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Exhibit 10.1

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PRIMO WATER CORPORATION,
 
PRIMO PRODUCTS, LLC,

PRIMO DIRECT, LLC,

PRIMO REFILL, LLC,

PRIMO ICE, LLC, and

PRIMO REFILL CANADA CORPORATION

$20,000,000 7.80% Senior Secured Fixed Rate Term Notes due June 20, 2021

$15,000,000 Senior Secured Floating Rate Revolving Notes due June 20, 2019

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Note Purchase Agreement
 

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Dated June 20, 2014
 

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Table of Contents

SECTION 1.
Authorization of Notes
1
SECTION 2.
Sale and Purchase of Term Notes; Borrowings under Revolving Notes; Additional
Floating Rate Provisions
2
Section 2.1.
Purchase and Sale of Term Notes.
2
Section 2.2.
Borrowings Under Revolving Notes
2
Section 2.3.
Additional Floating Rate Provisions
4
SECTION 3.
Fees
10
SECTION 4.
Conditions to Closing
10
Section 4.1.
Representations and Warranties
10
Section 4.2.
Performance; No Default
10
Section 4.3.
Closing Documents
11
Section 4.4.
[Intentionally Omitted]
13
Section 4.5.
Related Proceedings
13
Section 4.6.
Purchase Permitted By Applicable Law, Etc.
13
Section 4.7.
Sale of Other Notes
13
Section 4.8.
Payment of Fees and Expenses
13
Section 4.9.
Private Placement Number
13
Section 4.10.
Changes in Corporate Structure
14
Section 4.11.
Funding Instructions
14
SECTION 5.
Representations and Warranties of the Companies
14
Section 5.1.
Organization; Power and Authority
14
Section 5.2.
Authorization, Etc
14
Section 5.3.
Disclosure
14
Section 5.4.
Organization and Ownership of Shares of Subsidiaries; Affiliates
15
Section 5.5.
Financial Statements; Material Liabilities
15
Section 5.6.
Compliance with Laws, Other Instruments, Etc
15
Section 5.7.
Governmental Authorizations, Etc.
16
Section 5.8.
Litigation; Observance of Agreements, Statutes and Orders; Solvency
16
Section 5.9.
Taxes
16
Section 5.10.
Title to Property; Leases
17
Section 5.11.
Licenses, Permits, Etc
17
Section 5.12.
Compliance with ERISA
17
Section 5.13.
Private Offering by each Company
18
Section 5.14.
Use of Proceeds; Margin Regulations
18
Section 5.15.
Existing Indebtedness; Future Liens
19
Section 5.16.
Foreign Assets Control Regulations, Etc
19
Section 5.17.
Status under Certain Statutes
21
Section 5.18.
Environmental Matters
21

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Section 5.19.
No Labor Disputes
21
Section 5.20.
Solvency
22
Section 5.21.
Hedging Agreements
22
Section 5.22.
Bank Accounts; Security Accounts
22
Section 5.23.
Rule 144A
22
Section 5.24.
Patents, Trademarks, Copyrights and Licenses
22
Section 5.25.
Material Contracts
22
Section 5.26.
Capital Structure
23
SECTION 6.
Representations of the Purchasers
23
Section 6.1.
Purchase for Investment
23
Section 6.2.
Source of Funds
23
SECTION 7.
Information as to each Company
25
Section 7.1.
Financial and Business Information
25
Section 7.2.
Officer’s Certificate
28
Section 7.3.
Visitation
29
Section 7.4.
Electronic Delivery
29
SECTION 8.
Payment and Prepayment of the Notes
30
Section 8.1.
Required Prepayments; Maturity
30
Section 8.2.
Optional Prepayments
30
Section 8.3.
Allocation of Partial Prepayments
31
Section 8.4.
Maturity; Surrender, Etc
31
Section 8.5.
Purchase of Notes
32
Section 8.6.
Yield Maintenance Amount
32
SECTION 9.
Affirmative Covenants
33
Section 9.1.
Compliance with Laws
33
Section 9.2.
Insurance
34
Section 9.3.
Maintenance of Properties
34
Section 9.4.
Payment of Taxes and Claims
34
Section 9.5.
Corporate Existence, Etc
35
Section 9.6.
Books and Records
35
Section 9.7.
Collateral; Subsequently Acquired Subsidiaries
35
Section 9.8.
Payment of Leasehold Obligations
37
Section 9.9.
Post-Closing Matters.
37
SECTION 10.
Negative Covenants
37
Section 10.1.
Transactions with Affiliates
37
Section 10.2.
Line of Business
38
Section 10.3.
Merger, Consolidation, Acquisition and Sale of Assets
38
Section 10.4.
Liens
40
Section 10.5.
Guaranties
40
Section 10.6.
Financial Covenants
40
Section 10.7.
Investments
41
Section 10.8.
Indebtedness
43
Section 10.9.
Dividends and Distributions
44
Section 10.10.
State of Incorporation; Names; Locations
45

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Section 10.11.
Changes to Fiscal Year End
45
Section 10.12.
Amendment to Organizational Documents
45
Section 10.13.
Terrorism Sanctions Regulations
45
Section 10.14.
ERISA
46
Section 10.15.
Prepayments
46
Section 10.16.
Subsidiaries
46
Section 10.17.
Leases
46
Section 10.18.
Amendments to Material Contracts
46
Section 10.19.
Subsidiary Restrictions
47
SECTION 11.
Events of Default
47
SECTION 12.
Remedies on Default, Etc
50
Section 12.1.
Acceleration
50
Section 12.2.
Other Remedies
51
Section 12.3.
Rescission
51
Section 12.4.
No Waivers or Election of Remedies, Expenses, Etc
51
SECTION 13.
Registration; Exchange; Substitution of Notes
52
Section 13.1.
Registration of Notes
52
Section 13.2.
Transfer and Exchange of Notes
52
Section 13.3.
Replacement of Notes
52
SECTION 14.
Payments on Notes
53
Section 14.1.
Place of Payment
53
Section 14.2.
Home Office Payment
53
Section 14.3.
Payments Due on Non-Business Days
53
Section 14.4.
Payments, When Received
54
SECTION 15.
Expenses, Indemnification, Etc
54
Section 15.1.
Transaction Expenses
54
Section 15.2.
Indemnification
55
Section 15.3.
Survival
55
SECTION 16.
Survival of Representations and Warranties; Entire Agreement
55
SECTION 17.
Amendment and Waiver
56
Section 17.1.
Requirements
56
Section 17.2.
Solicitation of Holders
56
Section 17.3.
Binding Effect, etc
57
Section 17.4.
Notes Held by any Company, etc
57
SECTION 18.
Notices
57
SECTION 19.
Reproduction of Documents
58
SECTION 20.
Confidential Information
59
SECTION 21.
[Intentionally Omitted]
60
SECTION 22.
Miscellaneous
62
Section 22.1.
Successors and Assigns
62

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Section 22.2.
Accounting Terms
62
Section 22.3.
Severability
63
Section 22.4.
Construction, etc
63
Section 22.5.
Counterparts
65
Section 22.6.
Governing Law
65
Section 22.7.
Jurisdiction and Process; Waiver of Jury Trial
65
Section 22.8.
Transaction References
65
SECTION 23.
THE COLLATERAL AGENT
68
Section 23.1.
Appointment, Powers and Rights
68
Section 23.2.
Certain Rights, Duties and Responsibilities of Collateral Agent
69
Section 23.3.
Collateral Agent’s Rights to Compensation
69
Section 23.4.
Certain Rights of the Collateral Agent
70
Section 23.5.
Showings Deemed Necessary by Collateral Agent
70
Section 23.6.
Resignation of Collateral Agent
65
Section 23.7.
Removal of Collateral Agent
65
Section 23.8.
Successor Collateral Agent
65
Section 23.9.
Appointment of Co-Collateral Agent or Successor Collateral Agent
66
Section 23.10.
Merger or Consolidation of Prudential
66
Section 23.11.
Conveyance upon Request of Successor Collateral Agent
67
Section 23.12.
Acceptance of Appointment by Co-Collateral Agent or Successor Collateral Agent
67
Section 23.13.
No Amendments Without Consent of Holders
67
Section 23.14.
Waivers and Consents by Holders
67
Section 23.15.
Notice of Amendments, Waivers, etc
68
SECTION 24.
Joint and Several Liability
71
Section 24.1.
Joint and Several Liability
71
Section 24.2.
Waivers
71
Section 24.3.
Extent of Liability; Contribution
72
Section 24.4.
Joint Enterprise
72
Section 24.5.
Subordination
72
SECTION 25.
Tax Indemnification.
71

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Schedules and Exhibits:

Schedule A:
Defined Terms
 
 
Schedule B:
Information Relating to Purchasers
 
 
Schedule 5.3:
Financial Statements
 
 
Schedule 5.4:
Subsidiaries of each Company and Ownership of Subsidiary Stock
 
 
Schedule 5.15:
Existing Indebtedness
 
 
Schedule 5.19:
Labor Matters
 
 
Schedule 5.22:
Bank Accounts; Security Accounts
 
 
Schedule 5.24:
Intellectual Property
 
 
Schedule 5.25:
Material Contracts
 
 
Schedule 5.26:
Capital Structure
 
 
Schedule 9.9:
Post-Closing Matters
 
 
Schedule 10.4:
Liens
 
 
Exhibit A-1:
Form of 7.80% Senior Secured Fixed Rate Term Notes due June 20, 2021
 
 
Exhibit A-2:
Form of Senior Secured Floating Rate Revolving Notes due June 20, 2019
 
 
Exhibit B:
Form of Borrowing Request
 
 
Exhibit C:
Form of Security Agreement
 
 
Exhibit D:
Form of Pledge Agreement

v

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PRIMO WATER CORPORATION
104 Cambridge Plaza Drive
Winston Salem, North Carolina 27104

June 20, 2014

To Each of the Purchasers Listed in
Schedule B Hereto:

7.80% Senior Secured Fixed Rate Term Notes due June 20, 2021

Senior Secured Floating Rate Revolving Notes due June 20, 2019

Ladies and Gentlemen:
 
PRIMO WATER CORPORATION, a Delaware corporation (“Parent”), PRIMO PRODUCTS, LLC,
a North Carolina limited liability company (“Products”), PRIMO DIRECT, LLC, a
North Carolina limited liability company (“Direct”), PRIMO REFILL, LLC, a North
Carolina limited liability company (“Refill”), PRIMO ICE, LLC, a North Carolina
limited liability company (“ICE”), and PRIMO REFILL CANADA CORPORATION, a
British Columbia, Canada corporation (together with Parent, Products, Direct,
Refill and ICE, together with each other Subsidiary of the Parent that hereafter
joins this Agreement, each a “Company” and collectively, the “Companies”)),
agrees with each of the Purchasers as follows:
 
SECTION 1.  Authorization of Notes.  The Companies will authorize the issue and
sale of the following:
 
(a)           their senior secured fixed rate term promissory notes (any such
term promissory notes which have been issued pursuant to any provision of this
Agreement, and any such term promissory notes which may be issued in
substitution or exchange therefore, herein, collectively, the “Term Notes”) in
the aggregate principal amount of $20,000,000, to be dated the date of issue
thereof, to mature June 20, 2021, to bear interest on the unpaid principal
balance thereof from the date thereof until the principal thereof shall have
become due and payable (a) at a rate per annum equal to 7.80% and (b) at the
Default Rate on the occurrence and during the continuance of an Event of
Default; such senior secured fixed rate term promissory notes to be
substantially in the form of Exhibit A-1 attached hereto, and
 
(b)           their senior secured floating rate revolving promissory notes (any
such revolving promissory notes which have been issued pursuant to any provision
of this Agreement, and any such revolving promissory notes which may be issued
in substitution or exchange therefore, herein, collectively, the “Revolving
Notes”; and together with the Term Notes, collectively, the “Notes”) in the
aggregate principal amount of $15,000,000, to be dated the date of issue
thereof, to be due and payable in full on the Revolving Commitment Termination
Date, to bear interest on the unpaid principal balance thereof from time to time
outstanding until the principal thereof shall become due and payable (a) at a
rate per annum equal to (I) the Adjusted LIBO Rate plus the Applicable Margin
with respect to LIBOR Loans or (II) the Base Rate plus the Applicable Margin
with respect to Base Rate Loans and (b) at the Default Rate on the occurrence
and during the continuance of an Event of Default; such senior secured floating
rate revolving promissory notes to be substantially in the form of Exhibit A-2.

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(c)           Certain capitalized and other terms used in this Agreement are
defined in Schedule B.  References to a “Schedule” and/or “Exhibit” are
references to a Schedule and/or Exhibit attached to this Agreement unless
otherwise specified.  References to a “Section” are references to a Section of
this Agreement unless otherwise specified.
 
SECTION 2.    Sale and Purchase of Term Notes; Borrowings under Revolving Notes;
Additional Floating Rate Provisions. 
 
Section 2.1.     Purchase and Sale of Term Notes.  The Companies hereby agree to
sell to each Purchaser and, subject to the terms and conditions herein set
forth, each Purchaser agrees to purchase from the Companies on the Date of
Closing, Term Notes in the principal amount set forth opposite such Purchaser’s
name on Schedule B at the purchase price of 100% of the principal amount
thereof. The Companies will deliver to each Purchaser of Term Notes, at the
offices of King & Spalding LLP, 1185 Avenue of the Americas, New York, New York
10036-2601, one or more Term Notes registered in its name, evidencing the
aggregate principal amount of Term Notes to be purchased by such Purchaser and
in the denomination or denominations specified on Schedule B attached hereto,
against payment of the purchase price thereof by wire transfer of immediately
available funds for credit to the Company Representative’s account number
identified in a written instruction of the Company Representative delivered to
each Purchaser before the date of closing, which shall be June 20, 2014 or any
other date on or before June 20, 2014 upon which the parties hereto may mutually
agree (the “Closing” or the “Date of Closing”). If at the Closing the Companies
shall fail to tender such Notes to any Purchaser as provided above in this
Section 2.1, or any of the conditions specified in Section 4 shall not have been
fulfilled to such Purchaser’s satisfaction or otherwise waived in writing by the
Required Holders, such Purchaser shall, at its election, be relieved of all
further obligations under this Agreement, without thereby waiving any rights
such Purchaser may have by reason of any of the conditions specified in Section
4 not having been fulfilled to such Purchaser’s satisfaction or such failure by
the Companies to tender such Notes.
 
Section 2.2.     Borrowings Under Revolving Notes. Each Company and each
Purchaser of Revolving Notes agree to the following provisions with respect to
the Revolving Notes:
 
(a)           The Revolving Loans.  Subject to and upon the terms and conditions
herein set forth, the Revolving Holders agree to make advances to the Companies
(each a “Revolving Loan” and, collectively, the “Revolving Loans”) from time to
time from the date hereof and prior to the Revolving Commitment Termination Date
in the aggregate principal amount outstanding at any one time not to exceed the
Revolving Commitment; provided that Revolving  Loans shall not be made more
frequently than six (6) times each calendar month.  The Revolving Loans shall be
evidenced by one or more Revolving Notes, dated as of the Date of Closing, and
the Companies will deliver to you on the Date of Closing, at the offices of King
& Spalding LLP, 1185 Avenue of the Americas, New York, New York, 10036-2601, one
or more Revolving Notes registered in its name, evidencing in the aggregate for
all Revolving Holders the amount of the Revolving Commitment as of the Date of
Closing, and in the denominations specified in the Schedule B attached hereto. 
The principal amount of each Revolving Loan shall be equal to at least $100,000,
and shall be an integral multiple of $50,000 or such lesser amount as shall be
available to be drawn under the Revolving Notes.  At the time of the making of
each Revolving Loan and at the time of the making of each payment of principal
on any Revolving Note, the applicable Revolving Holder shall make a notation in
the records of such Revolving Holder, specifying the date and the amount of the
Revolving Loan or payment; provided that the failure of such Revolving Holder to
do so or any other inaccuracy in such records shall not affect the obligations
of the Companies otherwise under this Agreement and any Revolving Note. Within
the limits of the Revolving Commitment, subject to the terms and conditions
hereof, the Companies may borrow from time to time (but not more frequently than
six (6) times each calendar month) in accordance with Section 2.2(b), shall or
may repay from time to time in accordance with Section 8.1, and may reborrow
(but not more frequently than six (6) times each calendar month) in accordance
with Section 2.2(b).  In addition, any amounts advanced, at the sole discretion
of the Revolving Holders, to pay any amount chargeable to or required to be paid
by any of the Companies and which the Companies have failed to pay pursuant to
the terms of, and within the time periods provided under, any Note Document,
including payments of reimbursable expenses, expenditures for the protection or
preservation of collateral and other sums payable under the Note Documents shall
be deemed a “Revolving Loan”.

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(b)           Manner of Borrowings.  Upon at least two (2) Business Days’ prior
written notice (which notice shall be irrevocable and binding on the Companies
and shall be in the form of Exhibit B (each, a “Borrowing Request”), the Company
Representative may request new Revolving Loans.  Each Borrowing Request shall be
signed by a Senior Financial Officer of the Company Representative and delivered
to each Revolving Holder at its address specified on Schedule B.  Each Borrowing
Request shall include without limitation the aggregate principal amount of the
requested Revolving Loan and, with reasonable particularity, the intended use of
the proceeds thereof, whether such Revolving Loan is to bear interest at the
Base Rate or the LIBO Rate, the duration of the Interest Period applicable to
any LIBO Rate Loan, and the proposed date of the funding of such Revolving
Loan   Each Borrowing Request shall be deemed received by a Revolving Holder
only when all information and documents required to be contained therein or
submitted therewith have been actually received by such Revolving Holder and
such information and documents conform to the requirements of this Agreement. 
Any Borrowing Request received by any Revolving Holder on a day which is not a
Business Day or after 12:00 noon, New York time, on a Business Day shall be
deemed received on the next succeeding Business Day.  Upon receipt of a proper
Borrowing Request as hereinabove provided, subject to the terms and conditions
of this Agreement, the Revolving Holders shall make the proceeds of such
Revolving Loan available to the Companies on the date specified in such notice
by crediting the Company Representative’s account designated in the applicable
Borrowing Request.
 
(c)           Termination and Voluntary Reduction in Revolving Commitment.  Each
Revolving Holder’s agreement to make Revolving Loans under the Revolving
Commitment in accordance with this Section 2.2 hereof shall terminate on the
Revolving Commitment Termination Date.  The Company Representative shall have
the right, upon not less than 10 Business Days’ irrevocable written notice to
each Revolving Holder, to terminate or permanently reduce the Revolving
Commitment prior to the Revolving Commitment Termination Date, in whole or in
part; provided that if such termination or reduction shall cause any LIBOR Loan
to be repaid prior to the last day of its Interest Period, then such termination
or reduction will be subject to Section 2.3(b) and any Breakage Cost Obligations
payable thereunder. Each partial voluntary permanent reduction in the Revolving
Commitment under this Section 2.2(c) shall be in an aggregate amount which is at
least $500,000 and integral multiplies thereof.  Once reduced, the Revolving
Commitment may not thereafter be increased.

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(d)           Confirmation of Amounts Outstanding.  The respective amounts of
principal and interest reflected in any one or more of the schedules annexed to
the Revolving Notes and in the records of any Revolving Holder shall constitute
prima facie evidence of the outstanding principal of, and accrued and unpaid
interest on, the Revolving Loans, absent manifest error, unless the Company
Representative notifies the relevant Revolving Holder in writing to the contrary
within thirty (30) days after information requested pursuant to the next
succeeding sentence has been delivered to the Company Representative.  The
Company Representative may, by written request to each Revolving Holder
delivered to the address set forth on Schedule B (or such other address as may
from time to time be given to the Company Representative by such Revolving
Holder), request a confirmation of such outstanding amounts from time to time. 
Upon receipt of such request, each Revolving Holder will promptly send the
Company Representative a written confirmation of such outstanding amounts.
 
(e)           Conditions to Revolving Loans.  The obligation of the Revolving
Holders to make each Revolving Loan to the Companies hereunder is subject to the
satisfaction of the following conditions:
 
(i)              timely receipt of the Borrowing Request required by Section
2.2(b);
 
(ii)            since December 31, 2013, there shall exist or have occurred no
act or event that could reasonably be expected to have a Material Adverse
Effect;
 
(iii)           the representations and warranties of the Companies contained in
this Agreement and the other Note Documents shall be true and correct in all
material respects on and as of the date of such Revolving Loan (except as such
representations and warranties relate to a specific date, in which case they
shall have been true and correct in all material respects on and as of such
specific date);
 
(iv)           on the date of such Revolving Loan, no Default or Event of
Default shall have occurred and be continuing; and
 
(v)            the extension of each Revolving Loan hereunder and the borrowing
of the Revolving Loans by the Companies (including the use of proceeds of the
Revolving Loans by the Companies) shall not violate any applicable law or
governmental regulation (including, without limitation, section 5 of the
Securities Act or Regulation T, U or X of the Board of Governors of the Federal
Reserve System), and each Revolving Holder shall have received such certificates
or other evidence as it may request to establish compliance with this condition.
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Each of the giving of a Borrowing Request pursuant to Section 2.2(b), the
acceptance by the Companies of the proceeds of the Revolving Loan made in
respect of such Borrowing Request, and the continuation of a Revolving Loan
pursuant to Section 2.3(a) shall constitute a representation and warranty by the
Companies to the effect that each of the conditions set forth in clauses (ii)
through (v) of this Section 2.2(e) shall be satisfied on the date such Revolving
Loans is made or continued (except as such representation and warranty may be
updated pursuant to the express terms of this Agreement and approved in writing
by the Required Holders).  In addition, the obligation of the Revolving Holders
to make a Revolving Loan on the Date of Closing, if any, is subject to the
satisfaction of the conditions to closing stated in Section 4.
 
Section 2.3.      Additional Floating Rate Provisions.
 
(a)           Revolving Loan Procedures; Interests on Notes.
 
(i)              The Company Representative shall elect, upon delivery of the
applicable Borrowing Request to each Revolving Holder, no later than 12:00 noon
New York City time on the second (2nd) Business Day immediately preceding the
date of borrowing, (a) whether the Loans are to be LIBOR Loans or Base Rate
Loans and (b) if the Loans are to be LIBOR Loans, the applicable Interest Period
or Interest Periods; provided that (x) no more than seven (7) Interest Periods
with respect to Revolving Loans that are LIBOR Loans may be in effect at any
time, and (y) in no event shall the aggregate principal amount of Revolving
Loans for any requested borrowing be less than $100,000.
 
(ii)             Subject to the terms and conditions hereof, the Company
Representative may elect from time to time to convert LIBOR Loans to Base Rate
Loans or Base Rate Loans to LIBOR Loans by giving an irrevocable telephonic
notice (confirmed by written notice received within one day after such
telephonic notice) to each Revolving Holder no later than 12:00 noon New York
City time on the third Business Day prior to the effective date of such
election, which effective date shall be the last day of the applicable Interest
Period for such Revolving Loans. Any such notice concerning conversions to LIBOR
Loans shall specify the length of the initial Interest Period or Interest
Periods therefor.
 
(iii)            If the Company Representative has failed to elect a new Loan
Type and Interest Period or Interest Periods for the Revolving Loans in a timely
manner, the Company Representative shall be deemed to have elected (a) to
continue LIBOR Loans as LIBOR Loans having an Interest Period or Interest
Periods equal to that of the Interest Period or Interest Periods immediately
preceding such new Interest Period or Interest Periods, and (b) to continue Base
Rate Loans as Base Rate Loans. All Interest Periods for the Revolving Loans
shall be deemed to end on the earlier of (x) the Revolving Commitment
Termination Date, (y) the date the Revolving Loans become due and payable
pursuant to Section 12 or (z) the date such Revolving Loans are prepaid pursuant
to Section 8.1.
 
(iv)           Notwithstanding any of the foregoing, if an Event of Default has
occurred and is continuing as of the end of any Interest Period, then the
Company Representative shall be deemed to have elected (a) to convert LIBOR
Loans to Base Rate Loans and (b) to continue Base Rate Loans as Base Rate Loans.

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(v)             Interest on the Revolving Notes shall: (a) be payable (I) on the
last day of each Interest Period, which, except as otherwise provided in the
definition of “Interest  Period”, shall be (A) with respect to any LIBOR Loan,
the day numerically corresponding to the commencement date of such LIBOR Loan in
the calendar month that is one, two, three or six months thereafter, in each
case as the Company Representative may specify or be deemed to specify, provided
that in the case of an Interest Period with respect to any LIBOR Loan in excess
of three months, interest shall also be payable on the day which occurs three
months after the first day of such Interest Period, and (B) with respect to any
Base Rate Loan, (I) the last day of each March, June, September or December next
succeeding the commencement date of such Base Rate Loan, (II) on the date of any
prepayment (on the amount prepaid), (III) at maturity (whether by acceleration
or otherwise) and (IV) after such maturity, on demand; and (b) be computed on
the actual number of days elapsed over, in the case of any LIBOR Loan, a year of
360 days and, in the case of any Base Rate Loan, a year of 365 or 366 days, as
the case may be.
 
(b)           Breakage Cost Indemnity.
 
(i)              The Companies jointly and severally agree to indemnify each
Revolving Holder for, and to pay promptly to such Revolving Holder upon written
request, any amounts required to compensate such Revolving Holder for any
losses, costs or expenses sustained or incurred by such Revolving Holder
(including, without limitation, any loss, cost or expense sustained or incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
to fund or maintain any LIBOR Loan) as a consequence of (a) any event (including
any prepayment of Revolving Notes pursuant to Section 8, any conversion from
LIBOR Loans to Base Rate Loans under Section 2.3, or any termination of or
permanent reduction in the Revolving Commitment pursuant to Section 2.2(c),
Section 8 or Section 12) that results in (I) such Revolving Holder receiving any
amount on account of the principal of any LIBOR Loan prior to the end of the
Interest Period in effect therefor or (II) in the case of any LIBOR Loan the
conversion of the Interest Period, other than on the last day of the Interest
Period in effect therefor, or (b) any default in the making of any payment or
prepayment required to be made in respect of any LIBOR Loans (such amount being
the “Breakage Cost Obligation”).
 
(ii)             A certificate of any Revolving Holder setting forth the loss,
costs or expenses which such Revolving Holder is entitled to be paid pursuant to
this Section 2.3, together with calculations in reasonable detail reflecting the
basis for such amount or amounts, shall be delivered to the Company
Representative and shall be conclusive absent manifest error. The Companies
jointly and severally agree to pay such Revolving Holder the amount shown as due
on any such certificate within 10 days after its receipt of the same.

6

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(iii)            The provisions of this Section 2.3(b) shall remain operative
and in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Revolving Loans, the invalidity or unenforceability of
any term or provision of this Agreement or any Revolving Note, or any
investigation made by or on behalf of any Revolving Holder.
 
(iv)           For purposes of calculating amounts payable by the Companies to
the Revolving Holders under this Section 2.3(b), each Revolving Holder shall be
deemed to have funded each LIBOR Loan made by it at the LIBOR Rate for such Loan
by a matching deposit or other borrowing in the applicable offshore Dollar
interbank market for a comparable amount and for a comparable period, whether or
not such LIBOR Loan was in fact so funded.
 
(c)           Reserve Requirements; Change in Circumstance.
 
(i)               Notwithstanding any other provision of this Agreement, if
after the date of this Agreement any change in applicable law or regulation or
in the interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof (whether or not having
the force of law) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Revolving Holder (other than any such
reserve requirement with respect to LIBOR Loans that are reflected in the
definition of LIBO Rate) or shall impose on such Revolving Holder or the London
interbank market any other condition affecting this Agreement or LIBOR Loans
made by such Revolving Holder and the result of any of the foregoing shall be to
increase the cost to such Revolving Holder of making or maintaining any LIBOR
Loan or to reduce the amount of any payment received or receivable by such
Revolving Holder under any Note Documents (whether of principal, interest or
otherwise), then each Company will pay to such Revolving Holder upon demand such
additional amount or amounts as will compensate such Revolving Holder for such
additional costs incurred or reduction suffered.
 
(ii)             If any Revolving Holder shall have determined that the adoption
after the date hereof of any law, rule, regulation, agreement or guideline
regarding capital adequacy, or any change after the date hereof in any such law,
rule, regulation, agreement or guideline (whether such law, rule, regulation,
agreement or guideline  has been adopted  before or after the date hereof) or
any change after the date hereof in the interpretation or administration thereof
by any governmental authority charged with the interpretation or administration
thereof, or compliance by such Revolving Holder with any request or directive
regarding capital adequacy (whether or not having the force of law) of any
governmental authority has or would have the effect of reducing the rate of
return on such Revolving Holder’s capital as a consequence of Revolving Loans
made pursuant hereto to a level below that which such Revolving Holder could
have achieved but for such applicability, adoption, change or compliance (taking
into consideration such Revolving Holder’s policies with respect to capital
adequacy) by an amount deemed by such Revolving Holder to be material, then from
time to time each Company agrees to pay to such Revolving Holder such additional
amount or amounts as will compensate such Revolving Holder for any such
reduction suffered.

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(iii)            A certificate of any Revolving Holder setting forth the amount
or amounts necessary to compensate such Revolving Holder as specified in clause
(i) or (ii) above shall be delivered to the Company Representative and shall be
conclusive absent manifest error. The Companies jointly and severally agree to
pay such Revolving Holder the amount shown as due on any such certificate within
ten days after its receipt of the same.
 
(iv)            Failure or delay on the part of any Revolving Holder to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
such Revolving Holder’s right to demand such compensation with respect to such
period or any other period, provided that the Companies shall not be required to
compensate the Revolving Holders pursuant to that foregoing provision of this
Section 2.3(c) for any increased costs incurred or reductions suffered more than
six months prior to the date that such Revolving Holder notifies the Company
Representative of the circumstances giving rise to such increased costs or
reductions and of such Revolving Holder’s intention to claim compensation
therefor (except that, if the change giving rise to such increased costs or
reductions is retroactive, then the six-month period referred to above shall be
extended to include the period of retroactive effect thereof). The protection of
this paragraph shall be available to any such Revolving Holder regardless of any
possible contention of the invalidity or inapplicability of the law, rule,
regulation, agreement, guideline or other change or condition that shall have
occurred or been imposed.
 
(v)             The provisions of this Section 2.3(c) shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Revolving Loans, the invalidity or unenforceability of
any term or provision of this Agreement or any Revolving Note, or any
investigation made by or on behalf of any Revolving Holder.
 
