Exhibit 10.1

 

 

 

SECOND AMENDED AND RESTATED LOAN

AND SECURITY AGREEMENT

by and among

FRESHPET, INC.

as Borrower,

THE LENDERS THAT ARE SIGNATORIES HERETO

as the Lenders,

and

CITY NATIONAL BANK,

together with its successors and assigns

as the Arranger and Administrative Agent

and

ONEWEST BANK N.A.,

as the Syndication Agent

Dated as of November 13, 2014

 

 

 

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

SECOND AMENDED AND RESTATED LOAN AND

SECURITY AGREEMENT

THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”),
is entered into as of November 13, 2014, by and among, on the one hand, the
lenders identified on the signature pages hereof (such lenders, together with
their respective successors and permitted assigns, are referred to hereinafter
each individually as a “Lender” and collectively as the “Lenders”) and CITY
NATIONAL BANK, a national banking association (“CNB”), as the arranger and
administrative agent for the Lenders (in such capacity, together with its
successors and assigns in such capacity, “Agent”), and ONEWEST BANK N.A., as
syndication agent and, on the other hand, FRESHPET, INC., a Delaware corporation
(“Borrower”).

WHEREAS, Borrower and CNB are parties to that certain Amended and Restated Loan
and Security Agreement, dated as of December 23, 2010 (as amended, restated,
supplemented, or otherwise modified from time to time prior to the date hereof,
the “Existing Loan Agreement”);

NOW, THEREFORE, in consideration of the premises herein contained and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree to amend and restate the Existing Loan
Agreement as follows:

1. DEFINITIONS AND CONSTRUCTION.

1.1 Definitions. As used in this Agreement, the following terms shall have the
following definitions:

“ACH Transactions” means any cash management or related services (including the
Automated Clearing House processing of electronic fund transfers through the
direct Federal Reserve Fedline system) provided by a Bank Product Provider for
the account of Borrower or its Subsidiaries.

“Account” means an account (as that term is defined in the Code).

“Account Debtor” means any Person who is obligated on an Account, chattel paper,
or a General Intangible.

“Accounting Changes” means changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions).

“Acquisition” means (a) the purchase or other acquisition by a Person or its
Subsidiaries of all or substantially all of the assets of (or any division or
business line of) any other Person, or (b) the purchase or other acquisition
(whether by means of a merger, consolidation, or otherwise) by a Person or its
Subsidiaries of all of the Stock of any other Person.

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

“Additional Documents” has the meaning set forth in Section 4.4(c).

“Adjusted EBITDA” means, with respect to any fiscal period, Borrower’s and its
Subsidiaries’ consolidated gross revenue, minus the cost of goods sold, minus
selling, general, and administrative expenses (but excluding: (a) any costs
associated with the installation of refrigerators in new locations and marketing
expenses incurred in connection with the introduction of new locations, provided
that the aggregate amount excluded pursuant to this clause (a) with respect to
any location shall not exceed $2,000, (b) all non-cash expenses or losses,
including any depreciation and amortization expense, and (c) non-recurring fees,
charges and other one-time start-up costs in connection with any real property
(including all buildings, fixtures, integrated equipment or other improvements
located thereon) now, hereafter or heretofore owned, leased, operated or used by
Borrower for the purpose of developing, manufacturing and marketing pet food,
and (d) other non-recurring fees, charges and other expenses that have been
approved by Agent and the Lenders, such approval not to be unreasonably
withheld), plus, (A) any costs or expenses incurred pursuant to any stock option
plan or any other management or employee benefit plan, agreement or any stock
subscription or stockholders agreement and (B) for any period ending on or
before June 30, 2015, the result of (i) the aggregate amount of marketing
expenses incurred by Borrower and its Subsidiaries in connection with television
marketing by Borrower and its Subsidiaries (“TV Expenditures”) minus
(ii) $1,500,000; provided, that (x) in the event that TV Expenditures during any
period ending on or before June 30, 2015 are greater than $1,500,000, the
aggregate amount added back to Adjusted EBITDA with respect to TV Expenditures
for such period shall not exceed $1,500,000, and (y) in the event that TV
Expenditures during any period ending on or before June 30, 2015 are less than
$1,500,000, the aggregate amount deducted from Adjusted EBITDA with respect to
TV Expenditures for such period shall not exceed $1,500,000.

“Advances” has the meaning set forth in Section 2.1.

“Affiliate” means, as applied to any Person, any other Person who, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such Person. For purposes of this definition,
“control” means the possession, directly or indirectly through one or more
intermediaries, of the power to direct the management and policies of a Person,
whether through the ownership of Stock, by contract, or otherwise; provided,
however, that, for purposes of Section 7.13 hereof: (a) any Person which owns
directly or indirectly 10% or more of the Stock having ordinary voting power for
the election of directors or other members of the governing body of a Person or
10% or more of the partnership or other ownership interests of a Person (other
than as a limited partner of such Person) shall be deemed an Affiliate of such
Person, (b) each director (or comparable manager) of a Person shall be deemed to
be an Affiliate of such Person, and (c) each partnership or joint venture in
which a Person is a partner or member of a joint venture shall be deemed an
Affiliate of such Person.

“Agent” has the meaning set forth in the preamble to this Agreement.

“Agent Advances” has the meaning set forth in Section 2.3(f)(i).

 

- 2 -

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

“Agent-Related Persons” means Agent, together with its Affiliates, officers,
directors, employees, attorneys, and agents.

“Agent’s Account” means the Deposit Account of Agent identified on Schedule A-1.

“Agent’s Liens” means the Liens granted by Borrower or its Subsidiaries to Agent
under this Agreement or the other Loan Documents.

“Agreement” has the meaning set forth in the preamble hereto.

“Applicable Cross-Default Amount” means $500,000.

“Applicable Margin” means, as of any date of determination and with respect to
Base Rate Loans or LIBOR Rate Loans, as applicable, the applicable margin set
forth in the following table that corresponds to the most recent Leverage Ratio
calculation delivered to Agent pursuant to Section 6.3 of the Agreement (the
“Leverage Ratio Calculation”); provided, that for the period from the
Restatement Effective Date through and including the first day of the month
following the date on which Agent receives the Leverage Ratio Calculation in
respect of the testing period ending December 31, 2015, the Applicable Margin
shall be set at the margin in the row styled “Level I”; provided further, that
any time an Event of Default has occurred and is continuing, the Applicable
Margin shall be set at the margin in the row styled “Level I”:

 

Level

  

Leverage Ratio

  

Applicable Margin
Relative to Base Rate
Loans (the “Base Rate
Margin”)

  

Applicable Margin
Relative to LIBOR
Rate Loans (the
“LIBOR Rate
Margin”)

I    Greater than or
equal to 2.00:1.0    3.75 percentage points    4.75 percentage points II   

Greater than or

equal to 1.0:1.00
and less than 2.00:1.00

   3.25 percentage points    4.25 percentage points III    Less than 1.0:1.00   
2.75 percentage points    3.75 percentage points

Except as set forth in the foregoing proviso, the Applicable Margin shall be
based upon the most recent Leverage Ratio Calculation, which will be calculated
as of the end of each

 

- 3 -

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

fiscal quarter. Except as set forth in the foregoing proviso, the Applicable
Margin shall be re-determined quarterly on the first day of the month following
the date of delivery to Agent of the certified calculation of the Leverage Ratio
pursuant to Section 6.3 (each such date, a “Redetermination Date”); provided,
however, that if Borrower fails to provide such certification when such
certification is due, the Applicable Margin shall be set at the margin in the
row styled “Level I” as of the first day of the month following the date on
which the certification was required to be delivered until the date on which
such certification is delivered (on which date (but not retroactively), without
constituting a waiver of any Default or Event of Default occasioned by the
failure to timely deliver such certification, the Applicable Margin shall be set
at the margin based upon the calculations disclosed by such certification. In
the event that the information regarding the Leverage Ratio contained in any
certificate delivered pursuant to Section 6.3 of the Agreement is shown to be
inaccurate, and such inaccuracy, if corrected, would have led to the application
of a higher Applicable Margin for any period (an “Applicable Period”) than the
Applicable Margin actually applied for such Applicable Period, then (i) Borrower
shall promptly deliver to Agent a correct certificate for such Applicable
Period, (ii) the Applicable Margin shall be determined as if the correct
Applicable Margin (as set forth in the table above) were applicable for such
Applicable Period, and (iii) Borrower shall promptly deliver to Agent full
payment in respect of the accrued additional interest as a result of such
increased Applicable Margin for such Applicable Period, which payment shall be
promptly applied by Agent to the affected Obligations.

“Applicable Revolver Unused Line Fee Percentage” means, as of any date of
determination, the applicable percentage set forth in the following table that
corresponds to the Revolver Usage of Borrower for such date as determined by
Agent at the end of such day; provided, that any time an Event of Default has
occurred and is continuing, the Applicable Revolver Unused Line Fee Percentage
shall be set at the margin in the row styled “Level II”:

 

Level

   Revolver Usage   Applicable Unused Line
Fee Percentage  

I

   Greater than or equal to 50%     0.50 % 

II

   Less than 50%     0.75 % 

The Applicable Revolver Unused Line Fee Percentage shall be re-determined on a
daily basis.

“Application Event” means the occurrence of (a) a failure by Borrower to repay
all of the Revolver Obligations in full on the Revolver Maturity Date, (b) a
failure by Borrower to repay all of the Term Loan Obligations in full on the
Term Loan Maturity Date, (c) a failure by Borrower to repay all of the Capex
Term Loan Obligations in full on the Capex Term Loan Maturity Date, or (d) an
Event of Default and the election by Agent or the Required Lenders to require
that payments and proceeds of Collateral be applied pursuant to Section 2.4(b)
of this Agreement.

 

- 4 -

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

“Assignee” has the meaning set forth in Section 14.1(a).

“Assignment and Acceptance” means an Assignment and Acceptance Agreement
substantially in the form of Exhibit A-1.

“Authorized Person” means any officer or employee of Borrower.

“Availability” means, as of any date of determination, the amount that Borrower
is entitled to borrow as Advances hereunder (after giving effect to all then
outstanding Obligations (other than Bank Product Obligations) and all sublimits
and reserves then applicable hereunder).

“Available Increase Amount” means, as of any date of determination, an amount
equal to the result of (a) $10,000,000 minus (b) the aggregate principal amount
of Increases to the Revolver Commitments previously made pursuant to
Section 2.15 of this Agreement.

“Bank Product” means any financial accommodation extended to Borrower or its
Subsidiaries by a Bank Product Provider (other than pursuant to this Agreement)
including: (a) credit cards, (b) credit card processing services, (c) debit
cards, (d) purchase cards, (e) ACH Transactions, (f) cash management, including
controlled disbursement, accounts or services, or (g) transactions under Hedge
Agreements.

“Bank Product Agreements” means those agreements entered into from time to time
by Borrower or its Subsidiaries with a Bank Product Provider in connection with
the obtaining of any of the Bank Products.

“Bank Product Collateralization” means providing cash collateral (pursuant to
documentation reasonably satisfactory to Agent) to be held by Agent for the
benefit of the Bank Product Providers in an amount determined by Agent as
sufficient to satisfy the reasonably estimated credit exposure with respect to
the then existing Bank Product Obligations.

“Bank Product Obligations” means all obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by Borrower or its
Subsidiaries to any Bank Product Provider pursuant to or evidenced by the Bank
Product Agreements and irrespective of whether for the payment of money, whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and including all such amounts that Borrower or its
Subsidiaries are obligated to reimburse to Agent or any member of the Lender
Group as a result of Agent or such member of the Lender Group purchasing
participations from, or executing indemnities or reimbursement obligations to, a
Bank Product Provider with respect to the Bank Products provided by such Bank
Product Provider to Borrower or its Subsidiaries.

“Bank Product Provider” means any Person that at the time it enters into a Bank
Product Agreement, is a Lender or an Affiliate of a Lender, in its capacity as a
party to such Bank Product Agreement.

“Bankruptcy Code” means title 11 of the United States Code, as in effect from
time to time.

 

- 5 -

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

“Base LIBOR Rate” means the rate per annum, determined by Lender in accordance
with its customary procedures, and utilizing such electronic or other quotation
sources as it considers appropriate (rounded upwards, if necessary, to the next
1/16th of one percent, to be the rate at which Dollar deposits (for delivery on
the first day of the requested Interest Period) are offered to major banks in
the London interbank market 2 Business Days prior to the commencement of the
requested Interest Period, for a term and in an amount comparable to the
Interest Period and the amount of the LIBOR Rate Loan requested (whether as an
initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a
conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrower in accordance
with this Agreement, which determination shall be conclusive in the absence of
manifest error.

“Base Rate” means the greatest of (a) the Federal Funds Rate plus 0.50%, (b) the
LIBOR Rate (which rate shall be calculated based upon an Interest Period of 1
month and shall be determined on a daily basis), plus 1 percentage point, and
(c) the rate most recently announced by Agent at its principal office in Los
Angeles, California as its “Prime Rate”, with the understanding that the “prime
rate” is one of Agent’s base rates (not necessarily the lowest of such rates)
and serves as the basis upon which effective rates of interest are calculated
for those loans making reference thereto and is evidenced by the recording
thereof after its announcement in such internal publications as Agent may
designate.

“Base Rate Loan” means the portion of the Advances that bears interest at a rate
determined by reference to the Base Rate.

“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of
ERISA) for which Borrower or any Subsidiary or ERISA Affiliate of Borrower has
been an “employer” (as defined in Section 3(5) of ERISA) within the past six
years.

“Board of Directors” means the board of directors (or comparable managers) of
Borrower or any committee thereof duly authorized to act on behalf of the board
of directors (or comparable managers).

“Books” means all of Borrower’s and its Subsidiaries’ now owned or hereafter
acquired books and records (including all of their Records indicating,
summarizing, or evidencing their assets (including the Collateral) or
liabilities, all of Borrower’s and its Subsidiaries’ Records relating to their
business operations or financial condition, and all of their goods or General
Intangibles related to such information).

“Borrower” has the meaning set forth in the preamble to this Agreement.

“Borrower Collateral” means all of Borrower’s now owned or hereafter acquired
right, title, and interest in and to each of the following:

(a) all of its Accounts,

(b) all of its Books,

(c) all of its commercial tort claims described on Schedule 5.7(d),

 

- 6 -

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

(d) all of its Deposit Accounts,

(e) all of its Equipment,

(f) all of its General Intangibles,

(g) all of its Inventory,

(h) all of its Investment Property (including all of its securities and
Securities Accounts),

(i) all of its Negotiable Collateral,

(j) all of its Supporting Obligations,

(k) money or other assets of Borrower that now or hereafter come into the
possession, custody, or control of any member of the Lender Group, and

(l) the proceeds and products, whether tangible or intangible, of any of the
foregoing, including proceeds of insurance covering any or all of the foregoing,
and any and all Accounts, Books, Deposit Accounts, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, Supporting Obligations, money, or other tangible or intangible
property resulting from the sale, exchange, collection, or other disposition of
any of the foregoing, or any portion thereof or interest therein, and the
proceeds thereof.

“Borrowing” means a borrowing hereunder consisting of Advances (or term loans,
in the case of the Term Loan or the Capex Term Loan) made on the same day by the
Lenders (or Agent on behalf thereof), or by Agent in the case of an Agent
Advance.

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks are authorized or required to close in the state of California,
except that, if a determination of a Business Day shall relate to a LIBOR Rate
Loan, the term “Business Day” also shall exclude any day on which banks are
closed for dealings in Dollar deposits in the London interbank market.

“Canadian Subsidiary” means Professor Connors Canada, Inc., a company organized
under the laws of the province of Ontario.

“Canadian Subsidiary Dissolution” means any of the consolidation, combination or
merger of the Canadian Subsidiary with and into Borrower or the liquidation,
wind up, dissolution or other similar transaction reasonably approved by the
Agent, of the Canadian Subsidiary (in each case, including any similar
transaction under local law governing of such Subsidiary); provided, that if the
aggregate Net Cash Proceeds received from all such transactions are in an amount
greater than $1,000,000, the remaining assets of the Canadian Subsidiary (if
any) and any proceeds of any of the foregoing shall be transferred to Borrower.

“Capex Term Loan” has the meaning set forth in Section 2.2(b).

 

- 7 -

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

“Capex Term Loan Amount” means $12,000,000.

“Capex Term Loan Commitment” means, with respect to each Lender, its Capex Term
Loan Commitment, and, with respect to all Lenders, their Capex Term Loan
Commitments, in each case as such Dollar amounts are set forth beside such
Lender’s name under the applicable heading on Schedule C-1 or in the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder, as such
amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 14.1.

“Capex Term Loan Commitment Expiration Date” means the earlier to occur of
(a) November 13, 2016, and (b) the date when the Capex Term Loan Commitments
have been reduced to $0.

“Capex Term Loan Maturity Date” means November 13, 2019.

“Capex Term Loan Obligations” all Obligations in respect of or relating to the
Capex Term Loan (including principal, interest, premiums, if any, fees, costs,
and expenses (including Lender Group Expenses) in respect thereof).

“Capital Expenditures” means, with respect to any Person for any period, the
aggregate of all expenditures by such Person and its Subsidiaries during such
period that are capital expenditures as determined in accordance with GAAP,
whether such expenditures are paid in cash or financed excluding (a) interest
capitalized during such period, (b) any expenditure described above to the
extent such expenditure is part of the aggregate amounts payable as
consideration for any Permitted Acquisition consummated during or prior to such
period, (c) to the extent permitted by this Agreement, a reinvestment of the Net
Cash Proceeds of any Disposition by Borrower or any of its Subsidiaries in
accordance with Section 2.4(e)(ii), (d) expenditures of proceeds of insurance
settlements, condemnation awards and other settlements in respect of lost,
destroyed, damaged or condemned assets, equipment or other property to the
extent such expenditures are made to replace or repair such lost, destroyed,
damaged or condemned assets, equipment or other property or otherwise to
acquire, maintain, develop, construct, improve, upgrade or repair assets or
properties useful in the business of the Borrower and the Restricted
Subsidiaries, (e) expenditures that are accounted for as capital expenditures of
such person and that actually are paid for by, or for which the Borrower or any
Restricted Subsidiary receives reimbursement in cash from, a third party and for
which none of the Borrower or any Subsidiary has provided or is required to
provide or incur, directly or indirectly, any consideration or obligation to
such third party or any other person (whether before, during or after such
period), and (f) other expenditures that Agent determines in its discretion to
exclude from this definition of “Capital Expenditures”.

“Capitalized Lease Obligation” means that portion of the obligations under a
Capital Lease that is required to be capitalized in accordance with GAAP.

“Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP. Notwithstanding anything else set
forth herein, any lease that was or would have been treated as an operating
lease under GAAP as in effect on

 

- 8 -

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

the Restatement Effective Date that would be treated as a capital lease solely
as a result of a change in GAAP after the Restatement Effective Date shall
always be treated as an operating lease for all purposes and at all times under
this Agreement.

“Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor’s Rating Group (“S&P”) or Moody’s Investor Service, Inc.
(“Moody’s”), (c) commercial paper maturing no more than 270 days 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, (d) certificates of deposit or
bankers’ acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank organized under the laws of the United States or any state
thereof having at the date of acquisition thereof combined capital and surplus
of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank
that satisfies the criteria described in clause (d) above, or (ii) any other
bank organized under the laws of the United States or any state thereof so long
as the amount maintained with any such other bank is less than or equal to
$100,000 and is insured by the Federal Deposit Insurance Corporation, and
(f) Investments in money market funds substantially all of whose assets are
invested in the types of assets described in clauses (a) through (e) above.

“Cash Management Account” has the meaning set forth in Section 2.7(a).

“Cash Management Agreements” means those certain cash management agreements, in
form and substance reasonably satisfactory to Agent, each of which is among
Borrower or one of its Subsidiaries, Agent, and one of the Cash Management
Banks.

“Cash Management Bank” has the meaning set forth in Section 2.7(a).

“CFC” means a controlled foreign corporation (as that term is defined in the
IRC).

“Change of Control” means:

(a) any Person or two or more Persons acting in concert (other than Permitted
Holders), shall have acquired beneficial ownership, directly or indirectly, of
Stock of Borrower (or other securities convertible into such Stock) representing
35% or more of the combined voting power of all Stock of Borrower entitled
(without regard to the occurrence of any contingency) to vote for the election
of members of the Board of Directors of Borrower;

(b) any Person or two or more Persons acting in concert (other than Permitted
Holders), shall have acquired by contract or otherwise, or shall have entered
into a contract or arrangement that, upon consummation thereof, will result in
its or their acquisition of the power to exercise, directly or indirectly, a
controlling influence over the management or policies of Borrower or control
over the Stock of such Person entitled to vote for members of the Board of
Directors of Borrower on a fully-diluted basis (and taking into account all such
Stock that such Person or group has the right to acquire pursuant to any option
right) representing 35% or more of the combined voting power of such Stock; or

 

- 9 -

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

(d) during any period of 24 consecutive months commencing on or after the
Restatement Effective Date, the occurrence of a change in the composition of the
Board of Directors of Borrower such that a majority of the members of such Board
of Directors are not Continuing Directors.

“Change in Law” means the occurrence after the date of the Agreement of: (a) the
adoption or effectiveness of any law, rule, regulation, judicial ruling,
judgment or treaty, (b) any change in any law, rule, regulation, judicial
ruling, judgment or treaty or in the administration, interpretation,
implementation or application by any Governmental Authority of any law, rule,
regulation, guideline or treaty, or (c) the making or issuance by any
Governmental Authority of any request, rule, guideline or directive, whether or
not having the force of law; provided that notwithstanding anything in the
Agreement to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer
Protection Act and all requests, rules, guidelines or directives thereunder or
issued in connection therewith and (ii) all requests, rules, guidelines or
directives concerning capital adequacy promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities shall,
in each case, be deemed to be a “Change in Law,” regardless of the date enacted,
adopted or issued.

“Chillers” means a refrigerated unit out of which Borrower’s products are sold.

“Code” means the California Uniform Commercial Code, as in effect from time to
time; provided, however, , that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, priority, or
remedies with respect to Agent’s Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of California, the term “Code” shall mean the Uniform Commercial Code
as enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority, or
remedies.

“Collateral” means all assets and interests in assets and proceeds thereof now
owned or hereafter acquired by Borrower or its Subsidiaries in or upon which a
Lien is granted under any of the Loan Documents.

“Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in Borrower’s or its Subsidiaries’ Books, Equipment, or Inventory, in each case,
in form and substance reasonably satisfactory to Agent.

“Collections” means all cash, checks, notes, instruments, and other items of
payment (including insurance proceeds, proceeds of cash sales, rental proceeds,
and tax refunds).

“Commercial Tort Claim Assignment” has the meaning set forth in Section 4.4(b).

 

- 10 -

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

“Commitment” means, with respect to each Lender, its Revolver Commitment, its
Term Loan Commitment, its Capex Term Loan Commitment, or its Total Commitment,
as the context requires, and, with respect to all Lenders, their Revolver
Commitments, their Term Loan Commitments, their Capex Term Loan Commitments, or
their Total Commitments, as the context requires, in each case as such Dollar
amounts are set forth beside such Lender’s name under the applicable heading on
Schedule C-1 or in the Assignment and Acceptance pursuant to which such Lender
became a Lender hereunder, as such amounts may be reduced or increased from time
to time pursuant to assignments made in accordance with the provisions of
Section 14.1.

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C-1 delivered by the chief financial officer of Borrower to Agent.

“Consolidated Funded Indebtedness” means, with respect to any Person at any
date, all Indebtedness for borrowed money of such Person, determined on a
consolidated basis in accordance with GAAP (other than Subordinated Debt and
Permitted Preferred Stock), including, in any event, but without duplication,
with respect to Borrower and its Subsidiaries, the Advances, Purchase Money
Indebtedness, and the amount of their Capitalized Lease Obligations, in each
case exclusive of Indebtedness owed by one Loan Party to another Loan Party and
any Indebtedness in respect of any of the foregoing.

“Continuing Director” means (a) any member of the Board of Directors who was a
director (or comparable manager) of Borrower on the Restatement Effective Date,
and (b) any individual who becomes a member of the Board of Directors after the
Restatement Effective Date if such individual was appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors,
but excluding any such individual originally proposed for election in opposition
to the Board of Directors in office at the Restatement Effective Date in an
actual or threatened election contest relating to the election of the directors
(or comparable managers) of Borrower and whose initial assumption of office
resulted from such contest or the settlement thereof.

“Control Agreement” means a control agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by Borrower or one of its
Subsidiaries, Agent, and the applicable securities intermediary (with respect to
a Securities Account) or bank (with respect to a Deposit Account).

“Copyright Security Agreement” means an amended and restated copyright security
agreement executed and delivered by Borrower and Agent, the form and substance
of which is reasonably satisfactory to Agent.

“Daily Balance” means, as of any date of determination and with respect to any
Obligation, the amount of such Obligation owed at the end of such day.

“Daily Revolver Unused Line Fee” means, as of any date, the product of (a) the
difference between (i) the aggregate amount of Revolver Commitments on such date
minus (ii) the Revolver Usage on such date times (b) the Applicable Revolver
Unused Line Fee Percentage for such date (calculated in accordance with the
provisions of Section 2.11(b)).

 

- 11 -

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

“Daily Capex Term Loan Unused Line Fee” means, as of any date, the product of
(a) the aggregate amount of remaining Capex Term Loan Commitments on such date
times (b) the 0.50% per annum (calculated in accordance with the provisions of
Section 2.11(c)).

“Default” means an event, condition, or default that, with the giving of notice,
the passage of time, or both, would be an Event of Default.

“Defaulting Lender” means any Lender that (a) has failed to fund any amounts
required to be funded by it under the Agreement on the date that it is required
to do so under the Agreement (including the failure to make a required payment
in connection with a Letter of Credit Disbursement), (b) notified the Borrower,
Agent, or any Lender in writing that it does not intend to comply with all or
any portion of its funding obligations under the Agreement, (c) has made a
public statement to the effect that it does not intend to comply with its
funding obligations under the Agreement or under other agreements generally (as
reasonably determined by Agent) under which it has committed to extend credit,
(d) failed, within 1 Business Day after written request by Agent, to confirm
that it will comply with the terms of the Agreement relating to its obligations
to fund any amounts required to be funded by it under the Agreement,
(e) otherwise failed to pay over to Agent or any other Lender any other amount
required to be paid by it under the Agreement on the date that it is required to
do so under the Agreement, or (f) (i) becomes or is insolvent or has a parent
company that has become or is insolvent or (ii) becomes the subject of a
bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee, or custodian or appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in any
such proceeding or appointment or has a parent company that has become the
subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, or custodian appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in any
such proceeding or appointment.

“Defaulting Lender Rate” means (a) for the first 3 days from and after the date
the relevant payment is due, the Base Rate, and (b) thereafter, the interest
rate then applicable to Advances that are Base Rate Loans (inclusive of the Base
Rate Margin applicable thereto).

“Deposit Account” means any deposit account (as that term is defined in the
Code).

“Designated Account” means the Deposit Account of Borrower identified on
Schedule D-1.

“Designated Account Bank” has the meaning ascribed thereto on Schedule D-1.

“Disbursement Letter” means an instructional letter executed and delivered by
Borrower to Agent regarding the extensions of credit to be made on the
Restatement Effective Date, the form and substance of which is reasonably
satisfactory to Agent.

“Disposition” means any transaction, or series of related transactions, pursuant
to which any Person or any of its Subsidiaries sells, assigns, transfers or
otherwise disposes of any property or assets (whether now owned or hereafter
acquired) to any other Person, in each case, whether or not the consideration
therefor consists of cash, securities or other assets owned by the

 

- 12 -

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

acquiring Person, whether voluntary or involuntary and including any casualty
losses or condemnations or other loss or destruction of any property of Borrower
or any of its Subsidiaries.

“Distribution” has the meaning ascribed thereto in Section 7.10.

“Dollars” or “$” means United States dollars.

“Eligible Equipment” means (a) the purchase of refrigerators, and (b) the
purchase of Equipment to be used at new or existing production facilities of
Borrower.

“Environmental Actions” means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other communication from any Governmental
Authority, or any third party involving violations of Environmental Laws or
releases of Hazardous Materials from (a) any assets, properties, or businesses
of Borrower, its Subsidiaries, or any of their predecessors in interest,
(b) from adjoining properties or businesses, or (c) from or onto any facilities
which received Hazardous Materials generated by Borrower, its Subsidiaries, or
any of their predecessors in interest.

“Environmental Law” means any applicable federal, state, provincial, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy, or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on
Borrower or its Subsidiaries, relating to the environment, the effect of the
environment on employee health, or Hazardous Materials, including the
Comprehensive Environmental Response Compensation and Liability Act, 42 USC
§9601 et seq.; the Resource Conservation and Recovery Act, 42 USC §6901 et seq.;
the Federal Water Pollution Control Act, 33 USC §1251 et seq.; the Toxic
Substances Control Act, 15 USC §2601 et seq.; the Clean Air Act, 42 USC §7401 et
seq.; the Safe Drinking Water Act, 42 USC §3803 et seq.; the Oil Pollution Act
of 1990, 33 USC §2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 USC §11001 et seq.; the Hazardous Material
Transportation Act, 49 USC §1801 et seq.; and the Occupational Safety and Health
Act, 29 USC §651 et seq. (to the extent it regulates occupational exposure to
Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.

“Environmental Liabilities and Costs” means all liabilities, monetary
obligations, losses, damages, punitive damages, consequential damages, treble
damages, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental Action.

“Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities and Costs.

 

- 13 -

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

“Equipment” means equipment (as that term is defined in the Code) and includes
machinery, machine tools, motors, furniture, furnishings, fixtures, vehicles
(including motor vehicles), computer hardware, tools, parts, and goods (other
than consumer goods, farm products, or Inventory), wherever located, including
all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto.

“ERISA Affiliate” means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of Borrower or its
Subsidiaries under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of Borrower or its Subsidiaries under IRC Section 414(c), (c) solely
for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which Borrower or any of its Subsidiaries is a member under IRC Section 414(m),
or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC,
any Person subject to ERISA that is a party to an arrangement with Borrower or
any of its Subsidiaries and whose employees are aggregated with the employees of
Borrower or its Subsidiaries under IRC Section 414(o).

“Event of Default” has the meaning set forth in Section 8.

“Excess Cash Flow” means, with respect to any fiscal period and with respect to
Borrower determined on a consolidated basis in accordance with GAAP the result
of:

(a) TTM EBITDA, minus

(b) the sum of

(i) the cash portion of Interest Expense paid during such fiscal period,

(ii) the cash portion of income taxes paid during such period,

(iii) all scheduled principal payments made in respect of the Term Loan and the
Capex Term Loan during such period,

(iv) the cash portion of Capital Expenditures (net of (y) any proceeds
reinvested in accordance with the proviso to Section 2.4(e)(ii) of this
Agreement, and (z) any proceeds of related financings with respect to such
expenditures) made during such period, and

(v) all other cash amounts added back in the determination of TTM EBITDA for
such period.

“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time
to time.

 

- 14 -

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

“Excluded Deposit Account” means a deposit account used solely for (i) 401(k) or
other employee benefit plans, (ii) tax deposits, (iii) trust or escrow or
fiduciary accounts, (iv) petty cash accounts or (v) zero balance accounts.

“Fee Letter” means that certain fee letter, dated as of even date herewith,
between Borrower and Agent, in form and substance reasonably satisfactory to
Agent.

“FATCA” means Sections 1471 through 1474 of the IRC, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with) and any current or future
regulations or official interpretations thereof.

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal to, for each day during such period, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by Agent from three
Federal funds brokers of recognized standing selected by it.

“Fixed Charges” means with respect to Borrower and its Subsidiaries for any
period, the sum, without duplication, of (a) Interest Expense, (b) principal
payments required to be paid during such period in respect of Indebtedness.

“Fixed Charge Coverage Ratio” means, with respect to Borrower and its
Subsidiaries for any period, the ratio of (i) TTM EBITDA for such period minus
the sum of (A) Maintenance Capital Expenditures made (to the extent not already
incurred in a prior period) or incurred during such period plus (B) all federal,
state, and local income taxes paid in cash during such period, plus (C) all
Distributions made during such period, to (ii) Fixed Charges for such period.

“Funding Date” means the date on which a Borrowing occurs.

“Funding Losses” has the meaning set forth in Section 2.13(b)(ii).

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

“General Intangibles” means general intangibles (as that term is defined in the
Code), including payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trade secrets, trademarks, servicemarks,
copyrights, blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other rights
under any royalty or licensing agreements, infringement claims, computer
programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, insurance premium rebates, tax refunds, and tax
refund claims, and any other personal property other than Accounts, Deposit
Accounts, goods, Investment Property, and Negotiable Collateral.

 

- 15 -

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

“Governing Documents” means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.

“Governmental Authority” means any federal, state, local, or other governmental
or administrative body, instrumentality, board, department, or agency or any
court, tribunal, administrative hearing body, arbitration panel, commission, or
other similar dispute-resolving panel or body.

“Guarantors” means each Subsidiary of Borrower that executes, or otherwise
becomes a party to, a Guaranty, including pursuant to the provisions of
Section 6.15 of this Agreement, and “Guarantor” means any one of them.

“Guarantor Security Agreement” means one or more security agreements executed
and delivered by each Guarantor (if any) in favor of Agent, in each case, in
form and substance reasonably satisfactory to Agent.

“Guaranty” means that certain general continuing guaranty executed and delivered
by each Guarantor (if any) in favor of Agent, in form and substance reasonably
satisfactory to Agent.

“Hazardous Materials” means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

“Hedge Agreement” means any and all agreements or documents now existing or
hereafter entered into by Borrower or any of its Subsidiaries that provide for
an interest rate, credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging Borrower’s or any of its Subsidiaries’
exposure to fluctuations in interest or exchange rates, loan, credit exchange,
security, or currency valuations or commodity prices.

“Hedge Obligations” means any and all obligations or liabilities, whether
absolute or contingent, due or to become due, now existing or hereafter arising,
of a Borrower or its Subsidiaries arising under, owing pursuant to, or existing
in respect of any Hedge Agreements.

“Holdout Lender” has the meaning set forth in Section 15.2(a).

“Increase” shall have the meaning ascribed thereto in Section 2.15.

 

- 16 -

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

“Increase Date” shall have the meaning ascribed thereto in Section 2.15.

“Increase Joinder” shall have the meaning ascribed thereto in Section 2.15.

“Indebtedness” means (a) all obligations for borrowed money (and Prohibited
Preferred Stock), (b) all obligations evidenced by bonds, debentures, notes, or
other similar instruments and all reimbursement or other obligations in respect
of letters of credit, bankers acceptances, interest rate swaps, or other
financial products, (c) all obligations as a lessee under Capital Leases,
(d) all obligations or liabilities of others secured by a Lien on any asset of a
Person or its Subsidiaries, irrespective of whether such obligation or liability
is assumed, (e) all obligations to pay the deferred purchase price of assets
(other than trade payables, deferred rent, taxes or compensation incurred in the
ordinary course of business and repayable in accordance with customary trade
practices), (f) all Hedge Obligations, and (g) any obligation guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted, or sold with recourse) any obligation of any other Person
that constitutes Indebtedness under any of clauses (a) through (f) above.

