Exhibit 10.6

Execution Version

 

 

 

CREDIT AGREEMENT

Dated as of October 5, 2011

by and among

HORIZON LINES, INC.,

as Parent,

HORIZON LINES, LLC,

as Borrower,

THE LENDERS THAT ARE SIGNATORIES HERETO,

as the Lenders,

and

WELLS FARGO CAPITAL FINANCE, LLC,

as Administrative Agent

WELLS FARGO CAPITAL FINANCE, LLC,

as Sole Lead Arranger and Sole Bookrunner

 

 

 

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TABLE OF CONTENTS

 

         Page  

1.

 

DEFINITIONS AND CONSTRUCTION

     1   

1.1

 

Definitions

     1   

1.2

 

Accounting Terms

     1   

1.3

 

Code

     2   

1.4

 

Construction

     2   

1.5

 

Schedules and Exhibits

     2   

2.

 

LOANS AND TERMS OF PAYMENT

     3   

2.1

 

Revolver Loans

     3   

2.2

 

Reserved

     3   

2.3

 

Borrowing Procedures and Settlements

     3   

2.4

 

Payments; Reductions of Revolver Commitments; Prepayments

     10   

2.5

 

Overadvances

     15   

2.6

 

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

     15   

2.7

 

Crediting Payments

     17   

2.8

 

Designated Account

     17   

2.9

 

Maintenance of Loan Account; Statements of Obligations

     17   

2.10

 

Fees

     18   

2.11

 

Letters of Credit

     18   

2.12

 

LIBOR Option

     23   

2.13

 

Capital Requirements

     25   

2.14

 

Increase Option

     27   

3.

 

CONDITIONS; TERM OF AGREEMENT

     28   

3.1

 

Conditions Precedent to the Initial Extension of Credit

     28   

3.2

 

Conditions Precedent to all Extensions of Credit

     28   

3.3

 

Maturity

     28   

3.4

 

Effect of Maturity

     29   

3.5

 

Early Termination by Borrower

     29   

3.6

 

Conditions Subsequent, Etc.

     29   

4.

 

REPRESENTATIONS AND WARRANTIES

     29   

4.1

 

Due Organization and Qualification; Subsidiaries

     29   

4.2

 

Due Authorization; No Conflict

     30   

4.3

 

Governmental Consents

     30   

4.4

 

Binding Obligations; Perfected Liens

     31   

4.5

 

Title to Assets; No Encumbrances

     31   

4.6

 

Jurisdiction of Organization; Location of Chief Executive Office; Organizational
Identification Number; Commercial Tort Claims

     32   

4.7

 

Litigation

     32   

4.8

 

Compliance with Laws

     32   

 

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4.9

 

No Material Adverse Change

     32   

4.10

 

Fraudulent Transfer

     33   

4.11

 

Employee Benefits

     33   

4.12

 

Environmental Condition

     34   

4.13

 

Intellectual Property

     34   

4.14

 

Leases

     34   

4.15

 

Deposit Accounts and Securities Accounts

     34   

4.16

 

Complete Disclosure

     34   

4.17

 

Material Contracts

     35   

4.18

 

Patriot Act

     35   

4.19

 

Indebtedness

     35   

4.20

 

Payment of Taxes

     35   

4.21

 

Margin Stock

     36   

4.22

 

Governmental Regulation

     36   

4.23

 

OFAC

     36   

4.24

 

Employee and Labor Matters

     36   

4.25

 

Eligible Accounts

     36   

4.26

 

Owned and Leased Locations

     37   

4.27

 

Reserved

     37   

4.28

 

Vessels

     37   

4.29

 

Jones Act Trade

     37   

5.

 

AFFIRMATIVE COVENANTS

     38   

5.1

 

Financial Statements, Reports, Certificates

     38   

5.2

 

Collateral Reporting

     38   

5.3

 

Existence

     38   

5.4

 

Maintenance of Properties

     38   

5.5

 

Taxes

     38   

5.6

 

Insurance

     39   

5.7

 

Inspection

     39   

5.8

 

Compliance with Laws

     40   

5.9

 

Environmental

     40   

5.10

 

Disclosure Updates

     40   

5.11

 

Formation of Subsidiaries, Etc.

     41   

5.12

 

Further Assurances

     42   

5.13

 

Lender Meetings

     43   

5.14

 

Material Contracts

     43   

5.15

 

Location of Books and Records

     43   

5.16

 

Compliance with ERISA

     43   

5.17

 

Jones Act Trade

     44   

5.18

 

Antitrust Judgment Lien

     44   

6.

 

NEGATIVE COVENANTS

     44   

6.1

 

Indebtedness

     44   

6.2

 

Liens

     44   

6.3

 

Restrictions on Fundamental Changes

     44   

 

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6.4

 

Disposal of Assets

     45   

6.5

 

Change Name

     45   

6.6

 

Nature of Business

     45   

6.7

 

Prepayments and Amendments

     45   

6.8

 

Change of Control

     46   

6.9

 

Restricted Stock Payments

     46   

6.10

 

Accounting Methods

     46   

6.11

 

Investments; Controlled Investments

     46   

6.12

 

Transactions with Affiliates

     46   

6.13

 

Use of Proceeds

     47   

6.14

 

Limitation on Issuance of Stock

     47   

6.15

 

Restrictions Affecting Subsidiaries

     48   

7.

 

FIXED CHARGE COVERAGE RATIO

     49   

8.

 

EVENTS OF DEFAULT

     49   

8.1

 

Payment Default

     49   

8.2

 

Covenant Default

     49   

8.3

 

Judgments

     50   

8.4

 

Voluntary Insolvency Proceeding

     50   

8.5

 

Involuntary Insolvency Proceeding

     50   

8.6

 

Restriction on Business

     50   

8.7

 

Cross Default

     50   

8.8

 

Misrepresentation

     51   

8.9

 

Failure of Guaranty

     51   

8.10

 

Failure of other Loan Documents

     51   

8.11

 

Invalidity of Loan Documents

     51   

8.12

 

ERISA Events

     52   

8.13

 

Designation as Senior Indebtedness

     52   

8.14

 

Chartered Vessel Document Default

     52   

8.15

 

Attachment/Levy Default

     52   

8.16

 

Jones Act Trade

     53   

9.

 

RIGHTS AND REMEDIES

     53   

9.1

 

Rights and Remedies

     53   

9.2

 

Remedies Cumulative

     53   

10.

 

WAIVERS; INDEMNIFICATION

     54   

10.1

 

Demand; Protest; etc.

     54   

10.2

 

The Lender Group’s Liability for Collateral

     54   

10.3

 

Indemnification

     54   

 

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11.

 

NOTICES

     55   

12.

 

CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER

     56   

13.

 

ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS

     57   

13.1

 

Assignments and Participations

     57   

13.2

 

Successors

     61   

14.

 

AMENDMENTS; WAIVERS

     61   

14.1

 

Amendments and Waivers

     61   

14.2

 

Replacement of Certain Lenders

     63   

14.3

 

No Waivers; Cumulative Remedies

     64   

15.

 

AGENT; THE LENDER GROUP

     64   

15.1

 

Appointment and Authorization of Agent

     64   

15.2

 

Delegation of Duties

     65   

15.3

 

Liability of Agent

     66   

15.4

 

Reliance by Agent

     66   

15.5

 

Notice of Default or Event of Default

     66   

15.6

 

Credit Decision

     67   

15.7

 

Costs and Expenses; Indemnification

     67   

15.8

 

Agent in Individual Capacity

     68   

15.9

 

Successor Agent

     68   

15.10

 

Lender in Individual Capacity

     69   

15.11

 

Collateral Matters

     69   

15.12

 

Restrictions on Actions by Lenders; Sharing of Payments

     71   

15.13

 

Agency for Perfection

     72   

15.14

 

Payments by Agent to Lenders

     72   

15.15

 

Concerning the Collateral and Related Loan Documents

     72   

15.16

 

Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other
Reports and Information

     72   

15.17

 

Several Obligations; No Liability

     73   

15.18

 

Intercreditor Agreement

     74   

16.

 

TAXES

     74   

17.

 

GENERAL PROVISIONS

     78   

17.1

 

Effectiveness

     78   

17.2

 

Section Headings

     78   

17.3

 

Interpretation

     78   

17.4

 

Severability of Provisions

     78   

17.5

 

Bank Product Providers

     78   

17.6

 

Debtor-Creditor Relationship

     79   

17.7

 

Counterparts; Electronic Execution

     79   

17.8

 

Revival and Reinstatement of Obligations

     79   

 

iv

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17.9

 

Confidentiality

     80   

17.10

 

Lender Group Expenses

     81   

17.11

 

Survival

     81   

17.12

 

Patriot Act

     81   

17.13

 

Integration

     81   

 

v

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SCHEDULES AND EXHIBITS

 

Schedule 1.1

  

Definitions

Schedule 3.1

  

Conditions Precedent

Schedule 3.6

  

Conditions Subsequent

Schedule 4.1

  

Capitalization of Parent’s Subsidiaries

Schedule 4.6(a)

  

States of Organization

Schedule 4.6(b)

  

Chief Executive Offices

Schedule 4.6(c)

  

Organizational Identification Numbers

Schedule 4.6(d)

  

Commercial Tort Claims

Schedule 4.7

  

Litigation

Schedule 4.12

  

Environmental Matters

Schedule 4.13

  

Intellectual Property

Schedule 4.15

  

Deposit Accounts and Securities Accounts

Schedule 4.17

  

Material Contracts

Schedule 4.19

  

Permitted Indebtedness

Schedule 4.26

  

Locations of Inventory and Equipment

Schedule 4.28

  

Vessels

Schedule 5.1

  

Financial Statements, Reports, Certificates

Schedule 5.2

  

Collateral Reporting

Schedule 6.12

  

Affiliate Transactions

Schedule A-1

  

Agent’s Account

Schedule A-2

  

Authorized Persons

Schedule C-1

  

Revolver Commitments

Schedule D-1

  

Designated Account

Schedule E-1

  

Existing Letters of Credit

Schedule P-1

  

Permitted Investments

Schedule P-2

  

Permitted Liens

Schedule R-1

  

Real Property Collateral

Schedule V-1

  

Chartered Vessel Documents

Exhibit A-1

  

Form of Assignment and Acceptance

Exhibit B-1

  

Form of Borrowing Base Certificate

Exhibit B-2

  

Form of Bank Products Provider Agreement

Exhibit C-1

  

Form of Compliance Certificate

Exhibit L-1

  

Form of LIBOR Notice

 

vi

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this “Agreement”), is entered into as of October 5, 2011,
by and among the lenders identified on the signature pages hereof (each of such
lenders, together with their respective successors and permitted assigns, are
referred to hereinafter as a “Lender”, as that term is hereinafter further
defined), WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability
company, as administrative agent for the Lenders (in such capacity, together
with its successors and assigns in such capacity, “Agent”), HORIZON LINES, INC.,
a Delaware corporation (“Parent”) and HORIZON LINES, LLC, a Delaware corporation
(“Borrower”).

The parties agree as follows:

 

1.

DEFINITIONS AND CONSTRUCTION.

1.1 Definitions. Capitalized terms used in this Agreement shall have the
meanings specified therefor on Schedule 1.1.

1.2 Accounting Terms. All accounting terms not specifically defined herein shall
be construed in accordance with GAAP; provided, however, that if Borrower
notifies Agent that Borrower requests an amendment to any provision hereof to
eliminate the effect of any Accounting Change occurring after the Closing Date
or in the application thereof on the operation of such provision (or if Agent
notifies Borrower that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such Accounting Change or in the application thereof, then
Agent and Borrower agree that they will negotiate in good faith amendments to
the provisions of this Agreement that are directly affected by such Accounting
Change with the intent of having the respective positions of the Lenders and
Borrower after such Accounting Change conform as nearly as possible to their
respective positions as of the date of this Agreement and, until any such
amendments have been agreed upon and agreed to by the Required Lenders, the
provisions in this Agreement shall be calculated as if no such Accounting Change
had occurred. When used herein, the term “financial statements” shall include
the notes and schedules thereto. Whenever the term “Parent” is used in respect
of a financial covenant or a related definition, it shall be understood to mean
Parent and its Subsidiaries on a consolidated basis, unless the context clearly
requires otherwise.

Notwithstanding anything herein to the contrary (a) any change in GAAP that
would result in a lease that is classified and accounted for as an operating
lease as of the Closing Date being treated as a Capital Lease (or being given a
substantially similar treatment) shall not be given effect in the definition of
Indebtedness or any related definitions or in the computation of any financial
ratio or requirement set forth in any Loan Document and (b) if the Borrower
notifies Agent that it or Parent is required to report under International
Financial Reporting Standards (“IFRS”), or has elected to do so through an
early-adoption policy, “GAAP” shall mean international financial reporting
standards pursuant to IFRS (provided that after such conversion, (i) the
Borrower cannot elect to report under U.S. generally accepted accounting
principles and (ii) the Borrower shall reconcile the two financial computation
methods under IFRS and GAAP in a manner reasonably acceptable to Agent).

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

1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes”
and “including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). The words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties. Any reference herein or in
any other Loan Document to the satisfaction, repayment, or payment in full of
the Obligations shall mean the repayment in full in cash or immediately
available funds (or, (a) in the case of contingent reimbursement obligations
with respect to Letters of Credit, providing Letter of Credit Collateralization,
and (b) in the case of obligations with respect to Bank Products (other than
Hedge Obligations), providing Bank Product Collateralization) of all of the
Obligations (including the payment of any Lender Group Expenses that have
accrued irrespective of whether demand has been made therefor and the payment of
any termination amount then applicable (or which would or could become
applicable as a result of the repayment of the other Obligations) under Hedge
Agreements provided by Hedge Providers) other than (i) Contingent Obligations,
(ii) any Bank Product Obligations (other than Hedge Obligations) that, at such
time, are allowed by the applicable Bank Product Provider to remain outstanding
without being required to be repaid or cash collateralized, and (iii) any Hedge
Obligations that, at such time, are allowed by the applicable Hedge Provider to
remain outstanding without being required to be repaid. Any reference herein to
any Person shall be construed to include such Person’s successors and assigns.
Any requirement of a writing contained herein or in any other Loan Document
shall be satisfied by the transmission of a Record.

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

 

2

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2.

LOANS AND TERMS OF PAYMENT.

2.1 Revolver Loans.

(a) Subject to the terms and conditions of this Agreement, and during the term
of this Agreement, each Lender with a Revolver Commitment agrees (severally, not
jointly or jointly and severally) to make revolving loans (“Revolver Loans”) to
Borrower in an aggregate amount (after giving effect to such Revolver Loans) at
any one time outstanding not to exceed the lesser of:

(i) such Lender’s Revolver Commitment, and

(ii) such Lender’s Pro Rata Share of an amount equal to (A) the lesser of
(1) the Maximum Revolver Amount and (2) the Borrowing Base at such time minus
(B) the sum of (1) the Letter of Credit Usage at such time, plus (2) the
principal amount of Swing Loans outstanding at such time.

(b) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to
the terms and conditions of this Agreement, reborrowed at any time during the
term of this Agreement. The outstanding principal amount of the Advances,
together with interest accrued and unpaid thereon, shall be due and payable on
the Maturity Date or, if earlier, on the date on which they are declared due and
payable pursuant to the terms of this Agreement.

(c) Anything to the contrary in this Section 2.1 notwithstanding, Agent shall
have the right (but not the obligation) to establish, increase, reduce,
eliminate, or otherwise adjust reserves from time to time against the Borrowing
Base or the Maximum Revolver Amount in such amounts, and with respect to such
matters, as Agent in its Permitted Discretion shall deem necessary or
appropriate, including (i) reserves in an amount equal to the Bank Product
Reserve Amount, (ii) reserves in an amount equal to the Dilution Reserve,
(iii) reserves in an amount equal to 1 month’s rent with respect to any leased
property where books and records pertaining to ABL Priority Collateral of a Loan
Party are located, unless a Collateral Access Agreement for such location has
been obtained and (iv) reserves with respect to (A) sums that Parent or its
Subsidiaries are required to pay under this Agreement or any other Loan Document
(such as taxes, assessments, insurance premiums, or, in the case of leased
assets, rents or other amounts payable under such leases) and has failed to pay
when due, and (B) amounts owing by Parent or its Subsidiaries to any Person to
the extent secured by a Lien (including the Antitrust Judgment Lien) on, or
trust over, any of the ABL Priority Collateral (other than a Permitted Lien
which is a permitted purchase money Lien or the interest of a lessor under a
Capital Lease), which Lien or trust, in the Permitted Discretion of Agent likely
would have a priority superior to Agent’s Liens (such as Liens or trusts in
favor of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or
suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes
where given priority under applicable law) in and to such item of the ABL
Priority Collateral; provided that, in each case, reserves established by Agent
and in effect on the Closing Date, if any, shall be mutually agreed upon by
Borrower and Agent.

2.2 Reserved.

2.3 Borrowing Procedures and Settlements.

(a) Procedure for Borrowing. Each Borrowing shall be made by a written request
by an Authorized Person delivered to Agent. Unless Swing Lender is not obligated
to

 

3

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make a Swing Loan pursuant to Section 2.3(b) below, such notice must be received
by Agent no later than 2:00 p.m. (New York time) on the Business Day that is the
requested Funding Date specifying (i) the amount of such Borrowing, and (ii) the
requested Funding Date, which shall be a Business Day; provided, however, that
if Swing Lender is not obligated to make a Swing Loan as to a requested
Borrowing, such notice must be received by Agent no later than 2:00 p.m. (New
York time) on the Business Day prior to the date that is the requested Funding
Date (or, if WFCF is the sole Lender at such time, such request shall be
effective if received by Agent not later than 1:00 p.m. (New York time) on the
Funding Date applicable thereto). At Agent’s election, in lieu of delivering the
above-described written request, any Authorized Person may give Agent telephonic
notice of such request by the required time. In such circumstances, Borrower
agrees that any such telephonic notice will be confirmed in writing within 24
hours of the giving of such telephonic notice, but the failure to provide such
written confirmation shall not affect the validity of the request.

(b) Making of Swing Loans. In the case of a request for an Advance and so long
as either (i) the aggregate amount of Swing Loans made since the last Settlement
Date, minus the amount of Collections or payments applied to Swing Loans since
the last Settlement Date, plus the amount of the requested Advance does not
exceed $15,000,000, or (ii) Swing Lender, in its sole discretion, shall agree to
make a Swing Loan notwithstanding the foregoing limitation, Swing Lender shall
make an Advance in the amount of such requested Borrowing (any such Advance made
solely by Swing Lender pursuant to this Section 2.3(b) being referred to as a
“Swing Loan” and such Advances being referred to as “Swing Loans”) available to
Borrower on the Funding Date applicable thereto by transferring immediately
available funds to the Designated Account. Anything contained herein to the
contrary notwithstanding, the Swing Lender may, but shall not be obligated to,
make Swing Loans at any time that one or more of the Lenders is a Defaulting
Lender. Each Swing Loan shall be deemed to be an Advance hereunder and shall be
subject to all the terms and conditions (including Section 3) applicable to
other Advances, except that all payments on any Swing Loan shall be payable to
Swing Lender solely for its own account. Subject to the provisions of
Section 2.3(d)(ii), Swing Lender shall not make and shall not be obligated to
make any Swing Loan if Swing Lender has actual knowledge that (A) one or more of
the applicable conditions precedent set forth in Section 3 will not be satisfied
on the requested Funding Date for the applicable Borrowing, or (B) the requested
Borrowing (together with all other outstanding Revolver Usage) would exceed the
lesser of (1) the Maximum Revolver Amount and (2) the Borrowing Base on such
Funding Date. Swing Lender shall not otherwise be required to determine whether
the applicable conditions precedent set forth in Section 3 have been satisfied
on the Funding Date applicable thereto prior to making any Swing Loan. The Swing
Loans shall be secured by Agent’s Liens, constitute Advances and Obligations
hereunder, and bear interest at the rate applicable from time to time to
Advances that are Base Rate Loans. Immediately upon the making of a Swing Loan,
each Lender shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the Swing Lender a risk participation in such Swing
Loan in an amount equal to such Lender’s Pro Rata share of the amount of such
Swing Loan.

(c) Making of Revolver Loans.

(i) In the event that Swing Lender is not obligated to make a Swing Loan, then
promptly after receipt of a request for a Borrowing pursuant to Section 2.3(a),

 

4

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Agent shall notify Lenders, not later than 4:00 p.m. (New York time) on the
Business Day immediately preceding the Funding Date applicable thereto (provided
that, so long as WFCF is the sole Lender, such notice shall be deemed so
delivered if the notice of Borrower under Section 2.3(a) is received by Agent
not later than 1:00 p.m. (New York time) on the Funding Date applicable
thereto), by telecopy, telephone, or other similar form of transmission, of the
requested Borrowing. Each Lender shall make the amount of such Lender’s Pro Rata
Share of the requested Borrowing available to Agent in immediately available
funds, to Agent’s Account, not later than 1:00 p.m. (New York time) on the
Funding Date applicable thereto. After Agent’s receipt of the proceeds of such
Advances, Agent shall make the proceeds thereof available to Borrower on the
applicable Funding Date by transferring immediately available funds equal to
such proceeds received by Agent to the Designated Account; provided, however,
that, subject to the provisions of Section 2.3(d)(ii), Agent shall not request
any Lender to make any Advance if it has knowledge that, and no Lender shall
have the obligation to make any Advance, if (A) one or more of the applicable
conditions precedent set forth in Section 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing unless such condition has
been waived, or (B) the requested Borrowing (together with all other outstanding
Revolver Usage) would exceed the lesser of (1) the Maximum Revolver Amount and
(2) the Borrowing Base on such Funding Date.

(ii) Unless Agent receives notice from a Lender prior to 12:00 noon (New York
time) on the date of a Borrowing, that such Lender will not make available as
and when required hereunder to Agent for the account of Borrower the amount of
that Lender’s Pro Rata Share of the Borrowing, Agent may assume that each Lender
has made or will make such amount available to Agent in immediately available
funds on the Funding Date and Agent may (but shall not be so required), in
reliance upon such assumption, make available to Borrower on such date a
corresponding amount. If any Lender shall not have made its full amount
available to Agent in immediately available funds and if Agent in such
circumstances has made available to Borrower such amount, that Lender shall on
the Business Day following such Funding Date make such amount available to
Agent, together with interest at the Defaulting Lender Rate for each day during
such period. A notice submitted by Agent to any Lender with respect to amounts
owing under this Section 2.3(c)(ii) shall be conclusive, absent manifest error.
If such amount is so made available, such payment to Agent shall constitute such
Lender’s Advance on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to Agent on the Business Day following the
Funding Date, Agent will notify Borrower of such failure to fund and, within 3
Business Days after demand by Agent, Borrower shall pay such amount to Agent for
Agent’s account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Advances composing such Borrowing.

(d) Protective Advances and Optional Overadvances.

(i) Any contrary provision of this Agreement or any other Loan Document
notwithstanding, but subject to Section 2.3(d)(iv), Agent hereby is authorized
by Borrower and Lenders, from time to time in Agent’s sole discretion, (A) after
the

 

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occurrence and during the continuance of a Default or an Event of Default, or
(B) at any time that any of the other applicable conditions precedent set forth
in Section 3 are not satisfied, to make Advances to, or for the benefit of,
Borrower on behalf of the Lenders that Agent, in its Permitted Discretion deems
necessary or desirable (1) to preserve or protect the ABL Priority Collateral,
or any portion thereof, or (2) to enhance the likelihood of repayment of the
Obligations (other than the Bank Product Obligations) (any of the Advances
described in this Section 2.3(d)(i) shall be referred to as “Protective
Advances”).

(ii) Any contrary provision of this Agreement or any other Loan Document
notwithstanding, but subject to Section 2.3(d)(iv), the Lenders hereby authorize
Agent or Swing Lender, as applicable, and either Agent or Swing Lender, as
applicable, may, but is not obligated to, knowingly and intentionally, continue
to make Advances (including Swing Loans) to Borrower notwithstanding that an
Overadvance exists or would be created thereby, so long as (A) after giving
effect to such Advances, the outstanding Revolver Usage does not exceed the
Borrowing Base by more than 10% of the lesser of (1) the Maximum Revolver Amount
and (2) the Borrowing Base, and (B) after giving effect to such Advances, the
outstanding Revolver Usage (except for and excluding amounts charged to the Loan
Account for interest, fees, or Lender Group Expenses) does not exceed the
Maximum Revolver Amount. In the event Agent obtains actual knowledge that the
Revolver Usage exceeds the amounts permitted by the immediately foregoing
provisions, regardless of the amount of, or reason for, such excess, Agent shall
notify Lenders as soon as practicable (and prior to making any (or any
additional) intentional Overadvances (except for and excluding amounts charged
to the Loan Account for interest, fees, or Lender Group Expenses) unless Agent
determines that prior notice would result in imminent harm to the Collateral or
its value, in which case Agent may make such Overadvances and provide notice as
promptly as practicable thereafter), and Lenders with Revolver Commitments
thereupon shall, together with Agent, jointly determine the terms of
arrangements that shall be implemented with Borrower intended to reduce, within
a reasonable time, the outstanding principal amount of the Advances to Borrower
to an amount permitted by the preceding sentence. In such circumstances, if any
Lender with a Revolver Commitment objects to the proposed terms of reduction or
repayment of any Overadvance, the terms of reduction or repayment thereof shall
be implemented according to the determination of the Required Lenders. In any
event: (x) if any unintentional Overadvance remains outstanding for more than 30
days, unless otherwise agreed to by the Required Lenders, Borrower shall
immediately repay Advances in an amount sufficient to eliminate all such
unintentional Overadvances, and (y) after the date all such Overadvances have
been eliminated, there must be at least five consecutive days before intentional
Overadvances are made. The foregoing provisions are meant for the benefit of
Lenders and Agent and are not meant for the benefit of Borrower, which shall
continue to be bound by the provisions of Section 2.5. Each Lender with a
Revolver Commitment shall be obligated to settle with Agent as provided in
Section 2.3(e) (or Section 2.3(g), as applicable) for the amount of such
Lender’s Pro Rata Share of any unintentional Overadvances by Agent reported to
such Lender, any intentional Overadvances made as permitted under this
Section 2.3(d)(ii), and any Overadvances resulting from the charging to the Loan
Account of interest, fees, or Lender Group Expenses.

 

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(iii) Each Protective Advance and each Overadvance shall be deemed to be an
Advance hereunder, except that no Protective Advance or Overadvance shall be
eligible to be a LIBOR Rate Loan and, prior to Settlement thereof, all payments
on the Protective Advances shall be payable to Agent solely for its own account.
The Protective Advances and Overadvances shall be repayable on demand, secured
by Agent’s Liens, constitute Obligations hereunder, and bear interest at the
rate applicable from time to time to Advances that are Base Rate Loans. The
ability of Agent to make Protective Advances is separate and distinct from its
ability to make Overadvances and its ability to make Overadvances is separate
and distinct from its ability to make Protective Advances. For the avoidance of
doubt, the limitations on Agent’s ability to make Protective Advances do not
apply to Overadvances and the limitations on Agent’s ability to make
Overadvances do not apply to Protective Advances. The provisions of this
Section 2.3(d) are for the exclusive benefit of Agent, Swing Lender, and Lenders
and are not intended to benefit Borrower in any way.

(iv) Notwithstanding anything contained in this Agreement or any other Loan
Document to the contrary: (A) no Overadvance or Protective Advance may be made
by Agent if such Advance would cause the aggregate principal amount of
Overadvances and Protective Advances outstanding to exceed an amount equal to
10% of the lesser of (1) the Maximum Revolver Amount and (2) the Borrowing Base
and (B) after giving effect to all Overadvances and Protective Advances, the
aggregate Revolver Usage (except for and excluding amounts charged to the Loan
Account for interest, fees, or Lender Group Expenses) shall not exceed the
Maximum Revolver Amount; provided that, to the extent any Protective Advance
causes the aggregate Revolver Usage (except for and excluding amounts charged to
the Loan Account for interest, fees, or Lender Group Expenses) to exceed the
Maximum Revolver Amount, such portion of such Protective Advance shall be for
Agent’s sole and separate account and not for the account of any Lender and
shall be entitled to priority in repayment in accordance with Section 2.4(b).

(e) Settlement. It is agreed that each Lender’s funded portion of the Advances
is intended by Lenders to equal, at all times, such Lender’s Pro Rata Share of
the outstanding Advances. Such agreement notwithstanding, Agent, Swing Lender,
and the other Lenders agree (which agreement shall not be for the benefit of
Borrower) that in order to facilitate the administration of this Agreement and
the other Loan Documents, settlement among Lenders as to the Revolver Loans, the
Swing Loans, and the Protective Advances shall take place on a periodic basis in
accordance with the following provisions:

(i) Agent shall request settlement (“Settlement”) with the Lenders on a weekly
basis, or on a more frequent basis if so determined by Agent (1) on behalf of
Swing Lender, with respect to the outstanding Swing Loans, (2) for itself, with
respect to the outstanding Protective Advances or Overadvances, and (3) with
respect to any Loan Party’s Collections or payments received, as to each by
notifying the Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 4:00 p.m. (New York
time) on the Business Day immediately prior to the date of such requested
Settlement (the date of such requested Settlement being the “Settlement Date”).
Such notice of a Settlement Date shall include a summary statement

 

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of the amount of outstanding Revolver Loans, Swing Loans, Overadvances, and
Protective Advances for the period since the prior Settlement Date. Subject to
the terms and conditions contained herein (including Section 2.3(g)): (y) if the
amount of the Advances (including Revolver Loans, Swing Loans, Overadvances, and
Protective Advances) made by a Lender that is not a Defaulting Lender exceeds
such Lender’s Pro Rata Share of the Advances (including Revolver Loans, Swing
Loans, Overadvances, and Protective Advances) as of a Settlement Date, then
Agent shall, by no later than 3:00 p.m. (New York time) on the Settlement Date,
transfer in immediately available funds to a Deposit Account of such Lender (as
such Lender may designate), an amount such that each such Lender shall, upon
receipt of such amount, have as of the Settlement Date, its Pro Rata Share of
the Advances (including Revolver Loans, Swing Loans, Overadvances, and
Protective Advances), and (z) if the amount of the Advances (including Revolver
Loans, Swing Loans, Overadvances, and Protective Advances) made by a Lender is
less than such Lender’s Pro Rata Share of the Advances (including Revolver
Loans, Swing Loans, Overadvances, and Protective Advances) as of a Settlement
Date, such Lender shall no later than 3:00 p.m. (New York time) on the
Settlement Date transfer in immediately available funds to Agent’s Account, an
amount such that each such Lender shall, upon transfer of such amount, have as
of the Settlement Date, its Pro Rata Share of the Advances (including Revolver
Loans, Swing Loans, Overadvances, and Protective Advances). Such amounts made
available to Agent under clause (z) of the immediately preceding sentence shall
be applied against the amounts of the applicable Swing Loans, Overadvances, or
Protective Advances and, together with the portion of such Swing Loans,
Overadvances, or Protective Advances representing Swing Lender’s Pro Rata Share
thereof, shall constitute Advances of such Lenders. If any such amount is not
made available to Agent by any Lender on the Settlement Date applicable thereto
to the extent required by the terms hereof, Agent shall be entitled to recover
for its account such amount on demand from such Lender together with interest
thereon at the Defaulting Lender Rate.

(ii) In determining whether a Lender’s actual balance of the Revolver Loans,
Swing Loans, Overadvances, and Protective Advances is less than, equal to, or
greater than such Lender’s Pro Rata Share of the Revolver Loans, Swing Loans,
Overadvances, and Protective Advances as of a Settlement Date, Agent shall, as
part of the relevant Settlement, apply to such balance the portion of payments
actually received in good funds by Agent with respect to principal, interest,
fees payable by Borrower and allocable to Lenders hereunder, and proceeds of
Collateral.

(iii) Between Settlement Dates, Agent, to the extent Protective Advances,
Overadvances, or Swing Loans are outstanding, may pay over to Agent or Swing
Lender, as applicable, any Collections or payments received by Agent, that in
accordance with the terms of this Agreement would be applied to the reduction of
the Advances, for application to the Protective Advances, Overadvances, or Swing
Loans. Between Settlement Dates, Agent, to the extent no Protective Advances,
Overadvances, or Swing Loans are outstanding, may pay over to Swing Lender any
Collections or payments received by Agent, that in accordance with the terms of
this Agreement would be applied to the reduction of the Advances, for
application to Swing Lender’s Pro Rata Share of the Advances. If, as of any
Settlement Date, Collections or payments of Parent

 

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or its Subsidiaries received since the then immediately preceding Settlement
Date have been applied to Swing Lender’s Pro Rata Share of the Advances (other
than to Swing Loans), as provided for in the previous sentence, Swing Lender
shall pay to Agent for the accounts of the Lenders, and Agent shall pay to the
Lenders (other than a Defaulting Lender if Agent has implemented the provisions
of Section 2.3(g)), to be applied to the outstanding Advances of such Lenders,
an amount such that each such Lender shall, upon receipt of such amount, have,
as of such Settlement Date, its Pro Rata Share of the Advances. During the
period between Settlement Dates, Swing Lender with respect to Swing Loans, Agent
with respect to Protective Advances and Overadvances, and each Lender with
respect to the Revolver Loans, shall be entitled to interest at the applicable
rate or rates payable under this Agreement on the daily amount of funds employed
by Swing Lender, Agent, or the Lenders, as applicable.

(iv) Anything in this Section 2.3(e) to the contrary notwithstanding, in the
event that a Lender is a Defaulting Lender, Agent shall not be obligated to
remit settlement amounts to the Defaulting Lender and, instead, may implement
the provisions set forth in Section 2.3(g).

(f) Reserved.

(g) Defaulting Lenders. Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrower to Agent for the Defaulting Lender’s
benefit or any Collections or proceeds of Collateral that would otherwise be
remitted hereunder to the Defaulting Lender, and, in the absence of such
transfer to the Defaulting Lender, Agent shall transfer any such payments
(A) first, to Swing Lender to the extent of any Swing Loans that were made by
Swing Lender and that were required to be, but were not, paid by the Defaulting
Lender or any other Person, (B) second, to the Issuing Lender, to the extent of
the portion of a Letter of Credit Disbursement that was required to be, but was
not, paid by the Defaulting Lender or any other Person, (C) third, to each
non-Defaulting Lender ratably in accordance with their Revolver Commitments
(but, in each case, only to the extent that such Defaulting Lender’s portion of
an Advance (or other funding obligation) was funded by such other non-Defaulting
Lender), (D) to a suspense account maintained by Agent, the proceeds of which
shall be retained by Agent and may be made available to be re-advanced to or for
the benefit of Borrower as if such Defaulting Lender had made its portion of
Advances (or other funding obligations) hereunder, and (E) from and after the
date on which the Revolver Commitment is cancelled or terminated and all other
Obligations have been paid in full, to such Defaulting Lender in accordance with
tier (N) of Section 2.4(b)(ii). Subject to the foregoing, Agent may hold and, in
its discretion, re-lend to Borrower for the account of such Defaulting Lender
the amount of all such payments received and retained by Agent for the account
of such Defaulting Lender. Solely for the purposes of voting or consenting to
matters with respect to the Loan Documents (including the calculation of Pro
Rata Share in connection therewith) and for the purpose of calculating the fee
payable under Section 2.10(b), such Defaulting Lender shall be deemed not to be
a “Lender” and such Lender’s Revolver Commitment shall be deemed to be zero;
provided, however, that the foregoing shall not apply to any of the matters
governed by Section 14.1(a)(i) through (iii). The provisions of this
Section 2.3(g) shall remain effective with respect to such Defaulting Lender
until the earlier of (y) the date on which all of the non-Defaulting Lenders,
Agent, Issuing Lender, and Borrower shall have waived, in writing, the
application of this Section 2.3(g) to such Defaulting Lender, or

 

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(z) the date on which such Defaulting Lender makes payment of all amounts that
it was obligated to fund hereunder, pays to Agent all amounts owing by
Defaulting Lender in respect of the amounts that it was obligated to fund
hereunder, and, if requested by Agent, provides adequate assurance of its
ability to perform its future obligations hereunder. The operation of this
Section 2.3(g) shall not be construed to increase or otherwise affect the
Revolver Commitment of any Lender, to relieve or excuse the performance by such
Defaulting Lender or any other Lender of its duties and obligations hereunder,
or to relieve or excuse the performance by Borrower of its duties and
obligations hereunder to Agent, Issuing Lender, or to the Lenders other than
such Defaulting Lender. Any failure by a Defaulting Lender to fund amounts that
it was obligated to fund hereunder shall constitute a material breach by such
Defaulting Lender of this Agreement and shall entitle Borrower, in addition to
any other remedies which it may be entitled, to replace such Defaulting Lender
in accordance with Section 14.2. In the event of a direct conflict between the
priority provisions of this Section 2.3(g) and any other provision contained in
this Agreement or any other Loan Document, it is the intention of the parties
hereto that such provisions be read together and construed, to the fullest
extent possible, to be in concert with each other. In the event of any actual,
irreconcilable conflict that cannot be resolved as aforesaid, the terms and
provisions of this Section 2.3(g) shall control and govern.

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

2.4 Payments; Reductions of Revolver Commitments; Prepayments.

(a) Payments by Borrower.

(i) Except as otherwise expressly provided herein, all payments by Borrower
shall be made to Agent’s Account for the account of the Lender Group and shall
be made in immediately available funds, no later than 3:00 p.m. (New York time)
on the date specified herein. Any payment received by Agent later than 3:00 p.m.
(New York time) shall be deemed to have been received on the following Business
Day and any applicable interest or fee shall continue to accrue until such
following Business Day.

(ii) Unless Agent receives notice from Borrower prior to the date on which any
payment is due to Lenders that Borrower will not make such payment in full as
and when required, Agent may assume that Borrower has made (or will make) such
payment in full to Agent on such date in immediately available funds and Agent
may (but shall not be so required), in reliance upon such assumption, distribute
to each Lender on such due date an amount equal to the amount then due such
Lender. If and to the extent Borrower does not make such payment in full to
Agent on the date when due, each Lender severally shall repay to Agent on demand
such amount distributed to such Lender, together with interest thereon at the
Defaulting Lender Rate for each day from the date such amount is distributed to
such Lender until the date repaid.

 

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(b) Apportionment and Application.

(i) So long as no Application Event has occurred and is continuing and except as
otherwise provided herein with respect to Defaulting Lenders, all principal and
interest payments received by Agent shall be apportioned ratably among Lenders
(according to the unpaid principal balance of the Obligations to which such
payments relate held by each Lender) and all payments of fees and expenses
received by Agent (other than fees or expenses that are for Agent’s separate
account or for the separate account of the Issuing Lender) shall be apportioned
ratably among the Lenders having a Pro Rata Share of the type of Revolver
Commitment or Obligation to which a particular fee or expense relates. All
payments to be made hereunder by Borrower shall be remitted to Agent and all
(subject to Section 2.4(b)(iv) and Section 2.4(e)) such payments, and all
proceeds of Collateral received by Agent, shall be applied, so long as no
Application Event has occurred and is continuing, to reduce the balance of the
Advances outstanding and, thereafter, to Borrower (to be wired to the Designated
Account) or such other Person entitled thereto under applicable law.

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

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

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

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

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

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

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

(G) seventh, to pay interest accrued in respect of the Swing Loans until paid in
full,

(H) eighth, to pay the principal of all Swing Loans until paid in full,

 

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(I) ninth, ratably, to pay interest accrued in respect of the Revolver Loans,

(J) tenth, ratably (i) to pay the principal of all Revolver Loans until paid in
full, (ii) to Agent, to be held by Agent, for the benefit of Issuing Lender (and
for the ratable benefit of each of the Lenders that have an obligation to pay to
Agent, for the account of the Issuing Lender, a share of each Letter of Credit
Disbursement), as cash collateral in an amount up to 105% of the Letter of
Credit Usage (to the extent permitted by applicable law, such cash collateral
shall be applied to the reimbursement of any Letter of Credit Disbursement as
and when such disbursement occurs and, if a Letter of Credit expires undrawn,
the cash collateral held by Agent in respect of such Letter of Credit shall, to
the extent permitted by applicable law, be reapplied pursuant to this
Section 2.4(b)(ii), beginning with tier (A) hereof), and (iii) ratably, to the
Hedge Providers based upon amounts certified to Agent to be due and payable to
such Hedge Provider on account of Noticed Bank Product Obligations constituting
Hedge Obligations,

(K) eleventh, ratably to the Bank Product Providers based upon amounts certified
to Agent to be due and payable to such Bank Product Provider on account of
Noticed Bank Product Obligations (other than Hedge Obligations provided for in
clause (J) above),

(L) twelfth, ratably to the Bank Product Providers on account of any other Bank
Product Obligations that are due and payable,

(M) thirteenth, to pay any other Obligations that are due and payable other than
Obligations owed to Defaulting Lenders,

(N) fourteenth, ratably to pay any Obligations that are due and payable owed to
Defaulting Lenders; and

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

(iii) Agent promptly shall distribute to each Lender, pursuant to the applicable
wire instructions received from each Lender in writing, such funds as it may be
entitled to receive, subject to a Settlement delay as provided in
Section 2.3(e).

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

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

 

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

(c) Reduction of Revolver Commitments. The Revolver Commitments shall terminate
on the Maturity Date. Borrower may reduce the Revolver Commitments, without
premium or penalty, to an amount (which may be zero) not less than the sum of
(A) the Revolver Usage as of such date, plus (B) the principal amount of all
Advances not yet made as to which a request has been given by Borrower under
Section 2.3(a), plus (C) the amount of all Letters of Credit not yet issued as
to which a request has been given by Borrower pursuant to Section 2.11(a). Each
such reduction shall be in an amount which is not less than $5,000,000 (unless
the Revolver Commitments are being reduced to zero and the amount of the
Revolver Commitments in effect immediately prior to such reduction are less than
$5,000,000), shall be made by providing not less than 5 Business Days prior
written notice to Agent and shall be irrevocable. Once reduced, the Revolver
Commitments may not be increased except in accordance with Section 2.14. Each
such reduction of the Revolver Commitments shall reduce the Revolver Commitments
of each Lender proportionately in accordance with its ratable share thereof.

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

(e) Mandatory Prepayments.

(i) Borrowing Base. If, at any time, the Revolver Usage on such date exceeds
(A) the Borrowing Base (such excess being referred to as the “Borrowing Base
Excess”) or (B) the Maximum Revolver Amount (such excess being referred to as
the “Commitment Excess”), then Borrower shall, subject to Section 2.5, promptly,
but in any event, within 3 Business Days prepay the Obligations in accordance
with Section 2.4(f) in an aggregate amount equal to the greater of the Borrowing
Base Excess and the Commitment Excess.

(ii) Dispositions.

(A) ABL Priority Collateral. Within 3 Business Days after the date of receipt by
any Loan Party of the Net Cash Proceeds of any voluntary or involuntary sale or
disposition by a Loan Party of any ABL Priority Collateral (including casualty
losses or condemnations) in excess of $500,000 individually, or $1,000,000 in
the aggregate in any fiscal year, other than sales or dispositions permitted
under clauses (b), (c), (f), (j), (l), (m) or (q) of the definition of

 

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Permitted Dispositions, Borrower shall prepay the outstanding principal amount
of the Obligations in accordance with Section 2.4(f) in an amount equal to 100%
of such Net Cash Proceeds (including condemnation awards and payments in lieu
thereof) received by such Person in connection with such sale or disposition,
provided that during any Trigger Period, concurrently with the receipt of any
Net Cash Proceeds in connection with this clause (A), 100% of such proceeds
shall be immediately deposited into Agent’s Account and used to prepay Advances
and/or provide for Letter of Credit Collateralization in accordance with
Section 2.4(f).