(d)           Illegality.
 
(i)              Notwithstanding any other provision of this Agreement, if,
after the date hereof, any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any
Revolving Holder to make or maintain any LIBOR Loan or to give effect to its
obligations as contemplated hereby with respect to any LIBOR Loan, then (a) such
Revolving Holder shall promptly notify the Company Representative in writing of
such circumstances (which notice shall be withdrawn when such Revolving Holder
determines that such circumstances no longer exist), (b) the obligation of such
Revolving Holder to make LIBOR Loans, to continue LIBOR Loans as LIBOR Loans and
to convert Base Rate Loans to LIBOR Loans shall forthwith be canceled and, until
such time as it shall no longer be unlawful for such Revolving Holder to make or
maintain LIBOR Loans, such Revolving Holder shall then be obligated only to make
Base Rate Loans and (c) such Revolving Holder may require that all LIBOR Loans
made by it be converted to Base Rate Loans, in which event all such LIBOR Loans
shall be automatically converted to Base Rate Loans as of the effective date of
such notice as provided in clause (ii) below.

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(ii)             For purposes of this Section 2.3(d), a notice to the Company
Representative by any Revolving Holder shall be effective as to LIBOR Loans made
by such Revolving Holder, if lawful, on the last day of the Interest Period or
Interest Periods currently applicable to such LIBOR Loans; in all other cases
such notice shall be effective on the date of receipt by the Company
Representative. If any such conversion of a LIBOR Loan occurs on a day which is
not the last day of the then current Interest Period with respect thereto, The
Companies jointly and severally shall pay to such Revolving Holder such amounts,
if any, as may be required pursuant to Section 2.3(b).
 
(e)           Inability to Determine Interest Rate.  If prior to the first day
of any Interest Period for any LIBOR Loan, any Revolving Holder shall have
determined (which determination shall be conclusive and binding upon each
Company) that, by reason of circumstances affecting the London interbank market,
adequate and reasonable means do not exist for ascertaining the LIBOR Rate for
such Interest Period, or there has occurred and is continuing any general
suspension or significant disruption to either the London interbank market or
the market for U.S. Treasury Securities, such Revolving Holder shall give notice
thereof to the Company Representative as soon as practicable thereafter.  If
such notice is given, (i) any LIBOR Loans requested to be made on the first day
of such Interest Period shall be made as Base Rate Loans, (ii) any Revolving
Loans that were to have been converted on the first day of such Interest Period
to or continued as LIBOR Loans shall be converted to or continued as Base Rate
Loans and (iii) any outstanding LIBOR Loans shall be converted, at the end of
the then applicable Interest Period, to Base Rate Loans. Until such notice has
been withdrawn by such Revolving Holder, no further LIBOR Loans shall be made or
continued as such, nor shall the Company Representative have the right to
convert Base Rate Loans to LIBOR Loans.
 
(f)            Dodd Frank Reform.  Notwithstanding anything in this Section to
the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act
and all requests, rules, guidelines or directives thereunder or issued in
connection therewith and (ii) all requests, rules, guidelines or directives
promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or the United States
or foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a change in law or regulation, regardless of the date
enacted, adopted or issued.
 
(g)           Mitigations of Obligations.  If a Company is required to pay any
additional amount to any Holder or any Governmental Authority for the account of
any Holder pursuant to this Section 2, then upon the request of the Company
Representative such Holder shall use reasonable efforts to designate a different
lending office for funding or booking the Obligations or to assign its rights
and obligations hereunder to another of its offices, branches or affiliates, if,
in the sole judgment of such Holder, such designation or assignment (i) would
eliminate or reduce amounts payable under Section 2, as the case may be, in the
future and (ii) would not subject such Holder to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Holder.  The
Companies hereby, jointly and severally, agrees to pay all reasonable and
documented (in summary form) costs and expenses incurred by any Holder in
connection with any such requested designation or assignment.

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SECTION 3.  Fees.
 
The Companies shall pay the following fees, each of which shall be fully earned
and non-refundable when paid:
 
(a)           to the Revolving Holders on the Date of Closing, ratably based
upon each such Holder’s pro rata share of the Revolving Notes, a non-refundable
structuring fee equal to 0.50% of the Revolving Commitment on the Date of
Closing, which fee shall be due and payable in full on the Date of Closing as a
condition to the effectiveness of this Agreement in accordance with the payment
instructions provided on Schedule B; and
 
(b)           to the Holders of Term Notes on the Date of Closing, ratably based
upon each such Holder’s pro rata share of the Term Notes, a non-refundable
structuring fee equal to 1.00% of the aggregate principal amount of the Term
Notes on the Date of Closing, which fee shall be due and payable in full on the
Date of Closing as a condition to the effectiveness of this Agreement in
accordance with the payment instructions provided on Schedule B;
 
(c)           to the Revolving Holders, ratably based upon each Revolving
Holder’s pro rata share of the Revolving Notes, a non-refundable unused fee with
respect to the Revolving Commitment (the “Revolving Commitment Fee”) payable on
the last day of each calendar quarter, commencing on June 30, 2014 through and
including on the Revolving Note Termination  Date, calculated at a rate of 0.50%
per annum (computed on the basis of actual days elapsed in a year of 360 days)
of the amount, if any, by which the average daily balance of Revolving Loans
outstanding in such calendar quarter (or portion thereof) is less than 100% of
the average daily amount of the Revolving Commitment during such calendar
quarter (or portion thereof); if the Revolving Commitment Fee is not be paid
when due, interest thereon shall be payable from and including the due date
until such fee is paid at the Default Rate then payable with respect to Base
Rate Loans; the Revolving Commitment Fee shall be paid to each Revolving Holder
in accordance with the payment instructions provided on Schedule B; and
 
(d)           to the Collateral Agent an annual administration fee of $35,000
payable on the Date of Closing and on each anniversary of the Date of Closing
(the “Administration Fee”).
 
SECTION 4.   Conditions to Closing.
 
Each Purchaser’s obligation to purchase and pay for the Term Notes to be sold to
such Purchaser at the Closing and to make Revolving Loans under the Revolving
Notes is subject to the fulfillment to such Purchaser’s satisfaction, prior to
or at the Closing, of the following conditions:
 

Section 4.1.     Representations and Warranties.  The representations and
warranties of the Companies in this Agreement and the other Note Documents shall
be correct when made and at the Closing.
 

Section 4.2.      Performance; No Default.  Each of the Companies shall have
performed and complied with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or at the
Closing.  Before and after giving effect to the issue and sale of the Notes (and
the application of the proceeds thereof as contemplated by Section 5.14), no
Default or Event of Default shall have occurred and be continuing.
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Section 4.3.     Closing Documents.  Each Purchaser shall have received the
following, each to be dated the Date of Closing unless otherwise indicated, and
each in form, scope and substance satisfactory to such Purchaser:
 
(a)           the Term Notes, if any, to be purchased by such Purchaser, duly
executed by all Companies;
 
(b)           the Revolving Notes, if any, to be issued to such Purchaser, duly
executed by all Companies;
 
(c)           the Security Agreement, duly executed and delivered by all
Companies and their Subsidiaries, together with (i) certified copies of Requests
for Information or Copies (Form UCC 11) or equivalent commercially obtained
reports, dated as of a recent date, listing all effective financing statements
or other personal property, tax and judgment Lien filings which name any Company
(in each case, under the applicable Person’s present name or any previous names)
as debtor and which are filed in the applicable jurisdictions where each is
organized or in which each transacts business, (ii) copies of such financing
statements or other filings, all UCC financing statements or other required
filings or notices deemed necessary or appropriate by such Purchaser to perfect
the Liens in favor of the Collateral Agent arising under the Note Documents,
duly authenticated and delivered by the Companies, as applicable, to be recorded
with the appropriate filing offices, and (iii) such patent, trademark and
copyright security agreements as the Holders shall require;
 
(d)           the Pledge Agreement, together with all certificates representing
the issued and outstanding capital stock of each Company (other than Parent) and
each of its Subsidiaries, and membership interest and other transfer powers
executed by the applicable issuer in blank and in form satisfactory to the
Holders;
 
(e)           Collateral Access Agreement from each landlord of each of the real
properties leased and occupied by the Companies where any Inventory (to the
extent such Inventory, individually or in the aggregate, at such location is
Material) or books and records are located, and from each bailee and
warehouseman of each of the real properties where Inventory (to the extent such
Inventory, individually or in the aggregate, as such location is Material) is
stored in a location not owned or leased by any Company;
 
(f)            a certificate of the Secretary of each Company attaching (i)
resolutions of its Board of Managers, Board of Directors or similar governing
body evidencing approval of the transactions contemplated by each of the Note
Documents to which it is a party and the execution, delivery and performance
thereof, and authorizing certain officers to execute and deliver the same, and
certifying that such resolutions were duly and validly adopted and have not
since been amended, revoked or rescinded together with certified copies of all
documents evidencing other necessary corporate, limited liability company and
governmental approvals, if any, with respect to each of the Note Documents to
which any Company is a party and certifying as to the names, titles and true
signatures of the officers of such Company authorized to sign the Note Documents
to which such Company is a party and any other documents to be delivered by such
Company hereunder or in connection herewith; (ii) the certificate of formation,
organization or other similar agreement of each Company as amended to date and
certified as of a recent date by the Secretary of State of such Company’s
jurisdiction of organization; (iii) the bylaws, limited liability company
agreement or other similar agreement of each Company; and (iv) good standing
certificates, each dated as of a recent date, with respect to each Company, from
such Company’s jurisdiction of organization and from each other material
jurisdiction in which such Company is required by law to qualify to transact
business as a foreign company;
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(g)           customary opinion(s) of counsel to the Companies as to such
matters as such Purchaser may reasonably request.  Each Company hereby directs
such counsel to deliver such opinions, agrees that the issuance and sale of any
Notes will constitute a reconfirmation of such direction, and understands and
agrees that each Purchaser will and hereby is authorized to rely on such
opinions;
 
(h)           an Officer’s Certificate of the Company Representative certifying
that (a) the representations and warranties of such Person contained in this
Agreement and the other Note Documents are true on and as of the Date of
Closing, (b) there shall exist on the Date of Closing no Event of Default or
Default, (c) that since December 31, 2013, no condition, event or act has
occurred or is continuing that could reasonably be expected to have a Material
Adverse Effect, (d) that after giving effect to the transactions on the Date of
Closing, the Companies are in pro forma compliance with each of the covenants
set forth in Section 10.6, (e) each Company is Solvent before and after giving
effect to the issuance of such Notes and the use of proceeds thereof and (f) no
dissolution or liquidation proceedings as to such Company have been commenced or
are contemplated by such Company;
 
(i)            (i) fully executed payoff letters in form and substance
reasonably satisfactory to the Purchasers, from all holders of Indebtedness of
the Companies other than Indebtedness listed on Schedule 5.15 (or the agent for
such holders), confirming that all obligations owing by any Company with respect
to such Indebtedness will be repaid in full in cash from the proceeds hereunder,
all commitments to lend or make other extensions of credit will automatically
terminate and all Liens upon any of the property of the Companies or any of
their Subsidiaries in favor of such parties shall be automatically terminate
upon such payment and (ii) all documents or instruments necessary to evidence
the release such Liens, including UCC termination statements, termination of
control agreements and other releases and terminations, in each case in form and
substance reasonably satisfactory to the Purchasers;
 
(j)            certificates of insurance evidencing the insurance coverage of
the Companies, naming the Collateral Agent, on behalf of the Holders from time
to time, as lender loss payee on all casualty and property policies, and as
additional insured on all liability policies, and a copy of such insurance
policy or policies;
 
(k)            copies of projections for the Company for fiscal years 2014
through and including 2016 of the Company, together with financial statements of
the Company, including balance sheets, income statements and cash flow
statements for each of the fiscal years ended December 31, 2012 and December 31,
2013; and
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(l)            such additional documents or certificates with respect to such
legal matters or limited liability company, partnership, corporate or other
proceedings related to the transactions contemplated hereby as may be reasonably
requested by such Purchaser.
 

Section 4.4.      Related Proceedings.  All limited liability company,
partnership, corporate and other proceedings taken or to be taken in connection
with the transactions contemplated hereby and all documents incident hereto, and
such Purchaser shall have received copies of such documents as such Purchaser
may reasonably request.  Each Purchaser shall have received written evidence,
reasonably satisfactory to such Purchaser and its special counsel, that all
material government, contractual and other third-party approvals and consents
necessary to the purchase of the Notes, the making or maintenance of Revolving
Loans and the carrying on of the business of each Company and its Subsidiaries
have been obtained.
 

Section 4.5.      Purchase Permitted By Applicable Law, Etc.  The offer by the
Companies of the Notes, and the purchase of and payment for the Term Notes to be
purchased by the Purchasers of Term Notes on the Date of Closing and the
disbursement of the Revolving Loan made on the Date of Closing (if any) shall
(a) be permitted by the laws and regulations of each jurisdiction to which such
Purchaser is subject, without recourse to provisions (such as section 1405(a)(8)
of the New York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular investment,
(b) not violate any applicable law or regulation (including, without limitation,
Regulation T, U or X of the Board of Governors of the Federal Reserve System)
and (c) not subject such Purchaser to any tax, penalty or liability under or
pursuant to any applicable law or regulation, which law or regulation was not in
effect on the date hereof.  If requested by such Purchaser, such Purchaser shall
have received an Officer’s Certificate certifying as to such matters of fact as
such Purchaser may reasonably specify to enable such Purchaser to determine
whether such purchase is so permitted.
 

Section 4.6.     Sale of Other Notes.  Contemporaneously with the Closing the
Companies shall sell to each other Purchaser, and each other Purchaser shall
purchase, the Notes to be purchased by it at the Closing as specified in
Schedule B.
 

Section 4.7.     Payment of Fees and Expenses.  Without limiting Section 15.1,
the Companies shall have paid on or before the Closing (i) the fees required to
be paid on the Date of Closing pursuant to Section 3 and (ii) the fees and
expenses of King & Spalding LLP, as set forth in a statement to be delivered to
the Company Representative at least one Business Day prior to the Date of
Closing.
 
Section 4.8.     Private Placement Number. Private Placement Numbers issued by
Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have
been obtained for the Term Notes and the Revolving Notes.
 
Section 4.9.     Changes in Corporate Structure.  No Company shall have changed
its jurisdiction of incorporation or organization, as applicable, or been a
party to any merger or consolidation or succeeded to all or any substantial part
of the liabilities of any other entity, at any time following the date of the
most recent financial statements referred to in Section 5.5. 
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Section 4.10.  Funding Instructions.  At least three Business Days prior to the
date of the Closing, each Purchaser shall have received written instructions
signed by a Responsible Officer on letterhead of the Company Representative
confirming the information specified in Section 2 including (i) the name and
address of the transferee bank, (ii) such transferee bank’s ABA number and (iii)
the account name and number into which the purchase price for the Notes is to be
deposited.
 

Notwithstanding the foregoing, to the extent any of the items described above
are permitted to be delivered after the Date of Closing pursuant to Section 9.9,
such items shall not be conditions precedent to the Purchasers’ obligations to
purchase and pay for the Term Notes at the Closing and to make Revolving Loans
under the Revolving Notes.
 

SECTION 5.   Representations and Warranties of the Companies.
 
Each Company represents and warrants to each Purchaser that:
 

Section 5.1.      Organization; Power and Authority.  Each Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  Each
Company has the corporate power and authority to own or hold under lease the
properties it purports to own or hold under lease, to transact the business it
transacts and proposes to transact, to execute and deliver this Agreement and
the Notes and to perform the provisions hereof and thereof.
 
Section 5.2.     Authorization, Etc.  This Agreement and the other Note
Documents have been duly au­thorized by all necessary corporate action on the
part of each Company, and this Agreement constitutes, and upon execution and
delivery thereof each other Note Document will constitute, a legal, valid and
binding obligation of such Company enforceable against such Company in
accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors’ rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
 

Section 5.3.      Disclosure.  This Agreement, the other Note Documents, the
financial statements listed in Schedule 5.3 or delivered pursuant to Section 7.1
or Section 7.4, and the documents, certificates or other writings delivered to
the Purchasers by or on behalf of each Company in connection with the
transactions contemplated hereby (this Agreement, such other Note Documents,
such financial statements and such documents, certificates or other writings and
such financial statements delivered to each Purchaser being referred to,
collectively, as the “Disclosure Documents”), taken as a whole, do not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made.  Except as disclosed in the Disclosure
Documents, since December 31, 2013, there has been no change in the condition
(financial or otherwise), operations, business, properties or prospects of any
Company or any Subsidiary except changes that could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  There is
no fact known to any Company that could reasonably be expected to have a
Material Adverse Effect that has not been set forth herein or in the Disclosure
Documents; provided, however, that no representation is made as to the financial
statement projections required to be delivered hereunder except that the
projections were based on information that the Companies believe to be accurate
and were calculated in a manner the Companies believe to be reasonable.
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Section 5.4.      Organization and Ownership of Shares of Subsidiaries;
Affiliates. 
 
(a)           Schedule 5.4 contains (except as  otherwise noted therein)
complete and correct lists of each Company and each of its Subsidiaries, showing
the name thereof, the jurisdiction of its organization, and (except for the
Parent) the percentage of shares of each class of its capital stock or similar
equity interests outstanding of such Company and each other Subsidiary.
 
(b)           All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 have been validly issued, are
fully paid and non-assessable and are owned free and clear of any Lien that is
prohibited by this Agreement.
 
(c)           Each Subsidiary is a corporation or other legal entity duly
organized, validly existing and, where applicable, in good standing under the
laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and, where applicable, is in good standing in
each jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.  Each such Subsidiary has the corporate or other
power and authority to own or hold under lease the properties it purports to own
or hold under lease and to transact the business it transacts and proposes to
transact.
 
(d)           No Subsidiary is subject to any legal, regulatory, contractual or
other restriction (other than the agreements listed on Schedule 5.4 and
customary limitations imposed by corporate law or similar statutes) restricting
the ability of such Subsidiary to pay dividends out of profits or make any other
similar distributions of profits to any Company or any of its Subsidiaries that
owns outstanding shares of capital stock or similar equity interests of such
Subsidiary.
 

Section 5.5.      Financial Statements; Material Liabilities.  All of the
publicly-filed financial statements (including in each case the related
schedules and notes) of the Parent and its Subsidiaries fairly present in all
material respects the consolidated financial position of the Parent and its
Subsidiaries as of the respective dates specified in such financial statements
and the consolidated results of their operations and cash flows for the
respective periods so specified and have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as set forth in the
notes thereto (subject, in the case of any interim financial statements, to
normal year-end adjustments).   The Companies and their Subsidiaries do not have
any Material liabilities that are not disclosed in the Disclosure Documents.
 

Section 5.6.     Compliance with Laws, Other Instruments, Etc.  The execution,
delivery and performance by the Companies of this Agreement and the other Note
Documents, and the offering, issuance and sale of the Notes, will not (i)
contravene, result in any breach of, or constitute a default under, or result in
the creation of any Lien in respect of any property of the Companies or any of
their Subsidiaries under, any indenture, mortgage, deed of trust, loan, purchase
or credit agreement, lease, corporate charter or by-laws, shareholders agreement
or any other agreement or instrument to which the Companies or any of their
Subsidiaries is bound or by which the Companies, any of their Subsidiaries or
any of their respective properties may be bound or affected, (ii) conflict with
or result in a breach of any of the terms, conditions or provisions of any
order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority applicable to the Companies or any of their Subsidiaries or (iii)
violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Companies or any of their Subsidiaries.
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Section 5.7.     Governmental Authorizations, Etc.  Except for the filings with
respect to Liens granted under the Note Documents, no consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by any Company of this Agreement or the other Note Documents, or the offering,
issuance and sale of the Notes.
 

Section 5.8.      Litigation; Observance of Agreements, Statutes and Orders;
Solvency.
 
(a)           There are no actions, suits, investigations or proceedings pending
or, to the best knowledge of any Company, threatened in writing against or
affecting any Company or any Subsidiary or any property of any Company or any
Subsidiary in any court or before any arbitrator of any kind or before or by any
Governmental Authority that could, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
 
(b)           Neither any Company nor any Subsidiary is (i) in default under any
agreement or instrument to which it is a party or by which it is bound, (ii) in
violation of any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or (iii) in violation of any applicable law, ordinance,
rule or regulation of any Governmental Authority (including, without limitation,
Environmental Laws, the USA PATRIOT Act or any of the other laws and regulations
that are referred to in Section 5.16), which default or violation could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
 

Section 5.9.      Taxes.  Each Company and its Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the amount
of which, individually or in the aggregate, is not Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which such Company or a Subsidiary,
as the case may be, has established adequate reserves in accordance with GAAP. 
Each Company knows of no basis for any other tax or assessment that could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.  The charges, accruals and reserves on the books of each Company
and its Subsidiaries in respect of U.S. federal, state or other taxes for all
fiscal periods are adequate to the knowledge of such Company in light of the
expected liability for such taxes except where the failure to state such charge,
accrual or reserve is not otherwise Material.
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Section 5.10.  Title to Property; Leases.  Each Company and its Subsidiaries
have good and sufficient title to their respective properties that individually
or in the aggregate are Material, including all such properties reflected in the
most recent audited balance sheet referred to in Section 5.5 or purported to
have been acquired by such Company or any Subsidiary after such date (except as
sold or otherwise disposed of in the ordinary course of business), in each case
free and clear of Liens except for Permitted Encumbrances.  All leases that
individually or in the aggregate are Material are valid and subsisting and are
in full force and effect in all material respects. As of the Date of Closing,
neither the Companies nor any of their Subsidiaries own any fee interest in any
real property.
 

Section 5.11.   Licenses, Permits, Etc. 
 
(a)           Each Company and its Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, proprietary software,
service marks, trademarks and trade names, or rights thereto without known
contravention with the rights of others except where such contravention could
not reasonably be expected to have a Material Adverse Effect.
 
(b)           To the knowledge of each Company, no product or service of such
Company or any of its Subsidiaries infringes in any material respect any
license, permit, franchise, authorization, patent, copyright, proprietary
software, service mark, trademark, trade name or other right owned by any other
Person.
 
(c)           To the knowledge of each Company, there is no Material violation
by any Person of any right of such Company or any of its Subsidiaries with
respect to any patent, copyright, proprietary software, service mark, trademark,
trade name or other right owned or used by such Company or any of its
Subsidiaries.
 

Section 5.12.   Compliance with ERISA. 
 
(a)            Each Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncom­pliance as have not resulted in and could not, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect.  Neither any Company nor any ERISA Affiliate has incurred any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans (as defined in section 3 of ERISA),
and no event, transaction or condition has occurred or exists that could,
individually or in the aggregate, reasonably be expected to result in the
incurrence of any such liability by such Company or any ERISA Affiliate, or in
the imposition of any Lien on any of the rights, properties or assets of such
Company or any ERISA Affiliate, in either case pursuant to Title I or IV of
ERISA or to section 430(k) of the Code or to any such penalty or excise tax
provisions under the Code or federal law or section 4068 of ERISA or by the
granting of a security interest in connection with the amendment of a Plan,
other than such liabilities or Liens as would not be individually or in the
aggregate Material.
 
(b)           The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans), determined as of the end of such
Plan’s most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan’s most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities.  The term “benefit liabilities” has the
meaning specified in section 4001 of ERISA and the terms “current value” and
“present value” have the meaning specified in section 3 of ERISA.
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(c)           Each Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
 
(d)           The expected postretirement benefit obligation (determined as of
the last day of Parent’s most recently ended fiscal year in accordance with
Financial Accounting Standards Board Accounting Standards Codification Topic
715-60, without regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code) of each Company and its Subsidiaries is
not Material.
 
(e)            The execution and delivery of this Agreement and the other Note
Documents and the issuance and sale of the Notes hereunder will not involve any
transaction that is subject to the prohibitions of section 406 of ERISA or in
connection with which a tax could be imposed pursuant to section
4975(c)(1)(A)-(D) of the Code.  The representation by each Company to each
Purchaser in the first sentence of this Section 5.12(e) is made in reliance upon
and subject to the accuracy of such Purchaser’s representation in Section 6.2 as
to the sources of the funds to be used to pay the purchase price of the Notes to
be purchased by such Purchaser.
 

Section 5.13.  Private Offering by each Company.  Neither any Company nor anyone
acting on its behalf has offered the Notes or any similar Securities for sale
to, or solicited any offer to buy the Notes or any similar Securities from, or
otherwise approached or negotiated in respect thereof with, any Person other
than the Purchasers.  Neither any Company nor anyone acting on its behalf has
taken, or will take, any action that would subject the issuance or sale of the
Notes to the registration requirements of section 5 of the Securities Act or to
the registration requirements of any Securities or blue sky laws of any
applicable jurisdiction.
 

Section 5.14.  Use of Proceeds; Margin Regulations.  Each Company will apply the
proceeds of the sale of the Term Notes and the Revolving Loans to refinance
existing Indebtedness on the Date of Closing, for working capital and for other
general corporate purposes.  No part of the proceeds from the sale of the Notes
or Revolving Loans hereunder will be used, directly or indirectly, for the
purpose of buying or carrying any margin stock within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for
the purpose of buying or carrying or trading in any Securities under such
circumstances as to involve any Company in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220).  Margin stock does not constitute more
than 10% of the value of the consolidated assets of each Company and its
Subsidiaries and each Company does not have any present intention that margin
stock will constitute more than 10% of the value of such assets.  As used in
this Section, the terms “margin stock” and “purpose of buying or carrying” shall
have the meanings assigned to them in said Regulation U.
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Section 5.15.   Existing Indebtedness; Future Liens. 
 
(a)           Except as described therein, Schedule 5.15 sets forth a complete
and correct list of all Indebtedness of each Company and its Subsidiaries that
is Material in amount as of the Date of Closing (other than the Indebtedness
specifically permitted under Section 10.8(l) and Section 10.8(m)) after giving
effect to the refinancing contemplated in Section 5.14 (including descriptions
of the obligors and obligees, principal amounts outstanding, any collateral
therefor and any Guaranties thereof), since which date there has been no
Material change in the amounts, interest rates, sinking funds, installment
payments or maturities of the Indebtedness of such Company or its Subsidiaries. 
Neither any Company nor any Subsidiary is in default and no waiver of default is
currently in effect, in the payment of any principal or interest on any
Indebtedness of such Company or such Subsidiary and no event or condition exists
with respect to any Indebtedness of any Company or any Subsidiary that would
permit (or that with notice or the lapse of time, or both, would permit) one or
more Persons to cause such Indebtedness to become due and payable before its
stated maturity or before its regularly scheduled dates of payment.
 
(b)           Except as disclosed in Schedule 5.15 and Indebtedness permitted
pursuant to Section 10.8(c), neither any Company nor any Subsidiary has agreed
or consented to cause or permit any of its property, whether now owned or
hereafter acquired, to be subject to a Lien that secures Indebtedness or to
cause or permit in the future (upon the happening of a contingency or otherwise)
any of its property, whether now owned or hereafter acquired, to be subject to a
Lien that secures Indebtedness.
 
(c)           Neither any Company nor any Subsidiary is a party to, or otherwise
subject to any provision contained in, any instrument evidencing Indebtedness of
such Company or such Subsidiary, any agreement relating thereto or any other
agreement (including, but not limited to, its charter or any other
organizational document) which limits the amount of, or otherwise imposes
restrictions on the incurring of, Indebtedness of any Company, except as
disclosed in Schedule 5.15.
 

Section 5.16.   Foreign Assets Control Regulations, Etc. 
 
(a)           Neither any Company nor any Controlled Entity is (i) a Person
whose name appears on the list of Specially Designated Nationals and Blocked
Persons published by the Office of Foreign Assets Control, United States
Department of the Treasury (“OFAC”) (an “OFAC Listed Person”) (ii) an agent,
department, or instrumentality of, or is otherwise beneficially owned by,
controlled by or acting on behalf of, directly or indirectly, (x) any OFAC
Listed Person or (y) any Person, entity, organization, foreign country or regime
that is subject to any OFAC Sanctions Program, or (iii) otherwise blocked,
subject to sanctions under or engaged in any activity in violation of other
United States economic sanctions, including but not limited to, the Trading with
the Enemy Act, the International Emergency Economic Powers Act, the
Comprehensive Iran Sanctions, Accountability and Divestment Act (“CISADA”) or
any similar law or regulation with respect to Iran or any other country, the
Sudan Accountability and Divestment Act, any OFAC Sanctions Program, or any
economic sanctions regulations administered and enforced by the United States or
any enabling legislation or executive order relating to any of the foregoing
(collectively, “U.S. Economic Sanctions”) (each OFAC Listed Person and each
other Person, entity, organization and government of a country described in
clause (i), clause (ii) or clause (iii), a “Blocked Person”).  Neither any
Company nor any Controlled Entity has been notified that its name appears or may
in the future appear on a state list of Persons that engage in investment or
other commercial activities in Iran or any other country that is subject to U.S.
Economic Sanctions.
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(b)           No part of the proceeds from the sale of the Notes hereunder
constitutes or will constitute funds obtained on behalf of any Blocked Person or
will otherwise be used by any Company or any Controlled Entity, directly or
indirectly, (i) in connection with any investment in, or any transactions or
dealings with, any Blocked Person, or (ii) otherwise in violation of U.S.
Economic Sanctions.
 
(c)           Neither any Company nor any Controlled Entity (i) has been found
in violation of, charged with, or convicted of, money laundering, drug
trafficking, terrorist-related activities or other money laundering predicate
crimes under the Currency and Foreign Transactions Reporting Act of 1970
(otherwise known as the Bank Secrecy Act), the USA PATRIOT Act or any other
United States law or regulation governing such activities (collectively,
“Anti-Money Laundering Laws”) or any U.S. Economic Sanctions violations, (ii) to
any Company’s actual knowledge after making due inquiry, is under investigation
by any Governmental Authority for possible violation of Anti-Money Laundering
Laws or any U.S. Economic Sanctions violations, (iii) has been assessed civil
penalties under any Anti-Money Laundering Laws or any U.S. Economic Sanctions,
or (iv) has had any of its funds seized or forfeited in an action under any
Anti-Money Laundering Laws. Each Company has established procedures and controls
which it reasonably believes are adequate (and otherwise comply with applicable
law) to ensure that such Company and each Controlled Entity is and will continue
to be in compliance with all applicable current and future Anti-Money Laundering
Laws and U.S. Economic Sanctions.
 
