Exhibit 10.1

 

Published CUSIP Number: 34988FAC5

Revolving Credit CUSIP Number: 34988FAD3

Term Loan CUSIP Number: 34988FAE1

 

 

 

CREDIT AGREEMENT

 

dated as of May 17, 2013,

 

by and among

 

FOSSIL, INC.,
as Borrower,

 

FOSSIL INTERMEDIATE, INC.,
FOSSIL TRUST,
FOSSIL PARTNERS, L.P.,
ARROW MERCHANDISING, INC.,
FOSSIL STORES I, INC.,
FOSSIL HOLDINGS, LLC,

and

FOSSIL INTERNATIONAL HOLDINGS, INC.,
as additional Credit Parties and/or Subsidiary Guarantors,

 

THE LENDERS REFERRED TO HEREIN,

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent, Swingline Lender and Issuing Lender,

 

BANK OF AMERICA, N.A.

and

JPMORGAN CHASE BANK, N.A.,

as Syndication Agents

 

and

 

HSBC BANK USA, NATIONAL ASSOCIATION

and

FIFTH THIRD BANK,

as Documentation Agents

 

WELLS FARGO SECURITIES, LLC,

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

and

J.P. MORGAN SECURITIES LLC,

as Joint Lead Arrangers and Joint Bookrunners

 

 

 

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

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I

DEFINITIONS

1

 

 

 

Section 1.1

Definitions

1

Section 1.2

Other Definitions and Provisions

29

Section 1.3

Accounting Terms

29

Section 1.4

UCC Terms

30

Section 1.5

Rounding

30

Section 1.6

References to Agreement and Laws

30

Section 1.7

Times of Day

30

Section 1.8

Letter of Credit Amounts

30

 

 

 

ARTICLE II

REVOLVING CREDIT FACILITY

30

 

 

 

Section 2.1

Revolving Credit Loans

30

Section 2.2

Swingline Loans

31

Section 2.3

Procedure for Advances of Revolving Credit Loans and Swingline Loans

32

Section 2.4

Repayment and Prepayment of Revolving Credit Loans and Swingline Loans

33

Section 2.5

Permanent Reduction of the Revolving Credit Commitment

34

Section 2.6

Termination of Revolving Credit Facility

34

 

 

 

ARTICLE III

LETTER OF CREDIT FACILITY

35

 

 

 

Section 3.1

L/C Commitment

35

Section 3.2

Procedure for Issuance of Letters of Credit

35

Section 3.3

Commissions and Other Charges

36

Section 3.4

L/C Participations

36

Section 3.5

Reimbursement Obligation of the Borrower

37

Section 3.6

Obligations Absolute

37

Section 3.7

Effect of Letter of Credit Application

38

Section 3.8

Guaranty by the Borrower of Reimbursement Obligations under Existing Letters of
Credit

38

 

 

 

ARTICLE IV

TERM LOAN FACILITY

38

 

 

 

Section 4.1

Initial Term Loan

38

Section 4.2

Procedure for Advance of Initial Term Loan

38

Section 4.3

Repayment of Initial Term Loan

39

Section 4.4

Prepayments of Term Loans

39

 

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TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

ARTICLE V

GENERAL LOAN PROVISIONS

41

 

 

 

Section 5.1

Interest

41

Section 5.2

Notice and Manner of Conversion or Continuation of Loans

42

Section 5.3

Fees

43

Section 5.4

Manner of Payment

43

Section 5.5

Evidence of Indebtedness

44

Section 5.6

Adjustments

45

Section 5.7

Obligations of Lenders

45

Section 5.8

Changed Circumstances

46

Section 5.9

Indemnity

47

Section 5.10

Increased Costs

48

Section 5.11

Taxes

49

Section 5.12

Mitigation Obligations; Replacement of Lenders

52

Section 5.13

Incremental Loans

53

Section 5.14

Cash Collateral

56

Section 5.15

Extension of Term Loans and Revolving Credit Commitments

57

 

 

 

ARTICLE VI

CONDITIONS OF CLOSING AND BORROWING

59

 

 

 

Section 6.1

Conditions to Closing and Initial Extensions of Credit

59

Section 6.2

Conditions to All Extensions of Credit

63

 

 

 

ARTICLE VII

REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES

63

 

 

 

Section 7.1

Organization; Power; Qualification

64

Section 7.2

Subsidiaries and Capitalization; Material Domestic Subsidiaries and Material
First-Tier Foreign Subsidiaries

64

Section 7.3

Authorization Enforceability

64

Section 7.4

Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc

64

Section 7.5

Compliance with Law; Governmental Approvals

65

Section 7.6

Tax Returns and Payments

65

Section 7.7

Intellectual Property Matters

65

Section 7.8

Environmental Matters

66

Section 7.9

Employee Benefit Matters

67

Section 7.10

Margin Stock

68

Section 7.11

Government Regulation

68

 

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TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

Section 7.12

Material Contracts

68

Section 7.13

Employee Relations

68

Section 7.14

Burdensome Provisions

68

Section 7.15

Financial Statements

68

Section 7.16

No Material Adverse Change

69

Section 7.17

Solvency

69

Section 7.18

Titles to Properties

69

Section 7.19

Litigation

69

Section 7.20

Absence of Defaults

69

Section 7.21

Senior Indebtedness Status

69

Section 7.22

Anti-Terrorism: Anti-Money Laundering

70

Section 7.23

Investment Bankers’ and Similar Fees

70

Section 7.24

Disclosure

70

 

 

 

ARTICLE VIII

FINANCIAL INFORMATION AND NOTICES

70

 

 

 

Section 8.1

Financial Statements and Projections

70

Section 8.2

Officer’s Compliance Certificate

71

Section 8.3

Other Reports

72

Section 8.4

Notice of Litigation and Other Matters

72

Section 8.5

Accuracy of Information

74

 

 

 

ARTICLE IX

AFFIRMATIVE COVENANTS

74

 

 

 

Section 9.1

Preservation of Corporate Existence and Related Matters

74

Section 9.2

Maintenance of Property and Licenses

74

Section 9.3

Insurance

75

Section 9.4

Accounting Methods and Financial Records

75

Section 9.5

Payment of Taxes and Other Obligations

75

Section 9.6

Compliance With Laws and Approvals

75

Section 9.7

Environmental Laws

75

Section 9.8

Compliance with ERISA

76

Section 9.9

Compliance with Agreements

76

Section 9.10

Visits and Inspections; Lender Meetings

76

Section 9.11

Subsidiaries

76

Section 9.12

Use of Proceeds

78

 

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TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

Section 9.13

Further Assurances

78

Section 9.14

Non-Consolidation

78

 

 

 

ARTICLE X

FINANCIAL COVENANTS

78

 

 

 

Section 10.1

Consolidated Total Leverage Ratio

78

Section 10.2

Consolidated Interest Coverage Ratio

79

Section 10.3

Maximum Capital Expenditures

79

 

 

 

ARTICLE XI

NEGATIVE COVENANTS

79

 

 

 

Section 11.1

Limitations on Indebtedness

79

Section 11.2

Limitations on Liens

81

Section 11.3

Limitations on Investments

83

Section 11.4

Limitations on Fundamental Changes

84

Section 11.5

Limitations on Asset Dispositions

85

Section 11.6

Limitations on Restricted Payments

86

Section 11.7

Transactions with Affiliates

87

Section 11.8

Certain Accounting Changes; Organizational Documents

87

Section 11.9

Limitation on Payments and Modifications of Subordinated Indebtedness

88

Section 11.10

No Further Negative Pledges; Restrictive Agreements

88

Section 11.11

Nature of Business

89

Section 11.12

Amendments of Other Documents

89

Section 11.13

Sale Leasebacks

89

Section 11.14

Domestic Subsidiaries

89

 

 

 

ARTICLE XII

DEFAULT AND REMEDIES

89

 

 

 

Section 12.1

Events of Default

89

Section 12.2

Remedies

91

Section 12.3

Rights and Remedies Cumulative; Non-Waiver; etc.

92

Section 12.4

Crediting of Payments and Proceeds

93

Section 12.5

Administrative Agent May File Proofs of Claim

94

Section 12.6

Credit Bidding

94

 

 

 

ARTICLE XIII

THE ADMINISTRATIVE AGENT

95

 

 

 

Section 13.1

Appointment and Authority

95

Section 13.2

Rights as a Lender

95

Section 13.3

Exculpatory Provisions

95

 

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TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

Section 13.4

Reliance by the Administrative Agent

96

Section 13.5

Delegation of Duties

97

Section 13.6

Resignation of Administrative Agent

97

Section 13.7

Non-Reliance on Administrative Agent and Other Lenders

98

Section 13.8

No Other Duties, etc.

98

Section 13.9

Collateral and Guaranty Matters

98

Section 13.10

Release of Liens and Guarantees of Subsidiaries

99

Section 13.11

Specified Cash Management Arrangements and Specified Hedge Agreements

99

 

 

 

ARTICLE XIV

MISCELLANEOUS

99

 

 

 

Section 14.1

Notices

99

Section 14.2

Amendments, Waivers and Consents

102

Section 14.3

Expenses; Indemnity

104

Section 14.4

Right of Set Off

105

Section 14.5

Governing Law; Jurisdiction, Etc.

106

Section 14.6

Waiver of Jury Trial

107

Section 14.7

Reversal of Payments

107

Section 14.8

Injunctive Relief; Punitive Damages

107

Section 14.9

Successors and Assigns; Participations

107

Section 14.10

Confidentiality

111

Section 14.11

Performance of Duties

112

Section 14.12

All Powers Coupled with Interest

112

Section 14.13

Survival

112

Section 14.14

Titles and Captions

113

Section 14.15

Severability of Provisions

113

Section 14.16

Counterparts; Integration; Effectiveness; Electronic Execution

113

Section 14.17

Term of Agreement

113

Section 14.18

USA Patriot Act

113

Section 14.19

Independent Effect of Covenants

114

Section 14.20

Inconsistencies with Other Documents

114

Section 14.21

Defaulting Lenders

114

 

v

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EXHIBITS

 

Exhibit A-1

-

Form of Revolving Credit Note

Exhibit A-2

-

Form of Swingline Note

Exhibit A-3

-

Form of Term Loan Note

Exhibit B

-

Form of Notice of Borrowing

Exhibit C

-

Form of Notice of Account Designation

Exhibit D

-

Form of Notice of Prepayment

Exhibit E

-

Form of Notice of Conversion/Continuation

Exhibit F

-

Form of Officer’s Compliance Certificate

Exhibit G

-

Form of Assignment and Assumption

Exhibit H

-

Form of Subsidiary Guaranty Agreement

Exhibit I

-

Form of Pledge Agreement

Exhibit J

-

Form of Joinder Agreement

Exhibit K-1

-

Form of U.S. Tax Compliance Certificate (Non-Partnership Foreign Lenders)

Exhibit K-2

-

Form of U.S. Tax Compliance Certificate (Non-Partnership Foreign Participants)

Exhibit K-3

-

Form of U.S. Tax Compliance Certificate (Foreign Participant Partnerships)

Exhibit K-4

-

Form of U.S. Tax Compliance Certificate (Foreign Lender Partnerships)

 

 

 

 

SCHEDULES

 

 

 

 

 

Schedule 1.1A

-

Existing Letters of Credit

Schedule 1.1B

-

Equity Investors

Schedule 1.1C

-

Revolving Credit Commitments

Schedule 1.1D

-

Term Loan Commitments

Schedule 7.1

-

Jurisdictions of Organization and Qualification

Schedule 7.2A

-

Subsidiaries and Capitalization

Schedule 7.2B

-

Material Domestic Subsidiaries and Material First-Tier Foreign Subsidiaries

Schedule 7.9

-

ERISA Plans

Schedule 7.12

-

Material Contracts

Schedule 7.13

-

Labor and Collective Bargaining Agreements

Schedule 7.18

-

Real Property

Schedule 8.1

-

Foreign Subsidiaries excluded from Audit

Schedule 11.1

-

Indebtedness and Guaranty Obligations

Schedule 11.2

-

Existing Liens

Schedule 11.3

-

Existing Loans, Advances and Investments

Schedule 11.7

-

Transactions with Affiliates

 

vi

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CREDIT AGREEMENT, dated as of May 17, 2013, by and among FOSSIL, INC., a
Delaware corporation (the “Borrower”), FOSSIL INTERMEDIATE, INC., a Delaware
corporation (“Fossil Intermediate”), FOSSIL TRUST, a business trust formed under
the Delaware Business Trust Act (and now existing as a statutory trust under the
Delaware Statutory Trust Act), FOSSIL PARTNERS, L.P., a Texas limited
partnership (“Fossil Partners”), ARROW MERCHANDISING, INC., a Texas corporation
(“Arrow”), FOSSIL STORES I, INC., a Delaware corporation (“Fossil Stores”),
FOSSIL HOLDINGS, LLC, a Delaware limited liability company (“Fossil Holdings”),
FOSSIL INTERNATIONAL HOLDINGS, INC., a Delaware corporation (“Fossil
International”), the additional Material Domestic Subsidiaries who may become a
party to this Agreement pursuant to the terms hereof, the lenders who are party
to this Agreement and the lenders who may become a party to this Agreement
pursuant to the terms hereof (collectively with the lenders party hereto, the
“Lenders”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association, as the Administrative Agent for the Lenders.

 

STATEMENT OF PURPOSE

 

The Borrower has requested, and, subject to the terms and conditions hereof, the
Administrative Agent and the Lenders have agreed, to extend certain credit
facilities to the Borrower on the terms and conditions of this Agreement.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, such parties hereby
agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1            Definitions.  The following terms when used in this
Agreement shall have the meanings assigned to them below:

 

“Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001)).

 

“Administrative Agent” means Wells Fargo, in its capacity as Administrative
Agent hereunder, and any successor thereto appointed pursuant to Section 13.6.

 

“Administrative Agent’s Office” means the office of the Administrative Agent
specified in or determined in accordance with the provisions of Section 14.1(c).

 

“Administrative Questionnaire” means an administrative questionnaire in a form
supplied by the Administrative Agent.

 

“Affiliate” means, with respect to any Person, any other Person (other than a
Subsidiary of the Borrower) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such first Person or any of its Subsidiaries.  The term “control” means (a) the
power to vote ten percent (10%) or more of the securities or other equity
interests of a Person having ordinary voting power, or (b) the possession,
directly or indirectly, of any other power to direct or cause the direction of
the management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.  The terms “controlling” and “controlled”
have meanings correlative thereto.

 

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

 

“Agreement” means this Credit Agreement.

 

“Applicable Law” means all applicable provisions of constitutions, laws,
statutes, ordinances, rules, regulations, permits, licenses and orders of courts
or Governmental Authorities and all orders and decrees of all courts and
arbitrators.

 

“Applicable Margin” means the corresponding percentages per annum as set forth
below based on the Consolidated Total Leverage Ratio:

 

Pricing
Level

 

Consolidated Total Leverage
Ratio

 

Commitment
Fee

 

LIBOR +

 

Base Rate
+

 

I

 

Less than 1.00 to 1.00

 

0.20

%

1.25

%

0.25

%

II

 

Greater than or equal to 1.00 to 1.00, but less than 1.50 to 1.00

 

0.25

%

1.50

%

0.50

%

III

 

Greater than or equal to 1.50 to 1.00, but less than 2.00 to 1.00

 

0.30

%

1.75

%

0.75

%

IV

 

Greater than or equal to 2.00 to 1.00

 

0.35

%

2.00

%

1.00

%

 

The Applicable Margin shall be determined and adjusted quarterly on the date
(each a “Calculation Date”) ten (10) Business Days after the day by which the
Borrower is required to provide an Officer’s Compliance Certificate pursuant to
Section 8.2 for the most recently ended Fiscal Quarter of the Borrower; provided
that (a) the Applicable Margin shall be based on Pricing Level II until the
first Calculation Date occurring after the Closing Date and, thereafter the
Pricing Level shall be determined by reference to the Consolidated Total
Leverage Ratio as of the last day of the most recently ended Fiscal Quarter of
the Borrower preceding the applicable Calculation Date, and (b) if the Borrower
fails to provide the Officer’s Compliance Certificate as required by Section 8.2
for the most recently ended Fiscal Quarter of the Borrower preceding the
applicable Calculation Date, the Applicable Margin from such Calculation Date
shall be based on Pricing Level IV until such time as an appropriate Officer’s
Compliance Certificate is provided, at which time the Pricing Level shall be
determined by reference to the Consolidated Total Leverage Ratio as of the last
day of the most recently ended Fiscal Quarter of the Borrower preceding such
Calculation Date.  The Applicable Margin shall be effective from one Calculation
Date until the next Calculation Date.  Any adjustment in the Applicable Margin
shall be applicable to all Extensions of Credit then existing or subsequently
made or issued.

 

Notwithstanding the foregoing, in the event that any financial statement or
Officer’s Compliance Certificate delivered pursuant to Section 8.1 or 8.2 is
shown to be inaccurate (regardless of whether (i) this Agreement is in effect,
(ii) any Commitments are in effect, or (iii) any Extension of Credit is
outstanding when such inaccuracy is discovered or such financial statement or
Officer’s Compliance Certificate was delivered), and such inaccuracy, if
corrected, would have led to the application of a higher Applicable Margin for
any period (an “Applicable Period”) than the Applicable Margin applied for such
Applicable Period, then (x) the Borrower shall immediately deliver to the
Administrative Agent a corrected Officer’s Compliance Certificate for such
Applicable Period, (y) the Applicable Margin for such Applicable Period shall be
determined as if the Consolidated Total Leverage Ratio in the corrected
Officer’s Compliance Certificate were applicable for such Applicable Period, and
(z) the Borrower shall immediately and retroactively be obligated to pay to the
Administrative Agent the accrued additional

 

2

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

 

interest and fees owing as a result of such increased Applicable Margin for such
Applicable Period, which payment shall be promptly applied by the Administrative
Agent in accordance with Section 5.4.  Nothing in this paragraph shall limit the
rights of the Administrative Agent and Lenders with respect to Section 5.1(c) or
Section 12.2 or any of their other rights under this Agreement.  The Borrower’s
obligations under this paragraph shall survive the termination of the
Commitments and the repayment of all other Obligations hereunder.

 

“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

 

“Arrangers” means Wells Fargo Securities, LLC, in its capacity as “left-side”
lead arranger and joint bookrunner, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and J.P. Morgan Securities LLC, in their respective capacities as
joint lead arrangers and joint bookrunners, and their successors.

 

“Asset Disposition” means the disposition (including any series of related
dispositions) of any assets (including, without limitation, any Capital Stock
owned) of any Credit Party or any Subsidiary thereof, whether by sale, lease,
transfer or otherwise, having a fair market value (including an aggregate fair
market value) of $1,000,000 or more.  The term “Asset Disposition” shall not
include any Equity Issuance.

 

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 14.9), and accepted by the Administrative Agent, in
substantially the form attached as Exhibit G or any other form approved by the
Administrative Agent.

 

“Attributable Indebtedness” means, on any date of determination, (a) in respect
of any Capital Lease of any Person, the capitalized amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP, and (b) in respect of any Synthetic Lease, the capitalized amount or
principal amount of the remaining lease payments under the relevant lease that
would appear on a balance sheet of such Person prepared as of such date in
accordance with GAAP if such lease were accounted for as a Capital Lease.

 

“Base Rate” means, at any time, the highest of (a) the Prime Rate, (b) the
Federal Funds Rate plus 0.50% and (c) except during any period of time during
which a notice delivered to the Borrower under Section 5.8 shall remain in
effect, LIBOR for an Interest Period of one month plus 1.0%; each change in the
Base Rate shall take effect simultaneously with the corresponding change or
changes in the Prime Rate, the Federal Funds Rate or LIBOR.

 

“Base Rate Loan” means any Loan bearing interest at a rate based upon the Base
Rate as provided in Section 5.1(a).

 

“Borrower” has the meaning assigned thereto in the introductory paragraph
hereto.

 

“Borrower Materials” has the meaning assigned thereto in Section 8.4.

 

“Business Day” means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday on
which banks in Dallas, Texas, Charlotte, North Carolina or New York, New York,
are open for the conduct of their commercial banking business, and (b) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, any LIBOR Rate Loan, or any Base Rate Loan as to
which the interest rate is determined by reference to

 

3

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

 

LIBOR, any day that is a Business Day described in clause (a) above and that is
also a day for trading by and between banks in Dollar deposits in the London
interbank market.

 

“Calculation Date” has the meaning assigned thereto in the definition of
Applicable Margin.

 

“Capital Asset” means, with respect to the Borrower and its Subsidiaries, any
asset that should, in accordance with GAAP, be classified and accounted for as a
capital asset on a Consolidated balance sheet of the Borrower and its
Subsidiaries.

 

“Capital Expenditures” means, with respect to the Borrower and its Subsidiaries
for any period, the aggregate cost of all Capital Assets acquired by the
Borrower and its Subsidiaries during such period, as determined in accordance
with GAAP.

 

“Capital Lease” means any lease of any property by the Borrower or any of its
Subsidiaries, as lessee, that should, in accordance with GAAP, be classified and
accounted for as a capital lease on a Consolidated balance sheet of the Borrower
and its Subsidiaries.

 

“Capital Stock” means (a) in the case of a corporation, capital stock, (b) in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of capital
stock, (c) in the case of a partnership, partnership interests (whether general
or limited), (d) in the case of a limited liability company, membership
interests, (e) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person and (f) any and all warrants, rights or options to
purchase any of the foregoing.

 

“Cash Collateralize” means, to pledge and deposit with, or deliver to, the
Administrative Agent, for the benefit of one or more of the Issuing Lender, the
Swingline Lender or the Lenders, as collateral for L/C Obligations or
obligations of the Lenders to fund participations in respect of L/C Obligations
or Swingline Loans, cash or deposit account balances or, if the Administrative
Agent, the Issuing Lender and the Swingline Lender shall agree, in their
reasonable discretion, other credit support, in each case pursuant to
documentation in form and substance satisfactory to the Administrative Agent,
the Issuing Lender and the Swingline Lender.  “Cash Collateral” shall have a
meaning correlative to the foregoing and shall include the proceeds of such cash
collateral and other credit support.

 

“Cash Equivalents” means, collectively, (a) marketable direct obligations issued
or unconditionally guaranteed by the United States or any agency thereof
maturing within one year from the date of acquisition thereof, (b) commercial
paper maturing no more than 270 days from the date of creation thereof and
currently having one of the three highest ratings obtainable from either
Standard & Poor’s Ratings Services, a division of the McGraw-Hill
Companies, Inc. (or any successor thereto), or Moody’s Investors Service, Inc.
(or any successor thereto), (c) certificates of deposit maturing no more than
one year from the date of creation thereof issued by commercial banks
incorporated under the laws of the United States or any State thereof, each
having combined capital, surplus and undivided profits of not less than
$500,000,000 and having a rating of “A” or better by a nationally recognized
rating agency; (d) time deposits maturing no more than thirty (30) days from the
date of creation thereof with commercial banks or savings banks or savings and
loan associations each having membership either in the FDIC or the deposits of
which are insured by the FDIC and in amounts not exceeding the maximum amounts
of insurance thereunder, (e) fully collateralized repurchase agreements with a
term of not more than 30 days for securities described in clause (a) above and
entered into with a financial institution satisfying the criteria of clause
(c) above, (f) investments in “money market funds” within the meaning of
Rule 2a-7 of the Investment Company Act of 1940, as amended, substantially all
of whose assets are invested in investments of the type described in clauses
(a) through (d) above, and (g) other short-term

 

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investments utilized by Foreign Subsidiaries in accordance with normal
investment practices for cash management in investments of a type analogous to
the foregoing.

 

“Cash Management Agreement” means any agreement to provide cash management
services, including p-cards (including purchasing cards and commercial cards),
treasury, depository, overdraft, credit or debit card (including non-card
electronic payables), electronic funds transfer and other cash management
arrangements.

 

“Cash Management Bank” means any Person that, (a) at the time it enters into a
Cash Management Agreement with a Credit Party, is a Lender, an Affiliate of a
Lender, the Administrative Agent or an Affiliate of the Administrative Agent, or
(b) at the time it (or its Affiliate) becomes a Lender (including on the Closing
Date), is a party to a Cash Management Agreement with a Credit Party, in each
case in its capacity as a party to such Cash Management Agreement.

 

“Change in Control” means an event or series of events by which:

 

(a)                                 (i) any “person” or “group” (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any
employee benefit plan of such person or its Subsidiaries, and any person or
entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan) other than the Equity Investors becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a “person” or “group” shall be deemed to have “beneficial ownership”
of all securities that such “person” or “group” has the right to acquire,
whether such right is exercisable immediately or only after the passage of time
(such right, an “option right”)), directly or indirectly, of more than
twenty-five percent (25%) of the equity securities of the Borrower entitled to
vote in the election of members of the board of directors (or equivalent
governing body) of the Borrower or (ii) a majority of the members of the board
of directors (or equivalent governing body) of the Borrower shall not be
Continuing Directors;

 

(b)                                 there shall have occurred under any
indenture or other instrument evidencing any Indebtedness or Capital Stock in
excess of $25,000,000 any “change in control” or similar provision (as set forth
in the indenture, agreement or other evidence of such Indebtedness) obligating
the Borrower to repurchase, redeem or repay all or any part of the Indebtedness
or Capital Stock provided for therein; or

 

(c)                                  the Borrower shall fail to own, directly or
indirectly, one hundred percent (100%) of the Capital Stock of each of the
Subsidiary Guarantors.

 

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

 

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“Class” means, when used in reference to any Loan, whether such Loan is a
Revolving Credit Loan, Swingline Loan or Term Loan and, when used in reference
to any Commitment, whether such Commitment is a Revolving Credit Commitment or a
Term Loan Commitment.

 

“Closing Date” means the date of this Agreement.

 

“Code” means the Internal Revenue Code of 1986, and the rules and regulations
thereunder.

 

“Collateral” means the collateral security for the Obligations pledged or
granted pursuant to the Security Documents.

 

“Commercial Letter of Credit Facility” means the uncommitted letter of credit
facility among Borrower, Fossil Partners, Fossil Group Europe GmbH, Fossil Asia
Pacific Ltd. and The Hong Kong and Shanghai Banking Corporation Limited (“HSBC”)
evidenced by the letter agreement dated as of November 5, 2012, as the same may
be amended, modified, supplemented, renewed, extended or replaced from time to
time (including, without limitation, any participation agreement existing from
time to time between HSBC and Wells Fargo relating thereto and any replacement
thereto provided from time to time by Wells Fargo).

 

“Commitment Fee” has the meaning assigned thereto in Section 5.3(a).

 

“Commitment Percentage” means, as to any Lender, such Lender’s Revolving Credit
Commitment Percentage or Term Loan Percentage, as applicable.

 

“Commitments” means, collectively, as to all Lenders, the Revolving Credit
Commitments and the Term Loan Commitments of such Lenders.

 

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, and any successor statute.

 

“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

 

“Consolidated” means, when used with reference to financial statements or
financial statement items of any Person, such statements or items on a
consolidated basis in accordance with applicable principles of consolidation
under GAAP.

 

“Consolidated EBITDA” means, for any period, the sum of the following determined
on a Consolidated basis, without duplication, for the Borrower and its
Subsidiaries in accordance with GAAP: (a) Consolidated Net Income for such
period, plus (b) the sum of the following, without duplication, to the extent
deducted in determining Consolidated Net Income for such period: (i) income and
franchise tax expense during such period, (ii) Consolidated Interest Expense,
(iii) amortization, depreciation and other non-cash charges for such period
(except to the extent that such non-cash charges are reserved for cash charges
to be taken in the future), (iv) extraordinary losses (excluding extraordinary
losses from discontinued operations), (v) the amount of premium payments paid by
the Borrower or its Subsidiaries, and charges in respect of unamortized fees and
expenses, in each case associated with the repayment of Indebtedness and
(vi) expenses relating to stock-based compensation plans resulting from the
application of Financial Accounting Standards Board Statement No. 123R, minus
(c) interest income and extraordinary gains for such period.

 

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“Consolidated Interest Coverage Ratio” means, as of any date of determination,
the ratio of (a) Consolidated EBITDA for the period of four (4) consecutive
Fiscal Quarters ending on or immediately prior to such date to (b) Consolidated
Interest Expense for the period of four (4) consecutive Fiscal Quarters ending
on or immediately prior to such date.

 

“Consolidated Interest Expense” means, for any period, the sum of the following
determined on a Consolidated basis, without duplication, for the Borrower and
its Subsidiaries in accordance with GAAP, interest expense (including, without
limitation, interest expense attributable to Capital Leases and all net payment
obligations pursuant to Hedge Agreements) for such period.  For purposes hereof,
“interest” shall include interest imputed on the Attributable Indebtedness in
respect of any Capital Lease or Synthetic Lease.

 

“Consolidated Net Income” means, for any period, the net income (or loss) of the
Borrower and its Subsidiaries for such period, determined on a Consolidated
basis, without duplication, in accordance with GAAP; provided that, in
calculating Consolidated Net Income of the Borrower and its Subsidiaries for any
period, there shall be excluded (a) the net income (or loss) of any Person
(other than a Subsidiary which shall be subject to clause (c) below), in which
the Borrower or any of its Subsidiaries has a joint interest with a third party,
except to the extent such net income is actually paid in cash to the Borrower or
any of its Subsidiaries by dividend or other distribution during such period,
(b) the net income (or loss) of any Person accrued prior to the date it becomes
a Subsidiary of the Borrower or any of its Subsidiaries or is merged into or
consolidated with the Borrower or any of its Subsidiaries or that Person’s
assets are acquired by the Borrower or any of its Subsidiaries except to the
extent included pursuant to the foregoing clause (a), and (c) the net income (if
positive), of any Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary to the Borrower or any of
its Subsidiaries of such net income (i) is not at the time permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to such
Subsidiary or (ii) would be subject to any taxes payable on such dividends or
distributions.

 

“Consolidated Total Indebtedness” means, as of any date of determination with
respect to the Borrower and its Subsidiaries on a Consolidated basis without
duplication, the sum of (a) all Indebtedness (other than Attributable
Indebtedness with respect to Capital Leases and Synthetic Leases) of the
Borrower and its Subsidiaries minus (b) all undrawn letters of credit.

 

“Consolidated Total Leverage Ratio” means, as of any date of determination, the
ratio of (a) Consolidated Total Indebtedness on such date to (b) Consolidated
EBITDA for the period of four (4) consecutive Fiscal Quarters ending on or
immediately prior to such date.

 

“Continuing Directors” means the directors of the Borrower on the Closing Date
and each other director of the Borrower, if, in each case, such other director’s
nomination for election to the board of directors (or equivalent governing body)
of the Borrower is recommended by at least 51% of the then Continuing Directors.

 

“Credit Facility” means, collectively, the Revolving Credit Facility, the Term
Loan Facility, the Swingline Facility and the L/C Facility.

 

“Credit Parties” means, collectively, the Borrower, the Subsidiary Guarantors
and the other Domestic Subsidiaries of the Borrower as of the Closing Date which
are parties to this Agreement.

 

“Debt Issuance” means the issuance of any Indebtedness for borrowed money by any
Credit Party or any of its Subsidiaries.

 

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“Debtor Relief Laws” means the Bankruptcy Code of the United States of America,
and all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect.

 

“Default” means any of the events specified in Section 12.1 which, with the
passage of time, the giving of notice or any other condition, would constitute
an Event of Default.

 

“Defaulting Lender” means, subject to Section 14.21(b), any Lender that (a) has
failed to (i) fund all or any portion of the Revolving Credit Loans, any Term
Loans, participations in L/C Obligations or participations in Swingline Loans
required to be funded by it hereunder within two Business Days of the date such
Loans or participations were required to be funded hereunder unless such Lender
notifies the Administrative Agent and the Borrower in writing that such failure
is the result of such Lender’s reasonable determination that one or more
conditions precedent to funding (each of which conditions precedent, together
with any applicable default, shall be specifically identified in such writing)
has not been satisfied, or (ii) pay to the Administrative Agent, the Issuing
Lender, the Swingline Lender or any other Lender any other amount required to be
paid by it hereunder (including in respect of its participation in Letters of
Credit or Swingline Loans) within two Business Days of the date when due,
(b) has notified the Borrower, the Administrative Agent, the Issuing Lender or
the Swingline Lender in writing that it does not intend to comply with its
funding obligations hereunder, or has made a public statement to that effect
(unless such writing or public statement relates to such Lender’s obligation to
fund a Loan hereunder and states that such position is based on such Lender’s
reasonable determination that a condition precedent to funding (which condition
precedent, together with any applicable default, shall be specifically
identified in such writing or public statement) cannot be satisfied), (c) has
failed, within three Business Days after written request by the Administrative
Agent or the Borrower, to confirm in writing to the Administrative Agent and the
Borrower that it will comply with its prospective funding obligations hereunder
(provided that such Lender shall cease to be a Defaulting Lender pursuant to
this clause (c) upon receipt of such written confirmation by the Administrative
Agent and the Borrower), or (d) has, or has a direct or indirect parent company
that has, (i) become the subject of a proceeding under any Debtor Relief Law, or
(ii) had appointed for it a receiver, custodian, conservator, trustee,
administrator, assignee for the benefit of creditors or similar Person charged
with reorganization or liquidation of its business or assets, including the FDIC
or any other state or federal regulatory authority acting in such a capacity;
provided that a Lender shall not be a Defaulting Lender solely by virtue of the
ownership or acquisition of any equity interest in that Lender or any direct or
indirect parent company thereof by a Governmental Authority 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 determination by the Administrative
Agent that a Lender is a Defaulting Lender under any one or more of clauses
(a) through (d) above shall be conclusive and binding absent manifest error, and
such Lender shall be deemed to be a Defaulting Lender (subject to
Section 14.21(b)) upon delivery of written notice of such determination to the
Borrower, the Issuing Lender, the Swingline Lender and each Lender.

 

“Disqualified Capital Stock” means any Capital Stock that, by its terms (or by
the terms of any security or other Capital Stock into which it is convertible or
for which it is exchangeable) or upon the happening of any event or condition,
(a)  matures or is mandatorily redeemable (other than solely for Qualified
Capital Stock), pursuant to a sinking fund obligation or otherwise (except as a
result of a change of control or asset sale so long as any rights of the holders
thereof upon the occurrence of a change of control or asset sale event shall be
subject to the prior repayment in full of the Loans and all other Obligations
that are accrued and payable and the termination of the Commitments), (b) is
redeemable at the option of the holder thereof (other than solely for Qualified
Capital Stock) (except as a result of a

 

8

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change of control or asset sale so long as any rights of the holders thereof
upon the occurrence of a change of control or asset sale event shall be subject
to the prior repayment in full of the Loans and all other Obligations that are
accrued and payable and the termination of the Commitments), in whole or in
part, (c) provides for the scheduled payment of dividends in cash or (d) is or
becomes convertible into or exchangeable for Indebtedness or any other Capital
Stock that would constitute Disqualified Capital Stock, in each case, prior to
the date that is 91 days after the Term Loan Maturity Date; provided, that if
such Capital Stock is issued pursuant to a plan for the benefit of the Borrower
or its Subsidiaries or by any such plan to such employees, such Capital Stock
shall not constitute Disqualified Capital Stock solely because it may be
required to be repurchased by the Borrower or its Subsidiaries in order to
satisfy applicable statutory or regulatory obligations.

 

“Dollars” or “$” means, unless otherwise qualified, dollars in lawful currency
of the United States.

 

“Domestic Subsidiary” means any Subsidiary organized under the laws of any
political subdivision of the United States.

 

“Eligible Assignee” means any Person that meets the requirements to be an
assignee under Section 14.9(b)(iii), (v) and (vi) (subject to such consents, if
any, as may be required under Section 14.9(b)(iii)).

 

“Employee Benefit Plan” means (a) any employee benefit plan within the meaning
of Section 3(3) of ERISA that is maintained for employees of any Credit Party or
any ERISA Affiliate or (b) any Pension Plan or Multiemployer Plan that has at
any time within the preceding six (6) years been maintained for the employees of
any Credit Party or any current or former ERISA Affiliate.

 

“Environmental Claims” means any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of noncompliance
or violation, investigations (other than internal reports prepared by any Person
in the ordinary course of business and not in response to any third party action
or request of any kind) or proceedings relating in any way to any actual or
alleged violation of or liability under any Environmental Law or relating to any
permit issued, or any approval given, under any such Environmental Law brought
by any Person, including, without limitation, any and all claims by Governmental
Authorities for cleanup, removal, response or remedial actions or damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from Hazardous Materials or arising from alleged injury or threat of
injury to human health or the environment from Hazardous Materials.

 

“Environmental Laws” means any and all federal, foreign, state, provincial and
local laws, statutes, ordinances, codes, rules, standards and regulations,
permits, licenses, approvals and orders of courts or Governmental Authorities,
relating to the protection of public health or the environment, including, but
not limited to, requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of any hazardous
waste (as defined by 42 U.S.C. §6903(5)), hazardous substance (as defined by 42
U.S.C. §9601(14)), hazardous material (as defined by 49 U.S.C. §5102(2)), toxic
pollutant (as listed pursuant to 33 U.S.C. §1317), or pollutant or contaminant
(as pollutant or contaminant is defined in 33 U.S.C. §9601(33)).

 

“Equity Investors” means, collectively, the Persons listed on Schedule 1.1B
attached hereto who constitute senior management of the Borrower on the Closing
Date and who own Capital Stock of the Borrower on the Closing Date.

 

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“Equity Issuance” means any issuance by any Credit Party or any Subsidiary
thereof to any Person that is not a Credit Party of (i) shares of its Capital
Stock, (ii) any shares of its Capital Stock pursuant to the exercise of options
or warrants or (iii) any shares of its Capital Stock pursuant to the conversion
of any debt securities to equity.  The term “Equity Issuance” shall not include
(A) any Asset Disposition or (B) any Debt Issuance.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, and the
rules and regulations thereunder.

 

“ERISA Affiliate” means any Person who together with any Credit Party or any of
its Subsidiaries is treated as a single employer within the meaning of
Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA.

 

“Eurodollar Reserve Percentage” means, for any day, the percentage (expressed as
a decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%)
which is in effect for 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, any basic, supplemental or emergency
reserves) in respect of eurocurrency liabilities or any similar category of
liabilities for a member bank of the Federal Reserve System in New York City.

 

“Event of Default” means any of the events specified in Section 12.1; provided
that any requirement for passage of time, giving of notice, or any other
condition, has been satisfied.

 

“Exchange Act” means the Securities Exchange Act of 1934.

 

“Excluded Swap Obligation” means, with respect to any Subsidiary Guarantor, any
Swap Obligation if, and to the extent that, all or a portion of the guarantee of
such Subsidiary Guarantor of, or the grant by such Subsidiary Guarantor of a
security interest to secured, 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 Subsidiary Guarantor’s
failure for any reason to constitute an “eligible contract participant” as
defined in the Commodity Exchange Act and the regulations thereunder at the time
the guarantee of such Subsidiary Guarantor or the grant of such security
interest becomes 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 any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of any Lender, its applicable lending office located in,
the jurisdiction imposing such Tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) in the case of a Lender, United States
federal withholding Taxes imposed on amounts payable to or for the account of
such Lender with respect to an applicable interest in a Loan or Commitment
pursuant to a law in effect on the date on which (i) such Lender acquires such
interest in the Loan or Commitment (other than pursuant to an assignment request
by the Borrower under Section 5.12(b)) or (ii) such Lender changes its lending
office, except in each case to the extent that, pursuant to Section 5.11,
amounts with respect to such Taxes were payable either to such Lender’s assignor
immediately before such Lender became a party hereto or to such Lender
immediately before it changed its lending office, (c) Taxes attributable to such
Recipient’s failure to

 

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comply with Section 5.11(g) and (d) any United States federal withholding Taxes
imposed under FATCA.

 

“Existing Credit Agreement” means that certain Credit Agreement, dated as of
December 17, 2010, among the Borrower, certain Subsidiaries of the Borrower
party thereto, the Lenders party thereto and Wells Fargo Bank, National
Association, as administrative agent, as amended by that certain Consent and
First Amendment to Credit Agreement, dated April 2, 2012.

 

“Existing Letters of Credit” means those letters of credit existing on the
Closing Date and identified on Schedule 1.1A.

 

“Extended Revolving Credit Commitment” shall have the meaning assigned to such
term in Section 5.15(f).

 

“Extended Term Loans” shall have the meaning assigned to such term in
Section 5.15(h).

 

“Extension” shall have the meaning assigned to such term in Section 5.15(a).

 

“Extension Offer” shall have the meaning assigned to such term in
Section 5.15(a).

 

“Extensions of Credit” means, as to any Lender at any time, (a) an amount equal
to the sum of (i) the aggregate principal amount of all Revolving Credit Loans
made by such Lender then outstanding, (ii) such Lender’s Revolving Credit
Commitment Percentage of the L/C Obligations then outstanding, (iii) such
Lender’s Revolving Credit Commitment Percentage of the Swingline Loans then
outstanding and (iv) the aggregate principal amount of the Term Loans made by
such Lender then outstanding, or (b) the making of any Loan or participation in
any Letter of Credit by such Lender, as the context requires.

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof and any agreements entered into
pursuant to Section 1471(b)(1) of the Code.

 

“FDIC” means the Federal Deposit Insurance Corporation.

 

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers on such
day (or, if such day is not a Business Day, for the immediately preceding
Business Day), as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day, provided that, if such rate is not so
published for any day which is a Business Day, “Federal Funds Rate” means the
average of the quotation for such day on such transactions received by the
Administrative Agent from three Federal Funds brokers of recognized standing
selected by the Administrative Agent.

 

“Fee Letters” means (a) the fee letter agreement dated April 15, 2013 among the
Borrower, the Administrative Agent and Wells Fargo Securities, LLC, (b) the fee
letter agreement dated April 15, 2013 between the Borrower and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, and (c) the fee letter agreement dated
April 15, 2013 between the Borrower and J.P. Morgan Securities LLC.

 

“Fiscal Quarter” means one of the four (4) periods falling in each Fiscal Year,
each such period being thirteen (13) weeks in duration, with the first such
period in any Fiscal Year beginning on the first

 

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day of such Fiscal Year and the last such period in any Fiscal Year ending on
the last Saturday closest to December 31.

 

“Fiscal Year” means the fifty—two (52) or fifty-three (53) week period beginning
on the date which is one day after the end of the similar preceding period and
ending on the Saturday closest to December 31st.

 

“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is resident for tax
purposes.  For purposes of this definition, the United States, each State
thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.

 

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

 

“Foreign Subsidiary Pledge Agreements” means pledge and security agreements or
other agreements valid and enforceable under the laws of the foreign
jurisdictions in which the Material First-Tier Foreign Subsidiaries are
organized and in form and substance reasonably satisfactory to the
Administrative Agent pursuant to which the Administrative Agent, for the benefit
of the Secured Parties and as security for the Obligations, is granted a
security interest (or the equivalent under the applicable foreign laws) in
sixty-five percent (65%) of the total outstanding voting Capital Stock (and one
hundred percent (100%) of the non-voting Capital Stock) of each Material
First-Tier Foreign Subsidiary.

 

“Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with
respect to the Issuing Lender, such Defaulting Lender’s Revolving Credit
Commitment Percentage of the outstanding L/C Obligations other than L/C
Obligations as to which such Defaulting Lender’s participation obligation has
been reallocated to other Lenders or Cash Collateralized in accordance with the
terms hereof and (b) with respect to the Swingline Lender, such Defaulting
Lender’s Revolving Credit Commitment Percentage of outstanding Swingline Loans
other than Swingline Loans as to which such Defaulting Lender’s participation
obligation has been reallocated to other Lenders or Cash Collateralized in
accordance with the terms hereof.

 

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its activities.

 

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

 

“Governmental Approvals” means all authorizations, consents, approvals, permits,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.

 

“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).

 

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“Guaranty Obligation” means, with respect to the Borrower and its Subsidiaries,
without duplication, any obligation, contingent or otherwise, of any such Person
pursuant to which such Person has directly or indirectly guaranteed any
Indebtedness or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of any such Person (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or other obligation (whether
arising by virtue of partnership arrangements, by agreement to keep well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement condition or otherwise) or (b) entered into for the purpose
of assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided, that the term Guaranty
Obligation shall not include endorsements for collection or deposit in the
ordinary course of business.