“Indemnified Liabilities” has the meaning set forth in Section 11.3.

“Indemnified Person” has the meaning set forth in Section 11.3.

“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.

“Installed Store” means a store or other place of business not owned, leased or
operated by a Loan Party or any of its Affiliates in which Borrower’s products
are maintained and sold.

“Intercompany Subordination Agreement” means a subordination agreement executed
and delivered by Borrower and each of its Subsidiaries and Agent, the form and
substance of which is reasonably satisfactory to Agent.

“Interest Expense” means, for any period, the aggregate of the cash interest
expense of Borrower and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.

“Interest Period” means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, 3 or 6 months thereafter; provided, however,
that (a) if any Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended (subject to clauses (c)-(e) below) to the
next succeeding Business Day, (b) interest shall accrue at the applicable rate
based upon the LIBOR Rate from and including the first day of each Interest
Period to, but excluding, the day on which any Interest Period expires, (c) any
Interest Period that would end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such

 

- 17 -

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

Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Business Day, (d) with respect to an Interest
Period that begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the end
of such Interest Period), the Interest Period shall end on the last Business Day
of the calendar month that is 1, 2, or 3 months after the date on which the
Interest Period began, as applicable, (e) Borrower may not elect an Interest
Period with respect to any Advances which will end after the Revolver Maturity
Date, (f) Borrower may not elect an Interest Period with respect to any portion
of the Term Loan which will end after the Term Loan Maturity Date, and
(g) Borrower may not elect an Interest Period with respect to any portion of the
Capex Term Loan which will end after the Capex Term Loan Maturity Date.

“Inventory” means inventory (as that term is defined in the Code).

“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, or capital contributions (excluding (a) commission, travel, and
similar advances to officers and employees of such Person made in the ordinary
course of business, and (b) bona fide Accounts arising in the ordinary course of
business consistent with past practice), purchases or other acquisitions of
Indebtedness, Stock, or all or substantially all of the assets of such other
Person (or of any division or business line of such other Person), and any other
items that are or would be classified as investments on a balance sheet prepared
in accordance with GAAP.

“Investment Property” means investment property (as that term is defined in the
Code).

“IRC” means the Internal Revenue Code of 1986, as in effect from time to time.

“Issuing Lender” means CNB or any other Lender that, at the request of Borrower
and with the consent of Agent, agrees, in such Lender’s sole discretion, to
become an Issuing Lender for the purpose of issuing Letters of Credit pursuant
to Section 2.12.

“L/C Disbursement” means a payment made by the Issuing Lender pursuant to a
Letter of Credit.

“Lender” and “Lenders” have the respective meanings set forth in the preamble to
this Agreement, and shall include any other Person made a party to this
Agreement in accordance with the provisions of Section 14.1.

“Lender Group” means, individually and collectively, each of the Lenders
(including the Issuing Lender) and Agent.

“Lender Group Expenses” means all (a) documented costs or expenses (including
taxes, and insurance premiums) required to be paid by Borrower or its
Subsidiaries under any of the Loan Documents that are paid, advanced, or
incurred by the Lender Group, (b) fees or charges paid or incurred by Agent in
connection with the Lender Group’s transactions with Borrower or its
Subsidiaries, including, fees or charges for photocopying, notarization,
couriers and messengers, telecommunication, public record searches (including
tax lien, litigation, and UCC searches and including searches with the patent
and trademark office, the copyright office,

 

- 18 -

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

or the department of motor vehicles), filing, recording, publication, appraisal
(including periodic collateral appraisals or business valuations to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement), real estate surveys, real estate title policies and
endorsements, and environmental examinations, (c) costs and expenses incurred by
Agent in the disbursement of funds to Borrower or other members of the Lender
Group (by wire transfer or otherwise), (d) charges paid or incurred by Agent
resulting from the dishonor of checks, (e) documented reasonable costs and
expenses paid or incurred by the Lender Group to correct any default or enforce
any provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (f) documented audit fees and expenses of Agent
related to audit examinations of the Books to the extent of the fees and charges
(and up to the amount of any limitation) contained in this Agreement,
(g) documented reasonable costs and expenses of third party claims or any other
suit paid or incurred by the Lender Group in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents or the Lender Group’s relationship with Borrower or any its
Subsidiaries, (h) Agent’s and each Lender’s documented reasonable costs and
expenses (including attorneys fees of one primary counsel and one local counsel
in each relevant jurisdiction) incurred in advising, structuring, drafting,
reviewing, administering, syndicating, or amending the Loan Documents, and
(i) Agent’s and each Lender’s documented reasonable costs and expenses
(including attorneys, accountants, consultants, and other advisors fees and
expenses) incurred in terminating, enforcing (including attorneys, accountants,
consultants, and other advisors fees and expenses incurred in connection with a
“workout,” a “restructuring,” or an Insolvency Proceeding concerning Borrower or
its Subsidiaries or in exercising rights or remedies under the Loan Documents),
or defending the Loan Documents, irrespective of whether suit is brought, or in
taking any Remedial Action concerning the Collateral.

“Lender-Related Person” means, with respect to any Lender, such Lender, together
with such Lender’s Affiliates, officers, directors, employees, attorneys, and
agents.

“Letter of Credit” has the meaning set forth in Section 2.12(a).

“Letter of Credit Collateralization” means either (a) providing cash collateral
(pursuant to documentation reasonably satisfactory to Agent, including
provisions that specify that the Letter of Credit Fees and all commissions,
fees, charges and expenses provided for in Section 2.12(d) of this Agreement
(including any fronting fees) will continue to accrue while the Letters of
Credit are outstanding) to be held by Agent for the benefit of the Revolving
Lenders in an amount equal to 105% of the then existing Letter of Credit Usage,
(b) delivering to Agent documentation executed by all beneficiaries under the
Letters of Credit, in form and substance reasonably satisfactory to Agent and
Issuing Lender, terminating all of such beneficiaries’ rights under the Letters
of Credit, or (c) providing Agent with a standby letter of credit, in form and
substance reasonably satisfactory to Agent, from a commercial bank acceptable to
Agent (in its sole discretion) in an amount equal to 105% of the then existing
Letter of Credit Usage (it being understood that the Letter of Credit Fee and
all fronting fees set forth in the Agreement will continue to accrue while the
Letters of Credit are outstanding and that any such fees that accrue must be an
amount that can be drawn under any such standby letter of credit).

 

- 19 -

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

“Letter of Credit Exposure” means, as of any date of determination with respect
to any Lender, such Lender’s Pro Rata Share of the Letter of Credit Usage on
such date.

“Letter of Credit Usage” means, as of any date of determination, the aggregate
undrawn amount of all outstanding Letters of Credit.

“Leverage Ratio” means, as of any date of determination, the ratio of
(a) Consolidated Funded Indebtedness of Borrower and its Subsidiaries as of such
date of determination to (b) TTM EBITDA of Borrower and its Subsidiaries as of
such date of determination.

“LIBOR Deadline” has the meaning set forth in Section 2.13(b)(i).

“LIBOR Notice” means a written notice in the form of Exhibit L-1.

“LIBOR Option” has the meaning set forth in Section 2.13(a).

“LIBOR Rate” means, for each Interest Period for each LIBOR Rate Loan, the rate
per annum determined by Agent (rounded upwards, if necessary, to the next 1/16th
of one percent by dividing (a) the Base LIBOR Rate for such Interest Period, by
(b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and
as of the effective day of any change in the Reserve Percentage.

“LIBOR Rate Loan” means each portion of an Advance, the Term Loan or a Capex
Term Loan that bears interest at a rate determined by reference to the LIBOR
Rate.

“Lien” means any interest in an asset securing an obligation owed to, or a claim
by, any Person other than the owner of the asset, irrespective of whether
(a) such interest is based on the common law, statute, or contract, (b) such
interest is recorded or perfected, and (c) such interest is contingent upon the
occurrence of some future event or events or the existence of some future
circumstance or circumstances. Without limiting the generality of the foregoing,
the term “Lien” includes the lien or security interest arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, security agreement, conditional sale or trust receipt, or from a
lease, consignment, or bailment for security purposes and also includes
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, and other title exceptions and encumbrances
affecting Real Property. For the avoidance of doubt, the term “Lien” shall not
be deemed to include any non-exclusive intellectual property license.

“Loan Account” has the meaning set forth in Section 2.10.

“Loan Documents” means this Agreement, the Cash Management Agreements, the
Control Agreements, the Copyright Security Agreement, the Fee Letter, any
Guarantor Security Agreement, any Guaranty, any Intercompany Subordination
Agreement, any Mortgages, the Stock Pledge Agreement, the Trademark Security
Agreement, the Warrant Agreement, any note or notes executed by Borrower in
connection with this Agreement and payable to Lender, and any other agreement
entered into, now or in the future, by Borrower and Lender in connection with
either this Agreement or the Existing Loan Agreement.

 

- 20 -

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

“Loan Parties” means Borrower and each Guarantor, and “Loan Party” means any one
of them.

“Maintenance Capital Expenditures” means, for any period, the sum of (without
duplication) (a) Capital Expenditures made during such period on account of the
maintenance of the Equipment of Borrower and its Subsidiaries, and (b) the
greater of (i) the actual amount of expenditures made during such period in
respect of the Chillers, and (ii) (A) for any period ending at any time during
Borrower’s 2014 fiscal year, $100,000, (B) for any period ending at any time
during Borrower’s 2015 fiscal year or Borrower’s 2016 fiscal year, $150,000,
(C) for any period ending at any time during Borrower’s 2017 fiscal year,
$250,000, (D) for any period ending at any time during Borrower’s 2018 fiscal
year, $350,000, and (E) for any period ending at any time during Borrower’s 2019
fiscal year, $450,000.

“Margin Stock” means “margin stock” as defined in Regulation U of the Board of
Governors of the Federal Reserve System of the United States (or any successor)
as in effect from time to time.

“Material Adverse Change” means (a) a material adverse change in the business,
operations, results of operations, assets, liabilities or condition (financial
or otherwise) of Borrower and its Subsidiaries, taken as a whole, (b) a material
impairment of Borrower’s and its Subsidiaries’ ability to perform their
respective obligations under the Loan Documents to which they are parties or of
the Lender Group’s ability to enforce the Obligations or realize upon the
Collateral, or (c) a material impairment of the enforceability or priority of
the Agent’s Liens with respect to the Collateral as a result of an action or
failure to act on the part of Borrower or its Subsidiaries.

“Material Contract” means, with respect to any Person, (a) each contract or
agreement to which such Person or any of its Subsidiaries is a party involving
aggregate consideration payable to or by such Person or such Subsidiary of
$2,500,000 or more (other than purchase orders in the ordinary course of the
business of such Person or such Subsidiary and other than contracts that by
their terms may be terminated by such Person or Subsidiary in the ordinary
course of its business upon less than 60 days notice without penalty or
premium), and (b) all other contracts or agreements, the loss or termination of
which could reasonably be expected to result in a Material Adverse Change.

“Maximum Revolver Amount” means $10,000,000, increased by the amount of any
Increase of the Revolver Commitments made in accordance with Section 2.15
hereof.

“Mortgages” means, individually and collectively, one or more mortgages, deeds
of trust, or deeds to secure debt, executed and delivered by Borrower or its
Subsidiaries in favor of Agent, in form and substance reasonably satisfactory to
Agent, that encumber the Real Property Collateral.

“Negotiable Collateral” means letters of credit, letter of credit rights,
instruments, promissory notes, drafts, documents, and chattel paper (including
electronic chattel paper and tangible chattel paper).

 

- 21 -

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

“Net Cash Proceeds” means, (i) with respect to any Disposition by any Person or
any of its Subsidiaries, the amount of cash received (directly or indirectly)
from time to time (whether as initial consideration or through the payment or
disposition of deferred consideration) by or on behalf of such Person or such
Subsidiary, in connection therewith after deducting therefrom only (A) the
amount of any Indebtedness secured by any Permitted Lien on any asset (other
than Indebtedness assumed by the purchaser of such asset) which is required to
be, and is, repaid in connection with such Disposition (other than Indebtedness
under this Agreement), (B) reasonable expenses related thereto incurred by such
Person or such Subsidiary in connection therewith, (C) transfer taxes paid to
any taxing authorities by such Person or such Subsidiary in connection
therewith, and (D) net income taxes to be paid in connection with such
Disposition (after taking into account any tax credits or deductions and any tax
sharing arrangements) and (ii) with respect to the issuance or incurrence of any
Indebtedness by any Person or any of its Subsidiaries, or the sale or issuance
by any Person or any of its Subsidiaries of any shares of its Stock, the
aggregate amount of cash received (directly or indirectly) from time to time
(whether as initial consideration or through the payment or disposition of
deferred consideration) by or on behalf of such Person or such Subsidiary in
connection therewith, after deducting therefrom only (A) reasonable expenses
related thereto incurred by such Person or such Subsidiary in connection
therewith, (B) transfer taxes paid by such Person or such Subsidiary in
connection therewith and (C) net income taxes to be paid in connection therewith
(after taking into account any tax credits or deductions and any tax sharing
arrangements); in each case of clause (i) and (ii) to the extent, but only to
the extent, that the amounts so deducted are properly attributable to such
transaction or to the asset that is the subject thereof.

“Non-Defaulting Lender” means, at any time, a Lender that at such time is not a
Defaulting Lender.

“Obligations” means (a) all loans (including the Term Loan and the Capex Term
Loan), Advances, debts, principal, interest (including any interest that accrues
after the commencement of an Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any such Insolvency
Proceeding), contingent reimbursement obligations with respect to outstanding
Letters of Credit, premiums, liabilities (including all amounts charged to
Borrower’s Loan Account pursuant hereto), obligations (including indemnification
obligations), fees (including the fees provided for in the Fee Letter), charges,
costs, Lender Group Expenses (including any fees or expenses that accrue after
the commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding),
lease payments, guaranties, covenants, and duties of any kind and description
owing by Borrower to the Lender Group pursuant to or evidenced by the Loan
Documents and irrespective of whether for the payment of money, whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all interest not paid when due and all Lender
Group Expenses that Borrower is required to pay or reimburse by the Loan
Documents, by law, or otherwise, and (b) all Bank Product Obligations. Any
reference in this Agreement or in the Loan Documents to the Obligations shall
include all extensions, modifications, renewals, or alterations thereof, both
prior and subsequent to any Insolvency Proceeding.

“Originating Lender” has the meaning set forth in Section 14.1(e).

 

- 22 -

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

“Overadvance” has the meaning set forth in Section 2.4(e)(i).

“OWB Fee and Reimbursement Agreement” means that certain Fee and Reimbursement
Agreement dated as of June 8, 2012 by and among the Borrower, MidOcean Partners
III, L.P., MidOcean Partners III-A, L.P., MidOcean Partners III-D, L.P., each of
the members of Freshpet Investors, LLC, and the other guarantors party thereto.

“Participant” has the meaning set forth in Section 14.1(e).

“Permitted Acquisition” means any Acquisition so long as:

(a) no Default or Event of Default shall have occurred and be continuing or
would result from the consummation of the proposed Acquisition and the proposed
Acquisition is consensual,

(b) Borrower has provided Agent with written confirmation, supported by
reasonably detailed calculations, that on a pro forma basis (including pro forma
adjustments arising out of events which are directly attributable to such
proposed Acquisition, are factually supportable, and are expected to have a
continuing impact, in each case, determined as if the combination had been
accomplished at the beginning of the relevant period; such eliminations and
inclusions to be mutually and reasonably agreed upon by Borrower and Agent)
created by adding the historical combined financial statements of Borrower
(including the combined financial statements of any other Person or assets that
were the subject of a prior Permitted Acquisition during the relevant period) to
the historical consolidated financial statements of the Person to be acquired
(or the historical financial statements related to the assets to be acquired)
pursuant to the proposed Acquisition, Borrower and its Subsidiaries would have
been in compliance with the financial covenants in Section 7.18 of the Agreement
for the 4 fiscal quarter period ended immediately prior to the proposed date of
consummation of such proposed Acquisition,

(c) Borrower has provided Agent with its due diligence package relative to the
proposed Acquisition, consisting of, to the extent reasonably available,
forecasted balance sheets, profit and loss statements, and cash flow statements
of the Person or assets to be acquired, together with appropriate supporting
details and a statement of underlying assumptions for the 1 year period
following the date of the proposed Acquisition, on a quarter by quarter basis),

(d) [Intentionally Omitted],

(e) Borrower has provided Agent with written notice of the proposed Acquisition
at least 5 Business Days prior to the anticipated closing date of the proposed
Acquisition, copies of the acquisition agreement and other material documents
relative to the proposed Acquisition, which agreement and documents must be
reasonably acceptable to Agent,

(f) the assets being acquired (other than a de minimis amount of assets in
relation to Borrower’s and its Subsidiaries’ total assets), or the Person whose
Stock is being acquired, are useful in or engaged in, as applicable, the
business of Borrower and its Subsidiaries or a business reasonably related
thereto,

 

- 23 -

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

(g) the assets being acquired (other than a de minimis amount of assets in
relation to the assets being acquired) are located within the United States or
Canada, or the Person whose Stock is being acquired is organized in a
jurisdiction located within the United States or Canada,

(h) the subject assets or Stock, as applicable, are being acquired directly by
Borrower or a Subsidiary, and, in connection therewith, such Borrower or
Subsidiary shall have provided such documents and instruments as requested are
required by Section 6.15 of the Agreement), and

(i) the consideration payable in respect of the proposed Acquisition shall be
composed solely of (i) common Stock of Borrower, (ii) proceeds of equity
contributions made to the Borrower by a Permitted Holder for the purpose of
funding, in whole or in part, a proposed Acquisition, or (iii) Subordinated Debt
permitted under this Agreement.

“Permitted Discretion” means a determination made in the exercise of reasonable
(from the perspective of a secured lender) business judgment.

“Permitted Dispositions” means (a) sales or other dispositions of Equipment that
is substantially worn, damaged, or obsolete in the ordinary course of business
or no longer used or useful, (b) sales of Inventory to buyers in the ordinary
course of business, (c) the use or transfer of money or Cash Equivalents in a
manner that is not prohibited by the terms of this Agreement or the other Loan
Documents, (d) the licensing, on a non-exclusive basis, of patents, trademarks,
copyrights, and other intellectual property rights in the ordinary course of
business, or the lapse of intellectual property that is immaterial or no longer
used in or necessary to its business, (e) any Dispositions of any property by
any Subsidiary to the Borrower to the extent (i) any resulting Investment
constitutes a Permitted Investment, (ii) the foregoing constitutes a
distribution permitted pursuant to Section 7.10, or (iii) the foregoing
constitutes a transaction permitted by Section 7.3, (f) any Disposition or
issuance by the Borrower of its own equity interests to the extent that any such
issuance does not result in a Change of Control, (g) any other Disposition of
property of Borrower; provided that the aggregate consideration received during
any fiscal year of the Borrower for all such Dispositions shall not exceed
$1,000,000, (h) Dispositions of property to the extent that (i) such property is
exchanged for credit against the purchase price of similar property or (ii) the
proceeds of such Disposition are promptly applied to the purchase price of such
similar property, (i) Dispositions of accounts receivables in connection with
the collection or compromise thereof in the ordinary course of business, (j) the
granting of a Permitted Lien, and (k) Dispositions resulting from property loss
events or takings and transfers of property that has suffered a property loss
event or a taking (constituting a total loss or constructive total loss of such
property) upon receipt of the Net Cash Proceeds of such property loss event or
taking.

“Permitted Holders” means the Persons identified on Schedule P-2 hereto.

“Permitted Investments” means (a) Investments in cash and Cash Equivalents,
(b) Investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) loans and advances to officers, managers, directors and employees
of any Loan Party in the ordinary course of business

 

- 24 -

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

for reasonable and customary business-related travel, entertainment, relocation
and analogous ordinary business purposes (including employee payroll advances),
(e) Investments resulting from entering into any Hedge Agreements,
(f) Investments received in settlement of amounts due to Borrower or any of its
Subsidiaries effected in the ordinary course of business or owing to Borrower or
any of its Subsidiaries as a result of Insolvency Proceedings involving an
Account Debtor or upon the foreclosure or enforcement of any Lien in favor of
Borrower or its Subsidiaries, (g) Permitted Acquisitions, (h) Investments by a
Loan Party in another Loan Party, (i) other Investments in an aggregate
outstanding amount not to exceed $1,000,000 at any time, (j) any Investment
owned by a Person at the time such Person is acquired and becomes a Subsidiary
pursuant to a Permitted Acquisition; provided that such Investment was not made
in connection with or in contemplation of such Permitted Acquisition, (k) any
Investments made from casualty insurance proceeds in connection with the
replacement, substitution, restoration or repair of assets on account of an
insurable event to the extent such assets were covered by casualty insurance
maintained by the Borrower or a Subsidiary, (l) Investments consisting of
purchases and acquisitions of inventory, supplies, material or equipment, in
each such case in the ordinary course of business, and (m) any other Investments
(other than an Investment that constitutes an Acquisition) made with the
proceeds of equity interests issued by the Borrower to a Permitted Holder. For
purposes of covenant compliance, the amount of any Permitted Investment shall be
the amount actually invested less cash returns on such Investment.

“Permitted Liens” means (a) Liens held by Agent, (b) Liens for unpaid taxes that
either (i) are not yet delinquent, or (ii) do not constitute an Event of Default
hereunder and are the subject of Permitted Protests, (c) Liens set forth on
Schedule P-1, (d) the interests of lessors under operating leases, (e) purchase
money Liens or the interests of lessors under Capital Leases to the extent that
such Liens or interests secure Permitted Purchase Money Indebtedness and so long
as such Lien attaches only to the asset purchased or acquired and the proceeds
thereof, (f) Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in
the ordinary course of business and not in connection with the borrowing of
money, and which Liens either (i) are for sums not yet delinquent by more than
30 days, or (ii) are the subject of Permitted Protests, (g) Liens on amounts
deposited in connection with obtaining worker’s compensation or other
unemployment insurance, (h) Liens on amounts deposited in connection with the
making or entering into of bids, tenders, or leases in the ordinary course of
business and not in connection with the borrowing of money, (i) Liens on amounts
deposited as security for surety or appeal bonds in connection with obtaining
such bonds in the ordinary course of business, (j) Liens resulting from any
judgment or award that is not an Event of Default hereunder, (k) with respect to
any Real Property, easements, rights of way, and zoning restrictions that do not
materially interfere with or impair the use or operation thereof and (l) Liens
securing Subordinated Debt.

“Permitted Preferred Stock” means and refers to any Preferred Stock issued by
the Borrower (and not by one or more of its Subsidiaries) that is not Prohibited
Preferred Stock.

“Permitted Protest” means the right of Borrower or any of its Subsidiaries to
protest any Lien (other than any Lien that secures the Obligations), taxes
(other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve with respect
to such obligation is established on the Books in such amount as is required
under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by

 

- 25 -

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

Borrower or any of its Subsidiaries, as applicable, in good faith, and (c) Agent
is satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of the Agent’s
Liens.

“Permitted Purchase Money Indebtedness” means, as of any date of determination,
Purchase Money Indebtedness that does not constitute Subordinated Debt and that
is incurred after the Restatement Effective Date in an aggregate amount
outstanding at any one time not in excess of $2,000,000, plus any Purchase Money
Indebtedness used to finance the purchase of Chillers.

“Post-Increase Revolver Lenders” has the meaning specified therefor in
Section 2.15 of this Agreement.

“Pre-Increase Revolver Lenders” has the meaning specified therefor in
Section 2.15 of this Agreement.

“Preferred Stock” means, as applied to the Stock of any Person, the Stock of any
class or classes (however designated) that is preferred with respect to the
payment of dividends, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such Person, over shares of Stock of
any other class of such Person.

“Prohibited Preferred Stock” means any Preferred Stock that by its terms is
mandatorily redeemable or subject to any other payment obligation (including any
obligation to pay dividends, other than dividends of shares of Preferred Stock
of the same class and series payable in kind or dividends of shares of common
stock) on or before a date that is less than 6 months after the Term Loan
Maturity Date, or, on or before the date that is less than 6 months after the
then extant Term Loan Maturity Date, is redeemable at the option of the holder
thereof for cash or assets or securities (other than distributions in kind of
shares of Preferred Stock of the same class and series or of shares of common
stock).

“Person” means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.

“Projections” means Borrower’s forecasted (a) balance sheets, (b) profit and
loss statements, (c) cash flow statements, and (d) statement of projected
capital expenditures, all prepared on a basis consistent with Borrower’s
historical financial statements, together with appropriate supporting details
and a statement of underlying assumptions.

“Pro Rata Share” means, as of any date of determination:

(a) with respect to a Lender’s obligation to make Advances and receive payments
of principal, interest, fees, costs, and expenses with respect thereto,
(i) prior to the Revolver Commitments being terminated or reduced to zero, the
percentage obtained by dividing (y) such Lender’s Revolver Commitment, by
(z) the aggregate Revolver Commitments of all Lenders, and (ii) from and after
the time that the Revolver Commitments have been terminated or reduced to zero,
the percentage obtained by dividing (y) the aggregate outstanding principal
amount of such Lender’s Advances by (z) the aggregate outstanding principal
amount of all Advances,

 

- 26 -

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

(b) with respect to a Lender’s obligation to participate in Letters of Credit,
to reimburse the Issuing Lender, and to receive payments of fees with respect
thereto, (i) prior to the Revolver Commitments being terminated or reduced to
zero, the percentage obtained by dividing (y) such Lender’s Revolver Commitment,
by (z) the aggregate Revolver Commitments of all Lenders, and (ii) from and
after the time that the Revolver Commitments have been terminated or reduced to
zero, the percentage obtained by dividing (y) the aggregate outstanding
principal amount of such Lender’s Advances by (z) the aggregate outstanding
principal amount of all Advances,

(c) with respect to a Lender’s obligation to make the Term Loan and receive
payments of interest, fees, and principal with respect thereto, (i) prior to the
making of the Term Loan, the percentage obtained by dividing (y) such Lender’s
Term Loan Commitment, by (z) the aggregate amount of all Lenders’ Term Loan
Commitments, and (ii) from and after the making of the Term Loan, the percentage
obtained by dividing (y) the principal amount of such Lender’s portion of the
Term Loan by (z) the principal amount of the Term Loan,

(d) with respect to a Lender’s obligation to make a Capex Term Loan and receive
payments of interest, fees, and principal with respect thereto, (i) prior to the
Capex Term Loan Commitment Expiration Date, (y) the sum of (A) such Lender’s
remaining Capex Term Loan Commitment, and (B) the outstanding principal balance
of such Lender’s Capex Term Loans, by (z) the sum of (A) the aggregate amount of
all Lenders’ remaining Capex Term Loan Commitments, and (B) the aggregate
outstanding principal balance of all Capex Term Loans, and (ii) from and after
the Capex Term Loan Commitment Expiration Date, the percentage obtained by
dividing (y) the outstanding principal balance of such Lender’s Capex Term Loans
by (z) the aggregate outstanding principal balance of all Capex Term Loans,

(e) with respect to all other matters as to a particular Lender (including the
indemnification obligations arising under Section 16.7), the percentage obtained
by dividing (i) the sum of (A) (x) prior to the termination or the reduction to
zero of the Revolver Commitments, such Lender’s Revolver Commitment, or (y) from
and after the termination or the reduction to zero of the Revolver Commitments,
the sum of the outstanding principal amount of such Lender’s Advances plus such
Lender’s ratable portion of the Risk Participation Liability with respect to
outstanding Letters of Credit, plus (B) the outstanding principal amount of such
Lender’s portion of the Term Loan, plus (C) (x) prior to the Term Loan
Commitment Expiration Date, the sum of (I) such Lender’s remaining Capex Term
Loan Commitment, and (II) the outstanding principal balance of such Lender’s
Capex Term Loans, or (y) from and after the Capex Term Loan Commitment
Expiration Date, the outstanding principal balance of such Lender’s Capex Term
Loans, by (ii) the sum of (A) (x) prior to the termination or the reduction to
zero of the Revolver Commitments, the aggregate amount of Revolver Commitments
of all Lenders, or (y) from and after the termination or the reduction to zero
of the Revolver Commitments, the outstanding principal amount of all Advances
plus the aggregate amount of the Risk Participation Liability with respect to
all outstanding Letters of Credit, plus (B) the outstanding principal amount of
the Term Loan, plus (C) (x) prior to the Term Loan Commitment Expiration Date,
the sum of (I) the aggregate amount of all Lenders’ remaining

 

- 27 -

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

Capex Term Loan Commitments, and (II) the aggregate outstanding principal
balance of all Capex Term Loans, or (y) from and after the Capex Term Loan
Commitment Expiration Date, the aggregate outstanding principal balance of all
Capex Term Loans.

“Purchase Money Indebtedness” means Indebtedness (other than the Obligations,
but including Capitalized Lease Obligations), incurred at the time of, or within
90 days after, the acquisition of any fixed assets for the purpose of financing
all or any part of the acquisition cost thereof.

“Qualifying IPO” means the issuance by Borrower of its common shares in an
underwritten primary public offering (other than a public offering pursuant to a
registration statement on Form S-8) pursuant to an effective registration
statement filed with the SEC in accordance with the Securities Act resulting in
gross proceeds of at least $100,000,000.

“Real Property” means any estates or interests in real property now owned or
hereafter acquired by Borrower or any of its Subsidiaries and the improvements
thereto.

“Real Property Collateral” means the Real Property identified on Schedule R-1
and any Real Property hereafter acquired by Borrower or any of its Subsidiaries.

“Record” means information that is inscribed on a tangible medium or which is
stored in an electronic or other medium and is retrievable in perceivable form.

“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials authorized by Environmental Laws.

“Replacement Lender” has the meaning set forth in Section 15.2(a).

“Report” has the meaning set forth in Section 16.17.

“Required Lenders” means, at any time, (a) if there are more than two Lenders
who are not Affiliates of one another, at least two Lenders who are not
Affiliates of one another whose aggregate Pro Rata Shares (calculated under
clause (d) of the definition of Pro Rata Shares) exceed 50%, and (b) otherwise,
all of the Lenders.

“Reserve Percentage” means, on any day, for any Lender, the maximum percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor Governmental Authority) for determining the reserve requirements
(including any basic, supplemental, marginal, or emergency reserves) that are in
effect on such date with respect to eurocurrency funding (currently referred to
as “eurocurrency liabilities”) of that Lender, but so long as such Lender is not
required or directed under applicable regulations to maintain such reserves, the
Reserve Percentage shall be zero.

 

- 28 -

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

“Restatement Effective Date” means November 13, 2014.

“Restatement Effective Date Business Plan” means the set of Projections of
Borrower for the 3 year period following the Restatement Effective Date (on a
year by year basis, and for the 1 year period following the Restatement
Effective Date, on a month by month basis), in form and substance (including as
to scope and underlying assumptions) reasonably satisfactory to Agent.

“Revolver Commitment” means, with respect to each Lender, its Revolver
Commitment, and, with respect to all Lenders, their Revolver Commitments, in
each case as such Dollar amounts are set forth beside such Lender’s name under
the applicable heading on Schedule C-1 or in the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder, as such amounts may be
reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of Section 14.1.

“Revolver Maturity Date” means November 13, 2017.

“Revolver Obligations” all Obligations in respect of or relating to the
Advances, Letters of Credit and Bank Product Obligations (including principal,
interest, premiums, if any, fees, costs, and expenses (including Lender Group
Expenses) in respect thereof).

“Revolver Usage” means, as of any date of determination, the sum of (a) the
amount of outstanding Advances, plus (b) the amount of the Letter of Credit
Usage.

“Revolving Loan Exposure” means, with respect to any Lender, as of any date of
determination (a) prior to the termination of the Revolver Commitments, the
amount of such Lender’s Revolver Commitment, and (b) after the termination of
the Revolver Commitments, the aggregate outstanding principal amount of the
Advances of such Lender.

“Risk Participation Liability” means, as to each Letter of Credit, all
reimbursement obligations of Borrower to the Issuing Lender with respect to such
Letter of Credit, consisting of (a) the amount available to be drawn or which
may become available to be drawn, (b) all amounts that have been paid by the
Issuing Lender with respect thereto to the extent not reimbursed by Borrower,
whether by the making of an Advance or otherwise, and (c) all accrued and unpaid
interest, fees, and expenses payable with respect thereto.

“SEC” means the United States Securities and Exchange Commission and any
successor thereto.

“Securities Account” means a securities account (as that term is defined in the
Code).

“Solvent” means, with respect to any Person on a particular date, that, at fair
valuations, the sum of such Person’s assets is greater than all of such Person’s
debts.

“Stock” means all shares, options, warrants, interests, participations, or other
equivalents (regardless of how designated) of or in a Person, whether voting or
nonvoting, including common stock, preferred stock, or any other “equity
security” (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).

 

- 29 -

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

“Stock Pledge Agreement” means an amended and restated stock pledge agreement,
in form and substance reasonably satisfactory to Agent, executed and delivered
by Borrower to Agent with respect to the pledge of the Stock owned by Borrower.

“Subordinated Debt” means Indebtedness of Borrower that is on terms and
conditions (including payment terms, interest rates, covenants, remedies,
defaults and other material terms) satisfactory to the Agent and which (a) has
been expressly subordinated in right of payment to all Obligations by the
execution and delivery of a subordination agreement, in form and substance
satisfactory to Agent and (b) if such Indebtedness is secured by a Lien, such
Lien is expressly subordinated to the Liens granted to Lender by the execution
and delivery of a subordination agreement, in form and substance satisfactory to
Agent.

“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the shares of Stock having ordinary voting power to elect a majority of
the board of directors (or appoint other comparable managers) of such
corporation, partnership, limited liability company, or other entity.

“Supporting Obligation” means a letter-of-credit right or secondary obligation
that supports the payment or performance of an Account, chattel paper, document,
General Intangible, instrument, or Investment Property.

“Taxes” has the meaning set forth in Section 16.11.

“Term Loan” has the meaning set forth in Section 2.2(a).

“Term Loan Amount” means $18,000,000.

“Term Loan Commitment” means, with respect to each Lender, its Term Loan
Commitment, and, with respect to all Lenders, their Term Loan Commitments, in
each case as such Dollar amounts are set forth beside such Lender’s name under
the applicable heading on Schedule C-1 or in the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder, as such amounts may be
reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of Section 14.1.

“Term Loan Maturity Date” means November 13, 2019.

“Term Loan Obligations” all Obligations in respect of or relating to the Term
Loan (including principal, interest, premiums, if any, fees, costs, and expenses
(including Lender Group Expenses) in respect thereof).