(B) Secured Notes Priority Collateral. Within 10 Business Days after the date of
receipt by any Loan Party or, if the Secured Notes or any Permitted Additional
Pari Passu Obligations (or any Refinancing Indebtedness in respect of the
foregoing) are outstanding, 10 Business Days after the expiration of all
prepayment and reinvestment periods under the Secured Notes Documents or
documents governing any Permitted Additional Pari Passu Obligations (or any
Refinancing Indebtedness in respect of the foregoing) with respect to the
receipt by any Loan Party, in each case, of the Net Cash Proceeds of any
voluntary or involuntary sale or disposition by any Loan Party of any Collateral
(other than ABL Priority Collateral) (including casualty losses or
condemnations), except sales or dispositions permitted under Sections 6.3 or
6.11, or under clauses (b), (c), (f), (j), (l), (m) or (q) of the definition of
Permitted Dispositions and unless the Secured Notes or any Permitted Additional
Pari Passu Obligations (or any Refinancing Indebtedness in respect of the
foregoing) are outstanding and such Net Cash Proceeds are prepaid or reinvested
in accordance with the terms of the Secured Notes Documents or such Permitted
Additional Pari Passu Obligations or Refinancing Indebtedness, and to the extent
the aggregate amount of Net Cash Proceeds received or unapplied by the Loan
Parties exceeds $2,500,000 in any fiscal year, then Borrower shall (I) prepay
the outstanding principal amount of the Obligations in accordance with
Section 2.4(f) in an amount equal to 100% of such Net Cash Proceeds (including
condemnation awards and payments in lieu thereof) received by such Person in
connection with such sales or dispositions or (II) if the Secured Notes or any
Permitted Additional Pari Passu Obligations (or any Refinancing Indebtedness in
respect of the foregoing) are not outstanding, so long as no Event of Default
under Section 8.1 has occurred and is continuing on the date such Net Cash
Proceeds are received, deliver to Agent, written notice that Parent or another
Loan Party intends to reinvest (or actually has reinvested) such Net Cash
Proceeds in assets useful in its business. If the Secured Notes or any Permitted
Additional Pari Passu Obligations (or any Refinancing Indebtedness in respect of
the foregoing) are not outstanding, to the extent that such Net Cash Proceeds
have not theretofore been applied to prepay the Obligations or reinvested within
12 months after the date of receipt thereof, or to the extent that Parent or
another Loan Party has entered into a binding commitment to reinvest such Net
Cash Proceeds, the date that is the later of (x) 12 months after the receipt
thereof and (y) 90 days after the date of entry into such binding commitment,
Borrower shall make an additional prepayment of the outstanding principal amount
of the Obligations in an amount equal to such unapplied Net Cash Proceeds.

 

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Nothing contained in this Section 2.4(e)(ii) shall permit Parent or any of its
Subsidiaries to sell or otherwise dispose of any assets other than in accordance
with Section 6.4.

(f) Application of Payments. Each prepayment pursuant to Section 2.4(e)(i) or
2.4(e)(ii) shall, (A) so long as no Application Event shall have occurred and be
continuing, be applied, first, to the outstanding principal amount of the
Advances (without a corresponding permanent reduction in the Maximum Revolver
Amount) until paid in full (applied first ratably to Protective Advances, second
ratably to Swing Loans and third ratably to Revolver Loans), and second, to cash
collateralize the Letters of Credit in an amount equal to 105% of the then
extant Letter of Credit Usage (without a corresponding permanent reduction in
the Maximum Revolver Amount), and (B) if an Application Event shall have
occurred and be continuing, be applied in the manner set forth in
Section 2.4(b)(ii).

2.5 Overadvances. If, at any time or for any reason, the amount of Obligations
owed by Borrower to the Lender Group pursuant to Section 2.1 or Section 2.11 is
greater than any of the limitations set forth in Section 2.1, Section 2.4(e)(i)
or Section 2.11, as applicable (an “Overadvance”), Borrower shall, subject to
Section 2.3(d)(ii), promptly, but in any event, within 3 Business Days of the
initial occurrence of an Overadvance pay to Agent, in cash, the amount of such
excess, which amount shall be used by Agent to reduce the Obligations in
accordance with the priorities set forth in Section 2.4(b); provided, however,
that in the case of an Overadvance that is caused solely as a result of (a) the
charging by Agent of Lender Group Expenses to the Loan Account or (b) the
implementation or increase of reserves by Agent subsequent to the Closing Date,
Borrower shall have 3 Business Days from the date of the initial occurrence of
such Overadvance to pay to Agent, in cash, the amount of such excess (which
period of 3 Business Days shall in no event be duplicative of the 3 Business
Days period referenced in Section 8.1(a)). Borrower promises to pay the
Obligations (including principal, interest, fees, costs, and expenses) in full
on the Maturity Date or, if earlier, on the date on which the Obligations (other
than the Bank Product Obligations) become due and payable pursuant to the terms
of this Agreement.

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

(a) Interest Rates. Except as provided in Section 2.6(c), all Obligations
(except for undrawn Letters of Credit) that have been charged to the Loan
Account pursuant to the terms hereof shall bear interest on the Daily Balance
thereof as follows:

(i) if the relevant Obligation is a LIBOR Rate Loan, at a per annum rate equal
to the LIBOR Rate plus the Applicable Margin for LIBOR Rate Loans, and

(ii) otherwise, at a per annum rate equal to the Base Rate plus the Applicable
Margin for Base Rate Loans.

(b) Letter of Credit Fee. Borrower shall pay Agent (for the ratable benefit of
the Lenders with a Revolver Commitment), a Letter of Credit fee (in addition to
the charges, commissions, fees, and costs set forth in Section 2.11(f)) which
shall accrue at a per annum rate equal to the Applicable Margin for LIBOR Rate
Loans times the Daily Balance of the undrawn amount of all outstanding Letters
of Credit.

 

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(c) Default Rate. (i) Immediately upon the occurrence and during the
continuation of an Event of Default under Sections 8.1, 8.4 or 8.5, or (ii) at
the election of the Required Lenders, upon the occurrence and during the
continuation of any other Event of Default,

(A) all Obligations (except for undrawn Letters of Credit) that have been
charged to the Loan Account pursuant to the terms hereof shall bear interest on
the Daily Balance thereof at a per annum rate equal to 2% above the per annum
rate otherwise applicable thereunder, and

(B) the Letter of Credit fee provided for in Section 2.6(b) shall be increased
to 2% above the per annum rate otherwise applicable hereunder.

(d) Payment. Except to the extent provided to the contrary in Section 2.10 or
Section 2.12(a), all interest, all Letter of Credit fees, and all other fees
payable hereunder or under any of the other Loan Documents shall be due and
payable, in arrears, on the first day of each month at any time that Obligations
or Revolver Commitments are outstanding. All costs and expenses payable
hereunder or under any of the other Loan Documents, and all Lender Group
Expenses shall be due and payable on demand of Agent. Borrower hereby authorizes
Agent, from time to time without prior notice to Borrower, to charge all
interest, Letter of Credit fees, and all other fees payable hereunder or under
any of the other Loan Documents (in each case, as and when due and payable), all
costs and expenses payable hereunder or under any of the other Loan Documents
(in each case, as and when accrued or incurred), and all Lender Group Expenses
(as and when accrued or incurred), all charges, commissions, fees, and costs
provided for in Section 2.11(f) (as and when accrued or incurred), all fees and
costs provided for in Section 2.10 (as and when accrued or incurred), and all
other payment obligations as and when due and payable under any Loan Document or
any Bank Product Agreement (including any amounts due and payable to the Bank
Product Providers in respect of Bank Products) to the Loan Account, which
amounts thereafter shall constitute Advances hereunder and, initially, shall
accrue interest at the rate then applicable to Advances that are Base Rate
Loans. Any interest, fees, costs, expenses, Lender Group Expenses, or other
amounts payable hereunder or under any other Loan Document or under any Bank
Product Agreement that are charged to the Loan Account shall thereupon
constitute Advances hereunder and shall initially accrue interest at the rate
then applicable to Advances that are Base Rate Loans (unless and until converted
into LIBOR Rate Loans in accordance with the terms of this Agreement).

(e) Computation. All interest and fees chargeable under the Loan Documents shall
be computed on the basis of a 360 day year, in each case, for the actual number
of days elapsed in the period during which the interest or fees accrue; provided
that Base Rate Loans bearing interest based on the “prime rate” shall be
calculated on the basis of a 365 day year (or a 366 day year, in the case of a
leap year). In the event the Base Rate is changed from time to time hereafter,
the rates of interest hereunder based upon the Base Rate automatically and
immediately shall be increased or decreased by an amount equal to such change in
the Base Rate.

 

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

2.7 Crediting Payments. The receipt of any payment item by Agent shall not be
considered a payment on account unless such payment item is a wire transfer of
immediately available federal funds made to Agent’s Account or unless and until
such payment item is honored when presented for payment. Should any payment item
not be honored when presented for payment, then Borrower shall be deemed not to
have made such payment and interest shall be calculated accordingly. Anything to
the contrary contained herein notwithstanding, any payment item shall be deemed
received by Agent only if it is received into Agent’s Account on a Business Day
on or before 3:00 p.m. (New York time). If any payment item is received into
Agent’s Account on a non-Business Day or after 3:00 p.m. (New York time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day.

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

2.9 Maintenance of Loan Account; Statements of Obligations. Agent shall maintain
an account on its books in the name of Borrower (the “Loan Account”) on which
Borrower will be charged with all Advances (including Revolver Loans, Protective
Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrower or for Borrower’s account, the Letters of Credit issued or arranged by
Issuing Lender for Borrower’s account, and with all other payment Obligations
hereunder or under the other Loan Documents, including, accrued interest, fees
and expenses, and Lender Group Expenses. In accordance with Section 2.7, the
Loan Account will be credited with all payments received by Agent from Borrower
or for Borrower’s account. Agent shall render monthly statements regarding the
Loan Account to Borrower, including principal, interest, fees, and including an
itemization of all charges and expenses constituting Lender Group Expenses
owing, and such statements, absent manifest error, shall be conclusively
presumed to be correct and accurate and constitute an account stated between
Borrower and the Lender Group unless, within 30 days after receipt thereof by
Borrower, Borrower shall deliver to Agent written objection thereto describing
the error or errors contained in any such statements.

 

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2.10 Fees. Borrower shall pay to Agent,

(a) for the account of Agent, as and when due and payable under the terms of the
Fee Letter, the fees set forth in the Fee Letter;

(b) for the ratable account of the Lenders, on the first day of each month from
and after the Closing Date up to the first day of the month prior to the Payoff
Date and on the Payoff Date, (i) if the average Daily Balance of the Revolver
Usage during the immediately preceding three-month period (or portion thereof)
exceeds 50% of the Maximum Revolver Amount, an unused line fee in an amount
equal to 0.375% per annum or (ii) if the average Daily Balance of the Revolver
Usage during the immediately preceding three-month period (or portion thereof)
is less than or equal to 50% of the Maximum Revolver Amount, an unused line fee
in an amount equal to 0.50% per annum, in either case times the result of
(A) the aggregate amount of the Maximum Revolver Amount, less (B) the average
Daily Balance of the Revolver Usage during the immediately preceding three-month
period (or portion thereof); and

(c) audit, appraisal, and valuation fees and charges, as and when incurred or
chargeable, as follows (i) a fee of $1,000 per day, per auditor, plus
out-of-pocket expenses for each financial audit of Borrower performed by
personnel employed by Agent, (ii) a fee of $1,000 per day, per applicable
individual, plus out of pocket expenses in connection with any modifications to
the electronic collateral reporting system established for Parent and the other
Loan Parties, and (iii) the actual charges paid or incurred by Agent if it
elects to employ the services of one or more third Persons to perform field
audits of Parent or the other Loan Parties or to appraise the Collateral, or any
portion thereof; provided, however, that so long as no Event of Default shall
have occurred and be continuing, Borrower shall not be obligated to reimburse
Agent for more than 2 audits and 1 appraisal for Collateral during any calendar
year; provided, further that (A) the total number of audits shall be increased
by 1 in any 12 month period during a Trigger Period and (B) upon the occurrence
and during the continuation of an Event of Default, there shall be no limit on
the number of audits or appraisals which may be conducted by Agent (or its
designee) upon reasonable prior notice, each at the expense of Borrower.

2.11 Letters of Credit.

(a) Subject to the terms and conditions of this Agreement, upon the request of
Borrower made in accordance herewith, the Issuing Lender agrees to issue, or to
cause an Underlying Issuer (including, as Issuing Lender’s agent) to issue, a
requested Letter of Credit. If Issuing Lender, at its option, elects to cause an
Underlying Issuer to issue a requested Letter of Credit, then Issuing Lender
agrees that it will enter into arrangements relative to the reimbursement of
such Underlying Issuer (which may include, among, other means, by becoming an
applicant with respect to such Letter of Credit or entering into undertakings
which provide for reimbursements of such Underlying Issuer with respect to such
Letter of Credit; each such obligation or undertaking, irrespective of whether
in writing, a “Reimbursement Undertaking”) with respect to Letters of Credit
issued by such Underlying Issuer. By submitting a request to Issuing Lender for
the issuance of a Letter of Credit, Borrower shall be deemed to

 

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have requested that Issuing Lender issue or that an Underlying Issuer issue the
requested Letter of Credit and to have requested Issuing Lender to issue a
Reimbursement Undertaking with respect to such requested Letter of Credit if it
is to be issued by an Underlying Issuer (it being expressly acknowledged and
agreed by Borrower that Borrower is and shall be deemed to be an applicant
(within the meaning of Section 5-102(a)(2) of the Code) with respect to each
Underlying Letter of Credit). Each request for the issuance of a Letter of
Credit, or the amendment, renewal, or extension of any outstanding Letter of
Credit, shall be made in writing by an Authorized Person and delivered to the
Issuing Lender via hand delivery, facsimile, or other electronic method of
transmission reasonably in advance of the requested date of issuance, amendment,
renewal, or extension. Each such request shall be in form and substance
reasonably satisfactory to the Issuing Lender and shall specify (i) the amount
of such Letter of Credit, (ii) the date of issuance, amendment, renewal, or
extension of such Letter of Credit, (iii) the proposed expiration date of such
Letter of Credit, (iv) the name and address of the beneficiary of the Letter of
Credit, and (v) such other information (including, the conditions of drawing,
and, in the case of an amendment, renewal, or extension, identification of the
Letter of Credit to be so amended, renewed, or extended) as shall be necessary
to prepare, amend, renew, or extend such Letter of Credit. Anything contained
herein to the contrary notwithstanding, the Issuing Lender may, but shall not be
obligated to, issue or cause the issuance of a Letter of Credit or to issue a
Reimbursement Undertaking in respect of an Underlying Letter of Credit, in
either case, that supports the obligations of Parent or its Subsidiaries (1) in
respect of (A) a lease of real property, or (B) an employment contract, or
(2) at any time that one or more of the Lenders is a Defaulting Lender. The
Issuing Lender shall have no obligation to issue a Letter of Credit or a
Reimbursement Undertaking in respect of an Underlying Letter of Credit, in
either case, if any of the following would result after giving effect to the
requested issuance:

(i) the Letter of Credit Usage would exceed (A) the lesser of (x) the Borrowing
Base and (y) the Maximum Revolver Amount less (B) the outstanding amount of
Advances (inclusive of Revolver Loans and Swing Loans), or

(ii) the Letter of Credit Usage would exceed $30,000,000.

Borrower and the Lender Group hereby acknowledge and agree that all Existing
Letters of Credit shall constitute Letters of Credit under this Agreement on and
after the Closing Date with the same effect as if such Existing Letters of
Credit were issued by Issuing Lender or an Underlying Issuer at the request of
Borrower on the Closing Date. Each Letter of Credit shall be in form and
substance reasonably acceptable to the Issuing Lender, including the requirement
that the amounts payable thereunder must be payable in Dollars. If Issuing
Lender makes a payment under a Letter of Credit or an Underlying Issuer makes a
payment under an Underlying Letter of Credit, Borrower shall pay to Agent an
amount equal to the applicable Letter of Credit Disbursement on the date such
Letter of Credit Disbursement is made and, in the absence of such payment, the
amount of the Letter of Credit Disbursement immediately and automatically shall
be deemed to be an Advance hereunder and, initially, shall bear interest at the
rate then applicable to Advances that are Base Rate Loans. If a Letter of Credit
Disbursement is deemed to be an Advance hereunder (notwithstanding any failure
to satisfy any condition precedent set forth in Section 3), Borrower’s
obligation to pay the amount of such Letter of Credit Disbursement to Issuing
Lender shall be automatically converted into an obligation to pay the resulting
Advance. Promptly following receipt by Agent of any payment from Borrower

 

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pursuant to this paragraph, Agent shall distribute such payment to the Issuing
Lender or, to the extent that Lenders have made payments pursuant to
Section 2.11(b) to reimburse the Issuing Lender, then to such Lenders and the
Issuing Lender as their interests may appear.

(b) Promptly following receipt of a notice of a Letter of Credit Disbursement
pursuant to Section 2.11(a), each Lender with a Revolver Commitment agrees to
fund its Pro Rata Share of any Advance deemed made pursuant to Section 2.11(a)
on the same terms and conditions as if Borrower had requested the amount thereof
as an Advance and Agent shall promptly pay to Issuing Lender the amounts so
received by it from the Lenders. By the issuance of a Letter of Credit or a
Reimbursement Undertaking (or an amendment, renewal, or extension of a Letter of
Credit or a Reimbursement Undertaking) and without any further action on the
part of the Issuing Lender or the Lenders with Revolver Commitments, the Issuing
Lender shall be deemed to have granted to each Lender with a Revolver
Commitment, and each Lender with a Revolver Commitment shall be deemed to have
purchased, a participation in each Letter of Credit issued by Issuing Lender and
each Reimbursement Undertaking, in an amount equal to its Pro Rata Share of such
Letter of Credit or Reimbursement Undertaking, and each such Lender agrees to
pay to Agent, for the account of the Issuing Lender, such Lender’s Pro Rata
Share of any Letter of Credit Disbursement made by Issuing Lender or an
Underlying Issuer under the applicable Letter of Credit. In consideration and in
furtherance of the foregoing, each Lender with a Revolver Commitment hereby
absolutely and unconditionally agrees to pay to Agent, for the account of the
Issuing Lender, such Lender’s Pro Rata Share of each Letter of Credit
Disbursement made by Issuing Lender or an Underlying Issuer and not reimbursed
by Borrower on the date due as provided in Section 2.11(a), or of any
reimbursement payment required to be refunded (or that Agent or Issuing Lender
elects, based upon the advice of counsel, to refund) to Borrower for any reason.
Each Lender with a Revolver Commitment acknowledges and agrees that its
obligation to deliver to Agent, for the account of the Issuing Lender, an amount
equal to its respective Pro Rata Share of each Letter of Credit Disbursement
pursuant to this Section 2.11(b) shall be absolute and unconditional and such
remittance shall be made notwithstanding the occurrence or continuation of an
Event of Default or Default or the failure to satisfy any condition set forth in
Section 3. If any such Lender fails to make available to Agent the amount of
such Lender’s Pro Rata Share of a Letter of Credit Disbursement as provided in
this Section, such Lender shall be deemed to be a Defaulting Lender and Agent
(for the account of the Issuing Lender) shall be entitled to recover such amount
on demand from such Lender together with interest thereon at the Defaulting
Lender Rate until paid in full.

(c) Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group
and each Underlying Issuer harmless from any damage, loss, cost, expense, or
liability, and reasonable attorneys fees incurred by Issuing Lender, any other
member of the Lender Group, or any Underlying Issuer arising out of or in
connection with any Reimbursement Undertaking or any Letter of Credit; provided,
however, that Borrower shall not be obligated hereunder to indemnify for any
loss, cost, expense, or liability that a court of competent jurisdiction finally
determines to have resulted from the gross negligence or willful misconduct of
the Issuing Lender, any other member of the Lender Group, or any Underlying
Issuer. Borrower agrees to be bound by the Underlying Issuer’s regulations and
interpretations of any Letter of Credit or by Issuing Lender’s interpretations
of any Reimbursement Undertaking even though this interpretation may be
different from Borrower’s own, and Borrower understands and agrees that none of
the Issuing Lender, any other member of the Lender Group, or any

 

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Underlying Issuer shall be liable for any error, negligence, or mistake, whether
of omission or commission, in following Borrower’s instructions or those
contained in the Letter of Credit or any modifications, amendments, or
supplements thereto. Borrower understands that the Reimbursement Undertakings
may require Issuing Lender to indemnify the Underlying Issuer for certain costs
or liabilities arising out of claims by Borrower against such Underlying Issuer.
Borrower hereby agrees to indemnify, save, defend, and hold Issuing Lender and
the other members of the Lender Group harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability (other than taxes
but including any taxes that represent losses, claims, damages etc. arising from
any non-tax claim) incurred by them as a result of the Issuing Lender’s
indemnification of an Underlying Issuer; provided, however, that Borrower shall
not be obligated hereunder to indemnify for any such loss, cost, expense, or
liability to the extent that it is caused by the gross negligence or willful
misconduct of the Issuing Lender or any other member of the Lender Group.
Borrower hereby acknowledges and agrees that none of the Issuing Lender, any
other member of the Lender Group, or any Underlying Issuer shall be responsible
for delays, errors, or omissions resulting from the malfunction of equipment in
connection with any Letter of Credit.

(d) The obligation of Borrower to reimburse the Issuing Lender for each drawing
under each Letter of Credit shall be absolute, unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement under
all circumstances, including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or another Loan Document,

(ii) the existence of any claim, counterclaim, setoff, defense or other right
that Parent or any of its Subsidiaries may have at any time against any
beneficiary or any transferee of such Letter of Credit (or any Person for whom
any such beneficiary or any such transferee maybe acting), the Issuing Lender or
any other Person, whether in connection with this Agreement, the transactions
contemplated hereby or such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction,

(iii) any draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect,
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such Letter of Credit,

(iv) any payment by the Issuing Lender under such Letter of Credit against
presentation of a draft or certificate that does not substantially or strictly
comply with the terms of such Letter of Credit (including, without limitation,
any requirement that presentation be made at a particular place or by a
particular time of day), or any payment made by the Issuing Lender under such
Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit,

 

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(v) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or discharge of, Borrower or any of its
Subsidiaries, or

(vi) the fact that any Event of Default shall have occurred and be continuing.

(e) Borrower hereby authorizes and directs any Underlying Issuer to deliver to
the Issuing Lender all instruments, documents, and other writings and property
received by such Underlying Issuer pursuant to such Underlying Letter of Credit
and to accept and rely upon the Issuing Lender’s instructions with respect to
all matters arising in connection with such Underlying Letter of Credit and the
related application.

(f) Borrower acknowledges and agrees that any and all issuance charges, usage
charges, commissions, fees, and costs incurred by the Issuing Lender relating to
Underlying Letters of Credit shall be Lender Group Expenses for purposes of this
Agreement and shall be reimbursable promptly, but in any event, within 1
Business Day by Borrower to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by Borrower that, as of the Closing Date, the
usage charge imposed by the Underlying Issuer is 0.125% per annum times the
stated amount of each Underlying Letter of Credit and shall be payable in
advance upon the issuance of each Letter of Credit, that such usage charge may
be changed from time to time, and that the Underlying Issuer also imposes a
schedule of charges for amendments, extensions, drawings, and renewals.

(g) If by reason of (i) any change after the Closing Date in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by the Issuing Lender,
any other member of the Lender Group, or Underlying Issuer with any direction,
request, or requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):

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

(ii) any Issuing Lender or other member of the Lender Group or Underlying Issuer
shall become subject to any taxes (other than Taxes, including Taxes resulting
from a Lender’s failure to provide the forms described in Section 16(c)) on its
loans, loan principal, letters of credit, commitments, or other obligations, or
its deposits, reserves, other liabilities or capital attributable thereto, or

(iii) there shall be imposed on the Issuing Lender, any other member of the
Lender Group, or Underlying Issuer any other condition regarding any Letter of
Credit or Reimbursement Undertaking,

and the result of the foregoing is to increase, directly or indirectly, the cost
to the Issuing Lender, any other member of the Lender Group, or an Underlying
Issuer of issuing, making, participating

 

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in, or maintaining any Reimbursement Undertaking or Letter of Credit or to
reduce the amount receivable in respect thereof, then, and in any such case,
Agent may, at any time within a reasonable period after the additional cost is
incurred or the amount received is reduced, notify Borrower, and Borrower shall
pay within 30 days after demand therefor, such amounts as Agent may specify to
be necessary to compensate the Issuing Lender, any other member of the Lender
Group, or an Underlying Issuer for such additional cost or reduced receipt,
together with interest on such amount from the date of such demand until payment
in full thereof at the rate then applicable to Base Rate Loans hereunder;
provided, however, that Borrower shall not be required to provide any
compensation pursuant to this Section 2.11(g) for any such amounts incurred more
than 180 days prior to the date on which the demand for payment of such amounts
is first made to Borrower; provided further, however, that if an event or
circumstance giving rise to such amounts is retroactive, then the 180-day period
referred to above shall be extended to include the period of retroactive effect
thereof. The determination by Agent of any amount due pursuant to this
Section 2.11(g), as set forth in a certificate setting forth the calculation
thereof in reasonable detail, shall, in the absence of manifest or demonstrable
error, be final and conclusive and binding on all of the parties hereto.

2.12 LIBOR Option.

(a) Interest and Interest Payment Dates. In lieu of having interest charged at
the rate based upon the Base Rate, Borrower shall have the option, subject to
Section 2.12(b) below (the “LIBOR Option”) to have interest on all or a portion
of the Revolver Loans be charged (whether at the time when made (unless
otherwise provided herein), upon conversion from a Base Rate Loan to a LIBOR
Rate Loan, or upon continuation of a LIBOR Rate Loan as a LIBOR Rate Loan) at a
rate of interest based upon the LIBOR Rate. Interest on LIBOR Rate Loans shall
be payable on the earliest of (i) the last day of the Interest Period applicable
thereto; provided, however, that, subject to the following clauses (ii) and
(iii), in the case of any Interest Period greater than 3 months in duration,
interest shall be payable at 3 month intervals after the commencement of the
applicable Interest Period and on the last day of such Interest Period; (ii) the
date on which all or any portion of the Obligations are accelerated pursuant to
the terms hereof, or (iii) the date on which this Agreement is terminated
pursuant to the terms hereof. On the last day of each applicable Interest
Period, unless Borrower properly has exercised the LIBOR Option with respect
thereto, the interest rate applicable to such LIBOR Rate Loan automatically
shall convert to the rate of interest then applicable to Base Rate Loans of the
same type hereunder. At any time that an Event of Default has occurred and is
continuing, unless consented to in writing by the Required Lenders, Borrower no
longer shall have the option to request that Advances bear interest at a rate
based upon the LIBOR Rate.

(b) LIBOR Election.

(i) Borrower may, at any time and from time to time, so long as no Event of
Default has occurred and is continuing (unless the Required Lenders otherwise
agree), elect to exercise the LIBOR Option by notifying Agent prior to 2:00 p.m.
(New York time) at least 3 Business Days prior to the commencement of the
proposed Interest Period (the “LIBOR Deadline”). Notice of Borrower’s election
of the LIBOR Option for a permitted portion of the Revolver Loans and an
Interest Period pursuant to this Section shall be made by delivery to Agent of a
LIBOR Notice received by Agent before the

 

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LIBOR Deadline, or by telephonic notice received by Agent before the LIBOR
Deadline (to be confirmed by delivery to Agent of a LIBOR Notice received by
Agent prior to 5:00 p.m. (New York time) on the same day). Promptly upon its
receipt of each such LIBOR Notice, Agent shall provide a copy thereof to each of
the affected Lenders.

(ii) Each LIBOR Notice shall be irrevocable and binding on Borrower. In
connection with each LIBOR Rate Loan, Borrower shall indemnify, defend, and hold
Agent and the Lenders harmless against any loss, cost, or expense actually
incurred by Agent or any Lender as a result of (A) the payment of any principal
of any LIBOR Rate Loan other than on the last day of an Interest Period
applicable thereto (including as a result of an Event of Default), (B) the
conversion of any LIBOR Rate Loan other than on the last day of the Interest
Period applicable thereto, or (C) the failure to borrow, convert, continue or
prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice delivered
pursuant hereto (such losses, costs, or expenses, “Funding Losses”). A
certificate of Agent or a Lender delivered to Borrower setting forth in
reasonable detail any amount or amounts that Agent or such Lender is entitled to
receive pursuant to this Section 2.12 shall be conclusive absent manifest error.
Borrower shall pay such amount to Agent or the Lender, as applicable, within 30
days of the date of its receipt of such certificate. If a payment of a LIBOR
Rate Loan on a day other than the last day of the applicable Interest Period
would result in a Funding Loss, Agent may, in its sole discretion at the request
of Borrower, hold the amount of such payment as cash collateral in support of
the Obligations until the last day of such Interest Period and apply such
amounts to the payment of the applicable LIBOR Rate Loan on such last day, it
being agreed that Agent has no obligation to so defer the application of
payments to any LIBOR Rate Loan and that, in the event that Agent does not defer
such application, Borrower shall be obligated to pay any resulting Funding
Losses.

(iii) Borrower shall have not more than 7 LIBOR Rate Loans in effect at any
given time. Borrower only may exercise the LIBOR Option for proposed LIBOR Rate
Loans of at least $1,000,000.

(c) Conversion. Borrower may prepay or convert LIBOR Rate Loans to Base Rate
Loans at any time; provided, however, that in the event that LIBOR Rate Loans
are converted or prepaid on any date that is not the last day of the Interest
Period applicable thereto, including as a result of any automatic prepayment
through the required application by Agent of proceeds of Parent’s and its
Subsidiaries’ Collections in accordance with Section 2.4(b) or for any other
reason, including early termination of the term of this Agreement or
acceleration of all or any portion of the Obligations pursuant to the terms
hereof, Borrower shall indemnify, defend, and hold Agent and the Lenders and
their Participants harmless against any and all Funding Losses in accordance
with Section 2.12 (b)(ii).

(d) Special Provisions Applicable to LIBOR Rate.

(i) The LIBOR Rate may be adjusted by Agent with respect to any Lender on a
prospective basis to take into account any additional or increased costs to such
Lender of maintaining or obtaining any eurodollar deposits or increased costs,
in each case, due to changes in applicable law occurring subsequent to the
commencement

 

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of the then applicable Interest Period, including changes in tax laws (except
changes of general applicability in corporate income tax laws and without
duplication of amounts payable under Section 16) and changes in the reserve
requirements imposed by the Board of Governors of the Federal Reserve System (or
any successor), which additional or increased costs would increase the cost of
funding or maintaining loans bearing interest at the LIBOR Rate. In any such
event, the affected Lender shall give Borrower and Agent notice of such a
determination and adjustment and Agent promptly shall transmit the notice to
each other Lender and, upon its receipt of the notice from the affected Lender,
Borrower may, by notice to such affected Lender (y) require such Lender to
furnish to Borrower a statement setting forth the basis for adjusting such LIBOR
Rate and the method for determining the amount of such adjustment, or (z) repay
the LIBOR Rate Loans with respect to which such adjustment is made (together
with any amounts due under Section 2.12(b)(ii)).

(ii) In the event that any change in market conditions or any law, regulation,
treaty, or directive, or any change therein or in the interpretation or
application thereof, shall at any time after the date hereof, in the reasonable
opinion of any Lender, make it unlawful or impractical for such Lender to fund
or maintain LIBOR Rate Loans or to continue such funding or maintaining, or to
determine or charge interest rates at the LIBOR Rate, such Lender shall give
notice of such changed circumstances to Agent and Borrower and Agent promptly
shall transmit the notice to each other Lender and (y) in the case of any LIBOR
Rate Loans of such Lender that are outstanding, the date specified in such
Lender’s notice shall be deemed to be the last day of the Interest Period of
such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender
thereafter shall accrue interest at the rate then applicable to Base Rate Loans,
and (z) Borrower shall not be entitled to elect the LIBOR Option until such
Lender determines that it would no longer be unlawful or impractical to do so.

(e) No Requirement of Matched Funding. Anything to the contrary contained herein
notwithstanding, neither Agent, nor any Lender, nor any of their Participants,
is required actually to acquire eurodollar deposits to fund or otherwise match
fund any Obligation as to which interest accrues at the LIBOR Rate.

2.13 Capital Requirements.

(a) If, after the date hereof, any Lender determines that (i) the adoption of or
change in any law, rule, regulation or guideline regarding capital requirements
for banks or bank holding companies, or any change in the interpretation,
implementation, or application thereof by any Governmental Authority charged
with the administration thereof, or (ii) compliance by such Lender or its parent
bank holding company with any guideline, request or directive of any such entity
regarding capital adequacy (whether or not having the force of law), has the
effect of reducing the return on such Lender’s or such holding company’s capital
as a consequence of such Lender’s Revolver Commitments hereunder to a level
below that which such Lender or such holding company could have achieved but for
such adoption, change, or compliance (taking into consideration such Lender’s or
such holding company’s then existing policies with respect to capital adequacy
and assuming the full utilization of such entity’s capital) by any amount deemed
by such Lender to be material, then such Lender may notify Borrower and Agent

 

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thereof. Following receipt of such notice, Borrower agrees to pay such Lender on
demand the amount of such reduction of return of capital as and when such
reduction is determined, payable within 30 days after presentation by such
Lender of a statement in the amount and setting forth in reasonable detail such
Lender’s calculation thereof and the assumptions upon which such calculation was
based (which statement shall be deemed true and correct absent manifest error).
In determining such amount, such Lender may use any reasonable averaging and
attribution methods. Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s right to demand such compensation; provided that Borrower shall not be
required to compensate a Lender pursuant to this Section for any reductions in
return incurred more than 180 days prior to the date that such Lender notifies
Borrower of such law, rule, regulation or guideline giving rise to such
reductions and of such Lender’s intention to claim compensation therefor;
provided further that if such claim arises by reason of the adoption of or
change in any law, rule, regulation or guideline that is retroactive, then the
180-day period referred to above shall be extended to include the period of
retroactive effect thereof.

(b) If any Lender requests additional or increased costs referred to in
Section 2.12(d)(i) or amounts under Section 2.11(g) or Section 2.13(a) or sends
a notice under Section 2.12(d)(ii) relative to changed circumstances (any such
Lender, an “Affected Lender”), then such Affected Lender shall use reasonable
efforts to promptly designate a different one of its lending offices or to
assign its rights and obligations hereunder to another of its offices or
branches, if (i) in the reasonable judgment of such Affected Lender, such
designation or assignment would eliminate or reduce amounts payable pursuant to
Section 2.12(d)(i) or Section 2.13(a), as applicable, or would eliminate the
illegality or impracticality of funding or maintaining LIBOR Rate Loans and
(ii) in the reasonable judgment of such Affected Lender, such designation or
assignment would not subject it to any material unreimbursed cost or expense and
would not otherwise be materially disadvantageous to it. Borrower agrees to pay
all reasonable out-of-pocket costs and expenses incurred by such Affected Lender
in connection with any such designation or assignment. If, after such reasonable
efforts, such Affected Lender does not so designate a different one of its
lending offices or assign its rights to another of its offices or branches so as
to eliminate Borrower’s obligation to pay any future amounts to such Affected
Lender pursuant to Section 2.12(d)(i), Section 2.11(g) or Section 2.13(a), as
applicable, or to enable Borrower to Obtain LIBOR Rate Loans, then Borrower
(without prejudice to any amounts then due to such Affected Lender under
Section 2.12(d)(i), Section 2.11(g) or Section 2.13(a), as applicable) may,
unless prior to the effective date of any such assignment the Affected Lender
withdraws its request for such additional amounts under Section 2.12(d)(i),
Section 2.11(g) or Section 2.13(a), as applicable, or indicates that it is no
longer unlawful or impractical to fund or maintain LIBOR Rate Loans, may seek a
substitute Lender reasonably acceptable to Agent to purchase the Obligations
owed to such Affected Lender and such Affected Lender’s Revolver Commitments
hereunder (a “Replacement Lender”), and if such Replacement Lender agrees to
such purchase, such Affected Lender shall assign to the Replacement Lender its
Obligations and Revolver Commitments, pursuant to an Assignment and Acceptance
Agreement, and upon such purchase by the Replacement Lender, such Replacement
Lender shall be deemed to be a “Lender” for purposes of this Agreement and such
Affected Lender shall cease to be a “Lender” for purposes of this Agreement.

 

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2.14 Increase Option.

(a) Request for Increase. Provided there exists no Default or Event of Default,
upon notice to Agent (which shall promptly notify Lenders), Borrower may from
time to time, request an increase in the Maximum Revolver Amount by an amount
(for all such requests) not exceeding $25,000,000; provided that any such
request for an increase shall be in a minimum amount of $5,000,000. At the time
of sending such notice, Borrower (in consultation with Agent) shall specify the
time period within which each Lender is requested to respond (which shall in no
event be less than ten Business Days from the date of delivery of such notice to
Lenders).

(b) Lender Elections to Increase. Each Lender shall notify Agent within such
time period whether or not it agrees to increase its Revolver Commitment and, if
so, whether by an amount equal to, greater than, or less than its Pro Rata Share
of such requested increase. Any Lender not responding within such time period
shall be deemed to have declined to increase its Revolver Commitment.

(c) Notification by Agent; Additional Lenders. Agent shall notify Borrower and
each Lender of Lenders’ responses to each request made hereunder. To achieve the
full amount of a requested increase and subject to the approval of Agent, the
Issuing Lender and the Swing Lender (which approvals shall not be unreasonably
withheld, conditioned or delayed), Borrower may also invite additional Eligible
Transferees to become Lenders pursuant to a joinder agreement in form and
substance satisfactory to Agent.

(d) Closing Date and Allocations. If the Maximum Revolver Amount is increased in
accordance with this Section, Agent and Borrower shall determine the effective
date (the “Increase Closing Date”) and the final allocation of such increase.
Agent shall promptly notify Borrower and Lenders of the final allocation of such
increase and the Increase Closing Date.

(e) Conditions to Effectiveness of Increase. As a condition precedent to such
increase, (i) Borrower shall deliver to Agent a certificate dated as of the
Increase Closing Date signed by a Responsible Officer of Borrower (A) certifying
and attaching the resolutions adopted by Borrower approving or consenting to
such increase, and (B) certifying that, before and after giving effect to such
increase, (I) the representations and warranties of the Loan Parties contained
in this Agreement or in the other Loan Documents shall be true and correct in
all material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof) on the Increase Closing Date
(except to the extent that such representations and warranties relate solely to
an earlier date), and (II) no Default or Event of Default shall have occurred
and be continuing on the Increase Closing Date, nor shall either result from the
making thereof and (ii) the Guarantors shall deliver to Agent a reaffirmation of
their obligations under the Guaranty in form and substance satisfactory to
Agent. The outstanding Revolver Loans and other Advances and Pro Rata Shares of
Swing Loans and Letters of Credit will be reallocated by Agent on the applicable
Increase Closing Date among Lenders (including the new Lenders providing a
portion of such increase) in accordance with their revised Pro Rata Shares and
Lenders (including such new Lenders) agree (1) to make all payments and
adjustments necessary to effect such reallocation and Borrower shall pay any and
all costs required pursuant to Section 2.12 in connection with such reallocation
as if such reallocation were a repayment and (2)

 

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without any further action or consent on the part of any Lender, Agent and
Borrower may amend this Agreement and any other Loan Documents to effect any
changes to the Loan Documents as may be necessary to reflect such increase and
the reallocation of the Pro Rata Shares of the Lenders, that do not otherwise
adversely affect the rights of any Lenders.

 

3.

CONDITIONS; TERM OF AGREEMENT.

3.1 Conditions Precedent to the Initial Extension of Credit. The obligation of
each Lender to make its initial Extension of Credit provided for hereunder is
subject to the satisfaction (or waiver by Agent and the Require Lenders) of each
of the conditions precedent set forth on Schedule 3.1 (the making of such
initial extension of credit being conclusively deemed to be the satisfaction or
waiver of the conditions precedent ).

3.2 Conditions Precedent to all Extensions of Credit. The obligation of the
Lender Group (or any member thereof) to make any Extension of Credit at any time
shall be subject to the satisfaction (or waiver by the Required Lenders) of the
following conditions precedent (and each request for an Advance or other
Extension of Credit, and the acceptance by Borrower of the proceeds of any such
Advance or making of any other Extension of Credit, shall constitute a
representation and warranty by Borrower that on the date of such Advance or
other Extension of Credit before and after giving effect thereto and to the
application of the proceeds therefrom, such statements below are true and
correct):

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

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

(c) Revolver Usage (after giving effect to such requested Extension of Credit)
shall not exceed the lesser of (i) the Maximum Revolver Amount and (ii) the
Borrowing Base.

3.3 Maturity. This Agreement shall continue in full force and effect for a term
ending on October 5, 2016 (the “Maturity Date”); provided that if the Secured
Notes (First Lien) and the Secured Notes (Second Lien) shall have not been
repaid, refinanced, or defeased in full or, in the reasonable determination of
Agent, adequately reserved for or cash collateralized on or prior to the 90th
day immediately preceding the maturity date of the Secured Notes (First Lien),
the Secured Notes (Second Lien) and any Additional Notes (and any Refinancing
Indebtedness in respect of the foregoing) permitted hereunder, then the Maturity
Date will occur on such 90th day; provided further that, with respect to any
refinancing, such refinanced notes shall have a maturity date that is at least
90 days later than the Maturity Date. The foregoing notwithstanding, the Lender
Group, upon the election of the Required Lenders, shall have the right to
terminate its obligations under this Agreement immediately and without notice
upon the occurrence and during the continuation of an Event of Default.

 

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3.4 Effect of Maturity. On the Maturity Date, all commitments of the Lender
Group to provide additional credit hereunder shall automatically be terminated
and the Obligations (other than Contingent Obligations) immediately shall become
due and payable without notice or demand and Borrower shall be required to repay
all of the Obligations (other than Contingent Obligations) in full. No
termination of the obligations of the Lender Group (other than payment in full
of the Obligations and termination of the Revolver Commitments) shall relieve or
discharge any Loan Party of its duties, obligations, or covenants hereunder or
under any other Loan Document and Agent’s Liens in the Collateral shall continue
to secure the Obligations and shall remain in effect until all Obligations have
been paid in full and the Revolver Commitments have been terminated. When all of
the Obligations have been paid in full and the Lender Group’s obligations to
provide additional credit under the Loan Documents have been terminated
irrevocably, Agent will, at Borrower’s sole expense, execute and deliver any
termination statements, lien releases, discharges of security interests, and
other similar discharge or release documents (and, if applicable, in recordable
form) as are reasonably necessary to release, as of record, Agent’s Liens and
any and all notices of security interests and Liens previously filed in favor of
Agent.

3.5 Early Termination by Borrower. Borrower has the option, at any time upon 5
Business Days prior written notice to Agent, to terminate this Agreement and
terminate the Revolver Commitments hereunder by repaying to Agent the
Obligations in full.

3.6 Conditions Subsequent, Etc. The obligation of the Lender Group (or any
member thereof) to continue to make Advances (or otherwise make Extensions of
Credit hereunder) is subject to the satisfaction or waiver, on or before the
date applicable thereto (or such later date as the Agent may agree in its sole
discretion), of the conditions subsequent and the other requirements set forth
on Schedule 3.6.

 

4.

REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender Group to enter into this Agreement, Parent and
Borrower hereby represent and warrant to the Lender Group that:

4.1 Due Organization and Qualification; Subsidiaries.

(a) Each Loan Party (i) is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization, (ii) is qualified to do
business in any state where the failure to be so qualified could reasonably be
expected to result in a Material Adverse Change (iii) has all requisite power
and authority to own and operate its properties, to carry on its business as
conducted where the failure to comply with this clause (iii) could reasonably be
expected to result in a Material Adverse Change and (iv) has all requisite power
and authority to, to enter into and perform under the Loan Documents to which it
is a party and to carry out the Transactions.

(b) Set forth on Schedule 4.1 is a complete and accurate description of the
authorized capital Stock of Parent, by class, and, as of the Closing Date, a
description of the number of shares of each such class that are issued and
outstanding.

 

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(c) Set forth on Schedule 4.1, is a complete and accurate list of the Loan
Parties’ direct and indirect Subsidiaries as of the Closing Date, showing, as of
the Closing Date: (i) the number and percentage of each class of Stock owned
directly or indirectly by Parent and its Subsidiaries in each of such
Subsidiaries, and (ii) the number of shares of each class of common and
preferred Stock (if any) authorized for each Loan Party and its Subsidiaries.
All of the outstanding capital Stock of each such Subsidiary has been validly
issued and is fully paid and non-assessable.

(d) Except as set forth on Schedule 4.1, there are no subscriptions, options,
warrants, or calls relating to any shares of Parent’s Subsidiaries’ capital
Stock, including any right of conversion or exchange under any outstanding
security or other instrument. Neither Parent nor any of its Subsidiaries is
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of Parent’s Subsidiaries’ capital Stock or any
security convertible into or exchangeable for any such capital Stock.

4.2 Due Authorization; No Conflict.

(a) As to each Loan Party, the execution, delivery, and performance by such Loan
Party of the Loan Documents to which it is a party have been duly authorized by
all necessary corporate or other organizational action on the part of such Loan
Party.

(b) As to each Loan Party, the execution, delivery, and performance by such Loan
Party of the Loan Documents to which it is a party do not and will not
(i) violate any material provision of federal, state, or local law or regulation
applicable to such Loan Party or its Subsidiaries, the Governing Documents of
such Loan Party, or any order, judgment, or decree of any court or other
Governmental Authority binding on such Loan Party or its Subsidiaries, other
than violations which, individually or in the aggregate could not reasonably be
expected to result in a Material Adverse Change, (ii) conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under any Material Contract (except those as to which waivers or consents have
been obtained) except to the extent that any such conflict, breach or default
could not individually or in the aggregate reasonably be expected to result in a
Material Adverse Change, (iii) result in or require the creation or imposition
of any Lien upon any assets of any Loan Party, other than Permitted Liens, or
(iv) require any approval of any Loan Party’s equity holders or any approval or
consent of any Person under any Material Contract, other than consents or
approvals that have been obtained and that are still in force and effect and
except, in the case of Material Contracts, for consents or approvals, the
failure to obtain could not individually or in the aggregate reasonably be
expected to result in a Material Adverse Change.

4.3 Governmental Consents. (i) The execution, delivery, and performance by each
Loan Party of the Loan Documents to which such Loan Party is a party, (ii) the
acceptance of Extensions of Credit by the Borrower, (iii) the making of the
Guaranty and (iv) the consummation of the other Transactions, in each case, do
not and will not require any registration with, consent, or approval of, or
notice to, or other action with or by, any Governmental Authority, other than
registrations, consents, approvals, notices, or other actions that have been
obtained and that are still in force and effect and except for filings and
recordings with respect to the Collateral to be made, or otherwise delivered to
Agent for filing or recordation, as of the Closing Date or, if later, as
specified in Schedule 3.6 or as required pursuant to Section 5.11 or 5.12 or the
Security Agreement.

 

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4.4 Binding Obligations; Perfected Liens.

(a) Each Loan Document has been duly executed and delivered by each Loan Party
that is a party thereto and is the legally valid and binding obligation of such
Loan Party, enforceable against such Loan Party in accordance with its
respective terms, except as enforcement may be limited by equitable principles
(whether enforcement is sought by proceedings in equity or at law) or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors’ rights generally.

(b) Agent’s Liens are and will be (other than with respect to Excluded Assets):

(i) validly created;

(ii) perfected (to the extent required under the Loan Documents) (A) with
respect to ABL Priority Collateral, upon the (I) execution and delivery of
Control Agreements with respect to Deposit Accounts and Securities Accounts
(other than Excluded Accounts) as contemplated by the Loan Documents and (II)
the filing of financing statements and (B) with respect to the Secured Notes
Priority Collateral, upon the (I) execution and delivery of Control Agreements
with respect to Deposit Accounts and Securities Accounts (other than Excluded
Accounts) as contemplated by the Loan Documents, (II) the filing of financing
statements, the filing of intellectual property security agreements with the
United States Patent and Trademark Office and/or the United States Copyright
Office, the recordation of Mortgages and the filing and recording of Vessel
Fleet Mortgages, in each case, in the appropriate filing offices and the payment
of the associated filing or recordation fees (provided that it is acknowledged
that the Liens shall not be perfected with respect to any non-U.S. copyrights,
patents or trademarks), and (III) the taking of possession or control by the
Agent or the collateral agent under Secured Notes Documents of the Collateral
with respect to which a security interest may be perfected only by possession or
control in each case under this clause (ii), to the extent such Liens can be
perfected by such actions, and

(iii) to the extent perfected as set forth in clause (ii) above, first priority
in and upon the ABL Priority Collateral and, in the case of Secured Notes
Priority Collateral, the priority set forth in the Intercreditor Agreement
(subject, in each case, only to Permitted Liens and the relative priorities
thereof).

4.5 Title to Assets; No Encumbrances. Each of the Loan Parties and its
Subsidiaries has (a) good, marketable and legal title to (in the case of fee
interests in Real Property), (b) valid leasehold interests in (in the case of
leasehold interests in real or personal property), and (c) good and marketable
title to or a license or other right to use (in the case of all other personal
property), all of its respective assets (except for minor defects in title to
property that do not materially interfere with its ability to conduct its
business as currently conducted or to use such properties for their intended
purposes), which, together with assets leased or licensed by

 

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the Loan Parties and their Subsidiaries, represents all assets in the aggregate
material to the conduct of the business of the Loan Parties and their
Subsidiaries. After giving effect to the Transactions, none of such assets are
subject to any Lien except for Permitted Liens.

4.6 Jurisdiction of Organization; Location of Chief Executive Office;
Organizational Identification Number; Commercial Tort Claims.

(a) The name of (within the meaning of Section 9-503 of the Code) and
jurisdiction of organization of each Loan Party and each of its Subsidiaries is
set forth on Schedule 4.6(a) (as such Schedule may be updated from time to time
to reflect changes resulting from transactions permitted under this Agreement).

(b) The chief executive office of each Loan Party and each of its Subsidiaries
is located at the address indicated on Schedule 4.6(b) (as such Schedule may be
updated from time to time to reflect changes resulting from transactions
permitted under this Agreement).

(c) Each Loan Party’s and each of its Subsidiaries’ tax identification numbers
and organizational identification numbers, if any, are identified on Schedule
4.6(c) (as such Schedule may be updated from time to time to reflect changes
resulting from transactions permitted under this Agreement).

(d) As of the Closing Date, no Loan Party holds any commercial tort claims for
which the expected amount recoverable exceeds $1,000,000, except as set forth on
Schedule 4.6(d).

4.7 Litigation. Except as specifically set forth on Schedule 4.7, there are no
actions, suits, or proceedings pending or, to the knowledge of any Loan Party,
threatened in writing against a Loan Party, any of its Subsidiaries or any
assets thereof that either individually or in the aggregate could reasonably be
expected to result in a Material Adverse Change.

4.8 Compliance with Laws. No Loan Party nor any of its Subsidiaries (a) is in
violation of any applicable laws, rules, regulations, executive orders, or codes
(including Environmental Laws) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Change, or (b) is subject
to or in default with respect to any final judgments, writs, injunctions,
decrees, rules or regulations of any Governmental Authority, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Change.

4.9 No Material Adverse Change. All historical financial statements relating to
the Loan Parties and their Subsidiaries that have been delivered by Parent or
Borrower to Agent have been prepared in accordance with GAAP (except, in the
case of unaudited financial statements, for the lack of footnotes and being
subject to year-end audit adjustments) and present fairly in all material
respects, the Loan Parties’ and their Subsidiaries’ consolidated financial
condition as of the date thereof and results of operations for the period then
ended. Since December 26, 2010, no event, circumstance, or change has occurred
that has resulted or could reasonably be expected to result in a Material
Adverse Change.

 

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4.10 Fraudulent Transfer.

(a) After giving effect to the Transactions, Borrower and its Subsidiaries,
taken as a whole, are Solvent.

(b) In executing the Loan Documents and consummating the Transactions, no Loan
Party intends to hinder, delay, or defraud either present or future creditors of
such Loan Party.

4.11 Employee Benefits.

(a) Each Loan Party and each ERISA Affiliate is in compliance with all
applicable provisions of ERISA, the IRC and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans except for
any required amendments for which the remedial amendment period as defined in
Section 401(b) of the IRC has not yet expired and except where a failure to so
comply could not reasonably be expected to have a Material Adverse Change. No
liability has been incurred by any Loan Party or any ERISA Affiliate which
remains unsatisfied for any taxes or penalties assessed with respect to any
Employee Benefit Plan or any Multiemployer Plan except for a liability that
could not reasonably be expected to result in a Material Adverse Change.

(b) As of the Closing Date, no Pension Plan has been terminated, nor has any
Pension Plan become subject to funding based benefit restrictions under
Section 436 of the IRC, nor has any funding waiver from the Internal Revenue
Service been received or requested with respect to any Pension Plan, nor has any
Loan Party or any ERISA Affiliate failed to make any contributions or to pay any
amounts due and owing with respect to a Pension Plan as required by Sections 412
or 430 of the IRC, Section 302 of ERISA or the terms of any Pension Plan prior
to the due dates of such contributions under Sections 412 or 430 of the IRC or
Section 302 of ERISA, nor has there been any event requiring any disclosure
under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension Plan
except, in each case, as could not reasonably be expected to result in a
Material Adverse Change.

(c) Except where the failure of any of the following representations to be
correct could not reasonably be expected to result in a Material Adverse Change,
no Loan Party nor any ERISA Affiliate has: (i) engaged in a nonexempt prohibited
transaction described in Section 406 of the ERISA or Section 4975 of the IRC,
(ii) incurred any liability to the PBGC which remains outstanding other than the
payment of premiums and there are no premium payments which are due and unpaid,
(iii) failed to make a required contribution or payment to a Multiemployer Plan,
or (iv) failed to make a required installment or other required payment under
Sections 412 or 430 of the IRC.

(d) No Termination Event has occurred or is reasonably expected to occur which
reasonably could be expected to result in a Material Adverse Change.

(e) Except where the failure of any of the following representations to be
correct in all material respects could not reasonably be expected to result in a
Material Adverse Change, no proceeding, claim (other than a benefits claim in
the ordinary course of business), lawsuit and/or investigation is existing or,
to the best of the knowledge of Parent and Borrower after due inquiry,
threatened concerning or involving any Employee Benefit Plan.

 

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4.12 Environmental Condition. Except as set forth on Schedule 4.12, (a) no Loan
Party’s nor any of its Subsidiaries’ properties or assets has ever been used by
a Loan Party, its Subsidiaries, or by previous owners or operators in the
disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such disposal, production, storage, handling,
treatment, release or transport was in violation of any applicable Environmental
Law that could reasonably be expected to result in a Material Adverse Change,
(b) no Loan Party’s nor any of its Subsidiaries’ properties or assets has ever
been designated or identified in any manner pursuant to any environmental
protection statute as a Hazardous Materials disposal site for which such
designation or identification could reasonably be expected to result in a
Material Adverse Change, (c) no Loan Party nor any of its Subsidiaries has
received notice that an Environmental Lien has attached to any revenues or to
any Real Property owned or operated by a Loan Party or its Subsidiaries, and
(d) no Loan Party nor any of its Subsidiaries nor any of their respective
facilities or operations is subject to any outstanding written order, consent
decree, or settlement agreement with any Person relating to any Environmental
Law or Environmental Liability that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Change.

4.13 Intellectual Property. Each Loan Party and its Subsidiaries own, or hold
licenses or other valid rights to use, all trademarks, trade names, copyrights,
patents, and licenses that are material to the conduct of its business as
currently conducted, and attached hereto as Schedule 4.13 is a true, correct,
and complete listing, as of the Closing Date, of all material registered or
applied for trademarks, copyrights and patents as to which Parent or one of its
Subsidiaries is the owner or is an exclusive licensee.

4.14 Leases. (a) Each Loan Party and its Subsidiaries enjoy peaceful and
undisturbed possession under all of its leases to which they are parties or
under which they are operating, (b) all of such leases are valid, subsisting and
in full force and effect, except as may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditor’s rights generally and by
general equitable principles and (c) no material default by the applicable Loan
Party or its Subsidiaries exists under any such leases, except, in each case of
the foregoing clauses (a), (b), and (c), as could not reasonably be expected to
result, individually or in the aggregate, in a Material Adverse Change.

4.15 Deposit Accounts and Securities Accounts. Set forth on Schedule 4.15 (as
updated pursuant to the provisions of the Security Agreement from time to time)
is a listing of all of the Loan Parties’ Deposit Accounts and Securities
Accounts, including, with respect to each bank or securities intermediary
(a) the name and address of such Person, (b) the account numbers of the Deposit
Accounts or Securities Accounts maintained with such Person, and
(c) identification of any Excluded Accounts and any Controlled Account.

4.16 Complete Disclosure. All factual information taken as a whole (other than
forward-looking information, projections, information of a general economic
nature and general information about Borrower’s industry) furnished by or on
behalf of a Loan Party or its Subsidiaries in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement or the
other Loan Documents, and all other such factual information taken as a whole
(other than forward-looking information, projections, information of a general
economic nature

 

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and general information about Borrower’s industry) hereafter furnished by or on
behalf of a Loan Party or its Subsidiaries in writing to Agent or any Lender
will be, true and accurate, in all material respects, on the date as of which
such information is dated or certified and not incomplete by omitting to state
any fact necessary to make such information (taken as a whole) not misleading in
any material respect at such time in light of the circumstances under which such
information was provided. The Projections delivered to Agent on August 3, 2011
represent, and as of the date on which any other Projections are delivered to
Agent, such additional Projections represent, Borrower’s good faith estimate, on
the date such Projections are delivered, of the Loan Parties’ and their
Subsidiaries’ future performance for the periods covered thereby based upon
assumptions believed by Borrower to be reasonable at the time of the delivery
thereof to Agent (provided, it is understood that such Projections are subject
to uncertainties and contingencies, many of which are beyond the control of the
Loan Parties and their Subsidiaries, that no assurances can be given that such
Projections will be realized, and that actual results may differ in a material
manner from such Projections).

4.17 Material Contracts. Set forth on Schedule 4.17 in reasonable detail is a
list of the Material Contracts as of the Closing Date. Except for matters which,
either individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Change, each Material Contract (other than those
that have expired at the end of their normal terms) (a) is in full force and
effect and (b) is not in default due to the action or inaction of the applicable
Loan Party.

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

4.19 Indebtedness. Set forth on Schedule 4.19 is (a) a true and complete list of
all Indebtedness of each Loan Party and each of its Subsidiaries with a
principal balance of more than $1,000,000 outstanding as of the dates specified
therein or if not so specified, the Closing Date, that is to remain outstanding
immediately after giving effect to the closing hereunder on the Closing Date,
and (b) certain other Indebtedness of each Loan Party and each of its
Subsidiaries with a principal balance of $1,000,000 or less outstanding on the
Closing Date that is to remain outstanding immediately after giving effect to
the closing hereunder on the Closing Date, and in the case of clause (b), such
Schedule accurately sets forth the approximate aggregate principal amount of
such Indebtedness as of the dates specified therein or if not so specified, the
Closing Date.

4.20 Payment of Taxes. Except as otherwise permitted under Section 5.5, all
material tax and information returns and reports of each Loan Party and its
Subsidiaries required to be

 

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filed by any of them have been timely filed, and all material taxes due and
payable and all material assessments, fees and other governmental charges upon a
Loan Party and its Subsidiaries and upon their respective assets, income,
businesses and franchises that are due and payable have been paid before
becoming delinquent and having penalties attach thereto. Each Loan Party and
each of its Subsidiaries have made adequate provision in accordance with GAAP
for all material taxes not yet due and payable. Borrower knows of no material
proposed tax assessment against a Loan Party or any of its Subsidiaries that is
not being actively contested by such Loan Party or such Subsidiary diligently,
in good faith, and by appropriate proceedings; provided such reserves or other
appropriate provisions, if any, as shall be required in conformity with GAAP
shall have been made or provided therefor.

4.21 Margin Stock. No Loan Party nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. No part of
the proceeds of the Advances or other Extensions of Credit made to Borrower will
be used to purchase or carry any such Margin Stock or to extend credit to others
for the purpose of purchasing or carrying any such margin stock or for any
purpose that violates the provisions of Regulation T, U or X of the Board of
Governors of the United States Federal Reserve.

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

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

4.24 Employee and Labor Matters. There is (i) no unfair labor practice complaint
pending or, to the knowledge of Parent and Borrower, threatened against Parent
or its Subsidiaries before any Governmental Authority and no grievance or
arbitration proceeding pending or threatened against Parent or its Subsidiaries
which arises out of or under any collective bargaining agreement and that could
reasonably be expected to result in a material liability, or (ii) no strike,
labor dispute, slowdown, stoppage or similar action or grievance pending or
threatened in writing against Parent or its Subsidiaries that could reasonably
be expected to result in a material liability.

4.25 Eligible Accounts. As to each Account that is identified by Borrower as an
Eligible Account in a Borrowing Base Certificate submitted to Agent, such
Account is (a) a bona fide existing payment obligation of the applicable Account
Debtor created by the sale and

 

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delivery of Inventory or the rendition of services to such Account Debtor in the
ordinary course of Borrower’s business, (b) owed to a Loan Party, and (c) not
excluded as ineligible by virtue of one or more of the excluding criteria (other
than Agent-discretionary criteria) set forth in the definition of Eligible
Accounts.

4.26 Owned and Leased Locations. Schedule 4.26 sets forth, as of the Closing
Date, a complete and accurate list of all real property owned or leased by each
Loan Party and identifies (a) whether such property is owned or leased,
(b) those properties where the books and records of any Loan Party pertaining to
ABL Priority Collateral are located and (c), if such locations identified under
clause (b) are leased, the lessor with respect to such property and the monthly
lease payments.

4.27 Reserved.

4.28 Vessels. Schedule 4.28 sets forth, as of the Closing Date, for each Vessel,
(a) its name, (b) its owner, (c) the arrangements (including intercompany
arrangements) pursuant to which the Vessel is chartered or operated by any Loan
Party or Subsidiary as of the Closing Date, (d) its class description, (e) the
name of its classification society, (f) its shipyard and year in which the
Vessel was constructed and (g) any and all applicable Chartered Vessel
Documents. Except as could not reasonably be expected to result, individually or
in the aggregate, in a Material Adverse Change, the Loan Parties and their
Subsidiaries own or are licensed or otherwise have the right to use all Vessels.
Except as could not reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Change, each Vessel (i) is adequate and
suitable for use by such Loan Party or Subsidiary in its business as presently
conducted by it, ordinary wear and tear and depreciation excepted; (ii) is
seaworthy for hull and machinery insurance warranty purposes; (iii) is insured
in accordance with the Vessel Fleet Mortgage and each of the arrangements
pursuant to which the Vessel is chartered or operated by the Loan Parties as set
forth in Schedule 4.28; (iv) is in compliance with any applicable Chartered
Vessel Documents covering such Vessel; (v) is in compliance with all Federal,
state, local or foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, code and decrees, or rule of common law (including
Environmental Laws) as are applicable to Vessels documented under U.S. flag and
is operated by a Loan Party or any Subsidiary in accordance with past practice;
(vi) is properly documented under the U.S. flag and owned by a Person eligible
to document the Vessel pursuant to 46 U.S.C. § 12103, and if holding a coastwise
trade endorsement, is owned by a Person deemed to be (or in the case of a
Chartered Vessel, a Person who has represented to Parent, Borrower, and the U.S.
Coast Guard, that it is) a “citizen of the United States” within the meaning of
46 U.S.C. § 50501(a) and (d); and (vii) except as set forth on Schedule 4.28, is
in compliance with the requirements of its present class and classification
society. As of the Closing Date, all of the Vessels are in class.

4.29 Jones Act Trade. Each of the Loan Parties and their Subsidiaries, in each
case, to the extent it owns or operates Vessels in the coastwise trade of the
United States, is a “citizen of the United States” within the meaning of 46
U.S.C. § 50501(a) and (d). Each of the Mortgaged Vessels is duly documented in
the name of the respective Loan Party or Subsidiary and duly qualified for the
coastwise trade of the United States. Each of the Vessels covered by a Chartered
Vessel Document is duly documented (or upon delivery by the shipyard building
the same will be duly documented) in the name of the owner thereof and the
relevant Chartered Vessel Documents are or shall be in full force and effect.

 

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5.

AFFIRMATIVE COVENANTS.

Each of Parent and Borrower covenants and agrees that, until termination of all
of the Revolver Commitments and payment in full of the Obligations (other than
Contingent Obligations), the Loan Parties shall and shall cause each of their
Subsidiaries to comply with each of the following:

5.1 Financial Statements, Reports, Certificates. Deliver to Agent, each of the
financial statements, reports, and other items set forth on Schedule 5.1 no
later than the times specified therein. In addition, each of Parent and Borrower
agrees that no Subsidiary of a Loan Party will have a fiscal year different from
that of Parent other than any Subsidiary acquired after the Closing Date, in
which case Parent shall cause such Subsidiary to have the same fiscal year as
Parent as soon as reasonably practicable after the date of acquisition thereof.
In addition, Parent agrees to maintain a system of accounting that enables
Parent to produce financial statements in accordance with GAAP. Each Loan Party
shall also (a) keep a reporting system that shows all additions, sales, claims,
returns, and allowances with respect to its and its Subsidiaries’ sales, and
(b) maintain its billing systems/practices substantially as in effect as of the
Closing Date and shall only make material modifications thereto with notice to
Agent.

5.2 Collateral Reporting. Provide Agent with each of the reports set forth on
Schedule 5.2 at the times specified therein. In addition, Borrower agrees to use
commercially reasonable efforts in cooperation with Agent to maintain a system
of electronic collateral reporting in order to provide electronic reporting of
each of the items set forth on such Schedule.

5.3 Existence. Except as otherwise permitted under Section 6.3 or Section 6.4,
with respect to each Loan Party at all times maintain and preserve in full force
and effect its existence (including being in good standing in its jurisdiction
of organization) and all rights and franchises, licenses and permits granted by
Governmental Authorities that are necessary in the normal conduct of its
business; provided, however, that no Loan Party shall be required to preserve
any such right or franchise, licenses or permits if such Person’s board of
directors (or similar governing body) shall determine that the preservation
thereof is no longer desirable in the conduct of the business of such Person, or
that the loss thereof could not reasonably be expected to result in a Material
Adverse Change.

5.4 Maintenance of Properties. Maintain and preserve all of its material
tangible assets that are necessary and useful in the proper conduct of its
business in good working order and condition, ordinary wear, tear, and casualty
and condemnation excepted and Permitted Dispositions excepted, except where the
failure to do so could not reasonably be expected to result in a Material
Adverse Change.

5.5 Taxes. Cause all material assessments and taxes imposed, levied, or assessed
against any Loan Party or its Subsidiaries, or any of their respective assets or
in respect of any of its income, businesses, or franchises to be paid in full,
before delinquency or before the expiration of any extension period, except to
the extent that the validity of such assessment or tax

 

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shall be the subject of a Permitted Protest and so long as, in the case of an
assessment or tax that has or may become a Lien against any of the Collateral,
such contest proceedings conclusively operate to stay the sale of any portion of
the Collateral to satisfy such assessment or tax. Parent will and will cause
each of its Subsidiaries to make timely payment or deposit of all material tax
payments and withholding taxes required of it and them by applicable laws.

5.6 Insurance. At Borrower’s expense, maintain insurance respecting each of the
Loan Parties’ and their Subsidiaries’ assets, covering loss or damage by fire,
theft, explosion, and such other hazards and risks as ordinarily are insured
against by other Persons engaged in the same or similar businesses; provided
that in the case of Vessels, the Vessels shall be insured in accordance with the
Vessel Fleet Mortgage and each of the arrangements pursuant to which the Vessel
is chartered or operated by the Loan Parties as set forth in Schedule 4.28.
Borrower also shall maintain (with respect to each of the Loan Parties and their
Subsidiaries) business interruption, general liability, and flood insurance with
respect to any Real Property Collateral in a flood plain. All such policies of
insurance shall be with financially sound and reputable insurance companies
having a “Best” rating of B+ or better and in such amounts and scope as is
carried generally in accordance with sound business practice by companies in
similar businesses similarly situated and located and in any event reasonably
satisfactory to Agent, it being understood that the amounts and scope set forth
in the certificates provided on the Closing Date are satisfactory. Subject to
the terms of the Intercreditor Agreement, all property insurance policies
covering the Collateral are to be made payable to Agent for the benefit of Agent
and the Lenders, as their interests may appear, in case of loss, pursuant to a
standard loss payable endorsement with a standard non contributory “lender” or
“secured party” clause and are to contain such other provisions as Agent may
reasonably require to fully protect the Lenders’ interest in the Collateral and
to any payments to be made under such policies. All certificates of property and
general liability insurance are to be delivered to Agent, with the loss payable
(but only in respect of Collateral) and additional insured endorsements in favor
of Agent and shall provide for not less than 30 days (10 days in the case of
non-payment) prior written notice to Agent of the exercise of any right of
cancellation. If Borrower fails to maintain such insurance, Agent may, after
providing written notice to the Borrower, arrange for such insurance, but at
Borrower’s expense and without any responsibility on Agent’s part for obtaining
the insurance, the solvency of the insurance companies, the adequacy of the
coverage, or the collection of claims. Borrower shall give Agent prompt notice
of any loss exceeding $2,500,000 covered by its casualty or business
interruption insurance. Upon the occurrence and during the continuance of an
Event of Default, subject to the terms of the Intercreditor Agreement, Agent
shall have the sole right to file claims under any property and general
liability insurance policies in respect of the Collateral, to receive, receipt
and give acquittance for any payments that may be payable thereunder, and to
execute any and all endorsements, receipts, releases, assignments, reassignments
or other documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies.

5.7 Inspection. Keep proper books of record and accounts in which full, true and
correct entries which permit the preparation of financial statements in
accordance with GAAP and which conform to all Requirements of Law, shall be made
of all material dealings and transactions in relation to its business and
activities. During regular business hours and, so long as no Event of Default
exists, upon reasonable notice to Borrower, Borrower shall permit Agent and each
of its duly authorized representatives or agents to visit any of its properties
and inspect

 

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any of its assets or books and records, to conduct appraisals and valuations, to
examine and make copies of its books and records, and to discuss its affairs,
finances, and accounts with, and to be advised as to the same by, its officers
and employees at mutually convenient times and reasonable intervals; provided
that the Borrower (or any other Loan Party) shall not be obligated to reimburse
for more than 2 audits and 1 appraisal during any calendar year; provided,
further, that (i) the total number of reimbursable audits shall be increased by
1 in any 12 month period during a Trigger Event and (ii) upon the occurrence and
during the continuance of an Event of Default, there shall be no limit on the
number of audits which may be conducted by the Agent, each at the expense of the
Borrower. Notwithstanding anything in this Section 5.7 to the contrary, none of
the Loan Parties or any of their officers or employees will be required to
disclose, permit the inspection, examination or making copies or abstracts of,
or discussion of, any document, information or other matter (i) in respect of
which disclosure to the Agent ( or its representatives or agents) is prohibited
by applicable law or binding agreement or (ii) that is subject to
attorney-client privilege or constitutes attorney work product.

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

5.9 Environmental.

(a) Keep any property either owned or operated by Parent or its Subsidiaries
free of any Environmental Liens or post bonds or other financial assurances
sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens,

(b) Comply with Environmental Laws except where the failure to do so could not
reasonably be expected to result in a Material Adverse Change,

(c) Promptly notify Agent of any release of a Hazardous Material in any
reportable quantity from or onto property owned or operated by a Loan Party and
take any Remedial Actions required to abate said release or otherwise to come
into compliance with applicable Environmental Law except where the failure to do
so could not reasonably be expected to result in a Material Adverse Change, and

(d) Promptly, but in any event within 5 Business Days of its receipt thereof,
provide Agent with written notice of any of the following: (i) notice that an
Environmental Lien has been filed against any of the real or personal property
of any Loan Party and (ii) commencement of any Environmental Action.

5.10 Disclosure Updates. Promptly and in no event later than 5 Business Days
after obtaining knowledge thereof, notify Agent if any written information,
exhibit, or report (other than projections, forward looking statements and
information of a general economic nature and general information about
Borrower’s industry) furnished to Agent or the Lender Group contained, at the
time it was furnished, any untrue statement of a material fact or omitted to
state any material fact necessary to make the statements contained therein
(taken as a whole) not misleading in light of the circumstances in which made
(it being understood that with respect to

 

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projections and other forward-looking statements, the same are subject to the
proviso in the last sentence of Section 4.16). The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not
cure or remedy the effect of the prior untrue statement of a material fact or
omission of any material fact nor shall any such notification have the effect of
amending or modifying this Agreement or any of the Schedules hereto.

5.11 Formation of Subsidiaries, Etc. At the time that (x) any Person becomes
(whether by acquisition, formation or otherwise) a direct or indirect Subsidiary
(other than any Foreign Subsidiary, any direct or indirect Subsidiary of a
Foreign Subsidiary or an Immaterial Subsidiary) of a Loan Party, (y) any
Immaterial Subsidiary ceases to be an Immaterial Subsidiary (but is otherwise
still a direct or indirect Domestic Subsidiary of a Loan Party and not a direct
or indirect Subsidiary of a Foreign Subsidiary) or (z) any Subsidiary of a Loan
Party that is not a Guarantor guarantees the Secured Notes, any Additional
Notes, any Permitted Additional Pari Passu Obligations, and the Vessel Financing
Debt (and any Refinancing Indebtedness in respect of the foregoing), such Loan
Party shall:

(a) within 30 days thereof (or such later date as permitted by Agent in its sole
discretion), (i) notify Agent thereof (and, notwithstanding the parenthetical in
clause (x) above, the existence of any Person that becomes a Foreign Subsidiary
or an Immaterial Subsidiary) and (ii) cause any Subsidiary described in clauses
(x), (y) or (z) above to provide to Agent a joinder (or such other supplements)
to the Guaranty and the Security Agreement, together with such other security
documents (including (A) upon request of Agent, Mortgages with respect to any
Real Property owned in full by such Subsidiary having a fair market value in
excess of $1,000,000, (B) Vessel Fleet Mortgages with respect to any Vessel
owned by such Subsidiary except to the extent a mortgage in favor of Agent is
prohibited as a result of a permitted mortgage in favor of the Maritime
Administration in connection with a U.S. Government-guaranteed financing
transaction under 46 U.S.C. Chapter 537, and (C) certificates of title with
respect to Chassis) as well as appropriate financing statements, all in form and
substance reasonably satisfactory to Agent and otherwise consistent with other
then existing Loan Documents (including being sufficient to grant Agent a first
priority Lien in and upon the ABL Priority Collateral and, in the case of
Secured Notes Priority Collateral, Liens with the priority set forth in the
Intercreditor Agreement (subject, in each case, only to Permitted Liens and the
relative priorities thereof));

(b) within 30 days thereof (or such later date as permitted by Agent in its sole
discretion), provide to Agent a pledge agreement (or an addendum to the Security
Agreement) and deliver appropriate Stock certificates and powers or financing
statements, pledging all of the direct or beneficial ownership interest in such
Subsidiary reasonably satisfactory to Agent; provided that no more than 65% of
the total outstanding voting Stock (and 100% of the total outstanding non-voting
Stock) of any first-tier Foreign Subsidiary of any Loan Party (and none of the
Stock of any Subsidiary of a Foreign Subsidiary) shall be required to be pledged
under the Loan Documents;

(c) within 30 days thereof (or such later date as permitted by Agent in its sole
discretion), 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 (including policies of title

 

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insurance or other documentation with respect to such Real Property owned in fee
and subject to a mortgage, such Vessels subject to Vessel Fleet Mortgages and
such Chassis for which certificates of title have been so delivered). Any
document, agreement, or instrument executed or issued pursuant to this
Section 5.11 shall be a Loan Document;

(d) Notwithstanding anything to the contrary in this Agreement or any other Loan
Document, so long as the Secured Notes or any Permitted Additional Pari Passu
Obligations (or Refinancing Indebtedness in respect of the foregoing) are
outstanding, the actions and deliverables required by this Section 5.11 with
respect to Agent’s security interest in any Secured Notes Priority Collateral
(including (i) the Stock in or of such Subsidiary, (ii) Mortgages with respect
to any Real Property owned in fee of a Loan Party, which shall only be delivered
to Agent upon its request therefor, (iii) Vessel Fleet Mortgages with respect to
any Vessel owned by such Subsidiary and (iv) Chassis subject to certificates of
title statues owned by such Subsidiary) shall be subject to the terms of the
Intercreditor Agreement and required only to the extent required under the
Secured Notes Documents, including the documentation required to evidence the
Agent’s security interest and the timing of delivery with respect thereto.

5.12 Further Assurances. At any time upon the reasonable request of Agent,
execute or deliver to Agent any and all financing statements, fixture filings,
security agreements, pledges, assignments, endorsements of certificates of
title, mortgages, vessel mortgages, deeds of trust, opinions of counsel, and all
other documents (the “Additional Documents”) that Agent may reasonably request
in form and substance reasonably satisfactory to Agent, to create, perfect, and
continue perfected or to better perfect Agent’s Liens (to the extent required
under the Loan Documents) in substantially all assets of the Loan Parties (other
than Immaterial Subsidiaries) (whether now owned or hereafter arising or
acquired, tangible or intangible, real or personal, but excluding Excluded
Assets), to create and perfect Liens in favor of Agent in any Real Property
acquired by the Loan Parties after the Closing Date with a fair market value in
excess of $1,000,000 and any Vessels acquired by the Loan Parties after the
Closing Date (except to the extent a mortgage in favor of Agent is prohibited as
a result of a permitted mortgage in favor of the Maritime Administration in
connection with a U.S. Government-guaranteed financing transaction under 46
U.S.C. Chapter 537), and in order to fully consummate all of the transactions
contemplated hereby and under the other Loan Documents; provided that (a) the
foregoing shall not apply to any Foreign Subsidiary of Parent or any Immaterial
Subsidiary and (b) Mortgages with respect to Real Property shall only be
delivered upon request of Agent. To the maximum extent permitted by applicable
law, if Parent refuses or fails to execute or deliver any reasonably requested
Additional Documents within a reasonable period of time following the request to
do so, Parent hereby authorizes Agent to execute any such Additional Documents
in the applicable Loan Party’s or its Subsidiary’s name, as applicable, and
authorizes Agent to file such executed Additional Documents in any appropriate
filing office. In furtherance and not in limitation of the foregoing, each Loan
Party shall take such actions as Agent may reasonably request from time to time
to ensure that the Obligations are guaranteed by the Guarantors and are secured,
to the extent required under the Loan Documents, by first priority Lien in and
upon the ABL Priority Collateral and, in the case of Secured Notes Priority
Collateral, the Lien priority set forth in the Intercreditor Agreement (subject,
in each case, only to Permitted Liens and the relative priorities thereof).

 

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Notwithstanding anything to the contrary in this Agreement or any other Loan
Document, so long as the Secured Notes or any Permitted Additional Pari Passu
Obligations (or Refinancing Indebtedness in respect of the foregoing) are
outstanding, the further assurances required to be taken in this Section 5.12
with respect to Agent’s security interest in any Secured Notes Priority
Collateral (including (A) the Stock in or of a Subsidiary of a Loan Party,
(B) Mortgages with respect to any Real Property owned in fee of a Loan Party,
which shall only be delivered to Agent upon its request therefor, (C) Vessel
Fleet Mortgages with respect to any Vessel owned by a Loan Party and (D) Chassis
subject to certificates of title statues owned by a Loan Party) shall be subject
to the terms of the Intercreditor Agreement and required only to the extent
required under the Secured Notes Documents, including the documentation required
to evidence the Agent’s security interest and the timing of delivery with
respect thereto.

5.13 Lender Meetings. Within 120 days after the close of each fiscal year of
Parent, at the request of Agent or of the Required Lenders and upon reasonable
prior notice, hold a meeting (at a time mutually agreeable and by meeting or
phone, as mutually agreed, by Agent and Parent) with all Lenders who choose to
attend such meeting at which meeting shall be reviewed the financial results of
the previous fiscal year and the financial condition of Parent and its
Subsidiaries and the projections presented for the current fiscal year of
Parent.

5.14 Material Contracts. Concurrently with the filing of Parent’s quarterly
financial statements with the SEC, deliver a list of any Material Contracts
entered into by a Loan Party since the making of the previous quarterly filings.
Promptly notify Agent (a) if any Material Contract is terminated other than in
accordance with its terms or (b) of a material default thereunder, except, in
each case of the foregoing clauses (a) and (b), as could not reasonably be
expected to result, individually or in the aggregate, in a Material Adverse
Change. Upon request from Agent, provide Agent with copies of each Material
Contract entered into, except to the extent not permitted to be disclosed
pursuant to confidentiality obligations.

5.15 Location of Books and Records. Keep each Loan Parties’ books and records
pertaining to the ABL Priority Collateral only at the locations identified on
Schedule 4.26 and their chief executive offices only at the locations identified
on Schedule 4.6(b); provided, however, that Borrower may amend Schedule 4.26 or
Schedule 4.6(b) so long as such amendment occurs by written notice to Agent not
less than 10 days prior to the date on which such books and records are moved to
such new location or such chief executive office is relocated and so long as
such new location is within the continental United States, and so long as, at
the time of such written notification, Borrower shall use commercially
reasonable efforts to provide Agent a Collateral Access Agreement with respect
to locations where such books and records are located.

5.16 Compliance with ERISA. In addition to and without limiting the generality
of Section 5.8, (a) except where the failure to so comply could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Change, (i) comply with applicable provisions of ERISA, the IRC and the
regulations and published interpretations thereunder with respect to all
Employee Benefit Plans (other than Multiemployer Plans), (ii) not take any
action or fail to take action the result of which could reasonably be expected
to result in a liability to the PBGC or to a Multiemployer Plan, (iii) not
participate in any non-exempt prohibited transaction with respect to any
Employee Benefit Plan that could result in any civil penalty under ERISA or

 

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tax under the IRC and (iv) operate each Employee Benefit Plan (other than
Multiemployer Plans) in such a manner that will not incur any tax liability
under Section 4980B of the IRC or any liability to any qualified beneficiary as
defined in Section 4980B of the IRC and (b) furnish to Agent upon Agent’s
request such additional information about any Employee Benefit Plan as may be
reasonably requested by Agent.

5.17 Jones Act Trade. With respect to each Loan Party that owns or operates
vessels in the coastwise trade of the United States, to remain a “citizen of the
United States” within the meaning of 46 U.S.C. § 50501(a) and (d), eligible to
own and operate vessels in the coastwise trade of the United States.

5.18 Judgment Liens. Take all actions necessary to satisfy the terms of the
Antitrust Judgment Lien and the Vessel Environmental Judgment Lien, including
the making of all payments due in respect thereof on or before the respective
dates such payments are due and payable as stipulated in the Antitrust Judgment
or the Vessel Environmental Judgment, as applicable. Promptly, after the making
of each such payment, Parent shall confirm to Agent that such payment has been
made.

 

6.

NEGATIVE COVENANTS.

Each of Parent and Borrower covenants and agrees that, until termination of all
of the Revolver Commitments and payment in full of the Obligations (other than
Contingent Obligations), the Loan Parties will not and will not permit any of
their Subsidiaries to do any of the following:

6.1 Indebtedness. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, liable with respect to any Indebtedness, except for
Permitted Indebtedness.

6.2 Liens. Create, incur, assume, or suffer to exist, any Lien on or with
respect to any of its assets, of any kind, whether now owned or hereafter
acquired, or any income or profits therefrom, except for Permitted Liens.

6.3 Restrictions on Fundamental Changes.

(a) Other than in order to consummate a Permitted Acquisition, enter into any
merger or consolidation, except for (i) any merger or consolidation between Loan
Parties, provided that Borrower must be the surviving entity of any such merger
to which it is a party and no merger may occur between Parent and Borrower,
(ii) any merger between a Loan Party and Subsidiaries of such Loan Party that
are not Loan Parties so long as such Loan Party is the surviving entity of any
such merger, and (iii) any merger between Subsidiaries of Parent that are not
Loan Parties,

(b) Liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution), except for (i) the liquidation or dissolution of Immaterial
Subsidiaries of Borrower, (ii) the liquidation or dissolution of a Loan Party
(other than Parent or Borrower) or any of its wholly-owned Subsidiaries so long
as all of the assets (including any interest in any Stock) of such liquidating
or dissolving Loan Party or Subsidiary are transferred to a Loan Party (or in
the case of a Subsidiary that is not a Loan Party, to any other Subsidiary of
Parent) that is not

 

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liquidating or dissolving at such time, or (iii) the liquidation or dissolution
of a Subsidiary of Parent that is not a Loan Party (except that in the case of
any such Subsidiary the Stock of which (or any portion thereof) is subject to a
Lien in favor of Agent, such liquidation or dissolution shall only be permitted
to the extent such Stock is transferred to a Loan Party or cancelled) so long as
all of the assets of such liquidating or dissolving Subsidiary are transferred
to a Subsidiary of Parent that is not liquidating or dissolving; provided that
for the avoidance of doubt, nothing in this Section 6.3 shall be construed to
prohibit or restrict the Non-Domestic Reorganization.

6.4 Disposal of Assets. Other than Permitted Dispositions or transactions
expressly permitted by Sections 6.3 or 6.11, convey, sell, lease, license,
assign, transfer, or otherwise dispose of (or enter into an agreement to convey,
sell, lease, license, assign, transfer, or otherwise dispose of) any of Parent’s
or its Subsidiaries assets.

6.5 Change Name. Change Parent’s or any other Loan Party’s name, organizational
identification number, state of organization or organizational identity;
provided, however, that Parent or any other Loan Party may change its name,
organizational identification number, state of organization or organizational
identity upon at least 10 Business Days’ prior written notice (or such later
date as Agent may agree in its sole discretion) to Agent of such change.

6.6 Nature of Business. Make any change in the nature of their business (taken
as a whole) as described in Schedule 6.6; provided, however, that the foregoing
shall not prohibit Parent and its Subsidiaries from: (a) engaging in any
business that is reasonably related or ancillary to its or their business,
(b) making any Permitted Disposition or Permitted Investments, (c) consummating
any other transactions permitted under Section 6.3 or 6.11, or (d) consummating
the Non-Domestic Reorganization.

6.7 Prepayments and Amendments.

(a) Restricted Debt Payments. Make any Restricted Debt Payments except for
Permitted Restricted Debt Payments.

(b) Amendments. Amend, modify, or change any of the terms or provisions of:

(i) the Senior Notes, except to the extent that such amendment, modification or
change could not, individually or in the aggregate, reasonably be expected to be
materially adverse to the interests of the Lenders; provided that in any event
the following amendments, modifications or changes shall be permitted: (x)
increases in the interest rate on such Secured Notes by not more than 2.00% per
annum, (y) changes that eliminate or waive (or otherwise make less restrictive
on Parent and its Subsidiaries) any covenant, representation, condition or event
of default, or increase any grace period related thereto and (z) amendments,
modifications or changes in accordance with clause (p) of the definition of
Permitted Indebtedness;

(ii) any Material Contract except to the extent that such amendment,
modification, or change could not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Change; and

 

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(iii) the Governing Documents of any Loan Party or any of its Subsidiaries if
the effect thereof, either individually or in the aggregate, could reasonably be
expected to be materially adverse to the interests of the Lenders.

