EXHIBIT 10.15

 

 

 

TERM LOAN AND SECURITY AGREEMENT

 

by and among

 

CPG INTERNATIONAL I INC.

SCRANTON PRODUCTS INC.

AZEK BUILDING PRODUCTS, INC.

PROCELL DECKING INC.

as Borrowers

 

CPG INTERNATIONAL INC.

SANTANA PRODUCTS INC.

CPG SUB I CORPORATION

VYCOM CORP.

SANATEC SUB I CORPORATION

as Guarantors

 

THE LENDERS FROM TIME TO TIME PARTY HERETO

 

WACHOVIA BANK, NATIONAL ASSOCIATION

as Administrative Agent

 

WACHOVIA CAPITAL MARKETS, LLC

as Lead Arranger and Lead Bookrunner

 

 

Dated: February 29, 2008

TABLE OF CONTENTS

 

SECTION 1. DEFINITIONS

1

SECTION 2. CREDIT FACILITIES

38

 

2.1 Loans

38

 

2.2 Prepayments

39

 

2.3 Joint and Several Liability of Borrowers

41

SECTION 3. INTEREST AND FEES

44

 

3.1 Interest

44

 

3.2 Fees

45

 

3.3 Inability to Determine Applicable Interest Rate

45

 

3.4 Illegality

45

 

3.5 Increased Costs

46

 

3.6 Capital Requirements

46

 

3.7 Certificates for Reimbursement

46

 

3.8 Delay in Requests

46

 

3.9 Mitigation; Replacement of Lenders

47

 

3.10 Funding Losses

47

 

3.11 Maximum Interest

48

 

3.12 No Requirement of Match Funding

48

SECTION 4. CONDITIONS PRECEDENT

48

 

4.1 Conditions Precedent to Effectiveness of Agreement to Make the Loans

48

SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST

54

 

5.1 Grant of Security Interest

54

 

5.2 Exclusions from Collateral

56

 

5.3 Perfection of Security Interests

56

 

5.4 Control Collateral Held by Control Agent.

60

 

5.5 Intercreditor Provisions.

60

SECTION 6. COLLECTION AND ADMINISTRATION

60

 

6.1 Borrowers’ Loan Accounts

60

 

6.2 [Reserved]

60

 

6.3 Lenders’ Evidence of Debt

60

 

6.4 Register

61

 

6.5 [Reserved]

61

 

6.6 [Reserved]

61

 

6.7 Payments

61

 

6.8 Taxes

62

 

6.9 [Reserved]

65

 

6.10     Appointment of Borrower Agent as Agent for Requesting Loans and
Receipts of Loans and Statements

65

 

6.11 Pro Rata Treatment

66

 

6.12 Sharing of Payments, Etc

66

 

6.13 [Reserved]

67

 

6.14 Obligations Several; Independent Nature of Lenders’ Rights

67

SECTION 7. COLLATERAL REPORTING AND COVENANTS

67

 

7.1 Collateral Reporting.

67

 

 

i

 

7.2 Accounts Covenants

67

 

7.3 Inventory Covenants

68

 

7.4 Equipment and Real Property

69

 

7.5 Power of Attorney

70

 

7.6 Right to Cure

70

 

7.7 Access to Premises

70

SECTION 8. REPRESENTATIONS AND WARRANTIES

71

 

8.1 Existence, Power and Authority

71

 

8.2       Name; State of Organization; Chief Executive Office; Collateral
Locations

71

 

8.3 Financial Statements; No Material Adverse Effect

72

 

8.4 Priority of Liens; Title to Properties

72

 

8.5 Tax Returns

72

 

8.6 Litigation

73

 

8.7 Compliance with Other Agreements and Applicable Laws

73

 

8.8 Environmental Compliance

73

 

8.9 Employee Benefits

74

 

8.10 Bank Accounts

75

 

8.11 Intellectual Property

75

 

8.12 Subsidiaries; Affiliates; Capitalization; Solvency

76

 

8.13 Labor Disputes

76

 

8.14 Restrictions on Subsidiaries

77

 

8.15 Material Contracts

77

 

8.16 Payable Practices

77

 

8.17 OFAC

77

 

8.18 Accuracy and Completeness of Information

77

 

8.19 Survival of Warranties; Cumulative

78

 

8.20 Compliance with FCPA

78

 

8.21 Anti-Terrorism Laws.

78

 

8.22 Regulation H

78

 

8.23 Insurance.

78

 

8.24 Brokers’ Fees.

78

 

8.25 Use of Proceeds.

78

 

8.26 Margin Regulations.

79

 

8.27 Investment Company Act; etc.

79

 

8.28 Consummation of Acquisition.

79

SECTION 9. AFFIRMATIVE COVENANTS

79

 

9.1 Maintenance of Existence

79

 

9.2 New Collateral Locations

80

 

9.3 Compliance with Laws, Regulations, Etc

80

 

9.4 Payment of Taxes and Claims

81

 

9.5 Insurance

82

 

9.6 Financial Statements and Other Information

82

 

9.7 Compliance with ERISA

87

 

9.8 End of Fiscal Years; Fiscal Quarters

87

 

9.9 License Agreements

87

 

9.10 Additional Guaranties and Collateral Security; Further Assurances

88

 

ii

 

9.11 Costs and Expenses

89

 

9.12 Collateral Access Agreements.

90

 

9.13 After Acquired Real Property.

90

 

9.14 Delivery of Reports.

90

 

9.15 Post-Closing Covenant.

90

SECTION 10. NEGATIVE COVENANTS

91

 

10.1 Sale of Assets, Consolidation, Merger, Dissolution, Etc

91

 

10.2 Encumbrances

93

 

10.3 Indebtedness

93

 

10.4 Investments

97

 

10.5 Restricted Payments

98

 

10.6 Transactions with Affiliates

101

 

10.7 Change in Business

102

 

10.8 Limitation of Restrictions Affecting Subsidiaries

102

 

10.9 Certain Payments of Indebtedness, Etc

103

 

10.10     Modifications of Indebtedness, Organizational Documents and Certain
Other Agreements

104

 

10.11 Inactive Subsidiaries; Parent Holding Company

104

 

10.12 Sale and Leasebacks

105

 

10.13 Designation of Designated Senior Debt

105

 

10.14 Foreign Assets Control Regulations, Etc

105

SECTION 11. FINANCIAL COVENANT

106

 

11.1 Maximum Senior Secured Leverage Ratio

106

SECTION 12. EVENTS OF DEFAULT AND REMEDIES

106

 

12.1 Events of Default

106

 

12.2 Remedies

108

SECTION 13. JURY TRIAL WAIVER; OTHER WAIVERS CONSENTS; GOVERNING LAW

111

 

13.1     Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver

111

 

13.2 Waiver of Notices

112

 

13.3 Amendments and Waivers

113

 

13.4 Waiver of Counterclaims

115

 

13.5 Indemnification

116

SECTION 14. THE AGENT

116

 

14.1 Appointment, Powers and Immunities

116

 

14.2 Reliance by Agent

117

 

14.3 Events of Default

117

 

14.4 Wachovia in Its Individual Capacity

118

 

14.5 Indemnification

118

 

14.6 Non-Reliance on Agent and Other Lenders

118

 

14.7 Failure to Act

119

 

14.8 [Reserved]

119

 

14.9 Concerning the Collateral and the Related Financing Agreements

119

 

14.10 [Reserved]

119

 

14.11 Collateral Matters

119

 

14.12 Agency for Perfection

121

 

iii

 

14.13 Agent May File Proofs of Claim

121

 

14.14 Successor Agent

122

 

14.15 Legal Representation of Agent

122

 

14.16 Other Agent Designations

122

 

14.17 Intercreditor Agreement.

123

SECTION 15. TERM OF AGREEMENT; MISCELLANEOUS

123

 

15.1 Term

123

 

15.2 Interpretative Provisions

124

 

15.3 Notices

126

 

15.4 Partial Invalidity

127

 

15.5 Confidentiality

127

 

15.6 Successors

128

 

15.7 Assignments; Participations

129

 

15.8 Entire Agreement

132

 

15.9 USA Patriot Act

132

 

15.10 No Advisory or Fiduciary Responsibility

132

 

15.11 Counterparts, Etc

133

 

 

iv

INDEX

TO

EXHIBITS AND SCHEDULES

 

Exhibit A

Form of Assignment and Acceptance

Exhibit B

Form of Patriot Act Certificate

Exhibit C

Information Certificate

Exhibit D

Form of Compliance Certificate

Exhibit E

Commitment Percentages

Exhibit F

Form of Officer’s Certificate

Schedule 1.35

Historical EBITDA

 

 

v

TERM LOAN AND SECURITY AGREEMENT

 

This Term Loan and Security Agreement (“Agreement”) dated February 29, 2008 is
entered into by and among CPG International I Inc., a Delaware corporation (“CPG
I”), Scranton Products, Inc., a Delaware corporation (“Scranton”), AZEK Building
Products, Inc., a Delaware corporation (“AZEK”), Procell Decking Inc., a
Delaware corporation (“Procell”, and together with CPG I, Scranton and AZEK, and
any Subsidiaries that may become parties hereto after the date hereof as
borrowers, each individually a “Borrower” and collectively, “Borrowers” as
hereinafter defined), CPG International Inc., a Delaware corporation (“Parent”),
Santana Products Inc., a Delaware corporation (“Santana”), CPG Sub I
Corporation, a Delaware Corporation (“Sub I”), Vycom Corp., a Delaware
corporation (“Vycom”) and Sanatec Sub I Corporation, a Delaware corporation
(“Sanatec”, and together with Parent, Santana, Sub I, Vycom, and any
Subsidiaries that are not Foreign Subsidiaries that may become parties hereto
after the date hereof as guarantors, each individually a “Guarantor” and
collectively “Guarantors” as hereinafter defined), the parties hereto from time
to time as lenders, whether by execution of this Agreement or an Assignment and
Acceptance (each individually, a “Lender” and collectively, “Lenders” as
hereinafter further defined), Wachovia Bank, National Association, a national
banking association, in its capacity as agent for Lenders (in such capacity,
“Agent” as hereinafter further defined).

 

W I T N E S S E T H:

 

WHEREAS, Borrowers and Guarantors have requested that Lenders provide a term
loan to Borrowers and each Lender is willing to (severally and not jointly) make
such term loan and provide such financial accommodations to Borrowers on a pro
rata basis according to its Commitment Percentage (as defined below) on the
terms and conditions set forth herein and in the other Financing Agreements (as
defined below), and Agent is willing to act as agent for Lenders on the terms
and conditions set forth herein and the other Financing Agreements;

 

NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

 

SECTION 1.

 

DEFINITIONS

 

For purposes of this Agreement, the following terms shall have the respective
meanings given to them below:

 

1.1      “ABL Agent” shall mean Wachovia, in its capacity as Agent under the ABL
Credit Agreement and the other ABL Financing Agreements.

 

1.2      “ABL Credit Agreement” shall mean that certain Loan and Security
Agreement dated as of February 13, 2008 as amended by that certain Amendment No.
1 dated as of the date hereof, by and among the Borrowers party thereto, the
Guarantors party thereto, the ABL Lenders and the ABL Agent pursuant to which
the ABL Lenders have agreed to provide revolving credit facilities to the
Borrowers party thereto, as in effect on the date hereof and as amended or
otherwise

 

1

modified from time to time in accordance with the terms of this Agreement and
the Intercreditor Agreement.

 

1.3      “ABL Financing Agreements” shall have the meaning specified for the
term “Financing Agreements” in the ABL Credit Agreement, each as in effect on
the date hereof and as amended or otherwise modified from time to time in
accordance with the terms of this Agreement.

 

1.4      “ABL Lenders” shall mean those certain lenders and other financial
institutions from time to time party to the ABL Credit Agreement.

 

1.5      “ABL Obligations” shall have the meaning specified for the term
“Obligations” in the ABL Credit Agreement.

 

1.6      “ABL Priority Collateral” shall have the meaning specified for the term
“ABL Priority Collateral” in the Intercreditor Agreement.

 

1.7        “Accounts” shall mean, as to each Borrower and Guarantor, all present
and future rights of such Borrower or Guarantor to payment of a monetary
obligation, whether or not earned by performance, which is not evidenced by
chattel paper or an instrument, (a) for property that has been or is to be sold,
leased, licensed, assigned, or otherwise disposed of, (b) for services rendered
or to be rendered, (c) for a secondary obligation incurred or to be incurred, or
(d) arising out of the use of a credit or charge card or information contained
on or for use with the card.

 

1.8      “Acquired Business” shall have the meaning given such term in the
definition of the term “Permitted Acquisitions” contained herein.

 

1.9        “Acquired Company” shall mean Creative Composite Products, Inc., a
corporation incorporated under the laws of the Province of Ontario.

 

1.10    “Acquired Indebtedness” shall mean Indebtedness of a Person or any of
its Subsidiaries existing at the time such Person becomes a Subsidiary of Parent
or at the time it merges or consolidates with the Parent or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and in each case not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Subsidiary of a
Borrower or such acquisition, merger or consolidation; provided, that, any
Indebtedness of such Person that is extinguished, redeemed, defeased (other than
through covenant defeasance), retired or otherwise repaid at the time of or
immediately upon consummation of the transaction pursuant to which such Person
becomes a Subsidiary of Parent will not be Acquired Indebtedness.

 

1.11      “Acquisition” shall mean the purchase of the outstanding Equity
Interests of the Acquired Company by AZEK Canada Inc. (formerly known as 2162771
Ontario Inc.), which is a wholly-owned subsidiary of AZEK.

 

1.12      “Acquisition Documents” shall mean (a) that certain Share Purchase
Agreement dated as of February 8, 2008 by and among 2162771 Ontario Inc., as the
purchaser, the Acquired Company, and the holders of all Equity Interests of the
Acquired Company, as the sellers, and (b) any other material agreement, document
or instrument executed in connection with the foregoing, in each case as
amended, modified, extended, restated, replaced, or supplemented from time to
time.

 

22

 

1.13    “Adjusted Eurodollar Rate” shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan comprising part of the same borrowing
(including conversions, extensions and renewals), the rate per annum determined
by dividing (a) the London Interbank Offered Rate for such Interest Period by
(b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For
purposes hereof, “Reserve Percentage” shall mean for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
of the Board of Governors of the Federal Reserve System (or any successor), as
such regulation may be amended from time to time or any successor regulation, as
the maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable with respect
to Eurocurrency liabilities as that term is defined in Regulation D (or against
any other category of liabilities that includes deposits by reference to which
the interest rate of Eurodollar Loans is determined), whether or not any Lender
has any Eurocurrency liabilities subject to such reserve requirement at that
time. Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities
and as such shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available from time to
time to a Lender. The Adjusted Eurodollar Rate shall be adjusted automatically
on and as of the effective date of any change in the Reserve Percentage.

 

1.14    “AEA Group” shall mean, collectively, AEA Investors LLC, AEA Management
(Cayman) Ltd., AEA Investors LP and their Affiliates.

 

1.15      “Affiliate” shall mean, with respect to a specified Person, any other
Person (excluding any Subsidiary) which directly or indirectly, through one or
more intermediaries, controls or is controlled by or is under common control
with such Person. For the purposes of this definition, the term “control”
(including with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any Person, means the possession,
directly or indirectly, of the power either (a) to vote ten (10%) percent or
more of the securities having ordinary voting power for the election of
directors of such Person or (b) to direct or cause the direction of the
management and policies, whether through the ownership of Equity Interests, by
agreement or otherwise. Notwithstanding the foregoing, none of Wachovia Capital
Markets, LLC, Agent or any Lender shall be deemed an Affiliate of Parent or any
of its Subsidiaries solely by reason of the relationship created by the
Financing Agreements. Furthermore, for purposes of Sections 8 and 10 (other than
Section 10.6) hereof, neither the limited partners participating in the AEA
Group's investment programs nor any mezzanine or other debt investment funds
managed by the AEA Group nor portfolio companies of the AEA Group shall
constitute an Affiliate of Parent or any of its Subsidiaries.

 

1.16    “Agent” shall mean Wachovia Bank, National Association, in its capacity
as agent on behalf of Lenders pursuant to the terms hereof and any replacement
or successor agent hereunder.

 

1.17      “Applicable Margin” shall mean (a) for Loans that are Base Rate Loans
a rate equal to the sum of (i) the Base Rate plus (ii) 4.00% and (b) for Loans
that are Eurodollar Rate Loans a rate equal to the sum of (i) the Eurodollar
Rate plus (ii) 5.00%.

 

1.18      “Approved Fund” shall mean any Person (other than a natural Person),
including, without limitation, any special purpose entity, that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary

 

32

course of its business; provided, that, such Approved Fund must be administered
by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate
of an entity that administers or manages a Lender.

 

1.19    “Arranger” shall mean Wachovia Capital Markets, LLC, a Delaware limited
liability company, in its capacity as lead arranger, and its successors and
assigns hereunder.

 

1.20      “Asset Disposition” shall mean the disposition of any or all of the
assets (including, without limitation, the Equity Interests of a Subsidiary or
any ownership interest in a joint venture) of any Borrower, any Guarantor or any
of their Subsidiaries, whether by sale, lease, transfer or otherwise, in each
case in excess of $1,000,000, individually or in the aggregate for all such
dispositions for any fiscal year. The term “Asset Disposition” shall not include
the sale, lease or transfer of assets permitted by subsections (a), (c) through
(f), (g) (except as otherwise stated in said subsection (g)), and (h) through
(p) of the definition of Permitted Dispositions.

 

1.21    “Assignment and Acceptance” shall mean an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender’s interest hereunder in accordance with the provisions of Section 15.7
hereof.

 

1.22    “Bank Product Provider” shall have the meaning set forth in the ABL
Credit Agreement.

 

1.23    “Base Rate” shall mean, on any date, the greater of (a) the rate from
time to time publicly announced by Wachovia, or its successors, as its prime
rate, whether or not such announced rate is the best rate available at such bank
or (b) the Federal Funds Rate in effect on such day plus one-half (1/2%)
percent.

 

1.24    “Base Rate Loans” shall mean any Loans or portion thereof on which
interest is payable based on the Base Rate in accordance with the terms hereof.

 

1.25  “Borrower Agent” shall mean CPG I in its capacity as Borrower Agent on
behalf of itself and the other Borrowers and Guarantors pursuant to Section 6.10
hereof and its successors and assigns in such capacity.

 

1.26      “Borrowers” shall have the meaning set forth in the preamble hereto;
each sometimes being referred to herein individually as a “Borrower”.

 

 

1.27

“Borrowing Base” shall have the meaning set forth in the ABL Credit Agreement.

 

1.28    “Borrowing Base Certificate” shall have the meaning set forth in the ABL
Credit Agreement.

 

1.29    “Business Day” shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of New York, the State of Pennsylvania or the State of
North Carolina, and a day on which Agent is open for the transaction of
business, except that if a determination of a Business Day shall relate to

 

42

any Eurodollar Rate Loans, the term Business Day shall also exclude any day on
which banks are closed for dealings in dollar deposits in the London interbank
market.

 

1.30    “Capital Expenditures” shall mean with respect to any Person for any
period the aggregate of all expenditures by such Person and its Subsidiaries
made during such period that in accordance with GAAP are or should be included
in “property, plant and equipment” or in a similar fixed asset account on its
balance sheet, whether such expenditures are paid in cash or financed and
including all Capitalized Lease Obligations paid or payable during such period,
other than the interest component of any Capitalized Lease Obligation (without
duplication as to any period). No expenditures for assets purchased as part of a
Permitted Acquisition will constitute Capital Expenditures for purposes hereof.

 

1.31    “Capitalized Lease Obligations” shall mean, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date on a balance sheet prepared in
accordance with GAAP.

 

1.32    “Cash Dominion Event” shall have the meaning set forth in the ABL Credit
Agreement.

 

1.33      “Cash Equivalents” shall mean (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States government or issued by
any agency thereof and backed by the full faith and credit of the United States,
in each case maturing within two years from the date of acquisition thereof; (b)
marketable direct obligations issued by any state, commonwealth or territory of
the United States of America or any political subdivision of any such state,
commonwealth or territory or any public instrumentality thereof maturing within
two years from the date of acquisition thereof and, at the time of acquisition,
having an investment grade rating from either S&P or Moody's; (c) commercial
paper or other indebtedness maturing no more than one year from the date of
creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody's (or, if at any time neither S&P nor
Moody's shall be rating such obligations, then an equivalent rating from another
nationally recognized rating service); (d) certificates of deposit, time
deposits and Eurodollar time deposits or bankers' acceptances maturing within
two years from the date of acquisition thereof and overnight bank deposits
issued by any bank organized under the laws of the United States of America or
any state thereof or the District of Columbia or any U.S. branch of a foreign
bank having at the date of acquisition thereof combined capital and surplus of
not less than $250,000,000 in the case of domestic banks and $100,000,000 (or
the dollar equivalent thereof) in the case of foreign banks; (e) repurchase
obligations for underlying securities of the types described in clauses (a), (b)
and (d) above entered into with any bank meeting the qualifications specified in
clause (iv) above or securities dealers of recognized national standing; (f)
United States dollars, euros, pounds sterling and local currencies held by
Foreign Subsidiaries from time to time in the ordinary course of business; (g)
in the case of any investment by a Foreign Subsidiary or investments made in a
country outside the United States of America, "Cash Equivalents" will also
include: (i) direct obligations of the sovereign nation (or any agency thereof)
in which such Foreign Subsidiary is organized and is conducting business or in
obligations fully and unconditionally guaranteed by such sovereign nation (or
agency thereof) and (ii) other customarily utilized high-quality investments in
the country where such Subsidiary is located or in which such investment is
made; and (h) investments in money market funds or shares

 

52

of investment companies that are registered under the Investment Company Act of
1940 that invest substantially all their assets in securities of the types
described in clauses (a) through (g) above. Notwithstanding the foregoing, Cash
Equivalents shall include amounts denominated in currencies other than those set
forth in clauses (a), (b) and (f) above, provided, that, such amounts are
converted into any currency listed in clauses (a), (b) and (f) above, as
promptly as practicable and in any event within ten (10) Business Days following
the receipt of such amounts.

 

1.34    “Change in Law” means the occurrence, after the date of this Agreement,
of any of the following: (a) the adoption or taking effect of any law, rule,
regulation or treaty, (b) any change in any law, rule, regulation or treaty or
in the administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority.

 

1.35    “Change in Consolidated Working Capital” means for any period, a
positive or negative number equal to the amount of Consolidated Working Capital
at the beginning of such period minus the amount of Consolidated Working Capital
at the end of such period.

 

1.36    “Change of Control” shall mean the occurrence of any of the following
events: (a) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of Parent's assets
(determined on a consolidated basis for Parent and its Subsidiaries) to any
Person or group of related Persons for purposes of Section 13(d) of the Exchange
Act (a “Group”), together with any Affiliates thereof (whether or not otherwise
in compliance with the provisions of this Agreement), other than to the AEA
Group and the Management Group; (b) the approval by the holders of Equity
Interests of Parent or any Borrower, as the case may be, of any plan or proposal
for the liquidation or dissolution of Parent or such Borrower, respectively
(whether or not otherwise in compliance with the provisions of this Agreement);
(c) any Person or Group, other than the AEA Group and the Management Group,
shall become the owner, directly or indirectly, beneficially or of record, of
shares representing more than fifty (50%) percent of the aggregate ordinary
voting power represented by the issued and outstanding Equity Interests of
Parent; (d) the replacement of a majority of the board of directors of Parent
over a two-year period from the directors who constituted the board of directors
of Parent at the beginning of such period, and such replacement shall not have
been approved by a vote of at least a majority of the board of directors of
Parent then still in office who either were members of any such board of
directors at the beginning of such period or whose election as a member of any
such board of directors was previously so approved; or (e) Parent at any time
ceases to own, directly or indirectly, one hundred (100%) percent of the Equity
Interests of any Borrower.

 

 

1.37

“Closing Date” shall mean the date of this Agreement.

 

1.38    “Code” shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.

 

1.39    “Collateral” shall mean a collective reference to all real and personal
property pledged to Agent pursuant to terms of the Financing Agreements or
otherwise, including, without limitation, the Priority Collateral and the ABL
Priority Collateral.

 

62

1.40    “Collateral Access Agreement” shall mean an agreement in writing, in
form and substance satisfactory to Agent, from any lessor of premises to any
Borrower or Guarantor or any other person to whom any Collateral is consigned or
who has custody, control or possession of any such Collateral or is otherwise
the owner or operator of any premises on which any of such Collateral is
located, in favor of Agent (and if applicable, the ABL Agent) with respect to
the Collateral at such premises or otherwise in the custody, control or
possession of such lessor, consignee or other person.

 

1.41      “Commitment Percentage” shall mean, for each Lender, the percentage
next to such Lender’s name on Exhibit E hereto or on Schedule 1 to the
Assignment and Acceptance Agreement pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 15.7 hereof, as
the same may be adjusted from time to time in accordance with the terms hereof.

 

1.42      “Consolidated EBITDA” shall mean, for any period, the sum (without
duplication) of: (a) Consolidated Net Income for such period; and (b) to the
extent Consolidated Net Income has been reduced thereby, (i) all income taxes of
Parent and its Subsidiaries paid or accrued in accordance with GAAP for such
period, (ii) Interest Expense for such period, (iii) Consolidated Non-cash Items
for such period less any non-cash items increasing Consolidated Net Income for
such period, all as determined on a consolidated basis for Parent and its
Subsidiaries in accordance with GAAP, (iv) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued), and (v) up to (A) $1,500,000 each year payable to the AEA Group
pursuant to the first paragraph of Section 2 of the Management Agreement (as in
effect on the date hereof), (B) any transactional fees payable to the AEA Group
pursuant to such Management Agreement and (C) reasonable expenses payable to the
AEA Group pursuant to such Management Agreement (provided, that, the aggregate
amounts for purposes of clauses (B) and (C) of this subsection (v) shall not
exceed $1,500,000 each year). Notwithstanding the foregoing, the EBITDA of
Parent and its Subsidiaries on a consolidated basis for each period set forth on
Schedule 1.35 hereto shall be deemed to be the amount set forth on Schedule 1.35
hereto opposite such period.

 

1.43      “Consolidated Net Income” shall mean, with respect to Parent and its
Subsidiaries for any period, the aggregate net income (or loss) of Parent and
its Subsidiaries for such period on a consolidated basis, determined in
accordance with GAAP; provided, that, there shall be excluded therefrom: (a)
after-tax gains or losses from asset sales or abandonment or reserves relating
thereto; (b) after-tax extraordinary or nonrecurring gains or losses and any
unusual or non-recurring charges (including severance, relocation costs and
one-time compensation charges and including restructuring charges or reserves
including costs related to closure of facilities), including any expenses,
charges, gains or losses incurred in connection with any issuance of debt or
equity; (c) the cumulative effect of a change in accounting principles; (d) the
net income of any Person, other than Parent or a Subsidiary, except to the
extent of cash dividends or distributions paid to Parent or to its Subsidiary by
such Person; (e) in the case of a successor to Parent or any Borrower by
consolidation or merger or as a transferee of the assets of Parent or such
Borrower, as the case may be, any net income of the successor corporation prior
to such consolidation, merger or transfer of assets; (f) the amortization of any
premiums, fees or expenses incurred in connection with any Permitted Acquisition
by Parent or any of its Subsidiaries of assets or Capital Stock or any amounts
required or permitted by Accounting Principles Board Opinions Nos. 16 (including
non-cash write-ups and non-cash charges relating to inventory and fixed assets,
in each case arising in connection with such

 

72

acquisition) and 17 (including non-cash charges relating to intangibles and
goodwill) to be recorded on Parent’s consolidated balance sheet, in each case in
connection with such Permitted Acquisitions; (g) any non-cash compensation
charge arising from the grant of or issuance of stock, stock options or other
equity based awards; (h) unrealized gains and losses with respect to Hedging
Agreements or other derivative instruments pursuant to FASB 133, “Accounting for
Derivative Instruments and Hedging Activities”, or otherwise; (i) any non-cash
impact attributable to the application of the purchase method of accounting in
accordance with GAAP, including, without limitation, the total amount of
depreciation and amortization, cost of sales or other non-cash expense resulting
from the write-up of assets for such period on a consolidated basis in
accordance with GAAP to the extent such non-cash expense results from such
purchase accounting adjustments; (j) fees, costs and expenses incurred by Parent
or any of its Subsidiaries during any period in connection with any acquisition
by Parent or any of its Subsidiaries (including, without limitation,
amortization of debt issuance costs, debt discount or premium and other
financing fees and expenses directly relating thereto and write-offs of any debt
issuance costs relating to Indebtedness being retired or repaid in connection
with such acquisition, as well as bonus payments paid to employees in connection
with such acquisition); (k) any net after-tax income (loss) from the early
extinguishment of Indebtedness or Hedging Agreements or other derivative
instruments or amortization or write-off of deferred financing fees and any
expenses of bridge or other financing fees; and (l) any impairment charge or
asset write-off pursuant to Financial Accounting Standards Board Statement No.
142 and No. 144 and the amortization of intangibles arising pursuant to No. 141.

 

1.44      “Consolidated Non-cash Items” shall mean, for any period, the
aggregate depreciation, amortization and all other non-cash expenses of Parent
(including, without limitation, charges related to the impairment of
intangibles) and its Subsidiaries reducing Consolidated Net Income of Parent and
its Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP (including deferred rent but excluding any such charge
which requires an accrual of or a reserve for cash charges for any period).

 

1.45      “Consolidated Working Capital” means at the date of determination
thereof, the aggregate amount of all current assets (excluding cash, Cash
Equivalents and deferred taxes recorded as assets) minus the aggregate amount of
all current liabilities (excluding, without duplication, Indebtedness under the
ABL Credit Agreement and deferred taxes recorded as liabilities), in each case
determined on a consolidated basis for the Parent and its Subsidiaries.

 

 

1.46

“Control Agent” shall have the meaning provided in the Intercreditor Agreement.

 

1.47      “Control Collateral” shall have the meaning provided in the
Intercreditor Agreement.

 

1.48      “Debt Issuance” shall mean the issuance of any Indebtedness by any
Borrower or Guarantor or any of their Subsidiaries (excluding any Equity
Issuance or any Indebtedness of any Borrower or Guarantor or their Subsidiaries
permitted to be incurred pursuant to Section 10.3 hereof (other than to the
extent set forth in clause (k) thereof)).

 

1.49    “Default” shall mean an act, condition or event which with notice or
passage of time or both would constitute an Event of Default.

 

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1.50    “Defaulting Lender” shall mean, at any time, any Lender that, at such
time (a) has failed to make a Loan required pursuant to the terms of this
Agreement and such default remains uncured, (b) has failed to pay to the Agent
or any Lender an amount owed by such Lender pursuant to the terms of this
Agreement and such default remains uncured, or (c) has been deemed insolvent or
has become subject to a bankruptcy or insolvency proceeding or to a receiver,
trustee or similar official.

 

1.51    “Deposit Account Control Agreement” shall mean an agreement in writing,
in form and substance reasonably satisfactory to Agent, by and among Agent (and
if applicable, the ABL Agent or the Control Agent), any Borrower or any
Guarantor that is the customer of the bank with respect to a deposit account at
such bank and such bank, which, if required hereunder, is sufficient to perfect
the security interests of Agent therein and provides such other rights with
respect thereto as Agent requires.

 

1.52    “Disqualified Equity Interest” means, with respect to any Person, any
Equity Interest in such Person that, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable, either
mandatorily or at the option of the holder thereof) or upon the happening of any
event or condition:

 

(a)       matures or is mandatorily redeemable (other than solely for Equity
Interests in such Person that do not constitute Disqualified Equity Interests
and cash in lieu of fractional shares of such Equity Interests), whether
pursuant to a sinking fund obligation or otherwise;

 

(b)       is convertible or exchangeable at the option of the holder thereof for
Indebtedness or Equity Interests (other than solely for Equity Interests in such
Person that do not constitute Disqualified Equity Interest and cash in lieu of
fractional shares of such Equity Interests); or

 

(c)       is redeemable (other than solely for Equity Interests in such Person
that do not constitute Disqualified Equity Interest and cash in lieu of
fractional shares of such Equity Interests) or is required to be repurchased by
such Person or any of its Affiliates, in whole or in part, at the option of the
holder thereof;

 

in each case, on or prior to the date that is six (6) months after the Maturity
Date; provided, that, an Equity Interest that would not constitute a
Disqualified Equity Interest but for terms thereof giving holders thereof the
right to require such Person to redeem or purchase such Equity Interest upon the
occurrence of an “asset sale” or a “change of control” shall not constitute a
Disqualified Equity Interest if any such requirement becomes operative only
after repayment in full in cash of all of the Obligations.

 

1.53      “Engagement Letter” shall mean the letter agreement dated February 14,
2008, addressed to Parent from Wachovia and Arranger, as amended, modified,
extended, restated, replaced, or supplemented from time to time.

 

1.54      “Eligible Transferee” shall mean (a) any Lender; (b) the parent
company of any Lender and/or any Affiliate of such Lender which is at least
fifty (50%) percent owned by such Lender or its parent company; (c) any person
(whether a corporation, partnership, trust or

 

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otherwise) that is an Approved Fund, and in each case is approved by Agent
(provided, that, subject to Section 15.7, so long as no Event of Default exists
or has occurred and is continuing, such person shall not include any person that
has been designated in writing by Borrower Agent to Agent prior to the date
hereof as unacceptable); and (d) any other commercial bank, financial
institution or “accredited investor” (as defined in Regulation D under the
Securities Act of 1933) approved by Agent, such approval not to be unreasonably
withheld, conditioned or delayed, provided, that, (i) neither any Borrower nor
any Guarantor or any Affiliate (other than any Sponsor Affiliated Lender or an
Affiliate of a Sponsor Affiliated Lender) of any Borrower or Guarantor shall
qualify as an Eligible Transferee and (ii) no Person to whom any Indebtedness
which is in any way subordinated in right of payment to any other Indebtedness
of any Borrower or Guarantor shall qualify as an Eligible Transferee, except as
Agent and Required Lenders may otherwise specifically agree.

 

1.55      “Environmental Laws” shall mean all foreign, Federal, State,
Provincial and local laws (including common law), legislation, rules, codes,
licenses, permits (including any conditions imposed therein), authorizations,
binding judicial or administrative decisions, injunctions or agreements between
any Borrower or Guarantor and any Governmental Authority, (a) relating to
pollution and the protection, preservation or restoration of the environment
(including air, water vapor, surface water, ground water, drinking water,
drinking water supply, surface land, subsurface land, plant and animal life or
any other natural resource), or to human health or safety, (b) relating to the
exposure to, or the use, storage, recycling, treatment, generation, manufacture,
processing, distribution, transportation, handling, labeling, production,
release or disposal, or threatened release, of Hazardous Materials, or (c)
relating to all laws with regard to recordkeeping, notification, disclosure and
reporting requirements respecting Hazardous Materials as now or may at any time
be in effect during the term of this Agreement.

 

1.56      “Equipment” shall mean, as to each Borrower and Guarantor, all of such
Borrower’s and Guarantor’s now owned and hereafter acquired equipment, wherever
located, including machinery, data processing and computer equipment (whether
owned or leased and including embedded software that is licensed as part of such
computer equipment), vehicles, rolling stock, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located.

 

1.57      “Equity Interests” shall mean, with respect to any Person, all of the
shares, interests, participations or other equivalents (however designated) of
such Person’s capital stock or partnership, limited liability company or other
equity, ownership or profit interests at any time outstanding, all of the
warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other interests in) such Person, all of
the securities convertible into or exchangeable for shares of capital stock of
(or other interests in) such Person or warrants, rights or options for the
purchase or acquisition from such Person of such shares (or such other
interests), but excluding any interests in phantom equity plans and any debt
security that is convertible into or exchangeable for such shares, and all of
the other ownership or profit interests in such Person (including partnership,
member or trust interests therein), whether voting or nonvoting, and whether or
not such shares, warrants, options, rights or other interests are outstanding on
any date of determination.

 

1.58    “Equity Issuance” shall mean any public offering by any Borrower or
Guarantor or any Subsidiary pursuant to a registration statement under the
Securities Act (other than a registration statement on Form S-8 (or any
successor form)) to any Person which is not a Borrower

 

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or Guarantor of (a) shares of its capital stock (including, without limitation,
any issuance of shares of its capital stock pursuant to the exercise of options
or warrants or pursuant to the conversion of any debt securities to equity) or
(b) warrants or options that are exercisable for shares of its capital stock.

 

1.59      “ERISA” shall mean the Employee Retirement Income Security Act of
1974, together with all rules, regulations and interpretations thereunder or
related thereto.

 

1.60      “ERISA Affiliate” shall mean any person required to be aggregated with
any Borrower, any Guarantor or any of its or their respective Subsidiaries under
Sections 414(b), 414(c), 414(m) or 414(o) of the Code.

 

1.61      “ERISA Event” shall mean (a) any “reportable event”, as defined in
Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a
Pension Plan, other than events as to which the requirement of notice has been
waived in regulations by the Pension Benefit Guaranty Corporation; (b) the
adoption of any amendment to a Pension Plan that would require the provision of
security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c)
a complete or partial withdrawal by any Borrower, Guarantor or any ERISA
Affiliate from a Multiemployer Plan or a cessation of operations which is
treated as such a withdrawal or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment
of a Pension Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the Pension Benefit Guaranty
Corporation to terminate a Pension Plan; (e) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan; (f) the
imposition of any liability under Title IV of ERISA, other than the Pension
Benefit Guaranty Corporation premiums due but not delinquent under Section 4007
of ERISA, upon any Borrower, Guarantor or any ERISA Affiliate in excess of
$2,500,000.

 

1.62      “Eurodollar Rate Loans” shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.

 

 

1.63

“Event of Default” shall have the meaning specified in Section 12.1 hereof.

 

1.64      “Excess Availability” shall have the meaning set forth in the ABL
Credit Agreement.

 

1.65      “Excess Cash Flow” shall mean, with respect to any fiscal year of the
Parent, for the Parent and its Subsidiaries on a consolidated basis, an amount
equal to (a) Consolidated EBITDA for such period plus (b) all cash extraordinary
or nonrecurring gains excluded from the definition of Consolidated Net Income
plus (c) the Change in Consolidated Working Capital for such period minus (d)
Capital Expenditures for such period (to the extent paid in cash and not
financed with purchase money Indebtedness) and cash consideration paid in
connection with Permitted Acquisitions permitted hereunder minus (e) Scheduled
Indebtedness Payments and other prepayments (accompanied, in the case of any
revolving Indebtedness, by the permanent reduction of commitments in respect
thereof) of Indebtedness permitted to be made by Section 10.9, in each case,
made during such period minus (f) Interest Expense (excluding any Interest
Expense associated with intercompany indebtedness) for such period minus (g)
amounts paid in cash in respect of federal, state, local and foreign income
taxes of Parent and its Subsidiaries with respect to such period

 

112

minus (h) all cash extraordinary or nonrecurring losses excluded from the
definition of Consolidated Net Income and other cash charges included in the
definition of Consolidated EBITDA minus (i) Restricted Payments made in cash
during such period to the extent permitted by Sections 10.5(g), (h), (i), (j) or
(k) and not financed minus (j) Permitted Investments made during such period to
the extent permitted by clauses (j), (s) or (t) of the definition of Permitted
Investments and not financed.

 

1.66      “Exchange Act” shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.

 

 

1.67

“Excluded Property” shall mean:

 

 

(a)

leased Real Property;

 

(b)       Real Property with a fair market value of less than (i) $500,000 for
any individual property or (ii) $1,000,000 in the aggregate for all excluded
Real Property other than any Real Property is adjacent to, contiguous with or
necessary or related to or used in connection with any Mortgaged Property;

 

(c)       motor vehicles subject to certificates of title in accordance with
applicable State law;

 

(d)       any rights or interests in any contract, lease, permit, license,
charter or license agreement covering real or personal property, as such, if
under the terms of such contract, lease, permit, license, charter or license
agreement, or applicable law with respect thereto, the valid grant of a security
interest or lien therein to Agent is prohibited and such prohibition has not
been or is not waived or the consent of the other party to such contract, lease,
permit, license, charter or license agreement has not been or is not otherwise
obtained or under applicable law such prohibition cannot be waived; provided,
that, the foregoing exclusion shall in no way be construed (i) to apply if any
such prohibition is unenforceable under Sections 9-406, 9-407 or 9-408 of the
UCC or other applicable law or (ii) so as to limit, impair or otherwise affect
Agent's unconditional continuing security interests in and liens upon any rights
or interests of a Borrower in or to monies due or to become due under any such
contract, lease, permit, license, charter or license agreement (including any
Receivables);

 

(e)       any Equipment which is, or at the time of a Borrower's acquisition
thereof shall be, subject to a purchase money mortgage or other purchase money
lien or security interest (including such interest giving rise to Capitalized
Lease Obligations) permitted under clause (e) of the definition of the term
Permitted Liens hereof if: (i) the valid grant of a security interest or lien to
Agent in such item of Equipment is prohibited by the terms of the agreement
between such Borrower and the holder of such purchase money mortgage or other
purchase money lien or security interest or under applicable law and such
prohibition has not been or is not waived, or the consent of the holder of the
purchase money mortgage or other purchase money lien or security interest has
not been or is not otherwise obtained, or under applicable law such prohibition
cannot be waived and (ii) the purchase money mortgage or other purchase money
lien or security interest on such item of Equipment is or shall become valid and
perfected;

 

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(f)        the Capital Stock of any Subsidiary organized under the laws of a
jurisdiction outside the United States of America, its territories or its
possessions that is a "controlled foreign corporation" (as such term is defined
in Section 957(a) of the Code or a successor provision thereof) in excess of
sixty five (65%) percent of all of the issued and outstanding shares of Capital
Stock of such Subsidiary entitled to vote (within the meaning of Treasury
Regulation Section 1.956-2);

 

(g)       trademark or servicemark applications that have been filed with the
U.S. Patent and Trademark Office on the basis of an "intent-to-use" with respect
to such marks, unless and until a statement of use or amendment to allege use is
filed or any other filing is made or circumstances otherwise change so that the
interests of any Borrower or Guarantor in such applications is no longer on an
"intent-to-use" basis, at which time such applications shall automatically and
without further action by the parties be subject to the security interests and
liens granted by Borrowers or Guarantors to Agent hereunder.

 

1.68      “Extraordinary Receipt” shall mean any cash received by or paid to or
for the account of any Person not in the ordinary course of business, including
tax refunds, pension plan reversions, proceeds of insurance (other than proceeds
of business interruption insurance to the extent such proceeds constitute
compensation for lost earnings), condemnation awards (and payments in lieu
thereof), indemnity payments and any purchase price adjustments; provided,
however, that an Extraordinary Receipt shall not include cash receipts from tax
refunds, proceeds of insurance, condemnation awards (or payments in lieu
thereof) or indemnity payments to the extent that such proceeds, awards or
payments (a) in respect of loss or damage to equipment, fixed assets or real
property are applied (or in respect of which expenditures were previously
incurred) to replace or repair the equipment, fixed assets or real property in
respect of which such proceeds were received in accordance with the terms of
Section 2.2, (b) are received by any Person in respect of any third party claim
against such Person and applied to pay (or to reimburse such Person for its
prior payment of) such claim and the costs and expenses of such Person with
respect thereto or (c) are, subject to the Intercreditor Agreement, required to
be applied to reduce the ABL Obligations (and are so applied).

 

1.69      “Federal Funds Rate” shall mean, for any period, a fluctuating
interest rate per annum equal, for each day during such period, to the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal Funds transactions with members of the Federal Reserve System
arranged by Federal Funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day on such transactions
received by the Agent from three Federal Funds brokers of recognized standing
selected by it.

 

1.70      “Financing Agreements” shall mean, collectively, this Agreement, the
Pledge Agreement, the Guarantee and all notes, guarantees, security agreements,
deposit account control agreements, investment property control agreements,
intercreditor agreements (including the Intercreditor Agreement) and all other
agreements, documents and instruments now or at any time hereafter executed
and/or delivered by any Borrower or Guarantor in connection with this Agreement.

 

132

1.71      “Fixed Charge Coverage Ratio” shall mean, with respect to the Parent
and its Subsidiaries on a consolidated basis for the twelve-month period ending
on the last day of any fiscal quarter, the ratio of (a) Consolidated EBITDA for
such twelve month period to (b) Fixed Charges for such twelve month period, in
each case calculated on a Pro Forma Basis.

 

1.72      “Fixed Charges” shall mean, with respect to the Parent and its
Subsidiaries on a consolidated basis for the twelve-month period ending in the
last day of any fiscal quarter, the sum of (a) Interest Expense for such period
plus (b) the amount of all cash dividend payments (excluding items eliminated in
consolidation) on any series of preferred stock of any Borrower or any of its
Subsidiaries (other than dividends paid in Equity Interests that are not
Disqualified Equity Interests) paid, accrued or scheduled to be paid or accrued
during such period.

 

1.73      “Flood Hazard Property” shall mean any Mortgaged Property that is in
an area designated by the Federal Emergency Management Agency as having special
flood or mudslide hazards.

 

1.74      “Foreign Lender” shall mean any Lender that is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code).

 

1.75      “Foreign Subsidiary” shall mean a Subsidiary of Parent that is
organized or incorporated under the laws of any jurisdiction outside of the
United States of America that is treated as a corporation for U.S. federal
income tax purposes and any direct or indirect Subsidiary of a Foreign
Subsidiary; sometimes being referred to herein collectively as “Foreign
Subsidiaries”.

 

1.76      “GAAP” shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except that,
unless otherwise agreed by Agent, for purposes of Section 11 hereof, GAAP shall
be determined on the basis of such principles in effect on the date hereof and
consistent with those used in the preparation of the most recent audited
financial statements delivered to Agent prior to the date hereof, subject,
however, in the case of determination of compliance with the financial covenant
in Section 11, to the provisions of Section 15.2(h) hereof.

 

1.77      “Governmental Authority” shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

 

1.78      “Guarantee” shall mean the guarantee dated as of the Closing Date
executed by the Guarantors in favor of Agent, for the benefit of the Secured
Parties, as the same may from time to time be amended, modified, extended,
restated, replaced, or supplemented from time to time in accordance with the
terms hereof and thereof.

 

1.79      “Guarantors” shall have the meaning set forth in the preamble hereto
and include any other Person other than a Foreign Subsidiary that any time after
the date hereof becomes a Guarantor; each sometimes being referred to herein
individually as a “Guarantor”.

