EXHIBIT 10.1

 

CONFIDENTIAL TREATMENT REQUESTED

Certain portions of this document have been omitted pursuant to a request for
Confidential Treatment and, where applicable, have been marked with “[***]” to
indicate where omissions have been made.

The confidential material has been filed separately with the Securities and
Exchange Commission.

 

Execution Copy

 

SUMMER INFANT, INC., and

 

SUMMER INFANT (USA), INC.,

 

as Borrowers, and

 

THE GUARANTORS FROM TIME TO TIME PARTY HERETO

 

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SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

Dated as of June 28, 2018

 

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CERTAIN FINANCIAL INSTITUTIONS,

 

as Lenders

 

and

 

BANK OF AMERICA, N.A.,

 

as Agent

 

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TABLE OF CONTENTS

 

 

 

Page

SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION

1

 

1.1.

DEFINITIONS

1

1.2.

ACCOUNTING TERMS

35

1.3.

UNIFORM COMMERCIAL CODE AND PPSA

35

1.4.

CERTAIN MATTERS OF CONSTRUCTION

35

1.5.

CURRENCY EQUIVALENTS

36

 

 

SECTION 2. CREDIT FACILITIES

37

 

 

2.1.

REVOLVER COMMITMENTS

37

2.2.

[RESERVED.]

38

2.3.

LETTER OF CREDIT FACILITY

38

 

 

SECTION 3. INTEREST, FEES AND CHARGES

40

 

 

 

3.1.

INTEREST

40

3.2.

FEES

42

3.3.

COMPUTATION OF INTEREST, FEES, YIELD PROTECTION

42

3.4.

REIMBURSEMENT OBLIGATIONS

42

3.5.

ILLEGALITY

43

3.6.

INABILITY TO DETERMINE RATES

43

3.7.

INCREASED COSTS; CAPITAL ADEQUACY

44

3.8.

MITIGATION

45

3.9.

FUNDING LOSSES

45

3.10.

MAXIMUM INTEREST

45

 

 

SECTION 4. LOAN ADMINISTRATION

46

 

 

4.1.

MANNER OF BORROWING AND FUNDING OF REVOLVER LOANS

46

4.2.

DEFAULTING LENDER

47

4.3.

NUMBER AND AMOUNT OF LIBOR LOANS; DETERMINATION OF RATE

48

4.4.

BORROWER AGENT

48

4.5.

ONE OBLIGATION

48

4.6.

EFFECT OF TERMINATION

48

 

 

SECTION 5. PAYMENTS

49

 

 

5.1.

GENERAL PAYMENT PROVISIONS

49

5.2.

REPAYMENT OF REVOLVER LOANS

49

5.3.

[RESERVED.]

49

5.4.

PAYMENT OF OTHER OBLIGATIONS

49

5.5.

MARSHALING; PAYMENTS SET ASIDE

49

5.6.

APPLICATION AND ALLOCATION OF PAYMENTS

49

 

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5.7.

DOMINION ACCOUNTS

50

5.8.

ACCOUNT STATED

51

5.9.

TAXES

51

5.10.

LENDER TAX INFORMATION

53

5.11.

NATURE AND EXTENT OF EACH BORROWER’S LIABILITY

54

 

 

SECTION 6. CONDITIONS PRECEDENT

56

 

 

6.1.

CONDITIONS PRECEDENT TO INITIAL LOANS

56

6.2.

CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS

59

 

 

SECTION 7. COLLATERAL

59

 

 

7.1.

GRANT OF SECURITY INTEREST

59

7.2.

LIEN ON DEPOSIT ACCOUNTS; CASH COLLATERAL

61

7.3.

[RESERVED]

61

7.4.

OTHER COLLATERAL

61

7.5.

NO ASSUMPTION OF LIABILITY

61

7.6.

FURTHER ASSURANCES

61

 

 

SECTION 8. COLLATERAL ADMINISTRATION

62

 

 

8.1.

BORROWING BASE CERTIFICATES

62

8.2.

ADMINISTRATION OF ACCOUNTS

62

8.3.

ADMINISTRATION OF INVENTORY

63

8.4.

ADMINISTRATION OF EQUIPMENT

63

8.5.

ADMINISTRATION OF DEPOSIT ACCOUNTS

64

8.6.

GENERAL PROVISIONS

64

8.7.

POWER OF ATTORNEY

65

 

 

SECTION 9. REPRESENTATIONS AND WARRANTIES

66

 

 

9.1.

GENERAL REPRESENTATIONS AND WARRANTIES

66

9.2.

COMPLETE DISCLOSURE

72

 

 

SECTION 10. COVENANTS AND CONTINUING AGREEMENTS

72

 

 

10.1.

AFFIRMATIVE COVENANTS

72

10.2.

NEGATIVE COVENANTS

76

10.3.

FINANCIAL COVENANTS

82

10.4.

RESTRICTIONS ON ACTIVITIES OF COMPANY

82

10.5.

RESTRICTIONS ON ACTIVITIES OF FOREIGN SUBSIDIARIES

82

 

 

SECTION 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT

82

 

 

11.1.

EVENTS OF DEFAULT

82

11.2.

REMEDIES UPON DEFAULT

85

11.3.

LICENSE

85

11.4.

SETOFF

86

11.5.

REMEDIES CUMULATIVE; NO WAIVER

86

 

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SECTION 12. AGENT

86

 

 

12.1.

APPOINTMENT, AUTHORITY AND DUTIES OF AGENT

86

12.2.

AGREEMENTS REGARDING COLLATERAL AND BORROWER MATERIALS

87

12.3.

RELIANCE BY AGENT

88

12.4.

ACTION UPON DEFAULT

88

12.5.

RATABLE SHARING

88

12.6.

INDEMNIFICATION

88

12.7.

LIMITATION ON RESPONSIBILITIES OF AGENT

89

12.8.

SUCCESSOR AGENT AND CO-AGENTS

89

12.9.

DUE DILIGENCE AND NON-RELIANCE

90

12.10.

REMITTANCE OF PAYMENTS AND COLLECTIONS

90

12.11.

INDIVIDUAL CAPACITIES

91

12.12.

TITLES

91

12.13.

BANK PRODUCT PROVIDERS

91

12.14.

NO THIRD PARTY BENEFICIARIES

91

 

 

SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS

91

 

 

13.1.

SUCCESSORS AND ASSIGNS

91

13.2.

PARTICIPATIONS

91

13.3.

ASSIGNMENTS

92

13.4.

REPLACEMENT OF CERTAIN LENDERS

93

 

 

SECTION 14. THE GUARANTEE

93

 

 

14.1.

GUARANTEE

93

14.2.

OBLIGATIONS UNCONDITIONAL

93

14.3.

REINSTATEMENT

94

14.4.

SUBROGATION

94

14.5.

REMEDIES

94

14.6.

INSTRUMENT FOR THE PAYMENT OF MONEY

95

14.7.

CONTINUING GUARANTEE

95

14.8.

GENERAL LIMITATION ON AMOUNT OF OBLIGATIONS GUARANTEED

95

14.9.

JOINT ENTERPRISE

95

14.10.

SUBORDINATION

95

14.11.

CONFLICTS WITH CANADIAN GUARANTY OR UK GUARANTY

95

 

 

SECTION 15. MISCELLANEOUS

95

 

 

15.1.

CONSENTS, AMENDMENTS AND WAIVERS

95

15.2.

INDEMNITY

96

15.3.

NOTICES AND COMMUNICATIONS

97

15.4.

PERFORMANCE OF OBLIGORS’ OBLIGATIONS

97

15.5.

CREDIT INQUIRIES

98

 

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15.6.

SEVERABILITY

98

15.7.

CUMULATIVE EFFECT; CONFLICT OF TERMS

98

15.8.

COUNTERPARTS

98

15.9.

ENTIRE AGREEMENT

98

15.10.

RELATIONSHIP WITH LENDERS

98

15.11.

NO ADVISORY OR FIDUCIARY RESPONSIBILITY

98

15.12.

CONFIDENTIALITY

99

15.13.

GOVERNING LAW

99

15.14.

CONSENT TO FORUM

99

15.15.

WAIVERS BY OBLIGORS

100

15.16.

PATRIOT ACT NOTICE

100

15.17.

CANADIAN ANTI-MONEY LAUNDERING LEGISLATION

100

15.18.

CONTINUED EFFECTIVENESS; NO NOVATION

101

15.19.

ACKNOWLEDGEMENT AND CONSENT TO BAIL-IN OF EEA FINANCIAL INSTITUTIONS

101

15.20.

INTERCREDITOR AGREEMENT

102

 

iv

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LIST OF EXHIBITS AND SCHEDULES

 

Exhibit A

 

Assignment and Acceptance

Exhibit B

 

Assignment Notice

 

 

 

Schedule 1.1(a)

 

Commitments of Lenders

Schedule 1.1(b)

 

Accruals

Schedule 1.1(c)

 

Existing Letters of Credit

Schedule 8.5

 

Deposit Accounts

Schedule 8.6.1

 

Business Locations

Schedule 9.1.4

 

Names and Capital Structure

Schedule 9.1.5

 

Title to Properties; Liens

Schedule 9.1.8

 

Surety Obligations

Schedule 9.1.10

 

Brokers

Schedule 9.1.11

 

Patents, Trademarks, Copyrights and Licenses

Schedule 9.1.13

 

Compliance with Laws

Schedule 9.1.14

 

Environmental Matters

Schedule 9.1.15

 

Restrictive Agreements

Schedule 9.1.16

 

Litigation

Schedule 9.1.18

 

Pension Plans

Schedule 9.1.20

 

Labor Contracts

Schedule 10.2.1

 

Existing Debt

Schedule 10.2.2

 

Permitted Liens

Schedule 10.2.17

 

Existing Affiliate Transactions

 

v

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SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated as of
June 28, 2018 (this “Agreement”), among SUMMER INFANT, INC., a Delaware
corporation (the “Company”), SUMMER INFANT (USA), INC., a Rhode Island
corporation (“SI USA”, and together with Company, collectively, “Borrowers”),
THE GUARANTORS FROM TIME TO TIME PARTY HERETO, the financial institutions from
time to time party to this Agreement from time to time as lenders (collectively,
“Lenders”) and BANK OF AMERICA, N.A., a national banking association, as agent
for the Lenders (“Agent”) amends and restates in its entirety that certain
Amended and Restated Loan and Security Agreement dated as of April 21, 2015 (as
amended prior to the date hereof, the “Existing Credit Agreement”) among the
Borrowers, the guarantors party thereto, the lenders party thereto, Bank of
America, N.A. as agent and Merrill Lynch, Pierce, Fenner & Smith Incorporated as
sole lead arranger and sole bookrunner.

 

R E C I T A L S:

 

Borrowers have requested that Lenders provide a credit facility to Borrowers to
finance their mutual and collective business enterprise of the Borrowers and the
other Obligors.  Lenders are willing to provide the credit facility on the terms
and conditions set forth in this Agreement.

 

NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties
agree as follows:

 

SECTION 1.                                           DEFINITIONS; RULES OF
CONSTRUCTION

 

1.1.                            Definitions.  As used herein, the following
terms have the meanings set forth below:

 

ABL Priority Collateral:  has the meaning assigned to such term in the
Intercreditor Agreement.

 

Account: as defined in the UCC (or, with respect to any account receivable of
any Canadian Guarantor to which the PPSA is applicable, as defined in the PPSA
or, with respect to any UK Guarantor, Book Debts), including all rights to
payment for goods sold or leased, or for services rendered.

 

Account Debtor: a Person obligated under an Account, Chattel Paper, General
Intangible or Intangible.

 

Accounts Formula Amount: 85% of the Value of Eligible Accounts.

 

Acquisition: a transaction or series of transactions resulting in
(a) acquisition of a business, division, or substantially all assets of a
Person; (b) record or beneficial ownership of 50% or more of the Equity
Interests of a Person; or (c) merger, consolidation or combination of a Borrower
or Subsidiary with another Person.

 

Affiliate: with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.  “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise.  “Controlling” and
“Controlled” have correlative meanings.

 

Agent Indemnitees: Agent and its officers, directors, employees, Affiliates,
agents and attorneys.

 

Agent Professionals: attorneys, accountants, appraisers, auditors, business
valuation experts, environmental engineers or consultants, field examiners,
turnaround consultants, and other professionals

 

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and experts retained by Agent.

 

Agreement Currency: as defined in Section 1.5.

 

Allocable Amount: as defined in Section 5.11.3.

 

Amazon Companies:  collectively, Amazon.com, Inc. and its Affiliates.

 

Anti-Corruption Laws: means laws relating to anti-bribery or anti-corruption
(governmental or commercial) which apply to any Obligor, including laws that
prohibit the corrupt payment, offer, promise, or authorization of the payment or
transfer of anything of value (including gifts or entertainment), directly or
indirectly, to any foreign government official, foreign government employee or
commercial entity to obtain a business advantage; including the FCPA, and all
national and international laws enacted to implement the OECD Convention on
Combating Bribery of Foreign Officials in International Business Transactions.

 

Anti-Terrorism Law: any law relating to terrorism or money laundering, including
the Patriot Act, the Canadian Anti-Money Laundering & Anti-Terrorism Legislation
and the UK Anti-Terrorism Laws.

 

Applicable Law: all laws, rules, regulations and governmental guidelines
applicable to the Person, conduct, transaction, agreement or matter in question,
including all applicable statutory law, common law and equitable principles, and
all provisions of constitutions, treaties, statutes, rules, regulations, orders
and decrees of Governmental Authorities, and including, without limitation, the
CPSC Regulations.

 

Applicable Margin or Applicable Unused Line Fee Rate: with respect to any Type
of Loan, the margin set forth below, or with respect to the unused line fees
payable under Section 3.2.1, the rate per annum set forth below, in each case,
as determined for the most recently ended Fiscal Quarter:

 

Level

 

Average Quarterly
Availability

 

Base Rate
Revolver
Loans

 

LIBOR
Revolver
Loans

 

Applicable
Unused Line
Fee Rate

I

 

> $30,000,000

 

0.75%

 

1.75%

 

0.35%

II

 

< $30,000,000

 

1.00%

 

2.00%

 

0.25%

 

Until December 29, 2018, the Applicable Margin and the Applicable Unused Line
Fee Rate shall be determined as if Level II were applicable.  Thereafter, the
Applicable Margin and the Applicable Unused Line Fee Rate shall be determined
based upon Average Quarterly Availability for each Fiscal Quarter as determined
by Agent based upon the Revolver Borrowing Base Certificates delivered pursuant
to Section 8.1 for each week during such Fiscal Quarter, which determination
shall be effective on the first day of the calendar month after receipt by Agent
of the Revolver Borrowing Base Certificate for the last week in such Fiscal
Quarter.  If any financial statement, Revolver Borrowing Base Certificate, Term
Loan Borrowing Base Certificate or Compliance Certificate due in the preceding
month has not been received, then, at the option of Agent or Required Lenders,
the Applicable Margin and the Applicable Unused Line Fee Rate shall be
determined as if Level II were applicable, from such day until the first day of
the calendar month following actual receipt.

 

Notwithstanding the foregoing, (i) in the event that the Fixed Charge Coverage
Ratio is at any time (regardless of whether a Financial Covenant Testing Period
is in effect) less than 1.00 to 1.00, the Applicable Margin for Base Rate
Revolver Loans and LIBOR Revolver Loans shall each be increased by 25 basis
points from the amounts set forth in the table above; and (ii) in the event that
the Leverage Ratio

 

2

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is at any time less than 3.75 to 1.00, the Applicable Margin for Base Rate
Revolver Loans and LIBOR Revolver Loans shall each be reduced by 25 basis points
from the amounts set forth in the table above; provided, that (x) the reductions
described in clause (ii) of this sentence shall automatically cease to be in
effect if any Event of Default has occurred and is continuing and (y) if any
calculation of Leverage Ratio or Fixed Charge Coverage Ratio is at any time
restated or otherwise revised or if the information set forth in any Compliance
Certificate otherwise proves to be false or incorrect such that the Applicable
Margin would have been higher than was otherwise in effect during any period,
without constituting a waiver of any Default or Event of Default arising as a
result thereof, interest due under this Agreement shall be immediately
recalculated at such higher rate for any such applicable periods and shall be
due and payable on demand.

 

Applicable Percentage:  with respect to any Lender, with respect to Revolver
Loans, LC Obligations, Revolver Overadvance Loans, Protective Advances or
Swingline Loans, a percentage equal to a fraction the numerator of which is such
Lender’s Revolver Commitment and the denominator of which is the aggregate
Revolver Commitments (provided, that if the Revolver Commitments have terminated
or expired, each Lender’s Applicable Percentage shall be determined based upon
such Lender’s share of the aggregate Revolver Exposure at such time).

 

Approved Fund: any Person (other than a natural person) that is engaged in
making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in its ordinary course of activities, and is
administered or managed by a Lender, an entity that administers or manages a
Lender, or an Affiliate of either.

 

Approved Processors:  collectively, Port Erie Plastics, Inc., TNT Plastic
Molding, Inc., AMA Plastics, Norco Plastics, Inc., and such other processors as
Agent shall approve from time to time in its Permitted Discretion.

 

Asset Disposition: a sale, lease, license, consignment, transfer or other
disposition of Property of an Obligor, including a disposition of Property in
connection with a sale-leaseback transaction or synthetic lease.

 

Assignment and Acceptance: an assignment agreement between a Lender and Eligible
Assignee, in the form of Exhibit A.

 

Availability: at any time, (a) the lesser of (i) the aggregate Revolver
Commitments at such time and (ii) the Revolver Borrowing Base, at such time
minus (b) the Revolver Exposure at such time.

 

Availability Reserve: the sum (without duplication) of (a) the Inventory
Reserve; (b) the Rent and Charges Reserve; (c) reserves for accrued and unpaid
Royalties, whether or not then due and payable; (d) the Bank Product Reserve;
(e) the Canadian Priority Payables Reserve; (f) the UK Priority Payables
Reserve; (g) the Dilution Reserve; (h) reserves for amounts owed by any Obligor
to any processor (including, without limitation, the Approved Processors);
(i) the aggregate amount of liabilities secured by Liens upon Collateral that
are senior to Agent’s Liens (but imposition of any such reserve shall not waive
an Event of Default arising therefrom); and (j) such additional reserves, in
such amounts and with respect to such matters, as Agent in its Permitted
Discretion may elect to impose from time to time.

 

Average Availability: the average daily Availability for an applicable period.

 

Average Quarterly Availability: the average daily Availability for the
applicable Fiscal Quarter.

 

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

 

3

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

 

Bank of America: Bank of America, N.A., a national banking association, and its
successors and assigns.

 

Bank of America Indemnitees: Bank of America and its officers, directors,
employees, Affiliates, agents and attorneys.

 

Bank Product: any of the following products, services or facilities extended to
any Borrower or Subsidiary by a Lender or any of its Affiliates: (a) Cash
Management Services; (b) foreign exchange products or services; (c) products
under Hedging Agreements; (d) commercial credit card and merchant card services;
and (e) other banking products or services as may be requested by any Borrower
or Subsidiary, other than Letters of Credit.

 

Bank Product Reserve: the aggregate amount of reserves established by Agent from
time to time in its Permitted Discretion in respect of Secured Bank Product
Obligations.

 

Bankruptcy Code: Title 11 of the United States Code.

 

Base Rate: for any day, a per annum rate equal to the greater of (a) the Prime
Rate for such day; (b) the Federal Funds Rate for such day, plus 0.50%; or
(c) LIBOR for a 30 day interest period as determined on such day, plus 1.5%.

 

Base Rate Loan: any Loan that bears interest based on the Base Rate.

 

Base Rate Revolver Loan: a Revolver Loan that bears interest based on the Base
Rate.

 

Beneficial Ownership Certification: a certification regarding beneficial
ownership required by the Beneficial Ownership Regulation.

 

Beneficial Ownership Regulation:  31 C.F.R. §1010.230.

 

Blocked Person: means any Person: (a) listed in the annex to, or is otherwise
subject to the provisions of, Executive Order No. 13224; (b) a Person owned or
controlled by, or acting for or on behalf of, any Person that is listed in the
annex to, or is otherwise subject to the provisions of, Executive Order
No. 13224; (c) a Person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law; (d) a Person
that commits, threatens or conspires to commit or supports “terrorism” as
defined in Executive Order No. 13224; or (e) a Person that is named on the most
current OFAC Lists.

 

Board of Governors: the Board of Governors of the Federal Reserve System.

 

Book Debts:  as defined in the UK Security Agreements.

 

Borrowed Money: with respect to any Obligor, without duplication, its (a) Debt
that (i) arises from the lending of money by any Person to such Obligor, (ii) is
evidenced by notes, drafts, bonds, debentures, credit documents or similar
instruments, (iii) accrues interest or is a type upon which interest charges are
customarily paid (excluding trade payables owing in the Ordinary Course of
Business), or (iv) was issued or assumed as full or partial payment for
Property; (b) Capital Leases; (c) unreimbursed reimbursement obligations with
respect to letters of credit; and (d) guaranties of any Debt of the foregoing
types owing by another Person.

 

4

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Borrower Agent: as defined in Section 4.4.

 

Borrower Materials: Revolver Borrowing Base and Term Loan Borrowing Base
information, reports, financial statements and other materials delivered by
Borrowers hereunder, as well as other Reports and information provided by Agent
to Lenders.

 

Borrowing: a group of Loans of one Type that are made on the same day or are
converted into Loans of one Type on the same day.

 

Business Day: any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the laws of, or are in fact
closed in, North Carolina and New York, and (i) if such day relates to a LIBOR
Loan, any such day on which dealings in Dollar deposits are conducted between
banks in the London interbank Eurodollar market or (ii) if the term “Business
Day” has a different meaning in the Canadian Security Agreements or the UK
Security Agreements, the definition in such other document shall control as to
issues covered in both this Agreement and such other document.

 

Canadian Anti-Money Laundering & Anti-Terrorism Legislation: the Criminal Code,
R.S.C. 1985, c. C-46, the Proceeds of Crime Act and the United Nations Act,
R.S.C. 1985, c. U-2 or any similar Canadian legislation, together with all
rules, regulations and interpretations thereunder or related thereto including,
without limitation, the Regulations Implementing the United Nations Resolutions
on the Suppression of Terrorism and the United Nations Al-Qaida and Taliban
Regulations promulgated under the United Nations Act.

 

Canadian Defined Benefit Pension Plan:  a Canadian Pension Plan with a “defined
benefit provision” as such term is defined in the Income Tax Act (Canada).

 

Canadian Dollars:  lawful money of Canada.

 

Canadian Guarantor: each Canadian Subsidiary that guarantees payment or
performance of the Obligations, including, without limitation, SI Canada.  The
definition of “Canadian Guarantors” means all of such entities collectively.

 

Canadian Guaranty: that certain Guarantee and Indemnity Agreement dated as of
the Original Closing Date made by the Canadian Guarantor, as may be amended, 
restated, replaced, confirmed, supplemented or otherwise modified from time to
time.

 

Canadian MEPP:  any “multi-employer pension plan” as such term is defined in the
PBA to which any Obligor or its Subsidiaries has any liability, contingent or
otherwise.

 

Canadian Pension Plan:  a pension plan that is required to be registered as a
pension plan under the PBA or the Income Tax Act (Canada) under which any
Obligor or its Subsidiaries has any liability, contingent or otherwise, but
excludes a Canadian MEPP.

 

Canadian Priority Payables Reserve: on any date of determination, reserves
established by Agent in its Permitted Discretion for amounts payable by Canadian
Guarantors and secured by any Liens, choate or inchoate, which rank or which
would reasonably be expected to rank in priority to or pari passu with Agent’s
Liens on Collateral in the Revolver Borrowing Base, amounts deemed to be held in
trust, or held in trust, pursuant to Applicable Law and/or for amounts which
represent costs in connection with the preservation, protection, collection or
realization of the Collateral, including, without limitation, any such amounts
due and not paid for wages, vacation pay, amounts (including severance pay)
payable under the Wage Earner Protection Program Act (Canada) or under the
Bankruptcy and Insolvency Act (Canada), amounts due and not paid under any
legislation relating to workers’ compensation or to employment insurance, all
amounts deducted or withheld and not paid and remitted when due under the Income
Tax

 

5

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Act (Canada), sales tax, goods and services tax, value added tax, harmonized
tax, excise tax, tax payable pursuant to Part IX of the Excise Tax Act (Canada)
or similar applicable provincial legislation, government royalties, amounts
currently or past due and not paid for realty, municipal or similar taxes and
all solvency deficiencies or wind-up deficiencies under the PBA and all amounts
currently or past due and not contributed, remitted or paid to any Canadian
Pension Plan or under the Canada Pension Plan or any similar statutory or other
claims that would have or would reasonably be expected to have priority over or
pari passu with any Liens granted to Agent in the future (“Priority Payables”).

 

Canadian Security Agreements:  (a) the General Security Agreement dated as of
the Original Closing Date, in form and substance reasonably acceptable to Agent,
executed by the Canadian Guarantors in favor of Agent, as the same may be
amended, restated, confirmed, supplemented or otherwise modified from time to
time, and (b) any other Canadian security agreement required to be executed by
any Obligor in favor of Agent after the Original Closing Date, in each case, as
the same may be amended, restated, confirmed, supplemented, replaced or
otherwise modified from time to time.

 

Canadian Subsidiary:  any Subsidiary of Company that is organized under the
federal laws of Canada or any province or territory thereof.

 

Capital Expenditures: all liabilities incurred or expenditures made by a
Borrower or Subsidiary for the acquisition of fixed assets, or any improvements,
replacements, substitutions or additions thereto with a useful life of more than
one year.

 

Capital Lease: any lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, provided, however, notwithstanding
anything to the contrary in the financial statements of the Obligors, the Lease
dated March 24, 2009 between Faith Realty II, LLC and SI USA shall not
constitute a “Capital Lease” for purposes of this Agreement.

 

Cash Collateral: cash, and any interest or other income earned thereon, that is
delivered to Agent to Cash Collateralize any Obligations.

 

Cash Collateral Account: a demand deposit, money market or other account
established by Agent at such financial institution as Agent may select in its
discretion, which account shall be subject to a Lien in favor of Agent.

 

Cash Collateralize: the delivery of cash to Agent, as security for the payment
of Obligations, in an amount equal to (a) with respect to LC Obligations, 103%
of the aggregate LC Obligations, and (b) with respect to any inchoate,
contingent or other Obligations (including Secured Bank Product Obligations),
Agent’s good faith estimate of the amount that is due or could become due,
including all fees and other amounts relating to such Obligations.  “Cash
Collateralization” has a correlative meaning.

 

Cash Dominion Period: the period (a) commencing on the day that an Event of
Default occurs, or Availability is less than the Cash Dominion Trigger Amount;
and (b) continuing until (x) no Event of Default shall have occurred and be
continuing and (y) during the preceding 30 consecutive days, Availability shall
have been greater than the Cash Dominion Trigger Amount at all times.

 

Cash Dominion Trigger Amount:  at any time, an amount equal to the greater of
(a) $5,000,000 and (b) 10% of the lesser of (i) the aggregate Revolver
Commitments at such time and (ii) the Revolver Borrowing Base (calculated
without giving effect to the Term Loan Push Down Reserve) at such time.

 

Cash Equivalents: (a) marketable obligations issued or unconditionally
guaranteed by, and backed by the full faith and credit of, the United States,
Canadian, the United Kingdom or English government, maturing within 12 months of
the date of acquisition; (b) certificates of deposit, time deposits and bankers’
acceptances maturing within 12 months of the date of acquisition, and overnight
bank deposits,

 

6

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

 

in each case which are issued by Bank of America or a commercial bank organized
under the laws of the United States, Canada, the United Kingdom or England or
any state, province or district thereof, rated A-1 (or better) by S&P or P-1 (or
better) by Moody’s at the time of acquisition, and (unless issued by a Lender)
not subject to offset rights; (c) repurchase obligations with a term of not more
than 30 days for underlying investments of the types described in clauses
(a) and (b) entered into with any bank described in clause (b); (d) commercial
paper issued by Bank of America or rated A-1 (or better) by S&P or P-1 (or
better) by Moody’s, and maturing within nine months of the date of acquisition;
and (e) shares of any money market fund that has substantially all of its assets
invested continuously in the types of investments referred to above, has net
assets of at least $500,000,000 and has the highest rating obtainable from
either Moody’s or S&P.

 

Cash Management Services: any services provided from time to time by a Lender or
any of its affiliates to any Borrower or Subsidiary in connection with
operating, collections, payroll, trust, or other depository or disbursement
accounts, including automated clearinghouse, e-payable, electronic funds
transfer, wire transfer, controlled disbursement, overdraft, depository,
information reporting, lockbox and stop payment services.

 

Casualty Event: means casualty or other insured damage to, or any taking under
power of eminent domain or by condemnation, expropriation or similar proceeding
of (and payments in lieu thereof), any property or asset of an Obligor.

 

CERCLA: the Comprehensive Environmental Response Compensation and Liability Act
(42 U.S.C. § 9601 et seq.).

 

Change in Law: the occurrence, after the date hereof, of (a) the adoption,
taking effect or phasing in of any law, rule, regulation or treaty; (b) any
change in any law, rule, regulation or treaty or in the administration,
interpretation or application thereof; or (c) the making, issuance or
application of any request, guideline, requirement or directive (whether or not
having the force of law) by any Governmental Authority; provided, however, that
“Change in Law” shall include, regardless of the date enacted, adopted or
issued, all requests, guidelines, requirements or directives (i) under or
relating to the Dodd-Frank Wall Street Reform and Consumer Protection Act, or
(ii) promulgated pursuant to Basel III by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any similar
authority) or any other Governmental Authority including CRD IV.

 

Change of Control: an event or series of events by which:

 

(a)                                 any “person” or “group” (as such terms are
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but
excluding any employee benefit plan of such person or its subsidiaries, and any
person or entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a
person or group shall be deemed to have “beneficial ownership” of all securities
that such person or group has the right to acquire, whether such right is
exercisable immediately or only after the passage of time (such right, an
“option right”)), directly or indirectly, of 45% or more of the Equity Interests
of a Borrower entitled to vote for members of the board of directors or
equivalent governing body of such Borrower on a fully-diluted basis (and taking
into account all such Equity Interests that such person or group has the right
to acquire pursuant to any option right);

 

(b)                                 during any period of 12 consecutive months,
a majority of the members of the board of directors or other equivalent
governing body of a Borrower cease to be composed of individuals (i) who were
members of that board or equivalent governing body on the first day of such
period, (ii) whose election or nomination to that board or equivalent governing
body was approved by individuals referred to in clause (i) above constituting at
the time of such election or nomination at least a majority of that board or
equivalent governing body or (iii) whose election or

 

7

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

 

nomination to that board or other equivalent governing body was approved by
individuals referred to in clauses (i) and (ii) above constituting at the time
of such election or nomination at least a majority of that board or equivalent
governing body (excluding, in the case of both clause (ii) and clause (iii), any
individual whose initial nomination for, or assumption of office as, a member of
that board or equivalent governing body occurs as a result of an actual or
threatened solicitation of proxies or consents for the election or removal of
one or more directors by any person or group other than a solicitation for the
election of one or more directors by or on behalf of the board of directors);

 

(c)                                  Company ceases to own, directly or
indirectly, 100% of the Equity Interests of any Subsidiary (other than
Subsidiaries that are joint ventures permitted under this Agreement);

 

(d)                                 a Borrower ceases to own, directly or
indirectly 100% of the Equity Interests of any Guarantor or other Subsidiary
(other than Subsidiaries that are joint ventures permitted under this
Agreement);

 

(e)                                  any “Change of Control” or similar event,
as defined in the Term Loan Agreement or any other Term Loan Document shall have
occurred; or

 

(f)                                   the sale or transfer of all or
substantially all of an Obligor’s assets except to another Obligor.

 

Claims: all claims, liabilities, obligations, losses, damages, penalties,
judgments, proceedings, interest, costs and expenses of any kind (including
remedial response costs, reasonable attorneys’ fees and Extraordinary Expenses)
at any time (including after Full Payment of the Obligations or replacement of
Agent or any Lender) incurred by any Indemnitee or asserted against any
Indemnitee by any Obligor or other Person, in any way relating to (a) any Loans,
Letters of Credit, Loan Documents, Borrower Materials, or the use thereof or
transactions relating thereto, (b) any action taken or omitted in connection
with any Loan Documents, (c) the existence or perfection of any Liens, or
realization upon any Collateral, (d) exercise of any rights or remedies under
any Loan Documents or Applicable Law, or (e) failure by any Obligor to perform
or observe any terms of any Loan Document, in each case including all costs and
expenses relating to any investigation, litigation, arbitration or other
proceeding (including an Insolvency Proceeding or appellate proceedings),
whether or not the applicable Indemnitee is a party thereto.

 

Code: the Internal Revenue Code of 1986, as amended.

 

Collateral: all Property described in Section 7.1, all Property described in any
Security Documents as security for any Obligations, and all other Property that
now or hereafter secures (or is intended to secure) any Obligations.

 

Commitment: for any Lender, the aggregate amount of such Lender’s Revolver
Commitment.  “Commitments” means the aggregate amount of all Revolver
Commitments.

 

Commodity Exchange Act: the Commodity Exchange Act (7 U.S.C. § 1 et seq.).

 

Company:  as defined in the Preamble hereto.

 

Competitor:  on any date, (a) any competitor (as reasonably determined by
Borrowers) of SI Holdings and its Subsidiaries (other than bona fide fixed
income investors or debt funds) that are identified to Agent by Borrower Agent
in writing on or prior to the Restatement Date; (b) any other Person (other than
any bona fide fixed income investor or debt funds) that is a competitor (as
reasonably determined by Borrowers) of SI Holdings and its Subsidiaries, which
Person has been designated as a

 

8

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

 

“Competitor” by written notice from Borrower Agent to Agent not less than two
(2) Business Days prior to such date; and (c) any Affiliate of a “Competitor
described in clause (a) or (b) of this definition, which Affiliate has been
designated as a “ Competitor” by written notice from Borrower Agent to Agent not
less than two (2) Business Days prior to such date; provided, that “Competitors
shall exclude any Person that Borrower Agent has designated as no longer being a
“Competitor” by written notice to Agent from time to time.  For the avoidance of
doubt, to the extent that Persons are identified as Competitors in writing by
Borrower Agent after the Restatement Date, the inclusion of such Persons as
Competitors shall not retroactively apply to prior assignments or participations
in respect of any Loan or Revolver Commitment under this Agreement.

 

Compliance Certificate: a certificate, in form and substance satisfactory to
Agent, containing a detailed calculation of the Fixed Charge Coverage Ratio as
of the Fiscal Month most recently ended, and, if a Financial Covenant Testing
Period shall be in effect, certifying compliance with Section 10.3.1.

 

Connection Income Taxes: Other Connection Taxes that are imposed on or measured
by net income (however denominated), or are franchise, capital, or branch
profits Taxes.

 

Consolidated EBITDA: shall have the same meaning as “EBITDA”, as such term is
defined herein.

 

Consolidated Total Assets:  shall mean, as of any date, the total assets of the
Borrowers and their Subsidiaries determined in accordance with GAAP, as of the
last day of the Fiscal Quarter ended immediately prior to the date of such
determination for which financial statements are required to have been delivered
pursuant to Sections 10.1.2(a) or (b).

 

Contingent Obligation: any obligation of a Person arising from a guaranty,
indemnity or other assurance of payment or performance of any Debt, lease,
dividend or other obligation (“primary obligations”) of another obligor
(“primary obligor”) in any manner, whether directly or indirectly, including any
obligation of such Person under any (a) guaranty, endorsement, co-making or sale
with recourse of an obligation of a primary obligor; (b) obligation to make
take-or-pay or similar payments regardless of nonperformance by any other party
to an agreement; and (c) arrangement (i) to purchase any primary obligation or
security therefor, (ii) to supply funds for the purchase or payment of any
primary obligation, (iii) to maintain or assure working capital, equity capital,
net worth or solvency of the primary obligor, (iv) to purchase Property or
services for the purpose of assuring the ability of the primary obligor to
perform a primary obligation, or (v) otherwise to assure or hold harmless the
holder of any primary obligation against loss in respect thereof.  The amount of
any Contingent Obligation shall be deemed to be the stated or determinable
amount of the primary obligation (or, if less, the maximum amount for which such
Person may be liable under the instrument evidencing the Contingent Obligation)
or, if not stated or determinable, the maximum reasonably anticipated liability
with respect thereto.

 

CPSC: means the U.S. Consumer Products Safety Commission.

 

CPSC Regulations: means all laws and regulations enforced by the CPSC.

 

CRD IV: (a) Regulation (EU) No 575/2013 of the European Parliament and of the
Council of 26 June 2013 on prudential requirements for credit institutions and
investment firms; and (b) Directive 2013/36/EU of the European Parliament and of
the Council of 26 June 2013 on access to the activity of credit institutions and
the prudential supervision of credit institutions and investment firms.

 

Current Asset Collateral:  that portion of the Collateral comprised of Accounts,
Chattel Paper, Commercial Tort Claims,
Documents, Instruments, Inventory, Investment Property, Letters of Credit (which
for the purpose of this definition only, shall have the meaning given to such
term in the UCC), Letter-of-Credit Rights, Supporting Obligations and General
Intangibles (to the extent such General

 

9

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

 

Intangibles arise or relate to any of the foregoing, but excluding Intellectual
Property), and all products and proceed thereof (including, without limitation,
cash proceeds, Cash Collateral, cash held in Deposit Accounts (other than cash
held in Deposit Accounts which is clearly identifiable as proceeds of Equipment,
Real Estate, fixtures or Intellectual Property), and proceeds of insurance with
respect to any of the foregoing).

 

CWA: the Clean Water Act (33 U.S.C. §§ 1251 et seq.).

 

Debt: as applied to any Person, without duplication, (a) all items that would be
included as liabilities on a balance sheet in accordance with GAAP, including
Capital Leases, but excluding trade payables incurred and being paid in the
Ordinary Course of Business; (b) all Contingent Obligations; (c) all
reimbursement obligations in connection with letters of credit issued for the
account of such Person; and (d) in the case of any Obligor, the Obligations. 
The Debt of a Person shall include any recourse Debt of any partnership in which
such Person is a general partner or joint venturer.

 

Default: an event or condition that, with the lapse of time or giving of notice,
would constitute an Event of Default.

 

Default Rate: for any Obligation (including, to the extent permitted by law,
interest not paid when due), 2% plus the interest rate otherwise applicable
thereto.

 

Defaulting Lender: any Lender that, as determined by Agent, (a) has failed to
perform any funding obligations hereunder, and such failure is not cured within
three Business Days; (b) has notified Agent or any Borrower that such Lender
does not intend to comply with its funding obligations hereunder or has made a
public statement to the effect that it does not intend to comply with its
funding obligations hereunder or under any other credit facility; (c) has
failed, within three Business Days following request by Agent, to confirm in a
manner satisfactory to Agent that such Lender will comply with its funding
obligations hereunder; or (d) has, or has a direct or indirect parent company
that has, become the subject of an Insolvency Proceeding or taken any action in
furtherance thereof (including reorganization, liquidation, or appointment of a
receiver, custodian, administrator or similar Person by the Federal Deposit
Insurance Corporation or any other regulatory authority); provided, however,
that a Lender shall not be a Defaulting Lender solely by virtue of a
Governmental Authority’s ownership of an equity interest in such Lender or
parent company unless the ownership provides immunity for such Lender from
jurisdiction of courts within the United States or from enforcement of judgments
or writs of attachment on its assets, or permits such Lender or Governmental
Authority to repudiate or otherwise to reject such Lender’s agreements.

 

Deposit Account: all “deposit accounts” as such term is defined in the UCC
and/or with respect to any Deposit Account located in Canada, any account with a
deposit function.

 

Deposit Account Control Agreements: the Deposit Account control or blocked
account agreements to be executed by each institution maintaining a Deposit
Account for an Obligor, in favor of Agent, as security for the Obligations.

 

Designated Jurisdiction: a country or territory that is the subject of a
Sanction.

 

Dilution Reserve: a reserve in an initial amount as of the Restatement Date
equal to $1,000,000 established by the Company and reflected on the balance
sheet of the Company and its Subsidiaries in respect of the accruals described
on Schedule 1.1(b) attached hereto, as the same may be adjusted from time to
time by Agent in its Permitted Discretion based upon the most recent field
examination conducted by Agent.

 

Distribution: any declaration or payment of a distribution, interest or dividend
on any Equity

 

10

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Interest (other than a rights distribution and/or payment-in-kind by the
Company); any distribution, advance or repayment of Debt to a holder of Equity
Interests; or any purchase, redemption, or other acquisition or retirement for
value of any Equity Interest.

 

Documents: means all “documents” as such term is defined in the UCC and/or with
respect to any Documents of an Obligor domiciled in Canada, a ‘document of
title’ as defined in the PPSA.

 

Dollars: lawful money of the United States.

 

Dominion Account: a collection or similar account established by an Obligor at
Bank of America over which Agent has exclusive control for withdrawal purposes.

 

EBITDA: determined on a consolidated basis for Company and Subsidiaries, for
each period of twelve consecutive months, equal to the aggregate of (a) net
income for such period, calculated before (i) interest expense, (ii) provision
for income taxes and (iii) depreciation and amortization expense; plus (b) the
sum (without duplication) of the following: (i) expenses, fees and charges
incurred in connection with the closing of the transactions contemplated by this
Agreement; (ii) non-cash charges resulting from the write-down of goodwill,
furniture, fixtures, equipment and software; (iii) non-cash charges associated
with the issuance and periodic re-measurement of Equity Interests in the
Company; (iv) non-cash losses attributable to deferred financing costs;
(v) non-cash losses attributable to fluctuations in currency values;
(vi) non-cash charges attributable to the issuance and/or exercise of employee
non-cash stock compensation to the extent permitted by this Agreement;
(vii) non-cash losses or charges resulting from the impact of purchase
accounting adjustments in connection with any Permitted Acquisition;
(viii) other non-cash losses or charges deducted in determining net income
(including, without limitation, non-cash losses or charges resulting from the
application of Statement of Financial Accounting Standards No. 142, Goodwill and
other Intangible Assets (FAS-142) and FAS-144, Accounting for Impairment of
Long-Lived Assets); (ix) losses attributable to the early retirement of
Indebtedness (other than the Obligations); (x) transaction related fees and
expenses incurred in connection with any Permitted Asset Disposition or any
Permitted Acquisition, all as approved by Agent in its Permitted Discretion;
(xi) indemnification payments made by the Obligors and for which the Obligors
have received reimbursement from third parties; (xii) fees and expenses of
advisors and independent consultants retained by Obligors and approved by Agent
in its Permitted Discretion, provided, that the aggregate amount of such fees
and expenses added back to EBITDA pursuant to this clause (b)(xii) shall not
exceed $250,000 during any Fiscal Quarter; (xiii) fees and expenses paid to
members of the Board of Directors of the Company in an aggregate amount not to
exceed $500,000 during any twelve-month period; (xiv) restructuring charges;
(xv) earn-out payments and severance payments; provided, that, for any period of
twelve consecutive months, the sum of the aggregate amounts added back pursuant
to clauses (b)(xii), (b)(xiii), (b)(xiv) and (b)(xv) shall not exceed $1,000,000
in the aggregate; and (xvi) losses arising from the sale of fixed or capital
assets; minus the sum (without duplication) of the following: (i) non-cash
income or gains resulting from the write-up of goodwill, furniture, fixtures,
equipment and software; (ii) non-cash income or gains attributable to
fluctuations in currency values; (iii) any other non-cash income or gains;
(iv) income or gains arising from the sale of fixed or capital assets;
(v) income or gains attributable to the early retirement of Indebtedness (other
than the Obligations); and (vi) any other non-recurring or extraordinary gains
(in each case, to the extent included in determining net income).

