rate
specified in clause (i) of Subparagraph 2.03(d).

 

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“Borrower” shall have the meaning given to that term in clause (1) of the
introductory paragraph hereof.

“Borrower Member” shall mean, at any time, a Person that holds any membership
interest in Borrower.

“Borrowing” shall mean a Revolving Loan Borrowing or a Term Loan Borrowing.

“Business Day” shall mean any day on which (a) commercial banks are not
authorized or required to close in Honolulu, Hawaii or (b) if such Business Day
is related to a Loan or Portion which bears or is to bear interest based on a
LIBOR Rate, dealings in Dollar deposits are carried out in the London interbank
market.

“Capital Adequacy Requirement” shall have the meaning given to that term in
Subparagraph 2.11(d).

“Capital Asset” shall mean, with respect to any Person, tangible fixed or
capital assets owned or leased (in the case of a Capital Lease) by such Person.

“Capital Expenditures” shall mean, with respect to any Person and any period,
all amounts expended and indebtedness incurred or assumed by such Person during
such period for the acquisition of Capital Assets. “Capital Expenditures” shall
include all amounts expended and indebtedness incurred or assumed in connection
with Capital Leases.

“Capital Leases” shall mean any and all lease obligations that, in accordance
with GAAP, are required to be capitalized on the books of a lessee.

“Cash Capital Expenditures” shall mean, with respect to any Person and any
period, the total Capital Expenditures made by such Person during such period
minus (a) Capital Expenditures made by such Person on account of Capital Leases
and (b) Capital Expenditures financed by such Person with the proceeds of
Indebtedness other than the Indebtedness arising under this Agreement.

“Change of Law” shall have the meaning given to that term in
Subparagraph 2.11(b).

“Closing Date” shall mean the date that the Acquisition closes and the initial
Term Loans are made to Borrower.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.

“Collateral” shall mean all property in which Agent or any Lender has a Lien to
secure the Obligations.

 

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“Commitments” shall mean, collectively, the Revolving Loan Commitments and the
Term Loan Commitments.

“Commitment Fee Percentage” shall mean, with respect to the Unused Commitment at
any time, the per annum rate which is determined pursuant to the Pricing Grid
and used to calculate the Commitment Fees.

“Commitment Fees” shall have the meaning given to that term in
Subparagraph 2.05(a).

“Contingent Obligation” shall mean, with respect to any Person without
duplication, (a) any Guaranty Obligation of that Person; and (b) any direct or
indirect obligation or liability, contingent or otherwise, of that Person (i) in
respect of any letter of credit or similar instrument issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings, (ii) as a general partner or joint venturer (with general liability)
in any partnership or joint venture, (iii) to purchase any materials, supplies
or other property from, or to obtain the services of, another Person if the
relevant contract or other related document or obligation requires that payment
for such materials, supplies or other property, or for such services, shall be
made regardless of whether delivery of such materials, supplies or other
property is ever made or tendered, or such services are ever performed or
tendered, or (iv) incurred pursuant to any interest rate swap, currency swap,
forward, cap, floor or other similar contract that is not entered into in
connection with a bona fide hedging operation that provides offsetting benefits
to such Person. The amount of any Contingent Obligation shall be deemed equal to
the liability in respect thereof reasonably anticipated in accordance with GAAP.

“Contractual Obligation” of any Person shall mean, any indenture, note, lease,
loan agreement, security, deed of trust, mortgage, security agreement, guaranty,
instrument, contract, agreement or other form of contractual obligation or
undertaking to which such Person is a party or by which such Person or any of
its property is bound.

“Control” shall mean, with respect to any Person, either (i) ownership directly
or indirectly of 51% or more of all equity interest in such Person or (ii) the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities, or otherwise.

“Credit Documents” shall mean and include this Agreement, the LC Applications,
the Notes, the Security Documents, and all documents, instruments and agreements
delivered to Agent or any Lender pursuant to Paragraph 3.01; and all other
documents, instruments and agreements delivered by any officer of Borrower to
Agent or any Lender in connection with this Agreement on or after the date of
this Agreement.

“Credit Event” shall mean the making of any Loan, the conversion of any Base
Rate Loan or Base Rate Portion into a LIBOR Loan or LIBOR Portion, the selection
of a new Interest Period for any LIBOR Loan or LIBOR Portion, the issuance of
any Letter of Credit or any amendment of any Letter of Credit which increases
its stated amount or extends its expiration date.

 

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“Default” shall have the meaning given to that term in Paragraph 6.01.

“Defaulting Lender” shall mean a Lender which has failed to fund its portion of
any Borrowing or its participation in any Drawing Payment and such failure has
continued for three (3) Business Days after written notice from Agent or
Borrower.

“Dollars” and “$” shall mean the lawful currency of the United States of
America.

“Drawing Payment” shall have the meaning given to that term in
Subparagraph 2.02(c).

“EBITDA” shall mean, with respect to Borrower and its Subsidiaries for any
period, the sum of the following calculated on a rolling four-quarter basis,
determined on a consolidated basis in accordance with GAAP where applicable:

(a) The net income or net loss of such Person and its Subsidiaries for such
period before provision for income taxes;

plus

(b) The sum (to the extent deducted in calculating net income or loss in
clause (a) above) of (i) all Interest Expenses of Borrower and its Subsidiaries
accruing during such period, and (ii) all depreciation and amortization of
Borrower and its Subsidiaries accruing during such period;

plus

(c) all transaction fees and expenses incurred within twelve (12) months after
the Closing Date by Borrower or its Subsidiaries in connection with the
Acquisition or the Senior Credit Facilities up to a maximum amount of
$600,000.00;

minus

(d) The sum (to the extent included in calculating net income or loss in
clause (a) above) of all extraordinary gains and losses of such Person and its
Subsidiaries accruing during such period.

“Employee Benefit Plan” shall mean any employee benefit plan within the meaning
of Section 1002(3) of ERISA maintained or contributed to by Borrower or any
ERISA Affiliate, other than a Multiemployer Plan.

“Environmental Laws” shall mean all Requirements of Law relating to the
protection of human health and the environment, including, without limitation,
all Requirements of Law, pertaining to reporting, licensing, permitting,
investigation, and remediation of emissions, discharges, releases, or threatened
releases of hazardous materials, chemical substances, pollutants, contaminants,
or hazardous or toxic substances, materials or wastes whether solid, liquid, or
gaseous in nature, into the air, surface water, groundwater, or land, or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of chemical substances, pollutants,
contaminants, or hazardous or toxic substances, materials, or wastes, whether
solid, liquid, or gaseous in nature.

 

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“Equity Securities” of any Person shall mean (a) all common stock, preferred
stock, participations, shares, partnership interests, membership interests or
other equity interests in such Person (regardless of how designated and whether
or not voting or non-voting) and (b) all warrants, options and other rights to
acquire any of the foregoing.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the
same may from time to time be amended or supplemented, including any rules of
regulations issued in connection therewith.

“ERISA Affiliate” shall mean any Person which is treated as a single employer
with Borrower under Section 414 of the Code.

“Event of Default” shall have the meaning given to that term in Paragraph 6.01.

“Excess Cash Flow” shall mean, with respect to Borrower for any fiscal year, the
sum of the following, determined on a consolidated basis in accordance with GAAP
where applicable:

(a) EBITDA of Borrower and its Subsidiaries for such year (excluding from the
calculation thereof any non-cash gains or losses);

minus

(b) All cash payments for taxes paid by Borrower and its Subsidiaries during
each year;

minus

(c) Cash Capital Expenditures;

minus

(d) Payment of mandatory principal payments under the Term Loan Facility, and
other Permitted Indebtedness, excluding the Revolving Credit Facility;

minus

(e) Cash payments for Interest Expenses;

minus

(f) Optional principal prepayments made to the Term Loan Facility during the
fiscal year end period being measured;

 

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minus

(g) Cash Distributions made by Borrower to Holdings in the amount necessary for
Holdings and its member in respect of their respective tax liabilities
attributable to Borrower.

“Excess Cash Flow Recapture” shall have the meaning given to that term in
Subparagraph 2.06(c)(iv).

“Executive Officer” shall mean, with respect to Borrower, the managing member of
Borrower or the chief executive officer, president, chief operating officer,
chief financial officer, vice president of finance, treasurer, controller,
accounting manager or any manager of Borrower.

“FACTA” shall mean Section 1471 through Section 1474 of the Code, as in effect
on the date hereof (and any amended or successor version that is substantially
comparable), and any current or future regulations promulgated therein or
published administrative guidance implementing such provision.

“Federal Funds Rate” shall mean, for any day, the Federal funds effective rate
as set forth in the weekly statistical release designated as H.15(519) published
by the Federal Reserve Bank of New York for such day, or in any successor
publication (or, if such rate is not so published for any day, the average rate
quoted to Agent on and for such day by three (3) Federal fund brokers of
recognized standing selected by Agent).

“Federal Reserve Board” shall mean the Board of Governors of the Federal Reserve
System.

“Financial Statements” shall mean, with respect to any accounting period for any
Person, statements of income, shareholders’ equity and cash flows of such Person
for such period, and a balance sheet of such Person as of the end of such
period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year if such period is less than a
full fiscal year or, if such period is a full fiscal year, corresponding figures
from the preceding annual audit, all prepared in reasonable detail and in
accordance with GAAP.

“Fixed Charge Coverage Ratio” shall mean, with respect to Borrower for any
period, the ratio, determined on a consolidated basis in accordance with GAAP
where applicable, of EBITDA divided by Fixed Charges.

“Fixed Charges” shall mean the sum of (1) all regularly scheduled principal and
interest payments made on loans, including principal and interest cash payments
made on subordinated debt if and when permitted, (2) all distributions to
members of Borrower, (3) all Cash Capital Expenditures for the current and
subsequent quarters, and (4) all cash payments for income taxes

“Funded Debt” of Borrower and its Subsidiaries shall mean the sum of (1) the
aggregate outstanding principal amount of all Indebtedness, including all bank
debt, Capital Leases and other direct loans from third parties or members,
excluding any subordinated loans from Members, (2) eight (8) times operating
lease and rental expense for the period of the four fiscal quarters most
recently ended, and (3) outstanding Standby Letters of Credit and Letters of
Credit for purchases of fuel and guarantees of performance.

 

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“GAAP” shall mean generally accepted accounting principles and practices as in
effect in the United States of America from time to time, consistently applied.

“Governmental Authority” shall mean any domestic or foreign national, state of
local government, any political subdivision thereof, any department, agency,
authority or bureau of any of the foregoing, or any other entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, without limitation, the Federal Deposit
Insurance Corporation, the Federal Reserve Board, the Comptroller of the
Currency, any central bank or any comparable authority.

“Governmental Charges” shall mean, with respect to any Person, all levies,
assessments, fees, claims or other charges imposed by any Governmental Authority
upon such Person or any of its property or otherwise payable by such Person.

“Governmental Rule” shall mean any law, rule, regulation, ordinance, order, code
interpretation, judgment, decree, policy or similar form of decision of any
Governmental Authority having the force of law.

“Guaranty Obligation” shall mean, with respect to any Person, any direct or
indirect liability of that Person with respect to any indebtedness, lease,
dividend, letter of credit or other obligation (the “primary obligations”) or
another Person (the “primary obligor”), including any obligation of that Person,
whether or not contingent, (a) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, or (b) to advance or provide funds (i) for the payment or discharge of
any such primary obligation, or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, or (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) otherwise to assure or hold harmless the holder of any such
primary obligation against loss in respect thereof. The amount of any Guaranty
Obligation shall be deemed equal to the liability in respect thereof reasonably
anticipated under GAAP.

“HIE” shall have the meaning given such term in the Recitals.

“Holdings” shall have the meaning given such term in the Recitals.

“Indebtedness” of any Person shall mean, without duplication:

(a) All obligations of such Person evidenced by notes, bonds, debentures or
other similar instruments and all other obligations of such Person for borrowed
money;

 

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(b) All obligations of such Person for the deferred purchase price of property
or services (including obligations under letters of credit and other credit
facilities which secured or financed such purchase price), other than trade
payables incurred by such Person in the ordinary course of its business on
ordinary terms and not overdue;

(c) All obligations of such Person under conditional sale or other title
retention agreements with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender of such agreement in the
event of default are limited to repossession or sale of such property);

(d) All obligations of such Person as lessee under or with respect to Capital
Leases;

(e) All obligations of such Person, contingent or otherwise, under or with
respect to letters of credit, acceptances or other similar facilities;

(f) All obligations of such Person, contingent or otherwise, under or with
respect to interest rate swap, cap or collar agreements, interest rate future or
option contracts, currency swap agreements, currency future or option contracts
or other similar agreements;

(g) All Contingent Obligations of such Person with respect to the obligations of
such Person or other Persons of the types described in clauses (a) – (f) above.

“Initial Term Loan Commitment” shall have the meaning given that term in
Subparagraph 2.03(b).

“Interest Account” shall have the meaning given to that term in
Subparagraph 2.08(c).

“Interest Expenses” shall mean, with respect to any Person for any period, the
sum, determined on a consolidated basis in accordance with GAAP where
applicable, of (a) all interest accruing on the indebtedness of such Person
during such period (including interest attributable to Capital Leases, minus
(b) to the extent included in calculating interest pursuant to clause (a) above,
all amortization of capitalized debt issuance costs of such Person during such
period.

“Interest Period” shall mean, with respect to any LIBOR Loan or LIBOR Portion,
the time periods selected by Borrower pursuant to Subparagraph 2.01(b),
Subparagraph 2.01(d), or Subparagraph 2.03(e) which commences on the first day
of such Loan or Portion or the effective date of any conversion and ends on the
last day of such time period, and thereafter, each subsequent time period
selected by Borrower pursuant to Subparagraph 2.01(e), or Subparagraph 2.03(f)
which commences on the last day of the immediately preceding time period and
ends on the last day of that time period.

 

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“Investment” of any Person shall mean any loan or advance of funds by such
Person to any other Person (other than advances to employees of such Person for
moving and travel expense, drawing accounts and similar expenditures in the
ordinary course of business), any purchase or other acquisition of any Equity
Securities or Indebtedness of any other Person, any capital contribution by such
Person to or any other investment by such Person in any other Person (including,
without limitation, any Guaranty Obligations of such Person and any Indebtedness
of such Person of the type described in clause (g) of the definition of
“Indebtedness” on behalf of any other Person); provided, however, that
Investments shall not include (a) accounts receivable or other indebtedness owed
by customers of such Person which are current assets and arose from sales in the
ordinary course of such Person’s business or (b) prepaid expenses of such Person
incurred and prepaid in the ordinary course of business.

“Issuing Bank” shall have the meaning given to that term in
Subparagraph 2.02(a).

“LC Application” shall have the meaning given to that term in
Subparagraph 2.02(b).

“LC Issuance Fees” shall have the meaning given to that term in
Subparagraph 2.05(e)(iii).

“Lenders” shall have the meaning given to that term in clause (2) of the
introductory paragraph hereof.

“Letter of Credit” shall have the meaning given to that term in
Subparagraph 2.02(a).

“Leverage Ratio” shall mean for any period the ratio of Funded Debt to EBITDA
plus Rents and lease payments on other facilities for the period of the four
(4) fiscal quarters most recently ended.

“LIBOR Loan” shall mean, at any time, a Revolving Loan which then bears interest
as provided in clause (ii) of Subparagraph 2.01(c).

“LIBOR Portion” shall mean, at any time, any portion of the Term Loan Borrowing
or any portion of any Term Loan which then bears interest at a rate specified in
clause (ii) of Subparagraph 2.03(d).

 

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“LIBOR Rate” shall mean, with respect to any Interest Period for the LIBOR Loans
in any Revolving Loan Borrowing consisting of LIBOR Loans or the LIBOR Portions
in any Term Loan Borrowing Portion consisting of LIBOR Portions, a rate per
annum equal to the quotient of (a) the arithmetic mean (rounded upward if
necessary to the nearest 1/16 of one percent) of the rates per annum appearing
on the Reuters screen LIBOR page (or any successor publication) on the second
Business Day prior to the first day of such Interest Period at or about 11:00
A.M. (London time) (for delivery on the first day of such Interest Period) for a
term comparable to such Interest Period, divided by (b) one minus the Reserve
Requirement for such Loans or Portions in effect from time to time. If for any
reason rates are not available as provided in clause (a) of the preceding
sentence, the rate to be used in clause (a) shall be the rate per annum at which
Dollar deposits are offered to Agent in the London interbank eurodollar currency
market on the second Business Day prior to the commencement of such Interest
Period at or about 11:00 A.M. (London time) (for delivery on the first day of
such Interest Period) for a term comparable to such Interest Period and in an
amount approximately equal to the amount of the Loan or Portion to be made or
funded by Agent, as part of such Borrowing or Portion.

“Lien” shall mean, with respect to any property, any security interest,
mortgage, pledge, lien, charge or other encumbrance in, of, or on such property
or the income therefrom, including, without limitation, the interest of a vendor
or lessor under a conditional sale agreement, Capital Lease or other title
retention agreement, or any agreement to provide any of the foregoing, and the
filing of any financing statement or similar instrument under the Uniform
Commercial Code or comparable law of any jurisdiction.

“Loan” shall mean a Revolving Loan or a Term Loan.

“Majority Lenders” shall mean (a) at any time Loans are outstanding and the
Lenders are obligated to make Revolving Loans pursuant to their Revolving Loan
Commitments, Lenders holding more than fifty percent (50%) of the aggregate
principal amount of all Loans outstanding, calculated as if Revolving Loans in
the full amount of the Lenders’ Revolving Loan Commitments were outstanding,
(b) at any time Loans are outstanding and the Lenders are not obligated to make
Revolving Loans pursuant to their Revolving Loan Commitments, Lenders holding
more than fifty percent (50%) of the aggregate principal amount of all Loans
outstanding and (c) at any time no Loans are outstanding, Lenders holding in
excess of fifty percent (50%) of the Total Credit at such time.

“Margin Stock” shall have the meaning given to that term in Regulation U issued
by the Federal Reserve Board, as amended from time to time, and any successor
regulation thereto.

“Material Adverse Effect” shall mean (a) any effect on the business, assets,
operations or financial or other condition of Borrower and its Subsidiaries
which materially and adversely affects the ability of Borrower to pay or perform
the Obligations in accordance with the terms of this Agreement and the other
Credit Documents or (b) any other effect which materially and adversely affects
the material rights and remedies of Agent or any Lender under this Agreement or
the other Credit Documents (including the material rights and remedies of Agent
or any Lender relating to the Collateral taken as a whole).

 

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“Membership Interests Pledge Agreement” shall have the meaning given such term
in Paragraph 2.15.

“Membership Interest Purchase Agreement” shall mean that certain Membership
Interest Purchase Agreement dated June 17, 2013 between Seller, Tesoro Hawaii,
LLC and Holdings pursuant to which Holdings has acquired all of the issued and
outstanding membership interests of Tesoro Hawaii, LLC from Seller, as amended
by that certain First Amendment to Membership Interest Purchase Agreement dated
September 25, 2013.

“MIPA Closing” shall have the meaning given such term in the Recitals.

“MSA” shall have the meaning given such term in the Recitals.

“Multiemployer Plan” shall mean any multiemployer plan as defined in
Section 1002(37)(A) of ERISA maintained or contributed to by Borrower or any
ERISA Affiliate.

“Note” shall mean a Revolving Loan Note or a Term Loan Note.

“Notice of Borrowing” shall mean a Notice of Revolving Loan Borrowing or a
Notice of Term Loan Borrowing.

“Notice of Interest Period Selection” shall mean a Notice of Revolving Loan
Interest Period Section or a Notice of Term Loan Interest Period Selection.

“Notice of Loan Conversion” shall mean a Notice of Revolving Loan Conversion or
a Notice of Term Loan Conversion.

“Notice of Revolving Loan Borrowing” shall have the meaning given to that term
in Subparagraph 2.01(c).

“Notice of Revolving Loan Conversion” shall have the meaning given to that term
in Subparagraph 2.01(d).

“Notice of Revolving Loan Interest Period Selection” shall have the meaning
given to that term in Subparagraph 2.01(e).

“Notice of Term Loan Borrowing” shall have the meaning given to that term in
Subparagraph 2.03(c).

“Notice of Term Loan Conversion” shall have the meaning given to that term in
Subparagraph 2.03(e).

“Notice of Term Loan Interest Period Selection” shall have the meaning given to
that term in Subparagraph 2.03(f).

 

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“Obligations” shall mean and include, with respect to Borrower, all loans,
advances, debts, liabilities, and obligations, howsoever arising, owed by
Borrower to Agent or any Lender of every kind and description (whether or not
evidenced by any note or instrument and whether or not for the payment of
money), direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising pursuant to the terms of this Agreement or any of
the other Credit Documents, including without limitation all interest, fees,
charges, expenses, reasonable attorneys’ fees and accountants’ fees chargeable
to Borrower or payable by Borrower hereunder or thereunder.

“Participants” shall have the meaning given to that term in
Subparagraph 8.06(b).

“PBGC” shall mean the Pension Benefit Guaranty Corporation, or any successor
thereto.

“Permitted Indebtedness” shall have the meaning given to that term in
Subparagraph 5.02(a).

“Permitted Liens” shall have the meaning given to that term in
Subparagraph 5.02(b).

“Person” shall mean and include an individual, a partnership, a corporation
(including a business trust, a limited liability company, or a limited liability
partnership), a joint stock company, an unincorporated association, a joint
venture, a trust or other entity or a Governmental Authority.

“Portion” shall mean a portion of the Term Loan Borrowing or of any Term Loan
which is either a Base Rate Portion or LIBOR Portion.

“Pricing Grid” shall mean Schedule 1.01(a).

“Proportionate Share” shall mean, with respect to each Lender at any time, a
fraction (expressed as a percentage rounded to the sixth digit to the right of
the decimal point), the numerator of which is the sum at such time of such
Lender’s Revolving Loan Commitment and Term Loan and the denominator of which is
the sum at such time of the Total Revolving Loan Commitment and the Term Loan
Borrowing.

“Register” shall have the meaning given to that term in Subparagraph 8.05(d).

“Reimbursement Obligation” shall have the meaning given to that term in
Subparagraph 2.02(c).

“Reimbursement Payment” shall have the meaning given to that term in
Subparagraph 2.02(c).

“Rents” shall mean the cash portion of payments made for real estate leases.

“Reportable Event” shall have the meaning given to that term in ERISA and
applicable regulations thereunder.

 

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“Requirement of Law” applicable to any Person shall mean (a) the Articles or
Certificate of Incorporation and By-laws, Partnership Agreement, Operating
Agreement, or other organizational or governing documents or such Person,
(b) any Governmental Rule applicable to such Person, (c) any license, permit,
approval or other authorization granted by any Governmental Authority to or for
the benefit of such Person or (d) any final judgment, decision or determination
of any Governmental Authority or arbitrator, in each case applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.

“Reserve Requirement” shall mean, with respect to any day in an Interest Period
for a LIBOR Loan or LIBOR Portion, the aggregate of the reserve requirement
rates (expressed as a decimal) in effect on such day for eurocurrency funding
(currently referred to as “Eurocurrency liabilities” in Regulation D of the
Federal Reserve Board) maintained by a member bank of the Federal Reserve
System. As used herein, the term “reserve requirement” shall include, without
limitation, any basic, supplemental or emergency reserve requirements imposed on
Lender by any Governmental Authority.

“Retail Business” shall have the meaning given such term in the Recitals.

“Revolving Credit Facility” shall have the meaning given to that term in
Section 2.01.

“Revolving Loan” shall have the meaning given to that term in
Subparagraph 2.01(a).

“Revolving Loan Borrowing” shall mean a borrowing by Borrower consisting of the
Revolving Loans made by each of the Lenders on the same date and of the same
Type pursuant to a single Notice of Revolving Loan Borrowing.

“Revolving Loan Commitment” shall mean, with respect to any Lender at any time,
such Lender’s Revolving Loan Proportionate Share at such time of the Total
Revolving Loan Commitment at such time.

“Revolving Loan Maturity Date” shall mean the date that is three (3) years after
the Closing Date on which date all amounts owing under the Revolving Credit
Facility are due and owing.

“Revolving Loan Note” shall have the meaning given to that term in
Subparagraph 2.08(a).

“Revolving Loan Proportionate Share” shall mean, with respect to each Lender,
the percentage set forth under the caption “Revolving Loan Proportionate Share”
opposite such Lender’s name on Schedule I, or, if different, such percentage as
may be set forth for such Lender in the Register.

“Security Agreement” shall have the meaning given to such term in
Subparagraph 2.15(a).

 

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“Security Documents” shall mean and include the Security Agreement, the
Membership Interests Pledge Agreement, and all other instruments, agreement,
certificates, opinions and documents (including Uniform Commercial Code
financing statements and fixture filings and landlord waivers) delivered to
Agent or any Lender in connection with any Collateral or to secure the
Obligations.

“Seller” shall have the meaning given such term in the Recitals.

“Senior Credit Facilities” shall mean the Revolving Credit Facility and the Term
Loan Facility.

“Smiley’s” shall have the meaning given such term in the Recitals.

“Solvent” shall mean, with respect to any Person on any date, that on such date
(a) the fair value of the property of such Person is greater than the fair value
of the liabilities (including, without limitation, contingent liabilities) of
such Person, (b) the present fair saleable value of the assets of such Person is
not less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured, (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay as such debts and liabilities
mature and (d) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person’s
property would constitute an unreasonably small capital.

“Standby LC Fee Rate” shall mean, with respect to Standby Letters of Credit, the
per annum rate which is used to calculate the Standby LC Usage Fees.

“Standby LC Usage Fee” shall have the meaning given to that term in
Subparagraph 2.05(d)(i).

“Standby Letter of Credit” shall have the meaning given to that term in
Subparagraph 2.02(a).

“Subsidiary” of any Person shall mean (a) any corporation of which more than
fifty percent (50%) of the issued and outstanding Equity Securities having
ordinary voting power to elect a majority of the Board of Directors of such
corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person’s other Subsidiaries, (b) any
partnership, joint venture, or other association of which more than fifty
percent (50%) of the equity interest having the power to vote, direct or control
the management of such partnership, joint venture of other association is at the
time owned and controlled by such Person, by such Person and one or more of the
other Subsidiaries or by one or more of such Person’s other Subsidiaries or
(c) any other Person included in the Financial Statements or such Person on a
consolidated basis.

 

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“Super-Majority Lenders” shall mean (a) at any time Loans are outstanding and
the Lenders are obligated to make Revolving Loans pursuant to their Revolving
Loan Commitments, Lenders holding more than sixty-six and two-thirds percent (66
2/3%) of the aggregate principal amount of all Loans outstanding, calculated as
if Revolving Loans in the full amount of the Revolving Loan Commitments were
outstanding, (b) at any time Loans are outstanding and the Lenders are not
obligated to make Revolving Loans pursuant to their Revolving Loan Commitments,
Lenders holding more than sixty-six and two-thirds percent (66 2/3%) of the
aggregate principal amount of all Loans outstanding and (c) at any time no Loans
are outstanding, Lenders holding in excess of sixty-six and two-thirds percent
(66 2/3%) of the Total Credit at such time.

“Taxes” shall have the meaning given to such term in Subparagraph 2.12(a).

“Term Loan” shall have the meaning given that term in Subparagraph 2.03(a).

“Term Loan Borrowing” shall mean the borrowing by Borrower consisting of the
Term Loans made by each of the Lenders.