 

142

 

1.80      “Guaranty Obligations” shall mean, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including, without limitation, any
obligation, whether or not contingent, (a) to purchase any such Indebtedness or
any property constituting security therefor, (b) to advance or provide funds or
other support for the payment or purchase of any such Indebtedness or to
maintain working capital, solvency or other balance sheet condition of such
other Person (including, without limitation, keep-well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (c) to lease or
purchase property, securities or services primarily for the purpose of assuring
the holder of such Indebtedness, or (d) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount of any
Guaranty Obligation hereunder shall (subject to any limitations set forth
therein) be deemed to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in respect of which
such Guaranty Obligation is made.

 

1.81      “Hazardous Materials” shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and including
any other substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).

 

1.82      “Hedge Agreement” shall mean an agreement between any Borrower or
Guarantor and Agent or any Bank Product Provider that is a swap agreement as
such term is defined in 11 U.S.C. Section 101, and including any rate swap
agreement, basis swap, forward rate agreement, commodity swap, interest rate
option, forward foreign exchange agreement, spot foreign exchange agreement,
rate cap agreement rate, floor agreement, rate collar agreement, currency swap
agreement, cross-currency rate swap agreement, currency option, and any other
similar agreement (including any option to enter into any of the foregoing or a
master agreement for any the foregoing together with all supplements thereto)
entered into for the purpose of protecting against or managing exposure to
fluctuations in interest or exchange rates, currency valuations or commodity
prices; sometimes being collectively referred to herein as “Hedge Agreements”.

 

1.83      “Inactive Subsidiary” shall mean, collectively, (a) each Subsidiary of
Parent listed on Schedule 1.74 to the Information Certificate and (b) a
Subsidiary of Parent designated in writing by Borrower Agent to Agent after the
date hereof as an Inactive Subsidiary and agreed to by Agent, provided, that,
(i) such Subsidiary so designated after the date hereof shall only be considered
an Inactive Subsidiary to the extent that the representations with respect
thereto set forth in Section 8.12(e) hereof are true and correct with respect
thereto and Agent shall have received such evidence thereof as it may reasonably
require and (ii) such Subsidiaries are sometimes referred to herein collectively
as “Inactive Subsidiaries”.

 

1.84      “Indebtedness” shall mean, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by

 

152

bonds, debentures, notes or similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid or accrued, (d) all
obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person (other than customary
reservations or retentions of title under agreements with suppliers entered into
in the ordinary course of business), (e) all obligations of such Person issued
or assumed as the deferred purchase price of property or services purchased by
such Person which are due six (6) months or more from the date after such
property is acquired or such services are completed, and including, without
limitation, customary indemnification, adjustment of purchase price or similar
obligations, earn-outs or other similar obligations, in each case, incurred in
connection with a Permitted Acquisition or Permitted Disposition (but excluding
trade debt and accrued expenses incurred in the ordinary course of business on
normal trade terms and not overdue by more than ninety (90) days) which would
appear as liabilities on a balance sheet of such Person in accordance with GAAP,
(f) all obligations of such Person under take-or-pay or similar arrangements or
under commodities agreements, (g) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any security interest in, lien or other encumbrance
upon, or payable out of the proceeds of production from property owned or
acquired by such Person, whether or not the obligations secured thereby have
been assumed, (h) all Guaranty Obligations of such Person with respect to
Indebtedness of another Person, (i) the principal portion of all Capitalized
Lease Obligations of such Person, (j) the maximum amount of all standby letters
of credit issued or bankers' acceptances facilities created for the account of
such Person and, without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (k) all preferred Equity Interests issued by such Person and
which by the terms thereof could be (at the request of the holders thereof or
otherwise) subject to mandatory sinking fund payments, redemption or other
acceleration prior to the date which is ninety-one (91) days after the Maturity
Date and other Disqualified Equity Interests, (l) the principal balance
outstanding under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product and (m)
the Indebtedness of any partnership or unincorporated joint venture in which
such Person is a general partner or a joint venturer, but only to the extent
such Person is liable for such Indebtedness.

 

1.85      “Information Certificate” shall mean, collectively, the Information
Certificate of Borrowers and Guarantors constituting Exhibit C hereto containing
material information with respect to Borrowers and Guarantors, their respective
businesses and assets provided by or on behalf of Borrowers and Guarantors to
Agent in connection with the preparation of this Agreement and the other
Financing Agreements and the financing arrangements provided for herein.

 

1.86      “Intellectual Property” shall mean, as to each Borrower and Guarantor,
such Borrower’s and Guarantor’s now owned and hereafter arising or acquired:
patents, patent rights, patent applications, copyrights, works which are the
subject matter of copyrights, copyright applications, copyright registrations,
trademarks, servicemarks, trade names, trade styles, trademark and service mark
applications, and licenses and rights to use any of the foregoing and all
applications, registrations and recordings relating to any of the foregoing as
may be filed in the United States Copyright Office, the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof, any political subdivision thereof or in any other country or
jurisdiction, together with all rights and privileges arising under applicable
law with respect to any Borrower’s or Guarantor’s use of any of the foregoing;
all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to sue for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating

162

standards; goodwill (including any goodwill associated with any trademark or
servicemark, or the license of any trademark or servicemark); customer and other
lists in whatever form maintained; trade secret rights, copyright rights, rights
in works of authorship; software and contract rights relating to computer
software programs, in whatever form created or maintained.

 

1.87      “Intercreditor Agreement” shall mean the intercreditor agreement by
and among the Agent, the ABL Agent and the Control Agent and agreed to by
Borrowers and Guarantors, providing for such parties' relative rights and
priorities with respect to the assets and properties of Borrowers and Guarantors
and related matters, as the same then exists or may thereafter be amended,
modified, supplemented, extended, renewed, restated or replaced which shall be
in form and substance satisfactory to Agent.

 

1.88      “Interest Expense” shall mean, for any period, as to any Person, as
determined in accordance with GAAP, the amount equal to total interest expense
of such Person and its Subsidiaries on a consolidated basis for such period,
whether paid or accrued (including the interest component of any Capital Lease
for such period), and in any event, including, without limitation, (a) discounts
in connection with the sale of any Accounts, (b) bank fees, commissions,
discounts and other fees and charges owed with respect to letters of credit,
banker’s acceptances or similar instruments or any factoring, securitization or
similar arrangements, (c) interest payable by addition to principal or in the
form of property other than cash and any other interest expense not payable in
cash, and (d) the costs or fees for such period associated with Hedging
Agreements to the extent not otherwise included in such total interest expense
(excluding breakage costs incurred in connection with the termination of Hedging
Agreements on or about the date hereof, if any).

 

1.89      “Interest Period” shall mean for any Eurodollar Rate Loan, a period of
approximately one (1), two (2), three (3), or six (6) months duration (and, if
acceptable to all Lenders, nine (9) or twelve (12) months duration) as any
Borrower (or Borrower Agent on behalf of such Borrower) may elect, the exact
duration to be determined in accordance with the customary practice in the
applicable Eurodollar Rate market; provided, that, such Borrower (or Borrower
Agent on behalf of such Borrower) may not elect an Interest Period which will
end after the last day of the then-current term of this Agreement.

 

 

1.90

“Interest Rate” shall mean,

 

(a)       as to Base Rate Loans, a rate equal to the then Applicable Margin for
Base Rate Loans on a per annum basis plus the Base Rate, and

 

(b)       as to Eurodollar Rate Loans, a rate equal to the then Applicable
Margin for Eurodollar Rate Loans on a per annum basis plus the Adjusted
Eurodollar Rate.

 

(c)       Notwithstanding anything to the contrary contained herein, Agent may,
at its option, and Agent shall, at the direction of the Required Lenders
increase the Applicable Margin otherwise used to calculate the Interest Rate for
Base Rate Loans and Eurodollar Rate Loans plus two percent (2%) per annum, for
the period from and after the date of the occurrence of an Event of Default but
only for so long as such Event of Default is continuing.

 

172

1.91      “International” shall mean CPG International Holdings LP, a Delaware
limited liability company, and its successors and assigns.

 

1.92      “Inventory” shall mean, as to each Borrower and Guarantor, all of such
Borrower’s and Guarantor’s now owned and hereafter existing or acquired goods,
wherever located, which (a) are leased by such Borrower or Guarantor as lessor;
(b) are held by such Borrower or Guarantor for sale or lease or to be furnished
under a contract of service; (c) are furnished by such Borrower or Guarantor
under a contract of service; or (d) consist of raw materials, work in process,
finished goods or materials used or consumed in its business.

 

 

1.93

“Investment” shall have the meaning set forth in Section 10.4 hereof.

 

1.94      “Investment Property Control Agreement” shall mean an agreement in
writing, in form and substance reasonably satisfactory to Agent, by and among
Agent (and if applicable, ABL Agent or Control Agent), the applicable Borrower
or Guarantor that is an account holder or customer (as the case may be) and any
securities intermediary, commodity intermediary or other person who has custody,
control or possession of any investment property of such account holder or
customer, that is sufficient to perfect the security interests of Agent therein
and provides such other rights with respect thereto as Agent requires.

 

1.95      “Last Twelve Month Period” shall mean, as of any date, the twelve (12)
most recent immediately preceding fiscal months for which Agent has received
financial statements in accordance with Section 9.6.

 

1.96      “Lenders” shall mean the financial institutions who are signatories
hereto as Lenders and other persons made a party to this Agreement as a Lender
in accordance with Section 15.7 hereof, and their respective successors and
assigns; each sometimes being referred to herein individually as a “Lender”.

 

 

1.97

“License Agreements” shall have the meaning set forth in Section 8.11 hereof.

 

1.98      “Loans” or “Term Loan” shall mean the term loan provided to or for the
benefit of any Borrower pursuant to Section 2.1 hereof.

 

1.99      “London Interbank Offered Rate” shall mean, with respect to any
Eurodollar Rate Loan for the Interest Period applicable thereto, , the rate of
interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Successor Page 3750 (or any successor page) as the London
interbank offered rate for deposits in U.S. Dollars at approximately 11:00 A.M.
(London time) two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, that, if more
than one rate is specified on Telerate Successor Page 3750 for such comparable
period, the applicable rate shall be the arithmetic mean of all such rates. If,
for any reason, such rate is not available, the term “London Interbank Offered
Rate” shall mean, with respect to any Eurodollar Rate Loan for the Interest
Period applicable thereto, the rate of interest per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars at approximately 11:00
A.M. (London time) two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the applicable rate for
such comparable period

 

182

shall be the arithmetic mean of all such rates. Notwithstanding the foregoing,
for purposes of this Agreement, the London Interbank Offered Rate shall in no
event be less than 3.25% at any time.

 

1.100    “Management Agreement” shall mean the Management Agreement, dated as of
May 10, 2005, by and between AEA Investors LLC and CPG I, as amended pursuant to
Amendment No. 1 to Management Agreement, dated as of May 1, 2006, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.

 

1.101    “Management Group” means the group consisting of the directors,
executive officers and other management personnel of any Borrower or any direct
or indirect parent entity of any Borrower, as the case may be, on the date
hereof, together with (a) any new directors whose election by such boards of
directors or whose nomination for election by the shareholders of any Borrower
or any direct or indirect parent entity of any Borrower as applicable, was
approved by a vote of a majority of the directors of such Borrower or any direct
or indirect parent entity of such Borrower, as applicable, then still in office
who were either directors on the date hereof or whose election or nomination was
previously so approved and (b) executive officers and other management personnel
of any Borrower or any direct or indirect parent entity of any Borrower, as
applicable, hired at a time when the directors on the date hereof, together with
the directors so approved, constituted a majority of the directors of such
Borrower or any direct or indirect parent entity of such Borrower, as
applicable.

 

1.102    “Material Adverse Effect” shall mean a material adverse effect on (a)
business, assets, liabilities, results of operations, property or financial
condition of the Parent and its Subsidiaries taken as a whole; (b) the ability
of any Borrower or any Guarantor to perform its obligations, when such
obligations are required to be performed, under this Agreement or any of the
other Financing Agreements or (c) the validity or enforceability of this
Agreement, any of the Notes or any of the other Financing Agreements or the
rights or remedies of the Agent or the Lenders hereunder or thereunder or the
perfection or priority of any Lien in favor of the Agent.

 

1.103    “Material Contract” shall mean (a) any contract or other agreement
(other than the Financing Agreements), written or oral, of any Borrower or
Guarantor involving monetary liability of or to any Person in an amount in
excess of $2,000,000 in any fiscal year (but excluding for this purpose
contracts or other agreements for the purchase and sale of goods or services
where the other party thereto has no obligation to purchase or sell such goods
or services under such contract or other agreement) and (b) any other contract
or other agreement (other than the Financing Agreements), whether written or
oral, to which any Borrower or Guarantor is a party as to which the breach,
nonperformance, cancellation or failure to renew by any party thereto would have
a Material Adverse Effect.

 

1.104    “Maturity Date” shall mean February 28, 2011 unless accelerated sooner
in accordance with the terms hereof.

 

1.105    “Maximum Interest Rate” shall mean the maximum non-usurious rate of
interest under applicable Federal or State law as in effect from time to time
that may be contracted for, taken, reserved, charged or received in respect of
the indebtedness of a Borrower to Agent or a Lender, or to the extent that at
any time such applicable law may thereafter permit a higher maximum non-usurious
rate of interest, then such higher rate.

 

192

1.106    “Mortgaged Property” shall mean any owned Real Property of a Borrower
or Guarantor listed in the Information Certificate (other than Excluded
Property) and any other Real Property of a Borrower or Guarantor subject to a
Mortgage pursuant to Section 9.13.

 

1.107    “Mortgages” shall mean any mortgage, deed of trust or deed to secure
debt executed by a Borrower or Guarantor in favor of the Agent, for the benefit
of the Secured Parties, as the same may be amended, modified, extended,
restated, replaced, or supplemented from time to time.

 

1.108    “Moody’s” shall mean Moody’s Investors Service, Inc., and its
successors and assigns.

 

1.109    “Multiemployer Plan” shall mean a “multi-employer plan” as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by any Borrower,
Guarantor or any ERISA Affiliate or with respect to which any Borrower,
Guarantor or any ERISA Affiliate may incur any liability.

 

1.110    “Net Cash Proceeds” shall mean the aggregate cash proceeds received by
Parent or any of its Subsidiaries in respect of any Asset Disposition,
Extraordinary Receipt, or as proceeds of any loans or other financial
accommodations provided to it or as proceeds from any Equity Issuance or
Indebtedness, in each case net of the reasonable and customary direct costs
relating to such Asset Disposition, Extraordinary Receipt, or loans or other
financial accommodation or Equity Issuance (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and taxes
paid or payable as a result thereof and in the case of any Asset Disposition,
amounts applied to the repayment of Indebtedness secured by a valid and
enforceable lien (other than a lien created under the Financing Agreements) on
the asset or assets that are the subject of such sale or other disposition
required to be repaid in connection with such transaction.

 

1.111    “Obligations” shall mean any and all Loans and all other obligations,
liabilities and indebtedness of every kind, nature and description owing by any
or all of Borrowers to Agent or any Lender, including principal, interest,
charges, fees, costs and expenses, however evidenced, whether as principal,
surety, endorser, guarantor or otherwise, arising under any of the Financing
Agreements, whether now existing or hereafter arising, whether arising before,
during or after the initial or any renewal term of this Agreement or after the
commencement of any case with respect to such Borrower under the United States
Bankruptcy Code or any similar statute (including the payment of interest and
other amounts which would accrue and become due but for the commencement of such
case, whether or not such amounts are allowed or allowable in whole or in part
in such case), whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated, or
secured or unsecured.

 

1.112    “OFAC” means the U.S. Department of the Treasury’s Office of Foreign
Assets Control.

 

 

1.113

“Other Taxes” shall have the meaning given to such term in Section 6.8 hereof.

 

1.114    “Parent” shall mean CPG International Inc., a Delaware corporation, and
its successors and assigns.

 

202

1.115    “Participant” shall mean any financial institution that acquires and
holds a participation in the interest of any Lender in any of the Loans in
conformity with the provisions of Section 15.7 of this Agreement governing
participations.

 

1.116    “Partnership Agreement” shall mean the Agreement of Limited Partnership
in International, effective as of May 10, 2005, by and among CPH Holding I LLC,
as General Partner and the persons who subscribe thereto as Limited Partners, as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.

 

1.117    “Patriot Act” shall mean The Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)), as
amended or modified from time to time.

 

1.118    “Pension Plan” shall mean a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which any Borrower or Guarantor sponsors,
maintains, or to which any Borrower, Guarantor or ERISA Affiliate makes, is
making, or is obligated to make contributions, other than a Multiemployer Plan.

 

 

1.119

“Permits” shall have the meaning set forth in Section 8.7.

 

1.120    “Permitted Acquisitions” shall mean the purchase by a Borrower or
Guarantor after the date hereof of all or substantially all of the assets of any
Person or a business or division of such Person (including pursuant to a merger
with such Person or the formation of a wholly owned Subsidiary solely for such
purpose that is merged with such Person) or of all or a majority of the Equity
Interests (such assets or Person being referred to herein as the “Acquired
Business”) and in one or a series of transaction that satisfies each of the
following conditions:

 

(a)       as of the date of the acquisition or any payment in respect thereof
and after giving effect to the acquisition or such payment, no Default or Event
of Default shall exist or have occurred and be continuing;

 

(b)       as of the date of such acquisition and after giving effect thereto and
to any payments in connection therewith and to any increase in the Borrowing
Base as a result of such acquisition, using the most recent calculation of the
Borrowing Base prior to the date of any such payment, on a pro forma basis, the
sum of (i) the aggregate amount of the Excess Availability of Borrowers and (ii)
cash on hand of Borrowers and Guarantors shall be not less than $10,000,000;

 

(c)       if the aggregate amount of the consideration payable with respect to
such proposed acquisition or series of related acquisitions is greater than
$5,000,000, Agent shall have received, not less than ten (10) Business Days’
prior to the acquisition, the Permitted Transaction Projections with respect to
such acquisition showing that the Senior Secured Leverage Ratio for Parent and
its Subsidiaries is projected to be equal to or less than 2.50 to 1.0 at all
times during such period; provided, that, consideration for such purpose shall
include the aggregate amount of the purchase price (including, but not limited
to, any assumed debt, earn-outs (valued at the maximum amount payable
thereunder), deferred payments, or Equity Interests, net of the applicable
Acquired Business’ cash (including Cash

 

212

Equivalents) balance as of the date of the acquisition) to be paid, issued or
delivered in connection with any such Permitted Acquisition;

 

(d)       Agent shall have received a Pro Forma Compliance Certificate
demonstrating that the Parent and its Subsidiaries shall be in compliance on a
Pro Forma Basis with the financial covenant set forth in Section 11.1 both
prior, and after giving effect, to such acquisition,

 

(e)       the Acquired Business shall be a company that engages in a line of
business substantially similar to, or ancillary or related to, or used or useful
to, the business that Borrowers are engaged in on the date hereof;

 

(f)        in the case of the acquisition of the Equity Interests of another
Person, the board of directors (or other comparable governing body) of such
other Person shall have duly approved such acquisition and such Person shall not
have announced that it will oppose such acquisition and shall not have commenced
any action which alleges that such acquisition will violate applicable law;

 

(g)       Agent shall have received, not less than ten (10) Business Days’ prior
written notice of the proposed acquisition and such information with respect
thereto as Agent may request, in each case with such information to include (i)
parties to such acquisition, (ii) the proposed date and amount of the
acquisition, (iii) a list and description of the assets or shares to be
acquired, (iv) the total purchase price for the assets to be purchased (and the
terms of payment of such purchase price);

 

(h)       if the aggregate amount of the consideration payable with respect to
such proposed acquisition or series of related acquisitions is greater than
$5,000,000, Agent shall have received either (i) the audited consolidated
financial statements with respect to the Acquired Business for the three (3)
fiscal years most recently ended for which financial statements are available,
together with an unqualified opinion of independent certified public
accountants, and interim unaudited consolidated financial statements with
respect to the Acquired Business for each quarterly period ended since the last
audited financial statements for which financial statements are available, or
(ii) a “quality of earnings” review with respect to the Acquired Business,
conducted by a third party reasonably acceptable to Agent, or (iii) such other
historical financial statements with respect to the Acquired Business as may be
acceptable to Agent; provided, that, (A) if the Acquired Business has not
existed for the last three (3) fiscal years, Agent shall have received such
satisfactory audited consolidated financial statements for the full fiscal years
for which it existed and which are completed and in addition, at the option of
the Agent, such satisfactory “quality of earnings” review and (B) consideration
for such purpose shall include the aggregate amount of the purchase price
(including, but not limited to, any assumed debt, earn-outs (valued at the
maximum amount payable thereunder), deferred payments, or Equity Interests, net
of the applicable Acquired Business’ cash (including Cash Equivalents) balance
as of the date of the acquisition) to be paid, issued or delivered in connection
with any such Permitted Acquisition;

 

(i)        if the aggregate amount of the consideration payable with respect to
such proposed acquisition or series of related acquisitions is equal to or less
than $5,000,000,

 

222

Agent shall have received either (i) the audited consolidated financial
statements with respect to the Acquired Business for the three (3) fiscal years
most recently ended for which financial statements are available, together with
an unqualified opinion of independent certified public accountants, and interim
unaudited consolidated financial statements with respect to the Acquired
Business for each quarterly period ended since the last audited financial
statements for which financial statements are available, or (ii) if any of such
audited financial statements and opinions are not available, such unaudited
financial statements or reviewed financial statements with respect to the
Acquired Business for such fiscal years as may have been prepared, or (iii) such
other historical financial statements with respect to the Acquired Business as
may be acceptable to Agent; provided, that, consideration for such purpose shall
include the aggregate amount of the purchase price (including, but not limited
to, any assumed debt, earn-outs (valued at the maximum amount payable
thereunder), deferred payments, or Equity Interests, net of the applicable
Acquired Business’ cash (including Cash Equivalents) balance as of the date of
the acquisition) to be paid, issued or delivered in connection with any such
Permitted Acquisition;

 

(j)        Agent shall have received a certificate of the chief financial
officer or chief executive officer of Borrower Agent certifying to Agent and
Lenders that such transaction complies with this definition;

 

(k)       upon Agent’s request, Agent shall have received (i) a reasonably
detailed description of all material information relating to such acquisition
and copies of all material documentation pertaining to such transaction, and
(ii) all such other information and data relating to such transaction or the
Acquired Business as may be reasonably requested by Agent; and

 

(l)        the total cash consideration (without taking into account the
proceeds of Subordinated Debt, unsecured Indebtedness or Equity Interests to the
extent used to pay a portion or all of the consideration for the Acquired
Business) for (i) all such acquisitions made during any twelve month period
shall not exceed $50,000,000 in the aggregate and (ii) all such acquisitions
made during the term of this Agreement shall not exceed $100,000,000 in the
aggregate.

 

 

1.121

“Permitted Dispositions” shall mean each of the following:

 

 

(a)

sales and leasing of Inventory in the ordinary course of business,

 

(b)       the sale or other disposition of used, worn-out, obsolete machinery,
equipment and interests in real property (other than Mortgaged Property) or
machinery, equipment and interests in real property (other than Mortgaged
Property) no longer used or useful in the conduct of the business of Parent and
its Subsidiaries, provided, that, subject to the Intercreditor Agreement, the
Net Cash Proceeds thereof shall be applied in accordance with the provisions of
Section 2.2(b);

 

(c)       the sale or other disposition of property by Parent or any Subsidiary
thereof to a Borrower or Guarantor, provided, that, if the transferor of such
property is a Borrower or Guarantor (i) the transferee thereof must be (A) a
Borrower if the transferor is a Borrower or (B) a Borrower or Guarantor if the
transferor is a Guarantor, (ii) to the extent such

 

232

transaction constitutes an Investment, such transaction is permitted under
Section 10.4 hereof and (iii) to the extent of any security interests and lien
of Agent with respect to such property prior to its sale or other disposition,
the security interest and lien of Agent on such property shall continue in all
respects and shall not be deemed released or terminated as a result of such sale
or other disposition and Borrowers and Guarantors shall execute and deliver such
agreements, documents and instruments as Agent may request with respect thereto;

 

(d)       the sale or other disposition of property by any Subsidiary that is
not a Borrower or Guarantor to any other Subsidiary that is not a Borrower or
Guarantor;

 

(e)       the sale of accounts receivable in connection with the collection or
compromise thereof in the ordinary course of business consistent with the
practices of Parent and its Subsidiaries as of the date hereof;

 

(f)        the grant by Parent and its Subsidiaries after the date hereof of a
license of any Intellectual Property owned by Parent and its Subsidiaries,
provided, that, the rights of the licensee shall be subject to the rights of
Agent, and shall not adversely affect, limit or restrict the rights of Agent to
use any Intellectual Property of Parent and its Subsidiaries to sell or
otherwise dispose of any Inventory or other Collateral or otherwise adversely
limit or interfere in any respect with the use of any such trademarks by Agent
in connection with the exercise of its rights or remedies hereunder or under any
of the other Financing Agreements;

 

(g)       the issuance and sale by Parent and its Subsidiaries of Equity
Interests of Parent and its Subsidiaries after the date hereof for cash;
provided, that, (i) Parent and its Subsidiaries shall not be required to pay any
cash dividends or repurchase or redeem such Equity Interests or make any other
payments in respect thereof, except as otherwise permitted in Section 10.5
hereof, (ii) in the case of any Equity Issuance, subject to the Intercreditor
Agreement, the Net Cash Proceeds of such issuance shall be applied to prepay the
Loans in accordance with the provisions of Section 2.2(b), except as Agent may
otherwise agree in writing, and (iii) as of the date of such issuance and sale
and after giving effect thereto, no Default or Event of Default shall exist or
have occurred and be continuing;

 

(h)       the issuance of Equity Interests of Parent consisting of common stock
pursuant to an employee stock option or grant or similar equity plan or 401(k)
plans of such Parent for the benefit of its employees, directors and
consultants; provided, that, in no event shall Parent be required to issue, or
shall Parent issue, Equity Interests pursuant to such stock plans or 401(k)
plans which would result in a Change of Control or other Default or Event of
Default;

 

(i)        the issuance of Equity Interests of a Foreign Subsidiary to foreign
nationals to the extent required by foreign law and in the ordinary course of
business;

 

 

(j)

the termination of Hedge Agreements permitted hereunder;

 

(k)       a transfer of Equipment by a Borrower or Guarantor to a manufacturer
or dealer with respect to such Equipment pursuant to a trade-in of such
Equipment; provided, that, such Equipment is replaced, substantially
concurrently by like-kind equipment having

 

242

the same or better value and without additional payments by such Borrower or
Guarantor in respect thereof;

 

(l)        the abandonment or other disposition of Intellectual Property that
(i) is not material and is no longer used or useful in any material respect in
the business of any Borrower, Guarantor or their Subsidiaries, (ii) does not
appear on or is not otherwise affixed to or incorporated in any Inventory, (iii)
is not necessary in connection with the Records, or (iv) does not have any
material value; provided, that, no Default or Event of Default shall exist or
have occurred and be continuing as of the date of such abandonment or other
disposition and after giving effect thereto;

 

(m)      the sale of any Equipment or Real Property that is otherwise permitted
hereunder as a Permitted Disposition pursuant to a Sale and Leaseback
Transaction;

 

(n)       any sale or other disposition of assets (other than Receivables and
Inventory) subject to a security interest or lien permitted hereunder pursuant
to the exercise by the holder of such security interest or lien of its remedies
with respect to such assets, to the extent that the default that gave rise to
the right of such holder to exercise its remedies is not a Default or Event of
Default hereunder;

 

(o)       any transfer of property or assets, or issuance of Equity Interests,
that is a Restricted Payment permitted under Section 10.5 or a Permitted
Acquisition permitted under Section 10.4 or Permitted Investment permitted under
Section 10.4;

 

(p)       the transfer of cash for the payment of Indebtedness to the extent
such payments are permitted hereunder and for the payment of other payables in
the ordinary course of the business of Borrowers and Guarantors;

 

(q)       sales or other dispositions of assets of Parent and its Subsidiaries
not otherwise subject to the provisions set forth in this definition, provided,
that, as to any such sale or other disposition, each of the following conditions
is satisfied:

 

(i)        such sales or other dispositions shall be in an amount not to exceed
$5,000,000 in the aggregate in any fiscal year;

 

(ii)      in the case of any sale or other disposition where the amount of the
consideration payable in connection with such sale or other disposition is in
excess of $2,500,000 at any time that the aggregate amount of the consideration
payable in connection with all such sales or other dispositions permitted under
this clause (q) in any fiscal year are in excess of $2,500,000, then as to all
sales or other dispositions in such fiscal year thereafter (and consideration
for such purpose shall include the aggregate amount of the purchase price
(including, but not limited to, any assumed debt, earn-outs (valued at the
maximum amount payable thereunder), deferred payments, or Equity Interests, to
be paid, issued or delivered in connection with any such sale or other
disposition):

 

252

(A)      not less than seventy-five (75%) percent of the consideration to be
received by Borrowers and Guarantors shall be paid or payable in cash and shall
be paid contemporaneously with consummation of the transaction;

 

(B)      the consideration paid or payable shall be in an amount not less than
the fair market value of the property disposed of;

 

(C)      such transaction does not involve the sale or other disposition of any
Equity Interest in any Subsidiary or of Receivables other than Receivables owned
by or attributable to other property concurrently being disposed of in a
transaction otherwise constituting a Permitted Disposition (but in no event
constituting Accounts of a Borrower); and

 

(D)      as of the date of any such sale or other disposition, and in each case
after giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing;

 

(iii)      in the case of any sale or other disposition where the amount of the
consideration payable in connection with such sale or other disposition is equal
to or less than $2,500,000 and so long as the aggregate amount of the
consideration payable in connection with all such sales or other dispositions
permitted under this clause (q) in any fiscal year is equal to or less than
$2,500,000, then as to all sales or other dispositions in such fiscal year (and
consideration for such purpose shall include the aggregate amount of the
purchase price (including, but not limited to, any assumed debt, earn-outs
(valued at the maximum amount payable thereunder), deferred payments, or Equity
Interests, to be paid, issued or delivered in connection with any such sale or
other disposition), as of the date of any such sale or other disposition, and in
each case after giving effect thereto, no Default or Event of Default shall
exist or have occurred and be continuing.

 

; provided further that with respect to any Asset Disposition permitted pursuant
to this clause (q), the Net Cash Proceeds therefrom shall be reinvested or
applied to prepay the Loans in accordance with the provisions of Section 2.2(b).

 

 

1.122

“Permitted Investments” shall mean each of the following:

 

(a)       Investments consisting of accounts receivables owing to any Borrower
or Guarantor if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary terms;

 

(b)       the endorsement of instruments for collection or deposit in the
ordinary course of business;

 

 

(c)

Investments in cash or Cash Equivalents;

 

(d)       deposits of cash for leases, utilities, worker’s compensation and
similar matters in the ordinary course of business;

 

262

(e)       obligations under Hedge Agreements permitted under Section 10.3(e)
hereof;

 

(f)        Investments the sole payment for which is Equity Interests of Parent
that are otherwise permitted to be issued under the terms hereof and do not
constitute Indebtedness;

 

(g)       receivables owing to Parent or any of its Subsidiaries if created or
acquired in the ordinary course of business consistent with current practices as
of the date hereof;

 

(h)       payroll, travel, commission and similar advances to cover matters that
in good faith are expected at the time of such advances to be treated as
expenses for accounting purposes in accordance with GAAP and that are made in
the ordinary course of business consistent with current practices as of the date
hereof;

 

(i)        the existing Investments of Parent and its Subsidiaries as of the
date hereof in their respective Subsidiaries; provided, that, Parent and its
Subsidiaries shall not have any further obligations or liabilities to make any
capital contributions or other additional investments or other payments to or in
or for the benefit of any of such Subsidiaries;

 

(j)        (i) loans and advances by Parent and its Subsidiaries to directors,
officers and employees of Parent and its Subsidiaries in the ordinary course of
business for bona fide (including, without limitation, in connection with the
purchase of Equity Interests by such directors, officers and employees) business
purposes not in excess of $5,000,000 at any time outstanding and (ii)
Investments made in connection with split-dollar life insurance program for the
benefit of directors, officers and employees of Parent and its Subsidiaries in
the ordinary course of business consistent with the current practices of Parent
and its Subsidiaries as of the date hereof;

 

(k)       stock or obligations issued to Parent and its Subsidiaries by any
Person (or the representative of such Person) in respect of Indebtedness of such
Person owing to Parent and its Subsidiaries in connection with the insolvency,
bankruptcy, receivership or reorganization of such Person or a composition or
readjustment of the debts of such Person; provided, that, the original of any
such stock or instrument evidencing such obligations shall be promptly delivered
to Agent, upon Agent’s request, together with such stock power, assignment or
endorsement by Parent and its Subsidiaries as Agent may request;

 

(l)        obligations of account debtors to Parent and its Subsidiaries arising
from Accounts which are past due evidenced by a promissory note made by such
account debtor payable to Parent and its Subsidiaries; provided, that, promptly
upon the receipt of the original of any such promissory note in an amount
greater than $250,000 individually or in the aggregate from any single account
debtor (or regardless of the amount after an Event of Default exists or has
occurred and is continuing, at the request of Agent) by Parent and its
Subsidiaries, such promissory note shall be endorsed to the order of Agent or
Control Agent, as applicable by Parent and its Subsidiaries and promptly
delivered to Agent or Control Agent, as applicable as so endorsed;

 

(m)      loans, advances and other Investments by a Borrower or Guarantor to or
in a Borrower or Guarantor, or by a Subsidiary that is not a Guarantor in any
other Subsidiary that is not a Guarantor, after the date hereof; provided, that,
as to any such Investments, each

 

272

of the following conditions is satisfied: (i) to the extent that such Investment
gives rise to any Indebtedness, such Indebtedness is permitted hereunder, (ii)
to the extent that such Investment gives rise to the issuance of any Equity
Interests, such issuance is permitted hereunder and (iii) as of the date of any
such Investment and after giving effect thereto, no Default or Event of Default
shall exist or have occurred and be continuing;

 

 

(n)

Investments constituting Restricted Payments permitted by Section 10.5;

 

(o)       Investments by Parent or any of its Subsidiaries in the form of Equity
Interests received as consideration for the sale of assets pursuant to a
Permitted Disposition by Parent or such Subsidiary to the extent permitted under
Section 10.1(b);

 

(p)       any indemnity, purchase price adjustment, earnout or similar
obligation payable to Parent or any of its Subsidiaries arising pursuant to a
Permitted Acquisition in each case permitted under Section 10.4 or a Permitted
Disposition in each case to the extent permitted under Section 10.1(b);

 

(q)       Investments consisting of advance payments for the purchase of
inventory, supplies, material or equipment or the licensing or contribution of
Intellectual Property pursuant to joint marketing arrangements with other
Persons and in respect of Capital Expenditures made in the ordinary course of
business consistent with the current practices of Borrowers as of the date
hereof, if any;

 

 

(r)

Investments permitted under Section 10.6;

 

(s)       loans by a Borrower or Guarantor to International the proceeds of
which are used to make a substantially contemporaneous payment of amounts
permitted to be paid to the former owners of Procell under Section 10.9(b);

 

(t)        Investments after the date hereof by Parent and its Subsidiaries in
or to any Person (including, without limitation, a joint venture, partnership or
other similar arrangement, whether in corporate, partnership or other legal
form) not otherwise subject to the provisions above or in Section 10.4;
provided, that, as to any such Investment, each of the following conditions is
satisfied:

 

(i)        such Investments shall be in an amount not to exceed $10,000,000 in
the aggregate for each fiscal year;

 

(ii)      in the case of any such Investments that are in excess of $1,750,000
or at any time that the aggregate amount of such Investments in any fiscal year
are in excess of $1,750,000, then as to all such Investments in such fiscal year
thereafter:

 

(A)      as of the date of the Investment or any payment in respect thereof and
after giving effect to the Investment or such payment, no Default or Event of
Default shall exist or have occurred and be continuing;

 

(B)      as of the date of such Investment and after giving effect thereto and
to any payments in connection therewith and to any increase in

 

282

the Borrowing Base as a result of such Investment (if any), using the most
recent calculation of the Borrowing Base prior to the date of any such
Investment and payment, on a pro forma basis, the sum of (i) the aggregate
amount of the Excess Availability of Borrowers and (ii) cash on hand of
Borrowers and Guarantors shall be not less than $10,000,000;

 

(C)      for any such Investment where the amount of any or all payments in
respect thereof exceeds $5,000,000, Agent shall have received, not less than ten
(10) Business Days’ prior to the Investment, the Permitted Transaction
Projections with respect to such Investment;

 

(E)      Agent shall have received a Pro Forma Compliance Certificate
demonstrating that the Parent and its Subsidiaries shall be in compliance on a
Pro Forma Basis with the financial covenant set forth in Section 11.1 both
prior, and after giving effect, to such acquisition,

 

(F)      the Investment shall be in or to a company that engages in a line of
business substantially similar to, or ancillary or related to, or used or useful
to, the business that Borrowers are engaged in on the date hereof;

 

(G)      Agent shall have received not less than ten (10) Business Days’ prior
written notice of the proposed Investment and such information with respect
thereto as Agent may request, in each case with such information to include (1)
parties to such Investment, (2) the proposed date and amount of the Investment,
and (3) the total amount of the Investment; and

 

(H)      Agent shall have received a certificate of the chief financial officer
or chief executive officer of Borrower Agent certifying to Agent and Lenders
that such transaction complies with this definition; and

 

(I)        upon Agent’s request, Agent shall have received (1) a reasonably
detailed description of all material information relating to such acquisition
and copies of all material documentation pertaining to such transaction, and (2)
all such other information and data relating to such transaction as may be
reasonably requested by Agent;

 

(iii)      in the case of any such Investments that are equal to or less than
$1,750,000 and so long as the aggregate amount of all such Investments in any
fiscal year are equal to or less than $1,750,000, then as to all such
Investments in such fiscal year, as of the date of any such Investment, and in
each case after giving effect thereto, no Default or Event of Default shall
exist or have occurred and be continuing.

 

292

 

1.123

“Permitted Liens” shall mean:

 

(a)       the security interests and liens of Agent for itself and the benefit
of the Secured Parties and the rights of setoff of Secured Parties provided for
herein or under applicable law;

 

(b)       liens securing the payment of taxes, assessments or other governmental
charges or levies either not yet overdue or the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to such Borrower, or Guarantor or Subsidiary, as the case may be,
which proceedings (or orders entered in connection with such proceedings) have
the effect of preventing the forfeiture or sale of the property subject to any
such Lien and with respect to which adequate reserves have been set aside on its
books in accordance with GAAP;

 

(c)       non-consensual statutory liens (other than liens arising under ERISA
or securing the payment of taxes) arising in the ordinary course of such
Borrower’s, Guarantor’s or Subsidiary’s business that do not secure Indebtedness
for borrowed money, such as carriers’, warehousemen’s, materialmen’s,
landlords’, workmen’s suppliers’, repairmen’s and mechanics’ liens, to the
extent: (i) such liens do not in the aggregate materially detract from the value
of the property of Borrowers and Guarantors taken as a whole and do not
materially impair the use thereof in the operation of Borrowers and Guarantors
taken as a whole, (ii) such liens secure Indebtedness which is not overdue or is
fully insured and being defended at the sole cost and expense and at the sole
risk of the insurer or being contested in good faith by appropriate proceedings
diligently pursued and available to such Borrower, Guarantor or such Subsidiary,
in each case prior to the commencement of foreclosure or other similar
proceedings, which proceedings (or orders entered in connection with such
proceeding) have the effect of preventing the forfeiture or sale of the property
subject to any such lien and with respect to which adequate reserves have been
set aside on its books in accordance with GAAP;

 

(d)       zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of Real Property which do not interfere in any
material respect with the use of such Real Property or ordinary conduct of the
business of such Borrower, Guarantor or such Subsidiary as presently conducted
thereon or materially impair the value or marketability of the Real Property
which may be subject thereto;

 

(e)       security interests in Equipment (excluding the Collateral) and Real
Property (excluding the Collateral) arising after the date hereof to secure
Indebtedness permitted under Section 10.3(b) hereof, whether such Indebtedness
is assumed or incurred by a Borrower, Guarantor or Subsidiary;

 

(f)        pledges and deposits of cash by any Borrower, Guarantor or Subsidiary
after the date hereof in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other types of social security
benefits consistent with the current practices of such Borrower, Guarantor or
Subsidiary as of the date hereof;

 

302

(g)       pledges and deposits of cash by any Borrower, Guarantor or Subsidiary
after the date hereof to secure the performance of tenders, bids, leases, trade
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations in each case in the ordinary course of business
consistent with the current practices of such Borrower, Guarantor or Subsidiary
as of the date hereof; provided, that, in connection with any performance bonds
issued by a surety or other person, the issuer of such bond shall have waived in
writing any rights in or to, or other interest in, any of the Collateral in an
agreement, in form and substance reasonably satisfactory to Agent;

 

(h)       liens arising from (i) operating leases and the precautionary UCC
financing statement filings in respect thereof and (ii) equipment or other
materials which are not owned by any Borrower, Guarantor or Subsidiary located
on the premises of such Borrower, Guarantor or Subsidiary (but not in connection
with, or as part of, the financing thereof) from time to time in the ordinary
course of business and consistent with current practices of such Borrower or
Guarantor and the precautionary UCC financing statement filings in respect
thereof;

 

(i)        statutory or common law liens or rights of setoff of depository banks
with respect to funds of any Borrower, Guarantor or Subsidiary at such banks to
secure fees and charges in connection with returned items or the standard fees
and charges of such banks in connection with the deposit accounts maintained by
such Borrower, Guarantor or Subsidiary at such banks (but not any other
Indebtedness or obligations);

 

(j)        judgments and other similar liens arising in connection with court
proceedings that do not constitute an Event of Default, provided, that, (i) such
liens are being contested in good faith and by appropriate proceedings
diligently pursued, (ii) adequate reserves or other appropriate provision, if
any, as are required by GAAP have been made therefore and (iii) a stay of
enforcement of any such liens is in effect;

 

(k)       leases or subleases of Real Property granted by any Borrower or
Guarantor in the ordinary course of business and consistent with past practice
to any Person so long as any such leases or subleases do not interfere in any
material respect with the ordinary conduct of the business of such Borrower or
Guarantor as presently conducted thereon or otherwise conflict with the term of
the Mortgages;

 

(l)        licenses of Intellectual Property permitted under clause (f) of the
definition of Permitted Disposition;

 

(m)      liens on goods in favor of customs and revenue authorities arising as a
matter of law to secure custom duties in connection with the importation of such
goods;

 

(n)       the liens of the ABL Agent for itself and the benefit of the Secured
Parties (as defined in the ABL Credit Agreement), securing the ABL Obligations
in accordance with the Intercreditor Agreement;

 

(o)       security interests and liens to secure Acquired Indebtedness permitted
hereunder; provided that (i) such security interests and liens otherwise
constitute Permitted Liens hereunder, (ii) the security interests and liens
secured such Acquired Indebtedness at

 

312

the time of and prior to the incurrence of such Acquired Indebtedness by the
Parent or a Subsidiary and were not granted in connection with, or in
anticipation of, the incurrence of such Acquired Indebtedness by the Parent or a
Subsidiary, and (iii) such security interests and liens do not extend to or
cover any property or assets of Parent or of any of its Subsidiaries other than
the property or assets that secured the Acquired Indebtedness prior to the time
such Indebtedness became Acquired Indebtedness of the Parent or a Subsidiary and
are no more favorable to the lienholders than those securing the Acquired
Indebtedness prior to the incurrence of such Acquired Indebtedness by Parent or
a Subsidiary;

 

(p)       the security interests and liens set forth on Schedule 8.4 to the
Information Certificate which are not otherwise permitted under the other
clauses of this definition and any security interests and liens to secure
Refinancing Indebtedness of the Indebtedness secured by such security interests
and liens to the extent permitted under Section 10.3(m) hereof.

 

1.124  “Permitted Tax Distributions” shall mean (a) in the event that
International, the parent of Parent, is treated as a corporation for applicable
Federal, State or local income tax purposes and is a member of a consolidated,
combined or similar U.S. Federal, State or local income tax group of which it or
another direct or indirect parent of Parent is the common parent, payments,
dividends or distributions to International, or another direct or indirect
parent of Parent, as the case may be, in order to pay the portion of any such
consolidated, combined or similar income taxes that are attributable to the
income of Parent and its Subsidiaries (to the extent such taxes are not payable
directly by Parent or its Subsidiaries); provided, that, the amount of such
payments, dividends or distributions, plus the amount of any such taxes payable
directly by Parent and its Subsidiaries, do not exceed the taxes that Parent and
its Subsidiaries would have paid as a stand-alone group; or (b) in the event
that Parent is treated as a partnership for applicable U.S. Federal, State or
local income tax purposes, aggregate payments, dividends or distributions to
International, or any other direct parent entity of Parent, as the case may be,
in an amount equal to, with respect to any taxable year of Parent, the product
of (i) the highest combined U.S. Federal, State (or provincial) and local
statutory tax rate (after taking into account the deductibility of State (or
provincial) and local income tax for U.S. Federal income tax purposes)
applicable to any direct (or, where the direct equity holder is a pass-through
entity, indirect) equity holder of Parent, or any other direct parent entity of
Parent, as the case may be, multiplied by (ii) the taxable income of Parent (to
the extent such taxes are not payable directly by Parent or its Subsidiaries).

 

1.125  “Permitted Transaction Projections” shall mean, as to any proposed
acquisition, Investment, disposition or other transaction, current, updated
projections (including in each case, forecasted balance sheets and statements of
income and loss, and statements of cash flow) for Parent and its Subsidiaries on
such basis (whether monthly, quarterly, annually or otherwise) for such period
as Agent may require after the acquisition, Investment or other transaction,
giving effect thereto, all in reasonable detail and in a format consistent with
the projections delivered by Parent to Agent prior to the date hereof, together
with such supporting information as Agent may reasonably request, which
projections shall have been prepared on the basis of the assumptions set forth
therein which Borrowers believe are fair and reasonable as of the date of
preparation in light of current and reasonably foreseeable business conditions
and using such methodology as is consistent with the most recent financial
statements delivered to Agent pursuant to Section 9.6 hereof.