 

EBITDA for Company and Subsidiaries for each of the months set forth below shall
be deemed to be the amount set forth below opposite such month:

 

Monthly Period

 

EBITDA

 

 

 

April 2017

 

$

[***]

May 2017

 

$

[***]

June 2017

 

$

[***]

 

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

[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

 

11

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July 2017

 

$

[***]

August 2017

 

$

[***]

September 2017

 

$

[***]

October 2017

 

$

[***]

November 2017

 

$

[***]

December 2017

 

$

[***]

January 2018

 

$

[***]

February 2018

 

$

[***]

March 2018

 

$

[***]

April 2018

 

$

[***]

 

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

 

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

 

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

 

Eligible Account: an Account owing to an Obligor that arises in the Ordinary
Course of Business from the sale of goods, is payable in Dollars, Canadian
Dollars or GBP and is deemed by Agent, in its Permitted Discretion, to be an
Eligible Account.  Without limiting the foregoing, no Account shall be an
Eligible Account if (a) it is unpaid for more than 60 days after the original
due date, or more than 120 days after the original invoice date; (b) 50% or more
of the Accounts owing by the Account Debtor are not Eligible Accounts as a
result of the application of the foregoing clause (a); (c) when aggregated with
other Accounts owing by the Account Debtor and its Affiliates, it exceeds 15% of
the aggregate Eligible Accounts (or such higher percentage as Agent may
establish for the Account Debtor from time to time) (provided that, only the
amount of Accounts in excess of the percentage set forth in this clause (c) (or
such higher percentage as Agent may establish with respect to any Account Debtor
in accordance with this clause (c)) shall be deemed ineligible under this clause
(c)), provided, further, that this clause (c) shall not apply to the following
Account Debtors: (i) the Amazon Companies, (ii) the Wal-Mart Companies, or
(iii) the Target Companies; (d) with respect to any Account owing from the
Amazon Companies, when aggregated with other Accounts owing from the Amazon
Companies, it exceeds 45% of the aggregate Eligible Accounts, provided, however,
that if, at any time, the corporate credit rating of Amazon.com, Inc. falls
below “BBB-” (by S&P or Fitch) or “Baa3” (by Moody’s), the Agent shall have the
right, in its sole discretion to decrease such maximum percentage (provided
further, that only the amount of Accounts in excess of the percentage set forth
in this clause (d) (or such lower percentage as shall be specified by Agent in
accordance with the foregoing proviso) shall be deemed ineligible under this
clause (d)); (e) with respect to any Account owing from the Wal-Mart Companies,
when aggregated with other Accounts owing from the Wal-Mart Companies, it
exceeds 35% of the aggregate Eligible Accounts, (provided, that only the amount
of Accounts in excess of the percentage set forth in this clause (e) shall be
deemed ineligible under this clause (e)); (f) with respect to any Account owing
by the Target Companies, when aggregated with other Accounts owing by the Target
Companies, it exceeds 25% of the aggregate Eligible Accounts (provided, that
only the amount of Accounts in excess of the percentage set forth in this clause
(f) shall be deemed ineligible under this clause (f)); (g) it does not conform
with a covenant or representation herein in all material respects, except (A) to
the extent that such representations and

 

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

[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

 

12

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warranties specifically refer to an earlier date, in which case they shall be
true and correct as of such earlier date, and (B) in the case of any
representation and warranty qualified by “materiality”, “Material Adverse
Effect”, or similar language, they shall be true and correct in all respects;
(h) it is owing by a creditor or supplier, or is otherwise subject to a
potential offset, counterclaim, dispute, deduction, discount, recoupment,
reserve, defense, chargeback, credit or allowance (but ineligibility shall be
limited to the amount thereof); (i) an Insolvency Proceeding has been commenced
by or against the Account Debtor or the Account Debtor has failed, has suspended
or ceased doing business, is liquidating, dissolving or winding up its affairs,
is not Solvent, or is subject to any Sanction or on any specially designated
nationals list maintained by OFAC; or the Borrower is not able to bring suit or
enforce remedies against the Account Debtor through judicial process; (j) the
Account Debtor is organized or has its principal offices or assets outside the
United States, Canada or the United Kingdom, unless the Account is (i) supported
by a letter of credit (delivered to and directly drawable by Agent) satisfactory
in all respects to Agent; or (ii) is a Mexican subsidiary of Target Corporation
or Wal-Mart Stores, Inc. and the aggregate amount of all Accounts deemed
eligible by this clause (j)(ii) does not exceed $1,000,000 at any time; (k) it
is owing by a Governmental Authority, unless the Account Debtor is the United
States, Canada or any province or territory thereof or the United Kingdom or any
department, agency or instrumentality thereof and the Account has been assigned
to Agent in compliance with the federal Assignment of Claims Act or other
Applicable Law (including the Financial Administration Act (Canada)); (l) it is
not subject to a duly perfected, first priority Lien in favor of Agent, or is
subject to any other Lien, other than Liens permitted under clauses (b), (d),
and (h) of Section 10.2 and any other Lien with respect thereto permitted under
this Agreement that are subject to an intercreditor agreement in form and
substance reasonably satisfactory to Agent between the holder of such Lien and
the Agent; (m) the goods giving rise to it have not been delivered to the
Account Debtor, or it otherwise does not represent a final sale; (n) it is
evidenced by Chattel Paper or an Instrument of any kind unless such Chattel
Paper or Instrument is in the possession of the Agent, and to the extent
necessary or appropriate, endorsed to Agent, or has been reduced to judgment;
(o) its payment has been extended or the Account Debtor has made a partial
payment, provided, that, with respect to any Account for which partial payment
has been made, only the Account for which a partial payment has been made (and
not any other Account owing from the same Account Debtor) shall be deemed
ineligible under this clause (o); (p) it arises from a sale to an Affiliate,
from a sale on a cash-on-delivery, bill-and-hold, sale-or-return,
sale-on-approval, consignment, or other repurchase or return basis, or from a
sale for personal, family or household purposes; (q) it represents a progress
billing or retainage, or relates to services for which a performance, surety or
completion bond or similar assurance has been issued; or (r) it includes a
billing for interest, fees or late charges, but ineligibility shall be limited
to the extent thereof.  In calculating delinquent portions of Accounts under
clauses (a) and (b), credit balances more than 120 days old will be excluded.

 

Eligible Assignee: a Person that is (a) a Lender, Affiliate of a Lender or
Approved Fund; (b) any other financial institution approved by Borrower Agent
(which approval shall not be unreasonably withheld or delayed, and shall be
deemed given if no objection is made within two Business Days after notice of
the proposed assignment) and Agent, which extends revolving credit facilities of
this type in its ordinary course of business; and (c) during any Event of
Default, any Person acceptable to Agent in its discretion; provided, that, in no
event shall the term “Eligible Assignee” include any Competitor.

 

Eligible In-Transit Inventory: Inventory owned by a Borrower or Guarantor that
would be Eligible Inventory if it were not subject to a Document and in transit
from a foreign location to a location of the applicable Borrower or Guarantor
within the United States, Canada or the United Kingdom, and that Agent, in its
Permitted Discretion, deems to be Eligible In-Transit Inventory.  Without
limiting the foregoing, no Inventory shall be Eligible In-Transit Inventory
unless it (a) is subject to a negotiable Document showing Agent (or, with the
consent of Agent, the applicable Borrower or Guarantor) as consignee, which
Document is in the possession of Agent or such other Person as Agent shall
approve; (b) is fully insured by marine cargo or other similar insurance, in
such amounts, with such insurance companies and subject to such deductibles as
are reasonably satisfactory to Agent and in respect of which Agent has been
named as loss payee; (c) is not sold by a vendor that has a right to reclaim,
divert

13

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shipment of, repossess, stop delivery, claim any reservation of title or
otherwise assert Lien rights against the Inventory, or with respect to whom any
Borrower or Guarantor is in default of any obligations; (d) is evidenced by a
full set of clean, original negotiable bills of lading consigned to the order of
Agent and such original bills of lading are in the possession of Agent or a
customs broker from whom Agent has received an executed Customs Broker Agreement
with respect to such inventory and title has passed to the applicable Borrower
or Guarantor at the time such inventory is delivered to the common carrier;
(e) is shipped by a common carrier that is not affiliated with the vendor and is
not subject to any Sanction or on any specially designated nationals list
maintained by OFAC; and (f) is being handled by a customs broker,
freight-forwarder or other handler that has delivered a Lien Waiver.

 

Eligible Inventory: Inventory owned by a Borrower or Guarantor that Agent, in
its Permitted Discretion, deems to be Eligible Inventory.  Without limiting the
foregoing, no Inventory shall be Eligible Inventory unless it (a) is finished
goods or raw materials, and not work-in-process, packaging or shipping
materials, labels, samples, display items, bags, replacement parts or
manufacturing supplies, provided that component parts and replacement parts
shall not be deemed ineligible under this clause (a) to the extent the most
recent inventory appraisal delivered to Agent ascribes a value to such component
parts and/or replacement parts; (b) is not held on consignment, nor subject to
any deposit or down payment; (c) is in saleable condition and is not damaged,
defective, shopworn or otherwise unfit for sale; (d) is not slow-moving,
perishable, obsolete or unmerchantable, and does not constitute returned or
repossessed goods, provided that slow-moving or obsolete inventory shall not be
deemed ineligible under this clause (d) to the extent the most recent inventory
appraisal delivered to Agent ascribes a value to such slow-moving or obsolete
inventory; (e) meets all standards imposed by any Governmental Authority, has
not been acquired from a Person subject to any Sanction or on any specially
designated nationals list maintained by OFAC, and does not constitute hazardous
materials under any Environmental Law; (f) conforms with the covenants and
representations herein; (g) is subject to Agent’s duly perfected, first priority
Lien, and no other Lien; (h) is within the continental United States, New
Brunswick or Ontario, Canada, or the United Kingdom, is not in transit except
between locations of Borrowers or Guarantors, unless such inventory constitutes
Eligible In-Transit Inventory and is not consigned to any Person; (i) is not
subject to any warehouse receipt or negotiable Document (other than Eligible
In-Transit Inventory subject to a Lien Waiver); (j) is not subject to any
License or other property or property right or other arrangement that restricts
such Borrower’s or Agent’s right to dispose of such Inventory, unless Agent has
received an appropriate Lien Waiver or is otherwise satisfied that it could sell
such inventory without infringing on the rights of such licensor following an
Event of Default; (k) is not located on leased premises or in the possession of
a warehouseman, processor, repairman, mechanic, shipper, freight forwarder or
other Person, unless the lessor or such Person is an Approved Processor and
(i) has delivered a Lien Waiver or (ii) an appropriate Rent and Charges Reserve
has been established for such location; and (l) is reflected in the details of a
current perpetual inventory report.

 

Enforcement Action: any action to enforce any Obligations (other than Secured
Bank Product Obligations) or Loan Documents or to exercise any rights or
remedies relating to any Collateral (whether by judicial action, self-help,
notification of Account Debtors, exercise of setoff or recoupment, exercise of
any right to act in an Obligor’s Insolvency Proceeding or to credit bid
Obligations, or otherwise).

 

Environmental Laws: all Applicable Laws and agreements with Governmental
Authorities (including all programs, permits and guidance promulgated by
regulatory agencies), relating to public health and safety matters or conditions
(but excluding occupational safety and health, to the extent regulated by OSHA)
or the protection or pollution of the environment, including but not limited to
CERCLA, RCRA and CWA.

 

Environmental Notice: a notice (whether written or oral) from any Governmental
Authority or other Person of any possible noncompliance with, investigation of a
possible violation of, litigation relating to, or potential fine or liability
under any Environmental Law, or with respect to any Environmental Release,
environmental pollution or hazardous materials, including any complaint,

 

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summons, citation, order, claim, demand or request for correction, remediation
or otherwise.

 

Environmental Release: a release as defined in CERCLA or under any other
Environmental Law.

 

Equity Interest: the interest of any (a) shareholder in a corporation;
(b) partner in a partnership (whether general, limited, limited liability or
joint venture); (c) member in a limited liability company; or (d) other Person
having any other form of equity security or ownership interest.

 

ERISA: the Employee Retirement Income Security Act of 1974.

 

ERISA Affiliate: any trade or business (whether or not incorporated) under
common control with an Obligor within the meaning of Section 414(b) or (c) of
the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).

 

ERISA Event: (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by any Obligor or ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by any Obligor or ERISA Affiliate from a Multiemployer Plan
or notification that a Multiemployer Plan is in reorganization; (d) the filing
of a notice of intent to terminate, the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan; (e) the determination that
any Pension Plan is considered an at risk plan or a plan in critical or
endangered status under the Code, ERISA or the Pension Protection Act of 2006;
(f) an event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan; (g) the imposition of any liability under Title IV of ERISA, other
than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon
any Obligor or ERISA Affiliate; or (h) failure by an Obligor or ERISA Affiliate
to meet all applicable requirements under the Pension Funding Rules in respect
of a Pension Plan, whether or not waived, or to make a required contribution to
a Multiemployer Plan.

 

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

 

Event of Default: as defined in Section 11.

 

Excluded Deposit Account: a Deposit Account maintained by any Obligor (a) which
has been established and is used exclusively for the sole purpose of making
payroll and withholding tax payments related thereto and other employee wage and
benefit payments to or for the benefit of such Obligor’s employees and accrued
and unpaid employee compensation (including salaries, wages, benefits and
expense reimbursements), (b) which is a zero balance operational disbursement or
similar account, (c) has been established and is used exclusively for the sole
purpose of making and remitting sales and use taxes, VAT and/or such Canadian
sales and use tax equivalents or (d) which is used for petty cash or similar
purposes so long as the amount on deposit (i) in each such individual Deposit
Account described in this clause (d) does not exceed $10,000 during any period
of seventy-two consecutive hours and (ii) in all Deposit Accounts referred to in
this clause (d) does not exceed $50,000 in the aggregate during any period of
seventy-two consecutive hours.

 

Excluded Swap Obligation: with respect to an Obligor, each Swap Obligation as to
which, and only to the extent that, such Obligor’s guaranty of or grant of a
Lien as security for such Swap Obligation is or becomes illegal under the
Commodity Exchange Act because the Obligor does not constitute an “eligible
contract participant” as defined in the act (determined after giving effect to
any keepwell, support or other agreement for the benefit of such Obligor and all
guarantees of Swap Obligations by other Obligors) when such guaranty or grant of
Lien becomes effective with respect to the Swap

 

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Obligation.  If a Hedging Agreement governs more than one Swap Obligation, only
the Swap Obligation(s) or portions thereof described in the foregoing sentence
shall be Excluded Swap Obligation(s) for the applicable Obligor

 

Excluded Taxes: (a) Taxes imposed on or measured by a Recipient’s net income
(however denominated), franchise Taxes and branch profits Taxes (i) as a result
of such Recipient being organized under the laws of, or having its principal
office or applicable Lending Office located in, the jurisdiction imposing such
Tax, or (ii) constituting Other Connection Taxes; (b) U.S. federal and Canadian
federal withholding Taxes imposed on amounts payable to or for the account of a
Lender with respect to its interest in a Loan or Commitment pursuant to a law in
effect when the Lender acquires such interest (except pursuant to an assignment
request by Borrower Agent under Section 13.4) or changes its Lending Office,
unless the Taxes were payable to its assignor immediately prior to such
assignment or to the Lender immediately prior to its change in Lending Office;
(c) Taxes attributable to a Recipient’s failure to comply with Section 5.10; and
(d) U.S. federal withholding Taxes imposed pursuant to FATCA.  In no event shall
“Excluded Taxes” include any U.S. withholding Tax imposed on amounts paid by or
on behalf of a foreign Obligor to a Recipient that has complied with
Section 5.10.2.

 

Existing Credit Agreement: as defined in the preamble to this Agreement.

 

Existing Letter of Credit:  any letter of credit that (a) was issued by the
Issuing Bank under the Existing Credit Agreement, (b) is outstanding on the
Restatement Date, and (c) is listed on Schedule 1.1(c).

 

Extraordinary Expenses: all costs, expenses or advances that Agent, Issuing Bank
or Lenders may incur during a Default or Event of Default, or during the
pendency of an Insolvency Proceeding of an Obligor, including those relating to:
(a) any audit, inspection, repossession, storage, repair, appraisal, insurance,
manufacture, preparation or advertising for sale, sale, collection, or other
preservation of or realization upon any Collateral; (b) any action, arbitration
or other proceeding (whether instituted by or against Agent, any Lender, any
Obligor, any representative of creditors of an Obligor or any other Person) in
any way relating to any Collateral (including the validity, perfection, priority
or avoidability of Agent’s Liens with respect to any Collateral), Loan
Documents, Letters of Credit or Obligations, including any lender liability or
other Claims; (c) the exercise, protection or enforcement of any rights or
remedies of Agent in, or the monitoring of, any Insolvency Proceeding;
(d) settlement or satisfaction of any taxes, charges or Liens with respect to
any Collateral; (e) any Enforcement Action; (f) negotiation and documentation of
any modification, waiver, workout, restructuring or forbearance with respect to
any Loan Documents or Obligations; and (g) Protective Advances.  “Extraordinary
Expenses” shall include transfer fees, Other Taxes, storage fees, insurance
costs, permit fees, utility reservation and standby fees, legal fees, appraisal
fees, brokers’ fees and commissions, auctioneers’ fees and commissions,
accountants’ fees, environmental study fees, wages and salaries paid to
employees of any Obligor or independent contractors in liquidating any
Collateral, and travel expenses.

 

Fair Salable Value: the amount that could be obtained for assets within a
reasonable time, either through collection or through sale under ordinary
selling conditions by a capable and diligent seller to an interested buyer who
is willing (but under no compulsion) to purchase.

 

FATCA: Sections 1471 through 1474 of the Code (including any amended or
successor version if substantively comparable and not materially more onerous to
comply with), and any agreements entered into pursuant to Section 1471(b)(1) of
the Code.

 

Federal Funds Rate: (a) the weighted average of interest rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers on the applicable Business Day (or on the preceding
Business Day, if the applicable day is not a Business Day), as published by the
Federal Reserve Bank of New York on the next Business Day; or (b) if no such
rate is

 

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published on the next Business Day, the average rate (rounded up, if necessary,
to the nearest 1/8 of 1%) charged to Bank of America on the applicable day on
such transactions, as determined by Agent.

 

Fee Letter: that certain amended and restated fee letter dated as of the
Restatement Date among Agent and Company as amended from time to time.

 

Financial Covenant Testing Period:  with respect to the occurrence of any
Financial Covenant Trigger Date, the period (a) commencing on the last day of
the Fiscal Month for which financial statements have been (or are required to
have been) delivered to Agent immediately prior to such Financial Covenant
Trigger Date, and (b) continuing thereafter until Availability for sixty (60)
consecutive days shall have exceeded the Financial Covenant Trigger Amount.

 

Financial Covenant Trigger Amount:  at any time of determination, an amount
equal to the greater of (a) 10% of the lesser of (i) the aggregate Revolver
Commitment as of such date and (ii) the Revolver Borrowing Base (calculated
without giving effect to the Term Loan Push Down Reserve) as of such date and
(b) $5,000,000

 

Financial Covenant Trigger Date:  any date on which Availability falls below the
Financial Covenant Trigger Amount.

 

Fiscal Month:  any fiscal month of any Fiscal Year, which fiscal month shall
consist of either four or five weeks and generally end on the Saturday closest
to the last day of each calendar month in accordance with the fiscal accounting
calendar of the Company and its Subsidiaries.

 

Fiscal Quarter: any fiscal quarter of any Fiscal Year, which fiscal quarter
shall consist of thirteen weeks divided into three Fiscal Months of four, four
and five weeks, which fiscal quarters shall generally end on the Saturday
closest to the last day of March, June, September and December of each Fiscal
Year in accordance with the fiscal accounting calendar of the Company and its
Subsidiaries.

 

Fiscal Year: the fiscal year of Company and its Subsidiaries for accounting and
tax purposes, generally ending on the Saturday closest to the last day of
December of each year.

 

Fixed Charge Coverage Ratio: the ratio, determined on a consolidated basis for
Company and its Subsidiaries for the most recent period of twelve consecutive
months, of (a) EBITDA minus Capital Expenditures (except those financed with
(i) Borrowed Money other than Revolver Loans or (ii) proceeds of Casualty Events
or the issuance of Equity Interests to the extent such Capital Expenditures are
made substantially contemporaneously with the receipt of such proceeds) and cash
taxes paid for such period, to (b) Fixed Charges paid in cash during such
period.

 

Fixed Charges: the sum of cash interest expense (other than payment-in-kind),
principal payments made on Borrowed Money (including, without limitation, the
Term Debt, but excluding the Revolver Loans unless such principal payment of the
Revolver Loans is accompanied by a permanent reduction in the Revolver
Commitments), and Distributions made.  Notwithstanding the foregoing, any
principal payments made in respect of any loans under the Existing Credit
Agreement prior to, or on, the Restatement Date shall not constitute “Fixed
Charges” for purposes hereof.

 

FLSA: the Fair Labor Standards Act of 1938.

 

Foreign Lender: any Lender that is not a U.S. Person.

 

Foreign Plan: any employee benefit plan or arrangement (a) maintained or
contributed to by any Obligor or Subsidiary that is not subject to the laws of
the United States or Canada; or (b) mandated by a government other than the
United States, Canada or the United Kingdom for employees of any Obligor or
Subsidiary.

 

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Foreign Subsidiary: a Subsidiary that is a “controlled foreign corporation”
under Section 957 of the Code, such that a guaranty by such Subsidiary of the
Obligations or a Lien on the assets of such Subsidiary to secure the Obligations
would result in material tax liability to Borrowers, provided, however, that SI
Canada and SI UK shall be deemed to not be Foreign Subsidiaries.

 

Fronting Exposure: a Defaulting Lender’s Applicable Percentage of LC Obligations
or Swingline Loans, as applicable, except to the extent allocated to other
Lenders under Section 4.2.

 

Full Payment: with respect to any Obligations, (a) the full cash payment
thereof, including any interest, fees and other charges accruing during an
Insolvency Proceeding (whether or not allowed in the proceeding); and (b) if
such Obligations are LC Obligations or inchoate or contingent in nature, Cash
Collateralization thereof (or delivery of a standby letter of credit acceptable
to Agent in its reasonable discretion, in the amount of required Cash
Collateral).  No Loans shall be deemed to have been paid in full until all
Commitments related to such Loans have expired or been terminated.

 

GAAP: generally accepted accounting principles in effect in the United States
from time to time.

 

GBP: means the lawful currency of the United Kingdom of Great Britain and
Northern Ireland.

 

Governmental Approvals: all authorizations, consents, approvals, licenses and
exemptions of, registrations and filings with, and required reports to, all
Governmental Authorities.

 

Governmental Authority: any federal, state, provincial, territorial, municipal,
local, foreign or other agency, authority, body, commission, court,
instrumentality, political subdivision, or other entity or officer exercising
executive, legislative, judicial, regulatory or administrative functions for any
governmental, judicial, investigative, regulatory or self-regulatory authority,
in each case whether associated with the United States, a state, district or
territory thereof, Canada, a province or territory thereof, the United Kingdom
or a country thereof or any other foreign entity or government (including the
Financial Conduct Authority, the Prudential Regulation Authority and any
supra-national bodies such as the European Union or the European Central Bank).

 

Guarantor Payment: as defined in Section 5.11.3.

 

Guarantors:  SI Canada, SI UK and each other Person who guarantees payment or
performance of any Obligations.

 

Guaranty: Section 14 of this Agreement and each guaranty agreement executed by a
Guarantor in favor of Agent, including, without limitation, the Canadian
Guaranty and the UK Guaranty.

 

Hedging Agreement: any “swap agreement” as defined in Section 101(53B)(A) of the
Bankruptcy Code.

 

Immaterial Foreign Subsidiary: shall mean, at any date of determination after
the Restatement Date, any Foreign Subsidiary of a Borrower  (a) the total assets
of which, in the aggregate with all other Immaterial Foreign Subsidiaries,
determined as of the Fiscal Quarter most recently ended, were less than 2.0% of
the Consolidated Total Assets of the Borrowers and their Subsidiaries as of such
date of determination, and (b) the Consolidated EBITDA attributable to such
Foreign Subsidiary for the period of four (4) consecutive Fiscal Quarters ending
on such date does not exceed, in the aggregate with all other Immaterial Foreign
Subsidiaries, 2.0% of the Consolidated EBITDA of the Borrowers and their
Subsidiaries for such period, in each case determined in accordance with GAAP;
provided, that (i) Borrowers shall not designate any additional Foreign
Subsidiary as an Immaterial Foreign Subsidiary if such designation would result
in a failure to comply with the provisions set forth in clause (a) or
(b) immediately above and (ii) no Foreign Subsidiary that owns any other Foreign
Subsidiary that fails to comply with clause (a) or (b) above shall be deemed to
be an Immaterial Foreign Subsidiary; and

 

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provided, further, if the total assets and/or gross revenues of all Foreign
Subsidiaries so designated by the Borrowers as “Immaterial Foreign Subsidiaries”
shall at any time exceed the limits set forth in either clause (a) or (b)
immediately above, then the Borrowers shall promptly re-designate one or more of
such Foreign Subsidiaries as not constituting Immaterial Foreign Subsidiaries,
in each case in a written notice to Agent, so that, as result of such
re-designation, the total assets and gross revenues of all Foreign Subsidiaries
still designated as “Immaterial Foreign Subsidiaries” do not exceed such limits;
provided, further, that if the total gross revenues of Born Free Holdings Ltd.
Shall at any time exceed $250,000, then the Borrowers shall promptly
re-designate such Foreign Subsidiary as not constituting an Immaterial Foreign
Subsidiary by written notice to Agent and following such re-designation, the
provisions of Sections 7 and 10.1.9 shall thereafter be applicable to such
Foreign Subsidiary.

 

Increased Field Exam/Appraisal Period:  with respect to the occurrence of any
Increased Field Exam/Appraisal Trigger Date, the period (a) commencing on the
Increased Field Exam/Appraisal Trigger Date and (b) continuing until
Availability for thirty (30) consecutive days shall have exceeded 20% of the
lesser of (i) the aggregate Revolver Commitment and (ii) the Revolver Borrowing
Base (calculated without giving effect to the Term Loan Push Down Reserve).

 

Increased Field Exam/Appraisal Trigger Date:  any date on which Availability for
thirty (30) consecutive days shall have been less than 20% of the lesser of
(a) the aggregate Revolver Commitment and (b) the Revolver Borrowing Base
(calculated without giving effect to the Term Loan Push Down Reserve) as of such
date.

 

Indebtedness: shall have the same meaning as “Debt”, as such term is defined
herein.

 

Indemnified Taxes: (a) Taxes other than Excluded Taxes, imposed on or relating
to any payment of an Obligation; and (b) to the extent not otherwise described
in clause (a), Other Taxes.

 

Indemnitees: Agent Indemnitees, Lender Indemnitees, Issuing Bank Indemnitees and
Bank of America Indemnitees.

 

Insolvency Law: collectively, the Bankruptcy Code, or any other insolvency,
debtor relief, debt adjustment, arrangement, receivership, or similar law
(whether state, provincial, territorial, federal or foreign), including, without
limitation, the Bankruptcy and Insolvency Act (Canada), the Companies Creditors
Arrangement Act (Canada), the Winding Up and Restructuring Act, any applicable
governing corporate statutes providing for arrangements, and the Insolvency Act
1986 (UK).

 

Insolvency Proceeding: any case or proceeding commenced by or against a Person
under any state, provincial, territorial, federal or foreign law for, or any
agreement of such Person to, (a) the seeking or any entry of an order for relief
under any Insolvency Law; (b) the appointment of a receiver, interim receiver,
monitor, reviewer and manager, trustee, liquidator, administrator, conservator
or other custodian for such Person or any part of its Property; or (c) an
assignment or trust mortgage for the benefit of creditors.

 

Intellectual Property: all present and future: trade secrets, know-how and other
proprietary information; trademarks, trademark applications, internet domain
names, service marks, trade dress, trade names, business names, designs, logos,
slogans (and all translations, adaptations, derivations and combinations of the
foregoing) indicia and other source and/or business identifiers, and all
registrations or applications for registrations which have heretofore been or
may hereafter be issued thereon throughout the world and including the goodwill
associated therewith; copyrights, copyrightable works (registered or
unregistered) and copyright applications (including copyrights for computer
programs) and all tangible and intangible property embodying the copyrights,
unpatented inventions (whether or not patentable); patents and patent
applications and patent disclosures; industrial design applications and
registered industrial designs; license agreements related to any of the
foregoing and income therefrom; books,

 

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records, writings, computer tapes or disks, flow diagrams, specification sheets,
all rights in computer software including source codes, object codes, and
executable code, data, databases and other physical manifestations, embodiments
or incorporations of any of the foregoing; all other intellectual property and
any proceeds and products thereof; and all common law and other rights
throughout the world in and to all of the foregoing.

 

Intellectual Property Claim: any claim or assertion (whether in writing or by
suit) that a Borrower’s or Subsidiary’s ownership, use, marketing, sale or
distribution of any Inventory, Equipment, Intellectual Property or other
Property violates another Person’s Intellectual Property.

 

Intercreditor Agreement: the Intercreditor Agreement dated as of the Restatement
Date between Agent and the Term Loan Agent, as the same may be amended,
restated, supplemented or otherwise modified from time to time.

 

Interest Period: as defined in Section 3.1.3.

 

Inventory: as defined in the UCC (or, with respect to any inventory of any
Canadian Guarantor to which the PPSA is applicable, as defined in the PPSA),
including all goods intended for sale, lease, display or demonstration; all work
in process; and all raw materials, and other materials and supplies of any kind
that are or could be used in connection with the manufacture, printing, packing,
shipping, advertising, sale, lease or furnishing of such goods, or otherwise
used or consumed in a Borrower’s or Guarantor’s business (but excluding
Equipment).

 

Inventory Formula Amount: the lesser of (i) 70% of the Value of Eligible
Inventory; or (ii) 85% of the NOLV Percentage of the Value of Eligible
Inventory.

 

Inventory Reserve: reserves established by Agent to reflect factors that may
negatively impact the Value of Inventory, including change in salability,
obsolescence, seasonality, theft, shrinkage, imbalance, change in composition or
mix, markdowns and vendor chargebacks.

 

Investment: an Acquisition; an acquisition of record or beneficial ownership of
any Equity Interests of a Person; or an advance or capital contribution to or
other investment in a Person.

 

IP Assignment: a collateral assignment or security agreement pursuant to which
an Obligor grants a Lien on its Intellectual Property to Agent, as security for
its Obligations.

 

IRS: the United States Internal Revenue Service.

 

Issuing Bank: Bank of America or any Affiliate of Bank of America, or any
replacement issuer appointed pursuant to Section 2.3.4.

 

Issuing Bank Indemnitees: Issuing Bank and its officers, directors, employees,
Affiliates, agents and attorneys.

 

Judgment Currency: as defined in Section 1.5.

 

LC Application: an application by Borrower Agent to Issuing Bank for issuance of
a Letter of Credit, in form and substance satisfactory to Issuing Bank.

 

LC Conditions: the following conditions necessary for issuance of a Letter of
Credit: (a) each of the conditions set forth in Section 6; (b) after giving
effect to such issuance, total LC Obligations do not exceed the Letter of Credit
Subline, no Revolver Overadvance exists and, if no Revolver Loans are
outstanding, the LC Obligations do not exceed the Revolver Borrowing Base
(without giving effect to the LC Reserve for purposes of this calculation);
(c) the expiration date of such Letter of Credit is (i) no more

 

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than 365 days from issuance, in the case of standby Letters of Credit, and
(ii) no more than 120 days from issuance, in the case of documentary Letters of
Credit; (d) the Letter of Credit and payments thereunder are denominated in
Dollars; and (e) the purpose and form of the proposed Letter of Credit is
satisfactory to Agent and Issuing Bank in their discretion.

 

LC Documents: all documents, instruments and agreements (including LC Requests
and LC Applications) delivered by Borrowers or any other Person to Issuing Bank
or Agent in connection with any Letter of Credit.

 

LC Obligations: the sum (without duplication) of (a) all amounts owing by
Borrowers for any drawings under Letters of Credit; and (b) the Stated Amount of
all outstanding Letters of Credit.

 

LC Request: a request for issuance of a Letter of Credit, to be provided by
Borrower Agent to Issuing Bank, in form satisfactory to Agent and Issuing Bank.

 

LC Reserve: the aggregate of all LC Obligations, other than those that have been
Cash Collateralized by Borrowers.

 

Lender Indemnitees: Lenders and Secured Bank Product Providers and their
officers, directors, employees, Affiliates, agents and attorneys.

 

Lenders: as defined in the preamble to this Agreement, including Agent in its
capacity as a provider of Swingline Loans and any other Person who hereafter
becomes a “Lender” pursuant to an Assignment and Acceptance, including any
Lending Office of the foregoing.

 

Lending Office: the office designated as such by the applicable Lender at the
time it becomes party to this Agreement or thereafter by notice to Agent and
Borrower Agent.

 

Letter of Credit: any standby or documentary letter of credit (including any
Existing Letter of Credit) issued by Issuing Bank for the account of an Obligor,
or any indemnity, guarantee, exposure transmittal memorandum or similar form of
credit support issued by Agent or Issuing Bank for the benefit of an Obligor.

 

Letter of Credit Subline: $5,000,000.

 

Leverage Ratio: the ratio, determined as of the end of any Fiscal Quarter, of
(a) Borrowed Money as of the last day of such quarter to (b) EBITDA for the four
Fiscal Quarters then ending.

 

LIBOR: the per annum rate of interest (rounded up to the nearest 1/8th of 1% and
in no event less than zero) determined by Agent at or about 11:00 a.m. (London
time) two Business Days prior to an interest period, for a term equivalent to
such period, equal to the London Interbank Offered Rate, or comparable or
successor rate approved by Agent, as published on the applicable Reuters screen
page (or other commercially available source designated by Agent from time to
time); provided, that any comparable or successor rate shall be applied by
Agent, if administratively feasible, in a manner consistent with market
practice.

 

LIBOR Loan: each set of LIBOR Revolver Loans having a common length and
commencement of Interest Period.

 

LIBOR Revolver Loan: a Revolver Loan that bears interest based on LIBOR.

 

LIBOR Screen Rate: the LIBOR quote on the applicable screen page Agent
designates to determine LIBOR (or such other commercially available source
providing such quotations as may be designated by Agent from time to time).

 

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LIBOR Successor Rate: as defined in Section 3.6(b).

 

LIBOR Successor Rate Conforming Changes:  with respect to any proposed LIBOR
Successor Rate, any conforming changes to the definition of Base Rate, Interest
Period, timing and frequency of determining rates and making payments of
interest and other administrative matters as may be appropriate, in the
discretion of Agent, to reflect the adoption of such LIBOR Successor Rate and to
permit the administration thereof by Agent in a manner substantially consistent
with market practice (or, if Agent determines that adoption of any portion of
such market practice is not administratively feasible or that no market practice
for the administration of such LIBOR Successor Rate exists, in such other manner
of administration as Agent determines in consultation with Borrower Agent).

 

License: any license or agreement under which an Obligor is authorized to use
Intellectual Property in connection with any manufacture, marketing,
distribution or disposition of Collateral, any use of Property or any other
conduct of its business.

 

Licensor: any Person from whom an Obligor obtains the right to use any
Intellectual Property.

 

Lien: any Person’s interest in Property securing an obligation owed to, or a
claim by, such Person, including any lien, security interest, pledge,
hypothecation, trust, reservation, encroachment, easement, right-of-way,
covenant, condition, restriction, leases, or other title exception, adverse
right/ claim or interest or deemed trust, or encumbrance.

 

Lien Waiver: an agreement, in form and substance reasonably satisfactory to
Agent, by which (a) for any material Collateral located on leased premises, the
lessor waives or subordinates any Lien it may have on the Collateral, and agrees
to permit Agent to enter upon the premises and remove the Collateral or to use
the premises to store or dispose of the Collateral; (b) for any Collateral held
by a warehouseman, processor, shipper, customs broker or freight forwarder, such
Person waives or subordinates any Lien it may have on the Collateral, agrees to
hold any Documents in its possession relating to the Collateral as agent for
Agent, and agrees to deliver the Collateral to Agent upon request; (c) for any
Collateral held by a repairman, mechanic or bailee, such Person acknowledges
Agent’s Lien, waives or subordinates any Lien it may have on the Collateral, and
agrees to deliver the Collateral to Agent upon request; and (d) for any
Collateral subject to a Licensor’s Intellectual Property rights, the Licensor
grants to Agent the right, vis-à-vis such Licensor, to enforce Agent’s Liens
with respect to the Collateral, including the right to dispose of it with the
benefit of the Intellectual Property, whether or not a default exists under any
applicable License.

 

Loan: a Revolver Loan.

 

Loan Documents: this Agreement, Other Agreements and Security Documents.

 

Loan Year: each 12 month period commencing on the Restatement Date and on each
anniversary of the Restatement Date.

 

Margin Stock: as defined in Regulation U of the Board of Governors.

 

Material Adverse Effect: the effect of any event, fact, circumstance or change
that, taken alone or in conjunction with other events or circumstances, (a) has
a material adverse effect on the business, assets, Properties, liabilities,
operations, or financial condition of the Obligors, taken as a whole, on the
value of any material Collateral, on the enforceability of any Loan Document, or
on the validity or priority of Agent’s Liens on any material portion of the
Collateral; (b) that could materially impair the ability of the Obligors, taken
as a whole, to perform their obligations under the Loan Documents, including
repayment of any Obligations; (c) that could reasonably be expected to
materially and adversely affect the Loans or the transactions contemplated by
this Agreement and the Loan Documents; or (d) otherwise materially impairs the
ability of Agent or any Lender to enforce or collect any Obligations or

 

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realize upon any material portion of the Collateral.  In determining whether any
individual event would result in a Material Adverse Effect, notwithstanding that
such event in and of itself does not have such effect, a Material Adverse Effect
shall be deemed to have occurred if the cumulative effect of such event and all
other then-existing events would result in a Material Adverse Effect.

 

Material Contract: any agreement or arrangement to which an Obligor is party
(other than the Loan Documents) (a) that is deemed to be a material contract
under any securities law applicable to such Person, including the Securities Act
of 1933; or (b) that relates to Subordinated Debt, or to Debt in an aggregate
amount of $3,000,000 or more.

 

Moody’s: Moody’s Investors Service, Inc., and its successors.

 

Multiemployer Plan: any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which any Obligor or ERISA Affiliate makes or is
obligated to make contributions, or during the preceding five plan years, has
made or been obligated to make contributions.

 

Net Proceeds: with respect to an Asset Disposition, proceeds (including, when
received, any deferred or escrowed payments) received by a Borrower or
Subsidiary in cash from such disposition, net of (a) reasonable and customary
costs and expenses actually incurred in connection therewith, including legal
fees and sales commissions; (b) amounts applied to repayment of Debt secured by
a Permitted Lien senior to Agent’s Liens on Collateral sold; (c) transfer or
similar taxes(including any reasonable estimate of taxes to be paid within one
(1) year of the date of the relevant transaction as a result of any gain
recognized in connection therewith; provided that any such estimated taxes not
actually due or payable by the end of such one year period shall constitute Net
Proceeds upon the earlier of the date that such taxes are determined by the
Borrower or any Subsidiary, as applicable not to be actually payable and the end
of such one year period, and (d) reasonable reserves in accordance with GAAP for
any liabilities or indemnification payments (fixed or contingent) attributable
to seller’s indemnities and representations and warranties to purchasers and
other retained liabilities in respect of such Asset Disposition undertaken by
Borrower or any Subsidiary in connection with such Asset Disposition; provided
that to the extent that any such amount ceases to be so reserved (other than any
reduction in such reserve to make a payment in respect of such liability or
indemnification obligations), the amount thereof shall be deemed to be Net
Proceeds of such Asset Disposition at such time.

 

NOLV Percentage: the net orderly liquidation value of Inventory of any Borrower
or Guarantor, expressed as a percentage, expected to be realized at an orderly,
negotiated sale held within a reasonable period of time, net of all liquidation
expenses, as determined from the most recent appraisal of such Borrower’s and/or
Guarantor’s Inventory performed by an appraiser and on terms satisfactory to
Agent.

 

Notice of Borrowing: a Notice of Borrowing to be provided by Borrower Agent to
request a Borrowing of Revolver Loans, in form satisfactory to Agent.

 

Notice of Conversion/Continuation: a Notice of Conversion/Continuation to be
provided by Borrower Agent to request a conversion or continuation of any Loans
as LIBOR Loans, in form satisfactory to Agent.

 

Obligations: all (a) principal of and premium, if any, on the Loans, (b) LC
Obligations and other obligations of Obligors with respect to Letters of Credit,
(c) interest, expenses, fees, indemnification obligations, Extraordinary
Expenses and other amounts payable by Obligors under the Loan Documents,
(d) Secured Bank Product Obligations, and (e) other Debts, obligations and
liabilities of any kind owing by Obligors pursuant to the Loan Documents,
whether now existing or hereafter arising, whether evidenced by a note or other
writing, whether allowed in any Insolvency Proceeding, whether arising from an
extension of credit, issuance of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, and whether direct or indirect, absolute or
contingent, due or to become due, primary or

 

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secondary, or joint or several; provided, that Obligations of an Obligor shall
not include its Excluded Swap Obligations.

 

Obligor: each Borrower, Guarantor, or other Person that is liable for payment of
any Obligations or that has granted a Lien in favor of Agent on its assets to
secure any Obligations.

 

OFAC: Office of Foreign Assets Control of the U.S. Treasury Department.

 

OFAC Lists: means, collectively, the SDN List and/or any other list of
terrorists or other restricted Persons maintained pursuant to any of the
rules and regulations of OFAC or pursuant to any other applicable executive
orders.

 

Ordinary Course of Business: the ordinary course of business of any Borrower or
Subsidiary, consistent with past practices and undertaken in good faith.

 

Organic Documents: with respect to any Person, its charter, certificate or
articles of incorporation, bylaws, articles of organization, articles of
amalgamation, limited partnership agreement, limited liability agreement,
operating agreement, members agreement, shareholders agreement, partnership
agreement, certificate of partnership, certificate of formation, voting trust
agreement, or similar agreement or instrument governing the formation or
operation of such Person.

 

Original Closing Date: February 28, 2013, the effective date of that certain
Loan and Security Agreement, dated as of the February 28, 2013 by and among
Obligors, Agent and the lenders party thereto.

 

OSHA: the Occupational Safety and Hazard Act of 1970.

 

Other Agreement: each LC Document, fee letter, Lien Waiver, Revolver Borrowing
Base Certificate, Term Loan Borrowing Base Certificate, Intercreditor Agreement,
Compliance Certificate, Borrower Materials, or other note, document, instrument
or agreement (other than this Agreement or a Security Document) now or hereafter
delivered by an Obligor or other Person to Agent or a Lender in connection with
any transactions relating hereto.

 

Other Collateral:  that portion of the Collateral not comprised of Current Asset
Collateral.  The Other Collateral shall include, among other things, Equipment,
Real Estate, fixtures and Intellectual Property.

 

Other Connection Taxes: Taxes imposed on a Recipient due to a present or former
connection between it and the taxing jurisdiction (other than connections
arising from the Recipient having executed, delivered, become party to,
performed obligations or received payments under, received or perfected a Lien
or engaged in any other transaction pursuant to, enforced, or sold or assigned
an interest in, any Loan or Loan Document).

 

Other Taxes: all present or future stamp, court, documentary, intangible,
recording, filing or similar Taxes that arise from any payment made under, from
the execution, delivery, performance, enforcement or registration of, from the
receipt or perfection of a Lien under, or otherwise with respect to, any Loan
Document, except Other Connection Taxes imposed with respect to an assignment
(other than an assignment made pursuant to Section 13.4(c)).

 

Participant: as defined in Section 13.2.

 

Patriot Act: the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L.
No. 107-56, 115 Stat. 272 (2001).

 

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Payment Item: each check, draft or other item of payment payable to a Borrower,
including those constituting proceeds of any Collateral.

 

PBA: the Pension Benefits Act (Ontario) or any other Canadian federal or
provincial pension benefits standards legislation under which any Canadian
Pension Plan or Canadian MEPP is registered, as amended.

 

PBGC: the Pension Benefit Guaranty Corporation.

 

Pension Funding Rules: Code and ERISA rules regarding minimum required
contributions (including installment payments) to Pension Plans set forth in,
for plan years ending prior to the Pension Protection Act of 2006 effective
date, Section 412 of the Code and Section 302 of ERISA, both as in effect prior
to such act, and thereafter, Sections 412, 430, 431, 432 and 436 of the Code and
Sections 302, 303, 304 and 305 of ERISA.

 

Pension Plan: any employee pension benefit plan (as defined in Section 3(2) of
ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA
and is sponsored or maintained by any Obligor or ERISA Affiliate or to which the
Obligor or ERISA Affiliate contributes or has an obligation to contribute, or in
the case of a multiple employer or other plan described in Section 4064(a) of
ERISA, has made contributions at any time during the preceding five plan years,
but for greater certainty, excludes a Canadian Pension Plan and a Canadian MEPP.

 

Permitted Acquisition: any Acquisition (i) consented to by the Required Lenders,
(ii) for which total consideration is paid entirely in an amount not greater
than $1,000,000; or (iii) as long as (a) no Event of Default exists or is caused
thereby; (b) the Acquisition is consensual; (c) the assets, business or Person
being acquired is useful or engaged in same or similar the business of Borrowers
and Subsidiaries, is located and organized within the United States or Canada as
applicable (or such other jurisdiction as Agent shall approve in its Permitted
Discretion) and had positive EBITDA for the 12 month period most recently ended;
(d) no Debt or Liens are incurred, assumed or result from the Acquisition,
except Debt permitted under Section 10.2.1(f) or (i); (e) the Person to be
acquired (or its board of directors or equivalent governing body) has not
(i) announced it will oppose such Acquisition or (ii) commenced any action which
alleges that such Acquisition violates, or will violate, any Applicable Law;
(f) upon giving pro forma effect thereto, either (i) Availability (calculated
without giving effect to the assets acquired in the Acquisition unless Agent has
completed its diligence (including a field exam) with respect to such assets) is
at least equal to 20% of the aggregate Revolver Commitments for the 30 days
preceding and as of the Acquisition and the Fixed Charge Coverage Ratio,
determined on a pro forma basis giving effect to the Acquisition, is not less
than 1.00 to 1:00 at any time or (ii) Availability (calculated without giving
effect to the assets acquired in the Acquisition unless agent has completed its
diligence (including a field examination) with respect to such assets) is at
least equal to 25% of the aggregate Revolver Commitments for the 30 days
preceding and as of the date of the Acquisition; (g) in the case of any
Acquisition where the consideration to be paid for such Acquisition equals or
exceeds $2,000,000, the Borrower Agent shall have furnished the Agent with
thirty (30) days’ prior written notice of such intended Acquisition and shall
have furnished the Agent with a current draft of the Acquisition documents (and
final copies thereof as and when executed), a summary of any due diligence
undertaken by the Obligors in connection with such Acquisition, appropriate
financial statements of the Person which is the subject of such Acquisition, pro
forma projected financial statements for the twelve (12) month period following
such Acquisition after giving effect to such Acquisition (including balance
sheets, cash flows and income statements by month for the acquired Person,
individually, and on a consolidated basis with all Obligors), and such other
information as the Agent may reasonably require, all of which shall be
reasonably satisfactory to the Agent; (h) after giving effect to the
Acquisition, if the Acquisition is an Acquisition of the Equity Interests, a
Borrower shall acquire and own, directly or indirectly, a majority of the Equity
Interests in the Person being acquired and shall control a majority of any
voting interests or shall otherwise control the governance of the Person being
acquired or formed; (i) either (1) the legal structure of the Acquisition

 

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shall be acceptable to the Agent in its Permitted Discretion, or (2) the
Borrowers shall have provided the Agent with a favorable solvency opinion from
an unaffiliated third party valuation firm reasonably satisfactory to the Agent;
(j) if the Person which is the subject of such Acquisition will be maintained as
a Subsidiary of a Borrower, or if the assets acquired in an acquisition will be
transferred to a Subsidiary which is to be an Obligor, such Subsidiary shall
have been joined as a “Borrower” hereunder or as a Guarantor, as the Agent shall
determine in its Permitted Discretion, and the Agent shall have received a first
priority security and/or mortgage interest (except for those Permitted Liens
that have priority in such Collateral by operation of law and, subject to the
Intercreditor Agreement, the Term Priority Collateral) in such Subsidiary’s
property of the same nature as constitutes Collateral under the Security
Documents; provided, that in the event such Subsidiary is joined as a “Borrower”
the assets of such Person will only be eligible for inclusion in the Revolver
Borrowing Base and Term Loan Borrowing Base, as the case may be, after a
satisfactory field examination, appraisals and legal diligence is conducted by
Agent in its Permitted Discretion; (k) the purchase price payable in respect of
(i) any single Acquisition or series of related Acquisitions shall not exceed
$2,500,000 in the aggregate and (ii) all Acquisitions (including the proposed
Acquisition) shall not exceed $5,000,000 in the aggregate during the term of
this Agreement.

