Exhibit 10.1

 

 

 

 

[tex10-1_logo.jpg]

 

SECOND AMENDED AND RESTATED

CREDIT AGREEMENT

 

dated as of

 

January 21, 2016

 

among

 

ESCALADE, INCORPORATED

 

and

 

INDIAN INDUSTRIES, INC.

as Borrowers,

 

Escalade’s Domestic Subsidiaries,

as Loan Parties Hereto,

 

The Lenders Party Hereto

 

and

 

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

  Page     ARTICLE I Definitions 1     SECTION 1.01. Defined Terms 1 SECTION
1.02. Classification of Loans and Borrowings 31 SECTION 1.03. Terms Generally 31
SECTION 1.04. Accounting Terms; GAAP 32     ARTICLE II The Credits 32    
SECTION 2.01. Commitments 32 SECTION 2.02. Loans and Borrowings 32 SECTION 2.03.
Requests for Revolving Borrowings 33 SECTION 2.04. RESERVED 33 SECTION 2.05.
Swingline Loan 33 SECTION 2.06. Letters of Credit 35 SECTION 2.07. Funding of
Borrowings 39 SECTION 2.08. Interest Elections 40 SECTION 2.09. Termination of
Commitments 41 SECTION 2.10. Repayment and Amortization of Loans; Evidence of
Debt 41 SECTION 2.11. Prepayment of Loans 42 SECTION 2.12. Fees 44 SECTION 2.13.
Interest 45 SECTION 2.14. Alternate Rate of Interest 45 SECTION 2.15. Increased
Costs 46 SECTION 2.16. Break Funding Payments 47 SECTION 2.17. Taxes 47 SECTION
2.18. Payments Generally; Allocation of Proceeds; Sharing of Set-offs 51 SECTION
2.19. Mitigation Obligations; Replacement of Lenders 53 SECTION 2.20. Defaulting
Lenders 54 SECTION 2.21. Returned Payments 55 SECTION 2.22. Banking Services and
Swap Agreements 56     ARTICLE III Representations and Warranties 56     SECTION
3.01. Organization; Powers 56 SECTION 3.02. Authorization; Enforceability 56
SECTION 3.03. Governmental Approvals; No Conflicts 56 SECTION 3.04. Financial
Condition; No Material Adverse Change 56 SECTION 3.05. Properties 57 SECTION
3.06. Litigation and Environmental Matters 57 SECTION 3.07. Compliance with Laws
and Agreements; No Default 57 SECTION 3.08. Investment Company Status 58 SECTION
3.09. Taxes 58 SECTION 3.10. ERISA 58 SECTION 3.11. Disclosure 58 SECTION 3.12.
Material Agreements 58 SECTION 3.13. Solvency 58 SECTION 3.14. Insurance 59
SECTION 3.15. Capitalization and Subsidiaries 59 SECTION 3.16. Regulation U 59

 