 

“Hazardous Materials”  means any substances or materials (a) which are or become
defined as hazardous wastes, hazardous substances, hazardous materials, solid
waste, special waste, extremely hazardous waste, hazardous constitutent,
restricted hazardous waste, pollutants, contaminants, chemical substances or
mixtures or toxic substances under any Environmental Law, (b) which are listed,
defined, designated or classified as, or otherwise determined by any
Environmental Law to be hazardous, ignitable, dangerous, toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise harmful to human health or the environment, or (c) which contain,
without limitation, asbestos in friable form, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum or petroleum
derived substances or waste, crude oil, nuclear fuel, natural gas or synthetic
gas.

 

“Hedge Agreement” means any agreement with respect to any Interest Rate
Contract, forward rate agreement, commodity swap, forward foreign exchange
agreement, currency swap agreement, cross-currency rate swap agreement, currency
option agreement or other agreement or arrangement designed to alter the risks
of any Person arising from fluctuations in interest rates, currency values or
commodity prices.

 

“Hedge Bank” means any Person that, (a) at the time it enters into a Hedge
Agreement with a Credit Party permitted under Article XI, is a Lender, an
Affiliate of a Lender, the Administrative Agent or an Affiliate of the
Administrative Agent or (b) at the time it (or its Affiliate) becomes a Lender
(including on the Closing Date), is a party to a Hedge Agreement with a Credit
Party, in each case in its capacity as a party to such Hedge Agreement.

 

“Increased Amount Date” has the meaning assigned thereto in Section 5.13(a)(ii).

 

“Incremental Agreement” means an agreement in form and substance satisfactory to
the Administrative Agent and executed by the Borrower, the Administrative Agent
and the applicable Incremental Lender to effectuate an Incremental Loan
Commitment in connection with Section 5.13.

 

“Incremental Lender” has the meaning assigned thereto in Section 5.13(b).

 

“Incremental Loan Commitments” has the meaning assigned thereto in
Section 5.13(a).

 

“Incremental Loans” has the meaning assigned thereto in Section 5.13(a).

 

“Incremental Revolving Credit Commitment” has the meaning assigned thereto in
Section 5.13(a).

 

“Incremental Revolving Credit Increase” has the meaning assigned thereto in
Section 5.13(a).

 

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“Incremental Term Loan” has the meaning assigned thereto in Section 5.13(a).

 

“Incremental Term Loan Commitment” has the meaning assigned thereto in
Section 5.13(a).

 

“Indebtedness” means, with respect to any Person at any date and without
duplication, the sum of the following calculated in accordance with GAAP:

 

(a)                                 all liabilities, obligations and
indebtedness for borrowed money including, but not limited to, obligations
evidenced by bonds, debentures, notes or other similar instruments of any such
Person;

 

(b)                                 all obligations to pay the deferred purchase
price of property or services of any such Person (including, without limitation,
all obligations under non-competition, earn-out or similar agreements), except
(i) trade payables arising in the ordinary course of business not more than
ninety (90) days past due, or (ii) that are currently being contested in good
faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided for on the books of such Person;

 

(c)                                  the Attributable Indebtedness of such
Person with respect to such Person’s obligations in respect of Capital Leases
and Synthetic Leases (regardless of whether accounted for as indebtedness under
GAAP);

 

(d)                                 all obligations of such Person under
conditional sale or other title retention agreements relating to property
purchased by such Person to the extent of the value of such property (other than
customary reservations or retentions of title under agreements with suppliers
entered into in the ordinary course of business);

 

(e)                                  all Indebtedness of any other Person
secured by a Lien on any asset owned or being purchased by such Person
(including indebtedness arising under conditional sales or other title retention
agreements except trade payable arising in the ordinary course of business),
whether or not such indebtedness shall have been assumed by such Person or is
limited in recourse;

 

(f)                                   all obligations, contingent or otherwise,
of any such Person relative to the face amount of letters of credit, whether or
not drawn, including, without limitation, any Reimbursement Obligation, and
banker’s acceptances issued for the account of any such Person;

 

(g)                                  all obligations of any such Person in
respect of Disqualified Capital Stock;

 

(h)                                 all Net Hedging Obligations of any such
Person in excess of $10,000,000 in the aggregate for all Credit Parties; and

 

(i)                                     all Guaranty Obligations of any such
Person with respect to any of the foregoing.

 

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person.

 

“Indemnified Taxes” means Taxes and Other Taxes other than Excluded Taxes.

 

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“Initial Term Loan” means the term loan made, or to be made, to the Borrower by
the Term Loan Lenders pursuant to Section 4.1.

 

“Insurance and Condemnation Event” means the receipt by any Credit Party or any
of its Subsidiaries of any cash insurance proceeds or condemnation award payable
by reason of theft, loss, physical destruction or damage, taking or similar
event with respect to any of their respective Property.

 

“Interest Period” has the meaning assigned thereto in Section 5.1(b).

 

“Interest Rate Contract” means any interest rate swap agreement, interest rate
cap agreement, interest rate floor agreement, interest rate collar agreement,
interest rate option or any other agreement regarding the hedging of interest
rate risk exposure executed in connection with hedging the interest rate
exposure of any Person and any confirming letter executed pursuant to such
agreement.

 

“Investments” has the meaning assigned thereto in Section 11.3.

 

“ISP98” means the International Standby Practices (1998 Revision, effective
January 1, 1999), International Chamber of Commerce Publication No. 590.

 

“Issuing Lender” means (a) with respect to Letters of Credit issued hereunder on
or after the Closing Date, Wells Fargo, in its capacity as issuer thereof, or
any successor thereto and (b) with respect to the Existing Letters of Credit,
Wells Fargo, in its capacity as issuer thereof.

 

“Joinder Agreement” means an agreement substantially in the form attached as
Exhibit J or in such other form as may be acceptable to the Administrative Agent
pursuant to which a Material Domestic Subsidiary becomes a party to this
Agreement and the Subsidiary Guaranty Agreement.

 

“L/C Commitment” means the lesser of (a) Ten Million Dollars ($10,000,000) and
(b) the Revolving Credit Commitment.

 

“L/C Facility” means the letter of credit facility established pursuant to
Article III.

 

“L/C Obligations” means at any time, an amount equal to the sum of (a) the
aggregate undrawn and unexpired amount of the then outstanding Letters of Credit
and (b) the aggregate amount of drawings under Letters of Credit which have not
then been reimbursed pursuant to Section 3.5.

 

“L/C Participants” means the collective reference to all the Revolving Credit
Lenders.

 

“Lender” means each Person executing this Agreement as a Lender on the Closing
Date and any other Person that shall have become a party to this Agreement as a
Lender pursuant to an Assignment and Assumption, other than any Person that
ceases to be a party hereto as a Lender pursuant to an Assignment and
Assumption.  Unless the context otherwise requires, the term “Lenders” includes
the Issuing Lender and the Swingline Lender.

 

“Lending Office” means, with respect to any Lender, the office of such Lender
maintaining such Lender’s Extensions of Credit.

 

“Letter of Credit Application” means an application, in the form specified by
the Issuing Lender from time to time, requesting the Issuing Lender to issue a
Letter of Credit.

 

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“Letters of Credit” means the collective reference to letters of credit issued
pursuant to Section 3.1 and the Existing Letters of Credit.

 

“LIBOR” means,

 

(a)                                 for any interest rate calculation with
respect to a LIBOR Rate Loan, the rate of interest per annum determined on the
basis of the rate for deposits in Dollars for a period equal to the applicable
Interest Period which appears on Reuters Screen LIBOR01 Page (or any successor
page) at approximately 11:00 a.m. (London time) two (2) Business Days prior to
the first day of the applicable Interest Period (rounded upward, if necessary,
to the nearest 1/100th of 1%).  If, for any reason, such rate does not appear on
Reuters Screen LIBOR01 Page (or any successor page), then “LIBOR” shall be
determined by the Administrative Agent to be the arithmetic average of the rate
per annum at which deposits in Dollars in minimum amounts of at least $5,000,000
would be offered by first class banks in the London interbank market to the
Administrative Agent at approximately 11:00 a.m. (London time) two (2) Business
Days prior to the first day of the applicable Interest Period for a period equal
to such Interest Period; and

 

(b)                                 for any interest rate calculation with
respect to a Base Rate Loan, the rate of interest per annum determined on the
basis of the rate for deposits in Dollars in minimum amounts of at least
$5,000,000 for a period equal to one month (commencing on the date of
determination of such interest rate) which appears on the Reuters Screen LIBOR01
Page (or any successor page) at approximately 11:00 a.m. (London time) on such
date of determination, or, if such date is not a Business Day, then the
immediately preceding Business Day (rounded upward, if necessary, to the nearest
1/100th of 1%).  If, for any reason, such rate does not appear on Reuters Screen
LIBOR01 Page (or any successor page), then “LIBOR” for such Base Rate Loan shall
be determined by the Administrative Agent to be the arithmetic average of the
rate per annum at which deposits in Dollars in minimum amounts of at least
$5,000,000 would be offered by first class banks in the London interbank market
to the Administrative Agent at approximately 11:00 a.m. (London time) on such
date of determination for a period equal to one month commencing on such date of
determination.

 

Each calculation by the Administrative Agent of LIBOR shall be conclusive and
binding for all purposes, absent manifest error.

 

“LIBOR Rate” means a rate per annum (rounded upwards, if necessary, to the next
higher 1/100th of 1%) determined by the Administrative Agent pursuant to the
following formula:

 

LIBOR Rate =

 

LIBOR

 

 

1.00 minus the Eurodollar Reserve Percentage

 

“LIBOR Rate Loan” means any Loan bearing interest at a rate based upon the LIBOR
Rate as provided in Section 5.1(a).

 

“Lien” means, with respect to any asset, any mortgage, leasehold mortgage, lien,
pledge, charge, security interest, hypothecation or encumbrance of any kind in
respect of such asset.  For the purposes of this Agreement, a Person shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
Capital Lease or other title retention agreement relating to such asset.

 

“Loan Documents” means, collectively, this Agreement, each Note, the Letter of
Credit Applications, the Security Documents, each of the Fee Letters and each
other document, instrument,

 

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certificate and agreement required to be executed and delivered by any Credit
Party or any of its Subsidiaries in favor of or provided to the Administrative
Agent or any Secured Party in connection with this Agreement or otherwise
referred to herein or contemplated hereby (excluding any Specified Hedge
Agreement and any Specified Cash Management Arrangement).

 

“Loans” means the collective reference to the Revolving Credit Loans, the Term
Loans and the Swingline Loans, and “Loan” means any of such Loans.

 

“Material Adverse Effect” means a material adverse effect on (a) the properties,
business, operations or financial condition of the Borrower, of the Credit
Parties taken as a whole or of the Borrower and its Subsidiaries taken as a
whole, or (b) the ability of any such Person or Persons referred to in
clause (a) preceding (either individually or taken as a whole as provided
therein) to perform its or their obligations under the Loan Documents to which
it is or they are (as applicable) a party.

 

“Material Contract” means any agreement to which any Credit Party or any
Subsidiary thereof is a party that is of the type referred to as a “material
definitive agreement” in Form 8-K or required to be attached as an exhibit to a
filing in accordance with Item 601 of Regulation S-K as promulgated by the SEC.

 

“Material Domestic Subsidiary” means Fossil Intermediate, Fossil Trust, Fossil
Stores and Fossil International and each other now existing or hereafter
acquired or created or existing Domestic Subsidiary of the Borrower which, at
any time on or after the Closing Date, has tangible assets having an aggregate
book value (determined in accordance with GAAP) of greater than $50,000,000 as
determined in accordance with Section 8.1(c).  For avoidance of doubt, once it
has been so determined that any Domestic Subsidiary has tangible assets which
meet such threshold, then such Domestic Subsidiary shall thereupon and at all
times thereafter be deemed to be a “Material Domestic Subsidiary” for purposes
of this Agreement, irrespective of any subsequent change in its tangible assets.

 

“Material First-Tier Foreign Subsidiary” means Fossil Europe B.V., Fossil (East)
Limited, Swiss Technology Holding GmbH and each other now existing or hereafter
acquired or created or existing Foreign Subsidiary of the Borrower which is
owned directly by the Borrower and/or one or more Domestic Subsidiaries and
which, at any time on or after the Closing Date, has tangible assets having an
aggregate book value (determined in accordance with GAAP) of greater than
$50,000,000 as determined in accordance with Section 8.1(c).  For avoidance of
doubt, once it has been so determined that any such Foreign Subsidiary has
tangible assets which meet such threshold, then such Foreign Subsidiary shall
thereupon and at all times thereafter be deemed to be a “Material First-Tier
Foreign Subsidiary” for purposes of this Agreement, irrespective of any
subsequent change in its tangible assets.

 

“Maximum Swingline Amount” means the lesser of (a) Twenty Million Dollars
($20,000,000) and (b) the Revolving Credit Commitment.

 

“Minimum Collateral Amount” means, at any time, (i) with respect to Cash
Collateral consisting of cash or deposit account balances, an amount equal to
100% of the Fronting Exposure of all Issuing Lenders with respect to Letters of
Credit issued and outstanding at such time and (ii) otherwise, an amount
determined by the Administrative Agent and the Issuing Lender in their
reasonable discretion.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA to which any Credit Party or any ERISA Affiliate is
making, or is accruing an obligation to make, or has accrued an obligation to
make contributions within the preceding six (6) years.

 

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“Net Cash Proceeds” means, as applicable, (a) with respect to any Asset
Disposition, the gross cash proceeds received by any Credit Party or any of its
Subsidiaries therefrom less the sum of (i) all income taxes and other taxes
assessed by a Governmental Authority as a result of such disposition and any
other fees and expenses incurred in connection with such disposition and
(ii) the principal amount of, premium, if any, and interest on any Indebtedness
secured by a Lien on the asset (or a portion thereof) disposed of, which
Indebtedness is required to be repaid in connection with such disposition,
(b) with respect to any Equity Issuance, the gross cash proceeds received by any
Credit Party or any of its Subsidiaries therefrom less all legal, underwriting
and other fees and expenses incurred in connection therewith and (c) with
respect to any Insurance and Condemnation Event, the gross cash proceeds
received by any Credit Party or any of its Subsidiaries therefrom less the sum
of (i) all fees and expenses in connection therewith and (ii) the principal
amount of, premium, if any, and interest on any Indebtedness secured by a Lien
on the asset (or a portion thereof) subject to such Insurance and Condemnation
Event, which Indebtedness is required to be repaid in connection therewith.

 

“Net Hedging Obligations” means, as of any date, the Termination Value of any
Hedge Agreement on such date.

 

“Non-Consenting Lender” means any Lender that has not consented to any proposed
amendment, modification, waiver or termination of any Loan Document which,
pursuant to Section 14.2, requires the consent of all Lenders or all affected
Lenders and with respect to which the Required Lenders shall have granted their
consent.

 

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

 

“Non-Guarantor Subsidiary” means any Subsidiary of the Borrower that is not a
Subsidiary Guarantor.

 

“Non-Material Foreign Subsidiary” means a Foreign Subsidiary which, at any date
of determination, has tangible assets having an aggregate book value (determined
in accordance with GAAP) of $20,000,000 or less.

 

“Notes” means the collective reference to the Revolving Credit Notes, the
Swingline Note and the Term Loan Notes.

 

“Notice of Account Designation” has the meaning assigned thereto in
Section 2.3(b).

 

“Notice of Borrowing” has the meaning assigned thereto in Section 2.3(a).

 

“Notice of Conversion/Continuation” has the meaning assigned thereto in
Section 5.2.

 

“Notice of Prepayment” has the meaning assigned thereto in Section 2.4(c).

 

“Obligations” means, in each case, whether now in existence or hereafter
arising: (a) the principal of and interest on (including interest accruing after
the filing of any bankruptcy or similar petition) the Loans, (b) the L/C
Obligations, (c) all Specified Obligations and (d) all other fees and
commissions (including attorneys’ fees), charges, indebtedness, loans,
liabilities, financial accommodations, obligations, covenants and duties owing
by any one or more of the Credit Parties to any one or more of the Secured
Parties or the Administrative Agent, in each case under any Loan Document or
otherwise, with respect to any Loan or Letter of Credit of every kind, nature
and description, direct or indirect, absolute or contingent, due or to become
due, contractual or tortious, liquidated or unliquidated, and

 

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whether or not evidenced by any note (including interest and fees that accrue
after the commencement by or against the Borrower or any other Credit Party of
any proceeding under any Debtor Relief Laws naming such Person as the debtor in
such proceeding, regardless of whether such interest and fees are allowed claims
in such proceeding; provided that (i) the Specified Obligations shall be secured
and guaranteed pursuant to the Security Documents only to the extent that, and
for so long as, the other Obligations are so secured and guaranteed and (ii) any
release of Collateral or Guarantors effected in the manner permitted by this
Agreement shall not require the consent of holders of the Specified Obligations.

 

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

 

“Officer’s Compliance Certificate” means a certificate of the chief financial
officer or the treasurer of the Borrower substantially in the form attached as
Exhibit F.

 

“Operating Lease” means, as to any Person as determined in accordance with GAAP,
any lease of Property (whether real, personal or mixed) by such Person as lessee
which is not a Capital Lease.

 

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Tax (other than connections arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Loan or Loan Document).

 

“Other Taxes” means all present or future stamp, court, documentary, intangible,
recording, filing or similar Taxes that arise from any payment made under, from
the execution, delivery, performance, enforcement or registration of, from the
receipt or perfection of a security interest under, or otherwise with respect
to, any Loan Document, except any such Taxes that are Other Connection Taxes
imposed with respect to an assignment (other than an assignment made pursuant to
Section 5.12(b)).

 

“Participant” has the meaning assigned thereto in Section 14.9(d).

 

“Participant Register” has the meaning assigned thereto in Section 14.9(d).

 

“PBGC” means the Pension Benefit Guaranty Corporation or any successor agency.

 

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan,
which is subject to the provisions of Title IV of ERISA or Section 412 or
Section 430 of the Code and which (a) is maintained for the employees of any
Credit Party or any ERISA Affiliate or (b) has at any time within the preceding
six (6) years been maintained for the employees of any Credit Party or any
current or former ERISA Affiliates.

 

“Permitted Acquisition” means any acquisition by the Borrower or any Subsidiary
Guarantor in the form of acquisitions of all or substantially all of the
business or a line of business (whether by the acquisition of Capital Stock,
assets or any combination thereof) of any other Person if each such acquisition
meets all of the following requirements:

 

(a)                                 no less than fifteen (15) Business Days
prior to the proposed closing date of such acquisition, the Borrower shall have
delivered written notice of such acquisition to the Administrative Agent and the
Lenders, which notice shall include the proposed closing date of such
acquisition;

 

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(b)                                 the Borrower shall have certified on or
before the closing date of such acquisition, in writing and in a form reasonably
acceptable to the Administrative Agent, that such acquisition has been approved
by the board of directors (or equivalent governing body) of the Person to be
acquired;

 

(c)                                  the Person or business to be acquired shall
be in a substantially similar line of business as the Borrower and its
Subsidiaries pursuant to Section 11.11;

 

(d)                                 if such transaction is a merger or
consolidation, the Borrower or a Subsidiary Guarantor shall be the surviving
Person and no Change in Control shall have been effected thereby;

 

(e)                                  the Borrower shall have delivered to the
Administrative Agent such documents reasonably requested by the Administrative
Agent or the Required Lenders (through the Administrative Agent) pursuant to
Section 9.11 to be delivered at the time required pursuant to Section 9.11;

 

(f)                                   no later than five (5) Business Days prior
to the proposed closing date of such acquisition, the Borrower shall have
delivered to the Administrative Agent and the Lenders an Officer’s Compliance
Certificate for the most recent Fiscal Quarter end preceding such acquisition
for which financial statements are available demonstrating, in form and
substance reasonably satisfactory thereto, (A) compliance (as of the date of the
acquisition and after giving effect thereto and any Indebtedness incurred in
connection therewith) with each covenant contained in Article X and (B) that the
Consolidated Total Leverage Ratio (as of the proposed closing date of the
acquisition and after giving effect thereto and any Indebtedness incurred in
connection therewith) shall be at least 0.25 below the applicable ratio set
forth in Section 10.1 (which compliance under clause (A) preceding and
calculation of the Consolidated Total Leverage Ratio under clause (B) preceding
shall be on a Pro Forma Basis);

 

(g)                                  no later than five (5) Business Days prior
to the proposed closing date of such acquisition, the Borrower, to the extent
requested by the Administrative Agent, (i) shall have delivered to the
Administrative Agent promptly upon the finalization thereof copies of
substantially final Permitted Acquisition Documents, which shall be in form and
substance reasonably satisfactory to the Administrative Agent, and (ii) shall
have delivered to (including via arrangement for the Administrative Agent to
have access to virtual data-rooms, if applicable), or made available for
inspection by, the Administrative Agent substantially complete Permitted
Acquisition Diligence Information, which shall be in form and substance
reasonably satisfactory to the Administrative Agent;

 

(h)                                 no Event of Default shall have occurred and
be continuing both before and after giving effect to such acquisition and any
Indebtedness incurred in connection therewith;

 

(i)                                     the Borrower shall demonstrate, in form
and substance reasonably satisfactory to the Administrative Agent, that the
entity to be acquired had Consolidated EBITDA for the four (4) Fiscal Quarter
period ended immediately prior to the proposed closing date of such acquisition
that either (i) was positive or (ii) was negative in an amount not to exceed
$10,000,000;

 

(j)                                    after giving effect to the acquisition,
at least $50,000,000 in availability shall exist under the Revolving Credit
Facility; and

 

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(k)                                 the Borrower shall provide such other
documents and other information as may be reasonably requested by the
Administrative Agent or the Required Lenders (through the Administrative Agent)
in connection with the acquisition.

 

“Permitted Acquisition Consideration” means the aggregate amount of the purchase
price, including, but not limited to, any assumed debt, deferred payments or
Capital Stock of the Borrower, net of the applicable acquired company’s cash and
Cash Equivalents balance (as shown on its most recent financial statements
delivered in connection with the applicable Permitted Acquisition), to be paid
in connection with any applicable Permitted Acquisition as set forth in the
applicable Permitted Acquisition Documents executed by the Borrower or any of
its Subsidiaries in order to consummate the applicable Permitted Acquisition.

 

“Permitted Acquisition Diligence Information” means, with respect to any
acquisition proposed by the Borrower or any Subsidiary Guarantor, to the extent
applicable, all material financial information, all material contracts, all
material customer lists, all material supply agreements and all other material
information, in each case, reasonably requested to be delivered to the
Administrative Agent in connection with such acquisition (except to the extent
that any such information is (a) subject to any confidentiality agreement,
unless mutually agreeable arrangements can be made to preserve such information
as confidential, (b) classified or (c) subject to any attorney-client
privilege).

 

“Permitted Acquisition Documents” means, with respect to any acquisition
proposed by the Borrower or any Subsidiary Guarantor, final copies or
substantially final drafts if not executed at the required time of delivery of
the purchase agreement, sale agreement, merger agreement or other agreement
evidencing such acquisition, including, without limitation, all legal opinions
and each other document of a material nature executed or delivered in connection
therewith and any amendment, modification or supplement to any of the foregoing.

 

“Permitted Liens” means the Liens permitted pursuant to Section 11.2.

 

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

“Platform” has the meaning assigned thereto in Section 8.4.

 

“Pledge Agreement” means the Pledge Agreement of even date herewith executed by
each Credit Party that is the direct parent of a Material First-Tier Foreign
Subsidiary in favor of the Administrative Agent, for the ratable benefit of the
Secured Parties, substantially in the form of Exhibit I, pursuant to which the
Administrative Agent, for the benefit of the Secured Parties and as security for
the Obligations, is granted a security interest in sixty-five percent (65%) of
the total outstanding voting Capital Stock (and one hundred percent (100%) of
the non-voting Capital Stock) of each Material First-Tier Foreign Subsidiary.

 

“Prime Rate” means, at any time, the rate of interest per annum publicly
announced from time to time by the Administrative Agent as its prime rate.  Each
change in the Prime Rate shall be effective as of the opening of business on the
day such change in such prime rate occurs.  The parties hereto acknowledge that
the rate announced publicly by the Administrative Agent as its prime rate is an
index or base rate and shall not necessarily be its lowest or best rate charged
to its customers or other banks.

 

“Pro Forma Basis” means, subject to the proviso below and for purposes of
calculating certain definitions and compliance with any test or financial
covenant under this Agreement for any period, that such Specified Transaction
(and all other Specified Transactions that have been consummated during the

 

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applicable period) and the following transactions in connection therewith shall
be deemed to have occurred as of the first day of the applicable period of
measurement in such test or covenant: (a) income statement items (whether
positive or negative) attributable to the Property or Person subject to such
Specified Transaction, (i) in the case of a disposition of all or substantially
all of the Capital Stock of a Subsidiary or any division, business unit, product
line or line of business, shall be excluded and (ii) in the case of a Permitted
Acquisition, shall be included (provided that such income statement items to be
included are reflected in financial statements or other financial data
reasonably acceptable to the Administrative Agent and based upon reasonable
assumptions and calculations which are expected to have a continuous impact),
(b) any retirement of Indebtedness and (c) any Indebtedness incurred or assumed
by the Borrower or any of its Subsidiaries in connection therewith, which
Indebtedness, if such Indebtedness has a floating or formula rate, shall have an
implied rate of interest for the applicable period for purposes of this
definition determined by utilizing the rate that is or would be in effect with
respect to such Indebtedness as at the relevant date of  determination;
provided, that the foregoing pro forma adjustments may be applied to any such
definition, test or financial covenant solely to the extent that such
adjustments (1) are reasonably expected to be realized within twelve (12) months
of such Specified Transaction as set forth in reasonable detail on a certificate
of a Responsible Officer of the Borrower delivered to the Administrative Agent
and (2) are calculated on a basis consistent with GAAP and Regulation S-X of the
Exchange Act.

 

“Property” means any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible, including,
without limitation, Capital Stock.

 

“Public Lenders” has the meaning assigned thereto in Section 8.4.

 

“Qualified Capital Stock” means any Capital Stock that is not Disqualified
Capital Stock.

 

“Recipient” means (a) the Administrative Agent, (b) any Lender and (c) the
Issuing Lender, as applicable.

 

“Register” has the meaning assigned thereto in Section 14.9(c).

 

“Reimbursement Obligation” means the obligation of the Borrower (and, in the
case of the Existing Letters of Credit, Fossil Partners) to reimburse the
Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of
Credit.

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, trustees,
administrators, managers, advisors and representatives of such Person and of
such Person’s Affiliates.

 

“Required Lenders” means, at any time, Lenders having Total Credit Exposures
representing more than 50% of the Total Credit Exposures of all Lenders.  The
Total Credit Exposure of any Defaulting Lender shall be disregarded in
determining Required Lenders at any time.

 

“Responsible Officer” means, as to any Person, the chief executive officer,
president, chief financial officer, controller, treasurer or assistant treasurer
of such Person or any other officer of such Person reasonably acceptable to the
Administrative Agent.  Any document delivered hereunder or under any other Loan
Document that is signed by a Responsible Officer of a Person shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Person and such Responsible
Officer shall be conclusively presumed to have acted on behalf of such Person.

 

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“Restricted Payments” has the meaning assigned thereto in Section 11.6.

 

“Revolving Credit Commitment” means (a) as to any Revolving Credit Lender, the
obligation of such Lender to make Revolving Credit Loans to, and to purchase
participations in L/C Obligations and Swingline Loans for the account of the
Borrower hereunder in an aggregate principal amount at any time outstanding not
to exceed the amount set forth opposite such Revolving Credit Lender’s name on
the Register, as such amount may be modified at any time or from time to time
pursuant to the terms hereof (including, without limitation, Section 5.13) and
(b) as to all Revolving Credit Lenders, the aggregate commitment of all
Revolving Credit Lenders to make Revolving Credit Loans, as such amount may be
modified at any time or from time to time pursuant to the terms hereof
(including, without limitation, Section 5.13).  The aggregate Revolving Credit
Commitment of all Revolving Credit Lenders on the Closing Date shall be
$750,000,000, and the Revolving Credit Commitment of each Lender is set forth on
Schedule 1.1C.

 

“Revolving Credit Commitment Percentage” means, as to any Revolving Credit
Lender at any time, the ratio of (a) the amount of the Revolving Credit
Commitment of such Lender to (b) the Revolving Credit Commitment of all the
Revolving Credit Lenders.

 

“Revolving Credit Exposure” means, as to any Revolving Credit Lender at any
time, the aggregate principal amount at such time of its outstanding Revolving
Credit Loans and such Revolving Credit Lender’s participation in L/C Obligations
and Swingline Loans at such time.

 

“Revolving Credit Facility” means the revolving credit facility established
pursuant to Article II (including any increase in such Revolving Credit Facility
established pursuant to Section 5.13).

 

“Revolving Credit Lenders” means, collectively, all of the Lenders with a
Revolving Credit Commitment.

 

“Revolving Credit Loan” means any revolving loan made to the Borrower pursuant
to the Revolving Credit Facility (including any such revolving loan resulting
from any increase in the Revolving Credit Facility pursuant to Section 5.13).

 

“Revolving Credit Maturity Date” means the earliest to occur of (a) May 17,
2018, (b) the date of termination of the entire Revolving Credit Commitment by
the Borrower pursuant to Section 2.5, (c) the date of termination of the
Revolving Credit Commitment pursuant to Section 12.2(a), or (d) if maturity is
extended pursuant to Section 5.15, such extended maturity date as determined in
accordance with Section 5.15.

 

“Revolving Credit Note” means a promissory note made by the Borrower in favor of
a Revolving Credit Lender evidencing the Revolving Credit Loans made by such
Revolving Credit Lender, substantially in the form attached as Exhibit A-1, and
any substitutes therefor, and any replacements, restatements, renewals or
extension thereof, in whole or in part.

 

“Revolving Credit Outstandings” means the sum of (a) with respect to Revolving
Credit Loans and Swingline Loans on any date, the aggregate outstanding
principal amount thereof after giving effect to any borrowings and prepayments
or repayments of Revolving Credit Loans and Swingline Loans, as the case may be,
occurring on such date; plus (b) with respect to any L/C Obligations on any
date, the aggregate outstanding amount thereof on such date after giving effect
to any Extensions of Credit occurring on such date in respect of Letters of
Credit and any other changes in the aggregate amount of the L/C Obligations as
of such date, including as a result of any reimbursements of outstanding unpaid

 

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drawings under any Letters of Credit or any reductions in the maximum amount
available for drawing under Letters of Credit taking effect on such date.

 

“Sanctioned Country” means a country subject to a sanctions program identified
on the list maintained by OFAC and available at
http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx,
or as otherwise published from time to time.

 

“Sanctioned Person” means (a) a Person named on the list of “Specially
Designated Nationals and Blocked Persons” maintained by OFAC available at
http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx,
or as otherwise published from time to time, (b) a Person named on the lists
maintained by the United Nations Security Council available at
http://www.un.org/sc/committees/list_compend.shtml, or as otherwise published
from time to time, (c) a Person named on the lists maintained by the European
Union available at http://eeas.europa.eu/cfsp/sanctions/consol-list_en.htm, or
as otherwise published from time to time, (d) a Person named on the lists
maintained by Her Majesty’s Treasury available at
http://www.hm-treasury.gov.uk/fin_sanctions_index.htm, or as otherwise published
from time to time, or (e) (i) an agency of the government of a Sanctioned
Country, (ii) an organization controlled by a Sanctioned Country, or (iii) a
person resident in a Sanctioned Country, to the extent subject to a sanctions
program administered by OFAC.

 

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

 

“Secured Parties” means collectively, the Lenders, the Administrative Agent, the
Swingline Lender, any Issuing Lender, any Hedge Bank, any Cash Management Bank,
any other holder from time to time of any of the Obligations and, in each case,
their respective successors and permitted assigns.

 

“Security Documents” means the collective reference to the Pledge Agreement, the
Foreign Subsidiary Pledge Agreements, the Subsidiary Guaranty Agreement, each
Joinder Agreement and each other agreement or writing pursuant to which any
Credit Party purports to pledge or grant a security interest in or other Lien on
any Property or assets securing the Obligations (or any party thereof) or any
such Person purports to guaranty the payment and/or performance of the
Obligations (or any part thereof).

 

“Solvent” and “Solvency” mean, with respect to any Person on any date of
determination, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s ability to pay such debts and
liabilities as they mature, (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s property would constitute an unreasonably small capital, and
(e) such Person is able to pay its debts and liabilities, contingent obligations
and other commitments as they mature in the ordinary course of business.  The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

 

“Specified Cash Management Arrangement” means any Cash Management Arrangement
entered into by (a) any Credit Party and (b) any Cash Management Bank, as
counterparty.  No Cash Management Bank that is a party to a Specified Cash
Management Arrangement shall have any rights in connection with the management
or release of any Collateral or of the Obligations of any Credit Party under any
Loan Document.

 

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“Specified Cash Management Obligations” means all existing or future payment and
other obligations owing by any Credit Party under any Specified Cash Management
Arrangement.

 

“Specified Hedge Agreement” means any Hedge Agreement entered into by (a) any
Credit Party and (b) Hedge Bank.  No Hedge Bank that is a party to a Specified
Hedge Agreement shall have any rights in connection with the management or
release of any Collateral or of the Obligations of any Credit Party under any
Loan Document.

 

“Specified Hedge Obligations” means all existing or future payment and other
obligations owing by any Credit Party under any Specified Hedge Agreement (other
than an Excluded Swap Obligation).

 

“Specified Obligations” means, collectively, (a) all Specified Hedge Obligations
and (b) all Specified Cash Management Obligations.

 

“Specified Transactions” means (a) any disposition of all or substantially all
of the assets or Capital Stock of any Subsidiary of the Borrower or any
division, business unit, product line or line of business, (b) any Permitted
Acquisition, (c) any incurrence of Indebtedness, (d) the classification of any
asset, business unit, division or line of business as a discontinued operation
and (e) the Transactions.

 

“Subordinated Indebtedness” means the collective reference to any Indebtedness
of any Credit Party or any Subsidiary thereof subordinated in right and time of
payment to the Obligations and containing such other terms and conditions, in
each case as are satisfactory to the Administrative Agent.

 

“Subsidiary” means, as to any Person, any corporation, partnership, limited
liability company or other entity of which more than fifty percent (50%) of the
outstanding Capital Stock having ordinary voting power to elect a majority of
the board of directors or other managers of such corporation, partnership,
limited liability company or other entity is at the time owned by (directly or
indirectly) or the management is otherwise controlled by (directly or
indirectly) such Person (irrespective of whether, at the time, Capital Stock of
any other class or classes of such corporation, partnership, limited liability
company or other entity shall have or might have voting power by reason of the
happening of any contingency).  Unless otherwise qualified, references to
“Subsidiary” or “Subsidiaries” herein shall refer to those of the Borrower.

 

“Subsidiary Guarantors” means, collectively, all direct and indirect Material
Domestic Subsidiaries of the Borrower in existence on the Closing Date or which
are or hereafter become a party to the Subsidiary Guaranty Agreement pursuant to
Section 9.11.

 

“Subsidiary Guaranty Agreement” means the unconditional guaranty agreement of
even date herewith executed by the Subsidiary Guarantors in favor of the
Administrative Agent, for the ratable benefit and the Secured Parties,
substantially in the form attached as Exhibit H.

 

“Swap Obligation” means, with respect to any Subsidiary Guarantor, 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.

 

“Swingline Facility” means the uncommitted swingline facility established
pursuant to Section 2.2.

 

“Swingline Lender” means Wells Fargo in its capacity as swingline lender
hereunder or any successor thereto.

 

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“Swingline Loan” means any swingline loan made by the Swingline Lender to the
Borrower pursuant to Section 2.2, and all such swingline loans collectively as
the context requires.

 

“Swingline Note” means a promissory note made by the Borrower in favor of the
Swingline Lender evidencing the Swingline Loans made by the Swingline Lender,
substantially in the form attached as Exhibit A-2, and any substitutes therefor,
and any replacements, restatements, renewals or extension thereof, in whole or
in part.

 

“Synthetic Lease” means any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product where such
transaction is considered borrowed money indebtedness for tax purposes but is
classified as an Operating Lease in accordance with GAAP.

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding) assessments, fees or other charges
imposed by any Governmental Authority, including any interest, fines, additions
to tax or penalties applicable thereto.

 

“Term Loan Commitment” means (a) as to any Term Loan Lender, the obligation of
such Term Loan Lender to make a portion of the Initial Term Loan and/or
Incremental Term Loans, as applicable, to the account of the Borrower hereunder
on the Closing Date (in the case of the Initial Term Loan) or the applicable
borrowing date (in the case of any Incremental Term Loans) in an aggregate
principal amount not to exceed the amount set forth opposite such Term Loan
Lender’s name on the Register, as such amount may be increased, reduced or
otherwise modified at any time or from time to time pursuant to the terms hereof
and (b) as to all Term Loan Lenders, the aggregate commitment of all Term Loan
Lenders to make such Term Loans.  The aggregate Term Loan Commitment with
respect to the Initial Term Loan of all Lenders on the Closing Date shall be
$250,000,000, and the Term Loan Commitment of each Lender is set forth on
Schedule 1.1D.

 

“Term Loan Facility” means the term loan facility established pursuant to
Article IV (including any new term loan facility established pursuant to
Section 5.13.

 

“Term Loan Lender” means any Lender with a Term Loan Commitment and/or
outstanding Term Loans.

 

“Term Loan Maturity Date” means the earliest to occur of (a) May 17, 2018,
(b) the date of termination of the Revolving Credit Commitment pursuant to
Section 12.2(a), or (c) if maturity is extended pursuant to Section 5.15, such
extended maturity date as determined in accordance with Section 5.15.

 

“Term Loan Note” means a promissory note made by the Borrower in favor of a Term
Loan Lender evidencing the portion of the Term Loans made by such Term Loan
Lender, substantially in the form attached as Exhibit A-3, and any substitutes
therefor, and any replacements, restatements, renewals or extension thereof, in
whole or in part.

 

“Term Loan Percentage” means, with respect to any Term Loan Lender at any time,
the percentage of the total outstanding principal balance of the Term Loans
represented by the outstanding principal balance of such Term Loan Lender’s Term
Loans.

 

“Term Loans” means the Initial Term Loans and, if applicable, the Incremental
Term Loans and “Term Loan” means any of such Term Loans.

 

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“Termination Event” means, except for any such event or condition that could not
reasonably be expected to have a Material Adverse Effect: (a) a “Reportable
Event” described in Section 4043 of ERISA for which the notice requirement has
not been waived by the PBGC, or (b) the withdrawal of any Credit Party or any
ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a
plan year in which it was a “substantial employer” as defined in
Section 4001(a)(2) of ERISA, or (c) the termination of a Pension Plan, the
filing of a notice of intent to terminate a Pension Plan or the treatment of a
Pension Plan amendment as a termination, under Section 4041 of ERISA, if the
plan assets are not sufficient to pay all plan liabilities, or (d) the
institution of proceedings to terminate, or the appointment of a trustee with
respect to, any Pension Plan or Multiemployer Plan by the PBGC, or (e) any other
event or condition which would constitute grounds under Section 4042(a) of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan, or (f) the imposition of a Lien pursuant to Section 412 or
Section 430(k) of the Code or Section 302 or Section 303(k) of ERISA, or (g) the
partial or complete withdrawal of any Credit Party or any ERISA Affiliate from a
Multiemployer Plan if withdrawal liability is asserted by such plan, or (h) any
event or condition which results in the reorganization or insolvency of a
Multiemployer Plan under Sections 4241 or 4245 of ERISA, or (i) any event or
condition which results in the termination of a Multiemployer Plan under
Section 4041A of ERISA or the institution by PBGC of proceedings to terminate a
Pension Plan under Section 4042 of ERISA.

 

“Termination Value” means, in respect of any one or more Hedge Agreements, after
taking into account the effect of any legally enforceable netting agreement
relating to such Hedge Agreements, (a) for any date on or after the date such
Hedge Agreements have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Hedge Agreements, as determined based upon one
or more mid-market or other readily available quotations provided by any
recognized dealer in such Hedge Agreements (which may include a Lender or any
Affiliate of a Lender).

 

“Threshold Amount” means $20,000,000.

 

“Total Credit Exposure” means, as to any Lender at any time, the unused
Commitments, Revolving Credit Exposure and outstanding principal amount of Term
Loans of such Lender at such time.

 

“Transactions” means, collectively, (a) the repayment in full of all
Indebtedness under the Existing Credit Agreement on the Closing Date, (b) the
initial Extensions of Credit, and (c) the payment of the all transaction fees,
charges and other amounts related to this Credit Facility (including, without
limitation, any financing fees, legal fees and expenses, due diligence fees or
any other fees and expenses in connection therewith), incurred in connection
with items (a) through (b) above.

 

“UCC” means the Uniform Commercial Code as in effect in the State of New York.

 

“Uniform Customs” means the Uniform Customs and Practice for Documentary Credits
(2007 Revision), effective July, 2007 International Chamber of Commerce
Publication No. 600.

 

“United States” means the United States of America.

 

“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.

 

“U.S. Tax Compliance Certificate” has the meaning assigned thereto in
Section 5.11(g)(ii)(B)(3).

 

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“Wells Fargo” means Wells Fargo Bank, National Association, a national banking
association, and its successors.

 

“Wholly-Owned” means, with respect to a Subsidiary, that all of the shares of
Capital Stock of such Subsidiary are, directly or indirectly, owned or
controlled by the Borrower and/or one or more of its Wholly-Owned Subsidiaries
(except for directors’ qualifying shares or other shares required by Applicable
Law to be owned by a Person other than the Borrower and/or one or more of its
Wholly-Owned Subsidiaries).

 

“Withholding Agent” means any Credit Party and the Administrative Agent.

 

Section 1.2            Other Definitions and Provisions.  With reference to this
Agreement and each other Loan Document, unless otherwise specified herein or in
such other Loan Document: (a) the definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined, (b) whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms, (c) the words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”, (d) the word
“will” shall be construed to have the same meaning and effect as the word
“shall”, (e) any reference herein to any Person shall be construed to include
such Person’s successors and assigns, (f) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (g) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement, (h) the words “asset” and “property” shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights,
(i) the term “documents” includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form, (j) in the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including;” the words “to” and “until” each mean
“to but excluding;” and the word “through” means “to and including” and
(k) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.

 

Section 1.3            Accounting Terms.

 

(a)         All accounting terms not specifically or completely defined herein
shall be construed, and all financial data (including financial ratios and other
financial calculations) required to be submitted pursuant to this Agreement
shall be prepared, in conformity with GAAP, applied on a consistent basis, as in
effect from time to time and in a manner consistent with that used in preparing
the audited financial statements required by Section 8.1(b), except as otherwise
specifically prescribed herein.  Notwithstanding the foregoing, all financial
statements delivered hereunder shall be prepared, and all financial covenants
contained herein shall be calculated, without giving effect to FASB ASC 825 and
FASB ASC 470-20 (or any similar accounting principle) permitting a Person to
value its financial liabilities or Indebtedness at the fair value thereof.

 

(b)         Notwithstanding anything to the contrary in this Agreement, for
purposes of determining compliance with any test or financial covenant contained
in this Agreement (including for purposes of determining the Applicable Margin)
with respect to any period during which any Specified Transaction occurs, such
test or financial covenant shall be calculated with respect to such period and
such Specified Transaction (and all other Specified Transactions that have been
consummated during such period) on a Pro Forma Basis.

 

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(c)         If at any time any change in GAAP would affect the computation of
any financial ratio or requirement set forth in any Loan Document, and either
the Borrower or the Required Lenders shall so request, the Administrative Agent,
the Lenders and the Borrower shall negotiate in good faith to amend such ratio
or requirement to preserve the original intent thereof in light of such change
in GAAP (subject to the approval of the Required Lenders); provided that, until
so amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Borrower shall
provide to the Administrative Agent and the Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

 

Section 1.4            UCC Terms.  Terms defined in the UCC in effect on the
Closing Date and not otherwise defined herein shall, unless the context
otherwise indicates, have the meanings provided by those definitions.  Subject
to the foregoing, the term “UCC” refers, as of any date of determination, to the
UCC then in effect.

 

Section 1.5            Rounding.  Any financial ratios required to be maintained
by the Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio or percentage is expressed
herein and rounding the result up or down to the nearest number (with a
rounding-up if there is no nearest number).