 

Permitted Asset Disposition: as long as no Event of Default exists and at any
time a Cash Dominion Period exists, all Net Proceeds are remitted to Agent or
Term Loan Agent pursuant to the terms of the Intercreditor Agreement, an Asset
Disposition that is (i) a sale of Inventory in the Ordinary Course of Business;
(ii) a disposition of Equipment that, in the aggregate during any 12 month
period, has a fair market or net book value (whichever is more) of $750,000 or
less; provided, that any such disposition of Equipment is not prohibited by the
Term Loan Agreement; (iii) a disposition of Inventory that is obsolete, surplus,
unmerchantable or otherwise unsalable in the Ordinary Course of Business;
(iv) [reserved]; (v) termination of a lease of real or personal Property that is
not necessary for the Ordinary Course of Business, could not reasonably be
expected to have a Material Adverse Effect and does not result from an Obligor’s
default; (vi) the disposition of accounts receivable in connection with the
collection or compromise thereof; (vii) non-exclusive licenses, sublicenses,
leases or subleases of Intellectual Property granted to others in the Ordinary
Course of Business or not interfering in any material respect with the business
of the Borrower or any Subsidiary; (viii) the sale or disposition of Cash
Equivalents for fair market value in the ordinary course of business; (ix) the
abandonment or other disposition of Intellectual Property, whether now or
hereafter owned or leased or acquired, that is, in the reasonable business
judgment of the Borrower, no longer economically practicable or commercially
desirable to maintain or used or useful in the business of the Borrower and the
Subsidiaries; (x) solely to the extent not otherwise permitted hereunder, sales,
transfers and other dispositions permitted by Section 10.2.9; (xi) sales,
transfers or other dispositions of Investments to the extent not a Restricted
Investment in joint ventures to the extent required by, or made pursuant to
customary buy/sell arrangements between, the parties set forth in joint venture
arrangements and similar binding agreements; or (xii) approved in writing by
Agent and Required Lenders.

 

Permitted Contingent Obligations: Contingent Obligations (a) arising from
endorsements of Payment Items for collection or deposit in the Ordinary Course
of Business; (b) arising from Hedging Agreements permitted hereunder;
(c) existing on the Restatement Date, and any extension or renewal thereof that
does not increase the amount of such Contingent Obligation when extended or
renewed; (d) incurred in the Ordinary Course of Business with respect to surety,
appeal or performance bonds, or other similar obligations; (e) arising from
customary indemnification obligations in favor of purchasers in connection with
dispositions of Equipment permitted hereunder or Acquisitions permitted
hereunder; (f) arising under the Loan Documents; or (g) in an aggregate amount
of $3,000,000 or less at any time.

 

Permitted Discretion:  a determination made by Agent, in good faith, in the
exercise of reasonable business judgment (from the perspective of a secured,
asset-based lender), based upon Agent’s consideration of factors that in the
exercise of such reasonable business judgment Agent believes: (a) could be
expected to materially and adversely affect the quantity, quality, mix or value
of Collateral (including any Applicable Law that may inhibit collection of an
Account), the enforceability or priority of

 

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Agent’s Liens, or the amount that Agent and Lenders could receive in liquidation
of any Collateral; (b) that any collateral report or financial information
delivered by any Obligor is incomplete, inaccurate or misleading in any material
respect; (c) could materially increase the likelihood of any Insolvency
Proceeding involving an Obligor; (d) could increase the credit risk of lending
to Borrowers on the security of the Collateral; or (e) could reasonably be
expected to result in a Default or Event of Default.

 

Permitted Lien: as defined in Section 10.2.2.

 

Permitted Purchase Money Debt: Purchase Money Debt of Borrowers and Subsidiaries
that is unsecured or secured only by a Purchase Money Lien, as long as the
aggregate amount does not exceed $2,500,000 at any time when combined with
Capital Lease obligations permitted under Section 10.2.1(c).

 

Permitted Restricted Payments: (a) Upstream Payments and (b) other Distributions
made by any Obligor or Subsidiary following the third (3rd) anniversary of the
Restatement Date; provided, that (i) at the time such Distribution is made and
after giving effect thereto, no Default or Event of Default shall have occurred
and be continuing, (ii) on a pro forma basis immediately after giving effect to
such Distribution, the financing thereof and the payment of reasonable costs and
expenses related thereto (including, without limitation, the funding of any
Revolver Loans or incurrence of other Debt to finance such Distribution or the
payment of such costs and expenses), either (A) both (1) Availability,
calculated as of the day such Distribution is made and for the period of 30
consecutive days ending on the day such Distribution is made, shall equal or
exceed 25% of the aggregate Revolver Commitments as of such date and (2) the
Fixed Charge Coverage Ratio, determined as if such Distribution has been made,
and all Debt related to such Distribution (including, without limitation, any
Revolver Loans made or other Debt incurred to finance such Distribution) had
been incurred, on the first day of the twelve consecutive month period most
recently ended prior to the date such Distribution is made for which financial
statements have been (or are required to have been) delivered to Agent pursuant
to Section 10.1.2(a) or (b), shall equal or exceed 1.00 to 1.00, or
(B) Availability, calculated as of the day such Distribution is made and for the
period of 30 consecutive days ending on the day such Distribution is made, shall
equal or exceed 30% of the aggregate Revolver Commitments as of such date, and
(iii) Agent shall have received a certificate of a Senior Officer of Borrower
Representative in form and substance reasonably satisfactory to Agent, dated as
of the date of such Distribution, certifying that the conditions set forth in
the foregoing clauses (b)(i) and (b)(ii) have been satisfied.

 

Person: any individual, corporation, limited liability company, unlimited
liability company, partnership, joint venture, association, trust,
unincorporated organization, Governmental Authority or other entity.

 

Plan: any employee benefit plan (as defined in Section 3(3) of ERISA)
established by an Obligor or, with respect to any such plan that is subject to
Section 412 of the Code or Title IV of ERISA, an ERISA Affiliate.

 

Platform: as defined in Section 14.3.3.

 

PPSA:  the Personal Property Security Act (Ontario) and/or the Personal Property
Security Act (New Brunswick), as applicable, and the regulations thereunder;
provided, that, if validity, perfection and effect of perfection and
non-perfection of Agent’s security interest in any Collateral of any Canadian
Guarantor or any other Obligor are governed by the personal property security
laws of any jurisdiction other than Ontario or New Brunswick, PPSA shall mean
those personal property security laws and regulations thereunder (including the
Civil Code of Quebec in the case of the Province of Quebec) in such other
jurisdiction for the purposes of the provisions hereof relating to such
validity, perfection, and effect of perfection and non-perfection and for the
definitions related to such provisions, as from time to time in effect.

 

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Prime Rate: the rate of interest announced by Bank of America from time to time
as its prime rate.  Such rate is set by Bank of America on the basis of various
factors, including its costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above or below such rate.  Any change in such rate publicly
announced by Bank of America shall take effect at the opening of business on the
day specified in the announcement.

 

Proceeds of Crime Act: means the Proceeds of Crime (Money Laundering) and
Terrorist Financing Act (Canada).

 

Properly Contested: with respect to any obligation of an Obligor, (a) the
obligation is subject to a bona fide dispute regarding amount or the Obligor’s
liability to pay; (b) the obligation is being properly contested in good faith
by appropriate proceedings promptly instituted and diligently pursued;
(c) appropriate reserves have been established in accordance with GAAP and
included in the calculation of the Revolver Borrowing Base and properly
reflected in any Revolver Borrowing Base Certificate (including, without
limitation, Priority Payables owing by any Canadian Guarantor); (d) non-payment
could not have a Material Adverse Effect, nor result in forfeiture or sale of
any material assets of the Obligor; (e) no Lien is imposed on assets of the
Obligor, unless (i) bonded and stayed to the satisfaction of Agent or (ii) if
such assets constitute Collateral, the fair market value of such Collateral does
not exceed $2,000,000; and (f) if the obligation results from entry of a
judgment or other order, such judgment or order is stayed pending appeal or
other judicial review.

 

Property: any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible.

 

Protective Advances: as defined in Section 2.1.5(b).

 

Purchase Money Debt: (a) Debt (other than the Obligations) for payment of any of
the purchase price of fixed assets; (b) Debt (other than the Obligations)
incurred within 10 days before or after acquisition of any fixed assets, for the
purpose of financing any of the purchase price thereof; and (c) any renewals,
extensions or refinancings (but not increases) thereof.

 

Purchase Money Lien: a Lien that secures Purchase Money Debt, encumbering only
the fixed assets acquired with such Debt and constituting a Capital Lease or a
purchase money security interest under the UCC or the PPSA.

 

Qualified ECP: an Obligor with total assets exceeding $10,000,000, or that
constitutes an “eligible contract participant” under the Commodity Exchange Act
and can cause another Person to qualify as an “eligible contract participant”
under Section 1a(18)(A)(v)(II) of such act.

 

RCRA: the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).

 

Real Estate: all right, title and interest (whether as owner, lessor or lessee)
in any real Property or any buildings, structures, parking areas or other
improvements thereon.

 

Recipient: Agent, Issuing Bank, any Lender or any other recipient of a payment
to be made by an Obligor under a Loan Document or on account of an Obligation.

 

Refinancing Conditions: the following conditions for Refinancing Debt:  (i) it
is in an aggregate principal amount that does not exceed the principal amount of
the Debt being extended, renewed or refinanced; (ii) it has a final maturity no
sooner than, a weighted average life no less than, and an interest rate no
greater than, the Debt being extended, renewed or refinanced; (iii) it is
subordinated to the Obligations at least to the same extent as the Debt being
extended, renewed or refinanced; (iv) the representations, covenants and
defaults applicable to it are no less favorable to Borrowers than those
applicable to the Debt being extended, renewed or refinanced; (v) no additional
Lien is granted to secure

 

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it; (vi) no additional Person is obligated on such Debt; and (v) upon giving
effect to it, no Default or Event of Default exists.

 

Refinancing Debt: Borrowed Money that is the result of an extension, renewal or
refinancing of Debt permitted under Section 10.2.1(b), (d) or (f).

 

Reimbursement Date: as defined in Section 2.3.2.

 

Rent and Charges Reserve: the aggregate of (a) all past due rent and other
amounts owing by an Obligor to any landlord, warehouseman, processor, repairman,
mechanic, shipper, freight forwarder, broker or other Person who possesses any
Collateral or could assert a Lien on any Collateral; and (b) a reserve at least
equal to three months’ rent and other charges that could be payable to any such
Person, unless it has executed a Lien Waiver.

 

Report: as defined in Section 12.2.3.

 

Reportable Event: any of the events set forth in Section 4043(c) of ERISA, other
than events for which the 30 day notice period has been waived.

 

Reporting Frequency Increase Trigger Amount:  an amount equal to 12.5% of the
lesser of (A) the aggregate Revolver Commitments and (B) the Revolver Borrowing
Base (calculated without giving effect to the Term Loan Push Down Reserve).

 

Required Lenders: Lenders (subject to Section 4.2) having (a) Revolver
Commitments in excess of 662/3% of the aggregate Revolver Commitments; and
(b) if the Revolver Commitments have terminated, Loans in excess of 662/3% of
all outstanding Loans; provided, however, that (i) if at any time there shall be
two or more Lenders, “Required Lenders” shall mean at least two Lenders (subject
to Section 4.2) having Revolver Commitments in excess of 662/3% of the aggregate
Revolver Commitments (or, if the Revolver Commitments have terminated, having
Loans in excess of 662/3% of all outstanding Loans), and (ii) the Revolver
Commitments and Loans of any Defaulting Lender shall be excluded from such
calculation.

 

Reserve Percentage: the reserve percentage (expressed as a decimal, rounded up
to the nearest 1/8th of 1%) applicable to member banks under regulations issued
by the Board of Governors for determining the maximum reserve requirement for
Eurocurrency liabilities.

 

Restatement Date: as defined in Section 6.1.

 

Restricted Investment: any Investment by a Borrower or Subsidiary, other than
(a) Investments in Subsidiaries to the extent existing on the Restatement Date;
(b) Cash Equivalents that are subject to Agent’s Lien and control, pursuant to
documentation in form and substance satisfactory to Agent; (c) loans and
advances permitted under Section 10.2.7; (d) Permitted Acquisitions, (e) subject
to the restrictions on intercompany loans set forth in
Section 10.2.7(d), Investments in Obligors, (f) Investments in joint ventures
not to exceed $1,000,000, and (g) investments in (x) Foreign Subsidiaries (other
than SI Asia) in an aggregate amount not to exceed $500,000 per Fiscal Year and
(y) SI Asia in an aggregate amount not to exceed $2,000,000 per Fiscal Year.

 

Restrictive Agreement: an agreement (other than a Loan Document) that conditions
or restricts the right of any Borrower, Subsidiary or other Obligor to incur or
repay Borrowed Money, to grant Liens on any assets, to declare or make
Distributions, to modify, extend or renew any agreement evidencing Borrowed
Money, or to repay any intercompany Debt.

 

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Revolver Borrowing Base: on any date of determination, an amount equal to the
sum of (a) the Accounts Formula Amount, plus (b) the Inventory Formula Amount,
minus (c) the Term Loan Push Down Reserve, minus (d) the Availability Reserve
established by Agent in its Permitted Discretion; provided, however, that
(i) Eligible In-Transit Inventory shall in no event contribute more than
$7,000,000 (after giving effect to the Inventory Formula Amount) to the Revolver
Borrowing Base at any time and (ii) Eligible Accounts owing to and Eligible
Inventory held by the UK Guarantors shall not contribute more than an aggregate
of $6,000,000 (after giving effect to the Account Formula Amount and Inventory
Formula Amount, respectively) to the Revolver Borrowing Base at any time.  If
any amount in this definition is stated in a currency other than Dollars on any
date, then such amount on such date shall be equal to the Dollar Equivalent of
such amount in such other currency.

 

Revolver Borrowing Base Certificate: a certificate, in form and substance
reasonably satisfactory to Agent, by which Borrowers certify calculation of the
Revolver Borrowing Base.

 

Revolver Commitment: for any Lender, its obligation to make Revolver Loans and
to participate in LC Obligations up to the maximum principal amount shown on
Schedule 1.1(a), as hereafter modified pursuant to an Assignment and Acceptance
to which it is a party.

 

Revolver Commitments: the aggregate Revolver Commitments of all Lenders.

 

Revolver Exposure:  at any time, the sum of (i) the outstanding principal amount
of Revolver Loans at such time plus (ii) the aggregate Stated Amount of LC
Obligations at such time.

 

Revolver Loan: a loan made pursuant to Section 2.1.1(b)(ii), and any Swingline
Loan, Revolver Overadvance Loan or Protective Advance.

 

Revolver Overadvance: as defined in Section 2.1.5(a).

 

Revolver Overadvance Loan: a Base Rate Revolver Loan made when a Revolver
Overadvance exists or is caused by the funding thereof.

 

Revolver Termination Date: the earliest to occur of (a) June 28, 2023; (b) the
date on which Borrowers terminate the Revolver Commitments pursuant to
Section 2.1.4; or (c) the date on which the Revolver Commitments are terminated
pursuant to Section 11.2.

 

Royalties: all royalties, fees, expense reimbursement and other amounts payable
by an Obligor under a License.

 

S&P: Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services
LLC business, and its successors.

 

Sanction: any sanction administered or enforced by the U.S. Government
(including OFAC), the Canadian Government, United Nations Security Council,
European Union, Her Majesty’s Treasury or other sanctions authority

 

Scheduled Unavailability Date: as defined in Section 3.6(b).

 

SDN List: means the list of the Specially Designated Nationals and Blocked
Persons.

 

Secured Bank Product Obligations: Debt, obligations and other liabilities with
respect to Bank Products owing by a Borrower or an Affiliate of a Borrower to a
Secured Bank Product Provider; provided, that Secured Bank Product Obligations
of an Obligor shall not include its Excluded Swap Obligations.

 

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Secured Bank Product Provider: (a) Bank of America or any of its Affiliates; and
(b) any other Lender or Affiliate of a Lender that is providing a Bank Product,
provided such provider delivers written notice to Agent, in form and substance
satisfactory to Agent, within 10 days following the later of the Restatement
Date or creation of the Bank Product, (i) describing the Bank Product and
setting forth the maximum amount to be secured by the Collateral and the
methodology to be used in calculating such amount, and (ii) agreeing to be bound
by Section 12.13.

 

Secured Parties: Agent, Issuing Bank, Lenders and Secured Bank Product
Providers.

 

Security Documents: the Guaranties, IP Assignments, Deposit Account Control
Agreements, the Canadian Security Agreements, the UK Security Agreements and all
other documents, instruments and agreements now or hereafter securing (or given
with the intent to secure) any Obligations.

 

Senior Officer: the chairman of the board, president, chief executive officer or
chief financial officer of a Borrower or, if the context requires, an Obligor.

 

Settlement Report: a report summarizing Revolver Loans and participations in LC
Obligations outstanding as of a given settlement date, allocated to Lenders in
accordance with their Applicable Percentages of the Revolver Commitments.

 

SI Asia: means Summer Infant Asia, Ltd., a Hong Kong Private Limited Company.

 

SI Canada: means Summer Infant Canada, Limited, a corporation formed under the
laws of the Province of New Brunswick.

 

SI UK: means Summer Infant Europe Limited, a private company with limited
liability incorporated in and registered under the laws of England and Wales
with company number 4322137.

 

Solvent: as to any Person, such Person (a) owns Property whose Fair Salable
Value is greater than the amount required to pay all of its debts (including
contingent, subordinated, unmatured and unliquidated liabilities); (b) owns
Property whose present Fair Salable Value is greater than the probable total
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities) of such Person as they become absolute and matured; (c) is able to
pay all of its debts as they mature; (d) has capital that is not unreasonably
small for its business and is sufficient to carry on its business and
transactions and all business and transactions in which it is about to engage;
(e) is not “insolvent” within the meaning of Section 101(32) of the Bankruptcy
Code (for SI UK this subsection (e) shall not be applicable); (f) is not an
“insolvent person” within the meaning of the Bankruptcy and Insolvency Act
(Canada); and (g) has not incurred (by way of assumption or otherwise) any
obligations or liabilities (contingent or otherwise) under any Loan Documents,
or made any conveyance in connection therewith, with actual intent to hinder,
delay or defraud either present or future creditors of such Person or any of its
Affiliates.

 

Specified Obligor: an Obligor that is not then an “eligible contract
participant” under the Commodity Exchange Act (determined prior to giving effect
to Section 5.11).

 

Spot Rate: the exchange rate, as determined by Agent, that is applicable to
conversion of one currency into another currency, which is (a) the exchange rate
reported by Bloomberg (or other commercially available source designated by
Agent) as of the end of the preceding business day in the financial market for
the first currency; or (b) if such report is unavailable for any reason, the
spot rate for the purchase of the first currency with the second currency as in
effect during the preceding business day in Agent’s principal foreign exchange
trading office for the first currency.

 

Stated Amount: the outstanding amount of a Letter of Credit, including any
automatic increase or tolerance (whether or not then in effect) provided by the
Letter of Credit or related LC Documents

 

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Subordinated Debt: Debt incurred by a Borrower that is expressly subordinate and
junior in right of payment to Full Payment of all Obligations, and is on terms
(including maturity, interest, fees, repayment, covenants and subordination)
satisfactory to Agent in its exclusive discretion.

 

Subsidiary: any entity at least 50% of whose voting securities or Equity
Interests is owned by a Borrower or any combination of Borrowers (including
indirect ownership by a Borrower through other entities in which the Borrower
directly or indirectly owns 50% of the voting securities or Equity Interests).

 

Swap Obligations: with respect to an Obligor, its obligations under a Hedging
Agreement that constitutes a “swap” within the meaning of Section 1a(47) of the
Commodity Exchange Act

 

Swingline Loan: any Borrowing of Base Rate Revolver Loans funded with Agent’s
funds, until such Borrowing is settled among Lenders or repaid by Borrowers.

 

Target Companies: collectively, Target Corporation and its Affiliates.

 

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

 

Termination Event:  (a) the whole or partial termination of a Canadian Defined
Benefit Pension Plan; or (b) the filing of a notice of intent to terminate in
whole or in part a Canadian Defined Benefit Pension Plan; or (c) the institution
of proceedings by any Governmental Authority to terminate in whole or in part or
have a trustee appointed to administer a Canadian Defined Benefit Pension Plan;
or (d) any other event or condition provided for in, or prescribed pursuant to,
the PBA that would entitle any Governmental Authority to require the termination
or winding up or partial termination or winding up of any Canadian Defined
Benefit Pension Plan.

 

Term Debt:  Debt of the Borrowers in an aggregate principal amount not in excess
of $17,500,000 incurred on or after the Restatement Date pursuant to the Term
Debt Documents (and any Refinancing Debt replacing or refinancing such Debt);
provided that (a) the stated maturity date of any such Refinancing Debt shall
not be earlier than the Revolver Termination Date, (b) the amortization of such
Refinancing Debt is not more frequent, and does not result in higher annual
payments, than the amortization of the refinanced Debt, (c) any Liens securing
such Refinancing Debt shall be subject to the terms of the Intercreditor
Agreement, (d) such Refinancing Debt shall not be secured by any assets not
constituting Collateral, (e) such Refinancing Debt shall not be guaranteed by
any Person that does not provide a Guaranty and (f) the holders of such
Refinancing Debt shall have entered into an intercreditor agreement
substantially similar to the Intercreditor Agreement.

 

Term Debt Documents:  collectively, the Term Loan Agreement and all other
agreements, instruments, documents and certificates executed and delivered to,
or in favor of, the Term Loan Agent and including, without limitation, all other
agreements whether heretofore, now or hereafter executed by or on behalf of any
Obligor, or any employee of any Obligor, and delivered to the Term Loan Agent
pursuant to the Term Loan Agreement.  Any reference to the Term Loan Agreement
or any other Term Debt Document shall include all appendices, exhibits and
schedules thereto, and all amendments, restatements, replacements, refinancings,
supplements or other modifications thereto to the extent permitted hereby.

 

Term Debt Repayments:  (a) regularly scheduled payments of principal and
interest in respect of the Term Debt in the amounts and on the dates set forth
in the Term Loan Agreement, (b) mandatory prepayments of Term Debt to the extent
required under the Term Loan Agreement (including the payment of any accrued
interest, premium, penalty or other fee in connection with such payment or
prepayment),

 

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and (c) voluntary prepayments in respect of the Term Debt (including the payment
of any accrued interest, premium, penalty or other fee in connection with such
payment or prepayment, collectively with any such payment or prepayment, a
“Voluntary Term Debt Prepayment”), provided, that, (i) at the time such
Voluntary Term Debt Prepayment is made and after giving effect thereto, no
Default or Event of Default shall have occurred and be continuing, (ii) on a pro
forma basis immediately after giving effect to such Voluntary Term Debt
Prepayment, the financing thereof and the payment of reasonable costs and
expenses related thereto (including, without limitation, the funding of any
Revolver Loans or incurrence of other Debt to finance such Voluntary Term Debt
Prepayment or the payment of such costs and expenses), either (A) both
(1) Availability, calculated as of the day such Voluntary Term Debt Prepayment
is made and for the period of 30 consecutive days ending on the day such
Voluntary Term Debt Prepayment is made, shall equal or exceed 25% of the
aggregate Revolver Commitments as of such date and (2) the Fixed Charge Coverage
Ratio, determined as if such Voluntary Term Debt Prepayment has been made, and
all Debt related to such Voluntary Term Debt Prepayment (including, without
limitation, any Revolver Loans made or other Debt incurred to finance such
Voluntary Term Debt Prepayment) had been incurred, on the first day of the
twelve consecutive month period most recently ended prior to the date such
Voluntary Term Debt Prepayment is made for which financial statements have been
(or are required to have been) delivered to Agent pursuant to
Section 10.1.2(a) or (b), shall equal or exceed 1.00 to 1.00, or
(B) Availability, calculated as of the day such Voluntary Term Debt Prepayment
is made and for the period of 30 consecutive days ending on the day such
Voluntary Term Debt Prepayment is made, shall equal or exceed 30% of the
aggregate Revolver Commitments as of such date, and (iii) Agent shall have
received a certificate of a Senior Officer of Borrower Representative in form
and substance satisfactory to Agent, dated as of the date of such Voluntary Term
Debt Prepayment, certifying that the conditions set forth in the foregoing
clauses (b)(i) and (b)(ii) have been satisfied.

 

Term Loan Agent:  Pathlight Capital LLC, as administrative agent for the lenders
party to the Term Loan Agreement, together with its successors and assigns.

 

Term Loan Agreement:  that certain Term Loan and Security Agreement dated as of
the Restatement Date by and among the Borrowers, the guarantors named therein
and from time to time party thereto, the lenders named therein and from time to
time party thereto and the Term Loan Agent, as the same may be amended,
restated, replaced, refinanced, refunded, supplemented or otherwise modified
from time to time in accordance with the terms of the Intercreditor Agreement.

 

Term Loan Borrowing Base: the “Term Loan Borrowing Base” as such term is defined
in the Term Loan Agreement or any equivalent term used to describe the
obligations arising thereunder and in connection therewith.

 

Term Loan Borrowing Base Certificate:  a certificate, in form and substance
satisfactory to Agent, by which Borrowers certify the calculation of the Term
Loan Borrowing Base.

 

Term Loan Push Down Reserve: a reserve against the Revolver Borrowing Base in an
amount equal to the amount by which, if any, (a) the aggregate outstanding
principal amount of the Term Debt exceeds (b) the Term Loan Borrowing Base.  For
purposes of the Term Loan Push Down Reserve, Agent will be entitled to rely
solely on the calculation made by Borrowers unless the Agent is notified by Term
Loan Agent that such calculation is inaccurate.  In such event, the Agent shall
be entitled to rely solely on the calculation of the Term Loan Push Down Reserve
by the Term Loan Agent.

 

Term Loans: the “Term Loans” under and as defined in the Term Loan Agreement.

 

Term Priority Collateral:  has the meaning assigned to such term in the
Intercreditor Agreement.

 

Transferee: any actual or potential Eligible Assignee, Participant or other
Person acquiring an interest in any Obligations.

 

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Type: any type of a Loan (i.e., Base Rate Loan or LIBOR Loan) that has the same
interest option and, in the case of LIBOR Loans, the same Interest Period.

 

UCC: the Uniform Commercial Code as in effect in the State of New York or, when
the laws of any other jurisdiction govern the perfection or enforcement of any
Lien, the Uniform Commercial Code of such jurisdiction.

 

UK Anti-Terrorism Laws: the Criminal Justice (Terrorism and Conspiracy) Act
1998, the Terrorism Act 2000, the Anti-Terrorism, Crime and Security Act 2001,
the Prevention of Terrorism Act 2005, the Terrorism Act 2006, the Money
Laundering Regulations 2007 and the Counter-Terrorism Act 2008.

 

UK Guarantor: collectively, SI UK and each other UK Subsidiary that guarantees
payment or performance of the Obligations.  The definition of “UK Guarantors”
means all of such entities collectively.

 

UK Guaranty: that certain Guarantee dated as of April 21, 2015 made by the UK
Guarantor, as may be amended, restated or otherwise modified from time to time.

 

UK Pension Scheme:  any pension, retirement benefits or employee benefit scheme
established by any UK Guarantor.

 

UK Priority Payables Reserve:  means (a) the prescribed part of the UK
Guarantors’ net property that would be made available for the satisfaction of
its unsecured debts pursuant to section 176A of the Insolvency Act 1986 together
with the UK Guarantors’ liabilities which constitute preferential debts pursuant
to section 386 of the Insolvency Act 1986 and any sums payable as administration
or liquidation expenses pursuant to rules 2.67(1) and 4.218(1) of the Insolvency
Rules 1986 plus (b) third party claims against the assets of the UK Guarantors
ranking or which may rank equal or prior to the claims of Agent (including by
way of retention of title); provided that such amounts shall be adjusted from
time to time hereafter upon delivery to the Agent of an acceptable waiver.

 

UK Security Agreements:  (a) the Debenture dated as of April 21, 2015 executed
by the UK Guarantors in favor of Agent, as the same may be amended, restated or
supplemented from time to time, and (b) any other UK security agreement required
to be executed by any Obligor in favor of Agent on, around or after April 21,
2015, in each case, as the same may be amended, restated or supplemented from
time to time.

 

UK Subsidiaries: any Subsidiary of Company that is organized under the laws of
England and Wales.

 

UK ST Law: the Law of Property Act 1925.

 

Unfunded Pension Liability: the excess of a Pension Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Pension
Plan’s assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to the Code, ERISA or the Pension Protection Act of
2006 for the applicable plan year; (specifically excluding SI UK from this
definition).

 

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

 

U.S. Tax Compliance Certificate: as defined in Section 5.10.2(b)(iii).

 

Upstream Payment: a Distribution by a Subsidiary of a Borrower to such Borrower.

 

Value: (a) for Inventory, its value determined on the basis of the lower of cost
or market,

 

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calculated on a first-in, first-out basis, and excluding any portion of cost
attributable to intercompany profit among Obligors and their Affiliates; and
(b) for an Account, its face amount, net of any returns, rebates, discounts
(calculated on the shortest terms), credits, allowances or Taxes (including
sales, excise or other taxes) that have been or could be claimed by the Account
Debtor or any other Person.

 

Wal-Mart Companies: collectively, Wal-Mart Stores, Inc. and its Affiliates.

 

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

 

1.2.                            Accounting Terms.  Under the Loan Documents
(except as otherwise specified herein), all accounting terms shall be
interpreted, all accounting determinations shall be made, and all financial
statements shall be prepared, in accordance with GAAP applied on a basis
consistent with the most recent audited financial statements of Borrowers
delivered to Agent before the Restatement Date and using the same inventory
valuation method as used in such financial statements, except for any change
required or permitted by GAAP if Borrowers’ certified public accountants concur
in such change, the change is disclosed to Agent, and Section 10.3 is amended in
a manner satisfactory to Required Lenders to take into account the effects of
the change.

 

1.3.                            Uniform Commercial Code and PPSA.  As used
herein, the following terms are defined in accordance with the UCC in effect in
the State of New York from time to time (or, with respect to any such property
of Canadian Guarantor to which the PPSA is applicable, in accordance with the
PPSA in effect in the Province of Ontario from time to time if defined therein
or, if applicable, with respect to any such property of the UK Guarantor to
which the UK Security Agreements are applicable, in accordance with the UK
Security Agreements):  “Chattel Paper,” “Commercial Tort Claim,” “Commodities
Accounts,” “Commodities Contracts,” “Electronic Chattel Paper,” “Equipment,”
“Financial Assets,” “Fixtures,” “General Intangibles,” “Goods,” “Instruments,”
“Intangibles,” “Investment Property,” “Letter-of-Credit Right,” “Payment
Intangibles,” “Proceeds,” “Promissory Notes,” “Records,” “Securities Accounts,”
“Security,” “Security Entitlements,” “Supporting Obligations,” and “Tangible
Chattel Paper.”

 

1.4.                            Certain Matters of Construction.  The terms
“herein,” “hereof,” “hereunder” and other words of similar import refer to this
Agreement as a whole and not to any particular section, paragraph or
subdivision.  Any pronoun used shall be deemed to cover all genders.  In the
computation of periods of time from a specified date to a later specified date,
“from” means “from and including,” and “to” and “until” each mean “to but
excluding.”  The terms “including” and “include” shall mean “including, without
limitation” and, for purposes of each Loan Document, the parties agree that the
rule of ejusdem generis shall not be applicable to limit any provision. 
Section titles appear as a matter of convenience only and shall not affect the
interpretation of any Loan Document.  All references to (a) laws or statutes
include all related rules, regulations, interpretations, amendments and
successor provisions; (b) any document, instrument or agreement include any
amendments, waivers and other modifications, extensions or renewals (to the
extent permitted by the Loan Documents); (c) any section mean, unless the
context otherwise requires, a section of this Agreement; (d) any exhibits or
schedules mean, unless the context otherwise requires, exhibits and schedules
attached hereto, which are hereby incorporated by reference; (e) any Person
include successors and assigns; (f) time of day mean time of day at Agent’s
notice address under Section 14.3.1; or (g) discretion of Agent, Issuing Bank or
any Lender mean the sole and absolute discretion of such Person.  All
determinations (including calculations of the Revolver Borrowing Base, Term Loan
Borrowing Base and financial covenants) made from time to time under the Loan
Documents

 

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shall be made in light of the circumstances existing at such time.  Revolver
Borrowing Base and Term Loan Borrowing Base calculations shall be consistent
with historical methods of valuation and calculation, and otherwise satisfactory
to Agent (and not necessarily calculated in accordance with GAAP).  Borrowers
shall have the burden of establishing any alleged negligence, misconduct or lack
of good faith by Agent, Issuing Bank or any Lender under any Loan Documents.  No
provision of any Loan Documents shall be construed against any party by reason
of such party having, or being deemed to have, drafted the provision.  A
reference to Borrowers’ “knowledge” or similar concept means actual knowledge of
a Senior Officer, or knowledge that a Senior Officer would have obtained if he
or she had engaged in good faith and diligent performance of his or her duties,
including reasonably specific inquiries of employees or agents and a good faith
attempt to ascertain the matter.  To the extent the definition of any category
or type of collateral is expanded by any amendment, modification or revision to
the Uniform Commercial Code or the PPSA, such expanded definition will apply
automatically as of the date of such amendment, modification or revision.

 

Notwithstanding the foregoing, and where the context so requires, (i) any term
defined in this Agreement by reference to the “Uniform Commercial Code” shall
also have any extended, alternative or analogous meaning given to such term in
applicable Canadian personal property security and other laws (including,
without limitation, the Personal Property Security Act of Ontario and New
Brunswick, the Bills of Exchange Act (Canada) and the Depository Bills and Notes
Act (Canada)), in all cases for the extension, preservation or betterment of the
security and rights of the Collateral, (ii) all references in this Agreement to
“Article 7”, “Article 8” or “Article 9” shall be deemed to refer also to
applicable Canadian securities transfer laws, (iii) all references in this
Agreement to a financing statement, continuation statement, amendment or
termination statement shall be deemed to refer also to the analogous documents
used under applicable Canadian personal property security laws, including,
without limitation, where applicable, financing change statements, (iv) all
references to the United States, or to any subdivision, department, agency or
instrumentality thereof shall be deemed to refer also to Canada, or to any
subdivision, department, agency or instrumentality thereof, and (v) all
references to federal or state securities law of the United States shall be
deemed to refer also to analogous federal and provincial securities laws in
Canada.

 

1.5.                            Currency Equivalents.

 

1.5.1.                  Calculations.  All references in the Loan Documents to
Loans, Letters of Credit, Obligations, Revolver Borrowing Base components, Term
Loan Borrowing Base components and other amounts shall be denominated in
Dollars, unless expressly provided otherwise.  The “Dollar Equivalent” of any
amounts denominated or reported under a Loan Document in a currency other than
Dollars shall be determined by Agent on a daily basis, based on the current Spot
Rate.  Borrowers shall report Value and other Revolver Borrowing Base and Term
Loan Borrowing Base components to Agent in the currency invoiced by Borrowers or
shown in Borrowers’ financial records, and unless expressly provided otherwise,
shall deliver financial statements and calculate financial covenants in
Dollars.  Notwithstanding anything herein to the contrary, if any Obligation is
funded and expressly denominated in a currency other than Dollars, Borrowers
shall repay such Obligation in such other currency.

 

1.5.2.                  Judgments.  If, for purposes of obtaining judgment in
any court, it is necessary to convert a sum from the currency provided under a
Loan Document (“Agreement Currency”) into another currency, the Spot Rate shall
be used as the rate of exchange.  Notwithstanding any judgment in a currency
(“Judgment Currency”) other than the Agreement Currency, a Borrower shall
discharge its obligation in respect of any sum due under a Loan Document only
if, on the Business Day following receipt by Agent of payment in the Judgment
Currency, Agent can use the amount paid to purchase the sum originally due in
the Agreement Currency.  If the purchased amount is less than the sum originally
due, such Borrower agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify Agent and Lenders against such loss.  If the purchased
amount is greater than the sum originally due, Agent shall return the excess
amount to such Borrower (or to the Person legally entitled thereto).

 

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SECTION 2.                                           CREDIT FACILITIES

 

2.1.                            Revolver Commitments.

 

2.1.1.                  Loans Outstanding Under Existing Credit Agreement;
Revolver Loans.

 

(a)                                 A portion of the Loans made and outstanding
under (and as defined in) the Existing Credit Agreement as of the Restatement
Date equal to the lesser of (x) the aggregate Revolver Commitments and (y) the
Revolver Borrowing Base, shall remain outstanding on the Restatement Date and
shall be automatically, and without any action on the part of any Person, deemed
to be converted into and constitute “Revolver Loans” hereunder and the Lenders
shall automatically, and without the requirement for additional documentation on
the Restatement Date, acquire such “Revolver Loans” in accordance with their
Applicable Percentages of the aggregate Revolver Commitments.

 

(b)                                 Each Lender agrees severally, up to its
Revolver Commitment and on the terms set forth herein, to make Revolver Loans to
Borrowers from time to time from the Restatement Date to but not including the
Revolver Termination Date.  Revolver Loans may be repaid and reborrowed as
provided herein.  In no event shall Lenders have any obligation to honor a
request for a Revolver Loan if (x) the sum of (A) the Revolver Exposure plus
(B) the requested Revolver Loan would exceed (y) the lesser of (A) the Revolver
Borrowing Base and (B) the aggregate Revolver Commitments at such time.

 

2.1.2.                  Revolver Notes.  The Revolver Loans made by each Lender
and interest accruing thereon shall be evidenced by the records of Agent and
such Lender.  At the request of any Lender, Borrowers shall deliver to such
Lender a promissory note evidencing such Lender’s Revolver Loans.

 

2.1.3.                  Use of Proceeds.  The proceeds of the Revolver Loans
shall be used by Borrowers solely (a) to satisfy existing Debt; (b) to pay fees
and transaction expenses associated with the closing of this credit facility;
(c) to pay Obligations in accordance with this Agreement; and (d) for lawful
corporate purposes of Borrowers, including working capital.  Borrowers shall
not, directly or indirectly, use any Letter of Credit or Loan proceeds, nor use,
lend, contribute or otherwise make available any Letter of Credit or Loan
proceeds to any Subsidiary, joint venture partner or other Person, (i) to fund
any activities of or business with any Person, or in any Designated
Jurisdiction, that, at the time of issuance of the Letter of Credit or funding
of the Loan, is the subject of any Sanction; or (ii) in any manner that would
result in a violation of a Sanction by any Person (including any Secured Party
or other individual or entity participating in a transaction).

 

2.1.4.                  Termination and Reduction of Revolver Commitments.

 

(a)                                 The Revolver Commitments shall terminate on
the Revolver Termination Date, unless sooner terminated in accordance with this
Agreement.  Upon at least 5 Business Days prior written notice to Agent at any
time after the first Loan Year, Borrowers may, at their option, terminate the
Revolver Commitments and this credit facility.  Any notice of termination given
by Borrowers shall be irrevocable; provided, that a notice of termination of the
credit facilities (including a termination of the Revolver Commitments)
delivered by Borrowers may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by Borrowers (by notice to Agent on or prior to the specified effective
date of such termination) if such condition is not satisfied.  On the
termination date, Borrowers shall make Full Payment of all Obligations.

 

(b)                                 Borrowers may permanently reduce the
aggregate Revolver Commitments, in accordance with each Lender’s Applicable
Percentage of the Revolver Commitments, upon at least 5 Business Days prior
written notice to Agent, which notice shall specify the amount of the reduction
and shall be irrevocable once given.  Each reduction shall be in a minimum
amount of $5,000,000, or an increment of $1,000,000 in excess thereof.

 

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2.1.5.                  Revolver Overadvances; Protective Advances.

 

(a)                                 If the aggregate Revolver Loans exceed the
Revolver Borrowing Base (a “Revolver Overadvance”) at any time, the excess
amount shall be payable by Borrowers on demand by Agent, but all such Revolver
Loans shall nevertheless constitute Obligations secured by the Collateral and
entitled to all benefits of the Loan Documents.

 

(b)                                 Agent shall be authorized, in its
discretion, notwithstanding that (i) a Revolver Overadvance exists or thereby
would be created, (ii) a Default or Event of Default has occurred and is
continuing, and/or (iii) any conditions in Section 6 are not satisfied, to
knowingly and intentionally, continue to make Base Rate Revolver Loans if Agent,
in its Permitted Discretion, deems such Base Rate Revolver Loans necessary or
desirable (x) to preserve or protect Collateral, (y) to enhance the
collectability or repayment of the Obligations, or (z) to pay costs, fees and
expenses then owing to Agent or any other amount (other than principal)
chargeable to Borrowers in respect of the Obligations (such Loans, “Protective
Advances”), so long as (A) after giving effect to such Protective Advances, the
Revolver Exposure does not exceed the Revolver Borrowing Base by more than ten
percent (10%), and (B) after giving effect to such Protective Advances, the
Revolver Exposure does not exceed the aggregate Revolver Commitments.  Each
Lender shall participate in each Protective Advance in accordance with such
Lender’s Applicable Percentage of the Revolver Commitments.  Required Lenders
may at any time revoke Agent’s authority to make further Protective Advances
under this clause (b) by written notice to Agent.  Absent such revocation,
Agent’s determination that funding of a Protective Advance is appropriate shall
be conclusive.

 

2.2.                            [Reserved.].

 

2.3.                            Letter of Credit Facility.

 

2.3.1.                  Issuance of Letters of Credit.  Issuing Bank shall issue
Letters of Credit from time to time until 30 days prior to the Revolver
Termination Date (or until the Revolver Termination Date, if earlier), on the
terms set forth herein, including the following:

 

(a)                                 Each Borrower acknowledges that Issuing
Bank’s issuance of any Letter of Credit is conditioned upon Issuing Bank’s
receipt of a LC Application with respect to the requested Letter of Credit, as
well as such other instruments and agreements as Issuing Bank may customarily
require for issuance of a letter of credit of similar type and amount.  Issuing
Bank shall have no obligation to issue any Letter of Credit unless (i) Issuing
Bank receives a LC Request and LC Application at least three Business Days prior
to the requested date of issuance; (ii) each LC Condition is satisfied; and
(iii) if a Defaulting Lender exists, such Lender or Borrowers have entered into
arrangements satisfactory to Agent and Issuing Bank to eliminate any Fronting
Exposure associated with such Lender.  If, in sufficient time to act, Issuing
Bank receives written notice from Required Lenders that a LC Condition has not
been satisfied, Issuing Bank shall not issue the requested Letter of Credit. 
Prior to receipt of any such notice, Issuing Bank shall not be deemed to have
knowledge of any failure of LC Conditions.

 

(b)                                 Letters of Credit may be requested by
Borrower Agent, on behalf of an Obligor, to support obligations incurred in the
Ordinary Course of Business, or as otherwise approved by Agent.  The renewal or
extension of any Letter of Credit shall be treated as the issuance of a new
Letter of Credit, except that delivery of a new LC Application shall be required
at the discretion of Issuing Bank.

 

(c)                                  Obligors assume all risks of the acts,
omissions or misuses of any Letter of Credit by the beneficiary.  In connection
with issuance of any Letter of Credit, none of Agent, Issuing Bank or any Lender
shall be responsible for the existence, character, quality, quantity, condition,
packing, value or delivery of any goods purported to be represented by any
Documents; any differences or variation in the character, quality, quantity,
condition, packing, value or delivery of any goods from that expressed in any
Documents; the form, validity, sufficiency, accuracy, genuineness or legal
effect of any Documents or of any endorsements thereon; the time, place, manner
or order in which shipment of goods is made; partial

 

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or incomplete shipment of, or failure to ship, any goods referred to in a Letter
of Credit or Documents; any deviation from instructions, delay, default or fraud
by any shipper or other Person in connection with any goods, shipment or
delivery; any breach of contract between a shipper or vendor and a Borrower;
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex, telecopy, e-mail, telephone or
otherwise; errors in interpretation of technical terms; the misapplication by a
beneficiary of any Letter of Credit or the proceeds thereof; or any consequences
arising from causes beyond the control of Issuing Bank, Agent or any Lender,
including any act or omission of a Governmental Authority.  The rights and
remedies of Issuing Bank under the Loan Documents shall be cumulative.  Issuing
Bank shall be fully subrogated to the rights and remedies of each beneficiary
whose claims against Borrowers are discharged with proceeds of any Letter of
Credit.

 

(d)                                 In connection with its administration of and
enforcement of rights or remedies under any Letters of Credit or LC
Documents, Issuing Bank shall be entitled to act, and shall be fully protected
in acting, upon any certification, documentation or communication in whatever
form believed by Issuing Bank, in good faith, to be genuine and correct and to
have been signed, sent or made by a proper Person.  Issuing Bank may consult
with and employ legal counsel, accountants and other experts to advise it
concerning its obligations, rights and remedies, and shall be entitled to act
upon, and shall be fully protected in any action taken in good faith reliance
upon, any advice given by such experts.  Issuing Bank may employ agents and
attorneys-in-fact in connection with any matter relating to Letters of Credit or
LC Documents, and shall not be liable for the negligence or misconduct of agents
and attorneys-in-fact selected with reasonable care.