 

322

1.126  “Person” or “person” shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S
status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.

 

1.127  “Plan” shall mean an employee benefit plan (as defined in Section 3(3) of
ERISA) which any Borrower or Guarantor sponsors, maintains, or to which it
makes, is making, or is obligated to make contributions, or in the case of a
Multiemployer Plan has made contributions at any time during the immediately
preceding six (6) plan years or with respect to which any Borrower or Guarantor
may incur liability.

 

1.128    “Pledge Agreement” shall mean the pledge agreement dated as of the
Closing Date executed by Borrowers and Guarantors in favor of Agent, for the
benefit of the Secured Parties, and the Control Agent, as the same may from time
to time be amended, modified, extended, restated, replaced, or supplemented from
time to time in accordance with the terms hereof and thereof.

 

1.129    “Priority Collateral” shall mean “Term Loan Priority Collateral” as
defined in the Intercreditor Agreement, and shall include, upon payment in full
of the ABL Obligations and the termination of the ABL Credit Agreement, all ABL
Priority Collateral.

 

1.130  “Procell Unit Purchase Agreement” shall mean, collectively, the following
(as the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced): (1) the Unit Purchase Agreement, dated
as of December 13, 2006, by and among CPG I and Christopher Bardasian, Kevin
Sloan and Larry Sloan, (2) that certain “side letter”, dated January 29, 2008,
by and among CPG I, International, Christopher Bardasian, Kevin Sloan and Larry
Sloan.

 

1.131  “Pro Forma Basis” shall mean, in connection with any calculation of
Consolidated EBITDA and Indebtedness, after giving effect on a pro forma basis
for the period of such calculation to: (a) the incurrence or repayment of any
Indebtedness of Borrowers and Guarantors (and the application of the proceeds
thereof) giving rise to the need to make such calculation and any incurrence or
repayment of other Indebtedness (and the application of the proceeds thereof),
other than the incurrence or repayment of Indebtedness in the ordinary course of
business for working capital purposes pursuant to the ABL Credit Agreement,
occurring during the Last Twelve Month Period or at any time subsequent to the
last day of the Last Twelve Month Period and on or prior to the date of such
incurrence or repayment, as if such incurrence or repayment, as the case may be
(and the application of the proceeds thereof), occurred on the first day of the
Last Twelve Month Period; and (b) any asset sales or asset acquisitions
(including, without limitation, any Permitted Acquisition giving rise to the
need to make such calculation as a result of Borrowers and Guarantors (including
any Person who becomes a Borrower or Guarantor as a result of such Permitted
Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA attributable to the
assets that are the subject of the Permitted Acquisition or asset sale during
the Last Twelve Month Period) occurring during the Last Twelve Month Period or
at any time subsequent to the last day of the Last Twelve Month Period and on or
prior to the date of such asset sale or Permitted Acquisition, as if such asset
sale or Permitted Acquisition (including the incurrence, assumption or liability
for any such Acquired Indebtedness) occurred on the first day of the Last Twelve
Month Period, including giving effect to any Pro Forma Cost Savings; provided,

 

332

that, such pro forma effect pursuant to this clause (b) shall be determined
using the relevant financial statements of the business acquired or to be
acquired if available and, in any event, shall be satisfactory to Agent.

 

1.132  “Pro Forma Compliance Certificate” shall mean, with respect to any event
or transaction, or proposed event or transaction, a certificate of the chief
financial officer, vice president of finance, treasurer or controller of
Borrower Agent or Parent containing reasonably detailed calculations of the
financial covenant set forth in Section 11 as of the most recent fiscal month
end for which Agent has received financial statements pursuant to Section 9.6
based on the Last Twelve Month Period and certifying that the other conditions
hereunder to the applicable event or transaction are satisfied, after giving
effect to the applicable event or transaction on a Pro Forma Basis.

 

1.133    “Pro Forma Cost Savings” shall mean with respect to any period, the
reductions in costs that (a) occurred during the Last Twelve Month Period that
are directly attributable to a stock or an asset acquisition and calculated on a
basis that is consistent with Article 11 of Regulation S-X under the Securities
Act or (b) are implemented, committed to be implemented, the commencement of
implementation of which has begun or reasonably expected to be implemented in
good faith by the business that was the subject of any such a stock or asset
acquisition within six (6) months of the date of the stock or asset acquisition
and that are supportable and quantifiable, as if, in the case of each of clauses
(a) and (b), all such reductions in costs had been effected as of the beginning
of such period, decreased by any non-one-time incremental expenses incurred or
to be incurred during the Last Twelve Month Period in order to achieve such
reduction in costs.

 

1.134    “Pro Rata Share” shall mean, as to any Lender, the fraction (expressed
as a percentage) the numerator of which shall be the unpaid amount of such
Lender’s Loans and the denominator of which shall be the aggregate amount of all
unpaid Loans.

 

1.135    “Provision for Taxes” shall mean an amount equal to all taxes imposed
on or measured by net income, whether Federal, State, Provincial, county or
local, and whether foreign or domestic, that are paid or payable by any Person
in respect of any period in accordance with GAAP.

 

1.136    “Qualified Equity Interests” shall mean any Equity Interests other than
Disqualified Equity Interests.

 

1.137    “Real Property” shall mean all now owned and hereafter acquired real
property of each Borrower and Guarantor, including leasehold interests, together
with all buildings, structures, and other improvements located thereon and all
licenses, easements and appurtenances relating thereto, wherever located.

 

1.138    “Receivables” shall mean all of the following now owned or hereafter
arising or acquired property of each Borrower and Guarantor: (a) all Accounts;
(b) all interest, fees, late charges, penalties, collection fees and other
amounts due or to become due or otherwise payable in connection with any
Account; (c) all payment intangibles of such Borrower or Guarantor; (d) letters
of credit, indemnities, guarantees, security or other deposits and proceeds
thereof issued payable to any Borrower or Guarantor or otherwise in favor of or
delivered to any Borrower or Guarantor in connection with any Account; or (e)
all other accounts, contract rights, chattel paper, instruments, notes, general
intangibles and other forms of obligations owing to any Borrower or

342

Guarantor, whether from the sale and lease of goods or other property, licensing
of any property (including Intellectual Property or other general intangibles),
rendition of services or from loans or advances by any Borrower or Guarantor or
to or for the benefit of any third person (including loans or advances to any
Affiliates or Subsidiaries of any Borrower or Guarantor) or otherwise associated
with any Accounts, Inventory or general intangibles of any Borrower or Guarantor
(including, without limitation, choses in action, causes of action, tax refunds,
tax refund claims, any funds which may become payable to any Borrower or
Guarantor in connection with the termination of any Plan or other employee
benefit plan and any other amounts payable to any Borrower or Guarantor from any
Plan or other employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption insurance and
proceeds thereof, casualty or any similar types of insurance and any proceeds
thereof and proceeds of insurance covering the lives of employees on which any
Borrower or Guarantor is a beneficiary).

 

1.139    “Records” shall mean, as to each Borrower and Guarantor, all of such
Borrower’s and Guarantor’s present and future books of account of every kind or
nature, purchase and sale agreements, invoices, ledger cards, bills of lading
and other shipping evidence, statements, correspondence, memoranda, credit files
and other data relating to the Collateral or any account debtor, together with
the tapes, disks, diskettes and other data and software storage media and
devices, file cabinets or containers in or on which the foregoing are stored
(including any rights of any Borrower or Guarantor with respect to the foregoing
maintained with or by any other person).

 

1.140    “Refinancing Indebtedness” shall have the meaning set forth in Section
10.3(m) hereof.

 

 

1.141

“Register” shall have the meaning set forth in Section 6.4 hereof.

 

1.142    “Required Lenders” shall mean, at any time, those Lenders to whom more
than fifty (50%) percent of the then outstanding Loans are owing.

 

1.143    “Restricted Payment” shall mean any (a) dividend or other distribution
(whether in cash, securities or other property) with respect to any Equity
Interests of Parent or any of its Subsidiaries, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such Equity Interests or on account of any return of capital
to Parent or such Subsidiary’s stockholders, partners or members (or the
equivalent Person thereof), or payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire any Equity Interests of Parent or any of its
Subsidiaries, or any setting apart of funds or property for any of the
foregoing, (b) the payment by Parent or any of its Subsidiaries of any
management, advisory or consulting fee to any Person or the payment of any
extraordinary salary, bonus or other form of compensation to any Person who is
directly or indirectly a significant partner, shareholder, owner or executive
officer of any such Person, to the extent such extraordinary salary, bonus or
other form of compensation is not included in the corporate overhead of Parent
or such Subsidiary and (c) prepayment of or redemption of principal in respect
of Indebtedness evidenced by the Senior Fixed Rate Notes and the Senior Floating
Rate Note.

 

1.144    “Sale and Leaseback Transaction” shall mean, with respect to a Borrower
or Guarantor, or any Subsidiary, any arrangement, directly or indirectly, with
any Person whereby

 

352

such Borrower or Guarantor or such Subsidiary shall sell or transfer any
property used or useful in its business, whether now owned or hereafter acquired
(other than transient ownership of equipment to be subject to any operating
lease), and thereafter rent or lease such property or other property that it
intends to use for substantially the same purpose or purposes as the property
being sold or transferred.

 

1.145    “Sanctioned Entity” shall mean (a) an agency of the government of, (b)
an organization directly or indirectly controlled by, or (c) a person resident
in, a country that is subject to a sanctions program identified on the list
maintained and published by OFAC and available at
http://www.treas.gov/offices/enforcement/ofac/programs, or as otherwise
published from time to time as such program may be applicable to such agency,
organization or person.

 

1.146    “Sanctioned Person” shall mean a person named on the list of Specially
Designated Nationals or Blocked Persons maintained by OFAC available at
http://www.treas.gov/offices/enforcement/ofac/sdn/index.html, or as otherwise
published from time to time.

 

1.147    “S&P” shall mean Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc. and its successors and assigns.

 

1.148    “Scheduled Indebtedness Payments” shall mean all regularly scheduled
(as determined at the beginning of the respective period) principal payments of
Indebtedness for borrowed money, Indebtedness for the deferred purchase price of
any property or services, including, without limitation, any indemnification,
adjustment of purchase price, earn-outs or other similar obligations incurred in
connection with a Permitted Acquisition or Permitted Disposition, and
Indebtedness with respect to Capital Leases (including the interest component
with respect to Indebtedness under Capital Leases)

 

1.149    “Secured Parties” shall mean, collectively, (a) Agent and (b) Lenders;
provided, that, such parties are sometimes referred to herein individually as a
“Secured Party”.

 

1.150    “Senior Fixed and Floating Rate Note Indenture” shall mean Indenture,
dated as of July 5, 2005, by CPG I, as Issuer and the Senior Fixed and Floating
Rate Note Trustee, with respect to the Senior Floating Rate Notes and Senior
Fixed Rate Notes, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.

 

1.151    “Senior Fixed and Floating Rate Note Trustee” shall mean Wells Fargo
Bank, N.A., as Trustee and its successors and assigns, and any replacement
trustee permitted pursuant to the terms and conditions of the Senior Fixed and
Floating Rate Note Indenture.

 

1.152    “Senior Fixed Rate Notes” shall mean, collectively, the 10 ½% Senior
Notes due 2013 in the original aggregate amount of $150,000,000 issued by CPG I
pursuant to the Senior Fixed and Floating Rate Note Indenture, as the same now
exist or may hereafter be amended, modified, supplemented, extended, modified,
supplemented, extended, renewed, restated or replaced.

 

1.153    “Senior Floating Rate Notes” shall mean, collectively, the Senior
Floating Rate Notes due 2012 in the original aggregate amount of $128,114,000
issued by CPG I pursuant to the

 

362

Senior Fixed and Floating Rate Note Indenture, as the same now exist or may
hereafter be amended, modified, supplemented, extended, modified, supplemented,
extended, renewed, restated or replaced.

 

1.154    “Senior Note Documents” shall mean, collectively, the following (as the
same now exist or may hereafter be amended, modified, supplemented, extended,
modified, supplemented, extended, renewed, restated or replaced): (a) the Senior
Floating Rate Notes, (b) the Senior Fixed Rate Notes, (c) the Senior Fixed and
Floating Rate Note Indenture, and (d) any agreements, documents or instruments
related to any of the foregoing.

 

1.155    “Senior Secured Leverage Ratio” shall mean, with respect to the Parent
and its Subsidiaries on a consolidated basis for the twelve-month period ending
in the last day of any fiscal quarter, the ratio of (a) secured Indebtedness on
the last day of such period (other than Indebtedness expressly subordinated to
the Loans and Indebtedness under clauses (d), (e), (f), (h) (but only with
respect to the Guaranty Obligations of Indebtedness excluded from this
definition of Senior Secured Leverage Ratio), (k) (except to the extent of
drafts that have been drawn but are unreimbursed) and (l) of the definition
thereof) to (b) Consolidated EBITDA for such twelve month period, in each case
calculated on a Pro Forma Basis.

 

1.156    “Solvent” shall mean, at any time with respect to any Person, that at
such time such Person (a) is able to pay its debts as they mature and has (and
has a reasonable basis to believe it will continue to have) sufficient capital
(and not unreasonably small capital) to carry on its business consistent with
its practices as of the date hereof, and (b) the assets and properties of such
Person at a fair valuation (and including as assets for this purpose at a fair
valuation all rights of subrogation, contribution or indemnification arising
pursuant to any guarantees given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including as to contingent liabilities arising
pursuant to any guarantee the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability).

 

 

1.157

“Special Agent Advances” shall have the meaning set forth in Section 14.11
hereof.

 

1.158    “Sponsor Affiliated Lender” shall mean AEA Middle Market Debt Funding
LLC or any of its Affiliates that may from time to time become a Lender
hereunder in accordance with the terms of Section 15.7(a); provided, however in
no event shall there be more than one Sponsor Affiliated Lender hereunder at any
time.

 

1.159    “Subordinated Debt” shall mean any Indebtedness of a Borrower or
Guarantor that is subject to, and subordinate in right of payment to, the right
of Agent and Lenders to receive the prior final payment and satisfaction in cash
in full of all of the Obligations and subject to such other terms and conditions
as Agent may require with respect thereto and shall include the Cash Earn Out
Consideration (if any), the Americhem Earn-Out Amount (if any) and the Tax
Payment Consideration (if any), as each such terms is defined in the Procell
Unit Purchase Agreement as in effect on the date hereof.

 

1.160    “Subsidiary” or “subsidiary” shall mean, with respect to any Person,
any corporation, limited liability company, limited liability partnership or
other limited or general

 

372

partnership, trust, association or other business entity of which an aggregate
of at least a majority of the outstanding Equity Interests or other interests
entitled to vote in the election of the board of directors of such corporation
(irrespective of whether, at the time, Equity Interests of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency), managers, trustees or other controlling
persons, or an equivalent controlling interest therein, of such Person is, at
the time, directly or indirectly, owned by such Person and/or one or more
subsidiaries of such Person.

 

 

1.161

“Term Loan Committed Amount” shall have the meaning set forth in Section 2.1(a).

 

1.162    “Term Note” or “Term Notes” shall mean the promissory notes of
Borrowers provided pursuant to Section 2.1 in favor of any of the Lenders
evidencing the Term Loan provided by any such Lender pursuant to Section 2.1,
individually or collectively, as appropriate, as such promissory notes may be
amended, modified, extended, restated, replaced or supplemented from time to
time.

 

1.163    “UCC” shall mean the Uniform Commercial Code as in effect in the State
of New York and any successor statute, as in effect from time to time (except
that terms used herein which are not otherwise defined herein and defined in the
Uniform Commercial Code as in effect in the State of New York on the date hereof
shall continue to have the same meaning notwithstanding any replacement or
amendment of such statute except as Agent may otherwise determine).

 

1.164    “US Dollars”, “US$” and “$” shall each mean lawful currency of the
United States of America.

 

1.165    “Wachovia” shall mean Wachovia Bank, National Association, and its
successors and assigns.

 

1.166    “Weighted Average Life to Maturity” shall mean, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment.

 

SECTION 2.

 

CREDIT FACILITIES

 

 

 

2.1

Loans.

 

(a)    Term Loan. Subject to the terms and conditions hereof and in reliance
upon the representations and warranties set forth herein, each Lender severally
agrees to make available to the Agent on the Closing Date such Lender’s
Commitment Percentage of a term loan in US Dollars in the aggregate principal
amount of TWENTY-FIVE MILLION DOLLARS ($25,000,000) (the “Term Loan Committed
Amount”) for the purposes hereinafter set forth. Upon receipt by the Agent of
the proceeds of the Term Loan made on

 

382

the Closing Date, such proceeds will then be made available to Borrowers by the
Agent by crediting the account of Borrowers on the books of the office of the
Agent, or at such other office as the Agent may designate in writing, with the
aggregate of such proceeds made available to the Agent by the Lenders and in
like funds as received by the Agent (or by crediting such other account(s) as
directed by Borrowers). The Term Loan may consist of Base Rate Loans or
Eurodollar Rate Loans, or a combination thereof, as Borrowers may request;
provided that on the Closing Date the Term Loan may only consist of Base Rate
Loans unless Borrowers deliver a completed notice of borrowing and a funding
indemnity letter, each in form and substance satisfactory to the Agent, not less
than three (3) Business Days prior to the Closing Date. Amounts repaid or
prepaid on the Term Loan may not be reborrowed.

 

(b)   Repayment of Term Loan. The principal amount of the Term Loan shall be
repaid in consecutive quarterly installments as follows, unless accelerated
sooner pursuant to Section 12.2.

 

Principal Amortization Payment Dates

Principal Amortization Payment

March 31, 2008

$62,500

June 30, 2008

$62,500

September 30, 2008

$62,500

December 31, 2008

$62,500

March 31, 2009

$62,500

June 30, 2009

$62,500

September 30, 2009

$62,500

December 31, 2009

$62,500

March 31, 2010

$62,500

June 30, 2010

$62,500

September 30, 2010

$62,500

December 31, 2010

$62,500

Maturity Date

$24,250,000 or the remaining outstanding principal amount of the

Term Loan

 

(c)    Term Notes. The Borrowers’ obligations to pay each Lender’s portion of
the Term Loan shall be evidenced, upon such Lender’s request, by a Term Note
made payable to such Lender.

 

 

 

2.2

Prepayments.

 

(a)       Optional Prepayments. The Borrowers shall have the right to repay
Loans in whole or in part from time to time; provided, however, that each
partial repayment of a Loan shall be in a minimum principal amount of $1,000,000
and integral multiples of $500,000 in excess thereof. The Borrower Agent shall
give three Business Days’ irrevocable notice in the case of Eurodollar Rate
Loans and same-day irrevocable notice on any Business Day in the case of Base
Rate Loans, to Agent (which shall notify the Lenders thereof as soon as
practicable). Payments shall be applied ratably to the remaining principal
installments

 

392

thereof as Borrowers may elect. All repayments under this Section 2.2(a) shall
be subject to Section 2.2(c) and Section 3.10, but otherwise without premium or
penalty. Interest on the principal amount prepaid shall be payable on the next
occurring interest payment date that would have occurred had such Loan not been
prepaid or, at the request of Agent, interest on the principal amount prepaid
shall be payable on any date that a repayment is made hereunder through the date
of repayment. Within the foregoing parameters, prepayments under this Section
shall be applied first to Base Rate Loans and then to Eurodollar Rate Loans in
direct order of Interest Period maturities.

 

 

(b)

Mandatory Prepayments.

 

(i)        Debt Issuances. Promptly, upon receipt by any Borrower or Guarantor
or any of their Subsidiaries of proceeds from any Debt Issuance, Borrowers shall
prepay the Loans in an aggregate amount equal to 100% of the Net Cash Proceeds
of such Debt Issuance (such prepayment to be applied as set forth in clause (vi)
below).

 

(ii)      Issuances of Equity. Promptly, upon receipt by any Borrower or
Guarantor or any of their Subsidiaries of proceeds from any Equity Issuance,
Borrowers shall prepay the Loans in an aggregate amount equal to 100% of the Net
Cash Proceeds of such Equity Issuance (such prepayment to be applied as set
forth in clause (vi) below).

 

(iii)      Asset Dispositions. Within three (3) Business Days following the
receipt by any Borrower or any Guarantor of Net Cash Proceeds from any Asset
Disposition, Borrowers shall prepay the Loans in an aggregate amount equal to
100% of such Net Cash Proceeds derived from such Asset Disposition (such
prepayment to be applied as set forth in clause (vi) below); provided, however,
in connection with any Asset Disposition, so long as no Default or Event of
Default then exists, such Net Cash Proceeds shall not be required to be so
applied to the extent Borrowers indicate in the compliance certificate required
to be delivered pursuant to section 9.6(d)(v) that a Borrower or a Guarantor
intends to use such Net Cash Proceeds to acquire fixed or capital assets in
replacement of the disposed assets (A) one year of the receipt of such Net Cash
Proceeds or (B) in the event a commitment to reinvest such Net Cash Proceeds has
been entered into during the one year referred to in clause (A) above, 18 months
of the receipt of such Net Cash Proceeds, it being expressly agreed that any Net
Cash Proceeds not so reinvested shall be applied to repay the Loans immediately
thereafter; provided further, in the case of the Net Cash Proceeds relating to
the disposition of any ABL Priority Collateral, such Net Cash Proceeds shall
only be required to prepay the Loans hereunder to the extent such proceeds are
not required to prepay the ABL Obligations pursuant to the ABL Credit Agreement
(and are so applied).

 

(iv)      Excess Cash Flow. Within 95 days after the end of the fiscal year
ending December 31, 2009, Borrowers shall prepay the Loans in an aggregate
amount equal to 50% of the Excess Cash Flow for such fiscal year minus the
principal amount of any optional prepayments of the Loans made from the first
day

 

402

of the subject fiscal year through the date of prepayment pursuant to this
clause (vi) (such prepayments to be applied as set forth in clause (vi) below).

 

(v)       Extraordinary Receipts. Promptly upon receipt by any Borrower or
Guarantor or any of their Subsidiaries of proceeds from any Extraordinary
Receipt, Borrowers shall prepay the Loans in an aggregate amount equal to one
hundred percent (100%) of the Net Cash Proceeds of such Extraordinary Receipt
(such prepayment to be applied as set forth in clause (vi) below); provided,
however, that, so long as no Default or Event of Default has occurred and is
continuing, Net Cash Proceeds from insurance or condemnation proceeds shall not
be required to be so applied to the extent Borrowers deliver to the Agent a
certificate stating that Borrowers and Guarantors intend to use such Net Cash
Proceeds to acquire assets useful to the business of Borrowers and Guarantors
within (a) one year of the receipt of such Net Cash Proceeds or (b) in the event
a commitment to reinvest such Net Cash Proceeds has been entered into during the
12 month period referred to in clause (a) above, 18 months of the receipt of
such Net Cash Proceeds, it being expressly agreed that any Net Cash Proceeds not
so reinvested shall be applied to prepay the Loans immediately thereafter (such
prepayment to be applied as set forth in clause (vi) below); and provided
further, that Net Cash Proceeds from insurance or condemnation proceeds relating
to ABL Priority Collateral shall only be required to prepay the Loans to the
extent the proceeds thereof are not required to be applied to reduce the ABL
Obligations pursuant to the ABL Credit Agreement (and are so applied).

 

(vi)      Application of Mandatory Prepayments. All amounts required to be paid
pursuant to this clause (b) shall be applied to the outstanding Loans (to reduce
scheduled installments under Section 2.1(b) on a pro rata basis) and to the
holders thereof on a pro rata basis. All prepayments under this Section shall be
subject to Section 3.10 and be accompanied by interest on the principal amount
prepaid through the date of prepayment.

 

(c)       Voluntary Prepayments Prior to the First Anniversary of the Closing
Date. Notwithstanding the foregoing, any voluntary prepayment of any portion of
the outstanding Loans made on or prior to the first anniversary of the Closing
Date shall be subject to a premium equal to the principal amount of such
prepayment multiplied by 1%.

 

 

 

2.3

Joint and Several Liability of Borrowers.

 

(a)       Notwithstanding anything in this Agreement or any other Financing
Agreements to the contrary, each Borrower, jointly and severally, in
consideration of the financial accommodations to be provided by Agent and
Lenders under this Agreement and the other Financing Agreements, for the mutual
benefit, directly and indirectly, of each Borrower and in consideration of the
undertakings of the other Borrowers to accept joint and several liability for
the Obligations, hereby irrevocably and unconditionally accepts, not merely as a
surety but also as a co-debtor, joint and several liability with the other
Borrowers, with respect to the payment and performance of all of the
Obligations, it being the intention of the parties hereto that all of the
Obligations shall be the joint and several obligations of each Borrower without
preferences or distinction among them. Borrowers

 

412

shall be liable for all amounts due to Agent and Lenders under this Agreement,
regardless of which Borrower actually receives the Loans hereunder or the amount
of such Loans received or the manner in which Agent or any Lender accounts for
such Loans or other extensions of credit on its books and records. The
Obligations of Borrowers with respect to Loans made to one of them, and the
Obligations arising as a result of the joint and several liability of one of
Borrowers hereunder, with respect to Loans made to the other of Borrowers
hereunder, shall be separate and distinct obligations, but all such other
Obligations shall be primary obligations of all Borrowers.

 

(b)       If and to the extent that any Borrower shall fail to make any payment
with respect to any of the Obligations as and when due or to perform any of the
Obligations in accordance with the terms thereof, then in each such event, the
other Borrowers will make such payment with respect to, or perform, such
Obligation.

 

(c)       Except as otherwise expressly provided herein, to the extent permitted
by law, each Borrower (in its capacity as a joint and several obligor in respect
of the obligations of the other Borrowers) hereby waives notice of acceptance of
its joint and several liability, notice of occurrence of any Default or Event of
Default (except to the extent notice is expressly required to be given pursuant
to the terms of this Agreement), or of any demand for any payment under this
Agreement or the other Financing Agreements, notice of any action at any time
taken or omitted by Agent or any Lender under or in respect of any of the
obligations hereunder, any requirement of diligence and, generally, all demands,
notices and other formalities of every kind in connection with this Agreement
and the other Financing Agreements. Each Borrower hereby assents to, and waives
notice of, any extension or postponement of the time for the payment of any of
the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Agent or any Lender at any time or
times in respect of any default by the other Borrowers in the performance or
satisfaction of any term, covenant, condition or provision of this Agreement,
any and all other indulgences whatsoever by Agent or any Lender in respect of
any of the obligations hereunder, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of
such obligations or the addition, substitution or release, in whole or in part,
of the other Borrowers. Without limiting the generality of the foregoing, each
Borrower (in its capacity as a joint and several obligor in respect of the
obligations of the other Borrowers) assents to any other action or delay in
acting or any failure to act on the part of Agent or any Lender, including,
without limitation, any failure strictly or diligently to assert any right or to
pursue any remedy or to comply fully with applicable laws or regulations
thereunder which might, but for the provisions of this Section 2.3, afford
grounds for terminating, discharging or relieving such Borrower, in whole or in
part, from any of its obligations under this Section 2.3, it being the intention
of each Borrower that, so long as any of the Obligations hereunder remain
unsatisfied, the obligations of such Borrower under this Section 2.3 shall not
be discharged except by performance and then only to the extent of such
performance. The obligations of each Borrower under this Section 2.3 shall not
be diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any Borrower or a Lender. The joint and several liability of Borrowers hereunder
shall continue in full force and effect notwithstanding any absorption, merger,
amalgamation or any other change whatsoever in the name, membership,
constitution or place of formation of any Borrower or any of the Lenders.

 

422

 

(d)       The provisions of this Section 2.3 are made for the benefit of the
Lenders and their successors and assigns, and subject to Section 14.3 hereof,
may be enforced by them from time to time against any Borrower as often as
occasion therefor may arise and without requirement on the part of Agent or any
Lender first to marshal any of its claims or to exercise any of its rights
against the other Borrowers or to exhaust any remedies available to it against
the other Borrowers or to resort to any other source or means of obtaining
payment of any of the Obligations hereunder or to elect any other remedy. The
provisions of this Section 2.3 shall remain in effect until all the Obligations
shall have been paid in full or otherwise fully satisfied. If at any time, any
payment, or any part thereof, made in respect of any of the Obligations is
rescinded or must otherwise be restored or returned by Agent or any Lender upon
the insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the
provisions of this Section 2.3 will forthwith be reinstated and in effect as
though such payment had not been made.

 

(e)       Notwithstanding any provision to the contrary contained herein or in
any of the other Financing Agreements, to the extent the obligations of a
Borrower shall be adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable Federal or State law
relating to fraudulent conveyances or transfers) then the obligations of such
Borrower hereunder shall be limited to the maximum amount that is permissible
under applicable law (whether Federal or State and including, without
limitation, the Bankruptcy Code of the United States).

 

(f)        With respect to the Obligations arising as a result of the joint and
several liability of Borrowers hereunder with respect to Loans or other
extensions of credit made to the other Borrowers hereunder, each of Borrowers
waives, until the Obligations shall have been paid in full and this Agreement
shall have been terminated, any right to enforce any right of subrogation or any
remedy which Agent or any Lender now has or may hereafter have against any
Borrower, any endorser or any guarantor of all or any part of the Obligations,
and any benefit of, and any right to participate in, any security or collateral
given to Agent or any Lender. Any claim which any Borrower may have against any
other Borrower with respect to any payments to Agent or Lenders hereunder or
under any of the other Financing Agreements are hereby expressly made
subordinate and junior in right of payment, without limitation as to any
increases in the Obligations arising hereunder or thereunder, to the prior
payment in full in cash of the Obligations. Upon the occurrence of any Event of
Default and for so long as the same is continuing, Agent and Lenders may proceed
directly and at once, without notice, against (i) with respect to Obligations of
Borrowers, either or both of them or (ii) with respect to Obligations of any
Borrower, to collect and recover the full amount, or any portion of the
applicable Obligations, without first proceeding against the other applicable
Borrowers or any other Person, or against any security or collateral for the
Obligations. Each Borrower consents and agrees that Agent and Lenders shall be
under no obligation to marshal any assets in favor of Borrower(s) or against or
in payment of any or all of the Obligations.

 

 

432

SECTION 3.

 

INTEREST AND FEES

 

 

 

3.1

Interest.

 

(a)       Borrowers shall pay to Agent, for the benefit of Lenders, interest on
the outstanding principal amount of the Loans at the Interest Rate. All interest
accruing hereunder on and after the date of any Event of Default or termination
hereof shall be payable on demand.

 

(b)       Each Borrower (or Borrower Agent on behalf of such Borrower) may from
time to time request Eurodollar Rate Loans or may request that Base Rate Loans
be converted to Eurodollar Rate Loans or that any existing Eurodollar Rate Loans
continue for an additional Interest Period. Such request from a Borrower (or
Borrower Agent on behalf of such Borrower) shall specify the amount of the
Eurodollar Rate Loans or the amount of the Base Rate Loans to be converted to
Eurodollar Rate Loans or the amount of the Eurodollar Rate Loans to be continued
(subject to the limits set forth below) and the Interest Period to be applicable
to such Eurodollar Rate Loans (and if it does not specify such Interest Period
shall be deemed to be a one (1) month period). Subject to the terms and
conditions contained herein, three (3) Business Days after receipt by Agent of
such a request from a Borrower (or Borrower Agent on behalf of such Borrower),
which may be telephonic (and followed by a confirmation in writing if requested
by Agent) such Eurodollar Rate Loans shall be made or Base Rate Loans shall be
converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue,
as the case may be; provided, that, (i) no Event of Default shall exist or have
occurred and be continuing, (ii) no Borrower or Borrower Agent shall have sent
any notice of termination of this Agreement, (iii) such Borrower (or Borrower
Agent on behalf of such Borrower) shall have complied with such customary
procedures as are established by Agent and specified by Agent to Borrower Agent
from time to time for requests by Borrowers for Eurodollar Rate Loans, (iv) no
more than three (3) Interest Periods may be in effect at any one time, (v) the
aggregate amount of the Eurodollar Rate Loans must be in an amount not less than
$1,000,000 or an integral multiple of $500,000 in excess thereof, and (vi) Agent
and each Lender shall have determined that the Interest Period or Adjusted
Eurodollar Rate is available to Agent and such Lender and can be readily
determined as of the date of the request for such Eurodollar Rate Loan by such
Borrower. Any request by or on behalf of a Borrower for Eurodollar Rate Loans or
to convert Base Rate Loans to Eurodollar Rate Loans or to continue any existing
Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything to the
contrary contained herein, Agent and Lenders shall not be required to purchase
United States Dollar deposits in the London interbank market or other applicable
Eurodollar Rate market to fund any Eurodollar Rate Loans, but the provisions
hereof shall be deemed to apply as if Agent and Lenders had purchased such
deposits to fund the Eurodollar Rate Loans.

 

(c)       Any Eurodollar Rate Loans shall automatically convert to Base Rate
Loans upon the last day of the applicable Interest Period, unless Agent has
received a request to continue such Eurodollar Rate Loan at least three (3)
Business Days prior to such last day in accordance with the terms hereof and
Borrowers are entitled to such Eurodollar Rate Loan under the terms hereof.

 

442

 

(d)       Interest shall be payable by Borrowers to Agent, for the account of
Lenders, (i) in connection with Base Rate Loans, in arrears on the last Business
Day of each fiscal quarter, (ii) as to any Eurodollar Rate Loan having an
Interest Period of three months or less, on the last day of such Interest
Period, and (iii) as to any Eurodollar Rate Loan having an Interest Period
longer than three (3) months, (A) each three (3) month anniversary following the
first day of such Interest Period and (B) the last day of such Interest Period,
and shall be calculated on the basis of a three hundred sixty (360) day year and
actual days elapsed, other than for Base Rate Loans which shall be calculated on
the basis of three hundred sixty-five (365) or three hundred sixty-six (366) day
year, as applicable, and actual days elapsed. The interest rate on
non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or
decrease by an amount equal to each increase or decrease in the Base Rate
effective on the date any change in such Base Rate is effective.

 

3.2      Fees. Borrowers shall pay (a) to Agent and Arranger (i) all reasonable
out-of-pocket costs and expenses (including the reasonable fees and
disbursements of counsel) in connection with the preparation, execution and
delivery of the Financing Agreements; and (ii) the other fees set forth in the
Engagement Letter and (b) to Agent the annual administrative fee described in
the Engagement Letter. To the extent payment in full of the applicable fee is
received by Agent from Borrowers on or about the date hereof, Agent shall pay to
each Lender its share of such fees in accordance with the terms of the
arrangements of Agent with such Lender.

 

3.3      Inability to Determine Applicable Interest Rate. If Agent shall
determine in good faith (which determination shall, absent manifest error, be
final and conclusive and binding on all partier hereto) that on any date by
reason of circumstances affecting the London interbank market adequate and fair
means do not exist for ascertaining the interest rate applicable to Eurodollar
Rate Loans on the basis provided for in the definition of Adjusted Eurodollar
Rate, Agent shall on such date give notice to Borrower Agent and each Lender of
such determination. Upon such date no Loans may be made as, or converted to,
Eurodollar Rate Loans until such time as Agent notifies Borrower Agent and
Lenders that the circumstances giving rise to such notice no longer exist and
any request for Loans or the conversion or continuation of any Eurodollar Rate
Loans received by Agent shall be deemed to be a request, or a continuation or
conversion, for or into Base Rate Loans.

 

3.4      Illegality. Notwithstanding anything to the contrary contained herein,
if (a) any change in any law or interpretation thereof by any Governmental
Authority makes it unlawful for a Lender to make or maintain a Eurodollar Rate
Loan or (b) a Lender determines in good faith (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto) has
become impracticable as a result of a circumstance that adversely affects the
London interbank market or the position of such Lender in such market, then such
Lender shall give notice thereof to Agent and Borrower Agent and may (i) declare
that Eurodollar Rate Loans will not thereafter be made by such Lender, such that
any request for a Eurodollar Rate Loans from such Lender shall be deemed to be a
request for a Base Rate Loan unless such Lender’s declaration has been withdrawn
(and it shall be withdrawn promptly upon the cessation of the circumstances
described in clause (a) or (b) above and (ii) require that all outstanding
Eurodollar Rate Loans made by such Lender be converted to Base Rate Loans
immediately, in which event all outstanding Eurodollar Rate Loans of such Lender
shall be so converted.

 

452

3.5      Increased Costs. If any Change in Law shall: (a) impose, modify or deem
applicable any reserve, special deposit, compulsory loan, insurance charge or
similar requirement against assets of, deposits with or for the account of, or
credit extended or participated in by, any Lender (except any reserve
requirement reflected in the Adjusted Eurodollar Rate); (b) subject any Lender
to any tax of any kind whatsoever with respect to this Agreement or any
Eurodollar Loan made by it, or change the basis of taxation of payments to such
Lender in respect thereof (except for Taxes or Other Taxes covered by Section
6.8 and the imposition of, or any change in the rate of, any taxes payable by
such Lender described in Sections 6.8(a)(i) and (ii)); or (c) impose on any
Lender or the London interbank market any other condition, cost or expense
affecting this Agreement or Eurodollar Rate Loans made by such Lender, and the
result of any of the foregoing shall be to increase the cost to such Lender of
making or maintaining any Eurodollar Rate Loan (or of maintaining its obligation
to make any such Loan), or to reduce the amount of any sum received or
receivable by such Lender hereunder (whether of principal, interest or any other
amount) then, upon request of such Lender, Borrowers will pay to such Lender
such additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.

 

3.6      Capital Requirements. If any Lender determines that any Change in Law
affecting such Lender or any lending office of such Lender or such Lender’s
holding company, if any, regarding capital requirements has or would have the
effect of reducing the rate of return on such Lender’s capital or on the capital
of such Lender’s holding company, if any, as a consequence of this Agreement or
the Loans made by such Lender, to a level below that which such Lender or such
Lender’s holding company could have achieved but for such Change in Law (taking
into consideration such Lender’s policies and the policies of such Lender’s
holding company with respect to capital adequacy), then from time to time
Borrowers will pay to such Lender such additional amount or amounts as will
compensate such Lender or such Lender’s holding company for any such reduction
suffered.

 

3.7      Certificates for Reimbursement. A certificate of a Lender setting forth
the amount or amounts necessary to compensate such Lender or its holding
company, as the case may be, as specified in Sections 3.5 or 3.6 and delivered
to Borrower Agent shall be conclusive absent manifest error. Borrowers shall pay
such Lender the amount shown as due on any such certificate within fifteen (15)
days after receipt thereof.

 

3.8      Delay in Requests. Failure or delay on the part of any Lender to demand
compensation pursuant to Sections 3.5 or 3.6 shall not constitute a waiver of
such Lender’s right to demand such compensation, provided that Borrowers shall
not be required to compensate a Lender pursuant to this Section for any
increased costs incurred or reductions occurring more than one hundred eighty
(180) days prior to the date that such Lender becomes aware of the event giving
rise to such Lender’s claim for compensation therefor (except that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the one hundred eighty (180) day period referred to above shall be extended
to include the period of retroactive effect thereof).

 

462

 

 

3.9

Mitigation; Replacement of Lenders.

 

(a)       If any Lender requests compensation under Sections 3.4, 3.5 or Section
3.6, or Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 6.8,
then such Lender shall, if requested by Borrower Agent, use reasonable efforts
(subject to overall policy considerations of such Lender) to designate a
different lending office for funding or booking its Loans hereunder, to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates or to take such other actions as such Lender or Agent determines, if,
in the judgment of such Lender, such designation, assignment or other action (i)
would eliminate or reduce amounts payable pursuant to such Sections in the
future and (ii) would not subject Agent or such Lender to any unreimbursed cost
or expense and Agent or such Lender would not suffer any economic, legal or
regulatory disadvantage. Nothing in this Section 3.9 shall affect or postpone
any of the obligations of Borrowers or the rights of Agent or such Lender
pursuant to this Section 3.9. Borrowers hereby agree to pay on demand all
reasonable costs and expenses incurred by Agent or any Lender in connection with
any such designation or assignment.

 

(b)       If any Lender requests compensation under Sections 3.4, 3.5 or 3.6, if
Borrowers are required to pay any additional amount to any Lender or
Governmental Authority pursuant to Section 6.8, then within sixty (60) days
thereafter, Borrower Agent may, at its sole expense and effort, upon notice to
such Lender and Agent, replace such Lender by requiring such Lender to assign
and delegate (and such Lender shall be obligated to assign and delegate),
without recourse, all of its interests, rights and obligations under this
Agreement to an Eligible Transferee that shall assume such obligations,
provided, that, (i) Borrower Agent has received the prior written consent of
Agent, (ii) such Lender shall have received payment of an amount equal to the
outstanding principal amount of its Loans that it has funded, if any, accrued
interest thereon, accrued fees and other amounts payable to it hereunder, from
the assignee (to the extent of such outstanding principal) and Borrower Agent
(in the case of accrued interest, fees and other amounts, including amounts
under Section 3.10), (iii) such assignment will result in a reduction in such
compensation and payments, and (iv) such assignment does not conflict with
applicable laws or regulations. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower Agent to require
such assignment and delegation cease to apply.

 

3.10    Funding Losses. Borrowers shall pay to Agent its customary
administrative charge and to each Lender all losses, expenses and liabilities
(including any interest paid by such Lender to Lenders of funds borrowed by it
to make or carry its Eurodollar Rate Loans and any loss, expense or liability
sustained by such Lender in connection with the liquidation or redeployment of
such) that it sustains (a) if for any reason (other than a default by such
Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date
specified therefor in a request for borrowing, or a conversion to or
continuation of, any Eurodollar Rate Loan does not occur on a date specific
therefor in a request for conversion or continuation, (b) if any prepayment or
other principal payment of, or any conversion of, any of its Eurodollar Rate
Loans occurs on a date prior to the last day of an Interest Period applicable to
such Loan, or (c) if any prepayment of any of its Eurodollar Rate Loans is not
made on any date specified in a notice of prepayment given by a Borrower (or on

 

472

its behalf by Borrower Agent). This covenant shall survive the termination or
non-renewal of this Agreement and the payment of the Obligations.

 

3.11    Maximum Interest. Notwithstanding anything to the contrary contained in
this Agreement or any of the other Financing Agreements, in no event whatsoever
shall the aggregate of all amounts that are contracted for, charged or received
by Agent or any Lender pursuant to the terms of this Agreement or any of the
other Financing Agreements and that are deemed interest under applicable law
exceed the Maximum Interest Rate (including, to the extent applicable, the
provisions of Section 5197 of the Revised Statutes of the United States of
America as amended, 12 U.S.C. Section 85, as amended). In no event shall any
Borrower or Guarantor be obligated to pay interest or such amounts as may be
deemed interest under applicable law in amounts which exceed the Maximum
Interest Rate. In the event any Interest is charged or received in excess of the
Maximum Interest Rate (“Excess”), each Borrower and Guarantor acknowledges and
stipulates that any such charge or receipt shall be the result of an accident
and bona fide error, and that any Excess received by Agent or any Lender shall
be applied, first, to the payment of the then outstanding and unpaid principal
hereunder; second to the payment of the other Obligations then outstanding and
unpaid; and third, returned to such Borrower or Guarantor. All monies paid to
Agent or any Lender hereunder or under any of the other Financing Agreements,
whether at maturity or by prepayment, shall be subject to any rebate of unearned
interest as and to the extent required by applicable law. For the purpose of
determining whether or not any Excess has been contracted for, charged or
received by Agent or any Lender, all interest at any time contracted for,
charged or received from any Borrower or Guarantor in connection with this
Agreement or any of the other Financing Agreements shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread during
the entire term of this Agreement in accordance with the amounts outstanding
from time to time hereunder and the Maximum Interest Rate from time to time in
effect in order to lawfully charge the maximum amount of interest permitted
under applicable laws. The provisions of this Section 3.11 shall be deemed to be
incorporated into each of the other Financing Agreements (whether or not any
provision of this Section is referred to therein).

 

3.12    No Requirement of Match Funding. Notwithstanding anything to the
contrary contained herein, Agent and Lenders shall not be required to acquire US
Dollar deposits in the London interbank market or any other offshore US Dollar
market to fund any Eurodollar Rate Loan or to otherwise match fund any
Obligations as to which interest accrues based on the Eurodollar Rate. All of
the provisions of this Section 3 shall be deemed to apply as if Agent, each
Lender or any Participant had acquired such deposits to fund any Eurodollar Rate
Loan or any other Obligation as to which interest is accruing at the Eurodollar
Rate by acquiring such US Dollar deposits for each Interest Period in the amount
of the Eurodollar Rate Loans or other applicable Obligations.

 

SECTION 4.

 

CONDITIONS PRECEDENT

 

4.1      Conditions Precedent to Effectiveness of Agreement to Make the Loans.
The agreement of Lenders to make the Loans shall become effective upon the
satisfaction, or waiver, immediately prior to or concurrently therewith each of
the following conditions precedent:

 

482

(a)       Agent shall have received (i) counterparts of this Agreement, executed
by a duly authorized officer of each party hereto, (ii) for the account of each
Lender requesting a promissory note, a Term Loan Note, (iii) counterparts of the
Intercreditor Agreement, Pledge Agreement, Guarantee, IP Security Agreement and
each Mortgage, in each case conforming to the requirements of this Agreement and
executed by duly authorized officers of the Borrowers, Guarantors or other
Persons, as applicable and (iv) counterparts of any other Financing Agreements,
executed by the duly authorized officers of the parties thereto;

 

(b)       the Agent shall have received evidence that all boards of directors
(including without limitation, the board of directors of the Acquired Company),
governmental, shareholder and material third party consents and approvals
necessary in connection with the Term Loan, the ABL Credit Agreement and the
Acquisition have been obtained and all applicable waiting periods have expired
without any action being taken by any authority that could restrain, prevent or
impose any material adverse conditions on such transactions or that could seek
or threaten any of the foregoing;

 

 

(c)

the Agent shall have received the following:

 

(i)        original certified articles of incorporation or other charter
documents, as applicable, of each Borrower and Guarantor certified (A) by an
officer of such Borrower or Guarantor as of the Closing Date to be true and
correct and in force and effect as of such date, and (B) to be true and complete
as of a recent date by the appropriate Governmental Authority of the state of
its incorporation or organization, as applicable;

 

(ii)      copies of resolutions of the board of directors or comparable managing
body of each Borrower and Guarantor approving and adopting the Financing
Agreements, the transactions contemplated therein and authorizing execution and
delivery thereof, certified by an officer of such Borrower or Guarantor as of
the Closing Date to be true and correct and in force and effect as of such date;

 

(iii)      a copy of the bylaws or comparable operating agreement of each
Borrower and Guarantor certified by an officer of such Borrower or Guarantor as
of the Closing Date to be true and correct and in force and effect as of such
date;

 

(iv)      original certificates of good standing, existence or its equivalent
with respect to each Borrower and Guarantor certified as of a recent date by the
appropriate Governmental Authorities of the state of incorporation or
organization and each other state in which the failure to so qualify and be in
good standing could reasonably be expected to have a Material Adverse Effect;
and

 

(v)       an incumbency certificate of each Borrower and Guarantor certified by
an officer to be true and correct as of the Closing Date;

 

(d)       the pro forma capital, ownership and management structure and
shareholding arrangement of the Parent, the Borrowers and their respective
Subsidiaries (and all agreements relating thereto) shall be reasonably
satisfactory to the Agent.