“Term Loan Commitment” shall mean, with respect to any Lender at any time, such
Lender’s Term Loan Proportionate Share at such time of the Total Term Loan
Commitment at such time.

“Term Loan Facility” shall have the meaning given to that term in
Subparagraph 2.03(a).

“Term Loan Installment Date” shall have the meaning given to that term in
Subparagraph 2.03(g).

“Term Loan Maturity Date” shall mean the date which is seven (7) years after the
Closing Date on which date all amounts owing under the Term Loan Facility are
due and owing.

“Term Loan Note” shall have the meaning given to that term in
Subparagraph 2.08(b).

“Term Loan Proportionate Share” shall mean, with respect to each Lender, the
percentage set forth under the caption “Term Loan Proportionate Share” opposite
such Lender’s name on Schedule I, or, if different, such percentage as may be
set forth for such Lender in the Register.

“Total Credit” shall mean, at any time, the sum of (a) the Total Revolving Loan
Commitment at such time, and (b) the Total Term Loan Commitment at such time or,
if the Term Loans have been made prior to such time, the aggregate principal
amount of all Term Loans outstanding at such time.

“Total Revolving Loan Commitment” shall have the meaning given to that term in
Subparagraph 2.01(a).

 

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“Total Term Loan Commitment” shall have the meaning given to that term in
Subparagraph 2.03(a).

“Trade LC Fee Rate” shall mean, with respect to Trade Letters of Credit, the per
annum rate which is determined pursuant to the Pricing Grid and used to
calculate the Trade LC Usage Fees.

“Trade LC Usage Fees” shall have the meaning given to that term in
Subparagraph 2.05(e)(ii).

“Trade Letter of Credit” shall have the meaning given to that term in
Subparagraph 2.02(a).

“Type” shall mean, with respect to any Loan, Borrowing or Portion at any time,
the classification of such Loan, Borrowing, or portion by the type of interest
rate it then bears, whether an interest rate based on the Base Rate or the LIBOR
Rate.

“UCP” shall have the meaning given to that term in Subparagraph 2.02(a).

“Unused Commitment” shall mean, at any time after this Agreement is executed by
Borrower, Agent and Lenders, the remainder of (a) the Total Revolving Loan
Commitment at such time minus (b) the sum of the aggregate principal amount of
all Revolving Loans then outstanding, and the aggregate amount available for
drawing under all Letters of Credit then outstanding.

1.02 GAAP. Unless otherwise indicated in this Agreement or any other Credit
Document, all accounting terms used in this Agreement or any other Credit
Document shall be construed, and all accounting and financial computations
hereunder or thereunder shall be computed, in accordance with GAAP. If GAAP
changes during the term of this Agreement such that any covenants contained
herein would then be calculated in a different manner or with different
components, Borrower, the Lenders and Agent agree to negotiate in good faith to
amend this Agreement in such respects as are necessary to conform those
covenants as criteria for evaluating Borrower’s financial condition to
substantially the same criteria as were effective prior to such change in GAAP;
provided, however, that, until Borrower, the Majority Lenders and Agent so amend
this Agreement, all such covenants shall be calculated in accordance with GAAP
as in effect immediately prior to such change.

1.03 Headings. Headings in this Agreement and each of the other Credit Documents
are for convenience of reference only and are not part of the substance hereof
or thereof.

1.04 Plural Terms. All terms defined in this Agreement or any other Credit
Document in the singular form shall have comparable meanings when used in the
plural form and vice versa.

1.05 Time. All references in this Agreement and each of the other Credit
Documents to a time of day shall mean Hawaii standard time (which is three
(3) hours behind Pacific Daylight Time and two (2) hours behind Pacific Standard
Time) unless otherwise indicated.

 

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1.06 Governing Law. This Agreement and each of the other Credit Documents
(unless otherwise provided in such other Credit Documents) shall be governed by
and construed in accordance with the laws of the State of Hawaii without
reference to conflicts of law rules.

1.07 Construction. This Agreement is the result of negotiations among, and has
been reviewed by, Borrower, each Lender, the Agent and their respective counsel.
Accordingly, this Agreement shall be deemed to be the product of all parties
hereto, and no ambiguity shall be construed in favor of or against Borrower, any
Lender or Agent.

1.08 Entire Agreement. This Agreement and each of the other Credit Documents,
taken together, constitute and contain the entire agreement of Borrower, the
Lenders and Agent and supersede any and all prior agreements, negotiations,
representations, warranties, correspondence, understandings and communications
among the parties, whether written or oral, respecting the subject matter hereof
including the commitment letter date as of August 29, 2013 between Borrower and
Agent.

1.09 Calculation of Interest and Fees. All calculations of interest and fees
under this Agreement and the other Credit Documents for any period (a) shall
include the first day of such period and exclude the last day of such period and
(b) shall be calculated on the basis of a year of 360 days for actual days
elapsed, except that during any period any Loan bears interest based upon the
Base Rate, such interest shall be calculated on the basis of a year of 365 or
366 days, as appropriate, for actual days elapsed.

1.10 Other Interpretive Provisions. References in this Agreement to “Recitals,”
“Sections,” “Paragraphs,” “Subparagraphs,” “Exhibits” and “Schedules” are to
recitals, sections, paragraphs, subparagraphs, exhibits and schedules herein and
hereto unless otherwise indicated. References in this Agreement and each of the
other Credit Documents to any document, instrument or agreement (a) shall
include all exhibits, schedules and other attachments thereto, (b) shall include
all documents, instruments or agreements issued or executed in replacement
thereof and (c) shall mean such document, instrument or agreement, or
replacement or predecessor thereto, as amended, modified and supplemented from
time to time and in effect at any given time. The words “hereof,” “herein” and
“hereunder” and words of similar import when used in this Agreement or any other
Credit Document shall refer to this Agreement or such other Credit Document, as
the case may be, as a whole and not to any particular provision of this
Agreement or such other Credit Document, as the case may be. The words “include”
and “including” and words of similar import when used in this Agreement or any
other Credit Document shall not be construed to be limiting or exclusive. In the
event of any conflict between the terms of this Agreement and the terms of any
other Credit Document, the terms of this Agreement shall govern.

 

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SECTION II. CREDIT FACILITIES

2.01 Revolving Credit Facility.

(a) Revolving Loan Availability. Subject to the terms and conditions of this
Agreement (including the amount limitations set forth in Paragraph 2.04), each
Lender severally agrees to advance to Borrower from time to time during the
period beginning on the Closing Date and ending on the Revolving Loan Maturity
Date such revolving loans as Borrower may request under this Paragraph 2.01
(individually, a “Revolving Loan”); provided, however, that (i) the aggregate
principal amount of all Revolving Loans made by such Lender at any time
outstanding shall not exceed such Lender’s Revolving Loan Commitment at such
time and (ii) the aggregate principal amount of all Revolving Loans made by all
Lenders at any time outstanding shall not exceed Five Million Dollars
($5,000,000) (such amount, as reduced from time to time pursuant to this
Agreement, to be referred to herein as the “Total Revolving Loan Commitment”).
All Revolving Loans shall be made on a pro rata basis by the Lenders in
accordance with their respective Revolving Loan Proportionate Shares, with each
Revolving Loan Borrowing to be comprised of a Revolving Loan by each Lender
equal to such Lender’s Revolving Loan Proportionate Share of such Revolving Loan
Borrowing. Except as otherwise provided herein, Borrower may borrow, repay and
reborrow Revolving Loans until the Revolving Loan Maturity Date.

(b) Notice of Revolving Loan Borrowing. Borrower shall request each Revolving
Loan Borrowing by delivering to Agent an irrevocable written notice in the form
of Exhibit A, appropriate completed (a “Notice of Revolving Loan Borrowing”),
which specifies, among other things:

(i) The principal amount of the requested Revolving Loan Borrowing, which shall
be in the minimum amount of $500,000 or an integral multiple of $500,000 in
excess thereof;

(ii) Whether the requested Revolving Loan Borrowing is to consist of Base Rate
Loans or LIBOR Loans;

(iii) If the requested Revolving Loan Borrowing is to consist of LIBOR Loans,
the initial Interest Period selected by Borrower for such Revolving Loans in
accordance with Subparagraph 2.01(e); and

(iv) The date of the requested Revolving Loan Borrowing, which shall be a
Business Day.

Borrower shall give each Notice of Revolving Loan Borrowing to Agent at least
three (3) Business Days before the date of the requested Revolving Loan
Borrowing in the case of a Revolving Loan Borrowing consisting of LIBOR Loans
and at least two (2) Business Days before the date of the requested Revolving
Loan Borrowing in the case of a Revolving Loan Borrowing consisting of Base Rate
Loans. Each Notice of Revolving Loan Borrowing shall be delivered by first-class
mail, facsimile or electronic mail to Agent at the office, facsimile number or
email address and during the hours specified in Paragraph 8.01; provided,
however, that Borrower shall promptly deliver to Agent the original of any
Notice of Revolving Loan Borrowing initially delivered by facsimile or
electronic mail. Borrower may request that one or more Revolving Loan Borrowings
be made on the same day. Agent shall promptly notify each Lender of the contents
of each Notice of Revolving Loan Borrowing and of the amount and Type of (and,
if applicable, the Interest Period for) each Revolving Loan to be made by such
Lender as part of the requested Revolving Loan Borrowing.

 

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(c) Revolving Loan Interest Rates. Borrower shall pay interest on the unpaid
principal amount of each Revolving Loan from the date of such Revolving Loan
until the maturity thereof, at one of the following rates per annum:

(i) During such periods as such Revolving Loan is a Base Rate Loan, at a rate
per annum equal to the Base Rate plus the Applicable Margin therefor, such rate
to change from time to time as the Applicable Margin or Base Rate shall change;
and

(ii) During such periods as such Revolving Loan is a LIBOR Loan, at a rate per
annum equal at all times during each Interest Period for such LIBOR Loan to the
LIBOR Rate for such Interest Period plus the Applicable Margin therefor, such
rate to change from time to time during such Interest Period as the Applicable
Margin shall change;

Provided further, however, that all Revolving Loans outstanding during the
period commencing on the Closing Date and ending three (3) Business Days
thereafter shall be Base Rate Loans during such period. The Applicable Margins
for Revolving Loans shall be determined as provided in the Pricing Grid and may
change for each calendar quarter, with the exception that until March 31, 2014,
the Applicable Margins shall be at pricing Level 2 in the Pricing Grid. All
Revolving Loans in each Revolving Loan Borrowing shall, at any given time prior
to maturity, bear interest at one, and only one, of the above rates. No more
than five (5) Revolving Loan Borrowings consisting of LIBOR Loans may be
outstanding at any time.

(d) Conversion of Revolving Loans. Borrower may convert any Revolving Loan
Borrowing from one Type of Revolving Loan Borrowing to the other Type. Borrower
shall request such a conversion by an irrevocable written notice to Agent in the
form of Exhibit B, appropriately completed (a “Notice of Revolving Loan
Conversion”), which specifies, among other things:

(i) The Revolving Loan Borrowing which is to be converted;

(ii) The Type of Loans into which such Revolving Loans are to be converted;

(iii) If such Revolving Loans are to be converted into LIBOR Loans, the initial
Interest Period selected by Borrower for such Revolving Loans in accordance with
Subparagraph 2.01(e); and

(iv) The date of the requested conversion, which shall be a Business Day.

Borrower shall give each Notice of Revolving Loan Conversion to Agent at least
three (3) Business Days before the date of the requested conversion in the case
of a conversion into LIBOR Loans and at least two (2) Business Days before the
date of the requested conversion in the case of a conversion into Base Rate
Loans. Each Notice of Revolving Loan Conversion shall be delivered by
first-class mail or facsimile to Agent at the office or to the facsimile number
and during the hours specified in Paragraph 8.01; provided, however, that
Borrower shall promptly deliver to Agent the original of any Notice of Revolving
Loan Conversion initially delivered by facsimile. Agent shall promptly notify
each Lender of the contents of each Notice of Revolving Loan Conversion.

 

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(e) LIBOR Loan Interest Periods.

(i) The initial and each subsequent Interest Period selected by Borrower for a
LIBOR Loan shall be thirty (30), ninety (90) or one hundred eighty (180) days as
Borrower may specify; provided, however, that (A) any such Interest Period which
would otherwise end on a day which is not a Business Day shall be extended to
the next succeeding Business Day unless such next Business Day falls in another
calendar month, in which case such Interest Period shall end on the immediately
preceding Business Day; (B) any such Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest period)
shall end on the last Business day of a calendar month; and (C) no such Interest
Period shall end after the Revolving Loan Maturity Date.

(ii) Borrower shall notify Agent by an irrevocable written notice in the form of
Exhibit C, appropriately completed (a “Notice of Revolving Loan Interest Period
Selection”), at least three (3) Business Days prior to the last day of each
Interest Period for LIBOR Loans of the Interest Period selected by Borrower for
the next succeeding Interest Period for such LIBOR Loans. Each Notice of
Revolving Loan Interest Period Selection shall be given by first-class mail or
facsimile to the office or the facsimile number and during the hours specified
in Paragraph 8.01; provided, however, that Borrower shall promptly deliver to
Agent the original of any Notice of Revolving Loan Interest Period Selection
initially delivered by facsimile. If Borrower fails to notify Agent of the next
Interest Period for LIBOR Loans in accordance with this Subparagraph 2.01(e),
such LIBOR Loans shall automatically convert to LIBOR Loans having an Interest
Period of thirty (30) days on the last day of the current Interest Period
therefor.

(f) Scheduled Revolving Loan Payments. Borrower shall repay the unpaid principal
amount of all Revolving Loans on the Revolving Loan Maturity Date. Borrower
shall pay accrued and billed interest on the unpaid principal amount of the
Revolving Loans in arrears (i) in the case of Base Rate Loans, on the last
Business Day in each calendar month; (ii) in the case of LIBOR Loans, (A) on the
last day of each Interest Period therefor (and, if any such Interest Period is
longer than three (3) months, every three (3) months after the first day of such
Interest Period) and (B) upon prepayment (to the extent thereof); and (iii) in
the case of all Revolving Loans, on the Revolving Loan Maturity Date.

(g) Purpose. Borrower shall use the proceeds of the Revolving Loans for
Borrower’s working capital needs, general corporate purposes and to repay
Borrower’s Obligations under this Agreement.

 

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2.02 Letter of Credit Facility.

(a) Letter of Credit Availability. Subject to the terms and conditions of this
Agreement (including the amount limitations set forth in Paragraph 2.04), Agent
(in its capacity as the issuer of letters of credit under this Paragraph 2.02,
“Issuing Bank”) agrees to issue on behalf of Borrower from time to time during
the period beginning on the Closing Date and ending on the Revolving Loan
Maturity Date such letters of credit as Borrower may request under this
Paragraph 2.02 (individually, a “Letter of Credit”); provided, however, as
follows:

(i) At no time shall the aggregate principal amount available for drawing under
all Letters of Credit at any time outstanding plus the principal amount of all
Revolving Loans outstanding exceed the Total Revolving Loan Commitment.

(ii) Each Letter of Credit shall be (A) an irrevocable Letter of Credit issued
for the benefit of a supplier of inventory to Borrower to secure the payment by
Borrower of the purchase price of such inventory upon Borrower’s receipt thereof
(a “Trade Letter of Credit”) or (B) an irrevocable standby Letter of Credit
issued to secure trade payables in the ordinary course of Borrower’s business
(provided such trade payables are not overdue on the date of issuance of such
Letter of Credit) or other obligations of Borrower (other than (1) trade
payables of Borrower which are overdue on the date of issuance of such Letter of
Credit or (2) any other Funded Debt) (a “Standby Letter of Credit”).

(iii) Each Trade Letter of Credit shall expire on or prior to the earlier of
(A) one hundred and eighty (180) days after its date of issuance and (B) the
Revolving Loan Maturity Date. Each Standby Letter of Credit shall expire on or
prior to the earlier of (1) one year after its date of issuance and (2) the
Revolving Loan Maturity Date.

(iv) Except as otherwise provided herein, each Letter of Credit shall be
governed by the Uniform Customs and Practices for Documentary Credits as most
recently published by the International Chamber of Commerce (the “UCP”) prior to
the date of issuance of such Letter of Credit and the terms of the UCP are
hereby incorporated by reference with respect to each Letter of Credit.

(v) Each Letter of Credit shall be in a form reasonably acceptable to Issuing
Bank.

Except as otherwise provided herein, Borrower may request Letters of Credit,
cause or allow Letters of Credit to expire and request additional Letters of
Credit until the Revolving Loan Maturity Date.

(b) LC Application. Borrower shall request each Letter of Credit by delivering
to Issuing Bank an irrevocable written application in a form reasonably
acceptable to Issuing Bank, appropriately completed (an “LC Application”), which
specifies, among other things:

(i) The stated amount of the requested Letter of Credit;

(ii) The name and address of the beneficiary of the requested Letter of Credit;

(iii) The expiration date of the requested Letter of Credit;

 

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(iv) The documentary conditions for drawing under the requested Letter of
Credit;

(v) The date of issuance for the requested Letter of Credit, which shall be a
Business Day; and

(vi) The aggregate amount available for drawing under all Letters of Credit then
outstanding.

Borrower shall give each LC Application to Issuing Bank at least three
(3) Business Days before the proposed date of issuance of the requested Letter
of Credit. Each LC Application shall be delivered by first-class mail or
facsimile to Agent at the office or facsimile number and during the hours
specified in Paragraph 8.01; provided, however, that Borrower shall promptly
deliver to Issuing Bank the original of any LC Application initially delivered
by facsimile. Agent shall promptly notify each Lender of the contents of each LC
Application. In the event of any conflict between the terms of this Agreement
and the terms of the LC Application, the terms of this Agreement shall control.

(c) Disbursement and Reimbursement.

(i) Disbursement. Issuing Bank will notify Borrower by facsimile forthwith upon
receipt of the presentment of any demand for payment under any Letter of Credit,
together with notice of the amount of such payment and the date such payment
shall be made. Subject to the terms and provisions of such Letter of Credit,
Issuing Bank shall make such payment (a “Drawing Payment”) to the appropriate
beneficiary.

(ii) Time of Reimbursement. Not later than 11:00 a.m. on the day following each
Drawing Payment made by Issuing Bank, Borrower shall make or cause to be made to
Issuing Bank a payment in the amount of such Drawing Payment (a “Reimbursement
Payment”), together with any accrued interest thereon as provided below;
provided, however, that (1) Borrower shall make such Reimbursement Payment to,
or cause such Reimbursement Payment to be made to, Agent for the benefit of the
Lenders if, prior to the time such Reimbursement Payment is made, Issuing Bank
has notified Borrower that it has requested the Lenders pursuant to clause (ii)
of Subparagraph 2.02(d) to pay to Issuing Bank their respective Revolving Loan
Proportionate Shares of the Drawing Payment made by Issuing Bank and
(2) Borrower shall pay interest on the amount of any Reimbursement Payment not
paid on the same day as the applicable Drawing Payment at a per annum rate equal
to (y) for the first day, the rate then applicable to Revolving Loans which are
Base Rate Loans and (z) for the second day and any subsequent day, the rate then
applicable to Revolving Loans which are Base Rate Loans plus two percent
(2%) per annum. If any such Reimbursement Payment is made to Agent, Agent shall
promptly pay to each Lender which has paid its Revolving Loan Proportionate
Share of the Drawing Payment, such Lender’s Revolving Loan Proportionate Share
of the Reimbursement Payment and shall promptly pay to Issuing Bank the balance
of such Reimbursement Payment.

 

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(iii) Reimbursement Obligation Absolute. The obligation of Borrower to reimburse
Issuing Bank or the Lenders, as the case may be, for Drawing Payments (such
obligation, together with the obligation to pay interest thereon, to be referred
to herein collectively as a “Reimbursement Obligation”) shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under and without regard to any circumstances,
including, without limitation (A) any lack of validity or enforceability of any
of the Credit Documents, (B) the existence of any claim, setoff, defense or
other right which Borrower may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any Persons for whom any such beneficiary
or transferee may be acting), Issuing Bank, any Agent, any other Lender or any
other Person, whether in connection with this Agreement, the transactions
contemplated herein or in the other Credit Documents, or in any unrelated
transaction, (C) any breach of contract or dispute between Borrower, any
beneficiary or any transferee of any Letter of Credit (or any Persons for whom
any such beneficiary or transferee may be acting), Issuing Bank, any Agent, any
other Lender or any other Person, (D) any demand, statement or other document
presented under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect, (E) payment by Issuing Bank under any Letter of
Credit against presentation of a demand for payment which does not comply with
the terms of such Letter of Credit, (F) any non application or misapplication by
any beneficiary or any transferee of any Letter of Credit (or any Persons for
whom any such beneficiary or transferee may be acting) of the proceeds of any
drawing under such Letter of Credit or (G) any delay, extension of time,
renewal, compromise or other indulgence or modification granted or agreed to by
Issuing Bank, any Agent or any other Lender, with or without notice to or
approval by Borrower, with respect to Borrower’s indebtedness under this
Agreement; provided, however, that this Subparagraph 2.02(c) shall not abrogate
any right which Borrower may have to seek to enjoin any drawing under any Letter
of Credit or to recover damages from Issuing Bank pursuant to Subparagraph
2.02(e).

(d) Lender Participations; Revolving Loan Funding.

(i) Participation Agreement. Each Lender severally, unconditionally and
irrevocably agrees with Issuing Bank to participate in the extension of credit
arising from the issuance of each Letter of Credit in an amount equal to such
Lender’s Revolving Loan Proportionate Share of the stated amount of such Letter
of Credit from time to time, and the issuance of each Letter of Credit shall be
deemed a confirmation by Issuing Bank of such participation in such amount;
provided, however, that at the time of such issuance the amount limitations set
forth in Paragraph 2.04 are not exceeded.

(ii) Participation Funding. Issuing Bank may request the Lenders to fund their
participations in Letters of Credit by paying to Issuing Bank all or any portion
of any Drawing Payment made or to be made by Issuing Bank under any Letter of
Credit. Issuing Bank shall make such a request by delivering to Agent (with a
copy to Borrower), at any time after the drawing for which such payment is
requested has been made upon Issuing Bank, a written request for such payment
which specifies the amount of such Drawing Payment and the date on which such
Drawing Payment is to be made or was made; provided, however, that Issuing Bank
shall not request the Lenders to make any payment under this
Subparagraph 2.02(d) in connection with any portion of a Drawing Payment for
which Issuing Bank has been reimbursed from a Reimbursement Payment by Borrower
unless such Reimbursement Payment has been thereafter recovered by Borrower.
Agent shall promptly notify each Lender of the contents of each such request and
of such Lender’s Revolving Loan Proportionate Share of the applicable portion of
such Drawing Payment. Promptly following receipt of such notice from Agent, each
Lender shall pay to Agent, for the benefit of Issuing Bank, such Lender’s
Revolving Loan Proportionate Share of the applicable portion of such Drawing
Payment.

 

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(iii) Funding Through Revolving Loans. At any time any Reimbursement Obligations
are outstanding, Agent may or, upon the written request of Issuing Bank (if
Borrower is not then the subject of a bankruptcy proceeding), shall (subject to
the terms and conditions of this Subparagraph 2.02(d)), initiate a Revolving
Loan Borrowing in an amount not exceeding the aggregate amount of such
outstanding Reimbursement Obligations and use the proceeds of such Revolving
Loan Borrowing to repay all or a portion of such Reimbursement Obligations.
Agent shall initiate such a Borrowing by delivering to each Lender (with a copy
to Borrower) a written notice which specifies the aggregate amount of
outstanding Reimbursement Obligations, the amount of the Revolving Loan
Borrowing (which initially shall consist of Base Rate Loans), the date of such
Revolving Loan Borrowing and the amount of the Revolving Loan to be made by such
Lender as part of such Revolving Loan Borrowing. Each Lender shall make
available to Agent funds in the amount of its Revolving Loan as provided in
Subparagraph 2.09(a). After receipt of such funds, Agent shall promptly disburse
such funds to Issuing Bank and the Lenders, as appropriate, in payment of the
outstanding Reimbursement Obligations.

(iv) Obligations Absolute. Each Lender’s obligations to fund its participations
under this Subparagraph 2.02(d) shall be absolute, unconditional and irrevocable
and shall not be affected by (A) the occurrence or existence of any Default or
Event of Default, (B) any failure to satisfy any condition set forth in Section
III, (C) any event or condition which might have a Material Adverse Effect,
(D) the failure of any other Lender to make any payment under this Subparagraph
2.02(d), (E) any right of offset, abatement, withholding or reduction which such
Lender may have against Issuing Bank, Agent, any other Lender or Borrower,
(F) any event, circumstance or condition set forth in Subparagraph 2.02(c) or
Subparagraph 2.02(e), or (G) any other event, circumstance or condition
whatsoever, whether or not similar to any of the foregoing; provided, however,
that nothing in this Paragraph 2.02 shall prejudice any right which any Lender
may have against Issuing Bank for any action by Issuing Bank which constitutes
gross negligence or willful misconduct.

(e) Liability of Issuing Bank, Etc. Borrower agrees that none of Issuing Bank,
Agent or any other Lender (nor any of their respective directors, officers or
employees) shall be liable or responsible for (i) the use which may be made of
any Letter of Credit or for any acts or omissions of any beneficiary or
transferee thereof in connection therewith; (ii) any reference which may be made
to this Agreement or to any Letter of Credit in any agreements, instruments or
other documents relating to obligations secured by such Letter of Credit;
(iii) the validity, sufficiency or genuineness of documents, or of any
endorsement(s) thereon, even if such documents should in fact prove to be in any
or all respects invalid, insufficient, fraudulent or forged or any statement
therein prove to be untrue or inaccurate in any respect whatsoever; (iv) payment
by Issuing Bank against presentation of documents which do not comply with the
terms of any Letter of Credit, including failure of any documents to bear any
reference or adequate reference to any Letter of Credit; or (v) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit, except only that Issuing Bank shall be liable to Borrower for acts or
events described in clauses (i) through (v) above, to the extent, but only to
the extent, of any damages suffered by Borrower (excluding consequential
damages) which Borrower proves were caused by (A) Issuing Bank’s willful
misconduct, bad faith or gross negligence in determining whether a drawing made
under any Letter of Credit complies with the terms and conditions therefor
stated in such Letter of Credit or (B) Issuing Bank’s willful misconduct, bad
faith or gross negligence in failing to pay under any Letter of Credit after a
drawing by the beneficiary thereof strictly complying with the terms and
conditions of such Letter of Credit. Without limiting the foregoing, Issuing
Bank may accept a drawing that appears on its face to be in order, without
responsibility for further investigation. The determination of whether a drawing
has been made under any Letter of Credit prior to its expiration or whether a
drawing made under any Letter of Credit is in proper and sufficient form shall
be made by Issuing Bank in its sole discretion, which determination shall be
conclusive and binding upon Borrower to the extent permitted by law. Borrower
hereby waives any right to object to any payment made under any Letter of Credit
with regard to a drawing that is in the form provided in such Letter of Credit
but which varies with respect to punctuation, capitalization, spelling or
similar matters of form.

 

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(f) Reports of Issuing Bank. Issuing Bank shall on a monthly basis provide to
Agent or any Lender such information regarding the Letters of Credit as Agent or
such Lender may reasonably request, including the Letters of Credit outstanding,
the stated amounts of outstanding Letters of Credit, the expiration dates of
outstanding Letters of Credit, the names of the beneficiaries of outstanding
Letters of Credit, the amounts of unpaid Reimbursement Obligations and the
amounts and times of Drawing Payments and Reimbursement Payments.