 

2.3.2.                  Reimbursement; Participations.

 

(a)                                 If Issuing Bank honors any request for
payment under a Letter of Credit, Borrowers shall pay to Issuing Bank, on the
same day (“Reimbursement Date”), the amount paid by Issuing Bank under such
Letter of Credit, together with interest at the interest rate for Base Rate
Revolver Loans from the Reimbursement Date until payment by Borrowers.  The
obligation of Borrowers to reimburse Issuing Bank for any payment made under a
Letter of Credit shall be absolute, unconditional, irrevocable, and joint and
several, and shall be paid without regard to any lack of validity or
enforceability of any Letter of Credit or the existence of any claim, setoff,
defense or other right that Borrowers may have at any time against the
beneficiary.  Whether or not Borrower Agent submits a Notice of Borrowing,
Borrowers shall be deemed to have requested a Borrowing of Base Rate Revolver
Loans in an amount necessary to pay all amounts due Issuing Bank on any
Reimbursement Date and each Lender agrees to fund its Applicable Percentage of
such Borrowing whether or not the Revolver Commitments have terminated, a
Revolver Overadvance exists or is created thereby, or the conditions in
Section 6 are satisfied.

 

(b)                                 Upon issuance of a Letter of Credit, each
Lender shall be deemed to have irrevocably and unconditionally purchased from
Issuing Bank, without recourse or warranty, an undivided interest and
participation in all LC Obligations relating to the Letter of Credit, in
accordance with such Lender’s Applicable Percentage.  If Issuing Bank makes any
payment under a Letter of Credit and Borrowers do not reimburse such payment on
the Reimbursement Date, Agent shall promptly notify Lenders and each Lender
shall promptly (within one Business Day) and unconditionally pay to Agent, for
the benefit of Issuing Bank, the Lender’s pro rata share of such payment.  Upon
request by a Lender, Issuing Bank shall furnish copies of any Letters of Credit
and LC Documents in its possession at such time.

 

(c)                                  The obligation of each Lender to make
payments to Agent for the account of Issuing Bank in connection with Issuing
Bank’s payment under a Letter of Credit shall be absolute, unconditional and
irrevocable, not subject to any counterclaim, setoff, qualification or exception
whatsoever, and shall be made in accordance with this Agreement under all
circumstances, irrespective of any lack of validity or unenforceability of any
Loan Documents; any draft, certificate or other document

 

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presented under a Letter of Credit having been determined to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; or the existence of any setoff or
defense that any Obligor may have with respect to any Obligations.  Issuing Bank
does not assume any responsibility for any failure or delay in performance or
any breach by any Borrower or other Person of any obligations under any LC
Documents.  Issuing Bank does not make to Lenders any express or implied
warranty, representation or guaranty with respect to the Collateral, LC
Documents or any Obligor.  Issuing Bank shall not be responsible to any Lender
for any recitals, statements, information, representations or warranties
contained in, or for the execution, validity, genuineness, effectiveness or
enforceability of any LC Documents; the validity, genuineness, enforceability,
collectibility, value or sufficiency of any Collateral or the perfection of any
Lien therein; or the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of any Obligor.

 

(d)                                 No Issuing Bank Indemnitee shall be liable
to any Lender or other Person for any action taken or omitted to be taken in
connection with any Letter of Credit or LC Document except as a result of its
gross negligence or willful misconduct.  Issuing Bank may refrain from taking
any action with respect to a Letter of Credit until it receives written
instructions from Required Lenders.

 

2.3.3.                  Cash Collateral.  If any LC Obligations, whether or not
then due or payable, shall for any reason be outstanding at any time (a) that an
Event of Default exists, (b) that Availability is less than zero, or (c) within
10 Business Days prior to the Revolver Termination Date, then Borrowers shall,
at Issuing Bank’s or Agent’s request, Cash Collateralize the stated amount of
all outstanding Letters of Credit and pay to Issuing Bank the amount of all
other LC Obligations.  Borrowers shall, on demand by Issuing Bank or Agent from
time to time, Cash Collateralize the Fronting Exposure of any Defaulting
Lender.  If Borrowers fail to provide any Cash Collateral as required hereunder,
Lenders may (and shall upon direction of Agent) advance, as Revolver Loans, the
amount of the Cash Collateral required (whether or not the Revolver Commitments
have terminated, a Revolver Overadvance exists or the conditions in Section 6
are satisfied).

 

2.3.4.                  Resignation of Issuing Bank.  Issuing Bank may resign at
any time upon notice to Agent and Borrowers.  On and after the effective date of
such resignation, Issuing Bank shall have no obligation to issue, amend, renew,
extend or otherwise modify any Letter of Credit, but shall continue to have all
rights and other obligations of an Issuing Bank hereunder relating to any Letter
of Credit issued by it prior to such date.  Agent shall promptly appoint a
replacement Issuing Bank, which, as long as no Default or Event of Default
exists, shall be reasonably acceptable to Borrowers.

 

SECTION 3.                                           INTEREST, FEES AND CHARGES

 

3.1.                            Interest.

 

3.1.1.                  Rates and Payment of Interest.

 

(a)                                 The Obligations shall bear interest (i) if a
Base Rate Loan, at the Base Rate in effect from time to time, plus the
Applicable Margin; (ii) if a LIBOR Loan, at LIBOR for the applicable Interest
Period, plus the Applicable Margin; and (iii) if any other Obligation
(including, to the extent permitted by law, interest not paid when due), at the
Base Rate in effect from time to time, plus the Applicable Margin for Base Rate
Revolver Loans.

 

(b)                                 During an Insolvency Proceeding with respect
to any Obligor, or during any other Event of Default if Agent or Required
Lenders in their discretion so elect, Obligations shall bear interest at the
Default Rate (whether before or after any judgment).  Each Obligor acknowledges
that the cost and expense to Agent and Lenders due to an Event of Default are
difficult to ascertain and that the Default Rate is fair and reasonable
compensation for this.

 

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(c)                                  Interest shall accrue from the date a Loan
is advanced or Obligation is incurred or payable, until paid in full by
Borrowers.  If a Loan is repaid on the same day made, one day’s interest shall
accrue.  Interest accrued on the Loans shall be due and payable in arrears,
(i) on the first day of each month; (ii) on any date of prepayment, with respect
to the principal amount of Loans being prepaid; and (iii) on the Revolver
Termination Date.  Interest accrued on any other Obligations shall be due and
payable as provided in the Loan Documents and, if no payment date is specified,
shall be due and payable on demand.  Notwithstanding the foregoing, interest
accrued at the Default Rate shall be due and payable on demand.

 

3.1.2.                  Application of LIBOR to Outstanding Loans.

 

(a)                                 Borrowers may on any Business Day, subject
to delivery of a Notice of Conversion/Continuation, elect to convert any portion
of the Base Rate Loans to, or to continue any LIBOR Loan at the end of its
Interest Period as, a LIBOR Loan.  During any Default or Event of Default, Agent
may (and shall at the direction of Required Lenders) declare that no Loan may be
made, converted or continued as a LIBOR Loan.

 

(b)                                 Whenever Borrowers desire to convert or
continue Loans as LIBOR Loans, Borrower Agent shall give Agent a Notice of
Conversion/Continuation, no later than 11:00 a.m. at least three Business Days
before the requested conversion or continuation date.  Promptly after receiving
any such notice, Agent shall notify each Lender thereof.  Each Notice of
Conversion/Continuation shall be irrevocable, and shall specify the amount of
Loans to be converted or continued, the conversion or continuation date (which
shall be a Business Day), and the duration of the Interest Period (which shall
be deemed to be 30 days if not specified).  If, upon the expiration of any
Interest Period in respect of any LIBOR Loans, Borrowers shall have failed to
deliver a Notice of Conversion/Continuation, they shall be deemed to have
elected to convert such Loans into Base Rate Loans.  Agent does not warrant or
accept responsibility for, nor shall it have any liability with respect to,
administration, submission or any other matter related to any rate described in
the definition of LIBOR.

 

3.1.3.                  Interest Periods.  In connection with the making,
conversion or continuation of any LIBOR Loans, Borrowers shall select an
interest period (“Interest Period”) to apply, which interest period shall be 30,
60 or 90 days; provided, however, that:

 

(a)                                 the Interest Period shall begin on the date
the Loan is made or continued as, or converted into, a LIBOR Loan, and shall
expire on the numerically corresponding day in the calendar month at its end;

 

(b)                                 if any Interest Period begins on a day for
which there is no corresponding day in the calendar month at its end or if such
corresponding day falls after the last Business Day of such month, then the
Interest Period shall expire on the last Business Day of such month; and if any
Interest Period would otherwise expire on a day that is not a Business Day, the
period shall expire on the next Business Day; and

 

(c)                                  no Interest Period shall extend beyond the
Revolver Termination Date.

 

3.1.4.                  Interest Rate Not Ascertainable.  If Agent shall
determine that on any date for determining LIBOR, due to any circumstance
affecting the London interbank market, adequate and fair means do not exist for
ascertaining such rate on the basis provided herein, then Agent shall
immediately notify Borrowers of such determination.  Until Agent notifies
Borrowers that such circumstance no longer

 

exists, the obligation of Lenders to make LIBOR Loans shall be suspended, and no
further Loans may be converted into or continued as LIBOR Loans.

 

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3.2.                            Fees.

 

3.2.1.                  Unused Line Fee.  Borrowers shall pay to Agent, for the
pro rata benefit of Lenders (based upon each Lender’s Applicable Percentage of
the aggregate Revolver Commitments), a fee equal to the Applicable Unused Line
Fee Rate times the amount by which the aggregate Revolver Commitments exceed the
average daily balance of Revolver Loans and stated amount of Letters of Credit
during any month.  Such fee shall be payable in arrears, on the first day of
each month and on the Revolver Termination Date.

 

3.2.2.                  LC Facility Fees.  Obligors shall pay (a) to Agent, for
the pro rata benefit of Lenders (based upon each Lender’s Applicable Percentage
of the aggregate Revolver Commitments), a fee equal to the Applicable Margin in
effect for LIBOR Revolver Loans times the average daily Stated Amount of Letters
of Credit, which fee shall be payable monthly in arrears, on the first day of
each month; (b) to Agent, for its own account, a fronting fee as set forth in
the Fee Letter on the Stated Amount of each Letter of Credit, which fee shall be
payable monthly in arrears, on the first day of each month; and (c) to Issuing
Bank, for its own account, all customary charges associated with the issuance,
amending, negotiating, payment, processing, transfer and administration of
Letters of Credit, which charges shall be paid as and when incurred.  During an
Event of Default, the fee payable under clause (a) shall be increased by 2% per
annum.

 

3.2.3.                  Fee Letters  Borrowers shall pay all fees set forth in
any fee letter executed in connection with this Agreement, including the Fee
Letter.

 

3.3.                            Computation of Interest, Fees, Yield
Protection.  All interest, as well as fees and other charges calculated on a per
annum basis, shall be computed for the actual days elapsed, based on a year of
365 days with respect to amounts denominated in GBP and 360 days with respect to
all other amounts.  For purposes of the Interest Act (Canada), if applicable,
(i) whenever any interest or fee under this Agreement is calculated using a rate
based on a year of 360 days, the rate determined pursuant to such calculation,
when expressed as an annual rate, is equivalent to (x) the applicable rate based
on a year of 360 days, multiplied by (y) the actual number of days in the
calendar year in which the period for which such interest or fee is payable (or
compounded) ends, and divided by (z) 360, (ii) the principle of deemed
reinvestment of interest does not apply to any interest calculation under this
Agreement, and (iii) the rates of interest stipulated in this Agreement are
intended to be nominal rates and not effective rates or yields.  Each Obligor
confirms that it understands and is able to calculate the rate of interest
applicable to advances based on the methodology for calculating per annum rates
provided for herein.  Each Obligor irrevocably agrees not to plead or assert,
whether by way of defence or otherwise, in any proceeding relating to this
Agreement or any Loan Documents, that the interest payable hereunder and the
calculation thereof has not been adequately disclosed to the Obligors as
required pursuant to Section 4 of the Interest Act (Canada).  Each determination
by Agent of any interest, fees or interest rate hereunder shall be final,
conclusive and binding for all purposes, absent manifest error.  All fees shall
be fully earned when due and shall not be subject to rebate, refund or
proration.  All fees payable under Section 3.2 are compensation for services and
are not, and shall not be deemed to be, interest or any other charge for the
use, forbearance or detention of money.  A certificate as to amounts payable by
Borrowers under Section 3.4, 3.6, 3.7, 3.9 or 5.9, submitted to Borrower Agent
by Agent or the affected Lender, as applicable, shall be final, conclusive and
binding for all purposes, absent manifest error, and Borrowers shall pay such
amounts to the appropriate party within 10 days following receipt of the
certificate.

 

3.4.                            Reimbursement Obligations.  Borrowers shall
reimburse Agent, Issuing Bank and Lenders for all Extraordinary Expenses. 
Borrowers shall also reimburse Agent for all reasonable and documented legal,
accounting, appraisal, consulting, and other fees, costs and expenses incurred
by it in connection with (a) negotiation and preparation of any Loan Documents,
including any amendment or other modification thereof; (b) administration of and
actions relating to any Collateral, Loan Documents and transactions contemplated
thereby, including any actions taken to perfect or maintain priority of Agent’s
Liens on any Collateral, to maintain any insurance required hereunder or to
verify Collateral; and (c) subject to the limits of Section 10.1.1(b), each
inspection, audit or appraisal with respect to any

 

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Obligor or Collateral, whether prepared by Agent’s personnel or a third party. 
If, for any reason (including inaccurate reporting on financial statements or a
Compliance Certificate), it is determined that a higher Applicable Margin should
have applied to a period than was actually applied, then the proper margin shall
be applied retroactively and Borrowers shall promptly pay to Agent, for the pro
rata benefit of Lenders, an amount equal to the difference between the amount of
interest and fees that would have accrued using the proper margin and the amount
actually paid.  All amounts payable by Borrowers under this Section shall be due
on demand.

 

3.5.                            Illegality.  If any Lender determines that any
Applicable Law has made it unlawful, or that any Governmental Authority has
asserted that it is unlawful, for any Lender or its applicable Lending Office to
make, maintain or fund LIBOR Loans, or to determine or charge interest rates
based upon LIBOR, or any Governmental Authority has imposed material
restrictions on the authority of such Lender to purchase or sell, or to take
deposits of, Dollars in the London interbank market, then, on notice thereof by
such Lender to Agent, any obligation of such Lender to make or continue LIBOR
Loans or to convert Base Rate Loans to LIBOR Loans shall be suspended until such
Lender notifies Agent that the circumstances giving rise to such determination
no longer exist.  Upon delivery of such notice, Borrowers shall prepay or, if
applicable, convert all LIBOR Loans of such Lender to Base Rate Loans, either on
the last day of the Interest Period therefor, if such Lender may lawfully
continue to maintain such LIBOR Loans to such day, or immediately, if such
Lender may not lawfully continue to maintain such LIBOR Loans.  Upon any such
prepayment or conversion, Borrowers shall also pay accrued interest on the
amount so prepaid or converted.

 

3.6.                            Inability to Determine Rates. (a)            If
Agent determines (which determination shall be conclusive absent manifest
error), or Borrower Agent or Required Lenders notify Agent (with, in the case of
the Required Lenders, a copy to Borrower Agent) that Borrower Agent or Required
Lenders (as applicable) have determined, that for any reason in connection with
a request for a Borrowing of, or conversion to or continuation of, a LIBOR Loan
that (a) Dollar deposits are not being offered to banks in the London interbank
Eurodollar market for the applicable amount and Interest Period of such Loan,
(b) adequate and reasonable means do not exist for determining LIBOR for the
requested Interest Period, or (c) LIBOR for the requested Interest Period does
not adequately and fairly reflect the cost to such Lenders of funding such Loan,
then Agent will promptly so notify Borrower Agent and each Lender.  Thereafter,
the obligation of Lenders to make or maintain LIBOR Loans shall be suspended
until Agent (upon instruction by Required Lenders) revokes such notice.  Upon
receipt of such notice, Borrower Agent may revoke any pending request for a
Borrowing of, conversion to or continuation of a LIBOR Loan or, failing that,
will be deemed to have submitted a request for a Base Rate Loan.

 

(b)                                 Notwithstanding anything to the contrary in
this Agreement or any other Loan Documents, if Agent determines (which
determination shall be conclusive absent manifest error), or Borrower Agent or
Required Lenders notify Agent (with, in the case of the Required Lenders, a copy
to Borrower Agent) that Borrower Agent or Required Lenders (as applicable) have
determined, that:

 

(i)                                     adequate and reasonable means do not
exist for ascertaining LIBOR for any requested Interest Period, including,
without limitation, because the LIBOR Screen Rate is not available or published
on a current basis and such circumstances are unlikely to be temporary; or

 

(ii)                                  the administrator of the LIBOR Screen Rate
or a Governmental Authority having jurisdiction over Agent has made a public
statement identifying a specific date after which LIBOR or the LIBOR Screen Rate
shall no longer be made available, or used for determining the interest rate of
loans (such specific date, the “Scheduled Unavailability Date”), or

 

(iii)                               syndicated loans currently being executed,
or that include language similar to that contained in this Section, are being
executed or amended (as applicable) to incorporate or adopt a new benchmark
interest rate to replace LIBOR,

 

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then, reasonably promptly after such determination by the Agent or receipt by
Agent of such notice , as applicable, Agent and the Borrowers may amend this
Agreement to replace LIBOR with an alternate benchmark rate (including any
mathematical or other adjustments to the benchmark (if any) incorporated
therein), giving due consideration to any evolving or then existing convention
for similar U.S. dollar denominated syndicated credit facilities for such
alternative benchmarks (any such proposed rate, a “LIBOR Successor Rate”),
together with any proposed LIBOR Successor Rate Conforming Changes (as defined
below) and any such amendment shall become effective at 5:00 p.m. (New York
time) on the fifth Business Day after Agent shall have posted such proposed
amendment to all Lenders and Borrower Agent unless, prior to such time, Lenders
comprising the Required Lenders have delivered to Agent written notice that such
Required Lenders do not accept such amendment.

 

If no LIBOR Successor Rate has been determined and the circumstances under
clause (b)(i) above exist or the Scheduled Unavailability Date has occurred (as
applicable), Agent will promptly so notify Borrower Agent and each Lender. 
Thereafter, (x) the obligation of Lenders to make or maintain LIBOR Loans shall
be suspended, (to the extent of the affected LIBOR Loans or Interest Periods),
and (y) the LIBOR component shall no longer be utilized in determining the Base
Rate.  Upon receipt of such notice, Borrower Agent may revoke any pending
request for a Borrowing of, conversion to or continuation of LIBOR Loans (to the
extent of the affected LIBOR Loans or Interest Periods) or, failing that, will
be deemed to have converted such request into a request for a committed
Borrowing of Base Rate Loans (subject to the foregoing clause (y)) in the amount
specified therein.

 

Notwithstanding anything to the contrary in this Agreement, any definition of
LIBOR Successor Rate shall provide that in no event shall such LIBOR Successor
Rate be less than zero for purposes of this Agreement.  For the avoidance of
doubt, implementation of a LIBOR Successor Rate shall not include a reduction of
the Applicable Margin.

 

3.7.                            Increased Costs; Capital Adequacy.

 

3.7.1.                  Change in Law.  If any Change in Law shall:

 

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

 

(d)                                 subject any Recipient to Taxes (other than
(i) Indemnified Taxes, (ii) Taxes described in clauses (b) through (d) of the
definition of Excluded Taxes, and (iii) Connection Income Taxes) with respect to
any Loan, Letter of Credit, Commitment or other obligations, or its deposits,
reserves, other liabilities or capital attributable thereto; or

 

(e)                                  impose on any Lender, Issuing Bank or
interbank market any other condition, cost or expense affecting any Loan, Loan
Document, Letter of Credit, participation in LC Obligations, or Commitment;

 

and the result thereof shall be to increase the cost to such Lender of making or
maintaining any Loan or Commitment, or to increase the cost to such Lender or
Issuing Bank of participating in, issuing or maintaining any Letter of Credit,
or to reduce the amount of any sum received or receivable by such Lender or
Issuing Bank hereunder (whether of principal, interest or any other amount)
then, upon request of such Lender or Issuing Bank, Borrowers will pay to such
Lender or Issuing Bank, as applicable, such additional amount or amounts as will
compensate such Lender or Issuing Bank, as applicable, for such additional costs
incurred or reduction suffered.

 

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3.7.2.                  Capital Adequacy.  If any Lender or Issuing Bank
determines that any Change in Law affecting such Lender or Issuing Bank or any
Lending Office of such Lender or such Lender’s or Issuing Bank’s holding
company, if any, regarding capital or liquidity requirements has or would have
the effect of reducing the rate of return on such Lender’s, Issuing Bank’s or
holding company’s capital as a consequence of this Agreement, or such Lender’s
or Issuing Bank’s Commitments, Loans, Letters of Credit or participations in LC
Obligations, to a level below that which such Lender, Issuing Bank or holding
company could have achieved but for such Change in Law (taking into
consideration such Lender’s, Issuing Bank’s and holding company’s policies with
respect to capital adequacy), then from time to time Borrowers will pay to such
Lender or Issuing Bank, as the case may be, such additional amount or amounts as
will compensate it or its holding company for any such reduction suffered.

 

3.7.3.                  LIBOR Loan Reserves.  If any Lender is required to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency funds or deposits, Borrowers shall pay additional
interest to such Lender on each LIBOR Loan equal to the costs of such reserves
allocated to the Loan by the Lender (as determined by it in good faith, which
determination shall be conclusive).  The additional interest shall be due and
payable on each interest payment date for the Loan; provided, however, that if
the Lender notifies Borrowers (with a copy to Agent) of the additional interest
less than 10 days prior to the interest payment date, then such interest shall
be payable 10 days after Borrowers’ receipt of the notice.

 

3.7.4.                  Compensation.  Failure or delay on the part of any
Lender or Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of its right to demand such compensation, but Borrowers
shall not be required to compensate a Lender or Issuing Bank for any increased
costs incurred or reductions suffered more than nine months prior to the date
that the Lender or Issuing Bank notifies Borrower Agent of the Change in Law
giving rise to such increased costs or reductions and of such Lender’s or
Issuing Bank’s intention to claim compensation therefor (except that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the nine-month period referred to above shall be extended to include the
period of retroactive effect thereof).

 

3.8.                            Mitigation.  If any Lender gives a notice under
Section 3.5 or requests compensation under Section 3.7, or if Borrowers are
required to pay any Indemnified Taxes or additional amounts with respect to a
Lender under Section 5.9, then such Lender shall use reasonable efforts to
designate a different Lending Office or to assign its rights and obligations
hereunder to another of its offices, branches or Affiliates, if, in the judgment
of such Lender, such designation or assignment (a) would eliminate the need for
such notice or reduce amounts payable or to be withheld in the future, as
applicable; and (b) would not subject the Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to it or unlawful.  Borrowers
shall pay all reasonable costs and expenses incurred by any Lender in connection
with any such designation or assignment.

 

3.9.                            Funding Losses.  If for any reason (other than
default by a Lender) (a) any Borrowing of, or conversion to or continuation of,
a LIBOR Loan does not occur on the date specified therefor in a Notice of
Borrowing or Notice of Conversion/Continuation (whether or not withdrawn),
(b) any repayment or conversion of a LIBOR Loan occurs on a day other than the
end of its Interest Period, (c) Borrowers fail to repay a LIBOR Loan when
required hereunder, or (d) a Lender (other than a Defaulting Lender) is required
to assign a LIBOR Loan prior to the end of its Interest Period pursuant to
Section 13.4, then Borrowers shall pay to Agent its customary administrative
charge and to each Lender all resulting losses and expenses, including loss of
anticipated profits and any loss or expense arising from liquidation or
redeployment of funds or from fees payable to terminate deposits of matching
funds.  Lenders shall not be required to purchase Dollar deposits in any
interbank or offshore Dollar market to fund any LIBOR Loan, but this
Section shall apply as if each Lender had purchased such deposits.

 

3.10.                     Maximum Interest.  Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the

 

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maximum rate of non-usurious interest permitted by Applicable Law (“maximum
rate”).  If Agent or any Lender shall receive interest in an amount that exceeds
the maximum rate, the excess interest shall be applied to the principal of the
Obligations or, if it exceeds such unpaid principal, refunded to Borrowers.  In
determining whether the interest contracted for, charged or received by Agent or
a Lender exceeds the maximum rate, such Person may, to the extent permitted by
Applicable Law, (a) characterize any payment that is not principal as an
expense, fee or premium rather than interest; (b) exclude voluntary prepayments
and the effects thereof; and (c) amortize, prorate, allocate and spread in equal
or unequal parts the total amount of interest throughout the contemplated term
of the Obligations hereunder.

 

SECTION 4.                                           LOAN ADMINISTRATION

 

4.1.                            Manner of Borrowing and Funding of Revolver
Loans.

 

4.1.1.                  Notice of Borrowing.

 

(a)                                 Whenever Borrowers desire funding of a
Borrowing of Revolver Loans Borrower Agent shall give Agent a Notice of
Borrowing.  Such notice must be received by Agent no later than 11:00
a.m. (i) on the Business Day of the requested funding date, in the case of Base
Rate Loans, and (ii) at least three Business Days prior to the requested funding
date, in the case of LIBOR Loans.  Notices received after 11:00 a.m. shall be
deemed received on the next Business Day.  Each Notice of Borrowing shall be
irrevocable and shall specify (A) the amount of the Borrowing, (B) the requested
funding date (which must be a Business Day), (C) whether the Borrowing is to be
made as Base Rate Loans or LIBOR Loans, and (D) in the case of LIBOR Loans, the
duration of the applicable Interest Period (which shall be deemed to be 30 days
if not specified).

 

(b)                                 Unless payment is otherwise timely made by
Borrowers, the becoming due of any Obligations (whether principal, interest,
fees or other charges, including Extraordinary Expenses, LC Obligations, Cash
Collateral and Secured Bank Product Obligations) shall be deemed to be a request
for Base Rate Revolver Loans; on the due date, in the amount of such
Obligations.  The proceeds of such Revolver Loans shall be disbursed as direct
payment of the relevant Obligation.  In addition, Agent may, at its option,
charge such Obligations against any operating, investment or other account of a
Borrower maintained with Agent or any of its Affiliates.

 

(c)                                  If Borrowers maintain any disbursement
account with Agent or any Affiliate of Agent, then presentation for payment of
any Payment Item when there are insufficient funds to cover it shall be deemed
to be a request for a Base Rate Revolver Loan in the date of such presentation,
in the amount of the Payment Item.  The proceeds of such Revolver Loan may be
disbursed directly to the disbursement account.

 

4.1.2.                  Fundings by Lenders.  Each Lender shall timely honor its
Commitments by funding its Applicable Percentage of each Borrowing that is
properly requested hereunder.  Except for Borrowings to be made as Swingline
Loans, Agent shall endeavor to notify Lenders of each Notice of Borrowing (or
deemed request for a Borrowing) by 12:00 noon on the proposed funding date for
Base Rate Loans or by 3:00 p.m. at least two Business Days before any proposed
funding of LIBOR Loans.  Each Lender shall fund to Agent such Lender’s
Applicable Percentage of the Borrowing to the account specified by Agent in
immediately available funds not later than 2:00 p.m. on the requested funding
date, unless Agent’s notice is received after the times provided above, in which
case Lender shall fund its Applicable Percentage by 11:00 a.m. on the next
Business Day.  Subject to its receipt of such amounts from Lenders, Agent shall
disburse the proceeds of each Borrowing as directed by Borrower Agent.  Unless
Agent shall have received (in sufficient time to act) written notice from a
Lender that it does not intend to fund its Applicable Percentage of a Borrowing,
Agent may assume that such Lender has deposited or promptly will deposit its
share with Agent, and Agent may disburse a corresponding amount to Borrowers. 
If a Lender’s share of any Borrowing or of any settlement pursuant to
Section 4.1.3(b) is

 

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not received by Agent, then Borrowers agree to repay to Agent on demand the
amount of such share, together with interest thereon from the date disbursed
until repaid, at the rate applicable to the Borrowing.  A Lender or Issuing Bank
may fulfill its obligations under Loan Documents through one or more Lending
Offices, and this shall not affect any obligation of Obligors under the Loan
Documents or with respect to any Obligations.

 

4.1.3.                  Swingline Loans; Settlement.

 

(a)                                 Agent may, but shall not be obligated to,
advance Swingline Loans to Borrowers, up to an aggregate outstanding amount of
$6,000,000, unless the funding is specifically required to be made by all
Lenders hereunder.  Each Swingline Loan shall constitute a Revolver Loan for all
purposes, except that payments thereon shall be made to Agent for its own
account.  The obligation of Borrowers to repay Swingline Loans shall be
evidenced by the records of Agent and need not be evidenced by any promissory
note.

 

(b)                                 Settlement of Swingline Loans and other
Revolver Loans among Lenders and Agent shall take place on a date determined
from time to time by Agent (but at least weekly),  in accordance with the
Settlement Report delivered by Agent to Lenders.  Between settlement dates,
Agent may in its discretion apply payments on Revolver Loans to Swingline Loans,
regardless of any designation by Borrower or any provision herein to the
contrary.  Each Lender’s obligation to make settlements with Agent is absolute
and unconditional, without offset, counterclaim or other defense, and whether or
not the Revolver Commitments have terminated, a Revolver Overadvance exists or
the conditions in Section 6 are satisfied.  If, due to an Insolvency Proceeding
with respect to a Borrower or otherwise, any Swingline Loan may not be settled
among Lenders hereunder, then each Lender shall be deemed to have purchased from
Agent a participation in such Loan (based upon such Lender’s Applicable
Percentage thereof) and shall transfer the amount of such participation to
Agent, in immediately available funds, within one Business Day after Agent’s
request therefor.

 

4.1.4.                  Notices.  Borrowers may request, convert or continue
Loans, select interest rates and transfer funds based on telephonic or e-mailed
instructions to Agent.  Borrowers shall confirm each such request by prompt
delivery to Agent of a Notice of Borrowing or Notice of Conversion/Continuation,
if applicable, but if it differs materially from the action taken by Agent or
Lenders, the records of Agent and Lenders shall govern.  Neither Agent nor any
Lender shall have any liability for any loss suffered by a Borrower as a result
of Agent or any Lender acting upon its understanding of telephonic or e-mailed
instructions from a person believed in good faith by Agent or any Lender to be a
person authorized to give such instructions on a Borrower’s behalf.

 

4.2.                            Defaulting Lender.

 

4.2.1.                  Reallocation of Applicable Percentage; Amendments.  For
purposes of determining Lenders’ obligations to fund or participate in Loans or
Letters of Credit, Agent may exclude the Revolver Commitments and Loans of any
Defaulting Lender(s) from the calculation of Applicable Percentages.  A
Defaulting Lender shall have no right to vote on any amendment, waiver or other
modification of a Loan Document, except as provided in Section 14.1.1(c).

 

4.2.2.                  Payments; Fees.   Agent may, in its discretion, receive
and retain any amounts payable to a Defaulting Lender under the Loan Documents,
and a Defaulting Lender shall be deemed to have assigned to Agent such amounts
until all Obligations owing to Agent, non-Defaulting Lenders and other Secured
Parties have been paid in full.  Agent may apply such amounts to the Defaulting
Lender’s defaulted obligations, use the funds to Cash Collateralize such
Lender’s Fronting Exposure, or readvance the amounts to Borrowers hereunder.  A
Lender shall not be entitled to receive any fees accruing hereunder during the
period in which it is a Defaulting Lender, and the unfunded portion of its
Revolver Commitment shall be disregarded for purposes of calculating the unused
line fee under Section 3.2.1.  If

 

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any LC Obligations owing to a Defaulted Lender are reallocated to other Lenders,
fees attributable to such LC Obligations under Section 3.2.2 shall be paid to
such Lenders.  Agent shall be paid all fees attributable to LC Obligations that
are not reallocated.

 

4.2.3.                  Cure.   Borrowers, Agent and Issuing Bank may agree in
writing that a Lender is no longer a Defaulting Lender.  At such time,
Applicable Percentages shall be reallocated without exclusion of such Lender’s
Commitments and Loans, and all outstanding Revolver Loans, LC Obligations and
other exposures under the Revolver Commitments shall be reallocated among
Lenders and settled by Agent (with appropriate payments by the reinstated
Lender) in accordance with the readjusted Applicable Percentages.  Unless
expressly agreed by Borrowers, Agent and Issuing Bank, no reinstatement of a
Defaulting Lender shall constitute a waiver or release of claims against such
Lender.  The failure of any Lender to fund a Loan, to make a payment in respect
of LC Obligations or otherwise to perform its obligations hereunder shall not
relieve any other Lender of its obligations, and no Lender shall be responsible
for default by another Lender.

 

4.3.                            Number and Amount of LIBOR Loans; Determination
of Rate.  Each Borrowing of LIBOR Loans when made shall be in a minimum amount
of $1,000,000, plus any increment of $500,000 in excess thereof.  No more than
six (6) Borrowings of LIBOR Loans may be outstanding at any time, and all LIBOR
Loans having the same length and beginning date of their Interest Periods shall
be aggregated together and considered one Borrowing for this purpose.  Upon
determining LIBOR for any Interest Period requested by Borrowers, Agent shall
promptly notify Borrowers thereof by telephone or electronically and, if
requested by Borrowers, shall confirm any telephonic notice in writing.

 

4.4.                            Borrower Agent.  Each Borrower and Obligor
hereby designates SI USA (“Borrower Agent”) as its representative and agent for
all purposes under the Loan Documents, including requests for Loans and Letters
of Credit, designation of interest rates, delivery or receipt of communications,
preparation and delivery of Revolver Borrowing Base Certificates, Term Loan
Borrowing Base Certificates and financial reports, receipt and payment of
Obligations, requests for waivers, amendments or other accommodations, actions
under the Loan Documents (including in respect of compliance with covenants),
and all other dealings with Agent, Issuing Bank or any Lender.  Borrower Agent
hereby accepts such appointment.  Agent and Lenders shall be entitled to rely
upon, and shall be fully protected in relying upon, any notice or communication
(including any notice of borrowing) delivered by Borrower Agent on behalf of any
Borrower or another Obligor.  Agent and Lenders may give any notice or
communication with a Borrower or another Obligor hereunder to Borrower Agent on
behalf of such Borrower or another Obligor.  Each of Agent, Issuing Bank and
Lenders shall have the right, in its discretion, to deal exclusively with
Borrower Agent for any or all purposes under the Loan Documents.  Each Borrower
and Obligor agrees that any notice, election, communication, representation,
agreement or undertaking made on its behalf by Borrower Agent shall be binding
upon and enforceable against it.

 

4.5.                            One Obligation.  The Loans, LC Obligations and
other Obligations constitute one general obligation of Borrowers and are secured
by Agent’s Lien on all Collateral; provided, however, that Agent and each Lender
shall be deemed to be a creditor of, and the holder of a separate claim against,
each Borrower to the extent of any Obligations jointly or severally owed by such
Borrower.

 

4.6.                            Effect of Termination.  On the effective date of
the termination of all Commitments, the Obligations shall be immediately due and
payable, and each Secured Bank Product Provider may terminate its and its
Affiliates’ Bank Products (including, only with the consent of Agent, any Cash
Management Services).  Until Full Payment of the Obligations, all undertakings
of Borrowers contained in the Loan Documents shall continue, and Agent shall
retain its Liens in the Collateral and all of its rights and remedies under the
Loan Documents.  Agent shall not be required to terminate its Liens unless it
receives Cash Collateral or a written agreement, in each case satisfactory to
it, protecting Agent and Lenders from the dishonor or return of any Payment
Items previously applied to the Obligations.

 

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Sections 2.3, 3.4, 3.6, 3.7, 3.9, 5.5, 5.9, 5.10, 12, 14.2, this Section, and
each indemnity or waiver given by an Obligor or Lender in any Loan Document,
shall survive Full Payment of the Obligations.

 

SECTION 5.                                           PAYMENTS

 

5.1.                            General Payment Provisions.  All payments of
Obligations shall be made in Dollars, without offset, counterclaim or defense of
any kind, free of (and without deduction for) any Taxes, except as required by
Applicable Law, and in immediately available funds, not later than 12:00 noon on
the due date.  Any payment after such time shall be deemed made on the next
Business Day.  Any payment of a LIBOR Loan prior to the end of its Interest
Period shall be accompanied by all amounts due under Section 3.9.  Borrowers
agree that Agent shall have the continuing, exclusive right to apply and reapply
payments and proceeds of Collateral against the Obligations, in such manner as
Agent deems advisable, but whenever possible, any prepayment of Loans shall be
applied first to Base Rate Loans and then to LIBOR Loans.

 

5.2.                            Repayment of Revolver Loans .  Revolver Loans
shall be due and payable in full on the Revolver Termination Date, unless
payment is sooner required hereunder.  Revolver Loans may be prepaid from time
to time, without penalty or premium.  If any Asset Disposition includes the
disposition of Accounts or Inventory, then the Net Proceeds of such Asset
Disposition in an amount equal to the greater of (a) the net book value of such
Accounts and Inventory, or (b) the reduction in the Revolver Borrowing Base upon
giving effect to such disposition, shall be applied to the Revolver Loans. 
Notwithstanding anything herein to the contrary, if a Revolver Overadvance
exists, Borrowers shall, on the sooner of Agent’s demand or the first Business
Day after any Borrower has knowledge thereof, repay the outstanding Revolver
Loans in an amount sufficient to cause Availability to no longer be less than
zero.

 

5.3.                            [Reserved.]

 

5.4.                            Payment of Other Obligations.  Obligations other
than Loans, including LC Obligations and Extraordinary Expenses, shall be paid
by Borrowers as provided in the Loan Documents or, if no payment date is
specified, on demand.

 

5.5.                            Marshaling; Payments Set Aside.  None of Agent
or Lenders shall be under any obligation to marshal any assets in favor of any
Obligor or against any Obligations.  If any payment by or on behalf of Borrowers
is made to Agent, Issuing Bank or any Lender, or Agent, Issuing Bank or any
Lender exercises a right of setoff, and such payment or the proceeds of such
setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by Agent, Issuing Bank or such Lender in its discretion)
to be repaid to a trustee, receiver or any other Person, then to the extent of
such recovery, the Obligation originally intended to be satisfied, and all
Liens, rights and remedies relating thereto, shall be revived and continued in
full force and effect as if such payment had not been made or such setoff had
not occurred.

 

5.6.                            Application and Allocation of Payments.

 

5.6.1.                  Application.  Payments made by Borrowers hereunder shall
be applied (a) first, as specifically required hereby; (b) second, to
Obligations then due and owing; (b) third, to other Obligations specified by
Borrowers; and (c) fourth, as determined by Agent in its discretion.

 

5.6.2.                  Post-Default Allocation.

 

(a)                                 Notwithstanding anything in any Loan
Document to the contrary, during an Event of Default, monies to be applied to
the Obligations, whether arising from payments by Obligors, realization on the
Collateral, setoff or otherwise, shall be allocated as follows:

 

(i)                                     first, to all Extraordinary Expenses
owing to Agent, Issuing Bank and Lenders, and to all other costs and expenses
owing to Agent;

 

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(ii)                                  second, to all amounts owing to Agent on
Swingline Loans;

 

(iii)                               third, to Issuing Bank in respect of amounts
owing by Borrowers for (x) any unreimbursed drawings made under Letters of
Credit and (y) fees, costs, expenses and indemnities owing to Issuing Bank in
respect of Letters of Credit;

 

(iv)                              fourth, to all Obligations constituting fees
owing or related to the Revolver Loans;

 

(v)                                 fifth, to all Obligations constituting
interest in respect of the Revolver Loans;

 

(vi)                              sixth, to Cash Collateralization of LC
Obligations;

 

(vii)                           seventh, to all Revolver Loans, and to Secured
Bank Product Obligations arising under Hedge Agreements (including Cash
Collateralization thereof) up to the amount of Reserves existing therefor;

 

(viii)                        eighth, to Secured Bank Product Obligations
exceeding the amount of Reserves existing therefor; and

 

(ix)                              last, to all remaining Obligations.

 

(b)                                 Subject to the priorities set forth in
clause (a) above, amounts shall be applied to payment of each category of
Obligations only after Full Payment of amounts payable from time to time under
all preceding categories.  If amounts are insufficient to satisfy a category,
they shall be paid ratably among outstanding Obligations in the category. 
Monies and proceeds obtained from an Obligor shall not be applied to its
Excluded Swap Obligations, but appropriate adjustments shall be made with
respect to amounts obtained from other Obligors to preserve the allocations in
any applicable category.  Agent shall have no obligation to calculate the amount
of any Secured Bank Product Obligation and may request a reasonably detailed
calculation thereof from a Secured Bank Product Provider.  If the provider fails
to deliver the calculation within five days following request, Agent may assume
the amount is zero.  The allocations set forth in this Section 5.6.2 are solely
to determine the rights and priorities among Secured Parties, and may be changed
by agreement of the affected Secured Parties, without the consent of any
Obligor.  This Section is not for the benefit of or enforceable by any Obligor,
and each Borrower irrevocably waives the right to direct the application of any
payments or Collateral proceeds subject to this Section 5.6.2.

 

(c)                                  Notwithstanding the order of application of
proceeds of Collateral set forth in this Section 5.6.2, the Collateral shall
secure all Obligations.

 

5.6.3.                  Erroneous Application.  Agent shall not be liable for
any application of amounts made by it in good faith and, if any such application
is subsequently determined to have been made in error, the sole recourse of any
Lender or other Person to which such amount should have been made shall be to
recover the amount from the Person that actually received it (and, if such
amount was received by any Lender, such Lender hereby agrees to return it).

 

5.7.                            Dominion Accounts.  During any Cash Dominion
Period, the ledger balances in the Dominion Accounts as of the end of each
Business Day shall be applied to the Obligations at the beginning of the next
Business Day; provided that, notwithstanding anything to contrary set forth
herein, at all times (regardless of whether a Cash Dominion Period is in
effect), the ledger balances in all Dominion Accounts maintained by the UK
Guarantor shall be applied to the Obligations at the beginning of the next
Business Day.  If, as a result of such application, a credit balance exists, the
balance shall not accrue interest in favor of Borrowers and shall be made
available to Borrowers as long as no Default or

 

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Event of Default exists.  If, at any time a Cash Dominion Period shall not be in
effect, the aggregate balance of all cash held in all Deposit Accounts of
Obligors (including all Dominion Accounts and all Excluded Deposit Accounts
(other than Deposit Accounts described in clause (a) of the definition of
“Excluded Deposit Accounts”), shall exceed $2,000,000 for more than five
Business Days, the Obligors shall remit to Agent to be applied to the
Obligations an amount sufficient to cause such aggregate balance in all Deposit
Accounts to be less than $2,000,000.  For the avoidance of doubt, the Agent
hereby agrees that a notice regarding the commencement of a Cash Dominion Period
shall not be delivered to the applicable depository bank under a Deposit Account
Control Agreement until such time as a Cash Dominion Period has occurred;
provided that Deposit Accounts of the UK Guarantor shall be subject to the
dominion and control of Agent at all times as set forth in Section 8.2.4.

 

5.8.                            Account Stated.  The Agent shall maintain in
accordance with its usual and customary practices account(s) evidencing the Debt
of Borrowers hereunder.  Any failure of Agent to record anything in a loan
account, or any error in doing so, shall not limit or otherwise affect the
obligation of Borrowers to pay any amount owing hereunder.  Entries made in a
loan account shall constitute presumptive evidence of the information contained
therein.  If any information contained in a loan account is provided to or
inspected by any Person, the information shall be conclusive and binding on such
Person for all purposes absent manifest error, except to the extent such Person
notifies Agent in writing within 30 days after receipt or inspection that
specific information is subject to dispute.

 

5.9.                            Taxes.

 

5.9.1.                  Payments Free of Taxes; Obligation to Withhold; Tax
Payment.

 

(a)                                 All payments of Obligations by Obligors
shall be made without deduction or withholding for any Taxes, except as required
by Applicable Law.  If Applicable Law (as determined by Agent in its discretion)
requires the deduction or withholding of any Tax from any such payment by Agent
or an Obligor, then Agent or such Obligor shall be entitled to make such
deduction or withholding.  The Agent or such Obligor, as applicable, may take
into account any applicable information and documentation provided pursuant to
Section 5.10.

 

(b)                                 If Agent or any Obligor is required by the
Code or the Income Tax Act (Canada) to withhold or deduct Taxes, including
backup withholding and withholding taxes, from any payment, then (i) Agent shall
pay the full amount that it determines is to be withheld or deducted to the
relevant Governmental Authority pursuant to the Code or the Income Tax Act
(Canada), and (ii) to the extent the withholding or deduction is made on account
of Indemnified Taxes, the sum payable by the applicable Obligor shall be
increased as necessary so that the Recipient receives an amount equal to the sum
it would have received had no such withholding or deduction been made.

 

(c)                                  If Agent or any Obligor is required by any
Applicable Law other than the Code or the Income Tax Act (Canada) to withhold or
deduct Taxes from any payment, then (i) Agent or such Obligor, to the extent
required by Applicable Law, shall timely pay the full amount to be withheld or
deducted to the relevant Governmental Authority, and (ii) to the extent the
withholding or deduction is made on account of Indemnified Taxes, the sum
payable by the applicable Obligor shall be increased as necessary so that the
Recipient receives an amount equal to the sum it would have received had no such
withholding or deduction been made.

 

5.9.2.                  Payment of Other Taxes.  Without limiting the foregoing,
Borrowers shall timely pay to the relevant Governmental Authority in accordance
with Applicable Law, or at Agent’s option, timely reimburse Agent for payment
of, any Other Taxes.

 

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5.9.3.                  Tax Indemnification.

