Exhibit 10.1

 

[Execution Version]

 

LOAN AND SECURITY AGREEMENT

 

by and among

 

CATALINA INDUSTRIES, INC.

CATALINA MERCHANDISING, INC.

RING LAMP COMPANY LIMITED

BMAC LIMITED

LANCER PRODUCTS LIMITED

GROVE PRODUCTS (CARAVAN ACCESSORIES) LIMITED

LIGHTEN POINT CORPORATION EUROPE LIMITED

CATALINA INTERNATIONAL LIMITED

ARCTIC PRODUCTS LIMITED

VAN-LINE LIMITED

 

as Borrowers

 

and

 

CATALINA LIGHTING, INC.

MERIDIAN LAMPS, INC.

BRITISH SYPHON INDUSTRIES LIMITED

GRAYSTONE RING LIMITED

RING GROUP LIMITED

RING PARTS LIMITED

MARSHALL’S UNIVERSAL LIMITED

HOVEKEY LIMITED

NEWTON MILL LIMITED

RING LIMITED

 

as Guarantors

 

and

 

CONGRESS FINANCIAL CORPORATION (FLORIDA), as Agent

 

and

 

THE LENDERS NAMED HEREIN,

as Lenders

 

Dated: December 23, 2003

 

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TABLE OF CONTENTS

 

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SECTION 1. DEFINITIONS    2 SECTION 2. CREDIT FACILITIES    39     2.1   
Revolving Loans    39     2.2    Letter of Credit Accommodations    41     2.3
   Term Loans    46     2.4    Commitments    47 SECTION 3. INTEREST AND FEES   
48     3.1    Interest    48     3.2    Fees    49     3.3    Changes in Laws
and Increased Costs of Loans    49 SECTION 4. CONDITIONS PRECEDENT    51     4.1
   Conditions Precedent to Initial Loans and Letter of Credit Accommodations   
51     4.2    Conditions Precedent to All Loans and Letter of Credit
Accommodations    55 SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST    55
    5.1    Grant of Security Interest    55     5.2    Special Provisions
Regarding Collateral and Obligations    57     5.3    Perfection of Security
Interests    58 SECTION 6. COLLECTION AND ADMINISTRATION    62     6.1   
Borrowers’ Loan Accounts    62     6.2    Statements    62     6.3    Collection
of Accounts    63     6.4    Payments    64     6.5    Taxes    67     6.6   
Authorization to Make Loans    69     6.7    Use of Proceeds    69     6.8   
Illegality    70     6.9    Euro    70     6.10    Appointment of Agent for
Requesting Loans and Receipts of Loans and Statements    71     6.11    Pro Rata
Treatment    72     6.12    Sharing of Payments, Etc.    72     6.13   
Settlement Procedures    73     6.14    Obligations Several; Independent Nature
of Lenders’ Rights    76 SECTION 7. COLLATERAL REPORTING AND COVENANTS    76    
7.1    Collateral Reporting    76     7.2    Accounts Covenants    77     7.3   
Inventory Covenants    78     7.4    Equipment and Real Property Covenants    79
    7.5    Power of Attorney    79     7.6    Right to Cure    80

 

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    7.7    Access to Premises    81 SECTION 8. REPRESENTATIONS AND WARRANTIES   
81     8.1    Corporate Existence, Power and Authority    81     8.2    Name;
State of Organization; Chief Executive Office; Collateral Locations    82    
8.3    Financial Statements; No Material Adverse Change    82     8.4   
Priority of Liens; Title to Properties    82     8.5    Tax Returns    83    
8.6    Litigation    83     8.7    Compliance with Other Agreements and
Applicable Laws    83     8.8    Environmental Compliance    84     8.9   
Employee Benefits    85     8.10    Bank Accounts    85     8.11    Intellectual
Property    86     8.12    Subsidiaries; Affiliates; Capitalization; Solvency   
86     8.13    Labor Disputes    87     8.14    Restrictions on Subsidiaries   
87     8.15    Material Contracts    88     8.16    Payable Practices    88    
8.17    Accuracy and Completeness of Information    88     8.18    US Inactive
and UK Dormant Subsidiaries    88     8.19    Survival of Warranties; Cumulative
   88 SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS    89     9.1    Maintenance
of Existence    89     9.2    New Collateral Locations    89     9.3   
Compliance with Laws, Regulations, Etc.    90     9.4    Payment of Taxes and
Claims    91     9.5    Insurance    91     9.6    Financial Statements and
Other Information    92     9.7    Sale of Assets, Consolidation, Merger,
Dissolution, Etc.    94     9.8    Encumbrances    97     9.9    Indebtedness   
99     9.10    Loans, Investments, Etc.    103     9.11    Dividends and
Redemptions    105     9.12    Transactions with Affiliates    107     9.13   
Compliance with ERISA    109     9.14    End of Fiscal Years; Fiscal Quarters   
109     9.15    Change in Business    109     9.16    Limitation of Restrictions
Affecting Subsidiaries    109     9.17    EBITDA    110     9.18    Adjusted
Tangible Net Worth    110     9.19    Leverage Ratio    110     9.20    Capital
Expenditures    110     9.21    US Excess Availability    111     9.22   
License Agreements    111     9.23    After Acquired Real Property    112    
9.24    New Subsidiaries    112     9.25    Costs and Expenses    113

 

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    9.26    Dissolution of US Inactive Subsidiaries; UK Dormant Subsidiaries   
114     9.27    Hyde Property    114     9.28    UK Bank Accounts    114    
9.29    Further Assurances    114 SECTION 10. EVENTS OF DEFAULT AND REMEDIES   
115     10.1    Events of Default    115     10.2    Remedies    118 SECTION 11.
JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW    122     11.1   
Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver    122    
11.2    Waiver of Notices    123     11.3    Amendments and Waivers    124    
11.4    Waiver of Counterclaims    126     11.5    Indemnification    126    
11.6    Currency Indemnity    127 SECTION 12. THE AGENT    127     12.1   
Appointment, Powers and Immunities    127     12.2    Reliance by Agent    128  
  12.3    Events of Default    129     12.4    Congress in its Individual
Capacity    129     12.5    Indemnification    130     12.6    Non-Reliance on
Agent and Other Lenders    130     12.7    Failure to Act    130     12.8   
Additional Loans    131     12.9    Concerning the Collateral and the Related
Financing Agreements    131     12.10    Field Audit, Examination Reports and
other Information; Disclaimer by Lenders    131     12.11    Collateral Matters
   132     12.12    Agency for Perfection    134     12.13    Successor Agent   
135 SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS    135     13.1    Term    135
    13.2    Interpretative Provisions    137     13.3    Notices    139     13.4
   Partial Invalidity    140     13.5    Successors    140     13.6   
Assignments; Participations    141     13.7    Entire Agreement    144     13.8
   Counterparts, Etc    144     13.9    Confidentiality    144

 

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INDEX TO

EXHIBITS AND SCHEDULES

 

Exhibit A    Form of Assignment and Acceptance Exhibit B    Commitments Exhibit
C    Information Certificate Exhibit D    Form of Compliance Certificate
Schedule 1.58    Existing Lenders Schedule 1.59    Existing Letters of Credit
Schedule 1.98    Permitted Holders Schedule 1.135    UK Dormant Subsidiaries
Schedule 1.166    US Inactive Subsidiaries Schedule 9.9(h)    Intercompany
Indebtedness Schedule 9.18(a)    Adjusted Tangible Net Worth (Holdings and
Subsidiaries) Schedule 9.18(b)    Adjusted Tangible Net Worth (UK) Schedule
9.19(a)    Leverage Ratio (Holdings and Subsidiaries)

 

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LOAN AND SECURITY AGREEMENT

 

This Loan and Security Agreement dated December 23, 2003 is entered into by and
among Catalina Industries, Inc., a Florida corporation (“CII”) and Catalina
Merchandising, Inc., a Florida corporation (“Merchandising” and, together with
CII, each individually, a “US Borrower” and collectively, “US Borrowers”), Ring
Lamp Company Limited, a company incorporated under the laws of England and Wales
with registration number 470202 (“Ring”), BMAC Limited, a company incorporated
under the laws of England and Wales with registration number 226513 (“BMAC”),
Lancer Products Limited, a company incorporated under the laws of England and
Wales with registration number 1358125 (“Lancer”), Grove Products (Caravan
Accessories) Limited, a company incorporated under the laws of England and Wales
with registration number 1148888 (“Grove”), Lighten Point Corporation Europe
Limited, a company incorporated under the laws of England and Wales with
registration number 1457632 (“Lighten”), Catalina International Limited, a
company incorporated under the laws of England and Wales with registration
number 3949382 (“International”), Arctic Products Limited, a company
incorporated under the laws of England and Wales with registration number
1582704 (“Arctic”) and Van-Line Limited, a company incorporated under the laws
of England and Wales with registration number 1601077 (“Van-Line” and, together
with Ring, BMAC, Lancer, Grove, Lighten, International and Arctic, each
individually, a “UK Borrower”, and collectively, “UK Borrowers” and, together
with US Borrowers, each individually, a “Borrower” and collectively,
“Borrowers”), British Syphon Industries Limited, a company incorporated under
the laws of England and Wales with registration number 205667 (“Syphon”),
Graystone Ring Limited, a company incorporated under the laws of England and
Wales with registration number 3045630 (“Graystone”), Ring Group Limited, a
company incorporated under the laws of England and Wales with registration
number 996508 (“Group”), Ring Parts Limited, a company incorporated under the
laws of England and Wales having registration number 3021015 (“Parts”),
Marshall’s Universal Limited, a company incorporated under the laws of England
and Wales with registration number 377387 (“Marshall’s”), Hovekey Limited, a
company incorporated under the laws of England and Wales with registration
number 2337036 (“Hovekey”), Newton Mill Limited, a company incorporated under
the laws of England and Wales, with registration number 299709 (“Newton”) and
Ring Limited, a company incorporated under the laws of England and Wales, with
registration number 29796 (“Ring Limited” and, together with Syphon, Graystone,
Group, Parts, Marshall’s, Hovekey and Newton, each individually, a “UK
Guarantor” and collectively, “UK Guarantors”), Catalina Lighting, Inc., a
Florida corporation (“Holding”) and Meridian Lamps, Inc., a Florida corporation
(“Meridian” and, together with Holding, each individually, a “US Guarantor” and
collectively, “US Guarantors” and, together with UK Guarantors, each
individually a “Guarantor” and collectively, “Guarantors”), the lenders from
time to time parties hereto as lenders, whether by execution of this Agreement
or an Assignment and Acceptance (each individually, a “Lender” and collectively,
“Lenders”) and Congress Financial Corporation (Florida), a Florida corporation,
in its capacity as agent for Lenders (in such capacity, “Agent”).

 

 

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W I T N E S S E T H:

 

WHEREAS, Borrowers and Guarantors have requested that Agent and Lenders enter
into financing arrangements with Borrowers pursuant to which Lenders may make
loans and provide other financial accommodations to Borrowers; and

 

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

 

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

 

SECTION 1. DEFINITIONS

 

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

 

1.1 “65% Mortgage” means the share mortgage granted or to be granted by Holding
in favor of Agent as agent and trustee for the Lenders in respect of sixty-five
(65%) percent of the shares in International.

 

1.2 “100% Mortgage” means the share mortgage granted or to be granted by Holding
in favor of Agent as agent and trustee for the Lenders in respect of one hundred
(100%) percent of the shares in International.

 

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

 

1.4 “Adjusted Eurodollar Rate” shall mean, with respect to any Eurodollar Rate
Loan, the rate per annum (rounded upwards, if necessary, to the next
one-sixteenth (1/16) of one (1%) percent) determined by dividing (a) the
Eurodollar Rate for the period of approximately one (1) month’s duration by (b)
a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For
purposes hereof, “Reserve Percentage” shall mean the reserve percentage,
expressed as a

 

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decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits
of US Dollars in a non-United States or an international banking office of
Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan
made with the proceeds of such deposit, whether or not the Reference Bank
actually holds or has made any such deposits or loans. The Adjusted Eurodollar
Rate shall be adjusted on and as of the effective day of any change in the
Reserve Percentage.

 

1.5 “Adjusted Tangible Net Worth” shall mean as to any Person, at any time, in
accordance with GAAP (except as otherwise specifically set forth below), on a
consolidated basis for such Person and its Subsidiaries (if any), the amount
equal to the difference between: (a) the aggregate net book value of all assets
of such Person and its Subsidiaries (excluding the value of patents, trademarks,
tradenames, copyrights, licenses, goodwill, leasehold improvements (other than
in the United Kingdom), plus or minus other comprehensive income or loss items
in accordance with GAAP) calculating the book value of inventory for this
purpose on a first-in- first-out or standard cost basis, as applicable, after
deducting from such book values all appropriate reserves in accordance with GAAP
(including all reserves for doubtful receivables, obsolescence, depreciation and
amortization) and (b) the aggregate amount of the Indebtedness and other
liabilities of such Person and its Subsidiaries (including tax and other proper
accruals).

 

1.6 “Administrative Borrower” shall mean with respect to: (a) US Borrowers, CII,
in its capacity as Administrative Borrower on behalf of itself and the other US
Borrowers pursuant to Section 6.10 hereof and (b) with respect to UK Borrowers,
Ring, in its capacity as Administrative Borrower on behalf of itself and the
other UK Borrowers pursuant to Section 6.10 hereof; in each case together with
their respective successors and assigns in such capacity.

 

1.7 “Affiliate” shall mean, with respect to a specified Person, any other Person
which directly or indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with such Person, and without limiting
the generality of the foregoing, includes (a) any Person which beneficially owns
or holds fifteen (15%) percent or more of any class of Voting Stock of such
Person or other equity interests in such Person, (b) any Person of which such
Person beneficially owns or holds fifteen (15%) percent or more of any class of
Voting Stock or in which such Person beneficially owns or holds fifteen (15%)
percent or more of the equity interests and (c) any director or executive
officer of such Person. For the purposes of this definition, the term “control”
(including with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting
Stock, by agreement or otherwise.

 

1.8 “Agent” shall mean Congress Financial Corporation (Florida), a Florida
corporation, in its capacity as agent on behalf of Lenders pursuant to the terms
hereof and any replacement or successor agent hereunder.

 

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1.9 “Agent UK Euro Payment Account” shall mean account no. 77985177 of Burdale
at Barclays Bank PLC, or such other account of Agent as Agent may from time to
time designate to Administrative Borrower as the Agent UK Euro Payment account
for purposes of this Agreement and other Financing Agreements.

 

1.10 “Agent UK Sterling Payment Account” shall mean account no. 20235954 of
Burdale at Barclays Bank PLC, or such other account of Agent as Agent may from
time to time designate to Administrative Borrower as the Agent UK Sterling
Payment Account for purposes of this Agreement and the other Financing
Agreements.

 

1.11 “Agent UK US Dollar Payment Account” shall mean account no. 74231922 of
Burdale at Barclays Bank PLC, or such other account of Agent as Agent may from
time to time designate to Administrative Borrower as the Agent UK US Dollar
Payment account for purposes of this Agreement and other Financing Agreements.

 

1.12 “Agent US Payment Account” shall mean account no. 5000000030334 of Agent at
Wachovia Bank, National Association, or such other account of Agent as Agent may
from time to time designate to Administrative Borrower as the Agent US Payment
Account for purposes of this Agreement and the other Financing Agreements.

 

1.13 “Assignment and Acceptance” shall mean an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender’s interest hereunder in accordance with the provisions of Section 13.6
hereof.

 

1.14 “Blocked Accounts” shall have the meaning set forth in Section 6.3 hereof.

 

1.15 “Borrowers” shall mean, collectively, the UK Borrowers and the US Borrowers
(together with their respective successors and assigns), each sometimes being
referred to herein individually as a “Borrower”.

 

1.16 “Borrowing Base” shall mean, at any time:

 

(a) as to the UK Borrowers, the amount equal to:

 

(i) the lesser of:

 

(A) the amount equal to (1) eighty-five (85%) percent of the Sterling Equivalent
of the Net Amount of the Eligible Accounts of UK Borrowers plus (2) the least of
(x) sixty (60%) percent multiplied by the Sterling Equivalent of the Value of
the Eligible Inventory of UK Borrowers consisting of finished goods and fifty
(50%) percent multiplied by the Sterling Equivalent of the Value of the Eligible
Inventory of UK Borrowers consisting of raw materials, (y) (I) from the date
hereof through and including the date which is thirty (30) days from the date

 

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hereof, up to ninety (90%) percent of the Net Recovery Percentage of the
Inventory of UK Borrowers multiplied by the Sterling Equivalent of the Value of
the Eligible Inventory of UK Borrowers, (II) from the date which is thirty-one
(31) days after the date hereof through and including the date which is sixty
(60) days from the date hereof, up to eighty-nine (89%) percent of the Net
Recovery Percentage of the Inventory of UK Borrowers multiplied by the Sterling
Equivalent of the Value of the Eligible Inventory of UK Borrowers, (III) from
the date which is sixty-one (61) days after the date hereof through and
including the date which is ninety (90) days from the date hereof, up to
eighty-eight (88%) percent of the Net Recovery Percentage of the Inventory of UK
Borrowers multiplied by the Sterling Equivalent of the Value of the Eligible
Inventory of UK Borrowers, (IV) from the date which is ninety-one (91) days
after the date hereof through and including the date which is one hundred twenty
(120) days from the date hereof, up to an eighty-seven (87%) percent of the Net
Recovery Percentage of the Inventory of UK Borrowers multiplied by the Sterling
Equivalent of the Value of the Eligible Inventory of UK Borrowers, (V) from the
date which is one hundred twenty-one (121) days after the date hereof through
and including the date which is one hundred fifty (150) days from the date
hereof, up to an eighty-six (86%) percent of the Net Recovery Percentage of the
Inventory of UK Borrowers multiplied by the Sterling Equivalent of the Value of
the Eligible Inventory of UK Borrowers and (VI) as of the date hereof which is
one hundred fifty-one (151) days after the date hereof and at all times
thereafter, up to eighty-five (85%) percent of the Net Recovery Percentage of
the Inventory of UK Borrowers multiplied by the Sterling Equivalent of the Value
of the Eligible Inventory of UK Borrowers and (z) the Inventory Loan Limit of UK
Borrowers; or

 

(B) the Revolving Loan Limit for UK Borrowers,

 

(ii) minus Reserves attributable to UK Borrowers; and

 

(b) as to each US Borrower, the amount equal to:

 

(i) the lesser of:

 

(A) the amount equal to (1) eighty-five (85%) percent of the US Dollar
Equivalent of the Net Amount of the Eligible Accounts of such US Borrower, plus
(2) the lesser of (x) the Inventory Loan Limit for such US Borrower, or (y)
forty-three and one-half (43  1/2%) percent multiplied by the US Dollar
Equivalent of Value of the Eligible Inventory of such US Borrower consisting of
finished goods and forty-three and one-half (43  1/2%) percent multiplied by the
US Dollar Equivalent of the Value of the Eligible Inventory of such US Borrower
consisting of raw materials, or (z) eighty-five (85%) percent of the Net
Recovery Percentage of the Inventory of such US Borrower multiplied by the US
Dollar Equivalent of the Value of the Eligible Inventory of such US Borrower, or

 

(ii) the Revolving Loan Limit for such US Borrower,

 

minus

 

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(iii) Reserves attributable to such US Borrower.

 

For purposes only of applying the Inventory Loan Limit, Agent may treat the then
undrawn amounts of outstanding Letter of Credit Accommodations for the purpose
of purchasing Eligible Inventory as Revolving Loans to the extent Agent is in
effect basing the issuance of the Letter of Credit Accommodations on the Value
of the Eligible Inventory being purchased with such Letter of Credit
Accommodations. In determining the actual amounts of such Letter of Credit
Accommodations to be so treated for purposes of the sublimit, the outstanding
Revolving Loans and Reserves shall be attributed first to any components of the
lending formulas set forth above that are not subject to such sublimit, before
being attributed to the components of the lending formulas subject to such
sublimit. The amounts of Eligible Inventory of any Borrower shall, at Agent’s
option, be determined based on the lesser of the amount of Inventory set forth
in the general ledger of such Borrower or the perpetual inventory record
maintained by such Borrower.

 

1.17 “Burdale” shall mean Burdale Financial Limited, a company incorporated
under the law of England and Wales, and its successors and assigns.

 

1.18 “Business Day” shall mean (a) in connection with any Loans or Letter of
Credit Accommodations made or provided to any US Borrower, or as such term is
used herein except as otherwise provided in clause (b) of this definition, any
day other than a Saturday, Sunday, or other day on which commercial banks are
authorized or required to close under the laws of the State of New York, or the
State of North Carolina, and a day on which Agent is open for the transaction of
business, and (b) in connection with any Loans or Letter of Credit
Accommodations made or provided to any UK Borrower or other matters related
exclusively to any UK Borrower any day (i) other than a Saturday, Sunday or
other day on which commercial banks are authorized or required to close under
the laws of the United Kingdom and (ii) on which Agent’s New York office and
Barclays Bank plc in London, England is open for the transaction of business;
provided, that, in any case (whether under clause (a) and (b) of this definition
or otherwise), if a determination of a Business Day shall relate to any
Eurodollar Rate Loans, the term Business Day shall also exclude any day on which
banks are closed for dealings in dollar deposits in the London interbank market
or other applicable Eurodollar Rate market.

 

1.19 “Capital Expenditures” shall mean all expenditures for, or contracts for
expenditures for, any fixed or capital assets (including, but not limited to,
tooling) or improvements, or for replacements, substitutions or additions
thereto, which have a useful life of more than one (1) year, including, but not
limited to, the direct or indirect acquisition of such assets by way of offset
items or otherwise and shall include the principal amount of capitalized lease
payments.

 

1.20 “Capital Leases” shall mean, as applied to any Person, any lease of (or any
agreement conveying the right to use) any property (whether real, personal or
mixed) by such Person as lessee which in accordance with GAAP, is required to be
reflected as a liability on the balance sheet of such Person.

 

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1.21 “Capital Stock” shall mean, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person’s capital stock or partnership, limited liability company or other equity
interests at any time outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock or other interests (but
excluding any debt security that is exchangeable for or convertible into such
capital stock).

 

1.22 “Cash Equivalents” shall mean, at anytime, (a) any evidence of Indebtedness
with a maturity date of one hundred eighty (180) days or less issued or directly
and fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof or England or Wales or any agency or instrumentality
thereof; provided, that, the full faith and credit of the United States of
America, or England or Wales is pledged in support thereof; (b) certificates of
deposit or bankers’ acceptances with a maturity of one hundred eighty (180) days
or less of any financial institution that is a member of the Federal Reserve
System or a bank incorporated under the laws of England or Wales, in any case,
having combined capital and surplus and undivided profits of not less than US
Dollar Equivalent of US$500,000,000; (c) commercial paper (including variable
rate demand notes) with a maturity of one hundred eighty (180) days or less
issued by an entity (except an Affiliate of any Borrower or Guarantor) organized
under the laws of any State of the United States of America or the District of
Columbia, England or Wales and rated at least A-1 by Standard & Poor’s Ratings
Service, a division of The McGraw-Hill Companies, Inc. or at least P-l by
Moody’s Investors Service, Inc.; (d) repurchase obligations with a term of not
more than thirty (30) days for underlying securities of the types described in
clause (a) above entered into with any financial institution having combined
capital and surplus and undivided profits of not less than US Dollar Equivalent
of US$500,000,000; (e) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or unconditionally guaranteed
by the United States of America, England or Wales or, in each case, issued by
any governmental agency thereof and backed by the full faith and credit of the
United States of America, England or Wales, in each case, maturing within one
hundred eighty (180) days or less from the date of acquisition; provided, that,
the terms of such agreements comply with the guidelines set forth in the Federal
Financial Agreements of Depository Institutions with Securities Dealers and
Others, as adopted by the Comptroller of the Currency on October 31, 1985; and
(f) investments in money market funds and mutual funds which invest
substantially all of their assets in securities of the types described in
clauses (a) through (e) above.

 

1.23 “Change of Control” shall mean, other than as permitted in Section 9.7
hereof, (a) the transfer (in one transaction or a series of transactions) of all
or substantially all of the assets of any Borrower or Guarantor to any Person or
group (as such term is used in Section 13(d)(3) of the Exchange Act); (b) the
liquidation or dissolution of any Borrower or Guarantor or the adoption of a
plan by the stockholders of any Borrower or Guarantor relating to the
dissolution or liquidation of such Borrower or Guarantor; (c) the acquisition by
any Person or group (as such term is used in Section 13(d)(3) of the Exchange
Act), except for one or more Permitted Holders, of beneficial ownership,
directly or indirectly, of a majority of the voting power of the total
outstanding Voting Stock of Parent or the Board of Directors of Parent;

 

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(d) during any period of two (2) consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of Parent (together
with any new directors who have been appointed by any Permitted Holder, or whose
nomination for election by the stockholders of Parent, was approved by a vote of
at least sixty-six and two-thirds (66 2/3%) percent of the directors then still
in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of Parent then still
in office, unless the new directors have been appointed by a Permitted Holder;
or (e) the failure of Catalina Holdings LLC to own and control, directly or
indirectly, more than fifty (50%) percent of the Voting Power of the total
outstanding Voting Stock of Holding.

 

1.24 “Change of UK Tax Law” means any change in (or in the interpretation,
administration or application of) any law applicable in the United Kingdom or UK
Treaty, or in any published practice or concession of any relevant tax
authority.

 

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

 

1.26 “Collateral” shall have the meaning set forth in Section 5.1 hereof.

 

1.27 “Collateral Access Agreement” shall mean an agreement in writing, in form
and substance satisfactory to Agent, from any lessor of premises to any Borrower
or Guarantor, or any other person to whom any Collateral is consigned or who has
custody, control or possession of any such Collateral or is otherwise the owner
or operator of any premises on which any of such Collateral is located, pursuant
to which such lessor, consignee or other person, inter alia, acknowledges the
first priority security interest of Agent in such Collateral, agrees to waive
any and all claims such lessor, consignee or other person may, at any time, have
against such Collateral, whether for processing, storage or otherwise, and
agrees to permit Agent access to, and the right to remain on, the premises of
such lessor, consignee or other person so as to exercise Agent’s rights and
remedies and otherwise deal with such Collateral and in the case of any
consignee or other person who at any time has custody, control or possession of
any Collateral, acknowledges that it holds and will hold possession of the
Collateral for the benefit of Agent and Lenders and agrees to follow all
instructions of Agent with respect thereto.

 

1.28 “Commitment” shall mean, at any time, as to each Lender, the sum of the US
Revolving Loan Commitment, plus the UK Revolving Commitment, plus the UK Term
Loan A Commitment, plus the UK Term Loan B Commitment, as each such commitment
is set forth next to such Lender’s name on Exhibit B hereto or on Schedule 1 to
the Assignment and Acceptance Agreement pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 13.6 hereof, as
the same may be adjusted from time to time in accordance with the terms hereof;
sometimes being collectively referred to herein as “Commitments”.

 

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1.29 “Congress” shall mean Congress Financial Corporation (Florida), a Florida
corporation, in its individual capacity, and its successors and assigns.

 

1.30 “Consolidated Net Income” shall mean, with respect to any Person for any
period, the aggregate of the net income (loss) of such Person and its
Subsidiaries, on a consolidated basis, for such period (excluding to the extent
included therein any extraordinary and/or one time or unusual and non-recurring
gains or any non-cash losses) after deducting all charges which should be
deducted before arriving at the net income (loss) for such period and, without
duplication, after deducting the Provision for Taxes for such period, all as
determined in accordance with GAAP; provided, that, (a) the net income of any
Person that is not a Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid or payable to such Person or a Subsidiary of such Person; (b)
except to the extent included pursuant to the foregoing clause, the net income
of any Person accrued prior to the date it becomes a Subsidiary of such Person
or is merged into or consolidated with such Person or any of its Subsidiaries or
that Person’s assets are acquired by such Person or by its Subsidiaries shall be
excluded; and (c) the net income (if positive) of any Subsidiary (other than a
Borrower or Obligor) to the extent that the declaration or payment of dividends
or similar distributions by such Subsidiary to such Person or to any other
wholly-owned Subsidiary of such Person is not at the time permitted by operation
of the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to such Subsidiary
shall be excluded. For the purposes of this definition, net income excludes any
gain or non-cash loss, together with any related Provision for Taxes for such
gain or non-cash loss, realized upon the sale or other disposition of any assets
that are not sold in the ordinary course of business (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or of any
Capital Stock of such Person or a Subsidiary of such Person and any net income
realized or loss incurred as a result of changes in accounting principles or the
application thereof to such Person.

 

1.31 “Credit Facility” shall mean the Loans and Letter of Credit Accommodations
provided to or for the benefit of any Borrower pursuant to Section 2 hereof.

 

1.32 “Currency Exchange Convention” shall mean (a) in the calculation of the
Sterling Equivalent, a procedure used by Agent or a Lender to value in Sterling
(i) the obligations or assets of any Borrower or Obligor that are originally
measured in Sterling and (ii) any other amount expressed in US Dollars, or any
other currency, other than Sterling, in each case by using the spot price for
the purchase of US Dollars with Sterling, or such other currency, as the case
may be, provided to Agent or such Lender by the Reference Bank for the
immediately preceding Business Day, (b) in the calculation of the Euro
Equivalent, a procedure used by Agent or a Lender to value in Euros (i) the
obligations or assets of any Borrower or Obligor that are originally measured in
Euros and (ii) any other amount expressed in US Dollars, or any other currency,
other than Euros, in each case by using the spot price for the purchase of US
Dollars with Euros, or such other currency, as the case may be, provided to
Agent or such Lender by the Reference Bank for the immediately preceding
Business Day, and (c) in the calculation of the US

 

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Dollar Equivalent, a procedure used by Agent or a Lender to value in US Dollars
(i) the obligations or assets of any Borrower or Obligor that are originally
measured in Sterling or any other currency and (ii) any other amount expressed
in Sterling or any other currency, other than US Dollars, in each case by using
the spot price for the purchase of US Dollars with Sterling, or such other
currency, as the case may be, provided to Agent or such Lender by the Reference
Bank for the immediately preceding Business Day.

 

1.33 “Customs Broker” shall mean the Persons selected by any Borrower after
written notice by Administrative Borrower to Agent, which persons are reasonably
acceptable to Agent to perform port of entry services to process Inventory
imported by such Borrower from outside the United States of America (in the case
of a US Borrower) or outside the United Kingdom (in the case of a UK Borrower)
and to supply facilities, labor and materials to such Borrower in connection
therewith, provided, that, as to each such person (a) Agent shall have received
a Collateral Access Agreement duly authorized, executed and delivered by such
person, (b) such agreement is in full force and effect and (c) such person shall
be in compliance in all material respects with the terms thereof.

 

1.34 “Debenture” shall mean the Guarantee and Debenture, dated on or about the
date hereof, by UK Borrowers and UK Guarantors in favor of Agent, for itself and
as agent for the Lenders, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.

 

1.35 “Default” shall mean an act, condition or event which with notice or
passage of time (including applicable grace periods, if any, expressly set forth
in Section 10.1) or both would constitute an Event of Default.

 

1.36 “Defaulting Lender” shall have the meaning set forth in Section 6.13(d)
hereof.

 

1.37 “Deposit Account Control Agreement” shall mean an agreement in writing, in
form and substance satisfactory to Agent, by and among Agent, a Borrower or
Guarantor with a deposit account at any bank and the bank at which such deposit
account is at any time maintained which provides that such bank will comply with
instructions originated by Agent directing disposition of the funds in the
deposit account without further consent by such Borrower or Guarantor and such
other terms and conditions as Agent may require, including as to any such
agreement with respect to any Blocked Account, providing that all items received
or deposited in the Blocked Accounts are the property of Agent, that the bank
has no lien upon, or right to setoff against, the Blocked Accounts, the items
received for deposit therein, or the funds from time to time on deposit therein
and that the bank will wire, or otherwise transfer, in immediately available
funds, on a daily basis to the Agent UK US Dollar Payment Account, Agent UK
Sterling Payment Account, the Agent UK Euro Payment Account or the Agent US
Payment Account, as applicable, all funds received or deposited into the Blocked
Accounts.

 

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1.38 “EBITDA” shall mean, as to any Person, with respect to any period, an
amount equal to: (a) the Consolidated Net Income of such Person and its
Subsidiaries for such period, plus (b) depreciation, amortization and other
non-cash charges (including, but not limited to, imputed interest and deferred
compensation) for such period (to the extent deducted in the computation of
Consolidated Net Income of such Person), all in accordance with GAAP, plus (c)
Interest Expense for such period (to the extent deducted in the computation of
Consolidated Net Income of such Person), plus (d) the Provision for Taxes for
such period (to the extent deducted in the computation of Consolidated Net
Income of such Person), plus (e) management fees paid or accrued during such
period in accordance with Section 9.12(b)(ii) (to the extent deducted in the
computation of Consolidated Net Income of such Person) plus (f) financing fees
paid pursuant to the Fee Letter, Section 3.2 hereof and legal fees and expenses
in connection with the preparation, negotiation and execution of the Financing
Agreements.

 

1.39 “Eligible Accounts” shall mean Accounts created by a Borrower which are and
continue to be acceptable to Agent based on the criteria set forth below. In
general, Accounts shall be Eligible Accounts if:

 

(a) such Accounts arise from the actual and bona fide sale and delivery of goods
by such Borrower or rendition of services by such Borrower in the ordinary
course of its business which transactions are completed in accordance with the
terms and provisions contained in any documents related thereto;

 

(b) such Accounts are not unpaid more than sixty (60) days after the original
due date thereof or more than ninety (90) days after the date of the original
invoice for them;

 

(c) such Accounts comply with the terms and conditions contained in Section
7.2(b) of this Agreement;

 

(d) such Accounts do not arise from sales on consignment, guaranteed sale, sale
and return, sale on approval, or other terms under which payment by the account
debtor may be conditional or contingent;

 

(e) as to such Accounts of any US Borrower, the chief executive office of the
account debtor with respect to such Accounts is located in the United States of
America or Canada (provided, that, at any time promptly upon Agent’s request,
such Borrower shall execute and deliver, or cause to be executed and delivered,
such other agreements, documents and instruments as may be required by Agent to
perfect the security interests of Agent in those Accounts of an account debtor
with its chief executive office or principal place of business in Canada in
accordance with the applicable laws of the Province of Canada in which such
chief executive office or principal place of business is located and take or
cause to be taken such other and further actions as Agent may request to enable
Agent as secured party with respect thereto to collect such Accounts under the
applicable Federal or Provincial laws of Canada) or, at Agent’s option, if the
chief executive office and principal place of business of the account debtor
with

 

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respect to such Accounts is located other than in the United States of America
or Canada, then if either: (i) the account debtor has delivered to such Borrower
an irrevocable letter of credit issued or confirmed by a bank satisfactory to
Agent and payable only in the United States of America and in US Dollars,
sufficient to cover such Account, in form and substance satisfactory to Agent
and if required by Agent, the original of such letter of credit has been
delivered to Agent or Agent’s agent and the issuer thereof, and such Borrower
has complied with the terms of Section 5.3(f) hereof with respect to the
assignment of the proceeds of such letter of credit to Agent or naming Agent as
transferee beneficiary thereunder, as Agent may specify, or (ii) such Account is
subject to credit insurance payable to Agent issued by an insurer and on terms
and in an amount acceptable to Agent, or (iii) such Account is otherwise
acceptable in all respects to Agent (subject to such lending formula with
respect thereto as Agent may determine);

 

(f) as to such Accounts of any UK Borrower, the chief executive office of the
account debtor with respect to such Accounts is located in the United Kingdom,
the United States, Canada, Norway or the European Union or, at Agent’s option,
if the chief executive office and principal place of business of the account
debtor with respect to such Accounts is located other than in the United
Kingdom, the United States, Canada, Norway or the European Union, then if
either: (i) the account debtor has delivered to such Borrower an irrevocable
letter of credit issued or confirmed by a bank satisfactory to Agent and payable
only in the United States of America and in US Dollars (or payable in such other
country and such other currency as Agent may determine in its sole discretion),
sufficient to cover such Account, in form and substance satisfactory to Agent
and if required by Agent, the original of such letter of credit has been
delivered to Agent or Agent’s agent and the issuer thereof, and such Borrower
has complied with the terms of Section 5.3(f) hereof with respect to the
assignment of the proceeds of such letter of credit to Agent or naming Agent as
transferee beneficiary thereunder, as Agent may specify, or (ii) such Account is
subject to credit insurance payable to Agent issued by an insurer and on terms
and in an amount acceptable to Agent, or (iii) such Account is otherwise
acceptable in all respects to Agent (subject to such lending formula with
respect thereto as Agent may determine);

 

(g) such Accounts do not consist of progress billings (such that the obligation
of the account debtors with respect to such Accounts is conditioned upon such
Borrower’s satisfactory completion of any further performance under the
agreement giving rise thereto), bill and hold invoices or retainage invoices,
except as to bill and hold invoices, if Agent shall have received an agreement
in writing from the account debtor, in form and substance satisfactory to Agent,
confirming the unconditional obligation of the account debtor to take the goods
related thereto and pay such invoice;

 

(h) the account debtor with respect to such Accounts has not asserted a
counterclaim, defense, dispute or any right of setoff or recoupment against such
Accounts (but the portion of the Accounts of such account debtor in excess of
the amount at any time and from time to time owed by such Borrower to such
account debtor or claimed owed by such account debtor may be deemed Eligible
Accounts),

 

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(i) there are no facts, events or occurrences which would impair the validity,
enforceability or collectability of such Accounts or reduce the amount payable
or delay payment thereunder beyond the terms set forth in clause (b) above
(other than reductions in the amount payable thereon as a result of the right to
return defective goods in the ordinary course of business);

 

(j) such Accounts of any US Borrower are subject to the first priority, valid
and perfected security interest of Agent and such Accounts of any UK Borrower
are subject to a first priority fixed charge in favor of Agent pursuant to the
Debenture, and in all cases any goods giving rise to all such Accounts are not,
and were not at the time of the sale thereof, subject to any claim, lien,
security interest, or charge except those permitted in this Agreement;

 

(k) neither the account debtor nor any officer or employee of the account debtor
with respect to such Accounts is an officer, employee, agent or other Affiliate
of any Borrower or Guarantor;

 

(l) the account debtors with respect to such Accounts are not any foreign
government, the United States of America, any State, political subdivision,
department, agency or instrumentality thereof, unless, if the account debtor is
the United States of America, any State, political subdivision, department,
agency or instrumentality thereof, upon Agent’s request, the Federal Assignment
of Claims Act of 1940, as amended or any similar State or local law, if
applicable, has been complied with in a manner satisfactory to Agent;

 

(m) there are no proceedings or actions which are threatened or pending against
the account debtors with respect to such Accounts which could be reasonably
expected to result in any material adverse change in any such account debtor’s
financial condition (including, without limitation, any bankruptcy, dissolution,
liquidation, reorganization administration, receivership or similar proceeding);

 

(n) such Accounts are not evidenced by or arising under any instrument or
chattel paper;

 

(o) such Accounts are not owed by an account debtor who has Accounts unpaid more
than ninety (90) days after the original invoice date for them which constitute
more than fifty (50%) percent of the total Accounts of such account debtor;

 

(p) the account debtor with respect to such Accounts, in the case of an account
debtor having its principal place of business in the United States, is not
located in a state requiring the filing of a Notice of Business Activities
Report or similar report in order to permit such Borrower to seek judicial
enforcement in such State of payment of such Account, unless such Borrower has
qualified to do business in such state or has filed a Notice of Business
Activities Report or equivalent report for the then current year or such failure
to file and inability

 

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to seek judicial enforcement is capable of being remedied without any material
delay or material cost;

 

(q) such Accounts are owed by account debtors whose total indebtedness to such
Borrower does not exceed the credit limit with respect to such account debtors
as determined by such Borrower from time to time, to the extent such credit
limit as to any account debtor is established consistent with the current
practices of such Borrower as of the date hereof and such credit limit is
acceptable to Agent (but the portion of the Accounts not in excess of such
credit limit may be deemed Eligible Accounts);

 

(r) such Accounts are owed by account debtors deemed creditworthy at all times
by Agent (as determined in good faith); and

 

(s) the aggregate amount of such Accounts owing by a single account debtor does
not constitute more than thirty (30%) percent of the aggregate amount of all
otherwise Eligible Accounts (but the portion of such Accounts not in excess of
such percentage may be deemed Eligible Accounts).

 

1.40 “Eligible Inventory” shall mean, Inventory of any US Borrower located in
the United States of America and Inventory of any UK Borrower located in the
United Kingdom, in each case, consisting of finished goods held for sale in the
ordinary course of the business of such Borrower and raw materials for such
finished goods, in each case which are acceptable to Agent based on the criteria
set forth below. In general, Eligible Inventory shall not include:

 

(a) work-in-process;

 

(b) spare parts for equipment;

 

(c) packaging and shipping materials;

 

(d) supplies used or consumed in such Borrower’s business;

 

(e) Inventory at premises other than those owned and controlled by any Borrower,
except any Inventory which would otherwise be deemed Eligible Inventory that is
not located at premises owned and operated by any Borrower may nevertheless be
considered Eligible Inventory if:

 

(i) as to locations which are leased by a Borrower, Agent shall have received a
Collateral Access Agreement from the owner and lessor of such location, duly
authorized, executed and delivered by such owner and lessor, or if Agent shall
not have received such Collateral Access Agreement (or Agent shall determine to
accept a Collateral Access Agreement that does not include all required
provisions or provisions in the form otherwise required by Agent), Agent may, at
its option, nevertheless consider Inventory at such location to be Eligible

 

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Inventory to the extent Agent shall have established such Reserves in respect of
amounts at any time payable by such Borrower to the owner and lessor thereof as
Agent shall determine;

 

(ii) as to locations owned and operated by a third person with the exception of
a number of locations used by UK Borrowers and identified to Agent by UK
Borrowers with respect to Eligible Inventory having a Value of up to the
Sterling Equivalent of £350,000, Agent shall have received a Collateral Access
Agreement from such owner and operator with respect to such location, duly
authorized, executed and delivered by such owner and operator or if Agent shall
not have received such Collateral Access Agreement (or Agent shall determine to
accept a Collateral Access Agreement that does not include all required
provisions or provisions in the form otherwise required by Agent), Agent may, at
its option, nevertheless consider Inventory at such location to be Eligible
Inventory to the extent Agent shall have established such Reserves in respect of
amounts at any time payable by such Borrower to the owner and operator thereof
as Agent shall determine, and in addition, if required by Agent with respect to
any such location in the United States, if Agent shall have received: (A) UCC
financing statements (or the equivalent) between the owner and operator, as
consignee or bailee and such Borrower, as consignor or bailor, in form and
substance satisfactory to Agent, which are duly assigned to Agent and (B) a
written notice to any lender to the owner and operator of the first priority
security interest in such Inventory of Agent and

 

(iii) in the case of Inventory (A) of a US Borrower outside the United States of
America which is in transit to either the premises of a Customs Broker in the
United States or premises of a US Borrower in the United States which are either
owned and controlled by a US Borrower or leased by a US Borrower, or of a US
Borrower which is in transit in the ordinary course of business of a US Borrower
directly to a customer of such US Borrower in the United States of America, or
(B) of a UK Borrower outside the United Kingdom which is in transit to either
the premises of a Customs Broker in the United Kingdom or premises of a UK
Borrower in the United Kingdom which are either owned and controlled by a UK
Borrower or leased by a UK Borrower, or is in transit in the ordinary course of
the business of a UK Borrower directly to a customer of such UK Borrower (but in
either case only if Agent has received a Collateral Access Agreement duly
authorized, executed and delivered by such Customs Broker or the owner and
lessor of such leased premises, as the case may be), provided, that, (1) Agent
has a first priority perfected security interest in and control and possession
of all originals of documents of title with respect to such Inventory, (2) Agent
has received (x) a Collateral Access Agreement, duly authorized, executed and
delivered by the Customs Broker handling the shipping and delivery of such
Inventory, (y) a copy of the certificate of marine cargo insurance in connection
therewith in which it has been named as an additional insured and loss payee in
a manner acceptable to Agent and (z) a copy of the invoice and manifest with
respect thereto, (3) such Inventory is not the subject to any Letter of Credit
Accommodation, and (4) the aggregate principal amount of all Loans outstanding
at any time to US Borrowers collectively, based upon such Inventory in transit
to any such premises, shall not exceed US$1,000,000 and the aggregate principal
amount of all Loans outstanding at any time to UK Borrowers collectively, based
upon such Inventory in transit to any such premises shall not exceed the
Sterling Equivalent of £2,500,000.

