Exhibit 10.1

 

 

 

 

 

 

 

 

 

CREDIT AND SECURITY AGREEMENT

 

 

among

 

 

ZAGG INC

as Borrower

 

 

THE LENDERS NAMED HEREIN

as Lenders

 

 

and

 

 

KEYBANK NATIONAL ASSOCIATION

as Administrative Agent, Swing Line Lender and Issuing Lender

 

 

KEYBANC CAPITAL MARKETS INC.

as Joint Lead Arranger and Sole Book Runner

 

ZB, N.A. D/B/A ZIONS FIRST NATIONAL BANK

as Joint Lead Arranger

 

 

_____________________

 

dated as of

March 3, 2016

_____________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

  

  Page ARTICLE I.  DEFINITIONS 1 Section 1.1.  Definitions 1 Section
1.2.  Accounting Terms 35 Section 1.3.  Terms Generally 35     ARTICLE
II.  AMOUNT AND TERMS OF CREDIT 35 Section 2.1.  Amount and Nature of Credit 35
Section 2.2.  Revolving Credit Commitment 36 Section 2.3.  Term Loan Commitment
41 Section 2.4.  Interest 42 Section 2.5.  Evidence of Indebtedness 43 Section
2.6.  Notice of Loans and Credit Events; Funding of Loans 44 Section
2.7.  Payment on Loans and Other Obligations 45 Section 2.8.  Prepayment 47
Section 2.9.  Commitment and Other Fees; Reduction of Revolving Credit
Commitment 48 Section 2.10.  Computation of Interest and Fees 49 Section
2.11.  Mandatory Payments 49 Section 2.12.  Swap Obligations Make-Well Provision
52 Section 2.13.  Establishment of Reserves 52 Section 2.14.  Record of
Advances; Application of Collections 53 Section 2.15.  Protective Advances 55
Section 2.16.  Addition of Borrowing Base Company 55     ARTICLE
III.  ADDITIONAL PROVISIONS RELATING TO EURODOLLAR LOANS; INCREASED CAPITAL;
TAXES 55 Section 3.1.  Requirements of Law 55 Section 3.2.  Taxes 57 Section
3.3.  Funding Losses 58 Section 3.4.  Eurodollar Rate Lending Unlawful;
Inability to Determine Rate 58 Section 3.5.  Discretion of Lenders as to Manner
of Funding 59     ARTICLE IV.  CONDITIONS PRECEDENT 59 Section 4.1.  Conditions
to Each Credit Event 59 Section 4.2.  Conditions to the First Credit Event 60
Section 4.3.  Post-Closing Conditions 64     ARTICLE V.  COVENANTS 65 Section
5.1.  Insurance 65 Section 5.2.  Money Obligations 65 Section 5.3.  Financial
Statements, Collateral Reporting and Information 65 Section 5.4.  Financial
Records 68 Section 5.5.  Franchises; Change in Business 68 Section 5.6.  ERISA
Pension and Benefit Plan Compliance 69 Section 5.7.  Financial Covenants 69

 

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TABLE OF CONTENTS

 

  Page Section 5.8.  Borrowing 69 Section 5.9.  Liens 70 Section
5.10.  Regulations T, U and X 71 Section 5.11.  Investments, Loans and
Guaranties 72 Section 5.12.  Merger and Sale of Assets 73 Section
5.13.  Acquisitions 73 Section 5.14.  Notice 75 Section 5.15.  Restricted
Payments 75 Section 5.16.  Environmental Compliance 76 Section 5.17.  Affiliate
Transactions 76 Section 5.18.  Use of Proceeds 77 Section 5.19.  Corporate Names
and Locations of Collateral 77 Section 5.20.  Subsidiary Guaranties, Security
Documents and Pledge of Stock or Other Ownership Interest 77 Section
5.21.  Collateral 78 Section 5.22.  Returns of Inventory 80 Section
5.23.  Acquisition, Sale and Maintenance of Inventory 80 Section 5.24.  Property
Acquired Subsequent to the Closing Date and Right to Take Additional Collateral
81 Section 5.25.  Restrictive Agreements 81 Section 5.26.  Other Covenants
and  Provisions 81 Section 5.27.  Guaranty Under Material Indebtedness Agreement
82 Section 5.28.  Amendment of Organizational Documents 82 Section
5.29.  Compliance with Laws 82 Section 5.30.  Fiscal Year of the Borrower 82
Section 5.31.  Banking Relationship 82 Section 5.32.  Further Assurances 82    
ARTICLE VI.  REPRESENTATIONS AND WARRANTIES 83 Section 6.1.  Corporate
Existence; Subsidiaries; Foreign Qualification 83 Section 6.2.  Corporate
Authority 83 Section 6.3.  Compliance with Laws and Contracts 83 Section
6.4.  Litigation and Administrative Proceedings 84 Section 6.5.  Title to Assets
84 Section 6.6.  Liens and Security Interests 84 Section 6.7.  Tax Returns 85
Section 6.8.  Environmental Laws 85 Section 6.9.  Locations 85 Section
6.10.  Continued Business 85 Section 6.11.  Employee Benefits Plans 86 Section
6.12.  Consents or Approvals 86 Section 6.13.  Solvency 86 Section
6.14.  Financial Statements 87 Section 6.15.  Regulations 87 Section
6.16.  Material Agreements 87

 

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TABLE OF CONTENTS

 

  Page Section 6.17.  Intellectual Property 87 Section 6.18.  Insurance 87
Section 6.19.  Deposit Accounts and Securities Accounts 88 Section
6.20.  Accurate and Complete Statements 88 Section 6.21.  Investment Company;
Other Restrictions 88 Section 6.22.  Acquisition Agreement Representations 88
Section 6.23.  Defaults 88     ARTICLE VII. SECURITY 88 Section 7.1.  Security
Interest in Collateral 88 Section 7.2.  Cash Management System 88 Section
7.3.  Collections and Receipt of Proceeds by Administrative Agent 90 Section
7.4.  Administrative Agent’s Authority Under Pledged Notes 92 Section
7.5.  Commercial Tort Claims 92 Section 7.6.  Use of Inventory and Equipment 92
    ARTICLE VIII.  EVENTS OF DEFAULT 93 Section 8.1.  Payments 93 Section
8.2.  Special Covenants 93 Section 8.3.  Other Covenants 93 Section
8.4.  Representations and Warranties 93 Section 8.5.  Cross Default 93 Section
8.6.  ERISA Default 93 Section 8.7.  Change in Control 93 Section
8.8.  Judgments 94 Section 8.9.  Material Adverse Change 94 Section
8.10.  Security 94 Section 8.11.  Validity of Loan Documents 94 Section
8.12.  Solvency 95     ARTICLE IX.  REMEDIES UPON DEFAULT 95 Section
9.1.  Optional Defaults 95 Section 9.2.  Automatic Defaults 96 Section
9.3.  Letters of Credit 96 Section 9.4.  Offsets 96 Section 9.5.  Equalization
Provisions 96 Section 9.6.  Administrative Agent’s Rights to Occupy and Use the
Collateral 98 Section 9.7.  Other Remedies 98 Section 9.8.  Application of
Proceeds 99     ARTICLE X.  THE ADMINISTRATIVE AGENT 100 Section
10.1.  Appointment and Authorization 100 Section 10.2.  Note Holders 101 Section
10.3.  Consultation With Counsel 101 Section 10.4.  Documents 101 Section
10.5.  Administrative Agent and Affiliates 101

 

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TABLE OF CONTENTS

 

  Page Section 10.6.  Knowledge or Notice of Default 102 Section 10.7.  Action
by Administrative Agent 102 Section 10.8.  Release of Collateral or Guarantor of
Payment 102 Section 10.9.  Delegation of Duties 103 Section
10.10.  Indemnification of Administrative Agent 103 Section 10.11.  Successor
Administrative Agent 103 Section 10.12.  Issuing Lender 104 Section
10.13.  Swing Line Lender 104 Section 10.14.  Administrative Agent May File
Proofs of Claim 104 Section 10.15.  No Reliance on Administrative Agent’s
Customer Identification Program 105 Section 10.16.  Other Agents 105     ARTICLE
XI.  MISCELLANEOUS 105 Section 11.1.  Lenders’ Independent Investigation 105
Section 11.2.  No Waiver; Cumulative Remedies 106 Section 11.3.  Amendments,
Waivers and Consents 106 Section 11.4.  Notices 107 Section 11.5.  Approved
Electronic Communication System 108 Section 11.6.  Costs, Expenses and
Documentary Taxes 109 Section 11.7.  Indemnification 109 Section
11.8.  Obligations Several; No Fiduciary Obligations 109 Section
11.9.  Execution in Counterparts 110 Section 11.10.  Binding Effect; Borrower’s
Assignment 110 Section 11.11.  Lender Assignments 110 Section 11.12.  Sale of
Participations 112 Section 11.13.  Replacement of Affected Lenders 113 Section
11.14.  Patriot Act Notice 113 Section 11.15.  Severability of Provisions;
Captions; Attachments 113 Section 11.16.  Investment Purpose 114 Section
11.17.  Entire Agreement 114 Section 11.18.  Limitations on Liability of the
Issuing Lenders 114 Section 11.19.  General Limitation of Liability 114 Section
11.20.  No Duty 115 Section 11.21.  Legal Representation of Parties 115 Section
11.22.  Acknowledgement and Consent to Bail-In of EEA Financial Institutions 115
Section 11.23.  Governing Law; Submission to Jurisdiction 116 Jury Trial Waiver
Signature Page 1

 

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TABLE OF CONTENTS

 

    Page Exhibit A Form of Revolving Credit Note E-1 Exhibit B Form of Swing
Line Note E-3 Exhibit C Form of Term Note E-5 Exhibit D Form of Borrowing Base
Certificate E-7 Exhibit E Form of Notice of Loan E-8 Exhibit F Form of
Compliance Certificate E-9 Exhibit G Form of Assignment and Acceptance Agreement
E-10       Schedule 1 Commitments of Lenders S-1 Schedule 2 Guarantors of
Payment S-2 Schedule 3 Borrowing Base Companies S-3 Schedule 4 Pledged
Securities S-4 Schedule 5.8 Indebtedness   Schedule 5.9 Liens   Schedule 5.11
Permitted Foreign Subsidiary Loans, Guaranties and Investments   Schedule 6.1
Corporate Existence; Subsidiaries; Foreign Qualification   Schedule 6.4
Litigation and Administrative Proceedings   Schedule 6.5 Real Estate Owned by
the Companies   Schedule 6.9 Locations   Schedule 6.11 Employee Benefits Plans  
Schedule 6.16 Material Agreements   Schedule 6.17 Intellectual Property  
Schedule 6.18 Insurance   Schedule 6.19 Deposit Accounts and Securities Accounts
  Schedule 7.4 Pledged Notes   Schedule 7.5 Commercial Tort Claims  

 

v

 

  

This CREDIT AND SECURITY AGREEMENT (as the same may from time to time be
amended, restated or otherwise modified, this “Agreement”) is made effective as
of the 3rd day of March, 2016 among:

 

(a) ZAGG INC, a Nevada corporation (the “Borrower”);

 

(b) the lenders listed on Schedule 1 hereto and each other Eligible Transferee,
as hereinafter defined, that from time to time becomes a party hereto pursuant
to Section 11.11 hereof (collectively, the “Lenders” and, individually, each a
“Lender”); and

 

(c) KEYBANK NATIONAL ASSOCIATION, a national banking association, as the
administrative agent for the Lenders under this Agreement (the “Administrative
Agent”), the Swing Line Lender and the Issuing Lender. 

 

WITNESSETH:

 

WHEREAS, the Borrower, the Administrative Agent and the Lenders desire to
contract for the establishment of credits in the aggregate principal amounts
hereinafter set forth, to be made available to the Borrower upon the terms and
subject to the conditions hereinafter set forth;

 

NOW, THEREFORE, it is mutually agreed as follows:

  

ARTICLE I. DEFINITIONS

 

Section 1.1. Definitions. As used in this Agreement, the following terms shall
have the meanings set forth below:

 

“Account” means an account, as that term is defined in the U.C.C.

 

“Account Debtor” means an account debtor, as that term is defined in the U.C.C.,
or any other Person obligated to pay all or any part of an Account in any manner
and includes (without limitation) any Guarantor thereof.

 

“Acquisition” means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of any Person (other than a Company), or any
business or division of any Person (other than a Company), (b) the acquisition
of in excess of fifty percent (50%) of the outstanding capital stock (or other
equity interest) of any Person (other than a Company), or (c) the acquisition of
another Person (other than a Company) by a merger, amalgamation or consolidation
or any other combination with such Person.

 

“Administrative Agent” means that term as defined in the first paragraph of this
Agreement.

 

 

 

“Administrative Agent Fee Letter” means the Administrative Agent Fee Letter
between the Borrower and the Administrative Agent, dated as of the Closing Date,
as the same may from time to time be amended, restated or otherwise modified.

 

“Advance Record” means that term as defined in Section 2.14(a) hereof.

 

“Advantage” means any payment (whether made voluntarily or involuntarily, by
offset of any deposit or other indebtedness or otherwise) received by any Lender
(a) prior to an Equalization Event, in respect of the Applicable Debt, if such
payment results in that Lender having less than its pro rata share (based upon
its Applicable Commitment Percentage) of the Applicable Debt then outstanding,
and (b) on and after an Equalization Event, in respect of the Obligations, if
such payment results in that Lender having less than its pro rata share (based
upon its Equalization Percentage) of the Obligations then outstanding.

 

“Affected Lender” means a Defaulting Lender, an Insolvent Lender or a Downgraded
Lender.

 

“Affiliate” means any Person, directly or indirectly, controlling, controlled by
or under common control with a Company and “control” (including the correlative
meanings, the terms “controlling”, “controlled by” and “under common control
with”) means the power, directly or indirectly, to direct or cause the direction
of the management and policies of a Company, whether through the ownership of
voting securities, by contract or otherwise.

 

“Agreement” means that term as defined in the first paragraph of this agreement.

 

“Annualized Consolidated EBITDA” means (a) for the fiscal quarter of the
Borrower ending on June 30, 2016, Consolidated EBITDA for the most recently
completed fiscal quarter of the Borrower multiplied by four, (b) for the fiscal
quarter of the Borrower ending on September 30, 2016, Consolidated EBITDA for
the most recently completed two fiscal quarters of the Borrower multiplied by
two, and (c) for the fiscal quarter of the Borrower ending on December 31, 2016,
Consolidated EBITDA for the most recently completed three fiscal quarters of the
Borrower multiplied by one and one-third.

 

“Anti-Corruption Laws” means all laws, rules, and regulations of any
jurisdiction applicable to the Companies from time to time concerning or
relating to bribery or corruption.

 

“Applicable Commitment Percentage” means, for each Lender:

 

(a) with respect to the Revolving Credit Commitment, the percentage, if any, set
forth opposite such Lender’s name under the column headed “Revolving Credit
Commitment Percentage”, as set forth on Schedule 1 hereto, subject to
assignments of interests pursuant to Section 11.11 hereof; and

 

(b) with respect to the Term Loan Commitment (or the Term Loan if the Term Loan
Commitment is no longer in effect), the percentage, if any, set forth opposite
such Lender’s name under the column headed “Term Loan Commitment Percentage”, as
set forth on Schedule 1 hereto, subject to assignments of interests pursuant to
Section 11.11 hereof.

 

 2 

 

 

“Applicable Debt” means:

 

(a) with respect to the Revolving Credit Commitment, collectively, (i) all
Indebtedness incurred by the Borrower to the Revolving Lenders pursuant to this
Agreement and the other Loan Documents, and includes, without limitation, the
principal of and interest on all Revolving Loans and all Swing Loans and all
obligations with respect to Letters of Credit, (ii) each extension, renewal or
refinancing of the foregoing, in whole or in part, (iii) the commitment,
prepayment and other fees and amounts payable hereunder in connection with the
Revolving Credit Commitment, and (iv) all Related Expenses incurred in
connection with the foregoing; and

 

(b) with respect to the Term Loan Commitment, collectively, (i) all Indebtedness
incurred by the Borrower to the Term Lenders pursuant to this Agreement and the
other Loan Documents, and includes, without limitation, the principal of and
interest on the Term Loan, (ii) each extension, renewal or refinancing of the
foregoing in whole or in part, (iii) all prepayment and other fees and amounts
payable hereunder in connection with the Term Loan Commitment, and (iv) all
Related Expenses incurred in connection with the foregoing.

 

“Applicable Margin” means:

 

(a) (i) one hundred fifty (150.00) basis points with respect to Revolving Loans
that are Eurodollar Loans, and (ii) fifty (50.00) basis points with respect to
Revolving Loans that are Base Rate Loans; and

 

(b) (i) two hundred (200.00) basis points with respect to portions of the Term
Loan that are Eurodollar Loans, and (ii) one hundred (100.00) basis points with
respect to portions of the Term Loan that are Base Rate Loans; and

 

“Appraised Inventory NOLV” means the appraised net orderly liquidation value of
the Eligible Inventory, as set forth in the most recent inventory appraisal
report completed on behalf of, and reasonably acceptable to, the Administrative
Agent.

 

“Approved Electronic Communication System” means the StuckyNet System or any
other equivalent electronic service, whether owned, operated or hosted by the
Administrative Agent, any affiliate of the Administrative Agent or any other
Person.

 

“Asset Sale” means that term as defined in Section 2.11(c)(ii) hereof.

 

“Assignment Agreement” means an Assignment and Acceptance Agreement in the form
of the attached Exhibit G.

 

 3 

 

 

“Authorized Officer” means a Financial Officer or other individual authorized by
a Financial Officer in writing (with a copy to the Administrative Agent) to
handle certain administrative matters in connection with this Agreement.

 

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by
the applicable EEA Resolution Authority in respect of any liability of an EEA
Financial Institution.

 

“Bail-In Legislation” means, with respect to any EEA Member Country implementing
Article 55 of Directive 2014/59/EU of the European Parliament and of the Council
of the European Union, the implementing law for such EEA Member Country from
time to time which is described in the EU Bail-In Legislation Schedule.

 

“Bank Product Agreements” means those certain cash management services and other
agreements entered into from time to time between a Company and the
Administrative Agent or a Lender (or an affiliate of a Lender) in connection
with any of the Bank Products.

 

“Bank Product Obligations” means all obligations, liabilities, contingent
reimbursement obligations, fees and expenses owing by a Company to the
Administrative Agent or any Lender (or an affiliate of a Lender) pursuant to or
evidenced by the Bank Product Agreements.

 

“Bank Products” means a service or facility extended to a Company by the
Administrative Agent or any Lender (or an affiliate of a Lender) for (a) credit
cards and credit card processing services, (b) debit cards, purchase cards and
stored value cards, (c) ACH transactions, and (d) cash management, including
controlled disbursement, accounts or services.

 

“Bankruptcy Code” means Title 11 of the United States Code entitled
“Bankruptcy”, as now or hereafter in effect, or any successor thereto, as
hereafter amended.

 

“Base Rate” means, for any day, a rate per annum equal to the highest of (a) the
Prime Rate, (b) one-half of one percent (.50%) in excess of the Federal Funds
Effective Rate, and (c) one percent (1%) in excess of the London interbank
offered rate for loans in Eurodollars for a period of one month (or, if such day
is not a Business Day, such rate as calculated on the most recent Business Day).
Any change in the Base Rate shall be effective immediately from and after such
change in the Base Rate. Notwithstanding the foregoing, if at any time the Base
Rate as determined above is less than zero, it shall be deemed to be zero for
purposes of this Agreement.

 

“Base Rate Loan” means a Revolving Loan described in Section 2.2(a) hereof or a
portion of the Term Loan described in Section 2.3 hereof, that shall be
denominated in Dollars and on which the Borrower shall pay interest at the
Derived Base Rate.

 

“Borrower” means that term as defined in the first paragraph of this Agreement.

 

 4 

 

 

“Borrowing Base” means an amount equal to the total of the following:

 

(a) up to eighty-five percent (85%) of the aggregate amount due and owing on
Eligible Accounts Receivable of the Borrowing Base Companies; plus

 

(b) up to eighty-five percent (85%) of the Appraised Inventory NOLV; minus

 

(c) Reserves, if any;

 

provided that (A) the aggregate amount of Eligible In-Transit Inventory included
in the calculation of subpart (b) above shall not exceed the Eligible In-Transit
Inventory Maximum Amount, (B) at no time shall the amount calculated pursuant to
subpart (b) above exceed the amount calculated pursuant to subpart (a) above,
and (C) anything herein to the contrary notwithstanding, the Administrative
Agent shall at all times have the right to modify or reduce such percentages or
dollar amount caps or other components of the Borrowing Base from time to time
in its reasonable credit judgment.

 

“Borrowing Base Certificate” means a Borrowing Base Certificate, in the form of
the attached Exhibit D.

 

“Borrowing Base Company” means each Company listed on Schedule 3 hereto, and
each additional Company that shall become a Borrowing Base Company pursuant to
Section 2.16 hereof.

 

“Business Day” means a day that is not a Saturday, a Sunday or another day of
the year on which national banks are authorized or required to close in
Cleveland, Ohio, and, in addition, if the applicable Business Day relates to a
Eurodollar Loan, is a day of the year on which dealings in Dollar deposits are
carried on in the London interbank Eurodollar market.

 

“Capital Distribution” means a payment made, liability incurred or other
consideration given by a Company to any Person that is not a Company, (a) for
the purchase, acquisition, redemption, repurchase, payment or retirement of any
capital stock or other equity interest of such Company, or (b) as a dividend,
return of capital or other distribution (other than any stock dividend, stock
split or other equity distribution payable only in capital stock or other equity
of such Company) in respect of such Company’s capital stock or other equity
interest.

 

“Capitalized Lease Obligations” means obligations of the Companies for the
payment of rent for any real or personal property under leases or agreements to
lease that, in accordance with GAAP, have been or should be capitalized on the
books of the lessee and, for purposes hereof, the amount of any such obligation
shall be the capitalized amount thereof determined in accordance with GAAP.

 

“Cash Collateral Account” means a commercial Deposit Account designated “cash
collateral account” and maintained by the Borrower with the Administrative
Agent, without liability by the Administrative Agent or the Lenders to pay
interest thereon, from which account the Administrative Agent, on behalf of the
Lenders, shall have the exclusive right to withdraw funds until all of the
Secured Obligations are paid in full.

 

 5 

 

 

“Cash Proceeds” means, with respect to (i) any Asset Sale, the aggregate cash
payments (including any cash received by way of deferred payment pursuant to a
note receivable issued in connection with such Asset Sale, other than the
portion of such deferred payment constituting interest, but only as and when so
received) received by any Company from such Asset Sale, (ii) any Material
Recovery Event, the aggregate cash payments, including all insurance proceeds
and proceeds of any award for condemnation or taking, received in connection
with such Material Recovery Event, (iii) any Equity Offering, the aggregate cash
proceeds received by Borrower in connection with such Equity Offering and (iv)
the incurrence of any Indebtedness by any Company, the aggregate cash proceeds
received by such Company in connection with the incurrence of such Indebtedness.

 

“Cash Security” means all cash, instruments, Deposit Accounts, Securities
Accounts and cash equivalents, in each case whether matured or unmatured,
whether collected or in the process of collection, upon which a Credit Party
presently has or may hereafter have any claim or interest, wherever located,
including but not limited to any of the foregoing that are presently or may
hereafter be existing or maintained with, issued by, drawn upon, or in the
possession of the Administrative Agent or any Lender.

 

“CFC” means a Controlled Foreign Corporation, as such term is defined in Section
957 of the Code.

 

“Change in Control” means:

 

(a) the acquisition of, or, if earlier, the shareholder or director approval of
the acquisition of, ownership or voting control, directly or indirectly,
beneficially (within the meaning of Rules 13d-3 and 13d-5 of the Exchange Act)
or of record, on or after the Closing Date, by any Person or group (within the
meaning of Sections 13d and 14d of the Exchange Act), of shares representing
more than twenty-five percent (25%) of the aggregate ordinary Voting Power
represented by the issued and outstanding equity interests of the Borrower;

 

(b) if, at any time during any period of twenty-four (24) consecutive months, a
majority of the members of the board of directors of the Borrower cease to be
composed of individuals (i) who were members of that board of directors on the
first day of such period, (ii) whose election or nomination to that board of
directors was approved by individuals referred to in subpart (i) hereof that
constituted, at the time of such election or nomination, at least a majority of
that board of directors, or (iii) whose election or nomination to that board of
directors was approved by individuals referred to in subparts (i) and (ii)
hereof that constituted, at the time of such election or nomination, at least a
majority of that board of directors;

 

(c) if the Borrower shall cease to, directly or indirectly, own and control one
hundred percent (100%) of each class of the outstanding equity interests of each
of its Subsidiaries (other than as a result of a liquidation or dissolution of a
Subsidiary permitted by Section 5.12 hereof); or

 

 6 

 

 

(d) the occurrence of a change in control, or other term of similar import used
therein, as defined in any Material Indebtedness Agreement.

 

“Closing Date” means the effective date of this Agreement as set forth in the
first paragraph of this Agreement.

 

“Closing Fee Letter” means the Closing Fee Letter between the Borrower and the
Administrative Agent, dated as of the Closing Date.

 

“Code” means the Internal Revenue Code of 1986, as amended, together with the
rules and regulations promulgated thereunder.

 

“Collateral” means (a) all of the Borrower’s existing and future (i) personal
property, (ii) Accounts, Investment Property, instruments, contract rights,
chattel paper, documents, supporting obligations, letter-of-credit rights,
Pledged Securities, Pledged Notes (if any), Commercial Tort Claims, General
Intangibles, Inventory and Equipment, (iii) funds now or hereafter on deposit in
the Cash Collateral Account, and (iv) Cash Security; and (b) Proceeds and
products of any of the foregoing.

 

“Collateral Access Agreement” means an agreement, in form and substance
reasonably satisfactory to the Administrative Agent, pursuant to which a
mortgagee or lessor of real property on which Collateral is stored or otherwise
located, or a warehouseman, consignor, processor or other bailee of Inventory or
other property owned by any Credit Party, acknowledges the Liens of the
Administrative Agent and waives (or, if approved by the Administrative Agent,
subordinates) any Liens held by such Person on such property, and, if
applicable, permits the Administrative Agent access to and use of such property
to access, assemble, complete and sell any Collateral stored or otherwise
located thereon.

 

“Collection” means any payment made to one or more Borrowing Base Companies from
an Account Debtor or customer of one or more Borrowing Base Companies including,
but not limited to, cash, checks, drafts and any other form of payment.

 

“Commercial Tort Claim” means a commercial tort claim, as that term is defined
in the U.C.C. (Schedule 7.5 hereto lists all Commercial Tort Claims of the
Credit Parties in existence as of the Closing Date.)

 

“Commitment” means the obligation hereunder of the Lenders, (a) during the
Commitment Period, to make Revolving Loans and to participate in the issuance of
Letters of Credit and Swing Loans pursuant to the Revolving Credit Commitment,
and (b) to make the Term Loan pursuant to the Term Loan Commitment.

 

“Commitment Period” means the period from the Closing Date to March 2, 2021, or
such earlier date on which the Commitment shall have been terminated pursuant to
Article IX hereof.

 

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, together with the rules and regulations
promulgated thereunder.

 

 7 

 

 

“Companies” means the Borrower and all Subsidiaries.

 

“Company” means the Borrower or a Subsidiary.

 

“Compliance Certificate” means a Compliance Certificate in the form of the
attached Exhibit F.

 

“Consideration” means, in connection with an Acquisition, the aggregate
consideration paid or to be paid, including borrowed funds, cash, deferred
payments, the issuance of securities or notes, the assumption or incurring of
liabilities (direct or contingent), the payment of consulting fees or fees for a
covenant not to compete and any other consideration paid or to be paid for such
Acquisition.

 

“Consolidated” means the resultant consolidation of the financial statements of
the Borrower and its Subsidiaries in accordance with GAAP, including principles
of consolidation consistent with those applied in preparation of the
consolidated financial statements referred to in Section 6.14 hereof.

 

“Consolidated Capital Expenditures” means, for any period, the amount of capital
expenditures of the Borrower, as determined on a Consolidated basis.

 

“Consolidated Depreciation and Amortization Charges” means, for any period, the
aggregate of all depreciation and amortization charges for fixed assets,
leasehold improvements and general intangibles (specifically including goodwill)
of the Borrower for such period, as determined on a Consolidated basis.

 

“Consolidated EBITDA” means, for any period, as determined on a Consolidated
basis, (a) Consolidated Net Earnings for such period plus, without duplication,
the aggregate amounts deducted in determining such Consolidated Net Earnings in
respect of (i) Consolidated Interest Expense, (ii) Consolidated Income Tax
Expense, (iii) Consolidated Depreciation and Amortization Charges, (iv) non-cash
expenses incurred in connection with stock-based compensation, (v) non-cash
impairments in respect of intangible assets, (vi) reasonable non-recurring
non-cash losses not incurred in the ordinary course of business and (vii)
one-time transaction-related expenses incurred in connection with the Mophie
Acquisition in an aggregate amount not to exceed Three Million Dollars
($3,000,000); minus (b) to the extent included in Consolidated Net Earnings for
such period, non-recurring gains not incurred in the ordinary course of
business.

 

“Consolidated Fixed Charges” means, for any period, as determined on a
Consolidated basis, the aggregate, without duplication, of (a) Consolidated
Interest Expense, and (b) principal payments on Consolidated Funded Indebtedness
(other than optional prepayments of the Revolving Loans), including, for
clarification, (i) payments on Capitalized Lease Obligations, and (ii) payments
on Indebtedness of the type permitted pursuant to Section 5.8(g) and (h) hereof.

 

 8 

 

 

“Consolidated Funded Indebtedness” means, at any date, all Indebtedness
(including, but not limited to, short-term, long-term and Subordinated
Indebtedness, if any) of the Borrower, as determined on a Consolidated basis.

 

“Consolidated Income Tax Expense” means, for any period, all provisions for
taxes based on the gross or net income of the Borrower (including, without
limitation, any additions to such taxes, and any penalties and interest with
respect thereto), as determined on a Consolidated basis.

 

“Consolidated Interest Expense” means, for any period, the interest expense
(including, without limitation, the “imputed interest” portion of Capitalized
Lease Obligations, synthetic leases and asset securitizations, if any, and
excluding deferred financing costs) of the Borrower for such period, as
determined on a Consolidated basis.

 

“Consolidated Net Earnings” means, for any period, the net income (loss) of the
Borrower for such period, as determined on a Consolidated basis.

 

“Consolidated Net Worth” means, at any date, the stockholders’ equity of the
Borrower, determined as of such date on a Consolidated basis.

 

“Consolidated Unfunded Capital Expenditures” means, for any period, Consolidated
Capital Expenditures that are not directly financed by the Companies with
long-term Indebtedness (other than Revolving Loans) or Capitalized Lease
Obligations, as determined on a Consolidated basis.

 

“Control Agreement” means a Deposit Account Control Agreement or Securities
Account Control Agreement.

 

“Controlled Disbursement Account” means a commercial Deposit Account designated
“controlled disbursement account” and maintained by one or more Credit Parties
with the Administrative Agent, without liability by the Administrative Agent to
pay interest thereon.

 

“Controlled Group” means a Company and each Person required to be aggregated
with a Company under Code Section 414(b), (c), (m) or (o).

 

“Credit Event” means the making by the Lenders of a Loan, the conversion by the
Lenders of a Base Rate Loan to a Eurodollar Loan, the continuation by the
Lenders of a Eurodollar Loan after the end of the applicable Interest Period,
the making by the Swing Line Lender of a Swing Loan, or the issuance (or
amendment or renewal) by the Issuing Lender of a Letter of Credit.

 

“Credit Exposure” means, at any time, with respect to a Specific Commitment, the
sum of (a) the aggregate principal amount of all Loans outstanding under such
Specific Commitment, and (b) the Letter of Credit Exposure, if any, applicable
to such Specific Commitment.

 

“Credit Party” means the Borrower, and any Subsidiary or other Affiliate that is
a Guarantor of Payment.

 

 9 

 

 

“Customs Broker” means a Person designated to perform inbound customs clearance
for the Borrower.

 

“Customs Broker Agency Agreement” means a customs broker agency agreement, in
form and substance reasonably satisfactory to the Administrative Agent, entered
into among the Administrative Agent, the Borrower and a Customs Broker.

 

“Default” means an event or condition that constitutes, or with the lapse of any
applicable grace period or the giving of notice or both would constitute, an
Event of Default, and that has not been waived by the Required Lenders (or, if
required hereunder, all of the Lenders) in writing.

 

“Default Rate” means (a) with respect to any Loan or other Obligation for which
a rate is specified, a rate per annum equal to two percent (2%) in excess of the
rate otherwise applicable thereto, and (b) with respect to any other amount, if
no rate is specified or available, a rate per annum equal to two percent (2%) in
excess of the Derived Base Rate for Revolving Loans from time to time in effect.

 

“Defaulting Lender” means a Lender, as reasonably determined by the
Administrative Agent, that (a) has failed (which failure has not been cured) to
fund any Loan or any participation interest in Letters of Credit or Swing Loans
required to be made hereunder in accordance with the terms hereof (unless such
Lender shall have notified the Administrative Agent and the Borrower in writing
of its good faith determination that a condition under Section 4.1 hereof to its
obligation to fund any Loan shall not have been satisfied); (b) has notified the
Borrower or the Administrative Agent in writing that it does not intend to
comply with any of its funding obligations under this Agreement or has made a
public statement to the effect that it does not intend to comply with its
funding obligations under this Agreement or generally under other agreements in
which it commits to extend credit; (c) has failed, within three Business Days
after receipt of a written request from the Administrative Agent or the Borrower
to confirm that it will comply with the terms of this Agreement relating to its
obligation to fund prospective Loans or participations in Letters of Credit or
Swing Loans, and such request states that the requesting party has reason to
believe that the Lender receiving such request may fail to comply with such
obligation, and states such reason; or (d) has failed to pay to the
Administrative Agent or any other Lender when due an amount owed by such Lender
to the Administrative Agent or any other Lender pursuant to the terms of this
Agreement, unless such amount is subject to a good faith dispute or such failure
has been cured. Any Defaulting Lender shall cease to be a Defaulting Lender when
the Administrative Agent determines, in its reasonable discretion, that such
Defaulting Lender is no longer a Defaulting Lender based upon the
characteristics set forth in this definition.

 

“Deposit Account” means a deposit account, as that term is defined in the U.C.C.

 

“Deposit Account Control Agreement” means each Deposit Account Control Agreement
among a Credit Party, the Administrative Agent and a depository institution,
dated on or after the Closing Date, to be in form and substance satisfactory to
the Administrative Agent, as the same may from time to time be amended, restated
or otherwise modified.

 

 10 

 

 

“Derived Base Rate” means a rate per annum equal to the sum of the Applicable
Margin (from time to time in effect) for Base Rate Loans plus the Base Rate.

 

“Derived Eurodollar Rate” means a rate per annum equal to the sum of the
Applicable Margin (from time to time in effect) for Eurodollar Loans plus the
Eurodollar Rate.

 

“Dodd-Frank Act” means the Dodd–Frank Wall Street Reform and Consumer Protection
Act (Pub.L. 111-203, H.R. 4173) signed into law on July 21, 2010, as amended
from time to time.

 

“Dollar” or the $ sign means lawful currency of the United States.

 

“Domestic Subsidiary” means a Subsidiary that is not a Foreign Subsidiary.

 

“Dormant Subsidiary” means a Company that (a) is not a Credit Party or the
direct or indirect equity holder of a Credit Party, (b) has aggregate assets of
less than Fifty Thousand Dollars ($50,000), and (c) has no direct or indirect
Subsidiaries with aggregate assets, for such Company and all such Subsidiaries,
of more than Fifty Thousand Dollars ($50,000).

 

“Downgraded Lender” means a Lender that has a non-credit enhanced senior
unsecured debt rating below investment grade from either Moody’s or Standard &
Poor’s, or any other nationally recognized statistical rating organization
recognized as such by the SEC, and that has been designated by the
Administrative Agent, in its reasonable discretion, as a Downgraded Lender. Any
Downgraded Lender shall cease to be a Downgraded Lender when the Administrative
Agent determines, in its reasonable discretion, that such Downgraded Lender is
no longer a Downgraded Lender based upon the characteristics set forth in this
definition.

 

“ECF Threshold” means, at the time of determination, an amount equal to twelve
and one-half percent (12.5%) of the Revolving Credit Commitment.

 

“ECF Shortfall Amount” means that term as defined in Section 2.11(c) hereof.

 

“EEA Financial Institution” means (a) any credit institution or investment firm
established in any EEA Member Country which is subject to the supervision of an
EEA Resolution Authority, (b) any entity established in an EEA Member Country
which is a parent of an institution described in subpart (a) of this definition,
or (c) any financial institution established in an EEA Member Country which is a
subsidiary of an institution described in subparts (a) or (b) of this definition
and is subject to consolidated supervision with its parent.

 

“EEA Member Country” means any of the member states of the European Union,
Iceland, Liechtenstein, and Norway.

 

 11 

 

 

“EEA Resolution Authority” means any public administrative authority or any
person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.

 

“Eligible Account Receivable” means an Account that is an account receivable
(i.e., each specific invoice) of a Borrowing Base Company that, at all times
until it is collected in full, continuously meets the following requirements:

 

(a) is not subject to any claim for credit, allowance, accrued returns or
adjustment by the Account Debtor or any defense, dispute, set-off, retention
payment, chargeback or counterclaim;

 

(b) arose in the ordinary course of business of such Borrowing Base Company from
the performance (fully completed) of services or bona fide sale of goods that
have been shipped to the Account Debtor, and both of the following are true: (i)
not more than ninety (90) (or, with respect to an Extended Term Account Debtor,
one hundred twenty (120)) days have elapsed since the invoice date, and (ii) not
more than sixty (60) days have elapsed since the date payment was due;

 

(c) is not owing from an Account Debtor with respect to which such Borrowing
Base Company has received any notice or has any knowledge of such Account
Debtor’s insolvency, bankruptcy or financial impairment, or that such Account
Debtor has suspended normal business operations, dissolved, liquidated or
terminated its existence;

 

(d) is not subject to an assignment, pledge, claim, mortgage, lien or security
interest of any type except that granted to or in favor of the Administrative
Agent, for the benefit of the Lenders;

 

(e) does not relate to any goods repossessed, lost, damaged, rejected or
returned, or acceptance of which has been revoked or refused;

 

(f) is not evidenced by a promissory note or any other instrument or by chattel
paper;

 

(g) has not been determined by the Administrative Agent to be unsatisfactory in
any respect, in the exercise of its reasonable credit judgment;

 

(h) is not a Government Account Receivable, unless otherwise agreed to by the
Administrative Agent;

 

(i) is not owing from another Company, an Affiliate, an equity holder of more
than five percent of or an employee of any Company;

 

(j) is not a Foreign Account Receivable;

 

 12 

 

 

(k) is not owing from an Account Debtor that has failed to pay more than fifty
percent (50%) of its currently outstanding accounts receivable within either or
both of the following (i) ninety (90) (or, with respect to an Extended Term
Account Debtor, one hundred twenty (120)) days of the invoice date, or (ii)
sixty (60) days of the date payment was due;

 

(l) with respect to an Account Debtor that, together with its affiliates, owes
one or more Borrowing Base Companies more than twenty-five percent (25%) (or,
with respect to Superior Communications Inc., thirty-five percent (35%)) of all
accounts receivable of one or more Borrowing Base Companies, is not the portion
of the accounts receivable that represents the amount in excess of twenty-five
percent (25%) (or, with respect to Superior Communications Inc., thirty-five
percent (35%)) of such accounts receivable;

 

(m) is an Account in which the Administrative Agent, for the benefit of the
Lenders, has a valid and enforceable first priority security interest;

 

(n) has not arisen in connection with sales of goods that were shipped or
delivered to an Account Debtor on consignment, a sale or return basis, a
guaranteed sale basis, a bill and hold basis, or on the basis of any similar
understanding;

 

(o) is not subject to any provision prohibiting assignment of the right to
payment or requiring notice of or consent to such assignment;

 

(p) is not owing from an Account Debtor located in a state that requires such
Borrowing Base Company, in order to sue such Account Debtor in such state’s
courts or otherwise enforce its remedies against such Account Debtor through
judicial process, to either (i) qualify to do business in such state or (ii)
file a report with the taxation division of such state for the then current
year, unless, in each case, such Borrowing Base Company has fulfilled such
requirements to the extent applicable for the then current year or fulfilled
such other requirements that permit such Borrowing Base Company to bring suit or
otherwise enforce its remedies against such Account Debtor through judicial
process;

 

(q) is not an Account with respect to which any of the representations,
warranties, covenants and agreements contained in this Agreement or any of the
Loan Documents are not or have ceased to be complete and correct, or have been
breached;

 

(r) is not an Account that represents a progress billing or an Account that has
had the time for payment extended by such Borrowing Base Company without the
consent of the Administrative Agent;

 

(s) is not owing by any state or any department, agency, or instrumentality
thereof unless such Borrowing Base Company has complied with any applicable
statutory or regulatory requirements thereof in respect of the security interest
of the Administrative Agent, for the benefit of the Lenders, as granted
hereunder;

 

 13 

 

 

(t) is not owing from an Account Debtor that is also a supplier to, or creditor
of, any Company to the extent of the amount owing to such supplier or creditor;
and

 

(u) does not represent a manufacturer’s or supplier’s credits, discounts,
incentive plans or similar arrangements entitling such Borrowing Base Company to
discounts on future purchases therefrom.

 

“Eligible In-Transit Inventory” means any Inventory that is in-transit to a
Borrowing Base Company:

 

(a) for which title has passed to such Borrowing Base Company;

 

(b) has been paid for by such Borrower;

 

(c) that is insured for the full value of such Inventory;

 

(d) for which the Administrative Agent, for the benefit of the Lenders, has a
first priority perfected security interest;

 

(e) that is covered by a “through” bill of lading;

 

(f) that is shipped by a common carrier that is not affiliated with the vendor;

 

(g) that is either: (i) located within the United States; or (ii) is
“on-the-water” and in transit to the United States, and for which:

 

(A) with respect to Inventory covered by a negotiable bill of lading, a bill of
lading for such inventory (1) is issued to the order of such Borrowing Base
Company, and (2) (y) is in the Administrative Agent’s possession (or in the
possession of a Customs Broker acting as agent for the Administrative Agent,
pursuant to the terms of a Customs Broker Agency Agreement), or (z) has been
duly negotiated to the Administrative Agent; and

 

(B) with respect to Inventory covered by a non-negotiable bill of lading, (1) a
bill of lading for such Inventory has not been issued in the name of any Person
other than such Borrowing Base Company or the Administrative Agent, and (2) no
bailee of such Inventory has received notification of any Lien of any other
Person with respect to such Inventory (except for any Lien in favor of the
Administrative Agent);

 

(h) that is in-transit for no longer than thirty (30) days; and

 

(i) that meets all of the requirements for Eligible Inventory other than
subparts (a), (b) and (c) of the Eligible Inventory definition.

 

 14 

 

 

“Eligible In-Transit Inventory Maximum Amount” means Ten Million Dollars
($10,000,000).