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

6.9 Restricted Stock Payments. Make any Restricted Stock Payment; provided,
however, that, so long as it is permitted by law, and so long as no Default or
Event of Default shall have occurred and be continuing or would result
therefrom, Parent and its Subsidiaries may make, Permitted Restricted Stock
Payments.

6.10 Accounting Methods. Modify or change its fiscal year or its method of
accounting (other than as may be required to conform to GAAP) without the prior
consent of Agent not to be unreasonably withheld, conditioned or delayed.

6.11 Investments; Controlled Investments.

(a) Investments. Make or acquire any Investment or incur any liabilities
(including contingent obligations) for or in connection with any Investment,
except for Permitted Investments.

(b) Controlled Investments. Subject to Section 3.6 with respect to Deposit
Accounts and Securities Accounts existing on the Closing Date, Parent shall not,
and shall not permit its Subsidiaries, to establish or maintain any Deposit
Account or Securities Account (other than Excluded Accounts) unless Agent shall
have received a Control Agreement in respect of such Deposit Account or
Securities Account.

6.12 Transactions with Affiliates. Enter into or permit to exist any transaction
with any Affiliate of Parent or any of its Subsidiaries except for:

(a) transactions (other than the payment of management, consulting, monitoring,
or advisory fees) between Parent or its Subsidiaries, on the one hand, and any
Affiliate of Parent or its Subsidiaries, on the other hand, so long as such
transactions (i) are fully disclosed to Agent prior to the consummation thereof,
if they involve one or more payments by Parent or its Subsidiaries in excess of
$2,500,000 for any single transaction or series of related transactions, and
(ii) are no less favorable, taken as a whole, to Parent or its Subsidiaries, as
applicable, than would be obtained in an arm’s length transaction with a
non-Affiliate,

(b) so long as it has been approved by Parent’s or its applicable Subsidiary’s
board of directors (or comparable governing body) in accordance with applicable
law, any indemnity provided for the benefit of directors (or comparable
managers) of Parent or its applicable Subsidiary,

(c) so long as it has been approved by Parent’s or its applicable Subsidiary’s
board of directors (or comparable governing body) in accordance with applicable
law, the payment of reasonable compensation, severance, or employee benefit
arrangements to employees, officers, and outside directors of Parent and its
Subsidiaries in the ordinary course of business,

 

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(d) transactions permitted by Section 6.3, Section 6.7(a) or Section 6.9, or any
Permitted Intercompany Investment,

(e) transactions between any Loan Parties, and/or between Subsidiaries thereof
that are not Loan Parties,

(f) any agreement, instrument or arrangement as in effect on the Closing Date
and identified on Schedule 6.12 or any amendment thereto (so long as such
amendment is not materially more disadvantageous taken as a whole, than the
applicable agreement, instrument or arrangement, as in effect on the date of the
Closing Date),

(g) loans or advances to employees of any Loan Party or its Subsidiaries in the
ordinary course of business and permitted by Section 6.11,

(h) payment of reasonable fees and reimbursement of expenses of directors of any
Loan Party, and

(i) the Transactions.

6.13 Use of Proceeds. Use the proceeds of any loan made hereunder for any
purpose other than (a) together with the proceeds of the Secured Notes (First
Lien) and Secured Notes (Second Lien), to refinance certain existing
Indebtedness of Parent (including Indebtedness incurred pursuant to the Existing
Credit Agreement), (b) to fund certain fees, costs and expenses associated with
Transactions, and (c) to finance the ongoing general corporate and working
capital needs of Borrower, the other Loan Parties and, to extent expressly
permitted hereunder, their Subsidiaries; including any Permitted Acquisition;
provided that no part of the proceeds of the loans made to Borrower will be used
to purchase or carry any such Margin Stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock or for any purpose that
violates the provisions of Regulation T, U or X of the Board of Governors of the
United States Federal Reserve).

6.14 Limitation on Issuance of Stock. Issue or sell or enter into any agreement
or arrangement for the issuance and sale of any of its Stock, except for the
issuance or sale of (a) common Stock (including options, warrants, interests,
participations or other equivalents relating thereto), (b) Permitted Preferred
Stock by Parent (including options, warrants, interests, participations or other
equivalents relating thereto), (c) instruments representing rights to issue
common Stock of Parent in exchange for any Secured Notes (Convertible) in
accordance with the terms of the Secured Notes Documents (Convertible),
(d) Stock of a Loan Party to another Loan Party, (e) Stock of a Non-Loan Party
to another Non-Loan Party, (f) Stock of a Non-Loan Party to a Loan Party so long
as the acquisition of such Stock by a Loan Party constitutes a Permitted
Investment, or (g) any warrants or options to acquire common Stock issued to
ensure compliance by any Loan Party of its agreement to be and remain a “citizen
of the United States” within the meaning of 46 U.S.C. § 50501(a) and (d).

 

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6.15 Restrictions Affecting Subsidiaries. Create or otherwise permit to exist
any encumbrance or restriction (other than pursuant to this Agreement or any
other Loan Document) that (a) limits the ability (i) of any Subsidiary to make
dividends or distributions to a Loan Party or to otherwise transfer property to
or invest in a Loan Party, (ii) of any Subsidiary to make loans or advances to
any Loan party or to pay any Indebtedness owed to a Loan Party, (iii) of any
Subsidiary to guarantee the Indebtedness of Borrower or (iv) of any Loan Party
to create, incur, assume or suffer to exist Liens on property of such Loan
Party, or (b) requires the grant of a Lien to secure an obligation of such
Person if a Lien is granted to secure another obligation of such Person;
provided, that the foregoing shall not apply to encumbrances or restrictions
which (A) are customary provisions in joint venture agreements and other similar
agreements applicable to joint ventures permitted under Section 6.11 and
applicable solely to such joint venture entered into in the ordinary course of
business, (B) are customary restrictions on leases, subleases, licenses or
sublicenses otherwise permitted hereunder so long as such restrictions relate
solely to the assets subject thereto, (C) are customary anti-assignment
provisions in contracts restricting the assignment of any agreement entered into
in the ordinary course of business, (D) are customary restrictions in contracts
for the disposition of any assets permitted by Section 6.4, provided that the
restrictions in any such contracts shall apply only to such assets that is to be
disposed of, (E) are customary provisions in leases of Real Property that
prohibit mortgages or pledges of the lessee’s interest under such lease, (F) are
contained in any Acquired Indebtedness not created in anticipation thereof,
(G) are contained in the Secured Notes Documents and any Refinancing
Indebtedness incurred in respect thereof, (H) are customary restrictions on
Liens in the terms of any Indebtedness for which Liens are permitted under
clause (f) of the definition of Permitted Liens if such restriction applies only
to the property financed by or the subject of such Indebtedness, (I) arise under
applicable law, (J) result from agreements in effect on the Closing Date and, if
of a material nature, disclosed to Agent, and any amendments, restatements,
modifications, renewals, supplements, refundings, replacements or refinancings
of such agreements; provided that the amendments, restatements, modifications,
renewals, supplements refundings, replacements or refinancings are not
materially more restrictive with respect to such dividend and other payment
restrictions than those contained in those agreements on the Closing Date,
(K) result from any agreement for the sale or other disposition of the equity
Stock or assets of a Person permitted by this Agreement that restricts
distributions by that Person pending such sale or other disposition,
(L) pursuant to Refinancing Indebtedness; provided that the restrictions
contained in the agreements governing such Refinancing Indebtedness are not
materially more restrictive, taken as a whole, than those contained in the
agreements governing the Indebtedness being refinanced, extended, renewed,
refunded, replaced, defeased or discharged, (M) restrictions on cash or other
deposits or net worth imposed by customers under contracts or other agreements
entered into in the ordinary course of business, (N) encumbrances on property
permitted by this Agreement that exist at the time such property was acquired by
the Loan Parties or their Subsidiaries or (O) restrictions or conditions
contained in any trading, netting, operating, construction, service, supply,
purchase or other similar agreement permitted by this Agreement to which a Loan
Party or any of its Subsidiaries is a party entered into in the ordinary course
of business; provided that such agreement prohibits the encumbrance of solely
the property or assets of such Person that are the subject of such agreement,
the payment rights arising thereunder or the proceeds thereof and does not
extend to any other asset or property of such Person.

 

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7.

FIXED CHARGE COVERAGE RATIO.

Each of Parent and Borrower covenants and agrees that, until termination of all
of the Revolver Commitments and payment in full of the Obligations (other than
Contingent Obligations), during a Trigger Period, Parent shall maintain, on a
consolidated basis, as of the last day of each fiscal month commencing with the
last day of the most recent fiscal month immediately preceding the commencement
of a Trigger Period for which financial information is available and ending on
the expiration of such Trigger Period, a Fixed Charge Coverage Ratio of at least
1.00 to 1.00 (computed for the 12 month period then ending).

 

8.

EVENTS OF DEFAULT.

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

8.1 Payment Default. If Borrower fails to pay when due and payable in accordance
with the terms hereof (whether at maturity, by reason of acceleration or
otherwise), (a) all or any portion of the Obligations (other than Bank Product
Obligations) consisting of interest, fees, or charges due the Lender Group,
reimbursement of Lender Group Expenses, or other amounts (other than any portion
thereof constituting principal) constituting Obligations (other than Bank
Product Obligations), and such failure continues for a period of 3 Business
Days, or (b) all or any portion of the principal of the Obligations (other than
Bank Product Obligations).

8.2 Covenant Default. If any Loan Party:

(a) fails to perform or observe any covenant or other agreement contained in any
of (i) Sections 3.6, 5.1, 5.2, 5.3 (solely if Borrower is not in good standing
in its jurisdiction of organization), 5.7 (solely if Borrower refuses to allow
Agent or its representatives or agents to visit Borrower’s properties, inspect
its assets or books or records, examine and make copies of its books and
records, or discuss Borrower’s affairs, finances, and accounts with officers and
employees of Borrower), 5.10, 5.11, 5.13, 5.15 or 5.17 of this Agreement,
(ii) Sections 6.1 through 6.15 of this Agreement, (iii) Section 7 of this
Agreement, or (iv) Section 6(k) of the Security Agreement;

(b) fails to perform or observe any covenant or other agreement contained in
Section 5.18 of this Agreement and such failure continues for a period of 3
Business Days;

(c) fails to perform or observe any covenant or other agreement contained in any
of Sections 5.3 (other than if Borrower is not in good standing in its
jurisdiction of organization), 5.4, 5.5, 5.6, 5.8, 5.12 or 5.14 of this
Agreement and such failure continues for a period of 10 days after the earlier
of (i) the date on which such failure shall first become known to any officer of
Borrower or (ii) the date on which written notice thereof is given to Borrower
by Agent; or

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

 

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8.3 Judgments. After the Closing Date, if one or more judgments, orders, or
awards for the payment of money involving an aggregate amount of $10,000,000, or
more (except for (a) the Vessel Environmental Judgment and (b) to the extent
(i) fully covered (other than to the extent of customary deductibles) by
insurance pursuant to which the insurer has not denied coverage or (ii) fully
covered by one or more unsecured settlements or plea agreements providing for
annual aggregate payments of not more than (A) for calendar years 2011 and 2012,
$15,000,000, (B) for calendar year 2013, $12,500,000 and (C) for calendar year
2014 and each calendar year thereafter, $10,000,000) is entered or filed against
a Loan Party or any of its Subsidiaries, or with respect to any of their
respective assets, and either (I) there is a period of 60 consecutive days at
any time after the entry of any such judgment, order, or award during which
(x) the same is not discharged, satisfied, vacated, or bonded pending appeal, or
(y) a stay of enforcement thereof is not in effect, or (II) enforcement
proceedings are commenced upon such judgment, order, or award.

8.4 Voluntary Insolvency Proceeding. If any Loan Party or any Subsidiary thereof
(other than any Immaterial Subsidiary) shall (a) commence an Insolvency
Proceeding, (b) admit in writing its inability to pay its debts as they become
due, or (c) take any corporate action for the purpose of authorizing any of the
foregoing.

8.5 Involuntary Insolvency Proceeding. If an Insolvency Proceeding is commenced
against a Loan Party or any of its Subsidiaries (other than any Immaterial
Subsidiary) and any of the following events occur: (a) such Loan Party or such
Subsidiary consents to the institution of such Insolvency Proceeding against it,
(b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 60 calendar days of the date of the filing thereof, (d) an
interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, such Loan Party or its Subsidiary, or (e) an order
for relief shall have been issued or entered therein.

8.6 Restriction on Business. If a Loan Party is enjoined, restrained, or in any
way prevented by court order from continuing to conduct all or any material part
of the business affairs of Parent and its Subsidiaries, taken as a whole, in
such a manner as results in, or could reasonably be expected to result in, a
Material Adverse Change.

8.7 Cross Default.

(a) If any Loan Party or any Subsidiary thereof shall (i) default in respect of
any Secured Notes or any Additional Notes and such default results in an “Event
of Default” (or the equivalent term) under, and as defined in, the Secured Notes
Documents or the documents evidencing the Additional Notes, (ii) default in the
payment of any Bank Product Obligations (other than Hedging Obligations) beyond
the period of grace, if any, provided in the instrument or agreement under which
such obligations were created, (iii) default in the payment of any Indebtedness
(other than (x) the Obligations and (y) obligations under any Hedge Agreements,
the Secured Notes or the Additional Notes) the aggregate outstanding amount of
which

 

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Indebtedness is in excess of $10,000,000 beyond the period of grace if any,
provided in the instrument or agreement under which such Indebtedness was
created, or (iv) default in the observance or performance of any other agreement
or condition relating to any Indebtedness (other than (x) the Obligations and
(y) obligations under any Hedge Agreements) the aggregate outstanding amount of
which Indebtedness is in excess of $10,000,000 or contained in any instrument or
agreement evidencing, securing or relating thereto or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause, with the
giving of notice and/or lapse of time, any such Indebtedness to become due prior
to its stated maturity (any applicable grace period having expired), including,
without limitation, pursuant to any “put”, or mandatory tender, redemption or
repurchase of such Indebtedness.

(b) If there is an involuntary “early termination event” or other similar event
(which event shall extend beyond any applicable cure periods or grace periods)
shall have occurred in respect of obligations owing under any Hedge Agreement of
a Loan Party, and the amount of such obligations, either individually or in the
aggregate for all such Hedge Agreements, is in excess of $10,000,000; provided
that, in respect of obligations owing under any Hedge Agreement of such Loan
Party owed to the applicable counterparty at such time, the amount for purposes
of this Section 8.7(b) shall be the amount payable on a net basis by such Loan
Party to such counterparty if such Hedge Agreement were terminated at such
time).

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

8.9 Failure of Guaranty. If the obligation of any Guarantor under the Guaranty
is limited or terminated by operation of law or by such Guarantor (other than in
accordance with the terms of this Agreement or any other Loan Document).

8.10 Failure of other Loan Documents. If the Security Agreement or any other
Loan Document that purports to create a Lien, shall, for any reason, fail or
cease to create a valid and perfected (to the extent required under the Loan
Documents) and, except to the extent of Permitted Liens which are permitted tax
Liens, the Antitrust Judgment Lien or the Vessel Environmental Judgment Lien,
first priority Lien in and upon the ABL Priority Collateral and, in the case of
Secured Notes Priority Collateral, the Lien priority set forth in the
Intercreditor Agreement, except (a) as a result of a disposition of the
applicable Collateral permitted under this Agreement or (b) as the result of an
action or failure to act on the part of Agent.

8.11 Invalidity of Loan Documents. The validity or enforceability of any Loan
Document shall at any time for any reason (other than solely as the result of an
action or failure to act on the part of Agent) be declared to be null and void,
or a proceeding shall be commenced by a Loan Party, or by any Governmental
Authority having jurisdiction over a Loan Party, seeking to establish the
invalidity or unenforceability thereof, or a Loan Party shall deny that such
Loan Party has any liability or obligation purported to be created under any
Loan Document.

 

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8.12 ERISA Events. The occurrence of any of the following events which
reasonably could be expected to result in a Material Adverse Change: (i) any
Loan Party or any ERISA Affiliate fails to make full payment when due of all
amounts which, under the provisions of any Pension Plan or Sections 412 or 430
of the IRC, any Loan Party or any ERISA Affiliate is required to pay as
contributions thereto or (ii) a Termination Event.

8.13 Designation as Senior Indebtedness. If (a) the Obligations shall at any
time fail to constitute “Senior Indebtedness”, “Designated Senior Indebtedness”
or any similar designation under and as defined in any agreement or instrument
governing any Indebtedness that is subordinated to the Obligations, (b) the
subordination provisions of any agreement or instrument governing any
Indebtedness in a principal amount in excess of $2,500,000 that is subordinated
to the Obligations shall for any reason (other than as a result of any action or
inaction of Agent or any Lender) be revoked or invalidated, or otherwise cease
to be in full force and effect, unless such Indebtedness would otherwise be
permitted to be incurred as “Senior Indebtedness” at such time (and for purposes
of any baskets, shall be deemed to be incurred as such), or any Loan Party shall
contest in any manner the validity or enforceability thereof, or (c) any
Indebtedness other than the Indebtedness evidenced by this Agreement and/or Bank
Product Obligations shall be designated as an “ABL Facility” or a “ Credit
Facility” or any similar designation under and as defined in the Secured Notes.

8.14 Chartered Vessel Document Default. Except to the extent a result of a
buy-out, buy-down, the Non-Domestic Reorganization, acquisition or other
purchase of a Chartered Vessel subject to a Chartered Vessel Document, any event
or condition occurs that (i) results in any amount (that is not covered by
insurance to the extent such insurance is provided by insurers that are solvent
and have not denied payment with respect to any such event or condition) in
excess of $10,000,000 that any Loan Party or Subsidiary is obligated to pay
under any Chartered Vessel Document becoming due prior to its scheduled payment
date or (ii) enables or permits (with or without the giving of notice) any
Person (A) to cause any amount (that is not covered by insurance to the extent
such insurance is provided by insurers that are solvent and have not denied
payment with respect to any such event or condition) in excess of $10,000,000
that any Loan Party or Subsidiary is obligated to pay under any Chartered Vessel
Document to become due, or (B) to require the prepayment, repurchase, redemption
or defeasance of any amount (that is not covered by insurance to the extent such
insurance is provided by insurers that are solvent and have not denied payment
with respect to any such event or condition) in excess of $10,000,000, in each
case prior to its scheduled payment date and, in the case of each of clauses
(i) and (ii), such event or condition shall continue unremedied past any
applicable cure or grace period for a period of 30 days.

8.15 Attachment/Levy Default. Any material Mortgaged Vessel shall have been
(i) attached, levied upon or taken into custody by virtue of any legal
proceeding in any court or tribunal or by an Governmental Authority in the
United States and such Mortgaged Vessel shall not have been released within 30
days after such attachment, levy or taking into custody or (ii) attached, levied
upon or taken into custody by virtue of any legal proceeding in any court or
tribunal or by any Governmental Authority outside the United States and such
Mortgaged Vessel

 

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shall not have been released within the earlier of (x) 75 days after such
attachment, levy or taking into custody or (y) the date on which the Mortgage
Trustee must make a filing in such attachment, levy or taking to preserve its
rights.

8.16 Jones Act Trade. Any Loan Party that owns or operates vessels in the
coastwise trade of the United States shall cease to qualify as a “citizen of the
United States” within the meaning of 46 U.S.C. § 50501(a) and (d), eligible to
own and operate vessels in the coastwise trade of the United States or any Loan
Party shall have received from the U.S. Coast Guard notice of revocation for any
Vessel of its privilege to operate in the coastwise trade of the United States.

 

9.

RIGHTS AND REMEDIES.

9.1 Rights and Remedies. Upon the occurrence and during the continuation of an
Event of Default, Agent may, and, at the instruction of the Required Lenders,
shall (in each case under clauses (a) or (b) by written notice to Borrower), in
addition to any other rights or remedies provided for hereunder or under any
other Loan Document or by applicable law, do any one or more of the following:

(a) declare the Obligations (other than the Bank Product Obligations), whether
evidenced by this Agreement or by any of the other Loan Documents immediately
due and payable, whereupon the same shall become and be immediately due and
payable and Borrower shall be obligated to repay all of such Obligations in
full, without presentment, demand, protest, or further notice or other
requirements of any kind, all of which are hereby expressly waived by Borrower;

(b) declare the Revolver Commitments terminated, whereupon the Revolver
Commitments shall immediately be terminated together with (i) any obligation of
any Lender hereunder to make Advances, (ii) the obligation of the Swing Lender
to make Swing Loans, and (iii) the obligation of the Issuing Lender to issue
Letters of Credit; and

(c) exercise all other rights and remedies available to Agent or Lenders under
the Loan Documents or applicable law.

The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.4 or Section 8.5, in addition to the remedies
set forth above, without any notice to Borrower or any other Person or any act
by the Lender Group, the Revolver Commitments shall automatically terminate and
the Obligations (other than the Bank Product Obligations), inclusive of all
accrued and unpaid interest thereon and all fees and all other amounts owing
under this Agreement or under any of the other Loan Documents, shall
automatically and immediately become due and payable and Borrower shall be
obligated to repay all of such Obligations in full, without presentment, demand,
protest, or notice of any kind, all of which are expressly waived by Parent.

9.2 Remedies Cumulative. The rights and remedies of the Lender Group under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy

 

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shall be deemed an election, and no waiver by the Lender Group of any Event of
Default shall be deemed a continuing waiver. No delay by the Lender Group shall
constitute a waiver, election, or acquiescence by it.

 

10.

WAIVERS; INDEMNIFICATION.

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

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

10.3 Indemnification. Borrower shall pay, indemnify, defend, and hold
Agent-Related Persons, the Lender-Related Persons, and each Participant (each,
an “Indemnified Person”) harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, liabilities, fines, costs, penalties, and damages, and all
reasonable fees and disbursements of one external legal counsel for all such
Indemnified Persons (and, in the case of an actual or perceived conflict of
interest among any one or more Indemnified Persons, one additional counsel to
each group of affected Indemnified Parties), experts, or consultants and all
other reasonable costs and expenses actually incurred in connection therewith or
in connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution and delivery (provided that Borrower shall
not be liable for costs and expenses (including attorneys fees) of any Lender
(other than WFCF) incurred in advising, structuring, drafting, reviewing,
administering or syndicating the Loan Documents), enforcement, performance, or
administration (including any restructuring or workout with respect hereto) of
this Agreement, any of the other Loan Documents, or the Transactions or any
transactions contemplated hereby or thereby or the monitoring of Parent’s and
its Subsidiaries’ compliance with the terms of the Loan Documents (provided,
however, that the indemnification in this clause (a) shall not extend to
(i) disputes solely between or among the Lenders, (ii) disputes solely between
or among Lenders and their respective Affiliates; it being understood and agreed
that the indemnification in this clause (a) shall extend to Agent (but not the
Lenders) relative to disputes between or among Agent on the one hand, and one or
more Lenders, or one or more of their Affiliates, on the other hand, or
(iii) any taxes or any costs attributable to taxes (other than taxes that
represent losses, claims, damages, etc. arising from any non-tax claim)),
(b) with respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan

 

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Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event, or circumstance in any manner related thereto, and (c) in
connection with or arising out of any presence or release of Hazardous Materials
at, on, under, to or from any assets or properties owned, leased or operated by
Borrower or any of its Subsidiaries or any Environmental Actions, Environmental
Liabilities or Remedial Actions related in any way to any such assets or
properties of Borrower or any of its Subsidiaries (each and all of the
foregoing, the “Indemnified Liabilities”). The foregoing to the contrary
notwithstanding, Borrower shall have no obligation to any Indemnified Person
under this Section 10.3 with respect to any Indemnified Liability that a court
of competent jurisdiction finally determines to have resulted from the gross
negligence or willful misconduct of such Indemnified Person or its officers,
directors, advisors, legal representatives, employees, attorneys, or agents.
This provision shall survive the termination of this Agreement and the repayment
of the Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which Borrower
was required to indemnify the Indemnified Person receiving such payment, the
Indemnified Person making such payment is entitled to be indemnified and
reimbursed by Borrower with respect thereto. WITHOUT LIMITATION, THE FOREGOING
INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED
LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY
NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

 

11.

NOTICES.

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

 

If to Parent or Borrower:

  

HORIZON LINES, INC.

4064 Colony Road, Suite 200

Charlotte, NC 28211

Attn: Michael T. Avara

     

Fax No.

 

 

    

with copies to:

  

 

       

 

       

 

       

Attn:

 

 

 

, Esq.

     

Fax No.

 

 

    

 

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If to Agent:

  

WELLS FARGO CAPITAL FINANCE, LLC

1100 Abernathy Road, Suite 1600

Atlanta, GA 30328

     

Attn:

 

 

       

Fax No.

 

 

    

with copies to:

  

WINSTON & STRAWN LLP

214 N. Tryon Street, Suite 2200

Charlotte, NC 28202

Attn: Molly McGill, Esq.

     

Fax No. 704-350-7800

    

Any party hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party. All notices or demands sent in accordance with this Section 11, shall be
deemed received on the earlier of the date of actual receipt or 3 Business Days
after the deposit thereof in the mail; provided, that (a) notices sent by
overnight courier service shall be deemed to have been given when received,
(b) notices by facsimile shall be deemed to have been given when sent (except
that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next Business Day
for the recipient) and (c) notices by electronic mail shall be deemed received
upon the sender’s receipt of an acknowledgment from the intended recipient (such
as by the “return receipt requested” function, as available, return email or
other written acknowledgment).

 

12.

CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

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

(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN
THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED
IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING
SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF
PARENT AND BORROWER AND EACH MEMBER OF

 

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THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT
EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO
VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
12(b).

(c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF PARENT AND
BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH OF PARENT AND BORROWER AND EACH MEMBER OF
THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY
AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.

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

 

13.

ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

13.1 Assignments and Participations.

(a) With the prior written consent of Borrower, which consent of Borrower shall
not be unreasonably withheld, delayed or conditioned, and shall not be required
(1) if an Event of Default has occurred and is continuing, or (2) in connection
with an assignment to a Person that is a Lender, an Affiliate (other than
individuals) of a Lender or a Related Fund; provided that Borrower shall be
deemed to have consented to a proposed assignment unless it objects thereto by
written notice to Agent within 5 Business Days after having received notice
thereof, and with the prior written consent of Agent, which consent of Agent
shall not be unreasonably withheld, delayed or conditioned, and shall not be
required in connection with an assignment to a Person that is a Lender, an
Affiliate (other than individuals) of a Lender or a

 

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Related Fund, any Lender may assign and delegate to one or more assignees so
long as such prospective assignee is an Eligible Transferee (each, an
“Assignee”; provided, however, that no Loan Party or Affiliate of a Loan Party
shall be permitted to become an Assignee) all or any portion of the Obligations,
the Revolver Commitments and the other rights and obligations of such Lender
hereunder and under the other Loan Documents, in a minimum amount (unless waived
by Agent) of $5,000,000 (except such minimum amount shall not apply to (x) an
assignment or delegation by any Lender to any other Lender or an Affiliate of
any Lender, (y) a group of new Lenders, each of which is an Affiliate of each
other or a Related Fund of such new Lender to the extent that the aggregate
amount to be assigned to all such new Lenders is at least $5,000,000 or (z) an
assignment to one or more Replacement Lenders pursuant to Section 14.2);
provided, however, that Borrower and Agent may continue to deal solely and
directly with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses, and related information with respect to the Assignee,
have been given to Borrower and Agent by such Lender and the Assignee and such
assignment has been recorded in the Register, (ii) such Lender and its Assignee
have delivered to Borrower and Agent an Assignment and Acceptance and Agent has
notified the assigning Lender of its receipt thereof in accordance with
Section 13.1(b), and (iii) except in connection with any assignment to any
Replacement Lender pursuant to Section 14.2, unless waived by Agent, the
assigning Lender or Assignee has paid to Agent for Agent’s separate account a
processing fee in the amount of $3,500.

(b) From and after the date that Agent notifies the assigning Lender (with a
copy to Borrower) that it has received an executed Assignment and Acceptance
and, if applicable, payment of the required processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall be a “Lender” and shall have the rights and obligations of a
Lender under the Loan Documents, and (ii) the assigning Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (except with respect to Section 10.3) and be released from any future
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto); provided, however, that nothing
contained herein shall release any assigning Lender from obligations that
survive the termination of this Agreement, including such assigning Lender’s
obligations under Section 15 and Section 17.9(a).

(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto,
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or the
performance or observance by Borrower of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (iii)

 

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such Assignee confirms that it has received a copy of this Agreement, together
with such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance, (iv) such Assignee will, independently and without reliance upon
Agent, such assigning Lender or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement,
(v) such Assignee appoints and authorizes Agent to take such actions and to
exercise such powers under this Agreement and the other Loan Documents as are
delegated to Agent, by the terms hereof and thereof, together with such powers
as are reasonably incidental thereto, and (vi) such Assignee agrees that it will
perform all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.

(d) Immediately upon Agent’s receipt of the required processing fee, if
applicable, and delivery of notice to the assigning Lender pursuant to
Section 13.1(b), this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Revolver Commitments arising therefrom. The Revolver
Commitment allocated to each Assignee shall reduce such Revolver Commitments of
the assigning Lender pro tanto.

(e) Any Lender may at any time sell to one or more commercial banks, financial
institutions, or other Persons (a “Participant”) participating interests in all
or any portion of its Obligations, its Revolver Commitment, and the other rights
and interests of that Lender (the “Originating Lender”) hereunder and under the
other Loan Documents; provided, however, that (i) the Originating Lender shall
remain a “Lender” for all purposes of this Agreement and the other Loan
Documents and the Participant receiving the participating interest in the
Obligations, the Revolver Commitments, and the other rights and interests of the
Originating Lender hereunder shall not constitute a “Lender” hereunder or under
the other Loan Documents and the Originating Lender’s obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Borrower,
Agent, and the Lenders shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender’s rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the right to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender (other than a
waiver of default interest), or (E) decrease the amount or postpone the due
dates of scheduled principal repayments or prepayments or premiums payable to
such Participant through such Lender, and (v) all amounts payable by Borrower
hereunder shall be determined as if such Lender had not sold such participation,
except that, if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be

 

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deemed to have the right of set off in respect of its participating interest in
amounts owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant are subject to the requirements and
limitations therein (including the requirements of Section 16(c)) only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agent,
Borrower, the Collections of Parent or its Subsidiaries, the Collateral, or
otherwise in respect of the Obligations. No Participant shall have the right to
participate directly in the making of decisions by Lenders among themselves.

(f) In connection with any such assignment or participation or proposed
assignment or participation or any grant of a security interest in, or pledge
of, its rights under and interest in this Agreement, a Lender may, subject to
the provisions of Section 17.9, disclose all documents and information which it
now or hereafter may have relating to Parent and its Subsidiaries and their
respective businesses.

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

(h) Agent (as a non-fiduciary agent on behalf of Borrower) shall maintain, or
cause to be maintained, a register (the “Register”) on which it enters the name
and address of each Lender and the Commitments of, and principal amounts (and
stated interest) of the Advances owing to, each Lender pursuant to the terms
hereof from time to time (each, a “Registered Loan”). (i) A Registered Loan (and
the registered note, if any, evidencing the same) may be assigned or sold in
whole or in part only by registration of such assignment or sale on the Register
(and each registered note shall expressly so provide) and (ii) any assignment or
sale of all or part of such Registered Loan (and the registered note, if any,
evidencing the same) may be effected only by registration of such assignment or
sale on the Register, together with the surrender of the registered note, if
any, evidencing the same duly endorsed by (or accompanied by a written
instrument of assignment or sale duly executed by) the holder of such registered
note, whereupon, at the request of the designated assignee(s) or transferee(s),
one or more new registered notes in the same aggregate principal amount shall be
issued to the designated assignee(s) or transferee(s). Prior to the registration
of assignment or sale of any Registered Loan (and the registered note, if any
evidencing the same), Borrower shall treat the Person in whose name such
Registered Loan (and the registered note, if any, evidencing the same) is
registered as the owner thereof for the purpose of receiving all payments
thereon and for all other purposes, notwithstanding notice to the contrary.

(i) In the event that a Lender sells participations in the Registered Loan, such
Lender, as a non-fiduciary agent on behalf of Borrower, shall maintain (or cause
to be maintained) a register on which it enters the name of all participants in
the Registered Loans held by it (and the principal amount (and stated interest
thereon) of the portion of such Registered Loans that is subject to such
participations) (the “Participant Register”); provided that no Lender

 

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shall have any obligation to disclose all or any portion of the Participant
Register (including the identity of any Participant or any information relating
to a Participant’s interest in any commitments, loans, letters of credit or its
other obligations under any Loan Document) to any Person except to the extent
that such disclosure is necessary to establish that such commitment, loan,
letter of credit or other obligation is in registered form under
Section 5f.103-1(c) of the United States Treasury Regulations. The entries in
the Participant Register shall be conclusive absent manifest error, and such
Lender shall treat each Person whose name is recorded in the Participant
Register as the owner of such participation for all purposes of this Agreement
notwithstanding any notice to the contrary. For the avoidance of doubt, Agent
(in its capacity as Agent) shall have no responsibility for maintaining a
Participant Register. A Registered Loan (and the registered note, if any,
evidencing the same) may be participated in whole or in part only by
registration of such participation on the Participant Register (and each
registered note shall expressly so provide). Any participation of such
Registered Loan (and the registered note, if any, evidencing the same) may be
effected only by the registration of such participation on the Participant
Register.

(j) Agent shall make a copy of the Register (and each Lender shall make a copy
of its Participant Register to the extent it has one) available for review by
Borrower from time to time as Borrower may reasonably request.

(k) The entries in the Register shall be conclusive absent manifest error, and
Borrower, Agent and Lenders shall treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement.

13.2 Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrower may not assign this Agreement or any rights or duties hereunder
without Lenders’ prior written consent and any prohibited assignment shall be
absolutely void ab initio. No consent to assignment by Lenders shall release
Borrower from its Obligations. A Lender may assign this Agreement and the other
Loan Documents and its rights and duties hereunder and thereunder pursuant to
Section 13.1 and, except as expressly required pursuant to Section 13.1, no
consent or approval by Borrower is required in connection with any such
assignment.

 

14.

AMENDMENTS; WAIVERS.

14.1 Amendments and Waivers.

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

(i) increase the amount of or extend the expiration date of any Revolver
Commitment of any Lender or amend, modify, or eliminate the last sentence of
Section 2.4(c) regarding pro rata Revolver Commitment reductions;

 

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(ii) postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document (other than mandatory prepayments,
the payment of which may be waived, postponed or delayed with the consent of the
Required Lenders);

(iii) reduce the principal of, or the rate of interest on, any loan or other
extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document (except (x) in connection with the
waiver of applicability of Section 2.6(c) (which waiver shall be effective with
the written consent of the Required Lenders and (y) that any amendment or
modification of defined terms used in the financial covenants and ratios under
this Agreement shall not constitute a reduction in the rate of interest or a
reduction of fees or any other amounts for purposes of this clause (iii));

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

(v) other than as permitted by Section 15.11 or as provided in the Intercreditor
Agreement, release Agent’s Lien in and to any material portion of the
Collateral;

(vi) amend, modify, or eliminate the definition of “Required Lenders” or “Pro
Rata Share”;

(vii) contractually subordinate any of Agent’s Liens other than as provided in
Section 15.11 or in the Intercreditor Agreement;

(viii) other than in connection with a merger, liquidation, dissolution or sale
of such Person expressly permitted by the terms hereof or the other Loan
Documents, release Borrower or any Guarantor from any obligation for the payment
of money or consent to the assignment or transfer by Borrower or any Guarantor
of any of its rights or duties under this Agreement or the other Loan Documents;

(ix) amend, modify, or eliminate any of the provisions of Section 2.4(b)(i) or
(ii);

(x) amend, modify, or eliminate any of the provisions of Section 13.1(a) to
permit a Loan Party or an Affiliate of a Loan Party to be permitted to become an
Assignee; or

(xi) amend, modify, or eliminate the definition of Borrowing Base or any of the
defined terms (including the definition of Eligible Accounts) that are used in
such definition to the extent that any such change results in more credit being
made available to Borrower based upon the Borrowing Base, but not otherwise, or
change Section 2.1(c).

 

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(b) No amendment, waiver, modification, elimination, or consent shall amend,
modify, or waive (i) the definition of, or any of the terms or provisions of,
the Fee Letter, without the written consent of Agent and Parent (and shall not
require the written consent of any of the Lenders), and (ii) any provision of
Section 15 pertaining to Agent, or any other rights or duties of Agent under
this Agreement or the other Loan Documents, without the written consent of
Agent, Borrower, and the Required Lenders,

(c) No amendment, waiver, modification, elimination, or consent shall amend,
modify, or waive any provision of this Agreement or the other Loan Documents
pertaining to Issuing Lender, or any other rights or duties of Issuing Lender
under this Agreement or the other Loan Documents, without the written consent of
Issuing Lender, Agent, Borrower, and the Required Lenders,

(d) No amendment, waiver, modification, elimination, or consent shall amend,
modify, or waive any provision of this Agreement or the other Loan Documents
pertaining to Swing Lender, or any other rights or duties of Swing Lender under
this Agreement or the other Loan Documents, without the written consent of Swing
Lender, Agent, Borrower, and the Required Lenders,

(e) Anything in this Section 14.1 to the contrary notwithstanding, (i) any
amendment, modification, elimination, waiver, consent, termination, or release
of, or with respect to, any provision of this Agreement or any other Loan
Document that relates only to the relationship of the Lender Group among
themselves, and that does not affect the rights or obligations of Parent or any
of its Subsidiaries, shall not require consent by or the agreement of any Loan
Party, (ii) any amendment, waiver, modification, elimination, or consent of or
with respect to any provision of this Agreement or any other Loan Document may
be entered into without the consent of, or over the objection of, any Defaulting
Lender other than any of the matters governed by Section 14.1(a)(i) through
(iii), (iii) any amendments necessary to implement any increase in the Maximum
Revolver Amount in accordance with Section 2.14, shall be effective if in a
writing signed only by Agent and Borrower and (iv) nothing in this Section 14.1
shall be construed to prohibit the amendment of any schedule hereto or to any
other Loan Document which is expressly permitted to be amended pursuant to
written notice provided to Agent by Borrower or the applicable Loan Party.

14.2 Replacement of Certain Lenders.

(a) If (i) any action to be taken by the Lender Group or Agent hereunder
requires the consent, authorization, or agreement of all Lenders or all Lenders
affected thereby and if such action has received the consent, authorization, or
agreement of the Required Lenders but not of all Lenders or all Lenders affected
thereby, (ii) any Lender makes a claim for compensation under Section 16 and a
replacement will result in a reduction in such compensation thereafter (a “Tax
Lender”), or (iii) any Lender is a Defaulting Lender, then Borrower or Agent,
upon at least 5 Business Days prior irrevocable notice, may permanently replace
any Lender that failed to give its consent, authorization, or agreement (a
“Holdout

 

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Lender”), any Tax Lender or any Defaulting Lender with one or more Replacement
Lenders, and the Holdout Lender, Tax Lender or Defaulting Lender, as applicable,
shall have no right to refuse to be replaced hereunder. Such notice to replace
the Holdout Lender, Tax Lender or Defaulting Lender, as applicable, shall
specify an effective date for such replacement, which date shall not be later
than 15 Business Days after the date such notice is given and such Lender will
retain its existing rights to payments pursuant to Sections 2 and 16.

(b) Prior to the effective date of such replacement, the Holdout Lender, Tax
Lender or Defaulting Lender, as applicable, and each Replacement Lender shall
execute and deliver an Assignment and Acceptance, subject only to the Holdout
Lender, Tax Lender or Defaulting Lender, as applicable, being repaid in full its
share of the outstanding Obligations (without any premium or penalty of any kind
whatsoever, but including (i) all interest, fees and other amounts that may be
due and payable in respect thereof, and (ii) an assumption of its Pro Rata Share
of participations in the Letters of Credit). If the Holdout Lender, Tax Lender
or Defaulting Lender, as applicable, shall refuse or fail to execute and deliver
any such Assignment and Acceptance prior to the effective date of such
replacement, Agent may, but shall not be required to, execute and deliver such
Assignment and Acceptance in the name or and on behalf of the Holdout Lender,
Tax Lender or Defaulting Lender, as applicable, and irrespective of whether
Agent executes and delivers such Assignment and Acceptance, the Holdout Lender,
Tax Lender or Defaulting Lender, as applicable, shall be deemed to have executed
and delivered such Assignment and Acceptance. The replacement of any Holdout
Lender, Tax Lender or Defaulting Lender, as applicable, shall otherwise be made
in accordance with the terms of Section 13.1. Until such time as one or more
Replacement Lenders shall have acquired all of the Obligations, the Revolver
Commitments, and the other rights and obligations of the Holdout Lender, Tax
Lender or Defaulting Lender, as applicable, hereunder and under the other Loan
Documents, the Holdout Lender, Tax Lender or Defaulting Lender, as applicable,
shall remain obligated to make the Holdout Lender’s, Tax Lender’s or Defaulting
Lender’s, as applicable, Pro Rata Share of Advances and to purchase a
participation in each Letter of Credit, in an amount equal to its Pro Rata Share
of such Letters of Credit.

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

 

15.

AGENT; THE LENDER GROUP.

15.1 Appointment and Authorization of Agent. Each Lender hereby designates and
appoints WFCF as its agent under this Agreement and the other Loan Documents and
each Lender hereby irrevocably authorizes (and by entering into a Bank Product
Agreement, each Bank Product Provider shall be deemed to designate, appoint, and
authorize) Agent to execute and deliver each of the other Loan Documents on its
behalf and to take such other action on its

 

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behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to
Agent by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Agent agrees to act as agent
for and on behalf of Lenders (and the Bank Product Providers) on the conditions
contained in this Section 15. Any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document notwithstanding, Agent shall not
have any duties or responsibilities, except those expressly set forth herein or
in the other Loan Documents, nor shall Agent have or be deemed to have any
fiduciary relationship with any Lender (or Bank Product Provider), and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against Agent. Without limiting the generality of the foregoing,
the use of the term “agent” in this Agreement or the other Loan Documents with
reference to Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only a representative relationship between independent
contracting parties. Each Lender hereby further authorizes (and by entering into
a Bank Product Agreement, each Bank Product Provider shall be deemed to
authorize) Agent to act as the secured party under each of the Loan Documents
that create a Lien on any item of Collateral. Except as expressly otherwise
provided in this Agreement, Agent shall have and may use its sole discretion
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions that Agent expressly is
entitled to take or assert under or pursuant to this Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, or of any
other provision of the Loan Documents that provides rights or powers to Agent,
Lenders agree that Agent shall have the right to exercise the following powers
as long as this Agreement remains in effect: (a) maintain, in accordance with
its customary business practices, ledgers and records reflecting the status of
the Obligations, the Collateral, the Collections of the Loan Parties, and
related matters, (b) execute or file any and all financing or similar statements
or notices, amendments, renewals, supplements, documents, instruments, proofs of
claim, notices and other written agreements with respect to the Loan Documents,
(c) make Advances, for itself or on behalf of Lenders, as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections of the
Loan Parties as provided in the Loan Documents, (e) open and maintain such bank
accounts and cash management arrangements as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the Collections of the Loan Parties,
(f) perform, exercise, and enforce any and all other rights and remedies of the
Lender Group with respect to Parent or its Subsidiaries, the Obligations, the
Collateral, the Collections of the Loan Parties, or otherwise related to any of
same as provided in the Loan Documents, and (g) incur and pay such Lender Group
Expenses as Agent may deem necessary or appropriate for the performance and
fulfillment of its functions and powers pursuant to the Loan Documents.