 

492

(e)       There shall not have been any material modification, amendment,
supplement or waiver to the Acquisition Documents without the prior written
consent of the Agent, and the Acquisition shall have been consummated in
accordance with the terms of the Acquisition Documents (without waiver of any
conditions precedent to the obligations of any party thereto material to the
interests of the Lenders). The Agent shall have received copies of all consents
or payoff letters required to be delivered in connection with the ABL Credit
Agreement. The Agent shall have received a copy, certified by an officer of the
Parent as true and complete, of each Acquisition Document as originally executed
and delivered, together with all exhibits and schedules thereto;

 

(f)        since September 30, 2007, no change, development, effect,
circumstance or occurrence shall have occurred that has had or would reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect;

 

(g)       there shall be no (i) bankruptcy or insolvency proceedings pending
with respect to the Parent, the Borrowers, the Acquired Company or any of their
respective Subsidiaries or (ii) pending or ongoing, action, suit, investigation,
litigation or proceeding in any court or before any other Governmental Authority
(A) affecting this Agreement or the other Financing Agreements, that has not
been settled, dismissed, vacated, discharged or terminated prior to the Closing
Date or (B) that purports to affect the Parent, the Borrowers, the Acquired
Company or any of their respective Subsidiaries, or any transaction contemplated
by the Financing Agreements, which action, suit, investigation, litigation or
proceeding could reasonably be expected to have a Material Adverse Effect, that
has not been settled, dismissed, vacated, discharged or terminated prior to the
Closing Date;

 

(h)       all of the existing Indebtedness for borrowed money of the Parent, the
Borrowers, the Acquired Company or any of their respective Subsidiaries (other
than Indebtedness permitted to exist pursuant to Section 10.3) shall be repaid
in full and all security interests related thereto shall be terminated on or
prior to the Closing Date;

 

(i)        Agent shall have received, in form and substance reasonably
satisfactory to the Agent, (i) copies of satisfactory audited consolidated
financial statements for the Parent and its Subsidiaries and the Acquired
Company and its Subsidiaries for fiscal years ended 2004, 2005, 2006 and 2007
(if available) and interim unaudited financial statements for each quarterly
period ended since the last audited financial statements for which financial
statements are available, (ii) copies of satisfactory unaudited consolidated
financial statements for the Parent and its Subsidiaries and the Acquired
Company for fiscal year ended 2007, (iii) pro forma consolidated statements of
income and loss and statements of cash flow for the Parent and its Subsidiaries
and the Acquired Company for the month ended immediately prior to the Closing
Date, and (iv) annual projections for the fiscal years ending 2008 through 2012,
prepared by management of balance sheets, income statements and cashflow
statements of the Parent and its Subsidiaries and the Acquired Company.

 

(j)        The Agent (or Control Agent in the case of clauses (D) and (G) below)
shall have received, in form and substance satisfactory to the Agent:

 

(A)      searches of UCC filings in the jurisdiction of incorporation or
formation, as applicable, of each Borrower and Guarantor and each jurisdiction

 

502

where any Collateral is located or where a filing would need to be made in order
to perfect the Agent’s security interest in the Collateral, copies of the
financing statements on file in such jurisdictions and evidence that no Liens
exist other than Permitted Liens and tax lien, judgment and pending litigation
searches;

 

(B)      searches of ownership of Intellectual Property in the appropriate
governmental offices and such patent/trademark/copyright filings as requested by
the Administrative Agent in order to perfect the Agent’s security interest in
the Intellectual Property;

 

(C)      completed UCC financing statements for each appropriate jurisdiction as
is necessary, in the Agent’s sole discretion, to perfect the Agent’s security
interest in the Collateral (including any fixture filings requested by the
Agent);

 

(D)      stock or membership certificates, if any, evidencing the Equity
Interests pledged to the Agent pursuant to the Pledge Agreement and duly
executed in blank undated stock or transfer powers;

 

(E)      duly executed consents as are necessary, in the Agent’s sole
discretion, to perfect the Lenders’ security interest in the Collateral;

 

(F)      in the case of any personal property Collateral located at premises
leased by a Borrower and Guarantor such Collateral Access Agreements from the
landlords of such real property to the extent the applicable Borrower or
Guarantor is able to secure such letters, consents and waivers after using
commercially reasonable efforts;

 

(G)      all instruments and chattel paper in the possession of any of the
Borrowers and Guarantors, together with allonges or assignments as may be
necessary or appropriate to perfect the Agent’s and the Lenders’ security
interest in the Collateral;

 

(H)      Deposit Account Control Agreements satisfactory to the Agent with
respect to each deposit account, except payroll accounts and to the extent
otherwise determined by the Agent; and

 

(I)        such documentation as may be required by the Administrative Agent to
comply with the Federal Assignment of Claims Act; and each Borrower and
Guarantor shall take such actions as may be required by the Administrative Agent
to file such documentation with the appropriate Governmental Authorities.

 

(k)       The Administrative Agent shall have received in form and substance
satisfactory to the Administrative Agent and the Lenders:

 

(A)      fully executed and notarized Mortgages encumbering the Mortgaged
Property as to properties owned by the Borrowers and Guarantors;

 

 

(B)

a title report in respect of each of the Mortgaged Properties;

 

512

 

(C)      with respect to each Mortgaged Property, a mortgage policy assuring the
Agent that the Mortgage with respect to such Mortgaged Property creates a valid
and enforceable first priority mortgage lien on such Mortgaged Property, free
and clear of all defects and encumbrances except Permitted Liens, which mortgage
policy shall be in form and substance reasonably satisfactory to the Agent and
shall provide for affirmative insurance and such reinsurance as the Agent may
reasonably request, all of the foregoing in form and substance reasonably
satisfactory to the Agent;

 

(D)      evidence as to (A) whether any Mortgaged Property is a Flood Hazard
Property and (B) if any Mortgaged Property is a Flood Hazard Property, (x)
whether the community in which such Mortgaged Property is located is
participating in the National Flood Insurance Program, (y) the applicable
Borrower or Guarantor’s written acknowledgment of receipt of written
notification from the Agent (I) as to the fact that such Mortgaged Property is a
Flood Hazard Property and (II) as to whether the community in which each such
Flood Hazard Property is located is participating in the National Flood
Insurance Program and (z) copies of insurance policies or certificates of
insurance of the Borrowers and Guarantors and their Subsidiaries evidencing
flood insurance reasonably satisfactory to the Agent and naming the Agent as
loss payee on behalf of the Lenders;

 

(E)      maps or plats of an as-built survey of the sites of the Mortgaged
Properties certified to the Agent and the Title Insurance Company in a manner
reasonably satisfactory to them, dated a date satisfactory to each of the Agent
and the Title Insurance Company by an independent professional licensed land
surveyor reasonably satisfactory to each of the Agent and the Title Insurance
Company, which maps or plats and the surveys on which they are based shall be
sufficient to delete any standard printed survey exception contained in the
applicable title policy and be made in accordance with the Minimum Standard
Detail Requirements for Land Title Surveys jointly established and adopted by
the American Land Title Association and the American Congress on Surveying and
Mapping in 2005, and, without limiting the generality of the foregoing, there
shall be surveyed and shown on such maps, plats or surveys the following: (A)
the locations on such sites of all the buildings, structures and other
improvements and the established building setback lines; (B) the lines of
streets abutting the sites and width thereof; (C) all access and other easements
appurtenant to the sites necessary to use the sites; (D) all roadways, paths,
driveways, easements, encroachments and overhanging projections and similar
encumbrances affecting the site, whether recorded, apparent from a physical
inspection of the sites or otherwise known to the surveyor; (E) any
encroachments on any adjoining property by the building structures and
improvements on the sites; and (F) if the site is described as being on a filed
map, a legend relating the survey to said map;

 

(F)      satisfactory third-party environmental reviews of all owned Mortgaged
Properties, including but not limited to Phase I environmental assessments,
together with reliance letters in favor of the Lenders;

 

522

(G)      to the extent requested by the Agent, opinions of counsel to the
Borrowers and Guarantors for each jurisdiction in which the Mortgaged Properties
are located;

 

(H)      to the extent available, zoning letters from each municipality or other
Governmental Authority for each jurisdiction in which the Mortgaged Properties
are located;

 

(I)        an appraisal of each owned Mortgaged Property, in form and substance
satisfactory to the Agent; and

 

(J)       legal descriptions for each leased Mortgaged Property to the extent
requested by Agent.

 

(l)        (i) Borrowers shall have at least $40,000,000 of availability under
the Borrowing Base and (ii) there shall be not less than $25,000,000 of Excess
Availability. Agent shall have received a copy, certified by the chief financial
officer of the Parent as true and complete, of each ABL Financing Agreement as
originally executed and delivered, together with all exhibits and schedules
thereto and all other ABL Financing Agreements;

 

(m)      the Agent shall have received a certificate satisfactory thereto,
substantially in the form of Exhibit B, for benefit of itself and the Lenders,
provided by the Parent that sets forth information required by the Patriot Act
including, without limitation, the identity of the Borrowers and Guarantors, the
name and address of the Borrowers and Guarantors and other information that will
allow the Agent or any Lender, as applicable, to identify the Borrowers and
Guarantors in accordance with the Patriot Act;

 

(n)       the Agent shall have received copies of insurance policies or
certificates and endorsements of insurance evidencing liability, casualty,
property and business interruption insurance meeting the requirements set forth
herein or in any other Financing Agreement. Subject to the Intercreditor
Agreement, Agent shall be named (i) as lender’s loss payee, as its interest may
appear, with respect to any such insurance providing coverage in respect of any
Collateral and (ii) as additional insured, as its interest may appear, with
respect to any such insurance providing liability coverage, and the Borrowers
and Guarantors will use their commercially reasonable efforts to have each
provider of any such insurance agree, by endorsement upon the policy or policies
issued by it or by independent instruments to be furnished to the Agent, that it
will give the Administrative Agent thirty (30) days prior written notice before
any such policy or policies shall be altered or cancelled;

 

(o)       the Agent shall have received an officer’s certificate prepared by the
chief financial officer of the Parent certifying, after giving effect to the
Acquisition, the borrowings under the ABL Financing Agreements and the funding
of the Term Loan, (i) to the financial condition, solvency and related matters
of the Borrowers and the Guarantors and (ii) that the Parent and the Borrowers
are in pro forma compliance with the financial covenant set forth in Section
11.1 (as evidenced through detailed calculations of such financial covenant on a
schedule to such certificate) as of the last day of the month ending at least
twenty (20) days preceding the Closing Date, in substantially the form of
Exhibit F hereto;

 

532

 

(p)       the Agent shall have received an opinion or opinions (including, if
requested by the Agent, local counsel opinions) of counsel for the Borrowers and
Guarantors, dated the Closing Date and addressed to the Agent and the Lenders,
in form and substance acceptable to the Agent (which shall include, without
limitation, opinions with respect to the due organization and valid existence of
each Borrower and Guarantor, opinions as to perfection of the Liens granted to
the Agent pursuant to the Financing Agreements and opinions as to the
non-contravention of the Borrowers’ and Guarantors’ organizational documents and
relevant Material Contracts).

 

(q)       the Agent shall have received evidence reasonably satisfactory thereto
provided by the Parent that the Senior Secured Leverage Ratio is not greater
than 1.0 to 1.0 after giving effect to the Acquisition, the initial borrowings
hereunder and the other transactions contemplated hereby for the four quarter
period ending as of the last day of the fiscal quarter ending prior to the
Closing Date;

 

(r)        the Agent shall have received all fees and expenses owed to Agent,
Arranger and Lenders;

 

(s)       the Agent shall have received evidence reasonably satisfactory thereto
that the Term Loan is permitted under the ABL Credit Agreement and the Senior
Note Documents;

 

(t)        the Agent shall have received evidence reasonably satisfactory
thereto that the Acquisition is permitted under the ABL Credit Agreement and the
Senior Note Documents;

 

(u)       the Agent shall have received evidence reasonably satisfactory thereto
that, as of the Closing Date, no Cash Dominion Event shall exist under the ABL
Credit Agreement; and

 

(v)       all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall be reasonably satisfactory in
form and substance to the Agent and its counsel.

 

SECTION 5.

 

GRANT AND PERFECTION OF SECURITY INTEREST

 

5.1      Grant of Security Interest. To secure payment and performance of all
Obligations, each Borrower and Guarantor hereby grants to Agent, for itself and
the benefit of the other Secured Parties, a continuing security interest in, a
lien upon, and a right of set off against, and hereby assigns to Agent, for
itself and the benefit of the other Secured Parties, as security, all personal
and real property and fixtures, and interests in property and fixtures, of each
Borrower and Guarantor, whether now owned or hereafter acquired or existing, and
wherever located (together with all other collateral security for the
Obligations at any time granted to or held or acquired by Agent or any Lender,
collectively, the “Collateral”), including:

 

542

 

(a)

all Accounts;

 

(b)       all general intangibles, including, without limitation, all
Intellectual Property;

 

 

(c)

all goods, including, without limitation, Inventory and Equipment;

 

 

(d)

all Mortgaged Property and fixtures;

 

(e)       all chattel paper, including, without limitation, all tangible and
electronic chattel paper;

 

 

(f)

all instruments, including, without limitation, all promissory notes;

 

 

(g)

all documents;

 

 

(h)

all deposit accounts;

 

(i)        all letters of credit, banker’s acceptances and similar instruments
and including all letter-of-credit rights;

 

(j)        all supporting obligations and all present and future liens, security
interests, rights, remedies, title and interest in, to and in respect of
Receivables and other Collateral, including (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;

 

(k)       all (i) investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts) and (ii) monies, credit balances,
deposits and other property of any Borrower or Guarantor now or hereafter held
or received by or in transit to Agent, any Lender or its Affiliates or at any
other depository or other institution from or for the account of any Borrower or
Guarantor, whether for safekeeping, pledge, custody, transmission, collection or
otherwise;

 

(l)        all commercial tort claims, including, without limitation, those
identified in the Information Certificate;

 

 

(m)

to the extent not otherwise described above, all Receivables;

 

 

(n)

all Records; and

 

(o)       all products and proceeds of the foregoing, in any form, including
insurance proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.

 

552

 

To secure payment and performance of all Obligations, each Borrower and
Guarantor hereby grants to the Control Agent, for itself and for the benefit of
the Lenders and the Agent, a continuing security interest in, a lien upon, and a
right of setoff against, and hereby assigns to the Control Agent, for itself and
for the benefit of the Lenders and the Agent, all Control Collateral of each
Borrower and Guarantor, whether now owned or hereafter acquired or existing, and
wherever located.

 

5.2      Exclusions from Collateral. Notwithstanding anything to the contrary
contained in Section 5.1 above, the types or items of Collateral described in
such Section shall not include Excluded Property.

 

 

 

5.3

Perfection of Security Interests.

 

(a)       So long as any Obligations are outstanding and this Agreement has not
been terminated, each Borrower and Guarantor irrevocably and unconditionally
authorizes Agent (or its agent) to file at any time and from time to time such
financing statements with respect to the Collateral naming Agent or its designee
as the secured party and such Borrower or Guarantor as debtor, as Agent may
require, and including any other information with respect to such Borrower or
Guarantor or otherwise required by part 5 of Article 9 of the Uniform Commercial
Code of such jurisdiction as Agent may determine, together with any amendment
and continuations with respect thereto, which authorization shall apply to all
financing statements filed on, prior to or after the date hereof. Each Borrower
and Guarantor hereby ratifies and approves all financing statements naming Agent
or its designee as secured party and such Borrower or Guarantor, as the case may
be, as debtor with respect to the Collateral (and any amendments with respect to
such financing statements) filed by or on behalf of Agent prior to the date
hereof and ratifies and confirms the authorization of Agent to file such
financing statements (and amendments, if any). Each Borrower and Guarantor
hereby authorizes Agent to adopt on behalf of such Borrower and Guarantor any
symbol required for authenticating any electronic filing. In the event that the
description of the collateral in any financing statement naming Agent or its
designee as the secured party and any Borrower or Guarantor as debtor includes
assets and properties of such Borrower or Guarantor that do not at any time
constitute Collateral, whether hereunder, under any of the other Financing
Agreements or otherwise, the filing of such financing statement shall
nonetheless be deemed authorized by such Borrower or Guarantor to the extent of
the Collateral included in such description and it shall not render the
financing statement ineffective as to any of the Collateral or otherwise affect
the financing statement as it applies to any of the Collateral. So long as any
Obligations are outstanding and this Agreement has not been terminated, in no
event shall any Borrower or Guarantor at any time file, or permit or cause to be
filed, any correction statement or termination statement with respect to any
financing statement (or amendment or continuation with respect thereto) naming
Agent or its designee as secured party and such Borrower or Guarantor as debtor.

 

(b)       Each Borrower and Guarantor does not have any chattel paper (whether
tangible or electronic) or instruments as of the date hereof, except as set
forth in the Information Certificate. In the event that any Borrower or
Guarantor shall be entitled to or shall receive any chattel paper or instrument
for obligations in excess of $250,000 in any one case or in the aggregate that
constitutes Collateral after the date hereof, Borrowers and

 

562

Guarantors shall promptly notify Agent thereof in writing. Promptly upon the
receipt thereof by or on behalf of any Borrower or Guarantor (including by any
agent or representative), such Borrower or Guarantor shall deliver, or cause to
be delivered to Agent (or Control Agent, as applicable), all tangible chattel
paper and instruments that such Borrower or Guarantor has or may at any time
acquire, accompanied by such instruments of transfer or assignment duly executed
in blank as Agent may from time to time reasonably specify, in each case except
as Agent may otherwise agree. At Agent’s option, each Borrower and Guarantor
shall, or Agent may at any time on behalf of any Borrower or Guarantor, cause
the original of any such instrument or chattel paper to be conspicuously marked
in a form and manner acceptable to Agent with the following legend referring to
chattel paper or instruments as applicable: “This [chattel paper][instrument] is
subject to the security interest of Wachovia Bank, National Association, as
Agent and any sale, transfer, assignment or encumbrance of this [chattel
paper][instrument] violates the rights of such secured party.”

 

(c)       In the event that any Borrower or Guarantor shall at any time hold or
acquire an interest in any electronic chattel paper or any “transferable record”
(as such term is defined in Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction) that constitute
Collateral, such Borrower or Guarantor shall promptly notify Agent thereof in
writing. Promptly upon Agent’s request, such Borrower or Guarantor shall take,
or cause to be taken, such actions as Agent may reasonably request to give Agent
or Control Agent control of such electronic chattel paper under Section 9-105 of
the UCC and control of such transferable record under Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or, as the case may
be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such
jurisdiction.

 

(d)       Each Borrower and Guarantor does not have any deposit accounts as of
the date hereof, except as set forth in the Information Certificate. Borrowers
and Guarantors shall not, directly or indirectly, after the date hereof open,
establish or maintain any deposit account, unless each of the following
conditions is satisfied: (i) Agent shall have received not less than ten (10)
Business Days’ prior written notice of the intention of any Borrower or
Guarantor to open or establish such account which notice shall specify in
reasonable detail and specificity acceptable to Agent the name of the account,
the owner of the account, the name and address of the bank at which such account
is to be opened or established, the individual at such bank with whom such
Borrower or Guarantor is dealing and the purpose of the account, (ii) the bank
where such account is opened or maintained shall be reasonably acceptable to
Agent, and (iii) on or before the opening of such deposit account, such Borrower
or Guarantor shall deliver to Agent a Deposit Account Control Agreement with
respect to such deposit account duly authorized, executed and delivered by such
Borrower or Guarantor and the bank at which such deposit account is opened and
maintained; provided, that, Borrowers and Guarantors shall not be required to
deliver a Deposit Account Control Agreement with a depository bank as to any
deposit account that is specifically and exclusively used for payroll, payroll
taxes and other employee wage and benefit payments to or for the benefit of any
Borrower’s or Guarantor’s salaried employees.

 

(e)       No Borrower or Guarantor owns or holds, directly or indirectly,
beneficially or as record owner or both, any investment property, as of the date
hereof, or have any

 

572

investment account, securities account, commodity account or other similar
account with any bank or other financial institution or other securities
intermediary or commodity intermediary as of the date hereof, in each case
except as set forth in the Information Certificate.

 

(i)        In the event that any Borrower or Guarantor shall be entitled to or
shall at any time after the date hereof hold or acquire any certificated
securities that constitute Collateral, such Borrower or Guarantor shall promptly
deliver the original of same to Agent, accompanied by such instruments of
transfer or assignment duly executed in blank as Agent may specify. If any
securities that constitute Collateral, now or hereafter acquired by any Borrower
or Guarantor are uncertificated and are issued to such Borrower or Guarantor or
its nominee directly by the issuer thereof, such Borrower or Guarantor shall
immediately notify Agent thereof and shall as Agent may specify, either (A)
cause the issuer to agree to comply with instructions from Agent as to such
securities, without further consent of any Borrower or Guarantor or such
nominee, or (B) arrange for Agent to become the registered owner of the
securities.

 

(ii)      Borrowers and Guarantors shall not, directly or indirectly, after the
date hereof open, establish or maintain any investment account, securities
account, commodity account or any other similar account (other than a deposit
account) with any securities intermediary or commodity intermediary that
constitute or do or will at any time have any Collateral in them unless each of
the following conditions is satisfied: (A) Agent shall have received not less
than ten (10) Business Days’ prior written notice of the intention of such
Borrower or Guarantor to open or establish such account which notice shall
specify in reasonable detail and specificity acceptable to Agent the name of the
account, the owner of the account, the name and address of the securities
intermediary or commodity intermediary at which such account is to be opened or
established, the individual at such intermediary with whom such Borrower or
Guarantor is dealing and the purpose of the account, (B) the securities
intermediary or commodity intermediary (as the case may be) where such account
is opened or maintained shall be reasonably acceptable to Agent, and (C) on or
before the opening of such investment account, securities account or other
similar account with a securities intermediary or commodity intermediary, such
Borrower or Guarantor shall execute and deliver, and cause to be executed and
delivered to Agent, an Investment Property Control Agreement with respect
thereto duly authorized, executed and delivered by such Borrower or Guarantor
and such securities intermediary or commodity intermediary.

 

(f)        Borrowers and Guarantors are not the beneficiary or otherwise
entitled to any right to payment under any letter of credit, banker’s acceptance
or similar instrument as of the date hereof, except as set forth in the
Information Certificate. In the event that any Borrower or Guarantor shall be
entitled to or shall receive any right to payment under any letter of credit,
banker’s acceptance or any similar instrument, whether as beneficiary thereof or
otherwise after the date hereof involving an amount in excess of $250,000 in any
one case or in the aggregate that constitute Collateral, such Borrower or
Guarantor shall promptly notify Agent thereof in writing. Such Borrower or
Guarantor shall promptly, as Agent may specify, either (i) deliver, or cause to
be delivered to Agent, with respect to any

 

582

such letter of credit, banker’s acceptance or similar instrument, the written
agreement of the issuer and any other nominated person obligated to make any
payment in respect thereof (including any confirming or negotiating bank), in
form and substance reasonably satisfactory to Agent, consenting to the
assignment of the proceeds of the letter of credit to Agent by such Borrower or
Guarantor and agreeing to make all payments thereon directly to Agent or as
Agent may otherwise direct or (ii) cause Agent to become, at Borrowers’ expense,
the transferee beneficiary of the letter of credit, banker’s acceptance or
similar instrument (as the case may be).

 

(g)       Borrowers and Guarantors do not have any commercial tort claims as of
the date hereof, except as set forth in the Information Certificate. In the
event that any Borrower or Guarantor shall at any time after the date hereof
have any commercial tort claims involving a claim in excess of $100,000 that
arise in connection with or are related to any other Collateral, such Borrower
or Guarantor shall promptly notify Agent thereof in writing, which notice shall
(i) set forth in reasonable detail the basis for and nature of such commercial
tort claim and (ii) include the express grant by such Borrower or Guarantor to
Agent of a security interest in such commercial tort claim (and the proceeds
thereof). In the event that such notice does not include such grant of a
security interest, the sending thereof by such Borrower or Guarantor to Agent
shall be deemed to constitute such grant to Agent. Upon the sending of such
notice, any commercial tort claim described therein shall constitute part of the
Collateral and shall be deemed included therein. Without limiting the
authorization of Agent provided in Section 5.3(a) hereof or otherwise arising by
the execution by such Borrower or Guarantor of this Agreement or any of the
other Financing Agreements, Agent is hereby irrevocably authorized from time to
time and at any time to file such financing statements naming Agent or its
designee as secured party and such Borrower or Guarantor as debtor, or any
amendments to any financing statements, covering any such commercial tort claim
as Collateral. In addition, each Borrower and Guarantor shall promptly upon
Agent’s request, execute and deliver, or cause to be executed and delivered, to
Agent such other agreements, documents and instruments as Agent may reasonably
require in connection with such commercial tort claim.

 

(h)       Borrowers and Guarantors do not have any goods, documents of title or
other Collateral in the custody, control or possession of a third party as of
the date hereof, except as set forth in the Information Certificate and except
for goods located in the United States in transit to a location of a Borrower or
Guarantor permitted herein in the ordinary course of business of such Borrower
or Guarantor in the possession of the carrier transporting such goods. In the
event that any goods, documents of title or other Collateral are at any time
after the date hereof having a value in excess of $250,000 in any one case or in
the aggregate in the custody, control or possession of any other person not
referred to in the Information Certificate or such carriers, Borrowers and
Guarantors shall promptly notify Agent thereof in writing. Promptly upon Agent’s
request, Borrowers and Guarantors shall use their commercially reasonable
efforts to deliver to Agent a Collateral Access Agreement duly authorized,
executed and delivered by such person and the Borrower or Guarantor that is the
owner of such Collateral.

 

(i)        Borrowers and Guarantors shall take any other actions reasonably
requested by Agent from time to time to cause the attachment, perfection and,
with respect to the Priority Collateral, first priority and, with respect to the
ABL Priority Collateral, second

 

592

priority (behind only the liens in favor of the ABL Agent permitted by Section
10.3(j)) of, and the ability of Agent to enforce, the security interest of Agent
in any and all of the Collateral, including, without limitation, (i) executing,
delivering and, where appropriate, filing financing statements and amendments
relating thereto under the UCC or other applicable law, to the extent, if any,
that any Borrower’s or Guarantor’s signature thereon is required therefor, (ii)
causing Agent’s name to be noted as secured party on any certificate of title
for a titled good if such notation is a condition to attachment, perfection or
priority of, or ability of Agent to enforce, the security interest of Agent in
such Collateral, (iii) complying with any provision of any statute, regulation
or treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or ability of
Agent to enforce, the security interest of Agent in such Collateral, and(iv)
obtaining the consents and approvals of any Governmental Authority or third
party, including, without limitation, any consent of any licensor, lessor or
other person obligated on Collateral, and taking all actions required by any
earlier versions of the UCC or by other law, as applicable in any relevant
jurisdiction.

 

 

 

5.4

Control Collateral Held by Control Agent.  

 

Notwithstanding any provision to the contrary herein, (a) any Collateral that
constitutes Control Collateral that is held by Agent hereunder shall be deemed
to be held by the Control Agent in accordance with the Intercreditor Agreement
and (b) any Collateral that constitutes Control Collateral that is held by
Control Agent pursuant to the terms of the Intercreditor Agreement shall be
deemed to be held by Agent for purposes of compliance with the terms herein.

 

 

 

5.5

Intercreditor Provisions.  

 

Notwithstanding anything herein to the contrary, the lien and security interest
granted to Agent pursuant to this Agreement and the exercise of any right or
remedy by Agent hereunder are subject to the provisions of the Intercreditor
Agreement, as the same may be amended, supplemented, modified or replaced from
time to time. In the event of any conflict between the terms of the
Intercreditor Agreement and this Agreement, the terms of the Intercreditor
Agreement shall govern.

 

SECTION 6.

 

COLLECTION AND ADMINISTRATION

 

6.1      Borrowers’ Loan Accounts. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans and other
Obligations and the Collateral, (b) all payments made by or on behalf of any
Borrower or Guarantor and (c) all other appropriate debits and credits as
provided in this Agreement, including fees, charges, costs, expenses and
interest. All entries in the loan account(s) shall be made in accordance with
Agent’s customary practices as in effect from time to time.

 

 

 

6.2

[Reserved].

 

6.3      Lenders’ Evidence of Debt. Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing the Obligations of
each Borrower to such Lender,

 

602

including the amounts of the Loans made by it and each repayment and prepayment
in respect thereof, including the amounts of principal and interest payable and
paid to such Lender from time to time hereunder. Any such records shall be
presumptively correct, absent manifest error, provided, that, the failure to
make any entry or any error in such records, shall not affect any Lender’s Pro
Rata Share of the Loans hereunder or the Obligations in respect of any
applicable Loans and in the event of any inconsistency between the Register and
any Lender’s records, the Register shall govern.

 

 

 

6.4

Register.

 

(a)       Agent (or its agent or sub-agent appointed by it) shall maintain a
register (the “Register”) for the recordation of the names and addresses of
Lenders and principal amount of the Loans (the “Registered Loans”) owing to each
Lender from time to time. The Register, as in effect at the close of business on
the preceding Business Day, shall be available for inspection by Borrower Agent
or any Lender (with respect to a Lender, solely with respect to the Obligations
owing to such Lender) at a reasonable time and from time to time upon reasonable
prior notice. Agent shall record, or cause to be recorded, in the Register the
Loans in accordance with the provisions of Section 15.7 and Agent shall also
maintain a copy of each Assignment and Acceptance delivered to and accepted by
it and shall modify the Register to give effect to each Assignment and
Acceptance, and any such recording shall be presumptively correct, absent
manifest error; provided, that, the failure to make any entry or any error in
such records, shall not affect any Lender’s Obligations in respect of any Loan.
Borrowers, Guarantors, Agent and Lenders shall treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. Borrowers hereby designate and authorize Agent, and Agent agrees, to
maintain, or cause to be maintained as agent for Borrowers’ solely for purposes
of maintaining the Register as provided in this Section 6.4(a).

 

(b)       Each Lender that grants a participation shall maintain a register as a
non-fiduciary agent of Borrowers on which it enters the name and address of each
Participant and the principal and interest amount of each Participant’s interest
in the Loans held by it (the “Participant Register”). The entries in the
Participant Register shall be conclusive, absent manifest error, and such Lender
shall treat each person whose name is recorded in the Participant Register as
the owner of such participation for all purposes of this Agreement
notwithstanding any notice to the contrary.

 

 

 

6.5

[Reserved].

 

 

 

6.6

[Reserved].

 

 

 

6.7

Payments.

 

(a)       All Obligations shall be payable to the account designated by the
Agent or such other place as Agent may designate in writing to Borrower Agent
from time to time.

 

(b)       Subject to the other terms and conditions contained herein, Agent
shall apply payments received or collected from any Borrower or Guarantor or for
the account of any Borrower or Guarantor (including the monetary proceeds of
collections or of realization

 

612

upon any Collateral) as follows: first, to the payment in full of any fees,
indemnities or expense reimbursements then due to Agent from any Borrower or
Guarantor; second, ratably, to the payment in full of any fees, indemnities, or
expense reimbursements then due to Lenders from any Borrower or Guarantor;
third, ratably, to the payment in full of interest due in respect of any Loans
(and including any Special Agent Advances); fourth, to the payment in full of
principal in respect of Special Agent Advances; fifth, ratably, to the payment
in full of principal in respect of the Loans, and sixth, to pay or prepay any
other Obligations, whether or not then due, in such order and manner as Agent
directs. All references to the term “ratably” as used in this Section 6.7(b)
shall mean pro rata on the basis of the amount owing to any one Person in
relationship to the amounts owing to all Persons of the same category of
Obligations within the same level of priority.

 

(c)       Notwithstanding anything to the contrary contained in this Agreement,
unless so directed by Agent, or unless a Default or an Event of Default shall
exist or have occurred and be continuing, Agent shall not apply any payments
which it receives to any Eurodollar Rate Loans, except (i) on the expiration
date of the Interest Period applicable to any such Eurodollar Rate Loans or (ii)
in the event that there are no outstanding Base Rate Loans.

 

(d)       At Agent’s option, all principal, interest, fees, costs, expenses and
other charges provided for in this Agreement or the other Financing Agreements
may be charged directly to the loan account(s) of any Borrower maintained by
Agent. If after receipt of any payment of, or proceeds of Collateral applied to
the payment of, any of the Obligations, Agent, any Lender is required to
surrender or return such payment or proceeds to any Person for any reason, then
the Obligations intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Agreement shall continue in full force and
effect as if such payment or proceeds had not been received by Agent or such
Lender. Borrowers and Guarantors shall be liable to pay to Agent, and do hereby
agree to indemnify and hold Agent and Lenders harmless for the amount of any
payments or proceeds surrendered or returned. This Section 6.7(d) shall remain
effective notwithstanding any contrary action which may be taken by Agent or any
Lender in reliance upon such payment or proceeds. This preceding two sentences
of this Section 6.7(d) shall survive the payment of the Obligations and the
termination of this Agreement.

 

 

 

6.8

Taxes.

 

(a)       Any and all payments by or on account of any of the Obligations shall
be made free and clear of and without deduction or withholding for or on account
of, duties, taxes, levies, imposts, fees, deductions, charges or withholdings of
any kind imposed by any Governmental Authority with respect to such payments,
excluding (i) in the case of each Lender and Agent (A) duties, taxes, levies,
imposts, fees, deductions, charges, or withholdings of any kind measured by its
net income, and franchise taxes imposed on it, by the jurisdiction (or any
political subdivision thereof) under the laws of which such Lender or Agent (as
the case may be) is incorporated or otherwise organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located and (B) any United States withholding taxes
due or payable with respect to payments under the Financing Agreements under
laws (including any statute, treaty or regulation) in effect on the date hereof
(or, in the case of an Eligible Transferee, the date of the Assignment and
Acceptance) applicable to such Lender or Agent, as the case may be,

 

622

but not excluding any United States withholding taxes payable as a result of any
change in such laws occurring after the date hereof (or the date of such
Assignment and Acceptance) and (ii) in the case of each Lender or Agent, duties,
taxes, levies, imposts, fees, deductions, charges or withholdings of any kind
imposed on it as a result of a present or former connection between such Lender
or Agent (as the case may be) and the jurisdiction imposing such duties, taxes,
levies, imposts, fees, deductions, charges or withholdings but excluding any
such connection arising from the activities of such Lender or Agent (as the case
may be) pursuant to or in respect of this Agreement or any of the other
Financing Agreements including but not limited to, executing delivering or
performing its obligations or receiving a payment under or enforcing this
Agreement or any of the other Financing Agreements (all such non-excluded
duties, taxes, levies, imposts, fees, deductions, charges, or withholdings and
all interest, penalties or similar liabilities with respect thereto being
hereinafter referred to as “Taxes”).

 

(b)       Subject to the last sentence of Section 6.8(g), if any Taxes shall be
required by law to be deducted from or in respect of any sum payable in respect
of the Obligations to any Lender or Agent (i) the sum payable shall be increased
as may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 6.8), such
Lender or Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the relevant Borrower
or Guarantor shall make such deductions, (iii) the relevant Borrower or
Guarantor shall pay the full amount deducted to the relevant taxing authority or
other authority in accordance with applicable law and (iv) the relevant Borrower
or Guarantor shall deliver to Agent evidence of such payment.

 

(c)       In addition, each Borrower and Guarantor agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies of the United States or any political subdivision thereof or
any applicable foreign jurisdiction, and all liabilities with respect thereto,
in each case arising from any payment made hereunder or under any of the other
Financing Agreements or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any of the other Financing
Agreements (collectively, “Other Taxes”).

 

(d)       Subject to the last sentence of Section 6.8(g), each Borrower and
Guarantor shall indemnify each Lender and Agent for the full amount of Taxes and
Other Taxes (including any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this Section 6.8) paid by such Lender or Agent (as the
case may be) and any liability (including for penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. This indemnification shall be made
within thirty (30) days from the date such Lender or Agent (as the case may be)
makes written demand therefor. A certificate as to the amount of such payment
delivered to Borrower Agent by a Lender or by Agent on its own behalf or on
behalf of a Lender, shall be conclusive absent manifest error.

 

(e)       As soon as practicable after any payment of Taxes or Other Taxes by
any Borrower or Guarantor, such Borrower or Guarantor shall furnish to Agent, at
its address referred to herein, the original or a certified copy of a receipt
evidencing payment thereof.

 

632

(f)        Without prejudice to the survival of any other agreements of any
Borrower or Guarantor hereunder or under any of the other Financing Agreements,
the agreements and obligations of such Borrower or Guarantor contained in this
Section 6.8 shall survive the termination of this Agreement and the payment in
full of the Obligations.

 

(g)       Each Foreign Lender shall deliver to Borrower Agent (with a copy to
Agent) on or prior to the date hereof, or in the case of a Foreign Lender that
is an assignee of an interest under this Agreement pursuant to Sections 15.7(b)
or 15.7(f) (unless the respective Lender was already a Lender hereunder
immediately prior to such assignment or transfer), on the date of the applicable
Assignment and Acceptance, or upon any change in lending office of a Foreign
Lender: (i) two (2) duly completed original signed copies of Internal Revenue
Service Form W-8BEN claiming exemption from, or a reduction to, withholding tax
under an income tax treaty with respect to payments to be made under this
Agreement and any of the other Financing Agreements, or any successor form, (ii)
two (2) duly completed original signed copies of Internal Revenue Service Form
W-8ECI claiming exemption from withholding tax with respect to payments to be
made under this Agreement and any of the other Financing Agreements because the
income is effectively connected with a U.S. trade or business or any successor
form, or (iii) in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under Sections 871(h) or 881(c) of the Code,
(A) a certificate of the Lender to the effect that such Lender is not a “bank”
within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent
shareholder” of any Borrower within the meaning of Section 881(c)(3)(B) of the
Code or a “controlled foreign corporation” with respect to which any Borrower is
a related person within the meaning of Section 864(d)(4) of the Code and (B) two
(2) duly completed original signed copies of Internal Revenue Service Form
W-8BEN certifying to such Lender’s entitlement to an exemption from withholding
tax with respect to payments of interest to be made under this Agreement and any
of the other Financing Agreements or any successor form. Each Lender that is not
a Foreign Lender and is not a person whose name indicates that it is an “exempt
recipient” (as such term is defined in Section 1.6049-4(c)(1)(ii) of the United
States Treasury Regulations) agrees to deliver to Borrower Agent (with a copy to
Agent) on or prior to the date hereof, or in the case of a Lender that is an
assignee of an interest under this Agreement pursuant to Sections 15.7(b) or
15.7(f) (unless the respective Lender was already a Lender hereunder immediately
prior to such assignment) on the date of the applicable Assignment and
Acceptance two (2) duly completed original signed copies of Internal Revenue
Service Form W-9 certifying to such Lender’s entitlement as of such date to a
complete exemption from United States backup withholding tax with respect to
payments to be made under this Agreement and any of the other Financing
Agreements, or successor forms. In addition, each Lender agrees that it will
deliver updated versions of the foregoing, as applicable, whenever the previous
certification has become obsolete or inaccurate in any material respect,
together with such other forms as may be required in order to confirm or
establish the entitlement of such Lender to a continued exemption from United
States withholding tax with respect to payments under this Agreement and any of
the other Financing Agreements. Unless Borrower Agent and Agent have received
forms or other documents satisfactory to them indicating that payments hereunder
or under any of the other Financing Agreements to or for a Foreign Lender are
not subject to United States withholding tax or are subject to such tax at a
rate reduced by an applicable tax treaty, Borrowers, Guarantors or Agent shall
withhold amounts required to be withheld by applicable requirements of law from
such payments at the applicable statutory rate.

 

642

Borrowers and Guarantors shall not be required to indemnify any Foreign Lender
or to pay any additional amounts to any Foreign Lender in respect of U.S.
withholding tax pursuant Section 6.8(b) or 6.8(d) above to the extent that the
obligation to pay such additional amounts would not have arisen but for a
failure by such Foreign Lender to comply with the provisions of this Section
6.8(g). Should a Lender become subject to Taxes because of its failure to
deliver a form required hereunder, Borrowers and Guarantors shall, at such
Lender’s expense, take such steps as such Lender shall reasonably request to
assist such Lender to recover such Taxes.

 

(h)       Any Lender claiming any additional amounts payable pursuant to this
Section 6.8 shall use its reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
applicable lending office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that would be payable
or may thereafter accrue and would not, in the sole determination of such
Lender, be otherwise disadvantageous in any material respect to such Lender.

 

(i)        If the Borrowers or Guarantors pay any additional amount pursuant to
this Section 6.8 with respect to any Lender, such Lender shall use reasonable
efforts to obtain a refund of tax or credit against its tax liabilities on
account of such payment; provided, that, such Lender shall have no obligation to
use such reasonable efforts to obtain a credit if it is in an excess foreign tax
credit position and shall have no obligation to use such reasonable efforts if
it believes in good faith that claiming a refund or credit would cause adverse
tax consequences to it. In the event that such Lender receives such a refund or
credit, such Lender shall pay to the Borrowers or Guarantors, an amount that
such Lender reasonably determines is equal to the net tax benefit obtained by
such Lender as a result of such payment by the Borrowers or Guarantors, as
applicable, so as to leave such Lender in no worse position that in which it
would have been in if payment of the relevant additional amount had not been
made. Nothing contained in this Section 6.8(j) shall require a Lender to
disclose or detail the basis of its calculation of the amount of any tax benefit
or any other amount or the basis of its determination referred to in the proviso
to the first sentence of this Section 6.8(j) to the Borrowers, Guarantors or any
other party.

 

 

 

6.9

[Reserved].

 

6.10    Appointment of Borrower Agent as Agent for Requesting Loans and Receipts
of Loans and Statements.

 

(a)       Each Borrower hereby irrevocably appoints and constitutes Borrower
Agent as its agent and attorney-in-fact to request and receive Loans pursuant to
this Agreement and the other Financing Agreements from Agent or any Lender in
the name or on behalf of such Borrower. Agent and Lenders may disburse the Loans
to such bank account of Borrower Agent or a Borrower or otherwise make such
Loans to a Borrower as Borrower Agent may designate or direct, without notice to
any other Borrower or Guarantor. Notwithstanding anything to the contrary
contained herein, Agent may at any time and from time to time require that Loans
to or for the account of any Borrower be disbursed directly to an operating
account of such Borrower.

 

652

(b)       Borrower Agent hereby accepts the appointment by Borrowers to act as
the agent and attorney-in-fact of Borrowers pursuant to this Section 6.10.
Borrower Agent shall ensure that the disbursement of any Loans to each Borrower
requested by or paid to or for the account of Parent, shall be paid to or for
the account of such Borrower.

 

(c)       Each Borrower and other Guarantor hereby irrevocably appoints and
constitutes Borrower Agent as its agent to receive statements on account and all
other notices from Agent and Lenders with respect to the Obligations or
otherwise under or in connection with this Agreement and the other Financing
Agreements.

 

(d)       Any notice, election, representation, warranty, agreement or
undertaking by or on behalf of any other Borrower or any Guarantor by Borrower
Agent shall be deemed for all purposes to have been made by such Borrower or
Guarantor, as the case may be, and shall be binding upon and enforceable against
such Borrower or Guarantor to the same extent as if made directly by such
Borrower or Guarantor.

 

(e)       No termination of the appointment of Borrower Agent as agent as
aforesaid shall be effective, except after ten (10) Business Days’ prior written
notice to Agent.

 

6.11    Pro Rata Treatment. Except to the extent otherwise provided in this
Agreement or as otherwise agreed by the applicable Lenders: (a) the making and
conversion of Loans shall be made among the Lenders based on their respective
Pro Rata Shares as to the Loans and (b) each payment on account of any
Obligations to or for the account of one or more of Lenders in respect of any
Obligations due on a particular day shall be allocated among the Lenders
entitled to such payments based on their respective Pro Rata Shares and shall be
distributed accordingly.

 

 

 

6.12

Sharing of Payments, Etc.

 

(a)       Each Borrower and Guarantor agrees that, in addition to (and without
limitation of) any right of setoff, banker’s lien or counterclaim Agent or any
Lender may otherwise have, each Lender shall be entitled, at its option (but
subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of such Borrower or
Guarantor at any of its offices, in dollars or in any other currency, against
any principal of or interest on any Loans owed to such Lender or any other
amount payable to such Lender hereunder, that is not paid when due (regardless
of whether such balances are then due to such Borrower or Guarantor), in which
case it shall promptly notify Borrower Agent and Agent thereof; provided, that,
such Lender’s failure to give such notice shall not affect the validity thereof.

 

(b)       If any Lender (including Agent) shall obtain from any Borrower or
Guarantor payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any of the other Financing
Agreements through the exercise of any right of setoff, banker’s lien or
counterclaim or similar right or otherwise (other than from Agent as provided
herein), and, as a result of such payment, such Lender shall have received more
than its Pro Rata Share of the principal of the Loans or more than its share of
such other amounts then due hereunder or thereunder by any Borrower or Guarantor
to such Lender than the percentage thereof received by any other Lender, it
shall promptly pay to Agent, for the benefit of Lenders, the amount of such
excess and

 

662

simultaneously purchase from such other Lenders a participation in the Loans or
such other amounts, respectively, owing to such other Lenders (or such interest
due thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all Lenders
shall share the benefit of such excess payment (net of any expenses that may be
incurred by such Lender in obtaining or preserving such excess payment) in
accordance with their respective Pro Rata Shares or as otherwise agreed by
Lenders. To such end all Lenders shall make appropriate adjustments among
themselves (by the resale of participation sold or otherwise) if such payment is
rescinded or must otherwise be restored.