 

Section 1.6            References to Agreement and Laws.  Unless otherwise
expressly provided herein, (a) references to formation documents, governing
documents, agreements (including the Loan Documents) and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
extensions, supplements and other modifications thereto, but only to the extent
that such amendments, restatements, extensions, supplements and other
modifications are not prohibited by any Loan Document; and (b) references to any
Applicable Law shall include all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such
Applicable Law.

 

Section 1.7            Times of Day.  Unless otherwise specified, all references
herein to times of day shall be references to Central time (daylight or
standard, as applicable).

 

Section 1.8            Letter of Credit Amounts.  Unless otherwise specified,
all references herein to the amount of a Letter of Credit at any time shall be
deemed to mean the maximum face amount of such Letter of Credit after giving
effect to all increases thereof contemplated by such Letter of Credit or the
Letter of Credit Application therefor (at the time specified therefor in such
applicable Letter of Credit or Letter of Credit Application and as such amount
may be reduced by (a) any permanent reduction of such Letter of Credit or
(b) any amount which is drawn, reimbursed and no longer available under such
Letter of Credit).

 

ARTICLE II

 

REVOLVING CREDIT FACILITY

 

Section 2.1            Revolving Credit Loans.  Subject to the terms and
conditions of this Agreement and the other Loan Documents, and in reliance upon
the representations and warranties set forth in this Agreement and the other
Loan Documents, each Revolving Credit Lender severally agrees to make Revolving
Credit Loans to the Borrower from time to time from the Closing Date through,
but not including, the Revolving Credit Maturity Date as requested by the
Borrower in accordance with the terms of Section 2.3; provided, that (a) the
Revolving Credit Outstandings shall not exceed the Revolving Credit

 

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Commitment and (b) the Revolving Credit Exposure of any Revolving Credit Lender
shall not at any time exceed such Revolving Credit Lender’s Revolving Credit
Commitment.  Each Revolving Credit Loan by a Revolving Credit Lender shall be in
a principal amount equal to such Revolving Credit Lender’s Revolving Credit
Commitment Percentage of the aggregate principal amount of Revolving Credit
Loans requested on such occasion.  Subject to the terms and conditions hereof,
the Borrower may borrow, repay and reborrow Revolving Credit Loans hereunder
until the Revolving Credit Maturity Date.

 

Section 2.2            Swingline Loans.

 

(a)         Availability.  Subject to the terms and conditions of this
Agreement, the Swingline Lender may (or may not) in its discretion from time to
time make Swingline Loans to the Borrower from time to time from the Closing
Date through, but not including, the Revolving Credit Maturity Date; provided,
that (a) after giving effect to any amount requested, the Revolving Credit
Outstandings shall not exceed the Revolving Credit Commitment and (b) the
aggregate principal amount of all outstanding Swingline Loans (after giving
effect to any amount requested) shall not exceed the lesser of (i) the Revolving
Credit Commitment less the sum of all outstanding Revolving Credit Loans and the
L/C Obligations and (ii) the Maximum Swingline Amount.

 

(b)         Refunding.

 

(i)            Swingline Loans shall be refunded by the Revolving Credit Lenders
on demand by the Swingline Lender.  Such refundings shall be made by the
Revolving Credit Lenders in accordance with their respective Revolving Credit
Commitment Percentages and shall thereafter be reflected as Revolving Credit
Loans of the Revolving Credit Lenders on the books and records of the
Administrative Agent.  Each Revolving Credit Lender shall fund its respective
Revolving Credit Commitment Percentage of Revolving Credit Loans as required to
repay Swingline Loans outstanding to the Swingline Lender upon demand by the
Swingline Lender but in no event later than 1:00 p.m. on the next succeeding
Business Day after such demand is made.  No Revolving Credit Lender’s obligation
to fund its respective Revolving Credit Commitment Percentage of a Swingline
Loan shall be affected by any other Revolving Credit Lender’s failure to fund
its Revolving Credit Commitment Percentage of a Swingline Loan, nor shall any
Revolving Credit Lender’s Revolving Credit Commitment Percentage be increased as
a result of any such failure of any other Revolving Credit Lender to fund its
Revolving Credit Commitment Percentage of a Swingline Loan.

 

(ii)           The Borrower shall pay to the Swingline Lender on demand the
amount of such Swingline Loans to the extent amounts received from the Revolving
Credit Lenders are not sufficient to repay in full the outstanding Swingline
Loans requested or required to be refunded.  In addition, the Borrower hereby
authorizes the Administrative Agent to charge any account maintained by the
Borrower with the Swingline Lender (up to the amount available therein) in order
to immediately pay the Swingline Lender the amount of such Swingline Loans to
the extent amounts received from the Revolving Credit Lenders are not sufficient
to repay in full the outstanding Swingline Loans requested or required to be
refunded.  If any portion of any such amount paid to the Swingline Lender shall
be recovered by or on behalf of the Borrower from the Swingline Lender in
bankruptcy or otherwise, the loss of the amount so recovered shall be ratably
shared among all the Revolving Credit Lenders in accordance with their
respective Revolving Credit Commitment Percentages (unless the amounts so
recovered by or on behalf of the Borrower pertain to a Swingline Loan extended
after the occurrence and during the continuance of an Event of Default of which
the Administrative Agent has received notice in the manner required pursuant to
Section 13.3 and which such Event of Default has not been waived by the Required
Lenders or the Lenders, as applicable).

 

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(iii)          Each Revolving Credit Lender acknowledges and agrees that its
obligation to refund Swingline Loans in accordance with the terms of this
Section is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation, non-satisfaction of the
conditions set forth in Article VI.  Further, each Revolving Credit Lender
agrees and acknowledges that if, prior to the refunding of any outstanding
Swingline Loans pursuant to this Section, one of the events described in
Section 12.1(i) or (j) shall have occurred, each Revolving Credit Lender will,
on the date the applicable Revolving Credit Loan would have been made, purchase
an undivided participating interest in the Swingline Loan to be refunded in an
amount equal to its Revolving Credit Commitment Percentage of the aggregate
amount of such Swingline Loan.  Each Revolving Credit Lender will immediately
transfer to the Swingline Lender, in immediately available funds, the amount of
its participation, and upon receipt thereof the Swingline Lender will deliver to
such Revolving Credit Lender a certificate evidencing such participation dated
the date of receipt of such funds and for such amount.  Whenever, at any time
after the Swingline Lender has received from any Revolving Credit Lender such
Revolving Credit Lender’s participating interest in a Swingline Loan, the
Swingline Lender receives any payment on account thereof, the Swingline Lender
will distribute to such Revolving Credit Lender its participating interest in
such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Revolving Credit Lender’s
participating interest was outstanding and funded).

 

(c)         Defaulting Lenders.  Notwithstanding anything to the contrary
contained in this Agreement, this Section 2.2 shall be subject to the terms and
conditions of Section 5.14 and Section 14.21.

 

Section 2.3            Procedure for Advances of Revolving Credit Loans and
Swingline Loans.

 

(a)         Requests for Borrowing.  The Borrower shall give the Administrative
Agent irrevocable prior written notice substantially in the form of Exhibit B (a
“Notice of Borrowing”) not later than 12:00 noon (i) on the same Business Day as
each Base Rate Loan and each Swingline Loan and (ii) at least three (3) Business
Days before each LIBOR Rate Loan, of its intention to borrow, specifying (A) the
date of such borrowing, which shall be a Business Day, (B) the amount of such
borrowing, which shall be (x) with respect to Base Rate Loans (other than
Swingline Loans), in an aggregate principal amount of $2,000,000 or a whole
multiple of $1,000,000 in excess thereof, provided that any borrowing of Base
Rate Loans may be in an aggregate amount that is equal to the entire unused
balance of the Revolving Credit Commitment or that is required to finance the
amount of a Reimbursement Obligation under a Letter of Credit, (y) with respect
to LIBOR Rate Loans, in an aggregate principal amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof and (z) with respect to Swingline
Loans, in an aggregate principal amount of $250,000 or a whole multiple of
$100,000 in excess thereof, (C) whether such Loan is to be a Revolving Credit
Loan or Swingline Loan, (D) in the case of a Revolving Credit Loan, whether such
Loan is to be a LIBOR Rate Loan or a Base Rate Loan, and (E) in the case of a
LIBOR Rate Loan, the duration of the Interest Period applicable thereto.  If the
Borrower fails to specify a type of Loan in a Notice of Borrowing, then the
applicable Loans shall be made as Base Rate Loans.  If the Borrower requests a
Borrowing of LIBOR Rate Loans in any such Notice of Borrowing, but fails to
specify an Interest Period, it will be deemed to have specified an Interest
Period of one month.  A Notice of Borrowing received after 12:00 noon shall be
deemed received on the next Business Day.  The Administrative Agent shall
promptly notify the Revolving Credit Lenders of each Notice of Borrowing.

 

(b)         Disbursement of Revolving Credit and Swingline Loans.  Not later
than 2:00 p.m. on the proposed borrowing date, (i) each Revolving Credit Lender
will make available to the Administrative Agent, for the account of the
Borrower, at the office of the Administrative Agent in funds immediately
available to the Administrative Agent, such Revolving Credit Lender’s Revolving
Credit Commitment

 

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Percentage of the Revolving Credit Loans to be made on such borrowing date and
(ii) the Swingline Lender will make available to the Administrative Agent, for
the account of the Borrower, at the office of the Administrative Agent in funds
immediately available to the Administrative Agent, the Swingline Loans to be
made on such borrowing date.  The Borrower hereby irrevocably authorizes the
Administrative Agent to disburse the proceeds of each borrowing requested
pursuant to this Section in immediately available funds by crediting or wiring
such proceeds to the deposit account of the Borrower identified in the most
recent notice substantially in the form attached as Exhibit C (a “Notice of
Account Designation”) delivered by the Borrower to the Administrative Agent or
as may be otherwise agreed upon by the Borrower and the Administrative Agent
from time to time.  Subject to Section 5.7 hereof, the Administrative Agent
shall not be obligated to disburse the portion of the proceeds of any Revolving
Credit Loan requested pursuant to this Section to the extent that any Revolving
Credit Lender has not made available to the Administrative Agent its Revolving
Credit Commitment Percentage of such Loan.  Revolving Credit Loans to be made
for the purpose of refunding Swingline Loans shall be made by the Revolving
Credit Lenders as provided in Section 2.2(b).

 

Section 2.4            Repayment and Prepayment of Revolving Credit Loans and
Swingline Loans.

 

(a)         Repayment on Termination Date.  The Borrower hereby agrees to repay
the outstanding principal amount of (i) all Revolving Credit Loans in full on
the Revolving Credit Maturity Date, and (ii) all Swingline Loans in accordance
with Section 2.2(b) (but, in any event, no later than the Revolving Credit
Maturity Date), together, in each case, with all accrued but unpaid interest
thereon.

 

(b)         Mandatory Prepayments due to Overadvances.  If at any time the
Revolving Credit Outstandings exceed the Revolving Credit Commitment, the
Borrower agrees to repay, immediately upon notice from the Administrative Agent
and by payment to the Administrative Agent for the account of the Revolving
Credit Lenders, an amount equal to such excess, with each such repayment applied
first, to the principal amount of outstanding Swingline Loans, second to the
principal amount of outstanding Revolving Credit Loans and third, with respect
to any Letters of Credit then outstanding, a payment of Cash Collateral into a
Cash Collateral account opened by the Administrative Agent, for the benefit of
the Revolving Credit Lenders, in an amount equal to such excess (such Cash
Collateral to be applied in accordance with Section 12.2(b)).

 

(c)         Optional Prepayments.  The Borrower may at any time and from time to
time prepay Revolving Credit Loans and Swingline Loans, in whole or in part,
with irrevocable prior written notice to the Administrative Agent substantially
in the form attached as Exhibit D (a “Notice of Prepayment”) given not later
than 12:00 noon (i) on the same Business Day as each date of prepayment of a
Base Rate Loan or Swingline Loan and (ii) at least three (3) Business Days
before each date of prepayment of a LIBOR Rate Loan, specifying the date and
amount of prepayment and whether the prepayment is of LIBOR Rate Loans, Base
Rate Loans, Swingline Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each.  Upon receipt of such notice, the
Administrative Agent shall promptly notify each Revolving Credit Lender.  If any
such notice is given, the amount specified in such notice shall be due and
payable on the date set forth in such notice.  Partial prepayments shall be,
except for mandatory prepayments required under Section 2.4(b) or
Section 4.4(b), in an aggregate amount of $2,000,000 or a whole multiple of
$1,000,000 in excess thereof with respect to Base Rate Loans (other than
Swingline Loans), $5,000,000 or a whole multiple of $1,000,000 in excess thereof
with respect to LIBOR Rate Loans and $100,000 or a whole multiple of $100,000 in
excess thereof with respect to Swingline Loans.  A Notice of Prepayment received
after 12:00 noon shall be deemed received on the next Business Day.  Each such
repayment shall be accompanied by any amount required to be paid pursuant to
Section 5.9 hereof.  Each notice of reduction and prepayment in full of the
entire Revolving Credit Commitment delivered by the Borrower may state that such
notice is conditioned upon the effectiveness of other Indebtedness, in which
case such notice may be revoked by the Borrower by notice

 

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to the Administrative Agent received on or prior to the specified effective date
of such reduction, if such condition is not satisfied.

 

(d)         Other Mandatory Prepayments.  Upon the occurrence of any event
triggering the prepayment requirement under Section 4.4(b)(i) or 4.4(b)(ii) and
in the event the Borrower elects not to prepay Term Loans pursuant to
Section 4.4(b) or if proceeds remain after the prepayment of the Term Loan
Facility pursuant to Section 4.4(b), the Borrower shall promptly deliver a
Notice of Prepayment to the Administrative Agent and upon receipt of such
notice, the Administrative Agent shall promptly so notify the Lenders.  Each
prepayment of the Loans under this Section shall be applied on the date of the
required prepayment under Section 4.4(b) to prepay the outstanding principal
amount of the Revolving Credit Loans, without a corresponding reduction of the
Revolving Credit Commitment.

 

(e)         Limitation on Prepayment of LIBOR Rate Loans.  The Borrower may not
prepay any LIBOR Rate Loan on any day other than on the last day of the Interest
Period applicable thereto unless such prepayment is accompanied by any amount
required to be paid pursuant to Section 5.9 hereof.

 

(f)          Hedge Agreements.  No repayment or prepayment pursuant to this
Section shall affect any of the Borrower’s obligations under any Hedge
Agreement.

 

Section 2.5            Permanent Reduction of the Revolving Credit Commitment.

 

(a)         Voluntary Reduction.  The Borrower shall have the right at any time
and from time to time, upon at least five (5) Business Days prior written notice
to the Administrative Agent, to permanently reduce, without premium or penalty,
(i) the entire Revolving Credit Commitment at any time or (ii) portions of the
Revolving Credit Commitment, from time to time, in an aggregate principal amount
not less than $3,000,000 or any whole multiple of $1,000,000 in excess thereof. 
Any reduction of the Revolving Credit Commitment shall be applied to the
Revolving Credit Commitment of each Revolving Credit Lender according to its
Revolving Credit Commitment Percentage.  All Commitment Fees accrued until the
effective date of any termination of the Revolving Credit Commitment shall be
paid on the effective date of such termination.

 

(b)         Corresponding Payment.  Each permanent reduction permitted pursuant
to this Section shall be accompanied by a payment of principal sufficient to
reduce the aggregate outstanding Revolving Credit Loans, Swingline Loans and L/C
Obligations, as applicable, after such reduction to the Revolving Credit
Commitment as so reduced and, if the aggregate amount of all outstanding Letters
of Credit exceeds the Revolving Credit Commitment as so reduced, the Borrower
shall be required to deposit Cash Collateral in a Cash Collateral account opened
by the Administrative Agent in an amount equal to such excess.  Such Cash
Collateral shall be applied in accordance with Section 12.2(b).  Any reduction
of the Revolving Credit Commitment to zero shall be accompanied by payment of
all outstanding Revolving Credit Loans and Swingline Loans (and furnishing of
Cash Collateral satisfactory to the Administrative Agent for all L/C
Obligations) and shall result in the termination of the Revolving Credit
Commitment, the L/C Commitment, the Swingline Facility and the Revolving Credit
Facility.  If the reduction of the Revolving Credit Commitment requires the
repayment of any LIBOR Rate Loan, such repayment shall be accompanied by any
amount required to be paid pursuant to Section 5.9 hereof.

 

Section 2.6            Termination of Revolving Credit Facility.  The Revolving
Credit Facility and the Revolving Credit Commitment, as well as the L/C
Commitment, shall terminate on the Revolving Credit Maturity Date.

 

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ARTICLE III

 

LETTER OF CREDIT FACILITY

 

Section 3.1            L/C Commitment.

 

(a)         Availability.  Subject to the terms and conditions hereof, the
Issuing Lender, in reliance on the agreements of the other Lenders set forth in
Section 3.4(a), agrees to issue performance standby letters of credit and, at
the sole discretion of the Issuing Lender, financial standby letters of credit
(the “Letters of Credit”) for the account of the Borrower (or, in the case of
the Existing Letters of Credit, for the account of Fossil Partners) on any
Business Day from the Closing Date through but not including the fifth (5th)
Business Day prior to the Revolving Credit Maturity Date in such form as may be
approved from time to time by the Issuing Lender; provided, that the Issuing
Lender shall have no obligation to issue any Letter of Credit if, after giving
effect to such issuance, (a) the L/C Obligations would exceed the L/C Commitment
or (b) the Revolving Credit Outstandings would exceed the Revolving Credit
Commitment.  Each Letter of Credit shall (i) be denominated in Dollars in a
minimum amount of $50,000 (or such lesser amount as agreed to by the Issuing
Lender), (ii) be a letter of credit issued to support obligations of the
Borrower or any of its Subsidiaries, contingent or otherwise, incurred in the
ordinary course of business, (iii) expire on a date no more than twelve (12)
months after the date of issuance or last renewal of such Letter of Credit
(subject to automatic renewal for additional one (1) year periods pursuant to
the terms of the Letter of Credit Application or other documentation acceptable
to the Issuing Lender), which date shall be no later than the fifth (5th)
Business Day prior to the Revolving Credit Maturity Date and (iv) be subject to
the Uniform Customs and/or ISP98, as set forth in the Letter of Credit
Application or as determined by the Issuing Lender and, to the extent not
inconsistent therewith, the laws of the State of New York.  The Issuing Lender
shall not at any time be obligated to issue any Letter of Credit hereunder if
such issuance would conflict with, or cause the Issuing Lender or any L/C
Participant to exceed any limits imposed by, any Applicable Law.  References
herein to “issue” and derivations thereof with respect to Letters of Credit
shall also include extensions or modifications of any outstanding Letters of
Credit, unless the context otherwise requires.  As of the Closing Date, each of
the Existing Letters of Credit shall constitute, for all purposes of this
Agreement and the other Loan Documents, a Letter of Credit issued and
outstanding hereunder.  The L/C Commitment shall automatically terminate
concurrently with the termination of the Revolving Credit Commitment.

 

(b)         Defaulting Lenders.  Notwithstanding anything to the contrary
contained in this Agreement, Article III shall be subject to the terms and
conditions of Section 5.14 and Section 14.21.

 

Section 3.2            Procedure for Issuance of Letters of Credit.  The
Borrower may from time to time request that the Issuing Lender issue a Letter of
Credit by delivering to the Issuing Lender at the Administrative Agent’s Office
a Letter of Credit Application therefor, completed to the satisfaction of the
Issuing Lender, and such other certificates, documents and other papers and
information as the Issuing Lender may request.  Upon receipt of any Letter of
Credit Application, the Issuing Lender shall process such Letter of Credit
Application and the certificates, documents and other papers and information
delivered to it in connection therewith in accordance with its customary
procedures and shall, subject to Section 3.1 and Article VI, promptly issue the
Letter of Credit requested thereby (but in no event shall the Issuing Lender be
required to issue any Letter of Credit earlier than three (3) Business Days
after its receipt of the Letter of Credit Application therefor and all such
other certificates, documents and other papers and information relating thereto)
by issuing the original of such Letter of Credit to the beneficiary thereof or
as otherwise may be agreed by the Issuing Lender and the Borrower.  The Issuing
Lender shall promptly furnish to the Borrower a copy of such Letter of Credit
and promptly notify each Revolving Credit Lender of such issuance and, upon
request by any Revolving Credit Lender, furnish to such

 

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Revolving Credit Lender a copy of such Letter of Credit and the amount of such
Revolving Credit Lender’s participation therein.

 

Section 3.3            Commissions and Other Charges.

 

(a)         Letter of Credit Commissions.  Subject to Section 14.21(a)(iii)(B),
the Borrower shall pay to the Administrative Agent, for the account of the
Issuing Lender and the L/C Participants, a letter of credit commission with
respect to each Letter of Credit in the amount equal to the daily amount
available to be drawn under such Letter of Credit multiplied by the Applicable
Margin with respect to Revolving Credit Loans that are LIBOR Rate Loans
(determined on a per annum basis).  Such commission shall be payable quarterly
in arrears on the last Business Day of each calendar quarter, on the Revolving
Credit Maturity Date and thereafter on demand of the Administrative Agent.  The
Administrative Agent shall, promptly following its receipt thereof, distribute
to the Issuing Lender and the L/C Participants all commissions received pursuant
to this Section in accordance with their respective Revolving Credit Commitment
Percentages.

 

(b)         Fronting Fee.  In addition to the foregoing commission, the Borrower
shall pay to the Administrative Agent, for the account of the Issuing Lender, a
fronting fee with respect to each Letter of Credit as separately agreed by the
Borrower and the Issuing Lender in the letter agreement described in clause
(a) of the definition of Fee Letters.  Such issuance fee shall be payable
quarterly in arrears on the last Business Day of each calendar quarter
commencing with the first such date to occur after the issuance of such Letter
of Credit, on the Revolving Credit Maturity Date and thereafter on demand of the
Administrative Agent.

 

(c)         Other Costs.  In addition to the foregoing fees and commissions, the
Borrower shall pay or reimburse the Issuing Lender for such normal and customary
costs and expenses as are incurred or charged by the Issuing Lender in issuing,
effecting payment under, amending or otherwise administering any Letter of
Credit.

 

Section 3.4            L/C Participations.

 

(a)         The Issuing Lender irrevocably agrees to grant, and hereby grants,
to each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant’s own account and risk,
an undivided interest equal to such L/C Participant’s Revolving Credit
Commitment Percentage in the Issuing Lender’s obligations and rights under and
in respect of each Letter of Credit issued hereunder and the amount of each
draft paid by the Issuing Lender thereunder.  Each L/C Participant
unconditionally and irrevocably agrees with the Issuing Lender that, if a draft
is paid under any Letter of Credit for which the Issuing Lender is not
reimbursed in full by the Borrower through a Revolving Credit Loan or otherwise
in accordance with the terms of this Agreement, such L/C Participant shall pay
to the Issuing Lender, upon demand at the Issuing Lender’s address for notices
specified herein, an amount equal to such L/C Participant’s Revolving Credit
Commitment Percentage of the amount of such draft, or any part thereof, which is
not so reimbursed.

 

(b)         Upon becoming aware of any amount required to be paid by any L/C
Participant to the Issuing Lender pursuant to Section 3.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under any Letter
of Credit, the Issuing Lender shall notify each L/C Participant of the amount
and due date of such required payment and such L/C Participant shall pay to the
Issuing Lender the amount specified on the applicable due date.  If any such
amount is paid to the Issuing Lender after the date such payment is due, such
L/C Participant shall pay to the Issuing Lender on demand, in addition

 

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to such amount, the product of (i) such amount, times (ii) the daily average
Federal Funds Rate as determined by the Administrative Agent during the period
from and including the date such payment is due to the date on which such
payment is immediately available to the Issuing Lender, times (iii) a fraction
the numerator of which is the number of days that elapse during such period and
the denominator of which is 360.  A certificate of the Issuing Lender with
respect to any amounts owing under this Section shall be conclusive in the
absence of manifest error.  With respect to payment to the Issuing Lender of the
unreimbursed amounts described in this Section, if the L/C Participants receive
notice that any such payment is due (A) prior to 1:00 p.m. on any Business Day,
such payment shall be due that Business Day, and (B) after 1:00 p.m. on any
Business Day, such payment shall be due on the following Business Day.

 

(c)         Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its
Revolving Credit Commitment Percentage of such payment in accordance with this
Section, the Issuing Lender receives any payment related to such Letter of
Credit (whether directly from the Borrower or otherwise), or any payment of
interest on account thereof, the Issuing Lender will distribute to such L/C
Participant its pro rata share thereof; provided, that in the event that any
such payment received by the Issuing Lender shall be required to be returned by
the Issuing Lender, such L/C Participant shall return to the Issuing Lender the
portion thereof previously distributed by the Issuing Lender to it.

 

Section 3.5            Reimbursement Obligation of the Borrower.  In the event
of any drawing under any Letter of Credit, the Borrower agrees (and, in the case
of the Existing Letters of Credit, Fossil Partners also agrees) to reimburse
(either with the proceeds of a Revolving Credit Loan as provided for in this
Section or with funds from other sources), in same day funds, the Issuing Lender
on each date on which the Issuing Lender notifies the Borrower of the date and
amount of a draft paid under any Letter of Credit for the amount of (a) such
draft so paid and (b) any amounts referred to in Section 3.3(c) incurred by the
Issuing Lender in connection with such payment.  Unless the Borrower shall
immediately notify the Issuing Lender that the Borrower intends to reimburse the
Issuing Lender for such drawing from other sources or funds, the Borrower shall
be deemed to have timely given a Notice of Borrowing to the Administrative Agent
requesting that the Revolving Credit Lenders make a Revolving Credit Loan as a
Base Rate Loan on such date in the amount of (i) such draft so paid and (ii) any
amounts referred to in Section 3.3(c) incurred by the Issuing Lender in
connection with such payment, and the Revolving Credit Lenders shall make a
Revolving Credit Loan as a Base Rate Loan in such amount, the proceeds of which
shall be applied to reimburse the Issuing Lender for the amount of the related
drawing and costs and expenses.  Each Revolving Credit Lender acknowledges and
agrees that its obligation to fund a Revolving Credit Loan in accordance with
this Section to reimburse the Issuing Lender for any draft paid under a Letter
of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation, non-satisfaction of the
conditions set forth in Section 2.3(a) or Article VI.  If the Borrower has
elected to pay the amount of such drawing with funds from other sources and
shall fail to reimburse the Issuing Lender as provided above, the unreimbursed
amount of such drawing shall bear interest at the rate which would be payable on
any outstanding Base Rate Loans which were then overdue from the date such
amounts become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full.

 

Section 3.6            Obligations Absolute.  The Borrower’s obligations under
this Article III (including, without limitation, the Reimbursement Obligations)
shall be absolute and unconditional under any and all circumstances and
irrespective of any set off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender or any beneficiary of a
Letter of Credit or any other Person.  The Borrower also agrees that the Issuing
Lender and the L/C Participants shall not be responsible for, and the Borrower’s
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or

 

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among the Borrower and any beneficiary of any Letter of Credit or any other
party to which such Letter of Credit may be transferred or any claims whatsoever
of the Borrower against any beneficiary of such Letter of Credit or any such
transferee.  The Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions caused by the Issuing Lender’s gross negligence or willful
misconduct, as determined by a court of competent jurisdiction by final
nonappealable judgment.  The Borrower agrees that any action taken or omitted by
the Issuing Lender under or in connection with any Letter of Credit or the
related drafts or documents, if done in the absence of gross negligence or
willful misconduct, shall be binding on the Borrower and shall not result in any
liability of the Issuing Lender or any L/C Participant to the Borrower.  The
responsibility of the Issuing Lender to the Borrower in connection with any
draft presented for payment under any Letter of Credit shall, in addition to any
payment obligation expressly provided for in such Letter of Credit, be limited
to determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in conformity with such
Letter of Credit.

 

Section 3.7            Effect of Letter of Credit Application.  To the extent
that any provision of any Letter of Credit Application related to any Letter of
Credit is inconsistent with the provisions of this Article III, the provisions
of this Article III shall apply.

 

Section 3.8            Guaranty by the Borrower of Reimbursement Obligations
under Existing Letters of Credit.  The Borrower hereby guarantees the payment,
promptly when due, of all Reimbursement Obligations of Fossil Partners with
respect to the Existing Letters of Credit.

 

ARTICLE IV

 

TERM LOAN FACILITY

 

Section 4.1            Initial Term Loan.  Subject to the terms and conditions
hereof, each Term Loan Lender severally agrees to make the Initial Term Loan to
the Borrower on the Closing Date in a principal amount equal to such Lender’s
Term Loan Commitment as of the Closing Date.

 

Section 4.2            Procedure for Advance of Initial Term Loan.  The Borrower
shall give the Administrative Agent an irrevocable Notice of Borrowing prior to
12:00 p.m. on the Closing Date requesting that the Term Loan Lenders make the
Initial Term Loan as a Base Rate Loan on such date (provided that the Borrower
may request, no later than three (3) Business Days prior to the Closing Date,
that the Lenders make the Initial Term Loan as a LIBOR Rate Loan if the Borrower
has delivered to the Administrative Agent a letter in form and substance
reasonably satisfactory to the Administrative Agent indemnifying the Lenders in
the manner set forth in Section 5.9 of this Agreement).  Upon receipt of such
Notice of Borrowing from the Borrower, the Administrative Agent shall promptly
notify each Term Loan Lender thereof.  Not later than 2:00 p.m. on the Closing
Date, each Term Loan Lender will make available to the Administrative Agent for
the account of the Borrower, at the Administrative Agent’s Office in immediately
available funds, the amount of such Initial Term Loan to be made by such Term
Loan Lender on the Closing Date.  The Borrower hereby irrevocably authorizes the
Administrative Agent to disburse the proceeds of the Initial Term Loan in
immediately available funds by wire transfer to such Person or Persons as may be
designated by the Borrower in writing.

 

Section 4.3            Repayment of Initial Term Loan.  The Borrower shall repay
the aggregate outstanding principal amount of the Initial Term Loan in
consecutive quarterly installments on the last Business Day of each of March,
June, September and December commencing September 30, 2013 as set forth below,
except as the amounts of individual installments may be adjusted pursuant to
Section 4.4 hereof:

 

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YEAR

 

PAYMENT DATE

 

PRINCIPAL
INSTALLMENT

 

2013

 

September 30

 

$

3,125,000

 

 

December 31

 

$

3,125,000

 

2014

 

March 31

 

$

3,125,000

 

 

June 30

 

$

3,125,000

 

 

September 30

 

$

3,125,000

 

 

December 31

 

$

3,125,000

 

2015

 

March 31

 

$

3,125,000

 

 

June 30

 

$

3,125,000

 

 

September 30

 

$

4,687,500

 

 

December 31

 

$

4,687,500

 

2016

 

March 31

 

$

4,687,500

 

 

June 30

 

$

4,687,500

 

 

September 30

 

$

6,250,000

 

 

December 31

 

$

6,250,000

 

2017

 

March 31

 

$

6,250,000

 

 

June 30

 

$

6,250,000

 

 

September 30

 

$

6,250,000

 

 

December 31

 

$

6,250,000

 

2018

 

March 31

 

$

6,250,000

 

 

Term Loan Maturity Date

 

Outstanding Balance

 

 

If not sooner paid, the Initial Term Loan shall be paid in full, together with
accrued interest thereon, on the Term Loan Maturity Date.

 

Section 4.4            Prepayments of Term Loans.

 

(a)         Optional Prepayments.  The Borrower shall have the right at any time
and from time to time, without premium or penalty, to prepay the Term Loans, in
whole or in part, upon delivery to the Administrative Agent of a Notice of
Prepayment not later than 11:00 a.m. (i) on the same Business Day in the case of
Base Rate Loans and (ii) at least three (3) Business Days’ notice in the case of
LIBOR Rate Loans, specifying the date and amount of repayment, whether the
repayment is of LIBOR Rate Loans or Base Rate Loans or a combination thereof,
and if a combination thereof, the amount allocable to each and whether the
repayment is of the Initial Term Loan, an Incremental Term Loan or a combination
thereof, and if a combination thereof, the amount allocable to each.  Each
optional prepayment of the Term Loans hereunder shall be in an aggregate
principal amount of at least $5,000,000 or any whole multiple of $1,000,000 in
excess thereof and shall be applied to the outstanding principal installments of
the Initial Term Loan and, if applicable, any Incremental Term Loans as directed
by the Borrower.  Each repayment shall be accompanied by any amount required to
be paid pursuant to Section 5.9 hereof.  A Notice of Prepayment received after
11:00 a.m. shall be deemed received on the next Business Day.  The
Administrative Agent shall promptly notify the applicable Term Loan Lenders of
each Notice of Prepayment.

 

(b)         Mandatory Prepayments.

 

(i)              Asset Dispositions.  The Borrower shall make mandatory
principal prepayments of the Loans in the manner set forth in clause (iii) below
in amounts equal to one hundred percent (100%) of the aggregate Net Cash
Proceeds from any Asset Disposition by any Credit Party or any of its
Subsidiaries.  Such prepayments shall be made within five (5) Business Days
after the

 

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date of receipt of the Net Cash Proceeds of any such Asset Disposition by such
Credit Party or any of its Subsidiaries, provided that, so long as no Default or
Event of Default has occurred and is continuing, no prepayments shall be
required hereunder (A) in connection with up to $40,000,000 of aggregate Net
Cash Proceeds from Asset Dispositions by any Credit Party or any of its
Subsidiaries during the term of this Agreement which are reinvested by any
Credit Party or any of its Subsidiaries in assets used or useful in the business
of the Credit Party and its Subsidiaries within one hundred eighty (180) days
after receipt of such Net Cash Proceeds by the applicable Credit Party or
Subsidiary, provided, that any portion of the Net Cash Proceeds not actually
reinvested within such one hundred eighty (180) day period shall be prepaid in
accordance with this Section, or (B) in connection with any Asset Disposition
permitted pursuant to Section 11.5 other than any Asset Disposition permitted
under Section 11.5(k) or (l).

 

(ii)             Insurance and Condemnation Events.  The Borrower shall make
mandatory principal prepayments of the Loans in the manner set forth in clause
(iii) below in an amount equal to one hundred percent (100%) of the aggregate
Net Cash Proceeds in excess of $1,000,000 per incident from any Insurance and
Condemnation Event by any Credit Party or any of its Subsidiaries.  Such
prepayments shall be made within five (5) Business Days after the date of
receipt of Net Cash Proceeds of any such Insurance and Condemnation Event by
such Credit Party or such Subsidiary; provided that, so long as no Default or
Event of Default has occurred and is continuing, no prepayments shall be
required hereunder in connection with Net Cash Proceeds from Insurance and
Condemnation Events by any Credit Party or any of its Subsidiaries which are
reinvested in assets within one hundred eighty (180) days after receipt of such
Net Cash Proceeds by such Credit Party or such Subsidiary; provided, that any
portion of the Net Cash Proceeds not actually reinvested within such one hundred
eighty (180) day period shall be prepaid in accordance with this Section, unless
the insurance proceeds are being used to rebuild or repair the affected property
and the rebuilding or repairs have commenced and are proceeding in a
commercially reasonable manner.

 

(iii)            Notice; Manner of Payment.  Upon the occurrence of any event
triggering the prepayment requirement under clauses (i) and (ii) above, the
Borrower shall promptly deliver a Notice of Prepayment to the Administrative
Agent and upon receipt of such notice, the Administrative Agent shall promptly
so notify the Lenders.  Each prepayment of the Loans under this Section shall be
applied as directed by the Borrower to either (A) prepay the Term Loans on a pro
rata basis (each such prepayment to be applied on a pro rata basis to the
remaining scheduled principal installments within each tranche) and/or (B) repay
the Revolving Credit Loans pursuant to Section 2.4(d), without a corresponding
reduction in the Revolving Credit Commitment.

 

(iv)            No Reborrowings.  Amounts prepaid under the Term Loans pursuant
to this Section may not be reborrowed.  Each prepayment shall be accompanied by
any amount required to be paid pursuant to Section 5.9.

 

ARTICLE V

 

GENERAL LOAN PROVISIONS

 

Section 5.1            Interest.

 

(a)         Interest Rate Options.  Subject to the provisions of this Section,
at the election of the Borrower, (i) the Revolving Credit Loans and the Term
Loans shall bear interest at (A) the Base Rate plus the Applicable Margin or
(B) the LIBOR Rate plus the Applicable Margin (provided that the LIBOR Rate

 

39

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shall not be available until three (3) Business Days after the Closing Date
unless the Borrower has delivered to the Administrative Agent a letter in form
and substance reasonably satisfactory to the Administrative Agent indemnifying
the Lenders in the manner set forth in Section 5.9 of this Agreement) and
(ii) any Swingline Loan shall bear interest at the Base Rate plus the Applicable
Margin.  The Borrower shall select the rate of interest and Interest Period, if
any, applicable to any Loan at the time a Notice of Borrowing is given or at the
time a Notice of Conversion/Continuation is given pursuant to Section 5.2.  Any
Loan or any portion thereof as to which the Borrower has not duly specified an
interest rate as provided herein shall be deemed a Base Rate Loan.

 

(b)         Interest Periods.  In connection with each LIBOR Rate Loan, the
Borrower, by giving notice at the times described in Section 2.3 or 5.2, as
applicable, shall elect an interest period (each, an “Interest Period”) to be
applicable to such Loan, which Interest Period shall be a period of one (1), two
(2), three (3) or six (6) months; provided that:

 

(i)            the Interest Period shall commence on the date of advance of or
conversion to any LIBOR Rate Loan and, in the case of immediately successive
Interest Periods, each successive Interest Period shall commence on the date on
which the immediately preceding Interest Period expires;

 

(ii)           if any Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided that, if any Interest Period with respect to a LIBOR Rate
Loan would otherwise expire on a day that is not a Business Day but is a day of
the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the immediately preceding Business Day;

 

(iii)          any Interest Period with respect to a LIBOR Rate Loan that begins
on the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the relevant calendar month at the
end of such Interest Period;

 

(iv)          no Interest Period shall extend beyond the Revolving Credit
Maturity Date or the Term Loan Maturity Date, as applicable; and

 

(v)           there shall be no more than ten (10) outstanding Interest Periods
in effect at any time.

 

(c)         Default Rate.  Subject to Section 12.3, (i) immediately upon the
occurrence and during the continuance of an Event of Default under
Section 12.1(a), (b), (i) or (j), or (ii) at the election of the Required
Lenders, upon the occurrence and during the continuance of any other Event of
Default, (A) the Borrower shall no longer have the option to request LIBOR Rate
Loans, Swingline Loans or Letters of Credit, (B) all outstanding LIBOR Rate
Loans shall bear interest at a rate per annum of two percent (2%) in excess of
the rate (including the Applicable Margin) then applicable to LIBOR Rate Loans
until the end of the applicable Interest Period and thereafter at a rate equal
to two percent (2%) in excess of the rate (including the Applicable Margin) then
applicable to Base Rate Loans, (C) all outstanding Base Rate Loans and other
Obligations arising hereunder or under any other Loan Document shall bear
interest at a rate per annum equal to two percent (2%) in excess of the rate
(including the Applicable Margin) then applicable to Base Rate Loans or such
other Obligations arising hereunder or under any other Loan Document and (D) all
accrued and unpaid interest shall be due and payable on demand of the
Administrative Agent.  Interest shall continue to accrue on the Obligations
after the filing by or against the Borrower of any petition seeking any relief
in bankruptcy or under any Debtor Relief Law.

 

40

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(d)         Interest Payment and Computation.  Interest on each Base Rate Loan
shall be due and payable in arrears on the last Business Day of each calendar
quarter commencing September 30, 2013; and interest on each LIBOR Rate Loan
shall be due and payable on the last day of each Interest Period applicable
thereto, and if such Interest Period extends over three (3) months, at the end
of each three (3) month interval during such Interest Period.  All computations
of interest for Base Rate Loans when the Base Rate is determined by the Prime
Rate shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed.  All other computations of fees and interest
provided hereunder shall be made on the basis of a 360-day year and actual days
elapsed (which results in more fees or interest, as applicable, being paid than
if computed on the basis of a 365/366-day year).

 

(e)         Maximum Rate.  In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest under this Agreement charged or
collected pursuant to the terms of this Agreement exceed the highest rate
permissible under any Applicable Law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto.  In the event that such
a court determines that the Lenders have charged or received interest hereunder
in excess of the highest applicable rate, the rate in effect hereunder shall
automatically be reduced to the maximum rate permitted by Applicable Law and the
Lenders shall at the Administrative Agent’s option (i) promptly refund to the
Borrower any interest received by the Lenders in excess of the maximum lawful
rate or (ii) apply such excess to the principal balance of the Obligations on a
pro rata basis.  It is the intent hereof that the Borrower not pay or contract
to pay, and that neither the Administrative Agent nor any Lender receive or
contract to receive, directly or indirectly in any manner whatsoever, interest
in excess of that which may be paid by the Borrower under Applicable Law.

 

Section 5.2            Notice and Manner of Conversion or Continuation of
Loans.  Provided that no Default or Event of Default has occurred and is then
continuing, the Borrower shall have the option to (a) convert at any time
following the third Business Day after the Closing Date all or any portion of
any outstanding Base Rate Loans (other than Swingline Loans) in a principal
amount equal to $5,000,000 or any whole multiple of $1,000,000 in excess thereof
into one or more LIBOR Rate Loans and (b) upon the expiration of any Interest
Period, (i) convert all or any part of its outstanding LIBOR Rate Loans in a
principal amount equal to $3,000,000 or a whole multiple of $1,000,000 in excess
thereof into Base Rate Loans (other than Swingline Loans) or (ii) continue such
LIBOR Rate Loans as LIBOR Rate Loans.  Whenever the Borrower desires to convert
or continue Loans as provided above, the Borrower shall give the Administrative
Agent irrevocable prior written notice in the form attached as Exhibit E (a
“Notice of Conversion/Continuation”) not later than 12:00 noon three
(3) Business Days before the day on which a proposed conversion or continuation
of such Loan is to be effective specifying (A) the Loans to be converted or
continued, and, in the case of any LIBOR Rate Loan to be converted or continued,
the last day of the Interest Period therefor, (B) the effective date of such
conversion or continuation (which shall be a Business Day), (C) the principal
amount of such Loans to be converted or continued, and (D) the Interest Period
to be applicable to such converted or continued LIBOR Rate Loan.  If the
Borrower fails to give a timely Notice of Conversion/Continuation prior to the
end of the Interest Period for any LIBOR Rate Loan, then the applicable LIBOR
Rate Loan shall be converted to a Base Rate Loan.  Any such automatic conversion
to a Base Rate Loan shall be effective as of the last day of the Interest Period
then in effect with respect to the applicable LIBOR Rate Loan.  If the Borrower
requests a conversion to, or continuation of, LIBOR Rate Loans, but fails to
specify an Interest Period, it will be deemed to have specified an Interest
Period of one month.  Notwithstanding anything to the contrary herein, a
Swingline Loan may not be converted to a LIBOR Rate Loan.  The Administrative
Agent shall promptly notify the affected Lenders of such Notice of
Conversion/Continuation.

 

41

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Section 5.3            Fees.

 

(a)         Commitment Fee.  Commencing on the Closing Date, subject to
Section 14.21(a)(iii)(A), the Borrower shall pay to the Administrative Agent,
for the account of the Revolving Credit Lenders, a non-refundable commitment fee
(the “Commitment Fee”) at a rate per annum equal to the Applicable Margin on the
average daily unused portion of the Revolving Credit Commitment of the Revolving
Credit Lenders (other than the Defaulting Lenders, if any); provided, that
(i) the amount of outstanding Swingline Loans shall not be considered usage, and
(ii) the amount of issued and outstanding undrawn Letters of Credit shall be
considered usage, in each case of the Revolving Credit Commitment for the
purpose of calculating the Commitment Fee.  The Commitment Fee shall be payable
in arrears on the last Business Day of each calendar quarter during the term of
this Agreement commencing September 30, 2013 and ending on the date upon which
all Obligations (other than contingent indemnification obligations not then due)
arising under the Revolving Credit Facility shall have been indefeasibly and
irrevocably paid and satisfied in full, all Letters of Credit have been
terminated or expired (or have been Cash Collateralized) and the Revolving
Credit Commitment has been terminated.  The Commitment Fee shall be distributed
by the Administrative Agent to the Revolving Credit Lenders (other than any
Defaulting Lender) pro rata in accordance with such Revolving Credit Lenders’
respective Revolving Credit Commitment Percentages.

