Exhibit 10.1

 

AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

 

AMONG

 

BANK HAPOALIM, B.M.
as Agent

 

THE FINANCIAL INSTITUTIONS PARTY HERETO,
as Lenders

 

XCEL BRANDS, INC.,
as Borrower

 

and

 

IM BRANDS, LLC,
JR LICENSING, LLC,
H LICENSING, LLC,
C WONDER LICENSING, LLC,
XCEL DESIGN GROUP, LLC,
IMNY RETAIL MANAGEMENT, LLC,
IMNY E-STORE, USA, LLC
as Guarantors

 

Dated: February 26, 2016

 

 

 

 

TABLE OF CONTENTS

 

      Page         1. DEFINITIONS 3   1.1 General Definitions 3   1.2 Accounting
Terms 24   1.3 Other Terms 24   1.4 Rules of Construction 24         2. LOANS 25
  2.1 Revolving Loans 25   2.2 Term Loan 26   2.3 Incremental Term Loans 26    
    3. REPAYMENT AND PREPAYMENTS 26   3.1 Intentionally Omitted 26   3.2
Repayment of Revolving Loan 27   3.3 Repayment of Term Loan 27   3.4 Repayment
of Incremental Term Loan 27   3.5 Timing and Type of Payment 27   3.6 Voluntary
Prepayments 27   3.7 Prepayment Events 27   3.8 Application of Payments 28   3.9
Taxes 29   3.10 Increased Costs and Reduction of Return 30   3.11 Certificates
of Lenders 31   3.12 Funding Losses 32         4. PROCEDURES 32   4.1 Procedure
for Revolving Loan 32   4.2 Conversion and Continuation Elections 33   4.3
Accounting of Loans 33   4.4 Payments by Lenders to Agent; Settlement 34        
5. INTEREST AND FEES 37   5.1 Interest and Fees 37         6. CONDITIONS
PRECEDENT 38   6.1 Conditions Precedent to the Effective Date 38   6.2
Conditions Precedent to each Loan 38         7. REPRESENTATIONS, WARRANTIES AND
COVENANTS 39   7.1 Corporate Existence; Compliance with Law 39   7.2 Names;
Organizational Information; Collateral Locations 39   7.3 Power; Authorization;
Enforceable Obligations 40   7.4 Financial Statements; Books and Records 40  
7.5 Material Adverse Change 40   7.6 Real Estate; Property 40

 

i

 

 

TABLE OF CONTENTS

 

      Page           7.7 Ventures, Subsidiaries and Affiliates; Outstanding
Equity Interests and Indebtedness 41   7.8 Government Regulation; Margin
Regulations 41   7.9 Taxes; Charges 41   7.10 Payment of Obligations 42   7.11
ERISA 42   7.12 Litigation 42   7.13 Intellectual Property 42   7.14 Full
Disclosure 43   7.15 Hazardous Materials 43   7.16 Insurance 43   7.17 Deposit
and Disbursement Accounts 43   7.18 Accounts 44   7.19 Conduct of Business 44  
7.20 Material Contracts 44   7.21 Further Assurances 44   7.22 Use of Proceeds
44   7.23 Financing Right of First Offer 45   7.24 Life Insurance 45   7.25
Subsidiaries 45         8. FINANCIAL REPORTS; FINANCIAL COVENANTS 45   8.1
Reports and Notices 45   8.2 Financial Covenants 46   8.3 Other Reports and
Information 46   8.4 Trademarks and License Agreements 46   8.5 Intentionally
Omitted 47   8.6 Bank Accounts 47         9. NEGATIVE COVENANTS 47         10.
SECURITY INTEREST 49   10.1 Grant of Security Interest 49   10.2 Agent’s Rights
51   10.3 Agent’s Appointment as Attorney-in-Fact 51   10.4 Grant of License to
Use Intellectual Property Collateral 52   10.5 Terminations; Amendments Not
Authorized 52   10.6 Inspections 52         11. TERM 52   11.1 Term of Agreement
52   11.2 Termination of Lien 53   11.3 Release of Lien 53         12. EVENTS OF
DEFAULT 53   12.1 Events of Default 53   12.2 Remedies 55

 

ii

 

 

TABLE OF CONTENTS

 

      Page           12.3 Waivers 56   12.4 Proceeds 57         13. AGENT 57  
13.1 Appointment and Duties 57   13.2 Binding Effect 58   13.3 Use of Discretion
58   13.4 Delegation of Rights and Duties 59   13.5 Reliance and Liability 59  
13.6 Agent Individually 61   13.7 Lender Credit Decision 61   13.8 Expenses;
Indemnities; Withholding 61   13.9 Resignation of Agent 62   13.10 Release of
Collateral or Guarantors 63         14. MISCELLANEOUS 64   14.1 No Waiver;
Cumulative Remedies 64   14.2 Amendments and Waivers 64   14.3 Expenses;
Indemnity 65   14.4 Borrowing Agency Provisions 66   14.5 Guaranty 67   14.6
Waivers 68   14.7 Benefit of Guaranty 68   14.8 Subordination of Subrogation 68
  14.9 Election of Remedies 68   14.10 Liability Cumulative 69   14.11 Waiver of
Subrogation 69   14.12 Assignments and Participations; Binding Effect 69   14.13
Set-off; Sharing of Payments. 72   14.14 Replacement of Lender 73   14.15
Creditor-Debtor Relationship 73   14.16 Actions in Concert 73   14.17
Descriptive Headings 74   14.18 Notices 74   14.19 Severability 74   14.20
Entire Agreement; Counterparts 74   14.21 SUBMISSION TO JURISDICTION 75   14.22
WAIVER OF TRIAL BY JURY, CERTAIN DAMAGES AND SETOFFS 75   14.23 GOVERNING LAW 75
  14.24 Reinstatement 75

 

iii

 

 

INDEX OF EXHIBITS AND SCHEDULES

 

Schedule I - Conditions Precedent Schedule II - Financial Covenants Schedule III
- Addresses for Notices Schedule IV - General Terms for Letters of Credit
Schedule V - Commitments       Exhibit A - Form of Revolving Loan Note Exhibit B
- Form of Term Loan Note Exhibit C - Form of Certificate of Compliance Exhibit D
- Form of Power of Attorney Exhibit E - Form of Quarterly Royalty Collections
Report Exhibit F - Form of Assignment Agreement Exhibit G - Form of LIBOR Notice
      Disclosure Schedule 7.2 - Names, Organizational Information and Collateral
Locations Disclosure Schedule 7.6 - Real Estate Disclosure Schedule 7.7 -
Ventures, Subsidiaries and Affiliates Disclosure Schedule 7.9 - Taxes Disclosure
Schedule 7.12 - Litigation Disclosure Schedule 7.13 - Intellectual Property
Disclosure Schedule 7.15 - Environmental Matters Disclosure Schedule 7.16 -
Insurance Disclosure Schedule 7.17 - Deposit and Disbursement Accounts
Disclosure Schedule 9(b) - Indebtedness Disclosure Schedule 9(e) - Permitted
Liens

 

iv

 

 

AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

 

This Amended and Restated Loan and Security Agreement is made as of February 26,
2016 by and among XCEL BRANDS, INC., a Delaware corporation (“Initial Borrower”
and together with each Person who hereafter becomes a Borrower, collectively,
“Borrowers”), each other Credit Party executing or becoming a party to this
Agreement, the financial institutions from time to time party to this Agreement
(collectively, “Lenders” and individually, each a “Lender”) and BANK HAPOALIM
B.M. (“BHI”) as collateral and administrative agent for Lenders (BHI in such
capacity “Agent”).

 

BACKGROUND

 

IM Brands and BHI are parties to a Line Letter Agreement dated as of July 31,
2013, as amended (the “IM Brands Line Letter”) pursuant to which BHI made a term
loan to IM Brands as evidenced by a Promissory Note dated July 31, 2013 in the
original principal amount of $13,000,000 made by IM Brands in favor of BHI (the
“IM Brands Term Loan”). To secure IM Brands’ obligations to BHI, IM Brands
executed and delivered to BHI a Security Agreement dated as of July 31, 2013, as
amended (the “IM Brands Security Agreement”) pursuant to which IM Brands granted
BHI a lien and security interest in substantially all of its assets. Borrower
guaranteed the payment and performance of IM Brands’ obligations to BHI pursuant
to a Guaranty dated July 31, 2013, as amended (the “Xcel/IM Brands Guaranty”).
The IM Brands Line Letter Agreement, the IM Brands Security Agreement and the
Xcel/IM Brands Guaranty are collectively referred to as the “Existing IM Brands
Loan Documents.”

 

JR Licensing and BHI are parties to a Line Letter Agreement dated as of April 1,
2014, as amended (the “JR Licensing Line Letter”) pursuant to which BHI made a
term loan to JR Licensing as evidenced by a Promissory Note dated April 1, 2014
in the original principal amount of $9,000,000 made by JR Licensing in favor of
BHI (the “JR Licensing Term Loan”). To secure JR Licensing’s obligations to BHI
, JR Licensing executed and delivered to BHI a Security Agreement dated as of
April 1, 2014, as amended (the “JR Licensing Security Agreement”) pursuant to
which JR Licensing granted BHI a lien and security interest in substantially all
of its assets. Borrower guaranteed the payment and performance of JR Licensing’s
obligations to BHI pursuant to a Guaranty dated April 1, 2014, as amended (the
“Xcel/JR Licensing Guaranty”). The JR Licensing Line Letter Agreement, the JR
Licensing Security Agreement and the Xcel/JR Licensing Guaranty are collectively
referred to as the “Existing JR Licensing Loan Documents.”

 

H Licensing and BHI are parties to a Line Letter Agreement dated as of December
22, 2014, as amended (the “H Licensing Line Letter”) pursuant to which BHI made
a term loan to H Licensing as evidenced by a Promissory Note dated December 22,
2014 in the original principal amount of $10,000,000 made by H Licensing in
favor of BHI (the “H Licensing Term Loan”). To secure H Licensing’s obligations
to BHI, H Licensing executed and delivered to BHI a Security Agreement dated as
of December 22, 2014, as amended (the “H Licensing Security Agreement”) pursuant
to which H Licensing granted BHI a lien and security interest in substantially
all of its assets. Borrower guaranteed the payment and performance of H
Licensing’s obligations to BHI pursuant to a Guaranty dated December 22, 2014,
as amended (the “Xcel/H Licensing Guaranty”). The H Licensing Line Letter
Agreement, the H Licensing Security Agreement and the Xcel/H Licensing Guaranty
are collectively referred to as the “Existing H Licensing Loan Documents.”

 

 

 

 

Each of IMNY Retail Management, LLC, a Delaware limited liability company, and
IMNY E-Store, USA, LLC, a Delaware limited liability company, guaranteed the
payment and performance of IM Brands’ obligations to BHI pursuant to a Guaranty
each dated April 30, 2014, as amended (the “Existing Guaranty Agreements”).

 

The Existing IM Brands Loan Documents, the Existing JR Licensing Loan Documents
and the Existing H Licensing Loan Documents are collectively referred to as the
“Existing Loan Documents.”

 

Borrowers, Credit Parties, BHI, the other Lenders party hereto and Agent have
agreed to amend and restate the Existing Loan Documents (other than the Xcel/IM
Brands Guaranty, the Excel/JR Licensing Guaranty and the Xcel/H Licensing
Guaranty (collectively, the “Terminated Guaranty Agreements”)) on the terms and
conditions set forth in this Agreement.

 

ARTICLE A
AMENDMENT AND RESTATEMENT

 

On the Effective Date, the Existing Loan Documents (other than the Terminated
Guaranty Agreements) shall be amended and restated in their entirety by this
Agreement and (a) all references to such Existing Loan Documents in any Loan
Document other than this Agreement (including in any amendment, waiver or
consent) shall be deemed to refer to such Existing Loan Documents as amended and
restated hereby and (b) all references to any section (or subsection) of such
Existing Loan Documents in any Loan Document (but not herein) shall be amended
to be, mutatis mutandis, references to the corresponding provisions of this
Agreement. This Agreement is not intended to constitute, and does not
constitute, a novation of the obligations and liabilities under such Existing
Loan Documents (including the Obligations) or to evidence payment of all or any
portion of such obligations and liabilities. On the Effective Date, the
Terminated Guaranty Agreements shall be terminated and of no further force and
effect.

 

On and after the Effective Date, (a) the Existing Loan Documents (other than the
Terminated Guaranty Agreements) shall be of no further force and effect except
to evidence (i) the incurrence of the “Obligations” under and as defined therein
and (ii) the representations and warranties made by any Credit Party prior to
the Effective Date and (b) the terms and conditions of this Agreement and rights
and remedies under the Loan Documents (other than the Terminated Guaranty
Agreements), shall apply to all Obligations incurred under the Existing Loan
Documents and the Notes issued thereunder.

 

Each Borrower and each Credit Party reaffirms the Liens granted pursuant to the
Existing Loan Documents and the Intellectual Property Security Agreements in
favor of BHI and confirms that such Liens are in favor of Agent for the benefit
of Secured Parties which Liens shall continue in full force and effect in favor
of Agent for the benefit of Secured Parties during the term of this Agreement
and any renewals or extensions thereof and shall continue to secure the
Obligations.

 

2

 

 

ARTICLE B
ASSUMPTION

 

Initial Borrower hereby assumes and agrees to pay, perform and be responsible
for and discharge or otherwise satisfy the IM Brands Term Loan, the JR Licensing
Term Loan and the H Licensing Term Loan.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
undertakings and terms and conditions contained herein, the parties hereto agree
as follows:

 

1.          DEFINITIONS

 

1.1           General Definitions. When used in this Agreement, the following
terms shall have the following meanings:

 

“Account Debtor” means any Person who is or may become obligated with respect
to, or on account of, an Account, Chattel Paper or General Intangibles
(including a Payment Intangible).

 

“Accounts” means all “accounts,” as such term is defined in the UCC, now owned
or hereafter acquired by any Person.

 

“Acquisition” means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person or of any business or a division
of a Person, (b) the acquisition of all or a portion of the Equity Interests of
any Person or (c) a merger or consolidation or other combination with another
Person.

 

“Acquisition Documentation” means with respect to an Acquisition (a) notice to
Agent of such Acquisition setting forth in reasonable detail the terms and
conditions of such Acquisition, pro forma financial statements of Initial
Borrower and its Included Subsidiaries after giving effect to the consummation
of such Acquisition and the incurrence or assumption of any Indebtedness in
connection therewith and to the extent available, a due diligence package with
respect to such Acquisition, in each case, prior to closing of such Acquisition;
(b) a certificate of a the Chief Executive Officer or Chief Financial Officer of
Borrowing Representative demonstrating on a pro forma basis, after giving effect
to the consummation of such Acquisition, compliance with the Financial Covenants
set forth on Schedule II calculated as of the last day of the most recent
completed Fiscal Quarter for which financial statements have been delivered; (c)
to the extent available, such other information agreements, instruments and
other documents as Agent may reasonably request; and (d) as soon as available,
executed counterparts of the respective agreements, documents or instruments
pursuant to which such Acquisition is to be consummated including any schedules
to such agreements, documents or instruments and all other material ancillary
agreements, instruments and documents to be executed or delivered in connection
therewith and, to the extent required under the related acquisition agreement,
all consents and approvals from applicable Governmental Authorities and other
Persons.

 

3

 

 

“Affiliate” means with respect to any Person (a) each other Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, five percent (5%) or more of the Equity Interests
having ordinary voting power for the election of directors of such Person;
(b) each other Person that controls, is controlled by or is under common control
with such Person or any Affiliate of such Person; or (c) each of such Person’s
officers, directors, joint venturers and partners. For the purpose of this
definition, “control” of a Person means the possession, directly or indirectly,
of the power to direct or cause the direction of its management or policies,
whether through the ownership of voting securities, by contract or otherwise.

 

“Agent” has the meaning given to such term in the preamble to this Agreement and
any successor administrative and collateral agent.

 

“Agent Report” has the meaning given to such term in Section 13.5(c).

 

“Aggregate Revolving Loan Commitment” means the combined Revolving Loan
Commitments of Lenders, which shall initially be in the amount of $0, as such
amount may be adjusted from time to time pursuant to this Agreement

 

“Aggregate Term Loan Commitment” means the combined Term Loan Commitments of
Lenders, which shall initially be in the amount of $27,875,000, as such amount
may be adjusted from time to time pursuant to this Agreement

 

“Agreement” means this Agreement including all appendices, exhibits or schedules
attached or otherwise identified thereto, restatements and modifications and
supplements thereto, and any appendices, exhibits or schedules to any of the
foregoing, each as in effect at the time such reference becomes operative;
provided, that except as specifically set forth in this Agreement, any reference
to the Disclosure Schedules to this Agreement shall be deemed a reference to the
Disclosure Schedules as in effect on the Effective Date or in a written
amendment thereto executed by Borrowers and Agent.

 

“Applicable Margin” means with respect to (a) Base Rate Loans, a percentage per
annum to be agreed to among Lenders and Borrowers and (b) with respect to LIBOR
Rate Loans, a percentage per annum to be agreed to among Lenders and Borrowers.

 

“Approved Fund” means, with respect to any Lender, any Person (other than a
natural Person) that (a) (i) 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 business or (ii) temporarily warehouses loans
for any Lender or any Person described in clause (i) above and (b) is advised or
managed by (i) such Lender, (ii) any Affiliate of such Lender or (iii) any
Person (other than an individual) or any Affiliate of any Person (other than an
individual) that administers or manages such Lender.

 

4

 

 

“Assignment Agreement” means an assignment agreement entered into by a Lender,
as assignor, and any Person, as assignee, pursuant to the terms and provisions
of Section 14.12 (with the consent of any party whose consent is required by
Section 15.14), accepted by Agent, substantially in the form of Exhibit F or any
other form approved by Agent.

 

“Bank Account” means a checking, NOW or money market account or any other
account on which a Borrower can draw checks with an office of Agent in the
United States.

 

“Banking Services” means each and any of the following bank services provided to
any Credit Party by any Lender or any of its Affiliates: (a) credit cards for
commercial customers (including “commercial credit cards” and purchasing cards),
(b) stored value cards, (c) merchant processing services, and (d) treasury
management services (including controlled disbursement, automated clearinghouse
transactions, return items, overdrafts and interstate depository network
services).

 

“Banking Services Obligations” means any and all obligations of any Credit
Party, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with Banking
Services.

 

“Base Rate” means the greater on any day of (a) Agent’s stated prime rate as
reflected in its books and records, as such prime rate may change from time to
time, or (b) 2.00% per annum plus the overnight federal funds rate published by
the Federal Reserve Bank of New York. Agent’s determination of its Base Rate
shall be conclusive and final; the Base Rate is a reference rate and is not
necessarily the lowest interest rate charged by Agent;

 

“Base Rate Loans” means those Loans bearing interest based upon the Base Rate.

 

“BHI” has the meaning given to such term in the preamble to this Agreement.

 

“Books and Records” means all books, records, board minutes, contracts,
licenses, insurance policies, environmental audits, business plans, files,
computer files, computer discs and other data and software storage and media
devices, accounting books and records, financial statements (actual and pro
forma), filings with Governmental Authorities and any and all records and
instruments relating to, or otherwise necessary or helpful in the collection of
or realization upon, the Collateral or any Borrower’s business.

 

“Borrower” has the meaning given to such term in the preamble to this Agreement.

 

“Borrowing Representative” means Initial Borrower.

 

“Business Day” means a day on which Agent is open for business and that is not a
Saturday, a Sunday or other New York State or federal holiday. When used in
connection with a LIBOR Rate Loan, the term “Business Day” shall also exclude
any English government holiday.

 

5

 

 

“Capital Adequacy Regulation” means any guideline, request or directive of any
central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any Lender or of any corporation controlling any Lender.

 

“Capital Expenditures” means all payments or accruals (including obligations
under capital leases) for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of more than one
year and that are required to be capitalized under GAAP.

 

“Cash Flow From Operations” means cash flow from operations of Initial Borrower
and Included Subsidiaries as determined in accordance with GAAP

 

“Cash Flow Recapture Requirement” has the meaning given to such term in Section
3.7

 

“Change of Control” means any event, transaction or occurrence as a result of
which Initial Borrower ceases to have the power, alone or in conjunction with
others, directly or indirectly, through voting securities, by contract or
otherwise, to direct or cause the direction of a Guarantor’s management and
policies.

 

“Change of Management” means Robert W. D’Loren shall no longer have the duties
of the Chairman of the Board of Directors of Initial Borrower.

 

“Charges” means all federal, state, county, city, municipal, local, foreign or
other governmental taxes (including taxes owed to PBGC at the time due and
payable), levies, customs or other duties, assessments, charges, liens, and all
additional charges, interest, penalties, expenses, claims or encumbrances upon
or relating to (a) the Collateral, (b) the Obligations, (c) the employees,
payroll, income or gross receipts of a Credit Party, (d) the ownership or use of
any assets by a Credit Party, or (e) any other aspect of a Credit Party’s
business.

 

“Chattel Paper” means all “chattel paper,” as such term is defined in the UCC,
now owned or hereafter acquired by any Person.

 

“Collateral” has the meaning given to such term in Section 10.1.

 

“Commitment” means, for each Lender, the sum of such Lender’s Revolving Loan
Commitment and Term Loan Commitment.

 

“Commitment Percentage” means, as to any Lender, the percentage equivalent of
such Lender’s Revolving Loan Commitment or Term Loan Commitment, divided by the
Aggregate Revolving Loan Commitment or Aggregate Term Loan Commitment, as
applicable; provided that after the Term Loans have been funded, Commitment
Percentages shall be determined for the Term Loans by reference to the
outstanding principal balances thereof as of any date of determination rather
than the Commitments therefor; provided, further, that following acceleration of
the Loans, such term means, as to any Lender, the percentage equivalent of the
principal amount of the Loans held by such Lender, divided by the aggregate
principal amount of the Loans held by all Lenders.

 

6

 

 

“Compliance Certificate” means a compliance certificate substantially in the
form of Exhibit C hereto.

 

“Contracts” means all the contracts, undertakings, or agreements (other than
rights evidenced by Chattel Paper, Documents or Instruments) in or under which
any Person may now or hereafter have any right, title or interest, including any
agreement relating to the terms of payment or the terms of performance of any
Account.

 

“Contractual Obligation” means as to any Person, any provision of any security
issued by such Person or of any agreement, instrument, or other undertaking to
which such Person is a party or by which it or any of its property is bound.

 

“Credit Parties” means each Borrower, each Guarantor and each other Person
(other than Agent and any Lender) that is or may become a party to this
Agreement or any other Loan Document.

 

“C Wonder” means C Wonder Licensing, LLC, a Delaware limited liability company.

 

“Default” means any act or event which, with the giving of notice or passage of
time or both, would unless cured or waived become an Event of Default.

 

“Default Rate” means the sum of (a) the Interest Rate in effect from time to
time as respects each Loan and (b) two percent (2.00%).

 

“Deposit Accounts” means all “deposit accounts” as such term is defined in the
UCC, now or hereafter held in the name of any Person.

 

“Determination Time” means 12:00 noon (or any later time determined by Agent in
its sole discretion), New York City time, of a Business Day that is three (3)
Business Days prior to the date of the applicable Loan.

 

“Disclosure Schedules” means the Disclosure Schedules prepared by Borrowers and
denominated as Disclosure Schedules 7.2 through 9(e) in the Index of Exhibits
and Schedules to this Agreement.

 

“Dollars”, “dollars” and “$” each mean the lawful money of the United States of
America.

 

“Documents” means all “documents,” as such term is defined in the UCC, now owned
or hereafter acquired by any Person, wherever located, including all bills of
lading, dock warrants, dock receipts, warehouse receipts, and other documents of
title, whether negotiable or non-negotiable.

 

7

 

 

“Early Termination Fee” means an amount equal to the principal amount
outstanding under the Term Loan on the date of prepayment and termination,
multiplied by: (i) two percent (2.00%) if the Term Loan or any Incremental Term
Loan (voluntarily by Borrowers, upon Default or otherwise) is prepaid on or
after the Effective Date and on or before the second anniversary of the
Effective Date; (ii) one percent (1.00%) if the Term Loan or any Incremental
Term Loan is prepaid (voluntarily by Borrowers, upon Default or otherwise) after
the second anniversary of the Effective Date and on or before the third
anniversary of the Effective Date; or (iii) zero percent (0.00%), if the Term
Loan or any Incremental Term Loan is prepaid (voluntarily by Borrowers, upon
Default or otherwise) after the third anniversary of the Effective Date.

 

“EBITDA” means, for the applicable period, for a Person, an amount equal to
(a) Net Income for Initial Borrower and the Included Subsidiaries on a
consolidated basis for such period, minus, (b) to the extent included in
calculating Net Income for Initial Borrower and the Included Subsidiaries on a
consolidated basis, the sum of, without duplication, (i) interest income
(whether cash or non-cash) for such period, (ii) income tax credits for such
period, (iii) gain from extraordinary or non-recurring items for such period
(including, without limitation, non-cash items related to purchase accounting)
and (iv) deferred compensation payments (regardless of when accrued), plus (c)
the following to the extent deducted in calculating such Net Income, (i) 
interest charges for such period, (ii) the provision for all federal, state,
local and foreign taxes payable for such period and the amount of payments
permitted pursuant to Section 9(h)(ii) deducted in calculating Net Income,
(iii) the amount of depreciation and amortization expense for such period, (iv)
the transaction fees, costs and expenses incurred in connection with the
negotiation and execution of this Agreement and the other Loan Documents and any
amendments thereto, (v) all other extraordinary or non-recurring non-cash
charges (including, without limitation, non-cash items related to purchase
accounting), (vi) deferred management salaries (accrued but not paid) and (vii)
all non-cash compensation (including without limitation, stock or equity
compensation) in such period

 

“Effective Date” means the Business Day on which the conditions precedent set
forth in Article VI have been satisfied or specifically waived in writing by
Agent.

 

“Environmental Laws” means all federal, state and local laws, statutes,
ordinances and regulations, now or hereafter in effect, and in each case as
amended or supplemented from time to time, and any applicable judicial or
administrative interpretation thereof relating to the regulation and protection
of human health, safety, the environment and natural resources (including
ambient air, surface water, groundwater, wetlands, land surface or subsurface
strata, wildlife, aquatic species and vegetation).

 

“Environmental Liabilities” means all liabilities, obligations,
responsibilities, remedial actions, removal costs, losses, damages of whatever
nature, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts and consultants and costs of investigation and
feasibility studies), fines, penalties, sanctions and interest incurred as a
result of any claim, suit, action or demand of whatever nature by any Person,
and which relate to any health or safety condition regulated under any
Environmental Law, environmental permits or in connection with any Release,
threatened Release, or the presence of a Hazardous Material.

 

“Equipment” means all “equipment” as such term is defined in the UCC, now owned
or hereafter acquired by any Person, wherever located.

 

8

 

 

“Equity Interests” means all certificated and uncertificated shares, options,
warrants, membership interests, general or limited partnership interests,
participation or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether
voting or nonvoting, including common Equity Interests, preferred Equity
Interests, or any other “equity security” (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934).

 

“Equity Interests Holder” means, as respects each Person, each holder of Equity
Interests of such Person.

 

“ERISA” means the Employee Retirement Income Security Act of 1974 (or any
successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.

 

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the IRC or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(b) of the IRC or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by any Credit Party of any liability under Title IV of
ERISA with respect to the termination of any Plan; (e) the receipt by any Credit
Party from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or to appoint a trustee to administer any Plan;
(f) the incurrence by any Credit Party of any liability with respect to any
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by any Credit Party of any notice, or the receipt by any Multiemployer
Plan from any Credit Party of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.

 

“Event of Default” has the meaning given to such term in Section 12.1.

 

“Excess Cash Flow” means (without duplication), for any fiscal period, Cash Flow
from Operations before any distributions permitted pursuant to Section 9(h)(iii)
for such period less (a) Capital Expenditures not made through the incurrence of
indebtedness less (b) all cash interest and principal (including indebtedness
owed to Lenders) paid or payable during such period less (c) all Taxes paid or
payable during such period less (d) all Pass Thru Distributions made during such
period.

 

“Excluded Equity Interests” means any (a) Equity Interests of Excluded
Subsidiaries and (b) an voting Equity Interests in excess of 65% of the
outstanding voting stock of any Foreign Subsidiary. For the purposes of this
definition, “voting Equity Interests” means, with respect to any issuer, the
issued and outstanding shares of each class of Equity Interegnsts of such issuer
entitled to vote (within the meaning of Treasury Regulations § 1.956-2(c)(2)).

 

9

 

 

“Excluded Subsidiary” means (a) a Subsidiary formed by a Credit Party after the
Effective Date solely to effectuate an Acquisition and such Acquisition has not
yet been consummated and (b) a Subsidiary formed or acquired by a Credit Party
after the Effective Date in connection with an Acquisition consummated with or
without Outside Financing (but not with the proceeds of a Loan).

 

“Excluded Tax” means: (a) Taxes measured by net income (including branch profit
Taxes) and franchise Taxes imposed in lieu of net income Taxes, in each case (i)
imposed on Agent, any Lender or LC Issuer as a result of being organized under
the laws of, or having its principal office or 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 to the extent that the obligation to
withhold amounts existed on the date that such Person became a Lender under this
Agreement, except to the extent that, pursuant to Section 3.9, amounts with
respect to such Taxes were payable to such Lender’s assignor immediately before
such Lender became a party hereto; (c) any United States federal withholding
Taxes imposed under FATCA; and (d) any United States federal withholding Taxes
attributable to a Lender’s failure to comply with Section 3.9(f).

 

“Existing Loan Documents” has the meaning given to such term in the Background
Section to this Agreement.

 

“FATCA” means Sections 1471, 1472, 1473 and 1474 of the IRC, as of the date of
this Agreement (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with), current or future
United States Treasury Regulations promulgated thereunder and published guidance
with respect thereto, and any agreements entered into pursuant to Section
1471(b)(1) of the IRC.

 

“Financial Statements” means income statement, balance sheet and statement of
cash flows of (a) Initial Borrower and the Included Subsidiaries, internally
prepared for each Fiscal Quarter, (b) Initial Borrower and its Subsidiaries,
internally prepared for each Fiscal Quarter and (c) Initial Borrower and its
Subsidiaries, audited each Fiscal Year, in each case prepared in accordance with
GAAP.

 

“Fiscal Month” means any of the monthly accounting periods of each Credit Party.

 

“Fiscal Quarter” means any of the quarterly accounting periods of each Credit
Party.

 

“Fiscal Year” means the 12 month period of each Credit Party ending on December
31 of each year. Subsequent changes of the Fiscal Year of each Credit Party
shall not change the term “Fiscal Year” unless Agent shall consent in writing to
such change.