(g) Purpose. Borrower shall use Trade Letters of Credit and Standby Letters of
Credit solely as provided in clause (ii) of Subparagraph 2.02(a).

2.03 Term Loan Facility.

(a) Term Loan Availability. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to advance to Borrower a term loan under
this Paragraph 2.03 (individually, a “Term Loan”) in the principal amount of
such Lender’s Term Loan Commitment; provided, however, that the aggregate
principal amount of all Term Loans made by all Lenders shall not exceed Thirty
Million Dollars ($30,000,000) (such amount to be referred to herein as the
“Total Term Loan Commitment”). The Term Loans shall be made on a pro rata basis
by the Lenders in accordance with their respective Term Loan Proportionate
Shares, with the Term Loan Borrowing to be comprised of a Term Loan by each
Lender equal to such Lender’s Term Loan Proportionate Share of the Term Loan
Borrowing. Each Lender shall advance its Term Loan in a single advance. Borrower
may not reborrow the principal amount of a Term Loan after repayment or
prepayment thereof.

(b) Initial Term Loan Availability. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to advance to Borrower on the Closing
Date a Term Loan in the principal amount of such Lender’s Term Loan Commitment
in the amount of Twenty-Six Million Dollars ($26,000,000) (such amount to be
referred to herein as the “Initial Term Loan Commitment”). The Borrower will not
be entitled to borrow the remaining Four Million Dollars ($4,000,000) of the
Total Term Loan Commitment until such time as Borrower and Smiley’s have
obtained liquor licenses for each and every location at which the Retail
Business is operated and a liquor license is required. Borrower’s ability to
draw the remaining Four Million Dollars ($4,000,000) of the Total Term Loan
Commitment shall expire on December 31, 2014.

 

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(c) Notice of Term Loan Borrowing. Borrower shall request the Term Loan
Borrowing by delivering to Agent an irrevocable written notice in the form of
Exhibit D, appropriately completed (a “Notice of Term Loan Borrowing”). Borrower
shall give the Notice of Term Loan Borrowing to Agent at least two (2) Business
Days before the Closing Date and any other date upon which Borrower desires to
obtain a Term Loan. The Notice of Term Loan Borrowing shall be delivered by
first class mail, facsimile or electronic mail to Agent at the office, facsimile
number or email address and during the hours specified in Paragraph 8.01;
provided, however, that Borrower shall promptly deliver to Agent the original of
the Notice of Term Loan Borrowing if initially delivered by facsimile or
electronic mail. Agent shall promptly notify each Lender of the contents of the
Notice of Term Loan Borrowing.

(d) Term Loan Interest Rates. Borrower shall pay interest on the unpaid
principal amount of each Term Loan from the date of such Term Loan until the
Term Loan Maturity Date, at the following rates per annum:

(i) During such periods as any portion of such Term Loan is a Base Rate Portion,
at a rate per annum on such Portion equal to the Base Rate plus the Applicable
Margin therefor, such rate to change from time to time as the Applicable Margin
or Base Rate shall change; and

(ii) During such periods as any portion of such Term Loan is a LIBOR Portion, at
a rate per annum on such Portion equal at all times during each Interest Period
for such Portion to the LIBOR Rate for such Interest Period plus the Applicable
Margin therefor, such rate to change from time to time as the Applicable Margin
shall change;

Provided, however, that all portions of the Term Loans outstanding during the
period commencing on the Closing Date and ending three (3) Business Days
thereafter shall be Base Rate Portions during such period. The Applicable
Margins for Base Rate Portions and LIBOR Portions of Term Loans shall be
determined as provided in the Pricing Grid and may change for each calendar
quarter, with the exception that until March 31, 2014 the Applicable Margins
shall be at pricing Level 2 in the Pricing Grid. Each Portion of the Term Loan
Borrowing shall be in a minimum amount of $1,000,000 or an integral multiple of
$100,000 in excess thereof (except to the extent that any lesser Portion results
from a mandatory prepayment of the Term Loan Borrowing pursuant to Subparagraph
2.06(c)). No more than seven (7) LIBOR Portions may be outstanding at any time.

(e) Conversion of Term Loans. Borrower may convert any Portion of the Term Loan
Borrowing from one Type of Portion to another Type. Borrower shall request such
a conversion by an irrevocable written notice to Agent in the form of Exhibit E,
appropriately completed (a “Notice of Term Loan Conversion”), which specifies,
among other things:

(i) The Portion of the Term Loan Borrowing which is to be converted;

 

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(ii) The amount and Type of each Portion of the Term Loan Borrowing into which
it is to be converted;

(iii) If any Portion of the Term Loan Borrowing is to be converted into a LIBOR
Portion, the initial Interest Period selected by Borrower for such Portion in
accordance with Subparagraph 2.03(f); and

(iv) The date of the requested conversion, which shall be a Business Day.

Borrower shall give each Notice of Term Loan Conversion to Agent at least three
(3) Business Days before the date of the requested conversion in the case of any
conversion into LIBOR Portions and at least two (2) Business Days before the
date of the requested conversion in the case of any conversion into Base Rate
Portions. Each Notice of Term Loan Conversion shall be delivered by first class
mail or facsimile to Agent at the office or to the facsimile number and during
the hours specified in Paragraph 8.01; provided, however, that Borrower shall
promptly deliver to Agent the original of any Notice of Term Loan Conversion
initially delivered by facsimile. Agent shall promptly notify each Lender of the
contents of each Notice of Term Loan Conversion.

(f) LIBOR Portion Interest Periods.

(i) The initial and each subsequent Interest Period selected by Borrower for all
Portions of a Term Loan Borrowing or a Term Loan consisting of LIBOR Portions
shall be thirty (30), ninety (90) or one hundred eighty (180) as Borrower may
specify; provided, however, that (A) any such Interest Period which would
otherwise end on a day which is not a Business Day shall be extended to the next
succeeding Business Day unless such next Business Day falls in another calendar
month, in which case such Interest Period shall end on the immediately preceding
Business Day; (B) any such Interest Period which begins on the last Business Day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on the
last Business Day of a calendar month; and (C) no such Interest Period shall end
after the Term Loan Maturity Date.

(ii) Borrower shall notify Agent by an irrevocable written notice in the form of
Exhibit F, appropriately completed (a “Notice of Term Loan Interest Period
Selection”), at least three (3) Business Days prior to the last day of each
Interest Period for the Portions of a Term Loan Borrowing or a Term Loan
consisting of LIBOR Portions of the Interest Period selected by Borrower for the
next succeeding Interest Period for such Portions. Each Notice of Term Loan
Interest Period Selection shall be given by first class mail, facsimile or
electronic mail to the office, the facsimile number or email address and during
the hours specified in Paragraph 8.01; provided, however, that Borrower shall
promptly deliver to Agent the original of any Notice of Term Loan Interest
Period Selection initially delivered by facsimile or electronic mail. If
Borrower fails to notify Agent of the next Interest Period for the LIBOR
Portions in any such Term Loan Borrowing or Term Loan in accordance with this
Subparagraph 2.03(e), such Portions shall automatically convert to LIBOR Loans
having an Interest Period of thirty (30) days on the last day of the current
Interest Period therefor.

 

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(g) Scheduled Term Loan Payments. Borrower shall repay the principal amount of
the Term Loans in twenty-eight (28) quarterly installments payable on the last
day in each March, June, September and December (commencing December 31, 2013,
and ending on June 30, 2020) and on the Term Loan Maturity Date (each such date
to be referred to herein as a “Term Loan Installment Date”). Upon disbursement
of the Initial Term Loan Commitment, the quarterly installments of principal
shall be in the amount of SIX HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($650,000.00), and upon disbursement of the remaining balance of the Term Loan
Commitment the quarterly installments of principal shall be in the amount of
SEVEN HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($750,000.00);

Provided, however, that the principal payment due on the Term Loan Maturity Date
shall be in the amount necessary to pay all remaining unpaid principal, interest
and all other charges owing on all Term Loans. Borrower shall pay accrued
interest on the unpaid principal amount of the Term Loans in arrears (A) in the
case of Base Rate Portions, on the last Business Day in each calendar month,
(B) in the case of LIBOR Portions, (1) on the last day of each Interest Period
therefor (and, if any such Interest Period is longer than three (3) months,
every three (3) months after the first day of such Interest Period) and (2) upon
prepayment (to the extent thereof); and (C) in the case of all Term Loans, on
the Term Loan Maturity Date.

(h) Purpose. Borrower shall use the proceeds of the Term Loans for (i) working
capital, capital expenditures and other lawful purposes, and (ii) to finance the
acquisition of the Retail Business by Borrower.

2.04 Additional Commitment Reductions, Etc.

(a) Optional Reduction or Cancellation of Commitments. Borrower may, upon three
(3) Business Days written notice to Agent, permanently reduce the Total
Revolving Loan Commitment by the amount of Five Hundred Thousand Dollars
($500,000) or an integral multiple thereof or cancel the Total Revolving Loan
Commitment in its entirety; provided, however, that:

(i) Borrower may not reduce the Total Revolving Loan Commitment if, after giving
effect to such reduction, the aggregate principal amount of all Revolving Loans
then outstanding, the aggregate amount available for drawings under all Letters
of Credit then outstanding, and the aggregate amount of all Reimbursement
Obligations then outstanding (such sum to be referred to herein as the
“Outstanding Revolving Facilities Credit”) would exceed the Total Revolving Loan
Commitment as so reduced; and

(ii) Borrower may not cancel the Total Revolving Loan Commitment if, after
giving effect to such cancellation, any Revolving Loan or Letter of Credit would
remain outstanding.

(b) Effect of Commitment Reductions. From the effective date of any reduction of
the Total Revolving Loan Commitment, the Unused Commitment Fees payable pursuant
to Subparagraph 2.05(c) shall be computed on the basis of the Total Revolving
Loan Commitment as so reduced. Once reduced or cancelled, the Total Revolving
Loan Commitment may not be increased or reinstated without the prior written
consent of Agent and all Lenders. Any reduction of the Total Revolving Loan
Commitment pursuant to this Paragraph 2.04 shall be applied ratably to reduce
each Lender’s Revolving Loan Commitment in accordance with clause (i) of
Subparagraph 2.10(a).

 

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2.05 Fees.

(a) Arrangement Fee. Borrower shall pay to Agent on the Closing Date, for its
own account, an arrangement fee (the “Arrangement Fee”) equal to one-quarter of
one percent (0.25%) of the sum of the Total Credit.

(b) Commitment Fees. Borrower shall pay to Agent on the Closing Date, for the
ratable benefit of the Lenders as provided in clause (vi) of Subparagraph
2.10(a), a nonrefundable commitment fee (the “Commitment Fee”) equal to
one-quarter of one percent (0.25%) of the sum of the Total Credit.

(c) Unused Commitment Fee. Borrower shall pay to Agent, for the ratable benefit
of the Lenders as provided in clause (vi) of Subparagraph 2.10(a), a
non-refundable fee on the Unused Commitment (the “Unused Commitment Fee”) equal
to the Commitment Fee Percentage on the daily average Unused Commitment for the
period beginning on the Closing Date and ending on the Revolving Loan Maturity
Date. The Commitment Fee Percentage shall be determined as provided in the
Pricing Grid and may change for each calendar quarter, with the exception that
until the calendar quarter ending March 31, 2014, the Commitment Fee Percentage
shall be at pricing Level 2 on the Pricing Grid. Borrower shall pay the Unused
Fees quarterly in arrears within three (3) Business Days following the last day
in each calendar quarter and on the Revolving Loan Maturity Date.

(d) Agent Fee. The Borrower shall pay to Agent an annual agent fee (the “Agent
Fee”) in the amount of $10,000 for the administration of the Senior Credit
Facilities on behalf of the Lenders. The Agent Fee will be due and payable
annually, commencing on the date which is one (1) year after the Closing Date.
The Agent Fee shall be payable to the Agent for its own account.

(e) Letter of Credit Fees.

(i) Standby Letter of Credit Usage Fees. Borrower shall pay to Agent, for the
ratable benefit of the Lenders as provided in clause (vii) of Subparagraph
2.10(a), nonrefundable letter of credit fees for the Standby Letters of Credit
(the “Standby LC Usage Fees”) equal to the Standby LC Fee Rate on the daily
average available amount of each Standby Letter of Credit for the period
beginning on the date such Standby Letter of Credit is issued and ending on the
date such Standby Letter of Credit expires. The Standby LC Fee Rate shall be
equal to the standard Standby LC Fee Rate charged by Issuing Bank. Borrower
shall pay the Standby LC Usage Fees quarterly in arrears within three
(3) Business Days following the last day in each calendar quarter and on the
Revolving Loan Maturity Date.

(ii) Trade Letter of Credit Usage Fees. Borrower shall pay to Agent, for the
ratable benefit of the Lenders as provided in clause (vii) of Subparagraph
2.10(a), nonrefundable letter of credit fees for the Trade Letters of Credit
(the “Trade LC Usage Fees”) equal to the Trade LC Fee Rate on the daily average
available amount of each Trade Letter of Credit for the period beginning on the
date such Trade Letter of Credit is issued and ending on the date such Trade
Letter of Credit expires. The Trade LC Fee Rate shall be equal to the Applicable
LIBOR Margin for the Revolving Credit Facility in the Pricing Grid Level 1.
Borrower shall pay the Trade LC Usage Fees quarterly in arrears within three
(3) Business Days following the last day in each calendar quarter and on the
Revolving Loan Maturity Date.

 

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(iii) Letter of Credit Issuance Fees. Borrower shall pay to Agent, for the sole
benefit of Issuing Bank, nonrefundable issuance fees for the Letters of Credit
(the “LC Issuance Fees”) equal to (A) in the case of each Standby Letter of
Credit, one hundred dollars ($100) and (B) in the case of each Trade Letter of
Credit, Issuing Bank’s then current standard issuance fee rate for trade letters
of credit on the original stated amount of each Trade Letter of Credit for the
period beginning on the date such Trade Letter of Credit is issued and ending on
the date such Trade Letter of Credit expires. Borrower shall pay the LC Issuance
Fees for each Standby Letter of Credit in advance on the date of issuance of
such Standby Letter of Credit. Borrower shall pay the LC Issuance Fees for each
Trade Letter of Credit in advance on the date of issuance of such Letter of
Credit.

(iv) Other Letter of Credit Fees. In addition to the Standby LC Usage Fees, the
Trade LC Usage Fees and the LC Issuance Fees, Borrower shall pay to Agent, for
the benefit of Issuing Bank, other standard fees of Issuing Bank for drawings
under, transfers of and amendments to any Letter of Credit and other
administrative actions performed by Issuing Bank in connection with any Letter
of Credit, payable at such times and in such amounts as are consistent with
Issuing Bank’s standard fee policy at the time of such amendment or other
action.

2.06 Prepayments.

(a) Terms of All Prepayments. Upon the prepayment of any Loan (whether such
prepayment is an optional prepayment under Subparagraph 2.06(b), a mandatory
prepayment required by Subparagraph 2.06(c) or a mandatory prepayment required
by any other provision of this Agreement or the other Credit Documents,
including, without limitation, a prepayment upon acceleration), Borrower shall
pay to the Agent for the benefit of the Lenders which made such Loan (i) all
accrued interest to the date of such prepayment on the amount prepaid (except
that no such payment of interest shall be required upon the prepayment of a Base
Rate Loan unless such prepayment occurs in connection with a reduction or
termination of the Total Revolving Loan Commitment), and (ii) if such prepayment
is the prepayment of a LIBOR Loan or a LIBOR Portion on a day other than the
last day of an Interest Period for such Loan or Portion, all amounts payable to
such Lender pursuant to Paragraph 2.13.

(b) Optional Prepayments. At its option, Borrower may, upon one (1) Business Day
notice to Agent, prepay any Borrowing in part, in an aggregate principal amount
of $1,000,000 or more in the case of the Term Loan Borrowing or $100,000 or more
in the case of a Revolving Loan Borrowing (or, in each case, such lesser amount
as may be outstanding at such time), or in whole.

 

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(c) Mandatory Prepayments. Borrower shall prepay the Loans as follows:

(i) One hundred percent (100%) of the cash proceeds, net of payment of ordinary
and reasonable expenses and taxes to the extent such taxes are actually paid, of
all sales of assets by Borrower or any Subsidiary of Borrower not in the
ordinary course of business (including the sale of membership interests in
Borrower or any Subsidiary of Borrower), to the extent the net cash proceeds of
the sale of any single asset exceed $500,000, which mandatory prepayment shall
be due within ten (10) Business Days of the closing of such sale, and all such
prepayments from net sales proceeds shall be applied to the outstanding
principal balance of the Term Loan Facility.

(ii) One hundred percent (100%) of the net cash proceeds of any casualty,
condemnation or insurance proceeds received by Borrower or any Subsidiary of
Borrower, to the extent that such casualty, condemnation or insurance proceeds
are not reasonably required by Borrower for replacement, acquisition or
redeployment, which mandatory prepayment shall be due within ten (10) Business
Days of the receipt of such proceeds to the extent that the net cash proceeds
exceed $500,000 in any fiscal year and all such repayments from such proceeds
shall be applied to the outstanding principal balance of the Term Loan Facility.

(iii) If, for Borrower’s fiscal year ending December 31, 2014 or any fiscal year
thereafter, Borrower has Excess Cash Flow based on the annual fiscal year end
audited financial statements for such fiscal year, within one hundred and eighty
(180) days after the such fiscal year end Borrower shall prepay Loans in an
aggregate principal amount equal to (1) fifty percent (50%) of such Excess Cash
Flow if the Leverage Ratio is equal to or greater than 4.50 to 1.00, or (2) zero
percent (0%) of such Excess Cash Flow if the Leverage Ratio is less than 4.50 to
1.00 (“Excess Cash Flow Recapture”), with all mandatory prepayments made by
Borrower pursuant to this clause (iv) applied to the outstanding principal
balance of the Term Loan Facility.

(d) Other Prepayment Application Requirements. All mandatory prepayments made by
Borrower pursuant to Subparagraph 2.06(c) which are applied to the Term Loan
Facility shall reduce the aggregate principal amount payable by Borrower on the
then remaining Term Loan Installment Dates, in inverse order of maturity. All
optional prepayments made by Borrower pursuant to Subparagraph 2.06(b) which are
applied to the Term Loan Facility shall reduce the aggregate principal amount
payable by Borrower on the then remaining Term Loan Installment Dates in the
order due. Without modifying the order of application of prepayments set forth
above:

(i) All prepayments of the Revolving Loans shall, to the extent possible, be
first applied to prepay Base Rate Loans and then, if any funds remain, to prepay
LIBOR Loans. Unless an Event of Default has occurred and is continuing, Borrower
may select the Revolving Loan Borrowings against which any such prepayments of
LIBOR Loans are to be applied.

(ii) All prepayments of the Term Loans shall, to the extent possible, be first
applied to prepay Base Rate Portions and then, if any funds remain, to prepay
LIBOR Portions. Unless an Event of Default has occurred and is continuing,
Borrower may select the LIBOR Portions against which any such prepayments are to
be applied.

 

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2.07 Other Payment Terms.

(a) Place and Manner. Except as otherwise expressly provided herein, Borrower
shall make all payments due to each Lender hereunder by payments to Agent, for
the account of such Lender and such Lender’s Applicable Lending Office, at
Agent’s office, located at the address specified in Paragraph 8.01, in lawful
money of the United States and in same day or immediately available funds not
later than 10:00 a.m. on the date due. Agent shall promptly disburse to each
Lender each such payment received by Agent for such Lender.

(b) Date. Whenever any payment due hereunder shall fall due on a day other than
a Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall be included in the computation of interest or
fees, as the case may be.

(c) Late Payments. If any amounts required to be paid by Borrower under this
Agreement or the other Credit Documents (including, without limitation,
principal or interest payable on any Loan, Reimbursement Payments or interest
thereon, any fees or other amounts) remain unpaid after such amounts are due,
Borrower shall pay interest on the aggregate, outstanding balance of such
amounts from the date due until those amounts are paid in full at the per annum
rate which would then be applicable to Base Rate Loans plus two percent (2%),
such rate to change from time to time as the Base Rate or Applicable Margin
shall change.

(d) Application of Payments. Unless otherwise specified herein or in the other
Credit Documents, all payments hereunder shall be applied first to unpaid fees,
costs and expenses then due and payable under this Agreement or the other Credit
Documents, second to accrued interest then due and payable under this Agreement
or the other Credit Documents, third to any unpaid Reimbursement Obligations and
finally to reduce the principal amount of outstanding Loans.

(e) Failure to Pay Agent. Unless Agent shall have received notice from Borrower
prior to the date on which any payment is due to any Lender hereunder that
Borrower will not make such payment in full, Agent may assume that Borrower has
made such payment in full to Agent on such date and Agent may, in reliance upon
such assumption, cause to be distributed to the appropriate Lenders on such due
date an amount equal to the amount then due such Lenders. If and to the extent
Borrower shall not have so made such payment in full to Agent, each such Lender
shall repay to Agent forthwith on demand such amount distributed to such Lender
together with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to
Agent, at the Federal Funds Rate. A certificate of Agent submitted to any Lender
with respect to any amounts owing by such Lender under this Subparagraph 2.07(e)
shall be conclusive absent manifest error.

 

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2.08 Notes and Interest Account.

(a) Revolving Loan Notes. The obligation of Borrower to repay the Revolving
Loans made by each Lender and to pay interest thereon at the rates provided
herein shall be evidenced by a promissory note in the form of Exhibit G
(individually, a “Revolving Loan Note”) which note shall be (i) payable to the
order of such Lender, (ii) in the amount of such Lender’s Revolving Loan
Commitment, (iii) dated the Closing Date and (iv) otherwise appropriately
completed. Borrower authorizes each Lender to record on the schedule annexed to
such Lender’s Revolving Loan Note the date and amount of each Revolving Loan
made by such Lender and of each payment or prepayment of principal thereon made
by Borrower, and agrees that all such notations shall constitute prima facie
evidence of the matters noted. Borrower further authorizes each Lender to attach
to and make a part of such Lender’s Revolving Loan Note continuations of the
schedule attached thereto as necessary.

(b) Term Loan Notes. The obligation of Borrower to repay the Term Loan made by
each Lender and to pay interest thereon at the rates provided herein shall be
evidenced by a promissory note in the form of Exhibit H (individually, a “Term
Loan Note”) which note shall be (i) payable to the order of such Lender, (ii) in
the amount of such Lender’s Term Loan, (iii) dated the Closing Date and
(iv) otherwise appropriately completed.

(c) Interest Account. Borrower authorizes Agent to record in an account or
accounts maintained by Agent on its books (the “Interest Account”) (i) the
interest rates applicable to all Loans and Portions and the effective dates of
all changes thereto, (ii) the Interest Period for each LIBOR Loan and LIBOR
Portion, (iii) the date and amount of each principal and interest payment on
each Loan and Portion and (iv) such other information as Agent may determine is
necessary for the computation of interest payable by Borrower hereunder.

2.09 Loan Funding, Etc.

(a) Lender Funding and Disbursement to Borrower. Each Lender shall, before 9:00
a.m. on the date of each Borrowing which includes Loans to be made by such
Lender, make available to Agent at its office specified in Paragraph 8.01, in
same day or immediately available funds, such Lender’s pro rata share of such
Borrowing. Except as otherwise provided with respect to Revolving Loan
Borrowings initiated by Agent pursuant to clause (iii) of Subparagraph 2.02(d),
after Agent’s receipt of such funds and upon fulfillment of the applicable
conditions set forth in Section III, Agent will promptly disburse such funds in
same day or immediately available funds to Borrower. Unless otherwise directed
by Borrower, Agent shall disburse the proceeds of each Borrowing to Borrower by
disbursement to the account or accounts specified in the applicable Notice of
Borrowing.

(b) Lender Failure to Fund. Unless Agent shall have received notice from a
Lender prior to the date of any Borrowing which includes Loans to be made by
such Lender that such Lender will not make available to Agent such Lender’s pro
rata share of such Borrowing, Agent may assume that such Lender has made such
portion available to Agent on the date of such Borrowing in accordance with
Subparagraph 2.09(a), and Agent may, in reliance upon such assumption, make
available to Borrower (or otherwise disburse) on such date a corresponding
amount. If any Lender does not make the amount of its pro rata share of any
Borrowing which includes Loans to be made by such Lender available to Agent on
or prior to the date of such Borrowing, such Lender shall pay to Agent, on
demand, interest which shall accrue on such amount until made available to Agent
at rates equal to (i) the daily Federal Funds Rate during the period from the
date of such Borrowing through the third Business Day thereafter and (ii) the
Base Rate thereafter. A certificate of Agent submitted to any Lender with
respect to any amounts owing under this Subparagraph 2.09(b) shall be conclusive
absent manifest error. If any Lender’s pro rata share of any Borrowing which
includes Loans to be made by such Lender is not in fact made available to Agent
by such Lender within three (3) Business Days after the date of such Borrowing,
Borrower shall pay to Agent, on demand, an amount equal to such pro rata share
together with interest thereon, for each day from the date such amount was made
available to Borrower until the date such amount is repaid to Agent, at the
interest rate applicable at the time to the Loans comprising such Borrowing.

 

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(c) Lenders’ Obligations Several. The failure of any Lender to make the Loan to
be made by it as part of any Borrowing or the failure of any Revolving Lender to
fund its participation in any Drawing Payment shall not relieve any other Lender
of its obligation hereunder to make its Loan on the date of such Borrowing or
fund its participation on the date of such funding, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender on the date of any Borrowing or fund the participation to be
funded by such other Lender on the date of such funding.

2.10 Pro Rata Treatment.

(a) Borrowings, Commitment Reductions, Etc. Except as otherwise provided herein:

(i) Each Revolving Loan Borrowing, each reduction of the Total Revolving Loan
Commitment, and participations in each Letter of Credit shall be made or shared
among the Lenders pro rata according to their respective Revolving Loan
Proportionate Shares; and the Term Loan Borrowing shall be made by the Lenders
pro rata according to their respective Term Loan Proportionate Shares;

(ii) Each payment of principal of Loans in any Borrowing shall be shared among
the Lenders which made or funded the Loans in such Borrowing pro rata according
to the respective unpaid principal amounts of such Loans so made or funded by
such Lenders;

(iii) Each payment of interest on Loans in any Borrowing shall be shared among
the Lenders which made or funded the Loans in such Borrowing pro rata according
to (A) the respective unpaid principal amounts of such Loans so made or funded
by such Lenders and (B) the dates on which such Lenders so made or funded such
Loans;

(iv) Each Reimbursement Payment and interest payable by Borrower thereon shall
be shared among the Lenders (including Agent) which made or funded the
applicable Drawing Payment pro rata according to the respective amounts of such
Drawing Payment so made or funded by such Lenders;

(v) Each payment of Commitment Fees shall be shared among the Lenders pro rata
according to their respective Revolving Loan Proportionate Shares;

(vi) Each payment of Unused Commitment Fees shall be shared among the Lenders
pro rata according to (A) their respective Revolving Loan Proportionate Shares,
and (B) in the case of each Lender which becomes a Lender hereunder after the
date hereof, the date upon which Lender so became a Lender;

 

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(vii) Each payment of Standby LC Usage Fees and Trade LC Usage Fees shall be
shared among the Lenders (including Agent in its capacity as a Lender) pro rata
according to (A) their respective Revolving Loan Proportionate Shares and (B) in
the case of each Lender which becomes a Lender hereunder after the date hereof,
the date upon which such Lender so became a Lender;

(viii) Each payment of interest (other than interest on Loans) shall be shared
among the Lenders and Agent owed the amount upon which such interest accrues pro
rata according to (A) the respective amounts so owed such Lenders and Agent and
(B) the dates on which such amounts became owing to such Lenders and Agent; and

(ix) All other payments under this Agreement and the other Credit Documents
shall be for the benefit of the Person or Persons specified.