 

(b)         Other Fees.  The Borrower shall pay to the Arrangers and the
Administrative Agent for their own respective accounts fees in the amounts and
at the times specified in the applicable Fee Letters.  The Borrower shall pay to
the applicable Lender(s) such fees as shall have been separately agreed upon
(pursuant to the applicable Fee Letter or otherwise) in writing in the amounts
and at the times so specified.

 

Section 5.4            Manner of Payment.

 

(a)         Sharing of Payments.  Each payment by the Borrower on account of the
principal of or interest on the Loans or of any fee, commission or other amounts
(including the Reimbursement Obligation) payable to the Lenders under this
Agreement (or any of them) shall be made not later than 1:00 p.m. on the date
specified for payment under this Agreement to the Administrative Agent at the
Administrative Agent’s Office for the account of the Lenders entitled to such
payment in Dollars, in immediately available funds, and shall be made without
any set off, counterclaim or deduction whatsoever.  Any payment received after
such time but before 2:00 p.m. on such day shall be deemed a payment on such
date for the purposes of Section 12.1, but for all other purposes shall be
deemed to have been made on the next succeeding Business Day.  Any payment
received after 2:00 p.m. shall be deemed to have been made on the next
succeeding Business Day for all purposes.  Upon receipt by the Administrative
Agent of each such payment, the Administrative Agent shall distribute to each
such Lender at its address for notices set forth herein its Commitment
Percentage in respect of the relevant Credit Facility (or other share as
provided herein) of such payment and shall wire advice of the amount of such
credit to each Lender.  Each payment to the Administrative Agent on account of
the principal of or interest on the Swingline Loans or of any fee, commission or
other amounts payable to the Swingline Lender shall be made in like manner, but
for the account of the Swingline Lender.  Each payment to the Administrative
Agent of the Issuing Lender’s fees or L/C Participants’ commissions shall be
made in like manner, but for the account of the Issuing Lender or the L/C
Participants, as the case may be.  Each payment to the Administrative Agent of
the Administrative Agent’s fees or expenses shall be made for the account of the
Administrative Agent, and any amount payable to any Lender under Sections 5.9,
5.10, 5.11 or 14.3 shall be paid to the Administrative Agent for the account of
the applicable Lender.  Subject to Section 5.1(b)(ii), if any payment under this
Agreement shall be specified to be made upon a day which is not a Business Day,
it shall be made on the next succeeding day which is a Business Day and such

 

42

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extension of time shall in such case be included in computing any interest if
payable along with such payment.

 

(b)         Defaulting Lenders.  Notwithstanding the foregoing clause (a), if
there exists a Defaulting Lender each payment by the Borrower to such Defaulting
Lender hereunder shall be applied in accordance with Section 14.21(a)(ii).

 

(c)         Authorization regarding Certain Payments.  To facilitate the payment
of certain amounts payable under this Agreement and the other Loan Documents,
the Borrower (i) shall maintain at least one of its principal deposit accounts
with Wells Fargo (or any successor Administrative Agent) and (ii) authorizes the
Administrative Agent to charge such deposit account and/or any other deposit
account maintained by the Borrower with Wells Fargo (or any successor
Administrative Agent), up to the amount available therein, in order to pay any
principal (including unreimbursed amounts drawn under Letters of Credit),
interest or fees then due by the Borrower under this Agreement, any Note or any
Fee Letter (but excluding costs and expenses or indemnification obligations
payable under Section 14.3).  The Borrower acknowledges and agrees that (A) the
Administrative Agent shall not be obligated to effectuate any such charge
referred to in this Section 5.4(c), (B) if and to the extent that the
Administrative Agent does effectuate any such charge, the same may cause an
overdraft which may result in the depository bank’s refusal to honor other items
drawn on such account until adequate deposits are made to such account, and
(C) if and to the extent that such a charge is not made, the Borrower is
nonetheless obligated to pay all such amounts when due in accordance with this
Agreement, the Notes and/or any Fee Letter (as applicable).

 

Section 5.5            Evidence of Indebtedness.

 

(a)         Extensions of Credit.  The Extensions of Credit made by each Lender
shall be evidenced by one or more accounts or records maintained by such Lender
and by the Administrative Agent in the ordinary course of business.  The
accounts or records maintained by the Administrative Agent and each Lender shall
be conclusive absent manifest error of the amount of the Extensions of Credit
made by the Lenders to the Borrower and the interest and payments thereon.  Any
failure to so record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Borrower hereunder to pay any amount
owing with respect to the Obligations.  In the event of any conflict between the
accounts and records maintained by any Lender and the accounts and records of
the Administrative Agent in respect of such matters, the accounts and records of
the Administrative Agent shall control in the absence of manifest error.  Upon
the request of any Lender made through the Administrative Agent, the Borrower
shall execute and deliver to such Lender (through the Administrative Agent) a
Revolving Credit Note and/or a Swingline Note, as applicable, which shall
evidence such Lender’s Revolving Credit Loans and/or Swingline Loans, as
applicable, in addition to such accounts or records.  Each Lender may attach
schedules to its Notes and endorse thereon the date, amount and maturity of its
Loans and payments with respect thereto.

 

(b)         Participations.  In addition to the accounts and records referred to
in Section 5.5(a), each Revolving Credit Lender and the Administrative Agent
shall maintain in accordance with its usual practice accounts or records
evidencing the purchases and sales by such Revolving Credit Lender of
participations in Letters of Credit and Swingline Loans.  In the event of any
conflict between the accounts and records maintained by the Administrative Agent
and the accounts and records of any Revolving Credit Lender in respect of such
matters, the accounts and records of the Administrative Agent shall control in
the absence of manifest error.

 

Section 5.6            Adjustments.  If any Lender shall, by exercising any
right of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of its Loans or

 

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other obligations hereunder resulting in such Lender’s receiving payment of a
proportion of the aggregate amount of its Loans and accrued interest thereon or
other such obligations (other than pursuant to Sections 5.9, 5.10, 5.11 or 14.3)
greater than its pro rata share thereof as provided herein, then the Lender
receiving such greater proportion shall (a) notify the Administrative Agent of
such fact, and (b) purchase (for cash at face value) participations in the Loans
and such other obligations of the other Lenders, or make such other adjustments
as shall be equitable, so that the benefit of all such payments shall be shared
by the Lenders ratably in accordance with the aggregate amount of principal of
and accrued interest on their respective Loans and other amounts owing them;
provided that:

 

(i)                                     if any such participations are purchased
and all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and

 

(ii)                                  the provisions of this Section shall not
be construed to apply to (A) any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement (including the application
of funds arising from the existence of a Defaulting Lender), (B) the application
of Cash Collateral provided for in Section 5.14 or (C) any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in any
of its Loans or participations in Swingline Loans and Letters of Credit to any
assignee or participant, other than to the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this Section shall apply).

 

Each Credit Party consents to the foregoing and agrees, to the extent it may
effectively do so under Applicable Law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against each
Credit Party rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of each Credit
Party in the amount of such participation.

 

Section 5.7                                    Obligations of Lenders.

 

(a)                           Funding by Lenders; Presumption by Administrative
Agent.  Unless the Administrative Agent shall have received notice from a Lender
(i) in the case of Base Rate Loans, not later than 1:00 p.m. on the date of any
proposed borrowing and (ii) otherwise, prior to the proposed date of any
borrowing that such Lender will not make available to the Administrative Agent
such Lender’s share of such borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with
Sections 2.3(b) and 4.2 and may, in reliance upon such assumption, make
available to the Borrower a corresponding amount.  In such event, if a Lender
has not in fact made its share of the applicable borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment to
the Administrative Agent, at (A) in the case of a payment to be made by such
Lender, the greater of the daily average Federal Funds Rate and a rate
determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation and (B) in the case of a payment to be made by
the Borrower, the interest rate applicable to Base Rate Loans.  If the Borrower
and such Lender shall pay such interest to the Administrative Agent for the same
or an overlapping period, the Administrative Agent shall promptly remit to the
Borrower the amount of such interest paid by the Borrower for such period.  If
such Lender pays its share of the applicable borrowing to the Administrative
Agent, then the amount so paid shall constitute such Lender’s Loan included in
such borrowing.  Any payment by the Borrower shall be without prejudice to any
claim the Borrower may have against a Lender that shall have failed to make such
payment to the Administrative Agent.

 

44

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(b)                           Payments by the Borrower; Presumptions by
Administrative Agent.  Unless the Administrative Agent shall have received
notice from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders, the Issuing Lender or the
Swingline Lender hereunder that the Borrower will not make such payment, the
Administrative Agent may assume that the Borrower has made such payment on such
date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders, the Issuing Lender or the Swingline Lender, as the
case may be, the amount due.  In such event, if the Borrower has not in fact
made such payment, then each of the Lenders, the Issuing Lender or the Swingline
Lender, as the case maybe, severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender, Issuing Lender or
the Swingline Lender, with interest thereon, for each day from and including the
date such amount is distributed to it to but excluding the date of payment to
the Administrative Agent, at the greater of the Federal Funds Rate and a rate
determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.

 

(c)                            Nature of Obligations of Lenders Regarding
Extensions of Credit.  The obligations of the Lenders under this Agreement to
make the Loans and issue or participate in Letters of Credit are several and are
not joint or joint and several.  The failure of any Lender to make available its
Commitment Percentage of any Loan requested by the Borrower shall not relieve it
or any other Lender of its obligation, if any, hereunder to make its Commitment
Percentage of such Loan available on the borrowing date, but no Lender shall be
responsible for the failure of any other Lender to make its Commitment
Percentage of such Loan available on the borrowing date.

 

Section 5.8                                    Changed Circumstances.

 

(a)                           Circumstances Affecting LIBOR Rate Availability. 
In connection with any request for a LIBOR Rate Loan or a Base Rate Loan as to
which the interest rate is determined with reference to LIBOR or a conversion to
or continuation thereof, if for any reason (i) the Administrative Agent shall
determine (which determination shall be conclusive and binding absent manifest
error) that Dollar deposits are not being offered to banks in the London
interbank Eurodollar market for the applicable amount and Interest Period of
such Loan, (ii) the Administrative Agent shall determine (which determination
shall be conclusive and binding absent manifest error) that reasonable and
adequate means do not exist for the ascertaining the LIBOR Rate for such
Interest Period with respect to a proposed LIBOR Rate Loan or any Base Rate Loan
as to which the interest rate is determined with reference to LIBOR or (iii) the
Required Lenders shall determine (which determination shall be conclusive and
binding absent manifest error) that the LIBOR Rate does not adequately and
fairly reflect the cost to such Lenders of making or maintaining such Loans
during such Interest Period, then the Administrative Agent shall promptly give
notice thereof to the Borrower.  Thereafter, until the Administrative Agent
notifies the Borrower that such circumstances no longer exist, the obligation of
the Lenders to make LIBOR Rate Loans or Base Rate Loans as to which the interest
rate is determined with reference to LIBOR and the right of the Borrower to
convert any Loan to or continue any Loan as a LIBOR Rate Loan or a Base Rate
Loan as to which the interest rate is determined with reference to LIBOR shall
be suspended, and (i) in the case of LIBOR Rate Loans, the Borrower shall either
(A) repay in full (or cause to be repaid in full) the then outstanding principal
amount of each such LIBOR Rate Loan together with accrued interest thereon
(subject to Section 5.1(d)), on the last day of the then current Interest Period
applicable to such LIBOR Rate Loan; or (B) convert the then outstanding
principal amount of each such LIBOR Rate Loan to a Base Rate Loan as to which
the interest rate is not determined by reference to LIBOR as of the last day of
such Interest Period; or (ii) in the case of Base Rate Loans as to which the
interest rate is determined by reference to LIBOR, the Borrower shall convert
the then outstanding principal amount of each such Loan to a Base Rate Loan as
to which the interest rate is not determined by reference to LIBOR as of the
last day of such Interest Period.

 

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(b)                           Laws Affecting LIBOR Rate Availability.  If, after
the date hereof, the introduction of, or any change in, any Applicable Law or
any change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any of the Lenders (or any of their
respective Lending Offices) with any request or directive (whether or not having
the force of law) of any such Governmental Authority, central bank or comparable
agency, shall make it unlawful or impossible for any of the Lenders (or any of
their respective Lending Offices) to honor its obligations hereunder to make or
maintain any LIBOR Rate Loan or any Base Rate Loan as to which the interest rate
is determined by reference to LIBOR, such Lender shall promptly give notice
thereof to the Administrative Agent and the Administrative Agent shall promptly
give notice to the Borrower and the other Lenders.  Thereafter, until the
Administrative Agent notifies the Borrower that such circumstances no longer
exist, (i) the obligations of the Lenders to make LIBOR Rate Loans or Base Rate
Loans as to which the interest rate is determined by reference to LIBOR, and the
right of the Borrower to convert any Loan or continue any Loan as a LIBOR Rate
Loan or a Base Rate Loan as to which the interest rate is determined by
reference to LIBOR shall be suspended and thereafter the Borrower may select
only Base Rate Loans as to which the interest rate is not determined by
reference to LIBOR hereunder, (ii) all Base Rate Loans shall cease to be
determined by reference to LIBOR and (iii) if any of the Lenders may not
lawfully continue to maintain a LIBOR Rate Loan to the end of the then current
Interest Period applicable thereto, the applicable Loan shall immediately be
converted to a Base Rate Loan as to which the interest rate is not determined by
reference to LIBOR for the remainder of such Interest Period.

 

Section 5.9                                    Indemnity.  The Borrower hereby
indemnifies each of the Lenders against any loss or expense (including any loss
or expense arising from the liquidation or reemployment of funds obtained by it
to maintain a LIBOR Rate Loan or from fees payable to terminate the deposits
from which such funds were obtained) which may arise or be attributable to each
Lender’s obtaining, liquidating or employing deposits or other funds acquired to
effect, fund or maintain any Loan (a) as a consequence of any failure by the
Borrower to make any payment when due of any amount due hereunder in connection
with a LIBOR Rate Loan, (b) due to any failure of the Borrower to borrow,
continue or convert on a date specified therefor in a Notice of Borrowing or
Notice of Conversion/Continuation or (c) due to any payment, prepayment or
conversion of any LIBOR Rate Loan on a date other than the last day of the
Interest Period therefor.  The amount of such loss or expense shall be
determined, in the applicable Lender’s reasonable discretion, based upon the
assumption that such Lender funded its Commitment Percentage of the LIBOR Rate
Loans in the London interbank market and using any reasonable attribution or
averaging methods which such Lender deems appropriate and practical.  A
certificate of such Lender setting forth in reasonable detail the factual basis
for, and calculations used in, determining such amount or amounts necessary to
compensate such Lender shall be forwarded to the Borrower through the
Administrative Agent and shall be conclusively presumed to be correct save for
manifest error.

 

Section 5.10                             Increased Costs.

 

(a)                           Increased Costs Generally.  If any Change in Law
shall:

 

(i)                                     impose, modify or deem applicable any
reserve, special deposit, compulsory loan, insurance charge or similar
requirement against assets of, deposits with or for the account of, or advances,
loans or other credit extended or participated in by, any Lender (except any
reserve requirement reflected in the LIBOR Rate) or the Issuing Lender;

 

(ii)                                  subject any Recipient to any Taxes of any
kind whatsoever with respect to this Agreement, any Letter of Credit, any
participation in a Letter of Credit or any LIBOR Rate Loan made by it, or change
the basis of taxation of payments to such Lender or the Issuing Lender in

 

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respect thereof (except for Indemnified Taxes or Other Taxes covered by
Section 5.11 and the imposition of, or any change in the rate of, any Excluded
Tax payable by such Lender or the Issuing Lender); or

 

(iii)                               impose on any Lender or the Issuing Lender
or the London interbank market any other condition, cost or expense (other than
Taxes) affecting this Agreement or LIBOR Rate Loans made by such Lender or any
Letter of Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to such
Lender or the Issuing Lender of making, converting to, continuing or maintaining
any LIBOR Rate Loan (or of maintaining its obligation to make any such Loan), or
to increase the cost to such Lender or the Issuing Lender of participating in,
issuing or maintaining any Letter of Credit (or of maintaining its obligation to
participate in or to issue any Letter of Credit), or to reduce the amount of any
sum received or receivable by such Lender or the Issuing Lender hereunder
(whether of principal, interest or any other amount) then, upon written request
of such Lender or the Issuing Lender, the Borrower shall promptly pay to any
such Lender or the Issuing Lender, as the case may be, such additional amount or
amounts as will compensate such Lender or the Issuing Lender, as the case may
be, for such additional costs incurred or reduction suffered.

 

(b)                           Capital Requirements.  If any Lender or the
Issuing Lender determines that any Change in Law affecting such Lender or the
Issuing Lender or any lending office of such Lender or such Lender’s or the
Issuing Lender’s holding company, if any, regarding capital or liquidity
requirements, has or would have the effect of reducing the rate of return on
such Lender’s or the Issuing Lender’s capital or on the capital of such Lender’s
or the Issuing Lender’s holding company, if any, as a consequence of this
Agreement, the Revolving Credit Commitment of such Lender or the Loans made by,
or participations in Letters of Credit or Swingline Loans held by, such Lender,
or the Letters of Credit issued by the Issuing Lender, to a level below that
which such Lender or the Issuing Lender or such Lender’s or the Issuing Lender’s
holding company could have achieved but for such Change in Law (taking into
consideration such Lender’s or the Issuing Lender’s policies and the policies of
such Lender’s or the Issuing Lender’s holding company with respect to capital
adequacy), then from time to time upon written request of such Lender or such
Issuing Lender the Borrower shall promptly pay to such Lender or the Issuing
Lender, as the case may be, such additional amount or amounts as will compensate
such Lender or the Issuing Lender or such Lender’s or the Issuing Lender’s
holding company for any such reduction suffered.

 

(c)                            Certificates for Reimbursement.  A certificate of
a Lender or the Issuing Lender setting forth in reasonable detail the factual
basis for, and calculations used in, determining such amount or amounts
necessary to compensate such Lender or the Issuing Lender or its holding
company, as the case may be, as specified in Section 5.10(a) or 5.10(b) and
delivered to the Borrower shall be conclusive absent manifest error.  The
Borrower shall pay such Lender or the Issuing Lender, as the case may be, the
amount shown as due on any such certificate within ten (10) days after receipt
thereof.

 

(d)                           Delay in Requests.  Failure or delay on the part
of any Lender or the Issuing Lender to demand compensation pursuant to this
Section shall not constitute a waiver of such Lender’s or the Issuing Lender’s
right to demand such compensation; provided that the Borrower shall not be
required to compensate a Lender or the Issuing Lender pursuant to this
Section for any increased costs incurred or reductions suffered more than six
(6) months prior to the date that such Lender or the Issuing Lender, as the case
may be, notifies the Borrower of the Change in Law giving rise to such increased
costs or reductions and of such Lender’s or the Issuing Lender’s intention to
claim compensation therefor (except that if the Change in Law giving rise to
such increased costs or reductions is retroactive, then the six-month period
referred to above shall be extended to include the period of retroactive effect
thereof).

 

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Section 5.11                             Taxes.

 

(a)                           Defined Terms.  For purposes of this Section 5.11,
the term “Lender” includes the Issuing Lender and the term “Applicable Law”
includes FATCA.

 

(b)                           Payments Free of Taxes.  Any and all payments by
or on account of any obligation of any Credit Party under any Loan Document
shall be made free and clear and without deduction or withholding for any Taxes;
except as required by Applicable Law.  If any Applicable Law (as determined in
the good faith discretion of an applicable Withholding Agent) requires the
deduction or withholding of any Tax from any such payment by a Withholding
Agent, then the applicable Withholding Agent shall be entitled to make such
deduction or withholding and shall timely pay the full amount deducted or
withheld to the relevant Governmental Authority in accordance with Applicable
Law and, if such Tax is an Indemnified Tax, then the sum payable by the
applicable Credit Party shall be increased as necessary so that, after such
deduction or withholding has been made (including such deductions and
withholdings applicable to additional sums payable under this Section), the
applicable Recipient receives an amount equal to the sum it would have received
had no such deduction or withholding been made.

 

(c)                            Payment of Other Taxes by the Borrower.  The
Credit Parties shall timely pay to the relevant Governmental Authority in
accordance with Applicable Law, or at the option of the Administrative Agent
timely reimburse it for the payment of, any Other Taxes.

 

(d)                           Indemnification by the Borrower.  The Credit
Parties shall jointly and severally indemnify each Recipient, within ten
(10) days after demand therefor, for the full amount of any Indemnified Taxes
(including Indemnified Taxes imposed or asserted on or attributable to amounts
payable under this Section) payable or paid by such Recipient or required to be
withheld or deducted from a payment to such Recipient and any reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority; provided that the Borrower shall not be obligated to
indemnify the Administrative Agent, any Lender or the Issuing Lender for any
amount in respect of any such penalties, interest or reasonable expenses if
written demand therefor was not made by the Administrative Agent, such Lender or
the Issuing Lender within 180 days from the date on which such party makes
payment for such penalties, interest or expenses; provided further that the
foregoing limitation shall not apply to any such penalties, interest or
reasonable expenses arising out of the retroactive application of any such
Indemnified Tax.  A certificate as to the amount of such payment or liability
delivered to the Borrower by a Recipient (with a copy to the Administrative
Agent), or by the Administrative Agent on its own behalf or on behalf of a
Recipient, shall be conclusive absent manifest error.

 

(e)                            Indemnification by the Lenders.  Each Lender
shall severally indemnify the Administrative Agent, within ten (10) days after
demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but
only to the extent that any Credit Party has not already indemnified the
Administrative Agent for such Indemnified Taxes and without limiting the
obligation of the Credit Parties to do so), (ii) any Taxes attributable to such
Lender’s failure to comply with the provisions of Section 14.9(d) relating to
the maintenance of a Participant Register and (iii) any Excluded Taxes
attributable to such Lender, in each case, that are payable or paid by the
Administrative Agent in connection with any Loan Document, and any reasonable
expenses arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the amount of such payment or liability
delivered to any Lender by the Administrative Agent shall be conclusive absent
manifest error.  Each Lender hereby authorizes the Administrative Agent to set
off and apply any and all amounts at any time owing to such Lender under any
Loan Document or otherwise payable by the Administrative Agent to the Lender
from any other source against any amount due to the Administrative Agent under
this paragraph (e).

 

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(f)                             Evidence of Payments.  As soon as practicable
after any payment of Taxes by any Credit Party to a Governmental Authority
pursuant to this Section 5.11, such Credit Party shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.

 

(g)                            Status of Lenders.

 

(i)                                     Any Lender that is entitled to an
exemption from or reduction of withholding Tax with respect to payments made
under any Loan Document shall deliver to the Borrower and the Administrative
Agent, at the time or times reasonably requested by the Borrower or the
Administrative Agent, such properly completed and executed documentation
reasonably requested by the Borrower or the Administrative Agent as will permit
such payments to be made without withholding or at a reduced rate of
withholding.  In addition, any Lender, if reasonably requested by the Borrower
or the Administrative Agent, shall deliver such other documentation prescribed
by Applicable Law or reasonably requested by the Borrower or the Administrative
Agent as will enable the Borrower or the Administrative Agent to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements.  Notwithstanding anything to the contrary in the
preceding two sentences, the completion, execution and submission of such
documentation (other than such documentation set forth in
Section 5.11(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in
the Lender’s reasonable judgment such completion, execution or submission would
subject such Lender to any material unreimbursed cost or expense or would
materially prejudice the legal or commercial position of such Lender.

 

(ii)                                  Without limiting the generality of the
foregoing, in the event that the Borrower is a U.S. Person:

 

(A)                               Any Lender that is a U.S. Person shall deliver
to the Borrower and the Administrative Agent on or prior to the date on which
such Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Borrower or the Administrative
Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt
from United States federal backup withholding tax;

 

(B)                               any Foreign Lender shall, to the extent it is
legally entitled to do so, deliver to the Borrower and the Administrative Agent
(in such number of copies as shall be requested by the recipient) on or prior to
the date on which such Foreign Lender becomes a Lender under this Agreement (and
from time to time thereafter upon the reasonable request of the Borrower or the
Administrative Agent), whichever of the following is applicable:

 

(1)                                 in the case of a Foreign Lender claiming the
benefits of an income tax treaty to which the United States is a party (x) with
respect to payments of interest under any Loan Document, executed originals of
IRS Form W-8BEN establishing an exemption from, or reduction of, United States
federal withholding Tax pursuant to the “interest” article of such tax treaty
and (y) with respect to any other applicable payments under any Loan
Document, IRS Form W-8BEN establishing an exemption from, or reduction of,
United States federal withholding Tax pursuant to the “business profits” or
“other income” article of such tax treaty;

 

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(2)                                 executed originals of IRS Form W-8ECI;

 

(3)                                 in the case of a Foreign Lender claiming the
benefits of the exemption for portfolio interest under section 881(c) of the
Code, (x) a certificate substantially in the form of Exhibit K-1 to the effect
that such Foreign Lender is not (A) a “bank” within the meaning of section
881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within
the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign
corporation” described in section 881(c)(3)(C) of the Code (a “U.S. Tax
Compliance Certificate”) and (y) executed originals of Internal Revenue Service
Form W-8BEN; or

 

(4)                                 to the extent a Foreign Lender is not the
beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS
Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in
the form of Exhibit K-2 or Exhibit K-3, IRS Form W-9, and/or other certification
documents from each beneficial owner, as applicable; provided that if the
Foreign Lender is a partnership and one or more direct or indirect partners of
such Foreign Lender are claiming the portfolio interest exemption, such Foreign
Lender may provide a U.S. Tax Compliance Certificate substantially in the form
of Exhibit K-4 on behalf of each such direct and indirect partner;

 

(C)                               any Foreign Lender shall, to the extent it is
legally entitled to do so, deliver to the Borrower and the Administrative Agent
(in such number of copies as shall be requested by the recipient) on or prior to
the date on which such Foreign Lender becomes a Lender under this Agreement (and
from time to time thereafter upon the reasonable request of the Borrower or the
Administrative Agent), executed originals of any other form prescribed by
Applicable Law as a basis for claiming exemption from or a reduction in United
States Federal withholding Tax duly completed, together with such supplementary
documentation as may be prescribed by Applicable Law to permit the Borrower or
the Administrative Agent to determine the withholding or deduction required to
be made; and

 

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

 

Each Lender agrees that if any form or certification it previously delivered
expires or becomes obsolete or inaccurate in any respect, it shall update such
form or certification or promptly notify the Borrower and the Administrative
Agent in writing of its legal inability to do so.

 

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(h)                           Treatment of Certain Refunds.  If the
Administrative Agent, a Lender or the Issuing Lender determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 5.11 (including by
the payment of additional amounts pursuant to this Section 5.11, it shall pay to
the indemnifying party an amount equal to such refund (but only to the extent of
indemnity payments made under this Section with respect to the Taxes giving rise
to such refund), net of all out-of-pocket expenses (including Taxes) of such
indemnified party and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund).  Such indemnifying
party, upon the request of such indemnified party, shall repay to such
indemnified party the amount paid over pursuant to this paragraph (h) (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such
refund to such Governmental Authority.  Notwithstanding anything to the contrary
in this paragraph (h), in no event will the indemnified party be required to pay
any amount to an indemnifying party pursuant to this paragraph (h) the payment
of which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid.  This paragraph shall not be construed
to require any indemnified party to make available its tax returns (or any other
information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.

 

(i)                               Survival.  Each party’s obligations under this
Section shall survive the resignation or replacement of the Administrative Agent
or any assignment of rights by, or the replacement of, a Lender, the termination
of the Commitments and the repayment, satisfaction or discharge of all
obligations under any Loan Document.

 

Section 5.12                             Mitigation Obligations; Replacement of
Lenders.

 

(a)                           Designation of a Different Lending Office.  If any
Lender requests compensation under Section 5.10, or requires the Borrower to pay
any Indemnified Taxes or additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 5.11, then such
Lender shall, at the request of the Borrower, use reasonable efforts to
designate a different lending office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to
Section 5.10 or Section 5.11, as the case may be, in the future and (ii) would
not subject such Lender to any unreimbursed cost or expense and would not
otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay
all reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.

 

(b)                           Replacement of Lenders.  If any Lender requests
compensation under Section 5.10, or if the Borrower is required to pay any
Indemnified Taxes or additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 5.11, and, in each
case, such Lender has declined or is unable to designate a different lending
office in accordance with Section 5.12(a) within ten (10) Business Days
following such request for compensation or request for payment, or if any Lender
is a Defaulting Lender hereunder or becomes a Non-Consenting Lender, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Section 14.9), all of its interests, rights (other than
its existing rights to payments pursuant to Section 5.10 or Section 5.11 and
obligations under this Agreement and the related Loan Documents to an Eligible
Assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that:

 

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(i)                                     the Borrower shall have paid to the
Administrative Agent the assignment fee specified in Section 14.9;

 

(ii)                                  such Lender shall have received payment of
an amount equal to the outstanding principal of its Loans and participations in
Letters of Credit, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder and under the other Loan Documents (including any
amounts under Section 5.9) from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts);

 

(iii)                               in the case of any such assignment resulting
from a claim for compensation under Section 5.10 or payments required to be made
pursuant to Section 5.11, such assignment will result in a reduction in such
compensation or payments thereafter;

 

(iv)                              such assignment does not conflict with
Applicable Law;

 

(v)                                 in the case of any assignment resulting from
a Lender becoming a Non-Consenting Lender, the applicable assignee shall have
consented to the applicable amendment, waiver or consent.

 

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.

 

Section 5.13                             Incremental Loans.

 

(a)                           At any time, the Borrower may by written notice to
the Administrative Agent elect to request the establishment of one or more
(x) incremental term loan commitments (any such incremental term loan
commitment, an “Incremental Term Loan Commitment”) to make one or more
additional term loans (any such additional term loans, an “Incremental Term
Loan”) and/or (y) increases in the Revolving Credit Commitments (any such
increase, an “Incremental Revolving Credit Commitment” and, together with the
Incremental Term Loan Commitments, the “Incremental Loan Commitments”) to make
revolving credit loans under the Revolving Credit Facility (any such increase,
an “Incremental Revolving Credit Increase” and, together with the Incremental
Term Loans, the “Incremental Loans”); provided that (i) the total aggregate
principal amount for all such Incremental Loan Commitments shall not (as of any
date of incurrence thereof) exceed $300,000,000 or, if greater, an amount equal
to the amount of additional Indebtedness that would cause the Consolidated Total
Leverage Ratio as of the Fiscal Quarter most recently ended prior to the
incurrence of such additional Indebtedness, calculated on a Pro Forma Basis
after giving effect to the incurrence of such additional Indebtedness, not to
exceed 2.00 to 1.00; and (ii) the total aggregate amount for each Incremental
Loan Commitment (and the Incremental Loans made thereunder) shall not be less
than a minimum principal amount of $5,000,000 or, if less, the remaining amount
permitted pursuant to the foregoing clause (i).  Each such notice shall specify
the date (each, an “Increased Amount Date”) on which the Borrower proposes that
any Incremental Loan Commitment shall be effective, which shall be a date not
less than ten (10) Business Days after the date on which such notice is
delivered to Administrative Agent.

 

(b)                           The Borrower may invite any Lender, any Affiliate
of any Lender and/or any Approved Fund, and/or any other Person reasonably
satisfactory to the Administrative Agent, to provide an Incremental Loan
Commitment (any such Person, an “Incremental Lender”); provided, however, that
no such Person may be an Incremental Lender unless such Person meets all of the
requirements of an assignee of the rights and obligations of a Lender under
Section 14.9 of this Agreement.  Any proposed

 

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Incremental Lender offered or approached to provide all or a portion of any
Incremental Loan Commitment may elect or decline, in its sole discretion, to
provide such Incremental Loan Commitment.

 

(c)                            Any Incremental Loan Commitment shall become
effective as of such Increased Amount Date; provided that:

 

(i)                                     no Default or Event of Default shall
exist on such Increased Amount Date before or after giving effect to (1) any
Incremental Loan Commitment, (2) the making of any Incremental Loans pursuant
thereto and (3) any Permitted Acquisition consummated in connection therewith;

 

(ii)                                  the Administrative Agent and the Lenders
shall have received from the Borrower an Officer’s Compliance Certificate
demonstrating, in form and substance reasonably satisfactory to the
Administrative Agent, that the Borrower is in compliance with the financial
covenants set forth in Article X, in each case based on the financial statements
most recently delivered pursuant to Section 8.1(a) or 8.1(b), as applicable,
both before and after giving effect (on a Pro Forma Basis) to (x) any
Incremental Loan Commitment, (y) the making of any Incremental Loans pursuant
thereto (with any Incremental Loan Commitment being deemed to be fully funded)
and (z) any Permitted Acquisition consummated in connection therewith;

 

(iii)                               each of the representations and warranties
contained in Article VII shall be true and correct in all material respects,
except to the extent any such representation and warranty is qualified by
materiality or reference to Material Adverse Effect, in which case, such
representation and warranty shall be true, correct and complete in all respects,
on such Increased Amount Date with the same effect as if made on and as of such
date (except for any such representation and warranty that by its terms is made
only as of an earlier date, which representation and warranty shall remain true
and correct as of such earlier date);

 

(iv)                              each Incremental Loan Commitment (and the
Incremental Loans made thereunder) shall constitute Obligations of the Borrower
and shall be secured and guaranteed with the other Extensions of Credit on a
pari passu basis;

 

(v)                                 in the case of each Incremental Term Loan
(the terms of which shall be set forth in the relevant Incremental Agreement):

 

(A)                               such Incremental Term Loan will mature and
amortize in a manner reasonably acceptable to the Administrative Agent, the
Incremental Lenders making such Incremental Term Loan and the Borrower, but will
not in any event have a shorter weighted average life to maturity than the
remaining weighted average life to maturity of the Initial Term Loan or a
maturity date earlier than the Term Loan Maturity Date;

 

(B)                               the Applicable Margin for such Incremental
Term Loan shall be determined by the Administrative Agent, the applicable
Incremental Lenders and the Borrower on the applicable Increased Amount Date;
and

 

(C)                               except as provided above, all other terms and
conditions applicable to any Incremental Term Loan, to the extent not consistent
with the terms and conditions applicable to the Initial Term Loan, shall be
reasonably satisfactory to the Administrative Agent and the Borrower;

 

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(vi)                              in the case of each Incremental Revolving
Credit Increase (the terms of which shall be set forth in the relevant
Incremental Agreement):

 

(A)                               such Incremental Revolving Credit Increase
shall mature on the Revolving Credit Maturity Date, shall bear interest and be
entitled to fees, in each case at the rate applicable to the Revolving Credit
Loans, and shall be subject to the same terms and conditions as the Revolving
Credit Loans, except for the payment of arrangement fees, upfront fees or
similar fees which may be required in connection with or as a condition to any
Lender’s or Incremental Lender’s agreement to provide an Incremental Revolving
Credit Commitment; provided that if the upfront fees paid on such Revolving
Credit Increase (calculated as a percentage of the principal amount thereof)
exceed the upfront fees paid in respect of the existing Revolving Credit
Commitments on the Closing Date (calculated as a percentage of the principal
amount thereof), the Borrower shall pay additional upfront fees to the Revolving
Credit Lenders holding such existing Revolving Credit Commitments so that the
upfront fees paid in respect of such Revolving Credit Increase are not higher
than the upfront fees paid in respect of the existing Revolving Credit
Commitments on the Closing Date;

 

(B)                               the outstanding Revolving Credit Loans and
Revolving Credit Commitment Percentages of Swingline Loans and L/C Obligations
will be reallocated by the Administrative Agent on the applicable Increased
Amount Date among the Revolving Credit Lenders (including the Incremental
Lenders providing such Incremental Revolving Credit Increase) in accordance with
their revised Revolving Credit Commitment Percentages (and the Revolving Credit
Lenders (including the Incremental Lenders providing such Incremental Revolving
Credit Increase) agree to make all payments and adjustments necessary to effect
such reallocation and the Borrower shall pay any and all costs required pursuant
to Section 5.9 in connection with such reallocation as if such reallocation were
a repayment); and

 

(C)                               except as provided above, all of the other
terms and conditions applicable to such Incremental Revolving Credit Increase
shall, except to the extent otherwise provided in this Section 5.13, be
identical to the terms and conditions applicable to the Revolving Credit
Facility;

 

(vii)                           such Incremental Loan Commitments shall be
effected pursuant to one or more Incremental Agreements executed and delivered
by the Borrower, the Administrative Agent and the applicable Incremental Lenders
(which Incremental Agreement may, without the consent of any other Lenders,
effect such amendments to this Agreement and the other Loan Documents as may be
necessary or appropriate, in the opinion of the Administrative Agent, to effect
the provisions of this Section 5.13); and

 

(viii)                        the Borrower shall deliver or cause to be
delivered any customary legal opinions or other documents (including, without
limitation, a resolution duly adopted by the board of directors (or equivalent
governing body) of each Credit Party authorizing such Incremental Loan and/or
Incremental Term Loan Commitment) reasonably requested by Administrative Agent
in connection with any such transaction.

 

(d)                           Any Incremental Lender making any Incremental Term
Loan shall be entitled to the same voting rights as the existing Term Loan
Lenders under the Term Loan Facility and each Incremental Term Loan shall
receive proceeds of prepayments on the same basis as the Initial Term Loan (such
prepayments to be shared pro rata on the basis of the original aggregate funded
amount thereof among the Initial Term

 

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Loan and the Incremental Term Loans).  The Incremental Term Loans shall be
deemed to be Term Loans; provided that such Incremental Term Loan shall be
designated as a separate tranche of Term Loans for all purposes of this
Agreement.  The Incremental Lenders shall be included in any determination of
the Required Lenders, and, unless otherwise agreed, the Incremental Lenders will
not constitute a separate voting class for any purposes under this Agreement.

 

(e)                            Any Incremental Lender with an Incremental
Revolving Credit Increase shall be entitled to the same voting rights as the
existing Revolving Credit Lenders under the Revolving Credit Facility and any
Extensions of Credit made in connection with each Incremental Revolving Credit
Increase shall receive proceeds of prepayments on the same basis as the other
Revolving Credit Loans made hereunder.

 

(f)                             Subject to the foregoing terms and conditions,
on any Increased Amount Date on which (i) any Incremental Term Loan Commitment
becomes effective, each Incremental Lender with an Incremental Term Loan
Commitment shall make, or be obligated to make, an Incremental Term Loan to the
Borrower in an amount equal to its Incremental Term Loan Commitment and shall
become a Term Loan Lender hereunder with respect to such Incremental Term Loan
Commitment and the Incremental Term Loan made pursuant thereto, or (ii) any
Incremental Revolving Credit Increase becomes effective, each Incremental Lender
with an Incremental Revolving Credit Commitment shall become a Revolving Credit
Lender hereunder with respect to such Incremental Revolving Credit Commitment.

 

Section 5.14                             Cash Collateral.  At any time that
there shall exist a Defaulting Lender, within one Business Day following the
written request of the Administrative Agent, the Issuing Lender or the Swingline
Lender (with a copy to the Administrative Agent), the Borrower shall Cash
Collateralize the Fronting Exposure of the Issuing Lender and/or the Swingline
Lender, as applicable, with respect to such Defaulting Lender (determined after
giving effect to Section 14.21(a)(iv) and any Cash Collateral provided by such
Defaulting Lender) in an amount not less than the Minimum Collateral Amount.

 

(a)                           Grant of Security Interest.  The Borrower, and to
the extent provided by any Defaulting Lender, such Defaulting Lender, hereby
grants to the Administrative Agent, for the benefit of the Issuing Lender and
the Swingline Lender, and agrees to maintain, a first priority security interest
in all such Cash Collateral as security for the Defaulting Lender’s obligation
to fund participations in respect of L/C Obligations and Swingline Loans, to be
applied pursuant to subsection (b) below.  If at any time the Administrative
Agent determines that Cash Collateral is subject to any right or claim of any
Person other than the Administrative Agent, the Issuing Lender and the Swingline
Lender as herein provided, or that the total amount of such Cash Collateral is
less than the Minimum Collateral Amount, the Borrower will, promptly upon demand
by the Administrative Agent, pay or provide to the Administrative Agent
additional Cash Collateral in an amount sufficient to eliminate such deficiency
(after giving effect to any Cash Collateral provided by the Defaulting Lender).

 

(b)                           Application.  Notwithstanding anything to the
contrary contained in this Agreement, Cash Collateral provided under this
Section 5.14 or Section 14.21 in respect of Letters of Credit and Swingline
Loans shall be applied to the satisfaction of the Defaulting Lender’s obligation
to fund participations in respect of L/C Obligations and Swingline Loans
(including, as to Cash Collateral provided by a Defaulting Lender, any interest
accrued on such obligation) for which the Cash Collateral was so provided, prior
to any other application of such property as may otherwise be provided for
herein.

 

(c)                            Termination of Requirement.  Cash Collateral (or
the appropriate portion thereof) provided to reduce the Fronting Exposure of the
Issuing Lender and/or the Swingline Lender, as applicable, shall no longer be
required to be held as Cash Collateral pursuant to this Section 5.14 following
(i) the elimination of the applicable Fronting Exposure (including by the
termination of Defaulting Lender status of the applicable Lender), or (ii) the
determination by the Administrative Agent,

 

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the Issuing Lender and the Swingline Lender that there exists excess Cash
Collateral; provided that, subject to Section 14.21, the Person providing Cash
Collateral, the Issuing Lender and the Swingline Lender may agree that Cash
Collateral shall be held to support future anticipated Fronting Exposure or
other obligations.