 

“Eligible Inventory” means all Inventory of a Borrowing Base Company in which
the Administrative Agent, for the benefit of the Lenders, has a valid and
enforceable first priority security interest, except Inventory that:

 

(a) is in-transit or located outside of the United States (other than Eligible
In-Transit Inventory);

 

(b) is in the possession of a bailee, consignee or other third party, unless (i)
reserves, satisfactory to the Administrative Agent, have been established with
respect thereto; or (ii) (A) with respect to a consignee, processor or bailee,
an acknowledged Collateral Access Agreement has been received by the
Administrative Agent, (B) such third party is listed on Schedule 6.9 hereto, as
amended from time to time, or the Administrative Agent has received prior
written notice of such third party location, (C) if required by the
Administrative Agent, proper notice has been given to all secured parties of
such third party that have filed U.C.C. Financing Statements claiming a security
interest in such third party’s inventory, and (D) if required by the
Administrative Agent, such Borrowing Base Company has filed appropriate U.C.C.
Financing Statements to protect its interest therein, in form and substance
satisfactory to the Administrative Agent;

 

(c) is located on facilities leased by such Borrowing Base Company, unless an
acknowledged Collateral Access Agreement has been received by the Administrative
Agent, or reserves, satisfactory to the Administrative Agent, have been
established with respect thereto;

 

(d) is work-in-process;

 

(e) is damaged, defective or obsolete or otherwise not merchantable;

 

(f) consists of (i) goods not held for sale, such as labels, maintenance items,
supplies and packaging, or held for return to vendors, or (ii) Inventory used in
connection with research and development or marketing and promotional purposes;

 

(g) contains or bears any intellectual property rights licensed to such
Borrowing Base Company by any Person other than a Credit Party unless the
Administrative Agent is satisfied that the Administrative Agent may sell or
otherwise dispose of such Inventory without (i) infringing the rights of such
licensor, (ii) violating any contract with such licensor, or (iii) incurring any
liability with respect to payment of royalties other than royalties incurred
pursuant to sale of such Inventory under the current licensing agreement;

 

(h) has had reclamation or similar rights asserted by the seller with respect
thereto;

 

 15 

 

 

(i) is held for return to vendors, or constitutes returns not yet processed,
held for inspection or not otherwise considered saleable;

 

(j) is subject to a Lien in favor of any Person other than the Administrative
Agent;

 

(k) is not produced in compliance with the Fair Labor Standards Act and is or is
subject to the “hot goods” provisions contained in 29 USC 215(a)(i), or
otherwise fails to comply in all material respects with all standards imposed by
any applicable Governmental Authority having authority over the disposition,
manufacture or use of such Inventory; or

 

(l) is determined by the Administrative Agent to be unsatisfactory in any
material respect, in the exercise of its reasonable credit judgment.

 

“Eligible Transferee” means (a) any Lender (other than an Affected Lender) or
any affiliate of a Lender (other than an Affected Lender), and (b) a commercial
bank, financial institution or other “accredited investor” (as defined in SEC
Regulation D) that is not the Borrower, a Subsidiary or an Affiliate.

 

“Environmental Laws” means all provisions of law (including the common law),
statutes, ordinances, codes, rules, guidelines, policies, procedures,
orders-in-council, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, authorizations, certificates, approvals,
registrations, awards and standards promulgated by a Governmental Authority or
by any court, agency, instrumentality, regulatory authority or commission of any
of the foregoing concerning environmental health or safety and protection of
natural resources, or regulation of the discharge of substances into, the
environment.

 

“Environmental Permits” means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.

 

“Equalization Event” means the earlier of (a) the occurrence of an Event of
Default under Section 8.12 hereof, or (b) the acceleration of the maturity of
the Obligations after the occurrence of an Event of Default.

 

“Equalization Maximum Amount” means that term as defined in Section 9.5(b)(i)
hereof.

 

“Equalization Percentage” means that term as defined in Section 9.5(b)(ii)
hereof.

 

“Equipment” means equipment, as that term is defined in the U.C.C.

 

“Equity Offering” means that term as defined in Section 2.11(c)(v) hereof.

 

 16 

 

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated pursuant thereto.

 

“ERISA Event” means (a) the existence of a condition or event with respect to an
ERISA Plan that presents a risk of the imposition of an excise tax or any other
liability on a Company or of the imposition of a Lien on the assets of a
Company; (b) the engagement by a Company in a non-exempt “prohibited
transaction” (as defined under ERISA Section 406 or Code Section 4975) or a
breach of a fiduciary duty under ERISA that could result in liability to a
Company; (c) the application by a Controlled Group member for a waiver from the
minimum funding requirements of Code Section 412 or ERISA Section 302 or a
Controlled Group member is required to provide security under Code Section
401(a)(29); (d) the occurrence of a Reportable Event with respect to any Pension
Plan as to which notice is required to be provided to the PBGC; (e) the
withdrawal by a Controlled Group member from a Multiemployer Plan in a “complete
withdrawal” or a “partial withdrawal” (as such terms are defined in ERISA
Sections 4203 and 4205, respectively); (f) the involvement of, or occurrence or
existence of any event or condition that makes likely the involvement of, a
Multiemployer Plan in any reorganization under ERISA Section 4241; (g) the
failure of an ERISA Plan (and any related trust) that is intended to be
qualified under Code Sections 401 and 501 to be so qualified or the failure of
any “cash or deferred arrangement” under any such ERISA Plan to meet the
requirements of Code Section 401(k); (h) the taking by the PBGC of any steps to
terminate a Pension Plan or appoint a trustee to administer a Pension Plan, or
the taking by a Controlled Group member of any steps to terminate a Pension
Plan; (i) the failure by a Controlled Group member or an ERISA Plan to satisfy
any requirements of law applicable to an ERISA Plan; (j) the commencement,
existence or threatening of a claim, action, suit, audit or investigation with
respect to an ERISA Plan, other than a routine claim for benefits; or (k) any
incurrence by or any expectation of the incurrence by a Controlled Group member
of any liability for post-retirement benefits under any Welfare Plan, other than
as required by ERISA Section 601, et. seq. or Code Section 4980B.

 

“ERISA Plan” means an “employee benefit plan” (within the meaning of ERISA
Section 3(3)) that a Controlled Group member at any time sponsors, maintains,
contributes to, has liability with respect to or has an obligation to contribute
to such plan.

 

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor person), as in effect
from time to time

 

“Eurocurrency Liabilities” shall have the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.

 

“Eurodollar” means a Dollar denominated deposit in a bank or branch outside of
the United States.

 

“Eurodollar Loan” means a Revolving Loan described in Section 2.2(a) hereof, or
a portion of the Term Loan described in Section 2.3 hereof, in each case, that
shall be denominated in Dollars and on which the Borrower shall pay interest at
the Derived Eurodollar Rate.

 

 17 

 

 

“Eurodollar Rate” means, with respect to a Eurodollar Loan, for any Interest
Period, a rate per annum equal to the quotient obtained (rounded upwards, if
necessary, to the nearest 1/16th of 1%) by dividing (a) the rate of interest,
determined by the Administrative Agent in accordance with its usual procedures
(which determination shall be conclusive absent manifest error) as of
approximately 11:00 A.M. (London time) two Business Days prior to the beginning
of such Interest Period pertaining to such Eurodollar Loan, as listed as the
London interbank offered rate, as published by Thomson Reuters or Bloomberg (or,
if for any reason such rate is unavailable from Thomson Reuters or Bloomberg,
from any other similar company or service that provides rate quotations
comparable to those currently provided by Thomson Reuters or Bloomberg) for
Dollar deposits in immediately available funds with a maturity comparable to
such Interest Period, provided that, in the event that such rate quotation is
not available for any reason, then the Eurodollar Rate shall be the average
(rounded upward to the nearest 1/16th of 1%) of the per annum rates at which
deposits in immediately available funds in Dollars for the relevant Interest
Period and in the amount of the Eurodollar Loan to be disbursed or to remain
outstanding during such Interest Period, as the case may be, are offered to the
Administrative Agent (or an affiliate of the Administrative Agent, in the
Administrative Agent’s discretion) by prime banks in any Eurodollar market
reasonably selected by the Administrative Agent, determined as of 11:00 A.M.
(London time) (or as soon thereafter as practicable), two Business Days prior to
the beginning of the relevant Interest Period pertaining to such Eurodollar
Loan; by (b) 1.00 minus the Reserve Percentage. Notwithstanding the foregoing,
if at any time the Eurodollar Rate, as determined above, is less than zero, it
shall be deemed to be zero for purposes of this Agreement.

 

“Event of Default” means an event or condition that shall constitute an event of
default as defined in Article VIII hereof.

 

“Excess Cash Flow” means, for any period, as determined on a Consolidated basis,
an amount equal to (a) Consolidated EBITDA, minus (b) the sum of (i) the
aggregate amount of the scheduled principal payments made with respect to
Consolidated Funded Indebtedness for such period, (ii) Consolidated Interest
Expenses paid in cash, (iii) Consolidated Income Tax Expense paid in cash, (iv)
Capital Distributions, (v) Consolidated Unfunded Capital Expenditures, and (vi)
Mophie Contingent Payments paid in cash during such period, to the extent such
payments were not already deducted in the calculation of Consolidated Net
Earnings for such period.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Excluded Assets” means, collectively, (i) the assets obtained by foreclosure or
execution under a judgment of $6.131 million entered in May 2015 on a promissory
note from a former ZAGG director and (ii) the net proceeds payable to Mophie
equity holders in connection with the sale of excess Mophie real property and
described in Section 2.11(c) of the Mophie Purchase Agreement.

 

 18 

 

 

“Excluded Swap Obligations” means, with respect to any Credit Party, any Swap
Obligation if, and to the extent that, all or a portion of the guarantee of such
Credit Party of, or the grant by such Credit Party of a security interest to
secure, such Swap Obligation (or any guarantee thereof) is or becomes illegal
under the Commodity Exchange Act or any rule, regulation or order of the
Commodity Futures Trading Commission (or the application or official
interpretation of any thereof) by virtue of such Credit Party’s failure to
constitute an “eligible contract participant” as defined in the Commodity
Exchange Act (determined after giving effect to any “keepwell, support or other
agreement” for the benefit of such Credit Party and any and all guarantees of
such Credit Party’s Swap Obligations by other Credit Parties), at the time such
guarantee or grant of security interest of such Credit Party becomes, or would
become, effective with respect to such Swap Obligation. If a Swap Obligation
arises under a master agreement governing more than one swap, such exclusion
shall apply only to the portion of such Swap Obligation that is attributable to
swaps for which such guarantee or security interest is, or becomes, illegal.

 

“Excluded Taxes” means, in the case of the Administrative Agent and each Lender,
taxes imposed on or measured by its overall net income or branch profits, and
franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction
(or any political subdivision thereof) under the laws of which the
Administrative Agent or such Lender, as the case may be, is organized or in
which its principal office is located, or, in the case of any Lender, in which
its applicable lending office is located.

 

“Extended Term Account Debtor” means Best Buy Co., Inc., Apple Inc. or Superior
Communications Inc.

 

“Federal Funds Effective Rate” means, for any day, the rate per annum (rounded
upward to the nearest one one-hundredth of one percent (1/100 of 1%)) announced
by the Federal Reserve Bank of New York (or any successor) on such day as being
the weighted average of the rates on overnight federal funds transactions
arranged by federal funds brokers on the previous trading day, as computed and
announced by such Federal Reserve Bank (or any successor) in substantially the
same manner as such Federal Reserve Bank computes and announces the weighted
average it refers to as the “Federal Funds Effective Rate” as of the Closing
Date.

 

“Financial Officer” means any of the following officers: chief executive
officer, president, chief financial officer, vice president of finance or
treasurer. Unless otherwise qualified, all references to a Financial Officer in
this Agreement shall refer to a Financial Officer of the Borrower.

 

“Fixed Charge Coverage Ratio” means, as determined for the most recently
completed four fiscal quarters of the Borrower, on a Consolidated basis, the
ratio of (a) the total of (i) Consolidated EBITDA, minus (ii) Consolidated
Income Tax Expense paid in cash, minus (iii) Capital Distributions, minus (iv)
Consolidated Unfunded Capital Expenditures; to (b) Consolidated Fixed Charges;
provided that, for purposes of calculating the Fixed Charge Coverage Ratio
pursuant to Section 5.7(b) hereof, such calculation shall be measured (i) for
the most recently completed fiscal quarter for the fiscal quarter of the
Borrower ending June 30, 2016, (ii) for the most recently completed two fiscal
quarters for the fiscal quarter of the Borrower ending September 30, 2016, and
(iii) for the most recently completed three fiscal quarters for the fiscal
quarter of the Borrower ending December 31, 2016.

 

 19 

 

 

“Foreign Account Receivable” means an Account that is an account receivable that
arises out of contracts with or orders from an Account Debtor that is not a
resident of the United States or Canada (other than Quebec), or an Account
payable in a currency other than Dollars.

 

“Foreign Subsidiary” means a Subsidiary that is organized under the laws of any
jurisdiction other than the United States, a State thereof or the District of
Columbia.

 

“GAAP” means generally accepted accounting principles in the United States as
then in effect, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, applied on a basis consistent with the
past accounting practices and procedures of the Borrower.

 

“General Intangibles” means (a) general intangibles, as that term is defined in
the U.C.C.; and (b) choses in action, causes of action, intellectual property,
customer lists, corporate or other business records, inventions, designs,
patents, patent applications, service marks, registrations, trade names,
trademarks, copyrights, licenses, goodwill, computer software, rights to
indemnification and tax refunds.

 

“Government Account Receivable” means an Account that is an account receivable
that arises out of contracts with or orders from the United States or any of its
departments, agencies or instrumentalities.

 

“Governmental Authority” means any nation or government, any state, province or
territory or other political subdivision thereof, any governmental agency,
department, authority, instrumentality, regulatory body, court, central bank or
other governmental entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government,
any securities exchange and any self-regulatory organization exercising such
functions.

 

“Guarantor” means a Person that shall have pledged its credit or property in any
manner for the payment or other performance of the indebtedness, contract or
other obligation of another and includes (without limitation) any guarantor
(whether of payment or of collection), surety, co-maker, endorser or Person that
shall have agreed conditionally or otherwise to make any purchase, loan or
investment in order thereby to enable another to prevent or correct a default of
any kind.

 

“Guarantor of Payment” means each of the Companies designated a “Guarantor of
Payment” on Schedule 2 hereto, each of which is executing and delivering a
Guaranty of Payment on the Closing Date, and any other Person that shall execute
and deliver a Guaranty of Payment (or Guaranty of Payment Joinder) to the
Administrative Agent subsequent to the Closing Date.

 

“Guaranty of Payment” means each Guaranty of Payment executed and delivered on
or after the Closing Date in connection with this Agreement by a Guarantor of
Payment, as the same may from time to time be amended, restated or otherwise
modified.

 

 20 

 

 

“Guaranty of Payment Joinder” means each Guaranty of Payment Joinder, executed
and delivered by a Guarantor of Payment for the purpose of adding such Guarantor
of Payment as a party to a previously executed Guaranty of Payment.

 

“Hedge Agreement” means any (a) hedge agreement, interest rate swap, cap, collar
or floor agreement, or other interest rate management device entered into by a
Company with any Person in connection with any Indebtedness of such Company, or
(b) currency swap agreement, forward currency purchase agreement or similar
arrangement or agreement designed to protect against fluctuations in currency
exchange rates entered into by a Company.

 

“Indebtedness” means, for any Company, without duplication, (a) all obligations
to repay borrowed money, direct or indirect, incurred, assumed, or guaranteed,
(b) all obligations in respect of the deferred purchase price of property or
services (including earn-outs but excluding trade accounts payable in the
ordinary course of business), (c) all obligations under conditional sales or
other title retention agreements, (d) all obligations (contingent or otherwise)
under any letter of credit or banker’s acceptance, (e) all net obligations under
any currency swap agreement, interest rate swap, cap, collar or floor agreement
or other interest rate management device or any Hedge Agreement, (f) all
synthetic leases, (g) all Capitalized Lease Obligations, (h) all obligations of
such Company with respect to asset securitization financing programs, (i) all
obligations to advance funds to, or to purchase assets, property or services
from, any other Person in order to maintain the financial condition of such
Person, (j) all indebtedness of the types referred to in subparts (a) through
(i) above of any partnership or joint venture (other than a joint venture that
is itself a corporation or limited liability company) in which such Company is a
general partner or joint venturer, unless such indebtedness is expressly made
non-recourse to such Company, (k) any other transaction (including forward sale
or purchase agreements) having the commercial effect of a borrowing of money
entered into by such Company to finance its operations or capital requirements,
and (l) any guaranty of any obligation described in subparts (a) through (k)
above.

 

“Insolvent Lender” means a Lender, as reasonably determined by the
Administrative Agent, that (a) has become or is not Solvent or is the subsidiary
of a Person that has become or is not Solvent, (b) has become the subject of a
proceeding under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, or has had a receiver,
conservator, trustee or custodian appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in any
such proceeding or appointment, or is a subsidiary of a Person that has become
the subject of a proceeding under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect, or
has had a receiver, conservator, trustee or custodian appointed for it, or has
taken any action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment, or (c) has become the
subject of a Bail-In Action; provided that a Lender shall not be an Insolvent
Lender solely by virtue of the ownership or acquisition or control of an equity
interest in such Lender or a parent company thereof by a Governmental Authority
or an instrumentality thereof so long as such ownership interest does not result
in or provide such Lender with immunity from the jurisdiction of courts within
the United States or from the enforcement of judgments or writs of attachment on
its assets or permit such Lender (or such Governmental Authority) to reject,
repudiate, disavow or disaffirm any contracts or agreements made with such
Lender. Any Insolvent Lender shall cease to be an Insolvent Lender when the
Administrative Agent determines, in its reasonable discretion, that such
Insolvent Lender is no longer an Insolvent Lender based upon the characteristics
set forth in this definition.

 

 21 

 

 

“Intellectual Property Security Agreement” means each Intellectual Property
Security Agreement, executed and delivered on or after the Closing Date by the
Borrower or a Guarantor of Payment, as the same may from time to time be
amended, restated or otherwise modified.

 

“Interest Adjustment Date” means the last day of each Interest Period.

 

“Interest Period” means, with respect to a Eurodollar Loan, the period
commencing on the date such Eurodollar Loan is made and ending on the last day
of such period, as selected by the Borrower pursuant to the provisions hereof,
and, thereafter (unless such Eurodollar Loan is converted to a Base Rate Loan),
each subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of such period, as selected by the
Borrower pursuant to the provisions hereof. The duration of each Interest Period
for a Eurodollar Loan shall be one month, two months, three months or six
months, in each case as the Borrower may select upon notice, as set forth in
Section 2.6 hereof; provided that if the Borrower shall fail to so select the
duration of any Interest Period at least three Business Days prior to the
Interest Adjustment Date applicable to such Eurodollar Loan, the Borrower shall
be deemed to have converted such Eurodollar Loan to a Base Rate Loan at the end
of the then current Interest Period. Notwithstanding the foregoing, no Interest
Period shall extend beyond the last day of the Commitment Period.

 

“Inventory” means inventory, as that term is defined in the U.C.C.

 

“Investment Property” means investment property, as that term is defined in the
U.C.C., unless the Uniform Commercial Code as in effect in another jurisdiction
would govern the perfection and priority of a security interest in investment
property, and, in such case, “investment property” shall be defined in
accordance with the law of that jurisdiction as in effect from time to time.

 

“Issuing Lender” means, as to any Letter of Credit transaction hereunder, the
Administrative Agent as issuer of the Letter of Credit, or, in the event that
the Administrative Agent either shall be unable to issue or the Administrative
Agent shall agree that another Revolving Lender may issue, a Letter of Credit,
such other Revolving Lender as shall be acceptable to the Administrative Agent
and shall agree to issue the Letter of Credit in its own name, but in each
instance on behalf of the Revolving Lenders.

 

“KeyBank” means KeyBank National Association, and its successors and assigns.

 

“Lender” means that term as defined in the first paragraph of this Agreement
and, as the context requires, shall include the Issuing Lender and the Swing
Line Lender.

 

 22 

 

 

“Lender Credit Exposure” means, for any Lender, at any time, the aggregate of
such Lender’s respective pro rata shares of the Revolving Credit Exposure and
the Term Loan Exposure.

 

“Letter of Credit” means a commercial documentary letter of credit or standby
letter of credit that shall be issued by the Issuing Lender for the account of
the Borrower or a Guarantor of Payment, including amendments thereto, if any,
and shall have an expiration date no later than the earlier of (a) three hundred
sixty-four (364) days after its date of issuance (provided that such Letter of
Credit may provide for the renewal thereof for additional one year periods), or
(b) thirty (30) days prior to the last day of the Commitment Period.

 

“Letter of Credit Commitment” means the commitment of the Issuing Lender, on
behalf of the Revolving Lenders, to issue Letters of Credit in an aggregate face
amount of up to Seven Million Five Hundred Thousand Dollars ($7,500,000).

 

“Letter of Credit Exposure” means, at any time, the sum of (a) the aggregate
undrawn amount of all issued and outstanding Letters of Credit, and (b) the
aggregate of the draws made on Letters of Credit that have not been reimbursed
by the Borrower or converted to a Revolving Loan pursuant to Section 2.2(b)(v)
hereof.

 

“Letter of Credit Fee” means, with respect to any Letter of Credit, for any day,
an amount equal to (a) the undrawn amount of such Letter of Credit, multiplied
by (b) the Applicable Margin for Revolving Loans that are Eurodollar Loans in
effect on such day divided by three hundred sixty (360).

 

“Leverage Ratio” means, as determined on a Consolidated basis, the ratio of (a)
Consolidated Funded Indebtedness (as of the end of the most recently completed
fiscal quarter of the Borrower); to (b) Consolidated EBITDA (for the most
recently completed four fiscal quarters of the Borrower); provided that, for
purposes of calculating the Leverage Ratio for the fiscal quarters of the
Borrower ending June 30, 2016, September 30, 2016, and December 31, 2016, such
ratio shall equal (i) Consolidated Funded Indebtedness (as of the end of most
recently completed fiscal quarter of the Borrower); to (ii) Annualized
Consolidated EBITDA.

 

“Lien” means any mortgage, deed of trust, security interest, lien (statutory or
other), charge, assignment, hypothecation, encumbrance on, pledge or deposit of,
or conditional sale, lease (other than Operating Leases), sale with a right of
redemption or other title retention agreement and any capitalized lease with
respect to any property (real or personal) or asset.

 

“Loan” means a Revolving Loan, a Swing Loan or the Term Loan.

 

“Loan Documents” means, collectively, this Agreement, each Note, each Guaranty
of Payment, each Guaranty of Payment Joinder, all documentation relating to each
Letter of Credit, each Security Document, the Administrative Agent Fee Letter
and the Closing Fee Letter, as any of the foregoing may from time to time be
amended, restated or otherwise modified or replaced, and any other document
delivered pursuant thereto.

 

 23 

 

 

“Lockbox” means the post office box rented by and in the name of the Borrower in
accordance with Section 7.2(a) hereof.

 

“Mandatory Prepayment” means that term as defined in Section 2.11(c) hereof.

 

“Master Agreement” means that Master Agreement entered into between the Borrower
and the Administrative Agent in connection with the cash management services
undertaken by the Administrative Agent on behalf of the Companies.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, liabilities (actual or contingent), operations, condition (financial or
otherwise) or prospects of any Company, (b) the business, assets, liabilities
(actual or contingent), operations, condition (financial or otherwise) or
prospects of the Companies taken as a whole, (c) the rights and remedies of the
Administrative Agent or the Lenders under any Loan Document, (d) the ability of
any Credit Party to perform its obligations under any Loan Document to which it
is a party, or (e) the legality, validity, binding effect or enforceability
against any Credit Party of any Loan Document to which it is a party.

 

“Material Indebtedness Agreement” means any debt instrument, lease (capital,
operating or otherwise), guaranty, contract, commitment, agreement or other
arrangement evidencing or entered into in connection with any Indebtedness of
any Company or the Companies equal to or in excess of the amount of One Million
Dollars ($1,000,000).

 

“Material Recovery Determination Notice” means that term as defined in Section
2.11(c)(iii) hereof.

 

“Material Recovery Event” means (a) any casualty loss in respect of assets of a
Company covered by casualty insurance, and (b) any compulsory transfer or taking
under threat of compulsory transfer of any asset of a Company by any
Governmental Authority; provided that, in the case of either subpart (a) or (b)
hereof, the Net Cash Proceeds received by the Companies from such loss, transfer
or taking exceeds Two Hundred Fifty Thousand Dollars ($250,000).

 

“Maximum Amount” means, for each Lender, the amount set forth opposite such
Lender’s name under the column headed “Maximum Amount” as set forth on Schedule
1 hereto, subject to (a) decreases pursuant to Section 2.9(e) hereof, (b)
decreases of the Term Loan by virtue of principal payments made, and (c)
assignments of interests pursuant to Section 11.11 hereof; provided that the
Maximum Amount for the Swing Line Lender shall exclude the Swing Line Commitment
(other than its pro rata share), and the Maximum Amount of the Issuing Lender
shall exclude the Letter of Credit Commitment (other than its pro rata share
thereof).

 

“Maximum Rate” means that term as defined in Section 2.4(e) hereof.

 

“Maximum Revolving Amount” means Eighty-Five Million Dollars ($85,000,000), as
such amount may be reduced pursuant to Section 2.9(e) hereof.

 

“Moody’s” means Moody’s Investors Service, Inc., and any successor to such
company.

 

 24 

 

 

“Mophie” means mophie inc., a California corporation.

 

“Mophie Acquisition” means the Acquisition by the Borrower (through a
wholly-owned subsidiary) of all of the capital stock of Mophie pursuant to the
Mophie Acquisition Documents.

 

“Mophie Acquisition Documents” means the Mophie Purchase Agreement and each
other document executed and delivered in connection therewith.

 

“Mophie Contingent Payments” means those payments required to be made by the
Companies to Mophie equity holders pursuant to Section 2.11(a), (b) or (d) of
the Mophie Purchase Agreement.

 

“Mophie Earn-Out Payments” means those payments required to be made by the
Companies to Mophie equity holders pursuant to Section 2.10 of the Mophie
Purchase Agreement.

 

“Mophie Purchase Agreement” means that certain Agreement and Plan of Merger,
dated as of February 2, 2016, by and among the Borrower, ZM Acquisition, Inc., a
Delaware corporation, Mophie and the shareholders of Mophie.

 

“Multiemployer Plan” means a Pension Plan that is subject to the requirements of
Subtitle E of Title IV of ERISA.

 

“Net Cash Proceeds” means (a) for any Asset Sale, the Cash Proceeds net of
attorneys’ fees, accountants’ fees, investment banking fees, amounts required to
be reserved for indemnification, adjustment of purchase price or similar
obligations pursuant to the agreements governing such Asset Sale, amounts
required to be applied to the repayment of Indebtedness secured by a Lien
expressly permitted by this Agreement on any asset that is the subject of such
Asset Sale (other than any Lien pursuant to a Loan Document) and other customary
fees and expenses actually incurred in connection therewith and net of taxes
paid or reasonably estimated to be payable as a result thereof (after taking
into account any available tax credits or deductions and any tax sharing
arrangements); (b) for any Material Recovery Event, the Cash Proceeds resulting
therefrom net of (i) reasonable and customary expenses incurred in connection
with such Material Recovery Event, and local taxes paid or reasonably estimated
to be payable as a consequence of such Material Recovery Event and the payment
of principal, premium and interest of Indebtedness (other than the Obligations)
secured by the asset that is the subject of the Material Recovery Event and
required to be, and that is, repaid under the terms thereof as a result of such
Material Recovery Event, and (ii) incremental federal, state and local income
taxes paid or payable as a result thereof and (c) for any Equity Offering by the
Borrower or any incurrence of Indebtedness by any Company, the Cash Proceeds
received from such Equity Offering or incurrence of Indebtedness, net of
attorneys’ fees, investment banking fees, accountants’ fees, underwriting
discounts and commissions and other customary fees and expenses actually
incurred in connection therewith.

 

“Non-Consenting Lender” means that term as defined in Section 11.3(c) hereof.

 

 25 

 

 

“Non-U.S. Lender” means that term as defined in Section 3.2(c) hereof.

 

“Note” means a Revolving Credit Note, the Swing Line Note or a Term Note, or any
other promissory note delivered pursuant to this Agreement.

 

“Notice of Loan” means a Notice of Loan in the form of the attached Exhibit E.

 

“Obligations” means, collectively, (a) all Indebtedness and other obligations
now owing or hereafter incurred by the Borrower to the Administrative Agent, the
Swing Line Lender, the Issuing Lender, or any Lender pursuant to this Agreement
and the other Loan Documents, and includes the principal of and interest on all
Loans, and all obligations of the Borrower or any other Credit Party pursuant to
Letters of Credit; (b) each extension, renewal, consolidation or refinancing of
any of the foregoing, in whole or in part; (c) the commitment and other fees,
and any prepayment fees, payable pursuant to this Agreement or any other Loan
Document; (d) all fees and charges in connection with Letters of Credit; (e)
every other liability, now or hereafter owing to the Administrative Agent or any
Lender by any Company pursuant to this Agreement or any other Loan Document; and
(f) all Related Expenses.

 

“Operating Account” means a commercial Deposit Account designated “operating
account” and maintained by the Borrower with the Administrative Agent, without
liability by the Administrative Agent to pay interest thereon, from which
account the Borrower shall have the right to withdraw funds until the
Administrative Agent, on behalf of the Lenders, terminates such right after the
occurrence of a Default or an Event of Default.

 

“Operating Leases” means all real or personal property leases under which any
Company is bound or obligated as a lessee or sublessee and which, under GAAP,
are not required to be capitalized on a balance sheet of such Company; provided
that Operating Leases shall not include any such lease under which any Company
is also bound as the lessor or sublessor.

 

“Organizational Documents” means, with respect to any Person (other than an
individual), such Person’s Articles (Certificate) of Incorporation, operating
agreement or equivalent formation documents, and Regulations (Bylaws), or
equivalent governing documents, and any amendments to any of the foregoing.

 

“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise, ad valorem or property taxes, goods and services taxes,
harmonized sales taxes and other sales taxes, use taxes, value added taxes,
transfer taxes, charges or similar taxes or levies arising from any payment made
hereunder or under any other Loan Document, or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any other Loan
Document.

 

“Overall Commitment Percentage” means, for any Lender, the percentage determined
by dividing (a) the sum, based upon such Lender’s Applicable Commitment
Percentages, of (i) the principal outstanding on the Term Loan, (ii) the
aggregate principal amount of Revolving Loans outstanding, (iii) the Swing Line
Exposure, and (iv) the Letter of Credit Exposure; by (b) the sum of (i) the
aggregate principal amount of all Loans outstanding, plus (ii) the Letter of
Credit Exposure.

 

 26 

 

 

“Participant” means that term as defined in Section 11.12 hereof.

 

“Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, USA
Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001, as
amended from time to time.

 

“Patriot Capital Payments” means capital contributions made by Borrower to
Patriot Corporation, but only when the aggregate amount of such capital
contributions are used by Patriot Corporation to pay royalty, cost-sharing and
other obligations due to the Borrower under the terms of that certain Technology
Platform Contribution License Agreement between Borrower and Patriot Corporation
dated December 31, 2012, as amended.

 

“Patriot Corporation” means Patriot Corporation, an unlimited liability company
organized and existing under the laws of Ireland.

 

“PBGC” means the Pension Benefit Guaranty Corporation, and its successor.

 

“Pension Plan” means an ERISA Plan that is a “pension plan” (within the meaning
of ERISA Section 3(2)).

 

“Permitted Foreign Subsidiary Loans, Guaranties and Investments” means:

 

(a) the investments by the Borrower or a Domestic Subsidiary in a Foreign
Subsidiary, in such amounts existing as of the Closing Date and set forth on
Schedule 5.11 hereto;

 

(b) the loans by the Borrower or a Domestic Subsidiary to a Foreign Subsidiary,
in such amounts existing as of the Closing Date and set forth on Schedule 5.11
hereto (and any extension, renewal or refinancing thereof but, only to the
extent that the principal amount thereof does not increase after the Closing
Date); and

 

(c) any investment by a Foreign Subsidiary in, or loan from a Foreign Subsidiary
to, or guaranty from a Foreign Subsidiary of Indebtedness of, a Company.

 

“Person” means any individual, sole proprietorship, partnership, joint venture,
unincorporated organization, corporation, limited liability company, unlimited
liability company, institution, trust, estate, Governmental Authority or any
other entity.

 

“Pledge Agreement” means each of the Pledge Agreements, relating to the Pledged
Securities, executed and delivered by the Borrower or a Guarantor of Payment, as
applicable, in favor of the Administrative Agent, for the benefit of the
Lenders, dated on or after the Closing Date, as any of the foregoing may from
time to time be amended, restated or otherwise modified.

 

 27 

 

 

“Pledged Notes” means the promissory notes payable to a Credit Party, as
described on Schedule 7.4 hereto, and any additional or future promissory notes
that may hereafter from time to time be payable to the Borrower.

 

“Pledged Securities” means all of the shares of capital stock or other equity
interest of a direct Subsidiary of a Credit Party, whether now owned or
hereafter acquired or created, and all proceeds thereof; provided that Pledged
Securities shall exclude shares of voting capital stock or other voting equity
interests in any Foreign Subsidiary that is a CFC in excess of sixty-five
percent (65%) of the total outstanding shares of voting capital stock or other
voting equity interest of such Foreign Subsidiary, whether held directly or
indirectly through a disregarded entity. (Schedule 4 hereto lists, as of the
Closing Date, all of the Pledged Securities.)

 

“Prime Rate” means the interest rate established from time to time by the
Administrative Agent as the Administrative Agent’s prime rate, whether or not
such rate shall be publicly announced; the Prime Rate may not be the lowest
interest rate charged by the Administrative Agent for commercial or other
extensions of credit. Each change in the Prime Rate shall be effective
immediately from and after such change.

 

“Proceeds” means (a) proceeds, as that term is defined in the U.C.C., and any
other proceeds, and (b) whatever is received upon the sale, exchange, collection
or other disposition of Collateral or proceeds, whether cash or non-cash. Cash
proceeds include, without limitation, moneys, checks and Deposit Accounts.
Proceeds include, without limitation, any Account arising when the right to
payment is earned under a contract right, any insurance payable by reason of
loss or damage to the Collateral, and any return or unearned premium upon any
cancellation of insurance. Except as expressly authorized in this Agreement, the
right of the Administrative Agent and the Lenders to Proceeds specifically set
forth herein, or indicated in any financing statement, shall never constitute an
express or implied authorization on the part of the Administrative Agent or any
Lender to a Company’s sale, exchange, collection or other disposition of any or
all of the collateral securing the Secured Obligations.

 

“Protective Advance” means a protective advance made by the Administrative Agent
in accordance with Section 2.15 hereof for the following:

 

(a) to pay and discharge past due taxes, assessments and governmental charges,
at any time levied on or with respect to any of the Collateral to the extent
that the applicable Company has failed to pay and discharge the same in
accordance with the requirements of this Agreement or any of the other Loan
Documents;

 

(b) to pay and discharge any claims of other creditors that are secured by any
Lien on any Collateral, other than a Lien permitted by Section 5.9 hereof;

 

(c) to pay for the maintenance, repair, restoration and preservation of any
Collateral to the extent the Company that owns such Collateral fails to comply
with its obligations in regard thereto under this Agreement and the other Loan
Documents, or the Administrative Agent reasonably believes payment of the same
is necessary or appropriate to avoid a material loss or material diminution in
value of such Collateral;

 

 28 

 

 

(d) to obtain and pay the premiums on insurance for any Collateral to the extent
the Companies fail to maintain such insurance in accordance with the
requirements of this Agreement and the other Loan Documents; or

 

(e) to otherwise maintain, protect or preserve the Collateral or the rights of
the Lenders under the Loan Documents and is made to enhance the likelihood of,
or to maximize the amount of, repayment of the Secured Obligations.

 

“Register” means that term as described in Section 11.11(i) hereof.

 

“Regularly Scheduled Payment Date” means the first day of each calendar month.

 

“Related Expenses” means any and all costs, liabilities and expenses (including,
without limitation, losses, damages, penalties, claims, actions, reasonable
attorneys’ fees, legal expenses, judgments, suits and disbursements) (a)
incurred by the Administrative Agent, or imposed upon or asserted against the
Administrative Agent or any Lender, in any attempt by the Administrative Agent
and the Lenders to (i) obtain, preserve, perfect or enforce any Loan Document or
any security interest evidenced by any Loan Document; (ii) obtain payment,
performance or observance of any and all of the Secured Obligations; or (iii)
maintain, insure, audit, collect, preserve, repossess or dispose of any of the
collateral securing the Secured Obligations or any part thereof, including,
without limitation, costs and expenses for appraisals, assessments and audits of
any Company or any such collateral; or (b) incidental or related to subpart (a)
above, including, without limitation, interest thereupon from the date incurred,
imposed or asserted until paid at the Default Rate.

 

“Related Writing” means each Loan Document, each Borrowing Base Certificate and
any other assignment, mortgage, security agreement, guaranty agreement,
subordination agreement, financial statement, audit report or other writing
furnished by any Credit Party, or any of its officers, to the Administrative
Agent or the Lenders pursuant to or otherwise in connection with this Agreement.

 

“Reportable Event” means a reportable event as that term is defined in Title IV
of ERISA, except actions of general applicability by the Secretary of Labor
under Section 110 of such Act.

 

“Required Lenders” means the holders, based upon each Lender’s Applicable
Commitment Percentages, of at least sixty-six and two-thirds percent (66 2/3%)
of an amount (the “Total Amount”) equal to the sum of:

 

(a)  (i) during the Commitment Period, the Maximum Revolving Amount, or (ii)
after the Commitment Period, the Revolving Credit Exposure; and

 

(b) the principal outstanding on the Term Loan;

 

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provided that (A) the portion of the Total Amount held or deemed to be held by
any Defaulting Lender or Insolvent Lender shall be excluded for purposes of
making a determination of Required Lenders, and (B) if there shall be two or
more Lenders (that are not Defaulting Lenders or Insolvent Lenders), Required
Lenders shall constitute at least two Lenders.

 

“Requirement of Law” means, as to any Person, any law, treaty, rule or
regulation or determination or policy statement or interpretation of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property.

 

“Reserve” or “Reserves” means any amount that the Administrative Agent reserves,
without duplication, pursuant to Section 2.13 hereof, against the Borrowing
Base.

 

“Reserve Percentage” means, for any day, that percentage (expressed as a
decimal) that is in effect on such day, as prescribed by the Board of Governors
of the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, all basic, supplemental,
marginal and other reserves and taking into account any transitional adjustments
or other scheduled changes in reserve requirements) for a member bank of the
Federal Reserve System in Cleveland, Ohio, in respect of Eurocurrency
Liabilities. The Eurodollar Rate shall be adjusted automatically on and as of
the effective date of any change in the Reserve Percentage.

 

“Restricted Payment” means, with respect to any Company, (a) any Capital
Distribution, (b) any amount paid by such Company in repayment, redemption,
retirement or repurchase, directly or indirectly, of any Subordinated
Indebtedness, (c) any earn-out payment or payment in respect of purchase price
adjustments in connection with an Acquisition permitted hereunder, or (d) any
amount paid by such Company in respect of any management, consulting or other
similar arrangement with any equity holder (other than a Company) of a Company
or an Affiliate.

 

“Revolving Credit Availability” means, at any time, the amount equal to the
Revolving Credit Commitment minus the Revolving Credit Exposure.

 

“Revolving Credit Commitment” means the obligation hereunder, during the
Commitment Period, of (a) the Revolving Lenders (and each Revolving Lender) to
make Revolving Loans, (b) the Issuing Lender to issue and each Revolving Lender
to participate in, Letters of Credit pursuant to the Letter of Credit
Commitment, and (c) the Swing Line Lender to make, and each Revolving Lender to
participate in, Swing Loans pursuant to the Swing Line Commitment; up to an
aggregate principal amount outstanding at any time equal to the lesser of (i)
the Borrowing Base, or (ii) the Maximum Revolving Amount.

 

“Revolving Credit Exposure” means, at any time, the sum of (a) the aggregate
principal amount of all Revolving Loans outstanding, (b) the Swing Line
Exposure, and (c) the Letter of Credit Exposure.

 

“Revolving Credit Note” means a Revolving Credit Note, in the form of the
attached Exhibit A, executed and delivered pursuant to Section 2.5(a) hereof.

 

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“Revolving Lender” means a Lender with a percentage of the Revolving Credit
Commitment as set forth on Schedule 1 hereto, or that acquires a percentage of
the Revolving Credit Commitment pursuant to Section 11.11 hereof.

 

“Revolving Loan” means a loan made to the Borrower by the Revolving Lenders in
accordance with Section 2.2(a) hereof.

 

“Sanctions” means economic or financial sanctions or trade embargoes imposed,
administered or enforced from time to time by (a) the U.S. government, including
those administered by the U.S. Department of the Treasury’s Office of Foreign
Assets Control or the U.S. Department of State or (b) the United Nations
Security Council, the European Union or Her Majesty’s Treasury of the United
Kingdom, or other relevant sanctions authorities.

 

“SEC” means the United States Securities and Exchange Commission, or any
governmental body or agency succeeding to any of its principal functions.

 

“Secured Obligations” means, collectively, (a) the Obligations, (b) all
obligations and liabilities of the Companies owing to a Lender (or an entity
that is an affiliate of a then existing Lender) under Hedge Agreements, and (c)
the Bank Product Obligations owing to a Lender (or an entity that is an
affiliate of a then existing Lender) under Bank Product Agreements; provided
that Secured Obligations of a Credit Party shall not include Excluded Swap
Obligations owing from such Credit Party.

 

“Securities Account” means a securities account, as that term is defined in the
U.C.C.

 

“Securities Account Control Agreement” means each Securities Account Control
Agreement among a Credit Party, the Administrative Agent and a Securities
Intermediary, dated on or after the Closing Date, to be in form and substance
satisfactory to the Administrative Agent, as the same may from time to time be
amended, restated or otherwise modified.

 

“Securities Intermediary” means a clearing corporation or a Person, including,
without limitation, a bank or broker, that in the ordinary course of its
business maintains Securities Accounts for others and is acting in that
capacity.

 

“Security Account” means a commercial Deposit Account maintained with the
Administrative Agent, without liability by the Administrative Agent to pay
interest thereon, as described in Section 7.2(e) hereof.

 

“Security Agreement” means each Security Agreement, executed and delivered by
one or more Guarantors of Payment in favor of the Administrative Agent, for the
benefit of the Lenders, dated as of the Closing Date, and any other Security
Agreement executed on or after the Closing Date, as the same may from time to
time be amended, restated or otherwise modified.

 

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“Security Agreement Joinder” means each Security Agreement Joinder, executed and
delivered by a Guarantor of Payment for the purpose of adding such Guarantor of
Payment as a party to a previously executed Security Agreement.