(b) Sharing of Payments, Etc. If any Lender shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of setoff, or
otherwise) on account of Loans or Reimbursement Obligations owed to it in excess
of its ratable share of payments on account of such Loans or Reimbursement
Obligations obtained by all Lenders entitled to such payments, such Lender shall
forthwith purchase from the other Lenders entitled to such payments such
participations in the Loans or Reimbursement Obligations as shall be necessary
to cause such purchasing Lender to share the excess payment ratably with each of
them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase shall be
rescinded and each other Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such other Lender’s ratable share (according to the proportion of (i) the amount
of such other Lender’s required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered. Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Subparagraph 2.10(b) may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of setoff) with
respect to such participation as fully as if such Lender were the direct
creditor of Borrower in the amount of such participation.

2.11 Change of Circumstances.

(a) Inability to Determine Rates. If, on or before the first day of any Interest
Period for any LIBOR Loan or LIBOR Portion, Agent shall determine that (i) the
LIBOR Rate for such Interest Period cannot be adequately and reasonably
determined due to the unavailability of funds in or other circumstances
affecting the London interbank market or (ii) the rates of interest for such
LIBOR Loans or LIBOR Portions, as the case may be, do not adequately and fairly
reflect the cost to the Lenders of making or maintaining such LIBOR Loans or
LIBOR Portions, Agent shall immediately give notice of such condition to
Borrower and the Lenders. After the giving of any such notice and until Agent
shall otherwise notify Borrower that the circumstances giving rise to such
condition no longer exist, Borrower’s right to request the making of or
conversion to, and the Lenders’ obligations to make or convert to LIBOR Loans or
LIBOR Portions shall be suspended. Any LIBOR Loans or LIBOR Portions outstanding
at the commencement of any such suspension shall, unless fully repaid, be
converted at the end of the then current Interest Period for such LIBOR Loans or
LIBOR Portions into Base Rate Loans or Base Rate Portions, as the case may be,
unless such suspension has then ended.

 

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(b) Illegality. If, after the date of this Agreement, the adoption of any
Governmental Rule, any change in any Governmental Rule or the application or
requirements thereof (whether such change occurs in accordance with the terms of
such Governmental Rule as enacted, as a result of amendment or otherwise), any
change in the interpretation or administration of any Governmental Rule by any
Governmental Authority, or compliance by any Lender with any request or
directive (whether or not having the force of law) of any Governmental Authority
(a “Change of Law”) shall make it unlawful or impossible for any Lender to make
or maintain any LIBOR Loan or LIBOR Portion, such Lender shall immediately
notify Agent and Borrower of such Change of Law. Upon receipt of such notice,
(i) Borrower’s right to request the making of or conversion to, and such
Lender’s obligation to make or convert to, LIBOR Loans or LIBOR Portions shall
be terminated, and (ii) Borrower shall, at the request of such Lender, either
(A) pursuant to Subparagraph 2.01(d) or Subparagraph 2.03(d), as the case may
be, convert any such then outstanding LIBOR Loans or LIBOR Portions of such
Lender into Base Rate Loans or Base Rate Portions, as the case may be, at the
end of the current Interest Period for such LIBOR Loans or LIBOR Portions, or
(B) immediately repay or convert any such LIBOR Loans or LIBOR Portions if such
Lender shall notify Borrower that such Lender may not lawfully continue to fund
and maintain such LIBOR Loans or LIBOR Portions. Any conversion or prepayment of
LIBOR Loans or LIBOR Portions made pursuant to the preceding sentence prior to
the last day of an Interest Period for such LIBOR Loans or LIBOR Portions shall
not be deemed a prepayment thereof for purposes of Paragraph 2.13. After any
Lender notifies Agent and Borrower of such a Change of Law and until such Lender
notifies Agent and Borrower that it is no longer unlawful or impossible for such
Lender to make or maintain any LIBOR Loan or LIBOR Portion, all Revolving Loans
and all Portions of the Term Loan of such Lender shall be Base Rate Loans and
Base Rate Portions, respectively.

(c) Increased Costs. If, after the date of this Agreement, any Change of Law:

(i) Shall subject any Lender to any Tax, duty or other charge with respect to
any LIBOR Loan or LIBOR Portion, or shall change the basis of taxation of
payments by Borrower to any Lender on such a LIBOR Loan or LIBOR Portion or in
respect to such a LIBOR Loan or LIBOR Portion under this Agreement (except for
changes in the rate of taxation on the overall net income of any Lender imposed
by its jurisdiction of incorporation or the jurisdiction in which its principal
executive office is located); or

(ii) Shall impose, modify or hold applicable any reserve (excluding any Reserve
Requirement or other reserve to the extent included in the calculation of the
LIBO Rate for any Loans or Portions), special deposit or similar requirement
against assets held by, deposits or other liabilities in or for the account of,
advances or loans by, or any other acquisition of funds by any Lender for any
LIBOR Loan or LIBOR Portion; or

(iii) Shall impose on any Lender any other condition related to any LIBOR Loan
or LIBOR Portion or such Lender’s Commitments;

 

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And the effect of any of the foregoing is to increase the actual cost to such
Lender of making, renewing, or maintaining any such LIBOR Loan or LIBOR Portion
or such Lender’s Commitments or to reduce any amount receivable by such Lender
hereunder, then Borrower shall from time to time, within ten (10) days after
demand by such Lender (which demand shall be accompanied by a statement setting
forth in reasonable detail the basis for the calculation of the amount
demanded), pay to such Lender additional amounts sufficient to reimburse such
Lender for such increased costs or to compensate such Lender for such reduced
amounts. A certificate as to the amount of such increased costs or reduced
amounts submitted by such Lender to Borrower shall constitute prima facie
evidence of such increased costs or reduced amounts. The obligations of Borrower
under this Subparagraph 2.11(c) shall survive the payment and performance of the
Obligations and the termination of this Agreement.

(d) Capital Requirements. If, after the date of this Agreement, any Lender
determines that (i) any generally applicable Change of Law affects the amount of
capital required to be maintained by such Lender (a “Capital Adequacy
Requirement”) and (ii) the amount of capital maintained by such Lender which is
directly attributable to or based upon the Loans, the Letters of Credit, the
Commitments or this Agreement must be increased as a result of such Capital
Adequacy Requirement (taking into account such Lender’s policies with respect to
capital adequacy), Borrower shall pay to such Lender, within ten (10) days after
demand of such Lender (which demand shall be accompanied by a statement setting
forth in reasonable detail the basis for the calculation of the amount
demanded), such amounts as such Lender shall determine are necessary to
compensate such Lender for the increased costs to such Lender of such increased
capital. A certificate of any Lender setting forth in reasonable detail the
computation of any such increased costs delivered by such Lender to Borrower
shall constitute prima facie evidence of such increased costs.

(e) Mitigation. As promptly as practical after any Lender becomes aware of
(i) any Change of Law or other circumstances will make it unlawful or impossible
for such Lender to make or maintain any LIBOR Loan or LIBOR Portion or (ii) any
obligation by Borrower to pay any amount pursuant to Subparagraph 2.11(c) or
Subparagraph 2.11(d), such Lender shall notify Borrower and Agent (and, if any
Lender has given notice of any such event described in clause (i) or (ii) above
and thereafter such event ceases to exist, such Lender shall promptly so notify
Borrower and Agent). Each Lender affected by any Change of Law or any other
circumstances which makes it unlawful or impossible for such Lender to make or
maintain any LIBOR Loan or LIBOR Portion or to which Borrower is obligated to
pay any amount pursuant to Subparagraph 2.11(b), Subparagraph 2.11(c) or
Subparagraph 2.11(d) shall use reasonable commercial efforts (including changing
the jurisdiction of its Applicable Lending Office) to avoid the effect of such
Change of Law or to avoid or materially reduce any amounts which Borrower is
obligated to pay pursuant to Subparagraph 2.11(c) or Subparagraph 2.11(d) if, in
the reasonable opinion of such Lender, such efforts would not be disadvantageous
to such Lender or contrary to such Lender’s normal banking practices.

(f) Nondiscrimination. Each Lender agrees that, in the event that it submits any
demand for payment under this Paragraph 2.11, it shall, as part of making such
demand, certify to Borrower that, to the best of such Lender’s knowledge, it is
concurrently making similar demands of other customers similarly situated.

 

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2.12 Taxes on Payments.

(a) Payments Free of Taxes. All payments made by Borrower under this Agreement
and the other Credit Documents shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority (except net income taxes and franchise taxes in
lieu of net income taxes or FACTA related taxes imposed on Agent or any Lender
by its jurisdiction of incorporation, the jurisdiction in which its Applicable
Lending Office is located or any political subdivision of either such
jurisdiction or the United States or any state or political subdivision thereof)
(all such non excluded taxes, levies, imposts, duties, charges, fees, deductions
and withholdings being hereinafter called “Taxes”). Subject to Subparagraph
2.12(c), if any Taxes are required to be withheld from any amounts payable to
Agent or any Lender hereunder or under the other Credit Documents, the amounts
so payable to Agent or such Lender shall be increased to the extent necessary to
yield to Agent or such Lender (after payment of all Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in this
Agreement and the other Credit Documents. Whenever any Taxes are payable by
Borrower, as promptly as possible thereafter, Borrower shall send to Agent for
its own account or for the account of such Lender, as the case may be, a
certified copy of an original official receipt received by Borrower showing
payment thereof. If Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to Agent the required receipts or other
required documentary evidence, Borrower shall indemnify Agent and the Lenders
for any incremental taxes, interest or penalties that may become payable by
Agent or any Lender as a result of any such failure. The obligations of
Borrower, Agent and each Lender under this Paragraph 2.12 shall survive the
payment and performance of the Obligations and the termination of this
Agreement.

(b) Mitigation. Agent or any Lender claiming any additional amounts payable
pursuant to this Paragraph 2.12 (or Subparagraph 2.11(c)(i)) shall use
reasonable commercial efforts to execute and file or provide to Borrower any
certificate or document requested from time to time in writing by Borrower
(including without limitation executed copies of Internal Revenue Service
Forms W-8BEN, W-8ECI, W-8IMY and W-9, or successor forms, reflecting a reduced
rate of withholding) or to change the jurisdiction of its Applicable Lending
Office if the making of such a filing, provision or such change in the
jurisdiction of its Applicable Lending Office would avoid the need for or
materially reduce the amount of any such additional amounts which may thereafter
accrue and if, in the reasonable opinion of Agent or such Lender in the case of
a change in the jurisdiction of its Applicable Lending Office, such change would
not be disadvantageous to such Agent or Lender or contrary to Agent’s or such
Lender’s normal banking practices.

(c) Refunds. If Agent or any Lender shall become aware that it is entitled to
receive a refund in respect of Taxes as to which it has been indemnified by
Borrower pursuant to this Paragraph 2.12, it shall promptly notify Borrower of
the availability of such refund and shall, within thirty (30) days after receipt
of a request by Borrower, apply for such refund at Borrower’s expense. If Agent
or any Lender, as applicable, receives a refund in respect of any Taxes as to
which it has been indemnified by Borrower pursuant to this Paragraph 2.12, it
shall promptly repay such refund to Borrower (to the extent of amounts that have
been paid by Borrower under this Paragraph 2.12 with respect to such refund),
net of all out-of-pocket expenses (including taxes imposed with respect to such
refund) of Agent or such Lender, as applicable, and without interest; provided,
however, that Borrower, upon the request of Agent or such Lender, as applicable,
agrees to return such refund (plus penalties, interest or other charges) to
Agent or such Lender in the event Agent or such Lender is required to repay such
refund.

 

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(d) Nondiscrimination. Each Lender agrees that, in the event that it submits any
demand for payment under this Paragraph 2.12, it shall, as part of making such
demand, certify to Borrower that, to the best of such Lender’s knowledge, it is
concurrently making similar demands of other customers similarly situated.

(e) Tax Returns. Nothing contained in this Paragraph 2.12 shall require Agent or
any Lender to make available any of its tax returns (or any other information
relating to its taxes which it deems to be confidential).

2.13 Funding Loss Indemnification. If Borrower shall (a) repay, prepay or
convert any LIBOR Loan or LIBOR Portion on any day other than the last day of an
Interest Period therefor (whether a scheduled payment, an optional prepayment or
conversion, a mandatory prepayment or conversion, a payment upon acceleration or
otherwise), except for a prepayment required pursuant to Subparagraph 2.09(b) or
Subparagraph 2.11(b), (b) fail to borrow any LIBOR Loan or LIBOR Portion for
which a Notice of Borrowing has been delivered to Agent (whether as a result of
the failure to satisfy any applicable conditions or otherwise) or (c) fail to
convert any Revolving Loans into LIBOR Loans or any Portion of the Term Loan
Borrowing into a LIBOR Portion in accordance with a Notice of Loan Conversion
delivered to Agent (whether as a result of the failure to satisfy any applicable
conditions or otherwise), Borrower shall, upon demand by any Lender, reimburse
such Lender and hold such Lender harmless for all costs and net losses incurred
by such Lender as a result of such repayment, prepayment or failure. Borrower
understands that such costs and losses may include, without limitation, losses
incurred by a Lender as a result of funding and other contracts entered into by
such Lender to fund a LIBOR Loan or LIBOR Portion. Each Lender demanding payment
under this Paragraph 2.13 shall deliver to Borrower, with a copy to Agent, a
certificate setting forth the amount of costs and losses for which demand is
made, which certificate shall set forth in reasonable detail the basis for the
calculation of the amount demanded. Such a certificate so delivered to Borrower
shall constitute prima facie evidence of such costs and losses.

2.14 Replacement of Affected Lenders and Defaulting Lenders. At any time any
Lender is an Affected Lender or a Defaulting Lender, Agent may replace such
Lender as a party to this Agreement with one or more other bank(s) or financial
institution(s) reasonably satisfactory to Agent, such bank(s) or financial
institution(s) to have commitments in such amounts as shall be reasonably
satisfactory to Agent. Upon notice from Agent, such Affected Lender or
Defaulting Lender shall assign, pursuant to an Assignment Agreement, its
Commitments, its Loans, its Notes and all of its other rights and obligations
hereunder to such replacement bank(s) or other financial institution(s) for a
purchase price equal to the sum of the principal amount of the Loans so
assigned, all accrued and unpaid interest thereon and its ratable share of all
fees to which it is entitled (except, in the case of a Defaulting Lender, any
amounts which would otherwise be payable to such Defaulting Lender pursuant to
Paragraph 2.13 as a result of such assignment being made prior to the last day
of an Interest Period for an outstanding LIBOR Loan or LIBOR Portion). Such
purchase price shall not be subject to the provisions of Subparagraph 2.10(b).
Any such assumption and purchase shall be made in accordance with the provisions
of Subparagraph 8.06(c) relating to assignments of Loans and Commitments.

 

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2.15 Security.

(a) Security Agreements, etc. The Obligations shall be secured by the following:

(i) Membership Interests Pledge Agreement(s), in form and content satisfactory
to Agent and Lenders in their sole discretion, pledging to Agent one hundred
percent (100%) of the membership interests in Borrower and each of Borrower’s
Subsidiaries, duly executed by Borrower and its Subsidiaries as applicable,
which membership interests shall not be subject to any other lien and
encumbrance (the “Membership Interests Pledge Agreement(s)”);

(ii) A Security Agreement in form and content satisfactory to Agent and Lenders
in their sole discretion, granting to Agent a security interest in all present
and future assets of the Borrower and its Subsidiaries, including, without
limitation, accounts receivable, inventory, machinery, equipment, contracts,
trademarks, copyrights, patents, license rights and general intangibles,
executed by Borrower and its Subsidiaries, as applicable (the “Security
Agreement”);

(b) Further Assurances. Borrower shall deliver to Agent such additional security
agreements, pledge agreements, lessor consents and estoppels (containing
appropriate lender protection language) and other instruments, agreements,
certificates, opinions and documents (including Uniform Commercial Code
financing statements and fixture filings and landlord waivers) as Agent may
reasonably request to:

(i) Grant, perfect, maintain, protect and evidence security interests in favor
of Agent, for the benefit of Agent and the Lenders, in any or all present and
future personal property of Borrower prior to the Liens or other interests of
any Person, except for Permitted Liens;

(ii) Grant, perfect, maintain, protect and evidence security interests in favor
of Agent, for the benefit of Agent and the Lenders, in any or all present and
future stock issued by Borrower prior to the Liens or other interests of any
Person; or

(iii) Otherwise establish, maintain, protect and evidence the rights provided to
Agent, for the benefit of Agent and the Lenders, pursuant to the Membership
Interests Pledge Agreement(s), the Security Agreement or any other Security
Document.

 

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SECTION III. CONDITIONS PRECEDENT.

3.01 Initial Conditions Precedent. The obligations of the Lenders to make the
Loans comprising the initial Borrowing and of Agent to issue the initial Letter
of Credit are subject to the conditions that:

(a) Receipt by Agent of the final executed Membership Interest Purchase
Agreement in form satisfactory to Agent in its sole discretion, together with
evidence that all conditions precedent to the Membership Interest Purchase
Agreement have been satisfied, including, but not limited to, receipt of all
required governmental approvals;

(b) Satisfactory review and acceptance of all environmental due diligence on all
assets owned or to be owned by Borrower, including the Acquired Assets, which
environmental due diligence shall include (i) a review of environmental
indemnities from Seller, (ii) review of all insurance coverage of Borrower
related to environmental risk, (iii) review of Borrower’s corporate
environmental policy, procedures and response protocols pertaining to the
operational business risk, identifying current company standards and customary
commercial practices within the industry to be performed by a qualified
environmental consultant, (iv) delivery and subsequent review of environmental
reports and/or investigations of all of the assets of Borrower, including the
Acquired Assets, completed by a qualified environmental consultant acceptable to
Agent, which reports and/or investigations may be reviewed by Agent’s
environmental consultants;

(c) Delivery by Borrower to Agent of due diligence procedures, satisfactory to
Agent in its sole discretion, with respect to the validation of the Acquisition
income statement supporting the historical EBITDA, revenue, cost of sales, and
operating expenses of the Acquired Assets (the “Agreed Upon Procedures”);

(d) Delivery to, and satisfactory review by, Agent and its counsel of due
diligence information from Borrower regarding litigation, tax (including tax
treatment of Acquired Assets), accounting, labor, insurance, pension liabilities
(actual or contingent), real estate leases, material contracts, debt agreements,
property ownership, environmental matters, including but not limited to
environmental liabilities to Lenders from Borrower, contingent liabilities and
management of Borrower and its Subsidiaries;

(e) Delivery to, and satisfactory review by, Agent of all insurance policies
issued to Borrower by insurance companies reasonably acceptable to Agent;

(f) Borrower shall have delivered to Agent, at Borrower’s sole expense, an
opinion of legal counsel in form and content satisfactory to Agent to the effect
that (i) the Borrower and its Subsidiaries have due authorization to executed
and deliver each of the Loan Documents, (ii) each of the Loan Documents are
legal, valid and binding instruments enforceable against the makers thereof in
accordance with their respective terms, (iii) such other matters incident to the
transactions contemplated hereby, as Agent may reasonably request;

(g) Borrower shall have delivered to Agent, on or prior to the Closing Date,
each item listed in Schedule 3.01, each in form and substance reasonably
satisfactory to Agent and Lenders and with sufficient copies for Agent and each
Lender;

(h) No event or condition which is reasonably likely to have a Material Adverse
Effect shall have occurred since December 31, 2012 and be continuing on the date
of such initial Borrowing or Letter of Credit; and

(i) The absence of any material disruption of, or a material change in
conditions in the financial, banking or capital markets which Agent, in its sole
discretion, deems material in connection with the syndication of the Senior
Credit Facilities.

 

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3.02 Conditions Precedent to Each Credit Event. The occurrence of each Credit
Event (including the initial Borrowing and the initial Letter of Credit) is
subject to the further conditions that:

(a) Borrower shall have delivered to Agent the Notice of Borrowing, Notice of
Loan Conversion, Notice of Interest Period Selection or LC Application, as the
case may be, for such Credit Event in accordance with this Agreement; and

(b) On the date such Credit Event is to occur and after giving effect to such
Credit Event, the following shall be true and correct:

(i) The representations and warranties of Borrower set forth in the Credit
Documents are true and correct in all material respects as if made on such date
(except for representations and warranties expressly made as of a specified
date, which shall be true in all material respects as of such date); and

(ii) No Default or Event of Default has occurred and is continuing or will
result from such Credit Event.

The submission by Borrower to Agent of each Notice of Borrowing, each Notice of
Conversion (other than a notice for a conversion to a Base Rate Loan or a Base
Rate Portion), each Notice of Interest Period Selection and each LC Application
shall be deemed to be a representation and warranty by Borrower as of the date
thereon as to the above.

 

SECTION IV. REPRESENTATIONS AND WARRANTIES.

4.01 Borrower’s Representations and Warranties. In order to induce Agent and the
Lenders to enter into this Agreement, Borrower hereby represents and warranties
to Agent and the Lenders as follows:

(a) Due Organization, Qualification, etc. Borrower (i) is a limited liability
company duly organized, validly existing and in good standing under the laws of
its state of organization; (ii) has the power and authority to own, lease and
operate its properties and carry on its business as now conducted; and (iii) is
duly qualified, licensed to do business and in good standing as a foreign
limited liability company in each jurisdiction where the failure to be so
qualified or licensed is reasonably likely to have a Material Adverse Effect.

(b) Authority. The execution, delivery and performance by Borrower of each
Credit Document to be executed by Borrower and the consummation of the
transactions contemplated thereby (i) are within the corporate power of Borrower
and (ii) have been duly authorized by all necessary corporate actions on the
part of Borrower.

 

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(c) Enforceability. Each Credit Document executed, or to be executed, by
Borrower has been, or will be, duly executed and delivered by Borrower and
constitutes, or will constitute, a legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms, except as
limited by bankruptcy, insolvency or other laws of general application relating
to or affecting the enforcement of creditors’ rights generally and general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).

(d) Non Contravention. The execution and delivery by Borrower of the Credit
Documents executed by Borrower and the performance and consummation of the
transactions contemplated thereby do not (i) violate any Requirement of Law
applicable to Borrower; (ii) violate any material provision of, or result in the
material breach or the acceleration of, or entitle any other Person to
accelerate (whether after the giving of notice or lapse of time or both), any
Contractual Obligation of Borrower; or (iii) result in the creation or
imposition of any Lien (or the obligation to create or impose any Lien) upon any
property, asset or revenue of Borrower (except such Liens as may be created in
favor of Agent pursuant to this Agreement or the other Credit Documents).

(e) Approvals. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Authority or other Person
(including, without limitation, the shareholders of any Person) is required in
connection with the execution and delivery of the Credit Documents executed by
Borrower and the performance and consummation of the transactions contemplated
thereby except for filings necessary to perfect the security interests granted
pursuant to the Credit Documents.

(f) No Violation or Default. Neither Borrower nor any of Borrower’s Subsidiaries
is in violation of or in default with respect to (i) any Requirement of Law
applicable to such Person or (ii) any Contractual Obligation of such Person,
where, in each case, such violation or default is reasonably likely to have a
Material Adverse Effect. Without limiting the generality of the foregoing,
neither Borrower nor any of Borrower’s Subsidiaries (A) is in violation of any
Environmental Laws, (B) has any liability under any Environmental Laws or
(C) has received written notice or other written communication of an
investigation or, to the knowledge of Borrower, is under investigation by any
Governmental Authority having authority to enforce Environmental Laws, where, in
each case, such violation, liability or investigation is reasonably likely to
have a Material Adverse Effect. No Event of Default or Default has occurred and
is continuing.

(g) Litigation. No actions, suits, proceedings or investigations are pending or,
to the knowledge of Borrower, threatened against Borrower or any of Borrower’s
Subsidiaries at law or in equity in any court or before any other Governmental
Authority which (i) is reasonably likely (alone or in the aggregate) to have a
Material Adverse Effect or (ii) seeks to enjoin, either directly or indirectly,
the execution, delivery or performance of the Credit Documents or the
transactions contemplated thereby.

(h) Title to Property; Leases. Borrower has good and sufficient title to all
properties that individually or in the aggregate are material, including all
such properties reflected in the most recent financial statements delivered to
Agent or purported to have been acquired by Borrower after said date (except as
sold or otherwise disposed of in the ordinary course of business), in each case
free and clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are material are valid and subsisting and are
in full force and effect in all material respects.

 

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(i) Financial Statements. The Financial Statements of Borrower which have been
delivered to Agent, (i) are in accordance with the books and records of
Borrower, which have been maintained in accordance with good business practice;
(ii) have been prepared in conformity with GAAP; and (iii) fairly present the
financial condition and results of operations of Borrower in all material
respects as of the date thereof and for the periods covered thereby. As of the
date of each of the Financial Statements of Borrower delivered pursuant to
clause (ii) or (iii) of Subparagraph 5.01(a), neither Borrower nor any of
Borrower’s Subsidiaries has any contingent obligations, liability for taxes or
other outstanding obligations which are reasonably likely, in the aggregate, to
have a Material Adverse Effect, except as disclosed in such Financial
Statements.

(j) No Agreements to Sell Assets; Etc. Neither Borrower nor any of Borrower’s
Subsidiaries has any legal obligation, absolute or contingent, to any Person to
sell the assets of Borrower or any of Borrower’s Subsidiaries (other than sales
in the ordinary course of business), or to effect any merger, consolidation or
other reorganization of Borrower or any of Borrower’s Subsidiaries or to enter
into any agreement with respect thereto.

(k) Employee Benefit Plans.

(i) Based on the latest valuation of each Employee Benefit Plan that is subject
to Title IV or section 302 of ERISA or Code Section 412 that either Borrower or
any ERISA Affiliate maintains or contributes to, or has any obligation under
(which occurred within twelve months of the date of this representation), the
aggregate benefit liabilities of such plan within the meaning of § 4001 of ERISA
did not exceed the aggregate value of the assets of such plan to the extent that
it is likely to have a Material Adverse Effect. Neither Borrower nor any ERISA
Affiliate has any liability with respect to any post retirement benefit under
any Employee Benefit Plan which is a welfare plan (as defined in section 3(1) of
ERISA), other than liability for health plan continuation coverage described in
Part 6 of Title I(B) of ERISA, which liability for health plan contribution
coverage is not reasonably likely to have a Material Adverse Effect.

(ii) Each Employee Benefit Plan complies, in both form and operation, in all
material respects, with its terms, ERISA and the Code, and no condition exists
or event has occurred with respect to any such plan which would result in the
incurrence by either Borrower or any ERISA Affiliate of any material liability,
fine or penalty which is likely to have a Material Adverse Effect. No Employee
Benefit Plan is being audited or investigated by any government agency or is
subject to any pending or threatened claim or suit. Neither Borrower nor any
ERISA Affiliate has nor, to the knowledge of Borrower or any ERISA Affiliate,
has any fiduciary of any Employee Benefit Plan engaged in a prohibited
transaction under section 406 of ERISA or section 4975 of the Code which is
reasonably likely to have a Material Adverse Effect.