 

Section 5.15                             Extension of Term Loans and Revolving
Credit Commitments.  Notwithstanding anything to the contrary in this Agreement,
the Borrower may make one or more offers (each, an “Extension Offer”) from time
to time to all Lenders of any tranche of Term Loans with a like maturity date or
Revolving Credit Commitments with a like maturity date, in each case on a pro
rata basis (based on the aggregate outstanding principal amount of the
respective tranche of Term Loans or Revolving Credit Commitments with a like
maturity date, as the case may be) and on the same terms to each such Lender, to
extend the maturity date of each such Lender’s Term Loans of such tranche and/or
Revolving Credit Commitments (each, an “Extension”, and each group of Term Loans
or Revolving Credit Commitments, as applicable, in each case as so extended, as
well as the original Term Loans and the original Revolving Credit Commitments
(in each case not so extended), being a separate “tranche”).  Each Extension
shall be subject to the following terms conditions:

 

(a)                                 no Default or Event of Default shall have
occurred and be continuing at the time the offering document in respect of an
Extension Offer is delivered to the Lenders or immediately prior to the
effectiveness of such Extension;

 

(b)                                 the Borrower shall provide the
Administrative Agent at least 10 Business Days (or such shorter period as may be
agreed by the Administrative Agent) prior written notice of such Extension, and
shall agree to such procedures as may be established by, or acceptable to, the
Administrative Agent, in each case acting reasonably to accomplish the purposes
of this Section;

 

(c)                                  the Administrative Agent and the Lenders
may, each in their sole and individual discretion, elect to agree to any
Extension Offer, it being understood that any Lender who has not responded to
such Extension Offer by the deadline set forth therein shall be deemed to have
rejected such Extension Offer;

 

(d)                                 each such Extension shall require the prior
written consent of (i) the Administrative Agent, (ii) each Lender agreeing to
such Extension with respect to one or more of its Term Loans and/or Revolving
Credit Commitments (or a portion thereof), and (iii) with respect to any
Extension of the Revolving Credit Commitments, the Issuing Lender and the
Swingline Lender;

 

(e)                                  (i) with respect to any Extension of
Revolving Credit Commitments, Revolving Credit Lenders holding at least 50% of
the Revolving Credit Commitments to be extended, the Issuing Lender and the
Swingline Lender must agree to such Extension and (ii) with respect to any
Extension of Term Loans, Term Loan Lenders holding at least 50% of the
applicable Term Loans to be extended must agree to such Extension;

 

(f)                                   the Revolving Credit Maturity Date or Term
Loan Maturity Date, as applicable, for each non-extending Lender shall remain
unchanged and the Borrower may, at its sole expense and effort, upon notice to
such non-extending Lender and the Administrative Agent, require such
non-extending Lender to assign and delegate, without recourse (in accordance
with and subject to the restrictions contained in, and consents required by,
Section 14.9), its Revolving Credit Commitment and/or Term Loans to an Eligible
Assignee;

 

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(g)                                  except as to interest rates, fees and final
maturity (which shall be set forth in the relevant Extension Offer), any
Revolving Credit Commitment extended pursuant to an Extension (an “Extended
Revolving Credit Commitment”), and the related outstandings, shall have the same
terms as the original Revolving Credit Commitments (and related outstandings);
provided that:

 

(i)                                     except for (1) payments of interest and
fees at different rates on Extended Revolving Credit Commitments (and related
outstandings), (2) repayments required upon the maturity date of the
non-extending Revolving Credit Commitments and (3) repayment made in connection
with a permanent repayment and termination of commitments, the borrowing and
repayment of Loans with respect to Extended Revolving Credit Commitments after
the applicable Extension date shall be made on a pro rata basis with all other
Revolving Credit Commitments;

 

(ii)                                  subject to the provisions of
Section 5.15(i) to the extent dealing with Swingline Loans and Letters of Credit
which mature or expire after a maturity date when there exist Extended Revolving
Credit Commitments with a longer maturity date, all Swingline Loans and Letters
of Credit shall be participated on a pro rata basis by all Revolving Credit
Lenders in accordance with their Revolving Credit Percentages; and

 

(iii)                               the permanent repayment of Revolving Credit
Loans with respect to, and termination of, Extended Revolving Credit Commitments
after the applicable Extension date shall be made on a pro rata basis with all
other Revolving Credit Commitments, except that the Borrower shall be permitted
to permanently repay and terminate commitments of any such tranche on a better
than a pro rata basis as compared to any other tranche with a later maturity
date than such tranche;

 

(h)                                 except as to interest rates, fees,
amortization, final maturity date, premium, required prepayment dates (which
shall, subject to immediately succeeding clauses (i), (ii) and (iii), be set
forth in the relevant Extension Offer), the Term Loans of any Term Lender that
agrees to an Extension with respect to such Term Loans extended pursuant to any
Extension (“Extended Term Loans”) shall have the same terms as the tranche of
Term Loans subject to such Extension Offer; provided that:

 

(i)                                     the final maturity date of any Extended
Term Loans shall be no earlier than the latest maturity date hereunder;

 

(ii)                                  the weighted average life to maturity of
any Extended Term Loans shall be no shorter than the remaining weighted average
life to maturity of the applicable tranche of Term Loans extended thereby;

 

(iii)                               the permanent repayment of Extended Term
Loans after the applicable Extension date shall be made on a pro rata basis with
all other Term Loans, except that the Borrower shall be permitted to voluntarily
prepay Extended Term Loans on a better than a pro rata basis as compared to any
other tranche with a later maturity date than such tranche;

 

(i)                                     at no time shall there be more than two
different tranches of Revolving Credit Commitments hereunder or two different
tranches of Term Loans hereunder;

 

(j)                                    on the Revolving Credit Maturity Date for
any non-extending Revolving Credit Lenders, (i) the Borrower shall repay all
outstanding Revolving Credit Loans due and payable to

 

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such non-extending Revolving Credit Lenders (together with all accrued and
unpaid interest thereon and accrued and unpaid Commitment Fees), (ii) each of
the non-extending Revolving Credit Lenders shall be automatically released from
their respective risk participation obligations under Section 2.2(b)(iii) with
respect to any outstanding Swingline Loans and under Section 3.4 with respect to
any outstanding Letters of Credit, (iii) all outstanding Revolving Credit Loans,
risk participation obligations with respect to any outstanding Swingline Loans
and risk participation obligations with respect to any outstanding Letters of
Credit (and the related L/C Obligations) shall be automatically reallocated
among the extending Revolving Credit Lenders based on their Extended Revolving
Credit Commitments and (iv) to the extent that the Revolving Credit Outstandings
would exceed the Extended Revolving Credit Commitments after giving effect to
such reallocation pursuant to the immediately preceding clause (iii), the
Borrower shall prepay Loans or Cash Collateralize Letters of Credit in
accordance with Section 2.4(b); and

 

(k)                                 the Lenders hereby irrevocably authorize the
Administrative Agent to enter into amendments to this Agreement and the other
Loan Documents with the Borrower as may be necessary in order to establish new
tranches or sub-tranches in respect of Revolving Credit Commitments or Term
Loans so extended and such technical amendments as may be necessary or
appropriate in the reasonable opinion of the Administrative Agent and the
Borrower in connection therewith, in each case on terms consistent with this
Section.

 

ARTICLE VI

 

CONDITIONS OF CLOSING AND BORROWING

 

Section 6.1                                    Conditions to Closing and Initial
Extensions of Credit.  The obligation of the Lenders to close this Agreement and
to make the initial Loans or issue or participate in the initial Letters of
Credit, if any, is subject to the satisfaction of each of the following
conditions precedent:

 

(a)                           Executed Loan Documents.  This Agreement, a
Revolving Credit Note in favor of each Revolving Credit Lender requesting a
Revolving Credit Note, a Term Loan Note in favor of each Term Loan Lender
requesting a Term Loan Note, a Swingline Note in favor of the Swingline Lender
and the Security Documents, together with any other applicable Loan Documents,
shall have been duly authorized, executed and delivered to the Administrative
Agent by the parties thereto, shall be in full force and effect and no Default
or Event of Default shall exist hereunder or thereunder.

 

(b)                           Closing Certificates; Etc.  The Administrative
Agent shall have received each of the following in form and substance reasonably
satisfactory to the Administrative Agent:

 

(i)                                     Officer’s Certificate.  A certificate
from a Responsible Officer of the Borrower to the effect that (A) all
representations and warranties of such Person contained in this Agreement and
the other Loan Documents are true, correct and complete and (B) after giving
effect to the Transactions, no Default or Event of Default has occurred and is
continuing; that each of the Credit Parties, as applicable, has satisfied each
of the conditions set forth in Section 6.1 and Section 6.2.

 

(ii)                                  Certificate of Secretary of each Credit
Party.  A certificate of a Responsible Officer of each Credit Party certifying
as to the incumbency and genuineness of the signature of each officer of such
Credit Party executing Loan Documents to which it is a party and certifying that
attached thereto is a true, correct and complete copy of (A) the articles or
certificate of incorporation or formation, partnership agreement, trust
agreement or other applicable governing document of such Credit Party and all
amendments thereto, certified as of a recent date by the

 

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appropriate Governmental Authority in its jurisdiction of incorporation or
formation, (B) the bylaws or other governing document of such Credit Party as in
effect on the Closing Date, (C) resolutions duly adopted by the board of
directors (or other governing body) of such Credit Party authorizing and
approving the Transactions and all other transactions contemplated hereunder and
the execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party, and (D) each certificate required to be
delivered pursuant to Section 6.1(b)(iii).

 

(iii)                               Certificates of Existence and Good
Standing.  Certificates as of a recent date of the legal existence and good
standing of each Credit Party under the laws of its jurisdiction of organization
or formation (or equivalent) and, to the extent requested by the Administrative
Agent, each other jurisdiction where such Credit Party is qualified to do
business and, to the extent available, a certificate of the relevant taxing
authorities of such jurisdictions certifying that such Credit Party has filed
required tax returns and owes no delinquent taxes.

 

(iv)                              Opinions of Counsel.  Favorable opinions of
counsel to the Credit Parties addressed to the Administrative Agent and the
Lenders with respect to the Credit Parties, the Loan Documents and such other
matters as the Lenders shall request.

 

(v)                                 Tax Forms.  Copies of the United States
Internal Revenue Service forms required by Section 5.11(g).

 

(c)                            Personal Property Collateral.

 

(i)                                     Filings and Recordings.  The
Administrative Agent shall have received all filings and recordations that are
necessary to perfect the security interests of the Administrative Agent, on
behalf of the Secured Parties, in the Collateral and all proceeds thereof and
the Administrative Agent shall have received evidence reasonably satisfactory to
the Administrative Agent that upon such filings and recordations such security
interests constitute valid and perfected first priority Liens thereon (subject
to Permitted Liens).

 

(ii)                                  Pledged Collateral.  The Administrative
Agent shall have received original stock certificates or other certificates
evidencing the Capital Stock pledged pursuant to the Security Documents,
together with an undated stock power for each such certificate duly executed in
blank by the registered owner thereof.

 

(iii)                               Lien Search.  The Administrative Agent shall
have received the results of a Lien search (including a search as to judgments,
pending litigation, tax and intellectual property matters), in form and
substance reasonably satisfactory thereto, made against the Credit Parties under
the Uniform Commercial Code (or applicable judicial docket) as in effect in each
jurisdiction in which filings or recordations under the Uniform Commercial Code
should be made to evidence or perfect security interests in all assets of such
Credit Party, indicating among other things that the assets of each such Credit
Party are free and clear of any Lien (except for Permitted Liens).

 

(iv)                              Hazard and Liability Insurance.  The
Administrative Agent shall have received certificates of property hazard,
business interruption and liability insurance covering each Credit Party,
evidence of payment of all insurance premiums for the current policy year of
each (naming the Administrative Agent as lender’s loss payee on all policies for
property hazard insurance and as additional insured on all certificates for
liability insurance), and, if requested by the

 

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Administrative Agent, copies (certified by a Responsible Officer of the
Borrower) of insurance policies in form and substance reasonably satisfactory to
the Administrative Agent.

 

(d)                           Consents; Defaults.

 

(i)                                     Governmental and Third Party Approvals. 
The Credit Parties shall have received all material governmental, shareholder
and third party consents and approvals necessary (or any other material consents
as determined in the reasonable discretion of the Administrative Agent) in
connection with the Transactions contemplated by this Agreement and the other
Loan Documents and the other transactions contemplated hereby and all applicable
waiting periods shall have expired without any action being taken by any Person
that could reasonably be expected to restrain, prevent or impose any material
adverse conditions on any of the Credit Parties or such other transactions or
that could seek or threaten any of the foregoing, and no law or regulation shall
be applicable which in the reasonable judgment of the Administrative Agent could
reasonably be expected to have such effect.

 

(ii)                                  No Injunction, Etc.  No action,
proceeding, investigation, regulation or legislation shall have been instituted,
threatened or proposed before any Governmental Authority to enjoin, restrain or
prohibit, or to obtain substantial damages in respect of, or which is related to
or arises out of this Agreement or the other Loan Documents or the consummation
of the transactions contemplated hereby or thereby, or which, in the
Administrative Agent’s sole discretion, would make it inadvisable to consummate
the Transactions contemplated by this Agreement or the other Loan Documents or
the consummation of the transactions contemplated hereby or thereby.

 

(e)                            Financial Matters.

 

(i)                                     Financial Statements.  The
Administrative Agent shall have received the audited Consolidated balance sheet
of the Borrower and its Subsidiaries as of the Fiscal Year 2012, and the related
audited statements of income and retained earnings and cash flows for the Fiscal
Year then ended.

 

(ii)                                  Payment at Closing.  The Borrower shall
have paid (A) to the Administrative Agent, the Arrangers and the Lenders the
fees set forth or referenced in Section 5.3 and any other accrued and unpaid
fees or commissions due hereunder, (B) all fees, charges and disbursements of
counsel to the Administrative Agent (directly to such counsel if requested by
the Administrative Agent) to the extent accrued and unpaid prior to or on the
Closing Date, plus (unless not required by the Administrative Agent) such
additional amounts of such fees, charges and disbursements as shall constitute
its reasonable estimate of such fees, charges and disbursements incurred or to
be incurred by it through the closing proceedings (provided that such estimate
shall not thereafter preclude a final settling of accounts between the Borrower
and the Administrative Agent) and (C) to any other Person such amount as may be
due thereto in connection with the Transactions contemplated hereby, including
all taxes, fees and other charges in connection with the execution, delivery,
recording, filing and registration of any of the Loan Documents.

 

(f)                             Miscellaneous.

 

(i)                                     Notice of Borrowing.  The Administrative
Agent shall have received a Notice of Borrowing from the Borrower in accordance
with Section 2.3(a), and a Notice of Account

 

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Designation specifying the account or accounts to which the proceeds of any
Loans made on or after the Closing Date are to be disbursed.

 

(ii)                                  Existing Indebtedness.  The Administrative
Agent shall have received a pay-off letter in form and substance satisfactory to
it evidencing repayment of all Indebtedness of the Borrower and its Subsidiaries
under the Existing Credit Agreement (other than the Existing Letters of Credit
which shall continue as Letters of Credit issued hereunder) and termination and
release of all collateral security under the Existing Credit Agreement, which
repayment and termination and release shall occur on the Closing Date and
concurrently with the initial advance of Loans hereunder.

 

(iii)                               PATRIOT Act.  The Borrower and each of the
Subsidiary Guarantors shall have provided to the Administrative Agent and the
Lenders the documentation and other information requested by the Administrative
Agent in order to comply with requirements of the Act, applicable “know your
customer” and anti-money laundering rules and regulations.

 

(iv)                              Other Documents.  All opinions, certificates
and other instruments and all proceedings in connection with the transactions
contemplated by this Agreement shall be satisfactory in form and substance to
the Administrative Agent.  The Administrative Agent shall have received copies
of all other documents, certificates and instruments reasonably requested
thereby, with respect to the transactions contemplated by this Agreement.

 

Without limiting the generality of the provisions of the last paragraph of
Section 13.3, for purposes of determining compliance with the conditions
specified in this Section 6.1, the Administrative Agent and each Lender that has
signed this Agreement shall be deemed to have consented to, approved or accepted
or to be satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender unless the
Administrative Agent shall have received notice from such Lender prior to the
proposed Closing Date specifying its objection thereto.

 

Section 6.2                                    Conditions to All Extensions of
Credit.  The obligations of the Lenders to make or participate in any Extensions
of Credit (including the initial Extension of Credit) and/or to convert or
continue any Loans and/or the obligation of the Issuing Lender to issue or
extend any Letter of Credit are subject to the satisfaction of the following
conditions precedent on the relevant borrowing, continuation, conversion,
issuance or extension date:

 

(a)                           Continuation of Representations and Warranties. 
The representations and warranties contained in Article VII shall be true and
correct in all material respects on and as of such borrowing, continuation,
conversion, issuance or extension date with the same effect as if made on and as
of such date, except for any representation and warranty expressly made only as
of an earlier date, which representation and warranty shall remain true and
correct in all material respects as of such earlier date, provided that any
representation or warranty that is qualified as to “materiality”, “Material
Adverse Effect” or similar language shall be true and correct in all respects on
and as of such respective dates.

 

(b)                           No Existing Default.  No Default or Event of
Default shall have occurred and be continuing (i) on the borrowing, continuation
or conversion date with respect to such Loan or after giving effect to the Loans
to be made, continued or converted on such date or (ii) on the issuance or
extension date with respect to such Letter of Credit or after giving effect to
the issuance or extension of such Letter of Credit on such date.

 

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(c)                            Notices.  The Administrative Agent shall have
received a Notice of Borrowing or Notice of Conversion/Continuation, as
applicable, from the Borrower in accordance with Section 2.3(a) or Section 5.2,
as applicable.

 

(d)                           No Material Adverse Effect.  No event shall have
occurred or circumstance shall exist that (either alone or in combination with
other events or circumstances) has had, or could reasonably be expected to have,
a Material Adverse Effect.

 

(e)                            Additional Documents.  The Administrative Agent
shall have received each additional document, instrument, legal opinion or other
item reasonably requested by it.

 

(f)                             New Swingline Loans/Letters of Credit.  So long
as any Lender is a Defaulting Lender, (i) the Swingline Lender shall not be
required to fund any Swingline Loans unless it is satisfied that it will have no
Fronting Exposure after giving effect to such Swingline Loan and (ii) the
Issuing Lender shall not be required to issue, extend, renew or increase any
Letter of Credit unless it is satisfied that it will have no Fronting Exposure
after giving effect thereto.

 

ARTICLE VII

 

REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES

 

To induce the Administrative Agent and the Lenders to enter into this Agreement
and to induce the Lenders to make Extensions of Credit, each of the Credit
Parties hereby jointly and severally represents and warrants to the
Administrative Agent and the Lenders, both before and after giving effect to the
transactions contemplated hereunder, which representations and warranties shall
be deemed made on the Closing Date and on and as of each borrowing,
continuation, conversion, issuance or extension date hereunder, that:

 

Section 7.1                                    Organization; Power;
Qualification.  Each Credit Party and each Subsidiary thereof is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or formation, has the power and authority to own its Properties
and to carry on its business as now being and hereafter proposed to be conducted
and is duly qualified and authorized to do business in each jurisdiction in
which the character of its Properties or the nature of its business requires
such qualification and authorization, except in jurisdictions where the failure
to be so qualified and authorized to do business could not reasonably be
expected to result in a Material Adverse Effect.  The jurisdictions in which
each Credit Party and each Subsidiary thereof are organized and qualified to do
business as of the Closing Date are described on Schedule 7.1.

 

Section 7.2                                    Subsidiaries and Capitalization;
Material Domestic Subsidiaries and Material First-Tier Foreign Subsidiaries. 
Each Subsidiary of each Credit Party as of the Closing Date is listed on
Schedule 7.2A.  All outstanding shares have been duly authorized and validly
issued and are fully paid and nonassessable (subject to capital calls for
non-corporations), with no personal liability attaching to the ownership
thereof, and not subject to any preemptive or similar rights, except as
described in Schedule 7.2A.  The shareholders or other owners, as applicable, of
each Credit Party (other than Borrower) and the Material First-Tier Foreign
Subsidiaries and the number of shares owned by each as of the Closing Date are
described on Schedule 7.2A.  As of the Closing Date, there are no outstanding
stock purchase warrants, subscriptions, options, securities, instruments or
other rights of any type or nature whatsoever, which are convertible into,
exchangeable for or otherwise provide for or permit the issuance of Capital
Stock of any Credit Party (other than Borrower) or any Material First-Tier
Foreign Subsidiary, except as described on Schedule 7.2A.  Each Material
Domestic Subsidiary of the Borrower as of the

 

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Closing Date, and each Material First-Tier Foreign Subsidiary of the Borrower as
of the Closing Date, is listed on Schedule 7.2B.

 

Section 7.3                                    Authorization Enforceability. 
Each Credit Party has the right, power and authority and has taken all necessary
corporate and other action to authorize the execution, delivery and performance
of this Agreement and each of the other Loan Documents to which it is a party in
accordance with their respective terms.  This Agreement and each of the other
Loan Documents have been duly executed and delivered by the duly authorized
officers of each Credit Party that is a party thereto, and each such document
constitutes the legal, valid and binding obligation of each Credit Party that is
a party thereto, enforceable in accordance with its terms, except as such
enforceability may be limited by any Debtor Relief Laws from time to time in
effect which affect the enforcement of creditors’ rights in general and the
availability of equitable remedies.

 

Section 7.4                                    Compliance of Agreement, Loan
Documents and Borrowing with Laws, Etc.  The execution, delivery and performance
by each Credit Party and each Material First-Tier Foreign Subsidiary of the Loan
Documents to which each such Person is a party, in accordance with their
respective terms, the Extensions of Credit hereunder and the transactions
contemplated hereby or thereby do not and will not, by the passage of time, the
giving of notice or otherwise, (a) require any Governmental Approval or violate
any Applicable Law relating to any Credit Party or any Material First-Tier
Foreign Subsidiary, (b) conflict with, result in a breach of or constitute a
default under the articles of incorporation, bylaws or other organizational
documents of any Credit Party or any Material First-Tier Foreign Subsidiary,
(c) conflict with, result in a breach of or constitute a default under any
indenture, agreement or other instrument to which such Person is a party or by
which any of its properties may be bound or any Governmental Approval relating
to such Person except to the extent that any such conflict, breach or default
could not individually or in the aggregate reasonably be expected to have a
Material Adverse Effect, (d) result in or require the creation or imposition of
any Lien upon or with respect to any property now owned or hereafter acquired by
such Person other than Liens arising under the Loan Documents or (e) require any
consent or authorization of, filing with (other than filings required to be made
with the SEC), or other act in respect of, an arbitrator or Governmental
Authority, and no consent or approval of any other Person is required in
connection with the execution, delivery, performance, validity or enforceability
of this Agreement other than (i) consents or approvals that have been obtained
and that are still in force and effect or third party approvals or consents
which, if not made or obtained could not reasonably be expected to have a
Material Adverse Effect and (ii) consents, recordings or filings with respect to
the Security Document as specified therein.

 

Section 7.5                                    Compliance with Law; Governmental
Approvals.  Each Credit Party and each Subsidiary thereof (a) has all
Governmental Approvals required by any Applicable Law for it to conduct its
business, each of which is in full force and effect, is final and not subject to
review on appeal and is not the subject of any pending or, to the best of its
knowledge, threatened attack by direct or collateral proceeding, (b) is in
compliance with each Governmental Approval applicable to it and in compliance
with all other Applicable Laws relating to it or any of its respective
properties except to the extent that any such non-compliance could not
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect and (c) has timely filed all material reports, documents and
other materials required to be filed by it under all Applicable Laws, with any
Governmental Authority and has retained all material records and documents
required to be retained by it under Applicable Law, except in each case where
the failure to have, comply or file could not reasonably be expected to have a
Material Adverse Effect.

 

Section 7.6                                    Tax Returns and Payments.  Each
Credit Party and each Subsidiary thereof has duly filed or caused to be filed
all federal, state, local and other tax returns required by Applicable Law to be
filed, and has paid, or made adequate provision for the payment of, all federal,
state, local and other

 

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taxes, assessments and governmental charges or levies upon it and its property,
income, profits and assets which are due and payable (other than (A) any amount
the validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided for on the books of the relevant Credit Party or (B) to the extent that
the failure to do so could not reasonably be expected to result in a Material
Adverse Effect).  Such returns accurately reflect in all material respects all
liability for taxes of any Credit Party or any Subsidiary thereof for the
periods covered thereby.  There is no ongoing audit or examination or, to the
knowledge of the Borrower, other investigation by any Governmental Authority of
the tax liability of any Credit Party or any Subsidiary thereof, in each case
that could reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.  No Governmental Authority has asserted any Lien or
other claim against any Credit Party or any Subsidiary thereof with respect to
unpaid taxes which has not been discharged or resolved (other than (a) any
amount the validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided for on the books of the relevant Credit Party and
(b) Permitted Liens or (c) to the extent such Lien or claim could not reasonably
be expected to have a Material Adverse Effect).  The charges, accruals and
reserves on the books of each Credit Party and each Subsidiary thereof in
respect of federal, state, local and other taxes for all Fiscal Years and
portions thereof since the organization of any Credit Party or any Subsidiary
thereof are in the judgment of the Borrower adequate, and the Borrower does not
anticipate any additional taxes or assessments of a material amount for any of
such years.

 

Section 7.7                                    Intellectual Property Matters. 
Each Credit Party and each Subsidiary thereof owns or possesses rights to use
all material franchises, licenses, copyrights, copyright applications, patents,
patent rights or licenses, patent applications, trademarks, trademark rights,
service mark, service mark rights, trade names, trade name rights, copyrights
and other rights with respect to the foregoing which are reasonably necessary to
conduct its business.  No event has occurred which permits, or after notice or
lapse of time or both would permit, the revocation or termination of any such
rights, and no Credit Party nor any Subsidiary thereof is liable to any Person
for infringement under Applicable Law with respect to any such rights as a
result of its business operations, except as could not reasonably be expected to
have a Material Adverse Effect.

 

Section 7.8                                    Environmental Matters.

 

(a)                           The properties currently owned, leased or operated
by each Credit Party and each Subsidiary thereof do not contain, and to their
knowledge have not previously contained, any Hazardous Materials in amounts or
concentrations which (i) constitute or constituted a violation of applicable
Environmental Laws or require remediation or removal thereunder, (ii) could
reasonably be expected to give rise to an Environmental Claim, or (iii) could
reasonably be expected to materially interfere with the continued operation of
such properties or, to the knowledge of each Credit Party and each Subsidiary
thereof, materially impair the fair saleable value thereof;

 

(b)                           (i) The operations of each Credit Party and its
Subsidiaries are in compliance, and, to the knowledge of each Credit Party and
each Subsidiary thereof, except for matters which have been resolved, have been
in compliance, in all material respects with applicable Environmental Laws;
(ii) except as could not reasonably be expected to have a Material Adverse
Effect, each Credit Party and its Subsidiaries has all Governmental Approvals
required by any Environmental Law for it to conduct its business, each of which
is in full force and effect, is final and not subject to review on appeal and is
not the subject of any pending or, to the best of its knowledge, threatened
attack by direct or collateral proceeding and is in compliance with such
Governmental Approvals.

 

(c)                            Except for matters which have been fully
resolved, neither any Credit Party nor any Subsidiary thereof has received any
written notice of violation, alleged violation, non-compliance,

 

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liability or potential liability regarding compliance with Environmental Laws or
the release, disposal, remediation or removal of any Hazardous Materials and, to
the knowledge of each Credit Party and its Subsidiaries as of the Closing Date,
no such notice is being threatened by any Person;

 

(d)                           To the knowledge of each Credit Party and its
Subsidiaries, Hazardous Materials have not been shipped off-site by any Credit
Party or its Subsidiaries in material violation of any Environmental Laws or in
a manner that could reasonably be expected to result in any material
Environmental Claim against any Credit Party or any of its Subsidiaries;

 

(e)                            No judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of the Borrower and its
Subsidiaries, threatened, under any Environmental Law to which any Credit Party
or any Subsidiary thereof is or will be named as a potentially responsible party
with respect to such properties or operations conducted in connection therewith,
nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements, outstanding under any Environmental Law with respect to the
operations of or real property currently owned, leased or used by any Credit
Party or any Subsidiary thereof that could reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect;

 

(f)                             There has been no release, or to the knowledge
of any Credit Party or its Subsidiaries, threat of release, of Hazardous
Materials at or from properties currently owned, leased or operated by any
Credit Party or any Subsidiary, now or in the past, or at or from any properties
formerly owned, leased or operated by any Credit Party or any Subsidiary during
the time of such ownership, lease or operation, in violation of or in amounts or
in a manner that could reasonably be expected to result in an Environmental
Claim that could reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect; and

 

(g)                            The representations and warranties made pursuant
to this Section 7.8 are the exclusive representations and warranties contained
in this Agreement regarding (i) compliance with or liability under Environmental
Laws, (ii) Environmental Claims, or (iii) Hazardous Materials.

 

Section 7.9                                    Employee Benefit Matters.

 

(a)                           As of the Closing Date, neither any Credit Party
nor any of its Domestic Subsidiaries maintains or contributes to, or has any
obligation under, any Employee Benefit Plan and no ERISA Affiliate maintains or
contributes to, or has any obligation under, any Pension Plan or Multiemployer
Plan, in each case other than those identified on Schedule 7.9.

 

(b)                           Each Credit Party and each ERISA Affiliate is in
compliance with all applicable provisions of ERISA, the Code and the regulations
and published interpretations thereunder with respect to all Employee Benefit
Plans except for any required amendments for which the remedial amendment period
as defined in Section 401(b) of the Code has not yet expired and except where a
failure to so comply could not reasonably be expected to have a Material Adverse
Effect.  Each Employee Benefit Plan that is intended to be qualified under
Section 401(a) of the Code has been determined by the Internal Revenue Service
to be so qualified, and each trust related to such plan has been determined to
be exempt under Section 501(a) of the Code except for such plans that have not
yet received determination letters but for which the remedial amendment period
for submitting a determination letter has not yet expired or except for
preapproved master, prototype or similar plans that are subject to an opinion
letter promulgated by the Internal Revenue Service on which the adopting plan
sponsor is entitled to rely.  No liability has been incurred by any Credit Party
or any ERISA Affiliate which remains unsatisfied for any taxes or penalties with
respect to any Employee Benefit Plan or any Multiemployer Plan except for a
liability that could not reasonably be expected to have a Material Adverse
Effect.

 

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(c)                            As of the Closing Date, no Pension Plan has been
terminated, nor has any funding waiver from the Internal Revenue Service been
received or requested with respect to any Pension Plan, nor has any Credit Party
or any ERISA Affiliate failed to make any contributions or to pay any amounts
due and owing as required by Section 412 of the Code, Section 302 of ERISA or
the terms of any Pension Plan prior to the due dates of such contributions under
Section 412 of the Code or Section 302 of ERISA, nor has there been any event
requiring any disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with
respect to any Pension Plan.

 

(d)                           Except where the failure of any of the following
representations to be correct could not reasonably be expected to have a
Material Adverse Effect, neither any Credit Party nor any ERISA Affiliate has: 
(i) engaged in a nonexempt prohibited transaction described in Section 406 of
the ERISA or Section 4975 of the Code, (ii) incurred any liability to the PBGC
which remains outstanding other than the payment of premiums, and there are no
premium payments which are due and unpaid, (iii) failed to make a required
contribution or payment to a Multiemployer Plan, or (iv) failed to make a
required installment or other required payment under Section 412 or Section 430
of the Code.

 

(e)                            No Termination Event has occurred or is
reasonably expected to occur and no Pension Plan or Multiemployer Plan is
considered an at-risk plan or a plan in endangered or critical status within the
meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of
ERISA.

 

(f)                             Except where the failure of any of the following
representations to be correct in all material respects could not reasonably be
expected to have a Material Adverse Effect, no proceeding, claim (other than a
benefits claim in the ordinary course of business), lawsuit and/or investigation
is existing or, to the knowledge of the Borrower and its Domestic Subsidiaries
after due inquiry, threatened concerning or involving any (i) Employee Benefit
Plan currently maintained or contributed to by any Credit Party or any ERISA
Affiliate, (ii) Pension Plan or (iii) Multiemployer Plan.

 

(g)                            Neither any Credit Party nor any Domestic
Subsidiary thereof is a party to any contract, agreement or arrangement that
could, solely as a result of the delivery of this Agreement or the consummation
of transactions contemplated hereby, result in the payment of any “excess
parachute payment” within the meaning of Section 280G of the Code.

 

Section 7.10                             Margin Stock.  Neither any Credit Party
nor any Subsidiary thereof is engaged principally or as one of its activities in
the business of extending credit for the purpose of “purchasing” or “carrying”
any “margin stock” (as each such term is defined or used, directly or
indirectly, in Regulation U of the Board of Governors of the Federal Reserve
System).  No part of the proceeds of any of the Loans or Letters of Credit will
be used for purchasing or carrying margin stock or for any purpose which
violates, or which would be inconsistent with, the provisions of Regulation T, U
or X of such Board of Governors.  If requested by any Lender (through the
Administrative Agent) or the Administrative Agent, the Borrower will furnish to
the Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-3 or FR Form U 1 referred to in
Regulation U.

 

Section 7.11                             Government Regulation.  Neither any
Credit Party nor any Domestic Subsidiary thereof is an “investment company” or a
company “controlled” by an “investment company” (as each such term is defined or
used in the Investment Company Act of 1940).

 

Section 7.12                             Material Contracts.  Schedule 7.12 sets
forth a complete and accurate list of all Material Contracts (other than the
Loan Documents) of each Credit Party and each Subsidiary thereof in effect as of
the Closing Date.  Other than as set forth in Schedule 7.12, each such Material
Contract is, and after giving effect to the consummation of the transactions
contemplated by the Loan Documents will be, in full force and effect in
accordance with the terms thereof (except any such Material Contract that

 

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has expired by its terms).  If and to the extent requested by the Administrative
Agent, each Credit Party and each Subsidiary thereof has delivered to the
Administrative Agent a true and complete copy of each Material Contract required
to be listed on Schedule 7.12 or any other Schedule hereto.  Neither any Credit
Party nor any Subsidiary thereof is in breach of or in default under any
Material Contract in any material respect.

 

Section 7.13                             Employee Relations.  Neither any Credit
Party nor any Domestic Subsidiary thereof is party to any collective bargaining
agreement nor has any labor union been recognized as the representative of its
employees except as set forth on Schedule 7.13.  Neither any Credit Party nor
any Subsidiary thereof knows of any pending, threatened or contemplated strikes,
work stoppage or other collective labor disputes involving its employees or
those of its Subsidiaries that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

 

Section 7.14                             [Reserved].

 

Section 7.15                             Financial Statements.  The audited and
unaudited financial statements delivered pursuant to Section 6.1(e)(i) are
complete and correct and present fairly, in all material respects, on a
Consolidated basis the assets, liabilities and financial position of the
Borrower and its Subsidiaries as at such dates, and the results of the
operations and changes of financial position for the periods then ended (other
than customary year-end adjustments for unaudited financial statements and the
absence of footnotes from unaudited financial statements).  All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP.  Such financial statements show all material
indebtedness and other material liabilities, direct or contingent, of the
Borrower and its Subsidiaries as of the date thereof, including material
liabilities for taxes, material commitments, and Indebtedness, in each case, to
the extent required to be disclosed under GAAP.

 

Section 7.16                             No Material Adverse Change.  Since
December 31, 2012, there has been no material adverse change in the properties,
business, operations, prospects, or condition (financial or otherwise) of the
Borrower, of the Credit Parties taken as a whole or of the Borrower and its
Subsidiaries taken as a whole, and no event has occurred or condition arisen,
either individually or in the aggregate, that could reasonably be expected to
have a Material Adverse Effect.

 

Section 7.17                             Solvency.  As of the Closing Date and
after giving effect to the Transactions, and on and as of each borrowing,
continuation, conversion or extension date hereunder, (a) the Credit Parties on
a Consolidated basis, are and will be Solvent, and (b) the Borrower and its
Subsidiaries, on a Consolidated Basis, are and will be Solvent.

 

Section 7.18                             Titles to Properties.  As of the
Closing Date, the real property listed on Schedule 7.18 constitutes all of the
real property of a material nature that is owned, leased, subleased or used by
any Credit Party or any of its Subsidiaries.  Each Credit Party and each
Subsidiary thereof has such title to the real property owned or leased by it as
is necessary or desirable to the conduct of its business and valid and legal
title to all of its personal property and assets, except as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

Section 7.19                             Litigation.  There are no actions,
suits or proceedings pending or, to the knowledge of the Borrower and its
Subsidiaries, threatened against or in any other way relating adversely to or
affecting any Credit Party or any Subsidiary thereof or any of their respective
properties in any court or before any arbitrator of any kind or before or by any
Governmental Authority that (a) has or could reasonably be expected to have a
Material Adverse Effect, or (b) materially and adversely affects any Transaction
contemplated hereby.

 

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Section 7.20                             Absence of Defaults.  No event has
occurred or is continuing (a) which constitutes a Default or an Event of
Default, or (b) which constitutes, or which with the passage of time or giving
of notice or both would constitute, a default or event of default by any Credit
Party or any Subsidiary thereof under any Material Contract or judgment, decree
or order to which any Credit Party or any Subsidiary thereof is a party or by
which any Credit Party or any Subsidiary thereof or any of their respective
properties may be bound or which would require any Credit Party or any
Subsidiary thereof to make any payment thereunder prior to the scheduled
maturity date therefore that, in any case under this clause (b), could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

Section 7.21                             Senior Indebtedness Status.  The
Obligations of each Credit Party under this Agreement and each of the other Loan
Documents (a) ranks and shall continue to rank at least senior in priority of
payment to all Subordinated Indebtedness and at least equal in priority to all
senior secured or unsecured Indebtedness of each such Person and (b) is
designated as “Senior Indebtedness” under all instruments and documents, now or
in the future, relating to all Subordinated Indebtedness.

 

Section 7.22                             Anti-Terrorism; Anti-Money Laundering. 
No Credit Party nor any of its Subsidiaries or, to their knowledge, any of their
Related Parties (i) is an “enemy” or an “ally of the enemy” within the meaning
of Section 2 of the Trading with the Enemy Act of the United States (50 U.S.C.
App. §§ 1 et seq.), (ii) is in violation of (A) the Trading with the Enemy Act,
(B) any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V) or any enabling legislation or
executive order relating thereto or (C) the PATRIOT Act (collectively, the
“Anti-Terrorism Laws”) or (iii) is a Sanctioned Person.  No part of the proceeds
of any Extension of Credit hereunder will be used by any Credit Party or any
Subsidiary thereof unlawfully directly or indirectly to fund any operations in,
finance any investments or activities in or make any payments to, a Sanctioned
Person or a Sanctioned Country, or in any other manner that will result in any
violation by any Credit Party or any Subsidiary thereof of any Anti-Terrorism
Laws.

 

Section 7.23                             Investment Bankers’ and Similar Fees. 
Neither any Credit Party nor any Subsidiary thereof has any obligation to any
Person in respect of any finders’, brokers’, investment banking or other similar
fee in connection with any of the Transactions.

 

Section 7.24                             Disclosure.  The Borrower has disclosed
to the Administrative Agent and the Lenders all agreements, instruments and
corporate or other restrictions to which any Credit Party and any Subsidiary
thereof are subject, and all other matters known to them, that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect.  No written financial statement, material report, material certificate
or other written material information furnished by or on behalf of any Credit
Party or any Subsidiary thereof to the Administrative Agent or any Lender in
connection with the transactions contemplated hereby and the negotiation of this
Agreement or delivered hereunder (as modified or supplemented by other
information so furnished), taken together as a whole, contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, pro forma financial information, estimated financial information
and other projected or estimated information, the Credit Parties only represent
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time.

 

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ARTICLE VIII

 

FINANCIAL INFORMATION AND NOTICES

 

Until all of the Obligations (other than (a) contingent indemnification
obligations not then due and (b) the Specified Obligations) have been paid and
satisfied in full in cash, all Commitments have been terminated and all Letters
of Credit have been terminated or expired (or been Cash Collateralized), each
Credit Party will furnish to the Administrative Agent (which shall make such
information available to the Lenders in accordance with its customary practice):

 

Section 8.1                                    Financial Statements and
Projections.

 

(a)                           Quarterly Financial Statements.  As soon as
practicable and in any event within forty-five (45) days (or, if earlier, five
(5) Business Days after the date of any required public filing thereof) after
the end of the first three Fiscal Quarters of each Fiscal Year (commencing with
the Fiscal Quarter ended March 30, 2013), an unaudited Consolidated balance
sheet of the Borrower and its Subsidiaries as of the close of such Fiscal
Quarter and unaudited Consolidated statements of income, retained earnings and
cash flows and a report containing management’s discussion and analysis of such
financial statements for the Fiscal Quarter then ended and that portion of the
Fiscal Year then ended, including the notes thereto, all in reasonable detail
setting forth in comparative form the corresponding figures as of the end of and
for the corresponding period in the preceding Fiscal Year and prepared by the
Borrower in accordance with GAAP and, if applicable, containing disclosure of
the effect on the financial position or results of operations of any change in
the application of accounting principles and practices during the period, and
certified by the chief financial officer of the Borrower to present fairly in
all material respects the financial condition of the Borrower and its
Subsidiaries on a Consolidated basis as of their respective dates and the
results of operations of the Borrower and its Subsidiaries for the respective
periods then ended, subject to normal year-end adjustments and the absence of
footnotes.

 

(b)                           Annual Financial Statements.  As soon as
practicable and in any event within seventy-five (75) days (or, if earlier, five
(5) Business Days after the date of any required public filing thereof) after
the end of each Fiscal Year (commencing with the Fiscal Year 2013), an audited
Consolidated balance sheet of the Borrower and its Subsidiaries as of the close
of such Fiscal Year and audited Consolidated statements of income, retained
earnings and cash flows and a report containing management’s discussion and
analysis of such financial statements for the Fiscal Year then ended, including
the notes thereto, all in reasonable detail setting forth in comparative form
the corresponding figures as of the end of and for the preceding Fiscal Year and
prepared in accordance with GAAP and, if applicable, containing disclosure of
the effect on the financial position or results of operations of any change in
the application of accounting principles and practices during the year;
provided, however, that the Foreign Subsidiaries identified on Schedule 8.1 may
be excluded from such audit.  Such annual financial statements shall be audited
by an independent certified public accounting firm of recognized national
standing acceptable to the Administrative Agent, and shall be accompanied by a
report and opinion thereon by such certified public accountants that is not
qualified with respect to scope limitations imposed by the Borrower or any of
its Subsidiaries or subject to any “going concern” or similar qualification or
with respect to accounting principles followed by the Borrower or any of its
Subsidiaries not in accordance with GAAP.

 

(c)                            Material Domestic Subsidiaries and Material
First-Tier Foreign Subsidiaries.  At each time financial statements are
delivered pursuant to Section 8.1(a) or Section 8.1(b), information in
reasonable form and detail which certifies as to the Material Domestic
Subsidiaries and Material First-Tier Foreign Subsidiaries then in existence,
and, if and to the extent so requested by the Administrative Agent, calculations
of the then current aggregate book value (determined in accordance

 

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with GAAP) of the tangible assets of any Domestic Subsidiary or Foreign
Subsidiary directly owned by the Borrower and/or any Domestic Subsidiary(ies).

 

Section 8.2                                    Officer’s Compliance
Certificate.  At each time financial statements are delivered pursuant to
Section 8.1(a) or 8.1(b) and at such other times as the Administrative Agent
shall reasonably request, an Officer’s Compliance Certificate signed by the
chief executive officer, chief financial officer, treasurer or controller of the
Borrower.

 

Section 8.3                                    Other Reports.

 

(a)                           Promptly upon receipt thereof, copies of all
reports, if any, submitted to any Credit Party, any Domestic Subsidiary thereof
or any Foreign Subsidiary thereof that is the subject of a going concern
disclosure or has received a qualified adverse audit report or any of their
respective boards of directors or other applicable governing body by their
respective independent public accountants in connection with their auditing
function, including, without limitation, any management report and any
management responses thereto;

 

(b)                           Promptly upon the request thereof, such other
information and documentation required by bank regulatory authorities under
applicable “know your customer” and anti-money laundering rules and regulations
(including, without limitation, the Act), as from time to time reasonably
requested by the Administrative Agent or any Lender; and

 

(c)                            Such other information regarding the operations,
business affairs and financial condition of any Credit Party or any Subsidiary
thereof as the Administrative Agent or any Lender may reasonably request.

 

Section 8.4                                    Notice of Litigation and Other
Matters.  Prompt (but in no event later than ten (10) days after any Responsible
Officer of any Credit Party obtains knowledge thereof) telephonic and written
notice of:

 

(a)                           the commencement of all proceedings and
investigations by or before any Governmental Authority and all actions and
proceedings in any court or before any arbitrator against or involving any
Credit Party or any Subsidiary thereof or any of their respective properties,
assets or businesses that, if adversely determined, could reasonably be expected
to have a Material Adverse Effect;

 

(b)                           any notice of any violation received by any Credit
Party or any Subsidiary thereof from any Governmental Authority including,
without limitation, any notice of violation of Environmental Laws which in any
such case could reasonably be expected to have a Material Adverse Effect;

 

(c)                            any labor controversy that has resulted in, or
threatens to result in, a strike or other work action against any Credit Party
or any Subsidiary thereof and that could reasonably be expected to have a
Material Adverse Effect;

 

(d)                           any attachment, judgment, lien, levy or order
exceeding the Threshold Amount that may be assessed against or threatened
against any Credit Party or any Subsidiary thereof;

 

(e)                            (i) any Default or Event of Default or (ii) any
event or circumstance which constitutes or which with the passage of time or
giving of notice or both would constitute a default or event of default under
any Material Contract to which the Borrower or any of its Subsidiaries is a
party or by which the Borrower or any Subsidiary thereof or any of their
respective properties may be bound which could reasonably be expected to have a
Material Adverse Effect;

 

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(f)                             (i) any unfavorable determination letter from
the Internal Revenue Service regarding the qualification of an Employee Benefit
Plan under Section 401(a) of the Code (along with a copy thereof), (ii) all
notices received by any Credit Party or any ERISA Affiliate of the PBGC’s intent
to terminate any Pension Plan or to have a trustee appointed to administer any
Pension Plan, (iii) all notices received by any Credit Party or any ERISA
Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount
of withdrawal liability pursuant to Section 4202 of ERISA and (iv) the Borrower
obtaining knowledge or reason to know that any Credit Party or any ERISA
Affiliate has filed or intends to file a notice of intent to terminate any
Pension Plan under a distress termination within the meaning of
Section 4041(c) of ERISA;

 

(g)                            any event or circumstance which makes any of the
representations set forth in Article VII that is subject to materiality or
Material Adverse Effect qualifications inaccurate in any respect or any event or
circumstance which makes any of the representations set forth in Article VII
that is not subject to materiality or Material Adverse Effect qualifications
inaccurate in any material respect;

 

(h)                           promptly after the same are available, copies of
each annual report, proxy or financial statement or other report or
communication sent to the stockholders of the Borrower, and copies of all
annual, regular, periodic and special reports and registration statements which
the Borrower may file or be required to file with the SEC under Section 13 or
15(d) of the Securities Exchange Act of 1934, and not otherwise required to be
delivered to the Administrative Agent pursuant hereto; and

 

(i)                               promptly, and in any event within ten
(10) Business Days after receipt thereof by any Credit Party or any Subsidiary
thereof, copies of each notice or other correspondence received from the SEC (or
comparable agency in any applicable non-U.S. jurisdiction) concerning any
investigation or possible investigation by such agency regarding financial or
other operational results of any Credit Party or any Subsidiary thereof.