(d)           (1)             Neither any Company nor any Controlled Entity (i)
has been charged with, or convicted of bribery or any other anti-corruption
related activity under any applicable law or regulation in a U.S. or any
non-U.S. country or jurisdiction, including but not limited to, the U.S. Foreign
Corrupt Practices Act and the U.K. Bribery Act 2010 (collectively,
“Anti-Corruption Laws”), (ii) to such Company’s actual knowledge after making
due inquiry, is under investigation by any U.S. or non-U.S. Governmental
Authority for possible violation of Anti-Corruption Laws, (iii) has been
assessed civil or criminal penalties under any Anti-Corruption Laws or (iv) has
been or is the target of sanctions imposed by the United Nations or the European
Union;
 
(2)             To each Company’s actual knowledge after making due inquiry,
neither such Company nor any Controlled Entity has, within the last five years,
directly or indirectly offered, promised, given, paid or authorized the offer,
promise, giving or payment of anything of value to a Governmental Official or a
commercial counterparty for the purposes of: (i) influencing any act, decision
or failure to act by such Government Official in his or her official capacity or
such commercial counterparty, (ii) inducing a Governmental Official to do or
omit to do any act in violation of the Governmental Official’s lawful duty, or
(iii) inducing a Governmental Official or a commercial counterparty to use his
or her influence with a government or instrumentality to affect any act or
decision of such government or entity; in each case in order to obtain, retain
or direct business or to otherwise secure an improper advantage in violation of
any applicable law or regulation or which would cause any Holder to be in
violation of any law or regulation applicable to such Holder; and
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(3)              No part of the proceeds from the sale of the Notes hereunder
will be used, directly or indirectly, for any improper payments, including
bribes, to any Governmental Official or commercial counterparty in order to
obtain, retain or direct business or obtain any improper advantage.  Each
Company has established procedures and controls which it reasonably believes are
adequate (and otherwise comply with applicable law) to ensure that such
Company and each Controlled Entity is and will continue to be in compliance with
all applicable current and future Anti-Corruption Laws.
 

Section 5.17.   Status under Certain Statutes.  Neither any Company nor any
Subsidiary is subject to regulation under the Investment Company Act of 1940, as
amended, the Public Utility Holding Company Act of 2005, as amended, the ICC
Termination Act of 1995, as amended, or the Federal Power Act, as amended.
 

Section 5.18.   Environmental Matters. As of the Date of Closing,
 
(a)            neither any Company nor any Subsidiary has knowledge of any claim
or has received any notice of any claim and no proceeding has been instituted
asserting any claim against such Company or any of its Subsidiaries or any of
their respective real properties or other assets now or formerly owned, leased
or operated by any of them, alleging any damage to the environment or violation
of any Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect.
 
(b)            neither any Company nor any Subsidiary has knowledge of any facts
which would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring on or
in any way related to real properties now or formerly owned, leased or operated
by any of them or to other assets or their use, except, in each case, such as
could not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect.
 
(c)            neither any Company nor any Subsidiary has stored any Hazardous
Materials on real properties now or formerly owned, leased or operated by any of
them in a manner which is contrary to any Environmental Law that could,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
 
(d)            neither any Company nor any Subsidiary has disposed of any
Hazardous Materials in a manner which is contrary to any Environmental Law that
could, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.
 
(e)            all buildings on all real properties now owned, leased or
operated by any Company or any Subsidiary are in compliance with applicable
Environmental Laws, except where failure to comply could not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.
 

Section 5.19.   No Labor Disputes. As of the Date of Closing, there are no
strikes or walkouts or union organization of any Company’s or any of such
Subsidiary’s employees in existence or threatened in writing and no labor
contract is scheduled to expire during the Term other than as set forth on
Schedule 5.19 (as such schedule may from time to time be updated by the Company
Representative providing written notice to each Holder of any newly arising
item).
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Section 5.20.   Solvency.  After giving effect to the transactions contemplated
by this Agreement, each Company is Solvent.
 
Section 5.21.   Hedging Agreements.  Neither any Company nor any of its
Subsidiaries is a party to any Hedging Agreement.
 
Section 5.22.  Bank Accounts; Security Accounts.  Neither any Company nor any of
its Subsidiaries has bank accounts, deposit accounts, investments accounts,
securities accounts or any other similar accounts other than the accounts set
forth Schedule 5.22 (as such Schedule may be supplemented and updated from time
to time by the Company Representative in writing to add additional accounts that
are subject to Control Agreements).  The purpose and type of each such account
is specified on Schedule 5.22.
 
Section 5.23.  Rule 144A.  The Notes are not of the same class as securities of
any Company, if any, listed on a national securities exchange, registered under
Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system.
 
Section 5.24.  Patents, Trademarks, Copyrights and Licenses.  All patents,
patent applications, trademarks, trademark applications, service marks, service
mark applications, registered copyrights, copyright applications, design rights,
trade names, assumed names and licenses owned or utilized by any Company or any
of its Subsidiaries are set forth on Schedule 5.24 (as such schedule may from
time to time be updated by Company Representative providing written notice to
each Holder of any newly acquired Intellectual Property rights, so long as the
Companies have taken (or caused to be taken) all steps required by the
Collateral Agent to perfect the Collateral Agent’s Lien therein), are valid and
have been duly registered or filed with all appropriate Governmental Authority
and constitute all of the Intellectual Property rights which are necessary for
the operation of its business; there is no objection to or pending challenge to
the validity of any such material patent, trademark, copyright, design right,
trade name, trade secret or license and no Company nor any of its Subsidiaries
is aware of any grounds for any challenge.  Each patent, patent application,
patent license, trademark, trademark application, trademark license, service
mark, service mark application, service mark license, copyright, copyright
application and copyright license owned or held by any Company or any such
Subsidiary and all trade secrets used by any Company or any such Subsidiary
consist of original material or property developed by such Company or such
Subsidiary or was lawfully acquired by such Company or such Subsidiary from the
proper and lawful owner thereof.  Each of such items has been maintained so as
to preserve the value thereof from the date of creation or acquisition thereof. 
 
Section 5.25.   Material Contracts. 
 
(a)            Except for the agreements set forth on Schedule 5.25
(collectively, the “Material Contracts”, as such schedule may from time to time
be updated by Company Representative providing written notice to each Holder)
there are no agreements or instruments to which any Company or any Subsidiary is
a party that the breach, nonperformance or cancellation of which, would
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.  The consummation of the transactions contemplated by
this Agreement will not give rise to a right of termination in favor of any
party to any Material Contract which would reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.
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(b)           Each Material Contract is in full force and effect and no defaults
enforceable against any Company or any Subsidiary exist thereunder, except as
could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.  No Company nor any Subsidiary of any
Company has received notice from any party to any Material Contract stating that
it intends to terminate or amend such contract, except to the extent such
termination could not reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect or as otherwise disclosed on Schedule
5.25.
 
Section 5.26.  Capital Structure. All of the equity interests of each of
Companies (other than Parent) and their Subsidiaries are owned directly or
indirectly by one of the Companies.  All issued and outstanding equity interests
of the Companies and their Subsidiaries are duly authorized and validly issued,
fully paid and non-assessable, and such equity interests were issued in
compliance with all applicable laws.  All issued and outstanding equity
interests of the Companies (other than Parent) and their Subsidiaries are free
and clear of all Liens other than Permitted Encumbrances and the Lien in favor
of the Collateral Agent.  The identity of the holders of the equity interests of
the Companies (other than Parent) and their Subsidiaries and the percentage of
their fully diluted ownership of the equity interests of Companies (other than
Parent) and their Subsidiaries as of the Date of Closing is set forth on
Schedule 5.26.  No shares of the equity interests of the Companies (other than
Parent) and their Subsidiaries, other than those described above, are issued and
outstanding as of the Date of Closing.  As of the Date of Closing there are no
preemptive or other outstanding rights, options, warrants, conversion rights or
similar agreements or understandings for the purchase or acquisition from any
Company (other than Parent) or any of its Subsidiaries of any equity interests
of any such entity.
 

SECTION 6.    Representations of the Purchasers.
 
Section 6.1.      Purchase for Investment.  Each Purchaser severally represents
that it is purchasing the Notes for its own account or for one or more separate
accounts maintained by such Purchaser or for the account of one or more pension
or trust funds and not with a view to the distribution thereof, provided that
the disposition of such Purchaser’s or their property shall at all times be
within such Purchaser’s or their control.  Each Holder understands that the
Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that no
Company is required to register the Notes.
 

Section 6.2.      Source of Funds.  Each Purchaser severally represents that at
least one of the following statements is an accurate representation as to each
source of funds (a “Source”) to be used by such Purchaser to pay the purchase
price of the Notes to be purchased by such Purchaser hereunder:
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(a)           the Source is an “insurance company general account” (as the term
is defined in the United States Department of Labor’s Prohibited Transaction
Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as
defined by the annual statement for life insurance companies approved by the
NAIC (the “NAIC Annual Statement”)) for the general account contract(s) held by
or on behalf of any employee benefit plan together with the amount of the
reserves and liabilities for the general account contract(s) held by or on
behalf of any other employee benefit plans maintained by the same employer (or
affiliate thereof as defined in PTE 95-60) or by the same employee organization
in the general account do not exceed 10% of the total reserves and liabilities
of the general account (exclusive of separate account liabilities) plus surplus
as set forth in the NAIC Annual Statement filed with such Purchaser’s state of
domicile; or
 
(b)           the Source is a separate account that is maintained solely in
connection with such Purchaser’s fixed contractual obligations under which the
amounts payable, or credited, to any employee benefit plan (or its related
trust) that has any interest in such separate account (or to any participant or
beneficiary of such plan (including any annuitant)) are not affected in any
manner by the investment performance of the separate account; or
 
(c)           the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 or (ii) a bank collective investment
fund, within the meaning of the PTE 91-38 and, except as disclosed by such
Purchaser to the Company Representative in writing pursuant to this clause (c),
no employee benefit plan or group of plans maintained by the same employer or
employee organization beneficially owns more than 10% of all assets allocated to
such pooled separate account or collective investment fund; or
 
(d)           the Source constitutes assets of an “investment fund” (within the
meaning of Part VI of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified
professional asset manager” or “QPAM” (within the meaning of Part VI of the QPAM
Exemption), no employee benefit plan’s assets that are managed by the QPAM in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an affiliate
(within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or
by the same employee organization and managed by such QPAM, represent more than
20% of the total client assets managed by such QPAM, the conditions of Part I(c)
and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person
controlling or controlled by the QPAM maintains an ownership interest in any
Company that would cause the QPAM and any Company to be “related” within the
meaning of Part VI(h) of the QPAM Exemption and (i) the identity of such QPAM
and (ii) the names of any employee benefit plans whose assets in the investment
fund, when combined with the assets of all other employee benefit plans
established or maintained by the same employer or by an affiliate (within the
meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization, represent 10% or more of the assets of such investment
fund, have been disclosed to the Company Representative in writing pursuant to
this clause (d);or
 
(e)           the Source constitutes assets of a “plan(s)” (within the meaning
of Part IV(h) of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house
asset manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM
Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are
satisfied, neither the INHAM nor a person controlling or controlled by the INHAM
(applying the definition of “control” in Part IV(d)(3) of the INHAM Exemption)
owns a 10% or more interest in any Company and (i) the identity of such INHAM
and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the
Source have been disclosed to the Company Representative in writing pursuant to
this clause (e); or
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(f)            the Source is a governmental plan; or
 
(g)           the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each of
which has been identified to the Company Representative in writing pursuant to
this clause (g); or
 
(h)           the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
 
As used in this Section 6.2, the terms “employee benefit plan,” “governmental
plan,” and “separate account” shall have the respective meanings assigned to
such terms in section 3 of ERISA.
 
SECTION 7.  Information as to each Company
 
Section 7.1.      Financial and Business Information.  Each Company shall
deliver to each Holder:
 
(a)           Monthly Statements.  Within thirty (30) days after the end of each
month (except for any month at the end of any fiscal quarter), an unaudited
balance sheet of Parent and its Subsidiaries on a consolidated basis and
unaudited statements of income and stockholders’ equity and cash flow of Parent
and its Subsidiaries on a consolidated basis reflecting results of operations
from the beginning of the fiscal year to the end of such month and for such
month, prepared on a basis consistent with prior practices and complete and
correct in all material respects, subject to normal and recurring year-end
adjustments that individually and in the aggregate are not material to the
business of the Companies and their Subsidiaries.
 
(b)           Quarterly Statements.  Within 60 days (or such shorter period that
is 15 days greater than the period applicable to the filing of the Parent’s
Quarterly Report on Form 10‑Q (the “Form 10‑Q”) with the SEC regardless of
whether Parent is subject to the filing requirements thereof) after the end of
each quarterly fiscal period in each fiscal year of the Company, (i) a
consolidated balance sheet of Parent and its Subsidiaries as at the end of such
quarter, and (ii) consolidated statements of income, changes in shareholders’
equity and cash flows of Parent and its Subsidiaries, for such quarter and for
the portion of the fiscal year ending with such quarter prepared in accordance
with GAAP applicable to quarterly financial statements generally, and certified
by a Senior Financial Officer as fairly presenting, in all material respects,
the financial position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified above of
copies of Parent’s Form 10‑Q prepared in compliance with the requirements
therefor and filed with the SEC shall be deemed to satisfy the requirements of
this Section 7.1(b) with respect to the first three fiscal quarters of any
fiscal year;
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(c)            Annual Statements.  Within 105 days (or such shorter period that
is 15 days greater than the period applicable to the filing of the Parent’s
Annual Report on Form 10‑K (the “Form 10‑K”) with the SEC regardless of whether
Parent is subject to the filing requirements thereof) after the end of each
fiscal year of Parent, (i) a consolidated balance sheet of Parent and its
Subsidiaries as at the end of such year, and (ii) consolidated statements of
income, changes in shareholders’ equity and cash flows of Parent and its
Subsidiaries for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by an opinion thereon (without a “going
concern” or similar qualification or exception and without any qualification or
exception as to the scope of the audit on which such opinion is based) of
independent public accountants of recognized national standing (provided that
the Companies’ current independent public accounting firm McGladrey & Pullen,
LLP and any other comparable successor that is reasonably acceptable to the
Required Holders shall be deemed to be so qualified), which opinion shall state
that such financial statements present fairly, in all material respects, the
financial position of the companies being reported upon and their results of
operations and cash flows and have been prepared in conformity with GAAP, and
that the examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable basis for such opinion in
the circumstances, provided that the delivery of any document required under
this clause (ii) within the time period specified above of Parent’s Form 10‑K
for such fiscal year (together with Parent’s annual report to shareholders, if
any, prepared pursuant to Rule 14a‑3 under the Securities Exchange Act of 1934)
prepared in accordance with the requirements therefor and filed with the SEC,
shall be deemed to satisfy the requirements of this Section 7.1(c)(ii);
 
(d)           SEC and Other Reports.  Promptly upon their becoming available,
(i) each financial statement, report, notice or proxy statement sent by any
Company or any Subsidiary to its principal lending banks as a whole (excluding
information sent to such banks in the ordinary course of administration of a
bank facility, such as information relating to pricing and borrowing
availability) or to its public Securities holders generally, and (ii) each
regular or periodic report, each registration statement (without exhibits except
as expressly requested by such Purchaser or Holder), and each prospectus and all
amendments thereto filed by any Company or any Subsidiary with the SEC and of
all press releases and other statements made available generally by any Company
or any Subsidiary to the public concerning developments that are Material;
provided that delivery in accordance with the terms provided under Section 7.4
shall be deemed to satisfy each Company’s obligations under this Section 7.1(c);
 
(e)           Notice of Default or Event of Default.  Promptly, and in any event
within five days after a Responsible Officer becoming aware of the existence of
any Default or Event of Default or that any Person has given any notice or taken
any action with respect to a claimed default hereunder or that any Person has
given any notice or taken any action with respect to a claimed default of the
type referred to in Section 11(f), a written notice specifying the nature and
period of existence thereof and what action the Companies are taking or propose
to take with respect thereto;
 
(f)            ERISA Matters.  Promptly, and in any event within five days after
a Responsible Officer becoming aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that such Company or an
ERISA Affiliate proposes to take with respect thereto:
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(i)              with respect to any Plan, any reportable event, as defined in
section 4043(c) of ERISA and the regulations thereunder, for which notice
thereof has not been waived pursuant to such regulations as in effect on the
date hereof; or
 
(ii)            the taking by the PBGC of steps to institute, or the threatening
by the PBGC of the institution of, proceedings under section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Plan, or
the receipt by any Company or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan;
 
(iii)            any event, transaction or condition that could result in the
incurrence of any liability by any Company or any ERISA Affili­ate pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, or in the imposition of any Lien on any of
the rights, properties or assets of any Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such penalty or excise tax provisions, if such
liability or Lien, taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material Adverse Effect;
 
(g)           Notices from Governmental Authority.   Promptly, and in any event
within 30 days of receipt thereof, copies of any notice to any Company or any
Subsidiary from any federal or state Governmental Authority relating to any
order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect;
 
(h)           Resignation or Replacement of Auditors.  Within ten days following
the date on which Parent’s auditors resign or Parent elects to change auditors,
as the case may be, notification thereof, together with such supporting
information as the Required Holders may request;
 
(i)            Insurance.  Upon the request of the Required Holders or in the
event of any change, removal or non-renewal of existing insurance in place as of
the Date of Closing or thereafter than as and when required in Section 10.2, (x)
current certificates of insurance and loss payee endorsements for all insurance
policies which the Companies and their Subsidiaries are required to maintain
pursuant to this Agreement, and (y) current certificates of insurance and loss
payee endorsements for all insurance policies which the Companies and their
Subsidiaries are required to maintain pursuant to this Agreement immediately
following the renewal of each such policy and any amendments thereto;
 
(j)            Information Required by Rule 144A.  With reasonable promptness
following the request of any Holder, such financial and other information as
such Holder may reasonably determine to be necessary in order to permit
compliance with the information requirements of Rule 144A under the Securities
Act in connection with the resale of Notes, except at such times as Parent is
subject to the reporting requirements of section 13 or 15(d) of the Exchange
Act; for the purpose of this Section 7.1(k), the term "qualified institutional
buyer" shall have the meaning specified in Rule 144A under the Securities Act;
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(k)            Bi-Annual Collateral Opinion.  With reasonable promptness
following the request of the Required Holders (provided that such request shall
not be made more than once every other year beginning with year 2016 and not
later than June 30), an opinion of independent outside counsel to the Companies,
which is acceptable to the Required Holders, stating that, in the opinion of
such counsel, all action (if any is required) has been taken with respect to the
recording, filing, registering, re-recording, refiling and re-registering of all
UCC financing statements in respect of all Collateral as is necessary under the
laws of each State in which such UCC financing statements are filed under
applicable law to maintain the perfection of the Lien in respect of such
Collateral (as to which perfection may be obtained by the filing of such
financing statements) (including, without limitation, to the extent provided for
therein and herein on any assets or property acquired by the Companies after the
Date of Closing), and reciting the details of such action (if any), and stating
that, in the opinion of such counsel, based upon the facts and circumstances
existing at the time such opinion is rendered, no additional action is, or will
become, during the thirty (30) months following the date of such opinion,
necessary for such purpose, or, if any such additional action is necessary, what
such action is and when it must be taken;
 
(l)             Requested Information.  With reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, assets or properties of the Companies or their Subsidiaries
(including, but without limitation, actual copies of Parent’s Form 10‑Q and Form
10‑K) or relating to the ability of any Company to perform its obligations
hereunder and under the Notes as from time to time may be reasonably requested
by any such Holder.
 

Section 7.2.     Officer’s Certificate.  Each set of financial statements
delivered to a Holder pursuant to Section 7.1(a),  Section 7.1(b) or Section
7.1(c) shall be accompanied by a certificate of a Senior Financial Officer
(except with respect to Section 7.1(a), a certification only with respect to
clause (b) shall be required):
 
(a)            Covenant Compliance.  Setting forth the information from such
financial statements that is required in order to establish whether the
Companies are in compliance with the requirements of Section 10 (including
without limitation Section 10.6) during the quarterly or annual period covered
by the statements then being furnished, (including with respect to each such
provision that involves mathematical calculations, the information from such
financial statements that is required to perform such calculations) and detailed
calculations of the maximum or minimum amount, ratio or percentage, as the case
may be, permissible under the terms of such Section, and the calculation of the
amount, ratio or percentage then in existence.  In the event that any Company or
any Subsidiary has made an election to measure any financial liability using
fair value (which election is being disregarded for purposes of determining
compliance with this Agreement pursuant to Section 21.2) as to the period
covered by any such financial statement, such Senior Financial Officer’s
certificate as to such period shall include a reconciliation from GAAP with
respect to such election; and
 
(b)           Event of Default.  Certifying that such Senior Financial Officer
has reviewed the relevant terms hereof and has made, or caused to be made, under
his or her supervision, a review of the transactions and conditions of the
Companies and their Subsidiaries from the beginning of the quarterly or annual
period covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence during
such period of any condition or event that constitutes a Default or an Event of
Default or, if any such condition or event existed or exists (including, without
limitation, any such event or condition resulting from the failure of any
Company or any Subsidiary to comply with any Environmental Law), specifying the
nature and period of existence thereof and what action the Companies shall have
taken or proposes to take with respect thereto.
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Section 7.3.      Visitation.  Each Company shall permit the representatives of
the Collateral Agent and each Significant Holder:
 
(a)           No Default.  If no Default or Event of Default then exists, at the
expense of such Holder and upon reasonable prior notice to the Company
Representative, to visit the principal executive office of the Companies, to
discuss the affairs, finances and accounts of the Companies and their
Subsidiaries with each Company’s officers, and (with the consent of the Company
Representative, which consent will not be unreasonably withheld) its independent
public accountants, and (with the consent of the Company Representative, which
consent will not be unreasonably withheld) to visit the other offices and
properties of the Companies and their Subsidiaries, all at such reasonable times
and as often as may be reasonably requested in writing; and
 
(b)           Default.  If a Default or Event of Default then exists, at the
joint and several expense of the Companies to visit and inspect any of the
offices or properties of the Companies and their Subsidiaries, to examine all
their respective books of account, records, reports and other papers, to make
copies and extracts therefrom, to conduct appraisals and field examinations of
the Collateral, and to discuss their respective affairs, finances and accounts
with their respective officers and independent public accountants (and by this
provision each Company authorizes said accountants to discuss the affairs,
finances and accounts of the Companies and their Subsidiaries), all at such
times and as often as may be requested.
 

Section 7.4.     Electronic Delivery.  Financial statements, opinions of
independent certified public accountants, other information and Officer’s
Certificates that are required to be delivered by Company Representative
pursuant to Sections 7.1(b) or (c) and Section 7.2 shall be deemed to have been
delivered if the Company Representative satisfies any of the following
requirements with respect thereto:
 
(i)               Parent shall have timely filed such Form 10–Q or Form 10–K,
satisfying the requirements of Section 7.1(b) or Section 7.1(c), as the case may
be, with the SEC on EDGAR and shall have delivered or otherwise made such form
and the related Officer’s Certificate satisfying the requirements of Section 7.2
available on its home page on the internet, which is located at
http://ir.primowater.com as of the date of this Agreement;
 
(ii)             such financial statements satisfying the requirements of
Section 7.1(b) or Section 7.1(c) and related Officer’s Certificate(s) satisfying
the requirements of Section 7.2 are timely posted by or on behalf of each
Company on IntraLinks or on any other similar website to which each Holder has
free access; or
 
(iii)            Company Representative shall have filed any of the items
referred to in Section 7.1(d) with the SEC on EDGAR and shall have made such
items available on its home page on the internet or on IntraLinks or on any
other similar website to which each Holder has free access;
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provided however, that in the case of any of clauses (ii) or (iii), each Company
shall have given each Holder prior written notice, which may be by e-mail or in
accordance with Section 18, of such posting or filing in connection with each
delivery, provided further, that upon request of any Holder to receive paper
copies of such notices and/or forms or to receive them by e-mail, the Company
Representative will promptly e-mail them or deliver such paper copies, as the
case may be, to such Holder.
 
SECTION 8.    Payment and Prepayment of the Notes.
 
Section 8.1.      Required Prepayments; Maturity.
 

(a)           Revolving Notes. At any time that the aggregate outstanding
principal amount of Revolving Loans exceeds the Revolving Commitment, including
as a result of a reduction in the Revolving Commitment in accordance with the
definition thereof, each Company shall immediately repay outstanding Revolving
Loans in the amount by which such Revolving Loans exceed the Revolving
Commitment.  The outstanding principal amount of the Revolving Notes, together
with unpaid interest accrued thereon, shall be due and payable in full on the
Revolving Commitment Termination Date.
 
(b)           Term Notes.  On June 20, 2017 and on each June 20 thereafter to
and including June 20, 2020, the Companies will jointly and severally prepay
$4,000,000 of the principal amount (or such lesser principal amount as shall
then be outstanding) of the Notes at par and without payment of the Yield
Maintenance Amount or any premium, provided that upon any partial prepayment of
the Notes pursuant to Section 8.2, the principal amount of each required
prepayment of the Notes becoming due under this Section 8.1(b) on and after the
date of such prepayment shall be reduced in the same proportion as the aggregate
unpaid principal amount of the Notes is reduced as a result of such prepayment. 
The entire unpaid principal balance of each Note shall be due and payable in
full on the Maturity Date.
 

Section 8.2.      Optional Prepayments.
 
(a)            The Companies may, at their option, upon notice as provided
below, prepay at any time all, or from time to time any part of, the Term Notes,
in an amount not less than $1,000,000 in the case of a partial prepayment, at
100% of the principal amount so prepaid, and the Yield Maintenance Amount
determined for the prepayment date with respect to such principal amount.  The
Company Representative will give each Holder written notice of each optional
prepayment under this Section 8.2 not less than ten days and not more than 60
days prior to the date fixed for such prepayment unless the Company
Representative and the Required Holders agree to another time period pursuant to
Section 17.  Each such notice shall specify such date (which shall be a Business
Day), the aggregate principal amount of the Term Notes to be prepaid on such
date, the principal amount of each Term Note held by such Holder to be prepaid
(determined in accordance with Section 8.3), and the interest to be paid on the
prepayment date with respect to such principal amount being prepaid, and shall
be accompanied by a certificate of a Senior Financial Officer as to the
estimated Yield Maintenance Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation.  Two Business Days prior to such
prepayment, the Company Representative shall deliver to each Holder a
certificate of a Senior Financial Officer specifying the calculation of such
Yield Maintenance Amount as of the specified prepayment date unless the Company
Representative and the Required Holders agree to another prepayment date
pursuant to Section 17.
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(b)           The Revolving Notes may be prepaid on any Business Day after the
Date of Closing in whole at any time or in part from time to time in part (in a
minimum amount of $250,000 and in multiples of $100,000 with respect to the
Revolving Notes), at the option of the Company Representative, at 100% of the
principal amount so prepaid plus interest thereon to the prepayment date, plus
any Breakage Cost Obligations payable thereunder.  The Company Representative
shall give each Revolving Holder irrevocable written notice of such prepayment
not less than three Business Days prior to the prepayment date, specifying such
prepayment date, specifying the aggregate principal amount of the Revolving
Loans to be prepaid on such date, identifying each Revolving Note held by such
Holder, and the principal amount of each such Revolving Note, to be prepaid on
such date and stating that such prepayment is to be made pursuant to this
Section and that, with respect to LIBOR Loans, the Interest Periods of the LIBOR
Loans being prepaid end on such prepayment date.  Notice of prepayment having
been given as aforesaid, the principal amount of the Revolving Loans specified
in such notice, together with interest thereon to the prepayment date and
Breakage Cost Obligations required in connection therewith, if any, herein
provided, shall become due and payable on such prepayment date.
 

Section 8.3.      Allocation of Partial Prepayments.
 
(a)           If at the time any payment of the principal of any of the
Revolving Notes or Term Notes, as the case may be, is to be made hereunder, and
there is more than one Note of such type outstanding, the aggregate principal
amount of each such required or optional partial payment of such Revolving Notes
or Term Notes, as the case may be, shall be allocated among all Notes of such
type outstanding at such time, ratably in proportion to the respective unpaid
principal amounts of all Notes of such type outstanding.
 
(b)           Upon any partial prepayment of Term Notes, the principal amount so
prepaid shall be allocated ratably to all remaining installments thereof.
 
(c)           Upon any partial prepayment of Revolving Notes pursuant to Section
8.2(b), the principal amount so prepaid shall be allocated first to Base Rate
Loans under such Revolving Notes until no Base Rate Loans remain outstanding
thereunder and then to LIBOR Loans under such Revolving Notes.
 

Section 8.4.      Maturity; Surrender, Etc.    In the case of each optional
prepayment of Notes pursuant to this Section 8, the principal amount of each
Note to be prepaid shall mature and become due and payable on the date fixed for
such prepayment, together with interest on such principal amount accrued to such
date and the applicable Yield Maintenance Amount or Breakage Cost Obligations,
if any.  From and after such date, unless the Companies shall fail to pay such
principal amount when so due and payable, together with the interest and Yield
Maintenance Amount or Breakage Cost Obligations, if any, as aforesaid, interest
on such principal amount shall cease to accrue.  Any Note paid or prepaid in
full shall be surrendered to the Company Representative and cancelled and shall
not be reissued, and no Note shall be issued in lieu of any prepaid principal
amount of any Note.
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Section 8.5.     Purchase of Notes.  The Companies will not and will not permit
any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or prepayment
of the Notes in accordance with this Agreement and the Notes.  The Companies
will promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment or prepayment of Notes pursuant to this Agreement and no Notes may be
issued in substitution or exchange for any such Notes.
 

Section 8.6.      Yield Maintenance Amount.
 
“Yield Maintenance Amount” means, with respect to any Note, an amount equal to
the excess, if any, of the Discounted Value of the Remaining Scheduled Payments
with respect to the Called Principal of such Note over the amount of such Called
Principal, provided that the Yield Maintenance Amount may in no event be less
than zero.  For the purposes of determining the Yield Maintenance Amount, the
following terms have the following meanings:
 
“Called Principal” means, with respect to any Note, the principal of such Note
that is to be prepaid pursuant to Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context requires.
 