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SECTION 3.17. Security Interest in Collateral 59 SECTION 3.18. Employment
Matters 59 SECTION 3.19. Federal Reserve Regulations 60 SECTION 3.20. Use of
Proceeds 60 SECTION 3.21. No Burdensome Restrictions 60 SECTION 3.22. Sanctions
Laws and Regulations 60 SECTION 3.23. Affiliate Transactions 60     ARTICLE IV
Conditions 60     SECTION 4.01. Effective Date 60 SECTION 4.02. Each Credit
Event 63 SECTION 4.03. Post-Closing Conditions 63     ARTICLE V Affirmative
Covenants 64     SECTION 5.01. Financial Statements; Borrowing Base and Other
Information 64 SECTION 5.02. Notices of Material Events 66 SECTION 5.03.
Existence; Conduct of Business 67 SECTION 5.04. Payment of Obligations 67
SECTION 5.05. Maintenance of Properties 67 SECTION 5.06. Books and Records;
Inspection Rights 67 SECTION 5.07. Compliance with Laws and Material Contractual
Obligations 68 SECTION 5.08. Use of Proceeds 68 SECTION 5.09. Insurance 68
SECTION 5.10. Accuracy of Information 68 SECTION 5.11. Casualty and Condemnation
68 SECTION 5.12. Appraisals 69 SECTION 5.13. Depository Banks 69 SECTION 5.14.
Additional Collateral; Further Assurances 69 SECTION 5.15. Hazardous Materials
70     ARTICLE VI Negative Covenants 71     SECTION 6.01. Indebtedness 71
SECTION 6.02. Liens 72 SECTION 6.03. Fundamental Changes 73 SECTION 6.04.
Investments, Loans, Advances, Guarantees and Acquisitions 74 SECTION 6.05. Asset
Sales 75 SECTION 6.06. Sale and Leaseback Transactions 76 SECTION 6.07. Swap
Agreements 76 SECTION 6.08. Restricted Payments; Certain Payments of
Indebtedness 76 SECTION 6.09. Transactions with Affiliates 77 SECTION 6.10.
Restrictive Agreements 78 SECTION 6.11. Amendment of Material Documents 78
SECTION 6.12. RESERVED 78 SECTION 6.13. Financial Covenants 78     ARTICLE VII
Events of Default 78     ARTICLE VIII The Administrative Agent 81     SECTION
8.01. Appointment 81 SECTION 8.02. Rights as a Lender 81 SECTION 8.03. Duties
and Obligations 82

 

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SECTION 8.04. Reliance 82 SECTION 8.05. Actions through Sub-Agents 82 SECTION
8.06. Resignation 83 SECTION 8.07. Non-Reliance 83 SECTION 8.08. RESERVED 84
SECTION 8.09. Not Partners or Co-Venturers; Administrative Agent as
Representative of the Secured Parties 84     ARTICLE IX Miscellaneous 85    
SECTION 9.01. Notices 85 SECTION 9.02. Waivers; Amendments 86 SECTION 9.03.
Expenses; Indemnity; Damage Waiver 89 SECTION 9.04. Successors and Assigns 90
SECTION 9.05. Survival 94 SECTION 9.06. Counterparts; Integration;
Effectiveness; Electronic Execution 94 SECTION 9.07. Severability 95 SECTION
9.08. Right of Setoff 95 SECTION 9.09. Governing Law; Jurisdiction; Consent to
Service of Process 95 SECTION 9.10. WAIVER OF JURY TRIAL 96 SECTION 9.11.
Headings 96 SECTION 9.12. Confidentiality 96 SECTION 9.13. Several Obligations;
Nonreliance; Violation of Law 97 SECTION 9.14. USA PATRIOT Act 97 SECTION 9.15.
Disclosure 97 SECTION 9.16. Appointment for Perfection 97 SECTION 9.17. Interest
Rate Limitation 97 SECTION 9.18. No Advisory or Fiduciary Responsibility 97
SECTION 9.19. RESERVED 98 SECTION 9.20. Amendment 98 SECTION 9.21. Consent and
Affirmation 98     ARTICLE X [Reserved] 98     ARTICLE XI The Borrower
Representative 98     SECTION 11.01. Appointment; Nature of Relationship 98
SECTION 11.02. Powers 99 SECTION 11.03. Employment of Agents 99 SECTION 11.04.
Notices 99 SECTION 11.05. Successor Borrower Representative 99 SECTION 11.06.
Execution of Loan Documents; Borrowing Base Certificate 99 SECTION 11.07.
Reporting 99

 

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SCHEDULES:

 

Commitment Schedule

Schedule 1.01 — Loan Guaranties and Security Agreements

Schedule 3.05 — Properties

Schedule 3.06 — Disclosed Matters

Schedule 3.12 — Material Agreements

Schedule 3.14 — Insurance

Schedule 3.15 — Capitalization and Subsidiaries

Schedule 3.23 — Affiliate Transactions

Schedule 6.01 — Existing Indebtedness

Schedule 6.02 — Existing Liens

Schedule 6.04 — Existing Investments

Schedule 6.10 — Existing Restrictions

 