 

(a)                                 Each Borrower shall indemnify and hold
harmless, on a joint and several basis, each Recipient against any Indemnified
Taxes (including those imposed or asserted on or attributable to amounts payable
under this Section) payable or paid by a Recipient or required to be withheld or
deducted from a payment to a Recipient, and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority.  Each Borrower shall indemnify and hold
harmless Agent against any amount that a Lender or Issuing Bank fails for any
reason to pay indefeasibly to Agent as required pursuant to this Section.  Each
Borrower shall make payment within 10 days after demand for any amount or
liability payable under this Section.  A certificate as to the amount of such
payment or liability delivered to Borrowers by a Lender or Issuing Bank (with a
copy to Agent), or by Agent on its own behalf or on behalf of any Recipient,
shall be conclusive absent manifest error.

 

(b)                                 Each Lender and Issuing Bank shall indemnify
and hold harmless, on a several basis, (i) Agent against any Indemnified Taxes
attributable to such Lender or Issuing Bank (but only to the extent Borrowers
have not already paid or reimbursed Agent therefor and without limiting
Borrowers’ obligation to do so), (ii) Agent and Obligors, as applicable, against
any Taxes attributable to such Lender’s failure to maintain a Participant
register as required hereunder, and (iii) Agent and Obligors, as applicable,
against any Excluded Taxes attributable to such Lender or Issuing Bank, in each
case, that are payable or paid by Agent or an Obligor in connection with any
Obligations, and any reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes were correctly or legally imposed
or asserted by the relevant Governmental Authority.  Each Lender and Issuing
Bank shall make payment within 10 days after demand for any amount or liability
payable under this Section.  A certificate as to the amount of such payment or
liability delivered to any Lender or Issuing Bank by Agent shall be conclusive
absent manifest error.

 

5.9.4.                  Evidence of Payments.  If Agent or an Obligor pays any
Taxes pursuant to this Section, then upon request, Agent shall deliver to
Borrower Agent or Borrower Agent shall deliver to Agent, respectively, a copy of
a receipt issued by the appropriate Governmental Authority evidencing the
payment, a copy of any return required by Applicable Law to report the payment,
or other evidence of payment reasonably satisfactory to Agent or Borrower Agent,
as applicable.

 

5.9.5.                  Treatment of Certain Refunds.  Unless required by
Applicable Law, at no time shall Agent have any obligation to file for or
otherwise pursue on behalf of a Lender or Issuing Bank, nor have any obligation
to pay to any Lender or Issuing Bank, any refund of Taxes withheld or deducted
from funds paid for the account of a Lender or Issuing Bank.  If a Recipient
determines in its discretion that it has received a refund of any Taxes as to
which it has been indemnified by Borrowers or with respect to which a Borrower
has paid additional amounts pursuant to this Section, it shall pay Borrowers an
amount equal to such refund (but only to the extent of indemnity payments made,
or additional amounts paid, by Borrowers with respect to the Taxes giving rise
to such refund), net of all reasonable out-of-pocket expenses (including Taxes)
incurred by such Recipient, and without interest (other than any interest paid
by the relevant Governmental Authority with respect to such refund), provided
that Borrowers agree, upon request by the Recipient, to repay the amount paid
over to Borrowers (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Recipient if the Recipient is required
to repay such refund to the Governmental Authority.  Notwithstanding anything
herein to the contrary, no Recipient shall be required to pay any amount to
Borrowers if such payment would place the Recipient in a less favorable net
after-Tax position than it would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid.  In no event shall Agent or any
Recipient be required to make its tax returns (or any other information relating
to its taxes that it deems confidential) available to any Obligor or other
Person.

 

5.9.6.                  Survival.  Each party’s obligations under Sections 5.9
and 5.10 shall survive the resignation or replacement of Agent or any assignment
of rights by or replacement of a Lender or Issuing

 

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Bank, the termination of the Commitments, and the repayment, satisfaction,
discharge or Full Payment of any Obligations.

 

5.10.                     Lender Tax Information.

 

5.10.1.           Status of Lenders.  Any Lender that is entitled to an
exemption from or reduction of withholding Tax with respect to payments of
Obligations shall deliver to Borrowers and Agent properly completed and executed
documentation reasonably requested by Borrowers or Agent as will permit such
payments to be made without or at a reduced rate of withholding.  In addition,
any Lender, if reasonably requested by Borrowers or Agent, shall deliver such
other documentation prescribed by Applicable Law or reasonably requested by
Borrowers or Agent to enable them to determine whether such Lender is subject to
backup withholding or information reporting requirements.  Notwithstanding the
foregoing, such documentation (other than documentation described in Sections
5.10.2(a), (b) and (d)) shall not be required if a Lender reasonably believes
delivery of the documentation would subject it to any material unreimbursed cost
or expense or would materially prejudice its legal or commercial position.

 

5.10.2.           Documentation.  Without limiting the foregoing, if any
Borrower is a U.S. Person,

 

(a)                                 Any Lender that is a U.S. Person shall
deliver to Borrowers and Agent on or prior to the date on which such Lender
becomes a Lender hereunder (and from time to time thereafter upon reasonable
request of Borrowers or Agent), executed originals of IRS Form W-0, certifying
that such Lender is exempt from U.S. federal backup withholding Tax;

 

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

 

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

 

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

 

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

 

(iv)                              to the extent a Foreign Lender is not the
beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS
Form W-8ECI, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate in form
satisfactory to Agent, IRS Form W-9, and/or other certification documents from
each beneficial owner, as applicable; provided that if the Foreign Lender is a
partnership and one or more direct or indirect partners of such Foreign Lender
are

 

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claiming the portfolio interest exemption, such Foreign Lender may provide a
U.S. Tax Compliance Certificate on behalf of each such direct and indirect
partner;

 

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

 

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

 

5.10.3.           Redelivery of Documentation.  If any form or certification
previously delivered by a Lender pursuant to this Section expires or becomes
obsolete or inaccurate in any respect, such Lender shall promptly update the
form or certification or notify Borrowers and Agent in writing of its inability
to do so.

 

5.11.                     Nature and Extent of Each Borrower’s Liability.

 

5.11.1.           Joint and Several Liability.  Each Borrower agrees that it is
jointly and severally liable for, and absolutely and unconditionally guarantees
to Agent and Lenders the prompt payment and performance of, all Obligations,
except its Excluded Swap Obligations.  Each Borrower agrees that its guaranty
obligations hereunder constitute a continuing guaranty of payment and not of
collection, that such obligations shall not be discharged until Full Payment 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
Loan Document, or any other document, instrument or agreement to which any
Obligor 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 Loan Document, or
any waiver, consent or indulgence of any kind by Agent or any Lender 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 Agent or any Lender
in respect thereof (including the release of any security or guaranty); (d) the
insolvency of any Obligor; (e) any election by Agent or any Lender in an
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 Obligor, as
debtor-in-possession under Section 364 of the Bankruptcy Code or any other
Insolvency Law or otherwise; (g) the disallowance of any claims of Agent or any
Lender against any Obligor for the repayment of any Obligations under
Section 502 of the Bankruptcy Code or any other Insolvency Law 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 Full Payment of
all Obligations.

 

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5.11.2.           Waivers.

 

(a)                                 Each Obligor 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 Agent or Lenders to marshal assets or to proceed
against any Obligor, other Person or security for the payment or performance of
any Obligations before, or as a condition to, proceeding against such Obligor. 
Each Obligor waives all defenses available to a surety, guarantor or
accommodation co-obligor other than Full Payment of all Obligations and waives,
to the maximum extent permitted by law, any right to revoke any guaranty of any
Obligations as long as it is an Obligor.  It is agreed among each Obligor, Agent
and Lenders that the provisions of this Section 5.11 are of the essence of the
transaction contemplated by the Loan Documents and that, but for such
provisions, Agent and Lenders would decline to make Loans and issue Letters of
Credit.  Each Obligor 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.

 

(b)                                 Agent and Lenders may, in their discretion,
pursue such rights and remedies as they deem appropriate, including realization
upon Collateral or any Real Estate by judicial foreclosure or nonjudicial sale
or enforcement, without affecting any rights and remedies under this
Section 5.11.  If, in taking any action in connection with the exercise of any
rights or remedies, Agent or any Lender shall forfeit any other rights or
remedies, including the right to enter a deficiency judgment against any
Borrower or other Person, whether because of any Applicable Laws pertaining to
“election of remedies” or otherwise, each Borrower 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 Borrower might otherwise have had.  Any election
of remedies that results in denial or impairment of the right of Agent or any
Lender to seek a deficiency judgment against any Borrower shall not impair any
other Borrower’s obligation to pay the full amount of the Obligations.  Each
Borrower 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 Borrower’s
rights of subrogation against any other Person.  Agent may bid all or a portion
of the Obligations at any foreclosure, trustee or other sale, including any
private sale, and the amount of such bid need not be paid by Agent but shall be
credited against the Obligations.  The amount of the successful bid at any such
sale, whether 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 5.11, notwithstanding that any present or future law or court
decision may have the effect of reducing the amount of any deficiency claim to
which Agent or any Lender might otherwise be entitled but for such bidding at
any such sale.

 

5.11.3.           Extent of Liability; Contribution.

 

(a)                                 Notwithstanding anything herein to the
contrary, each Borrower’s liability under this Section 5.11 shall be limited to
the greater of (i) all amounts for which such Borrower is primarily liable, as
described below, and (ii) such Borrower’s Allocable Amount.

 

(b)                                 If any Borrower makes a payment under this
Section 5.11 of any Obligations (other than amounts for which such Borrower is
primarily liable) (a “Guarantor Payment”) that, taking into account all other
Guarantor Payments previously or concurrently made by any other Borrower,
exceeds the amount that such Borrower would otherwise have paid if each Borrower
had paid the aggregate Obligations satisfied by such Guarantor Payments in the
same proportion that such Borrower’s Allocable Amount bore to the total
Allocable Amounts of all Borrowers, then such Borrower shall be entitled to
receive contribution and indemnification payments from, and to be reimbursed by,
each other Borrower for 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 Borrower shall be the maximum amount
that could then be recovered from such Borrower under this Section 5.11 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.

 

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(c)                                  Nothing contained in this Section 5.11
shall limit the liability of any Borrower to pay Loans made directly or
indirectly to that Borrower (including Loans advanced to any other Borrower and
then re-loaned or otherwise transferred to, or for the benefit of, such
Borrower), LC Obligations relating to Letters of Credit issued to support its
business, Secured Bank Product Obligations incurred to supports its business,
and all accrued interest, fees, expenses and other related Obligations with
respect thereto, for which such Borrower shall be primarily liable for all
purposes hereunder.  Agent and Lenders shall have the right, at any time in
their discretion, to condition Loans and Letters of Credit upon a separate
calculation of borrowing availability for each Borrower and to restrict the
disbursement and use of such Loans and Letters of Credit to such Borrower.

 

(d)                                 Each Obligor that is a Qualified ECP when
its guaranty of or grant of Lien as security for a Swap Obligation becomes
effective hereby jointly and severally, absolutely, unconditionally and
irrevocably undertakes to provide funds or other support to each Specified
Obligor with respect to such Swap Obligation as may be needed by such Specified
Obligor from time to time to honor all of its obligations under the Loan
Documents in respect of such Swap Obligation (but, in each case, only up to the
maximum amount of such liability that can be hereby incurred without rendering
such Qualified ECP’s obligations and undertakings under this Section 5.11
voidable under any applicable fraudulent transfer or conveyance act).  The
obligations and undertakings of each Qualified ECP under this Section shall
remain in full force and effect until Full Payment of all Obligations.  Each
Obligor intends this Section to constitute, and this Section shall be deemed to
constitute, a guarantee of the obligations of, and a “keepwell, support or other
agreement” for the benefit of, each Obligor for all purposes of the Commodity
Exchange Act.

 

5.11.4.           Joint Enterprise.  Each Borrower has requested that Agent and
Lenders make this credit facility available to Borrowers on a combined basis, in
order to finance Borrowers’ business most efficiently and economically. 
Borrowers’ business is a mutual and collective enterprise, and the successful
operation of each Borrower is dependent upon the successful performance of the
integrated group.  Borrowers believe that consolidation of their credit facility
will enhance the borrowing power of each Borrower and ease administration of the
facility, all to their mutual advantage.  Borrowers acknowledge that Agent’s and
Lenders’ willingness to extend credit and to administer the Collateral on a
combined basis hereunder is done solely as an accommodation to Borrowers and at
Borrowers’ request.

 

5.11.5.           Subordination.  Each Obligor hereby subordinates any claims,
including any rights at law or in equity to payment, subrogation, reimbursement,
exoneration, contribution, indemnification or set off, that it may have at any
time against any other Obligor, howsoever arising, to the Full Payment of all
Obligations.

 

SECTION 6.                                           CONDITIONS PRECEDENT

 

6.1.                            Conditions Precedent to Initial Loans.  In
addition to the conditions set forth in Section 6.2, Lenders shall not be
required to fund any requested Loan, issue any Letter of Credit, or otherwise
extend credit to Borrowers hereunder, until the date (“Restatement Date”) that
each of the following conditions has been satisfied:

 

(a)                                 Each Loan Document shall have been duly
executed and delivered to Agent by each of the signatories thereto, and each
Obligor shall be in compliance with all terms thereof.

 

(b)                                 Agent shall have received acknowledgments of
all filings or recordations necessary to perfect its Liens in the Collateral, as
well as UCC, PPSA and Lien searches and other evidence satisfactory to Agent
that such Liens are the only Liens upon the Collateral, except Permitted Liens.

 

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(c)                                  Agent shall have received certificates, in
form and substance satisfactory to it, from a knowledgeable Senior Officer of
each Borrower certifying that, after giving effect to the initial Loans and
transactions hereunder, (i) the Company and its Subsidiaries, taken as a whole,
are Solvent; (ii) no Default or Event of Default exists; (iii) the
representations and warranties set forth in Section 9 are true and correct; and
(iv) such Borrower has complied with all agreements and conditions to be
satisfied by it under the Loan Documents.

 

(d)                                 Agent shall have received a certificate of a
duly authorized officer of each Obligor, certifying (i) that attached copies of
such Obligor’s Organic Documents are true and complete, and in full force and
effect, without amendment except as shown; (ii) that an attached copy of
resolutions authorizing execution and delivery of the Loan Documents is true and
complete, and that such resolutions are in full force and effect, were duly
adopted, have not been amended, modified or revoked, and constitute all
resolutions adopted with respect to this credit facility; (iii) to the title,
name and signature of each Person authorized to sign the Loan Documents.  Agent
may conclusively rely on this certificate until it is otherwise notified by the
applicable Obligor in writing;  (iv) with respect to any UK Guarantor, (A) that
the Company and each of its Subsidiaries has complied within the relevant
timeframe with any notice it has received pursuant to Part 21A of the Companies
Act 2006 from that UK Guarantor; and no “warning notice” or “restrictions
notice” (in each case as defined in Schedule 1B of the Companies Act 2006) has
been issued in respect of shares in that UK Guarantor and (B) that the attached
copy of its “PSC register” (within the meaning of section 790C(10) of the
Companies Act 2006) is true and complete, and in full force and effect, without
amendment except as shown, and (v) with respect to any UK Guarantor, the
solvency of such UK Guarantor and the ability of such UK Guarantor to pay its
debts as they fall due.

 

(e)                                  Agent shall have received a written opinion
of (i) Greenberg Traurig LLP, US counsel to the Obligors, (ii) Stewart McKelvey,
special New Brunswick counsel to the Canadian Guarantor, (iii) Stikeman Elliott
LLP, special Ontario counsel to the Canadian Guarantor, and (iv) Norton Rose
Fulbright LLP, special UK counsel to Agent, as well as any local counsel to
Borrowers or Agent, in form and substance satisfactory to Agent.

 

(f)                                   Agent shall have received good standing
certificates (or their equivalents) for each Obligor, issued by the Secretary of
State or other appropriate official of such Obligor’s jurisdiction of
organization and each jurisdiction where such Obligor’s conduct of business or
ownership of Property necessitates qualification.

 

(g)                                  (i) Agent shall have received copies of all
documents, instruments and agreements related to the Term Debt and shall be
reasonably satisfied with all of the terms and conditions of the Term Debt,
(ii) Agent shall have received evidence reasonably satisfactory to Agent that
Borrower shall have received (or on the Restatement Date shall receive) cash
proceeds of the Term Debt in an aggregate principal amount not less than
$15,000,000, and (iii) Agent and the holders of the Term Debt shall have entered
into the Intercreditor Agreement.

 

(h)                                 Agent shall have received copies of policies
or certificates of insurance for the insurance policies carried by Obligors,
together with loss payable endorsements naming Agent as loss payee and as
additional insured (in the case of Canadian insurance policies, first mortgagee
(with respect to the ABL Priority Collateral), and in the case of UK Insurance
policies, first loss payee), all in compliance with the Loan Documents.

 

(i)                                     Agent shall have completed its business,
financial and legal due diligence of Obligors.  No material adverse change, in
the good faith opinion of Agent, in the business, assets, Properties,
liabilities, operations, condition (financial or otherwise) of the Borrowers and
the Guarantors, taken as a whole, financial condition of any Obligor or in the
quality, quantity or value of any Collateral has occurred since March 31, 2018.

 

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(j)                                    Borrowers shall have paid all fees and
expenses to be paid to Agent and Lenders on the Restatement Date.

 

(k)                                 Agent shall have received a Revolver
Borrowing Base Certificate and a Term Loan Borrowing Base Certificate, each
prepared as of June 23, 2018.  Upon giving effect to the initial funding of
Loans and issuance of Letters of Credit, and the payment by Borrowers of all
fees and expenses incurred in connection herewith as well as any payables
stretched beyond their customary payment practices, Availability shall be at
least $9,500,000.

 

(l)                                     Agent shall have received reasonably
satisfactory evidence that all principal, interest, and other amounts owing in
respect of all indebtedness for borrowed money of Obligors (other than
indebtedness listed on Schedule 10.2.1 hereto) will be repaid in full on the
Restatement Date with the proceeds of the initial Loans hereunder on the
Restatement Date and the proceeds of the Term Debt funded on the Restatement
Date and any and all Liens securing such indebtedness will be terminated and
released on the Restatement Date.

 

(m)                             With respect to each leased property or
warehouse of each Obligor, Agent shall have either (i) received a Lien Waiver
with respect to such leased property or warehouse or (ii) established a Rent and
Charges Reserve with respect to such leased property or warehouse.

 

(n)                                 Agent shall have received (i) audited
financial statements of the Company and its Subsidiaries for the fiscal year
ended December 30, 2017, (ii) the internally prepared monthly divisional
financial statements of the Company and its Subsidiaries for the months ended
January 31, 2018, February 28, 2018, March 31, 2018 and April 30, 2018, (iii) a
pro forma balance sheet of the Company and its Subsidiaries dated as of the
Restatement Date after giving pro forma effect to the funding of the Term Debt,
the repayment in full of existing Debt and the funding of the initial Loans on
the Restatement Date and (iv) projections of the consolidated balance sheets,
results of operations, cash flow and Availability for the 2018 Fiscal Year on a
Fiscal Month basis and for each other Fiscal Year ending prior to the Revolver
Termination Date on a Fiscal Year basis.

 

(o)                                 No action, suit, investigation, litigation
or proceeding shall be threatened or pending in any court or before any
arbitrator or governmental instrumentality that in Agent’s judgment could
reasonably be expected to have a Material Adverse Effect.

 

(p)                                 Agent shall have received satisfactory
evidence that the Obligors have received all governmental and third party
consents and approvals as may be appropriate in connection with the Loans and
the transactions contemplated by this Agreement.

 

(q)                                 Agent shall have received fully executed
Assignment and Assumptions between each of Citizens Business Capital and KeyBank
National Association (each, an “Exiting Lender”), as “Assignor” and Bank of
America, N.A., as “Assignee”, providing for the sale and assignment by each of
the Exiting Lenders to Bank of America, N.A. of all rights and interests of each
Exiting Lender in and to the loans and commitments of such Exiting Lender
outstanding under the Existing Credit Agreement, which sale and assignment shall
become effective immediately prior to the effectiveness of this Agreement.

 

(r)                                    KYC Information.

 

(i)                                     Upon the reasonable request of any
Lender made at least ten (10) days prior to the Restatement Date, Borrowers
shall have provided to such Lender, and such Lender shall be reasonably
satisfied with, the documentation and other information so requested in
connection with applicable “know your customer” and anti-money-laundering
rules and regulations, including, without limitation, the PATRIOT Act and the
Canadian Anti-Money

 

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Laundering & Anti-Terrorism Legislation, in each case at least five (5) days
prior to the Restatement Date.

 

(ii)                                  At least five (5) days prior to the
Restatement Date, any Borrower that qualifies as a “legal entity customer” under
the Beneficial Ownership Regulation shall deliver, to each Lender that so
requests, a Beneficial Ownership Certification in relation to such Borrower.

 

6.2.                            Conditions Precedent to All Credit Extensions. 
Agent, Issuing Bank and Lenders shall not be required to fund any Loans, arrange
for issuance of any Letters of Credit or grant any other accommodation to or for
the benefit of Borrowers, unless the following conditions are satisfied:

 

(a)                                 No Default or Event of Default shall exist
at the time of, or result from, such funding, issuance or grant;

 

(b)                                 The representations and warranties of each
Obligor in the Loan Documents shall be true and correct in all material respects
(without duplication or any materiality provisions therein) on the date of, and
upon giving effect to, such funding, issuance or grant (except for
representations and warranties that expressly relate to an earlier date);

 

(c)                                  All conditions precedent in any other Loan
Document shall be satisfied;

 

(d)                                 No event shall have occurred or circumstance
exist that has or could reasonably be expected to have a Material Adverse
Effect; and

 

(e)                                  With respect to issuance of a Letter of
Credit, the LC Conditions shall be satisfied.

 

Each request (or deemed request) by Borrowers for funding of a Loan, issuance of
a Letter of Credit or grant of an accommodation shall constitute a
representation by Borrowers that the foregoing conditions are satisfied on the
date of such request and on the date of such funding, issuance or grant.

 

SECTION 7.                                           COLLATERAL

 

7.1.                            Grant of Security Interest.  To secure the
prompt payment and performance of all Obligations, each Obligor (other than any
UK Guarantor) hereby grants to Agent, for the benefit of Secured Parties, a
continuing security interest in and Lien upon all Property of such Obligor,
including all of the following Property, whether now owned or hereafter
acquired, and wherever located:

 

(a)                                 all Accounts;

 

(b)                                 all Chattel Paper, including all Tangible
Chattel Paper and all Electronic Chattel Paper;

 

(c)                                  all Commercial Tort Claims, including those
shown on Schedule 9.1.16;

 

(d)                                 all Deposit Accounts, Securities Accounts
and Commodities Accounts (and all money, cash and Cash Equivalents, checks,
other negotiable instruments, funds, evidences of payment, Commodities
Contracts, Security Entitlements, Securities and other assets (including
Financial Assets) contained in, or credited to, such Deposit Accounts,
Securities Accounts and Commodities Accounts);

 

(e)                                  all Documents (including, if applicable,
electronic documents);

 

(f)                                   all General Intangibles and Intangibles,
including Intellectual Property, Payment Intangibles, intercompany Debt and
customer lists;

 

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(g)                                  all Goods, including Inventory, Equipment
and Fixtures;

 

(h)                                 all Instruments, including Promissory Notes;

 

(i)                                     all Investment Property (including all
Securities and Equity Interests);

 

(j)                                    all Letters of Credit (which, for
purposes of this clause (j) only, shall have the meaning given to such term in
the UCC) and Letter-of-Credit Rights;

 

(k)                                 all Supporting Obligations;

 

(l)                                     all monies, cash and Cash Equivalents,
whether or not in the possession or under the control of Agent, a Lender, or a
bailee or Affiliate of Agent or a Lender, including any Cash Collateral;

 

(m)                             all books and records (including databases,
customer lists, files, correspondence, tapes, and other records, whether
tangible or electronic, computer programs, print-outs and computer records)
pertaining to the foregoing clauses (a) through (l) above; and

 

(n)                                 to the extent not covered by clauses
(a) through (m) above, (i) all other Property of such Obligor, whether tangible
or intangible and (ii) all Proceeds, Supporting Obligations and products of each
of the foregoing and all accessions to, substitutions  and replacements for, and
rents, profits and products of, each of the foregoing, any and all insurance
claims, proceeds of any insurance, indemnity, warranty or guaranty payable to
such Obligor from time to time with respect to any of the foregoing and any
other contract rights or rights to the payment of money or tort claims.

 

In no event shall the grant of the security interest in this Agreement or in any
other Loan Document attach to, or the term “Collateral” be deemed to include,
(a) any of the outstanding Equity Interests in (x) an Immaterial Foreign
Subsidiary or (y) a Foreign Subsidiary (i) in excess of 65% of the voting power
of all classes of equity interests of such Foreign Subsidiary entitled to vote
in the election of directors or other similar body of such Foreign Subsidiary or
(ii) to the extent that the pledge thereof is prohibited by the laws of the
jurisdiction of such foreign subsidiary’s organization; (b) any equity interest
in any Foreign Subsidiary that is not a first-tier subsidiary of an Borrower;
(c) any lease, license, contract, property rights or agreement to which Debtor
is a party or any of such Debtor’s rights or interests thereunder, if, and for
so long as and to the extent that, the grant of the security interest would
constitute or result in (i) the abandonment, invalidation or unenforceability of
any material right, title or interest of such Debtor therein or (ii) a breach or
termination pursuant to the terms of, or a default under, any such lease,
license, contract, property rights or agreement (other than to the extent that
any such breach, termination or default would be rendered ineffective pursuant
to Section 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code of the
applicable jurisdiction (or any successor provision or provisions), any other
applicable law or principles of equity), provided, however, that the security
interest (x) shall attach immediately when the condition causing such
abandonment, invalidation or unenforceability is remedied, (y) shall attach
immediately to any severable term of such lease, license, contract, property
rights or agreement to the extent that such attachment does not result in any of
the consequences specified in (i) or (ii) above and (z) shall attach immediately
to any such lease, license, contract, property rights or agreement to which the
account debtor or such Obligor’s counterparty has consented to such attachment;
(d) any equity interest acquired after the date hereof that is an equity
interest in an entity other than a subsidiary of an Obligor, if the terms of the
organizational documents of the issuer of such equity interests do not permit
the grant of the security interest in such equity interests by the owner thereof
or Obligor; (e) any application to register any trademark or service mark prior
to the filing under applicable law of a verified statement of use (or the
equivalent) for such trademark or service mark to the extent the creation of a
security interest therein or the grant of a mortgage thereon would void or
invalidate such trademark or service mark; and (f) except as may be mutually
agreed by the Borrowers and Agent, any fee-owned

 

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Real Estate or leasehold interests in Real Estate (other than, for the avoidance
of doubt, Fixtures) (collectively, the “Excluded Property”); provided, however,
that any Collateral (or any portion thereof) that ceases to satisfy the criteria
for Excluded Property (whether as a result of an Obligor obtaining any necessary
consent, any change in any rule of law, statute or regulation or otherwise)
shall no longer be Excluded Property and the security interest shall attach
immediately to such Collateral (or portion thereof) at such time.

 

7.2.                            Lien on Deposit Accounts; Cash Collateral.

 

7.2.1.                  Deposit Accounts.  To further secure the prompt payment
and performance of all Obligations, each Obligor (other than a UK Guarantor)
hereby grants to Agent a continuing security interest in and Lien upon all
amounts credited to any Deposit Account of such Obligor, including any sums in
any lockbox or Dominion Account.

 

7.2.2.                  Cash Collateral.  Cash Collateral may be invested, at
Agent’s discretion (and with the consent of Borrower Agent, as long as no Event
of Default exists), but Agent shall have no duty to do so, regardless of any
agreement or course of dealing with any Obligor, and shall have no
responsibility for any investment or loss.  Each Obligor (other than a UK
Guarantor) hereby grants to Agent, as security for the Obligations, a security
interest in all Cash Collateral held from time to time and all proceeds thereof,
whether held in a Cash Collateral Account or otherwise.  Agent may apply Cash
Collateral to the payment of Obligations as they become due, in such order as
Agent may elect.  Each Cash Collateral Account and all Cash Collateral shall be
under the sole dominion and control of Agent, and no Obligor or other Person
shall have any right to any Cash Collateral, until Full Payment of all
Obligations.

 

7.3.                            [Reserved].

 

7.4.                            Other Collateral.

 

7.4.1.                  Commercial Tort Claims.  Obligors shall promptly notify
Agent in writing if any Obligor has a Commercial Tort Claim (other than, as long
as no Default or Event of Default exists, a Commercial Tort Claim for less than
$100,000), shall promptly amend Schedule 9.1.16 to include such claim, and shall
take such actions as Agent deems appropriate to subject such claim to a duly
perfected, first priority Lien in favor of Agent.

 

7.4.2.                  Certain After-Acquired Collateral.  Obligors shall
promptly notify Agent in writing if, after the Restatement Date, any Obligor
obtains any interest in any Collateral consisting of Deposit Accounts, Chattel
Paper, Documents, Instruments, Intellectual Property, Investment Property or
Letter-of-Credit Rights and, upon Agent’s request, shall promptly take such
actions as Agent deems appropriate to effect Agent’s duly perfected, first
priority Lien (subject to Permitted Liens) upon such Collateral, including
obtaining any appropriate possession, control agreement or Lien Waiver.  If any
Collateral is in the possession of a third party, at Agent’s request, Obligors
shall obtain an acknowledgment that such third party holds the Collateral for
the benefit of Agent.

 

7.5.                            No Assumption of Liability.  The Lien on
Collateral granted hereunder is given as security only and shall not subject
Agent or any Lender to, or in any way modify, any obligation or liability of
Obligors relating to any Collateral.  In no event shall the grant of any Lien
under any Loan Document secure an Excluded Swap Obligation of the granting
Obligor.

 

7.6.                            Further Assurances.  All Liens granted to Agent
under the Loan Documents are for the benefit of Secured Parties.  Promptly upon
reasonable request, Obligors shall deliver such instruments and agreements, and
shall take such actions, as Agent reasonably deems necessary and appropriate
under Applicable Law to evidence or perfect its Lien on any Collateral, or
otherwise to give effect to the intent

 

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of this Agreement.  Each Obligor authorizes Agent to file any financing
statement that describes the Collateral as “all assets” or “all personal
property” of such Obligor, or words to similar effect, and ratifies any action
taken by Agent before the Restatement Date to effect or perfect its Lien on any
Collateral.

 

SECTION 8.                                           COLLATERAL ADMINISTRATION

 

8.1.                            Borrowing Base Certificates.  Obligors shall
deliver to Agent (and Agent shall promptly deliver same to Lenders) (i) by the
fifteenth (15th) day of each calendar month, and at such other times as Agent
may request, a Revolver Borrowing Base Certificate and a Term Loan Borrowing
Base Certificate setting forth the amounts of Accounts, Inventory, Eligible
Accounts, Eligible Inventory, the Accounts Formula Amount, the Inventory Formula
Amount, the status of Priority Payables, the Term Loan Push Down Reserve, the
Availability Reserve, the Revolver Borrowing Base, the Term Loan Borrowing Base,
the Revolver Exposure and Availability as of the most recently ended Fiscal
Month, and (ii) at any time Availability falls below the Reporting Frequency
Increase Trigger Amount, by Wednesday of each week, an updated Revolver
Borrowing Base Certificate and Term Loan Borrowing Base Certificate (which
updated Revolver Borrowing Base Certificate and Term Loan Borrowing Base
Certificate shall include updated calculations of the Revolver Borrowing Base,
Term Loan Borrowing Base, the Term Loan Push Down Reserve, Availability and the
status of Priority Payables as of the end of the most recently ended week based
solely upon sales, collections and Loan activity since the last day of the
Fiscal Month for which a monthly Revolver Borrowing Base Certificate and a
monthly Term Loan Borrowing Base shall have been prepared).  All calculations of
Availability in any Revolver Borrowing Base Certificate and/or Term Loan
Borrowing Base Certificate shall originally be made by Obligors and certified by
a Senior Officer, provided that Agent may from time to time review and, in its
Permitted Discretion, adjust any such calculation (a) to reflect its estimate of
declines in value of any Collateral, due to collections received or otherwise;
(b) to the extent Agent believes that the calculation was not made in accordance
with this Agreement or does not accurately reflect the Availability Reserve; or
(c) to the extent the Term Loan Agent has advised Agent that the calculation
does not accurately reflect the Term Loan Push Down Reserve.

 

8.2.                            Administration of Accounts.

 

8.2.1.                  Records and Schedules of Accounts.  Each Obligor shall
keep accurate and complete records of its Accounts, including all payments and
collections thereon, and shall submit to Agent sales, collection, reconciliation
and other reports in form satisfactory to Agent, on such periodic basis as Agent
may request.  Each Obligor shall also provide to Agent, on or before the 15th
day of each month, a detailed aged trial balance of all Accounts as of the end
of the most recent Fiscal Month, specifying each Account’s Account Debtor name
and address, amount, invoice date and due date, showing any discount, allowance,
credit, authorized return or dispute, and including such proof of delivery,
copies of invoices and invoice registers, copies of related documents, repayment
histories, status reports and other information as Agent may reasonably
request.  If Accounts in an aggregate face amount of $250,000 or more cease to
be Eligible Accounts, Obligors shall notify Agent of such occurrence promptly
(and in any event within one Business Day) after any Obligor has knowledge
thereof.

 

8.2.2.                  Taxes.  If an Account of any Obligor includes a charge
for any Taxes, Agent is authorized, in its discretion, to pay the amount thereof
to the proper taxing authority for the account of such Obligor and to charge
Obligors therefor; provided, however, that neither Agent nor Lenders shall be
liable for any Taxes that may be due from Obligors or with respect to any
Collateral.

 

8.2.3.                  Account Verification.  Whether or not a Default or Event
of Default exists, Agent shall have the right at any time, in the name of Agent,
any designee of Agent or any Obligor, to verify the validity, amount or any
other matter relating to any Accounts of Obligors by mail, telephone or
otherwise.  Obligors shall cooperate fully with Agent in an effort to facilitate
and promptly conclude any such verification process.

 

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8.2.4.                  Maintenance of Dominion Accounts.  Obligors shall
maintain Dominion Accounts pursuant to lockbox or other arrangements acceptable
to Agent.  On or prior to the Restatement Date, Obligors shall have entered into
agreements (in form and substance reasonably satisfactory to Agent) with Bank of
America, in its capacity as lockbox servicer and Dominion Account bank,
establishing Agent’s Lien on and dominion and control over all lockboxes and
Dominion Accounts and which provide (i) in case of lockboxes and Dominion
Accounts of the UK Guarantor, that Agent have exclusive dominion and control at
all times (regardless of whether a Cash Dominion Period is in effect), and
(ii) in the case of lockboxes and Dominion Accounts of any Obligor other than
the UK Guarantor, that Agent may exercise dominion and control at any time
during a Cash Dominion Period and that during a Cash Dominion Period all
remittances received in a lockbox be immediately deposited to a Dominion
Account.  Agent and Lenders assume no responsibility to Obligors for any lockbox
arrangement or Dominion Account, including any claim of accord and satisfaction
or release with respect to any Payment Items accepted by any bank.

 

8.2.5.                  Proceeds of Collateral.  Borrowers shall request in
writing and otherwise take all necessary steps to ensure that at all times from
and after the Restatement Date, all payments on Accounts or otherwise relating
to Collateral are made directly to a Dominion Account (or a lockbox relating to
a Dominion Account).  If any Obligor or Subsidiary receives cash or Payment
Items with respect to any Collateral, it shall hold same in trust for Agent and
promptly (not later than the next Business Day) deposit same into a Dominion
Account (or a lockbox which is swept into a Dominion Account).

 

8.3.                            Administration of Inventory.

 

8.3.1.                  Records and Reports of Inventory.  Each Obligor shall
keep accurate and complete records of its Inventory, including costs and daily
withdrawals and additions, and, prior to the 15th day after the end of each
month, shall submit to Agent inventory and reconciliation reports for the most
recently ended Fiscal Month in form satisfactory to Agent.  Each Obligor shall
conduct a physical inventory at least once per calendar year (and on a more
frequent basis if requested by Agent when an Event of Default exists) and
periodic cycle counts consistent with historical practices, and shall provide to
Agent a report based on each such inventory and count promptly upon completion
thereof, together with such supporting information as Agent may request.  Agent
may participate in and observe each physical count.

 

8.3.2.                  Returns of Inventory.  No Obligor shall return any
Inventory to a supplier, vendor or other Person, whether for cash, credit or
otherwise, unless (a) such return is in the Ordinary Course of Business; (b) no
Default, Event of Default or Revolver Overadvance exists or would result
therefrom; (c) Agent is promptly notified if the aggregate Value of all
Inventory returned in any month exceeds $375,000; and (d) any payment received
by an Obligor for a return is promptly remitted to Agent for application to the
Obligations.

 

8.3.3.                  Acquisition, Sale and Maintenance.  No Obligor shall
acquire or accept any Inventory on consignment or approval, and shall take all
steps to assure that all Inventory is produced in accordance with Applicable
Law, including the FLSA.  No Obligor shall sell any Inventory on consignment or
approval or any other basis under which the customer may return or require an
Obligor to repurchase such Inventory.  Obligors shall use, store and maintain
all Inventory with reasonable care and caution, in accordance with applicable
standards of any insurance and in conformity with all Applicable Law, and shall
make current rent payments (within applicable grace periods provided for in
leases) at all locations where any Collateral is located.

 

8.4.                            Administration of Equipment.

 

8.4.1.                  Records and Schedules of Equipment.  Each Obligor shall
keep accurate and complete records of its Equipment, including kind, quality,
quantity, cost, acquisitions and dispositions

 

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thereof, and shall submit to Agent, on such periodic basis as Agent may request,
a current schedule thereof, in form satisfactory to Agent.  Promptly upon
request, Obligors shall deliver to Agent evidence of their ownership or
interests in any Equipment.

 

8.4.2.                  Dispositions of Equipment.  No Obligor shall sell, lease
or otherwise dispose of any Equipment, without the prior written consent of
Agent, other than (a) a Permitted Asset Disposition; and (b) replacement of
Equipment that is worn, damaged or obsolete with Equipment of like function and
value, if the replacement Equipment is acquired substantially contemporaneously
with such disposition and is free of Liens (other than Permitted Liens).

 

8.4.3.                  Condition of Equipment.  The Equipment is in good
operating condition and repair, and all necessary replacements and repairs have
been made so that the value and operating efficiency of the Equipment is
preserved at all times, reasonable wear and tear excepted.  Each Obligor shall
ensure that the Equipment is mechanically and structurally sound, and capable of
performing the functions for which it was designed, in accordance with
manufacturer specifications.  No Obligor shall permit any Equipment to become
affixed to real Property unless any landlord or mortgagee delivers a Lien
Waiver.

 

8.5.                            Administration of Deposit Accounts.  Schedule
8.5 sets forth all Deposit Accounts maintained by Obligors, including all
Dominion Accounts.  Each Obligor shall take all actions necessary to establish
Agent’s control over each such Deposit Account (other than Excluded Deposit
Accounts).  Each Obligor shall be the sole account holder of each Deposit
Account and shall not allow any Person (other than Agent) to have control over a
Deposit Account or any Property deposited therein.  Each Obligor shall promptly
notify Agent of any opening or closing of a Deposit Account and, with the
consent of Agent, will amend Schedule 8.5 to reflect same.

 

8.6.                            General Provisions.

 

8.6.1.                  Location of Collateral.  All tangible items of
Collateral, other than Inventory in transit, shall at all times be kept by
Obligors at the business locations set forth in Schedule 8.6.1, except that
Obligors may (a) make sales or other dispositions of Collateral in accordance
with Section 10.2.6; and (b) move Collateral to another location in the United
States or Canada, as applicable, upon 30 Business Days prior written notice to
Agent.

 

8.6.2.                  Insurance of Collateral; Condemnation Proceeds.

 

(a)                                 Each Obligor shall maintain insurance with
respect to the Collateral, covering casualty, hazard, theft, malicious mischief,
flood and other risks, in amounts, with endorsements and with insurers (with a
Best’s Financial Strength Rating of at least A_, unless otherwise approved by
Agent) satisfactory to Agent.  All proceeds under each policy shall be payable
to Agent.  From time to time upon request, Obligors shall deliver to Agent the
originals or certified copies of its insurance policies and updated flood plain
searches.  Unless Agent shall agree otherwise, each policy shall include
satisfactory endorsements (i) showing Agent as loss payee; (ii) requiring 30
days prior written notice to Agent in the event of cancellation of the policy
for any reason whatsoever; and (iii) specifying that the interest of Agent shall
not be impaired or invalidated by any act or neglect of any Obligor or the owner
of the Property, nor by the occupation of the premises for purposes more
hazardous than are permitted by the policy.  If any Obligor fails to provide and
pay for any insurance, Agent may, at its option, but shall not be required to,
procure the insurance and charge Obligors therefor.  Each Obligor agrees to
deliver to Agent, promptly as rendered, copies of all reports made to insurance
companies.  While no Event of Default exists, Obligors may settle, adjust or
compromise any insurance claim, as long as the proceeds are delivered to Agent. 
If an Event of Default exists, only Agent shall be authorized to settle, adjust
and compromise such claims.

 

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(b)                                 Any proceeds of insurance (other than
proceeds from workers’ compensation or D&O insurance) and any awards arising
from condemnation of any Collateral shall be paid to Agent or to Term Loan Agent
in accordance with the Intercreditor Agreement.

 

(c)                                  If requested by Obligors in writing within
15 days after Agent’s receipt of any insurance proceeds or condemnation awards
relating to any loss or destruction of Term Priority Collateral (as such term is
defined in the Intercreditor Agreement), Obligors may use such proceeds or
awards to repair or replace such Term Priority Collateral (and until so used,
the proceeds shall be held by Agent or Term Loan Agent as Cash Collateral) as
long as (i) no Event of Default exists; (ii) such repair or replacement is
undertaken and concluded within 180 days, in accordance with plans reasonably
satisfactory to Agent; (iii) replacement buildings are constructed on the sites
of the original casualties and are of comparable size, quality and utility to
the destroyed buildings; (iv) the repaired or replaced Property is free of
Liens, other than Permitted Liens that are not Purchase Money Liens;
(v) Borrowers comply with disbursement procedures for such repair or replacement
as Agent may reasonably require; and (vi) the aggregate amount of such proceeds
or awards from any single Casualty Event or condemnation does not exceed
$250,000.

 

8.6.3.                  Protection of Collateral.  All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping any
Collateral, all Priority Payables and Taxes payable with respect to any
Collateral (including any sale thereof), and all other payments required to be
made by Agent to any Person to realize upon any Collateral, shall be borne and
paid by Obligors.  Agent shall not be liable or responsible in any way for the
safekeeping of any Collateral, for any loss or damage thereto (except for
reasonable care in its custody while Collateral is in Agent’s actual
possession), for any diminution in the value thereof, or for any act or default
of any warehouseman, carrier, forwarding agency or other Person whatsoever, but
the same shall be at Obligors’ sole risk.

 

8.6.4.                  Defense of Title.  Each Obligor shall defend its title
to Collateral and Agent’s Liens therein against all Persons, claims and demands,
except Permitted Liens.

 

8.7.                            Power of Attorney.  Each Obligor hereby
irrevocably constitutes and appoints Agent (and all Persons designated by Agent)
as such Obligor’s true and lawful attorney (and agent-in-fact) for the purposes
provided in this Section.  Agent, or Agent’s designee, may, without notice and
in either its or an Obligor’s name, but at the cost and expense of Obligors:

 

(a)                                 Endorse an Obligor’s name on any Payment
Item remitted to or deposited in any lockbox or Dominion Account; and

 

(b)                                 During an Event of Default, (i) notify any
Account Debtors of the assignment of their Accounts, demand and enforce payment
of Accounts by legal proceedings or otherwise, and generally exercise any rights
and remedies with respect to Accounts; (ii) settle, adjust, modify, compromise,
discharge or release any Accounts or other Collateral, or any legal proceedings
brought to collect Accounts or Collateral; (iii) sell or assign any Accounts and
other Collateral upon such terms, for such amounts and at such times as Agent
deems advisable; (iv) collect, liquidate and receive balances in Deposit
Accounts or investment accounts, and take control, in any manner, of proceeds of
Collateral; (v) prepare, file and sign an Obligor’s name to a proof of claim or
other document in a bankruptcy of an Account Debtor, or to any notice,
assignment or satisfaction of Lien or similar document; (vi) receive, open and
dispose of mail addressed to an Obligor, and notify postal authorities to
deliver any such mail to an address designated by Agent; (vii) endorse any
Chattel Paper, Document, Instrument, bill of lading, or other document or
agreement relating to any Accounts, Inventory or other Collateral; (viii) use an
Obligor’s stationery and sign its name to verifications of Accounts and notices
to Account Debtors; (ix) use information contained in any data processing,
electronic or information systems relating to Collateral; (x) make and adjust
claims under insurance policies; (xi) take any action as may be necessary or
appropriate to obtain payment under any letter of credit, banker’s acceptance or
other instrument for

 

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which an Obligor is a beneficiary; and (xii) take all other actions as Agent
deems appropriate to fulfill any Borrower’s obligations under the Loan
Documents.

 

SECTION 9.                                           REPRESENTATIONS AND
WARRANTIES

 

9.1.                            General Representations and Warranties.  To
induce Agent and Lenders to enter into this Agreement and to make available the
Commitments, Loans and Letters of Credit, each Obligor represents and warrants
that:

 

9.1.1.                  Organization and Qualification.  Each Obligor and
Subsidiary (other than any Immaterial Foreign Subsidiary) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization or formation.  Each Obligor and Subsidiary is duly qualified,
authorized to do business and in good standing as a foreign corporation in each
jurisdiction where failure to be so qualified could reasonably be expected to
have a Material Adverse Effect.