“Discounted Value” means, with respect to the Called Principal of any Note, the
amount obtained by discounting all Remaining Scheduled Payments with respect to
such Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
 
“Reinvestment Yield” means, with respect to the Called Principal of any Note,
0.75% over the yield to maturity implied by the yield(s) reported as of 10:00
a.m. (New York City time) on the second Business Day preceding the Settlement
Date with respect to such Called Principal, on the display designated as “Page
PX1” (or such other display as may replace Page PX1) on Bloomberg Financial
Markets for the most recently issued actively traded on-the-run U.S. Treasury
securities (“Reported”) having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date.  If there are no such U.S.
Treasury securities Reported having a maturity equal to such Remaining Average
Life, then such implied yield to maturity will be determined by (a) converting
U.S. Treasury bill quotations to bond equivalent yields in accordance with
accepted financial practice and (b) interpolating linearly between the yields
Reported for the applicable most recently issued actively traded on-the-run U.S.
Treasury securities with the maturities (1) closest to and greater than such
Remaining Average Life and (2) closest to and less than such Remaining Average
Life.  The Reinvestment Yield shall be rounded to the number of decimal places
as appears in the interest rate of the applicable Note.
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If such yields are not Reported or the yields Reported as of such time are not
ascertainable (including by way of interpolation), then “Reinvestment Yield”
means, with respect to the Called Principal of any Note, 0.75% over the yield to
maturity implied by the U.S. Treasury constant maturity yields reported, for the
latest day for which such yields have been so reported as of the second Business
Day preceding the Settlement Date with respect to such Called Principal, in
Federal Reserve Statistical Release H.15 (or any comparable successor
publication) for the U.S. Treasury constant maturity having a term equal to the
Remaining Average Life of such Called Principal as of such Settlement Date.  If
there is no such U.S. Treasury constant maturity having a term equal to such
Remaining Average Life, such implied yield to maturity will be determined by
interpolating linearly between (1) the U.S. Treasury constant maturity so
reported with the term closest to and greater than such Remaining Average Life
and (2) the U.S. Treasury constant maturity so reported with the term closest to
and less than such Remaining Average Life.  The Reinvestment Yield shall be
rounded to the number of decimal places as appears in the interest rate of the
applicable Note.
 
“Remaining Average Life” means, with respect to any Called Principal, the number
of years obtained by dividing (i) such Called Principal into (ii) the sum of the
products obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number of
years, computed on the basis of a 360-day year composed of twelve 30-day months
and calculated to two decimal places, that will elapse between the Settlement
Date with respect to such Called Principal and the scheduled due date of such
Remaining Scheduled Payment.
 
“Remaining Scheduled Payments” means, with respect to the Called Principal of
any Note, all payments of such Called Principal and interest thereon that would
be due after the Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled due date,
provided that if such Settlement Date is not a date on which interest payments
are due to be made under the Notes, then the amount of the next succeeding
scheduled interest payment will be reduced by the amount of interest accrued to
such Settlement Date and required to be paid on such Settlement Date pursuant to
Section 8.4 or Section 12.1.
 
“Settlement Date” means, with respect to the Called Principal of any Note, the
date on which such Called Principal is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable pursuant to Section
12.1, as the context requires.
 

SECTION 9.    Affirmative Covenants.
 

Each Company covenants that so long as any of the Notes are outstanding:
 

Section 9.1.      Compliance with Laws.  Without limiting Section 10.13, each
Company will, and will cause each of its Subsidiaries to, comply with all laws,
ordinances or governmental rules or regulations to which each of them is
subject, including, without limitation, ERISA, Environmental Laws, the USA
PATRIOT Act and the other laws and regulations that are referred to in Section
5.16, and will obtain and maintain in effect all licenses, certificates,
permits, franchises and other governmental authorizations necessary to the
ownership of their respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that non-compliance
with such laws, ordinances or governmental rules or regulations or failures to
obtain or maintain in effect such licenses, certificates, permits, franchises
and other governmental authorizations could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
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Section 9.2.     Insurance.  Each Company will, and will cause each of its
Subsidiaries to, maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses, against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated. Without limiting the foregoing, each Company shall, and
shall cause each of its Subsidiaries to, (a) keep all its insurable properties
insured against the hazards of fire, flood, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts, not less than
as is customary in the case of companies engaged in businesses similar to such
Company’s business, including, without limitation, business interruption
insurance on terms and conditions reasonably acceptable to the Required Holders;
(b) maintain liability insurance against claims for personal injury, death or
property damage suffered by others; and (c) maintain all such worker's
compensation or similar insurance as may be required under the laws of any
state, province or jurisdiction in which such Company is engaged in business.
Each Company shall (i) furnish each Holder with copies of all policies and
evidence of the maintenance of such policies required hereby upon the request of
the Required Holders and (ii) cause all such policies to include appropriate
loss payable endorsements, and/or additional insured endorsements, in form and
substance reasonably satisfactory to the Collateral Agent, providing with
respect to loss payable endorsements that (A) all proceeds thereunder shall be
payable to the Collateral Agent on behalf of the Holders, (B) no such insurance
shall be affected by any act or neglect of the insured or owner of the property
described in such policy, and (C) that such policy and loss payable clauses may
not be cancelled, amended or terminated unless at least thirty (30) days’ prior
written notice is given to each Holder (or such shorter period as the Required
Holders may agree). If any insurance losses are paid by check, draft or other
instrument payable to any Company and the Collateral Agent jointly after any
Event of Default and so long as such Event of Default exists, the Collateral
Agent may endorse such Company’s name thereon and do such other things as the
Required Holders may deem advisable to reduce the same to cash and apply the
same in accordance with this Agreement.
 

Section 9.3.     Maintenance of Properties.  Each Company will, and will cause
each of its Subsidiaries to, maintain and keep, or cause to be maintained and
kept, their respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried on in
connection therewith may be properly conducted at all times.
 

Section 9.4.      Payment of Taxes and Claims.  Each Company will, and will
cause each of its Subsidiaries to, file all tax returns required to be filed in
any jurisdiction and to pay and discharge all taxes shown to be due and payable
on such returns and all other taxes, assessments, governmental charges, or
levies imposed on them or any of their properties, assets, income or franchises,
to the extent the same have become due and payable and before they have become
delinquent and all claims for which sums have become due and payable that have
or might become a Lien on properties or assets of any Company or any Subsidiary,
provided that neither any Company nor any Subsidiary need pay any such tax,
assessment, charge, levy or claim if (i) the amount, applicability or validity
thereof is contested by such Company or such Subsidiary on a timely basis in
good faith and in appropriate proceedings, and a Company or a Subsidiary has
established adequate reserves therefor in accordance with GAAP on the books of
such Company or such Subsidiary or (ii) the nonpayment of all such taxes,
assessments, charges, levies and claims could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
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Section 9.5.      Corporate Existence, Etc.  Subject to Section 10.3, each
Company will at all times preserve and keep its corporate existence in full
force and effect.  Subject to Sections 10.3, each Company will at all times
preserve and keep in full force and effect the corporate existence of each of
its Subsidiaries (unless merged into another Company) and all rights and
franchises of each Company and its Subsidiaries unless, in the good faith
judgment of such Company, the termination of or failure to preserve and keep in
full force and effect such corporate existence, right or franchise could not,
individually or in the aggregate, have a Material Adverse Effect.
 

Section 9.6.     Books and Records.  Each Company will, and will cause each of
its Subsidiaries to, maintain proper books of record and account in conformity
with GAAP and all applicable requirements of any Governmental Authority having
legal or regulatory jurisdiction over such Company or such Subsidiary, as the
case may be.  Each Company will, and will cause each of its Subsidiaries to,
keep books, records and accounts which, in reasonable detail, accurately reflect
all transactions and dispositions of assets.  Each Company and its Subsidiaries
have devised a system of internal accounting controls sufficient to provide
reasonable assurances that their respective books, records, and accounts
accurately reflect all transactions and dispositions of assets and each Company
will, and will cause each of its Subsidiaries to, continue to maintain such
system.

 
Section 9.7.      Collateral; Subsequently Acquired Subsidiaries.
 
(a)           It is the intent of the parties that all Obligations shall be
secured by substantially all the property and assets of the Companies, whether
now existing or hereafter acquired, including, without limitation, securities
accounts, real property, accounts, chattel paper, instruments, deposit accounts,
investment property, documents, contracts, letter-­of-credit rights, general
intangibles, equipment, inventory, permits, patents, trademarks, copyrights,
trade names, service marks, Stock issued by each Company (other than Parent) and
its Subsidiaries or other Persons and other properties acquired after the Date
of Closing, but excluding the Excluded Collateral.
 
(b)           At each Company’s expense, promptly upon request by the Required
Holders, each Company shall execute and deliver (and, where applicable,
authorize the filing of), and shall cause its Subsidiaries to execute and
deliver (and, where applicable, authorize the filing of), any and all financing
statements, continuation statements and amendments, mortgages, deeds of trust
and other instruments, agreements or other documents, and take all action
(including, without limitation, filing all UCC financing statements,
continuation statements and amendments, filing or recording mortgages and deeds
of trust and filing assignments or other documents customarily filed with the
U.S. Patent and Trademark Office or the U.S. Copyright Office) that may be
required under applicable law, or that the Required Holders or the Collateral
Agent may reasonably request in order to effectuate the transactions
contemplated by the Note Documents and in order to grant, preserve, maintain,
protect and perfect the validity and first priority of the security interests
and Liens created or purported to be created by the Note Documents or in order
to effectuate the intent of the parties set forth in Section 10.7.
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(c)           At each Company’s expense, each Company shall: (a) cause each
subsequently acquired or organized Subsidiary, at the time of such acquisition
or organization, to execute and deliver (1) a joinder to this Agreement and all
Notes (pursuant to a supplement in form, scope and substance satisfactory to the
Required Holders) pursuant to which such Subsidiary shall become a Company and a
co-issuer hereunder, and (2) a joinder to the Security Agreement (pursuant to a
supplement in form, scope and substance satisfactory to the Required Holders) in
order to grant the Collateral Agent a valid, first priority perfected pledge or
security interest in substantially all of the assets and properties of such
Subsidiary, including without limitation, any outstanding capital stock of any
other Subsidiary or other Person which may be held by such Subsidiary; and (b)
deliver or cause such Subsidiary to deliver to the Collateral Agent all
supplements to the Pledge Agreement, certificates, stock powers and other
documents required by the Note Documents executed by such Subsidiary, or take or
cause such Subsidiary to take such other actions, all as may be necessary to
provide the Collateral Agent with a first priority perfected pledge of and
security interest in all outstanding Capital Securities owned or held by such
Subsidiary.
 
(d)           Any security interests and Liens granted by the Companies pursuant
to this Section shall be created under the Note Documents and other security
agreements, pledge agreements, mortgages, deeds of trust, assignments and other
instruments, agreements and other documents in form, scope and substance
reasonably satisfactory to the Required Holders and to the Collateral Agent, and
at each Company’s expense, each Company will deliver or cause to be delivered to
the Collateral Agent all such instruments, agreements and other documents,
including, without limitation, legal opinions, title insurance policies,
Collateral Access Agreements, Lien waivers, surveys, environmental site
assessments and lien searches, as the Required Holders or the Collateral Agent
shall request to evidence compliance with this Section, including without
limitation those documents that would have been required to be delivered on the
Date of Closing pursuant to Section 4 with respect to such Subsidiary if such
Subsidiary had been a Company on the Date of Closing.
 
(e)            Without limitation of the foregoing, if any Company shall acquire
at any time or times hereafter any fee interest in real property that is not
encumbered by the Mortgages, each Company agrees to promptly execute and
deliver, or to cause any Subsidiary to promptly execute and deliver, to the
Collateral Agent, as additional security and collateral for the Obligations,
deeds of trust, security deeds, mortgages or other collateral assignments
satisfactory in form and substance to Required Holders and their counsel (herein
collectively referred to as “New Mortgages”) covering such real property,
together with (1) evidence that all filing, documentary, stamp, intangible and
recording taxes and fees have been paid or escrowed with the title companies
issuing the title insurance policies referred to in clause (2) below, (2) fully
paid American Land Title Association Lender’s Extended Coverage title insurance
policies, or commitments to issue the same, in form and substance, with
endorsements and in amounts reasonably acceptable to the Purchaser, issued by
title insurers acceptable to the Purchasers, insuring the Mortgages to be valid
first and subsisting Liens on applicable Company’s interest in the property
described therein, free and clear of all Liens, excluding Permitted
Encumbrances, with the so-called “survey exception” deleted and providing for
future advances, zoning and other endorsements reasonably requested by
Purchasers, (3) a survey of each of the properties subject to a Mortgage,
together with an affidavit stating the survey accurately reflects the property
as of the Date of Closing, prepared by a land surveyor duly registered and
licensed in the state in which such property is located and in form and
substance reasonably acceptable to the  Purchaser; (4) evidence regarding flood
status, in form and substance sufficient to satisfy all FIRREA requirements of
any financial institution; (5) a “Phase I” Environmental Site Assessment
(prepared at the joint and several expense of the Companies by independent
environmental consultants reasonably acceptable to the Purchasers) of the owned
real properties of the Companies and related easements and rights of way (in
each case in form and substance reasonably acceptable to the Purchaser),
together with such additional assessments in respect of any material risks
identified by such Phase I assessments, as the Purchaser may reasonably require;
and (6) an environmental indemnity agreement executed by the Companies in favor
of the Holders.  Each New Mortgage shall be duly recorded (at each Company’s
expense) in each office where such recording is required to constitute a valid
Lien on the real property covered thereby.  With respect to each New Mortgage,
each Company shall deliver, or cause the applicable Subsidiary to deliver, to
the Holders, at the joint and several expense of the Companies, mortgagee title
insurance policies issued by a title insurance company reasonably satisfactory
to the Required Holders insuring the Collateral Agent, as mortgagee; which
policies shall be in form and substance reasonably satisfactory to the Required
Holders and shall insure a valid first-priority Lien in favor of the Collateral
Agent on the property covered thereby, subject to no other Liens and subject
only to those exceptions reasonably acceptable to the Required Holders and their
counsel.
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Section 9.8.      Payment of Leasehold Obligations.  Each Company shall, and
shall cause each of its Subsidiaries to, at all times pay, when and as due, its
rental obligations under all leases under which it is a tenant, and shall
otherwise comply, in all material respects, with all other terms of such leases
and keep them in full force and effect and, at the Required Holders’ request,
will provide evidence of having done so, except, in each case, where the failure
to do so could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.

 
Section 9.9.   Post-Closing Matters.  Each Company shall, and shall cause each
of its Subsidiaries to, satisfy the requirements set forth on Schedule 9.9 on or
before the date specified for such requirement or such later date to be
determined by the Required Holders.

 
SECTION 10.  Negative Covenants.
 
Each Company covenants that so long as any of the Notes are outstanding:

 
Section 10.1.   Transactions with Affiliates. Without the prior written consent
of the Required Holders, each Company will not and will not permit any
Subsidiary to enter into directly or indirectly any transaction or group of
related transactions (including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than any Company), or any executive officer or director of
Parent, except (x) in the ordinary course and pursuant to the reasonable
requirements of such Company’s or such Subsidiary’s business and upon fair and
reasonable terms no less favorable to such Company than would be obtainable in a
comparable arm’s-length transaction with a Person not an Affiliate, (y)
transactions among Companies and their Subsidiaries expressly permitted by
Section 10.7(k) and Section 10.9, and (z) any employment or compensation
arrangement or agreement, employee benefit plan or arrangement, officer or
director indemnification agreement or any similar arrangement or other
compensation arrangement entered into in good faith, for actual services
rendered to any Company or any Subsidiary, by any Company and the Subsidiaries
in the ordinary course of business and non-cash payments, issuance of securities
or awards pursuant thereto, and including the grant of stock options, restricted
stock, stock appreciation rights, phantom stock awards or similar rights to
employees and directors in each case approved by the board of directors of such
Company.
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Section 10.2.  Line of Business.  Without the prior written consent of the
Required Holders, each Company will not and will not permit any Subsidiary to
engage in any business if, as a result, the general nature of the business in
which such Company and its Subsidiaries, taken as a whole, would then be engaged
would be substantially changed from the general nature of the business in which
such Company and its Subsidiaries, taken as a whole, are engaged on the date of
this Agreement.

 
Section 10.3.   Merger, Consolidation, Acquisition and Sale of Assets. 
 
(a)           Without the prior written consent of the Required Holders, each
Company will not and will not permit any Subsidiary to consummate any merger,
amalgamation, consolidation or other reorganization with or into any other
Person or acquire all or a substantial portion of the assets or equity interests
of any Person or permit any other Person to consolidate or amalgamate with or
merge with it; except, that, (i) a Company may merge, amalgamate or consolidate
into another Company so long as (A) no Event of Default shall have occurred and
be continuing, (B) the Company Representative shall give the Holders at least
ten (10) Business Days prior notice thereof, (C) if a Company is a party to such
merger, amalgamation or consolidation, a Company shall be the surviving entity,
(D) no Company shall merge, amalgamate or consolidate with a Company that exists
under the laws of a country different than the country in which such Company
exists and (E) prior to such merger, amalgamation or consolidation, the
Companies have taken (or caused to be taken) all steps required by the Required
Holders with respect thereto (including without limitation all steps required by
the Required Holders to maintain the Collateral Agent’s Lien on the Collateral
granted by such Companies, as well as the priority and effectiveness of such
Lien); and (ii) a Subsidiary that is not a Company may merge, amalgamate or
consolidate into another Subsidiary that is not a Company so long as (A) no
Event of Default shall have occurred and be continuing, (B) the Company
Representative shall give the Holders at least ten (10) Business Days prior
notice thereof, and (C) prior to such merger, amalgamation or consolidation
Companies have taken (or caused to be taken) all steps, if any, required by the
Required Holders with respect thereto.
 
(b)           Without the prior written consent of the Required Holders, each
Company will not and will not permit any Subsidiary to acquire all or a
substantial portion of the assets or equity interests of any Person except for
investments permitted by Section 10.7.
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(c)           Without the prior written consent of the Required Holders, each
Company will not and will not permit any Subsidiary to directly or indirectly,
sell, assign, lease, transfer, abandon or otherwise dispose of any of its assets
or properties (including, without limitation, the Collateral) to any other
Person (each, a “Disposition”), except for:
 
(i)               the sale of Inventory in the ordinary course of business,
 
(ii)             provided no Default or Event of Default shall have occurred and
be continuing or result therefrom, the Disposition of assets (other than equity
interests of any of its Subsidiaries) having a fair market value not to exceed
$250,000 in the aggregate in any fiscal year;
 
(iii)            the sale, lease, transfer or Disposition of used, worn-out or
obsolete machinery and equipment and machinery and equipment no longer used or
useful in the conduct of business of the Companies or any of their Subsidiaries
having a fair market value not to exceed (i) $2,000,000 in the aggregate in
connection with the DS Agreement and (ii) $250,000 in the aggregate in any
fiscal year with respect to any other used, worn-out or obsolete machinery and
equipment or machinery and equipment no longer used or useful in the conduct of
business of any Company or its Subsidiaries;
 
(iv)            the sale, lease, transfer or Disposition of property by a
Company to another Company;
 
(v)            the grant in the ordinary course of business by any Company or
any of its Subsidiaries after the date hereof of a non-exclusive license of any
Intellectual Property or any exclusive license of any Intellectual Property in a
particular territory; provided, that, the rights of the licensee shall be
subject to the rights of the Collateral Agent, and shall not adversely affect,
limit or restrict the rights of the Collateral Agent to use such Intellectual
Property or to sell or otherwise dispose of any Inventory or other Collateral in
connection with the exercise by the Collateral Agent of any rights or remedies
hereunder or under any of the Note Documents, or otherwise adversely limit or
interfere in any material respect with the use of any such Intellectual Property
by the Collateral Agent in connection with the exercise of its rights or
remedies hereunder or under any of the Note Documents or by any Company or
Subsidiary;
 
(vi)            the issuance of equity interests by Companies; provided, that,
no Company or Subsidiary shall be required to pay any cash dividends,
distributions or repurchase or redeem such equity interests or make any other
payments in respect thereof, except as otherwise expressly permitted in Section
10.7;
 
(vii)          the issuance of equity interests by any Company consisting of
common stock (or its equivalent) pursuant to the Primo Water Corporation 2010
Omnibus Long-Term Incentive Plan, Primo Water Corporation 2010 Employee Stock
Purchase Plan or any similar equity plan or 401(k) plan of the Companies and
their Subsidiaries for the benefit of their employees, directors and officers;
 
(viii)         the abandonment or other disposition of Intellectual Property
that is not material and is no longer used or useful in any material respect in
the business of any Company or any of its Subsidiaries and does not appear on or
is otherwise not affixed to or incorporated in any Inventory or Equipment or
have any material value (including, without limitation, any Intellectual
Property associated with the sale of Intellectual Property to Omnifro Beverage
Company, LLC);
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(ix)            involuntary Dispositions occurring by reason of casualty or
condemnation;
 
(x)             the leasing, occupancy agreements or sub-leasing of real
property or Equipment in the ordinary course of business consistent with past
practices that would not materially interfere with the required use of such real
property or Equipment by any Company or any of its Subsidiaries;
 
(xi)            transfers of condemned real property as a result of the exercise
of “eminent domain” or other similar policies to the respective governmental
authority or agency that has condemned the same (whether by deed in lieu of
condemnation or otherwise), and transfers of properties that have been subject
to a casualty to the respective insurer of such real property as part of an
insurance settlement; and
 
(xii)           any Disposition of property or assets, or issuance of equity
interests, permitted under Section 10.3(a) or Section 10.7.

 
Section 10.4.   Liens.  Each Company will not and will not permit any of its
Subsidiaries to directly or indirectly create, incur, assume or permit to exist
(upon the happening of a contingency or otherwise) any Lien on or with respect
to any property or asset (including, without limitation, any document or
instrument in respect of goods or accounts receivable) of such Company or any
such Subsidiary, whether now owned or held or hereafter acquired, or any income
or profits therefrom, or assign or otherwise convey any right to receive income
or profits, except Permitted Encumbrances.

 
Section 10.5.   Guaranties.  Each Company will not and will not permit any
Subsidiary to become liable upon the obligations of any Person by assumption,
endorsement or guarantee thereof or otherwise (other than with respect to the
Obligations) except:
 
(i)               for the endorsement of checks in the ordinary course of
business;
 
(ii)             guarantees that constitute Permitted Indebtedness;

(iii)            guarantees that constitute investments permitted pursuant to
Section 10.7(g); and

(iv)            guarantees not permitted under clauses (i) through (iii) above
in an aggregate outstanding amount not to exceed $100,000 at any time.
 
Section 10.6.   Financial Covenants.
 
(a)            Total Debt to EBITDA Ratio.  The Companies will not permit the
ratio of Consolidated Total Indebtedness as of any date to Consolidated EBITDA
for the twelve (12) month period ending on or immediately prior to such date to
exceed the ratio set forth below for such date:
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Date
Ratio
From the Date of Closing through and including September 30, 2015
3.00:1.00
October 1, 2015 and thereafter
2.75:1.00

(b)           Tangible Net Worth.  The Companies will not permit its
Consolidated Tangible Net Worth as of any date to be less than (x) $11,000,000,
plus (y) 50% of Consolidated Net In­come on a cumulative basis for each
succeeding Fiscal Quarter, commencing with the Fiscal Quarter ending on June 30,
2014; provided that if Consolidated Net Income is negative in any Fiscal Quarter
the amount added for such Fiscal Quarter shall be zero and such negative
Consolidated Net Income shall not reduce the amount of Consolidated Net Income
added from any previous Fiscal Quarter.
 
(c)            Fixed Charge Coverage Ratio.  The Companies will not permit the
ratio of Consolidated EBITDA to Consolidated Fixed Charges, in each case,
measured for as of the last day of each fiscal quarter of such Company for the
four fiscal quarter period ending on such date, to be less than the ratio set
forth below for such date:

Period
Ratio
For the fiscal quarter ending on June 30, 2014
0.75:1.00
For the fiscal quarter ending on September 30, 2014
0.80:1.00
For the fiscal quarter ending on December 31, 2014
0.90:1.00
For the fiscal quarter ending on March 31, 2015 and each fiscal quarter
thereafter
1.00:1.00

 
Section 10.7.   Investments.  Each Company will not and will not permit any
Subsidiary to purchase or acquire Indebtedness or Equity Interests of, or any
other interest in, any Person, or make advances, loans or other extensions of
credit to any Person, including, without limitation, any Subsidiary or
Affiliate, or enter into any joint venture or partnership, except:
 
(a)            as expressly permitted pursuant to Section 10.3 and Section
10.8(j);
 
(b)           the endorsement of instruments for collection or deposit in the
ordinary course of business;
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(c)           equity interests or other obligations issued to the Companies by
any Person (or the representative of such Person) in compromise or settlement of
Indebtedness of such Person owing to the Companies (whether or not in connection
with the insolvency, bankruptcy, receivership or reorganization of such a Person
or a composition or readjustment of the debts of such Person) or upon the
foreclosure, perfection or enforcement of any Lien in favor of a Company
securing any such obligations;
 
(d)           obligations of account debtors to the Companies and their
Subsidiaries arising from Accounts which are evidenced by a promissory note made
by such account debtor payable to the applicable Company or Subsidiary;
provided, that, promptly upon the receipt of the original of any such promissory
note issued to any Company from any account debtor in excess of $250,000 in the
aggregate (or regardless of the amount after an Event of Default exists or has
occurred and is continuing, at the request of the Required Holders), such
promissory note(s) shall, upon the request of the Required Holders, be endorsed
to the order of the Collateral Agent by the Companies and promptly delivered to
the Collateral Agent as so endorsed;
 
(e)            investments by the Companies and their Subsidiaries in the form
of equity interests received as part or all of the consideration for the sale of
assets pursuant to a Disposition by any such Company of a Subsidiary to the
extent permitted under Section 10.2(c);
 
(f)            the existing investments of any Company or Subsidiary thereof as
of the Date of Closing in their respective Subsidiaries;
 
(g)           investments, advances, loans or extensions of credit made after
the date hereof by (i) a Company in another Company, and (ii) a Non-US
Subsidiary of a Company in a Non-US Subsidiary of a Company; provided, that, in
no such case shall a Company make an investment, advance, loan or extension of
credit in a Person that is not a Company except as otherwise permitted pursuant
to this clause (g);
 
(h)           Permitted Acquisitions;
 
(i)            the extension of commercial trade credit in connection with the
sale of Inventory or the provision of services, each in the ordinary course of
its business;
 
(j)            deposits of cash for leases, utilities, worker’s compensation and
similar matters in the ordinary course of business;
 
(k)            advances or loans by a Company or any Subsidiary of a Company to
its employees, officers or directors in the ordinary course of business in an
aggregate amount not to exceed $75,000 at any time outstanding for:  (i)
reasonable and necessary work-related travel or other ordinary business expenses
to be incurred by such employee, officer or director in connection with their
work for such Company or Subsidiary and (ii) reasonable and necessary relocation
expenses of such employees, officers and directors (including home mortgage
financing for relocated employees, officers and directors);
 
(l)            entry into joint ventures or partnerships that do not involve or
require any investment in cash or other property by any of the Companies and
their Subsidiaries in or for the account of another Person; and
 
(m)          investments not permitted under clauses (a) through (l) above in an
aggregate outstanding amount that are not Material; provided, that, as of the
date of such investment or any payment made in respect thereof and after giving
effect to such investment or payment, no Default or Event of Default shall exist
or have occurred and be continuing.
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Section 10.8.   Indebtedness.  Each Company will not and will not permit any
Subsidiary to create, incur, assume or suffer to exist any Indebtedness
(exclusive of trade payables incurred in the ordinary course of business
consistent with past practices outstanding no more than thirty (30) days past
its due date) except in respect of:
 
(a)           Indebtedness arising under the Note Documents;
 
(b)           Indebtedness (other than the Obligations) to the extent incurred
after the Date of Closing to finance Capital Expenditures in an aggregate amount
not to exceed $1,000,000 at any one time outstanding;
 
(c)           Indebtedness existing on the Date of Closing as set forth on
Schedule 5.15 and any refinancings, refundings, renewals or extensions thereof
(without shortening the maturity thereof or increasing the principal amount
thereof (excluding accrued interest, fees, discounts, premiums and expenses));
 
(d)           Indebtedness expressly permitted by Section 10.5 or Section 10.7;
 
(e)           Indebtedness in respect of netting services, overdraft protections
and otherwise in connection with deposit accounts and Indebtedness arising from
the honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently (except in the case of daylight overdrafts)
drawn against insufficient funds in the ordinary course of business; provided,
that, such Indebtedness is extinguished within five (5) Business Days of
incurrence and such Indebtedness does not exceed $500,000 in the aggregate at
any time;
 
(f)            Indebtedness in respect of bid, performance and surety bonds,
including guarantees or obligations of the Companies with respect to letters of
credit supporting such bid, performance and surety bonds or other forms of
credit enhancement supporting performance obligations under services contracts,
workers’ compensation claims, self-insurance obligations, unemployment
insurance, health, disability and other employee benefits or property, casualty
or liability insurance in each case incurred in the ordinary course of business;
provided, that, upon the request of the Required Holders, the Holders shall have
received true, correct and complete copies of all material agreements, documents
or instruments evidencing or otherwise related to such Indebtedness, as duly
authorized, executed and delivered by the parties thereto;
 
(g)           unsecured Indebtedness arising from agreements to provide for
customary indemnification, adjustment of purchase price or similar obligations,
earn-outs or other similar obligations, in each case, incurred in connection
with a Permitted Acquisition or Disposition permitted hereunder and in the case
of earn-outs or other similar obligations so long as they have been subordinated
to the Obligations pursuant to a subordination agreement in favor of the Holders
on terms and conditions reasonably satisfactory to the Required Holders;
 
(h)           unsecured subordinated Indebtedness of the Companies and their
Subsidiaries arising after the date hereof to any third person not otherwise
permitted in this Section 10.8, in an aggregate outstanding principal amount not
to exceed $100,000 at any time and any refinancings, refundings, renewals or
extensions thereof (without shortening the maturity thereof or increasing the
principal amount thereof (excluding accrued interest, fees, discounts, premiums
and expenses)); provided, that, (i) as of the date of incurring such
Indebtedness and after giving effect thereto, no Default or Event of Default
shall exist or have occurred and be continuing, (ii) the terms and provisions of
such Indebtedness shall provide that no principal or interest (other than
interest payable in kind (i.e., non-cash interest)) shall be paid in respect
thereof until after all of the Obligations are paid in full in cash, and (iii)
such third person shall have entered into a subordination agreement with the
Collateral Agent for the benefit of the Holders on terms and conditions
reasonably satisfactory to the Required Holders;
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(i)            Indebtedness arising pursuant to financing of insurance premiums
payable on insurance policies maintained by or for the benefit of the Companies
or any of their Subsidiaries; provided, that, upon the request of the Required
Holders, the Holders shall have received true, correct and complete copies of
all material agreements, documents and instruments evidencing or otherwise
related to such Indebtedness;
 
(j)            Indebtedness of any Company to another Company; provided, (i) all
such Indebtedness shall be evidenced by promissory notes and all such notes
shall be subject to a first priority Lien pursuant to the Security Agreement and
(ii) all such Indebtedness shall be unsecured and subordinated in right of
payment to the payment in full in cash of the Obligations pursuant to the terms
of the applicable promissory notes or an intercompany subordination agreement
that in any such case, is reasonably satisfactory to Required Holders;
 
(k)            additional unsecured Indebtedness of the Companies and their
Subsidiaries in an aggregate principal amount not to exceed $100,000 at any one
time outstanding;
 
(l)            additional Indebtedness of the Companies and their Subsidiaries
in connection with the Lowes Factoring Agreement in an amount not to exceed
$2,300,000; and
 
(m)          unsecured Indebtedness arising under credit card or purchase card
programs incurred directly by, or guaranteed by, the Companies or their
Subsidiaries in an aggregate amount not to exceed $1,000,000 at any one time
outstanding.