“Total Commitment” means, with respect to each Lender, its Total Commitment,
and, with respect to all Lenders, their Total Commitments, in each case as such
Dollar amounts are set forth beside such Lender’s name under the applicable
heading on Schedule C-1 attached hereto or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder, as such amounts may be reduced or increased from time to time
pursuant to assignments made in accordance with the provisions of Section 14.1.

 

- 30 -

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

“Trademark Security Agreement” means an amended and restated trademark security
agreement executed and delivered by Borrower and Agent, the form and substance
of which is satisfactory to Agent.

“TTM EBITDA” means, as of any date of determination, Adjusted EBITDA of Borrower
determined on a consolidated basis in accordance with GAAP, for the 12 month
period most recently ended; provided, however, that (a) TTM EBITDA for the
twelve month period ending December 31, 2014 shall be equal to the product of
(i) Adjusted EBITDA for the fiscal quarter ending December 31, 2014 times
(ii) four (4), (b) TTM EBITDA for the twelve month period ending March 31, 2015
shall be equal to the sum of (i) the product of (A) Adjusted EBITDA for the
fiscal quarter ending December 31, 2014 times (B) three (3) plus (ii) Adjusted
EBITDA for the fiscal quarter ending March 31, 2015, and (c) TTM EBITDA for the
twelve month period ending June 30, 2015 shall be equal to the sum of (i) the
product of (A) Adjusted EBITDA for the fiscal quarter ending December 31, 2014
times (B) two (2) plus (ii) Adjusted EBITDA for the fiscal quarter ending
March 31, 2015, plus (iii) Adjusted EBITDA for the fiscal quarter ending
June 30, 2015.

“United States” means the United States of America.

“Voidable Transfer” has the meaning set forth in Section 17.6.

“Warrant Agreement” means that certain Common Stock Warrant Agreement dated as
of October 5, 2006 by and between Borrower and CNB.

1.2 Accounting Terms. All accounting terms not specifically defined herein shall
be construed in accordance with GAAP; provided, that if Borrower notifies Agent
that Borrower requests an amendment to any provision hereof to eliminate the
effect of any Accounting Change occurring after the Restatement Effective Date
or in the application thereof on the operation of such provision (or if Agent
notifies Borrower that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such Accounting Change or in the application thereof, then
Agent and Borrower agree that they will negotiate in good faith amendments to
the provisions of this Agreement that are directly affected by such Accounting
Change with the intent of having the respective positions of the Lenders and
Borrower after such Accounting Change conform as nearly as possible to their
respective positions as of the date of this Agreement and, until any such
amendments have been agreed upon and agreed to by the Required Lenders, the
provisions in this Agreement shall be calculated as if no such Accounting Change
had occurred. When used herein, the term “financial statements” shall include
the notes and schedules thereto. Whenever the term “Borrower” is used in respect
of a financial covenant or a related definition, it shall be understood to mean
Borrower and its Subsidiaries on a consolidated basis unless the context clearly
requires otherwise. Notwithstanding anything to the contrary contained herein,
(a) all financial statements delivered hereunder shall be prepared, and all
financial covenants contained herein shall be calculated, without giving effect
to any election under the Statement of Financial Accounting Standards No. 159
(or any similar accounting principle) permitting a Person to

 

- 31 -

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

value its financial liabilities or Indebtedness at the fair value thereof, and
(b) the term “unqualified opinion” as used herein to refer to opinions or
reports provided by accountants shall mean an opinion or report that is
(i) unqualified, and (ii) does not include any explanation, supplemental
comment, or other comment concerning the ability of the applicable Person to
continue as a going concern or concerning the scope of the audit.

1.3 Code. Any terms used in this Agreement that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein;
provided, however, that to the extent that the Code is used to define any term
herein and such term is defined differently in different Articles of the Code,
the definition of such term contained in Article 9 shall govern.

1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes”
and “including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. The words “asset” and “property” shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible
assets and properties. Any reference in this Agreement or in the other Loan
Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to the
satisfaction or repayment in full of the Obligations shall mean the repayment in
full in cash (or cash collateralization in accordance with the terms hereof) of
all Obligations other than contingent indemnification Obligations as to which no
claim as been asserted and other than any Bank Product Obligations that, at such
time, are allowed by the applicable Bank Product Provider to remain outstanding
and are not required to be repaid or cash collateralized pursuant to the
provisions of this Agreement, and the termination of all Commitments of the
Lenders. Any reference herein to any Person shall be construed to include such
Person’s successors and assigns. Any requirement of a writing contained herein
or in the other Loan Documents shall be satisfied by the transmission of a
Record and any Record transmitted shall constitute a representation and warranty
as to the accuracy and completeness of the information contained therein.

1.5 Schedules and Exhibits. All of the schedules and exhibits attached to this
Agreement shall be deemed incorporated herein by reference.

 

- 32 -

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

2. LOAN AND TERMS OF PAYMENT.

2.1 Revolver Advances.

(a) Subject to the terms and conditions of this Agreement, and during the term
of this Agreement, each Lender with a Revolver Commitment agrees (severally, not
jointly or jointly and severally) to make advances (“Advances”) to Borrower in
an amount at any one time outstanding not to exceed such Lender’s Pro Rata Share
of an amount equal to the Maximum Revolver Amount less the Letter of Credit
Usage.

(b) The Lenders with Revolver Commitments shall have no obligation to make
additional Advances hereunder to the extent such additional Advances would cause
the Revolver Usage to exceed the Maximum Revolver Amount.

(c) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to
the terms and conditions of this Agreement, reborrowed at any time during the
term of this Agreement.

2.2 Term Loans.

(a) Term Loan. Subject to the terms and conditions of this Agreement, on the
Restatement Effective Date, each Lender with a Term Loan Commitment agrees
(severally, not jointly or jointly and severally) to make term loans
(collectively, the “Term Loan”) to Borrower in an amount equal to such Lender’s
Pro Rata Share of the Term Loan Amount.

(b) Capex Term Loan. Subject to the terms and conditions of this Agreement, each
Lender with a Capex Term Loan Commitment agrees (severally, not jointly or
jointly and severally) to make term loans (each a “Capex Term Loan” and
collectively, the “Capex Term Loans”) to Borrower from time to time from the
Restatement Effective Date until the Capex Term Loan Commitment Expiration Date,
or until the earlier reduction of its Capex Term Loan Commitment to zero in
accordance with the terms hereof, in an aggregate principal amount not to exceed
the unused portion of such Lender’s Capex Term Loan Commitment. The aggregate
principal amount of the Capex Term Loans (based on initial principal amount)
shall not exceed the Capex Term Loan Amount. The Capex Term Loan Commitment of
each Lender shall (x) automatically and permanently be reduced to the extent
that such Lender makes a Capex Term Loan to Borrower, and (y) automatically and
permanently be reduced to zero on the Capex Term Loan Commitment Expiration
Date. Each Capex Term Loan requested by Borrower pursuant to this Section 2.2(b)
shall be in a minimum amount of $5,000,000, and in integral multiples of
$1,000,000 in excess thereof. Any principal amount of the Capex Term Loans that
is repaid or prepaid may not be reborrowed.

(c) Repayments.

(i) The Term Loan shall be repaid in 20 equal consecutive quarterly
installments, each in the amount of $642,857.14, which installment payments
shall be due and payable on the last day of each fiscal quarter, commencing on
December 31, 2014. The outstanding unpaid principal balance and all accrued and
unpaid interest under the Term Loan shall be due and payable on the Term Loan
Maturity Date, or if earlier, the date of termination of this Agreement, whether
by its terms, by prepayment, or by acceleration. All amounts outstanding under
the Term Loan shall constitute Obligations.

 

- 33 -

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

(ii) The Capex Term Loan shall be repaid as follows: (A) the portion (if any) of
the Capex Term Loans funded on or after the Restatement Effective Date and on or
prior to the first anniversary of the Restatement Effective Date (such portion,
the “First Anniversary Capex Term Loan Amount”) shall be repaid in 16 equal
consecutive quarterly installments, each in an amount equal to 1/28th of the
First Anniversary Capex Term Loan Amount, which installment payments shall be
due and payable on the last day of each fiscal quarter, commencing on
December 31, 2015, and (B) the portion (if any) of the Capex Term Loans funded
after the first anniversary of the Restatement Effective Date and on or prior to
the second anniversary of the Restatement Effective Date (such portion, the
“Second Anniversary Capex Term Loan Amount”) shall be repaid in 12 equal
consecutive quarterly installments, each in an amount equal to 1/28th of the
Second Anniversary Capex Term Loan Amount, which installment payments shall be
due and payable on the last day of each fiscal quarter, commencing on
December 31, 2016. The outstanding unpaid principal balance and all accrued and
unpaid interest under the Capex Term Loan shall be due and payable on the Capex
Term Loan Maturity Date, or if earlier, the date of termination of this
Agreement, whether by its terms, by prepayment, or by acceleration. All amounts
outstanding under the Capex Term Loan shall constitute Obligations.

2.3 Borrowing Procedures.

(a) Procedure for Borrowing. Each Borrowing shall be made by an irrevocable
written request in substantially the form of Exhibit N-1 hereto (a “Notice of
Borrowing”) by an Authorized Person delivered to Agent. In the case of a request
for a Base Rate Loan, such notice must be received by Agent no later than 10:00
a.m. (California time) on the Business Day prior to the date that is the
requested Funding Date or, in the case of a request for a LIBOR Rate Loan, no
later than 10:00 a.m. (California time) at least 3 Business Days prior to the
date that is the requested Funding Date, in each case, specifying (i) the amount
of such Borrowing, and (ii) the requested Funding Date, which shall be a
Business Day. At Agent’s election, in lieu of delivering the above-described
written request, any Authorized Person may give Agent telephonic notice of such
request by the required time (promptly confirmed in writing by the delivery of
the Notice of Borrowing). In such circumstances, Borrower agrees that any such
telephonic notice will be confirmed in writing within 24 hours of the giving of
such telephonic notice, but the failure to provide such written confirmation
shall not affect the validity of the request.

(b) [Intentionally Omitted.]

(c) Making of Loans.

(i) Promptly after receipt of a request for a Borrowing pursuant to
Section 2.3(a), Agent shall notify the Lenders, not later than 1:00 p.m.
(California time) on the Business Day immediately preceding the Funding Date
applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount of
such Lender’s Pro Rata Share of the requested Borrowing available to Agent in
immediately available funds, to Agent’s Account, not later than 10:00 a.m.
(California time) on the Funding Date applicable thereto. After Agent’s receipt
of the proceeds of such Advances (or the Term Loan or Capex Term Loan, as
applicable), Agent shall make the proceeds thereof

 

- 34 -

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

available to Borrower on the applicable Funding Date by transferring immediately
available funds equal to such proceeds received by Agent to Borrower’s
Designated Account; provided, however, that, subject to the provisions of
Section 2.3(j), Agent shall not request any Lender to make, and no Lender shall
have the obligation to make, any Advance (or its portion of the Term Loan or the
Capex Term Loan) if Agent shall have actual knowledge that (1) one or more of
the applicable conditions precedent set forth in Section 3 will not be satisfied
on the requested Funding Date for the applicable Borrowing unless such condition
has been waived, or (2) the requested Borrowing would exceed the Availability on
such Funding Date.

(ii) Unless Agent receives notice from a Lender on or prior to the Restatement
Effective Date or, with respect to any Borrowing after the Restatement Effective
Date, prior to 9:00 a.m. (California time) on the date of such Borrowing, that
such Lender will not make available as and when required hereunder to Agent for
the account of Borrower the amount of that Lender’s Pro Rata Share of the
Borrowing, Agent may assume that each Lender has made or will make such amount
available to Agent in immediately available funds on the Funding Date and Agent
may (but shall not be so required), in reliance upon such assumption, make
available to Borrower on such date a corresponding amount. If and to the extent
any Lender shall not have made its full amount available to Agent in immediately
available funds and Agent in such circumstances has made available to Borrower
such amount, that Lender shall on the Business Day following such Funding Date
make such amount available to Agent, together with interest at the Defaulting
Lender Rate for each day during such period. A notice submitted by Agent to any
Lender with respect to amounts owing under this subsection shall be conclusive,
absent manifest error. If such amount is so made available, such payment to
Agent shall constitute such Lender’s Advance (or portion of the Term Loan, as
applicable) on the date of Borrowing for all purposes of this Agreement. If such
amount is not made available to Agent on the Business Day following the Funding
Date, Agent will notify Borrower of such failure to fund and, upon demand by
Agent, Borrower shall pay such amount to Agent for Agent’s account, together
with interest thereon for each day elapsed since the date of such Borrowing, at
a rate per annum equal to the interest rate applicable at the time to the
Advances (or portion of the Term Loan or Capex Term Loan, as applicable)
composing such Borrowing. The failure of any Lender to make any Advance (or
portion of the Term Loan or Capex Term Loan, as applicable) on any Funding Date
shall not relieve any other Lender of any obligation hereunder to make an
Advance (or portion of the Term Loan or Capex Term Loan, as applicable) on such
Funding Date, but no Lender shall be responsible for the failure of any other
Lender to make the Advance (or portion of the Term Loan or Capex Term Loan, as
applicable) to be made by such other Lender on any Funding Date.

(d) Defaulting Lenders

(i) Notwithstanding the provisions of Section 2.4(b), Agent shall not be
obligated to transfer to a Defaulting Lender any payments made by Borrower to
Agent for the Defaulting Lender’s benefit or any proceeds of Collateral that
would otherwise be remitted hereunder to the Defaulting Lender, and, in the
absence of such transfer to the Defaulting Lender, Agent shall transfer any such
payments: (A) first, to Issuing Lender, to the extent of the portion of a Letter
of Credit Disbursement that was required to be, but was not, paid by the
Defaulting Lender, (B) second, to each Non-Defaulting Lender ratably in
accordance with their Commitments (but, in each case, only to the extent that
such Defaulting Lender’s portion of an

 

- 35 -

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

Advance (or other funding obligation) was funded by such other Non-Defaulting
Lender), (C) third, to a suspense account maintained by Agent, the proceeds of
which shall be retained by Agent and may be made available to be re-advanced to
or for the benefit of Borrower (upon the request of Borrower and subject to the
conditions set forth in Section 3.2) as if such Defaulting Lender had made its
portion of Advances (or other funding obligations) hereunder, and (D) fourth,
from and after the date on which all other Obligations have been paid in full,
to such Defaulting Lender in accordance with tier (J) of Section 2.4(b)(iii).
Subject to the foregoing, Agent may hold and, in its Permitted Discretion,
re-lend to Borrower for the account of such Defaulting Lender the amount of all
such payments received and retained by Agent for the account of such Defaulting
Lender. Solely for the purposes of voting or consenting to matters with respect
to the Loan Documents (including the calculation of Pro Rata Share in connection
therewith) and for the purpose of calculating the fee payable under
Section 2.11(b), such Defaulting Lender shall be deemed not to be a “Lender” and
such Lender’s Commitment shall be deemed to be zero. This Section shall remain
effective with respect to such Lender until the earlier of (y) the date on which
all of the Non-Defaulting Lenders, Agent, Issuing Lender, and Borrower shall
have waived, in writing, the application of this Section 2.3(d) to such
Defaulting Lender, or (z) the date on which such Defaulting Lender makes payment
of all amounts that it was obligated to fund hereunder, pays to Agent all
amounts owing by Defaulting Lender in respect of the amounts that it was
obligated to fund hereunder, and, if requested by Agent, provides adequate
assurance of its ability to perform its future obligations hereunder (on which
earlier date, so long as no Event of Default has occurred and is continuing, any
remaining cash collateral held by Agent pursuant to Section 2.3(d)(ii) shall be
released to Borrower). The operation of this Section shall not be construed to
increase or otherwise affect the Commitment of any Lender, to relieve or excuse
the performance by such Defaulting Lender or any other Lender of its duties and
obligations hereunder, or to relieve or excuse the performance by Borrower of
its duties and obligations hereunder to Agent or to the Lenders other than such
Defaulting Lender. Any failure by a Defaulting Lender to fund amounts that it
was obligated to fund hereunder shall constitute a material breach by such
Defaulting Lender of this Agreement and shall entitle Borrower, at its option,
upon written notice to Agent, to arrange for a substitute Lender to assume the
Commitment of such Defaulting Lender, such substitute Lender to be reasonably
acceptable to Agent. In connection with the arrangement of such a substitute
Lender, the Defaulting Lender shall have no right to refuse to be replaced
hereunder, and agrees to execute and deliver a completed form of Assignment and
Acceptance in favor of the substitute Lender (and agrees that it shall be deemed
to have executed and delivered such document if it fails to do so) subject only
to being repaid its share of the outstanding Obligations (other than Bank
Product Obligations, but including (1) all interest, fees, and other amounts
that may be due and payable in respect thereof, and (2) an assumption of its Pro
Rata Share of the Risk Participation Liability) without any premium or penalty
of any kind whatsoever; provided, however, that any such assumption of the
Commitment of such Defaulting Lender shall not be deemed to constitute a waiver
of any of the Lender Groups’ or Borrower’s rights or remedies against any such
Defaulting Lender arising out of or in relation to such failure to fund. In the
event of a direct conflict between the priority provisions of this
Section 2.3(d) and any other provision contained in this Agreement or any other
Loan Document, it is the intention of the parties hereto that such provisions be
read together and construed, to the fullest extent possible, to be in concert
with each other. In the event of any actual, irreconcilable conflict that cannot
be resolved as aforesaid, the terms and provisions of this Section 2.3(d) shall
control and govern.

 

- 36 -

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

(ii) If any Letter of Credit is outstanding at the time that a Lender becomes a
Defaulting Lender then:

(A) such Defaulting Lender’s Letter of Credit Exposure shall be reallocated
among the Non-Defaulting Lenders in accordance with their respective Pro Rata
Shares but only to the extent the sum of all Non-Defaulting Lenders’ Revolving
Loan Exposures plus such Defaulting Lender’s Letter of Credit Exposure does not
exceed the total of all Non-Defaulting Lenders’ Revolver Commitments;

(B) if the reallocation described in clause (A) above cannot, or can only
partially, be effected, Borrower shall within one Business Day following notice
by the Agent (or a longer period as Agent may reasonably agree) cash
collateralize such Defaulting Lender’s Letter of Credit Exposure (after giving
effect to any partial reallocation pursuant to clause (A) above), pursuant to a
cash collateral agreement to be entered into in form and substance reasonably
satisfactory to the Agent, for so long as such Letter of Credit Exposure is
outstanding; provided, that Borrower shall not be obligated to cash
collateralize any Defaulting Lender’s Letter of Credit Exposure if such
Defaulting Lender is also the Issuing Lender;

(C) if Borrower cash collateralizes any portion of such Defaulting Lender’s
Letter of Credit Exposure pursuant to this Section 2.3(d)(ii), Borrower shall
not be required to pay any Letter of Credit Fees to Agent for the account of
such Defaulting Lender pursuant to Section 2.6(b) with respect to such cash
collateralized portion of such Defaulting Lender’s Letter of Credit Exposure
during the period such Letter of Credit Exposure is cash collateralized;

(D) to the extent the Letter of Credit Exposure of the Non-Defaulting Lenders is
reallocated pursuant to this Section 2.3(d)(ii), then the Letter of Credit Fees
payable to the Non-Defaulting Lenders pursuant to Section 2.6(b) shall be
adjusted in accordance with such Non-Defaulting Lenders’ Letter of Credit
Exposure;

(E) to the extent any Defaulting Lender’s Letter of Credit Exposure is neither
cash collateralized nor reallocated pursuant to this Section 2.3(d)(ii), then,
without prejudice to any rights or remedies of the Issuing Lender or any Lender
hereunder, all Letter of Credit Fees that would have otherwise been payable to
such Defaulting Lender under Section 2.6(b) with respect to such portion of such
Letter of Credit Exposure shall instead be payable to the Issuing Lender until
such portion of such Defaulting Lender’s Letter of Credit Exposure is cash
collateralized or reallocated;

(F) so long as any Lender is a Defaulting Lender the Issuing Lender shall not be
required to issue, amend, or increase any Letter of Credit, in each case, to the
extent (x) the Defaulting Lender’s Pro Rata Share of such Letter of Credit
cannot be reallocated pursuant to this Section 2.3(d)(ii) or (y) the Issuing
Lender has not otherwise entered into arrangements reasonably satisfactory to
Issuing Lender and Borrower to eliminate or Issuing Lender’s risk with respect
to the Defaulting Lender’s participation in Letters of Credit; and

(G) Agent may release any cash collateral provided by Borrower pursuant to this
Section 2.3(d)(ii) to the Issuing Lender and the Issuing Lender may apply any
such cash collateral to the payment of such Defaulting Lender’s Pro Rata Share
of any Letter of Credit Disbursement that is not reimbursed by Borrower pursuant
to Section 2.12(a).

 

- 37 -

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

(e) [Intentionally Omitted.]

(f) Agent Advances.

(i) Agent hereby is authorized by Borrower and the Lenders, from time to time in
Agent’s sole discretion, (1) after the occurrence and during the continuance of
a Default or an Event of Default, or (2) at any time that any of the other
applicable conditions precedent set forth in Section 3 have not been satisfied,
to make Advances to Borrower on behalf of the Lenders that Agent, in its
Permitted Discretion deems necessary or desirable (A) to preserve or protect the
Collateral, or any portion thereof, (B) to enhance the likelihood of repayment
of the Obligations (other than the Bank Product Obligations), or (C) to pay any
other amount chargeable to Borrower pursuant to the terms of this Agreement,
including Lender Group Expenses and the costs, fees, and expenses described in
Section 10 (any of the Advances described in this Section 2.3(f) shall be
referred to as “Agent Advances”). Each Agent Advance shall be deemed to be an
Advance hereunder, except that no such Agent Advance shall be eligible to be a
LIBOR Rate Loan and all payments thereon shall be payable to Agent solely for
its own account.

(ii) The Agent Advances shall be repayable on demand, secured by the Agent’s
Liens granted to Agent under the Loan Documents, constitute Obligations
hereunder, and bear interest at the rate applicable from time to time to
Advances that are Base Rate Loans.

(iii) Each Lender with a Revolver Commitment shall be obligated to settle with
Agent for the amount of such Lender’s Pro Rata Share of any Agent Advances made
as permitted under this Section 2.3(f).

(g) [Intentionally Omitted.]

(h) Notation. Agent, as a non-fiduciary agent for Borrower, shall maintain a
register showing the principal amount of the Advances (and portion of the Term
Loan and Capex Term Loan, as applicable), owing to each Lender, including the
Agent Advances, and the interests therein of each Lender, from time to time and
such register shall, absent manifest error, conclusively be presumed to be
correct and accurate.

(i) Lenders’ Failure to Perform. All Advances (other than Agent Advances) shall
be made by the Lenders contemporaneously and in accordance with their Pro Rata
Shares. It is understood that (i) no Lender shall be responsible for any failure
by any other Lender to perform its obligation to make any Advance (or other
extension of credit) hereunder, nor shall any Commitment of any Lender be
increased or decreased as a result of any failure by any other Lender to perform
its obligations hereunder, and (ii) no failure by any Lender to perform its
obligations hereunder shall excuse any other Lender from its obligations
hereunder.

(j) Optional Overadvances. Any contrary provision of this Agreement
notwithstanding, the Lenders hereby authorize Agent and Agent may, but is not
obligated to, knowingly and intentionally, continue to make Advances to Borrower
notwithstanding that an

 

- 38 -

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

Overadvance exists or thereby would be created, so long as after giving effect
to such Advances, the outstanding Revolver Usage (except for and excluding
amounts charged to the Loan Account for interest, fees, or Lender Group
Expenses) does not exceed the Maximum Revolver Amount. The foregoing provisions
are for the exclusive benefit of Agent and the Lenders and are not intended to
benefit Borrower in any way. The Advances that are made pursuant to this
Section 2.3(i) shall be subject to the same terms and conditions as any other
Advance, except that they shall not be eligible for the LIBOR Option and the
rate of interest applicable thereto shall be the rate applicable to Advances
that are Base Rate Loans under Section 2.6(c) hereof without regard to the
presence or absence of a Default or Event of Default.

(i) In the event Agent obtains actual knowledge that the Revolver Usage exceeds
the amounts permitted by the preceding paragraph, regardless of the amount of,
or reason for, such excess, Agent shall notify the Lenders as soon as
practicable (and prior to making any (or any additional) intentional
Overadvances (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) unless Agent determines that prior
notice would result in imminent harm to the Collateral or its value), and the
Lenders with Revolver Commitments thereupon shall, together with Agent, jointly
determine the terms of arrangements that shall be implemented with Borrower
intended to reduce, within a reasonable time, the outstanding principal amount
of the Advances to Borrower to an amount permitted by the preceding paragraph.
In the event Agent or any Lender disagrees over the terms of reduction or
repayment of any Overadvance, the terms of reduction or repayment thereof shall
be implemented according to the determination of the Required Lenders.

(ii) Each Lender with a Revolver Commitment shall be obligated to settle with
Agent for the amount of such Lender’s Pro Rata Share of any unintentional
Overadvances by Agent reported to such Lender, any intentional Overadvances made
as permitted under this Section 2.3(j), and any Overadvances resulting from the
charging to the Loan Account of interest, fees, or Lender Group Expenses.

2.4 Payments.

(a) Payments by Borrower.

(i) Except as otherwise expressly provided herein, all payments by Borrower
shall be made to Agent’s Account for the account of the Lender Group and shall
be made in immediately available funds, no later than 11:00 a.m. (California
time) on the date specified herein. Any payment received by Agent later than
11:00 a.m. (California time) shall be deemed to have been received (unless
Agent, in its sole discretion, elects to credit it on the date received) on the
following Business Day and any applicable interest or fee shall continue to
accrue until such following Business Day.

(ii) Unless Agent receives notice from Borrower prior to the date on which any
payment is due to the Lenders that Borrower will not make such payment in full
as and when required, Agent may assume that Borrower has made (or will make)
such payment in full to Agent on such date in immediately available funds and
Agent may (but shall not be so required), in reliance upon such assumption,
distribute to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent Borrower does not make

 

- 39 -

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

such payment in full to Agent on the date when due, each Lender severally shall
repay to Agent on demand such amount distributed to such Lender, together with
interest thereon at the Defaulting Lender Rate for each day from the date such
amount is distributed to such Lender until the date repaid.

(b) Apportionment and Application.

(i) So long as no Application Event has occurred and is continuing and except as
otherwise provided herein with respect to Defaulting Lenders, all principal and
interest payments received by Agent shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Obligations to which
such payments relate held by each Lender) and all payments of fees and expenses
received by Agent (other than fees or expenses that are for Agent’s separate
account or for the separate account of Issuing Lender) shall be apportioned
ratably among the Lenders having a Pro Rata Share of the type of Commitment or
Obligation to which a particular fee or expense relates.

(ii) Subject to Section 2.4(b)(v), Section 2.4(d), Section 2.4(e), and
Section 2.4(f), all payments to be made hereunder by Borrower shall be remitted
to Agent and all such payments, and all proceeds of Collateral received by
Agent, shall be applied, so long as no Application Event has occurred and is
continuing and except as otherwise provided herein with respect to Defaulting
Lenders, to reduce the balance of the Advances outstanding and, thereafter, to
Borrower (to be wired to the Designated Account) or such other Person entitled
thereto under applicable law.

(iii) At any time that an Application Event has occurred and is continuing and
except as otherwise provided herein with respect to Defaulting Lenders, all
payments remitted to Agent and all proceeds of Collateral received by Agent
shall be applied as follows:

(A) first, to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to Agent under the Loan Documents, until
paid in full,

(B) second, to pay any fees or premiums then due to Agent under the Loan
Documents until paid in full,

(C) third, to pay interest due in respect of all Agent Advances until paid in
full,

(D) fourth, to pay the principal of all Agent Advances until paid in full,

(E) fifth, ratably, to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to any of the Lenders under the Loan
Documents, until paid in full,

(F) sixth, ratably, to pay any fees or premiums then due to any of the Lenders
under the Loan Documents until paid in full,

 

- 40 -

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

(G) ninth, ratably, to pay interest accrued in respect of the Advances (other
than Agent Advances), the Term Loan and the Capex Term Loan until paid in full,

(H) tenth, ratably (i) to pay the principal of all Advances until paid in full,
(ii) to Agent, to be held by Agent, for the benefit of Issuing Lender (and for
the ratable benefit of each of the Lenders that have an obligation to pay to
Agent, for the account of Issuing Lender, a share of each Letter of Credit
Disbursement), as cash collateral in an amount up to 105% of the Letter of
Credit Usage (to the extent permitted by applicable law, such cash collateral
shall be applied to the reimbursement of any Letter of Credit Disbursement as
and when such disbursement occurs and, if a Letter of Credit expires undrawn,
the cash collateral held by Agent in respect of such Letter of Credit shall, to
the extent permitted by applicable law, be reapplied pursuant to this
Section 2.4(b)(iii), beginning with tier (A) hereof), (iii) ratably, to the Bank
Product Providers based upon amounts then certified by the applicable Bank
Product Provider to Agent (in form and substance satisfactory to Agent) to be
due and payable to such Bank Product Providers on account of Bank Product
Obligations, (iv) to pay the outstanding principal balance of the Term Loan (in
the inverse order of the maturity of the installments due thereunder) until the
Term Loan is paid in full, and (v) to pay the outstanding principal balance of
the Capex Term Loan (in the inverse order of the maturity of the installments
due thereunder) until the Capex Term Loan is paid in full,

(I) eleventh, to pay any other Obligations other than Obligations owed to
Defaulting Lenders,

(J) twelfth, ratably to pay any Obligations owed to Defaulting Lenders; and

(K) thirteenth, to Borrower (to be wired to the Designated Account) or such
other Person entitled thereto under applicable law.

(iv) Agent promptly shall distribute to each Lender, pursuant to the applicable
wire instructions received from each Lender in writing, such funds as it may be
entitled to receive.

(v) In each instance, so long as no Application Event has occurred and is
continuing, Section 2.4(b)(iii) shall not apply to any payment made by Borrower
to Agent and specified by Borrower to be for the payment of specific Obligations
then due and payable (or prepayable) under any provision of this Agreement or
any other Loan Document.

(vi) For purposes of Section 2.4(b)(iii), “paid in full” of a type of Obligation
means payment in cash or immediately available funds of all amounts owing on
account of such type of Obligation, including interest accrued after the
commencement of any Insolvency Proceeding, default interest, interest on
interest, and expense reimbursements, irrespective of whether any of the
foregoing would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.

(vii) In the event of a direct conflict between the priority provisions of this
Section 2.4 and any other provision contained in this Agreement or any other
Loan

 

- 41 -

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

Document, it is the intention of the parties hereto that such provisions be read
together and construed, to the fullest extent possible, to be in concert with
each other. In the event of any actual, irreconcilable conflict that cannot be
resolved as aforesaid, if the conflict relates to the provisions of
Section 2.3(d) and this Section 2.4, then the provisions of Section 2.3(d) shall
control and govern, and if otherwise, then the terms and provisions of this
Section 2.4 shall control and govern.

(c) Reduction of Commitments.

(i) Revolver Commitments. The Revolver Commitments shall terminate on the
Revolver Maturity Date. Borrower may reduce the Revolver Commitments, without
premium or penalty, to an amount (which may be zero) not less than the sum of
(A) the Revolver Usage as of such date, plus (B) the principal amount of all
Advances not yet made as to which a request has been given by Borrower under
Section 2.3(a), plus (C) the amount of all Letters of Credit not yet issued as
to which a request has been given by Borrower pursuant to Section 2.12(a). Each
such reduction shall be in an amount which is not less than $1,000,000 (unless
the Revolver Commitments are being reduced to zero and the amount of the
Revolver Commitments in effect immediately prior to such reduction are less than
$5,000,000), shall be made by providing not less than 10 Business Days prior
written notice to Agent, and shall be irrevocable. Once reduced, the Revolver
Commitments may not be increased. Each such reduction of the Revolver
Commitments shall reduce the Revolver Commitments of each Lender proportionately
in accordance with its ratable share thereof.

(ii) Term Loan Commitments. The Term Loan Commitments shall terminate upon the
making of the Term Loan.

(iii) Capex Term Loan Commitments. The Capex Term Loan Commitments (A) shall be
reduced to the extent that the Capex Term Loans are made by the Lenders, and
(B) shall terminate on the Capex Term Loan Commitment Expiration Date.

(d) Optional Prepayments.

(i) Advances. Borrower may prepay the principal of any Advance at any time in
whole or in part, without premium or penalty.

(ii) Term Loan. Borrower may, upon at least 10 Business Days prior written
notice to Agent, prepay the principal of the Term Loan, in whole or in part.
Each prepayment made pursuant to this Section 2.4(d)(ii) shall be accompanied by
the payment of accrued interest to the date of such payment on the amount
prepaid. Each such prepayment shall be applied against the remaining
installments of principal due on the Term Loan in the inverse order of maturity
(for the avoidance of doubt, any amount that is due and payable on the Term Loan
Maturity Date shall constitute an installment).

(iii) Capex Term Loan. Borrower may, upon at least 10 Business Days prior
written notice to Agent, prepay the principal of the Capex Term Loan, in whole
or in part. Each prepayment made pursuant to this Section 2.4(d)(iii) shall be
accompanied by the payment of accrued interest to the date of such payment on
the amount prepaid. Each such prepayment shall be applied against the remaining
installments of principal due on the Capex Term Loan in the inverse order of
maturity (for the avoidance of doubt, any amount that is due and payable on the
Capex Term Loan Maturity Date shall constitute an installment).

 

- 42 -

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

(e) Mandatory Prepayments.

(i) If, at any time or for any reason, the amount of Obligations owed by
Borrower to Lender pursuant to Sections 2.1 is greater than the Dollar
limitations set forth in Sections 2.1, (an “Overadvance”), Borrower immediately
shall pay to Agent, in cash, the amount of such excess, which amount shall be
used by Agent to reduce the Obligations in accordance with the priorities set
forth in Section 2.4(b). In addition, Borrower hereby promises to pay the
Obligations (including principal, interest, fees, costs, and expenses) in
Dollars in full to Agent as and when due and payable under the terms of this
Agreement and the other Loan Documents.

(ii) Immediately upon the receipt by Borrower or any of its Subsidiaries of the
proceeds of any Disposition by Borrower or any of its Subsidiaries of property
or assets (excluding sales or dispositions which qualify as Permitted
Dispositions under clauses (a) through (f), (h), or (i) of the definition of
Permitted Dispositions), Borrower shall prepay the outstanding principal amount
of the Obligations in accordance with Section 2.4(f)(i) in an amount equal to
100% of the Net Cash Proceeds (including insurance proceeds and condemnation
awards and payments in lieu thereof) received by such Person in connection with
such sales or dispositions; provided that, so long as (A) no Default or Event of
Default shall have occurred and is continuing, (B) the Net Cash Proceeds of such
Disposition are held in a cash collateral account in which Agent has a perfected
first-priority security interest, and (C) Borrower or its Subsidiaries, as
applicable, complete such replacement, purchase, or construction within 180 days
after the initial receipt of such monies, Borrower and its Subsidiaries shall
have the option to apply such monies to the costs of replacement of the property
or assets that are the subject of such sale or disposition unless and to the
extent that such applicable period shall have expired without such replacement,
purchase or construction being made or completed, in which case, such monies
shall be paid to Agent and applied in accordance with Section 2.4(f). Nothing
contained in this Section 2.4(e)(ii) shall permit Borrower or any of its
Subsidiaries to sell or otherwise dispose of any property or assets other than
in accordance with Section 7.4.