 

“Fixed Charge Coverage Ratio” means for any period, as respects any Person, the
ratio of (a) EBITDA of such Person for such period plus Liquid Assets (not to
exceed $6,000,000) minus Capital Expenditures for such Person to (b) the Fixed
Charges for such period.

 

10

 

 

“Fixed Charges” means for any period, as respects any Person, the sum of (a) the
cash interest expense of such Person for such period, (b) the principal amount
of total debt of such Person having a scheduled due date during such period
other than any such amounts payable in Equity Interests, (c) all Pass Thru
Distributions and (d) all other cash distributions or dividends made by such
Person.

 

“Fixed Rate” means 5.1%.

 

“Fixed Rate Loan” means those Loans bearing interest based upon a Fixed Rate.

 

“Foreign Subsidiary” means, with respect to any Person, a Subsidiary of such
Person that is a “controlled foreign corporation” under Section 957 of the IRC.

 

“GAAP” means generally accepted accounting principles, practices and procedures
in effect from time to time in the United States of America.

 

“General Intangibles” means all “general intangibles” as such term is defined in
the UCC, now owned or hereafter acquired by any Person including all right,
title and interest which such Person may now or hereafter have in or under any
Contract, all Payment Intangibles, customer lists, Licenses, Intellectual
Property, interests in partnerships, joint ventures and other business
associations, permits, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information, procedures,
designs, knowledge, know-how, Software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials, Books and Records, Goodwill
(including the Goodwill associated with any Intellectual Property), all rights
and claims in or under insurance policies (including insurance for fire, damage,
loss, and casualty, whether covering personal property, real property, tangible
rights or intangible rights, all liability, life, key-person, and business
interruption insurance, and all unearned premiums), uncertificated securities,
choses in action, deposit accounts, rights to receive tax refunds and other
payments, rights to receive dividends, distributions, cash Instruments and other
property in respect of or in exchange for pledged Equity Interests and
Investment Property, and rights of indemnification.

 

“GMR” means guaranteed minimum royalties.

 

“Goods” means all “goods”, as such term is defined in the UCC, now owned or
hereafter acquired by any Person, wherever located, including embedded software
to the extent included in “goods” as defined in the UCC.

 

“Goodwill” means all goodwill, trade secrets, proprietary or confidential
information, technical information, procedures, formulae, quality control
standards, designs, operating and training manuals, customer lists, and
distribution agreements now owned or hereafter acquired by any Person.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, taxing, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

 

11

 

 

“Guaranteed Indebtedness” means, as to any Person, any obligation of such Person
guaranteeing any indebtedness, lease, dividend, or other obligation (“primary
obligations”) of any other Person (the “primary obligor”) in any manner,
including any obligation or arrangement of such guaranteeing Person (whether or
not contingent): (i) to purchase or repurchase any such primary obligation;
(ii) to advance or supply funds (a) for the purchase or payment of any such
primary obligation or (b) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor; (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation; or (iv) to indemnify the owner of such primary
obligation against loss in respect thereof.

 

“Guarantor” means IM Brands, JR Licensing, H. Licensing, C Wonder, Xcel Design,
IMNY Retail Management, LLC, IMNY E-Store, USA, LLC and each other Person which
guarantees or supports the Obligations of any Borrower to Lenders in connection
with the transactions contemplated by this Agreement.

 

“Guaranty” means any agreement to perform all or any portion of the Obligations
on behalf of any Borrower, in favor of, and in form and substance satisfactory
to Agent, together with all amendments, modifications and supplements thereto,
and shall refer to such Guaranty as the same may be in effect at the time such
reference becomes operative.

 

“Hazardous Material” means any substance, material or waste which is regulated
by or forms the basis of liability now or hereafter under, any Environmental
Laws, including any material or substance which is (a) defined as a “solid
waste,” “hazardous waste,” “hazardous material,” “hazardous substance,”
“extremely hazardous waste,” “restricted hazardous waste,” “pollutant,”
“contaminant,” “hazardous constituent,” “special waste,” “toxic substance” or
other similar term or phrase under any Environmental Laws, (b) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB’s), or
any radioactive substance.

 

“Hazardous Waste” has the meaning given to such term in the Resource
Conservation and Recovery Act (42 U.S.C. §§ 6901 et. seq.).

 

“H Licensing” means H Licensing, LLC, a Delaware limited liability company.

 

“IM Brands” means IM Brands, LLC, a Delaware limited liability company.

 

“Impacted Lender” means any Lender that fails to provide Agent, within three (3)
Business Days following Agent’s written requests, satisfactory assurance that
such Lender will not become a Non-Funding Lender.

 

“Included Subsidiary” means a Subsidiary of Initial Borrower that is a party to
this Agreement on the Effective Date or that becomes a party to this Agreement
after the Effective Date.

 

“Incremental Term Loan” has the meaning given to such term in Section 2.3.

 

12

 

 

“Incremental Term Loan Effective Date” has the meaning given to such term in
Section 2.3.

 

“Incremental Term Loan Maturity Date” shall mean the final maturity date of any
Incremental Term Loan, as set forth in the applicable Term Note.

 

“Indebtedness” of any Person means: (i) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services
(including reimbursement and all other obligations with respect to surety bonds,
letters of credit and bankers’ acceptances, whether or not matured, but not
including obligations to trade creditors incurred in the ordinary course of
business and not more than 90 days past due); (ii) all obligations evidenced by
notes, bonds, debentures or similar instruments; (iii) all indebtedness created
or arising under any conditional sale or other title retention agreements with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property); (iv) all obligations under capital
leases; (v) all Guaranteed Indebtedness; (vi) all Indebtedness referred to in
clauses (i), (ii), (iii), (iv) or (v) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in property (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness; and (vii) the Obligations.

 

“Indemnified Person” has the meaning given to such term in Section 14.3(b).

 

“Indemnified Tax” means (a) any Tax other than an Excluded Tax and (b) to the
extent not otherwise described in clause (a), Other Taxes.

 

“Initial Borrower” has the meaning given to such term in the preamble to this
Agreement.

 

“Instruments” means all “instruments”, as such term is defined in the UCC, now
owned or hereafter acquired by any Person, wherever located, including all
certificated securities and all notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.

 

“Intellectual Property” means any and all Licenses, patents, patent
registrations, copyrights, copyright registrations, trademarks, trademark
registrations, trade secrets, domain names, website addresses and customer
lists.

 

“Intellectual Property Security Agreement” means each Intellectual Property
Security Agreement made in favor of Agent by each applicable Credit Party.

 

“Intercreditor Agreement” means any intercreditor and subordination agreement
accepted by Agent from time to time with respect to Indebtedness of or Liens on
assets of any Credit Party.

 

13

 

 

“Interest Period” means any term of one (1) day, one (1) week, one (1) to six
(6), nine (9) or twelve (12) months or such other term as may be acceptable to
Agent in its discretion. Each Interest Period shall commence immediately at the
end of the preceding Interest Period, if any. If any Interest Period would
otherwise come to an end on a day that is not a Business Day, its termination
shall be postponed to the next day that is a Business Day unless it would
thereby terminate in the next calendar month. In such case, such Interest Period
shall terminate on the immediately preceding Business Day.

 

“Interest Rate” means with respect to (a) Revolving Loans that are LIBOR Rate
Loans, the sum of the LIBOR Rate plus the Applicable Margin for LIBOR Rate
Loans, (b) Revolving Loans that are Base Rate Loans, the sum of the Base Rate
plus the Applicable Margin for Base Rate Loans, (c) the Term Loan, the Fixed
Rate per annum and (d) each Incremental Term Loan, the interest rate set forth
in the related Term Note.

 

“Inventory” means all “inventory”, as such term is defined in the UCC, now or
hereafter owned or acquired by any Person, wherever located.

 

“Investment Property” means all “investment property”, as such term is defined
in the UCC, now owned or hereafter acquired by any Person, wherever located.

 

“IRC” and “IRS” means respectively, the Internal Revenue Code of 1986, as
amended, and the Internal Revenue Service, and any successors thereto.

 

“ISP” means the International Standby Practices, International Chamber of
Commerce Publication No. 590, as the same may be amended from time to time.

 

“JR Licensing” means JR Licensing, LLC, a Delaware limited liability company.

 

“LC Issuer” means Agent or other financial institution selected by Agent, in its
discretion, to issue Letters of Credit pursuant to this Agreement.

 

“Lender” has the meaning given to such term in the preamble to this Agreement.

 

“Letter of Credit” and “L/C” means a letter of credit issued by an LC Issuer at
the request of Borrowing Representative and on behalf of a Borrower containing
terms and conditions satisfactory to Agent, which letter of credit may either be
a commercial letter of credit or standby letter of credit.

 

“Letter of Credit Fee” has the meaning given to such term in Schedule IV.

 

“Letter of Credit Obligations” means all outstanding obligations (including all
duty, freight, taxes, costs, insurance and any other charges and expenses)
incurred by any Lender, whether direct or indirect, contingent or otherwise, due
or not due, in connection with the issuance or guarantee by LC Issuer or any
Lender of Letters of Credit all as further set forth in Schedule IV.

 

“Letter-of-Credit Rights” has the meaning given to “letter-of-credit rights” as
such term is defined in the UCC, now owned or hereafter acquired by any Person,
including rights to payment or performance under a letter of credit, whether or
not such Person, as beneficiary, has demanded or is at the time entitled to
demand payment or performance.

 

14

 

 

“LIBOR Rate” means for the applicable Interest Period, the rate per annum
(carried out to the fifth decimal) equal to the rate determined by Agent to be
the offered rate on a page or service (whether provided by Bridge Telerate,
Reuters, Bloomberg or any other service) that displays an average Interest
Settlement Rate as set by the ICE Benchmark Administration (ICE) (or the
successor thereto if the ICE is no longer making an Interest Settlement Rate
available) for deposits in Dollars (for delivery on the first (1st) Business Day
of such Interest Period) with a term equivalent to such Interest Period,
determined as of approximately 11:00 a.m. (London time) two (2) Business Days
prior to the first Business Day of such Interest Period. If Agent determines
that the rate referenced in the first sentence of this paragraph is not
available, then “LIBOR Rate” will mean, as applicable to any Interest Period,
the rate determined (a) on the basis of the offered rates for deposits in
Dollars with a term equivalent to such Interest Period, which are offered by
four major banks selected by Agent in the London interbank market at
approximately 11:00 a.m. London time, on the Business Day that is two (2)
Business Days prior to the first (1st) Business Day of such Interest Period; or
(b) by applying such other recognized source of London Eurocurrency deposit
rates as Lender may determine from time to time. If any Lender determines in its
sole discretion that the LIBOR Rate cannot be determined or does not represent
its effective cost of maintaining a Loan, then interest shall accrue at the
effective cost to such Lender to maintain the Loan (as determined by such Lender
in its sole discretion).

 

“LIBOR Rate Loans” means those Loans bearing interest based upon the LIBOR Rate.

 

“License” means any rights under any written agreement now or hereafter acquired
by any Person to use any trademark, trademark registration, copyright, copyright
registration or invention for which a patent is in existence or other license of
rights or interests now held or hereafter acquired by any Person.

 

“Lien” means any mortgage, security deed or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, security interest, charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever including any lease or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement under the UCC or comparable law of any
jurisdiction.

 

“Life Insurance Assignment” means an Assignment of Life Insurance Policy as
Collateral executed by the owner and the beneficiary thereof, in form and
substance satisfactory to Agent, granting Agent for the benefit of Secured
Parties a Lien on a Life Insurance Policy to secure payment of the Obligations.

 

“Life Insurance Policies” means collectively, the life insurance policies
maintained by Credit Parties upon the lives of Isaac Mizrahi in the amount of
$15,000,000, Judith Ripka in the amount of $15,000,000, Cameron Silver in the
amount of $10,000,000 and any other the spokespersons and key principals of each
Credit Party as agreed to between Agent and Borrowing Representative in amounts
to be agreed upon between Agent and Credit Parties.

 

15

 

 

“Liquid Assets” means (a) assets (which are unencumbered except as permitted
pursuant to the terms of the Loan Documents) in the form of cash and cash
equivalents consisting of certificates of deposit and money market funds issued
by a commercial bank having net assets of not less than $500,000,000 less (b)
the amount of any Liens thereon and any unsatisfied judgment, writ, order of
attachment, levy or garnishment entered or issued against Initial Borrower or
any of the Included Subsidiaries.

 

“Litigation” means any claim, lawsuit, litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority.

 

“Loan Documents” means this Agreement, each Note, each Guaranty, each Power of
Attorney, each Intellectual Property Security Agreement, the Pledge Agreement,
each Life Insurance Assignment, all documents, instruments and agreements
relating to Letters of Credit and all other documents, instruments and
agreements now or hereafter executed and/or delivered in connection herewith or
therewith.

 

“Loans” means the Revolving Loan, Term Loan and all other extensions of credit
hereunder or under any Loan Document.

 

“Margin Stock” has the meaning given to such term in Section 7.8.

 

“Master License Agreement” means the Master License Agreement between H
Licensing and The H Company IP, LLC dated December 22, 2014.

 

“Material Adverse Effect” means a material adverse effect on (a) the condition,
operations, assets or business of Credit Parties taken as a whole, (b) Credit
Parties taken as whole ability to pay or perform the Obligations in accordance
with the terms hereof or any Loan Document, (c) the value of the Collateral, the
Liens on the Collateral or the priority of any such Lien or (d) the practical
realization of the benefits of Agent’s and Lenders’ rights and remedies under
this Agreement and the Loan Documents.

 

“Material Contract” means any (a) QVC Agreement, (b) any Revenue License or (c)
any other contract to which any Credit Party is a party, in each case the
breach, nonperformance or cancellation of which could reasonably be expected to
have a Material Adverse Effect.

 

“Maximum Legal Rate” has the meaning given to such term in Section 5.1(a)(iv).

 

“Maximum Revolving Amount” means an amount equal to an amount agreed upon among
Borrowers and Lenders.

 

“Minimum Actionable Amount” means $750,000.

 

“Multiemployer Plan” means a “multiemployer plan,” as defined in Section 4001(a)
(3) of ERISA, to which any Credit Party is making, is obligated to make, has
made or been obligated to make, contributions on behalf of participants who are
or were employed by any of them.

 

16

 

 

“Net Income” means, for the applicable period, for Initial Borrower and the
Included Subsidiaries on a consolidated basis, the net income (or loss) after
taxes for such period determined in accordance with GAAP, but excluding (a) any
net income of minority-owned Subsidiaries (except to the extent of net income
distributed or representing a management fee or other similar fee), (c)
unrealized gains or losses due solely to fluctuations in currency values, (d)
earnings (or losses) resulting from my revaluation or write-up or write-down of
assets and (e) unrealized gains or losses under all interest rate or currency
forwards, options, swaps, caps or collar agreements, foreign exchange
agreements, commodity contracts or similar arrangements entered into by Initial
Borrower or any Included Subsidiary providing for protection against
fluctuations in interest rates, currency exchange rates, commodity prices, or
the exchange of nominal interest obligations, either generally or under specific
contingencies.

 

“Net Worth” means as at any date of determination an amount equal to (a) all of
the assets of Initial Borrower and the Included Subsidiaries on a consolidated
basis that, in accordance with GAAP, are properly classified as assets on such
date minus (b) all liabilities of Initial Borrower and the Included Subsidiaries
on a consolidated basis that, in accordance with GAAP, are properly classified
as liabilities at such date plus (c) the amount of depreciation and amortization
expenses and write downs of general intangibles commencing with the Fiscal
Quarter most recently preceding the Effective Date and ending on such date of
determination.

 

“Non-Funding Lender” means any Lender that has (a) failed to fund any payments
required to be made by it under the Loan Documents within two (2) Business Days
after any such payment is due (excluding expense and similar reimbursements that
are subject to good faith disputes), (b) given written notice (and Agent has not
received a revocation in writing), to a Borrower, Borrowing Representative,
Agent, any Lender, or LC Issuer or has otherwise publicly announced (and Agent
has not received notice of a public retraction) that such Lender believes it
will fail to fund payments or purchases of participations required to be funded
by it under the Loan Documents or one or more other syndicated credit
facilities, (c) failed to fund, and not cured, loans, participations, advances,
or reimbursement obligations under one or more other syndicated credit
facilities, unless subject to a good faith dispute, or (d) (i) become subject to
a voluntary or involuntary case under the Bankruptcy Code or any similar
bankruptcy laws, (ii) a custodian, conservator, receiver or similar official
appointed for it or any substantial part of such Person’s assets, or (iii) made
a general assignment for the benefit of creditors, been liquidated, or otherwise
been adjudicated as, or determined by any Governmental Authority having
regulatory authority over such Person or its assets to be, insolvent or
bankrupt, and for this clause (d), Agent has determined that such Lender is
reasonably likely to fail to fund any payments required to be made by it under
the Loan Documents.

 

“Notes” means the collective reference to the Revolving Loan Notes and the Term
Notes.

 

17

 

 

“Obligations” means the Banking Services Obligations, all Loans, all advances,
debts, liabilities, obligations, covenants and duties owing by any Credit Party
to Agent or any Lender of every kind and description (whether or not evidenced
by any note or other instrument and whether or not for the payment of money or
the performance or non-performance of any act), direct or indirect, absolute or
contingent, due or to become due, contractual or tortious, liquidated or
unliquidated, whether existing by operation of law or otherwise now existing or
hereafter arising under this Agreement or any other Loan Document, including all
interest (including interest accruing at the then applicable rate provided in
this Agreement after the maturity of the Loans and interest accruing at the then
applicable rate provided in this Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), charges or any other payments any Credit Party is
required to make by law or otherwise arising under or as a result of this
Agreement or any other Loan Document.

 

“OFAC” means the Office of Foreign Assets Control of the United States
Department of the Treasury.

 

“Other Connection Taxes” means Taxes imposed as a result of a present or former
connection between Agent, any Lender or LC Issuer and the jurisdiction imposing
such Tax, other than any such connection arising solely from Agent, such Lender
or LC Issuer having executed, delivered, become a party to, performed its
obligations or received a payment under, received or perfected as 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 Lender” has the meaning given to such term in Section 4.4.

 

“Other Taxes” has the meaning given to such term in Section 3.9.

 

“Outside Financing” means financing obtained by an Excluded Subsidiary from a
Person other than Lenders provided that Borrowers have complied with Section
7.23 of this Agreement.

 

“Participant Register” has the meaning given to such term in Section 14.12(g).

 

“Pass Thru Distributions” mean dividends declared and paid by a Credit Party to
its Equity Interests Holders, or which could have been declared and paid by a
Credit Party, in an amount not to exceed the Pass Thru Tax Liabilities.

 

“Pass Thru Tax Liabilities” means the amount of state and federal income tax
paid or to be paid by a Credit Party’s Equity Interest Holders on taxable income
earned by such Credit Party and attributable to the Equity Interest Holders as a
result of such Credit Party’s status as a disregarded entity for tax purposes,
assuming the highest marginal income tax rate for federal and state (for the
state or states in which any Equity Interest Holder is liable for income taxes
with respect to such income) income tax purposes, after taking into account any
deduction for state income taxes in calculating the federal income tax liability
and all other deductions, credits, deferrals and other reductions available to
Equity Interest Holders from or through a Credit Party.

 

“Payment Intangible” has the meaning give to the term “payment intangible” in
the UCC and in any event shall include, a General Intangible under which the
Account Debtor’s principal obligation is a monetary obligation.

 

18

 

 

“Payment Office” means 1177 Avenue of the Americans, New York, New York 10036 or
such other place as Agent may from time to time designate in writing.

 

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

 

“Permitted Acquisition” means any Acquisition by (a) a Credit Party of
Intellectual Property assets of a Target or (b) a Credit Party of more than 50%
of the Equity Interests of a Target organized under the laws of any State in the
United States causing such Target to become a Subsidiary of such Credit Party,
in each case, to the extent (i) not hostile and approved by the board of
directors (or similar body) and/or the Equity Interest Holders of the Target and
(ii) that each of the following conditions shall have been satisfied: (A) Agent
shall have received the Acquisition Documentation relating thereto; and (B) no
Default or Event of Default shall then exist or would exist after giving effect
thereto; and (iv) Agent and Required Lenders shall have approved such
Acquisition and any new Subsidiary has satisfied the requirements of Section
7.25.

 

“Permitted Liens” means the following Liens: (a) Liens for Charges, either not
yet due and payable or to the extent that nonpayment thereof is permitted by the
terms of Section 7.10; (b) pledges or deposits securing obligations under
worker’s compensation, unemployment insurance, social security or public
liability laws or similar legislation; (c) pledges or deposits securing bids,
tenders, contracts (other than contracts for the payment of money), leases to
which any Credit Party is a party as lessee, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred or made in the
ordinary course of business; (d) deposits securing public or statutory
obligations of any Credit Party; (e) inchoate and unperfected workers’,
mechanics’, or similar liens arising in the ordinary course of business so long
as such Liens attach only to Equipment, fixtures or real estate; (f) carriers’,
warehousemen’s, suppliers’ or other similar possessory liens arising in the
ordinary course of business and securing indebtedness not yet due and payable;
(g) deposits of money securing, or in lieu of, surety, appeal or customs bonds
in proceedings to which any Credit Party is a party; (h) Purchase Money Liens
securing Purchase Money Indebtedness (or rent) to the extent permitted under
this Agreement; (i) Liens in existence on the Effective Date as disclosed on
Disclosure Schedule 9(e) provided that no such Lien is spread to cover
additional property after the Effective Date and the amount of Indebtedness
secured thereby is not increased; (j) the interests of non-exclusive licensees
under license agreement entered into in the ordinary course of business;
(k) Liens in favor of Agent for the benefit of Secured Parties securing the
Obligations; and (l) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that do not materially
interfere with the ordinary conduct of the business of Credit Parties.

 

“Person” means any individual, sole proprietorship, partnership, limited
liability partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, public benefit
corporation, entity or government (whether federal, state, county, city,
municipal or otherwise, including any instrumentality, division, agency, body or
department thereof), and shall include such Person’s successors and assigns.

 

19

 

 

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title III of ERISA or Section 412 of the IRC or
Section 302 of ERISA, and in respect of which a Credit Party is (or, if such
plan were terminated, would under Section 4069 of ERISA be deemed to be) an
“employer” as defined in Section 3(5) of ERISA.

 

“Proceeds” means “proceeds”, as such term is defined in the UCC and, in any
event, shall include: (a) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to any Credit Party or any other Person from time
to time with respect to any Collateral; (b) any and all payments (in any form
whatsoever) made or due and payable to a Credit Party from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of any Collateral by any governmental body, governmental authority,
bureau or agency (or any person acting under color of governmental authority);
(c) any claim of a Credit Party against third parties (i) for past, present or
future infringement of any Intellectual Property or (ii) for past, present or
future infringement or dilution of any trademark or trademark license or for
injury to the goodwill associated with any trademark, trademark registration or
trademark licensed under any trademark License; (d) any recoveries by a Credit
Party against third parties with respect to any litigation or dispute concerning
any Collateral, including claims arising out of the loss or nonconformity of,
interference with the use of, defects in, or infringement of rights in, or
damage to, Collateral; (e) all amounts collected on, or distributed on account
of, other Collateral, including dividends, interest, distributions and
Instruments with respect to Investment Property and pledged Equity Interests;
and (f) any and all other amounts , rights to payment or other property acquired
upon the sale, lease, license, exchange or other disposition of Collateral and
all rights arising out of Collateral.

 

“Purchase Money Indebtedness” means (a) any Indebtedness incurred for the
payment of all or any part of the purchase price of any fixed asset, (b) any
Indebtedness incurred for the sole purpose of financing or refinancing all or
any part of the purchase price of any fixed asset, and (c) any renewals,
extensions or refinancings thereof (but not any increases in the principal
amounts thereof outstanding at that time).

 

“Purchase Money Lien” means any Lien upon any fixed assets which secures the
Purchase Money Indebtedness related thereto but only if such Lien shall at all
times be confined solely to the asset the purchase price of which was financed
or refinanced through the incurrence of the Purchase Money Indebtedness secured
by such Lien and only if such Lien secures only such Purchase Money
Indebtedness.

 

“Quarterly Royalty Collections Report” means a report substantially in the form
of Exhibit E hereto.

 

“QVC Agreements” means collectively, (a) the Second Amended and Restated
Agreement and Consent to Assignment dated as of September 28, 2011 among QVC,
Inc., IM Brands, Initial Borrower and Isaac Mizrahi, (b) the License Agreement
dated as of April 1, 2014 among QVC, Inc., JR Licensing, Initial Borrower,
Judith Ripka Berk and Beth Vogel, (c) the License Agreement dated as of December
22, 2014 among QVC, Inc., H Licensing and Initial Borrower, (d) the Licensing
Agreement dated as of July 31, 2015 among QVC, Inc., C Wonder and Initial
Borrower and (e) any other agreement between a Credit Party (other than the
Initial Borrower relating to a transaction with an Excluded Subsidiary) and QVC,
Inc. which is a Revenue License, in each case as amended to the Effective Date
and as further amended, supplemented, restated or otherwise modified from time
to time.

 

20

 

 

“Real Property” has the meaning given to such term in Section 7.6.

 

“Release” means, as to any Person, any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials in the indoor or outdoor environment by such
Person, including the movement of Hazardous Materials through or in the air,
soil, surface water, ground water or property.

 

“Register” has the meaning assigned to such term in Section 4.3(b).

 

“Related Person” means with respect to any Person, each Affiliate of such Person
and each director, officer, employee, agent, trustee, representative, attorney,
accountant and each advisor and other consultants of such Person.

 

“Replacement Lender” has the meaning assigned to such term in Section 14.14.

 

“Required Lenders” means at any time (a) Lenders then holding more than fifty
percent (50%) of the sum of the Aggregate Revolving Loan Commitment then in
effect plus the aggregate unpaid principal balance of the Term Loans then
outstanding, or (b) if the Aggregate Revolving Loan Commitments have terminated,
Lenders then holding more than fifty percent (50%) of the sum of the aggregate
unpaid principal amount of Loans then outstanding and outstanding Letter of
Credit Obligations.

 

“Required Revolving Lenders” means at any time (a) Lenders then holding more
than fifty percent (50%) of the sum of the Aggregate Revolving Loan Commitments
then in effect, or (b) if the Aggregate Revolving Loan Commitments have
terminated, Lenders then holding more than fifty percent (50%) of the sum of the
aggregate outstanding amount of Revolving Loans and outstanding Letter of Credit
Obligations.

 

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

 

“Restricted Payment” means: (a) the declaration or payment of any dividend or
the incurrence of any liability to make any other payment or distribution of
cash or other property or assets on or in respect of Credit Party’s Equity
Interests; (b) any payment or distribution made in respect of any Subordinated
Debt of any Credit Party in violation of any subordination or other agreement
made in favor of Lenders; (c) any payment on account of the purchase,
redemption, defeasance or other retirement of any Credit Party’s Equity
Interests or Indebtedness or any other payment or distribution made in respect
of any thereof, either directly or indirectly; or (d) any payment, loan,
contribution, or other transfer of funds or other property to any Equity
Interests Holder of such Person which is not expressly and specifically
permitted in this Agreement; provided, that no payment to Agent or any Lender
shall constitute a Restricted Payment.

 

21

 

 

“Revenue License” means each License pursuant to which a Credit Party is
entitled to receive revenue from the licensee party thereto.

 

“Revolving Lender” means each Lender with a Revolving Loan Commitment (or if the
Revolving Loan Commitments have terminated, who hold Revolving Loans or
participations in Letter of Credit Obligations).

 

“Revolving Loan” shall have the meaning given to such term in Section 2.1(a).

 

“Revolving Loan Availability Period” means the period starting on a date agreed
to between Borrowers and Revolving Lenders and ending on the Revolving Loan
Maturity Date, subject to earlier termination after the occurrence of an Event
of Default.

 

“Revolving Loan Commitment” means, with respect to each Lender, the amount set
forth opposite such Lender’s name in Schedule V under the heading “Revolving
Loan Commitment” as the same may be adjusted from time to time in accordance
with the terms of this Agreement.

 

“Revolving Loan Maturity Date” means the date agreed to between Borrowers and
Revolving Lenders as the Revolving Loan Maturity Date.

 

“Revolving Loan Note” means each promissory note executed by a Borrower
substantially in the form of Exhibit A.

 

“Sanctioned Country” means, at any time, a country or territory which is the
subject or target of any Sanctions.

 

“Sanctioned Person” means, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by the OFAC or the U.S.
Department of State, (b) any Person operating, organized or resident in a
Sanctioned Country or (c) any Person controlled by any such Person.

 

“Sanctions” means economic or financial sanctions or trade embargoes imposed,
administered or enforced from time to time by the U.S. government, including
those administered by the OFAC or the U.S. Department of State.

 

“Secured Parties” means Agent, each Lender, LC Issuer and each other holder of
an Obligation.

 

“Settlement Date” has the meaning given to such term in Section 4.4(b).

 

“Software” means all “software” as such term is defined in the UCC, including
all computer programs and all supporting information provided in connection with
a transaction related to any program.

 

“SPV” means any special purpose funding vehicle identified as such in writing by
any Lender to Agent.

 

22

 

 

“Subordinated Debt” means any note, document, instrument or agreement now or any
time hereafter executed and/or delivered by any Credit Party with or in favor of
any Subordinated Lender which evidences the principal, interest and other
amounts owed by a Credit Party to such Subordinated Lender.

 

“Subordinated Lender” means any Person who enters into a Subordination Agreement
with Agent with respect to amounts owed by any Credit Party to such Person.

 

“Subordination Agreement” means all subordination agreements accepted by Agent
from time to time with respect to Subordinated Debt of any Credit Party.

 

“Subsidiary” means, with respect to any Person, (i) any corporation of which an
aggregate of more than 50% of the outstanding Equity Interests having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Equity Interests of any other class or
classes of such corporation has or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Equity Interests whether by proxy,
agreement, operation of law or otherwise, and (ii) any partnership or limited
liability company in which such Person or one or more Subsidiaries of such
Person has an equity interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or manager or may exercise the powers of a general partner or
manager.

 

“Supporting Obligations” means all “supporting obligations” as such term is
defined in the UCC, including Letter-of-Credit Rights or secondary obligations
that supports the payment or performance of Accounts, Chattel Paper, Documents,
General Intangibles, Instruments, or Investment Property.

 

“Target” means any Person or business unit or asset group of any Person which is
in the business of owning and licensing Intellectual Property acquired or
proposed to be acquired in an Acquisition.

 

“Taxes” shall have the meaning given to such term in Section 3.9.