EXHIBITS:

 

Exhibit A — Form of Assignment and Assumption

Exhibit B — Form of Opinion of Borrower’s Counsel

Exhibit C — Form of Borrowing Base Certificate

Exhibit D — Form of Compliance Certificate

Exhibit E — Joinder Agreement

Exhibit F-1 — U.S. Tax Certificate (For Foreign Lenders that are not
Partnerships for U.S. Federal Income Tax Purposes)

Exhibit F-2 — U.S. Tax Certificate (For Foreign Participants that are not
Partnerships for U.S. Federal Income Tax Purposes)

Exhibit F-3 — U.S. Tax Certificate (For Foreign Participants that are
Partnerships for U.S. Federal Income Tax Purposes)

Exhibit F-4 — U.S. Tax Certificate (For Foreign that are Partnerships for U.S.
Federal Income Tax Purposes)

Exhibit G – Form of Revolving Note

Exhibit H – Form of Term Note

 

 iv

 

 

THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT is dated as of January 21,
2016, and is among ESCALADE, INCORPORATED, the other Loan Parties hereto, and
JPMORGAN CHASE BANK, N.A., as Administrative Agent, Issuing Bank, Swingline
Lender, and a Lender.

 

The Borrower Representative and the Administrative Agent are parties to that
certain First Amended and Restated Credit Agreement, dated as of August 27, 2013
(as amended to date, the “Existing Credit Agreement”). The Loan Parties,
excluding the Borrower, are parties to those certain Unlimited Continuing
Guaranties, executed by each Guarantor individually in favor of the
Administrative Agent for the benefit of the Lenders.

 

In consideration of their mutual covenants and agreements hereinafter set forth
and intending to be legally bound hereby, the parties hereto covenant and agree
that the Existing Credit Agreement shall be, and it is hereby, amended and
restated in its entirety by this Agreement.

 

The parties hereto agree as follows:

 

ARTICLE I

 

Definitions

 

SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:

 

“ABR”, when used in reference to any Loan or any Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.

 

“Account” has the meaning assigned to such term in the Security Agreement.

 

“Account Debtor” means any Person obligated on an Account.

 

“Acquisition” means any transaction, or any series of related transactions,
consummated on or after the Effective Date, by which any Loan Party (a) acquires
any going business, business unit or all or substantially all of the assets of
any Person, whether through purchase of assets, merger or otherwise or (b)
directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes) of the Equity Interests of a Person which has ordinary voting power for
the election of directors or other similar management personnel of a Person
(other than Equity Interests having such power only by reason of the happening
of a contingency) or a majority of the outstanding Equity Interests of a Person.

 

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period or for any ABR Borrowing, an interest rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for
such Interest Period multiplied by (b) the Statutory Reserve Rate.

 

“Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as
administrative agent for the Lenders hereunder.

 

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

 

 1

 

 

“Affiliate” means, with respect to a specified 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.

 

“Agency Site” means the Intralinks or another Electronic System established by
the Administrative Agent to administer this Agreement.

 

“Aggregate Credit Exposure” means, at any time, the aggregate Credit Exposure of
all the Lenders at such time.

 

“Aggregate Revolving Exposure” means, at any time, the aggregate Revolving
Exposure of all the Lenders at such time (with the Swingline Exposure of each
Lender calculated assuming that all of the Lenders have funded their
participations in all Swingline Loans outstanding at such time).

 

“Agreement” means this Second Amended and Restated Credit Agreement, dated as of
January __, 2016, by and among the Borrowers, the other Loan Parties party
hereto and JPMorgan Chase Bank, N.A., as the Administrative Agent, Issuing Bank,
Swingline Lender and as a Lender, as amended, restated and/or modified from time
to time.