(iii) Promptly upon the issuance or incurrence by Borrower or any of its
Subsidiaries of any Indebtedness (except for Indebtedness permitted under
Section 7.1) Borrower shall prepay the outstanding principal amount of the
Obligations in accordance with Section 2.4(f) in an amount equal to 100% of the
Net Cash Proceeds received by such Person in connection with such issuance or
incurrence. The provisions of this Section 2.4(e)(iii) shall not be deemed to be
implied consent to any such issuance or incurrence otherwise prohibited by the
terms and conditions of this Agreement.

(iv) Promptly upon the issuance by Borrower or any of its Subsidiaries of any
Stock (except for (A) the issuance of Stock by Borrower to any Permitted Holder,
(B) the issuance of Stock of Borrower to directors, officers and employees of
Borrower and its Subsidiaries pursuant to employee stock option plans (or other
employee incentive plans or other compensation arrangements) approved by the
Board of Directors) Borrower shall prepay the outstanding principal amount of
the Obligations in accordance with Section 2.4(f) in an amount equal to 50% of
the Net Cash Proceeds received by such Person in connection with such

 

- 43 -

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

issuance; provided, however, that if the Leverage Ratio of Borrower and its
Subsidiaries as of the end of the fiscal quarter most recently ended prior to
the date of the issuance of such Stock as to which financial statements were
required to be delivered pursuant to this Agreement was equal to or less than
2.0:1.0, then no prepayment in respect of such issuance of Stock shall be
required. The provisions of this Section 2.4(e)(iv) shall not be deemed to be
implied consent to any such issuance otherwise prohibited by the terms and
conditions of this Agreement. For the avoidance of doubt, this
Section 2.4(e)(iv) shall not apply to Qualifying IPO.

(v) Within 10 days of delivery to Agent of audited annual financial statements
pursuant to Section 6.3(b), commencing with the delivery to Agent of the
financial statements for Borrower’s fiscal year ended December 31, 2015 or, if
such financial statements are not delivered to Agent on the date such statements
are required to be delivered pursuant to Section 6.3(b), within 10 days after
the date such statements were required to be delivered to Agent pursuant to
Section 6.3(b), Borrower shall (A) if such financial statements demonstrate that
the Leverage Ratio of Borrower and its Subsidiaries as of the end of such fiscal
year was greater than 1.50:1.00, prepay the outstanding principal amount of the
Obligations in accordance with Section 2.4(f) in an amount equal to 50% of the
Excess Cash Flow of Borrower and its Subsidiaries for such fiscal year, and
(B) if such financial statements demonstrate that the Leverage Ratio of Borrower
and its Subsidiaries as of the end of such fiscal year was 1.50:1.0 or less,
then no prepayment shall be required. The foregoing to the contrary
notwithstanding, at Agent’s election, in its sole and absolute discretion, if
the remaining amount of the capital expenditures projected to be made during
such fiscal year exceeds the remaining amount of the Capex Term Loan Commitments
at such time, then Agent may permit Borrower to reduce the amount of the
mandatory prepayment that would otherwise be due and payable pursuant to this
Section 2.4(e)(v) to the extent of such excess (but not to an amount that is
less than $0).

(f) Application of Payments.

(i) Each prepayment pursuant to Section 2.4(e)(i) shall, (A) so long as no
Application Event shall have occurred and be continuing, be applied, first, to
the outstanding principal amount of the Revolving Loans until paid in full, and
second, to cash collateralize the Letters of Credit in an amount equal to 105%
of the then outstanding Letter of Credit Usage, and (B) if an Application Event
shall have occurred and be continuing, be applied in the manner set forth in
Section 2.4(b)(iii).

(ii) Each prepayment pursuant to Section 2.4(e)(ii), 2.4(e)(iii), 2.4(e)(iv), or
2.4(e)(v) shall (A) so long as no Application Event shall have occurred and be
continuing, be applied, first, ratably to the outstanding principal amount of
the Term Loan and the Capex Term Loan until paid in full, and second, to the
outstanding principal amount of the Advances (without a corresponding permanent
reduction in the Maximum Revolver Amount), until paid in full, and third, to
cash collateralize the Letters of Credit in an amount equal to 105% of the then
outstanding Letter of Credit Usage (without a corresponding permanent reduction
in the Maximum Revolver Amount), and (B) if an Application Event shall have
occurred and be continuing, be applied in the manner set forth in
Section 2.4(b)(iii). Each such prepayment of the Term Loan and the Capex Term
Loan shall be applied against the remaining installments of principal of the
Term Loan or the Capex Term Loan, as applicable, in the inverse order of
maturity (for the avoidance of doubt, any amount that is due and payable on the
Term Loan Maturity Date or the Capex Term Loan Maturity Date, as applicable,
shall constitute an installment).

 

- 44 -

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

2.5 Promise to Pay; Promissory Notes.

(a) Borrower agrees to pay the Lender Group Expenses on the earlier of (i) the
first day of the month following the date on which the applicable Lender Group
Expenses were first incurred or (ii) the date on which demand therefor is made
by Agent (it being acknowledged and agreed that any charging of such costs,
expenses or Lender Group Expenses to the Loan Account pursuant to the provisions
of Section 2.6(d) shall be deemed to constitute a demand for payment thereof for
the purposes of this subclause (ii)). Borrower promises to pay all of the
Revolver Obligations (including principal, interest, premiums, if any, fees,
costs, and expenses (including Lender Group Expenses) in respect thereof) in
full on the Revolver Maturity Date or, if earlier, on the date on which the
Revolver Obligations (other than the Bank Product Obligations) become due and
payable pursuant to the terms of this Agreement. Borrower promises to pay all of
the Term Loan Obligations (including principal, interest, premiums, if any,
fees, costs, and expenses (including Lender Group Expenses) in respect thereof)
in full on the Term Loan Maturity Date or, if earlier, on the date on which the
Term Loan Obligations become due and payable pursuant to the terms of this
Agreement. Borrower promises to pay all of the Capex Term Loan Obligations
(including principal, interest, premiums, if any, fees, costs, and expenses
(including Lender Group Expenses) in respect thereof) in full on the Capex Term
Loan Maturity Date or, if earlier, on the date on which the Capex Term Loan
Obligations become due and payable pursuant to the terms of this Agreement.
Borrower agrees that its obligations contained in the first sentence of this
Section 2.5(a) shall survive payment or satisfaction in full of all other
Obligations.

(b) Any Lender may request that any portion of its Commitments or the Loans made
by it be evidenced by one or more promissory notes. In such event, Borrower
shall execute and deliver to such Lender the requested promissory notes payable
to the order of such Lender in a form furnished by Agent and reasonably
satisfactory to Borrower. Thereafter, the portion of the Commitments and Loans
evidenced by such promissory notes and interest thereon shall at all times be
represented by one or more promissory notes in such form payable to the order of
the payee named therein.

2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.

(a) Interest Rates. Except as provided in clause (c) below, all Obligations
(except for undrawn Letters of Credit and except for Bank Product Obligations)
that have been charged to the Loan Account pursuant to the terms hereof shall
bear interest on the Daily Balance thereof as follows: (i) if the relevant
Obligation is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate
plus the LIBOR Rate Margin, and (ii) if the relevant Obligation is a Base Rate
Loan, at a per annum rate equal to the Base Rate plus the Base Rate Margin.

(b) Letter of Credit Fee. Borrower shall pay Agent (for the ratable benefit of
the Lenders with a Revolver Commitment), a Letter of Credit fee (the “Letter of
Credit Fee”) (which fee shall be in addition to the fronting fees and
commissions, other fees, charges and expenses set forth in Section 2.12(d)) that
shall accrue at a per annum rate equal to the LIBOR Rate Margin times the Daily
Balance of the undrawn amount of all outstanding Letters of Credit.

 

- 45 -

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

(c) Default Rate. Upon the occurrence and during the continuation of an Event of
Default (and at the election of Agent or the Required Lenders),

(i) all Obligations (except for undrawn Letters of Credit and except for Bank
Product Obligations) that have been charged to the Loan Account pursuant to the
terms hereof shall bear interest on the Daily Balance thereof at a per annum
rate equal to 2.00 percentage points above the per annum rate otherwise
applicable hereunder, and

(ii) the Letter of Credit fee provided for above shall be increased to 2.00
percentage points above the per annum rate otherwise applicable hereunder.

(d) Payment. Except to the extent provided to the contrary in Section 2.11,
Section 2.12(d), or Section 2.13(a), (i) all interest, Letter of Credit fees,
and all other fees payable hereunder shall be due and payable, in arrears, on
the first day of each quarter at any time that Obligations or Commitments are
outstanding, and (ii) all costs and expenses payable hereunder or under any of
the other Loan Documents, and all Lender Group Expenses shall be due and payable
on the earlier of (x) the first day of the month following the date on which the
applicable costs, expenses, or Lender Group Expenses were first invoiced to
Borrower or (y) the date on which demand therefor is made by Agent (it being
acknowledged and agreed that any charging of such costs, expenses or Lender
Group Expenses to the Loan Account pursuant to the provisions of the following
sentence shall be deemed to constitute a demand for payment thereof for the
purposes of this subclause (y)). To the extent that such amounts are not
otherwise paid when due, Borrower hereby authorizes Agent to obtain payment in
respect of such interest and fees and all other amounts payable hereunder or
pursuant to the other Loan Documents (as and when payable hereunder or under the
other Loan Documents) by debiting the Designated Account in an amount equal to
the amount thereof. Borrower hereby authorizes Agent, from time to time without
prior notice to Borrower, to charge to the Loan Account (A) on the first day of
each quarter, all interest accrued during the prior quarter on the Advances, the
Term Loan or the Capex Term Loan hereunder, (B) on the first day of each
quarter, all Letter of Credit Fees accrued or chargeable hereunder during the
prior quarter, (C) as and when incurred or accrued, all fees and costs provided
for in Section 2.11 (a) or (d), (D) on the first day of each quarter, the
Revolver Unused Line Fee and the Capex Term Loan Unused Line Fee accrued during
the prior quarter pursuant to Section 2.11(b) or (c), (E) as and when due and
payable, all other fees payable hereunder or under any of the other Loan
Documents, (F) as and when incurred or accrued, the fronting fees and all
commissions, other fees, charges and expenses provided for in Section 2.12(d),
(G) as and when incurred or accrued, all other Lender Group Expenses, and (H) as
and when due and payable all other payment obligations payable under any Loan
Document or any Bank Product Agreement (including any amounts due and payable to
the Bank Product Providers in respect of Bank Products). All amounts (including
interest, fees, costs, expenses, Lender Group Expenses, or other amounts payable
hereunder or under any other Loan Document or under any Bank Product Agreement)
charged to the Loan Account shall thereupon constitute Advances hereunder, shall
constitute Obligations hereunder, and shall initially accrue interest at the
rate then applicable to Advances that are Base Rate Loans (unless and until
converted into LIBOR Rate Loans in accordance with the terms of this Agreement).

 

- 46 -

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

(e) Computation. All interest and fees chargeable under the Loan Documents shall
be computed on the basis of a 360 day year for the actual number of days elapsed
(except in the case of Base Rate Loans, which shall be 365 days). In the event
the Base Rate is changed from time to time hereafter, the rates of interest
hereunder based upon the Base Rate automatically and immediately shall be
increased or decreased by an amount equal to such change in the Base Rate.

(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrower and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrower is and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrower in
excess of such legal maximum, whenever received, shall be applied to reduce the
principal balance of the Obligations to the extent of such excess.

2.7 Cash Management.

(a) Borrower shall and shall cause each of its Subsidiaries to (i) establish and
maintain cash management services of a type and on terms reasonably satisfactory
to Agent at one or more of the banks set forth on Schedule 2.7(a) (each, a “Cash
Management Bank”), and shall request in writing and otherwise take such
reasonable steps to ensure that all of its and its Subsidiaries’ Account Debtors
forward payment of the amounts owed by them directly to such Cash Management
Bank, and (ii) deposit or cause to be deposited promptly, and in any event no
later than the first Business Day after the date of receipt thereof, all of
their Collections (including those sent directly by their Account Debtors to
Borrower or one of its Subsidiaries) into a bank account in Agent’s name (a
“Cash Management Account”) at one of the Cash Management Banks; provided that
(i) the Borrower may keep up to $25,000 in the aggregate in accounts that are
not subject to the foregoing and (ii) the requirements in this Section 2.7 or
Section 4.7 shall not apply to Excluded Deposit Accounts.

(b) Each Cash Management Bank shall establish and maintain Cash Management
Agreements with Agent and Borrower, in form and substance reasonably acceptable
to Agent. Each such Cash Management Agreement shall provide, among other things,
that (i) the Cash Management Bank will comply with any instructions originated
by Agent directing the disposition of the funds in such Cash Management Account
without further consent by Borrower or its Subsidiaries, as applicable, (ii) the
Cash Management Bank has no rights of setoff or recoupment or any other claim
against the applicable Cash Management Account other than for payment of its
service fees and other charges directly related to the administration of such
Cash Management Account and for returned checks or other items of payment, and
(iii) upon the instruction of Agent (an “Activation Instruction”), the Cash
Management Bank will forward by daily sweep all amounts in the applicable Cash
Management Account to the Agent’s Account. Agent agrees not to issue an
Activation Instruction with respect to the Cash Management Accounts unless an
Event of Default has occurred and is continuing at the time such Activation
Instruction is issued.

 

- 47 -

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

(c) So long as no Default or Event of Default has occurred and is continuing,
Borrower may amend Schedule 2.7(a) to add or replace a Cash Management Bank or
Cash Management Account; provided, however, that (i) such prospective Cash
Management Bank shall be reasonably satisfactory to Agent, and (ii) prior to the
time of the opening of such Cash Management Account, Borrower (or its
Subsidiary, as applicable) and such prospective Cash Management Bank shall have
executed and delivered to Agent a Cash Management Agreement. Borrower (or its
Subsidiaries, as applicable) shall close any of its Cash Management Accounts
(and establish replacement cash management accounts in accordance with the
foregoing sentence) promptly and in any event within 30 days of notice from
Agent (or such longer period as the Agent may reasonably agree; but in no event
later than 60 days after such notice is given) that the creditworthiness of any
Cash Management Bank is no longer acceptable in Agent’s reasonable judgment, or
as promptly as practicable and in any event within 60 days of notice from Agent
(or such longer period as the Agent may reasonably agree; but in no event later
than 90 days after such notice is given) that the operating performance, funds
transfer, or availability procedures or performance of the Cash Management Bank
with respect to Cash Management Accounts or Agent’s liability under any Cash
Management Agreement with such Cash Management Bank is no longer acceptable in
Agent’s reasonable judgment.

(d) The Cash Management Accounts shall be cash collateral accounts subject to
Control Agreements.

2.8 Crediting Payments. The receipt of any payment item by Agent (whether from
transfers to Agent by the Cash Management Banks pursuant to the Cash Management
Agreements or otherwise) shall not be considered a payment on account unless
such payment item is a wire transfer of immediately available federal funds made
to the Agent’s Account or unless and until such payment item is honored when
presented for payment. Should any payment item not be honored when presented for
payment, then Borrower shall be deemed not to have made such payment and
interest shall be calculated accordingly. Anything to the contrary contained
herein notwithstanding, any payment item shall be deemed received by Agent only
if it is received into the Agent’s Account on a Business Day on or before 11:00
a.m. (California time). If any payment item is received into the Agent’s Account
on a non-Business Day or after 11:00 a.m. (California time) on a Business Day,
it shall be deemed to have been received by Agent as of the opening of business
on the immediately following Business Day.

2.9 Designated Account. Agent is authorized to make the Advances, the Term Loan,
and the Capex Term Loan, and Issuing Lender is authorized to issue the Letters
of Credit, under this Agreement based upon telephonic or other instructions
received from anyone purporting to be an Authorized Person or, without
instructions, if pursuant to Section 2.6(d). Borrower agrees to establish and
maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Advances requested by Borrower and made by
Agent or the Lenders hereunder. Unless otherwise agreed by Agent and Borrower,
any Advance or Agent Advance requested by Borrower and made by Agent or the
Lenders hereunder shall be made to the Designated Account.

 

- 48 -

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

2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall
maintain an account on its books in the name of Borrower (the “Loan Account”) on
which Borrower will be charged with the Term Loan, the Capex Term Loan, all
Advances (including Agent Advances) made by Agent or the Lenders to Borrower or
for Borrower’s account, the Letters of Credit issued by Issuing Lender for
Borrower’s account, and with all other payment Obligations hereunder or under
the other Loan Documents (except for Bank Product Obligations), including,
accrued interest, fees and expenses, and Lender Group Expenses. In accordance
with Section 2.8, the Loan Account will be credited with all payments received
by Agent from Borrower or for Borrower’s account, including all amounts received
in the Agent’s Account from any Cash Management Bank. Agent shall render
statements regarding the Loan Account to Borrower, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Lender Group Expenses owing, and such statements, absent manifest
error, shall be conclusively presumed to be correct and accurate and constitute
an account stated between Borrower and the Lender Group unless, within 30 days
after receipt thereof by Borrower, Borrower shall deliver to Agent written
objection thereto describing the error or errors contained in any such
statements.

2.11 Fees. Borrower shall pay to Agent the following fees and charges, which
fees and charges shall be non-refundable when paid (irrespective of whether this
Agreement is terminated thereafter) and shall be apportioned among the Lenders
in accordance with the terms of agreements between Agent and individual Lenders:

(a) Fee Letter Fees. As and when due and payable under the terms of the Fee
Letter, the fees set forth in the Fee Letter,

(b) Revolver Unused Line Fee. Borrower shall pay to Agent, for the ratable
account of the Revolving Lenders, a revolver unused line fee (the “Revolver
Unused Line Fee”), quarterly in arrears, on the first day of each quarter from
and after the Restatement Effective Date up to the first day of the quarter
prior to the date on which the Revolver Obligations are paid in full and the
Revolver Commitments are terminated or are reduced to zero and on the date on
which the Revolver Obligations are paid in full and the Revolver Obligations are
terminated or are reduced to zero, in an amount equal to the result of the sum
of the Daily Revolver Unused Line Fee for each day during such fiscal quarter.

(c) Capex Term Loan Unused Line Fee. Borrower shall pay to Agent, for the
ratable account of the Revolving Lenders, a capex term loan unused line fee (the
“Capex Term Loan Unused Line Fee”), quarterly in arrears, on the first day of
each quarter from and after the Restatement Effective Date up to the first day
of the quarter prior to the Capex Term Loan Commitment Expiration Date and on
the Capex Term Loan Commitment Expiration Date, in an amount equal to the result
of the sum of the Daily Capex Term Loan Unused Line Fee for each day during
such fiscal quarter.

(d) Audit, Appraisal, and Valuation Charges. Audit, appraisal, and valuation
fees and charges shall consist of the actual charges paid or incurred by Agent
if it elects to employ the services of one or more third Persons to perform
financial audits of Borrower or its Subsidiaries, to establish electronic
collateral reporting systems, to appraise the Collateral, or any portion
thereof, or to assess Borrower’s or its Subsidiaries’ business valuation;

 

- 49 -

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

provided, however, that so long as no Event of Default shall have occurred and
be continuing, Borrower shall not be obligated to reimburse Agent for more than
2 audits, appraisals or valuations during any calendar year.

2.12 Letters of Credit.

(a) Subject to the terms and conditions of this Agreement, upon the request of
Borrower made in accordance herewith, and prior to the Revolver Maturity Date,
the Issuing Lender agrees to issue letters of credit for the account of Borrower
(each, a “Letter of Credit”). By submitting a request to Issuing Lender for the
issuance of a Letter of Credit, Borrower shall be deemed to have requested that
Issuing Lender issue the requested Letter of Credit. Each request for the
issuance of a Letter of Credit, or the amendment, renewal, or extension of any
outstanding Letter of Credit, shall be irrevocable and shall be made in writing
by an Authorized Person and delivered to Issuing Lender via telefacsimile or
other electronic method of transmission reasonably acceptable to Issuing Lender
and reasonably in advance of the requested date of issuance, amendment, renewal,
or extension. Each such request shall be in form and substance satisfactory to
the Issuing Lender in its Permitted Discretion and shall specify (i) the amount
of such Letter of Credit, (ii) the date of issuance, amendment, renewal, or
extension of such Letter of Credit, (iii) the proposed expiration date of such
Letter of Credit, (iv) the name and address of the beneficiary thereof, and
(v) such other information (including, in the case of an amendment, renewal, or
extension, identification of the outstanding Letter of Credit to be so amended,
renewed, or extended) as shall be necessary to prepare, amend, renew, or extend
such Letter of Credit. The Issuing Lender shall have no obligation to issue a
Letter of Credit if any of the following would result after giving effect to the
issuance of such requested Letter of Credit:

(i) the Letter of Credit Usage would exceed $2,500,000, or

(ii) the Letter of Credit Usage would exceed the Maximum Revolver Amount less
the outstanding amount Advances.

Each Letter of Credit shall be in form and substance acceptable to the Issuing
Lender (in the exercise of its Permitted Discretion), including the requirement
that the amounts payable thereunder must be payable in Dollars. If Issuing
Lender is obligated to advance funds under a Letter of Credit, Borrower promptly
shall reimburse such L/C Disbursement to Issuing Lender by paying to Agent an
amount equal to such L/C Disbursement not later than 11:00 a.m., California
time, on the date that such L/C Disbursement is made, if Borrower shall have
received written or telephonic notice of such L/C Disbursement prior to
10:00 a.m., California time, on such date, or, if such notice has not been
received by Borrower prior to such time on such date, then not later than
11:00 a.m., California time, on the Business Day that Borrower receives such
notice, if such notice is received prior to 10:00 a.m., California time, on the
date of receipt, and, in the absence of such reimbursement, the L/C Disbursement
immediately and automatically shall be deemed to be an Advance hereunder and,
thereafter, shall bear interest at the rate then applicable to Advances that are
Base Rate Loans under Section 2.6. To the extent an L/C Disbursement is deemed
to be an Advance hereunder, Borrower’s obligation to reimburse such L/C
Disbursement shall be discharged and replaced by the resulting Advance. Promptly
following receipt by Agent of any payment from Borrower pursuant to this
paragraph, Agent shall distribute such payment to the Issuing Lender or, to the
extent that Lenders have made payments pursuant to Section 2.12(c) to reimburse
the Issuing Lender, then to such Lenders and the Issuing Lender as their
interests may appear.

 

- 50 -

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

(b) Promptly following receipt of a notice of L/C Disbursement pursuant to
Section 2.12(a), each Lender with a Revolver Commitment agrees to fund its Pro
Rata Share of any Advance deemed made pursuant to the foregoing subsection on
the same terms and conditions as if Borrower had requested such Advance and
Agent shall promptly pay to Issuing Lender the amounts so received by it from
the Lenders. By the issuance of a Letter of Credit (or an amendment to a Letter
of Credit increasing the amount thereof) and without any further action on the
part of the Issuing Lender or the Lenders with Revolver Commitments, the Issuing
Lender shall be deemed to have granted to each Lender with a Revolver
Commitment, and each Lender with a Revolver Commitment shall be deemed to have
purchased, a participation in each Letter of Credit, in an amount equal to its
Pro Rata Share of the Risk Participation Liability of such Letter of Credit, and
each such Lender agrees to pay to Agent, for the account of the Issuing Lender,
such Lender’s Pro Rata Share of any payments made by the Issuing Lender under
such Letter of Credit. In consideration and in furtherance of the foregoing,
each Lender with a Revolver Commitment hereby absolutely and unconditionally
agrees to pay to Agent, for the account of the Issuing Lender, such Lender’s Pro
Rata Share of each L/C Disbursement made by the Issuing Lender and not
reimbursed by Borrower on the date due as provided in clause (a) of this
Section, or of any reimbursement payment required to be refunded to Borrower for
any reason. Each Lender with a Revolver Commitment acknowledges and agrees that
its obligation to deliver to Agent, for the account of the Issuing Lender, an
amount equal to its respective Pro Rata Share of each L/C Disbursement made by
the Issuing Lender pursuant to this Section 2.12(b) shall be absolute and
unconditional and such remittance shall be made notwithstanding the occurrence
or continuation of an Event of Default or Default or the failure to satisfy any
condition set forth in Section 3 hereof. If any such Lender fails to make
available to Agent the amount of such Lender’s Pro Rata Share of each L/C
Disbursement made by the Issuing Lender in respect of such Letter of Credit as
provided in this Section, such Lender shall be deemed to be a Defaulting Lender
and Agent (for the account of the Issuing Lender) shall be entitled to recover
such amount on demand from such Lender together with interest thereon at the
Defaulting Lender Rate until paid in full. In the event there is a Defaulting
Lender as of the date of any request for the issuance of a Letter of Credit, the
Issuing Lender shall not be required to issue or arrange for such Letter of
Credit to the extent (i) the Defaulting Lender’s Letter of Credit Exposure with
respect to such Letter of Credit may not be reallocated pursuant to
Section 2.3(d)(ii), or (ii) the Issuing Lender has not otherwise entered into
arrangements reasonably satisfactory to it and Borrower to eliminate the Issuing
Lender’s risk with respect to the participation in such Letter of Credit of the
Defaulting Lender, which arrangements may include Borrower cash collateralizing
such Defaulting Lender’s Letter of Credit Exposure in accordance with
Section 2.3(d)(ii). Additionally, Issuing Lender shall have no obligation to
issue a Letter of Credit if (A) any order, judgment, or decree of any
Governmental Authority or arbitrator shall, by its terms, purport to enjoin or
restrain Issuing Lender from issuing such Letter of Credit, or any law
applicable to Issuing Lender or any request or directive (whether or not having
the force of law) from any Governmental Authority with jurisdiction over Issuing
Lender shall prohibit or request that Issuing Lender refrain from the issuance
of letters of credit generally or such Letter of Credit in particular, (B) the
issuance of such Letter of Credit would violate one or more policies of Issuing
Lender applicable to letters of credit generally, or (C) if amounts demanded to
be paid under any Letter of Credit will or may not be in United States Dollars.

 

- 51 -

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

(c) Borrower hereby agrees to indemnify, save, defend, and hold harmless each
member of the Lender Group (including Issuing Lender and its branches,
Affiliates, and correspondents) and each such Person’s respective directors,
officers, employees, attorneys and agents (each, including Issuing Lender, a
“Letter of Credit Related Person”) (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, liabilities, fines, costs, penalties, and damages, and all
reasonable fees and disbursements of attorneys, experts, or consultants and all
other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), (the “Letter of Credit
Indemnified Costs”), and which arise out of or in connection with, or as a
result of:

(i) any Letter of Credit or any pre-advice of its issuance;

(ii) any transfer, sale, delivery, surrender or endorsement of any Drawing
Document at any time(s) held by any such Letter of Credit Related Person in
connection with any Letter of Credit;

(iii) any action or proceeding arising out of, or in connection with, any Letter
of Credit (whether administrative, judicial or in connection with arbitration),
including any action or proceeding to compel or restrain any presentation or
payment under any Letter of Credit, or for the wrongful dishonor of, or honoring
a presentation under, any Letter of Credit;

(iv) any independent undertakings issued by the beneficiary of any Letter of
Credit;

(v) any unauthorized instruction or request made to Issuing Lender in connection
with any Letter of Credit or requested Letter of Credit or error in computer or
electronic transmission;

(vi) an adviser, confirmer or other nominated person seeking to be reimbursed,
indemnified or compensated;

(vii) any third party seeking to enforce the rights of an applicant,
beneficiary, nominated person, transferee, assignee of Letter of Credit proceeds
or holder of an instrument or document;

(viii) the fraud, forgery or illegal action of parties other than the Letter of
Credit Related Person;

(ix) Issuing Lender’s performance of the obligations of a confirming institution
or entity that wrongfully dishonors a confirmation; or

(x) the acts or omissions, whether rightful or wrongful, of any present or
future de jure or de facto governmental or regulatory authority or cause or
event beyond the control of the Letter of Credit Related Person;

in each case, including that resulting from the Letter of Credit Related
Person’s own negligence; provided, however, that such indemnity shall not be
available to any Letter of Credit Related Person claiming indemnification under
clauses (i) through (x) above to the extent

 

- 52 -

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

that such Letter of Credit Indemnified Costs may be finally determined in a
final, non-appealable judgment of a court of competent jurisdiction to have
resulted directly from the gross negligence or willful misconduct of the Letter
of Credit Related Person claiming indemnity. Borrower hereby agrees to pay the
Letter of Credit Related Person claiming indemnity on demand from time to time
all amounts owing under this Section 2.12(c). If and to the extent that the
obligations of Borrower under this Section 2.12(c) are unenforceable for any
reason, Borrower agrees to make the maximum contribution to the Letter of Credit
Indemnified Costs permissible under applicable law. Borrower hereby acknowledges
and agrees that neither the Lender Group nor the Issuing Lender shall be
responsible for delays, errors, or omissions resulting from the malfunction of
equipment in connection with any Letter of Credit. This indemnification
provision shall survive termination of this Agreement and all Letters of Credit.

(d) Any and all charges, commissions, fees, and costs incurred by the Issuing
Lender relating to Letters of Credit shall be Lender Group Expenses for purposes
of this Agreement and promptly shall be reimbursable by Borrower to Agent for
the account of the Issuing Lender; it being acknowledged and agreed by Borrower
that, as of the Restatement Effective Date, the issuance charge imposed by
Issuing Lender is 0.125% per annum times the face amount of each Letter of
Credit, that such issuance charge may be changed from time to time, and that the
Issuing Lender also imposes a schedule of charges for amendments, extensions,
drawings, and renewals.

(e) The liability of Issuing Lender (or any other Letter of Credit Related
Person) under, in connection with or arising out of any Letter of Credit (or
pre-advice), regardless of the form or legal grounds of the action or
proceeding, shall be limited to direct damages suffered by Borrower that are
caused directly by Issuing Lender’s gross negligence or willful misconduct in
(i) honoring a presentation under a Letter of Credit that on its face does not
at least substantially comply with the terms and conditions of such Letter of
Credit, (ii) failing to honor a presentation under a Letter of Credit that
strictly complies with the terms and conditions of such Letter of Credit or
(iii) retaining drawing documents presented under a Letter of Credit. Issuing
Lender shall be deemed to have acted with due diligence and reasonable care if
Issuing Lender’s conduct is in accordance with this Agreement. Borrower’s
aggregate remedies against Issuing Lender and any Letter of Credit Related
Person for wrongfully honoring a presentation under any Letter of Credit or
wrongfully retaining honored Drawing Documents shall in no event exceed the
aggregate amount paid by Borrower to Issuing Lender in respect of the honored
presentation in connection with such Letter of Credit under Section 2.12.
Borrower shall take action to avoid and mitigate the amount of any damages
claimed against Issuing Lender or any other Letter of Credit Related Person,
including by enforcing its rights against the beneficiaries of the Letters of
Credit. Any claim by Borrower under or in connection with any Letter of Credit
shall be reduced by an amount equal to the sum of (x) the amount (if any) saved
by Borrower as a result of the breach or alleged wrongful conduct complained of;
and (y) the amount (if any) of the loss that would have been avoided had
Borrower taken all reasonable steps to mitigate any loss, and in case of a claim
of wrongful dishonor, by specifically and timely authorizing Issuing Lender to
effect a cure.

(f) Borrower is responsible for preparing or approving the final text of the
Letter of Credit as issued by Issuing Lender, irrespective of any assistance
Issuing Lender may provide such as drafting or recommending text or by Issuing
Lender’s use or refusal to use text

 

- 53 -

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

submitted by Borrower. Borrower is solely responsible for the suitability of the
Letter of Credit for Borrower’s purposes. With respect to any Letter of Credit
containing an “automatic amendment” to extend the expiration date of such Letter
of Credit, Issuing Lender, in its sole and absolute discretion, may give notice
of nonrenewal of such Letter of Credit and, if Borrower does not at any time
want such Letter of Credit to be renewed, Borrower will so notify Agent and
Issuing Lender at least 15 calendar days before Issuing Lender is required to
notify the beneficiary of such Letter of Credit or any advising bank of such
nonrenewal pursuant to the terms of such Letter of Credit.

(g) Borrower’s reimbursement and payment obligations under this Section 2.12 are
absolute, unconditional and irrevocable and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever, including:

(i) any lack of validity, enforceability or legal effect of any Letter of Credit
or this Agreement or any term or provision therein or herein;

(ii) payment against presentation of any draft, demand or claim for payment
under any drawing document that does not comply in whole or in part with the
terms of the applicable Letter of Credit or which proves to be fraudulent,
forged or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, or which is signed, issued or presented by a Person
or a transferee of such Person purporting to be a successor or transferee of the
beneficiary of such Letter of Credit;

(iii) Issuing Lender or any of its branches or Affiliates being the beneficiary
of any Letter of Credit;

(iv) Issuing Lender or any correspondent honoring a drawing against a drawing
document up to the amount available under any Letter of Credit even if such
drawing document claims an amount in excess of the amount available under the
Letter of Credit;

(v) the existence of any claim, set-off, defense or other right that Borrower or
any other Person may have at any time against any beneficiary, any assignee of
proceeds, Issuing Lender or any other Person;

(vi) any other event, circumstance or conduct whatsoever, whether or not similar
to any of the foregoing that might, but for this Section 2.12(g), constitute a
legal or equitable defense to or discharge of, or provide a right of set-off
against, Borrower’s reimbursement and other payment obligations and liabilities,
arising under, or in connection with, any Letter of Credit, whether against
Issuing Lender, the beneficiary or any other Person; or

(vii) the fact that any Default or Event of Default shall have occurred and be
continuing;

provided, however, that subject to Section 2.12(e) above, the foregoing shall
not release Issuing Lender from such liability to Borrower as may be finally
determined in a final, non-appealable judgment of a court of competent
jurisdiction against Issuing Lender following reimbursement or payment of the
obligations and liabilities, including reimbursement and other payment
obligations, of Borrower to Issuing Lender arising under, or in connection with,
this Section 2.12 or any Letter of Credit.