 

(c)       Each Borrower and Guarantor agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise, in
a manner consistent with this Section, all rights of setoff, banker’s lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.

 

(d)       Nothing contained herein shall require any Lender to exercise any
right of setoff, banker’s lien, counterclaims or similar rights or shall affect
the right of any Lender to exercise, and retain the benefits of exercising, any
such right with respect to any other Indebtedness or obligation of any Borrower
or Guarantor. If, under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section applies, such Lender shall, to the extent practicable, assign such
rights to Agent for the benefit of Lenders and, in any event, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of Lenders entitled under this Section to share in the benefits of any recovery
on such secured claim.

 

 

 

6.13

[Reserved].

 

6.14    Obligations Several; Independent Nature of Lenders’ Rights. The
obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements and
no action taken by the Lenders pursuant hereto or thereto shall be deemed to
constitute the Lenders to be a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and subject to Section 14.3
hereof, each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.

 

SECTION 7.

 

COLLATERAL REPORTING AND COVENANTS

 

7.1      Collateral Reporting. Borrowers shall provide Agent with a copy of any
Collateral or other reports provided to ABL Agent or ABL Lenders pursuant to the
ABL Credit Agreement.

 

 

 

7.2

Accounts Covenants.

 

672

 

(a)       Borrowers shall notify Agent promptly of (i) the assertion of any
claims, offsets, defenses or counterclaims by any account debtor, or any
disputes with any account debtor or any settlement, adjustment or compromise
thereof, to the extent any of the foregoing exceeds $250,000 in any one case or
$500,000 in the aggregate and (ii) all material adverse information of which it
has notice relating to the financial condition of any account debtor. No credit,
discount, allowance or extension or agreement for any of the foregoing shall be
granted to any account debtor except in the ordinary course of a Borrower’s
business in accordance with the current practices of such Borrower as in effect
on the date hereof. At any time that an Event of Default exists or has occurred
and is continuing and after the Discharge of the ABL Obligations (as defined in
the Intercreditor Agreement), Agent shall, at its option, have the exclusive
right to settle, adjust or compromise any claim, offset, counterclaim or dispute
with account debtors or grant any credits, discounts or allowances.

 

(b)       With respect to each Account: (i) the amounts shown on any invoice
delivered to Agent or schedule thereof delivered to Agent shall be true and
complete in all material respects, (ii) no payments shall be made thereon except
those sent to the Concentration Accounts (as defined in the ABL Credit
Agreement) and as otherwise may be instructed by the ABL Agent, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing shall be
granted to any account debtor except as reported to Agent in accordance with
this Agreement and except for credits, discounts, allowances or extensions made
or given in the ordinary course of each Borrower’s business, (iv) there shall be
no setoffs, deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto other than as reported to Agent in accordance with
the terms of this Agreement, and (v) none of the transactions giving rise
thereto will violate any applicable foreign, Federal, State or local laws or
regulations, all documentation relating thereto will be legally sufficient under
such laws and regulations and all such documentation will be legally enforceable
in accordance with its terms.

 

(c)       Agent shall have the right at any time or times, in Agent’s name or in
the name of a nominee of Agent, to verify the validity, amount or any other
matter relating to any Receivables or other Collateral, by mail, telephone,
facsimile transmission or otherwise.

 

7.3      Inventory Covenants. With respect to the Inventory: (a) each Borrower
and Guarantor shall at all times maintain inventory records reasonably
satisfactory to Agent, keeping correct and accurate records in all material
respects itemizing and describing the kind, type, quality and quantity of
Inventory, such Borrower’s or Guarantor’s cost therefor and daily withdrawals
therefrom and additions thereto; (b) Borrowers and Guarantors shall conduct a
physical count of the Inventory either through periodic cycle counts or wall to
wall counts, so that all Inventory is subject to such counts at least once each
year, but at any time or times as Agent may request at any time a Default or an
Event of Default exists or has occurred and is continuing, and promptly
following such physical inventory (whether through periodic cycle counts or wall
to wall counts) shall supply Agent at least once each calendar quarter if any
such counts are performed within such quarter, or otherwise once each calendar
year, with a report in the form and with such specificity as may be reasonably
satisfactory to Agent concerning such physical count; (c) Borrowers and
Guarantors shall not remove any Inventory from the locations set forth or
permitted herein, without the prior written consent of Agent, except for sales
of Inventory in the ordinary course of its business and

 

682

except to move Inventory directly from one location set forth or permitted
herein to another such location and except for Inventory shipped from the
manufacturer thereof to such Borrower or Guarantor which is in transit to the
locations set forth or permitted herein; (d) Borrowers shall deliver or cause to
be delivered to Agent copies of written appraisals as to the Inventory delivered
to the ABL Agent and accompanied by a statement that Agent and Lenders are
expressly permitted to rely thereon; (e) Borrowers and Guarantors shall produce,
use, store and maintain the Inventory with all reasonable care and caution and
in accordance with applicable standards of any insurance and in conformity with
applicable laws (including the requirements of the Federal Fair Labor Standards
Act of 1938, as amended and all rules, regulations and orders related thereto);
(f) as between Agent and Lenders, on the one hand, and Borrowers and Guarantors,
on the other hand, each Borrower and Guarantor assumes all responsibility and
liability arising from or relating to the use, sale or other disposition of the
Inventory (but nothing contained herein shall be construed as the basis for any
liability of any Borrower or Guarantor as to any third party); (g) as of the
date hereof, Borrowers and Guarantors do not sell Inventory to any customer on
approval, or any other basis which entitles the customer to return or may
obligate any Borrower or Guarantor to repurchase such Inventory but shall give
Agent prior written notice if such practice changes together with such
information with respect to the new policy as may reasonably be requested by
Agent; (h) Borrowers and Guarantors shall keep the Inventory in good and
marketable condition; and (i) Borrowers and Guarantors shall not acquire or
accept any Inventory on consignment or approval unless such Inventory has been
specifically identified in a report with respect thereto provided by Borrower
Agent to Agent pursuant to Section 7.1(a) hereof when required to be included in
such report or Agent has otherwise received prior written notice thereof in form
and substance reasonably satisfactory to Agent.

 

7.4      Equipment and Real Property. (a) Borrowers and Guarantors shall keep
the Equipment in good order, repair, running and marketable condition (ordinary
wear and tear excepted); (b) Borrowers and Guarantors shall use the Equipment
and Real Property with all reasonable care and caution and in accordance with
applicable standards of any insurance and in conformity with all applicable laws
in all material respects; (c) the Equipment is and shall be used in the business
of Borrowers and Guarantors and not for personal, family, household or farming
use; provided, that, certain motor vehicles used primarily by employees for
business purposes may from time to time be incidentally used for personal,
family or household use, as permitted by the internal policies of the applicable
Borrower or Guarantor if any; (d) Borrowers and Guarantors shall not remove any
Equipment from the locations set forth or permitted herein, except to the extent
necessary to have any Equipment repaired, replaced or maintained in the ordinary
course of its business or to move Equipment directly from one location set forth
or permitted herein to another such location and except for the movement of
motor vehicles used by or for the benefit of such Borrower or Guarantor in the
ordinary course of business; (e) the Equipment is now and shall remain personal
property and Borrowers and Guarantors shall not permit any of the Equipment to
be or become a part of or affixed to real property, other than any Mortgaged
Property (but not including for this purpose any plumbing and electrical
fixtures, heating, ventilation and air conditioning, wall and floor coverings,
walls or ceilings and other fixtures not constituting trade fixtures); and (f)
as between Agent and Lenders, on the one hand, and Borrowers and Guarantors, on
the other hand, each Borrower and Guarantor assumes all responsibility and
liability arising from or relating to the use, sale or other disposition of the
Equipment and Real Property (but nothing contained herein shall be construed as
the basis for any liability of any Borrower or Guarantor as to any third party).

 

692

7.5      Power of Attorney. Each Borrower and Guarantor hereby irrevocably
designates and appoints Agent (and all persons designated by Agent) as such
Borrower’s and Guarantor’s true and lawful attorney-in-fact, and authorizes
Agent, in such Borrower’s, Guarantor’s or Agent’s name, to, at any time an Event
of Default exists or has occurred and is continuing and subject to the terms of
the Intercreditor Agreement, (a) demand payment on any Collateral, (b) enforce
payment of any of the Collateral by legal proceedings or otherwise, (c) exercise
all of such Borrower’s or Guarantor’s rights and remedies to collect any
Collateral, (d) sell or assign any Collateral upon such terms, for such amount
and at such time or times as the Agent deems advisable, (e) settle, adjust,
compromise, extend or renew any of the Collateral, (f) discharge and release any
Collateral, (g) prepare, file and sign such Borrower’s or Guarantor’s name on
any proof of claim in bankruptcy or other similar document against an account
debtor or other obligor in respect of any Collateral, (h) notify the post office
authorities to change the address for delivery of remittances from account
debtors or other obligors in respect of Collateral to an address designated by
Agent, and open and dispose of all mail addressed to such Borrower or Guarantor
and handle and store all mail relating to the Collateral, (i) clear Inventory
the purchase of which was financed with a letter of credit through U.S. Bureau
of Customs and Border Protection or foreign export control authorities in such
Borrower’s or Guarantor’s name, Agent’s name or the name of Agent’s designee,
and to sign and deliver to customs officials powers of attorney in such
Borrower’s or Guarantor’s name for such purpose, and to complete in such
Borrower’s or Guarantor’s or Agent’s name, any order, sale or transaction,
obtain the necessary documents in connection therewith and collect the proceeds
thereof, and (j) do all acts and things which are necessary, in Agent’s
reasonable determination, to fulfill such Borrower’s or Guarantor’s obligations
under this Agreement and the other Financing Agreements. Each Borrower and
Guarantor hereby releases Agent and Lenders and their respective officers,
employees and designees from any liabilities arising from any act or acts under
this power of attorney and in furtherance thereof, whether of omission or
commission, except as a result of Agent’s or any Lender’s own gross negligence
or willful misconduct as determined pursuant to a final non-appealable order of
a court of competent jurisdiction.

 

7.6      Right to Cure. Agent may, at its option, upon prior notice to Borrower
Agent, (a) cure any default by any Borrower or Guarantor under any material
agreement with a third party that affects the Collateral, its value or the
ability of Agent to collect, sell or otherwise dispose of the Collateral or the
rights and remedies of Agent or any Lender therein or the ability of any
Borrower or Guarantor to perform its obligations hereunder or under any of the
other Financing Agreements, (b) pay or bond on appeal any judgment entered
against any Borrower or Guarantor, (c) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and (d) pay any amount, incur any expense or perform any act
which, in Agent’s judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Agent and Lenders with
respect thereto. Agent may add any amounts so expended to the Obligations and
charge any Borrower’s account therefor or may demand immediate payment thereof.
Agent and Lenders shall be under no obligation to effect such cure, payment or
bonding and shall not, by doing so, be deemed to have assumed any obligation or
liability of any Borrower or Guarantor.

 

7.7      Access to Premises. From time to time as requested by Agent, at the
cost and expense of Borrowers, (a) Agent or its designee shall have complete
access to all of each Borrower’s and Guarantor’s premises during normal business
hours and after notice to Parent, or at any time and without notice to Borrower
Agent if an Event of Default exists or has occurred and is continuing, for the
purposes of inspecting, verifying and auditing the Collateral and all of each

 

702

Borrower’s and Guarantor’s books and records, including the Records and (b) each
Borrower and Guarantor shall promptly furnish to Agent such copies of such books
and records or extracts therefrom as Agent may reasonably request, and Agent or
any Lender or Agent’s designee may use during normal business hours such of any
Borrower’s and Guarantor’s personnel, equipment, supplies and premises as may be
reasonably necessary for the foregoing and if an Event of Default exists or has
occurred and is continuing for the realization of Collateral.

 

SECTION 8.

 

REPRESENTATIONS AND WARRANTIES

 

Each Borrower and Guarantor hereby represents and warrants to Agent and Lenders
the following:

 

8.1      Existence, Power and Authority. Each Borrower and Guarantor is a
corporation, limited liability company or limited partnership duly organized and
in good standing under the laws of its jurisdiction of organization and is duly
qualified as a foreign corporation, limited liability company or limited
partnership, as applicable, and in good standing in all states or other
jurisdictions where the nature and extent of the business transacted by it or
the ownership of assets makes such qualification necessary, where the failure to
so qualify has or would reasonably be expected to have a Material Adverse
Effect. The execution, delivery and performance of this Agreement, the other
Financing Agreements and the transactions contemplated hereunder and thereunder
(a) are all within each Borrower’s and Guarantor’s corporate or limited
liability company or limited partnership powers, (b) have been duly authorized,
(c) are not in contravention of law or the terms of any Borrower’s or
Guarantor’s certificate of incorporation, certificate of formation, bylaws,
operating agreement, limited partnership agreement or other organizational
documentation, or any indenture, material agreement or undertaking to which any
Borrower or Guarantor is a party or by which any Borrower or Guarantor or its
property are bound and (d) will not result in the creation or imposition of, or
require or give rise to any obligation to grant, any lien, security interest,
charge or other encumbrance upon any property of any Borrower or Guarantor
except as permitted hereunder. This Agreement and the other Financing Agreements
to which any Borrower or Guarantor is a party constitute legal, valid and
binding obligations of such Borrower and Guarantor enforceable in accordance
with their respective terms except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
law).

 

8.2      Name; State of Organization; Chief Executive Office; Collateral
Locations.

 

(a)       The exact legal name of each Borrower and Guarantor is as set forth on
the signature page of this Agreement and in the Information Certificate. No
Borrower or Guarantor has, during the five (5) years prior to the date of this
Agreement, been known by or used any other corporate or fictitious name or been
a party to any merger or consolidation, or acquired all or substantially all of
the assets of any Person, or acquired any of its property or assets out of the
ordinary course of business, except as set forth in the Information Certificate.

 

712

(b)       Each Borrower and Guarantor is an organization of the type and
organized in the jurisdiction set forth in the Information Certificate. The
Information Certificate accurately sets forth the organizational identification
number of each Borrower and Guarantor or accurately states that such Borrower or
Guarantor has none and accurately sets forth the federal employer identification
number of each Borrower and Guarantor.

 

(c)       The chief executive office and mailing address of each Borrower and
Guarantor and each Borrower’s and Guarantor’s Records concerning Accounts are
located only at the address identified as such in Schedule 8.2 to the
Information Certificate and its only other places of business and the only other
locations of Collateral, if any, are the addresses set forth in Schedule 8.2 to
the Information Certificate, subject to the rights of any Borrower or Guarantor
to establish new locations in accordance with Section 9.2 below and other than
Collateral in transit to any such locations.

 

8.3      Financial Statements; No Material Adverse Effect. All financial
statements relating to any Borrower or Guarantor which have been or may
hereafter be delivered by any Borrower or Guarantor to Agent and Lenders have
been prepared in accordance with GAAP (except as to any interim financial
statements, to the extent such statements are subject to normal year-end
adjustments and do not include any notes) and fairly present in all material
respects the financial condition and the results of operation of such Borrower
and Guarantor as at the dates and for the periods set forth therein. Except as
disclosed in any interim financial statements furnished by Borrowers and
Guarantors to Agent prior to the date of this Agreement, there has been no act,
condition or event which has had or is reasonably likely to have a Material
Adverse Effect since the date of the most recent audited financial statements of
any Borrower or Guarantor furnished by any Borrower or Guarantor to Agent prior
to the date of this Agreement. The projections dated January 16, 2008 for the
fiscal years ending 2008 through 2012 that have been delivered to Agent or any
projections hereafter delivered to Agent have been prepared in light of the past
operations of the businesses of Borrowers and Guarantors and are based upon
estimates and assumptions stated therein, all of which Borrowers and Guarantors
believe to be reasonable and fair in light of the then current conditions and
current facts and reflect the good faith and reasonable estimates of Borrowers
and Guarantors of the future financial performance of Parent and its
Subsidiaries and of the other information projected therein for the periods set
forth therein.

 

8.4      Priority of Liens; Title to Properties. The security interests and
liens granted to Agent under this Agreement and the other Financing Agreements
constitute (x) valid and perfected first priority liens in the case of Priority
Collateral and (y) valid and perfected second priority liens in the case of ABL
Priority Collateral and security interests in and upon the Collateral subject
only to the liens indicated on Schedule 8.4 to the Information Certificate and
the other liens permitted under Section 10.2 hereof. Each Borrower and Guarantor
has good and marketable fee simple title to or valid leasehold interests in all
of its Real Property and good, valid and merchantable title to all of its other
properties and assets subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except for Permitted Liens and
such other exceptions shown on the mortgage policies delivered in accordance
with Section 4.1(k)(C) and agreed to by the Agent and those granted to Agent and
such others as are specifically listed on Schedule 8.4 to the Information
Certificate or permitted under Section 9.8 hereof.

 

8.5      Tax Returns. Each Borrower and Guarantor has filed, or caused to be
filed, in a timely manner all material tax returns, reports and declarations
which are required to be filed by it.

 

722

All information in such tax returns, reports and declarations is complete and
accurate in all material respects. Each Borrower and Guarantor has paid or
caused to be paid all taxes due and payable by it, except taxes (a) the validity
of which are being contested in good faith by appropriate proceedings diligently
pursued and available to such Borrower or Guarantor and with respect to which
adequate reserves have been set aside on its books and (b) which could not,
individually or in the aggregate, have a Material Adverse Effect. Adequate
provision has been made for the payment of all accrued and unpaid Federal,
State, county, local, foreign and other taxes whether or not yet due and payable
and whether or not disputed.

 

8.6      Litigation. (a) there is no investigation by any Governmental Authority
pending, or to the best of any Borrower’s or Guarantor’s knowledge threatened in
writing, against or affecting any Borrower or Guarantor, its or their assets or
business and (b) there is no action, suit, proceeding or claim by any Person
pending, or to the best of any Borrower’s or Guarantor’s knowledge threatened in
writing, against any Borrower or Guarantor or its or their assets or goodwill,
or against or affecting any transactions contemplated by this Agreement, in each
case, which if adversely determined against such Borrower or Guarantor has or
could reasonably be expected to have a Material Adverse Effect.

 

 

 

8.7

Compliance with Other Agreements and Applicable Laws.

 

(a)       Borrowers and Guarantors are not in default in any respect under, or
in violation in any respect of the terms of, any agreement, contract,
instrument, lease or other commitment to which it is a party or by which it or
any of its assets are bound. Borrowers and Guarantors are in material compliance
with the requirements of all applicable laws, rules, regulations and orders of
any Governmental Authority relating to their respective businesses, including,
without limitation, those set forth in or promulgated pursuant to the
Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards
Act of 1938, as amended, ERISA, the Code, as amended, and the rules and
regulations thereunder, and all Environmental Laws, in each case where the
failure to comply has or could reasonably be expected to have a Material Adverse
Effect.

 

(b)       Borrowers and Guarantors have obtained all material permits, licenses,
approvals, consents, certificates, orders or authorizations of any Governmental
Authority required for the lawful conduct of its business (the “Permits”). All
of the Permits are valid and subsisting and in full force and effect. There are
no actions, claims or proceedings pending or to the best of any Borrower’s or
Guarantor’s knowledge, threatened in writing that seek the revocation,
cancellation, suspension or modification of any of the Permits where any of the
same would have a Material Adverse Effect.

 

8.8      Environmental Compliance. Except for matters which, when considered
either individually or in the aggregate could not be reasonably expected to have
a Material Adverse Effect:

 

(a)       Borrowers, Guarantors and their Subsidiaries have not generated, used,
stored, treated, transported, manufactured, handled, produced or disposed of any
Hazardous Materials, on any property owned, leased or operated by it or used by
it in any manner which at any time violates any applicable Environmental Law or
Permit, and the operations of Borrowers, Guarantors and their Subsidiaries at
such properties complies with all Environmental Laws and all Permits.

 

732

 

(b)       No Borrower or Guarantor has received any notice of or otherwise has
any information that there has been any investigation by any Governmental
Authority or any proceeding, complaint, order, directive, claim, citation or
notice by any Governmental Authority or any other person nor is any
investigation pending or to the best of any Borrower’s or Guarantor’s knowledge
threatened in writing, with respect to any non compliance with or violation of
the requirements of any Environmental Law by any Borrower or Guarantor and any
of its Subsidiaries or the release, spill or discharge, threatened or actual, of
any Hazardous Material or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials or any other environmental, health or safety matter with regard to any
properties or assets owned, leased or operated by it or used by Borrowers,
Guarantors or their Subsidiaries or their businesses.

 

(c)       Borrowers, Guarantors and their Subsidiaries have no liability
(contingent or otherwise) in connection with a release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials under or from any property owned, leased or
operated by it or used by it or otherwise in connection with their businesses.

 

 

 

8.9

Employee Benefits.

 

(a)       Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or State law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the Internal Revenue Service and to the
best of any Borrower’s or Guarantor’s knowledge, nothing has occurred which
would cause the loss of such qualification where such loss, when combined with
other such occurrences or failures to comply, would not reasonably be expected
to have a Material Adverse Effect. Each Borrower and its ERISA Affiliates have
made all required contributions to any Plan subject to Section 412 of the Code,
and no application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code has been made with respect to any
Plan.

 

(b)       Except as set forth in the Information Certificate, there are no
pending, or to the best of any Borrower’s or Guarantor’s knowledge, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan. Except as set forth in the Information Certificate, there
has been no prohibited transaction or violation of the fiduciary responsibility
rules with respect to any Plan.

 

(c)       (i) Except as set forth in the Information Certificate, no ERISA Event
has occurred or is reasonably expected to occur; (ii) based on the latest
valuation of each Pension Plan and on the actuarial methods and assumptions
employed for such valuation (determined in accordance with the assumptions used
for funding such Pension Plan pursuant to Section 412 of the Code), the
aggregate current value of accumulated benefit liabilities of such Pension Plan
under Section 4001(a)(16) of ERISA does not exceed the aggregate current value
of the assets of such Pension Plan; (iii) each Borrower and Guarantor, and their
ERISA Affiliates, have not incurred and do not reasonably expect to

 

742

incur, any liability under Title IV of ERISA with respect to any Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iv) each
Borrower and Guarantor, and their ERISA Affiliates, have not incurred and do not
reasonably expect to incur, any liability (and no event has occurred which, with
the giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (v) each Borrower and Guarantor, and their ERISA Affiliates, have not
engaged in a transaction that would be subject to Section 4069 or 4212(c) of
ERISA.

 

8.10    Bank Accounts. All of the deposit accounts, investment accounts or other
accounts in the name of or used by any Borrower or Guarantor maintained at any
bank or other financial institution are set forth on Schedule 8.10 to the
Information Certificate, subject to the right of each Borrower and Guarantor to
establish new accounts in accordance with Section 5.3 hereof.

 

8.11    Intellectual Property. Except as would not reasonably be expected to
have a Material Adverse Effect, each Borrower and Guarantor owns or licenses or
otherwise has the right to use all Intellectual Property necessary for the
operation of its business as presently conducted. As of the date hereof,
Borrowers and Guarantors do not have any material Intellectual Property
registered, or subject to pending applications, in the United States Patent and
Trademark Office or any similar office or agency in the United States, any State
thereof, any political subdivision thereof, other than those described in
Schedule 8.11 to the Information Certificate and has not granted any licenses
with respect thereto other than as set forth in Schedule 8.11 to the Information
Certificate. Except as would not have a Material Adverse Effect, no event has
occurred which permits or would permit after notice or passage of time or both,
the revocation, suspension or termination of such rights. To the best of any
Borrower’s and Guarantor’s knowledge, no slogan or other advertising device,
product, process, method, substance or other Intellectual Property or goods
bearing or using any Intellectual Property presently contemplated to be sold by
or employed by any Borrower or Guarantor infringes any patent, trademark,
servicemark, tradename, copyright, license or other Intellectual Property owned
by any other Person presently where such infringement has or would reasonably be
expected to have Material Adverse Effect or adversely affect the ability of any
Borrower to sell or otherwise dispose of Inventory having a value in excess of
$250,000. No claim or litigation is pending or threatened in writing against or
affecting any Borrower or Guarantor contesting its right to sell or use any such
Intellectual Property where such claim or litigation if adversely determined for
any Borrower or Guarantor would reasonably be expected to have a Material
Adverse Effect or would adversely affect the ability of any Borrower to sell or
otherwise dispose of Inventory having a value in excess of $250,000. Schedule
8.11 to the Information Certificate sets forth all of the material agreements or
other arrangements of each Borrower and Guarantor pursuant to which such
Borrower or Guarantor has a license or other right to use any trademarks, logos,
designs, representations or other Intellectual Property owned by another person
as in effect on the date hereof and the dates of the expiration of such
agreements or other arrangements of such Borrower or Guarantor as in effect on
the date hereof which is necessary or of material value to such Borrower’s or
Guarantor’s business (collectively, together with such agreements or other
arrangements as may be entered into by any Borrower or Guarantor after the date
hereof, collectively, the “License Agreements” and individually, a “License
Agreement”). No material trademark, servicemark, copyright or other material
Intellectual Property at any time used by any Borrower or Guarantor which is
owned by another person, or owned by such Borrower or Guarantor subject to any
security interest, lien, collateral assignment, pledge or other encumbrance in
favor of any person other than Agent, is affixed to or incorporated in any
Eligible Inventory (as

 

752

defined in the ABL Credit Agreement), except (a) to the extent permitted under
the term of the license agreements listed on Schedule 8.11 to the Information
Certificate and (b) to the extent the sale of Inventory to which such
Intellectual Property is affixed or incorporated is permitted to be sold by such
Borrower or Guarantor under applicable law (including the United States
Copyright Act of 1976).

 

 

 

8.12

Subsidiaries; Affiliates; Capitalization; Solvency.

 

(a)       Each Borrower and Guarantor does not have any direct or indirect
Subsidiaries or Affiliates and is not engaged in any joint venture or
partnership as of the date hereof except as set forth in Schedule 8.12 to the
Information Certificate.

 

(b)       As of the date hereof, each Borrower and Guarantor is the record and
beneficial owner of all of the issued and outstanding shares of Equity Interests
of each of the Subsidiaries listed on Schedule 8.12 to the Information
Certificate as being owned by such Borrower or Guarantor and there are no
proxies, irrevocable or otherwise, with respect to such shares and no equity
securities of any of the Subsidiaries are or may become required to be issued by
reason of any options, warrants, rights to subscribe to, calls or commitments of
any kind or nature and there are no contracts, commitments, understandings or
arrangements by which any Subsidiary is or may become bound to issue additional
shares of its Equity Interests or securities convertible into or exchangeable
for such shares.

 

(c)       The issued and outstanding shares of Equity Interests of each Borrower
and Guarantor (other than Parent) are directly and beneficially owned and held
by the persons indicated in the Information Certificate, and in each case all of
such shares have been duly authorized and are fully paid and non-assessable,
free and clear of all claims, liens, pledges and encumbrances of any kind,
except as disclosed in writing to Agent prior to the date hereof or otherwise
permitted hereunder.

 

(d)       Each Borrower and Guarantor is Solvent and will continue to be Solvent
after giving effect to the Acquisition, the creation of the Obligations, the
security interests of Agent and the other transaction contemplated hereunder.

 

(e)       The Inactive Subsidiaries do not have any material liabilities, are
not engaged in any business or commercial activities, do not own any assets with
a book value of more than $100,000 in the aggregate and are not obligated or
liable, directly or indirectly, contingently or otherwise, in respect of any
material Indebtedness or other material obligations.

 

 

 

8.13

Labor Disputes.

 

(a)       Set forth on Schedule 8.13 to the Information Certificate is a list
(including dates of termination) of all collective bargaining or similar
agreements between or applicable to each Borrower and Guarantor and any union,
labor organization or other bargaining agent in respect of the employees of any
Borrower or Guarantor on the date hereof.

 

762

(b)       Except as set forth on Schedule 8.13 to the Information Certificate,
there is (i) no significant unfair labor practice complaint pending against any
Borrower or Guarantor or, to the best of any Borrower’s or Guarantor’s
knowledge, threatened in writing against it, before the National Labor Relations
Board, and no significant grievance or significant arbitration proceeding
arising out of or under any collective bargaining agreement is pending on the
date hereof against any Borrower or Guarantor or, to best of any Borrower’s or
Guarantor’s knowledge, threatened against it, and (ii) no significant strike,
labor dispute, slowdown or stoppage is pending against any Borrower or Guarantor
or, to the best of any Borrower’s or Guarantor’s knowledge, threatened against
any Borrower or Guarantor.

 

8.14    Restrictions on Subsidiaries. Except for restrictions contained in this
Agreement or any other agreement with respect to Indebtedness of any Borrower or
Guarantor permitted hereunder as in effect on the date hereof, there are no
contractual or consensual restrictions on any Borrower or Guarantor or any of
its Subsidiaries which prohibit or otherwise restrict (a) the transfer of cash
or other assets (i) between any Borrower or Guarantor and any of its or their
Subsidiaries or (ii) between any Subsidiaries of any Borrower or Guarantor or
(b) the ability of any Borrower or Guarantor or any of its or their Subsidiaries
to incur Indebtedness or grant security interests to Agent or any Lender in the
Collateral.

 

8.15    Material Contracts. Schedule 8.15 to the Information Certificate sets
forth all Material Contracts to which any Borrower or Guarantor is a party or is
bound as of the date hereof. Borrowers and Guarantors have delivered true,
correct and complete copies of such Material Contracts to Agent on or before the
date hereof. Borrowers and Guarantors are not in breach or in default in any
material respect of or under any Material Contract and have not received any
notice of the intention of any other party thereto to terminate any Material
Contract.

 

8.16    Payable Practices. Each Borrower and Guarantor has not made any material
change in its customary accounts payable practices from those in effect
immediately prior to the date hereof.

 

8.17    OFAC. None of Borrower, any Subsidiary of Borrower or any Affiliate of
Borrower: (a) is a Sanctioned Person, (b) has more than ten (10%) percent of its
assets in Sanctioned Entities, or (c) derives more than ten (10%) percent of its
operating income from investments in, or transactions with Sanctioned Persons or
Sanctioned Entities. The proceeds of any Loan will not be used and have not been
used to fund any operations in, finance any investments or activities in, or
make any payments to, a Sanctioned Person or a Sanctioned Entity.

 

8.18    Accuracy and Completeness of Information. All information furnished by
or on behalf of any Borrower or Guarantor in writing to Agent or any Lender in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including all information on the
Information Certificate is true and correct in all material respects on the date
as of which such information is dated or certified and does not omit any
material fact necessary in order to make such information not misleading. No
event or circumstance has occurred which has had or could reasonably be expected
to have a Material Adverse Affect, which has not been fully and accurately
disclosed to Agent in writing prior to the date hereof.

 

772

8.19    Survival of Warranties; Cumulative. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement and shall be conclusively
presumed to have been relied on by Agent and Lenders regardless of any
investigation made or information possessed by Agent or any Lender. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which any Borrower or
Guarantor shall now or hereafter give, or cause to be given, to Agent or any
Lender.

 

8.20    Compliance with FCPA. Each Borrower and Guarantor is in compliance with
the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq., and any foreign
counterpart thereto. None of the Borrowers or Guarantors has made a payment,
offering, or promise to pay, or authorized the payment of, money or anything of
value (a) in order to assist in obtaining or retaining business for or with, or
directing business to, any foreign official, foreign political party, party
official or candidate for foreign political office, (b) to a foreign official,
foreign political party or party official or any candidate for foreign political
office, and (c) with the intent to induce the recipient to misuse his or her
official position to direct business wrongfully to such Borrower or Guarantor or
to any other Person, in violation of the Foreign Corrupt Practices Act, 15
U.S.C. §§ 78dd-1, et seq.

 

8.21    Anti-Terrorism Laws. No Borrower or Guarantor nor any of their
Subsidiaries is an “enemy” or an “ally of the enemy” within the meaning of
Section 2 of the Trading with the Enemy Act of the United States of America (50
U.S.C. App. §§ 1 et seq.), as amended. No Borrower or Guarantor nor any or their
Subsidiaries is in violation of (a) the Trading with the Enemy Act, as amended,
(b) any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto or (c) the Patriot Act. No
Borrower or Guarantor (i) is a blocked person described in Section 1 of the
Anti-Terrorism Order or (ii) to the best of its knowledge, engages in any
dealings or transactions, or is otherwise associated, with any such blocked
person.

 

 

 

8.22

Regulation H. No Mortgaged Property is a Flood Hazard Property.

 

8.23    Insurance. The insurance coverage of the Borrowers and Guarantors as of
the Closing Date is outlined as to carrier, policy number, expiration date, type
and amount in the insurance certificates delivered to the Agent on the Closing
Date pursuant to Section 4.1(n) and such insurance coverage complies with the
requirements set forth in Section 9.5. The insurance certificates delivered to
the Agent hereunder shall be updated from time to time by the Borrowers to
include additional insurance coverage.

 

8.24    Brokers’ Fees. No Borrower or Guarantor has any obligation to any Person
in respect of any finder’s, broker’s, investment banking or other similar fee in
connection with any of the transactions contemplated under the Finance
Agreements other than the closing and other fees payable pursuant to this
Agreement.

 

8.25    Use of Proceeds. The proceeds of the Term Loan shall be used by the
Borrowers solely (a) to finance in whole or in part the Acquisition, (b)
refinance certain existing Indebtedness of the Parent and its Subsidiaries, (c)
to pay any costs, fees and expenses associated with this Agreement on the
Closing Date, (d) to pay any costs, fees and expenses incurred in connection
with

 

782

the Acquisition and (e) for working capital and other general corporate purposes
of the Parent and its Subsidiaries.

 

8.26    Margin Regulations. No part of the proceeds of the Term Loan will be
used directly or indirectly for any purpose that violates, or that would require
any Lender to make any filings in accordance with, the provisions of Regulation
T, U or X of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect. The Borrowers and Guarantors (a) are not
engaged, principally or as one of their important activities, in the business of
extending credit for the purpose of “purchasing” or “carrying” “margin stock”
within the respective meanings of each of such terms under Regulation U and (b)
taken as a group do not own “margin stock” except as identified in the financial
statements referred to in Section 8.3 or delivered pursuant to Section 9.6 and
the aggregate value of all “margin stock” owned by the Parent and its
Subsidiaries taken as a group does not exceed 25% of the value of their assets.

 

8.27    Investment Company Act; etc. No Borrower or Guarantor is an “investment
company”, or a company “controlled” by an “investment company”, within the
meaning of the Investment Company Act of 1940, as amended. No Borrower or
Guarantor is subject to regulation under the Federal Power Act, the Interstate
Commerce Act, the Public Utility Holding Company Act of 2005 or any federal or
state statute or regulation limiting its ability to incur the Obligations.

 

8.28    Consummation of Acquisition. The Acquisition and related transactions
have been consummated substantially in accordance with the terms of the
Acquisition Documents. As of the Closing Date, the Acquisition Documents have
not been materially altered, amended or otherwise modified or supplemented or
any condition thereof waived without the prior written consent of Agent. Each of
the representations and warranties made in the Acquisition Documents by each of
the parties thereto is true and correct, except for any representation or
warranty therein the failure of which to be true and correct, does not have or
could not reasonably be expected to have a Material Adverse Effect.

 

SECTION 9.

 

AFFIRMATIVE COVENANTS

 

 

 

9.1

Maintenance of Existence.

 

(a)       Each Borrower and Guarantor shall at all times preserve, renew and
keep in full force and effect its corporate or limited liability company or
limited partnership existence and rights and franchises with respect thereto and
maintain in full force and effect all Permits necessary to carry on the business
as presently or proposed to be conducted, other than as (i) permitted in Section
10.1 hereof or (ii) otherwise permitted hereunder or under any of the other
Financing Agreements.

 

(b)       No Borrower or Guarantor shall change its name unless each of the
following conditions is satisfied: (i) Agent shall have received not less than
thirty (30) days (or at such later time as Agent may agree) prior written notice
from Borrower Agent of such proposed change in its corporate name, which notice
shall accurately set forth the new name; and (ii) Agent shall have received a
copy of the amendment to the certificate of incorporation, certificate of
formation or other organizational document of such Borrower or Guarantor, as

 

792

applicable, providing for the name change certified by the Secretary of State of
the jurisdiction of incorporation or organization of such Borrower or Guarantor
as soon as it is available.

 

(c)       No Borrower or Guarantor shall change its chief executive office or
its mailing address or organizational identification number (or if it does not
have one, shall not acquire one) unless Agent shall have received not less than
thirty (30) days’ prior written notice from Borrower Agent of such proposed
change, which notice shall set forth such information with respect thereto as
Agent may reasonably require and Agent shall have received such agreements as
Agent may reasonably require in connection therewith. No Borrower or Guarantor
shall change its type of organization, jurisdiction of organization or other
legal structure, except that a Borrower, Guarantor or Subsidiary may convert
(either directly or by way of merger) into a limited liability company or
limited partnership or other form of legal entity acceptable to Agent, provided,
that, each of the following conditions is satisfied: (i) such company,
partnership or other legal entity is organized under the laws of a jurisdiction
in the United States of America, (ii) Agent shall have received not less than
fifteen (15) days’ prior written notice from Borrower Agent of such proposed
change, which notice shall accurately set forth a description of the new form,
(iii) Agent shall have received the organizational documents of such entity
(certified by the appropriate Governmental Authority, where available to be so
certified), together with such other agreements, documents, and instruments
related thereto as Agent may reasonably request, (iv) such change shall not
adversely affect the security interests and liens of Agent in the assets of such
Borrower or Guarantor or the ability of Agent to enforce any of its rights or
remedies with respect to such Borrower or Guarantor, in the determination of
Agent and (v) as of the date of such conversion, and after giving effect
thereto, no Default or Event of Default shall exist or have occurred and be
continuing.

 

9.2      New Collateral Locations. Each Borrower and Guarantor may only open any
new location so long as (a) such locations are within the United States or its
territories or Canada, (b) such location is set forth in the copy of the
applicable report provided to the Agent pursuant to Section 7.1(a) to the extent
required under such Section or in any event if Collateral having a value of more
than $250,000 is or will be kept at such location, Agent has received ten (10)
Business Days’ written notice within the time of the opening of any such new
location and (c) upon Agent’s request, such Borrower or Guarantor executes and
delivers, or causes to be executed and delivered, to Agent such agreements,
documents, and instruments as Agent may deem reasonably necessary or desirable
to protect its interests in the Collateral at such location; provided, that, so
long as no Event of Default exists or has occurred and is continuing, upon
Agent’s request, Borrowers and Guarantors shall only be required to use their
commercially reasonable efforts to obtain a Collateral Access Agreement.

 

 

 

9.3

Compliance with Laws, Regulations, Etc.

 

(a)       Each Borrower and Guarantor shall, and shall cause any Subsidiary to,
at all times, comply in all respects with all laws, rules, regulations,
licenses, approvals, orders and other Permits applicable to it and duly observe
all requirements of any foreign, Federal, State or local Governmental Authority
where the failure to do so has or could reasonably be expected to have a
Material Adverse Effect.

 

802

(b)       Borrowers and Guarantors shall give written notice to Agent
immediately upon any Borrower’s or Guarantor’s receipt of any notice of, or any
Borrower’s or Guarantor’s otherwise obtaining knowledge of, (i) the occurrence
of any event involving the release, spill or discharge, threatened or actual, of
a material amount of any Hazardous Material that has or could reasonably be
expected to have a Material Adverse Effect or (ii) any investigation,
proceeding, complaint, order, directive, claims, citation or notice that with
respect to any of the following: (A) any material non-compliance with or
material violation of any Environmental Law by any Borrower or Guarantor or (B)
the release, spill or discharge of any Hazardous Material other than in the
ordinary course of business and other than as permitted under any applicable
Environmental Law. Copies of all environmental surveys, audits, assessments,
feasibility studies and results of remedial investigations shall be promptly
furnished, or caused to be furnished, by such Borrower or Guarantor to Agent
upon Agent’s request. Each Borrower and Guarantor shall take prompt action to
respond to any material non-compliance with any of the Environmental Laws and
shall regularly report to Agent on such response.

 

(c)       Without limiting the generality of the foregoing, whenever Agent
reasonably determines that there is non-compliance, or any condition which
requires any action by or on behalf of any Borrower or Guarantor in order to
avoid any non compliance, with any Environmental Law that has or could
reasonably be expected to have a Material Adverse Effect, Borrowers shall, at
Agent’s request and Borrowers’ expense: (i) cause an independent environmental
engineer reasonably acceptable to Agent to conduct such tests of the site where
non-compliance or alleged non compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to Agent a report as
to such non-compliance setting forth the results of such tests, a proposed plan
for responding to any environmental problems described therein, and an estimate
of the costs thereof and (ii) provide to Agent a supplemental report of such
engineer whenever the scope of such non-compliance, or such Borrower’s or
Guarantor’s response thereto or the estimated costs thereof, shall change in any
material respect.

 

(d)       Each Borrower and Guarantor shall indemnify and hold harmless Agent
and Lenders and their respective directors, officers, employees, agents,
invitees, representatives, successors and assigns, from and against any and all
losses, claims, damages, liabilities, costs, and expenses (including reasonable
attorneys’ fees and expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage,
release, threatened release, spill, discharge, disposal or presence of a
Hazardous Material, including the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of any Borrower or
Guarantor and the preparation and implementation of any closure, remedial or
other required plans. All representations, warranties, covenants and
indemnifications in this Section 9.3 shall survive the payment of the
Obligations and the termination of this Agreement.

 

9.4      Payment of Taxes and Claims. Except as could not reasonably be expected
to have a Material Adverse Effect, each Borrower and Guarantor shall, and shall
cause any Subsidiary to, duly pay and discharge all material taxes, assessments,
contributions and governmental charges upon or against it or its properties or
assets, except for taxes the validity of which is being contested in good faith
by appropriate proceedings diligently pursued and available to such Borrower,

 

812

Guarantor or Subsidiary, as the case may be, and with respect to which adequate
reserves have been set aside on its books to the extent required by GAAP.

 

9.5      Insurance. Each Borrower and Guarantor shall, and shall cause any
Subsidiary to, at all times, maintain with financially sound and reputable
insurers insurance with respect to the Collateral against loss or damage and all
other insurance of the kinds and in the amounts customarily insured against or
carried by corporations of established reputation engaged in the same or similar
businesses and similarly situated. Said policies of insurance shall be
reasonably satisfactory to Agent as to form, amount and insurer (provided, that,
Borrowers and Guarantors may maintain self insurance plans to the extent
companies of the same or similar businesses and similarly situated do so).
Borrowers and Guarantors shall furnish certificates, policies or endorsements to
Agent or Control Agent as Agent shall reasonably require as proof of such
insurance, and, Agent is authorized, but not required, to obtain such insurance
at the expense of Borrowers if any Borrower or Guarantor fails at any time to do
so. All policies shall provide for at least thirty (30) days prior written
notice to Agent or Control Agent of any cancellation or reduction of coverage.
Agent or Control Agent may act as attorney for each Borrower and Guarantor in
obtaining, and at any time an Event of Default exists or has occurred and is
continuing, adjusting, settling, amending and canceling such insurance.
Borrowers and Guarantors shall cause Agent or Control Agent to be named as a
loss payee as its interests may appear and an additional insured (but without
any liability for any premiums) under such insurance policies and Borrowers and
Guarantors shall obtain non-contributory lender’s loss payable endorsements to
all insurance policies in form and substance satisfactory to Agent. Such
lender’s loss payable endorsements shall specify that the proceeds of such
insurance shall be payable to Agent or Control Agent as its interests may appear
and further specify that Agent and Lenders shall be paid regardless of any act
or omission by any Borrower, Guarantor or any of its or their Affiliates.
Payments of insurance proceeds may be subject to the Intercreditor Agreement and
the prepayment provisions contained in Section 2.2(b) hereof, if and to the
extent applicable. Without limiting any other rights of Agent, Control Agent or
Lenders, any insurance proceeds received by Agent or Control Agent or proceeds
of condemnation awards payable at any time may, subject to the Intercreditor
Agreement, be applied to payment of the Obligations, whether or not then due, in
any order and in such manner as Agent may determine.

 

 

 

9.6

Financial Statements and Other Information.

 

(a)       Each Borrower and Guarantor shall, and shall cause any Subsidiary to,
keep proper books and records in which true and complete entries shall be made
of all dealings or transactions of or in relation to the Collateral and the
business of such Borrower, Guarantor and its Subsidiaries in accordance with
GAAP. Borrowers and Guarantors shall during regular business hours and upon
reasonable notice from the Agent furnish to Agent and Lenders all such financial
and other information as Agent shall reasonably request relating to the
Collateral and the assets, business and operations of Borrowers and Guarantors,
and Borrower shall notify the auditors and accountants of Borrowers and
Guarantors that Agent is authorized to obtain such information directly from
them (other than materials protected by the attorney-client privilege and
materials which the Borrower may not disclose without violation of a
confidentiality obligation binding upon it) at any reasonable time (upon three
days advance notice so long as no Default or Event of Default shall have
occurred and be continuing). Without limiting the foregoing, Borrowers shall
furnish or cause to be furnished to Agent and each Lender, the following:

 

822

 

(i)        as soon as available, but in any event within thirty (30) days after
the end of each fiscal month that is not the end of a fiscal quarter of Parent,
monthly unaudited consolidated financial statements and unaudited consolidating
financial statements (in substantially the same format and with the same scope
of information as have been provided to Agent prior to the date hereof), all in
reasonable detail (but without footnotes), fairly presenting in all material
respects the financial position and the results of the operations of Parent and
its Subsidiaries as of the end of and through such fiscal month, subject to
normal year-end adjustments; and

 

(ii)      as soon as available, but in any event within forty-five (45) days
after the end of each of the first three fiscal quarters of each fiscal year of
Parent, quarterly unaudited consolidated financial statements and unaudited
consolidating financial statements (including in each case balance sheets,
statements of income and loss, statements of cash flow, and statements of
shareholders’ equity), all in reasonable detail, fairly presenting in all
material respects the financial position and the results of the operations of
Parent and its Subsidiaries as of the end of and through such fiscal quarter,
subject to normal year-end adjustments; and

 

(iii)      within ninety (90) days after the end of each fiscal year, audited
consolidated financial statements and unaudited consolidating financial
statements of Parent and its Subsidiaries (including in each case balance
sheets, statements of income and loss, statements of cash flow and statements of
shareholders’ equity), and the accompanying notes thereto, all in reasonable
detail, fairly presenting in all material respects the financial position and
the results of the operations of Parent and its Subsidiaries as of the end of
and for such fiscal year.