 

9.1.2.                  Power and Authority.  Each Obligor is duly authorized to
execute, deliver and perform its obligations under the Loan Documents.  The
execution, delivery and performance of the Loan Documents have been duly
authorized by all necessary action, and do not (a) require any consent or
approval of any holders of Equity Interests of any Obligor, except those already
obtained; (b) contravene the Organic Documents of any Obligor; (c) violate or
cause a default under any Applicable Law or Material Contract; or (d) result in
or require the imposition of any Lien (other than Permitted Liens) on any
Obligor’s Property.

 

9.1.3.                  Enforceability.  Each Loan Document is a legal, valid
and binding obligation of each Obligor party thereto, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors’ rights
generally.

 

9.1.4.                  Capital Structure.  Schedule 9.1.4 shows (a) for each
Obligor and Subsidiary, its name, jurisdiction of organization or formation and
any agreement binding on the holders of its Equity Interests with respect to
such Equity Interests, and (b) for each Subsidiary of the Company, its
authorized and issued Equity Interests and the names of the holders of its
Equity Interests.  Except as disclosed on Schedule 9.1.4, in the five years
preceding the Restatement Date, no Obligor or Subsidiary has acquired any
substantial assets from any other Person nor been the surviving entity in a
merger or combination.  Each Obligor has good title to its Equity Interests in
its Subsidiaries, subject only to Permitted Liens, and all such Equity Interests
are duly issued, fully paid and non-assessable.  Except for the Equity Interests
issued under the Company’s 2006 Performance Equity Plan, the Company’s 2012
Incentive Compensation Plan, and inducement grants to new employees approved by
the Compensation Committee of the Company’s Board of Directors, there are no
outstanding purchase options, warrants, subscription rights, agreements to issue
or sell, convertible interests, phantom rights or powers of attorney relating to
Equity Interests of any Obligor or Subsidiary.

 

9.1.5.                  Title to Properties; Priority of Liens.  Each Obligor
and Subsidiary has good and marketable title to (or valid leasehold interests
in) all of its Real Estate, and good title to all of its personal Property,
including all Property reflected in any financial statements delivered to Agent
or Lenders, in each case free of Liens except Permitted Liens.  Except as
otherwise indicated on Schedule 9.1.5, each Obligor and Subsidiary has paid and
discharged all lawful claims that, if unpaid, could become a Lien on its
Properties, other than Permitted Liens.  The provisions of the Security
Documents, together with such filings and other actions required to be taken
hereby or by the applicable Security Documents  are effective to create in favor
of the Agent, for the benefit of the Secured Parties referred to therein, a
legal, valid and enforceable security interest in and first priority Lien
(except for those Permitted Liens that have priority in such Collateral by
operation of law and except as to the Term Priority Collateral, for the Liens of
the Term Loan Agent to the extent provided in the Intercreditor Agreement) on
all right title and interest of the respective Obligors in the Collateral
described therein, subject to applicable bankruptcy,

 

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insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law, except (a) as otherwise
contemplated hereby or under any other Loan Documents, and (b) except as to
specific items of Collateral as to which Agent may determine, in consultation
with the Borrower Agent, not to perfect its security interest therein based on
the value thereof relative to the costs of such perfection.

 

9.1.6.                  Accounts.  Agent may rely, in determining which Accounts
are Eligible Accounts, on all statements and representations made by Obligors
with respect thereto.  Obligors warrant, with respect to each Account at the
time it is shown as an Eligible Account in a Revolver Borrowing Base Certificate
or a Term Loan Borrowing Base Certificate, that:

 

(a)                                 it is genuine and in all respects what it
purports to be, and is not evidenced by a judgment;

 

(b)                                 it arises out of a completed, bona fide sale
and delivery of goods in the Ordinary Course of Business, and substantially in
accordance with any purchase order, contract or other document relating thereto;

 

(c)                                  it is for a sum certain, maturing as stated
in the invoice covering such sale, a copy of which has been furnished or is
available to Agent on request;

 

(d)                                 it is not subject to any offset, Lien (other
than Agent’s Lien), defense, dispute, counterclaim or other adverse condition
except as arising in the Ordinary Course of Business and disclosed to Agent and
is not subject to any discount or deduction except discounts and deductions
arising in the Ordinary Course of Business consistent with past practices or
otherwise disclosed in writing to Agent; and it is absolutely owing by the
Account Debtor, without contingency in any respect;

 

(e)                                  no purchase order, agreement, document or
Applicable Law restricts assignment of the Account to Agent (regardless of
whether, under the UCC and/or PPSA, as applicable, the restriction is
ineffective), and the applicable Obligor is the sole payee or remittance party
shown on the invoice;

 

(f)                                   no extension, compromise, settlement,
modification, credit, deduction or return has been authorized with respect to
the Account, except discounts or allowances granted in the Ordinary Course of
Business for prompt payment that are reflected on the face of the invoice
related thereto and in the reports submitted to Agent hereunder; and

 

(g)                                  to the best of Obligors’ knowledge,
(i) there are no facts or circumstances that are reasonably likely to impair the
enforceability or collectibility of such Account; (ii) the Account Debtor had
the capacity to contract when the Account arose, continues to meet the
applicable Obligor’s customary credit standards, is Solvent, is not
contemplating or subject to an Insolvency Proceeding, and has not failed, or
suspended or ceased doing business; and (iii) there are no proceedings or
actions threatened or pending against any Account Debtor that could reasonably
be expected to have a material adverse effect on the Account Debtor’s financial
condition.

 

9.1.7.                  Financial Statements.  The consolidated and
consolidating balance sheets, and related statements of income, cash flow and
shareholder’s equity, of Company and Subsidiaries that have been and are
hereafter delivered to Agent and Lenders, are prepared in accordance with GAAP,
or in the case of the Canadian Guarantor, GAAP as in effect in Canada, as and to
the extent applicable (in either case, except as otherwise noted therein and, in
the case of unaudited financial statements, subject to the absence of footnotes
and normal year-end adjustments), and fairly present the financial positions and
results of operations of Company and Subsidiaries at the dates and for the
periods indicated.  All projections delivered from time to time to Agent and
Lenders have been prepared in good faith, based on

 

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reasonable assumptions in light of the circumstances at such time provided,
that, with respect to projected financial information, it being understood and
agreed that (a) any financial or business projections furnished by the Borrowers
are subject to significant uncertainties and contingencies, which may be beyond
the control of the Borrowers, (b) no assurance is given by the Borrowers that
the results of such projections will be realized and (c) the actual results may
differ from the results of such projections and such differences may be
material.  Except as otherwise disclosed by the Company in its filings with the
Securities and Exchange Commission, or any similar applicable Governmental
Authority in any other applicable jurisdiction, since December 30, 2017, there
has been no change in the business, assets, Properties, liabilities, operations
or financial condition of the Obligors, taken as a whole, that could reasonably
be expected to have a Material Adverse Effect.  No financial statement delivered
to Agent or Lenders at any time contains any untrue statement of a material
fact, nor fails to disclose any material fact necessary to make such statement
not materially misleading.  The Obligors, taken as a whole, are Solvent.

 

9.1.8.                  Surety Obligations.  Except as disclosed on Schedule
9.1.8, no Obligor or Subsidiary is obligated as surety or indemnitor under any
bond or other Material Contract that assures payment or performance of any
obligation of any Person, except as permitted hereunder.

 

9.1.9.                  Taxes.  Each Obligor and Subsidiary (other than any
Immaterial Foreign Subsidiary) has filed all federal, state, provincial,
territorial, and other material tax returns and other reports that it is
required by law to file, and has paid, or made provision for the payment of, all
material Taxes and Priority Payables upon it, its income and its Properties that
are due and payable, except to the extent being Properly Contested.  The
provision for Taxes on the books of each Obligor and Subsidiary is adequate for
all years not closed by applicable statutes, and for its current Fiscal Year.

 

9.1.10.           Brokers.  Except as disclosed on Schedule 9.1.10, there are no
brokerage commissions, finder’s fees or investment banking fees payable in
connection with any transactions contemplated by the Loan Documents.

 

9.1.11.           Intellectual Property. Each Obligor and Subsidiary owns or has
the lawful right to use all Intellectual Property, licenses, permits and other
authorizations reasonably necessary for the conduct of its business as currently
conducted, and does not infringe upon misuse, misappropriate or violate any
rights held by any other Person except for such infringements, misuses,
misappropriations or violations that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect. 
Except as disclosed on Schedule 9.1.11, there is no pending or, to any Obligor’s
or Subsidiary’s knowledge, threatened Intellectual Property Claim with respect
to any Obligor, any Subsidiary or any of their Property (including any
Intellectual Property) that, if adversely determined, could reasonably be
expected to have a Material Adverse Effect.  Except as disclosed on Schedule
9.1.11, no Obligor or Subsidiary pays or owes any Royalty or other compensation
to any Person with respect to any Intellectual Property.  All Intellectual
Property owned, licensed by, or otherwise subject to any interests of, any
Obligor or Subsidiary is shown on Schedule 9.1.11.

 

9.1.12.           Governmental Approvals.  Each Obligor and Subsidiary has, is
in compliance with, and is in good standing with respect to, all Governmental
Approvals necessary to conduct its business and to own, lease and operate its
Properties, except where noncompliance could not reasonably be expected to have
a Material Adverse Effect.  All necessary import, export or other licenses,
permits or certificates for the import or handling of any goods or other
Collateral have been procured and are in effect, and Obligors and Subsidiaries
have complied with all foreign and domestic laws with respect to the shipment
and importation of any goods or Collateral, except where noncompliance could not
reasonably be expected to have a Material Adverse Effect.

 

9.1.13.           Compliance with Laws.(a)  Each Obligor and Subsidiary has duly
complied, and its Properties and business operations are in compliance, in all
material respects with all Applicable Law, except where noncompliance could not
reasonably be expected to have a Material Adverse Effect.  There

 

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have been (i) no citations, notices of noncompliance or requests for information
issued to any Obligor by the CPSC within the immediately preceding three years
other than those described on Schedule 9.1.13, and (ii) no notices or orders of
material noncompliance issued to any Obligor by any other Governmental
Authority under any Applicable Law.  To the best knowledge of the Obligors, no
Inventory has been produced by Obligors in violation of the FLSA or in violation
of any CPSC Regulations.  The Obligors have current and effective certificates
of compliance for each children’s product and each children’s toy that the
Obligors sell, manufacture or distribute.  The Obligors conduct current testing
of all children’s products and children’s toys that the Obligors sell,
manufacture or distribute in accordance with Applicable Law.  Except as
described on Schedule 9.1.13, there are no pending or, to the knowledge of
the Obligors, threatened (in writing), recalls, or regulatory actions or
investigations by the CPSC with respect to the Obligors or any of the products
or toys that the Obligors sell, manufacture or distribute.  To the best
knowledge of the Obligors, none of the products or toys that the Obligors sell,
manufacture or distribute contains a defect that could create a substantial
product hazard or could create an unreasonable risk of serious injury or death. 
The Obligors have complied in a timely manner with all reporting requirements
under the CPSC Regulations.  To the best knowledge of the Obligors, the Obligors
have not materially misrepresented in any report filed by the Obligors with the
CPSC, the scope of the hazards posed by any toys or products that the Obligors
sell, manufacture or distribute or the numbers of incidents or injuries that
have been caused by or that have been alleged to have been caused by such toys
and products.

 

(b)                                 Without limiting the foregoing, no Obligor
or, to the knowledge of the Borrowers, any of their respective Affiliates (i) is
in violation of any Anti-Terrorism Law, (ii) engages in or conspires to engage
in any transaction that evades or avoids, or has the purpose of evading or
avoiding, any of the prohibitions set forth in any Anti-Terrorism Law, or
(iii) is a Blocked Person. No Obligor or, to the knowledge of the Borrowers, any
of their respective Affiliates (x) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of
any Blocked Person, or (y) deals in, or otherwise engages in any transaction
relating to, any property or interest in property blocked pursuant to Executive
Order No. 13224, any similar executive order or other Anti- Terrorism Law.

 

(c)                                  No Obligor or, to the knowledge of the
Borrowers, any of their respective Affiliates or any officer, director, or
employee, or agent, representative, sales intermediary of such Person, in each
case, acting on behalf of any Obligor or any of its Restricted Subsidiaries in
violation of any applicable Anti-Corruption Law. None of the Obligors or any of
their Affiliates has been convicted of violating any Anti-Corruption Laws or
subjected to any investigation by a Governmental Authority for violation of any
applicable Anti-Corruption Laws. There is no material suit, litigation,
arbitration, claim, audit, action, proceeding or investigation pending or, to
the knowledge of any executive officer of the Borrowers, threatened (in writing)
against or affecting the Obligors or any of their Affiliates related to any
applicable Anti-Corruption Law, before or by any Governmental Authority. None of
the Obligors has conducted or initiated any internal investigation or made a
voluntary, directed, or involuntary disclosure to any Governmental Authority
with respect to any alleged act or omission arising under or relating to any
noncompliance with any Anti-Corruption Law. In the three (3) years prior to the
Closing Date, none of the Obligors has received any written notice, request or
citation for any actual or potential noncompliance with any of the foregoing.

 

9.1.14.           Compliance with Environmental Laws.  Except with respect to
any matters that, either individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect and disclosed on Schedule
9.1.14, no Obligor’s or Subsidiary’s past or present operations, Real Estate or
other Properties are subject to any federal, state, provincial, municipal or
local investigation to determine whether any remedial action is needed to
address any environmental pollution, hazardous material or environmental
clean-up.  No Obligor or Subsidiary has received any Environmental Notice.  No
Obligor or Subsidiary has any contingent liability with respect to any
Environmental Release, environmental pollution or hazardous material on any Real
Estate now or previously owned, leased or

 

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operated by it, except where such liability could not reasonably be expected to
result in a Material Adverse Effect.

 

9.1.15.           Burdensome Contracts.  No Obligor or Subsidiary is party or
subject to any Restrictive Agreement, except as shown on Schedule 9.1.15.  No
such Restrictive Agreement prohibits the execution, delivery or performance of
any Loan Document by an Obligor.

 

9.1.16.           Litigation.  Except as shown on Schedule 9.1.16, there are no
proceedings or investigations pending or, to any Obligor’s knowledge, threatened
in writing against any Obligor or Subsidiary, or any of their businesses,
operations, Properties, prospects or conditions, that (a) relate to any Loan
Documents or transactions contemplated thereby; or (b) could reasonably be
expected to have a Material Adverse Effect if determined adversely to any
Obligor or Subsidiary.  Except as shown on such Schedule, no Obligor has a
Commercial Tort Claim (other than, as long as no Default or Event of Default
exists, a Commercial Tort Claim for less than $100,000).  No Obligor or
Subsidiary is in default with respect to any order, injunction or judgment of
any Governmental Authority.

 

9.1.17.           No Defaults.  No event or circumstance has occurred or exists
that constitutes a Default or Event of Default.  No Obligor or Subsidiary is in
default, and, to the knowledge of the Obligors and each of their Subsidiaries,
no event or circumstance has occurred or exists that with the passage of time or
giving of notice would constitute a material default, under any Material
Contract or in the payment of any Borrowed Money in excess of $500,000.  To the
best knowledge of the Obligors, there is no basis upon which any party (other
than an Obligor or Subsidiary) could terminate a Material Contract prior to its
scheduled termination date.

 

9.1.18.           ERISA.  Except as disclosed on Schedule 9.1.18:

 

(a)                                 Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code, and other federal
and state laws.  Each Plan that is intended to qualify under Section 401(a) of
the Code has received a favorable determination letter from the IRS or an
application for such a letter is currently being processed by the IRS with
respect thereto and, to the knowledge of Borrowers, nothing has occurred which
would prevent, or cause the loss of, such qualification.  Each Obligor and ERISA
Affiliate has met all applicable requirements under the Code, ERISA and the
Pension Protection Act of 2006, and no application for a waiver of the minimum
funding standards or an extension of any amortization period has been made with
respect to any Plan.

 

(b)                                 There are no pending or, to the knowledge of
Borrowers, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan that could reasonably be expected to have a
Material Adverse Effect.  There has been no prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan that has resulted
in or could reasonably be expected to have a Material Adverse Effect.

 

(c)                                  (i) No ERISA Event has occurred or is
reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension
Liability; (iii) no Obligor or ERISA Affiliate has incurred, or reasonably
expects to incur, any liability under Title IV of ERISA with respect to any
Pension Plan (other than premiums due and not delinquent under Section 4007 of
ERISA); (iv) no Obligor or ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; (v) no
Obligor or ERISA Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA; and (vi) as of the most recent valuation date
for any Pension Plan or Multiemployer Plan, the funding target attainment
percentage (as defined in Section 430(d)(2) of the Code) is at least 60%, and no
Obligor or ERISA Affiliate knows of any fact or circumstance that could
reasonably be expected to cause the funding target attainment percentage for any
such plan to drop below 60% as of such date.

 

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(d)                                 With respect to any Foreign Plan, (i) all
employer and employee contributions required by law or by the terms of the
Foreign Plan have been made, or, if applicable, accrued, in accordance with
normal accounting practices; (ii) the fair market value of the assets of each
funded Foreign Plan, the liability of each insurer for any Foreign Plan funded
through insurance, or the book reserve established for any Foreign Plan,
together with any accrued contributions, is sufficient to procure or provide for
the accrued benefit obligations with respect to all current and former
participants in such Foreign Plan according to the actuarial assumptions and
valuations most recently used to account for such obligations in accordance with
applicable generally accepted accounting principles; and (iii) it has been
registered as required and has been maintained in good standing with applicable
regulatory authorities.

 

(e)                                  (i) each Obligor is in compliance with the
requirements of the PBA and other Applicable Laws with respect to each Canadian
Pension Plan, except where the failure to so comply would not have a Material
Adverse Effect,  (ii) to the knowledge of the Obligors, no fact or situation
exists that may reasonably be expected to adversely affect the registered status
of any Canadian Pension Plan which could reasonably be expected to have a
Material Adverse Effect, (iii) no Obligor maintains, sponsors or contributes to
any Canadian Defined Benefit Pension Plan other than those consented to pursuant
to Section 10.2.18 hereof, (iv) no Termination Event has occurred in respect of
which a Canadian Priority Payables Reserve has not been taken,(v) no Lien has
arisen in respect of Obligors or their property in connection with any Canadian
Pension Plan (save for contribution amounts not yet due) which could reasonably
be expected to have a Material Adverse Effect; and (vi) all required
contributions of any Obligor to each Canadian Pension Plan have been made when
due under Applicable Laws (except for contributions, the outstanding status of
which cannot be reasonably expected to have a Material Adverse Effect).

 

(f)                                   Neither SI UK nor any of its Subsidiaries
is or has at any time been (i) an employer (for the purposes of sections 38 to
51 of the Pensions Act 2004) of an occupational pension scheme which is not a
money purchase scheme (both terms as defined in the Pensions Schemes Act 1993);
or (ii) “connected” with or an “associate” of (as those terms are used in
sections 38 and 43 of the Pensions Act 2004) such an employer.

 

9.1.19.           Trade Relations.  Except as set forth on the Company’s filings
with the Securities and Exchange Commission, there exists no actual or
threatened (in writing) termination, limitation or modification of any business
relationship between any Obligor or Subsidiary and any customer or supplier, or
any group of customers or suppliers, who individually or in the aggregate are
material to the business of such Obligor or Subsidiary.  There exists no
condition or circumstance that could reasonably be expected to materially impair
the ability of any Obligor or Subsidiary to conduct its business at any time
hereafter in substantially the same manner as conducted on the Restatement Date.

 

9.1.20.           Labor Relations.  Except as described on Schedule 9.1.20, no
Obligor or Subsidiary is party to or bound by any collective bargaining
agreement, management agreement or consulting agreement (other than design
services consulting agreements and other consulting agreements that have been
disclosed to Agent).  Except as would not, either individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect, there
are no material grievances, disputes or controversies with any union or other
organization of any Obligor’s or Subsidiary’s employees, or, to any Obligor’s
knowledge, any asserted or threatened strikes, work stoppages or demands for
collective bargaining.

 

9.1.21.           Payable Practices.  No Obligor or Subsidiary has made any
material change in its historical accounts payable practices from those in
effect on the Restatement Date.

 

9.1.22.           Not a Regulated Entity.  No Obligor is (a) an “investment
company” or a “person directly or indirectly controlled by or acting on behalf
of an investment company” within the meaning of the Investment Company Act of
1940; or (b) subject to regulation under the Federal Power Act, the

 

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Interstate Commerce Act, any public utilities code or any other Applicable Law
regarding its authority to incur Debt.

 

9.1.23.           Margin Stock.  No Obligor or Subsidiary is engaged,
principally or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock.  No Loan
proceeds or Letters of Credit will be used by Obligors to purchase or carry, or
to reduce or refinance any Debt incurred to purchase or carry, any Margin Stock
or for any related purpose governed by Regulations T, U or X of the Board of
Governors.

 

9.1.24.           OFAC.  None of (i) Borrower, Subsidiary or any director,
officer, or employee, or (ii) to the knowledge of the Borrower, any agent,
affiliate or representative thereof, is or is owned or controlled by any
individual or entity that is currently the subject or target of any Sanction or
is located, organized or resident in a Designated Jurisdiction.

 

9.1.25.           Beneficial Ownership Certification.  As of the Restatement
Date, the information included in the Beneficial Ownership Certification, if
applicable, is true and correct in all respects.

 

9.1.26.           Centre of Main Interests and Establishments.  For the purposes
of regulation (EU) 2015/848 of 20 May 2015 on insolvency proceedings (recast)
(the “Regulation”), each of the UK Guarantors’ centre of main interest (as that
term is used in Article 3(l) of the Regulation) is situated in its jurisdiction
of incorporation and none of them have an “establishment” (as that term is used
in Article 2(10) of the Regulation) in any other jurisdiction.

 

9.1.27.           EEA Financial Institutions.  No Obligor is an EEA Financial
Institution.

 

9.2.                            Complete Disclosure.  No Loan Document contains
any untrue statement of a material fact, nor fails to disclose any material fact
necessary to make the statements contained therein, in light of the
circumstances in which they are made, not materially misleading.  There is no
fact or circumstance that any Obligor has failed to disclose to Agent in writing
that could reasonably be expected to have a Material Adverse Effect.

 

SECTION 10.                                    COVENANTS AND CONTINUING
AGREEMENTS

 

10.1.                     Affirmative Covenants.  As long as any Commitments or
Obligations are outstanding, each Obligor shall, and shall cause each Subsidiary
to:

 

10.1.1.           Inspections; Appraisals.

 

(a)                                 Permit Agent from time to time, subject
(except when an Event of Default exists) to reasonable notice and normal
business hours, to visit and inspect the Properties of any Obligor or
Subsidiary, inspect, audit and make extracts from any Obligor’s or Subsidiary’s
books and records, and discuss with its officers, employees, agents, advisors
and independent accountants such Obligor’s or Subsidiary’s business, financial
condition, assets, prospects and results of operations.  Lenders may participate
in any such visit or inspection, at their own expense.  Neither Agent nor any
Lender shall have any duty to any Obligor to make any inspection, nor to share
any results of any inspection, appraisal or report with any Obligor.  Obligors
acknowledge that all inspections, appraisals and reports are prepared by Agent
and Lenders for their purposes, and Obligors shall not be entitled to rely upon
them.  This Section 10.1.1(a) shall not apply to Immaterial Foreign Subsidiaries
unless an Event of Default has occurred and is continuing.

 

(b)                                 Reimburse Agent for all reasonable charges,
costs and expenses of Agent in connection with (i) examinations of any Obligor’s
books and records or any other financial or Collateral matters as Agent deems
appropriate, once per Loan Year; and (ii) appraisals of Inventory, once per Loan

 

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Year; provided, however, that (i) during any Increased Field Exam/Appraisal
Period, the Obligors shall reimburse Agent for up to two appraisals of Inventory
and two field examinations per Loan Year, and (ii) if an examination or
appraisal is initiated during an Event of Default, all charges, costs and
expenses therefor shall be reimbursed by Borrowers without regard to any such
limits.  Obligors agree to pay Agent’s then standard charges for examination
activities, including the standard charges of Agent’s internal examination and
appraisal groups, as well as the reasonable and documented charges of any third
party used for such purposes.  No calculation of the Revolver Borrowing Base
shall include Collateral acquired in a Permitted Acquisition or otherwise
outside the Ordinary Course of Business until completion of applicable field
examinations and appraisals reasonably satisfactory to Agent.

 

10.1.2.           Financial and Other Information.  Keep adequate records and
books of account with respect to its business activities, in which proper
entries are made in accordance with GAAP reflecting all financial transactions;
and furnish to Agent and Lenders:

 

(a)                                 as soon as available, and in any event
within 90 days after the close of each Fiscal Year, balance sheets as of the end
of such Fiscal Year and the related statements of income, cash flow and
shareholders’ equity for such Fiscal Year, on consolidated and consolidating
bases for Obligors and Subsidiaries, which consolidated statements shall be
audited and certified (without qualification except to the extent any
qualification results solely from a current maturity of any Indebtedness) by a
firm of independent certified public accountants of recognized standing selected
by Borrowers and reasonably acceptable to Agent, it being agreed that RSM US,
LLP is acceptable to Agent, and shall set forth in comparative form
corresponding figures for the preceding Fiscal Year and other information
reasonably acceptable to Agent;

 

(b)                                 as soon as available, and in any event
within 45 days after the end of each Fiscal Quarter ending thereafter, unaudited
balance sheets as of the end of such quarter and the related statements of
income and cash flow for such Fiscal Quarter and for the portion of the Fiscal
Year then elapsed, on consolidated and, to the extent applicable, consolidating
bases for Obligors and Subsidiaries, setting forth in comparative form
corresponding figures for the preceding Fiscal Year and certified by a Senior
Officer of Obligors as prepared in accordance with GAAP and fairly presenting in
all material respects the financial position and results of operations for such
Fiscal Quarter and period, subject to normal year-end adjustments and the
absence of footnotes;

 

(c)                                  as soon as available, and in any event
within 30 days after the end of each month, unaudited balance sheets as of the
end of the most recent Fiscal Month and the related statements of income and
cash flow for such Fiscal Month and for the portion of the Fiscal Year then
elapsed, on consolidated and, to the extent applicable, consolidating bases for
Obligors and Subsidiaries, setting forth in comparative form corresponding
figures for the preceding Fiscal Year and certified by the chief financial
officer of Borrower Agent as prepared in accordance with GAAP and fairly
presenting the financial position and results of operations for such month and
period, subject only to normal year-end audit adjustments and the absence of
footnotes;

 

(d)                                 concurrently with delivery of financial
statements under clauses (a), (b) and (c) above, or more frequently if requested
by Agent while a Default or Event of Default exists, a Compliance Certificate
executed by the chief financial officer of Borrower Agent (for the avoidance of
doubt, regardless of whether a Financial Covenant Testing Period shall be in
effect, Obligors shall be required to deliver a Compliance Certificate
concurrently with the delivery of all financial statements under clauses (a),
(b) and (c) above, which Compliance Certificate shall contain a detailed
calculation of the Fixed Charge Coverage Ratio as of the Fiscal Month most
recently ended, which calculation shall be deemed to have been provided solely
for informational purposes if a Financial Covenant Testing Period shall not be
in effect at such time);

 

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(e)                                  concurrently with delivery of financial
statements under clause (a) above, copies of all management letters and other
material reports submitted to any Obligor(s) by their accountants in connection
with such financial statements;

 

(f)                                   as soon as available, but in any event not
later than thirty (30) days after the last day of each Fiscal Year, projections
of Borrowers’ consolidated balance sheets, results of operations, cash flow and
Availability for such Fiscal Year, on a Fiscal Month by Fiscal Month basis;

 

(g)                                  at Agent’s request, a listing of each
Obligor’s trade payables, specifying the trade creditor and balance due, and a
detailed trade payable aging, all in form reasonably satisfactory to Agent;

 

(h)                                 promptly after the sending or filing
thereof, copies of any proxy statements, financial statements or reports that
any Borrower has made generally available to its shareholders; copies of any
regular, periodic and special reports or registration statements or prospectuses
that any Borrower files with the Securities and Exchange Commission or any other
Governmental Authority, or any securities exchange; and copies of any press
releases or other statements made available by a Borrower to the public
concerning material changes to or developments in the business of such Borrower;

 

(i)                                     (i) promptly after the sending or filing
thereof, copies of any annual report to be filed in connection with each Plan
and, on the request of the Agent, the most recently filed actuarial valuation
report in respect of a Canadian Defined Benefit Pension Plan;

 

(j)                                    as soon as available an in any event with
30 days after the end of each month, a written report containing an analysis by
management of the financial results of most recent Fiscal Month;

 

(k)                                 as soon as available, but in any event
within thirty (30) days after the end of each Fiscal Year, a report summarizing
the insurance coverage (specifying type, amount and carrier) in effect for each
Obligor and containing such additional information as the Agent, or any Lender
through the Agent, may reasonably specify;

 

(l)                                     promptly upon receipt, copies of any
notices and documents received in connection with the Term Debt Documents; and

 

(m)                             such other reports and information (financial or
otherwise) as Agent may reasonably request from time to time in connection with
any Collateral or any Borrower’s, Subsidiary’s or other Obligor’s financial
condition or business.

 

10.1.3.           Notices.  Notify Agent and Lenders in writing, promptly, and
in any event within two Business Days, after an Obligor’s obtaining knowledge
thereof, of any of the following that affects an Obligor:  (a) the threat in
writing or commencement of any proceeding or investigation, whether or not
covered by insurance, if an adverse determination could have a Material Adverse
Effect; (b) any pending or threatened labor dispute, strike or walkout, or the
expiration of any material labor contract; (c) any material default under or
termination of a Material Contract; (d) the existence of any Default or Event of
Default; (e) any judgment in an amount exceeding $1,000,000; (f) the assertion
of any Intellectual Property Claim, if an adverse resolution could have a
Material Adverse Effect; (g) any violation or asserted violation (in writing) of
any Applicable Law (including ERISA, OSHA, FLSA or any Environmental Laws), if
an adverse resolution could have a Material Adverse Effect; (h) any
Environmental Release which could reasonably be expected to have a Material
Adverse Effect, by an Obligor or on any Property owned, leased or occupied by an
Obligor; or receipt of any Environmental Notice; (i) the occurrence of any ERISA
Event or Termination Event; (j) the discharge of or any withdrawal or
resignation by Borrowers’ independent accountants; (k) any opening of a new
office or place of business, at least 30 days prior to such opening; (l) the
threat (in writing) or commencement of any regulatory action or investigation by
the CPSC with respect to any Obligor or with respect to any product or toy sold,
manufactured or distributed by any Obligor; (m) the receipt by any Obligor of
any Epidemiological Report, the posting of any notice on SaferProducts.gov, or
request for information issued to any Obligor by the CPSC, all with respect to
any

 

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product or toy sold, manufactured or distributed by any Obligor; (n) the
commencement of any voluntary or involuntary recall of any product or toy that
the Obligors sell, manufacture or distribute; (o) simultaneously with delivery
of such notice under the Term Loan Agreement, the existence of any default or
event of default under the Term Loan Documents; (p) of any material change in
accounting policies or financial reporting practices by any Obligor(s); (q) the
filing and/or the enforcement against the Obligors of any Lien for unpaid Taxes
or Priority Payables that in the aggregate for all such occurrences exceed
$1,000,000; (r) any sale, disposition, or abandonment of any Intellectual
Property and/or Equipment, including any such sale, disposition, or abandonment
that constitutes a Permitted Asset Disposition hereunder; (s) any sale or
transfer of Equity Interest that would constitute a Change of Control under
clause (a), (c), (d) or (e) of the definition of Change of Control not less than
thirty (30) days prior to the consummation of such sale or transfer, (t) any
sale or transfer of a material portion of the assets of any Subsidiary that
would constitute a Change of Control under clause (f) of the definition of
Change of Control not less than thirty (30) days prior to the consummation of
such sale or transfer, or (u) any loss, theft, damage or destruction of any ABL
Priority Collateral in an amount greater than or equal to: (i) $50,000 with
respect to any single occurrence or (ii) $200,000 in the aggregate from and
after the Restatement Date.

 

Each notice pursuant to this Section 10.1.3 shall be accompanied by a statement
of a Senior Officer of the Borrower Agent setting forth details of the
occurrence referred to therein and stating what action the Borrower Agent has
taken and proposes to take with respect thereto. Each notice pursuant to this
Section 10.1.3 shall describe with particularity any and all provisions of this
Agreement and any other Loan Document that have been breached.

 

10.1.4.           Landlord and Storage Agreements.  Upon request, provide Agent
with copies of all existing agreements, and promptly after execution thereof
provide Agent with copies of all future agreements, between an Obligor and any
landlord, warehouseman, processor, shipper, bailee or other Person that owns any
premises at which any Collateral may be kept or that otherwise may possess or
handle any Collateral.

 

10.1.5.           Compliance with Laws.  Comply with all Applicable Laws,
including ERISA, PBA, Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, CPSC
Regulations and laws regarding collection and payment of Taxes, and maintain all
Governmental Approvals necessary to the ownership of its Properties or conduct
of its business, unless failure to comply (other than failure to comply with
Anti-Terrorism Laws) or maintain could not reasonably be expected to have a
Material Adverse Effect.  Without limiting the generality of the foregoing, if
any Environmental Release, which could reasonably be expected to have a Material
Adverse Effect, occurs at or on any Properties of any Obligor or Subsidiary, it
shall act promptly and diligently to investigate and report to Agent and all
appropriate Governmental Authorities the extent of, and to make appropriate
remedial action to eliminate, such Environmental Release, whether or not
directed to do so by any Governmental Authority.  Maintain adequate testing and
other procedures to ensure the safety of all products and toys that the Obligors
sell, manufacture or distribute.

 

10.1.6.           Taxes.  Pay and discharge all Taxes prior to the date on which
they become delinquent or penalties attach, unless such Taxes are being Properly
Contested.

 

10.1.7.           Insurance.  In addition to the insurance required hereunder
with respect to Collateral, maintain insurance with insurers (with a Best Rating
of at least A-, unless otherwise approved by Agent) reasonably satisfactory to
Agent, (a) with respect to the Properties and business of Obligors and
Subsidiaries (other than the Immaterial Foreign Subsidiaries) of such type
(including product liability, workers’ compensation, larceny, embezzlement, or
other criminal misappropriation insurance), in such amounts, and with such
coverages and deductibles as are customary for companies similarly

 

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situated; and (b) business interruption insurance in an amount not less than
$20,000,000, with deductibles and subject to an insurance assignment reasonably
satisfactory to Agent, which shall provide for the proceeds of business
interruption insurance to be payable to Agent for application to the
Obligations.

 

10.1.8.           Licenses.  Keep each License which constitutes a Material
Contract affecting any Collateral (including the manufacture, distribution or
disposition of Inventory) or any other material Property of Obligors and
Subsidiaries in full force and effect; promptly notify Agent of any proposed
modification to any such License, or entry into any new License which
constitutes a Material Contract, in each case at least 30 days prior to its
effective date; pay all Royalties when due; and notify Agent of any material
default or breach asserted in writing by any Person to have occurred under any
License which constitutes a Material Contract.

 

10.1.9.           Future Subsidiaries.  Promptly (not later than 5 Business
Days) notify Agent upon any Person becoming a Subsidiary and, if such Person is
not a Foreign Subsidiary (other than a Foreign Subsidiary that is no longer
designated an Immaterial Foreign Subsidiary), cause it to guaranty the
Obligations in a manner satisfactory to Agent, and to execute and deliver such
documents, instruments and agreements and to take such other actions as Agent
shall require to evidence and perfect a Lien in favor of Agent on all assets of
such Person, including delivery of such legal opinions, in form and substance
reasonably satisfactory to Agent, as it shall deem appropriate.

 

10.1.10.    UK Pension Schemes.  Ensure that neither SI UK nor any of its
Subsidiaries is or has been at any time an employer (for the purposes of
sections 38 to 51 of the Pensions Act 2004) of an occupational pension scheme
which is not a money purchase scheme (both terms as defined in the Pension
Schemes Act 1993) or “connected” with or an “associate” of (as those terms are
used in sections 38 or 43 of the Pensions Act 2004) such an employer.

 

10.1.11.    Ongoing Obligation. Promptly following any request therefor, provide
information and documentation reasonably requested by the Administrative Agent
or any Lender for purposes of compliance with applicable “know your customer”
and anti-money-laundering rules and regulations, including, without limitation,
the PATRIOT Act and the Beneficial Ownership Regulation.

 

10.1.12.    People with Significant Control regime.  The Company and its
Subsidiaries shall (a) within the relevant timeframe, comply with any notice it
receives pursuant to Part 21A of the Companies Act 2005 from any company
incorporated in the United Kingdom whose shares are subject of a Lien in favor
of the Agent, and (b) promptly (not later than 5 Business Days) provide the
Agent with a copy of that notice.

 

10.1.13.    Centre of Main Interests.  Each UK Guarantor shall maintain its
centre of main interests in England and Wales for the purposes of the
Regulation.

 

10.2.                     Negative Covenants.  As long as any Commitments or
Obligations are outstanding, each Obligor shall not and shall not permit any
Subsidiary (other than Foreign Subsidiaries) to:

 

10.2.1.           Permitted Debt.  Create, incur, guarantee or suffer to exist
any Debt, except:

 

(a)                                 the Obligations;

 

(b)                                 the Term Debt so long as the principal
amount thereunder does not exceed the Term Loan Maximum Amount (as defined in
the Intercreditor Agreement), subject to the limitations set forth in the
Intercreditor Agreement;

 

(c)                                  Permitted Purchase Money Debt and
obligations with respect to Capital Leases so long as the aggregate amount
outstanding under this clause (c) does not exceed $2,500,000 at any time;

 

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(d)                                 Borrowed Money listed on Schedule 10.2.1
(other than the Obligations, Subordinated Debt and Permitted Purchase Money
Debt), but only to the extent outstanding on the Restatement Date and not
satisfied with proceeds of Loans funded on the Restatement Date;

 

(e)                                  Debt with respect to Bank Products incurred
in the ordinary course of business;

 

(f)                                   Debt that is in existence when a Person
becomes a Subsidiary or that is secured by an asset when acquired by a Borrower
or Subsidiary, as long as such Debt was not incurred in contemplation of such
Person becoming a Subsidiary or such acquisition, and does not exceed $1,000,000
in the aggregate at any time;

 

(g)                                  Permitted Contingent Obligations;

 

(h)                                 Refinancing Debt as long as each Refinancing
Condition is satisfied;

 

(i)                                     Subordinated Debt;

 

(j)                                    Debt of the Obligors owing to any
Subsidiary and of any Subsidiary owing to an Obligor or any other Subsidiary;
provided, that any such Debt that is owed by a Subsidiary that is not an Obligor
shall be subject to Sections 10.2.5 and 10.2.7;

 

(k)                                 Debt owed to any Person (including
obligations in respect of letters of credit for the benefit of such Person)
providing workers’ compensation, health, disability or other employee benefits
or property, casualty, liability insurance, self-insurance, pursuant to
reimbursement or indemnification obligations to such Person or to finance
insurance premiums, in each case incurred in the Ordinary Course of Business;

 

(l)                                     Debt consisting of cash earnout
obligations owed to the seller of any business or assets acquired in a Permitted
Acquisition; provided that the aggregate amount of Debt outstanding at any one
time permitted under this Section 10.2.1(l) shall not exceed $1,500,000; and

 

(m)                             Debt that is not included in any of the
preceding clauses of this Section, is not secured by a Lien and does not exceed
$1,000,000 in the aggregate at any time.

 

For purposes of determining compliance with this Section 10.2.1, in the event
that an item of Debt (or any portion thereof, but excluding any Indebtedness
incurred pursuant to Section 10.2.1(a) at any time meets the criteria of more
than one of the categories described above in Section 10.2.1, the Borrower, in
its sole discretion, may classify or reclassify (or later divide, classify or
reclassify) such item of Debt (or any portion thereof) and shall only be
required to include the amount and type of such Debt in one of the above
clauses.  Accrual of interest or dividends, the accretion of accreted value, the
accretion or amortization of original issue discount and the payment of
interest, premium, fees or expenses, in the form of additional Debt (in each
case so long as such additional Debt is in the same form and on the same terms
as the Debt to which such payment relates) shall not be deemed to be an
incurrence of Debt for purposes of this Section 10.2.1.

 

10.2.2.           Permitted Liens.  Create or suffer to exist any Lien upon any
of its Property, except the following (collectively, “Permitted Liens”):

 

(a)                                 Liens in favor of Agent;

 

(b)                                 Liens in favor of the Term Loan Agent
securing the Term Debt to the extent such Liens are subject to the Intercreditor
Agreement;

 

(c)                                  Purchase Money Liens securing Permitted
Purchase Money Debt;

 

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(d)                                 Liens for Taxes not yet overdue or being
Properly Contested;

 

(e)                                  inchoate statutory Liens (other than Liens
for Priority Payables, Liens for Taxes or Liens imposed under ERISA) arising in
the Ordinary Course of Business, but only if (i) payment of the obligations
secured thereby is not yet due or is being Properly Contested, and (ii) such
Liens do not materially impair the value or use of the Property or materially
impair operation of the business of any Borrower or Subsidiary;

 

(f)                                   Liens incurred or deposits made in the
Ordinary Course of Business to secure the performance of tenders, bids, leases,
contracts (except those relating to Borrowed Money), statutory obligations and
other similar obligations, or arising as a result of progress payments under
government contracts, as long as such Liens are at all times junior to Agent’s
Liens;

 

(g)                                  Liens arising in the Ordinary Course of
Business that are subject to Lien Waivers;

 

(h)                                 Liens arising by virtue of a judgment or
judicial order against any Borrower or Subsidiary, or any Property of a Borrower
or Subsidiary, as long as such Liens do not give rise to a Default or an Event
of Default hereunder and are being Properly Contested;

 

(i)                                     easements, rights-of-way, restrictions,
covenants or other agreements of record, and other similar charges or
encumbrances on Real Estate, that do not secure any monetary obligation and do
not interfere with the Ordinary Course of Business;

 

(j)                                    normal and customary rights of setoff
upon deposits in favor of depository institutions, and Liens of a collecting
bank on Payment Items in the course of collection;

 

(k)                                 Liens securing Debt permitted by
Section 10.2.1(c) so long as such Lien does not cover more than the property
subject to such Capital Lease;

 

(l)                                     with respect to any Collateral covered
by the UK Security Agreements, any Security (as such term is defined in the UK
Security Agreements) arising solely by operation of law or in the ordinary
course of trading securing amounts not more than 30 days overdue and not arising
as a result of any default or omission of an Obligor or its Subsidiaries;

 

(m)                             statutory Liens of landlords, carriers,
warehousemen, mechanics, materialmen and other Liens imposed by Applicable Law
in the Ordinary Course of Business for amounts not yet due or which are being
Properly Contested;

 

(n)                                 pledges and deposits made in the Ordinary
Course of Business in compliance with workers’ compensation, unemployment
insurance and other social security laws or regulations;

 

(o)                                 any Lien existing on any property or asset
(other than Accounts or Inventory) prior to the acquisition thereof by the
Borrower or any Subsidiary or existing on any property or asset of any Person
that became or becomes a Subsidiary after the Restatement Date prior to the time
such Person became or becomes a Subsidiary; provided that (i) such Lien is not
created in contemplation of such acquisition or such Person becoming a
Subsidiary as the case may be, (ii) such Lien shall not apply to any other
property or asset of the Borrower or any Obligor (other than any replacements of
such property or assets and additions and accessions thereto, after-acquired
property subject to a Lien securing Debt and other obligations incurred prior to
such time and which Debt and other obligations are permitted hereunder that
require, pursuant to their terms at such time, a pledge of after-acquired
property, and the proceeds and the products thereof and customary security
deposits in respect thereof and in the case of multiple financings of equipment
provided by any lender, other equipment financed by such lender), (iii) such
Lien shall secure only those obligations and unused commitments (and to the
extent such obligations

 

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and commitments constitute Debt, such Debt is permitted hereunder) that it
secures on the date of such acquisition or the date such Person becomes a
Subsidiary, as the case may be, and extensions, renewals and replacements
thereof so long as the principal amount of such extensions, renewals and
replacements does not exceed the principal amount of the obligations being
extended, renewed or replaced (plus any accrued but unpaid interest (including
any portion thereof which is payable in kind in accordance with the terms of
such extended, renewed or replaced Debt) and premium payable by the terms of
such obligations thereon and fees and expenses associated therewith) and
(iv) the Debt secured by such Lien is incurred pursuant to and in accordance
with the terms of Section 10.2.1(f);

 

(p)                                 Liens representing (i) any interest or title
of a licensor, lessor or sublicensor or sublessor under any lease or license
permitted by this Agreement, (ii) any Lien or restriction that the interest or
title of such lessor, licensor, sublessor or sublicensor may be subject to, or
(iii) the interest of a licensee, lessee, sublicensee or sublessee arising by
virtue of being granted a license or lease permitted by this Agreement, in each
case not interfering in any material respect with the ordinary conduct of the
business of the Borrowers and the Subsidiaries, taken as a whole;

 

(q)                                 any Lien in connection with debt permitted
under Section 10.2.1(h);

 

(r)                                    Liens arising out of conditional sale,
title retention, consignment or similar arrangements for the sale of goods
entered into in the Ordinary Course of Business;

 

(s)                                   the filing of UCC financing statements
solely as a precautionary measure or required notice in connection with
operating leases or consignment of goods;

 

(t)                                    Liens not otherwise permitted by this
Section10.2.2 to the extent that the aggregate outstanding amount of the
obligations secured thereby at any time outstanding does not exceed $500,000;

 

(u)                                 Liens in favor of customs and revenue
authorities to secure payment of customs duties in connection with the
importation of goods;

 

(v)                                 Liens of bailees in the Ordinary Course of
Business;

 

(w)                               utility and similar deposits in the Ordinary
Course of Business;

 

(x)                                 non-exclusive licenses and sublicenses
granted by a Borrower or any of its Subsidiaries and leases and subleases by a
Borrower or any Subsidiary to third parties in the Ordinary Course of Business
not interfering with the business of a Borrower or any of its Subsidiaries; and

 

(y)                                 existing Liens shown on Schedule 10.2.2.