 

“Term” means with respect to (a) the Term Loan, the Effective Date through the
Term Loan Maturity Date, (b) each Incremental Term Loan, the effective date of
such Incremental Term Loan through the applicable Incremental Term Loan Maturity
Date and (c) the Revolving Loan and Letters of Credit, the Revolving Loan
Availability Period, in each case, subject to acceleration upon the occurrence
of an Event of Default hereunder or other termination hereunder.

 

“Term Loan” means the loan in the amount specified in Section 2.2 and any
renewals, extensions, revisions, modifications or replacements thereof.

 

“Term Loan Commitment” means the amount set forth opposite such Lender’s name in
Schedule V under the heading “Term Loan Commitment” as the same may be adjusted
from time to time in accordance with this Agreement.

 

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“Term Loan Maturity Date” means January 1, 2021.

 

“Term Note” means each promissory note of a Borrowers substantially in the form
of Exhibit B.

 

“Termination Date” means the date on which all Obligations under this Agreement
are indefeasibly paid in full, in cash, and no Borrower shall have any further
right to borrow any moneys or obtain other Loans or financial accommodations
under this Agreement.

 

“UCC” means the Uniform Commercial Code as the same may, from time be in effect
in the State of New York; provided, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Agent’s Lien on any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term “UCC” means the Uniform Commercial Code as
in effect in such other jurisdiction for purposes of the provisions of this
Agreement relating to such attachment, perfection, priority or remedies and for
purposes of definitions related to such provisions.

 

“Unused Line Fee Percentage” means 0%.

 

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title III of ERISA.

 

“Xcel Design” means Xcel Design Group, LLC, a Delaware limited liability
company.

 

1.2           Accounting Terms. Any accounting terms used in this Agreement
which are not specifically defined shall have the meanings customarily given
them in accordance with GAAP and all financial computations shall be computed,
unless specifically provided herein, in accordance with GAAP consistently
applied.

 

1.3           Other Terms. All other terms used in this Agreement and defined in
the UCC, shall have the meaning given therein unless otherwise defined herein;
provided that to the extent that UCC is used to define any term herein or in any
Loan Document and such term is defined differently in different Articles or
Divisions of the UCC, the definition of such term contained in Article or
Division 9 shall govern

 

1.4           Rules of Construction. All Schedules, Addenda and Exhibits hereto
or expressly identified to this Agreement are incorporated herein by reference
and taken together with this Agreement constitute but a single agreement. The
words “herein”, hereof” and “hereunder” or other words of similar import refer
to this Agreement as a whole, including the Exhibits and Schedules thereto, as
the same may be from time to time amended, modified, restated or supplemented,
and not to any particular section, subsection or clause contained in this
Agreement. Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter. The term “or” is not exclusive. The term
“including” (or any form thereof) shall not be limiting or exclusive. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references in this
Agreement or in the Schedules to this Agreement to sections, schedules,
disclosure schedules, exhibits, and attachments shall refer to the corresponding
sections, schedules, disclosure schedules, exhibits, and attachments of or to
this Agreement. All references to any instruments or agreements, including
references to any of this Agreement or any of the other Loan Documents shall
include any and all modifications or amendments thereto and any and all
extensions or renewals thereof.

 

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2.          LOANS

 

2.1           Revolving Loans.

 

(a)          Subject to the terms and conditions set forth herein and in the
Loan Documents, each Lender with a Revolving Loan Commitment, severally and not
jointly, shall make Revolving Loan (each, a “Revolving Loan”) to Borrowers
solely to consummate a Permitted Acquisition from time to time during the
Revolving Loan Availability Period which, in the aggregate at any time
outstanding, together with all outstanding Letter of Credit Obligations, will
not exceed such Revolving Lender’s Commitment Percentage of the Maximum
Revolving Amount.

 

(b)          The Revolving Loan made by each Lender with a Revolving Loan
Commitment will be evidenced by a Revolving Loan Note in an amount equal to such
Lender’s Revolving Loan Commitment and this Agreement. Such Revolving Loan Note
shall be executed by each Borrower prior to the making of the initial Revolving
Loan.

 

(c)          If any Borrower does not pay any interest, fees, costs or charges
to Agent when due, Borrowers shall thereby be deemed to have requested, and
Agent is hereby authorized at its discretion to make a Revolving Loan as of such
date in an amount equal to such unpaid interest, fees, costs or charges.

 

(d)          If any Credit Party at any time fails to perform or observe any of
the covenants contained in this Agreement or any other Loan Document, Agent may,
but need not, perform or observe such covenant on behalf and in the name, place
and stead of such Credit Party (or, at Agent’s option, in Agent’s name) and may,
but need not, take any and all other actions which Agent may deem necessary to
cure or correct such failure (including the payment of taxes, the satisfaction
of Liens, the performance of obligations owed to Account Debtors, lessors or
other obligors, the procurement and maintenance of insurance, the execution of
assignments, security agreements and financing statements, and the endorsement
of instruments). The amount of all monies expended and all reasonable costs and
expenses (including reasonable attorneys’ fees and legal expenses) incurred by
Agent in connection with or as a result of the performance or observance of such
agreements or the taking of such action by Agent shall be deemed to be a
Revolving Loan and added to the Obligations. To facilitate Agent’s performance
or observance of such covenants of Credit Parties, each Credit Party hereby
irrevocably appoints Agent, or Agent’s delegate, acting alone, as such Credit
Party’s attorney in fact (which appointment is coupled with an interest) with
the right (but not the duty) from time to time to create, prepare, complete,
execute, deliver, endorse or file in the name and on behalf of such Credit Party
any and all instruments, documents, assignments, security agreements, financing
statements, applications for insurance and other agreements and writings
required to be obtained, executed delivered or endorsed by such Credit Party.

 

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(e)          During Revolving Loan Availability Period, each Borrower may
borrow, prepay and reborrow Revolving Loan, all in accordance with the terms and
conditions hereof.

 

(f)          Notwithstanding anything to the contrary contained in this
Agreement, LC Issuer shall have no obligation to issue any Letter of Credit or
incur Letter of Credit Obligations. In the event that LC Issuer does issue any
Letter of Credit or incur Letter of Credit Obligations, such issuance or
incurrence would be subject to the terms and conditions of this Agreement,
including Schedule IV.

 

2.2           Term Loan. The outstanding principal amount of Existing Term Loans
of $27,875,000 shall be held by each Lender with a Term Loan Commitment in an
amount equal to such Lender’s Commitment Percentage of the Term Loan Commitment.
The Term Loan of each Lender with a Term Loan Commitment shall be evidenced by,
and repayable in accordance with the terms of the Term Note payable to such
Lender in an amount equal to the Term Loan Commitment held by each Lender and
this Agreement. Any principal amount repaid in respect of the Term Loan may not
be reborrowed.

 

2.3           Incremental Term Loans.

 

(a)          Borrowing Representative may, by written notice to Agent from time
to time, request that the outstanding principal amount of Revolving Loans be
converted to a term loan (each an “Incremental Term Loan”). Such notice shall
set forth (i) the amount of the Incremental Term Loan being requested (which
shall be in minimum increments of $1,000,000 and a minimum amount of $5,000,000,
(ii) the date on which such Incremental Term Loan is requested to become
effective (which shall not be less than ten (10) Business Days nor more than
sixty (60) days after the date of such notice) (the “Incremental Term Loan
Effective Date”), and (iii) the proposed Incremental Term Loan Maturity Date,
which maturity date cannot be later than the Term Loan Maturity Date, and
amortization schedule of such Incremental Term Loan.

 

(b)          Each Revolving Lender will be deemed to have made an Incremental
Term Loan to Borrowers equal to its Commitment Percentage of the requested
Incremental Term Loan by converting the equivalent amount of the Revolving Loans
into an Incremental Term Loan. Notwithstanding the foregoing, no Incremental
Term Loan shall become effective unless (i) on the date of such effectiveness,
the conditions set forth in Section 6.2 shall be satisfied and Agent shall have
received a certificate to that effect dated such date and executed by the Chief
Financial Officer or Chief Executive Officer Borrowing Representative. Each
Incremental Term Loan shall be evidenced by a Term Note payable to each Lender
that converts a Revolving Loan to an Interim Term Loan in an amount equal to
such Incremental Term Loan and having an amortization schedule as set forth in
the request for such Incremental Term Loan.

 

3.          REPAYMENT AND PREPAYMENTS

 

3.1           Intentionally Omitted.

 

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3.2           Repayment of Revolving Loan. Borrowers shall be required to make a
mandatory repayment hereunder at any time that the aggregate outstanding
principal balance of the Revolving Loan made by Lenders to Borrowers hereunder
is in excess of the Maximum Revolving Amount, in an amount equal to such excess.
The Revolving Loan outstanding shall be due and payable on the Revolving Loan
Maturity Date.

 

3.3           Repayment of Term Loan. The Term Loan and all accrued and unpaid
interest thereon shall be repaid in accordance with the applicable Term Note.

 

3.4           Repayment of Incremental Term Loan. Each Incremental Term Loan and
all accrued and unpaid interest thereon shall be repaid in accordance with the
Term Note delivered in connection with such Incremental Term Loan.

 

3.5           Timing and Type of Payment. Any payments of principal, interest,
fees or any other amounts payable hereunder or under any Loan Document shall be
made prior to 12:00 noon (New York time) on the due date thereof in immediately
available funds. The payment of any amounts due under this Agreement or any
other Loan Document shall be made in Dollars.

 

3.6           Voluntary Prepayments

. Borrowing Representative shall have the right, at any time upon thirty (30)
day’s prior written notice to Agent to (a) terminate voluntarily Borrowers’
right to receive or benefit from, and Revolving Lenders’ obligation to make and
to incur, Revolving Loans and Letter of Credit Obligations, (b) repay all
outstanding Revolving Loans, Letter of Credit Obligations and accrued and unpaid
interest thereon or (b) cause Borrowers to prepay all or a portion of the Term
Loan or Incremental Term Loan, provided that any prepayment of less than all of
the outstanding balance of the Term Loan or Incremental Term Loan shall be
applied to the remaining installments of the Term Loan or Incremental Term Loan
in the inverse order of their maturity. If the Term Loan or any Incremental Term
Loan is prepaid on or prior to the third anniversary of the Effective Date
(including as a result of the occurrence of an Event of Default), Borrowers
shall pay to such Lenders the applicable Early Termination Fee. Each Borrower
acknowledges and agrees that (i) it would be difficult or impractical to
calculate Lenders’ actual damages from early repayment of the Term Loan or
Incremental Term Loan, (ii) the Early Termination Fee is intended to be fair and
reasonable approximations of such damages, and (iii) the Early Termination Fee
is not intended to be a penalty.

 

3.7           Prepayment Events.

 

(a)          If for any Fiscal Year commencing with the fiscal year ending on
December 31, 2017, there shall be Excess Cash Flow for such Fiscal Year,
Borrowers shall pay to Agent for the benefit of Lenders holding a portion of the
Term Loan an amount equal to ten percent (10%) of such Excess Cash Flow (the
“Cash Flow Recapture Requirement”), to be applied to the principal amount of the
Term Loan in the reverse order of maturity. The Cash Flow Recapture Requirement
for any such Fiscal Year shall be received by Agent no later than the date that
is seven (7) days after the delivery of the Financial Statements for such Fiscal
Year required pursuant to Section 8.1(b). The Cash Flow Recapture requirement
shall be applied to the unpaid principal balance of the Term Loan, and after the
Term Loan has been paid in full, to the outstanding principal balance of the
Incremental Term Loans pro rata with any balance going to pay the outstanding
principal balance of the Revolving Loan. Borrowers shall not be required to pay
an Early Termination Fee on any amount repaid due to the Cash Flow Recapture
Requirement. To the extent applicable, amounts prepaid shall be applied first to
any Base Rate Loans then outstanding and then to outstanding LIBOR Rate Loans
with the shortest Interest Periods remaining. Together with each prepayment of a
LIBOR Rate Loan or a Fixed Rate Loan, Borrowers shall pay any amounts due and
payable pursuant to Section 3.12.

 

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(b)          Agent shall have the right, at the cost and expense of Borrowers,
to require the appraisal by an independent appraisal firm acceptable to Agent of
the trademarks of the Included Subsidiaries (i) to the extent that any appraisal
previously prepared for the benefit of Agent or Lenders is three (3) or more
years old, (ii) at any time following the write down of a material amount of the
value of any of trademarks of the Included Subsidiaries taken as a whole and
(iii) if Agent in its reasonable discretion believes that the value of the
trademarks of the Included Subsidiaries taken has a whole has been impaired in a
material respect. If the amount of the Loans exceeds fifty percent (50%) of the
appraised value of the trademarks of the Included Subsidiaries taken as a whole,
Agent shall have the right to require that Borrowers reduce the amount of the
Loans by such excess.

 

3.8           Application of Payments. During the continuance of an Event of
Default, Agent may, and, upon the direction of Required Lenders, shall apply any
and all payments received by Agent in respect of any Obligation in accordance
with clauses first through sixth below. Notwithstanding any provision herein to
the contrary, all payments made by Credit Parties to Agent after any or all of
the Obligations have been accelerated (so long as such acceleration has not been
rescinded), including proceeds of Collateral, shall be applied as follows:

 

first, to payment of costs and expenses, including attorney fees and expenses,
of Agent payable or reimbursable by the Credit Parties under the Loan Documents;

 

second, to payment of costs and expenses of Lenders payable or reimbursable by
Borrowers under this Agreement;

 

third, to payment of all accrued unpaid interest on the Obligations and fees
owed to Agent, Lenders and LC Issuers;

 

fourth, to payment of principal of the Obligations including, without
limitation, Letter of Credit Obligations then due and payable and cash
collateralization of unmatured Letter of Credit Obligations to the extent not
then due and payable);

 

fifth, to payment of any other amounts owing constituting Obligations; and

 

sixth, any remainder shall be for the account of and paid to whoever may be
lawfully entitled thereto.

 

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In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to the application to the next
succeeding category and (ii) each of Lenders or other Persons entitled to
payment shall receive an amount equal to its pro rata share of amounts available
to be applied pursuant to clauses third, fourth and fifth above.

 

3.9           Taxes.

 

(a)          Except as required by a Requirement of Law, each payment by any
Credit Party under any Loan Document shall be made free and clear of 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, additions to tax, penalties or
other liabilities) with respect thereto (collectively, “Taxes”) other than
Excluded Taxes.

 

(b)          If any Taxes shall be required by any Requirement of Law to be
deducted from or in respect of any amount payable under any Loan Document to
Agent, any Lender or LC Issuer (i) if such Tax is an Indemnified Tax, such
amount payable shall be increased as necessary to ensure that, after all
required deductions for Indemnified Taxes are made (including deductions
applicable to any increases to any amount under this Section 3.9), Agent, such
Lender or LC Issuer receive the amount Agent, such Lender or LC Issuer would
have received had no such deductions been made, (ii) the relevant Credit Party
shall make such deductions, (iii) the relevant Credit Party shall timely pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable Requirements of Law and (iv) within thirty (30) days after such
payment is made, the relevant Credit Party shall deliver to Agent an original or
certified copy of a receipt evidencing such payment or other evidence of payment
reasonably satisfactory to Agent.

 

(c)          In addition, the relevant Credit Party shall timely pay to the
relevant Governmental Authority in accordance with the applicable Requirement of
Law, or at the option of Agent timely reimburse it for the payment of, any
stamp, court, documentary, intangible, recording, filing or similar Taxes
imposed by any applicable Requirement of Law or Governmental Authority and all
liabilities with respect thereto (including by reason of any delay in payment
thereof), in each case arising from the execution, delivery or registration of,
or otherwise with respect to, any Loan Document or any transaction contemplated
therein (collectively, “Other Taxes”).

 

(d)          Borrowers shall reimburse and indemnify, within thirty (30) days
after receipt of demand therefor, Agent, Lenders and LC Issuer for all
Indemnified Taxes (including any Indemnified Taxes imposed by any jurisdiction
on amounts payable under this Section 3.9) paid or payable by Agent, any Lender
or LC Issuer and any liabilities arising therefrom or with respect thereto,
whether or not such Indemnified Taxes were correctly or legally asserted.

 

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(e)          If Agent, any Lender or LC Issuer 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 3.9 (including
additional amounts paid pursuant to this Section 3.9), it shall pay to the
Borrowing Representative an amount equal to such refund (but only to the extent
of indemnity payments made under this Section 3.9 with respect to the Taxes
giving rise to such refund), without interest (other than any interest paid by
the relevant Governmental Authority with respect to such refund).
Notwithstanding anything to the contrary in this Section 3.9(e), in no event
will Agent, any Lender or LC Issuer be required to pay any amount to Borrowing
Representative pursuant to this Section 3.9(e) if such payment would place
Agent, any Lender or LC Issuer in a less favorable position (on a net after-Tax
basis) than Agent, any Lender or LC Issuer would have been in if the
indemnification payments or additional amounts giving rise to such refund had
never been paid. This Section 3.9(e) shall not be construed to require Agent,
any Lender or LC Issuer to make available its Tax returns (or any other
information relating to its Taxes which it deems confidential) to the Borrowing
Representative or any other Person.

 

(f)          Each Lender that is a “United States person” as defined under
Section 7701(a)(30) of the IRC shall deliver to Agent and the Borrowing
Representative on or prior to the date such Lender becomes a Lender under this
Agreement (and from time to time thereafter upon the reasonable request of the
Agent or Borrowing Representative) two properly completed and executed IRS Forms
W-9 (or applicable successor form) to establish that such Lender is not subject
to United States federal backup withholding tax. Each Lender that is not a
“United States person” (as so defined) shall, to the extent it is legally
entitled to do so, deliver to Agent and the Borrowing Representative on or prior
to the date such Lender becomes a Lender under this Agreement (and from time to
time thereafter upon the reasonable request of the Agent or Borrowing
Representative) two properly completed and executed IRS Forms W-8BEN, W-8BEN-E,
W-8ECI, or W-8IMY, as applicable, and in each case together with a portfolio
interest exemption certificate, if applicable, and such other information
reasonably requested by Agent or Borrowing Representative to establish that such
Lender is entitled to an exemption from or a reduced rate of United States
federal withholding Tax with respect to payments made to such Lender under this
Agreement or any other Loan Document.

 

3.10         Increased Costs and Reduction of Return.

 

(a)          If any Lender or LC Issuer shall determine that, due to either
(i) the introduction of, or any change in, or in the interpretation of, any
Requirement of Law or (ii) the compliance with any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of
law), in the case of either clause (i) or (ii) subsequent to the date hereof,
(x) there shall be any increase in the cost to such Lender or LC Issuer of
agreeing to make or making, funding or maintaining any Loans or of issuing or
maintaining any Letter of Credit or (y) such Lender or LC Issuer shall be
subject to any Taxes (other than (A) Indemnified Taxes and (B) Excluded Taxes)
on its loans, loan principal, letters of credit, commitments, or other
obligations, or its deposits, reserves, other liabilities or capital
attributable thereto, then Borrowers shall be liable for, and shall from time to
time, within thirty (30) days of demand therefor by such Lender or LC Issuer
(with a copy of such demand to Agent), pay to such Lender or LC Issuer, as
applicable, additional amounts as are sufficient to compensate such Lender or LC
Issuer, as applicable for such increased costs or such Taxes; provided, that
Borrowers shall not be required to compensate any Lender or LC Issuer pursuant
to this Section 3.10(a) for any increased costs or Taxes incurred more than 180
days prior to the date that such Lender or LC Issuer notifies the Borrowing
Representative, in writing of the increased costs and of such Lender’s or LC
Issuer’s intention to claim compensation thereof; provided, further, that if the
circumstance giving rise to such increased costs is retroactive, then the
180-day period referred to above shall be extended to include the period of
retroactive effect thereof.

 

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(b)          If any Lender or LC Issuer shall have determined that:

 

(i)          the introduction of any Capital Adequacy Regulation;

 

(ii)         any change in any Capital Adequacy Regulation;

 

(iii)        any change in the interpretation or administration of any Capital
Adequacy Regulation by any central bank or other Governmental Authority charged
with the interpretation or administration thereof; or

 

(iv)        compliance by such Lender or LC Issuer or any entity controlling
such Lender or LC Issuer, with any Capital Adequacy Regulation;

 

affects the amount of capital required or expected to be maintained by such
Lender or LC Issuer or any entity controlling such Lender or LC Issuer and
(taking into consideration such Lender’s or such entities’ policies with respect
to capital adequacy and such Lender’s or LC Issuer’s desired return on capital)
determines that the amount of such capital is increased as a consequence of its
loans, credits or obligations under this Agreement, then, within thirty (30)
days of demand of such Lender or LC Issuer (with a copy to Agent), Borrowers
shall pay to such Lender or LC Issuer, as applicable, from time to time as
specified by such Lender or LC Issuer, additional amounts sufficient to
compensate such Lender or LC Issuer (or the entity controlling such Lender or LC
Issuer) for such increase; provided, that Borrowers shall not be required to
compensate such Lender or LC Issuer pursuant to this Section 3.10(b) for any
amounts incurred more than 180 days prior to the date that such Lender or LC
Issuer notifies the Borrowing Representative, in writing of the amounts and of
such Lender’s or LC Issuer’s intention to claim compensation thereof; provided,
further, that if the event giving rise to such increase is retroactive, then the
180-day period referred to above shall be extended to include the period of
retroactive effect thereof.

 

(c)          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 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 of America or foreign
regulatory authorities, in each case in respect of this clause (ii) pursuant to
Basel III, shall, in each case, be deemed to be a change in a Requirement of Law
under this Section 3.10 and/or a change in Capital Adequacy Regulation under
this Section 3.10, as applicable, regardless of the date enacted, adopted or
issued.

 

3.11         Certificates of Lenders. The applicable Lender or LC Issuer shall
deliver to the Borrowing Representative a certificate setting forth in
reasonable detail the amount payable to such Lender under Sections 3.9 and 3.10
and such certificate shall be conclusive and binding on the Credit Parties in
the absence of manifest error.

 

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3.12         Funding Losses. Borrowers agree to reimburse each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of: (a) the failure of Borrowers to borrow, continue
or convert a LIBOR Rate Loan or a Fixed Rate Loan after the Borrowing
Representative has given (or is deemed to have given) a notice of borrowing of a
LIBOR Rate Loan or a Fixed Rate Loan or a notice of conversion of a Base Rate
Loan to a LIBOR Rate Loan or continuation of a LIBOR Rate Loan; (b) the
prepayment of a Fixed Rate Loan other than on the due date thereof or a LIBOR
Rate Loan on a day which is not the last day of the Interest Period with respect
thereto; or (c) the conversion of any LIBOR Rate Loan to a Base Rate Loan on a
day that is not the last day of the applicable Interest Period; including any
such loss or expense arising from the liquidation or reemployment of funds
obtained by it to maintain its LIBOR Rate Loans or Fixed Rate Loans hereunder or
from fees payable to terminate the deposits from which such funds were obtained.
Solely for purposes of calculating amounts payable by Borrowers to the Lenders
under this Section 3.12: each LIBOR Rate Loan made by a Lender (and each related
reserve, special deposit or similar requirement) shall be conclusively deemed to
have been funded at the LIBOR Rate used in determining the interest rate for
such LIBOR Rate Loan by a matching deposit or other borrowing in the interbank
Eurodollar market for a comparable amount and for a comparable period, whether
or not such LIBOR Rate Loan is in fact so funded.

 

4.          PROCEDURES

 

4.1           Procedure for Revolving Loan. Borrowing Representative on behalf
of each Borrower may by written notice request a borrowing of Revolving Loan
prior to 11:00 a.m. (New York time) on the date which is two (2) Business Days
prior to the Business Day of the requested borrowing of a Revolving Loan. All
Revolving Loan shall be disbursed from whichever office or other place Agent may
designate from time to time and, together with any and all other Obligations of
Borrowers to Secured Parties, shall be charged to Borrowers’ account on Agent’s
books. The proceeds of each Revolving Loan made by Revolving Lenders shall be
made available to Borrowers on the Business Day so requested by way of credit to
the applicable Borrower’s operating account maintained with such bank as
Borrowing Representative designated to Agent. Any and all Obligations due and
owing hereunder may be charged to Borrowers’ account and shall constitute
Revolving Loan. The principal amount of any single Revolving Loan request shall
be not less than $100,000.

 

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4.2           Conversion and Continuation Elections. Other than as respects
Fixed Rate Loans, Borrowing Representative shall have the option to (a) request
that any Loan be made as a LIBOR Rate Loan, (b) convert at any time all or any
part of outstanding Loans from Base Rate Loans to LIBOR Rate Loans, (c) convert
any LIBOR Rate Loan to a Base Rate Loan, subject to Section 3.12 if such
conversion is made prior to the expiration of the Interest Period applicable
thereto, or (d) continue all or any portion of any Loan as a LIBOR Rate Loan
upon the expiration of the applicable Interest Period. Any Loan or group of
Loans having the same proposed Interest Period to be made or continued as, or
converted into, a LIBOR Rate Loan must be in a minimum amount of $1,000,000. Any
such election must be made by Borrowing Representative by 2:00 p.m. on the
second Business Day prior to (1) the date of any proposed Loan which is to bear
interest at LIBOR, (2) the end of each Interest Period with respect to any LIBOR
Rate Loans to be continued as such, or (3) the date on which Borrowers wish to
convert any Base Rate Loan to a LIBOR Rate Loan for an Interest Period
designated by the Borrowing Representative in such election. If no election is
received with respect to a LIBOR Rate Loan by 2:00 p.m. on the second Business
Day prior to the end of the Interest Period with respect thereto, that LIBOR
Rate Loan shall be converted to a Base Rate Loan at the end of its Interest
Period. Borrowing Representative must make such election by notice to Agent in
writing. In the case of any conversion or continuation, such election must be
made pursuant to a written notice in the form attached hereto as Exhibit G. No
Loan shall be made, converted into or continued as a LIBOR Rate Loan, if the
conditions to Loans and Letters of Credit in Section 6.2 are not met at the time
of such proposed conversion or continuation and Agent or Required Lenders have
determined not to make or continue any Loan as a LIBOR Rate Loan as a result
thereof. Agent will, with reasonable promptness, notify the Borrowing
Representative and the Lenders of each determination of the LIBOR Rate; provided
that any failure to do so shall not relieve any Borrower of any liability
hereunder or provide the basis for any claim against Agent. All conversions and
continuations shall be made pro rata according to the respective outstanding
principal amounts of the Loans held by each Lender with respect to which the
notice was given.

 

4.3           Accounting of Loans.

 

(a)          Agent is authorized by Borrowers to record on its books or records
the date, principal amount, amount and date of all payments of principal of and
interest on each Loan, and the outstanding principal balance of the Loans and
such recordation shall constitute prima facie evidence as to all such
information contained therein. Agent shall provide Borrowing Representative on a
monthly basis with a statement and accounting of such recordations but any
failure on the part of Agent to keep such recordation (or any errors therein) or
to send a statement thereof to Borrowing Representative shall not limit or
otherwise affect the obligation of any Borrower to repay (with applicable
interest) any Loans. Except to the extent that Borrowing Representative shall,
within sixty (60) days after such statement and accounting is sent, notify Agent
in writing of any objection any Borrower may have thereto (stating with
particularity the basis for such objection), such statement and accounting shall
be deemed final, binding and conclusive upon Borrowers, absent manifest error.

 

(b)          Agent, acting as a non-fiduciary agent of Borrowers and the other
Credit Parties solely for tax purposes and solely with respect to the actions
described in this Section 4.3, shall establish and maintain (i) a record of
ownership (the “Register”) in which Agent agrees to register by book entry the
interests (including any rights to receive payment hereunder) of Agent, each
Lender and each LC Issuer in the Term Loan, each Incremental Term Loan, the
Revolving Loans and Letter of Credit Obligations, each of their obligations
under this Agreement to participate in each Loan, Letter of Credit and Letter of
Credit Obligations, and any assignment of any such interest, obligation or right
and (ii) accounts in the Register in accordance with its usual practice in which
it shall record (A) the names and addresses of Lenders and the LC Issuers (and
each change thereto pursuant to this Agreement), (B) the Commitments of each
Lender, (C) the amount of each Loan, and for LIBOR Rate Loans, the Interest
Period applicable thereto, (D) the amount of any principal or interest due and
payable or paid, (E) the amount of the Letter of Credit Obligations due and
payable or paid in respect of Letters of Credit and (F) any other payment
received by Agent from a Borrower or other Credit Party and its application to
the Obligations.

 

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(c)          Notwithstanding anything to the contrary contained in this
Agreement, the Loans (including any Notes evidencing such Loans and, in the case
of Revolving Loans, the corresponding obligations to participate in Letter of
Credit Obligations) are registered obligations, the right, title and interest of
Lenders and LC Issuers and their assignees in and to such Loans shall be
transferable only upon notation of such transfer in the Register and no
assignment thereof shall be effective until recorded therein. This Section shall
be construed so that the Loans are at all times maintained in “registered form”
within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the IRC.

 

(d)          Credit Parties, Agent, Lenders and LC Issuers shall treat each
Person whose name is recorded in the Register as a Lender or LC Issuer, as
applicable, for all purposes of this Agreement. Information contained in the
Register with respect to any Lender or any LC Issuer shall be available for
access by Borrowers, Borrowing Representative, Agent, such Lender or such LC
Issuer during normal business hours and from time to time upon at least one
Business Day’s prior notice. No Lender or LC Issuer shall, in such capacity,
have access to or be otherwise permitted to review any information in the
Register other than information with respect to such Lender or LC Issuer unless
otherwise agreed by Agent.

 

4.4           Payments by Lenders to Agent; Settlement.

 

(a)          Agent may, on behalf of Lenders, disburse funds to Borrowers for
Loans requested. Each Lender shall reimburse Agent on demand for all funds
disbursed on its behalf by Agent, or if Agent so requests, each Lender will
remit to Agent its Commitment Percentage of any Loan before Agent disburses same
to Borrowers. If Agent elects to require that each Lender make funds available
to Agent prior to disbursement by Agent to Borrowers, Agent shall advise each
Lender by electronic transmission of the amount of such Lender’s Commitment
Percentage of the Loan requested by Borrowing Representative no later than the
Business Day prior to the scheduled borrowing date applicable thereto, and each
such Lender shall pay Agent such Lender’s Commitment Percentage of such
requested Loan, in same day funds, by wire transfer to Agent’s account, as
designated by Agent to such Lender, no later than 1:00 p.m. on such scheduled
Borrowing date. Nothing in this Section 4.4(a) or elsewhere in this Agreement or
the other Loan Documents shall be deemed to require Agent to advance funds on
behalf of any Lender or to relieve any Lender from its obligation to fulfill its
Commitments hereunder or to prejudice any rights that Agent, any Lender or
Borrowers may have against any Lender as a result of any default by such Lender
hereunder.