 

“Security Document” means each Security Agreement, each Security Agreement
Joinder, each Pledge Agreement, each Intellectual Property Security Agreement,
each Collateral Access Agreement, each Control Agreement, each U.C.C. Financing
Statement or similar filing as to a jurisdiction located outside of the United
States filed in connection herewith or perfecting any interest created in any of
the foregoing documents, and any other document pursuant to which any Lien is
granted by a Company or any other Person to the Administrative Agent, for the
benefit of the Lenders, as security for the Secured Obligations, or any part
thereof, and each other agreement executed or provided to the Administrative
Agent in connection with any of the foregoing, as any of the foregoing may from
time to time be amended, restated or otherwise modified or replaced.

 

“Settlement Date” means that term as defined in Section 2.2(c)(ii) hereof.

 

“Solvent” means, with respect to any Person, that (a) the fair value of such
Person’s assets is in excess of the total amount of such Person’s debts, as
determined in accordance with the Bankruptcy Code, (b) the present fair saleable
value of such Person’s assets is in excess of the amount that will be required
to pay such Person’s debts as such debts become absolute and matured, (c) such
Person is able to realize upon its assets and pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities) as
such liabilities mature in the ordinary course of business, (d) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond its ability to pay as such debts and liabilities mature, and (e) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which its property would constitute an
unreasonably small amount of capital. As used in this definition, the term
“debts” includes any legal liability, whether matured or unmatured, liquidated
or unliquidated, absolute, fixed or contingent, as determined in accordance with
the Bankruptcy Code.

 

“Specific Commitment” means the Revolving Credit Commitment or the Term Loan
Commitment.

 

“Standard & Poor’s” means Standard & Poor’s Financial Services LLC, a subsidiary
of The McGraw-Hill Companies, Inc., and any successor to such company.

 

“StuckyNet System” means the StuckyNet-Link internet-based communication system
utilized by the Administrative Agent.

 

“Subordinated Indebtedness” means Indebtedness that shall have been subordinated
(by written terms or written agreement being, in either case, in form and
substance satisfactory to the Administrative Agent) in favor of the prior
payment in full of the Obligations.

 

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“Subsidiary” means (a) a corporation more than fifty percent (50%) of the Voting
Power of which is owned, directly or indirectly, by the Borrower or by one or
more other subsidiaries of the Borrower or by the Borrower and one or more
subsidiaries of the Borrower, (b) a partnership, limited liability company or
unlimited liability company of which the Borrower, one or more other
subsidiaries of the Borrower or the Borrower and one or more subsidiaries of the
Borrower, directly or indirectly, is a general partner or managing member, as
the case may be, or otherwise has an ownership interest greater than fifty
percent (50%) of all of the ownership interests in such partnership, limited
liability company or unlimited liability company, or (c) any other Person (other
than a corporation, partnership, limited liability company or unlimited
liability company) in which the Borrower, one or more other subsidiaries of the
Borrower or the Borrower and one or more subsidiaries of the Borrower, directly
or indirectly, has at least a majority interest in the Voting Power or the power
to elect or direct the election of a majority of directors or other governing
body of such Person.

 

“Swap Obligations” means, with respect to any Company, any obligation to pay or
perform under any agreement, contract or transaction that constitutes a “swap”
within the meaning of section 1a(47) of the Commodity Exchange Act.

 

“Swing Line Commitment” means the commitment of the Swing Line Lender to make
Swing Loans to the Borrower, on a discretionary basis, up to the aggregate
amount at any time outstanding of Eight Million Five Hundred Thousand Dollars
($8,500,000).

 

“Swing Line Exposure” means, at any time, the aggregate principal amount of all
Swing Loans outstanding.

 

“Swing Line Lender” means KeyBank, as holder of the Swing Line Commitment.

 

“Swing Line Note” means the Swing Line Note, in the form of the attached
Exhibit B executed and delivered pursuant to Section 2.5(b) hereof.

 

“Swing Loan” means a loan that shall be denominated in Dollars made to the
Borrower by the Swing Line Lender under the Swing Line Commitment, in accordance
with Section 2.2(c) hereof.

 

“Swing Loan Maturity Date” means, with respect to any Swing Loan, the earlier of
(a) the first Wednesday (or the next Business Day if such Wednesday is not a
Business Day) after the date such Swing Loan is made, (b) demand by the Swing
Line Lender, or (c) the last day of the Commitment Period.

 

“Target EBITDA” means, for any period, in accordance with GAAP, net earnings for
such period, plus the aggregate amounts deducted in determining such net
earnings in respect of (a) income taxes, (b) interest expense, and (c)
depreciation and amortization charges.

 

“Taxes” means any and all present or future taxes of any kind, including, but
not limited to, levies, imposts, duties, surtaxes, charges, fees, deductions or
withholdings now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority (together with any interest, penalties, fines,
additions to taxes or similar liabilities with respect thereto) other than
Excluded Taxes.

 

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“Term Lender” means a Lender with a percentage of the Term Loan Commitment as
set forth on Schedule 1 hereto, or that acquires a percentage of the Term Loan
Commitment pursuant to Section 11.11 hereof.

 

“Term Loan” means the loan made to the Borrower by the Term Lenders in the
original principal amount of Twenty-Five Million Dollars ($25,000,000), in
accordance with Section 2.3 hereof.

 

“Term Loan Commitment” means the obligation hereunder of each Term Lender to
participate in the making of the Term Loan, up to the amount set forth opposite
such Term Lender’s name under the column headed “Term Loan Commitment Amount” as
set forth on Schedule 1 hereto.

 

“Term Loan Exposure” means, at any time, the outstanding principal amount of the
Term Loan.

 

“Term Note” means a Term Note, in the form of the attached Exhibit C executed
and delivered pursuant to Section 2.5(c) hereof.

 

“Total Commitment Amount” means the principal amount of One Hundred Ten Million
Dollars ($110,000,000), as such amount is decreased by principal payments on the
Term Loan, and as such amount may be decreased pursuant to Section 2.9(e)
hereof.

 

“U.C.C.” means the Uniform Commercial Code, as in effect from time to time in
the State of New York.

 

“U.C.C. Financing Statement” means a financing statement filed or to be filed in
accordance with the Uniform Commercial Code, as in effect from time to time, in
the relevant state or states.

 

“United States” means the United States of America.

 

“Voting Power” means, with respect to any Person, the exclusive ability to
control, through the ownership of shares of capital stock, partnership
interests, membership interests or otherwise, the election of members of the
board of directors or other similar governing body of such Person. The holding
of a designated percentage of Voting Power of a Person means the ownership of
shares of capital stock, partnership interests, membership interests or other
interests of such Person sufficient to control exclusively the election of that
percentage of the members of the board of directors or similar governing body of
such Person.

 

“Welfare Plan” means an ERISA Plan that is a “welfare plan” within the meaning
of ERISA Section 3(l).

 

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution
Authority, the write-down and conversion powers of such EEA Resolution Authority
from time to time under the Bail-In Legislation for the applicable EEA Member
Country, which write-down and conversion powers are described in the EU Bail-In
Legislation Schedule.

 

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Section 1.2. Accounting Terms.

 

(a) Any accounting term not specifically defined in this Article I shall have
the meaning ascribed thereto by GAAP.

 

(b) If any change in the rules, regulations, pronouncements, opinions or other
requirements of the Financial Accounting Standards Board (or any successor
thereto or agency with similar function) with respect to GAAP, or if the
Borrower adopts the International Financial Reporting Standards, and such change
or adoption results in a change in the calculation of any component (or
components in the aggregate) of the financial covenants set forth in Section 5.7
hereof or the related financial definitions, at the option of the Administrative
Agent, the Required Lenders or the Borrower, the parties hereto will enter into
good faith negotiations to amend such financial covenants and financial
definitions in such manner as the parties shall agree, each acting reasonably,
in order to reflect fairly such change or adoption so that the criteria for
evaluating the financial condition of the Borrower shall be the same in
commercial effect after, as well as before, such change or adoption is made (in
which case the method and calculating such financial covenants and definitions
hereunder shall be determined in the manner so agreed); provided that, until so
amended, such calculations shall continue to be computed in accordance with GAAP
as in effect prior to such change or adoption.

 

Section 1.3. Terms Generally. The foregoing definitions shall be applicable to
the singular and plural forms of the foregoing defined terms. Unless otherwise
defined in this Article I, terms that are defined in the U.C.C. are used herein
as so defined. 

 

ARTICLE II. AMOUNT AND TERMS OF CREDIT

 

Section 2.1. Amount and Nature of Credit.

 

(a) Subject to the terms and conditions of this Agreement, the Lenders, during
the Commitment Period and to the extent hereinafter provided, shall make Loans
to the Borrower, participate in Swing Loans made by the Swing Line Lender to the
Borrower, and issue or participate in Letters of Credit at the request of the
Borrower, in such aggregate amount as the Borrower shall request pursuant to the
Commitment; provided that in no event shall the aggregate principal amount of
all Loans and Letters of Credit outstanding under this Agreement be in excess of
the Total Commitment Amount.

 

(b) Each Lender, for itself and not one for any other, agrees to make Loans,
participate in Swing Loans, and issue or participate in Letters of Credit,
during the Commitment Period, on such basis that, immediately after the
completion of any borrowing by the Borrower or the issuance of a Letter of
Credit:

 

(i) the aggregate outstanding principal amount of Loans made by such Lender
(other than Swing Loans made by the Swing Line Lender), when combined with such
Lender’s pro rata share, if any, of the Letter of Credit Exposure and the Swing
Line Exposure, shall not be in excess of the Maximum Amount for such Lender; and

 

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(ii) with respect to each Specific Commitment, the aggregate outstanding
principal amount of Loans (other than Swing Loans) made by such Lender with
respect to such Specific Commitment shall represent that percentage of the
aggregate principal amount then outstanding on all Loans (other than Swing
Loans) within such Specific Commitment that shall be such Lender’s Applicable
Commitment Percentage.

 

Within each Specific Commitment, each borrowing (other than Swing Loans which
shall be risk participated on a pro rata basis) from the Lenders shall be made
pro rata according to the respective Applicable Commitment Percentages of the
Lenders.

 

(c) The Loans may be made as Revolving Loans as described in Section 2.2(a)
hereof, as the Term Loan as described in Section 2.3 hereof, and as Swing Loans
as described in Section 2.2(c) hereof, and Letters of Credit may be issued in
accordance with Section 2.2(b) hereof.

 

Section 2.2. Revolving Credit Commitment.

 

(a) Revolving Loans. Subject to the terms and conditions of this Agreement,
during the Commitment Period, the Revolving Lenders shall make a Revolving Loan
or Revolving Loans to the Borrower in such amount or amounts as the Borrower,
through an Authorized Officer, may from time to time request, but not exceeding
in aggregate principal amount at any time outstanding hereunder the Revolving
Credit Commitment, when such Revolving Loans are combined with the Letter of
Credit Exposure and the Swing Line Exposure. The Borrower shall have the option,
subject to the terms and conditions set forth herein, to borrow Revolving Loans,
maturing on the last day of the Commitment Period, by means of any combination
of Base Rate Loans or Eurodollar Loans. Subject to the provisions of this
Agreement, the Borrower shall be entitled under this Section 2.2(a) to borrow
Revolving Loans, repay the same in whole or in part and re-borrow Revolving
Loans hereunder at any time and from time to time during the Commitment Period.
The aggregate outstanding amount of all Revolving Loans shall be payable in full
on the last day of the Commitment Period.

 

(b) Letters of Credit.

 

(i) Generally. Subject to the terms and conditions of this Agreement, during the
Commitment Period, the Issuing Lender shall, in its own name, on behalf of the
Revolving Lenders, issue such Letters of Credit for the account of the Borrower
or a Guarantor of Payment, as the Borrower may from time to time request. The
Borrower shall not request any Letter of Credit (and the Issuing Lender shall
not be obligated to issue any Letter of Credit) if, after giving effect thereto,
(A) the Letter of Credit Exposure would exceed the Letter of Credit Commitment,
or (B) the Revolving Credit Exposure would exceed the Revolving Credit
Commitment. The issuance of each Letter of Credit shall confer upon each
Revolving Lender the benefits and liabilities of a participation consisting of
an undivided pro rata interest in the Letter of Credit to the extent of such
Revolving Lender’s Applicable Commitment Percentage.

 

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(ii) Request for Letter of Credit. Each request for a Letter of Credit shall be
delivered to the Administrative Agent (and to the Issuing Lender, if the Issuing
Lender is a Lender other than the Administrative Agent) by an Authorized Officer
not later than 11:00 A.M. (Eastern time) three Business Days prior to the date
of the proposed issuance of the Letter of Credit (or such shorter period as may
be acceptable to the Issuing Lender). Each such request shall be in a form
acceptable to the Administrative Agent (and the Issuing Lender, if the Issuing
Lender is a Lender other than the Administrative Agent) and shall specify the
face amount thereof, whether such Letter of Credit is a commercial documentary
or a standby Letter of Credit, the account party, the beneficiary, the requested
date of issuance, amendment, renewal or extension, the expiry date thereof, and
the nature of the transaction or obligation to be supported thereby.
Concurrently with each such request, the Borrower, and any Guarantor of Payment
for whose account the Letter of Credit is to be issued, shall execute and
deliver to the Issuing Lender an appropriate application and agreement, being in
the standard form of the Issuing Lender for such letters of credit, as amended
to conform to the provisions of this Agreement if required by the Administrative
Agent. The Administrative Agent shall give the Issuing Lender and each Revolving
Lender notice of each such request for a Letter of Credit.

 

(iii) Commercial Documentary Letters of Credit Fees. With respect to each Letter
of Credit that shall be a commercial documentary letter of credit and the drafts
thereunder, whether issued for the account of the Borrower or a Guarantor of
Payment, the Borrower agrees to (A) pay to the Administrative Agent, for the pro
rata benefit of the Revolving Lenders, a non-refundable commission based upon
the face amount of such Letter of Credit, which shall be paid quarterly in
arrears, on the first day of each January, April, July and October of each
calendar year, in an amount equal to the aggregate sum of the Letter of Credit
Fee for such Letter of Credit for each day of such quarter; (B) pay to the
Administrative Agent, for the sole benefit of the Issuing Lender, an additional
Letter of Credit fee, which shall be paid on each date that such Letter of
Credit is issued, amended or renewed, at the rate of one-eighth percent (1/8%)
of the face amount of such Letter of Credit; and (C) pay to the Administrative
Agent, for the sole benefit of the Issuing Lender, such other issuance,
amendment, renewal, negotiation, draw, acceptance, telex, courier, postage and
similar transactional fees as are customarily charged by the Issuing Lender in
respect of the issuance and administration of similar letters of credit under
its fee schedule as in effect from time to time.

 

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(iv) Standby Letters of Credit Fees. With respect to each Letter of Credit that
shall be a standby letter of credit and the drafts thereunder, if any, whether
issued for the account of the Borrower or a Guarantor of Payment, the Borrower
agrees to (A) pay to the Administrative Agent, for the pro rata benefit of the
Revolving Lenders, a non-refundable commission based upon the face amount of
such Letter of Credit, which shall be paid quarterly in arrears, on the first
day of each January, April, July and October of each calendar year, in an amount
equal to the aggregate sum of the Letter of Credit Fee for such Letter of Credit
for each day of such quarter; (B) pay to the Administrative Agent, for the sole
benefit of the Issuing Lender, an additional Letter of Credit fee, which shall
be paid on each date that such Letter of Credit is issued, amended or renewed at
the rate of one-eighth percent (1/8%) of the face amount of such Letter of
Credit; and (C) pay to the Administrative Agent, for the sole benefit of the
Issuing Lender, such other issuance, amendment, renewal, negotiation, draw,
acceptance, telex, courier, postage and similar transactional fees as are
customarily charged by the Issuing Lender in respect of the issuance and
administration of similar letters of credit under its fee schedule as in effect
from time to time.

 

(v) Refunding of Letters of Credit with Revolving Loans. Whenever a Letter of
Credit shall be drawn, the Borrower shall immediately reimburse the Issuing
Lender for the amount drawn. In the event that the amount drawn shall not have
been reimbursed by the Borrowers on the date of the drawing of such Letter of
Credit, at the sole option of the Administrative Agent (and the Issuing Lender,
if the Issuing Lender is a Lender other than the Administrative Agent), the
Borrower shall be deemed to have requested a Revolving Loan, subject to the
provisions of Sections 2.2(a) and 2.6 hereof (other than the requirement set
forth in Section 2.6(d) hereof), in the amount drawn. Such Revolving Loan shall
be evidenced by the Revolving Credit Notes (or, if a Lender has not requested a
Revolving Credit Note, by the records of the Administrative Agent and such
Lender). Each Revolving Lender agrees to make a Revolving Loan on the date of
such notice, subject to no conditions precedent whatsoever. Each Revolving
Lender acknowledges and agrees that its obligation to make a Revolving Loan
pursuant to Section 2.2(a) hereof when required by this Section 2.2(b)(v) shall
be absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, the occurrence and continuance of a
Default or Event of Default, and that its payment to the Administrative Agent,
for the account of the Issuing Lender, of the proceeds of such Revolving Loan
shall be made without any offset, abatement, recoupment, counterclaim,
withholding or reduction whatsoever and whether or not the Revolving Credit
Commitment shall have been reduced or terminated. The Borrower irrevocably
authorizes and instructs the Administrative Agent to apply the proceeds of any
borrowing pursuant to this Section 2.2(b)(v) to reimburse, in full (other than
the Issuing Lender’s pro rata share of such borrowing), the Issuing Lender for
the amount drawn on such Letter of Credit. Each such Revolving Loan shall be
deemed to be a Base Rate Loan unless otherwise requested by and available to the
Borrower hereunder. Each Revolving Lender is hereby authorized to record on its
records relating to its Revolving Credit Note (or, if such Lender has not
requested a Revolving Credit Note, its records relating to Revolving Loans) such
Revolving Lender’s pro rata share of the amounts paid and not reimbursed on the
Letters of Credit.

 

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(vi) Participation in Letters of Credit. If, for any reason, the Administrative
Agent (and the Issuing Lender if the Issuing Lender is a Lender other than the
Administrative Agent) shall be unable to or, in the opinion of the
Administrative Agent, it shall be impracticable to, convert any amount drawn
under a Letter of Credit to a Revolving Loan pursuant to the preceding
subsection, the Administrative Agent (and the Issuing Lender if the Issuing
Lender is a Lender other than the Administrative Agent) shall have the right to
request that each Revolving Lender fund a participation in the amount due with
respect to such Letter of Credit, and the Administrative Agent shall promptly
notify each Revolving Lender thereof (by facsimile or email (in each case
confirmed by telephone) or telephone (confirmed in writing)). Upon such notice,
but without further action, the Issuing Lender hereby agrees to grant to each
Revolving Lender, and each Revolving Lender hereby agrees to acquire from the
Issuing Lender, an undivided participation interest in the amount due with
respect to such Letter of Credit in an amount equal to such Revolving Lender’s
Applicable Commitment Percentage of the principal amount due with respect to
such Letter of Credit. In consideration and in furtherance of the foregoing,
each Revolving Lender hereby absolutely and unconditionally agrees, upon receipt
of notice as provided above, to pay to the Administrative Agent, for the account
of the Issuing Lender, such Revolving Lender’s ratable share of the amount due
with respect to such Letter of Credit (determined in accordance with such
Revolving Lender’s Applicable Commitment Percentage). Each Revolving Lender
acknowledges and agrees that its obligation to acquire participations in the
amount due under any Letter of Credit that is drawn but not reimbursed by the
Borrower pursuant to this Section 2.2(b)(vi) shall be absolute and unconditional
and shall not be affected by any circumstance whatsoever, including, without
limitation, the occurrence and continuance of a Default or Event of Default, and
that each such payment shall be made without any offset, abatement, recoupment,
counterclaim, withholding or reduction whatsoever and whether or not the
Revolving Credit Commitment shall have been reduced or terminated. Each
Revolving Lender shall comply with its obligation under this Section 2.2(b)(vi)
by wire transfer of immediately available funds, in the same manner as provided
in Section 2.6 hereof with respect to Revolving Loans. Each Revolving Lender is
hereby authorized to record on its records such Revolving Lender’s pro rata
share of the amounts paid and not reimbursed on the Letters of Credit.

 

(vii) Requests for Letters of Credit When One or More Revolving Lenders are
Affected Lenders. No Letter of Credit shall be requested or issued hereunder if
any Revolving Lender is at such time an Affected Lender hereunder, unless the
Administrative Agent (and the Issuing Lender) has entered into satisfactory (to
the Administrative Agent) arrangements with the Borrower or such Affected Lender
to eliminate or mitigate the reimbursement risk with respect to such Affected
Lender (including, without limitation, the posting of cash collateral).

 

(viii) Letters of Credit Issued and Outstanding When One or More Revolving
Lenders are Affected Lenders. With respect to any Letters of Credit that have
been issued and are outstanding at the time any Revolving Lender is an Affected
Lender, the Administrative Agent (and the Issuing Lender) shall have the right
to require that the Borrower or such Affected Lender cash collateralize, in form
and substance satisfactory to the Administrative Agent (and the Issuing Lender),
such Letters of Credit so as to eliminate or mitigate the reimbursement risk
with respect to such Affected Lender.

 

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(c) Swing Loans.

 

(i) Generally. Subject to the terms and conditions of this Agreement, during the
Commitment Period, the Swing Line Lender shall make a Swing Loan or Swing Loans
to the Borrower in such amount or amounts as the Borrower, through an Authorized
Officer, may from time to time request and to which the Swing Line Lender may
agree; provided that the Borrower shall not request any Swing Loan if, after
giving effect thereto, (A) the Revolving Credit Exposure would exceed the
Revolving Credit Commitment, or (B) the Swing Line Exposure would exceed the
Swing Line Commitment. Each Swing Loan shall be due and payable on the Swing
Loan Maturity Date applicable thereto. Each Swing Loan shall be made in Dollars.

 

(ii) Refunding of Swing Loans. As often as the Administrative Agent, in its sole
discretion, deems appropriate, but in no event later than 11:00 A.M. (Eastern
time) on each Wednesday (or the next Business Day if such Wednesday is not a
Business Day) (each a “Settlement Date”), the Swing Line Lender shall require
(and the Revolving Lenders and the Borrower agree that the Swing Line Lender
shall have the right to so require) that the then outstanding Swing Loans be
refinanced as a Revolving Loan. Such Revolving Loan shall be a Base Rate Loan
unless otherwise requested by and available to the Borrower hereunder. Upon
receipt of such notice by the Borrower and the Revolving Lenders, the Borrower
shall be deemed, on such day, to have requested a Revolving Loan in the
principal amount of the Swing Loan in accordance with Sections 2.2(a) and 2.6
hereof (other than the requirement set forth in Section 2.6(d) hereof). Each
Lender agrees to make a Revolving Loan on the date of such notice, subject to no
conditions precedent whatsoever. Such Revolving Loan shall be evidenced by the
Revolving Credit Notes (or, if a Revolving Lender has not requested a Revolving
Credit Note, by the records of the Administrative Agent and such Revolving
Lender). Each Lender acknowledges and agrees that such Lender’s obligation to
make a Revolving Loan pursuant to Section 2.2(a) hereof when required by this
Section 2.2(c)(ii) is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including, without limitation, the occurrence and
continuance of a Default or Event of Default, and that its payment to the
Administrative Agent, for the account of the Swing Line Lender, of the proceeds
of such Revolving Loan shall be made without any offset, abatement, recoupment,
counterclaim, withholding or reduction whatsoever and whether or not the
Revolving Credit Commitment shall have been reduced or terminated. The Borrower
irrevocably authorizes and instructs the Administrative Agent to apply the
proceeds of any borrowing pursuant to this Section 2.2(c)(ii) to repay in full
such Swing Loan. Each Revolving Lender is hereby authorized to record on its
records relating to its Revolving Credit Note (or, if such Revolving Lender has
not requested a Revolving Credit Note, its records relating to Revolving Loans)
such Revolving Lender’s pro rata share of the amounts paid to refund such Swing
Loan.

 

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(iii) Participation in Swing Loans. If, for any reason, the Swing Line Lender is
unable to or, in the opinion of the Administrative Agent, it is impracticable
to, convert any Swing Loan to a Revolving Loan pursuant to the preceding Section
2.2(c)(ii), then on any day that a Swing Loan is outstanding (whether before or
after the maturity thereof), the Administrative Agent shall have the right to
request that each Revolving Lender fund a participation in such Swing Loan, and
the Administrative Agent shall promptly notify each Revolving Lender thereof (by
facsimile or email (in each case confirmed by telephone) or telephone (confirmed
in writing)). Upon such notice, but without further action, the Swing Line
Lender hereby agrees to grant to each Revolving Lender, and each Revolving
Lender hereby agrees to acquire from the Swing Line Lender, an undivided
participation interest in the right to share in the payment of such Swing Loan
in an amount equal to such Revolving Lender’s Applicable Commitment Percentage
of the principal amount of such Swing Loan. In consideration and in furtherance
of the foregoing, each Revolving Lender hereby absolutely and unconditionally
agrees, upon receipt of notice as provided above, to pay to the Administrative
Agent, for the benefit of the Swing Line Lender, such Revolving Lender’s ratable
share of such Swing Loan (determined in accordance with such Revolving Lender’s
Applicable Commitment Percentage). Each Revolving Lender acknowledges and agrees
that its obligation to acquire participations in Swing Loans pursuant to this
Section 2.2(c)(iii) is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including, without limitation, the occurrence and
continuance of a Default or an Event of Default, and that each such payment
shall be made without any offset, abatement, recoupment, counterclaim,
withholding or reduction whatsoever and whether or not the Revolving Credit
Commitment shall have been reduced or terminated. Each Revolving Lender shall
comply with its obligation under this Section 2.2(c)(iii) by wire transfer of
immediately available funds, in the same manner as provided in Section 2.6
hereof with respect to Revolving Loans to be made by such Revolving Lender.

 

(iv) Requests for Swing Loan When One or More Revolving Lenders are Affected
Lenders. No Swing Loan shall be requested or issued hereunder if any Revolving
Lender is at such time an Affected Lender hereunder, unless the Administrative
Agent has entered into satisfactory (to the Administrative Agent and the Swing
Line Lender) arrangements with the Borrower or such Affected Lender to eliminate
or mitigate the reimbursement risk with respect to such Affected Lender
(including, without limitation, the posting of cash collateral).

 

(v) Swing Loans Outstanding When One or More Revolving Lenders are Affected
Lenders. With respect to any Swing Loans that are outstanding at the time any
Revolving Lender is an Affected Lender, the Administrative Agent shall have the
right to require that the Borrower or such Affected Lender cash collateralize,
in form and substance satisfactory to the Administrative Agent, such Swing Loans
so as to eliminate or mitigate the reimbursement risk with respect to such
Affected Lender.

 

Section 2.3. Term Loan Commitment. Subject to the terms and conditions of this
Agreement, the Term Lenders shall make the Term Loan to the Borrower on the
Closing Date, in the amount of the Term Loan Commitment. The Term Loan shall be
payable in consecutive monthly installments of Five Hundred Twenty Thousand
Eight Hundred Thirty-Three and 34/100 Dollars ($520,833.34) for each month,
commencing April 1, 2016, and continuing on each Regularly Scheduled Payment
Date thereafter, with the balance thereof payable in full on March 2, 2020. The
Borrower shall notify the Administrative Agent, in accordance with the notice
provisions of Section 2.6 hereof, whether the Term Loan will be a Base Rate Loan
or one or more Eurodollar Loans. The Term Loan may be a mixture of a Base Rate
Loan and one or more Eurodollar Loans. Once the Term Loan is made, any portion
of the Term Loan repaid may not be re-borrowed. The Term Loan Commitment shall
terminate on the date that the Term Loan is made.

 

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Section 2.4. Interest.

 

(a) Revolving Loans.

 

(i) Base Rate Loan. The Borrower shall pay interest on the unpaid principal
amount of a Revolving Loan that is a Base Rate Loan outstanding from time to
time from the date thereof until paid at the Derived Base Rate for Revolving
Loans from time to time in effect. Interest on such Base Rate Loan shall be
payable, commencing April 1, 2016, and continuing on each Regularly Scheduled
Payment Date thereafter and at the maturity thereof.

 

(ii) Eurodollar Loans. The Borrower shall pay interest on the unpaid principal
amount of each Revolving Loan that is a Eurodollar Loan outstanding from time to
time, with the interest rate to be fixed in advance on the first day of the
Interest Period applicable thereto through the last day of the Interest Period
applicable thereto (but subject to changes in the Applicable Margin for
Eurodollar Loans), at the Derived Eurodollar Rate for Revolving Loans. Interest
on such Eurodollar Loan shall be payable on each Interest Adjustment Date with
respect to an Interest Period (provided that, if an Interest Period shall exceed
three months, the interest must also be paid every three months, commencing
three months from the beginning of such Interest Period).

 

(b) Swing Loans. The Borrower shall pay interest to the Administrative Agent,
for the sole benefit of the Swing Line Lender (and any Revolving Lender that
shall have funded a participation in such Swing Loan), on the unpaid principal
amount of each Swing Loan outstanding from time to time from the date thereof
until paid at the Derived Base Rate for Revolving Loans from time to time in
effect. Interest on Swing Loans shall be payable on each Regularly Scheduled
Payment Date. Each Swing Loan shall bear interest for a minimum of one day.

 

(c) Term Loan.

 

(i) Base Rate Loan. With respect to any portion of the Term Loan that is a Base
Rate Loan, the Borrower shall pay interest on the unpaid principal amount
thereof outstanding from time to time from the date thereof until paid,
commencing April 1, 2016, and continuing on each Regularly Scheduled Payment
Date thereafter and at the maturity thereof, at the Derived Base Rate for the
Term Loan from time to time in effect.

 

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(ii) Eurodollar Loans. With respect to any portion of the Term Loan that is a
Eurodollar Loan, the Borrower shall pay interest on the unpaid principal amount
of such Eurodollar Loan outstanding from time to time, with the interest rate to
be fixed in advance on the first day of the Interest Period applicable thereto
through the last day of the Interest Period applicable thereto (but subject to
changes in the Applicable Margin for Eurodollar Loans), at the Derived
Eurodollar Rate for the Term Loan. Interest on such Eurodollar Loan shall be
payable on each Interest Adjustment Date with respect to an Interest Period
(provided that, if an Interest Period shall exceed three months, the interest
must also be paid every three months, commencing three months from the beginning
of such Interest Period).

 

(d) Default Rate. Anything herein to the contrary notwithstanding, if an Event
of Default shall occur, upon the election of the Administrative Agent or the
Required Lenders (i) the principal of each Loan and the unpaid interest thereon
shall bear interest, until paid, at the Default Rate, (ii) the fee for the
aggregate undrawn amount of all issued and outstanding Letters of Credit shall
be increased by two percent (2%) in excess of the rate otherwise applicable
thereto, and (iii) in the case of any other amount not paid when due from the
Borrower hereunder or under any other Loan Document, such amount shall bear
interest at the Default Rate; provided that, during an Event of Default under
Section 8.1 or 8.12 hereof, the applicable Default Rate shall apply without any
election or action on the part of the Administrative Agent or any Lender.

 

(e) Limitation on Interest. In no event shall the rate of interest hereunder
exceed the maximum rate allowable by law. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable law (the “Maximum Rate”). If the Administrative
Agent or any Lender shall receive interest in an amount that exceeds the Maximum
Rate, the excess interest shall be applied to the principal of the Loans or, if
it exceeds such unpaid principal, refunded to the Borrower. In determining
whether the interest contracted for, charged, or received by the Administrative
Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent
permitted by applicable law, (i) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations.

 

Section 2.5. Evidence of Indebtedness.

 

(a) Revolving Loans. Upon the request of a Revolving Lender, to evidence the
obligation of the Borrower to repay the portion of the Revolving Loans made by
such Revolving Lender and to pay interest thereon, the Borrower shall execute a
Revolving Credit Note, payable to the order of such Revolving Lender in the
principal amount equal to its Applicable Commitment Percentage of the Revolving
Credit Commitment, or, if less, the aggregate unpaid principal amount of
Revolving Loans made by such Revolving Lender; provided that the failure of a
Revolving Lender to request a Revolving Credit Note shall in no way detract from
the Borrower’s obligations to such Revolving Lender hereunder.

 

(b) Swing Loans. Upon the request of the Swing Line Lender, to evidence the
obligation of the Borrower to repay the Swing Loans and to pay interest thereon,
the Borrower shall execute a Swing Line Note, payable to the order of the Swing
Line Lender in the principal amount of the Swing Line Commitment, or, if less,
the aggregate unpaid principal amount of Swing Loans made by the Swing Line
Lender; provided that the failure of the Swing Line Lender to request a Swing
Line Note shall in no way detract from the Borrower’s obligations to the Swing
Line Lender hereunder.

 

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(c) Term Loan. Upon the request of a Term Lender, to evidence the obligation of
the Borrower to repay the portion of the Term Loan made by such Term Lender and
to pay interest thereon, the Borrower shall execute a Term Note, payable to the
order of such Term Lender in the principal amount of its Applicable Commitment
Percentage of the Term Loan Commitment; provided that the failure of such Term
Lender to request a Term Note shall in no way detract from the Borrower’s
obligations to such Term Lender hereunder.

 

Section 2.6. Notice of Loans and Credit Events; Funding of Loans.

 

(a) Notice of Loans and Credit Events. The Borrower, through an Authorized
Officer, shall provide to the Administrative Agent a Notice of Loan prior to (i)
11:00 A.M. (Eastern time) on the proposed date of borrowing of, or conversion of
a Loan to, a Base Rate Loan, (ii) 11:00 A.M. (Eastern time) three Business Days
prior to the proposed date of borrowing of, continuation of, or conversion of a
Loan to, a Eurodollar Loan, and (iii) 2:00 P.M. (Eastern time) on the proposed
date of borrowing of a Swing Loan (or such later time as agreed to from time to
time by the Swing Line Lender); provided that, if a request for a Revolving Loan
that is a Base Rate Loan shall not be on a Settlement Date, such request shall
be deemed to be a request for a Swing Loan (unless the Administrative Agent
shall elect to have the Revolving Lenders fund such request with a Revolving
Loan that meets the requirements of this Section 2.6) so long as the Swing Line
Exposure does not exceed the Swing Line Commitment. An Authorized Officer of the
Borrower may verbally request a Loan, so long as a Notice of Loan is received by
the end of the same Business Day, and, if the Administrative Agent or any Lender
provides funds or initiates funding based upon such verbal request, the Borrower
shall bear the risk with respect to any information regarding such funding that
is later determined to have been incorrect. The Borrower shall comply with the
notice provisions set forth in Section 2.2(b) hereof with respect to Letters of
Credit.

 

(b) Funding of Loans. The Administrative Agent shall notify the appropriate
Lenders of the date, amount and Interest Period (if applicable) promptly upon
the receipt of a Notice of Loan (other than for a Swing Loan, or a Revolving
Loan to be funded as a Swing Loan), and, in any event, by 1:00 P.M. (Eastern
time) on the date such Notice of Loan is received. On the date that the Credit
Event set forth in such Notice of Loan is to occur, each such Revolving Lender
shall provide to the Administrative Agent, not later than 3:00 P.M. (Eastern
time), the amount in Dollars, in federal or other immediately available funds,
required of it. If the Administrative Agent shall elect to advance the proceeds
of such Loan prior to receiving funds from such Revolving Lender, the
Administrative Agent shall have the right, upon prior notice to the Borrower, to
debit any account of the Borrower or otherwise receive such amount from the
Borrower, promptly after demand, in the event that such Revolving Lender shall
fail to reimburse the Administrative Agent in accordance with this subsection
(b). The Administrative Agent shall also have the right to receive interest from
such Revolving Lender at the Federal Funds Effective Rate in the event that such
Revolving Lender shall fail to provide its portion of the Loan on the date
requested and the Administrative Agent shall elect to provide such funds.

 

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(c) Conversion and Continuation of Loans.

 

(i) At the request of the Borrower to the Administrative Agent, subject to the
notice and other provisions of this Agreement, the appropriate Lenders shall
convert a Base Rate Loan to one or more Eurodollar Loans at any time and shall
convert a Eurodollar Loan to a Base Rate Loan on any Interest Adjustment Date
applicable thereto. Swing Loans may be converted by the Swing Line Lender to
Revolving Loans in accordance with Section 2.2(c)(ii) hereof.

 

(ii) At the request of the Borrower to the Administrative Agent, subject to the
notice and other provisions of this Agreement, the appropriate Lenders shall
continue one or more Eurodollar Loans as of the end of the applicable Interest
Period as a new Eurodollar Loan with a new Interest Period.

 

(d) Minimum Amount for Eurodollar Loans. Each request for a Eurodollar Loan
shall be in an amount of not less than One Million Dollars ($1,000,000),
increased by increments of Five Hundred Thousand Dollars ($500,000).

 

(e) Interest Periods. The Borrower shall not request that Eurodollar Loans be
outstanding for more than six different Interest Periods at the same time.

 

(f) Advancing of Non Pro-Rata Revolving Loans. Notwithstanding anything in this
Agreement to the contrary, if the Borrower requests a Revolving Loan pursuant to
Section 2.6(a) hereof (and all conditions precedent set forth in Section 4.1
hereof are met) at a time when one or more Revolving Lenders are Affected
Lenders, the Administrative Agent shall have the option, in its sole discretion,
to require the non-Affected Lenders to honor such request by making a non
pro-rata Revolving Loan to the Borrower in an amount equal to (i) the amount
requested by the Borrower, minus (ii) the portions of such Revolving Loan that
should have been made by such Affected Lenders. For purposes of such Revolving
Loans, the Revolving Lenders that are making such Revolving Loan shall do so in
an amount equal to their Applicable Commitment Percentages of the amount
requested by the Borrower. For the avoidance of doubt, in no event shall the
aggregate outstanding principal amount of Loans made by a Lender (other than
Swing Loans made by the Swing Line Lender), when combined with such Lender’s pro
rata share, if any, of the Letter of Credit Exposure and the Swing Line
Exposure, be in excess of the Maximum Amount for such Lender.

 

Section 2.7. Payment on Loans and Other Obligations.

 

(a) Payments Generally. Each payment made hereunder by a Credit Party shall be
made without any offset, abatement, recoupment, counterclaim, withholding or
reduction whatsoever.

 

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(b) Payments from Borrower. All payments (including prepayments) to the
Administrative Agent of the principal of or interest on each Loan or other
payment, including but not limited to principal, interest, fees or any other
amount owed by the Borrower under this Agreement, shall be made in Dollars. All
payments described in this subsection (b) shall be remitted to the
Administrative Agent, at the address of the Administrative Agent for notices
referred to in Section 11.4 hereof for the account of the appropriate Lenders
(or the Issuing Lender or the Swing Line Lender, as appropriate) not later than
11:00 A.M. (Eastern time) on the due date thereof in immediately available
funds. Any such payments received by the Administrative Agent (or the Issuing
Lender or the Swing Line Lender) after 11:00 A.M. (Eastern time) shall be deemed
to have been made and received on the next Business Day.

 

(c) Payments to Lenders. On each Settlement Date (and more frequently if deemed
appropriate by the Administrative Agent), the Administrative Agent shall
distribute to each Lender its ratable share, if any, of the amount of principal
payments received by the Administrative Agent for the account of such Lender.
With respect to interest, commitment fees and other payments received by the
Administrative Agent from the Borrower, the Administrative Agent shall promptly
distribute to each Lender its ratable share, if any, of the amount of interest,
commitment fee or other payment received by the Administrative Agent for the
account of such Lender. Payments received by the Administrative Agent shall be
delivered to the Lenders in immediately available funds. Each Lender shall
record any principal, interest or other payment, the principal amounts of Base
Rate Loans, Eurodollar Loans Swing Loans and Letters of Credit, all prepayments
and the applicable dates, including Interest Periods, with respect to the Loans
made, and payments received by such Lender, by such method as such Lender may
generally employ; provided that failure to make any such entry shall in no way
detract from the obligations of the Borrower under this Agreement or any Note.
The aggregate unpaid amount of Loans, types of Loans, Interest Periods and
similar information with respect to the Loans and Letters of Credit set forth on
the records of the Administrative Agent shall be rebuttably presumptive evidence
with respect to such information, including the amounts of principal, interest
and fees owing to each Lender.

 

(d) Timing of Payments. Whenever any payment to be made hereunder, including,
without limitation, any payment to be made on any Loan, shall be stated to be
due on a day that is not a Business Day, such payment shall be made on the next
Business Day and such extension of time shall in each case be included in the
computation of the interest payable on such Loan; provided that, with respect to
a Eurodollar Loan, if the next Business Day shall fall in the succeeding
calendar month, such payment shall be made on the preceding Business Day and the
relevant Interest Period shall be adjusted accordingly.

 

(e) Affected Lender. To the extent that the Administrative Agent receives any
payments or other amounts for the account of a Revolving Lender that is an
Affected Lender, at the discretion of the Administrative Agent, such Affected
Lender shall be deemed to have requested that the Administrative Agent use such
payment or other amount (or any portion thereof, at the discretion of the
Administrative Agent) first, to cash collateralize its unfunded risk
participation in Swing Loans and the Letters of Credit pursuant to Sections
2.2(b)(vi), 2.2(c)(iii) and 2.6(b) hereof, and, with respect to any Defaulting
Lender, second, to fulfill its obligations to make Loans.

 

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(f) Payment of Non Pro-Rata Revolving Loans. Notwithstanding anything in this
Agreement to the contrary, at the sole discretion of the Administrative Agent,
in order to pay Revolving Loans made to the Borrower that were not advanced pro
rata by the Revolving Lenders, any payment of any Loan may first be applied to
such Revolving Loans that were not advanced pro rata.

 

Section 2.8. Prepayment.

 

(a) Right to Prepay.

 

(i) The Borrower shall have the right at any time or from time to time to
prepay, on a pro rata basis for all of the appropriate Lenders (except with
respect to Swing Loans, which shall be paid to the Swing Line Lender and any
Lender that has funded a participation in such Swing Loan), all or any part of
the principal amount of the Loans then outstanding representing the obligations
under any Specific Commitment with the proceeds of such prepayment to be
distributed on a pro rata basis to the holders of the Specific Commitment being
prepaid. Such payment shall include interest accrued on the amount so prepaid to
the date of such prepayment and any amount payable under Article III hereof with
respect to the amount being prepaid. Prepayments of Base Rate Loans shall be
without any premium or penalty. Each prepayment of the Term Loan shall be
applied to the principal installments thereof in the inverse order of their
respective maturities.

 

(ii) The Borrower shall have the right, at any time or from time to time, to
prepay, for the benefit of the Swing Line Lender (and any Revolving Lender that
has funded a participation in such Swing Loan), all or any part of the principal
amount of the Swing Loans then outstanding, as designated by the Borrower, plus
interest accrued on the amount so prepaid to the date of such prepayment.

 

(iii) Notwithstanding anything in this Section 2.8 or otherwise to the contrary,
at the discretion of the Administrative Agent, in order to prepay Revolving
Loans made to the Borrower that were not advanced pro rata by all of the
Revolving Lenders, any prepayment of a Revolving Loan shall first be applied to
Revolving Loans made by the Revolving Lenders during any period in which a
Defaulting Lender or Insolvent Lender shall exist.