 

- 54 -

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

(h) Without limiting any other provision of this Agreement, Issuing Lender and
each other Letter of Credit Related Person (if applicable) shall not be
responsible to Borrower for, and Issuing Lender’s rights and remedies against
Borrower and the obligation of Borrower to reimburse Issuing Lender for each
drawing under each Letter of Credit shall not be impaired by:

(i) honor of a presentation under any Letter of Credit that on its face
substantially complies with the terms and conditions of such Letter of Credit,
even if the Letter of Credit requires strict compliance by the beneficiary;

(ii) honor of a presentation of any drawing document that appears on its face to
have been signed, presented or issued (A) by any purported successor or
transferee of any beneficiary or other Person required to sign, present or issue
such drawing document or (B) under a new name of the beneficiary;

(iii) acceptance as a draft of any written or electronic demand or request for
payment under a Letter of Credit, even if nonnegotiable or not in the form of a
draft or notwithstanding any requirement that such draft, demand or request bear
any or adequate reference to the Letter of Credit;

(iv) the identity or authority of any presenter or signer of any drawing
document or the form, accuracy, genuineness or legal effect of any drawing
document (other than Issuing Lender’s determination that such drawing document
appears on its face substantially to comply with the terms and conditions of the
Letter of Credit);

(v) acting upon any instruction or request relative to a Letter of Credit or
requested Letter of Credit that Issuing Lender in good faith believes to have
been given by a Person authorized to give such instruction or request;

(vi) any errors, omissions, interruptions or delays in transmission or delivery
of any message, advice or document (regardless of how sent or transmitted) or
for errors in interpretation of technical terms or in translation or any delay
in giving or failing to give notice to Borrower;

(vii) any acts, omissions or fraud by, or the insolvency of, any beneficiary,
any nominated person or entity or any other Person or any breach of contract
between the beneficiary and Borrower or any of the parties to the underlying
transaction to which the Letter of Credit relates;

(viii) assertion or waiver of any provision of the ISP or UCP that primarily
benefits an issuer of a letter of credit, including any requirement that any
drawing document be presented to it at a particular hour or place;

 

- 55 -

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

(ix) payment to any paying or negotiating bank (designated or permitted by the
terms of the applicable Letter of Credit) claiming that it rightfully honored or
is entitled to reimbursement or indemnity under Standard Letter of Credit
Practice applicable to it;

(x) acting or failing to act as required or permitted under standard letter of
credit practice applicable to where Issuing Lender has issued, confirmed,
advised or negotiated such Letter of Credit, as the case may be;

(xi) honor of a presentation after the expiration date of any Letter of Credit
notwithstanding that a presentation was made prior to such expiration date and
dishonored by Issuing Lender if subsequently Issuing Lender or any court or
other finder of fact determines such presentation should have been honored;

(xii) dishonor of any presentation that does not strictly comply or that is
fraudulent, forged or otherwise not entitled to honor; or

(xiii) honor of a presentation that is subsequently determined by Issuing Lender
to have been made in violation of international, federal, state or local
restrictions on the transaction of business with certain prohibited Persons.

(i) If by reason of (x) any Change in Law, or (y) compliance by Issuing Lender
or any other member of the Lender Group with any direction, request, or
requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Board of Governors as from time to time in effect (and any successor thereto):

(i) any reserve, deposit, or similar requirement is or shall be imposed or
modified in respect of any Letter of Credit issued or caused to be issued
hereunder or hereby, or

(ii) there shall be imposed on Issuing Lender or any other member of the Lender
Group any other condition regarding any Letter of Credit,

(iii) and the result of the foregoing is to increase, directly or indirectly,
the cost to Issuing Lender or any other member of the Lender Group of issuing,
making, participating in, or maintaining any Letter of Credit or to reduce the
amount receivable in respect thereof, then, and in any such case, Agent may, at
any time within a reasonable period after the additional cost is incurred or the
amount received is reduced, notify Borrower, and Borrower shall pay within 30
days after demand therefor, such amounts as Agent may specify to be necessary to
compensate Issuing Lender or any other member of the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section 2.12(i), as set forth in a certificate
setting forth the calculation thereof in reasonable detail, shall, in the
absence of manifest or demonstrable error, be final and conclusive and binding
on all of the parties hereto.

 

- 56 -

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

2.13 LIBOR Option.

(a) Interest and Interest Payment Dates. In lieu of having interest charged at
the rate based upon the Base Rate, Borrower shall have the option, subject to
Section 2.13(b) below (the “LIBOR Option”) to have interest on all or a portion
of the Advances, the Term Loan or the Capex Term Loan be charged (whether at the
time when made (unless otherwise provided herein), upon conversion from a Base
Rate Loan to a LIBOR Rate Loan, or upon continuation of a LIBOR Rate Loan as a
LIBOR Rate Loan) at a rate of interest based upon the LIBOR Rate. Interest on
LIBOR Rate Loans shall be payable on the earliest of (i) the last day of the
Interest Period applicable thereto (provided, however, that, subject to the
following clauses (ii) and (iii), in the case of any Interest Period greater
than 3 months in duration, interest shall be payable at 3 month intervals after
the commencement of the applicable Interest Period and on the last day of such
Interest Period), (ii) the date on which all or any portion of the Obligations
are accelerated pursuant to the terms hereof, or (iii) termination of this
Agreement pursuant to the terms hereof. On the last day of each applicable
Interest Period, unless Borrower properly has exercised the LIBOR Option with
respect thereto, the interest rate applicable to such LIBOR Rate Loan
automatically shall convert to the rate of interest then applicable to Base Rate
Loans of the same type hereunder. At any time that an Event of Default has
occurred and is continuing, Borrower no longer shall have the option to request
that Advances, the Term Loan or the Capex Term Loan bear interest at a rate
based upon the LIBOR Rate and Agent shall have the right to convert the interest
rate on all outstanding LIBOR Rate Loans to the rate then applicable to Base
Rate Loans hereunder.

(b) LIBOR Election.

(i) Borrower may, at any time and from time to time, so long as no Event of
Default has occurred and is continuing, elect to exercise the LIBOR Option by
notifying Agent prior to 10:00 a.m. (California time) at least 3 Business Days
prior to the commencement of the proposed Interest Period (the “LIBOR
Deadline”). Notice of Borrower’s election of the LIBOR Option for a permitted
portion of the Advances, the Term Loan or the Capex Term Loan and an Interest
Period pursuant to this Section shall be made by delivery to Agent of a LIBOR
Notice received by Agent before the LIBOR Deadline, or by telephonic notice
received by Agent before the LIBOR Deadline (to be confirmed by delivery to
Agent of a LIBOR Notice received by Agent prior to 5:00 p.m. (California time)
on the same day). Promptly upon its receipt of each such LIBOR Notice, Agent
shall provide a copy thereof to each of the Lenders having a Revolver
Commitment.

(ii) Each LIBOR Notice shall be irrevocable and binding on Borrower. In
connection with each LIBOR Rate Loan, Borrower shall indemnify, defend, and hold
Agent and the Lenders harmless against any loss, cost, or expense incurred by
Agent or any Lender as a result of (a) the payment of any principal of any LIBOR
Rate Loan other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (b) the conversion of any LIBOR
Rate Loan other than on the last day of the Interest Period applicable thereto,
or (c) the failure to borrow, convert, continue or prepay any LIBOR Rate Loan on
the date specified in any LIBOR Notice delivered pursuant hereto (such losses,
costs, and expenses, collectively, “Funding Losses”). Funding Losses shall, with
respect to Agent or any Lender, be deemed to equal the amount determined by
Agent or such Lender to be the excess, if any, of (i) the amount of interest
that would have accrued on the principal amount of such LIBOR Rate Loan had such
event not occurred, at the LIBOR Rate that would have been applicable thereto,

 

- 57 -

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

for the period from the date of such event to the last day of the then current
Interest Period therefor (or, in the case of a failure to borrow, convert, or
continue, for the period that would have been the Interest Period therefor),
minus (ii) the amount of interest that would accrue on such principal amount for
such period at the interest rate which Agent or such Lender would be offered
were it to be offered, at the commencement of such period, Dollar deposits of a
comparable amount and period in the London interbank market. A certificate of
Agent or a Lender delivered to Borrower setting forth any amount or amounts that
Agent or such Lender is entitled to receive pursuant to this Section 2.13 shall
be conclusive absent manifest error.

(iii) Borrower shall have not more than 5 LIBOR Rate Loans in effect at any
given time. Borrower only may exercise the LIBOR Option for LIBOR Rate Loans of
at least $100,000 and integral multiples of $100,000 in excess thereof.

(c) Prepayments. Borrower may prepay LIBOR Rate Loans at any time; provided,
however, , that in the event that LIBOR Rate Loans are prepaid on any date that
is not the last day of the Interest Period applicable thereto, including as a
result of any automatic prepayment through the required application by Agent of
proceeds of Borrower’s and its Subsidiaries’ Collections in accordance with
Section 2.4(b) or for any other reason, including early termination of the term
of this Agreement or acceleration of all or any portion of the Obligations
pursuant to the terms hereof, Borrower shall indemnify, defend, and hold Agent
and the Lenders and their Participants harmless against any and all Funding
Losses in accordance with clause (b)(ii) above.

(d) Special Provisions Applicable to LIBOR Rate.

(i) The LIBOR Rate may be adjusted by Agent with respect to any Lender on a
prospective basis to take into account any additional or increased costs to such
Lender of maintaining or obtaining any eurodollar deposits or increased costs,
in each case, due to changes in applicable law occurring subsequent to the
commencement of the then applicable Interest Period, including any Changes in
Law (including any changes in tax laws (except changes of general applicability
in corporate income tax laws)) and changes in the reserve requirements imposed
by the Board of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage, which additional or increased costs would
increase the cost of funding or maintaining loans bearing interest at the LIBOR
Rate. In any such event, the affected Lender shall give Borrower and Agent
notice of such a determination and adjustment and Agent promptly shall transmit
the notice to each other Lender and, upon its receipt of the notice from the
affected Lender, Borrower may, by notice to such affected Lender (A) require
such Lender to furnish to Borrower a statement setting forth in reasonable
detail the basis for adjusting such LIBOR Rate and the method for determining
the amount of such adjustment, or (B) repay the LIBOR Rate Loans of such Lender
with respect to which such adjustment is made (together with any amounts due
under Section 2.13(b)(ii)).

(ii) In the event that any change in market conditions or any Change in Law
shall at any time after the date hereof, in the reasonable opinion of any
Lender, make it unlawful or impractical for such Lender to fund or maintain
LIBOR Rate Loans or to continue such funding or maintaining, or to determine or
charge interest rates at the LIBOR Rate, such Lender shall give notice of such
changed circumstances to Agent and Borrower and Agent

 

- 58 -

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

promptly shall transmit the notice to each other Lender and (y) in the case of
any LIBOR Rate Loans of such Lender that are outstanding, the date specified in
such Lender’s notice shall be deemed to be the last day of the Interest Period
of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender
thereafter shall accrue interest at the rate then applicable to Base Rate Loans,
and (z) Borrower shall not be entitled to elect the LIBOR Option until such
Lender determines that it would no longer be unlawful or impractical to do so.

(e) No Requirement of Matched Funding. Anything to the contrary contained herein
notwithstanding, neither Agent, nor any Lender, nor any of their Participants,
is required actually to acquire eurodollar deposits to fund or otherwise match
fund any Obligation as to which interest accrues at the LIBOR Rate. The
provisions of this Section shall apply as if each Lender or its Participants had
match funded any Obligation as to which interest is accruing at the LIBOR Rate
by acquiring eurodollar deposits for each Interest Period in the amount of the
LIBOR Rate Loans.

2.14 Capital Requirements.

(a) If, after the date hereof, Issuing Lender or any Lender determines that
(i) any Change in Law regarding capital or reserve requirements for banks or
bank holding companies, or (ii) compliance by Issuing Lender or such Lender, or
their respective parent bank holding companies, with any guideline, request or
directive of any Governmental Authority regarding capital adequacy (whether or
not having the force of law), has the effect of reducing the return on Issuing
Lender’s, such Lender’s, or such holding companies’ capital as a consequence of
Issuing Lender’s or such Lender’s commitments hereunder to a level below that
which Issuing Lender, such Lender, or such holding companies could have achieved
but for such Change in Law or compliance (taking into consideration Issuing
Lender’s, such Lender’s, or such holding companies’ then existing policies with
respect to capital adequacy and assuming the full utilization of such entity’s
capital) by any amount deemed by Issuing Lender or such Lender to be material,
then Issuing Lender or such Lender may notify Borrower and Agent in writing
thereof. Following receipt of such written notice, Borrower agrees to pay
Issuing Lender or such Lender on demand the amount of such reduction of return
of capital as and when such reduction is determined, payable within 60 days
after presentation by Issuing Lender or such Lender of a statement in the amount
and setting forth in reasonable detail Issuing Lender’s or such Lender’s
calculation thereof and the assumptions upon which such calculation was based
(which statement shall be deemed true and correct absent manifest error). In
determining such amount, Issuing Lender or such Lender may use any reasonable
averaging and attribution methods. Failure or delay on the part of Issuing
Lender or any Lender to demand compensation pursuant to this Section shall not
constitute a waiver of Issuing Lender’s or such Lender’s right to demand such
compensation.

(b) If Issuing Lender or any Lender requests additional or increased costs
referred to in Section 2.12(i) or Section 2.13(d)(i) or amounts under
Section 2.14(a) or sends a notice under Section 2.13(d)(ii) relative to changed
circumstances (such Issuing Lender or Lender, an “Affected Lender”), then such
Affected Lender shall use reasonable efforts to promptly designate a different
one of its lending offices or to assign its rights and obligations hereunder to
another of its offices or branches, if (i) in the reasonable judgment of such
Affected Lender, such designation or assignment would eliminate or reduce
amounts payable pursuant to

 

- 59 -

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

Section 2.12(i), Section 2.13(d)(i) or Section 2.14(a), as applicable, or would
eliminate the illegality or impracticality of funding or maintaining LIBOR Rate
Loans and (ii) in the reasonable judgment of such Affected Lender, such
designation or assignment would not subject it to any material unreimbursed cost
or expense and would not otherwise be materially disadvantageous to it. Borrower
agrees to pay all reasonable out-of-pocket costs and expenses incurred by such
Affected Lender in connection with any such designation or assignment. If, after
such reasonable efforts, such Affected Lender does not so designate a different
one of its lending offices or assign its rights to another of its offices or
branches so as to eliminate Borrower’s obligation to pay any future amounts to
such Affected Lender pursuant to Section 2.12(i), Section 2.13(d)(i) or
Section 2.14(a), as applicable, or to enable Borrower to obtain LIBOR Rate
Loans, then Borrower (without prejudice to any amounts then due to such Affected
Lender under Section 2.12(i), Section 2.13(d)(i) or Section 2.14(a), as
applicable) may, unless prior to the effective date of any such assignment the
Affected Lender withdraws its request for such additional amounts under
Section 2.12(i), Section 2.13(d)(i) or Section 2.14(a), as applicable, or
indicates that it is no longer unlawful or impractical to fund or maintain LIBOR
Rate Loans, may designate a different Issuing Lender or substitute a Lender, in
each case, reasonably acceptable to Agent to purchase the Obligations owed to
such Affected Lender and such Affected Lender’s commitments hereunder (a
“Replacement Lender”), and if such Replacement Lender agrees to such purchase,
such Affected Lender shall assign to the Replacement Lender its Obligations and
commitments, and upon such purchase by the Replacement Lender, which such
Replacement Lender shall be deemed to be “Issuing Lender” or a “Lender” (as the
case may be) for purposes of this Agreement and such Affected Lender shall cease
to be “Issuing Lender” or a “Lender” (as the case may be) for purposes of this
Agreement.

(c) Notwithstanding anything herein to the contrary, the protection of Sections
2.12(i), 2.13(d), and 2.14 shall be available to Issuing Lender and each Lender
(as applicable) regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, judicial ruling, judgment,
guideline, treaty or other change or condition which shall have occurred or been
imposed, so long as it shall be customary for issuing banks or lenders affected
thereby to comply therewith.

2.15 Accordion.

(a) At any time during the period from and after the Restatement Effective Date
through but excluding the Revolver Maturity Date, at the option of Borrower (but
subject to the conditions set forth in clause (b) below), the Revolver
Commitments and the Maximum Revolver Amount may be increased by an amount in the
aggregate for all such increases of the Revolver Commitments and the Maximum
Revolver Amount not to exceed the Available Increase Amount (each such increase,
an “Increase”). Agent shall invite each Lender to increase its Revolver
Commitments (it being understood that no Lender shall be obligated to increase
its Revolver Commitments) in connection with a proposed Increase, and if
sufficient Lenders do not agree to increase their Revolver Commitments in
connection with such proposed Increase, then Agent or Borrower may invite any
prospective lender who is reasonably satisfactory to Agent and Borrower to
become a Lender in connection with a proposed Increase (the date such Increase
is made, the “Increase Date”). Any Increase shall be in an amount of at least
$5,000,000 and integral multiples of $1,000,000 in excess thereof. In no event
may the Revolver Commitments and the Maximum Revolver Amount be increased
pursuant to this Section 2.14 on more than two

 

- 60 -

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

occasions in the aggregate for all such Increases. Additionally, for the
avoidance of doubt, it is understood and agreed that in no event shall the
aggregate amount of the Increases to the Revolver Commitments exceed
$10,000,000.

(b) Each of the following shall be conditions precedent to any Increase of the
Revolver Commitments and the Maximum Revolver Amount in connection therewith:

(i) Agent or Borrower have obtained the commitment of one or more Lenders (or
other prospective lenders) reasonably satisfactory to Agent and Borrower to
provide the applicable Increase and any such Lenders (or prospective lenders),
Borrower, and Agent have signed a joinder agreement to this Agreement (an
“Increase Joinder”), in form and substance reasonably satisfactory to Agent, to
which such Lenders (or prospective lenders), Borrower, and Agent are party,

(ii) each of the conditions precedent set forth in Section 3.3 are satisfied,

(iii) Borrower has delivered to Agent updated pro forma Projections (after
giving effect to the applicable Increase) for Borrower and its Subsidiaries
evidencing (A) that on a pro forma basis after giving effect to the applicable
Increase, the Leverage Ratio of Borrower and its Subsidiaries as of the end of
the fiscal quarter most recently ended as to which financial statements were
required to be delivered pursuant to this Agreement was at least 0.25 less than
the maximum Leverage Ratio permitted pursuant to Section 7.18(a)(i) for such
fiscal quarter, and (B) compliance on a pro forma basis with Section 7.18 for
the 4 fiscal quarters (on a quarter-by-quarter basis) immediately following the
proposed date of the applicable Increase, and

(c) Unless otherwise specifically provided herein, all references in this
Agreement and any other Loan Document to Revolving Loans shall be deemed, unless
the context otherwise requires, to include Revolving Loans made pursuant to the
increased Revolver Commitments and Maximum Revolver Amount pursuant to this
Section 2.15.

(d) Each of the Lenders having a Revolver Commitment prior to the Increase Date
(the “Pre-Increase Revolver Lenders”) shall assign to any Lender which is
acquiring a new or additional Revolver Commitment on the Increase Date (the
“Post-Increase Revolver Lenders”), and such Post-Increase Revolver Lenders shall
purchase from each Pre-Increase Revolver Lender, at the principal amount
thereof, such interests in the Revolving Loans and participation interests in
Letters of Credit on such Increase Date as shall be necessary in order that,
after giving effect to all such assignments and purchases, such Revolving Loans
and participation interests in Letters of Credit will be held by Pre-Increase
Revolver Lenders and Post-Increase Revolver Lenders ratably in accordance with
their Pro Rata Share after giving effect to such increased Revolver Commitments.

(e) The Revolving Loans, Revolver Commitments, and Maximum Revolver Amount
established pursuant to this Section 2.15 shall constitute Revolving Loans,
Revolver Commitments, and Maximum Revolver Amount under, and shall be entitled
to all the benefits afforded by, this Agreement and the other Loan Documents,
and shall, without limiting the foregoing, benefit equally and ratably from any
guarantees and the security interests created by

 

- 61 -

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

the Loan Documents. Borrower shall take any actions reasonably required by Agent
to ensure and demonstrate that the Liens and security interests granted by the
Loan Documents continue to be perfected under the Code or otherwise after giving
effect to the establishment of any such new Revolver Commitments and Maximum
Revolver Amount.

3. CONDITIONS; TERM OF AGREEMENT.

3.1 Conditions Precedent to the Initial Extension of Credit. The obligation of
each Lender to make its initial extension of credit provided for hereunder, is
subject to the prior fulfillment, to the satisfaction of Agent and each Lender
(the making of such initial extension of credit by a Lender being conclusively
deemed to be its satisfaction or waiver of the following), of each of the
following conditions precedent:

(a) the Restatement Effective Date shall occur on or before November 13, 2014;

(b) Agent shall have received each of the following documents, in form and
substance satisfactory to Agent, duly executed, and each such document shall be
in full force and effect:

(i) the Disbursement Letter,

(ii) the Fee Letter,

(iii) the Intercompany Subordination Agreement,

(iv) [Intentionally Omitted],

(v) the Stock Pledge Agreement, and

(vi) the Trademark Security Agreement,

(c) Agent shall have received a certificate from the Secretary of Borrower
(i) attesting to the resolutions of Borrower’s Board of Directors authorizing
its execution, delivery, and performance of this Agreement and the other Loan
Documents to which Borrower is a party, (ii) authorizing specific officers of
Borrower to execute the same, and (iii) attesting to the incumbency and
signatures of such specific officers of Borrower;

(d) Agent shall have received copies of Borrower’s Governing Documents, as
amended, modified, or supplemented to the Restatement Effective Date, certified
by the Secretary of Borrower;

(e) Agent shall have received a certificate of status with respect to Borrower,
dated within 10 days of the Restatement Effective Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good standing in
such jurisdiction;

 

- 62 -

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

(f) Agent shall have received certificates of status with respect to Borrower,
each dated within 30 days of the Restatement Effective Date, such certificates
to be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of Borrower) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that Borrower is in good standing in such
jurisdictions;

(g) Agent shall have received a certificate of insurance as are required by
Section 6.8, the form and substance of which shall be reasonably satisfactory to
Agent;

(h) Agent shall have received an opinion of Borrower’s counsel in form and
substance reasonably satisfactory to Agent;

(i) Agent shall have received satisfactory evidence (including a certificate of
the chief financial officer of Borrower) that all tax returns required to be
filed by Borrower and its Subsidiaries have been timely filed and all taxes upon
Borrower and its Subsidiaries or their properties, assets, income, and
franchises (including (a) Real Property taxes and sales taxes, which could,
individually or in the aggregate, reasonably be expected to result in a
liability to Borrower or any of its Subsidiaries in excess of $10,000, and
(b) payroll taxes) have been paid prior to delinquency, except such taxes that
are the subject of a Permitted Protest;

(j) Agent shall have received Borrower’s Restatement Effective Date Business
Plan;

(k) Borrower shall have paid all Lender Group Expenses incurred in connection
with the transactions evidenced by this Agreement and invoiced at least 2
Business Days prior to the Restatement Effective Date;

(l) Agent shall have received copies of Borrower’s quarterly financial
statements for the two quarter period ending June 30, 2014, which shall be in
form and substance reasonably satisfactory to Agent;

(m) Borrower and each of its Subsidiaries shall have received all licenses,
approvals or evidence of other actions required by any Governmental Authority in
connection with the execution and delivery by Borrower or its Subsidiaries of
the Loan Documents or with the consummation of the transactions contemplated
thereby;

(n) Agent shall have received such evidence as it shall require of (i) the
consummation of a Qualifying IPO, (ii) the receipt by Borrower of at least
$100,000,000 of gross proceeds from the Qualifying IPO, and (iii) the conversion
of all outstanding Series C Preferred Stock (including any outstanding guarantee
fees pursuant to the OWB Fee and Reimbursement Agreement which are to be
converted to Series C Preferred Stock) of the Borrower into common Stock; and

(o) The aggregate amount of the Term Loans, the Capex Term Loans, and the
Advances funded on the Restatement Effective Date do not exceed $25,000,000 in
the aggregate.

3.2 Conditions Subsequent to the Initial Extension of Credit. The obligation of
the Lender Group (or any member thereof) to continue to make Advances (or
otherwise extend

 

- 63 -

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

credit hereunder) is subject to the fulfillment, on or before the date
applicable thereto, of each of the conditions subsequent set forth below (the
failure by Borrower to so perform or cause to be performed constituting an Event
of Default):

(a) within 30 days of the Restatement Effective Date (or such longer period as
the Agent may reasonably agree; but in no event later than 90 days after the
Restatement Effective Date), deliver to Agent certified copies of the policies
of insurance, together with the endorsements thereto, as are required by
Section 6.8, the form and substance of which shall be reasonably satisfactory to
Agent and its counsel; and

(b) within 30 days of the Restatement Effective Date (or such longer period as
Agent may reasonably agree; but in no event later than 60 days after the
Restatement Effective Date), Agent shall have received a Control Agreement from
each Cash Management Bank (other than Agent) set forth on Schedule 2.7(a).

3.3 Conditions Precedent to all Extensions of Credit. The obligation of the
Lender Group (or any member thereof) to make any Advances hereunder at any time
(or to extend any other credit hereunder) shall be subject to the following
conditions precedent:

(a) the representations and warranties of Borrower or its Subsidiaries contained
in this Agreement or in the other Loan Documents shall be true and correct in
all material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof) on and as of the date of such
extension of credit, as though made on and as of such date (except to the extent
that such representations and warranties relate solely to an earlier date, in
which case such representations and warranties shall be true and correct in all
material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof) as of such earlier date);

(b) no Default or Event of Default shall have occurred and be continuing on the
date of such extension of credit, nor shall either result from the making
thereof;

(c) no injunction, writ, restraining order, or other order of any nature
restricting or prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority against
Borrower, Agent, any Lender, or any of their Affiliates; and

(d) no Material Adverse Change shall have occurred.

3.4 Term. This Agreement shall continue in full force and effect for a term
ending on the Term Loan Maturity Date. The foregoing notwithstanding, the Lender
Group, upon the election of the Required Lenders, shall have the right to
terminate its obligations under this Agreement immediately and without notice
upon the occurrence and during the continuation of an Event of Default.

3.5 Effect of Termination. On the date of termination of this Agreement,
pursuant to the provisions hereof, all commitments of the Lender Group to
provide additional credit

 

- 64 -

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

hereunder shall automatically be terminated and, except to the extent due and
payable prior to such date pursuant to the provisions hereof, all Obligations
(including contingent reimbursement obligations of Borrower with respect to
outstanding Letters of Credit and including all Bank Product Obligations)
immediately shall become due and payable without notice or demand (including
(a) providing Letter of Credit Collateralization, and (b) providing Bank Product
Collateralization). No termination of this Agreement, however, shall relieve or
discharge Borrower or its Subsidiaries of their duties, Obligations, or
covenants hereunder or under any other Loan Document and the Agent’s Liens in
the Collateral shall remain in effect until all Obligations have been paid in
full and the Lender Group’s obligations to provide additional credit hereunder
have been terminated. When this Agreement has been terminated and all of the
Obligations have been paid in full and the Lender Group’s obligations to provide
additional credit under the Loan Documents have been terminated irrevocably,
Agent will, at Borrower’s sole expense, execute and deliver any termination
statements, lien releases, mortgage releases, re-assignments of trademarks,
discharges of security interests, and other similar discharge or release
documents (and, if applicable, in recordable form) as are reasonably necessary
to release, as of record, the Agent’s Liens and all notices of security
interests and liens previously filed by Agent with respect to the Obligations.

3.6 Early Termination by Borrower. Borrower has the option, at any time upon 3
Business Days prior written notice to Agent, to terminate this Agreement by
paying to Agent, in cash, the Obligations (including (a) providing Letter of
Credit Collateralization, and (b) providing Bank Product Collateralization), in
full. If Borrower has sent a notice of termination pursuant to the provisions of
this Section, then the Commitments shall terminate and Borrower shall be
obligated to repay the Obligations (including (a) providing Letter of Credit
Collateralization, and (b) providing Bank Product Collateralization), in full.

4. CREATION OF SECURITY INTEREST.

4.1 Grant of Security Interest. Borrower hereby grants to Agent, for the benefit
of the Lender Group and the Bank Product Providers, a continuing security
interest in all of its right, title, and interest in all currently existing and
hereafter acquired or arising Borrower Collateral in order to secure prompt
repayment of any and all of the Obligations in accordance with the terms and
conditions of the Loan Documents and in order to secure prompt performance by
Borrower of each of its covenants and duties under the Loan Documents. The
Agent’s Liens in and to the Borrower Collateral shall attach to all Borrower
Collateral without further act on the part of Agent or Borrower. Anything
contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, Borrower and its
Subsidiaries have no authority, express or implied, to dispose of any item or
portion of the Collateral.

4.2 Negotiable Collateral. In the event that any Borrower Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that Agent determines that perfection or priority of Agent’s security
interest is dependent on or enhanced by possession, Borrower, promptly upon the
request of Agent, shall endorse and deliver physical possession of such
Negotiable Collateral to Agent.

4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral. At
any time after the occurrence and during the continuation of an Event of
Default, Agent or

 

- 65 -

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

Agent’s designee may (a) notify Account Debtors of Borrower that Borrower’s
Accounts, chattel paper, or General Intangibles have been assigned to Agent or
that Agent has a security interest therein, or (b) collect Borrower’s Accounts,
chattel paper, or General Intangibles directly and charge the collection costs
and expenses to the Loan Account. Borrower agrees that it will hold in trust for
the Lender Group, as the Lender Group’s trustee, any of its or its Subsidiaries’
Collections that it receives and immediately will deliver such Collections to
Agent or a Cash Management Bank in their original form as received by Borrower
or its Subsidiaries.

4.4 Filing of Financing Statements; Commercial Tort Claims; Delivery of
Additional Documentation Required.

(a) Borrower authorizes Agent at any time and from time to time to file,
transmit, or communicate, as applicable, financing statements and amendments
(i) describing the Borrower Collateral as “all personal property of debtor” or
“all assets of debtor” or words of similar effect, (ii) describing the Borrower
Collateral as being of equal or lesser scope or with greater detail, or
(iii) that contain any information required by part 5 of Article 9 of the Code
for the sufficiency or filing office acceptance. Borrower also hereby ratifies
any and all financing statements or amendments previously filed by Agent in any
jurisdiction.

(b) If Borrower or its Subsidiaries acquire any commercial tort claims with a
value in excess of $250,000 after the date hereof, Borrower shall promptly (but
in any event within 3 Business Days after such acquisition) deliver to Agent a
written description of such commercial tort claim and shall deliver a written
agreement, in form and substance reasonably satisfactory to Agent, pursuant to
which Borrower or its Subsidiary, as applicable, shall grant a perfected
security interest in all of its right, title and interest in and to such
commercial tort claim to Agent, as security for the Obligations (a “Commercial
Tort Claim Assignment”).

(c) At any time upon the request of Agent, Borrower shall execute or deliver to
Agent, and shall cause its Subsidiaries to execute or deliver to Agent, any and
all financing statements, original financing statements in lieu of continuation
statements, amendments to financing statements, fixture filings, security
agreements, pledges, assignments, Commercial Tort Claim Assignments,
endorsements of certificates of title, and all other documents (collectively,
the “Additional Documents”) that Agent may request in its Permitted Discretion,
in form and substance reasonably satisfactory to Agent, to create, perfect, and
continue perfected or to better perfect the Agent’s Liens in the assets of
Borrower and its Subsidiaries (whether now owned or hereafter arising or
acquired, tangible or intangible, real or personal), to create and perfect Liens
in favor of Agent in any owned Real Property acquired after the Restatement
Effective Date, and in order to fully consummate all of the transactions
contemplated hereby and under the other Loan Documents. To the maximum extent
permitted by applicable law, Borrower authorizes Agent to execute any such
Additional Documents in Borrower’s name and authorizes Agent to file such
executed Additional Documents in any appropriate filing office. In addition, on
such periodic basis as Agent shall require, Borrower shall (i) provide Agent
with a report of all new U.S. federal patent applications, patents, registered
copyrights, copyright applications, registered trademarks, and trademark
registration acquired or generated by Borrower or its Subsidiaries during the
prior period, and (ii) cause to be prepared, executed, and delivered to Agent
supplemental schedules to the applicable Loan Documents to identify such
patents, copyrights, and trademarks as being subject to the security interests
created thereunder;

 

- 66 -

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

provided, however, that neither Borrower nor any of its Subsidiaries shall
register with the U.S. Copyright Office any unregistered copyrights (whether in
existence on the Restatement Effective Date or thereafter acquired, arising, or
developed) unless within 20 days of the filing of an application for such
registration, the applicable Person executes and delivers to Agent a copyright
security agreement in form and substance reasonably satisfactory to Agent,
supplemental schedules to any existing copyright security agreement, or such
other documentation as Agent reasonably deems necessary in order to perfect and
continue perfected Agent’s Liens on such copyrights following such registration.

4.5 Power of Attorney. Borrower hereby irrevocably makes, constitutes, and
appoints Agent (and any of Agent’s officers, employees, or agents designated by
Agent) as Borrower’s true and lawful attorney, with power to (a) if Borrower
refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the name of Borrower on any of the documents
described in Section 4.4, (b) at any time that an Event of Default has occurred
and is continuing, sign Borrower’s name on any invoice or bill of lading
relating to the Borrower Collateral, drafts against Account Debtors, or notices
to Account Debtors, (c) send requests for verification of Borrower’s or its
Subsidiaries’ Accounts, (d) endorse Borrower’s name on any of its payment items
(including all of its Collections) that may come into the Lender Group’s
possession, (e) at any time that an Event of Default has occurred and is
continuing, make, settle, and adjust all claims under Borrower’s policies of
insurance and make all determinations and decisions with respect to such
policies of insurance, and (f) at any time that an Event of Default has occurred
and is continuing, settle and adjust disputes and claims respecting Borrower’s
or its Subsidiaries’ Accounts, chattel paper, or General Intangibles directly
with Account Debtors, for amounts and upon terms that Agent determines to be
reasonable, and Agent may cause to be executed and delivered any documents and
releases that Agent determines to be necessary. The appointment of Agent as
Borrower’s attorney, and each and every one of its rights and powers, being
coupled with an interest, is irrevocable until all of the Obligations have been
fully and finally repaid and performed and the Lender Group’s obligations to
extend credit hereunder are terminated.

4.6 Right to Inspect. Agent and each Lender (through any of their respective
officers, employees, or agents) shall have the right, from time to time
hereafter to inspect the Books and make copies or abstracts thereof and to
check, test, and appraise the Collateral, or any portion thereof, in order to
verify Borrower’s and its Subsidiaries’ financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral.