 

(b)          At least once each calendar week or more frequently at Agent’s
election (each, a “Settlement Date”), Agent shall advise each Lender by
electronic transmission of the amount of such Lender’s Commitment Percentage of
principal, interest and Fees paid for the benefit of Lenders with respect to
each applicable Loan. Agent shall pay to each Lender such Lender’s Commitment
Percentage of principal, interest and fees paid by Borrowers since the previous
Settlement Date for the benefit of such Lender on the Loans held by it. Such
payments shall be made by wire transfer to such Lender not later than 2:00 p.m.
on the next Business Day following each Settlement Date.

 

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(c)          Agent may assume that each Revolving Lender will make its
Commitment Percentage of each Revolving Loan available to Agent on each
borrowing date. If such Commitment Percentage is not, in fact, paid to Agent by
such Revolving Lender when due, Agent will be entitled to recover such amount on
demand from such Revolving Lender without setoff, counterclaim or deduction of
any kind. If any Revolving Lender fails to pay the amount of its Commitment
Percentage forthwith upon Agent’s demand, Agent shall promptly notify Borrowing
Representative and Borrowers shall immediately repay such amount to Agent.
Nothing in this Section 4.4 shall be deemed to require Agent to advance funds on
behalf of any Revolving Lender or to relieve any Revolving Lender from its
obligation to fulfill its Commitments hereunder or to prejudice any rights that
Borrowers may have against any Revolving Lender as a result of any default by
such Revolving Lender hereunder. Without limiting the provisions of Section 4.4,
to the extent that Agent advances funds to Borrowers on behalf of any Revolving
Lender and is not reimbursed therefor on the same Business Day as such advance
is made, Agent shall be entitled to retain for its account all interest accrued
on such advance from the date such advance was made until reimbursed by the
applicable Revolving Lender.

 

(d)          (i)          If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Agent from Borrowers and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender on
demand without setoff, counterclaim or deduction of any kind.

 

(ii)         If Agent determines at any time that any amount received by Agent
under this Agreement or any other Loan Document must be returned to any Credit
Party or paid to any other Person pursuant to any insolvency law or otherwise,
then, notwithstanding any other term or condition of this Agreement or any other
Loan Document, Agent will not be required to distribute any portion thereof to
any Lender. In addition, each Lender will repay to Agent on demand any portion
of such amount that Agent has distributed to such Lender, together with interest
at such rate, if any, as Agent is required to pay to any Borrower or such other
Person, without setoff, counterclaim or deduction of any kind, and Agent will be
entitled to set-off against future distributions to such Lender any such amounts
(with interest) that are not repaid on demand.

 

(e)          (i)          The failure of any Non-Funding Lender to make any
Revolving Loan, Letter of Credit Obligation, Term Loan or Incremental Term Loan
or any payment required by it, or to make any payment required by it under any
Loan Document, or to fund any purchase of any participation to be made or funded
by it on the date specified therefor shall not relieve any other Lender (each
such other Revolving Lender, an “Other Lender”) of its obligations to make such
loan, fund the purchase of any such participation, or make any other such
required payment on such date, and neither Agent nor, other than as expressly
set forth herein, any Other Lender shall be responsible for the failure of any
Non-Funding Lender to make a loan, fund the purchase of a participation or make
any other required payment under any Loan Document.

 

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(ii)         If any Revolving Lender is a Non-Funding Lender, all or a portion
of such Non-Funding Lender’s Letter of Credit Obligations (unless such Lender is
the LC Issuer that issued such Letter of Credit) shall, at Agent’s election at
any time or upon any LC Issuer’s, written request delivered to Agent (whether
before or after the occurrence of any Default or Event of Default), be
reallocated to and assumed by the Revolving Lenders that are not Non-Funding
Lenders or Impacted Lenders pro rata in accordance with their Commitment
Percentages of the Aggregate Revolving Loan Commitment (calculated as if the
Non-Funding Lender’s Commitment Percentage was reduced to zero and each other
Revolving Lender’s (other than any other Non-Funding Lender’s or Impacted
Lender’s) Commitment Percentage had been increased proportionately), provided
that no Revolving Lender shall be reallocated any such amounts or be required to
fund any amounts that would cause the sum of its outstanding Revolving Loans and
outstanding Letter of Credit Obligations to exceed its Revolving Loan
Commitment.

 

(iii)        Notwithstanding anything set forth herein to the contrary, a
Non-Funding Lender shall not have any voting or consent rights under or with
respect to any Loan Document or constitute a “Lender” or a “Revolving Lender”
(or be, or have its Loans and Commitments, included in the determination of
“Required Lenders”, “Required Revolving Lenders” or “Lenders directly affected”)
for any voting or consent rights under or with respect to any Loan Document,
provided that (A) the Commitment of a Non-Funding Lender may not be increased,
extended or reinstated, (B) the principal of a Non-Funding Lender’s Loans may
not be reduced or forgiven, and (C) the interest rate applicable to Obligations
owing to a Non-Funding Lender may not be reduced in such a manner that by its
terms affects such Non-Funding Lender more adversely than other Lenders, in each
case without the consent of such Non-Funding Lender. Moreover, for the purposes
of determining Required Lenders and Required Revolving Lenders, the Loans,
Letter of Credit Obligations, and Commitments held by Non-Funding Lenders shall
be excluded from the total Loans and Commitments outstanding.

 

(iv)        Agent shall be authorized to use all payments received by Agent for
the benefit of any Non-Funding Lender pursuant to this Agreement to pay in full
the Aggregate Excess Funding Amount (as defined below) to the appropriate
Secured Parties. Following such payment in full of the Aggregate Excess Funding
Amount, Agent shall be entitled to hold such funds as cash collateral in a
non-interest bearing account up to an amount equal to such Non-Funding Lender’s
unfunded Revolving Loan Commitment and to use such amount to pay such
Non-Funding Lender’s funding obligations hereunder until the Obligations are
paid in full in cash, all Letter of Credit Obligations have been discharged or
cash collateralized and all Commitments have been terminated. Upon any such
unfunded obligations owing by a Non-Funding Lender becoming due and payable,
Agent shall be authorized to use such cash collateral to make such payment on
behalf of such Non-Funding Lender. With respect to such Non-Funding Lender’s
failure to fund Revolving Loans or purchase participations in Letters of Credit
or Letter of Credit Obligations, any amounts applied by Agent to satisfy such
funding shortfalls shall be deemed to constitute a Revolving Loan or amount of
the participation required to be funded and, if necessary to effectuate the
foregoing, the other Revolving Lenders shall be deemed to have sold, and such
Non-Funding Lender shall be deemed to have purchased, Revolving Loans or Letter
of Credit participation interests from the other Revolving Lenders until such
time as the aggregate amount of the Revolving Loans and participations in
Letters of Credit and Letter of Credit Obligations are held by the Revolving
Lenders in accordance with their Commitment Percentages of the Aggregate
Revolving Loan Commitment. Any amounts owing by a Non-Funding Lender to Agent
which are not paid when due shall accrue interest at the interest rate
applicable during such period to Revolving Loans that are Base Rate Loans. In
the event that Agent is holding cash collateral of a Non-Funding Lender that
cures pursuant to clause (v) below or ceases to be a Non-Funding Lender pursuant
to the definition of Non-Funding Lender, Agent shall return the unused portion
of such cash collateral to such Lender. The “Aggregate Excess Funding Amount” of
a Non-Funding Lender shall be the aggregate amount of (A) all unpaid obligations
owing by such Lender to Agent, LC Issuers, and other Lenders under the Loan
Documents, including such Lender’s pro rata share of all Revolving Loans and
Letter of Credit Obligations, plus, without duplication, (B) all amounts of such
Non-Funding Lender’s Letter of Credit Obligations.

 

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(v)         A Lender may cure its status as a Non-Funding Lender under clause
(a) of the definition of Non-Funding Lender if such Lender (A) fully pays to
Agent, on behalf of the applicable Secured Parties, the Aggregate Excess Funding
Amount, plus all interest due thereon and (B) timely funds the next Revolving
Loan required to be funded by such Lender or makes the next reimbursement
required to be made by such Lender with respect to Letters of Credit. Any such
cure shall not relieve any Lender from liability for breaching its contractual
obligations hereunder.

 

(vi)        A Lender that is a Non-Funding Lender pursuant to clause (a) of the
definition of Non-Funding Lender shall not earn and shall not be entitled to
receive, and Borrowers shall not be required to pay, such Lender’s portion of
the unused line fee, if any, payable pursuant to Section 5.1(c).

 

(f)          Agent is hereby authorized by each Credit Party and each other
Secured Party to establish procedures (and to amend such procedures from time to
time) to facilitate administration and servicing of the Loans and other matters
incidental thereto.

 

5.          INTEREST AND FEES

 

5.1           Interest and Fees.

 

(a)          Interest.

 

(i)          Except as modified by Section 5.1(a)(iii) below, Borrowers shall
pay interest on the unpaid principal balance of the Loans for each day they are
outstanding at the Interest Rate applicable to such Loan. Interest with respect
to a Revolving Loan begins to accrue as soon as such Revolving Loan is made or
deemed to be made. Interest will continue to accrue until payment in full of the
Obligations. Interest and fees shall be computed on the basis of actual days
elapsed in a year of 360 days. Interest on Revolving Loans shall be payable in
arrears on the first day of each month for interest accrued during the preceding
month and upon termination of this Agreement. Interest on the Term Loan and
Incremental Term Loans shall be payable in arrears on the day on which the
scheduled principal payments are required to be made under the applicable Term
Note for interest accrued since the immediately preceding payment date and upon
termination of this Agreement.

 

(ii)         Effective upon the occurrence of any Event of Default and for so
long as any Event of Default shall be continuing, the Interest Rate shall
automatically be increased to the Default Rate, and all outstanding Obligations
shall continue to accrue interest from the date of such Event of Default at the
Default Rate applicable to such Obligations.

 

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(iii)        Notwithstanding the foregoing, in no event shall the aggregate
interest exceed the maximum rate permitted under any applicable law or
regulation, as in effect from time to time (the “Maximum Legal Rate”) and if any
provision of this Agreement or Loan Document is in contravention of any such law
or regulation, interest payable under this Agreement and each Loan Document
shall be computed on the basis of the Maximum Legal Rate (so that such interest
will not exceed the Maximum Legal Rate) and once the amount of interest payable
hereunder or under the Loan Documents is less than the Maximum Legal Rate, the
amount of interest payable hereunder or any Loan Document shall not be reduced
below the amount computed based upon the Maximum Legal Rate until the aggregate
amount of interest paid equals the amount of interest which would have been
payable if the Maximum Legal Rate had not been imposed.

 

(b)          Borrowers shall pay principal, interest and all other amounts
payable hereunder, or under any Loan Document, without any deduction whatsoever,
including any deduction for any set-off or counterclaim.

 

(c)          Fees.

 

(i)          Unused Line Fee. An unused line fee equal to the Unused Line Fee
Percentage per annum of the amount by which (i) the Maximum Revolving Amount,
exceeds (ii) the average daily outstanding principal balance of the Revolving
Loan during the immediately preceding month (or part thereof), which each such
fee shall be deemed to be fully earned and payable, in arrears, on the first day
of each month until the Termination Date.

 

(ii)         Upfront Fee. On the Effective Date, Borrowers shall pay Agent for
the benefit of each Lender having a Term Loan Commitment, an upfront fee in the
amount of $69,462.

 

6.          CONDITIONS PRECEDENT

 

6.1           Conditions Precedent to the Effective Date. The Effective Date
shall be subject to the fulfillment (to the satisfaction of Agent) of each of
the conditions precedent set forth on Schedule I.

 

6.2           Conditions Precedent to each Loan. Each of the Loans to be made by
Lenders on or after the Effective Date shall be subject to the fulfillment (to
the satisfaction of Agent) of each of the following conditions as of the date of
each Loan:

 

(a)          other than as respects the Term Loan made on the Effective Date,
Agent shall have received a request for such Loan in form and in substance
satisfactory to Agent;

 

(b)          the representations and warranties set forth in this Agreement and
in the other Loan Documents, shall be true and correct in all material respects
on and as of the date of such Loan with the same effect as though made on and as
of such date, except to the extent that any such representation or warranty is
expressly stated to relate to a specific earlier date, in which case, such
representation and warranty shall be true and correct as of such earlier date;

 

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(c)          no Default or Event of Default shall have occurred and be
continuing at the time of and after giving effect to such Loan;

 

(d)          Agent shall have received all fees due and payable on or prior to
such date; and

 

(e)          all legal matters incident to such Loan shall be reasonably
satisfactory to Agent and its counsel, including agreements relating to the
Trademark Licenses.

 

7.          REPRESENTATIONS, WARRANTIES AND COVENANTS

 

To induce Agent and Lenders to enter into this Agreement and to make the Loans,
each Credit Party represents and warrants (each of which representations and
warranties shall survive the execution and delivery of this Agreement), and
promises to and agrees with Agent and Lenders until the Termination Date as
follows:

 

7.1           Corporate Existence; Compliance with Law. Each Credit Party:
(a) is, as of the Effective Date, and will continue to be (i) a corporation or
limited liability company duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation, (ii) duly
qualified to do business and in good standing in each other jurisdiction where
its ownership or lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified could not reasonably
be expected to have a Material Adverse Effect, and (iii) in compliance with all
Requirements of Law and Contractual Obligations, except to the extent failure to
comply therewith could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; and (b) has and will continue to
have (i) the requisite power and authority and the legal right to execute,
deliver and perform its obligations under the Loan Documents to which it is a
party, and to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease, and to conduct its
business as now, heretofore or proposed to be conducted, and (ii) all licenses,
permits, franchises, rights, powers, consents or approvals from or by all
Persons or Governmental Authorities having jurisdiction over such Credit Party
which are necessary or appropriate for the conduct of its business.

 

7.2           Names; Organizational Information; Collateral Locations.
Disclosure Schedule 7.2 sets forth as of the Effective Date, each Credit Party’s
name as it appears in official filing in the state of its incorporation or other
organization, the type of entity of each Credit Party, the state of each Credit
Party’s incorporation or organization and organizational identification number
issued by each Credit Party’s state of incorporation or organization or a
statement that no such number has been issued. The location of each Credit
Party’s chief executive office, corporate offices, warehouses, other locations
of Collateral and locations where records with respect to Collateral are kept as
of the Effective Date (including in each case the county of such locations) are
as set forth in Disclosure Schedule 7.2 and, except as set forth in such
Disclosure Schedule, such locations have not changed during the preceding twelve
months. With respect to each of the premises identified in Disclosure Schedule
7.2 on or prior to the Effective Date a bailee, landlord or mortgagee agreement
acceptable to Agent has been obtained. As of the Effective Date, during the
prior five years, except as set forth in Disclosure Schedule 7.2, no Credit
Party shall have been known as or conducted business in any other name
(including trade names).

 

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7.3           Power; Authorization; Enforceable Obligations. The execution,
delivery and performance by each Credit Party of the Loan Documents to which it
is a party, and the creation of all Liens provided for herein and therein: (a)
are and will continue to be within such Credit Party’s power and authority; (b)
have been and will continue to be duly authorized by all necessary or proper
action; (c) are not and will not be in violation of any Requirement of Law or
Contractual Obligation of such Credit Party; (d) do not and will not result in
the creation or imposition of any Lien (other than Permitted Liens) upon any of
the Collateral; and (e) do not and will not require the consent or approval of
any Governmental Authority or any other Person, except for such consents and
approvals which have been obtained and are in full force and effect as of the
Effective Date. As of the Effective Date, each Loan Document shall have been
duly executed and delivered on behalf of each Credit Party, and each such Loan
Document upon such execution and delivery shall be and will continue to be a
legal, valid and binding obligation of each Credit Party, enforceable against it
in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency and other similar laws affecting creditors’ rights
generally.

 

7.4           Financial Statements; Books and Records.

 

(a)          The Financial Statements delivered by Initial Borrower to Agent and
each Lender for its most recently ended Fiscal Year and Fiscal Quarter, are
true, correct and complete and reflect fairly and accurately the financial
condition of Initial Borrower on a consolidated and consolidating basis as of
the date of each such Financial Statement in accordance with GAAP.

 

(b)          Each Credit Party shall keep adequate Books and Records with
respect to the Collateral and its business activities in which proper entries,
reflecting all financial transactions, and payments and credits received on, and
all other dealings with, the Collateral, will be made in accordance with GAAP
and all Requirements of Law and on a basis consistent with the Financial
Statements.

 

7.5           Material Adverse Change. Between the date of each Credit Party’s
most recent Financial Statements delivered to Agent and each Lender and the
Effective Date: (a) no Credit Party has incurred any obligations, contingent or
non-contingent liabilities, or liabilities for Charges, long-term leases or
unusual forward or long-term commitments which could, alone or in the aggregate,
reasonably be expected to have a Material Adverse Effect; and (b) no events have
occurred which alone or in the aggregate has had or could reasonably be expected
to have a Material Adverse Effect. No Requirement of Law or Contractual
Obligation of any Credit Party has or have had or could reasonably be expected
to have a Material Adverse Effect. No Credit Party is in default, and to each
Credit Party’s knowledge no third party is in default, under or with respect to
any of its Contractual Obligations, which alone or in the aggregate has had or
could reasonably be expected to have a Material Adverse Effect.

 

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7.6           Real Estate; Property. The real estate listed in Disclosure
Schedule 7.6 constitutes all of the real property owned, leased, or used by each
Credit Party in its business (the “Real Property”) as of the Effective Date, and
no Credit Party will execute any material agreement or contract in respect of
such real estate (other than renewals of leases with respect thereto) after the
date of this Agreement without giving Agent prompt prior written notice thereof.
Each Credit Party holds and will continue to hold good and marketable fee simple
title to all of its owned real estate, and good and marketable title to all of
its other properties and assets, and valid and insurable leasehold interests in
all of its leases (both as lessor and lessee, sublessee or assignee), and none
of the properties and assets of any Credit Party are or will be subject to any
Liens, except Permitted Liens.

 

7.7           Ventures, Subsidiaries and Affiliates; Outstanding Equity
Interests and Indebtedness. Except as set forth in Disclosure Schedule 7.7, as
of the Effective Date, no Credit Party has any Subsidiaries, is engaged in any
joint venture or partnership with any other Person, or is an Affiliate of any
other Person. All of the issued and outstanding Equity Interests of each Credit
Party (other than Initial Borrower) (including all rights to purchase, options,
warrants or similar rights or agreements pursuant to which such Credit Party may
be required to issue, sell, repurchase or redeem any of its Equity Interests) as
of the Effective Date is owned by each of the Equity Interests Holders (and in
the amounts) set forth on Disclosure Schedule 7.7. All outstanding Indebtedness
of each Credit Party as of the Effective Date is described in Disclosure
Schedule 9(b).

 

7.8           Government Regulation; Margin Regulations. No Credit Party is
subject to or regulated under or any federal or state statute, rule or
regulation that restricts or limits any Credit Party’s ability to incur
Indebtedness, pledge its assets, or to perform its obligations under the Loan
Documents. The making of a Loan, the application of the proceeds and repayment
thereof, and the consummation of the transactions contemplated by the Loan
Documents do not and will not violate the Certificate or Articles of
Incorporation and By-laws or other organizational or governing documents of such
Credit Party or any Requirement of Law. No Credit Party is engaged, nor will it
engage in the business of extending credit for the purpose of “purchasing” or
“carrying” any “margin security” as such terms are defined in Regulation U of
the Federal Reserve Board as now and hereafter in effect (such securities being
referred to herein as “Margin Stock”). No Credit Party owns Margin Stock, and
none of the proceeds of any Loan or other extensions of credit under any Loan
Document will be used, directly or indirectly, for the purpose of purchasing or
carrying any Margin Stock or reducing or retiring any Indebtedness which was
originally incurred to purchase or carry any Margin Stock. No Credit Party will
take or permit to be taken any action which might cause any Loan Document to
violate any regulation of the Federal Reserve Board.

 

7.9           Taxes; Charges. Except as disclosed on Disclosure Schedule 7.9 all
tax returns, reports and statements required by any Governmental Authority to be
filed by each Credit Party have, as of the Effective Date, been filed and will,
until the Termination Date, be filed with the appropriate Governmental Authority
and no tax Lien has been filed against each Credit Party or any of each Credit
Party’s property. Proper and accurate amounts have been and will be withheld by
each Credit Party from its employees for all periods in complete compliance with
all Requirements of Law and such withholdings have and will be timely paid to
the appropriate Governmental Authorities. Disclosure Schedule 7.9 sets forth as
of the Effective Date those taxable years for which each Credit Party’s tax
returns are currently being audited by the IRS or any other applicable
Governmental Authority and any assessments or threatened assessments in
connection with such audit, or otherwise currently outstanding. Except as
described on Disclosure Schedule 7.9, no Credit Party is as of the Effective
Date liable for any Charges: (a) under any agreement (including any tax sharing
agreements or agreement extending the period of assessment of any Charges) or
(b) to any Credit Party’s knowledge, as a transferee. As of the Effective Date,
no Credit Party has agreed or been requested to make any adjustment under IRC
Section 481(a), by reason of a change in accounting method or otherwise, which
could reasonably be expected to have a Material Adverse Effect.

 

41

 

 

7.10         Payment of Obligations. Each Credit Party will pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all of its Charges and other obligations of whatever nature, except
where the amount or validity thereof is currently being contested in good faith
by appropriate proceedings and reserves, in conformity with GAAP, with respect
thereto have been provided on the books of such Credit Party and none of the
Collateral is or could reasonably be expected to become subject to any Lien or
forfeiture or loss as a result of such contest.

 

7.11         ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other existing ERISA Events, could
reasonably be expected to result in a liability of any Credit Party of more than
the Minimum Actionable Amount. The present value of all accumulated benefit
obligations of any Credit Party under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent Financial Statements reflecting such amounts,
exceed the fair market value of the assets of such Plan by more than the Minimum
Actionable Amount, and the present value of all accumulated benefit obligations
of all underfunded Plans (based on the assumptions used for purposes of
Statement of Financial Account Standards No. 87) did not, as of the date of the
most recent Financial Statements reflecting such amounts, exceed the fair market
value of the assets of such underfunded Plans by more than the Minimum
Actionable Amount. No Credit Party has incurred or reasonably expects to incur
any Withdrawal Liability in excess of the Minimum Actionable Amount.

 

7.12         Litigation. No Litigation is pending or, to the knowledge of any
Credit Party, threatened by or against any Credit Party or against any Credit
Party’s properties or revenues (a) with respect to any of the Loan Documents or
any of the transactions contemplated hereby or thereby, or (b) which could
reasonably be expected to have a Material Adverse Effect. Except as set forth on
Disclosure Schedule 7.12, as of the Effective Date there is no Litigation
pending or threatened against any Credit Party which seeks damages in excess of
the Minimum Actionable Amount or injunctive relief or alleges criminal
misconduct of any Credit Party. Each Credit Party shall notify Agent in writing
within five (5) Business Days of learning of the existence, threat or
commencement of any Litigation against any Credit Party or any Plan or any
allegation of criminal misconduct against any Credit Party.

 

7.13         Intellectual Property. As of the Effective Date, all material
Intellectual Property owned or used by each Credit Party is listed, together
with application or registration numbers, where applicable, in Disclosure
Schedule 7.13. Each Credit Party is the sole legal and beneficial owner, or is
licensed on commercial terms to use, all Intellectual Property necessary to
conduct its business as currently conducted except for such Intellectual
Property the failure of which to own or license could not reasonably be expected
to have a Material Adverse Effect. Each Credit Party will maintain the patenting
and registration of all Intellectual Property with the United States Patent and
Trademark Office, the United States Copyright Office, or other appropriate
Governmental Authority and each Credit Party will promptly patent or register,
as the case may be, all new Intellectual Property and notify Agent in writing
five (5) Business Days prior to filing any such new patent or registration.

 

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7.14         Full Disclosure. No information contained in any Loan Document, the
Financial Statements or any written statement furnished by or on behalf of any
Credit Party under any Loan Document, or to induce Agent and Lenders to execute
the Loan Documents, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.

 

7.15         Hazardous Materials. Except as set forth on Disclosure Schedule
7.15, as of the Effective Date, (a) no Credit Party is subject to any
Environmental Liabilities or, to any Credit Party’s knowledge, potential
Environmental Liabilities, in excess of the Minimum Actionable Amount in the
aggregate, (b) no notice has been received by any Credit Party identifying it as
a “potentially responsible party” or requesting information under CERCLA or
analogous state statutes, and to the knowledge of any Credit Party, there are no
facts, circumstances or conditions that may result in such Credit Party being
identified as a “potentially responsible party” under CERCLA or analogous state
statutes; and (c) each Credit Party has provided to Agent copies of all existing
environmental reports, reviews and audits and all written information pertaining
to actual or potential Environmental Liabilities, in each case relating to any
Credit Party. Each Credit Party: (i) shall comply in all material respects with
all applicable Environmental Laws and environmental permits; (ii) shall notify
Agent in writing within seven (7) days if and when it becomes aware of any
Release, on, at, in, under, above, to, from or about any of its Real Property;
and (iii) shall promptly forward to Agent a copy of any order, notice, permit,
application, or any communication or report received by it or any Credit Party
in connection with any such Release.

 

7.16         Insurance. Disclosure Schedule 7.16 lists all insurance of any
nature maintained as of the Effective Date for current occurrences by Borrowers,
as well as a summary of the terms of such insurance. Each Credit Party shall
deliver to Agent certified copies and endorsements to all of its (a) “All Risk”
and business interruption insurance policies naming Agent as loss payee, and (b)
general liability and other liability policies naming Agent as an additional
insured. All policies of insurance on real and personal property will contain an
endorsement, in form and substance acceptable to Agent, showing lender loss
payable to Agent (Form 438 BFU or equivalent) and extra expense and business
interruption endorsements. Such endorsement, or an independent instrument
furnished to Agent, will provide that the insurance companies will give Agent at
least thirty (30) days prior written notice before any such policy or policies
of insurance shall be altered or canceled and that no act or default of any
Credit Party or any other Person shall affect the right of Agent or Lenders to
recover under such policy or policies of insurance in case of loss or damage.

 

7.17         Deposit and Disbursement Accounts. Disclosure Schedule 7.17 lists
as of the Effective Date all banks and other financial institutions at which
each Credit Party, maintains deposits and/or other accounts and correctly
identifies the name, address and telephone number of each such depository, the
name in which the account is held, a description of the purpose of the account,
and the complete account number.

 

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7.18         Accounts. No Credit Party has made, nor will any Credit Party make,
any agreement with any Account Debtor for any extension of time for the payment
of any Account, any compromise or settlement for less than the full amount
thereof, any release of any Account Debtor from liability therefor, or any
deduction therefrom except a discount or allowance for prompt or early payment
allowed by a Credit Party and such other compromises or settlements in the
ordinary course of its business consistent with historical practice of such
Credit Party. With respect to the Accounts pledged as collateral pursuant to any
Loan Document (a) the amounts shown on all invoices, statements and reports
which may be delivered to Agent with respect thereto are actually and absolutely
owing to a Credit Party as indicated thereon and are not in any way contingent;
(b) no payments have been or shall be made thereon except payments immediately
delivered to Agent as required hereunder; and (c) to each Credit Party’s
knowledge all Account Debtors have the capacity to contract.

 

7.19         Conduct of Business. Each Credit Party (a) shall conduct its
business substantially as now conducted or as otherwise permitted hereunder, and
(b) shall at all times maintain, preserve and protect all of the Collateral and
each Credit Party’s other property, used or useful in the conduct of its
business and keep the same in good repair, working order and condition and make,
or cause to be made, all necessary or appropriate repairs, replacements and
improvements thereto consistent with industry practices.

 

7.20         Material Contracts. No Credit Party is in default in the
performance, observance or fulfillment of any of its obligations, covenants or
conditions contained in any Material Contract except to the extent that such
failure could reasonably be expected to have a Material Adverse Effect.

 

7.21         Further Assurances. At any time and from time to time, upon the
written request of Agent and at the sole expense of Credit Parties, each Credit
Party shall promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as Agent may reasonably
deem desirable (a) to obtain the full benefits of this Agreement and the other
Loan Documents, (b) to protect, preserve and maintain Agent’s rights in any
Collateral, or (c) to enable Agent and Lenders to exercise all or any of the
rights and powers herein granted.

 

7.22         Use of Proceeds. All proceeds of all Loans and Letters of Credit
shall be used by Borrowers solely for Permitted Acquisitions and such other
purposes as specifically permitted pursuant to the terms of this Agreement.

 

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7.23         Financing Right of First Offer. If, in connection with an
Acquisition where the consideration therefor will be paid other than by cash of
Initial Borrower or any direct or indirect Subsidiary of Initial Borrower or by
the issuance of Equity Interests of Initial Borrower, each Borrower hereby
grants to Lenders a right of first offer to provide such financing. Borrowing
Representative shall notify Agent of its request for such financing and submit
in writing to Agent, the sources and uses of funds for the proposed transaction,
the requested amount of any such proposed financing and, to the extent not in
violation of any applicable confidentiality agreement, the supporting financial
information and documentation relating to the proposed Acquisition. Lenders
shall have the right, but not the obligation, to deliver a term sheet setting
forth the terms and conditions upon which Lenders would be willing to provide
such financing. Within ten (10) Business Days of receipt by Agent of all such
information required by Agent and Lenders in connection with such request, Agent
shall either inform Borrowing Representative that Lenders have declined to
provide such financing or Agent shall deliver a term sheet setting forth the
proposed terms and conditions on which Lenders will seek approval to provide
such financing. Upon acceptance in writing of such proposed term sheet by
Borrowing Representative, Lenders shall seek credit approval for such financing
and inform Borrowing Representative within thirty (30) days of receipt of such
accepted term sheet as to whether or not Lenders have received approval with
respect thereto. If Lenders have declined to provide such financing or Borrowers
have not accepted the proposed term sheet, Borrower may seek Outside Financing
to provide such financing,

 

7.24         Life Insurance. Credit Parties shall maintain each Life Insurance
Policy in full force and effect and if any Life Insurance Policy shall be
scheduled to terminate within thirty (30) days, such Credit Party shall deliver
to Agent a satisfactory renewal thereof. Credit Parties shall pay all premiums
on the Life Insurance Policy when due and shall take any other action that
impairs the value of the Life Insurance Policy.