 
Section 10.9.   Dividends and Distributions.  Each Company will not and will not
permit its Subsidiaries to declare, pay or make any dividend or distribution or
payment with respect to:
 
(a)            any shares of the equity interests of any Company or any of their
Subsidiaries (other than dividends or distributions payable in its equity
interests permitted hereunder) or apply any of its funds, property or assets to
the purchase, redemption or other retirement of any such equity interests;
except, that, (i) in lieu of making tax payments directly, the Companies and
their Subsidiaries may make dividends and distributions to Parent from time to
time for the sole purpose of allowing Parent to, and Parent shall promptly upon
receipt thereof use the proceeds thereof solely to, pay federal and state income
taxes and franchise taxes solely arising out of the consolidated operations of
Parent and its Subsidiaries, after taking into account all available credits and
deductions; (ii) the Companies and their Subsidiaries may make dividends and
distributions to any Company from time to time in respect of any equity
interests owned by any Company; and (iii) Parent may purchase and redeem its
equity interests for the sole purpose of providing proceeds to Equity Interest
Option Holders in order to permit such Equity Interest Option Holders to pay
federal, state and provincial income taxes solely arising out of and relating to
options and warrants owned by such Equity Interest Option Holders; provided,
that, the aggregate amount of purchases and redemptions under this clause (iii)
shall not exceed $250,000 during any fiscal year; and
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(b)            any redemption, prepayment (whether mandatory or optional),
defeasance, repurchase or any other payment in respect of any Subordinated Debt,
or apply any of its funds, property or assets to the purchase, redemption or
other retirement of any Subordinated Debt; except, that, mandatory payments may
be made on Subordinated Debt to the extent expressly permitted in any
subordination or intercreditor agreement executed by the Holders with respect
thereto.
 
Section 10.10. State of Incorporation; Names; Locations.   Each Company will not
and will not permit any Subsidiary to change the jurisdiction in which it is
incorporated or otherwise organized, or change its legal name (or use a
different name), location of chief executive office or location of any of the
Collateral, unless the Company Representative has given the Holders not less
than thirty (30) days prior written notice thereof (along with an update of the
applicable Schedules) and the Companies have taken (or caused to be taken) all
steps required by the Required Holders with respect thereto (including without
limitation all steps required by the Required Holders to maintain the Collateral
Agent’s Lien on such Collateral, as well as the priority and effectiveness of
such Lien); provided, that, no Company shall change its jurisdiction of
incorporation or organization or location of any of its Collateral to a
jurisdiction or location from (a) the continental United States to outside of
the continental United States or (b) one country to another country.

 
Section 10.11. Changes to Fiscal Year End.  Each Company will not and will not
permit any Subsidiary to change its fiscal year-end from December 31, or make
any change (a) in accounting treatment and reporting practices except as
required by GAAP consistently applied or (b) in tax reporting treatment except
as required by law.

 
Section 10.12. Amendment to Organizational Documents.  Each Company will not and
will not permit any Subsidiary to amend, modify or waive any term or provision
of its certificate of formation, limited liability company agreement,
certificate of incorporation, by-laws, partnership agreement or other applicable
documents relating to its formation or governance, or any shareholders
agreement, other than amendments, modifications and waivers that are not
materially adverse in any respect to the Holders and of which the Holders have
received at least five (5) Business Days’ prior written notice.

 
Section 10.13. Terrorism Sanctions Regulations.  Each Company will not and will
not permit any Controlled Entity (a) to become (including by virtue of being
owned or controlled by a Blocked Person), own or control a Blocked Person or any
Person that is the target  of sanctions imposed by the United Nations or by the
European Union, or (b) directly or indirectly to have any investment in or
engage in any dealing or transaction (including, without limitation, any
investment, dealing or transaction involving the proceeds of the Notes) with any
Person if such investment, dealing or transaction (i) would cause any Holder to
be in violation of any law or regulation applicable to such Holder, or (ii) is
prohibited by or subject to sanctions under any U.S. Economic Sanctions, or (c) 
to engage, nor shall any Affiliate of either engage, in any activity that could
subject such Person or any Holder to sanctions under CISADA or any similar law
or regulation with respect to Iran or any other country that is subject to U.S.
Economic Sanctions.
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Section 10.14. ERISA. Each Company will not and will not permit any Subsidiary
to maintain, or permit any member of the Controlled Group to maintain, or become
obligated to contribute, or permit any member of the Controlled Group to become
obligated to contribute, to any Title IV Plan, (b) engage, or permit any member
of the Controlled Group to engage, in any non-exempt “prohibited transaction”,
as that term is defined in Section 406 of ERISA and Section 4975 of the Code,
(c) incur, or permit any member of the Controlled Group to fail the applicable
“minimum funding standard”, as that term is defined in Section 302 of ERISA or
Section 412 of the Code, (d) terminate, or permit any member of the Controlled
Group to terminate, any Title IV Plan where such event could result in any
liability of any Company or any member of the Controlled Group or the imposition
of a Lien on the property of any Company or any member of the Controlled Group
pursuant to Section 4068 of ERISA, (e) assume, or permit any member of the
Controlled Group to assume, any obligation to contribute to any Multiemployer
Plan, (f) incur, or permit any member of the Controlled Group to incur, any
withdrawal liability to any Multiemployer Plan, except to the extent that the
failure to comply, individually or in the aggregate, could not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect, (g) fail promptly to notify the Holders of the occurrence of any
Termination Event, (h) fail to comply, or permit a member of the Controlled
Group to fail to comply, with the requirements of ERISA or the Code or other
applicable laws in respect of any Plan, or (i) fail to meet, or permit any
member of the Controlled Group to fail to meet, all minimum funding requirements
under ERISA or the Code or postpone or delay or allow any member of the
Controlled Group to postpone or delay any funding requirement with respect of
any Title IV Plan.

 
Section 10.15. Prepayments. Each Company will not and will not permit any of its
Subsidiaries to directly or indirectly, voluntarily prepay any Indebtedness
(other than the Obligations), or voluntarily repurchase, redeem, retire or
otherwise acquire any Indebtedness of any Company or any Subsidiary, in each
case prior to the due date thereof if after giving effect to such prepayment any
Default or Event of Default would reasonably be expected to exist.

 
Section 10.16. Subsidiaries. Each Company will not and will not permit any of
its Subsidiaries to form any Subsidiary except U.S. Subsidiaries to the extent
that the requirements of Section 9.7 have been satisfied in connection with such
formation.

 
Section 10.17. Leases. After the Date of Closing, each Company will not and will
not permit any Subsidiary to enter as lessee into any lease arrangement for
Equipment or real property if after giving effect thereto, aggregate annual
rental payments for all leased property would exceed $500,000 in any one (1)
fiscal year for all Companies and their Subsidiaries (or such higher amount as
the Required Holders may approve in their sole discretion).  Any renewal,
replacement or extension of any lease or lease arrangement that exists as of the
Date of Closing shall not be taken into account for the purposes of this Section
10.17.
 
Section 10.18. Amendments to Material Contracts.  Without the prior written
consent of the Required Holders, each Company will not and will not permit any
of its Subsidiaries to amend, modify or waive any term or provision of any
Material Contract, unless each Holder is provided prior five (5) Business Days’
prior written notice of any such amendment, modification or waiver and such
amendment, modification or waiver is not materially adverse in any respect to
any Holder.
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Section 10.19. Subsidiary Restrictions.  Except for the Note Documents and the
Lowes Factoring Agreement, the Companies will not and will not permit any
Subsidiary to enter into, or be otherwise subject to, any contract, agreement or
other binding obligation that directly or indirectly limits the amount of, or
otherwise restricts (i) the payment to the Companies of dividends or other
redemptions or distributions with respect to its capital stock by any
Subsidiary, (ii) the repayment to the Companies by any Subsidiary of
intercompany loans or advances, or (iii) other intercompany transfers to the
Companies of property or other assets by Subsidiaries.

 
SECTION 11.  Events of Default.
 
An “Event of Default” shall exist if any of the following conditions or events
shall occur and be continu­ing:
 
(a)            any Company defaults in the payment of any principal, interest or
Yield Maintenance Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by declaration
or otherwise; or
 
(b)           any Company defaults in the payment of any fees or Breakage Cost
Obligations on any Note or any other amount due under any Note Documents for
more than three days after the same becomes due and payable; or
 
(c)           any Company defaults in the performance of or compliance with any
term contained in Section 7.1(e) or Section 10; or
 
(d)           any Company defaults in the performance of or compliance with any
term contained herein (other than those referred to in Sections 11(a), (b) and
(c)) or in any other Note Document, and such default is not remedied within 30
days after the occurrence of such default; or
 
(e)            any representation or warranty made in writing by or on behalf of
any Company or by any officer of any Company in this Agreement, any other Note
Document or any Disclosure Document furnished in connection with the
transactions contemplated hereby proves to have been false or incorrect in any
material respect on the date as of which made; or
 
(f)            (i) any Company or any Subsidiary is in default (as principal or
as guarantor or other surety) in the payment of any principal of, premium or
make-whole amount, fees, breakage costs, interest or other amounts on any
Indebtedness that is outstanding in an aggregate principal amount of at least
$1,000,000 beyond any period of grace provided with respect thereto, or (ii) any
Company or any Subsidiary is in default in the performance of or compliance with
any term of any evidence of any Indebtedness in an aggregate outstanding
principal amount of at least $1,000,000 or of any mortgage, indenture or other
agreement relating thereto or any other condition exists, and as a consequence
of such default or condition such Indebtedness has become, or has been declared
(or one or more Persons are entitled to declare such Indebtedness to be), due
and payable before its stated maturity or before its regularly scheduled dates
of payment, or (iii) as a consequence of the occurrence or continuation of any
event or condition (other than the passage of time or the right of the holder of
Indebtedness to convert such Indebtedness into equity interests), (x) any
Company or any Subsidiary has become obligated to purchase or repay Indebtedness
before its regular maturity or before its regularly scheduled dates of payment
in an aggregate outstanding principal amount of at least $1,000,000, or (y) one
or more Persons have the right to require any Company or any Subsidiary to
purchase or repay Indebtedness in an aggregate outstanding principal amount of
at least $1,000,000 before its regular maturity or before its regularly
scheduled dates of payment; or
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(g)           any Company or any Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due, (ii)
files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or
 
(h)           a court or other Governmental Authority of competent jurisdiction
enters an order appointing, without consent by any Company or any of its
Subsidiaries, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for relief
or reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of any Company or any of its
Subsidiaries, or any such petition shall be filed against any Company or any of
its Subsidiaries and such petition shall not be dismissed within 60 days; or
 
(i)            one or more final judgments or orders for the payment of money
aggregating in excess of $1,000,000, including, without limitation, any such
final order enforcing a binding arbitration decision, are rendered against one
or more of any Company and its Subsidiaries and which judgments are not, within
60 days after entry thereof, bonded, discharged or stayed pending appeal, or are
not discharged within 60 days after the expiration of such stay;
 
(j)             if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a waiver of
such standards or extension of any amortization period is sought or granted
under section 412 of the Code, (ii) a notice of intent to terminate any Plan
shall have been or is reasonably expected to be filed with the PBGC or the PBGC
shall have instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified any
Company or any ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate “amount of unfunded benefit liabilities”
(within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined
in accordance with Title IV of ERISA, shall exceed $500,000, (iv) any Company or
any ERISA Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (v) any Company or
any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) any Company
or any Subsidiary establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase the
liability of any Company or any Subsidiary thereunder; and any such event or
events described in clauses (i) through (vi) above, either individually or
together with any other such event or events, could reasonably be expected to
result in any liability by any Company or any member of the Controlled Group in
excess of $500,000.  As used in this Section 11(j), the terms “employee benefit
plan” and “employee welfare benefit plan” shall have the respective meanings
assigned to such terms in section 3 of ERISA;
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(k)           a Change of Control shall occur;
 
(l)            any Company shall contest in any manner the validity, binding
nature or enforceability of Section 23, or the Obligations of any Company
hereunder are not or cease to be legal, valid, binding and enforceable in
accordance with the terms hereof;
 
(m)          any material provision of any of the Note Documents (other than
provisions relating to the creation, validity, or perfection of a Lien) shall
for any reason cease to be valid, binding and enforceable with respect to any
Company hereto or thereto in accordance with its terms, or any such Company
shall challenge the enforceability hereof or thereof, or shall assert in
writing, or take any action or fail to take any action based on the assertion
that any material provision of any of the Note Documents (other than provisions
relating to the creation, validity, or perfection of a Lien) has ceased to be or
is otherwise not valid, binding or enforceable in accordance with its terms;
 
(n)           any Lien created hereunder or provided for under any other Note
Document in any Collateral having a value in excess of $750,000 for any reason
ceases to be or is not a valid and perfected Lien having a first priority
interest, except for Permitted Encumbrances;
 
(o)           except for Permitted Encumbrances, issuance of a notice of Lien,
levy, assessment, injunction or attachment against any property of any Company
or any of its Subsidiaries having an aggregate value that is Material which is
not stayed or bonded pending appeal or lifted within thirty (30) days;
 
(p)           any portion of the Collateral having an aggregate value that is
Material shall be seized or taken by a Governmental Body, or any Company or the
title and rights of any Company in and to any portion of the Collateral having
an aggregate value in excess of $100,000 shall have become the subject matter of
litigation which might, in the opinion of the Required Holders, upon final
determination, result in impairment or loss of the security provided by this
Agreement or the other Note Documents;
 
(q)           the indictment by any Governmental Authority of any Company or any
Subsidiary of any Company of which any Company, such Subsidiary or any Holder
receives notice, in either case, as to which there is a reasonable possibility
of an adverse determination, in the good faith determination of the Required
Holders, under any criminal statute, or commencement or threatened commencement
of criminal proceedings against such Company or such Subsidiary, pursuant to
which criminal statute or proceedings the penalties or remedies sought or
available include forfeiture of (a) any of the Collateral having a value in
excess of $500,000 or (b) any other property of the Companies and their
Subsidiaries taken as a whole, which is necessary or material to the conduct of
any Company’s business or the Companies and their Subsidiaries taken as a whole;
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(r)            the operations of any Company’s or any Subsidiary’s facilities is
interrupted in any material respect by virtue of any determination, ruling,
decision, decree or order of any court or Governmental Authority of competent
jurisdiction, and such interruption could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect; or
 
(s)           any Material Adverse Change shall occur.

 
SECTION 12.  Remedies on Default, Etc.

 
Section 12.1.   Acceleration. 
 
(a)           (a)  If an Event of Default with respect to any Company described
in Section 11(g) or (h) (other than an Event of Default described in clause (i)
of Section 11(g) or described in clause (vi) of Section 11(g) by virtue of the
fact that such clause encompasses clause (i) of Section 11(g)) has occurred, (x)
all the Notes then outstanding shall automatically become immediately due and
payable and (y) the Revolving Commitment shall automatically and immediately be
terminated without notice of any kind, which is hereby waived by each Company.
 
(b)           If any other Event of Default has occurred and is continuing, (x)
Required Holders may at any time at its or their option, by notice or notices to
the Company Representative, declare all the Notes then outstanding to be
immediately due and payable and (y) Holders of more than 50% of the aggregate
principal amount of the Revolving Notes then outstanding may at its or their
option, by notice or notices to the Company, declare that the Revolving
Commitment be terminated and the Revolving Commitment shall thereupon become
immediately terminated, without any notice (except as expressly provided in this
clause (b)) of any kind, which is hereby waived by each Company.
 
(c)            If any Event of Default described in Section 11(a) or (b) has
occurred and is continuing, any Holder or Holders at the time outstanding (other
than any Company or any Affiliate of any of them) may at any time, at its or
their option, by notice or notices to the Company Representative, declare all
the Notes held by it or them to be immediately due and payable.
 
(d)           Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon (including, but not limited to, interest accrued thereon
at the Default Rate) and (y) the Yield Maintenance Amount determined in respect
of such principal amount (to the full extent permitted by applicable law) and
any Breakage Cost Obligations, shall all be immediately due and payable, in each
and every case without presentment, demand, protest or further notice, all of
which are hereby waived.  Each Company acknowledges, and the parties hereto
agree, that each Holder has the right to maintain its investment in the Notes
free from repayment by such Company (except as herein specifically provided for)
and that the provision for payment of a Yield Maintenance Amount and/or Breakage
Cost Obligations by such Company in the event that the Notes are prepaid or are
accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
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Section 12.2.  Other Remedies.  If any Default or Event of Default has occurred
and is continuing, and irrespective of whether any Notes have become or have
been declared immediately due and payable under Section 12.1, the Holder at the
time outstanding may proceed to protect and enforce the rights of such Holder by
an action at law, suit in equity or other appropriate proceeding, whether for
the specific performance of any agreement contained herein or in any other Note
Document, or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or by
law or otherwise or the Collateral Agent may exercise any rights or remedies
under the Note Documents in accordance with the provisions thereof.  No remedy
conferred in this Agreement or the other Note Documents upon the Holder or the
Collateral Agent is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy conferred herein or now or hereafter existing at law or in equity or by
statute or otherwise.

 
Section 12.3.   Rescission.  At any time after any Notes have been declared due
and payable pursuant to Section 12.1(b) or (c), the Holders of not less than 51%
in principal amount of the Term Notes and not less than 51% of the Revolving
Notes then outstanding, by written notice to the Company Representative, may
rescind and annul any such declaration and its consequences if (a) the Companies
have paid all principal of, interest and fees on, any Break Cost Obligations and
Yield Maintenance Amount, if any, on any Notes that are due and payable and are
unpaid other than by reason of such declaration, (b) neither any Company nor any
other Person shall have paid any amounts which have become due solely by reason
of such declaration, (c) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 17, and (d)
no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes or any other Note Documents.  No rescission and
annulment under this Section 12.3 will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.

 
Section 12.4.  No Waivers or Election of Remedies, Expenses, Etc.  No course of
dealing and no delay on the part of any Holder in exercising any right, power or
remedy shall operate as a waiver thereof or otherwise prejudice such Holder’s
rights, powers or remedies.  No right, power or remedy conferred by this
Agreement or any other Note Document upon any Holder thereof shall be exclusive
of any other right, power or remedy referred to herein or therein or now or
hereafter available at law, in equity, by statute or otherwise.  Without
limiting the obligations of each Company under Section 15, each Company will pay
to the Holder on demand such further amount as shall be sufficient to cover all
costs and expenses of such Holder incurred in any enforcement or collection
under this Section 12, including, without limitation, reasonable attorneys’
fees, expenses and disbursements.
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SECTION 13.  Registration; Exchange; Substitution of Notes.

 
Section 13.1.   Registration of Notes.  The Company Representative shall keep at
its principal executive office a register for the registration and registration
of transfers of Notes.  The name and address of each Holder, each transfer
thereof and the name and address of each transferee of one or more Notes shall
be registered in such register.  If any Holder is a nominee, then (a) the name
and address of the beneficial owner of such Note or Notes shall also be
registered in such register as an owner and Holder thereof and (b) at any such
beneficial owner’s option, either such beneficial owner or its nominee may
execute any amendment, waiver or consent pursuant to this Agreement.  Prior to
due presentment for registration of transfer, the Person(s) in whose name any
Note(s) shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and each Company shall not be affected by any
notice or knowledge to the contrary.  The Company Representative shall give to
any Institutional Investor promptly upon request therefor, a complete and
correct copy of the names and addresses of all registered Holders.

 
Section 13.2.  Transfer and Exchange of Notes.  Upon surrender of any Note to
the Company Representative at the address and to the attention of the designated
officer (all as specified in Section 18(iii)), for registration of transfer or
exchange (and in the case of a surrender for registration of transfer
accompanied by a written instrument of transfer duly executed by the registered
Holder or such Holder’s attorney duly authorized in writing and accompanied by
the relevant name, address and other information for notices of each transferee
of such Note or part thereof), within ten Business Days thereafter, each Company
shall execute and deliver, at the joint and several expense of the Companies
(except as provided below), one or more new Notes (as requested by the Holder
thereof) in exchange therefor, in an aggregate principal amount equal to the
unpaid principal amount of the surrendered Note.  Each such new Note shall be
payable to such Person as such Holder may request and shall be substantially in
the form of Exhibit A-1 (with respect to each new Term Notes) or Exhibit A-2
(with respect to each new Revolving Notes).  Each such new Note shall be dated
and bear interest from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if no interest shall
have been paid thereon.  Each Company may require payment of a sum sufficient to
cover any stamp tax or governmental charge imposed in respect of any such
transfer of Notes.  Notes shall not be transferred in denominations of less than
$250,000, provided that if necessary to enable the registration of transfer by a
Holder of its entire holding of Notes, one Note may be in a denomination of less
than $250,000.  Any transferee, by its acceptance of a Note registered in its
name (or the name of its nominee), shall be deemed to have made the
representation set forth in Section 6.2.  Notwithstanding anything to the
contrary contained in this Agreement or the other Note Documents, in no event
shall the Holders sell, transfer or assign the Notes to any Competitor.

 
Section 13.3.   Replacement of Notes.  Upon receipt by the Company
Representative at the address and to the attention of the designated officer
(all as specified in Section 18(iii)) of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be notice from such Holder of such ownership and such
loss, theft, destruction or mutilation), and
 
(a)            in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the Holder is, or is a nominee
for, an original Purchaser or another Holder with a minimum net worth of at
least $25,000,000 or a Qualified Institutional Buyer, such Person’s own
unsecured agreement of indemnity shall be deemed to be satisfactory), or
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(b)            in the case of mutilation, upon surrender and cancellation
thereof, within ten Business Days thereafter, the Companies at their own joint
and several expense, shall execute and deliver, in lieu thereof, a new Note,
dated and bearing interest from the date to which interest shall have been paid
on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.

 
SECTION 14.  Payments on Notes.

 
Section 14.1.  Place of Payment.  Subject to Section 14.2, payments of
principal, Yield Maintenance Amount and Breakage Cost Obligations, if any, and
interest and fees due and payable on the Notes or otherwise payable under any
Note Documents shall be made in New York, New York at the principal office of
JPMorgan Chase Bank, N.A. in such jurisdiction.  The Company Representative may
at any time, by notice to each Holder, change the place of payment of the Notes
so long as such place of payment shall be either the principal office of the
Company Representative in such jurisdiction or the principal office of a bank or
trust company in such jurisdiction.

 
Section 14.2.  Home Office Payment.  So long as any Purchaser or its nominee
shall be the Holder, and notwithstanding anything contained in Section 14.1 or
in such Note to the contrary, each Company will pay all sums becoming due on
such Note for principal, Yield Maintenance Amount and Breakage Cost Obligations,
if any, and interest and fees due and payable on the Notes or otherwise payable
under any Note Documents by the method and at the address specified for such
purpose below such Purchaser’s name in Schedule B, or by such other method or at
such other address as such Purchaser shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company Representative made concurrently with or reasonably
promptly after payment or prepayment in full of any Note, such Purchaser shall
surrender such Note for cancellation, reasonably promptly after any such
request, to the Company Representative at its principal executive office or at
the place of payment most recently designated by the Company Representative
pursuant to Section 14.1.  Prior to any sale or other disposition of any Note
held by a Purchaser or its nominee, such Purchaser will, at its election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company
Representative in exchange for a new Note or Notes pursuant to Section 13.2. 
Each Company will afford the benefits of this Section 14.2 to any direct or
indirect transferee of any Note purchased by a Purchaser under this Agreement
and that has made the same agreement relating to such Note as the Purchasers
have made in this Section 14.2.

 
Section 14.3.  Payments Due on Non-Business Days.  Anything in this Agreement or
the Notes to the contrary notwithstanding, (x) subject to clause (y), any
payment of interest on any Note that is due on a date that is not a Business Day
shall be made on the next succeeding Business Day without including the
additional days elapsed in the computation of the interest payable on such next
succeeding Business Day; provided, however, that if the maturity date of any
Note is a date other than a Business Day, and such payment of interest is made
on the next succeeding Business Day, such payment shall include the additional
days elapsed in the computation of interest payable on such next succeeding
Business Day, and (y) any payment of principal of or Yield Maintenance Amount on
any Note or fees or Breakage Cost Obligations due hereunder (including principal
due on the Maturity Date of such Note) that is due on a date that is not a
Business Day shall be made on the next succeeding Business Day and shall include
the additional days elapsed in the computation of interest payable on such next
succeeding Business Day.
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Section 14.4.   Payments, When Received.  Any payment to be made to the Holders
hereunder or under any other Note Documents shall be deemed to have been made on
the Business Day such payment actually becomes available at such Holder’s bank
prior to the close of business of such bank, provided that interest for one day
at the non-default interest rate of the Notes shall be due on the amount of any
such payment that actually becomes available to such Holder at such Holder’s
bank after 1:00 p.m. (local time of such bank).

 
SECTION 15.  Expenses, Indemnification, Etc.

 
Section 15.1.   Transaction Expenses.  Whether or not the transactions
contemplated hereby are consummated, each Company will pay all costs and
expenses (including reasonable attorneys’ fees of a special counsel and, if
reasonably required by the Required Holders, local or other counsel) incurred by
the Purchasers and each other Holder in connection with such transactions and in
connection with any amendments, waivers, consents, restructurings or workouts
under or in respect of this Agreement or any other Note Document (whether or not
such amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this Agreement
or any other Note Document or in responding to any subpoena or other legal
process or informal investigative demand issued in connection with this
Agreement or any other Note Document, or by reason of being a Holder, (b) the
costs and expenses incurred by the Collateral Agent or Required Holders in
connection with any appraisals, field examinations, collateral analysis or
monitoring or other business analysis conducted by outside Persons in connection
with this Agreement and the other Note Documents (it being understood that the
Companies shall not be responsible for more than (i) one (1) appraisal of
Inventory during such year unless an Event of Default has occurred and is
continuing, in which case each Company shall be responsible for such appraisals
of Inventory as the Required Holders may request; and (ii) three (3) field
examinations during such year unless an Event of Default has occurred and is
continuing, in which case each Company shall be responsible for such field
examinations as the Required Holders may request), or to the extent that the
Companies do not maintain the insurance policies required hereunder, the cost
incurred by the Collateral Agent or Holders in obtaining such insurance, (c) the
costs and expenses, including financial advisors’ fees, incurred in connection
with the insolvency or bankruptcy of any Company or any Subsidiary or in
connection with any work-out or restructuring of the transactions contemplated
hereby and by the other Note Documents, and (d) the costs and expenses incurred
in connection with the initial filing of this Agreement and all related
documents and financial information with the SVO; provided, that such costs and
expenses under this clause (d) shall not exceed $3,500.  Each Company will pay,
and will save each Purchaser and each other Holder harmless from, (i) all claims
in respect of any fees, costs or expenses, if any, of brokers and finders (other
than those, if any, retained by a Purchaser or other Holder in connection with
its purchase of the Notes) and (ii) any and all wire transfer fees that any bank
deducts from any payment under such Note to such Holder or otherwise charges to
a Holder with respect to a payment under such Note.
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Section 15.2.   Indemnification. Each Company shall indemnify the Collateral
Agent, each Holder and each Related Party of any of the foregoing Persons (each
such Person being called an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, penalties, liabilities and
related expenses, including the reasonable fees, charges and disbursements of
any counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement or any other Note Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
or the parties to any other Note Document of their respective obligations
hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby, (ii) any Note, the use of the proceeds thereof, and the
Collateral (including the ownership, collection, possession, use or operation
thereof), (iii) any actual or alleged presence or release of Hazardous Materials
on or from any property owned or operated by any Company or any of its
Subsidiaries, or any Environmental Liability related in any way to any Company,
any of its Subsidiaries, or any Collateral, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether or not any
Indemnitee is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
penalties, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee.   To the extent
that any Company fails to pay any amount required to be paid by it to the
Collateral Agent under this Section 15.2, each Holder severally agrees to pay to
the Collateral Agent its pro rata share (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount; provided that the unreimbursed expense or indemnified loss, claim,
damage, penalty, liability or related expense, as the case may be, was incurred
by or asserted against the Collateral Agent in its capacity as such.  To the
extent permitted by applicable law, each Company shall not assert, and each
Company hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any other Note Document or any agreement or instrument
contemplated hereby or thereby, the transactions contemplated by this Agreement
or any Note or the use of the proceeds thereof.  All amounts due under this
Section shall be payable not later than five Business Days after written demand
therefor.

 
Section 15.3.   Survival.  The obligations of each Company under this Section 15
will survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement or any other Note Document, and the
termination of this Agreement.

 
SECTION 16.  Survival of Representations and Warranties; Entire Agreement.
 
All representations and warranties contained herein shall survive the execution
and delivery of this Agreement and the Notes, the purchase or transfer by any
Purchaser of any Note or portion thereof or interest therein and the payment of
any Note, and may be relied upon by any subsequent Holder, regardless of any
investigation made at any time by or on behalf of such Purchaser or any other
Holder.  All statements contained in any certificate or other instrument
delivered by or on behalf of any Company pursuant to this Agreement shall be
deemed representations and warranties of each Company under this Agreement. 
Subject to the preceding sentence, this Agreement, the Notes and any Subsidiary
Guaranties embody the entire agreement and understanding between each Purchaser
and each Company and supersede all prior agreements and understandings relating
to the subject matter hereof.
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SECTION 17.  Amendment and Waiver. 