4.7 Control Agreements. Borrower agrees that it will and will cause its
Subsidiaries to take commercially reasonable steps in order for Agent to obtain
control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the
Code with respect to (subject to the proviso contained in Section 7.12) all of
its or their Securities Accounts, Deposit Accounts, electronic chattel paper,
Investment Property, and letter-of-credit rights; provided that (i) the Borrower
may keep up to $25,000 in the aggregate in accounts that are not subject to the
foregoing and (ii) the requirements in this Section 4.7 or Section 2.7 shall not
apply to Excluded Deposit Accounts. Upon the occurrence and during the
continuance of a Event of Default, Agent may notify any bank or securities
intermediary to liquidate the applicable Deposit Account or Securities Account
or any related Investment Property maintained or held thereby and remit the
proceeds thereof to the Agent’s Account.

 

- 67 -

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

5. REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender Group to enter into this Agreement, Borrower makes
the following representations and warranties to the Lender Group which shall be
true, correct, and complete, in all material respects (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof), as of the Restatement Effective Date, and shall be true, correct, and
complete, in all material respects (except that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof), as of the date of the
making of each Advance (or other extension of credit) made thereafter, as though
made on and as of the date of such Advance (or other extension of credit)
(except to the extent that such representations and warranties relate solely to
an earlier date, in which case such representations and warranties shall be true
and correct in all material respects (except that such materiality qualifier
shall not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) as of such earlier
date) and such representations and warranties shall survive the execution and
delivery of this Agreement:

5.1 No Encumbrances. Borrower and its Subsidiaries have good and indefeasible
title to, or a valid leasehold interest in, their personal property assets and
good and marketable title to, or a valid leasehold interest in, their Real
Property, in each case, free and clear of Liens except for Permitted Liens.

5.2 [Intentionally Omitted].

5.3 [Intentionally Omitted].

5.4 Equipment. All of the Equipment of Borrower and its Subsidiaries that is
necessary or material to conduct their business is used or held for use in their
business and is fit for such purposes, except for any failure to comply with the
foregoing with respect to Equipment with a market value less than or equal to
$250,000.

5.5 Location of Inventory and Equipment. The Inventory and Equipment of Borrower
and its Subsidiaries (other than (w) Equipment out for repair, (x) Equipment in
transit between such locations, (y) Chillers located at one or more of the
Installed Stores and (z) other Equipment with an after market value not in
excess of $250,000) are not stored with a bailee, warehouseman, or similar party
and (other than (w) Equipment out for repair, (x) Equipment in transit between
such locations, (y) Chillers located at one or more of the Installed Stores and
(z) other Equipment with an after market value not in excess of $250,000) are
located only at, or in-transit between, the locations identified on Schedule 5.5
(as such Schedule may be updated pursuant to Section 6.9).

5.6 Inventory Records. Borrower keeps correct and accurate records itemizing and
describing the type, quality, and quantity of its and its Subsidiaries’
Inventory and the book value thereof in all material respects.

 

- 68 -

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

5.7 State of Incorporation; Location of Chief Executive Office; Organizational
Identification Number; Commercial Tort Claims.

(a) The jurisdiction of organization of Borrower and each of its Subsidiaries is
set forth on Schedule 5.7(a), as such Schedule may be amended upon no less than
30 days prior written notice to Agent.

(b) The chief executive office of Borrower and each of its Subsidiaries is
located at the address indicated on Schedule 5.7 (b) (as such Schedule may be
updated pursuant to Section 6.9).

(c) Borrower’s and each of its Subsidiaries’ organizational identification
numbers, if any, are identified on Schedule 5.7(c), as such Schedule may be
amended upon no less than 30 days prior written notice to Agent.

(d) As of the Restatement Effective Date, Borrower and its Subsidiaries do not
hold any commercial tort claims, except as set forth on Schedule 5.7(d), as such
Schedule may be amended upon no less than 30 days prior written notice to Agent.

5.8 Due Organization and Qualification; Subsidiaries.

(a) Borrower is duly organized and existing and in good standing under the laws
of the jurisdiction of its organization and qualified to do business in any
state where the failure to be so qualified reasonably could be expected to
result in a Material Adverse Change.

(b) [Intentionally Omitted].

(c) Set forth on Schedule 5.8(c), as such Schedule may be amended upon no less
than 30 days prior written notice to Agent, is a complete and accurate list of
Borrower’s direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their organization, (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries, and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by Borrower. All of the outstanding capital Stock of each such
Subsidiary has been validly issued and is fully paid and in the case of a
corporation, non-assessable.

(d) Except as set forth on Schedule 5.8(d), as such Schedule may be amended upon
no less than 30 days prior written notice to Agent there are no subscriptions,
options, warrants, or calls relating to any shares of Borrower’s Subsidiaries’
capital Stock, including any right of conversion or exchange under any
outstanding security or other instrument. Neither Borrower nor any of its
Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of Borrower’s Subsidiaries’
capital Stock or any security convertible into or exchangeable for any such
capital Stock.

5.9 Due Authorization; No Conflict.

(a) The execution, delivery, and performance by Borrower of this Agreement and
the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of Borrower.

 

- 69 -

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

(b) The execution, delivery, and performance by Borrower of this Agreement and
the other Loan Documents to which it is a party do not and will not (i) violate
any provision of federal, state, or local law or regulation applicable to
Borrower, the Governing Documents of Borrower, or any order, judgment, or decree
of any court or other Governmental Authority binding on Borrower, (ii) conflict
with, result in a breach of, or constitute (with due notice or lapse of time or
both) a default under any contractual obligation of Borrower, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of Borrower, other than Permitted Liens, or (iv) require
any approval of Borrower’s interestholders or any approval or consent of any
Person under any contractual obligation of Borrower, other than consents or
approvals that have been obtained and that are still in force and effect except
in the case of clauses (ii) or (iv) where the failure to do so could not
reasonably be expected to result in a Material Adverse Change.

(c) Other than the filing of financing statements and the recordation of the
Mortgages, the execution, delivery, and performance by Borrower of this
Agreement and the other Loan Documents to which Borrower is a party do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority or any other Person,
other than consents or approvals that have been obtained and that are still in
force and effect.

(d) This Agreement and the other Loan Documents to which Borrower is a party,
and all other documents contemplated hereby and thereby, when executed and
delivered by Borrower will be the legally valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors’ rights generally.

(e) The Agent’s Liens are validly created, perfected, and first priority Liens,
subject only to Permitted Liens (with respect to copyrights, trademarks, and
patents, if and to the extent that perfection can be achieved by UCC filings or
filings with the U.S. Patent and Trademark Office or U.S. Copyright Office, as
applicable).

5.10 Litigation. Other than those matters described on Schedule 5.10 and other
than matters arising after the Restatement Effective Date that reasonably could
not be expected to result in a Material Adverse Change, there are no actions,
suits, or proceedings pending or, to the best knowledge of Borrower, threatened
against Borrower or any of its Subsidiaries.

5.11 No Material Adverse Change. All financial statements relating to Borrower
and its Subsidiaries that have been delivered by Borrower to Agent have been
prepared in accordance with GAAP (except, in the case of unaudited financial
statements, for the lack of footnotes and being subject to year-end audit
adjustments and reclassifications) and present fairly in all material respects,
Borrower’s and its Subsidiaries’ financial condition as of the date thereof and
results of operations for the period then ended. There has not been a Material
Adverse Change with respect to Borrower and its Subsidiaries since the date of
the latest financial statements submitted to Agent on or before the Restatement
Effective Date.

 

- 70 -

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

5.12 Fraudulent Transfer.

(a) The Loan Parties on a consolidated basis are Solvent.

(b) No transfer of property is being made by Borrower or its Subsidiaries and no
obligation is being incurred by Borrower or its Subsidiaries in connection with
the transactions contemplated by this Agreement or the other Loan Documents with
the intent to hinder, delay, or defraud either present or future creditors of
Borrower or its Subsidiaries.

5.13 Employee Benefits. None of Borrower, any of its Subsidiaries, or any of
their ERISA Affiliates maintains or contributes to any Benefit Plan.

5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a) to
Borrower’s knowledge, none of Borrower’s or its Subsidiaries’ properties or
assets has ever been used by Borrower, its Subsidiaries, or by previous owners
or operators in the disposal of, or to produce, store, handle, treat, release,
or transport, any Hazardous Materials, where such use, production, storage,
handling, treatment, release or transport was in violation, in any material
respect, of any applicable Environmental Law, (b) to Borrower’s knowledge, none
of Borrower’s or its Subsidiaries’ properties or assets has ever been designated
or identified in any manner pursuant to any environmental protection statute as
a Hazardous Materials disposal site, (c) neither Borrower nor any of its
Subsidiaries has received notice that a Lien arising under any Environmental Law
has attached to any revenues or to any Real Property owned or operated by
Borrower or its Subsidiaries, and (d) neither Borrower nor its Subsidiaries has
received a summons, citation, notice, or directive from the United States
Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by Borrower or its Subsidiaries
resulting in the releasing or disposing of Hazardous Materials into the
environment that individually or in the aggregate could reasonably be expected
to result in a Material Adverse Change.

5.15 Brokerage Fees. Neither Borrower nor any of its Subsidiaries has utilized
the services of any broker or finder in connection with Borrower’s obtaining
financing from the Lender Group under this Agreement and no brokerage commission
or finders fee is payable by Borrower or its Subsidiaries in connection
herewith.

5.16 Intellectual Property. Borrower and its Subsidiaries own, hold licenses in
or otherwise have a right to use all trademarks, trade names, copyrights,
patents, patent rights, and licenses that are necessary to the conduct of its
business as currently conducted, and attached hereto as Schedule 5.16 (as
updated from time to time) is a true, correct, and complete listing of all
material patents, patent applications, registered trademarks, trademark
applications, copyright registrations and copyright applications as to which
Borrower or one of its Subsidiaries is the owner or is an exclusive licensee.

5.17 Leases. Borrower and its Subsidiaries enjoy peaceful and undisturbed
possession under all leases material to their business and to which they are
parties or under which they are operating, and all of such leases are valid and
subsisting and no material default by Borrower or its Subsidiaries exists under
any of them.

5.18 Deposit Accounts and Securities Accounts. Set forth on Schedule 5.18 (as
updated from time to time) is a listing of all of Borrower’s and its
Subsidiaries’ Deposit

 

- 71 -

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

Accounts and Securities Accounts, including, with respect to each bank or
securities intermediary (a) the name and address of such Person, and (b) the
account numbers of the Deposit Accounts or Securities Accounts maintained with
such Person.

5.19 Complete Disclosure. All factual information (taken as a whole) furnished
by or on behalf of Borrower or its Subsidiaries in writing to Agent or any
Lender (including all information contained in the Schedules hereto or in the
other Loan Documents) for purposes of or in connection with this Agreement, the
other Loan Documents, or any transaction contemplated herein or therein is, and
all other such factual information (taken as a whole) hereafter furnished by or
on behalf of Borrower or its Subsidiaries in writing to Agent or any Lender will
be, true and accurate, in all material respects, on the date as of which such
information is dated or certified and not incomplete by omitting to state any
fact necessary to make such information (taken as a whole) not misleading in any
material respect at such time in light of the circumstances under which such
information was provided. On the Restatement Effective Date, the Restatement
Effective Date Projections represent, and as of the date on which any other
Projections are delivered to Agent, such additional Projections represent
Borrower’s good faith estimate of its and its Subsidiaries’ future performance
for the periods covered thereby (it being understood that actual results may
vary from such forecasts and that such variances may be material).

5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete list of all
Indebtedness of Borrower and its Subsidiaries outstanding immediately prior to
the Restatement Effective Date that is to remain outstanding after the
Restatement Effective Date and such Schedule accurately reflects the aggregate
principal amount of such Indebtedness and describes the principal terms thereof.

5.21 Margin Stock. No Loan Party nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. No part of
the proceeds of the loans made to Borrower will be used to purchase or carry any
Margin Stock or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock or for any purpose that violates the provisions of
Regulation T, U or X of the Board of Governors.

5.22 Governmental Regulation. No Loan Party nor any of its Subsidiaries is
subject to regulation under the Federal Power Act or the Investment Company Act
of 1940 or under any other federal or state statute or regulation which may
limit its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable. No Loan Party nor any of its
Subsidiaries is a “registered investment company” or a company “controlled” by a
“registered investment company” or a “principal underwriter” of a “registered
investment company” as such terms are defined in the Investment Company Act of
1940.

5.23 OFAC. No Loan Party nor any of its Subsidiaries is in violation of any of
the country or list based economic and trade sanctions administered and enforced
by OFAC. No Loan Party nor any of its Subsidiaries (a) is a Sanctioned Person or
a Sanctioned Entity, (b) has its assets located in Sanctioned Entities, or
(c) derives revenues from investments in, or transactions with Sanctioned
Persons or Sanctioned Entities. No proceeds of any loan made hereunder will be
used to fund any operations in, finance any investments or activities in, or
make any payments to, a Sanctioned Person or a Sanctioned Entity.

 

- 72 -

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

5.24 Patriot Act. To the extent applicable, each Loan Party is in compliance, in
all material respects, with the (a) Trading with the Enemy Act, as amended, and
each of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, and (b) Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA Patriot Act of 2001) (the “Patriot Act”). No part of the
proceeds of the loans made hereunder will be used by any Loan Party or any of
their Affiliates, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

6. AFFIRMATIVE COVENANTS.

Borrower covenants and agrees that, until termination of all of the Commitments
and payment in full of the Obligations, Borrower shall and shall cause each of
its Subsidiaries to do all of the following:

6.1 Accounting System. Maintain a system of accounting that enables Borrower to
produce financial statements in accordance with GAAP and maintain records
pertaining to the Collateral that contain information as from time to time
reasonably may be requested by Agent. Borrower also shall keep a reporting
system that shows all additions, sales, claims, returns, and allowances with
respect to its and its Subsidiaries’ sales.

6.2 Collateral Reporting. Provide Agent (and if so requested by Agent, with
copies for each Lender) with the following documents at the following times in
form reasonably satisfactory to Agent:

 

Quarterly (not later than the 45th day of each quarter)    (a) a detailed list
of Borrower’s and its Subsidiaries’ customers, including number of Installed
Store locations, and Upon request by Agent   

(b) copies of invoices in connection with Borrower’s and its Subsidiaries’
Accounts, credit memos, remittance advices, deposit slips, shipping and delivery
documents in connection with Borrower’s and its Subsidiaries’ Accounts and, for
Inventory and Equipment acquired by Borrower or its Subsidiaries, purchase
orders and invoices, and

 

(c) such other reports as to the Collateral or the financial condition of
Borrower and its Subsidiaries, as Agent may request.

 

- 73 -

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

6.3 Financial Statements, Reports, Certificates. Deliver to Agent, with copies
to each Lender:

(a) within 45 days after the end of each quarter during each of Borrower’s
fiscal years,

(i) an unaudited consolidated balance sheet, income statement, and statement of
cash flow covering Borrower’s and its Subsidiaries’ operations during such
period and for the three month period then ended, and

(ii) a Compliance Certificate,

(b) within 120 days after the end of each of Borrower’s fiscal years,

(i) consolidated financial statements of Borrower and its Subsidiaries for each
such fiscal year, audited by independent certified public accountants reasonably
acceptable to Agent and certified, without any qualifications (including any
(A) “going concern” or like qualification or exception (except to the extent
that such qualification or exception is due solely to the fact that the Term
Loan Maturity Date at the time of such audit is scheduled to occur within twelve
months of the end of such fiscal year), (B) qualification or exception as to the
scope of such audit, or (C) qualification which relates to the treatment or
classification of any item and which, as a condition to the removal of such
qualification, would require an adjustment to such item, the effect of which
would be to cause any noncompliance with the provisions of Section 7.18), by
such accountants to have been prepared in accordance with GAAP (such audited
financial statements to include a balance sheet, income statement, and statement
of cash flow and, if prepared, such accountants’ letter to management), and

(ii) a Compliance Certificate,

(c) within 31 days after the start of each of Borrower’s fiscal years, copies of
Borrower’s Projections, in form (including as to scope) satisfactory to Agent,
in its Permitted Discretion, for the forthcoming fiscal year, month by month,
certified by the chief financial officer of Borrower as being such officer’s
good faith estimate of the financial performance of Borrower during the period
covered thereby,

(d) if and when filed by Borrower,

(i) Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current
reports, and

(ii) any other filings made by Borrower with the SEC,

(e) promptly, but in any event within 5 days after a senior officer of Borrower
has knowledge of any event or condition that constitutes a Default or an Event
of Default, notice thereof and a statement of the curative action that Borrower
proposes to take with respect thereto (if any),

(f) promptly after the commencement thereof, but in any event within 5 days
after the service of process with respect thereto on Borrower or any of its
Subsidiaries, notice of all actions, suits, or proceedings brought by or against
Borrower or any of its Subsidiaries before any Governmental Authority which
reasonably could be expected to result in a Material Adverse Change, and

(g) upon the request of Agent, any other information reasonably requested
relating to the financial condition of Borrower or its Subsidiaries.

 

- 74 -

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

In addition, Borrower agrees that no Subsidiary of Borrower will have a fiscal
year different from that of Borrower. Borrower also agrees to cooperate with
Agent to allow Agent to consult with its independent certified public
accountants if Agent reasonably requests the right to do so and that, in such
connection, its independent certified public accountants are authorized to
communicate with Agent and to release to Agent whatever financial information
concerning Borrower or its Subsidiaries that Agent reasonably may request.

6.4 Guarantor Reports. Cause each Guarantor to deliver its annual financial
statements at the time when Borrower provides its audited financial statements
to Agent, but only to the extent such Guarantor’s financial statements are not
consolidated with Borrower’s financial statements.

6.5 [Intentionally Omitted].

6.6 Maintenance of Properties. Maintain and preserve all of its properties which
are necessary or material to the proper conduct to its business in good working
order and condition, ordinary wear and tear excepted, and comply at all times
with the provisions of all material leases to which it is a party as lessee, so
as to prevent any loss or forfeiture thereof or thereunder, except for any
failure to comply with the foregoing with respect to properties with a market
value less than or equal to $250,000.

6.7 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrower,
its Subsidiaries, or any of their respective assets to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest. Borrower will and will cause its Subsidiaries to make timely
payment or deposit of all tax payments and withholding taxes required of it and
them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A.,
state disability, and local, state, and federal income taxes, and will, upon
request, furnish Agent with proof satisfactory to Agent indicating that Borrower
and its Subsidiaries have made such payments or deposits.

6.8 Insurance.

(a) At Borrower’s expense, maintain insurance respecting its and its
Subsidiaries’ assets wherever located, covering loss or damage by fire, theft,
explosion, and all other hazards and risks as ordinarily are insured against by
other Persons engaged in the same or similar businesses. Borrower also shall
maintain business interruption, public liability, and product liability
insurance, as well as insurance against larceny, embezzlement, and criminal
misappropriation. All such policies of insurance shall be in such amounts and
with such insurance companies as are reasonably satisfactory to Agent (it being
understood and agreed that the insurance company that provides such insurance on
the Restatement Effective Date, and the amounts of the insurance maintained on
the Restatement Effective Date shall be deemed to be

 

- 75 -

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

satisfactory to Agent). Borrower shall deliver copies of all such policies to
Agent with an endorsement naming Agent as the sole loss payee (under a
satisfactory lender’s loss payable endorsement) or additional insured, as
appropriate (except with respect to business interruption). Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Agent in the event of cancellation
of the policy for any reason whatsoever.

(b) Borrower shall give Agent prompt notice of any loss in excess of $250,000
covered by such insurance. Agent shall have the exclusive right to adjust any
losses claimed under any such insurance policies after the occurrence and during
the continuation of an Event of Default, without any liability to Borrower
whatsoever in respect of such adjustments. Any monies received as payment for
any loss under any insurance policy mentioned above (other than liability
insurance policies) or as payment of any award or compensation for condemnation
or taking by eminent domain shall be applied as set forth in, subject to
Section 2.4(c).

(c) Borrower will not and will not suffer or permit its Subsidiaries to take out
separate insurance concurrent in form or contributing in the event of loss with
that required to be maintained under this Section 6.8, unless Agent is included
thereon as an additional insured or loss payee under a lender’s loss payable
endorsement. Borrower promptly shall notify Agent whenever such separate
insurance is taken out, specifying the insurer thereunder and full particulars
as to the policies evidencing the same, and copies of such policies promptly
shall be provided to Agent.

6.9 Location of Inventory and Equipment. Keep Borrower’s and its Subsidiaries’
Inventory and Equipment (other than (w) Equipment out for repair, (x) Equipment
in transit between such locations, (y) Chillers located at, or in transit to,
one or more of the Installed Stores and (z) other Equipment with an after market
value not in excess of $250,000) only at the locations identified on
Schedule 5.5 and their chief executive offices only at the locations identified
on Schedule 5.7(b); provided, however, that Borrower may amend Schedule 5.5 and
Schedule 5.7 so long as such amendment occurs by written notice to Agent not
less than 30 after the date on which such Inventory or Equipment is moved to
such new location or such chief executive office is relocated, so long as such
new location is within the continental United States, and so long as, at the
time of such written notification, Borrower uses commercially reasonable efforts
to provide to Agent a Collateral Access Agreement with respect thereto.

6.10 Compliance with Laws. Comply with the requirements of all applicable laws,
rules, regulations, and orders of any Governmental Authority, other than laws,
rules, regulations, and orders the non-compliance with which, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Change.

6.11 Leases. Pay when due all rents and other amounts, in each case to the
extent that such amounts that are not paid when due exceed $250,000 in the
aggregate at any one time, payable under any material leases to which Borrower
or any of its Subsidiaries is a party or by which Borrower’s or any such
Subsidiaries’ properties and assets are bound, unless such payments are the
subject of a Permitted Protest.

 

- 76 -

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

6.12 Existence. At all times preserve and keep in full force and effect
Borrower’s and its Subsidiaries’ existence and good standing and any rights and
franchises material to their businesses; provided, however, that neither
Borrower or any of its Subsidiaries shall be required to preserve any such right
or franchise if such Person’s board of directors (or similar governing body)
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of such Person, and that the loss thereof is not
disadvantageous in any material respect to such Person or to the Lenders;
provided further that this Section 6.12 shall not prohibit or otherwise limit
the Canadian Subsidiary Dissolution.

6.13 Environmental. (a) Keep any property either owned or operated by Borrower
or its Subsidiaries free of any Environmental Liens which could, individually or
in the aggregate, reasonably be expected to secure a liability to Borrower or
any of its Subsidiaries in excess of $500,000, or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply with Environmental Laws where any such failure
to comply could, individually or in the aggregate, reasonably be expected to
result in a liability to Borrower or any of its Subsidiaries in excess of
$500,000 and provide to Agent documentation of such compliance which Agent
reasonably requests, (c) promptly notify Agent of any release of a Hazardous
Material in any reportable quantity from or onto property owned or operated by
Borrower or its Subsidiaries which could, individually or in the aggregate,
reasonably be expected to result in a liability to Borrower or any of its
Subsidiaries in excess of $500,000 and take any Remedial Actions required to
abate said release or otherwise to come into compliance with applicable
Environmental Law, and (d) promptly, but in any event within 5 days of its
receipt thereof, provide Agent with written notice of any of the following:
(i) notice that an Environmental Lien which could, individually or in the
aggregate, reasonably be expected to secure a liability to Borrower or any of
its Subsidiaries in excess of $500,000 has been filed against any of the real or
personal property of Borrower or its Subsidiaries, (ii) commencement of any
Environmental Action or notice that an Environmental Action will be filed
against Borrower or its Subsidiaries, and (iii) notice of a violation, citation,
or other administrative order which reasonably could be expected to result in a
Material Adverse Change.

6.14 Disclosure Updates. Promptly and in no event later than 5 Business Days
after obtaining knowledge thereof, notify Agent if any written information,
exhibit, or report furnished to Agent contained, at the time it was furnished,
any untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made. The foregoing to the contrary notwithstanding,
any notification pursuant to the foregoing provision will not cure or remedy the
effect of the prior untrue statement of a material fact or omission of any
material fact nor shall any such notification have the effect of amending or,
modifying this Agreement or any of the Schedules hereto.

6.15 Formation of Subsidiaries. At the time that Borrower or any Guarantor forms
any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary
after the Restatement Effective Date, Borrower or such Guarantor shall (a) cause
such new Subsidiary to provide to Agent a Guaranty, Guarantor Security
Agreement, and Intercompany Subordination Agreement (or joinder thereto),
together with such other security documents (including Mortgages with respect to
any Real Property of such new Subsidiary), as well as appropriate financing
statements (and with respect to all property subject to a Mortgage, fixture

 

- 77 -

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

filings), all in form and substance satisfactory to Agent (including being
sufficient to grant Agent a first priority Lien (subject to Permitted Liens) in
and to the assets of such newly formed or acquired Subsidiary); provided that
the Guaranty, Guarantor Security Agreement, and such other security documents
shall not be required to be provided to Agent with respect to any Subsidiary of
Borrower that is a CFC if providing such documents would result in material
adverse tax consequences, (b) within 10 days of such formation or acquisition)
or such later date as permitted by Agent in its sole discretion) provide to
Agent a pledge agreement and appropriate certificates and powers or financing
statements, hypothecating all of the direct or beneficial ownership interest in
such new Subsidiary, in form and substance satisfactory to Agent; provided that
only 65% of the total outstanding voting Stock of any first tier Subsidiary of
Borrower that is a CFC (and none of any Subsidiary of such CFC) shall be
required to be pledged if pledging a greater amount would result in adverse tax
consequences (which pledge, if reasonably requested by Agent, shall be governed
by the laws of the jurisdiction of such Subsidiary), and (c) within 10 days of
such formation or acquisition (or such later date as permitted by Agent) provide
to Agent all other documentation, including one or more opinions of counsel
satisfactory to Agent, which in its opinion is appropriate with respect to the
execution and delivery of the applicable documentation referred to above
(including policies of title insurance or other documentation with respect to
all property subject to a Mortgage). Any document, agreement, or instrument
executed or issued pursuant to this Section 6.15 shall be a Loan Document.

6.16 Canadian Subsidiary. Within 30 days (or such longer period as reasonably
agreed to by Agent) after the written request therefor by Agent, Borrower shall
deliver an additional stock pledge agreement (in addition to the Stock Pledge
Agreement that is delivered on the Restatement Effective Date) which is governed
by Ontario law and which is otherwise in form and substance reasonably
satisfactory to Agent, pursuant to which Borrower shall pledge all outstanding
voting Stock of the Canadian Subsidiary (and none of any Subsidiary of such
Canadian Subsidiary); provided that only 65% of the total outstanding voting
Stock of the Canadian Subsidiary (and none of any Subsidiary of such Canadian
Subsidiary) shall be required to be pledged if pledging a greater amount would
result in adverse tax consequences.

7. NEGATIVE COVENANTS.

Borrower covenants and agrees that, until termination of all of the Commitments
and payment in full of the Obligations, Borrower will not and will not permit
any of its Subsidiaries to do any of the following:

7.1 Indebtedness. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:

(a) Indebtedness evidenced by this Agreement and the other Loan Documents,

(b) Indebtedness set forth on Schedule 5.20,

(c) Permitted Purchase Money Indebtedness,

(d) refinancings, renewals, or extensions of Indebtedness permitted under
clauses (b) and (c) above (and continuance or renewal of any Permitted Liens
associated therewith) so long as: (i) the terms and conditions of such
refinancings, renewals, or extensions

 

- 78 -

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

do not, in Agent’s reasonable judgment, materially impair the prospects of
repayment of the Obligations by Borrower or materially impair Borrower’s
creditworthiness, (ii) such refinancings, renewals, or extensions do not result
in an increase in the principal amount of, or interest rate with respect to, the
Indebtedness so refinanced, renewed, or extended, (iii) such refinancings,
renewals, or extensions do not result in a shortening of the average weighted
maturity of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions that, taken as a whole, are materially more burdensome or
restrictive to Borrower, (iv) if the Indebtedness that is refinanced, renewed,
or extended was subordinated in right of payment to the Obligations, then the
terms and conditions of the refinancing, renewal, or extension Indebtedness must
include subordination terms and conditions that are at least as favorable to the
Lenders as those that were applicable to the refinanced, renewed, or extended
Indebtedness, and (v) the Indebtedness that is refinanced, renewed, or extended
is not recourse to any Person that is liable on account of the Obligations other
than those Persons which were obligated with respect to the Indebtedness that
was refinanced, renewed, or extended,

(e) endorsement of instruments or other payment items for deposit,

(f) Indebtedness composing Permitted Investments,

(g) Subordinated Indebtedness in an aggregate amount not to exceed $5,000,000 at
any time outstanding,

(h) Hedge Obligations, and

(i) other unsecured Indebtedness in an aggregate amount not to exceed $2,500,000
at any time outstanding.

7.2 Liens. Create, incur, assume, or suffer to exist, directly or indirectly,
any Lien on or with respect to any of its assets, of any kind, whether now owned
or hereafter acquired, or any income or profits therefrom, except for Permitted
Liens (including Liens that are replacements of Permitted Liens to the extent
that the original Indebtedness is refinanced, renewed, or extended under
Section 7.1(d) and so long as the replacement Liens only encumber those assets
that secured the refinanced, renewed, or extended Indebtedness).

7.3 Restrictions on Fundamental Changes.

(a) Enter into any merger, consolidation, reorganization, or recapitalization,
or reclassify its Stock other than (i) to consummate a Permitted Acquisition and
(ii) mergers between Borrower and any of its Subsidiaries, provided that
Borrower is the surviving entity of such merger and remains an entity organized
under the laws of a state within the United States.

(b) Liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution); provided that this Section 7.3(b) shall not prohibit or otherwise
limit the Canadian Subsidiary Dissolution.

(c) Convey, sell, lease, license, assign, transfer, or otherwise dispose of, in
one transaction or a series of transactions, all or any substantial part of its
assets.

 

- 79 -

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

7.4 Disposal of Assets. Other than Permitted Dispositions, convey, sell, lease,
license, assign, transfer, or otherwise dispose of any of Borrower’s or its
Subsidiaries assets; provided that this Section 7.4 shall not prohibit or
otherwise limit the Canadian Subsidiary Dissolution.

7.5 Change Name. Change Borrower’s or any of its Subsidiaries’ names,
organizational identification number, state of organization or organizational
identity; provided, however, that Borrower or any of its Subsidiaries may change
their names upon at least 30 days prior written notice to Agent of such change
and so long as, at the time of such written notification, Borrower or its
Subsidiary provides any financing statements necessary to perfect and continue
perfected the Agent’s Liens.

7.6 Nature of Business. Make any change in the principal nature of its or their
business.

7.7 Prepayments and Amendments. Except in connection with a refinancing
permitted by Section 7.1(e),

(a) optionally prepay, redeem, defease, purchase, or otherwise acquire any
Subordinated Indebtedness of Borrower or its Subsidiaries, other than the
Obligations in accordance with this Agreement, or

(b) directly or indirectly, amend, modify, alter, increase, or change any of the
terms or conditions of any agreement, instrument, document, indenture, or other
writing evidencing or concerning Indebtedness permitted under Section 7.1(b) to
the extent that such amendment, modification, or change could, individually or
in the aggregate, reasonably be expected to be materially adverse to the
interests of the Lender Group.

7.8 Change of Control. Cause, permit, or suffer, directly or indirectly, any
Change of Control.

7.9 Consignments. Consign any of its or their Inventory or sell any of its or
their Inventory on bill and hold, sale or return, sale on approval, or other
conditional terms of sale.

7.10 Distributions. Make any distribution or declare or pay any dividends (in
cash or other property, other than common Stock) on, or purchase, acquire,
redeem, or retire any of Borrower’s Stock, of any class, whether now or
hereafter outstanding (each, a “Distribution”), other than (a) so long as no
Default or Event of Default has occurred and is continuing or would result
therefrom, Borrower may make distributions to former employees, officers, or
directors of Borrower (or any spouses, ex-spouses, or estates of any of the
foregoing) on account of redemptions of Stock of Borrower held by such Persons,
provided that the aggregate amount of such redemptions made by Borrower during
any fiscal year does not exceed $500,000, (b) dividends and distributions
declared and paid on the Stock of any Subsidiary of Borrower ratably to the
holders of such Stock, and (c) cashless repurchases of Stock of the Borrower
deemed to occur upon exercise of stock options or warrants if such Stock
represent a portion of the exercise price of such options or warrants.

 

- 80 -

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

7.11 Accounting Methods. Modify or change its fiscal year or its method of
accounting (other than as may be required to conform to GAAP) or enter into,
modify, or terminate any agreement currently existing, or at any time hereafter
entered into with any third party accounting firm or service bureau for the
preparation or storage of Borrower’s or its Subsidiaries’ accounting records
without said accounting firm or service bureau agreeing to provide Agent
information regarding Borrower’s and its Subsidiaries’ financial condition.

7.12 Investments. Except for Permitted Investments, directly or indirectly, make
or acquire any Investment or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however, that
Borrower and its Subsidiaries shall not have Permitted Investments (other than
in the Cash Management Accounts) in Deposit Accounts or Securities Accounts in
an aggregate amount in excess of $25,000 at any one time unless Borrower or its
Subsidiary, as applicable, and the applicable securities intermediary or bank
have entered into Control Agreements governing such Permitted Investments in
order to perfect (and further establish) the Agent’s Liens in such Permitted
Investments. Subject to the foregoing proviso, Borrower shall not and shall not
permit its Subsidiaries to establish or maintain any Deposit Account or
Securities Account unless Agent shall have received a Control Agreement in
respect of such Deposit Account or Securities Account.

7.13 Transactions with Affiliates. Directly or indirectly enter into or permit
to exist any transaction with any Affiliate of Borrower except for transactions
that (i) are in the ordinary course of Borrower’s business, (ii) are upon fair
and reasonable terms, and (iii) are no less favorable to Borrower or its
Subsidiaries, as applicable, than would be obtained in an arm’s length
transaction with a non-Affiliate.

7.14 Suspension. Suspend or go out of a substantial portion of its or their
business.

7.15 [Intentionally omitted.]

7.16 Use of Proceeds. Use the proceeds of (a) the Advances and the Term Loan for
any purpose other than (i) on the Restatement Effective Date, to repay the
Indebtedness evidenced by the Existing Loan Agreement and to pay transactional
fees, costs, and expenses incurred in connection with this Agreement, the other
Loan Documents, and the transactions contemplated hereby and thereby, and
(ii) thereafter, to purchase Eligible Equipment, finance general corporate
expenses and to use in any other manner consistent with the terms and conditions
hereof, for its lawful and permitted purposes; provided, that in no event shall
any proceeds of the Advances be used to refinance or repay any Subordinated
Debt, any Indebtedness owed to any Permitted Holder or to any Affiliate of the
Borrower or any Permitted Preferred Stock, or (b) the Capex Term Loan for any
purpose other than (i) to finance Capital Expenditures, or (ii) to refinance a
portion of the Subordinated Debt or Permitted Preferred Stock existing on the
Restatement Effective Date in an aggregate amount not to exceed $7,000,000.

7.17 [Intentionally omitted.]

 

- 81 -

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

7.18 Financial Covenants.

(a) Fail to maintain or achieve:

(i) Leverage Ratio. A Leverage Ratio, measured on a quarter-end basis, as of
December 31, 2014 and as of the last day of each fiscal quarter thereafter, that
is less than or equal to 3.00:1.00.