 

(b) Notice of Prepayment. The Borrower shall give the Administrative Agent
irrevocable written notice of prepayment of (i) a Base Rate Loan or Swing Loan
by no later than 11:00 A.M. (Eastern time) on the Business Day on which such
prepayment is to be made, and (ii) a Eurodollar Loan by no later than 1:00 P.M.
(Eastern time) three Business Days before the Business Day on which such
prepayment is to be made; provided that this notice requirement shall not be
applicable with respect to the daily application of funds in the Cash Collateral
Accounts to prepay the Revolving Loans. Swing Loans may be prepaid without
advance notice if prepaid through a “sweep” cash management arrangement with the
Administrative Agent.

 

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(c) Minimum Amount for Eurodollar Loans. Each prepayment of a Eurodollar Loan
shall be in the principal amount of not less than the lesser of One Million
Dollars ($1,000,000), or the principal amount of such Loan, or, with respect to
a Swing Loan, the principal balance of such Swing Loan, except in the case of a
mandatory payment pursuant to Section 2.11(c) or Article III hereof.

 

Section 2.9. Commitment and Other Fees; Reduction of Revolving Credit
Commitment.

 

(a) Commitment Fee. The Borrower shall pay to the Administrative Agent, for the
ratable account of the Revolving Lenders, as a consideration for the Revolving
Credit Commitment, a commitment fee from the Closing Date to and including the
last day of the Commitment Period, payable monthly, at a rate per annum equal to
(i) twenty (20.00) basis points, multiplied by (ii) (A) the average daily
Maximum Revolving Amount in effect during such month, minus (B) the average
daily Revolving Credit Exposure (exclusive of the Swing Line Exposure) during
such month. The commitment fee shall be payable in arrears, on April 1, 2016 and
continuing on each Regularly Scheduled Payment Date thereafter, and on the last
day of the Commitment Period.

 

(b) Administrative Agent Fee. The Borrower shall pay to the Administrative
Agent, for its sole benefit, the fees set forth in the Administrative Agent Fee
Letter.

 

(c) Collateral Audit and Appraisal Fees. The Borrower shall promptly reimburse
the Administrative Agent, for its sole benefit, for all costs and expenses
relating to (i) collateral field audits, (ii) Inventory appraisals, and (iii)
any other collateral assessment expenses that may be conducted from time to time
by or on behalf of the Administrative Agent, the scope and frequency of which
shall be in the reasonable discretion of the Administrative Agent; provided
that, other than during the continuance of an Event of Default, the Borrower
need not reimburse the Administrative Agent for more than (A) two such audits
and collateral assessments during a calendar year, or, (B) if the Revolving
Credit Availability for the most recently completed fiscal quarter of the
Borrower is equal to or less than an amount equal to twenty five percent (25%)
multiplied by the Maximum Revolving Amount, three such audits and collateral
assessments during a calendar year. Notwithstanding the foregoing, and in
addition thereto, the Borrower shall also promptly reimburse the Administrative
agent, for its sole benefit, for all costs and expenses related to (1) a desktop
inventory appraisal to be conducted every six months during the Commitment
Period (or at such more frequent intervals as may be determined by the
Administrative Agent during the continuance of an Event of Default), and (2)
full Inventory and brand / intellectual property appraisals at such intervals as
the Administrative Agent may determine, but in no event more often that once per
every consecutive twelve (12) month period (or at such more frequent intervals
as may be determined by the Administrative Agent during the continuance of an
Event of Default).

 

(d) Authorization to Debit Account. The Borrower hereby agrees that the
Administrative Agent has the right to debit from any Deposit Account of the
Borrower or any other Credit Party, amounts owing to the Administrative Agent
and the Lenders by the Borrower under this Agreement and the Loan Documents for
payment of fees, expenses and other amounts incurred or owing in connection
therewith.

 

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(e) Optional Reduction of Revolving Credit Commitment. The Borrower may at any
time and from time to time permanently reduce in whole or ratably in part the
Maximum Revolving Amount to an amount not less than the then existing Revolving
Credit Exposure, by giving the Administrative Agent not fewer than five Business
Days’ written notice of such reduction, provided that any such partial reduction
shall be in an aggregate amount, for all of the Lenders, of not less than Five
Million Dollars ($5,000,000), increased in increments of One Million Dollars
($1,000,000). The Administrative Agent shall promptly notify each Revolving
Lender of the date of each such reduction and such Revolving Lender’s
proportionate share thereof. After each such partial reduction, the commitment
fees payable hereunder shall be calculated upon the Maximum Revolving Amount as
so reduced. If the Borrower reduces in whole the Revolving Credit Commitment, on
the effective date of such reduction (the Borrower having prepaid in full the
unpaid principal balance, if any, of the Revolving Loans, together with all
interest (if any) and commitment and other fees accrued and unpaid with respect
thereto, and provided that no Letter of Credit Exposure or Swing Line Exposure
shall exist), all of the Revolving Credit Notes shall be delivered to the
Administrative Agent marked “Canceled” and the Administrative Agent shall
redeliver such Revolving Credit Notes to the Borrower. Any partial reduction in
the Maximum Revolving Amount shall be effective during the remainder of the
Commitment Period. Upon each decrease of the Maximum Revolving Amount, the Total
Commitment Amount shall be decreased by the same amount.

 

Section 2.10. Computation of Interest and Fees. Interest on Loans, Letter of
Credit fees, Related Expenses, and commitment and other fees and charges
hereunder shall be computed on the basis of a year having three hundred sixty
(360) days and calculated for the actual number of days elapsed.

 

Section 2.11. Mandatory Payments.

 

(a) Revolving Credit Exposure. If, at any time, the Revolving Credit Exposure
shall exceed the Revolving Credit Commitment, the Borrower shall, no later than
the same Business Day, pay an aggregate principal amount of the Revolving Loans
sufficient to bring the Revolving Credit Exposure within the Revolving Credit
Commitment.

 

(b) Swing Line Exposure. If, at any time, the Swing Line Exposure shall exceed
the Swing Line Commitment, the Borrower shall, as promptly as practicable, but
in no event later than the same Business Day, pay an aggregate principal amount
of the Swing Loans sufficient to bring the Swing Line Exposure within the Swing
Line Commitment.

 

(c) Mandatory Prepayments. The Borrower shall, until the Term Loan is paid in
full, make Mandatory Prepayments (each a “Mandatory Prepayment”) in accordance
with the following provisions:

 

(i) Excess Cash Flow. The Borrower shall:

 

(A) with respect to the fiscal year of the Borrower ending December 31, 2016, by
no later than June 30, 2017, make a prepayment on the Term Loan in an amount not
less than twenty-five percent (25%) of the total of (1) the Excess Cash Flow for
the 2016 fiscal year, if any, minus (2) the aggregate amount of Mophie Earn-Out
Payments paid in cash prior to June 30, 2017; and

 

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(B) commencing with the fiscal year of the Borrower ending December 31, 2017,
within fifteen (15) days after the date the Borrower has delivered (or should
have delivered) its annual audit report pursuant to Section 5.3(c) hereof, make
a prepayment on the Term Loan in an amount not less than twenty-five percent
(25%) of the Excess Cash Flow for the most recently completed fiscal year, if
any.

 

Notwithstanding the foregoing, if, after giving pro forma effect to any required
Excess Cash Flow payment, such payment would result in the Revolving Credit
Availability being less than the ECF Threshold, then the Borrower may elect,
upon three days’ prior written notice to the Administrative Agent, to pay the
portion of the required Excess Cash Flow payment such that, after making such
payment, the Revolving Credit Availability is equal to the ECF Threshold;
provided that, after the making of such payment, any remaining balance of such
required Excess Cash Flow payment (the “ECF Shortfall Amount”) shall be paid by
the Borrower by no later than December 31 of such year (it being understood that
the payment of the ECF Shortfall Amount may not be further deferred or delayed).

 

(ii) Certain Proceeds of Asset Sales. Upon the sale or other disposition of any
assets (except for any Excluded Asset) by a Company (permitted pursuant to
Section 5.12 hereof) to any Person other than in the ordinary course of business
(each, an “Asset Sale”), and, to the extent the Cash Proceeds of such Asset Sale
are in excess of Two Hundred Thousand Dollars ($200,000) during any fiscal year
of the Borrower and are not to be reinvested in fixed assets or other similar
assets within one hundred eighty (180) days of such Asset Sale, the Borrower
shall make a Mandatory Prepayment, not later than the third Business Day
following the date of receipt of Cash Proceeds from such Asset Sale in excess of
Two Hundred Thousand Dollars ($200,000), an amount equal to one hundred percent
(100%) of the Net Cash Proceeds of such Asset Sale.

 

(iii) Certain Proceeds of a Material Recovery Event. Within ten days after the
occurrence of a Material Recovery Event, the Borrower shall furnish to the
Administrative Agent written notice thereof. Within thirty (30) days after such
Material Recovery Event, the Borrower shall notify the Administrative Agent of
the Borrower’s determination as to whether or not to replace, rebuild or restore
the affected property (a “Material Recovery Determination Notice”). If the
Borrower decides not to replace, rebuild or restore such property, or if the
Borrower has not delivered the Material Recovery Determination Notice within
thirty (30) days after such Material Recovery Event, then, not later than the
third Business Day following the date of receipt of any Cash Proceeds in respect
thereof (excluding proceeds of business interruption insurance) the Borrower
shall make a Mandatory Prepayment equal to 100% of the Net Cash Proceeds then
received from such Material Recovery Event. If the Borrower decides to replace,
rebuild or restore such property, then any such replacement, rebuilding or
restoration must be (A) commenced within six months of the date of the Material
Recovery Event, and (B) substantially completed within twelve (12) months of
such commencement date or such longer period of time necessary to complete the
work with reasonable diligence and approved in writing by the Administrative
Agent, in its reasonable discretion, with such Net Cash Proceeds available to
the appropriate Companies for replacement, rebuilding or restoration of such
property. Any amounts not so applied to the costs of replacement or restoration
shall be applied as a Mandatory Prepayment.

 

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(iv) Certain Proceeds of Indebtedness. If, at any time, any of the Companies
shall issue or incur Indebtedness other than Indebtedness permitted pursuant to
Section 5.8 hereof (which other Indebtedness shall not be incurred without the
prior written consent of the Administrative Agent and the Required Lenders), the
Borrower shall make a Mandatory Prepayment in an amount equal to one hundred
percent (100%) of the Net Cash Proceeds of such Indebtedness not later than the
second Business Day following the receipt of such Cash Proceeds.

 

(v) Certain Proceeds of Equity Offerings. Within thirty (30) days after any
equity offering (other than the offering or exercise of stock options or other
equity awards pursuant to management incentive plans or to finance an
Acquisition permitted under Section 5.13 hereof) by the Borrower (each, an
“Equity Offering”), the Borrower shall make a Mandatory Prepayment in an amount
equal to fifty percent (50%) of the Net Cash Proceeds of such Equity Offering
not later than the second Business Day following the receipt of such Cash
Proceeds.

 

(d) Application of Mandatory Prepayments.

 

(i) Involving a Company Prior to an Event of Default. So long as no Event of
Default shall have occurred, each Mandatory Prepayment required to be made
pursuant to subsection (c) hereof shall be applied (A) first, to the Term Loan,
until paid in full (provided that any Term Loan Lender may decline to accept its
pro rata share of such Mandatory Prepayment, in which case such Term Loan
Lender’s share of such Mandatory Prepayment shall be applied as set forth in
subpart (B) hereof), and (B) second, to any outstanding Revolving Loans.

 

(ii) Involving a Company After an Event of Default. If a Mandatory Prepayment is
required to be made pursuant to subsection (c) hereof at the time that an Event
of Default shall have occurred, then such Mandatory Prepayment shall be paid by
the Borrower to the Administrative Agent to be applied to the following, on a
pro rata basis among: (A) the Maximum Revolving Amount (with payments to be made
in the following order: Revolving Loans, Swing Loans, and to be held by the
Administrative Agent in a special account as security for any Letter of Credit
Exposure pursuant to subsection (iii) hereof), and (B) the unpaid principal
balance of the Term Loan

 

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(iii) Involving Letters of Credit. Any amounts to be distributed for application
to a Revolving Lender’s liabilities with respect to any Letter of Credit
Exposure as a result of a Mandatory Prepayment shall be held by the
Administrative Agent in an interest bearing trust account (the “Special Trust
Account”) as collateral security for such liabilities until a drawing on any
Letter of Credit, at which time such amounts, together with interest accrued
thereon, shall be released by the Administrative Agent and applied to such
liabilities. If any such Letter of Credit shall expire without having been drawn
upon in full, the amounts held in the Special Trust Account with respect to the
undrawn portion of such Letter of Credit, together with interest accrued
thereon, shall be applied by the Administrative Agent in accordance with the
provisions of subsections (i) and (ii) above.

 

(e) Mandatory Payments Generally. Unless otherwise designated by the Borrower,
each Mandatory Prepayment made with respect to a Specific Commitment pursuant to
subsection (a) or (c) hereof shall be applied in the following order: (i) first,
to the outstanding Base Rate Loans, and (ii) second, to the outstanding
Eurodollar Loans, provided that, in each case, if the outstanding principal
amount of any Eurodollar Loan shall be reduced to an amount less than the
minimum amount set forth in Section 2.6(d) hereof as a result of such
prepayment, then such Eurodollar Loan shall be converted into a Base Rate Loan
on the date of such prepayment. Any prepayment of a Eurodollar Loan or Swing
Loan pursuant to this Section 2.11 shall be subject to the prepayment provisions
set forth in Article III hereof. Each Mandatory Prepayment made with respect to
the Term Loan shall be applied to the payments of principal in the inverse order
of their respective maturities.

 

Section 2.12. Swap Obligations Make-Well Provision. The Borrower, to the extent
that it is an “eligible contract participant” as defined in the Commodity
Exchange Act, hereby absolutely, unconditionally and irrevocably undertakes to
provide such funds or other support as may be needed from time to time by each
other Credit Party in order for such Credit Party to honor its obligations under
the Loan Documents in respect of the Swap Obligations. The obligations of the
Borrower under this Section 2.12 shall remain in full force and effect until all
Secured Obligations are paid in full. The Borrower intends that this Section
2.12 constitute, and this Section 2.12 shall be deemed to constitute, a
“keepwell, support, or other agreement” for the benefit of each other Credit
Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange
Act.

 

Section 2.13. Establishment of Reserves. The Administrative Agent, on behalf of
the Lenders, shall have the right, from time to time, in the good faith exercise
of its reasonable credit judgment (consistent with the asset-based nature of
this credit), to establish Reserves in such amounts and with respect to such
matters as the Administrative Agent deems necessary or appropriate, and to
increase or decrease such Reserves. In exercising such reasonable credit
judgment, the Administrative Agent may take into account factors that (a) will
or could reasonably be expected to adversely affect the value of any collateral
securing the Secured Obligations, the enforceability or priority of the Liens of
the Administrative Agent or the amount that the Administrative Agent, for the
benefit of the Lenders, would be likely to receive in the liquidation of such
collateral, or (b) may demonstrate that any collateral report or financial
information concerning the Credit Parties is incomplete, inaccurate or
misleading in any material respect. In exercising such reasonable credit
judgment, Reserves may be established against anticipated obligations,
contingencies or conditions affecting the Companies, including, without
limitation, (i) tax liabilities and other obligations owing to Governmental
Authorities, (ii) asserted litigation liabilities, (iii) anticipated remediation
for compliance with Environmental Laws, (iv) obligations owing to any lessor of
real property, any warehouseman, any processor or any mortgagor on third party
mortgaged sites, (v) obligations or liabilities of the Companies under Hedge
Agreements, (vi) Bank Product Obligations, (vii) customs and broker fees
(including freight and duty fees), (viii) warranty liabilities, and (ix)
accounts payable with balances over sixty (60) days past due. Reserves may also
be established with respect to the dilution of accounts receivable, as a result
of inventory appraisals and other results of field examinations.

 

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Section 2.14. Record of Advances; Application of Collections.

 

(a) Maintenance of Record of Advances. The Administrative Agent, on behalf of
the Lenders, shall maintain records in respect of the Credit Parties that shall
reflect (i) the aggregate outstanding principal amount of Revolving Loans and
accrued interest, (ii) the unreimbursed Letter of Credit drawings, (iii) the
aggregate outstanding principal amount of Swing Loans and accrued interest, and
(iv) all other Obligations that shall have become payable hereunder (the
“Advance Record”). Each entry by the Administrative Agent in the Advance Record
shall be, to the extent permitted by applicable law and absent manifest error,
prima facie evidence of the data entered. Such entries by the Administrative
Agent shall not be a condition to the Borrower’s obligation to repay the
Obligations.

 

(b) Charges, Credits and Reports. The Borrower hereby authorizes the
Administrative Agent, on behalf of the Lenders, to charge the Advance Record
with all Revolving Loans, Swing Loans and all other Obligations under this
Agreement or any other Loan Document. The Advance Record will be credited in
accordance with the provisions of this Agreement with all payments received by
the Administrative Agent directly from the Borrower or any other Credit Party or
otherwise for the account of the Borrower or any other Credit Party pursuant to
this Agreement. The Administrative Agent shall send the Borrower monthly
statements in accordance with the Administrative Agent’s standard procedures.
Any and all such periodic or other statements or reconciliations of the Advance
Record shall be final, binding and conclusive upon the Borrower and the other
Credit Parties in all respects, absent manifest error, unless the Administrative
Agent receives specific written objection thereto from the Borrower within
thirty (30) Business Days after such statements or reconciliation shall have
been sent to the Borrower.

 

(c) Application of Specific Payments. Except for the crediting to the Advance
Record of Collections deposited to the Cash Collateral Account as provided
below, the Borrower shall make all other payments to be made by the Borrower
under this Agreement with respect to the Obligations not later than 2:00 P.M.
(Eastern time) on the day when due, without setoff, counterclaim, defense or
deduction of any kind. Payments received after 2:00 P.M. (Eastern time) shall be
deemed to have been received on the next Business Day. Prior to the occurrence
of an Event of Default, the Borrower may specify to the Administrative Agent the
Obligations to which such payment is to be applied. If the Borrower does not
specify an application for such payment or if an Event of Default has occurred,
the Administrative Agent shall apply such payment in its discretion.

 

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(d) Crediting of Collections. For the purpose of calculating interest on the
Obligations and determining the aggregate amount of Loans outstanding, the
amount of the Revolving Credit Exposure and the availability for additional
Revolving Loans and Letters of Credit, all Collections deposited into the Cash
Collateral Account shall be credited to the account of the Borrower or the other
Credit Parties, as appropriate (as reflected in the Advance Record) on the next
Business Day after the Business Day on which the Administrative Agent has
received notice of the deposit of the proceeds of such Collections into the Cash
Collateral Account (including automated clearinghouse and federal wire
transfers); provided that, immediately available funds shall be applied on the
same Business Day. Such Collections shall be credited as follows: (i) first, to
any costs and expenses due under this Agreement, (ii) second, to any fees due
and payable under this Agreement, (iii) third, to Swing Loans, (iv) fourth, to
Base Rate Loans, and (v) fifth, to Eurodollar Loans. If such Collections made on
a date other than a Settlement Date are in excess of the aggregate amount of
Swing Loans outstanding, then such Collections may, in the discretion of the
Administrative Agent depending on the amount of such payment, be credited
towards the Swing Line Lender’s pro rata share of Revolving Loans outstanding
until such payments can be reallocated among the Revolving Lenders on the next
Settlement Date. From time to time, upon advance written notice to the Borrower,
the Administrative Agent may adopt such additional or modified regulations and
procedures as the Administrative Agent may deem reasonable and appropriate with
respect to the operation of the Cash Collateral Account and not substantially
inconsistent with the terms of this Agreement.

 

(e) Application of Deposits in Cash Collateral Account. Deposits of Collections
to the Cash Collateral Account shall be credited to the Advance Record of the
Borrower on a daily basis in accordance with subsection (d) above, and thereby
reduce the Swing Line Exposure or the Revolving Credit Exposure (other than in
respect of the undrawn amount of any Letter of Credit outstanding) as the
Administrative Agent may choose, in its sole discretion; provided that, prior to
the occurrence of an Event of Default, the Administrative Agent will use
reasonable efforts to avoid applications of payments that would cause prepayment
of a Eurodollar Loan prior to the expiration of the applicable Interest Period.
Upon payment in full of the Secured Obligations and the termination of the
Commitment, deposits of Collections to the Cash Collateral Account shall be
credited by the Administrative Agent as directed by the Borrower.

 

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Section 2.15. Protective Advances. The Administrative Agent may, in its
reasonable discretion, make Protective Advances without the consent of the
Lenders, so long as after giving effect to such Protective Advances, the
aggregate amount of outstanding Protective Advances shall not exceed ten percent
(10%) of the Total Commitment Amount. A Protective Advance is for the account of
the Borrower and shall constitute Obligations. Any such Protective Advances
incurred after the occurrence and during the continuance of an Event of Default
shall be deemed to have been made in connection with the exercise of remedies by
the Administrative Agent and shall have the priority set forth in Section 9.8
hereof as expenses of the Administrative Agent incurred in connection with the
exercise of remedies under this Agreement or the other Loan Documents. To the
extent the Administrative Agent makes Protective Advances, the Borrower hereby
agrees to promptly reimburse the Administrative Agent, on demand, for all such
Protective Advances. The advance of any such Protective Advances on any one
occasion shall not obligate the Administrative Agent to advance any Protective
Advances on any other occasion and nothing in this Section 2.15 shall be
construed as excusing any Company from the performance of any covenant or other
agreement of such Company with respect to any of the foregoing matters as set
forth in this Agreement or in any of the other Loan Documents. The Revolving
Lenders shall reimburse the Administrative Agent for any Protective Advances to
the extent that the Administrative Agent does not receive reimbursement pursuant
to any other provision of this Agreement, and, at the sole option of the
Administrative Agent, the Administrative Agent may reimburse itself for
Protective Advances through the making of a Swing Loan or by requesting that the
Revolving Lenders fund a Revolving Loan, subject to no conditions precedent
whatsoever (but, for clarification, subject to the first sentence hereof) other
than notice to the Revolving Lenders in accordance with Section 2.6(a) hereof.
The Required Lenders may at any time revoke the Administrative Agent’s
authorization to make Protective Advances by delivering written notice of such
revocation to the Administrative Agent.

 

Section 2.16. Addition of Borrowing Base Company. At the request of the Borrower
and at the sole discretion of the Administrative Agent, a Domestic Subsidiary
may become a Borrowing Base Company hereunder, provided that, in addition to the
Administrative Agent’s consent, (a) such Domestic Subsidiary shall have complied
with all requirements of Section 5.20 hereof, (b) the assets of such Domestic
Subsidiary shall have been appraised and otherwise evaluated for borrowing base
eligibility purposes in a manner and by appraisers satisfactory to the
Administrative Agent, the results of which shall be satisfactory to the
Administrative Agent, and (c) such Domestic Subsidiary shall have provided to
the Administrative Agent such corporate governance and authorization documents
and an opinion of counsel and any other documents and items as may be deemed
necessary or advisable by the Administrative Agent, all of the foregoing to be
in form and substance satisfactory to the Administrative Agent. 

 

ARTICLE III. ADDITIONAL PROVISIONS RELATING TO

EURODOLLAR LOANS; INCREASED CAPITAL; TAXES

 

Section 3.1. Requirements of Law.

 

(a) If, after the Closing Date, (i) the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof by a
Governmental Authority, or (ii) the compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank or
other Governmental Authority:

 

(A) shall subject any Lender to any tax of any kind whatsoever with respect to
this Agreement, any Letter of Credit or any Eurodollar Loan made by it, or
change the basis of taxation of payments to such Lender in respect thereof
(except for Taxes and Excluded Taxes which are governed by Section 3.2 hereof);

 

(B) shall impose, modify or hold applicable any reserve, special deposit,
insurance charge, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any office of
such Lender that is not otherwise included in the determination of the
Eurodollar Rate; or

 

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(C) shall impose on such Lender any other condition;

 

and the result of any of the foregoing is to increase the cost to such Lender of
making, converting into, continuing or maintaining Eurodollar Loans or issuing
or participating in Letters of Credit, or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall pay to
such Lender, promptly after receipt of a written request therefor, any
additional amounts necessary to compensate such Lender for such increased cost
or reduced amount receivable. If any Lender becomes entitled to claim any
additional amounts pursuant to this subsection (a), such Lender shall promptly
notify the Borrower (with a copy to the Administrative Agent) of the event with
reasonable detail by reason of which it has become so entitled.

 

(b) If any Lender shall have determined that, after the Closing Date, the
adoption of or any change in any Requirement of Law regarding capital adequacy
or liquidity, or liquidity requirements, or in the interpretation or application
thereof by a Governmental Authority or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy or liquidity (whether or not having the force of law) from any
Governmental Authority shall have the effect of reducing the rate of return on
such Lender’s or such corporation’s capital as a consequence of its obligations
hereunder, or under or in respect of any Letter of Credit, to a level below that
which such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration the policies of such Lender or
such corporation with respect to capital adequacy and liquidity), then from time
to time, upon submission by such Lender to the Borrower (with a copy to the
Administrative Agent) of a written request therefor (which shall include the
method for calculating such amount and reasonable detail with respect to such
calculation), the Borrower shall promptly pay or cause to be paid to such Lender
such additional amount or amounts as will compensate such Lender or such
corporation for such reduction.

 

(c) For purposes of this Section 3.1 and Section 3.4(a) hereof, the Dodd-Frank
Act, any requests, rules, guidelines or directives concerning capital adequacy
promulgated by the Bank for International Settlements, or the Basel Committee on
Banking Regulations and Supervisory Practices (or any successor or similar
authority) under Basel III, and any rules, regulations, orders, requests,
guidelines and directives adopted, promulgated or implemented in connection with
any of the foregoing, regardless of the date adopted, issued, promulgated or
implemented, are deemed to have been introduced and adopted after the Closing
Date.

 

(d) A certificate as to any additional amounts payable pursuant to this Section
3.1 submitted by any Lender to the Borrower (with a copy to the Administrative
Agent) shall be conclusive absent manifest error. In determining any such
additional amounts, such Lender may use any method of averaging and attribution
that it (in its sole discretion) shall deem applicable. The obligations of the
Borrower pursuant to this Section 3.1 shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

 

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Section 3.2. Taxes.

 

(a) All payments made by any Credit Party under any Loan Document shall be made
free and clear of, and without deduction or withholding for or on account of,
any Taxes or Other Taxes. If any Taxes or Other Taxes are required to be
deducted or withheld from any amounts payable to the Administrative Agent or any
Lender hereunder, the amounts so payable to the Administrative Agent or such
Lender shall be increased to the extent necessary to yield to the Administrative
Agent or such Lender (after deducting, withholding and payment of all Taxes and
Other Taxes) interest or any such other amounts payable hereunder at the rates
or in the amounts specified in the Loan Documents.

 

(b) Whenever any Taxes or Other Taxes are required to be withheld and paid by a
Credit Party, such Credit Party shall timely withhold and pay such taxes to the
relevant Governmental Authorities. As promptly as possible thereafter, the
Borrower shall send to the Administrative Agent for its own account or for the
account of the relevant Lender, as the case may be, a certified copy of an
original official receipt received by such Credit Party showing payment thereof
or other evidence of payment reasonably acceptable to the Administrative Agent
or such Lender. If such Credit Party shall fail to pay any Taxes or Other Taxes
when due to the appropriate Governmental Authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, such Credit Party and the Borrower shall indemnify the Administrative
Agent and the appropriate Lenders on demand for any incremental Taxes or Other
Taxes paid or payable by the Administrative Agent or such Lender as a result of
any such failure.

 

(c) Each Lender that is not (i) a citizen or resident of the United States, (ii)
a corporation, partnership or other entity created or organized in or under the
laws of the United States (or any jurisdiction thereof), or (iii) an estate or
trust that is subject to federal income taxation regardless of the source of its
income (any such Person, a “Non-U.S. Lender”) shall deliver to the Borrower and
the Administrative Agent two copies of either U.S. Internal Revenue Service Form
W-8BEN-E, Form W-8IMY or Form W-8ECI, or, in the case of a Non-U.S. Lender
claiming exemption from U.S. federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of “portfolio interest”, a statement
with respect to such interest and two copies of a Form W-8BEN-E, or any
subsequent versions thereof or successors thereto, properly completed and duly
executed by such Non-U.S. Lender claiming complete exemption from, or a reduced
rate of, U.S. federal withholding tax on all payments by Credit Parties under
this Agreement and the other Loan Documents. Such forms shall be delivered by
each Non-U.S. Lender on or before the date it becomes a party to this Agreement
or such other Loan Document. In addition, each Non-U.S. Lender shall deliver
such forms or appropriate replacements promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender. Each
Non-U.S. Lender shall promptly notify the Borrower at any time it determines
that such Lender is no longer in a position to provide any previously delivered
certificate to the Borrower (or any other form of certification adopted by the
U.S. taxing authorities for such purpose). Notwithstanding any other provision
of this subsection (c), a Non-U.S. Lender shall not be required to deliver any
form pursuant to this subsection (c) that such Non-U.S. Lender is not legally
able to deliver.

 

(d) The agreements in this Section 3.2 shall survive the termination of the Loan
Documents and the payment of the Loans and all other amounts payable hereunder.

 

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Section 3.3. Funding Losses. The Borrower agrees to indemnify each Lender,
promptly after receipt of a written request therefor, and to hold each Lender
harmless from, any loss or expense that such Lender may sustain or incur as a
consequence of (a) failure by the Borrower to make a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrower has given a notice
(including a written or verbal notice that is subsequently revoked) requesting
the same in accordance with the provisions of this Agreement, (b) failure by the
Borrower to make any prepayment of or conversion from Eurodollar Loans after the
Borrower has given a notice (including a written or verbal notice that is
subsequently revoked) thereof in accordance with the provisions of this
Agreement, (c) the making of a prepayment of a Eurodollar Loan on a day that is
not the last day of an Interest Period applicable thereto, (d) any conversion of
a Eurodollar Loan to a Base Rate Loan on a day that is not the last day of an
Interest Period applicable thereto, or (e) any compulsory assignment of such
Lender’s interests, rights and obligations under this Agreement pursuant to
Section 11.3(c) or 11.13 hereof. Such indemnification shall be in an amount
equal to the excess, if any, of (i) the amount of interest that would have
accrued on the amounts so prepaid, or not so borrowed, converted or continued,
for the period from the date of such prepayment or of such failure to borrow,
convert or continue to the last day of such Interest Period (or, in the case of
a failure to borrow, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable rate of
interest for such Loans provided for herein over (ii) the amount of interest (as
reasonably determined by such Lender) that would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the appropriate London interbank market, along with any
administration fee charged by such Lender. A certificate as to any amounts
payable pursuant to this Section 3.3 submitted to the Borrower (with a copy to
the Administrative Agent) by any Lender, together with a reasonably detailed
calculation and description of such amounts, shall be conclusive absent manifest
error. The obligations of the Borrower pursuant to this Section 3.3 shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.

 

Section 3.4. Eurodollar Rate Lending Unlawful; Inability to Determine Rate.

 

(a) If any Lender shall determine (which determination shall, upon notice
thereof to the Borrower and the Administrative Agent, be conclusive and binding
on the Borrower) that, after the Closing Date, (i) the introduction of or any
change in or in the interpretation of any law makes it unlawful, or (ii) any
Governmental Authority asserts that it is unlawful, for such Lender to make or
continue any Loan as, or to convert (if permitted pursuant to this Agreement)
any Loan into, a Eurodollar Loan, the obligations of such Lender to make,
continue or convert into any such Eurodollar Loan shall, upon such
determination, be suspended until such Lender shall notify the Administrative
Agent that the circumstances causing such suspension no longer exist, and all
outstanding Eurodollar Loans payable to such Lender shall automatically convert
(if conversion is permitted under this Agreement) into a Base Rate Loan, or be
repaid (if no conversion is permitted) at the end of the then current Interest
Periods with respect thereto or sooner, if required by law or such assertion.

 

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(b) If the Administrative Agent or the Required Lenders determine that for any
reason adequate and reasonable means do not exist for determining the Eurodollar
Rate for any requested Interest Period with respect to a proposed Eurodollar
Loan, or that the Eurodollar Rate for any requested Interest Period with respect
to a proposed Eurodollar Loan does not adequately and fairly reflect the cost to
the Lenders of funding such Loan, the Administrative Agent will promptly so
notify the Borrower and each Lender. Thereafter, the obligation of the Lenders
to make or maintain such Eurodollar Loan shall be suspended until the
Administrative Agent (upon the instruction of the Required Lenders) revokes such
notice. Upon receipt of such notice, the Borrower may revoke any pending request
for a borrowing of, conversion to or continuation of such Eurodollar Loan or,
failing that, will be deemed to have converted such request into a request for a
borrowing of a Base Rate Loan in the amount specified therein.

 

Section 3.5. Discretion of Lenders as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Lender shall be entitled to
fund and maintain its funding of all or any part of such Lender’s Loans in any
manner such Lender deems to be appropriate; it being understood, however, that
for the purposes of this Agreement all determinations hereunder shall be made as
if such Lender had actually funded and maintained each Eurodollar Loan during
the applicable Interest Period for such Loan through the purchase of deposits
having a maturity corresponding to such Interest Period and bearing an interest
rate equal to the Eurodollar Rate for such Interest Period. 

 

ARTICLE IV. CONDITIONS PRECEDENT

 

Section 4.1. Conditions to Each Credit Event. The obligation of the Lenders, the
Issuing Lender and the Swing Line Lender to participate in any Credit Event
shall be conditioned, in the case of each Credit Event, upon the following:

 

(a) all conditions precedent as listed in Section 4.2 hereof required to be
satisfied prior to the first Credit Event shall have been satisfied prior to or
as of the first Credit Event;

 

(b) the Borrower shall have submitted a Notice of Loan (or with respect to a
Letter of Credit, complied with the provisions of Section 2.2(b)(ii) hereof) and
otherwise complied with Section 2.6 hereof;

 

(c) no Default or Event of Default shall then exist or immediately after such
Credit Event would exist; and

 

(d) each of the representations and warranties contained in Article VI hereof
shall be true in all material respects (or in all respects in the case of any
representation or warranty qualified by materiality or Material Adverse Effect)
as if made on and as of the date of such Credit Event, except to the extent that
any thereof expressly relate to an earlier date, in which case such
representation and warranty shall be true and correct in all material respects
(or in all respects in the case of any representation or warranty qualified by
materiality or Material Adverse Effect) as of such earlier date.

 

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Each request by the Borrower for a Credit Event shall be deemed to be a
representation and warranty by the Borrower as of the date of such request as to
the satisfaction of the conditions precedent specified in subsections (c) and
(d) above.

 

Section 4.2. Conditions to the First Credit Event. The Borrower shall cause the
following conditions to be satisfied on or prior to the Closing Date. The
obligation of the Lenders, the Issuing Lender and the Swing Line Lender to
participate in the first Credit Event is subject to the Borrower satisfying each
of the following conditions prior to or concurrently with such Credit Event:

 

(a) Notes as Requested. The Borrower shall have executed and delivered to (i)
each Revolving Lender requesting a Revolving Credit Note such Revolving Lender’s
Revolving Credit Note, (ii) each Term Lender requesting a Term Note such Term
Lender’s Term Note, and (iii) the Swing Line Lender the Swing Line Note, if
requested by the Swing Line Lender.

 

(b) Subsidiary Documents. Each Guarantor of Payment shall have executed and
delivered to the Administrative Agent (i) a Guaranty of Payment, in form and
substance satisfactory to the Administrative Agent, and (ii) a Security
Agreement and such other documents or instruments, as may be required by the
Administrative Agent to create or perfect the Liens of the Administrative Agent
in the assets of such Guarantor of Payment, all to be in form and substance
satisfactory to the Administrative Agent.

 

(d) Pledge Agreements. Each Credit Party that has a Subsidiary shall have (i)
executed and delivered to the Administrative Agent, for the benefit of the
Lenders, a Pledge Agreement, in form and substance satisfactory to the
Administrative Agent, with respect to the Pledged Securities, (ii) executed and
delivered to the Administrative Agent, for the benefit of the Lenders,
appropriate transfer powers for each of the Pledged Securities that are
certificated, and (iii) delivered to the Administrative Agent, for the benefit
of the Lenders, the Pledged Securities (to the extent such Pledged Securities
are certificated).

 

(e) Intellectual Property Security Agreements. Each Credit Party that owns
federally registered intellectual property shall have executed and delivered to
the Administrative Agent, for the benefit of the Lenders, an Intellectual
Property Security Agreement, in form and substance satisfactory to the
Administrative Agent.

 

(f) Collateral Access Agreements. The Borrower shall have delivered to the
Administrative a Collateral Access Agreement, for each location of a Credit
Party where any of the collateral securing any part of the Obligations is
located, unless such location is owned by the Company that owns the collateral
located there; provided that (i) the Borrower shall not be required to deliver a
Collateral Access Agreement with respect to any such location if it would not be
required to deliver a Collateral Access Agreement pursuant to Section 5.21(e)
hereof, and (ii) with respect to any Collateral Access Agreements not delivered
to the Administrative Agent as of the Closing Date, the Borrower shall deliver
such Collateral Access Agreements pursuant to Section 4.3(a) hereof.

 

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(g) Lien Searches. With respect to the property owned or leased by each Credit
Party, and any other property securing the Secured Obligations, the Borrower
shall have caused to be delivered to the Administrative Agent (i) the results of
Uniform Commercial Code lien searches, satisfactory to the Administrative Agent
and the Lenders, (ii) the results of federal and state tax lien and judicial
lien searches, satisfactory to the Administrative Agent and the Lenders, and
(iii) Uniform Commercial Code termination statements reflecting termination of
all U.C.C. Financing Statements previously filed by any Person and not expressly
permitted pursuant to Section 5.9 hereof.

 

(h) Officer’s Certificate, Resolutions, Organizational Documents. The Borrower
shall have delivered to the Administrative Agent an officer’s certificate (or
comparable domestic or foreign documents) certifying the names of the officers
of each Credit Party authorized to sign the Loan Documents, together with the
true signatures of such officers and certified copies of (i) the resolutions of
the board of directors (or comparable domestic or foreign documents) of such
Credit Party evidencing approval of the execution, delivery and performance of
the Loan Documents and the execution and performance of other Related Writings
to which such Credit Party is a party, and the consummation of the transactions
contemplated thereby, and (ii) the Organizational Documents of such Credit
Party.

 

(i) Good Standing and Full Force and Effect Certificates. The Borrower shall
have delivered to the Administrative Agent a good standing certificate or full
force and effect certificate (or comparable document, if neither certificate is
available in the applicable jurisdiction), as the case may be, for each Credit
Party, issued on or about the Closing Date by the Secretary of State in the
state or states where such Credit Party is incorporated or formed or qualified
as a foreign entity.

 

(j) Legal Opinion. The Borrower shall have delivered to the Administrative Agent
an opinion of counsel for the Borrower and each other Credit Party, in form and
substance satisfactory to the Administrative Agent and the Lenders.

 

(k) Mophie Acquisition Documents. The Borrower shall have provided to the
Administrative Agent copies of the Mophie Acquisition Documents, certified by a
Financial Officer as true and complete, which documents shall be in form and
substance satisfactory to the Administrative Agent, including evidence that (i)
the total Consideration paid on the Closing Date for the Mophie Acquisition does
not exceed One Hundred Million Dollars ($100,000,000), and (ii) the Mophie
Acquisition has been consummated contemporaneously with the making of the first
Credit Event, in accordance with the terms of the Mophie Acquisition Documents
and in compliance with applicable law and regulatory approvals.

 

(l) Insurance Certificates. The Borrower shall have delivered to the
Administrative Agent certificates of insurance on ACORD 25 and 27 or 28 form and
proof of endorsements satisfactory to the Administrative Agent and the Lenders,
providing for adequate personal property and liability insurance for each
Company, with the Administrative Agent, on behalf of the Lenders, listed as
lender’s loss payee and additional insured, as appropriate.

 

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(m) Cash Management Systems. The Borrower shall have established (i) the cash
management system, specified in Section 7.2 hereof (subject to Section 4.3
hereof), and executed the Master Agreement, in form and substance satisfactory
to the Administrative Agent, and (ii) a Cash Collateral Account, Operating
Account, Controlled Disbursement Account and Lockbox arrangement, in each case
satisfactory to the Administrative Agent.

 

(n) Customer List. The Borrower shall have delivered to the Administrative Agent
a complete list of all Account Debtors of each Borrowing Base Company, including
but not limited to the name, address and contact information of each such
Account Debtor, in form and detail satisfactory to the Administrative Agent.

 

(o) Financial Reports of Mophie. The Borrower shall have delivered to the
Administrative Agent (i) the restated financial statements of Mophie for the
fiscal year ended December 31, 2014, in form and substance satisfactory to the
Administrative Agent, and (ii) unaudited financial statements of Mophie for the
fiscal year ended December 31, 2015; in each case, prepared on a consolidated
and consolidating (in accordance with GAAP) basis, excluding footnotes, in form
and substance satisfactory to the Administrative Agent.

 

(p) Pro-Forma Projections. The Borrower shall have delivered to the
Administrative Agent annual pro-forma projections of financial statements (which
report shall include balance sheets and statements of income (loss) and
cash-flow) of the Borrower on a quarterly basis for the fiscal year ending
December 31, 2016 and on an annual basis for the fiscal years ending December
31, 2017 and December 31, 2018, in each case prepared on a Consolidated and
consolidating (in accordance with GAAP) basis, in form and substance
satisfactory to the Administrative Agent, including the provision of adequate
text explaining the significant assumptions from which such pro-forma
projections were prepared; provided that no representation or warranty shall be
made as to the impact of future general economic conditions or as to whether the
Borrower’s projections will actually be realized, it being recognized by the
Lenders that such projections as to future events are not to be viewed as facts
and that actual results may differ materially from the projections delivered
pursuant to this Section 4.2(q).

 

(q) Collateral Audit, Inventory and Equipment Appraisals / Pre-Close
Roll-Forward Exam. The Administrative Agent shall have received (i) the results
of a collateral field audit of the Borrower and Mophie, (ii) a pre-closing
collateral roll-forward exam, and (iii) a net orderly liquidation value
appraisal of the Inventory and intellectual property of the Borrower and Mophie
prepared by an independent appraiser acceptable to the Administrative Agent; in
each case to be in form and substance reasonably satisfactory to the
Administrative Agent.

 

(r) Quality of Earnings Report. The Borrower shall have delivered to the
Administrative Agent a copy of the quality of earnings report prepared by an
independent third party in connection with the Mophie Acquisition, in form and
substance satisfactory the Administrative Agent.

 

(s) Revolving Credit Availability. On the Closing Date, the Revolving Credit
Availability shall be no less than Ten Million Dollars ($10,000,000); provided
that, for purposes of calculating the Revolving Credit Availability under this
Section 4.2(s), Revolving Credit Exposure shall include, without duplication,
(i) any fees and expenses due under Section 4.2(t) hereof, (ii) any accounts
payable of the Borrowing Base Companies with balances over sixty (60) days past
due, and (iii) the Borrower’s initial credit request under the Revolving Credit
Commitment.