 

Documents required to be delivered pursuant to this Article may be delivered
electronically and, if so delivered, shall be deemed to have been delivered on
the date (i) on which the Borrower posts such documents, or provides a link
thereto on the Borrower’s website on the Internet at the website address listed
in Section 14.1; or (ii) on which such documents are posted on the Borrower’s
behalf on an Internet or intranet website, if any, to which each Lender and the
Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Administrative Agent); provided that: (A) the Borrower
shall deliver paper copies of such documents to the Administrative Agent or any
Lender that requests the Borrower to deliver such paper copies until a written
request to cease delivering paper copies is given by the Administrative Agent or
such Lender and (B) the Borrower shall notify the Administrative Agent and each
Lender (by facsimile or electronic mail) of the posting of any such documents
and provide to the Administrative Agent by electronic mail electronic versions
of such documents.  Notwithstanding anything contained herein, in every instance
the Borrower shall be required to provide paper copies of the Officer’s
Compliance Certificates required by Section 8.2 to the Administrative Agent. 
Except for such Officer’s Compliance Certificates, the Administrative Agent
shall have no obligation to request the delivery or to maintain copies of the
documents referred to above, and in any event shall have no responsibility to
monitor compliance by the Borrower with any such request for delivery, and each
Lender shall be solely responsible for requesting delivery to it or maintaining
its copies of such documents.

 

The Borrower hereby acknowledges that (a) the Administrative Agent and/or the
Arrangers will make available to the Lenders and the Issuing Lender materials
and/or information provided by or on behalf of the Borrower hereunder
(collectively, “Borrower Materials”) by posting the Borrower Materials on
SyndTrak Online or another similar electronic system (the “Platform”) and
(b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do
not wish to receive material non-public information

 

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with respect to the Borrower or its securities) (each, a “Public Lender”).  The
Borrower hereby agrees that, so long as the Borrower is the issuer of any
outstanding debt or equity securities that are registered under the Exchange
Act, registered under the Securities Act of 1933, as amended, or issued pursuant
to a private offering or is actively contemplating issuing any such securities,
it will use commercially reasonable efforts to identify that portion of the
Borrower Materials that may be distributed to the Public Lenders and that
(w) all such Borrower Materials shall be clearly and conspicuously marked
“PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear
prominently on the first page thereof; (x) by marking Borrower Materials
“PUBLIC,” the Borrower shall be deemed to have authorized the Administrative
Agent, the Arrangers, the Issuing Lender and the Lenders to treat such Borrower
Materials as not containing any material non-public information (although it may
be sensitive and proprietary) with respect to the Borrower or its securities for
purposes of United States Federal and state securities laws (provided, however,
that to the extent such Borrower Materials constitute Information, they shall be
treated as set forth in Section 14.10); (y) all Borrower Materials marked
“PUBLIC” are permitted to be made available through a portion of the Platform
designated “Public Investor;” and (z) the Administrative Agent and the Arrangers
shall be entitled to treat any Borrower Materials that are not marked “PUBLIC”
as being suitable only for posting on a portion of the Platform not designated
“Public Investor.”  Notwithstanding the foregoing, the Borrower shall be under
no obligation to mark any Borrower Materials “PUBLIC”.

 

Section 8.5                                    Accuracy of Information.  All
written information, reports, statements and other papers and data furnished by
or on behalf of any Credit Party or any Subsidiary thereof to the Administrative
Agent or any Lender whether pursuant to this Article VIII or any other provision
of this Agreement, or any of the Security Documents, shall, at the time the same
is so furnished, comply with the representations and warranties set forth in
Section 7.24.

 

ARTICLE IX

 

AFFIRMATIVE COVENANTS

 

Until all of the Obligations (other than (a) contingent indemnification
obligations not then due and (b) the Specified Obligations) have been paid and
satisfied in full in cash, all Commitments have been terminated and all Letters
of Credit have been terminated or expired (or been Cash Collateralized), each
Credit Party will, and will cause each of its Subsidiaries to:

 

Section 9.1                                    Preservation of Corporate
Existence and Related Matters.  Except as permitted by Section 11.4 and except
as could not reasonably be expected to result in a Material Adverse Effect,
preserve and maintain its separate corporate or other entity existence and all
rights, franchises, licenses and privileges necessary to the conduct of its
business, and qualify and remain qualified as a foreign corporation or other
entity and authorized to do business in each jurisdiction where the nature and
scope of its activities require it to so qualify under Applicable Law.

 

Section 9.2                                    Maintenance of Property and
Licenses.

 

(a)                           In addition to the requirements of any of the
Security Documents, protect and preserve all Properties necessary and material
to the conduct of its business, including material copyrights, patents, trade
names, service marks and trademarks; maintain in good working order and
condition, ordinary wear and tear excepted, all material buildings, equipment
and other tangible real and personal property; and from time to time make or
cause to be made all repairs, renewals and replacements thereof and additions to
such Property necessary for the conduct of its business, so that the business
carried on in connection therewith may be conducted in a commercially reasonable
manner.

 

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(b)                           Maintain, in full force and effect in all material
respects, each and every material license, permit, certification, qualification,
approval or franchise issued by any Governmental Authority (each a “License”)
required for each of them to conduct their respective businesses as presently
conducted.

 

Section 9.3                                    Insurance.  Maintain insurance
with financially sound and reputable insurance companies against at least such
risks and in at least such amounts as are customarily maintained by similar
businesses and as may be required by Applicable Law (including, without
limitation, hazard and business interruption insurance).  All such insurance
shall (a) provide that no cancellation or material modification thereof shall be
effective until at least 30 days after receipt by the Administrative Agent of
written notice thereof, and (b) with respect to liability insurance, name the
Administrative Agent as an additional insured party thereunder.  On the Closing
Date and from time to time thereafter, deliver to the Administrative Agent upon
its request information in reasonable detail as to the insurance then in effect,
stating the names of the insurance companies, the amounts and rates of the
insurance, the dates of the expiration thereof and the properties and risks
covered thereby.  Notwithstanding the foregoing sentences of this Section 9.3,
any Credit Party or any Foreign Subsidiary may self-insure against such risks
and in such amounts as are customary in the Borrower’s industry.

 

Section 9.4                                    Accounting Methods and Financial
Records.  Maintain a system of accounting, and keep proper books, records and
accounts (which shall be true and complete in all material respects) as may be
required or as may be necessary to permit the preparation of financial
statements in accordance with GAAP and in compliance with the regulations of any
Governmental Authority having jurisdiction over it or any of its properties.

 

Section 9.5                                    Payment of Taxes and Other
Obligations.  Pay and perform (a) all taxes, assessments and other governmental
charges that may be levied or assessed upon it or any of its Property and
(b) all other indebtedness, obligations and liabilities in accordance with
customary trade practices, except where the validity or amount thereof is
contested in good faith and the Borrower or such Subsidiary has adequate
reserves with respect thereto in accordance with GAAP or the failure to make
payment could not reasonably be expected to result in a Material Adverse Effect.

 

Section 9.6                                    Compliance With Laws and
Approvals.  Observe and remain in compliance in all material respects with all
Applicable Laws and maintain in full force and effect all Governmental Approvals
of a material nature, in each case applicable to the conduct of its business.

 

Section 9.7                                    Environmental Laws.  In addition
to and without limiting the generality of Section 9.6, (a) comply in all
material respects with, and use reasonable efforts to require such compliance by
all tenants and subtenants with, applicable Environmental Laws and obtain and
comply with and maintain, and use reasonable efforts to require that all tenants
and subtenants, if any, obtain and comply in all material respects with and
maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws, (b) promptly comply in all
material respects with all lawful orders and directives of any Governmental
Authority regarding Environmental Laws and satisfy all successful, final,
non-appealable Environmental Claims brought by any Person, including without
limitation the investigation, sampling, remediation, removal and monitoring of
Hazardous Materials, and (c) defend, indemnify and hold harmless the
Administrative Agent and the Lenders, and their respective parents,
Subsidiaries, Affiliates, employees, agents, officers and directors, from and
against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or unknown,
contingent or otherwise, arising out of, or in any way relating to the presence
of Hazardous Materials, or the violation of, noncompliance with or liability
under any Environmental Laws applicable to the operations of the Borrower or any
such Subsidiary, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, reasonable
attorney’s and consultant’s fees, investigation and laboratory fees, response
costs,

 

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court costs and litigation expenses, except (i) to the extent that any of the
foregoing directly result from the gross negligence or willful misconduct of the
party seeking indemnification therefor, as determined by a court of competent
jurisdiction by final nonappealable judgment or (ii) to the extent that any of
the foregoing relate solely to conditions which first occur or come into
existence after the consummation of a foreclosure or a deed in lieu of
foreclosure with respect to the real Property involved as to which neither any
Credit Party nor any of its Subsidiaries has any control and either (A) such
conditions result from the negligence or willful misconduct of the party seeking
indemnification therefor, as determined by a court of competent jurisdiction by
a final nonappealable judgment, or (B) such conditions first occur or come into
existence more than two years after the consummation of such foreclosure or deed
in lieu of foreclosure.

 

Section 9.8                                    Compliance with ERISA.  In
addition to and without limiting the generality of Section 9.6, (a) except where
the failure to so comply could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, (i) comply with all applicable
provisions of ERISA, the Code and the regulations and published interpretations
thereunder with respect to all Employee Benefit Plans, (ii) not take any action
or fail to take action the result of which could reasonably be expected to
result in a liability to the PBGC or to a Multiemployer Plan, (iii) not
participate in any prohibited transaction that could result in any civil penalty
under ERISA or tax under the Code and (iv) operate each Employee Benefit Plan in
such a manner that will not incur any tax liability under Section 4980B of the
Code or any liability to any qualified beneficiary as defined in Section 4980B
of the Code and (b) furnish to the Administrative Agent upon the Administrative
Agent’s request such additional information about any Employee Benefit Plan as
may be reasonably requested by the Administrative Agent.

 

Section 9.9                                    Compliance with Agreements. 
Comply in all respects with each term, condition and provision of all leases,
agreements and other instruments entered into in the conduct of its business
including, without limitation, any Material Contract except to the extent that
any non-compliance could not reasonably be expected to have a Material Adverse
Effect; provided, that the Borrower or any such Subsidiary may contest any such
lease, agreement or other instrument in good faith through applicable
proceedings so long as adequate reserves are maintained in accordance with GAAP.

 

Section 9.10                             Visits and Inspections; Lender
Meetings.  Permit representatives of the Administrative Agent or any Lender,
from time to time upon prior reasonable notice and at such times during normal
business hours, at the Borrower’s expense, to visit and inspect its properties;
inspect, audit and make extracts from its books, records and files, including,
but not limited to, management letters prepared by independent accountants; and
discuss with its principal officers, and its independent accountants, its
business, assets, liabilities, financial condition, results of operations and
business prospects, provided that so long as no Event of Default has occurred
and is continuing, the Borrower shall be entitled to advance notice of, and an
opportunity to be present and participate in, any discussions with its
independent accountants.  Upon the occurrence and during the continuance of an
Event of Default, the Administrative Agent or any Lender may do any of the
foregoing at any time without advance notice.

 

Upon the request of the Administrative Agent or the Required Lenders,
participate in a meeting of the Administrative Agent and Lenders once during
each Fiscal Year, which meeting will be held at the Borrower’s corporate offices
(or such other location as may be agreed to by the Borrower and the
Administrative Agent) at such time as may be agreed by the Borrower and the
Administrative Agent.

 

Section 9.11                             Subsidiaries.

 

(a)                           Domestic Subsidiaries.  Notify the Administrative
Agent upon the creation or acquisition of any Domestic Subsidiary (including,
without limitation, any Material Domestic Subsidiary) and of any

 

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Domestic Subsidiary becoming a Material Domestic Subsidiary and, with respect to
any Material Domestic Subsidiary so created or acquired or becoming such, and
promptly thereafter (and in any event within thirty (30) days after such
creation or acquisition or occurrence and as such time period may be extended by
the Administrative Agent in its sole discretion), cause such Person to
(i) become a party to this Agreement and a Subsidiary Guarantor by delivering to
the Administrative Agent a duly executed Joinder Agreement or such other
document as the Administrative Agent shall deem appropriate for such purpose,
(ii) grant a security interest in all Collateral (subject to the exceptions
specified in the Pledge Agreement) owned by such Subsidiary, (iii) deliver to
the Administrative Agent such documents and certificates referred to in
Section 6.1 as may be reasonably requested by the Administrative Agent,
(iv) deliver to the Administrative Agent such updated Schedules to the Loan
Documents as requested by the Administrative Agent with respect to such Person,
and (v) deliver to the Administrative Agent such other documents as may be
reasonably requested by the Administrative Agent, all in form, content and scope
reasonably satisfactory to the Administrative Agent.

 

(b)                           Foreign Subsidiaries.  Notify the Administrative
Agent upon the creation or acquisition of any Foreign Subsidiary (including,
without limitation, any Material First-Tier Foreign Subsidiary) and of any
Foreign Subsidiary becoming a Material First-Tier Foreign Subsidiary and, with
respect to any Material First-Tier Foreign Subsidiary existing as of the Closing
Date or so created or acquired or becoming such, (i) subject to the proviso in
clause (1) below, as of the Closing Date (as to each Material First-Tier Foreign
Subsidiary then in existence) or (ii) promptly thereafter (and in any event
within ninety (90) days after such creation or acquisition or occurrence and as
such time period may be extended by the Administrative Agent in its sole
discretion) as to each Material First-Tier Foreign Subsidiary so created or
acquired or becoming such after the Closing Date), cause (A) the Borrower and/or
the applicable Domestic Subsidiary(ies) to deliver to the Administrative Agent
Security Documents pledging sixty-five percent (65%) of the total outstanding
voting Capital Stock (and one hundred percent (100%) of the non-voting Capital
Stock) of any such Material First-Tier Foreign Subsidiary as security for the
Obligations and a consent thereto executed by such Material First-Tier Foreign
Subsidiary (including, without limitation, if applicable, original stock
certificates (or the equivalent thereof pursuant to the Applicable Laws and
practices of any relevant foreign jurisdiction) evidencing the Capital Stock of
such Material First-Tier Foreign Subsidiary, together with an appropriate
undated stock power for each certificate duly executed in blank by the
registered owner thereof), (B) such Person to deliver to the Administrative
Agent such documents and certificates referred to in Section 6.1 as may be
reasonably requested by the Administrative Agent, (C) such Person to deliver to
the Administrative Agent such updated Schedules to the Loan Documents as
requested by the Administrative Agent with regard to such Person and (D) such
Person to deliver to the Administrative Agent a legal opinion of counsel to the
Borrower and/or such Domestic Subsidiary(ies), as applicable, and such Material
First-Tier Foreign Subsidiary and such other documents as may be reasonably
requested by the Administrative Agent, all in form, content and scope reasonably
satisfactory to the Administrative Agent.

 

(c)                            Notwithstanding the foregoing, to the extent any
new Subsidiary is created solely for the purpose of consummating a merger
transaction pursuant to a Permitted Acquisition, and such new Subsidiary at no
time holds any assets or liabilities other than any merger consideration
contributed to it contemporaneously with the closing of such merger transaction,
such new Subsidiary shall not be required to take the actions set forth in
Section 9.11(a) or (b), as applicable, until the consummation of such Permitted
Acquisition (at which time, the surviving entity of the respective merger
transaction shall be required to so comply with Section 9.11(a) or (b), as
applicable, within ten (10) Business Days of the consummation of such Permitted
Acquisition).

 

(d)                           Notwithstanding the foregoing, the provisions of
this Section 9.11 shall not apply to assets as to which the Administrative Agent
and the Borrower shall reasonably determine that the costs

 

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and burdens of obtaining a security interest therein or perfection thereof
outweigh the value of the security afforded thereby.

 

Section 9.12                             Use of Proceeds.  The Borrower shall
use the proceeds of the Extensions of Credit (a) to pay in full all Indebtedness
outstanding under the Existing Credit Agreement (other than the Existing Letters
of Credit), (b) to finance the acquisition of Capital Assets, and (c) for
working capital and general corporate purposes of the Borrower and its
Subsidiaries, including the payment of certain fees, commissions and expenses
incurred in connection with the Transactions and this Agreement, and (d) the
repurchase of the Borrower’s Capital Stock as and to the extent permitted by
Section 11.6(d).  The Borrower shall use the proceeds of any Incremental Term
Loan and any Incremental Revolving Credit Increase as permitted by Section 5.13.

 

Section 9.13                             Further Assurances.  Maintain the
security interest created by the Security Documents as a perfected, first
priority security interest; and make, execute and deliver all such additional
and further acts, things, deeds, instruments and documents as the Administrative
Agent or the Required Lenders (through the Administrative Agent) may reasonably
require for the purposes of implementing or effectuating the provisions of this
Agreement and the other Loan Documents, or of renewing the rights of the Secured
Parties with respect to the Collateral as to which the Administrative Agent, for
the ratable benefit of the Secured Parties, has a perfected security interest
pursuant hereto or thereto, including, without limitation, filing any financing
or continuation statements under the UCC (or other similar laws) in effect in
any jurisdiction with respect to the security interests created hereby or by the
other Loan Documents.

 

Section 9.14                             Non-Consolidation.  Maintain (a) entity
records and books of account separate from those of any other entity which is an
Affiliate of such entity, (b) not commingle its funds or assets with those of
any other entity which is an Affiliate of such entity (except pursuant to cash
management systems reasonably acceptable to the Administrative Agent) and
(c) provide that its board of directors (or equivalent governing body) will hold
all appropriate meetings to authorize and approve such entity’s actions, which
meetings will be separate from those of other entities (except to the extent
that joint meetings are held generally consistent with the practices of the
Borrower and its Subsidiaries as in effect on the Closing Date).

 

Section 9.15                             Post-Closing Obligations.  Within sixty
(60) days of the Closing Date (as such time period may be extended by the
Administrative Agent in its sole discretion), the Administrative Agent shall
have received all necessary Foreign Subsidiary Pledge Agreements, certificates,
organizational documents, Lien searches, legal opinions and each other
agreement, document or instrument reasonably requested by the Administrative
Agent to ensure the validity and enforceability of the Foreign Subsidiary Pledge
Agreements and the ability of the Administrative Agent to exercise its rights
and remedies thereunder.

 

ARTICLE X

 

FINANCIAL COVENANTS

 

Until all of the Obligations (other than (a) contingent indemnification
obligations not then due and (b) the Specified Obligations) have been paid and
satisfied in full in cash, all Commitments have been terminated and all Letters
of Credit have been terminated or expired (or been Cash Collateralized), the
Borrower and its Subsidiaries on a Consolidated basis will not:

 

Section 10.1                             Consolidated Total Leverage Ratio.  As
of the last day of any Fiscal Quarter, permit the Consolidated Total Leverage
Ratio to be greater than 2.50 to 1.00.

 

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Section 10.2                             Consolidated Interest Coverage Ratio. 
As of the last day of any Fiscal Quarter, permit the Consolidated Interest
Coverage Ratio to be less than 3.50 to 1.00.

 

Section 10.3                             Maximum Capital Expenditures.  Permit
the aggregate amount of all Capital Expenditures during any Fiscal Year to
exceed (a) $200,000,000 from the Closing Date through the Fiscal Year ending
2013 and during each of fiscal years 2014 and 2015, and (b) $250,000,000 during
each Fiscal Year thereafter.  Notwithstanding the foregoing, the maximum amount
of Capital Expenditures permitted by this Section in any Fiscal Year shall be
increased by the amount of Capital Expenditures that were permitted to be made
under this Section in the immediately preceding Fiscal Year (without giving
effect to any carryover amount from prior Fiscal Years) over the amount of
Capital Expenditures actually made during such preceding Fiscal Year; provided,
that Capital Expenditures in such Fiscal Year shall be counted last against any
amount so carried forward.

 

ARTICLE XI

 

NEGATIVE COVENANTS

 

Until all of the Obligations (other than (a) contingent indemnification
obligations not then due and (b) the Specified Obligations) have been paid and
satisfied in full in cash, all Commitments have been terminated and all Letters
of Credit have been terminated or expired (or been Cash Collateralized), the
Credit Parties will not, and will not permit any of their respective
Subsidiaries to:

 

Section 11.1                             Limitations on Indebtedness.  Create,
incur, assume or suffer to exist any Indebtedness except:

 

(a)                           the Obligations (excluding Indebtedness and
obligations owing under Hedge Agreements permitted pursuant to Section 11.1(b));

 

(b)                           Indebtedness and obligations owing under Hedge
Agreements entered into in order to manage existing or anticipated interest
rate, exchange rate or commodity price risks and not for speculative purposes;

 

(c)                            Indebtedness existing on the Closing Date and
listed on Schedule 11.1, and any refinancings, refundings, renewals or
extensions thereof; provided that (i) the principal amount of such Indebtedness
is not increased at the time of such refinancing, refunding, renewal or
extension except by an amount equal to a reasonable premium or other reasonable
amount paid, and fees and expenses reasonably incurred, in connection with such
refinancing and by an amount equal to any existing commitments unutilized
thereunder, (ii) the final maturity date and weighted average life of such
refinancing, refunding, renewal or extension shall not be prior to or shorter
than that applicable to the Indebtedness prior to such refinancing, refunding,
renewal or extension and (iii) any refinancing, refunding, renewal or extension
of any Subordinated Indebtedness shall be (A) on subordination terms at least as
favorable to the Lenders, (B) no more restrictive on the Borrower and its
Subsidiaries than the Subordinated Indebtedness being refinanced, refunded,
renewed or extended and (C) in an amount not less than the amount outstanding at
the time of such refinancing, refunding, renewal or extension;

 

(d)                           Indebtedness incurred in connection with Capital
Leases and purchase money Indebtedness in an aggregate amount not to exceed
$50,000,000 at any time outstanding;

 

(e)                            Indebtedness of a Person existing at the time
such Person became a Subsidiary or assets were acquired from such Person in
connection with an Investment permitted pursuant to Section 11.3, to the extent
that (i) such Indebtedness was not incurred in connection with, or in
contemplation of, such

 

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Person becoming a Subsidiary or the acquisition of such assets, (ii) neither the
Borrower nor any Subsidiary thereof (other than such Person or any other Person
that such Person merges with or that acquires the assets of such Person) shall
have any liability or other obligation with respect to such Indebtedness and
(iii) the aggregate outstanding principal amount of such Indebtedness does not
exceed $30,000,000 at any time outstanding;

 

(f)                             Indebtedness of Foreign Subsidiaries in an
aggregate principal amount not to exceed $150,000,000 at any time outstanding;

 

(g)                            Guaranty Obligations with respect to Indebtedness
permitted pursuant to subsections (a) through (f) of this Section;

 

(h)                           unsecured intercompany Indebtedness (i) owed by
any Credit Party to another Credit Party, (ii) owed by any Foreign Subsidiary to
another Foreign Subsidiary, (iii) owed by any Foreign Subsidiary to any Credit
Party in an aggregate principal amount not to exceed $75,000,000 at any time
outstanding (provided that any Indebtedness owed by such Foreign Subsidiary to
any Credit Party pursuant to this clause (iii) shall be evidenced by a demand
note in form and substance reasonably satisfactory to the Administrative Agent),
(iv) owed by any Credit Party to any Foreign Subsidiary (provided, that such
Indebtedness shall be subordinated to the Obligations in a manner reasonably
satisfactory to the Administrative Agent);

 

(i)                               Indebtedness arising from the honoring by a
bank or other financial institution of a check, draft or other similar
instrument drawn against insufficient funds in the ordinary course of business;

 

(j)                              Subordinated Indebtedness of the Borrower and
its Subsidiaries; provided, that in the case of each incurrence of such
Subordinated Indebtedness, (i) no Default or Event of Default shall have
occurred and be continuing or would be caused by the incurrence of such
Subordinated Indebtedness, (ii) the Administrative Agent shall have received
satisfactory written evidence that the Borrower would be in compliance with all
covenants contained in this Agreement on a Pro Forma Basis after giving effect
to the issuance of any such Subordinated Indebtedness, and (iii) the
Consolidated Total Leverage Ratio (determined as of the date of incurrence of
such Subordinated Indebtedness calculated on a Pro Forma Basis after giving
effect to such Subordinated Indebtedness) shall be at least 0.25 below the
applicable ratio set forth in Section 10.1 as of such date;

 

(k)                           Indebtedness under performance bonds, surety
bonds, release, appeal and similar bonds, statutory obligations or with respect
to workers’ compensation claims, in each case incurred in the ordinary course of
business, and reimbursement obligations in respect of any of the foregoing;

 

(l)                               Indebtedness consisting of promissory notes
issued to current or former officers, directors and employees (or their
respective family members, estates or trusts or other entities for the benefit
of any of the foregoing) of the Borrower or its Subsidiaries to purchase or
redeem Capital Stock or options of the Borrower permitted pursuant to
Section 11.6(d)(ii); provided that the aggregate principal amount of all such
Indebtedness shall not exceed $2,000,000 at any time outstanding;

 

(m)                       Indebtedness of Fossil Partners, Fossil Group Europe
GmbH, Fossil Asia Pacific Ltd. and/or any other Foreign Subsidiary under the
Commercial Letter of Credit Facility not to exceed $150,000,000 in aggregate
principal amount at any time outstanding, and Guaranty Obligations of the
Borrower or any Subsidiary Guarantor with respect to such Indebtedness;

 

(n)                           additional unsecured Indebtedness not otherwise
permitted pursuant to this Section in an aggregate principal amount not to
exceed $10,000,000 at any time outstanding; and

 

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(o)                           unsecured Guaranty Obligations arising with
respect to customary indemnification obligations owed to purchasers in
connection with Asset Dispositions permitted by Section 11.5.

 

Section 11.2                             Limitations on Liens.  Create, incur,
assume or suffer to exist any Lien on or with respect to any of its Property,
whether now owned or hereafter acquired, except:

 

(a)                           Liens securing the Obligations and Liens created
pursuant to the Loan Documents (including, without limitation, Liens in favor of
the Swingline Lender and/or the Issuing Lender, as applicable, on Cash
Collateral granted pursuant to the Loan Documents);

 

(b)                           Liens in existence on the Closing Date and
described on Schedule 11.2 and the replacement, renewal or extension thereof,
including Liens incurred in connection with any refinancing, refunding, renewal
or extension of Indebtedness pursuant to Section 11.1(c) (solely to the extent
that such Liens were in existence on the Closing Date and described on
Schedule 11.2); provided that the scope of any such Lien shall not be increased,
or otherwise expanded, to cover any additional property or type of asset, as
applicable, beyond that in existence on the Closing Date;

 

(c)                            Liens for taxes, assessments and other
governmental charges or levies (excluding any Lien imposed pursuant to any of
the provisions of ERISA (or with respect to any Employee Benefit Plan, the Code)
or Environmental Laws) (i) not yet due or as to which the period of grace, if
any, related thereto has not expired or, with respect to an aggregate amount of
such taxes, assessments or other governmental charges or levies owed by Foreign
Subsidiaries not in excess of $1,000,000 not delinquent for more than 30 days or
(ii) which are being contested in good faith and by appropriate proceedings if
adequate reserves are maintained to the extent required by GAAP, provided, in
each case, that no notice of such a Lien has been filed or recorded under the
Code or other Applicable Law;

 

(d)                           (i) the claims of materialmen, mechanics,
carriers, warehousemen, processors or landlords for labor, materials, supplies
or rentals incurred in the ordinary course of business, (A) which are not
overdue for a period of more than sixty (60) days or (B) which are being
contested in good faith and by appropriate proceedings if adequate reserves are
maintained to the extent required by GAAP and (ii) do not, individually or in
the aggregate, materially impair the use thereof in the operation of the
business of the Borrower or any of its Subsidiaries;

 

(e)                            Liens consisting of deposits or pledges made in
the ordinary course of business in connection with, or to secure payment of,
obligations under workers’ compensation, unemployment insurance and other types
of social security or similar legislation, or to secure the performance of bids,
trade contracts and leases (other than Indebtedness), statutory obligations,
surety bonds (other than bonds related to judgments or litigation), performance
bonds and other obligations of a like nature incurred in the ordinary course of
business, in each case, so long as no foreclosure sale or similar proceeding has
been commenced with respect to any portion of the Collateral on account thereof;

 

(f)                             Liens constituting encumbrances in the nature of
zoning restrictions, easements and rights or restrictions of record on the use
of real property, which in the aggregate are not substantial in amount and which
do not, in any case, materially detract from the value of such property or
impair the use thereof in the ordinary conduct of business;

 

(g)                            purported Liens evidenced by the filing of
precautionary UCC financing statements relating solely to personal property
leased pursuant to operating leases entered into in the ordinary course of
business of the Borrower and its Subsidiaries;

 

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(h)                           Liens securing Indebtedness permitted under
Section 11.1(d); provided that (i) such Liens shall be created substantially
simultaneously with the acquisition or lease of the related asset, (ii) such
Liens do not at any time encumber any property other than the property financed
by such Indebtedness, (iii) the principal amount of Indebtedness secured thereby
is not increased and (iv) the principal amount of Indebtedness secured by any
such Lien shall at no time exceed one hundred percent (100%) of the original
purchase price or lease payment amount of such property at the time it was
acquired;

 

(i)                               Liens securing judgments for the payment of
money not constituting an Event of Default under Section 12.1(m) or securing
appeal or other surety bonds relating to such judgments;

 

(j)                              (i) Liens on tangible property or tangible
assets (i) of any Subsidiary which are in existence at the time that such
Subsidiary is acquired pursuant to a Permitted Acquisition and (ii) of the
Borrower or any of its Subsidiaries existing at the time such tangible property
or tangible assets are purchased or otherwise acquired by the Borrower or such
Subsidiary thereof pursuant to a transaction permitted pursuant to this
Agreement; provided that, with respect to each of the foregoing clauses (i) and
(ii), (A) such Liens (1) are not incurred in connection with, or in anticipation
of, such Permitted Acquisition, purchase or other acquisition, (2) are
applicable only to specific tangible property or tangible assets, (3) are not
“blanket” or all asset Liens and (4) do not attach to any other property or
assets of the Borrower or any of its Subsidiaries and (B) the Indebtedness
secured by such Liens is permitted under Section 11.1(e) of this Agreement);

 

(k)                           (i) Liens of a collecting bank arising in the
ordinary course of business under Section 4-210 of the Uniform Commercial Code
in effect in the relevant jurisdiction and (ii) Liens of any depositary bank in
connection with statutory, common law and contractual rights of set-off and
recoupment with respect to any deposit account of any Borrower or any Subsidiary
thereof;

 

(l)                               (i) contractual or statutory Liens of
landlords to the extent relating to the property and assets relating to any
lease agreements with such landlord, and (ii) contractual Liens of suppliers
(including sellers of goods) or customers granted in the ordinary course of
business to the extent limited to the property or assets relating to such
contract;

 

(m)                       any interest or title of a licensor, sublicensor,
lessor or sublessor with respect to any assets under any license or lease
agreement entered into in the ordinary course of business; provided that the
same do not interfere in any material respect with the business of the Borrower
or its Subsidiaries or materially detract from the value of the relevant assets
of the Borrower or its Subsidiaries;

 

(n)                           Liens affecting the assets of the Foreign
Subsidiaries which are the obligors with respect to the Indebtedness permitted
under Section 11.1(f) and which secure only such Indebtedness permitted under
Section 11.1(f);

 

(o)                           non-consensual Liens in favor of customs or
revenue authorities arising under Applicable Law to secure the payment of custom
duties in connection with the importation of goods purchased in the ordinary
course of business, which Liens are secured only by such goods;

 

(p)                           any interest or title of an owner of equipment or
inventory on loan or consignment to the Borrower or any Credit Party, and Liens
arising from precautionary UCC financing statement filings related thereto;

 

(q)                           options, put and call arrangements, rights of
first refusal and similar rights relating to Investments in joint ventures,
partnerships and other similar Investments permitted to be made under
Section 11.3;

 

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(r)                              rights of set-off and similar rights affecting
cash deposits securing Indebtedness under Hedge Agreements permitted under
Section 11.1(b); and

 

(s)                             Liens with respect to obligations not exceeding
$10,000,000 at any time outstanding.

 

Notwithstanding the foregoing, none of the foregoing Permitted Liens referred to
in this Section 11.2 above shall attach to, affect or encumber any Capital Stock
of any Subsidiary, except pursuant to the Loan Documents.

 

Section 11.3                             Limitations on Investments.  Purchase,
own, invest in or otherwise acquire, directly or indirectly, any Capital Stock,
interests in any partnership or joint venture (including, without limitation,
the creation or capitalization of any Subsidiary), evidence of Indebtedness or
other obligation or security, substantially all or a portion of the business or
assets of any other Person or any other investment or interest whatsoever in any
other Person, or make or permit to exist, directly or indirectly, any loans,
advances or extensions of credit to, or any investment in cash or by delivery of
Property in, any Person (all the foregoing, “Investments”) except:

 

(a)                           (i) equity Investments existing on the Closing
Date in Subsidiaries existing on the Closing Date, (ii) Investments existing on
the Closing Date (other than Investments in Subsidiaries existing on the Closing
Date) and described on Schedule 11.3 and (iii) equity Investments made after the
Closing Date in Subsidiary Guarantors;

 

(b)                           Investments in cash and Cash Equivalents;

 

(c)                            Investments by the Borrower or any of its
Subsidiaries in the form of Capital Expenditures permitted pursuant to this
Agreement;

 

(d)                           deposits made in the ordinary course of business
to secure the performance of leases or other obligations as permitted by
Section 11.2;

 

(e)                            Hedge Agreements permitted pursuant to
Section 11.1;

 

(f)                             purchases of assets in the ordinary course of
business;

 

(g)                            Investments by the Borrower or any Subsidiary
thereof in the form of (i) Permitted Acquisitions to the extent that any Person
or Property acquired in such acquisition becomes a part of the Borrower or a
Subsidiary Guarantor or becomes (whether or not such Person is a Wholly-Owned
Subsidiary) a Subsidiary Guarantor in the manner contemplated by Section 9.11
and (ii) Permitted Acquisitions to the extent that any Person or Property
acquired in such acquisition does not become a Subsidiary Guarantor or a part of
a Subsidiary Guarantor in an aggregate amount not to exceed at any time
outstanding $100,000,000;

 

(h)                           Investments in the form of loans and advances to
employees in the ordinary course of business, which, in the aggregate, do not
exceed at any time outstanding $1,000,000;

 

(i)                               Investments in the form of Indebtedness
permitted pursuant to Section 11.1(h);

 

(j)                              (i) Investments by a Foreign Subsidiary in
another Foreign Subsidiary, and (ii) Investments by the Borrower or a Domestic
Subsidiary in any Foreign Subsidiary in an aggregate amount not to exceed at any
time outstanding $100,000,000;

 

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(k)                           Guaranty Obligations of the Credit Parties and
their Subsidiaries permitted pursuant to Section 11.1;

 

(l)                               Investments in joint ventures; provided, that
the aggregate amount of all such Investments shall not at any time outstanding
exceed $75,000,000;

 

(m)                       Investments by the Borrower or a Subsidiary Guarantor
in the Borrower or a Subsidiary Guarantor;

 

(n)                           the contribution or other transfer of the Capital
Stock of any Foreign Subsidiarity that is not a Material First-Tier Foreign
Subsidiary to a Material First-Tier Foreign Subsidiary; and

 

(o)                           other additional Investments not otherwise
permitted pursuant to this Section not exceeding $10,000,000 in the aggregate in
any Fiscal Year.

 

For purposes of determining the amount of any Investment outstanding for
purposes of this Section 11.3, such amount shall be deemed to be the amount of
such Investment when made, purchased or acquired less any amount realized in
respect of such Investment upon the sale, collection or return of capital (not
to exceed the original amount invested).

 

Section 11.4                             Limitations on Fundamental Changes. 
Merge, consolidate or enter into any similar combination with any other Person
or liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution) except:

 

(a)                           (i) any Wholly-Owned Subsidiary of the Borrower
may be merged, amalgamated or consolidated with or into the Borrower (provided
that the Borrower shall be the continuing or surviving entity) or (ii) any
Wholly-Owned Subsidiary of the Borrower may be merged, amalgamated or
consolidated with or into any Subsidiary Guarantor (provided that the Subsidiary
Guarantor shall be the continuing or surviving entity or, simultaneously with
such transaction, the continuing or surviving entity shall become a Subsidiary
Guarantor and the Borrower shall comply with Section 9.11 in connection
therewith);

 

(b)                           (i) any Non-Guarantor Subsidiary that is a Foreign
Subsidiary may be merged, amalgamated or consolidated with or into, or be
liquidated into, any other Non-Guarantor Subsidiary and (ii) any Non-Guarantor
Subsidiary that is a Domestic Subsidiary may be merged, amalgamated or
consolidated with or into, or be liquidated into, any other Non-Guarantor
Subsidiary that is a Domestic Subsidiary;

 

(c)                            any Subsidiary may dispose of all or
substantially all of its assets (upon voluntary liquidation, dissolution,
winding up or otherwise) to the Borrower or any Subsidiary Guarantor; provided
that, with respect to any such disposition by any Non-Guarantor Subsidiary, the
consideration for such disposition shall not exceed the fair value of such
assets;

 

(d)                           (i) any Non-Guarantor Subsidiary that is a Foreign
Subsidiary may dispose of all or substantially all of its assets (upon voluntary
liquidation, dissolution, winding up or otherwise) to any other Non-Guarantor
Subsidiary and (ii) any Non-Guarantor Subsidiary that is a Domestic Subsidiary
may dispose of all or substantially all of its assets (upon voluntary
liquidation, dissolution, winding up or otherwise) to any other Non-Guarantor
Subsidiary that is a Domestic Subsidiary;

 

(e)                            dispositions permitted by Section 11.5;

 

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(f)                             any Wholly-Owned Subsidiary of the Borrower may
merge with or into the Person such Wholly-Owned Subsidiary was formed to acquire
in connection with a Permitted Acquisition, provided that (i) a Subsidiary
Guarantor shall be the continuing or surviving entity or (ii) simultaneously
with such transaction, the continuing or surviving entity shall become a
Subsidiary Guarantor and the Borrower shall comply with Section 9.11 in
connection therewith; and

 

(g)                            any Person may merge into the Borrower or any of
its Wholly-Owned Subsidiaries in connection with a Permitted Acquisition;
provided that (i) in the case of a merger involving the Borrower or a Subsidiary
Guarantor, the continuing or surviving Person shall be the Borrower or such
Subsidiary Guarantor and (ii) the continuing or surviving Person shall be the
Borrower or a Wholly-Owned Subsidiary of the Borrower.

 

Section 11.5                             Limitations on Asset Dispositions. 
Make any Asset Disposition (including, without limitation, the sale of any
accounts receivable and leasehold interests) except:

 

(a)                           the sale of inventory in the ordinary course of
business;

 

(b)                           the sale of obsolete, worn-out or surplus assets
no longer used or usable in the business of the Borrower or any of its
Subsidiaries and dispositions of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement equipment
or the proceeds of such disposition are reasonably promptly applied to the
purchase price of such replacement equipment;

 

(c)                            the transfer of assets in connection with any
other transaction permitted pursuant to Section 11.3 or 11.4;

 

(d)                           the Borrower or any Subsidiary may write-off,
discount, sell or otherwise dispose of defaulted or past due receivables and
similar obligations in the ordinary course of business and not as part of an
accounts receivable financing transaction or a securitization transaction;

 

(e)                            the disposition of any Hedge Agreement;

 

(f)                             dispositions of Investments in cash and Cash
Equivalents;

 

(g)                            (i) any Subsidiary Guarantor may transfer assets
to the Borrower or any other Subsidiary Guarantor, (ii) the Borrower may
transfer assets in the ordinary course of its business to any Subsidiary
Guarantor, (iii) any Non-Guarantor Subsidiary may transfer assets to the
Borrower or any Subsidiary Guarantor (provided that, in connection with any such
transfer, the Borrower or such Subsidiary Guarantor shall not pay more than an
amount equal to the fair market value of such assets as determined at the time
of such transfer) and (iv) any Non-Guarantor Subsidiary may transfer assets to
any other Non-Guarantor Subsidiary;

 

(h)                           non-exclusive licenses and sublicenses of
intellectual property rights in the ordinary course of business not interfering,
individually or in the aggregate, in any material respect with the conduct of
the business of the Borrower and its Subsidiaries;

 

(i)                               leases, subleases, licenses or sublicenses of
real or personal property granted by any Borrower or any of its Subsidiaries to
others in the ordinary course of business not interfering in any material
respect with the business of the Borrower or any of its Subsidiaries;

 

(j)                              dispositions in connection with Insurance and
Condemnation Events; provided that the Net Cash Proceeds thereof are applied
pursuant to the terms of Section 4.4(b)(ii);

 

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(k)         dispositions of Property in connection with sale/leaseback
transactions referred to in Section 11.13 involving consideration in an
aggregate amount (on or after the Closing Date) not to exceed $50,000,000;
provided that the Net Cash Proceeds thereof are applied pursuant to the terms of
Section 4.4(b)(i);

 

(l)          dispositions of Property of Foreign Subsidiaries located outside of
the United States (and not moved outside of the United States in anticipation of
such disposition) having an aggregate fair market value (on or after the Closing
Date) not to exceed $100,000,000 during the term of this Agreement; provided
that the Net Cash Proceeds thereof are applied pursuant to the terms of
Section 4.4(b)(i);

 

(m)        dispositions in the ordinary course of business consisting of the
abandonment of intellectual property rights that, in the reasonable good faith
determination of the applicable Credit Party or its Subsidiaries, are not
material to the conduct of its or any of its Subsidiaries’ business;

 

(n)         dispositions in the ordinary course of business of tangible Property
as part of a like kind exchange under Section 1031 of the Code;

 

(o)         dispositions of accounts receivable in connection with collection
efforts relating thereto, in each case in the ordinary course of business and
consistent with past practices; and

 

(p)         additional Asset Dispositions not otherwise permitted pursuant to
this Section in an aggregate amount not to exceed $10,000,000 in any Fiscal
Year.

 

Section 11.6          Limitations on Restricted Payments.  Declare or pay any
dividend on, or make any payment or other distribution on account of, or
purchase, redeem, retire or otherwise acquire (directly or indirectly), or set
apart assets for a sinking or other analogous fund for the purchase, redemption,
retirement or other acquisition of, any class of Capital Stock of any Credit
Party or any Subsidiary thereof, or make any distribution of cash, property or
assets to the holders of shares of any Capital Stock of any Credit Party or any
Subsidiary thereof (all of the foregoing, the “Restricted Payments”) provided
that:

 

(a)         the Borrower or any Subsidiary thereof may pay dividends in shares
of its own Qualified Capital Stock and may make cash payments in lieu of
issuance of fractional shares in connection with the exercise of warrants,
options or other securities convertible into or exchangeable for equity
interests of the Borrower or any of its Subsidiaries;

 

(b)         any Subsidiary of the Borrower may make Restricted Payments to the
Borrower or any Subsidiary Guarantor or ratably to all holders of its
outstanding Qualified Capital Stock;

 

(c)         (i) Non-Guarantor Subsidiaries that are Domestic Subsidiaries may
make Restricted Payments to other Non-Guarantor Subsidiaries that are Domestic
Subsidiaries and (ii) Non-Guarantor Subsidiaries that are Foreign Subsidiaries
may make Restricted Payments to other Non-Guarantor Subsidiaries that are
Foreign Subsidiaries; and

 

(d)         so long as (A) no Default or Event of Default has occurred and is
continuing or would result therefrom, (B) the Borrower and its Subsidiaries are
in compliance on a Pro Forma Basis with the covenants contained in Article X
after giving effect to the making of all such Restricted Payments, and (C) the
Consolidated Total Leverage Ratio (as of the proposed date of such Restricted
Payment and calculated on a Pro Forma Basis after giving effect to such
Restricted Payment) shall be at least 0.25 below the applicable ratio set forth
in Section 10.1 as of such date, the Borrower may (i) pay cash

 

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dividends to its shareholders if and to the extent permitted by Applicable Law
and approved by the board of directors of the Borrower, (ii) redeem, retire or
otherwise acquire shares of its Capital Stock or options or other equity or
phantom equity in respect of its Capital Stock from present or former officers,
employees, directors or consultants (or their family members or trusts or other
entities for the benefit of any of the foregoing) or make severance payments to
such Persons in connection with the death, disability or termination of
employment or consultancy of any such officer, employee, director or consultant
in an aggregate amount not to exceed $1,000,000 during any Fiscal Year, and
(iii) redeem, retire or otherwise acquire shares of its Capital Stock or options
or other equity or phantom equity in respect of its Capital Stock pursuant to
any stock repurchase program adopted by the board of directors of the Borrower.