 

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(f) Inventory subject to a security interest or lien in favor of any Person
other than Agent except those permitted in this Agreement (but without limiting
the right of Agent to establish any Reserves with respect to amounts secured by
such security interest or lien in favor of any Person even if permitted herein);

 

(g) bill and hold goods, or unserviceable or obsolete Inventory;

 

(h) Inventory which is not subject to the first priority, valid and perfected
security interest of Agent;

 

(i) returned, damaged and/or defective Inventory;

 

(j) Inventory purchased or sold on consignment;

 

(k) Inventory of any US Borrower located outside the United States of America,
which is not within the exception set forth in clause (e)(iii) above;

 

(l) Inventory of any UK Borrower located outside the United Kingdom which is not
within the exception set forth in clause (e)(iii) above.

 

The criteria for Eligible Inventory set forth above may only be changed and any
new criteria for Eligible Inventory may only be established by Agent in good
faith based on either: (1) an event, condition or other circumstance arising
after the date hereof, or (2) an event, condition or other circumstance existing
on the date hereof to the extent Agent has no written notice thereof from a
Borrower prior to the date hereof, in either case under the immediately
preceding clauses (1) or (2) which adversely affects or could reasonably be
expected to adversely affect the Inventory in the good faith determination of
Agent. Any Inventory which is not Eligible Inventory shall nevertheless be part
of the Collateral.

 

1.41 “Eligible Transferee” shall mean (a) any Lender; (b) the parent company of
any Lender and/or any Affiliate of such Lender which is at least fifty (50%)
percent owned by such Lender or its parent company; (c) any Person that is
engaged in the business of making, purchasing, holding or otherwise investing in
bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or with respect to any
Lender that is a fund which invests in bank loans and similar extensions of
credit, any other fund that invests in bank loans and similar extensions of
credit and is managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor (each, a “Related Fund”); and (d) any other
commercial bank, financial institution or “accredited investor” (as defined in
Regulation D under the Securities Act of 1933) approved by Agent, provided,
that, (i) neither any Borrower nor any Guarantor or any Affiliate of any
Borrower or Guarantor shall qualify as an Eligible Transferee and (ii) no Person
to whom any Indebtedness is owed which is in any way subordinated in right of
payment to any other Indebtedness of any Borrower or Guarantor shall qualify as
an Eligible Transferee, except as Agent may otherwise specifically agree.

 

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1.42 “Enforcement Action” shall mean the exercise by Agent in good faith of any
of its material enforcement rights and remedies hereunder or under the other
Financing Agreements, applicable law or otherwise at any time upon the
occurrence and during the continuance of an Event of Default (including, the
demand for the immediate payment of all of the Obligations, the solicitation of
bids from third parties to conduct the liquidation of the Collateral, the
engagement or retention of sales brokers, marketing agents, investment bankers,
accountants, appraisers, auctioneers or other third parties for the purposes of
valuing, marketing, promoting and selling the Collateral, the commencement of
any action to foreclose on the security interests or Liens of Agent in all or
any material portion of the Collateral, notification of Account Debtors to make
payments to Agent, any action to take possession of all or any material portion
of the Collateral or commencement of any legal proceedings or actions against or
with respect to all or any portion of the Collateral).

 

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

 

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

 

1.45 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
in effect from time to time, together with all rules and regulations thereunder
or related thereto.

 

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

 

1.47 “ERISA Event” shall mean the occurrence of any of the following: (a) any
“reportable event”, as defined in Section 4043(c) of ERISA or the regulations
issued thereunder, with respect to a Plan for which the Pension Benefit Guaranty
Corporation notice requirement

 

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has not been waived; (b) the adoption of any amendment to a Plan that would
require the provision of security pursuant to Section 401(a)(29) of the Code or
Section 307 of ERISA; (c) the existence with respect to any Plan of an
“accumulated funding deficiency” (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (d) the filing pursuant to Section
412 of the Code or Section 303(d) of ERISA of an application for a waiver of the
minimum funding standard with respect to any Plan; (e) the occurrence of a
non-exempt “prohibited transaction” (within the meaning of Section 4975 of the
Code) or with respect to which any Borrower or Guarantor or any of its or their
respective Subsidiaries could be reasonably expected to have liability in excess
of US$250,000; (f) a complete or partial withdrawal by any Borrower or Guarantor
or any ERISA Affiliate from a Multiemployer Plan or a cessation of operations
which is treated as such a withdrawal or notification that a Multiemployer Plan
is in reorganization; (g) the filing of a notice of intent to terminate a Plan
(other than a Multiemployer Plan), the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the Pension Benefit Guaranty Corporation to terminate a Plan; or
(h) the appointment by the Pension Benefit Guaranty Corporation of a trustee to
administer any Plan.

 

1.48 “Euro” shall mean the single currency of those member states of the
European Union participating in the European economic and monetary union, and
which from time to time adopt a single, shared currency, pursuant to the Treaty
on European Union, being the Treaty of Rome of March 25, 1957, as amended by the
Single European Act 1986 and the Maastricht Treaty (which was signed at
Maastricht on February 7,1992, and came into force on November 1, 1993), as
amended from time to time.

 

1.49 “Euro Equivalent” shall mean at any time (a) as to any amount denominated
in Euros, the amount thereof and (b) as to any amount denominated in US Dollars
or any other currency, the equivalent amount in Euros calculated by Agent at
such time using the Currency Exchange Convention in effect on the Business Day
of determination.

 

1.50 “Euro Revolving Loans” shall mean any Revolving Loan or portion thereof
denominated in Euros and on which interest is payable based on the UK Euro Rate
in accordance with the terms hereof.

 

1.51 “Eurodollar Rate” shall mean with respect to a Eurodollar Rate Loan, the
interest rate per annum equal to the arithmetic average of the rates of interest
per annum (rounded upwards, if necessary, to the next one-sixteenth (1/16) of
one (1%) percent) at which Reference Bank is offered deposits of United States
dollars in the London interbank market (or other Eurodollar Rate market selected
by a Borrower or Administrative Borrower on behalf of such Borrower and approved
by Agent) on or about 9:00 a.m. (New York time) two (2) Business Days prior to
the first business day of each month for a period of approximately one (1)
month’s duration in accordance with customary practice in the applicable
Eurodollar Rate market.

 

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

 

1.53 “Event of Default” shall mean the occurrence or existence of any event or
condition described in Section 10.1 hereof.

 

1.54 “Excess Availability” shall mean, as to UK Borrowers (collectively) or each
US Borrower, as the case may be, the US Dollar Equivalent of the amount, as
determined by Agent, calculated at any date, equal to: (a) the lesser of: (i)
the Borrowing Base of UK Borrowers or such Borrower and (ii) the Revolving Loan
Limit of UK Borrowers or such Borrower (in each case under clauses (i) and (ii)
after giving effect to any Reserves attributable to UK Borrowers or such
Borrower other than Reserves in respect of Letter of Credit Accommodations),
minus (b) the sum of: (i) the amount of all then outstanding and unpaid
Obligations of UK Borrowers or such Borrower (but not including for this purpose
outstanding Letter of Credit Accommodations for the account of UK Borrowers or
such Borrower, the then aggregate outstanding principal amount of the Term Loans
or the Obligations of UK Borrowers or such Borrower arising pursuant to any
guarantees in favor of Agent and Lenders of the Obligations of the other
Borrowers) plus (ii) the amount of Reserves then established in respect of
Letter of Credit Accommodations for the account of UK Borrowers or such
Borrower.

 

1.55 “Excess Closing Availability” shall mean, as to UK Borrowers (collectively)
or each US Borrower, as the case may be, the US Dollar Equivalent of the amount,
as determined by Agent, calculated at any date, equal to: (a) the lesser of: (i)
the Borrowing Base of UK Borrowers or such Borrower and (ii) the Revolving Loan
Limit of UK Borrowers or such Borrower (in each case under clauses (i) and (ii)
after giving effect to any Reserves attributable to UK Borrowers or such
Borrower other than Reserves in respect of Letter of Credit Accommodations),
minus (b) the sum of: (i) the amount of all then outstanding and unpaid
Obligations of UK Borrowers or such Borrower (but not including for this purpose
outstanding Letter of Credit Accommodations for the account of UK Borrowers or
such Borrower, the then aggregate outstanding principal amount of the Term Loans
or the Obligations of UK Borrowers or such Borrower arising pursuant to any
guarantees in favor of Agent and Lenders of the Obligations of the other
Borrowers) plus (ii) the amount of all Reserves then established in respect of
Letter of Credit Accommodations for the account of UK Borrowers or such
Borrower, plus (iii) the aggregate amount of all then outstanding and unpaid
trade payables and other obligations of UK Borrowers or such Borrower which are
outstanding more than sixty (60) days past due as of such time (other than trade
payables or other obligations being contested or disputed by UK Borrowers or
such Borrower in good faith or intercompany payables of any Borrower), plus (iv)
without duplication, the amount of checks issued by UK Borrowers or such
Borrower to pay trade payables and other obligations which are more than sixty
(60) days past due as of such time (other than trade payables or other
obligations being contested or disputed by UK Borrowers or such Borrower in good
faith), but not yet sent.

 

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

 

1.57 “Exchange Rate” shall mean the prevailing spot rate of exchange of such
bank as Agent may select for the purpose of conversion of one currency to
another, at or around 11:00 a.m. New York City time, on the date on which any
such conversion of currency is to be made under this Agreement or the amount of
assets in any one currency are to be determined in another currency under this
Agreement.

 

1.58 “Existing Lenders” shall mean the lenders to Borrowers listed on Schedule
1.58 hereto (and including SunTrust Bank in its capacity as agent acting for
such lenders) and their respective predecessors, successors and assigns.

 

1.59 “Existing Letters of Credit” shall mean, collectively, the letters of
credit issued for the account of a Borrower or Guarantor or for which such
Borrower or Guarantor is otherwise liable listed on Schedule 1.59 hereto, as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.

 

1.60 “Fee Letter” shall mean the letter agreement, dated of even date herewith,
by and among certain Borrowers and Agent, setting forth certain fees payable by
certain Borrowers to Agent for the benefit of itself and Lenders, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.

 

1.61 “Financing Agreements” shall mean, collectively, this Agreement and all
notes, guarantees, security agreements, deposit account control agreements,
investment property control agreements, intercreditor agreements and all other
agreements, documents and instruments now or at any time hereafter executed
and/or delivered by any Borrower or Obligor in connection with this Agreement.

 

1.62 “Funded Debt” shall mean: (a) as to Holding and its Subsidiaries, or (b) UK
Borrowers and UK Guarantors (collectively), as the case may be, on a
consolidated basis, liabilities for borrowed money, including, without
limitation, undrawn or unreimbursed Letter of Credit Accommodations (to the
extent such Letters of Credit Accommodations are not specifically secured one
hundred percent (100%) by cash or cash guaranties) and Capital Lease
obligations.

 

1.63 “GAAP” shall mean: (a) with respect to US Borrowers and US Guarantors,
generally accepted accounting principles in the United States of America as in
effect from time to time as set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public
Accountants and the statements and pronouncements of the Financial Accounting
Standards Board and (b) with respect to the UK Borrowers and UK Guarantors,
generally accepted accounting principles in the United Kingdom as in effect from
time to time; in each case which are applicable to the circumstances as of the
date of

 

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determination consistently applied, except that for purposes of Sections 9.17,
9.18, 9.19, 9.20 and 9.21 hereof, GAAP shall be determined on the basis of such
principles in effect on the date hereof and consistent (including with respect
to the treatment of pension and other retirement benefit plans of the UK
Borrowers and UK Guarantors) with those used in the preparation of the most
recent audited financial statements delivered to Agent prior to the date hereof.

 

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

 

1.65 “Guarantors” shall mean, collectively, the UK Guarantors and the US
Guarantors (together with their respective successors and assigns); each
sometimes being referred to herein individually as a “Guarantor”.

 

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

 

1.67 “Holding” shall have the meaning set forth in the preamble.

 

1.68 “Holding Note” shall mean the promissory note, dated as of the date hereof,
by Holding, as maker, in favor of International, as payee, in the original
principal amount of the US Dollar Equivalent of $4,500,000 and the Sterling
Equivalent of £10,000,000, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.

 

1.69 “Hyde Property” means all that leasehold property known as Broadway,
Broadway Industrial Estate, Hyde, Greater Manchester SK14 5BE, England as the
same is registered at Land Registry with title number absolute under title
number GM12514.

 

1.70 “Indebtedness” shall mean, with respect to any Person, any liability of
such Person, whether or not contingent, (a) in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof) or evidenced by bonds, notes, debentures or
similar instruments; (b) representing the balance deferred and unpaid of the
purchase price of any property or services (except any such balance that
constitutes an account payable to a trade creditor (whether or not an Affiliate)
created, incurred, assumed or

 

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guaranteed by such Person in the ordinary course of business of such Person in
connection with obtaining goods, materials or services that is not overdue by
more than ninety (90) days, unless the trade payable is being contested in good
faith); (c) representing all obligations as lessee under leases which have been,
or should be, in accordance with GAAP recorded as Capital Leases; (d)
representing any contractual obligation, contingent or otherwise, of such Person
to pay or be liable for the payment of any indebtedness described in this
definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge thereof,
or to maintain solvency, assets, level of income, or other financial condition;
(e) representing all obligations with respect to redeemable stock and redemption
or repurchase obligations under any Capital Stock or other equity securities
issued by such Person (excluding redemption or repurchase obligations that may
be triggered solely at the option of such Person); (f) representing all
reimbursement obligations and other liabilities of such Person with respect to
surety bonds (whether bid, performance or otherwise), letters of credit,
banker’s acceptances, drafts or similar documents or instruments issued for such
Person’s account; (g) representing all indebtedness of such Person in respect of
indebtedness of another Person for borrowed money or indebtedness of another
Person otherwise described in this definition which is secured by any consensual
lien, security interest, collateral assignment, conditional sale, mortgage, deed
of trust, or other encumbrance on any asset of such Person, whether or not such
obligations, liabilities or indebtedness are assumed by or are a personal
liability of such Person, all as of such time; (h) representing all obligations,
liabilities and indebtedness of such Person (marked to market) arising under
swap agreements, cap agreements and collar agreements and other agreements or
arrangements designed to protect such person against fluctuations in interest
rates or currency or commodity values; and (i) representing all obligations owed
by such Person under License Agreements with respect to non-refundable, advance
or minimum guarantee royalty payments.

 

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

 

1.72 “Intellectual Property” shall mean, as to each Borrower and Guarantor, such
Borrower’s and Guarantor’s now owned and hereafter arising or acquired: patents,
patent rights, patent applications, copyrights, works which are the subject
matter of copyrights, copyright registrations, trademarks, trade names, trade
styles, trademark and service mark applications, and licenses and rights to use
any of the foregoing; all extensions, renewals, reissues, divisions,
continuations, and continuations-in-part of any of the foregoing; all rights to
sue for past, present and future infringement of any of the foregoing;
inventions, trade secrets, formulae, processes, compounds, drawings, designs,
blueprints, surveys, reports, manuals, and operating standards; goodwill
(including any goodwill associated with any trademark or the license of any
trademark);

 

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customer and other lists in whatever form maintained; trade secret rights,
copyright rights, rights in works of authorship, domain names and domain name
registration; software and contract rights relating to computer software
programs, in whatever form created or maintained.

 

1.73 “Interest Expense” shall mean, for any period, as to any Person, as
determined in accordance with GAAP, the total interest expense of such Person,
whether paid or accrued during such period (including the interest component of
Capital Leases for such period), including, without limitation, discounts in
connection with the sale of any Accounts and bank fees, commissions, discounts
and other fees and charges owed with respect to letters of credit, banker’s
acceptances or similar instruments, but excluding interest paid in property
other than cash and any other interest expense not payable in cash; provided,
that, Interest Expense shall not include interest paid in kind (as opposed to in
cash).

 

1.74 “Interest Rate” shall mean:

 

(a) Subject to clause (b) of this definition below:

 

(i) as to US Dollar Prime Rate Revolving Loans, a rate equal to the US Prime
Rate;

 

(ii) as to US Dollar Eurodollar Rate Revolving Loans, a rate equal to two and
one-quarter (2  1/4%) percent per annum in excess of the Adjusted Eurodollar
Rate (based on the Eurodollar Rate as then in effect);

 

(iii) as to UK Term Loan B, a rate equal to nine (9%) percent per annum;

 

(iv) as to UK Term Loan A, a rate equal to two and one-quarter (2  1/4%) percent
per annum in excess of the UK Sterling Rate;

 

(v) as to UK Sterling Revolving Loans, a rate of two and one-quarter (2  1/4%)
percent per annum in excess of the UK Sterling Rate;

 

(vi) as to Euro Revolving Loans, a rate equal to two and one-quarter (2  1/4%)
percent per annum in excess of the UK Euro Rate; and

 

(vii) as to US Dollar UK Revolving Loans, a rate equal to two and one-quarter (2
 1/4%) percent per annum in excess of the UK Dollar Rate.

 

(b) Notwithstanding anything to the contrary contained in clause (a) of this
definition, the Interest Rate shall mean the per annum rates set forth above
plus (in each case) two (2%) percent per annum, at Agent’s option, without
notice, (i) either (A) for the period on and after the date of termination or
non-renewal hereof until such time as all Obligations are paid and satisfied in
full in immediately available funds, or (B) for the period from and after the
date

 

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of the occurrence of any Event of Default, and for so long as such Event of
Default is continuing as determined by Agent in good faith and (ii) on the
Revolving Loans to UK Borrowers (collectively) or each US Borrower at any time
outstanding in excess of the Borrowing Base of UK Borrowers or such US Borrower
or the Revolving Loan Limit of UK Borrowers or such US Borrower (whether or not
such excess(es) arise or are made with or without Agent’s or any Lender’s
knowledge or consent and whether made before or after an Event of Default).

 

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

 

1.76 “Inventory Loan Limit” shall mean, (a) as to each US Borrower, at any time,
the amount equal to the US Dollar Equivalent of US$3,000,000 minus the
then-outstanding principal amount of Revolving Loans to the other US Borrowers
(and including Letter of Credit Accommodations issued for the account of US
Borrowers to the extent provided in the definition of the term Borrowing Base)
based on Eligible Inventory and (b) as to all UK Borrowers, at any time, the
amount equal to the Sterling Equivalent of £10,000,000.

 

1.77 “Investment Property Control Agreement” shall mean an agreement in writing,
in form and substance satisfactory to Agent, by and among Agent, any Borrower or
Guarantor (as the case may be) and any securities intermediary, commodity
intermediary or other person who has custody, control or possession of any
investment property of such Borrower or Guarantor acknowledging that such
securities intermediary, commodity intermediary or other person has custody,
control or possession of such investment property on behalf of Agent, that it
will comply with entitlement orders originated by Agent with respect to such
investment property, or other instructions of Agent, or (as the case may be)
apply any value distributed on account of any commodity contract as directed by
Agent, in each case, without the further consent of such Borrower or Guarantor
and including such other terms and conditions as Agent may reasonably require.

 

1.78 “Lenders” shall mean the lenders that are signatories hereto as Lenders and
other persons made a party to this Agreement as a Lender in accordance with
Section 13.6 hereof, and their respective successors and assigns; each sometimes
being referred to herein individually as a “Lender”.

 

1.79 “Letter of Credit Accommodations” shall mean, collectively, (a) the letters
of credit, merchandise purchase or other guaranties which are from time to time
either issued or opened by Agent or any Lender for the account of any Borrower
or Obligor pursuant to this Agreement, or (b) with respect to which Agent or
Lenders have agreed pursuant to this Agreement to indemnify the issuer or
guaranteed to the issuer the performance by any Borrower or Obligor of its

 

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obligations to such issuer; sometimes being referred to herein individually as
“Letter of Credit Accommodation”.

 

1.80 “Leverage Ratio” shall mean as at the end of each fiscal quarter
(calculated for the twelve (12) month period ending as of each such fiscal
quarter), the ratio of (a) Funded Debt to (b) EBITDA.

 

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

 

1.82 “Loans” shall mean, collectively, the Revolving Loans and the Term Loans.

 

1.83 “Material Adverse Effect” shall mean a material adverse effect on (a) the
financial condition, business, performance or operations of any Borrower or of
Borrowers and Guarantors (taken as a whole); (b) the legality, validity or
enforceability of any material provision this Agreement or any material
provision of the other Financing Agreements; (c) the legality, validity,
enforceability, perfection or priority of the security interests and liens of
Agent upon any Collateral consisting of assets and properties of US Borrowers
and Guarantors having an aggregate value in excess of the US Dollar Equivalent
of US$200,000 or Collateral consisting of assets and properties of UK Borrowers
and UK Guarantors having an aggregate value in excess of the Sterling Equivalent
of £500,000; (d) any Collateral consisting of assets and properties of US
Borrowers and US Guarantors having an aggregate value in excess of the US Dollar
Equivalent of US$200,000 or Collateral consisting of assets and properties of UK
Borrowers and UK Guarantors having an aggregate value in excess of the Sterling
Equivalent of £500,000; (e) the ability of Borrowers and Guarantors (taken as a
whole) to repay the Obligations or of any Borrower or Guarantor to perform its
obligations under this Agreement or any of the other Financing Agreements as and
when to be performed; or (f) the ability of Agent or any Lender to enforce the
Obligations or realize upon any Collateral consisting of assets and properties
of US Borrowers and US Guarantors having an aggregate value in excess of the US
Dollar Equivalent of US$200,000 or Collateral consisting of assets and
properties of UK Borrowers and UK Guarantors having an aggregate value in excess
of the Sterling Equivalent of £500,000 or otherwise with respect to the rights
and remedies of Agent and Lenders under this Agreement or any of the other
Financing Agreements.

 

1.84 “Material Contract” shall mean any contract or other agreement (other than
the Financing Agreements), whether written or oral, to which any Borrower or
Guarantor is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto would have a Material Adverse Effect.

 

1.85 “MLA Cost” means:

 

(a) in the case of UK Lender which is a bank regulated in the United Kingdom,
the cost (expressed as a rate per annum) of such UK Lender of complying with the
requirements of

 

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the Bank of England and/or the United Kingdom Financial Services Authority
and/or any other applicable regulatory authority in respect of monetary control,
liquidity or otherwise; and

 

(b) in the case of a UK Lender which is not a bank regulated in the United
Kingdom, the cost of any person from which such UK Lender obtains funding for
its participation in any UK Sterling Revolving Loans of complying with the
requirements of the Bank of England and/or the United Kingdom Financial Services
Authority and/or any other applicable regulatory authority in respect of
monetary control, liquidity or otherwise, in each case as certified by the
relevant UK Lender to the Agent from time to time,

 

in each case as certified by the relevant UK Lender to Agent from time to time.

 

1.86 “Mortgage” shall mean the mortgage contained in the Debenture with respect
to the Hyde Property (as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced).

 

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

 

1.88 “Net Amount of Eligible Accounts” shall mean, as to any Borrower, the gross
amount of the Eligible Accounts of such Borrower less (a) sales, excise or
similar taxes included in the amount thereof and (b) returns, discounts, claims,
credits and allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed with respect thereto.

 

1.89 “Net Cash Proceeds” shall mean, with respect to any sale or other
disposition of assets contemplated by Section 2.3(b) and permitted under Section
9.7(b), the aggregate amount of cash received from time to time by a Borrower or
Guarantor in connection with such sale or other disposition after deducting
therefrom only (a) legal fees, finder’s fees and other similar fees and other
commissions and (b) the amount of income taxes reasonably estimated to be
actually payable by such Borrower or Guarantor (or the direct or indirect equity
holders of such Borrower or Guarantor) in connection with or as a result of such
sale or other disposition.

 

1.90 “Net Recovery Percentage” shall mean the fraction, expressed as a
percentage, (a) the numerator of which is the amount equal to the amount of the
recovery in respect of the Inventory at such time a “net orderly liquidation
value” basis as set forth in the most recent acceptable appraisal of Inventory
received by Agent in accordance with Section 7.3, net of operating expenses,
liquidation expenses and commissions, and (b) the denominator of which is the
applicable original cost of the aggregate amount of the Inventory subject to
such appraisal.

 

1.91 “Non-Credit Party” shall mean (together with its successors and assigns) a
Subsidiary of Holding that is neither a Borrower nor a Guarantor; hereinafter
sometimes referred to collectively as the “Non-Credit Parties”.

 

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1.92 “Obligations” shall mean any and all Loans, Letter of Credit Accommodations
and all other obligations, liabilities and indebtedness of every kind, nature
and description owing by any or all of Borrowers to Agent or any Lender and/or
any of their Affiliates, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, arising under this Agreement or any of the other Financing
Agreements, whether now existing or hereafter arising, whether arising before,
during or after the initial or any renewal term of this Agreement or after the
commencement of any case with respect to such Borrower under the United States
Bankruptcy Code, any insolvency or bankruptcy laws of the United Kingdom
(including the Insolvency Act 1986) or any similar statute (including the
payment of interest and other amounts which would accrue and become due but for
the commencement of such case, whether or not such amounts are allowed or
allowable in whole or in part in such case), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, or secured or unsecured.

 

1.93 “Obligor” shall mean any guarantor, endorser, acceptor, surety or other
person (other than Borrowers) liable on or with respect to the Obligations or
who is the owner of any property which is security for the Obligations
(including, without limitation, Guarantors).

 

1.94 “Operating Leases” shall mean, as applied to any Person, any lease of (or
any agreement conveying the right to use) any property (whether real, personal
or mixed) by such Person as lessee, excluding any Capital Lease.

 

1.95 “Other Taxes” shall mean any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution or delivery by any
Borrower or Guarantor, or registration of, or otherwise with respect to, this
Agreement or any of the other Financing Agreements.

 

1.96 “Parent” shall mean Sun Catalina Holdings LLC, a Delaware limited liability
company, and its successors and assigns.

 

1.97 “Participant” shall mean any financial institution that acquires and holds
a participation in the interest of any Lender in any of the Loans and Letter of
Credit Accommodations in conformity with the provisions of Section 13.6 of this
Agreement governing participations.

 

1.98 “Permitted Holders” shall mean the persons listed on Schedule 1.98 hereto
and their respective successors and assigns (including officers, directors and
employees of Borrowers and Guarantors that replace officers, directors and
employees of Borrowers and Guarantors that held Capital Stock of Parent on the
date hereof).

 

1.99 “Person” or “person” shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S
status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint

 

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stock corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.

 

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

 

1.101 “Priority Payables” shall mean, as to any Borrower at any time, (a) the
full amount of the liabilities of such Borrower at such time which (i) have a
trust imposed to provide for payment or a security interest, pledge, lien or
charge ranking or capable of ranking senior to or pari passu with security
interests, liens or charges securing the Obligations on any of the Eligible
Accounts or Eligible Inventory of such Borrower under Federal, State, county,
district, municipal or local law in the United Kingdom or (ii) have a right
imposed to provide for payment ranking or capable of ranking senior to or pari
passu with the Obligations under local or national law, regulation or directive,
including, but not limited to, claims for unremitted and/or accelerated rents,
taxes (including claims for debts due to Inland Revenue or Customs and Excise),
wages, withholding taxes, VAT and other amounts payable to an insolvency
administrator, employee withholdings or deductions and vacation pay, workers’
compensation obligations, government royalties or pension fund obligations in
each case to the extent such trust, or security interest, lien or charge has
been or may be imposed and (b) the amount equal to sixty (60%) percent
multiplied by the aggregate Value of the Eligible Inventory of such Borrower
which Agent considers is or may be subject to retention of title by a supplier
or a right of a supplier to recover possession thereof, where such supplier’s
right has priority over the security interests, liens or charges securing the
Obligations, including, without limitation, Eligible Inventory subject to a
right of a supplier to repossess goods pursuant to any applicable laws granting
revendication or similar rights to unpaid suppliers or any similar laws of the
United Kingdom.

 

1.102 “Pro Rata Share” shall mean (a) with respect to matters related to the US
Revolving Loan Commitment of a US Revolving Lender, the fraction (expressed as a
percentage) obtained by dividing (i) such US Revolving Lender’s US Revolving
Loan Commitment by (ii) the aggregate US Revolving Loan Commitments of all US
Revolving Lenders; provided, that, if the US Revolving Loan Commitments have
been terminated, the numerator of such fraction shall be the outstanding amount
of such US Revolving Lender’s Revolving Loans and interest in the Letter of
Credit Accommodations and the denominator of such fraction shall be the
aggregate amount of all US Revolving Lenders’ outstanding Revolving Loans and
interest in Letter of Credit Accommodations; (b) with respect to matters
relating to the UK Revolving Commitment of a UK Revolving Lender, the fraction
(expressed as a percentage) obtained by dividing (i) such UK Revolving Lender’s
UK Revolving Commitment by (ii) the aggregate UK Revolving Commitments of all UK
Revolving Lenders; provided, that, if the UK Revolving Commitments have been
terminated, the numerator of such fraction shall be the outstanding amount of
such UK Revolving Lender’s Revolving Loans and interest in Letter of Credit
Accommodations and the

 

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denominator of such fraction shall be the aggregate amount of all UK Revolving
Lenders’ outstanding Revolving Loans and interest in Letter of Credit
Accommodations; (c) with respect to matters relating to the UK Term Loan A
Commitment of a UK Term Loan A Lender (including, without limitation, the making
or repayment of UK Term Loan A), the fraction (expressed as a percentage)
obtained by dividing (i) such UK Term Loan A Lender’s UK Term Loan A Commitment
by (ii) the aggregate UK Term Loan A Commitments of all UK Term Loan A Lenders;
provided, that, if the UK Term Loan A Commitments have been terminated, the
numerator of such fraction shall be the outstanding amount of the UK Term Loan A
owing to such UK Term Loan A Lender and the denominator of such fraction shall
be the aggregate amount outstanding in respect of UK Term Loan A; (d) with
respect to matters relating to the UK Term Loan B Commitment of a UK Term Loan B
Lender (including, without limitation, the making or repayment of UK Term Loan
B), the fraction (expressed as a percentage) obtained by dividing (i) such UK
Term Loan B Lender’s UK Term Loan B Commitment by (ii) the aggregate UK Term
Loan B Commitments of all UK Term Loan B Lenders; provided, that, if the UK Term
Loan B Commitments have been terminated, the numerator of such fraction shall be
the outstanding amount of the UK Term Loan B owing to such UK Term Loan B Lender
and the denominator of such fraction shall be the aggregate amount outstanding
in respect of the UK Term Loan B and (e) with respect to all other matters, the
fraction (expressed as a percentage) obtained by dividing (i) such Lender’s
Commitment by (ii) the aggregate Commitments of all Lenders; provided, that, if
the Commitments have been terminated, the numerator of such fraction shall be
the outstanding amount of such Lender’s Loans and interest in the Letter of
Credit Accommodations and the denominator of such fraction shall be the
aggregate amount of all outstanding Loans and Letter of Credit Accommodations,
in each case as the same may be adjusted from time to time in accordance with
the provisions of Section 13.6.

 

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

 

1.104 “Real Property” shall mean all now owned and hereafter acquired real
property of each Borrower and Guarantor, including leasehold interests, together
with all buildings, structures, and other improvements located thereon and all
licenses, easements and appurtenances relating thereto, wherever located,
including the Hyde Property and any other real property and related assets more
particularly described in the Mortgage.

 

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

 

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

 

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

 

1.107 “Reference Bank” shall mean Wachovia Bank, National Association, or such
other bank as Agent may from time to time designate.

 

1.108 “Register” shall have the meaning set forth in Section 13.6 hereof.

 

1.109 “Renewal Date” shall have the meaning set forth in Section 13.1 hereof.

 

1.110 “Required Lenders” shall mean, at any time, those Lenders whose Pro Rata
Shares aggregate at least fifty-one (51%) percent of the aggregate of the
Commitments of all Lenders or, if the Commitments shall have been terminated,
Lenders to whom at least fifty-one (51%) percent of the then outstanding
Obligations are owing.

 

1.111 “Required Revolving Lenders” shall mean, at any time, those Lenders whose
Pro Rata Shares aggregate at least fifty-one (51%) percent of the aggregate of
the Commitments of all Lenders to make Revolving Loans, or if the Commitments to
make Revolving Loans shall have been terminated, Revolving Lenders to whom at
least fifty-one (51%) percent of the then outstanding Revolving Loans are owing.

 

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1.112 “Reserves” shall mean as of any date of determination, such amounts as
Agent may from time to time establish and revise in good faith reducing the
amount of Revolving Loans and Letter of Credit Accommodations which would
otherwise be available to any Borrower under the lending formula(s) provided for
herein: (a) to reflect events, conditions, contingencies or risks which, as
determined by Agent in good faith, adversely affect, or would have a reasonable
likelihood of adversely affecting, either (i) the Collateral or any other
property which is security for the Obligations or its value or (ii) the assets,
business or prospects of any Borrower or Obligor or (iii) the security interests
and other rights of Agent or any Lender in the Collateral (including the
enforceability, perfection and priority thereof) or (b) to reflect Agent’s good
faith belief that any collateral report or financial information furnished by or
on behalf of any Borrower or Obligor to Agent is or may have been incomplete,
inaccurate or misleading in any material respect or (c) to reflect outstanding
Letter of Credit Accommodations as provided in Section 2.2 hereof or (d) in
respect of any state of facts which Agent determines in good faith constitutes a
Default or an Event of Default or (e) to reflect the amount of the Priority
Payables; provided, however, that Agent shall not establish a Reserve to reflect
the amount of Priority Payables during the period from the date hereof through
and including June 30, 2004, so long as EBITDA of Holding and its Subsidiaries
shall be at all times during such period greater than zero (0) and; provided,
further, that prior to the occurrence of an Event of Default, Agent shall not
establish a Reserve with respect to Inventory of UK Borrowers subject to
retention of title by a supplier or a right of a supplier to recover possession
thereof, to the extent that such Priority Payables do not exceed the Sterling
Equivalent of £1,700,000 in the aggregate, or (f) to reflect Agent’s estimate of
the amount of any Reserve necessary to reflect changes in applicable currency
exchange rates or currency exchange markets or (g) to reflect the amount of
liability (contingent or otherwise) incurred by Agent in respect of its
agreement to guarantee or in effect guarantee any Indebtedness of Borrowers and
Guarantors to any Affiliate of Congress which is permitted under Section 9.9(g).
Without limiting the generality of the foregoing, Reserves may be established to
reflect that dilution with respect to the Accounts (based on the ratio of the
aggregate amount of non-cash reductions in Accounts for any period to the
aggregate dollar amount of the sales of Borrowers for such period) as calculated
by Agent for any period is or is reasonably anticipated to be greater than five
(5%) percent or to reflect that the liquidation value of the Equipment or fair
market value of any of the Real Property as set forth in the most recent
acceptable appraisals received by Agent with respect thereto has declined so
that the then outstanding principal amount of the Term Loans is greater than
such percentage with respect to such appraised values as Agent used in
establishing the original principal amount of the Term Loans multiplied by such
appraised values. To the extent Agent may revise the lending formulas used to
determine the Borrowing Base or establish new criteria or revise existing
criteria for Eligible Accounts or Eligible Inventory so as to address any
circumstances, condition, event or contingency in a manner satisfactory to
Agent, Agent shall not establish a Reserve for the same purpose. The amount of
any Reserve established by Agent shall have a reasonable relationship to the
event, condition or other matter which is the basis for such reserve as
determined by Agent in good faith. The term “Reserves” as used herein shall
include the Special Availability Reserve.

 

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1.113 “Revolving Lenders” shall mean, individually and collectively, each of the
US Revolving Lenders and the UK Revolving Lenders.

 

1.114 “Revolving Loan Limit” shall mean, (a) as to each US Borrower, at any
time, the amount equal to the US$6,000,000 minus the then outstanding principal
amount of the Revolving Loans and Letter of Credit Accommodations provided by US
Revolving Lenders to the other US Borrowers, and (b) as to UK Borrowers
(collectively), at any time, the amount equal to the Sterling Equivalent of
£22,000,000; in each case as such amounts may be amended from time to time with
the prior written consent of Agent, Lenders and Administrative Borrower.

 

1.115 “Revolving Loans” shall mean the loans now or hereafter made by or on
behalf of any Lender or by Agent for the account of any Lender on a revolving
basis pursuant to the Credit Facility (involving advances, repayments and
readvances) as set forth in Section 2.1 hereof.

 

1.116 “Ring US Accounts” shall mean the accounts in the name of Ring Limited
with Sun Trust Bank, Central Florida CIB - Florida Diversified, PO Box 620547,
Orlando, Florida 32862-0547 with account numbers 215252195233 and 215252195241.

 

1.117 “Senior Note” shall mean the 12% Senior Secured Subordinated Note due 2006
issued by Holding in the original principal amount of $3,400,348, as amended by
First Amendment to Note Agreement and Subordinated Note, dated on or about the
date hereof, by and between Holding and SunTrust Equity Funding, LLC, as
successor in interest to SunTrust Banks, Inc., as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.

 

1.118 “Senior Note Agreements” shall mean the Senior Note, the Senior Note
Purchase Agreement, and all agreements, documents and instruments at any time
executed and/or delivered in connection therewith, as all of the foregoing now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.

 

1.119 “Senior Note Purchase Agreement” shall mean the Note Purchase Agreement,
dated as of July 23, 2001 by and among Holding, certain of its affiliates and
the holder of the Senior Note, as amended by First Amendment to Note Agreement
and Subordinated Note, dated on or about the date hereof, by and between Holding
and Suntrust Equity Funding, LLC, as successor in interest to Suntrust Banks,
Inc., as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed or replaced.

 

1.120 “Special Availability Reserve” shall have the meaning set forth in Section
2.5 hereof.

 

1.121 “Subordination Agreement” shall have the meaning set forth in Section
9.9(g) hereof.

 

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

 

1.123 “Special Agent Advances” shall have the meaning set forth in Section 12.11
hereof.

 

1.124 “Sterling” and “£” shall mean lawful currency of the United Kingdom.

 

1.125 “Sterling Equivalent” shall mean at any time (a) as to any amount
denominated in Sterling, the amount thereof and (b) as to any amount denominated
in US Dollars or any other currency, the equivalent amount in Sterling
calculated by Agent at such time using the Currency Exchange Convention in
effect on the Business Day of determination.

 

1.126 “Subsidiary” or “subsidiary” shall mean, with respect to any Person, any
corporation, limited liability company, limited liability partnership or other
limited or general partnership, trust, association or other business entity of
which an aggregate of at least a majority of the outstanding Capital Stock or
other interests entitled to vote in the election of the board of directors of
such corporation (irrespective of whether, at the time, Capital Stock of any
other class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency), managers, trustees or other
controlling persons, or an equivalent controlling interest therein, of such
Person is, at the time, directly or indirectly, owned by such Person and/or one
or more subsidiaries of such Person. For the purposes of Section 9 hereof,
Catalina Lighting Canada, (1992) Inc. shall not be deemed a Subsidiary.

 

1.127 “Sun Capital” shall mean Sun Capital Partners Management, LLC, a Delaware
limited liability company, and its successors and assigns.

 

1.128 “Taxes” shall mean any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of any Lender, (a) such taxes (including income taxes,
franchise taxes or capital taxes) as are imposed on or measured by such Lender’s
net income or capital (or other taxes imposed in lieu thereof) by any
jurisdiction or political subdivision thereof and (b) all interest and penalties
imposed on such Lender with respect to the taxes described in clause (a) above.

 

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1.129 “Term Loan” shall mean any loan made pursuant to Section 2.3 hereof or any
other loan or advance made after the date hereof designated as a “Term Loan”.

 

1.130 “Triggering Event” shall mean one or more of the following events: (a) the
occurrence and continuance of an Event of Default under Section 10.1(a)(i)
hereof with respect to the Borrowers’ failure to pay any of the Obligations
arising pursuant to UK Term Loan B which remains uncured or unremedied for one
hundred twenty (120) days (including principal, interest, fees and expenses
attributable thereto); (b) the occurrence and continuance of an Event of Default
under Section 10.1(g) or 10.1(h) hereof; or (c) the occurrence of any other
Event of Default and the acceleration by Agent of the payment of all or a
material portion of the Obligations.

 

1.131 “UCC” shall mean the Uniform Commercial Code as in effect in the State of
Florida, and any successor statute, as in effect from time to time (except that
terms used herein which are defined in the Uniform Commercial Code as in effect
in the State of Florida on the date hereof shall continue to have the same
meaning notwithstanding any replacement or amendment of such statute except as
Agent may otherwise determine).

 

1.132 “UK Borrowers” shall have the meaning set forth in the preamble hereto.

 

1.133 “UK Dollar Rate” shall mean the sum of: (i) the thirty day LIBOR United
States Dollar rate quoted on the first Business Day of each month in the
Financial Times, London edition as conclusively determined by Agent or Burdale
(on behalf of Agent), or in the event, for any reason the Financial Times,
London edition ceases or fails to quote such rate, or its quote of such rate is
manifestly in error, a UK Lender’s cost of funds from whatever source it may
reasonably request plus (ii) the MLA Cost.

 

1.134 “UK Dormant Company” shall mean a company incorporated in England and
Wales which (i) does not trade (whether for its own account or for that of
another), (ii) does not carry out any transactions which would require it to
make entries into its accounting records in accordance with Section 221 of the
UK Companies Act 1985 and (iii) does not hold or own (whether legally or
beneficially) any material assets of property or owe or have outstanding any
material liabilities.

 

1.135 “UK Dormant Subsidiaries” shall mean the subsidiaries of CII identified in
Schedule 1.135.

 

1.136 “UK Euro Rate” shall mean the sum of: (i) the thirty day LIBOR euro rate
quoted on the first Business Day of each month in the Financial Times, London
edition as conclusively determined by Agent or Burdale (on behalf of Agent), or
in the event, for any reason the Financial Times, London edition ceases or fails
to quote such rate, or its quote of such rate is manifestly in error, a UK
Lender’s cost of funds from whatever source it may reasonably request plus (ii)
the MLA Cost.

 

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1.137 “UK Fixed Term Loans” shall mean any Term Loans (including Term Loan B) or
portion thereof made to a UK Borrower which are denominated in Sterling and on
which interest is payable at a fixed rate per annum.

 

1.138 “UK Guarantors” shall have the meaning set forth in the preamble hereto.

 

1.139 “UK Lender” shall mean, at any time, each Lender having a UK Revolving
Commitment, UK Term Loan A Commitment or UK Term Loan B Commitment or a Loan
made to any UK Borrower owing to it at such time; sometimes being referred to
herein collectively as “UK Lenders”.