 

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(t) Administrative Agent Fee Letter, Closing Fee Letter and Other Fees. The
Borrower shall have (i) executed and delivered to the Administrative Agent, the
Administrative Agent Fee Letter and paid to the Administrative Agent, for its
sole account, the fees stated therein, (ii) executed and delivered to the
Administrative Agent, the Closing Fee Letter and paid to the Administrative
Agent, for the benefit of the Lenders, the fees stated therein, and (iii) paid
all legal fees and expenses of the Administrative Agent in connection with the
preparation and negotiation of the Loan Documents.

 

(u) Advertising Release Form. The Borrower shall have delivered to the
Administrative Agent an advertising release form, authorizing the Administrative
Agent to publicize the transaction and specifically to use the name of the
Borrower in connection with “tombstone” advertisements in one or more
publications selected by the Administrative Agent.

 

(v) Existing Credit Agreements. The Borrower shall have delivered to the
Administrative Agent an executed payoff letter (in form and substance
satisfactory to the Administrative Agent) with respect to (i) the Credit
Agreement between the Borrower and Wells Fargo Bank, National Association, dated
as of December 7, 2012, as amended, (ii) the Credit Agreement among Mophie,
mophie llc, a Michigan limited liability company, mophie Netherlands Coöperatie
U.A., the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative
agent, dated as of October 14, 2014, as amended, and (iii) the Construction Loan
Agreement between mophie llc, a Michigan limited liability company and JPMorgan
Chase Bank, N.A., dated as of July 1, 2014, as amended; and, in each case of
subparts (i), (ii) and (iii) above, shall have terminated such agreement, which
termination shall be deemed to have occurred upon payment in full of all of the
Indebtedness outstanding thereunder and termination of the commitments
established therein, and such payoff letter shall provide for the release and
termination of any liens or security interests in respect thereof.

 

(w) Consents. The Borrower shall have delivered to the Administrative Agent
evidence that all necessary and material consents, permits, licenses and
approvals (whether from governmental authorities, equity holders or otherwise)
required for the execution, delivery and performance by each Credit Party of the
Loan Documents and the Mophie Acquisition Documents have been duly obtained (or
waived in writing) and are in full force and effect.

 

(x) Closing Certificate. The Borrower shall have delivered to the Administrative
Agent and the Lenders an officer’s certificate certifying that, as of the
Closing Date, (i) all conditions precedent set forth in this Article IV have
been satisfied, (ii) no Default or Event of Default exists or immediately after
the first Credit Event will exist, (iii) the Revolving Credit Availability, as
calculated pursuant to Section 4.2(s) hereof, is no less than Ten Million
Dollars ($10,000,000), and (iv) each of the representations and warranties
contained in Article VI hereof are true and correct as of the Closing Date.

 

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(y) Letter of Direction. The Borrower shall have delivered to the Administrative
Agent a letter of direction authorizing the Administrative Agent, on behalf of
the Lenders, to disburse the proceeds of the Loans, which letter of direction
includes the authorization to transfer funds under this Agreement and the wire
instructions that set forth the locations to which such funds shall be sent.

 

(z) No Material Adverse Change. No material adverse change, in the reasonable
judgment of the Administrative Agent, shall have occurred in the financial
condition, operations or prospects of the Companies taken as a whole since
September 30, 2015.

 

(aa) Miscellaneous. The Borrower shall have provided to the Administrative Agent
and the Lenders such other items and shall have satisfied such other conditions
as may be reasonably required by the Administrative Agent or the Lenders.

 

Section 4.3. Post-Closing Conditions. On or before the dates specified in this
Section 4.3 (unless a longer period is agreed to in writing by the
Administrative Agent), the Borrower shall satisfy each of the following items
specified in the subsections below:

 

(a) Collateral Access Agreements. No later than thirty (30) days after the
Closing Date, the Borrower shall deliver to the Administrative a Collateral
Access Agreement (not delivered as of the Closing Date pursuant to Section
4.2(f) hereof), for each location of a Credit Party where any of the collateral
securing any part of the Obligations is located, unless such location is owned
by the Company that owns the collateral located there; provided that the
Borrower shall not be required to deliver a Collateral Access Agreement with
respect to any such location if it would not be required to deliver a Collateral
Access Agreement pursuant to Section 5.21(e) hereof.

 

(b) Deposit Accounts. No later than sixty (60) days after the Closing Date, the
Borrower shall close each Deposit Account (other than with respect to Deposit
Accounts permitted to remain open pursuant to the terms of Section 5.21(d)
hereof) maintained by a Company at any financial institution other than the
Administrative Agent.

 

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ARTICLE V. COVENANTS

 

Section 5.1. Insurance. Each Company shall at all times maintain insurance upon
its Inventory, Equipment and other personal and real property (including, if
applicable, insurance required by the National Flood Insurance Reform Act of
1994) in such form, written by such companies, in such amounts, for such
periods, and against such risks as may be acceptable to the Administrative
Agent, with provisions satisfactory to the Administrative Agent for, with
respect to Credit Parties, payment of all losses thereunder to the
Administrative Agent, for the benefit of the Lenders, and such Company as their
interests may appear (with lender’s loss payable and additional insured
endorsements, as appropriate, in favor of the Administrative Agent, for the
benefit of the Lenders), and, if required by the Administrative Agent after the
occurrence of an Event of Default, the Borrower shall deposit the policies with
the Administrative Agent. Any such policies of insurance shall provide for no
fewer than thirty (30) days prior written notice of cancellation to the
Administrative Agent and the Lenders. Any sums received by the Administrative
Agent, for the benefit of the Lenders, in payment of insurance losses, returns,
or unearned premiums under the policies may, at the option of the Administrative
Agent, be applied upon the Obligations whether or not the same is then due and
payable, or may be delivered to the Companies for the purpose of replacing,
repairing, or restoring the insured property; provided that if an Event of
Default does not then exist, any such sums received by the Administrative Agent
shall be delivered to the Borrower unless otherwise required pursuant to Section
2.11(c) hereof. The Administrative Agent is hereby authorized to act as
attorney-in-fact for the Companies, after the occurrence and during the
continuance of an Event of Default, in obtaining, adjusting, settling and
canceling such insurance and endorsing any drafts. In the event of failure to
provide such insurance as herein provided, the Administrative Agent may, at its
option, provide such insurance and the Borrower shall pay to the Administrative
Agent, upon demand, the cost thereof. Should the Borrower fail to pay such sum
to the Administrative Agent upon demand, interest shall accrue thereon, from the
date of demand until paid in full, at the Default Rate. Within ten days of the
Administrative Agent’s written request, the Borrower shall furnish to the
Administrative Agent such information about the insurance of the Companies as
the Administrative Agent may from time to time reasonably request, which
information shall be prepared in form and detail satisfactory to the
Administrative Agent and certified by a Financial Officer.

 

Section 5.2. Money Obligations. Each Company shall pay in full (a) prior in each
case to the date when penalties would attach, all material taxes, assessments
and governmental charges and levies (except only those so long as and to the
extent that the same shall be contested in good faith by appropriate and timely
proceedings and for which adequate provisions have been established in
accordance with GAAP) for which it may be or become liable or to which any or
all of its properties may be or become subject; (b) all of its material wage
obligations to its employees in compliance with the Fair Labor Standards Act (29
U.S.C. §§ 206-207) or any comparable provisions; and (c) all of its other
material obligations calling for the payment of money (except only those so long
as and to the extent that the same shall be contested in good faith and for
which adequate provisions have been established in accordance with GAAP) before
such payment becomes overdue.

 

Section 5.3. Financial Statements, Collateral Reporting and Information.

 

(a) Borrowing Base. The Borrower shall deliver to the Administrative Agent, as
frequently as the Administrative Agent may request, but no less frequently than
by 5:00 P.M. (Eastern time) twenty (20) days after the end of each calendar
month (or the next Business Day if such day is not a Business Day), a Borrowing
Base Certificate (for the period ending on the last day of the prior calendar
month) prepared and certified by a Financial Officer. Each such Borrowing Base
Certificate shall be updated for all activity (sales, billings, collections,
credits and similar information) impacting the accounts receivable of the
Borrowing Base Companies from the date of the immediately preceding Borrowing
Base Certificate to the date of such Borrowing Base Certificate. The amount of
Eligible Inventory and the determination as to which accounts receivable
constitute Eligible Accounts Receivable to be included on each Borrowing Base
Certificate shall, absent a request from the Administrative Agent that such
amounts be calculated more frequently, be the amount that is calculated and
updated monthly pursuant to subsections (e) and (f) below.

 

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(b) Monthly Financials. The Borrower shall deliver to the Administrative Agent,
within thirty (30) days after the end of each calendar month, monthly internal
unaudited balance sheets of the Borrower, as of the end of such calendar month
and statements of income (loss), stockholders’ equity and cash flow for the
month and fiscal year-to-date periods and a comparison to budget or plan, all
prepared on a Consolidated and consolidating (in accordance with GAAP) basis, in
form and detail satisfactory to the Administrative Agent and certified by a
Financial Officer.

 

(c) Annual Audit Report. The Borrower shall deliver to the Administrative Agent,
within ninety (90) days after the end of each fiscal year of the Borrower (or,
if earlier, within five days after the date which Borrower shall be required to
submit its Form 10-K), an annual audit report of the Borrower for that year
prepared on a Consolidated and consolidating (in accordance with GAAP) basis, in
form and detail satisfactory to the Administrative Agent and certified by an
unqualified opinion of an independent public accountant satisfactory to the
Administrative Agent, which report shall include balance sheets and statements
of income (loss), stockholders’ equity and cash-flow for that period.

 

(d) Compliance Certificate. The Borrower shall deliver a Compliance Certificate
to the Administrative Agent, concurrently with the delivery of the financial
statements set forth in subsection (b) above for the months that correspond to
each of the first three quarterly periods of each fiscal year of the Borrower,
and with the delivery of the annual audit report referenced in subsection (c)
above.

 

(e) Accounts Receivable Aging Report. The Borrower shall deliver to the
Administrative Agent, within twenty (20) days after the end of each calendar
month, an accounts receivable aging report, in form and substance satisfactory
to the Administrative Agent and signed by a Financial Officer, (i) aged by the
original invoice date of accounts receivable of the Borrowing Base Companies,
prepared as of the last day of the preceding calendar month, reconciled to the
month-end balance sheet and month-end Borrowing Base Certificate, together with
the calculation of the current month-end Eligible Accounts Receivable, (ii) upon
the Administrative Agent’s request, an aging by original invoice date of all
existing accounts receivable, specifying the names, current value and dates of
invoices for each Account Debtor, and (iii) that includes any other information
the Administrative Agent shall reasonably request with respect to such accounts
receivable and its evaluation of such reports.

 

(f) Inventory Report. The Borrower shall deliver to the Administrative Agent,
within twenty (20) days after the end of each calendar month, a summary of
Inventory, in form and substance satisfactory to the Administrative Agent and
signed by a Financial Officer, based upon month-end balances reconciled to the
month-end balance sheet and the month-end Borrowing Base Certificate, and
accompanied by an Inventory certification, in form and substance reasonably
acceptable to the Administrative Agent and including, without limitation, (i) a
calculation of the Eligible Inventory (the calculation of Eligible Inventory
reflecting the then most recent month-end balance), and (ii) a report of the
Inventory by location or whether such Inventory is in-transit. The Borrower
shall deliver to the Administrative Agent, after the end of each calendar month,
Inventory records, in such detail as the Administrative Agent shall deem
reasonably necessary to determine the level of Eligible Inventory. The values
shown on the Inventory reports shall be at the lower of cost or market value,
determined in accordance with the usual cost accounting system of the Borrowing
Base Companies. The Borrower shall provide such other reports with respect to
the Inventory of the Borrowing Base Companies as the Administrative Agent may
reasonably request from time to time.

 

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(g) Accounts Payable Aging Report. The Borrower shall deliver to the
Administrative Agent, within twenty (20) days after the end of each calendar
month, in form and detail satisfactory to the Administrative Agent, an aging
summary of the accounts payable of the Borrowing Base Companies, dated as of the
last day of the preceding month.

 

(h) Management Reports. The Borrower shall deliver to the Administrative Agent,
concurrently with the delivery of the annual audit report referenced in
subsection (c) above, a copy of any management report, letter or similar writing
that may have been furnished to the Borrower by the independent public
accountants in respect of the systems, operations, financial condition or
properties of the Companies.

 

(i) Customer List. The Borrower shall deliver to the Administrative Agent an
updated customer list, concurrently with the delivery of any field audit report
and upon request by any field examiner of the Administrative Agent, that sets
forth all Account Debtors of the Borrowing Base Companies, including but not
limited to the name, address and contact information of each such Account
Debtor, in form and detail satisfactory to the Administrative Agent.

 

(j) Projections. The Borrower shall deliver to the Administrative Agent, within
thirty (30) days after the end of each fiscal year of the Borrower, projected
monthly balance sheets, income statements, cash-flow statements and a
calculation of the projected Revolving Credit Availability and projected
compliance with Section 5.7 hereof for the then current fiscal year of the
Borrower, all prepared on a Consolidated basis, consistent with GAAP and in form
and detail satisfactory to the Administrative Agent.

 

(k) Locations of Collateral. The Borrower shall deliver to the Administrative
Agent, simultaneously with the delivery of the annual audit report delivered
pursuant to Section 5.3(c) above, a replacement Schedule 6.9 that sets forth
each location (including third party locations) where any Company conducts
business or maintains any Accounts, Inventory or Equipment, in form and
substance satisfactory to the Administrative Agent.

 

(l) Financial Information of the Companies. The Borrower shall deliver to the
Administrative Agent and the Lenders, within ten days of the written request of
the Administrative Agent or any Lender, such other information about the
financial condition, properties and operations of any Company as the
Administrative Agent or such Lender may from time to time reasonably request,
which information shall be submitted in form and detail satisfactory to the
Administrative Agent or such Lender and certified by a Financial Officer of the
Company or Companies in question.

 

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(m) Shareholder and SEC Documents. The Borrower shall deliver to the
Administrative Agent and the Lenders (or give notice of the availability thereof
on the SEC Edgar website), as soon as available, (i) copies of Form 10-Q
quarterly reports, Form 10-K annual reports and Form 8-K current reports, (ii)
notice of (and upon the request of the Administrative Agent, copies of) any
other filings made by the Borrower with the SEC, and (iii) notice of (and, upon
the request of the Administrative Agent, copies of) any other information that
is provided by the Borrower to its shareholders generally.

 

(n) Delivery Through Approved Electronic Communication System. Unless otherwise
required by the Administrative Agent, all documents and other information
required to be provided to the Administrative Agent pursuant to Section 5.3(a)
(Borrowing Base Certificate), Section 5.3(e) (Accounts Receivable Aging Report),
Section 5.3(f) (Inventory Report), Section 5.3(g) (Accounts Payable Aging
Report) and Section 5.3(h) (Equipment Report), shall be delivered to the
Administrative Agent through the Approved Electronic Communication System.

 

(o) Mophie Financial Statements. No later than forty-five (45) days after the
Closing Date, the Borrower shall deliver to the Administrative Agent (i) audited
financial statements of Mophie for the fiscal year ended December 31, 2015, in
each case, prepared on a consolidated and consolidating (in accordance with
GAAP) basis, excluding footnotes, in form and substance satisfactory to the
Administrative Agent, with such audited financial statements showing no material
changes or adjustments from the unaudited financial statements of Mophie
previously delivered by the Borrower pursuant to Section 4.2(p) hereof, and (ii)
all management letters and reports prepared for Mophie by independent public
accountants for the fiscal year ended December 31, 2015.

 

(p) Generally. All documents and other information required to be provided to
the Administrative Agent shall also be provided to the Lenders (or distributed
or otherwise made available to the Lenders by the Administrative Agent).

 

Section 5.4. Financial Records. Each Company shall at all times maintain true
and complete, in all material respects, records and books of account, including,
without limiting the generality of the foregoing, appropriate provisions for
possible losses and liabilities, all in accordance with GAAP, and at all
reasonable times (during normal business hours and, other than after the
occurrence of an Event of Default, upon reasonable notice to such Company)
permit the Administrative Agent or any Lender, or any representative of the
Administrative Agent or such Lender, to examine such Company’s books and records
and to make excerpts therefrom and transcripts thereof.

 

Section 5.5. Franchises; Change in Business.

 

(a) Each Company (other than a Dormant Subsidiary) shall preserve and maintain
at all times its existence, and its material rights and franchises necessary for
its business, except as otherwise permitted pursuant to Section 5.12 hereof.

 

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(b) No Company shall engage in any business if, as a result thereof, the general
nature of the business of the Companies taken as a whole would be substantially
changed from the general nature of the business the Companies are engaged in on
the Closing Date.

 

Section 5.6. ERISA Pension and Benefit Plan Compliance. No Company shall incur
any material accumulated funding deficiency within the meaning of ERISA, or any
material liability to the PBGC, established thereunder in connection with any
ERISA Plan. The Borrower shall furnish to the Administrative Agent and the
Lenders (a) as soon as possible and in any event within thirty (30) days after
any Company knows or has reason to know that any material Reportable Event with
respect to any ERISA Plan has occurred, a statement of a Financial Officer of
such Company, setting forth details as to such Reportable Event and the action
that such Company proposes to take with respect thereto, together with a copy of
the notice of such Reportable Event given to the PBGC if a copy of such notice
is available to such Company, and (b) promptly after receipt thereof, a copy of
any material notice such Company, or any member of the Controlled Group may
receive from the PBGC or the Internal Revenue Service with respect to any ERISA
Plan administered by such Company; provided that this latter clause shall not
apply to notices of general application promulgated by the PBGC or the Internal
Revenue Service. The Borrower shall promptly notify the Administrative Agent of
any material taxes assessed, proposed to be assessed or that the Borrower has
reason to believe may be assessed against a Company by the Internal Revenue
Service with respect to any ERISA Plan. As used in this Section 5.6, “material”
means the measure of a matter of significance that shall be determined as being
an amount equal to five percent (5%) of Consolidated Net Worth. As soon as
practicable, and in any event within twenty (20) days, after any Company shall
become aware that an ERISA Event shall have occurred, such Company shall provide
the Administrative Agent with notice of such ERISA Event with a certificate by a
Financial Officer of such Company setting forth the details of the event and the
action such Company or another Controlled Group member proposes to take with
respect thereto. The Borrower shall, at the request of the Administrative Agent,
deliver or cause to be delivered to the Administrative Agent true and correct
copies of any documents relating to the ERISA Plan of any Company.

 

Section 5.7. Financial Covenants.

 

(a) Leverage Ratio. The Borrower shall not suffer or permit at any time the
Leverage Ratio, as of June 30, 2016 and as of the end of each fiscal quarter of
the Borrower thereafter, to exceed 3.50 to 1.00.

 

(b) Fixed Charge Coverage Ratio. The Borrower shall not suffer or permit at any
time the Fixed Charge Coverage Ratio, as of June 30, 2016 and as of the end of
each fiscal quarter of the Borrower thereafter, to be less than 1.10 to 1.00.

 

Section 5.8. Borrowing. No Company shall create, incur or have outstanding any
Indebtedness of any kind; provided that this Section 5.8 shall not apply to the
following:

 

(a) the Loans, the Letters of Credit and any other Indebtedness under this
Agreement;

 

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(b) any loans granted to, or Capitalized Lease Obligations entered into by, any
Company for the purchase or lease of fixed assets (and refinancings of such
loans or Capitalized Lease Obligations), which loans and Capitalized Lease
Obligations shall only be secured by the fixed assets being purchased or leased,
so long as the aggregate principal amount of all such loans and Capitalized
Lease Obligations for all Companies shall not exceed Two Million Dollars
($2,000,000) at any time outstanding.

 

(c) the Indebtedness existing on the Closing Date, in addition to the other
Indebtedness permitted to be incurred pursuant to this Section 5.8, as set forth
in Schedule 5.8 hereto (and any extension, renewal or refinancing thereof but
only to the extent that the principal amount thereof does not increase after the
Closing Date);

 

(d) loans to, and guaranties of Indebtedness of, a Company from a Company so
long as each such Company is a Credit Party;

 

(e) Indebtedness under any Hedge Agreement, so long as such Hedge Agreement
shall have been entered into in the ordinary course of business and not for
speculative purposes;

 

(f) Permitted Foreign Subsidiary Loans, Guaranties and Investments;

 

(g) Indebtedness consisting of earn-out payments or unsecured obligations in
respect of purchase price adjustments in connection with Acquisitions permitted
hereunder in an aggregate amount not to exceed Five Million Dollars ($5,000,000)
at any time outstanding (for clarification, payments on Indebtedness of this
type shall be subject to the provisions of Section 5.15(a) hereof);

 

(h) in addition to the Indebtedness set forth in subsection (g) above,
Indebtedness consisting of earn-out payments or unsecured obligations in respect
of purchase price adjustments in connection with Acquisitions permitted
hereunder; so long as, at such time that such obligations are no longer
contingent and appear in the liabilities section of the balance sheet of such
Company, such Indebtedness is at all times subject to a subordination agreement
in form and substance reasonably satisfactory to the Administrative Agent (for
clarification, payments on Indebtedness of this type shall be subject to the
provisions of Section 5.15(a) hereof); and

 

(i) other unsecured Indebtedness, in addition to the Indebtedness listed above,
in an aggregate principal amount for all Companies not to exceed One Million
Dollars ($1,000,000) at any time outstanding.

 

Section 5.9. Liens. No Company shall create, assume or suffer to exist (upon the
happening of a contingency or otherwise) any Lien upon any of its property or
assets, whether now owned or hereafter acquired; provided that this Section 5.9
shall not apply to the following:

 

(a) Liens for taxes not yet due or that are being actively contested in good
faith by appropriate proceedings and for which adequate reserves shall have been
established in accordance with GAAP;

 

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(b) other statutory Liens, including, without limitation, statutory Liens of
landlords, carriers, warehousers, utilities, mechanics, repairmen, workers and
materialmen, incidental to the conduct of its business or the ownership of its
property and assets that (i) were not incurred in connection with the incurring
of Indebtedness or the obtaining of advances or credit, and (ii) do not in the
aggregate materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its business;

 

(c) any Lien granted to the Administrative Agent, for the benefit of the Lenders
(and affiliates thereof);

 

(d) the Liens existing on the Closing Date as set forth in Schedule 5.9 hereto
and replacements, extensions, renewals, refundings or refinancings thereof, but
only to the extent that the amount of debt secured thereby, and the amount and
description of property subject to such Liens, shall not be increased;

 

(e) purchase money Liens on fixed assets securing the loans and Capitalized
Lease Obligations pursuant to Section 5.8(b) hereof, provided that such Lien is
limited to the purchase price and only attaches to the property being acquired;

 

(f) Liens on property or assets of a Subsidiary to secure obligations of such
Subsidiary to the Borrower or a Guarantor of Payment;

 

(g) Liens arising in the ordinary course of business on amounts deposited to
secure any Credit Party’s obligations in connection with worker’s compensation,
unemployment insurance or other social security, old age pension or public
liability obligations;

 

(h) easements or other minor defects or irregularities in title of real property
not interfering in any material respect with the use of such property in the
business of any Company; or

 

(i) other Liens (including all Liens existing on the Closing Date as set forth
in Schedule 5.9 hereto), not incurred in connection with the incurring of
Indebtedness, securing amounts, in the aggregate for all Companies, not to
exceed One Hundred Fifty Thousand Dollars ($150,000) at any time.

 

No Company shall enter into any contract or agreement (other than a contract or
agreement entered into in connection with the purchase or lease of fixed assets
that prohibits Liens on such fixed assets) that would prohibit the
Administrative Agent or the Lenders from acquiring a security interest, mortgage
or other Lien on, or a collateral assignment of, any of the property or assets
of such Company.

 

Section 5.10. Regulations T, U and X. No Company shall take any action that
would result in any non-compliance of the Loans or Letters of Credit with
Regulations T, U or X, or any other applicable regulation, of the Board of
Governors of the Federal Reserve System.

 

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Section 5.11. Investments, Loans and Guaranties. No Company shall without the
prior written consent of the Administrative Agent and the Required Lenders (a)
create, acquire or hold any Subsidiary, (b) make or hold any investment in any
stocks, bonds or securities of any kind, (c) be or become a party to any joint
venture or other partnership, (d) make or keep outstanding any advance or loan
to any Person, or (e) be or become a Guarantor of any kind (other than a
Guarantor of Payment under the Loan Documents); provided that this Section 5.11
shall not apply to the following:

 

(i) any endorsement of a check or other medium of payment for deposit or
collection through normal banking channels or similar transaction in the
ordinary course of business;

 

(ii) any investment in direct obligations of the United States or in
certificates of deposit issued by a member bank (having capital resources in
excess of Five Hundred Million Dollars ($500,000,000)) of the Federal Reserve
System;

 

(iii) any investment in commercial paper or securities that at the time of such
investment is assigned the highest quality rating in accordance with the rating
systems employed by either Moody’s or Standard & Poor’s;

 

(iv) the holding of each of the Subsidiaries listed on Schedule 6.1 hereto, and
the creation, acquisition and holding of and any investment in any new
Subsidiary after the Closing Date so long as such new Subsidiary shall have been
created, acquired or held, and investments made, in accordance with the terms
and conditions of this Agreement;

 

(v) loans to, investments in and guaranties of the Indebtedness (permitted under
Section 5.8(d) hereof) of, a Company from or by a Company so long as each such
Company is a Credit Party;

 

(vi) Permitted Foreign Subsidiary Loans, Guaranties and Investments;

 

(vii) the creation of a Subsidiary for the purpose of making an Acquisition
permitted by Section 5.13 hereof or the holding of any Subsidiary as a result of
an Acquisition made pursuant to Section 5.13 hereof, and investments therein, so
long as, in each case, such Acquisition is permitted under Section 5.13 hereof
and such Subsidiary becomes a Guarantor of Payment promptly following such
Acquisition if required by Section 5.20 hereof;

 

(viii) Patriot Capital Payments, so long as (A) no Default or Event of Default
shall then exist or, after giving pro forma effect to such payment, thereafter
shall begin to exist, (B) the aggregate amount of all such Patriot Capital
Payments shall not exceed Two Million Dollars ($2,000,000) in any calendar
quarter and (C) Patriot Corporation shall, within twenty (20) days of receiving
any such Patriot Capital Payment, make corresponding payments to a Credit Party
in an amount not less than the amount of such Patriot Capital Payment; or

 

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(ix) any advance or loan to an officer or employee of a Company made in the
ordinary course of such Company’s business, so long as all such advances and
loans from all Companies aggregate not more than the maximum principal sum of
Fifty Thousand Dollars ($50,000) at any time outstanding.

 

For purposes of this Section 5.11, the amount of any investment in equity
interests shall be based upon the initial amount invested and shall not include
any appreciation in value or return on such investment but shall take into
account repayments, redemptions and return of capital.

 

Section 5.12. Merger and Sale of Assets. No Company shall merge, amalgamate or
consolidate with any other Person, or sell, lease or transfer or otherwise
dispose of any assets to any Person other than in the ordinary course of
business, except that, if no Default or Event of Default shall then exist or
immediately thereafter shall begin to exist:

 

(a) a Company (other than the Borrower) may merge with (i) the Borrower
(provided that the Borrower shall be the continuing or surviving Person) or (ii)
any one or more Guarantors of Payment (provided that a Guarantor of Payment
shall be the continuing or surviving Person);

 

(b) a Company (other than the Borrower) may sell, lease, transfer or otherwise
dispose of any of its assets to (i) the Borrower or (ii) any Guarantor of
Payment;

 

(c) a Foreign Subsidiary may merge or amalgamate with another Company provided
that, if either Company is a Credit Party, a Credit Party shall be the
continuing or surviving Person and a Borrower shall be a continuing or surviving
Person;

 

(d) a Company may sell any Excluded Asset;

 

(e) a Company may sell, lease, transfer or otherwise dispose of any assets that
are obsolete or no longer useful in such Company’s business; and

 

(f) Acquisitions may be effected in accordance with the provisions of Section
5.13 hereof.

 

Section 5.13. Acquisitions. No Company shall effect an Acquisition; provided
that a Company may effect (a) the Mophie Acquisition on the Closing Date, and
(b) any other Acquisition so long as such Acquisition meets all of the following
requirements:

 

(i) the Companies shall have no further obligations to make Mophie Earn-Out
Payments;

 

(ii) in the case of an Acquisition that involves a merger, amalgamation or other
combination including the Borrower, the Borrower shall be the surviving entity;

 

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(iii) in the case of an Acquisition that involves a merger, amalgamation or
other combination including a Credit Party (other than the Borrower), a Credit
Party shall be the surviving entity;

 

(iv) the business to be acquired shall be similar, or related to, or incidental
to the lines of business of the Companies;

 

(v) the Companies shall be in full compliance with the Loan Documents both prior
to and after giving pro forma effect to such Acquisition;

 

(vi) no Default or Event of Default shall exist prior to or, after giving pro
forma effect to such Acquisition, thereafter shall begin to exist;

 

(vii) such Acquisition is not actively opposed by the board of directors (or
similar governing body) of the selling Persons or the Persons whose equity
interests are to be acquired;

 

(viii) if the aggregate Consideration paid for any such Acquisition is equal to
or greater than One Million Dollars ($1,000,000) but less than Five Million
Dollars ($5,000,000), the Borrower shall have provided evidence reasonably
satisfactory to the Administrative Agent that the Revolving Credit Availability
is no less than (A) twenty-five percent (25%) of the Revolving Credit Commitment
for both thirty (30) consecutive days before, and after giving pro forma effect
to, such Acquisition if the outstanding principal balance on the Term Loan is
equal to or greater than Twelve Million Five Hundred Thousand Dollars
($12,500,000); and (B) fifteen percent (15%) of the Revolving Credit Commitment
for both thirty (30) consecutive days before, and after giving pro forma effect
to, such Acquisition if the outstanding principal balance on the Term Loan is
less than Twelve Million Five Hundred Thousand Dollars ($12,500,000);

 

(ix) if the aggregate Consideration paid for any such Acquisition is equal to or
greater than Five Million Dollars ($5,000,000):

 

(A) the Borrower shall have provided to the Administrative Agent and the
Lenders, (1) at least ten Business Days prior to such Acquisition, historical
financial statements of the target entity and a pro forma financial statement of
the Companies accompanied by a certificate of a Financial Officer showing (x)
that the target entity has generated positive Target EBITDA (subject to
adjustments as may be agreed to by the Administrative Agent) for the most
recently completed four fiscal quarters prior to such Acquisition, (y) the
Leverage Ratio, both prior to and after giving pro forma effect to such
Acquisition, is at least one quarter (0.25) turn below the Leverage Ratio
requirement then in effect pursuant to Section 5.7 hereof, and (z) the Fixed
Charge Coverage Ratio, both prior to and after giving pro forma effect to such
Acquisition, is greater than or equal to 1.20 to 1.00; and (2) such other
information regarding the Acquisition as the Administrative Agent and the
Lenders may reasonably request;

 

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(B) the Borrower shall have provided evidence reasonably satisfactory to the
Administrative Agent that the Revolving Credit Availability is no less than (1)
twenty-five percent (25%) of the Revolving Credit Commitment for both thirty
(30) consecutive days before, and after giving pro forma effect to, such
Acquisition if the outstanding principal balance on the Term Loan is equal to or
greater than Twelve Million Five Hundred Thousand Dollars ($12,500,000), and (2)
fifteen percent (15%) of the Revolving Credit Commitment for both thirty (30)
consecutive days before, and after giving pro forma effect to, such Acquisition
if the outstanding principal balance on the Term Loan is less than Twelve
Million Five Hundred Thousand Dollars ($12,500,000); and

 

(C) at the time of the consummation of such Acquisition, no ECF Shortfall Amount
remains unpaid;

 

(x) prior to any Accounts and Inventory acquired in connection with such
Acquisition being included in the determination of the Borrowing Base, such
assets shall have been appraised and otherwise been evaluated for borrowing base
eligibility purposes in a manner and by appraisers satisfactory to the
Administrative Agent, the results of which shall be satisfactory to the
Administrative Agent; and

 

(xi) the aggregate amount of Consideration paid for all Acquisitions for all
Companies (A) during any fiscal year of the Borrower, would not exceed Fifteen
Million Dollars ($15,000,000), and (B) during the Commitment Period, would not
exceed Twenty-Five Million Dollars ($25,000,000).

 

Section 5.14. Notice. The Borrower shall cause a Financial Officer to promptly
notify the Administrative Agent and the Lenders, in writing, whenever any of the
following shall occur:

 

(a) a Default or Event of Default may occur hereunder or any representation or
warranty made in Article VI hereof or elsewhere in this Agreement or in any
Related Writing may for any reason cease in any material respect to be true and
complete;

 

(b) the Borrower learns of a litigation or proceeding against the Borrower
before a court, administrative agency or arbitrator that, if successful, is
reasonably likely to have a Material Adverse Effect; or

 

(c) the Borrower learns that there has occurred or begun to exist any event,
condition or thing that is reasonably likely to have a Material Adverse Effect.

 

Section 5.15. Restricted Payments. No Company shall make or commit itself to
make any Restricted Payment at any time, except that:

 

(a) the Borrower may make earn-out payments or payments in respect of purchase
price adjustments (including Mophie Earn-Out Payments and Mophie Contingent
Payments) in connection with an Acquisition permitted hereunder so long as (i)
no Default or Event of Default shall then exist or, after giving pro forma
effect to such payment, thereafter shall begin to exist, (ii) the Revolving
Credit Availability is no less than twelve and one-half percent (12.5%) of the
Revolving Credit Commitment for both thirty (30) consecutive days before, and
after giving pro forma effect to, each such payment, and (iii) except for Mophie
Earn-Out Payments and Mophie Contingent Payments, no ECF Shortfall Amount
remains unpaid; and

 

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(b) a Company may make Capital Distributions so as long as (i) the Revolving
Credit Availability is no less than fifteen percent (15%) of the Revolving
Credit Commitment for both thirty (30) consecutive days before, and after giving
pro forma effect to, each such payment, (ii) the Fixed Charge Coverage Ratio
shall be greater than 1.25 to 1.00 after giving pro forma effect to each such
payment, (iii) no Default or Event of Default shall then exist or, after giving
pro forma effect to such payment, thereafter shall begin to exist, and (iv) no
ECF Shortfall Amount remains unpaid.

 

Section 5.16. Environmental Compliance. Each Company shall comply in all
material respects with any and all Environmental Laws and Environmental Permits
including, without limitation, all Environmental Laws in jurisdictions in which
such Company owns or operates a facility or site, arranges for disposal or
treatment of hazardous substances, solid waste or other wastes, accepts for
transport any hazardous substances, solid waste or other wastes or holds any
interest in real property or otherwise. The Borrower shall furnish to the
Administrative Agent and the Lenders, promptly after receipt thereof, a copy of
any notice any Company may receive from any Governmental Authority or private
Person, or otherwise, that any material litigation or proceeding pertaining to
any environmental, health or safety matter has been filed or is threatened
against such Company, any real property in which such Company holds any interest
or any past or present operation of such Company. No Company shall allow the
release or disposal of hazardous waste, solid waste or other wastes on, under or
to any real property in which any Company holds any ownership interest or
performs any of its operations, in violation of any material Environmental Law.
As used in this Section 5.16, “litigation or proceeding” means any demand,
claim, notice, suit, suit in equity action, administrative action, investigation
or inquiry whether brought by any Governmental Authority or private Person, or
otherwise. The Borrower shall defend, indemnify and hold the Administrative
Agent and the Lenders harmless against all costs, expenses, claims, damages,
penalties and liabilities of every kind or nature whatsoever (including
attorneys’ fees) arising out of or resulting from the noncompliance of any
Company with any Environmental Law. Such indemnification shall survive any
termination of this Agreement.

 

Section 5.17. Affiliate Transactions. No Company shall, directly or indirectly,
enter into or permit to exist any transaction or series of transactions
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate (other than a
Company that is a Credit Party) on terms that shall be less favorable to such
Company than those that might be obtained at the time in a transaction with a
Person that is not an Affiliate; provided that the foregoing shall not prohibit
(a) the payment of customary and reasonable directors’ fees to directors who are
not employees of a Company or an Affiliate; (b) any employment agreement,
employee benefit plan, stock option plan, officer, director, consultant or
employee indemnification agreement (and the payment of indemnities and fees
pursuant to such arrangements) or any similar arrangement entered into by a
Company in the ordinary course of business; (c) loans to employees or officers
to the extent permitted under this Agreement; (d) loans and investments in
Foreign Subsidiaries permitted under Section 5.11 hereof; and (e) the Patriot
Capital Payments.

 

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Section 5.18. Use of Proceeds. The Borrower’s use of the proceeds of the Loans
shall be for working capital and other general corporate purposes of the
Companies and for the refinancing of existing Indebtedness and for Acquisitions
permitted hereunder. Neither the Borrower nor any of its Subsidiaries and their
respective directors, officers, employees and agents will, directly or
indirectly, use the proceeds of the Loans and Letters of Credit, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint
venture partner or other Person, (a) to finance or facilitate activities or
business of or with any Person, or in any country or territory, that, at the
time of such funding, is, or whose government is, the subject of Sanctions, (b)
in furtherance of an offer, promise to pay, or the authorization thereof, or any
other offering of value, to any Person in violation of any Anti-Corruption Laws,
or (c) in any manner that would result in the violation of any Sanctions
applicable to any party hereto.

 

Section 5.19. Corporate Names and Locations of Collateral. No Company shall (a)
change its corporate name, or (b) change its state, province or other
jurisdiction, or form of organization, or extend or continue its existence in or
to any other jurisdiction (other than its jurisdiction of organization at the
date of this Agreement); unless, in each case, the Borrower shall have provided
the Administrative Agent and the Lenders with at least ten Business Days prior
written notice thereof. The Borrower shall also provide the Administrative Agent
with at least thirty (30) days prior written notification of (i) any change in
any location where any Company’s Inventory or Equipment is maintained, and any
new locations where any Company’s Inventory or Equipment is to be maintained;
(ii) any change in the location of the office where any Company’s records
pertaining to its Accounts are kept; (iii) the location of any new places of
business and the changing or closing of any of its existing places of business;
and (iv) any change in the location of any Company’s chief executive office. In
the event of any of the foregoing or if otherwise deemed appropriate by the
Administrative Agent, the Administrative Agent is hereby authorized to file new
U.C.C. Financing Statements describing the Collateral and otherwise in form and
substance sufficient for recordation wherever necessary or appropriate, as
determined in the Administrative Agent’s sole discretion, to perfect or continue
perfected the security interest of the Administrative Agent, for the benefit of
the Lenders, in the Collateral. The Borrower shall pay all filing and recording
fees and taxes in connection with the filing or recordation of such U.C.C.
Financing Statements and security interests and shall promptly reimburse the
Administrative Agent therefor if the Administrative Agent pays the same. Such
amounts not so paid or reimbursed shall be Related Expenses hereunder.

 

Section 5.20. Subsidiary Guaranties, Security Documents and Pledge of Stock or
Other Ownership Interest.

 

(a) Guaranties and Security Documents. Each Subsidiary (that is not a Dormant
Subsidiary, a CFC or a Subsidiary that is held directly or indirectly by a CFC)
created, acquired or held subsequent to the Closing Date, shall promptly execute
and deliver to the Administrative Agent, for the benefit of the Lenders, a
Guaranty of Payment (or a Guaranty of Payment Joinder) of all of the Obligations
and a Security Agreement (or a Security Agreement Joinder), and mortgages, as
appropriate, such agreements to be prepared by the Administrative Agent and in
form and substance acceptable to the Administrative Agent, along with any such
other supporting documentation, Security Documents, corporate governance and
authorization documents, and an opinion of counsel as may be deemed necessary or
advisable by the Administrative Agent. With respect to a Subsidiary that has
been classified as a Dormant Subsidiary, at such time that such Subsidiary no
longer meets the requirements of a Dormant Subsidiary, the Borrower shall
provide to the Administrative Agent prompt written notice thereof, and shall
provide, with respect to such Subsidiary, all of the documents referenced in the
foregoing sentence. In addition, each such Subsidiary shall be subject to the
Patriot Act requirements set forth in Section 11.14 hereof.

 

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(b) Pledge of Stock or Other Ownership Interest. With respect to the creation or
acquisition of a Subsidiary (that is not a Subsidiary of a CFC), the Borrower
shall deliver to the Administrative Agent, for the benefit of the Lenders, all
of the share certificates (or other evidence of equity) owned by a Credit Party
pursuant to the terms of a Pledge Agreement prepared by the Administrative Agent
and in form and substance satisfactory to the Administrative Agent, and executed
by the appropriate Credit Party; provided that no such pledge shall include
shares of voting capital stock or other voting equity interests of any Foreign
Subsidiary that is a CFC in excess of sixty-five percent (65%) of the total
outstanding shares of voting capital stock or other voting equity interest of
such Foreign Subsidiary, whether held directly or indirectly through a
disregarded entity.

 

(c) Perfection or Registration of Interest in Foreign Shares. With respect to
any foreign shares pledged to the Administrative Agent, for the benefit of the
Lenders, on or after the Closing Date, the Administrative Agent shall at all
times, in the discretion of the Administrative Agent or the Required Lenders,
have the right to perfect, at the Borrower’s cost, payable upon request therefor
(including, without limitation, any foreign counsel, or foreign notary, filing,
registration or similar, fees, costs or expenses), its security interest in such
shares in the respective foreign jurisdiction. Such perfection may include the
requirement that the applicable Company promptly execute and deliver to the
Administrative Agent a separate pledge document (prepared by the Administrative
Agent and in form and substance satisfactory to the Administrative Agent),
covering such equity interests, that conforms to the requirements of the
applicable foreign jurisdiction, together with an opinion of local counsel as to
the perfection of the security interest provided for therein, and all other
documentation necessary or desirable to effect the foregoing and to permit the
Administrative Agent to exercise any of its rights and remedies in respect
thereof.