 

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective
Rate in effect on such day plus ½ of 1% and (c) the Adjusted LIBO Rate for a one
month Interest Period on such day (or if such day is not a Business Day, the
immediately preceding Business Day) plus 1%, provided that, the Adjusted LIBO
Rate for any day shall be based on the LIBO Rate at approximately 11:00 a.m.
London time on such day, subject to the interest rate floors set forth therein.
Any change in the Alternate Base Rate due to a change in the Prime Rate, the
Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from
and including the effective date of such change in the Prime Rate, the Federal
Funds Effective Rate or the Adjusted LIBO Rate, respectively. If the Alternate
Base Rate is being used as an alternate rate of interest pursuant to
Section 2.14 hereof, then the Alternate Base Rate shall be the greater of clause
(a) and (b) above and shall be determined without reference to clause (c) above.

 

“Anti-Corruption Laws” means all laws, rules and regulations of any jurisdiction
applicable to any Borrower or any Affiliate of any Borrower from time to time
concerning or relating to bribery or corruption.

 

“Applicable Percentage” means, with respect to each Lender, (a) with respect to
Revolving Loans, Swingline Loans, Letters of Credit, LC Disbursements and LC
Exposure, a percentage equal to a fraction the numerator of which is such
Lender’s Revolving Commitment and the denominator of which is the aggregate
Revolving Commitment of all Revolving Lenders (provided that if the Revolving
Commitments have terminated or expired as of the date of determination, the
Applicable Percentages shall be determined based upon such Lender’s share of the
Aggregate Revolving Exposure of all Lenders at that date); provided that, in
accordance with Section 2.20, so long as any Lender shall be a Defaulting
Lender, such Defaulting Lender’s Commitment shall be disregarded in the
calculation under this clause (a), and (b) with respect to the Term Loans, a
percentage equal to a fraction the numerator of which is the outstanding
principal amount of such Lender’s Term Loan and the denominator of which is the
aggregate outstanding amount of the Term Loans of all Term Lenders.

 

“Applicable Rate” means, for any day, with respect to any ABR Loan or Eurodollar
Loan, or with respect to the Letter of Credit participation fees or Commitment
Fees payable hereunder, as the case may be, the applicable rate per annum set
forth below, based upon the Company’s Funded Debt to EBITDA Ratio as of the most
recent determination date:

 

 2

 

 

Funded Debt to
EBITDA Ratio  Revolving
Eurodollar
Borrowing   Term
Eurodollar
Borrowing   ABR
Revolving
Borrowing   ABR Term
Borrowing   Letter of
Credit Fee   Commitment
Fee  Category 1   2.50%   2.75%   0.50%   0.75%   2.50%   0.45% Greater than or
equal to 2.50 to 1.0                               Category 2   2.25%   2.50% 
 0.25%   0.50%   2.25%   0.40% Greater than or equal to 2.25 to 1.0 but less
than 2.50 to 1.0                               Category 3   2.00%   2.25% 
 0.00%   0.25%   2.00%   0.35% Greater than or equal to 2.00 to 1.0 but less
than 2.50 to 1.0                               Category 4   1.75%   2.00% 
 (0.25)%   0.00%   1.75%   0.30% Greater than or equal to 1.75 to 1.0 but less
than 2.00 to 1.0                               Category 5   1.50%   1.75% 
 (0.50)%   (0.25)%   1.50%   0.30% Less than 1.75 to 1.0                     
        

 