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

 

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

15.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile or other electronic method
of transmission, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent, or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to Borrower or counsel to any Lender),
independent accountants and other experts selected by Agent. Agent shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Loan Document unless Agent shall first receive such advice or
concurrence of Lenders as it deems appropriate and until such instructions are
received, Agent shall act, or refrain from acting, as it deems advisable. If
Agent so requests, it shall first be indemnified to its reasonable satisfaction
by Lenders (and, if it so elects, the Bank Product Providers) against any and
all liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Required Lenders and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all of Lenders (and Bank Product Providers). Notwithstanding any
other provision of a Loan Document to the contrary, Agent need not, and may omit
to, do anything if it would or might in its reasonable opinion constitute a
breach of any law or regulation or a breach of a fiduciary obligation or duty of
confidentiality.

15.5 Notice of Default or Event of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrower referring to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a “notice of default.” Agent promptly will notify Lenders of its
receipt of any such notice or of any Event of Default of which Agent has actual
knowledge. If any Lender obtains actual knowledge of any Event of Default, such
Lender promptly shall notify the other Lenders and Agent of such Event of
Default. Each Lender shall be solely responsible for giving any notices to its
Participants, if any. Subject to Section 15.4, Agent shall take such action with
respect to

 

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such Default or Event of Default as may be requested by the Required Lenders in
accordance with Section 9; provided, however, that unless and until Agent has
received any such request, Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable.

15.6 Credit Decision. Each Lender (and Bank Product Provider) acknowledges that
none of the Agent-Related Persons has made any representation or warranty to it,
and that no act by Agent hereinafter taken, including any review of the affairs
of Parent and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender (or Bank
Product Provider). Each Lender represents (and by entering into a Bank Product
Agreement, each Bank Product Provider shall be deemed to represent) to Agent
that it has, independently and without reliance upon any Agent-Related Person
and based on such due diligence, documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
prospects, operations, property, financial and other condition and
creditworthiness of Borrower or any other Person party to a Loan Document, and
all applicable bank regulatory laws relating to the Transactions or any
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Borrower. Each Lender also represents (and by
entering into a Bank Product Agreement, each Bank Product Provider shall be
deemed to represent) that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of Borrower or any other Person party
to a Loan Document. Except for notices, reports, and other documents expressly
herein required to be furnished to Lenders by Agent, Agent shall not have any
duty or responsibility to provide any Lender (or Bank Product Provider) with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of Borrower or any
other Person party to a Loan Document that may come into the possession of any
of the Agent-Related Persons. Each Lender acknowledges (and by entering into a
Bank Product Agreement, each Bank Product Provider shall be deemed to
acknowledge) that Agent does not have any duty or responsibility, either
initially or on a continuing basis (except to the extent, if any, that is
expressly specified herein) to provide such Lender (or Bank Product Provider)
with any credit or other information with respect to Borrower, its Affiliates or
any of their respective business, legal, financial or other affairs, and
irrespective of whether such information came into Agent’s or its Affiliates’ or
representatives’ possession before or after the date on which such Lender became
a party to this Agreement (or such Bank Product Provider entered into a Bank
Product Agreement).

15.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender Group
Expenses to the extent Agent reasonably deems necessary or appropriate for the
performance and fulfillment of its functions, powers, and obligations pursuant
to the Loan Documents, including court costs, attorneys fees and expenses, fees
and expenses of financial accountants, advisors, consultants, and appraisers,
costs of collection by outside collection agencies, auctioneer fees and
expenses, and costs of security guards or insurance premiums paid to maintain
the Collateral, whether or not Borrower is obligated to reimburse Agent or
Lenders for such expenses pursuant to this Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient

 

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

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

15.9 Successor Agent. Agent may resign as Agent upon 30 days prior written
notice to the Lenders (unless such notice is waived by the Required Lenders) and
Borrower (unless such notice is waived by Borrower) and without any notice to
the Bank Product Providers. If Agent resigns under this Agreement, the Required
Lenders shall be entitled, with (so long as no Event of Default has occurred and
is continuing) the consent of Borrower (such consent not to be unreasonably
withheld, delayed, or conditioned), appoint a successor Agent for the Lenders
(and the Bank Product Providers). If, at the time that Agent’s resignation is
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the Issuing Lender or the Swing Lender, such resignation shall also operate to
effectuate its resignation as the Issuing Lender or the Swing Lender, as
applicable, and it shall automatically be relieved of any further obligation to
issue Letters of Credit, to cause the Underlying Issuer to issue Letters of
Credit, or to make Swing Loans. If no successor Agent is appointed prior to the
effective date of the resignation of Agent, Agent may appoint, after consulting
with the Lenders and Borrower, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law or if any Insolvency Proceeding is commenced by or against Agent,
the Required Lenders may agree in writing to remove and replace Agent with a
successor Agent from among the Lenders with (so long as no Event of Default has
occurred and is continuing) the consent of Borrower (such consent not to be
unreasonably withheld, delayed, or conditioned). In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term “Agent” shall mean such successor Agent and the retiring Agent’s
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent’s resignation hereunder as Agent, the provisions of this Section 15 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 30 days following a retiring Agent’s
notice of resignation, the retiring Agent’s resignation shall nevertheless
thereupon become effective and the Required Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Required Lenders
appoint a successor Agent as provided for above.

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

15.11 Collateral Matters.

(a) Lenders hereby irrevocably authorize (and by entering into a Bank Product
Agreement, each Bank Product Provider shall be deemed to authorize) Agent to
release any Lien on any Collateral (i) upon the termination of the Revolver
Commitments and payment in full of all of the Obligations, (ii) constituting
property being sold, transferred or otherwise disposed of if a release is
required or desirable in connection therewith and if Borrower certifies to Agent
that the sale or disposition is permitted under Section 6.4 (and Agent may rely
conclusively on any

 

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such certificate, without further inquiry), (iii) constituting property in which
Parent or its Subsidiaries owned no interest at the time Agent’s Lien was
granted nor at the time of such release, (iv) constituting property leased to
Parent or its Subsidiaries under a lease that has expired, is terminated in a
transaction permitted under this Agreement or (v) constituting Secured Notes
Priority Collateral in connection with the release of Liens on such Collateral
as provided for in the Intercreditor Agreement. The Loan Parties and Lenders
hereby irrevocably authorize (and by entering into a Bank Product Agreement,
each Bank Product Provider shall be deemed to authorize) Agent, based upon the
instruction of the Required Lenders, to (a) consent to, credit bid or purchase
(either directly or through one or more acquisition vehicles) all or any portion
of the Collateral at any sale thereof conducted under the provisions of the
Bankruptcy Code, including under Section 363 of the Bankruptcy Code, (b) credit
bid or purchase (either directly or through one or more acquisition vehicles)
all or any portion of the Collateral at any sale or other disposition thereof
conducted under the provisions of the Code, including pursuant to Sections 9-610
or 9-620 of the Code, or (c) credit bid or purchase (either directly or through
one or more acquisition vehicles) all or any portion of the Collateral at any
other sale or foreclosure conducted by Agent (whether by judicial action or
otherwise) in accordance with applicable law. In connection with any such credit
bid or purchase, the Obligations owed to Lenders and the Bank Product Providers
shall be entitled to be, and shall be, credit bid on a ratable basis (with
Obligations with respect to contingent or unliquidated claims being estimated
for such purpose if the fixing or liquidation thereof would not unduly delay the
ability of Agent to credit bid or purchase at such sale or other disposition of
the Collateral and, if such claims cannot be estimated without unduly delaying
the ability of Agent to credit bid, then such claims shall be disregarded, not
credit bid, and not entitled to any interest in the asset or assets purchased by
means of such credit bid) and Lenders and the Bank Product Providers whose
Obligations are credit bid shall be entitled to receive interests (ratably based
upon the proportion of their Obligations credit bid in relation to the aggregate
amount of Obligations so credit bid) in the asset or assets so purchased (or in
the Stock of the acquisition vehicle or vehicles that are used to consummate
such purchase). Except as provided above, Agent will not execute and deliver a
release of any Lien on any Collateral without the prior written authorization of
(y) if the release is of all or substantially all of the Collateral, all of the
Lenders other than any Defaulting Lenders (without requiring the authorization
of the Bank Product Providers), or (z) otherwise, the Required Lenders other
than Defaulting Lenders (without requiring the authorization of the Bank Product
Providers). Upon request by Agent or Borrower at any time, the Lenders will (and
if so requested, the Bank Product Providers will) confirm in writing Agent’s
authority to release any such Liens on particular types or items of Collateral
pursuant to this Section 15.11; provided, however, that (1) Agent shall not be
required to execute any document necessary to evidence such release on terms
that, in Agent’s opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of Borrower in respect of)
all interests retained by Borrower, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral. Lenders further
hereby irrevocably authorize (and by entering into a Bank Product Agreement,
each Bank Product Provider shall be deemed to authorize) Agent, at its option
and in its sole discretion, to release or subordinate any Lien granted to or
held by Agent under any Loan Document to the holder of any Permitted Lien on
such property if such Permitted Lien secures Permitted Purchase

 

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Money Indebtedness (and any Refinancing Indebtedness in respect thereof) or the
Secured Notes (and any Refinancing Indebtedness in respect thereof) (but only
with respect to Secured Notes Priority Collateral) or as otherwise permitted
under the Loan Documents.

(b) Agent shall have no obligation whatsoever to any of the Lenders (or the Bank
Product Providers) to assure that the Collateral exists or is owned by Parent or
its Subsidiaries or is cared for, protected, or insured or has been encumbered,
or that Agent’s Liens have been properly or sufficiently or lawfully created,
perfected, protected, or enforced or are entitled to any particular priority, or
that any particular items of Collateral meet the eligibility criteria applicable
in respect thereof or whether to impose, maintain, reduce, or eliminate any
particular reserve hereunder or whether the amount of any such reserve is
appropriate or not, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent pursuant to any of
the Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission, or event related thereto, subject to the terms
and conditions contained herein, Agent may act in any manner it may deem
appropriate, in its sole discretion given Agent’s own interest in the Collateral
in its capacity as one of the Lenders and that Agent shall have no other duty or
liability whatsoever to any Lender (or Bank Product Provider) as to any of the
foregoing, except as otherwise provided herein.

15.12 Restrictions on Actions by Lenders; Sharing of Payments.

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

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

 

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

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

15.15 Concerning the Collateral and Related Loan Documents. Each member of the
Lender Group authorizes and directs Agent to enter into this Agreement and the
other Loan Documents. Each member of the Lender Group agrees (and by entering
into a Bank Product Agreement, each Bank Product Provider shall be deemed to
agree) that any action taken by Agent in accordance with the terms of this
Agreement or the other Loan Documents relating to the Collateral and the
exercise by Agent of its powers set forth therein or herein, together with such
other powers that are reasonably incidental thereto, shall be binding upon all
of Lenders (and such Bank Product Provider). Agent is authorized by Lenders,
without necessity of any notice to or further consent from any Lender, from time
to time, to take any action with respect to any Collateral or Loan Documents
which may be necessary to perfect and maintain perfected the security interest
in and Liens upon Collateral pursuant to the Loan Documents.

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

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

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

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

 

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(d) agrees to keep all Reports and other non-public information regarding Parent
and its Subsidiaries and their operations, assets, and existing and contemplated
business plans in a confidential manner in accordance with Section 17.9, and

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

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

15.17 Several Obligations; No Liability. Notwithstanding that certain of the
Loan Documents now or hereafter may have been or will be executed only by or in
favor of Agent in its capacity as such, and not by or in favor of the Lenders,
any and all obligations on the part of Agent (if any) to make any credit
available hereunder shall constitute the several (and not joint) obligations of
the respective Lenders on a ratable basis, according to their respective
Revolver Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Revolver Commitments. Nothing contained herein shall confer upon any Lender any
interest in, or subject any Lender to any liability for, or in respect of, the
business, assets, profits, losses, or liabilities of any other Lender. Each
Lender shall be solely responsible for notifying its Participants of any matters
relating to the Loan Documents to the extent any such notice may be required,
and no Lender shall have any obligation, duty, or liability to any Participant
of any other Lender. Except as provided in Section 15.7, no member of the Lender
Group shall have any liability for the acts of any other member of the Lender
Group. No Lender shall be responsible to Borrower or any other Person for any
failure by any other Lender (or Bank Product Provider) to fulfill its
obligations to make

 

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credit available hereunder, nor to advance for such Lender (or Bank Product
Provider) or on its behalf, nor to take any other action on behalf of such
Lender (or Bank Product Provider) hereunder or in connection with the financing
contemplated herein.

15.18 Intercreditor Agreement. Each Lender (a) consents to the subordination of
Liens provided for in the Intercreditor Agreement, (b) agrees that it will be
bound by, and will take no actions contrary to, the provisions of the
Intercreditor Agreement, (c) authorizes and instructs Agent to enter into the
Intercreditor Agreement as Agent on behalf of such holder of Obligations,
(d) acknowledges (or is deemed to acknowledge) that a copy of the Intercreditor
Agreement was delivered, or made available, to such Lender and that such Lender
reviewed the Intercreditor Agreement and (e) authorizes and instructs Agent to
enter into amendments, restatements, amendments and restatements of, or to
supplement or other wise modify the Intercreditor Agreement or enter into one or
more other intercreditor agreements having terms reasonably satisfactory to
Agent, from time to time, in connection with the incurrence or Refinancing
Indebtedness in respect of secured Permitted Indebtedness.

 

16.

TAXES.

(a) All payments made by or on behalf of a Loan Party hereunder or under any
note or other Loan Document will be made without setoff, counterclaim, or other
defense. In addition, all such payments will be made free and clear of, and
without deduction or withholding for, any present or future Taxes, and in the
event any deduction or withholding of Taxes is required, each Loan Party shall
comply with the next sentence of this Section 16(a). If any Taxes are so levied
or imposed, each Loan Party agrees to timely pay the full amount of such Taxes
and such additional amounts as may be necessary (whether or not such Taxes or
amounts were correctly or legally imposed or asserted by the relevant
Governmental Authority) so that every payment of all amounts due under this
Agreement or any Loan Document, including any amount paid pursuant to this
Section 16(a) after withholding or deduction for or on account of any Taxes,
will not be less than the amount such member of the Lender Group or Underlying
Issuer would have received had no such withholding or deduction been made. The
Loan Parties will furnish to Agent as promptly as possible after the date the
payment of any Tax is due pursuant to applicable law, certified copies of tax
receipts issued by the Governmental Authority (or other evidence reasonably
acceptable to Agent) evidencing such payment by the Loan Parties. The Loan
Parties shall jointly and severally indemnify the Lender Group and the
Underlying Issuer, within 10 days after demand therefor, for the full amount of
any Taxes (including such amounts described in Section 16(b) and any Taxes
imposed or asserted on, or attributable to, amounts payable under this Section)
payable or paid by such member of the Lender Group or the Underlying Issuer or
required to be withheld or deducted from a payment to such member of the Lender
Group or the Underlying Issuer and any reasonable expenses arising therefrom or
with respect thereto, whether or not such Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to the Borrower by the Lender
(with a copy to Agent), or by Agent on its own behalf or on behalf of a Lender,
shall be conclusive absent manifest error.

(b) The Loan Parties agree to timely pay any present or future stamp, value
added, filing, recording, intangible, court or documentary or other similar
taxes or any other excise or property taxes, charges, or similar levies that
arise from any payment made hereunder

 

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or from the execution, delivery, performance, registration, recordation, or
filing of, from the receipt or perfection of a security interest under, or
otherwise with respect to this Agreement or any other Loan Document.

(c) If Borrower is a U.S. Person and if Agent, the Underlying Issuer, a Lender
or Participant is entitled to claim an exemption or reduction from United States
withholding tax, such Lender or such Participant agrees with and in favor of
Agent, to deliver to each of Borrower and Agent (or, in the case of a
Participant, to the Lender granting the participation only, and, in the case of
Agent, to Borrower only) one of the following before receiving its first payment
under this Agreement (all such forms are required to be provided by the
beneficial owner of such payments, other than those forms required by
Section 16(c)(iv)):

(i) if Agent, such Lender or such Participant is entitled to claim an exemption
from United States withholding tax pursuant to the portfolio interest exception,
(A) a statement of the Lender or Participant, signed under penalty of perjury,
that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of the IRC,
(II) a 10% shareholder of Borrower (within the meaning of Section 871(h)(3)(B)
of the IRC), or (III) a controlled foreign corporation related to Borrower
within the meaning of Section 864(d)(4) of the IRC, and (B) a properly completed
and executed Internal Revenue Service Form W-8BEN or Form W-8IMY (with proper
attachments);

(ii) if such Agent, such Lender or such Participant is entitled to claim an
exemption from, or a reduction of, withholding tax under a United States tax
treaty, a properly completed and executed copy of Internal Revenue Service Form
W-8BEN;

(iii) if Agent, such Lender or such Participant is entitled to claim that any
payment made under this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade or business of
such Lender, a properly completed and executed copy of Internal Revenue Service
Form W-8ECI;

(iv) if Agent, such Lender or such Participant is entitled to claim that any
payment made under this Agreement is exempt from United States withholding tax
because such Lender or such Participant serves as an intermediary, a properly
completed and executed copy of Internal Revenue Service Form W-8IMY (with proper
attachments); or

(v) a properly completed and executed copy of any other form or forms, including
Internal Revenue Service Form W-9, as may be required under the IRC or other
laws of the United States as a condition to exemption from, or reduction of,
United States withholding or backup withholding tax.

Agent, and each Lender or Participant shall provide new forms (or successor
forms) upon the expiration or obsolescence of any previously delivered forms and
to promptly notify Agent (or, in the case of a Participant, to the Lender
granting the participation only and in the case of Agent, Borrower only) of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.

 

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

(d) If a Lender or Participant claims an exemption from withholding tax in a
jurisdiction other than the United States, such Lender or such Participant
agrees with and in favor of Agent, to deliver to each of Borrower and Agent (or,
in the case of a Participant, to the Lender granting the participation only) any
such form or forms, as may be required under the laws of such jurisdiction as a
condition to exemption from, or reduction of, foreign withholding or backup
withholding tax before receiving its first payment under this Agreement, but
only if such Lender or such Participant is legally able to deliver such forms,
provided, however, that nothing in this Section 16(d) shall require a Lender or
Participant to disclose any information that it deems to be confidential
(including without limitation, its tax returns). Each Lender and each
Participant shall provide new forms (or successor forms) upon the expiration or
obsolescence of any previously delivered forms and to promptly notify Agent (or,
in the case of a Participant, to the Lender granting the participation only) of
any change in circumstances which would modify or render invalid any claimed
exemption or reduction. Notwithstanding anything to the contrary in the
preceding two sentences, the completion, execution and submission of such
documentation shall not be required if in the Lender’s reasonable judgment such
completion, execution or submission would subject such Lender to any material
unreimbursed cost or expense or would materially prejudice the legal or
commercial position of such Lender.

(e) If a Lender or Participant claims exemption from, or reduction of,
withholding tax and such Lender or such Participant sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of
Borrower to such Lender or such Participant, such Lender or such Participant
agrees to notify Agent (or, in the case of a sale of a participation interest,
to the Lender granting the participation only) of the percentage amount in which
it is no longer the beneficial owner of Obligations of Borrower to such Lender
or such Participant. To the extent of such percentage amount, Agent will treat
such Lender’s or such Participant’s documentation provided pursuant to
Section 16(c) or 16(d) as no longer valid. With respect to such percentage
amount, such Participant or Assignee may provide new documentation, pursuant to
Section 16(c) or 16(d), if applicable. Borrower agrees that each Participant
shall be entitled to the benefits of this Section 16 with respect to its
participation in any portion of the Revolver Commitments and the Obligations so
long as such Participant complies with the obligations set forth in this
Section 16 with respect thereto.

(f) Without limiting the obligations of the Loan Parties under Section 16(a), if
a Lender or a Participant is entitled to a reduction in the applicable
withholding tax, Borrower

 

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and Agent (or, in the case of a Participant, to the Lender granting the
participation) may withhold from any interest payment to such Lender or such
Participant an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required by
Section 16(c) or 16(d) are not delivered to Agent (or, in the case of a
Participant, to the Lender granting the participation), then Agent (or, in the
case of a Participant, to the Lender granting the participation) may withhold
from any interest payment to such Lender or such Participant not providing such
forms or other documentation an amount equivalent to the applicable withholding
tax.

(g) Each Lender shall severally indemnify Agent, within 10 days after demand
therefor, for (i) any Taxes attributable to such Lender (but only to the extent
that any Loan Party has not already indemnified Agent for such Taxes and without
limiting the obligation of the Loan Party to do so), (ii) any taxes attributable
to such Lender’s failure to comply with the provisions of Section 13 relating to
the maintenance of a Participant Register and (iii) any taxes that are not
included in the definition of Taxes attributable to such Lender, in each case,
that are payable or paid by Agent in connection with any Loan Document, and any
reasonable expenses (including interest and penalties) arising therefrom or with
respect thereto, whether or not such taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to any Lender by Agent shall be
conclusive absent manifest error. Each member of the Lender Group and the
Underlying Issuer hereby authorizes Agent to set off and apply any and all
amounts at any time owing to the member of the Lender Group or the Underlying
Issuer under any Loan Document or otherwise payable by Agent to the Lender from
any other source against any amount due to Agent under this paragraph (g).

(h) If Agent or a Lender determines, in its sole discretion, that it has
received a refund of any Taxes as to which it has been indemnified by Borrower
or with respect to which Borrower has paid additional amounts pursuant to this
Section 16, so long as no Default or Event of Default has occurred and is
continuing, it shall pay over such refund to Borrower (but only to the extent of
payments made, or additional amounts paid, by Borrower under this Section 16
with respect to Taxes giving rise to such a refund), net of all out-of-pocket
expenses of Agent or such Lender and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such a refund);
provided, that Borrower, upon the request of Agent or such Lender, agrees to
repay the amount paid over to Borrower (plus any penalties, interest or other
charges, imposed by the relevant Governmental Authority, other than such
penalties, interest or other charges imposed as a result of the willful
misconduct or gross negligence of Agent hereunder) to Agent or such Lender in
the event Agent or such Lender is required to repay such refund to such
Governmental Authority. Notwithstanding anything to the contrary in this
paragraph (h), in no event will the indemnified party be required to pay any
amount to an indemnifying party pursuant to this paragraph (h) the payment of
which would place the indemnified party in a less favorable net after-tax
position than the indemnified party would have been in if the indemnification
payments or additional amounts giving rise to such refund had never been paid.
Notwithstanding anything in this Agreement to the contrary, this Section 16
shall not be construed to require Agent or any Lender to make available its tax
returns (or any other information which it deems confidential) to Borrower or
any other Person.

 

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17.

GENERAL PROVISIONS.

17.1 Effectiveness. This Agreement shall be binding and deemed effective when
executed by Parent, Borrower, Agent, and each Lender whose signature is provided
for on the signature pages hereof.

17.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.

17.3 Interpretation. Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed against the Lender Group or any Loan Party, whether
under any rule of construction or otherwise. On the contrary, this Agreement has
been reviewed by all parties and shall be construed and interpreted according to
the ordinary meaning of the words used so as to accomplish fairly the purposes
and intentions of all parties hereto.

17.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

17.5 Bank Product Providers. Each Bank Product Provider shall be deemed a third
party beneficiary hereof and of the provisions of the other Loan Documents for
purposes of any reference in a Loan Document to the parties for whom Agent is
acting. Agent hereby agrees to act as agent for such Bank Product Providers and,
by virtue of entering into a Bank Product Agreement, the applicable Bank Product
Provider shall be automatically deemed to have appointed Agent as its agent and
to have accepted the benefits of the Loan Documents; it being understood and
agreed that the rights and benefits of each Bank Product Provider under the Loan
Documents consist exclusively of such Bank Product Provider’s being a
beneficiary of the Liens and security interests (and, if applicable, guarantees)
granted to Agent and the right to share in payments and collections out of the
Collateral as more fully set forth herein. In addition, each Bank Product
Provider, by virtue of entering into a Bank Product Agreement, shall be
automatically deemed to have agreed that Agent shall have the right, but shall
have no obligation, to establish, maintain, relax, or release reserves in
respect of the Bank Product Obligations and that if reserves are established
there is no obligation on the part of Agent to determine or insure whether the
amount of any such reserve is appropriate or not. In connection with any such
distribution of payments or proceeds of Collateral, Agent shall be entitled to
assume no amounts are due or owing to any Bank Product Provider unless such Bank
Product Provider has provided a written certification (setting forth a
reasonably detailed calculation) to Agent as to the amounts that are due and
owing to it and such written certification is received by Agent a reasonable
period of time prior to the making of such distribution. Agent shall have no
obligation to calculate the amount due and payable with respect to any Bank
Products, but may rely upon the written certification of the amount due and
payable from the relevant Bank Product Provider. In the absence of an updated
certification, Agent shall be entitled to assume that the amount due and payable
to the relevant Bank Product Provider is the amount last certified to Agent by
such Bank Product Provider as being due and payable (less any distributions made
to such Bank Product Provider on account thereof). The Loan Parties may obtain
Bank Products from any Bank Product Provider, although they are not required to
do so. Parent and Borrower

 

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acknowledge and agree that no Bank Product Provider has committed to provide any
Bank Products and that the providing of Bank Products by any Bank Product
Provider is in the sole and absolute discretion of such Bank Product Provider.
Notwithstanding anything to the contrary in this Agreement or any other Loan
Document, no provider or holder of any Bank Product shall have any voting or
approval rights hereunder (or be deemed a Lender) or under any other Loan
Document solely by virtue of its status as the provider or holder of such
agreements or products or the Obligations owing thereunder, nor shall the
consent of any such provider or holder be required (other than in their
capacities as Lenders, to the extent applicable) for any matter hereunder or
under any of the other Loan Documents, including as to any matter relating to
the Collateral or the release of Collateral or Guarantors.

17.6 Debtor-Creditor Relationship. The relationship between Lenders and Agent,
on the one hand, and the Loan Parties, on the other hand, is solely that of
creditor and debtor. No member of the Lender Group has (or shall be deemed to
have) any fiduciary relationship or duty to any Loan Party arising out of or in
connection with the Loan Documents or the Transactions or any transactions
contemplated thereby, and there is no agency or joint venture relationship
between the members of the Lender Group, on the one hand, and the Loan Parties,
on the other hand, by virtue of any Loan Document or any transaction
contemplated therein.

17.7 Counterparts; Electronic Execution. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by facsimile or
other electronic method of transmission (including Adobe portable document
format (.pdf)) shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by facsimile or other electronic method of transmission also
shall deliver an original executed counterpart of this Agreement but the failure
to deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement. The foregoing shall apply
to each other Loan Document mutatis mutandis.

17.8 Revival and Reinstatement of Obligations. If the incurrence or payment of
the Obligations by Borrower or Guarantors or the transfer to the Lender Group of
any property should for any reason subsequently be asserted, or declared, to be
void or voidable under any state or federal law relating to creditors’ rights,
including provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (each, a “Voidable Transfer”), and if the Lender Group is required to
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the advice of counsel, then, as to any such Voidable Transfer, or the
amount thereof that the Lender Group is required or elects to repay or restore,
and as to all reasonable costs, expenses, and attorneys fees of the Lender Group
related thereto, the liability of Borrower or such Guarantor automatically shall
be revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.

 

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17.9 Confidentiality.

(a) Agent and Lenders each individually (and not jointly or jointly and
severally) agree that information regarding Parent and its Subsidiaries, their
operations, assets, and existing and contemplated business plans (“Confidential
Information”) shall be treated by Agent and Lenders in a confidential manner,
and shall not be disclosed by Agent and Lenders to Persons who are not parties
to this Agreement, except: (i) to attorneys for and other advisors, accountants,
auditors, and consultants to any member of the Lender Group and to employees,
directors and officers of any member of the Lender Group (the Persons in this
clause (i), “Lender Group Representatives”) on a “need to know” basis in
connection with this Agreement and the Transactions or any transactions
contemplated hereby and on a confidential basis, (ii) to Subsidiaries and
Affiliates of any member of the Lender Group (including the Bank Product
Providers), provided that any such Subsidiary or Affiliate shall have agreed to
receive such information hereunder subject to the terms of this Section 17.9,
(iii) as may be required by regulatory authorities purporting to have legal
authority to regulate the business and operations of such member of the Lender
Group or its Affiliates so long as such authorities are informed of the
confidential nature of such information, (iv) as may be required by statute,
decision, or judicial or administrative order, rule, or regulation; provided
that (x) prior to any disclosure under this clause (iv), the disclosing party
shall provide Borrower with prior notice thereof, to the extent that it is
practicable to do so and to the extent that the disclosing party is permitted to
provide such prior notice to Borrower pursuant to the terms of the applicable
statute, decision, or judicial or administrative order, rule, or regulation and
(y) any disclosure under this clause (iv) shall be limited to the portion of the
Confidential Information as may be required by such statute, decision, or
judicial or administrative order, rule, or regulation, (v) as may be agreed to
in advance in writing by Borrower, (vi) as requested or required by any
Governmental Authority pursuant to any subpoena or other legal process,
provided, that, (x) prior to any disclosure under this clause (vi) the
disclosing party agrees to provide Borrower with prior written notice thereof,
to the extent that it is practicable to do so and to the extent that the
disclosing party is permitted to provide such prior written notice to Borrower
pursuant to the terms of the subpoena or other legal process and (y) any
disclosure under this clause (vi) shall be limited to the portion of the
Confidential Information as may be required by such Governmental Authority
pursuant to such subpoena or other legal process, (vii) as to any such
information that is or becomes generally available to the public (other than as
a result of prohibited disclosure by Agent or Lenders or the Lender Group
Representatives), (viii) in connection with any assignment, participation or
pledge of any Lender’s interest under this Agreement, provided that prior to
receipt of Confidential Information any such assignee, participant, or pledgee
shall have agreed in writing to receive such Confidential Information hereunder
subject to the terms of this Section, (ix) in connection with any litigation or
other adversary proceeding involving parties hereto which such litigation or
adversary proceeding involves claims related to the rights or duties of such
parties under this Agreement or the other Loan Documents; provided, that, prior
to any disclosure to any Person (other than any Loan Party, Agent, any Lender,
any of their respective Affiliates, or their respective counsel) under this
clause (ix) with respect to litigation involving any Person (other than
Borrower, Agent, any Lender, any of their respective Affiliates, or their
respective counsel), the disclosing party agrees to provide Borrower with prior
written notice thereof, and (x) in connection with, and to the extent reasonably
necessary for, the exercise of any secured creditor remedy under this Agreement
or under any other Loan Document.

 

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(b) Anything in this Agreement to the contrary notwithstanding, Agent may
(i) provide customary information concerning the terms and conditions of this
Agreement and the other Loan Documents to loan syndication and pricing reporting
services, and (ii) use the name, logos, and other insignia of Borrower and the
Loan Parties and the Revolver Commitments provided hereunder in any “tombstone”
or comparable advertising, on its website or in other marketing materials of
Agent.

17.10 Lender Group Expenses. Borrower agrees to pay the Lender Group Expenses on
the earlier of (a) the first day of the month following the date on which such
Lender Group Expenses were first incurred or (b) the date on which written
demand therefor, together with reasonably detailed documentation thereof, is
made by Agent. Borrower agrees that its obligations contained in this
Section 17.10 shall survive payment or satisfaction in full of all other
Obligations.

17.11 Survival. All representations and warranties made by the Loan Parties in
the Loan Documents and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of the Loan Documents and the making of any
loans and issuance of any Letters of Credit, regardless of any investigation
made by any such other party or on its behalf and notwithstanding that Agent,
the Issuing Lender, or any Lender may have had notice or knowledge of any
Default or Event of Default or incorrect representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Revolver Commitments have not
expired or terminated.

17.12 Patriot Act. Each Lender that is subject to the requirements of the
Patriot Act hereby notifies Borrower that pursuant to the requirements of the
Patriot Act, it is required to obtain, verify and record information that
identifies Borrower, which information includes the name and address of Borrower
and other information that will allow such Lender to identify Borrower in
accordance with the Patriot Act. In addition, if Agent is required by law or
regulation or internal policies to do so, it shall have the right to
periodically conduct (a) Patriot Act searches, OFAC/PEP searches, and customary
individual background checks for the Loan Parties and (b) OFAC/PEP searches and
customary individual background checks for the Loan Parties’ senior management
and key principals, and Borrower agrees to cooperate in respect of the conduct
of such searches and further agrees that the reasonable out-of-pocket costs and
expenses for such searches shall constitute Lender Group Expenses hereunder.

17.13 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
Transactions or any transactions contemplated hereby and shall not be
contradicted or qualified by any other agreement, oral or written, before the
date hereof. The foregoing to the contrary notwithstanding, all Bank Product
Agreements, if any, are independent agreements governed by the written
provisions of such Bank Product Agreements, which will remain in full force and
effect, unaffected by any repayment, prepayments, acceleration, reduction,
increase, or change in the terms of any credit extended hereunder, except as
provided in such Bank Product Agreement.

 

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[Signature pages to follow.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date first above written.

 

HORIZON LINES, INC.,

as Parent

By:

 

 

Title:

HORIZON LINES, LLC,

as Borrower.

By:

 

 

Title:

 

Horizon Lines, Inc.

Credit Agreement

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

WELLS FARGO CAPITAL FINANCE, LLC,

as Agent and as a Lender

By:

 

 

Title:

 

Horizon Lines, Inc.

Credit Agreement

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

Schedule 1.1

Definitions

As used in the Agreement, the following terms shall have the following
definitions:

“ABL Priority Collateral” has the meaning specified therefor in the
Intercreditor Agreement.

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

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

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

“Acquired Indebtedness” means Indebtedness of a Person whose assets or Stock is
acquired by Parent or any of its Subsidiaries in a Permitted Acquisition;
provided, however, that such Indebtedness (a) is either Purchase Money
Indebtedness or a Capital Lease with respect to Equipment or mortgage financing
with respect to Real Property, (b) was in existence prior to the date of such
Permitted Acquisition, and (c) was not incurred in connection with, or in
contemplation of, such Permitted Acquisition.

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

“Additional Documents” has the meaning specified therefor in Section 5.12 of the
Agreement.

“Additional Notes” has the meaning specified therefor in the applicable Secured
Notes Documents as in effect on the Closing Date.

“Adjusted EBITDA” means, with respect to any fiscal period (in each case,
determined on a consolidated basis in accordance with GAAP and, in each case,
without duplication):

(a) Parent’s consolidated net earnings (or loss) for such period,

minus

(b) the sum of the following amounts of Parent for such period to the extent
included in determining consolidated net earnings (or loss) for such period:

(i) extraordinary, unusual, or non-recurring gains,

 

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(ii) interest income,

(iii) tax benefit or credit,

(iv) exchange, translation or performance gains relating to any hedging
transactions or foreign currency fluctuations,

(v) income arising by reason of the application of FAS 141R,

(vi) the gain from the reversal in the fiscal month ending May 22, 2011 of
$19,200,000 of the $30,000,000 charge recorded in the fiscal month ending
December 26, 2010 for the present value of the original $45,000,000 fine
resulting from the settlement of the Antitrust Investigation (which such
$19,200,000 gain resulted from the reduction of the fine from $45,000,000 to
$15,000,000) pursuant to the Antitrust Judgment,

(vii) earnings, to the extent such exists, contributed by the Non-Domestic
Service,

(viii) earnings, to the extent such exists, contributed by the TP1 Service, and

(ix) non-cash charges and non-cash expenses previously added back to Parent’s
consolidated net earnings (or loss) in determining Adjusted EBITDA pursuant to
clauses (c)(i), (c)(ii), (c)(viii), (c)(ix), (c)(xi), (c)(xii), (c)(xiv),
(c)(xv) and (c)(xvi), below to the extent such non-cash charges and non-cash
expenses have become cash charges and cash expenses during such period,

plus

(c) the sum of the following amounts of Parent for such period to the extent
included in determining consolidated net earnings (or loss) for such period:

(i) non-cash extraordinary, unusual, impairment, or non-recurring losses,

(ii) other non-cash charges or non-cash expenses, in each case incurred other
than in the ordinary course of business,

(iii) interest expense,

(iv) tax expense based on income, profits or capital, including federal,
foreign, state, franchise and similar taxes (including tonnage taxes) (and for
the avoidance of doubt, specifically excluding any sales taxes or any other
taxes held in trust for, or on behalf of, a Governmental Authority),

 

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(v) depreciation and amortization,

(vi) non-cash compensation expense (including deferred non-cash compensation
expense), or other non-cash expenses or charges, arising from the sale or
issuance of stock, the granting of stock options, and the granting of stock
appreciation rights, restricted stock and similar arrangements (including any
re-pricing, amendment, modification, substitution, or change of any such stock,
stock option, stock appreciation rights, or similar arrangements) minus the
amount of any such expenses or charges when paid in cash to the extent not
deducted in the computation of Parent’s consolidated net earnings (or loss),

(vii) expenses incurred as a result of the repurchase, redemption or retention
of Capital Stock earned under equity compensation programs solely in order to
make withholding tax payments in an aggregate amount not to exceed $1,500,000 in
any fiscal year,

(viii) non-cash restructuring charges unrelated to the Non-Domestic
Reorganization,

(ix) non-cash fees, expenses or charges incurred other than in the ordinary
course of business associated with changes in the method of operations pursuant
to cost reduction programs,

(x) Non-Domestic Reorganization Charges in an aggregate amount not to exceed
$35,000,000 in the fourth fiscal quarter of fiscal year 2011 and the first
fiscal quarter of 2012,

(xi) non-cash exchange, translation or performance losses relating to any
hedging transactions or foreign currency fluctuations,

(xii) non-cash losses on sales of fixed or other tangible assets or write-downs
of fixed, other tangible or intangible assets,

(xiii) Recapitalization Costs in an aggregate amount not to exceed $2,500,000 in
fiscal year 2011,

(xiv) any amortization of debt discount, premium and deferred financing costs or
write-off of financing costs, including but not limited to non-cash expense or
loss associated with the early retirement or extinguishment of debt,

(xv) non-cash loss on modification of debt,

(xvi) non-cash charges resulting from the application of purchase accounting,

(xvii) charges recorded for the fine resulting from the settlement of the
Antitrust Investigation in aggregate amount not exceed $15,000,000 over the
period beginning with the fiscal month ending December 26, 2010 and ending
March 24, 2016,

 

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(xviii) charges for such period relating to the lawsuits of claimants that opted
out of the class action lawsuits subject to the Puerto Rico Settlement in an
aggregate amount not to exceed $25,000,000 during the term of this Agreement,

(xix) charges for such period relating to the Indirect Purchasers Settlement in
an aggregate amount not to exceed $1,800,000 during the term of this Agreement,

(xx) legal and professional fees and expenses incurred during such period
relating to Antitrust Litigation Matters in an aggregate amount not to exceed
(A) $7,500,000 during any twelve-month period and (B) $7,500,000 incurred after
the Closing Date during the term of this Agreement,

(xxi) charges for the settlement of, and legal and professional fees and
expenses incurred during such period relating to, the investigation into
environmental compliance recordkeeping in an aggregate amount not to exceed
$3,500,000 during the term of this Agreement,

(xxii) Non-Domestic Service losses for the period prior to the commencement of
the Non-Domestic Reorganization in the amounts and for the periods set forth in
the Non-Domestic Service Losses Schedule in an aggregate amount not to exceed
$35,800,000 in fiscal year 2011;

(xxiii) Non-Domestic Service losses for the period after the commencement of the
Non-Domestic Reorganization in an aggregate amount not to exceed (A) $10,000,000
in any fiscal quarter and (B) $25,000,000 during the term of this Agreement, and

(xxiv) TP1 Service losses in an aggregate amount not to exceed $1,500,000 for
fiscal year 2011.

“Advances” means Revolver Loans (including Revolver Loans that result in an
Overadvance), Swing Loans and Protective Advances, or any one of them, as the
context may require.

“Affected Lender” has the meaning specified therefor in Section 2.13(b) of the
Agreement.

“Affiliate” means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, “control” means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, for purposes of the definition of Eligible Accounts and
Section 6.12 of the Agreement: (a) any Person which owns directly or indirectly
10% or more of the Stock having ordinary voting power for the election of
directors or other members of the governing body of a Person or 10% or more of
the partnership or other ownership interests of a Person (other than as a
limited partner of such Person) shall be deemed an Affiliate of such Person,
(b) each director (or comparable manager) of a Person shall be deemed to be an
Affiliate of such Person, and (c) each partnership in which a Person is a
general partner shall be deemed an Affiliate of such Person.

 

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“Agent” has the meaning specified therefor in the preamble to the Agreement.

“Agent-Related Persons” means Agent, together with its Affiliates (including the
Issuing Lender and the Swing Lender), officers, directors, employees, attorneys,
and agents.

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

“Agent’s Liens” means the Liens granted by each of the Loan Parties to Agent
under the Loan Documents.

“Agreement” means the Credit Agreement to which this Schedule 1.1 is attached.

“Antitrust Investigation” means the investigation by the Antitrust Division of
the United States Department of Justice regarding possible antitrust violations
by the Loan Parties or their Subsidiaries with respect to the ocean shipping
business.

“Antitrust Judgment” has the meaning specified therefor in the definition of
Antitrust Judgment Lien.

“Antitrust Judgment Lien” means the Lien securing the obligations of Parent and
its Subsidiaries with respect to that certain Second Amended Judgment (the
“Antitrust Judgment”) entered by the United States District Court for the
Judicial District of Puerto Rico on April 28, 2011 in the case of United States
of America v. Horizon Lines, LLC (Case Number 03:11-CR-0071-001 (DRD)) (a notice
of which was recorded in favor of the United States of America in the Register
of Deeds for Mecklenburg County, North Carolina on June 07, 2011), pursuant to
which judgment Borrower is required to pay over a period of 5 years, the
following amounts by the following dates: (i) $1,000,000 on or before May 28,
2011, (ii) $1,000,000 on or before March 22, 2012, (iii) $2,000,000 on or before
March 22, 2013, (iv) $3,000,000 on or before March 22, 2014, (v) $4,000,000 on
or before March 22, 2015, and (vi) $4,000,000 on or before March 22, 2016.

“Antitrust Litigation Matters” means any civil action, criminal action or
investigation, including related shareholder litigation, involving any
allegation of a violation of federal, state or other antitrust law by any of the
Loan Parties or their Subsidiaries with respect to the ocean shipping business.