 

Section 5.21. Collateral. Each Credit Party shall:

 

(a) at all reasonable times and, except after the occurrence of an Event of
Default, upon reasonable notice, allow the Administrative Agent and the Lenders
by or through any of the Administrative Agent’s officers, agents, employees,
attorneys or accountants to (i) examine, inspect and make extracts from such
Credit Party’s books and other records, including, without limitation, the tax
returns of such Credit Party, (ii) arrange for verification of such Credit
Party’s Accounts, under reasonable procedures, directly with Account Debtors or
by other methods, (iii) examine and inspect such Credit Party’s Inventory and
Equipment, wherever located, (iv) subject to Section 2.9(c) hereof, conduct
Inventory appraisals and brand appraisals;

 

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(b) promptly furnish to the Administrative Agent or any Lender upon request (i)
additional statements and information with respect to the Collateral, and all
writings and information relating to or evidencing any of such Credit Party’s
Accounts (including, without limitation, computer printouts or typewritten
reports listing the mailing addresses of all present Account Debtors), and (ii)
any other writings and information as the Administrative Agent or such Lender
may request;

 

(c) promptly notify the Administrative Agent in writing upon the acquisition or
creation of any Accounts with respect to which the Account Debtor is the United
States or any other Governmental Authority, or any business that is located in a
foreign country;

 

(d) promptly notify the Administrative Agent in writing upon the acquisition or
creation by any Credit Party of a Deposit Account or Securities Account not
maintained at the Administrative Agent, and at no time permit the aggregate
balance in all Deposit Accounts and Securities Accounts that are not maintained
at the Administrative Agent, to exceed Ten Thousand Dollars ($10,000) at any
time;

 

(e) promptly notify the Administrative Agent in writing whenever the Equipment
or Inventory of a Company is located at a location of a third party (other than
another Company) that is not listed on Schedule 6.9 hereto and cause to be
executed any Collateral Access Agreement that may be required by the
Administrative Agent or the Required Lenders; provided that a Collateral Access
Agreement shall not be required for any Equipment or Inventory located at such
location to the extent that the aggregate value of all Equipment and Inventory
of all Companies maintained at such location does not exceed Two Hundred Fifty
Thousand Dollars ($250,000); provided further that, at the discretion of the
Administrative Agent, a Collateral Access Agreement shall be required for any
such third party location where billing and/or accounts receivable collections
are performed;

 

(f) promptly notify the Administrative Agent and the Lenders in writing of any
information that such Credit Party has or may receive with respect to the
Collateral that might reasonably be determined to materially and adversely
affect the value thereof or the rights of the Administrative Agent and the
Lenders with respect thereto;

 

(g) maintain such Credit Party’s (i) Equipment in good operating condition and
repair, ordinary wear and tear excepted, making all necessary replacements
thereof so that the value and operating efficiency thereof shall at all times be
maintained and preserved, (ii) finished goods Inventory in saleable condition,
and (iii) other items of Collateral, taken as an entirety, in such conditions as
is consistent with generally accepted business practices, ordinary wear and tear
excepted;

 

(h) deliver to the Administrative Agent, to hold as security for the Secured
Obligations, all certificated Investment Property owned by such Credit Party, in
suitable form for transfer by delivery, or accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Administrative Agent, or in the event such Investment
Property is in the possession of a Securities Intermediary or credited to a
Securities Account, execute with the related Securities Intermediary a
Securities Account Control Agreement over such Securities Account in favor of
the Administrative Agent, for the benefit of the Lenders, in form and substance
satisfactory to the Administrative Agent;

 

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(i) provide to the Administrative Agent, on a quarterly basis (as necessary), a
list of any patents, trademarks or copyrights that have been federally
registered by a Credit Party since the last list so delivered, and provide for
the execution of an appropriate Intellectual Property Security Agreement; and

 

(j) upon request of the Administrative Agent, promptly take such action and
promptly make, execute and deliver all such additional and further items, deeds,
assurances, instruments and any other writings as the Administrative Agent may
from time to time deem necessary or appropriate, including, without limitation,
chattel paper, to carry into effect the intention of this Agreement, or so as to
completely vest in and ensure to the Administrative Agent and the Lenders their
respective rights hereunder and in or to the Collateral.

 

Each Credit Party hereby authorizes the Administrative Agent, on behalf of the
Lenders, to file U.C.C. Financing Statements or other appropriate notices with
respect to the Collateral. If certificates of title or applications for title
are issued or outstanding with respect to any of the Inventory or Equipment of
any Credit Party, such Credit Party shall, upon request of the Administrative
Agent, (i) execute and deliver to the Administrative Agent a short form security
agreement, prepared by the Administrative Agent and in form and substance
satisfactory to the Administrative Agent, and (ii) deliver such certificate or
application to the Administrative Agent and cause the interest of the
Administrative Agent, for the benefit of the Lenders, to be properly noted
thereon. The Borrower hereby authorizes the Administrative Agent or the
Administrative Agent’s designated agent (but without obligation by the
Administrative Agent to do so) to incur Related Expenses (whether prior to,
upon, or subsequent to any Default or Event of Default), and the Borrower shall
promptly repay, reimburse, and indemnify the Administrative Agent and the
Lenders for any and all Related Expenses. If the Borrower fails to keep and
maintain its Equipment in good operating condition, ordinary wear and tear
excepted, the Administrative Agent may (but shall not be required to) so
maintain or repair all or any part of the Borrower’s Equipment and the cost
thereof shall be a Related Expense. All Related Expenses are payable to the
Administrative Agent upon demand therefor; the Administrative Agent may, at its
option, debit Related Expenses directly to any Deposit Account of a Company
located at the Administrative Agent or the Revolving Loans.

 

Section 5.22. Returns of Inventory. No Credit Party shall return any Inventory
to a supplier, vendor or other Person, whether for cash, credit or otherwise,
unless (a) such return is in the ordinary course of business; (b) no Default or
Event of Default exists or would result therefrom; (c) the Administrative Agent
is promptly notified if the aggregate value of all Inventory returned in any
month exceeds Two Hundred Thousand Dollars ($200,000); and (d) any payment
received by such Credit Party for a return is promptly remitted to the
Administrative Agent for application to the Obligations.

 

Section 5.23. Acquisition, Sale and Maintenance of Inventory. The Credit Parties
shall take commercially reasonable steps to assure that all Inventory is
produced in all material respects in accordance with applicable laws, including
the Fair Labor Standards Act (29 U.S.C. §§ 206-207). The Credit Parties shall
use, store and maintain all Inventory with reasonable care and caution, in
accordance with applicable standards of any insurance policies and in conformity
in all material respects with all applicable laws, and shall make current rent
payments (within applicable grace periods provided for in leases) at all
locations where any collateral securing the Secured Obligations is located.

 

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Section 5.24. Property Acquired Subsequent to the Closing Date and Right to Take
Additional Collateral. The Borrower shall provide the Administrative Agent with
prompt written notice with respect to any real or personal property (other than
in the ordinary course of business and excluding Accounts, Inventory, Equipment
and General Intangibles and other property acquired in the ordinary course of
business) acquired by any Company subsequent to the Closing Date. In addition to
any other right that the Administrative Agent and the Lenders may have pursuant
to this Agreement or otherwise, upon written request of the Administrative
Agent, whenever made, the Borrower shall, and shall cause each Guarantor of
Payment to, grant to the Administrative Agent, for the benefit of the Lenders,
as additional security for the Secured Obligations, a first Lien on any real or
personal property of the Borrower and each Guarantor of Payment (other than for
leased equipment or equipment subject to a purchase money security interest in
which the lessor or purchase money lender of such equipment holds a first
priority security interest, in which case, the Administrative Agent shall have
the right to obtain a security interest junior only to such lessor or purchase
money lender), including, without limitation, such property acquired subsequent
to the Closing Date, in which the Administrative Agent does not have a first
priority Lien. The Borrower agrees that, within ten days after the date of such
written request, to secure all of the Secured Obligations by delivering to the
Administrative Agent security agreements, intellectual property security
agreements, pledge agreements, mortgages (or deeds of trust, if applicable) or
other documents, instruments or agreements or such thereof as the Administrative
Agent may require. The Borrower shall pay all recordation, legal and other
expenses in connection therewith.

 

Section 5.25. Restrictive Agreements. Except as set forth in this Agreement, the
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary to (a) make,
directly or indirectly, any Capital Distribution to the Borrower, (b) make,
directly or indirectly, loans or advances or capital contributions to the
Borrower or (c) transfer, directly or indirectly, any of the properties or
assets of such Subsidiary to the Borrower; except for such encumbrances or
restrictions existing under or by reason of (i) applicable law, (ii) customary
non-assignment provisions in leases or other agreements entered in the ordinary
course of business and consistent with past practices, or (iii) customary
restrictions in security agreements or mortgages securing Indebtedness, or
capital leases, of a Company to the extent such restrictions shall only restrict
the transfer of the property subject to such security agreement, mortgage or
lease.

 

Section 5.26. Other Covenants and Provisions. In the event that any Company
shall enter into, or shall have entered into, any Material Indebtedness
Agreement, wherein the covenants, representations and agreements contained
therein shall be more restrictive than the covenants, representations and
agreements set forth herein, then the Companies shall immediately be bound
hereunder (without further action) by such more restrictive covenants,
representations and agreements with the same force and effect as if such
covenants, representations and agreements were written herein. In addition to
the foregoing, the Borrower shall provide prompt written notice to the
Administrative Agent of the creation or existence of any Material Indebtedness
Agreement that has such more restrictive provisions, and shall, within fifteen
(15) days thereafter (if requested by the Administrative Agent), execute and
deliver to the Administrative Agent an amendment to this Agreement that
incorporates such more restrictive provisions, with such amendment to be in form
and substance satisfactory to the Administrative Agent.

 

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Section 5.27 Guaranty Under Material Indebtedness Agreement. No Company shall be
or become a primary obligor or Guarantor of the Indebtedness incurred pursuant
to any Material Indebtedness Agreement unless such Company shall also be a
Guarantor of Payment under this Agreement prior to or concurrently therewith.

 

Section 5.28. Amendment of Organizational Documents. Without the prior written
consent of the Administrative Agent, no Company shall (a) amend its
Organizational Documents in any manner adverse to the Lenders, or (b) amend its
Organizational Documents to change its name or state, province or other
jurisdiction of organization, or its form of organization, except as otherwise
provided in Section 5.19(b) hereof.

 

Section 5.29. Compliance with Laws. Each Company shall (a) comply with all
material federal, state, local, or foreign applicable statutes, rules,
regulations, and orders including, without limitation, those relating to
environmental protection, occupational safety and health, and equal employment
practices; (b) comply with Anti-Corruption Laws, and shall have implemented
policies and procedures designed to ensure compliance therewith; and (c) ensure
that no Company, or to the knowledge of any Company, any director or officer of
a Company, is a Person that is, or is owned or controlled by Persons that are
(i) the subject of any Sanctions, or (ii) located, organized or resident in, or
operating in, a country or territory that is, or whose government is, the
subject of Sanctions.

 

Section 5.30. Fiscal Year of Borrower. The Borrower shall not change the date of
its fiscal year-end without the prior written consent of the Administrative
Agent and the Required Lenders. As of the Closing Date, the fiscal year end of
the Borrower is December 31 of each year.

 

Section 5.31. Banking Relationship. No later than sixty (60) days after the
Closing Date, and until payment in full of the Obligations, the Borrower shall
maintain its primary banking and depository relationship with the Administrative
Agent.

 

Section 5.32. Further Assurances. The Borrower shall, and shall cause each other
Credit Party to, promptly upon request by the Administrative Agent, or the
Required Lenders through the Administrative Agent, (a) correct any material
defect or error that may be discovered in any Loan Document or in the execution,
acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register any and all
such further acts, deeds, certificates, assurances and other instruments related
to any of the collateral securing the Secured Obligations as the Administrative
Agent, or the Required Lenders through the Administrative Agent, may reasonably
require from time to time in order to carry out more effectively the purposes of
the Loan Documents.

 

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ARTICLE VI. REPRESENTATIONS AND WARRANTIES

 

Section 6.1. Corporate Existence; Subsidiaries; Foreign Qualification. Each
Company is duly organized, validly existing, and in good standing (or comparable
concept in the applicable jurisdiction) under the laws of its state or
jurisdiction of incorporation or organization, and is duly qualified and
authorized to do business and is in good standing (or comparable concept in the
applicable jurisdiction) as a foreign entity in the jurisdictions set forth
opposite its name on Schedule 6.1 hereto, which are all of the states or
jurisdictions where the character of its property or its business activities
makes such qualification necessary, except where the failure to so qualify could
not reasonably be expected to cause or result in a Material Adverse Effect. Each
Foreign Subsidiary is validly existing under the laws of its jurisdiction of
organization. Schedule 6.1 hereto sets forth, as of the Closing Date, each
Subsidiary of the Borrower (and whether such Subsidiary is a Dormant
Subsidiary), its state (or jurisdiction) of formation, its relationship to the
Borrower, including the percentage of each class of stock or other equity
interest owned by a Company, each Person that owns the stock or other equity
interest of each Company, its tax identification number, the location of its
chief executive office and its principal place of business. Except as set forth
on Schedule 6.1 hereto, the Borrower, directly or indirectly, owns all of the
equity interests of each of its Subsidiaries.

 

Section 6.2. Corporate Authority. Each Credit Party has the right and power and
is duly authorized and empowered to enter into, execute and deliver the Loan
Documents to which it is a party and to perform and observe the provisions of
the Loan Documents. The Loan Documents to which each Credit Party is a party
have been duly authorized and approved by such Credit Party’s board of directors
or other governing body, as applicable, and are the legal, valid and binding
obligations of such Credit Party, enforceable against such Credit Party in
accordance with their respective terms. The execution, delivery and performance
of the Loan Documents do not conflict with, result in a breach in any of the
provisions of, constitute a default under, or result in the creation of a Lien
(other than Liens permitted under Section 5.9 hereof) upon any assets or
property of any Company under the provisions of, such Company’s Organizational
Documents or any material agreement to which such Company is a party.

 

Section 6.3. Compliance with Laws and Contracts. Each Company:

 

(a) holds all material permits, certificates, licenses, orders, registrations,
franchises, authorizations, and other approvals from any Governmental Authority
necessary for the conduct of its business and is in compliance in all material
respects with all applicable laws relating thereto;

 

(b) is in compliance with all federal, state, local, or foreign applicable
statutes, rules, regulations, and orders including, without limitation, those
relating to environmental protection, occupational safety and health, and equal
employment practices, except where the failure to be in compliance could not
reasonably be expected to have or results in a Material Adverse Effect;

 

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(c) is not in violation of or in default under any agreement to which it is a
party or by which its assets are subject or bound, except with respect to any
violation or default that could not reasonably be expected to have or result in
a Material Adverse Effect;

 

(d) has ensured that no Company, or to the knowledge of any Company, any
director or officer of a Company, is a Person that is, or is owned or controlled
by Persons that are (i) the subject of any Sanctions, or (ii) located, organized
or resident in, or operating in, a country or territory that is, or whose
government is, the subject of Sanctions;

 

(e) is in compliance with all applicable Bank Secrecy Act (“BSA”) and anti-money
laundering laws and regulations;

 

(f) is in compliance with Anti-Corruption Laws, and has implemented policies and
procedures designed to ensure compliance therewith;

 

(g) is in compliance with the Patriot Act; and

 

(h) represents and warrants that it is not an EEA Financial Institution.

 

Section 6.4. Litigation and Administrative Proceedings. Except as disclosed on
Schedule 6.4 hereto, there are (a) no lawsuits, actions, investigations,
examinations or other proceedings pending or, to the knowledge of the Borrower,
threatened against any Company, or in respect of which any Company may have any
liability, in any court or before or by any Governmental Authority, arbitration
board, or other tribunal that could reasonably be expected to have a Material
Adverse Effect, (b) no orders, writs, injunctions, judgments, or decrees of any
court or Governmental Authority to which any Company is a party or by which the
property or assets of any Company are bound that could reasonably be expected to
have a Material Adverse Effect, and (c) no grievances, disputes, or
controversies outstanding with any union or other organization of the employees
of any Company, or threats of work stoppage, strike, or pending demands for
collective bargaining that could reasonably be expected to have a Material
Adverse Effect.

 

Section 6.5. Title to Assets. Each Company has good title to and ownership of
all property it purports to own, which property is free and clear of all Liens,
except those permitted under Section 5.9 hereof. As of the Closing Date, the
Companies own the real estate listed on Schedule 6.5 hereto.

 

Section 6.6. Liens and Security Interests. On and after the Closing Date, except
for Liens permitted pursuant to Section 5.9 hereof, (a) there is and will be no
U.C.C. Financing Statement or similar notice of Lien outstanding covering any
personal property of any Company; (b) there is and will be no mortgage or charge
outstanding covering any real property of any Company; and (c) no real or
personal property of any Company is subject to any Lien of any kind. The
Administrative Agent, for the benefit of the Lenders, upon the filing of the
U.C.C. Financing Statements and taking such other actions necessary to perfect
its Lien against collateral of the corresponding type as authorized hereunder
will have a valid and enforceable first Lien on the collateral securing the
Secured Obligations. No Company has entered into any contract or agreement
(other than a contract or agreement entered into in connection with the purchase
or lease of fixed assets that prohibits Liens on such fixed assets) that exists
on or after the Closing Date that would prohibit the Administrative Agent or the
Lenders from acquiring a Lien on, or a collateral assignment of, any of the
property or assets of any Company.

 

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Section 6.7. Tax Returns. All federal, state, provincial and material local tax
returns and other material reports required by law to be filed in respect of the
income, business, properties and employees of each Company have been filed (or
extended or challenged as permitted by applicable law) and all taxes,
assessments, fees and other governmental charges that are due and payable have
been paid, except as otherwise permitted herein. The provision for taxes on the
books of each Company is adequate, in all material respects, for all years not
closed by applicable statutes and for the current fiscal year.

 

Section 6.8. Environmental Laws. Each Company is in compliance with all
Environmental Laws, including, without limitation, all Environmental Laws in all
jurisdictions in which any Company owns or operates, or has owned or operated, a
facility or site, arranges or has arranged for disposal or treatment of
hazardous substances, solid waste or other wastes, accepts or has accepted for
transport any hazardous substances, solid waste or other wastes or holds or has
held any interest in real property or otherwise, except to the extent that any
such failure to comply could not reasonably be expected to have a Material
Adverse Effect. No litigation or proceeding arising under, relating to or in
connection with any Environmental Law or Environmental Permit is pending or, to
the best knowledge of each Company, threatened, against any Company, any real
property in which any Company holds or has held an interest or any past or
present operation of any Company. No release, threatened release or disposal of
hazardous waste, solid waste or other wastes is occurring, or has occurred
(other than those that are currently being remediated in accordance with
Environmental Laws), on, under or to any real property in which any Company
holds any interest or performs any of its operations, in material violation of
any material Environmental Law. As used in this Section 6.8, “litigation or
proceeding” means any demand, claim, notice, suit, suit in equity, action,
administrative action, investigation or inquiry whether brought by any
Governmental Authority or private Person, or otherwise.

 

Section 6.9. Locations. As of the Closing Date, the Companies have places of
business or maintain their Accounts, Inventory and Equipment at the locations
(including third party locations) set forth on Schedule 6.9 hereto, and each
Company’s chief executive office is set forth on Schedule 6.9 hereto. Schedule
6.9 hereto further specifies whether each location, as of the Closing Date, (a)
is owned by the Companies, or (b) is leased by a Company from a third party,
and, if leased by a Company from a third party, if a Collateral Access Agreement
has been requested. As of the Closing Date, Schedule 6.9 hereto correctly
identifies the name and address of each third party location where assets of the
Companies are located.

 

Section 6.10. Continued Business. There exists no actual, pending, or, to the
Borrower’s knowledge, any threatened termination, cancellation or limitation of,
or any modification or change in the business relationship of any Company and
any customer or supplier, or any group of customers or suppliers, whose
purchases or supplies, individually or in the aggregate, are material to the
business of any Company, and there exists no present condition or state of facts
or circumstances that would have a Material Adverse Effect or prevent a Company
from conducting such business or the transactions contemplated by this Agreement
in substantially the same manner in which it was previously conducted.

 

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Section 6.11. Employee Benefits Plans. Schedule 6.11 hereto identifies each
ERISA Plan as of the Closing Date. No ERISA Event has occurred or is expected to
occur with respect to an ERISA Plan. Full payment has been made of all amounts
that a Controlled Group member is required, under applicable law or under the
governing documents, to have paid as a contribution to or a benefit under each
ERISA Plan. The liability of each Controlled Group member with respect to each
ERISA Plan has been fully funded based upon reasonable and proper actuarial
assumptions, has been fully insured, or has been fully reserved for on its
financial statements. No changes have occurred or are expected to occur that
would cause a material increase in the cost of providing benefits under the
ERISA Plan. With respect to each ERISA Plan that is intended to be qualified
under Code Section 401(a), (a) the ERISA Plan and any associated trust
operationally comply with the applicable requirements of Code Section 401(a) in
all material respects; (b) the ERISA Plan and any associated trust have been
amended to comply with all such requirements as currently in effect, other than
those requirements for which a retroactive amendment can be made within the
“remedial amendment period” available under Code Section 401(b) (as extended
under Treasury Regulations and other Treasury pronouncements upon which
taxpayers may rely); (c) the ERISA Plan and any associated trust have received a
favorable determination letter from the Internal Revenue Service stating that
the ERISA Plan qualifies under Code Section 401(a), that the associated trust
qualifies under Code Section 501(a) and, if applicable, that any cash or
deferred arrangement under the ERISA Plan qualifies under Code Section 401(k),
unless the ERISA Plan was first adopted at a time for which the above-described
“remedial amendment period” has not yet expired; (d) the ERISA Plan currently
satisfies the requirements of Code Section 410(b), without regard to any
retroactive amendment that may be made within the above-described “remedial
amendment period”; and (e) no contribution made to the ERISA Plan is subject to
an excise tax under Code Section 4972. With respect to any Pension Plan, the
“accumulated benefit obligation” of Controlled Group members with respect to the
Pension Plan (as determined in accordance with Statement of Accounting Standards
No. 87, “Employers’ Accounting for Pensions”) does not exceed the fair market
value of Pension Plan assets.

 

Section 6.12. Consents or Approvals. No consent, approval or authorization of,
or filing, registration or qualification with, any Governmental Authority or any
other Person is required to be obtained or completed by any Company in
connection with the execution, delivery or performance of any of the Loan
Documents, that has not already been obtained or completed.

 

Section 6.13. Solvency. The Borrower has received consideration that is the
reasonably equivalent value of the obligations and liabilities that the Borrower
has incurred to the Administrative Agent and the Lenders. The Borrower is not
insolvent as defined in any applicable state, federal or relevant foreign
statute, nor will the Borrower be rendered insolvent by the execution and
delivery of the Loan Documents to the Administrative Agent and the Lenders. The
Borrower is not engaged or about to engage in any business or transaction for
which the assets retained by it are or will be an unreasonably small amount of
capital, taking into consideration the obligations to the Administrative Agent
and the Lenders incurred hereunder. The Borrower does not intend to, nor does it
believe that it will, incur debts beyond its ability to pay such debts as they
mature.

 

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Section 6.14. Financial Statements. The audited Consolidated financial
statements of the Borrower for the fiscal year ended December 31, 2014 and the
unaudited Consolidated financial statements of the Borrower for the fiscal
quarter ended September 30, 2015, furnished to the Administrative Agent and the
Lenders, are true and complete, have been prepared in accordance with GAAP, and
fairly present the financial condition of the Companies as of the dates of such
financial statements and the results of their operations for the periods then
ending. Since the dates of such statements, there has been no material adverse
change in any Company’s financial condition, properties or business or any
change in any Company’s accounting procedures.

 

Section 6.15. Regulations. No Company is engaged principally or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any “margin stock” (within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System of the United States).
Neither the granting of any Loan (or any conversion thereof) or Letter of Credit
nor the use of the proceeds of any Loan or Letter of Credit will violate, or be
inconsistent with, the provisions of Regulation T, U or X or any other
Regulation of such Board of Governors.

 

Section 6.16. Material Agreements. Except as disclosed on Schedule 6.16 hereto,
as of the Closing Date, no Company is a party to any (a) debt instrument
(excluding the Loan Documents); (b) lease (capital, operating or otherwise),
whether as lessee or lessor thereunder; (c) contract, commitment, agreement, or
other arrangement involving the purchase or sale of any inventory by it, or the
license of any right to or by it; (d) contract, commitment, agreement, or other
arrangement with any of its “Affiliates” (as such term is defined in the
Exchange Act) other than a Company; (e) management or employment contract or
contract for personal services with any of its Affiliates that is not otherwise
terminable at will or on less than ninety (90) days’ notice without liability;
(f) collective bargaining agreement; or (g) other contract, agreement,
understanding, or arrangement with a third party; that, as to subparts (a)
through (g) above, if violated, breached, or terminated for any reason, would
have or would be reasonably expected to have a Material Adverse Effect.

 

Section 6.17. Intellectual Property. Each Company owns, or has the right to use,
all of the material patents, patent applications, industrial designs, designs,
trademarks, service marks, copyrights and licenses, and rights with respect to
the foregoing, necessary for the conduct of its business without any known
material conflict with the rights of others. Schedule 6.17 hereto sets forth all
federally registered patents, trademarks, copyrights, service marks and license
agreements owned by each Company.

 

Section 6.18. Insurance. Each Company maintains with financially sound and
reputable insurers insurance with coverage (including, if applicable, insurance
required by the National Flood Insurance Reform Act of 1994) and limits as
required by law and as is customary with Persons engaged in the same businesses
as the Companies. Schedule 6.18 hereto sets forth all insurance carried by the
Companies on the Closing Date, setting forth in detail the amount and type of
such insurance.

 

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Section 6.19. Deposit Accounts and Securities Accounts. Schedule 6.19 hereto
lists all banks, other financial institutions and Securities Intermediaries at
which any Credit Party maintains Deposit Accounts or Securities Accounts as of
the Closing Date, and Schedule 6.19 hereto correctly identifies the name,
address and telephone number of each such financial institution or Securities
Intermediary, the name in which the account is held, a description of the
purpose of the account, and the complete account number therefor.

 

Section 6.20. Accurate and Complete Statements. Neither the Loan Documents nor
any written statement made by any Company in connection with any of the Loan
Documents contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained therein or in the Loan
Documents not misleading. After due inquiry by the Borrower, there is no known
fact that any Company has not disclosed to the Administrative Agent and the
Lenders that has or is likely to have a Material Adverse Effect.

 

Section 6.21. Investment Company; Other Restrictions. No Company is (a) an
“investment company” or a company “controlled” by an “investment company” within
the meaning of the Investment Company Act of 1940, as amended, or (b) subject to
any foreign, federal, state or local statute or regulation limiting its ability
to incur Indebtedness.

 

Section 6.22. Acquisition Agreement Representations. To the extent reasonably
necessary to preserve or protect the rights of the Administrative Agent and the
Lenders in respect of the Collateral, the Borrower covenants and agrees to
enforce and pursue all remedies reasonably available to it in connection with
any breach of a representation and warranty made by Mophie, as seller under the
Mophie Purchase Agreement, and its equity holders.

 

Section 6.23. Defaults. No Default or Event of Default exists, nor will any
begin to exist immediately after the execution and delivery hereof.

 

ARTICLE VII. SECURITY

 

Section 7.1. Security Interest in Collateral. In consideration of and as
security for the full and complete payment of all of the Secured Obligations,
the Borrower hereby grants to the Administrative Agent, for the benefit of the
Lenders (and affiliates thereof that hold Secured Obligations), a security
interest in the Collateral.

 

Section 7.2. Cash Management System. The Borrower shall establish and maintain,
until the payment in full of the Secured Obligations and the termination of the
Commitment, the cash management systems described below:

 

(a) Lockbox. On or before the Closing Date, the Borrower shall (i) establish a
lockbox arrangement with the Administrative Agent, on behalf of the Lenders (the
“Lockbox”), which shall be governed by the Master Agreement, and, within sixty
(60) days after the Closing Date, shall request in writing and otherwise take
such reasonable steps to ensure that each Account Debtor forwards all
Collections from such Account Debtor directly to the Lockbox (if the Borrower
neglects or refuses to notify any Account Debtor to remit all such Collections
to the Lockbox, the Administrative Agent shall be entitled to make such
notification), (ii) hold in trust for the Administrative Agent, as fiduciary for
the Administrative Agent, all checks, cash and other items of payment received
by the Borrower, and (iii) not commingle any such Collections with any other
funds or property of the Borrower, but will hold such funds separate and apart
in trust and as fiduciary for the Administrative Agent until deposit is made
into the Cash Collateral Account.

 

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(b) Cash Collateral Account. On or before the Closing Date, the Borrower shall
have established a Cash Collateral Account with the Administrative Agent, on
behalf of the Lenders. All Collections from Account Debtors sent to the Lockbox
shall be deposited directly on a daily basis, and in any event no later than the
first Business Day after the date of receipt thereof, into the Cash Collateral
Account in the identical form in which such Collections were made (except for
any necessary endorsements) whether by cash or check. All amounts deposited in
the Cash Collateral Account from the Lockbox or any other source shall be under
the sole and exclusive control of the Administrative Agent. The Borrower shall
have no interest in or control over such funds. The Cash Collateral Account
shall not be subject to any deduction, set off, banker’s lien or any other right
in favor of any Person other than the Administrative Agent.

 

(c) Operating Account. The Borrower shall maintain, in its name, an Operating
Account with the Administrative Agent, into which account the Administrative
Agent shall, from time to time, deposit proceeds of the Revolving Loans made to
the Borrower for use by the Companies in accordance with the provisions of
Section 5.18 hereof. Unless otherwise agreed by the Administrative Agent and the
Borrower, any Revolving Loan requested by the Borrower and made under this
Agreement shall be deposited into the Operating Account. The Borrower shall not
accumulate or maintain cash in the Operating Account or payroll or other such
accounts, as of any date of determination, in excess of checks outstanding
against the Controlled Disbursement Account (or Controlled Disbursement
Accounts) and other deposit accounts approved by the Administrative Agent (such
as medical benefit accounts, flexible spending accounts and automated clearing
house accounts) as of that date, and amounts necessary to meet minimum balance
requirements.

 

(d) Controlled Disbursement Account. The Borrower shall maintain, in the name of
the Borrower, a Controlled Disbursement Account with the Administrative Agent,
on behalf of the Lenders. The Borrower may maintain more than one Controlled
Disbursement Account. The Borrower shall base its requests for Revolving Loans
on, among other things, the daily balance of the Controlled Disbursement Account
(or Controlled Disbursement Accounts). The Borrower shall not, and shall not
cause or permit any Company, to maintain cash in any Controlled Disbursement
Account, as of any date of determination, in excess of checks outstanding
against such account as of that date, and amounts necessary to meet minimum
balance requirements.

 

(e) Lockbox and Security Accounts. The Lockbox established pursuant to the
Lockbox agreement and the Cash Collateral Account, the Operating Account and the
Controlled Disbursement Accounts shall be Security Accounts, with all cash,
checks and other similar items of payment in such accounts securing payment of
the Secured Obligations.

 

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(f) Costs of Collection. All reasonable costs of collection of the Accounts of
the Borrower, including out-of-pocket expenses, administrative and
record-keeping costs, reasonable attorneys’ fees, and all service charges and
costs related to the establishment and maintenance of the Security Accounts
shall be the sole responsibility of the Borrower, whether the same are incurred
by the Administrative Agent or the Borrower. The Borrower hereby indemnifies and
holds the Administrative Agent harmless from and against any loss or damage with
respect to any deposits made in the Security Accounts that are dishonored or
returned for any reason. If any deposits are dishonored or returned unpaid for
any reason, the Administrative Agent, in its sole discretion, may charge the
amount thereof against the Cash Collateral Account or any other Security Account
or other Deposit Account of the Borrower. The Administrative Agent shall not be
liable for any loss or damage resulting from any error, omission, failure or
negligence on the part of the Administrative Agent, except losses or damages
resulting from the Administrative Agent’s own gross negligence or willful
misconduct, as determined by a final judgment of a court of competent
jurisdiction.

 

(g) Return of Funds. Upon the payment in full of the Secured Obligations (other
than continuing indemnification obligations) and the termination of the
Commitment hereunder, (i) the Administrative Agent’s security interests and
other rights in funds in the Security Accounts shall terminate, (ii) all rights
to such funds shall revert to the Borrower, and (iii) the Administrative Agent
will, at the Borrower’s expense, take such steps as the Borrower may reasonably
request to evidence the termination of such security interests and to effect the
return to the Borrower of such funds.

 

(h) Attorney-in-Fact to Endorse Documents. The Administrative Agent, or the
Administrative Agent’s designated agent, is hereby constituted and appointed
attorney-in-fact for the Borrower with authority and power to endorse any and
all instruments, documents, and chattel paper upon the failure of the Borrower
to do so. Such authority and power, being coupled with an interest, shall be (i)
irrevocable until all of the Secured Obligations are paid, (ii) exercisable by
the Administrative Agent at any time and without any request upon the Borrower
by the Administrative Agent to so endorse, and (iii) exercisable in the name of
the Administrative Agent or the Borrower. The Borrower hereby waives
presentment, demand, notice of dishonor, protest, notice of protest, and any and
all other similar notices with respect thereto, regardless of the form of any
endorsement thereof. The Administrative Agent shall not be bound or obligated to
take any action to preserve any rights therein against prior parties thereto.

 

Section 7.3. Collections and Receipt of Proceeds by Administrative Agent. The
Borrower hereby constitutes and appoints the Administrative Agent, or the
Administrative Agent’s designated agent, as the Borrower’s attorney-in-fact to
exercise, at any time, all or any of the following powers which, being coupled
with an interest, shall be irrevocable until the complete and full payment of
all of the Secured Obligations:

 

(a) to receive, retain, acquire, take, endorse, assign, deliver, accept, and
deposit, in the name of the Administrative Agent or the Borrower, any and all of
the Borrower’s cash, instruments, chattel paper, documents, Proceeds of
Accounts, Proceeds of Inventory, collection of Accounts, and any other writings
relating to any of the Collateral. The Borrower hereby waives presentment,
demand, notice of dishonor, protest, notice of protest, and any and all other
similar notices with respect thereto, regardless of the form of any endorsement
thereof. The Administrative Agent shall not be bound or obligated to take any
action to preserve any rights therein against prior parties thereto;

 

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(b) to transmit to Account Debtors, on any or all of the Borrower’s Accounts,
after the occurrence of an Event of Default, notice of assignment to the
Administrative Agent, for the benefit of the Lenders, thereof and the security
interest therein, and to request from such Account Debtors at any time, in the
name of the Administrative Agent or the Borrower, information concerning the
Borrower’s Accounts and the amounts owing thereon;

 

(c) after the occurrence of an Event of Default, to transmit to purchasers of
any or all of the Borrower’s Inventory, notice of the Administrative Agent’s
security interest therein, and to request from such purchasers at any time, in
the name of the Administrative Agent or the Borrower, information concerning the
Borrower’s Inventory and the amounts owing thereon by such purchasers;

 

(d) after the occurrence of an Event of Default, to notify and require Account
Debtors on the Borrower’s Accounts and purchasers of the Borrower’s Inventory to
make payment of their indebtedness directly to the Administrative Agent;

 

(e) after the occurrence of an Event of Default, to enter into or assent to such
amendment, compromise, extension, release or other modification of any kind of,
or substitution for, the Accounts, or any thereof, as the Administrative Agent,
in its sole discretion, may deem to be advisable;

 

(f) after the occurrence of an Event of Default, to enforce the Accounts or any
thereof, or any other Collateral, by suit or otherwise, to maintain any such
suit or other proceeding in the name of the Administrative Agent or the
Borrower, and to withdraw any such suit or other proceeding. The Borrower agrees
to lend every assistance requested by the Administrative Agent in respect of the
foregoing, all at no cost or expense to the Administrative Agent and including,
without limitation, the furnishing of such witnesses and of such records and
other writings as the Administrative Agent may require in connection with making
legal proof of any Account. The Borrower agrees to reimburse the Administrative
Agent in full for all court costs and attorneys’ fees and every other cost,
expense or liability, if any, incurred or paid by the Administrative Agent in
connection with the foregoing, which obligation of the Borrower shall constitute
Obligations, shall be secured by the Collateral and shall bear interest, until
paid, at the Default Rate;

 

(g) to take or bring, in the name of the Administrative Agent or the Borrower,
all steps, actions, suits, or proceedings deemed by the Administrative Agent
necessary or desirable to effect the receipt, enforcement, and collection of the
Collateral; and

 

(h) to accept all collections in any form relating to the Collateral, including
remittances that may reflect deductions, and to deposit the same into the Cash
Collateral Account or, at the option of the Administrative Agent, to apply them
as a payment against the Loans or any other Secured Obligations in accordance
with this Agreement.

 

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Section 7.4. Administrative Agent’s Authority Under Pledged Notes. For the
better protection of the Administrative Agent and the Lenders hereunder, the
Borrower has executed (or will execute, with respect to future Pledged Notes) an
appropriate endorsement on (or separate from) each Pledged Note and has
deposited (or will deposit, with respect to future Pledged Notes) such Pledged
Note with the Administrative Agent, for the benefit of the Lenders. The Borrower
irrevocably authorizes and empowers the Administrative Agent, for the benefit of
the Lenders, to (a) ask for, demand, collect and receive all payments of
principal of and interest on the Pledged Notes; (b) compromise and settle any
dispute arising in respect of the foregoing; (c) execute and deliver vouchers,
receipts and acquittances in full discharge of the foregoing; (d) exercise, in
the Administrative Agent’s discretion, any right, power or privilege granted to
the holder of any Pledged Note by the provisions thereof including, without
limitation, the right to demand security or to waive any default thereunder; (e)
endorse the Borrower’s name to each check or other writing received by the
Administrative Agent as a payment or other proceeds of or otherwise in
connection with any Pledged Note; (f) enforce delivery and payment of the
principal and/or interest on the Pledged Notes, in each case by suit or
otherwise as the Administrative Agent may desire; and (g) enforce the security,
if any, for the Pledged Notes by instituting foreclosure proceedings, by
conducting public or other sales or otherwise, and to take all other steps as
the Administrative Agent, in its discretion, may deem advisable in connection
with the forgoing; provided, however, that nothing contained or implied herein
or elsewhere shall obligate the Administrative Agent to institute any action,
suit or proceeding or to make or do any other act or thing contemplated by this
Section 7.4 or prohibit the Administrative Agent from settling, withdrawing or
dismissing any action, suit or proceeding or require the Administrative Agent to
preserve any other right of any kind in respect of the Pledged Notes and the
security, if any, therefor.

 

Section 7.5. Commercial Tort Claims. If any Credit Party shall at any time hold
or acquire a Commercial Tort Claim, such Credit Party shall promptly notify the
Administrative Agent thereof in a writing signed by such Credit Party, that sets
forth the details thereof and grants to the Administrative Agent (for the
benefit of the Lenders) a Lien thereon and on the Proceeds thereof, all upon the
terms of this Agreement, with such writing to be prepared by and in form and
substance reasonably satisfactory to the Administrative Agent.

 

Section 7.6. Use of Inventory and Equipment. Until the exercise by the
Administrative Agent and the Required Lenders of their rights under Article IX
hereof, the Borrower may (a) retain possession of and use its Inventory and
Equipment in any lawful manner not inconsistent with this Agreement or with the
terms, conditions, or provisions of any policy of insurance thereon; (b) sell or
lease its Inventory in the ordinary course of business or as otherwise expressly
permitted by this Agreement; and (c) use and consume any raw materials or
supplies, the use and consumption of which are necessary in order to carry on
the Borrower’s business.

 

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ARTICLE VIII. EVENTS OF DEFAULT

 

Any of the following specified events shall constitute an Event of Default (each
an “Event of Default”):

 

Section 8.1. Payments. If the principal of or interest on any Loan, any amount
owing in respect of any Letters of Credit, any amount owing pursuant to Section
2.11 hereof, or any commitment or other fee, or any other Obligations owing
hereunder, shall not be paid in full when due and payable.

 

Section 8.2. Special Covenants. If any Company shall fail or omit to perform and
observe Section 5.7, 5.8, 5.9, 5.11, 5.12, 5.13, 5.15, 5.18, 5.26, 5.27 or 5.28
hereof.

 

Section 8.3. Other Covenants.

 

(a) If any Company shall fail or omit to perform and observe Section 5.3 or 5.4,
and that Default shall not have been fully corrected within five days after the
earlier of (i) any Financial Officer of such Company becomes aware of the
occurrence thereof, or (ii) the giving of written notice thereof to the Borrower
by the Administrative Agent that the specified Default is to be remedied.

 

(b) If any Company shall fail or omit to perform or observe any agreement or
other provision (other than those referred to in Section 8.1, 8.2 or 8.3(a)
hereof) contained or referred to in this Agreement or any Related Writing that
is on such Company’s part to be complied with, and that Default shall not have
been fully corrected within fifteen (15) days after the earlier of (i) any
Financial Officer of such Company becomes aware of the occurrence thereof, or
(ii) the giving of written notice thereof to the Borrower by the Administrative
Agent or the Required Lenders that the specified Default is to be remedied.

 

Section 8.4. Representations and Warranties. If any representation, warranty or
statement made in or pursuant to this Agreement or any other Related Writing or
any other material information furnished by any Company to the Administrative
Agent or the Lenders, or any thereof, shall be false or erroneous in any
material respect.

 

Section 8.5. Cross Default. If any Company shall default in the payment of
principal or interest due and owing under any Material Indebtedness Agreement,
beyond any period of grace provided with respect thereto or in the performance
or observance of any other agreement, term or condition contained in any
agreement under which such obligation is created, if the effect of such default
is to allow the acceleration of the maturity of such Indebtedness or to permit
the holder thereof to cause such Indebtedness to become due prior to its stated
maturity.

 

Section 8.6. ERISA Default. The occurrence of one or more ERISA Events that (a)
the Required Lenders determine could have a Material Adverse Effect, or (b)
results in a Lien on any of the assets of any Company.

 

Section 8.7. Change in Control. If any Change in Control shall occur.

 

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Section 8.8. Judgments. There is entered against any Company:

 

(a) a final judgment or order for the payment of money by a court of competent
jurisdiction, that remains unpaid or unstayed and undischarged for a period
(during which execution shall not be effectively stayed) of thirty (30) days
after the date on which the right to appeal has expired, provided that such
occurrence shall constitute an Event of Default only if the aggregate of all
such judgments for all such Companies, shall exceed the lesser of (i) the
Revolving Credit Availability or (ii) Five Hundred Thousand Dollars ($500,000)
(less any amount that will be covered by the proceeds of insurance and is not
subject to dispute by the insurance provider); or

 

(b) any one or more non-monetary final judgments that are not covered by
insurance, or, if covered by insurance, for which the insurance company has not
agreed to or acknowledged coverage, and that, in either case, the Required
Lenders reasonably determine have, or could be expected to have, individually or
in the aggregate, a Material Adverse Effect and, in either case, (i) enforcement
proceedings are commenced by the prevailing party or any creditor upon such
judgment or order, or (ii) there is a period of three consecutive Business Days
during which a stay of enforcement of such judgment, by reason of a pending
appeal or otherwise, is not in effect.

 

Section 8.9. Material Adverse Change. There shall have occurred any condition or
event that the Administrative Agent or the Required Lenders determine has or is
reasonably likely to have a Material Adverse Effect.

 

Section 8.10. Security. If any Lien granted in this Agreement or any other Loan
Document in favor of the Administrative Agent, for the benefit of the Lenders,
shall be determined to be (a) void, voidable or invalid, or is subordinated or
not otherwise given the priority contemplated by this Agreement and the Borrower
(or the appropriate Credit Party) has failed to promptly execute appropriate
documents to correct such matters, or (b) unperfected as to any material amount
of Collateral (as determined by the Administrative Agent, in its reasonable
discretion) and the Borrower (or the appropriate Credit Party) has failed to
promptly execute appropriate documents to correct such matters.