 

7.25         Subsidiaries. Within ten (10) Business Days following the time that
any Credit Party forms any direct or indirect Subsidiary (other than a direct or
indirect Subsidiary of an Excluded Subsidiary) or acquires any direct or
indirect Subsidiary (other than a direct or indirect Subsidiary of an Excluded
Subsidiary) after the Effective Date, within ten (10) Business Days of such
event (or such later date as permitted by Agent in its sole discretion), Credit
Parties shall (a) cause such new Subsidiary to become a Guarantor and to grant
Agent a first priority Lien (subject to Permitted Liens) in and to the assets of
such newly formed or acquired Subsidiary, (b) provide, or cause the applicable
Credit Party to provide, to Agent a pledge agreement and appropriate
certificates and powers or financing statements, pledging all of the direct or
beneficial ownership Equity Interests owned by such Credit Party in such new
Subsidiary in form and substance reasonably satisfactory to Agent; provided that
with respect to a Foreign Subsidiary of any Credit Party, such Credit Party
shall only be required to pledge sixty five percent (65%) of the outstanding
voting Equity Interests held by such Credit Party and (c) provide to Agent all
other documentation, including one or more opinions of counsel reasonably
satisfactory to Agent, which, in its opinion, is appropriate with respect to the
execution and delivery of the applicable documentation referred to above Nothing
contained in this Section 7.25 shall prohibit any Credit Party from forming or
acquiring a Subsidiary that will be an Excluded Subsidiary.

 

8.          FINANCIAL REPORTS; FINANCIAL COVENANTS

 

8.1           Reports and Notices. From the Effective Date until the Termination
Date, each Borrowing Representative shall deliver to Agent and each Lender:

 

(a)          within sixty (60) days following the end of each Fiscal Quarter,
the Financial Statements for such Fiscal Quarter on a consolidated and
consolidating basis, setting forth in each case in comparative form the figures
as of the end of and for the corresponding period, in the previous Fiscal Year
and accompanied by a Compliance Certificate executed by the Chief Executive
Officer, Chief Financial Officer or Director of Borrowing Representative;

 

45

 

 

(b)        within one hundred and twenty (120) days following the close of each
Fiscal Year, the Financial Statements for such Fiscal Year on a consolidated
basis certified by CohnReznick LLP or another independent certified accounting
firm or recognized standing reasonably acceptable to Agent, which shall provide
comparisons to the prior Fiscal Year, and shall be accompanied by (i) a
statement in reasonable detail showing the calculations used in determining
compliance with the financial covenants hereunder, (ii) any management letter
that may be issued, (iii) unaudited consolidating Financial Statements for such
Fiscal Year on a consolidating basis and (iv) a Compliance Certificate executed
by the Chief Executive Officer, Chief Financial Officer or Director of Borrowing
Representative;

 

(c)        within sixty (60) days after the close of each calendar quarter a
copy of its Quarterly Royalty Collections Report showing actual royalties billed
and collected in the period covered thereby and setting forth the GMR for such
period.

 

(d)        promptly upon their distribution, copies of all financial statements,
reports and proxy statements which Initial Borrower shall have sent to its
Equity Interests Holders, promptly after the sending or filing thereof, copies
of all regular and periodic reports which Initial Borrower shall file with the
London Stock Exchange, the Securities and Exchange Commission or any other
securities exchange; and

 

(e)        each Borrower will cause each Guarantor to comply with the financial
reporting requirements set forth in their respective Guaranties.

 

8.2       Financial Covenants. No Borrower shall breach any of the financial
covenants set forth in Schedule II.

 

8.3       Other Reports and Information. Each Credit Party shall advise Agent
promptly, in reasonable detail, of: (a) any Lien, other than Permitted Liens,
attaching to or asserted against any of the Collateral or any occurrence causing
a material loss or decline in value of any Collateral and the estimated (or
actual, if available) amount of such loss or decline; (b) any material change in
the composition of the Collateral; (c) the occurrence of any Default, Event of
Default or other event which has had or could reasonably be expected to have a
Material Adverse Effect; and (d) any actual or alleged breaches of any Material
Contract or termination or threat to terminate any Material Contract or any
amendment to or modification of a Material Contract, in each case which affect
in a material respect the amount payable to a Credit Party thereunder or could
otherwise reasonably be expected to have a Material Adverse Effect, or the
execution of any new Material Contract by any Credit Party. Each Credit Party
shall, upon request of Agent, furnish to Agent such other reports and
information in connection with the affairs, business, financial condition,
operations, prospects or management of such Credit Party or the Collateral as
Agent may request, all in reasonable detail.

 

8.4       Trademarks and License Agreements. Borrower shall provide (i) written
notice to Agent immediately upon any occurrence of the termination of any
Material Contract and (ii) within forty-five (45) days after the close of each
calendar quarter a written report summarizing all material changes to and
material defaults under any Material Contract.

 

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8.5       Intentionally Omitted.

 

8.6       Bank Accounts. Each Credit Party shall maintain its primary deposit
accounts and operating accounts at Agent in accordance with the standard account
documents of Agent such that at least 80% of the aggregate amount of cash of
such Persons are in deposit accounts at Agent.

 

9.        NEGATIVE COVENANTS

 

Each Credit Party covenants and agrees that from the Effective Date until the
Termination Date, such Credit Party shall not, directly or indirectly, by
operation of law or otherwise:

 

(a)        consummate an Acquisition or otherwise combine with or make any
investment in any Person, except (i) any Subsidiary of a Borrower may dispose of
any or all of its assets (upon voluntary liquidation or otherwise) to an
Included Subsidiary; (ii) any Credit Party may be merged or consolidated with or
into another Credit Party except that if a Borrower is a party to such merger or
consolidation, such Borrower shall be the continuing or surviving entity; (iii)
a Permitted Acquisition; (iv) an Acquisition consummated by an Excluded
Subsidiary provided that such Acquisition is not consummated with the proceeds
of a Loan and, to the extent such Acquisition is consummated with Outside
Financing, such Borrower has complied with Section 7.23; (v) investments in
Excluded Subsidiaries, provided that prior to or after giving effect thereto no
Event of Default shall occur or be continuing; and (vi) investments in a Person
in which one or more Persons other than any the Credit Parties or their
Subsidiaries owns 50% or more of Equity Interests, provided that prior to or
after giving effect thereto no Event of Default shall occur or be continuing;

 

(b)        cancel any debt owing to it or create, incur, assume or permit to
exist any Indebtedness, except: (i) the Obligations, (ii) Indebtedness existing
as of the Effective Date set forth on Disclosure Schedule 9(b), and any
refinancings, refundings, renewals or extensions thereof (without any increase
in the principal amount thereof and any shortening of the maturity of any
principal amount thereof) except that any Credit Party may amend Disclosure
Schedule 9(b) to (A) modify the manner, calculations or mechanics by which
amounts thereunder are payable in Equity Interests of Initial Borrower and (B)
extend the maturity of all or any portion of the Indebtedness evidenced thereby;
(iii) deferred taxes, (iv) by endorsement of instruments or items of payment for
deposit to the general account of such Credit Party, (v) for Guaranteed
Indebtedness incurred for the benefit of a Borrower if the primary obligation is
permitted by this Agreement; (vi) additional Indebtedness (including Purchase
Money Indebtedness) incurred after the Effective Date in an aggregate
outstanding amount for Credit Parties not exceeding the $750,000; (vii)
unsecured indebtedness not to exceed $500,000 in the aggregate at any time
outstanding; (viii) indebtedness under Rate Contracts entered in the ordinary
course of business in order to mitigate interest rate, currency or similar risks
and not for speculative purposes with respect to the Term Loan;

 

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(c)        enter into any lending, borrowing or other commercial transaction
with any of its employees, directors or Affiliates (including upstreaming and
downstreaming of cash and intercompany loan and advances) other than (i)
transactions on terms not materially less favorable than if the transaction had
been negotiated in good faith on an arm’s length basis with a non-Affiliate,
(ii) loans or advances to employees in the ordinary course of business in an
aggregate outstanding amount not exceeding the Minimum Actionable Amount and
(iii) the allocation by Initial Borrower of general administrative and other
corporate expenses of Initial Borrower to any other Credit Party in accordance
with Initial Borrower’s expense allocation method that is an acceptable
methodology with segment reporting;

 

(d)        make any changes in any of its business objectives, purposes, or
operations which could reasonably be expected to adversely affect repayment of
the Obligations or could reasonably be expected to have a Material Adverse
Effect or engage in any business other than that presently engaged in or amend
its charter or by-laws or other organizational documents;

 

(e)        create or permit any Lien on any of its properties or assets, except
for Permitted Liens and Liens to secure Outside Financing on the Equity
Interests held in Excluded Subsidiaries;

 

(f)        sell, transfer, issue, convey, assign or otherwise dispose of any of
its assets or properties, including its Accounts or any shares of its Equity
Interests or engage in any sale-leaseback, synthetic lease or similar
transaction except for (i) dispositions of obsolete, worn out or damaged
Equipment not used in any Credit Party’s business; (ii) as permitted pursuant to
the terms of the Intellectual Property Security Agreement; (iii) the sale of
Inventory in the ordinary course of business; (iv) the disposition of other
assets having a fair market value not to exceed $750,000 in the aggregate in any
Fiscal Year; (v) any settlement of or payment in respect of any property or
casualty insurance claim or any condemnation proceeding relating to any property
of any Credit Party if such property is Collateral; (vi) non-exclusive licenses
of Intellectual Property in the ordinary course of business; (vii) any transfer,
conveyance, assignment or other disposition from one Credit Party to another
Credit Party.

 

(g)        change its name, state of incorporation or organization, chief
executive office, corporate offices, warehouses or other Collateral locations,
or location of its records concerning the Collateral, or acquire, lease or use
any real estate after the Effective Date without such Credit Party, in each
instance, giving thirty (30) days prior written notice thereof to Agent and
taking all actions deemed necessary or appropriate by Agent to continuously
protect and perfect Agent’s Liens upon the Collateral or store or hold any
assets of another Person other than advertising contributions, royalty advances
and security deposits received by a Credit Party in the ordinary course of
business except to the extent Agent has received notice thereof;

 

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(h)        make or permit any Restricted Payment other than: (i) any Subsidiary
of a Credit Party may make such payments to such Credit Party; (ii) Pass-Thru
Distributions on a quarterly basis not more than five (5) business days prior to
the date on which any quarterly estimated tax payment is payable; provided,
however, that, upon determination of the actual tax liability with respect to
the taxable income of a Credit Party for any tax year, the next quarterly
estimated payment shall be increased or reduced by the difference between the
estimated payments made during such tax year and such actual tax liability;
(iii) subject to compliance with the Cash Flow Recapture Requirement for such
Fiscal Year, Initial Borrower may make distributions from Excess Cash Flow on or
after January 1, 2016, in an amount not to exceed fifty percent (50%) of Excess
Cash Flow; (iv) dividend payments or distributions in the form of Equity
Interests; and (v) as long as no Event of Default has occurred and is continuing
or would arise as a result thereof and after giving effect to such payment
Initial Borrower has retained funds in amount equal to ten percent (10%) of the
Excess Cash Flow for the most recently completed Fiscal Quarter, any Credit
Party may redeem Equity Interests from officers, directors and employees of such
Credit Party.

 

10.       SECURITY INTEREST

 

10.1       Grant of Security Interest.

 

(a)        As collateral security for the prompt and complete payment and
performance of all of the Obligations, each Credit Party executing this
Agreement hereby grants to Agent for the benefit of Secured Parties a security
interest in and Lien upon all of its property and assets, whether real or
personal, tangible or intangible, and whether now owned or hereafter acquired,
or in which it now has or at any time in the future may acquire any right,
title, or interest, including all of the following property in which it now has
or at any time in the future may acquire any right, title or interest: all
Accounts; all Deposit Accounts and all funds on deposit therein; all cash and
cash equivalents; all commodity contracts; all investments, Equity Interests and
Investment Property; all Inventory; all Equipment; all Goods; all Chattel Paper,
all Documents; all Instruments; all Books and Records; all General Intangibles;
all Supporting Obligations; all Letter-of-Credit Rights; and to the extent not
otherwise included, all Proceeds and products of all and any of the foregoing
and all collateral security and guarantees given by any Person with respect to
any of the foregoing, but excluding in all events Hazardous Waste and the
Excluded Equity Interests (all of the foregoing, together with any other
collateral pledged to Agent for the benefit of Secured Parties pursuant to any
other Loan Document, collectively, the “Collateral”).

 

(b)        Each Credit Party executing this Agreement and Agent agree that this
Agreement creates, and is intended to create, valid and continuing Liens upon
the Collateral in favor of Agent for the benefit of Secured Parties. Each such
Credit Party represents, warrants and promises to Agent and Lenders that: (i)
such Credit Party is the sole owner of each item of the Collateral upon which it
purports to grant a Lien pursuant to the Loan Documents, and has good and
marketable title thereto free and clear of any and all Liens or claims of
others, other than Permitted Liens; (ii) the security interests granted pursuant
to this Agreement will constitute valid perfected security interests in all of
the Collateral in favor of Agent for the benefit of Secured Parties as security
for the prompt and complete payment and performance of the Obligations,
enforceable in accordance with the terms hereof against any and all creditors of
and purchasers from such Credit Party (other than purchasers of Inventory in the
ordinary course of business) and such security interests are prior to all other
Liens on the Collateral in existence on the date hereof except for Permitted
Liens which have priority by operation of law; and (iii) no effective security
agreement, financing statement, equivalent security or Lien instrument or
continuation statement covering all or any part of the Collateral is or will be
on file or of record in any public office, except those relating to Permitted
Liens. Each Credit Party executing this Agreement promises to defend the right,
title and interest of Agent in and to the Collateral against the claims and
demands of all Persons whomsoever (other than with respect to Permitted Liens),
and each Credit Party shall take such actions, including (x) the prompt delivery
of all negotiable Documents, original Instruments, Chattel Paper and
certificated Equity Interests owned by such Credit Party to Agent, (y)
notification of Agent’s interest in Collateral at Agent’s request, and (z) the
institution of litigation against third parties as shall be prudent in order to
protect and preserve such Credit Party’s and Agent’s respective and several
interests in the Collateral. Each Credit Party executing this Agreement shall
mark its Books and Records pertaining to the Collateral to evidence the Loan
Documents and the Liens granted under the Loan Documents. All Chattel Paper
shall be marked with the following legend: “This writing and the obligations
evidenced or secured hereby are subject to the security interest of Bank
Hapoalim B.M., as Agent.”

 

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(c)        Each Credit Party executing this Agreement shall take such action
reasonably requested by Agent to obtain waivers or subordinations of Liens from
landlords and mortgagees, and each Credit Party shall in all instances obtain
signed acknowledgments of Agent’s Liens from bailees having possession of such
Credit Party’s Goods that they hold for the benefit of Agent.

 

(d)        Each Credit Party executing this Agreement shall promptly, and in any
event within two (2) Business Days after becoming a beneficiary under a letter
of credit, notify Agent thereof and thereafter enter into a tri-party agreement
with Agent and the issuer and/or confirmation bank with respect to
Letter-of-Credit Rights assigning such Letter-of-Credit Rights to Agent and
directing all payments thereunder to Agent, all in form and substance reasonably
satisfactory to Agent.

 

(e)        Each Credit Party executing this Agreement shall take all steps as
Agent may reasonably request to grant Agent control of all electronic chattel
paper in accordance with the UCC and all “transferable records” as defined in
each of the Uniform Electronic Transactions Act and the Electronic Signatures in
Global and National Commerce Act.

 

(f)        Each Credit Party executing this Agreement hereby irrevocably
authorizes Agent at any time and from time to time to file in any filing office
in any Uniform Commercial UCC jurisdiction any initial financing statements and
amendments thereto that (i) indicate the Collateral (x) as all assets of such
Credit Party or words of similar effect, regardless of whether any particular
asset comprised in the Collateral falls within the scope of Article 9 of the UCC
or such jurisdiction, or (y) as being of an equal or lesser scope or with
greater detail, and (ii) contain any other information required by Part 5 of
Article 9 of the UCC or the filing office for acceptance of any financing
statement or amendment, including whether each Credit Party is an organization,
the type of organization and any organization identification number issued to
each Credit Party, and in the case of a financing statement filed as a fixture
filing or indicating Collateral as as-extracted collateral or timber to be cut,
a sufficient description of real property to which the Collateral relates. Each
Credit Party agrees to furnish any such information to Agent promptly upon
request. Each Credit Party also ratifies its authorization for Agent to have
filed any initial financing statements or amendments thereto if filed prior to
the date hereof.

 

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(g)        Each Credit Party shall promptly, and in any event within two (2)
Business Days after the same is acquired by it, notify Agent of any commercial
tort claim (as defined in the UCC) acquired by it and unless otherwise consented
by Agent, each Credit Party shall enter into a supplement to this Agreement,
granting to Agent for the benefit of Secured Parties a Lien in such commercial
tort claim.

 

10.2       Agent’s Rights.

 

(a)        Agent may (i) at any time in Agent’s own name or in the name of each
Credit Party, communicate with Account Debtors, parties to Contracts, and
obligors in respect of Instruments, Chattel Paper or other Collateral to verify
to Agent’s satisfaction, the existence, amount and terms of any such Accounts,
Contracts, Instruments or Chattel Paper or other Collateral, and (ii) following
the occurrence of an Event of Default, at any time and without prior notice to
any Credit Party notify Account Debtors, parties to Contracts, and obligors in
respect of Chattel Paper, Instruments, or other Collateral that the Collateral
has been assigned to Agent and that payments shall be made directly to Agent.
Upon the request of Agent, each Credit Party shall so notify such Account
Debtors, parties to Contracts, and obligors in respect of Instruments, Chattel
Paper or other Collateral. Each Credit Party hereby constitutes Agent or Agent’s
designee such Credit Party’s attorney with power to endorse such Credit Party’s
name upon any notes, acceptance drafts, money orders or other evidences of
payment or Collateral.

 

(b)        Each Credit Party shall remain liable under each Contract, Instrument
and License to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, and neither Agent nor any Lender shall
have any obligation or liability whatsoever to any Person under any Contract,
Instrument or License (between any Credit Party and any Person other than Agent
or any Lender) by reason of or arising out of the execution, delivery or
performance of this Agreement, and neither Agent nor any Lender shall be
required or obligated in any manner (i) to perform or fulfill any of the
obligations of any Credit Party, (ii) to make any payment or inquiry, or (iii)
to take any action of any kind to collect, compromise or enforce any performance
or the payment of any amounts which may have been assigned to it or to which it
may be entitled at any time or times under or pursuant to any Contract,
Instrument or License.

 

10.3       Agent’s Appointment as Attorney-in-Fact. On the Effective Date, each
Credit Party shall execute and deliver a Power of Attorney in the form attached
as Exhibit D. The power of attorney granted pursuant to the Power of Attorney
and all powers granted under any Loan Document are powers coupled with an
interest and shall be irrevocable until the Termination Date. The powers
conferred on Agent under the Power of Attorney are solely to protect Agent’s
interests in the Collateral and shall not impose any duty upon it to exercise
any such powers. Agent agrees, except for the powers granted in clause (h) of
the Power of Attorney, not to exercise any power or authority granted under the
Power of Attorney unless an Event of Default has occurred and is continuing.
Each Credit Party authorizes Agent to file any financing or continuation
statement without the signature of Borrowers to the extent permitted by
applicable law. NONE OF AGENT OR ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO ANY CREDIT PARTY FOR ANY ACT
OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF
DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, OR FOR ANY PUNITIVE,
EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

 

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10.4       Grant of License to Use Intellectual Property Collateral. In
connection with the exercise of Agent’s rights and remedies with respect to the
Collateral following an acceleration of the Obligations, each Credit Party
hereby grants to Agent an irrevocable, non-exclusive license without payment of
royalty or other compensation to any Credit Party, but subject to the terms of
any agreements relating thereto (including the payment of royalties required
thereunder), to use, transfer, license or sublicense any Intellectual Property
now owned, licensed to, or hereafter acquired by any Credit Party, and wherever
the same may be located, and including in such license access to all media in
which any of the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof; provided,
that such license will terminate on the Termination Date and all amounts
received by Agent with respect thereto shall be applied to the Obligations.

 

10.5       Terminations; Amendments Not Authorized. Each Credit Party executing
this Agreement acknowledges that it is not authorized to file any financing
statement or amendment or termination statement with respect to any financing
statement without the prior written consent of Agent and agrees that it will not
do so without the prior written consent of Agent, subject to Borrower’s rights
under Section 9-509(d)(2) of the UCC.

 

10.6       Inspections. At all times following the occurrence of a Default or an
Event of Default and up to one time during each 6-month period, absent the
occurrence of a Default or an Event of Default, at a time during normal business
hours mutually agreeable to Agent and Borrowing Representative, Agent shall have
the right, at the cost and expense of Borrowers, to (a) have access to, visit,
inspect, review, evaluate and make physical verification and appraisals of each
Credit Party’s properties and the Collateral, (b) inspect, examine and copy (or
take originals if necessary) and make extracts from such Credit Party’s Books
and Records, including management letters prepared by independent accountants,
and (c) discuss with each Credit Party’s principal officers, and independent
accountants, each Credit Party’s business, assets, liabilities, financial
condition, results of operations and business prospects. Each Credit Party will
deliver to Agent any instrument necessary for Agent to obtain records from any
service bureau maintaining records for such Credit Party.

 

11.       TERM

 

11.1       Term of Agreement. Any obligation of Lenders to make Loans and extend
their financial accommodations under this Agreement or any Loan Document shall
continue in full force and effect until the expiration of the applicable Term.
The termination of the Agreement shall not affect any of Agent’s or any Lender’s
rights hereunder or any Loan Document and the provisions hereof and thereof
shall continue to be fully operative until all transactions entered into, rights
or interests created and the Obligations have been paid or performed in full.
Notwithstanding the foregoing, Agent shall release its security interests at any
time upon payment to it of all Obligations if each Credit Party shall have
provided Agent with an executed release of any and all claims which Credit
Parties may have or thereafter have under this Agreement and/or any Loan
Document.

 

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11.2       Termination of Lien. The Liens and rights granted to Agent hereunder
and any Loan Documents and the financing statements filed in connection herewith
or therewith shall continue in full force and effect, notwithstanding the
termination of any obligation to extend financial accommodations under this
Agreement or the fact that Borrowers’ account may from time to time be
temporarily in a zero or credit position, until all of the Obligations have been
paid or performed in full after the termination of this Agreement or each Credit
Party has furnished Agent with an indemnification satisfactory to Agent with
respect thereto. Agent shall not be required to send such termination statements
to any Credit Party, or to file them with any filing office, unless and until
all obligations to extend financial accommodations under the Loan Documents
shall have been terminated in accordance with their terms and all Obligations
paid or performed in full.

 

11.3       Release of Lien. Agent shall release any Lien held by Agent hereunder
and under any other Loan Documents and the financing statements filed in
connection herewith or therewith against any part of the Collateral is sold or
disposed of by any Credit Party if such sale or disposition is permitted by this
Agreement or is otherwise consented to by Required Lenders.

 

12.       EVENTS OF DEFAULT

 

12.1       Events of Default. If any one or more of the following events (each,
an “Event of Default”) shall occur and be continuing:

 

(a)       any Borrower (i) shall fail to pay the principal of any Loan when and
as the same shall become due and payable (whether at maturity, by acceleration
or otherwise) or (ii) shall fail to pay interest on any Loan, any fees payable
hereunder or any other Obligations within three (3) Business Days of when such
becomes due and payable; or

 

(b)       any representation or warranty made or deemed made in or in connection
with this Agreement or any other Loan Document or as an inducement to enter into
this Agreement or any other Loan Document or any representation, warranty,
statement or information contained in any report, certificate, financial
statement or other instrument or agreement furnished in connection with or
pursuant to this Agreement or any other Loan Document shall prove to have been
false or misleading in any material respect when made, deemed to be made or
furnished; or

 

(c)       (i) any Credit Party shall fail or neglect to perform, keep or observe
any of the covenants, promises, agreements, requirements, conditions or other
terms or provisions contained in Sections 7.1, 7.3, 7.18, 7.19, 8.2 and 9 of
this Agreement; or (ii) any Credit Party shall fail or neglect to perform, keep
or observe any of the other covenants, promises, agreements, requirements,
conditions or other terms or provisions contained in this Agreement (other than
those set forth in the Sections referred to in clause (i) immediately above) or
any of the other Loan Documents and such breach is not remediable or, if
remediable, continues unremedied for a period of thirty (30) days after the
earlier to occur of (x) the date on which any officer of any Credit Party
becomes aware of such breach and (y) the date on which Agent shall have notified
any Credit Party of such breach; or

 

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(d)       this Agreement or any other Loan Document shall not be for any reason,
or shall be asserted by any Credit Party not to be, in full force and effect in
all material respects in accordance with its terms or the Lien granted or
intended to be granted to Agent pursuant to this Agreement or any other Loan
Document shall cease to be a valid and perfected Lien having the first priority
(or a lesser priority if expressly permitted in this Agreement or another Loan
Document); or

 

(e)       any judgment involving an aggregate liability of $750,000 or more
(excluding amounts covered by insurance to the extent the relevant third party
insurers have agreed in writing to cover such amounts) shall be rendered against
any Credit Party or there shall be any attachment or execution against any of
the assets or properties of any Credit Party, and such judgment, attachment or
execution remains unpaid, unstayed or undismissed for a period of thirty (30)
days from the date of such judgment; or

 

(f)       any Credit Party shall be dissolved or shall generally not pay, or
shall be generally unable to pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted or a petition shall be filed by or against any Credit Party seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition of it
or its debts under any law relating to bankruptcy, insolvency or reorganization
or relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property and , in the case of any such
proceeding filed against a Credit Party, such proceeding shall continue
undismissed or unstatyed for sixty (60) days; or any Credit Party shall take any
action to authorize any of the actions set forth above in this clause (f); or

 

(g)          any Credit Party shall (i) fail to pay any principal or interest,
regardless of amount, due in respect of Indebtedness exceeding $500,000 when and
as the same shall become due and payable or (ii) fail to observe or perform any
other term, covenant, condition or agreement contained in any agreements or
instruments evidencing or governing any such Indebtedness if the effect of any
failure referred to in this clause (ii) is to cause, or to permit the holder or
holders of such indebtedness or a trustee on its or their behalf to cause, such
Indebtedness to become due prior to its stated maturity; or

 

(h)       the occurrence of a Change of Control or Change of Management; or

 

(i)       there shall be commenced against any Credit Party any Litigation
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in the
entry of an order for any such relief which remains unstayed or undismissed for
thirty (30) consecutive days; or any Credit Party shall have concealed, removed
or permitted to be concealed or removed, any part of its property with intent to
hinder, delay or defraud any of its creditors or made or suffered a transfer of
any of its property or the incurring of an obligation which may be fraudulent
under any bankruptcy, fraudulent transfer or other similar law; or

 

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(j)       the termination of, any amendment or other modification to, or any
default under any QVC Agreement, the Master License Agreement or any other
Revenue License but only to the extent such event could reasonably be expected
to have a Material Adverse Effect on any Credit Party’s business or financial
condition and, with respect to any such termination, the applicable Credit Party
has not replaced the applicable agreement within sixty (60) days of such
termination in the case of any QVC Agreement or within ninety (90) days of such
termination in the case of any other such agreement, in each case with a similar
agreement which generates revenue at least equivalent to the agreement which was
terminated; or

 

(k)       the occurrence of any event with Elizabeth Arden that results in a
material adverse effect on the value of the Intellectual Property purchased
pursuant to the Asset Purchase Agreement dated as of December 22, 2014 among
Initial Borrower, H Licensing and The H Company IP, LLC; or

 

(l)       any Credit Party shall take or participate in any action which would
be prohibited under the provisions of any Subordination Agreement or
Intercreditor Agreement or make any payment on the Subordinated Debt that any
Person was not entitled to receive under the provisions of the applicable
Subordination Agreement or Intercreditor Agreement;

 

then, and in any such event and at any time thereafter, if such or any other
Event of Default shall then be continuing, Agent in its sole discretion may, and
at the direction of the Required Lenders shall, declare any or all of the
Obligations to be due and payable, and the same shall immediately become due and
payable without presentment, demand, protest or notice of any kind, all of which
are hereby expressly waived, other than the notices required by this
Section 12.1; provided, however, if an Event of Default under paragraph (f)
above shall occur and be continuing, then all of the Obligations shall become
immediately due and payable without any necessary action or notice by Agent.

 

12.2        Remedies.

 

(a)      In addition to the rights and remedies set forth in Section 12.1, if
any Event of Default shall have occurred and be continuing, Agent may, without
notice except to the extent required by applicable law, require that all Letter
of Credit Obligations be fully cash collateralized pursuant to Schedule IV, or
exercise any rights and remedies provided to Agent under the Loan Documents or
at law or equity, including all remedies provided under the UCC.

 

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(b)       Without limiting the generality of the foregoing, each Credit Party
expressly agrees that upon the occurrence of any Event of Default and expiration
of the applicable cure period, Agent may take any action necessary to collect,
receive, assemble, process, appropriate and realize upon the Collateral, or any
part thereof, or appoint a third party to do so and may forthwith sell, lease,
assign, give an option or options to purchase or otherwise dispose of and
deliver said Collateral (or contract to do so), or any part thereof, in one or
more parcels at public or private sale or sales, at any exchange at such prices
as it may deem best, for cash or on credit or for future delivery. Agent shall
have the right upon any such public sale, to the extent permitted by law, to
purchase for the benefit of Secured Parties the whole or any part of said
Collateral so sold, free of any right of equity of redemption, which right each
Credit Party hereby releases. Such sales may be adjourned or continued from time
to time with or without notice. Agent shall have the right to conduct such sales
on any Credit Party’s premises or elsewhere and shall have the right to use any
Credit Party’s premises without rent or other charge for such sales or other
action with respect to the Collateral for such time as Agent deems necessary or
advisable.

 

(c)       Upon the occurrence and during the continuance of an Event of Default
and expiration of any applicable cure period, and at Agent’s request, each
Credit Party further agrees to assemble the Collateral and make it available to
Agent at places which Agent shall reasonably select, whether at its premises or
elsewhere. Agent shall have no obligation to any Credit Party to maintain or
preserve the rights of any Credit Party as against third parties with respect to
any Collateral while such Collateral is in the possession of Agent. Agent may,
if it so elects, seek the appointment of a receiver or keeper to take possession
of any Collateral and to enforce any of Agent’s remedies with respect thereto
without prior notice or hearing. To the maximum extent permitted by applicable
law, each Credit Party waives all claims, damages, and demands against Agent,
its Affiliates, agents, and the officers and employees of any of them arising
out of the repossession, retention or sale of any Collateral except such as are
determined in a final judgment by a court of competent jurisdiction to have
arisen solely out of the gross negligence or willful misconduct of such Person.
Each Credit Party agrees that ten (10) days prior notice by Agent to each Credit
Party of the time and place of any public sale or of the time after which a
private sale may take place is reasonable notification of such matters. Each
Credit Party shall remain liable for any deficiency if the proceeds of any sale
or disposition of the Collateral are insufficient to pay all amounts to which
Agent and Lenders are entitled.