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

“Applicable Leverage Premium” means, as of any date of determination, the
applicable premium set forth in the following table that corresponds to the most
recent calculation of the Leverage Ratio delivered to Agent pursuant to
Section 5.1 of the Agreement

 

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(the “Leverage Ratio Calculation”); provided that for the period from the
Closing Date through the date Agent receives the Leverage Ratio Calculation in
respect of the Reference Period ending December 25, 2011, the Applicable
Leverage Premium shall be set at “Level IV”:

 

Level   

Leverage Ratio

   Leverage Premium   I    < 4.00 to 1.00      0.00 %  II   

³ 4.00 to 1.00 but

< 5.00 to 1.00

     0.25 %  III   

³ 5.00 to 1.00 but

< 6.00 to 1.00

     0.50 %  IV    ³ 6.00 to 1.00      0.75 % 

Except as set forth in the foregoing proviso, the Applicable Leverage Premium
shall be based upon the most recent Leverage Ratio Calculation, which will be
calculated as of the end of each fiscal month for the most recently ended 12
month period. Except as set forth in the proviso to the first sentence of this
definition, the Applicable Leverage Premium shall be re-determined monthly on
the first day of the calendar month following the date of delivery to Agent of
the certified calculation thereof pursuant to Section 5.1 of the Agreement;
provided, however, that if Parent fails to provide such certification when such
certification is due, the Applicable Leverage Premium shall be set at “Level IV”
as of the first day of the calendar month following the date on which the
certification was required to be delivered until the date on which such
certification or a subsequent month’s certification is delivered (on which date
(but not retroactively), without constituting a waiver of any Default or Event
of Default occasioned by the failure to timely deliver such certification, the
Applicable Leverage Premium shall be set at the Level based upon the
calculations disclosed by such certification). In the event that the information
regarding the Leverage Ratio contained in any certificate delivered pursuant to
Section 5.1 of the Agreement is shown to be inaccurate, and such inaccuracy, if
corrected, would have led to the application of a higher Applicable Leverage
Premium for any period (a “Margin Period”) than the Applicable Leverage Premium
actually applied for such Margin Period, then (i) Parent shall promptly deliver
to Agent a correct certificate for such Margin Period, (ii) the Applicable
Leverage Premium shall be determined as if the correct Applicable Leverage
Premium (as set forth in the table above) were applicable for such Margin
Period, and (iii) Parent shall promptly deliver to Agent full payment in respect
of the accrued additional interest as a result of such increased Applicable
Leverage Premium for such Margin Period, which payment shall be promptly applied
by Agent to the affected Obligations.

 

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“Applicable Margin” means, as of any date of determination, the sum of (a) the
applicable margin set forth in the following table that corresponds to the most
recent calculation of Average Three-Month Excess Availability delivered to Agent
pursuant to Section 5.1 of the Agreement (the “Excess Availability Calculation”)
plus (b) the Applicable Leverage Premium; provided that for the period from the
Closing Date through the date Agent receives the Excess Availability Calculation
in respect of the Reference Period ending December 25, 2011, the Applicable
Margin shall be calculated based on “Level II”:

 

Level   

Average Three-

Month Excess

Availability

   LIBOR Rate Loans     Base Rate Loans   I    > $60,000,000      2.25 %     
1.25 %  II   

£ $60,000,000 but

> $45,000,000

     2.50 %      1.50 %  III   

£ $45,000,000 but

> $30,000,000

     2.75 %      1.75 %  IV    £ $30,000,000      3.00 %      2.00 % 

Except as set forth in the foregoing proviso, the Applicable Margin shall be
based upon the most recent Excess Availability Calculation, which will be
calculated as of the end of each fiscal month. Except as set forth in the
proviso to the first sentence of this definition, the Applicable Margin shall be
re-determined monthly on the first day of the calendar month following the date
of delivery to Agent of the certified calculation of the Average Three-Month
Excess Availability pursuant to Section 5.1 of the Agreement; provided, however,
that if Parent fails to provide such certification when such certification is
due, the Applicable Margin shall be set at “Level IV” as of the first day of the
calendar month following the date on which the certification was required to be
delivered until the date on which such certification or a subsequent month’s
certification is delivered (on which date (but not retroactively), without
constituting a waiver of any Default or Event of Default occasioned by the
failure to timely deliver such certification, the Applicable Margin shall be set
at the Level based upon the calculations disclosed by such certification). In
the event that the information regarding the Average Three-Month Excess
Availability contained in any certificate delivered pursuant to Section 5.1 of
the Agreement is shown to be inaccurate, and such inaccuracy, if corrected,
would have led to the application of a higher Applicable Margin for any period
(a “Margin Period”) than the Applicable Margin actually applied for such Margin
Period, then (i) Parent shall promptly deliver to Agent a correct certificate
for such Margin Period, (ii) the Applicable Margin shall be determined as if the
correct Applicable Margin (as set forth in the table above) were applicable for
such Margin Period, and (iii) Parent shall promptly deliver to Agent full
payment in respect of the accrued additional interest as a result of such
increased Applicable Margin for such Margin Period, which payment shall be
promptly applied by Agent to the affected Obligations.

“Assignee” has the meaning specified therefor in Section 13.1(a) of the
Agreement.

 

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

“Authorized Person” means any one of the individuals identified on Schedule A-2,
as such schedule is updated from time to time by written notice from Parent to
Agent.

“Average Three-Month Excess Availability” means for any consecutive three month
period, an amount equal to the sum of the actual amount of Excess Availability
on each day during such three-month period, as calculated by Borrower subject to
confirmation by Agent, divided by the number of days in such three-month period.

“Bank Product” means any one or more of the following financial products or
accommodations extended to a Loan Party by a Bank Product Provider: (a) credit
cards, (b) credit card processing services, (c) debit cards, (d) stored value
cards, (e) purchase cards (including so-called “procurement cards” or
“P-cards”), (f) Cash Management Services, or (g) transactions under Hedge
Agreements.

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

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

“Bank Product Obligations” means (a) all obligations, liabilities, reimbursement
obligations, fees, or expenses owing to any Bank Product Provider pursuant to or
evidenced by a Bank Product Agreement and irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising and (b) all Hedge Obligations.

“Bank Product Provider” means any Lender or any of its Affiliates; provided that
if, at any time, a Lender ceases to be a Lender under the Agreement, then, from
and after the date on which it ceases to be a Lender thereunder, neither it nor
any of its Affiliates shall constitute Bank Product Providers and the
obligations with respect to Bank Products provided by such former Lender or any
of its Affiliates shall no longer constitute Bank Product Obligations.

“Bank Products Provider Agreement” means a letter agreement in substantially the
form attached hereto as Exhibit B-2, in form and substance reasonably
satisfactory to Agent, duly executed by the applicable Bank Product Provider,
Borrower, and Agent.

“Bank Product Reserve Amount” means, as of any date of determination, the Dollar
amount of reserves that Agent has determined is necessary or appropriate to
establish in its Permitted Discretion in respect of Bank Product Obligations
then provided or outstanding.

 

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

“Base Rate” means, for any day, a per annum rate equal to the greatest of
(a) the Federal Funds Rate plus  1/2%, (b) the LIBOR Rate (which rate shall be
calculated based upon an Interest Period of 1 month and shall be determined on a
daily basis), plus 1%, and (c) the rate of interest announced, from time to
time, within Wells Fargo at its principal office in San Francisco as its “prime
rate”, with the understanding that the “prime rate” is one of Wells Fargo’s base
rates (not necessarily the lowest of such rates) and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto and is evidenced by the recording thereof after its
announcement in such internal publications as Wells Fargo may designate.

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

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

“Borrower” has the meaning specified therefor in the preamble to the Agreement.

“Borrowing” means a borrowing consisting of Revolver Loans made on the same day
by the Lenders (or Agent on behalf thereof), or by Swing Lender in the case of a
Swing Loan, or by Agent in the case of a Protective Advance.

“Borrowing Base” means, as of any date of determination, the result of (a) 85%
of the amount of Eligible Accounts; less (b) the aggregate amount of reserves,
if any, established by Agent in its Permitted Discretion under Section 2.1(c) of
the Agreement.

“Borrowing Base Certificate” means a certificate in the form of Exhibit B-1.

“Borrowing Base Excess” has the meaning specified therefor in Section 2.4(e)(i).

“Bridge Credit Agreement” means that certain Second Lien Term Loan Facility,
dated as of September 13, 2011, among Parent, as borrower, certain Subsidiaries
of Parent as guarantors, the banks and other financial institutions party
thereto, as lenders, and Cantor Fitzgerald Securities, as administrative agent
for the lenders thereunder, as amended.

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

“Capital Expenditures” means, with respect to any Person for any period, the
aggregate of all expenditures by such Person and its Subsidiaries during such
period that are capital expenditures as determined in accordance with GAAP,
whether such expenditures are

 

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paid in cash or financed; provided that the following shall not be considered
Capital Expenditures (a) expenditures as a result of a trade-in or reinvestment
of proceeds of an asset disposition, (b) expenditures using proceeds of
insurance or condemnation event proceeds, (c) expenditures made to effect a
Permitted Acquisition, (d) expenditures resulting from a reinvestment in
accordance with Section 2.4(e)(ii), (e) expenditures financed solely with net
cash proceeds from an issuance of Stock, (f) expenditures made as a tenant in
leasehold improvements, to the extent reimbursed by the landlords and
(g) expenditures actually paid for by a third party (excluding any Loan Party or
any Subsidiary thereof) and for which no Loan Party or any Subsidiary has
provided or is required to provide or incur, directly or indirectly, and
consideration or monetary obligation to such third party or any other Person
(whether before, during or after such period).

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

“Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

“Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued or fully guaranteed by any state of the United States
or any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof and, at the
time of acquisition, having one of the two highest ratings obtainable from
either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc.
(“Moody’s”), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit, time
deposits, overnight bank deposits or bankers’ acceptances maturing within 1 year
from the date of acquisition thereof issued by any bank organized under the laws
of the United States or any state thereof or the District of Columbia or any
United States branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $250,000,000, (e) Deposit Accounts
maintained with (collectively, the “Specified Institutions”) (i) any bank that
satisfies the criteria described in clause (d) above, or (ii) any other bank
organized under the laws of the United States or any state thereof so long as
the full amount maintained with any such other bank is insured by the Federal
Deposit Insurance Corporation, (f) repurchase obligations of any commercial bank
satisfying the requirements of clause (d) of this definition or recognized
securities dealer having combined capital and surplus of not less than
$250,000,000, having a term of not more than seven days, with respect to
securities satisfying the criteria in clauses (a) or (d) above, (g) debt
securities with maturities of six months or less from the date of acquisition
backed by standby letters of credit issued by any commercial bank satisfying the
criteria described in clause (d) above, (h) Investments in money market funds
substantially all of whose assets are invested in the types of assets described
in clauses (a) through (g) above, and (i) Securities Accounts maintained with
Specified Institutions in which all of the assets therein are Investments in the
types of assets described in clauses (a) through (g) above.

 

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“Cash Management Services” means any cash management or related services
including treasury, depository, return items, overdraft, controlled
disbursement, merchant store value cards, e-payables services, electronic funds
transfer, interstate depository network, automatic clearing house transfer
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) and other cash management
arrangements.

“Change of Control” means at any time, after giving effect to the ownership
changes on the Closing Date as a result of the consummation of the Transactions,
the occurrence of any of the following events:

(a) any “person” or “group” (as such terms are used in Section 13(d) and 14(d)
of the Exchange Act), is or becomes the “beneficial owner” (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to
have “beneficial ownership” of all securities that such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of 35% or more of the then outstanding voting
Stock of Parent;

(b) the replacement of a majority of the Board of Directors of Parent over a 24
month period from the directors who constituted the Board of Directors at the
beginning of such period, and such replacement shall not have been approved by a
vote of at least a majority of the Board of Directors of Parent then still in
office who either were members of such Board of Directors at the beginning of
such period or whose election as a member of such Board of Directors was
previously so approved;

(c) the occurrence of a “Change of Control” (or any comparable term) under, and
as defined in, the documents evidencing any of the Senior Notes; and

(d) Parent fails to own and control, directly or indirectly, 100% of the Stock
of each other Loan Party, except (i) as a result of any transaction permitted
under Section 6.3, (ii) as a result of any sale or other disposition permitted
under clause (p) of the definition of Permitted Dispositions or (iii) to the
extent such other Loan Party is released from the Guaranty or no longer required
to be a Guarantor pursuant to and in accordance with the terms of the Loan
Documents.

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

 

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“Chartered Vessel” means any Vessel leased, chartered, subleased or subchartered
by a Loan Party or any Subsidiary pursuant to one or more Chartered Vessel
Documents.

“Chartered Vessel Documents” means all Vessel leases, charters, subleases,
subcharters and all related documents in respect of any Chartered Vessel,
including those listed on Schedule V-1 hereto.

“Chassis” has the meaning specified therefor in the Security Agreement.

“Closing Date” means the date on which each of the conditions precedent set
forth on Schedule 3.1 either have been satisfied or have been waived.

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

“Collateral” means all assets and interests in assets and proceeds thereof now
owned or hereafter acquired by a Loan Party in or upon which a Lien is granted
by such Person in favor of Agent or the Lenders under any of the Loan Documents.
For the avoidance of doubt, “Collateral” does not include any Excluded Assets.

“Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in a Loan Party’s books and records pertaining to ABL Priority Collateral, in
each case, in form and substance reasonably satisfactory to Agent.

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

“Commitment Excess” has the meaning specified therefor in Section 2.4(e)(i).

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

“Confidential Information” has the meaning specified therefor in Section 17.9(a)
of the Agreement.

“Contingent Obligations” means taxes, costs, indemnifications, reimbursements,
damages, contingent Obligations and other claims and liabilities which are not
due and owing or in respect of which no assertion of liability or no claim or
demand for payment, in each case, in writing, has been made at such time.

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

 

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“Controlled Account” has the meaning specified therefor in the Security
Agreement.

“Controlled Account Agreement” has the meaning specified therefor in the
Security Agreement.

“Copyright Security Agreement” has the meaning specified therefor in the
Security Agreement.

“CoT Chassis” has the meaning specified therefor in the Security Agreement.

“CSX” means CSX Corporation, a Virginia corporation.

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

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

“Defaulting Lender” means any Lender that (a) has failed to fund any amounts
required to be funded by it under the Agreement within 1 Business Day of the
date that it is required to do so under the Agreement (including the failure to
make available to Agent amounts required pursuant to a Settlement or to make a
required payment in connection with a Letter of Credit Disbursement),
(b) notified Borrower, Agent, or any Lender in writing that it does not intend
to comply with all or any portion of its funding obligations under the
Agreement, (c) has made a public statement to the effect that it does not intend
to comply with its funding obligations under the Agreement or under other
agreements generally (as reasonably determined by Agent) under which it has
committed to extend credit, (d) failed, within 3 Business Day after written
request by Agent, to confirm that it will comply with the terms of the Agreement
relating to its obligations to fund any amounts required to be funded by it
under the Agreement, (e) otherwise failed to pay over to Agent or any other
Lender any other amount required to be paid by it under the Agreement within 1
Business Day of the date that it is required to do so under the Agreement,
unless the subject of a good faith dispute, or (f) (i) becomes or is insolvent
or has a parent company that has become or is insolvent or (ii) becomes the
subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, or custodian or appointed for it, or has taken any action
in furtherance of, or indicating its consent to, approval of or acquiescence in
any such proceeding or appointment or has a parent company that has become the
subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, or custodian appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in any
such proceeding or appointment.

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

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

 

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

“Designated Account Bank” has the meaning specified therefor in Schedule D-1.

“Dilution” means, as of any date of determination, a percentage, based upon the
experience of the immediately prior 3 consecutive months, that is the result of
dividing the Dollar amount of (a) bad debt write-downs, discounts, advertising
allowances, credits, or other similar dilutive items with respect to Borrower’s
Accounts during such period, by (b) Borrower’s billings with respect to Accounts
during such period.

“Dilution Reserve” means, as of any date of determination, an amount sufficient
to reduce the advance rate against Eligible Accounts by 1% for each percentage
point by which Dilution is in excess of 5%.

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

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
the United States, any state thereof or the District of Columbia.

“Earn-Outs” means unsecured liabilities of a Loan Party arising under an
agreement to make any deferred payment as a part of the Purchase Price for a
Permitted Acquisition, including performance bonuses or consulting payments in
any related services, employment or similar agreement, in an amount that is
subject to or contingent upon the revenues, income, cash flow or profits (or the
like) of the underlying target.

“Eligible Accounts” means those Accounts created by any Loan Party in the
ordinary course of its business, that arise out of such Loan Party’s sale of
goods or rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made in the Loan Documents, to the
extent not excluded by virtue of one or more of the excluding criteria set forth
below; provided, however, that such criteria may be revised from time to time by
Agent in Agent’s Permitted Discretion to address the results of any field exam
performed by Agent from time to time after the Closing Date. In determining the
amount to be included, Eligible Accounts shall be calculated net of customer
deposits and unapplied cash. Eligible Accounts shall not include the following:

(a) Accounts that the Account Debtor has failed to pay within 90 days of
original invoice date or Accounts with payment terms of more than 60 days;
provided, however, that Accounts with payment terms greater than 60 days will
not be excluded from Eligible Accounts to the extent the aggregate amount of
such Accounts does not exceed $1,000,000,

(b) Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of
all Accounts owed by that Account Debtor (or its Affiliates) are deemed
ineligible under clause (a) above,

(c) Accounts with respect to which the Account Debtor is an Affiliate of a Loan
Party or an employee or agent of a Loan Party,

 

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(d) Accounts that are not payable in Dollars,

(e) Accounts with respect to which the Account Debtor (i) does not maintain its
chief executive office in the United States, or (ii) is not organized under the
laws of the United States or any state thereof, or (iii) is the government of
any foreign country or sovereign state, or of any state, province, municipality,
or other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof, except in any such case, to the
extent (y) the Account is supported by a letter of credit satisfactory to Agent
(as to form, substance, and issuer or domestic confirming bank) in its Permitted
Discretion that has been delivered to Agent and is directly drawable by Agent,
or (z) the Account is covered by credit insurance in form, substance, and
amount, and by an insurer, satisfactory to Agent in its Permitted Discretion,

(f) Accounts with respect to which the Account Debtor is either (i) the United
States or any department, agency, or instrumentality of the United States
(exclusive, however, of Accounts with respect to which a Loan Party has
complied, to the reasonable satisfaction of Agent, with the Assignment of Claims
Act, 31 USC §3727, or has otherwise made arrangements with respect to such
Accounts satisfactory to Agent in its Permitted Discretion) (any such Account
described in this clause (i) being referred to herein as a “US Government
Account”), or (ii) any state of the United States (exclusive, however, of
Accounts with respect to which a Loan Party has made arrangements with respect
to such Accounts satisfactory to Agent in its Permitted Discretion); provided
that US Government Accounts which are not otherwise excluded from Eligible
Accounts for any other reason hereunder shall be included as Eligible Accounts
notwithstanding that compliance with the Assignment of Claims Act, 31 USC §3727
has not been effected unless and until 10 Business Days after Agent shall have
requested that such compliance be effected (the “Exclusion Date”), and upon such
request, Borrower agrees to cooperate with Agent to execute and obtain all
requisite government assignments and consents from the applicable government
account debtor as soon as possible, it being understood that from the Exclusion
Date until such government assignments and consents have been obtained such US
Government Accounts may be excluded from Eligible Accounts in Agent’s Permitted
Discretion,

(g) Accounts with respect to which the Account Debtor is a creditor of any Loan
Party, has a right of setoff or has asserted a right of setoff, or has disputed
its obligation to pay all or any portion of the Account, in each case solely to
the extent of such claim, right of setoff, or dispute,

(h) Accounts with respect to an Account Debtor whose total obligations owing to
a Loan Party exceed 10% (except that, in the case of Wal-Mart, such percentage
shall be 20%) (such percentage, as applied to a particular Account Debtor, being
subject to reduction by Agent in its Permitted Discretion if the
creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts,
to the extent of the obligations owing by such Account Debtor in excess of such
percentage; provided, however, that, in each case, the amount of Accounts that
would otherwise be Eligible Accounts that are excluded because they exceed the
foregoing percentage shall be determined by Agent based on all of the otherwise
Eligible Accounts prior to giving effect to any eliminations based upon the
foregoing concentration limit,

 

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(i) Accounts with respect to which the Account Debtor is subject to an
Insolvency Proceeding, is not Solvent, has gone out of business, or as to which
a Loan Party has received notice of an imminent Insolvency Proceeding or a
material impairment of the financial condition of such Account Debtor,

(j) Accounts, the collection of which, Agent, in its Permitted Discretion,
believes to be doubtful by reason of the Account Debtor’s financial condition,

(k) Accounts that are not subject to a valid and perfected first priority
Agent’s Lien; provided that, without limiting the effect or application of any
other exclusion in the definition of Eligible Accounts, the existence of
(i) state and federal tax Liens so long as any such lien (A) is permitted under
the Agreement, (B) has priority by operation of applicable law and (C) to the
extent that (1) any Loan Party has knowledge of such Lien (other than an
inchoate Lien) or (2) the related taxes are overdue and unpaid or (3) the
applicable tax authority has recorded or filed such lien, in each case, such
Loan Party shall have promptly notified Agent of the existence of such Liens and
the related taxes, but in any event within 5 days thereof, (ii) the Antitrust
Judgment Lien, and (iii) the Vessel Environmental Judgment Lien, shall, in each
case, not result in Accounts being excluded from Eligible Accounts; provided
further that Agent shall at all times have the unfettered right to establish
reserves in its Permitted Discretion against any of the foregoing Liens as
provided in Section 2.1(c) of the Agreement.

(l) Accounts that are subject to a Lien of any other Person (other than a Person
with whom Agent entered into an intercreditor agreement subordinating such
Person’s Liens to Agent’s Liens on terms satisfactory to Agent, and other than
Liens constituting Permitted Liens set forth in clause (g) of the definition
thereof for which Agent has received written notice thereof),

(m) Accounts with respect to which the services giving rise to such Account have
not been performed and billed to the Account Debtor (it being understood that
services giving rise to an account for shipment of ocean freight are deemed
performed at such time as the vessel carrying such freight sets sail from the
port of departure),

(n) Accounts with respect to which the Account Debtor is a Sanctioned Person or
Sanctioned Entity,

(o) Accounts that represent the right to receive progress payments or other
advance billings that are due prior to the completion of performance by any Loan
Party of the subject contract for goods or service (it being understood that
services giving rise to an account for shipment of ocean freight are deemed
performed at such time as the vessel carrying such freight sets sail from the
port of departure),

(p) Accounts with payment terms requiring that cash payment be made on the date
of the performance of the underlying service,

(q) Accounts associated with volume incentive discounts (such as GL#3440000),
solely to the extent of any such volume incentive discount agreed to by the Loan
Parties and accrued against such Accounts,

 

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(r) Accounts with a remaining balance currently outstanding that is less than
the original invoice amount,

(s) Accounts solely to the extent cash has been received in payment of such
Accounts but unapplied to the specific invoices (such as amounts in GL#1539700),
or

(t) Accounts acquired in connection with any Permitted Acquisition, until the
completion of an audit of such Accounts, satisfactory to Agent in its Permitted
Discretion (which audit may be conducted prior to the closing of such Permitted
Acquisition).

“Eligible Transferee” means (a) a commercial bank organized under the laws of
the United States, or any state thereof, and having total assets in excess of
$500,000,000, (b) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $500,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$500,000,000, (d) any Affiliate (other than individuals) of a pre-existing
Lender, (e) so long as no Event of Default has occurred and is continuing, any
other Person approved by Agent and Borrower (such approval by Borrower not to be
unreasonably withheld, conditioned or delayed), and (f) during the continuation
of an Event of Default, any other Person approved by Agent; provided that an
“Eligible Transferee” shall not include any Loan Party or any Affiliate of any
Loan Party.

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

“Environmental Action” means any written complaint, summons, citation,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding or judgment from any Governmental Authority, or any Person involving
violations or alleged violations of Environmental Laws or releases or threatened
releases of Hazardous Materials (a) from any assets, properties, or businesses
of Parent, any Subsidiary of Parent, or any of their predecessors in interest,
or (b) from or onto any facilities which received Hazardous Materials generated
by Parent, any Subsidiary of Parent, or any of their predecessors in interest.

“Environmental Law” means any applicable federal, state, provincial, foreign or
local statute, law, rule having the force and effect of law, regulation,
ordinance, code, binding and enforceable guideline, binding and enforceable
written policy, or rule of common law now or hereafter in effect and in each
case as amended, including any judicial or administrative order, consent decree
or judgment, in each case, to the extent binding on Parent or its Subsidiaries,
relating to the environment, the effect of the environment on employee health,
or Hazardous Materials, in each case as amended from time to time.

 

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

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

“Equipment” means equipment (as that term is defined in the Code).

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

“ERISA Affiliate” means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of Parent or its
Subsidiaries under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of Parent or its Subsidiaries under IRC Section 414(c), (c) solely for
purposes of Section 302 of ERISA or Section 412 or 430 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which Parent or any of its Subsidiaries is a member under IRC Section 414(m), or
(d) solely for purposes of Section 302 of ERISA or Section 412 or 430 of the
IRC, any Person subject to ERISA that is a party to an arrangement with Parent
or any of its Subsidiaries and whose employees are aggregated with the employees
of Parent or its Subsidiaries under IRC Section 414(o).

“Event of Default” has the meaning specified therefor in Section 8 of the
Agreement.

“Excess Availability” means, as of any date of determination, an amount equal to
(a) the lesser of (i) the Maximum Revolver Amount and (ii) the Borrowing Base
minus (b) the Revolver Usage minus (c) the aggregate amount, if any, of all
trade payables of the Loan Parties that are more than 60 days past due, except
for trade payables which are being disputed in good faith by a Loan Party.

“Excess Availability Calculation” has the meaning specified therefor in the
definition of Applicable Margin.

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

“Excluded Accounts” has the meaning specified therefor in the Security
Agreement.

“Excluded Assets” has the meaning specified therefor in the Security Agreement.

 

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“Existing Credit Agreement” means that certain Credit Agreement, dated as of
August 8, 2007, among Parent, certain Subsidiaries of Parent as guarantors, the
lenders party thereto and Wells Fargo Bank, National Association (successor by
merger to Wachovia Bank, National Association), as administrative agent, as
amended.

“Existing Letters of Credit” means those letters of credit described on
Schedule E-1 to the Agreement.

“Existing Notes” means the 4.25% Convertible Secured Notes due 2012, issued by
Parent in an aggregate principal amount of $330,000,000.

“Extension of Credit” means, as the context may require, (i) the making of an
Advance by a Lender or (ii) the issuance of any Letter of Credit by the Issuing
Lender or the amendment, extension or renewal of any Letter of Credit; provided
that “Extensions of Credit” shall not include conversions and continuations of
outstanding Advances.

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

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

“Fee Letter” means that certain fee letter, dated as of August 26, 2011, between
Parent and Agent.

“Fixed Charge Coverage Ratio” means, with respect to Parent and its
Subsidiaries, determined on a consolidated basis, for any Reference Period, the
ratio of (a) Adjusted EBITDA for such period for such period, minus the sum of
(i) Unfinanced Capital Expenditures made or incurred during such period,
(ii) all federal state, and local income taxes paid in cash during such period
to the extent added back in the calculation of Adjusted EBITDA for such period
and (iii) Restricted Stock Payments paid in cash during such period to persons
other than Parent or another Loan Party to (b) Fixed Charges for such period.

“Fixed Charges” means, with respect to any fiscal period and with respect to
Parent and its Subsidiaries determined on a consolidated basis in accordance
with GAAP, the sum, without duplication, of (a) Interest Expense (net of
interest income and other cash offsets to Interest Expense) paid in cash during
such period, (b) scheduled principal payments in respect of Funded Indebtedness
that are required to be paid during such period and (c) scheduled payments after
the Closing Date in respect of the Antitrust Judgment, the Vessel Environmental
Judgment and any scheduled payments in connection any judgments, orders or
awards entered into or existing after the Closing Date for such period, which
are secured by Liens on the Collateral.

 

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For the purposes of calculating Interest Expense with respect to Fixed Charges
for any Reference Period, if at any time during such Reference Period (and after
the Closing Date), Parent or any of its Subsidiaries shall have (to the extent
permitted by the Agreement) (a) converted any Indebtedness of Parent or any of
its Subsidiaries into Stock of Parent or such Subsidiary or (b) repurchased or
repaid any Indebtedness (other than (x) the repayment of revolving Indebtedness
that does not permanently reduce the commitments therefor and Indebtedness
maturing within 1 year of the date of issuance thereof and (y) repurchases or
repayments of term loans, notes and other Funded Indebtedness maturing more than
1 year after the date of issuance thereof which are refinanced or replaced by
other Funded Indebtedness) of Parent or any of its Subsidiaries (collectively, a
“Specified Transaction”), then Interest Expense for such Reference Period shall
be calculated as if such Specified Transaction occurred on the first day of such
Reference Period and all Interest Expense attributable to such converted or
refinanced Indebtedness shall be excluded from the calculation of Fixed Charges;
provided that Interest Expense accrued prior to the Closing Date shall be
measured as the actual amount thereof paid and not in accordance with the
preceding provisions of this paragraph.

“Foreign Lender” means any Lender or Participant that is not a United States
person within the meaning of Section 7701(a)(30) of the IRC.

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

“Funded Indebtedness” means, as of any date of determination, all Indebtedness
for borrowed money or letters of credit of Parent, determined on a consolidated
basis in accordance with GAAP, that by its terms matures more than one year
after the date of calculation, and any such Indebtedness maturing within one
year from such date that is renewable or extendable at the option of Parent or
its Subsidiaries, as applicable, to a date more than one year from such date,
including, in any event, but without duplication, with respect to Parent and its
Subsidiaries, the Revolver Usage, and the amount of their Capitalized Lease
Obligations.

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

“Funding Losses” has the meaning specified therefor in Section 2.12(b)(ii) of
the Agreement.

“GAAP” means, subject to the limitations and application thereof set forth in
Section 1.2, generally accepted accounting principles as in effect from time to
time in the United States, consistently applied; provided, however, that all
calculations relative to liabilities shall be made without giving effect to
Statement of Financial Accounting Standards No. 159.

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

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

 

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“Guarantors” means (a) each Domestic Subsidiary of Parent (other than any
Immaterial Subsidiary and any other Subsidiary that is not required to become a
Guarantor pursuant to Section 5.11), (b) Parent and (c) each other Person that
becomes a guarantor after the Closing Date pursuant to Section 5.11 of the
Agreement, and “Guarantor” means any one of them.

“Guaranty” means that certain general continuing guaranty, dated as of even date
with the Agreement, executed and delivered by each extant Guarantor in favor of
Agent, for the benefit of the Lender Group and the Bank Product Providers, in
form and substance reasonably satisfactory to Agent.

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

“Hedge Agreement” means a “swap agreement” as that term is defined in
Section 101(53B)(A) of the Bankruptcy Code, including, without limitation, any
rate swap agreement, forward rate agreement, commodity swap, commodity option
(including with respect to commodities, raw materials, emission rights and
weather related risks or assets), interest rate option, forward foreign exchange
agreement, spot foreign exchange agreement, rate cap agreement, rate floor
agreement, rate collar agreement, currency swap agreement, cross-currency rate
swap agreement, currency option (including in each case with respect to any
indexes in respect of any of the foregoing, and any other similar agreement.

“Hedge Obligations” means any and all obligations or liabilities, whether
absolute or contingent, due or to become due, now existing or hereafter arising,
of a Loan Party arising under, owing pursuant to, or existing in respect of
Hedge Agreements entered into with one or more of the Hedge Providers.

“Hedge Provider” means any Lender or any of its Affiliates; provided, however,
that no such Person (other than Wells Fargo or its Affiliates) shall constitute
a Hedge Provider unless and until Agent shall have received a Bank Product
Provider Agreement from such Person and with respect to the applicable Hedge
Agreement within 10 days after (a) the execution and delivery of such Hedge
Agreement with any Loan Party or (b) if such Person entered into such Hedge
Agreement prior to the Closing Date, the Closing Date; provided further,
however, that if, at any time, a Lender ceases to be a Lender under the
Agreement, then, from and after the date on which it ceases to be a Lender
thereunder, neither it nor any of its Affiliates shall constitute Hedge
Providers and the obligations with respect to Hedge Agreements entered into with
such former Lender or any of its Affiliates shall no longer constitute Hedge
Obligations.

 

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“Holdout Lender” has the meaning specified therefor in Section 14.2(a) of the
Agreement.

“Immaterial Subsidiary” means a direct or indirect Subsidiary of Parent with
respect to which each of the following is satisfied: (a) the aggregate net sales
of such Subsidiary are less than $2,000,000 for the period of 12 months most
recently ended prior to such Subsidiary being designated an Immaterial
Subsidiary, (b) the book value of the tangible assets of such Subsidiary is less
than $1,500,000, (c) after giving pro forma effect to the designation of such
Subsidiary as an Immaterial Subsidiary, (i) the aggregate net sales of all
Subsidiaries that are not Guarantors for the 12 months most recently ended prior
to such designation do not exceed $5,000,000 and (ii) the aggregate book value
of the tangible assets of all Immaterial Subsidiaries does not exceed
$5,000,000, (d) Parent has designated such Subsidiary as an Immaterial
Subsidiary under the Agreement and Parent has provided written notice to Agent
in reasonable detail of such designation within 5 days after designation
thereof, (e) such Subsidiary does not own any Stock or hold any Lien on any
property of a Loan Party and (f) such Subsidiary has never been a Loan Party
after being an Immaterial Subsidiary.

“Increase Closing Date” has the meaning specified therefor in Section 2.14(d).

“Indebtedness” as to any Person means (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, or other
financial products, (c) all obligations of such Person as a lessee under Capital
Leases, (d) all obligations or liabilities of others secured by a Lien on any
asset of such Person, irrespective of whether such obligation or liability is
assumed, (e) all obligations of such Person to pay the deferred purchase price
of assets (other than trade payables incurred in the ordinary course of business
and repayable in accordance with customary trade practices), (f) all obligations
of such Person owing under Hedge Agreements (which amount shall be calculated
based on the amount that would be payable by such Person if the Hedge Agreement
were terminated on the date of determination), (g) any Prohibited Preferred
Stock of such Person, and (h) any obligation of such Person guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted, or sold with recourse) any obligation of any other Person
that constitutes Indebtedness under any of clauses (a) through (g) above.
Notwithstanding the foregoing, “Indebtedness,” except for purposes of
Section 8.7, shall not include obligations under any unsecured settlement or
plea agreements or similar arrangements providing for the payment of judgments,
decrees, orders, awards, settlements or fines. For purposes of this definition,
(i) the amount of any Indebtedness represented by a guaranty or other similar
instrument shall be the lesser of the principal amount of the obligations
guaranteed and still outstanding and the maximum amount for which the
guaranteeing Person may be liable pursuant to the terms of the instrument
embodying such Indebtedness, and (ii) the amount of any Indebtedness described
in clause (d) above shall be the lower of the amount of the obligation and the
fair market value of the assets of such Person securing such obligation.

“Indemnified Liabilities” has the meaning specified therefor in Section 10.3 of
the Agreement.

 

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“Indemnified Person” has the meaning specified therefor in Section 10.3 of the
Agreement.

“Indirect Purchasers Settlement” means the $1,800,000 settlement of the
investigation by the Puerto Rico office of Monopolistic Affairs and the lawsuit
filed by the Commonwealth of Puerto Rico and the class action lawsuit in the
indirect purchasers case.

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

“Intercreditor Agreement” means that certain Intercreditor Agreement, dated as
of the date hereof, by and among Parent, Borrower, Agent, and the applicable
trustee under each of the Secured Notes.

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

“Interest Period” means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, or 3, or 6 months thereafter and 9 or 12
months thereafter, if available to, and consented to by, each Lender; provided,
however, that (a) interest shall accrue at the applicable rate based upon the
LIBOR Rate from and including the first day of each Interest Period to, but
excluding, the day on which any Interest Period expires, (b) any Interest Period
that would end on a day that is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another month, in
which case such Interest Period shall end on the next preceding Business Day,
(c) with respect to an Interest Period that begins on the last Business Day of a
month (or on a day for which there is no numerically corresponding day in the
month at the end of such Interest Period), the Interest Period shall end on the
last Business Day of the month that is 1, 2, or 3, or 6 months after (or 9 or 12
months after, if available to, and consented to by, each Lender) the date on
which the Interest Period began, as applicable, and (d) Borrower may not elect
an Interest Period which will end after the Maturity Date.

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

“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, capital contributions (excluding (a) commission, travel, and similar
advances to officers, directors (or the equivalent) and employees of such Person
made in the ordinary course of business, and (b) bona fide Accounts arising in
the ordinary course of business), or acquisitions of Indebtedness, Stock, or all
or substantially all of the assets of such other Person (or of any division or
business line of such other Person), and any other items, in each case, that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP. The value of an Investment shall be determined based on its cost on
the date each such Investment was made, minus all capital returned and sale
proceeds received in respect thereof, and without giving effect to any other
subsequent changes in value.

 

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

“Issuing Lender” means WFCF (or one of its Affiliates).

“Lender” has the meaning specified therefor in the preamble to the Agreement,
shall include the Issuing Lender and the Swing Lender, and shall also include
any Assignee made a party to the Agreement pursuant to and in accordance with
the provisions of Section 13.1 of the Agreement, and “Lenders” means each of the
Lenders or any one or more of them.

“Lender Group” means each of the Lenders (including the Issuing Lender and the
Swing Lender) and Agent, or any one or more of them.

“Lender Group Expenses” means all (a) costs or expenses (including taxes, and
insurance premiums) required to be paid by a Loan Party under any of the Loan
Documents that are paid, advanced, or incurred by the Lender Group,
(b) out-of-pocket fees or charges paid or incurred by Agent in connection with
the Lender Group’s transactions with the Loan Parties under any of the Loan
Documents, including, fees or charges for photocopying, notarization, couriers
and messengers, telecommunication, public record searches (including tax lien,
litigation, and uniform commercial code searches and including searches with the
patent and trademark office, the copyright office, or, if applicable, the
department of motor vehicles), filing, recording, publication, appraisal
(including periodic collateral appraisals or business valuations to the extent
of the fees and charges (and up to the amount of any limitation) contained in
the Agreement or the Fee Letter), real estate surveys, real estate title
policies and endorsements, and environmental audits, (c) Agent’s customary fees
and charges (as adjusted from time to time) with respect to the disbursement of
funds (or the receipt of funds) to or for the account of Borrower (whether by
wire transfer or otherwise), together with any out-of-pocket costs and expenses
incurred in connection therewith, (d) out-of-pocket charges paid or incurred by
Agent resulting from the dishonor of checks payable by or to any Loan Party,
(e) reasonable out-of-pocket costs and expenses paid or incurred by the Lender
Group to correct any default or enforce any provision of the Loan Documents, or
during the continuance of an Event of Default, in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) reasonable out-of-pocket
audit fees and expenses (including travel, meals, and lodging) of Agent related
to any inspections or audits to the extent of the fees and charges (and up to
the amount of any limitation) contained in the Agreement or the Fee Letter,
(g) reasonable out-of-pocket costs and expenses of third party claims or any
other suit paid or incurred by the Lender Group in enforcing or defending the
Loan Documents or in connection with the Transactions or any transactions
contemplated by the Loan Documents, (h) Agent’s reasonable costs and expenses
(including reasonable attorneys fees) incurred in advising, structuring,
drafting, reviewing, administering (including travel, meals, and lodging),
syndicating, or amending the Loan Documents, (i) Agent’s and each Lender’s
reasonable costs and expenses (including reasonable attorneys, accountants,
consultants, and other advisors fees and expenses) incurred in terminating,
enforcing (including attorneys, accountants, consultants, and other advisors
fees and expenses incurred in connection with a “workout,” a “restructuring,” or
an

 

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Insolvency Proceeding concerning Parent or any of the other Loan Parties or in
exercising rights or remedies under the Loan Documents), or defending the Loan
Documents, irrespective of whether suit is brought, or in taking any Remedial
Action concerning the Collateral, and (j) usage charges, charges, fees, costs
and expenses for amendments, renewals, extensions, transfers, or drawings from
time to time imposed by the Underlying Issuer or incurred by the Issuing Lender
in respect of Letters of Credit and out-of-pocket charges, fees, costs and
expenses paid or incurred by the Underlying Issuer or Issuing Lender in
connection with the issuance, amendment, renewal, extension, or transfer of, or
drawing under, any Letter of Credit or any demand for payment thereunder.

“Lender Group Representatives” has the meaning specified therefor in
Section 17.9 of the Agreement.

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

“Letter of Credit” means a letter of credit (as that term is defined in the
Code) issued by Issuing Lender or a letter of credit (as that term is defined in
the Code) issued by Underlying Issuer, as the context requires, including each
Existing Letter of Credit.

“Letter of Credit Collateralization” means either (a) providing cash collateral
(pursuant to documentation reasonably satisfactory to Agent, including
provisions that specify that the Letter of Credit fee and all usage charges set
forth in the Agreement will continue to accrue while such Letters of Credit is
outstanding) to be held by Agent for the benefit of the Applicable Party in an
amount equal to 105% of the then existing Letter of Credit Usage, (b) delivering
to Agent documentation executed by all beneficiaries under the Letters of
Credit, in form and substance reasonably satisfactory to Agent and the Issuing
Lender, terminating all of such beneficiaries’ rights under the Letters of
Credit or (c) providing Agent with a standby letter of credit, in form and
substance reasonably satisfactory to Agent, from a commercial bank acceptable to
Agent (in its sole discretion) in an amount equal to 105% of the then existing
Letter of Credit Usage (it being understood that the Letter of Credit fee and
all usage charges set forth in the Agreement will continue to accrue while the
Letters of Credit are outstanding and that any such fees that accrue must be an
amount that can be drawn under any such standby letter of credit). “Applicable
Party” means (i) prior to termination of the of the Lenders obligations to
purchase participations in Letters of Credit, those Lenders with a Revolver
Commitment, and (ii) thereafter, the Issuing Lender.

“Letter of Credit Disbursement” means a payment made by Issuing Lender or
Underlying Issuer pursuant to a Letter of Credit.

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

“Leverage Ratio” means, as of the last day of any fiscal month, the ratio of
(a) the amount of Funded Indebtedness as of such date, to (b) Adjusted EBITDA
for the Reference Period ended as of such date.

 

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“LIBOR Deadline” has the meaning specified therefor in Section 2.12(b)(i) of the
Agreement.

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

“LIBOR Option” has the meaning specified therefor in Section 2.12(a) of the
Agreement.

“LIBOR Rate” means the rate per annum rate determined by Agent pursuant to the
following formula:

 

LIBOR Rate =   

LIBOR Base Rate

      1.00-LIBOR Reserve Percentage   

“LIBOR Base Rate” means the rate per annum rate appearing on Macro*World’s
(www.mworld.com; the “Service”) Page BBA LIBOR - USD (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service) 2 Business Days prior to the commencement of the requested Interest
Period, for a term and in an amount comparable to the Interest Period and the
amount of the LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan
or as a continuation of a LIBOR Rate Loan or as a conversion of a Base Rate Loan
to a LIBOR Rate Loan) by Borrower in accordance with the Agreement, which
determination shall be conclusive in the absence of manifest error.

“LIBOR Reserve Percentage” means, for any day during any Interest Period, the
reserve percentage (expressed as a decimal, carried out to five decimal places)
in effect on such day applicable to member banks under regulations issued from
time to time by the Federal Reserve Bank for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) with respect to LIBOR Rate Loans (currently referred to as
“Eurocurrency liabilities”). The LIBOR Rate for each outstanding LIBOR Rate Loan
shall be adjusted automatically as of the effective date of any change in the
LIBOR Reserve Percentage.

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

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, easement, lien (statutory or other),
security interest, or other security arrangement and any other preference,
priority, or preferential arrangement of any kind or nature whatsoever,
including any conditional sale contract or other title retention agreement, the
interest of a lessor under a Capital Lease and any synthetic or other financing
lease having substantially the same economic effect as any of the foregoing.

“Loan Account” has the meaning specified therefor in Section 2.9 of the
Agreement.

 

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“Loan Documents” means the Agreement, the Intercreditor Agreement, any Borrowing
Base Certificate, the Controlled Account Agreement, the Control Agreements, the
Copyright Security Agreement, the Fee Letter, the Guaranty, the Letters of
Credit, the Mortgages, the Vessel Fleet Mortgages, the Patent Security
Agreement, the Security Agreement, the Trademark Security Agreement, any note or
notes executed by Borrower evidencing Obligations under the Agreement and
payable to any member of the Lender Group, any Letter of Credit application or
Letter of Credit agreement entered into by Borrower in connection with the
Agreement, and any other instrument or agreement entered into, now or in the
future, by Parent or any of its Subsidiaries and any member of the Lender Group
in connection with the Agreement.