 

1.140 “UK Qualifying Lender” means a UK Lender which is:

 

(a) beneficially entitled to the interest payable on an advance made under a
Financing Agreement by any person (including the UK Lender) who was a bank (as
defined in section 840A of the UK Taxes Act) at the time that the advance was
made, and which is within the charge to United Kingdom corporation tax as
respects that interest; or

 

(b) beneficially entitled to the interest payable on an advance made under a
Financing Agreement and is:

 

(i) a company resident in the United Kingdom for United Kingdom tax purposes;

 

(ii) a partnership each member of which is a company resident in the United
Kingdom for United Kingdom tax purposes; or

 

(iii) a company not so resident in the United Kingdom which carries on a trade
in the United Kingdom through a branch or agency and which brings the interest
into account in computing its chargeable profits for the purposes of section
11(2) of the UK Taxes Act; or

 

(c) a UK Treaty Lender.

 

1.141 “UK Revolving Commitment” shall mean, at any time, as to any UK Lender,
the principal amount set forth opposite such UK Lender’s name on Exhibit B
hereto designated as such UK Lender’s UK Revolving Commitment or on Schedule 1
to the Assignment and Acceptance Agreement pursuant to which such UK Lender
became a UK Lender hereunder in accordance with the provisions of Section 13.6
hereof, as the same may be adjusted from time to time in accordance with the
terms hereof; sometimes being collectively (as to all UK Lenders) referred to
herein as the “UK Revolving Commitments”.

 

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1.142 “UK Revolving Lender” shall mean, at any time, each UK Lender having a UK
Revolving Commitment or a Revolving Loan made to any UK Borrower owing to it at
such time; sometimes being referred to herein collectively as “UK Revolving
Lenders”.

 

1.143 “UK Sterling Rate” shall mean the sum of: (i) the thirty day LIBOR
sterling rate quoted on the first Business Day of each month in the Financial
Times, London edition as conclusively determined by Agent or Burdale (on behalf
of Agent), or in the event, for any reason the Financial Times, London edition
ceases or fails to quote such rate, or its quote of such rate is manifestly in
error, a UK Lender’s cost of funds from whatever source it may reasonably
request plus (ii) the MLA Cost.

 

1.144 “UK Sterling Revolving Loans” shall mean any Revolving Loans or portion
thereof which are denominated in Sterling and on which interest is payable based
on the UK Sterling Rate in accordance with the terms hereof.

 

1.145 “UK Sterling Term Loans” shall mean any Term Loans or portion thereof made
to a UK Borrower which are denominated in Sterling and on which interest is
payable based on the UK Sterling Rate in accordance with the terms hereof.

 

1.146 “UK Term Lenders” shall mean, individually and collectively, each of the
UK Term Loan A Lenders and UK Term Loan B Lenders.

 

1.147 “UK Taxes Act” means the United Kingdom Income and Corporation Taxes Act
1988.

 

1.148 “UK Term Loan A” shall mean the term loan made by the UK Term Loan A
Lenders to or for the benefit of International as provided for in Section 2.3(a)
hereof.

 

1.149 “UK Term Loan A Commitment” shall mean, at any time, as to any UK Lender,
the principal amount set forth opposite such UK Lender’s name on Exhibit B
hereto designated as such UK Lender’s UK Term Loan A Commitment or on Schedule 1
to the Assignment and Acceptance Agreement pursuant to which such UK Lender
became a UK Lender hereunder in accordance with the provisions of Section 13.6
hereof, as the same maybe adjusted from time to time in accordance with the
terms hereof; sometimes being collectively (as to all such Lenders) referred to
herein as the “UK Term Loan A Commitments”.

 

1.150 “UK Term Loan A Lenders” shall mean, at any time, UK Lenders having a UK
Term Loan A Commitment or the UK Term Loan A or any part of it owing to it at
such time; each sometimes being referred to herein individually as a “UK Term
Loan A Lender”.

 

1.151 “UK Term Loan B” shall mean the term loan made by any UK Term Loan B
Lenders to or for the benefit of International provided for in Section 2.3(b)
hereof.

 

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1.152 “UK Term Loan B Commitment” shall mean, at any time, as to any UK Lender,
the principal amount set forth opposite such UK Lender’s name on Exhibit B
hereto designated as such UK Lender’s UK Term Loan B Commitment or on Schedule 1
to the Assignment and Acceptance Agreement pursuant to which such UK Lender
became a UK Lender hereunder in accordance with the provisions of Section 13.6
hereof, as the same may be adjusted from time to time in accordance with the
terms hereof; sometimes being collectively (as to all Lenders) referred to
herein as the “UK Term Loan B Commitments”.

 

1.153 “UK Term Loan B Lenders” shall mean, at any time, UK Lenders having a UK
Term Loan B Commitment or the UK Term Loan B or any part of it owing to it at
such time; each sometimes being referred to herein individually as a “UK Term
Loan B Lender”.

 

1.154 “UK Term Loans” shall mean, collectively, the UK Term Loan A and the UK
Term Loan B; sometimes being referred to herein individually as a “UK Term
Loan”.

 

1.155 “UK Term Loan Commitments” shall mean, individually and collectively, each
of the UK Term Loan A Commitments and UK Term Loan B Commitments.

 

1.156 “UK Treaty Lender” means a UK Lender which:

 

(a) is treated as a resident of a UK Treaty State for the purposes of a UK
Treaty; and

 

(b) does not carry on a business in the United Kingdom through a permanent
establishment with which that UK Lender’s participation in an advance is
effectively connected.

 

1.157 “UK Treaty State” means a jurisdiction having a double taxation agreement
(a UK Treaty) with the United Kingdom which makes provision for full exemption
from tax imposed by the United Kingdom on interest.

 

1.158 “US Borrowers” shall have the meaning set forth in the preamble hereto.

 

1.159 “US Dollar Equivalent” shall mean at any time (a) as to any amount
denominated in US Dollars, the amount thereof at such time, and (b) as to any
amount denominated in Sterling or any other currency, the equivalent amount in
US Dollars calculated by Agent (or by a Borrower or Guarantor with the consent
of Agent) at such time using the Currency Exchange Convention in effect on the
Business Day of determination.

 

1.160 “US Dollar Eurodollar Rate Revolving Loans” shall mean US Dollar Revolving
Loans or any portion thereof made to a US Borrower which are denominated in US
Dollars and on which interest is payable based on the Eurodollar Rate in
accordance with the terms hereof.

 

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1.161 “US Dollar Prime Rate Revolving Loans” shall mean US Dollar Revolving
Loans or any portion thereof made to a US Borrower which are denominated in US
Dollars and on which interest is payable based on the US Prime Rate in
accordance with the terms hereof.

 

1.162 “US Dollar Revolving Loans” shall mean any Revolving Loans or portion
thereof which are denominated in US Dollars and on which interest is payable
based on the US Prime Rate or the Eurodollar Rate in accordance with the terms
hereof.

 

1.163 “US Dollar UK Revolving Loans” shall mean any Revolving Loans or any
portion thereof made to a UK Borrower which are denominated in US Dollars and on
which interest is payable based on the UK Dollar Rate in accordance with the
terms hereof.

 

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

 

1.165 “US Guarantors” shall have the meaning set forth in the preamble hereto.

 

1.166 “US Inactive Subsidiaries” shall mean the subsidiaries of CII identified
in Schedule 1.166.

 

1.167 “US Lender” shall mean, at any time, each US Lender having a US Revolving
Loan Commitment or a Loan made to any US Borrower owing to it at such time;
sometimes being referred to herein collectively as “US Lenders”.

 

1.168 “US Prime Rate” shall mean the rate from time to time publicly announced
by Reference Bank, or its successors, as its prime rate, whether or not such
announced rate is the best rate available at such bank.

 

1.169 “US Prime Rate Loans” shall mean any US Dollar Revolving Loans or any
portion thereof on which interest is payable based on the US Prime Rate in
accordance with the terms thereof.

 

1.170 “US Revolving Lender” shall mean, at any time, each US Lender having a US
Revolving Loan Commitment or a Revolving Loan made to any US Borrower owing to
it at such time; sometimes being referred to herein collectively as “US
Revolving Lenders”.

 

1.171 “US Revolving Loan Commitment” shall mean, at any time, as to any US
Lender, the principal amount set forth opposite such US Lender’s name on Exhibit
B hereto designated as such US Lender’s US Revolving Loan Commitment or on
Schedule 1 to the Assignment and Acceptance Agreement pursuant to which such US
Lender became a US Lender hereunder in accordance with the provisions of Section
13.6 hereof, as the same may be adjusted from time to time in accordance with
the terms hereof; sometimes being collectively (as to all US Lenders) referred
to herein as the “US Revolving Loan Commitments”.

 

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1.172 “Value” shall mean, as determined by Agent in good faith, with respect to
Inventory, the lower of (a) cost computed on a first-in-first-out or standard
basis, as applicable, in accordance with GAAP or (b) market value, provided,
that, for purposes of the calculation of the Borrowing Base, (i) the Value of
the Inventory shall not include: (A) the portion of the value of Inventory equal
to the profit earned by any Affiliate on the sale thereof to any Borrower or (B)
write-ups or write-downs in value with respect to currency exchange rates and
(ii) notwithstanding anything to the contrary contained herein, the cost of the
Inventory shall be computed in the same manner and consistent with the most
recent appraisal of the Inventory received and accepted by Agent prior to the
date hereof, if any.

 

1.173 “VAT” shall mean Value Added Tax imposed in the United Kingdom and any
equivalent tax applicable in any European jurisdiction.

 

1.174 “Voting Stock” shall mean with respect to any Person, (a) one (1) or more
classes of Capital Stock of such Person having general voting powers to elect at
least a majority of the board of directors, managers or trustees of such Person,
irrespective of whether at the time Capital Stock of any other class or classes
have or might have voting power by reason of the happening of any contingency,
and (b) any Capital Stock of such Person convertible or exchangeable without
restriction at the option of the holder thereof into Capital Stock of such
Person described in clause (a) of this definition.

 

SECTION 2. CREDIT FACILITIES

 

2.1 Revolving Loans.

 

(a) Subject to and upon the terms and conditions contained herein, each US
Revolving Lender severally (and not jointly) agrees to fund its Pro Rata Share
of US Dollar Revolving Loans to each US Borrower from time to time in amounts
requested by such Borrower (or Administrative Borrower on behalf of such
Borrower) up to the amount outstanding at any time equal to the lesser of (i)
the Borrowing Base of such Borrower at such time or (ii) the Revolving Loan
Limit of such Borrower at such time. Subject to and upon the terms and
conditions contained herein, each UK Revolving Lender severally (and not
jointly) agrees to fund its Pro Rata Share of UK Sterling Revolving Loans, Euro
Revolving Loans and US Dollar UK Revolving Loans to UK Borrowers in amounts
requested by a UK Borrower (or Administrative Borrower on behalf of a UK
Borrower) up to the amount outstanding at any time equal to the lesser of (i)
the Borrowing Base of UK Borrowers at such time or (ii) the Revolving Loan Limit
of UK Borrowers at such time. Unless Agent otherwise notifies the Administrative
Borrower, any request for the borrowing, continuation or conversion of Revolving
Loans by any UK Borrower (or Administrative Borrower on behalf of such UK
Borrower) shall be made to Burdale (on behalf of Agent) and any request for the
borrowing, continuation or conversion of Revolving Loans by any US Borrower (or
Administrative Borrower on behalf of such Borrower) shall be made to Agent.
Notwithstanding anything to the contrary set forth in this Loan Agreement or any

 

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of the other Financing Agreements, no UK Borrower, including Administrative
Borrower, on behalf of any UK Borrower, shall request, nor shall Agent or any
Lender be obligated to provide, Revolving Loans or Letter of Credit
Accommodations to any UK Borrower other than Ring which are denominated in any
currency other than Sterling, except as may otherwise be agreed in writing by
Agent (or Burdale on behalf of Agent).

 

(b) Agent may, in its discretion, from time to time, upon not less than five (5)
days prior notice to Administrative Borrower in the United States of America and
in the United Kingdom, reduce the lending formula(s) with respect to Eligible
Inventory to the extent that Agent determines in good faith that: (i) the number
of days of the turnover of the Eligible Inventory for any period has adversely
changed or (ii) the liquidation value of the Eligible Inventory, or any category
thereof, has decreased, including any decrease attributable to a change in the
nature, quality or mix of the Inventory. The amount of any decrease in the
lending formulas shall have a reasonable relationship to the event, condition or
circumstance which is the basis for such decrease as determined by Agent in good
faith. In determining whether to reduce the lending formula(s), Agent may
consider events, conditions, contingencies or risks which are also considered in
determining Eligible Accounts, Eligible Inventory or in establishing Reserves.

 

(c) Except in Agent’s discretion, with the consent of all Lenders, or as
otherwise provided herein, (i) the aggregate principal amount of the Revolving
Loans and Letter of Credit Accommodations outstanding at any time to UK
Borrowers (collectively) or each US Borrower shall not exceed the lesser of the
Revolving Loan Limit of UK Borrowers or such US Borrower or the Borrowing Base
of UK Borrowers or such US Borrower, (ii) the aggregate principal amount of the
Loans and Letter of Credit Accommodations outstanding at any time to UK
Borrowers (collectively) shall not exceed the Revolving Loan Limit for the UK
Borrowers plus the outstanding amount of the UK Term Loan B, (iii) the aggregate
principal amount of the Revolving Loans and Letter of Credit Accommodations
outstanding at any time to UK Borrowers (collectively) and each US Borrower
based on the Eligible Inventory shall not exceed the applicable Inventory Loan
Limit, and (iv) the aggregate principal amount of the Revolving Loans and Letter
of Credit Accommodations outstanding at any time to US Borrowers collectively
shall not exceed US$6,000,000.

 

(d) In the event that the aggregate principal amount of the Revolving Loans and
Letter of Credit Accommodations outstanding to UK Borrowers (collectively) or
any US Borrower exceeds the Borrowing Base of UK Borrowers or such US Borrower
or the Revolving Loan Limit of UK Borrowers or such US Borrower, or the
aggregate principal amount of Revolving Loans and Letter of Credit
Accommodations based on the Eligible Inventory of UK Borrowers (collectively) or
any US Borrower exceeds the Inventory Loan Limit of UK Borrowers or such US
Borrower, or the Loans and/or Letter of Credit Accommodations exceed any of the
other sublimits set forth in Section 2.1(c) above, or the aggregate amount of
the outstanding Letter of Credit Accommodations exceed the sublimit for Letter
of Credit Accommodations set forth in Section 2.2(e) such event shall not limit,
waive or otherwise affect any rights of Agent or Lenders in such circumstances
or on any future occasions and the relevant Borrowers shall, upon

 

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demand by Agent, which may be made at any time or from time to time, immediately
repay to Agent the entire amount of any such excess(es) for which payment is
demanded.

 

2.2 Letter of Credit Accommodations.

 

(a) Subject to and upon the terms and conditions contained herein, (i) at the
request of any US Borrower (or Administrative Borrower on behalf of such US
Borrower), Agent agrees, for the ratable risk of each US Revolving Lender
according to its Pro Rata Share, to provide or arrange for Letter of Credit
Accommodations denominated in US Dollars for the account of such US Borrower
containing terms and conditions acceptable to Agent, each US Revolving Lender
and the issuer thereof and (ii) at the request of any UK Borrower (or
Administrative Borrower on behalf of such UK Borrower), Agent or Burdale (on
behalf of Agent) agrees, for the ratable risk of each UK Revolving Lender,
according to its Pro Rata Share, to provide or arrange for Letter of Credit
Accommodations denominated in US Dollars, Euros or Sterling for the account of
Ring, and denominated in Sterling for the account of any other UK Borrower, in
each case containing terms and conditions acceptable to Agent or Burdale (on
behalf of Agent), each UK Revolving Lender and the issuer thereof. Any payments
made by or on behalf of Agent or any US Revolving Lender to any issuer thereof
and/or related parties in connection with the Letter of Credit Accommodations
provided to or for the benefit of any US Borrower shall constitute additional US
Dollar Revolving Loans to such US Borrower pursuant to this Section 2. Any
payments made by Agent or any UK Revolving Lender to any issuer thereof and/or
related parties in connection with Letter of Credit Accommodations denominated
in Sterling provided to UK Borrowers shall constitute additional UK Sterling
Revolving Loans to UK Borrowers pursuant to this Section 2. Any payments made by
Agent or any UK Revolving Lender to any issuer thereof and/or related parties in
connection with Letter of Credit Accommodations denominated in Euros provided to
UK Borrowers shall constitute additional Euro Revolving Loans to UK Borrowers
pursuant to this Section 2. Any payment made by Agent or any UK Revolving Lender
to any issuer thereof and/or related parties in connection with Letter of Credit
Accommodations denominated in US Dollars provided to any UK Borrower shall
constitute additional US Dollar UK Revolving Loans to such UK Borrower pursuant
to this Section 2.

 

(b) In addition to any charges, fees or expenses charged by any bank or issuer
in connection with the Letter of Credit Accommodations, US Borrowers shall pay
to Agent, for the benefit of US Revolving Lenders, a letter of credit fee in
respect of Letter of Credit Accommodations issued for the benefit of any US
Borrower and UK Borrowers shall pay to Agent or Burdale (on behalf of Agent),
for the benefit of UK Revolving Lenders, a letter of credit fee in respect of
Letter of Credit Accommodations issued for the benefit of any UK Borrower, in
each case at a rate equal to two and one-quarters (2.25%) percent per annum on
the daily outstanding balance of the Letter of Credit Accommodations for the
immediately preceding month (or part thereof), payable in arrears as of the
first day of each succeeding month, except that Agent may, and upon the written
direction of Required Revolving Lenders shall, require Borrowers to pay to Agent
or Burdale (on behalf of Agent) for the ratable benefit of Revolving Lenders
such letter of credit fee, at a rate equal to four and one-quarters (4.25%)
percent per

 

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annum on such daily outstanding balance for: (i) the period from and after the
date of termination hereof until Agent and Lenders have received full and final
payment of all Obligations (notwithstanding entry of a judgment against any
Borrower) and (ii) the period from and after the date of the occurrence of an
Event of Default for so long as such Event of Default is continuing as
determined by Agent in good faith. Such letter of credit fee shall be calculated
on the basis of a three hundred sixty (360) day year and actual days elapsed and
the obligation of Borrowers to pay such fee shall survive the termination of
this Agreement.

 

(c) The Borrower requesting such Letter of Credit Accommodation (or
Administrative Borrower on behalf of such Borrower) shall give Agent or Burdale
(on behalf of Agent) two (2) Business Days’ prior written notice of such
Borrower’s request for the issuance of a Letter of Credit Accommodation. Such
notice shall be irrevocable and shall specify the original face amount of the
Letter of Credit Accommodation requested, the effective date (which date shall
be a Business Day) of issuance of such requested Letter of Credit Accommodation,
whether such Letter of Credit Accommodations may be drawn in a single draw or in
partial draws, the date on which such requested Letter of Credit Accommodation
is to expire (which date shall be a Business Day), the purpose for which such
Letter of Credit Accommodation is to be issued, the currency denomination of
such Letter of Credit Accommodation, and the beneficiary of the requested Letter
of Credit Accommodation. The Borrower requesting the Letter of Credit
Accommodation (or Administrative Borrower on behalf of such Borrower) shall
attach to such notice the proposed form of the Letter of Credit Accommodation.

 

(d) In addition to being subject to the satisfaction of the applicable
conditions precedent contained in Section 4 hereof and the other terms and
conditions contained herein, no Letter of Credit Accommodations shall be
available unless each of the following conditions precedent have been satisfied
in a manner satisfactory to Agent: (i) the Borrower requesting such Letter of
Credit Accommodation (or Administrative Borrower on behalf of such Borrower)
shall have delivered to the proposed issuer of such Letter of Credit
Accommodation at such times and in such manner as such proposed issuer may
require, an application, in form and substance satisfactory to such proposed
issuer and Agent, for the issuance of the Letter of Credit Accommodation and
such other documents as may be required pursuant to the terms thereof, and the
form and terms of the proposed Letter of Credit Accommodation shall be
satisfactory to Agent and such proposed issuer, (ii) as of the date of issuance,
no order of any court, arbitrator or other Governmental Authority shall purport
by its terms to enjoin or restrain money center banks generally from issuing
letters of credit of the type and in the amount of the proposed Letter of Credit
Accommodation, and no law, rule or regulation applicable to money center banks
generally and no request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over money center banks
generally shall prohibit, or request that the proposed issuer of such Letter of
Credit Accommodation refrain from, the issuance of letters of credit generally
or the issuance of such Letters of Credit Accommodation; and (iii) the Excess
Availability of the Borrower requesting such Letter of Credit Accommodation,
prior to giving effect to any Reserves with respect to such Letter of Credit
Accommodations, on the date of the proposed issuance of any Letter of Credit
Accommodations,

 

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shall be equal to or greater than: (A) if the proposed Letter of Credit
Accommodation is for the purpose of purchasing Eligible Inventory and the
documents of title with respect thereto are consigned to the issuer, the sum of
(1) the percentage equal to one hundred (100%) percent minus the then-applicable
percentage with respect to Eligible Inventory set forth in the definition of the
term Borrowing Base multiplied by the Value of such Eligible Inventory, plus (2)
freight, taxes, duty and other amounts which Agent or Burdale (on behalf of
Agent) estimates must be paid in connection with such Inventory upon arrival and
for delivery to one of such Borrower’s locations for Eligible Inventory within
the United States of America and (B) if the proposed Letter of Credit
Accommodation is for any other purpose or the documents of title are not
consigned to the issuer in connection with a Letter of Credit Accommodation for
the purpose of purchasing Inventory, an amount equal to one hundred (100%)
percent of the face amount thereof and all other commitments and obligations
made or incurred by Agent with respect thereto. Effective on the issuance of
each Letter of Credit Accommodation, a Reserve shall be established in the
applicable amount set forth in Section 2.2(d)(iii)(A) or Section 2.2(d)(iii)(B).

 

(e) Except in Agent’s discretion, with the consent of all Lenders, the amount of
all outstanding Letter of Credit Accommodations and all other commitments and
obligations made or incurred by Agent or any Revolving Lender to or for the
benefit of Borrowers in connection therewith shall not at any time exceed US
$2,000,000 with respect to US Borrowers in the aggregate, and the Sterling
Equivalent of £3,500,000 with respect to UK Borrowers in the aggregate.

 

(f) Borrowers and Guarantors shall indemnify and hold Agent and Lenders harmless
from and against any and all losses, claims, damages, liabilities, costs and
expenses which Agent or any Lender may suffer or incur in connection with any
Letter of Credit Accommodations and any documents, drafts or acceptances
relating thereto, including any losses, claims, damages, liabilities, costs and
expenses due to any action taken by any issuer or correspondent with respect to
any Letter of Credit Accommodation, except for such losses, claims, damages,
liabilities, costs or expenses that are a direct result of the gross negligence
or willful misconduct of Agent or any Lender as determined pursuant to a final
non-appealable order of a court of competent jurisdiction. Each Borrower and
Guarantor assumes all risks with respect to the acts or omissions of the drawer
under or beneficiary of any Letter of Credit Accommodation and for such purposes
the drawer or beneficiary shall be deemed such Borrower’s agent. Each Borrower
and Guarantor assumes all risks for, and agrees to pay, all foreign, Federal,
State and local taxes, duties and levies relating to any goods subject to any
Letter of Credit Accommodations or any documents, drafts or acceptances
thereunder. Each Borrower and Guarantor hereby releases and holds Agent and
Lenders harmless from and against any acts, waivers, errors, delays or
omissions, whether caused by any Borrower, Guarantor, by any issuer or
correspondent or otherwise with respect to or relating to any Letter of Credit
Accommodation, except for the gross negligence or willful misconduct of Agent or
any Lender as determined pursuant to a final, non-appealable order of a court of
competent jurisdiction. The provisions of this Section 2.2(f) shall survive the
payment of Obligations and the termination of this Agreement.

 

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(g) In connection with Inventory purchased pursuant to Letter of Credit
Accommodations, Borrowers and Guarantors shall, at the request of Agent or
Burdale (on behalf of Agent), instruct all suppliers, carriers, forwarders,
customs brokers, warehouses or others receiving or holding cash, checks,
Inventory, documents or instruments in which Agent holds a security interest to
deliver them to Agent or Burdale (on behalf of Agent) and/or make them subject
to Agent’s order, and if they shall come into such Borrower’s or Guarantor’s
possession, to deliver them, upon the request of Agent or Burdale (on behalf of
Agent), to Agent or Burdale (on behalf of Agent) in their original form.
Borrowers and Guarantors shall also, at the request of Agent or Burdale (on
behalf of Agent), designate Agent or Burdale (on behalf of Agent) as the
consignee on all bills of lading and other negotiable and non-negotiable
documents and shall, upon the request of the Agent or Burdale (on behalf of the
Agent) deliver them (or procure that they are delivered) to the Agent or Burdale
(on behalf of the Agent) in their original form.

 

(h) Each Borrower and Guarantor hereby irrevocably authorizes and directs any
issuer of a Letter of Credit Accommodation to name such Borrower or Guarantor as
the account party therein and to deliver to Agent or Burdale (on behalf of
Agent) all instruments, documents and other writings and property received by
such issuer pursuant to the Letter of Credit Accommodations and to accept and
rely upon the instructions of Agent or Burdale (on behalf of Agent) and
agreements with respect to all matters arising in connection with the Letter of
Credit Accommodations or the applications therefor. Nothing contained herein
shall be deemed or construed to grant any Borrower or Guarantor any right or
authority to pledge the credit of Agent or any Lender in any manner. Agent and
Lenders shall have no liability of any kind with respect to any Letter of Credit
Accommodation provided by an issuer other than Agent or any Lender unless Agent
or Burdale (on behalf of Agent) has duly executed and delivered to such issuer
the application or a guarantee or indemnification in writing with respect to
such Letter of Credit Accommodation. Borrowers and Guarantors shall be bound by
any reasonable interpretation made in good faith by Agent or Burdale (on behalf
of Agent), or any other issuer or correspondent under or in connection with any
Letter of Credit Accommodation or any documents, drafts or acceptances
thereunder, notwithstanding that such interpretation may be inconsistent with
any instructions of any Borrower or Guarantor. Agent and Burdale (on behalf of
Agent) shall have the sole and exclusive right and authority to, and Borrowers
and Guarantors shall not: (i) at any time an Event of Default exists or has
occurred and is continuing, (A) approve or resolve any questions of
non-compliance of documents, (B) give any instructions as to acceptance or
rejection of any documents or goods or (C) execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders, and (ii) at all
times (provided that if no Event of Default has occurred and is continuing,
neither Agent nor Burdale (on behalf of Agent) shall exercise any of the
following unless agreed to by or on behalf of any Borrower), (A) grant any
extensions of the maturity of, time of payment for, or time of presentation of,
any drafts, acceptances, or documents, and (B) agree to any amendments,
renewals, extensions, modifications, changes or cancellations of any of the
terms or conditions of any of the applications, Letter of Credit Accommodations,
or documents, drafts or acceptances thereunder or any letters of credit included
in the Collateral. Agent and Burdale (on behalf of Agent) may take such actions
either in its own name or in any Borrower’s name or in any Guarantor’s name.

 

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(i) Any rights, remedies, duties or obligations granted or undertaken by any
Borrower or Guarantor to any issuer or correspondent in any application for any
Letter of Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been granted or undertaken by such Borrower or Guarantor to Agent or
Burdale (on behalf of Agent) for the ratable benefit of Revolving Lenders. Any
duties or obligations undertaken by Agent or Burdale (on behalf of Agent) to any
issuer or correspondent in any application for any Letter of Credit
Accommodation, or any other agreement by Agent in favor of any issuer or
correspondent to the extent relating to any Letter of Credit Accommodation,
shall be deemed to have been undertaken by Borrowers and Guarantors to Agent for
the ratable benefit of Revolving Lenders and to apply in all respects to
Borrowers and Guarantors.

 

(j) (i) Immediately upon the issuance or amendment of any Letter of Credit
Accommodation, each US Revolving Lender shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, an
undivided interest and participation to the extent of such US Revolving Lender’s
Pro Rata Share of the liability with respect to such Letter of Credit
Accommodation (including, without limitation, all Obligations with respect
thereto) issued for the benefit of any US Borrower and (ii) Immediately upon the
issuance or amendment of any Letter of Credit Accommodation, each UK Revolving
Lender shall be deemed to have irrevocably and unconditionally purchased and
received, without recourse or warranty, an undivided interest and participation
to the extent of such UK Revolving Lender’s Pro Rata Share of the liability with
respect to such Letter of Credit Accommodation (including, without limitation,
all Obligations with respect thereto) issued for the benefit of any UK Borrower.

 

(k) Each Borrower is irrevocably and unconditionally obligated, without
presentment, demand or protest, to pay to Agent or Burdale (on behalf of Agent)
any amounts paid by an issuer of a Letter of Credit Accommodation with respect
to such Letter of Credit Accommodation (whether through the borrowing of
Revolving Loans in accordance with Section 2.2(a) or otherwise). In the event
that any Borrower fails to pay Agent or Burdale (on behalf of Agent) on the date
of any payment under a Letter of Credit Accommodation in an amount equal to the
amount of such payment, Agent (to the extent it has actual notice thereof) shall
promptly notify each US Revolving Lender (in the case of a Letter of Credit
Accommodation issued for the account of a US Borrower) and Burdale on behalf of
Agent (to the extent it has actual notice thereof) shall promptly notify each UK
Revolving Lender (in the case of a Letter of Credit Accommodation issued for the
account of a UK Borrower) of the unreimbursed amount of such payment and each
such Revolving Lender agrees, upon one (1) Business Day’s notice, to fund to
Agent or Burdale (on behalf of Agent) the purchase of its participation in such
Letter of Credit Accommodation in an amount equal to its Pro Rata Share of the
unpaid amount. The obligation of each such Revolving Lender to deliver to Agent
or Burdale (on behalf of Agent) an amount equal to its respective participation
pursuant to the foregoing sentence is absolute and unconditional and such
remittance shall be made notwithstanding the occurrence or continuance of any
Event of Default, the failure to satisfy any other condition set forth in
Section 4 or any

 

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other event or circumstance. If such amount is not made available by such
Revolving Lender when due, Agent or Burdale (on behalf of Agent) shall be
entitled to recover such amount on demand from such Revolving Lender with
interest thereon, for each day from the date such amount was due until the date
such amount is paid to Agent at the interest rate then payable by any Borrower
in respect of Revolving Loans that are US Prime Rate Loans or UK Sterling
Revolving Loans or Euro Revolving Loans or US Dollar Foreign Revolving Loans (as
applicable) as set forth in Section 3.1 (a) hereof.

 

2.3 Term Loans.

 

(a) UK Term Loan A.

 

(i) Subject to and upon the terms and conditions contained herein, each UK Term
Loan A Lender severally (and not jointly) agrees to fund its Pro Rata Share of
the UK Term Loan A to International in the original principal amount equal to
the Sterling Equivalent of £305,000.

 

(ii) The UK Term Loan A is (A) evidenced by a drawdown request in such original
principal amount duly executed and delivered by International to Agent
concurrently herewith; (B) to be repaid, together with interest and other
amounts, in accordance with this Agreement and the other Financing Agreements,
and (C) secured by the Collateral as provided in Section 5.1. The principal
amount of UK Term Loan A shall be repaid in thirty-six (36) consecutive monthly
installments (or earlier as provided herein) payable on the first day of each
month commencing January 1, 2003, of which the first thirty-five (35)
installments shall each be in the amount equal to one ninety-sixth (1/96) of the
original principal amount of such UK Term Loan A and the last installment shall
be in the amount of the entire unpaid balance of such UK Term Loan A; provided,
that, the entire unpaid principal amount of such UK Term Loan A and all accrued
and unpaid interest thereon shall be due and payable on the effective date of
termination or non-renewal of the Financing Agreements. The advance in respect
of the UK Term Loan A shall be made in Sterling and all payments (including
interest and fees) in respect of the UK Term Loan A shall be made and/or repaid
solely in Sterling.

 

(b) UK Term Loan B.

 

(i) Subject to and upon the terms and conditions contained herein, each UK Term
Loan B Lender severally (and not jointly) agrees to fund its Pro Rata Share of
the UK Term Loan B to International in the original principal amount equal to
the US Dollar Equivalent of US$5,000,000.

 

(ii) The UK Term Loan B is (A) evidenced by a Term Promissory Note in such
original principal amount duly executed and delivered by International to Agent
concurrently herewith; (B) to be repaid, together with interest and other
amounts, in accordance with this Agreement, such Term Promissory Note, and the
other Financing Agreements, and (C) secured by the Collateral as provided in
Section 5.1. The principal amount of UK Term Loan B shall be

 

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repaid on the third anniversary of the date of this Agreement (or earlier as
provided herein); provided, that, the entire unpaid principal amount of such UK
Term Loan B and all accrued and unpaid interest thereon shall be due and payable
on the effective date of termination or non-renewal of the Financing Agreements.
All loans made and payments (including interest) to be made in respect of UK
Term Loan B, and all fees in respect thereof, shall be made and/or repaid solely
in US Dollars.

 

(iii) Notwithstanding anything to the contrary contained herein, UK Borrowers
shall prepay, or cause to be prepaid, without premium or penalty, UK Term Loan B
in an amount equal to all Net Cash Proceeds from any sale of rights with respect
to certain property located in China used by Go Gro Industries Ltd., located at
Feng Huang Gang, Xin An Zhen, Boa An District, Shen Zhen, People’s Republic of
China (the “China Property”). Subject to the terms of this Agreement, any time
after the date which is three-hundred sixty (360) days after the date hereof,
Borrower may voluntarily prepay UK Term Loan B, without premium or penalty;
provided, that, (A) as of the date of such prepayment and after giving effect
thereof, no Default or Event of Default shall exist or have occurred and be
continuing and (B) the sum of the Excess Availability for the UK Borrowers plus
the Excess Availability for the US Borrowers for each of the immediately
preceding ninety (90) consecutive days prior to such prepayment shall not have
been less than, in the aggregate, the Sterling Equivalent of £4,750,000, and as
of the date of such prepayment and after giving effect to such payment or
portion thereof, the Excess Availability shall not be less than the Sterling
Equivalent of £4,750,000 and the sum of the Excess Availability for the UK
Borrowers plus the Excess Availability for the US Borrowers for the one hundred
eighty (180) day period following the date of any such prepayment shall be
projected to be at all times not less than the Sterling Equivalent of
£4,750,000, pursuant to projections of Borrowers in form and substance
satisfactory to Agent.

 

2.4 Commitments. The aggregate amount of each Revolving Lender’s Pro Rata Share
of the Revolving Loans and Letter of Credit Accommodations shall not exceed the
amount of such Revolving Lender’s US Revolving Loan Commitment or UK Revolving
Commitment (as applicable) as set forth on Exhibit B attached hereto, as the
same may from time to time be amended in accordance with the provisions hereof.

 

2.5 Special Availability Reserve. Except as Agent may otherwise agree, Agent
shall establish on the date which is one hundred eighty (180) days after the
date hereof, and shall thereafter maintain, a Reserve in an amount equal to the
US Dollar Equivalent of US$700,000 (the “Special Availability Reserve”);
provided, however, that the Special Availability Reserve shall not be maintained
by Agent at any time or times that UK Term Loan B has been fully and finally
repaid in cash or that the following conditions are satisfied, as determined by
Agent: (a) Borrowers and Guarantors shall cause the Subordination Agreement to
be amended in a manner satisfactory to Agent and UK Term Loan B Lenders, such
that either: (i) Agent shall have a valid and perfected, first-priority security
interest in and to the Non-Core UK Shares (as defined in the Subordination
Agreement), for the benefit of Lenders, or (ii) the holder of the Senior Note
shall have waived in a manner satisfactory to Agent and UK Term Loan B Lenders,

 

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any right to maintain a security interest in the Non-Core UK Shares which is not
junior to the security interest therein of Agent, for the benefit of Lenders,
and (b) either the Hong Kong Shares (as defined in the Subordination Agreement)
shall be owned by Holding free of liens, claims or encumbrances of any kind, or
Agent shall have a valid and perfected first-priority security interest therein,
for the benefit of Lenders.

 

SECTION 3. INTEREST AND FEES

 

3.1 Interest.

 

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

 

(b) The UK Term Loan A made to or for the account of any UK Borrower shall at
all times be a UK Sterling Term Loan, and the UK Term Loan B shall at all times
be a UK Fixed Term Loan. Subject to the terms and conditions contained herein,
any UK Borrower (or Administrative Agent on behalf of such UK Borrower) may from
time to time request Revolving Loans, which request shall be made to Burdale on
behalf of Agent; provided, that any such request from a UK Borrower (or
Administrative Agent on behalf of such UK Borrower) shall specify whether such
Revolving Loan shall be a US Dollar UK Revolving Loan, a UK Sterling Revolving
Loan or a Euro Revolving Loan. All Revolving Loans to US Borrowers shall be US
Dollar Eurodollar Rate Revolving Loans so long as (i) no Default or Event of
Default shall exist or have occurred and be continuing, (ii) no party hereto
shall have sent any notice of termination of this Agreement, or (iii) Agent
shall have determined that the Adjusted Eurodollar Rate is available to Agent
and Lenders and can be readily determined as of the date of the US Dollar
Eurodollar Rate Revolving Loan. On and after the failure of any of the
conditions in clauses (i), (ii) or (iii) of the preceding sentence to be
satisfied, all US Dollar Eurodollar Rate Revolving Loans shall automatically
convert to US Dollar Prime Rate Revolving Loans, except as Agent may otherwise
determine. US Borrowers shall pay to Agent, for the benefit of US Revolving
Lenders, upon demand by Agent (or Agent may, at its option, charge any loan
account of a US Borrower) any amounts required to compensate any US Revolving
Lender or Participant for any loss (including loss of anticipated profits), cost
or expense incurred by such Person as a result of the conversion of US Dollar
Eurodollar Rate Revolving Loans to US Dollar Prime Rate Revolving Loans pursuant
to any of the foregoing. Notwithstanding anything to the contrary contained
herein, Agent and US Revolving Lenders shall not be required to purchase United
States Dollar deposits in the London interbank market or other applicable
Eurodollar Rate market to fund any Eurodollar Rate Loans, but the provisions
hereof shall be deemed to apply as if Agent and US Revolving Lenders had
purchased such deposits to fund the Eurodollar Rate Loans.

 

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(c) Interest shall be payable by Borrowers to Agent or Burdale (on behalf of
Agent), for the account of Lenders, monthly in arrears not later than the first
day of each calendar month and shall be calculated on the basis of a three
hundred sixty (360) day year and actual days elapsed. The interest rate on
non-contingent Obligations (other than UK Term Loan B and Eurodollar Rate Loans)
shall increase or decrease by an amount equal to each increase or decrease in
the US Prime Rate or the UK Sterling Rate or the UK Eurodollar Rate or the UK
Dollar Rate, as applicable, effective on the first day of the month after any
change in the US Prime Rate or the UK Sterling Rate or the UK Eurodollar Rate or
the UK Dollar Rate, as applicable, is announced based on the US Prime Rate or
the UK Sterling Rate or the UK Eurodollar Rate or the UK Dollar Rate, as the
case may be, in effect on the last day of the month in which any such change
occurs. In no event shall charges constituting interest payable by Borrowers to
Agent or Burdale (on behalf of Agent) and Lenders exceed the maximum amount or
the rate permitted under any applicable law or regulation, and if any such part
or provision of this Agreement is in contravention of any such law or
regulation, such part or provision shall be deemed amended to conform thereto.

 

3.2 Fees.

 

(a) US Borrowers and International shall pay to Agent, for the account of
Lenders in accordance with their respective Pro Rata Shares, monthly an unused
line fee at a rate equal to the sum of (a) three-eighths (3/8%) percent per
annum calculated upon the amount by which US$6,000,000 exceeds the average daily
principal balance of the outstanding Revolving Loans and Letter of Credit
Accommodations to US Borrowers plus (b) three-eighths (3/8%) percent per annum
calculated upon the amount by which the Sterling Equivalent of £22,000,000
exceeds the Sterling Equivalent of the average daily principal balance of the
outstanding Revolving Loans and Letter of Credit Accommodations to UK Borrowers;
in each case during the immediately preceding month (or part thereof) while this
Agreement is in effect and for so long thereafter as any of the Obligations are
outstanding, which fee shall be payable on the first day of each month in
arrears.

 

(b) US Borrowers and International agree to pay to Agent the other fees and
amounts set forth in the Fee Letter in the amounts and at the times specified
therein.

 

3.3 Changes in Laws and Increased Costs of Loans.

 

(a) If after the date hereof, either (i) any change in, or in the interpretation
of, any law or regulation is introduced, including, without limitation, with
respect to reserve requirements, applicable to Lender or any banking or
financial institution from whom any Lender borrows funds or obtains credit (a
“Funding Bank”), or (ii) a Funding Bank or any Lender complies with any future
guideline or request from any central bank or other Governmental Authority or
(iii) a Funding Bank or any Lender determines that the adoption of any
applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or

 

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comparable agency charged with the interpretation or administration thereof has
or would have the effect described below, or a Funding Bank or any Lender
complies with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, and in the case of any event set forth in this clause (iii), such
adoption, change or compliance has or would have the direct or indirect effect
of reducing the rate of return on any Lender’s capital as a consequence of its
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration
the Funding Bank’s or Lender’s policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, and the result of any of the
foregoing events described in clauses (i), (ii) or (iii) is or results in an
increase in the cost to any Lender of funding or maintaining the Loans or the
Letter of Credit Accommodations, then Borrowers and Guarantors shall from time
to time upon demand by Agent, pay to Agent additional amounts sufficient to
indemnify Lenders against such increased cost on an after-tax basis (after
taking into account applicable deductions and credits in respect of the amount
indemnified). A certificate as to the amount of such increased cost shall be
submitted to Administrative Borrower by Agent and shall be conclusive, absent
manifest error.

 

(b) If prior to the first day of any month, (i) Agent shall have determined in
good faith (which determination shall be conclusive and binding upon Borrowers
and Guarantors) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period, (ii) Agent has received notice from the Required
Lenders that the Eurodollar Rate determined or to be determined for the next
month will not adequately and fairly reflect the cost to US Revolving Lenders of
making or maintaining Eurodollar Rate Loans during such next month, or (iii) US
Dollar deposits in the principal amounts of the Eurodollar Rate Loans required
to be made hereunder are not generally available in the London interbank market,
Agent shall give written notice thereof to Administrative Borrower as soon as
practicable thereafter, and will also give prompt written notice to
Administrative Borrower when such conditions no longer exist. If notice that
such conditions exist is given (A) any Eurodollar Rate Loans requested to be
made on the first day of such month shall be made as US Prime Rate Loans, (B)
each outstanding Eurodollar Rate Loan shall be converted to or continued as US
Prime Rate Loans and (C) each outstanding Eurodollar Rate Loan shall be
converted, on the last day of the then-current month, to US Prime Rate Loans.
Until such notice has been withdrawn by Agent, no further Eurodollar Rate Loans
shall be made or continued as such, nor shall any US Borrower (or Administrative
Borrower on behalf of such US Borrower) have the right to convert US Prime Rate
Loans to Eurodollar Rate Loans.

 

(c) Notwithstanding any other provision herein, if the adoption of or any change
in any law, treaty, rule or regulation or final, non-appealable determination of
an arbitrator or a court or other Governmental Authority or in the
interpretation or application thereof occurring after the date hereof shall make
it unlawful for Agent or any Lender to make or maintain Eurodollar Rate Loans as
contemplated by this Agreement, (i) Agent shall promptly give written notice of
such circumstances to Administrative Borrower (which notice shall be withdrawn
whenever such circumstances no longer exist), (ii) the commitment of such Lender
hereunder to

 

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make Eurodollar Rate Loans, continue Eurodollar Rate Loans as such and convert
US Prime Rate Loans to Eurodollar Rate Loans shall forthwith be canceled and,
until such time as it shall no longer be unlawful for such Lender to make or
maintain Eurodollar Rate Loans, such Lender shall then have a commitment only to
make a US Prime Rate Loan when a Eurodollar Rate Loan is requested and (iii)
such Lender’s US Prime Rate Loans then outstanding as Eurodollar Rate Loans, if
any, shall be converted automatically to US Prime Rate Loans on the last day of
the then-current month with respect to such Loans or within such earlier period
as required by law. If any such conversion of a Eurodollar Rate Loan occurs on a
day which is not the last day of the then-current month with respect thereto,
Borrowers and Guarantors shall pay to such Lender such amounts, if any, as may
be required pursuant to Section 3.3(d) below.