 

(d)       Agent’s and Lenders’ rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies which Agent or any
Lender may have under any other Loan Document or at law or in equity. Recourse
to the Collateral shall not be required. All provisions of this Agreement are
intended to be subject to all applicable mandatory provisions of law that may be
controlling and to be limited, to the extent necessary, so that they do not
render this Agreement invalid or unenforceable, in whole or in part.

 

12.3       Waivers. Except as otherwise provided for in this Agreement and to
the fullest extent permitted by applicable law, each Credit Party waives: (a)
presentment, demand and protest, and notice of presentment, dishonor, intent to
accelerate, acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all Loan Documents, the
Notes, Accounts, Contracts, Documents, Instruments, Chattel Paper and guaranties
at any time held by Agent or any Lender on which any Credit Party may in any way
be liable; (b) all rights to notice and a hearing prior to Agent’s taking
possession or control of, or to Agent’s replevy, attachment or levy upon, any
Collateral or any bond or security which might be required by any court prior to
allowing Agent to exercise any of its remedies; and (c) the benefit of all
valuation, appraisal and exemption laws. Each Credit Party acknowledges that it
has been advised by counsel of its choices and decisions with respect to this
Agreement, the other Loan Documents and the transactions evidenced hereby and
thereby.

 

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12.4       Proceeds. The Proceeds of any sale, disposition or other realization
upon any Collateral shall be applied by Agent upon receipt to the Obligations in
such order as Agent may deem advisable in its sole discretion (including the
cash collateralization of any Letter of Credit Obligations) and after the
indefeasible payment and satisfaction in full in cash of all of the Obligations,
and after the payment by Agent of any other amount required by any provision of
law, including the UCC, the surplus, if any, shall be paid to Borrowers or their
representatives or to whomsoever may be lawfully entitled to receive the same,
or as a court of competent jurisdiction may direct.

 

13.       AGENT

 

13.1       Appointment and Duties.

 

(a)       Each Lender and each LC Issuer hereby appoints Agent (together with
any successor Agent pursuant to Section 13.9) as agent hereunder and authorizes
Agent to (i) execute and deliver the Loan Documents and accept delivery thereof
on its behalf from any Credit Party, (ii) take such action on its behalf and to
exercise all rights, powers and remedies and perform the duties as are expressly
delegated to Agent under such Loan Documents and (iii) exercise such powers as
are incidental thereto.

 

(b)       Without limiting the generality of clause (a) above, Agent shall have
the sole and exclusive right and authority (to the exclusion of Lenders and LC
Issuers), and is hereby authorized, to (i) act as the disbursing and collecting
agent for Lenders and LC Issuer with respect to all payments and collections
arising in connection with the Loan Documents (including in any proceeding
described in Section 12.1(f) or any other bankruptcy, insolvency or similar
proceeding), and each Person making any payment in connection with any Loan
Document to any Secured Party is hereby authorized to make such payment to
Agent, (ii) file and prove claims and file other documents necessary or
desirable to allow the claims of Secured Parties with respect to any Obligation
in any proceeding described in Section 12.1(f) or any other bankruptcy,
insolvency or similar proceeding (but not to vote, consent or otherwise act on
behalf of such Person), (iii) act as collateral agent for each Secured Party for
purposes of the perfection of all Liens created by such agreements and all other
purposes stated therein, (iv) manage, supervise and otherwise deal with the
Collateral, (v) take such other action as is necessary or desirable to maintain
the perfection and priority of the Liens created or purported to be created by
the Loan Documents, (vi) except as may be otherwise specified in any Loan
Document, exercise all remedies given to Agent and the other Secured Parties
with respect to the Collateral, whether under the Loan Documents, applicable
Requirements of Law or otherwise and (vii) execute any amendment, consent or
waiver under the Loan Documents on behalf of any Lender that has consented in
writing to such amendment, consent or waiver; provided, however, that Agent
hereby appoints, authorizes and directs each Lender and LC Issuer to act as
collateral sub-agent for Agent, Lenders and LC Issuer for purposes of the
perfection of Liens with respect to any deposit account maintained by a Credit
Party with, and cash and cash equivalents held by, such Lender or LC Issuer, and
may further authorize and direct Lenders and LC Issuer to take further actions
as collateral sub-agents for purposes of enforcing such Liens or otherwise to
transfer the Collateral subject thereto to Agent, and each Lender and LC Issuer
hereby agrees to take such further actions to the extent, and only to the
extent, so authorized and directed.

 

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(c)       Under the Loan Documents, Agent (i) is acting solely on behalf of
Secured Parties, with duties that are entirely administrative in nature,
notwithstanding the use of the defined term “Agent”, the terms “agent”, “Agent”
and “collateral agent” and similar terms in any Loan Document to refer to Agent,
which terms are used for title purposes only, (ii) is not assuming any
obligation under any Loan Document other than as expressly set forth therein or
any role as agent, fiduciary or trustee of or for any Lender, LC Issuer or any
other Person and (iii) shall have no implied functions, responsibilities,
duties, obligations or other liabilities under any Loan Document, and each
Secured Party, by accepting the benefits of the Loan Documents, hereby waives
and agrees not to assert any claim against Agent based on the roles, duties and
legal relationships expressly disclaimed in clauses (i) through (iii) above.

 

13.2        Binding Effect. Each Secured Party, by accepting the benefits of the
Loan Documents, agrees that (i) any action taken by Agent or Required Lenders
(or, if expressly required hereby, a greater proportion of Lenders) in
accordance with the provisions of the Loan Documents, (ii) any action taken by
Agent in reliance upon the instructions of Required Lenders (or, where so
required, such greater proportion) and (iii) the exercise by Agent or Required
Lenders (or, where so required, such greater proportion) of the powers set forth
herein or therein, together with such other powers as are incidental thereto,
shall be authorized and binding upon all of Secured Parties.

 

13.3       Use of Discretion.

 

(a)       Agent 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 Agent is
required to exercise as directed in writing by Required Lenders (or such other
number or percentage of Lenders as shall be expressly provided for herein or in
the other Loan Documents); provided, that Agent shall not be required to take
any action that, in its opinion or the opinion of its counsel, may expose Agent
to liability or that is contrary to any Loan Document or applicable Requirement
of Law.

 

(b)       Agent 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 any Credit Party or its
Affiliates that is communicated to or obtained by Agent or any of its Affiliates
in any capacity.

 

(c)       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, Agent
in accordance with the Loan Documents for the benefit of all Secured Parties;
provided that the foregoing shall not prohibit (i) Agent from exercising on its
own behalf the rights and remedies that inure to its benefit (solely in its
capacity as Agent) hereunder and under the other Loan Documents, (ii) LC Issuer
from exercising the rights and remedies that inure to its benefit (solely in its
capacity as LC Issuer) hereunder and under the other Loan Documents, (iii) any
Lender from exercising setoff rights or (iv) 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 bankruptcy or other debtor
relief law; and provided further that if at any time there is no Person acting
as Agent hereunder and under the other Loan Documents, then (A) Required Lenders
shall have the rights otherwise ascribed to Agent pursuant to Section 13.1 and
(B) in addition to the matters set forth in clauses (ii), (iii) and (iv) of the
preceding proviso and subject to Section 13.1, any Lender may, with the consent
of Required Lenders, enforce any rights and remedies available to it and as
authorized by Required Lenders.

 

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13.4        Delegation of Rights and Duties. Agent may, upon any term or
condition it specifies, delegate or exercise any of its rights, powers and
remedies under, and delegate or perform any of its duties or any other action
with respect to, any Loan Document by or through any trustee, co-agent,
employee, attorney-in-fact and any other Person (including any Secured Party),
provided that Agent shall be liable for all acts or failures to act of any such
Person to the same extent as Agent would be if Agent performed such action. Any
such Person shall benefit from this Article 13 to the extent provided by Agent.

 

13.5       Reliance and Liability.

 

(a)       Agent may, without incurring any liability hereunder, (i) treat the
payee of any Note as its holder until such Note has been assigned in accordance
with the terms of this Agreement, (ii) rely on the Register, (iii) consult with
any advisors, accountants and other experts (including advisors to, and
accountants and experts engaged by, any Credit Party) and (iv) rely and act upon
any document and information (including those transmitted by electronic
transmission) and any telephone message or conversation, in each case believed
by it to be genuine and transmitted, signed or otherwise authenticated by the
appropriate parties.

 

(b)       None of Agent and its Related Persons shall be liable for any action
taken or omitted to be taken by any of them under or in connection with any Loan
Document, and each Secured Party, each Borrower and each other Credit Party
hereby waive and shall not assert (and each Borrower shall cause each other
Credit Party to waive and agree not to assert) any right, claim or cause of
action based thereon, except to the extent of liabilities resulting primarily
from the gross negligence or willful misconduct of Agent or, as the case may be,
such Related Person (each as determined in a final, non-appealable judgment by a
court of competent jurisdiction) in connection with the duties expressly set
forth herein. Without limiting the foregoing, Agent:

 

(i)       shall not be responsible or otherwise incur liability for any action
or omission taken in reliance upon the instructions of Required Lenders or for
the actions or omissions of any of its Related Persons selected with reasonable
care (other than employees, officers and directors of Agent, when acting on
behalf of Agent);

 

(ii)      shall not be responsible to any Lender, LC Issuer or other Person for
the due execution, legality, validity, enforceability, effectiveness,
genuineness, sufficiency or value of, or the attachment, perfection or priority
of any Lien created or purported to be created under or in connection with, any
Loan Document;

 

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(iii)     makes no warranty or representation, and shall not be responsible, to
any Lender, LC Issuer or other Person for any statement, document, information,
representation or warranty made or furnished by or on behalf of any Credit Party
or any Related Person of any Credit Party in connection with any Loan Document
or any transaction contemplated therein or any other document or information
with respect to any Credit Party, whether or not transmitted or (except for
documents expressly required under any Loan Document to be transmitted to
Lenders) omitted to be transmitted by Agent, including as to completeness,
accuracy, scope or adequacy thereof, or for the scope, nature or results of any
due diligence performed by Agent in connection with the Loan Documents; and

 

(iv)     shall not have any duty to ascertain or to inquire as to the
performance or observance of any provision of any Loan Document, whether any
condition set forth in any Loan Document is satisfied or waived, as to the
financial condition of any Credit Party or as to the existence or continuation
or possible occurrence or continuation of any Default or Event of Default and
shall not be deemed to have notice or knowledge of such occurrence or
continuation unless it has received a notice from Borrower, any Lender or LC
Issuer describing such Default or Event of Default clearly labeled “notice of
default” (in which case Agent shall promptly give notice of such receipt to all
Lenders);

 

and, for each of the items set forth in clauses (i) through (iv) above, each
Lender, LC Issuer and each Borrower hereby waives and agrees not to assert (and
each of Holdings and Borrowers shall cause each other Credit Party to waive and
agree not to assert) any right, claim or cause of action it might have against
Agent based thereon.

 

(c)       Each Lender and LC Issuer (i) acknowledges that it has performed and
will continue to perform its own diligence and has made and will continue to
make its own independent investigation of the operations, financial conditions
and affairs of the Credit Parties and (ii) agrees that is shall not rely on any
audit or other report provided by Agent or its Related Persons (an “Agent
Report”). Each Lender and LC Issuer further acknowledges that any Agent Report
(i) is provided to Lenders and LC Issuers solely as a courtesy, without
consideration, and based upon the understanding that such Lender or LC Issuer
will not rely on such Agent Report, (ii) was prepared by Agent or its Related
Persons based upon information provided by the Credit Parties solely for Agent’s
own internal use, (iii) may not be complete and may not reflect all information
and findings obtained by Agent or its Related Persons regarding the operations
and condition of the Credit Parties. Neither Agent nor any of its Related
Persons makes any representations or warranties of any kind with respect to (i)
any existing or proposed financing, (ii) the accuracy or completeness of the
information contained in any Agent Report or in any related documentation, (iii)
the scope or adequacy of Agent’s and its Related Persons’ due diligence, or the
presence or absence of any errors or omissions contained in any Agent Report or
in any related documentation, and (iv) any work performed by Agent or Agent’s
Related Persons in connection with or using any Agent Report or any related
documentation.

 

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(d)        Neither Agent nor any of its Related Persons shall have any duties or
obligations in connection with or as a result of any Lender or LC Issuer
receiving a copy of any Agent Report. Without limiting the generality of the
forgoing, neither Agent nor any of its Related Persons shall have any
responsibility for the accuracy or completeness of any Agent Report, or the
appropriateness of any Agent Report for any Lender’s or LC Issuer’s purposes,
and shall have no duty or responsibility to correct or update any Agent Report
or disclose to any Lender or LC Issuer any other information not embodied in any
Agent Report, including any supplemental information obtained after the date of
any Agent Report. Each Lender and LC Issuer releases, and agrees that it will
not assert, any claim against Agent or its Related Persons that in any way
relates to any Agent Report or arises out of any Lender or LC Issuer having
access to any Agent Report or any discussion of its contents, and agrees to
indemnify and hold harmless Agent and its Related Persons from all claims,
liabilities and expenses relating to a breach by any Lender or LC Issuer arising
out of such Lender’s or LC Issuer’s access to any Agent Report or any discussion
of its contents.

 

13.6       Agent Individually. Agent and its Affiliates may make loans and other
extensions of credit to, acquire Stock of, engage in any kind of business with,
any Credit Party or Affiliate thereof as though it were not acting as Agent and
may receive separate fees and other payments therefor. To the extent Agent or
any of its Affiliates makes any Loan or otherwise becomes a Lender hereunder, it
shall have and may exercise the same rights and powers hereunder and shall be
subject to the same obligations and liabilities as any other Lender and the
terms “Lender”, “Revolving Lender”, “Required Lender” and any similar terms
shall, except where otherwise expressly provided in any Loan Document, include,
without limitation, Agent or such Affiliate, as the case may be, in its
individual capacity as Lender, Revolving Lender or as one of Required Lenders
respectively.

 

13.7       Lender Credit Decision. Each Lender and each LC Issuer acknowledges
that it shall, independently and without reliance upon Agent, any Lender or LC
Issuer or any of their Related Persons or upon any document (including any
offering and disclosure materials in connection with the syndication of the
Loans) solely or in part because such document was transmitted by Agent or any
of its Related Persons, conduct its own independent investigation of the
financial condition and affairs of each Credit Party and make and continue to
make its own credit decisions in connection with entering into, and taking or
not taking any action under, any Loan Document or with respect to any
transaction contemplated in any Loan Document, in each case based on such
documents and information as it shall deem appropriate. Except for documents
expressly required by any Loan Document to be transmitted by Agent to Lenders or
LC Issuers, Agent shall not have any duty or responsibility to provide any
Lender or LC Issuer with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of any Credit Party or any Affiliate of any Credit Party that
may come in to the possession of Agent or any of its Related Persons.

 

13.8       Expenses; Indemnities; Withholding.

 

(a)       Each Lender agrees to reimburse Agent and each of its Related Persons
(to the extent not reimbursed by any Credit Party) promptly upon demand,
severally and ratably, for any costs and expenses (including fees, charges and
disbursements of financial, legal and other advisors and taxes paid in the name
of, or on behalf of, any Credit Party) that may be incurred by Agent or any of
its Related Persons in connection with the preparation, syndication, execution,
delivery, administration, modification, consent, waiver or enforcement of, or
the taking of any other action (whether through negotiations, through any
work-out, bankruptcy, restructuring or other legal or other proceeding
(including, without limitation, preparation for and/or response to any subpoena
or request for document production relating thereto) or otherwise) in respect
of, or legal advice with respect to its rights or responsibilities under, any
Loan Document.

 

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(b)       Each Lender further agrees to indemnify Agent and each of its Related
Persons (to the extent not reimbursed by any Credit Party), severally and
ratably, from and against liabilities (including taxes, interests and penalties
imposed for not properly withholding or backup withholding on payments made to
or for the account of any Lender) that may be imposed on, incurred by or
asserted against Agent or any of its Related Persons in any matter relating to
or arising out of, in connection with or as a result of any Loan Document or any
other act, event or transaction related, contemplated in or attendant to any
such document, or, in each case, any action taken or omitted to be taken by
Agent or any of its Related Persons under or with respect to any of the
foregoing; provided, however, that no Lender shall be liable to Agent or any of
its Related Persons to the extent such liability has resulted primarily from the
gross negligence or willful misconduct of Agent or, as the case may be, such
Related Person, as determined by a court of competent jurisdiction in a final
non-appealable judgment or order.

 

(c)       To the extent required by any applicable law, Agent may withhold from
any payment to any Lender under a Loan Document an amount equal to any
applicable withholding tax. If the IRS or any other Governmental Authority
asserts a claim that Agent did not properly withhold tax from amounts paid to or
for the account of any Lender (because the appropriate certification form was
not delivered, was not properly executed, or fails to establish an exemption
from, or reduction of, withholding tax with respect to a particular type of
payment, or because such Lender failed to notify Agent or any other Person of a
change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason), or Agent reasonably
determines that it was required to withhold taxes from a prior payment but
failed to do so, such Lender shall promptly indemnify Agent fully for all
amounts paid, directly or indirectly, by such Agent as tax or otherwise,
including penalties and interest, and together with all expenses incurred by
Agent, including legal expenses, allocated internal costs and out-of-pocket
expenses. Agent may offset against any payment to any Lender under a Loan
Document, any applicable withholding tax that was required to be withheld from
any prior payment to such Lender but which was not so withheld, as well as any
other amounts for which Agent is entitled to indemnification from such Lender.

 

13.9       Resignation of Agent .

 

(a)       Agent may resign at any time by delivering notice of such resignation
to Lenders and Borrowing Representative, effective on the date set forth in such
notice or, if no such date is set forth therein, upon the date such notice shall
be effective in accordance with the terms of this Section 13.9. If Agent
delivers any such notice, Required Lenders shall have the right to appoint a
successor Agent. If, after thirty (30) days after the date of retiring Agent’s
notice of resignation, no successor Agent has been appointed by Required Lenders
that has accepted such appointment, then the retiring Agent may, on behalf of
Lenders, appoint a successor Agent from among Lenders. Each appointment under
this clause (a) shall be subject to the prior consent of the Borrowing
Representative, which may not be unreasonably withheld but shall not be required
during the continuance of an Event of Default.

 

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(b)       Effective immediately upon its resignation, (i) the retiring Agent
shall be discharged from its duties and obligations under the Loan Documents,
(ii) Lenders shall assume and perform all of the duties of Agent until a
successor Agent shall have accepted a valid appointment hereunder, (iii) the
retiring Agent and its Related Persons shall no longer have the benefit of any
provision of any Loan Document other than with respect to any actions taken or
omitted to be taken while such retiring Agent was, or because such Agent had
been, validly acting as Agent under the Loan Documents and (iv) the retiring
Agent shall take such action as may be reasonably necessary to assign to the
successor Agent its rights as Agent under the Loan Documents. Effective
immediately upon its acceptance of a valid appointment as Agent, a successor
Agent shall succeed to, and become vested with, all the rights, powers,
privileges and duties of the retiring Agent under the Loan Documents.

 

13.10     Release of Collateral or Guarantors. Each Lender and LC Issuer hereby
consents to the release and hereby directs Agent to release (or, in the case of
Section 13.10(b)(ii) below, release or subordinate) the following:

 

(a)       any Subsidiary of Borrowers from its guaranty of any Obligation if all
of the Equity Interests of such Subsidiary owned by any Credit Party are sold or
transferred in a transaction permitted under the Loan Documents (including
pursuant to a waiver or consent); and

 

(b)       any Lien held by Agent for the benefit of Secured Parties against (i)
any Collateral that is sold, transferred, conveyed or otherwise disposed of by a
Credit Party in a transaction permitted by the Loan Documents (including
pursuant to a waiver or consent), (ii) any property subject to a Lien permitted
hereunder and (iii) all of the Collateral and all Credit Parties, upon (A)
termination of the Commitments, (B) payment and satisfaction in full of all
Loans, all Letter of Credit Obligations and all other Obligations under the Loan
Documents that Agent has theretofore been notified in writing by the holder of
such Obligation are then due and payable, (C) deposit of cash collateral with
respect to all contingent Obligations (or, as an alternative to cash collateral
in the case of any Letter of Credit Obligation, receipt by Agent of a back-up
letter of credit), in amounts and on terms and conditions and with parties
satisfactory to Agent and each indemnitee that is, or may be, owed such
Obligations (excluding contingent Obligations (other than Letter of Credit
Obligations) as to which no claim has been asserted) and (D) to the extent
requested by Agent, receipt by Agent and Secured Parties of liability releases
from the Credit Parties each in form and substance acceptable to Agent.

 

Each Lender and LC Issuer hereby directs Agent, and Agent hereby agrees, upon
receipt of notice from the Borrowing Representative, to execute and deliver or
file such documents and to perform other actions reasonably necessary to release
the guaranties and Liens when and as directed in this Section 13.10.

 

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14.       MISCELLANEOUS

 

14.1       No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of Lender, any right, remedy, power or privilege
under this Agreement or any other Loan Documents shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege. No notice to or
demand on any Credit Party in any case shall, of itself, entitle it to any other
or further notice or demand in similar or other circumstances. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.

 

14.2       Amendments and Waivers.

 

(a)       No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent with respect to any departure by any Credit Party
therefrom, shall be effective unless the same shall be in writing and signed by
Agent, Required Lenders (or by Agent with the consent of Required Lenders), and
Credit Parties, and then such waiver shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no such waiver, amendment, or consent shall, unless in writing and signed by all
Lenders directly affected thereby (or by Agent with the consent of all Lenders
directly affected thereby), in addition to Agent and Required Lenders (or by
Agent with the consent of Required Lenders) and Borrowers, do any of the
following:

 

(i)       increase or extend the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 12.2);

 

(ii)      postpone or delay any date fixed for, or reduce or waive, any
scheduled installment of principal or any payment of interest, fees or other
amounts (other than principal) due to Lenders (or any of them) or LC Issuer
hereunder or under any other Loan Document;

 

(iii)     reduce the principal of, or the rate of interest specified herein or
the amount of interest payable in cash specified herein on any Loan, or of any
fees or other amounts payable hereunder or under any other Loan Document;

 

(iv)     change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans which shall be required for Lenders or any of them
to take any action hereunder;

 

(v)      amend this Section 14.2 or, subject to Section 14.2(e) below, the
definition of Required Lenders or any provision providing for consent or other
action by all Lenders; or

 

(vi)     discharge any Credit Party from its respective payment Obligations
under the Loan Documents, or release all or substantially all of the Collateral,
except as otherwise may be provided in this Agreement or the other Loan
Documents;

 

it being agreed that all Lenders shall be deemed to be directly affected by an
amendment or waiver of the type described in the preceding clauses (iv), (v) and
(vi).

 

(b)       No amendment, waiver or consent shall, unless in writing and signed by
Agent or LC Issuer, as the case may be, in addition to Required Lenders or all
Lenders directly affected thereby, as the case may be (or by Agent with the
consent of Required Lenders or all Lenders directly affected thereby, as the
case may be), affect the rights or duties of Agent or LC Issuer, as applicable,
under this Agreement or any other Loan Document

 

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(c)       No amendment or waiver shall, unless signed by Agent and Required
Lenders (or by Agent with the consent of Required Lenders): (i) amend or waive
compliance with the conditions precedent to the obligations of Lenders to make
any Revolving Loan (or of LC Issuer to issue any Letter of Credit); (ii) waive
any Default or Event of Default for the purpose of satisfying the conditions
precedent to the obligations of Lenders to make any Revolving Loan (or of LC
Issuer to issue any Letter of Credit); or (iii) amend or waive this Section
14.2(c).

 

(d)       Notwithstanding anything set forth herein to the contrary, a
Non-Funding Lender shall not have any voting or consent rights under or with
respect to any Loan Document or constitute a “Lender” (or be, or have its Loans
and Commitments, included in the determination of “Required Lenders” or “Lenders
directly affected” pursuant to this Section 14.2) for any voting or consent
rights under or with respect to any Loan Document, except that a Non-Funding
Lender shall be treated as an “Affected Lender” for purposes of Section
14.2(a)(i) and 14.2(a)(iii) solely with respect to an increase in such
Non-Funding Lender’s Commitments, a reduction of the principal amount owed to
such Non-Funding Lender or, unless such Non-Funding Lender is treated the same
as the other Lenders holding Loans of the same type, a reduction in the interest
rates applicable to the Loans held by such Non-Funding Lender. Moreover, for the
purposes of determining Required Lenders and Required Revolving Lenders, the
Revolving Loans and Revolving Commitments held by Non-Funding Lenders shall be
excluded from the total Loans and Commitments outstanding.

 

(e)       Notwithstanding anything to the contrary contained in this
Section 14.2, (i) Borrowers may amend Disclosure Schedules upon notice to Agent
and with the consent of Agent, (ii) Agent may amend Schedule III and V and (iii)
Agent and Credit Parties may amend or modify this Agreement and any other Loan
Document to (A) cure any ambiguity, omission, defect or inconsistency therein,
or (B) grant a new Lien for the benefit of Secured Parties, extend an existing
Lien over additional property for the benefit of Secured Parties or join
additional Persons as Credit Parties.

 

14.3       Expenses; Indemnity.

 

(a)       Each Credit Party agrees to, jointly and severally, pay or reimburse
Agent or each Lender for all costs and expenses (including, without limitation,
the reasonable fees and expenses of all counsel, advisors, consultants and
auditors) incurred by Agent and each Lender in connection with: (i) the
preparation, negotiation, execution, delivery, performance and enforcement of
this Agreement and the other Loan Documents, any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated shall be consummated); (ii) the enforcement or protection of
Agent’s and each Lender’s rights in connection with this Agreement and the other
Loan Documents or in connection with the Loans; (iii) any advice in connection
with the administration of the Loans or the rights under this Agreement or the
other Loan Documents; (iv) any litigation, dispute, suit, proceeding or action
(whether instituted by or between any combination of Agent, any Lender, any
Credit Party or any other Person), and an appeal or review thereof, in any way
relating to the Collateral, this Agreement, any other Loan Document, or any
action taken or any other agreements to be executed or delivered in connection
therewith, whether as a party, witness or otherwise; and (v) any effort (x) to
monitor the Loans, (y) to evaluate, observe or assess any Borrower or any other
Credit Party or the affairs of such Person, and (z) to verify, protect,
evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of the
Collateral. Each Credit Party further agrees, jointly and severally, to
indemnify Agent and Lenders from and agrees to hold it harmless against any
documentary taxes, assessments or charges made by any governmental authority by
reason of the execution and delivery of this Agreement or any of the other Loan
Documents.

 

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(b)       Each Credit Party agrees, jointly and severally, to indemnify Agent,
Lenders, the LC Issuers, their correspondents and each of their respective
directors, shareholders, officers, employees and agents (each, an “Indemnified
Person”) against, and agrees to hold each Indemnified Person harmless from, any
and all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees, charges and disbursements, incurred by or asserted
against any Indemnified Person arising out of, in any way connected with or as a
result of (i) the use of any of the proceeds of any Loan, (ii) the transactions
financed by the Loans, (iii) this Agreement, any other Loan Document or any
other document contemplated hereby or thereby, the performance by the parties
hereto or thereto of their respective obligations hereunder and thereunder or
the consummation of the transactions contemplated hereby and thereby, or (iv)
any claim, litigation, investigation or proceedings relating to any of the
foregoing, whether or not any Indemnified Person Indemnity is a party thereto;
provided, however, that such indemnity shall not, as to any Indemnified Person,
apply to any such losses, claims, damages, liabilities or related expenses to
the extent that they result from the gross negligence or willful misconduct of
such Indemnified Party.

 

(c)       The provisions of this Section 14.3 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement and
the repayment of the Loans. All amounts due under this Section 14.3 shall be
payable on written demand therefor.

 

14.4       Borrowing Agency Provisions. If and to the extent that at any time or
from time to time there are multiple Borrowers, then.

 

(a)       Each Borrower acknowledges that, together with each other Borrower, it
is part of an affiliated common enterprise in which any loans or other financial
accommodations extended to any one Borrower will result in direct and
substantial economic benefit to each other Borrower, and each Borrower will
likewise benefit from the economies of scale associated with Borrowers, as a
group, applying for credit or other financial accommodations on a collective
basis.

 

(b)       Each Borrower hereby irrevocably designates Borrowing Representative
to be its agent and in such capacity to borrow, sign and endorse notes, and
execute and deliver all instruments, documents, writings and further assurances
now or hereafter required hereunder, on behalf of such Borrower or Borrowers,
and hereby authorizes Agent and Lenders to pay over or credit all loan proceeds
hereunder in accordance with the request of Borrowing Representative.

 

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(c)       The handling of this credit facility as a co-borrowing facility with a
Borrowing Representative in the manner set forth in this Agreement is solely as
an accommodation to Borrowers and at their request. Neither Agent nor any Lender
shall incur liability to Borrowers as a result thereof. To induce Agent and
Lenders to do so and in consideration thereof, each Borrower, jointly and
severally, hereby indemnifies Agent and Lenders and holds Agent and Lenders
harmless from and against any and all liabilities, expenses, losses, damages and
claims of damage or injury asserted against Agent, any Lender or any LC Issuer
by any Person arising from or incurred by reason of the handling of the
financing arrangements of Borrowers as provided herein, reliance by Agent, any
Lender or LC Issuer on any request or instruction from Borrowing Representative
or any other action taken by Agent, any Lender or LC Issuer with respect to this
Section 14.4 except due to willful misconduct or gross negligence by the
indemnified party.

 

(d)       All Obligations shall be joint and several, and each Borrower shall
make payment upon the maturity of the Obligations by acceleration or otherwise,
and such obligation and liability on the part of each Borrower shall in no way
be affected by any extensions, renewals and forbearance granted by Agent, any
Lender or LC Issuer to any Borrower, failure of Agent or any Lender to give any
Borrower notice of borrowing or any other notice, any failure of Agent or any
Lender to pursue or preserve its rights against any Borrower, the release by
Agent of any Collateral now or thereafter acquired from any Borrower, and such
agreement by each Borrower to pay upon any notice issued pursuant thereto is
unconditional and unaffected by prior recourse by Agent, any Lender or LC Issuer
to the other Borrowers or any Collateral for such Borrower’s Obligations or the
lack thereof.