 

Section 11.7          Transactions with Affiliates.  Directly or indirectly
enter into any transaction, including, without limitation, any purchase, sale,
lease or exchange of Property, the rendering of any service or the payment of
any management, advisory or similar fees, with (a) any officer, director, holder
of any Capital Stock in, or other Affiliate of, the Borrower or any of its
Subsidiaries, or (b) any Affiliate of any such officer, director or holder,
other than:

 

(i)            transactions permitted by Sections 11.1, 11.3, 11.4, 11.6 and
11.13;

 

(ii)           transactions existing on the Closing Date and described on
Schedule 11.7;

 

(iii)          other transactions in the ordinary course of business on terms as
favorable as would be obtained by it on a comparable arm’s length transaction
with an independent, unrelated third party;

 

(iv)          employment and severance arrangements (including stock option
plans and employee benefit plans and arrangements), and amendments thereto, with
their respective officers and employees in the ordinary course of business; and

 

(v)           payment of customary fees and reasonable out of pocket costs to,
and indemnities for the benefit of, directors, officers and employees of the
Borrower and its Subsidiaries in the ordinary course of business to the extent
attributable to the ownership or operation of the Borrower and its Subsidiaries.

 

Section 11.8          Certain Accounting Changes; Organizational Documents. 
(a) Change its Fiscal Year end, or make (without the consent of the
Administrative Agent) any material change in its accounting treatment and
reporting practices except as required by GAAP or (b) amend, modify or change
its articles of incorporation (or corporate charter or other similar
organizational documents) or amend, modify or change its bylaws (or other
similar documents) in any manner which could materially and adversely affect the
rights or interests of the Administrative Agent and/or the Lenders.

 

Section 11.9          Limitation on Payments and Modifications of Subordinated
Indebtedness.

 

(a)         Amend, modify, waive or supplement (or permit the modification,
amendment, waiver or supplement of) any of the terms or provisions of any
Subordinated Indebtedness in any respect which could materially and adversely
affect the rights or interests of the Administrative Agent and/or the Lenders.

 

(b)         Cancel, forgive, make any payment or prepayment on, or redeem or
acquire for value (including, without limitation, (i) by way of depositing with
any trustee with respect thereto money or securities before due for the purpose
of paying when due and (ii) at the maturity thereof) any Subordinated
Indebtedness, except:

 

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(i)            refinancings, refundings, renewals, extensions or exchange of any
Subordinated Indebtedness permitted pursuant to Section 11.1(j) or
Section 11.1(n), and by any subordination agreement applicable thereto; and

 

(ii)           the payment of interest, expenses and indemnities in respect of
Subordinated Indebtedness permitted pursuant to Section 11.1(j) or
Section 11.1(n) (other than any such payments prohibited by the subordination
provisions thereof).

 

Section 11.10       No Further Negative Pledges; Restrictive Agreements.

 

(a)         Enter into, assume or be subject to any agreement prohibiting or
otherwise restricting the creation or assumption of any Lien upon its properties
or assets, whether now owned or hereafter acquired, or requiring the grant of
any security for such obligation if security is given for some other obligation,
except (i) pursuant to this Agreement and the other Loan Documents,
(ii) pursuant to any document or instrument governing Indebtedness incurred
pursuant to Section 11.1(d); provided, that any such restriction contained
therein relates only to the asset or assets acquired in connection therewith,
(iii) restrictions contained in the organizational documents of any Credit Party
as of the Closing Date and (iv) restrictions in connection with any Permitted
Lien or any document or instrument governing any Permitted Lien (provided, that
any such restriction contained therein relates only to the asset or assets
subject to such Permitted Lien).

 

(b)         Create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of any Credit Party or any
Subsidiary thereof to (i) pay dividends or make any other distributions to any
Credit Party or any Subsidiary on its Capital Stock or with respect to any other
interest or participation in, or measured by, its profits, (ii) pay any
Indebtedness or other obligation owed to the Borrower or any Subsidiary
Guarantor, (iii) make loans or advances to the Borrower or any Subsidiary
Guarantor, (iv) sell, lease or transfer any of its properties or assets to the
Borrower or any Subsidiary Guarantor or (v) act as a guarantor pursuant to the
Loan Documents or any renewals, refinancings, exchanges, refundings or extension
thereof, except (in respect of any of the matters referred to in
clauses (i) through (v) above) for such encumbrances or restrictions existing
under or by reason of (A) this Agreement and the other Loan Documents,
(B) Applicable Law, (C) any document or instrument governing Indebtedness
incurred pursuant to Section 11.1(d) (provided, that any such restriction
contained therein relates only to the asset or assets acquired in connection
therewith), (D) any Permitted Lien or any document or instrument governing any
Permitted Lien (provided, that any such restriction contained therein relates
only to the asset or assets subject to such Permitted Lien), (E) obligations
that are binding on a Subsidiary at the time such Subsidiary first becomes a
Subsidiary of the Borrower, so long as such obligations are not entered into in
contemplation of such Person becoming a Subsidiary, (F) customary restrictions
contained in an agreement related to the sale of Property (to the extent such
sale is permitted pursuant to Section 11.5) that limit the transfer of such
Property pending the consummation of such sale, (G) customary restrictions in
leases, subleases, licenses and sublicenses or asset sale agreements otherwise
permitted by this Agreement so long as such restrictions relate only to the
assets subject thereto and (H) customary provisions restricting assignment of
any agreement entered into in the ordinary course of business.

 

Section 11.11       Nature of Business.  With respect to the Borrower and its
Subsidiaries, engage in any business other than the business conducted by the
Borrower and its Subsidiaries as of the Closing Date and business activities
reasonably related or ancillary thereto or that are reasonable extensions
thereof.

 

Section 11.12       Amendments of Other Documents.  Amend, modify, waive or
supplement (or permit modification, amendment, waiver or supplement of) any of
the terms or provisions of any Material

 

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Contract, in any respect which would materially and adversely affect the rights
or interests of the Administrative Agent and the Lenders hereunder, in each,
without the prior written consent of the Administrative Agent.

 

Section 11.13       Sale Leasebacks.  Directly or indirectly become or remain
liable as lessee or as guarantor or other surety with respect to any lease,
whether an operating lease or a Capital Lease, of any Property (whether real,
personal or mixed), whether now owned or hereafter acquired, (a) which any
Credit Party or any Subsidiary thereof has sold or transferred or is to sell or
transfer to a Person which is not another Credit Party or Subsidiary of a Credit
Party or (b) which any Credit Party or any Subsidiary of a Credit Party intends
to use for substantially the same purpose as any other Property that has been
sold or is to be sold or transferred by such Credit Party or such Subsidiary to
another Person which is not another Credit Party or Subsidiary of a Credit Party
in connection with such lease, in each case except as permitted pursuant to
Section 11.5(k).

 

Section 11.14       Domestic Subsidiaries.  Permit any Domestic Subsidiary to be
a non-Wholly-Owned Subsidiary or permit any Material Domestic Subsidiary to be a
Non-Guarantor Subsidiary.

 

ARTICLE XII

 

DEFAULT AND REMEDIES

 

Section 12.1          Events of Default.  Each of the following shall constitute
an Event of Default, whatever the reason for such event or circumstance and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment or order of any court or any order, rule or
regulation of any Governmental Authority or otherwise:

 

(a)         Default in Payment of Principal and Interest of Loans and
Reimbursement Obligations.  The Borrower shall default in any payment of
(i) principal of any Loan or Reimbursement Obligation when and as due or
(ii) interest on any Loan or Reimbursement Obligation and such default shall
continue for a period of five (5) Business Days, in each case, whether at
maturity, by reason of acceleration or otherwise.

 

(b)         Other Payment Default.  The Borrower or any other Credit Party shall
default in the payment when and as due (whether at maturity, by reason of
acceleration or otherwise) of any other Obligation (other than those Obligations
addressed in clause (a) above and any Specified Obligations), and such default
shall continue for a period of five (5) Business Days.

 

(c)         Misrepresentation.  Any representation, warranty, certification or
statement of fact made or deemed made by or on behalf of any Credit Party or any
Subsidiary thereof in this Agreement, in any other Loan Document or in any
document delivered in connection herewith or therewith that is subject to
materiality or Material Adverse Effect qualifications shall be incorrect or
misleading in any respect when made or deemed made, or any representation,
warranty, certification or statement of fact made or deemed made by or on behalf
of any Credit Party or any Subsidiary thereof in this Agreement, any other Loan
Document or in any document delivered in connection herewith or therewith that
is not subject to materiality or Material Adverse Effect qualifications shall be
incorrect or misleading in any material respect when made or deemed made.

 

(d)         Default in Performance of Certain Covenants.  Any Credit Party shall
default in the performance or observance of any covenant or agreement contained
in Sections 8.1, 8.2 or 8.4(e)(i) or Articles X or XI.

 

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(e)         Default in Performance of Other Covenants and Conditions.  Any
Credit Party or any Subsidiary thereof shall default in the performance or
observance of any term, covenant, condition or agreement contained in this
Agreement (other than as specifically provided for in this Section) or any other
Loan Document and such default shall continue for a period of thirty (30) days
after the earlier of (i) the Administrative Agent’s delivery of written notice
thereof to the Borrower and (ii) a Responsible Officer of the Borrower having
obtained knowledge thereof.

 

(f)          Indebtedness Cross Default.  Any Credit Party or any Subsidiary
thereof shall (i) default in the payment of any Indebtedness (other than the
Loans or any Reimbursement Obligation) the aggregate outstanding amount (or with
respect to any Hedge Agreement, the Hedge Termination Value) of which
Indebtedness is in excess of the Threshold Amount beyond the period of grace, if
any, provided in the instrument or agreement under which such Indebtedness was
created, or (ii) default in the observance or performance of any other agreement
or condition relating to any Indebtedness (other than the Loans or any
Reimbursement Obligation) the aggregate outstanding amount (or with respect to
any Hedge Agreement, the Hedge Termination Value) of which Indebtedness is in
excess of the Threshold Amount or contained in any instrument or agreement
evidencing, securing or relating thereto, any other event shall occur or other
condition shall exist, the effect of which is to cause, or to permit the holder
or holders of such Indebtedness (or a trustee or agent on behalf of such holder
or holders) to cause any such Indebtedness, with the giving of notice and/or
lapse of time, if required, to become due or to otherwise be required to be
repurchased, prepaid, defeased or redeemed, in each such case, prior to its
stated maturity (any applicable grace period having expired).

 

(g)         Other Cross-Defaults.  Any Credit Party shall default in the payment
when due, or in the performance or observance, of any obligation or condition of
any Material Contract and all applicable grace, notice or other cure periods
shall have expired unless, but only as long as, the existence of any such
default is being contested by such Credit Party or any such Subsidiary in good
faith by appropriate proceedings and adequate reserves in respect thereof have
been established on the books of the Borrower or such Credit Party to the extent
required by GAAP.

 

(h)         Change in Control.  Any Change in Control shall occur.

 

(i)          Voluntary Bankruptcy Proceeding.  Any Credit Party or any
Subsidiary (other than a Non-Material Foreign Subsidiary) thereof shall
(i) commence a voluntary case under any Debtor Relief Laws, (ii) file a petition
seeking to take advantage of any Debtor Relief Laws, (iii) consent to or fail to
contest in a timely and appropriate manner any petition filed against it in an
involuntary case under any Debtor Relief Laws, (iv) apply for or consent to, or
fail to contest in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of a substantial part of its property, domestic or foreign, (v) admit in
writing its inability to pay its debts as they become due, (vi) make a general
assignment for the benefit of creditors, or (vii) take any corporate or other
entity action for the purpose of authorizing any of the foregoing.

 

(j)          Involuntary Bankruptcy Proceeding.  A case or other proceeding
shall be commenced against any Credit Party or any Subsidiary (other than a
Non-Material Foreign Subsidiary) thereof in any court of competent jurisdiction
seeking (i) relief under the any Debtor Relief Laws, or (ii) the appointment of
a trustee, receiver, custodian, liquidator or the like for any Credit Party or
any such Subsidiary thereof or for all or any substantial part of their
respective assets, domestic or foreign, and such case or proceeding shall
continue without dismissal or stay for a period of sixty (60) consecutive days,
or an order granting the relief requested in such case or proceeding (including,
but not limited to, an order for relief under such federal bankruptcy laws)
shall be entered.

 

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(k)         Failure of Agreements.  Any provision of this Agreement or any
provision of any other Loan Document shall for any reason cease to be valid and
binding on any Credit Party or any such Person shall so state in writing, or any
Loan Document shall for any reason cease to create a valid and perfected first
priority Lien (subject to Permitted Liens) on, or security interest in, any of
the Collateral purported to be covered thereby, in each case other than in
accordance with the express terms hereof or thereof.

 

(l)          Termination Event.  The occurrence of any of the following events: 
(i) any Credit Party or any ERISA Affiliate fails to make full payment when due
of all amounts which, under the provisions of any Pension Plan or Section 412 or
Section 430 of the Code, any Credit Party or any ERISA Affiliate is required to
pay as contributions thereto, and the failure to make such payment could
reasonably be expected to have a Material Adverse Effect, (ii) a funding
shortfall as determined under Section 430 of the Code in excess of the Threshold
Amount occurs or exists, whether or not waived, with respect to any Pension
Plan, (iii) a Termination Event or (iv) any Credit Party or any ERISA Affiliate
as employers under one or more Multiemployer Plans makes a complete or partial
withdrawal from any such Multiemployer Plan and the plan sponsor of such
Multiemployer Plans notifies such withdrawing employer that such employer has
incurred a withdrawal liability requiring payments in an amount exceeding the
Threshold Amount.

 

(m)        Judgment.  A judgment or order for the payment of money which causes
the aggregate amount of all such judgments or orders (net of any amounts paid or
fully covered by independent third party insurance as to which the relevant
insurance company does not dispute coverage) to exceed the Threshold Amount
shall be entered against any Credit Party or any Subsidiary thereof by any court
and such judgment or order shall continue without having been discharged,
vacated or stayed for a period of thirty (30) consecutive days after the entry
thereof.

 

Section 12.2          Remedies.  Upon the occurrence of an Event of Default,
with the consent of the Required Lenders, the Administrative Agent may, or upon
the request of the Required Lenders, the Administrative Agent shall, by notice
to the Borrower:

 

(a)         Acceleration; Termination of Facilities.

 

(i)            Terminate the Revolving Credit Commitment (and thereby the L/C
Commitment) and declare the principal of and interest on the Loans and the
Reimbursement Obligations at the time outstanding, and all other amounts owed to
the Lenders and to the Administrative Agent under this Agreement or any of the
other Loan Documents (including, without limitation, all L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented or shall be entitled to present the documents required
thereunder) and all other Obligations (other than Specified Obligations), to be
forthwith due and payable, whereupon the same shall immediately become due and
payable without presentment, demand, protest or other notice of any kind, all of
which are expressly waived by each Credit Party, anything in this Agreement or
the other Loan Documents to the contrary notwithstanding, and terminate the
Credit Facility and any right of the Borrower to request borrowings or Letters
of Credit thereunder; provided, that upon the occurrence of an Event of Default
specified in Section 12.1(i) or Section 12.1(j), the Credit Facility shall be
automatically terminated and all Obligations (other than Specified Obligations)
shall automatically become due and payable without presentment, demand, protest
or other notice of any kind, all of which are expressly waived by each Credit
Party, anything in this Agreement or in any other Loan Document to the contrary
notwithstanding; and

 

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(ii)           exercise on behalf of the Secured Parties all of its other rights
and remedies under this Agreement, the other Loan Documents and Applicable Law,
in order to satisfy all of the Obligations.

 

(b)         Letters of Credit.  With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to Section 12.2(a), the Borrower shall at such time
deposit in a Cash Collateral account opened by the Administrative Agent an
amount equal to one hundred five percent (105%) of the aggregate then undrawn
and unexpired amount of such Letters of Credit.  Amounts held in such Cash
Collateral account shall be applied by the Administrative Agent to the payment
of drafts drawn under such Letters of Credit, and the unused portion thereof
after all such Letters of Credit shall have expired or been fully drawn upon, if
any, shall be applied to repay the other Obligations on a pro rata basis.  After
all such Letters of Credit shall have expired or been fully drawn upon, the
Reimbursement Obligation shall have been satisfied and all other Obligations
shall have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Borrower.

 

(c)         Rights of Collection.  Exercise on behalf of the Secured Parties all
of its other rights and remedies under this Agreement, the other Loan Documents
and Applicable Law, in order to satisfy all of the Borrower’s Obligations.

 

Section 12.3          Rights and Remedies Cumulative; Non-Waiver; etc.  The
enumeration of the rights and remedies of the Administrative Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Administrative Agent and/or the Lenders of any right or remedy
shall not preclude the exercise of any other rights or remedies, all of which
shall be cumulative, and shall be in addition to any other right or remedy given
hereunder or under the other Loan Documents or that may now or hereafter exist
at law or in equity or by suit or otherwise.  No delay or failure to take action
on the part of the Administrative Agent or any Lender in exercising any right,
power or privilege shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
or shall be construed to be a waiver of any Event of Default.  No course of
dealing between the Borrower, the Administrative Agent and the Lenders or their
respective agents or employees shall be effective to change, modify or discharge
any provision of this Agreement or any of the other Loan Documents or to
constitute a waiver of any Event of Default.

 

Notwithstanding anything to the contrary contained herein or in any other Loan
Document, the authority to enforce rights and remedies hereunder and under the
other Loan Documents against the Credit Parties or any of them shall be vested
exclusively in, and all actions and proceedings at law in connection with such
enforcement shall be instituted and maintained exclusively by, the
Administrative Agent in accordance with Section 12.2 for the benefit of all the
Lenders and the Issuing Lender; provided that the foregoing shall not prohibit
(a) the Administrative Agent from exercising on its own behalf the rights and
remedies that inure to its benefit (solely in its capacity as Administrative
Agent) hereunder and under the other Loan Documents, (b) the Issuing Lender or
the Swingline Lender from exercising the rights and remedies that inure to its
benefit (solely in its capacity as Issuing Lender or Swingline Lender, as the
case may be) hereunder and under the other Loan Documents, (c) any Lender from
exercising setoff rights in accordance with Section 14.4 (subject to the terms
of Section 5.6), or (d) any Lender from filing proofs of claim or appearing and
filing pleadings on its own behalf during the pendency of a proceeding relative
to any Credit Party under any Debtor Relief Law; and provided, further, that if
at any time there is no Person acting as Administrative Agent hereunder and
under the other Loan Documents, then (i) the Required Lenders shall have the
rights otherwise ascribed to the Administrative Agent pursuant to Section 12.2
and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the
preceding proviso and subject to Section 5.6, any Lender may, with the consent
of the Required Lenders, enforce any rights and remedies available to it and as
authorized by the Required Lenders.

 

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Section 12.4          Crediting of Payments and Proceeds.  In the event that the
Obligations have been accelerated pursuant to Section 12.2 or the Administrative
Agent or any Lender has exercised any right or remedy set forth in this
Agreement or any other Loan Document, all payments received by the Lenders upon
the Obligations and all net proceeds from the enforcement of the Obligations
shall be applied:

 

First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts, including attorney fees, payable to the
Administrative Agent in its capacity as such, the Issuing Lender in its capacity
as such and the Swingline Lender in its capacity as such (ratably among the
Administrative Agent, the Issuing Lender and Swingline Lender in proportion to
the respective amounts described in this clause First payable to them);

 

Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Lenders under the Loan Documents, including attorney fees (ratably among the
Lenders in proportion to the respective amounts described in this clause Second
payable to them);

 

Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans and Reimbursement Obligations (ratably among the
Lenders in proportion to the respective amounts described in this clause Third
payable to them);

 

Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans, Reimbursement Obligations, Specified Hedge Obligations
(including any termination payments and any accrued and unpaid interest thereon)
and Specified Cash Management Obligations (ratably among the Lenders, the
Issuing Lender and the counterparties to the Specified Hedge Obligations and
Specified Cash Management Obligations, as applicable, in proportion to the
respective amounts described in this clause Fourth held by them);

 

Fifth, to the Administrative Agent for the account of the Issuing Lender, to
Cash Collateralize any L/C Obligations then outstanding; and

 

Last, the balance, if any, after the Revolving Credit Commitment has terminated
and all of the Obligations have been indefeasibly paid in full, to the Borrower
or as otherwise required by Applicable Law.

 

Notwithstanding the foregoing, Specified Obligations arising under the Specified
Cash Management Arrangements and Specified Hedge Agreements shall be excluded
from the application described above if the Administrative Agent has not
received written notice thereof, together with such supporting documentation as
the Administrative Agent may reasonably request, from the applicable Cash
Management Bank or Hedge Bank, as the case may be.  Each Cash Management Bank or
Hedge Bank not a party to this Agreement that has given the notice contemplated
by the preceding sentence shall, by such notice, be deemed to have acknowledged
and accepted the appointment of the Administrative Agent pursuant to the terms
of Article XIII for itself and its Affiliates as if a “Lender” party hereto.

 

Section 12.5          Administrative Agent May File Proofs of Claim.  In case of
the pendency of any proceeding under any Debtor Relief Law or any other judicial
proceeding relative to any Credit Party, the Administrative Agent (irrespective
of whether the principal of any Loan or L/C Obligation 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:

 

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(a)         to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans, L/C Obligations and all other
Obligations arising under the Loan Document 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,
the Administrative Agent and their respective agents and counsel and all other
amounts due the Lenders and the Administrative Agent under Sections 3.3, 5.3 and
14.3) allowed in such judicial proceeding; and

 

(b)         to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to 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 under Sections 3.3, 5.3 and 14.3.

 

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.

 

Section 12.6          Credit Bidding.

 

(a)           The Administrative Agent, on behalf of itself and the Lenders,
shall have the right to credit bid and purchase for the benefit of the
Administrative Agent and the Lenders all or any portion of Collateral at any
sale thereof conducted by the Administrative Agent under the provisions of the
UCC, including pursuant to Sections 9-610 or 9-620 of the UCC, at any sale
thereof conducted under the provisions of the United States Bankruptcy Code,
including Section 363 thereof, or a sale under a plan of reorganization, or at
any other sale or foreclosure conducted by the Administrative Agent (whether by
judicial action or otherwise) in accordance with Applicable Law.

 

(b)           Each Lender hereby agrees that, except as otherwise provided in
any Loan Documents or with the written consent of the Administrative Agent and
the Required Lenders, it will not take any enforcement action, accelerate
obligations under any Loan Documents, or exercise any right that it might
otherwise have under Applicable Law to credit bid at foreclosure sales, UCC
sales or other similar dispositions of Collateral.

 

ARTICLE XIII

 

THE ADMINISTRATIVE AGENT

 

Section 13.1          Appointment and Authority.  Each of the Lenders and the
Issuing Lender hereby irrevocably designates and appoints Wells Fargo to act on
its behalf as the Administrative Agent hereunder and under the other Loan
Documents and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent
by the terms hereof or thereof, together with such actions and powers as are
reasonably incidental thereto.  The provisions of this Article are solely for
the benefit of the Administrative Agent, the Lenders and the Issuing Lender, and
neither the Borrower nor any Subsidiary thereof shall have rights as a
third-party beneficiary of any of such provisions.  It is understood and agreed
that the use of the term “agent” herein

 

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or in any other Loan Documents (or any other similar term) 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 as a matter of market custom and is intended to create
or reflect only an administrative relationship between contracting parties.

 

The Administrative Agent shall also act as the “collateral agent” under the Loan
Documents, and each of the Secured Parties hereby irrevocably appoints and
authorizes the Administrative Agent to act as the agent of such Secured Party
for purposes of acquiring, holding and enforcing any and all Liens on Collateral
granted by any of the Credit Parties to secure any of the Obligations, together
with such powers and discretion as are reasonably incidental thereto (including,
without limitation, to enter into additional Loan Documents or supplements to
existing Loan Documents on behalf of the Secured Parties).  In this connection,
the Administrative Agent, as “collateral agent” and any co-agents, sub-agents
and attorneys-in-fact appointed by the Administrative Agent pursuant to this
Article XIII for purposes of holding or enforcing any Lien on the Collateral (or
any portion thereof) granted under the Security Documents, or for exercising any
rights and remedies thereunder at the direction of the Administrative Agent,
shall be entitled to the benefits of all provisions of Articles XIII and XIV
(including Section 14.3, as though such co-agents, sub-agents and
attorneys-in-fact were the “collateral agent” under the Loan Documents) as if
set forth in full herein with respect thereto.

 

Section 13.2          Rights as a Lender.  The Person serving as the
Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent, and the term “Lender” or “Lenders” shall,
unless otherwise expressly indicated or unless the context otherwise requires,
include the Person serving as the Administrative Agent hereunder in its
individual capacity.  Such Person and its Affiliates may accept deposits from,
lend money to, own securities of, act as the financial advisor or in any other
advisory capacity for and generally engage in any kind of business with the
Borrower or any Subsidiary or other Affiliate thereof as if such Person were not
the Administrative Agent hereunder and without any duty to account therefor to
the Lenders.  Without limiting the generality of the foregoing, each Lender
acknowledges and agrees that Wells Fargo may have a participation or other
interest in the Commercial Letter of Credit Facility.

 

Section 13.3          Exculpatory Provisions.

 

(a)         The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein and in the other Loan Documents, and its
duties hereunder and thereunder shall be administrative in nature.  Without
limiting the generality of the foregoing, the Administrative Agent:

 

(i)            shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default or Event of Default has occurred and is
continuing;

 

(ii)           shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Loan Documents that the
Administrative Agent is required to exercise as directed in writing by the
Required Lenders (or such other number or percentage of the Lenders as shall be
expressly provided for herein or in the other Loan Documents), provided that the
Administrative Agent shall not be required to take any action that, in its
opinion or the opinion of its counsel, may expose the Administrative Agent to
liability or that is contrary to any Loan Document or Applicable Law, including
for the avoidance of doubt any action that may be in violation of the automatic
stay under any Debtor Relief Law or that may effect a forfeiture, modification
or termination of property of a Defaulting Lender in violation of any Debtor
Relief Law; and

 

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(iii)          shall not, except as expressly set forth herein and in the other
Loan Documents, have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrower or any of its
Subsidiaries or Affiliates that is communicated to or obtained by the Person
serving as the Administrative Agent or any of its Affiliates in any capacity.

 

(b)         The Administrative Agent shall not be liable for any action taken or
not taken by it (i) with the consent or at the request of the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary, or as
the Administrative Agent shall believe in good faith shall be necessary, under
the circumstances as provided in Section 14.2 and Section 12.2) or (ii) in the
absence of its own gross negligence or willful misconduct as determined by a
court of competent jurisdiction by final nonappealable judgment.  The
Administrative Agent shall be deemed not to have knowledge of any Default or
Event of Default unless and until notice describing such Default or Event of
Default is given to the Administrative Agent by the Borrower, a Lender or the
Issuing Lender.

 

(c)         The Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement or any other Loan Document,
(ii) the contents of any certificate, report or other document delivered
hereunder or thereunder or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or therein or the occurrence of any Default or Event
of Default, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement, any other Loan Document or any other agreement, instrument or
document or (v) the satisfaction of any condition set forth in Article VI or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.

 

Section 13.4          Reliance by the Administrative Agent.  The Administrative
Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing (including any electronic message, Internet or
intranet website posting or other distribution) believed by it to be genuine and
to have been signed, sent or otherwise authenticated by the proper Person.  The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to have been made by the proper Person, and shall
not incur any liability for relying thereon.  In determining compliance with any
condition hereunder to the making of a Loan, or the issuance, extension, renewal
or increase of a Letter of Credit, that by its terms must be fulfilled to the
satisfaction of a Lender or the Issuing Lender, the Administrative Agent may
presume that such condition is satisfactory to such Lender or the Issuing Lender
unless the Administrative Agent shall have received notice to the contrary from
such Lender or the Issuing Lender prior to the making of such Loan or the
issuance of such Letter of Credit.  The Administrative Agent may consult with
legal counsel (who may be counsel for the Borrower), independent accountants and
other experts selected by it, and shall not be liable for any action taken or
not taken by it in accordance with the advice of any such counsel, accountants
or experts.

 

Section 13.5          Delegation of Duties.  The Administrative Agent may
perform any and all of its duties and exercise its rights, remedies and powers
hereunder or under any other Loan Document by or through any one or more sub
agents appointed by the Administrative Agent.  The Administrative Agent and any
such sub agent may perform any and all of its duties and exercise its rights,
remedies and powers by or through their respective Related Parties.  The
exculpatory provisions of this Article shall apply to any such sub agent and to
the Related Parties of the Administrative Agent and any such sub agent, and
shall apply to their respective activities in connection with the syndication of
the Credit Facility as well as activities as Administrative Agent.

 

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Section 13.6          Resignation of Administrative Agent.

 

(a)         The Administrative Agent may at any time give notice of its
resignation to the Lenders, the Issuing Lender and the Borrower.  Upon receipt
of any such notice of resignation, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor, which shall be a bank
with an office in the United States, or an Affiliate of any such bank with an
office in the United States.  If no such successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation (or such
earlier day as shall be agreed by the Required Lenders) (the “Resignation
Effective Date”), then the retiring Administrative Agent may (but shall not be
obligated to), on behalf of the Lenders and the Issuing Lender, appoint a
successor Administrative Agent meeting the qualifications set forth above. 
Whether or not a successor has been appointed, such resignation shall become
effective in accordance with such notice on the Resignation Effective Date.

 

(b)         If the Person serving as Administrative Agent is a Defaulting Lender
pursuant to clause (d) of the definition thereof, the Required Lenders may, to
the extent permitted by Applicable Law, by notice in writing to the Borrower and
such Person, remove such Person as Administrative Agent and, in consultation
with the Borrower, appoint a successor.  If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days (or such earlier day as shall be agreed by the Required Lenders)
(the “Removal Effective Date”), then such removal shall nonetheless become
effective in accordance with such notice on the Removal Effective Date.

 

(c)         With effect from the Resignation Effective Date or the Removal
Effective Date (as applicable), (i) the retiring or removed Administrative Agent
shall be discharged from its duties and obligations hereunder and under the
other Loan Documents (except that in the case of any collateral security held by
the Administrative Agent on behalf of the Lenders or the Issuing Lender under
any of the Loan Documents, the retiring or removed Administrative Agent shall
continue to hold such collateral security until such time as a successor
Administrative Agent is appointed) and (ii) except for any indemnity payments
owed to the retiring or removed Administrative Agent, all payments,
communications and determinations provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender and the Issuing
Lender directly, until such time as a successor Administrative Agent is
appointed as provided for above.  Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring or removed Administrative Agent (other than any rights to indemnity
payments owed to the retiring or removed Administrative Agent), and the retiring
or removed Administrative Agent shall be discharged from all of its duties and
obligations hereunder or under the other Loan Documents.  The fees payable by
the Borrower to a successor Administrative Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower and such
successor.  After the retiring or removed Administrative Agent’s resignation or
removal hereunder and under the other Loan Documents, the provisions of this
Article and Section 14.3 shall continue in effect for the benefit of such
retiring or removed Administrative Agent, its sub-agents and their respective
Related Parties in respect of any actions taken or omitted to be taken by any of
them while the retiring or removed Administrative Agent was acting as
Administrative Agent.

 

(d)         Any resignation by, or removal of, Wells Fargo as Administrative
Agent pursuant to this Section shall also constitute its resignation as Issuing
Lender and Swingline Lender.  Upon the acceptance of a successor’s appointment
as Administrative Agent hereunder, (i) such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the
retiring Issuing Lender and Swingline Lender, (ii) the retiring Issuing Lender
and Swingline Lender shall be discharged from all of their respective duties and
obligations hereunder or under the other Loan Documents, and (iii) the successor
Issuing Lender shall issue letters of credit in substitution for the Letters of
Credit, if any,

 

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outstanding at the time of such succession or make other arrangement
satisfactory to the retiring Issuing Lender to effectively assume the
obligations of the retiring Issuing Lender with respect to such Letters of
Credit.

 

Section 13.7          Non-Reliance on Administrative Agent and Other Lenders. 
Each Lender and the Issuing Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender or any of
their Related Parties and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement.  Each Lender and the Issuing Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.

 

Section 13.8          No Other Duties, etc.  Anything herein to the contrary
notwithstanding, none of the syndication agents, documentation agents,
co-agents, bookrunner, lead manager, arranger, lead arranger or co-arranger
listed on the cover page or signature pages hereof shall have any powers, duties
or responsibilities under this Agreement or any of the other Loan Documents,
except in its capacity, as applicable, as the Administrative Agent, a Lender or
the Issuing Lender hereunder.

 

Section 13.9          Collateral and Guaranty Matters.  Each of the Lenders
(including its or any of its Affiliate’s capacities as a Hedge Bank or Cash
Management Bank) irrevocably authorize the Administrative Agent, at its option
and in its discretion (without notice to, or vote or consent of, any
counterparty to any Specified Hedge Agreement or Specified Cash Management
Agreement that was a Lender or an Affiliate of any Lender at the time such
agreement was executed):

 

(a)         to release any Lien on any Collateral granted to or held by the
Administrative Agent, for the ratable benefit of the Secured Parties (whether or
not on the date of such release there may be outstanding Specified Obligations
or contingent indemnification obligations not then due), under any Loan Document
(i) upon repayment of all outstanding principal of and all accrued interest on
the Loans and Reimbursement Obligations, payment of all outstanding fees and
expenses hereunder, the termination of all Commitments and the expiration or
termination of all Letters of Credit, (ii) that is sold or otherwise disposed of
or to be sold or otherwise disposed of as part of or in connection with any sale
or other disposition permitted hereunder or under any other Loan Documents, or
(iii) subject to Section 14.2, if approved, authorized or ratified in writing by
the Required Lenders;

 

(b)         to subordinate or release any Lien on any non-material portion of
the Collateral (whether or not on the date of such subordination or release
there may be outstanding Specified Obligations or contingent indemnification
obligations not then due) granted to or held by the Administrative Agent under
any Loan Document to the holder of any Permitted Lien; and

 

(c)         to release any Subsidiary Guarantor (whether or not on the date of
such release there may be outstanding Specified Obligations or contingent
indemnification obligations not then due) from its obligations under the
Subsidiary Guaranty Agreement and any other Loan Documents if such Person ceases
to be a Subsidiary as a result of a transaction permitted hereunder or under the
other Loan Documents.

 

Upon request by the Administrative Agent at any time, the Required Lenders will
confirm in writing the Administrative Agent’s authority to release or
subordinate its interest in particular types or items of property, or to release
any Subsidiary Guarantor from its obligations under the Subsidiary Guaranty
Agreement pursuant to this Section.

 

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Section 13.10       Release of Liens and Guarantees of Subsidiaries.  If any of
the Collateral shall be sold, transferred or otherwise disposed of by the
Borrower or any other Credit Party in a transaction permitted by this Agreement
(including by way of merger, consolidation or in connection with the sale of a
Subsidiary permitted hereunder), then the Administrative Agent, at the request
and sole expense of the Borrower or such other Credit Party, shall execute and
deliver without recourse, representation or warranty all releases or other
documents necessary or desirable for the release of the Liens created by any of
the Security Documents on such Collateral.  In the case of any such sale,
transfer or disposal of any property constituting Collateral in a transaction
constituting an Asset Disposition permitted pursuant to Section 11.5, the Liens
created by any of the Security Documents on such property shall be automatically
released (without need for further action by any person).  At the request and
sole expense of the Borrower, a Subsidiary that is a Credit Party shall be
released from all its obligations under this Agreement and under all other Loan
Documents in the event that all of the Capital Stock of such Subsidiary shall be
sold, transferred or otherwise disposed of in a transaction permitted by this
Agreement (including by way of merger or consolidation) and if no Event of
Default exists or would result therefrom, and the Administrative Agent, at the
request and sole expense of the Borrower, shall execute and deliver without
recourse, representation or warranty all releases or other documents necessary
or desirable to evidence or confirm the foregoing.

 

Section 13.11       Specified Cash Management Arrangements and Specified Hedge
Agreements.  No Cash Management Bank or Hedge Bank that obtains the benefits of
Section 12.4 or any Collateral by virtue of the provisions hereof or of any
Security Document shall have any right to notice of any action or to consent to,
direct or object to any action hereunder or under any other Loan Document or
otherwise in respect of the Collateral (including the release or impairment of
any Collateral) other than in its capacity as a Lender and, in such case, only
to the extent expressly provided in the Loan Documents.  Notwithstanding any
other provision of this Article XIII to the contrary, the Administrative Agent
shall not be required to verify the payment of, or that other satisfactory
arrangements have been made with respect to, Specified Hedge Agreements and
Specified Cash Management Arrangement unless the Administrative Agent has
received written notice of such Specified Hedge Agreements and Specified Cash
Management Arrangement, together with such supporting documentation as the
Administrative Agent may reasonably request, from the applicable Cash Management
Bank or Hedge Bank, as the case may be.

 

ARTICLE XIV

 

MISCELLANEOUS

 

Section 14.1          Notices.

 

(a)         Notices Generally.  Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in Section 14.1(b) below), all notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
telecopier as follows:

 

If to the Borrower

or another Credit
Party:                                                               
Fossil, Inc. (if to the Borrower) or
c/o Fossil, Inc. (if to another Credit Party)
901 S. Central Expressway
Richardson, Texas  75080
Attention of:  Randy S. Hyne, Esq.
Telephone No.:  972-699-2115
Telecopy No.:  972-744-8387

 

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E mail:  randyh@fossil.com
Webpage:  www.fossil.com

 

With copies
to:                                                                                                              
Akin Gump Strauss Hauer & Feld LLP
1111 Louisiana Street, 44th Floor
Houston, TX 77002-5200
Attention of:  Phyllis Y. Young
Telephone No.:  713-220-8168
Telecopy No.:  713-236-0822
E mail:  pyoung@akingump.com

 

If to Wells Fargo as

Administrative
Agent:                                                                        
Wells Fargo Bank, National Association
1525 W W.T. Harris Boulevard
Charlotte, North Carolina 28262
MAC- D1109-019

Attention of:  Stefani Scott

Telephone No.:  704-590-2912
Telecopy No.:  704-715-0017
E-mail:  Stefani.Scott@wellsfargo.com

 

With copies
to:                                                                                                              
Wells Fargo Bank, National Association
l 1445 Ross Ave, Suite 300 l
Dallas, Texas  75202

MAC T9216-031
Attention of:  Cyndi Giles
Telephone No.:  214-777-4036
Telecopy No.:  877-302-2106
E mail:  Cynthia.M.Giles@wellsfargo.com

 

If to any
Lender:                                                                                                  
To the address set forth on the Register

 

Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient).  Notices delivered through electronic communications to the extent
provided in Section 14.1(b) below, shall be effective as provided in said
Section 14.1(b).

 

(b)         Electronic Communications.  Notices and other communications to the
Lenders and the Issuing Lender hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agent, provided that the
foregoing shall not apply to notices to any Lender or the Issuing Lender
pursuant to Article II if such Lender or the Issuing Bank, as applicable, has
notified the Administrative Agent that is incapable of receiving notices under
such Article by electronic communication.  The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may be
limited to particular notices or communications.

 

Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the

 

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intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement), provided that if
such notice or other communication is not sent during the normal business hours
of the recipient, such notice or communication shall be deemed to have been sent
at the opening of business on the next business day for the recipient, and
(ii) notices or communications posted to an Internet or intranet website shall
be deemed received upon the deemed receipt by the intended recipient at its
e-mail address as described in the foregoing clause (i) of notification that
such notice or communication is available and identifying the website address
therefor.

 

(c)         Administrative Agent’s Office.  The Administrative Agent hereby
designates its office located at the address set forth above, or any subsequent
office which shall have been specified for such purpose, by written notice to
the Borrower and the Lenders, as the Administrative Agent’s Office referred to
herein, to which payments due are to be made and at which Loans will be
disbursed and Letters of Credit requested.

 

(d)         Change of Address, Etc.  Any party hereto may change its address or
telecopier number for notices and other communications hereunder by notice to
the other parties hereto.

 

(e)         Platform.

 

(i)            Each Credit Party agrees that the Administrative Agent may, but
shall not be obligated to, make the Borrower Materials available to the Issuing
Lender and the other Lenders by posting the communications on the Platform.

 

(ii)           The Platform is provided “as is” and “as available.”  The Agent
Parties (as defined below) do not warrant the accuracy or completeness of the
Borrower Materials or the adequacy of the Platform, and expressly disclaim
liability for errors or omissions in the Borrower Materials.  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 any
Agent Party in connection with the Borrower Materials or the Platform.  In no
event shall the Administrative Agent or any of its Related Parties
(collectively, the “Agent Parties”) have any liability to any Credit Party, any
Lender or any other Person or entity for losses, claims, damages, liabilities or
expenses of any kind (whether in tort, contract or otherwise) arising out of any
Credit Party’s or the Administrative Agent’s transmission of communications
through the Internet (including, without limitation, the Platform), except to
the extent that such losses, claims, damages, liabilities or expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Agent Party; provided that in no event shall any Agent Party have any
liability to any Credit Party, any Lender, the Issuing Lender or any other
Person for indirect, special, incidental, consequential or punitive damages,
losses or expenses (as opposed to actual damages, losses or expenses).