 

(d) Borrowers and Guarantors shall indemnify Agent and each Lender and to hold
Agent and each Lender harmless from any loss or expense which Agent or such
Lender may sustain or incur as a consequence the conversion of any Eurodollar
Rate Loans to Prime Rate Loans in accordance with the terms hereof. This
covenant shall survive the termination or non-renewal of this Loan Agreement and
the payment of the Obligations.

 

SECTION 4. CONDITIONS PRECEDENT

 

4.1 Conditions Precedent to Initial Loans and Letter of Credit Accommodations.
Each of the following is a condition precedent to Agent and Lenders making the
initial Loans and providing the initial Letter of Credit Accommodations
hereunder:

 

(a) Agent shall have received, in form and substance satisfactory to Agent, all
releases, terminations and such other documents as Agent may request to evidence
and effectuate the termination by the Existing Lenders of their respective
financing arrangements with Borrowers and Guarantors and the termination and
release by them, of any interest in and to the Collateral of each Borrower and
Guarantor, duly authorized, executed and delivered by each of them, including,
but not limited to, (i) UCC termination statements for all UCC financing
statements previously filed by them or their predecessors, as secured party and
any Borrower or Guarantor, as debtor; and (ii) satisfactions and discharges of
any mortgages, deeds of trust or deeds to secure debt by any Borrower or
Guarantor in favor of any of them, in form acceptable for recording with the
appropriate Governmental Authority;

 

(b) all requisite corporate action and proceedings in connection with this
Agreement and the other Financing Agreements shall be satisfactory in form and
substance to Agent, and Agent shall have received all information and copies of
all documents, including records of requisite corporate action and proceedings
which Agent may have requested in connection therewith, such documents where
requested by Agent or its counsel to be certified by appropriate corporate
officers or Governmental Authority (and including a copy of the certificate of
incorporation or articles of organization of each Borrower and Guarantor
certified by the Secretary of State (or equivalent Governmental Authority) which
shall set forth the same complete corporate name of such Borrower or Guarantor
as is set forth herein and such document

 

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as shall set forth the organizational identification number of each Borrower or
Guarantor, if one is issued in its jurisdiction of incorporation or
organization);

 

(c) except as Agent and Lenders shall otherwise permit, no material adverse
change shall have occurred in the assets, business or prospects of Borrowers
since the date of Agent’s latest field examination (not including for this
purpose the field review referred to in clause (d) below) and no change or event
shall have occurred which would impair the ability of any Borrower or Obligor to
perform its obligations hereunder (taking into consideration any rights of
contribution such Borrower or Obligor may have) or under any of the other
Financing Agreements to which it is a party or of Agent or any Lender to enforce
the Obligations or realize upon the Collateral;

 

(d) Agent shall have completed a field review of the Records and such other
information with respect to the Collateral as Agent may require to determine the
amount of Loans available to Borrowers (including, without limitation, current
perpetual inventory records and/or roll-forwards of Accounts and Inventory
through the date of closing and test counts of the Inventory in a manner
satisfactory to Agent, together with such supporting documentation as may be
necessary or appropriate, and other documents and information that will enable
Agent to accurately identify and verify the Collateral), the results of which in
each case shall be satisfactory to Agent, not more than three (3) Business Days
prior to the date hereof;

 

(e) Agent shall have received, in form and substance satisfactory to Agent, all
consents, waivers, acknowledgments and other agreements from third persons which
Agent may deem necessary or desirable in order to permit, protect and perfect
its security interests in and liens upon the Collateral or to effectuate the
provisions or purposes of this Agreement and the other Financing Agreements,
including, without limitation, Collateral Access Agreements by owners and
lessors of leased premises of each Borrower and by processors and warehouses at
which Collateral is located;

 

(f) the aggregate Excess Closing Availability of Borrowers as determined by
Agent, as of the date hereof, shall be not less than US Dollar Equivalent of
US$5,000,000 after giving effect to the initial Loans made or to be made and
Letter of Credit Accommodations issued or to be issued in connection with the
initial transactions hereunder;

 

(g) Agent shall have received, in form and substance satisfactory to Agent,
Deposit Account Control Agreements by and among Agent, each Borrower and each
bank where such Borrower has a deposit account, in each case, duly authorized,
executed and delivered by such bank and Borrower (or Agent shall be the bank’s
customer with respect to such deposit account as Agent may specify);

 

(h) Agent shall have received evidence, in form and substance satisfactory to
Agent, that Agent has a valid perfected first priority security interest in all
of the Collateral (other than the Collateral of each UK Borrower and UK
Guarantor) and that Agent has valid, equitable

 

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assignments and first ranking fixed and floating charges upon the Collateral of
each UK Borrower and UK Guarantor, in each case subject only to liens expressly
permitted hereunder;

 

(i) Agent shall have received and reviewed lien and judgement search results (to
the extent liens are recorded and publicly available) for the jurisdiction of
incorporation or organization of each Borrower and Guarantor, the jurisdiction
of the chief executive office of each Borrower and Guarantor and all
jurisdictions in which assets of Borrowers and Guarantors are located, which
search results shall be in form and substance satisfactory to Agent;

 

(j) Agent shall have received, in form and substance satisfactory to Agent, a
valid and effective title insurance policy issued by a company and agent
acceptable to Agent: (i) insuring the priority, amount and sufficiency of the
Mortgages, (ii) insuring against matters that would be disclosed by surveys and
(iii) containing any legally available endorsements, assurances or affirmative
coverage requested by Agent for protection of its interests;

 

(k) Agent shall have received evidence of insurance and loss payee endorsements
required hereunder and under the other Financing Agreements, in form and
substance satisfactory to Agent, and certificates of insurance policies and/or
endorsements naming Agent as loss payee;

 

(l) Agent and Lenders shall be satisfied that, immediately after giving effect
to the transactions contemplated to occur under this Agreement on the date
hereof, Holding and its Subsidiaries are Solvent;

 

(m) with respect to all fees and expenses incurred by Parent and its Affiliates
(other than Borrowers) in connection with the transactions contemplated by the
Financing Agreements that Borrowers desire to reimburse with the proceeds of the
initial Loans, Agent and Lenders shall have received satisfactory evidence of
such fees and expenses and shall be satisfied with the amount of such fees and
expenses;

 

(n) Agent and its counsel shall have completed its due diligence review with
respect to Borrowers and Guarantors, the results of which shall be satisfactory
to Agent;

 

(o) Agent shall have received payment of all fees due and payable on the date
hereof and reimbursement of all documented and invoiced costs and expenses
incurred by Agent and Lenders in connection with this Agreement;

 

(p) Agent shall have received a certified copy of each notice required to be
dispatched pursuant to the Debenture and acknowledgments from all recipients of
such notices as required by the Debenture or agreement by the relevant recipient
of the form of acknowledgment to be given by it;

 

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(q) Agent shall have received a copy of the mandate for each Blocked Account in
the United Kingdom duly completed (so far as possible) by each UK Borrower and
evidence satisfactory to Agent that such Blocked Accounts have been opened;

 

(r) Agent shall have received all title documents for the Mortgaged Property (as
defined in the Debenture);

 

(s) Agent shall have received appropriate HM Land Registry application forms
duly completed accompanied by all necessary Land Registry fees with respect to
the Mortgaged Property;

 

(t) Agent shall have received satisfactory results to all priority searches and
Land Charges searches in relation to the Mortgaged Property and the security to
be provided over it by the Debenture;

 

(u) Agent shall have received appropriate Trade Marks Registry, Designs Registry
and Patent office forms duly completed accompanied by all necessary fees to
enable the recordation of the security interests created by the Debenture;

 

(v) Agent shall have received all certificates of registration with respect to
all Specified Intellectual Property (as defined in the Debenture);

 

(w) Agent shall have received, in form and substance satisfactory to Agent, such
opinion letters of counsel to Borrowers and Guarantors with respect to the
Financing Agreements, the Purchase Agreements and such other matters as Agent
may request;

 

(x) Agent shall have received, in form and substance satisfactory to Agent,
Forms DS1 discharging all existing mortgages, charges and liens affecting the
Mortgage;

 

(y) Agent shall have received, in form and substance satisfactory to Agent,
Forms 395 in relation to this Agreement and the other relevant Financing
Agreements;

 

(z) Agent shall have received, in form and substance satisfactory to Agent, a
certified copy of the register of members and directors of each UK Borrower and
Guarantor and each other company owned by a UK Borrower and Guarantor;

 

(aa) Agent shall have received, in form and substance satisfactory to Agent,
deeds of release from any existing lenders in respect of any existing security
granted by the UK Borrowers and UK Guarantors, with accompanying Forms 403a;

 

(bb) Agent shall have received, in form and substance satisfactory to Agent,
evidence of the completion of the procedure in Sections 155-158 of the Companies
Act 1985 by each UK Borrower and UK Guarantor; and

 

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(cc) Agent shall have received, in form and substance satisfactory to Agent, the
other Financing Agreements and all instruments and documents hereunder and
thereunder shall have been duly executed and delivered to Agent, in form and
substance satisfactory to Agent.

 

4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations. Each
of the following is an additional condition precedent to the Loans and/or
providing Letter of Credit Accommodations to Borrowers, including the initial
Loans and Letter of Credit Accommodations and any future Loans and Letter of
Credit Accommodations:

 

(a) all representations and warranties contained herein and in the other
Financing Agreements shall be true and correct in all material respects with the
same effect as though such representations and warranties had been made on and
as of the date of the making of each such Loan or providing each such Letter of
Credit Accommodation and after giving effect thereto, except to the extent that
such representations and warranties expressly relate solely to an earlier date
(in which case such representations and warranties shall have been true and
accurate on and as of such earlier date);

 

(b) no law, regulation, order, judgment or decree of any Governmental Authority
shall exist, and no action, suit, investigation, litigation or proceeding shall
be pending or threatened in any court or before any arbitrator or Governmental
Authority, which (i) purports to enjoin, prohibit, restrain or otherwise affect
(A) the making of the Loans or providing the Letter of Credit Accommodations, or
(B) the consummation of the transactions contemplated pursuant to the terms
hereof or the other Financing Agreements or (ii) has or has a reasonable
likelihood of having a Material Adverse Effect; and

 

(c) with respect to the making of any Loan to a US Borrower or providing a
Letter of Credit Accommodation at the request of any US Borrower (i) no Default
or Event of Default shall exist or have occurred and be continuing on and as of
the date of the making of such Loan or providing each such Letter of Credit
Accommodation and after giving effect thereto, and (ii) with respect to the
making of any Loan to a UK Borrower or providing a Letter of Credit
Accommodation at the request of a UK Borrower, no Default or Event of Default by
any of the UK Borrowers or UK Guarantors, or Default or Event of Default by US
Borrowers or US Guarantors which would have a Material Adverse Effect on the UK
Borrowers or UK Guarantors collectively, shall exist or have occurred and be
continuing on and as of the date of the making of such Loan or Letter of Credit
Accommodation and after giving effect thereto.

 

SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST

 

5.1 Grant of Security Interest. To secure payment and performance of all
Obligations, each US Borrower and US Guarantor hereby grants to Agent, for
itself and the ratable benefit of Lenders, and to secure payment and performance
of the Obligations of the UK Borrowers and UK Guarantors, each UK Borrower and
UK Guarantor hereby grants to Agent, for itself and the

 

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ratable benefit of the UK Lenders, in each case a continuing security interest
in, a lien upon, and a right of set off against, and hereby assigns to Agent,
for itself and the ratable benefit of the applicable Lenders, as security, all
of the following property and interests in property of each Borrower and
Guarantor, whether now owned or hereafter acquired or existing, and wherever
located (together with all other collateral security for the Obligations at any
time granted to or held or acquired by Agent or any Lender, collectively, the
“Collateral”):

 

(a) all Accounts;

 

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

 

(c) all goods, including, without limitation, Inventory and Equipment;

 

(d) all Real Property and fixtures;

 

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

 

(f) all instruments, including, without limitation, all promissory notes;

 

(g) all documents;

 

(h) all deposit accounts;

 

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

 

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

 

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

 

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

 

(m) to the extent not otherwise described above, all Receivables;

 

(n) all Records;

 

(o) to the extent not described above, all personal and real property and
fixtures and interests in property and fixtures; and

 

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

 

Notwithstanding anything to the contrary set forth herein, Collateral shall not
include any interest in Real Property owned by Holding located at 18191 N.W.
68th Avenue, Miami, Florida and the Real Property leased by CII located at 2214
South Green Street, Tupelo, Mississippi, in each case to the extent that Holding
or CII, as the case may be, is contractually prohibited under the terms of the
mortgage or lease, as the case may be, with respect to such interests in Real
Property, from granting a security interest therein to Agent hereunder. Each
Borrower and Guarantor expressly authorizes the description of Collateral as set
forth above.

 

5.2 Special Provisions Regarding Collateral and Obligations.

 

(a) Notwithstanding anything to the contrary contained in this Section 5, (i) to
secure the payment and performance of the Obligations of each US Borrower and US
Guarantor, the pledge by any US Borrower or US Guarantor of shares of Capital
Stock of any direct Subsidiary of such US Borrower or US Guarantor that is not
incorporated or formed under the laws of the United States of America or a
political subdivision thereof shall not exceed sixty-five (65%) percent of all
of the issued and outstanding shares of Capital Stock of such Subsidiary, and
(ii) the grant of a security interest in the Collateral by UK Borrowers and UK
Guarantors in favor of Agent under laws of England and Wales is further
evidenced by other Financing Agreements.

 

(b) Notwithstanding anything to the contrary contained in this Section 5, the
types or items of Collateral described in Section 5.1 shall not include any
rights or interest in any contract, license or license agreement covering
personal property of a Borrower or Guarantor, so long as under the terms of such
contract, license or license agreement, or applicable law with respect thereto,
the grant of a security interest or lien therein to Agent is prohibited and such
prohibition has not been or is not waived or the consent of the other party to
such contract, license or license agreement has not been or is not otherwise
obtained; provided, that, the foregoing exclusion shall in no way be construed
(i) to apply if any such prohibition is unenforceable under the UCC or other
applicable law or (ii) so as to limit, impair or otherwise affect Agent’s
unconditional continuing security interests in and liens upon any rights or
interests

 

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of such Borrower or Guarantor in or to monies due or to become due under any
such contract, license or license agreement (including any Receivables).

 

(c) Notwithstanding any provision of this Agreement or any of the other
Financing Agreements to the contrary, UK Borrowers and UK Guarantors shall not
be deemed to be Obligors with respect to the Obligations of US Borrowers and US
Guarantors, and the Collateral consisting of assets and property of UK Borrowers
and UK Guarantors shall not be deemed to be collateral security for the
Obligations of US Borrowers and US Guarantors.

 

5.3 Perfection of Security Interests.

 

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

 

(b) Each Borrower and Guarantor does not have any chattel paper (whether
tangible or electronic) or instruments as of the date hereof, except as set
forth in the Information Certificate. In the event that any Borrower or
Guarantor shall be entitled to or shall receive any

 

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

 

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

 

(d) Each Borrower and Guarantor does not have any deposit accounts as of the
date hereof, except as set forth in the Information Certificate. Borrowers and
Guarantors shall not, directly or indirectly, after the date hereof open,
establish or maintain any deposit account unless each of the following
conditions is satisfied: (i) Agent shall have received not less than five (5)
Business Days prior written notice of the intention of any Borrower or Guarantor
to open or establish such account which notice shall specify in reasonable
detail and specificity acceptable to Agent the name of the account, the owner of
the account, the name and address of the bank at which such account is to be
opened or established, the individual at such bank with whom such Borrower or
Guarantor is dealing and the purpose of the account, (ii) the bank where such
account is opened or maintained shall be acceptable to Agent, and (iii) on or
before the opening of such deposit account, such Borrower or Guarantor shall as
Agent may specify either (A) deliver to Agent a Deposit Account Control
Agreement with respect to such deposit account duly authorized, executed and
delivered by such Borrower or Guarantor and the bank at which such deposit
account is opened and maintained or (B) arrange for Agent to become the customer
of the bank with respect to the deposit account on terms and conditions
acceptable to Agent. The terms of this subsection (d) shall not apply to deposit
accounts specifically and exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of any Borrower’s or
Guarantor’s salaried employees.

 

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(e) No Borrower or Guarantor owns or holds, directly or indirectly, beneficially
or as record owner or both, any investment property, as of the date hereof, or
have any investment account, securities account, commodity account or other
similar account with any bank or other financial institution or other securities
intermediary or commodity intermediary as of the date hereof, in each case
except as set forth in the Information Certificate.

 

(i) In the event that any Borrower or Guarantor shall be entitled to or shall at
any time after the date hereof hold or acquire any certificated securities, such
Borrower or Guarantor shall promptly endorse, assign and deliver the same to
Agent, accompanied by such instruments of transfer or assignments duly executed
in blank as Agent may from time to time specify. If any securities, now or
hereafter acquired by any Borrower or Guarantor are uncertificated and are
issued to such Borrower or Guarantor or its nominee directly by the issuer
thereof, such Borrower or Guarantor shall immediately notify Agent thereof and
shall as Agent may specify, either (A) cause the issuer to agree to comply with
instructions from Agent as to such securities, without further consent of any
Borrower or Guarantor or such nominee, or (B) arrange for Agent to become the
registered owner of the securities. Notwithstanding anything to the contrary
contained in this Section 5.3(e)(i), to secure the payment and performance of
the Obligations of each Borrower and Guarantor (other than the UK Borrowers and
UK Guarantors), the pledge by any Borrower or Guarantor of shares of Capital
Stock of any direct Subsidiary of such Borrower or Guarantor that is not
incorporated or formed under the laws of the United States of America or a
political subdivision thereof shall not exceed sixty-five (65%) percent of all
of the issued and outstanding shares of Capital Stock of such Subsidiary.

 

(ii) Borrowers and Guarantors shall not, directly or indirectly, after the date
hereof open, establish or maintain any investment account, securities account,
commodity account or any other similar account (other than a deposit account)
with any securities intermediary or commodity intermediary unless each of the
following conditions is satisfied: (A) Agent shall have received not less than
five (5) Business Days prior written notice of the intention of such Borrower or
Guarantor to open or establish such account which notice shall specify in
reasonable detail and specificity acceptable to Agent the name of the account,
the owner of the account, the name and address of the securities intermediary or
commodity intermediary at which such account is to be opened or established, the
individual at such intermediary with whom such Borrower or Guarantor is dealing
and the purpose of the account, (B) the securities intermediary or commodity
intermediary (as the case may be) where such account is opened or maintained
shall be acceptable to Agent, and (C) on or before the opening of such
investment account, securities account or other similar account with a
securities intermediary or commodity intermediary, such Borrower or Guarantor
shall as Agent may specify either (1) execute and deliver, and cause to be
executed and delivered to Agent, an Investment Property Control Agreement with
respect thereto duly authorized, executed and delivered by such Borrower or
Guarantor and such securities intermediary or commodity intermediary or (2)
arrange for Agent to become the entitlement holder with respect to such
investment property on terms and conditions acceptable to Agent.

 

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(f) Borrowers and Guarantors are not the beneficiary or otherwise entitled to
any right to payment under any letter of credit, banker’s acceptance or similar
instrument as of the date hereof, except as set forth in the Information
Certificate. In the event that any Borrower or Guarantor shall be entitled to or
shall receive any right to payment under any letter of credit, banker’s
acceptance or any similar instrument, whether as beneficiary thereof or
otherwise after the date hereof, such Borrower or Guarantor shall promptly
notify Agent thereof in writing. Such Borrower or Guarantor shall immediately,
as Agent may specify, either (i) deliver, or cause to be delivered to Agent,
with respect to any such letter of credit, banker’s acceptance or similar
instrument, the written agreement of the issuer and any other nominated person
obligated to make any payment in respect thereof (including any confirming or
negotiating bank), in form and substance satisfactory to Agent, consenting to
the assignment of the proceeds of the letter of credit to Agent by such Borrower
or Guarantor and agreeing to make all payments thereon directly to Agent or as
Agent may otherwise direct or (ii) cause Agent to become, at Borrowers’ expense,
the transferee beneficiary of the letter of credit, banker’s acceptance or
similar instrument (as the case may be).

 

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

 

(h) Borrowers and Guarantors do not have any goods, documents of title or other
Collateral in the custody, control or possession of a third party as of the date
hereof, except as set forth in the Information Certificate and except for goods
located in the United States or the United Kingdom or in transit to a location
of a Borrower or Guarantor permitted herein in the ordinary course of business
of such Borrower or Guarantor in the possession of the carrier transporting such
goods. In the event that any goods, documents of title or other Collateral are
at any time after the date hereof in the custody, control or possession of any
other person not

 

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referred to in the Information Certificate or such carriers, Borrowers and
Guarantors shall promptly notify Agent thereof in writing. Promptly upon Agent’s
request, Borrowers and Guarantors shall deliver to Agent a Collateral Access
Agreement duly authorized, executed and delivered by such person and the
Borrower or Guarantor that is the owner of such Collateral.

 

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

 

(j) If any UK Borrower acquires any right, title and interest in or to any
Intellectual Property, it will give Agent prompt written notice of same.
Promptly upon the request of Agent, such UK Borrower will create in favor of
Agent a first ranking right of pledge or fixed charge, as the case may be, in
any such Intellectual Property by executing such deeds and agreements and taking
all such other action as agent may reasonably require.

 

SECTION 6. COLLECTION AND ADMINISTRATION

 

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

 

6.2 Statements. Agent or Burdale (on behalf of Agent) shall render to
Administrative Borrower in the United States of America and in the United
Kingdom each month a statement setting forth the balance in the Borrowers’ loan
account(s) maintained by Agent or Burdale (on behalf of Agent) for Borrowers
pursuant to the provisions of this Agreement, including principal, interest,
fees, costs and expenses. Each such statement shall be subject to subsequent
adjustment by Agent or Burdale (on behalf of Agent) but shall, absent manifest
errors or omissions, be

 

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considered correct and deemed accepted by Borrowers and Guarantors and
conclusively binding upon Borrowers and Guarantors as an account stated except
to the extent that Agent or Burdale (on behalf of Agent) receives a written
notice from Administrative Borrower of any specific exceptions of Administrative
Borrower thereto within forty-five (45) days after the date such statement has
been received by Administrative Borrower. Until such time as Agent or Burdale
(on behalf of Agent) shall have rendered to Administrative Borrower a written
statement as provided above, the balance in any Borrower’s loan account(s) shall
be presumptive evidence of the amounts due and owing to Agent and Lenders by
Borrowers and Guarantors.

 

6.3 Collection of Accounts.

 

(a) Borrowers shall establish and maintain, at their expense, blocked accounts
or lockboxes and related blocked accounts (in either case, “Blocked Accounts”),
as Agent may specify, with such banks as are acceptable to Agent into which
Borrowers shall promptly deposit and direct their respective account debtors to
directly remit all payments on Receivables and all payments constituting
proceeds of Inventory or other Collateral in the identical form in which such
payments are made, whether by cash, check or other manner. Borrowers shall
deliver, or cause to be delivered to Agent a Depository Account Control
Agreement duly authorized, executed and delivered by each bank where a Blocked
Account is maintained as provided in Section 5.3 hereof or at any time and from
time to time Agent may become the bank’s customer with respect to any of the
Blocked Accounts and promptly upon Agent’s request, Borrowers shall execute and
deliver such agreements and documents as Agent may require in connection
therewith. Each Borrower and Guarantor agrees that all payments made to such
Blocked Accounts or other funds received and collected by Agent or any Lender,
whether in respect of the Receivables, as proceeds of Inventory or other
Collateral or otherwise shall be treated as payments to Agent and Lenders in
respect of the Obligations and therefore shall constitute the property of Agent
and Lenders to the extent of the then outstanding Obligations.

 

(b) For purposes of calculating the amount of the Revolving Loans available to
each Borrower, such payments will be applied (conditional upon final collection)
to the Obligations on the Business Day(s) following the date of receipt by Agent
or Burdale (on behalf of Agent) of immediately available funds in the Agent US
Payment Account, the Agent UK US Dollar Payment Account, the Agent UK Euro
Payment Account or the Agent UK Sterling Payment Account provided such payments
and notice thereof are received in accordance with Agent’s or Burdale’s usual
and customary practices as in effect from time to time and within sufficient
time to credit such Borrower’s loan account on such day, and if not, then on the
next Business Day. For the purposes of calculating interest on the Obligations,
such payments or other funds received will be applied (conditional upon final
collection) to the Obligations two (2) Business Day(s) following the date of
receipt of immediately available funds by Agent or Burdale (on behalf of Agent)
in the Agent US Payment Account, the Agent UK Euro Payment Account, the Agent UK
US Dollar Payment Account or the Agent UK Sterling Payment Account provided such
payments or other funds and notice thereof are received in accordance with
Agent’s or Burdale’s usual and customary practices as in effect from time to
time and within

 

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sufficient time to credit such Borrower’s loan account on such day, and if not,
then on the next Business Day. The economic benefit of the timing in the
application of payments (and the administrative charge with respect thereto, if
applicable) shall be for the sole benefit of Agent.

 

(c) Each Borrower and Guarantor and their respective shareholders, directors,
employees, agents, Subsidiaries or other Affiliates shall, acting as trustee for
Agent, receive, as the property of Agent, any monies, checks, notes, drafts or
any other payment relating to and/or proceeds of Accounts or other Collateral
which come into their possession or under their control and immediately upon
receipt thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts, or remit the same or cause the same to be remitted, in kind, to Agent.
In the event that the Debenture in respect of any bank at which a Blocked
Account is maintained by any UK Borrower is not, at any time, effective or is
not in full force and effect, the UK Borrowers and the UK Guarantors shall
(unless otherwise directed by Agent and without prejudice to Agent’s or any
Lender’s rights and remedies under the Financing Agreements), for so long as the
Debenture is ineffective or not in full force and effect and ending on the date
when all Obligations have been repaid or discharged in full and this Agreement
terminated, collect as agent and trustee for Agent all Receivables which would
otherwise have been payable into the Blocked Account and immediately pay (or
procure the payment of) all amounts due in respect of those Receivables into the
Agent UK Sterling Payment Account, the Agent UK US Dollar Payment Account or the
Agent UK Euro Payment Account. UK Borrowers will not be entitled to close or
vary the operation of the Blocked Accounts without the prior written consent of
Agent or to withdraw moneys from the Blocked Account and shall take such steps
as are necessary to ensure that the Blocked Account is at all times operated by
the relevant Bank so as to give effect to the arrangements set out in the
Debenture and will at all times procure that the Blocked Account is subject to
the Debenture, hi no event shall the same be commingled with any Borrower’s or
Guarantor’s own funds. Borrowers agree to reimburse Agent on demand for any
amounts owed or paid to any bank at which a Blocked Account or any other deposit
account is established or any other bank or person involved in the transfer of
funds to or from the Blocked Accounts arising out of Agent’s payments to or
indemnification of such bank or person. The obligations of Borrowers to
reimburse Agent for such amounts pursuant to this Section 6.3 shall survive the
termination of this Agreement.

 

6.4 Payments.

 

(a) All Obligations of each US Borrower shall be payable to the Agent US Payment
Account, and all Obligations of each UK Borrower shall be payable to the Agent
UK Euro Payment Account, the Agent UK US Dollar Payment Account or the Agent UK
Sterling Payment Account as provided in Section 6.3 or such other place as Agent
or Burdale (on behalf of Agent) may designate from time to time. So long as no
Triggering Event shall exist or have occurred and be continuing, Agent and each
Lender shall apply payments received or collected from any Borrower or Guarantor
or for the account of any Borrower or Guarantor (including the monetary proceeds
of collections or of realization upon any Collateral) as follows: first, to pay
any fees, indemnities or expense reimbursements then due to Agent and Lenders
from any Borrower or

 

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Guarantor; second, to pay interest due in respect of any Loans; third, to pay
principal due in respect of the Loans; fourth, to pay or prepay any other
Obligations whether or not then due, in such order and manner as Agent or
Burdale (on behalf of Agent) determines; provided, that, notwithstanding
anything to the contrary contained in this Agreement, (i) unless so directed by
Administrative Borrower, or unless a Default or an Event of Default shall exist
or have occurred and be continuing, Agent shall not apply any payments which it
receives to any Eurodollar Rate Loans made to any US Borrower, except in the
event that there are no outstanding US Prime Rate Loans made to any US Borrower,
(ii) to the extent any Borrower uses any proceeds of the Loans or Letter of
Credit Accommodations to acquire rights in or the use of any Collateral or to
repay any Indebtedness used to acquire rights in or the use of any Collateral,
payments in respect of the Obligations shall be deemed applied first to the
Obligations arising from Loans and Letter of Credit Accommodations that were not
used for such purposes and second to the Obligations arising from Loans and
Letter of Credit Accommodations the proceeds of which were used to acquire
rights in or the use of any Collateral in the chronological order in which such
Borrower acquired such rights in or the use of such Collateral, (iii) all such
payments by any UK Borrower or any UK Guarantor (including amounts received into
any of the Agent UK Euro Payment Account, the Agent UK US Dollar Payment Account
or the Agent UK Sterling Payment Account or any proceeds of any realization of
assets owned by any UK Guarantor or UK Borrower referred to in the Debenture or
Section 5.1 hereof) shall be applied to pay any Obligations of UK Borrowers and
UK Guarantors to Agent or any Lenders only; (iv) all such payments by US
Borrowers shall be applied to pay any obligation of US Borrowers to Agent or any
US Revolving Lender before being applied to any other Obligations; (v) the
security constituted by the 65% Mortgage shall rank in priority to the security
constituted by the 100% Mortgage and accordingly any amounts received by the
Agent pursuant to the enforcement of the security constituted by the 65%
Mortgage shall be applied first to pay the Secured Liabilities (as defined in
the 65% Mortgage) before being applied to the Secured Liabilities (as defined in
the 100% Mortgage); (vi) any Net Cash Proceeds received by Holding in respect of
the sale of the China Property will not be applied in the order set out in this
Section 6.4 and may be applied in prepayment of the UK Term Loan B in accordance
with Clause 2.3(b)(iii) but, for the avoidance of doubt, no other repayment or
prepayment of principal due in respect of the UK Term Loan B will be made except
pursuant to the application of payments as provided in this Section 6.4,
notwithstanding that any such principal may have become due and payable pursuant
to any Financing Agreement, and (vii) to the extent Agent or any Lender receives
any payments or collections in respect of the Obligations in a currency other
than US Dollars, Euros or Sterling, Agent or Burdale (on behalf of Agent) may,
at its option (but is not obligated to), convert such other currency to US
Dollars, Euros or Sterling at the Exchange Rate on such date and in such market
as Agent or Burdale (on behalf of Agent) may select (regardless as to whether
such rate is the best available rate) and the Borrower whose Obligations are
thereby paid shall pay the costs of such conversion (or Agent or Burdale on
behalf of Agent may, at its option, charge such costs to the loan account of
such Borrower maintained by Agent or Burdale on behalf of Agent). Payment and
collections received in respect of the Obligations of any Borrower in any
currency other than the currency in which any outstanding Obligations of such
Borrower are denominated will be accepted and/or applied at the discretion of
Agent.

 

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(b) If a Triggering Event shall exist or have occurred and be continuing, all
amounts received or collected from any Borrower or Guarantor, including any
proceeds of Collateral owned by any Borrower or Guarantor shall (subject to the
provisions of the UK Enterprise Act 2002) be applied as follows:

 

(i) first, to the payment in full of the expenses for the collection and
enforcement of the Obligations and for the protection, preservation or sale,
disposition or other realization upon the Collateral, including all expenses,
liabilities and advances incurred or made by or on behalf of Agent, in
connection therewith (including attorneys’ fees and legal expenses and other
expenses of Agent);

 

(ii) second, to the payment in full of the Obligations (and including cash
collateral for outstanding Letter of Credit Accommodations in an amount equal to
one hundred five (105%) percent of the aggregate undrawn amount thereof) other
than the early termination fee payable under Section 13.1(c) hereof and UK Term
Loan B (including principal, interest, fees and expenses attributable thereto);

 

(iii) third, to the payment in full of the Obligations arising pursuant to the
UK Term Loan B (including principal, interest, fees (other than any Pro Rata
Share of the early termination fee payable under Section 13.1(c) hereof) and
expenses attributable thereto); and

 

(iv) fourth, to the payment in full of all other Obligations, including the
payment of the early termination fee payable under Section 13.1(c) hereof.

 

(c) At the option of Agent or Burdale on behalf of Agent, all principal,
interest, fees, costs, expenses and other charges provided for in this Agreement
or the other Financing Agreements may be charged directly to the loan account(s)
of any Borrower. Borrowers and Guarantors shall make all payments to Agent and
Lenders on the Obligations free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind. If after receipt of any payment of, or proceeds of
Collateral applied to the payment of, any of the Obligations, Agent or any
Lender is required to surrender or return such payment or proceeds to any Person
for any reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue and this Agreement shall continue in
full force and effect as if such payment or proceeds had not been received by
Agent or such Lender. Borrowers and Guarantors shall be liable to pay to Agent
or Burdale (on behalf of Agent), and do hereby indemnify and hold Agent and
Lenders harmless for the amount of any payments or proceeds surrendered or
returned. This Section 6.4(c) shall remain effective notwithstanding any
contrary action which may be taken by Agent or any Lender in reliance upon such
payment or proceeds. This Section 6.4 shall survive the payment of the
Obligations and the termination of this Agreement.

 

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6.5 Taxes.

 

(a) Any and all payments by each Borrower and Guarantor to Agent or any Lender
under this Agreement and any of the other Financing Agreements shall be made
free and clear of, and without deduction or withholding for any Taxes, hi
addition, Borrowers shall pay all Other Taxes (or Agent may, at its option, pay
such Other Taxes and charge the loan account of any Borrower for such amounts so
paid).

 

(b) Subject to the last sentence of Section 6.5(f), each Borrower and Guarantors
shall indemnify and hold harmless Agent and Lenders for the full amount of Taxes
or Other Taxes paid by Agent or any Lender (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section, but not
including Other Taxes that arise as a result of Agent or any Lender’s
arrangements with the applicable taxing jurisdiction, if any, and not as a
result of this Agreement) and any liability (including penalties, interest and
expenses (including reasonable attorney’s fees and expenses) other than those
resulting solely from a failure by Agent or any Lender to pay any Taxes or Other
Taxes which it is required to pay and for which it received an indemnity
payment) arising therefrom or with respect thereto, whether or not such Taxes or
Other Taxes were correctly or legally asserted by the relevant Governmental
Authority. Payment under this indemnification shall be made within ten (10) days
after the date Agent or any Lender makes written demand therefor. If such Taxes
or Other Taxes were not correctly or legally asserted, Agent or such Lender
shall, upon Administrative Borrower’s request and at Borrowers’ expense, provide
such documents to Administrative Borrower in form and substance satisfactory to
Agent, as Administrative Borrower may reasonably request, to enable Borrowers to
contest such Taxes or Other Taxes pursuant to appropriate proceedings then
available to such Borrower (so long as providing such documents shall not, in
the good faith determination of Agent, have a reasonable likelihood of resulting
in any liability of Agent or any Lender).

 

(c) If any Borrower or Guarantor shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to
Agent or any Lender, then:

 

(i) subject to the last sentence of Section 6.5(f) the sum payable shall be
increased as necessary so that after making all required deductions and
withholdings (including deductions and withholdings applicable to additional
sums payable under this Section) such Lender (or Agent on behalf of such Lender)
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made;

 

(ii) such Borrower or Guarantor shall make such deductions and withholdings;

 

(iii) such Borrower or Guarantor shall pay the full amount deducted or withheld
to the relevant taxing authority or other authority in accordance with
applicable law; and

 

(iv) to the extent not paid to Agent and Lenders pursuant to Section 6.5(c)(i),
such Borrower or Guarantor shall also pay to Agent or any Lender, at the time
interest is paid, all

 

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additional amounts which Agent or any Lender specifies as necessary in its good
faith determination to preserve the after-tax yield such Lender would have
received if such Taxes or Other Taxes had not been imposed.

 

(d) Within thirty (30) days after the date of any payment by any Borrower or
Guarantor of Taxes or Other Taxes, such Borrower or Guarantor shall furnish to
Agent the original or a certified copy of a receipt evidencing payment thereof,
or other evidence of payment satisfactory to Agent.

 

(e) If any Borrower or Guarantor otherwise would be required to pay additional
amounts to a Lender (or Agent on behalf of such Lender) pursuant to subsection
(c) of this Section, then upon Borrower’s written request such Lender shall use
reasonable efforts at Borrowers’ expense (consistent with legal and regulatory
restrictions) to take such action, including changing the jurisdiction of its
lending office so as to eliminate any such additional payment by such Borrower
or Guarantor which may thereafter accrue.

 

(f) In the event a US Revolving Lender shall assign the Obligations and its
rights hereunder to an assignee which is organized under the laws of a
jurisdiction outside the United States, such assignee of a US Revolving Lender
shall provide Administrative Borrower with an IRS Form 4224 or Form 1001 or
other applicable form, certificate or document prescribed by the Internal
Revenue Service certifying as to such assignee’s being entitled to full
exemption from United States withholding tax with respect to all payments to be
made to such assignee hereunder and under any of the other Financing Agreements
(unless such assignee of a US Revolving Lender is unable to do so by reason of a
change in law, including, without limitation, any statute, treaty, ruling,
determination or regulation occurring subsequent to the effective date of such
assignment). Notwithstanding anything to the contrary contained in subsection
(b) and (c) of this Section 6.5, unless Administrative Borrower has received
forms or other documents indicating that payments to such assignee hereunder or
under any of the other Financing Agreements are not subject to United States of
America withholding tax, Borrower shall, in the case of payments to or for any
assignee of US Revolving Lender organized under the laws of a jurisdiction
outside the United States (i) withhold taxes from such payments at the
applicable statutory rate, or at a rate reduced by an applicable tax treaty and
(ii) pay such assignee such payment net of any taxes so withheld. Such assignee
will be required to use reasonable efforts (including reasonable efforts to
change its lending office) to avoid or to minimize any amounts which might
otherwise be payable by any Borrower or Guarantor pursuant to this Section 6.5;
provided, that, such efforts shall not cause the imposition on such assignee of
any additional costs or legal or regulatory burdens deemed by such assignee in
good faith to be material.

 

(g) If Agent or any Lender receives a refund in respect of any Taxes or Other
Taxes for which Agent or such Lender has received payment from any Borrower or
Guarantor hereunder, so long as no Event of Default shall exist or have occurred
and be continuing, Agent or such Lender (as the case may be) shall credit to the
loan account of Borrowers the amount of such refund.

 

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(h) No UK Borrower shall be required to pay any increased amount on account of
any withholding or deduction of any Tax to any UK Lender in accordance with the
terms of this Section 6.5 if:

 

(i) the payment could have been made to the relevant UK Lender without a such a
withholding or deduction if the UK Lender had been a UK Qualifying Lender, but
on that date that UK Lender is not or has ceased to be a UK Qualifying Lender
other than as a result of any Change of UK Tax Law occurring after the date it
became a Lender; or

 

(ii) the relevant UK Lender is a UK Treaty Lender and the UK Borrower making the
payment is able to demonstrate that the payment could have been made to the UK
Lender without any such withholding or deduction had that UK Lender complied
with its obligations under Section 6.5(i) below.

 

(i) If any of the UK Lenders is a UK Treaty Lender, the UK Treaty Lender and
each UK Borrower which makes a payment to which that UK Treaty Lender is
entitled shall co-operate in completing any procedural formalities necessary for
that UK Borrower to obtain authorization to make that payment without any
withholding or deduction on account of any Tax.

 

6.6 Authorization to Make Loans. Agent and Lenders are authorized to make the
Loans and provide the Letter of Credit Accommodations based upon telephonic or
other instructions received from anyone purporting to be an officer of
Administrative Borrower or any Borrower or other authorized person or, at the
discretion of Agent, if such Loans are necessary to satisfy any Obligations. All
requests for Loans or Letter of Credit Accommodations hereunder shall specify
the date on which the requested advance is to be made or Letter of Credit
Accommodations established (which day shall be a Business Day) and the amount of
the requested Loan. Requests received by Agent after 11:00 a.m. Miami, Florida
time and requests received by Burdale after 11:00 a.m. London time on any day
shall be deemed to have been made as of the opening of business on the
immediately following Business Day. All Loans and Letter of Credit
Accommodations under this Agreement shall be conclusively presumed to have been
made to, and at the request of and for the benefit of, any Borrower or Guarantor
when deposited to the credit of any Borrower or Guarantor or otherwise disbursed
or established in accordance with the instructions of any Borrower or Guarantor
or in accordance with the terms and conditions of this Agreement.

 

6.7 Use of Proceeds.

 

(a) International shall use the initial proceeds of the Loans provided by the
Agent to International under this Agreement to fund an intercompany loan from
International as lender to Holding as borrower, which such loan shall be applied
by Holding to pay all outstanding obligations of any Borrowers or Guarantors
under the financing agreements with the Existing Lenders. International may also
use the initial proceeds of the Loans provided to it by the Agent

 

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under this Agreement for costs, expenses and fees in connection with the
preparation, negotiation, execution and delivery of this Agreement and any other
Financing Agreement.

 

(b) All other Loans made or Letter of Credit Accommodations provided to or for
the benefit of International or any other Borrower pursuant to this Agreement
shall be used by such Borrower only for general operating, working capital and
other proper corporate purposes of such Borrower not prohibited by this terms of
this Agreement and, for the avoidance of doubt, no Loan or Letter of Credit
Accommodation provided to or for the benefit of any UK Borrower (other than
International pursuant to (a) above) shall be used for any purpose other than
working capital purposes and, in particular, not in any way which would cause a
breach of section 151 of the Companies Act 1985.

 

(c) None of the proceeds will be used, directly or indirectly, for the purpose
of purchasing or carrying any margin security or for the purposes of reducing or
retiring any indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the Loans to
be considered a “purpose credit” within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System, as amended.

 

6.8 Illegality. In the event that any change in or introduction of or change in
the interpretation or application of any law, regulation, treaty, or official
directive or official request (whether or not having the force of law but, if
not, being of a type with which Agent or any Lender is accustomed to comply)
makes it unlawful (or contrary to such directive or request) in any jurisdiction
applicable to Agent or such Lender for Agent or such Lender to make available or
maintain the financing arrangements provided for herein (or any of them) or to
give effect to its obligations under the Financing Agreements, Agent or such
Lender may give seven (7) Business Days written notice to that effect to
Administrative Borrower in the United States of America and in the United
Kingdom and upon such notice this Agreement shall terminate. Agent or such
Lender will use reasonable efforts (including reasonable efforts to change its
lending office) to avoid the making or maintaining of such financing
arrangements from being unlawful or contrary to such directive or request;
provided, that, such efforts shall not cause the imposition on Agent or such
Lender of any additional costs or legal or regulatory burdens deemed by Agent or
such Lender to be material.

 

6.9 Euro.

 

(a) Unless otherwise prohibited by law, if more than one currency or currency
unit are at the same time recognized by the central bank of any country in
Europe as the lawful currency of that country, then:

 

(i) any reference in the Financing Agreements to, and any obligations arising
under the Financing Agreements in, the currency of that country shall be
translated into, or paid in, the currency or currency unit of that country
designated by Agent; and

 

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(ii) any translation from one currency or currency unit of such country to
another shall be at the official rate of exchange recognized by the central bank
for the conversion of that currency or currency unit into the other, rounded up
or down by Agent.