For purposes of the foregoing, (a) the Applicable Rate shall be determined as of
the end of each Fiscal Quarter of the Company based upon the Company’s annual or
quarterly consolidated financial statements delivered pursuant to Section 5.01
and (b) each change in the Applicable Rate resulting from a change in the Funded
Debt to EBITDA Ratio shall be effective during the period commencing on and
including the date of delivery to the Administrative Agent of such consolidated
financial statements indicating such change and ending on the date immediately
preceding the effective date of the next such change, provided that the Funded
Debt to EBITDA Ratio shall be deemed to be in Category 1 at the option of the
Administrative Agent or at the request of the Lenders if the Borrowers fail to
deliver the annual or quarterly consolidated financial statements required to be
delivered by it pursuant to Section 5.01, during the period from the expiration
of the time for delivery thereof until such consolidated financial statements
are delivered. On the Effective Date, the Applicable Rate shall be deemed to be
in Category 5, and the Applicable Rate shall be determined beginning as of the
end of the Fiscal Quarter following the Borrowers’ delivery of the annual
financial statements delivered pursuant to Section 5.01 for the Fiscal Year
ending December 26, 2015. If at any time the Administrative Agent determines
that the financial statements upon which the Applicable Rate was determined were
incorrect (Whether based on a restatement, fraud or otherwise), the Borrowers
shall be required to retroactively pay any additional amount that the Borrowers
would have been required to pay if such financial statements had been accurate
at the time they were delivered.

 

“Appraisal” means a written statement setting forth an opinion of the market
value of the real estate and all buildings, structures and other improvements on
the real estate that (i) has been independently and impartially prepared by a
qualified appraiser directly engaged by the Administrative Agent or its agent,
(ii) complies with all applicable federal and state laws and regulations dealing
with appraisals or valuations of real property, and (iii) has been reviewed as
to form and content and approved by the Administrative Agent, in its reasonable
judgment.

 

 3

 

 

“Appraised Value” means (i) from the Effective Date until an updated Appraisal
is obtained for the Gainesville Facility, $4,360,000, or (ii) the value of the
Gainesville Facility at any point in time as expressed in an Appraisal obtained
following the Effective Date.

 

“Approved Fund” has the meaning assigned to such term in Section 9.04.

 

“Approved LC Amount” means the maximum amount of LC Exposure that may be
outstanding at any time, as approved from time to time in writing by the
Required Lenders. As of the Effective Date, the Approved LC Amount is
$5,000,000.00.

 

“Assignment and Assumption” means an assignment and assumption agreement entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.

 

“Availability Period” means the period from and including the Effective Date to
but excluding the earlier of the Maturity Date and the date of termination of
the Commitments.

 

“Available Revolving Commitment” means, at any time, the aggregate Revolving
Commitments minus the Aggregate Revolving Exposure.

 

“Banking Services” means each and any of the following bank services provided to
any Loan Party by Chase or any of its Affiliates: (a) credit cards for
commercial customers (including, without limitation, “commercial credit cards”
and purchasing cards), (b) stored value cards and (c) merchant processing
services, and (d) treasury management services (including, without limitation,
controlled disbursement, automated clearinghouse transactions, return items,
overdrafts and interstate depository network services).

 

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

 

“Banking Services Reserves” means all Reserves which the Administrative Agent
from time to time establishes in its Permitted Discretion for Banking Services
then provided or outstanding.

 

“Bankruptcy Event” means, with respect to any Person, when such Person becomes
the subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, administrator, custodian, assignee for the benefit of
creditors or similar Person charged with reorganization or liquidation of its
business, appointed for it, or, in the good faith determination of the
Administrative Agent, has taken any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any such proceeding or appointment,
provided that a Bankruptcy Event shall not result solely by virtue of any
ownership interest, or the acquisition of any ownership interest, in such Person
by a Governmental Authority or instrumentality thereof, provided, further, that
such ownership interest does not result in or provide such Person with immunity
from the jurisdiction of courts within the United States or from the enforcement
of judgments or writs of attachment on its assets or permit such Person (or such
Governmental Authority or instrumentality), to reject, repudiate, disavow or
disaffirm any contracts or agreements made by such Person.

 

“Beneficial Owner” means, with respect to any U.S. Federal withholding Tax, the
beneficial owner, for U.S. Federal income tax purposes, to whom such Tax
relates.

 

 4

 

 

“Board” means the Board of Governors of the Federal Reserve System of the U.S.