 

14.5       Guaranty. Each Guarantor hereby, jointly and severally, absolutely
and unconditionally guarantees to Secured Parties and its successors and assigns
the full and prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of all Obligations owed or hereafter owing to Secured
Parties by each Borrower. Each Guarantor agrees that its guaranty obligation
hereunder is a continuing guaranty of payment and performance and not of
collection, and that its obligations shall be absolute and unconditional,
irrespective of, and unaffected by:

 

(a)       the genuineness, validity, regularity, enforceability or any future
amendment of, or change in, this Agreement, any other Loan Documents;

 

(b)       the absence of any action to enforce this Agreement (including this
Section 14.5) or any other Loan Document or the waiver or consent by any Secured
Party with respect to any of the provisions hereof or thereof;

 

(c)       the existence, value or condition of, or failure to perfect its Lien
against, any security for the Obligations or any action, or the absence of any
action, by any Secured Party in respect thereof (including the release of any
such security);

 

(d)       the insolvency of any Credit Party; or

 

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(e)       any other action or circumstances that might otherwise constitute a
legal or equitable discharge or defense of a surety or guarantor,

 

it being agreed by each Guarantor that its obligations shall not be discharged
until the payment and performance, in full, of the Obligations has occurred.
Each Guarantor shall be regarded, and shall be in the same position, as
principal debtor with respect to the Obligations guaranteed hereunder.

 

14.6       Waivers. Each Credit Party expressly waives all rights it may have
now or in the future under any statute, or at common law, or at law or in
equity, or otherwise, to compel Agent or any Lender to marshal assets or to
proceed in respect of the Obligations against any other Credit Party, any other
party or against any security for the payment and performance of the Obligations
before proceeding against, or as a condition to proceeding against, such Credit
Party. It is agreed among each Credit Party, Agent and Lenders that the
foregoing waivers are of the essence of the transactions contemplated by this
Agreement and the other Loan Documents and that, but for the provisions of this
Section 14.6 and such waivers, Lenders would decline to enter into this
Agreement.

 

14.7       Benefit of Guaranty. Each Credit Party agrees that the provisions of
Section 14.5 are for the benefit of Agent and Lenders and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between any other Credit Party and any Secured Party, the
obligations of such other Credit Party under this Agreement or the other Loan
Documents.

 

14.8       Subordination of Subrogation. Notwithstanding anything to the
contrary in this Agreement or in any other Loan Documents, each Credit Party
hereby expressly and irrevocably subordinates to payment of the Obligations any
and all rights at law or in equity to subrogation, reimbursement, exoneration,
contribution, indemnification or set off and any and all defenses available to a
surety, guarantor or accommodation co-obligor until the Obligations are
indefeasibly paid in full in cash. Each Credit Party acknowledges and agrees
that this waiver is intended to benefit Agent and Lenders and shall not limit or
otherwise affect such Credit Party’s liability hereunder or the enforceability
of Section 14.5.

 

14.9       Election of Remedies. If Agent or any Lender may, under applicable
law, proceed to realize its benefits under this Agreement or any other Loan
Document giving Agent a Lien upon any Collateral, whether owned by any Borrower
or by any other Person, either by judicial foreclosure or by non-judicial sale
or enforcement, Agent and Lenders may, at its sole option, determine which of
its remedies or rights it may pursue without affecting any of its rights and
remedies under Section 14.5. If, in the exercise of any of its rights and
remedies, any Secured Party shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against any Credit Party or
any other Person, whether because of any applicable laws pertaining to “election
of remedies” or the like, each Credit Party hereby consents to such action by
Agent and Lenders and waives any claim based upon such action, even if such
action by Agent or any Lender shall result in a full or partial loss of any
rights of subrogation which such Credit Party might otherwise have had but for
such action by Agent or any Lender. Any election of remedies that results in the
denial or impairment of the right of Agent or any Lender to seek a deficiency
judgment against any Credit Party shall not impair any other Credit Party’s
obligation to pay the full amount of the Obligations. In the event Agent or any
Lender shall bid at any foreclosure or trustee’s sale or at any private sale
permitted by law, this Agreement or any other Loan Document, Agent or such
Lender may bid all or less than the amount of the Obligations and the amount of
such bid need not be paid by Agent or such Lender but may be credited against
the Obligations. The difference between such bid amount and the remaining
balance of the Obligations shall be conclusively deemed to be the amount of the
Obligations guaranteed under Section 14.5 notwithstanding that any present or
future law or court decision or ruling may have the effect of reducing the
amount of any deficiency claim to which Agent or any Lender might otherwise be
entitled but for such bidding at any such sale.

 

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14.10     Liability Cumulative. The liability of Credit Parties under Section
14.5 is in addition to and shall be cumulative with all liabilities of each
Credit Party to Secured Parties under this Agreement and the other Loan
Documents or in respect of any Obligations or obligation of the other Credit
Parties, without any limitation as to amount, unless the instrument or agreement
evidencing or creating such other liability specifically provides to the
contrary.

 

14.11     Waiver of Subrogation. Each Borrower expressly waives any and all
rights of subrogation, reimbursement, indemnity, exoneration, contribution of
any other claim which such Borrower may now or hereafter have against the other
Borrowers or other Person directly or contingently liable for the Obligations
hereunder, or against or with respect to the other Borrowers’ property
(including, without limitation, any property which is Collateral for the
Obligations), arising from the existence or performance of this Agreement, until
termination of this Agreement and repayment in full of the Obligations.

 

14.12     Assignments and Participations; Binding Effect.

 

(a)       Binding Effect. This Agreement shall become effective when it shall
have been executed by each Borrower, the other Credit Parties signatory hereto
and Agent and when Agent shall have been notified by each Lender that such
Lender has executed it. Thereafter, it shall be binding upon and inure to the
benefit of, but only to the benefit of, each Borrower, the other Credit Parties
hereto, Agent, each Lender and each LC Issuer receiving the benefits of the Loan
Documents and each other Secured Party and, in each case, their respective
successors and permitted assigns. Except as expressly provided in any Loan
Document none of any Borrower, any other Credit Party, any LC Issuer or Agent
shall have the right to assign any rights or obligations hereunder or any
interest herein.

 

(b)       Right to Assign. Each Lender may sell, transfer, negotiate or assign
(each, an “Assignment”) all or a portion of its rights and obligations hereunder
(including all or a portion of its Commitments and its rights and obligations
with respect to Loans and Letters of Credit) to (i) any existing Lender (other
than a Non-Funding Lender or Impacted Lender), (ii) any Affiliate or Approved
Fund of any existing Lender (other than a Non-Funding Lender or Impacted Lender)
or (iii) any other Person acceptable (which acceptance shall not be unreasonably
withheld or delayed) to Agent and as long as no Event of Default is continuing,
Borrowers (which acceptances shall be deemed to have been given unless an
objection is delivered to Agent within five (5) Business Days after notice of a
proposed Assignment is delivered to Borrowing Representative); provided,
however, that (w) for each Loan, the aggregate outstanding principal amount
(determined as of the effective date of the applicable Assignment) of the Loans,
Commitments and Letter of Credit Obligations subject to any such Assignment
shall be in a minimum amount of $5,000,000, unless such Assignment is made to an
existing Lender or an Affiliate or Approved Fund of any existing Lender, is of
the assignor’s (together with its Affiliates and Approved Funds) entire interest
in such facility or is made with the prior consent of Borrowers (to the extent
required) and Agent, (x) such Assignment shall be effective only upon the
acknowledgement in writing of such sale by Agent, (y) interest accrued prior to
and through the date of any such Assignment may not be assigned, and (z) such
Assignment by Lenders who are Non-Funding Lenders due to clause (a) of the
definition of Non-Funding Lender shall be subject to Agent’s prior written
consent in all instances, unless in connection with such Assignment, such
Non-Funding Lender cures, or causes the cure of, its Non-Funding Lender status.
Agent’s refusal to accept a sale to a Credit Party, an Affiliate of a Credit
Party, a holder of Subordinated Debt or an Affiliate of such a holder, or to any
Person that would be a Non-Funding Lender or an Impacted Lender, or the
imposition of conditions or limitations (including limitations on voting) upon
sales to such Persons, shall not be deemed to be unreasonable.

 

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(c)       Procedure. The parties to each sale made in reliance on clause (b)
above (other than those described in clause (e) or (f) below) shall execute and
deliver to Agent an Assignment Agreement evidencing such sale, together with any
existing Note subject to such sale (or any affidavit of loss therefor acceptable
to Agent), any tax forms required to be delivered pursuant to this Agreement and
payment of an assignment fee in the amount of $3,500 to Agent, unless waived or
reduced by Agent; provided, that (i) if a sale by a Lender is made to an
Affiliate or an Approved Fund of such assigning Lender, then no assignment fee
shall be due in connection with such sale, and (ii) if a sale by a Lender is
made to an assignee that is not an Affiliate or Approved Fund of such assignor
Lender, and concurrently to one or more Affiliates or Approved Funds of such
Assignee, then only one assignment fee of $3,500 shall be due in connection with
such sale (unless waived or reduced by Agent). Upon receipt of all the
foregoing, and conditioned upon such receipt and, if such assignment is made in
accordance with clause (iii) of Section 14.12(b), upon Agent (and Borrowers, if
applicable) consenting to such Assignment, from and after the effective date
specified in such Assignment, Agent shall record or cause to be recorded in the
Register the information contained in such Assignment Agreement.

 

(d)       Effectiveness. Subject to the recording of an Assignment by Agent in
the Register, (i) the assignee thereunder shall become a party hereto and, to
the extent that rights and obligations under the Loan Documents have been
assigned to such assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a Lender, (ii) any applicable Note shall be
transferred to such assignee through such entry and (iii) the assignor
thereunder shall, to the extent that rights and obligations under this Agreement
have been assigned by it pursuant to such Assignment Agreement, relinquish its
rights (except for those surviving the termination of the Commitments and the
payment in full of the Obligations) and be released from its obligations under
the Loan Documents, other than those relating to events or circumstances
occurring prior to such assignment (and, in the case of an Assignment Agreement
covering all or the remaining portion of an assigning Lender’s rights and
obligations under the Loan Documents, such Lender shall cease to be a party
hereto).

 

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(e)          Grant of Security Interests. In addition to the other rights
provided in this Section 14.12, each Lender may grant a security interest in, or
otherwise assign as collateral, any of its rights under this Agreement, whether
now owned or hereafter acquired (including rights to payments of principal or
interest on the Loans), to (A) any federal reserve bank (pursuant to Regulation
A of the Federal Reserve Board), without notice to Agent or (B) any holder of,
or trustee for the benefit of the holders of, such Lender’s indebtedness or
equity securities, by notice to Agent; provided, however, that no such holder or
trustee, whether because of such grant or assignment or any foreclosure thereon
(unless such foreclosure is made through an assignment in accordance with clause
(b) above), shall be entitled to any rights of such Lender hereunder and no such
Lender shall be relieved of any of its obligations hereunder.

 

(f)          Participants and SPVs. In addition to the other rights provided in
this Section 14.12, each Lender may, (x) with notice to Agent, grant to an SPV
the option to make all or any part of any Loan that such Lender would otherwise
be required to make hereunder (and the exercise of such option by such SPV and
the making of Loans pursuant thereto shall satisfy the obligation of such Lender
to make such Loans hereunder) and such SPV may assign to such Lender the right
to receive payment with respect to any Obligation and (y) without notice to or
consent from Agent or any Borrower, sell participations to one or more Persons
in or to all or a portion of its rights and obligations under the Loan Documents
(including all its rights and obligations with respect to the Revolving Loan and
Letters of Credit); provided, however, that, whether as a result of any term of
any Loan Document or of such grant or participation, (i) no such SPV or
participant shall have a commitment, or be deemed to have made an offer to
commit, to make Loans hereunder, and, except as provided in the applicable
option agreement, none shall be liable for any obligation of such Lender
hereunder, (ii) such Lender’s rights and obligations, and the rights and
obligations of the Credit Parties and Secured Parties towards such Lender, under
any Loan Document shall remain unchanged and each other party hereto shall
continue to deal solely with such Lender, which shall remain the holder of the
Obligations in the Register, except that (A) each such participant and SPV shall
be entitled to the benefit of Sections 3.9 and 3.10, but, with respect to
Section 3.9, only to the extent such participant or SPV delivers the tax forms
required pursuant to Section 3.9(f) as if it were a Lender and then only to the
extent of any amount to which such Lender would be entitled in the absence of
any such grant or participation and (B) each such SPV may receive other payments
that would otherwise be made to such Lender with respect to Loans funded by such
SPV to the extent provided in a notice provided to Agent by such SPV and such
Lender, provided, however, that in no case (including pursuant to clause (A) or
(B) above) shall an SPV or participant have the right to enforce any of the
terms of any Loan Document, and (iii) the consent of such SPV or participant
shall not be required (either directly, as a restraint on such Lender’s ability
to consent hereunder or otherwise) for any amendments, waivers or consents with
respect to any Loan Document or to exercise or refrain from exercising any
powers or rights such Lender may have under or in respect of the Loan Documents
(including the right to enforce or direct enforcement of the Obligations),
except for those described in clauses (ii) and (iii) of Section 14.2(a) with
respect to amounts, or dates fixed for payment of amounts, to which such
participant or SPV would otherwise be entitled and, in the case of participants,
except for those described in clause (v) of Section 14.2(a). No party hereto
shall institute (and Borrowers shall cause each other Credit Party not to
institute) against any SPV grantee of an option pursuant to this clause (f) any
bankruptcy, reorganization, insolvency, liquidation or similar proceeding, prior
to the date that is one year and one day after the payment in full of all
outstanding commercial paper of such SPV; provided, however, that each Lender
having designated an SPV as such agrees to indemnify each Indemnified Person
against any liability that may be incurred by, or asserted against, such
Indemnified Person as a result of failing to institute such proceeding
(including a failure to be reimbursed by such SPV for any such liability). The
agreement in the preceding sentence shall survive the termination of the
Commitments and the payment in full of the Obligations.

 

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(g)          A Lender that makes a grant to an SPV or sells a participation
pursuant to Section 14.12(f) shall, acting solely as a non-fiduciary agent of
Borrowers and the other Credit Parties, maintain a register similar to the
Register (the “Participant Register”) on which it enters the name and address of
each participant or SPV and the principal amounts (and stated interest) of each
participant’s or SPV’s interest in the Loans or other Obligations under the Loan
Documents. 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 interest for all purposes of
this Agreement notwithstanding any notice to the contrary. For avoidance of
doubt, the Agent (in its capacity as Agent) shall have no responsibility for
maintaining a Participant Register.

 

14.13         Set-off; Sharing of Payments.

 

(a)          Right of Setoff. Each of Agent, each Lender, each LC Issuer and
each Affiliate (including each branch office thereof) of any of them is hereby
authorized, without notice or demand (each of which is hereby waived by each
Credit Party), at any time and from time to time during the continuance of any
Event of Default and to the fullest extent permitted by applicable Requirements
of Law, to set off and apply any and all deposits (whether general or special,
time or demand, provisional or final) at any time held and other indebtedness,
claims or other obligations at any time owing by Agent, such Lender, such LC
Issuer or any of their respective Affiliates to or for the credit or the account
of Borrowers or any other Credit Party against any Obligation of any Credit
Party now or hereafter existing, whether or not any demand was made under any
Loan Document with respect to such Obligation and even though such Obligation
may be unmatured. No Lender or LC Issuer shall exercise any such right of setoff
without the prior consent of Agent or Required Lenders. Each of Agent, each
Lender and each LC Issuer agrees promptly to notify Borrowing Representative and
Agent after any such setoff and application made by such Lender or its
Affiliates; provided, however, that the failure to give such notice shall not
affect the validity of such setoff and application. The rights under this
Section 14.13 are in addition to any other rights and remedies (including other
rights of setoff) that Agent, Lenders, LC Issuer, their Affiliates and the other
Secured Parties, may have.

 

(b)          Sharing of Payments, Etc. If any Lender, Agent or LC Issuer
directly or through an Affiliate or branch office thereof, obtains any payment
of any Obligation of any Credit Party (whether voluntary, involuntary or through
the exercise of any right of setoff or the receipt of any Collateral or
Proceeds) and such payment exceeds the amount Agent, such Lender or LC Issuer
would have been entitled to receive if all payments had gone to, and been
distributed by, Agent in accordance with the provisions of the Loan Documents,
Agent, such Lender or LC Issuer shall purchase for cash from other Lenders such
participations in their Obligations as necessary for such Lender to share such
excess payment with such Lenders to ensure such payment is applied as though it
had been received by Agent and applied in accordance with this Agreement (or, if
such application would then be at the discretion of Borrowers, applied to repay
the Obligations in accordance herewith); provided, however, that (i) if such
payment is rescinded or otherwise recovered from such Lender, Agent or LC Issuer
in whole or in part, such purchase shall be rescinded and the purchase price
therefor shall be returned to such Lender, Agent or LC Issuer without interest
and (ii) such Lender, Agent or LC Issuer shall, to the fullest extent permitted
by applicable Requirements of Law, be able to exercise all its rights of payment
(including the right of setoff) with respect to such participation as fully as
if such Lender, Agent or LC Issuer were the direct creditor of the applicable
Credit Party in the amount of such participation. If a Non-Funding Lender
receives any such payment as described in the previous sentence, such Lender
shall turn over such payments to Agent in an amount that would satisfy the cash
collateral requirements set forth in this Agreement.

 

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14.14         Replacement of Lender. Within forty-five (45) days after: any
failure by any Lender to consent to a requested amendment, waiver or
modification to any Loan Document in which Required Lenders have already
consented to such amendment, waiver or modification but the consent of each
Lender (or each Lender directly affected thereby, as applicable) is required
with respect thereto, Borrowers may, at its option, notify Agent and such
Affected Lender (or such non-consenting Lender) of Borrowers’ intention to
obtain, at Borrowers’ expense, a replacement Lender (“Replacement Lender”) for
such Affected Lender (or such non-consenting Lender), which Replacement Lender
shall be reasonably satisfactory to Agent. In the event Borrowers obtain a
Replacement Lender within forty-five (45) days following notice of its intention
to do so, the Affected Lender (or such non-consenting Lender) shall sell and
assign its Loans and Commitments to such Replacement Lender, at par, provided
that Borrowers have reimbursed such Affected Lender for any increased costs for
which it is entitled to reimbursement under this Agreement through the date of
such sale and assignment. In the event that a replaced Lender does not execute
an Assignment within five (5) Business Days after receipt by such replaced
Lender of notice of replacement pursuant to this Section 14.14 and presentation
to such replaced Lender of an Assignment evidencing an assignment pursuant to
this Section 14.14, Borrowers shall be entitled (but not obligated) to execute
such an Assignment on behalf of such replaced Lender, and any such Assignment so
executed by Borrowers, the Replacement Lender and Agent, shall be effective for
purposes of this Section 14.14 and Section 14.12. Notwithstanding the foregoing,
with respect to a Lender that is a Non-Funding Lender or an Impacted Lender,
Agent may, but shall not be obligated to, obtain a Replacement Lender and
execute an Assignment on behalf of such Non-Funding Lender or Impacted Lender at
any time with three (3) Business Days’ prior notice to such Lender (unless
notice is not practicable under the circumstances) and cause such Lender’s Loans
and Commitments to be sold and assigned, in whole or in part, at par. Upon any
such assignment and payment, such replaced Lender shall no longer constitute a
“Lender” for purposes hereof; provided, any rights of such replaced Lender to
indemnification hereunder shall survive.

 

14.15         Creditor-Debtor Relationship. The relationship between Agent, each
Lender and the LC Issuer, on the one hand, and the Credit Parties, on the other
hand, is solely that of creditor and debtor. No Secured Party has any fiduciary
relationship or duty to any Credit Party arising out of or in connection with,
and there is no agency, tenancy or joint venture relationship between Secured
Parties and Credit Parties by virtue of, any Loan Document or any transaction
contemplated therein.

 

14.16         Actions in Concert. Notwithstanding anything contained herein to
the contrary, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights against any Credit Party
arising out of this Agreement or any other Loan Document (including exercising
any rights of setoff) without first obtaining the prior written consent of Agent
or Required Lenders, it being the intent of Lenders that any such action to
protect or enforce rights under this Agreement and the other Loan Documents
shall be taken in concert and at the direction or with the consent of Agent or
Required Lenders.

 

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14.17         Descriptive Headings. The descriptive headings of the various
provisions of this Agreement are inserted for convenience of reference only and
shall not be deemed to affect the meaning or construction of any of the
provisions hereof.

 

14.18         Notices. Except as otherwise provided herein, whenever any notice,
demand, request or other communication shall or may be given to or served upon
any party by any other party, or whenever any party desires to give or serve
upon any other party any communication with respect to this Agreement, each such
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
days after deposit in the United States Mail, registered or certified mail,
return receipt requested, with proper postage prepaid, (b) upon transmission,
when sent by telecopy or other similar facsimile transmission (with such
telecopy or facsimile promptly confirmed by delivery of a copy by personal
delivery or United States Mail as otherwise provided in this Section 14.18, (c)
one (1) Business Day after deposit with a reputable overnight courier with all
charges prepaid or (d) when hand-delivered, all of which shall be addressed to
the party to be notified and sent to the address or facsimile number indicated
in Schedule III or to such other address (or facsimile number) as may be
substituted by notice given as herein provided or may be set forth in an
Assignment Agreement.

 

14.19         Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

14.20         Entire Agreement; Counterparts. This Agreement and the other Loan
Documents represent the agreement of Credit Parties, Agent and Lenders with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by any Borrower, Agent or any Lender relative to
the subject matter hereof not expressly set forth or referred to herein or in
the other Loan Documents. Nothing in this Agreement or in the other Loan
Documents, express or implied, is intended to confer upon any party, other than
the parties hereto and thereto, any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents. This Agreement
may be signed in any number of counterparts with the same effect as if the
signatures thereto and hereto were upon the same instrument. Any signature
delivered by a party via facsimile or electronic transmission shall be deemed to
be an original signature hereto.

 

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14.21         SUBMISSION TO JURISDICTION. EACH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY: (a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING, DIRECTLY OR INDIRECTLY, RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK AND THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; (b) CONSENTS THAT ANY SUCH
ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN
ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; (c) AGREES THAT SERVICE OF
PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY
THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL), POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH IN SCHEDULE III TO THIS
AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH AGENT SHALL HAVE BEEN NOTIFIED
PURSUANT TO SECTION 14.19; AND (d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE
RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

 

14.22         WAIVER OF TRIAL BY JURY, CERTAIN DAMAGES AND SETOFFS. IN ANY LEGAL
ACTION OR PROCEEDING, DIRECTLY OR INDIRECTLY, RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR ANY DOCUMENT, INSTRUMENT OR AGREEMENT DELIVERED PURSUANT
HERETO OR THERETO, (A) EACH OF EACH CREDIT PARTY, AGENT AND EACH LENDER HEREBY,
TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, IRREVOCABLY AND UNCONDITIONALLY
WAIVES THE RIGHT TO TRIAL BY JURY IN CONNECTION WITH ANY SUCH LEGAL ACTION OR
PROCEEDING, AND (B) EACH OF EACH CREDIT PARTY, AGENT AND EACH LENDER HEREBY, TO
THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LEGAL ACTION OR
PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, ACTUAL DAMAGES. EACH BORROWER AGREES THAT THIS SECTION 14.22
IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND ACKNOWLEDGES THAT
LENDERS WOULD NOT EXTEND TO ANY BORROWER ANY LOANS HEREUNDER IF THIS SECTION
14.25 WERE NOT PART OF THIS AGREEMENT.

 

14.23         GOVERNING LAW. THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE
OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE CONFLICT OF
LAW PRINCIPLES THEREOF

 

14.24         Reinstatement. This Agreement shall continue to be effective, or
be reinstated, as the case may be, if at any time payment of all or any part of
the Obligations is rescinded or must otherwise be returned or restored by Agent
or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of any Credit Party, or otherwise, all as though such payments
had not been made.

 

[Signature Page Follows]

 

75

 

 

IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
first above written.

 

  XCEL BRANDS, INC.         By:       Name:     Title:         IM BRANDS, LLC  
      By:       Name:     Title:         JR LICENSING, LLC         By:      
Name:     Title:         H LICENSING, LLC         By:       Name:     Title:    
    C WONDER LICENSING, LLC         By:       Name:     Title:

 

SIGNATURE PAGE TO

AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

 

 

 

  

        XCEL DESIGN GROUP, LLC         By:       Name:     Title:         IMNY
RETAIL MANAGEMENT, LLC         By:       Name:     Title:         IMNY E-STORE,
USA, LLC         By:       Name:     Title:         BANK HAPOALIM B.M.        
By:       Name:     Title:         By:       Name:     Title:

 

SIGNATURE PAGE TO

AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

 

 

 

 

SCHEDULE I

 

CONDITIONS PRECEDENT

 

The following items must be received by Agent in form and substance satisfactory
to Agent on or prior to the date of the initial Loan:

 

1.          this Agreement duly executed by each Credit Party;

 

2.          the Term Loan Note duly executed by each Borrower;

 

3.          acknowledgement copies of proper financing statements (Form UCC-l)
duly filed under the UCC in all jurisdictions as may be necessary or, in the
opinion of Agent, desirable to perfect Agent’s Lien on the Collateral;

 

4.          certified copies of UCC, tax lien and judgment searches, or other
evidence satisfactory to Agent, listing all effective financing statements which
name each Credit Party (under present name, any previous name or any trade or
doing business name) as debtor and covering all jurisdictions requested by
Agent, together with copies of such other financing statements;

 

5.          duly executed Intellectual Property Security Agreement from each
Credit Party which owns Intellectual Property;

 

6.          duly executed Pledge Agreement from Initial Borrower together with
the certificates representing the Equity Interests of Included Subsidiaries
owned by Initial Borrower, together with an undated stock power for each such
certificate executed in bland by a duly authorized officer of Initial Borrower;

 

7.          duly executed favorable opinions of counsel to Credit Parties
addressing such matters as Agent may reasonably request;

 

8.          evidence of the completion of all other recordings and filings
(including UCC-3 termination statements and other Lien release documentation) as
may be necessary or, in the opinion of and at the request of Agent, desirable to
perfect Agent’s Lien on the Collateral and ensure such Collateral is free and
clear of other Liens;

 

9.          Powers of Attorney duly executed by each Credit Party;

 

10.         for each Credit Party, such Person’s (a) charter and all amendments
thereto, (b) good standing certificates in its state of incorporation and (c)
good standing certificates and certificates of qualification to conduct business
in each jurisdiction where its ownership or lease of property or the conduct of
its business requires such qualification, each dated a recent date prior to the
Effective Date and certified by the applicable Secretary of State;

 

1

 

 

11.         a certificate of an officer of each Credit Party together with
copies of: (a) such Person’s bylaws or operating agreement together with all
amendments thereto and (b) resolutions of such Person’s Board of Directors
Members, Managers and Equity Interests Holders, approving and authorizing the
execution, delivery and performance of the Loan Documents to which such Person
is a party and the transactions to be consummated in connection therewith, each
certified as of the Effective Date by an officer of such Person as being in full
force and effect without any modification or amendment;

 

12.         for each Credit Party, signature and incumbency certificates of the
officers of each such Person executing any of the Loan Documents, certified as
of the Effective Date by such Person’s officer as being true, accurate, correct
and complete;

 

13.         any and all subordination and/or intercreditor agreements as Agent
shall have deemed necessary or appropriate with respect to any Indebtedness of
any Credit Party; and

 

14.         such other certificates, documents and agreements respecting any
Credit Party as Agent may reasonably request.

 

2

 

 

SCHEDULE II

 

FINANCIAL COVENANTS

 

1.          Minimum Net Worth. Net Worth of Initial Borrower and the Included
Subsidiaries on a consolidated basis shall not be less than $90,000,000 at the
end of each Fiscal Quarter ending on December 31 and June 30 of each fiscal
year.

 

2.          Minimum Liquid Assets. Liquid Assets of Initial Borrower and the
Included Subsidiaries on a consolidated basis shall be at least $5,000,000 at
all times until such time as the ratio of Indebtedness to EBITDA is less than
1.0 to 1.0, in which event Liquid Assets of Initial Borrower and its
Subsidiaries on a consolidated basis shall be at least $3,000,000.

 

3.          Fixed Charge Coverage Ratio. The Fixed Charge Ratio of Initial
Borrower and the Included Subsidiaries on a consolidated basis at the end of
each Fiscal Quarter ending on December 31 and June 30 of each fiscal year for
the twelve Fiscal Month period ending on such Fiscal Quarter shall not be less
than 1.20 to 1.00.

 

4.          Capital Expenditures. Capital Expenditures of Initial Borrower and
the Included Subsidiaries on a consolidated basis in the Fiscal Year ending
December 31, 2016 shall not exceed $2,650,000 and in any Fiscal Year ending
after December 31, 2016 shall not exceed $700,000.

 

5.          Minimum EBITDA. EBITDA of Initial Borrower and the Included
Subsidiaries on a consolidated basis shall not be less than $7,500,000 for the
Fiscal Year ending December 31, 2015, not less than $9,500,000 for the Fiscal
Year ending December 31, 2016 and not less than $9,000,000 for each Fiscal Year
ending on and after December 31, 2017.

 

1

 

 

SCHEDULE III

 

ADDRESSES FOR NOTICES

 

Agent’s, LC Issuers and BHI’s Address:

 

Name: Bank Hapoalim B.M. Address: 1177 Avenue of the Americas   New York, New
York 10036 Attention: Amanda Milazzo, Vice President Telephone: (212) 782-2177
Facsimile: (212) 782-2345       and     Attention: Mitchell Barnett, Senior Vice
President Telephone: (212) 782 2064 Facsimile: (212) 782 2345

 

Each Credit Party’s and Borrowing Representative’s Address:

 

Name: Xcel Brands, Inc. Address: 475 Tenth Avenue, 4th Floor   New York, New
York 10018 Attention: James Haran Telephone: (347) 532-5894 Facsimile: (347)
436-9178

 

1

 

 

SCHEDULE IV

 

GENERAL TERMS FOR LETTERS OF CREDIT

 

1.          LC Issuer may, subject to the terms and conditions hereinafter set
forth, incur Letter of Credit Obligations in respect of the issuance of Letters
of Credit issued on terms acceptable to LC Issuer and supporting obligations of
a Borrower incurred in the ordinary course of such Borrower’s business, in order
to support the payment of such Borrower’s inventory purchase obligations,
insurance premiums, or utility or other operating expenses and obligations, as
Borrowing Representative, on behalf of such Borrower, shall request by written
notice to Agent that is received by Agent not less than five (5) Business Days
prior to the requested date of issuance of any such Letter of Credit; provided,
that: (a) that the aggregate amount of all Letter of Credit Obligations at any
one time outstanding (whether or not then due and payable) shall not exceed an
amount to be agreed upon between such Borrower and Agent and (b) no Letter of
Credit shall have an expiry date which is later than the Revolving Loan Maturity
Date or one year following the date of issuance thereof. The applicable Borrower
will enter into an application and agreement for such Letter of Credit with the
LC Issuer selected by Agent. The LC Issuer shall be determined by Agent in its
sole discretion.