 

(b)       Borrowers and Guarantors shall promptly notify Agent in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to Collateral having a value of more than $250,000 or which if
adversely determined would result in any material adverse change in any
Borrower’s or Guarantor’s business, properties, assets, goodwill or condition,
financial or otherwise, (ii) any Material Contract being terminated or amended
or any new Material Contract entered into (in which event Borrowers and
Guarantors shall provide Agent with a copy of such Material Contract), (iii) any
order, judgment or decree in excess of $500,000 shall have been entered against
any Borrower or Guarantor any of its or their properties or assets, (iv) any
notification of a material violation of laws or regulations received by any
Borrower or Guarantor (including, without limitation, Environmental Laws), (v)
any ERISA Event, (vi) any labor controversy that has resulted in, or threatens
to result in, a strike or other work action against any Borrower or Guarantor
which could reasonably be expected to have a Material Adverse Effect, (vii) any
other development or event which could reasonably be expected to have a Material
Adverse Effect and (viii) the occurrence of any Default or Event of Default.

 

(c)       Borrowers and Guarantors shall furnish to Agent (i) not less than ten
(10) Business Days’ prior written notice of (A) the intention of any
Subsidiaries of Parent to merge or consolidate as permitted under Section
10.1(a) hereof, together with such other information with respect thereto as
Agent may reasonably request, (B) the issuance and sale by Parent or any
Subsidiary of Equity Interests as permitted under clause (g) of the

832

definition of Permitted Dispositions, together with such other information with
respect thereto as Agent may reasonably request, (C) the intention of any
Subsidiary of Parent to wind up, liquidate or dissolve as permitted under
Section 10.1(c) hereof, together with such other information with respect
thereto as Agent may reasonably request, and (ii) all notices or demands in
connection with such Indebtedness either received by any Borrower or Guarantor
or on its behalf promptly after the receipt thereof, or sent by any Borrower or
Guarantor or on its behalf concurrently with the sending thereof, as the case
may be.

 

(d)       Borrowers and Guarantors shall furnish to Agent and each Lender, in
form and detail reasonably satisfactory to Agent:

 

(i)        concurrently with the delivery of the financial statements referred
to in Section 9.6(a)(iii), the unqualified opinion of independent certified
public accountants with respect to the audited consolidated financial
statements, which independent accounting firm shall be selected by Borrower
Agent and reasonably acceptable to Agent, that such audited consolidated
financial statements have been prepared in accordance with GAAP, and present
fairly in all material respects the results of operations and financial
condition of Parent and its Subsidiaries as of the end of and for the fiscal
year then ended and stating that in making the examination necessary therefor no
knowledge was obtained of any Default or Event of Default, or if any such
Default or Event of Default shall exist, stating the nature and status of such
event;

 

(ii)      concurrently with the delivery of the financial statements referred to
in Sections 9.6(a)(ii) and 9.6(a)(iii), a compliance certificate substantially
in the form of Exhibit D hereto by the chief financial officer, vice president
of finance, treasurer or controller of Borrower Agent on behalf of Borrowers and
Guarantors, along with a schedule in form reasonably satisfactory to Agent of
the calculations used in determining, as of the end of such month, the ratio
provided for in Section 11 of this Agreement for such month and a written
summary of material changes in GAAP and in the consistent application thereof
that materially affected the financial covenant calculations for the applicable
period;

 

(iii)      at such time as available, but in any event prior to the end of each
fiscal year of Parent, beginning with the fiscal year ending December 31, 2008,
projected consolidated financial statements (including in each case
substantially in the same format and with the same scope of information as in
the projections most recently provided to Agent prior to the date hereof) of
Parent and its Subsidiaries for the next fiscal year, all in reasonable detail,
and in a format consistent with the projections delivered by Borrowers to Agent
prior to the date hereof, together with such supporting information as Agent may
reasonably request, which projected financial statements shall be prepared on a
quarterly basis for the next succeeding year and shall represent the reasonable
best estimate by Borrowers and Guarantors of the future financial performance of
Parent and its Subsidiaries for the periods set forth therein and shall have
been prepared on the basis of the assumptions set forth therein which Borrowers
and Guarantors believe are fair and reasonable as of the date of preparation in
light of current and reasonably foreseeable business conditions

 

842

(it being understood that actual results may differ from those set forth in such
projected financial statements);

 

(iv)      promptly after the same are available, copies of each annual report,
proxy or annual or quarterly financial statement or other report or
communication sent to the equity holders of any Borrower or Guarantor, and
copies of all annual, regular, periodic and special reports and registration
statements which a Borrower or Guarantor may file or be required to file with
the Securities and Exchange Commission under Section 13 or 15(d) of the Exchange
Act, and not otherwise required to be delivered to Agent pursuant hereto;

 

(v)       concurrently with the delivery of the financial statements referred to
in Sections 9.6(a)(i) and 9.6(a)(ii), a certificate by the chief financial
officer, vice president of finance, treasurer or controller of Borrower Agent on
behalf of Borrowers and Guarantors containing information regarding the amount
of all Asset Dispositions, Debt Issuances, Equity Issuances, Extraordinary
Receipts, Permitted Investments, Restricted Payments, and optional prepayments
of Indebtedness that occurred during the period covered by such financial
statements and such other information with respect thereto as Agent may request;

 

(vi)      promptly after any request by Agent or any Lender, copies of any
detailed audit reports, management letters or recommendations submitted to the
board of directors (or the audit committee of the board of directors) of Parent
by independent accountants in connection with the accounts or books of Parent or
any Subsidiary, or any audit of any of them;

 

(vii)    promptly, and in any event within five (5) Business Days after receipt
thereof by any Borrower or Guarantor or any Subsidiary thereof, copies of each
notice or other correspondence received from the Securities and Exchange
Commission (or comparable agency in any applicable non-U.S. jurisdiction)
concerning any investigation or possible investigation or other inquiry by such
agency regarding financial or other operational results of Parent or any
Subsidiary thereof;

 

(viii)    concurrently with the delivery of the financial statements referred to
in Sections 9.6(a)(i) and 9.6(a)(ii), a certificate by the chief executive
officer, chief financial officer, vice president of finance, treasurer or
controller of Borrower Agent on behalf of Borrowers and Guarantors attaching the
insurance binder or other evidence of insurance for any insurance coverage of
Borrowers, Guarantors or any Subsidiary that was renewed, replaced or modified
during the period covered by such financial statements.

 

(e)       As to any information contained in materials furnished pursuant to
Section 9.6(d)(iv), Parent shall not be separately required to furnish such
information under Section 9.6(a) hereof, but the foregoing shall not be in
derogation of the obligation of Parent to furnish the information and materials
described in Section 9.6(a) at the times specified therein.

 

852

(f)        Documents required to be delivered pursuant to Section 9.6(a)(iii) or
Section 9.6(d)(iv) (to the extent any such documents are included in materials
otherwise filed with the Securities and Exchange Commission may be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date on which such documents are posted on a Borrower’s behalf on an
Internet or intranet website, if any, to which each Lender and Agent has access
(whether commercial, third-party website or whether sponsored by Agent);
provided that: (i) Borrowers shall deliver paper copies of such documents to
Agent or any Lender that requests Borrowers to deliver such paper copies until a
written request to cease delivering paper copies is given by Agent or such
Lender and (ii) Borrowers shall notify Agent and each Lender (by telecopier or
electronic mail) of the posting of any such documents and provide to Agent by
electronic mail electronic versions (i.e., soft copies) of such documents.
Notwithstanding anything contained herein, in every instance Borrowers shall be
required to provide paper copies of the compliance certificates required by
Section 9.6(d)(ii) to Agent. Except for such compliance certificates, Agent
shall have no obligation to request the delivery or to maintain copies of the
documents referred to above, and in any event shall have no responsibility to
monitor compliance by Borrowers with any such request for delivery, and each
Lender shall be solely responsible for requesting delivery to it or maintaining
its copies of such documents.

 

(g)       Borrowers and Guarantors hereby acknowledge that Agent and/or its
Affiliates may make available to Lenders materials and/or information provided
by or on behalf of Borrowers hereunder (collectively, “Borrower Materials”) by
posting the Borrower Materials on IntraLinks or another similar electronic
system (the “Platform”) and certain of the Lenders may be “public-side” Lenders
(i.e., Lenders that do not wish to receive material non-public information with
respect to Borrowers, Guarantors or their securities) (each, a “Public Lender”).
Borrowers and Guarantors shall be deemed to have authorized Agent and its
Affiliates, and the Lenders to treat Borrower Materials marked “PUBLIC” or
otherwise at any time filed with the Securities and Exchange Commission as not
containing any material non-public information with respect to Borrowers,
Guarantors or their securities for purposes of United States federal and state
securities laws (provided, however, that to the extent such Borrower Materials
constitute Information, they shall be treated as set forth in Section 15.5). All
Borrower Materials marked “PUBLIC” are permitted to be made available through a
portion of the Platform designated as “Public Investor.” Agent and its
Affiliates and Lenders shall be entitled to treat any Borrower Materials that
are not marked “PUBLIC” or that are not at any time filed with the Securities
and Exchange Commission as being suitable only for posting on a portion of the
Platform not marked as “Public Investor.”

 

(h)       Borrowers and Guarantors shall furnish or cause to be furnished to
Agent such other information respecting the Collateral and the business of
Borrowers and Guarantors, as Agent may, from time to time, reasonably request.
Agent is hereby authorized to deliver a copy of any financial statement or any
other information relating to the business of Borrowers and Guarantors to any
court or other Governmental Authority or to any Lender or Participant or
prospective Lender or Participant or any Affiliate of any Lender or Participant
subject to Section 15.5 hereof. Any documents, schedules, invoices or other
papers delivered to Agent or any Lender may be destroyed or otherwise disposed
of by Agent or such Lender one (1) year after the same are delivered to Agent or
such Lender, except as otherwise designated by Borrower Agent to Agent or such
Lender in writing.

 

862

9.7      Compliance with ERISA. Except as could not reasonably be expected to
have a Material Adverse Effect, each Borrower and Guarantor shall, and shall
cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance with
the applicable provisions of ERISA, the Code and other Federal and State law;
(b) cause each Plan which is qualified under Section 401(a) of the Code to
maintain such qualification; (c) not terminate any Pension Plan so as to incur
any liability to the Pension Benefit Guaranty Corporation; (d) not allow or
suffer to exist any prohibited transaction involving any Plan or any trust
created thereunder which would subject such Borrower, Guarantor or such ERISA
Affiliate to a tax or other liability on prohibited transactions imposed under
Section 4975 of the Code or ERISA; (e) make all required contributions to any
Plan which it is obligated to pay under Section 302 of ERISA, Section 412 of the
Code or the terms of such Plan; (f) not allow or suffer to exist any accumulated
funding deficiency, whether or not waived, with respect to any such Pension
Plan; (g) not engage in a transaction that could be subject to Section 4069 or
4212(c) of ERISA; or (h) not allow or suffer to exist any occurrence of a
reportable event or any other event or condition which presents a risk of
termination by the Pension Benefit Guaranty Corporation of any Plan that is a
single employer plan, which termination could result in any liability to the
Pension Benefit Guaranty Corporation.

 

9.8      End of Fiscal Years; Fiscal Quarters. Each Borrower and Guarantor
shall, for financial reporting purposes, cause its, and each of its
Subsidiaries’ fiscal years to end on December 31 of each year, and fiscal
quarters to end on the last day of each of March, June, September and December
of each year.

 

 

 

9.9

License Agreements.

 

(a)       With respect to a material License Agreement applicable to
Intellectual Property that is owned by a third party and licensed to a Borrower
or Guarantor and that is affixed to or otherwise necessary for the manufacture,
sale or distribution of any Inventory or the collection of Receivables (other
than an off-the-shelf product with a shrink wrap license or that is generally
available), each Borrower and Guarantor shall (i) give Agent prompt prior
written notice of its intention to not renew or to terminate, cancel, surrender
or release its rights under any such License Agreement, or any amendment of any
such License Agreement that limits the scope of the right of such Borrower or
Guarantor to use the Intellectual Property subject to such License Agreement in
any material respect, either with respect to product, territory, term or
otherwise, or that increases in any material respect the amounts to be paid by
such Borrower or Guarantor thereunder or in connection therewith, (ii) give
Agent prompt written notice of any such License Agreement entered into by such
Borrower or Guarantor after the date hereof, or any material amendment to any
such License Agreement existing on the date hereof, in each case together with a
true, correct and complete copy thereof and such other information with respect
thereto as Agent may in good faith request, (iii) give Agent prompt written
notice of any material breach of any obligation, or any default, by the third
party that is the licensor or by the Borrower or Guarantor that is the licensee
or any other party under any such License Agreement, and deliver to Agent
(promptly upon the receipt thereof by such Borrower or Guarantor in the case of
a notice to such Borrower or Guarantor and concurrently with the sending thereof
in the case of a notice from such Borrower or Guarantor) a copy of each notice
of default and any other notice received or delivered by such Borrower or
Guarantor in connection with any such a License Agreement that relates to the
scope of the right, or the continuation of the right, of such

 

872

Borrower or Guarantor to use the Intellectual Property subject to such License
Agreement or the amounts required to be paid thereunder.

 

(b)       With respect to a material License Agreement applicable to
Intellectual Property that is owned by a third party and licensed to a Borrower
or Guarantor and that is affixed to or otherwise necessary for the manufacture,
sale or distribution of any Inventory or the collection of Receivables (other
than an off-the-shelf product with a shrink wrap license or that is generally
available), at any time an Event of Default shall exist or have occurred and be
continuing and subject to the Intercreditor Agreement, Agent shall have, and is
hereby granted, the irrevocable right and authority, at its option, to renew or
extend the term of such License Agreement, whether in its own name and behalf,
or in the name and behalf of a designee or nominee of Agent or in the name and
behalf of such Borrower or Guarantor, subject to and in accordance with the
terms of such License Agreement. Agent may, but shall not be required to,
perform any or all of such obligations of such Borrower or Guarantor under any
of the License Agreements, including, but not limited to, the payment of any or
all sums due from such Borrower or Guarantor thereunder. Any sums so paid by
Agent shall constitute part of the Obligations.

 

 

 

9.10

Additional Guaranties and Collateral Security; Further Assurances.

 

(a)       In the case of the formation or acquisition by a Borrower or Guarantor
of any Subsidiary after the date hereof (other than a Foreign Subsidiary or
Inactive Subsidiary), as to any such Subsidiary, (i) the Borrower or Guarantor
forming such Subsidiary shall cause any such Subsidiary to execute and deliver
to Agent, in form and substance satisfactory to Agent, a joinder agreement to
the Financing Agreements in order to make such Subsidiary a party to this
Agreement as a “Borrower” if it owns plant, property or equipment or otherwise
as a “Guarantor”, and a party to any guarantee as a “Guarantor” or pledge
agreement as a “Pledgor”, and including, but not limited to, supplements and
amendments hereto and to any of the other Financing Agreements, authorization to
file UCC financing statements, Collateral Access Agreements (to the extent
required under Section 9.2), to the extent such Person owns Real Property, those
documents and other deliverables required by Section 9.13, other agreements,
documents or instruments contemplated under Section 5.3 and other consents,
waivers, acknowledgments and other agreements from third persons which Agent may
deem reasonably necessary or desirable in order to permit, protect and perfect
its security interests in and liens upon the assets of such Subsidiary and the
Equity Interests of any Borrower or Guarantor in such Subsidiary, corporate
resolutions and other organization and authorizing documents of such Person, and
favorable opinions of counsel to such person and (ii) the Borrower or Guarantor
forming such Subsidiary shall execute and deliver to Agent, a pledge and
security agreement, in form and substance satisfactory to Agent, granting to
Agent a pledge of and lien on all of the issued and outstanding shares of Equity
Interests of any such Subsidiary, and otherwise comply with the terms of Section
5.3 hereof with respect thereto, such other agreements, documents and
instruments as Agent may require in connection with the documents referred to
above, including, but not limited to, supplements and amendments hereto,
corporate resolutions and other organization and authorizing documents and
favorable opinions of counsel to such person.

 

(b)       In the case of an acquisition of assets (other than Equity Interests)
by a Borrower or Guarantor after the date hereof, Agent shall have received, in
form and

 

882

substance satisfactory to Agent, (i) evidence that Agent has valid and perfected
security interests in and liens upon all purchased assets to the extent such
assets constitute Collateral hereunder (except in the case of deposit accounts,
within thirty (30) days after the acquisition thereof), (ii) except as Agent may
otherwise agree, all Collateral Access Agreements (to the extent required under
Section 9.2 hereof) and other consents, waivers, acknowledgments and other
agreements from third persons which Agent may deem necessary or desirable in
order to permit, protect and perfect its security interests in and liens upon
the assets purchased, and (iii) such other agreements, documents and instruments
as Agent may require in connection with the documents referred to above,
including, but not limited to, supplements and amendments hereto, corporate
resolutions and other organization and authorizing documents and favorable
opinions of counsel to such person. Borrowers and Guarantors shall use
commercially reasonable efforts to obtain the agreement of the seller consenting
to the collateral assignment by the Borrower or Guarantor purchasing such assets
of all rights and remedies and claims for damages of such Borrower or Guarantor
relating to the Collateral (including, without limitation, any bulk sales
indemnification) under the agreements, documents and instruments relating to
such acquisition; provided, that, Borrowers and Guarantors shall not be required
to use such commercially reasonable efforts if in the good faith, reasonable
judgment of Borrowers, such efforts would result in the failure to consummate
the acquisition. 

 

(c)       At the request of Agent at any time and from time to time, Borrowers
and Guarantors shall, at their expense, duly execute and deliver, or cause to be
duly executed and delivered, such further agreements, documents and instruments,
and do or cause to be done such further acts as may be necessary or proper to
evidence, perfect, maintain and enforce the security interests and the priority
thereof in the Collateral and to otherwise effectuate the provisions or purposes
of this Agreement or any of the other Financing Agreements.

 

9.11    Costs and Expenses. Borrowers and Guarantors shall pay to Agent on
demand all reasonable costs, expenses, filing fees and taxes paid or payable in
connection with the preparation, negotiation, execution, delivery, recording,
syndication, administration, collection, liquidation, enforcement and defense of
the Obligations, Agent’s rights in the Collateral, this Agreement, the other
Financing Agreements, the Mortgages and all other documents related hereto or
thereto, including any amendments, supplements or consents which may hereafter
be contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
UCC financing statement filing taxes and fees, documentary taxes, intangibles
taxes and mortgage recording taxes and fees, if applicable), (b) costs and
expenses and fees for insurance premiums, environmental audits, title insurance
premiums, surveys, assessments, engineering reports and inspections, appraisal
fees and search fees, background checks, costs and expenses of remitting loan
proceeds, together with Agent’s customary charges and fees with respect thereto;
(c) actual costs and expenses of preserving and protecting the Collateral; (d)
actual costs and expenses paid or incurred in connection with obtaining payment
of the Obligations, enforcing the security interests and liens of Agent in the
Collateral, selling or otherwise realizing upon the Collateral, and otherwise
enforcing the provisions of this Agreement and the other Financing Agreements or
defending any claims made or threatened against Agent or any Lender arising out
of the transactions contemplated hereby and thereby (including preparations for
and consultations concerning any such matters); and (e) the reasonable fees and
disbursements of counsel (including legal assistants) to Agent in connection
with any of the foregoing and in addition, at any time an

 

892

Event of Default exists or has occurred and is continuing, the reasonable fees
and disbursements of one counsel (including legal assistants) to Lenders in
connection with matters described in clauses (c) or (d) above.

 

9.12    Collateral Access Agreements. In the case of any personal property
Collateral located at premises leased by a Borrower or Guarantor with a value in
excess of $250,000, such Borrower or Guarantor will provide the Agent with a
Collateral Access Agreement from the landlords on such real property to the
extent (a) requested by the Agent and (b) such Borrower or Guarantor is able to
secure such letters, consents and waivers after using commercially reasonable
efforts (such letters, consents and waivers shall be in form and substance
satisfactory to the Agent).

 

9.13    After Acquired Real Property. If after the date hereof any Borrower or
Guarantor acquires (a) any fixtures (other than Excluded Property) or (b) any
Real Property (other than Excluded Property), without limiting any other rights
of Agent or any Lender, or duties or obligations of any Borrower or Guarantor,
such Borrower or Guarantor shall promptly notify the Agent of such new fixtures
or Real Property and, upon Agent’s request, shall (i) deliver to the Agent a UCC
fixture financing statement (or the information to complete a UCC fixture
financing statement) with respect to such fixtures, together with a legal
description of the Real Property where such fixtures are located, (ii) execute
and deliver to Agent a mortgage, deed of trust or deed to secure debt, as Agent
may determine, in form and substance substantially similar to the Mortgages and
including any provisions relating to specific state laws satisfactory to Agent
and in form appropriate for recording in the real estate records of the
jurisdiction in which such Real Property is located, which mortgage, deed of
trust or deed to secure debt shall grant to Agent a first and only lien and
mortgage on and security interest in such Real Property (except as such Borrower
or Guarantor would otherwise be permitted to incur hereunder or under the
Mortgages or as otherwise consented to in writing by Agent) and (iii) such
surveys, title reports, title commitments and policies, flood hazard
determinations, environmental reports and other agreements, documents and
instruments as Agent may require in connection with any such Real Property.

 

9.14    Delivery of Reports. Borrowers and Guarantors shall deliver to Agent any
field audit or examination report, appraisals with respect to the Collateral and
financing statements required to be delivered to the ABL Agent pursuant to the
ABL Credit Agreement, simultaneously with the delivery of such reports to the
ABL Agent.

 

9.15    Post-Closing Covenant. As soon as practicable but in any event within
forty-five (45) days after the Closing Date (or such extended period of time as
agreed to by the Agent), the Borrowers and Guarantors shall deliver to the Agent
the following, each in form and substance reasonably satisfactory to the Agent:

 

 

(a)

a title report in respect of each of the Mortgaged Properties;

 

(b)       a mortgage policy assuring the Agent that the Mortgage with respect to
such Mortgaged Property creates a valid and enforceable first priority mortgage
lien on such Mortgaged Property, free and clear of all defects and encumbrances
except Permitted Liens and such other encumbrances shown on Schedule B to such
policy that are reasonably acceptable to the Agent, which mortgage policy shall
provide for affirmative insurance and such reinsurance as the Agent may
reasonably request;

 

902

(c)       maps or plats of an as-built survey of the sites of the Mortgaged
Properties certified to the Agent and the Title Insurance Company in a manner
reasonably satisfactory to them, dated as of the Closing Date or such other sate
within fourty-five (45) days after the Closing Date reasonably satisfactory to
each of the Agent and the Title Insurance Company by an independent professional
licensed land surveyor issuing the maps or plats (the “Surveyor”), which shall
be reasonably satisfactory to each of the Agent and the Title Insurance Company,
which maps or plats and the surveys on which they are based shall be sufficient
to delete any standard printed survey exception contained in the applicable
title policy and be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and adopted by the
American Land Title Association and the American Congress on Surveying and
Mapping in 2005, and, without limiting the generality of the foregoing, there
shall be surveyed and shown on such maps, plats or surveys the following, all to
the extent visible or plottable pursuant to a recorded document: (i) the
locations on such sites of all the buildings, structures and other improvements
and the established building setback lines; (ii) the lines of streets abutting
the sites and width thereof; (iii) all access and other easements appurtenant to
the sites necessary to use the sites; (iv) all roadways, paths, driveways,
easements, encroachments and overhanging projections and similar encumbrances
affecting the site, whether recorded, apparent from a physical inspection of the
sites or otherwise known to the surveyor; (v) any encroachments on any adjoining
property by the building structures and improvements on the sites; and (vi) if
the site is described as being on a filed map, a legend relating the survey to
said map;

 

(d)       satisfactory third-party environmental reviews of all owned Mortgaged
Properties, including but not limited to Phase I environmental assessments,
together with reliance letters in favor of the Lenders;

 

(e)       to the extent available, zoning letters from each municipality or
other Governmental Authority for each jurisdiction in which the Mortgaged
Properties are located; and

 

(f)        in the case of any personal property Collateral located at premises
leased by a Borrower or Guarantor, (i) a legal description for each such leased
premises and (ii) such Collateral Access Agreements from the landlords of such
real property to the extent the applicable Borrower or Guarantor is able to
secure such Collateral Access Agreements after using commercially reasonable
efforts.

 

SECTION 10.

 

NEGATIVE COVENANTS

 

10.1    Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each Borrower
and Guarantor shall not, and shall not permit any Subsidiary to, directly or
indirectly,

 

(a)       merge into or with or consolidate with any other Person or permit any
other Person to merge into or with or consolidate with it except that any
wholly-owned Subsidiary of Parent may merge with and into or consolidate with
any other wholly-owned Subsidiary of Parent (including any such Subsidiary that
only becomes a Subsidiary after giving effect to such merger or consolidation
subject to the conditions set forth herein), provided, that, in

 

912

each case each of the following conditions is satisfied: (i) as of the effective
date of the merger or consolidation and after giving effect thereto, no Default
or Event of Default shall exist or have occurred and be continuing, (ii) Agent
shall have received, true, correct and complete copies of all agreements,
documents and instruments relating to such merger or consolidation, including,
but not limited to, the certificate or certificates of merger to be filed with
each appropriate Secretary of State (with a copy as filed promptly after such
filing), (iii) the surviving entity shall expressly confirm, ratify and assume
the Obligations and the Financing Agreements to which it is a party in writing,
in form and substance reasonably satisfactory to Agent, and Borrowers and
Guarantors shall execute and deliver such other agreements, documents and
instruments as Agent may reasonably request in connection therewith and (iv) in
the case of a merger with a Person that is not a wholly-owned Subsidiary
immediately prior to such merger, such merger shall not be permitted unless it
is also permitted under Section 10.4(b) hereof;

 

(b)       sell, issue, assign, lease, license, transfer, abandon or otherwise
dispose of any Equity Interests or any of its assets to any other Person, except
for Permitted Dispositions; provided, that, to the extent that any Collateral is
sold as permitted by this Section 10.1(b), other than to a Borrower or
Guarantor, or to the extent that Agent and Required Lenders may consent to any
other sale of any assets, concurrently with, and subject to the satisfaction of
the conditions to such sale (including the receipt of the Net Cash Proceeds
related thereto), upon the written request of Borrower Agent and effective upon
the transfer of the title of the assets sold and the satisfaction of the
applicable conditions to such Permitted Disposition, Agent shall, at Borrowers’
expense, cause to be filed a UCC financing statement amendment providing for the
release by Agent of the assets so sold from its security interest granted
hereunder;

 

(c)       suspend operations, wind up, liquidate or dissolve except that any
Subsidiary of Parent (other than a Borrower) may wind up, liquidate and
dissolve; provided, that, each of the following conditions is satisfied, (i) the
winding up, liquidation and dissolution of such Guarantor or other Subsidiary
shall not violate any law or any order or decree of any court or other
Governmental Authority in any material respect and shall not conflict with or
result in the breach of, or constitute a default under, any indenture, mortgage,
deed of trust, or any other agreement or instrument to which any Borrower or
Guarantor is a party or may be bound, (ii) such winding up, liquidation or
dissolution shall be done in accordance with the requirements of all applicable
laws and regulations, (iii) effective upon such winding up, liquidation or
dissolution, all of the assets and properties of such Guarantor or other
Subsidiary shall be duly and validly transferred and assigned to its
shareholders, free and clear of any liens, restrictions or encumbrances other
than the security interest and liens of Agent or as are otherwise permitted
hereunder (and Agent shall have received such evidence thereof as Agent may
reasonably require) and Agent shall have received such deeds, assignments or
other agreements as Agent may request to evidence and confirm the transfer of
such assets and without limiting the foregoing, in the case of a winding up,
liquidation or dissolution of a Borrower the transfer and assignment shall be to
an entity that is or becomes a Borrower upon such transfer and assignment and
has executed and delivered all such agreements, documents and instruments as
Agent may require and as is otherwise provided for herein and Agent shall
maintain and have a perfected security interests in and liens upon all such
assets and properties as so transferred on the same terms and with the same
priority, (iv) Agent shall have received all documents and agreements that any
Borrower or

 

922

Guarantor has filed with any Governmental Authority or as are otherwise required
to effectuate such winding up, liquidation or dissolution, (v) no Borrower or
Guarantor shall assume any Indebtedness, obligations or liabilities as a result
of such winding up, liquidation or dissolution, or otherwise become liable in
respect of any obligations or liabilities of the entity that is winding up,
liquidating or dissolving, unless such Indebtedness is otherwise expressly
permitted hereunder, and (vi) as of the date of such winding up, liquidation or
dissolution and after giving effect thereto, no Default or Event of Default
shall exist or have occurred and be continuing; or

 

(d)       agree to do any of the foregoing, except to the extent that such
agreement contains a condition requiring the consent of the Required Lenders if
the agreement to do any of the foregoing is otherwise prohibited by the terms
hereof.

 

10.2    Encumbrances. Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, create, incur, assume or suffer to exist any security
interest, mortgage, pledge, lien, charge or other encumbrance of any nature
whatsoever on any of its assets or properties, including the Collateral, or file
or permit the filing of, or permit to remain in effect, any financing statement
or other similar notice of any security interest or lien with respect to any
such assets or properties, except Permitted Liens.

 

10.3    Indebtedness. Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any Indebtedness, or guarantee,
assume, endorse, or otherwise become responsible for (directly or indirectly),
the Indebtedness, performance, obligations or dividends of any other Person,
except:

 

 

(a)

the Obligations;

 

(b)       Indebtedness (including Capitalized Lease Obligations) arising after
the date hereof to the extent secured by security interests in Equipment and
mortgages on Real Property (other than Mortgaged Property) acquired after the
date hereof in an aggregate outstanding principal amount not to exceed
$10,000,000 at any time; provided, that, (i) such security interests and
mortgages do not apply to any property of such Borrower, Guarantor or Subsidiary
other than specific items of Equipment or Real Property, (ii) the Indebtedness
secured thereby does not exceed the cost of the applicable Equipment or Real
Property, as the case may be and (iii) as of the date any such Indebtedness is
incurred and after giving effect thereto, no Default or Event of Default shall
exist or have occurred and be continuing;

 

(c)       Indebtedness and the Guaranty Obligations of the Parent and its
Subsidiaries under the Senior Floating Rate Notes and the Senior Fixed Rate
Notes; provided, that, the aggregate outstanding principal amount of such
Indebtedness evidenced by the Senior Floating Rate Notes shall not exceed
$128,114,000 and the aggregate outstanding principal amount of such Indebtedness
evidenced by the Senior Fixed Rate Notes shall not exceed $150,000,000, except
to the extent that Parent may incur additional Indebtedness under clause (k) of
this Section 10.3 below;

 

(d)       Indebtedness of any Borrower or Guarantor to any other Borrower or
Guarantor or any other Subsidiary of Parent arising after the date hereof
pursuant to

 

932

Permitted Investments consisting of loans and advances to such Borrower,
Guarantor or other Subsidiary; provided, that, as to any such Indebtedness at
any time owing by a Borrower to a Guarantor or any other Subsidiary of Parent
(other than a Borrower), (i) the Indebtedness arising pursuant to such
Investment shall be Subordinated Debt, (ii) promptly upon Agent’s request, Agent
shall have received a subordination agreement, in form and substance
satisfactory to Agent, providing for the terms of the subordination in right of
payment of such Indebtedness of such Borrower (or such Guarantor, in the case of
Indebtedness owing by a Guarantor to a Subsidiary of Parent that is not a
Borrower or Guarantor) to the prior final payment and satisfaction in full of
all of the Obligations, duly authorized, executed and delivered by such
Guarantor and such Borrower, (iii) such Borrower (or such Guarantor, in the case
of Indebtedness owing by a Guarantor to a Subsidiary of Parent that is not a
Borrower or Guarantor) shall not, directly or indirectly make, or be required to
make, any payments in respect of such Indebtedness except subject to the terms
of subordination applicable thereto, (iv) in the case of any Indebtedness owing
to a Borrower or Guarantor, the Indebtedness arising pursuant to any such loan
shall not be evidenced by a promissory note or other instrument, unless the
single original of such note or other instrument is promptly delivered to Agent
(or the Control Agent, if applicable) upon its request to hold as part of the
Collateral, with such endorsement and/or assignment by the payee of such note or
other instrument as Agent may require, and (v) except as Agent may otherwise
hereafter agree, as of the date any such Indebtedness is incurred and after
giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing;

 

(e)       Indebtedness of any Borrower or Guarantor entered into in the ordinary
course of business pursuant to a Hedge Agreement; provided, that, (i) such
arrangements are not for speculative purposes, and (ii) such Indebtedness shall
be unsecured, except to the extent such Indebtedness constitutes part of the ABL
Obligations arising under or pursuant to Hedge Agreements with any Bank Product
Provider that are secured under the terms hereof;

 

(f)        Indebtedness in respect of netting services, overdraft protections
and otherwise in connection with deposit accounts and Indebtedness arising from
the honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently (except in the case of daylight overdrafts)
drawn against insufficient funds in the ordinary course of business; provided,
that, such Indebtedness is extinguished within five (5) Business Days of
incurrence;

 

(g)       Guaranty Obligations in respect of Indebtedness of a Borrower or
Guarantor to the extent that such Indebtedness is otherwise permitted pursuant
to this Section 10.3;

 

(h)       Indebtedness of Parent or any of its Subsidiaries in respect of bid,
payment and performance bonds, workers’ compensation claims, unemployment
insurance, health, disability and other employee benefits or property, casualty
or liability insurance, or guarantees of the foregoing types of Indebtedness, in
the ordinary course of business and consistent with current practices as of the
date hereof; provided, that, upon Agent’s request, Agent shall have received
true, correct and complete copies of all material agreements, documents or
instruments evidencing or otherwise related to such Indebtedness, as duly
authorized, executed and delivered by the parties thereto;

 

942

(i)        Indebtedness arising after the date hereof from agreements of Parent
or a Subsidiary to provide for customary indemnification, adjustment of purchase
price or similar obligations, earn-outs or other similar obligations, in each
case, incurred in connection with a Permitted Acquisition or Permitted
Disposition other than guarantees of Indebtedness of any Person acquiring all or
any portion of such business, assets or subsidiary for the purpose of financing
such acquisition or disposition;

 

(j)        Indebtedness arising after the date hereof pursuant to the ABL Credit
Agreement; provided, that, (i) the aggregate principal amount of such
Indebtedness shall not exceed $100,000,000, (ii) such Indebtedness shall be
secured to the extent permitted under clause (n) of the definition of Permitted
Liens, and (iii) Agent shall have received the Intercreditor Agreement, duly
authorized, executed and delivered by the ABL Agent, the Control Agent, the
Borrowers and Guarantors, and true, correct and complete copies of the ABL
Financing Agreements and all other agreements, documents or instruments
evidencing or otherwise related to such Indebtedness, in each case in form and
substance reasonably satisfactory to Agent;

 

(k)       unsecured Indebtedness of Borrowers and Guarantors arising after the
date hereof to any third person (but not to any other Borrower or Guarantor or
other Affiliate of Parent), including Acquired Indebtedness, not otherwise
permitted in this Section 10.3; provided, that, each of the following conditions
is satisfied:

 

(i)        such Indebtedness shall not exceed in the aggregate the greater of
(x) $50,000,000 and (y) such amount of Indebtedness, which will not result,
after giving effect to the incurrence thereof and the receipt and application of
the proceeds thereof, in the Fixed Charge Coverage Ratio being less than 2.0 to
1.0 on a Pro Forma Basis, in each case, at any time outstanding; provided that
any amount in excess of $40,000,000 not used to directly finance a Permitted
Acquisition shall be deemed to constitute a Debt Issuance and be subject to the
mandatory prepayment set forth in Section 2.2(b),

 

(ii)      in the case of any such Indebtedness in excess of $2,500,000 or at any
time after the aggregate amount of such Indebtedness incurred in any fiscal year
exceeds $2,500,000 thereafter as to any such Indebtedness incurred in such
fiscal year, Agent shall have received not less than ten (10) Business Days’
prior written notice of the intention of such Borrower or Guarantor to incur
such Indebtedness, which notice shall set forth in reasonable detail
satisfactory to Agent the amount of such Indebtedness, the person or persons to
whom such Indebtedness will be owed, the interest rate, the schedule of
repayments and maturity date with respect thereto and such other information as
Agent may request with respect thereto,

 

(iii)      such Indebtedness shall be on commercially reasonable terms and
conditions,

 

(iv)      in the case of any such Indebtedness in excess of $2,500,000 or at any
time after the aggregate amount of such Indebtedness incurred in any fiscal year
exceeds $2,500,000 thereafter as to any such Indebtedness incurred in such
fiscal year, Agent shall have received a Pro Forma Compliance Certificate
demonstrating

 

952

that, upon giving effect on a Pro Forma Basis to such transaction, the Parent
and its Subsidiaries shall be in compliance with the financial covenant set
forth in Section 11.1 both prior, and after giving effect, to such transaction,

 

(v)       for any such Indebtedness in excess of $5,000,000, Agent shall have
received, not less than ten (10) Business Days’ prior to incurring such
Indebtedness, the Permitted Transaction Projections showing that the Parent and
its Subsidiaries shall be in compliance with the financial covenant set forth in
Section 11.1 both prior, and after giving effect, to such Indebtedness;

 

(vi)      Agent shall have received true, correct and complete copies of all
agreements, documents or instruments evidencing or otherwise related to such
Indebtedness,

 

(vii)    as of the date of incurring such Indebtedness and after giving effect
thereto, no Default or Event of Default shall exist or have occurred and be
continuing; and

 

(viii)    such Indebtedness shall have a maturity date no sooner than six (6)
months after the Maturity Date and shall not be otherwise redeemable at the
option of the holder prior to such date;

 

(l)        the Indebtedness set forth in the Information Certificate which is
not otherwise permitted by the other clauses of this Section 10.3; and

 

(m)      Indebtedness of any Borrower or Guarantor arising after the date hereof
issued in exchange for, or the proceeds of which are used to extend, refinance,
replace or substitute for Indebtedness permitted under Sections 10.3(b), (c),
(j) and (l) hereof (the “Refinancing Indebtedness”); provided, that, as to any
such Refinancing Indebtedness, each of the following conditions is satisfied:
(i) Agent shall have received not less than ten (10) Business Days’ prior
written notice of the intention to incur such Indebtedness, which notice shall
set forth in reasonable detail satisfactory to Agent, the amount of such
Indebtedness, the schedule of repayments and maturity date with respect thereto
and such other information with respect thereto as Agent may reasonably request,
(ii) promptly upon Agent’s request, Agent shall have received true, correct and
complete copies of all agreements, documents and instruments evidencing or
otherwise related to such Indebtedness, as duly authorized, executed and
delivered by the parties thereto, (iii) the Refinancing Indebtedness shall have
a Weighted Average Life to Maturity and a final maturity equal to or greater
than the Weighted Average Life to Maturity and the final maturity, respectively,
of the Indebtedness being extended, refinanced, replaced, or substituted for,
(iv) the Refinancing Indebtedness shall rank in right of payment no more senior
than, and be at least as subordinated (if subordinated) to, the Obligations as
the Indebtedness being extended, refinanced, replaced or substituted for, (v)
the Refinancing Indebtedness shall not include terms and conditions with respect
to any Borrower or Guarantor which are more burdensome or restrictive in any
material respect than those included in the Indebtedness so extended,
refinanced, replaced or substituted for, taken as a whole, so that in view of
all of the terms and conditions of the Refinancing Indebtedness, such terms and
conditions are more favorable to such Borrower or Guarantor, (vi) as of the

 

962

date of incurring such Indebtedness and after giving effect thereto, no Default
or Event of Default shall exist or have occurred and be continuing, (vii) the
principal amount of such Refinancing Indebtedness shall not exceed the principal
amount of the Indebtedness so extended, refinanced, replaced or substituted for
(plus the amount of reasonable refinancing fees and expenses incurred in
connection therewith outstanding on the date of such event), (viii) the
Refinancing Indebtedness shall be secured by substantially the same assets,
provided, that, such security interests (if any) with respect to the Refinancing
Indebtedness shall have a priority no more senior than, and be at least as
subordinated, if subordinated (on terms and conditions substantially similar to
the subordination provisions applicable to the Indebtedness so extended,
refinanced, replaced or substituted for or as is otherwise acceptable to Agent)
as the security interest with respect to the Indebtedness so extended,
refinanced, replaced or substituted for, and (ix) Borrowers and Guarantors may
only make payments of principal, interest and fees, if any, in respect of such
Indebtedness to the extent such payments would have been permitted hereunder in
respect of the Indebtedness so extended, refinanced, replaced or substituted
for.

 

For purposes of determining any particular amount of Indebtedness hereunder,
Guaranty Obligations in respect of the same Indebtedness otherwise included in
the determination of such particular amount shall not be included. In the event
that specific Indebtedness meets the criteria of more than one of the categories
of Indebtedness described above or is otherwise permitted to be incurred
hereunder, the Borrower Agent shall, in its sole discretion, classify (or later
reclassify) such item of Indebtedness in any manner that complies with such
covenant. Indebtedness permitted hereby need not be permitted solely by
reference to one provision permitting such Indebtedness but may be permitted in
part by one such provision and in part by one or more other provisions hereof
permitting such Indebtedness. Accrual of interest, accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the form
of additional Indebtedness with the same terms, the payment of dividends on
Disqualified Equity Interests in the form of additional shares of the same class
of Disqualified Equity Interests, the classification of preferred stock as
Indebtedness under GAAP and change in the amount outstanding due solely to the
result of fluctuations in the exchange rates of currencies will not be deemed to
be an incurrence of Indebtedness for purposes hereof. For purposes of
determining compliance with any dollar-denominated restriction on the incurrence
of Indebtedness denominated in a foreign currency, the dollar-equivalent
principal amount of such Indebtedness incurred pursuant thereto shall be
calculated based on the relevant currency exchange rate in effect on the date
that such Indebtedness was incurred. The amount of Indebtedness issued at a
price less than the amount of the liability thereof shall be determined in
accordance with GAAP.

 

10.4    Investments. Each Borrower and Guarantor shall not, and shall not permit
any Subsidiary to, directly or indirectly, purchase, hold or acquire (including
pursuant to any merger with any Person that was not a wholly owned Subsidiary
immediately prior to such merger) any Equity Interests, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, or make or permit to exist any capital contribution or other
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other
Person constituting a business unit or all or a substantial part of the assets
or property of any other Person (whether through purchase of assets, merger or
otherwise), or form or

 

972

acquire any Subsidiaries, or agree to do any of the foregoing (each of the
foregoing an “Investment”), except:

 

 

(a)

Permitted Investments;

 

 

(b)

Permitted Acquisitions;

 

(c)       the Investments consisting of loans and advances set forth on Schedule
10.4 to the Information Certificate which are not otherwise permitted by the
other clauses of this Section 10.4.