“Loan Party” means Borrower or any Guarantor.

“Margin Stock” as defined in Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.

“Material Adverse Change” means (a) a material adverse change in, or material
adverse effect on, the business, affairs, properties, operations, condition
(financial or otherwise), assets or liabilities (whether actual or contingent)
of Parent and its Subsidiaries, taken as a whole (b) a material impairment of
Parent’s and its Subsidiaries ability to perform their obligations under the
Loan Documents to which they are parties or of the Lender Group’s ability to
enforce the Obligations or realize upon the Collateral, or (c) a material
impairment of the enforceability or priority of Agent’s Liens with respect to
the Collateral as a result of an action or failure to act on the part of Parent
or its Subsidiaries; provided, however, that none of the following will be
deemed to constitute, individually or in the aggregate, a Material Adverse
Change:

(i) the negative changes, if any, in the financial position and results of
operations of Parent since December 26, 2010, as reflected in Part I, item 1 of
the 10Q Report for the quarter ended June 26, 2011 (the “10Q Report”); (ii) the
performance of the business and operations of Parent and its Subsidiaries for
any period prior to the Closing Date in a manner materially consistent with
Parent’s financial projections previously delivered to the Agent and dated
August 3, 2011 (for the avoidance of doubt, any decrease of projected adjusted
trailing 12-month Adjusted EBITDA from the amounts reflected in such projections
of not more than 22.75% would be considered materially consistent); (iii) notice
of the delisting of Parent’s shares so long as Parent is diligently pursuing a
plan of action with the New York Stock Exchange to avoid a delisting;
(iv) (a) any workforce reductions (and any related restructuring costs)
occurring prior to the date hereof and disclosed in Part I, item 1 of the 10Q
Report under the heading “Restructuring”, (b) Parent’s senior management changes
occurring after December 26, 2010 described in Part II, item 7 of Parent’s
annual report on Form 10-K for the year ended December 26, 2010 (the “10K
Report”) under the heading “Recent Developments” and (c) the separation and
compensation obligations relating to Parent’s former CEO, interim CEO and any
permanent CEO disclosed in Part I, item 1 and Part I, item 7 of the 10K Report
and Part I, item 2 of the 10Q Report under the heading “Executive Overview”;
(v) (a) the existence of the litigation matters, judgments and settlements, and
the payments of the respective amounts of such judgments and settlements, and
the payment of legal fees and expenses incurred in connection with such matters,
judgments and settlements, described in Part II, item 1 of the 10Q Report, the
actual settlement of which such non-antitrust litigation matters does not exceed
$7,500,000 in the

 

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aggregate and (b) settlement and other similar items disclosed in writing to,
and agreed to by, the Agent prior to the date of the Commitment Letter, in
amounts less than or equal to the amounts disclosed in writing to, and agreed to
in writing by, the Agent prior to the date of the Commitment Letter; (vi) the
contraction in liquidity described in Part I, item 2 of the 10Q Report under the
heading “Liquidity Outlook”; and (vii) the Non-Domestic Reorganization to the
extent the actual cost and expenses therefor do not exceed the amount agreed to
in writing by Agent prior to the Closing Date.

Notwithstanding anything herein to the contrary, the foregoing clauses in the
proviso immediately above shall not be construed as precluding any material
worsening of any of the circumstances or conditions described in such clauses
which worsening causes a material adverse change in or has a material adverse
effect on the business, affairs, properties, operations, condition (financial or
otherwise), assets or liabilities (whether actual or contingent) of Parent and
its Subsidiaries, taken as a whole, from constituting a Material Adverse Change.

“Material Contract” means, with respect to any Loan Party, all contracts or
agreements, the loss of which could reasonably be expected to result in a
Material Adverse Change.

“Maturity Date” has the meaning specified therefor in Section 3.3 of the
Agreement.

“Maximum Revolver Amount” means $100,000,000, decreased by the amount of
reductions in the Revolver Commitments made in accordance with Section 2.4(c) of
the Agreement or increased pursuant to Section 2.14.

“Moody’s” has the meaning specified therefor in the definition of Cash
Equivalents.

“Mortgage Policy” has the meaning specified therefor in Schedule 3.6.

“Mortgage Trustee” means the “Mortgagee” as defined in the applicable Vessel
Fleet Mortgage.

“Mortgaged Vessel” means each Vessel and appurtenance thereto owned by any Loan
Party and identified as such on Schedule 4.28 and each other Vessel and all
appurtenances thereto with respect to which a Vessel Fleet Mortgage is granted
pursuant to the Loan Documents.

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

“Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA to which any Loan Party or any ERISA Affiliate is
making, or is accruing an obligation to make, or has accrued an obligation to
make contributions within the preceding seven (7) years.

 

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“Net Cash Proceeds” means, with respect to any sale or disposition by Parent or
any of its Subsidiaries of assets, the amount of cash proceeds received
(directly or indirectly) from time to time (whether as initial consideration or
through the payment of deferred consideration) by or on behalf of Parent or its
Subsidiaries, in connection therewith after deducting therefrom only (i) the
amount of any Indebtedness secured by any Permitted Lien on any such asset
(other than (A) Indebtedness owing to Agent or any Lender under the Agreement or
the other Loan Documents and (B) Indebtedness assumed by the purchaser of such
assets) which is required to be, and is, repaid in connection with such sale or
disposition, (ii) reasonable fees, commissions, and expenses related thereto and
required to be paid by Parent or such Subsidiary in connection with such sale or
disposition, (iii) any payment with respect to liabilities associated with such
assets or assets and retained by Parent or any of its Subsidiaries after such
sale or other disposition thereof, including, without limitation, severance
costs, pension and other post-employment benefit liabilities and liabilities
related to environmental matters or against any indemnification obligations
associated with such transaction, (iv) any cash escrows in connection with
purchase price adjustments, reserves or indemnities (until released) and
(v) taxes paid or payable to any taxing authorities by Parent or such Subsidiary
as a result of such sale or disposition, in each case to the extent, but only to
the extent, that the amounts so deducted are properly attributable to such
transaction.

“Non-Domestic Reorganization” means the complete or partial shut-down, wind-down
closure, restructuring, reorganization, consolidation or reduction of the
Non-Domestic Service.

“Non-Domestic Reorganization Charges” means any and all reasonable fees, costs,
charges, expenses or liabilities associated with, or resulting from, the
Non-Domestic Reorganization, including without limitation (i) such fees, costs,
charges, expenses or liabilities resulting from, or associated with, the sale,
disposition, trade-in, lease, sub-lease, use or maintenance of Vessels and any
other related assets, (ii) such fees, costs, charges, expenses or liabilities
resulting from, or associated with, the storage, parking, docking, dry-docking,
repair, refurbishment or reflagging of Vessels and other related assets and
(iii) such fees, costs, charges, expenses or liabilities resulting from, or
associated with the compliance with any agreements relevant to the Non-Domestic
Service, and/or the buy-down or early termination or breach of any such
agreement, including any early termination payments, lease and/or sub-lease
payments (including any such payments resulting from an early-termination or a
termination in breach of the terms and conditions of any relevant agreement),
breakage costs, indemnities, premiums, off-sets, make-whole payments, parking
charges, penalties, fines and any litigation, settlement and/or work-out fees,
costs, charges, expenses and/or liabilities in connection with any of the
foregoing.

“Non-Domestic Service” means the non-domestic service provided by Parent and its
Subsidiaries using vessels not qualified for operation in the coastwise trade of
the United States.

“Non-Domestic Services Losses Schedule” means that certain schedule of
Non-Domestic Service losses referred to clause (xxii) of the definition of
Adjusted EBITDA and delivered to Agent after the Closing Date pursuant to
Section 3.6.

 

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“Non-Loan Party” means any Subsidiary of Parent that is not a Loan Party.

“Noticed Bank Product Obligations” means (a) all Bank Product Obligations of
Wells Fargo and its Affiliates and (b) those Bank Product Obligations of other
Bank Product Providers for which Agent has received a Bank Product Provider
Agreement within 10 days after the date of the provision of such Bank Product to
a Parent or its Subsidiaries, as such Noticed Bank Product Obligations may be
adjusted from time to time pursuant to a written report delivered in accordance
with the applicable Bank Product Provider Agreement; provided that (i) no
Noticed Bank Product Obligations may be established or increased (A) at any time
that an Event of Default exists or (B) if a reserve in the amount of such
established or increased Bank Product Obligations would cause an Overadvance and
(ii) for any Bank Product Obligations existing on the Closing Date, Agent shall
have received a Bank Product Provider Agreement within 10 days after the Closing
Date.

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

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

“Originating Lender” has the meaning specified therefor in Section 13.1(e) of
the Agreement.

“Overadvance” has the meaning specified therefor in Section 2.5 of the
Agreement.

 

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“Parent” has the meaning specified thereof in the preamble to the Agreement.

“Participant” has the meaning specified therefor in Section 13.1(e) of the
Agreement.

“Participant Register” has the meaning specified therefor in Section 13.1(i) of
the Agreement.

“Patent Security Agreement” has the meaning specified therefor in the Security
Agreement.

“Patriot Act” has the meaning specified therefor in Section 4.18 of the
Agreement.

“Payoff Date” means the first date on which all of the Obligations are paid in
full and the Revolver Commitments of the Lenders are terminated.

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

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

“Permitted Acquisition” means any Acquisition by Parent or a Loan Party so long
as:

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

(b) no Indebtedness will be incurred, assumed, or would exist with respect to
Parent or its Subsidiaries as a result of such Acquisition, other than
Indebtedness permitted under clauses (f), (g), (m) or (x) of the definition of
Permitted Indebtedness and no Liens will be incurred, assumed, or would exist
with respect to the assets of Parent or its Subsidiaries as a result or such
Acquisition other than Permitted Liens,

(c) Borrower has provided Agent with due diligence materials relative to the
proposed Acquisition, including forecasted balance sheets, profit and loss
statements, and cash flow statements of the Person or assets to be acquired, all
prepared on a basis consistent with such Person’s (or assets’) historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions for the 1 year period following the date of
the proposed Acquisition, on a quarter by quarter basis), in form and substance
reasonably satisfactory to Agent,

 

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(d) Adjusted EBITDA (calculated as if the assets being acquired or the Person
whose Stock is being acquired is Parent and its Subsidiaries on a consolidated
basis for purposes of the definition of Adjusted EBITDA) attributable to the
assets being acquired or the Person whose Stock is being acquired for the 12
consecutive month period most recently concluded prior to the date of the
proposed Acquisition is not negative by more than 5% of Parent and its
Subsidiary’s Adjusted EBITDA for then most recent Reference Period for which a
Compliance Certificate containing a calculation thereof has been delivered to
Agent,

(e) Borrower has provided Agent with written notice of the proposed Acquisition
at least 15 Business Days prior to the anticipated closing date of the proposed
Acquisition and, not later than 5 Business Days prior to the anticipated closing
date of the proposed Acquisition, copies of the acquisition agreement and other
material documents relative to the proposed Acquisition, which agreement and
documents must be reasonably acceptable to Agent,

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

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

(h) the subject assets or Stock, as applicable, are being acquired directly by
Borrower or one of its Subsidiaries that is a Loan Party, and, in connection
therewith, Borrower or the applicable Loan Party shall have complied with
Section 5.11 or 5.12, as applicable, of the Agreement, and

(i) the Specified Condition is satisfied and at least 5 Business Days prior to
the anticipated closing date of the proposed Acquisition, Agent shall have
received a certificate of a Responsible Officer of Parent demonstrating that the
Specified Condition has been satisfied (and attaching the calculations with
respect thereto).

“Permitted Additional Pari Passu Obligations” has the meaning specified therefor
in the applicable Secured Notes Documents as in effect on the Closing Date.

“Permitted Discretion” means a determination made in good faith in the exercise
of reasonable (from the perspective of an asset-based secured lender) business
judgment.

“Permitted Dispositions” means:

(a) sales, abandonment, or other dispositions of equipment, machinery or other
similar tangible assets that are (i) substantially worn, damaged, or obsolete or
(ii) no longer used or useful in the business of Parent and its Subsidiaries,

 

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(b) sales of Inventory or damaged or abandoned or seized cargo to buyers in the
ordinary course of business,

(c) the use or transfer of money or Cash Equivalents in a manner that is not
prohibited by the terms of the Agreement or the other Loan Documents,

(d) the licensing of patents, trademarks, copyrights, and other intellectual
property rights in the ordinary course of business in a manner that does not
materially impair the conduct of the business or the value of the ABL Priority
Collateral,

(e) the granting of Permitted Liens,

(f) the sale or discount, in each case without recourse, of Accounts arising in
the ordinary course of business, but only in connection with the compromise or
collection thereof,

(g) any involuntary loss, damage or destruction of property,

(h) any involuntary condemnation, seizure or taking, by exercise of the power of
eminent domain or otherwise, or confiscation or requisition of use of property,

(i) the leasing or subleasing of assets of Parent or its Subsidiaries in the
ordinary course of business, or assets related to the Non-Domestic Service,

(j) (i) the sale or issuance of Stock (other than Prohibited Preferred Stock) of
Parent, (ii) the sale or issuance of Stock of any Loan Party to any other Loan
Party, (iii) sale or issuance of Stock of any Non-Loan Party to any Non-Loan
Party, and (iv) the sale or issuance of Stock of any Non-Loan Party to any Loan
Party in connection with a Permitted Investment by such Loan Party,

(k) the lapse of or abandonment of patents, trademarks and other intellectual
property of Parent and its Subsidiaries to the extent such asset is not material
to the conduct of their business,

(l) the making of a Permitted Restricted Stock Payment,

(m) the making of a Permitted Investment,

(n) the Non-Domestic Reorganization,

(o) the disposition of cranes and related assets (or interests therein) located
in Puerto Rico, Guam or Hawaii or originally purchased for use in Alaska;

(p) the sale, wind-up, shutdown or other disposition (in one or more
transactions) of all or substantially all of the current business of Horizon
Logistics, LLC and its Subsidiary Aero Logistics, LLC as integrated third-party
logistics providers of transportation and distribution solutions (including
transportation management, full truckload and less-than truckload transportation
brokerage, international ocean transportation as a Non-Vessel Operating

 

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Common Carrier, expedited ground and international air, and warehousing and
distribution services) to client-shippers requiring transportation services
principally to, from and within North America (such business, the “Logistics
Business”), whether such sale or sales, wind-up, shutdown or other dispositions
are consummated pursuant to one or more dispositions of the Stock in such
Subsidiaries and/or pursuant to one or more dispositions of the assets and
liabilities of the Logistics Business,

(q) dispositions of assets (i) to any Loan Party, (ii) by any Non-Loan Party to
any other Non-Loan Party and (iii) by any Loan Party to any Non-Loan Party in
connection with a Permitted Investment by such Loan Party or otherwise made in
compliance with Section 6.12(a), and

(r) so long as no Default or Event of Default has occurred and is continuing or
would result therefrom, dispositions of assets (other than ABL Priority
Collateral, Stock of Subsidiaries of Parent, or Material Contracts) not
otherwise permitted in clauses (a) through (m) above so long as made at fair
market value and the aggregate fair market value of all assets disposed of in
all such dispositions since the Closing Date (including the proposed
disposition) would not exceed $15,000,000,

provided that substantially concurrently with the disposition of any Accounts
included in the Borrowing Base as a result of a Permitted Disposition, the
Borrower shall deliver a revised Borrowing Base Certificate reflecting such
disposition.

“Permitted Indebtedness” means:

(a) Indebtedness evidenced by the Agreement or the other Loan Documents, as well
as Indebtedness owed to Underlying Issuers with respect to Underlying Letters of
Credit,

(b) Indebtedness (other than Purchase Money Indebtedness) set forth on Schedule
4.19 and any Refinancing Indebtedness in respect of such Indebtedness (other
than the Existing Notes),

(c) Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in
respect of such Indebtedness,

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

(e) Indebtedness consisting of (i) unsecured guarantees incurred in the ordinary
course of business with respect to surety and appeal bonds, performance bonds,
bid bonds, appeal bonds, completion guarantee and similar obligations;
(ii) unsecured guarantees arising with respect to customary indemnification
obligations to purchasers in connection with Permitted Dispositions; and
(iii) unsecured guarantees with respect to Indebtedness of Parent or one of its
Subsidiaries, to the extent that the Person that is obligated under such
guaranty could have incurred such underlying Indebtedness,

(f) Indebtedness of Parent that is incurred on the date of the consummation of a
Permitted Acquisition solely for the purpose of consummating such Permitted
Acquisition so long as (i) no Default or Event of Default has occurred and is
continuing or would result therefrom, (ii) such Indebtedness is not incurred for
working capital purposes, and (iii) such Indebtedness does not mature prior to
the date that is 91 days after the Maturity Date,

 

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

(h) Indebtedness incurred in the ordinary course of business under performance,
surety, statutory, and appeal bonds,

(i) Indebtedness owed to any Person providing property, casualty, liability, or
any other insurance to Parent or any of its Subsidiaries and other similar or
deferred payment obligations in respect of insurance, so long as the amount of
such Indebtedness is not in excess of the amount of the unpaid cost (and related
fees, costs and expenses) of, and shall be incurred only to defer the cost of,
such insurance for the year in which such Indebtedness is incurred and such
Indebtedness is outstanding only during such year,

(j) the incurrence by Parent or its Subsidiaries of Indebtedness under Hedge
Agreements that are incurred for the bona fide purpose of hedging the interest
rate, commodity, or foreign currency risks associated with Parent’s and its
Subsidiaries’ operations and not for speculative purposes,

(k) Indebtedness incurred in respect of credit cards, credit card processing
services, debit cards, stored value cards, purchase cards (including so-called
“procurement cards” or “P-cards”), or Cash Management Services, in each case,
incurred in the ordinary course of business,

(l) unsecured Indebtedness of Parent owing to former employees, officers, or
directors (or any spouses, ex-spouses, or estates of any of the foregoing)
incurred in connection with the repurchase by Parent of the Stock of Parent that
has been issued to such Persons, so long as (i) no Default or Event of Default
has occurred and is continuing or would result from the incurrence of such
Indebtedness, and (ii) the aggregate amount of all such Indebtedness outstanding
at any one time does not exceed $2,500,000,

(m) Indebtedness owing to sellers of assets or Stock to a Loan Party that is
incurred by the applicable Loan Party in connection with the consummation of one
or more Permitted Acquisitions so long as (i) the aggregate principal amount for
all such unsecured Indebtedness does not exceed $10,000,000 at any one time
outstanding and (ii) it is otherwise on terms and conditions (including all
economic terms and the absence of covenants) reasonably acceptable to Agent,

(n) contingent liabilities in respect of any indemnification obligation,
adjustment of purchase price, non-compete, or similar obligation of Parent or
the applicable Loan Party incurred in connection with the consummation of one or
more Permitted Acquisitions,

(o) Indebtedness constituting Permitted Investments,

(p) Indebtedness of the Loan Parties consisting of:

(i) the Secured Notes (First Lien) in an aggregate principal amount not to
exceed $225,000,000 at any time outstanding less the aggregate amount of
principal repayments and redemptions with respect thereto made after the Closing
Date, and Refinancing Indebtedness in respect thereof,

 

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(ii) the Secured Notes (Second Lien) in an aggregate principal amount not to
exceed $100,000,000 at any time outstanding less the aggregate amount of
principal repayments and redemptions with respect thereto made after the Closing
Date, and Refinancing Indebtedness in respect thereof,

(iii) the Secured Notes (Convertible) in an aggregate principal amount not to
exceed $280,000,000 at any time outstanding less the aggregate amount of
conversions into common Stock of Parent, principal repayments and redemptions
with respect thereto made after the Closing Date, and Refinancing Indebtedness
in respect thereof,

(iv) the Additional Notes and Permitted Additional Pari Passu Obligations to the
extent permitted to be issued and outstanding under the Secured Notes Documents
as in effect on the date hereof in an aggregate outstanding principal amount,
together with the aggregate principal amount of Vessel Financing Debt, not to
exceed $50,000,000 at any time outstanding less the aggregate amount of
principal repayments and redemptions with respect thereto made after the Closing
Date (and Refinancing Indebtedness in respect of the foregoing), and

provided that, in each case, such Refinancing Indebtedness has no scheduled
amortization or scheduled payment of principal prior to the 91st day after the
Maturity Date,

(q) Indebtedness in respect of workers’ compensation claims, unemployment or
other insurance or self-insurance obligations, health, disability or other
benefits to employees or former employees and their families, bankers’
acceptances, performance, completion and surety bonds, completion guarantees and
similar obligations in the ordinary course of business,

(r) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently drawn against
insufficient funds, so long as such Indebtedness is covered within five Business
Days and does not exceed $2,500,000 in the aggregate,

(s) to the extent constituting Indebtedness, obligations in respect of bankers’
acceptances, tender, bid, judgment, appeal, performance or governmental contract
bonds and completion guarantees, surety, standby letters of credit and warranty
and contractual service obligations of a like nature, trade letters of credit
and documentary letters of credit and similar bonds or guarantees provided in
the ordinary course of business in an aggregate amount not to exceed $2,500,000,

(t) Indebtedness in the form of unsecured notes to fund non-pro rata Stock
buyback(s) in an amount not to exceed the minimum amount necessary to ensure
compliance by any Loan Party of its agreement to be and remain a “citizen of the
United States” within the

 

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meaning of 46 U.S.C. § 50501(a) and (d), eligible to own and operate vessels in
the coastwise trade of the United States; provided that such Indebtedness has no
scheduled amortization or payment of principal prior to the 91st day after the
Maturity Date,

(u) Indebtedness incurred to finance the replacement (through construction,
acquisition, lease or otherwise) of one or more Vessels and the Vessel Related
Assets in respect thereof, upon a total loss (including without limitation with
respect to a Vessel, an actual, constructive, compromised, agreed or arranged
total loss of such Vessel), destruction, condemnation, confiscation,
requisition, seizure, forfeiture or other taking of title to or use of such
Vessel (provided that such loss, destruction, condemnation, confiscation,
requisition, seizure, forfeiture or other taking of title to or use of such
Vessel was covered by insurance or resulted in the actual payment of
compensation, indemnification or similar payments to such Person (collectively,
a “Total Loss”)) in an aggregate amount no greater than the Ready for Sea Cost
for such replacement Vessel, in each case, less all compensation, damages and
other payments (including insurance proceeds other than in respect of business
interruption insurance) actually received by Parent or any of its Subsidiaries
from any Person in connection with the Total Loss in excess of amounts actually
used to repay Indebtedness secured by the Vessel subject to the Total Loss,

(v) Indebtedness incurred in relation to (i) maintenance, repairs,
refurbishments and replacements required to maintain the classification of or
the U.S. Coast Guard-issued Certificate of Inspection for any of the Vessels
owned, leased or bareboat chartered to or by the any Loan Party or any
Subsidiary thereof, (ii) drydocking of any of the Vessels owned or leased by any
Loan Party or any Subsidiary thereof for maintenance, repair, refurbishment or
replacement purposes in the ordinary course of business; and (iii) any
expenditures which will or may be reasonably expected to be recoverable from
insurance on such Vessels,

(w) Indebtedness (which may include, for the avoidance of doubt, deferred or
installment payment obligations) (“Vessel Financing Debt”), in an aggregate
principal amount, together with the aggregate principal amount of Indebtedness
outstanding pursuant to clause (p)(iv) above, not to exceed $50,000,000,
incurred in order to repurchase, repay, refinance, redeem, defease or otherwise
retire for value the all or any portion of the obligations of any Loan Party or
any Subsidiary thereof with respect to ship financing arrangements (including
those related to the Non-Domestic Service) in existence on the Closing Date, and
any Refinancing Indebtedness in respect thereof, provided that (a)(i) the
affirmative covenants and negative covenants (including financial maintenance
covenants) are customary for financings of the applicable type of Permitted
Indebtedness and, in any event, no more restrictive than the Loan Documents,
(ii) the cross default provisions are not materially less favorable to the Loan
Parties than those contained in the Secured Notes Documents as in effect on the
Closing Date, and (iii) the other terms and conditions thereof (other than those
covered by clause (b) or (c) below), taken as a whole, are not materially less
favorable to the Loan Parties than those contained in the Secured Notes
Documents as in effect on the Closing Date, in each case except to the extent
approved by Agent (such approval not to be unreasonably withheld, delayed or
conditioned), (b) the scheduled amortization for such Indebtedness shall be no
greater than the scheduled amortization for the Secured Notes (First Lien) as in
effect on the Closing Date for any period on or prior to the 91st day following
the Maturity Date, (c) the interest rates for any cash-pay interest

 

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(or portion of the total interest rate required to be regularly paid in cash),
for such Indebtedness shall be no greater than 2.00% in excess of the applicable
interest rates for the Secured Notes (Second Lien) as in effect on the Closing
Date for any period on or prior to the 91st day following the Maturity Date, and
(d) such Indebtedness shall have a maturity date at least 91 days after the
Maturity Date,

(x) additional Indebtedness in an aggregate principal amount (or accreted value,
as applicable) at any time outstanding, including all Refinancing Indebtedness
incurred to renew, refund, refinance, replace, defease or discharge any
Indebtedness incurred pursuant to this clause (x), not to exceed $20,000,000,
and

(y) the payment obligations with respect to the Antitrust Judgment and the
Vessel Environmental Judgment.

Notwithstanding anything in the foregoing to the contrary, the accrual of
interest, the accretion of accreted value, the payment of interest in the form
of additional Indebtedness and the payment or accrual of premiums, fees and
expenses in cash or in the form of additional Indebtedness shall not be deemed
to be existing, or an incurrence of Indebtedness, for purposes any basket amount
in this definition.

“Permitted Intercompany Investments” means Investments made by (a) a Loan Party
to or in another Loan Party (other than Parent), (b) a Non-Loan Party to or in
another Non-Loan Party, (c) a Non-Loan Party to or in a Loan Party, so long such
Indebtedness is subordinated in right of payment to the Obligations on terms and
conditions reasonably satisfactory to Agent and (d) a Loan Party to or in a
Non-Loan Party so long as (i) the amount of such loans (together with all
Investments made pursuant to clause (o) of the definition of Permitted
Investments) does not exceed $2,500,000 outstanding at any one time and (ii) no
Default or Event of Default has occurred and is continuing or would result
therefrom.

“Permitted Investments” means:

(a) Investments in cash and Cash Equivalents,

(b) Investments in negotiable instruments deposited or to be deposited for
collection in the ordinary course of business,

(c) advances made in connection with purchases of goods or services in the
ordinary course of business,

(d) Investments received in settlement of amounts due to any Loan Party or any
of its Subsidiaries effected in the ordinary course of business or owing to any
Loan Party or any of its Subsidiaries as a result of Insolvency Proceedings
involving an Account Debtor or upon the foreclosure or enforcement of any Lien
in favor of a Loan Party or its Subsidiaries,

(e) Investments owned by any Loan Party or any of its Subsidiaries on the
Closing Date and set forth on Schedule P-1,

(f) guarantees permitted under the definition of Permitted Indebtedness,

 

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(g) Permitted Intercompany Investments,

(h) Stock or other securities acquired in connection with the satisfaction or
enforcement of Indebtedness or claims due or owing to a Loan Party or its
Subsidiaries (in bankruptcy of customers or suppliers or otherwise outside the
ordinary course of business) or as security for any such Indebtedness or claims,

(i) deposits of cash made in the ordinary course of business to secure
performance of operating leases,

(j) non-cash loans to employees, officers, and directors of Parent or any of its
Subsidiaries for the purpose of purchasing Stock in Parent so long as the
proceeds of such loans are used in their entirety to purchase such stock in
Parent,

(k) Permitted Acquisitions,

(l) Investments in the form of capital contributions and the acquisition of
Stock made by any Loan Party in any other Loan Party (other than capital
contributions to or the acquisition of Stock of Parent),

(m) Investments resulting from entering into (i) Bank Product Agreements, or
(ii) agreements relative to Indebtedness that is permitted under clause (j) of
the definition of Permitted Indebtedness,

(n) Investments held by a Person acquired in a Permitted Acquisition to the
extent that such Investments were not made in contemplation of or in connection
with such Permitted Acquisition and were in existence on the date of such
Permitted Acquisition,

(o) any Investments received in compromise or resolution of litigation,
arbitration or other disputes,

(p) Investments resulting from Hedging Obligations,

(q) loans and advances to officers, directors or employees (i) for
business-related travel expenses, moving expenses and other similar expenses,
including as part of a recruitment or retention plan, in each case incurred in
the ordinary course of business, (ii) required by applicable employment laws and
(iii) other loans and advances not to exceed $2,000,000 at any one time
outstanding,

(r) prepaid expenses, and lease, utility, workers’ compensation and other
deposits, if created, acquired or entered into in the ordinary course of
business,

(s) payroll, business-related travel, and similar advances to cover matters that
are expected at the time of such advances to be ultimately treated as expenses
for accounting purposes and that are made in the ordinary course of business,

(t) Investments resulting from the prepayment of obligations of Parent and/or
any of its Subsidiaries related to the payment or prepayment of ship financing
arrangements (including those related to the Non-Domestic Service) in existence
on the Closing Date or otherwise resulting from the Non-Domestic Reorganization,

 

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(u) so long as no Default or Event of Default has occurred and is continuing or
would result therefrom, any other Investments (together with all Loans made
pursuant to clause (d) of the definition of Permitted Intercompany Investments)
in an aggregate amount not to exceed $5,000,000 during the term of the
Agreement, and

(v) additional Investments not otherwise permitted in clauses (a) through
(u) above so long as the Specified Condition is satisfied,

provided that no Acquisition shall be permitted hereunder that is not a
Permitted Acquisition.

“Permitted Liens” means

(a) Liens granted to, or for the benefit of, Agent to secure the Obligations,

(b) Liens for unpaid taxes, assessments, or other governmental charges or levies
that (i) are not yet delinquent, (ii) do not have priority over Agent’s Liens
and the underlying taxes, assessments, or charges or levies are the subject of
Permitted Protests, or (iii) have priority by operation of applicable law, are
the subject of Permitted Protests and, to the extent that (A) any Loan Party has
knowledge of such Lien (other than an inchoate Lien) or (B) the related taxes,
assessments, charges or levies are overdue and unpaid or (C) the applicable
Governmental Authority has recorded or filed such lien, in each case, such Loan
Party shall have promptly notified Agent of the existence of such Liens and the
related taxes, assessments, charges or levies but in any even within 5 days of
such recording or filing),

(c) judgment Liens arising solely as a result of the existence of judgments,
orders, or awards that do not constitute an Event of Default under Section 8.3
of the Agreement,

(d) Liens set forth on Schedule P-2; provided, however, that to qualify as a
Permitted Lien, any such Lien described on Schedule P-2 shall only secure the
Indebtedness that it secures on the Closing Date and any Refinancing
Indebtedness in respect thereof,

(e) the rights, interests, Liens or title of lessors and sub-lessors under
leases and licensors under license agreements or in the property being leased or
licensed,

(f) purchase money Liens or the interests of lessors and sub-lessors under
Capital Leases and/or Sale/Leaseback Transactions to the extent that such Liens
or interests secure Permitted Purchase Money Indebtedness and so long as
(i) such Lien attaches only to the asset purchased or acquired and the proceeds
thereof, and (ii) such Lien only secures the Indebtedness that was incurred to
acquire the asset purchased or acquired or any Refinancing Indebtedness in
respect thereof,

(g) statutory Liens arising in favor of warehousemen, landlords, carriers,
mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course
of business and not in connection with the borrowing of money, and which Liens
either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted
Protests,

 

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(h) Liens on amounts deposited to secure Parent’s and its Subsidiaries
obligations in connection with worker’s compensation or other unemployment
insurance, employee-loyalty and/or disability benefits, and/or casualty
insurance or self-insurance,

(i) Liens on amounts deposited to secure Parent’s and its Subsidiaries
obligations in connection with the making or entering into of bids, tenders, or
leases in the ordinary course of business and not in connection with the
borrowing of money,

(j) Liens on amounts deposited to secure Parent’s and its Subsidiaries
reimbursement obligations with respect to surety or appeal bonds obtained in the
ordinary course of business,

(k) with respect to any Real Property, easements, rights of way, encroachments,
zoning restrictions, title irregularities and similar matters or restrictions
that do not materially interfere with or impair the use or operation thereof,

(l) licenses of patents, trademarks, copyrights, and other intellectual property
rights in the ordinary course of business in any manner that does not materially
impair the conduct of the business or the value of the ABL Priority Collateral,

(m) Liens that are replacements of Permitted Liens to the extent that the
original Indebtedness is the subject of Refinancing Indebtedness and so long as
the replacement Liens only encumber those assets that secured the original
Indebtedness,

(n) rights of setoff, bankers’ liens and other Liens upon deposit accounts,
securities accounts or commodities accounts in favor of banks or other
depository intermediary or brokerage institutions, solely to the extent incurred
(i) in connection with the maintenance of such deposit accounts, securities
accounts or commodities accounts in the ordinary course of business or (ii) in
respect of credit cards, credit card processing services, debit cards, stored
value cards, purchase cards (including so-called “procurement cards” or
“P-cards”), or Cash Management Services, in each case, incurred in the ordinary
course of business,

(o) Liens granted in the ordinary course of business on the unearned portion of
insurance premiums and other similar deferred payment obligations in connection
therewith securing the financing of insurance premiums and other similar
deferred payment obligations in connection therewith to the extent the financing
is permitted under the definition of Permitted Indebtedness,

(p) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties in connection with the importation of goods,

(q) Liens solely on any earnest money deposits made by Parent or any of its
Subsidiaries in connection with any letter of intent or purchase agreement with
respect to a Permitted Acquisition,

 

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(r) Liens on assets (other than ABL Priority Collateral) in connection with
Indebtedness permitted under clause (f) of Permitted Indebtedness; provided that
such Indebtedness is subject to an intercreditor agreement having terms
reasonably satisfactory to Agent,

(s) Liens on assets (other than ABL Priority Collateral) in connection with
Indebtedness permitted under clause (m) of Permitted Indebtedness; provided that
such Indebtedness is subject to an intercreditor agreement having terms
reasonably satisfactory to Agent,

(t) Liens assumed by Parent or its Subsidiaries in connection with a Permitted
Acquisition that secure Acquired Indebtedness,

(u) (i) Liens on the Collateral securing Indebtedness permitted under clause
(p) of the definition of Permitted Indebtedness (other than clause (iv)), and
(ii) Liens securing Indebtedness permitted under clause (p)(iv) of the
definition of Permitted Indebtedness; provided that the holders of such
Indebtedness (or their authorized representatives on their behalf) shall have
entered into a joinder to the Intercreditor Agreement or such other
documentation reasonably satisfactory to Agent agreeing to be bound by the terms
thereof and to have the same rights and obligations thereunder as holders of the
Secured Notes,

(v) Liens to secure the performance of tenders, completion guarantees, statutory
obligations, surety, environmental or appeal bonds, bids, leases, government
contracts, performance bonds or other obligations of a like nature incurred in
the ordinary course of business,

(w) to the extent constituting Liens, options, put and call arrangements, rights
of first refusal and similar rights relating to Permitted Investments in joint
ventures,

(x) Liens arising from precautionary UCC financing statement filings regarding
operating leases entered into by the Loan Parties or any of their Subsidiaries
in the ordinary course of business or other precautionary UCC financing
statement filings,

(y) Liens on Vessels and Vessel Related Assets incurred in the ordinary course
of business of the Loan Parties or their Subsidiaries arising from Vessel
chartering, drydocking, maintenance, repair, refurbishment or replacement, the
furnishing of supplies, bunkers and other necessaries to Vessels and Vessel
Related Assets, repairs and improvements to Vessels and Vessel Related Assets,
crews’ wages, the wages of a stevedore, maritime Liens, Liens covered by
insurance and any deductible applicable thereto, and other Liens filed in
respect of any Vessel not otherwise constituting Permitted Liens under the
foregoing of this clause (w) or clause (x); provided that the Loan Party shall
cause any such Lien to be removed within 30 days of obtaining knowledge thereof
except where (i) the validity or amount thereof is being contested in good faith
by appropriate proceedings, (ii) the Loan Party has set aside on its books
adequate reserves with respect thereto to the extent required by GAAP,
(iii) such contest effectively suspends the enforcement of such Lien securing
such obligation and (iv) neither the Vessel nor any interest therein has been
arrested by reason thereof or would be in any danger of being sold, forfeited or
lost during the pendency of such contest,

 

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(z) Liens on Vessels and Vessel Related Assets for salvage (including contract
salvage) and general average,

(aa) Liens on Vessels and Vessel Related Assets securing Indebtedness incurred
to finance the construction, purchase or lease of, or repairs, improvements or
additions to, a Vessel (which term, for purposes of this clause (z), shall
include the Capital Stock of a Person substantially all of the assets of which
are Vessels and Vessel Related Assets, as the context may require), provided
that (i) the principal amount of Indebtedness secured by such a Lien does not
exceed (x) with respect to Indebtedness incurred to finance the construction of
such Vessel, 87.5% of the sum of (1) the contract price pursuant to the Vessel
Construction Contract for such Vessel and (2) any other Ready for Sea Cost for
such Vessel, and (y) with respect to Indebtedness Incurred to finance the
acquisition of such Vessel, 87.5% of the sum of (1) the contract price for the
acquisition of such Vessel and (2) any other Ready for Sea Cost of such Vessel,
(ii) in the case of Indebtedness that matures within nine months after the
incurrence of such Indebtedness, the principal amount of Indebtedness secured by
such a Lien shall not exceed the fair market value, as determined in good faith
by the Board of Directors of Parent, of such Vessel at the time such Lien is
incurred, (iii) in the case of a Sale/Leaseback Transaction, the principal
amount of Indebtedness secured by such a Lien shall not exceed the fair market
value, as determined in good faith by the Board of Directors of Parent, of such
Vessel at the time such Lien is incurred and (iv) in the case of Indebtedness
representing Capital Lease Obligations relating to a Vessel, the principal
amount of Indebtedness secured by such a Lien shall not exceed 100% of the sum
of (1) the fair market value, as determined in good faith by the Board of
Directors of Parent, of such Vessel at the time such Lien is incurred and
(2) any Ready for Sea Costs for such Vessel, provided, further, however that
such Lien may not extend to any other property owned by such Loan Party or any
of its Subsidiaries at the time the Lien is incurred and the Indebtedness (other
than any interest thereon) secured by the Lien may not be incurred more than 180
days after the later of the acquisition, completion of construction, repair,
improvement, addition or commencement of full operation of the property subject
to the Lien,

(bb) Liens on Vessels and Vessel Related Assets in favor of the Maritime
Administration in respect of guaranties provided thereby of Indebtedness
incurred by the Loan Parties and their Subsidiaries for the purposes of
acquiring or constructing new Vessels pursuant to 46 U.S.C. Chapter 537,

(cc) Liens on Collateral securing Vessel Financing Debt ranking junior to the
Agent’s Liens on the ABL Priority Collateral; provided that such Indebtedness is
subject to an intercreditor agreement with terms and conditions that are at
least as favorable to Agent and the Lender Group as those in the Intercreditor
Agreement (or otherwise reasonably satisfactory to Agent) in form and substance
reasonably satisfactory to Agent,

(dd) Liens on assets (other than ABL Priority Collateral) securing Indebtedness
incurred pursuant to clause (x) of the definition of Permitted Indebtedness;
provided that (i) Agent has received written notice of the incurrence of such
Indebtedness and (ii) if requested by Agent in its Permitted Discretion, such
Indebtedness is subject to an intercreditor agreement having terms reasonably
satisfactory to Agent, and

 

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(ee) Liens on assets (other than ABL Priority Collateral) not otherwise
permitted under clauses (a) though (dd) above securing obligations in an amount
not to exceed $1,500,000 at any time outstanding.

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

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

“Permitted Purchase Money Indebtedness” means, as of any date of determination,
Purchase Money Indebtedness in an aggregate principal amount outstanding at any
one time not in excess of $25,000,000.

“Permitted Restricted Debt Payments” means:

(a) Refinancing Indebtedness thereof permitted by Section 6.1,

(b) the payment of scheduled principal installments, if any, and interest in
respect of subordinated Indebtedness (other than any such payment prohibited by
the subordination provisions thereof),

(c) the payment of scheduled principal installments in respect of the Senior
Notes and interest in respect thereof,

(d) Restricted Debt Payments of Indebtedness constituting Permitted Intercompany
Investments; provided that no Default or Event of Default is continuing or would
result therefrom,

(e) the conversion of the Secured Notes (Convertible) into common Stock of
Parent (or into instruments representing rights with respect to common Stock),

(f) Restricted Debt Payments of the Senior Notes solely with the proceeds from
any sale or other disposition of Secured Notes Priority Collateral and any
premium owed with respect to such principal payment, and

(h) additional Restricted Debt Payments of the Senior Notes not otherwise
permitted in clauses (a) through (f) above so long as the Specified Condition is
satisfied.

“Permitted Restricted Stock Payments” means:

(a) (i) Restricted Stock Payments made by any Subsidiary of Parent to Parent or
any wholly-owned Subsidiary of Parent and (ii) Restricted Stock Payments made in
cash by any non-wholly-owned Subsidiary of Parent to its shareholders generally
so long as Parent or its

 

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respective Subsidiary which owns the Stock in the Subsidiary paying such
Restricted Stock Payments receives at least its proportionate share thereof
(based upon its relative holding of the Stock in the Subsidiary paying such
Restricted Stock Payments and taking into account the relative preferences, if
any, of the various classes of Stock of such Subsidiary and any requirements
imposed by applicable law); provided that any Restricted Stock Payment made by a
Loan Party pursuant to clause (i) immediately above to a wholly-owned Subsidiary
that is not a Loan Party may only be made if (1) no Default or Event of Default
is continuing or would result therefrom and (2) such wholly-owned Subsidiary
promptly distributes and/or transfer any assets received pursuant to such
Restricted Stock Payment (directly or indirectly through other wholly-owned
Subsidiaries) to a Loan Party,

(b) the redemption or purchase shares of Parent’s common Stock or options to
purchase Parent’s common Stock, as the case may be, held by former officers or
employees of Parent or any of its Subsidiaries following the death, disability,
retirement or termination of employment of such officers or employees, provided
that (i) the only consideration paid by Parent in respect of such redemptions
and/or purchases shall be cash, and (ii) the aggregate amount paid by Parent in
cash in respect of all such redemptions and/or purchases shall not exceed
$3,000,000 in any fiscal year of Parent plus the proceeds of any key-man life
insurance,

(c) Restricted Stock Payments, in accordance with Parent’s Governing Documents,
to the holders of the Stock issued by Parent (i) solely with the proceeds of
Indebtedness permitted pursuant to clause (q) of the definition of Permitted
Indebtedness and (ii) so long as clauses (a) and (c) of the Specified Condition
are satisfied, in an aggregate amount not to exceed the lesser of
(A) $15,000,000 during the term of the Agreement and (B) the minimum amount
necessary to ensure compliance by any Loan Party of its agreement to be and
remain a “citizen of the United States” within the meaning of 46 U.S.C. §
50501(a) and (d), eligible to own and operate vessels in the coastwise trade of
the United States, and

(d) additional Restricted Stock Payments not otherwise permitted in clauses
(a) or (b) above so long as the Specified Condition is satisfied; provided that
in no event shall this clause (d) permit additional Restricted Stock Payments
described in clause (c) above or any other Restricted Stock Payments intended to
ensure compliance by any Loan Party of its agreement to be and remain a “citizen
of the United States” within the meaning of 46 U.S.C. § 50501(a) and (d),
eligible to own and operate vessels in the coastwise trade of the United States,
or to accomplish the same results.