(ii) Fixed Charge Coverage Ratio. A Fixed Charge Coverage Ratio, measured on a
quarter-end basis, for the 12 month period ending December 31, 2014 and for each
12 month period ending on the last day of any fiscal quarter thereafter, of at
least 1.25:1.00.

(b) Make:

(i) Capital Expenditures. Capital Expenditures in any fiscal year in excess of
the amount set forth in the following table for the applicable period:

 

Fiscal Year
2014     Fiscal Year
2015     Fiscal Year
2016     Fiscal Year
2017     Fiscal Year
2018     Fiscal Year
2019   $ 22,000,000      $ 38,000,000      $ 20,000,000      $ 18,000,000      $
18,000,000      $ 18,000,000   

provided, that if the amount of the Capital Expenditures permitted to be made in
any fiscal year as set forth in the above table is greater than the actual
amount of the Capital Expenditures (excluding the amount, if any, of Capital
Expenditures made with Net Cash Proceeds reinvested pursuant to the proviso in
Section 2.4(e)(ii)) actually made in such fiscal year (the amount by which such
permitted Capital Expenditures for such fiscal year exceeds the actual amount of
Capital Expenditures for such fiscal year, the “Excess Amount”), then 50% of
such Excess Amount (the “Carry-Over Amount”) may be carried forward to the next
succeeding Fiscal Year (the “Succeeding Fiscal Year”); provided further that the
Carry-Over Amount applicable to a particular Succeeding Fiscal Year may not be
used in that Fiscal Year until the amount permitted above to be expended in such
Fiscal Year has first been used in full and the Carry-Over Amount applicable to
a particular Succeeding Fiscal Year may not be carried forward to another fiscal
year.

8. EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default
(each, an “Event of Default”) under this Agreement:

8.1 If Borrower fails to pay when due and payable, or when declared due and
payable, (a) all or any portion of the Obligations consisting of the
reimbursement of Lender Group Expenses (other than any portion thereof
constituting principal, any amount payable to Issuing Lender in reimbursement of
any drawing under a Letter of Credit, fees or interest) constituting Obligations
(including any portion thereof that accrues after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any such Insolvency Proceeding), and such failure continues
for a period of 10 days, (b) all or any portion

 

- 82 -

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

of the Obligations consisting of principal or any amount payable to Issuing
Lender in reimbursement of any drawing under a Letter of Credit, or (c) any
interest or other amounts that do not constitute Lender Group Expenses
(including any portion thereof that accrues after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any such Insolvency Proceeding), principal or any amount
payable to Issuing Lender in reimbursement of any drawing under a Letter of
Credit and such failure continues for a period of five days;

8.2 If Borrower or any of its Subsidiaries:

(a) fails to perform or observe any covenant or other agreement contained in any
of (i) Sections 6.2, 6.3, 6.8, 6.12, 6.15, or 6.16 of this Agreement, or
(ii) Sections 7.1 through 7.18 of this Agreement; or

(b) fails to perform or observe any covenant or other agreement contained in
this Agreement, or in any of the other Loan Documents, in each case, other than
any such covenant or agreement that is the subject of another provision of this
Section 8 (in which event such other provision of this Section 8 shall govern),
and such failure continues for a period of 30 days after the earlier of (i) the
date on which such failure shall first become known to any officer of Borrower
or (ii) the date on which written notice thereof is given to Borrower by Agent;

8.3 If any material portion of Borrower’s or any of its Subsidiaries’ assets is
attached, seized, subjected to a writ or distress warrant or levied upon;

8.4 If an Insolvency Proceeding is commenced by Borrower or any of its
Subsidiaries;

8.5 If an Insolvency Proceeding is commenced against Borrower, or any of its
Subsidiaries, and any of the following events occur: (a) Borrower or such
Subsidiary consents to the institution of such Insolvency Proceeding against it,
(b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 45 calendar days of the date of the filing thereof, (d) an
interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, Borrower or any of its Subsidiaries, or (e) an order
for relief shall have been entered therein;

8.6 If Borrower or any of its Subsidiaries is enjoined, restrained, or in any
way prevented by court order from continuing to conduct all or any material part
of its business affairs;

8.7 If a notice of Lien, levy, or assessment is filed of record involving an
amount of the Applicable Cross-Default Amount or more with respect to any of
Borrower’s or any of its Subsidiaries’ assets by the United States, or any
department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, or if any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a Lien, whether choate or
otherwise, upon any of Borrower’s or any of its Subsidiaries’ assets and the
same is not paid before such payment is delinquent;

 

- 83 -

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

8.8 If a judgment or other claim becomes a Lien or encumbrance involving an
amount of the Applicable Cross-Default Amount or more upon any material portion
of Borrower’s or any of its Subsidiaries’ assets;

8.9 If there is a default in any material agreement of Indebtedness or any
Material Contract to which Borrower or any of its Subsidiaries is a party
involving an amount of the Applicable Cross-Default Amount or more and such
default (a) occurs at the final maturity of the obligations thereunder, or
(b) results in a right by the other party thereto, irrespective of whether
exercised, to accelerate the maturity of Borrower’s or its Subsidiaries’
obligations thereunder or to terminate such agreement;

8.10 If Borrower or any of its Subsidiaries makes any payment on account of
Indebtedness that has been contractually subordinated in right of payment to the
payment of the Obligations (other than reimbursement of a de minimis amount of
expenses), except to the extent such payment is permitted by the terms of the
subordination provisions applicable to such Indebtedness;

8.11 If any warranty, representation, certificate, statement, or Record made
herein or in any other Loan Document or delivered in writing to Agent or any
Lender in connection with this Agreement or any other Loan Document proves to be
untrue in any material respect (except that such materiality qualifier shall not
be applicable to any representations and warranties that already are qualified
or modified by materiality in the text thereof) as of the date of issuance or
making or deemed making thereof;

8.12 If the obligation of any Guarantor under any Guaranty (if any) is limited
or terminated by operation of law or by any such Guarantor thereunder;

8.13 If this Agreement or any other Loan Document that purports to create a
Lien, shall, for any reason, fail or cease to create a valid and perfected and,
except to the extent permitted by the terms hereof or thereof, first priority
Lien on or security interest in the Collateral covered hereby or thereby (with
respect to intellectual property, limited to perfection in the United States),
except as a result of a disposition of the applicable Collateral in a
transaction permitted under this Agreement; or

8.14 Any provision of any Loan Document shall at any time for any reason be
declared to be null and void, or the validity or enforceability thereof shall be
contested by Borrower or its Subsidiaries, or a proceeding shall be commenced by
Borrower or its Subsidiaries, or by any Governmental Authority having
jurisdiction over Borrower or its Subsidiaries seeking to establish the
invalidity or unenforceability thereof, or Borrower or its Subsidiaries, shall
deny that Borrower or its Subsidiaries has any liability or obligation purported
to be created under any Loan Document.

9. THE LENDER GROUP’S RIGHTS AND REMEDIES.

9.1 Rights and Remedies. Upon the occurrence, and during the continuation, of an
Event of Default, the Required Lenders (at their election but without notice of
their election and without demand) may authorize and instruct Agent to do any
one or more of the following on behalf of the Lender Group (and Agent, acting
upon the instructions of the Required Lenders,

 

- 84 -

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

shall do the same on behalf of the Lender Group), in addition to any other
rights or remedies provided for hereunder or under any other Loan Document or by
applicable law, all of which are authorized by Borrower:

(a) (i) Declare the principal of, and any and all accrued and unpaid interest
and fees in respect of, the Loans and all other Obligations (other than the Bank
Product Obligations), whether evidenced by this Agreement or by any of the other
Loan Documents to be immediately due and payable, whereupon the same shall
become and be immediately due and payable and Borrower shall be obligated to
repay all of such Obligations in full, without presentment, demand, protest, or
further notice or other requirements of any kind, all of which are hereby
expressly waived by Borrower, and (ii) direct Borrower to provide (and Borrower
agrees that upon receipt of such notice it will provide) Letter of Credit
Collateralization to Agent to be held as security for Borrower’s reimbursement
obligations for drawings that may subsequently occur under issued and
outstanding Letters of Credit;

(b) Cease advancing money or extending credit to or for the benefit of Borrower
under this Agreement, under any of the Loan Documents, or under any other
agreement between Borrower and the Lender Group;

(c) Declare the Commitments terminated, whereupon the Commitments shall
immediately be terminated together with (i) any obligation of any Lender to make
Advances and (ii) the obligation of Issuing Lender to issue Letters of Credit,
and (iii) the obligation of any Lender to make Capex Term Loans;

(d) Settle or adjust disputes and claims directly with Borrower’s Account
Debtors for amounts and upon terms which Agent considers advisable, and in such
cases, Agent will credit Borrower’s Loan Account with only the net amounts
received by Agent in payment of such disputed Accounts after deducting all
Lender Group Expenses incurred or expended in connection therewith;

(e) Cause Borrower to hold all of its returned Inventory in trust for the Lender
Group and segregate all such Inventory from all other assets of Borrower or in
Borrower’s possession;

(f) Without notice to or demand upon Borrower, make such payments and do such
acts as Agent considers necessary or reasonable to protect its security
interests in the Collateral. Borrower agrees to assemble the Collateral if Agent
so requires, and to make the Collateral available to Agent at a place that Agent
may designate which is reasonably convenient to both parties. Borrower
authorizes Agent to enter the premises where the Collateral is located, to take
and maintain possession of the Collateral, or any part of it, and to pay,
purchase, contest, or compromise any Lien that in Agent’s determination appears
to conflict with the priority of Agent’s Liens in and to the Collateral and to
pay all expenses incurred in connection therewith and to charge Borrower’s Loan
Account therefor. With respect to any of Borrower’s owned or leased premises,
Borrower hereby grants Agent a license to enter into possession of such premises
and to occupy the same, without charge, in order to exercise any of the Lender
Group’s rights or remedies provided herein, at law, in equity, or otherwise;

 

- 85 -

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

(g) Without notice to Borrower (such notice being expressly waived), and without
constituting an acceptance of any collateral in full or partial satisfaction of
an obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by the Lender
Group (including any amounts received in the Cash Management Accounts), or
(ii) Indebtedness at any time owing to or for the credit or the account of
Borrower held by the Lender Group;

(h) Hold, as cash collateral, any and all balances and deposits of Borrower held
by the Lender Group, and any amounts received in the Cash Management Accounts,
to secure the full and final repayment of all of the Obligations;

(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell (in the manner provided for herein) the Borrower
Collateral. Borrower hereby grants to Agent a license or other right to use,
without charge, Borrower’s labels, patents, copyrights, trade secrets, trade
names, trademarks, service marks, and advertising matter, or any property of a
similar nature, as it pertains to the Borrower Collateral, in completing
production of, advertising for sale, and selling any Borrower Collateral and
Borrower’s rights under all licenses and all franchise agreements shall inure to
the Lender Group’s benefit;

(j) Sell the Borrower Collateral at either a public or private sale, or both, by
way of one or more contracts or transactions, for cash or on terms, in such
manner and at such places (including Borrower’s premises) as Agent determines is
commercially reasonable. It is not necessary that the Borrower Collateral be
present at any such sale;

(k) Except in those circumstances where no notice is required under the Code,
Agent shall give notice of the disposition of the Borrower Collateral as
follows:

(i) Agent shall give Borrower a notice in writing of the time and place of
public sale, or, if the sale is a private sale or some other disposition other
than a public sale is to be made of the Borrower Collateral, the time on or
after which the private sale or other disposition is to be made; and

(ii) The notice shall be personally delivered or mailed, postage prepaid, to
Borrower as provided in Section 12, at least 10 days before the earliest time of
disposition set forth in the notice; no notice needs to be given prior to the
disposition of any portion of the Borrower Collateral that is perishable or
threatens to decline speedily in value or that is of a type customarily sold on
a recognized market;

(l) Agent, on behalf of the Lender Group, may credit bid and purchase at any
public sale;

(m) Agent may seek the appointment of a receiver or keeper to take possession of
all or any portion of the Borrower Collateral or to operate same and, to the
maximum extent permitted by law, may seek the appointment of such a receiver
without the requirement of prior notice or a hearing; and

(n) The Lender Group shall have all other rights and remedies available at law
or in equity or pursuant to any other Loan Document.

 

- 86 -

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

The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.4 or Section 8.5, in addition to the remedies
set forth above, without any notice to Borrower or any other Person or any act
by the Lender Group, the Commitments shall automatically terminate and the
Obligations (other than the Bank Product Obligations), inclusive of the
principal of, and any and all accrued and unpaid interest and fees in respect
of, the Loans and all other Obligations (other than the Bank Product
Obligations), whether evidenced by this Agreement or by any of the other Loan
Documents, shall automatically become and be immediately due and payable and
Borrower shall automatically be obligated to repay all of such Obligations in
full (including Borrower being obligated to provide (and Borrower agrees that it
will provide) (1) Letter of Credit Collateralization to Agent to be held as
security for Borrower’s reimbursement obligations in respect of drawings that
may subsequently occur under issued and outstanding Letters of Credit, and
(2) Bank Product Collateralization to be held as security for Borrower’s or its
Subsidiaries’ obligations in respect of outstanding Bank Products), without
presentment, demand, protest, or notice or other requirements of any kind, all
of which are expressly waived by Borrower.

9.2 Remedies Cumulative. The rights and remedies of the Lender Group under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.

10. TAXES AND EXPENSES.

If Borrower fails to pay any monies (whether taxes, assessments, insurance
premiums, or, in the case of leased properties or assets, rents or other amounts
payable under such leases) due to third Persons, or fails to make any deposits
or furnish any required proof of payment or deposit, all as required under the
terms of this Agreement, then, Agent, in its sole discretion and without prior
notice to Borrower, may do any or all of the following: (a) make payment of the
same or any part thereof, (b) set up such reserves against the Borrowing Base or
the Maximum Revolver Amount as Agent deems necessary to protect the Lender Group
from the exposure created by such failure, or (c) in the case of the failure to
comply with Section 6.8 hereof, obtain and maintain insurance policies of the
type described in Section 6.8 and take any action with respect to such policies
as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to, or contest the validity of, any such expense, tax, or Lien and the receipt
of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.

 

- 87 -

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

11. WAIVERS; INDEMNIFICATION.

11.1 Demand; Protest; etc. Borrower waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of documents,
instruments, chattel paper, and guarantees at any time held by the Lender Group
on which Borrower may in any way be liable.

11.2 The Lender Group’s Liability for Borrower Collateral. Borrower hereby
agrees that: (a) so long as Agent complies with its obligations, if any, under
the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Borrower Collateral, (ii) any loss
or damage thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all
risk of loss, damage, or destruction of the Borrower Collateral shall be borne
by Borrower.

11.3 Indemnification. Borrower shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons, and each Participant (each,
an “Indemnified Person”) harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution, delivery, enforcement, performance, or
administration (including any restructuring or workout with respect hereto) of
this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby or the monitoring of Borrower’s and its
Subsidiaries’ compliance with the terms of the Loan Documents, and (b) with
respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the “Indemnified Liabilities”). The
foregoing to the contrary notwithstanding, Borrower shall have no obligation to
any Indemnified Person under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment of the Obligations. If any Indemnified Person makes any payment to any
other Indemnified Person with respect to an Indemnified Liability as to which
Borrower was required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrower with respect thereto. WITHOUT LIMITATION,
THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF
ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

 

- 88 -

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

12. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands by Borrower
or Agent to the other relating to this Agreement or any other Loan Document
shall be in writing and (except for financial statements and other informational
documents which may be sent by first-class mail, postage prepaid) shall be
personally delivered or sent by registered or certified mail (postage prepaid,
return receipt requested), overnight courier, electronic mail (at such email
addresses as Borrower or Agent, as applicable, may designate to each other in
accordance herewith), or telefacsimile to Borrower or Agent, as the case may be,
at its address set forth below:

 

If to Borrower:   

FRESHPET, INC.

400 Plaza Drive FL1

Secaucus, NJ 07094

Attn: Richard Kassar

Fax No. (201) 866-2018

with copies to:    KIRKLAND & ELLIS LLP    601 Lexington Avenue    New York, NY
10022    Attn: Jason Kanner, Esq.    Fax No. (212) 446-6460 If to Agent:    CITY
NATIONAL BANK    555 S. Flower Street    24th Floor    Los Angeles, California
90071    Attn: Garen Papazyan    Fax No.: (213) 673-9801 with copies to:   

CITY NATIONAL BANK

agencyservices@cnb.com

 

and

 

PAUL HASTINGS LLP

   515 South Flower Street    Twenty-Fifth Floor    Los Angeles, California
90071    Attention: Peter Burke, Esq.    Facsimile: 213-996-3338

Any party hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party. All notices or demands sent in accordance with this Section 12, shall be
deemed received on the earlier of the date of actual receipt or 3 Business Days
after the deposit thereof in the mail; provided, that (a) notices sent by
overnight courier service shall be deemed to have been given when received, (b)

 

- 89 -

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

notices by facsimile shall be deemed to have been given when sent (except that,
if not given during normal business hours for the recipient, shall be deemed to
have been given at the opening of business on the next Business Day for the
recipient) and (c) notices by electronic mail shall be deemed received upon the
sender’s receipt of an acknowledgment from the intended recipient (such as by
the “return receipt requested” function, as available, return email or other
written acknowledgment).

13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION.

(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL
MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO, AND ANY
CLAIMS, CONTROVERSIES OR DISPUTES ARISING HEREUNDER OR THEREUNDER OR RELATED
HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN
THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED
IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA; PROVIDED, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING
SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER
AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 13(b).

(c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND EACH MEMBER
OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS, IF ANY, TO A JURY
TRIAL OF ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION DIRECTLY OR
INDIRECTLY BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS (EACH A
“CLAIM”). BORROWER AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY

 

- 90 -

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

WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.

(d) BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES AND THE STATE OF CALIFORNIA, IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO ANY LOAN DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT
AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN
THE COURTS OF ANY JURISDICTION.

(e) NO CLAIM MAY BE MADE BY ANY LOAN PARTY AGAINST THE AGENT, ISSUING LENDER,
ANY OTHER LENDER OR ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, COUNSEL,
REPRESENTATIVE, AGENT, OR ATTORNEY-IN-FACT OF ANY OF THEM FOR ANY SPECIAL,
INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OR LOSSES IN RESPECT OF
ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF
OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION THEREWITH, AND
EACH LOAN PARTY HEREBY WAIVES, RELEASES, AND AGREES NOT TO SUE UPON ANY CLAIM
FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED
TO EXIST IN ITS FAVOR.

(f) IN THE EVENT ANY LEGAL PROCEEDING IS FILED IN A COURT OF THE STATE OF
CALIFORNIA (THE “COURT”) BY OR AGAINST ANY PARTY HERETO IN CONNECTION WITH ANY
CLAIM AND THE WAIVER SET FORTH IN CLAUSE (C) ABOVE IS NOT ENFORCEABLE IN SUCH
PROCEEDING, THE PARTIES HERETO AGREE AS FOLLOWS:

(i) WITH THE EXCEPTION OF THE MATTERS SPECIFIED IN SUBCLAUSE (ii) BELOW, ANY
CLAIM SHALL BE DETERMINED BY A GENERAL REFERENCE PROCEEDING IN ACCORDANCE WITH
THE PROVISIONS OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1.
THE PARTIES INTEND THIS GENERAL REFERENCE AGREEMENT TO BE SPECIFICALLY
ENFORCEABLE. VENUE FOR THE REFERENCE PROCEEDING SHALL BE IN THE COUNTY OF LOS
ANGELES, CALIFORNIA.

 

- 91 -

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

(ii) THE FOLLOWING MATTERS SHALL NOT BE SUBJECT TO A GENERAL REFERENCE
PROCEEDING: (A) NON-JUDICIAL FORECLOSURE OF ANY SECURITY INTERESTS IN REAL OR
PERSONAL PROPERTY, (B) EXERCISE OF SELF-HELP REMEDIES (INCLUDING SET-OFF OR
RECOUPMENT), (C) APPOINTMENT OF A RECEIVER, AND (D) TEMPORARY, PROVISIONAL, OR
ANCILLARY REMEDIES (INCLUDING WRITS OF ATTACHMENT, WRITS OF POSSESSION,
TEMPORARY RESTRAINING ORDERS, OR PRELIMINARY INJUNCTIONS). THIS AGREEMENT DOES
NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY OF THE RIGHTS AND
REMEDIES DESCRIBED IN CLAUSES (A) - (D) AND ANY SUCH EXERCISE OR OPPOSITION DOES
NOT WAIVE THE RIGHT OF ANY PARTY TO PARTICIPATE IN A REFERENCE PROCEEDING
PURSUANT TO THIS AGREEMENT WITH RESPECT TO ANY OTHER MATTER.

(iii) UPON THE WRITTEN REQUEST OF ANY PARTY, THE PARTIES SHALL SELECT A SINGLE
REFEREE, WHO SHALL BE A RETIRED JUDGE OR JUSTICE. IF THE PARTIES DO NOT AGREE
UPON A REFEREE WITHIN 10 DAYS OF SUCH WRITTEN REQUEST, THEN, ANY PARTY SHALL
HAVE THE RIGHT TO REQUEST THE COURT TO APPOINT A REFEREE PURSUANT TO CALIFORNIA
CODE OF CIVIL PROCEDURE SECTION 640(B). THE REFEREE SHALL BE APPOINTED TO SIT
WITH ALL OF THE POWERS PROVIDED BY LAW. PENDING APPOINTMENT OF THE REFEREE, THE
COURT SHALL HAVE THE POWER TO ISSUE TEMPORARY OR PROVISIONAL REMEDIES.

(iv) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE REFEREE SHALL
DETERMINE THE MANNER IN WHICH THE REFERENCE PROCEEDING IS CONDUCTED INCLUDING
THE TIME AND PLACE OF HEARINGS, THE ORDER OF PRESENTATION OF EVIDENCE, AND ALL
OTHER QUESTIONS THAT ARISE WITH RESPECT TO THE COURSE OF THE REFERENCE
PROCEEDING. ALL PROCEEDINGS AND HEARINGS CONDUCTED BEFORE THE REFEREE, EXCEPT
FOR TRIAL, SHALL BE CONDUCTED WITHOUT A COURT REPORTER, EXCEPT WHEN ANY PARTY SO
REQUESTS A COURT REPORTER AND A TRANSCRIPT IS ORDERED, A COURT REPORTER SHALL BE
USED AND THE REFEREE SHALL BE PROVIDED A COURTESY COPY OF THE TRANSCRIPT. THE
PARTY MAKING SUCH REQUEST SHALL HAVE THE OBLIGATION TO ARRANGE FOR AND PAY THE
COSTS OF THE COURT REPORTER, PROVIDED THAT SUCH COSTS, ALONG WITH THE REFEREE’S
FEES, SHALL ULTIMATELY BE BORNE BY THE PARTY WHO DOES NOT PREVAIL, AS DETERMINED
BY THE REFEREE.

(v) THE REFEREE MAY REQUIRE ONE OR MORE PREHEARING CONFERENCES. THE PARTIES
HERETO SHALL BE ENTITLED TO DISCOVERY, AND THE REFEREE SHALL OVERSEE DISCOVERY
IN ACCORDANCE WITH THE RULES OF DISCOVERY, AND SHALL ENFORCE ALL DISCOVERY
ORDERS IN THE SAME MANNER AS ANY TRIAL COURT JUDGE IN PROCEEDINGS AT LAW IN THE
STATE OF CALIFORNIA.

 

- 92 -

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

(vi) THE REFEREE SHALL APPLY THE RULES OF EVIDENCE APPLICABLE TO PROCEEDINGS AT
LAW IN THE STATE OF CALIFORNIA AND SHALL DETERMINE ALL ISSUES IN ACCORDANCE WITH
CALIFORNIA SUBSTANTIVE AND PROCEDURAL LAW. THE REFEREE SHALL BE EMPOWERED TO
ENTER EQUITABLE AS WELL AS LEGAL RELIEF AND RULE ON ANY MOTION WHICH WOULD BE
AUTHORIZED IN A TRIAL, INCLUDING MOTIONS FOR DEFAULT JUDGMENT OR SUMMARY
JUDGMENT. THE REFEREE SHALL REPORT HIS OR HER DECISION, WHICH REPORT SHALL ALSO
INCLUDE FINDINGS OF FACT AND CONCLUSIONS OF LAW. THE REFEREE SHALL ISSUE A
DECISION AND PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE, SECTION 644, THE
REFEREE’S DECISION SHALL BE ENTERED BY THE COURT AS A JUDGMENT IN THE SAME
MANNER AS IF THE ACTION HAD BEEN TRIED BY THE COURT. THE FINAL JUDGMENT OR ORDER
FROM ANY APPEALABLE DECISION OR ORDER ENTERED BY THE REFEREE SHALL BE FULLY
APPEALABLE AS IF IT HAS BEEN ENTERED BY THE COURT.

(g) THE PARTIES RECOGNIZE AND AGREE THAT ALL CLAIMS RESOLVED IN A GENERAL
REFERENCE PROCEEDING PURSUANT HERETO WILL BE DECIDED BY A REFEREE AND NOT BY A
JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL
OF THEIR OWN CHOICE, EACH PARTY HERETO KNOWINGLY AND VOLUNTARILY AND FOR THEIR
MUTUAL BENEFIT AGREES THAT THIS REFERENCE PROVISION SHALL APPLY TO ANY DISPUTE
BETWEEN THEM THAT ARISES OUT OF OR IS RELATED TO THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS.

14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

14.1 Assignments and Participations.

(a) Any Lender may assign and delegate to one or more assignees (each an
“Assignee”) all, or any ratable part of all, of the Obligations, the Commitments
and the other rights and obligations of such Lender hereunder and under the
other Loan Documents, in a minimum amount of $5,000,000; provided, however, that
(w) a Lender may not assign all or any portion of the Obligations or the
Commitments to Borrower, any Permitted Holder or any Affiliate thereof, (x) the
prior written consent of Agent (not to be unreasonably withheld, delayed or
conditioned) shall be required prior to any such assignment by a Lender to
another Person that is not a Lender or an Affiliate of a Lender, (y) so long as
no Event of Default has occurred and is continuing, the prior written consent of
Borrower (not to be unreasonably withheld, delayed or conditioned) shall be
required prior to any such assignment by a Lender to another Person that is not
a Lender or an Affiliate of a Lender and (z) Borrower and Agent may continue to
deal solely and directly with such Lender in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses, and related information with respect to
the Assignee, have been given to Borrower and Agent by such Lender and the
Assignee, (ii) such Lender and its Assignee have delivered to Borrower and Agent
an Assignment and Acceptance, and (iii) the assigning Lender or Assignee has
paid to Agent for Agent’s separate account a processing fee in the amount of
$5,000. Anything

 

- 93 -

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

contained herein to the contrary notwithstanding, the payment of any fees shall
not be required if such assignment is in connection with any merger,
consolidation, sale, transfer, or other disposition of all or any substantial
portion of the business or loan portfolio of the assigning Lender.

(b) From and after the date that Agent notifies the assigning Lender (with a
copy to Borrower) that it has received an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, shall have
the rights and obligations of a Lender under the Loan Documents, and (ii) the
assigning Lender shall, to the extent that rights and obligations hereunder and
under the other Loan Documents have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (except with respect to
Section 11.3 hereof) and be released from any future obligations under this
Agreement (and in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender’s rights and obligations under this
Agreement and the other Loan Documents, such Lender shall cease to be a party
hereto and thereto), and such assignment shall effect a novation between
Borrower and the Assignee; provided, however, , that nothing contained herein
shall release any assigning Lender from obligations that survive the termination
of this Agreement, including such assigning Lender’s obligations under Article
16 and Section 17.7 of this Agreement.

(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (1) other than as provided in
such Assignment and Acceptance, such 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
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto,
(2) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or the
performance or observance by Borrower of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (3) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance,
(4) such Assignee will, independently and without reliance upon Agent, such
assigning Lender or any other Lender, 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, (5) such
Assignee appoints and authorizes Agent to take such actions and to exercise such
powers under this Agreement as are delegated to Agent, by the terms hereof,
together with such powers as are reasonably incidental thereto, and (6) such
Assignee agrees that it will perform all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.

(d) Immediately upon Agent’s receipt of the required processing fee payment and
the fully executed Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender to the extent of such assignment.

 

- 94 -

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

(e) Any Lender may at any time, with the written consent of Agent, sell to one
or more commercial banks, financial institutions, or other Persons not
Affiliates of such Lender (a “Participant”) participating interests in its
Obligations, the Commitment, and the other rights and interests of that Lender
(the “Originating Lender”) hereunder and under the other Loan Documents;
provided, however, that (i) the Originating Lender shall remain a “Lender” for
all purposes of this Agreement and the other Loan Documents and the Participant
receiving the participating interest in the Obligations, the Commitments, and
the other rights and interests of the Originating Lender hereunder shall not
constitute a “Lender” hereunder or under the other Loan Documents and the
Originating Lender’s obligations under this Agreement shall remain unchanged,
(ii) the Originating Lender shall remain solely responsible for the performance
of such obligations, (iii) Borrower, Agent, and the Lenders shall continue to
deal solely and directly with the Originating Lender in connection with the
Originating Lender’s rights and obligations under this Agreement and the other
Loan Documents, (iv) no Lender shall transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to this Agreement or of any other Loan Document would (A) extend the
final maturity date of the Obligations hereunder in which such Participant is
participating, (B) reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating, (C) release all or
substantially all of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender, or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums, and (v) all amounts
payable by Borrower hereunder shall be determined as if such Lender had not sold
such participation, except that, if amounts outstanding under this Agreement are
due and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant only shall be derivative through the
Originating Lender with whom such Participant participates and no Participant
shall have any rights under this Agreement or the other Loan Documents or any
direct rights as to the other Lenders, Agent, Borrower, the Collections of
Borrower or its Subsidiaries, the Collateral, or otherwise in respect of the
Obligations. No Participant shall have the right to participate directly in the
making of decisions by the Lenders among themselves. Each Lender that sells a
participation shall, acting solely for this purpose as an agent of the Borrower,
maintain a register on which it enters the name and address of each Participant
and the principal amounts (and stated interest) of each Participant’s interest
in the Obligations (the “Participant Register”); provided that no Lender shall
have any obligation to disclose all or any portion of the Participant Register
(including the identity of any Participant or any information relating to a
Participant’s interest in any commitments, loans, letters of credit or its other
obligations) to any Person except to the extent that such disclosure is
necessary to establish that such commitment, loan, letter of credit or other
obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations. The entries in the Participant Register shall be
conclusive absent manifest error,

 

- 95 -

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

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.

(f) In connection with any such assignment or participation or proposed
assignment or participation, a Lender may, subject to the provisions of
Section 17.7, disclose all documents and information which it now or hereafter
may have relating to Borrower and its Subsidiaries and their respective
businesses.

(g) Any other provision in this Agreement notwithstanding, any Lender may at any
time create a security interest in, or pledge, all or any portion of its rights
under and interest in this Agreement in favor of any Federal Reserve Bank in
accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce such pledge
or security interest in any manner permitted under applicable law.

14.2 Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrower may not assign this Agreement or any rights or duties hereunder
without the Lenders’ prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release Borrower from its Obligations. A Lender may assign this Agreement and
the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by Borrower is required in
connection with any such assignment.

15. AMENDMENTS; WAIVERS.

15.1 Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document (other than Bank Product Agreements), and
no consent with respect to any departure by Borrower therefrom, shall be
effective unless the same shall be in writing and signed by the Required Lenders
(or by Agent at the written request of the Required Lenders) and Borrower and
then any such waiver or consent shall be effective, but only in the specific
instance and for the specific purpose for which given; provided, however, that
no such waiver, amendment, or consent shall, unless in writing and signed by all
of the Lenders affected thereby and Borrower, do any of the following:

(a) increase or extend any Commitment of any Lender,

(b) postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,

(c) reduce the principal of, or the rate of interest on, any loan or other
extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,

(d) change the Pro Rata Share that is required to take any action hereunder,

 

- 96 -

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

(e) amend or modify this Section or any provision of the Agreement providing for
consent or other action by all Lenders,

(f) other than as permitted by Section 16.12, release Agent’s Lien in all or
substantially all of the Collateral,

(g) change the definition of “Required Lenders” or “Pro Rata Share”,

(h) other than as permitted by this Agreement or any other Loan Document,
release Borrower or all or substantially all of the Guarantors from any
obligation for the payment of money, or amend any of the provisions of
Section 16.

and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent or Issuing Lender, as applicable, affect
the rights or duties of Agent or Issuing Lender, as applicable, under this
Agreement or any other Loan Document. The foregoing notwithstanding, any
amendment, modification, waiver, consent, termination, or release of, or with
respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrower, shall not require consent
by or the agreement of Borrower.

15.2 Replacement of Holdout Lender.

(a) If any action to be taken by the Lender Group or Agent hereunder requires
the unanimous consent, authorization, or agreement of all Lenders, and a Lender
(“Holdout Lender”) fails to give its consent, authorization, or agreement, then
Agent, upon at least 5 Business Days prior irrevocable notice to the Holdout
Lender, may permanently replace the Holdout Lender with one or more substitute
Lenders (each, a “Replacement Lender”), and the Holdout Lender shall have no
right to refuse to be replaced hereunder. Such notice to replace the Holdout
Lender shall specify an effective date for such replacement, which date shall
not be later than 15 Business Days after the date such notice is given.

(b) Prior to the effective date of such replacement, the Holdout Lender and each
Replacement Lender shall execute and deliver an Assignment and Acceptance,
subject only to the Holdout Lender being repaid its share of the outstanding
Obligations (including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any kind whatsoever.
If the Holdout Lender shall refuse or fail to execute and deliver any such
Assignment and Acceptance prior to the effective date of such replacement, the
Holdout Lender shall be deemed to have executed and delivered such Assignment
and Acceptance. The replacement of any Holdout Lender shall be made in
accordance with the terms of Section 14.1. Until such time as the Replacement
Lenders shall have acquired all of the Obligations, the Commitments, and the
other rights and obligations of the Holdout Lender hereunder and under the other
Loan Documents, the Holdout Lender shall remain obligated to make the Holdout
Lender’s Pro Rata Share of Advances and to purchase a participation in each
Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.

15.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or

 

- 97 -

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

delay by Agent or any Lender in exercising the same, will operate as a waiver
thereof. No waiver by Agent or any Lender will be effective unless it is in
writing, and then only to the extent specifically stated. No waiver by Agent or
any Lender on any occasion shall affect or diminish Agent’s and each Lender’s
rights thereafter to require strict performance by Borrower of any provision of
this Agreement. Agent’s and each Lender’s rights under this Agreement and the
other Loan Documents will be cumulative and not exclusive of any other right or
remedy that Agent or any Lender may have.