 

10.5    Restricted Payments. Each Borrower and Guarantor shall not, and shall
not permit any Subsidiary to, declare or make, or agree to pay or make, directly
or indirectly, any Restricted Payment, except:

 

(a)       each Borrower and Guarantor, and each Subsidiary, may declare and make
dividend payments or other distributions payable solely in the Equity Interests
of such Person (other than Disqualified Equity Interests);

 

(b)       any Subsidiary of Parent may pay dividends or other distributions to a
Borrower or Guarantor, provided, that, as to any such dividends or distributions
by a Borrower, as of the date of such dividends or other distributions, and
after giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing, except as Agent may otherwise hereafter agree;

 

(c)       any Subsidiary of Parent may pay or make dividends or other
distributions to CPG I or Parent the proceeds of which are used to make
substantially contemporaneous payments to the AEA Group to the extent such
payments are permitted pursuant to Section 10.5(d) below;

 

(d)       Borrowers and Guarantors may pay (i) up to $1,500,000 each year to the
AEA Group pursuant to the first paragraph of Section 2 of the Management
Agreement (as in effect on the date hereof), (ii) any transactional fees payable
to the AEA Group pursuant to such Management Agreement and (iii) reasonable
expenses payable to the AEA Group pursuant to such Management Agreement;
provided, that, as of the date of any payment of such amounts under clauses (i)
through (iii) and after giving effect thereto, (A) using the most recent
calculation of the Borrowing Base prior to the date of any such Investment and
payment, on a pro forma basis, the sum of (x) the aggregate amount of the Excess
Availability of Borrowers and (y) cash on hand of Borrowers and Guarantors shall
be not less than $10,000,000 and (B) no Default or Event of Default shall exist
or have occurred and be continuing;

 

(e)       any Subsidiary of Parent may pay or make distributions to CPG I or
Parent or any direct or indirect parent entity of Parent that are used to make
substantially contemporaneous payments of any of the following (i) accounting,
legal, administrative and other general corporate and overhead expenses,
franchise or similar taxes and other fees required to maintain the corporate
existence of CPG I or Parent or such direct or indirect parent entity and to pay
other operating costs, including customary salary, bonus and other

 

982

benefits payable to, and indemnities provided on behalf of, officers and
employees of any such parent entity, in each case as to any of the foregoing
only to the extent related to, and required for, the existence or operation of
Parent or any of its Subsidiaries, and as are reasonably and in good faith
allocable to the operation of Parent and its Subsidiaries (ii) reasonable
directors fees and to reimburse reasonable out-of-pocket expenses of the board
of directors of Parent and any direct or indirect parent entity of Parent, in
each case in an amount not more than the portion of such fees and expenses as
are reasonably and in good faith allocable to the operation of Parent and its
Subsidiaries and (iii) fees and expenses, as incurred, of an offering of
securities or indebtedness of Parent or CPG I that is not consummated, or of a
registered public offering or of an acquisition which is not consummated;
provided, that, as of the date of any payment of such amounts under clauses (i)
through (iii) to or for the benefit of any direct or indirect parent of Parent,
and after giving effect thereto, using the most recent calculation of the
Borrowing Base prior to the date of any such Investment and payment, on a pro
forma basis, the sum of (x) the aggregate amount of the Excess Availability of
Borrowers and (y) cash on hand of Borrowers and Guarantors shall be not less
than $10,000,000 and as of the date of any payment of such amounts and after
giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing;

 

(f)        any Subsidiary of Parent may pay or make distributions to Parent or
any direct or indirect parent entity of Parent that are used to make
substantially contemporaneous payments of any Permitted Tax Distributions;

 

(g)       any Subsidiary of Parent may pay or make distributions to Parent that
are used to make substantially contemporaneous payments to, and Parent may make
payments to, repurchase or redeem Equity Interests and options to purchase
Equity Interests of Parent held by officers, directors or employees or former
officers, directors or employees (or their transferees, estates or beneficiaries
under their estates) of Parent pursuant to any management equity subscription
agreement, employee agreement or stock option agreement or other agreement with
such officer, director or employee or former officer, director or employee;
provided, that, the aggregate cash consideration paid for all such payments,
repurchases or redemptions shall not in any fiscal year of Parent exceed the sum
of: (i) $5,000,000 plus amount equal to the amount by which any such
repurchases, redemptions or other payments not made pursuant to this clause (h)
in the immediately preceding fiscal year of Parent are less than $5,000,000;
plus (ii) in the case of any such officer, director, employee or former officer,
director or employee, an amount equal to the Net Cash Proceeds received by CPG I
(whether directly or from Parent) of any resales or new issuances of Equity
Interests of Parent, and options in respect of Equity Interests of Parent, to
such any such officer, director, employee or former officer, director or
employee at any time after the initial issuances thereof to such officer,
director, employee or former officer, director or employee, together with the
aggregate amount of deferred compensation due and owing by Parent or any of its
Subsidiaries to such officer, director, employee or former officer, director or
employee that is cancelled, waived or exchanged at any time after the initial
issuances of any such Equity Interests and options for the grant to such
officer, director, employee or former officer, director or employee of the right
to receive or acquire other Equity Interests of Parent or CPG I, plus (iii) in
the case of any such officer, director, employee or former officer, director or
employee, an amount equal to the Net Cash Proceeds received by CPG I (whether
directly or from Parent), of key man life insurance policies on

 

992

the life of such officer, director, employee or former officer, director or
employee that have been received by Parent or any of its Subsidiaries;

 

(h)       Borrowers and Guarantors may make payments to redeem the Equity
Interests of Parent owned by Christopher Bardasian, Kevin Sloan and Larry Sloan
as of the date hereof as required, and in accordance with, the terms of the
Procell Unit Purchase Agreement (as in effect on the date hereof), provided,
that, as to any such payment and after giving effect thereto, each of the
following conditions is satisfied: (i) the aggregate amount of all such payments
shall not exceed $5,400,000 and all such payments shall be made prior to July 1,
2008, except as Agent may otherwise hereafter agree, (ii) using the most recent
calculation of the Borrowing Base prior to the date of any such payment, on a
pro forma basis, the sum of (A) the aggregate amount of the Excess Availability
of Borrowers and (B) cash on hand of Borrowers and Guarantors shall be not less
than $10,000,000 and (iii) as of the date of making any payment in respect of
any such payment and after giving effect thereto, no Default or Event of Default
shall exist or have occurred and be continuing;

 

(i)        Borrowers and Guarantors may make other Restricted Payments not
otherwise expressly provided for in this Section 10.5 in the case of any such
Restricted Payments provided, that, each of the following conditions is
satisfied:

 

(i)        the aggregate amount of such Restricted Payments shall not exceed
$10,000,000 in any fiscal year,

 

(ii)      in the case of any such Restricted Payment in excess of $1,750,000 or
at any time after the aggregate amount of such Restricted Payments made in any
fiscal year exceeds $1,750,000, (A) Agent shall have received not less than ten
(10) Business Days’ prior written notice of the intention of such Borrower or
Guarantor to make such Restricted Payment, which notice shall set forth in
reasonable detail satisfactory to Agent the amount of any such payments, the
nature and purpose of such Restricted Payment, the date such payments are to be
made and such other information as Agent may request with respect thereto, (B)
Agent shall have received a Pro Forma Compliance Certificate demonstrating that,
upon giving effect on a Pro Forma Basis to such transaction, the Parent and its
Subsidiaries shall be in compliance with the financial covenant set forth in
Section 11.1 both prior, and after giving effect, to such Restricted Payment,
(C) as of the date of any such payment and after giving effect thereto, using
the most recent calculation of the Borrowing Base prior to the date of any such
payment, on a pro forma basis, the sum of (x) the aggregate amount of the Excess
Availability of Borrowers and (y) cash on hand of Borrowers and Guarantors shall
be not less than $10,000,000 and (D) as of the date of making any payment in
respect of any such redemption, retirement or repurchase and after giving effect
thereto, no Default or Event of Default shall exist or have occurred and be
continuing;

 

(iii)    in the case of any such Restricted Payments that are equal to or less
than $1,750,000 and so long as the aggregate amount of such Restricted Payments
made in any fiscal year is equal to or less than $1,750,000, then as to all such
Restricted Payments in such fiscal year thereafter, (A) as of the date of any
such Restricted Payment and after giving effect thereto, using the most recent
calculation

 

1002

of the Borrowing Base prior to the date of any such sale or other disposition,
on a pro forma basis, there shall be Excess Availability, and (B) as of the date
of any such Restricted Payment, and in each case after giving effect thereto, no
Default or Event of Default shall exist or have occurred and be continuing;

 

(j)        Parent may pay any dividend or redeem any of its Equity Interests
within sixty (60) days after the date of the declaration of such dividend or the
mailing of such irrevocable redemption notice if the dividend or redemption
payment, as the case may be, would have otherwise been permitted under the terms
of this Section 10.5 on the date of such declaration or the date of the mailing
of such notice; and

 

(k)       Parent may repurchase its Equity Interests to the extent such
repurchase is deemed to occur upon (i) the non-cash exercise of stock options to
the extent such Equity Interests represents a portion of the exercise price of
such options and (ii) the withholding of a portion of such Equity Interests to
pay taxes associated therewith, and the purchase of fractional shares of Equity
Interests of Parent or any Subsidiary arising out of stock dividends, splits or
combinations or business combinations.

 

10.6    Transactions with Affiliates. Each Borrower and Guarantor shall not,
directly or indirectly, purchase, acquire or lease any property from, or sell,
transfer or lease any property to, any officer, director or other Affiliates of
such Borrower or Guarantor, except pursuant to the reasonable requirements of
such Borrower’s or Guarantor’s business (as the case may be) and upon fair and
reasonable terms no less favorable to such Borrower or Guarantor than such
Borrower or Guarantor would obtain in a comparable arm’s length transaction with
an unaffiliated person, except for the following:

 

(a)       any employment or compensation arrangement or agreement, employee
benefit plan or arrangement, officer or director indemnification agreement or
any similar arrangement or other compensation arrangement entered into by Parent
or any of its Subsidiaries in the ordinary course of business and payments,
issuance of securities or awards pursuant thereto, and including the grant of
stock options, restricted stock, stock appreciation rights, phantom stock awards
or similar rights to employees and directors in each case approved by the Board
of Directors of such Borrower or Guarantor;

 

(b)       transactions exclusively between or among Parent and any of its
Subsidiaries or exclusively between or among such Subsidiaries (including any
Person that becomes a Subsidiary as a result of such transaction), provided that
such transactions are not otherwise prohibited by this Agreement;

 

(c)       to the extent permitted under Section 10.5(d) hereof, up to $1,500,000
each year to the AEA Group pursuant to the first paragraph of Section 2 of the
Management Agreement (as in effect on the date hereof), (B) any transactional
fees payable to the AEA Group pursuant to such Management Agreement and (C)
reasonable expenses payable to the AEA Group pursuant to such Management
Agreement;

 

 

(d)

Restricted Payments permitted under Section 10.5 hereof; and

 

 

1012

(e)       loans and investments permitted under clauses (g) and (j) of the
definition of Permitted Investments;

 

(f)        the issuance of Qualified Equity Interests to Affiliates to the
extent such issuance is permitted under clause (g) of the definition of
Permitted Dispositions;

 

(g)       any merger or consolidation of Parent or its Subsidiaries with
Affiliates of Parent or such Subsidiaries (i) to the extent permitted under
Section 10.1(a), solely for the purpose of reorganizing to facilitate an initial
public offering of securities of Parent or any direct or indirect parent entity
of Parent or (ii) to the extent permitted under Section 9.1, solely to
reincorporate the Parent or such Subsidiary in a new jurisdiction;

 

(h)       transactions pursuant to or contemplated by the Partnership Agreement
as in effect on the date hereof.

 

10.7    Change in Business. Each Borrower and Guarantor shall not engage in any
business other than the business of such Borrower or Guarantor on the date
hereof and any business reasonably related, ancillary or complimentary to the
business in which such Borrower or Guarantor is engaged on the date hereof.

 

10.8    Limitation of Restrictions Affecting Subsidiaries. Each Borrower and
Guarantor shall not, directly, or indirectly, create or otherwise cause or
suffer to exist any encumbrance or restriction which prohibits or limits the
ability of any Subsidiary of such Borrower or Guarantor to (a) pay dividends or
make other distributions or pay any Indebtedness owed to such Borrower or
Guarantor or any Subsidiary of such Borrower or Guarantor; (b) make loans or
advances to such Borrower or Guarantor or any Subsidiary of such Borrower or
Guarantor, (c) transfer any of its properties or assets to such Borrower or
Guarantor or any Subsidiary of such Borrower or Guarantor; except for
encumbrances and restrictions arising under (i) applicable law, rule, regulation
or order, including of any regulatory body, (ii) this Agreement, the other
Financing Agreements, the ABL Credit Agreement and the Senior Note Documents or
an agreement governing any other Indebtedness permitted hereby provided that,
with respect to any agreement governing such other Indebtedness, the provisions
relating to such encumbrance or restriction are no less favorable to the Parent
and its Subsidiaries in any material respect, taken as a whole, than the
provisions contained in this Agreement as in effect on the date hereof, (iii)
customary provisions restricting subletting or assignment of (x) any lease
governing a leasehold interest of such Borrower or Guarantor or any Subsidiary
of such Borrower or Guarantor or (y) any contracts and licenses (including,
without limitation, those relating to intellectual property), in each case
entered into in the ordinary course of business, (iv) customary restrictions on
real property interests found in easement agreements of such Borrower or
Guarantor or any Subsidiary of such Borrower or Guarantor, (v) any agreement
relating to permitted Indebtedness incurred by, or Equity Interests of, a
Subsidiary of such Borrower or Guarantor prior to the date on which such
Subsidiary was acquired by such Borrower or such Guarantor and outstanding on
such acquisition date, (vi) restrictions on the transfer of assets subject to
any Lien permitted hereunder imposed by the holder of such Lien, (vii)
restrictions imposed by any agreement to sell assets or Equity Interests
permitted hereunder to any Person pending the closing of such sale, (viii)
purchase money Indebtedness or Capitalized Lease Obligations that impose
restrictions on the property purchased or leased, (ix) provisions in joint
venture agreements, partnership agreements, limited liability company
organizational governance documents, asset sale and stock sale agreements,
sale-leaseback

 

1022

agreements, stock sale agreements and other similar agreements that restrict the
transfer of ownership interests in such entity, (x) restrictions on cash or
other deposits or net worth imposed by customers or suppliers under contracts
entered into in the ordinary course of business, (xi) encumbrances pursuant to
the subordination provisions of any Indebtedness permitted to be incurred
hereunder, (xii) encumbrances on the assets or capital stock of Foreign
Subsidiaries pursuant to Indebtedness of Foreign Subsidiaries permitted to be
incurred hereunder that are not expected to make the Borrowers unable to make
principal or interest payments hereunder, as determined in good faith by the
Borrower Agent, and (xiii) agreements existing on the date hereof and
amendments, restatements, modifications, renewals, supplements, refundings,
replacements, refinancings, extensions or continuations of contracts,
instruments or contractual obligations in existence on the date hereof or those
referred to above; provided, that, any such encumbrances or restrictions
contained in such extension or continuation are no less favorable to the Parent
and Subsidiaries than those encumbrances and restrictions under or pursuant to
the contracts, instruments or contractual obligations so extended or continued.

 

10.9    Certain Payments of Indebtedness, Etc. Borrowers and Guarantors shall
not, and shall not permit any Subsidiary to, make or agree to make any payment,
prepayment, redemption, retirement, defeasance, purchase or sinking fund payment
or other acquisition for value of any of its Indebtedness other than the
Indebtedness under the Financing Agreements and Indebtedness under the ABL
Credit Agreement (but in such case subject to the Intercreditor Agreement)
including, without limitation, by way of depositing money or securities with the
trustee therefor before the date required for the purpose of paying any portion
of such Indebtedness when due), or otherwise set aside or deposit or invest any
sums for such purpose, except that:

 

(a)       Parent may make (i) regularly scheduled payments of principal and
interest in respect of Indebtedness evidenced by the Senior Fixed Rate Notes and
the Senior Floating Rate Notes and (ii) to the extent permitted by Section 10.5,
prepayments of, or redemptions of, principal in respect thereof;

 

(b)       Borrowers and Guarantors may make payments in respect of the
Indebtedness owing to Christopher Bardasian, Kevin Sloan and Larry Sloan
constituting the earn-out consideration payable to them under the Procell Unit
Purchase Agreement to the extent due and payable in accordance with the terms of
such agreement as in effect on the date hereof not to exceed $6,900,000 in the
aggregate; provided, that, as to any such payments and after giving effect
thereto, each of the following conditions shall be satisfied: (i) all such
payments shall be made prior to July 1, 2008, except as Agent may otherwise
hereafter agree, (ii) using the most recent calculation of the Borrowing Base
prior to the date of any such payment, on a pro forma basis, the sum of (x) the
aggregate amount of the Excess Availability of Borrowers and (y) cash on hand of
Borrowers and Guarantors shall be not less than $10,000,000 and (iii) no Default
or Event of Default shall exist or have occurred and be continuing;

 

(c)       Borrowers and Guarantors may make payments in respect of Indebtedness
owing by them in exchange for substantially contemporaneous issuance of
Qualified Equity Interests of Parent permitted hereunder or with Net Cash
Proceeds from the substantially contemporaneous sale of Qualified Equity
Interests of Parent;

 

1032

(d)       Borrowers and Guarantors may make payments in respect of Indebtedness
permitted under Sections 10.3(b), (c), (j) and (l) in each case with proceeds of
Refinancing Indebtedness as permitted under Section 10.3(m); and

 

(e)       as to payments in respect of any other Indebtedness permitted under
Section 10.3 hereof not subject to the provisions above in this Section 10.9,
Borrower and Guarantors may make payments of regularly scheduled principal and
interest or other mandatory payments as and when due in respect of such
Indebtedness in accordance with the terms thereof (and in the case of
Subordinated Debt, subject to the terms of subordination set forth therein or
applicable thereto).

 

10.10    Modifications of Indebtedness, Organizational Documents and Certain
Other Agreements. Borrowers and Guarantors shall not, and shall not permit any
Subsidiary to:

 

(a)       amend, modify or otherwise change its certificate of incorporation,
articles of association, certificate of formation, limited liability agreement,
limited partnership agreement or other organizational documents, as applicable,
including, without limitation, entering into any new agreement with respect to
any of its Equity Interests, except for amendments, modifications or other
changes that do not affect the rights and privileges of any Borrower or
Guarantor, or its Subsidiaries and do not affect the ability of a Borrower,
Guarantor or such Subsidiary to amend, modify, renew or supplement the terms of
this Agreement or any of the other Financing Agreements, or otherwise affect the
interests of Agent or Lenders and so long as at the time of any such amendment,
modification or change, no Default or Event of Default shall exist or have
occurred and be continuing;

 

(b)       amend, modify or otherwise change (or permit the amendment,
modification or other change in any manner of) any of the provisions of the
Senior Note Documents, the ABL Credit Agreement (except to the extent permitted
under the Intercreditor Agreement) or any agreements, documents or instruments
in respect of any Subordinated Debt or any agreements related to the
Indebtedness permitted under Sections 10.3(k), (l), and (m) hereof, except,
that, Borrowers and Guarantors, and any Subsidiary, may, after prior written
notice to Agent, amend, modify, alter or change the terms thereof to forgive, or
cancel any portion of such Indebtedness (other than pursuant to payments
thereof), or to reduce the interest rate or any fees in connection therewith, or
to make the terms thereof less restrictive or burdensome to Borrowers,
Guarantors or such Subsidiary.

 

 

 

10.11

Inactive Subsidiaries; Parent Holding Company.

 

(a)       Except as otherwise provided in Section 10.11(b) below, Borrowers and
Guarantors will not permit any Inactive Subsidiary to (i) engage in any business
or conduct any operations, (ii) own assets with a book value of more than
$100,000 in the aggregate and (iii) incur any obligations or liabilities in
respect of any Indebtedness or otherwise.

 

(b)       In the event that a Borrower or Guarantor intends to have any then
Inactive Subsidiary commence any business or operations or own assets with a
book value of more than $100,000 in the aggregate or incur any obligations or
liabilities in respect of any Indebtedness or otherwise, (i) Borrowers and
Guarantors shall give Agent not less than ten (10) Business Days’ prior written
notice thereof with reasonable detail and specificity and

 

1042

such other information with respect thereto as Agent may request and (ii) at any
time thereafter, promptly upon the request of Agent, Borrowers and Guarantors
shall cause such Inactive Subsidiary to execute and deliver to Agent, in form
and substance satisfactory to Agent, a joinder agreement to the Financing
Agreements in order to, among other things, make such Subsidiary a party to this
Agreement as a “Guarantor” and a party to any guarantee as a “Guarantor” or
pledge agreement as a “Pledgor”, and without limitation, supplements and
amendments hereto and to any of the other Financing Agreements, authorization to
file UCC financing statements, Collateral Access Agreements (to the extent
required under Section 9.2 hereof), other agreements, documents or instruments
contemplated under Section 5.3 hereof and other consents, waivers,
acknowledgments and other agreements from third persons which Agent may deem
reasonably necessary or desirable in order to permit, protect and perfect its
security interests in and liens upon the assets of such Subsidiary, corporate
resolutions and other organization and authorizing documents of such Person, and
favorable opinions of counsel to such person; provided, that such Inactive
Subsidiary is not a Foreign Subsidiary and (iii) upon the satisfaction of each
of the conditions set forth in this Section 10.11(b), such Inactive Subsidiary
shall cease to be deemed an Inactive Subsidiary for purposes of this Agreement.

 

(c)       Except for any Guaranty Obligations in respect of Indebtedness of CPG
I evidenced by the Senior Fixed Rate Notes and the Senior Floating Rate Notes
permitted hereunder and as otherwise provided in Sections 10.3(d), 10.3(f),
10.3(g), 10.3(h), 10.3(i), 10.3(j) and 10.3(k), Parent shall not incur any
Indebtedness nor grant any security interests, liens or other encumbrances upon
any of its properties or assets nor engage in any operations, business or
activity other than holding one hundred (100%) percent of the Equity Interests
of CPG I and each of any administrative, management or other activities
incidental to such holdings, pledging its interests therein to Agent and
executing and delivering the Financing Agreements to which it is a party and
fulfilling its obligations thereunder.

 

10.12  Sale and Leasebacks. Borrowers and Guarantors shall not, and shall not
permit any Subsidiary to, enter into any Sale and Leaseback Transaction, unless
the sale of such property is permitted under Section 10.1 hereof and the lease
back of the property gives rise to Indebtedness permitted under Section 10.3
hereof.

 

10.13  Designation of Designated Senior Debt. Borrowers and Guarantors shall
not, and shall not permit any Subsidiary to, designate any Indebtedness, other
than the Obligations and the obligations under the ABL Credit Agreement (if
applicable), as “Designated Senior Debt”, or any similar term under and as
defined in the agreements relating to any Indebtedness of Borrowers or
Guarantors, including Subordinated Debt or Indebtedness of any Borrower or
Guarantor evidenced by any of the Senior Note Documents or Senior Floating Rate
Note Documents, which contains such designation. Borrowers and Guarantors shall,
and shall cause any Subsidiary to, designate the Obligations as “Designated
Senior Debt” or any similar term under and as defined in the agreements relating
to any Indebtedness (including any Subordinated Debt) of any Borrower or
Guarantor which contains such designation.

 

10.14  Foreign Assets Control Regulations, Etc. None of the requesting or
borrowing of the Loans or the use of the proceeds thereof will violate the
Trading With the Enemy Act (50 U.S.C. §1 et seq., as amended) (the “Trading With
the Enemy Act”) or any of the foreign assets control regulations of the United
States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as

 

1052

amended) (the “Foreign Assets Control Regulations”) or any enabling legislation
or executive order relating thereto (including, but not limited to (a) Executive
order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079 (2001)) (the “Executive Order”) and (b) the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (Public Law 107-56). None of Borrowers or any of their
Subsidiaries or other Affiliates is or will become a Sanctioned Entity or
Sanctioned Person” as described in the Executive Order, the Trading with the
Enemy Act or the Foreign Assets Control Regulations or engages or will engage in
any dealings or transactions, or be otherwise associated, with any such
Sanctioned Entity or Sanctioned Person.

 

SECTION 11.

 

FINANCIAL COVENANT

 

11.1    Maximum Senior Secured Leverage Ratio. Commencing on the day immediately
following the Closing Date, the Senior Secured Leverage Ratio as of the end of
each fiscal quarter of the Parent shall be less than or equal to 2.5 to 1.0.

 

SECTION 12.

 

EVENTS OF DEFAULT AND REMEDIES

 

12.1    Events of Default. The occurrence or existence of any one or more of the
following events are referred to herein individually as an “Event of Default”,
and collectively as “Events of Default”:

 

(a)       (i) any Borrower fails to make any principal payment hereunder when
due or fails to pay interest, fees or any of the other Obligations within three
(3) Business Days after the due date thereof, or (ii) any Borrower or Guarantor
fails to perform any of the covenants contained in Sections 2.2, 2.3, 3, 5, 7,
9.5, 9.6, 10 and 11, or (iii) any Borrower or Guarantor fails to perform any of
the terms, covenants, conditions or provisions contained in this Agreement or
any of the other Financing Agreements other than those described in Sections
12.1(a)(i) and 12.1(a)(ii) above and such failure shall continue for thirty (30)
days; provided, that, such thirty (30) day period shall not apply in the case of
any failure to observe any such covenant which is not capable of being cured at
all or within such thirty (30) day period or which has been the subject of a
prior failure within a six (6) month period;

 

(b)       any representation, warranty or statement of fact made by any Borrower
or Guarantor to Agent in this Agreement, the other Financing Agreements or any
other written agreement, schedule, confirmatory assignment or otherwise that are
qualified as to materiality or Material Adverse Effect shall when made or deemed
made be incorrect, false or misleading and any other such representation,
warranty or statement of fact made by any Borrower or Guarantor to Agent shall
when made or deemed made be incorrect, false or misleading in any material
respect;

 

1062

(c)       any Guarantor revokes or terminates or purports to revoke or terminate
any guarantee of such party in favor of Agent or any Lender, except as a result
of a transaction permitted under Section 10.1 hereof;

 

(d)       any judgment for the payment of money is rendered against any Borrower
or Guarantor in excess of $7,000,000 in the aggregate (to the extent not covered
by independent third party insurance where the insurer has not declined or
disputed coverage) and shall remain undischarged or unvacated for a period in
excess of thirty (30) days or execution shall at any time not be effectively
stayed, or any judgment other than for the payment of money, or injunction,
attachment, garnishment or execution is rendered against any Borrower or
Guarantor or any of the Collateral having a value in excess of $1,000,000;

 

(e)       any Borrower or Guarantor makes an assignment for the benefit of
creditors or makes or sends notice of a bulk transfer;

 

(f)        a case or proceeding under the bankruptcy laws of the United States
of America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at law or in equity) is
filed against any Borrower or Guarantor other than the Inactive Subsidiaries or
all or any part of its properties and such petition or application is not
dismissed within sixty (60) days after the date of its filing or any Borrower or
Guarantor other than the Inactive Subsidiaries shall file any answer admitting
or not contesting such petition or application or indicates its consent to,
acquiescence in or approval of, any such action or proceeding or the relief
requested is granted sooner;

 

(g)       a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at a law or equity) is
filed by any Borrower or Guarantor (other than the Inactive Subsidiaries) or for
all or any part of its property;

 

(h)       any default in respect of any Indebtedness of any Borrower or
Guarantor in any case in a principal amount (or, in the case of a revolving
credit facility, a commitment amount) in excess of $7,000,000 (including
Subordinated Debt or any Indebtedness evidenced by or arising under any of the
Senior Note Documents or the ABL Credit Agreement), which default continues for
more than the applicable cure period, if any, with respect thereto, including
any default by any Borrower or Guarantor under any Material Contract, which
default continues for more than the applicable cure period, if any, with respect
thereto and/or is not waived in writing by the other parties thereto or the
subordination provisions contained in any agreement related to any Subordinated
Debt shall cease to be in full force and effect or to give Agent or Lenders the
rights, powers and privileges purported to be created thereby,

 

(i)        any material provision hereof or of any of the other Financing
Agreements shall for any reason cease to be valid, binding and enforceable with
respect to any party hereto or thereto (other than Agent) in accordance with its
terms, or any such party shall challenge the enforceability hereof or thereof,
or shall assert in writing, or take any action or fail to take any action based
on the assertion that any provision hereof or of any of the other

 

1072

Financing Agreements has ceased to be or is otherwise not valid, binding or
enforceable in accordance with its terms, or any security interest provided for
herein or in any of the other Financing Agreements shall cease to be a valid and
perfected first priority security interest in any of the Collateral purported to
be subject thereto (except as otherwise permitted herein or therein);

 

(j)        an ERISA Event shall occur which results in or could reasonably be
expected to result in liability of any Borrower in an aggregate amount in excess
of $2,500,000;

 

(k)       any Borrower or Guarantor shall be prohibited or otherwise restrained
from conducting the business theretofore conducted by it in any manner that has
or could reasonably be expected to result in a Material Adverse Effect by virtue
of any determination, ruling, decision, decree or order of any court or
Governmental Authority of competent jurisdiction;

 

 

(l)

any Change of Control; or

 

(m)      any uninsured damage to or loss, theft or destruction of any assets of
the Borrowers or Guarantors or any of their Subsidiaries shall occur that is in
excess of $2,500,000.

 

 

 

12.2

Remedies.

 

(a)       At any time an Event of Default exists or has occurred and is
continuing, Agent and Lenders shall have all rights and remedies provided in
this Agreement, the other Financing Agreements, the UCC and other applicable
law, all of which rights and remedies may be exercised without notice to or
consent by any Borrower or Guarantor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Agent and Lenders hereunder, under any of the
other Financing Agreements, the UCC or other applicable law, are cumulative, not
exclusive and enforceable, in Agent’s discretion, alternatively, successively,
or concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by any Borrower or Guarantor of this
Agreement or any of the other Financing Agreements. Subject to Section 14
hereof, Agent may, and at the direction of the Required Lenders shall, at any
time or times an Event of Default exists or has occurred and is continuing,
proceed directly against any Borrower or Guarantor to collect the Obligations
without prior recourse to the Collateral.

 

(b)       Without limiting the generality of the foregoing, at any time an Event
of Default exists or has occurred and is continuing, Agent may, at its option
and shall upon the direction of the Required Lenders, upon notice to Borrower
Agent, accelerate the payment of all Obligations and demand immediate payment
thereof to Agent for itself and the benefit of Lenders (provided, that, upon the
occurrence of any Event of Default described in Sections 12.1(f) and 12.1(g),
all Obligations shall automatically become immediately due and payable)
(provided, that, upon the occurrence of any Event of Default described in
Sections 12.1(f) and 12.1(g), any obligation of the Agent or a Lender hereunder
shall automatically terminate).

 

1082

(c)       Without limiting the foregoing, at any time an Event of Default exists
or has occurred and is continuing and only at such time or times, Agent may, in
its discretion (i) with or without judicial process or the aid or assistance of
others, enter upon any premises on or in which any of the Collateral may be
located and take possession of the Collateral or complete processing,
manufacturing and repair of all or any portion of the Collateral, (ii) require
any Borrower or Guarantor, at Borrowers’ expense, to assemble and make available
to Agent any part or all of the Collateral at any place and time designated by
Agent, (iii) collect, foreclose, receive, appropriate, setoff and realize upon
any and all Collateral, (iv) remove any or all of the Collateral from any
premises on or in which the same may be located for the purpose of effecting the
sale, foreclosure or other disposition thereof or for any other purpose, (v)
sell, lease, transfer, assign, deliver or otherwise dispose of any and all
Collateral (including entering into contracts with respect thereto, public or
private sales at any exchange, broker’s board, at any office of Agent or
elsewhere) at such prices or terms as Agent may deem reasonable, for cash, upon
credit or for future delivery, with the Agent having the right to purchase the
whole or any part of the Collateral at any such public sale, all of the
foregoing being free from any right or equity of redemption of any Borrower or
Guarantor, which right or equity of redemption is hereby expressly waived and
released by Borrowers and Guarantors and/or (vi) terminate this Agreement. If
any of the Collateral is sold or leased by Agent upon credit terms or for future
delivery, the Obligations shall not be reduced as a result thereof until payment
therefor is finally collected by Agent. If notice of disposition of Collateral
is required by law, ten (10) days prior notice by Agent to Borrower Agent
designating the time and place of any public sale or the time after which any
private sale or other intended disposition of Collateral is to be made, shall be
deemed to be reasonable notice thereof and, subject to applicable law, Borrowers
and Guarantors waive any other notice. In the event Agent institutes an action
to recover any Collateral or seeks recovery of any Collateral by way of
prejudgment remedy, each Borrower and Guarantor waives the posting of any bond
which might otherwise be required.

 

(d)       At any time or times that an Event of Default exists or has occurred
and is continuing, Agent may, in its discretion, enforce the rights of any
Borrower or Guarantor against any account debtor, secondary obligor or other
obligor in respect of any of the Accounts or other Receivables. Without limiting
the generality of the foregoing, Agent may, in its discretion, at such time or
times (i) notify any or all account debtors, secondary obligors or other
obligors in respect thereof that the Receivables have been assigned to Agent and
that Agent has a security interest therein and Agent may direct any or all
account debtors, secondary obligors and other obligors to make payment of
Receivables directly to Agent, (ii) extend the time of payment of, compromise,
settle or adjust for cash, credit, return of merchandise or otherwise, and upon
any terms or conditions, any and all Receivables or other obligations included
in the Collateral and thereby discharge or release the account debtor or any
secondary obligors or other obligors in respect thereof without affecting any of
the Obligations, (iii) demand, collect or enforce payment of any Receivables or
such other obligations, but without any duty to do so, and Agent and Lenders
shall not be liable for any failure to collect or enforce the payment thereof
nor for the negligence of its agents or attorneys with respect thereto and
(iv) take whatever other action Agent may deem necessary or desirable for the
protection of its interests and the interests of Lenders. At any time that an
Event of Default exists or has occurred and is continuing, at Agent’s request,
all invoices and statements sent to any account debtor shall state that the
Accounts and such other obligations have been assigned to Agent and are payable
directly and only to Agent

 

1092

and Borrowers and Guarantors shall deliver to Agent such originals of documents
evidencing the sale and delivery of goods or the performance of services giving
rise to any Accounts as Agent may require. In the event any account debtor
returns Inventory when an Event of Default exists or has occurred and is
continuing, Borrowers shall, upon Agent’s request, hold the returned Inventory
in trust for Agent, segregate all returned Inventory from all of its other
property, dispose of the returned Inventory solely according to Agent’s
instructions, and not issue any credits, discounts or allowances with respect
thereto without Agent’s prior written consent.

 

(e)       To the extent that applicable law imposes duties on Agent or any
Lender to exercise remedies in a commercially reasonable manner (which duties
cannot be waived under such law), each Borrower and Guarantor acknowledges and
agrees that it is not commercially unreasonable for Agent or any Lender (i) to
fail to incur expenses reasonably deemed significant by Agent or any Lender to
prepare Collateral for disposition or otherwise to complete raw material or work
in process into finished goods or other finished products for disposition, (ii)
to fail to obtain third party consents for access to Collateral to be disposed
of, or to obtain or, if not required by other law, to fail to obtain consents of
any Governmental Authority or other third party for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against account debtors, secondary obligors or
other persons obligated on Collateral or to remove liens or encumbrances on or
any adverse claims against Collateral, (iv) to exercise collection remedies
against account debtors and other persons obligated on Collateral directly or
through the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to
contact other persons, whether or not in the same business as any Borrower or
Guarantor, for expressions of interest in acquiring all or any portion of the
Collateral, (vii) to hire one or more professional auctioneers to assist in the
disposition of Collateral, whether or not the collateral is of a specialized
nature, (viii) to dispose of Collateral by utilizing Internet sites that provide
for the auction of assets of the types included in the Collateral or that have
the reasonable capability of doing so, or that match buyers and sellers of
assets, (ix) to dispose of assets in wholesale rather than retail markets, (x)
to disclaim disposition warranties, (xi) to purchase insurance or credit
enhancements to insure Agent or Lenders against risks of loss, collection or
disposition of Collateral or to provide to Agent or Lenders a guaranteed return
from the collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Agent in the collection
or disposition of any of the Collateral. Each Borrower and Guarantor
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by Agent or any Lender would not be
commercially unreasonable in the exercise by Agent or any Lender of remedies
against the Collateral and that other actions or omissions by Agent or any
Lender shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section. Without limitation of the foregoing, nothing
contained in this Section shall be construed to grant any rights to any Borrower
or Guarantor or to impose any duties on Agent or Lenders that would not have
been granted or imposed by this Agreement or by applicable law in the absence of
this Section.

 

1102

(f)        For the purpose of enabling Agent to exercise the rights and remedies
hereunder, each Borrower and Guarantor hereby grants to Agent, to the extent
assignable, an irrevocable, non-exclusive license (exercisable at any time an
Event of Default shall exist or have occurred and for so long as the same is
continuing and only at such time or times) without payment of royalty or other
compensation to any Borrower or Guarantor, to use, assign, license or sublicense
any of the trademarks, service-marks, trade names, business names, trade styles,
designs, logos and other source of business identifiers and other Intellectual
Property and general intangibles now owned or hereafter acquired by any Borrower
or Guarantor, wherever the same maybe located, including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout thereof.

 

(g)       At any time an Event of Default exists or has occurred and is
continuing, Agent may apply the cash proceeds of Collateral actually received by
Agent from any sale, lease, foreclosure or other disposition of the Collateral
to payment of the Obligations, in whole or in part and in accordance with the
terms hereof, whether or not then due or may hold such proceeds as cash
collateral for the Obligations. Borrowers and Guarantors shall remain liable to
Agent and Lenders for the payment of any deficiency with interest at the highest
rate provided for herein and all costs and expenses of collection or
enforcement, including attorneys’ fees and expenses.

 

(h)       Without limiting the foregoing, upon the occurrence of a Default or an
Event of Default, Agent and Lenders may, at Agent’s option, and upon the
occurrence of an Event of Default at the direction of the Required Lenders,
Agent and Lenders shall, without notice, (i) cease making Loans or reduce the
lending formulas or amounts of Loans available to Borrowers and/or (ii) in the
case of an Event of Default, terminate any provision of this Agreement providing
for any future Loans to be made by Agent and Lenders.

 

SECTION 13.

 

JURY TRIAL WAIVER; OTHER WAIVERS CONSENTS; GOVERNING LAW

 

13.1    Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.

 

(a)       The validity, interpretation and enforcement of this Agreement and the
other Financing Agreements (except as otherwise provided therein) and any
dispute arising out of the relationship between the parties hereto, whether in
contract, tort, equity or otherwise, shall be governed by the internal laws of
the State of New York but excluding any principles of conflicts of law or other
rule of law that would cause the application of the law of any jurisdiction
other than the laws of the State of New York.

 

(b)       Borrowers, Guarantors, Agent and Lenders irrevocably consent and
submit to the non-exclusive jurisdiction of the of the Supreme Court of the
State of New York, New York County and the United States District Court for the
Southern District of New York, whichever Agent may elect, and waive any
objection based on venue or forum non conveniens with respect to any action
instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental to

 

1112

the dealings of the parties hereto in respect of this Agreement or any of the
other Financing Agreements or the transactions related hereto or thereto, in
each case whether now existing or hereafter arising, and whether in contract,
tort, equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above (except that Agent and
Lenders shall have the right to bring any action or proceeding against any
Borrower or Guarantor or its or their property in the courts of any other
jurisdiction which Agent deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against any Borrower or
Guarantor or its or their property).

 

(c)       Each Borrower and Guarantor hereby waives personal service of any and
all process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth
herein and service so made shall be deemed to be completed five (5) days after
the same shall have been so deposited in the U.S. mails, or, at Agent’s option,
by service upon any Borrower or Guarantor (or Borrower Agent on behalf of such
Borrower or Guarantor) in any other manner provided under the rules of any such
courts. Within thirty (30) days after such service, such Borrower or Guarantor
shall appear in answer to such process, failing which such Borrower or Guarantor
shall be deemed in default and judgment may be entered by Agent against such
Borrower or Guarantor for the amount of the claim and other relief requested.

 

(d)       BORROWERS, GUARANTORS, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER
THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWERS,
GUARANTORS, AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT ANY BORROWER, ANY GUARANTOR, AGENT OR ANY LENDER MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.

 

(e)       Agent and Secured Parties shall not have any liability to any Borrower
or Guarantor (whether in tort, contract, equity or otherwise) for losses
suffered by such Borrower or Guarantor in connection with, arising out of, or in
any way related to the transactions or relationships contemplated by this
Agreement, or any act, omission or event occurring in connection herewith,
unless it is determined by a final and non-appealable judgment or court order
binding on Agent and such Lender, that the losses were the result of acts or
omissions constituting gross negligence or willful misconduct. Each Borrower and
Guarantor: (i) certifies that neither Agent, any Lender, nor any representative,
agent or attorney acting for or on behalf of Agent or any Lender has
represented, expressly or otherwise, that Agent and Lenders would not, in the
event of litigation, seek to enforce any of the waivers provided for in this
Agreement or any of the other Financing Agreements and

 

1122

(ii) acknowledges that in entering into this Agreement and the other Financing
Agreements, Agent and Lenders are relying upon, among other things, the waivers
and certifications set forth in this Section 11.1 and elsewhere herein and
therein.

 

13.2    Waiver of Notices. Each Borrower and Guarantor hereby expressly waives
demand, presentment, protest and notice of protest and notice of dishonor with
respect to any and all instruments and chattel paper, included in or evidencing
any of the Obligations or the Collateral, and any and all other demands and
notices of any kind or nature whatsoever with respect to the Obligations, the
Collateral and this Agreement, except such as are expressly provided for herein
or required by applicable law and cannot be waived thereunder. No notice to or
demand on any Borrower or Guarantor which Agent or any Lender may elect to give
shall entitle such Borrower or Guarantor to any other or further notice or
demand in the same, similar or other circumstances.

 

 

 

13.3

Amendments and Waivers.

 

(a)       Neither this Agreement nor any other Financing Agreement nor any terms
hereof or thereof may be amended, waived, discharged or terminated unless such
amendment, waiver, discharge or termination is in writing signed by Agent and
the Required Lenders or at Agent’s option, by Agent with the authorization or
consent of the Required Lenders, and as to amendments to any of the Financing
Agreements (other than with respect to any provision of Section 14 hereof), by
any Borrower and such amendment, waiver, discharger or termination shall be
effective and binding as to all Lenders only in the specific instance and for
the specific purpose for which given; except, that, no such amendment, waiver,
discharge or termination shall:

 

(i)        reduce the interest rate or any fees or extend the time of payment of
principal, interest or any fees or reduce the principal amount of any Loan
without the consent of each Lender directly affected thereby,

 

(ii)      increase the Pro Rata Share of any Lender over the amount thereof then
in effect or provided hereunder, in each case without the consent of the Lender
directly affected thereby,

 

(iii)      release all or substantially all of the Collateral (except as
expressly required hereunder or under any of the other Financing Agreements or
applicable law and except as permitted under Section 14.11(b) hereof), or
release of any Borrower or any Guarantor, or agree to the subordination of any
of the Obligations, or alter the order of application set forth in Section
6.7(b), in each case without the consent of Agent and all of Lenders,

 

(iv)      consent to the assignment or transfer by any Borrower or Guarantor of
any of their rights and obligations under this Agreement, without the consent of
Agent and all of Lenders,

 

(v)       amend, modify or waive any terms of this Section 13.3, without the
consent of Agent and all of Lenders;

 

1132

(vi)      reduce any percentage specified in the definition of Required Lenders
without the consent of Agent and all of Lenders;

 

(vii)    amend or modify the definition of “Interest Period” without the written
consent of Agent and all of Lenders;

 

(viii)    amend or modify the definition of “Obligations” to delete or exclude
any obligation or liability described therein without the consent of Agent and
all of Lenders; or

 

(ix)      amend, modify or waive any provision of the Financing Agreements
requiring consent, approval or request of all Lenders without the written
consent of Agent and all of Lenders.

 

(b)       Agent and Lenders shall not, by any act, delay, omission or otherwise
be deemed to have expressly or impliedly waived any of its or their rights,
powers and/or remedies unless such waiver shall be in writing and signed as
provided herein. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Agent or any Lender of any right,
power and/or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right, power and/or remedy which Agent or any Lender would
otherwise have on any future occasion, whether similar in kind or otherwise.

 

(c)       Notwithstanding anything to the contrary contained in Section 13.3(a)
above, in connection with any amendment, waiver, discharge or termination, in
the event that any Lender whose consent thereto is required shall fail to
consent or fail to consent in a timely manner (such Lender being referred to
herein as a “Non-Consenting Lender”), but the consent of any other Lenders to
such amendment, waiver, discharge or termination that is required are obtained,
if any, then Wachovia or Borrower Agent shall have the right, but not the
obligation, at any time within one hundred twenty (120) days thereafter, and
upon the exercise by Wachovia or Borrower Agent of such right, such
Non-Consenting Lender shall have the obligation, to sell, assign and transfer to
Wachovia or such Eligible Transferee as Wachovia may specify, the Pro Rata Share
of such Non-Consenting Lender and all rights and interests of such
Non-Consenting Lender pursuant thereto. Wachovia shall provide the
Non-Consenting Lender with prior written notice of its intent to exercise its
right under this Section (or if Wachovia does not exercise such right, Borrower
Agent shall provide Agent and the Non-Consenting Lender with prior written
notice of its intent to exercise its right under this Section), which notice
shall specify the date on which such purchase and sale shall occur, which date
shall be within thirty (30) days after such notice. Such purchase and sale shall
be pursuant to the terms of an Assignment and Acceptance (whether or not
executed by the Non-Consenting Lender), except that on the date of such purchase
and sale, Wachovia, or such Eligible Transferee specified by Wachovia shall pay
to the Non-Consenting Lender (except as Wachovia and such Non-Consenting Lender
may otherwise agree) the amount equal to: (i) the principal balance of the Loans
held by the Non-Consenting Lender outstanding as of the close of business on the
business day immediately preceding the effective date of such purchase and sale,
plus (ii) amounts accrued and unpaid in respect of interest and fees payable to
the Non-Consenting Lender to the effective date of the purchase (including
amounts payable under Section 3.10 as if the Non-Consenting Lender’s Eurodollar
Rate Loans were being prepaid on the purchase date, but in no event

 

1142

shall the Non-Consenting Lender be deemed entitled to any early termination
fee). Such purchase and sale shall be effective on the date of the payment of
such amount to the Non-Consenting Lender and the Pro Rata Share of the
Non-Consenting Lender shall terminate on such date.

 

(d)       The consent of Agent shall be required for any amendment, waiver or
consent affecting the rights or duties of Agent hereunder or under any of the
other Financing Agreements, in addition to the consent of the Lenders otherwise
required by this Section. Notwithstanding anything to the contrary contained in
Section 13.3(a) above, (i) in the event that Agent shall agree that any items
otherwise required to be delivered to Agent as a condition of the Term Loan
hereunder may be delivered after the date hereof, Agent may, in its discretion,
agree to extend the date for delivery of such items or take such other action as
Agent may deem appropriate as a result of the failure to receive such items as
Agent may determine or may waive any Event of Default as a result of the failure
to receive such items, in each case without the consent of any Lender and (ii)
Agent may consent to any change in the type of organization, jurisdiction of
organization or other legal structure of any Borrower, Guarantor or any of their
Subsidiaries and amend the terms hereof or of any of the other Financing
Agreements as may be necessary or desirable to reflect any such change, in each
case without the approval of any Lender.

 

 

(e)

[Reserved.]

 

(f)        Notwithstanding anything to the contrary herein, (i) except as set
forth in clause (h) below, each Lender is entitled to vote as such Lender sees
fit on any bankruptcy reorganization plan that affects the Loans, and each
Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy
Code of the United States supersedes the unanimous consent provisions set forth
herein and (ii) Agent and the Required Lenders shall determine whether or not to
allow a Borrower or Guarantor to use cash collateral in the context of a
bankruptcy or insolvency proceeding and such determination shall be binding on
all of the Lenders.

 

(g)       Notwithstanding the foregoing, any provision of this Agreement may be
amended by an agreement in writing entered into by Borrowers and Agent with the
express consent of the Required Lenders if at the time such amendment becomes
effective, each Lender not consenting thereto receives payment in full of the
principal of and interest accrued on each Loan made by it and all other amounts
owing to it or accrued for its account under this Agreement.

 

(h)       Notwithstanding anything in this Agreement or any other Financing
Agreements to the contrary, the Sponsor Affiliated Lender shall not be permitted
to exercise its right to vote (x) as a Lender hereunder or under any of the
other Financing Agreements for any purpose whatsoever other than in connection
with any amendment, waiver or other modification specified in Sections
13.3(a)(i) – (ix) or in Section 13.3(i) or (y) under section 1126(e) of Title 11
of the United States Code (as now and hereafter in effect, or any successor
statute) or any other bankruptcy law in the event that any proceeding thereunder
shall be instituted by or against any Borrower or Guarantor; provided, however,
that to the extent the Sponsor Affiliated Lender is not entitled to vote on a
specific issue, the voting rights associated with such issue shall be allocated
pro rata to the Lenders (other than the

 

1152

Sponsor Affiliated Lenders) that hold the remaining portion of the principal
amount of the Loans.