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

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

 

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“Prohibited Preferred Stock” means any Preferred Stock that by its terms is
mandatorily redeemable or subject to any other payment obligation (including any
obligation to pay dividends, other than dividends of shares of Preferred Stock
of the same class and series payable in kind or dividends of shares of common
stock) on or before a date that is less than 1 year after the Maturity Date, or,
on or before the date that is less than 1 year after the Maturity Date, is
redeemable at the option of the holder thereof for cash or assets or securities
(other than distributions in kind of shares of Preferred Stock of the same class
and series or of shares of common stock).

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

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

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

(b) with respect to a Lender’s obligation to participate in Letters of Credit,
Protective Advances, Swing Loans and Reimbursement Undertakings, to reimburse
the Issuing Lender, Agent and the Swing Lenders, as applicable, and right to
receive payments of fees with respect thereto, (i) prior to the Revolver
Commitments being terminated or reduced to zero, the percentage obtained by
dividing (y) such Lender’s Revolver Commitment, by (z) the aggregate Revolver
Commitments of all Lenders, and (ii) from and after the time that the Revolver
Commitments have been terminated or reduced to zero, the percentage obtained by
dividing (y) the outstanding principal amount of such Lender’s Advances by
(z) the outstanding principal amount of all Advances; provided, however, that if
all of the Advances have been repaid in full and Letters of Credit remain
outstanding, Pro Rata Share under this clause shall be determined based upon
subclause (i) of this clause as if the Revolver Commitments had not been
terminated or reduced to zero and based upon the Revolver Commitments as they
existed immediately prior to their termination or reduction to zero, and

(c) with respect to all other matters as to a particular Lender (including the
indemnification obligations arising under Section 15.7 of the Agreement),
(i) prior to the Revolver Commitments being terminated or reduced to zero, the
percentage obtained by dividing (y) such Lender’s Revolver Commitment, by
(z) the aggregate amount of Revolver Commitments of all Lenders, and (ii) from
and after the time that the Revolver Commitments have been terminated or reduced
to zero, the percentage obtained by dividing (y) the outstanding principal
amount of such Lender’s Advances, by (z) the outstanding principal amount of all
Advances; provided, however, that if all of the Advances have been repaid in
full and Letters of

 

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Credit remain outstanding, Pro Rata Share under this clause shall be determined
based upon subclause (i) of this clause as if the Revolver Commitments had not
been terminated or reduced to zero and based upon the Revolver Commitments as
they existed immediately prior to their termination or reduction to zero.

“Protective Advances” has the meaning specified therefor in Section 2.3(d)(i) of
the Agreement.

“Puerto Rico Settlement” means the settlement of certain class action lawsuits
(which were consolidated into a single multidistrict litigation proceeding (case
no. MDL1960) in the District of Puerto Rico), in each case involving any
allegation of a violation of federal, state or other antitrust law by any of the
Loan Parties or their Subsidiaries with respect to the ocean shipping business
in the Puerto Rico trade lanes.

“Purchase Money Indebtedness” means Indebtedness (other than the Obligations,
but including mortgage financings, Capitalized Lease Obligations and any
obligations under Sale/Leaseback Transactions), incurred at the time of, or
within 180 days after, the acquisition, development, construction, installation,
expansion, repair or improvement of any fixed assets for the purpose of
financing all or any part of the acquisition, development, construction,
installation, expansion, repair or improvement cost thereof.

“Purchase Price” means, with respect to any Acquisition, an amount equal to the
aggregate consideration, whether cash, property or securities (including the
fair market value of any Stock of Parent issued in connection with such
Acquisition and including the maximum amount of Earn-Outs), paid or delivered by
Parent or one of its Subsidiaries in connection with such Acquisition (whether
paid at the closing thereof or payable thereafter and whether fixed or
contingent), but excluding therefrom (a) any cash of the seller and its
Affiliates used to fund any portion of such consideration and (b) any cash or
Cash Equivalents acquired in connection with such Acquisition.

“Ready for Sea Costs” means with respect to a Vessel or Vessels to be acquired
or leased (pursuant to a Capital Lease Obligation) by any Loan Party or any
Subsidiary thereof, the aggregate amount of expenditures incurred to acquire or
construct and bring such Vessel or Vessels to the condition and location
necessary for their intended use, including any and all inspections, appraisals,
repairs, modifications, additions, permits and licenses in connection with such
acquisition or lease, which would be classified and accounted for as “property,
plant and equipment” in accordance with GAAP.

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

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

“Recapitalization” means the Transactions, as well as any activities preceding
the Transactions relating to (a) the second amendment to the Existing Credit
Agreement dated as of March 9, 2011, (b) the third amendment to the Existing
Credit Agreement dated as of June 24, 2011, (c) the fourth amendment to the
Existing Credit Agreement dated as of September 13.

 

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2011, (d) the Bridge Credit Agreement, (e) any attempt to obtain consent or
waiver from the holders of the Existing Notes in connection with the Antitrust
Judgment or otherwise, (f) any proposed refinancing of the Existing Credit
Agreement or the Indebtedness under the Existing Notes.

“Recapitalization Costs” means the fees and expenses incurred by (or
reimbursable to third parties by) Parent, Borrower and any of their respective
Subsidiaries in connection with the Recapitalization.

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

“Reference Period” means any applicable period of 12 consecutive fiscal months.

“Refinancing Indebtedness” means refinancings, renewals, replacements, exchanges
or extensions of Indebtedness so long as:

(a) such refinancings, renewals, replacements, exchanges or extensions do not
result in an increase in the principal amount of the Indebtedness so refinanced,
renewed, replaced, exchanged or extended, other than by the amount of premiums
paid thereon, interest and fees accrued thereon and the fees and expenses
incurred in connection therewith and by the amount of unfunded commitments with
respect thereto,

(b) such refinancings, renewals, replacements, exchanges or extensions do not
result in a shortening of the maturity date or the average weighted maturity
(measured as of the refinancing, renewal, replacement, exchange or extension) of
the Indebtedness so refinanced, renewed, replaced, exchanged or extended, nor
are they on terms or conditions that, taken as a whole, are materially less
favorable to the Loan Parties, taken as a whole, than those of the Indebtedness
being refinanced, renewed, replaced, exchanged or extended,

(c) if the Indebtedness that is refinanced, renewed, replaced, exchanged or
extended was subordinated (i) in right of payment to the Obligations or
(ii) with respect to the priority of Liens to the Agent’s Liens, then, in each
case, the terms and conditions of the refinancing, renewal, replacement,
exchange or extension must include subordination and intercreditor terms and
conditions that are at least as favorable to the Lender Group as those that were
applicable to the refinanced, renewed, replaced, exchanged or extended
Indebtedness,

(d) the Indebtedness that is refinanced, renewed, replaced, exchanged or
extended is not recourse to any Person that is liable on account of the
Obligations other than those Persons which were obligated with respect to the
Indebtedness that was refinanced, renewed, replaced, exchanged or extended, and

(e) no Default or Event of Default is continuing or would result from such
refinancing, renewal, replacement, exchange or extension.

“Register” has the meaning specified therefor in Section 13.1(h) of the
Agreement.

 

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“Registered Loan” has the meaning specified therefor in Section 13.1(h) of the
Agreement.

“Reimbursement Undertaking” has the meaning specified therefor in
Section 2.11(a) of the Agreement.

“Related Fund” means, with respect to any Lender that is an investment fund, any
other investment fund that invests in commercial loans and that is managed or
advised by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

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

“Replacement Lender” has the meaning specified therefor in Section 2.13(b) of
the Agreement.

“Report” has the meaning specified therefor in Section 15.16 of the Agreement.

“Required Lenders” means, at any time, Lenders whose aggregate Pro Rata Shares
(calculated under clause (c) of the definition of Pro Rata Shares) exceed 50%
(subject to Section 14.1(e) with respect to Defaulting Lenders); provided,
however, that at any time there are 2 or more Lenders, “Required Lenders” must
include at least 2 Lenders.

“Requirement of Law” means, as to any Person, the articles or certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and each law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

“Responsible Officer” means the chief executive officer, corporate secretary,
the president, the controller, the chief financial officer or the treasurer of a
Loan Party, as applicable, or any other officer having substantially the same
authority and responsibility; or, with respect to compliance with financial
covenants or delivery of financial information, the chief financial officer, the
controller or the treasurer of a Borrower, as applicable, or any other officer
having substantially the same authority and responsibility.

“Restricted Debt Payment” means any payment, prepayment, redemption, defeasance,
purchase, distribution on account of, retirement or other acquisition of, or the
setting apart of assets for a sinking or other analogous fund for the same or
similar purpose with respect to (a) any Indebtedness that is subordinated in
right of payment to the Obligations and (b) the Senior Notes; provided that, for
avoidance of doubt, the foregoing shall not be construed to limit the payment of
fees (other than fees in the nature of penalties, premiums or similar payments),
expense reimbursements or indemnification payments required to be paid in
connection with any such Indebtedness.

 

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“Restricted Stock Payment” means to (a) declare or pay any dividend or make any
other payment or distribution on account of Stock issued by Parent (including
any payment in connection with any merger or consolidation involving Parent) or
to the direct or indirect holders of Stock issued by Parent, in each case, in
their capacity as such (other than dividends or distributions payable in Stock
(other than Prohibited Preferred Stock) issued by Parent, or (b) purchase,
redeem, or otherwise acquire or retire for value (including in connection with
any merger or consolidation involving Parent) any Stock issued by Parent.

“Revolver Commitment” means, with respect to each Lender, its Revolver
Commitment, and, with respect to all Lenders, their Revolver Commitments, in
each case as such Dollar amounts are set forth beside such Lender’s name under
the applicable heading on Schedule C-1 or in the Assignment and Acceptance
pursuant to which such Lender became a Lender under the Agreement, as such
amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 13.1 of the Agreement.

“Revolver Loans” has the meaning specified therefor in Section 2.1(a) of the
Agreement and, for avoidance of doubt, shall include Overadvances.

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

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, (d) a Person resident in
or determined to be resident in a country, in each case, that is subject to a
country sanctions program administered and enforced by OFAC.

“Sanctioned Person” means a person named on the list of Specially Designated
Nationals maintained by OFAC.

“Sale/Leaseback Transaction” means any arrangement, directly or indirectly,
between any Loan Party and an unrelated third party whereby such Loan Party
shall sell or transfer any property, real or personal, used or useful in its
business, whether now owned or hereafter acquired, and thereafter rent or lease
such property or other property from such third party which such Loan Party
intends to use for substantially the same purpose or purposes as the property
being sold or transferred.

“S&P” has the meaning specified therefor in the definition of Cash Equivalents.

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

“Secured Notes” means, collectively, the Secured Notes (Convertible), the Secure
Notes (First Lien) and the Secured Notes (Second Lien).

 

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“Secured Notes (Convertible)” means, collectively the Convertible Secured Notes
due April 15, 2017 in an aggregate principal amount not to exceed $280,000,000,
which have been issued by Parent pursuant to and are subject to the Secured
Notes Indenture (Convertible).

“Secured Notes (First Lien)” means the 11% First Lien Secured Notes due
October 15, 2016 in an aggregate principal amount not to exceed $225,000,000,
which have been issued by Borrower pursuant to and are subject to the Secured
Notes Indenture (First Lien).

“Secured Notes (Second Lien)” means, collectively the Second Lien Secured Notes
due October 15, 2016 in an aggregate principal amount not to exceed $100,000,000
plus any accretions or paid-in-kind interest thereon, which have been issued by
Borrower pursuant to and are subject to the Secured Notes Indenture (Second
Lien).

“Secured Notes Documents” means, collectively, the Secured Notes Documents
(Convertible), the Secure Notes Documents (First Lien) and the Secured Notes
Documents (Second Lien).

“Secured Notes Documents (Convertible)” means, collectively, the Secured Notes
Indenture (Convertible) and all other loan agreements, indentures, note purchase
agreements, promissory notes, guarantees, intercreditor agreements, assignment
and assumption agreements and other instruments and agreements evidencing the
terms of the Secured Notes (Convertible), including a security agreement with a
collateral description and Lien structure similar to that of the Agreement and
satisfactory to Agent.

“Secured Notes Documents (First Lien)” means, collectively, the Secured Notes
Indenture (First Lien) and all other loan agreements, indentures, note purchase
agreements, promissory notes, guarantees, intercreditor agreements, assignment
and assumption agreements and other instruments and agreements evidencing the
terms of the Secured Notes (First Lien), including a security agreement with a
collateral description and Lien structure similar to that of the Agreement and
satisfactory to Agent.

“Secured Notes Documents (Second Lien)” means, collectively, the Secured Notes
Indenture (Second Lien) and all other loan agreements, indentures, note purchase
agreements, promissory notes, guarantees, intercreditor agreements, assignment
and assumption agreements and other instruments and agreements evidencing the
terms of the Secured Notes (Second Lien), including a security agreement with a
collateral description and Lien structure similar to that of the Agreement and
satisfactory to Agent.

“Secured Notes Indenture (Convertible)” means that certain Indenture, dated as
of October 5, 2011, among Parent, the Borrower, the other Guarantors and U.S.
Bank National Association, as trustee.

“Secured Notes Indenture (First Lien)” means that certain Indenture, dated as of
October 5, 2011, among Parent, the Borrower, the other Guarantors and U.S. Bank
National Association, as trustee.

 

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“Secured Notes Indenture (Second Lien)” means that certain Indenture, dated as
of October 5, 2011, among Parent, the Borrower, the other Guarantors and U.S.
Bank National Association, as trustee.

“Secured Notes Priority Collateral” means Notes Priority Collateral (as defined
in the Intercreditor Agreement).

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

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

“Security Agreement” means a security and pledge agreement, dated as of even
date with the Agreement, in form and substance reasonably satisfactory to Agent,
executed and delivered by Borrower and Guarantors to Agent.

“Senior Notes” means the Secured Notes, the Additional Notes, the Permitted
Additional Pari Passu Obligations and the Vessel Financing Debt (and any
Refinancing Indebtedness in respect of the foregoing), or any one of them, as
the context may require.

“Settlement” has the meaning specified therefor in Section 2.3(e)(i) of the
Agreement.

“Settlement Date” has the meaning specified therefor in Section 2.3(e)(i) of the
Agreement.

“Shipco” means CSX Alaska Vessel Company, LLC, a Subsidiary of CSX.

“Solvent” means, with respect to any Person or consolidated group of Persons,
taken as a whole (a “Group”), as the context may require, on a particular date,
that:

(a) the fair value of the assets of such Person or Group is greater than the
total amount of liabilities, including contingent, subordinated, absolute,
fixed, matured or unmatured and liquidated or unliquidated liabilities, of such
Person or Group,

(b) the present fair saleable value of the assets of such Person or Group
exceeds (i) the amount that will be required to pay the probable liability of
such Person or Group on its debts as such debts become absolute and matured and
(ii) the total liabilities of such Person or Group (including, without
limitation, subordinated, unmatured, unliquidated and known contingent
liabilities),

(c) such Person or Group will be able to pay their debts and other liabilities,
contingent obligations and other commitments as they mature in the normal course
of business,

(d) such Person or Group is not engaged in business or any transaction, or is
about to engage in business or any transaction, for which its property would
constitute unreasonably small capital, and

 

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(e) such Person or Group is not “insolvent” as such term is defined in
Section 101(32) of Title 11 of the United States Code, 11 U.S.C. Section 101,
et. seq.

“Specified Condition” means, with respect to the making of any Specified Event
(a) Excess Availability for the 30 consecutive days ending on the date of such
Specified Event (including the date thereof) (calculated on a pro forma basis
after giving effect to such Specified Event), plus, so long as there are no
outstanding Advances on the date of such Specified Event, the Specified
Liquidity Amount, shall not be less than $40,000,000, (b) the Fixed Charge
Coverage Ratio shall be greater than 1.00 to 1.00 (calculated on a pro forma
basis after giving effect to such Specified Event), and (c) no Default or Event
of Default is continuing or would result from such Specified Event.

“Specified Event” means the making of, or entering into, a Permitted
Acquisition, a Permitted Investment, a Permitted Restricted Stock Payment or a
Permitted Restricted Debt Payment, in each case, which expressly references the
Specified Condition.

“Specified Liquidity Amount” means, with respect to any Specified Event, an
amount up to $10,000,000, which amount shall be on deposit in an account at the
Agent or any of its Affiliates subject to a first priority perfected security
interest (subject only to Permitted Liens) in favor of Agent and available for
withdrawal by Borrower no earlier than 5 Business Days after the occurrence of
such Specified Event.

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

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

“Swing Lender” means WFCF or any other Lender that, at the request of Borrower
and with the consent of Agent agrees, in such Lender’s sole discretion, to
become the Swing Lender under Section 2.3(b) of the Agreement.

“Swing Loan” has the meaning specified therefor in Section 2.3(b) of the
Agreement.

“Taxes” means any taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein and all
interest, penalties or similar liabilities with respect thereto; provided,
however, that Taxes shall exclude the following, including any interest or
penalties with respect thereto (i) any tax imposed on the net income or net
profits of Agent, any Underlying Issuer, any Lender or any Participant
(including any branch profits or similar taxes), in each case imposed by the
jurisdiction (or by any political subdivision or taxing

 

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authority thereof) in which Agent, such Underlying Issuer, such Lender or such
Participant is organized or the jurisdiction (or by any political subdivision or
taxing authority thereof) in which Agent’s, such Underlying Issuer’s, such
Lender’s or such Participant’s principal office is located; (ii) taxes resulting
from Agent’s, such Underlying Issuer’s, such Lender’s or such Participant’s
failure (other than as a result of a Change in Law) to comply with the
requirements of Section 16(c) or (d) of the Agreement, (iii) U.S. federal
withholding Taxes imposed under FATCA, and (iv) any United States federal
withholding taxes that would be imposed on amounts payable to a Lender or
Participant based upon the applicable withholding rate in effect at the time
such Person becomes a party to the Agreement (or designates a new lending
office), except that Taxes shall include (A) any amount that such Person (or its
assignor, if any) was previously entitled to receive pursuant to Section 16(a)
of the Agreement, if any, with respect to such withholding tax at the time such
Person becomes a party to the Agreement (or designates a new lending office),
and (B) United States federal withholding taxes that may be imposed after the
time such Person becomes a party to the Agreement (or designates a new lending
office), as a result of a Change in Law, rule, regulation, treaty, order or
other decision with respect to any of the foregoing by any Governmental
Authority.

“Tax Lender” has the meaning specified therefor in Section 14.2(a) of the
Agreement.

“Termination Event” means the occurrence of any of the following which,
individually or in the aggregate, has resulted or could reasonably be expected
to result in liability of Borrower in an aggregate amount in excess of
$10,000,000 (a) a “Reportable Event” described in Section 4043 of ERISA for
which the thirty (30) day notice requirement has not been waived by the PBGC, or
(b) the withdrawal of any Loan Party or any ERISA Affiliate from a Pension Plan
during a plan year in which it was a “substantial employer” as defined in
Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such
a withdrawal under Section 4062(e) of ERISA, or (c) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or the
treatment of a Pension Plan amendment as a termination, under Section 4041 of
ERISA, if the plan assets are not sufficient to pay all plan liabilities, or
(d) the institution of proceedings to terminate, or the appointment of a trustee
with respect to, any Pension Plan by the PBGC, or (e) any other event or
condition which would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan,
or (f) the imposition of a Lien pursuant to Section 430(k) of the IRC or
Section 303 of ERISA, or (g) the determination that any Pension Plan or
Multiemployer Plan is considered an at-risk plan or plan in endangered or
critical status with the meaning of Sections 430, 431 or 432 of the IRC or
Sections 303, 304 or 305 of ERISA or (h) the partial or complete withdrawal of
any Loan Party or any ERISA Affiliate from a Multiemployer Plan if withdrawal
liability is asserted by such plan, or (i) any event or condition which results
in the reorganization or insolvency of a Multiemployer Plan under Sections 4241
or 4245 of ERISA, or (j) any event or condition which results in the termination
of a Multiemployer Plan under Section 4041A of ERISA or the institution by PBGC
of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA, or
(k) the imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon any Loan Party
or any ERISA Affiliate.

 

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“TP1 Service” means the trans-Pacific service preceding the Non-Domestic Service
in which Parent and its Subsidiaries used vessels not qualified for operation in
the coastwise trade of the United States.

“Trademark Security Agreement” has the meaning specified therefor in the
Security Agreement.

“Transactions” means collectively, (a) the repayment, in full, of the
outstanding principal, accrued interest, and accrued fees and expenses owing
under or in connection with the Existing Credit Agreement, (b) the entering into
of the Loan Documents and the incurrence of all Advances and the issuance of all
Letters of Credit on the Closing Date, (c) the issuance of the Secured Notes
(First Lien) and the Secured Notes (Second Lien), (d) the issuance of the
Secured Notes (Convertible) and common Stock of Parent in exchange for the
Existing Notes and (e) the payment of fees and expenses in connection with the
foregoing.

“Trigger Amount” means the greater of (a) $12,500,000 and (b) 12.5% of the
Maximum Revolver Amount.

“Trigger Period” means the period (a) commencing on the date that an Event of
Default occurs, or Excess Availability is less than the Trigger Amount and
(b) continuing until, during the preceding consecutive 45 days, no Event of
Default exists and Excess Availability is equal to or greater than the Trigger
Amount at all times.

“Underlying Issuer” means Wells Fargo or one of its Affiliates.

“Underlying Letter of Credit” means a Letter of Credit that has been issued by
an Underlying Issuer.

“Unfinanced Capital Expenditures” means, for any period, the Capital
Expenditures made by Parent and its Subsidiaries during such period, which
Capital Expenditures are not financed from the proceeds of any Indebtedness
(other than the Revolver Loans, it being agreed that, to the extent financed
with Revolver Loans, such Capital Expenditures shall be deemed Unfinanced
Capital Expenditures).

“United States” means the United States of America.

“U.S. Person” means a “United States person” as defined in Section 7701(a)(30)
of the IRC.

“Voidable Transfer” has the meaning specified therefor in Section 17.8 of the
Agreement.

“Vessel” has the meaning specified therefor in the Security Agreement.

“Vessel Construction Contract” means any contract for the construction (or
construction and acquisition) of a Vessel entered into by any Loan Party or any
Subsidiary thereof, including any amendments, supplements or modifications
thereto or change orders in respect thereof.

 

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“Vessel Environmental Judgment” has the meaning specified therefor in the
definition of Vessel Environmental Judgment Lien.

“Vessel Environmental Judgment Lien” means the Lien, if any, securing the
obligations of Parent and its Subsidiaries with respect to the fines and
penalties (the “Vessel Environmental Judgment”) in an aggregate amount not to
exceed $1,600,000 that may be assessed against Parent and Borrower as a result
of the settlement of the investigation into certain environmental issues
pertaining to the use and operation of certain of Borrower’s Vessels by the
Unites States Coast Guard and United States Attorney for the Northern and
Central Districts of California described under the heading “Environmental
Matters” in Part II of the Parent’s Form 10-Q Report for the period ended
June 26, 2011, pursuant to which judgment the Parent and its Subsidiaries shall
be required to make payments in substantially the amounts previously disclosed
in writing to Agent prior to the Closing Date.

“Vessel Fleet Mortgage” has the meaning specified therefor in the Security
Agreement.

“Vessel Financing Debt” has the meaning specified therefor in clause (w) of the
definition of Permitted Indebtedness.

“Vessel Related Assets” means with respect to any Vessel, the fixed assets
attached to or maintained on such Vessel and all related spares and equipment
and any additional improvements thereto, but in no event shall Vessel Related
Assets include any assets that constitute ABL Priority Collateral.

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

“WFCF” means Wells Fargo Capital Finance, LLC, a Delaware limited liability
company.

 

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Schedule 3.1

Conditions Precedent

The obligation of each Lender to make its initial Extension of Credit provided
for in the Agreement is subject to the satisfaction or waiver, of each of the
following conditions precedent (the making of such initial Extension of Credit
being conclusively deemed to be the satisfaction or waiver of all of the
following:

(a) the Closing Date shall occur on or before October 31, 2011;

(b) Agent shall have received the results of Lien searches (including a search
as to judgments, pending litigation and tax matters) for the jurisdiction of
organization of each Loan Party and the jurisdiction of the chief executive
office of each Loan Party, which, solely with respect to ABL Priority
Collateral, such search results shall be reasonably satisfactory to Agent;

(c) Agent shall have received (i) UCC-1 financing statements in form appropriate
for filing in each Loan Parties’ jurisdiction of organization and
(ii) agreements, documents and instruments reasonably necessary to perfect the
Agent’s Liens to the extent required under the Loan Documents to be perfected as
of the Closing Date, other than those agreements, documents and instruments
identified on Schedule 3.6;

(d) Agent shall have received each of the following documents, duly executed by
the Loan Party party thereto:

(i) the Agreement,

(ii) the promissory notes requested by any Lender at least 2 Business Days prior
to the Closing Date, if any,

(iii) the Guaranty,

(iv) the Security Agreement,

(v) the Intercreditor Agreement,

(vi) a disbursement letter executed and delivered by Borrower to Agent regarding
the Extensions of Credit to be made under the Agreement on the Closing Date, the
form and substance of which is reasonably satisfactory to Agent,

(vii) a payoff letter, in form and substance reasonably satisfactory to Agent,
from Wells Fargo Bank, N.A., as administrative agent (“Existing Agent”) for the
lenders (“Existing Lenders”) party to the Existing Credit Agreement, respecting
the amount necessary to repay in full all of the obligations of Parent and its
Subsidiaries owing to Existing Agent and Existing Lenders under the Existing
Credit Agreement (other than the Existing Letters of Credit) and releasing all
of the Liens existing in favor of Existing Agent in and to the assets of

 

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Parent and its Subsidiaries, together with termination statements and other
documentation evidencing the termination by Existing Lender of its Liens in and
to the properties and assets of Parent and its Subsidiaries; and

(viii) a payoff letter, in form and substance reasonably satisfactory to Agent,
from Cantor Fitzgerald Securities, as administrative agent (the “Bridge Agent”)
for the lenders (“Bridge Lenders”) party to the Bridge Credit Agreement,
respecting the amount necessary to repay in full all of the obligations of
Parent and its Subsidiaries owing under the Bridge Credit Agreement and
releasing all of the Liens existing in favor thereof in and to the assets of
Parent and its Subsidiaries, together with termination statements and other
documentation evidencing the termination thereby of its Liens in and to the
properties and assets of Parent and its Subsidiaries;

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

(f) Agent shall have received copies of each Loan Parties’ Governing Documents,
as amended, modified, or supplemented to the Closing Date, certified by the
appropriate officer of the jurisdiction of organization of such Loan Party and
the Secretary of such Loan Party;

(g) Agent shall have received a certificate of status with respect to each Loan
Party, dated within 20 days of the Closing Date, such certificate to be issued
by the appropriate officer of the jurisdiction of organization of such Loan
Party, which certificate shall indicate that such Loan Party is in good standing
in each such jurisdiction;

(h) Agent shall have received certificates of insurance and endorsements as are
required by Section 5.6, the form and substance of which shall be reasonably
satisfactory to Agent;

(i) Agent shall have received a legal opinion from Kirkland and Ellis LLP, legal
counsel to the Loan Parties, and Carlsmith Ball LLP, as special Hawaii counsel
to Hawaii Stevedores, Inc., each addressed to Agent and each Lender and
otherwise in form and substance reasonably satisfactory to Agent;

(j) Agent shall have received (i) a Borrowing Base Certificate from Borrower,
calculating the Borrowing Base as of the most recent month-end occurring at
least 10 days prior to the Closing Date (based on the confirmatory field exam
conducted within a reasonable period of time prior to the Closing Date) and
certifying that Excess Availability together with cash on hand of the Loan
Parties, after giving effect to the consummation of the Transactions, is not
less than $40,000,000 and (ii) a solvency certificate certified by the chief
financial officer or treasurer of Parent in form and substance satisfactory to
Agent;

 

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(k) Agent shall have (i) completed customary “bring-down” due diligence, with
results reasonably satisfactory to Agent and (ii) completed a confirmatory field
exam of the Loan Parties and the Collateral in accordance with Agent’s customary
procedures and practices and as otherwise required by the nature and
circumstances of the businesses of the Loan Parties and the Collateral,
reflecting that the Borrower has Excess Availability, together with cash on hand
of the Loan Parties, of at least $40,000,000 as required by clause (j) above;

(l) Agent shall have completed (i) customary Patriot Act searches, OFAC/PEP
searches and customary individual background checks for Parent, and
(ii) OFAC/PEP searches and customary individual background searches for Parent’s
senior management and key principals, and each Guarantor, the results of which
shall be satisfactory to Agent and Lenders;

(m) Agent shall have received (i) copies of interim unaudited consolidated
financial statements of Parent and its Subsidiaries for the most recent
month-end occurring not less than 30 days prior to the Closing Date, (ii) a set
of Projections of Parent and its Subsidiaries prepared by management of Parent,
which shall be quarterly from the Closing Date through the end of the first four
fiscal quarters following the Closing Date and annually thereafter for the term
of the Agreement, and (iii) an opening pro forma balance sheet of Parent and its
Subsidiaries as of the date of the most recent unaudited consolidated financial
statements referred to in clause (i), but giving effect to the Transactions on
the Closing Date, all in form and substance (including as to scope and
underlying assumptions) reasonably satisfactory to Agent;

(n) Borrower shall have paid all Lender Group Expenses incurred in connection
with the transactions evidenced by the Agreement;

(o) All fees and reasonable out-of-pocket expenses that have been properly
documented and are in each case due and payable to WFCF, the Agent and counsel
to the Agent on the Closing Date pursuant to the Fee Letter, the Commitment
Letter, dated as of August 26, 2011 between WFCF and Parent, including the Term
Sheet attached thereto, shall have been, or substantially concurrently with the
consummation of the Transactions on the Closing Date shall be, paid;

(p) Agent shall have received copies of each Material Contract (except to the
extent not permitted to be disclosed pursuant to confidentially obligations of
the Loan Parties or their Subsidiaries);

(q) (i) the Secured Notes (First Lien), in an aggregate principal amount of
$225,000,000, the Secured Notes (Second Lien), in an aggregate principal amount
of $100,000,000, and the Secured Notes (Convertible), in an aggregate principal
amount of $280,000,000, shall have been, or substantially concurrently with the
effectiveness of the Agreement shall be, issued on terms and conditions
reasonably satisfactory to Agent and Borrower shall have received the net
proceeds of the Secured Notes (other than the portion thereof constituting loans
under the Bridge Loan Facility converted to Secured Notes) substantially
simultaneously with the Closing Date, and (ii) all or substantially all (but in
no event shall more than $20,000,000 in principal amount of the Existing Notes
remain outstanding on the Closing Date after giving effect to the Transactions
and any remaining Existing Notes

 

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shall remain unsecured and the documents evidencing the Existing Notes shall be
amended to remove substantially all of the restrictive covenants and certain
events of default thereunder other than the required repayment thereof) of the
outstanding principal amount of the Existing Notes shall have been exchanged for
the Secured Notes (Convertible) and approximately $50,000,00 of common Stock of
Parent, each on terms and conditions reasonably satisfactory to Agent.

(r) Agent shall have received a certificate signed by a Responsible Officer of
Parent, which certifies and attaches copies of the final and executed Secured
Notes Indenture (Convertible), Secured Notes Indenture (First Lien), Secured
Notes Indenture (Second Lien), each of the final and executed security
agreements with respect thereto, and each of the final and executed note
purchase agreements with respect thereto;

(s) the pro forma capital and ownership structure and the shareholding
arrangements of Parent and its Subsidiaries, after giving effect to the
Transactions, shall be substantially consistent with the description thereof
delivered to Agent on or prior to August 26, 2011;

(t) Parent and its Subsidiaries shall have received all governmental and
third-party approvals necessary, if any, in connection with the consummation of
the Transactions, which shall all be in full force and effect, unless the
absence of any such approval could not reasonably be expected to result in a
Material Adverse Change;

(u) to the extent required by, or delivered to, the trustee under the Secured
Notes on the Closing Date, Agent shall have received copies of all such
possessory Collateral constituting Notes Priority Collateral; and

(v) Agent shall have received a certificate signed by a Responsible Officer of
Parent which certifies that each Loan Party that owns or operates vessels in the
coastwise trade of the United States is a “citizen of the United States” within
the meaning of 46 U.S.C. § 50501(a) and (d).

 

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SCHEDULE 3.6

CONDITIONS SUBSEQUENT

1. Promptly after the Closing Date, Agent shall have received a Coast Guard form
CG-1330, Certificate of Ownership, covering the Vessels subject to the Vessel
Fleet Mortgages, evidencing recordation of the Vessel Fleet Mortgage in favor of
Agent and copies of each Vessel Fleet Mortgage certified by the U.S. Coast Guard
National Vessel Documentation Center.

2. Promptly after the Closing Date, Agent shall have received a legal opinion
from Blank Rome LLP, maritime legal counsel to the Loan Parties in the form
agreed to immediately prior to the Closing Date,

3. Promptly after the Closing Date each applicable Loan Party shall amend its
limited liability company operating agreement, partnership agreement, bylaws and
other formation documents to remove any references to a Credit Agreement dated
February 26, 2003 among inter alia, Horizon Lines, LLC and ABN AMRO Bank, N.V.
as administrative agent.

4. Within 5 Business Days after the Closing Date, Agent shall have received a
monthly schedule of the Non-Domestic Service losses for fiscal year 2011
referenced in clause (c)(xxii) of the definition of Adjusted EBITDA.

5. Within 10 days after the Closing Date, Agent shall have received for the
fiscal month ended September 25, 2011, each of the items identified in clauses
(a) through (g) of Schedule 5.2.

6. Within 15 days after the Closing Date, Agent shall have received certificates
of property insurance as are required by Section 5.6, with a schedule of
properties attached thereto and otherwise in the form agreed to immediately
prior to the Closing Date.

7. Within 40 days after the Closing Date, Agent shall have received for the
fiscal quarter ended September 25, 2011, the quarterly financial statements
identified in clause (c) of Schedule 5.1.

8. Within 60 days after the Closing Date, Agent shall have received, with
respect to each Deposit Account and Security Account (other than Excluded
Accounts), executed Control Agreements; provided that upon the commencement of
any Trigger Period, such Control Agreements will be delivered to Agent within 5
Business Days thereafter (as such date may be extended by the Agent in its sole
discretion).

9. At such time as, and to the extent required by, or delivered to, the trustee
under the Secured Notes: (a) a certificate executed by an officer of Parent that
includes a schedule setting forth the model, model year, identification number
and location of all CoT Chassis owned by each Loan Party, along with
representations by the Parent as to the accuracy in all material respects of the
information set forth on such schedule and (b) evidence that Agent’s Lien has
been noted on the certificates of title with respect to the CoT Chassis owned by
the Loan Parties to the extent multiple lien holders can be noted thereon.

 

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Schedule 5.1

Financial Statements, Reports, Certificates

Deliver to Agent each of the financial statements, reports, or other items set
forth below at the following times in form satisfactory to Agent:

 

as soon as available, but in any event within 30 days (45 days in the case of a
month that is the end of one of Parent’s fiscal quarters) after the end of each
fiscal month during each of Parent’s fiscal years,   

(a) an unaudited consolidated and consolidating balance sheet, income statement,
and statement of cash flow covering Parent’s and its Subsidiaries’ operations
during such period and compared, in the case of such balance sheet, to the end
of the prior fiscal year, and in the case of such statements of income and cash
flow, to the prior year period and plan and

 

(b) a Compliance Certificate attaching (i) the financial statements described in
clause (a) above, (ii) the Excess Availability Calculation, the Leverage Ratio
Calculation, the calculation of Fixed Charge Coverage Ratio and the calculation
of Adjusted EBITDA, each in form and containing sufficient detail satisfactory
to Agent, (iii) a schedule of all Hedge Agreements entered into by Parent or any
of its Subsidiaries with any Lender and/or any Affiliates of any Lender, which
schedule shall show whether such Hedge Agreement is secured pursuant to any of
the Loan Documents.

as soon as available, but in any event within 45 days after the end of each
fiscal quarter during each of Parent’s fiscal years,   

(c) an unaudited consolidated and consolidating balance sheet, income statement,
statement of cash flow, and statement of shareholder’s equity covering Parent’s
and its Subsidiaries’ operations during such period, and compared to the prior
year period and plan, together with a corresponding discussion and analysis of
results from management and

 

(d) a Compliance Certificate attaching (i) the financial statements described in
clause (a) above, (ii) the Excess Availability Calculation, the Leverage Ratio
Calculation, the calculation of Fixed Charge Coverage Ratio and the calculation
of Adjusted EBITDA, each in form and containing sufficient detail satisfactory
to Agent, (iii) a schedule of all Hedge Agreements entered into by Parent or any
of its Subsidiaries with any Lender and/or any Affiliates of any Lender, which
schedule shall show whether such Hedge Agreement is secured pursuant to any of
the Loan Documents.

as soon as available, but in any event within 90 days after the end of each of
Parent’s fiscal years,   

(e) consolidated and consolidating financial statements of Parent and its
Subsidiaries for each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Agent and certified, without any
qualifications (including any (A) “going concern” or like qualification or
exception or (B) qualification or exception as to the scope of such audit, by
such accountants to have been prepared in accordance with GAAP (such audited
financial

 

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statements to include a balance sheet, income statement, statement of cash flow,
and statement of shareholder’s equity and, if prepared, such accountants’ letter
to management), and

 

(f) a Compliance Certificate attaching (i) the financial statements described in
clause (c) above, (ii) supplemental Schedules in accordance with the Credit
Agreement, (iii) the Excess Availability Calculation, the Leverage Ratio
Calculation, the calculation of Fixed Charge Coverage Ratio and the calculation
of Adjusted EBITDA, each in form and containing sufficient detail satisfactory
to Agent, and (iv) a schedule of all Hedge Agreements entered into by Parent or
any of its Subsidiaries with any Lender and/or any Affiliates of any Lender,
which schedule shall show whether such Hedge Agreement is secured pursuant to
any of the Loan Documents.

as soon as available, but in any event within 45 days after the start of each of
Parent’s fiscal years,   

(g) copies of Parent’s Projections, in form and containing sufficient detail
(including as to scope and underlying assumptions, subject to the qualifications
in Section 4.16 of the Agreement) reasonably satisfactory to Agent, in its
Permitted Discretion, for the forthcoming 3 years, year by year, and for the
forthcoming fiscal year, month by month, certified by the chief financial
officer of Parent as being the good faith estimate of the financial performance
of Parent and its consolidated Subsidiaries during the period covered thereby.

if and when filed by Parent,   

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

 

(i) any other material filings made by Parent with the SEC, and

 

(j) any other material information that is provided by Parent to its
shareholders generally.

 

(It is understood and agreed that in the event Agent, after the Closing Date,
notifies Parent that electronic delivery of items (h), (i) and (j) is
acceptable, then such electronic delivery shall be deemed to satisfy the
requirements of items (h), (i) and (j).)

Concurrently with the filing of Parent’s Form 10-Q quarterly report and
Form 10-K annual report,   

(k) a list of any Material Contracts entered into by a Loan Party since the most
recent such filing.

promptly after being furnished or received,   

(l) copies of all notices, reports, certificates and other information furnished
to or received from any of the holders of the Secured Notes, or any other
trustee, agent or representative of such holders (including any notices or other
documents relating to any default or potential default thereunder, but in any
event excluding routine notices, reports and certificates of an administrative
nature), and

 

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(m) a copy of the annual citizenship affidavit required to be submitted to
MARAD.

At such time as, and to the extent required by, or delivered to, the trustee
under the Secured Notes,   

(n) copies of any possessory Collateral constituting Notes Priority Collateral,
and

 

(o) Additional Documents, substantially similar to those Additional Documents
(other than with respect to the Collateral identified in clause (n) above) to
the collateral agent under the Secured Notes, in favor of Agent to ensure that
the ABL Collateral (as defined in the Intercreditor Agreement) and the Notes
Collateral (as defined in the Intercreditor Agreement) are identical to the
extent required by the Intercreditor Agreement.

Promptly after execution thereof,   

(p) any settlement or plea agreement or similar arrangement providing for
aggregate payments in excess of $5,000,000 per calendar year.

promptly, but in any event within 5 days after Parent or Borrower has knowledge
of any event or condition that constitutes a Default or an Event of Default,   

(q) notice of such event or condition and a statement of the curative action
that Parent or Borrower proposes to take with respect thereto.

promptly after the commencement thereof, but in any event within 5 Business Days
after the service of process with respect thereto on Parent or any of its
Subsidiaries,   

(r) notice of all actions, suits, or proceedings brought by or against Parent or
any of its Subsidiaries before any Governmental Authority which reasonably could
be expected to result in a Material Adverse Change.

on or before 5 Business Days (or such shorter period as Agent may agree) prior
to the date of any Specified Event utilizing any basket amount available as a
result of satisfaction of the Specified Condition,   

(s) Parent shall provide Agent a certificate of a Responsible Officer, along
with reasonably detailed calculations (calculated on a pro forma basis after
giving effect to such Specified Event), certifying compliance with each of the
conditions set forth in the definition of “Specified Condition”.

 

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upon the request of Agent,   

(t) any other information reasonably requested relating to the financial
condition of Parent or its Subsidiaries.

 

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Schedule 5.2

Collateral Reporting

Provide Agent with each of the documents set forth below at the following times
in form satisfactory to Agent:

 

Monthly (no later than the 5th day after the end of each calendar month), except
during a Trigger Period, in which case it shall be weekly (no later than 1
Business Day following the end of each week)

  

(a) a Borrowing Base Certificate for the fiscal month most recently ended or
calendar week, as applicable (the “Reporting Period”),

 

(b) a detailed aging, by total, of each Loan Parties’ Accounts, together with a
reconciliation and supporting documentation for any reconciling items noted
(delivered electronically in an acceptable format, if Parent has implemented
electronic reporting) for the Reporting Period,

 

(c) a detailed calculation of those Accounts that are not eligible for the
Borrowing Base, if Parent has not implemented electronic reporting for the
Reporting Period,

 

(d) a summary aging, by vendor, of Parent’s and its Subsidiaries’ accounts
payable and any book overdraft (delivered electronically in an acceptable
format, if Parent has implemented electronic reporting) and an aging, by vendor,
of any held checks for the Reporting Period, and

 

(e) a detailed report regarding Parent’s and the other Loan Parties’ cash and
Cash Equivalents, including an indication of which amounts are deposited in
Deposit Accounts and/or Securities Accounts subject to Control Agreements for
the Reporting Period.

Monthly (no later than the 10th day after each calendar month)

  

(f) a detailed reconciliation to Parent’s general ledger accounts (delivered
electronically in an acceptable format) for the Reporting Period, and

 

(g) a monthly Account roll-forward, in a format acceptable to Agent, tied to the
beginning and ending account receivable balances of Parent’s general ledger for
the Reporting Period.

Monthly (no later than the 30th day after each calendar month),

  

(h) a reconciliation of Accounts, trade accounts payable, Parent’s general
ledger accounts to its monthly financial statements including any book reserves
related to each such category for the Reporting Period.

Quarterly (no later than the 45th day after each fiscal quarter),

  

(i) a report regarding Parent’s and its Subsidiaries’ accrued, but unpaid, ad
valorem taxes for the most recently ended fiscal quarter.

 

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Upon request by Agent,

  

(j) a detailed list of Parent’s and the other Loan Parties’ customers, with
address and contact information, and

 

(k) such other reports as to the Collateral or the financial condition of Parent
and its Subsidiaries, as Agent may reasonably request, including updates to
Schedules 4.13 and 4.17.

 

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