 

Section 8.11. Validity of Loan Documents. If (a) any material provision, in the
sole opinion of the Administrative Agent, of any Loan Document shall at any time
cease to be valid, binding and enforceable against any Credit Party; (b) the
validity, binding effect or enforceability of any Loan Document against any
Credit Party shall be contested by any Credit Party; (c) any Credit Party shall
deny that it has any or further liability or obligation under any Loan Document;
or (d) any Loan Document shall be terminated, invalidated or set aside, or be
declared ineffective or inoperative or in any way cease to give or provide to
the Administrative Agent and the Lenders the benefits purported to be created
thereby.

 

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Section 8.12. Solvency. If any Company (other than a Dormant Subsidiary) shall
(a) except as permitted pursuant to Section 5.12 hereof, discontinue business;
(b) generally not pay its debts as such debts become due; (c) make a general
assignment for the benefit of creditors; (d) apply for or consent to the
appointment of an interim receiver, a receiver, a receiver and manager, an
administrator, a sequestrator, a monitor, a custodian, a trustee, an interim
trustee, a liquidator, an agent or any other similar official of all or a
substantial part of its assets or of such Company; (e) be adjudicated a debtor
or insolvent or have entered against it an order for relief under the Bankruptcy
Code, or under any other bankruptcy insolvency, liquidation, winding-up,
corporate or similar statute or law, foreign, federal, state or provincial, in
any applicable jurisdiction, now or hereafter existing, as any of the foregoing
may be amended from time to time, or other applicable statute for jurisdictions
outside of the United States, as the case may be; (f) file a voluntary petition
under the Bankruptcy Code or seek relief under any bankruptcy or insolvency or
analogous law in any jurisdiction outside of the United States, or file a
proposal or notice of intention to file such petition; (g) have an involuntary
proceeding under the Bankruptcy Code filed against it and the same shall not be
controverted within ten (10) days, or shall continue undismissed for a period of
thirty (30) days from commencement of such proceeding or case; (h) file a
petition, an answer, an application or a proposal seeking reorganization or an
arrangement with creditors or seeking to take advantage of any other law
(whether federal, provincial or state, or, if applicable, other jurisdiction)
relating to relief of debtors, or admit (by answer, by default or otherwise) the
material allegations of a petition filed against it in any bankruptcy,
reorganization, insolvency or other proceeding (whether federal, provincial or
state, or, if applicable, other jurisdiction) relating to relief of debtors; (i)
suffer or permit to continue unstayed and in effect for thirty (30) consecutive
days any judgment, decree or order entered by a court of competent jurisdiction,
that approves a petition or an application or a proposal seeking its
reorganization or appoints an interim receiver, a receiver and manager, an
administrator, custodian, trustee, interim trustee or liquidator of all or a
substantial part of its assets, or of such Company; (j) have an administrative
receiver appointed over the whole or substantially the whole of its assets, or
of such Company; (k) have assets, the value of which is less than its
liabilities; or (l) have a moratorium declared in respect of any of its
Indebtedness, or any analogous procedure or step is taken in any jurisdiction.

 

ARTICLE IX. REMEDIES UPON DEFAULT

 

Notwithstanding any contrary provision or inference herein or elsewhere:

 

Section 9.1. Optional Defaults. If any Event of Default referred to in Section
8.1, 8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9, 8.10 or 8.11 hereof shall occur,
the Administrative Agent may, with the consent of the Required Lenders, and
shall, at the written request of the Required Lenders, give written notice to
the Borrower to:

 

(a) terminate the Commitment, if not previously terminated, and, immediately
upon such election, the obligations of the Lenders, and each thereof, to make
any further Loan, and the obligation of the Issuing Lender to issue any Letter
of Credit, immediately shall be terminated; and/or

 

(b) accelerate the maturity of all of the Obligations (if the Obligations are
not already due and payable), whereupon all of the Obligations shall become and
thereafter be immediately due and payable in full without any presentment or
demand and without any further or other notice of any kind, all of which are
hereby waived by the Borrower.

 

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Section 9.2. Automatic Defaults. If any Event of Default referred to in Section
8.12 hereof shall occur:

 

(a) all of the Commitment shall automatically and immediately terminate, if not
previously terminated, and no Lender thereafter shall be under any obligation to
grant any further Loan, nor shall the Issuing Lender be obligated to issue any
Letter of Credit; and

 

(b) the principal of and interest then outstanding on all of the Loans, and all
of the other Obligations, shall thereupon become and thereafter be immediately
due and payable in full (if the Obligations are not already due and payable),
all without any presentment, demand or notice of any kind, which are hereby
waived by the Borrower.

 

Section 9.3. Letters of Credit. If the maturity of the Obligations shall be
accelerated pursuant to Section 9.1 or 9.2 hereof, the Borrower shall
immediately deposit with the Administrative Agent, as security for the
obligations of the Borrower and any Guarantor of Payment to reimburse the
Administrative Agent and the Revolving Lenders for any then outstanding Letters
of Credit, cash equal to one hundred five percent (105%) of the sum of the
aggregate undrawn balance of any then outstanding Letters of Credit. The
Administrative Agent and the Lenders are hereby authorized, at their option, to
deduct any and all such amounts from any deposit balances then owing by any
Lender (or any affiliate of such Lender, wherever located) to or for the credit
or account of any Company, as security for the obligations of the Borrower and
any Guarantor of Payment to reimburse the Administrative Agent and the Revolving
Lenders for any then outstanding Letters of Credit.

 

Section 9.4. Offsets. If there shall occur or exist any Event of Default
referred to in Section 8.12 hereof or if the maturity of the Obligations is
accelerated pursuant to Section 9.1 or 9.2 hereof, each Lender shall have the
right at any time to set off against, and to appropriate and apply toward the
payment of, any and all of the Obligations then owing by the Borrower or a
Guarantor of Payment to such Lender (including, without limitation, any
participation purchased or to be purchased pursuant to Section 2.2(b), 2.2(c) or
9.5 hereof), whether or not the same shall then have matured, any and all
deposit (general or special) balances and all other indebtedness then held or
owing by such Lender (including, without limitation, by branches and agencies or
any affiliate of such Lender, wherever located) to or for the credit or account
of the Borrower or any Guarantor of Payment, all without notice to or demand
upon the Borrower or any other Person, all such notices and demands being hereby
expressly waived by the Borrower.

 

Section 9.5. Equalization Provisions.

 

(a) Equalization Within Commitments Prior to an Equalization Event. Each
Revolving Lender agrees with the other Revolving Lenders that, if it at any time
shall obtain any Advantage over the other Revolving Lenders, or any thereof, in
respect of the Applicable Debt (except as to Swing Loans and Letters of Credit
prior to the Administrative Agent’s giving of notice to participate and amounts
under Article III hereof), such Revolving Lender, upon written request of the
Administrative Agent, shall purchase from the other Revolving Lenders, for cash
and at par, such additional participation in the Applicable Debt as shall be
necessary to nullify the Advantage. Each Term Lender agrees with the other Term
Lenders that, if it at any time shall obtain any Advantage over the other Term
Lenders, or any thereof, in respect of the Applicable Debt (except as to amounts
under Article III hereof), such Term Lender shall purchase from the other Term
Lenders, for cash and at par, such additional participation in the Applicable
Debt as shall be necessary to nullify the Advantage.

 

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(b) Equalization Between Commitments After an Equalization Event. After the
occurrence of an Equalization Event, each Lender agrees with the other Lenders
that, if such Lender at any time shall obtain any Advantage over the other
Lenders or any thereof determined in respect of the Obligations (including Swing
Loans and Letters of Credit but excluding amounts under Article III hereof) then
outstanding, such Lender shall purchase from the other Lenders, for cash and at
par, such additional participation in the Obligations as shall be necessary to
nullify the Advantage in respect of the Obligations. For purposes of determining
whether or not, after the occurrence of an Equalization Event, an Advantage in
respect of the Obligations shall exist, the Administrative Agent shall, as of
the date that the Equalization Event occurs:

 

(i) add the Revolving Credit Exposure and the Term Loan Exposure to determine
the equalization maximum amount (the “Equalization Maximum Amount”); and

 

(ii) determine an equalization percentage (the “Equalization Percentage”) for
each Lender by dividing the aggregate amount of its Lender Credit Exposure by
the Equalization Maximum Amount.

 

After the date of an Equalization Event, the Administrative Agent shall
determine whether an Advantage exists among the Lenders by using the
Equalization Percentage. Such determination shall be conclusive absent manifest
error.

 

(c) Recovery of Amount. If any such Advantage resulting in the purchase of an
additional participation as set forth in subsection (a) or (b) hereof shall be
recovered in whole or in part from the Lender receiving the Advantage, each such
purchase shall be rescinded, and the purchase price restored (but without
interest unless the Lender receiving the Advantage is required to pay interest
on the Advantage to the Person recovering the Advantage from such Lender)
ratably to the extent of the recovery.

 

(d) Application and Sharing of Set-Off Amounts. Each Lender further agrees with
the other Lenders that, if it at any time shall receive any payment for or on
behalf of the Borrower on any Indebtedness owing by the Borrower to that Lender
(whether by voluntary payment, by realization upon security, by reason of offset
of any deposit or other Indebtedness, by counterclaim or cross action, by
enforcement of any right under any Loan Document, or otherwise), it shall apply
such payment first to any and all Indebtedness owing by the Borrower to that
Lender pursuant to this Agreement (including, without limitation, any
participation purchased or to be purchased pursuant to this Section 9.5 or any
other section of this Agreement). Each Credit Party agrees that any Lender so
purchasing a participation from the other Lenders, or any thereof, pursuant to
this Section 9.5 may exercise all of its rights of payment (including the right
of set-off) with respect to such participation as fully as if such Lender were a
direct creditor of such Credit Party in the amount of such participation.

 

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Section 9.6. Administrative Agent’s Rights to Occupy and Use the Collateral. The
Administrative Agent and the Lenders shall at all times have the rights and
remedies of a secured party under the U.C.C., in addition to the rights and
remedies of a secured party provided elsewhere within this Agreement, in any
other Related Writing executed by the Borrower or otherwise provided in law or
equity. Upon the occurrence of an Event of Default and at all times thereafter,
the Administrative Agent may require the Borrower to assemble the collateral
securing the Secured Obligations, which the Borrower agrees to do, and make it
available to the Administrative Agent and the Lenders at a reasonably convenient
place to be designated by the Administrative Agent. The Administrative Agent
may, with or without notice to or demand upon the Borrower and with or without
the aid of legal process, make use of such force as may be necessary to enter
any premises where such collateral, or any thereof, may be found and to take
possession thereof (including anything found in or on such collateral that is
not specifically described in this Agreement, each of which findings shall be
considered to be an accession to and a part of such collateral) and for that
purpose may pursue such collateral wherever the same may be found, without
liability for trespass or damage caused thereby to the Borrower. After any
delivery or taking of possession of the collateral securing the Secured
Obligations, or any thereof, pursuant to this Agreement, then, with or without
resort to the Borrower personally or any other Person or property, all of which
the Borrower hereby waives, and upon such terms and in such manner as the
Administrative Agent may deem advisable, the Administrative Agent, in its
discretion, may sell, assign, transfer and deliver any of such collateral at any
time, or from time to time. No prior notice need be given to the Borrower or to
any other Person in the case of any sale of such collateral that the
Administrative Agent determines to be perishable or to be declining speedily in
value or that is customarily sold in any recognized market, but in any other
case the Administrative Agent shall give the Borrower not fewer than ten days
prior notice of either the time and place of any public sale of such collateral
or of the time after which any private sale or other intended disposition
thereof is to be made. The Borrower waives advertisement of any such sale and
(except to the extent specifically required by the preceding sentence) waives
notice of any kind in respect of any such sale. At any such public sale, the
Administrative Agent or the Lenders may purchase such collateral, or any part
thereof, free from any right of redemption, all of which rights the Borrower
hereby waives and releases. After deducting all Related Expenses, and after
paying all claims, if any, secured by Liens having precedence over this
Agreement, the Administrative Agent may apply the net proceeds of each such sale
to or toward the payment of the Secured Obligations, whether or not then due, in
such order and by such division as the Administrative Agent, in its sole
discretion, may deem advisable. Any excess, to the extent permitted by law,
shall be paid to the Borrower, and the Borrower shall remain liable for any
deficiency. In addition, the Administrative Agent shall at all times have the
right to obtain new appraisals of the Borrower or any collateral securing the
Secured Obligations, the cost of which shall be paid by the Borrower.

 

Section 9.7. Other Remedies. The remedies in this Article IX are in addition to,
and not in limitation of, any other right, power, privilege, or remedy, either
in law, in equity, or otherwise, to which the Lenders may be entitled. The
Administrative Agent shall exercise the rights under this Article IX and all
other collection efforts on behalf of the Lenders and no Lender shall act
independently with respect thereto, except as otherwise specifically set forth
in this Agreement. In addition, the Administrative Agent shall exercise
remedies, pursuant to the Loan Documents, against collateral securing the
Secured Obligations, and no affiliate of a Lender shall act independently with
respect thereto, except as otherwise specifically set forth in this Agreement.

 

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Section 9.8. Application of Proceeds.

 

(a) Payments Prior to Exercise of Remedies. Prior to the exercise by the
Administrative Agent, on behalf of the Lenders, of remedies under this Agreement
or the other Loan Documents, all monies received by the Administrative Agent
shall be applied, unless otherwise required by the terms of the other Loan
Documents or by applicable law, as follows (provided that the Administrative
Agent shall have the right at all times to apply any payment received from the
Borrower first to the payment of all obligations (to the extent not paid by the
Borrower) incurred by the Administrative Agent pursuant to Sections 11.6 and
11.7 hereof and to the payment of Related Expenses to the Administrative Agent):

 

(i) with respect to payments received in connection with the Revolving Credit
Commitment, to the Revolving Lenders; and

 

(ii) with respect to payments received in connection with the Term Loan
Commitment, to the Term Loan Lenders.

 

(b) Payments Subsequent to Exercise of Remedies. After the exercise by the
Administrative Agent or the Required Lenders of remedies under this Agreement or
the other Loan Documents, all monies received by the Administrative Agent shall
be applied, unless otherwise required by the terms of the other Loan Documents
or by applicable law, as follows:

 

(i) first, to the payment of all obligations (to the extent not paid by the
Borrower) incurred by the Administrative Agent pursuant to Sections 11.6 and
11.7 hereof and to the payment of Related Expenses to the Administrative Agent;

 

(ii) second, to the payment pro rata of (A) interest then accrued and payable on
the outstanding Loans, (B) any fees then accrued and payable to the
Administrative Agent, (C) any fees then accrued and payable to the Issuing
Lender or the holders of the Letter of Credit Commitment in respect of the
Letter of Credit Exposure, (D) any commitment fees, amendment fees and similar
fees shared pro rata among the Lenders under this Agreement that are then
accrued and payable, and (E) to the extent not paid by the Borrower, to the
obligations owing to the Lenders (other than the Administrative Agent) pursuant
to Sections 11.6 and 11.7 hereof;

 

(iii) third, for payment of (A) principal outstanding on the Loans and the
Letter of Credit Exposure, on a pro rata basis to the Lenders, based upon each
such Lender’s Overall Commitment Percentage, provided that the amounts payable
in respect of the Letter of Credit Exposure shall be held and applied by the
Administrative Agent as security for the reimbursement obligations in respect
thereof, and, if any Letter of Credit shall expire without being drawn, then the
amount with respect to such Letter of Credit shall be distributed to the
Lenders, on a pro rata basis in accordance with this subpart (iii), (B) the
Indebtedness under any Hedge Agreement with a Lender (or an entity that is an
affiliate of a then existing Lender), such amount to be based upon the net
termination obligation of the applicable Company under such Hedge Agreement, and
(C) the Bank Product Obligations owing to a Lender (or an entity that is an
affiliate of a then existing Lender) under Bank Product Agreements; with such
payment to be pro rata among (A), (B) and (C) of this subpart (iii);

 

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(iv) fourth, to any remaining Secured Obligations; and

 

(v) finally, any remaining surplus after all of the Secured Obligations have
been paid in full, to the Borrower or to whomsoever shall be lawfully entitled
thereto.

 

Each Lender hereby agrees to promptly provide all information reasonably
requested by the Administrative Agent regarding any Bank Product Obligations
owing to such Lender (or affiliate of such Lender) or any Hedge Agreement
entered into by a Company with such Lender (or affiliate of such Lender), and
each such Lender, on behalf of itself and any of its affiliates, hereby agrees
to promptly provide notice to the Administrative Agent upon such Lender (or any
of its affiliates) entering into any such Hedge Agreement or Bank Product
Agreement. 

 

ARTICLE X. THE ADMINISTRATIVE AGENT

 

The Lenders authorize KeyBank and KeyBank hereby agrees to act as agent for the
Lenders in respect of this Agreement upon the terms and conditions set forth
elsewhere in this Agreement, and upon the following terms and conditions:

 

Section 10.1. Appointment and Authorization.

 

(a) General. Each Lender hereby irrevocably appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers hereunder as are delegated to the Administrative Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. Neither
the Administrative Agent nor any of its affiliates, directors, officers,
attorneys or employees shall (i) be liable for any action taken or omitted to be
taken by it or them hereunder or in connection herewith, except for its or their
own gross negligence or willful misconduct (as determined by a final
non-appealable judgment of a court of competent jurisdiction), or be responsible
in any manner to any of the Lenders for the effectiveness, enforceability,
genuineness, validity or due execution of this Agreement or any other Loan
Documents, (ii) be under any obligation to any Lender to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or conditions
hereof or thereof on the part of the Borrower or any other Company, or the
financial condition of the Borrower or any other Company, or (iii) be liable to
any of the Companies for consequential damages resulting from any breach of
contract, tort or other wrong in connection with the negotiation, documentation,
administration or collection of the Loans or Letters of Credit or any of the
Loan Documents. Notwithstanding any provision to the contrary contained in this
Agreement or in any other Loan Document, the Administrative Agent shall not have
any duty or responsibility except those expressly set forth herein, nor shall
the Administrative Agent have or be deemed to have any fiduciary relationship
with any Lender or participant, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term “agent” herein and in other Loan Documents with reference to
the Administrative Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any applicable
law. Instead, such term is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
independent contracting parties.

 

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(b) Bank Products and Hedging Products. Each Lender that is providing Bank
Products or products in connection with a Hedge Agreement (or whose affiliate is
providing such products) hereby irrevocably authorizes the Administrative Agent
to take such action as agent on its behalf (and its affiliate’s behalf) with
respect to the collateral securing the Secured Obligations and the realization
of payments with respect thereto pursuant to Section 9.8(b)(iii) hereof. The
Borrower and each Lender agree that the indemnification and reimbursement
provisions of this Agreement shall be equally applicable to the actions of the
Administrative Agent pursuant to this subsection. Each Lender hereby represents
and warrants to the Administrative Agent that it has the authority to authorize
the Administrative Agent as set forth above.

 

Section 10.2. Note Holders. The Administrative Agent may treat the payee of any
Note as the holder thereof (or, if there is no Note, the holder of the interest
as reflected on the books and records of the Administrative Agent) until written
notice of transfer shall have been filed with the Administrative Agent, signed
by such payee and in form satisfactory to the Administrative Agent.

 

Section 10.3. Consultation With Counsel. The Administrative Agent may consult
with legal counsel selected by the Administrative Agent and shall not be liable
for any action taken or suffered in good faith by the Administrative Agent in
accordance with the opinion of such counsel.

 

Section 10.4. Documents. The Administrative Agent shall not be under any duty to
examine into or pass upon the validity, effectiveness, genuineness or value of
any Loan Document or any other Related Writing furnished pursuant hereto or in
connection herewith or the value of any collateral obtained hereunder, and the
Administrative Agent shall be entitled to assume that the same are valid,
effective and genuine and what they purport to be.

 

Section 10.5. Administrative Agent and Affiliates. KeyBank and its affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the Companies and
Affiliates as though KeyBank were not the Administrative Agent hereunder and
without notice to or consent of any Lender. Each Lender acknowledges that,
pursuant to such activities, KeyBank or its affiliates may receive information
regarding any Company or any Affiliate (including information that may be
subject to confidentiality obligations in favor of such Company or such
Affiliate) and acknowledge that the Administrative Agent shall be under no
obligation to provide such information to other Lenders. With respect to Loans
and Letters of Credit (if any), KeyBank and its affiliates shall have the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though KeyBank were not the Administrative Agent, and the terms “Lender”
and “Lenders” include KeyBank and its affiliates, to the extent applicable, in
their individual capacities.

 

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Section 10.6. Knowledge or Notice of Default. The Administrative Agent shall not
be deemed to have knowledge or notice of the occurrence of any Default or Event
of Default unless the Administrative Agent has received written notice from a
Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a “notice of default”. In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders); provided that, unless and until the Administrative
Agent shall have received such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable, in
its discretion, for the protection of the interests of the Lenders.

 

Section 10.7. Action by Administrative Agent. Subject to the other terms and
conditions hereof, so long as the Administrative Agent shall be entitled,
pursuant to Section 10.6 hereof, to assume that no Default or Event of Default
shall have occurred and be continuing, the Administrative Agent shall be
entitled to use its discretion with respect to exercising or refraining from
exercising any rights that may be vested in it by, or with respect to taking or
refraining from taking any action or actions that it may be able to take under
or in respect of, this Agreement. The Administrative Agent shall incur no
liability under or in respect of this Agreement by acting upon any notice,
certificate, warranty or other paper or instrument believed by it to be genuine
or authentic or to be signed by the proper party or parties, or with respect to
anything that it may do or refrain from doing in the reasonable exercise of its
judgment, or that may seem to it to be necessary or desirable in the premises.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against the Administrative Agent as a result of the Administrative
Agent’s acting or refraining from acting hereunder in accordance with the
instructions of the Required Lenders.

 

Section 10.8. Release of Collateral or Guarantor of Payment. In the event of a
merger, transfer of assets or other transaction permitted pursuant to Section
5.12 hereof (or otherwise permitted pursuant to this Agreement) where the
proceeds of such merger, transfer or other transaction are applied in accordance
with the terms of this Agreement to the extent required to be so applied, or in
the event of a merger, consolidation, dissolution or similar event, permitted
pursuant to this Agreement, the Administrative Agent, at the request and expense
of the Borrower, is hereby authorized by the Lenders to (a) release the relevant
Collateral from this Agreement or any other Loan Document, (b) release a
Guarantor of Payment in connection with such permitted transfer or event, and
(c) duly assign, transfer and deliver to the affected Person (without recourse
and without any representation or warranty) such Collateral as is then (or has
been) so transferred or released and as may be in the possession of the
Administrative Agent and has not theretofore been released pursuant to this
Agreement.

 

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Section 10.9. Delegation of Duties. The Administrative Agent may execute any of
its duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel and
other consultants or experts concerning all matters pertaining to such duties.
The Administrative Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects in the absence of
gross negligence or willful misconduct, as determined by a final and
non-appealable judgment of a court of competent jurisdiction.

 

Section 10.10. Indemnification of Administrative Agent. The Lenders agree to
indemnify the Administrative Agent (to the extent not reimbursed by the
Borrower) ratably, according to their respective Overall Commitment Percentages,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including attorneys’ fees
and expenses) or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by or asserted against the Administrative Agent in its
capacity as agent in any way relating to or arising out of this Agreement or any
other Loan Document, or any action taken or omitted by the Administrative Agent
with respect to this Agreement or any other Loan Document, provided that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including
attorneys’ fees and expenses) or disbursements resulting from the Administrative
Agent’s gross negligence or willful misconduct, as determined by a final and
non-appealable judgment of a court of competent jurisdiction, or from any action
taken or omitted by the Administrative Agent in any capacity other than as agent
under this Agreement or any other Loan Document. No action taken in accordance
with the directions of the Required Lenders shall be deemed to constitute gross
negligence or willful misconduct for purposes of this Section 10.10. The
undertaking in this Section 10.10 shall survive repayment of the Loans,
cancellation of the Notes, if any, expiration or termination of the Letters of
Credit, termination of the Commitment, any foreclosure under, or modification,
release or discharge of, any or all of the Loan Documents, termination of this
Agreement and the resignation or replacement of the agent.

 

Section 10.11. Successor Administrative Agent. The Administrative Agent may
resign as agent hereunder by giving not fewer than thirty (30) days prior
written notice to the Borrower and the Lenders. If the Administrative Agent
shall resign under this Agreement, then either (a) the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders (with the
consent of the Borrower so long as an Event of Default does not exist and which
consent shall not be unreasonably withheld), or (b) if a successor agent shall
not be so appointed and approved within the thirty (30) day period following the
Administrative Agent’s notice to the Lenders of its resignation, then the
Administrative Agent shall appoint a successor agent that shall serve as agent
until such time as the Required Lenders appoint a successor agent. If no
successor agent has accepted appointment as the Administrative Agent by the date
that is thirty (30) days following a retiring Administrative Agent’s notice of
resignation, the retiring Administrative Agent’s resignation shall nevertheless
thereupon become effective, and the Lenders shall assume and perform all of the
duties of the Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above. Upon its
appointment, such successor agent shall succeed to the rights, powers and duties
as agent, and the term “Administrative Agent” means such successor effective
upon its appointment, and the former agent’s rights, powers and duties as agent
shall be terminated without any other or further act or deed on the part of such
former agent or any of the parties to this Agreement. After any retiring
Administrative Agent’s resignation as the Administrative Agent, the provisions
of this Article X shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was the Administrative Agent under this Agreement and
the other Loan Documents.

 

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Section 10.12. Issuing Lender. The Issuing Lender shall act on behalf of the
Revolving Lenders with respect to any Letters of Credit issued by the Issuing
Lender and the documents associated therewith. The Issuing Lender shall have all
of the benefits and immunities (a) provided to the Administrative Agent in this
Article X with respect to any acts taken or omissions suffered by the Issuing
Lender in connection with the Letters of Credit and the applications and
agreements for letters of credit pertaining to such Letters of Credit as fully
as if the term “Administrative Agent”, as used in this Article X, included the
Issuing Lender with respect to such acts or omissions, and (b) as additionally
provided in this Agreement with respect to the Issuing Lender.

 

Section 10.13. Swing Line Lender. The Swing Line Lender shall act on behalf of
the Revolving Lenders with respect to any Swing Loans. The Swing Line Lender
shall have all of the benefits and immunities (a) provided to the Administrative
Agent in this Article X with respect to any acts taken or omissions suffered by
the Swing Line Lender in connection with the Swing Loans as fully as if the term
“Administrative Agent”, as used in this Article X, included the Swing Line
Lender with respect to such acts or omissions, and (b) as additionally provided
in this Agreement with respect to the Swing Line Lender.

 

Section 10.14. Administrative Agent May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Credit Party, (a) the Administrative Agent
(irrespective of whether the principal of any Loan shall then be due and payable
as herein expressed or by declaration or otherwise and irrespective of whether
the Administrative Agent shall have made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise, to (i)
file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans, and all other Obligations that are owing and
unpaid and to file such other documents as may be necessary or advisable in
order to have the claims of the Lenders and the Administrative Agent (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Lenders and the Administrative Agent and their respective agents and
counsel and all other amounts due the Lenders and the Administrative Agent)
allowed in such judicial proceedings, and (ii) collect and receive any monies or
other property payable or deliverable on any such claims and to distribute the
same; and (b) any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding is hereby
authorized by each Lender to make such payments to the Administrative Agent and,
in the event that the Administrative Agent shall consent to the making of such
payments directly to the Lenders, to pay to the Administrative Agent any amount
due for the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent. Nothing contained herein shall be deemed to authorize the
Administrative Agent to authorize or consent to or accept or adopt on behalf of
any Lender any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.

 

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Section 10.15. No Reliance on Administrative Agent’s Customer Identification
Program. Each Lender acknowledges and agrees that neither such Lender, nor any
of its affiliates, participants or assignees, may rely on the Administrative
Agent to carry out such Lender’s or its affiliate’s, participant’s or assignee’s
customer identification program, or other obligations required or imposed under
or pursuant to the Patriot Act or the regulations thereunder, including the
regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the
“CIP Regulations”), or any other anti-terrorism law, including any programs
involving any of the following items relating to or in connection with the
Borrower, its Affiliates or agents, the Loan Documents or the transactions
hereunder: (a) any identity verification procedures, (b) any record keeping, (c)
any comparisons with government lists, (d) any customer notices or (e) any other
procedures required under the CIP Regulations or such other laws.

 

Section 10.16. Other Agents. The Administrative Agent shall have the continuing
right from time to time to designate one or more Lenders (or its or their
affiliates) as “syndication agent”, “co-syndication agent”, “documentation
agent”, “co-documentation agent”, “book runner”, “lead arranger”, “joint lead
arranger”, “arrangers” or other designations for purposes hereof. Any such
designation referenced in the previous sentence or listed on the cover of this
Agreement shall have no substantive effect, and any such Lender and its
affiliates so referenced or listed shall have no additional powers, duties,
responsibilities or liabilities as a result thereof, except in its capacity, as
applicable, as the Administrative Agent, a Lender, the Swing Line Lender or the
Issuing Lender hereunder. 

 

ARTICLE XI. MISCELLANEOUS

 

Section 11.1. Lenders’ Independent Investigation. Each Lender, by its signature
to this Agreement, acknowledges and agrees that the Administrative Agent has
made no representation or warranty, express or implied, with respect to the
creditworthiness, financial condition, or any other condition of any Company or
with respect to the statements contained in any information memorandum furnished
in connection herewith or in any other oral or written communication between the
Administrative Agent and such Lender. Each Lender represents that it has made
and shall continue to make its own independent investigation of the
creditworthiness, financial condition and affairs of the Companies in connection
with the extension of credit hereunder, and agrees that the Administrative Agent
has no duty or responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information with respect thereto
(other than such notices as may be expressly required to be given by the
Administrative Agent to the Lenders hereunder), whether coming into its
possession before the first Credit Event hereunder or at any time or times
thereafter. Each Lender further represents that it has reviewed each of the Loan
Documents.

 

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Section 11.2. No Waiver; Cumulative Remedies. No omission or course of dealing
on the part of the Administrative Agent, any Lender or the holder of any Note
(or, if there is no Note, the holder of the interest as reflected on the books
and records of the Administrative Agent) in exercising any right, power or
remedy hereunder or under any of the other Loan Documents shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder or under any of the Loan
Documents. The remedies herein provided are cumulative and in addition to any
other rights, powers or privileges held under any of the Loan Documents or by
operation of law, by contract or otherwise.

 

Section 11.3. Amendments, Waivers and Consents.

 

(a) General Rule. No amendment, modification, termination, or waiver of any
provision of any Loan Document nor consent to any variance therefrom, shall be
effective unless the same shall be in writing and signed by the Required Lenders
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.

 

(b) Exceptions to the General Rule. Notwithstanding the provisions of subsection
(a) of this Section 11.3:

 

(i) Consent of Affected Lenders Required. No amendment, modification, waiver or
consent shall (A) extend or increase the Commitment of any Lender without the
written consent of such Lender, (B) extend the date scheduled for payment of any
principal (excluding mandatory prepayments) of or interest on the Loans or
Letter of Credit reimbursement obligations or fees payable hereunder without the
written consent of each Lender directly affected thereby, (C) reduce or forgive
the principal amount of any Loan, the stated rate of interest thereon (provided
that the institution of the Default Rate or post default interest and a
subsequent removal of the Default Rate or post default interest shall not
constitute a decrease in interest rate pursuant to this Section 11.3) or the
stated rate of fees payable hereunder, without the consent of each Lender
directly affected thereby, (D) change the manner of pro rata application of any
payments made to the Lenders hereunder, without the consent of each Lender
directly affected thereby, (E) without the unanimous consent of the Lenders,
change any percentage voting requirement, voting rights, or the Required Lenders
definition in this Agreement, (F) without the unanimous consent of the Lenders,
release the Borrower or any Guarantor of Payment or of any material amount of
collateral securing the Secured Obligations, except in connection with a
transaction specifically permitted hereunder, (G) without the unanimous consent
of the Lenders, amend this Section 11.3 or Section 9.5 hereof, or (H) increase
the advance rates set forth in the definition of Borrowing Base or add new
categories of eligible assets without the consent of each Revolving Lender
(other than any Defaulting Lender or Insolvent Lender).

 

(ii) Provisions Relating to Special Rights and Duties. No provision of this
Agreement affecting the Administrative Agent in its capacity as such shall be
amended, modified or waived without the consent of the Administrative Agent. The
Administrative Agent Fee Letter may be amended or modified by the Administrative
Agent and the Borrower without the consent of any other Lender. No provision of
this Agreement relating to the rights or duties of the Issuing Lender in its
capacity as such shall be amended, modified or waived without the consent of the
Issuing Lender. No provision of this Agreement relating to the rights or duties
of the Swing Line Lender in its capacity as such shall be amended, modified or
waived without the consent of the Swing Line Lender.

 

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(iii) Technical and Conforming Modifications. Notwithstanding the foregoing,
technical and conforming modifications to the Loan Documents may be made with
the consent of the Borrower and the Administrative Agent (A) if such
modifications are not adverse to the Lenders and are requested by Governmental
Authorities, or (B) to cure any ambiguity, defect or inconsistency.

 

(c) Replacement of Non-Consenting Lender. If, in connection with any proposed
amendment, waiver or consent hereunder, the consent of all Lenders is required,
but only the consent of Required Lenders is obtained, (any Lender withholding
consent as described in this subsection (c) being referred to as a
“Non-Consenting Lender”), then, so long as the Administrative Agent is not the
Non-Consenting Lender, the Administrative Agent may (and shall, if requested by
the Borrower), at the sole expense of the Borrower, upon notice to such
Non-Consenting Lender and the Borrower, require such Non-Consenting Lender to
assign and delegate, without recourse (in accordance with the restrictions
contained in Section 11.11 hereof) all of its interests, rights and obligations
under this Agreement to a financial institution acceptable to the Administrative
Agent and the Borrower that shall assume such obligations (which assignee may be
another Lender, if a Lender accepts such assignment); provided that such
Non-Consenting Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from such financial institution (to
the extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts, including any breakage compensation
under Article III hereof).

 

(d) Generally. Notice of amendments, waivers or consents ratified by the Lenders
hereunder shall be forwarded by the Administrative Agent to all of the Lenders.
Each Lender or other holder of a Note, or if there is no Note, the holder of the
interest as reflected on the books and records of the Administrative Agent (or
interest in any Loan or Letter of Credit) shall be bound by any amendment,
waiver or consent obtained as authorized by this Section 11.3, regardless of its
failure to agree thereto.

 

Section 11.4. Notices. All notices, requests, demands and other communications
provided for hereunder shall be in writing and, if to the Borrower, mailed or
delivered to it, addressed to it at the address specified on the signature pages
of this Agreement, except as otherwise specifically provided in 5.3(n) hereof,
if to the Administrative Agent or a Lender, mailed or delivered to it, addressed
to the address of the Administrative Agent or such Lender specified on the
signature pages of this Agreement, or, as to each party, at such other address
as shall be designated by such party in a written notice to each of the other
parties. All notices, statements, requests, demands and other communications
provided for hereunder shall be deemed to be given or made when delivered (if
received during normal business hours on a Business Day, such Business Day or
otherwise the following Business Day), or two Business Days after being
deposited in the mails with postage prepaid by registered or certified mail,
addressed as aforesaid, or sent by facsimile or electronic communication, in
each case of facsimile or electronic communication with telephonic confirmation
of receipt. All notices hereunder shall not be effective until received. For
purposes of Article II hereof, the Administrative Agent shall be entitled to
rely on telephonic instructions from any person that the Administrative Agent in
good faith believes is an Authorized Officer, and the Borrower shall hold the
Administrative Agent and each Lender harmless from any loss, cost or expense
resulting from any such reliance.

 

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Section 11.5. Approved Electronic Communication System.

 

(a) Unless otherwise specifically identified therein, each posting to an
Approved Electronic Communication System shall be deemed to be a representation
and warranty by the Borrower, the Authorized Officer submitting the information
to the Approved Electronic Communication System, and, if such Authorized Officer
is not a Financial Officer, the Financial Officer who authorized such Authorized
Officer to submit such information, as of the date of such posting, of the
accuracy of the information provided with respect thereto, and that each of the
representations and warranties contained in this Agreement and the other Loan
Documents are true and correct as if made on and as of the date of such posting.

 

(b) Although the Approved Electronic Communication System is secured with
generally-applicable security procedures and policies implemented or modified
from time to time, the Borrower and each other Credit Party acknowledge and
agree that the distribution of material through an electronic medium is not
necessarily secure and that there are confidentiality and other risks associated
with such distribution. In consideration for the convenience and other benefits
afforded by such distribution and for the other consideration provided
hereunder, the receipt and sufficiency of which is hereby acknowledged, the
Borrower and each other Credit Party hereby approves of the use of the Approved
Electronic Communication System and understands and assumes the risks of using
such forms of communication.

 

(c) The Approved Electronic Communication System is provided “as is” and “as
available”. Neither the Administrative Agent nor any of the Administrative
Agent’s affiliates, officers, directors, attorneys, agents or employees warrant
the accuracy, adequacy or completeness of the Approved Electronic Communication
System and each expressly disclaims any liability for errors or omissions in the
Approved Electronic Communication System. No warranty of any kind, express,
implied or statutory, including, without limitation, any warranty of
merchantability, fitness for a particular purpose, non-infringement of third
party rights or freedom from viruses or other code defects, is made by the
Administrative Agent (or any of the Administrative Agent’s affiliates, officers,
directors, attorneys, agents or employees) in connection with the Approved
Electronic Communication System.

 

(d) The Borrower and each other Credit Party agrees that the Administrative
Agent may, but shall not be obligated to, store information provided through the
Approved Electronic Communication System in accordance with the Administrative
Agent’s generally-applicable document retention procedures and policies in
effect from time to time.

 

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Section 11.6. Costs, Expenses and Documentary Taxes. The Borrower agrees to pay
on demand all costs and expenses of the Administrative Agent and all Related
Expenses, including but not limited to (a) syndication, administration, travel
and out-of-pocket expenses, including but not limited to attorneys’ fees and
expenses, of the Administrative Agent in connection with the preparation,
negotiation and closing of the Loan Documents and the administration of the Loan
Documents, and the collection and disbursement of all funds hereunder and the
other instruments and documents to be delivered hereunder, (b) extraordinary
expenses of the Administrative Agent in connection with the administration of
the Loan Documents and the other instruments and documents to be delivered
hereunder, and (c) the reasonable fees and expenses of special counsel for the
Administrative Agent, with respect to the foregoing, and of local counsel, if
any, who may be retained by said special counsel with respect thereto. The
Borrower also agrees to pay on demand all costs and expenses (including Related
Expenses) of the Administrative Agent and the Lenders, including reasonable
attorneys’ fees and expenses, in connection with the restructuring or
enforcement of, or collection or protection of its rights in connection with,
the Obligations, this Agreement or any other Related Writing. In addition, the
Borrower shall pay any and all stamp, transfer, documentary and other taxes,
assessments, charges and fees payable or determined to be payable in connection
with the execution and delivery of the Loan Documents, and the other instruments
and documents to be delivered hereunder, and agrees to hold the Administrative
Agent and each Lender harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or failure to pay such taxes or
fees. All obligations provided for in this Section 11.6 shall survive any
termination of this Agreement.

 

Section 11.7. Indemnification. The Borrower agrees to defend, indemnify and hold
harmless the Administrative Agent and the Lenders (and their respective
affiliates, officers, directors, attorneys, agents and employees) from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including attorneys’ fees) or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against the Administrative Agent or any Lender in connection with
any investigative, administrative or judicial proceeding (whether or not such
Lender or the Administrative Agent shall be designated a party thereto) or any
other claim by any Person relating to or arising out of any Loan Document or any
actual or proposed use of proceeds of the Loans or any of the Obligations, or
any activities of any Company or its Affiliates; provided that no Lender nor the
Administrative Agent shall have the right to be indemnified under this Section
11.7 for its own gross negligence or willful misconduct, as determined by a
final and non-appealable judgment of a court of competent jurisdiction. All
obligations provided for in this Section 11.7 shall survive any termination of
this Agreement.

 

Section 11.8. Obligations Several; No Fiduciary Obligations. The obligations of
the Lenders hereunder are several and not joint. Nothing contained in this
Agreement and no action taken by the Administrative Agent or the Lenders
pursuant hereto shall be deemed to constitute the Administrative Agent or the
Lenders a partnership, association, joint venture or other entity. No default by
any Lender hereunder shall excuse the other Lenders from any obligation under
this Agreement; but no Lender shall have or acquire any additional obligation of
any kind by reason of such default. The relationship between the Borrower and
the Lenders with respect to the Loan Documents and the other Related Writings is
and shall be solely that of debtor and creditors, respectively, and neither the
Administrative Agent nor any Lender shall have any fiduciary obligation toward
any Credit Party with respect to any such documents or the transactions
contemplated thereby.

 

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Section 11.9. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
and by facsimile or other electronic signature, each of which counterparts when
so executed and delivered shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement.

 

Section 11.10. Binding Effect; Borrower’s Assignment. This Agreement shall
become effective when it shall have been executed by the Borrower, the
Administrative Agent and each Lender and thereafter shall be binding upon and
inure to the benefit of the Borrower, the Administrative Agent and each of the
Lenders and their respective successors and permitted assigns, except that the
Borrower shall not have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Administrative Agent and all of
the Lenders.

 

Section 11.11. Lender Assignments.

 

(a) Assignments of Commitments. Each Lender shall have the right at any time or
times to assign to an Eligible Transferee (other than to a Defaulting Lender),
without recourse, all or a percentage of all of the following: (i) such Lender’s
Commitment, (ii) all Loans made by that Lender, (iii) such Lender’s Notes, and
(iv) such Lender’s interest in any Letter of Credit or Swing Loan, and any
participation purchased pursuant to Section 2.2(b) or (c) or Section 9.5 hereof.
Each Lender shall at all times maintain the same Applicable Commitment
Percentage (as rounded to the sixth decimal) with respect to the Revolving
Credit Commitment and the Term Loan Commitment.

 

(b) Prior Consent. No assignment may be consummated pursuant to this Section
11.11 without the prior written consent of the Borrower and the Administrative
Agent (other than an assignment by any Lender to any affiliate of a Lender which
affiliate is an Eligible Transferee and either wholly-owned by a Lender or is
wholly-owned by a Person that wholly owns, either directly or indirectly, a
Lender, or to another Lender), which consent of the Borrower and the
Administrative Agent shall not be unreasonably withheld; provided that (i) the
consent of the Borrower shall not be required if, at the time of the proposed
assignment, any Default or Event of Default shall then exist and (ii) the
Borrower shall be deemed to have granted its consent unless the Borrower has
expressly objected to such assignment within three Business Days after notice
thereof. Anything herein to the contrary notwithstanding, any Lender may at any
time make a collateral assignment of all or any portion of its rights under the
Loan Documents to a Federal Reserve Bank, and no such assignment shall release
such assigning Lender from its obligations hereunder.

 

(c) Minimum Amount. Each such assignment shall be in a minimum amount of the
lesser of Five Million Dollars ($5,000,000) of the assignor’s Commitment and
interest herein, or the entire amount of the assignor’s Commitment and interest
herein.

 

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(d) Assignment Fee. Unless the assignment shall be to an affiliate of the
assignor or the assignment shall be due to merger of the assignor or for
regulatory purposes, either the assignor or the assignee shall remit to the
Administrative Agent, for its own account, an administrative fee of Three
Thousand Five Hundred Dollars ($3,500).