(iii) Neither Borrower nor any ERISA Affiliate has any material contingent
obligations to any Multiemployer Plan which is likely to have a Material Adverse
Effect. Neither Borrower nor any ERISA Affiliate has incurred any material
liability (including secondary liability) to any Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan under
Section 4201 of ERISA or as a result of a sale of assets described in
Section 4204 of ERISA. Neither Borrower nor any ERISA Affiliate has been
notified that any Multiemployer Plan is in reorganization or insolvent under and
within the meaning of Section 4241 or Section 4245 of ERISA or that any
Multiemployer Plan intends to terminate or has been terminated under
Section 4041A of ERISA.

 

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(l) Hazardous Materials.

(i) Except as set forth in those certain reports listed on Schedule 7.05
attached hereto, and except as would not reasonably be expected to result in a
Material Adverse Effect, the real property owned and/or leased by Borrower is
not and has not been a site for the use, generation, manufacture, storage,
treatment, release, threatened release, discharge, disposal, transportation or
presence of any oil, flammable explosives, asbestos, urea formaldehyde
insulation, radioactive materials, hazardous wastes, toxic or contaminated
substances or similar materials, including, without limitation, any substances
which are defined as “hazardous substances”, “hazardous wastes”, “hazardous
materials”, “toxic substances”, “wastes”, “regulated substances”, “industrial
solid wastes”, or “pollutants” under the Hazardous Materials Laws, as described
below, and/or other applicable environmental laws, ordinances and regulations
(collectively, the “Hazardous Materials”). “Hazardous Materials” shall not
include commercially reasonable amounts of such materials used in the ordinary
course of operation of the real property owned and/or leased by Borrower which
are used and stored in accordance with all applicable environmental laws,
ordinances and regulations.

(ii) Except as set forth in those certain reports listed on Schedule 7.05
attached hereto, and except as would not be reasonably expected to result in a
Material Adverse Effect, the real property owned and/or leased by Borrower is in
compliance with all laws, ordinances and regulations relating to Hazardous
Materials (“Hazardous Materials Laws”), including, without limitation: the Clean
Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water Pollution
Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource
Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et
seq.; the Comprehensive Environment Response, Compensation and Liability Act of
1980, as amended (including the Superfund Amendments and Reauthorization Act of
1986, “CERCLA”), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control
Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and
Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine
Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the
Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.; the Hawaii
Occupational Safety and Health Law, Haw. Rev. Stat. Chapter 392, as amended;
Haw. Rev. Stat. Chapters 128D (Environmental Response), 149A (Pesticides), 195D
(Conservation), 340A (Solid Waste), 340E (Safe Drinking Water), 342B (Air
Pollution Control), 342D (Water Pollution), 342F (Noise Pollution), 342H (Solid
Waste Pollution), 342J (Hazardous Waste), 342L (Underground Storage Tanks), and
342P (Asbestos), all as amended; and all comparable state and local laws, laws
of other jurisdictions or orders and regulations.

(iii) There are no claims or actions (“Hazardous Materials Claims”) pending or,
to the knowledge of Borrower, threatened against Borrower, or the real property
owned or, to the knowledge of Borrower, leased by Borrower by any governmental
entity or agency or by any other person or entity relating to Hazardous
Materials or pursuant to the Hazardous Materials Laws, which is reasonably
likely (alone or in the aggregate) to have a Material Adverse Effect.

 

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(m) Governmental Charges. Borrower and Borrower’s Subsidiaries have filed or
caused to be filed all material tax returns which are required by law to be
filed by them. Borrower and Borrower’s Subsidiaries have paid, or made provision
for the payment of, all taxes and other Governmental Charges which have become
due pursuant to said returns or otherwise, except such Governmental Charges, if
any, which are being contested in good faith and as to which adequate reserves
(determined in accordance with GAAP) have been provided or which are not
reasonably likely to have a Material Adverse Effect if unpaid.

(n) Margin Stock. Borrower owns no Margin Stock which, in the aggregate, would
constitute a substantial part of the assets of Borrower, and no proceeds of any
Loan and no Letter of Credit will be used to purchase or carry, directly or
indirectly, any Margin Stock or to extend credit, directly or indirectly, to any
Person for the purpose of purchasing or carrying any Margin Stock.

(o) Catastrophic Events. Neither Borrower nor any of Borrower’s Subsidiaries and
none of their properties is affected by any fire, explosion, accident, drought,
storm, hail, earthquake, embargo, act of God or other casualty that is
reasonably likely to have a Material Adverse Effect. As of the Closing Date,
there are no disputes presently subject to grievance procedure, arbitration or
litigation under any of the collective bargaining agreements, employment
contracts or employee welfare or incentive plans to which Borrower or any of
Borrower’s Subsidiaries is a party, and there are no strikes, lockouts, work
stoppages or slowdowns, or, to the best knowledge of Borrower, jurisdictional
disputes or organizing activities occurring or threatened which alone or in the
aggregate are reasonably likely to have a Material Adverse Effect.

(p) Accuracy of Information Furnished. None of the Credit Documents and none of
the other certificates, written statements or written information furnished to
Agent or any Lender by any officer of Borrower or any of Borrower’s Subsidiaries
in connection with the Credit Documents or the transactions contemplated thereby
contains or will contain any materially untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
therein, taken as a whole together with other written information so furnished,
in light of the circumstances under which they were made, not misleading.
Projections furnished by Borrower are and will be good faith projections of
Borrower based upon methods and data Borrower believes to be reasonable and
accurate at the time such projections were or are prepared. Agent and Lenders
expressly acknowledge, however, that projections are based upon estimates and
assumptions about circumstances and events that have not yet taken place and
that actual results may vary from projections.

4.02 Reaffirmation. Borrower shall be deemed to have reaffirmed, for the benefit
of Agent and Lenders, each representation and warranty contained in Paragraph
4.01 on and as of the date of each Credit Event (except for representations and
warranties expressly made as of a specified date, which shall be true as of such
date).

 

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SECTION V. COVENANTS.

5.01 Affirmative Covenants. Until the termination of this Agreement and the
satisfaction in full by Borrower of all Obligations (other than contingent
indemnification obligations and other provisions in the Credit Documents that
expressly survive the termination thereof), Borrower will comply, and will cause
compliance, with the following affirmative covenants, unless Majority Lenders
shall otherwise consent in writing:

(a) Financial Statements, Reports, etc. Borrower shall furnish to Agent for each
Lender (and Agent shall promptly thereupon furnish to each Lender) the
following, each in such form and such detail as Agent shall reasonably request:

(i) As soon as available and in no event later than forty-five (45) days after
the last day of each fiscal quarter of Borrower, a copy of the Financial
Statements of Borrower and Borrower’s Subsidiaries for such quarter and for the
fiscal year to date (prepared on a consolidated and consolidating basis),
certified by an Executive Officer of Borrower to present fairly the financial
condition, results of operations and other information reflected therein and to
have been prepared in accordance with GAAP (subject to normal year end audit
adjustments and the possible absence of footnotes);

(ii) As soon as available and in no event later than one-hundred and twenty
(120) days after the close of each fiscal year of Borrower, (A) copies of the
audited consolidated Financial Statements of Borrower and Borrower’s
Subsidiaries for such fiscal year, prepared by an accounting firm acceptable to
Agent, and (B) copies of the unqualified opinions (or qualified opinions
reasonably acceptable to Agent) and management letters delivered by such
accountants in connection with all such Financial Statements;

(iii) Contemporaneously with the quarterly and year-end Financial Statements
required by the foregoing clauses (i) and (ii), (A) a certificate of an
Executive Officer of Borrower in the form of Exhibit I, appropriately completed
(a “Compliance Certificate”) and (B) management’s discussion of Borrower’s
operations for the period covered by such Financial Statements, including a
comparison with Borrower’s operations for the corresponding quarter in the
immediately preceding fiscal year or with the immediately preceding fiscal year,
as the case may be, and, if requested by Agent, a budget variance analysis;

(iv) As soon as possible and in no event later than five (5) Business Days after
any officer of Borrower knows of the occurrence or existence of (A) any
Reportable Event under any Employee Benefit Plan or Multiemployer Plan; (B) any
litigation, suits or claims against Borrower or its Subsidiaries involving
potential monetary damages payable by Borrower or any of its Subsidiaries of
$1,000,000 or more (alone or in the aggregate) not covered by insurance; (C) any
other event or condition which is reasonably likely to have a Material Adverse
Effect; or (D) any Default or Event of Default; the statement of an Executive
Officer of Borrower setting forth details of such event, condition, Default or
Event of Default and the action which Borrower proposes to take with respect
thereto;

(v) At least thirty (30) days after the first day of each fiscal year of
Borrower, the consolidated operating budget of Borrower and its Subsidiaries for
such fiscal year, including quarterly cash flow projections and quarterly
projections of Borrower’s compliance with each of the covenants set forth in
Paragraph 5.03;

 

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(vi) Contemporaneously with the quarterly and year-end Financial Statements
required by the foregoing clauses (i) and (ii), a certificate of an Executive
Officer of Borrower which sets forth the amount of any membership interest
repurchases from members of Borrower or any distributions paid to members of
Borrower during the period covered by such Financial Statements;

(vii) Such other information relating to compliance by Borrower with the terms
of the Credit Documents to which it is a party as any Lender through Agent may
from time to time reasonably request; and

(viii) Such other certificates, opinions, statements, documents and information
relating to the operations or condition (financial or otherwise) of Borrower or
any of its Subsidiaries, and compliance by Borrower with the terms of this
Agreement and the other Credit Documents as any Lender through Agent may from
time to time reasonably request.

(b) Books and Records. Borrower and its Subsidiaries shall at all times keep
proper books of record and account in accordance with good business practices
and GAAP.

(c) Inspections. Borrower and its Subsidiaries shall permit personnel of Agent
or any Lender and, if no Event of Default has occurred and is continuing, with
the consent of Borrower (which consent shall not be unreasonably withheld or
delayed), any Person designated by Agent or any Lender, upon reasonable notice
and during normal business hours, to visit and inspect (which inspection shall
not include any invasive environmental sampling unless required by law) any of
the properties and offices of Borrower and its Subsidiaries, to examine the
books and records of Borrower and its Subsidiaries and make copies thereof and
to discuss the affairs, finances and accounts of Borrower and its Subsidiaries
with, and to be advised as to the same by, their officers, auditors and
accountants, all at such times and intervals as Agent or any Lender may
reasonably request; provided, however, that (i) Agent and Lenders may not
inspect the accounts and inventory of Borrower and its Subsidiaries more than
once in each calendar year unless an Event of Default has occurred, (ii) Agent
and Lenders shall use reasonable efforts to coordinate their visits and
inspections so as not to be unreasonably burdensome to Borrower and (iii) any
discussions between a Lender or Agent and Borrower’s auditors or accountants
shall be with the right of an officer of Borrower to be in attendance.

(d) Insurance. Borrower and its Subsidiaries shall:

(i) Carry and maintain insurance of the types and in the amounts customarily
carried from time to time during the term of this Agreement by others engaged in
substantially the same business as such Person and operating in the same
geographic area as such Person, including, but not limited to, fire, public
liability, property damage and worker’s compensation;

(ii) Carry and maintain each policy for such insurance with a company which is
rated B+ or better by A.M. Best and Company at the time such policy is placed
and at the time of each annual renewal thereof, and which insurer is reasonably
satisfactory to the Agent;

(iii) Deliver to Agent from time to time, as Agent may request, schedules
setting forth all insurance then in effect.

 

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(e) Governmental Charges. Borrower and its Subsidiaries shall promptly pay and
discharge when due all taxes and other Governmental Charges prior to the date
upon which penalties accrue thereon which, if unpaid, is reasonably likely to
have a Material Adverse Effect, except such taxes and other Governmental Charges
as may in good faith be contested or disputed, or for which arrangements for
deferred payment have been made, provided that in each such case appropriate
reserves are maintained in accordance with GAAP.

(f) Use of Proceeds. Borrower shall use the proceeds of the Loans and the
Letters of Credit only for the respective purposes set forth in Subparagraph
2.01(g), Subparagraph 2.02(g), and Subparagraph 2.03(h). Borrower shall not use
any part of the proceeds of any Loan or any Letter of Credit, directly or
indirectly, for the purpose of purchasing or carrying any Margin Stock or for
the purpose of purchasing or carrying or trading in any securities under such
circumstances as to involve Borrower, any Lender Party or any Agent in a
violation of Regulations G, T, U or X issued by the Federal Reserve Board.

(g) General Business Operations. Each of Borrower and its Subsidiaries shall
(i) preserve and maintain its existence as a limited liability company and all
of its material rights, privileges and franchises reasonably necessary to the
conduct of its business (provided that Borrower may take any action permitted by
Subparagraph 5.02(d) and may dissolve or liquidate any Subsidiary if such
dissolution or liquidation is not reasonably likely to have a Material Adverse
Effect), (ii) conduct its business activities in compliance with all
Requirements of Law and Contractual Obligations applicable to such Person, the
violation of which is reasonably likely to have a Material Adverse Effect,
(iii) keep all property useful and necessary in its business in good working
order and condition, ordinary wear and tear excepted, and (iv) maintain its
chief executive office and principal place of business in Hawaii.

(h) Separate Operations. Borrower shall take all reasonable steps necessary to
maintain its status as a separate legal entity and to make it manifest to third
parties that Borrower is an entity with assets and liabilities separate and
distinct from its Subsidiaries, and any other Affiliates. Without limiting the
generality of the foregoing, Borrower shall maintain separate bank accounts from
its Affiliates and shall not commingle its funds with the funds of its
Affiliates.

(i) Certain Post Closing Matters. After the Closing Date, Borrower shall cause
all deposit and cash management accounts to be maintained with Agent (provided
that any credit card processing service and lock box service accounts may be
maintained with other financial institutions if all balances in each such
account are swept daily into an account maintained with Agent).

 

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(j) Annual Bank Meetings. At least once during each fiscal year of Borrower,
Borrower shall conduct a bank meeting (either telephonically or in person) with
representatives of Agent and each of the Lenders wherein representatives of
Borrower will report on the financial condition and results of operations of
Borrower and its Subsidiaries for the immediately preceding period and report on
such other matters as Agents and such Lenders may reasonably request.

(k) Compliance With U.S.A. Patriot Act and Anti-Terrorism Laws. Agent and
Lenders hereby notify Borrower that pursuant to the requirements of the U.S.A.
Patriot Act (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the
“Patriot Act”), and their respective policies and practices, Agent and Lenders
are required to obtain, verify and record certain information and documentation
that identifies Borrower and each principal of Borrower, which information
includes the name and address of Borrower and each such principal and such other
information that will allow Lender to identify such party in accordance with the
Patriot Act. Borrower is not, and will not become a person (individually, a
“Prohibited Person” and collectively, “Prohibited Persons”) either listed on the
specially Designated Nationals and Blocked Persons List maintained by the Office
of Foreign Asset Control, U.S. Department of the Treasury (the “OFAC List”) or
otherwise subject to any other prohibition or restriction imposed by laws,
regulations or executive orders, including Executive Order No. 13224,
administered by the Office of the Foreign Asset Control, U.S. Department of the
Treasury (collectively the “OFAC Rules”). Borrower (i) is not and will not
become owned or controlled by a Prohibited Person, (ii) is not acting and will
not act for or on behalf of a Prohibited Person, (iii) is not otherwise
associated with and will not become associated with a Prohibited Person, (iv) is
not providing and will not provide material, financial or technological support
or other services to or in support of acts of terrorism of a Prohibited Person.
Borrower will not transfer any interest in Borrower to, or enter into a Lease
with, any Prohibited Person. Borrower will not enter into any Lease or undertake
any activities related to this Agreement in violation of the Federal Bank
Secrecy Act, 31 U.S.C. § 5311, et seq. or any federal or state laws, including
but not limited to, 18 U.S.C. §§ 1956, 1957 and 1960 prohibiting money
laundering and terrorist financing (collectively, “Anti-Money Laundering Laws”).
Borrower shall provide information as Agent or Lenders may require from time to
time to permit Agent and Lenders to satisfy their obligations under the Patriot
Act, the OFAC Rules or the Anti-Money Laundering Laws. Borrower shall
immediately notify Agent if Borrower has knowledge that any tenant, any
principal or any member or beneficial owner of Borrower or any principal of
Borrower is or becomes a Prohibited Person or (A) is convicted of, (B) pleads
nolo contendere to (C) is indicted on or (D) is arraigned and held over on
charges under the Anti-Money Laundering Laws or involving money laundering or
predicate crimes to money laundering.

5.02 Negative Covenants. Until the termination of this Agreement and the
satisfaction in full by Borrower of all Obligations (other than contingent
indemnification obligations and other provisions in the Credit Documents that
expressly survive the termination thereof), Borrower will comply, and will cause
compliance, with the following negative covenants, unless Majority Lenders shall
otherwise consent in writing:

(a) Indebtedness. Neither Borrower nor any of its Subsidiaries shall create,
incur, assume or permit to exist any Indebtedness except for the following
(“Permitted Indebtedness”):

(i) The Obligations of Borrower under the Credit Documents;

 

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(ii) Indebtedness under purchase money loans and Capital Leases incurred by
Borrower or any of its Subsidiaries to finance the acquisition by such Person of
real property, fixtures or equipment provided that in each case, (A) such
Indebtedness is incurred by such Person at the time of, or not later than thirty
(30) days after, the acquisition by such Person of the property so financed,
(B) such Indebtedness does not exceed the purchase price of the property so
financed, and (C) the aggregate principal amount outstanding of such
Indebtedness shall not exceed $1,000,000 at any time;

(iii) Indebtedness arising from the endorsement of instruments for collection in
the ordinary course of Borrower’s or a Subsidiary’s business;

(iv) Indebtedness of Borrower and its Subsidiaries under interest rate
protection, currency swap and foreign exchange arrangements, provided that all
such arrangements are entered into in connection with bona fide hedging
operations and not for speculation;

(v) Indebtedness of Borrower and its Subsidiaries with respect to surety,
appeal, indemnity, performance or other similar bonds in the ordinary course of
business;

(vi) Indebtedness of Borrower and its Subsidiaries under initial or successive
refinancings of any Indebtedness permitted by clause (ii) above, provided that
(A) the principal amount of any such refinancing does not exceed the principal
amount of the Indebtedness being refinanced, and (B) the material terms and
provisions of any such refinancing (including maturity, redemption, prepayment,
default and subordination provisions) are no less favorable to Lenders than the
Indebtedness being refinanced;

(vii) Guaranty Obligations of Borrower for the obligations of buying
organizations or purchasing agents acting on behalf of Borrower and its
Subsidiaries for purchases of inventory in the ordinary course of Borrower’s and
its Subsidiaries’ business, provided that the obligations guaranteed by Borrower
arise only in connection with such purchases of inventory on behalf of Borrower
and its Subsidiaries;

(viii) Indebtedness of Borrower and its Subsidiaries under Capital Leases of
real property;

(ix) Indebtedness of Borrower and its Subsidiaries for trade accounts payable,
provided that such accounts arise in the ordinary course of business;

(x) Indebtedness of Borrower and its Subsidiaries for expense accruals in the
ordinary course of business;

(xi) Indebtedness of Borrower and its Subsidiaries with respect to any financed
portion of insurance policy premiums, provided that such financed portion is not
past due; and

(xii) Other Indebtedness not included in 5.02(a)(i)-(xi) above of Borrower and
its Subsidiaries not exceeding $100,000 in aggregate amount at any time.

 

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(b) Liens. Neither Borrower nor any of its Subsidiaries shall create, incur,
assume or permit to exist any Lien on or with respect to any of its assets or
property of any character, whether now owned or hereafter acquired, except for
the following (“Permitted Liens”):

(i) Liens in favor of Agent securing the Obligations;

(ii) Liens for taxes or other governmental charges not at the time delinquent or
thereafter payable without penalty or being contested in good faith, provided
that adequate reserves for the payment thereof have been established in
accordance with GAAP;

(iii) Liens of carriers, warehousemen, mechanics, materialmen, vendors, and
landlords and other similar Liens imposed by law incurred in the ordinary course
of business for sums not overdue or being contested in good faith, provided that
adequate reserves for the payment thereof have been established in accordance
with GAAP;

(iv) Deposits under workers’ compensation, unemployment insurance and social
security laws or to secure the performance of bids, tenders, contracts (other
than for the repayment of borrowed money) or leases, or to secure statutory
obligations of surety or appeal bonds or to secure indemnity, performance or
other similar bonds in the ordinary course of business;

(v) Zoning restrictions, easements, rights-of-way, title irregularities and
other similar encumbrances, which alone or in the aggregate are not substantial
in amount and do not materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business of Borrower or
any of its Subsidiaries;

(vi) Liens on property existing at the time such property is acquired by
Borrower or any of its Subsidiaries provided that, in each case, such Lien was
not created in contemplation of such acquisition by Borrower or such Subsidiary;

(vii) Liens on the property or assets of any Subsidiary of Borrower in favor of
Borrower or any other Subsidiary of Borrower;

(viii) Liens securing the Indebtedness of Borrower and its Subsidiaries under
operating leases and Capital Leases, provided that, in the case of each lease,
such Lien (A) does not extend to any property other than the property leased
pursuant to such lease and (B) does not secure any Indebtedness other than the
Indebtedness under such lease;

(ix) Banker’s Liens and similar Liens (including set-off rights) in respect of
bank deposits;

(x) Liens created under fuel terminalling and storage agreements entered into in
the normal course of business;

(xi) Liens arising out of any conditional sale, title retention, consignment or
other similar arrangements for the sale of goods entered into by Borrower or any
of its Subsidiaries in the ordinary course of business to the extent such Liens
do not attach to any assets other than the goods subject to such arrangements;

 

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(xii) Liens (A) incurred in the ordinary course of business in connection with
the purchase or shipping of goods or assets (or the related assets and proceeds
thereof), which Liens are in favor of the seller or shipper of such goods or
assets and only attach to such goods or assets, and (B) in favor of customs and
revenue authorities arising as a matter of law to secure payment of customs
duties in connection with the importation of goods; and

(xiii) Liens incurred in the ordinary course of business in connection with the
financing of insurance premiums, to the extent of such financing is permitted
under this Agreement.

(c) Asset Dispositions. Neither Borrower nor any of its Subsidiaries shall sell,
lease, transfer or otherwise dispose of all or any substantial part of its
assets or property, whether now owned or hereafter acquired, except for the
following:

(i) Sales of inventory by Borrower and its Subsidiaries in the ordinary course
of their businesses;

(ii) Sales of surplus, damaged, worn or obsolete equipment;

(iii) Sales or other dispositions of Investments permitted by Subparagraph
5.02(f) for not less than fair market value;

(iv) Sales or assignments of defaulted receivables to a collection agency in the
ordinary course of business;

(v) Subleases and leases of real property, provided that each such sublease or
lease (A) shall be for a fair market rent and (B) shall have other terms which
then would prevail in the market for similar transactions between unaffiliated
parties dealing at arm’s length;

(vi) Any sale and leaseback of assets or property, provided that, in each case,
(A) the sale is for fair market value, (B) the lease is for a fair market rent
for sales and leasebacks, (C) the other terms of the transaction are terms which
then would prevail in the market for similar transactions between unaffiliated
parties dealing at arm’s length, and (D) the aggregate fair market value
(determined at the time of the applicable sale) of all assets or property
subject to such sales shall not exceed $1,000,000;

(vii) Licenses by Borrower of its trademarks, in the ordinary course of its
business, provided that, in each case, (A) the license is for a fair market
royalty, (B) the other terms of the transaction are terms which then would
prevail in the market for similar transactions between unaffiliated parties
dealing at arm’s length, (C) all steps necessary to perfect Agent’s security
interest in the license agreement, royalty payments and other rights of Borrower
in connection therewith have been taken and (D) such license does not materially
impair Borrower’s right to use the name “HIE Retail” in Hawaii or the value of
such name to Borrower in Hawaii; and

 

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(viii) Other sales, leases, transfers and disposals of assets, provided that the
aggregate value of all such property (based upon the greater of the fair market
or book value of such property) so sold, leased, transferred or otherwise
disposed of in an fiscal year does not exceed $500,000 per year.

(d) Change in Control. There shall not be any change in Control of Borrower or
any of its subsidiaries.

(e) Mergers, Acquisitions, Etc. Neither Borrower nor any of its Subsidiaries
shall consolidate with or merge into any other Person or permit any other Person
to merge into it, acquire or establish any Subsidiary or acquire all or
substantially all of the assets of any other Person, except that:

(i) Any wholly owned Subsidiary of Borrower (or any Subsidiary which is
wholly-owned except for any voting stock legally required to be held by another
Person which is less than one percent (1%) in aggregate of the Subsidiary’s
outstanding voting stock) may merge into any other such Subsidiary of Borrower;
and

(ii) Any Subsidiary may merge into Borrower provided that Borrower is the
surviving corporation and so long as no Event of Default exists at the time of
such merger or would result therefrom.

(f) Investments. Neither Borrower nor any of its Subsidiaries shall make any
Investment except the following:

(i) Direct obligations of, or obligations the principal and interest on which
are unconditionally guaranteed by, the United States of America or obligations
of any agency of the United States of America to the extent such obligations are
backed by the full faith and credit of the United States of America, in each
case maturing within one year from the date of acquisition thereof;

(ii) Certificates of deposit maturing within one year from the date of
acquisition thereof issued by a commercial bank or trust company organized under
the laws of the United States of America or a state thereof or that is a Lender,
provided that (A) such deposits are denominated in Dollars, (B) such bank or
trust company has capital, surplus and undivided profits of not less than
$100,000,000 and (C) such bank or trust company has certificates of deposit or
other debt obligations rated at least A-1 (or its equivalent) by Standard and
Poor’s Ratings Group or P-1 (or its equivalent) by Moody’s Investors Service,
Inc.;

(iii) Open market commercial paper maturing within 270 days from the date of
acquisition thereof issued by a corporation organized under the laws of the
United States of America or a state thereof, provided such commercial paper is
rated at least A-1 (or its equivalent) by Standard and Poor’s Ratings Group or
P-1 (or its equivalent) by Moody’s Investors Service, Inc.; and

 

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(iv) Any repurchase agreement entered into with a commercial bank or trust
company organized under the laws of the United States of America or a state
thereof or that is a Lender, provided that (A) such bank or trust company has
capital, surplus and undivided profits of not less than $100,000,000, (B) such
bank or trust company has certificates of deposit or other debt obligations
rated at least A-1 (or its equivalent) by Standard and Poor’s Ratings Group or
P-1 (or its equivalent) by Moody’s Investors Service, Inc., (C) the repurchase
obligations of such bank or trust company under such repurchase agreement are
fully secured by a perfected security interest in a security or instrument of
the type described in clause (i), (ii) or (iii) above and (D) such security or
instrument so securing the repurchase obligations has a fair market value at the
time such repurchase agreement is entered into of not less than 100% of such
repurchase obligations.

(g) Dividends, Redemptions, Etc. Borrower or any of its Subsidiaries may pay
dividends or make any distributions on its Equity Securities; purchase, redeem,
retire, defease or otherwise acquire for value any of its Equity Securities;
return any capital to any holder of its Equity Securities as such; make any
distribution of assets, Equity Securities, obligations or securities to any
holder of its Equity Securities as such; or set apart any sum for any such
purpose as long as the payment of such dividends, redemption or other
transaction:

(i) Shall not result in a change of Control of Borrower; and

(ii) Shall not result in Borrower failing to be in compliance with any of the
provisions set forth in Paragraph 5.02 of this Credit Agreement.