 

(b) If a change in any currency of a country in Europe occurs, this Agreement
will, to the extent Agent deems it to be necessary, be amended to comply with
any generally accepted conventions and market practice and otherwise to reflect
the change in currency in such country.

 

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

 

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

 

(b) Administrative Borrower hereby accepts the appointment by Borrowers to act
as the agent of Borrowers pursuant to this Section 6.10. Administrative Borrower
shall ensure that the disbursement of any Loans to each Borrower requested by or
paid to or for the account of any Borrower, or the issuance of any Letter of
Credit Accommodations for a Borrower hereunder, shall be paid to or for the
account of such Borrower.

 

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

 

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

 

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

 

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6.11 Pro Rata Treatment. Except to the extent otherwise provided in this
Agreement or any other Financing Agreement: (a) the making and conversion of
Loans shall be made among the Lenders based on their respective Pro Rata Shares
as to the Loans and (b) each payment on account of any Obligations (including,
without limitation, each payment on account of any fees) to or for the account
of one or more of Lenders in respect of any Obligations due on a particular day
shall be allocated among the Lenders entitled to such payments based on their
respective Pro Rata Shares and shall be distributed accordingly.

 

6.12 Sharing of Payments, Etc.

 

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

 

(b) If any Lender (including Agent) shall obtain from any Borrower or Guarantor
payment of any principal of or interest on any Loan owing to it or payment of
any other amount under this Agreement or any of the other Financing Agreements
through the exercise of any right of setoff, banker’s lien or counterclaim or
similar right or otherwise (other than from Agent as provided herein), and, as a
result of such payment, such Lender shall have received more than its Pro Rata
Share of the principal of the Loans or more than its share of such other amounts
then due hereunder or thereunder by any Borrower or Guarantor to such Lender
than the percentage thereof received by any other Lender, it shall promptly pay
to Agent, for the benefit of Lenders, the amount of such excess and
simultaneously purchase from such other Lenders a participation in the Loans or
such other amounts, respectively, owing to such other Lenders (or such interest
due thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all Lenders
shall share the benefit of such excess payment (net of any expenses that may be
incurred by such Lender in obtaining or preserving such excess payment) in
accordance with their respective Pro Rata Shares or as otherwise agreed by
Lenders. To such end all Lenders shall make appropriate adjustments among
themselves (by the resale of participation sold or otherwise) if such payment is
rescinded or must otherwise be restored.

 

(c) Each Borrower and Guarantor agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise, in
a manner consistent with this Section, all rights of setoff, banker’s lien,
counterclaim or similar rights with respect to such

 

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participation as fully as if such Lender were a direct holder of Loans or other
amounts (as the case may be) owing to such Lender in the amount of such
participation.

 

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

 

6.13 Settlement Procedures.

 

(a) In order to administer the Credit Facility in an efficient manner and to
minimize the transfer of funds between Agent and Lenders, Agent (in the case of
US Borrowers) or Burdale (on behalf of Agent, in the case of UK Borrowers) may,
at its option, subject to the terms of this Section, make available, on behalf
of Lenders, the full amount of the Loans (other than UK Term Loan B) requested
or charged to any Borrower’s loan account(s) or otherwise to be advanced by
Lenders pursuant to the terms hereof, without requirement of prior notice to
Lenders of the proposed Loans.

 

(b) With respect to all Loans made by Agent or Burdale on behalf of Lenders as
provided in this Section, the amount of each Lender’s Pro Rata Share of the
outstanding Loans shall be computed weekly, and shall be adjusted upward or
downward on the basis of the amount of the outstanding Loans as of 5:00 p.m.
Miami, Florida time on the Business Day immediately preceding the date of each
settlement computation; provided, that, Agent or Burdale (on behalf of Agent)
retains the absolute right at any time or from time to time to make the above
described adjustments at intervals more frequent than weekly, but in no event
more than twice in any week. Agent or Burdale (on behalf of Agent) shall deliver
to each of the Lenders after the end of each week, or at such lesser period or
periods as Agent or Burdale (on behalf of Agent) shall determine, a summary
statement of the amount of outstanding Loans for such period (such week or
lesser period or periods being hereinafter referred to as a “Settlement
Period”). If the summary statement is sent by Agent or Burdale (on behalf of
Agent) and received by a Lender prior to 12:00 p.m. Miami, Florida time, then
such Lender shall make the settlement transfer described in this Section by no
later than 3:00 p.m. Miami, Florida time on the same Business Day and if
received by a Lender after 12:00 p.m. Miami, Florida time, then such Lender
shall make the settlement transfer by not later than 3:00 p.m. Miami, Florida
time on the next Business Day following the date of receipt. If, as of the end
of any Settlement Period, the amount of a Lender’s Pro Rata Share of the
outstanding Loans is more than such Lender’s Pro Rata Share of the outstanding
Loans as of the end of the previous Settlement Period, then such Lender shall
forthwith (but in no event later than the time set forth in the preceding
sentence) transfer to Agent

 

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or Burdale (on behalf of Agent) by wire transfer in immediately available funds
the amount of the increase. Alternatively, if the amount of a Lender’s Pro Rata
Share of the outstanding Loans in any Settlement Period is less than the amount
of such Lender’s Pro Rata Share of the outstanding Loans for the previous
Settlement Period, Agent or Burdale (on behalf of Agent) shall forthwith
transfer to such Lender by wire transfer in immediately available funds the
amount of the decrease. The obligation of each of the Lenders to transfer such
funds and effect such settlement shall be irrevocable and unconditional and
without recourse to or warranty by Agent or Burdale (on behalf of Agent). Agent
and each Lender agrees to mark its books and records at the end of each
Settlement Period to show at all times the dollar amount of its Pro Rata Share
of the outstanding Loans and Letter of Credit Accommodations. Each Lender shall
only be entitled to receive interest on its Pro Rata Share of the Loans to the
extent such Loans have been funded by such Lender. Because the Agent or Burdale
on behalf of Lenders may be advancing and/or may be repaid Loans prior to the
time when Lenders will actually advance and/or be repaid such Loans, interest
with respect to Loans shall be allocated by Agent or Burdale (on behalf of
Agent) in accordance with the amount of Loans actually advanced by and repaid to
each Lender and the Agent and shall accrue from and including the date such
Loans are so advanced to but excluding the date such Loans are either repaid by
Borrowers or actually settled with the applicable Lender as described in this
Section.

 

(c) To the extent that Agent or Burdale (on behalf of Agent) has made any such
amounts available and the settlement described above shall not yet have
occurred, upon repayment of any Loans by a Borrower, Agent or Burdale (on behalf
of Agent) may apply such amounts repaid directly to any amounts made available
by Agent or Burdale (on behalf of Agent) pursuant to this Section. In lieu of
weekly or more frequent settlements, Agent or Burdale (on behalf of Agent) may,
at its option, at any time require each Lender to provide Agent or Burdale (on
behalf of Agent) with immediately available funds representing its Pro Rata
Share of each Loan, prior to the disbursement by Agent or Burdale (on behalf of
Agent) of such Loan to Borrower. In such event, all Loans under this Agreement
shall be made by the Lenders simultaneously and proportionately to their Pro
Rata Shares. No Lender shall be responsible for any default by any other Lender
in the other Lender’s obligation to make a Loan requested hereunder nor shall
the Commitment of any Lender be increased or decreased as a result of the
default by any other Lender in the other Lender’s obligation to make a Loan
hereunder.

 

(d) If Agent or Burdale (on behalf of Agent) is not funding a particular Loan to
a Borrower (or Administrative Borrower for the benefit of such Borrower)
pursuant to this Section on any day, Agent or Burdale (on behalf of Agent) may
assume that each Lender will make available to Agent or Burdale (on behalf of
Agent) such Lender’s Pro Rata Share of the Loan requested or otherwise made on
such day and Agent or Burdale (on behalf of Agent) may, in its discretion, but
shall not be obligated to, cause a corresponding amount to be made available to
or for the benefit of such Borrower on such day. If Agent or Burdale (on behalf
of Agent) makes such corresponding amount available to a Borrower and such
corresponding amount is not in fact made available to Agent or Burdale (on
behalf of Agent) by such Lender, Agent or Burdale (on behalf of Agent) shall be
entitled to recover such corresponding amount on demand from such

 

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Lender together with interest thereon for each day from the date such payment
was due until the date such amount is paid to Agent or Burdale (on behalf of
Agent) at the Federal Funds Rate for each day during such period (as published
by the Federal Reserve Bank of New York or at the option of Agent or Burdale (on
behalf of Agent) based on the arithmetic mean determined by Agent or Burdale (on
behalf of Agent) of the rates for the last transaction in overnight Federal
funds arranged prior to 9:00 a.m. (New York City time) on that day by each of
the three leading brokers of Federal funds transactions in New York City
selected by Agent or Burdale on behalf of Agent and if such amounts are not paid
within three (3) days of the demand of Agent or Burdale (on behalf of Agent), at
the highest interest Rate provided for in Section 3.1 hereof applicable to
Revolving Loans consisting of US Prime Rate Loans, Euro Revolving Loans, US
Dollar Foreign Revolving Loans or UK Sterling Revolving Loans, whichever Agent
or Burdale (on behalf of Agent) may elect. During the period in which such
Lender has not paid such corresponding amount to Agent or Burdale (on behalf of
Agent), notwithstanding anything to the contrary contained in this Agreement or
any of the other Financing Agreements, the amount so advanced by Agent or
Burdale (on behalf of Agent) to or for the benefit of any Borrower shall, for
all purposes hereof, be a Loan made by Agent or Burdale (on behalf of Agent) for
its own account. Upon any such failure by a Lender to pay Agent or Burdale (on
behalf of Agent), Agent or Burdale (on behalf of Agent) shall promptly
thereafter notify Administrative Borrower of such failure and Borrowers shall
pay such corresponding amount to Agent or Burdale (on behalf of Agent) for its
own account within five (5) Business Days of Administrative Borrower’s receipt
of such notice. A Lender who fails to pay Agent or Burdale (on behalf of Agent)
its Pro Rata Share of any Loans made available by the Agent or Burdale (on
behalf of Agent) on such Lender’s behalf, or any Lender who fails to pay any
other amount owing by it to Agent or Burdale (on behalf of Agent), is a
“Defaulting Lender”. Agent or Burdale (on behalf of Agent) shall not be
obligated to transfer to a Defaulting Lender any payments received by Agent or
Burdale (on behalf of Agent) for the Defaulting Lender’s benefit, nor shall a
Defaulting Lender be entitled to the sharing of any payments hereunder
(including any principal, interest or fees). Amounts payable to a Defaulting
Lender shall instead be paid to or retained by Agent or Burdale (on behalf of
Agent). Agent or Burdale (on behalf of Agent) may hold and, in its discretion,
relend to a Borrower the amount of all such payments received or retained by it
for the account of such Defaulting Lender. For purposes of voting or consenting
to matters with respect to this Agreement and the other Financing Agreements and
determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a
“Lender” and such Lender’s Commitment shall be deemed to be zero (0). This
Section shall remain effective with respect to a Defaulting Lender until such
default is cured. The operation of this Section shall not be construed to
increase or otherwise affect the Commitment of any Lender, or relieve or excuse
the performance by any Borrower or Obligor of their duties and obligations
hereunder.

 

(e) Nothing in this Section or elsewhere in this Agreement or the other
Financing Agreements shall be deemed to require Agent or Burdale (on behalf of
Agent) to advance funds on behalf of any Lender or to relieve any Lender from
its obligation to fulfill its Commitment hereunder or to prejudice any rights
that any Borrower may have against any Lender as a result of any default by any
Lender hereunder in fulfilling its Commitment.

 

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6.14 Obligations Several; Independent Nature of Lenders’ Rights. The obligation
of each Lender hereunder is several, and no Lender shall be responsible for the
obligation or commitment of any other Lender hereunder. Nothing contained in
this Agreement or any of the other Financing Agreements and no action taken by
the Lenders pursuant hereto or thereto shall be deemed to constitute the Lenders
to be a partnership, an association, a joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and subject to Section 12.3 hereof, each Lender
shall be entitled to protect and enforce its rights arising out of this
Agreement and it shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.

 

SECTION 7. COLLATERAL REPORTING AND COVENANTS

 

7.1 Collateral Reporting.

 

(a) Borrowers shall provide Agent with the following documents in a form
satisfactory to Agent:

 

(i) on a regular basis as required by Agent, schedules of sales made, credits
issued and cash received;

 

(ii) as soon as possible after the end of each week (but in any event within no
later than Wednesday of the immediately succeeding week), on a weekly basis or
more frequently as Agent may request, (A) perpetual inventory reports and (B) a
report of the Priority Payables of each Borrower;

 

(iii) as soon as possible after the end of each month (but in any event within
no later than the tenth day of the immediately succeeding month), on a monthly
basis or more frequently as Agent may request, (A) agings of accounts receivable
(together with a reconciliation to the previous month’s aging and general
ledger), (B) agings of accounts payable (and including information indicating
the amounts owing to owners and lessors of leased premises, warehouses,
processors and other third parties from time to time in possession of any
Collateral), (C) summary inventory reports by location and category (and
including the amounts of Inventory and the value thereof at any leased locations
and at premises of warehouses, processors or other third parties);

 

(iv) upon Agent’s request, (A) copies of customer statements and credit memos,
remittance advices and reports, and copies of deposit slips and bank statements,
(B) copies of shipping and delivery documents, and (C) copies of purchase
orders, invoices and delivery documents for Inventory and Equipment acquired by
any Borrower or Guarantor;

 

(v) such other reports as to the Collateral as Agent shall request from time to
time.

 

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(b) If any Borrower’s or Guarantor’s records or reports of the Collateral are
prepared or maintained by an accounting service, contractor, shipper or other
agent, such Borrower and Guarantor hereby irrevocably authorizes such service,
contractor, shipper or agent to deliver such records, reports, and related
documents to Agent and to follow Agent’s instructions with respect to further
services at any time that an Event of Default exists or has occurred and is
continuing.

 

(c) All of the documents, reports and schedules provided by Borrowers to Agent
hereunder for Receivables payable in any currency other than US Dollars and
Inventory located outside the United States of America shall set forth the US
Dollar Equivalent for the amount of the Receivables and Value of the Inventory
included in any such documents, reports or schedules.

 

7.2 Accounts Covenants.

 

(a) Borrowers shall notify Agent promptly of: (i) any material delay in any
Borrower’s performance of any of its material obligations to any account debtor
or the assertion of any material claims, offsets, defenses or counterclaims by
any account debtor, or any material disputes with account debtors, or any
settlement, adjustment or compromise thereof, (ii) all material adverse
information known to any Borrower or Guarantor relating to the financial
condition of any account debtor and (iii) any event or circumstance which, to
the best of any Borrower’s or Guarantor’s knowledge, would cause Agent to
consider any then-existing Accounts of any US Borrowers in excess of the US
Dollar Equivalent of US$50,000 or any then-existing Accounts of any UK Borrower
in excess of the US Dollar Equivalent of £500,000, as no longer constituting
Eligible Accounts. No credit, discount, allowance or extension or agreement for
any of the foregoing shall be granted to any account debtor without Agent’s
consent, except in the ordinary course of a Borrower’s or Guarantor’s business
in accordance with practices and policies previously disclosed in writing to
Agent and except as set forth in the schedules delivered to Agent pursuant to
Section 7.1 (a) above. So long as no Event of Default exists or has occurred and
is continuing, Borrowers and Guarantors shall settle, adjust or compromise any
claim, offset, counterclaim or dispute with any account debtor. At any time that
an Event of Default exists or has occurred and is continuing, Agent shall, at
its option, have the exclusive right to settle, adjust or compromise any claim,
offset, counterclaim or dispute with account debtors or grant any credits,
discounts or allowances.

 

(b) With respect to each Account: (i) the amounts shown on any invoice delivered
to Agent or schedule thereof delivered to Agent shall be true and complete in
all material respects, (ii) no payments shall be made thereon except payments
immediately delivered to Agent pursuant to the terms of this Agreement, (iii) no
credit, discount, allowance or extension or agreement for any of the foregoing
shall be granted to any account debtor except as reported to Agent in accordance
with this Agreement and except for credits, discounts, allowances or extensions
made or given in the ordinary course of each Borrower’s business in accordance
with practices and policies previously disclosed to Agent, (iv) there shall be
no setoffs, deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto except as

 

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reported to Agent in accordance with the terms of this Agreement, (v) none of
the transactions giving rise thereto will violate any applicable foreign,
Federal, State or local laws or regulations, all documentation relating thereto
will be legally sufficient under such laws and regulations and all such
documentation will be legally enforceable in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, moratorium or
similar laws limiting creditors’ rights generally and by general equitable
principles.

 

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

 

7.3 Inventory Covenants. With respect to the Inventory: (a) each Borrower and
Guarantor shall at all times maintain inventory records reasonably satisfactory
to Agent, keeping correct and accurate records itemizing and describing the
kind, type, quality and quantity of Inventory, such Borrower’s or Guarantor’s
cost therefor and daily withdrawals therefrom and additions thereto; (b)
Borrowers and Guarantors shall conduct a physical count of the Inventory at
least once each year but at any time or times as Agent may request upon the
occurrence and during the continuance of an Event of Default, and promptly
following such physical inventory shall supply Agent with a report in the form
and with such specificity as may be satisfactory to Agent concerning such
physical count; (c) Borrowers and Guarantors shall not remove any Inventory from
the locations set forth or permitted herein, without the prior written consent
of Agent, except for sales of Inventory in the ordinary course of its business
and except to move Inventory directly from one location set forth or permitted
herein to another such location and except for Inventory shipped from the
manufacturer thereof to such Borrower or Guarantor which is in transit to the
locations set forth or permitted herein; (d) upon Agent’s request, Borrowers
shall, at their expense, no more than two (2) times in any twelve (12) month
period, but at any time or times as Agent may request upon the occurrence and
during the continuance of an Event of Default, deliver or cause to be delivered
to Agent written appraisals as to the Inventory in form, scope and methodology
acceptable to Agent and by an appraiser acceptable to Agent, addressed to Agent
and Lenders and upon which Agent and Lenders are expressly permitted to rely;
(e) Borrowers and Guarantors shall produce, use, store and maintain the
Inventory with all reasonable care and caution and in accordance with applicable
standards of any insurance and in conformity with applicable laws (including the
requirements of the Federal Fair Labor Standards Act of 1938, as amended and all
rules, regulations and orders related thereto); (f) none of the Inventory or
other Collateral constitutes farm products or the proceeds thereof; (g) each
Borrower and Guarantor assumes all responsibility and liability arising from or
relating to the production, use, sale or other disposition of the Inventory; (h)
Borrowers and Guarantors shall not sell Inventory to any customer on approval,
or any other basis which entitles the customer to return or may obligate any
Borrower or Guarantor to repurchase such Inventory (other than the return of
defective Inventory in the ordinary course of business); (i) Borrowers and
Guarantors shall keep the Inventory in good and marketable condition; (j)
Borrowers and Guarantors shall not, without prior written notice to Agent or the
specific identification of such Inventory in a report with

 

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respect thereto provided by Administrative Borrower to Agent pursuant to Section
7.1 (a) hereof, acquire or accept any Inventory on consignment or approval; and
(k) each Borrower shall promptly notify Agent in writing if any supplier or
other creditor of such Borrower imposes any retention of title provisions with
respect to any supply arrangements with such Borrower.

 

7.4 Equipment and Real Property Covenants. With respect to the Equipment and
Real Property: (a) upon Agent’s request, Borrowers and Guarantors shall, at
their expense, no more than one (1) time in any twelve (12) month period, but at
any time or times as Agent may request upon the occurrence and during the
continuance of an Event of Default, deliver or cause to be delivered to Agent
written appraisals as to the Equipment and/or the Real Property in form, scope
and methodology acceptable to Agent and by an appraiser acceptable to Agent,
addressed to Agent and upon which Agent is expressly permitted to rely; (b)
Borrowers and Guarantors shall keep the Equipment in good order, repair, running
and marketable condition (ordinary wear and tear excepted); (c) Borrowers and
Guarantors shall use the Equipment and Real Property with all reasonable care
and caution and in accordance with applicable standards of any insurance and in
conformity with all applicable laws; (d) the Equipment is and shall be used in
the business of Borrowers and Guarantors and not for personal, family, household
or farming use; (e) Borrowers and Guarantors shall not remove any Equipment from
the locations set forth or permitted herein, except to the extent necessary to
have any Equipment repaired or maintained in the ordinary course of its business
or to move Equipment directly from one location set forth or permitted herein to
another such location and except for the movement of motor vehicles used by or
for the benefit of such Borrower or Guarantor in the ordinary course of
business; (f) the Equipment is now and shall remain personal property and
Borrowers and Guarantors shall not permit any of the Equipment to be or become a
part of or affixed to real property; (g) each Borrower and Guarantor assumes all
responsibility and liability arising from the use of the Equipment and Real
Property; and (h) promptly upon Agent’s request, each Borrower shall furnish to
Agent a list, in reasonable detail, of all Equipment owned by such Borrower.

 

7.5 Power of Attorney. Each Borrower and Guarantor hereby irrevocably designates
and appoints Agent (and all persons designated by Agent) as such Borrower’s and
Guarantor’s true and lawful attorney-in-fact, and authorizes Agent, in such
Borrower’s, Guarantor’s or Agent’s name, to: (a) at any time an Event of Default
exists or has occurred and is continuing (i) demand payment on Receivables or
other Collateral, (ii) enforce payment of Receivables by legal proceedings or
otherwise, (iii) exercise all of such Borrower’s or Guarantor’s rights and
remedies to collect any Receivable or other Collateral, (iv) sell or assign any
Receivable upon such terms, for such amount and at such time or times as the
Agent deems advisable, (v) settle, adjust, compromise, extend or renew an
Account, (vi) discharge and release any Receivable, (vii) prepare, file and sign
such Borrower’s or Guarantor’s name on any proof of claim in bankruptcy or other
similar document against an account debtor or other obligor in respect of any
Receivables or other Collateral, (viii) notify the post office authorities to
change the address for delivery of remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral to an address
designated by Agent, and open and dispose of all mail addressed to such Borrower
or Guarantor and handle and store all mail relating to the Collateral;

 

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and (ix) do all acts and things which are necessary, in Agent’s determination,
to fulfill such Borrower’s or Guarantor’s obligations under this Agreement and
the other Financing Agreements and (b) at any time to (i) take control in any
manner of any item of payment in respect of Receivables or constituting
Collateral or otherwise received in or for deposit in the Blocked Accounts or
otherwise received by Agent or any Lender, (ii) have access to any lockbox or
postal box into which remittances from account debtors or other obligors in
respect of Receivables or other proceeds of Collateral are sent or received,
(iii) endorse such Borrower’s or Guarantor’s name upon any items of payment in
respect of Receivables or constituting Collateral or otherwise received by Agent
and any Lender and deposit the same in Agent’s account for application to the
Obligations, (iv) endorse such Borrower’s or Guarantor’s name upon any chattel
paper, document, instrument, invoice, or similar document or agreement relating
to any Receivable or any goods pertaining thereto or any other Collateral,
including any Warehouse or other receipts, or bills of lading and other
negotiable or non-negotiable documents, (v) clear Inventory the purchase of
which was financed with Letter of Credit Accommodations through U.S. Customs or
foreign export control authorities (or similar authorities) in such Borrower’s
or Guarantor’s name, Agent’s name or the name of Agent’s designee, and to sign
and deliver to customs officials powers of attorney in such Borrower’s or
Guarantor’s name for such purpose, and to complete in such Borrower’s or
Guarantor’s or Agent’s name, any order, sale or transaction, obtain the
necessary documents in connection therewith and collect the proceeds thereof,
and (vi) sign such Borrower’s or Guarantor’s name on any verification of
Receivables and notices thereof to account debtors or any secondary obligors or
other obligors in respect thereof. Each Borrower and each Guarantor hereby
releases Agent and Lenders and their respective officers, employees and
designees from any liabilities arising from any act or acts under this power of
attorney and in furtherance thereof, whether of omission or commission, except
as a result of Agent’s or any Lender’s own gross negligence or willful
misconduct as determined pursuant to a final non-appealable order of a court of
competent jurisdiction.

 

7.6 Right to Cure. Agent may, at its option, upon prior notice to Administrative
Borrower, (a) cure any default by any Borrower or Guarantor under any material
agreement with a third party that affects the Collateral, its value or the
ability of Agent to collect, sell or otherwise dispose of the Collateral or the
rights and remedies of Agent or any Lender therein or the ability of any
Borrower or Guarantor to perform its obligations hereunder or under any of the
other Financing Agreements, (b) pay or bond on appeal any judgment entered
against any Borrower or Guarantor, (c) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and pay any amount, incur any expense or perform any act
which, in Agent’s judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Agent and Lenders with
respect thereto. Agent may add any amounts so expended to the Obligations and
charge any Borrower’s account therefor, such amounts to be repayable by
Borrowers on demand. Agent and Lenders shall be under no obligation to effect
such cure, payment or bonding and shall not, by doing so, be deemed to have
assumed any obligation or liability of any Borrower or Guarantor. Any payment
made or other action taken by Agent or any Lender under this Section shall be
without prejudice to any right to assert an Event of Default hereunder and to
proceed accordingly.

 

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7.7 Access to Premises. From time to time as requested by Agent, at the cost and
expense of Borrowers, (a) Agent or its designee shall have complete access to
all of each Borrower’s and Guarantor’s premises during normal business hours and
after notice to Administrative Borrower, or at any time and without notice to
Administrative Borrower if an Event of Default exists or has occurred and is
continuing, for the purposes of inspecting, verifying and auditing the
Collateral and all of each Borrower’s and Guarantor’s books and records,
including the Records, and (b) each Borrower and Guarantor shall promptly
furnish to Agent such copies of such books and records or extracts therefrom as
Agent may request, and Agent or any Lender or Agent’s designee may use during
normal business hours such of any Borrower’s and Guarantor’s personnel,
equipment, supplies and premises as may be reasonably necessary for the
foregoing and if an Event of Default exists or has occurred and is continuing
for the collection of Receivables and realization of other Collateral.

 

SECTION 8. REPRESENTATIONS AND WARRANTIES

 

Each Borrower and Guarantor hereby represents and warrants to Agent and Lenders
the following (which shall survive the execution and delivery of this
Agreement), the truth and accuracy of which are a continuing condition of the
making of Loans and providing Letter of Credit Accommodations to Borrowers:

 

8.1 Corporate Existence, Power and Authority. Each Borrower and Guarantor is a
limited liability company or a corporation duly formed or organized and in good
standing under the laws of its state or jurisdiction of incorporation or
organization and is duly qualified as a foreign limited liability company or
foreign corporation and in good standing in all states or other jurisdictions
where the nature and extent of the business transacted by it or the ownership of
assets makes such qualification necessary, except for those jurisdictions in
which the failure to so qualify would not have a material adverse effect on such
Borrower’s or Guarantor’s financial condition, results of operation or business
or the rights of Agent in or to any of the Collateral. The execution, delivery
and performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder (a) are all within each
Borrower’s and Guarantor’s powers as a limited liability company or corporate
powers, (b) have been duly authorized, (c) are not in contravention of law or
the terms of any Borrower’s or Guarantor’s articles of organization, operating
agreement, certificate of incorporation, by-laws, or other organizational
documentation, or any indenture, agreement or undertaking to which any Borrower
or Guarantor is a party or by which any Borrower or Guarantor or its property
are bound and (d) will not result in the creation or imposition of, or require
or give rise to any obligation to grant, any lien, security interest, charge or
other encumbrance upon any property of any Borrower or Guarantor. This Agreement
and the other Financing Agreements to which any Borrower or Guarantor is a party
constitutes the legal, valid and binding obligations of such Borrower and
Guarantor enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or similar
laws limiting creditors’ rights generally and by general equitable principles.

 

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

 

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

 

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

 

(c) The chief executive office and mailing address of each Borrower and
Guarantor and each Borrower’s and Guarantor’s Records concerning Accounts are
located only at the address identified as such in Schedule 8.2 to the
Information Certificate and its only other places of business and the only other
locations of Collateral, if any, are the addresses set forth in Schedule 8.2 to
the Information Certificate, subject to the rights of any Borrower or Guarantor
to establish new locations in accordance with Section 9.2 below. The Information
Certificate correctly identifies any of such locations which are not owned by a
Borrower or Guarantor and sets forth the owners and/or operators thereof.

 

8.3 Financial Statements; No Material Adverse Change. All financial statements
relating to any Borrower or Guarantor which have been or may hereafter be
delivered by any Borrower or Guarantor to Agent and Lenders have been prepared
in accordance with GAAP (except as to any interim financial statements, to the
extent such statements are subject to normal year-end adjustments and do not
include any notes) and fairly present in all material respects the financial
condition and the results of operation of such Borrower or Guarantor as at the
dates and for the periods set forth therein. Except as disclosed in any interim
financial statements furnished by Borrowers and Guarantors to Agent prior to the
date of this Agreement, there has been no act, condition or event which has had
or is reasonably likely to have a Material Adverse Effect since the date of the
most recent audited financial statements of any Borrower or Guarantor furnished
by any Borrower or Guarantor to Agent prior to the date of this Agreement.

 

8.4 Priority of Liens; Title to Properties. The security interests and liens
granted to Agent under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated on Schedule 8.4 to
the Information Certificate and the other liens permitted under Section 9.8
hereof. Each Borrower and Guarantor has good and marketable fee simple title to
or valid leasehold interests in all of its Real Property and good, valid and
merchantable title to all of

 

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its other properties and assets subject to no liens, mortgages, pledges,
security interests, encumbrances or charges of any kind, except those granted to
Agent and such others as are specifically listed on Schedule 8.4 to the
Information Certificate or permitted under Section 9.8 hereof.

 

8.5 Tax Returns. Except as set forth on Schedule 8.5 to the Information
Certificate, each Borrower and Guarantor has filed, or caused to be filed, in a
timely manner all material tax returns, reports and declarations which are
required to be filed by it. All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Each Borrower
and Guarantor has paid or caused to be paid all material taxes due and payable
or claimed due and payable in any assessment received by it, except (a) taxes
the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to such Borrower or Guarantor and
with respect to which adequate reserves have been set aside on its books and (b)
taxes for which a valid extension to file the applicable tax returns have been
granted. Adequate provision has been made for the payment of all material
accrued and unpaid Federal, State, county, local, foreign and other taxes
whether or not yet due and payable and whether or not disputed.

 

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

 

8.7 Compliance with Other Agreements and Applicable Laws.

 

(a) Borrowers and Guarantors are not in default in any respect under, or in
violation in any material respect of the terms of, any Material Contract.
Borrowers and Guarantors are in compliance with the requirements of all
applicable laws, rules, regulations and orders of any Governmental Authority
relating to their respective businesses, including, without limitation, those
set forth in or promulgated pursuant to the Occupational Safety and Health Act
of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, ERISA,
the Code, as amended, and the rules and regulations thereunder, and all
Environmental Laws, except where the failure to so comply would not reasonably
be expected to have a Material Adverse Effect.

 

(b) Borrowers and Guarantors have obtained all material permits, licenses,
approvals, consents, certificates, orders or authorizations of any Governmental
Authority required for the lawful conduct of its business (the “Permits”),
except that as to Permits required under Environmental Laws, such Permits have
been obtained in accordance with Section 8.8(d). All of the Permits are valid
and subsisting and in full force and effect. There are no actions,

 

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claims or proceedings pending or to the best of any Borrower’s or Guarantor’s
knowledge, threatened that seek the revocation, cancellation, suspension or
modification of any of the Permits.

 

(c) No consent, approval or other action of, or filing with, or notice to any
Governmental Authority is required in connection with the execution, delivery
and performance of this Agreement, the other Financing Agreements or any of the
instruments or documents to be delivered pursuant hereto or thereto, except for
the filing of UCC financing statements and similar instruments and the filing of
the Mortgage.

 

8.8 Environmental Compliance.

 

(a) Except as set forth on Schedule 8.8 to the Information Certificate,
Borrowers, Guarantors, any Subsidiary of any Borrower or Guarantor and Sellers
have not generated, used, stored, treated, transported, manufactured, handled,
produced or disposed of any Hazardous Materials, on or off its premises (whether
or not owned by it) in any manner which at any time violates any applicable
Environmental Law or Permit, except for such violations which could not
reasonably be expected to result in a Material Adverse Effect, and the
operations of Borrowers, Guarantors, any Subsidiary of any Borrower or Guarantor
comply in all material respects with all Environmental Laws and all Permits,
except where the failure to so comply could not be reasonably expected to have a
Material Adverse Effect.

 

(b) Except as set forth on Schedule 8.8 to the Information Certificate, there
has been no investigation by any Governmental Authority or any proceeding,
complaint, order, directive, claim, citation or notice by any Governmental
Authority or any other person nor is any pending or to the best of any
Borrower’s or Guarantor’s knowledge threatened, with respect to any
non-compliance with or violation of the requirements of any Environmental Law by
any Borrower or Guarantor, any Subsidiary of any Borrower or Guarantor or any
Seller (which pertains to the Purchased Assets) the release, spill or discharge,
threatened or actual, of any Hazardous Material or the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of any
Hazardous Materials or any other environmental, occupational health or safety
matter, which could reasonably be expected to have a Material Adverse Effect.

 

(c) Except as set forth on Schedule 8.8 to the Information Certificate,
Borrowers, Guarantors and their Subsidiaries have no material liability
(contingent or otherwise) in connection with a release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials which could be reasonably expected to result
in a Material Adverse Effect.

 

(d) Except as set forth on Schedule 8.5 to the Information Certificate,
Borrowers, Guarantors and their Subsidiaries have all Permits required to be
obtained or filed in connection

 

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with the operations of Borrowers, Guarantors under any Environmental Law and all
of such licenses, certificates, approvals or similar authorizations and other
Permits are valid and in full force and effect, except where the failure to
obtain or file could not be reasonably expected to have a Material Adverse
Effect.

 

8.9 Employee Benefits.

 

(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or State law. Each Plan which is
intended to qualify under Section 401 (a) of the Code has received a favorable
determination letter from the Internal Revenue Service and to the best of any
Borrower’s or Guarantor’s knowledge, nothing has occurred which would cause the
loss of such qualification. Each Borrower and its ERISA Affiliates have made all
required contributions to any Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

 

(b) There are no pending, or to the best of any Borrower’s or Guarantor’s
knowledge, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan. There has been no non-exempt prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which could be reasonably expected to result in any material liability
to any Borrower or Guarantor.

 

(c) (i) No ERISA Event has occurred and no condition, event or circumstance
exists that could be reasonably expected to result in the occurrence of an ERISA
Event; (ii) the current value of the assets of each Plan subject to Title IV of
ERISA (determined in accordance with the assumptions used for funding such Plan
pursuant to Section 412 of the Code) are not less than such Plan’s liabilities
under Section 4001(a)(16) of ERISA; (iii) each Borrower and Guarantor and their
ERISA Affiliates have not incurred, and no condition, event or circumstance
exists that could be reasonably expected to result in, any liability under Title
IV of ERISA with respect to any Plan (other than premiums due and not delinquent
under Section 4007 of ERISA); (iv) each Borrower and Guarantor, and their ERISA
Affiliates, have not incurred and do not reasonably expect to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) each Borrower and
Guarantor, and their ERISA Affiliates, have not engaged in a transaction that
would be subject to Section 4069 or 4212(c) of ERISA.

 

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

 

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8.11 Intellectual Property. Except as set forth on Schedule 8.11 to the
Information Certificate, each Borrower and Guarantor owns or licenses or
otherwise has the right to use all Intellectual Property necessary for the
operation of its business as presently conducted or proposed to be conducted. As
of the date hereof, Borrowers and Guarantors do not have any Intellectual
Property registered, or subject to pending applications, in the United States
Patent and Trademark Office or any similar office or agency in the United
States, any State thereof, any political subdivision thereof or in any other
country, other than those described in Schedule 8.11 to the Information
Certificate and have not granted any licenses with respect thereto other than as
set forth in Schedule 8.11 to the Information Certificate. No event has occurred
which permits or would permit after notice or passage of time or both, the
revocation, suspension or termination of such rights, other than the expiration
in the ordinary course of business of any license agreement pertaining to any
licensed Intellectual Property. To the best of any Borrower’s and Guarantor’s
knowledge, no slogan or other advertising device, product, process, method,
substance or other Intellectual Property or goods bearing or using any
Intellectual Property presently contemplated to be sold by or employed by any
Borrower or Guarantor infringes any patent, trademark, servicemark, tradename,
copyright, license or other intellectual property owned by any other Person
presently and no claim or litigation is pending or, to the best of any
Borrower’s and Guarantor’s knowledge, threatened against or affecting any
Borrower or Guarantor contesting its right to sell or use any such Intellectual
Property. Schedule 8.11 to the Information Certificate sets forth all of the
agreements or other arrangements of each Borrower and Guarantor pursuant to
which such Borrower or Guarantor has a license or other right to use any
trademarks, logos, designs, representations or other Intellectual Property owned
by another person as in effect on the date hereof and the dates of the
expiration of such agreements or other arrangements of such Borrower or
Guarantor as in effect on the date hereof (collectively, together with such
agreements or other arrangements as may be entered into by any Borrower or
Guarantor after the date hereof, collectively, the “License Agreements” and
individually, a “License Agreement”). No trademark, servicemark, copyright or
other Intellectual Property at any time used by any Borrower or Guarantor which
is owned by another person, or owned by such Borrower or Guarantor subject to
any security interest, lien, collateral assignment, pledge or other encumbrance
in favor of any person other than Agent, is affixed to any Eligible Inventory,
except (a) to the extent permitted under the term of the license agreements
listed on Schedule 8.11 to the Information Certificate and (b) to the extent the
sale of Inventory to which such Intellectual Property is affixed is permitted to
be sold by such Borrower or Guarantor under applicable law (including the United
States Copyright Act of 1976).

 

8.12 Subsidiaries; Affiliates; Capitalization; Solvency.

 

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

 

(b) Each Borrower and Guarantor is the record and beneficial owner of all of the
issued and outstanding shares of Capital Stock of each of the Subsidiaries
listed on Schedule

 

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8.12 to the Information Certificate as being owned by such Borrower or Guarantor
and there are no proxies, irrevocable or otherwise, with respect to such shares
and no equity securities of any of the Subsidiaries are or may become required
to be issued by reason of any options, warrants, rights to subscribe to, calls
or commitments of any kind or nature and there are no contracts, commitments,
understandings or arrangements by which any Subsidiary is or may become bound to
issue additional shares of it Capital Stock or securities convertible into or
exchangeable for such shares, except as set forth in Schedule 8.12 to the
Information Certificate.

 

(c) The issued and outstanding shares of Capital Stock of each Borrower and
Guarantor are directly and beneficially owned and held by the persons indicated
in the Information Certificate, and in each case all of such shares have been
duly authorized and are fully paid and non-assessable, free and clear of all
claims, liens, pledges and encumbrances of any kind, except as set forth in
Schedule 8.12 to the Information Certificate.

 

(d) Each Borrower is Solvent and will continue to be Solvent after the creation
of the Obligations, the security interests of Agent and the other transaction
contemplated hereunder and after giving effect to any rights of contribution
which such Borrower may have.

 

8.13 Labor Disputes.

 

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

 

(b) There is (i) no material unfair labor practice complaint pending against any
Borrower or Guarantor or, to the best of any Borrower’s or Guarantor’s
knowledge, threatened against it, before the National Labor Relations Board (or
similar Governmental Authority), and no material grievance or material
arbitration proceeding arising out of or under any collective bargaining
agreement is pending on the date hereof against any Borrower or Guarantor or, to
best of any Borrower’s or Guarantor’s knowledge, threatened against it, and (ii)
no material strike, labor dispute, slowdown or stoppage is pending against any
Borrower or Guarantor or, to the best of any Borrower’s or Guarantor’s
knowledge, threatened against any Borrower or Guarantor.

 

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

 

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8.15 Material Contracts. Schedule 8.15 to the Information Certificate sets forth
all Material Contracts to which any Borrower or Guarantor is a party or is bound
as of the date hereof. Borrowers and Guarantors have delivered true, correct and
complete copies of such Material Contracts to Agent on or before the date
hereof. Borrowers and Guarantors are not in breach or in default in any material
respect of or under any Material Contract and have not received any notice of
the intention of any other party thereto to terminate any Material Contract.
Each Borrower and Guarantor is a party to all contracts necessary for the
operation of its business as presently conducted, as conducted immediately prior
to the date hereof or as presently proposed to be conducted, except for those
that the failure to obtain could not reasonably be expected to have a Material
Adverse Effect.

 

8.16 Payable Practices; Retention of Title. Each Borrower and Guarantor has not
made any material change in its historical accounts payable practices from those
in effect immediately prior to the date hereof. As of the date hereof, none of
the conditions of supply of any supplier or other creditor of a Borrower or
Guarantor include any retention of title or Romalpa provisions which pertain to
such Borrower or Guarantor.

 

8.17 Accuracy and Completeness of Information. All information furnished by or
on behalf of any Borrower or Guarantor in writing to Agent or any Lender in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including all information on the
Information Certificate (but excluding any financial projections for purposes of
this Section 8.17) is true and correct in all material respects on the date as
of which such information is dated or certified and does not omit any material
fact necessary in order to make such information not misleading. No event or
circumstance has occurred since September 30, 2002 which has had or could
reasonably be expected to have a Material Adverse Affect, which has not been
fully and accurately disclosed to Agent in writing prior to the date hereof.

 

8.18 US Inactive and UK Dormant Subsidiaries.

 

(a) None of the US Inactive Subsidiaries owns (or will own) any material assets
or conducts or engages (or will engage) in any business.

 

(b) Each of the UK Dormant Subsidiaries is a UK Dormant Company.

 

8.19 Survival of Warranties; Cumulative. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement and shall be deemed to have
been made again to Agent and Lenders on the date of each additional borrowing or
other credit accommodation hereunder and shall be conclusively presumed to have
been relied on by Agent and Lenders regardless of any investigation made or
information possessed by Agent or any Lender. The representations and warranties
set forth herein shall be cumulative and in addition to any other
representations or

 

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warranties which any Borrower or Guarantor shall now or hereafter give, or cause
to be given, to Agent or any Lender.

 

SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS

 

9.1 Maintenance of Existence.

 

(a) Each Borrower and Guarantor shall at all times preserve, renew and keep in
full force and effect its existence and rights and franchises with respect
thereto and maintain in full force and effect all licenses, trademarks,
tradenames, approvals, authorizations, leases, contracts and Permits necessary
to carry on the business as presently or proposed to be conducted, except as to
any Guarantor permitted under Section 9.7.

 

(b) No Borrower or Guarantor shall change its name unless each of the following
conditions is satisfied: (i) Agent shall have received not less than thirty (30)
days prior written notice from Administrative Borrower of such proposed change
in its corporate name, which notice shall accurately set forth the new name; and
(ii) Agent shall have received a copy of the amendment to the Articles of
Organization or Certificate of Incorporation (or similar organizational
documents) of such Borrower or Guarantor providing for the name change certified
by the Secretary of State (or similar Governmental Authority) of the
jurisdiction of incorporation or organization of such Borrower or Guarantor as
soon as it is available.

 

(c) No Borrower or Guarantor shall change its chief executive office or its
mailing address or organizational identification number (or if it does not have
one, shall not acquire one) unless Agent shall have received not less than
thirty (30) days’ prior written notice from Administrative Borrower of such
proposed change, which notice shall set forth such information with respect
thereto as Agent may require and Agent shall have received such agreements as
Agent may reasonably require in connection therewith. No Borrower or Guarantor
shall change its type of organization, jurisdiction of organization or other
legal structure.