 

(e) Assignment Agreement. Unless the assignment shall be due to merger of the
assignor or a collateral assignment for regulatory purposes, the assignor shall
(i) cause the assignee to execute and deliver to the Borrower and the
Administrative Agent an Assignment Agreement, and (ii) execute and deliver, or
cause the assignee to execute and deliver, as the case may be, to the
Administrative Agent such additional amendments, assurances and other writings
as the Administrative Agent may reasonably require.

 

(f) Non-U.S. Assignee. If the assignment is to be made to an assignee that is
organized under the laws of any jurisdiction other than the United States or any
state thereof, the assignor Lender shall cause such assignee, at least five
Business Days prior to the effective date of such assignment, (i) to represent
to the assignor Lender (for the benefit of the assignor Lender, the
Administrative Agent and the Borrower) that under applicable law and treaties no
taxes will be required to be withheld by the Administrative Agent, the Borrower
or the assignor with respect to any payments to be made to such assignee in
respect of the Loans hereunder, (ii) to furnish to the assignor Lender (and, in
the case of any assignee registered in the Register (as defined below), the
Administrative Agent and the Borrower) either U.S. Internal Revenue Service Form
W-8ECI, Form W-8IMY, Form W-8BEN, or Form W-8BEN-E, as applicable (wherein such
assignee claims entitlement to complete exemption from U.S. federal withholding
tax on all payments hereunder), and (iii) to agree (for the benefit of the
assignor, the Administrative Agent and the Borrower) to provide to the assignor
Lender (and, in the case of any assignee registered in the Register, to the
Administrative Agent and the Borrower) a new Form W-8ECI, Form W-8IMY, Form
W-8BEN, or Form W-8BEN-E, as applicable, upon the expiration or obsolescence of
any previously delivered form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments duly executed and completed
by such assignee, and to comply from time to time with all applicable U.S. laws
and regulations with regard to such withholding tax exemption.

 

(g) Deliveries by Borrower. Upon satisfaction of all applicable requirements
specified in subsections (a) through (f) above, the Borrower shall execute and
deliver (i) to the Administrative Agent, the assignor and the assignee, any
consent or release (of all or a portion of the obligations of the assignor)
required to be delivered by the Borrower in connection with the Assignment
Agreement, and (ii) to the assignee, if requested, and the assignor, if
applicable, an appropriate Note or Notes. After delivery of the new Note or
Notes, the assignor’s Note or Notes, if any, being replaced shall be returned to
the Borrower marked “replaced”.

 

(h) Effect of Assignment. Upon satisfaction of all applicable requirements set
forth in subsections (a) through (g) above, and any other condition contained in
this Section 11.11, (i) the assignee shall become and thereafter be deemed to be
a “Lender” for the purposes of this Agreement, (ii) the assignor shall be
released from its obligations hereunder to the extent that its interest has been
assigned, (iii) in the event that the assignor’s entire interest has been
assigned, the assignor shall cease to be and thereafter shall no longer be
deemed to be a “Lender” and (iv) the signature pages hereto and Schedule 1
hereto shall be automatically amended, without further action, to reflect the
result of any such assignment.

 

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(i) Administrative Agent to Maintain Register. The Administrative Agent shall
maintain at the address for notices referred to in Section 11.4 hereof a copy of
each Assignment Agreement delivered to it and a register (the “Register”) for
the recordation of the names and addresses of the Lenders and the Commitment of,
and principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Administrative Agent and the Lenders may treat each Person
whose name is recorded in the Register as the owner of the Loan recorded therein
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.

 

Section 11.12. Sale of Participations. Any Lender may, in the ordinary course of
its commercial banking business and in accordance with applicable law, at any
time sell participations to one or more Eligible Transferees (each a
“Participant”) in all or a portion of its rights or obligations under this
Agreement and the other Loan Documents (including, without limitation, all or a
portion of the Commitment and the Loans and participations owing to it and the
Note, if any, held by it); provided that:

 

(a) any such Lender’s obligations under this Agreement and the other Loan
Documents shall remain unchanged;

 

(b) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations;

 

(c) the parties hereto shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement and each of the other Loan Documents;

 

(d) such Participant shall be bound by the provisions of Section 9.5 hereof, and
the Lender selling such participation shall obtain from such Participant a
written confirmation of its agreement to be so bound; and

 

(e) no Participant (unless such Participant is itself a Lender) shall be
entitled to require such Lender to take or refrain from taking action under this
Agreement or under any other Loan Document, except that such Lender may agree
with such Participant that such Lender will not, without such Participant’s
consent, take action of the type described as follows:

 

(i) increase the portion of the participation amount of any Participant over the
amount thereof then in effect, or extend the Commitment Period, without the
written consent of each Participant affected thereby; or

 

(ii) reduce the principal amount of or extend the time for any payment of
principal of any Loan, or reduce the rate of interest or extend the time for
payment of interest on any Loan, or reduce the commitment fee, without the
written consent of each Participant affected thereby.

 

 112 

 

 

The Borrower agrees that any Lender that sells participations pursuant to this
Section 11.12 shall still be entitled to the benefits of Article III hereof,
notwithstanding any such transfer; provided that the obligations of the Borrower
shall not increase as a result of such transfer and the Borrower shall have no
obligation to any Participant.

 

Section 11.13. Replacement of Affected Lenders. Each Lender agrees that, during
the time in which any Lender is an Affected Lender, the Administrative Agent
shall have the right (and the Administrative Agent shall, if requested by the
Borrower), at the sole expense of the Borrower, upon notice to such Affected
Lender and the Borrower, to require that such Affected Lender assign and
delegate, without recourse (in accordance with the restrictions contained in
Section 11.11 hereof), all of its interests, rights and obligations under this
Agreement to an Eligible Transferee, approved by the Borrower (unless an Event
of Default shall exist) and the Administrative Agent, that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that such Affected Lender shall have received payment of
an amount equal to the outstanding principal of its Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder (recognizing
that any Affected Lender may have given up its rights under this Agreement to
receive payment of fees and other amounts pursuant to Section 2.7(e) and (f)
hereof), from such Eligible Transferee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts, including any breakage compensation under Article III hereof).

 

Section 11.14. Patriot Act Notice. Each Lender, and the Administrative Agent
(for itself and not on behalf of any other party), hereby notifies the Credit
Parties that, pursuant to the requirements of the Patriot Act, such Lender and
the Administrative Agent are required to obtain, verify and record information
that identifies the Credit Parties, which information includes the name and
address of each of the Credit Parties and other information that will allow such
Lender or the Administrative Agent, as applicable, to identify the Credit
Parties in accordance with the Patriot Act. The Borrower shall provide, to the
extent commercially reasonable, such information and take such actions as are
reasonably requested by the Administrative Agent or a Lender in order to assist
the Administrative Agent or such Lender in maintaining compliance with the
Patriot Act.

 

Section 11.15. Severability of Provisions; Captions; Attachments. Any provision
of this Agreement that shall be prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. The several captions to sections and subsections herein are
inserted for convenience only and shall be ignored in interpreting the
provisions of this Agreement. Each schedule or exhibit attached to this
Agreement shall be incorporated herein and shall be deemed to be a part hereof.

 

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Section 11.16. Investment Purpose. Each of the Lenders represents and warrants
to the Borrower that such Lender is entering into this Agreement with the
present intention of acquiring any Note issued pursuant hereto (or, if there is
no Note, the interest as reflected on the books and records of the
Administrative Agent) for investment purposes only and not for the purpose of
distribution or resale, it being understood, however, that each Lender shall at
all times retain full control over the disposition of its assets.

 

Section 11.17. Entire Agreement. This Agreement, any Note and any other Loan
Document or other agreement, document or instrument attached hereto or executed
on or as of the Closing Date integrate all of the terms and conditions mentioned
herein or incidental hereto and supersede all oral representations and
negotiations and prior writings with respect to the subject matter hereof
(except with respect to any provisions of the Administrative Agent Fee Letter or
any commitment letter and fee letter between the Borrower and KeyBank that by
their terms survive the termination of such agreements, in each case, which
shall remain in full force and effect after the Closing Date).

 

Section 11.18. Limitations on Liability of the Issuing Lender. The Borrower
assumes all risks of the acts or omissions of any beneficiary or transferee of
any Letter of Credit with respect to its use of such Letters of Credit. Neither
the Issuing Lender nor any of its officers or directors shall be liable or
responsible for (a) the use that may be made of any Letter of Credit or any acts
or omissions of any beneficiary or transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by the Issuing Lender
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to such Letter of Credit; or (d) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit, except that the
account party on such Letter of Credit shall have a claim against the Issuing
Lender, and the Issuing Lender shall be liable to such account party, to the
extent of any direct, but not consequential, damages suffered by such account
party that such account party proves were caused by (i) the Issuing Lender’s
willful misconduct or gross negligence (as determined by a final judgment of a
court of competent jurisdiction) in determining whether documents presented
under a Letter of Credit comply with the terms of such Letter of Credit, or (ii)
the Issuing Lender’s willful failure to make lawful payment under any Letter of
Credit after the presentation to it of documentation strictly complying with the
terms and conditions of such Letter of Credit. In furtherance and not in
limitation of the foregoing, the Issuing Lender may accept documents that appear
on their face to be in order, without responsibility for further investigation.

 

Section 11.19. General Limitation of Liability. No claim may be made by any
Credit Party or any other Person against the Administrative Agent, the Issuing
Lender, or any other Lender or the affiliates, directors, officers, employees,
attorneys or agents of any of them for any damages other than actual
compensatory damages in respect of any claim for breach of contract or any other
theory of liability arising out of or related to the transactions contemplated
by this Agreement or any of the other Loan Documents, or any act, omission or
event occurring in connection therewith; and the Borrower, each Lender, the
Administrative Agent and the Issuing Lender hereby, to the fullest extent
permitted under applicable law, waive, release and agree not to sue or
counterclaim upon any such claim for any special, indirect, consequential or
punitive damages, whether or not accrued and whether or not known or suspected
to exist in their favor and regardless of whether any Lender, Issuing Lender, or
the Administrative Agent has been advised of the likelihood of such loss of
damage.

 

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Section 11.20. No Duty. All attorneys, accountants, appraisers, consultants and
other professional persons (including the firms or other entities on behalf of
which any such Person may act) retained by the Administrative Agent or any
Lender with respect to the transactions contemplated by the Loan Documents shall
have the right to act exclusively in the interest of the Administrative Agent or
such Lender, as the case may be, and shall have no duty of disclosure, duty of
loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to the Borrower, any other Companies, or any other Person, with
respect to any matters within the scope of such representation or related to
their activities in connection with such representation. The Borrower agrees, on
behalf of itself and its Subsidiaries, not to assert any claim or counterclaim
against any such persons with regard to such matters, all such claims and
counterclaims, now existing or hereafter arising, whether known or unknown,
foreseen or unforeseeable, being hereby waived, released and forever discharged.

 

Section 11.21. Legal Representation of Parties. The Loan Documents were
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement or any
other Loan Document to be construed or interpreted against any party shall not
apply to any construction or interpretation hereof or thereof.

 

Section 11.22. Acknowledgement and Consent to Bail-In of EEA Financial
Institutions. Notwithstanding anything to the contrary in any Loan Document or
in any other agreement, arrangement or understanding among any such parties,
each party hereto acknowledges that any liability of any EEA Financial
Institution arising under any Loan Document, to the extent such liability is
unsecured, may be subject to the write-down and conversion powers of an EEA
Resolution Authority and agrees and consents to, and acknowledges and agrees to
be bound by:

 

(a) the application of any Write-Down and Conversion Powers by an EEA Resolution
Authority to any such liabilities arising hereunder which may be payable to it
by any party hereto that is an EEA Financial Institution; and

 

(b) the effects of any Bail-in Action on any such liability, including, if
applicable:

 

(i) a reduction in full or in part or cancellation of any such liability;

 

(ii) a conversion of all, or a portion of, such liability into shares or other
instruments of ownership in such EEA Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise
conferred on it, and that such shares or other instruments of ownership will be
accepted by it in lieu of any rights with respect to any such liability under
this Agreement or any other Loan Document; or

 

(iii) the variation of the terms of such liability in connection with the
exercise of the write-down and conversion powers of any EEA Resolution
Authority.

 

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Section 11.23. Governing Law; Submission to Jurisdiction.

 

(a) Governing Law. This Agreement, each of the Notes and any other Related
Writing shall be governed by and construed in accordance with the laws of the
State of New York and the respective rights and obligations of the Borrower, the
Administrative Agent, and the Lenders shall be governed by New York law.

 

(b) Submission to Jurisdiction. The Borrower hereby irrevocably submits to the
non-exclusive jurisdiction of any New York state or federal court sitting in New
York County, New York over any action or proceeding arising out of or relating
to this Agreement, the Obligations or any other Related Writing, and the
Borrower hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York state or federal court.
The Borrower, on behalf of itself and its Subsidiaries, hereby irrevocably
waives, to the fullest extent permitted by law, any objection it may now or
hereafter have to the laying of venue in any action or proceeding in any such
court as well as any right it may now or hereafter have to remove such action or
proceeding, once commenced, to another court on the grounds of FORUM NON
CONVENIENS or otherwise. The Borrower agrees that a final, non-appealable
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.

 

[Remainder of page left intentionally blank]

 

 116 

 

 

JURY TRIAL WAIVER. TO THE EXTENT PERMITTED BY LAW, THE BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE
IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG
THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS, OR ANY THEREOF, ARISING
OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
OR THE TRANSACTIONS RELATED THERETO.

 

IN WITNESS WHEREOF, the parties have executed and delivered this Credit and
Security Agreement as of the date first set forth above.

 

Address:      910 West Legacy Center Drive

Suite 500

Midvale, Utah 84047

Attention: Chief Financial Officer

 

ZAGG INC

 

By: /s/ Randall L. Hales                                                

Randall L. Hales

President 

   

Address:    127 Public Square

Cleveland, Ohio 44114-1306

Attention: KeyBank Business Capital

KEYBANK NATIONAL ASSOCIATION

as the Administrative Agent, the Swing Line

Lender, the Issuing Lender and as a Lender

 

By: /s/ Michael Gutia                                                   

Michael Gutia

Vice President 

 

 

Signature Page 1 of 3 to

Credit and Security Agreement

 

 

Address:    One South Main Street

Salt Lake City, UT 84133

Attention: Adam Whitefield

 

ZB, N.A. DBA ZIONS FIRST NATIONAL BANK

 

By: /s/ Adam Whitefield                                             

Adam Whitefield

Vice President

 

 

 

 

Signature Page 2 of 3 to

Credit and Security Agreement

 

 

Address:   3 Park Plaza

Suite 900

Irvine, CA 92614

Attention: James Fallahay

 

JPMORGAN CHASE BANK, N.A.

 

By: /s/ James Fallahay                                                  

James Fallahay

Authorized Officer

 

 

 

Signature Page 3 of 3 to

Credit and Security Agreement

 

 

SCHEDULE 1

 

COMMITMENTS OF LENDERS

 

LENDERS  REVOLVING CREDIT
COMMITMENT
PERCENTAGE   REVOLVING
CREDIT
COMMITMENT
AMOUNT   TERM LOAN COMMITMENT PERCENTAGE   TERM LOAN
COMMITMENT
AMOUNT   MAXIMUM AMOUNT  KeyBank National Association   36.36%  $30,909,090.90  
 36.36%  $9,090,909.10   $40,000,000.00  ZB, N.A. d/b/a Zions First National
Bank   31.82%  $27,045,454.55    31.82%  $7,954,545.45   $35,000,000.00 
JPMorgan Chase Bank, N.A.   31.82%  $27,045,454.55    31.82%  $7,954,545.45  
$35,000,000.00  Total Commitment Amount   100%  $85,000,000.00    100% 
$25,000,000.00   $110,000,000.00 

 

 S-1 

 

 

SCHEDULE 2

 

GUARANTORS OF PAYMENT

 

iFrogz Inc., a Utah corporation

mophie inc., a California corporation

mophie LLC, a Michigan limited liability company

ZAGG Intellectual Property Holding Co., Inc., a Nevada corporation

ZAGG LLC, a Nevada limited liability company

ZAGG Retail, Inc., a Nevada corporation

 

 S-2 

 

 

SCHEDULE 3

 

BORROWING BASE COMPANIES

 

ZAGG Inc, a Nevada corporation

iFrogz Inc., a Utah corporation

mophie inc., a California corporation

mophie LLC, a Michigan limited liability company

ZAGG Retail, Inc., a Nevada corporation

 

 S-3 

 

 

SCHEDULE 4

 

PLEDGED SECURITIES

 

Pledgor

Name of Subsidiary

Jurisdiction of Subsidiary

Shares

Certificate Number

Ownership Percentage

ZAGG Inc

ZAGG Intellectual Property Holding Co., Inc.

Nevada 1,000,000 2 100%

ZAGG Inc

ZAGG Retail, Inc. Nevada 1,000,000 2 100%

ZAGG Inc

iFrogz Inc. Utah 67,586 11 100%

ZAGG Inc

ZAGG LLC Nevada N/A 001 100%

ZAGG Inc

mophie, inc. California 100 C-1 100%

iFrogz Inc

Superior Brand Limited Hong Kong 65 3 100%*

ZAGG LLC

Bronco Corporation Cayman 65 1 100%*

ZAGG LLC

Patriot Corporation Ireland 65 9 99%*

mophie, inc 

mophie LLC Michigan N/A N/A 100%

mophie, inc 

mophie Technology Development Co., Ltd. (Shenzhen)

China N/A N/A 100%*

mophie, inc.

mophie Netherlands Cooperatie U.A.

Netherlands N/A N/A 99%*

mophie LLC

mophie Netherlands Cooperatie U.A.

Netherlands N/A N/A 1%*

 

* 100% of the equity interests or stock of each first-tier Foreign Subsidiary
(other than voting equity interests in excess of 65% of any such Foreign
Subsidiary that is a CFC) constitute Pledged Securities.

 

 S-4 

 

 

EXHIBIT A

FORM OF

REVOLVING CREDIT NOTE

$___________ ________, 20__

 

FOR VALUE RECEIVED, the undersigned, ZAGG INC, a Nevada corporation (the
“Borrower”), promises to pay, on the last day of the Commitment Period, as
defined in the Credit Agreement (as hereinafter defined), to the order of
_________ (“Lender”) at the main office of KEYBANK NATIONAL ASSOCIATION, as the
Administrative Agent, as hereinafter defined, 127 Public Square, Cleveland, Ohio
44114-1306 the principal sum of

 

_______________________________ AND 00/100
_____________________________________DOLLARS

 

or the aggregate unpaid principal amount of all Revolving Loans, as defined in
the Credit Agreement, made by Lender to the Borrower pursuant to Section 2.2(a)
of the Credit Agreement, whichever is less, in lawful money of the United States
of America.

 

As used herein, “Credit Agreement” means the Credit and Security Agreement dated
as of March 3, 2016, among the Borrower, the Lenders, as defined therein, and
KeyBank National Association, as the administrative agent for the Lenders (the
“Administrative Agent”), as the same may from time to time be amended, restated
or otherwise modified. Each capitalized term used herein that is defined in the
Credit Agreement and not otherwise defined herein shall have the meaning
ascribed to it in the Credit Agreement.

 

The Borrower also promises to pay interest on the unpaid principal amount of
each Revolving Loan from time to time outstanding, from the date of such
Revolving Loan until the payment in full thereof, at the rates per annum that
shall be determined in accordance with the provisions of Section 2.4(a) of the
Credit Agreement. Such interest shall be payable on each date provided for in
such Section 2.4(a); provided that interest on any principal portion that is not
paid when due shall be payable on demand.

 

The portions of the principal sum hereof from time to time representing Base
Rate Loans and Eurodollar Loans, interest owing thereon and payments of
principal and interest of any thereof, shall be shown on the records of Lender
by such method as Lender may generally employ; provided that failure to make any
such entry shall in no way detract from the obligations of the Borrower under
this Note or the Credit Agreement.

 

If this Note shall not be paid at maturity, whether such maturity occurs by
reason of lapse of time or by operation of any provision for acceleration of
maturity contained in the Credit Agreement, the principal hereof and the unpaid
interest thereon shall bear interest, pursuant to the terms of the Credit
Agreement, until paid, at a rate per annum equal to the Default Rate. All
payments of principal of and interest on this Note shall be made in immediately
available funds.

 

 E-1 

 

 

This Note is one of the Revolving Credit Notes referred to in the Credit
Agreement and is entitled to the benefits thereof. Reference is made to the
Credit Agreement for a description of the right of the undersigned to anticipate
payments hereof, the right of the holder hereof to declare this Note due prior
to its stated maturity, and other terms and conditions upon which this Note is
issued.

 

Except as expressly provided in the Credit Agreement, the Borrower expressly
waives presentment, demand, protest and notice of any kind. This Note shall be
governed by and construed in accordance with the laws of the State of New York.

 

JURY TRIAL WAIVER. THE BORROWER, TO THE EXTENT PERMITTED BY LAW, HEREBY WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE, AMONG THE BORROWER, THE ADMINISTRATIVE AGENT AND
THE LENDERS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
NOTE OR ANY OTHER NOTE OR INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.

 

 

ZAGG INC

 

By: ___________________________________

Name: _________________________________

Title: __________________________________

 

 E-2 

 

 

EXHIBIT B

FORM OF

SWING LINE NOTE

 

$________ ___________, 20__

 

FOR VALUE RECEIVED, the undersigned, ZAGG INC, a Nevada corporation (the
“Borrower”), promises to pay to the order of KEYBANK NATIONAL ASSOCIATION (the
“Swing Line Lender”) at the main office of KEYBANK NATIONAL ASSOCIATION, as the
Administrative Agent, as hereinafter defined, 127 Public Square, Cleveland, Ohio
44114-1306 the principal sum of

 

_______________________________ AND 00/100
_____________________________________DOLLARS

 

or the aggregate unpaid principal amount of all Swing Loans, as defined in the
Credit Agreement (as hereinafter defined), made by the Swing Line Lender to the
Borrower pursuant to Section 2.2(c) of the Credit Agreement, whichever is less,
in lawful money of the United States of America on the earlier of the last day
of the Commitment Period, as defined in the Credit Agreement, or, with respect
to each Swing Loan, the Swing Loan Maturity Date applicable thereto.

 

As used herein, “Credit Agreement” means the Credit and Security Agreement dated
as of March 3, 2016, among the Borrower, the Lenders, as defined therein, and
KeyBank National Association, as the administrative agent for the Lenders (the
“Administrative Agent”), as the same may from time to time be amended, restated
or otherwise modified. Each capitalized term used herein that is defined in the
Credit Agreement and not otherwise defined herein shall have the meaning
ascribed to it in the Credit Agreement.

 

The Borrower also promises to pay interest on the unpaid principal amount of
each Swing Loan from time to time outstanding, from the date of such Swing Loan
until the payment in full thereof, at the rates per annum that shall be
determined in accordance with the provisions of Section 2.4(b) of the Credit
Agreement. Such interest shall be payable on each date provided for in such
Section 2.4(b); provided that interest on any principal portion that is not paid
when due shall be payable on demand.

 

The principal sum hereof from time to time, and the payments of principal and
interest thereon, shall be shown on the records of the Swing Line Lender by such
method as the Swing Line Lender may generally employ; provided that failure to
make any such entry shall in no way detract from the obligations of the Borrower
under this Note or the Credit Agreement.

 

If this Note shall not be paid at maturity, whether such maturity occurs by
reason of lapse of time or by operation of any provision for acceleration of
maturity contained in the Credit Agreement, the principal hereof and the unpaid
interest thereon shall bear interest, pursuant to the terms of the Credit
Agreement, until paid, at a rate per annum equal to the Default Rate. All
payments of principal of and interest on this Note shall be made in immediately
available funds.

 

 E-3 

 

 

This Note is the Swing Line Note referred to in the Credit Agreement and is
entitled to the benefits thereof. Reference is made to the Credit Agreement for
a description of the right of the undersigned to anticipate payments hereof, the
right of the holder hereof to declare this Note due prior to its stated
maturity, and other terms and conditions upon which this Note is issued.

 

Except as expressly provided in the Credit Agreement, the Borrower expressly
waives presentment, demand, protest and notice of any kind. This Note shall be
governed by and construed in accordance with the laws of the State of New York.

 

JURY TRIAL WAIVER. THE BORROWER, TO THE EXTENT PERMITTED BY LAW, HEREBY WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE, AMONG THE BORROWER, THE ADMINISTRATIVE AGENT AND
THE LENDERS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
NOTE OR ANY OTHER NOTE OR INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.

 

 

ZAGG INC

 

By: ___________________________________

Name: _________________________________

Title: __________________________________

 

 E-4 

 

 

EXHIBIT C

FORM OF

TERM NOTE

$________ ___________, 2016

 

FOR VALUE RECEIVED, the undersigned, ZAGG INC, a Nevada corporation (the
“Borrower”), promises to pay to the order of _________ (“Lender”) at the main
office of KEYBANK NATIONAL ASSOCIATION, as the Administrative Agent, as
hereinafter defined, 127 Public Square, Cleveland, Ohio 44114-1306 the principal
sum of

 

_______________________________ AND 00/100
_____________________________________DOLLARS

 

in lawful money of the United States of America in consecutive principal
payments as set forth in the Credit Agreement (as hereinafter defined).

 

As used herein, “Credit Agreement” means the Credit and Security Agreement dated
as of March 3, 2016, among the Borrower, the Lenders, as defined therein, and
KeyBank National Association, as the administrative agent for the Lenders (the
“Administrative Agent”), as the same may from time to time be amended, restated
or otherwise modified. Each capitalized term used herein that is defined in the
Credit Agreement and not otherwise defined herein shall have the meaning
ascribed to it in the Credit Agreement.

 

The Borrower also promises to pay interest on the unpaid principal amount of the
Term Loan from time to time outstanding, from the date of the Term Loan until
the payment in full thereof, at the rates per annum that shall be determined in
accordance with the provisions of Section 2.4(c) of the Credit Agreement. Such
interest shall be payable on each date provided for in such Section 2.4(c);
provided that interest on any principal portion that is not paid when due shall
be payable on demand.

 

The portions of the principal sum hereof from time to time representing Base
Rate Loans and Eurodollar Loans, interest owing thereon, and payments of
principal and interest of any thereof, shall be shown on the records of Lender
by such method as Lender may generally employ; provided that failure to make any
such entry shall in no way detract from the obligations of the Borrower under
this Note or the Credit Agreement.

 

If this Note shall not be paid at maturity, whether such maturity occurs by
reason of lapse of time or by operation of any provision for acceleration of
maturity contained in the Credit Agreement, the principal hereof and the unpaid
interest thereon shall bear interest, pursuant to the terms of the Credit
Agreement, until paid, at a rate per annum equal to the Default Rate. All
payments of principal of and interest on this Note shall be made in immediately
available funds.

 

This Note is one of the Term Notes referred to in the Credit Agreement and is
entitled to the benefits thereof. Reference is made to the Credit Agreement for
a description of the right of the undersigned to anticipate payments hereof, the
right of the holder hereof to declare this Note due prior to its stated
maturity, and other terms and conditions upon which this Note is issued.

 

 E-5 

 

 

Except as expressly provided in the Credit Agreement, the Borrower expressly
waives presentment, demand, protest and notice of any kind. This Note shall be
governed by and construed in accordance with the laws of the State of New York.

 

JURY TRIAL WAIVER. THE BORROWER, TO THE EXTENT PERMITTED BY LAW, HEREBY WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE, AMONG THE BORROWER, THE ADMINISTRATIVE AGENT AND
THE LENDERS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
NOTE OR ANY OTHER NOTE OR INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.

 

 

ZAGG INC

 

By: ___________________________________

Name: _________________________________

Title: __________________________________

 

 E-6 

 

 

EXHIBIT D

FORM OF

BORROWING BASE CERTIFICATE

 

See attached.

 

 E-7 

 

 

EXHIBIT E

FORM OF

NOTICE OF LOAN

_______________________, 20____

 

KeyBank National Association, as the Administrative Agent

1300 Key Center

127 Public Square

Cleveland, Ohio 44114

Attention: KeyBank Business Capital

Ladies and Gentlemen:

 

The undersigned, ZAGG INC, a Nevada corporation (the “Borrower”), refers to the
Credit and Security Agreement, dated as of March 3, 2016 (as the same may from
time to time be amended, restated or otherwise modified, the “Credit Agreement”,
the terms defined therein being used herein as therein defined), among the
undersigned, the Lenders, as defined in the Credit Agreement, and KeyBank
National Association, as the administrative agent for the Lenders (the
“Administrative Agent”), and hereby gives you notice, pursuant to Section 2.6 of
the Credit Agreement that the Borrower hereby requests [a Loan (the “Proposed
Loan”)][an interest change with respect to a portion of a Term Loan (the “Term
Loan Interest Change”)], and in connection therewith sets forth below the
information relating to the [Proposed Loan][Term Loan Interest Change] as
required by Section 2.6 of the Credit Agreement:

 

(a)The Business Day of the [Proposed Loan][Term Loan Interest Change] is
__________, 20__.

  

(b)The amount of the [Proposed Loan][Term Loan Interest Change] is
$_______________.

  

(c)The [Proposed Loan is to be][Term Loan Interest Change is for]:

a Revolving Loan ____ / the Term Loan ___. (Check one.)

  

(d)The [Proposed Loan][Term Loan Interest Change] is to be a Base Rate Loan ____
/ Eurodollar Loan ___/ Swing Loan_____. (Check one.)

  

(e)If the [Proposed Loan][Term Loan Interest Change] is a Eurodollar Loan, the
Interest Period requested is one month ___, two months ___, three months ___,
six months ____. (Check one.)

 

The undersigned hereby certifies on behalf of the Borrower that the following
statements are true on the date hereof, and will be true on the date of the
[Proposed Loan][Term Loan Interest Change]:

 

(i)     the representations and warranties contained in each Loan Document are
true and correct, before and after giving effect to the [Proposed Loan][Term
Loan Interest Change] and the application of the proceeds therefrom, as though
made on and as of such date;

 

(ii)    no event has occurred and is continuing, or would result from such
[Proposed Loan][Term Loan Interest Change], or the application of proceeds
therefrom, that constitutes a Default or Event of Default; and

 

(iii)   the conditions set forth in Section 2.6 and Article IV of the Credit
Agreement have been satisfied.

 

 

ZAGG INC

 

By: ___________________________________

Name: _________________________________

Title: __________________________________

 

 E-8 

 

 

EXHIBIT F

FORM OF

COMPLIANCE CERTIFICATE

For Fiscal Quarter ended ____________________

 

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

(1) I am the duly elected [President] or [Chief Financial Officer] of ZAGG INC,
a Nevada corporation (the “Borrower”);

 

(2) I am familiar with the terms of that certain Credit and Security Agreement,
dated as of March 3, 2016, among the Borrower, the lenders party thereto
(together with their respective successors and assigns, collectively, the
“Lenders”), as defined in the Credit Agreement, and KeyBank National
Association, as the Administrative Agent (as the same may from time to time be
amended, restated or otherwise modified, the “Credit Agreement”, the terms
defined therein being used herein as therein defined), and the terms of the
other Loan Documents, and I have made, or have caused to be made under my
supervision, a review in reasonable detail of the transactions and condition of
the Borrower and its Subsidiaries during the accounting period covered by the
attached financial statements;

 

(3) The review described in paragraph (2) above did not disclose, and I have no
knowledge of, the existence of any condition or event that constitutes or
constituted a Default or Event of Default, at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate;

 

(4) The representations and warranties made by the Borrower contained in each
Loan Document are true and correct as though made on and as of the date hereof;
and

 

(5) Set forth on Attachment I hereto are calculations of the financial covenants
set forth in Section 5.7 of the Credit Agreement, and the calculation of Excess
Cash Flow, which calculations show compliance with the terms thereof.

 

IN WITNESS WHEREOF, I have signed this certificate the ___ day of _________,
20___.

 

 

ZAGG INC

 

By: ___________________________________

Name: _________________________________

Title: __________________________________

 

 E-9 

 

 

EXHIBIT G

FORM OF

ASSIGNMENT AND ACCEPTANCE AGREEMENT

 

This Assignment and Acceptance Agreement (this “Assignment Agreement”) between
______________________ (the “Assignor”) and ______________________ (the
“Assignee”) is dated as of __________ ___, 20___. The parties hereto agree as
follows:

 

1. Preliminary Statement. Assignor is a party to a Credit and Security
Agreement, dated as of March 3, 2016 (as the same may from time to time be
amended, restated or otherwise modified, the “Credit Agreement”), among ZAGG
INC, a Nevada corporation (the “Borrower”), the lenders party thereto (together
with their respective successors and assigns, collectively, the “Lenders” and,
individually, each a “Lender”), and KEYBANK NATIONAL ASSOCIATION, as the
administrative agent for the Lenders (the “Administrative Agent”). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
attributed to them in the Credit Agreement.

 

2. Assignment and Assumption. Assignor hereby sells and assigns to Assignee, and
Assignee hereby purchases and assumes from Assignor, an interest in and to
Assignor’s rights and obligations under the Credit Agreement, effective as of
the Assignment Effective Date (as hereinafter defined), equal to the percentage
interest specified on Annex 1 hereto (hereinafter, the “Assigned Percentage”) of
Assignor’s right, title and interest in and to (a) the Commitment, (b) any Loan
made by Assignor that is outstanding on the Assignment Effective Date, (c)
Assignor’s interest in any Letter of Credit outstanding on the Assignment
Effective Date, (d) any Note delivered to Assignor pursuant to the Credit
Agreement, and (e) the Credit Agreement and the other Related Writings. After
giving effect to such sale and assignment and on and after the Assignment
Effective Date, Assignee shall be deemed to have one or more Applicable
Commitment Percentages under the Credit Agreement equal to the Applicable
Commitment Percentages set forth in subparts II.A and II.B on Annex 1 hereto and
an Assigned Amount as set forth on subparts I.A and I.B of Annex 1 hereto
(hereinafter, the “Assigned Amount”).

 

3. Assignment Effective Date. The Assignment Effective Date (the “Assignment
Effective Date”) shall be [__________ __, ____] (or such other date agreed to by
the Administrative Agent). On or prior to the Assignment Effective Date,
Assignor shall satisfy the following conditions:

 

(a) receipt by the Administrative Agent of this Assignment Agreement, including
Annex 1 hereto, properly executed by Assignor and Assignee and accepted and
consented to by the Administrative Agent and, if necessary pursuant to the
provisions of Section 11.11(b) of the Credit Agreement, by the Borrower;

 

(b) receipt by the Administrative Agent from Assignor of a fee of Three Thousand
Five Hundred Dollars ($3,500), if required by Section 11.11(d) of the Credit
Agreement;

 

 E-10 

 

 

(c) receipt by the Administrative Agent from Assignee of an administrative
questionnaire, or other similar document, which shall include (i) the address
for notices under the Credit Agreement, (ii) the address of its Lending Office,
(iii) wire transfer instructions for delivery of funds by the Administrative
Agent, and (iv) such other information as the Administrative Agent shall
request; and

 

(d) receipt by the Administrative Agent from Assignor or Assignee of any other
information required pursuant to Section 11.11 of the Credit Agreement or
otherwise necessary to complete the transaction contemplated hereby.

 

4. Payment Obligations. In consideration for the sale and assignment of Loans
hereunder, Assignee shall pay to Assignor, on the Assignment Effective Date, the
amount agreed to by Assignee and Assignor. Any interest, fees and other payments
accrued prior to the Assignment Effective Date with respect to the Assigned
Amount shall be for the account of Assignor. Any interest, fees and other
payments accrued on and after the Assignment Effective Date with respect to the
Assigned Amount shall be for the account of Assignee. Each of Assignor and
Assignee agrees that it will hold in trust for the other party any interest,
fees or other amounts which it may receive to which the other party is entitled
pursuant to the preceding sentence and to pay the other party any such amounts
which it may receive promptly upon receipt thereof.

 

5. Credit Determination; Limitations on Assignor’s Liability. Assignee
represents and warrants to Assignor, the Borrower, the Administrative Agent and
the Lenders (a) that it is capable of making and has made and shall continue to
make its own credit determinations and analysis based upon such information as
Assignee deemed sufficient to enter into the transaction contemplated hereby and
not based on any statements or representations by Assignor; (b) Assignee
confirms that it meets the requirements to be an assignee as set forth in
Section 11.11 of the Credit Agreement; (c) Assignee confirms that it is able to
fund the Loans and the Letters of Credit as required by the Credit Agreement;
(d) Assignee agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Credit Agreement and the other Related
Writings are required to be performed by it as a Lender thereunder; and (e)
Assignee represents that it has reviewed each of the Loan Documents and by its
signature to this Assignment Agreement, agrees to be bound by and subject to the
terms and conditions of the Loan Documents as if it were an original party
thereto. It is understood and agreed that the assignment and assumption
hereunder are made without recourse to Assignor and that Assignor makes no
representation or warranty of any kind to Assignee and shall not be responsible
for (i) the due execution, legality, validity, enforceability, genuineness,
sufficiency or collectability of the Credit Agreement or any other Related
Writings, (ii) any representation, warranty or statement made in or in
connection with the Credit Agreement or any of the other Related Writings, (iii)
the financial condition or creditworthiness of the Borrower or any Guarantor of
Payment, (iv) the performance of or compliance with any of the terms or
provisions of the Credit Agreement or any of the other Related Writings, (v) the
inspection of any of the property, books or records of the Borrower, or (vi) the
validity, enforceability, perfection, priority, condition, value or sufficiency
of any collateral securing or purporting to secure the Loans or Letters of
Credit. Neither Assignor nor any of its officers, directors, employees, agents
or attorneys shall be liable for any mistake, error of judgment, or action taken
or omitted to be taken in connection with the Loans, the Letters of Credit, the
Credit Agreement or the other Related Writings, except for its or their own
gross negligence or willful misconduct. Assignee appoints the Administrative
Agent to take such action as agent on its behalf and to exercise such powers
under the Credit Agreement as are delegated to the Administrative Agent by the
terms thereof.

 

 E-11 

 

 

6. Indemnity. Assignee agrees to indemnify and hold harmless Assignor against
any and all losses, cost and expenses (including, without limitation, attorneys’
fees) and liabilities incurred by Assignor in connection with or arising in any
manner from Assignee’s performance or non-performance of obligations assumed
under this Assignment Agreement.

 

7. Subsequent Assignments. After the Assignment Effective Date, Assignee shall
have the right, pursuant to Section 11.11 of the Credit Agreement, to assign the
rights which are assigned to Assignee hereunder, provided that (a) any such
subsequent assignment does not violate any of the terms and conditions of the
Credit Agreement, any of the other Related Writings, or any law, rule,
regulation, order, writ, judgment, injunction or decree and that any consent
required under the terms of the Credit Agreement or any of the other Related
Writings has been obtained, (b) the assignee under such assignment from Assignee
shall agree to assume all of Assignee’s obligations hereunder in a manner
satisfactory to Assignor, and (c) Assignee is not thereby released from any of
its obligations to Assignor hereunder.

 

8. Reductions of Aggregate Amount of Commitments. If any reduction in the Total
Commitment Amount occurs between the date of this Assignment Agreement and the
Assignment Effective Date, the percentage of the Total Commitment Amount
assigned to Assignee shall remain the percentage specified in Section 1 hereof
and the dollar amount of the Commitment of Assignee shall be recalculated based
on the reduced Total Commitment Amount.

 

9. Acceptance of Administrative Agent; Notice by Assignor. This Assignment
Agreement is conditioned upon the acceptance and consent of the Administrative
Agent and, if necessary pursuant to Section 11.11 of the Credit Agreement, upon
the acceptance and consent of the Borrower; provided that the execution of this
Assignment Agreement by the Administrative Agent and, if necessary, by the
Borrower is evidence of such acceptance and consent.

 

10. Entire Agreement. This Assignment Agreement embodies the entire agreement
and understanding between the parties hereto and supersedes all prior agreements
and understandings between the parties hereto relating to the subject matter
hereof.

 

11. Governing Law. This Assignment Agreement shall be governed by the laws of
the State of New York.

 

12. Notices. Notices shall be given under this Assignment Agreement in the
manner set forth in the Credit Agreement. For the purpose hereof, the addresses
of the parties hereto (until notice of a change is delivered) shall be the
address set forth under each party’s name on the signature pages hereof.

 

13. Counterparts. This Assignment Agreement may be executed in any number of
counterparts, by different parties hereto in separate counterparts and by
facsimile signature, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.

 

[Remainder of page intentionally left blank.]

 

 E-12 

 

 

14. JURY TRIAL WAIVER. EACH OF THE UNDERSIGNED, TO THE EXTENT PERMITTED BY LAW,
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG THE ADMINISTRATIVE AGENT, ANY OF
THE LENDERS, AND THE BORROWER, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS ASSIGNMENT AGREEMENT OR ANY NOTE OR OTHER AGREEMENT,
INSTRUMENT OR DOCUMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR THE
TRANSACTIONS RELATED HERETO.

 

IN WITNESS WHEREOF, the parties hereto have executed this Assignment Agreement
by their duly authorized officers as of the date first above written.

 

    [NAME OF THE ASSIGNOR]       Address:                 Attn:     By:    
Phone:     Name:     Fax:     Title:                   [NAME OF THE ASSIGNEE]  
    Address:                 Attn:     By:     Phone:     Name:     Fax:    
Title:         Accepted and Consented to this ___ day of _______, 20__:  
Accepted and Consented to this ___ day of _______, 20__:

 

KEYBANK NATIONAL ASSOCIATION   [INSERT SIGNATURE OF THE BORROWER IF REQUIRED]
    as the Administrative Agent           [ZAGG, INC] By:       Name:     By:   
Title:       Name:           Title:  

 

 E-13 

 

 

ANNEX 1

TO

ASSIGNMENT AND ACCEPTANCE AGREEMENT

 

On and after the Assignment Effective Date, after giving effect to all other
assignments being made by Assignor on the Assignment Effective Date, the
Commitment of Assignee, and, if this is less than an assignment of all of
Assignor’s interest, Assignor, shall be as follows:

I.INTEREST BEING ASSIGNED TO ASSIGNEE

  A.

Revolving Credit Commitment

Applicable Commitment Percentage of

  %     Revolving Credit Commitment $       Assigned Amount                 B.
Term Loan Commitment         Applicable Commitment Percentage of         Term
Loan Commitment   %     Assigned Amount $  

 

II.ASSIGNEE’S COMMITMENT (as of the Assignment Effective Date)

 

 A.

Revolving Credit Commitment

Applicable Commitment Percentage of

  %     Revolving Credit Commitment $       Assigned Amount                 B.
Term Loan Commitment         Applicable Commitment Percentage of         Term
Loan Commitment   %     Assigned Amount $  

III.ASSIGNOR’S COMMITMENT (as of the Assignment Effective Date)

 

 A.

Revolving Credit Commitment

Applicable Commitment Percentage of

  %     Revolving Credit Commitment $       Assigned Amount                 B.
Term Loan Commitment         Applicable Commitment Percentage of         Term
Loan Commitment   %     Assigned Amount $  

 

 

E-14