 

For purposes of determining compliance with this Section 10.2.2, (x) a Lien need
not be incurred solely by reference to one category of Liens described above but
may be incurred under any combination of such categories (including in part
under one such category and in part under any other such category) and (y) in
the event that a Lien (or any portion thereof) meets the criteria of one or more
of such categories of Liens described above, the Borrowers, in their sole
discretion, may classify or may subsequently reclassify at any time such Lien
(or any portion thereof) in any manner that complies with this covenant.

 

Notwithstanding anything to the contrary contained in this Agreement or any
other Loan Document (including any provision for, reference to, or
acknowledgement of, any Lien or Permitted Lien), nothing herein and no approval
by the Agent or any Lender of any Lien or Permitted Lien (whether such approval
is oral or in writing) shall be construed as or deemed to constitute a
subordination by the Agent or such Lender of any security interest or other
right, interest or Lien in or to the Collateral or any part thereof in favor of
any Lien or Permitted Lien or any holder of any Lien or Permitted Lien.

 

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10.2.3.           [Intentionally Deleted].

 

10.2.4.           Distributions; Upstream Payments.  Declare or make, directly
or indirectly, any Distribution (or enter into any agreement which obligates any
Borrower or Subsidiary to make any Distribution unless such agreement is
conditioned upon either obtaining the consent of Agent and Required Lenders to
such transaction or the Full Payment of the Obligations upon the making of such
Distribution), except Permitted Restricted Payments; or create or suffer to
exist any encumbrance or restriction on the ability of a Subsidiary to make any
Upstream Payment, except for restrictions under the Loan Documents, under
Applicable Law or in effect on the Restatement Date as shown on Schedule 9.1.15.

 

10.2.5.           Restricted Investments.  Make any Restricted Investment.

 

10.2.6.           Disposition of Assets.  Make any Asset Disposition, except a
Permitted Asset Disposition, a disposition of Equipment under Section 8.4.2, or
a transfer of Property by a Subsidiary or Obligor to a Borrower.

 

10.2.7.           Loans.  Make any loans or advances, except (a) to officers,
directors, partners and employees of the Obligors in the Ordinary Course of
Business in an amount greater than $200,000 to any individual at any time or in
an aggregate amount greater than $500,000 at any time outstanding, for travel,
entertainment, relocation and analogous ordinary business purposes; (b) prepaid
expenses and extensions of trade credit made in the Ordinary Course of Business;
(c) deposits with financial institutions permitted hereunder; and (d) as long as
no Default or Event of Default exists, intercompany loans by an Obligor to
another Obligor, provided that intercompany loans from the US Borrowers (i) to
the Canadian Guarantors shall not exceed $500,000 in the aggregate at any time
and (ii) to the UK Guarantors shall not exceed $1,000,000 in the aggregate at
any time.

 

10.2.8.           Restrictions on Payment of Certain Debt.  Except in connection
with any Refinancing permitted under Section 10.2.1, make any payments (whether
voluntary or mandatory, or a prepayment, redemption, retirement, defeasance or
acquisition) with respect to any (a) Subordinated Debt, except regularly
scheduled payments of principal, interest and fees, but only to the extent
permitted under any subordination agreement relating to such Debt (and a Senior
Officer of Borrower Agent shall certify to Agent, not less than five Business
Days prior to the date of payment, that all conditions under such agreement have
been satisfied); (b) Borrowed Money (other than the Obligations or the Term
Debt, subject in all respects to the terms of the Intercreditor Agreement) prior
to its due date under the agreements evidencing such Debt as in effect on the
Original Closing Date (or as amended thereafter with the consent of Agent); or
(c) Term Debt prior to the due date for such payments under the Term Debt
Documents as in effect on the Restatement Date (or as amended, restated,
refinanced, replaced, supplemented or otherwise modified thereafter in
accordance with the Intercreditor Agreement), other than Term Debt Repayments.

 

10.2.9.           Fundamental Changes.  (a) Change its name or conduct business
under any fictitious name; change its tax, charter or other organizational
identification number; change its form or state of organization, without, in the
case of any such change described in this clause (a), providing not less than
ten (10) days prior written notice to Agent, (b) liquidate, wind up its affairs
or dissolve itself; or (c) merge, combine or consolidate with any Person,
whether in a single transaction or in a series of related transactions, except
for (i) mergers or consolidations of a wholly-owned Subsidiary with another
wholly-owned Subsidiary or into a Borrower; or (ii) Permitted Acquisitions.

 

10.2.10.    Subsidiaries.  Form or acquire any Subsidiary after the Restatement
Date, except in accordance with Sections 10.1.9, 10.2.5 and 10.2.9; or permit
any existing Subsidiary to issue any additional Equity Interests except
director’s qualifying shares.

 

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10.2.11.    Organic Documents.  Amend, modify or otherwise change any of its
Organic Documents in any manner adverse to the Lenders, except in connection
with either a rights distribution by the Company or a transaction permitted
under Section 10.2.9.

 

10.2.12.    Tax Consolidation.  File or consent to the filing of any
consolidated income tax return with any Person other than Obligors and
Subsidiaries.

 

10.2.13.    Accounting Changes.  Make any material change in accounting
treatment or reporting practices, except as required by GAAP and in accordance
with Section 1.2; or change its Fiscal Year.

 

10.2.14.    Restrictive Agreements.  Become a party to any Restrictive
Agreement, except a Restrictive Agreement (a) in effect on the Restatement Date;
and (b) following the Restatement Date, subject to Agent’s prior consent.

 

10.2.15.    Hedging Agreements.  Enter into any Hedging Agreement, except to
hedge risks arising in the Ordinary Course of Business and not for speculative
purposes.

 

10.2.16.    Conduct of Business.  Engage in any business, other than (i) the
businesses conducted by the Obligors on the Restatement Date and activities
incidental or supplemental thereto, and (ii) businesses similar to the business
conducted by the Obligors on the Original Closing Date or other businesses
approved by Agent in its Permitted Discretion.  This Section 10.2.16 shall not
apply to Immaterial Foreign Subsidiaries.

 

10.2.17.    Affiliate Transactions.  Enter into or be party to any transaction
with an Affiliate, except (a) transactions expressly permitted by the Loan
Documents; (b) payment of reasonable compensation to officers and employees for
services actually rendered, and payment of customary directors’ fees and
indemnities; (c) transactions solely among Obligors; (d) transactions with
Affiliates that were consummated prior to the Restatement Date, as shown on
Schedule 10.2.17; (e) intercompany loans permitted under Section 10.2.7; and
(f) subject to Agent’s prior consent (such consent not to be unreasonably
withheld, denied, delayed or conditioned), transactions with Affiliates in the
Ordinary Course of Business, upon fair and reasonable terms which are fully
disclosed to Agent and no less favorable than would be obtained in a comparable
arm’s-length transaction with a non-Affiliate.

 

10.2.18.    Plans.  Become party to (including by way of acquisition of any
Person), without the consent of the Agent (acting reasonably), any Multiemployer
Plan, Canadian Defined Benefit Pension Plan or Foreign Plan, other than any in
existence on the Restatement Date.

 

10.2.19.    Amendments to Term Debt and Subordinated Debt.  (a) Amend, restate,
supplement or otherwise modify the Term Loan Agreement (or any document or
instrument executed in connection therewith) if such amendment, restatement,
supplement or other modification would not be permitted under the Intercreditor
Agreement or (b) amend, restate, supplement or otherwise modify any document,
instrument or agreement relating to the Subordinated Debt, if such modification
(i) increases the principal balance of such Debt, or increases any required
payment of principal or interest; (ii) accelerates the date on which any
installment of principal or any interest is due, or adds any additional
redemption, put or prepayment provisions; (iii) shortens the final maturity date
or otherwise accelerates amortization; (iv) increases the interest rate;
(v) materially increases or adds any fees or charges; (vi) modifies any covenant
in a manner or adds any representation, covenant or default that is more onerous
or restrictive in any material respect for any Obligor or Subsidiary, or that is
otherwise materially adverse to any Obligor, any Subsidiary or Lenders; or
(vii) results in the Obligations not being fully benefited by the subordination
provisions thereof.

 

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10.3.                     Financial Covenants.

 

10.3.1.           Fixed Charge Coverage Ratio.  If a Financial Covenant Testing
Period shall be continuing, Obligors and their Subsidiaries shall maintain a
Fixed Charge Coverage Ratio as of the last day of each Fiscal Month, commencing
on the first day of such Financial Covenant Testing Period and continuing until
such Financial Covenant Testing Period shall no longer be continuing, for each
period of twelve consecutive Fiscal Months then most recently ended, of at least
1.00 to 1.00.

 

10.4.                     Restrictions on Activities of Company.  Obligors
covenant and agree that Company shall not (i) hold any assets other than the
Equity Interests of SI USA, SI UK or SI Asia and cash and Cash Equivalents,
(ii) have any material liabilities other than liabilities under the Loan
Documents, tax liabilities in the Ordinary Course of Business, liabilities under
employment agreements and written employment arrangements, and corporate,
administrative and operating expenses in the Ordinary Course of Business, or
(iii) engage in any business other than owning the Equity Interests of SI USA
and activities incidental to such ownership, acting as a co-borrower in respect
of the Obligations hereunder, and granting to Agent for the benefit of Lenders,
security interests in and Liens upon its assets pursuant to the Security
Documents to which it is a party.

 

10.5.                     Restrictions on Activities of Foreign Subsidiaries. 
Obligors covenant and agree that (a) no Obligor shall guaranty any liabilities
or obligations of any Foreign Subsidiary; (b) no Obligor shall make any
Investment in, or transfer any properties or assets to, any Foreign Subsidiary,
other than as permitted under Sections 10.2.5 and 10.2.17; (c) no Foreign
Subsidiary shall create or suffer to exist any encumbrance or restriction on the
ability of a Subsidiary to make any Upstream Payment, except for restrictions
under the Loan Documents, under Applicable Law or in effect on the Restatement
Date as shown on Schedule 9.1.15 and (d) the aggregate outstanding Debt owed by
Foreign Subsidiaries (excluding Debt owed to Obligors that is permitted under
Section 10.2.7) shall not at any time exceed the foreign currency equivalent of
$250,000.  Obligors further agree if the total gross revenues of Born Free
Holdings Ltd. shall at any time exceed $250,000, then the Borrowers shall
promptly re-designate such Foreign Subsidiary as no longer constituting an
Immaterial Foreign Subsidiary by written notice to Agent (following such
re-designation the provisions of Sections 7 and 10.1.9 shall thereafter be
applicable to such Foreign Subsidiary)

 

SECTION 11.                                    EVENTS OF DEFAULT; REMEDIES ON
DEFAULT

 

11.1.                     Events of Default.  Each of the following shall be an
“Event of Default” if it occurs for any reason whatsoever, whether voluntary or
involuntary, by operation of law or otherwise:

 

(a)                                 Any Obligor fails to pay (i) its Obligations
under the Loan Documents constituting principal, interest, or any fees payable
under Sections 3.2.1, 3.2.2 or 3.2.3 when due (whether at stated maturity, on
demand, upon acceleration or otherwise) or (ii) solely with respect to any
Obligations not constituting principal, interest, or any fees payable under
Sections 3.2.1, 3.2.2 or 3.2.3;

 

(b)                                 Any representation, warranty or other
written statement of an Obligor made in connection with any Loan Documents or
transactions contemplated thereby is incorrect or misleading in any material
respect when given;

 

(c)                                  An Obligor breaches or fail to perform any
covenant contained in Section 7.4, 8.1, 8.2.4, 8.2.5, 8.5, 8.6.2, 10.1.1(a),
10.1.2, 10.1.3, 10.1.6, 10.2 or 10.3;

 

(d)                                 An Obligor breaches or fails to perform any
other covenant contained in any Loan Documents, and such breach or failure is
not cured within 20 days after a Senior Officer of such Obligor has knowledge
thereof or receives notice thereof from Agent, whichever is sooner; provided,
however, that such notice and opportunity to cure shall not apply if the breach
or failure to perform is not capable of being cured within such period or is a
willful breach by an Obligor;

 

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(e)                                  A Guarantor repudiates, revokes or attempts
to revoke in writing its Guaranty; an Obligor or third party denies or contests
the validity or enforceability of any Loan Documents or Obligations, or the
perfection or priority of any Lien granted to Agent; or any Loan Document ceases
to be in full force or effect for any reason (other than a waiver or release by
Agent and Lenders);

 

(f)                                   Any (i) breach or default of an Obligor
occurs under any Hedging Agreement, (ii) any “Event of Default” (as defined in
the Term Loan Agreement) occurs under the Term Debt Documents, or (iii) any
breach or default of an Obligor occurs under any instrument or agreement to
which it is a party or by which it or any of its Properties is bound, relating
to any Debt (other than the Obligations or the Term Debt) in excess of
$2,000,000 (if, with respect to this clause (iii), the maturity of or any
payment with respect to such Debt may be accelerated or demanded due to such
breach); provided that so long as the Agent has not exercised any remedies under
this Section 11, any Default or Event of Default under this
Section 11.1(f) shall be immediately cured and no longer continuing (without any
action on the part of the Agent, any Lender or otherwise) as and when any such
failure (x) is remedied by the Borrowers or applicable Subsidiary or (y) is
waived (including in the form of amendment) by the requisite holders of the
applicable foregoing;

 

(g)                                  Any final non-appealable judgment or order
for the payment of money is entered against an Obligor in an amount that
exceeds, individually or cumulatively with all unsatisfied judgments or orders
against all Obligors, $1,000,000 (net of insurance coverage therefor that has
not been denied by the insurer) and has not been paid, satisfied, discharged, or
vacated and there is a period of 30 calendar days during which a stay of
enforcement of such judgment, by reason of a pending appeal or otherwise, is not
in effect;

 

(h)                                 A loss, theft, damage or destruction occurs
with respect to any Collateral if the amount not covered by insurance exceeds
$2,000,000;

 

(i)                                     An Obligor is enjoined, restrained or in
any way prevented by any Governmental Authority from conducting any material
part of its business; an Obligor suffers the loss, revocation or termination of
any material license, permit, lease or agreement necessary to its business;
there is a cessation of any material part of an Obligor’s business for a
material period of time; any material Collateral or Property of an Obligor is
taken or impaired through condemnation; an Obligor agrees to or commences any
liquidation, dissolution or winding up of its affairs; or an Obligor is not
Solvent;

 

(j)                                    An Insolvency Proceeding is commenced by
an Obligor; an Obligor makes an offer of settlement, extension or composition to
its unsecured creditors generally; any Obligor becomes unable or admits in
writing its inability or fails generally to pay its debts as they become due in
the Ordinary Course of Business; a trustee, a receiver, an interim receiver,
monitor, liquidator or similar official is appointed to take possession of any
substantial Property of or to operate any of the business of an Obligor; or an
Insolvency Proceeding or proceeding applicable to bankruptcy or insolvency is
commenced against an Obligor and:  the Obligor consents to institution of the
proceeding, the petition or notice commencing the proceeding is not timely
contested by the Obligor, the petition or notice is not, in respect of an
Obligor (other than a UK Guarantor, dismissed within 45 days after filing, an
order for relief is entered in the proceeding, or in respect of a UK Guarantor,
the petition is a winding-up petition which is frivolous or vexatious and is
discharged, stayed or dismissed within 14 days of commencement;

 

(k)                                 (i) An ERISA Event occurs with respect to a
Pension Plan or Multiemployer Plan that has resulted or could reasonably be
expected to result in liability of an Obligor to a Pension Plan, Multiemployer
Plan or PBGC or that constitutes grounds for appointment of a trustee for or
termination by the PBGC of any Pension Plan or Multiemployer Plan; an Obligor or
ERISA Affiliate fails to pay when due any installment payment with respect to
its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan;
(ii) a Termination Event  occurs with respect to a Canadian Defined Benefit
Pension Plan in respect of which a Canadian Priority Payables Reserve has not
been taken or any Lien

 

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arises in respect of Obligors (save for contribution amounts not yet due) in
connection with any Canadian Pension Plan which Lien would reasonably be
expected to result in a Material Adverse Effect; (iii) an event occurs which
constitutes grounds for the termination of any UK Pension Scheme or for the
appointment of a receiver, liquidator, administrator or trustee in bankruptcy of
any UK Pension Scheme or if any Obligor is in default with respect to the terms
of payment or the performance of its obligations under any UK Pension Scheme or
any Lien arises in respect of any Obligor in connection with any UK Pension
Scheme or (iv) any event similar to the foregoing occurs or exists with respect
to a Foreign Plan;

 

(l)                                     An Obligor or any of its Senior Officers
is criminally indicted or convicted for (i) a felony committed in the conduct of
the Obligor’s business, or (ii) violating any state, provincial or federal law
(including the Controlled Substances Act, Money Laundering Control Act of 1986,
Proceeds of Crime Act and Illegal Exportation of War Materials Act) that could
lead to forfeiture of any material Property or any Collateral;

 

(m)                             A Change of Control occurs, or a “Change of
Control” or similar event occurs under the Term Loan Agreement;

 

(n)                                 [Reserved]; or

 

(o)                                 Any fine is issued against any Obligors by
the CPSC in an amount that exceeds, individually or cumulatively with all other
fines issued by the CPSC against the Obligors within the prior 12 months,
$1,500,000;

 

(p)                                 Obligors institute a recall of products or
toys constituting Inventory which: (i) is unsaleable or unable to be repaired
and has an aggregate Value in excess of $2,000,000, (ii) results in, or could
reasonably be expected to result in, the Obligors expending in excess of
$2,000,000 in connection with the recall, repair, remediation or replacement of
such Inventory, or (iii) results in, or could reasonably be expected to result
in, the Obligors incurring claims, losses, liabilities or damages in excess of
$5,000,000 in the aggregate (net of insurance coverage therefor that has not
been denied by the insurer);

 

(q)                                 (i) the Intercreditor Agreement shall for
any reason be revoked or invalidated, or otherwise cease to be in full force and
effect, or any party to such Intercreditor Agreement shall contest in writing,
the validity or enforceability thereof or deny that it has any further liability
or obligation thereunder, or the Liens securing the Obligations, for any reason
shall not have the priority contemplated by the Intercreditor Agreement; or
(ii) the subordination provisions of any agreement or instrument relating to any
Subordinated Debt shall for any reason be revoked or invalidated, or otherwise
cease to be in full force and effect, or any Person party thereto (other than
Agent, the Lenders or the Issuing Bank) shall contest in any manner the validity
or enforceability thereof or deny that it has any further liability or
obligation thereunder, or the Obligations, for any reason shall not have the
priority contemplated by this Agreement or such subordination provisions;

 

(r)                                    (i) Any provision of any Loan Document,
at any time after its execution and delivery and for any reason other than as
expressly permitted hereunder or thereunder or satisfaction in full of all the
Obligations, ceases to be in full force and effect; or any Obligor or any other
Person contests in any manner the validity or enforceability of any provision of
any Loan Document; or any Obligor denies that it has any or further liability or
obligation under any provision of any Loan Document, or purports to revoke,
terminate or rescind any provision of any Loan Document or seeks to avoid, limit
or otherwise adversely affect any Lien purported to be created under any
Security Document; or (ii) any Lien purported to be created under any Security
Document shall cease to be, or shall be asserted by any Loan Party or any other
Person not to be, a valid and perfected Lien on any Collateral, with the
priority required by the applicable Security Document and/or the Intercreditor
Agreement; or

 

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(s)                                   Except as otherwise expressly permitted
hereunder, an Obligor shall take any action to either: (i) suspend the operation
of all or a material portion of its business in the ordinary course,
(ii) suspend the payment of any material obligations in the ordinary course or
suspend the performance under Material Contracts in the ordinary course,
(iii) solicit proposals for the liquidation of, or undertake to liquidate, all
or a material portion of its assets, or (iv) solicit proposals for the
employment of, or employ, an agent or other third party to conduct a program of
liquidation sales of any material portion of its business, taken as a whole.

 

11.2.                     Remedies upon Default.  If an Event of Default
described in Section 11.1(j) occurs with respect to any Borrower, then to the
extent permitted by Applicable Law, all Obligations (other than Secured Bank
Product Obligations) shall become automatically due and payable and all
Commitments shall terminate, without any action by Agent or notice of any kind. 
In addition, or if any other Event of Default exists, Agent may in its
discretion (and shall upon written direction of Required Lenders) do any one or
more of the following from time to time:

 

(a)                                 declare any Obligations (other than Secured
Bank Product Obligations) immediately due and payable, whereupon they shall be
due and payable without diligence, presentment, demand, protest or notice of any
kind, all of which are hereby waived by Borrowers to the fullest extent
permitted by law;

 

(b)                                 terminate, reduce or condition any
Commitment, or make any adjustment to the Revolver Borrowing Base;

 

(c)                                  require Obligors to Cash Collateralize LC
Obligations, Secured Bank Product Obligations and other Obligations that are
contingent or not yet due and payable, and, if Obligors fail promptly to deposit
such Cash Collateral, Agent may (and shall upon the direction of Required
Lenders) advance the required Cash Collateral as Revolver Loans (whether or not
a Revolver Overadvance exists or is created thereby, or the conditions in
Section 6 are satisfied); and

 

(d)                                 exercise any other rights or remedies
afforded under any agreement, by law, at equity or otherwise, including the
rights and remedies of a secured party under the UCC, PPSA or UK ST Law.  Such
rights and remedies include the rights to (i) take possession of any Collateral;
(ii) require Obligors to assemble Collateral, at Obligors’ expense, and make it
available to Agent at a place designated by Agent; (iii) enter any premises
where Collateral is located and store Collateral on such premises until sold
(and if the premises are owned or leased by an Obligor, Obligors agree not to
charge for such storage); and (iv) sell or otherwise dispose of any Collateral
in its then condition, or after any further manufacturing or processing thereof,
at public or private sale, with such notice as may be required by Applicable
Law, in lots or in bulk, at such locations, all as Agent, in its discretion,
deems advisable.  Each Obligor agrees that 10 days’ notice of any proposed sale
or other disposition of Collateral by Agent shall be reasonable, and that any
sale conducted on the internet or to a licensor of Intellectual Property shall
be commercially reasonable.  Agent may conduct sales on any Obligor’s premises,
without charge, and any sale may be adjourned from time to time in accordance
with Applicable Law.  Agent shall have the right to sell, lease or otherwise
dispose of any Collateral for cash, credit or any combination thereof, and Agent
may purchase any Collateral at public or, if permitted by law, private sale and,
in lieu of actual payment of the purchase price, may credit bid and set off the
amount of such price against the Obligations.

 

11.3.                     License.  Agent is hereby granted an irrevocable,
non-exclusive license or other right to use, license or sub-license (without
payment of royalty or other compensation to any Person) any or all Intellectual
Property of Obligors, computer hardware and software, trade secrets, brochures,
customer lists, promotional and advertising materials, labels, packaging
materials and other Property, in advertising for sale, marketing, selling,
collecting, completing manufacture of, or otherwise exercising any rights or

 

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remedies with respect to, any Collateral.  Each Obligor’s rights and interests
under Intellectual Property shall inure to Agent’s benefit.

 

11.4.                     Setoff.  At any time during an Event of Default,
Agent, Issuing Bank, Lenders, and any of their Affiliates are authorized, to the
fullest extent permitted by Applicable Law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final, in whatever
currency) at any time held and other obligations (in whatever currency) at any
time owing by Agent, Issuing Bank, such Lender or such Affiliate to or for the
credit or the account of an Obligor against any Obligations, irrespective of
whether or not Agent, Issuing Bank, such Lender or such Affiliate shall have
made any demand under this Agreement or any other Loan Document and although
such Obligations may be contingent or unmatured or are owed to a branch or
office of Agent, Issuing Bank, such Lender or such Affiliate different from the
branch or office holding such deposit or obligated on such indebtedness.  The
rights of Agent, Issuing Bank, each Lender and each such Affiliate under this
Section are in addition to other rights and remedies (including other rights of
setoff) that such Person may have.

 

11.5.                     Remedies Cumulative; No Waiver.

 

11.5.1.           Cumulative Rights.  All agreements, warranties, guaranties,
indemnities and other undertakings of Obligors under the Loan Documents are
cumulative and not in derogation of each other.  The rights and remedies of
Agent and Lenders are cumulative, may be exercised at any time and from time to
time, concurrently or in any order, and are not exclusive of any other rights or
remedies available by agreement, by law, at equity or otherwise.  All such
rights and remedies shall continue in full force and effect until Full Payment
of all Obligations.

 

11.5.2.           Waivers.  No waiver or course of dealing shall be established
by (a) the failure or delay of Agent or any Lender to require strict performance
by Obligors with any terms of the Loan Documents, or to exercise any rights or
remedies with respect to Collateral or otherwise; (b) the making of any Loan or
issuance of any Letter of Credit during a Default, Event of Default or other
failure to satisfy any conditions precedent; or (c) acceptance by Agent or any
Lender of any payment or performance by an Obligor under any Loan Documents in a
manner other than that specified therein.  It is expressly acknowledged by
Obligors that any failure to satisfy a financial covenant on a measurement date
shall not be cured or remedied by satisfaction of such covenant on a subsequent
date.

 

SECTION 12.                                    AGENT

 

12.1.                     Appointment, Authority and Duties of Agent.

 

12.1.1.           Appointment and Authority.  Each Secured Party appoints and
designates Bank of America as Agent under all Loan Documents and to hold the
security interests constituted by the UK Security Agreements on trust for the
Secured Parties in accordance with their terms and the Agent accepts that
appointment.  Agent may, and each Secured Party authorizes Agent to, enter into
all Loan Documents to which Agent is intended to be a party and accept all
Security Documents, for the benefit of Secured Parties.  Any action taken by
Agent in accordance with the provisions of the Loan Documents, and the exercise
by Agent of any rights or remedies set forth therein, together with all other
powers reasonably incidental thereto, shall be authorized by and binding upon
all Secured Parties.  Without limiting the generality of the foregoing, Agent
shall have the sole and exclusive authority to (a) act as the disbursing and
collecting agent for Lenders with respect to all payments and collections
arising in connection with the Loan Documents; (b) execute and deliver as Agent
each Loan Document, including any intercreditor or subordination agreement, and
accept delivery of each Loan Document; (c) act as collateral agent for Secured
Parties for purposes of perfecting and administering Liens under the Loan
Documents, and for all other purposes stated therein; (d) manage, supervise or
otherwise deal with Collateral; and (e) take any Enforcement Action or otherwise
exercise any rights or remedies with respect to any Collateral or under any Loan
Documents, Applicable Law or otherwise.  The duties of Agent are ministerial and

 

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administrative in nature only, and Agent shall not have a fiduciary relationship
with any Secured Party, Participant or other Person, by reason of any Loan
Document or any transaction relating thereto.  Agent alone shall be authorized
to determine whether any Account or Inventory constitutes an Eligible Account,
Eligible In-Transit Inventory or Eligible Inventory, whether to impose or
release any reserve, or whether any conditions to funding or to issuance of a
Letter of Credit have been satisfied, which determinations and judgments, if
exercised in good faith, shall exonerate Agent from liability to any Secured
Party or other Person for any error in judgment.

 

12.1.2.           Duties.  Agent shall not have any duties except those
expressly set forth in the Loan Documents.  The conferral upon Agent of any
right shall not imply a duty to exercise such right, unless instructed to do so
by Lenders in accordance with this Agreement.

 

12.1.3.           Agent Professionals.  Agent may perform its duties through
agents and employees.  Agent may consult with and employ Agent Professionals,
and shall be entitled to act upon, and shall be fully protected in any action
taken in good faith reliance upon, any advice given by an Agent Professional. 
Agent shall not be responsible for the negligence or misconduct of any agents,
employees or Agent Professionals selected by it with reasonable care.

 

12.1.4.           Instructions of Required Lenders.  The rights and remedies
conferred upon Agent under the Loan Documents may be exercised without the
necessity of joinder of any other party, unless required by Applicable Law. In
determining compliance with a condition for any action hereunder, including
satisfaction of any condition in Section 6, Agent may presume that the condition
is satisfactory to a Secured Party unless Agent has received notice to the
contrary from such Secured Party before Agent takes the action.  Agent may
request instructions from Required Lenders or other Secured Parties with respect
to any act (including the failure to act) in connection with any Loan Documents
or Collateral, and may seek assurances to its satisfaction from Secured Parties
of their indemnification obligations against Claims that could be incurred by
Agent.  Agent may refrain from any act until it has received such instructions
or assurances, and shall not incur liability to any Person by reason of so
refraining.  Instructions of Required Lenders shall be binding upon all Secured
Parties, and no Secured Party shall have any right of action whatsoever against
Agent as a result of Agent acting or refraining from acting pursuant to
instructions of Required Lenders.  Notwithstanding the foregoing, instructions
by and consent of specific parties shall be required to the extent provided in
Section 14.1.1.  In no event shall Agent be required to take any action that, in
its opinion, is contrary to Applicable Law or any Loan Documents or could
subject any Agent Indemnitee to personal liability.

 

12.2.                     Agreements Regarding Collateral and Borrower
Materials.

 

12.2.1.           Lien Releases; Care of Collateral.  Secured Parties authorize
Agent to release any Lien with respect to any Collateral (a) upon Full Payment
of the Obligations; (b) that is the subject of a disposition or Lien that
Borrowers certify in writing is a Permitted Asset Disposition or a Permitted
Lien entitled to priority over Agent’s Liens (and Agent may rely conclusively on
any such certificate without further inquiry); (c) that does not constitute a
material part of the Collateral; or (d) subject to Section 14.1, with the
consent of Required Lenders.  Secured Parties authorize Agent to subordinate its
Liens to any Purchase Money Lien or other Lien entitled to priority hereunder. 
Agent shall have no obligation to assure that any Collateral exists or is owned
by an Obligor, or is cared for, protected or insured, nor to assure that Agent’s
Liens have been properly created, perfected or enforced, or are entitled to any
particular priority, nor to exercise any duty of care with respect to any
Collateral.

 

12.2.2.           Possession of Collateral.  Agent and Secured Parties appoint
each Lender as agent (for the benefit of Secured Parties) for the purpose of
perfecting Liens in any Collateral held or controlled by such Lender, to the
extent such Liens are perfected by possession or control.  If any Lender obtains
possession or control of any Collateral, it shall notify Agent thereof and,
promptly upon Agent’s request, deliver such Collateral to Agent or otherwise
deal with it in accordance with Agent’s instructions.

 

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12.2.3.           Reports.  Agent shall promptly provide to Lenders, when
complete, any field audit, examination or appraisal report prepared for Agent
with respect to any Obligor or Collateral (“Report”).  Reports and other
Borrower Materials may be made available to Lenders by providing access to them
on the Platform, but Agent shall not be responsible for system failures or
access issues that may occur from time to time.  Each Lender agrees (a) that
Reports are not intended to be comprehensive audits or examinations, and that
Agent or any other Person performing an audit or examination will inspect only
specific information regarding the Obligations or Collateral and will rely
significantly upon Obligors’ books, records and representations; (b) that Agent
makes no representation or warranty as to the accuracy or completeness of any
Borrower Materials and shall not be liable for any information contained in or
omitted from any Borrower Materials, including any Report; and (c) to keep all
Borrower Materials confidential and strictly for such Lender’s internal use, not
to distribute any Report or other Borrower Materials (or the contents thereof)
to any Person (except to such Lender’s Participants, attorneys and accountants),
and to use all Borrower Materials solely for administration of the Obligations. 
Each Lender shall indemnify and hold harmless Agent and any other Person
preparing a Report from any action such Lender may take as a result of or any
conclusion it may draw from any Borrower Materials, as well as from any Claims
arising as a direct or indirect result of Agent furnishing same to such Lender,
via the Platform or otherwise.

 

12.3.                     Reliance By Agent.  Agent shall be entitled to rely,
and shall be fully protected in relying, upon any certification, notice or other
communication (including those by telephone, telex, telegram, telecopy or
e-mail) believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person.  Agent shall have a reasonable and practicable
amount of time to act upon any instruction, notice or other communication under
any Loan Document, and shall not be liable for any delay in acting.

 

12.4.                     Action Upon Default.  Agent shall not be deemed to
have knowledge of any Default or Event of Default, or of any failure to satisfy
any conditions in Section 6, unless it has received written notice from a
Borrower or Required Lenders specifying the occurrence and nature thereof.  If
any Lender acquires knowledge of a Default, Event of Default or failure of such
conditions, it shall promptly notify Agent and the other Lenders thereof in
writing.  Each Secured Party agrees that, except as otherwise provided in any
Loan Documents or with the written consent of Agent and Required Lenders, it
will not take any Enforcement Action, accelerate Obligations (other than Secured
Bank Product Obligations), or exercise any right that it might otherwise have
under Applicable Law to credit bid at foreclosure sales, UCC sales or PPSA sales
other dispositions of Collateral, or to assert any rights relating to any
Collateral.

 

12.5.                     Ratable Sharing.  If any Lender obtains any payment or
reduction of any Obligation, whether through set-off or otherwise, in excess of
its share of such Obligation, determined in accordance with each Lender’s
Applicable Percentage of such Obligation (or in accordance with Section 5.6.2,
as applicable), such Lender shall forthwith purchase from Agent, Issuing Bank
and the other Lenders such participations in the affected Obligation as are
necessary to share the excess payment or reduction in accordance with each
Lender’s Applicable Percentage thereof (or in accordance with Section 5.6.2, as
applicable).  If any of such payment or reduction is thereafter recovered from
the purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest.  Notwithstanding
the foregoing, if a Defaulting Lender obtains a payment or reduction of any
Obligation, it shall immediately turn over the amount thereof to Agent for
application under Section 4.2.2 and it shall provide a written statement to
Agent describing the Obligation affected by such payment or reduction.  No
Lender shall set off against any Dominion Account without Agent’s prior consent.

 

12.6.                     Indemnification.  EACH SECURED PARTY SHALL INDEMNIFY
AND HOLD HARMLESS AGENT INDEMNITEES AND ISSUING BANK INDEMNITEES, TO THE EXTENT
NOT REIMBURSED BY OBLIGORS, ON A PRO RATA BASIS, AGAINST ALL CLAIMS THAT MAY BE
INCURRED BY OR ASSERTED AGAINST ANY SUCH INDEMNITEE, PROVIDED THAT ANY CLAIM
AGAINST AN AGENT INDEMNITEE

 

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RELATES TO OR ARISES FROM ITS ACTING AS OR FOR AGENT (IN THE CAPACITY OF
AGENT).  In Agent’s discretion, it may reserve for any Claims made against an
Agent Indemnitee or Issuing Bank Indemnitee, and may satisfy any judgment, order
or settlement relating thereto, from proceeds of Collateral prior to making any
distribution of Collateral proceeds to Secured Parties.  If Agent is sued by any
receiver, trustee or other Person for any alleged preference or fraudulent
transfer, then any monies paid by Agent in settlement or satisfaction of such
proceeding, together with all interest, costs and expenses (including attorneys’
fees) incurred in the defense of same, shall be promptly reimbursed to Agent by
each Lender to the extent of its Applicable Percentage.  Notwithstanding
anything to the contrary set forth herein, no Indemnitee shall be entitled to
indemnification from any Lender for a claim that is directly and solely
attributable to the gross negligence or willful misconduct of such Indemnitee.

 

12.7.                     Limitation on Responsibilities of Agent.  Agent shall
not be liable to any Secured Party for any action taken or omitted to be taken
under the Loan Documents, except for losses directly and solely caused by
Agent’s gross negligence or willful misconduct.  Agent does not assume any
responsibility for any failure or delay in performance or any breach by any
Obligor, Lender or other Secured Party of any obligations under the Loan
Documents.  Agent does not make any express or implied representation, warranty
or guarantee to Secured Parties with respect to any Obligations, Collateral,
Loan Documents or Obligor.  No Agent Indemnitee shall be responsible to Secured
Parties for any recitals, statements, information, representations or warranties
contained in any Loan Documents or Borrower Materials; the execution, validity,
genuineness, effectiveness or enforceability of any Loan Documents; the
genuineness, enforceability, collectibility, value, sufficiency, location or
existence of any Collateral, or the validity, extent, perfection or priority of
any Lien therein; the validity, enforceability or collectibility of any
Obligations; or the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of any Obligor or Account
Debtor.  No Agent Indemnitee shall have any obligation to any Secured Party to
ascertain or inquire into the existence of any Default or Event of Default, the
observance by any Obligor of any terms of the Loan Documents, or the
satisfaction of any conditions precedent contained in any Loan Documents.  Agent
shall not be responsible or have any liability for, or have any duty to
ascertain, inquire into, monitor the list or identities of, or enforce,
compliance with the provisions hereof relating to Competitors.  Without limiting
the generality of the foregoing, Agent shall not (x) be obligated to ascertain,
monitor or inquire as to whether any Lender (other than a Lender which is an
Affiliate of Agent) or Participant (other than a Participant which is an
Affiliate of Agent) or prospective Lender or Participant (other than a
prospective Lender or a Participant which is an Affiliate of Agent) is a
Competitor or (y) have any liability with respect to or arising out of any
assignment or participation of Loans, or disclosure of confidential information,
to any Competitor.

 

12.8.                     Successor Agent and Co-Agents.

 

12.8.1.           Resignation; Successor Agent.  Subject to the appointment and
acceptance of a successor Agent as provided below, Agent may resign at any time
by giving at least 30 days written notice thereof to Lenders and Borrower
Agent.  Upon receipt of such notice, Required Lenders shall have the right to
appoint a successor Agent which shall be (a) a Lender or an Affiliate of a
Lender; or (b) a financial institution reasonably acceptable to Required Lenders
and (provided no Default or Event of Default exists) Borrower Agent.  If no
successor agent is appointed prior to the effective date of Agent’s resignation,
then Agent may appoint a successor agent that is a financial institution
acceptable to it, which shall be a Lender unless no Lender accepts the role. 
Upon acceptance by a successor Agent of its appointment hereunder, such
successor Agent shall thereupon succeed to and become vested with all the powers
and duties of the retiring Agent without further act, and the retiring Agent
shall be discharged from its duties and obligations hereunder but shall continue
to have the benefits of the indemnification set forth in Sections 12.6 and
14.2.  Notwithstanding any Agent’s resignation, the provisions of this
Section 12 shall continue in effect for its benefit with respect to any actions
taken or omitted to be taken by it while Agent.  Any successor to Bank of
America by merger or acquisition of stock or this loan shall continue to be
Agent hereunder without further act on the part of any Secured Party or Obligor.

 

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12.8.2.           Co-Collateral Agent.  If necessary or appropriate under
Applicable Law, Agent may appoint a Person to serve as a co-collateral agent or
separate collateral agent under any Loan Document.  Each right and remedy
intended to be available to Agent under the Loan Document shall also be vested
in such agent.  Secured Parties shall execute and deliver any instrument or
agreement that Agent may request to effect such appointment.  If the agent shall
die, dissolve, become incapable of acting, resign or be removed, then all the
rights and remedies of such agent, to the extent permitted by Applicable Law,
shall vest in and be exercised by Agent until appointment of a new agent.

 

12.9.                     Due Diligence and Non-Reliance.  Each Lender
acknowledges and agrees that it has, independently and without reliance upon
Agent or any other Lenders, and based upon such documents, information and
analyses as it has deemed appropriate, made its own credit analysis of each
Obligor and its own decision to enter into this Agreement and to fund Loans and
participate in LC Obligations hereunder.  Each Secured Party has made such
inquiries as it feels necessary concerning the Loan Documents, Collateral and
Obligors.  Each Secured Party acknowledges and agrees that the other Secured
Parties have made no representations or warranties concerning any Obligor, any
Collateral or the legality, validity, sufficiency or enforceability of any Loan
Documents or Obligations.  Each Secured Party will, independently and without
reliance upon any other Secured Party, and based upon such financial statements,
documents and information as it deems appropriate at the time, continue to make
and rely upon its own credit decisions in making Loans and participating in LC
Obligations, and in taking or refraining from any action under any Loan
Documents.  Except for notices, reports and other information expressly
requested by a Lender, Agent shall have no duty or responsibility to provide any
Secured Party with any notices, reports or certificates furnished to Agent by
any Obligor or any credit or other information concerning the affairs, financial
condition, business or Properties of any Obligor (or any of its Affiliates)
which may come into possession of Agent or its Affiliates.

 

12.10.              Remittance of Payments and Collections.

 

12.10.1.          Remittances Generally.  All payments by any Lender to Agent
shall be made by the time and on the day set forth in this Agreement, in
immediately available funds.  If no time for payment is specified or if payment
is due on demand by Agent and request for payment is made by Agent by 11:00
a.m. on a Business Day, payment shall be made by Lender not later than 2:00
p.m. on such day, and if request is made after 11:00 a.m., then payment shall be
made by 11:00 a.m. on the next Business Day.  Payment by Agent to any Secured
Party shall be made by wire transfer, in the type of funds received by Agent. 
Any such payment shall be subject to Agent’s right of offset for any amounts due
from such payee under the Loan Documents.

 

12.10.2.          Failure to Pay.  If any Secured Party fails to pay any amount
when due by it to Agent pursuant to the terms hereof, such amount shall bear
interest, from the due date until paid in full, at the rate determined by Agent
as customary for interbank compensation for two Business Days and thereafter at
the Default Rate for Base Rate Loans.  In no event shall Borrowers be entitled
to receive credit for any interest paid by a Secured Party to Agent, nor shall
any Defaulting Lender be entitled to interest on any amounts held by Agent
pursuant to Section 4.2.

 

12.10.3.          Recovery of Payments.  If Agent pays an amount to a Secured
Party in the expectation that a related payment will be received by Agent from
an Obligor and such related payment is not received, then Agent may recover such
amount from the Secured Party.  If Agent determines that an amount received by
it must be returned or paid to an Obligor or other Person pursuant to Applicable
Law or otherwise, then, notwithstanding any other term of any Loan Document,
Agent shall not be required to distribute such amount to any Secured Party.  If
any amounts received and applied by Agent to any Obligations are later required
to be returned by Agent pursuant to Applicable Law, each Lender shall pay to
Agent, on demand, such Lender’s Applicable Percentage of the amounts required to
be returned.

 

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12.11.              Individual Capacities.  As a Lender, Bank of America shall
have the same rights and remedies under the Loan Documents as any other Lender,
and the terms “Lenders,” “Required Lenders,” or any similar term shall include
Bank of America in its capacity as a Lender.  Agent, Lenders and their
Affiliates may accept deposits from, lend money to, provide Bank Products to,
act as financial or other advisor to, and generally engage in any kind of
business with, Obligors and their Affiliates, as if they were not Agent or
Lenders hereunder, without any duty to account therefor to any Secured Party. 
In their individual capacities, Agent, Lenders and their Affiliates may receive
information regarding Obligors, their Affiliates and their Account Debtors
(including information subject to confidentiality obligations), and shall have
no obligation to provide such information to any Secured Party.

 

12.12.              Titles.  Each Lender, other than Bank of America, that is
designated (on the cover page of this Agreement or otherwise) by Bank of America
as an “Arranger,” “Bookrunner” or “Agent” of any type shall have no right, power
or duty under any Loan Documents other than those applicable to all Lenders, and
shall in no event have any fiduciary duty to any Secured Party.

 

12.13.              Bank Product Providers.  Each Secured Bank Product Provider,
by delivery of a notice to Agent of a Bank Product, agrees to be bound by the
Loan Documents, including Sections 5.6, 14.3.3 and 12.  Each Secured Bank
Product Provider shall indemnify and hold harmless Agent Indemnitees, to the
extent not reimbursed by Obligors, against all Claims that may be incurred by or
asserted against any Agent Indemnitee in connection with such provider’s Secured
Bank Product Obligations.

 

12.14.              No Third Party Beneficiaries.  This Section 12 is an
agreement solely among Secured Parties and Agent, and shall survive Full Payment
of the Obligations.  This Section 12 does not confer any rights or benefits upon
Borrowers or any other Person.  As between Obligors and Agent, any action that
Agent may take under any Loan Documents or with respect to any Obligations shall
be conclusively presumed to have been authorized and directed by Secured
Parties.

 

SECTION 13.                                    BENEFIT OF AGREEMENT; ASSIGNMENTS

 

13.1.                     Successors and Assigns.  This Agreement shall be
binding upon and inure to the benefit of Obligors, Agent, Lenders, Secured
Parties, and their respective successors and assigns, except that (a) no Obligor
shall have the right to assign its rights or delegate its obligations under any
Loan Documents; (b) any assignment by a Lender must be made in compliance with
Section 13.3.  Agent may treat the Person which made any Loan as the owner
thereof for all purposes until such Person makes an assignment in accordance
with Section 13.3; and (c) no Lender may assign any Revolver Loans or any
portion of its Revolver Commitments to any Competitor without the prior written
consent of Borrower Agent.  Any authorization or consent of a Lender shall be
conclusive and binding on any subsequent transferee or assignee of such Lender.

 

13.2.                     Participations.

 

13.2.1.           Permitted Participants; Effect.  Subject to Section 13.3.3,
any Lender may sell to a financial institution (“Participant”) a participating
interest in the rights and obligations of such Lender under any Loan Documents;
provided, that no Lender shall sell any participating interest to any Competitor
without the prior written consent of Borrower Agent.  Despite any sale by a
Lender of participating interests to a Participant, such Lender’s obligations
under the Loan Documents shall remain unchanged, it shall remain solely
responsible to the other parties hereto for performance of such obligations, it
shall remain the holder of its Loans and Commitments for all purposes, all
amounts payable by Obligors shall be determined as if it had not sold such
participating interests, and Obligors and Agent shall continue to deal solely
and directly with such Lender in connection with the Loan Documents.  Each
Lender shall be solely responsible for notifying its Participants of any matters
under the Loan Documents, and Agent and the other Lenders shall not have any
obligation or liability to any such Participant.  A Participant shall not be
entitled to the benefits of Section 5.9 unless Borrower Agent agrees otherwise
in

 

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writing and such Participant shall not be entitled to receive any greater
payment under Section 5.9 than its participating Lender would have been entitled
to receive.