 

Section 14.2          Amendments, Waivers and Consents.  Except as set forth
below or as specifically provided in any Loan Document, any term, covenant,
agreement or condition of this Agreement or any of the other Loan Documents may
be amended or waived by the Lenders, and any consent given by the Lenders, if,
but only if, such amendment, waiver or consent is in writing signed by the
Required Lenders (or by the Administrative Agent with the consent of the
Required Lenders) and delivered to the Administrative Agent and, in the case of
an amendment, signed by the Borrower and any other Credit Party which is a party
thereto; provided, that no amendment, waiver or consent shall:

 

(a)         without the prior written consent of the Required Lenders, amend,
modify or waive (i) Section 6.2 or any other provision of this Agreement if the
effect of such amendment, modification or

 

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waiver is to require the Revolving Credit Lenders (pursuant to, in the case of
any such amendment to a provision hereof other than Section 6.2, any
substantially concurrent request by the Borrower for a borrowing of Revolving
Credit Loans) to make Revolving Credit Loans when such Revolving Credit Lenders
would not otherwise be required to do so, (ii) the Maximum Swingline Amount or
(iii) the amount of the L/C Commitment;

 

(b)         increase the Commitment of any Lender, the Maximum Swingline Amount
of the Swingline Lender or the L/C Commitment of the Issuing Lender (or
reinstate any Revolving Credit Commitment or the L/C Commitment terminated
pursuant to Section 12.2) or the amount of Loans of any Lender, in any case,
without the written consent of such Lender;

 

(c)         postpone any date fixed by this Agreement or any other Loan Document
for any payment (including any mandatory prepayment) of principal, interest,
fees or other amounts due to the Lenders (or any of them) or any scheduled or
mandatory reduction of the Revolving Credit Commitment hereunder or under any
other Loan Document without the written consent of each Lender directly and
adversely affected thereby;

 

(d)         reduce the principal of, or the rate of interest specified herein
on, any Loan or Reimbursement Obligation, or (subject to the second proviso to
this Section below) any fees or other amounts payable hereunder or under any
other Loan Document without the written consent of each Lender directly and
adversely affected thereby; provided that only the consent of the Required
Lenders shall be necessary (i) to waive any obligation of the Borrower to pay
interest at the rate set forth in Section 5.1(c) during the continuance of an
Event of Default or (ii) to amend any financial covenant hereunder (or any
defined term used therein) even if the effect of such amendment would be to
reduce the rate of interest on any Loan or L/C Obligation or to reduce any fee
payable hereunder;

 

(e)         change Section 5.6 or Section 12.4 in a manner that would alter the
order of application or the pro rata sharing of payments required thereby
without the written consent of each Lender directly and adversely affected
thereby;

 

(f)          except as otherwise permitted by this Section 14.2, change any
provision of this Section or reduce the percentages specified in the definition
of “Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders required to amend, waive or otherwise modify any rights
hereunder or make any determination or grant any consent hereunder, without the
written consent of each Lender directly affected thereby;

 

(g)         consent to the assignment or transfer by any Credit Party of such
Credit Party’s rights and obligations under any Loan Document to which it is a
party (except as permitted pursuant to Section 11.4), in each case, without the
written consent of each Lender;

 

(h)         release any Subsidiary Guarantor from its Subsidiary Guaranty
Agreement (other than as authorized in Section 13.9), without the written
consent of each Lender; or

 

(i)          release any material portion of the Collateral or release any
Security Document (other than as authorized in Section 13.9 or as otherwise
specifically permitted or contemplated in this Agreement or the applicable
Security Document) without the written consent of each Lender;

 

provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Issuing Lender in addition to the Lenders required
above, affect the rights or duties of the Issuing Lender under this Agreement or
any Letter of Credit Application relating to any Letter of Credit issued or to
be issued by it; (ii) no amendment, waiver or consent shall, unless in writing
and signed by the Swingline

 

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Lender in addition to the Lenders required above, affect the rights or duties of
the Swingline Lender under this Agreement; (iii) no amendment, waiver or consent
shall, unless in writing and signed by the Administrative Agent in addition to
the Lenders required above, affect the rights or duties of the Administrative
Agent under this Agreement or any other Loan Document; (iv) a Fee Letter may be
amended, or rights or privileges thereunder waived, in a writing executed only
by the parties thereto, (v) any waiver, amendment or modification of this
Agreement that by its terms affects the rights or duties under this Agreement of
Lenders holding Loans or Commitments of a particular Class (but not the Lenders
holding Loans or Commitments of any other Class) may be effected by an agreement
or agreements in writing entered into by the Borrower and the requisite
percentage in interest of the affected Class of Lenders that would be required
to consent thereto under this Section if such Class of Lenders were the only
Class of Lenders hereunder at the time, and (vi) the Administrative Agent and
the Borrower shall be permitted to amend any provision of the Loan Documents
(and such amendment shall become effective without any further action or consent
of any other party to any Loan Document) if the Administrative Agent and the
Borrower shall have jointly identified an obvious error or any error or omission
of a technical or immaterial nature in any such provisions.  Notwithstanding
anything to the contrary herein, no Defaulting Lender shall have any right to
approve or disapprove any amendment, waiver or consent hereunder, except that
(x) the Commitment of such Lender may not be increased or extended without the
consent of such Lender, (y) the principal amount of any obligation owing to such
Lender may not be reduced or forgiven without the consent of such Lender, and
(z) any waiver, amendment or modification requiring the consent of all Lenders
or each affected Lender under any Credit Facility that by its terms affects any
Defaulting Lender more adversely than other affected Lenders shall require the
consent of such Lender.

 

Notwithstanding anything in this Agreement to the contrary, each Lender hereby
irrevocably authorizes the Administrative Agent on its behalf, and without
further consent, to enter into amendments or modifications to this Agreement
(including, without limitation, amendments to this Section 14.2) or any of the
other Loan Documents or to enter into additional Loan Documents as the
Administrative Agent reasonably deems appropriate in order to effectuate the
terms of Section 5.13 (including, without limitation, as applicable, (A) to
permit the Incremental Term Loans and the Incremental Revolving Credit Increases
to share ratably in the benefits of this Agreement and the other Loan Documents
and (B) to include the Incremental Term Loan Commitments and the Incremental
Revolving Credit Increase, as applicable, or outstanding Incremental Term Loans
and outstanding Incremental Revolving Credit Increase, as applicable, in any
determination of (1) Required Lenders or (2) similar required lender terms
applicable thereto) and Section 5.15, as applicable; provided that no such
amendment or modification shall result in any increase in the amount of any
Lender’s Commitment or any increase in any Lender’s Commitment Percentage, in
each case, without the written consent of such affected Lender.

 

Section 14.3          Expenses; Indemnity.

 

(a)         Costs and Expenses.  Each of the Borrower and the other Credit
Parties, jointly and severally, shall pay (i) all reasonable out of pocket
expenses incurred by the Administrative Agent and its Affiliates (including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent), in connection with the syndication of the Credit Facility, the
preparation, negotiation, execution, delivery and administration of this
Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable out of
pocket expenses incurred by the Issuing Lender in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder and (iii) all reasonable out of pocket expenses incurred by
the Administrative Agent, any Lender or the Issuing Lender (including the fees,
charges and disbursements of any counsel for the Administrative Agent, any
Lender or the Issuing Lender, provided that, for purposes of this parenthetical,
such counsel shall be limited to one United States counsel and one counsel in
each

 

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applicable foreign jurisdiction, in each case as chosen by the Administrative
Agent, except if and to the extent that conflicts of interest reasonably
necessitate otherwise), in connection with the enforcement, exercise and/or
protection of its rights and/or remedies (A) in connection with this Agreement
and the other Loan Documents, including its rights under this Section, or (B) in
connection with the Loans made or Letters of Credit issued hereunder, including
all such out of pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

 

(b)         Indemnification by the Borrower.  Each of the Borrower and the other
Credit Parties, jointly and severally, shall indemnify the Administrative Agent
(and any sub-agent thereof), each Lender, the Issuing Lender and the Swingline
Lender, and each Related Party of any of the foregoing Persons (each such Person
being called an “Indemnitee”) against, and hold each Indemnitee harmless from,
and shall pay or reimburse any such Indemnitee for, any and all losses, claims
(including, without limitation, any Environmental Claims or civil penalties or
fines assessed by OFAC), damages, liabilities and related expenses (including
the fees, charges and disbursements of any counsel for any Indemnitee, provided
that, for purposes of this parenthetical, such counsel shall be limited to one
United States counsel and one counsel in each applicable foreign jurisdiction,
in each case as chosen by the Administrative Agent, except if and to the extent
that conflicts of interest reasonably necessitate otherwise), incurred by any
Indemnitee or asserted against any Indemnitee by any Person (including the
Borrower or any other Credit Party), other than such Indemnitee and its Related
Parties, arising out of, in connection with, or as a result of (i) the execution
or delivery of this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
of their respective obligations hereunder or thereunder or the consummation of
the transactions contemplated hereby or thereby (including, without limitation,
the Transactions), (ii) any Loan or Letter of Credit or the use or proposed use
of the proceeds therefrom (including any refusal by the Issuing Lender to honor
a demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such Letter
of Credit), (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by any Credit Party or any
Subsidiary thereof, or any Environmental Claim related in any way to any Credit
Party or any Subsidiary, (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory, whether brought by a third party or by any
Credit Party or any Subsidiary thereof, and regardless of whether any Indemnitee
is a party thereto, or (v) any claim (including, without limitation, any
Environmental Claims or civil penalties or fines assessed by OFAC),
investigation, litigation or other proceeding (whether or not the Administrative
Agent or any Lender is a party thereto) and the prosecution and defense thereof,
arising out of or in any way connected with the Loans, this Agreement, any other
Loan Document, or any documents contemplated by or referred to herein or therein
or the transactions contemplated hereby or thereby, including without
limitation, reasonable attorneys and consultant’s fees, provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses (x) are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee or
(y) result from a claim brought by any Credit Party or any Subsidiary thereof
against an Indemnitee for breach in bad faith of such Indemnitee’s obligations
hereunder or under any other Loan Document, if such Credit Party or such
Subsidiary has obtained a final and nonappealable judgment in its favor on such
claim as determined by a court of competent jurisdiction.  This
Section 14.3(b) shall not apply with respect to Taxes other than any Taxes that
represent losses, claims, damages, etc. arising from any non-Tax claim.

 

(c)         Reimbursement by Lenders.  To the extent that any Credit Party for
any reason fails to indefeasibly pay any amount required under
Section 14.3(a) or Section 14.3(b) to be paid by it to the Administrative Agent
(or any sub-agent thereof), the Issuing Lender, the Swingline Lender or any
Related Party of any of the foregoing, each Lender severally agrees to pay to
the Administrative Agent (or any such sub-agent), the Issuing Lender, the
Swingline Lender or such Related Party, as the case may be, such

 

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Lender’s pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought based on each Lender’s share
of the Total Credit Exposure at such time, or if the Total Credit Exposure has
been reduced to zero, then based on such Lender’s share of the Total Credit
Exposure immediately prior to such reduction) of such unpaid amount (including
any such unpaid amount in respect of a claim asserted by such Lender): provided
that with respect to such unpaid amounts owed to the Issuing Lender or the
Swingline Lender solely in its capacity as such, only the Revolving Credit
Lenders shall be required to pay such unpaid amounts, such payment to be made
severally among them based on such Revolving Credit Lenders’ Revolving Credit
Commitment Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought or, if the Revolving Credit
Commitment has been reduced to zero as of such time, determined immediately
prior to such reduction): provided, further,  that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent (or any such
sub-agent), the Issuing Lender or the Swingline Lender in its capacity as such,
or against any Related Party of any of the foregoing acting for the
Administrative Agent (or any such sub-agent), the Issuing Lender or the
Swingline Lender in connection with such capacity.  The obligations of the
Lenders under this Section 14.3(c) are subject to the provisions of
Section 5.7.  Notwithstanding anything to the contrary contained herein, no
payment made by any Lender under this Section 14.3(c) shall be deemed to modify,
reduce, release or otherwise affect the obligations of any Credit Party
hereunder.

 

(d)         Waiver of Consequential Damages, Etc.  To the fullest extent
permitted by Applicable Law, the Borrower and each other Credit Party shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby, the transactions contemplated hereby or thereby, any Loan
or Letter of Credit or the use of the proceeds thereof.  No Indemnitee referred
to in Section 14.3(b) above shall be liable for any damages arising from the use
by unintended recipients of any information or other materials distributed by it
through telecommunications, electronic or other information transmission systems
in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby.

 

(e)         Payments.  All amounts due under this Section shall be payable
within five (5) days after demand therefor, which demand shall be accompanied by
a statement from the applicable Person to whom such payment is due setting forth
such amounts in reasonable detail.

 

(f)          Survival.  Each party’s obligations under this Section shall
survive the termination of the Loan Documents and payment of the obligations
hereunder.

 

Section 14.4          Right of Set Off.  If an Event of Default shall have
occurred and be continuing, each Lender, the Issuing Lender, the Swingline
Lender and each of their respective Affiliates is hereby authorized at any time
and from time to time, to the fullest extent permitted by Applicable Law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final, in whatever currency) at any time held and other
obligations (in whatever currency) at any time owing by such Lender, the Issuing
Lender, the Swingline Lender or any such Affiliate to or for the credit or the
account of the Borrower or any other Credit Party against any and all of the
obligations of the Borrower or such Credit Party now or hereafter existing under
this Agreement or any other Loan Document to such Lender, the Issuing Lender or
the Swingline Lender or any of their respective Affiliates, irrespective of
whether or not such Lender, the Issuing Lender, the Swingline Lender or any such
Affiliate shall have made any demand under this Agreement or any other Loan
Document and although such obligations of the Borrower or such Credit Party may
be contingent or unmatured or are owed to a branch or office of such Lender, the
Issuing Lender, the Swingline Lender or such Affiliate different from the
branch, office or Affiliate holding such deposit or obligated on such
indebtedness: provided that in the event that any

 

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Defaulting Lender shall exercise any such right of setoff, (x) all amounts so
set off shall be paid over immediately to the Administrative Agent for further
application in accordance with the provisions of Section 12.4 and, pending such
payment, shall be segregated by such Defaulting Lender from its other funds and
deemed held in trust for the benefit of the Administrative Agent, the Issuing
Lender, the Swingline Lender and the Lenders, and (y) the Defaulting Lender
shall provide promptly to the Administrative Agent a statement describing in
reasonable detail the Obligations owing to such Defaulting Lender as to which it
exercised such right of setoff.  The rights of each Lender, the Issuing Lender,
the Swingline Lender and their respective Affiliates under this Section are in
addition to other rights and remedies (including other rights of setoff) that
such Lender, the Issuing Lender, the Swingline Lender or their respective
Affiliates may have.  Each Lender, the Issuing Lender and the Swingline Lender
agrees to notify the Borrower and the Administrative Agent promptly after any
such setoff and application; provided that the failure to give such notice shall
not affect the validity of such setoff and application.

 

Section 14.5          Governing Law; Jurisdiction, Etc.

 

(a)         Governing Law.  This Agreement and the other Loan Documents, unless
expressly set forth therein, shall be governed by, and construed and enforced in
accordance with, the law of the State of New York (including Section 5-1401 of
the General Obligations Law of the State of New York), without reference to the
conflicts or choice of law principles thereof that would require application of
another law (but giving effect to federal laws relating to national banks).

 

(b)         Submission to Jurisdiction.  Each of the Borrower and the other
Credit Parties irrevocably and unconditionally submits, for itself and its
property, to the exclusive jurisdiction of any court of the State of New York
sitting in New York, New York and of the United States District Court of the
Southern District of New York, and any appellate court from any thereof, in any
action, litigation or proceeding arising out of or relating to this Agreement or
any other Loan Document, or for recognition or enforcement of any judgment, and
each of the parties hereto irrevocably and unconditionally agrees that all
claims in respect of any such action, litigation or proceeding may be heard and
determined in such New York state court or, to the fullest extent permitted by
Applicable Law, in such Federal court.  Each of the parties hereto agrees that a
final judgment in any such action, litigation 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.

 

(c)         Waiver of Venue.  The Borrower and each other Credit Party
irrevocably and unconditionally waives, to the fullest extent permitted by
Applicable Law, any objection that it may now or hereafter have to the laying of
venue of any action, litigation or proceeding arising out of or relating to this
Agreement or any other Loan Document in any court referred to Section 14.5(b). 
Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by Applicable Law, the defense of an inconvenient forum to the
maintenance of such action, litigation or proceeding in any such court.

 

(d)         Service of Process.  Each party hereto irrevocably consents to
service of process in the manner provided for notices in Section 14.1.  Nothing
in this Agreement will affect the right of any party hereto to serve process in
any other manner permitted by Applicable Law.

 

Section 14.6          Waiver of Jury Trial.  EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT

 

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NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

 

Section 14.7          Reversal of Payments.  To the extent any Credit Party
makes a payment or payments to the Administrative Agent for the ratable benefit
of the Lenders or the Administrative Agent receives any payment or proceeds of
the Collateral which payments or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any Debtor
Relief Law or equitable cause, then, to the extent of such payment or proceeds
repaid, the Obligations or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if such payment or proceeds
had not been received by the Administrative Agent.

 

Section 14.8          Injunctive Relief; Punitive Damages.

 

(a)         Each of the Borrower and the other Credit Parties recognizes that,
in the event the Borrower or such other Credit Party fails to perform, observe
or discharge any of its obligations or liabilities under this Agreement, any
remedy of law may prove to be inadequate relief to the Lenders.  Therefore, each
of the Borrower and the other Credit Parties agrees that the Administrative
Agent and the Lenders, at the their option, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.

 

(b)         The Administrative Agent, the Lenders, the Borrower and the other
Credit Parties hereby agree that no such Person shall have a remedy of punitive
or exemplary damages against any other party to a Loan Document and each such
Person hereby waives any right or claim to punitive or exemplary damages that
they may now have or may arise in the future in connection with any dispute,
claim or controversy arising out of, connected with or relating to this
Agreement or any other Loan Document, between or among parties hereto and to the
other Loan Documents, whether such dispute, claim or controversy is resolved
through arbitration or judicially.

 

Section 14.9          Successors and Assigns; Participations.

 

(a)         Successors and Assigns Generally.  The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that neither the
Borrower nor any other Credit Party may assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of the
Administrative Agent and each Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an assignee in
accordance with the provisions of Section 14.9(b), (ii) by way of participation
in accordance with the provisions of Section 14.9(d) or (iii) by way of pledge
or assignment of a security interest subject to the restrictions of
Section 14.9(e) (and any other attempted assignment or transfer by any party
hereto shall be null and void).  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in Section 14.9(d) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

 

(b)         Assignments by Lenders.  Any Lender may at any time assign to one or
more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its

 

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Revolving Credit Commitment and the Loans at the time owing to it); provided
that, in each case with respect to any Credit Facility, any such assignment
shall be subject to the following conditions:

 

(i)            Minimum Amounts.

 

(A)          in the case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment and/or the Loans at the time owing to it (in each
case with respect to any Credit Facility) or in the case of an assignment to a
Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be
assigned; and

 

(B)          in any case not described in paragraph (i)(A) of this
Section 14.9(b), the aggregate amount of the Commitment (which for this purpose
includes Loans outstanding thereunder) or, if the applicable Commitment is not
then in effect, the principal outstanding balance of the Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date) shall not be less than $5,000,000, unless each
of the Administrative Agent and, so long as no Event of Default has occurred and
is continuing, the Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed); provided that the Borrower shall be deemed to
have given its consent five (5) Business Days after the date written notice
thereof has been delivered by the assigning Lender (through the Administrative
Agent) unless such consent is expressly refused by the Borrower prior to such
fifth (5th) Business Day;

 

(ii)           Proportionate Amounts.  Each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loan or the Commitment
assigned, except that this clause (ii) shall not prohibit any Lender from
assigning all or a portion of its rights and obligations among separate Classes
on a non-pro rata basis;

 

(iii)          Required Consents.  No consent shall be required for any
assignment except to the extent required by paragraph (i)(B) of this
Section 14.9(b) and, in addition:

 

(A)          the consent of the Borrower (such consent not to be unreasonably
withheld or delayed) shall be required unless (1) an Event of Default has
occurred and is continuing at the time of such assignment or (2) such assignment
is to a Lender, an Affiliate of a Lender or an Approved Fund; provided, that the
Borrower shall be deemed to have consented to any such assignment unless it
shall object thereto by written notice to the Administrative Agent within five
(5) Business Days after having received notice thereof;

 

(B)          the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required for assignments in respect
of (i) the Revolving Credit Facility if such assignment is to a Person that is
not a Lender with a Revolving Credit Commitment, an Affiliate of such Lender or
an Approved Fund with respect to such Lender or (ii) the Term Loans to a Person
who is not a Lender, an Affiliate of a Lender or an Approved Fund; and

 

(C)          the consents of the Issuing Lender and the Swingline Lender (such
consents not to be unreasonably withheld or delayed) shall be required for any
assignment in respect of the Revolving Credit Facility.

 

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(iv)          Assignment and Assumption.  The parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $3,500 for each assignment;
provided, that (A) only one such fee will be payable in connection with
simultaneous assignments to two or more related Approved Funds by a Lender and
(B) the Administrative Agent may, in its sole discretion, elect to waive such
processing and recording fee in the case of any assignment.  The assignee, if it
is not a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire.

 

(v)           No Assignment to Certain Persons.  No such assignment shall be
made to (A) the Borrower or any other Credit Party or any of the Borrower’s
Subsidiaries or Affiliates or (B) any Defaulting Lender or any of its
Subsidiaries or Affiliates or to any Person who, upon becoming a Lender
hereunder, would constitute any of the foregoing Persons described in this
clause (B).

 

(vi)          No Assignment to Natural Persons.  No such assignment shall be
made to a natural person.

 

(vii)         Certain Additional Payments.  In connection with any assignment of
rights and obligations of any Defaulting Lender hereunder, no such assignment
shall be effective unless and until, in addition to the other conditions thereto
set forth herein, the parties to the assignment shall make such additional
payments to the Administrative Agent in an aggregate amount sufficient, upon
distribution thereof as appropriate (which may be outright payment, purchases by
the assignee of participations or subparticipations, or other compensating
actions, including funding, with the consent of the Borrower and the
Administrative Agent, the applicable pro rata share of Loans previously
requested, but not funded by, the Defaulting Lender, to each of which the
applicable assignee and assignor hereby irrevocably consent), to (A) pay and
satisfy in full all payment liabilities which constitute a part of the
Obligations then owed by such Defaulting Lender to the Administrative Agent, the
Issuing Lender, the Swingline Lender and each other Lender hereunder (and
interest accrued thereon), and (B) acquire (and fund as appropriate) its full
pro rata share of all Loans and participations in Letters of Credit and
Swingline Loans in accordance with its Revolving Credit Commitment Percentage. 
Notwithstanding the foregoing, in the event that any assignment of rights and
obligations of any Defaulting Lender hereunder shall become effective under
Applicable Law without compliance with the provisions of this clause (vii), then
the assignee of such interest shall be deemed to be a Defaulting Lender for all
purposes of this Agreement until such compliance occurs.

 

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to Section 14.9(c), from and after the effective date specified in each
Assignment and Assumption, the assignee thereunder shall be a party to this
Agreement and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto) but shall continue to be entitled to
the benefits of Sections 5.9, 5.10, 5.11 and 14.3 with respect to facts and
circumstances occurring prior to the effective date of such assignment;
provided, that, except to the extent otherwise expressly agreed by the affected
parties, no assignment by a Defaulting Lender will constitute a waiver or
release of any claim of any party hereunder arising from that Lender’s having
been a Defaulting Lender.  Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (d) of
this section (other than a purported assignment to a natural Person or the
Borrower or any of the Borrower’s Affiliates or Subsidiaries, which shall be
null and void).

 

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(c)         Register.  The Administrative Agent, acting solely for this purpose
as a non-fiduciary agent of the Borrower, shall maintain at one of its offices
in the United States, a copy of each Assignment and Assumption delivered to it
and a register for the recordation of the names and addresses of the Lenders,
and the Commitment of, and principal amounts of (and stated interest on) the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”).  The entries in the Register shall be conclusive, absent manifest
error, and the Borrower, the Administrative Agent and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary.  The Register shall be available for inspection by the Borrower
and any Lender (but only to the extent of entries in the Register that are
applicable to such Lender), at any reasonable time and from time to time upon
reasonable prior notice.

 

(d)         Participations.  Any Lender may at any time, without the consent of,
or notice to, the Borrower or the Administrative Agent, sell participations to
any Person (other than a natural Person or the Borrower or any of the Borrower’s
Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such
Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans owing to it); provided that (i) such
Lender’s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Administrative
Agent, the Issuing Lender, the Swingline Lender and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement.  For the avoidance of
doubt, each Lender shall be responsible for the indemnity under
Section 14.3(c) with respect to any payments made by such Lender to its
Participant(s).

 

Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver or modification described in
Section 14.2 that directly affects such Participant and could not be affected by
a vote of the Required Lenders.  The Borrower agrees that each Participant shall
be entitled to the benefits of Sections 5.9, 5.10 and 5.11 (subject to the
requirements and limitations therein, including the requirements under
Section 5.11(g) (it being understood that the documentation required under
Section 5.11(g) shall be delivered to the participating Lender)) to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to Section 14.9(b); provided that such Participant (A) agrees to be
subject to the provisions of Section 5.12 as if it were an assignee under
Section 14.9(b); and (B) shall not be entitled to receive any greater payment
under Sections 5.10 or 5.11, with respect to any participation, than its
participating Lender would have been entitled to receive, except to the extent
such entitlement to receive a greater payment results from a Change in Law that
occurs after the Participant acquired the applicable participation.  Each Lender
that sells a participation agrees, at the Borrower’s request and expense, to use
reasonable efforts to cooperate with the Borrower to effectuate the provisions
of Section 5.12(b) with respect to any Participant.  To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 14.4 as
though it were a Lender; provided that such Participant agrees to be subject to
Section 5.6 as though it were a Lender.

 

Each Lender that sells a participation shall, acting solely for this purpose as
a non-fiduciary agent of the Borrower, maintain a register on which it enters
the name and address of each Participant and the principal amounts of (and
stated interest on) each Participant’s interest in the Loans or other
obligations under the Loan Documents (the “Participant Register”); provided that
no Lender shall have any obligation to disclose all or any portion of the
Participant Register (including the identity of any Participant or any
information relating to a Participant’s interest in any commitments, loans,
letters of credit or its other obligations under any Loan Document) to any
Person except to the extent that such disclosure is

 

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necessary to establish that such commitment, loan, letter of credit or other
obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations.  The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each Person whose
name is recorded in the Participant Register as the owner of such participation
for all purposes of this Agreement notwithstanding any notice to the contrary. 
For the avoidance of doubt, the Administrative Agent (in its capacity as
Administrative Agent) shall have no responsibility for maintaining a Participant
Register.

 

(e)         Certain Pledges.  Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including without limitation any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.

 

Section 14.10       Confidentiality.  Each of the Administrative Agent, the
Lenders and the Issuing Lender agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its Affiliates and to its and its Related Parties (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent required or requested by, or required to be
disclosed to, any rating agency, or regulatory or similar authority having
jurisdiction over such Person or its Related Parties (including any
self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by Applicable Laws or regulations or
by any subpoena or similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies under this Agreement or under any
other Loan Document (or any Specified Hedge Agreement or Specified Cash
Management Arrangement) or any action or proceeding relating to this Agreement
or any other Loan Document (or any Specified Hedge Agreement or Specified Cash
Management Arrangement) or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement, Participant or proposed Participant, or (ii) any actual or
prospective counterparty (or its Related Parties) to any swap or derivative
transaction relating to the Borrower and its obligations under this Agreement,
(g) on a confidential basis to (i) any rating agency in connection with rating
the Borrower or its Subsidiaries or the Credit Facility or (ii) the CUSIP
Service Bureau or any similar agency in connection with the issuance and
monitoring of CUSIP numbers with respect to the Credit Facility, (h) with the
consent of the Borrower, (i) to Gold Sheets and other similar bank trade
publications, such information to consist of deal terms and other information
customarily found in such publications, (j) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this
Section or (ii) becomes available to the Administrative Agent, any Lender, the
Issuing Lender or any of their respective Affiliates on a nonconfidential basis
from a source other than any Credit Party or its Subsidiaries or (k) to
governmental regulatory authorities in connection with any regulatory
examination of the Administrative Agent or any Lender or in accordance with the
Administrative Agent’s or any Lender’s regulatory compliance policy if the
Administrative Agent or such Lender deems necessary for the mitigation of claims
by those authorities against the Administrative Agent or such Lender or any of
its subsidiaries or affiliates.  For purposes of this Section, “Information”
means all information received from any Credit Party or any Subsidiary thereof
relating to any Credit Party or any Subsidiary thereof or any of their
respective businesses, other than any such information that is available to the
Administrative Agent, any Lender or the Issuing Lender on a nonconfidential
basis prior to disclosure by any Credit Party or any Subsidiary thereof;
provided that, in the case of information received from a Credit Party or any
Subsidiary thereof after the date hereof, such information is clearly identified
at the time of delivery as confidential.  Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the

 

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same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

 

Section 14.11       Performance of Duties.  Each of the Credit Party’s
obligations under this Agreement and each of the other Loan Documents shall be
performed by such Credit Party at its sole cost and expense.

 

Section 14.12       All Powers Coupled with Interest.  All powers of attorney
and other authorizations granted to the Administrative Agent, any Lender or any
Person designated by the Administrative Agent or any Lender pursuant to any
provisions of this Agreement or any of the other Loan Documents shall be deemed
coupled with an interest and shall be irrevocable so long as any of the
Obligations (other than (a) contingent indemnification obligations and
(b) Specified Obligations) remain unpaid or unsatisfied, the Revolving Credit
Commitment remains in effect or any Credit Facility has not been terminated.

 

Section 14.13       Survival.

 

(a)         All representations and warranties set forth in Article VII and all
representations and warranties contained in any certificate or any of the Loan
Documents (including, but not limited to, any such representation or warranty
made in or in connection with any amendment thereto) shall constitute
representations and warranties made under this Agreement.  Unless otherwise
expressly provided in this Agreement or the other applicable Loan Document(s),
all representations and warranties made under this Agreement shall be made or
deemed to be made at and as of the Closing Date and on each borrowing,
continuation, conversion, issuance or extension date hereunder, shall survive
the Closing Date and shall not be waived by the execution and delivery of this
Agreement, any investigation made by or on behalf of the Lenders or any
borrowing, continuation, conversion, issuance or extension hereunder.

 

(b)         Notwithstanding any termination of this Agreement, the indemnities
to which the Administrative Agent and the Lenders are entitled under the
provisions of this Article XIV and any other provision of this Agreement and the
other Loan Documents shall continue in full force and effect and shall protect
the Administrative Agent and the Lenders against events and circumstances
arising after such termination as well as before.

 

Section 14.14       Titles and Captions.  Titles and captions of Articles,
Sections and subsections in, and the table of contents of, this Agreement are
for convenience only, and neither limit nor amplify the provisions of this
Agreement.

 

Section 14.15       Severability of Provisions.  Any provision of this Agreement
or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.

 

Section 14.16       Counterparts; Integration; Effectiveness; Electronic
Execution.

 

(a)         Counterparts; Integration; Effectiveness.  This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract.  Delivery of an executed
signature page of this Agreement by facsimile or electronic transmission shall
be effective as delivery of a manually executed counterparty hereof.  This
Agreement and the other Loan Documents, and any separate letter agreements with
respect to fees payable to the Administrative Agent, the Issuing Lender,

 

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the Swingline Lender and/or the Arrangers, constitute the entire contract among
the parties relating to the subject matter hereof and supersede any and all
previous agreements and understandings, oral or written, relating to the subject
matter hereof.  In the event of any conflict between the provisions of this
Agreement and those of any other Loan Document, the provisions of this Agreement
shall control; provided that the inclusion of supplemental rights or remedies in
favor of the Administrative Agent or the Lenders in any other Loan Document
shall not be deemed a conflict with this Agreement.  Each Loan Document was
drafted with the joint participation of the respective parties thereto and shall
be construed neither against nor in favor of any party, but rather in accordance
with the fair meaning thereof.  Except as provided in Section 6.1, this
Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof that, when taken together, bear the signatures of each of
the other parties hereto.

 

(b)         Electronic Execution of Assignments.  The words “execution,”
“signed,” “signature,” and words of like import in any Assignment and Assumption
shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any Applicable Law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.

 

Section 14.17       Term of Agreement.  This Agreement shall remain in effect
from the Closing Date through and including the date upon which all Obligations
(other than (a) contingent indemnification obligations not then due and (b) the
Specified Obligations) arising hereunder or under any other Loan Document shall
have been indefeasibly and irrevocably paid and satisfied in full, all Letters
of Credit have been terminated or expired (or been Cash Collateralized) and the
Revolving Credit Commitment has been terminated.  No termination of this
Agreement shall affect the rights and obligations of the parties hereto arising
prior to such termination or in respect of any provision of this Agreement which
survives such termination.

 

Section 14.18       USA Patriot Act.  The Administrative Agent and each Lender
hereby notifies the Borrower that pursuant to the requirements of the Act, each
of them is required to obtain, verify and record information that identifies the
Borrower and Guarantors, which information includes the name and address of each
Borrower and Guarantor and other information that will allow such Lender to
identify such Borrower or Guarantor in accordance with the Act.

 

Section 14.19       Independent Effect of Covenants.  Each of the Borrower and
the other Credit Parties expressly acknowledges and agrees that each covenant
contained in Article VIII, IX, X or XI hereof shall be given independent
effect.  Accordingly, each of the Borrower and the other Credit Parties shall
not engage in any transaction or other act otherwise permitted under any
covenant contained in Article VIII, IX, X or XI if, before or after giving
effect to such transaction or act, the Borrower or such other Credit Party shall
or would be in breach of any other covenant contained in Article VIII, IX, X or
XI.

 

Section 14.20       Inconsistencies with Other Documents.  In the event there is
a conflict or inconsistency between this Agreement and any other Loan Document,
the terms of this Agreement shall control; provided that any provision of the
Security Documents which imposes additional burdens on the Borrower or any of
its Subsidiaries or further restricts the rights of the Borrower or any of its
Subsidiaries or gives the Administrative Agent or Lenders additional rights
shall not be deemed to be in conflict or inconsistent with this Agreement and
shall be given full force and effect.

 

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Section 14.21       Defaulting Lenders.

 

(a)         Defaulting Lender Adjustments.  Notwithstanding anything to the
contrary contained in this Agreement, if any Lender becomes a Defaulting Lender,
then, until such time as such Lender is no longer a Defaulting Lender, to the
extent permitted by Applicable Law:

 

(i)            Waivers and Amendments.  Such Defaulting Lender’s right to
approve or disapprove any amendment, waiver or consent with respect to this
Agreement shall be restricted as set forth in the definition of Required Lenders
and Section 14.2.

 

(ii)           Defaulting Lender Waterfall. Any payment of principal, interest,
fees or other amounts received by the Administrative Agent for the account of
such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Article XII or otherwise) or received by the Administrative Agent from a
Defaulting Lender pursuant to Section 12.4 shall be applied at such time or
times as may be determined by the Administrative Agent as follows: first, to the
payment of any amounts owing by such Defaulting Lender to the Administrative
Agent hereunder; second, to the payment on a pro rata basis of any amounts owing
by such Defaulting Lender to the Issuing Lender and the Swingline Lender
hereunder; third, to Cash Collateralize the Fronting Exposure of the Issuing
Lender and the Swingline Lender with respect to such Defaulting Lender in
accordance with Section 5.14; fourth, as the Borrower may request (so long as no
Default or Event of Default exists), to the funding of any Loan or funded
participation in respect of which such Defaulting Lender has failed to fund its
portion thereof as required by this Agreement, as determined by the
Administrative Agent; fifth, if so determined by the Administrative Agent and
the Borrower, to be held in a deposit account and released pro rata in order to
(A) satisfy such Defaulting Lender’s potential future funding obligations with
respect to Loans and funded participations under this Agreement and (B) Cash
Collateralize the Issuing Lender’s future Fronting Exposure with respect to such
Defaulting Lender with respect to future Letters of Credit and Swingline Loans
issued under this Agreement, in accordance with Section 5.14; sixth, to the
payment of any amounts owing to the Lenders, the Issuing Lender or the Swingline
Lender as a result of any judgment of a court of competent jurisdiction obtained
by any Lender, the Issuing Lender or the Swingline Lender against such
Defaulting Lender as a result of such Defaulting Lender’s breach of its
obligations under this Agreement; seventh, so long as no Default or Event of
Default exists, to the payment of any amounts owing to the Borrower as a result
of any judgment of a court of competent jurisdiction obtained by the Borrower
against such Defaulting Lender as a result of such Defaulting Lender’s breach of
its obligations under this Agreement; and eighth, to such Defaulting Lender or
as otherwise directed by a court of competent jurisdiction; provided that if
(1) such payment is a payment of the principal amount of any Loans or funded
participations in Letters of Credit or Swingline Loans in respect of which such
Defaulting Lender has not fully funded its appropriate share, and (2) such Loans
were made or the related Letters of Credit or Swingline Loans were issued at a
time when the conditions set forth in Section 6.2 were satisfied or waived, such
payment shall be applied solely to pay the Loans of, and funded participations
in Letters of Credit or Swingline Loans owed to, all Non-Defaulting Lenders on a
pro rata basis prior to being applied to the payment of any Loans of, or funded
participations in Letters of Credit or Swingline Loans owed to, such Defaulting
Lender until such time as all Loans and funded and unfunded participations in
L/C Obligations and Swingline Loans are held by the Lenders pro rata in
accordance with the Revolving Credit Commitments under the applicable Revolving
Credit Facility without giving effect to Section 14.21(a)(iv). Any payments,
prepayments or other amounts paid or payable to a Defaulting Lender that are
applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash
Collateral pursuant to this Section shall be deemed paid to and redirected by
such Defaulting Lender, and each Lender irrevocably consents hereto.

 

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(iii)          Certain Fees.

 

(A)          No Defaulting Lender shall be entitled to receive any Commitment
Fee for any period during which that Lender is a Defaulting Lender (and the
Borrower shall not be required to pay any such fee that otherwise would have
been required to have been paid to that Defaulting Lender).

 

(B)          Each Defaulting Lender shall be entitled to receive letter of
credit commissions pursuant to Section 3.3 for any period during which that
Lender is a Defaulting Lender only to the extent allocable to its Revolving
Credit Commitment Percentage of the stated amount of Letters of Credit for which
it has provided Cash Collateral pursuant to Section 5.14.

 

(C)          With respect to any Commitment Fee or letter of credit commission
not required to be paid to any Defaulting Lender pursuant to clause (A) or
(B) above, the Borrower shall (1) pay to each Non-Defaulting Lender that portion
of any such fee otherwise payable to such Defaulting Lender with respect to such
Defaulting Lender’s participation in L/C Obligations or Swingline Loans that has
been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below,
(2) pay to each Issuing Lender and Swingline Lender, as applicable, the amount
of any such fee otherwise payable to such Defaulting Lender to the extent
allocable to such Issuing Lender’s or Swingline Lender’s Fronting Exposure to
such Defaulting Lender, and (3) not be required to pay the remaining amount of
any such fee.

 

(iv)          Reallocation of Participations to Reduce Fronting Exposure.  All
or any part of such Defaulting Lender’s participation in L/C Obligations and
Swingline Loans shall be reallocated among the Non-Defaulting Lenders in
accordance with their respective Revolving Credit Commitment Percentages
(calculated without regard to such Defaulting Lender’s Revolving Credit
Commitment) but only to the extent that (x) the conditions set forth in
Section 6.2 are satisfied at the time of such reallocation (and, unless the
Borrower shall have otherwise notified the Administrative Agent at such time,
the Borrower shall be deemed to have represented and warranted that such
conditions are satisfied at such time), and (y) such reallocation does not cause
the aggregate Revolving Credit Exposure of any Non-Defaulting Lender to exceed
such Non-Defaulting Lender’s Revolving Credit Commitment.  No reallocation
hereunder shall constitute a waiver or release of any claim of any party
hereunder against a Defaulting Lender arising from that Lender having become a
Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of
such Non-Defaulting Lender’s increased exposure following such reallocation.

 

(v)           Cash Collateral, Repayment of Swingline Loans.  If the
reallocation described in clause (iv) above cannot, or can only partially, be
effected, the Borrower shall, without prejudice to any right or remedy available
to it hereunder or under law, (x) first, prepay Swingline Loans in an amount
equal to the Swingline Lender’s Fronting Exposure and (y) second, Cash
Collateralize the Issuing Lender’s Fronting Exposure in accordance with the
procedures set forth in Section 5.14.

 

(b)         Defaulting Lender Cure.  If the Borrower, the Administrative Agent,
the Issuing Lender and the Swingline Lender agree in writing that a Lender is no
longer a Defaulting Lender, the Administrative Agent will so notify the parties
hereto, whereupon as of the effective date specified in such notice and subject
to any conditions set forth therein (which may include arrangements with respect
to any Cash Collateral), such Lender will, to the extent applicable, purchase at
par that portion of outstanding Loans of the other Lenders or take such other
actions as the Administrative Agent may determine to be necessary to cause the
Loans and funded and unfunded participations in Letters of Credit

 

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and Swingline Loans to be held pro rata by the Lenders in accordance with the
Commitments under the applicable Credit Facility (without giving effect to
Section 14.21(a)(iv)), whereupon such Lender will cease to be a Defaulting
Lender; provided that no adjustments will be made retroactively with respect to
fees accrued or payments made by or on behalf of the Borrower while that Lender
was a Defaulting Lender; and provided, further, that except to the extent
otherwise expressly agreed by the affected parties, no change hereunder from
Defaulting Lender to Lender will constitute a waiver or release of any claim of
any party hereunder arising from that Lender’s having been a Defaulting Lender.

 

[Signature pages to follow]

 

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by its duly authorized officer(s) as of the day and year first written
above.

 

 

THE CREDIT PARTIES:

 

 

 

FOSSIL, INC.,

 

as the Borrower

 

 

 

By:

/s/ Randy S. Hyne

 

Name:

Randy S. Hyne

 

Title:

Vice President, General Counsel and Secretary

 

 

 

FOSSIL INTERMEDIATE, INC.,

 

as a Credit Party and a Subsidiary Guarantor

 

 

 

By:

/s/ Randy S. Hyne

 

Name:

Randy S. Hyne

 

Title:

Secretary

 

 

 

FOSSIL TRUST,

 

as a Credit Party and a Subsidiary Guarantor, and acting pursuant to the
Agreement and Contract of Trust of Fossil Trust dated August 31, 1994

 

 

 

By:

/s/ Randy S. Hyne

 

Name:

Randy S. Hyne

 

Title:

Secretary

 

 

 

FOSSIL PARTNERS, L.P.,

 

as a Credit Party and a Subsidiary Guarantor

 

 

 

By:

Fossil, Inc.

 

Title:

General Partner

 

 

 

By:

/s/ Randy S. Hyne

 

Name:

Randy S. Hyne

 

Title:

Vice President, General Counsel and Secretary

 

 

 

ARROW MERCHANDISING, INC.,

 

as a Credit Party

 

 

 

By:

/s/ Randy S. Hyne

 

Name:

Randy S. Hyne

 

Title:

Secretary

 

Fossil, Inc.

Credit Agreement

Signature Page

 

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FOSSIL STORES I, INC.,

 

as a Credit Party and a Subsidiary Guarantor

 

 

 

By:

/s/ Randy S. Hyne

 

Name:

Randy S. Hyne

 

Title:

Secretary

 

 

 

FOSSIL HOLDINGS, LLC,

 

as a Credit Party

 

 

 

By:

Dennis R. Secor

 

Name:

Dennis R. Secor

 

Title:

Manager

 

 

 

FOSSIL INTERNATIONAL HOLDINGS, INC.,

 

as a Credit Party and a Subsidiary Guarantor

 

 

 

By:

/s/ Randy S. Hyne

 

Name:

Randy S. Hyne

 

Title:

Secretary

 

Fossil, Inc.

Credit Agreement

Signature Page

 

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AGENT AND LENDERS:

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

As Administrative Agent, Swingline Lender, Issuing Lender and Lender

 

 

 

By:

/s/ Cynthia M. Giles

 

Name:

Cynthia M. Giles

 

Title:

Senior Vice President

 

 

 

BANK OF AMERICA, N.A.

 

 

 

By:

/s/ Allison W. Connally

 

Name:

Allison W. Connally

 

Title:

Senior Vice President

 

 

 

JPMORGAN CHASE BANK, N.A.

 

 

 

By:

/s/ Laura Woodward

 

Name:

Laura Woodward

 

Title:

Officer

 

 

 

FIFTH THIRD BANK

 

 

 

By:

/s/ Julia Harman

 

Name:

Julia Harman

 

Title:

Vice President

 

 

 

HSBC BANK USA, NATIONAL ASSOCIATION

 

 

 

By:

/s/ Brian Gingue

 

Name:

Brian Gingue

 

Title:

Vice President

 

 

 

CITIBANK, N.A.

 

 

 

By:

/s/ Nicholas Renna

 

Name:

Nicholas Renna

 

Title:

SVP

 

Fossil, Inc.

Credit Agreement

Signature Page

 

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COMPASS BANK

 

 

 

By:

/s/ Ramon Garcia

 

Name:

Ramon Garcia

 

Title:

Senior Vice President

 

 

 

BRANCH BANKING AND TRUST COMPANY

 

 

 

By:

/s/ Sarah Bryson

 

Name:

Sarah Bryson

 

Title:

Vice President

 

 

 

COMERICA BANK

 

 

 

By:

/s/ Vontoba Terry

 

Name:

Vontoba Terry

 

Title:

Comerica Bank

 

 

 

KEYBANK NATIONAL ASSOCIATION

 

 

 

By:

/s/ Shibani Faehnle

 

Name:

Shibani Faehnle

 

Title:

Vice President

 

 

 

ROYAL BANK OF CANADA

 

 

 

By:

/s/ Michael G. Wang

 

Name:

Michael G. Wang

 

Title:

Authorized Signatory

 

 

 

U.S. BANK NATIONAL ASSOCIATION

 

 

 

By:

/s/ Mark Rodgers

 

Name:

Mark Rodgers

 

Title:

Assistant Vice President

 

Fossil, Inc.

Credit Agreement

Signature Page

 

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