(h) Change in Business. Neither Borrower nor any of its Subsidiaries shall
engage, either directly or indirectly through Affiliates, in any business
substantially different in any material respect from its present business.

(i) ERISA. Neither Borrower nor any ERISA Affiliate shall (i) adopt or institute
any defined benefit Employee Benefit Plan that is an employee pension benefit
plan within the meaning of Section 3(2) of ERISA, (ii) take any action which
will result in the partial or complete withdrawal, within the meanings of
sections 4203 and 4205 of ERISA, from a Multiemployer Plan, (iii) engage or
permit any Person to engage in any transaction prohibited by section 406 of
ERISA or section 4975 of the Code involving any Employee Benefit Plan or
Multiemployer Plan which would subject either Borrower or any ERISA Affiliate to
any tax, penalty or other liability including a liability to indemnify,
(iv) incur or allow to exist any accumulated funding deficiency (within the
meaning of section 412 of the Code or section 302 of ERISA), (v) fail to make
full payment when due of all amounts due as contributions to any Employee
Benefit Plan or Multiemployer Plan, (vi) fail to comply with the requirements of
section 4980B of the Code or Part 6 of Title I(B) of ERISA, or (vii) adopt any
amendment to any Employee Benefit Plan which would require the posting of
security pursuant to section 401(a)(29) of the Code, where singly or
cumulatively, the above would have a Material Adverse Effect.

(j) Transactions With Affiliates. Except as set forth on Schedule 5.02(i),
neither Borrower nor any of its Subsidiaries shall enter into any Contractual
Obligation with any Affiliate or engage in any other transaction with any
Affiliate except upon terms at least as favorable to Borrower or such Subsidiary
as an arms length transaction with unaffiliated Persons.

(k) Accounting Changes. Neither Borrower nor any of its Subsidiaries shall
change (i) its fiscal year (currently a calendar year) or (ii) its accounting
practices except as permitted by GAAP.

 

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5.03 Financial Covenants. Borrower shall maintain Borrower’s financial status in
accordance with the following:

(a) A maximum Leverage Ratio measured commencing on the Closing Date and
building up to a rolling four-quarter basis, as follows:

 

Period (during and as of last day of)

   Maximum Leverage Ratio

2013 Fiscal Year

   5.75 to 1.00

2014 Fiscal Year

   5.50 to 1.00

2015 Fiscal Year

   5.25 to 1.00

2016 Fiscal Year

   5.00 to 1.00

2017 Fiscal Year, and at all times thereafter

   4.75 to 1.00

(b) A minimum Fixed Charge Coverage Ratio of not less than 1.15:1.00, to be
measured commencing on the Closing Date and building up to a rolling four
quarter basis.

(c) The financial covenants shall be tested on a quarterly basis commencing with
fiscal quarter ending March 31, 2014 and calculated on a trailing four-quarter
basis. For the first full fiscal quarter following the Closing Date, all
financial covenants shall be calculated using the preceding quarter times 4 to
annualize. For the second full fiscal quarter following the Closing Date, all
financial covenants shall be calculated using the preceding two quarters times 2
to annualize. For the third full fiscal quarter following the Closing Date, all
financial covenants shall be calculated using the preceding three quarters times
1.33 to annualize.

 

SECTION VI. DEFAULT.

6.01 Events of Default. The occurrence or existence of any one or more of the
following shall constitute an “Event of Default” hereunder:

(a) Borrower (i) shall fail to pay when due any principal payment or any
Reimbursement Payment, (ii) fail to pay when due any interest payment or any
fees payable pursuant to Paragraph 2.07 and such failure shall continue for
three (3) Business Days after notice thereof has been given to Borrower by Agent
or (iii) shall fail to pay when due any other payment required under the terms
of this Agreement or any of the other Credit Documents and such failure shall
continue for five (5) Business Days after notice thereof has been given to
Borrower by Agent; or

(b) Borrower shall fail to observe or perform any other covenant, obligation,
condition or agreement contained in this Agreement or the other Credit Documents
and such failure shall continue for twenty (20) days after notice thereof has
been given to Borrower by Agent; or

 

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(c) Any written representation, warranty, certificate, information or other
statement (financial or otherwise) made or furnished by any officer of Borrower
to Agent or any Lender in or in connection with this Agreement or any of the
other Credit Documents shall be materially false, incorrect, incomplete or
misleading in any material respect when made or furnished; or

(d) Borrower or any of Borrower’s Subsidiaries shall (i) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian of itself or of
all or a substantial part of its property, (ii) be unable, or admit in writing
its inability, to pay its debts generally as they mature, (iii) make a general
assignment for the benefit of its or any of its creditors, (iv) be dissolved or
liquidated in full or in part (except for the dissolution of any of Borrower’s
Subsidiaries to the extent permitted by Subparagraph 5.01(g)), (v) become
insolvent (as such term may be defined or interpreted under any applicable
statute), (vi) commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or consent to any such relief or to the appointment of or taking possession of
its property by any official in an involuntary case or other proceeding
commenced against it, or (vii) take any action for the purpose of effecting any
of the foregoing; or

(e) Proceedings for the appointment of a receiver, trustee, liquidator or
custodian of Borrower or any of Borrower’s Subsidiaries or of all or a
substantial part of the property thereof, or an involuntary case or other
proceedings seeking liquidation, reorganization or other relief with respect to
Borrower or any of Borrower’s Subsidiaries or the debts thereof under any
bankruptcy, insolvency or other similar law now or hereafter in effect shall be
commenced and an order for relief entered or such proceeding shall not be
dismissed or discharged within sixty (60) days of commencement; or

(f) (i) A final judgment or order for the payment of money in excess of
$5,000,000 (exclusive of amounts which are covered by (A) insurance issued by an
insurer satisfying the rating requirements set forth in Subparagraph 5.01(d),
(B) cash reserves of Borrower or (C) rights of indemnification or contribution
owed by a credit worthy obligor) shall be rendered against Borrower or any of
its Subsidiaries and the same shall remain undischarged for a period of thirty
(30) days during which execution shall not be effectively stayed or (ii) any
judgment lien, writ, assessment, writ of attachment, tax lien, execution lien or
other order of court in aid of execution, garnishment, charging order or any
other involuntary lien or similar process in excess of $5,000,000 shall be
issued or levied against the property of Borrower or any of its Subsidiaries and
such lien, writ, assessment, order or process shall not be released, stayed,
vacated or otherwise dismissed within thirty (30) days after issue or levy; or

(g) Any Credit Document or any material term thereof shall cease to be, or be
asserted by Borrower not to be, a legal, valid and binding obligation of
Borrower enforceable in accordance with its terms; or

(h) Any Reportable Event occurs which constitutes grounds for the termination of
any Employee Benefit Plan by the PBGC or for the appointment of a trustee by the
PBGC to administer any Employee Benefit Plan, or any Employee Benefit Plan shall
be terminated with unfunded liabilities within the meaning of Title IV of ERISA
or a trustee shall be appointed by the PBGC to administer any Employee Benefit
Plan; or

 

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(Any of the events or conditions set forth in Subparagraphs 6.01(a)-(h), prior
to the giving of any required notice or the expiration of any specified grace
period, shall constitute a “Default” hereunder.)

6.02 Cure Right.

(a) In the event an Event of Default arises from Borrower’s failure to comply
with Paragraph 5.03 of this Agreement (the “Financial Covenants”), then within
ten (10) Business Days after the earlier of (A) Borrower becoming aware that
such Event of Default exists and (B) the Agent notifying Borrower of the
occurrence of such Event of Default, Holdings or its Affiliates may make cash
capital contributions to Borrower (collectively the “Cure Right”), and upon the
receipt by Borrower of such cash (the “Specified Equity Contribution” and the
amount of such Specified Equity Contribution, the “Cure Amount”) pursuant to the
exercise by Holdings or its Affiliates of such Cure Right, Borrower shall
immediately use the Cure Amount to repay any outstanding Term Loans. The Cure
Amount must be in an amount sufficient to satisfy all covenants prescribed in
Paragraph 5.03 for the period being measured, and is to be the greater of the
following:

(i) for any default of the Leverage Ratio, the Cure Amount shall be sufficient
to reduce the Funded Debt component of the Leverage Ratio to a level sufficient
to satisfy the Maximum Leverage Ratio as required pursuant to Paragraph 5.03(a);
and

(ii) for any default of the Fixed Charge Coverage Ratio, the Cure Amount shall
be the amount of principal reduction required to satisfy the Minimum Fixed
Charge Coverage Ratio as prescribed in Paragraph 5.03(b) times the years
remaining in the ten (10) year amortization period of the Term Loan. Thereafter,
the regularly scheduled quarterly principal payments on the Term Loan pursuant
to Paragraph 2.03(g) will be reduced by the amount of principal reduction
required to satisfy the Minimum Fixed Charge Coverage Ratio divided by 4 (the
“Revised Principal Payment”).

(b) After the payment of any Cure Amount in accordance with Paragraph 6.02(a),
the applicable Financial Covenant(s) shall be recalculated giving effect to the
relevant adjustments set forth in subparagraphs 6.02(a)(i) and/or (ii).

(c) After giving effect to the foregoing recalculations and Specified Equity
Contribution, Borrower shall deliver to Agent a Compliance Certificate
reflecting the revised calculations of the Financial Covenants for the
applicable period, certifying as to the Cure Amount and the date that the
specified Equity Contribution was received and then Borrower shall be deemed to
have complied with the Financial Covenants as to the relevant date of
determination with the same effect as though there had been no failure to comply
therewith at such date, and the applicable breach or default of the Financial
Covenants that had occurred shall be deemed cured for purposes of this
Agreement.

(d) The ability to exercise the Cure Right above will be limited to one
(1) occurrence during any twenty-four (24) month period.

(e) If the Cure Amount is received to satisfy a Fixed Charge Coverage Ratio
Default, the Revised Principal Payment shall be used for future covenant
compliance purposes.

 

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6.03 Remedies. Upon the occurrence or existence of any Event of Default and at
any time thereafter during the continuance of such Event of Default, Agent may,
with the consent of the Majority Lenders, or shall, upon instructions from the
Super-Majority Lenders, by written notice to Borrower, (a) terminate the
Commitments and the obligations of the Lender Parties to make Loans or issue
Letters of Credit, (b) declare all outstanding Obligations payable by Borrower
to be immediately due and payable without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived, anything
contained herein or in the Notes to the contrary notwithstanding, and/or
(c) direct Borrower to deliver to Agent funds in an amount equal to the
aggregate amount available for drawing of all outstanding Letters of Credit.
Borrower immediately shall deliver to Agent all funds directed by Agent pursuant
to clause (c) above, and Agent shall hold such funds in a non-interest bearing
account as additional Collateral for the Obligations. Borrower hereby grants to
Agent, for the benefit of the Agent and the Lenders, a security interest in such
funds and such account. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, Agent may exercise any right,
power or remedy permitted to it by law, either by suit in equity or by action at
law, or both. Immediately after taking any action under this Paragraph 6.03,
Agent shall notify each Lender of such action.

 

SECTION VII. AGENTS AND RELATIONS AMONG LENDERS.

7.01 Appointment, Powers and Immunities. Each Lender hereby appoints and
authorizes Agent to act as its agent hereunder and under the other Credit
Documents with such powers as are expressly delegated to Agent by the terms of
this Agreement and the other Credit Documents, together with such other powers
as are reasonably incidental thereto. Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement or in any
other Credit Document, be a trustee for any Lender or have any fiduciary duty to
any Lender. Notwithstanding anything to the contrary contained herein, Agent
shall not be required to take any action which is contrary to this Agreement or
any other Credit Document or applicable law. Neither Agent nor any Lender shall
be responsible to any other Lender for any recitals, statements, representations
or warranties made by Borrower contained in this Agreement or in any other
Credit Document, for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, or any other Credit Document or
for any failure by Borrower to perform its obligations hereunder or thereunder.
Agent may employ agents and attorneys-in-fact and shall not be responsible to
any Lender for the negligence or misconduct of any such agents or attorneys in
fact selected by Agent with reasonable care. Neither the Agent or its directors,
officers, employees or agents shall be responsible to any Lender for any action
taken or omitted to be taken by it or them hereunder or under any other Credit
Document or in connection herewith or therewith, except for its or their own
gross negligence or willful misconduct. Except as otherwise provided under this
Agreement, Agent shall take such action with respect to the Credit Documents as
shall be directed by the Majority Lenders. The Agent shall promptly furnish to
each Lender copies of all material documents, reports, certificates, financial
statements and notices furnished to Agent by Borrower; provided, however, that
Agent shall not be liable to any Lender for its failure to provide copies of
such material documents, reports, certificates, financial statements and notices
unless such failure constitutes gross negligence or willful misconduct by the
Agent.

 

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7.02 Reliance by Agent. Agent shall be entitled to rely upon any certificate,
notice or other document (including any email or facsimile) believed by it in
good faith to be genuine and correct and to have been signed or sent by or on
behalf of the proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by Agent with
reasonable care. As to any other matters not expressly provided for by this
Agreement, Agent shall not be required to take any action or exercise any
discretion, but Agent shall be required to act or to refrain from acting upon
instructions of the Majority Lenders and shall in all cases be fully protected
by the Lenders in acting, or in refraining from acting, hereunder or under any
other Credit Document in accordance with the instructions of the Majority
Lenders, and such instructions of the Majority Lenders and any action taken or
failure to act pursuant thereto shall be binding on Agent and all Lenders.

7.03 Defaults. Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default unless Agent has received a notice
from a Lender or Borrower, referring to this Agreement, describing such Default
or Event of Default and stating that such notice is a “Notice of Default”. If
Agent receives such a notice of the occurrence of a Default or Event of Default,
Agent shall give prompt notice thereof to the Lenders. Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Majority Lenders; provided, however, that until Agent shall have
received such directions, Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interest of the Lenders.

7.04 Indemnification. Without limiting the Obligations of Borrower hereunder,
each Lender agrees to indemnify Agent, ratably in accordance with such Lender’s
Proportionate Share, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may at any time be imposed on, incurred by or
asserted against Agent in any way relating to or arising out of this Agreement
or any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or the enforcement of any of the
terms hereof or thereof or of any such other documents; provided, however, that
no Lender shall be liable for any of the foregoing to the extent they arise from
Agent’s gross negligence or willful misconduct. Agent shall be fully justified
in refusing to take or to continue to take any action hereunder unless it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The obligations of each Lender under this
Paragraph 7.04 shall survive the payment and performance of the Obligations, the
termination of this Agreement and any Lender ceasing to be a party to this
Agreement.

7.05 Non Reliance. Each Lender represents that it has, independently and without
reliance on Agent, or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of the
financial condition and affairs of Borrower and the Subsidiaries, including, but
not limited to, all environmental due diligence including, but not limited to
the due diligence report prepared by Bureau Veritas dated October 23, 2013, and
its own decision to enter into this Agreement and agrees that it will,
independently and without reliance upon Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own appraisals and decisions in taking or not taking action
under this Agreement. Neither Agent nor any Lender shall be required to keep any
Lender informed as to the performance or observance by Borrower of the
obligations under this Agreement or any other document referred to or provided
for herein or to make inquiry of, or to inspect the properties or books of
Borrower. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by Agent hereunder, neither
Agent nor any Lender shall have any duty or responsibility to provide Agent or
any Lender with any credit or other information concerning Borrower, which may
come into the possession of Agent or any Lender or any of its or their
Affiliates.

 

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7.06 Resignation of Agent. Subject to the appointment and acceptance of a
successor Agent as provided below, Agent may resign at any time by giving notice
thereof to the Lenders. Upon any such resignation, the Majority Lenders shall
have the right to appoint a successor Agent, which, provided that no Event of
Default has occurred and is continuing, shall be reasonably acceptable to
Borrower. If no successor Agent shall have been appointed by the Majority
Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Agent’s giving of notice of resignation, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent, which (a) shall be a
bank having a combined capital, surplus and retained earnings of not less than
U.S. $500,000,000 and (b) provided that no Event of Default has occurred and is
continuing, shall be reasonably acceptable to Borrower. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent’s
resignation as Agent, the provisions of this Section VII shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as Agent.

7.07 Authorization. Agent is hereby authorized by the Lenders to execute,
deliver and perform, each of the Credit Documents to which Agent is or is
intended to be a party and each Lender agrees to be bound by all of the
agreements of Agent contained in the Credit Documents.

7.08 Agent in Its Individual Capacity. Agent and its affiliates may make loans
to, accept deposits from and generally engage in any kind of business with
Borrower and its Subsidiaries and affiliates as though such Agent were not an
Agent hereunder. With respect to Loans made and Letters of Credit issued by
Agent in its capacity as a Lender and/or Issuing Bank, Agent shall have the same
rights and powers under this Agreement and the other Credit Documents as any
other Lender and may exercise the same as though it was not an Agent.

 

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SECTION VIII. MISCELLANEOUS.

8.01 Notices. Except as otherwise provided herein, all notices, requests,
demands, consents, instructions or other communications to or upon Borrower, any
Lender or Agent under this Agreement or the other Credit Documents shall be in
writing and faxed, mailed or delivered, if to Borrower or Agent at its
respective facsimile number or address set forth below or, if to any Lender, at
the address or facsimile number specified beneath the heading “Address for
Notices” under the name of such Lender in Schedule I (or to such other facsimile
number or address for any party as indicated in any notice given by that party
to the other parties). All such notices and communications shall be effective
(a) when sent by Federal Express or other overnight service of recognized
standing, upon receipt; (b) when mailed, first class postage prepaid and
addressed as aforesaid through the United States Postal Service, upon receipt;
(c) when delivered by hand, upon delivery; (d) when faxed, upon confirmation of
receipt by the recipient; and by electronic mail (at such email addresses as
Agent or Borrower, as applicable, may designate to each other in accordance
herewith), upon receipt; provided, however, that any notice delivered to Agent
under Section II shall not be effective until received by such Person.

 

Agent:    Bank of Hawaii    Corporate Banking Department    130 Merchant Street,
20th Floor    Honolulu, Hawaii 96813    Attn: Mr. Darrell McCorquodale   
Telephone: (808) 694-8286    Facsimile: (808) 694-8301    Email:
darrell.mccorquodale@boh.com Borrower:    HIE Retail, LLC    c/o Hawaii Pacific
Energy, LLC    800 Gessner Road, Suite 875    Houston, Texas 77024    Attn:
Brice Tarzwell, Chief Legal Officer    Telephone: (832) 850-2551    Facsimile:
(832) 565-1207    Email: btarzwell@txnenergy.com

Each Notice of Borrowing, Notice of Loan Conversion, Notice of Interest Period
Selection and LC Application shall be given by Borrower to Agent at the address
referred to above during such Person’s normal business hours; provided, however,
that any such notice or application received by any such Person after 11:00 a.m.
on any Business Day shall be deemed received by Agent on the next Business Day.
In any case where this Agreement authorizes notices, requests, demands or other
communications by Borrower to Agent or any Lender to be made by telephone or
facsimile, Agent or any Lender may conclusively presume that anyone purporting
to be a person designated in any incumbency certificate or other similar
document received by such Agent or Lender is such a person.

8.02 Expenses. Borrower shall pay on demand, whether or not any Loan is made or
any Letter of Credit is issued hereunder, (a) all reasonable fees and
out-of-pocket expenses, including reasonable attorneys’ fees and expenses,
reasonably incurred by Agent in connection with the preparation, negotiation,
execution and delivery of, and the exercise of its duties under, the commitment
letter dated as of August 29, 2013 between Borrower and Agent and its
structuring of, due diligence relating to and syndication of the credit
facilities set forth in this Agreement; (b) all reasonable fees and
out-of-pocket expenses, including reasonable attorneys’ fees and expenses,
reasonably incurred by Agent in connection with the preparation, negotiation,
execution and delivery of this Agreement and the other Credit Documents, and the
preparation, negotiation, execution and delivery of amendments and waivers
hereunder and thereunder; (c) all reasonable fees and out-of-pocket expenses
payable to third parties, including reasonable attorneys’ fees and expenses,
reasonably incurred by Agent in connection with the exercise of its duties
(including permitted audits not exceeding one per calendar year if no Event of
Default has occurred) under this Agreement and the other Credit Documents; and
(d) all reasonable fees and out-of-pocket expenses, including reasonable
attorneys’ fees and expenses, incurred by Agent or any Lender in the enforcement
or attempted enforcement of any of the Obligations or in preserving any of
Agent’s or the Lenders’ rights and remedies (including all such fees and
expenses incurred in connection with any “workout” or restructuring affecting
the Credit Documents or the Obligations or any bankruptcy or similar proceeding
involving Borrower or any of Borrower’s Subsidiaries). As used herein, the term
“reasonable attorneys’ fees and expenses” shall include, without limitation,
reasonable allocable costs and expenses of Agent’s in house legal counsel and
staff.

 

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8.03 Indemnification. To the fullest extent permitted by law, Borrower agrees to
protect, indemnify, defend and hold harmless Agent, Lenders and their Affiliates
and their respective directors, officers, employees, agents and advisors
(“Indemnitees”) from and against any and all liabilities, losses, damages or
expenses of any kind or nature and from any suits, claims or demands (including
in respect of or for reasonable attorney’s fees and other expenses) arising on
account of or in connection with (a) any use by Borrower of any proceeds of the
Loans or any Letter of Credit, (b) any violation or alleged violation of any
Requirement of Law by Borrower or any of its Affiliates, (c) any acquisition or
proposed acquisition by Borrower or any of its Subsidiaries of the stock or
assets (in whole or in part) of any other Person or (d) the execution, delivery
and performance of this Agreement and the other Credit Documents by any of the
Indemnitees (unless arising out of any violation by any of the Agent, the
Lenders or any of their Affiliates of any applicable law governing its banking
powers); except to the extent such liability arises from the willful misconduct
or gross negligence of the Indemnitees. Upon receiving knowledge of any suit,
claim or demand asserted by a third party that Agent or any Lender believes is
covered by this indemnity, Agent or such Lender shall give Borrower prompt
written notice of the matter (specifying with reasonable particularity the basis
therefor) and an opportunity (but not the obligation) to participate in and
defend it, at Borrower’s sole cost and expense, with legal counsel reasonably
satisfactory to Agent or such Lender, as the case may be. Any failure or delay
of Agent or any Lender to notify Borrower of any such suit, claim or demand as
required by this Paragraph 8.03 or to cooperate in the defense thereof shall not
relieve Borrower of its obligations under this Paragraph 8.03 but shall reduce
such obligations to the extent of any increase in those obligations caused
solely by any such failure or delay which is unreasonable. The obligations of
Borrower under this Paragraph 8.03 shall survive the payment and performance of
the Obligations and the termination of this Agreement.

8.04 Waivers; Amendments. Any term, covenant, agreement or condition of this
Agreement or any other Credit Document may be amended or waived if such
amendment or waiver is in writing and is signed by Borrower and the Majority
Lenders; provided, however that:

(a) Any amendment, waiver or consent which (i) amends this Paragraph 8.04;
(ii) releases any substantial part of the Collateral consisting of the
Borrower’s membership interests pledged to Agent, accounts and inventory
included in the Security Agreement; (iii) amends the definition of Majority
Lenders or Super-Majority Lenders; (iv) amends Subparagraph 8.05(a);
(v) increases the Total Credit at any time or (vi) release guaranties, if any,
must be in writing and signed by all Lenders;

 

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(b) Any amendment, waiver or consent which (i) increases the Revolving Loan
Commitment, (ii) extends the Revolving Loan Maturity Date, (iii) reduces the
principal of or interest on any Revolving Loan or any fees or other amounts
payable for the account of the Lenders hereunder, or (iv) postpones any date
fixed for any payment of the principal of or interest on any Revolving Loans or
any fees or other amounts payable for the account of the Lenders hereunder or
thereunder, must be in writing and signed by all Lenders; any amendment, waiver
or consent which (A) increases the Term Loan Commitment, (B) extends the Term
Loan Maturity Date, (C) reduces the principal of or interest on the Term Loan or
any fees or other amounts payable for the account of the Lenders hereunder, or
(D) postpones any date fixed for any payment of the principal of or interest on
any Term Loan or any fees or other amounts payable for the account of the
Lenders hereunder or thereunder, must be in writing and signed by all Lenders,
provided that only the consent of the Majority Lenders shall be required to
revoke the application of the default interest rate;

(c) Any amendment, waiver or consent which increases or decreases any Revolving
Loan Proportionate Share or Term Loan Proportionate Share of any Lender must be
in writing and signed by such Lender;

(d) Any amendment, waiver or consent which increases the LC Commitment or
otherwise affects the rights or obligations of Issuing Bank must be signed by
Issuing Bank;

(e) Any amendment, waiver or consent which affects the rights or obligations of
Agent must be in writing and signed by Agent.

No failure or delay by Agent or any Lender in exercising any right hereunder
shall operate as a waiver thereof or of any other right nor shall any single or
partial exercise of any such right preclude any other further exercise thereof
or of any other right. Unless otherwise specified in such waiver or consent, a
waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which given.

8.05 Successors and Assigns.

(a) Binding Effect. This Agreement and the other Credit Documents shall be
binding upon and inure to the benefit of Borrower, the Lenders, Agent, all
future holders of the Notes and their respective successors and permitted
assigns, except that Borrower may not assign or transfer any of its rights or
obligations under any Credit Document without the prior written consent of Agent
and each Lender. All references in this Agreement to any Person shall be deemed
to include all successors and assigns of such Person.

 

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(b) Participations. Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more banks or other financial institutions (“Participants”) participating
interests in any Loan owing to such Lender, any Note held by such Lender, any
Commitment of such Lender or any other interest of such Lender under this
Agreement and the other Credit Documents; provided, however, that no Lender may
sell a participating interest in its Loans and Commitments which is in a
principal amount of less than Five Million and No/100 Dollars ($5,000,000.00).
In the event of any such sale by a Lender of participating interests to a
Participant, such Lender’s obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any such Note for all purposes under this Agreement and Borrower, such Lender
shall retain the right to approve amendments and waivers and other voting rights
hereunder and Agent shall continue to deal solely and directly with such Lender
in connection with such Lender’s rights and obligations under this Agreement;
provided, however, that any agreement pursuant to which any Lender sells a
participating interest to a Participant may require the selling Lender to obtain
the consent of such Participant in order for such Lender to agree in writing to
any amendment of a type specified in clause (i), (ii), (iii) or (iv) of
Subparagraph 8.05(b). Borrower agrees that if amounts outstanding under this
Agreement and the other Credit Documents are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall, to the fullest extent permitted by law, be
deemed to have the right of setoff in respect of its participating interest in
amounts owing under this Agreement and any other Credit Documents to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under this Agreement or any other Credit Documents; provided,
however, that (i) no Participant shall have any rights under this sentence which
are greater than those of the selling Lender and (ii) such rights of setoff
shall be subject to the obligation of such Participant to share with the
Lenders, and the Lenders agree to share with such Participant, as provided in
Subparagraph 2.10(b). Borrower also agrees that any Lender which has transferred
all or part of its interests in the Commitments and the Loans to one or more
Participants shall, notwithstanding any such transfer, be entitled to the full
benefits accorded such Lender under Paragraph 2.11, Paragraph 2.12, and
Paragraph 2.13, as if such Lender had not made such transfer.