 

9.2 New Collateral Locations. Each US Borrower and US Guarantor may open or
occupy any new location within the continental United States, each UK Borrower
and UK Guarantor may open or occupy any new location within the United Kingdom,
in each case, provided, that, such Borrower or Guarantor (a) gives Agent thirty
(30) days prior written notice of the intended opening of any such new location
and (b) executes and delivers, or causes to be executed and delivered, to Agent
such agreements, documents, and instruments as Agent may deem reasonably
necessary or desirable to perfect and protect its interests in the Collateral at
such location.

 

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9.3 Compliance with Laws, Regulations, Etc.

 

(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary to, at all
times, comply in all material respects with all laws, rules, regulations,
licenses, approvals, orders and other Permits applicable to it and duly observe
all requirements of any foreign, Federal, State or local Governmental Authority,
including without limitation, ERISA, the Code, the Occupational Safety and
Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as
amended, and all Environmental Laws; provided, that, unless the failure to
comply with Environmental Laws could be reasonably expected to have a Material
Adverse Effect as determined by Agent in good faith, the failure to comply with
Environmental Laws in any material respect shall not constitute a breach of this
Section 9.3(a) so long as each of the following conditions have been satisfied
as determined by Agent in good faith: (i) such Borrower or Guarantor is promptly
and diligently taking actions in accordance with applicable Environmental Laws
to cure and remedy such non-compliance to the extent required by Environmental
Laws and adequate reserves have been established on the books of such Borrower
or Guarantor with respect thereto as required in accordance with GAAP; (ii) such
Borrower or Guarantor shall promptly notify Agent in writing of such failure to
comply and state whether or not such Borrower or Guarantor is liable for losses,
costs and expenses in connection with such failure and (iii) the aggregate
amounts incurred (or reasonably expected to be incurred) by Borrowers and
Guarantors in connection with such non-compliance (whether remediation costs or
otherwise) shall not exceed the US Dollar Equivalent of US$250,000 during any
twelve month period.

 

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

 

(c) Without limiting the generality of the foregoing, whenever Agent reasonably
determines that there is a violation, or any condition which requires any action
by or on behalf of any Borrower or Guarantor in order to avoid any violation, of
any Environmental Law in any material respect, Borrowers shall, at Agent’s
request and Borrowers’ expense: (i) cause an independent environmental engineer
reasonably acceptable to Agent to conduct such tests of the site where a
violation or alleged violation of such Environmental Laws has occurred as to the

 

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subject matter of such violation and prepare and deliver to Agent a report as to
the violation setting forth the results of such tests, a proposed plan for
responding to any violation of Environmental Laws described therein, and an
estimate of the costs thereof and (ii) provide to Agent a supplemental report of
such engineer whenever the scope of such violation, or such Borrower’s or
Guarantor’s response thereto or the estimated costs thereof, shall change in any
material respect.

 

(d) Each Borrower and Guarantor shall indemnify and hold harmless Agent and
Lenders and their respective directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all losses,
claims, damages, liabilities, costs, and expenses (including reasonable
attorneys’ fees and expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage,
release, threatened release, spill, discharge, disposal or presence of a
Hazardous Material, including the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of any Borrower or
Guarantor and the preparation and implementation of any closure, remedial or
other required plans (“Losses”) unless it is determined pursuant to a final
non-appealable order of a court of competent jurisdiction that the Losses were
the result of acts or omissions constituting gross negligence or willful
misconduct of Agent or any Lender. All representations, warranties, covenants
and indemnifications in this Section 9.3 shall survive the payment of the
Obligations and the termination of this Agreement.

 

9.4 Payment of Taxes and Claims. Each Borrower and Guarantor shall, and shall
cause any Subsidiary to, duly pay and discharge when due all material taxes,
assessments, contributions and governmental charges upon or against it or its
properties or assets, except for taxes the validity of which are being contested
in good faith by appropriate proceedings diligently pursued and available to
such Borrower, Guarantor or Subsidiary, as the case may be, and with respect to
which adequate reserves have been set aside on its books. Each Borrower and
Guarantor shall be liable for any tax or penalties imposed on Agent or any
Lender as a result of the financing arrangements provided for herein and each
Borrower and Guarantor agrees to indemnify and hold Agent harmless with respect
to the foregoing, and to repay to Agent, for the benefit of Lenders, on demand
the amount thereof, and until paid by such Borrower or Guarantor such amount
shall be added and deemed part of the Loans, provided, that, nothing contained
herein shall be construed to require any Borrower or Guarantor to pay any income
or franchise taxes attributable to the income of Lenders from any amounts
charged or paid hereunder to Lenders. The foregoing indemnity shall survive the
payment of the Obligations and the termination of this Agreement.

 

9.5 Insurance. Each Borrower and Guarantor shall, and shall cause any Subsidiary
to, at all times, maintain with financially sound and reputable insurers
insurance with respect to the Collateral against loss or damage and all other
insurance of the kinds and in the amounts customarily insured against or carried
by corporations of established reputation engaged in the same or similar
businesses and similarly situated. Said policies of insurance shall be
reasonably satisfactory to Agent as to form, amount and insurer. Borrowers and
Guarantors shall furnish certificates, policies or endorsements to Agent as
Agent shall reasonably require as proof of such

 

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insurance, and, if any Borrower or Guarantor fails to do so, Agent is
authorized, but not required, to obtain such insurance at the expense of
Borrowers. All policies shall provide for at least thirty (30) days prior
written notice to Agent of any cancellation or reduction of coverage and that
Agent may act as attorney for each Borrower and Guarantor in obtaining, and at
any time an Event of Default exists or has occurred and is continuing,
adjusting, settling, amending and canceling such insurance. Borrowers and
Guarantors shall cause Agent to be named as a loss payee and an additional
insured (but without any liability for any premiums) under such insurance
policies and Borrowers and Guarantors shall obtain non-contributory lender’s
loss payable endorsements to all insurance policies in form and substance
satisfactory to Agent. Such lender’s loss payable endorsements shall specify
that the proceeds of such insurance shall be payable to Agent as its interests
may appear and further specify that Agent and Lenders shall be paid regardless
of any act or omission by any Borrower, Guarantor or any of its or their
Affiliates. At its option, Agent may apply any insurance proceeds received by
Agent at any time to the cost of repairs or replacement of Collateral and/or to
payment of the Obligations, whether or not then due, in any order and in such
manner as Agent may determine or hold such proceeds as cash collateral for the
Obligations.

 

9.6 Financial Statements and Other Information.

 

(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary to, keep
proper books and records in which true and complete entries shall be made of all
dealings or transactions of or in relation to the Collateral and the business of
such Borrower, Guarantor and its Subsidiaries in accordance with GAAP. Borrowers
and Guarantors shall promptly furnish to Agent and Lenders all such financial
and other information as Agent shall reasonably request relating to the
Collateral and the assets, business and operations of Borrowers and Guarantors,
and to notify the auditors and accountants of Borrowers and Guarantors that
Agent is authorized to obtain such information directly from them. Without
limiting the foregoing, Borrowers and Guarantors shall furnish or cause to be
furnished to Agent, the following: (i) within thirty (30) days after the end of
each fiscal month, monthly unaudited consolidated financial statements, and
unaudited consolidating financial statements (including in each case balance
sheets, statements of income and loss, statements of cash flow, and statements
of shareholders’ equity), all in reasonable detail, fairly presenting in all
material respects the financial position and the results of the operations of
Holding and its Subsidiaries as of the end of and through such fiscal month,
certified to be correct by the chief financial officer of Holding, subject to
normal year-end adjustments and no footnotes and accompanied by a compliance
certificate substantially in the form of Exhibit D hereto, along with a schedule
in a form satisfactory to Agent of the calculations used in determining, as of
the end of such month, whether Borrowers and Guarantors are in compliance with
the covenants set forth in Sections 9.17, 9.18, 9.19, 9.20 and 9.21 of this
Agreement for such month, (ii) within forty-five (45) days after the end of each
fiscal quarter, quarterly unaudited consolidated financial statements, and
unaudited consolidating financial statements (including in each case balance
sheets, statements of income and loss, statements of cash flow, and statements
of shareholders’ equity), all in reasonable detail, fairly presenting in all
material respects the financial position and the results of the operations of

 

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Holding and its Subsidiaries as of the end of and through such fiscal quarter,
certified to be correct by the chief financial officer of Holding, subject to
normal year-end adjustments and no footnotes and accompanied by a compliance
certificate substantially in the form of Exhibit D hereto, along with a schedule
in a form satisfactory to Agent of the calculations used in determining, as of
the end of such quarter, whether Borrowers and Guarantors are in compliance with
the covenants set forth in Sections 9.17, 9.18, 9.19, 9.20 and 9.21 of this
Agreement for such quarter and (iii) within one hundred twenty (120) days after
the end of each fiscal year, audited consolidated financial statements and
unaudited consolidating financial statements of Holding and its Subsidiaries
(including in each case balance sheets, statements of income and loss,
statements of cash flow, and statements of shareholders’ equity), and the
accompanying notes thereto, all in reasonable detail, fairly presenting in all
material respects the financial position and the results of the operations of
Holding and its Subsidiaries as of the end of and for such fiscal year, together
with the unqualified opinion of independent certified public accountants (which
shall not contain a going concern qualification) with respect to the audited
consolidated financial statements, which accountants shall be an independent
accounting firm selected by Borrowers and acceptable to Agent, that such audited
consolidated financial statements have been prepared in accordance with GAAP,
and present fairly in all material respects the results of operations and
financial condition of Holding and its Subsidiaries as of the end of and for the
fiscal year then ended.

 

(b) Borrowers and Guarantors shall promptly notify Agent in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to Collateral having a value of more than the US Dollar
Equivalent of US$50,000 or which if adversely determined would result in any
material adverse change in any Borrower’s or Guarantor’s business, properties,
assets, goodwill or condition, financial or otherwise, (ii) any Material
Contract being terminated or amended in any material adverse respect or any new
Material Contract entered into (in which event Borrowers and Guarantors shall
provide Agent with a copy of such Material Contract), (iii) any order, judgment
or decree in excess of the US Dollar Equivalent of US$50,000 shall have been
entered against any Borrower or Guarantor any of its or their properties or
assets, (iv) any notification of a material violation of laws or regulations
received by any Borrower or Guarantor, (v) any ERISA Event, and (vi) the
occurrence of any Default or Event of Default.

 

(c) Promptly upon becoming aware of the same, Borrowers and Guarantors shall
notify Agent in writing of any supplier or other creditor whose arrangements
include any retention of title liens or other rights with respect to any goods
supplied to any Borrower or Guarantor. Borrowers and Guarantors shall promptly
after the sending or filing thereof furnish or cause to be furnished to Agent
copies of all reports which any Borrower or Guarantor sends to its stockholders
generally and copies of all reports and registration statements which any
Borrower or Guarantor files with the Securities and Exchange Commission, any
national securities exchange or the National Association of Securities Dealers,
Inc. or similar securities commission or exchange.

 

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(d) Borrowers and Guarantors shall furnish or cause to be furnished to Agent
annual projected financial statements (prepared on a monthly basis) and such
other budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrowers and Guarantors, as Agent may, from time
to time, reasonably request. Agent and Lenders acknowledge that any financial
projections and forecasts delivered by any Borrower or Guarantor (i) may contain
projected results which could differ from the actual results and (ii) will be
prepared by such Borrower or Guarantor in good faith, based upon assumptions
that are reasonable in light of the circumstances existing at the time such
financial projections or forecasts are prepared. Agent is hereby authorized to
deliver a copy of any financial statement or any other information relating to
the business of Borrowers and Guarantors to any court or other Governmental
Authority or, subject to Section 13.9, to any Lender or Participant or
prospective Lender or Participant or any Affiliate of any Lender or Participant.
Each Borrower and Guarantor hereby irrevocably authorizes and directs all
accountants or auditors to deliver to Agent, at Borrowers’ expense, copies of
the financial statements of any Borrower and Guarantor and any reports or
management letters prepared by such accountants or auditors on behalf of any
Borrower or Guarantor and to disclose to Agent and Lenders such information as
they may have regarding the business of any Borrower and Guarantor. Any
documents, schedules, invoices or other papers delivered to Agent or any Lender
may be destroyed or otherwise disposed of by Agent or such Lender one (1) year
after the same are delivered to Agent or such Lender, except as otherwise
designated by party to Agent or such Lender in writing.

 

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

 

(a) merge into or with or consolidate with any other Person or permit any other
Person to merge into or with or consolidate with it except that any wholly-owned
Subsidiary of Holding (other than any Borrower) may merge with and into or
consolidate with any other wholly-owned Subsidiary of Holding (other than any
Borrower), provided, that, each of the following conditions is satisfied as
determined by Agent in good faith: (i) Agent shall have received not less than
ten (10) Business Days’ prior written notice of the intention of such
Subsidiaries to so merge or consolidate, which notice shall set forth in
reasonable detail satisfactory to Agent, the persons that are merging or
consolidating, which person will be the surviving entity, the locations of the
assets of the persons that are merging or consolidating, and the material
agreements and documents relating to such merger or consolidation, (ii) Agent
shall have received such other information with respect to such merger or
consolidation as Agent may reasonably request, (iii) as of the effective date of
the merger or consolidation and after giving effect thereto, no Default or Event
of Default shall exist or have occurred and be continuing, (iv) Agent shall have
received, true, correct and complete copies of all agreements, documents and
instruments relating to such merger or consolidation, including, but not limited
to, the certificate or certificates of merger to be filed with each appropriate
Secretary of State (with a copy as filed promptly after such filing), (v) the
surviving corporation shall expressly confirm, ratify and assume the Obligations
and the Financing Agreements to which it is a party in writing, in form and
substance satisfactory to Agent, and Borrowers and Guarantors shall execute and
deliver

 

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such other agreements, documents and instruments as Agent may request in
connection therewith;

 

(b) sell, assign, lease, transfer, abandon or otherwise dispose of any Capital
Stock or Indebtedness to any other Person or any of its assets to any other
Person, except for

 

(i) (A) sales of Inventory in the ordinary course of business, (B) transfers of
Inventory by one UK Borrower to another UK Borrower, and (C) the sale or other
disposition of Capital Stock of Holding which does not result in a Change of
Control,

 

(ii) the sale or other disposition of Equipment (including worn-out or obsolete
Equipment or Equipment no longer used or useful in the business of any Borrower
or Guarantor) so long as such sales or other dispositions do not involve
Equipment having an aggregate fair market value in excess of the US Dollar
Equivalent of US$50,000 for all such Equipment disposed of in any fiscal year of
Borrowers which does not consist of motor vehicles or as Agent may otherwise
agree; provided, that, all Net Cash Proceeds from any such sale or other
disposition shall be promptly paid to Agent to be applied to the outstanding
principal amount of Revolving Loans, which amounts may be reborrowed in
accordance with the terms hereof,

 

(iii) the issuance and sale by any Borrower (other than International) or
Guarantor of Capital Stock of such Borrower or Guarantor after the date hereof
or the issuance and sale, with the consent of Agent, which consent shall not be
unreasonably withheld, by International of Capital Stock of International after
the date hereof; provided, that, (A) Agent shall have received not less than ten
(10) Business Days’ prior written notice of such issuance and sale by such
Borrower or Guarantor, which notice shall specify the parties to whom such
shares are to be sold, the terms of such sale, the total amount which it is
anticipated will be realized from the issuance and sale of such stock and the
net cash proceeds which it is anticipated will be received by such Borrower or
Guarantor from such sale, (B) such Borrower or Guarantor shall not be required
to pay any cash dividends or repurchase or redeem such Capital Stock or make any
other payments in respect thereof, except as otherwise permitted in Section 9.11
hereof, (C) the terms of such Capital Stock, and the terms and conditions of the
purchase and sale thereof, shall not include any terms that include any
limitation on the right of any Borrower to request or receive Loans or Letter of
Credit Accommodations or the right of any Borrower and Guarantor to amend or
modify any of the terms and conditions of this Agreement or any of the other
Financing Agreements or otherwise in any way relate to or affect the
arrangements of Borrowers and Guarantors with Agent and Lenders or are more
restrictive or burdensome to any Borrower or Guarantor than the terms of any
Capital Stock in effect on the date hereof, (D) except as Agent may otherwise
agree in writing, all of the proceeds of the sale and issuance of such Capital
Stock shall be paid to Agent for application to the Obligations in such order
and manner as Agent may determine or at Agent’s option, to be held as cash
collateral for the Obligations, (E) if the issuer of the Capital Stock is a UK
Borrower or UK Guarantor, such Capital Stock shall only be issued to one or more
of UK Borrowers and/or UK Guarantors, or, in the case of additional ordinary
shares in Ring, to the holders of existing convertible preferred shares and only
in accordance with

 

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the terms of the Memorandum and Articles of Association of Ring as in effect on
the date hereof, and (F) as of the date of such issuance and sale and after
giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing,

 

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

 

(v) the sale by Go Gro Industries Ltd. of its Accounts or interests therein in
connection with factoring or other financing arrangements entered into in the
ordinary course of its business, or of the China Property (as defined in Section
2.3 hereof) or any interest therein; provided, that, the actual and/or
contingent obligations of the Borrowers and Guarantors with respect to any of
the foregoing shall at no time exceed US$250,000 (or its equivalent) in the
aggregate,

 

(c) wind up, liquidate or dissolve except that any Guarantor or Non-Credit Party
may wind up, liquidate and dissolve, provided, that, each of the following
conditions is satisfied, (i) the winding up, liquidation and dissolution of such
Guarantor shall not violate any law or any order or decree of any court or other
Governmental Authority in any material respect and shall not conflict with or
result in the breach of, or constitute a default under, any indenture, mortgage,
deed of trust, or any other agreement or instrument to which any Borrower or
Guarantor is a party or may be bound, (ii) such winding up, liquidation or
dissolution shall be done in accordance with the requirements of all applicable
laws and regulations, (iii) effective upon such winding up, liquidation or
dissolution, all of the assets and properties of such Guarantor or Non-Credit
Party, as the case may be, shall be duly and validly transferred and assigned to
a Borrower or Guarantor, free and clear of any liens, restrictions or
encumbrances other than the security interest and liens of Agent (and Agent
shall have received such evidence thereof as Agent may require) and Agent shall
have received such deeds, assignments or other agreements as Agent may request
to evidence and confirm the transfer of such assets of such Guarantor or
Non-Credit Party, as the case may be, to a Borrower or Guarantor, (iv) Agent
shall have received all documents and agreements that any Borrower or Guarantor
has filed with any Governmental Authority or as are otherwise required to
effectuate such winding up, liquidation or dissolution, (v) no Borrower or
Guarantor shall assume any Indebtedness, obligations or liabilities as a result
of such winding up, liquidation or dissolution, or otherwise become liable in
respect of any obligations or liabilities of the entity that is winding up,
liquidating or dissolving, unless such Indebtedness is otherwise expressly
permitted hereunder, (vi) Agent shall have received not less than ten (10)
Business Days prior written notice of the intention of such Guarantor or
Non-Credit Party, as the case may be, to wind up, liquidate or dissolve, and
(vii) as of the date of such winding up, liquidation or dissolution and after
giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing, or

 

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(d) agree to do any of the foregoing; provided, that, nothing in this Section
9.7(d) shall prohibit any Borrower, Guarantor or Non-Credit Party from entering
into a non-binding letter of intent with respect to any of the foregoing.

 

9.8 Encumbrances. Each Borrower and Guarantor shall not, and shall not permit
any Subsidiary to, create, incur, assume or suffer to exist any security
interest, mortgage, pledge, lien, charge or other encumbrance of any nature
whatsoever on any of its assets or properties, including the Collateral, except:

 

(a) the security interests and liens of Agent for itself and the benefit of
Lenders with respect to the assets of Borrowers and Guarantors (other than UK
Borrowers and UK Guarantors) and the equitable assignment and fixed and floating
charges of Agent with respect to the assets of UK Borrowers and UK Guarantors;

 

(b) the security interests and liens of the holder of the Senior Note to secure
the repayment obligations with respect thereto pursuant to and in accordance
with the terms of the Senior Note Agreements as in effect on the date hereof and
subject to the terms and conditions set forth in the Subordination Agreement;
provided, that, without limitation upon Section 2.5 hereof or any of the other
provisions of this Agreement or any of the other Financing Agreements, in the
event that Holding at any time grants to the holder of the Senior Note a
security interest in the Hong Kong Shares, Holding shall also grant a security
interest therein to Agent, for the benefit of Lenders, which security interest
shall rank in priority not less senior than pari passu with such security
interest of the holder of the Senior Note;

 

(c) the security interests and liens of International in and to the Capital
Stock of International and of Catalina Lighting Canada, (1992) Inc., to secure
the repayment obligations under the Holding Note as in effect on the date hereof
and subject to subordination arrangements in form and substance satisfactory to
Agent in accordance with Section 9.10(g) hereof,

 

(d) liens securing the payment of taxes, assessments or other governmental
charges or levies either not yet overdue or the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to such Borrower, or Guarantor or Subsidiary, as the case may be and
with respect to which adequate reserves have been set aside on its books;

 

(e) non-consensual statutory liens (other than liens securing the payment of
taxes) arising in the ordinary course of such Borrower’s, Guarantor’s or
Subsidiary’s business to the extent: (i) such liens secure Indebtedness which is
not overdue or (ii) such liens secure Indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to such Borrower,
Guarantor or such Subsidiary, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books;

 

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

 

(g) purchase money security interests in Equipment (including Capital Leases)
and purchase money mortgages on Real Property to secure Indebtedness permitted
under Section 9.9(b) hereof;

 

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

 

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

 

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

 

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

 

(l) the security interests and liens set forth on Schedule 8.4 to the
Information Certificate; and

 

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(m) liens, mortgages or other encumbrances granted or subsisting with respect to
any asset of a Non-Credit Party, to the extent the same is incurred in
connection with any event, circumstance or transaction not otherwise prohibited
by this Agreement or any of the other Financing Agreements.

 

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

 

(a) the Obligations;

 

(b) purchase money Indebtedness (including Capital Leases) arising after the
date hereof to the extent secured by purchase money security interests in
Equipment (including Capital Leases) and purchase money mortgages on Real
Property not to exceed the US Dollar Equivalent of US$250,000 in the aggregate
at any time outstanding with respect to US Borrowers and US Guarantors and the
US Dollar Equivalent of £1,000,000 in the aggregate at any time outstanding with
respect to UK Borrowers and UK Guarantors, so long as such security interests
and mortgages do not apply to any property of such Borrower, Guarantor or
Subsidiary other than the Equipment or Real Property so acquired, and the
indebtedness secured thereby does not exceed the cost of the Equipment or Real
Property so acquired, as the case may be;

 

(c) guarantees by any Borrower or Guarantor of the Obligations of the other
Borrowers or Guarantors in favor of Agent for the benefit of Lenders;

 

(d) the Indebtedness of any Borrower or Guarantor to any other Borrower or
Guarantor or of any Non-Credit Party to another Non-Credit Party, in any case
arising after the date hereof pursuant to loans by any Borrower, Guarantor or
Non-Credit Party permitted under Section 9.10(g) hereof;

 

(e) unsecured Indebtedness of any Borrower or Guarantor arising after the date
hereof to any third person (but not to any other Borrower or Guarantor),
provided, that, each of the following conditions is satisfied as determined by
Agent and Term Loan B Lender: (i) such Indebtedness shall be on terms and
conditions acceptable to Agent and shall be subject and subordinate in right of
payment to the right of Agent and Lenders to receive the prior indefeasible
payment and satisfaction in full payment of all of the Obligations pursuant to
the terms of an intercreditor agreement between Agent and such third party, in
form and substance satisfactory to Agent, (ii) Agent shall have received not
less than ten (10) days prior written notice of the intention of such Borrower
or Guarantor to incur such Indebtedness, which notice shall set forth in
reasonable detail satisfactory to Agent the amount of such Indebtedness, the
person or persons to whom such Indebtedness will be owed, the interest rate, the
schedule of repayments and maturity date with respect thereto and such other
information as Agent may request with respect thereto, (iii) Agent shall have
received true, correct and complete copies of all agreements,

 

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documents and instruments evidencing or otherwise related to such Indebtedness,
(iv) except as Agent may otherwise agree in writing, all of the proceeds of the
loans or other accommodations giving rise to such Indebtedness shall be paid to
Agent for application to the Obligations in such order and manner as Agent may
determine or at Agent’s option, to be held as cash collateral for the
Obligations, (v) as of the date of incurring such Indebtedness and after giving
effect thereto, no Default or Event of Default shall exist or have occurred and
be continuing, (vi) such Borrower and Guarantor shall not, directly or
indirectly, (A) amend, modify, alter or change the terms of such Indebtedness or
any agreement, document or instrument related thereto, except, that, such
Borrower or Guarantor may, after prior written notice to Agent, amend, modify,
alter or change the terms thereof so as to extend the maturity thereof, or defer
the timing of any payments in respect thereof, or to forgive or cancel any
portion of such Indebtedness (other than pursuant to payments thereof), or to
reduce the interest rate or any fees in connection therewith, or (B) redeem,
retire, defease, purchase or otherwise acquire such Indebtedness (except
pursuant to regularly scheduled payments permitted herein), or set aside or
otherwise deposit or invest any sums for such purpose, and (vii) Borrowers and
Guarantors shall furnish to Agent all notices or demands in connection with such
Indebtedness either received by any Borrower or Guarantor or on its behalf
promptly after the receipt thereof, or sent by any Borrower or Guarantor or on
its behalf concurrently with the sending thereof, as the case may be;

 

(f) Indebtedness of Borrowers, Guarantors and Non-Credit Parties under interest
rate swap agreements, interest rate cap agreements, interest rate collar
agreements, interest rate exchange agreements or similar contractual
arrangements intended to protect such Person against fluctuations in interest
rates and currency swap agreements, forward currency purchase agreements or
similar contractual arrangements intended to protect such Person against
fluctuations in currency exchange rates; provided, that, (i) such arrangements
are with banks or other financial institutions that have combined capital and
surplus and undivided profits of not less than the US Dollar Equivalent of
US$250,000,000 and are not for speculative purposes and (ii) such Indebtedness
shall be unsecured (but such Indebtedness may be supported by Letter of Credit
Accommodations issued pursuant to Section 2.2);

 

(g) secured Indebtedness of Holding evidenced by the Senior Note as such Senior
Note is in effect on the date hereof or as permitted to be amended in accordance
with the terms hereof and the Indebtedness of US Borrowers and Meridian as
guarantors of such Indebtedness; provided, that:

 

(i) the aggregate amount of such Indebtedness shall not exceed the US Dollar
Equivalent of $3,400,348.00 less the aggregate amount of all repayments or
redemptions, whether optional or mandatory, in respect thereof, plus interest
thereon (including all applicable capitalized interest) at the rate provided for
in the Senior Note as in effect on the date hereof,

 

(ii) the Obligations shall at all times constitute “Senior Indebtedness” as
defined in the Senior Note Purchase Agreement as in effect on the date hereof,
and are and shall be entitled

 

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to all of the rights and benefits thereof under the Senior Note Agreements as in
effect on the date hereof and there is not, and shall not be, any other Senior
Indebtedness,

 

(iii) the Agent and the holder of the Senior Note shall have entered into a
Subordination Agreement with Agent, for the benefit of Lenders, in form and
substance satisfactory to Agent (the “Subordination Agreement”), which
Subordination Agreement shall be in full force and effect,

 

(iv) Borrowers and Guarantors shall not, directly or indirectly, make any
payments in respect of such Indebtedness, except as may be permitted in the
Subordination Agreement and subject to the terms and conditions set forth
therein,

 

(v) Borrowers and Guarantors shall not, directly or indirectly, amend, modify,
alter or change any terms of such Indebtedness or the Senior Note or any of the
Senior Note Agreements or any related agreements, documents and instruments so
as to do any of the following: (A) increase the interest rate on such
Indebtedness; (B) change the dates upon which payments of principal or interest
are due on such Indebtedness other than to extend such dates; (C) change any
default or event of default other than to delete or make less restrictive any
default provision therein, or add any covenant with respect to such
Indebtedness; (D) change the redemption or prepayment provisions of such
Indebtedness other than to extend the dates therefor or to reduce the premiums
payable in connection therewith; (E) grant additional security or collateral to
secure payment of such Indebtedness; or (F) change or amend any other term if
such change or amendment would materially increase the obligations of Borrowers
or Guarantors or confer additional material rights upon the holder of the Senior
Note in a manner adverse to Agent or any Lender,

 

(vi) Borrowers and Guarantors shall not, directly or indirectly, redeem, retire,
defease, purchase or otherwise acquire such Indebtedness other than at maturity
(as set forth in the Senior Note as in effect on the date hereof or as extended
after the date hereof), or set aside or otherwise deposit or invest any sums for
such purpose, and

 

(vii) Borrowers and Guarantors shall furnish to Agent all material written
notices or demands in connection with such Indebtedness either received by any
Borrower or Guarantor or on its behalf, promptly after the receipt thereof, or
sent by any Borrower or Guarantor or on its behalf, concurrently with the
sending thereof, as the case may be;

 

(h) the unsecured Indebtedness of any US Borrower to any other US Borrower in
respect of loans by such US Borrower to such other US Borrower outstanding as of
the date hereof as set forth in Schedule 9.9(h) hereto; provided, that, (i) the
Indebtedness arising pursuant to any such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note or
other instrument is promptly delivered to Agent upon its request to hold as part
of the Collateral, with such endorsement and/or assignment by the payee of such
note or other instrument as Agent may require, and (ii) no Borrower or Guarantor
shall directly or

 

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indirectly make, or be required to make, any payments in respect of such
Indebtedness prior to the indefeasible payment and satisfaction in full of the
Obligations;

 

(i) the secured Indebtedness evidenced by the Holding Note, subject to the
provisions of Section 9.10(g) hereof;

 

(j) the Indebtedness set forth on Schedule 9.9 to the Information Certificate;
provided, that, (i) Borrowers and Guarantors may only make regularly scheduled
payments of principal and interest in respect of such Indebtedness in accordance
with the terms of the agreement or instrument evidencing or giving rise to such
Indebtedness as in effect on the date hereof, (ii) Borrowers and Guarantors
shall not, directly or indirectly, (A) amend, modify, alter or change the terms
of such Indebtedness or any agreement, document or instrument related thereto as
in effect on the date hereof except, that, Borrowers and Guarantors may, after
prior written notice to Agent, amend, modify, alter or change the terms thereof
so as to extend the maturity thereof, or defer the timing of any payments in
respect thereof, or to forgive or cancel any portion of such Indebtedness (other
than pursuant to payments thereof), or to reduce the interest rate or any fees
in connection therewith, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose, and (iii) Borrowers and Guarantors shall furnish to Agent all
notices or demands in connection with such Indebtedness either received by any
Borrower or Guarantor or on its behalf, promptly after the receipt thereof, or
sent by any Borrower or Guarantor or on its behalf, concurrently with the
sending thereof, as the case may be;

 

(k) unsecured Indebtedness of Holding arising pursuant to the redemption by
Parent of its common stock in accordance with Section 9.1 l(d); provided, that,
(i) the aggregate principal amount of such Indebtedness incurred in any fiscal
year shall not exceed the amount expressly permitted in Section 9.1 l(d), (ii)
no Borrower or Guarantor shall make, or be required to make, any payments in
respect of such Indebtedness other than regularly scheduled payments of interest
at a rate per annum not to exceed the US Prime Rate plus 2%, (iii) Agent shall
have received a subordination agreement, in form and substance satisfactory to
Agent, duly executed and delivered by the holder or holders of such
Indebtedness, (iv) Borrowers and Guarantors shall not, directly or indirectly,
(A) amend, modify, alter or change the terms of such Indebtedness or any
agreement, document or instrument related thereto except, that, the Borrowers
and Guarantors may, after prior written notice to the Agent, amend, modify,
alter or change the terms thereof so as to extend the maturity thereof, or defer
the timing of any payments in respect thereof, or to forgive or cancel any
portion of such Indebtedness (other than pursuant to payments thereof), or to
reduce the interest rate or any fees in connection therewith, or (B) redeem,
retire, defease, purchase or otherwise acquire such Indebtedness, or set aside
or otherwise deposit or invest any sums for such purpose, and (v) Borrowers and
Guarantors shall furnish to the Agent all notices or demands in connection with
such Indebtedness either received by any Borrower or Guarantor or on its behalf,
promptly after the receipt thereof, or sent by any Borrower or Guarantor or on
its behalf, concurrently with the sending thereof, as the case may be;

 

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(l) in the case of any Non-Credit Party, Indebtedness (a) arising under the Loan
Agreement, dated as of December 3, 2001, between Congress Financial Corporation
(Canada) and Catalina Lighting Canada, (1992) Inc., as amended; and

 

(m) to the extent the same constitutes Indebtedness hereunder, Indebtedness
arising from transactions of the type referred to in Section 9.12(a)(iv) hereof.

 

9.10 Loans, Investments, Etc. Each Borrower and Guarantor shall not, and shall
not permit any Subsidiary to, directly or indirectly, make any loans or advance
money or property to any person, or invest in (by capital contribution, dividend
or otherwise) or purchase or repurchase the Capital Stock or Indebtedness or all
or a substantial part of the assets or property of any person, or form or
acquire any Subsidiaries, or agree to do any of the foregoing, except:

 

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

 

(b) investments in cash or Cash Equivalents, provided, that, in the case of
Borrowers and Guarantors (i) no Loans are then outstanding and (ii) the terms
and conditions of Section 5.3 hereof shall have been satisfied with respect to
the deposit account, investment account or other account in which such cash or
Cash Equivalents are held;

 

(c) the existing equity investments of each Borrower and Guarantor as of the
date hereof in its Subsidiaries, provided, that, no Borrower or Guarantor shall
have any further obligations or liabilities to make any capital contributions or
other additional investments or other payments to or in or for the benefit of
any of such Subsidiaries;

 

(d) loans and advances by any Borrower, Guarantor or Non-Credit Party to
employees of such Borrower, Guarantor or Non-Credit Party not to exceed the
principal amount of the US Dollar Equivalent of US$250,000 in the aggregate at
any time outstanding for: (i) reasonably and necessary work-related travel or
other ordinary business expenses to be incurred by such employee in connection
with their work for such Borrower, Guarantor or Non-Credit Party and (ii)
reasonable and necessary relocation expenses of such employees (including home
mortgage financing for relocated employees);

 

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

 

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(f) obligations of account debtors to any Borrower, Guarantor or Non-Credit
Party arising from Accounts which are past due evidenced by a promissory note
made by such account debtor payable to such Borrower, Guarantor or Non-Credit
Party; provided, that, promptly upon the receipt of the original of any such
promissory note by a Borrower or Guarantor, such promissory note shall be
endorsed to the order of Agent by such Borrower or Guarantor and promptly
delivered to Agent as so endorsed; and

 

(g) loans by a Borrower or Guarantor to another Borrower or Guarantor (including
the loans by International to Holding evidenced by the Holding Note as of the
date hereof) or by a Non-Credit Party to another Non-Credit Party after the date
hereof, provided, that,

 

(i) as to all of such loans, (A) within thirty (30) days after the end of each
fiscal month, Borrowers shall provide to Agent a report in form and substance
satisfactory to Agent of the outstanding amount of such loans as of the last day
of the immediately preceding month and indicating any loans made and payments
received during the immediately preceding month, (B) the Indebtedness arising
pursuant to any such loan shall not be evidenced by a promissory note or other
instrument, unless the single original of such note or other instrument is
promptly delivered to Agent upon its request to hold as part of the Collateral,
with such endorsement and/or assignment by the payee of such note or other
instrument as Agent may require, (C) as of the date of any such loan and after
giving effect thereto, the Borrower or Guarantor making such loan shall be
Solvent, (D) as of the date of any such loan and after giving effect thereto, no
Default or Event of Default shall exist or have occurred and be continuing, and
(E) in the case only of the loan evidenced by the Holding Note (1) Holding shall
not directly or indirectly make, or be required to make, any payments in respect
of such Indebtedness prior to the end of the current term of this Agreement,
except, that, Holding may make regularly scheduled payments of interest in
respect of such Indebtedness in accordance with the terms of the Holding Note as
in effect on the date hereof; provided, that, as of the date of any such payment
and after giving effect thereto, no Default or Event of Default shall exist or
have occurred and be continuing, and (2) the security interest of International
in the Capital Stock of International and of Catalina Lighting Canada (1992),
Inc. to secure the payment obligations of Holdings under the Holding Note shall
be subordinate to the security interests therein of Agent, for the benefit of
Lenders, pursuant to subordination provisions of the applicable pledge
agreements, which provisions are in form and substance satisfactory to Agent and
are in full force and effect,

 

(ii) as to loans by a Guarantor to a Borrower, (A) the Indebtedness arising
pursuant to such loan shall be subject to, and subordinate in right of payment
to, the right of Agent and Lenders to receive the prior final payment and
satisfaction in full of all of the Obligations on terms and conditions
acceptable to Agent, (B) promptly upon Agent’s request, Agent shall have
received a subordination agreement, in form and substance satisfactory to Agent,
providing for the terms of the subordination in right of payment of such
Indebtedness of such Borrower to the prior final payment and satisfaction in
full of all of the Obligations, duly authorized, executed and delivered by such
Guarantor and such Borrower, and (C) such Borrower

 

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shall not, directly or indirectly make, or be required to make, any payments in
respect of such Indebtedness prior to the end of the then-current term of this
Agreement;

 

(iii) as to loans by a Borrower to another Borrower, as of the date of any such
loan and after giving effect thereto, (A) with respect to any such loans by any
US Borrower to any other Borrower, (1) the Excess Availability of such US
Borrower shall be not less than the US Dollar Equivalent of US$1,000,000, and
(2) the aggregate outstanding principal amount of all loans made by US Borrowers
to UK Borrowers shall not exceed the US Dollar Equivalent of US$500,000 at any
time, (B) with respect to any such loans by any UK Borrower to any other
Borrower, (1) the Excess Availability of UK Borrowers shall be not less than the
US Dollar Equivalent of US$2,000,000, and (2) the aggregate outstanding
principal amount of all loans made by UK Borrowers to US Borrowers and US
Guarantors shall not exceed the US Dollar Equivalent of £15,000,000, and (C) no
Borrower shall make any loans to any Guarantor, except, that, (1) UK Borrowers
and UK Guarantors may make loans to other UK Borrowers and UK Guarantors;
provided, that, as of the making of any such loans and after giving effect
thereto, all UK Borrowers and UK Guarantors shall be “Chargors” under the
Debenture and Obligors hereunder, and (2) US Borrowers and US Guarantors may
make loans to other US Borrowers and US Guarantors; provided, that, (x) as of
the making of any such loans and after giving effect thereto, all US Borrowers
and US Guarantors shall be Obligors hereunder and (y) the aggregate principal
amount of all such loans shall not exceed the US Dollar Equivalent of
US$2,000,000 at any time outstanding;

 

(h) the loans and advances set forth on Schedule 9.10 to the Information
Certificate; provided, that, as to such loans and advances, Borrowers and
Guarantors shall not, directly or indirectly, amend, modify, alter or change the
terms of such loans and advances or any agreement, document or instrument
related thereto and Borrowers and Guarantors shall furnish to Agent all notices
or demands in connection with such loans and advances either received by any
Borrower or Guarantor or on its behalf, promptly after the receipt thereof, or
sent by any Borrower or Guarantor or on its behalf, concurrently with the
sending thereof, as the case may be; and

 

(i) to the extent Holding receives the proceeds of a cash capital contribution
after the date hereof from its shareholders (each, a “Parent Contribution”),
Holding and its Subsidiaries may promptly apply such proceeds to make a cash
capital contribution to their respective Subsidiaries in an amount not to exceed
the Parent Contribution; provided, that, no Borrower or Guarantor shall be
permitted to make any capital contribution pursuant to this clause (i) from any
source other than the proceeds of the Parent Contribution received from the
shareholders of Holding.

 

9.11 Dividends and Redemptions. Each Borrower and Guarantor shall not, directly
or indirectly, declare or pay any dividends on account of any shares of class of
any Capital Stock of such Borrower or Guarantor now or hereafter outstanding, or
set aside or otherwise deposit or invest any sums for such purpose, or redeem,
retire, defease, purchase or otherwise acquire any

 

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shares of any class of Capital Stock (or set aside or otherwise deposit or
invest any sums for such purpose) for any consideration or apply or set apart
any sum, or make any other distribution (by reduction of capital or otherwise)
in respect of any such shares or agree to do any of the foregoing, except that:

 

(a) any Borrower or Guarantor may declare and pay such dividends or redeem,
retire, defease, purchase or otherwise acquire any shares of any class of
Capital Stock for consideration in the form of shares of common stock (so long
as after giving effect thereto no Change of Control or other Default or Event of
Default shall exist or occur);

 

(b) Borrowers and Guarantors may pay dividends to the extent permitted in
Section 9.12 below;

 

(c) any Subsidiary of a Borrower or Guarantor may pay dividends to a Borrower;

 

(d) Holding may repurchase Capital Stock consisting of its common stock held by
employees pursuant to any employee stock ownership plan thereof upon the
termination, retirement or death of any such employee in accordance with the
provisions of such plan, provided, that, as to any such repurchase, each of the
following conditions is satisfied: (i) as of the date of the payment for such
repurchase and after giving effect thereto, no Default or Event of Default shall
exist or have occurred and be continuing, (ii) such repurchase shall be paid
with funds legally available therefor either in cash or in the form of
Indebtedness permitted under Section 9.9(h), (iii) such repurchase shall not
violate any law or regulation or the terms of any indenture, agreement or
undertaking to which such Borrower or Guarantor is a party or by which such
Borrower or Guarantor or its or their property are bound, and (iv) the aggregate
amount of all payments for such repurchases in any calendar year shall not
exceed the US Dollar Equivalent of US$250,000;

 

(e) UK Borrowers may pay dividends in cash (and not any other asset) in respect
of any of their respective Capital Stock during any fiscal year, commencing with
the fiscal year beginning October 1, 2003, provided, that, as to any payment of
such dividend, each of the following conditions is satisfied:

 

(i) such payment shall be made with funds legally available therefor;

 

(ii) such dividend shall not violate any law or regulation or the terms of any
indenture, agreement or undertaking to which any UK Borrower is a party or by
which any UK Borrower or its properties are bound;

 

(iii) the aggregate annual amount of such payments shall not exceed the US
Dollar Equivalent of £4,000,000;

 

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(iv) as of the date of the payment of such dividend or redemption or repurchase
and after giving effect thereto, no Event of Default or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default shall exist or have occurred;

 

(v) for the thirty (30) consecutive day period immediately preceding any such
payment, UK Borrowers shall have had aggregate Excess Availability of not less
than the US Dollar Equivalent of £2,000,000;

 

(vi) as of the date of the payment of such dividend and after giving effect
thereto, UK Borrowers have aggregate Excess Availability of not less than the US
Dollar Equivalent of £2,000,000;

 

(f) the payment of dividends in respect of existing preference shares in UK
Borrowers and UK Guarantors in accordance with the Memorandum and Articles each
of UK Borrowers and UK Guarantors as in effect on the date hereof; and

 

(g) UK Borrowers may pay dividends in cash to Holding in the aggregate amounts
from time to time payable by Holding under the Holding Note; provided, that, (i)
such dividends are paid substantially contemporaneously with the making of a
regularly scheduled payment of interest by Holding under the Holding Note as in
effect on the date hereof, and (ii) as of the payment of each such dividend and
after giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing.