 

(i)        Notwithstanding anything in this Agreement or any other Financing
Agreements to the contrary, any amendment, waiver, consent, modification or
other action affecting the rights, benefits or obligations of the Sponsor
Affiliated Lender (and not the rights, benefits or obligations of all other
Lenders holding a portion of the outstanding principal amount of the Loans in
the same manner) shall require the consent of the Sponsor Affiliated Lender.

 

13.4    Waiver of Counterclaims. Each Borrower and Guarantor waives all rights
to interpose any claims, deductions, setoffs or counterclaims of any nature
(other then compulsory counterclaims) in any action or proceeding with respect
to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.

 

13.5    Indemnification. Each Borrower and Guarantor shall, jointly and
severally, indemnify and hold Agent, each Lender, and their respective officers,
directors, agents, employees, advisors and counsel and their respective
Affiliates (each such person being an “Indemnitee”), harmless from and against
any and all losses, claims, damages, penalties, liabilities, costs or expenses
(including attorneys’ fees and expenses) imposed on, incurred by or asserted
against any of them in connection with any litigation, investigation, claim or
proceeding commenced or threatened related to the negotiation, preparation,
execution, delivery, enforcement, performance or administration of this
Agreement, any other Financing Agreements, or any undertaking or proceeding
related to any of the transactions contemplated hereby or any act, omission,
event or transaction related or attendant thereto, including amounts paid in
settlement, court costs, and the fees and expenses of counsel except that
Borrowers and Guarantors shall not have any obligation under this Section 13.5
to indemnify an Indemnitee with respect to a matter covered hereby resulting
from the gross negligence or willful misconduct of such Indemnitee as determined
pursuant to a final, non-appealable order of a court of competent jurisdiction
(but without limiting the obligations of Borrowers or Guarantors as to any other
Indemnitee). To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section may be unenforceable because it violates any
law or public policy, Borrowers and Guarantors shall pay the maximum portion
which it is permitted to pay under applicable law to Agent and Lenders in
satisfaction of indemnified matters under this Section. To the extent permitted
by applicable law, no Borrower or Guarantor shall assert, and each Borrower and
Guarantor hereby waives, any claim against any Indemnitee, on any theory of
liability for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement, any of the other Financing Agreements or any undertaking or
transaction contemplated hereby. No Indemnitee referred to above shall be liable
for any damages arising from the use by unintended recipients of any information
or other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or any
of the other Financing Agreements or the transaction contemplated hereby or
thereby. All amounts due under this Section shall be payable upon demand. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.

 

 

1162

SECTION 14.

 

THE AGENT

 

14.1    Appointment, Powers and Immunities. Each Secured Party irrevocably
designates, appoints and authorizes Wachovia to act as Agent hereunder and under
the other Financing Agreements with such powers as are specifically delegated to
Agent by the terms of this Agreement and of the other Financing Agreements,
together with such other powers as are reasonably incidental thereto. Agent (a)
shall have no duties or responsibilities except those expressly set forth in
this Agreement and in the other Financing Agreements, and shall not by reason of
this Agreement or any other Financing Agreement be a trustee or fiduciary for
any Secured Party; (b) shall not be responsible to Secured Parties for any
recitals, statements, representations or warranties contained in this Agreement
or in any of the other Financing Agreements, or in any certificate or other
document referred to or provided for in, or received by any of them under, this
Agreement or any other Financing Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Financing Agreement or any other document referred to or provided for
herein or therein or for any failure by any Borrower or any Guarantor or any
other Person to perform any of its obligations hereunder or thereunder; and (c)
shall not be responsible to Secured Parties for any action taken or omitted to
be taken by it hereunder or under any other Financing Agreement or under any
other document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or willful
misconduct as determined by a final non-appealable judgment of a court of
competent jurisdiction. Agent may employ agents and attorneys in fact and shall
not be responsible for the negligence or misconduct of any such agents or
attorneys in fact selected by it in good faith. Agent may deem and treat the
payee of any note as the holder thereof for all purposes hereof unless and until
the assignment thereof pursuant to an agreement (if and to the extent permitted
herein) in form and substance satisfactory to Agent shall have been delivered to
and acknowledged by Agent.

 

14.2    Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy or other electronic means) believed by it 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. As to any matters not expressly
provided for by this Agreement or any other Financing Agreement, Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by the Required Lenders or
all of Lenders as is required in such circumstance, and such instructions and
any action taken or failure to act pursuant thereto shall be binding on all
Lenders.

 

 

 

14.3

Events of Default.

 

(a)       Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or an Event of Default or other failure of a condition
precedent to the Loans hereunder, unless and until Agent has received written
notice from a Lender, or a Borrower specifying such Event of Default or any
unfulfilled condition precedent, and stating that such notice is a “Notice of
Default or Failure of Condition”. In the event that Agent receives such a Notice
of Default or Failure of Condition, Agent shall give prompt notice thereof to
the Lenders. Agent shall (subject to Section 14.7) take such action with respect
to

 

1172

any such Event of Default or failure of condition precedent as shall be directed
by the Required Lenders to the extent provided for herein; provided, that,
unless and 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 or by reason of such Event of Default or failure of condition
precedent, as it shall deem advisable in the best interest of Lenders. Without
limiting the foregoing, and notwithstanding the existence or occurrence and
continuance of an Event of Default or any other failure to satisfy any of the
conditions precedent set forth in Section 4 of this Agreement to the contrary,
unless and until otherwise directed by the Required Lenders, Agent may, but
shall have no obligation to, continue to make Loans for the ratable account and
risk of Lenders from time to time if Agent believes making such Loans is in the
best interests of Lenders.

 

(b)       Except with the prior written consent of Agent, no Secured Party may
assert or exercise any enforcement right or remedy in respect of the Loans or
other Obligations, as against any Borrower or Guarantor or any of the Collateral
or other property of any Borrower or Guarantor or otherwise under any of the
Financing Agreements.

 

14.4    Wachovia in Its Individual Capacity. With respect to the Loans made by
it, so long as Wachovia shall be a Lender hereunder, it shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not acting as Agent, and the term “Lender” or “Lenders” shall,
unless the context otherwise indicates, include Wachovia in its individual
capacity as Lender hereunder. Wachovia (and any successor acting as Agent) and
its Affiliates may (without having to account therefor to any Lender) lend money
to, make investments in and generally engage in any kind of business with
Borrowers (and any of its Subsidiaries or Affiliates) as if it were not acting
as Agent, and Wachovia and its Affiliates may accept fees and other
consideration from any Borrower or Guarantor and any of its Subsidiaries and
Affiliates for services in connection with this Agreement or otherwise without
having to account for the same to Lenders.

 

14.5    Indemnification. Lenders agree to indemnify Agent (to the extent not
reimbursed by Borrowers hereunder and without limiting any obligations of
Borrowers hereunder) ratably, in accordance with their Pro Rata Shares, for any
and all claims of any kind and nature whatsoever that may be imposed on,
incurred by or asserted against Agent (including by any Lender) arising out of
or by reason of any investigation in or in any way relating to or arising out of
this Agreement or any other Financing Agreement or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents; provided, that, no Lender shall be
liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by
a final non-appealable judgment of a court of competent jurisdiction. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.

 

 

 

14.6

Non-Reliance on Agent and Other Lenders.

 

(a)       Each Secured Party agrees that it has, independently and without
reliance on Agent or any other Secured Party, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of
Borrowers and Guarantors and has

 

1182

made its own decision to enter into this Agreement and that it will,
independently and without reliance upon Agent or any other Secured Party, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under this Agreement or any of the other Financing Agreements. Agent
shall not be required to keep itself informed as to the performance or
observance by any Borrower or Guarantor of any term or provision of this
Agreement or any of the other Financing Agreements or any other document
referred to or provided for herein or therein or to inspect the properties or
books of any Borrower or Guarantor. Agent will use reasonable efforts to provide
Lenders with any information received by Agent from any Borrower or Guarantor
which is required to be provided to Lenders or deemed to be requested by Lenders
hereunder and with a copy of any Notice of Default or Failure of Condition
received by Agent from any Borrower or any Lender; provided, that, Agent shall
not be liable to any Lender for any failure to do so, except to the extent that
such failure is attributable to Agent’s own gross negligence or willful
misconduct as determined by a final non-appealable judgment of a court of
competent jurisdiction. Except for notices, reports and other documents
expressly required to be furnished to Lenders by Agent or deemed requested by
Lenders hereunder, Agent shall not have any duty or responsibility to provide
any Lender with any other credit or other information concerning the affairs,
financial condition or business of any Borrower or Guarantor that may come into
the possession of Agent.

 

14.7    Failure to Act. Except for action expressly required of Agent hereunder
and under the other Financing Agreements, Agent shall in all cases be fully
justified in failing or refusing to act hereunder and thereunder unless it shall
receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 14.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.

 

 

 

14.8

[Reserved].

 

 

 

14.9

Concerning the Collateral and the Related Financing Agreements.

 

(a)       Each Secured Party authorizes and directs Agent to enter into this
Agreement and the other Financing Agreements. Each Secured Party agrees that any
action taken by Agent or Required Lenders (or such greater percentage as may be
required hereunder) in accordance with the terms of this Agreement or the other
Financing Agreements and the exercise by Agent or Required Lenders (or such
greater percentage as may be required hereunder) of their respective powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all Secured Parties.

 

(b)       Without limiting the generality of the foregoing, each Secured Party
authorizes Agent to enter into the Intercreditor Agreement on behalf of such
Secured Party and agrees that it will be bound by the terms of the Intercreditor
Agreement as if it were a direct signatory thereto, whether or not such Secured
Party executes the Intercreditor Agreement.

 

 

 

14.10

[Reserved].

 

 

 

14.11

Collateral Matters.

 

1192

 

(a)       Agent may, at its option, from time to time, at any time on or after
an Event of Default and for so long as the same is continuing or upon any other
failure of a condition precedent to the Loans hereunder, make such disbursements
and advances (“Special Agent Advances”) which Agent, in its sole discretion,
deems necessary or (with respect to clauses (i) and (ii)) desirable (i) to
preserve or protect the Collateral or any portion thereof, (ii) to enhance the
likelihood or maximize the amount of repayment by Borrowers and Guarantors of
the Loans and other Obligations, provided, that, the aggregate principal amount
of the Special Agent Advances pursuant to this clause (ii) outstanding at any
time shall not exceed the aggregate amount equal to $3,000,000 or (iii) to pay
any other amount chargeable to any Borrower or Guarantor pursuant to the terms
of this Agreement or any of the other Financing Agreements consisting of costs,
fees and expenses. The Special Agent Advances shall be repayable on demand and
together with all interest thereon shall constitute Obligations secured by the
Collateral. Special Agent Advances shall not constitute Loans but shall
otherwise constitute Obligations hereunder. Interest on Special Agent Advances
shall be payable at the Interest Rate then applicable to Base Rate Loans and
shall be payable on demand. Each Lender agrees that it shall make available to
Agent, upon Agent’s demand, in immediately available funds, the amount equal to
such Lender’s Pro Rata Share of each such Special Agent Advance. If such funds
are not made available to Agent by such Lender, such Lender shall be deemed a
Defaulting Lender and Agent shall be entitled to recover such funds, on demand
from such Lender together with interest thereon for each day from the date such
payment was due until the date such amount is paid to Agent at the Federal Funds
Rate for each day during such period (as published by the Federal Reserve Bank
of New York or at Agent’s option based on the arithmetic mean determined by
Agent of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m on that day by each of the three leading brokers of Federal
funds transactions in New York selected by Agent) and if such amounts are not
paid within three (3) days of Agent’s demand, at the highest Interest Rate
provided for in Section 3.1 hereof applicable to Base Rate Loans.

 

(b)       Lenders hereby irrevocably authorize Agent, at its option and in its
discretion to release any security interest in, mortgage or lien upon, any of
the Collateral (i) upon termination of this Agreement and payment and
satisfaction of all of the Obligations and delivery of cash collateral to the
extent required under Section 15.1 below, or (ii) constituting property being
sold or disposed of if Borrower Agent or any Borrower or Guarantor certifies to
Agent that the sale or disposition is made in compliance with Section 10.1
hereof (and Agent may rely conclusively on any such certificate, without further
inquiry), or (iii) constituting property in which any Borrower or Guarantor did
not own an interest at the time the security interest, mortgage or lien was
granted or at any time thereafter, or (iv) having a value in the aggregate in
any twelve (12) month period of less than $10,000,000, and to the extent Agent
may release its security interest in and lien upon any such Collateral pursuant
to the sale or other disposition thereof, such sale or other disposition shall
be deemed consented to by Lenders, or (v) if required or permitted under the
terms of any of the other Financing Agreements, including any intercreditor
agreement, or (vi) subject to Section 13.3, if the release is approved,
authorized or ratified in writing by the Required Lenders. Except as provided
above, Agent will not release any security interest in, mortgage or lien upon,
any of the Collateral without the prior written authorization of all of Lenders.
Upon request by Agent at any time, Lenders will promptly

 

1202

confirm in writing Agent’s authority to release particular types or items of
Collateral pursuant to this Section.

 

(c)       Without any manner limiting Agent’s authority to act without any
specific or further authorization or consent by the Required Lenders, each
Lender agrees to confirm in writing, upon request by Agent, the authority to
release Collateral conferred upon Agent under this Section. Agent shall (and is
hereby irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the security interest, mortgage or liens
granted to Agent upon any Collateral to the extent set forth above; provided,
that, (i) Agent shall not be required to execute any such document on terms
which, in Agent’s opinion, would expose Agent to liability or create any
obligations or entail any consequence other than the release of such security
interest, mortgage or liens without recourse or warranty and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any
security interest, mortgage or lien upon (or obligations of any Borrower or
Guarantor in respect of) the Collateral retained by such Borrower or Guarantor.

 

(d)       Agent shall have no obligation whatsoever to any Secured Party or any
other Person to investigate, confirm or assure that the Collateral exists or is
owned by any Borrower or Guarantor or is cared for, protected or insured or has
been encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans hereunder, or whether any particular
reserves are appropriate, or that the liens and security interests granted to
Agent pursuant hereto or any of the Financing Agreements or otherwise have been
properly or sufficiently or lawfully created, perfected, protected or enforced
or are entitled to any particular priority, or to exercise at all or in any
particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent in this Agreement or in any of the other Financing
Agreements, it being understood and agreed that in respect of the Collateral, or
any act, omission or event related thereto, subject to the other terms and
conditions contained herein, Agent may act in any manner it may deem
appropriate, in its discretion, given Agent’s own interest in the Collateral as
a Lender and that Agent shall have no duty or liability whatsoever to any other
Lender.

 

14.12  Agency for Perfection. Each Secured Party hereby appoints Agent and each
other Secured Party as agent and bailee for the purpose of perfecting the
security interests in and liens upon the Collateral of Agent in assets which, in
accordance with Article 9 of the UCC can be perfected only by possession (or
where the security interest of a secured party with possession has priority over
the security interest of another secured party) and Agent and each Secured Party
hereby acknowledges that it holds possession of any such Collateral for the
benefit of Agent as secured party. Should any Secured Party obtain possession of
any such Collateral, such Secured Party shall notify Agent thereof, and,
promptly upon Agent’s request therefor shall deliver such Collateral to Agent or
Collateral Agent or in accordance with Agent’s instructions.

 

 

 

14.13

Agent May File Proofs of Claim.

 

(a)       In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Borrower or Guarantor, Agent (irrespective
of whether the principal of any Loan shall then be due and payable as herein
expressed or by declaration or

 

1212

otherwise and irrespective of whether Agent shall have made any demand on the
Borrowers) shall be entitled and empowered, by intervention in such proceeding
or otherwise:

 

(i)        to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans and all other Obligations that
are owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of Lenders and Agent (including any claim
for the reasonable compensation, expenses, disbursements and advances of Lenders
and Agent and their respective agents and counsel and all other amounts due
Lenders and Agent allowed in such judicial proceeding; and

 

(ii)      to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make such
payments to Agent and, in the event that Agent shall consent to the making of
such payments directly to Lenders, to pay to Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of Agent and its
agents and counsel, and any other amounts due Agent.

 

(b)       Nothing contained herein shall be deemed to authorize Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Lender or to authorize Agent to vote in respect of the
claim of any Lender in any such proceeding.

 

14.14  Successor Agent. Agent may resign as Agent upon thirty (30) days’ notice
to Lenders and Parent. If Agent resigns under this Agreement, the Required
Lenders shall appoint from among the Lenders a successor agent for Lenders. If
no successor agent is appointed prior to the effective date of the resignation
of Agent, Agent may appoint, after consulting with Lenders and Parent, a
successor agent from among Lenders. Upon the acceptance by the Lender so
selected of its appointment as successor agent hereunder, such successor agent
shall succeed to all of the rights, powers and duties of the retiring Agent and
the term “Agent” as used herein and in the other Financing Agreements shall mean
such successor agent and the retiring Agent’s appointment, powers and duties as
Agent shall be terminated. After any retiring Agent’s resignation hereunder as
Agent, the provisions of this Section 14 shall inure to its benefit as to any
actions taken or omitted by it while it was Agent under this Agreement. If no
successor agent has accepted appointment as Agent by the date which is thirty
(30) days after the date of a retiring Agent’s notice of resignation, the
retiring Agent’s resignation shall nonetheless thereupon become effective and
Lenders shall perform all of the duties of Agent hereunder until such time, if
any, as the Required Lenders appoint a successor agent as provided for above.

 

14.15  Legal Representation of Agent. In connection with the negotiation,
drafting, and execution of this Agreement and the other Financing Agreements, or
in connection with future legal representation relating to loan administration,
amendments, modifications, waivers, or enforcement of remedies, Moore & Van
Allen PLLC has only represented and shall only represent Wachovia in its
capacity as Agent and as a Lender. Each other Lender hereby acknowledges that
such firm does not represent it in connection with any such matters.

 

1222

 

14.16  Other Agent Designations. Agent may at any time and from time to time
determine that a Lender may, in addition, be a “Co-Agent”, “Syndication Agent”,
“Documentation Agent”. “Control Agent” or similar designation hereunder and
enter into an agreement with such Lender to have it so identified for purposes
of this Agreement. Any such designation shall be effective upon written notice
by Agent to Borrower Agent of any such designation. Any Lender that is so
designated as a Co-Agent, Syndication Agent, Documentation Agent, Control Agent
or such similar designation by Agent shall have no right, power, obligation,
liability, responsibility or duty under this Agreement or any of the other
Financing Agreements other than those applicable to all Lenders as such. Without
limiting the foregoing, the Lenders so identified shall not have or be deemed to
have any fiduciary relationship with any Lender and no Lender shall be deemed to
have relied, nor shall any Lender rely, on a Lender so identified as a Co-Agent,
Syndication Agent, Documentation Agent, Control Agent or such similar
designation in deciding to enter into this Agreement or in taking or not taking
action hereunder.

 

 

 

14.17

Intercreditor Agreement.

 

Each of the Lenders hereby acknowledges that it has received and reviewed the
Intercreditor Agreement and agrees to be bound by the terms thereof. Each Lender
(and each Person that becomes a Lender hereunder pursuant to Section 15.7)
hereby (i) acknowledges that Wachovia is acting under the Intercreditor
Agreement in multiple capacities as Agent, ABL Agent and Control Agent and (ii)
waives any conflict of interest, now contemplated or arising hereafter, in
connection therewith and agrees not to assert against Wachovia any claims,
causes of action, damages or liabilities of whatever kind or nature relating
thereto. Each Lender (and each Person that becomes a Lender hereunder pursuant
to Section 15.7) hereby authorizes and directs Wachovia to enter into the
Intercreditor Agreement on behalf of such Lender and agrees that Wachovia, in
its various capacities thereunder, may take such actions on its behalf as is
contemplated by the terms of the Intercreditor Agreement. In addition, each
Lender and Agent acknowledge and agree that (a) the rights and remedies of Agent
and the Lenders hereunder and under the other Financing Agreements are subject
to the Intercreditor Agreement and (b) in the event of a conflict the provisions
of the Intercreditor Agreement shall control.

 

SECTION 15.

 

TERM OF AGREEMENT; MISCELLANEOUS

 

 

 

15.1

Term.

 

(a)       This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on the Maturity Date, unless sooner
terminated pursuant to the terms hereof. Upon the Maturity Date or any other
effective date of termination of the Financing Agreements, Borrowers shall pay
to Agent all outstanding and unpaid Obligations and shall furnish cash
collateral to Agent (or at Agent’s option, a letter of credit issued for the
account of Borrowers and at Borrowers’ expense, in form and substance
satisfactory to Agent, by an issuer acceptable to Agent and payable to Agent as
beneficiary) in such amounts as Agent determines are reasonably necessary to
secure Agent and Lenders from loss, cost, damage or expense, including
attorneys’ fees and expenses, in connection with any contingent

 

1232

Obligations, including checks or other payments provisionally credited to the
Obligations and/or as to which Agent or any Lender has not yet received final
and indefeasible payment (and including any contingent liability of Agent to any
bank at which deposit accounts of Borrowers and Guarantors are maintained under
any Deposit Account Control Agreement). Such payments in respect of the
Obligations and cash collateral shall be remitted by wire transfer in Federal
funds to the bank account of Agent, as Agent may, in its discretion, designate
in writing to Borrower Agent for such purpose. Interest shall be due until and
including the next Business Day, if the amounts so paid by Borrowers to the bank
account designated by Agent are received in such bank account later than 2:00
p.m.

 

(b)       No termination of this Agreement or any of the other Financing
Agreements shall relieve or discharge any Borrower or Guarantor of its
respective duties, obligations and covenants under this Agreement or any of the
other Financing Agreements until all Obligations have been fully and finally
discharged and paid, and Agent’s continuing security interest in the Collateral
and the rights and remedies of Agent and Lenders hereunder, under the other
Financing Agreements and applicable law, shall remain in effect until all such
Obligations have been fully and finally discharged and paid, other than the
contingent Obligations for which Agent has received cash collateral, or at its
option, a letter of credit, in accordance with Section 15.1(a) above.
Accordingly, each Borrower and Guarantor waives any rights it may have under the
UCC to demand the filing of termination statements with respect to the
Collateral and Agent shall not be required to send such termination statements
to Borrowers or Guarantors, or to file them with any filing office, unless and
until this Agreement shall have been terminated in accordance with its terms and
all Obligations paid and satisfied in full in immediately available funds, other
than the contingent Obligations for which Agent has received cash collateral, or
at its option, a letter of credit, in accordance with Section 15.1(a) above.

 

 

 

15.2

Interpretative Provisions.

 

(a)       All terms used herein which are defined in Article 1, Article 8 or
Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.

 

(b)       All references to the plural herein shall also mean the singular and
to the singular shall also mean the plural unless the context otherwise
requires.

 

(c)       All references to any Borrower, Guarantor, Agent and Lenders pursuant
to the definitions set forth in the recitals hereto, or to any other person
herein, shall include their respective successors and assigns.

 

(d)       The words “hereof”, “herein”, “hereunder”, “this Agreement” and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not any particular provision of this Agreement and as this Agreement
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.

 

(e)       The word “including” when used in this Agreement shall mean
“including, without limitation” and the word “will” when used in this Agreement
shall be construed to have the same meaning and effect as the word “shall”.

 

1242

(f)        An Event of Default shall exist or continue or be continuing until
such Event of Default is waived in accordance with Section 13.3 or is cured.
Reference herein to a Default or Event of Default that “exists” shall only
include a Default or Event of Default, as the case may be, that has not been
cured or waived in accordance with the terms hereof, so that such Default or
Event of Default, as the case may be, shall cease to exist and shall not be
deemed to be continuing if it has been so cured or waived.

 

(g)       All references to the term “good faith” used herein when applicable to
Agent or any Lender shall mean, notwithstanding anything to the contrary
contained herein or in the UCC, honesty-in-fact in the conduct or transaction
concerned and observance of reasonable commercial standards of fair dealing
based on how an asset-based lender with similar rights providing a credit
facility of the type set forth herein would act in similar circumstances at the
time with the information then available to it. All references to the term
“reasonably” or “reasonable” as applied to any conduct or determination by Agent
shall be based on how an asset-based lender with similar rights providing a
credit facility of the type set forth herein would act in similar circumstances.

 

(h)       Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP applied on a basis consistent with the most recent audited
consolidated financial statements of Parent delivered to the Lenders; provided,
that, in the event of any change in GAAP after the date hereof that affects the
covenants in Section 11 hereof, Borrower Agent may by notice to Agent, or Agent
may, and at the request of Required Lenders shall, by notice to Borrower Agent
require that such covenants be calculated in accordance with GAAP as in effect,
and as applied by Parent and its Subsidiaries, immediately before the applicable
change in GAAP became effective, until either the notice from the applicable
party is withdrawn or such covenant is amended in a manner satisfactory to
Parent, Agent and the Required Lenders. Parent shall deliver to Agent and upon
Agent’s request, to each Lender at the same time as the delivery of any
financial statements given in accordance with the provisions of Section 9.6
hereof (i) a description in reasonable detail of any material change in the
application of accounting principles employed in the preparation of such
financial statements from those applied in the most recently preceding monthly,
quarterly or annual financial statements and (ii) a reasonable estimate of the
effect on the financial statements on account of such changes in application.
Notwithstanding the above, all calculations of the financial covenant in Section
11 shall be made on a Pro Forma Basis.

 

(i)        Unless otherwise indicated herein, all references to time of day
refer to Eastern Standard Time or Eastern daylight saving time, as in effect in
New York City on such day. For purposes of the computation of a period of time
from a specified date to a later specified date, the word “from” means “from and
including” and the words “to” and “until” each means “to and including”;
provided, that, with respect to a computation of fees or interest payable to
Agent or any Lender, such period shall in any event consist of at least one full
day.

 

(j)        Unless otherwise expressly provided herein, (i) references herein to
any agreement, document or instrument shall be deemed to include all subsequent
amendments, modifications, supplements, extensions, renewals, restatements or
replacements with respect

 

1252

thereto, but only to the extent the same are not prohibited by the terms hereof
or of any other Financing Agreement, and (ii) references to any statute or
regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, recodifying, supplementing or
interpreting the statute or regulation.

 

(k)       The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.

 

(l)        This Agreement and other Financing Agreements may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.

 

(m)      This Agreement and the other Financing Agreements are the result of
negotiations among and have been reviewed by counsel to Agent and the other
parties, and are the products of all parties. Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Agent or Lenders
merely because of Agent’s or any Lender’s involvement in their preparation.

 

 

 

15.3

Notices.

 

(a)       All notices, requests and demands hereunder shall be in writing and
deemed to have been given or made: if delivered in person, immediately upon
delivery; if by facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next Business Day, one (1) Business Day after
sending; and if by certified mail, return receipt requested, five (5) days after
mailing. Notices delivered through electronic communications shall be effective
to the extent set forth in Section 15.3(b) below. All notices, requests and
demands upon the parties are to be given to the following addresses (or to such
other address as any party may designate by notice in accordance with this
Section):

 

If to any Borrower or Guarantor:

CPG International Inc.

801 Corey Street
Scranton, Pennsylvania 18505

Attention: Scott Harrison

Telephone No.: (570) 558-8000

Telecopy No. (570) 558-8201

 

with a copy to:

Fried, Frank, Harris, Shriver & Jacobson LLP

One New York Plaza
New York, New York 10004

Attention: Emil Buchman, Esq.

Telephone No.: (212) 859-8298

Telecopy No. (212) 859-4000

 

 

 

1262

 

If to Agent:

Wachovia Bank, National Association

1525 W. WT Harris Blvd

NC0608/CP8

Charlotte, North Carolina 28262

Attention: Syndication Agency Services

Telephone No.: (704) 590-2703

Telecopy No.: (704) 590-2708

 

with a copy to:

Wachovia Bank, National Association

301 South College Street, NC5562

Charlotte, North Carolina 28288

Attention: Portfolio Management

Telecopier: (704) 383-[____]

Telephone: (704) 383-[____]

 

 

(b)       Notices and other communications to Lenders hereunder may be delivered
or furnished by electronic communication (including e-mail and Internet or
intranet websites) pursuant to procedures approved by Agent or as otherwise
determined by Agent; provided, that, the foregoing shall not apply to notices to
any Lender pursuant to Section 2 hereof if such Lender has notified Agent that
it is incapable of receiving notices under such Section by electronic
communication. Unless Agent otherwise requires, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided, that, if such notice or other communication
is not given during the normal business hours of the recipient, such notice
shall be deemed to have been sent at the opening of business on the next
Business Day for the recipient, and (ii) notices or communications posted to an
Internet or intranet website shall be deemed received upon the deemed receipt by
the intended recipient at its e-mail address as described in the foregoing
clause (i) of notification that such notice or communications is available and
identifying the website address therefor. In no event shall Agent or any of its
officers, directors, agents, employees, advisors and counsel and their
respective Affiliates have any liability to Borrowers, Guarantors, any Lender or
any other Person for losses, claims, damages, liabilities or expenses of any
kind (whether in tort, contract or otherwise) arising out of the Borrowers’ or
Agent’s transmission of materials through the Internet, except to the extent
that such losses, claims, damages, liabilities or expenses are determined by a
court of competent jurisdiction by a final nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Person;
provided, that, in no event shall Agent or any of its officers, directors,
agents, employees, advisors and counsel and their respective Affiliates have any
liability to Borrowers, Guarantors, any Lender or any other Person for indirect,
special, incidental, consequential or punitive damages (as opposed to direct or
actual damages).

 

15.4    Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.

 

1272

 

 

15.5

Confidentiality.

 

(a)       Agent and each Lender agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (i) to
its Affiliates and to its and its Affiliates’ respective partners, directors,
officers, employees, agents, advisors, trustees and representatives and to any
pledgee referred to in Section 15.7 hereof and to any direct or indirect
contractual counterparty (or such contractual counterparty’s professional
advisor) (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential), (ii) to the extent requested by any
regulatory authority purporting to have jurisdiction over it (including any
self-regulatory authority, such as the National Association of Insurance
Commissioners), or otherwise in accordance with its compliance with applicable
regulations, (iii) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process, (iv) to any other party hereto, (v) in
connection with the exercise of any remedies hereunder or under any of the other
Financing Agreements or any action or proceeding relating to this Agreement or
any of the other Financing Agreements or applicable law or the enforcement of
rights hereunder or thereunder, (vi) subject to an agreement containing
provisions substantially the same as those of this Section, to (A) any assignee
of or Participant in, or any prospective assignee of or Participant in, any of
its rights or obligations under this Agreement or (B) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction, (vii) with
the consent of Borrower Agent, or (viii) to the extent such Information (A)
becomes publicly available other than as a result of a breach of this Section or
(B) becomes available to Agent, any Lender or any of their respective Affiliates
on a nonconfidential basis from a source other than Borrower Agent.

 

(b)       For purposes of this Section, “Information” means all information
received from a Borrower or Guarantor or any Subsidiary relating to Borrowers,
Guarantors or any Subsidiary or any of their respective businesses, other than
any such information that is available to Agent or any Lender on a
nonconfidential basis prior to disclosure by such Borrower or Guarantor or any
Subsidiary, provided that, in the case of information received from a Borrower,
Guarantor or any Subsidiary after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

(c)       Agent and each Lender acknowledges that (i) the Information may
include material non-public information concerning a Borrower or a Subsidiary,
as the case may be, (ii) it has developed compliance procedures regarding the
use of material non-public information and (iii) it will handle such material
non-public information in accordance with applicable laws and regulations,
including Federal and state securities laws. The obligations of Agent and
Lenders under this Section 15.5 shall supersede and replace the obligations of
Agent and Lenders under any confidentiality letter signed prior to the date
hereof or any other arrangements concerning the confidentiality of information
provided by any Borrower or Guarantor to Agent or any Lender.

 

1282

(d)       Agent may share with its respective Affiliates any information
relating to the Term Loan and Parent and its Subsidiaries. Agent may disclose
information relating to the Term Loan to Gold Sheets and other publications with
such information to consist of deal terms and other information customarily
found in such publications. In addition, Agent may otherwise use the corporate
names and logos of Borrowers and Guarantors and such information in “tombstones”
or other advertisements, public statements or other marketing materials, and in
connection with obtaining a published CUSIP from the Standard & Poor’s CUSIP
Service Bureau.

 

15.6    Successors. This Agreement, the other Financing Agreements and any other
document referred to herein or therein shall be binding upon and inure to the
benefit of and be enforceable by Agent, Secured Parties, Borrowers, Guarantors
and their respective successors and assigns, except that no Borrower may assign
its rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Agent and Lenders. Any such purported assignment without such express prior
written consent shall be void. No Secured Party may assign its rights and
obligations under this Agreement without the prior written consent of Agent,
except as provided in Section 15.7 below. The terms and provisions of this
Agreement and the other Financing Agreements are for the purpose of defining the
relative rights and obligations of Borrowers, Guarantors, Agent and Secured
Parties with respect to the transactions contemplated hereby and there shall be
no third party beneficiaries of any of the terms and provisions of this
Agreement or any of the other Financing Agreements.

 

 

 

15.7

Assignments; Participations.

 

(a)       Each Lender may assign all or, if less than all, a portion equal to at
least $5,000,000 in the aggregate for the assigning Lender, of such rights and
obligations under this Agreement to one or more Eligible Transferees (but not
including for this purpose any assignments in the form of a participation), each
of which assignees shall become a party to this Agreement as a Lender by
execution of an Assignment and Acceptance; provided, that, (i) such transfer or
assignment will not be effective without the prior written consent of Agent,
which consent shall not be unreasonably withheld, conditioned or delayed,
provided, that, the consent of Agent shall not be required in connection with an
assignment to another Lender, to any Affiliate of a Lender, or to any Approved
Fund, (ii) so long as no Event of Default has occurred and is continuing, such
transfer or assignment will not be effective without the prior written consent
of Borrower Agent, which consent shall not be unreasonably withheld, conditioned
or delayed; provided, that, the consent of Borrower Agent shall not be required
in connection with an assignment to another Lender, to any Affiliate of a
Lender, or to any Approved Fund or prior to the completion of the primary
syndication as determined by Agent, (iii) in the case of an assignment of the
entire remaining amount of the assigning Lender’s Loans at the time owing to it
or in the case of an assignment to a Lender, an Affiliate of a Lender or an
Approved Fund, no minimum amount need be assigned, (iv) such transfer or
assignment will not be effective until recorded by Agent on the Register, and
(v) Agent shall have received for its sole account payment of a processing fee
from the assigning Lender or the assignee in the amount of $3,500.
Notwithstanding the foregoing, without the consent of the Agent, no assignment
of any Loans to the Sponsor Affiliated Lender (other than the initial assignment
of $7,500,000 in principal amount of the Loans to AEA Middle Market Debt Funding
LLC following the Closing Date) or to an Affiliate of a Sponsor Affiliated
Lender (other than an assignment by

 

1292

the Sponsor Affiliated Lender to one of its Affiliates of the entire remaining
amount of the Sponsor Affiliated Lender’s Loans) shall be permitted.

 

(b)       Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, the
assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and thereunder and the assigning Lender shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement.

 

(c)       By execution and delivery of an Assignment and Acceptance, the
assignor and assignee thereunder confirm to and agree with each other and the
other parties hereto as follows: (i) other than as provided in such Assignment
and Acceptance, the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any of the other
Financing Agreements or the execution, legality, enforceability, genuineness,
sufficiency or value of this Agreement or any of the other Financing Agreements
furnished pursuant hereto, (ii) the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Borrower, Guarantor or any of their Subsidiaries or the performance or
observance by any Borrower or Guarantor of any of the Obligations; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Financing Agreements, together with such other documents and information it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance, (iv) such assignee will, independently and
without reliance upon the assigning Lender, Agent and based on 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 this Agreement and the
other Financing Agreements, (v) such assignee appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Financing Agreements as are delegated to Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto, and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement and the
other Financing Agreements are required to be performed by it as a Lender. Agent
and Lenders may furnish any information concerning any Borrower or Guarantor in
the possession of Agent or any Lender from time to time to assignees and
Participants.

 

(d)       Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement and the other Financing Agreements (including, without limitation, all
or a portion of the Loans owing to it, without the consent of Agent or the other
Lenders); provided, that, (i) such Lender’s obligations under this Agreement and
the other Financing Agreements shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, and Borrowers, Guarantors, the other Lenders and Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement and the other Financing
Agreements, (iii) the

1302

Participant shall not have any rights under this Agreement or any of the other
Financing Agreements (the Participant’s rights against such Lender in respect of
such participation to be those set forth in the agreement executed by such
Lender in favor of the Participant relating thereto) and all amounts payable by
any Borrower or Guarantor hereunder shall be determined as if such Lender had
not sold such participation, (iv) each Lender shall retain the sole right to
vote, approve or consent, or to not approve or not consent, to or in connection
with any amendment, waiver or other modifications of any of the terms and
provisions hereof or of any of the other Financing Agreements or to otherwise
act or refrain from acting hereunder or thereunder within its exclusive
discretion and without any vote, approval or consent of any Participant, other
than for the forgiveness of principal, interest or fees, reductions in the
interest rate or fees payable with respect to any Loan in which such Participant
has an interest, the extension of the Maturity Date for a Loan in which such
Participant has an interest, or any date fixed for any regularly scheduled
payment of principal, interest or fees in such Loan, or the release of a
Borrower or Guarantor or all or substantially all of the Collateral and in the
case of any Participant that may be an Affiliate of a Borrower or Guarantor, (A)
no such Participant shall have any of the rights to vote, approve or consent to
any amendment, waiver or modification hereof or of any of the other Financing
Agreements or the right to vote, approve or consent to any vote, approval of
consent or other action or refraining from action of the Lender in whose Loans
such Participant has an interest, and (B) such Participant shall not, and shall
not have the right to, attend any meeting (whether conducted by telephone or in
person) with any Agent or Lender or receive any information from Agent or any
Lender in connection with the Term Loan.

 

(e)       Nothing in this Agreement shall prevent or prohibit any Lender from
pledging its Loans hereunder to a Federal Reserve Bank or other Federal banking
authority or institution in support of borrowings made by such Lenders from such
Federal Reserve Bank or other such banking authority or institution; provided,
that, no such pledge shall release such Lender from any of its obligations
hereunder or substitute any such pledgee for such Lender as a party hereto.

 

(f)        Notwithstanding anything to the contrary contained herein, any Lender
(a “Granting Lender”) may grant to a special purpose funding vehicle identified
as such in writing from time to time by the Granting Lender to Agent and
Borrower Agent (an “SPC”) the option to provide all or any part of any Loan that
such Granting Lender would otherwise be obligated to make pursuant to this
Agreement; provided that (i) nothing herein shall constitute a commitment by any
SPC to fund any Loan, and (ii) if an SPC elects not to exercise such option or
otherwise fails to make all or any part of such Loan, the Granting Lender shall
be obligated to make such Loan pursuant to the terms hereof or, if it fails to
do so, to make such payment to Agent as are required hereunder. Each party
hereto hereby agrees that (i) neither the grant to any SPC nor the exercise by
any SPC of such option shall increase the costs or expenses or otherwise
increase or change the obligations of any Borrower or Guarantor under this
Agreement or otherwise, (ii) no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement for which a Lender would be liable, and
(iii) the Granting Lender shall for all purposes, including the approval of any
amendment, waiver or other modification of any provision of any Loan Document,
remain the lender of record hereunder. The making of a Loan by an SPC hereunder
shall utilize the Pro Rata Share of the Granting Lender to the same extent, and
as if, such Loan were made by such Granting Lender. In furtherance of the
foregoing, each party hereto

 

1312

hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding commercial paper or other senior debt of any SPC, it will not
institute against, or join any other Person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding
under the laws of the United States or any State thereof. Notwithstanding
anything to the contrary contained herein, any SPC may (i) with notice to, but
without prior consent of Borrower Agent and Agent and with the payment of a
processing fee in the amount of $3,500, assign all or any portion of its right
to receive payment with respect to any Loan to the Granting Lender and (ii)
disclose on a confidential basis any non-public information relating to its
funding of Loans to any rating agency, commercial paper dealer or provider of
any surety or Guarantee or credit or liquidity enhancement to such SPC.

 

15.8    Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.

 

15.9    USA Patriot Act. Each Lender subject to the USA PATRIOT Act (Title III
of Pub.L. 107-56 (signed into law October 26, 2001) (the “Act”) hereby notifies
Borrowers and Guarantors that pursuant to the requirements of the Act, it is
required to obtain, verify and record information that identifies each person or
corporation who opens an account and/or enters into a business relationship with
it, which information includes the name and address of Borrowers and Guarantors
and other information that will allow such Lender to identify such person in
accordance with the Act and any other applicable law. Borrowers and Guarantors
are hereby advised that any Loans hereunder are subject to satisfactory results
of such verification.

 

15.10  No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated hereby, Borrowers and Guarantors each
acknowledge and agree, and acknowledge their respective Affiliates’
understanding, that: (a) the Term Loan provided for hereunder and any related
arranging or other services in connection therewith (including in connection
with any amendment, waiver or other modification hereof or of any of the other
Financing Agreements) are an arm’s-length commercial transaction between
Borrowers and Guarantors and their respective Subsidiaries, on the one hand, and
Agent and Arranger, on the other hand, and each of Borrowers and Guarantors is
capable of evaluating and understanding and understands and accepts the terms,
risks and conditions of the transactions contemplated hereby and by the other
Financing Agreements (including any amendment, waiver or other modification
hereof or thereof); (b) in connection with the process leading to such
transaction, Agent and Arranger is and has been acting solely as a principal and
is not the financial advisor, agent or fiduciary, for any Borrower or Guarantor
or any of their respective Affiliates, stockholders, creditors or employees or
any other Person; (c) neither Agent nor Arranger has assumed or will assume an
advisory, agency or fiduciary responsibility in favor of any Borrower or
Guarantors or any of their respective Affiliates with respect to any of the
transactions contemplated hereby or the process leading thereto, including with
respect to any amendment, waiver or other modification hereof or of any of the
other

 

1322

Financing Agreements (irrespective of whether Agent or Arranger has advised or
is currently advising any Borrower or Guarantor or any of their respective
Affiliates on other matters) and neither Agent nor Arranger has any obligation
to any Borrower or Guarantor or any of their respective Affiliates with respect
to the transactions contemplated hereby except those obligations expressly set
forth herein and in the other Financing Agreements; (d) Agent and the Arranger
and their respective Affiliates may be engaged in a broad range of transactions
that involve interests that differ from those of Borrowers and Guarantors and
their respective Affiliates, and neither Agent nor Arranger has any obligation
to disclose any of such interests by virtue of any advisory, agency or fiduciary
relationship; and (e) Agent and the Arranger have not provided and will not
provide any legal, accounting, regulatory or tax advice with respect to any of
the transactions contemplated hereby (including any amendment, waiver or other
modification hereof or of any of the other Financing Agreements) and each
Borrower and Guarantor has consulted its own legal, accounting, regulatory and
tax advisors to the extent it has deemed appropriate. Each Borrower and
Guarantor hereby waives and releases, to the fullest extent permitted by law,
any claims that it may have against Agent and the Arranger with respect to any
breach or alleged breach of agency or fiduciary duty.

 

15.11  Counterparts, Etc. This Agreement or any of the other Financing
Agreements may be executed in any number of counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile or other electronic method of
transmission shall have the same force and effect as the delivery of an original
executed counterpart of this Agreement or any of such other Financing
Agreements. Any party delivering an executed counterpart of any such agreement
by telefacsimile or other electronic method of transmission shall in a timely
manner also deliver an original executed counterpart, but the failure to do so
shall not affect the validity, enforceability or binding effect of such
agreement.

 

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1332

IN WITNESS WHEREOF, Agent, Lenders, Borrowers and Guarantors have caused these
presents to be duly executed as of the day and year first above written.

 

 

 

 

 

BORROWERS:

 

 

 

 

 

CPG INTERNATIONAL I INC.

 

 

 

 

By:

/s/ SCOTT HARRISON

 

Name:

Scott Harrison

 

Title:

Executive Vice President and Chief Financial Officer

 

 

 

 

 

SCRANTON PRODUCTS INC.

 

By:

/s/ SCOTT HARRISON

 

Name:

Scott Harrison

 

Title:

Executive Vice President and Chief Financial Officer

 

 

 

 

 

AZEK BUILDING PRODUCTS, INC.

 

By:

/s/ SCOTT HARRISON

 

Name:

Scott Harrison

 

Title:

Executive Vice President and Chief Financial Officer

 

 

 

 

 

PROCELL DECKING INC.

 

By:

/s/ SCOTT HARRISON

 

Name:

Scott Harrison

 

Title:

Executive Vice President and Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

[SIGNATURES CONTINUED ON NEXT PAGE]

 

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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

 

 

 

 

GUARANTORS:

 

 

 

 

 

CPG INTERNATIONAL

 

 

 

 

By:

/s/ SCOTT HARRISON

 

Name:

Scott Harrison

 

Title:

Executive Vice President and Chief Financial Officer

 

 

 

 

 

SANTANA PRODUCTS INC.

 

By:

/s/ SCOTT HARRISON

 

Name:

Scott Harrison

 

Title:

Executive Vice President and Chief Financial Officer

 

 

 

 

 

 

 

 

VYCOM CORP.

 

 

 

 

By:

/s/ AMY C. BEVACQUA

 

Name:

Amy C. Bevacqua

 

Title:

Vice President

 

 

 

 

CPG SUB I CORP.

 

 

 

 

By:

/s/ AMY C. BEVACQUA

 

Name:

Amy C. Bevacqua

 

Title:

Vice President

 

 

 

 

 

SANATEC CORP.

 

 

 

 

By:

/s/ AMY C. BEVACQUA

 

Name:

Amy C. Bevacqua

 

Title:

Vice President

 

 

 

 

 

 

[SIGNATURES CONTINUED ON NEXT PAGE]

 

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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

 

 

AGENTS AND LENDERS:

 

 

 

 

 

WACHOVIA BANK, NATIONAL

 

 

ASSOCIATION, as Agent and as a Lender

 

By:

/s/ JACOB PETKOVICH

 

Name:

Jacob Petkovich

 

Title:

Vice President-Leveraged Finance

 

 

 

 

STRUCTURED PRINCIPAL STRATEGIES LLC,

 

as a Lender

 

By:

/s/ BRIAN GRABENSTEIN

 

Name:

Brian Grabenstein

 

 

 

 

 

HAR1\1039522v2

 

 

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