(c) Assignments. Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time, sell and
assign to any Lender, any affiliate of a Lender or any Person (individually, an
“Assignee Lender”) all or a portion of its rights and obligations under this
Agreement and the other Credit Documents (such a sale and assignment to be
referred to herein as an “Assignment”) pursuant to an assignment agreement in
the form of Exhibit J (an “Assignment Agreement”), executed by each Assignee
Lender and such assignor Lender (an “Assignor Lender”) and delivered to Agent
for its acceptance and recording in the Register; provided, however, that

(i) Without the written consent of Agent (which consent shall not be
unreasonably withheld), no Lender may make any Assignment of its Revolving Loan
Commitment or Revolving Loans to any Assignee Lender which is not, immediately
prior to such Assignment, a Revolving Lender hereunder or an affiliate thereof;

(ii) Without the written consent of Agent (which consent shall not be
unreasonably withheld), no Lender may make any Assignment of its Term Loan
Commitment or Term Loan to any Assignee Lender which is not, immediately prior
to such Assignment, a Lender hereunder or an affiliate thereof;

 

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(iii) No Lender may make any Assignment of its Revolving Loan Commitment or
Revolving Loans which does not assign and delegate an equal pro rata interest in
each along with all related rights, duties and obligations of such Lender under
this Agreement and the other Credit Documents;

(iv) No Lender may make any Assignment of its Term Loan Commitment or Term Loan
which does not assign and delegate an equal pro rata interest in each along with
all related rights, duties and obligations of such Lender under this Agreement
and the other Credit Documents; and

(v) Unless an Event of Default has occurred and is continuing, no Lender may
make any Assignment of its Term Loan Commitment, Term Loan, Revolving Loan
Commitment, or Revolving Loans to any Person that (a) is a competitor of, or is
engaged in the same or a similar business as, the Borrower or any of its
Subsidiaries, or (b) is a majority owner or affiliate of a competitor of, or
company in the same or similar business as the Borrower or any of its
subsidiaries.

Upon such execution, delivery, acceptance and recording of each Assignment
Agreement, from and after the Assignment Effective Date determined pursuant to
such Assignment Agreement, (A) each Assignee Lender thereunder shall be a
Lender, hereunder with a Revolving Loan Proportionate Share and/or Term Loan
Proportionate Share (as the case may be) as set forth on Attachment 1 to such
Assignment Agreement and shall have the rights, duties and obligations of such a
Lender or Lenders under this Agreement and the other Credit Documents, and
(B) the Assignor Lender thereunder shall be a Lender hereunder with a Revolving
Loan Proportionate Share and/or Term Loan Proportionate Share (as the case may
be) as set forth on Attachment 1 to such Assignment Agreement, or, if after such
assignment the Assignor Lender has no Revolving Loan Proportionate Share or Term
Loan Proportionate Share, as the case may be, the Assignor Lender shall cease to
be a Lender as to such Loan (and shall cease to have any obligations to make any
such Loans); provided, however, that any such Assignor Lender which ceases to be
a Lender shall continue to be entitled to the benefits of any provision of this
Agreement which by its terms survives the termination of this Agreement. Each
Assignment Agreement shall be deemed to amend Schedule I to the extent, and only
to the extent, necessary to reflect the addition of each Assignee Lender, the
deletion of each Assignor Lender which ceases to be a Lender and the resulting
adjustment of Revolving Loan Proportionate Shares and/or Term Loan Proportionate
Shares arising from the purchase by each Assignee Lender of all or a portion of
the rights and obligations of an Assignor Lender under this Agreement and the
other Credit Documents. On or prior to the Assignment Effective Date determined
pursuant to each Assignment Agreement, Borrower, at its own expense, shall
execute and deliver to Agent, in exchange for the surrendered Note or Notes (as
the case may be) of the Assignor Lender thereunder, a new Note or Notes (as the
case may be) to the order of each Assignee Lender thereunder (with any new
Revolving Loan Note to be in an amount equal to the Revolving Loan Commitment
assumed by such Assignee Lender, and any new Term Loan Note to be in the
original principal amount of the Term Loan then held by such Assignee Lender
and, if the Assignor Lender is continuing as a Lender hereunder, a new Note or
Notes (as the case may be) to the order of the Assignor Lender (with any new
Revolving Loan Note to be in an amount equal to the Revolving Loan Commitment
retained by it, and any new Term Loan Note to be in the original principal
amount of the Term Loan retained by it. Each such new Note shall be dated the
Closing Date and otherwise be in the form of the Note replaced thereby (provided
that Borrower shall not be obligated to pay any principal paid or interest
accrued prior to the Assignment Effective Date to such Assignee Lender but such
accrued interest shall continue to be payable to Assignor Lender). The Notes
surrendered by the Assignor Lender shall be returned by Agent to Borrower marked
“replaced” or “cancelled”, as appropriate. Each Assignee Lender which was not
previously a Lender hereunder and which is not organized under the laws of the
United States of America or a state thereof shall, within three (3) Business
Days of becoming a Lender, deliver to Borrower and Agent those certificates or
documents as contemplated in Subparagraph 2.12(b), as necessary or helpful to
certify that such Lender is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal taxes (including,
without limitation, executed copies of Internal Revenue Service Forms W-8BEN,
W-8IMY, or successor forms).

 

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(d) Register. Agent shall maintain at its address referred to in Paragraph 8.01
a copy of each Assignment Agreement delivered to it and a register (the
“Register”) for the recordation of the names and addresses of the Lenders and
the Revolving Loan Proportionate Shares and Term Loan Proportionate Shares of
each Lender from time to time. The entries in the Register shall be conclusive
in the absence of manifest error, and Borrower, Agent and the Lenders may treat
each Person whose name is recorded in the Register as the owner of the Loans
recorded therein for all purposes of this Agreement. The Register shall be
available for inspection by Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice.

(e) Registration. Upon its receipt of an Assignment Agreement executed by an
Assignor Lender and an Assignee Lender (and by Agent to the extent consent is
required by Subparagraph 8.06(c)), together with payment to Agent by Assignor
Lender of a registration and processing fee of $3,500, Agent shall (i) promptly
accept such Assignment Agreement and (ii) on the Assignment Effective Date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Lenders and
Borrower. Agent may, from time to time at its election, prepare and deliver to
the Lenders and Borrower a revised Schedule I reflecting the names, addresses
and respective Revolving Loan Proportionate Shares and Term Loan Proportionate
Shares of all Lenders then parties hereto.

(f) FATCA. If a payment made to a Lender under this Agreement or other Credit
Document would be subject to U.S. federal withholding tax imposed by FATCA if
such Lender were to fail to comply with the applicable reporting requirements of
FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as
applicable), such Lender shall deliver to Borrower and Agent at the time or
times prescribed by law and at such time or times reasonably requested by
Borrower or Agent such documentation prescribed by applicable law (including as
prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional
documentation reasonably requested by Borrower or Agent as may be necessary for
Borrower or Agent to comply with their obligations under FATCA and to determine
that such Lender has complied with such Lender’s obligations under FATCA or to
determine the amount to deduct and withhold from such payment.

 

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8.06 Setoff; Security Interest.

(a) Setoff. In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, with the prior consent of Agent but
without prior notice to Borrower, any such notice being expressly waived by
Borrower to the extent permitted by applicable law, upon the occurrence and
during the continuance of an Event of Default, to set off and apply against any
indebtedness, whether matured or unmatured, of Borrower to such Lender, any
amount owing from such Lender to Borrower, at or at any time after, the
occurrence of any of the above mentioned events, and as security for such
indebtedness, Borrower hereby grants to each Lender a continuing security
interest in any and all deposits, accounts or moneys of Borrower then or
thereafter maintained with such Lender, subject in each case to Subparagraph
2.10(b). To the extent permitted by applicable Governmental Rule, the aforesaid
right of set off may be exercised by such Lender against Borrower or against any
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver or execution, judgment or attachment creditor of Borrower or
against anyone else claiming through or against Borrower or such trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver, or execution, judgment or attachment creditor, notwithstanding the
fact that such right of set off shall not have been exercised by such Lender
prior to the occurrence of an Event of Default. Each Lender agrees promptly to
notify Borrower after any such set off and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of
such set off and application.

(b) Security Interest. As security for the Obligations, Borrower hereby grants
to each Lender, for the benefit of Agent and all Lenders, a continuing security
interest in any and all deposit accounts or moneys of Borrower now or hereafter
maintained with such Lender. Each Lender shall have all of the rights of a
secured party with respect to such security interest.

8.07 No Third Party Rights. Nothing expressed in or to be implied from this
Agreement is intended to give, or shall be construed to give, any Person, other
than the parties hereto and their permitted successors and assigns hereunder,
any benefit or legal or equitable right, remedy or claim under or by virtue of
this Agreement or under or by virtue of any provision herein.

8.08 Partial Invalidity. If at any time any provision of this Agreement is or
becomes illegal, invalid or unenforceable in any respect under the law or any
jurisdiction, neither the legality, validity or enforceability of the remaining
provisions of this Agreement nor the legality, validity or enforceability of
such provision under the law of any other jurisdiction shall in any way be
affected or impaired thereby.

8.09 Jury Trial. EACH OF BORROWER, THE LENDERS AND AGENT, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO ANY CREDIT DOCUMENT.

 

- 70 -

--------------------------------------------------------------------------------

8.10 Counterparts. This Agreement may be executed in any number of identical
counterparts, any set of which signed by all the parties hereto shall be deemed
to constitute a complete, executed original for all purposes.

8.11 Confidentiality. Each Lender and Agent shall use its best efforts not to
disclose to any Person any information with respect to Borrower or any of
Borrower’s Subsidiaries which is furnished pursuant to this Agreement, except
that any Lender or Agent may disclose any such information (a) to its own
directors, officers, employees, auditors, counsel and other professional
advisors and to its Affiliates if such Lender or Agent or such Lender’s or such
Agent’s holding or parent company in its sole discretion determines that any
such party should have access to such information; (b) to another Lender; (c) if
generally available to the public; (d) if required or appropriate in any report,
statement or testimony submitted to any Governmental Authority having or
claiming to have jurisdiction over such Lender or Agent; (e) if required or
appropriate in response to any summons or subpoena or in connection with any
litigation, to the extent permitted or deemed advisable by counsel; (f) to
comply with any Requirement of Law applicable to such Lender or Agent; (g) to
any Participant or Assignee Lender or any prospective Participant or Assignee
Lender, provided that such Person agrees in writing, in form and content
satisfactory to Agent, to be bound by the terms of this Paragraph 8.11; or
(h) otherwise with the prior consent of Borrower.

8.12 ERISA. If any Lender is, or is acting on behalf of, an ERISA Entity (as
defined below), such Lender represents, warrants and covenants that the
acquisition and holding of the Notes, throughout the term of the holding by such
Lender, will not result in a nonexempt prohibited transaction under
Section 406(a) of ERISA or Section 4975 of the Code with respect to Borrower.
For the purpose of this paragraph, the term “ERISA Entity” shall mean (a) an
“employee benefit plan” within the meaning of Section 3(3) of ERISA which is
subject to Title I of ERISA, (b) a “plan” within the meaning of Section 4975(e)
of the Code, and (c) any person whose assets are deemed to be “plan assets”
within the meaning of 29 C.F.R. § 2510.3 101.

8.13 Securities Laws. Each Lender represents and warrants that such Lender is
not an entity formed to hold Loans or Notes and that it is the present intention
of such Lender to acquire each Note drawn to its order for its own account and
not with a view to the distribution or sale thereof, subject, nevertheless, to
the necessity that such Lender remain in control at all times of the disposition
of property held by it for its own account; it being understood that the
foregoing representation and warranty shall not affect the character of the
Loans as commercial lending transactions. Each Lender covenants that neither
such Lender nor anyone acting on behalf of such Lender will offer any Loan or
Note or solicit any offer to acquire any Loan or Note from anyone in violation
of the Securities Act of 1933, as amended, or any state securities laws.

[The next page is the first signature page]

 

- 71 -

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IN WITNESS WHEREOF, Borrower, the Lenders and Agent have caused this Agreement
to be executed as of the day and year first above written.

 

BORROWER:     HIE RETAIL, LLC     By:  

/s/ Geoff Beal

    Name:   Geoff Beal     Title:   VP & Treasurer AGENT:     BANK OF HAWAII,  
  As Administrative and Collateral Agent     By:  

/s/ Darrell McCorquodale

    Name:   Darrell McCorquodale     Title:   Vice President LENDERS:    
AMERICAN SAVINGS BANK, F.S.B.     As a Lender     By:  

/s/ Edward Chin

    Name:   Edward Chin     Title:   VP     CENTRAL PACIFIC BANK     As a Lender
    By:  

/s/ Michael Militar

    Name:   Michael Militar     Title:   Vice President     BANK OF HAWAII,    
As a Lender     By:  

/s/ Darrell McCorquodale

    Name:   Darrell McCorquodale     Title:   Vice President

 

- 72 -

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EXHIBIT A

NOTICE OF REVOLVING LOAN BORROWING

Bank of Hawaii

130 Merchant Street, 20th Floor

Honolulu, Hawaii 96813

Attention: Mr. Darrell McCorquodale

This Notice of Revolving Loan Borrowing, executed and delivered this      day of
            , 20    , by HIE Retail, LLC, a Hawaii limited liability company
(“Borrower”), pursuant to Paragraph 2.01(b) of that certain Credit Agreement
(the “Credit Agreement”) dated             , 2013, between Borrower and BANK OF
HAWAII, as Agent, and the Lenders. All terms not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement.

 

1. Principal Amount of Requested Revolving Loan Borrowing $            

     

a. Base Rate Loan requested

      $                

b. LIBOR Loan requested:

     

(i) Amount

   $                   

(ii) Length of Initial Interest Period

     

2. Requested Date of Revolving Loan Borrowing                     

In connection with the foregoing Revolving Loan Borrowing and pursuant to the
terms and provisions of the Credit Agreement, the undersigned hereby certifies
that:

(i) The undersigned is the duly elected, qualified and acting
                     of Borrower and, as such officer, is authorized to make and
deliver this certificate.

(ii) The representations and warranties contained in Paragraph 4.01 of the
Credit Agreement and in each of the Credit Documents are true and correct in all
material respects on and as of the date hereof with the same force and effect as
though made on and as of the date hereof.

(iii) To the actual knowledge of Borrower, no event has occurred and is
continuing, or would result from the Revolving Loan Borrowing requested hereby,
which constitutes a Default or an Event of Default under the Credit Agreement.

(iv) The information contained herein is true and correct.

--------------------------------------------------------------------------------

EXECUTED and delivered this      day of             , 20    .

 

HIE RETAIL, LLC By:  

 

  Name:   Title:

 

- 2 -

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EXHIBIT B

NOTICE OF REVOLVING LOAN CONVERSION

Bank of Hawaii

130 Merchant Street, 20th Floor

Honolulu, Hawaii 96813

Attention: Mr. Darrell McCorquodale

This Notice of Revolving Loan Conversion, executed and delivered this      day
of             , 20    , by HIE RETAIL, LLC, a Hawaii limited liability company
(“Borrower”), pursuant to Paragraph 2.01(d) of that certain Credit Agreement
(the “Credit Agreement”) dated             , 2013, between Borrower and BANK OF
HAWAII, as Agent, and the Lenders. All terms not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement.

 

1. Principal Amount of Revolving Loan Borrowing to be converted

     $                

Check Applicable Box

    

¨ a. Base Rate Loans requested

     $                

¨ b. LIBOR Loan requested:

    

(i) Amount

  $               

(ii) Length of Interest Period

    

2. Requested Date of Conversion

    

In connection with the foregoing Revolving Loan Conversion and pursuant to the
terms and provisions of the Credit Agreement, the undersigned hereby certifies
that:

(i) The undersigned is the duly elected, qualified and acting
                     of Borrower and, as such officer, is authorized to make and
deliver this certificate.

(ii) The representations and warranties contained in Paragraph 4.01 of the
Credit Agreement and in each of the Credit Documents are true and correct in all
material respects on and as of the date hereof with the same force and effect as
though made on and as of the date hereof.

(iii) To the actual knowledge of Borrower, no event has occurred and is
continuing, or would result from the Loan Borrowing requested hereby, which
constitutes a Default or an Event of Default under the Credit Agreement.

(iv) The information contained herein is true and correct.

--------------------------------------------------------------------------------

EXECUTED and delivered this      day of             , 20    .

 

HIE RETAIL, LLC By:  

 

  Name:   Title:

 

- 2 -

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EXHIBIT C

NOTICE OF REVOLVING LOAN INTEREST PERIOD SELECTION

Bank of Hawaii

130 Merchant Street, 20th Floor

Honolulu, Hawaii 96813

Attention: Mr. Darrell McCorquodale

This Notice of Revolving Loan Interest Period Selection, executed and delivered
this      day of             , 20    , by HIE RETAIL, LLC, a Hawaii limited
liability company (“Borrower”), pursuant to Paragraph 2.01(e) of that certain
Credit Agreement (the “Credit Agreement”) dated             , 2013, between
Borrower and BANK OF HAWAII, as Agent, and the Lenders. All terms not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.

 

1. Principal Amount of Revolving Loan Borrowing

   $                

2. Date that Current Interest Period Expires

  

3. Length of New Interest Period

  

In connection with the foregoing Interest Period Selection and pursuant to the
terms and provisions of the Credit Agreement, the undersigned hereby certifies
that:

(i) The undersigned is the duly elected, qualified and acting
                     of Borrower and, as such officer, is authorized to make and
deliver this certificate.

(ii) The representations and warranties contained in Paragraph 4.01 of the
Credit Agreement and in each of the Credit Documents are true and correct in all
material respects on and as of the date hereof with the same force and effect as
though made on and as of the date hereof.

(iii) To the actual knowledge of Borrower, no event has occurred and is
continuing, or would result from the selection of Interest Period requested
hereby, which constitutes a Default or an Event of Default under the Credit
Agreement.

(iv) The information contained herein is true and correct.

EXECUTED and delivered this      day of             , 20    .

 

HIE RETAIL, LLC By:  

 

  Name:   Title:

--------------------------------------------------------------------------------

EXHIBIT D

NOTICE OF TERM LOAN BORROWING

Bank of Hawaii

130 Merchant Street, 20th Floor

Honolulu, Hawaii 96813

Attention: Mr. Darrell McCorquodale

This Notice of Term Loan Borrowing, executed and delivered this      day of
            , 20    , by HIE RETAIL, LLC, a Hawaii limited liability company
(“Borrower”), pursuant to Paragraph 2.03(b) of that certain Credit Agreement
(the “Credit Agreement”) dated             , 2013, between Borrower and BANK OF
HAWAII, as Agent, and the Lenders. All terms not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement.

 

1. Principal Amount of Requested Term Loan Borrowing

         $                

a. Base Rate Loan requested

      $                   

b. LIBOR Loan requested:

        

(i) Amount

   $                      

(ii) Length of Initial Interest Period

        

2. Requested Date of Term Loan Borrowing

        

In connection with the foregoing Term Loan Borrowing and pursuant to the terms
and provisions of the Credit Agreement, the undersigned hereby certifies that:

(i) The undersigned is the duly elected, qualified and acting
                     of Borrower and, as such officer, is authorized to make and
deliver this certificate.

(ii) The representations and warranties contained in Paragraph 4.01 of the
Credit Agreement and in each of the Credit Documents are true and correct in all
material respects on and as of the date hereof with the same force and effect as
though made on and as of the date hereof.

(iii) To the actual knowledge of Borrower, no event has occurred and is
continuing, or would result from the Loan Borrowing requested hereby, which
constitutes a Default or an Event of Default under the Credit Agreement.

(iv) The information contained herein is true and correct.

--------------------------------------------------------------------------------

EXECUTED and delivered this      day of             , 20    .

 

HIE RETAIL, LLC By:  

 

  Name:   Title:

 

- 2 -

--------------------------------------------------------------------------------

EXHIBIT E

NOTICE OF TERM LOAN CONVERSION

Bank of Hawaii

130 Merchant Street, 20th Floor

Honolulu, Hawaii 96813

Attention: Mr. Darrell McCorquodale

This Notice of Term Loan Conversion, executed and delivered this      day of
            , 20    , by HIE RETAIL, LLC, a Hawaii limited liability company
(“Borrower”), pursuant to Paragraph 2.03(d) of that certain Credit Agreement
(the “Credit Agreement”) dated             , 2013, between Borrower and BANK OF
HAWAII, as Agent, and the Lenders. All terms not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement.

 

1. Principal Amount of Term Loan Borrowing to be converted

     $                

Check Applicable Box

    

¨ a. Base Rate Loans requested

     $                

¨ b. LIBOR Loan requested:

    

(i) Amount

  $               

(ii) Length of Interest Period

    

2. Requested Date of Conversion

    

In connection with the foregoing Term Loan Conversion and pursuant to the terms
and provisions of the Credit Agreement, the undersigned hereby certifies that:

(i) The undersigned is the duly elected, qualified and acting
                     of Borrower and, as such officer, is authorized to make and
deliver this certificate.

(ii) The representations and warranties contained in Paragraph 4.01 of the
Credit Agreement and in each of the Credit Documents are true and correct in all
material respects on and as of the date hereof with the same force and effect as
though made on and as of the date hereof.

(iii) To the actual knowledge of Borrower, no event has occurred and is
continuing, or would result from the Term Loan Conversion requested hereby,
which constitutes a Default or an Event of Default under the Credit Agreement.

(iv) The information contained herein is true and correct.

--------------------------------------------------------------------------------

EXECUTED and delivered this      day of             , 20    .

 

HIE RETAIL, LLC By:  

 

  Name:   Title:

 

- 2 -

--------------------------------------------------------------------------------

EXHIBIT F

NOTICE OF TERM LOAN INTEREST PERIOD SELECTION

Bank of Hawaii

130 Merchant Street, 20th Floor

Honolulu, Hawaii 96813

Attention: Mr. Darrell McCorquodale

This Notice of Term Loan Interest Period Selection, executed and delivered this
     day of             , 20    , by HIE RETAIL, LLC, a Hawaii limited liability
company (“Borrower”), pursuant to Paragraph 2.03(e) of that certain Credit
Agreement (the “Credit Agreement”) dated             , 2013, between Borrower
and BANK OF HAWAII, as Agent, and the Lenders. All terms not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement.

 

1. Principal Amount of Term Loan Borrowing

   $                

2. Date that Current Interest Period Expires

  

3. Length of New Interest Period

  

In connection with the foregoing Interest Period Selection and pursuant to the
terms and provisions of the Credit Agreement, the undersigned hereby certifies
that:

(i) The undersigned is the duly elected, qualified and acting
                     of Borrower and, as such officer, is authorized to make and
deliver this certificate.

(ii) The representations and warranties contained in Paragraph 4.01 of the
Credit Agreement and in each of the Credit Documents are true and correct in all
material respects on and as of the date hereof with the same force and effect as
though made on and as of the date hereof.

(iii) To the actual knowledge of Borrower, no event has occurred and is
continuing, or would result from the selection of Interest Period requested
hereby, which constitutes a Default or an Event of Default under the Credit
Agreement.

(iv) The information contained herein is true and correct.

EXECUTED and delivered this      day of             , 20    .

 

HIE RETAIL, LLC By:  

 

  Name:   Title:

--------------------------------------------------------------------------------

EXHIBIT G

REVOLVING LOAN NOTE

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE IS NOT TRANSFERABLE WITHOUT
COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH LAWS UNLESS AN EXEMPTION
OR EXCLUSION FROM REGISTRATION IS AVAILABLE.

 

$                   Honolulu, Hawaii                   , 2013

FOR VALUE RECEIVED, HIE RETAIL, LLC, a Hawaii limited liability company
(“Borrower”), hereby promises to pay to the order of BANK OF HAWAII, a Hawaii
corporation (“Lender”), the principal sum of                      AND NO/100
DOLLARS ($        ) or such lesser amount as shall equal the aggregate
outstanding principal balance of the Revolving Loans made by Lender to Borrower
pursuant to the Credit Agreement referred to below (as amended from time to
time, the “Credit Agreement”), on or before the Revolving Loan Maturity Date
specified in the Credit Agreement; and to pay interest on said sum, or such
lesser amount, at the rates and on the dates provided in the Credit Agreement.

Borrower shall make all payments hereunder, for the account of Lender’s
Applicable Lending Office, to Agent as indicated in the Credit Agreement, in
lawful money of the United States and in same day or immediately available
funds.

Borrower hereby authorizes Lender to record on the schedule(s) annexed to this
note the date and amount of each Revolving Loan and of each payment or
prepayment of principal made by Borrower and agrees that all such notations
shall constitute prima facie evidence of the matters noted.

This Note is one of the Revolving Loan Notes referred to in the Credit
Agreement, dated as of             , 2013, among Borrower, Lender and the other
financial institutions from time to time parties thereto (collectively, the
“Lenders”), and Bank of Hawaii, as agent for the Lenders. This Note is subject
to the terms of the Credit Agreement, including the rights of prepayment and the
rights of acceleration of maturity set forth therein. Terms used herein have the
meanings assigned to those terms in the Credit Agreement, unless otherwise
defined herein.

The transfer, sale or assignment of any rights under or interest in this note is
subject to certain restrictions contained in the Credit Agreement, including
Paragraph 8.05 thereof.

Borrower shall pay all reasonable fees and expenses, including reasonable
attorneys’ fees, incurred by Lender in the enforcement or attempt to enforce any
of Borrower’s obligations hereunder not performed when due. Borrower hereby
waives notice of presentment, demand, protest or notice of any other kind. This
note shall be governed by and construed in accordance with the laws of the State
of Hawaii.

--------------------------------------------------------------------------------

HIE RETAIL, LLC By:  

 

  Name:   Title:

 

- 2 -

--------------------------------------------------------------------------------

LOANS AND PAYMENTS OF PRINCIPAL

 

Date

   Type
of Loan    Amount
of Loan    Amount
of Interest
Period    Unpaid
Principal
Paid or
Prepaid    Principal
Balance    Notation
Made By                                                      

 

- 3 -

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EXHIBIT H

TERM LOAN NOTE

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE IS NOT TRANSFERABLE WITHOUT
COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH LAWS UNLESS AN EXEMPTION
OR EXCLUSION FROM REGISTRATION IS AVAILABLE.

 

$                   Honolulu, Hawaii                   , 2013

FOR VALUE RECEIVED, HIE RETAIL, LLC, a Hawaii limited liability company
(“Borrower”), hereby promises to pay to the order of BANK OF HAWAII, a Hawaii
corporation (“Lender”), the principal sum of                      AND NO/00
DOLLARS ($        ) in installments, payable as provided in the Credit Agreement
referred to below (as amended from time to time, the “Credit Agreement”); and to
pay interest on the outstanding balance of said sum at the rates and on the
dates provided in the Credit Agreement; provided, however, that all principal
and accrued interest remaining unpaid shall be payable in full on the Term Loan
Maturity Date.

Borrower shall make all payments hereunder, for the account of Lender’s
Applicable Lending Office, to Agent as indicated in the Credit Agreement, in
lawful money of the United States and in same day or immediately available
funds.

This Note is one of the Term Loan Notes referred to in the Credit Agreement,
dated as of             , 2013, among Borrower, Lender and the other financial
institutions from time to time parties thereto (collectively, the “Lenders”),
and Bank of Hawaii, as agent for the Lenders. This Note is subject to the terms
of the Credit Agreement, including the rights of prepayment and the rights of
acceleration of maturity set forth therein. Terms used herein have the meanings
assigned to those terms in the Credit Agreement, unless otherwise defined
herein.