 
Section 17.1.  Requirements.  This Agreement and the Notes may be amended, and
the observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), only with the written consent of each Company
and the Required Holders, except that:
 
(a)            no amendment or waiver of any of Sections 1, 2, 3, 4, 5, 6 or 21
hereof, or any defined term (as it is used therein), will be effective as to any
Purchaser unless consented to by such Purchaser in writing;
 
(b)            no amendment or waiver may, without the written consent of each
Purchaser and the Holder at the time outstanding, (i) subject to Section 12
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the time of
payment or method of computation of (x) interest or fees on the Notes or (y) the
Yield Maintenance Amount or Breakage Cost Obligations, (ii) change the
percentage of the principal amount of the Notes the Holders of which are
required to consent to any amendment or waiver, (iii) amend any of Sections 8
(except as set forth in the second sentence of Section 8.2 and Section 17.1(c)),
11(a), 11(b), 12, 17 or 20) or (iv) release all or substantially all of the
Companies from their obligations hereunder, or release all or substantially all
of the Collateral; and
 
(c)            Section 8.5 may be amended or waived to permit offers to purchase
made by any Company or an Affiliate pro rata to the Holders at the time
outstanding upon the same terms and conditions only with the written consent of
the Company Representative and the Super-Majority Holders.

 
Section 17.2.   Solicitation of Holders.
 
(a)            Solicitation. Each Company will provide each Holder with
sufficient information, sufficiently far in advance of the date a decision is
required, to enable such Holder to make an informed and considered decision with
respect to any proposed amendment, waiver or consent in respect of any of the
provisions hereof or of the other Note Documents.  The Company Representative
will deliver executed or true and correct copies of each amendment, waiver or
consent effected pursuant to this Section 17 or the other Note Documents to each
Holder promptly following the date on which it is executed and delivered by, or
receives the consent or approval of, the requisite Holders.
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(b)           Payment. Each Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security or provide other credit
support, to any Holder as consideration for or as an inducement to the entering
into by such Holder of any waiver or amendment of any of the terms and
provisions hereof or of the other Note Documents unless such remuneration is
concurrently paid, or security is concurrently granted or other credit support
concurrently provided, on the same terms, ratably to each Holder even if such
Holder did not consent to such waiver or amendment.
 
(c)           Consent in Contemplation of Transfer.  Any consent given pursuant
to this Section 17 or the other Note Documents by a Holder that has transferred
or has agreed to transfer its Note to any Company, any Subsidiary or any
Affiliate of a Company (either pursuant to a waiver under Section 17.1(c) or
subsequent to Section 8.5 having been amended pursuant to Section 17.1(c)) in
connection with such consent shall be void and of no force or effect except
solely as to such Holder, and any amendments effected or waivers granted or to
be effected or granted that would not have been or would not be so effected or
granted but for such consent (and the consents of all other Holders that were
acquired under the same or similar conditions) shall be void and of no force or
effect except solely as to such Holder.

 
Section 17.3.   Binding Effect, etc.  Any amendment or waiver consented to as
provided in this Section 17 or the other Note Documents applies equally to all
Holders and is binding upon them and upon each future Holder and upon each
Company without regard to whether such Note has been marked to indicate such
amendment or waiver.  No such amendment or waiver will extend to or affect any
obligation, covenant, agreement, Default or Event of Default not expressly
amended or waived or impair any right consequent thereon.  No course of dealing
between any Company and any Holder and no delay in exercising any rights
hereunder or under the other Note Documents shall operate as a waiver of any
rights of any Holder.

 
Section 17.4.   Notes Held by any Company, etc. Solely for the purpose of
determining whether the Holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or under the other
Note Documents, or have directed the taking of any action provided herein or in
any other Note Document to be taken upon the direction of the Holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by any Company or any of its
Affiliates shall be deemed not to be outstanding.

 
SECTION 18.  Notices.
 
Except to the extent otherwise provided in Section 7.4, all notices and
communications provided for hereunder shall be in writing and sent (a) by
telecopy if the sender on the same day sends a confirming copy of such notice by
an internationally recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by an internationally recognized overnight delivery service
(with charges prepaid).  Any such notice must be sent:
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(i)               if to any Purchaser or its nominee, to such Purchaser or
nominee at the address specified for such communications in Schedule B, or at
such other address as such Purchaser or nominee shall have specified to the
Company Representative in writing,
 
(ii)             if to any other Holder, to such Holder at such address as such
other Holder shall have specified to the Company Representative in writing, or
 
(iii)            if to any Company, to the Company Representative at its address
set forth at the beginning hereof to the attention of Mark Castaneda and David
Mills, with a copy to each, or at such other address or to such other Person as
the Company Representative shall have specified to the Holders in writing.
 
Notices and other communications to the Purchaser and any Holder hereunder may
be delivered or furnished by electronic communications (including e-mail and
internet or intranet websites) pursuant to procedures approved by the Required
Holders.  The Required Holders may, in their discretion, agree that the Holders
will accept notices and other communications hereunder by electronic
communications pursuant to procedures approved by the Required Holders; provided
that approval of such procedures may be limited to particular notices or
communications. All such notices and other communications (i) sent to an e-mail
address shall be deemed received upon the sender’s receipt of an acknowledgement
from the intended recipient (such as by the “return receipt requested” function,
as available, return e-mail or other written acknowledgement); provided that if
not given during the normal business hours of the recipient, such notice or
communication shall be deemed to have been given at the opening of business on
the next Business Day for the recipient, and (ii) posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing clause
(b)(i) of notification that such notice or communication is available and
identifying the website address therefor; provided that if not given during the
normal business hours of the recipient, such notice or communication shall be
deemed to have been given at the opening of business on the next Business Day
for the recipient.  Notwithstanding anything on any Workspace (as defined in
Section 20) to the contrary, the confidentiality provisions of Section 20 shall
govern and control all communications hereunder or under any other Note
Document.
 
Notices under this Section 18 will be deemed given only when actually received.

 
SECTION 19.  Reproduction of Documents.
 
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by any Purchaser at the Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to any Purchaser, may be
reproduced by such Purchaser by any photographic, photostatic, electronic,
digital, or other similar process and such Purchaser may destroy any original
document so reproduced.  Each Company agrees and stipulates that, to the extent
permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such Purchaser in the regular course of business) and
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.  This Section 19 shall not prohibit any
Company or any other Holder from contesting any such reproduction to the same
extent that it could contest the original, or from introducing evidence to
demonstrate the inaccuracy of any such reproduction.
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SECTION 20.  Confidential Information.
 
For the purposes of this Section 20, “Confidential Information” means
information delivered to any Purchaser by or on behalf of any Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by such
Purchaser as being confidential information of such Company or such Subsidiary,
provided that such term does not include information that (a) was publicly known
or otherwise known to such Purchaser prior to the time of such disclosure, (b)
subsequently becomes publicly known through no act or omission by such Purchaser
or any Person acting on such Purchaser’s behalf, (c) otherwise becomes known to
such Purchaser other than through disclosure by any Company or any Subsidiary or
(d) constitutes financial statements delivered to such Purchaser under Section
7.1 that are otherwise publicly available.  Each Purchaser will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by such Purchaser in good faith to protect confidential information of
third parties delivered to such Purchaser, provided that such Purchaser may
deliver or disclose Confidential Information to (i) its directors, officers,
employees, agents, attorneys, trustees and affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by its Notes), (ii) its auditors, financial advisors and other
professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with this Section 20, (iii) any other
Holder, (iv) any Person to which it sells or offers to sell such Note or any
part thereof or any participation therein (if such Person has agreed in writing
prior to its receipt of such Confidential Information to be bound by this
Section 20), (v) any Person from which it offers to purchase any Security of
such Company (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by this Section 20), (vi) any federal or
state regulatory authority having jurisdiction over such Purchaser, (vii) the
NAIC or the SVO or, in each case, any similar organization, or any nationally
recognized rating agency that requires access to information about such
Purchaser’s investment portfolio, or (viii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect compliance
with any law, rule, regulation or order applicable to such Purchaser, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which such Purchaser is a party or (z) if an Event of Default has
occurred and is continuing, to the extent such Purchaser may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under this
Agreement and the other Note Documents.  Each Holder, by its acceptance of a
Note, will be deemed to have agreed to be bound by and to be entitled to the
benefits of this Section 20 as though it were a party to this Agreement.  On
reasonable request by the Company Representative in connection with the delivery
to any Holder of information required to be delivered to such Holder under this
Agreement or requested by such Holder (other than a Holder that is a party to
this Agreement or its nominee), such Holder will enter into an agreement with
the Company Representative embodying this Section 20.
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In the event that as a condition to receiving access to information relating to
any Company or its Subsidiaries in connection with the transactions contemplated
by or otherwise pursuant to this Agreement, any Purchaser or Holder is required
to agree to a confidentiality undertaking (whether through IntraLinks, another
secure website, a secure virtual workspace or otherwise) which is different from
this Section 20, this Section 20 shall not be amended thereby and, as between
such Purchaser or such Holder and such Company, this Section 20 shall supersede
any such other confidentiality undertaking.
 
In the event of any inconsistency between this Agreement and any statement
contained in or transmitted with the Confidential Information, or required to
agree to as a condition to access any Confidential Information, including,
without limitation, any Confidential Information transmitted pursuant to a
virtual workspace or website (any such virtual workspace or website, a
“Workspace”), this Agreement shall control, notwithstanding any term or
provision contained in any such Workspace indicating that the term and 
provision of such Workspace shall control, and notwithstanding any requirement
or condition for entry into such workspace, including, without limitation, the
requirement to click "I Agree" or like condition, which shall neither amend nor
supplement (or be deemed to amend or supplement) either this Agreement or this
provision.

 
SECTION 21.  Miscellaneous.

 
Section 21.1.  Successors and Assigns.  All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent Holder) whether so expressed or not.

 
Section 21.2.  Accounting Terms.  All accounting terms used herein which are not
expressly defined in this Agreement have the meanings respectively given to them
in accordance with GAAP.  Except as otherwise specifically provided herein, (i)
all computations made pursuant to this Agreement shall be made in accordance
with GAAP, and (ii) all financial statements shall be prepared in accordance
with GAAP.  For purposes of determining compliance with this Agreement
(including, without limitation, Section 9, Section 10 and the definition of
“Indebtedness”), any election by the Company Representative to measure any
financial liability using fair value (as permitted by Financial Accounting
Standards Board Accounting Standards Codification Topic No. 825-10-25 – Fair
Value Option, International Accounting Standard 39 – Financial Instruments:
Recognition and Measurement or any similar accounting standard) shall be
disregarded and such determination shall be made as if such election had not
been made.

 
Section 21.3.   Severability.  Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.

 
Section 21.4. Construction, etc.  Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant.  Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
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Section 21.5.  Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument.  Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.

 
Section 21.6.  Governing Law.  This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of New York excluding choice‑of‑law principles of the law of such
State that would permit the application of the laws of a jurisdiction other than
such State.

 
Section 21.7.   Jurisdiction and Process; Waiver of Jury Trial. 
 
(a)           Each Company irrevocably submits to the non-exclusive jurisdiction
of any New York State or federal court sitting in the Borough of Manhattan, The
City of New York, over any suit, action or proceeding arising out of or relating
to this Agreement or the Notes.  To the fullest extent permitted by applicable
law, each Company irrevocably waives and agrees not to assert, by way of motion,
as a defense or otherwise, any claim that it is not subject to the jurisdiction
of any such court, any objection that it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum.
 
(b)           Each Company consents to process being served by or on behalf of
any Holder in any suit, action or proceeding of the nature referred to in
Section 21.7(a) by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, return receipt
requested, to it at its address specified in Section 18 or at such other address
of which such Holder shall then have been notified pursuant to said Section. 
each Company agrees that such service upon receipt (i) shall be deemed in every
respect effective service of process upon it in any such suit, action or
proceeding and (ii) shall, to the fullest extent permitted by applicable law, be
taken and held to be valid personal service upon and personal delivery to it. 
Notices hereunder shall be conclusively presumed received as evidenced by a
delivery receipt furnished by the United States Postal Service or any reputable
commercial delivery service.
 
(c)            Nothing in this Section 21.7 shall affect the right of any Holder
to serve process in any manner permitted by law, or limit any right that the
Holders may have to bring proceedings against any Company in the courts of any
appropriate jurisdiction or to enforce in any lawful manner a judgment obtained
in one jurisdiction in any other jurisdiction.
 
(d)           The parties hereto hereby waive trial by jury in any action
brought on or with respect to this Agreement, the Notes or any other document
executed in connection herewith or therewith.

 
Section 21.8.   Transaction References. Each Company agrees that Prudential
Capital Group may (a) refer to its role in originating the purchase of the Notes
from each Company, as well as the identity of such Company and the aggregate
principal amount and issue date of the Notes, on its internet site or in
marketing materials, press releases, published “tombstone” announcements or any
other print or electronic medium and (b) display such Company’s corporate logo
in conjunction with any such reference.
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SECTION 22.  THE COLLATERAL AGENT.

 
Section 22.1.   Appointment, Powers and Rights.  Subject to Section 22.7, the
Purchasers hereby irrevocably appoint and authorize The Prudential Insurance
Company of America to act as the Collateral Agent under the Note Documents, to
exercise such powers as are expressly delegated to the Collateral Agent by the
terms of this Section 22.1 and the Note Documents (and such other powers as are
reasonably incidental thereto) and to discharge the duties of the Collateral
Agent set out in the Note Documents.  Prudential hereby accepts such appointment
and agrees to perform such duties, subject to the provisions of this Section
22.  The Collateral Agent shall not have any duties or responsibilities except
those expressly set forth in this Section 22 and the other Note Documents, and
no implied duties or obligations shall be read into this Agreement against the
Collateral Agent.

 
Section 22.2.   Certain Rights, Duties and Responsibilities of Collateral Agent.
 
(a)           Undertakings.
 
(i)              (i) If no Event of Default exists, the Collateral Agent shall,
to the extent so directed by the provisions of this Agreement or by the Required
Holders, perform such duties and only such duties as are specifically set forth
in this Agreement and the other Note Documents, and no implied covenants or
obligations shall be read into this Agreement and the other Note Documents,
against the Collateral Agent.
 
(ii)             If an Event of Default exists, the Collateral Agent shall, to
the extent expressly so directed by the Required Holders, exercise any one or
more of the rights and powers vested in it by the Note Documents for the benefit
of the Holders.
 
(iii)            Whether or not an Event of Default exists, the Required Holders
shall have the right, by an instrument or instruments in writing executed and
delivered to the Collateral Agent and providing for indemnity pursuant to
Section 22.4(e) hereof, to direct the method and place of conducting proceedings
to be taken under any Note Document; provided that such direction shall not be
otherwise than in accordance with applicable law and this Agreement.
 
(b)           No Exculpation.  No provision of this Agreement shall be construed
to relieve the Collateral Agent from liability for its own gross negligence or
willful misconduct, except that:
 
(i)         this Section 22.2(b) shall not be construed to limit the effect of
Section 22.2(a);
 
(ii)        the Collateral Agent shall not be liable for any error of judgment
made in good faith by an officer or by an employee of the Collateral Agent
delegated responsibility for such judgment with due care unless it shall be
proved that the Collateral Agent was grossly negligent in ascertaining the
pertinent facts; and
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(iii)            the Collateral Agent shall not be liable to any Holder with
respect to any action taken or omitted to be taken by it, in good faith after an
Event of Default shall have occurred, in accordance with the direction of the
Required Holders relating to the method and place of conducting any proceeding
for any remedy available to the Collateral Agent.
 
(c)            Expenditures.  No provision of this Section 22 shall require the
Collateral Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties, or in the exercise
of any of its rights or powers, if it shall have grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
 
(d)           Applicability of Section 22.2 to Section 22.5.  Notwithstanding
anything herein to the contrary, whether or not therein expressly so provided,
every provision of this Section 22 relating to the conduct or affecting the
liability of, or affording protection to, the Collateral Agent shall be subject
to the provisions of Section 22.2 to Section 22.5, inclusive.
 
(e)            Notices of Events of Default.  The Collateral Agent shall not be
deemed to have any knowledge of any Event of Default unless and until it
receives written notice thereof from the Company Representative or from any
Holder.
 
(f)            Note Documents.  The Collateral Agent’s rights, duties and
obligations under each Note Document shall be subject to the provisions of this
Section 22.
 
(g)           Insurance; Taxes.   Except in accordance with written instructions
furnished by the Required Holders (and in any event subject to Section 22.2(c)),
the Collateral Agent shall have no duty to (i) see to any insurance on the
properties of the Companies and their Subsidiaries or to effect or maintain any
such insurance, or (ii) to see to the payment or discharge of any taxes with
respect to the Companies, their Subsidiaries and their properties.
 
(h)           Limited Requirement to Act.  Notwithstanding anything contained
herein to the contrary, the Collateral Agent shall not be required to take any
action in any jurisdiction if the taking of such action will (i) require the
Collateral Agent to qualify or obtain a license to do business as a foreign
corporation in such jurisdiction; (ii) result in any fee, tax or other
governmental charge under the laws of any jurisdiction other than any fee, tax
or other governmental charge otherwise payable by the Collateral Agent; or (iii)
subject the Collateral Agent to personal jurisdiction in any jurisdiction other
than the State of New York for causes of action arising from acts unrelated to
the Collateral Agent’s performance under the Note Documents.  In addition, as a
condition precedent to the foreclosure or other acquisition of title to any
portion of the Collateral pursuant to the Note Documents or otherwise, the
Collateral Agent shall be entitled to obtain advice of counsel (which advice
shall be an expense of each Company) to determine whether such foreclosure will
result in any of the consequences described in the preceding sentence.  In the
event that such counsel advises that such foreclosure or other acquisition of
title will result in one or more of such consequences, the Collateral Agent will
appoint a co-collateral agent pursuant to Section 22.9 hereof to proceed with
such foreclosure or acquisition.
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Section 22.3.  Collateral Agent’s Rights to Compensation. Each Company covenants
and agrees to pay to the Collateral Agent from time to time, and the Collateral
Agent shall be entitled to, reasonable compensation for all services rendered by
it, in such amounts and at such times as are customary for such services at such
time.

 
Section 22.4.   Certain Rights of the Collateral Agent.
 
(a)            No Representations and Covenants; Events of Default, etc.  The
Collateral Agent shall not be responsible for any recitals or representations of
the Companies or in any other Note Document, or for insuring the Collateral, nor
shall the Collateral Agent be bound to ascertain or inquire as to the
performance or observance of any covenants, conditions or agreements contained
herein, and the Collateral Agent shall be deemed to have knowledge of a Default
or Event of Default only upon receipt of written notice thereof from one of the
Holders or any Company, which notice shall state that it is a “Notice of
Default.”  The Collateral Agent shall promptly notify in writing all Holders of
any Default or Event of Default of which the Collateral Agent has received such
notice promptly after receipt of such notice.
 
(b)           No Representations or Warranties; No Accountability.  The
Collateral Agent makes no representation or warranty as to the validity,
sufficiency or enforceability of this Agreement, the Notes, any other Note
Document or any instrument included in the Collateral, or as to the value,
title, condition, fitness for use of, or maintenance or adequacy of insurance
on, or otherwise with respect to, any the Collateral.  The Collateral Agent
shall not be accountable to anyone for the use or application of any of the
Notes or the proceeds thereof except as specifically provided in this Agreement
or for the use or application of any Property or the proceeds thereof which
shall be released from the Lien and security interest in favor of the Collateral
Agent in accordance with the provisions of this Agreement and any applicable
Note Document.
 
(c)           Reliance.  The Collateral Agent may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document believed by it, in good faith, to be genuine and
to have been signed or presented by the proper party or parties.  Unless other
evidence in respect thereof is specifically prescribed herein, any request,
direction, order or demand of a Holder mentioned herein or in any of the other
Note Documents shall be sufficiently evidenced by a written instrument signed by
a Person purporting to be a senior officer of such Holder.  As to any fact or
matter the manner of ascertainment of which is not specifically described
herein, the Collateral Agent may for all purposes hereof rely on a certificate
signed by a Person purporting to be a senior officer of a Holder as to any such
fact or matter, and such certificate shall constitute full protection to the
Collateral Agent for any action taken or omitted to be taken by it in good faith
in reliance thereon.
 
(d)           Professional Consultation.  The Collateral Agent may consult with
counsel, appraisers, engineers, accountants and other skilled Persons to be
selected by the Collateral Agent, and the written advice of any thereof shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
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(e)           Indemnity for Specific Actions.  The Collateral Agent shall be
under no obligation to take any action to protect, preserve or enforce any
rights or interests in the Collateral or to take any action toward the execution
or enforcement of its rights hereunder or under any Note Document, whether on
its own motion or on the request of any other Person, which in the opinion of
the Collateral Agent may involve loss, liability or expense to it, unless one or
more Holders shall offer and furnish reasonable security or indemnity against
loss, liability and expenses to the Collateral Agent.
 
(f)            Investigation.  The Collateral Agent shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, note or other paper or document, unless requested in
writing to do so by the Required Holders.
 
(g)           Agents.  The Collateral Agent may (at the expense of each 
Company) exercise any of the powers granted hereunder or perform any of its
duties hereunder either directly or by or through agents or attorneys, and the
Collateral Agent shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed by it with due care.

 
Section 22.5.  Showings Deemed Necessary by Collateral Agent.  Anything in this
Agreement contained to the contrary notwithstanding, the Collateral Agent shall
have the right, but (except to the extent so directed by the Required Holders)
shall not be required, to demand in respect of withdrawal of any cash, the
release of any Collateral, the subjection of any after-acquired Collateral to
the Lien of any Note Document, or any other action whatsoever within the purview
hereof, any showings, certificates, opinions, appraisals or other information by
the Collateral Agent deemed necessary or appropriate in addition to the matters
by the terms hereof required as a condition precedent to such action.

 
Section 22.6.  Resignation of Collateral Agent.  The Collateral Agent may resign
by mailing notice specifying the time and date when such resignation shall take
effect to the Company Representative and to all Holders.  Such resignation shall
take effect at the time and on the date specified in such notice (being not less
than thirty (30) calendar days after the mailing of such notice) unless
previously a successor Collateral Agent shall have been appointed as hereinafter
provided, in which event such resignation shall take effect immediately upon the
appointment of such successor.

 
Section 22.7.  Removal of Collateral Agent.  The Collateral Agent may be removed
and a successor may be appointed at any time by an instrument or concurrent
instruments in writing signed and acknowledged by the Required Holders and
delivered to each of the Collateral Agent and the Companies, and in the case of
the appointment of a successor Collateral Agent, to such successor Collateral
Agent; provided that no successor Collateral Agent shall be appointed without
the prior written consent of the Company Representative, which consent shall not
be unreasonably withheld.

 
Section 22.8.  Successor Collateral Agent.  Each successor to the Collateral
Agent named in this Agreement shall be a trust company, banking corporation or
banking association organized under the laws of the United States of America or
any State thereof and having an office in the United States of America, in good
standing and having capital and surplus aggregating at least One Hundred Million
Dollars ($100,000,000) (or, if such successor is a subsidiary of a holding
company, such holding company has such capital and surplus).
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Section 22.9.   Appointment of Co-Collateral Agent or Successor Collateral
Agent.
 
(a)           Successor Collateral Agent.  If the Collateral Agent shall have
given notice of resignation pursuant to Section 22.6 or if notice of removal
shall have been given pursuant to Section 22.7, which notice, in either case,
does not appoint a successor Collateral Agent, or if such successor Collateral
Agent shall not have been so appointed or shall not have accepted such
appointment within fifteen (15) calendar days after the giving of such notice of
resignation or the giving of any such notice of removal, as the case may be, a
successor Collateral Agent may be appointed by the Required Holders.  If no such
appointment shall have been made within thirty (30) calendar days after the
giving of such notice of resignation or the giving of such notice of removal, a
successor Collateral Agent may be appointed by any Holder, or, upon application
of the retiring Collateral Agent, by any court of competent jurisdiction. 
Notwithstanding anything to the contrary contained herein, no successor
Collateral Agent shall be appointed without the prior written consent of the
Company Representative, which consent shall not be unreasonably withheld.
 
(b)           Co-Collateral Agent.  If at any time it shall be necessary or
prudent in order to conform to any law of any jurisdiction in which any part of
the Collateral is located, or the Collateral Agent is so advised by counsel, the
parties hereto shall execute and deliver an agreement supplemental hereto and
all other instruments and agreements necessary or proper to constitute a bank or
trust company or one or more Persons approved by the Collateral Agent and the
Required Holders (with the written consent of the Company Representative, which
consent shall not be unreasonably withheld), to act as co-collateral agent,
jointly with the Collateral Agent, or to act as separate collateral agent
hereunder.

 
Section 22.10. Merger or Consolidation of Prudential.  Any Person into which
Prudential, or any successor to it, may be merged or consolidated, or any
company resulting from any merger or consolidation to which Prudential or any
successor to it shall be a party, shall be the successor to the Collateral Agent
under this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto, so long as
 
(i)              such Person is a trust company, banking corporation, banking
association or insurance company organized under the laws of the United States
of America or any State thereof and having an office in the United States of
America, and
 
(ii)             such Person (or, if such company is a subsidiary of a holding
company, such company’s holding company has combined capital and surplus of at
least One Hundred Million Dollars ($100,000,000).

The Holders will, upon the request of the merged, consolidated or converted
trust company, insurance company, corporation or banking association, execute,
acknowledge and cause to be recorded or filed suitable instruments in writing to
confirm the estates, rights and interests of such trust company, insurance
company, corporation or banking association, as the case may be, as Collateral
Agent under this Agreement.
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Section 22.11. Conveyance upon Request of Successor Collateral Agent.  Should
any deed, conveyance or instrument in writing from any Company be required by
any successor Collateral Agent for more fully and certainly vesting in and
confirming to such new Collateral Agent such estates, rights, powers and duties,
then upon request of such successor Collateral Agent any and all such deeds,
conveyances and instruments in writing shall be made, executed, acknowledged and
delivered, and shall be caused to be recorded and filed, by such Company.

 
Section 22.12. Acceptance of Appointment by Co-Collateral Agent or Successor
Collateral Agent.  Any new Collateral Agent appointed pursuant to any of the
provisions of this Section 22.12 shall execute, acknowledge and deliver to the
Holders an instrument accepting such appointment, and thereupon such new
Collateral Agent, without any further act, deed or conveyance, shall become
vested with all the estates, rights and powers of its predecessor hereunder with
like effect as if originally named as Collateral Agent herein; but, nevertheless
upon the written request of the Holders or of the successor Collateral Agent and
payment of all amounts then owing to the Collateral Agent ceasing to act, the
Collateral Agent ceasing to act shall execute and deliver an instrument
transferring to such successor Collateral Agent, all the estates, rights and
powers of the Collateral Agent so ceasing to act, and shall duly assign,
transfer and deliver any of the Property and moneys held by such Collateral
Agent to the successor Collateral Agent so appointed in its place.

 
Section 22.13. No Amendments Without Consent of Holders.  The Collateral Agent
will not, without the necessary consent specified in Section 22.14, enter into
any amendment to this Agreement or any Note Document.

 
Section 22.14. Waivers and Consents by Holders.  Upon the waiver or consent of
the Required Holders, and only upon such waiver or consent, (a) the Collateral
Agent shall execute an appropriate instrument permitting any Person to take any
action prohibited, or omit the taking of any action required, by any of the
provisions of the Note Documents; and (b) the Companies and the Collateral Agent
may enter into an agreement for the purposes of amending, adding, or eliminating
any provision of any Note Document; provided that no such waiver, consent or
amendment shall:
 
(i)               impair or affect the right of any Holder to receive payments
or prepayments of the principal of and payments of the interest on the Notes, as
therein provided, without the consent of such Holder;
 
(ii)              permit the creating of any Lien or security interest with
respect to any of the Collateral without the consent of all of the Holders;
 
(iii)            effect the deprivation of any Holder of the benefit of any Lien
upon all or any part of the Collateral without the consent of such Holder;
 
(iv)            create any priority with respect to any of the Notes without the
consent of all of the Holders;
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(v)            amend or waive any provision of Section 22.13, this Section 22.14
or Section 22.15 without the consent of all of the Holders; or
 
(vi)            modify the rights, duties or immunities of the Collateral Agent
without the consent of the Collateral Agent and all of the Holders.

If in the reasonable opinion of the Collateral Agent any such document adversely
affects any right, duty, immunity or indemnity in favor of the Collateral Agent
hereunder or under any Note Document, the Collateral Agent may in its discretion
decline to execute such document.
 
Any Holder may specify that any such written consent executed by it shall be
effective only with respect to a portion of the Notes held by it (in which case
it shall specify, by series of Notes and dollar amount, the aggregate principal
amount of Notes with respect to which such consent shall be effective) and in
the event of any such specification such Holders shall be deemed to have
executed such written consent only with respect to the portion of the Notes so
specified.

Section 22.15. Notice of Amendments, Waivers, etc.  Promptly after the execution
of any properly approved agreement or instrument of permission pursuant to the
provisions of Section 22.14, the Collateral Agent shall give written notice,
setting forth in general terms the substance of such consent or instrument,
together with a conformed copy thereof, to each Holder.  Any failure of the
Collateral Agent to give such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such agreement or instrument.

 
SECTION 23.  JOINT AND SEVERAL LIABILITY

 
Section 23.1.  Joint and Several Liability.  Each Company agrees that it is
jointly and severally liable for, and absolutely and unconditionally guarantees
to the Collateral Agent and each Holder the prompt payment and performance of,
all Obligations and all agreements under the Note Documents.  Subject to the
preceding sentence, each Company agrees that its guaranty obligations hereunder
constitute a continuing guaranty of payment and performance and not of
collection, that such obligations shall not be discharged until payment in full
in cash of the Obligations, and that such obligations are absolute and
unconditional, irrespective of (a) the genuineness, validity, regularity,
enforceability, subordination or any future modification of, or change in, any
Obligations, or any other document, instrument or agreement to which any Company
is or may become a party or be bound; (b) the absence of any action to enforce
this Agreement (including this Section) or any other Note Document, or any
waiver, consent or indulgence of any kind by the Collateral Agent or any Holder
with respect thereto; (c) the existence, value or condition of, or failure to
perfect a Lien or to preserve rights against, any security or guaranty for the
Obligations or any action, or the absence of any action, by the Collateral Agent
in respect thereof (including the release of any security or guaranty); (d) the
insolvency of any Company; (e) any election by the Collateral Agent or any
Holder in any bankruptcy or other insolvency proceeding for the application of
Section 1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant of a Lien
by any other Company, as debtor-in-possession under Section 364 of the
Bankruptcy Code or otherwise; (g) the disallowance of any claims of the
Collateral Agent or any Holder against any Company for the repayment of any
Obligations under Section 502 of the Bankruptcy Code or otherwise; or (h) any
other action or circumstances that might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor, except payment in full
in cash of all Obligations.
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Section 23.2.   Waivers.
 