16. AGENT; THE LENDER GROUP.

16.1 Appointment and Authorization of Agent. Each Lender hereby designates and
appoints CNB as its representative under this Agreement and the other Loan
Documents and each Lender hereby irrevocably authorizes Agent to execute and
deliver each of the other Loan Documents on its behalf and to take such other
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Agent agrees to
act as such on the express conditions contained in this Section 16. The
provisions of this Section 16 (other than the proviso to Section 16.11(a))are
solely for the benefit of Agent, and the Lenders, and Borrower and its
Subsidiaries shall have no rights as a third party beneficiary of any of the
provisions contained herein. Any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document notwithstanding, Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
nor shall Agent have or be deemed to have any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word “Agent” is for convenience only, that CNB is
merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections of Borrower and its Subsidiaries, and related matters,
(b) execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents,
(c) make Advances, for itself or on behalf of Lenders as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections of
Borrower and its Subsidiaries as provided in the Loan Documents, (e) open and
maintain such bank accounts and cash management arrangements as Agent deems
necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collateral and the Collections of
Borrower and its Subsidiaries, (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to Borrower, the
Obligations, the Collateral, the Collections of Borrower and its Subsidiaries,
or otherwise related to any of same as provided in the Loan Documents, and
(g) incur and pay such Lender Group Expenses as Agent may deem necessary or
appropriate for the performance and fulfillment of its functions and powers
pursuant to the Loan Documents.

 

- 98 -

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

16.2 Delegation of Duties. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.

16.3 Liability of Agent. None of the Agent-Related Persons shall (a) be liable
for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by Borrower or any Subsidiary or
Affiliate of Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrower or the books or
records or properties of any of Borrower’s Subsidiaries or Affiliates.

16.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to Borrower or counsel to any
Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the requisite Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.

16.5 Notice of Default or Event of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrower

 

- 99 -

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

referring to this Agreement, describing such Default or Event of Default, and
stating that such notice is a “notice of default.” Agent promptly will notify
the Lenders of its receipt of any such notice or of any Event of Default of
which Agent has actual knowledge. If any Lender obtains actual knowledge of any
Event of Default, such Lender promptly shall notify the other Lenders and Agent
of such Event of Default. Each Lender shall be solely responsible for giving any
notices to its Participants, if any. Subject to Section 16.4, Agent shall take
such action with respect to such Default or Event of Default as may be requested
by the Required Lenders in accordance with Section 9; provided, however, that
unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.

16.6 Credit Decision. Each Lender acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it, and that no act by Agent
hereinafter taken, including any review of the affairs of Borrower and its
Subsidiaries or Affiliates, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender represents to
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of
Borrower and any other Person party to a Loan Document, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to Borrower. Each
Lender also represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of Borrower and any other Person party
to a Loan Document. Except for notices, reports, and other documents expressly
herein required to be furnished to the Lenders by Agent, Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of Borrower and any other Person party
to a Loan Document that may come into the possession of any of the Agent-Related
Persons.

16.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender Group
Expenses to the extent Agent reasonably deems necessary or appropriate for the
performance and fulfillment of its functions, powers, and obligations pursuant
to the Loan Documents, including court costs, attorneys fees and expenses, fees
and expenses of financial accountants, advisors, consultants, and appraisers,
costs of collection by outside collection agencies, auctioneer fees and
expenses, and costs of security guards or insurance premiums paid to maintain
the Collateral, whether or not Borrower is obligated to reimburse Agent or
Lenders for such expenses pursuant to this Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from the
Collections of Borrower and its Subsidiaries received by Agent to reimburse
Agent for such out-of-pocket costs and expenses prior to the distribution of any
amounts to Lenders. In the event Agent is not reimbursed for such costs and
expenses from the Collections of Borrower and its Subsidiaries received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender’s Pro Rata Share

 

- 100 -

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

thereof. Whether or not the transactions contemplated hereby are consummated,
the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent
not reimbursed by or on behalf of Borrower and without limiting the obligation
of Borrower to do so), according to their Pro Rata Shares, from and against any
and all Indemnified Liabilities; provided, however, , that no Lender shall be
liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities resulting solely from such Person’s gross negligence or
willful misconduct nor shall any Lender be liable for the obligations of any
Defaulting Lender in failing to make an Advance or other extension of credit
hereunder. Without limitation of the foregoing, each Lender shall reimburse
Agent upon demand for such Lender’s Pro Rata Share of any costs or out of pocket
expenses (including attorneys, accountants, advisors, and consultants fees and
expenses) incurred by Agent in connection with the preparation, execution,
delivery, administration, modification, amendment, or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that Agent is not reimbursed for such expenses by or on behalf of Borrower. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of Agent.

16.8 Agent in Individual Capacity. CNB and its Affiliates may make loans to,
issue letters of credit for the account of, accept deposits from, acquire equity
interests in, and generally engage in any kind of banking, trust, financial
advisory, underwriting, or other business with Borrower and its Subsidiaries and
Affiliates and any other Person party to any Loan Documents as though CNB were
not Agent hereunder, and, in each case, without notice to or consent of the
other members of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, CNB or its Affiliates may receive
information regarding Borrower or its Affiliates and any other Person party to
any Loan Documents that is subject to confidentiality obligations in favor of
Borrower or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms “Lender” and “Lenders” include CNB in its individual capacity.

16.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the
Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term “Agent” 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 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent’s
notice of resignation, the retiring Agent’s resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.

 

- 101 -

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

16.10 Lender in Individual Capacity. Any Lender and its respective Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting, or other business with Borrower and its
Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though such Lender were not a Lender hereunder without notice to or consent of
the other members of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, such Lender and its respective
Affiliates may receive information regarding Borrower or its Affiliates and any
other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender shall not be under any obligation to provide such
information to them.

16.11 Withholding Taxes.

(a) All payments made by Borrower hereunder or under any note or other Loan
Document will be made without setoff, counterclaim, or other defense. In
addition, all such payments will be made free and clear of, and without
deduction or withholding for, any present or future Taxes, and in the event any
deduction or withholding of Taxes is required, Borrower shall comply with the
penultimate sentence of this Section 16.11(a). “Taxes” shall mean, any taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but excluding
any tax imposed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein measured by or based on the net income or net
profits of any Lender) and all interest, penalties or similar liabilities with
respect thereto. If any Taxes are so levied or imposed, Borrower agrees to pay
the full amount of such Taxes and such additional amounts as may be necessary so
that every payment of all amounts due under this Agreement, any note, or Loan
Document, including any amount paid pursuant to this Section 16.11(a) after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein; provided, however, that Borrower shall not be
required to increase any such amounts if the increase in such amount payable
results from Agent’s or such Lender’s own willful misconduct or gross negligence
(as finally determined by a court of competent jurisdiction); and provided
further that Borrower shall not be required to increase any such amounts if the
increase in such amounts payable is or pertains to (i) any withholding tax
(including backup withholding tax) that is attributable to such person’s failure
to comply with Section 16.5(b), (ii) any branch profits taxes imposed by the
United States of America or any similar tax imposed by any other jurisdiction in
which any “lender” (including, to the extent applicable, and for purposes of
this Section 16.11 only, an Assignee or Participant) is located, (iii) in the
case of a foreign lender, any withholding tax that (x) is imposed on amounts
payable to such foreign lender at the time such foreign lender becomes a party
to this Agreement, (y) is imposed on amounts payable to such foreign lender as a
result or consequences of the foreign lender designating a new lending office,
or (z) is attributable to such foreign lender’s failure to comply with
Section 16.11, and (iv) any U.S.

 

- 102 -

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

federal withholding Taxes imposed under FATCA. Borrower will furnish to Agent as
promptly as possible after the date the payment of any Tax is due pursuant to
applicable law certified copies of tax receipts evidencing such payment by
Borrower.

(b) If a Lender claims an exemption from United States withholding tax, Lender
agrees with and in favor of Agent and Borrower, to deliver to Agent:

(i) if such Lender claims an exemption from United States withholding tax
pursuant to its portfolio interest exception, (A) a statement of the Lender,
signed under penalty of perjury, that it is not a (I) a “bank” as described in
Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of Borrower (within the
meaning of Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign
corporation related to Borrower within the meaning of Section 864(d)(4) of the
IRC, and (B) a properly completed and executed IRS Form W-8BEN or W-8BEN-E,
before receiving its first payment under this Agreement and at any other time
reasonably requested by Agent or Borrower;

(ii) if such Lender claims an exemption from, or a reduction of, withholding tax
under a United States tax treaty, properly completed and executed IRS Form
W-8BEN before receiving its first payment under this Agreement and at any other
time reasonably requested by Agent or Borrower;

(iii) if such Lender claims that interest paid under this Agreement is exempt
from United States withholding tax because it is effectively connected with a
United States trade or business of such Lender, two properly completed and
executed copies of IRS Form W-8ECI before receiving its first payment under this
Agreement and at any other time reasonably requested by Agent or Borrower; or;

(iv) such other form or forms, including IRS Form W-9, as may be required under
the IRC or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding or backup withholding tax before
receiving its first payment under this Agreement and at any other time
reasonably requested by Agent or Borrower.

If a payment made to a Lender under any Loan Document would be subject to U.S.
federal withholding Tax imposed by FATCA if such Lender were to fail to comply
with the applicable reporting requirements of FATCA (including those contained
in Section 1471(b) or 1472(b) of the IRC, as applicable), such Lender shall
deliver to the Borrower and the Administrative Agent at the time or times
prescribed by law and at such time or times reasonably requested by the Borrower
or the Administrative Agent such documentation prescribed by applicable law
(including as prescribed by Section 1471(b)(3)(C)(i) of the IRC) and such
additional documentation reasonably requested by the Borrower or the
Administrative Agent as may be necessary for the Borrower and the Administrative
Agent to comply with their obligations under FATCA and to determine that such
Lender has complied with such Lender’s obligations under FATCA or to determine
the amount to deduct and withhold from such payment. Solely for purposes of this
clause (D), “FATCA” shall include any amendments made to FATCA after the date of
this Agreement.

 

- 103 -

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

Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.

(c) If a Lender claims an exemption from withholding tax in a jurisdiction other
than the United States, Lender agrees with and in favor of Agent and Borrower,
to deliver to Agent any such form or forms, as may be required under the laws of
such jurisdiction as a condition to exemption from, or reduction of, foreign
withholding or backup withholding tax before receiving its first payment under
this Agreement and at any other time reasonably requested by Agent or Borrower.

Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.

(d) If any Lender claims exemption from, or reduction of, withholding tax and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of Borrower to such Lender, such Lender agrees to
notify Agent and Borrower of the percentage amount in which it is no longer the
beneficial owner of Obligations of Borrower to such Lender. To the extent of
such percentage amount, Agent and Borrower will treat such Lender’s
documentation provided pursuant to Sections 16.11(b) or 16.11(c) as no longer
valid. With respect to such percentage amount, Lender may provide new
documentation, pursuant to Sections 16.11 (b) or 16.11(c), if applicable.

(e) If any Lender is entitled to a reduction in the applicable withholding tax,
Agent may withhold from any interest payment to such Lender an amount equivalent
to the applicable withholding tax after taking into account such reduction. If
the forms or other documentation required by subsection (b) or (c) of this
Section 16.11 are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.

(f) If the IRS or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that Agent did not properly withhold tax from
amounts paid to or for the account of any Lender due to a failure on the part of
the Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall indemnify and hold
Agent harmless for all amounts paid, directly or indirectly, by Agent, as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to Agent under this Section 16.11,
together with all costs and expenses (including attorneys fees and expenses).
The obligation of the Lenders under this subsection shall survive the payment of
all Obligations and the resignation or replacement of Agent.

(g) If any party determines, in its sole discretion exercised in good faith,
that it has received a refund of any Taxes as to which it has been indemnified
pursuant to this Section (including by the payment of additional amounts
pursuant to this Section), it shall pay to the indemnifying party an amount
equal to such refund (but only to the extent of indemnity payments made under
this Section with respect to the Taxes giving rise to such refund), net of all
out-of-pocket expenses (including Taxes) of such indemnified party and without
interest (other

 

- 104 -

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

than any interest paid by the relevant taxing authority with respect to such
refund). Such indemnifying party, upon the request of such indemnified party,
shall repay to such indemnified party the amount paid over pursuant to this
paragraph (g) (plus any penalties, interest or other charges imposed by the
relevant taxing authority) in the event that such indemnified party is required
to repay such refund to such taxing authority. This paragraph shall not be
construed to require any indemnified party to make available its Tax returns (or
any other information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.

16.12 Collateral Matters.

(a) The Lenders hereby irrevocably authorize Agent, at its option and in its
sole discretion, to release any Lien on any Collateral (i) upon the termination
of the Commitments and payment and satisfaction in full by Borrower of all
Obligations, (ii) constituting property being sold or disposed of if a release
is required or desirable in connection therewith and if Borrower certifies to
Agent that the sale or disposition is permitted under Section 7.4 of this
Agreement or the other Loan Documents (and Agent may rely conclusively on any
such certificate, without further inquiry), (iii) constituting property in which
Borrower or its Subsidiaries owned no interest at the time the Agent’s Lien was
granted nor at any time thereafter, or (iv) constituting property leased to
Borrower or its Subsidiaries under a lease that has expired or is terminated in
a transaction permitted under this Agreement. Except as provided above, Agent
will not execute and deliver a release of any Lien on any Collateral without the
prior written authorization of (y) if the release is of all or substantially all
of the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders.
Upon request by Agent or Borrower at any time, the Lenders will confirm in
writing Agent’s authority to release any such Liens on particular types or items
of Collateral pursuant to this Section 16.12; provided, however, , that
(1) Agent shall not be required to execute any document necessary to evidence
such release on terms that, in Agent’s opinion, would expose Agent to liability
or create any obligation or entail any consequence other than the release of
such Lien without recourse, representation, or warranty, and (2) such release
shall not in any manner discharge, affect, or impair the Obligations or any
Liens (other than those expressly being released) upon (or obligations of
Borrower in respect of) all interests retained by Borrower, including, the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.

(b) Agent shall have no obligation whatsoever to any of the Lenders to assure
that the Collateral exists or is owned by Borrower or is cared for, protected,
or insured or has been encumbered, or that the Agent’s Liens 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 pursuant to any of the Loan Documents, it being understood and agreed that
in respect of the Collateral, or any act, omission, or event related thereto,
subject to the terms and conditions contained herein, Agent may act in any
manner it may deem appropriate, in its sole discretion given Agent’s own
interest in the Collateral in its capacity as one of the Lenders and that Agent
shall have no other duty or liability whatsoever to any Lender as to any of the
foregoing, except as otherwise provided herein.

 

- 105 -

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

16.13 Restrictions on Actions by Lenders; Sharing of Payments.

(a) Each of the Lenders agrees that it shall not, without the express written
consent of Agent, and that it shall, to the extent it is lawfully entitled to do
so, upon the written request of Agent, set off against the Obligations, any
amounts owing by such Lender to Borrower or any deposit accounts of Borrower now
or hereafter maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so in writing by Agent,
take or cause to be taken any action, including, the commencement of any legal
or equitable proceedings, to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral.

(b) If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender’s ratable portion of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (2) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, , that to the extent that such excess payment received by the
purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the excess
payment.

16.14 Agency for Perfection. Agent hereby appoints each other Lender as its
agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent’s Liens in assets which, in accordance with Article 8 or
Article 9, as applicable, of the Code can be perfected only by possession or
control. Should any Lender obtain possession or control of any such Collateral,
such Lender shall notify Agent thereof, and, promptly upon Agent’s request
therefor shall deliver possession or control of such Collateral to Agent or in
accordance with Agent’s instructions.

16.15 Payments by Agent to the Lenders. All payments to be made by Agent to the
Lenders shall be made by bank wire transfer of immediately available funds
pursuant to such wire transfer instructions as each party may designate for
itself by written notice to Agent. Concurrently with each such payment, Agent
shall identify whether such payment (or any portion thereof) represents
principal, premium, fees, or interest of the Obligations.

16.16 Concerning the Collateral and Related Loan Documents. Each member of the
Lender Group authorizes and directs Agent to enter into this Agreement and the
other Loan Documents. Each member of the Lender Group agrees that any action
taken by Agent in accordance with the terms of this Agreement or the other Loan
Documents relating to the Collateral and the exercise by Agent of its powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.

 

- 106 -

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

16.17 Field Examinations and Examination Reports; Confidentiality; Disclaimers
by Lenders; Other Reports and Information. By becoming a party to this
Agreement, each Lender:

(a) is deemed to have requested that Agent furnish such Lender, promptly after
it becomes available, a copy of each field examination or examination report
(each a “Report” and collectively, “Reports”) prepared by Agent, and Agent shall
so furnish each Lender with such Reports,

(b) expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report,

(c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or other party performing any examination
will inspect only specific information regarding Borrower and will rely
significantly upon the Books, as well as on representations of Borrower’s
personnel,

(d) agrees to keep all Reports and other material, non-public information
regarding Borrower and its Subsidiaries and their operations, assets, and
existing and contemplated business plans in a confidential manner in accordance
with Section 17.7, and

(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold Agent and any other Lender
preparing a Report harmless from any action the indemnifying Lender may take or
fail to take or any conclusion the indemnifying Lender may reach or draw from
any Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to Borrower, or the indemnifying
Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or
loans of Borrower, and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.

In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrower to Agent that has not been contemporaneously
provided by Borrower to such Lender, and, upon receipt of such request, Agent
promptly shall provide a copy of same to such Lender, (y) to the extent that
Agent is entitled, under any provision of the Loan Documents, to request
additional reports or information from Borrower, any Lender may, from time to
time, reasonably request Agent to exercise such right as specified in such
Lender’s notice to Agent, whereupon Agent promptly shall request of Borrower the
additional reports or information reasonably specified by such Lender, and, upon
receipt thereof from Borrower, Agent promptly shall provide a copy of same to
such Lender, and (z) any time that Agent renders to Borrower a statement
regarding the Loan Account, Agent shall send a copy of such statement to each
Lender.

 

- 107 -

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

16.18 Several Obligations; No Liability. Notwithstanding that certain of the
Loan Documents now or hereafter may have been or will be executed only by or in
favor of Agent in its capacity as such, and not by or in favor of the Lenders,
any and all obligations on the part of Agent (if any) to make any credit
available hereunder shall constitute the several (and not joint) obligations of
the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.
Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in Section 16.7, no member of the Lender Group shall have any
liability for the acts of any other member of the Lender Group. No Lender shall
be responsible to Borrower or any other Person for any failure by any other
Lender to fulfill its obligations to make credit available hereunder, nor to
advance for it or on its behalf in connection with its Commitment, nor to take
any other action on its behalf hereunder or in connection with the financing
contemplated herein.

16.19 Bank Product Providers. Each Bank Product Provider shall be deemed a party
hereto for purposes of any reference in a Loan Document to the parties for whom
Agent is acting; it being understood and agreed that the rights and benefits of
such Bank Product Provider under the Loan Documents consist exclusively of such
Bank Product Provider’s right to share in payments and collections out of the
Collateral as more fully set forth herein. In connection with any such
distribution of payments and collections, Agent shall be entitled to assume no
amounts are due to any Bank Product Provider unless such Bank Product Provider
has notified Agent in writing of the amount of any such liability owed to it
prior to such distribution.

16.20 Syndication Agent. Syndication Agent, in such capacity, shall not have any
right, power, obligation, liability, responsibility, or duty under this
Agreement other than those applicable to it in its capacity as a Lender. Without
limiting the foregoing, the Syndication Agent, in such capacities, shall not
have or be deemed to have any fiduciary relationship with any Lender or any Loan
Party. Each Lender, Agent, Issuing Lender, and each Loan Party acknowledges that
it has not relied, and will not rely, on the Syndication Agent in deciding to
enter into this Agreement or in taking or not taking action hereunder.
Syndication Agent, in such capacity, shall be entitled to resign at any time by
giving notice to Agent and Borrower.

16.21 Legal Representation of Agent. In connection with the negotiation,
drafting, and execution of this Agreement and the other Loan Documents, or in
connection with future legal representation relating to loan administration,
amendments, modifications, waivers, or enforcement of remedies, Paul Hastings
LLP (“PH”) only has represented and only shall represent CNB in its capacity as
Agent and as a Lender. Each other Lender hereby acknowledges that PH does not
represent it in connection with any such matters.

 

- 108 -

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

17. GENERAL PROVISIONS.

17.1 Effectiveness. This Agreement shall be binding and deemed effective when
executed by Borrower, Agent, and each Lender whose signature is provided for on
the signature pages hereof.

17.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.

17.3 Interpretation. Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed against the Lender Group or Borrower, whether under
any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to accomplish fairly the purposes and
intentions of all parties hereto.

17.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

17.5 Counterparts; Electronic Execution. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.

17.6 Revival and Reinstatement of Obligations; Certain Waivers.

(a) If any member of the Lender Group or any Bank Product Provider repays,
refunds, restores, or returns in whole or in part, any payment or property
(including any proceeds of Collateral) previously paid or transferred to such
member of the Lender Group or such Bank Product Provider in full or partial
satisfaction of any Obligation or on account of any other obligation of any Loan
Party under any Loan Document or any Bank Product Agreement, because the
payment, transfer, or the incurrence of the obligation so satisfied is asserted
or declared to be void, voidable, or otherwise recoverable under any law
relating to creditors’ rights, including provisions of the Bankruptcy Code
relating to fraudulent transfers, preferences, or other voidable or
recoverable obligations or transfers (each, a “Voidable Transfer”), or
because such member of the Lender Group or Bank Product Provider elects to do so
on the reasonable advice of its counsel in connection with a claim that the
payment, transfer, or incurrence is or may be a Voidable Transfer, then, as to
any such Voidable Transfer, or the amount thereof that such member of the Lender
Group or Bank Product Provider elects to repay,

 

- 109 -

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

restore, or return (including pursuant to a settlement of any claim in respect
thereof), and as to all reasonable costs, expenses, and attorneys fees of such
member of the Lender Group or Bank Product Provider related thereto, (i) the
liability of the Loan Parties with respect to the amount or property paid,
refunded, restored, or returned will automatically and immediately be revived,
reinstated, and restored and will exist and (ii) Agent’s Liens securing such
liability shall be effective, revived, and remain in full force and effect, in
each case, as fully as if such Voidable Transfer had never been made. If, prior
to any of the foregoing, (A) Agent’s Liens shall have been released or
terminated or (B) any provision of this Agreement shall have been terminated
or cancelled, Agent’s Liens, or such provision of this Agreement, shall be
reinstated in full force and effect and such prior release, termination,
cancellation or surrender shall not diminish, release, discharge, impair or
otherwise affect the obligation of any Loan Party in respect of such liability
or any Collateral securing such liability.

(b) Anything to the contrary contained herein notwithstanding, if Agent or any
Lender accepts a guaranty of only a portion of the Obligations pursuant to any
guaranty, Borrower hereby waives its right under Section 2822(a) of the
California Civil Code or any similar laws of any other applicable jurisdiction
to designate the portion of the Obligations satisfied by the applicable
guarantor’s partial payment.

17.7 Confidentiality. Agent and Lenders each individually (and not jointly or
jointly and severally) agree that material, non-public information regarding
Borrower and its Subsidiaries, their operations, assets, and existing and
contemplated business plans shall be treated by Agent and the Lenders in a
confidential manner, and shall not be disclosed by Agent and the Lenders to
Persons who are not parties to this Agreement, except: (a) to attorneys for and
other advisors, accountants, auditors, and consultants to any member of the
Lender Group, (b) to Subsidiaries and Affiliates of any member of the Lender
Group (including the Bank Product Providers), provided that any such Subsidiary
or Affiliate shall have agreed to receive such information hereunder subject to
the terms of this Section 17.7, (c) as may be required by statute, decision, or
judicial or administrative order, rule, or regulation, (d) as may be agreed to
in advance by Borrower or its Subsidiaries or as requested or required by any
Governmental Authority pursuant to any subpoena or other legal process, (e) as
to any such information that is or becomes generally available to the public
(other than as a result of prohibited disclosure by Agent or the Lenders),
(f) in connection with any assignment, prospective assignment, sale, prospective
sale, participation or prospective participations, or pledge or prospective
pledge of any Lender’s interest under this Agreement, provided that any such
assignee, prospective assignee, purchaser, prospective purchaser, participant,
prospective participant, pledgee, or prospective pledgee shall have agreed in
writing to receive such information hereunder subject to the terms of this
Section, and (g) in connection with any litigation or other adversary proceeding
involving parties hereto which such litigation or adversary proceeding involves
claims related to the rights or duties of such parties under this Agreement or
the other Loan Documents. The provisions of this Section 17.7 shall survive for
2 years after the payment in full of the Obligations.

17.8 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

 

- 110 -

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

[Signature pages to follow.]

 

- 111 -

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

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

 

FRESHPET, INC., a Delaware corporation By:  

/s/ Stephen Macchiaverna

Title:  

Senior Vice President, Controller, and Secretary

CITY NATIONAL BANK,

a national banking association,

as Agent and as a Lender

By:  

/s/ Garen Papazyan

Title:  

Senior Vice President

ONEWEST BANK N.A.,

as Syndication Agent and as a Lender

By:  

/s/ David G. Ligon

Title:  

Executive Vice President

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

TABLE OF CONTENTS

 

                 Page  

1.

  

DEFINITIONS AND CONSTRUCTION

     1      

1.1

    

Definitions

     1      

1.2

    

Accounting Terms

     31      

1.3

    

Code

     32      

1.4

    

Construction

     32      

1.5

    

Schedules and Exhibits

     32   

2.

  

LOAN AND TERMS OF PAYMENT

     33      

2.1

    

Revolver Advances

     33      

2.2

    

Term Loan

     33      

2.3

    

Borrowing Procedures and Settlements

     34      

2.4

    

Payments

     39      

2.5

    

Overadvances

     45      

2.6

    

Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations

     45      

2.7

    

Cash Management

     47      

2.8

    

Crediting Payments; Float Charge

     48      

2.9

    

Designated Account

     48      

2.10

    

Maintenance of Loan Account; Statements of Obligations

     49      

2.11

    

Fees

     49      

2.12

    

Letters of Credit

     50      

2.13

    

LIBOR Option

     57      

2.14

    

Capital Requirements

     59   

3.

  

CONDITIONS; TERM OF AGREEMENT

     62      

3.1

    

Conditions Precedent to the Initial Extension of Credit

     62      

3.2

    

Conditions Subsequent to the Initial Extension of Credit

     63      

3.3

    

Conditions Precedent to all Extensions of Credit

     64      

3.4

    

Term

     64      

3.5

    

Effect of Termination

     64      

3.6

    

Early Termination by Borrower

     65   

 

-i-

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

TABLE OF CONTENTS

(continued)

 

                 Page  

4.

  

CREATION OF SECURITY INTEREST

     65      

4.1

    

Grant of Security Interest

     65      

4.2

    

Negotiable Collateral

     65      

4.3

    

Collection of Accounts, General Intangibles, and Negotiable Collateral

     65      

4.4

    

Filing of Financing Statements; Commercial Tort Claims; Delivery of Additional
Documentation Required

     66      

4.5

    

Power of Attorney

     67      

4.6

    

Right to Inspect

     67      

4.7

    

Control Agreements

     67   

5.

  

REPRESENTATIONS AND WARRANTIES

     68      

5.1

    

No Encumbrances

     68      

5.2

    

Eligible Accounts

     68      

5.3

    

Eligible Inventory

     68      

5.4

    

Equipment

     68      

5.5

    

Location of Inventory and Equipment

     68      

5.6

    

Inventory Records

     68      

5.7

    

State of Incorporation; Location of Chief Executive Office; Organizational
Identification Number; Commercial Tort Claims

     69      

5.8

    

Due Organization and Qualification; Subsidiaries

     69      

5.9

    

Due Authorization; No Conflict

     69      

5.10

    

Litigation

     70      

5.11

    

No Material Adverse Change

     70      

5.12

    

Fraudulent Transfer

     71      

5.13

    

Employee Benefits

     71      

5.14

    

Environmental Condition

     71      

5.15

    

Brokerage Fees

     71      

5.16

    

Intellectual Property

     71      

5.17

    

Leases

     71      

5.18

    

Deposit Accounts and Securities Accounts

     71      

5.19

    

Complete Disclosure

     72      

5.20

    

Indebtedness

     72   

 

-ii-

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

TABLE OF CONTENTS

(continued)

 

                 Page  

6.

  

AFFIRMATIVE COVENANTS

     73      

6.1

    

Accounting System

     73      

6.2

    

Collateral Reporting

     73      

6.3

    

Financial Statements, Reports, Certificates

     74      

6.4

    

Guarantor Reports

     75      

6.5

    

Returns

     75      

6.6

    

Maintenance of Properties

     75      

6.7

    

Taxes

     75      

6.8

    

Insurance

     75      

6.9

    

Location of Inventory and Equipment

     76      

6.10

    

Compliance with Laws

     76      

6.11

    

Leases

     76      

6.12

    

Existence

     77      

6.13

    

Environmental

     77      

6.14

    

Disclosure Updates

     77      

6.15

    

Formation of Subsidiaries

     77   

7.

  

NEGATIVE COVENANTS

     78      

7.1

    

Indebtedness

     78      

7.2

    

Liens

     79      

7.3

    

Restrictions on Fundamental Changes

     79      

7.4

    

Disposal of Assets

     80      

7.5

    

Change Name

     80      

7.6

    

Nature of Business

     80      

7.7

    

Prepayments and Amendments

     80      

7.8

    

Change of Control

     80      

7.9

    

Consignments

     80      

7.10

    

Distributions

     80      

7.11

    

Accounting Methods

     81      

7.12

    

Investments

     81      

7.13

    

Transactions with Affiliates

     81      

7.14

    

Suspension

     81      

7.15

    

Compensation

     81   

 

-iii-

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

TABLE OF CONTENTS

(continued)

 

                 Page     

7.16

    

Use of Proceeds

     81      

7.17

    

Inventory and Equipment with Bailees

     81      

7.18

    

Financial Covenants

     82   

8.

  

EVENTS OF DEFAULT

     82   

9.

  

THE LENDER GROUP’S RIGHTS AND REMEDIES

     84      

9.1

    

Rights and Remedies

     84      

9.2

    

Remedies Cumulative

     87   

10.

  

TAXES AND EXPENSES

     87   

11.

  

WAIVERS; INDEMNIFICATION

     88      

11.1

    

Demand; Protest; etc

     88      

11.2

    

The Lender Group’s Liability for Borrower Collateral

     88      

11.3

    

Indemnification

     88   

12.

  

NOTICES

     89   

13.

  

CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER

     90   

14.

  

ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS

     93      

14.1

    

Assignments and Participations

     93      

14.2

    

Successors

     96   

15.

  

AMENDMENTS; WAIVERS

     96      

15.1

    

Amendments and Waivers

     96      

15.2

    

Replacement of Holdout Lender

     97      

15.3

    

No Waivers; Cumulative Remedies

     97   

16.

  

AGENT; THE LENDER GROUP

     98      

16.1

    

Appointment and Authorization of Agent

     98      

16.2

    

Delegation of Duties

     99      

16.3

    

Liability of Agent

     99      

16.4

    

Reliance by Agent

     99      

16.5

    

Notice of Default or Event of Default

     99      

16.6

    

Credit Decision

     100      

16.7

    

Costs and Expenses; Indemnification

     100      

16.8

    

Agent in Individual Capacity

     101   

 

-iv-

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

TABLE OF CONTENTS

(continued)

 

                 Page     

16.9

    

Successor Agent

     101      

16.10

    

Lender in Individual Capacity

     102      

16.11

    

Withholding Taxes

     102      

16.12

    

Collateral Matters

     105      

16.13

    

Restrictions on Actions by Lenders; Sharing of Payments

     106      

16.14

    

Agency for Perfection

     106      

16.15

    

Payments by Agent to the Lenders

     106      

16.16

    

Concerning the Collateral and Related Loan Documents

     106      

16.17

    

Field Examinations and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information

     107      

16.18

    

Several Obligations; No Liability

     108      

16.19

    

Bank Product Providers

     108      

16.20

    

Legal Representation of Agent

     108   

17.

  

GENERAL PROVISIONS

     109      

17.1

    

Effectiveness

     109      

17.2

    

Section Headings

     109      

17.3

    

Interpretation

     109      

17.4

    

Severability of Provisions

     109      

17.5

    

Counterparts; Electronic Execution

     109      

17.6

    

Revival and Reinstatement of Obligations

     109      

17.7

    

Confidentiality

     110      

17.8

    

Integration

     110   

 

-v-

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

EXHIBITS AND SCHEDULES

 

Exhibit A-1    Form of Assignment and Acceptance Exhibit C-1    Form of
Compliance Certificate Exhibit L-1    Form of LIBOR Notice Schedule A-1   
Agent’s Account Schedule C-1    Commitments Schedule D-1    Designated Account
Schedule P-1    Permitted Liens Schedule R-1    Real Property Collateral
Schedule 2.7(a)    Cash Management Banks Schedule 5.5    Locations of Inventory
and Equipment Schedule 5.7(a)    States of Organization Schedule 5.7(b)    Chief
Executive Offices Schedule 5.7(c)    Organizational Identification Numbers
Schedule 5.7(d)    Commercial Tort Claims Schedule 5.8(c)    Capitalization of
Borrower’s Subsidiaries Schedule 5.10    Litigation Schedule 5.14   
Environmental Matters Schedule 5.16    Intellectual Property Schedule 5.18   
Deposit Accounts and Securities Accounts Schedule 5.20    Permitted Indebtedness

 

- 1 -

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

Schedule A-1

Agent’s Account

An account at a bank designated by Agent from time to time as the account into
which Borrower shall make all payments to Agent under this Agreement and the
other Loan Documents; unless and until Agent notifies Borrower to the contrary,
Agent’s Account shall be that certain deposit account bearing account number
101306674 and maintained by Agent City National Bank, Los Angeles, N.A., ABA #
122016066, 2100 Park Place, El Segundo, CA 90245.

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

Schedule C-1

Commitments

 

Lender

   Revolver
Commitment      Term Loan
Commitment      Capex Term Loan
Commitment      Total
Commitment  

City National Bank

   $ 5,000,000       $ 9,000,000       $ 6,000,000       $ 20,000,000   

OneWest Bank N.A.

   $ 5,000,000       $ 9,000,000       $ 6,000,000       $ 20,000,000   

All Lenders

   $ 10,000,000       $ 18,000,000       $ 12,000,000       $ 40,000,000   

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

Schedule D-1

Designated Account

Account number 123380541 of Borrower maintained with Borrower’s Designated
Account Bank, or such other deposit account of Borrower (located within the
United States) that has been designed as such, in writing, by Borrower to Agent.

“Designated Account Bank” means City National Bank, Los Angeles, N.A., whose
office is located at 2100 Park Place, El Segundo, CA 90245, and whose ABA number
is 122016066.