The transfer, sale or assignment of any rights under or interest in this note is
subject to certain restrictions contained in the Credit Agreement, including
Paragraph 8.05 thereof.

Borrower shall pay all reasonable fees and expenses, including reasonable
attorneys’ fees, incurred by Lender in the enforcement or attempt to enforce any
of Borrower’s obligations hereunder not performed when due. Borrower hereby
waives notice of presentment, demand, protest or notice of any other kind. This
note shall be governed by and construed in accordance with the laws of the State
of Hawaii.

--------------------------------------------------------------------------------

HIE RETAIL, LLC By:  

 

  Name:   Title:

 

- 2 -

--------------------------------------------------------------------------------

EXHIBIT I

COMPLIANCE CERTIFICATE

Bank of Hawaii

130 Merchant Street, 20th Floor

Honolulu, Hawaii 96813

Attention: Mr. Darrell McCorquodale

 

SUBJECT:    Credit Agreement (the “Credit Agreement”) dated             , 2013,
between HIE RETAIL, LLC (“Borrower”) and Bank of Hawaii, as Agent (“Agent”) and
the Lenders

Borrower is providing this Compliance Certificate in accordance with
Paragraph 5.01(a)(iv) of the Credit Agreement.

This Compliance Certificate covers the period from             , 20     through
            , 20    , inclusive (the “Covered Period”). Borrower hereby
represents, warrants and certifies to Agent that, as of the date hereof (or such
other date as may be specified below):

 

  1. Attached hereto, as Attachment A, is an accurate calculation of the
Leverage Ratio of Borrower, and an accurate calculation of the Fixed Charge
Coverage Ratio of the Borrower, all as of the last day of the fiscal quarter
preceding the date of this Compliance Certificate. The information furnished in
Attachment A hereto is true and correct as of the last day of the fiscal quarter
preceding the date of this Compliance Certificate.

 

  2. Except as disclosed in Attachment B hereto, the representations and
warranties set forth in Section IV of the Agreement are true and correct on and
as of the date hereof.

 

  3. As of the date hereof, no event has occurred and is continuing that
(a) constitutes an Event of Default under the Agreement, or (b) with the giving
of notice or passage of time, or both, would constitute an Event of Default.
Borrower has observed and performed all of Borrower’s covenants and other
agreements, and satisfied every condition contained in the Credit Agreement and
in the other Credit Documents to be observed, performed and satisfied by
Borrower.

EXECUTED and delivered this      day of             , 20    .

 

HIE RETAIL, LLC By:  

 

  Name:   Title:

--------------------------------------------------------------------------------

Attachment A

Section 1.01: Calculation of EBITDA

Calculations of the Borrower’s EBITDA shall be for the prior four fiscal
quarters ending on date of calculation.

 

Net income or (loss) before taxes    plus: depreciation and amortization   
plus: Interest Expenses    plus: all transaction fees and expenses incurred
within 12 months after Closing (maximum $300,000)    minus: extraordinary gains
or plus extraordinary losses (to the extent included in net income above)   
Equals: EBITDA   

Section 5.03(a) Leverage Ratio: Funded Debt divided by EBITDA, plus rent and
lease payments

 

A) Funded Debt

  

B) EBITDA plus Rents and lease payments on other facilities and equipment for
the period of the four (4) fiscal quarters most recently ended

  

A divided by B

  

Section 5.03 (b) Minimum Fixed Charge Coverage Ratio

Fixed Charge Coverage Ratio Calculation (Section 1.01):

 

A) EBITDA

  

B) cash payments for Interest Expenses

  

C) plus: scheduled principal payments for Indebtedness for the succeeding twelve
calendar months

  

D) all distributions to members of Borrower

  

--------------------------------------------------------------------------------

E) all Cash Capital Expenditures for the current and subsequent quarters

  

F) all cash payments for income taxes

  

G) Sum of B+C+D+E (Fixed Charges)

  

Fixed Charge Coverage Ratio: A divided by G

  

Section 2.06 (c)(iii): Mandatory Prepayments

Excess Cash Flow Recapture Calculation

Excess Cash Flow (Section 1.01) determined for each fiscal year beginning with
Borrower’s fiscal year ending December 31, 2014.

 

A) EBITDA

  

B) minus: cash payments for taxes paid by Borrower and its Subsidiaries during
each year

  

C) minus: Cash Capital Expenditures

  

D) minus: scheduled principal payments

  

E) minus: cash payments for Interest Expenses

  

F) minus: optional principal prepayments made to the Term Loan Facility

  

G) minus: cash distributions made by Borrower to Holdings in respect of tax
liabilities attributable to Borrower

  

H) equals: Excess Cash Flow

  

Excess Cash Flow subject to recapture:

  

Leverage Ratio equal to or greater than 4.50:1.00 = 50%

  

Leverage Ratio is less than 4.50:1.00 = None

  

Excess Cash Flow Recapture Amount:

  

 

- 2 -

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EXHIBIT J

ASSIGNMENT AGREEMENT

THIS ASSIGNMENT AGREEMENT, dated as of the date set forth at the top of
Attachment 1 hereto, by and among:

 

  (1) The financial institution designated under item A of Attachment 1 hereto
as the Assignor Lender (“Assignor Lender”) and

 

  (2) Each financial institution designated under item B of Attachment 1 hereto
as an Assignee Lender (individually, an “Assignee Lender”).

R E C I T A L S:

A. Assignor Lender is one of the financial institutions which is a party to the
Credit Agreement dated as of             , 2013, by and among HIE RETAIL, LLC, a
Hawaii limited liability company (“Borrower”), Assignor Lender and the other
financial institutions parties hereto (collectively, the “Lenders”), and BANK OF
HAWAII, as administrative and collateral agent for the Lenders (jointly in such
capacities, “Agent”). (Such Credit Agreement, as amended, supplemented or
otherwise modified in accordance with its terms from time to time to be referred
to herein as the “Credit Agreement”).

B. Assignor Lender wishes to sell, and Assignee Lender wishes to purchase, a
portion of Assignor Lender’s rights under the Credit Agreement pursuant to
Subparagraph 8.05(c) of the Credit Agreement.

AGREEMENT

Now, therefore, the parties hereto hereby agree as follows:

1. Definitions. Except as otherwise defined in this Assignment Agreement, all
capitalized terms used herein and defined in the Credit Agreement have the
respective meanings given to those terms in the Credit Agreement.

2. Sale and Assignment. Subject to the terms and conditions of this Assignment
Agreement, Assignor Lender hereby agrees to sell, assign and delegate to each
Assignee Lender and each Assignee Lender hereby agrees to purchase, accept and
assume an undivided interest in and share of Assignor Lender’s rights,
obligations and duties under the Credit Agreement and the other Credit Documents
equal to the Revolving Loan Proportionate Share or Term Loan Proportionate Share
set forth under the caption “Revolving Loan Proportionate Share” or “Term Loan
Proportionate Share,” as the case may be, opposite such Assignee Lender’s name
on Attachment 1 hereto.

3. Assignment Effective Upon Notice. Upon (a) receipt by Agent of five
(5) counterparts of this Assignment Agreement (to each of which is attached a
fully completed Attachment 1), each of which has been executed by Assignor
Lender and each Assignee Lender (and, if any Assignee Lender is not then a
Lender, by Agent) and (b) payment to Agent of the registration and processing
fee specified in Subparagraph 8.05(e) by Assignor Lender, Agent will transmit to
Borrower, Assignor Lender and each Assignee Lender an Assignment Effective
Notice substantially in the form of Attachment 2 hereto (an “Assignment
Effective Notice”). Such Assignment Effective Notice shall set forth the date on
which the assignment affected by this Assignment Agreement shall become
effective (the “Assignment Effective Date”), which date shall be the fifth
Business Day following the date of such Assignment Effective Notice.

--------------------------------------------------------------------------------

4. Assignment Effective Date. At or before 12:00 noon (local time of Assignor
Lender) on the Assignment Effective Date, each Assignee Lender shall pay to
Assignor Lender, in immediately available or same day funds, an amount equal to
the purchase price, as agreed between Assignor Lender and such Assignee Lender
(the “Purchase Price”), for the Revolving Loan Proportionate Share or Term Loan
Proportionate Share, as the case may be, purchased by such Assignee Lender
hereunder. Effective upon receipt by Assignor Lender of the Purchase Price
payable by each Assignee Lender, the sale, assignment and delegation to such
Assignee Lender of such Proportionate Share as described in Paragraph 2 hereof
shall become effective.

5. Payments After the Assignment Effective Date. Assignor Lender and each
Assignee Lender hereby agree that Agent shall, and hereby authorize and direct
Agent to, allocate amounts payable under the Credit Agreement and the other
Credit Documents as provided in the Credit Agreement in accordance with its
appropriate Revolving Loan Proportionate Share or Term Loan Proportionate Share,
as the case may be. Assignor Lender and each Assignee Lender have made separate
arrangements for (i) the payment by Assignor Lender to such Assignee Lender of
any principal, interest, fees or other amounts previously received or otherwise
payable to Assignor Lender hereunder if Assignor Lender and such Assignee Lender
have otherwise agreed that such Assignee Lender is entitled to receive any such
amounts and (ii) the payment by such Assignee Lender to Assignor Lender of any
principal, interest, fees or other amounts hereafter payable to such Assignee
Lender hereunder if Assignor Lender and such Assignee Lender have otherwise
agreed that Assignor Lender is entitled to receive any such amounts.

6. Delivery of Notes. On or prior to the Assignment Effective Date, Assignor
Lender will deliver to Agent the applicable Notes payable to Assignor Lender. On
or prior to the Assignment Effective Date, Borrower will deliver to Agent Notes
for each Assignee Lender and Assignor Lender, in each case in principal amounts
reflecting, in accordance with the Credit Agreement, their respective
Commitments (as adjusted pursuant to this Assignment Agreement). As provided in
Subparagraph 8.05(c) of the Credit Agreement, each such new Note shall be dated
the Closing Date and otherwise be in the form of Note replaced thereby (provided
that Borrower shall not be obligated to pay any principal paid or interest
accrued prior to the effective date of this assignment to the Assignee Lender).
Promptly after the Assignment Effective Date, Agent will send to each of
Assignor Lender and Assignee Lenders its new Notes and will send to Borrower the
superseded Notes of Assignor Lender, marked “replaced.”

7. Delivery of Copies of Credit Documents. Concurrently with the execution and
delivery hereof, Assignor Lender will provide to each Assignee Lender (if it is
not already a Lender party to the Credit Agreement) conformed copies of all
documents delivered to Assignor Lender on or prior to the Closing Date in
satisfaction of the conditions precedent set forth in the Credit Agreement.

 

- 2 -

--------------------------------------------------------------------------------

8. Further Assurances. Each of the parties to this Assignment Agreement agrees
that at any time and from time to time upon the written request of any other
party, it will execute and deliver such further documents and do such further
acts and things as such other party may reasonably request in order to effect
the purposes of this Assignment Agreement.

9. Further Representations, Warranties and Covenants. Assignor Lender and each
Assignee Lender further represent and warrant to and covenant with each other,
Agent and the Lender Parties as follows:

 

  (a) Other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned hereby agree and clear of any
adverse claim, Assignor Lender makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the other Credit Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or the other Credit Documents furnished.

 

  (b) Assignor Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or any of its
obligations under the Credit Agreement or any other Credit Documents.

 

  (c) Each Assignee Lender confirms that it has received a copy of the Credit
Agreement and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment
Agreement.

 

  (d) Each Assignee Lender will, independently and without reliance upon any
Agent, Assignor Lender or any other Lender and based upon such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement and
the other Credit Documents.

 

  (e) Each Assignee Lender appoints and authorizes Agent to take such action as
Agent on its behalf and to exercise such powers under the Credit Agreement and
the other Credit Documents as are delegated to Agent by the terms thereof,
together with such powers as are reasonably incidental thereto, all in
accordance with Section VII of the Credit Agreement.

 

  (f) Each Assignee Lender agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Agreement and the
other Credit Documents are required to be performed by it as a Lender.

 

- 3 -

--------------------------------------------------------------------------------

  (g) Attachment 1 hereto sets forth the revised Revolving Loan Proportionate
Shares or Term Loan Proportionate Shares, as the case may be, of Assignor Lender
and each Assignee Lender as well as administrative information with respect to
each Assignee Lender.

10. Effect of this Assignment Agreement. On and after the Assignment Effective
Date, (a) each Assignee Lender shall be a Lender with a Revolving Loan
Proportionate Share or Term Loan Proportionate Share, as the case may be, as set
forth on Attachment 1 hereto and shall have the rights, duties and obligations
of such a Lender under the Credit Agreement and the other Credit Documents and
(b) Assignor Lender shall be a Lender with a Revolving Loan Proportionate Share
or Term Loan Proportionate Share, as the case may be, as set forth on Attachment
1 hereto, or, if the Revolving Loan Proportionate Share and Term Loan
Proportionate Share of Assignor Lender has been reduced to 0%, Assignor Lender
shall cease to be a Lender.

11. Miscellaneous. This Assignment Agreement shall be governed by, and construed
in accordance with, the laws of the State of Hawaii. Paragraph headings in this
Assignment Agreement are for convenience of reference only and are not part of
the substance hereof.

IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to
be executed by their respective duly authorized officers as of the date set
forth in Attachment 1 hereto.

 

                    ,                         , As an Assignor Lender     As an
Assignee Lender By:  

 

    By:  

 

  Name:         Name:   Title:         Title:

CONSENTED TO AND ACKNOWLEDGED BY:

 

BANK OF HAWAII, As Agent By:  

 

  Name:   Title:

 

- 4 -

--------------------------------------------------------------------------------

ATTACHMENT 1

TO ASSIGNMENT AGREEMENT

NAMES, ADDRESSES AND PROPORTIONATE SHARES

OF ASSIGNOR LENDER AND ASSIGNEE LENDERS AFTER ASSIGNMENT

            , 20    

 

A. ASSIGNOR LENDER

       REVOLVING LOAN
PROPORTIONATE
SHARE*    TERM LOAN
PROPORTIONATE
SHARE*

 

        Applicable Lending Office:        

 

 

       

 

 

        Attention:  

 

        Address for notices:        

 

       

 

       

 

       

 

        Attention:  

 

        Telephone No.  

 

        Facsimile No.  

 

        Wiring Instructions:        

 

        ABA No.  

 

        Contact:  

 

       

 

* To be expressed by a percentage rounded to the sixth digit to the right of the
decimal point.

--------------------------------------------------------------------------------

B. ASSIGNEE LENDER

       REVOLVING LOAN
PROPORTIONATE
SHARE*    TERM LOAN
PROPORTIONATE
SHARE*

 

        Applicable Lending Office:        

 

       

 

       

 

       

 

        Attention:  

 

        Address for notices:        

 

       

 

       

 

       

 

        Attention:  

 

        Telephone No.  

 

        Facsimile No.  

 

        Wiring Instructions:        

 

        ABA No.  

 

        Attention:  

 

        Reference:          

 

- 2 -

--------------------------------------------------------------------------------

ATTACHMENT 2

TO ASSIGNMENT AGREEMENT

FORM OF

ASSIGNMENT EFFECTIVE NOTICE

The undersigned, as agent for the Lenders under the Credit Agreement, dated as
of             , 2013 among HIE RETAIL, LLC, a Hawaii limited liability company
(“Borrower”), the financial institutions parties thereto (the “Lenders”) and
Bank of Hawaii, as administrative and collateral agent for the Lenders (jointly
in such capacities, “Agent”), acknowledges receipt of five executed counterparts
of a completed Assignment Agreement, a copy of which is attached hereto. [Note:
Attach copy of Assignment Agreement.] Terms defined in such Assignment Agreement
are used herein therein defined.

1. Pursuant to such Assignment Agreement, you are advised that the Assignment
Effective Date will be             [Insert fifth business day following date of
Assignment Effective Notice].

2. Pursuant to such Assignment Agreement, Assignor Lender is required to deliver
to Agent on or before the Assignment Effective Date the Notes payable to
Assignor Lender.

3. Pursuant to such Assignment Agreement, Borrower is required to deliver to
Agent on or before the Assignment Effective Date the following Notes, each dated
             [Insert appropriate date]:

4. Pursuant to such Assignment Agreement, each Assignee Lender is required to
pay its Purchase Price to Assignor Lender at or before 12:00 Noon [local time of
Assignor Lender) on the Assignment Effective Date in immediately available
funds.

 

Very truly yours,

BANK OF HAWAII,

as Agent

By:  

 

  Name:   Title:

--------------------------------------------------------------------------------

SCHEDULE I

LENDERS

 

LENDER

   REVOLVING LOAN
PROPORTIONATE SHARE*     TERM LOAN
PROPORTIONATE SHARE*  

AMERICAN SAVINGS BANK

 

Applicable Lending Office:

American Savings Bank, F.S.B., Honolulu

 

American Savings Bank

Attn: Edward Chin

 

Address for Notices:

American Savings Bank, F.S.B.

1001 Bishop Street, 25th Floor

Honolulu, Hawaii 96813

 

Wiring Instructions:

American Savings Bank, Honolulu

ABA #321370765

Attn: Commercial and Consumer Loans

Account Nos. 0020000-01194 and 0020000-01195

Reference: HIE Retail, LLC

         .     %          .     % 

CENTRAL PACIFIC BANK

 

Applicable Lending Office:

Central Pacific Bank, Honolulu

 

Central Pacific Bank

Attn: Michael Militar

 

Address for Notices:

Central Pacific Bank

Corporate Banking

220 South King Street, Suite 575

Honolulu, HI 96813

 

Wiring Instructions:

Central Pacific Bank

ABA #121301578

Reference:

         .     %          .     % 

--------------------------------------------------------------------------------

LENDER

   REVOLVING LOAN
PROPORTIONATE SHARE*     TERM LOAN
PROPORTIONATE SHARE*  

BANK OF HAWAII

 

Applicable Lending Office:

Bank of Hawaii, Corporate Banking Department

 

Bank of Hawaii

Attn: Darrell McCorquodale

 

Address for Notices:

Bank of Hawaii

Corporate Banking Department

130 Merchant Street, 20th Floor

Honolulu, Hawaii 96813

 

Wiring Instructions:

Bank of Hawaii

ABA #121301028

Account to Credit: 0298 206330

Attn: Iwalani Sabarra-Kapika

Reference:

         .     %          .     % 

 

* To be expressed as a percentage rounded to the seventh digit to the right of
the decimal point.

 

- 2 -

--------------------------------------------------------------------------------

SCHEDULE II

PROPORTIONATE SHARES AND COMMITMENTS OF THE LENDERS

 

LENDERS

   REVOLVING LOAN
PROPORTIONATE
SHARE1     REVOLVING LOAN
COMMITMENT      TERM LOAN
PROPORTIONATE
SHARE1     TERM LOAN
COMMITMENT      TOTAL
COMMITMENTS  

American Savings Bank

     28.57143 %    $ 1,428,571         28.57143 %    $ 8,571,429       $
10,000,000   

Central Pacific Bank

     28.57143 %    $ 1,428,571         28.57143 %    $ 8,571,429       $
10,000,000   

Bank of Hawaii

     42.85714 %    $ 2,142,857         42.85714 %    $ 12,857,143       $
15,000,000      

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

TOTAL

     100.00 %    $ 5,000,000         100.00 %    $ 30,000,000       $ 35,000,000
     

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

1  Expressed as a percentage rounded to the seventh digit to the right of the
decimal point.

--------------------------------------------------------------------------------

SCHEDULE 1.01(A)

PRICING GRID

Revolving Credit Facility

 

Level

   Leverage Ratio    Applicable Margin
for LIBOR Loans     Applicable Margin
for Base Rate Loans     Unused Fees  

1

   < 4.00x      1.75 %      – 0.25 %      0.25 % 

2

   > 4.00x but
£ 5.00x      2.00 %      0 %      0.375 % 

3

   > 5.00x      2.25 %      0.25 %      0.50 % 

Term Loan Facility

 

Level

   Leverage Ratio    Applicable Margin
for LIBOR Loans     Applicable Margin
for Base Rate Loans  

1

   < 4.00x      2.00 %      0 % 

2

   ³ 4.00x but
£ 5.00x      2.25 %      0.25 % 

3

   > 5.00x      2.50 %      0.50 % 

--------------------------------------------------------------------------------

SCHEDULE 3.01

INITIAL CONDITIONS PRECEDENT

 

A. Principal Credit Documents.

(1) The Credit Agreement, duly executed by Borrower, each Lender and Agent;

(2) A Revolving Loan Note payable to each Lender, each duly executed by
Borrower;

(3) A Term Loan Note payable to each Lender, each duly executed by Borrower;

(4) The Membership Interests Pledge Agreement, duly executed by Holdings with
respect to the pledge of 100% of its membership interests in Borrower; and

(5) The Security Agreement, duly executed by Borrower.

 

B. Borrower Corporate Documents.

(1) The Articles of Organization of Borrower, certified as of a recent date
prior to the Closing Date by the State of Hawaii;

(2) A Certificate of Good Standing for Borrower, certified as of a recent date
prior to the Closing Date by the State of Hawaii;

(3) A certificate of the Manager of Borrower, dated the Closing Date, certifying
(a) that the Articles of Organization of Borrower, in the form certified by the
State of Hawaii and delivered to Agent pursuant to item B(1) hereof, is in full
force and effect and has not been amended, supplemented, revoked or repealed
since the date of such certification; (b) that attached thereto is a true and
correct copy of the Operating Agreement of Borrower as in effect on the Closing
Date; (c) that attached thereto are true and correct copies of resolutions duly
adopted by the members of Borrower and continuing in effect, which authorize the
execution, delivery and performance by Borrower of the Credit Agreement and the
other Credit Documents executed or to be executed by Borrower and the
consummation of the transactions contemplated hereby and thereby; and (d) that
there are no proceedings for the dissolution or liquidation of Borrower; and

(4) A certificate of the Manager of Borrower, dated the Closing Date, certifying
the incumbency, signatures and authority of the managers or officers of Borrower
authorized to execute, deliver and perform the Credit Agreement and the other
Credit Documents executed or to be executed by Borrower.

--------------------------------------------------------------------------------

C. Financial Statements, Financial Condition, Etc.

(1) A copy of the a) pro-forma closing balance sheet of Borrower for the period
ending September 30, 2013 taking into consideration the effect of the
Acquisition, and b) pro-forma Leverage Ratio calculation pursuant to Paragraph
5.03(c) of the Credit Agreement, with both financial exhibits certified by the
Manager of Borrower; and

(2) Such other financial, business and other information regarding Borrower or
any of their Subsidiaries as Agent may reasonably request, including information
as to possible contingent liabilities, tax matters, environmental matters and
obligations for employee benefits and compensation.

 

D. Collateral Documents.

(1) Such Uniform Commercial Code financing statements and fixture filings
(appropriately completed and executed) for filing in such jurisdictions as Agent
may request to perfect the Liens granted to Agent in this Agreement, the
Security Documents, and the other Credit Documents;

(2) Such Uniform Commercial Code termination statements (appropriately completed
and executed) for filing in such jurisdictions as Agent may request to terminate
any financing statement evidencing Liens of other Persons in the Collateral
which are prior to the Liens granted to Agent in this Agreement, the Security
Documents, and the other Credit Documents, except for any such prior Liens which
are expressly permitted by the Credit Agreement to be prior;

(3) Uniform Commercial Code search certificates from the jurisdictions in which
Uniform Commercial Code financing statements are to be filed pursuant to
item D.(1) above reflecting no other financing statements or filings which
evidence Liens of other Persons in the Collateral which are prior to the Liens
granted to Agent in this Agreement, the Security Documents and the other Credit
Documents, except for any such prior Liens (a) which are expressly permitted by
the Credit Agreement to be prior or (b) for which Agent has received a
termination statement pursuant to item D.(2) above;

(4) Such other documents, instruments and agreements as Agent may reasonably
request to establish and perfect the Liens granted to Agent in this Agreement,
the Security Documents and the other Credit Documents; and

(5) Such other evidence as Agent may request to establish that the Liens granted
to Agent in this Agreement, the Security Agreements, and the other Credit
Documents are perfected and prior to the Liens of other Persons in the
Collateral, except for any such Liens which are expressly permitted by the
Credit Agreement to be prior.

 

E. Other Items.

(1) Certificates of insurance evidencing the insurance Borrower is required to
maintain pursuant to Subparagraph 5.01(d), together with endorsements thereto as
required by such subparagraph;

 

- 2 -

--------------------------------------------------------------------------------

(2) Receipt by Agent of the final executed Membership Interest Purchase
Agreement, MSA contribution agreement, assignments and other conveyances between
HIE and Borrower of satisfactory evidence that Holdings acquired all of the
issued and outstanding membership interests of Tesoro Hawaii prior to the date
hereof;

(3) Evidence satisfactory to Agent that the proceeds of the Term Loan Borrowing
to be made on the Closing Date will be used to finance Borrower’s acquisition of
the Retail Business;

(4) Opinion letter of legal counsel to Borrower required under
Paragraph 3.01(f);

(5) A certificate of an Executive Officer of Borrower, addressed to Agent and
dated the Closing Date, certifying that:

(a) The representations and warranties set forth in Paragraph 4.01 are true and
correct in all material respects as of such date (except for such
representations and warranties made as of a specified date, which shall be true
and correct in all material respects as of such date); and

(b) No Event of Default or Default has occurred and is continuing as of such
date;

(6) All fees and expenses payable to Agent and Lenders on or prior to the
Closing Date;

(7) All fees and expenses of Agent’s counsel, Carlsmith Ball LLP, through the
Closing Date; and

(8) Such other evidence as Agent or any Lender may reasonably request to
establish the accuracy and completeness of the representations and warranties
and the compliance with the terms and conditions contained in this Agreement and
the other Credit Documents.

 

- 3 -

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SCHEDULE 5.02(i)

TRANSACTIONS WITH AFFILIATES

The following agreements have been entered into by HIE Retail, LLC in connection
with the transfer of the retail gasoline station and convenience store business
to HIE Retail, LLC:

 

  1. Contribution and Assignment Agreement among Hawaii Independent Energy, LLC,
HIE Retail, LLC and Hawaii Pacific Energy, LLC

 

  2. Management Services and Employment Services Agreement between HIE Retail,
LLC and Hawaii Independent Energy, LLC

 

  3. Trademark Sublicense Agreement between Hawaii Independent Energy, LLC and
HIE Retail, LLC

 

  4. Bill of Sale, Assignment and Assumption Agreement among Hawaii Independent
Energy, LLC, HIE Retail, LLC and Hawaii Pacific Energy, LLC

--------------------------------------------------------------------------------

SCHEDULE 7.05

ENVIRONMENTAL DUE DILIGENCE

None.

--------------------------------------------------------------------------------

Exhibits

 

Exhibit A    Notice of Revolving Loan Borrowing Exhibit B    Notice of Revolving
Loan Conversion Exhibit C    Notice of Revolving Loan Interest Period Selection
Exhibit D    Notice of Term Loan Borrowing Exhibit E    Notice of Term Loan
Conversion Exhibit F    Notice of Term Loan Interest Period Selection Exhibit G
   Revolving Loan Note Exhibit H    Term Loan Note Exhibit I    Compliance
Certificate Exhibit J    Assignment Agreement

 

Schedule I    Lenders Schedule II    Proportionate Shares and Commitments of the
Lenders Schedule 1.01(a)    Pricing Grid Schedule 3.01    Initial Conditions
Precedent Schedule 5.02(i)    Transactions with Affiliates Schedule 7.05   
Environmental Due Diligence