(a)            Each Company expressly waives all rights that it may have now or
in the future under any statute, at common law, in equity or otherwise, to
compel the Collateral Agent to marshal assets or to proceed against any Company,
other Person or security for the payment or performance of any Obligations
before, or as a condition to, proceeding against such Company.  Each Company
waives all defenses available to a surety, guarantor or accommodation co-obligor
other than payment in full in cash of all Obligations.  It is agreed among each
Company and each Holder that the provisions of this Section 23 are of the
essence of the transaction contemplated by the Note Documents and that, but for
such provisions, the Holders would decline to purchase the Notes.  Each Company
acknowledges that its guaranty pursuant to this Section is necessary to the
conduct and promotion of its business, and can be expected to benefit such
business.
 
(i)               The Collateral Agent may, in its discretion, pursue such
rights and remedies as it deems appropriate, including realization upon
Collateral by judicial foreclosure or non-judicial sale or enforcement, without
affecting any rights and remedies under this Section 23.  If, in taking any
action in connection with the exercise of any rights or remedies, the Collateral
Agent or any Holder shall forfeit any other rights or remedies, including the
right to enter a deficiency judgment against any Company or other Person,
whether because of any applicable laws pertaining to “election of remedies” or
otherwise, each Company consents to such action and waives any claim based upon
it, even if the action may result in loss of any rights of subrogation that any
Company might otherwise have had.  Any election of remedies that results in
denial or impairment of the right of the Collateral Agent or any Holder to seek
a deficiency judgment against any Company shall not impair any other Company’s
obligation to pay the full amount of the Obligations.  Each Company waives all
rights and defenses arising out of an election of remedies, such as nonjudicial
foreclosure with respect to any security for the Obligations, even though that
election of remedies destroys such Company’s rights of subrogation against any
other Person.  The Collateral Agent may bid all or a portion of the Obligations
at any foreclosure or trustee’s sale or at any private sale, and the amount of
such bid need not be paid by the Collateral Agent but shall be credited against
the Obligations.  The amount of the successful bid at any such sale, whether the
Collateral Agent or any other Person is the successful bidder, shall be
conclusively deemed to be the fair market value of the Collateral, and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations guaranteed
under this Section 23, notwithstanding that any present or future law or court
decision may have the effect of reducing the amount of any deficiency claim to
which the Collateral Agent might otherwise be entitled but for such bidding at
any such sale.

 
Section 23.3.   Extent of Liability; Contribution.
 
(a)           Notwithstanding anything herein to the contrary, each Company’s
liability under this Section 23 shall be limited to the greater of (i) all
amounts for which such Company is primarily liable, as described below, and (ii)
such Company’s Allocable Amount (as defined below).
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(b)           If any Company makes a payment under this Section 23 of any
Obligations (other than amounts for which such Company is primarily liable) (a
“Guarantor Payment”) that, taking into account all other Guarantor Payments
previously or concurrently made by any other Company, exceeds the amount that
such Company would otherwise have paid if each Company had paid the aggregate
Obligations satisfied by such Guarantor Payments in the same proportion that
such Company’s Allocable Amount bore to the total Allocable Amounts of all
Companies, then such Company shall be entitled to receive contribution and
indemnification payments from, and to be reimbursed by, each other Company the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Guarantor Payment.  The “Allocable Amount” for
any Company shall be the maximum amount that could then be recovered from such
Company under this Section 23 without rendering such payment voidable under
Section 548 of the Bankruptcy Code or under any applicable state fraudulent
transfer or conveyance act, or similar statute or common law.
 
(c)           Nothing contained in this Section 23 shall limit the liability of
any Company to repay the Notes issued by that Company (including any amount of
the proceeds from the Notes advanced to any other Company and then re-loaned or
otherwise transferred to, or for the benefit of, such Company) and all accrued
interest, fees, expenses and other related obligations under the Note Documents
with respect thereto, for which such Company shall be primarily liable for all
purposes hereunder.

 
Section 23.4.   Joint Enterprise.  Each Company has requested that the
Collateral Agent and each Holder purchase the Notes issued jointly by the
Companies, in order to finance Companies’ business most efficiently and
economically.  Companies’ business is a mutual and collective enterprise, and
the successful operation of each Company is dependent upon the successful
performance of the integrated group.  Companies believe that consolidation of
their credit facilities will enhance the borrowing power of each Company and
ease administration of the facility, all to their mutual advantage.  Companies
acknowledge that the Collateral Agent’s and each Holder’s willingness to extend
credit and to administer the Collateral on a combined basis hereunder is done
solely as an accommodation to Companies and at Companies’ request.

 
Section 23.5.  Subordination.  Each Company hereby subordinates any claims,
including all indebtedness, any right of payment, subrogation, contribution
(including rights of contribution pursuant to Section 23.3 hereof) and
indemnity, that it may have from or against any other Company, and any successor
or assign of any other Company, including any trustee, receiver or
debtor-in-possession, howsoever arising, due or owing or whether heretofore, now
or hereafter existing, to the payment in full of all of the Obligations.  Each
Company agrees that upon the occurrence and during the continuation of any Event
of Default, such Company will not permit any other Company to repay such
indebtedness or any part thereof or accept payment from any Company of such
indebtedness or any part thereof without the prior written consent of the
Required Holders.  If any Company receives any such payment without the prior
written consent of the Required Holders, the amount so paid shall be held by
such Company in trust for the benefit of the Holders, shall be segregated from
the other funds of such Company, and shall forthwith be paid over to the
Collateral Agent to be held by the Collateral Agent as collateral for, or then
or at any time thereafter applied in whole or in part by the Collateral Agent
against, all or any portions of the Obligations, whether matured or unmatured,
in such order as the Required Holders shall elect.
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SECTION 24.  Tax Indemnification

 
Section 24.1.   All payments whatsoever under this Agreement and the Notes will
be made by the Companies in lawful currency of the United States of America free
and clear of, and without liability for withholding or deduction for or on
account of, any present or future Taxes of whatever nature imposed or levied by
or on behalf of any jurisdiction (or any political subdivision or taxing
authority of or in such jurisdiction) (hereinafter a “Taxing Jurisdiction”),
unless the withholding or deduction of such Tax is compelled by law.

 
Section 24.2.   If any deduction or withholding for any Tax of a Taxing
Jurisdiction shall at any time be required in respect of any amounts to be paid
by any Company under this Agreement or the Notes, the Companies will, jointly
and severally, pay to the relevant Taxing Jurisdiction the full amount required
to be withheld, deducted or otherwise paid before penalties attach thereto or
interest accrues thereon and pay to each Holder such additional amounts as may
be necessary in order that the net amounts paid to such Holder pursuant to the
terms of this Agreement or the Notes after such deduction, withholding or
payment (including any required deduction or withholding of Tax on or with
respect to such additional amount), shall be not less than the amounts then due
and payable to such Holder under the terms of this Agreement or the Notes before
the assessment of such Tax, provided that no payment of any additional amounts
shall be required to be made for or on account of:
 
(a)             any Tax that would not have been imposed but for the existence
of any present or former connection between such Holder (or a fiduciary,
settlor, beneficiary, member of, shareholder of, or possessor of a power over,
such Holder, if such holder is an estate, trust, partnership or corporation or
any Person other than the Holder to whom the Notes or any amount payable thereon
is attributable for the purposes of such Tax) and the Taxing Jurisdiction, other
than the mere holding of the relevant Note or the receipt of payments thereunder
or in respect thereof or the exercise of remedies in respect thereof, including
such Holder (or such other Person described in the above parenthetical) being or
having been a citizen or resident thereof, or being or having been present or
engaged in trade or business therein or having or having had an establishment,
office, fixed base or branch therein, provided that this exclusion shall not
apply with respect to a Tax that would not have been imposed but for the
Companies, after the date of the Closing, opening an office in, moving an office
to, reincorporating in, or changing the Taxing Jurisdiction from or through
which payments on account of this Agreement or the Notes are made to, the Taxing
Jurisdiction imposing the relevant Tax;
 
(b)            any Tax that would not have been imposed but for the delay or
failure by such Holder (following a written request by the Company
Representative) to provide to the Company Representative, or file with the
relevant Taxing Jurisdiction, as applicable, Forms (as defined below) that are
required to be provided or filed by such Holder to avoid or reduce such Taxes
(including for such purpose any refilings or renewals of filings that may from
time to time be required by the relevant Taxing Jurisdiction), provided that the
filing or provision of such Forms would not (in such Holder’s reasonable
judgment) impose any unreasonable burden (in time, resources or otherwise) on
such Holder or result in any confidential or proprietary income tax return
information being revealed, either directly or indirectly, to any Person and
such delay or failure could have been lawfully avoided by such Holder, and
provided further that such Holder shall be deemed to have satisfied the
requirements of this clause (b)(ii) upon the good faith completion and
submission of such Forms (including refilings or renewals of filings) as may be
specified in a written request of the Company Representative no later than 60
days after receipt by such Holder of such written request (accompanied by copies
of such Forms and related instructions, if any, all in the English language or
with an English translation thereof); or
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(c)             any combination of clauses (i) and (ii) above.
 
Section 24.3.  By acceptance of any Note, the Holder agrees, subject to the
limitations of clause (b)(ii) above, that it will from time to time with
reasonable promptness (x) duly complete and deliver to or as reasonably directed
by the Company Representative all such forms, certificates, documents and
returns provided to such Holder by the Company Representative (collectively,
together with instructions for completing the same, “Forms”) required to be
provided or filed by or on behalf of such Holder in order to avoid or reduce any
such Tax pursuant to the provisions of an applicable statute, regulation or
administrative practice of the relevant Taxing Jurisdiction or of a tax treaty
between the United States and such Taxing Jurisdiction and (y) provide the
Company Representative with such information with respect to such Holder as the
Company Representative may reasonably request in order to complete any such
Forms, provided that nothing in this Section 24 shall require any Holder to
provide information with respect to any such Form or otherwise if in the opinion
of such Holder such Form or disclosure of information would involve the
disclosure of tax return or other information that is confidential or
proprietary to such Holder, and provided further that each such Holder shall be
deemed to have complied with its obligation under this paragraph with respect to
any Form if such Form shall have been duly completed and delivered by such
Holder to the Company Representative or mailed to the appropriate taxing
authority, whichever is applicable, within 60 days following a written request
of the Company Representative (which request shall be accompanied by copies of
such Form and English translations of any such Form not in the English language)
and, in the case of a transfer of any Note, at least 90 days prior to the
relevant interest payment date.

 
Section 24.4.   On or before the date of the Closing the Company Representative
will furnish each Purchaser with copies of the appropriate Form (and English
translation if required as aforesaid) currently required to be filed in Canada
or any province thereof pursuant to Section 24.2(b), if any, and in connection
with the transfer of any Note the Company Representative will furnish the
transferee of such Note with copies of any Form and English translation then
required.

 
Section 24.5.   If any payment is made by any Company to or for the account of
the Holder after deduction for or on account of any Taxes, and increased
payments are made by the such Company pursuant to this Section 24, then, if such
Holder at its sole discretion determines that it has received or been granted a
refund of such Taxes, such Holder shall, to the extent that it can do so without
prejudice to the retention of the amount of such refund, reimburse to the such
Company such amount as such Holder shall, in its sole discretion, determine to
be attributable to the relevant Taxes or deduction or withholding.  Nothing
herein contained shall interfere with the right of the Holder to arrange its tax
affairs in whatever manner it thinks fit and, in particular, no Holder shall be
under any obligation to claim relief from its corporate profits or similar tax
liability in respect of such Tax in priority to any other claims, reliefs,
credits or deductions available to it or (other than as set forth in Section
24.2(b)) oblige any Holder to disclose any information relating to its tax
affairs or any computations in respect thereof.
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Section 24.6.   The Company Representative will furnish the Holders, promptly
and in any event within 60 days after the date of any payment by any Company of
any Tax in respect of any amounts paid under this Agreement or the Notes, the
original tax receipt issued by the relevant taxation or other authorities
involved for all amounts paid as aforesaid (or if such original tax receipt is
not available or must legally be kept in the possession of such Company, a duly
certified copy of the original tax receipt or any other reasonably satisfactory
evidence of payment), together with such other documentary evidence with respect
to such payments as may be reasonably requested from time to time by any Holder.

 
Section 24.7.   If any Company is required by any applicable law, as modified by
the practice of the taxation or other authority of any relevant Taxing
Jurisdiction, to make any deduction or withholding of any Tax in respect of
which such Company would be required to pay any additional amount under this
Section 24, but for any reason does not make such deduction or withholding with
the result that a liability in respect of such Tax is assessed directly against
the Holder, and such holder pays such liability, then the Companies will
promptly reimburse such Holder for such payment (including any related interest
or penalties to the extent such interest or penalties arise by virtue of a
default or delay by the Companies) upon demand by such Holder accompanied by an
official receipt (or a duly certified copy thereof) issued by the taxation or
other authority of the relevant Taxing Jurisdiction.

 
Section 24.8.   If any Company makes payment to or for the account of any Holder
and such Holder is entitled to a refund of the Tax to which such payment is
attributable upon the making of a filing (other than a Form described above),
then such Holder shall, as soon as practicable after receiving written request
from the Company Representative (which shall specify in reasonable detail and
supply the refund forms to be filed) use reasonable efforts to complete and
deliver such refund forms to or as directed by the Company Representative,
subject, however, to the same limitations with respect to Forms as are set forth
above.

 
Section 24.9.  The obligations of the Companies under this Section 24 shall
survive the payment or transfer of any Note and the provisions of this Section
24 shall also apply to successive transferees of the Notes.

*    *    *    *    *
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If you are in agreement with the foregoing, please sign the form of agreement on
a counterpart of this Agreement and return it to the Company Representative,
whereupon this Agreement shall become a binding agreement between you and each
Company.

Very truly yours,
 
PRIMO WATER CORPORATION
 
By:
/s/ 
Mark Castaneda
 
Name:
Mark Castaneda
Title:
Chief Financial Officer
 
PRIMO PRODUCTS, LLC
 
By:
/s/ 
Mark Castaneda
Name:
Mark Castaneda
Title:
Chief Financial Officer
 
PRIMO DIRECT, LLC
 
By:
/s/ 
Mark Castaneda
Name:
Mark Castaneda
Title:
Chief Financial Officer
 
 
PRIMO REFILL, LLC
 
 
 
 
 
 
By:
/s/ 
Mark Castaneda
Name:
Mark Castaneda
Title:
Chief Financial Officer
 
PRIMO ICE, LLC
 
By:
/s/ 
Mark Castaneda
Name:
Mark Castaneda
Title:
Chief Financial Officer
 
 
PRIMO REFILL CANADA CORPORATION
 
 
 
 
 
 
By:
/s/ 
Mark Castaneda
Name:
Mark Castaneda
Title:
Chief Financial Officer

[SIGNATURE PAGE TO NOTE PURCHASE AGREEMENT]

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

This Agreement is hereby
accepted and agreed to as
of the date hereof.
 
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
 
By:
/s/ 
Billy Green
Name:
Billy Green
Title:
Vice President
 
 
PICA HARTFORD LIFE INSURANCE COMFORT TRUST
 
 
 
 
 
 
 
By:
The Prudential Insurance Company of America, as Grantor
 
By:
/s/ 
Billy Green
Name:
Billy Green
Title:
Vice President

[SIGNATURE PAGE TO NOTE PURCHASE AGREEMENT]

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Schedule A
Defined Terms
 
As used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:
 
“Accounts” means and include as to each Company and each of its Subsidiaries,
all of such Company’s and Subsidiary’s “accounts” as defined in the UCC whether
now owned or hereafter acquired including, without limitation all present and
future rights of such Company to payment of a monetary obligation, whether or
not earned by performance, which is not evidenced by chattel paper or an
instrument, (a) for property that has been or is to be sold, leased, licensed,
assigned, or otherwise disposed of, (b) for services rendered or to be rendered,
(c) for a secondary obligation incurred or to be incurred, or (d) arising out of
the use of a credit or charge card or information contained on or for use with
any such card.
 
 “Adjusted LIBO Rate” means, with respect to any Revolving Loan for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next
1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by
(b) the Statutory Reserve Rate.
 
“Administration Fee” is defined in Section 3(d).
 
“Affiliate” means, at any time, and with respect to any Person, any other Person
that at such time directly or indirectly through one or more intermediaries
Controls, or is Controlled by, or is under common Control with, such first
Person, and, with respect to any Company, shall include any Person beneficially
owning or holding, directly or indirectly, 20% or more of any class of voting or
equity interests of such Company or any Subsidiary or any Person of which such
Company and its Subsidiaries beneficially own or hold, in the aggregate,
directly or indirectly, 20% or more of any class of voting or equity interests. 
“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise. Unless the
context otherwise clearly requires, any reference to an “Affiliate” is a
reference to an Affiliate of any Company.
 
“Agreement” means this Agreement, including all Schedules attached to this
Agreement, as it may be amended, restated, supplemented or otherwise modified
from time to time.
 
“Anti-Corruption Laws” is defined in Section 5.16(d)(1).
 
“Anti-Money Laundering Laws” is defined in Section 5.16(c).
 
“Applicable Margin” means, with respect to each Revolving Loan, (a) 4.25% with
respect to LIBOR Loans and (b) 3.25% with respect to Base Rate Loans.
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“Base Rate” means, for any day, a rate per annum equal to the greater of (a) the
Prime Rate in effect on such day, (b) the Federal Funds Rate in effect on such
day plus ½ of 1% and (c) the LIBO Rate for a three-month Interest Period,
calculated daily, plus 1.00% per annum.  Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be effective from and
including the effective date of such change in the Prime Rate or the Federal
Funds Rate, respectively.
 
“Base Rate Loan” means a principal amount outstanding from time to time under
any Revolving Note that bears interest at the Base Rate.
 
“Blocked Person” is defined in Section 5.16(a).
 
“Borrowing Request” is defined in Section 2.2(b).
 
“Breakage Cost Obligations” is defined in Section 2.3(b).
 
“Business Day” means (a) with respect to any determination of the Interest
Period with respect to any LIBOR-Based Loan, a London Business Day; (b) with
respect to any payment to be made hereunder, under the Notes, or otherwise in
connection herewith, a day other than a Saturday, a Sunday or a day on which the
bank designated by any Holder to receive for such Holder’s account payments on
such Note is required by law (other than a general banking moratorium or holiday
for a period exceeding four consecutive days) to be closed; and (c) for all
other purposes, a day other than a Saturday, a Sunday or a day on which the
national banks located in New York City, New York are required by law (other
than a general banking moratorium or holiday for a period exceeding four
consecutive days) to be closed.
 
 “Capital Expenditures” means, with respect to the Companies and their
Subsidiaries, without duplication, all expenditures (including deposits) made by
the Companies and their Subsidiaries for, or contracts for expenditures with
respect to any fixed assets or improvements, or for replacements, substitutions
or additions thereto, which have a useful life of more than one (1) year,
including the direct or indirect acquisition of such assets by way of increased
product or service charges, offset items or otherwise, as determined in
accordance GAAP consistently applied and all other expenditures which, in
accordance with GAAP, would be required to be capitalized and shown on the
consolidated balance sheet of Parent.
 
“Capital Lease” means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
 
“Change of Control” means the occurrence of any event (whether in one or more
transactions) which results in (a) fifty-one (51%) percent or more of the Voting
Equity Interests of Parent is owned and controlled by a single Person (as such
term is used in Section 13(d)(3) of the Exchange Act), or (b) one hundred (100%)
percent of the Equity Interests of each Company (other than Parent) is no longer
owned and controlled directly or indirectly by Parent.
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“CISADA” means the Comprehensive Iran Sanctions, Accountability and Divestment
Act.
 
“Closing” is defined in Section 2.1.
 
“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.
 
“Collateral” means any and all property of each Company in which Liens are
granted or purported to be granted under any Note Document to secure any and all
of the Obligations, including, without limitation, all tangible and intangible
property of such Company, all personal and real property of such Company, all
movable and immovable property of such Company, in each case whether now owned
or hereafter acquired and wherever located, of such Company except for any
Excluded Collateral.
 
“Collateral Agent” means The Prudential Insurance Company of America, in its
capacity as Collateral Agent for the Holders, and it successors and assigns in
such capacity.
 
“Company” and “Companies” are defined in the preamble to this Agreement.
 
“Company Representative” means Primo Water Corporation, a Delaware corporation.
 
“Competitor” means any Person primarily engaged in the sale or distribution of
water and/or other non-alcoholic beverages identified in writing to the Holders
prior to the Date of Closing, as such list of Persons may be updated from time
to time upon mutual agreement of the Company Representative and the Required
Holders.
 
“Confidential Information” is defined in Section 20.
 
“Consolidated EBITDA” means, for any period, without duplication, the total of
the following for Parent and its Subsidiaries on a consolidated basis, each
calculated for such period:
 
(a)            Consolidated Net Income; plus
 
(b)            (without duplication), to the extent included in the calculation
of Consolidated Net Income, the sum of (i) income and franchise taxes paid or
accrued, (ii) Consolidated Interest Expense, net of interest income, paid or
accrued, (iii) amortization and depreciation, (iv) non-cash impairment charges,
(v) non-cash compensation expense, (vi) non-cash equity charges, (viii) charges
related to a Permitted Acquisition for severance, non-recurring, transition and
reserves in an amount not to exceed $500,000 in the aggregate during any fiscal
year, (ix) charges related to the Discontinued Operations (including legal and
other expenses associated therewith) in an aggregate amount not to exceed
$150,000 during the term of this Agreement and (x) extraordinary or
non-recurring transaction costs incurred in connection with the DS Agreement not
to exceed $2,000,000 in the aggregate during the term of this Agreement; less
A-3

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(c)            (without duplication), to the extent included in the calculation
of Consolidated Net Income, the sum of (i) the income of any Person (other than
a Company or a Subsidiary of any Company) in which any Company or a Subsidiary
of any Company has an ownership interest except to the extent such income is
received by any Company or such Subsidiary in a cash distribution during such
period, (ii) gains or losses from sales or other dispositions of assets (other
than sales of inventory in the normal course of business) and (iii) the greater
of (A) $0 and (B) the sum of extraordinary or non-recurring gains less
extraordinary or non-recurring losses;
 
provided that notwithstanding the foregoing Consolidated EBITDA shall be deemed
to be (i) $2,975,102 for the fiscal quarter ended September 30, 2013, (ii)
$1,891,174 for the fiscal quarter ended December 31, 2013 and (iii) $2,684,508
for the fiscal quarter ended March 31, 2014.
 
“Consolidated Fixed Charges” means, for Parent and its Subsidiaries on a
consolidated basis for any period, the sum (without duplication) of (i)
Consolidated Interest Expense paid in cash for such period, (ii) Capital
Expenditures made during such period, (iii) income and franchise taxes paid in
cash for such period and (iv) scheduled principal payments made on Indebtedness
within the next twelve (12) months.
 
“Consolidated Interest Expense” means, for Parent and its Subsidiaries on a
consolidated basis for any period, as determined in accordance with GAAP
consistently applied, the total interest expense of Parent and its Subsidiaries,
whether paid or accrued during such period but without duplication (including
the interest component of Capital Leases for such period).
 
“Consolidated Net Income” means, for Parent and its Subsidiaries on a
consolidated basis for any period, the aggregate income (or loss) of Parent and
its Subsidiaries for such period, all computed and calculated in accordance with
GAAP consistently applied on a consolidated basis.
 
“Consolidated Tangible Net Worth” means, for Parent and its Subsidiaries on a
consolidated basis as of any date, (i) the total assets of Parent and its
Subsidiaries that would be reflected on Parent’s consolidated balance sheet as
of such date prepared in accordance with GAAP, after eliminating all amounts
properly attributable to minority interests, if any, in the stock and surplus of
such Subsidiaries, minus (ii) the sum of (x) the total liabilities of Parent and
its Subsidiaries that would be reflected on Parent’s consolidated balance sheet
as of such date prepared in accordance with GAAP, (y) the amount of any write-up
in the book value of any assets resulting from a revaluation thereof or any
write-up in excess of the cost of such assets acquired reflected on the
consolidated balance sheet of Parent as of such date prepared in accordance with
GAAP and (z) the net book amount of all assets of Parent and its Subsidiaries
that would be classified as intangible assets on a consolidated balance sheet of
Parent as of such date prepared in accordance with GAAP.
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“Consolidated Total Indebtedness” shall mean, as of any date, all Indebtedness
of Parent and its Subsidiaries measured on a consolidated basis as of such date,
but excluding Indebtedness of the type described in clause (i) of the definition
of Indebtedness.
 
“Control Agreement” means all agreements, in form and substance satisfactory to
the Required Holders, among any of the Companies, a banking or financial
institution with which any deposit account of any of the Companies is
maintained, and the Collateral Agent, which agreement grants the Collateral
Agent “control” (within the meaning of Section 9-104 of the UCC) of such deposit
account and all deposits and balances held in such deposit account.
 
“Controlled Entity” means (i) any of the Subsidiaries of any Company and any of
its or any Company’s respective Controlled Affiliates and (ii) if any Company
has a parent company, such parent company and its Controlled Affiliates. As used
in this definition, “Control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
 
“Controlled Group” means all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under common control
which, together with any Company, are treated as a single employer under Section
414 of the Code.
 
“Date of Closing” is defined in Section 2.1.
 
“Default” means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
 
“Default Rate” means, (a) with respect to Revolving Loans, a rate of interest
per annum from time to time equal to the lesser of (i) the maximum rate
permitted by applicable law and  (ii) the  greater  of (A) 2.00%  over  the 
rate  of interest in effect immediately prior to such Event of Default and (B)
2.00% over the Base Rate plus the Applicable Margin applicable to Base Rate
Loans, and (b) with respect to Term Notes, a rate of interest per annum from
time to time equal to the lesser of (i) the maximum rate permitted by applicable
law and  (ii) 9.80%.
 
“Direct” is defined in the preamble to this Agreement.
 
“Disclosure Documents” is defined in Section 5.3.
 
“Discontinued Operations” means the Companies’ former operations related to the
carbonated beverage appliances, flavorings and accessories businesses that have
been discontinued.
 
“DS Agreement” means that certain Strategic Alliance Agreement, made and entered
into as of the 12th day of November 2013, by and between Parent and DS Waters of
America, Inc., a Delaware corporation, as amended, restated, supplemented or
otherwise modified as permitted pursuant to the terms of this Agreement.
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“EDGAR” means the SEC’s Electronic Data Gathering, Analysis and Retrieval System
or any successor SEC electronic filing system for such purposes.
 
“Environmental Laws” means any and all federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to Hazardous Materials.
 
“Equipment” means and include as to each Company and each of its Subsidiaries,
all of such Company’s and Subsidiary’s, whether now owned or hereafter acquired
and wherever located equipment, machinery, apparatus, motor vehicles, fittings,
furniture, furnishings, fixtures, parts, accessories, and all other goods (other
than Inventory) and all replacements and substitutions therefor or accessions
thereto.
 
“Equity Interest Option Holder” means those directors, officers and employees
holding options and/or warrants in respect of the equity interests of Parent.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time in effect.
 
“ERISA Affiliate” means any trade or business (whether or not incorporated) that
is treated as a single employer together with each Company under section 414 of
the Code.
 
“Event of Default” is defined in Section 11.
 
“Excluded Collateral” has the meaning set forth in the Security Agreement.
 
“Federal Funds Rate” means, for any day, the weighted average (rounded upwards,
if necessary, to the next 1/100 of 1%) 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 that
is a Business Day, the average (rounded upwards, if necessary, to the next 1/100
of 1%) of the quotations for such day for such transactions received by the
Collateral Agent from three Federal funds brokers of recognized standing
selected by it.
 
“Form 10‑K” is defined in Section 7.1(c).
 
“Form 10‑Q” is defined in Section 7.1(b).
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“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States of America.
 
“Governmental Authority” means
 
(a)              the government of
 
(i) the United States of America or any state or other political subdivision
thereof, or
 
(ii) any other jurisdiction in which any Company or any Subsidiary conducts all
or any part of its business, or which asserts jurisdiction over any properties
of any Company or any Subsidiary, or
 
(b)              any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
 
“Governmental Official” means any governmental official or employee, employee of
any government-owned or government-controlled entity, political party, any
official of a political party, candidate for political office, official of any
public international organization or anyone else acting in an official capacity.
 
“Hazardous Materials” means any and all pollutants, toxic or hazardous wastes or
other substances that might pose a hazard to health and safety, the removal of
which may be required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage or filtration of which is or
shall be restricted, prohibited or penalized by any applicable law including,
but not limited to, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum, petroleum products, lead based paint, radon gas or similar
restricted, prohibited or penalized substances.
 
“Hedging Agreements” means an agreement between any Company and any financial
institution that is a rate swap agreement, basis swap, forward rate agreement,
commodity swap, 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, any other similar agreement (including any option to enter into
any of the foregoing or a master agreement for any of the foregoing together
with all supplements thereto) for the purpose of protecting against fluctuations
in or managing exposure with respect to interest or exchange rates, currency
valuations or commodity prices.
 
“Holder” means, with respect to any Note, the Person in whose name such Note is
registered in the register maintained by the Company Representative pursuant to
Section 13.1 (so long as any such registration complies with Section 13.2),
provided, however, that if such Person is a nominee, then for the purposes of
Sections 7, 12, 17.2 and 18 and any related definitions in this Schedule B,
“Holder” means the beneficial owner of such Note whose name and address appears
in such register.
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“ICE” is defined in the preamble to this Agreement.
 
“INHAM Exemption” is defined in Section 6.2(e).
 