 

9.12 Transactions with Affiliates. Each Borrower and Guarantor shall not,
directly or indirectly:

 

(a) purchase, acquire or lease any property or services from, or sell, transfer
or lease any property or services to, any officer, director or other Affiliate
of such Borrower or Guarantor, except (i) for transfers of property expressly
permitted under Section 9.7 and loans and investments expressly permitted under
Sections 9.9 and 9.10, (ii) except for transfers in the ordinary course of and
pursuant to the reasonable requirements of such Borrower’s or Guarantor’s
business (as the case may be) and upon fair and reasonable terms no less
favorable to such Borrower or Guarantor than such Borrower or Guarantor would
obtain in a comparable arm’s length transaction with an unaffiliated person,
(iii) reasonable allocations among Holding and its Subsidiaries of the costs of
items purchased on a group basis, and of general corporate expenses and
overhead, in each case, in the ordinary course of business and in a manner
consistent with past practice and (iv) the purchase in the ordinary course of
business and in a manner consistent with past practice, of Inventory and
services from any Subsidiary which is not a Borrower, on extended payment terms;
or

 

(b) make any payments (whether by dividend, loan or otherwise) of management,
consulting or other fees for management or similar services, or of any
Indebtedness owing to any

 

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officer, employee, shareholder, director or any other Affiliate of any Borrower
or Guarantor, except:

 

(i) reasonable compensation to officers, employees and directors for services
rendered to any Borrower or Guarantor in the ordinary course of business;

 

(ii) payments by a Borrower or Guarantor to Sun Capital of:

 

(A) a fee in the amount of $450,000, which fee shall be payable in two (2)
installments of $225,000 each, of which the first installment shall be payable
on April 1, 2004 and the second installment shall be payable on June 1, 2004 or
which may be paid on such earlier date on which there shall have been a Change
of Control in connection with a transaction as to which Agent shall have
provided its prior written consent, provided that in each instance such amounts
may not be paid unless: (x) as of the date of each payment and after giving
effect thereto, no Event of Default or act, condition or event which with notice
or passage of time or both would constitute an Event of Default shall exist or
have occurred and be continuing; and (y) for the thirty (30) consecutive day
period immediately preceding any such payment and after giving effect thereto,
Holding and its Subsidiaries shall have had, and shall have, aggregate Excess
Availability of not less than the US Dollar Equivalent of US$2,500,000 provided,
further, that, if the conditions set forth in clauses (x) and (y) of this
subsection (b)(ii)(A) are not satisfied as of any such date, the fee which
otherwise would have been payable on such date if such conditions had then been
satisfied may be paid on the first date thereafter as of which such conditions
are satisfied; and

 

(B) of a management fee in an aggregate amount per calendar quarter not to
exceed the US Dollar Equivalent of US$125,000 (the “Quarterly Amount”);
provided, that, as to any such payment, as of the date of such payment and after
giving effect thereto, (1) no Event of Default has occurred and is continuing or
would result therefrom and (2) the aggregate Excess Availability of Borrowers
for the thirty (30) consecutive days immediately preceding the date of such
payment, and the aggregate Excess Availability of Borrowers on the date of any
such payment and after giving effect thereto, shall, in each case, be not less
than the US Dollar Equivalent of US$2,000,000; provided, further, that, if the
aggregate amount of management fees paid by Borrowers and Guarantors under this
clause (2)(i)(B) during any calendar quarter is less than the Quarterly Amount
for such fiscal quarter, then the Quarterly Amount for the succeeding fiscal
quarters shall be increased by the amount equal to such shortfall until such
shortfall is paid in full to Sun Capital pursuant to this Section
9.12(b)(ii)(B); and

 

(iii) reimbursement of reasonable out-of-pocket costs and expenses incurred by
Sun Capital and its Affiliates for the direct benefit of Borrowers and
Guarantors in the ordinary course of and pursuant to the reasonable requirements
of their business; provided that, as of the date of such reimbursement and after
giving effect thereto no Event of Default has occurred and is continuing or
would result therefrom.

 

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

 

9.14 End of Fiscal Years; Fiscal Quarters. Each Borrower and Guarantor shall,
for financial reporting purposes, cause its, and each of its Subsidiaries’ (a)
fiscal years to end on September 30 of each year and (b) fiscal quarters to end
on December 31, March 31, June 30 and September 30 of each year.

 

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

 

9.16 Limitation of Restrictions Affecting Subsidiaries. Each Borrower and
Guarantor shall not, directly or indirectly, create or otherwise cause or suffer
to exist any encumbrance or restriction which prohibits or limits the ability of
any Subsidiary of such Borrower or Guarantor to (a) pay dividends or make other
distributions or pay any Indebtedness owed to such Borrower or Guarantor or any
Subsidiary of such Borrower or Guarantor; (b) make loans or advances to such
Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor, (c)
transfer any of its properties or assets to such Borrower or Guarantor or any
Subsidiary of such Borrower or Guarantor; or (d) create, incur, assume or suffer
to exist any lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired, other than encumbrances and restrictions arising
under (i) applicable law, (ii) this Agreement, (iii) customary provisions
restricting subletting or assignment of any lease governing a leasehold interest
of such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor,
(iv) customary restrictions on dispositions of real property interests found in
reciprocal easement agreements of such Borrower or Guarantor or any Subsidiary
of such Borrower or Guarantor, (v) any agreement relating to permitted
Indebtedness incurred by a Subsidiary of such Borrower or Guarantor prior to the
date on which such Subsidiary was acquired by such Borrower or such Guarantor
and outstanding on such acquisition date, and (vi) the extension or continuation
of contractual obligations in

 

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existence on the date hereof; provided, that, any such encumbrances or
restrictions contained in such extension or continuation are no less favorable
to Agent and Lenders than those encumbrances and restrictions under or pursuant
to the contractual obligations so extended or continued.

 

9.17 EBITDA.

 

(a) The EBITDA of Holding and its Subsidiaries (on a consolidated basis) for the
immediately preceding twelve (12) consecutive month period (treated as a single
accounting period) as of the end of each month shall not be less than the US
Dollar Equivalent of US$10,000,000.

 

(b) The EBITDA of UK Borrowers and UK Guarantors (on a consolidated basis) for
the immediately preceding twelve (12) month period (treated as a single
accounting period) as of the end of each month shall be less than the Sterling
Equivalent of £6,000,000.

 

9.18 Adjusted Tangible Net Worth.

 

(a) Holding and its Subsidiaries shall at all times have, and shall maintain,
Adjusted Tangible Net Worth of not less than the US Dollar Equivalent of the
amount indicated on Schedule 9.18(a) hereto with respect to each of the periods
specified therein.

 

(b) UK Borrowers and UK Guarantors shall at all times have, and shall maintain,
Adjusted Tangible Net Worth of not less than the Sterling Equivalent of the
amount indicated on Schedule 9.18(b) hereto with respect to each of the periods
specified therein.

 

9.19 Leverage Ratio.

 

(a) Holding and its Subsidiaries (on a consolidated basis) shall at all times
have, and shall maintain, a Leverage Ratio of not greater than the Leverage
Ratio indicated on Schedule 9.19(a) with respect to each of the periods
specified therein.

 

(b) UK Borrowers and UK Guarantors (on a consolidated basis) shall at all times
have, and shall maintain, a Leverage Ratio of not greater than 2.5:1.0.

 

9.20 Capital Expenditures.

 

(a) US Borrowers and US Guarantors shall not directly or indirectly, make or
commit to make, whether through purchase, capital leases or otherwise, Capital
Expenditures in any fiscal year of US Borrowers and US Guarantors in excess of
the US Dollar Equivalent of $1,750,000 (the “Base Amount”); provided, that, if
the aggregate amount of Capital Expenditures expended by US Borrowers and US
Guarantors during any fiscal year, commencing with the fiscal year ending
September 30, 2004, is less than the Base Amount for such fiscal year, then the

 

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amount of Capital Expenditures permitted to be expended hereunder in the
immediately succeeding fiscal year shall be increased by the lesser of (a) such
shortfall and (b) 50% of such Base Amount.

 

(b) UK Borrowers and UK Guarantors shall not directly or indirectly, make or
commit to make, whether through purchase, capital leases or otherwise, Capital
Expenditures in any fiscal year of UK Borrowers and UK Guarantors in excess of
the Sterling Equivalent of £1,200,000 (the “Base Amount”); provided, that, if
the aggregate amount of Capital Expenditures expended by UK Borrowers and UK
Guarantors during any fiscal year, commencing with the fiscal year ending
September 30, 2004, is less than the Base Amount for such fiscal year, then the
amount of Capital Expenditures permitted to be expended hereunder in the
immediately succeeding fiscal year shall be increased by the lesser of (a) such
shortfall and (b) 50% of such Base Amount.

 

9.21 US Excess Availability. US Borrowers shall at all times have, and shall
maintain, aggregate Excess Availability of not less than the US Dollar
Equivalent of US$300,000.

 

9.22 License Agreements.

 

(a) Each Borrower and Guarantor shall (i) promptly and faithfully observe and
perform all of the material terms, covenants, conditions and provisions of the
material License Agreements to which it is a party to be observed and performed
by it, at the times set forth therein, if any, (ii) not do, permit, suffer or
refrain from doing anything that could reasonably be expected to result in a
default under or breach of any of the terms of any material License Agreement,
(iii) not cancel, surrender, modify, amend, waive or release any material
License Agreement in any material respect or any term, provision or right of the
licensee thereunder in any material respect, or consent to or permit to occur
any of the foregoing; except, that, subject to Section 9.22(b) below, such
Borrower or Guarantor may cancel, surrender or release any material License
Agreement in the ordinary course of the business of such Borrower or Guarantor;
provided, that, such Borrower or Guarantor (as the case may be) shall give Agent
not less than fifteen (15) days prior written notice of its intention to so
cancel, surrender and release any such material License Agreement, (iv) give
Agent prompt written notice of any material License Agreement entered into by
such Borrower or Guarantor after the date hereof, together with a true, correct
and complete copy thereof and such other information with respect thereto as
Agent may request, (v) give Agent prompt written notice of any material breach
of any obligation, or any default, by any party under any material License
Agreement, and deliver to Agent (promptly upon the receipt thereof by such
Borrower or Guarantor in the case of a notice to such Borrower or Guarantor and
concurrently with the sending thereof in the case of a notice from such Borrower
or Guarantor) a copy of each notice of default and every other notice and other
communication received or delivered by such Borrower or Guarantor in connection
with any material License Agreement which relates to the right of such Borrower
or Guarantor to continue to use the property subject to such License Agreement,
and (vi) furnish to Agent, promptly upon the request of Agent, such information
and evidence as Agent may reasonably require from time

 

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to time concerning the observance, performance and compliance by such Borrower
or Guarantor or the other party or parties thereto with the material terms,
covenants or provisions of any material License Agreement.

 

(b) Each Borrower and Guarantor will either (i) exercise any option to renew or
extend the term of each material License Agreement to which it is a party in
such manner as will cause the term of such material License Agreement to be
effectively renewed or extended for the period provided by such option and give
prompt written notice thereof to Agent or (ii) give Agent prior written notice
that such Borrower or Guarantor does not intend to renew or extend the term of
any such material License Agreement or that the term thereof shall otherwise be
expiring, not less than sixty (60) days prior to the date of any such
non-renewal or expiration, hi the event of the failure of such Borrower or
Guarantor to extend or renew any material License Agreement to which it is a
party, Agent shall have, and is hereby granted, the irrevocable right and
authority, at its option, to renew or extend the term of such material License
Agreement, whether in its own name and behalf, or in the name and behalf of a
designee or nominee of Agent or in the name and behalf of such Borrower or
Guarantor, as Agent shall determine at any time that an Event of Default shall
exist or have occurred and be continuing. Agent may, but shall not be required
to, perform any or all of such obligations of such Borrower or Guarantor under
any of the License Agreements, including, but not limited to, the payment of any
or all sums due from such Borrower or Guarantor thereunder. Any sums so paid by
Agent shall constitute part of the Obligations.

 

9.23 After Acquired Real Property. If any Borrower or Guarantor hereafter
acquires any Real Property, fixtures or any other property that is of the kind
or nature described in the Mortgages and such Real Property, fixtures or other
property at any one location has a fair market value in an amount equal to or
greater than the US Dollar Equivalent of US$100,000 (or if a Default or Event of
Default exists, then regardless of the fair market value of such assets),
without limiting any other rights of Agent or any Lender, or duties or
obligations of any Borrower or Guarantor, promptly upon Agent’s request, such
Borrower or Guarantor shall execute and deliver to Agent a mortgage, deed of
trust or deed to secure debt, as Agent may determine, in form and substance
substantially similar to the Mortgages and as to any provisions relating to
specific state laws satisfactory to Agent and in form appropriate for recording
in the real estate records of the jurisdiction in which such Real Property or
other property is located granting to Agent a perfected lien and mortgage on and
security interest in such Real Property, fixtures or other property (except as
such Borrower or Guarantor would otherwise be permitted to incur hereunder or
under the Mortgages or as otherwise consented to in writing by Agent) and such
other agreements, documents and instruments as Agent may require in connection
therewith.

 

9.24 New Subsidiaries. If any Borrower or Guarantor shall form or acquire any
Subsidiary on or after the date hereof, (a) such Borrower or Guarantor shall
promptly cause any such Subsidiary to execute and deliver to Agent, in form and
substance satisfactory to Agent, (i) an absolute and unconditional guarantee of
payment of any and all present and future

 

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Obligations, (ii) a security agreement granting to Agent, for the ratable
benefit of Lenders, a first security interest and lien on all of the assets of
such Subsidiary (except as otherwise consented to by Agent in writing), (iii)
related Uniform Commercial Code Financing Statements (and/or other similar lien
registrations), and (iv) such other agreements, documents and instruments as
Agent may require, including, but not limited to, supplements and amendments
hereto and other loan agreements or instruments evidencing indebtedness of such
new Subsidiary to Agent and Lenders, and (b) promptly upon Agent’s request (i)
such Borrower or Guarantor shall execute and deliver to Agent in form and
substance satisfactory to Agent, a pledge and security agreement granting to
Agent, for the ratable benefit of Lenders, a pledge of and lien on all of the
issued and outstanding shares of Capital Stock of such Subsidiary, and (ii) such
Borrower or Guarantor shall deliver to Agent the original stock certificates
evidencing such shares of Capital Stock (or such other evidence as may be issued
in the case of a partnership or limited liability company) together with stock
powers with respect thereto duly executed in blank (or the equivalent thereof in
the case of a partnership or limited liability company); provided, that, (x) any
Subsidiary of any Borrower or Guarantor that is not incorporated or formed under
the United States of America or a political subdivision thereof shall not be
required to guaranty or pledge its assets to secure any Obligations other than
the Obligations of the UK Borrowers and UK Guarantors and (y) to secure the
Obligations of US Borrowers and US Guarantors, the pledge of shares of Capital
Stock of any Subsidiary of a Borrower or Guarantor that is not incorporated or
formed under the United States of America or a political subdivision thereof
shall not exceed sixty-five (65%) percent of all of the issued and outstanding
shares of Capital Stock of such Subsidiary.

 

9.25 Costs and Expenses. Borrowers and Guarantors shall pay to Agent and Lenders
on demand all costs, expenses, filing fees and taxes paid or payable in
connection with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Agent’s rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if applicable);
(b) costs and expenses and fees for insurance premiums, appraisal fees and
search fees, costs and expenses of remitting loan proceeds, collecting checks
and other items of payment, and establishing and maintaining the Blocked
Accounts, together with Agent’s customary charges and fees with respect thereto;
(c) charges, fees or expenses charged by any bank or issuer in connection with
the Letter of Credit Accommodations; (d) costs and expenses of preserving and
protecting the Collateral; (e) costs and expenses paid or incurred in connection
with obtaining payment of the Obligations, enforcing the security interests and
liens of Agent, selling or otherwise realizing upon the Collateral, and
otherwise enforcing the provisions of this Agreement and the other Financing
Agreements or defending any claims made or threatened against Agent or any
Lender arising out of the transactions contemplated hereby and thereby
(including preparations for and consultations concerning any such matters); (f)
all out-of-pocket expenses and costs heretofore and from time to time hereafter
incurred by Agent and Lenders during the

 

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course of periodic field examinations of the Collateral and such Borrower’s or
Guarantor’s operations, plus a per diem charge at the rate of US$850 per person
per day for Agent’s examiners in the field and office; and (g) the reasonable
fees and disbursements of counsel (including legal assistants) to Agent and
Lenders in connection with any of the foregoing.

 

9.26 Dissolution of US Inactive Subsidiaries; UK Dormant Subsidiaries. (a) On or
before the date which is ninety (90) days after the date hereof, cause each US
Inactive Subsidiary to (i) be dissolved in accordance with all applicable laws
and regulations and (ii) assign all of its assets to its shareholders.

 

(b) Borrowers and Guarantors shall procure that each of the UK Dormant
Subsidiaries shall remain a UK Dormant Company.

 

9.27 Hyde Property. The Borrowers and the Guarantors shall procure that within
sixty (60) days of the date of this Agreement the Agent will have received, in
form and substance satisfactory to it, such documentation as the Agent may
reasonably require with respect to the Hyde Property including, without
limitation, a report on title (in form and substance satisfactory to the Agent)
prepared by Denton Wilde Sapte and addressed to the Agent and a letter from
Edwards Symmons & Partners addressed to the Agent confirming that they have read
the report on title and that nothing in such report affects the valuation
provided to the Agent in respect of the Hyde Property prior to the date of this
Agreement and if such report on title reveals any matters which the Agent
considers material, the Borrowers and the Guarantors will, where requested by
the Agent, forthwith take all necessary action to ensure the remedying or
removal of any matters which might, in the opinion of the valuer or the Agent’s
solicitors, as appropriate, materially and adversely affect the open market
value of the Hyde Property or the extent to which the Hyde Property can continue
to be used for its current use.

 

9.28 UK Bank Accounts.

 

(a) None of the UK Borrowers or the UK Guarantors shall maintain any bank
accounts which are not Charged Accounts (as defined in the Debenture) other than
the Excluded Accounts (as defined in the Debenture) and the Ring US Accounts;

 

(b) The Ring US Accounts shall be used solely by Ring Limited for the purpose of
providing cash collateral in respect of any letters of credit issued or opened
by the Existing Lenders and disclosed in writing to the Agent before the date of
this Agreement.

 

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

 

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may at any time and from time to time request a certificate from an officer of
any Borrower or Guarantor representing that all conditions precedent to the
making of Loans and providing Letter of Credit Accommodations contained herein
are satisfied. In the event of such request by Agent, Agent and Lenders may, at
Agent’s option, cease to make any further Loans or provide any further Letter of
Credit Accommodations until Agent has received such certificate and, in
addition, Agent has determined that such conditions are satisfied.

 

SECTION 10. EVENTS OF DEFAULT AND REMEDIES

 

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

 

(a) (i) any Borrower fails to pay any of the Obligations when due or (ii) any
Borrower or Obligor fails to perform any of the covenants contained in Sections
9.3, 9.4, 9.6, 9.13, 9.14, 9.15, and 9.16 of this Agreement and such failure
shall continue for fifteen (15) days; provided, that, such fifteen (15) day
period shall not apply in the case of: (A) any failure to observe any such
covenant which is not capable of being cured at all or within such fifteen (15)
day period or which has been the subject of a prior failure within a six (6)
month period or (B) an intentional breach by any Borrower or Obligor of any such
covenant or (iii) any UK Borrower or UK Guarantor fails to perform any of the
terms, covenants, conditions or provisions contained in Sections 9.17(b),
9.18(b), 9.19(b) or 9.20(b) hereof, or (iv) any US Borrower or US Guarantor
fails to perform any of the terms, covenants, conditions or provisions contained
in Sections 9.17(a), 9.18(a), 9.18(a), 9.20(a) or 9.21 hereof, or (v) any
Borrower or Obligor fails to perform any of the terms, covenants, conditions or
provisions contained in this Agreement or any of the other Financing Agreements
other than those described in Sections 10.1(a)(i), 10.1(a)(ii), 10.1(a)(iii) and
10.1(a)(iv) above;

 

(b) any representation, warranty or statement of fact made by any Borrower or
Guarantor to Agent in this Agreement, the other Financing Agreements or any
other written agreement, schedule, confirmatory assignment or otherwise shall
when made or deemed made be false or misleading in any material respect;

 

(c) any Obligor revokes or terminates or fails to perform any of the terms,
covenants, conditions or provisions of any guarantee, endorsement or other
agreement of such party in favor of Agent or any Lender;

 

(d) one or more judgments for the payment of money is or are rendered against
any Borrower or Obligor in excess of the US Dollar Equivalent of US$150,000 in
the aggregate (to the extent not covered by insurance where the insurer has
assumed responsibility in writing for such judgment) and shall remain
undischarged or unvacated for a period in excess of forty-five (45) days or
execution shall at any time not be effectively stayed, or any judgment other
than for

 

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the payment of money, or injunction, attachment, garnishment or execution is
rendered against any Borrower or Obligor or any of the Collateral having a value
in excess of the US Dollar Equivalent of US$150,000;

 

(e) any Obligor (being a natural person or a general partner of an Obligor which
is a partnership) dies or any Borrower or Obligor, which is a partnership,
limited liability company, limited liability partnership or a corporation,
dissolves or suspends or discontinues doing business;

 

(f) any Borrower or Obligor makes an assignment for the benefit of creditors,
makes or sends notice of a bulk transfer or calls a meeting of its creditors or
principal creditors in connection with a moratorium or adjustment of the
Indebtedness due to them;

 

(g) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute or
under any bankruptcy or insolvency laws of the United Kingdom (including the
Insolvency Act of 1986) or any similar law or statue of any jurisdiction now or
hereafter in effect (whether at law or in equity) is filed against any Borrower
or Obligor or all or any part of its properties and such petition or application
is not dismissed within forty-five (45) days after the date of its filing or any
Borrower or Obligor shall file any answer admitting or not contesting such
petition or application or indicates its consent to, acquiescence in or approval
of, any such action or proceeding or the relief requested is granted sooner or
any other step is taken or procedure is commenced including the making of an
application or service of a notice with a view to any UK Borrower or UK
Guarantor being adjudicated or found insolvent or the winding up or dissolution
of any UK Borrower or UK Guarantor, or the appointment of an administrator,
trustee, receiver or similar officer in respect of any UK Borrower or UK
Guarantor;

 

(h) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statue or
under any bankruptcy or insolvency laws of the United Kingdom (including the
Insolvency Act of 1986) or any similar law or statue of any jurisdiction now or
hereafter in effect (whether at a law or equity) is filed by any Borrower or
Obligor or for all or any part of its property;

 

(i) any default in respect of any Indebtedness of any Borrower or Obligor (other
than Indebtedness owing to Agent and Lenders hereunder), in any case in an
amount in excess of the US Dollar Equivalent of US$50,000, including under or in
respect of the Senior Note or the Holding Note, which default continues for more
than the applicable cure period, if any, with respect thereto and/or is not
waived in writing by the other parties thereto, or any default by any Borrower
or Obligor under any Material Contract, which default continues for more than
the applicable cure period, if any, with respect thereto and/or is not waived in
writing by the other parties thereto;

 

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(j) any material provision hereof or of any of the other Financing Agreements
shall for any reason cease to be valid, binding and enforceable with respect to
any party hereto or thereto (other than Agent) in accordance with its terms, or
any party to this Agreement or the other Financing Agreements shall challenge
the enforceability hereof or thereof, or shall assert in writing, or take any
action or fail to take any action based on the assertion that any provision
hereof or of any of the other Financing Agreements has ceased to be or is
otherwise not valid, binding or enforceable in accordance with its terms, or any
security interest provided for herein or in any of the other Financing
Agreements shall cease to be a valid and perfected first priority security
interest in any of the Collateral purported to be subject thereto (except as
otherwise permitted herein or therein);

 

(k) an ERISA Event shall occur which results in or could reasonably be expected
to result in liability of any Borrower in an aggregate amount in excess of the
US Dollar Equivalent of US$250,000;

 

(l) any Change of Control shall occur;

 

(m) the indictment by any Governmental Authority, or as Agent may reasonably and
in good faith determine, the threatened indictment by any Governmental Authority
of any Borrower or Obligor of which any Borrower, Obligor or Agent receives
notice, in either case, as to which there is a reasonable likelihood of an
adverse determination, in the good faith determination of Agent, under any
criminal statute, or commencement or threatened commencement of criminal or
civil proceedings against such Borrower or Obligor, pursuant to which statute or
proceedings the penalties or remedies sought or available include forfeiture of
(i) any of the Collateral having a value in excess of US Dollar Equivalent of
US$100,000 or (ii) any other property of any Borrower or Guarantor which is
necessary or material to the conduct of its business;

 

(n) there shall occur any event, development or condition that would constitute
or have a Material Adverse Effect after the date hereof;

 

(o) any bank at which any deposit account of any Borrower or Guarantor is
maintained shall fail to comply with any of the material terms of any Deposit
Account Control Agreement to which such bank is a party or any securities
intermediary, commodity intermediary or other financial institution at any time
in custody, control or possession of any investment property of any Borrower or
Guarantor shall fail to comply with any of the material terms of any Investment
Property Control Agreement to which such person is a party; or

 

(p) there shall be an event of default (after applicable grace periods, if any)
under any of the other Financing Agreements.

 

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10.2 Remedies.

 

(a) At any time an Event of Default exists or has occurred and is continuing,
Agent and Lenders shall have all rights and remedies provided in this Agreement,
the other Financing Agreements, the UCC and other applicable law, all of which
rights and remedies may be exercised without notice to or consent by any
Borrower or Obligor, except as such notice or consent is expressly provided for
hereunder or required by applicable law. All rights, remedies and powers granted
to Agent and Lenders hereunder, under any of the other Financing Agreements, the
UCC or other applicable law, are cumulative, not exclusive and enforceable, in
Agent’s discretion, alternatively, successively, or concurrently on any one or
more occasions, and shall include, without limitation, the right to apply to a
court of equity for an injunction to restrain a breach or threatened breach by
any Borrower or Obligor of this Agreement or any of the other Financing
Agreements. Subject to Section 12 hereof, Agent may, and at the direction of the
Required Lenders shall, at any time or times, proceed directly against any
Borrower or Obligor to collect the Obligations without prior recourse to the
Collateral.

 

(b) Without limiting the foregoing, at any time an Event of Default exists or
has occurred and is continuing, Agent may, in its discretion, and upon the
direction of the Required Lenders, shall (i) upon notice to Administrative
Borrower, accelerate the payment of all Obligations and demand immediate payment
thereof to Agent for itself and the ratable benefit of Lenders, (provided, that,
upon the occurrence of any Event of Default described in Sections 10.1(g) and
10.1(h), all Obligations shall automatically become immediately due and
payable), (ii) with or without judicial process or the aid or assistance of
others, enter upon any premises on or in which any of the Collateral may be
located and take possession of the Collateral or complete processing,
manufacturing and repair of all or any portion of the Collateral, (iii) require
any Borrower or Obligor, at Borrowers’ expense, to assemble and make available
to Agent any part or all of the Collateral at any place and time designated by
Agent, (iv) collect, foreclose, receive, appropriate, setoff and realize upon
any and all Collateral, (v) remove any or all of the Collateral from any
premises on or in which the same may be located for the purpose of effecting the
sale, foreclosure or other disposition thereof or for any other purpose, (vi)
sell, lease, transfer, assign, deliver or otherwise dispose of any and all
Collateral (including entering into contracts with respect thereto, public or
private sales at any exchange, broker’s board, at any office of Agent or
elsewhere) at such prices or terms as Agent may deem reasonable, for cash, upon
credit or for future delivery, with the Agent having the right to purchase the
whole or any part of the Collateral at any such public sale, all of the
foregoing being free from any right or equity of redemption of any Borrower or
Obligor, which right or equity of redemption is hereby expressly waived and
released by Borrowers and Obligors and/or (vii) terminate this Agreement. If any
of the Collateral is sold or leased by Agent upon credit terms or for future
delivery, the Obligations shall not be reduced as a result thereof until payment
therefor is finally collected by Agent. If notice of disposition of Collateral
is required by law, ten (10) days prior notice by Agent to Administrative
Borrower in the United States of America and in the United Kingdom designating
the time and place of any public sale or the time after which any private sale
or other intended disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and Borrowers and Obligors waive any other notice. In
the event Agent institutes an action to recover any Collateral or seeks recovery
of any Collateral by way of prejudgment remedy, each

 

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Borrower and Obligor waives the posting of any bond which might otherwise be
required. At any time an Event of Default exists or has occurred and is
continuing, upon Agent’s request, Borrowers will either, as Agent shall specify,
furnish cash collateral to the issuer to be used to secure and fund Agent’s
reimbursement obligations to the issuer in connection with any Letter of Credit
Accommodations or furnish cash collateral to Agent for the Letter of Credit
Accommodations. Such cash collateral shall be in the amount equal to one hundred
five (105%) percent of the aggregate undrawn amount of the Letter of Credit
Accommodations outstanding plus the amount of any fees and expenses payable in
connection therewith through the end of the latest expiration date of such
Letter of Credit Accommodations.

 

(c) At any time or times that an Event of Default exists or has occurred and is
continuing, Agent may, in its discretion, and upon the direction of the Required
Lenders, Agent shall, enforce the rights of any Borrower or Obligor against any
account debtor, secondary obligor or other obligor in respect of any of the
Accounts or other Receivables. Without limiting the generality of the foregoing,
at any time an Event of Default exists or has occurred and is continuing, Agent
may, in its discretion, and upon the direction of the Required Lenders, Agent
shall, at such time or times (i) notify any or all account debtors, secondary
obligors or other obligors in respect thereof that the Receivables have been
assigned to Agent and that Agent has a security interest therein and Agent may
direct any or all accounts debtors, secondary obligors and other obligors to
make payment of Receivables directly to Agent, (ii) extend the time of payment
of, compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Receivables or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any secondary obligors or other obligors in respect thereof
without affecting any of the Obligations, (iii) demand, collect or enforce
payment of any Receivables or such other obligations, but without any duty to do
so, and Agent and Lenders shall not be liable for any failure to collect or
enforce the payment thereof nor for the negligence of its agents or attorneys
with respect thereto and (iv) take whatever other action Agent may deem
necessary or desirable for the protection of its interests and the interests of
Lenders. At any time that an Event of Default exists or has occurred and is
continuing, at Agent’s request, all invoices and statements sent to any account
debtor shall state that the Accounts and such other obligations have been
assigned to Agent and are payable directly and only to Agent and Borrowers and
Obligors shall deliver to Agent such originals of documents evidencing the sale
and delivery of goods or the performance of services giving rise to any Accounts
as Agent may require. In the event any account debtor returns Inventory when an
Event of Default exists or has occurred and is continuing, Borrowers shall, upon
Agent’s request, hold the returned Inventory in trust for Agent, segregate all
returned Inventory from all of its other property, dispose of the returned
Inventory solely according to Agent’s instructions, and not issue any credits,
discounts or allowances with respect thereto without Agent’s prior written
consent.

 

(d) To the extent that applicable law imposes duties on Agent or any Lender to
exercise remedies in a commercially reasonable manner (which duties cannot be
waived under such law and to the extent not prohibited by Section 9-602 of the
UCC), each Borrower and Guarantor acknowledges and agrees that it is not
commercially unreasonable for Agent or any

 

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

 

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

 

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(f) Agent may apply the cash proceeds of Collateral actually received by Agent
from any sale, lease, foreclosure or other disposition of the Collateral to
payment of the Obligations, in whole or in part and in such order as Agent may
elect, whether or not then due. Borrowers and Guarantors shall remain liable to
Agent and Lenders for the payment of any deficiency with interest at the highest
rate provided for herein and all costs and expenses of collection or
enforcement, including attorneys’ fees and expenses.

 

(g) Without limiting the foregoing, upon the occurrence and during the
continuance of a Default or an Event of Default, (i) Agent and Lenders may, at
Agent’s option, and upon the occurrence and during the continuance of an Event
of Default at the direction of the Required Lenders, Agent and Lenders shall,
without notice, (A) cease making Loans or arranging for Letter of Credit
Accommodations or reduce the lending formulas or amounts of Loans and Letter of
Credit Accommodations available to Borrowers and/or (B) terminate any provision
of this Agreement providing for any future Loans or Letter of Credit
Accommodations to be made by Agent and Lenders to Borrowers and (ii) Agent may,
at its option, establish such Reserves as Agent determines, without limitation
or restriction, notwithstanding anything to the contrary contained herein.

 

(h) Notwithstanding anything to the contrary contained herein or in any of the
other Financing Agreements other than Section 10.2(i) below, except as the Term
Loan B Lenders shall otherwise agree, Agent shall demand payment of the
Obligations and commence and pursue such other Enforcement Actions as Agent in
good faith deems appropriate within one hundred twenty (120) days after the date
of the receipt by Agent of written notice executed and delivered by the UK Term
Loan B Lenders of an Event of Default described in Sections 10.1(a)(i), 10.1(g),
10.1(h), 10.1(m) or 10.1(a)(iv) (to the extent arising as a result of the
failure to comply with Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.16, 9.17,
9.18, 9.19 or 9.20 hereof), and requesting that Agent commence Enforcement
Actions, provided, that, (i) such Event of Default has not been waived or cured,
(ii) in the good faith determination of Agent, taking an Enforcement Action is
permitted under the terms of this Agreement and applicable law, (iii) taking an
Enforcement Action shall not result in any liability of Agent or Lenders to any
Borrower, Obligor or any other person, (iv) Agent shall be entitled to all of
the benefits of Sections 12.2, 12.3 and 12.5 hereof, and (v) Agent shall not be
required to take an Enforcement Action so long as within the period provided
above, Agent shall, at its option, either (A) appoint Saberasu Japan Investments
II B.V., as an agent of Agent for purposes of exercising the rights of Agent to
take an Enforcement Action, subject to the terms hereof or (B) resign as Agent
and Saberasu Japan Investments II B.V., shall automatically be deemed to be the
successor Agent hereunder for purposes hereof, except with respect to the
provisions of Section 2 hereof and in connection with all matters relating to
the determination of the Borrowing Base and each of its components (including
Eligible Accounts, Eligible Inventory, Reserves and receiving reports in respect
of Collateral and conducting field examinations with respect to the Collateral
and similar

 

(i) Notwithstanding anything to the contrary contained herein or in any of the
other Financing Agreements, Agent and Lenders shall not be entitled to exercise
rights or remedies

 

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under this Section 10.2 or otherwise at law or in equity, against any of UK
Borrowers, UK Guarantors or Collateral consisting of assets of UK Borrowers or
UK Guarantors, with respect to an Event of Default consisting exclusively of the
breach of any of the covenants set forth in any of Sections 9.17(a), 9.18(a),
9.19(a), 9.20(a) or 9.21 hereof (each of which covenants shall be deemed to have
been made only by US Borrowers and US Guarantors) or any other Event of Default
by any of US Borrowers or US Guarantors, unless such Event of Default by US
Borrowers or US Guarantors would have a Material Adverse Effect on the UK
Borrowers and the UK Guarantors collectively. Nothing contained herein shall
prohibit, restrict or prevent Agent or Lenders from exercising their rights and
remedies against any of the UK Borrowers, UK Guarantors or any Collateral
consisting of assets or property of UK Borrowers or UK Guarantors, with respect
to any Event of Default not consisting exclusively of the breach of one or more
enumerated covenants set forth in the preceding sentence or consisting of an
Event of Default referred to in the preceding sentence that has such Material
Adverse Effect.

 

SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS: GOVERNING LAW

 

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

 

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

 

(b) Borrowers, Guarantors, Agent and Lenders irrevocably consent and submit to
the non-exclusive jurisdiction of the Supreme Court of the State of New York for
New York County and the United States District Court for the Southern District
of New York, whichever Agent may elect, and waive any objection based on venue
or forum non conveniens with respect to any action instituted therein arising
under this Agreement or any of the other Financing Agreements or in any way
connected with or related or incidental to the dealings of the parties hereto in
respect of this Agreement or any of the other Financing Agreements or the
transactions related hereto or thereto, in each case whether now existing or
hereafter arising, and whether in contract, tort, equity or otherwise, and agree
that any dispute with respect to any such matters shall be heard only in the
courts described above (except that Agent and Lenders shall have the right to
bring any action or proceeding against any Borrower or Guarantor or its or their
property in the courts of any other jurisdiction which Agent deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against any Borrower or Guarantor or its or their property).

 

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

 

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

 

(e) Agent and Lenders shall not have any liability to any Borrower or Guarantor
(whether in tort, contract, equity or otherwise) for losses suffered by such
Borrower or Guarantor in connection with, arising out of, or in any way related
to the transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined by a
final and non-appealable judgment or court order binding on Agent and such
Lender, that the losses were the result of acts or omissions constituting gross
negligence or willful misconduct. In any such litigation, Agent and Lenders
shall be entitled to the benefit of the rebuttable presumption that it acted in
good faith and with the exercise of ordinary care in the performance by it of
the terms of this Agreement. Each Borrower and Guarantor: (i) certifies that
neither Agent, any Lender nor any representative, agent or attorney acting for
or on behalf of Agent or any Lender has represented, expressly or otherwise,
that Agent and Lenders would not, in the event of litigation, seek to enforce
any of the waivers provided for in this Agreement or any of the other Financing
Agreements and (ii) acknowledges that in entering into this Agreement and the
other Financing Agreements, Agent and Lenders are relying upon, among other
things, the waivers and certifications set forth in this Section 11.1 and
elsewhere herein and therein.

 

11.2 Waiver of Notices. Each Borrower and Guarantor hereby expressly waives
demand, presentment, protest, notice of protest and notice of dishonor with
respect to any and all

 

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instruments and chattel paper, included in or evidencing any of the Obligations
or the Collateral, and any and all other demands and notices of any kind or
nature whatsoever with respect to the Obligations, the Collateral and this
Agreement, except such as are expressly provided for herein. No notice to or
demand on any Borrower or Guarantor which Agent or any Lender may elect to give
shall entitle such Borrower or Guarantor to any other or further notice or
demand in the same, similar or other circumstances.

 

11.3 Amendments and Waivers.

 

(a) Neither this Agreement nor any other Financing Agreement nor any terms
hereof or thereof may be amended, changed, waived, discharged or terminated
unless such change, amendment, waiver, discharge or termination is (i) in
writing signed by Agent and the Required Lenders or at Agent’s option, by Agent
with the authorization of the Required Lenders, and (ii) as to amendments to any
of the Financing Agreements (other than with respect to any provision of Section
12 hereof), by any Borrower; except, that, no such change, amendment, waiver,
discharge or termination shall:

 

(A) reduce the interest rate or any fees, extend the time of payment of
principal, interest or any fees or reduce the principal amount of any Loan or
Letter of Credit Accommodation, in each case without the consent of each Lender
directly affected thereby;

 

(B) increase the Commitment of any Lender over the amount thereof then in effect
or provided hereunder, in each case without the consent of the Lender directly
affected thereby;

 

(C) release any Collateral (except as expressly required hereunder or under any
of the other Financing Agreements or applicable law and except as permitted
under Section 12.1 l(b) hereof), or subordinate the liens of Agent for the
benefit of Lenders, without the consent of Agent and all of Lenders;

 

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

 

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

 

(F) amend, modify or waiver any terms of this Sections 6.4 or 11.3 hereof,
without the consent of Agent and all of Lenders; or

 

(G) increase the advance rates (in excess of the stated advance rates in effect
on the date hereof) constituting part of the Borrowing Base (in excess of the
advance rates set forth

 

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in the definition of “Borrowing Base” as in effect on the date hereof), without
the consent of Agent and all of Lenders.

 

Notwithstanding anything to the contrary contained herein, any change, waiver,
discharge or termination with respect to the following shall require the consent
of Agent and all of the UK Term Loan B Lenders:

 

(1) the terms of Section 9.19 hereof (or any definition with respect to
financial terms used in such financial covenant in a manner which has the effect
of reducing the amounts which Holding and its Subsidiaries are required to
maintain pursuant to such financial covenants);

 

(2) the definitions of “Borrowing Base” (but only to the extent such proposed
change in the definition would increase the advance rates above those in effect
on the date hereof), “Change of Control”, “Eligible Accounts”, “Eligible
Inventory”, “Eligible Transferee”, “Excess Availability”, “Interest Rate”,
“Material Adverse Effect”, “Net Recovery Percentage”, “US Prime Rate”, “Pro Rata
Share”, “Required Lenders”, “Revolving Loan Limit” (but only to the extent such
proposed change in the definition would increase the amount of Revolving Loans
available to the Borrowers) or “Triggering Event”; and

 

(3) any of the following Sections in any material respect: 2.1, 2.2, 2.3, 3.2,
6.4, 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.16, 9.17, 9.18, 9.19, 9.20, 9.21,
10.1(a), 10.2,11.3,12.8, 12.11, 12.12, 13.1 or 13.7(a) hereof.

 

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

 

(c) Notwithstanding anything to the contrary contained in Section 11.3(a)
hereof, in connection with any amendment, waiver, discharge or termination, in
the event that any Lender whose consent thereto is required shall fail to
consent or fail to consent in a timely manner (such Lender being referred to
herein as a “Non-Consenting Lender”), but the consent of any other Lenders to
such amendment, waiver, discharge or termination that is required are obtained,
if any, then Congress shall have the right, but not the obligation, at any time
thereafter, and upon the exercise by Congress of such right, such Non-Consenting
Lender shall have the obligation, to sell, assign and transfer to Congress or
such Eligible Transferee as Congress may specify, the Commitment of such
Non-Consenting Lender and all rights and interests of such Non-Consenting Lender
pursuant thereto. Congress shall provide the Non-Consenting Lender with prior
written notice of its intent to exercise its right under this Section, which
notice shall specify

 

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the date on which such purchase and sale shall occur. Such purchase and sale
shall be pursuant to the terms of an Assignment and Acceptance (whether or not
executed by the Non-Consenting Lender), except that on the date of such purchase
and sale, Congress, or such Eligible Transferee specified by Congress, shall pay
to the Non-Consenting Lender (except as Congress and such Non-Consenting Lender
may otherwise agree) the amount equal to: (i) the principal balance of the Loans
held by the Non-Consenting Lender outstanding as of the close of business on the
Business Day immediately preceding the effective date of such purchase and sale,
plus (ii) amounts accrued and unpaid in respect of interest and fees payable to
the Non-Consenting Lender to the effective date of the purchase (but in no event
shall the Non-Consenting Lender be deemed entitled to any early termination
fee), minus (iii) the amount of the closing fee received by the Non-Consenting
Lender pursuant to the terms hereof or of any of the other Financing Agreements
multiplied by the fraction, the numerator of which is the number of months
remaining in the then-current term of the Credit Facility and the denominator of
which is the number of months in the then-current term thereof. Such purchase
and sale shall be effective on the date of the payment of such amount to the
Non-Consenting Lender and the Commitment of the Non-Consenting Lender shall
terminate on such date.

 

(d) The consent of Agent shall be required for any amendment, waiver or consent
affecting the rights or duties of Agent hereunder or under any of the other
Financing Agreements, in addition to the consent of the Lenders otherwise
required by this Section and the exercise by Agent of any of its rights
hereunder with respect to Reserves or Eligible Accounts or Eligible Inventory
shall not be deemed an amendment to the advance rates provided for in this
Section 11.3.