 

13.2.2.           Voting Rights.  Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, waiver or other
modification of a Loan Document other than that which forgives principal,
interest or fees, reduces the stated interest rate or fees payable with respect
to any Loan or Commitment in which such Participant has an interest, postpones
the Revolver Termination Date or any date fixed for any regularly scheduled
payment of principal, interest or fees on such Loan or Commitment, or releases
any Borrower, Guarantor or substantially all Collateral.

 

13.2.3.           Participant Register.  Each Lender that sells a participation
shall, acting as a non-fiduciary agent of Borrowers (solely for tax purposes),
maintain a register in which it enters the Participant’s name, address and
interest in Commitments, Loans (and stated interest) and LC Obligations. 
Entries in the register shall be conclusive, absent manifest error, and such
Lender shall treat each Person recorded in the register as the owner of the
participation for all purposes, notwithstanding any notice to the contrary.  No
Lender shall have an obligation to disclose any information in such register
except to the extent necessary to establish that a Participant’s interest is in
registered form under the Code.

 

13.2.4.           Benefit of Set-Off.  Obligors agree that each Participant
shall have a right of set-off in respect of its participating interest to the
same extent as if such interest were owing directly to a Lender, and each Lender
shall also retain the right of set-off with respect to any participating
interests sold by it.  By exercising any right of set-off, a Participant agrees
to share with Lenders all amounts received through its set-off, in accordance
with Section 12.5 as if such Participant were a Lender.

 

13.3.                     Assignments.

 

13.3.1.           Permitted Assignments.  A Lender may assign to an Eligible
Assignee any of its rights and obligations under the Loan Documents, as long as
(a) each assignment is of a constant, and not a varying, percentage of the
transferor Lender’s rights and obligations under the Loan Documents and, in the
case of a partial assignment, is in a minimum principal amount of $10,000,000
(unless otherwise agreed by Agent in its discretion) and integral multiples of
$500,000 in excess of that amount; (b) except in the case of an assignment in
whole of a Lender’s rights and obligations, the aggregate amount of the
Commitments retained by the transferor Lender is at least $10,000,000 (unless
otherwise agreed by Agent in its discretion); and (c) the parties to each such
assignment shall execute and deliver to Agent, for its acceptance and recording,
an Assignment and Acceptance.  Nothing herein shall limit the right of a Lender
to pledge or assign any rights under the Loan Documents to secure obligations of
such Lender, including a pledge or assignment to a Federal Reserve Bank;
provided, however, that no such pledge or assignment shall release the Lender
from its obligations hereunder nor substitute the pledge or assignee for such
Lender as a party hereto.

 

13.3.2.           Effect; Effective Date.  Upon delivery to Agent of an
assignment notice in the form of Exhibit B and a processing fee of $3,500
(unless otherwise agreed by Agent in its discretion), the assignment shall
become effective as specified in the notice, if it complies with this
Section 13.3.  From such effective date, the Eligible Assignee shall for all
purposes be a Lender under the Loan Documents, and shall have all rights and
obligations of a Lender thereunder.  Upon consummation of an assignment, the
transferor Lender, Agent and Borrowers shall make appropriate arrangements for
issuance of replacement and/or new notes, if applicable.  The transferee Lender
shall comply with Section 5.10 and deliver, upon request, an administrative
questionnaire satisfactory to Agent.

 

13.3.3.           Certain Assignees.  No assignment or participation may be made
to an Obligor, Affiliate of an Obligor, Defaulting Lender or natural person.
Agent shall have no obligation to determine whether any assignee is permitted
under the Loan Documents.  Any assignment by a Defaulting Lender shall be
effective only upon payment by the Eligible Assignee or Defaulting Lender to
Agent of an

 

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aggregate amount sufficient, upon distribution (through direct payment,
purchases of participations or other compensating actions as Agent deems
appropriate), to satisfy all funding and payment liabilities then owing by the
Defaulting Lender hereunder.  If an assignment by a Defaulting Lender shall
become effective under Applicable Law for any reason without compliance with the
foregoing sentence, then the assignee shall be deemed a Defaulting Lender for
all purposes until such compliance occurs.

 

13.3.4.           Register.  Agent, acting as a non-fiduciary agent of Obligors
(solely for tax purposes), shall maintain (a) a copy of each Assignment and
Acceptance delivered to it, and (b) a register for recordation of the names,
addresses and Commitments of, and the Loans, interest and LC Obligations owing
to, each Lender.  Entries in the register shall be conclusive, absent manifest
error, and Obligors, Agent and Lenders shall treat each lender recorded in such
register as a Lender for all purposes under the Loan Documents, notwithstanding
any notice to the contrary.  Agent may choose to show only one Borrower as the
borrower in the register, without any effect on the liability of any Obligor
with respect to the Obligations.  The register shall be available for inspection
by Obligors or any Lender, from time to time upon reasonable notice.

 

13.4.                     Replacement of Certain Lenders.  If a Lender (a) fails
to give its consent to any amendment, waiver or action for which consent of all
Lenders was required and Required Lenders consented, or (b) is a Defaulting
Lender, then, in addition to any other rights and remedies that any Person may
have, Agent or Borrower Agent may, by notice to such Lender within 120 days
after such event, require such Lender to assign all of its rights and
obligations under the Loan Documents to Eligible Assignee(s), pursuant to
appropriate Assignment and Acceptance(s), within 20 days after the notice. 
Agent is irrevocably appointed as attorney-in-fact to execute any such
Assignment and Acceptance if the Lender fails to execute it.  Such Lender shall
be entitled to receive, in cash, concurrently with such assignment, all amounts
owed to it under the Loan Documents through the date of assignment.

 

SECTION 14.                                    THE GUARANTEE

 

14.1.                     Guarantee.  The Guarantors hereby guarantee to each
Lender, the Issuing Bank and Agent and their respective successors and permitted
assigns the prompt payment in full when due (whether at stated maturity, by
acceleration or otherwise) of the Obligations.  The Guarantors hereby further
agree that if the Borrowers shall fail to pay in full when due (whether at
stated maturity, by acceleration or otherwise) any of the obligations, the
Guarantors will promptly pay the same, without any demand or notice whatsoever,
and that in the case of any extension of time of payment or renewal of any of
the obligations, the same will be promptly paid in full when due (whether at
extended maturity, by acceleration or otherwise) in accordance with the terms of
such extension or renewal.

 

14.2.                     Obligations Unconditional.  The obligations of the
Guarantors under Section 14.1 are absolute and unconditional irrespective of the
value, genuineness, validity, regularity or enforceability of this Agreement,
the other Loan Documents or any other agreement or instrument referred to herein
or therein, or any substitution, release or exchange of any other guarantee of
or security for any of the obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 14.2 that the obligations of the
Guarantors hereunder shall be absolute and unconditional under any and all
circumstances.  Without limiting the generality of the foregoing, it is agreed
that the occurrence of any one or more of the following shall not alter or
impair the liability of the Guarantors hereunder, which shall remain absolute
and unconditional as described above:

 

(I)                                   AT ANY TIME OR FROM TIME TO TIME, WITHOUT
NOTICE TO SUCH GUARANTORS, THE TIME FOR ANY PERFORMANCE OF OR COMPLIANCE WITH
ANY OF THE OBLIGATIONS SHALL BE EXTENDED, OR SUCH PERFORMANCE OR COMPLIANCE
SHALL BE WAIVED;

 

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(II)                              ANY OF THE ACTS MENTIONED IN ANY OF THE
PROVISIONS HEREOF OR OF THE OTHER LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR
INSTRUMENT REFERRED TO HEREIN OR THEREIN SHALL BE DONE OR OMITTED;

 

(III)                         THE MATURITY OF ANY OF THE OBLIGATIONS SHALL BE
ACCELERATED, OR ANY OF THE OBLIGATIONS SHALL BE MODIFIED, SUPPLEMENTED OR
AMENDED IN ANY RESPECT, OR ANY RIGHT HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS
OR ANY OTHER AGREEMENT OR INSTRUMENT REFERRED TO HEREIN OR THEREIN SHALL BE
WAIVED OR ANY OTHER GUARANTEE OF ANY OF THE OBLIGATIONS OR ANY SECURITY THEREFOR
SHALL BE RELEASED OR EXCHANGED IN WHOLE OR IN PART OR OTHERWISE DEALT WITH; OR

 

(IV)                          ANY LIEN OR SECURITY INTEREST GRANTED TO, OR IN
FAVOR OF, AGENT, THE ISSUING BANK OR ANY LENDER OR LENDERS AS SECURITY FOR ANY
OF THE OBLIGATIONS SHALL FAIL TO BE PERFECTED.

 

EACH GUARANTOR HEREBY EXPRESSLY WAIVES DILIGENCE, PRESENTMENT, DEMAND OF
PAYMENT, PROTEST AND ALL NOTICES WHATSOEVER, AND ANY REQUIREMENT THAT AGENT, THE
ISSUING BANK OR ANY LENDER EXHAUST ANY RIGHT, POWER OR REMEDY OR PROCEED AGAINST
BORROWERS OR ANY OTHER GUARANTOR HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS OR
ANY OTHER AGREEMENT OR INSTRUMENT REFERRED TO HEREIN OR THEREIN, OR AGAINST ANY
OTHER PERSON UNDER ANY OTHER GUARANTEE OF, OR SECURITY FOR, ANY OF THE
OBLIGATIONS, AND HEREBY WAIVE THE BENEFITS OF DIVISION AND DISCUSSION.

 

14.3.                     Reinstatement.  The obligations of the Guarantors
under this Section 14 shall be automatically reinstated if and to the extent
that for any reason any payment by or on behalf of any Borrower in respect of
the Obligations is rescinded or must be otherwise restored by any holder of any
of the Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
Agent, the Issuing Bank and each Lender on demand for all reasonable costs and
expenses (including fees and expenses of counsel) incurred by Agent, any Lender
or the Issuing Bank in connection with such rescission or restoration, including
any such costs and expenses incurred in defending against any claim alleging
that such payment constituted a preference, fraudulent transfer or similar
payment under any bankruptcy, insolvency or similar law.

 

14.4.                     Subrogation.  Until Full Payment of the Obligations,
each of the Guarantors hereby waives all rights of subrogation or contribution,
whether arising by contract or operation of law (including, without limitation,
any such right arising under the bankruptcy code, as amended) or otherwise by
reason of any payment by it pursuant to the provisions of this Section 14 and
further agrees with each Borrower for the benefit of each creditor of such
Borrower (including Agent, the Issuing Bank and each Lender) that any such
payment by it shall constitute a contribution of capital by such Guarantor to
such Borrower.

 

14.5.                     Remedies.  The Guarantors agree that, as between the
Guarantors and the Lenders, the Obligations of Borrowers hereunder may be
declared to be forthwith due and payable as provided in Section 11.2 (and shall
be deemed to have become automatically due and payable in the circumstances
provided in Section 11.2) for purposes of Section 14.1 notwithstanding any stay,
injunction or other prohibition preventing such declaration (or such obligations
from becoming automatically due and payable) as against Borrowers and that, in
the event of such declaration (or such obligations being deemed to have become
automatically due and payable), such Obligations (whether or not due and

 

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payable by Borrowers) shall forthwith become due and payable by the Guarantor
for purposes of, and, in the case of the Canadian Guarantors, subject to the
limitations set forth in, Section 14.1.

 

14.6.                     Instrument for the Payment of Money.  Each of the
Guarantors hereby acknowledges that the guarantee in this Section 14 constitutes
an instrument for the payment of money only, and consents and agrees that Agent,
the Issuing Bank, or any Lender, at its sole option, in the event of a dispute
by such Guarantor in the payment of any moneys due hereunder, shall have the
right to summary judgment or such other expedited procedure as may be available
for a suit on a note or other instrument for the payment of money only.

 

14.7.                     Continuing Guarantee.  The guarantee in this
Section 14 is a continuing guarantee and shall apply to all Obligations whenever
arising.

 

14.8.                     General Limitation on Amount of Obligations
Guaranteed.   In any action or proceeding involving any state or non-U.S.
corporate law, or any state or federal or non-U.S. bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, if the
obligations of the Guarantors under Section 14.1 would otherwise be held or
determined to be void, invalid or unenforceable, or subordinated to the claims
of any other creditors, on account of the amount of its liability under
Section 14.1, then, notwithstanding any other provision hereof to the contrary,
the amount of such liability shall, without any further action by the
Guarantors, any Lender, Agent or other Person, be automatically limited and
reduced to the highest amount that is valid and enforceable and not subordinated
to the claims of other creditors as determined in such action or proceeding.

 

14.9.                     Joint Enterprise.  Each Guarantor acknowledges that
(a) the Obligors’ business is a mutual and collective enterprise, and the
successful operation of each Obligor is dependent upon the successful
performance of the integrated group and (b) such Guarantor shall derive direct
and indirect economic and other benefits from the establishment by the Secured
Parties of the credit facility under this Agreement in favor of Borrowers.

 

14.10.              Subordination.  Each Borrower and each Guarantor hereby
subordinates any claims, including any right of payment, subrogation,
contribution and indemnity that it may have at any time against any other
Obligor, howsoever arising, to the Full Payment of the Obligations.

 

14.11.              Conflicts with Canadian Guaranty or UK Guaranty.  In the
event that any of the terms of this Section 14 conflict with (i) the Canadian
Guaranty as they relate to the Canadian Guarantors and/or (ii) the UK Guaranty
as they relate to the UK Guarantors, the terms of the Canadian Guaranty and/or
the UK Guaranty (as applicable) shall control.

 

SECTION 15.                                    MISCELLANEOUS

 

15.1.                     Consents, Amendments and Waivers.

 

15.1.1.           Amendment.  No modification of any Loan Document, including
any extension or amendment of a Loan Document or any waiver of a Default or
Event of Default, shall be effective without the prior written agreement of
Agent (with the consent of Required Lenders) and each Obligor party to such Loan
Document; provided, however, that

 

(a)                                 without the prior written consent of Agent,
no modification shall be effective with respect to any provision in a Loan
Document that relates to any rights, duties or discretion of Agent;

 

(b)                                 without the prior written consent of Issuing
Bank, no modification shall be effective with respect to any LC Obligations,
Section 2.3 or any other provision in a Loan Document that relates to any
rights, duties or discretion of Issuing Bank;

 

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(c)                                  without the prior written consent of each
affected Lender, including a Defaulting Lender, no modification shall be
effective that would (i) increase the Commitment of such Lender; (ii) reduce the
amount of, or waive or delay payment of, any principal, interest or fees payable
to such Lender (except as provided in Section 4.2); (iii) extend the Revolver
Termination Date applicable to such Lender’s Obligations; or (iv) amend this
clause (c);

 

(d)                                 without the prior written consent of all
Lenders having Revolver Commitments (or if the Revolver Commitments have
terminated, all Lenders having outstanding Revolver Loans), amend the definition
of the term “Revolver Borrowing Base” (or any defined term used in the
definition of “Revolver Borrowing Base”, provided that the Agent may in its
Permitted Discretion, without the necessity of obtaining the consent of any
Lender, increase or decrease the amount of the Availability Reserve, or
increase, decrease, add or eliminate any of the components thereof, or reduce
the percentages used in the definitions of Accounts Formula Amount and Inventory
Formula Amount);

 

(e)                                  [Reserved];

 

(f)                                   without the prior written consent of all
Lenders (except any Defaulting Lender), no modification shall be effective that
would (i) alter Sections 5.6.2, 7.1 (except to add Collateral) or 15.1.1;
(ii) amend the definitions of the terms “Applicable Percentage” or “Required
Lenders”; (iii) release all or substantially all of the Collateral;
(iv) subordinate the Liens in favor of Agent securing the Obligations to Liens
in favor of any other Person (other than (x) Purchase Money Liens securing
Permitted Purchase Money Debt, and (y) Liens securing obligations with respect
to Capital Leases permitted by Section 10.2.1(b), which Liens do not cover more
than the property subject to the applicable Capital Leases);  or (v) except in
connection with a merger, disposition or similar transaction expressly permitted
hereby, release any Obligor from liability for any Obligations; and

 

(g)                                  without the prior written consent of a
Secured Bank Product Provider, no modification shall be effective that affects
its relative payment priority under Section 5.6.2.

 

15.1.2.           Limitations.  The agreement of Obligors shall not be necessary
to the effectiveness of any modification of a Loan Document that deals solely
with the rights and duties of Lenders, Agent and/or Issuing Bank as among
themselves.  Only the consent of the parties to any agreement relating to fees
or a Bank Product shall be required for modification of such agreement, and no
Bank Product provider (in such capacity) shall have any right to consent to
modification of any Loan Document other than its Bank Product agreement.  Any
waiver or consent granted by Agent or Lenders hereunder shall be effective only
if in writing and only for the matter specified.

 

15.1.3.           Payment for Consents.  No Obligor will, directly or
indirectly, pay any remuneration or other thing of value, whether by way of
additional interest, fee or otherwise, to any Lender (in its capacity as a
Lender hereunder) as consideration for agreement by such Lender with any
modification of any Loan Documents, unless such remuneration or value is
concurrently paid, on the same terms, to all Lenders providing their consent, in
accordance with each such Lender’s Applicable Percentage.

 

15.2.                     Indemnity.  EACH OBLIGOR SHALL INDEMNIFY AND HOLD
HARMLESS THE INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED
AGAINST ANY INDEMNITEE, INCLUDING CLAIMS ASSERTED BY ANY OTHER OBLIGOR OR OTHER
PERSON OR ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE.  In no event shall any
party to a Loan Document have any obligation thereunder to indemnify or hold
harmless an Indemnitee with respect to a Claim that is determined in a final,
non-appealable judgment by a court of competent jurisdiction to result from the
gross negligence or willful misconduct of such Indemnitee.

 

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15.3.                     Notices and Communications.

 

(a)                                 Notice Address.  Subject to Section 4.1.4,
all notices and other communications by or to a party hereto shall be in writing
and shall be given to any Obligor, at Borrower Agent’s address shown on the
signature pages hereof, and to any other Person at its address shown on the
signature pages hereof (or, in the case of a Person who becomes a Lender after
the Restatement Date, at the address shown on its Assignment and Acceptance), or
at such other address as a party may hereafter specify by notice in accordance
with this Section 14.3.  Each communication shall be effective only (a) if given
by facsimile transmission, when transmitted to the applicable facsimile number,
if confirmation of receipt is received; (b) if given by mail, three Business
Days after deposit in the U.S. mail, with first-class postage pre-paid,
addressed to the applicable address; or (c) if given by personal delivery, when
duly delivered to the notice address with receipt acknowledged.  Notwithstanding
the foregoing, no notice to Agent pursuant to Section 2.1.4, 2.3, 3.1.2, 4.1.1
or 5.3.3 shall be effective until actually received by the individual to whose
attention at Agent such notice is required to be sent.  Any written
communication that is not sent in conformity with the foregoing provisions shall
nevertheless be effective on the date actually received by the noticed party. 
Any notice received by Borrower Agent shall be deemed received by all Obligors.

 

(b)                                 Electronic Communications; Voice Mail. 
Electronic mail and internet websites may be used only for routine
communications, such as delivery of Borrower Materials, administrative matters,
distribution of Loan Documents, and matters permitted under Section 4.1.4. 
Agent and Lenders make no assurances as to the privacy and security of
electronic communications.  Electronic and voice mail may not be used as
effective notice under the Loan Documents.

 

(c)                                  Platform.  Borrower Materials shall be
delivered pursuant to procedures approved by Agent, including electronic
delivery (if possible) upon request by Agent to an electronic system maintained
by Agent (“Platform”).  Borrowers shall notify Agent of each posting of Borrower
Materials on the Platform and the materials shall be deemed received by Agent
only upon its receipt of such notice.  Borrower Materials and other information
relating to this credit facility may be made available to Secured Parties on the
Platform.  The Platform is provided “as is” and “as available.”  Agent does not
warrant the accuracy or completeness of any information on the Platform nor the
adequacy or functioning of the Platform, and expressly disclaims liability for
any errors or omissions in the Borrower Materials or any issues involving the
Platform.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT
OF THIRD PARTY RIGHTS, OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY
AGENT WITH RESPECT TO BORROWER MATERIALS OR THE PLATFORM.  Lenders acknowledge
that Borrower Materials may include material non-public information of Obligors
and should not be made available to any personnel who do not wish to receive
such information or who may be engaged in investment or other market-related
activities with respect to any Obligor’s securities.  No Agent Indemnitee shall
have any liability to Borrowers, Secured Parties or any other Person for losses,
claims, damages, liabilities or expenses of any kind (whether in tort, contract
or otherwise) relating to use by any Person of the Platform or delivery of
Borrower Materials and other information through the Platform.

 

(d)                                 Non-Conforming Communications.  Agent and
Lenders may rely upon any communications purportedly given by or on behalf of
any Obligor even if they were not made in a manner specified herein, were
incomplete or were not confirmed, or if the terms thereof, as understood by the
recipient, varied from a later confirmation.  Each Obligor shall indemnify and
hold harmless each Indemnitee from any liabilities, losses, costs and expenses
arising from any electronic or telephonic communication purportedly given by or
on behalf of an Obligor.

 

15.4.                     Performance of Obligors’ Obligations.  Agent may, in
its discretion at any time and from time to time, at Obligors’ expense, pay any
amount or do any act required of an Obligor under any

 

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Loan Documents or otherwise lawfully requested by Agent to (a) enforce any Loan
Documents or collect any Obligations; (b) protect, insure, maintain or realize
upon any Collateral; or (c) defend or maintain the validity or priority of
Agent’s Liens in any Collateral, including any payment of a judgment, insurance
premium, warehouse charge, finishing or processing charge, or landlord claim, or
any discharge of a Lien.  All payments, costs and expenses (including
Extraordinary Expenses) of Agent under this Section shall be reimbursed to Agent
by Borrowers, on demand, with interest from the date incurred until paid in
full, at the Default Rate applicable to Base Rate Loans.  Any payment made or
action taken by Agent under this Section shall be without prejudice to any right
to assert an Event of Default or to exercise any other rights or remedies under
the Loan Documents.

 

15.5.                     Credit Inquiries.  Agent and Lenders may (but shall
have no obligation) to respond to usual and customary credit inquiries from
third parties concerning any Obligor or Subsidiary.

 

15.6.                     Severability.  Wherever possible, each provision of
the Loan Documents shall be interpreted in such manner as to be valid under
Applicable Law.  If any provision is found to be invalid under Applicable Law,
it shall be ineffective only to the extent of such invalidity and the remaining
provisions of the Loan Documents shall remain in full force and effect.

 

15.7.                     Cumulative Effect; Conflict of Terms.  The provisions
of the Loan Documents are cumulative.  The parties acknowledge that the Loan
Documents may use several limitations or measurements to regulate similar
matters, and they agree that these are cumulative and that each must be
performed as provided.  Except as otherwise provided in another Loan Document
(by specific reference to the applicable provision of this Agreement), if any
provision contained herein is in direct conflict with any provision in another
Loan Document, the provision herein shall govern and control.

 

15.8.                     Counterparts.  Any Loan Document may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract.  This Agreement shall become
effective when Agent has received counterparts bearing the signatures of all
parties hereto.  Agent may (but shall have no obligation to) accept any
signature, contract formation or record-keeping through electronic means, which
shall have the same legal validity and enforceability as manual or paper-based
methods, to the fullest extent permitted by Applicable Law, including the
Federal Electronic Signatures in Global and National Commerce Act, the New York
State Electronic Signatures and Records Act, or any similar state law based on
the Uniform Electronic Transactions Act.

 

15.9.                     Entire Agreement.  Time is of the essence with respect
to all Loan Documents and Obligations.  The Loan Documents constitute the entire
agreement, and supersede all prior understandings and agreements, among the
parties relating to the subject matter thereof.

 

15.10.              Relationship with Lenders.  The obligations of each Lender
hereunder are several, and no Lender shall be responsible for the obligations or
Commitments of any other Lender.  Amounts payable hereunder to each Lender shall
be a separate and independent debt.  It shall not be necessary for Agent or any
other Lender to be joined as an additional party in any proceeding for such
purposes.  Nothing in this Agreement and no action of Agent, Lenders or any
other Secured Party pursuant to the Loan Documents or otherwise shall be deemed
to constitute Agent and any Secured Party to be a partnership, joint venture or
similar arrangement, nor to constitute control of any Obligor.

 

15.11.              No Advisory or Fiduciary Responsibility.  In connection with
all aspects of each transaction contemplated by any Loan Document, Obligors
acknowledge and agree that (a)(i) this credit facility and any related arranging
or other services by Agent, any Lender, any of their Affiliates or any arranger
are arm’s-length commercial transactions between Obligors and such Person;
(ii) Obligors have consulted their own legal, accounting, regulatory and tax
advisors to the extent they have deemed appropriate; and (iii) Obligors are
capable of evaluating, and understand and accept, the terms, risks and
conditions of the transactions contemplated by the Loan Documents; (b) each of
Agent, Lenders, their

 

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Affiliates and any arranger is and has been acting solely as a principal and,
except as expressly agreed in writing by the relevant parties, has not been, is
not, and will not be acting as an advisor, agent or fiduciary for Obligors, any
of their Affiliates or any other Person, and has no obligation with respect to
the transactions contemplated by the Loan Documents except as expressly set
forth therein; and (c) Agent, Lenders, their Affiliates and any arranger may be
engaged in a broad range of transactions that involve interests that differ from
those of Obligors and their Affiliates, and have no obligation to disclose any
of such interests to Obligors or their Affiliates.  To the fullest extent
permitted by Applicable Law, each Obligor hereby waives and releases any claims
that it may have against Agent, Lenders, their Affiliates and any arranger with
respect to any breach of agency or fiduciary duty in connection with any
transaction contemplated by a Loan Document.

 

15.12.              Confidentiality.  Each of Agent, Lenders and Issuing Bank
shall maintain the confidentiality of all Information (as defined below), except
that Information may be disclosed (a) to its Affiliates, and to its and their
partners, directors, officers, employees, agents, advisors and representatives
(provided such Persons are informed of the confidential nature of the
Information and instructed to keep it confidential); (b) to the extent requested
by any governmental, regulatory or self-regulatory authority purporting to have
jurisdiction over it or its Affiliates; (c) to the extent required by Applicable
Law or by any subpoena or other legal process; (d) to any other party hereto;
(e) in connection with any action or proceeding relating to any Loan Documents
or Obligations; (f) subject to an agreement containing provisions substantially
the same as this Section, to any Transferee or any actual or prospective party
(or its advisors) to any Bank Product or to any swap, derivative or other
transaction under which payments are to be made by reference to an Obligor or
Obligor’s obligations; (g) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) is
available to Agent, any Lender, Issuing Bank or any of their Affiliates on a
nonconfidential basis from a source other than Borrowers; (h) on a confidential
basis to a provider of a Platform; or (i) with the consent of Borrower Agent.
Notwithstanding the foregoing, Agent and Lenders may publish or disseminate
general information concerning this credit facility for league table, tombstone
and advertising purposes, and may use Obligors’ logos, trademarks or product
photographs in advertising materials.  As used herein, “Information” means all
information received from an Obligor or Subsidiary relating to it or its
business that is identified as confidential when delivered.  Any Person required
to maintain the confidentiality of Information pursuant to this Section shall be
deemed to have complied with this Section if such Person exercises a degree of
care similar to that which such Person accords its own confidential
information.  Each of Agent, Lenders and Issuing Bank acknowledges that
(i) Information may include material non-public information; (ii) it has
developed compliance procedures regarding the use of material non-public
information; and (iii) it will handle such material non-public information in
accordance with Applicable Law.

 

15.13.              GOVERNING LAW.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS,
UNLESS OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT
TO FEDERAL LAWS RELATING TO NATIONAL BANKS).

 

15.14.              Consent to Forum.                                       
EACH OBLIGOR HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL OR
STATE COURT SITTING IN OR WITH JURISDICTION OVER NEW YORK, IN ANY PROCEEDING OR
DISPUTE RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY SUCH
PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT.  EACH OBLIGOR
IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE
REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR
INCONVENIENT FORUM.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 14.3.1.  Nothing herein
shall limit the right of Agent or any Lender to bring proceedings against any
Obligor in any other court, nor limit the right of

 

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any party to serve process in any other manner permitted by Applicable Law. 
Nothing in this Agreement shall be deemed to preclude enforcement by Agent of
any judgment or order obtained in any forum or jurisdiction.

 

15.15.              Waivers by Obligors.  To the fullest extent permitted by
Applicable Law, each Obligor waives (a) the right to trial by jury (which Agent
and each Lender hereby also waives) in any proceeding or dispute of any kind
relating in any way to any Loan Documents, Obligations or Collateral;
(b) presentment, demand, protest, notice of presentment, default, non-payment,
maturity, release, compromise, settlement, extension or renewal of any
commercial paper, accounts, documents, instruments, chattel paper and guaranties
at any time held by Agent on which an Obligor may in any way be liable, and
hereby ratifies anything Agent may do in this regard; (c) notice prior to taking
possession or control of any Collateral; (d) any bond or security that might be
required by a court prior to allowing Agent to exercise any rights or remedies;
(e) the benefit of all valuation, appraisement and exemption laws; (f) any claim
against Agent, Issuing Bank or any Lender, on any theory of liability, for
special, indirect, consequential, exemplary or punitive damages (as opposed to
direct or actual damages) in any way relating to any Enforcement Action,
Obligations, Loan Documents or transactions relating thereto; and (g) notice of
acceptance hereof.  Each Obligor acknowledges that the foregoing waivers are a
material inducement to Agent, Issuing Bank and Lenders entering into this
Agreement and that they are relying upon the foregoing in their dealings with
Obligors.  Each Obligor has reviewed the foregoing waivers with its legal
counsel and has knowingly and voluntarily waived its jury trial and other rights
following consultation with legal counsel.  In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.

 

15.16.              Patriot Act Notice.  Agent and Lenders hereby notify
Obligors that pursuant to the Patriot Act, Agent and Lenders are required to
obtain, verify and record information that identifies each Obligor, including
its legal name, address, tax ID number and other information that will allow
Agent and Lenders to identify it in accordance with the Patriot Act.  Agent and
Lenders will also require information regarding each personal guarantor, if any,
and may require information regarding Obligors’ management and owners, such as
legal name, address, social security number and date of birth.  Borrowers shall,
promptly upon request, provide all documentation and other information as
Agent, Issuing Bank or any Lender may request from time to time in order to
comply with any obligations under any “know your customer,” anti-money
laundering or other requirements of Applicable Law.

 

15.17.              Canadian Anti-Money Laundering Legislation.

 

(a)                                 Each Obligor acknowledges that, pursuant to
the Proceeds of Crime Act and other applicable anti-money laundering,
anti-terrorist financing, government sanction and “know your client” laws
(collectively, including any guidelines or orders thereunder, “AML
Legislation”), the Lenders may be required to obtain, verify and record
information regarding the Obligors and their respective directors, authorized
signing officers, direct or indirect shareholders or other Persons in control of
the Obligors, and the transactions contemplated hereby. Each Obligor shall
promptly provide all such information, including supporting documentation and
other evidence, as may be reasonably requested by any Lender or any prospective
assignee or participant of a Lender, any Issuing Bank or any Agent, in order to
comply with any applicable AML Legislation, whether now or hereafter in
existence.

 

(b)                                 If the Agent has ascertained the identity of
any Obligor or any authorized signatories of the Obligors for the purposes of
applicable AML Legislation, then the Agent:

 

(i)                                     shall be deemed to have done so as an
agent for each Lender, and this Agreement shall constitute a “written agreement”
in such regard between each Lender and the Agent within the meaning of the
applicable AML Legislation; and

 

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(ii)           shall provide to each Lender copies of all information obtained
in such regard without any representation or warranty as to its accuracy or
completeness.

 

Notwithstanding the preceding sentence and except as may otherwise be agreed in
writing, each of the Lenders agrees that neither the Agent nor any other Agent
has any obligation to ascertain the identity of the Obligors or any authorized
signatories of the Obligors on behalf of any Lender, or to confirm the
completeness or accuracy of any information it obtains from any Obligor or any
such authorized signatory in doing so.

 

15.18.     Continued Effectiveness; No Novation.  Notwithstanding anything
contained herein, the terms of this Agreement are not intended to and do not
serve to effect a novation of the obligations, liabilities or indebtedness of
Obligors under the Existing Credit Agreement.  Instead, it is the express
intention of the parties hereto to reaffirm, amend and restate the obligations,
liabilities and indebtedness of Obligors created under or otherwise evidenced by
the Existing Credit Agreement.  All revolver loans outstanding under, the
Existing Credit Agreement as of the Restatement Date shall automatically be
deemed to constitute Revolver Loans under this Agreement (as more fully
described in Section 2.1.1).  Obligors acknowledge and confirm that the liens
and security interests granted by Obligors to Agent and Lenders under the
Existing Credit Agreement remain in full force and effect and continue to secure
all obligations, liabilities and indebtedness of Obligors under this Agreement. 
The term “Obligations” used in this Agreement and in the other Loan Documents
(or any other term used herein or therein to describe or refer to the
obligations, liabilities and indebtedness of the Obligors) describes and refers
to all obligations, liabilities and indebtedness of Obligors under this
Agreement and under the Existing Credit Agreement, as amended and restated
hereby, as the same had been previously amended, modified, supplemented or
restated prior to the date hereof and as the same may be further amended,
modified, supplemented or restated from time to time.  The Loan Documents and
all agreements, documents and instruments executed and delivered in connection
with any of the foregoing shall each be deemed to be amended to the extent
necessary to give effect to the provisions of this Agreement.  Cross-references
in the Loan Documents to particular section or subsection numbers in the
Existing Credit Agreement shall be deemed to be cross-references to the
corresponding sections or subsections, as applicable, of this Agreement.

 

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

 

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

 

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

 

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

 

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

 

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15.20.     Intercreditor Agreement.

 

(a)           Each Lender party hereto (i) understands, acknowledges and agrees
that it (and each of its successors and assigns) and each other Lender (and each
of their successors and assigns) shall be bound by the Intercreditor Agreement,
(ii) authorizes and directs Agent to enter into the Intercreditor Agreement on
its behalf, and (iii) agrees that any action taken by Agent pursuant to the
Intercreditor Agreement shall be binding upon such Lender.

 

(b)           The provisions of this Section 15.20 are not intended to summarize
or fully describe the provisions of the Intercreditor Agreement.  Reference must
be made to the Intercreditor Agreement itself to understand all terms and
conditions thereof.  Each Lender is responsible for making its own analysis and
review of the Intercreditor Agreement and the terms and provisions thereof, and
neither Agent nor any of its Affiliates makes any representation to any Lender
as to the sufficiency or advisability of the provisions contained in the
Intercreditor Agreement. A copy of the Intercreditor Agreement may be obtained
from Agent.

 

(c)           The Intercreditor Agreement is an agreement solely amongst the
Secured Parties (as defined in the Intercreditor Agreement) and their respective
agents (including their successors and assigns) and is acknowledged and agreed
to by the Obligors as party thereto.  As more fully provided therein, the
Intercreditor Agreement can only be amended by the parties thereto in accordance
with the provisions thereof.

 

(d)           In the event of any conflict between this Agreement and the
Intercreditor Agreement, the Intercreditor Agreement shall govern.

 

[Remainder of page intentionally left blank; signatures begin on following page]

 

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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the
date set forth above.

 

 

BORROWERS:

 

 

 

SUMMER INFANT, INC.

 

 

 

By:

/s/ William E. Mote, Jr.

 

Name:

William E. Mote, Jr.

 

Title:

Chief Financial Officer

 

Address:

 

 

 

1275 Park East Drive

 

 

Woonsocket, Rhode Island 02895

 

 

Attn: William E. Mote, Jr.

 

 

Telephone: 401-671-6550

 

 

Email: wmote@summerinfant.com

 

 

 

 

SUMMER INFANT (USA), INC.

 

 

 

 

By:

/s/ William E. Mote, Jr.

 

Name:

William E. Mote, Jr.

 

Title:

Chief Financial Officer

 

Address:

 

 

 

1275 Park East Drive

 

 

Woonsocket, Rhode Island 02895

 

 

Attn: William E. Mote, Jr.

 

 

Telephone: 401-671-6550

 

 

Email: wmote@summerinfant.com

 

[Signature Page to Second Amended and Restated Loan and Security Agreement]

 

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

 

 

GUARANTORS:

 

 

 

SUMMER INFANT CANADA, LIMITED

 

 

 

By:

/s/ William E. Mote, Jr.

 

Name:

William E. Mote, Jr.

 

Title:

Chief Financial Officer

 

Address:

 

 

 

1275 Park East Drive

 

 

Woonsocket, Rhode Island 02895

 

 

Attn: William E. Mote, Jr.

 

 

Telephone: 401-671-6550

 

 

Email: wmote@summerinfant.com

 

 

 

 

SUMMER INFANT EUROPE LIMITED

 

 

 

 

By:

/s/ William E. Mote, Jr.

 

Name:

William E. Mote, Jr.

 

Title:

Chief Financial Officer

 

Address:

 

 

 

1275 Park East Drive

 

 

Woonsocket, Rhode Island 02895

 

 

Attn: William E. Mote, Jr.

 

 

Telephone: 401-671-6550

 

 

Email: wmote@summerinfant.com

 

[Signature Page to Second Amended and Restated Loan and Security Agreement]

 

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AGENT:

 

 

 

BANK OF AMERICA, N.A., as Agent

 

 

 

By:

/s/ Cynthia G. Stannard

 

Name:

Cynthia G. Stannard

 

Title:

Senior Vice President

 

Address:

 

 

 

Bank of America, N.A.

 

 

Mail Code: CT2-500-35-02

 

 

Cityplace 1, 185 Asylum Street

 

 

Hartford, CT 06103

 

 

Attn: Cynthia Stannard, SVP

 

 

Telecopy: 860-952-6830

 

 

Telephone: 860-952-6827

 

 

Email: cynthia.stannard@baml.com

 

 

 

 

LENDER:

 

 

 

 

BANK OF AMERICA, N.A., as Lender

 

 

 

 

By:

/s/ Cynthia G. Stannard

 

Name:

Cynthia G. Stannard

 

Title:

Senior Vice President

 

Address:

 

 

 

Bank of America, N.A.

 

 

Mail Code: CT2-500-35-02

 

 

Cityplace 1, 185 Asylum Street

 

 

Hartford, CT 06103

 

 

Attn: Cynthia Stannard, SVP

 

 

Telecopy: 860-952-6830

 

 

Telephone: 860-952-6827

 

 

email: Cynthia.stannard@baml.com

 

[Signature Page to Second Amended and Restated Loan and Security Agreement]

 

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Exhibit A

to

Second Amended and Restated Loan and Security Agreement

 

ASSIGNMENT AND ACCEPTANCE

 

Reference is made to the Second Amended and Restated Loan and Security Agreement
dated as of June   , 2018, as amended (“Loan Agreement”), among SUMMER
INFANT, INC., and SUMMER INFANT (USA), INC. (collectively, “Borrowers”), the
Guarantors party thereto from time to time, BANK OF AMERICA, N.A., as agent
(“Agent”) for the financial institutions from time to time party to the Loan
Agreement (“Lenders”), and such Lenders.  Terms are used herein as defined in
the Loan Agreement.

 

(“Assignor”) and                                         (“Assignee”) agree as
follows:

 

1.             Assignor hereby assigns to Assignee and Assignee hereby purchases
and assumes from Assignor (a) a principal amount of $         of Assignor’s
outstanding Revolver Loans and $            of Assignor’s participations in LC
Obligations, and (b) the amount of $           of Assignor’s Revolver Commitment
(which represents     % of the total Revolver Commitments) (the foregoing items
being, collectively, the “Assigned Interest”), together with an interest in the
Loan Documents corresponding to the Assigned Interest.  This Agreement shall be
effective as of the date (“Effective Date”) indicated in the corresponding
Assignment Notice delivered to Agent, provided such Assignment Notice is
executed by Assignor, Assignee, Agent and Borrower Agent, if applicable.  From
and after the Effective Date, Assignee hereby expressly assumes, and undertakes
to perform, all of Assignor’s obligations in respect of the Assigned Interest,
and all principal, interest, fees and other amounts which would otherwise be
payable to or for Assignor’s account in respect of the Assigned Interest shall
be payable to or for Assignee’s account, to the extent such amounts accrue on or
after the Effective Date.

 

2.             Assignor (a) represents that as of the date hereof, prior to
giving effect to this assignment, its Revolver Commitment is $           and the
outstanding balance of its Revolver Loans and participations in LC Obligations
is $          ; (b) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Agreement or any other instrument or document furnished pursuant thereto, other
than that Assignor is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse
claim; and (c) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of Borrowers or the performance by
Borrowers of their obligations under the Loan Documents.  [Assignor is attaching
the Note[s] held by it and requests that Agent exchange such Note[s] for new
Notes payable to Assignee [and Assignor].]

 

3.             Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received copies of the Loan Agreement and such other Loan Documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (c) agrees that it shall,
independently and without reliance upon Assignor and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents;
(d) confirms that it is an Eligible Assignee; (e) appoints and authorizes Agent
to take such action as agent on its behalf and to exercise such powers under the
Loan Agreement as are delegated to Agent by the terms thereof, together with
such powers as are incidental thereto; (f) agrees that it will observe and
perform all obligations that are required to be performed by it as a “Lender”
under the Loan Documents;

 

A-1

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and (g) represents and warrants that the assignment evidenced hereby will not
result in a non-exempt “prohibited transaction” under Section 406 of ERISA.

 

4.             This Agreement shall be governed by the laws of the State of New
York.  If any provision is found to be invalid under Applicable Law, it shall be
ineffective only to the extent of such invalidity and the remaining provisions
of this Agreement shall remain in full force and effect.

 

5.             Each notice or other communication hereunder shall be in writing,
shall be sent by messenger, by telecopy or facsimile transmission, or by
first-class mail, shall be deemed given when sent and shall be sent as follows:

 

(a)                                 If to Assignee, to the following address (or
to such other address as Assignee may designate from time to time):

 

 

 

 

(b)                                 If to Assignor, to the following address (or
to such other address as Assignor may designate from time to time):

 

 

 

 

Payments hereunder shall be made by wire transfer of immediately available
Dollars as follows:

 

If to Assignee, to the following account (or to such other account as Assignee
may designate from time to time):

 

 

 

ABA No.

 

Account No.

Reference:

 

If to Assignor, to the following account (or to such other account as Assignor
may designate from time to time):

 

 

 

ABA No.

 

Account No.

Reference:

 

A-2

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IN WITNESS WHEREOF, this Assignment and Acceptance is executed as of
             .

 

 

 

 

(“Assignee”)

 

 

 

 

 

By

 

 

 

Title:

 

 

 

 

 

 

 

(“Assignor”)

 

 

 

 

 

By

 

 

 

Title:

 

A-3

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EXHIBIT B

to

Second Amended and Restated Loan and Security Agreement

 

ASSIGNMENT NOTICE

 

Reference is made to (1) the Second Amended and Restated Loan and Security
Agreement dated as of June   , 2018, as amended (“Loan Agreement”), among SUMMER
INFANT, INC., and SUMMER INFANT (USA), INC. (collectively, “Borrowers”), the
Guarantors party thereto from time to time, BANK OF AMERICA, N.A., as agent
(“Agent”) for the financial institutions from time to time party to the Loan
Agreement (“Lenders”), and such Lenders; and (2) the Assignment and Acceptance
dated as of             , 20   (“Assignment Agreement”), between
                   (“Assignor”) and                      (“Assignee”).  Terms
are used herein as defined in the Loan Agreement.

 

Assignor hereby notifies Borrowers and Agent of Assignor’s intent to assign to
Assignee pursuant to the Assignment Agreement (a) a principal amount of
$         of Assignor’s outstanding Revolver Loans and $            of
Assignor’s participations in LC Obligations and (b) the amount of $           of
Assignor’s Revolver Commitment (which represents     % of the total Revolver
Commitments) (the foregoing items being, collectively, the “Assigned Interest”),
together with an interest in the Loan Documents corresponding to the Assigned
Interest.  This Agreement shall be effective as of the date (“Effective Date”)
indicated below, provided this Assignment Notice is executed by Assignor,
Assignee, Agent and Borrower Agent, if applicable.  Pursuant to the Assignment
Agreement, Assignee has expressly assumed all of Assignor’s obligations under
the Loan Agreement to the extent of the Assigned Interest, as of the Effective
Date.

 

For purposes of the Loan Agreement, Agent shall deem Assignor’s Revolver
Commitment to be reduced by $         , and Assignee’s Revolver Commitment to be
increased by $         .

 

The address of Assignee to which notices and information are to be sent under
the terms of the Loan Agreement is:

 

 

The address of Assignee to which payments are to be sent under the terms of the
Loan Agreement is shown in the Assignment and Acceptance.

 

This Notice is being delivered to Borrowers and Agent pursuant to Section 13.3
of the Loan Agreement.  Please acknowledge your acceptance of this Notice by
executing and returning to Assignee and Assignor a copy of this Notice.

 

B-1

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IN WITNESS WHEREOF, this Assignment Notice is executed as of              .

 

 

 

 

(“Assignee”)

 

 

 

 

 

By

 

 

 

Title:

 

 

 

 

 

 

 

(“Assignor”)

 

 

 

 

 

By

 

 

 

Title:

 

ACKNOWLEDGED AND AGREED,

AS OF THE DATE SET FORTH ABOVE:

 

BORROWER AGENT:*

 

SUMMER INFANT (USA), INC.

 

By

 

 

 

Title:

 

 

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* No signature required if Assignee is a Lender, U.S.-based Affiliate of a
Lender or Approved Fund, or if an Event of Default exists.

 

BANK OF AMERICA, N.A.,

as Agent

 

By

 

 

 

Title:

 

 

B-2

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SCHEDULE 1.1

to

Second Amended and Restated Loan and Security Agreement

 

COMMITMENTS OF LENDERS

 

Lender

 

Revolver 
Commitment

 

Applicable 
Percentage

 

Bank of America, N.A.

 

$

60,000,000

 

100

%

 

 

 

 

 

 

TOTALS:

 

$

60,000,000

 

100

%

 

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