 

2.          The notice to be provided to Agent requesting that Lenders incur
Letter of Credit Obligations shall be in the form of a Letter of Credit
application in the form customarily employed by the LC Issuer, together with a
written request by a Borrower and the LC Issuer that Agent approve such
Borrower’s application. Approval by Agent in the written form agreed upon
between Agent and the LC Issuer (a) will authorize the LC Issuer to issue the
requested Letter of Credit and (b) will conclusively establish the existence of
the Letter of Credit Obligation as of the date of such approval.

 

3.          Each Letter of Credit shall be subject to the Uniform Commercial
Customs and, to the extent not inconsistent therewith, the laws of the State of
New York.

 

4.          Each reimbursement by Lenders of a payment by the LC Issuer or Agent
pursuant to a Letter of Credit shall be deemed to be a Revolving Loan on the
date of such reimbursement in a principal amount equal to the amount so paid.
Each Borrower shall be obligated to reimburse Agent and each Lender for each
payment made in respect of any Letter of Credit (including, the payment of
principal, fees and interest on any payment made by Agent or any Lender in
reimbursement of any payment made under a Letter of Credit by an LC Issuer.

 

5.          The obligations of each Borrower under this Schedule IV shall be
absolute, unconditional and irrevocable under any and all circumstances and
shall be paid strictly in accordance with this Agreement irrespective of: (a)
any lack of validity or enforceability of any Letter of Credit or of any demand,
application, reimbursement agreement or other agreement or instrument relating
thereto (collectively, the “Related Documents”); (b) the existence of any claim,
setoff, defense or other right that any Borrower or any other Person may at any
time have against the beneficiary under any Letter of Credit, Agent, any Lender,
the LC Issuer, any of their correspondents or any other Person; (c) any improper
or erroneous or mistaken payment by any LC Issuer under any Letter of Credit;
(d) any supplement or waiver of or any consent to depart from the terms of any
Letter of Credit or Related Document; and (e) any other circumstance or event
whatsoever, whether or not similar to any of the foregoing.

 

1

 

 

6.          Neither Agent nor any LC Issuer nor any of their correspondents
shall be responsible for: (a) the use which may be made of any Letter of Credit,
or any acts or omissions in connection therewith; (b) the existence, character,
quality, quantity, condition, packing, value or delivery of the goods purporting
to be represented by documents; (c) any difference in character, quality,
quantity, condition or value of the goods from that expressed in the documents;
(d) the validity, sufficiency or genuineness of documents, or of any
endorsements thereon, even if such documents should in fact prove to be in any
or all respects invalid, insufficient, fraudulent or forged; (e) the time,
place, manner or order in which shipment is made; (f) any partial or incomplete
shipment or failure or omission to ship any or all of the goods referred to in
any Letter of Credit; (g) the character, adequacy, validity or genuineness of
any insurance, the solvency or responsibility of any insurer or any other risk
connected with insurance; (h) any deviation from instructions, delay, default or
fraud by the shipper or anyone else in connection with goods or the shipping
thereof; (i) the solvency, responsibility or relationship to the goods of any
party issuing any documents in connection with the goods; (j) any delay in
arrival or failure to arrive of either the goods or any of the documents
relating thereto; (k) any delay in giving or failure to give notice of arrival
or any other notice; (l) any breach of contract between the shippers or vendors
and the consignees or buyers; (m) compliance with or circumstances resulting
from any laws, customs and regulations which may be effective in countries of
negotiation or payment of any Letter of Credit; (n) any failure of any draft,
instrument or demand to bear any reference or adequate reference to the related
Letter of Credit, any failure of documents to accompany any draft, instrument or
demand at negotiation or any failure of any Person to note the amount of any
draft, instrument or demand on the reverse of the related Letter of Credit or to
surrender or take up such Letter of Credit or to send forward documents apart
from drafts, in each case as required by the terms of the related Letter of
Credit, any of which requirements, if contained in any Letter of Credit, may be
waived by Agent or the LC Issuer; (o) any errors, omissions, interruptions or
delays in transmission or delivery of any message, by mail, telex, cable,
telegraph, wireless or otherwise, whether or not they be in cipher; (p) any
failure of any document to conform to, or be presented under, the Letter of
Credit in any instance where any Borrower or its agent, upon request, has
received documents and/or goods represented thereby; or (q) any refusal by
Agent, the LC Issuer or any of their correspondents to pay or honor drafts drawn
or purportedly drawn under any Letter of Credit because of any applicable law,
decree or edict, legal or illegal, of any governmental agency now or hereafter
in force, or for any other matter beyond Agent’s control. Nor shall Agent nor
any Lender be responsible for any act, error, omission, neglect or default under
the terms of any Letter of Credit or any Related Documents or otherwise, or for
any insolvency or failure in business, of the LC Issuer or any of the
correspondents of Agent or the LC Issuer. None of the foregoing shall affect,
impair, or prevent the vesting of any of Agent’s or any Lender’s rights or
powers hereunder, or any Borrower’s obligations hereunder. In furtherance of and
extension of and not in limitation of the specific provisions hereinabove set
forth, each Borrower agrees that any action taken, and any action or omission,
by Agent, the LC Issuer or any of their correspondents, in the absence of bad
faith on its part, under or in connection with any Letter of Credit or the
related drafts, instruments or demands, documents or goods shall be binding on
such Borrower and shall not put Agent, the LC Issuer or any of their
correspondents under any resulting liability to Agent or any Lender.

 

2

 

 

7.          Each Borrower agrees to procure promptly any necessary import and
export and other licenses for the import or export or shipping of the goods or
payment therefor, to comply with all foreign and domestic governmental
regulations in regard to the shipment of the goods or the financing thereof, to
furnish such certificates in that respect as Agent may at any time require, to
keep the goods adequately covered by insurance satisfactory in all respects to
Agent, with companies satisfactory to Agent, and to assign the policies and/or
certificates of insurance to Agent, or to make the loss or adjustment, if any,
payable to Agent, at Agent’s option, and to furnish Agent promptly on demand
with evidence of acceptance by the insurers of such assignment.

 

8.          Each Borrower hereby certifies, covenants and agrees that no
shipments will be made or other transactions undertaken under any Letter of
Credit in violation of the laws of the United States, any applicable foreign law
or the applicable regulations of any United States or foreign governmental
agency or authority.

 

9.          In the event that any Letter of Credit Obligations, whether or not
then due or payable, shall for any reason be outstanding on the Termination
Date, each Borrower will either (a) cause the underlying Letter of Credit to be
returned and canceled and each corresponding Letter of Credit Obligation to be
terminated, or (b) pay to Agent, in immediately available funds, an amount equal
to 105% of the maximum amount then available to be drawn under all Letters of
Credit in favor of Borrowers not so returned and canceled to be held by Agent as
cash collateral in an account under the exclusive dominion and control of Agent
(the “Cash Collateral Account”).

 

10.         In the event Agent or Lenders shall incur any Letter of Credit
Obligation, Borrowers agree to pay Agent and Lenders, the fees, charges and
commissions agreed to between Borrowers and Agent and shall reimburse Agent and
Lenders for all fees and charges paid by Agent on account of any Letter of
Credit or Letter of Credit Obligations to the LC Issuer.

 

3

 

 

SCHEDULE V

 

COMMITMENTS

 

Revolving Loan Commitments

 

$0

 

Term Loan Commitments

 

Bank Hapoalim B.M. $27,875,000

 

1

 

 

EXHIBIT A

 

REVOLVING LOAN NOTE

 

$[          ] [               ]

 

This Revolving Loan Note (this “Note”) is executed and delivered under and
pursuant to the terms of that certain Loan and Security Agreement dated as of
February 26, 2016 (as amended, modified, supplemented or restated from time to
time, the “Loan Agreement”) by and among [________] (“Lender”), XCEL BRANDS,
INC. (“Initial Borrower” and together with each Person who hereafter becomes a
Borrower, collectively “Borrowers”), and any other Credit Party executing or
becoming a party to the Loan Agreement, the financial institutions party thereto
from time to time as Lenders and BANK HAPOALIM B.M., as agent for Lenders (in
such capacity, “Agent”) Capitalized terms not otherwise defined herein shall
have the meanings given thereto in the Loan Agreement.

 

FOR VALUE RECEIVED, Borrowers, jointly and severally, promise to pay to the
order of Lender at the offices of Agent at offices located at 1177 Avenue of the
Americas, New York, New York 10036 or at such other place as the holder hereof
may from time to time designate to Borrowers in writing:

 

(i)          the principal sum of [             ($         )], or if different
from such amount, the unpaid principal balance of Revolving Loan as may be due
and owing from time to time under the Loan Agreement, payable in accordance with
the provisions of the Loan Agreement, subject to acceleration upon the
occurrence of an Event of Default under the Loan Agreement, or earlier
termination of the Loan Agreement pursuant to the terms thereof; and

 

(ii)         interest on the principal amount of this Note from time to time
outstanding, payable at the applicable interest rate in accordance with the
provisions of the Loan Agreement. Upon and after the occurrence of an Event of
Default, and during the continuation thereof, interest shall be payable at the
applicable Default Rate. In no event, however, shall interest hereunder exceed
the maximum interest rate permitted by law.

 

This Note is the Revolving Loan Note referred to in the Loan Agreement and is
secured, inter alia, by the Liens granted pursuant to the Loan Agreement and the
other Loan Documents, is entitled to the benefits of the Loan Agreement and the
other Loan Documents, and is subject to all of the agreements, terms and
conditions therein contained.

 

This Note may be voluntarily prepaid, in whole or in part, on the terms and
conditions set forth in the Loan Agreement.

 

If an Event of Default under Section 12.1(f) of the Loan Agreement shall occur,
then this Note shall immediately become due and payable, without notice,
together with attorneys’ fees if the collection hereof is placed in the hands of
an attorney to obtain or enforce payment hereof. If any other Event of Default
shall occur under the Loan Agreement or any of the other Loan Documents which is
not cured within any applicable grace period, then this Note may, as provided in
the Loan Agreement, be declared to be immediately due and payable, without
notice, together with attorneys’ fees, if the collection hereof is placed in the
hands of an attorney to obtain or enforce payment hereof.

 

1

 

 

This Note shall be governed by and construed in accordance with the laws of the
State of New York.

 

To the fullest extent permitted by applicable law, each Borrower waives:
(a) presentment, demand and protest, and notice of presentment, dishonor, intent
to accelerate, acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all of the Obligations,
the Loan Agreement, this Note or any other Loan Documents; (b) all rights to
notice and a hearing prior to Agent’s taking possession or control of, or to
Agent’s replevy, attachment or levy upon, the Collateral or any bond or security
that might be required by any court prior to allowing Agent to exercise any of
its remedies; and (c) the benefit of all valuation, appraisal and exemption
laws.

 

Each Borrower acknowledges that this Note is executed as part of a commercial
transaction and that the proceeds of this Note will not be used for any personal
or consumer purpose.

 

2

 

 

Each Borrower agrees to pay to Agent all fees and expenses described in the Loan
Agreement and the other Loan Documents.

 

  XCEL BRANDS, INC.         By:       Name:     Title:

 

3

 

 

EXHIBIT B

 

FORM OF TERM LOAN NOTE

 

$27,875,000 [__], 2016

 

This Term Loan Note (this “Note”) is executed and delivered under and pursuant
to the terms of that certain Amended and Restated Loan and Security Agreement
dated as of February 26, 2016 (as amended, modified, supplemented or restated
from time to time, the “Loan Agreement”) by and among [_________] (“Lender”),
XCEL BRANDS, INC. (“Initial Borrower” and together with each Person who
hereafter becomes a Borrower, collectively “Borrowers”), and any other Credit
Party executing or becoming a party to the Loan Agreement, the financial
institutions party thereto as Lenders and BANK HAPOALIM B.M., as agent for
Lenders (in such capacity, “Agent”). Capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Loan Agreement.

 

FOR VALUE RECEIVED, Borrower promises to pay to the order of Lender at the
offices of Agent located at 1177 Avenue of the Americas, New York, New York
10036 or at such other place as the holder hereof may from time to time
designate to Borrower in writing:

 

(i)          the principal sum of Twenty-Seven Million Eight Hundred and
Seventy-Five Thousand Dollars ($27,875,000), payable, subject to acceleration
upon the occurrence of an Event of Default under the Loan Agreement, or earlier
termination of the Loan Agreement pursuant to the terms thereof, in quarterly
installments commencing on April 1, 2016 and on each April 1, July 1, October 1
and January 1 thereafter in the amounts set forth below for the corresponding
period, with the entire unpaid balance due and payable on the Term Loan Maturity
Date:

Period  Amount        April 1, 2016-October 1, 2016  $875,000  January 1,
2017-October 1, 2017  $1,000,000  January 1, 2018-October 1, 2018  $1,000,000 
January 1, 2019-October 1, 2019  $1,000,000  January 1, 2020-October 1, 2020 
$1,000,000 

 

and

 

(ii)         interest on the principal amount of this Note from time to time
outstanding, payable at the applicable interest rate set forth in the Loan
Agreement commencing on April 1, 2016 and on each April 1, July 1, October 1 and
January 1 thereafter and upon payment in full of the principal amount of this
Note. Upon and after the occurrence of an Event of Default, and during the
continuation thereof, interest shall be payable at the applicable Default Rate.
In no event, however, shall interest hereunder exceed the maximum interest rate
permitted by law.

 

This Note is the Term Loan Note referred to in the Loan Agreement and is
secured, inter alia, by the liens granted pursuant to the Loan Agreement and the
other Loan Documents, is entitled to the benefits of the Loan Agreement and the
other Loan Documents, and is subject to all of the agreements, terms and
conditions therein contained.

 

1

 

 

Payments received by Lender shall be applied against principal and interest as
provided for in the Agreement. This Note may be voluntarily prepaid, in whole or
in part, on the terms and conditions set forth in the Loan Agreement.

 

If an Event of Default under Section 12.1(f) of the Loan Agreement shall occur,
then this Note shall immediately become due and payable, without notice,
together with attorneys’ fees if the collection hereof is placed in the hands of
an attorney to obtain or enforce payment hereof. If any other Event of Default
shall occur under the Loan Agreement or any of the other Loan Documents which is
not cured within any applicable grace period, then this Note may, as provided in
the Loan Agreement, be declared to be immediately due and payable, without
notice, together with attorneys’ fees, if the collection hereof is placed in the
hands of an attorney to obtain or enforce payment hereof.

 

This Note shall be governed by and construed in accordance with the laws of the
State of New York.

 

To the fullest extent permitted by applicable law, Borrower waives:
(a) presentment, demand and protest, and notice of presentment, dishonor, intent
to accelerate, acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all of the Obligations,
the Loan Agreement, this Note or any other Loan Documents; (b) all rights to
notice and a hearing prior to Agent’s taking possession or control of, or to
Agent’s replevy, attachment or levy upon, the Collateral or any bond or security
that might be required by any court prior to allowing Agent to exercise any of
its remedies; and (c) the benefit of all valuation, appraisal and exemption
laws.

 

Borrower acknowledges that this Note is executed as part of a commercial
transaction and that the proceeds of this Note will not be used for any personal
or consumer purpose.

 

2

 

 

Borrower agrees to pay to Agent all fees and expenses described in the Loan
Agreement and the other Loan Documents.

 

  XCEL BRANDS, INC.         By:       Name:     Title:

 

3

 

 

EXHIBIT C

 

FORM OF CERTIFICATE OF COMPLIANCE

 

Use Borrowing Representative Letterhead with this Form]

 

[Date]

 

To: Account Manager

 

This is to certify that in accordance with the Loan and Security Agreement dated
as of February 26, 2016 (the “Loan Agreement;” capitalized terms are used herein
as defined in the Loan Agreement) that the attached Financial Statements are
complete and true and have been prepared in conformance with GAAP. In addition
there are no Defaults or Events of Default continuing as of such date [if there
are acceptable exceptions, list them].

 

No Credit Party is in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any Material
Contract and there had been no termination or threat of termination of any
Material Contract except to the extent such default could not reasonably be
expected to have a Material Adverse Effect or any material amendment to or
modification of a Material Contract, or the execution of any new Material
Contract by any Credit Party.

 

No Credit Party has formed or acquired any Subsidiary except for: [List new
Subsidiaries, including Excluded Subsidiaries].

 

The following is a list of Outside Financing obtained by each Excluded
Subsidiary: [List Outside Financing].

 

Also attached are the covenant calculations used in determining compliance with
the financial covenants contained in Schedule II to the Agreement.

 

Very truly yours,

 

Chief Executive Officer

 

or Chief Financial Officer

 

1

 

 

EXHIBIT D

 

POWER OF ATTORNEY

 

This Power of Attorney is executed and delivered by [Insert Name of Credit
Party], a [Insert Credit Party’s State of Formation] [Insert Credit Party’s form
of organization] (“Grantor”) to Bank Hapoalim B.M. (hereinafter referred to as
“Attorney”), as Agent, under an Amended and Restated Loan and Security
Agreement, dated as of February 26, 2016 and other related documents (the “Loan
Documents”). No person to whom this Power of Attorney is presented, as authority
for Attorney to take any action or actions contemplated hereby, shall be
required to inquire into or seek confirmation from Grantor as to the authority
of Attorney to take any action described below, or as to the existence of or
fulfillment of any condition to this Power of Attorney, which is intended to
grant to Attorney unconditionally the authority to take and perform the actions
contemplated herein, and Grantor irrevocable waives any right to commence any
suit or action, in law or equity, against any person or entity which acts in
reliance upon or acknowledges the authority granted under this Power of
Attorney. The power of attorney granted hereby is coupled with an interest, and
may not be revoked or canceled by Grantor without Attorney’s written consent.

 

Grantor hereby irrevocably constitutes and appoints Attorney (and all officers,
employees or agents designated by Attorney), with full power of substitution, as
Grantor’s true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of Grantor and in the name of Grantor or in its
own name, from time to time in Attorney’s discretion, to take any and all
appropriate action and to execute and deliver any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
the Loan Documents and, without limiting the generality of the foregoing,
Grantor hereby grants to Attorney the power and right, on behalf of Grantor,
without notice to or assent by Grantor, and at any time, to sell, transfer,
pledge make any agreement with respect to or otherwise deal with any of the
Collateral in such manner as is consistent with the Uniform Commercial Code of
the State and as fully and completely as though Attorney were the absolute owner
thereof for all purposes, and to do at the Grantor’s expense, at any time, or
from time to time, all acts and things which the Bank deems necessary to
protect, preserve or realize upon the Collateral and Attorney’s security
interest therein, in order to effect the intent of the Loan Documents, all as
fully and effectively as Grantor might do, including, without limitation, (i)
the filing and prosecuting of registration and transfer applications with the
appropriate federal or local agencies or authorities with respect to trademarks,
copyrights and patentable inventions and processes, (ii) the exercise of voting
rights with respect to voting securities, which rights may be exercised, if
Attorney so elects, with a view to causing the liquidation in a commercially
reasonable manner of assets of the issuer of any such securities and (iii) the
execution, delivery and recording, in connection with any sale or other
disposition of any Collateral, of the endorsements, assignments or other
instruments of conveyance or transfer with respect to such Collateral Grantor
hereby ratifies, to the extent permitted by law, all that said Attorney shall
lawfully do or cause to be done by virtue hereof.

 

1

 

 

IN WITNESS WHEREOF, this Power of Attorney is executed by Grantor on
[          ].

 

  [Insert Name of Credit Party]         By:       Name:     Title:

 

NOTARY PUBLIC CERTIFICATE

 

On this _____ day of February, 2016, ______________, who is personally known to
me appeared before me in his/her capacity as the ____________ of __________
(“Grantor”) and executed on behalf of Grantor the Power of Attorney in favor of
Bank Hapoalim B.M. to which this Certificate is attached.

 

      Notary Public

 

2

 

 

EXHIBIT E

 

FORM OF QUARTERLY ROYALTY COLLECTIONS REPORT

 

[Name]

Royalty Collection Report

Quarter Ending [                              ]

 

Account No.   Licensee   Contract Year  [Quarter]
Revenue
Payments
Received  [Quarter]
Guaranteed
Minimum
Royalties  [Quarter]
Revenues
(GAAP
Basis)                                                  [Total]  [Total] 
[Total]

 

 1 

 

 

EXHIBIT F

 

FORM OF ASSIGNMENT AGREEMENT

 

This ASSIGNMENT, dated as of the Effective Date, is entered into between
                   (“Assignor”) and                    (“Assignee”).

 

The parties hereto hereby agree as follows:

 

Borrower: Xcel Brands, Inc., a Delaware corporation and                 , a
                (together, the “Borrowers”)     Agent: Bank Hapoalim B.M., as
administrative and collateral agent for the Lenders and LC Issuers (in such
capacity and together with its successors and permitted assigns, the “Agent”)  
  Loan Agreement: Amended and Restated Loan and Security Agreement, dated as of
February 26, 2016, among Borrowers, the other Credit Parties party thereto, the
Lenders and LC Issuers party thereto and the Agent (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the “Loan
Agreement”; capitalized terms used herein without definition are used as defined
in the Loan Agreement)     Effective Date: _________, ____

 

 1 

 

 

Loan/ Commitment Assigned  Aggregate amount of
Commitments or principal
amount of Loans for all
Lenders   Aggregate amount of
Commitments  or
principal amount of
Loans Assigned   Percentage
Assigned  Revolving Loan Commitment  $______________   $______________  
 __.___% Term Loan Commitment  $______________   $______________    __.___%

 

[THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK]

 

 2 

 

 

Section 1.          Assignment. Assignor hereby sells and assigns to Assignee,
and Assignee hereby purchases and assumes from Assignor, Assignor’s rights and
obligations in its capacity as Lender under the Loan Agreement and the other
Loan Documents, in each case to the extent related to the amounts identified
above (the “Assigned Interest”).

 

Section 2.          Representations, Warranties and Covenants of Assignor.
Assignor (a) represents and warrants to Assignee and the Agent that (i) it has
full power and authority, and has taken all actions necessary for it, to execute
and deliver this Assignment and to consummate the transactions contemplated
hereby and (ii) it is the legal and beneficial owner of its Assigned Interest
and that such Assigned Interest is free and clear of any Lien and other adverse
claims and (iii) the Person signing, executing and delivering this Assignment on
behalf of the Assignor is an authorized signatory for the Assignor and is
authorized to execute, sign and deliver this Agreement, (b) makes no other
representation or warranty and assumes no responsibility, including with respect
to the aggregate amount of the Loans and Commitments, the percentage of the
Loans and Commitments represented by the amounts assigned, any statements,
representations and warranties made in or in connection with any Loan Document
or any other document or information furnished pursuant thereto, the execution,
legality, validity, enforceability or genuineness of any Loan Document or any
document or information provided in connection therewith and the existence,
nature or value of any Collateral, (c) assumes no responsibility (and makes no
representation or warranty) with respect to the financial condition of any
Credit Party or the performance or nonperformance by any Credit Party of any
obligation under any Loan Document or any document provided in connection
therewith and (d) attaches any Notes held by it evidencing at least in part the
Assigned Interest of such Assignor (or, if applicable, an affidavit of loss or
similar affidavit therefor) and requests that the Agent exchange such Notes for
new Notes in accordance with the Loan Agreement.

 

Section 3.          Representations, Warranties and Covenants of Assignee.
Assignee (a) represents and warrants to Assignor and the Agent that (i) it has
full power and authority, and has taken all actions necessary for Assignee, to
execute and deliver this Assignment and to consummate the transactions
contemplated hereby, (ii) it is [not] an Affiliate or an Approved Fund of
_______, a Lender and (iii) it is sophisticated with respect to decisions to
acquire assets of the type represented by the Assigned Interest assigned to it
hereunder and either Assignee or the Person exercising discretion in making the
decision for such assignment is experienced in acquiring assets of such type,
(iv) the Person signing, executing and delivering this Assignment on behalf of
the Assignor is an authorized signatory for the Assignor and is authorized to
execute, sign and deliver this Agreement (b) appoints and authorizes the Agent
to take such action as administrative agent on its behalf and to exercise such
powers under the Loan Documents as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably incidental thereto, (c)
shall perform in accordance with their terms all obligations that, by the terms
of the Loan Documents, are required to be performed by it as a Lender, (d)
confirms it has received such documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and shall continue to make its own credit decisions in taking or not
taking any action under any Loan Document independently and without reliance
upon Agent, any LC Issuer, any Lender or any other Indemnitee and based on such
documents and information as it shall deem appropriate at the time, (e)
acknowledges and agrees that, as a Lender, it may receive material non-public
information and confidential information concerning the Credit Parties and their
Affiliates and their Equity Interests and agrees to use such information in
accordance with the Loan Agreement, (f) specifies as its applicable lending
offices (and addresses for notices) the offices at the addresses set forth
beneath its name on the signature pages hereof, (g) shall pay to the Agent an
assignment fee in the amount of $3,500 to the extent such fee is required to be
paid under Section 9.9 of the Loan Agreement and (h) to the extent required
pursuant to Section 3.9(f) of the Loan Agreement, attaches two completed
originals of IRS Forms W-8ECI, W-8BEN, W-8BEN-E, W-8IMY or W-9 and, if
applicable, a portfolio interest exemption certificate.

 

 3 

 

 

Section 4.          Determination of Effective Date; Register. Following the due
execution and delivery of this Assignment by Assignor, Assignee and, to the
extent required by the Loan Agreement, Borrowers, this Assignment (including its
attachments) will be delivered to the Agent for its acceptance and recording in
the Register. The effective date of this Assignment (the “Effective Date”) shall
be the later of (i) the acceptance of this Assignment by the Agent and (ii) the
recording of this Assignment in the Register. The Agent shall insert the
Effective Date when known in the space provided therefor at the beginning of
this Assignment.

 

Section 5.          Effect. As of the Effective Date, (a) Assignee shall be a
party to the Loan Agreement and, to the extent provided in this Assignment, have
the rights and obligations of a Lender under the Loan Agreement and (b) Assignor
shall, to the extent provided in this Assignment, relinquish its rights (except
those surviving the termination of the Commitments and payment in full of the
Obligations) and be released from its obligations under the Loan Documents other
than those obligations relating to events and circumstances occurring prior to
the Effective Date.

 

Section 6.          Distribution of Payments. On and after the Effective Date,
the Agent shall make all payments under the Loan Documents in respect of each
Assigned Interest (a) in the case of amounts accrued to but excluding the
Effective Date, to Assignor and (b) otherwise, to Assignee.

 

Section 7.          Miscellaneous.

 

(a)         The parties hereto, to the extent permitted by law, waive all right
to trial by jury in any action, suit, or proceeding arising out of, in
connection with or relating to, this Assignment and any other transaction
contemplated hereby. This waiver applies to any action, suit or proceeding
whether sounding in tort, contract or otherwise.

 

(b)         On and after the Effective Date, this Assignment shall be binding
upon, and inure to the benefit of, the Assignor, Assignee, the Agent and their
Related Persons and their successors and assigns.

 

(c)         This Assignment shall be governed by, and be construed and
interpreted in accordance with, the law of the State of New York.

 

(d)         This Assignment may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute one
and the same agreement.

 

 4 

 

 

(e)        Signature pages may be detached from multiple separate counterparts
and attached to a single counterpart. Delivery of an executed signature page of
this Assignment by facsimile transmission or other electronic transmission shall
be as effective as delivery of a manually executed counterpart of this
Assignment.

 

 5 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

 

  [NAME OF ASSIGNOR], as Assignor       By:       Name:     Title:       [NAME
OF ASSIGNEE], as Assignee       By:       Name:     Title:       Lending Office
for LIBOR Rate Loans:       [Insert Address (including contact name, fax number
and e-mail address)]       Lending Office (and address for notices) for any
other purpose:       [Insert Address (including contact name, fax number and
e-mail address)]

 

 6 

 

 

ACCEPTED and AGREED   this __ day of ______ _____:       BANK HAPOALIM B.M., as
Agent       By:       Name:     Title:         By:       Name:     Title:      
XCEL BRANDS, INC.,   as the Borrowing Representative       By:       Name:    
Title:  

 

 7 

 

 

DISCLOSURE SCHEDULE 7.2

 

NAMES, ORGANIZATIONAL INFORMATION, COLLATERAL LOCATIONS

 

Credit Party’s official name; State of Incorporation or Organization; Type of
entity; Organizational identification number issued by each Borrower’s state of
incorporation or organization or a statement that no such number has been
issued:

 

Chief Executive Office and principal place of business:

 

Warehouses:

 

Other Premises at which Collateral is stored or Location:

 

Locations of Records Concerning Collateral:

 

 1 

 

 

DISCLOSURE SCHEDULE 7.6

 

REAL ESTATE

 

[Describe all real property owned or leased or used in business]

 

Address Type [owned, leased,
warehouse] County                  

 

 1 

 

 

DISCLOSURE SCHEDULE 7.7

 

VENTURES, SUBSIDIARIES AND AFFILIATES

 

[List all subsidiaries, affiliates and joint ventures]

 

Name Type (subsidiary,
affiliate, etc.) Percentage owned by
Credit Party (identify)                  

 

 1 

 

 

DISCLOSURE SCHEDULE 7.9

 

TAXES

 

[List all matters described in Section 7.9]

 

 1 

 

 

DISCLOSURE SCHEDULE 7.12

 

LITIGATION

 

[Describe all material Litigation and amount in controversy]

 

 1 

 

 

DISCLOSURE SCHEDULE 7.13

 

INTELLECTUAL PROPERTY

 

[Describe all Intellectual Property used or licensed]

 

Description Owner Registration # License (if any) Type (Trademark,
Patent, Copyright,
etc.)                        

 

 1 

 

 

DISCLOSURE SCHEDULE 7.15

 

ENVIRONMENTAL MATTERS

 

[Describe any Environmental Matters referenced to in Section 7.15]

 

 1 

 

 

DISCLOSURE SCHEDULE 7.16

 

INSURANCE

 

[List all Insurance Policies]

 

Type Insured Beneficiary Amount                        

 

 1 

 

 

DISCLOSURE SCHEDULE 7.17

 

DEPOSIT AND DISBURSEMENT ACCOUNTS

 

1.          Disbursement Accounts

 

2.          Payroll Account

 

3.          Petty Cash Account

 

4.          Other Accounts

 

 1 

 

 

DISCLOSURE SCHEDULE 9(b)

 

INDEBTEDNESS

 

[Give detailed description of Indebtedness existing as of Effective Date.]

 

 1 

 

 

DISCLOSURE SCHEDULE 9(e)

 

PERMITTED LIENS

 

[Give detailed description of Liens existing as of the Effective Date.]

 

 1