 

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

 

11.5 Indemnification. Each Borrower and Guarantor shall, jointly and severally,
indemnify and hold Agent and each Lender, and its officers, directors, agents,
employees, advisors and counsel and their respective Affiliates (each such
person being an “Indemnitee”), harmless from and against any and all losses,
claims, damages, liabilities, costs or expenses (including attorneys’ fees and
expenses) imposed on, incurred by or asserted against any of them in connection
with any litigation, investigation, claim or proceeding commenced or threatened
related to the negotiation, preparation, execution, delivery, enforcement,
performance or administration of this Agreement, any other Financing Agreements,
or any undertaking or proceeding related to any of the transactions contemplated
hereby or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of
counsel except that Borrowers and Guarantors shall not have any obligation under
this Section 11.5 to indemnify an Indemnitee with respect to a matter covered
hereby resulting from the gross negligence or willful misconduct of such
Indemnitee as determined pursuant to a final, non-appealable order of a court of
competent jurisdiction (but without

 

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limiting the obligations of Borrowers or Guarantors as to any other Indemnitee).
To the extent that the undertaking to indemnify, pay and hold harmless set forth
in this Section may be unenforceable because it violates any law or public
policy, Borrowers and Guarantors shall pay the maximum portion which it is
permitted to pay under applicable law to Agent and Lenders in satisfaction of
indemnified matters under this Section. To the extent permitted by applicable
law, no Borrower or Guarantor shall assert, and each Borrower and Guarantor
hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any of the other Financing Agreements or any undertaking or
transaction contemplated hereby. All amounts due under this Section shall be
payable upon demand. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.

 

11.6 Currency Indemnity. If, for the purposes of obtaining judgment in any court
in any jurisdiction with respect to this Agreement or any of the other Financing
Agreements, it becomes necessary to convert into the currency of such
jurisdiction (the “Judgment Currency”) any amount due under this Agreement or
under any of the other Financing Agreements in any currency other than the
Judgment Currency (the “Currency Due”), then such conversion shall be made at
the rate of exchange prevailing on the Business Day before the day on which
judgment is given. For this purpose, “rate of exchange” means the rate at which
Agent is able, on the relevant date, to purchase the Currency Due with the
Judgment Currency in accordance with its normal practice, hi the event that
there is a change in the rate of exchange prevailing between the Business Day
before the day on which the judgment is given and the date of receipt by Agent
of the amount due, Borrowers will, on the date of receipt by Agent, pay such
additional amounts, if any, or be entitled to receive reimbursement of such
amount, if any, as may be necessary to ensure that the amount received by Agent
and Lenders on such date is the amount in the Judgment Currency which when
converted at the rate of exchange prevailing on the date of receipt by Agent is
the amount then due under this Agreement or such other of the Financing
Agreements in the Currency Due. If the amount of the Currency Due which Agent is
able to purchase is less than the amount of the Currency Due originally due to
it, Borrowers shall indemnify and save Agent and Lenders harmless from and
against loss or damage arising as a result of such deficiency. The indemnity
contained herein shall constitute an obligation separate and independent from
the other obligations contained in this Agreement and the other Financing
Agreements, shall give rise to a separate and independent cause of action, shall
apply irrespective of any indulgence granted by Agent from time to time and
shall continue in full force and effect notwithstanding any judgment or order
for a liquidated sum in respect of an amount due under this Agreement or any of
the other Financing Agreements or under any judgment or order.

 

SECTION 12. THE AGENT

 

12.1 Appointment, Powers and Immunities. Each Lender irrevocably designates,
appoints and authorizes Congress to act as Agent hereunder and under the other
Financing Agreements with such powers as are specifically delegated to Agent by
the terms of this

 

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Agreement and of the other Financing Agreements, together with such other powers
as are reasonably incidental thereto. Agent (a) shall have no duties or
responsibilities except those expressly set forth in this Agreement and in the
other Financing Agreements, and shall not by reason of this Agreement or any
other Financing Agreement be a trustee or fiduciary for any Lender (except to
the extent specifically provided in the Financing Agreements that are governed
by the laws of England and Wales); (b) shall not be responsible to Lenders for
any recitals, statements, representations or warranties contained in this
Agreement or in any of the other Financing Agreements, or in any certificate or
other document referred to or provided for in, or received by any of them under,
this Agreement or any other Financing Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Financing Agreement or any other document referred to or provided for
herein or therein or for any failure by any Borrower or any Obligor or any other
Person to perform any of its obligations hereunder or thereunder; and (c) shall
not be responsible to Lenders for any action taken or omitted to be taken by it
hereunder or under any other Financing Agreement or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful misconduct
as determined by a final non-appealable judgment of a court of competent
jurisdiction. Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. Agent may deem and treat the
payee of any note as the holder thereof for all purposes hereof unless and until
the assignment thereof pursuant to an agreement (if and to the extent permitted
herein) in form and substance satisfactory to Agent shall have been delivered to
and acknowledged by Agent. Agent hereby appoints Burdale as its sub-agent solely
for (i) purposes of matters relating to the Collateral of the UK Borrowers and
UK Guarantors and (ii) the administration and management of the credit
facilities and accommodations made available to the UK Borrowers including,
without limitation, (A) receipt of requests for Term Loans, Revolving Loans and
Letter of Credit Accommodations from the UK Borrowers, (B) the making of Term
Loans, Revolving Loans and Letter of Credit Accommodations to the UK Borrowers,
(C) the receipt of all payments made by or for the account of the UK Borrowers
and (D) the operation of the loan account(s) of the UK Borrowers, and Burdale
hereby accepts such appointment and agrees to act as such in accordance with the
directions of Agent.

 

12.2 Reliance by Agent. Agent shall be entitled to rely upon any certification,
notice or other communication (including any thereof by telephone, telecopy,
telex, telegram or cable) believed by it to be genuine and correct and to have
been signed or sent by or on behalf of the proper Person or Persons, and upon
advice and statements of legal counsel, independent accountants and other
experts selected by Agent. As to any matters not expressly provided for by this
Agreement or any other Financing Agreement, Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder or thereunder in
accordance with instructions given by UK Lenders as to matters exclusively
relating to any UK Borrower and by US Revolving Lenders as to matters
exclusively relating to any US Borrower or all of Lenders as is required under
the circumstances described herein and Required Lenders in all other matters and

 

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such instructions of Agent and any action taken or failure to act pursuant
thereto shall be binding on all Lenders.

 

12.3 Events of Default.

 

(a) Agent shall not be deemed to have knowledge or notice of the occurrence of
an Event of Default or other failure of a condition precedent to the Loans and
Letter of Credit Accommodations hereunder, unless and until Agent has received
written notice from a Lender, or a Borrower specifying such Event of Default or
any unfulfilled condition precedent, and stating that such notice is a “Notice
of Default or Failure of Condition”. In the event that Agent receives such a
Notice of Default or Failure of Condition, Agent shall give prompt notice
thereof to the Lenders. Agent shall (subject to Section 12.7) take such action
with respect to any such Event of Default or failure of condition precedent as
shall be directed by Required Lenders as to matters exclusively relating to any
UK Borrower and by US Revolving Lenders as to matters exclusively relating to
any US Borrower and otherwise as directed by Required Lenders; provided, that,
unless and until Agent shall have received such directions, Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to or by reason of such Event of Default or failure of condition
precedent, as it shall deem advisable and in the best interest of Lenders.
Without limiting the foregoing, and notwithstanding the existence or occurrence
and continuance of an Event of Default or any other failure to satisfy any of
the conditions precedent set forth in Section 4 of this Agreement to the
contrary, Agent may, but shall have no obligation to, continue to make Loans and
issue or cause to be issued Letter of Credit Accommodations for the ratable
account and risk of Lenders from time to time if Agent believes making such
Loans or issuing or causing to be issued such Letter of Credit Accommodations is
in the best interests of Lenders.

 

(b) Except with the prior written consent of Agent, no Lender may assert or
exercise any enforcement right or remedy in respect of the Loans, Letter of
Credit Accommodations or other Obligations, as against any Borrower or Obligor
or any of the Collateral or other property of any Borrower or Obligor.

 

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

 

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

 

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

 

12.7 Failure to Act. Except for action expressly required of Agent hereunder and
under the other Financing Agreements, Agent shall in all cases be fully
justified in failing or refusing to act hereunder and thereunder unless it shall
receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.

 

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12.8 Additional Loans. Agent shall not make any Revolving Loans or provide any
Letter of Credit Accommodations to any Borrower on behalf of Revolving Lenders
intentionally and with actual knowledge that such Revolving Loans or Letter of
Credit Accommodations would cause the aggregate amount of the total outstanding
Revolving Loans and Letter of Credit Accommodations to UK Borrowers
(collectively) to exceed the Borrowing Base of UK Borrowers or any US Borrower
to exceed the Borrowing Base of such US Borrower, without the prior consent of
all Lenders, except, that, Agent may make such additional Revolving Loans or
provide such additional Letter of Credit Accommodations on behalf of Lenders,
intentionally and with actual knowledge that such Revolving Loans or Letter of
Credit Accommodations will cause the total outstanding Revolving Loans and
Letter of Credit Accommodations to UK Borrowers (collectively) or any US
Borrower to exceed the Borrowing Base of UK Borrowers or such US Borrower, as
Agent may deem necessary or advisable in its discretion, provided, that: (a) the
total principal amount of the additional Revolving Loans or additional Letter of
Credit Accommodations to any Borrower which Agent may make or provide after
obtaining such actual knowledge that the aggregate principal amount of the
Revolving Loans equal or exceed the Borrowing Bases of Borrowers, plus the
amount of Special Agent Advances made pursuant to Section 12.1 l(a)(iii) hereof
then outstanding, shall not exceed the lesser of (i) an amount equal to ten
(10%) percent of the Borrowing Base at any time, and (ii) an aggregate amount
equal to the US Dollar Equivalent of US$4,500,000 outstanding at any time and
shall not cause the total principal amount of the Loans and Letter of Credit
Accommodations to exceed $50,000,000 and (b) no such additional Revolving Loan
or Letter of Credit Accommodation shall be outstanding more than ninety (90)
days after the date such additional Revolving Loan or Letter of Credit
Accommodation is made or issued (as the case may be), except as the Required
Lenders may otherwise agree. Each Revolving Lender shall be obligated to pay
Agent the amount of its Pro Rata Share of any such additional Revolving Loans or
Letter of Credit Accommodations.

 

12.9 Concerning the Collateral and the Related Financing Agreements. Each Lender
authorizes and directs Agent to enter into this Agreement and the other
Financing Agreements. Each Lender agrees that any action taken by Agent or
Required Lenders in accordance with the terms of this Agreement or the other
Financing Agreements and the exercise by Agent or Required Lenders of their
respective powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the
Lenders.

 

12.10 Field Audit, Examination Reports and other Information; Disclaimer by
Lenders. By signing 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 audit or examination report and a
weekly report with respect to the Borrowing Base prepared by Agent (each field
audit or examination report and monthly report with respect to the Borrowing
Base being referred to herein as a “Report” and collectively, “Reports”);

 

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(b) expressly agrees and acknowledges that Agent (i) does not make any
representation or warranty as to the accuracy of any Report, or (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 any other party performing any audit or
examination will inspect only specific information regarding Borrowers and
Guarantors and will rely significantly upon Borrowers’ and Guarantors’ books and
records, as well as on representations of Borrowers’ and Guarantors’ personnel;
and

 

(d) agrees to keep all Reports confidential and strictly for its internal use in
accordance with the terms of Section 13.9 hereof, and not to distribute or use
any Report in any other manner.

 

12.11 Collateral Matters.

 

(a) Agent may, at its option, from time to time, at any time on or after an
Event of Default and for so long as the same is continuing or upon any other
failure of a condition precedent to the Loans and Letter of Credit
Accommodations hereunder, make such disbursements and advances (“Special Agent
Advances”) which Agent, in its sole discretion, deems necessary or desirable
either (i) to preserve or protect the Collateral or any portion thereof, (ii) to
enhance the likelihood or maximize the amount of repayment by Borrowers and
Guarantors of the Loans and other Obligations or (iii) to pay any other amount
chargeable to any Borrower or Guarantor pursuant to the terms of this Agreement
or any of the other Financing Agreements consisting of costs, fees and expenses
and payments to any issuer of Letter of Credit Accommodations; provided, that,
the aggregate principal amount of the Special Agent Advances pursuant to clauses
(i) and (ii) above, plus the then outstanding principal amount of the additional
Loans and Letter of Credit Accommodations which Agent may make or provide as set
forth in Section 12.8 hereof, shall not exceed an amount equal to the lesser of
(i) the US Dollar Equivalent of US$4,500,000 and (ii) ten (10%) percent of the
Borrowing Base at any time. Special Agent Advances shall be repayable on demand
and be secured by the Collateral. Special Agent Advances shall not constitute
Loans but shall otherwise constitute Obligations hereunder. Agent shall notify
each Lender and Administrative Borrower in writing of each such Special Agent
Advance, which notice shall include a description of the purpose of such Special
Agent Advance. Without limitation of its obligations pursuant to Section 6.13,
each Lender agrees that it shall make available to Agent, upon Agent’s demand,
in immediately available funds, the amount equal to such Lender’s Pro Rata Share
of each such Special Agent Advance. If such funds are not made available to
Agent by such Lender, Agent shall be entitled to recover such funds, on demand
from such Lender together with interest thereon for each day from the date such
payment was due until the date such amount is paid to Agent at the Federal Funds
Rate for each day during such period (as published by the Federal Reserve Bank
of New York or at Agent’s option based on the arithmetic mean determined by
Agent of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that

 

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day by each of the three leading brokers of Federal funds transactions in New
York City selected by Agent) and if such amounts are not paid within three (3)
days of Agent’s demand, at the highest Interest Rate provided for in Section 3.1
hereof applicable to Revolving Loans consisting of US Prime Rate Loans.

 

(b) Lenders hereby irrevocably authorize Agent, at its option and in its
discretion to release any security interest in, mortgage or lien upon, any of
the Collateral (i) upon termination of the Commitments and payment and
satisfaction of all of the Obligations and delivery of cash collateral to the
extent required under Section 13.1 below, (ii) constituting property being sold
or disposed of if Administrative Borrower or any Borrower certifies to Agent
that such sale or disposition is made in compliance with Section 9.7 hereof (and
Agent may rely conclusively on any such certificate, without further inquiry),
(iii) constituting property in which any Borrower or Guarantor did not own an
interest at the time the security interest, mortgage or lien was granted or at
any time thereafter, (iv) having a value in the aggregate in any twelve (12)
month period of less than the US Dollar Equivalent of US$1,000,000, or (v) if
approved, authorized or ratified in writing by all Lenders. Except as provided
above, Agent will not release any security interest in, mortgage or lien upon,
any of the Collateral without the prior written authorization of all of Lenders.
Upon request by Agent at any time, Lenders will promptly confirm in writing
Agent’s authority to release particular types or items of Collateral pursuant to
this Section 12.1 l(b).

 

(c) Without any manner limiting Agent’s authority to act without any specific or
further authorization or consent by the Required Lenders, each Lender agrees to
confirm in writing, upon request by Agent, the authority to release Collateral
conferred upon Agent under this Section 12.11. Agent shall (and is hereby
irrevocably authorized by Lenders to) execute such documents as may be necessary
to evidence the release of the security interest, mortgage or liens granted to
Agent upon any Collateral to the extent set forth above; provided, that, Agent
shall not be required to execute any such document on terms which, in Agent’s
opinion, would expose Agent to liability or create any obligations or entail any
consequence other than the release of such security interest, mortgage or liens
without recourse or warranty and such release shall not in any manner discharge,
affect or impair the Obligations or any security interest, mortgage or lien upon
(or obligations of any Borrower or Guarantor in respect of) the Collateral
retained by such Borrower or Guarantor.

 

(d) Agent shall have no obligation whatsoever to any Lender or any other Person
to investigate, confirm or assure that the Collateral exists or is owned by any
Borrower or Guarantor or is cared for, protected or insured or has been
encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letter of Credit Accommodations
hereunder, or whether any particular reserves are appropriate, or that the liens
and security interests granted to Agent pursuant hereto or any of the Financing
Agreements or otherwise have been properly, 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

 

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powers granted or available to Agent in this Agreement or in any of the other
Financing Agreements, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, Agent may act in any
manner it may deem appropriate, in its discretion, given Agent’s own interest in
the Collateral as a Lender and that Agent shall have no duty or liability
whatsoever to any other Lender.

 

(e) Upon any sale or transfer of Collateral to a Person that is not a Borrower
or Guarantor which is expressly permitted pursuant to the terms of this
Agreement or any other Financing Agreement, or consented to in writing by the
Required Lenders or all of the Lenders, as applicable, and upon at least five
Business Days’ prior written request by Administrative Borrower, Agent shall
(and is hereby irrevocably authorized by the Lenders to) execute such documents
as may be necessary to evidence the release of the Liens granted to Agent for
the benefit of the Lenders herein or pursuant hereto upon the Collateral that
was so sold or transferred, provided that (i) Agent shall not be required to
execute any such document on terms which, in such Agent’s opinion, would expose
Agent to liability or create any obligation or entail any consequence other than
the release of such Liens without recourse or warranty and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any Liens
upon (or obligations of Borrowers and Guarantors in respect of) all interests
retained by Borrowers and Guarantors, including (without limitation) the
proceeds of the sale, all of which shall continue to constitute part of the
Collateral.

 

(f) Upon any sale or transfer of all of the issued and outstanding Capital Stock
of a Borrower or Guarantor to a Person that is not a Borrower or Guarantor or an
Affiliate thereof which is expressly permitted pursuant to the terms of this
Agreement or any other Financing Agreement, or consented to in writing by the
Required Lenders or all of the Lenders, as applicable, and upon at least five
Business Days’ prior written request by Administrative Borrower, Agent shall
(and is hereby irrevocably authorized by the Lenders to) execute such documents
as may be necessary to evidence the release of such Borrower or Guarantor from
the Financing Agreements to which it is a party, provided that (i) Agent shall
not be required to execute any such document on terms which, in such Agent’s
opinion, would expose Agent to liability or create any obligation or entail any
consequence other than the release of such Borrower or Guarantor without
recourse or warranty and (ii) such release shall not in any manner discharge,
affect or impair the Obligations of or any Liens upon the assets of the other
Borrowers and Guarantors or the Liens upon the proceeds of the sale, all of
which shall continue to constitute part of the Collateral.

 

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

 

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Agent thereof, and, promptly upon Agent’s request therefor shall deliver such
Collateral to Agent or in accordance with Agent’s instructions.

 

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

 

SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS

 

13.1 Term.

 

(a) This Agreement and the other Financing Agreements shall become effective as
of the date set forth on the first page hereof and shall continue in full force
and effect for a term ending on June 30, 2006 (the “Renewal Date”), and from
year to year thereafter, unless sooner terminated pursuant to the terms hereof;
provided, however, that UK Term Loan B shall be due and payable on the Renewal
Date without regard to whether the term of this Agreement is extended . Agent
may, at its option (or shall at the written direction of any Lender received by
Agent at least ninety (90) days prior to the Renewal Date or the anniversary of
any Renewal Date, as the case may be), terminate this Agreement and the other
Financing Agreements, or Administrative Borrower or any Borrower may terminate
this Agreement and the other Financing Agreements, each case, effective on the
Renewal Date or on the anniversary of the Renewal Date in any year by giving to
the other party at least sixty (60) days prior written notice; provided, that,
this Agreement and all other Financing Agreements must be terminated
simultaneously. In addition, Borrowers may terminate this Agreement at any time
upon ten (10) days prior written notice to Agent (which notice shall be
irrevocable) and Agent may, at its option, and shall at the direction of
Required Lenders, terminate this Agreement at any time on or after an Event of
Default; provided, that, in each case, this Agreement and all other Financing
Agreements must be terminated simultaneously. Upon the Renewal Date or any other
effective date of termination of the Financing Agreements, Borrowers shall pay
to Agent all outstanding and unpaid Obligations

 

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(other than unasserted contingent indemnification obligations) and shall furnish
cash collateral to Agent (or at Agent’s option, a letter of credit issued for
the account of Borrowers and at Borrowers’ expense, in form and substance
satisfactory to Agent, by an issuer acceptable to Agent and payable to Agent as
beneficiary) in such amounts as Agent determines are reasonably necessary to
secure Agent and Lenders from loss, cost, damage or expense, including
reasonable attorneys’ fees and expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the Obligations and/or as
to which Agent or any Lender has not yet received final and indefeasible
payment. The amount of such cash collateral (or letter of credit, as Agent may
determine) as to any Letter of Credit Accommodations shall be in the amount
equal to one hundred five (105%) percent of the amount of the Letter of Credit
Accommodations plus the amount of any fees and expenses payable in connection
therewith through the end of the latest expiration date of such Letter of Credit
Accommodations. Such payments in respect of the Obligations and cash collateral
shall be remitted by wire transfer in Federal funds to the Agent US Payment
Account or such other bank account of Agent, as Agent may, in its discretion,
designate in writing to Administrative Borrower for such purpose. Interest shall
be due until and including the next Business Day, if the amounts so paid by
Borrowers to the Agent US Payment Account, the Agent UK Euro Payment Account,
the Agent UK US Dollar Payment Account or Agent UK Sterling Payment Account (as
applicable) or other bank account designated by Agent are received in such bank
account later than 12:00 noon, Miami, Florida time.

 

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

 

(c) If for any reason this Agreement is terminated prior to the Renewal Date, in
view of the impracticality and extreme difficulty of ascertaining actual damages
and by mutual agreement of the parties as to a reasonable calculation of Agent’s
and each Lender’s lost profits as a result thereof, Borrowers agree to pay to
Agent for itself and the ratable benefit of Lenders in accordance with their
respective Pro Rata Shares, upon the effective date of such termination, an
early termination fee in the amount equal to

 

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Amount

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

  

Period

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

(i) 2% of the Revolving Loan Limit of US Borrowers, plus 2% of the Revolving
Loan Limit of UK Borrowers, plus 2% of the Sterling Equivalent of £305,000, plus
2% of US$5,000,000    From the date hereof to and excluding the first
anniversary of the date hereof (ii) 1% of the Revolving Loan Limit of US
Borrowers, plus 1% of the Revolving Loan Limit of UK Borrowers, plus 1% of the
Sterling Equivalent of £305,000, plus 1% of US$5,000,000    From and after the
first anniversary of the date hereof to but excluding June 30, 2006 or if the
term of this Agreement is extended, at any time prior to the end of the
then-current term.

 

Such early termination fee shall be presumed to be the amount of damages
sustained by Agent and Lenders as a result of such early termination and
Borrowers and Guarantors agree that it is reasonable under the circumstances
currently existing. In addition, Agent and Lenders shall be entitled to such
early termination fee upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h) hereof, even if Agent and Lenders do not exercise
the right to terminate this Agreement, but elect, at their option, to provide
financing to any Borrower or permit the use of cash collateral under the United
States Bankruptcy Code. The early termination fee provided for in this Section
13.1 shall be deemed included in the Obligations.

 

(d) Notwithstanding anything to the contrary contained in Section 13.1(c) above,
in the event of the termination of this Agreement at the request of
Administrative Borrower prior to the end of the term of this Agreement and the
full and final payment of all Obligations and the receipt by Agent of cash
collateral, all as provided in Section 13.1(a) above, Borrowers shall not be
required to pay to Agent, for the benefit of Lenders, an early termination fee
if such full and final payment of all Obligations is made to Agent, for the
benefit of Lenders, with the proceeds of a sale of all of the issued and
outstanding stock or other share capital of all classes of Holding; provided,
that, (i) Agent shall have determined, in its sole discretion, to provide its
prior written consent to such sale and (ii) Agent shall have received full and
final such payment of all Obligations and proceeds on or before the first
anniversary of the date of this Agreement.

 

13.2 Interpretative Provisions.

 

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

 

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

 

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

 

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

 

(e) The word “including” when used in this Agreement shall mean “including,
without limitation”.

 

(f) An Event of Default shall exist or continue or be continuing until such
Event of Default is waived in accordance with Section 11.3 or is cured in a
manner satisfactory to Agent, if such Event of Default is capable of being cured
as determined by Agent.

 

(g) For all purposes of this Agreement (but not for purposes of the preparation
of any financial statements delivered pursuant hereto), the equivalent in Euros,
Sterling, or other currency of any amount in US Dollars, and the equivalent
other than US Dollars of any amount in Euros, Sterling or other currency, shall
be determined pursuant to the Currency Exchange Convention.

 

(h) All references to the term “good faith” used herein when applicable to Agent
or any Lender shall mean, notwithstanding anything to the contrary contained
herein or in the UCC, honesty in fact in the conduct or transaction concerned.
Borrowers and Guarantors shall have the burden of proving any lack of good faith
on the part of Agent or any Lender alleged by any Borrower or Guarantor at any
time.

 

(i) Any accounting term used in this Agreement shall have unless otherwise
specifically provided herein, the meaning customarily given in accordance with
GAAP, and all financial computations hereunder shall be computed, unless
otherwise specifically provided herein, in accordance with GAAP as consistently
applied and using the same method for inventory valuation as used in the
preparation of the financial statements of Holding most recently received by
Agent prior to the date hereof.

 

(j) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including”, the words “to” and
“until” each mean “to but excluding” and the word “through” means “to and
including”.

 

(k) Unless otherwise expressly provided herein, (i) references herein to any
agreement, document or instrument shall be deemed to include all subsequent
amendments, modifications, supplements, extensions, renewals, restatements or
replacements with respect thereto, but only to the extent the same are not
prohibited by the terms hereof or of any other

 

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Financing Agreement, and (ii) references to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending, replacing, recodifying, supplementing or interpreting the statute or
regulation.

 

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

 

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

 

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

 

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

 

If to any Borrower or Guarantor:

  

Catalina Lighting, Inc.

18191 Northwest 68th Avenue

Miami, Florida 33015

Attention: Robert Varakian

                 Chief Executive Officer

Telephone No.: 305-558-4777 ext. 490

Telecopy No.:   305-819-8276

with a copy to:

  

Ring Lamp Company Limited

Gelderd Road

Leeds, West Yorkshire, LS12 6NB England

Attention: Tony Welham

Telephone No.: (44) 113-276-7676

Telecopy No.:   (44) 113-231-0785

 

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and a copy to:

  

Sun Catalina Holdings LLC

5200 Town Center Circle, Suite 470

Boca Raton, Florida 33486

Attention: Marc J. Leder, Rodger R. Krouse

                 and C. Deryl Couch

Telephone No.: (561) 394-0550

Telecopy No.:   (561) 394-0540

with a copy to:

  

Morgan, Lewis & Bockius LLP

101 Park Avenue

New York, New York 10178

Attention: Patricia F. Brennan, Esq.

Telephone No.: (212) 309-6814

Telecopy No.:   (212) 309-6001

If to Agent:

  

Congress Financial Corporation (Florida)

777 Brickell Avenue

Miami, Florida 33131

Attention: Portfolio Manager

Telephone No.: (305) 371-6671

Telecopy No.:   (305) 371-9456

with a copy to:

  

Burdale Financial Limited

53 Queen Anne Street

London, England W1G 9HP

Attention: Mr. Nigel Hogg

Telephone No.: 00-44-207-935-1115

Telecopy No.:   00-44-207-486-3513

 

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

 

13.5 Successors. This Agreement, the other Financing Agreements and any other
document referred to herein or therein shall be binding upon and inure to the
benefit of and be enforceable by Agent, Lenders, Borrowers, Guarantors and their
respective successors and assigns, except that Borrower may not assign its
rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Agent and Lenders. Any such purported assignment without such express prior
written consent shall be void. No Lender may assign its rights and obligations
under this Agreement without the prior written consent of Agent, except as
provided in Section 13.6 below.

 

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The terms and provisions of this Agreement and the other Financing Agreements
are for the purpose of defining the relative rights and obligations of
Borrowers, Guarantors, Agent and Lenders with respect to the transactions
contemplated hereby and there shall be no third party beneficiaries of any of
the terms and provisions of this Agreement or any of the other Financing
Agreements.

 

13.6 Assignments; Participations.

 

(a) Each Lender may assign all or, if less than all, a portion equal to at least
the US Dollar Equivalent of US$5,000,000 in the aggregate for the assigning
Lender, of such rights and obligations under this Agreement to one or more
Eligible Transferees (but not including for this purpose any assignments in the
form of a participation), each of which assignees shall become a party to this
Agreement as a Lender by execution of an Assignment and Acceptance; provided,
that, (i) such transfer or assignment will not be effective until recorded by
Agent on the Register and (ii) Agent shall have received for its sole account
payment of a processing fee from the assigning Lender or the assignee in the
amount of US$5,000. Anything contained herein to the contrary notwithstanding,
the consent of Borrower or Agent shall not be required, the minimum assignment
amount shall not be applicable, such transfer or assignment shall not be
required to be recorded by Agent on the Register in order to be effective, and
payments of the processing fee shall not be required if (x) 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 a Lender or (y) in the case of any UK Term Loan B Lender, the assignee is an
Affiliate (other than individual(s) of such UK Term Loan B Lender) or any
Related Fund (as defined in Section 1.41 hereof); provided, however, that
Borrower and Agent may continue to deal solely and directly with the assigning
Lender in connection with the interest so assigned until such time as written
notice of such assignment shall have been delivered by the assigning Lender or
the assignee to Agent.

 

(b) Agent shall maintain a register of the names and addresses of Lenders, their
Commitments and the principal amount of their Loans (the “Register”). Agent
shall also maintain a copy of each Assignment and Acceptance delivered to and
accepted by it and shall modify the Register to give effect to each Assignment
and Acceptance. The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and any Borrowers, Obligors, Agent and
Lenders may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by Administrative Borrower and any Lender at any reasonable time
and from time to time upon reasonable prior notice.

 

(c) Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, the assignee
thereunder shall be a party hereto and to the other Financing Agreements and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations
(including, without limitation, the obligation to participate in Letter of
Credit

 

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Accommodations) of a Lender hereunder and thereunder and the assigning Lender
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement.

 

(d) By execution and delivery of an Assignment and Acceptance, the assignor and
assignee thereunder confirm to and agree with each other and the other parties
hereto as follows: (i) other than as provided in such Assignment and Acceptance,
the assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or any of the other Financing
Agreements or the execution, legality, enforceability, genuineness, sufficiency
or value of this Agreement or any of the other Financing Agreements furnished
pursuant hereto, (ii) the assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Borrower, Obligor or any of their Subsidiaries or the performance or observance
by any Borrower or Obligor of any of the Obligations; (iii) such assignee
confirms that it has received a copy of this Agreement and the other Financing
Agreements, together with such other documents and information it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (iv) such assignee will, independently and without
reliance upon the assigning Lender, Agent and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Financing Agreements, (v) such assignee appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Financing Agreements as are delegated to Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto, and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement and the
other Financing Agreements are required to be performed by it as a Lender. Agent
and Lenders may furnish any information concerning any Borrower or Obligor in
the possession of Agent or any Lender from time to time to assignees and
Participants.

 

(e) Each Lender may sell participations to one or more banks or other entities
in or to all or a portion of its rights and obligations under this Agreement and
the other Financing Agreements (including, without limitation, all or a portion
of its Commitments and the Loans owing to it and its participation in the Letter
of Credit Accommodations, without the consent of Agent or the other Lenders);
provided, that, (i) such Lender’s obligations under this Agreement (including,
without limitation, its Commitment hereunder) and the other Financing Agreements
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, and Borrowers,
Guarantors, the other Lenders and Agent shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement and the other Financing Agreements, and (iii)
the Participant shall not have any rights under this Agreement or any of the
other Financing Agreements (the Participant’s rights against such Lender in
respect of such participation to be those set forth in the agreement executed by
such Lender in favor of the Participant relating

 

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thereto) and all amounts payable by any Borrower or Obligor hereunder shall be
determined as if such Lender had not sold such participation.

 

(f) Nothing in this Agreement shall prevent or prohibit any Lender from pledging
its Loans hereunder to a Federal Reserve Bank in support of borrowings made by
such Lenders from such Federal Reserve Bank.

 

(g) Borrowers and Guarantors shall assist Agent or any Lender permitted to sell
assignments or participations under this Section 13.6 in whatever manner
reasonably necessary in order to enable or effect any such assignment or
participation, including (but not limited to) the execution and delivery of any
and all agreements, notes and other documents and instruments as shall be
requested and the delivery of informational materials, appraisals or other
documents for, and the participation of relevant management in meetings and
conference calls with, potential Lenders or Participants. Borrowers shall
certify the correctness, completeness and accuracy, in all material respects, of
all descriptions of Borrowers and Guarantors and their affairs provided,
prepared or reviewed by any Borrower or Guarantor that are contained in any
selling materials and all other information provided by it and included in such
materials.

 

(h) (i) UK Borrowers shall maintain, or cause to be maintained, a register (the
“Term Loan Register”) on which it enters the name of each Lender as the
registered owner of the Term Loans held by such Lender. A Registered Term Loan
(and the Registered Term Note, if any, evidencing the same) may be assigned or
sold in whole or in part only by registration of such assignment or sale on the
Term Loan Register (and each Registered Term Note shall expressly so provide).
Any assignment or sale of all or part of such Registered Term Loan (and the
Registered Term Note, if any, evidencing the same) may be effected only by
registration of such assignment or sale on the Term Loan Register, together with
the surrender of the Registered Term Note, if any, evidencing the same duly
endorsed by (or accompanied by a written instrument of assignment or sale duly
executed by) the holder of such Registered Term Note, whereupon, at the request
of the designated assignee(s) or transferee(s), one or more new Registered Term
Notes in the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s). Prior to the registration of assignment or sale of
any Registered Term Loan (and the Registered Term Note, if any evidencing the
same), UK Borrowers shall treat the Person in whose name such Loan (and the
Registered Term Note, if any, evidencing the same) is registered as the owner
thereof for the purpose of receiving all payments thereon and for all other
purposes, notwithstanding notice to the contrary.

 

(ii) In the event that any Lender sells participations in a Registered Term
Loan, such Lender shall maintain a register on which it enters the name of all
participants in such Registered Term Loan (the “Participant Register”). A
Registered Term Loan (and the Registered Term Note, if any, evidencing the same)
may be participated in whole or in part only by registration of such
participation on the Participant Register (and each Registered Term Note shall
expressly so provide). Any participation of such Registered Term Loan (and the
Registered

 

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Term Note, if any, evidencing the same) may be effected only by the registration
of such participation on the Participant Register.

 

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

 

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

 

13.9 Confidentiality.

 

(a) Agent and each Lender shall use all reasonable efforts to keep confidential,
in accordance with its customary procedures for handling confidential
information and safe and sound lending practices, any non-public information
supplied to it by any Borrower or Guarantor pursuant to this Agreement,
provided, that, nothing contained herein shall limit the disclosure of any such
information: (i) to the extent required by statute, rule, regulation, subpoena
or court order, (ii) to bank examiners and other regulators, auditors and/or
accountants, (iii) in connection with any litigation to which Agent or such
Lender is a party relating to this Agreement, (iv) to Agent or any Lender or any
Affiliate of Agent or any Lender or to any Participant (or prospective Lender or
Participant) so long as such Lender or Participant (or prospective Lender or
Participant) shall have been instructed to treat such information as
confidential in accordance with this Section 13.9, or (v) to counsel for Agent
or any Participant or Lender (or prospective Participant or Lender so long as
clause (iv) of this Section is satisfied as to such person).

 

(b) In the event that Agent or any Lender receives a request or demand to
disclose any confidential information pursuant to any subpoena or court order,
Agent or such Lender, as the case may be, agrees (i) to the extent permitted by
applicable law or if permitted by applicable law, statute, rule or regulation
and to the extent Agent determines in good faith that it will not create any
risk of liability to Agent or such Lender, that Agent or such Lender will
promptly notify Administrative Borrower of such request so that Administrative
Borrower may seek a protective order or other appropriate relief or remedy and
(ii) if disclosure of such information is

 

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required, disclose such information and, subject to reimbursement by Borrowers
of Agent’s or such Lender’s reasonable expenses, cooperate with Administrative
Borrower in reasonable efforts to obtain an order or other reliable assurance
that confidential treatment will be accorded to such portion of the disclosed
information which Administrative Borrower so designates, to the extent permitted
by applicable law or if permitted by applicable law, to the extent Agent or such
Lender determines in good faith that it will not create any risk of liability to
Agent or such Lender.

 

(c) In no event shall this Section 13.9 or any other provision of this Agreement
or applicable law be deemed: (i) to apply to or restrict disclosure of
information that has been or is made public by any Borrower or Guarantor or any
third party, (ii) to apply to or restrict disclosure of information that was or
becomes available to Agent or any Lender from a person other than any Borrower
or Guarantor, (iii) require Agent or any Lender to return any materials
furnished by any Borrower or Guarantor to Agent or (iv) prevent Agent from
responding to routine informational requests in accordance with the Code of
Ethics for the Exchange of Credit Information promulgated by The Robert Morris
Associates or other applicable industry standards relating to the exchange of
credit information. The obligations of Agent and Lenders under this Section 13.9
shall supersede and replace the obligations of Agent and Lenders under any
confidentiality letter signed prior to the date hereof.

 

(d) Notwithstanding anything to the contrary set forth herein or in any of the
other Financing Agreements or any other written or oral understanding or
agreement, (i) any obligations of confidentiality contained herein, in any of
the other Financing Agreements or any such other understanding or agreement do
not apply and have not applied from the commencement of discussions between the
parties to the tax treatment and tax structure of the transactions contemplated
herein (and any related transactions or arrangements), and (ii) each party (and
each of its employees, representatives, or other agents) may disclose to any and
all persons the tax treatment and tax structuring of the transactions
contemplated herein and all materials of any kind (including opinions or other
tax analyses) that are provided to such party relating to such tax treatment and
tax structure, all within the meaning of Treasury Regulation Section 1.6011-4;
provided, that, each party recognizes that the privilege that it may, in its
discretion, maintain with respect to the confidentiality of a communication
relating to the transactions contemplated herein, including a confidential
communication with its attorney or a confidential communication with a federally
authorized tax practitioner under Section 7525 of the Internal Revenue Code, is
not intended to be affected by the foregoing. Borrowers do not intend to treat
the Loans and related transactions as being a “reportable transaction” (within
the meaning of Treasury Regulation Section 1.6011-4). In the event Borrowers
determine to take any action inconsistent with such intention, it will promptly
notify Agent thereof. Each Borrower acknowledges that one or more of Lenders may
treat its Loans as part of a transaction that is subject to Treasury Regulation
Section 1.6011-4 or Section 301.6112-1, and the Agent and such Lender or
Lenders, as applicable, may file such IRS forms or maintain such lists and other
records as they may determine is required by such Treasury Regulations.

 

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146

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

 

BORROWERS

 

CATALINA INDUSTRIES, INC.

By:   /s/    MICHAEL KALB            

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

Title:

  Vice-President    

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

 

CATALINA MERCHANDISING, INC.

By:   /s/    MICHAEL KALB            

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

Title:

  Vice-President    

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

 

RING LAMP COMPANY LIMITED

By:   /s/    ANTHONY FREDERICK WELHAM            

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

Title:

  Director    

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

By:

  /s/    JOHN MADDISON HALL            

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

Title:

  Director    

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

 

BMAC LIMITED

By:   /s/    ANTHONY FREDERICK WELHAM            

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

Title:

  Director    

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

By:

  /s/    JOHN MADDISON HALL            

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

Title:

  Director    

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

 

[SIGNATURES CONTINUE ON NEXT PAGE]

 

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

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

LANCER PRODUCTS LIMITED

By:   /s/    ANTHONY FREDERICK WELHAM            

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

Title:

  Director    

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

By:

  /s/    JOHN MADDISON HALL            

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

Title:

  Director    

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

 

GROVE PRODUCTS (CARAVAN

ACCESSORIES) LIMITED

By:   /s/    ANTHONY FREDERICK WELHAM            

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

Title:

  Director    

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

By:

  /s/    JOHN MADDISON HALL            

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

Title:

  Director    

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

 

LIGHTEN POINT CORPORATION EUROPE

LIMITED

By:   /s/    ANTHONY FREDERICK WELHAM            

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

Title:

  Director    

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

By:

  /s/    JOHN MADDISON HALL            

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

Title:

  Director    

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

 

CATALINA INTERNATIONAL LIMITED

By:   /s/    STEPHEN GERALD MARBLE            

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

Title:

  Director

By:

  /s/    ROBERT VARAKIAN            

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

Title:

  Director

 

[SIGNATURES CONTINUE ON NEXT PAGE]

 

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

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

ARCTIC PRODUCTS LIMITED

By:   /s/    ANTHONY FREDERICK WELHAM            

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

Title:

  Director    

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

By:

  /s/    JOHN MADDISON HALL            

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

Title:

  Director    

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

 

VAN-LINE LIMITED

By:   /s/    ANTHONY FREDERICK WELHAM            

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

Title:

  Director    

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

By:

  /s/    JOHN MADDISON HALL            

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

Title:

  Director    

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

GUARANTORS

 

CATALINA LIGHTING, INC.

By:   /s/    MICHAEL KALB            

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

Title:

  Vice-President    

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

 

MERIDIAN LAMPS, INC.

By:   /s/    MICHAEL KALB            

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

Title:

  Vice-President    

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

 

[SIGNATURES CONTINUE ON NEXT PAGE]

 

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

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

BRITISH SYPHON INDUSTRIES LIMITED

By:   /s/    ANTHONY FREDERICK WELHAM            

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

Title:

  Director    

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

By:

  /s/    JOHN MADDISON HALL            

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

Title:

  Director    

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

 

GRAYSTONE RING LIMITED

By:   /s/    ANTHONY FREDERICK WELHAM            

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

Title:

  Director    

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

By:

  /s/    JOHN MADDISON HALL            

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

Title:

  Director    

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

 

RING GROUP LIMITED

By:   /s/    ANTHONY FREDERICK WELHAM            

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

Title:

  Director    

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By:

  /s/    JOHN MADDISON HALL            

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Title:

  Director    

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RING PARTS LIMITED

By:   /s/    ANTHONY FREDERICK WELHAM            

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Title:

  Director    

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By:

  /s/    JOHN MADDISON HALL            

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Title:

  Director    

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[SIGNATURES CONTINUED ON NEXT PAGE]

 

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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

MARSHALL’S UNIVERSAL LIMITED

By:   /s/    ANTHONY FREDERICK WELHAM            

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Title:

  Director    

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By:

  /s/    JOHN MADDISON HALL            

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Title:

  Director    

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HOVEKEY LIMITED

By:   /s/    ANTHONY FREDERICK WELHAM            

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Title:

  Director    

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By:

  /s/    JOHN MADDISON HALL            

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Title:

  Director    

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NEWTON MILL LIMITED

By:   /s/    ANTHONY FREDERICK WELHAM            

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Title:

  Director    

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By:

  /s/    JOHN MADDISON HALL            

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Title:

  Director    

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RING LIMITED

By:   /s/    ANTHONY FREDERICK WELHAM            

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Title:

  Director

By:

  /s/    JOHN MADDISON HALL            

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Title:

  Director    

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[SIGNATURES CONTINUE ON NEXT PAGE]

 

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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

AGENT

CONGRESS FINANCIAL CORPORATION (FLORIDA), as Agent

By:   /s/    DANIEL J. COTT              

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Title:

  Senior Vice President    

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LENDERS

CONGRESS FINANCIAL CORPORATION (FLORIDA)

By:   /s/    DANIEL J. COTT              

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Title:

  Senior Vice President    

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BURDALE FINANCIAL LIMITED

By:   /s/    NIGEL B. HOGG            

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Title:

  Director

 

[SIGNATURES CONTINUE ON NEXT PAGE]

 

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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

SABERASU JAPAN INVESTMENTS II B.V.

By:   /s/    J.J. ZWEERTS            

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Title:

  Managing Director By:   /s/    JOHN C.A. VAN BEEK            

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Title:

  Managing Director

 

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THE SCHEDULES AND EXHIBITS TO EXHIBIT 10.1 HAVE BEEN INTENTIONALLY OMITTED.
CATALINA LIGHTING, INC. AGREES T FURNISH SUPPLENTALLY A COPY OF ANY OMITTED
SCHEDULE OR EXHIBIT UPON REQUEST OF THE SECURITIES AND EXCHANGE COMMISSION.