 “Indebtedness” of a Person at a particular date shall mean (a) whether direct
or guaranteed (i) indebtedness for borrowed money arising from the lending of
money by any Person to any Company or any of their respective Subsidiaries or
(ii) indebtedness, whether or not in any such case arising from the lending by
any Person of money to any Company or any of their respective Subsidiaries, upon
which interest charges are customarily paid (other than accounts payable) or
that was issued or assumed as full or partial payment for property; (b) that
portion of obligations with respect to Capital Leases that is properly
classified as a liability on a balance sheet in conformity with GAAP
consistently applied; (c) notes payable and drafts accepted representing
extensions of credit; (d) any obligation owed for all or any part of the
deferred purchase price of property or services if the purchase price is due
more than six (6) months from the date the obligation is incurred or is
evidenced by a note or similar written instrument (including, without
limitation, the maximum potential amount of all earn-outs and similar deferred
payment obligations regardless of the length of deferral); (e) all indebtedness
secured by any Lien on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is non-recourse to the credit of that Person; (f) any
contractual obligation, contingent or otherwise, of such Person to pay or be
liable for the payment of any indebtedness described in this definition of
another Person, including, without limitation, any such indebtedness, directly
or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise
acquire such indebtedness, obligation or liability or any security therefor, or
to provide funds for the payment or discharge thereof, or to maintain solvency,
assets, level of income, or other financial condition; (g) all obligations
evidenced by bonds, debentures, notes or similar instruments; (h) all
reimbursement obligations and other liabilities of such Person with respect to
surety bonds (whether bid, performance or otherwise), letters of credit,
banker’s acceptances, drafts or similar documents or instruments issued for such
Person’s account; (i) all obligations, liabilities and indebtedness of such
Person (marked to market) arising under Hedging Agreements; (j) the principal
and interest portions of all rental obligations of such Person under any
synthetic lease or similar off-balance sheet financing where such transaction is
considered to be borrowed money for tax purposes but is classified as an
operating lease in accordance with GAAP consistently applied, in each case
whether such liabilities are present or future, actual or contingent and whether
owned jointly or severally and (k) all obligations under and with respect to
factoring agreements, including, without limitation, those obligations arising
under the Lowes Factoring Agreement. 
 
“Institutional Investor” shall mean an insurance company, bank, savings and loan
company, “qualified institutional buyer” (as such term is defined under Rule
144A promulgated under the Securities Act, or any successor law, rules or
regulation) or “accredited investor” (as such term is defined under Regulation D
promulgated under the Securities Act, or any successor law, rule or regulation).
A-8

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“Intellectual Property” means all trade secrets and other proprietary
information; trademarks, service marks, business names, Internet domain names,
designs, logos, trade dress, slogans, indicia and other source and/or business
identifiers, and the goodwill of the business relating thereto and all
registrations or applications for registrations which have heretofore been or
may hereafter be issued thereon throughout the world; copyrights (including
copyrights for computer programs and software) and copyright registrations or
applications for registrations which have heretofore been or may hereafter be
issued throughout the world and all tangible property embodying the copyrights;
unpatented inventions (whether or not patentable); patent applications and
patents; industrial designs, industrial design applications and registered
industrial designs; license agreements related to any of the foregoing and
income therefrom; books, records, writings, computer tapes or disks, flow
diagrams, specification sheets, source codes, object codes and other physical
manifestations, embodiments or incorporations of any of the foregoing; the right
to sue for all infringements of any of the foregoing; and all common law and
other rights throughout the world in and to all of the foregoing.
 
“Interest Period” means (i) as to any LIBOR Loan, the period commencing on the
date of such LIBOR Loan or on the last day of the immediately preceding Interest
Period applicable thereto, as the case may be, and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is one, two, three or six months thereafter, in
each case as the Company Representative may specify or be deemed to specify, and
(ii) as to any Base Rate Loan, the period commencing on the date of such Base
Rate or on the last day of the immediately preceding Interest Period applicable
thereto, as the case may be, and ending on the earlier of (a) the March 31, June
30, September 30 and December 31, as applicable, next succeeding such
commencement date and (b) the date, if any, that such Base Rate Loan is
converted to a LIBOR Loan or LIBOR Loans; provided, however, that (x) if any
Interest Period pertaining to a LIBOR Loan would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day, and (y) if any Interest Period pertaining to a Base Rate
Loan would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day.  Interest shall accrue from and
including the first day of an Interest Period to but excluding the earlier of
(1) the last day of such Interest Period and (2) the day on which the applicable
Loan is repaid or prepaid in full.
 
“Inventory” means and include as to each Company and each Subsidiary of each
Company, all of such Company’s and Subsidiary’s now owned or hereafter acquired
inventory (as such term is defined in the UCC), goods, merchandise and other
personal property, wherever located, to be furnished under any contract of
service or held for sale or lease, all raw materials, work in process, finished
goods and materials and supplies of any kind, nature or description which are or
might be used or consumed in such Company’s or Subsidiary’s business or used in
selling or furnishing such goods, merchandise and other personal property, all
other inventory of such Company or Subsidiary, and all documents of title or
other documents representing them.
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“LIBO Rate” means, with respect to any Revolving Loan for any Interest Period,
the rate appearing on Bloomberg Page BBAM (or on any successor or substitute
page of such service, or any successor to or substitute for such service,
providing rate quotations comparable to those currently provided on such page of
such service, as determined by the Required Holders from time to time for
purposes of providing quotations of interest rates applicable to deposits in the
relevant currency in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for deposits in the relevant currency with a maturity
comparable to such Interest Period.  In the event that such rate is not
available at such time for any reason, then the “LIBO Rate” with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which
deposits in the relevant currency of $5,000,000 and for a maturity comparable to
such Interest Period are offered by the principal London office of the
Collateral Agent in immediately available funds in the London interbank market
at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
 
“LIBOR Loan” means a principal amount outstanding from time to time under any
Revolving Note that bears interest at the Adjusted LIBO Rate.
 
“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge,
security interest or other encumbrance, or any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any conditional
sale or other title retention agreement or Capital Lease, upon or with respect
to any property or asset of such Person (including in the case of stock,
stockholder agreements, voting trust agreements and all similar arrangements).
 
“Loan Type” means, as to any Revolving Loan, its character as a LIBOR Loan or a
Base Rate Loan.
 
“Lowes Factoring Agreement” means that certain Accounts Receivable Purchase
Agreement between Parent and Bank of America, N.A. in the form delivered to the
Purchasers prior to the Date of Closing.
 
“Material” means material in relation to the business, operations, affairs,
financial condition, assets,  or properties of the Companies and their
Subsidiaries taken as a whole or, to the extent quantifiable in regards to any
representation, warranty or covenant herein, then an amount equal to or greater
than $250,000.
 
“Material Adverse Change” means the (a) termination of the DS Agreement by
either party thereto and failure by the Companies, within six (6) months after
notice of termination of the DS Agreement is delivered to or received by the
Companies, to enter into one or more new agreements or arrangements with one or
more alternative bottlers and/or distributors such that such agreement or
agreements are of a breadth and scope individually or in the aggregate
substantially comparable to the DS Agreement or (b) discontinuation, material
interruption or material suspension of the sale of all or substantially all of
the Companies’ product lines and/or services in all or substantially all of the
retail stores of Wal-Mart and/or Lowes Home Improvements.
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“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, affairs, financial condition, assets or properties of the Companies
and their Subsidiaries taken as a whole, (b) the ability of any Company to
perform its obligations under this Agreement and the other Note Documents or (c)
the validity or enforceability of this Agreement, the Notes or any other Note
Document.
 
“Maturity Date” is defined in the first paragraph of each Note.
 
“Mortgages” means the fee mortgages, deeds of trust, deeds to secure debt and
similar instruments hereafter executed and delivered by the Companies in favor
of the Collateral Agent, or a trustee for the benefit of the Collateral Agent,
each in form and substance reasonably satisfactory to the Required Holders, as
each may be amended, restated, supplemented or otherwise modified from time to
time.
 
“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term
is defined in section 4001(a)(3) of ERISA).
 
“NAIC” means the National Association of Insurance Commissioners or any
successor thereto.
 
“NAIC Annual Statement” is defined in Section 6.2(a).
 
“New Mortgage” is defined in Section 9.7(e).
 
“Non-US Subsidiary” means any Subsidiary other than a US Subsidiary.
 
“Note Documents” means this Agreement, the Notes, the Security Documents and all
other instruments, certificates, documents and other writings now or hereafter
executed and delivered by or on behalf of any Company pursuant to or in
connection with any of the foregoing or any of the transactions contemplated
thereby, and any and all amendments, supplements and other modifications to any
of the foregoing.
 
“Notes” is defined in Section 1.
 
“Obligations” shall mean all amounts owing by the Companies to the Collateral
Agent and the Holders pursuant to or in connection with this Agreement or any
other Note Document including, without limitation, all principal, interest
(including any interest accruing after the filing of any petition in bankruptcy
or the commencement of any insolvency, reorganization or like proceeding
relating to any Company, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), the Yield Maintenance Amount,
reimbursement obligations, fees, expenses, indemnification and reimbursement
payments, costs and expenses (including all fees and expenses of counsel to the
Collateral Agent and any Holder) incurred pursuant to this Agreement or any
other Note Document), whether direct or indirect, absolute or contingent,
liquidated or unliquidated, now existing or hereafter arising hereunder or
thereunder.
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“OFAC” is defined in Section 5.16(a).
 
“OFAC Listed Person” is defined in Section 5.16(a).
 
“OFAC Sanctions Program” means any economic or trade sanction that OFAC is
responsible for administering and enforcing.  A list of OFAC Sanctions Programs
may be found at
http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx.
 
“Officer’s Certificate” means a certificate of a Senior Financial Officer or of
any other officer of the Company Representative whose responsibilities extend to
the subject matter of such certificate.
 
“Parent” means Primo Water Corporation, a Delaware corporation.
 
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA or any successor thereto.
 
“Permitted Acquisition” means the purchase by any Company after the date hereof
of all or substantially all of the assets or property or all of the equity
interests of any Person or any business unit or division of such Person (such
assets or Person being referred to herein as the “Target”), subject to the
satisfaction of each of the following conditions:
 
(a)             the Holders shall have received at least thirty (30) days’ prior
written notice of such proposed Permitted Acquisition, which notice shall
include a reasonably detailed description of such proposed Permitted
Acquisition;
 
(b)            the Target’s assets shall only comprise a business of the type
engaged in by Companies as of the date hereof or ancillary businesses reasonably
related to the business engaged in by Companies as of the date hereof, and which
business would not subject the  Collateral Agent or Holders to regulatory or
third party approvals in connection with the exercise of its rights and remedies
under this Agreement or any other Note Documents other than approvals applicable
to the exercise of such rights and remedies with respect to Companies prior to
such proposed Permitted Acquisition;
 
(c)             the total cash and non-cash consideration paid by Companies and
their Subsidiaries (including, without limitation, assumption or incurrence of
all Indebtedness (including without limitation earn-outs and deferred purchase
price obligations)) for (i) all Permitted Acquisitions shall not exceed
$10,000,000 in the aggregate during the Term or (ii) any Permitted Acquisition
shall not exceed $3,000,000;
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(d)             the Companies and their Subsidiaries (including the Target), on
a consolidated basis, shall have a Fixed Charge Coverage Ratio of at least
1.10:1.0 on the date of and on a pro forma basis for the trailing twelve (12)
month period after giving effect to such proposed Permitted Acquisition;
 
(e)              Target must have had a positive EBITDA (calculated for such
Target in a manner consistent with the calculation of Consolidated EBITDA) on a
cumulative basis for the immediately preceding four (4) fiscal quarters and no
more than one fiscal quarter during such four fiscal quarter period may have a
negative EBITDA;
 
(f)              at or prior to the closing of such proposed Permitted
Acquisition, the Collateral Agent will be granted a priority perfected security
interest and lien (subject to Permitted Encumbrances) in all assets and equity
interests (other than Excluded Collateral) acquired in connection therewith,
each Person acquired in connection therewith shall have joined this Agreement as
a Company, and each Company and each Person acquired in connection therewith
shall have executed and delivered (or caused to be executed and delivered) such
documents and taken such actions as are required pursuant to Section  9.7;
 
(g)            such proposed Permitted Acquisition shall not be hostile and,
prior to its closing, shall have been approved by the board of directors (or
other similar body) and/or the stockholders or other equity holders of the
Target;
 
(h)            such proposed Permitted Acquisition shall only involve assets
located in the United States;
 
(i)              all material consents necessary for such proposed Permitted
Acquisition (including such consents as the Required Holders deem reasonably
necessary) have been acquired and such proposed Permitted Acquisition is
consummated in accordance with the applicable acquisition documents and
applicable law;
 
(j)               each of the representations and warranties made by any Company
in or pursuant to this Agreement and any other Note Document to which it is a
party, and each of the representations and warranties contained in any
certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement or any other Note Document shall be
true and correct in all material respects (without duplication of any
materiality qualifiers already set forth therein) on and as of such date such
proposed Permitted Acquisition is consummated both before and after giving
effect thereto as if made on and as of such date, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and correct
in all material respects (without duplication of any materiality qualifiers
already set forth therein) on and as of such earlier date);
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(k)             the Company Representative shall have delivered to the Holders,
in form and substance reasonably satisfactory to the Required Holders:
 
(1)            a pro forma consolidated balance sheet, income statement and cash
flow statement of Parent and its Subsidiaries (the “Acquisition Pro Forma”),
based on recent financial statements, which shall be complete and shall fairly
present in all material respects the assets, liabilities, financial condition
and results of operations of Parent and its Subsidiaries in accordance with GAAP
consistently applied, but taking into account such proposed Permitted
Acquisition, and (y) on a pro forma basis, no Default or Event of Default has
occurred and is continuing or would result after giving effect to such proposed
Permitted Acquisition and the Companies would have been in compliance with the
financial covenants set forth in Section 10.6 for the four (4) quarter period
reflected in the Officer’s Certificate most recently delivered pursuant to
Section 7.2(a) prior to the consummation of such proposed Permitted Acquisition
(after giving effect to such proposed Permitted Acquisition and all Revolving
Loans funded in connection therewith as if made on the first (1st) day of such
period); and
 
  (B)           a certificate of the chief financial officer of the Company
Representative to the effect that:  (x) each Company (after taking into
consideration all rights of contribution and indemnity such Company has against
each other Company) will be Solvent upon the consummation of such proposed
Permitted Acquisition; (y) the Acquisition Pro Forma fairly presents the
financial condition of the Companies and their Subsidiaries (on a consolidated
and consolidating basis) as of the date thereof after giving effect to such
proposed Permitted Acquisition; and (z) the Companies have completed their due
diligence investigation with respect to the Target and such proposed Permitted
Acquisition, which investigation was conducted in a manner similar to that which
would have been conducted by a prudent purchaser of a comparable business and
the results of which investigation were delivered to the Holders;
 
(l)              on or prior to the date of such proposed Permitted Acquisition,
the Holders shall have received, in form and substance reasonably satisfactory
to the Required Holders, copies of the acquisition agreement (which shall allow
collateral assignments of the Companies’ rights thereunder in favor of the
Collateral Agent) or merger agreement, as applicable, and all related agreements
and instruments, and all opinions, certificates, lien search results and other
documents reasonably requested by the Required Holders; and
 
(m)            concurrently with consummation of such proposed Permitted
Acquisition, the Company Representative shall have delivered to the Holders a
certificate stating that the foregoing conditions have been satisfied.
 
“Permitted Encumbrances” means:
 
(a)             Liens in favor of the Collateral Agent securing the Obligations;
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(b)             Liens for taxes, assessments or other governmental charges (“Tax
Lien”) not delinquent or being contested in good faith and by appropriate
proceedings by the applicable Company or Subsidiary of a Company and with
respect to which proper reserves have been taken by the Companies and the
Subsidiaries; provided, that, the Tax Lien shall have no effect on the priority
of the Liens in favor of the Collateral Agent or the value of the Collateral in
which the Collateral Agent has such a Lien (taking into account any such
reserves taken by the Companies) and a stay of enforcement of any such Tax Lien
shall be in effect;
 
(c)             deposits or pledges to secure obligations under worker’s
compensation, social security or similar laws, or under unemployment insurance,
in each case made in the ordinary course of business and excluding deposits,
liens or pledges under ERISA;
 
(d)             deposits or pledges of cash to secure bids, tenders, contracts
(other than contracts for the payment of money), leases, statutory obligations,
surety and appeal bonds and other obligations of like nature arising in the
ordinary course of the applicable Company’s or Subsidiary’s business;
 
(e)             mechanics’, workers’, materialmen’s, carriers’, warehousemen’s,
landlords or other like Liens arising in the ordinary course of the applicable
Company’s or Subsidiary’s business with respect to obligations which are (i) not
due or (ii) being contested in good faith and by appropriate proceedings by the
applicable Company or Subsidiary of a Company and with respect to which proper
reserves have been taken by the Companies and the Subsidiaries; provided, that,
the such Lien shall have no effect on the priority of the Liens in favor of the
Collateral Agent or the value of the Collateral in which the Collateral Agent
has such a Lien and a stay of enforcement of any such Lien shall be in effect;
 
(f)              Liens placed upon fixed assets and Intellectual Property
related to such fixed assets hereafter acquired by any Company or any Subsidiary
to secure a portion of the purchase price thereof; provided, that, (i) any such
Lien shall not encumber any other property of the Companies or their
Subsidiaries and (ii) the aggregate amount secured by such Liens shall not
exceed $500,000;
 
(g)             Liens in existence on the date hereof that are disclosed on
Schedule 10.4;
 
(h)             Liens on amounts not exceeding $100,000 in the aggregate
deposited as security for surety or appeal bonds in connection with obtaining
such bonds in the ordinary course of business;
 
(i)               with respect to any real property, Liens consisting of
easements, rights of way and zoning restrictions that do not materially
interfere with or impair the use or operation thereof;
 
(j)               Liens on depository accounts granted or arising in the
ordinary course of business in favor of depositary banks maintaining such
depository accounts solely to the extent they secure customary account fees and
charges payable in respect of such depository accounts;
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(k)             non-consensual statutory Liens (other than Liens securing the
payment of taxes or ERISA matters) arising in the ordinary course of a Company
or Subsidiary’s business; provided, that, such Liens do not secure Indebtedness
or any other amounts in excess of $100,000 in the aggregate which are past due;
 
(l)              Liens arising from (i) operating leases with respect to assets
which are not owned by any Company or any Subsidiary and the precautionary UCC
financing statement filings in respect thereof and (ii) equipment or other
materials which are not owned by any Company or Subsidiary located on the
premises of such Company or Subsidiary (but not in connection with, or as part
of, the financing thereof) from time to time in the ordinary course of business
and consistent with current practices of the Companies and their Subsidiaries
and the precautionary UCC financing statement filings in respect thereof;
 
(m)             judgments and other similar Liens arising in connection with
court proceedings that do not constitute an Event of Default;
 
(n)             Liens of a collection bank arising under Section 4-210 of the
UCC on items in the course of collection;
 
(o)             Liens in favor of customs and revenue authorities arising as a
matter of law to secure custom duties which are not past due in connection with
the importation of goods by the Companies or their Subsidiaries in the ordinary
course of business;
 
(p)             Liens on specific fixed assets and Intellectual Property related
to such specific fixed assets (as opposed to any blanket lien on any asset type)
acquired pursuant to a Permitted Acquisition in existence at the time such
assets are acquired pursuant to such Permitted Acquisition and not created in
contemplation thereof; provided, that, such Liens do not attach to any assets
other than the assets acquired pursuant to such Permitted Acquisition;
 
(q)             receipt of deposits and advances from customers in the ordinary
course of business which may create an interest in the Inventory to be sold to
such customers, but which do not constitute contractual Liens granted by a
Company or any Subsidiary;
 
(r)               Liens on amounts not exceeding $500,000 in the aggregate
deposited as security for corporate credit card programs maintained in the
ordinary course of business; and
 
(s)              Liens securing Indebtedness permitted under Section 10.8(l) but
only to the extent such Liens are only on the accounts receivable factored
pursuant to the factoring arrangements permitted thereby.
 
“Permitted Indebtedness” means the Indebtedness expressly permitted pursuant to
Section 10.8 of this Agreement.
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“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, business entity or
Governmental Authority.
 
“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA)
subject to Title I of ERISA that is or, within the preceding five years, has
been established or maintained, or to which contributions are or, within the
preceding five years, have been made or required to be made, by any Company or
any ERISA Affiliate or with respect to which any Company or any ERISA Affiliate
may have any liability.
 
“Pledge Agreement” means (a) the Pledge Agreement, dated as of even date
herewith and executed and delivered by each Company and each of its Subsidiaries
in favor of the Collateral Agent, substantially in the form of Exhibit E
attached hereto, as the same may be amended, restated, supplemented or otherwise
modified from time to time, and (b) any additional pledge agreement executed
pursuant to Section 9.7 with respect to any subsequently acquired or organized
Subsidiary.
 
 “Prime Rate” means the rate of interest per annum publicly announced from time
to time by JPMorganChase Bank, N.A. as its prime rate in effect at its principal
office in New York City; each change in the Prime Rate shall be effective from
and including the date such change is publicly announced as being effective.
 
“Products” is defined in the preamble to this Agreement.
 
 “property” or “properties” means, unless otherwise specifically limited, real
or personal property of any kind, tangible or intangible, choate or inchoate.
 
“PTE” is defined in Section 6.2(a).
 
“Purchaser” or “Purchasers” means each of the purchasers that has executed and
delivered this Agreement to each Company and such Purchaser’s successors and
assigns (so long as any such assignment complies with Section 13.2), provided,
however, that any Purchaser of a Note that ceases to be the registered holder or
a beneficial owner (through a nominee) of such Note as the result of a transfer
thereof pursuant to Section 13.2 shall cease to be included within the meaning
of “Purchaser” of such Note for the purposes of this Agreement upon such
transfer.
 
“Qualified Institutional Buyer” means any Person who is a “qualified
institutional buyer” within the meaning of such term as set forth in Rule
144A(a)(1) under the Securities Act.
 
“QPAM Exemption” is defined in Section 6.2(d).
 
“Refill” is defined in the preamble to this Agreement.
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“Related Fund” means, with respect to any Holder, any fund or entity that (i)
invests in Securities or bank loans, and (ii) is advised or managed by such
Holder, the same investment advisor as such Holder or by an affiliate of such
Holder or such investment advisor.
 
“Reportable Event” means a reportable event described in Section 4043(b) of
ERISA or the regulations promulgated thereunder.
 
“Required Revolving Holders means, at any time, Holders holding more than 50% of
the Revolving Commitment, or to the extent that the Revolving Commitment has
terminated, Holders holding more than 50% of the aggregate outstanding Revolving
Loans (in each case exclusive of any portion of the Revolving Commitment or
Revolving Loans then owned by any one or more of any Company or any of its
Affiliates).
 
“Required Holders” means, collectively, the Required Revolving Holders and the
Required Term Holders.
 
“Required Term Holders” means, at any time, the Holders holding more than 50% of
the aggregate principal amount of the Term Notes at the time outstanding
(exclusive of Term Notes then owned by any one or more of any Company or any of
its Affiliates).
 
“Responsible Officer” means any Senior Financial Officer and any other officer
of the Company Representative with responsibility for the administration of the
relevant portion of this Agreement.
 
“Restricted Accounts” means deposit accounts or other accounts (a) established
and used (and at all times will be used) solely for the purpose of paying
current payroll obligations of the Companies (and which do not (and will not at
any time) contain any deposits other than those necessary to fund current
payroll), in each case in the ordinary course of business, (b) maintained (and
at all times will be maintained) solely in connection with an employee benefit
plan, but solely to the extent that all funds on deposit therein are solely held
for the benefit of, and owned by, employees (and will continue to be so held and
owned) pursuant to such plan, and (c) used in the ordinary course of business
for petty cash, the balance of which shall not exceed $25,000 in the aggregate
at any time; provided, that, without limiting the foregoing, in order for any
such deposit account or other account to constitute a “Restricted Account”, such
deposit or other account must be expressly designated as a “Restricted Account”
on Schedule 5.22 (as such schedule may from time to time be updated in
accordance with Section 5.22), which designation shall constitute a
representation and warranty by each Company that such deposit account or other
account satisfies the criteria set forth in this definition to constitute a
“Restricted Account”.
 
“Revolving Commitment” means the commitment of the Revolving Holders to make
Revolving Loans pursuant to Section 2.2 in an aggregate principal amount not to
exceed the principal amount of $15,000,000, as such amount may be reduced from
time to time in accordance with the terms hereof. The Revolving Commitment as to
any Revolving Holder shall mean the commitment of such Revolving Holder
severally, and not jointly, to make its pro rata share of Revolving Loans
available pursuant to Section 2.2.
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“Revolving Commitment Fee” is defined in Section 3(c).
 
“Revolving Holder” means any Holder with a Revolving Commitment.
 
“Revolving Loan” is defined in Section 2.2(a).
 
“Revolving Commitment Termination Date” means June 20, 2019, or such earlier
date as of which the Revolving Commitment has been terminated pursuant to
Section 2.2(d), Section 8 or Section 12.
 
“Revolving Notes” is defined in Section 1.
 
“SEC” means the Securities and Exchange Commission of the United States, or any
successor thereto.
 
“Security Agreement” means (a) the Security Agreement, dated as of even date
herewith and executed and delivered by each Company and each of its Subsidiaries
in favor of the Collateral Agent, substantially in the form of Exhibit D
attached hereto, as the same may be amended, restated, supplemented or otherwise
modified from time to time, and (b) any additional security agreement executed
pursuant to Section 9.7 by any subsequently acquired or organized Subsidiary.
 
“Security Documents” means the Security Agreement, the Pledge Agreement, the
Mortgages, the Control Agreements, the Securities Account Control Agreements and
all other mortgages, deeds of trust, assignments, pledges, financing statements,
lien entry forms, notices, documents and other writing executed by or on behalf
of the Companies and delivered from time to time in favor of the Collateral
agent for the benefit of the Holders in order to secure the Obligations and any
and all amendments, supplements or other modifications thereto.
 
“Securities” or “Security” shall have the meaning specified in section 2(1) of
the Securities Act.
 
“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.
 
“Senior Financial Officer” means the chief financial officer, principal
accounting officer, vice president of finance, treasurer, senior director of
accounting, controller or comptroller of the Company Representative.
 
“Significant Holder” means the (i) Revolving Holders and, (ii) any Holder of at
least thirty three (33%) percent of the Term Notes.
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“Solvent” means, at any time with respect to any Person, that at such time such
Person (a) is able to pay its debts as they mature and has (and has a reasonable
basis to believe it will continue to have) sufficient capital (and not
unreasonably small capital) to carry on its business consistent with its
practices as of the date hereof, and (b) the assets and properties of such
Person at a fair valuation (and including as assets for this purpose at a fair
valuation all rights of subrogation, contribution or indemnification arising
pursuant to any guarantees given by such Person) are greater than the
liabilities of such Person, and (c) such Person is not engaged in any business
or transaction, or about to engage in any business or transaction, for which its
assets would constitute unreasonably small capital (within the meaning of the
Uniform Fraudulent Transfer Act, the Uniform Fraudulent Conveyance Act and
section 548 of the Federal Bankruptcy Code); and (d) is able to pay its debts as
such debts mature; and (e) such Person is not entering into any Note Document
with any intent to hinder, delay, or defraud any of its current creditors or
future creditors.
 
“Source” is defined in Section 6.2.
 
“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Collateral Agent is subject for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board).  Such reserve percentages shall include those
imposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Holder under such Regulation D or any
comparable regulation.  The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
 
“Subordinated Debt” means Indebtedness of any Company or any Subsidiary of any
Company subordinated to the Obligations as to right and time of payment and as
to other rights and remedies thereunder, including without limitation the
Indebtedness permitted under Section 10.8(h).
 
“Subsidiary” means, as to any Person, any other Person in which such first
Person or one or more of its Subsidiaries or such first Person and one or more
of its Subsidiaries owns sufficient equity or voting interests to enable it or
them (as a group) ordinarily, in the absence of contingencies, to elect a
majority of the directors (or Persons performing similar functions) of such
second Person, and any partnership or joint venture if more than a 50% interest
in the profits or capital thereof is owned by such first Person or one or more
of its Subsidiaries or such first Person and one or more of its Subsidiaries
(unless such partnership or joint venture can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries).  Unless the context otherwise clearly requires, any reference to
a “Subsidiary” is a reference to a Subsidiary of the Parent.
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“Super-Majority Holders” means at any time on or after the Closing, the Holders
of at least 66-2/3% in principal amount of the Notes at the time outstanding
(exclusive of Notes then owned by any Company or any of its Affiliates).
 
“SVO” means the Securities Valuation Office of the NAIC or any successor to such
Office.
 
“Tax” means any tax (whether income, documentary, sales, stamp, registration,
issue, capital, property, excise or otherwise), duty, assessment, levy, impost,
fee, compulsory loan, charge or withholding.
 
“Tax Lien” is defined in the definition of “Permitted Encumbrances.”
 
“Term Notes” is defined in Section 1.
 
“Termination Event” means (a) a Reportable Event with respect to any Plan or
Multiemployer Plan; (b) the withdrawal of any Company or any of their
Subsidiaries or any member of the Controlled Group from a Plan or Multiemployer
Plan during a plan year in which such entity was a “substantial employer” as
defined in Section 4001(a)(2) of ERISA; (c) the providing of notice of intent to
terminate a Plan in a distress termination described in Section 4041(c) of
ERISA; (d) the institution by the PBGC of proceedings to terminate a Plan or
Multiemployer Plan; (e) any event or condition (i) which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan or Multiemployer Plan, or (ii) that may
result in termination of a Multiemployer Plan pursuant to Section 4041A of
ERISA; or (f) the partial or complete withdrawal within the meaning of Sections
4203 and 4205 of ERISA, of any Company, any Subsidiary thereof or any member of
the Controlled Group from a Multiemployer Plan.
 
“UCC” means the Uniform Commercial Code as in effect in the State of New York
from time to time.
 
“USA PATRIOT Act” means United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.
 
“US Subsidiary” means a Subsidiary organized, incorporated or otherwise formed
under the laws of the United States or any state thereof or the District of
Columbia.
 
“U.S. Economic Sanctions” is defined in Section 5.16(a).
 
“Wholly-Owned Subsidiary” means, at any time, any Subsidiary all of the equity
interests (except directors’ qualifying shares) and voting interests of which
are owned by any one or more of any Company and any Company’s other Wholly-Owned
Subsidiaries at such time.
 
“Yield Maintenance Amount” is defined in Section 8.6.
 
 
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