 

“Borrower” or “Borrowers” means, individually and collectively, the Company and
Indian Industries, Inc., an Indiana corporation.

 

“Borrower Representative” has the meaning assigned to such term in Section
11.01.

 

“Borrowing” means (a) Revolving Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Revolving Loans, as to
which a single Interest Period is in effect, (b) Term Loans made on the same
date and, in the case of Eurodollar Term Loans, as to which a single Interest
Period is in effect, or (c) a Swingline Loan.

 

“Borrowing Base” means, at any date of determination, the sum of (a) 80% of the
Eligible Accounts of the Loan Parties at such date, plus (b) 50% of the Eligible
Raw Material Inventory of the Loan Parties at such date, plus 50% of the
Eligible Finished Goods Inventory of the Loan Parties at such date, plus, the
Maximum Eligible In-Transit Inventory at such date, less (c) the sum of the
Reserves at such date, less (d) the Term Loan Collateral Block as of such date.
The Borrowing Base at any time shall be determined by reference to the most
recent Borrowing Base Certificate delivered to the Administrative Agent.

 

“Borrowing Base Certificate” means a certificate, completed, signed and
certified as accurate and complete by a Financial Officer of the Borrower
Representative, in substantially the form of Exhibit C or another form which is
acceptable to the Administrative Agent in its sole discretion.

 

“Borrowing Request” means a request by the Borrower Representative for a
Revolving Borrowing in accordance with Section 2.03.

 

“Burdensome Restrictions” means any consensual encumbrance or restriction of the
type described in clause (a) or (b) of Section 6.10.

 

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
the term “Business Day” shall also exclude any day on which banks are not open
for general business in London.

 

“Capital Expenditures” means, without duplication, any expenditure or commitment
to expend money for any purchase or other acquisition of any asset which would
be classified as a fixed or capital asset on a consolidated balance sheet of the
Loan Parties prepared in accordance with GAAP.

 

“Capital Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.

 

“Capital Use Certificate” means a certificate of a Financial Officer to the
effect that the Loan Parties intend to apply the Net Proceeds from a Sale or
Casualty Prepayment Event (or a portion thereof specified in such certificate),
commencing within 90 days after receipt of such Net Proceeds, to acquire (or
replace or rebuild) real property, Equipment or other tangible assets (excluding
Inventory) to be used in the business of the Loan Parties, and certifying that
no Default has occurred and is continuing as of the date of such certificate.

 

 5

 

 

“Change in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the SEC
thereunder as in effect on the date hereof) other than Robert Griffin, or
Persons under his Control, of Equity Interests representing more than 50% of the
aggregate ordinary voting power represented by the issued and outstanding Equity
Interests of the Company; (b) occupation of a majority of the seats (other than
vacant seats) on the board of directors of the Company by Persons who were
neither (i) nominated by the board of directors of the Company nor (ii)
appointed by directors so nominated; or (c) the acquisition of direct or
indirect Control of the Company by any Person or group other than Robert Griffin
or Persons under his Control; or (d) the Company shall cease to own, free and
clear of all Liens or other encumbrances, 100% of the outstanding voting Equity
Interests of Indian Industries, Inc. on a fully diluted basis.

 

“Change in Law” means the occurrence after the date of this Agreement or, with
respect to any Lender, such later date on which such Lender becomes a party to
this Agreement) of any of the following: (a) the adoption or taking effect of
any law, rule, regulation or treaty, (b) any change in any law, rule, regulation
or treaty or in the administration, interpretation or application thereof by any
Governmental Authority or (c) compliance by any Lender or the Issuing Bank (or,
for purposes of Section 2.15(b), by any lending office of such Lender or by such
Lender’s or the Issuing Bank’s holding company, if any) with any request,
guideline, requirement or directive (whether or not having the force of law) of
any Governmental Authority made or issued after the date of this Agreement;
provided that, notwithstanding anything herein to the contrary, (x) the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines, requirements or directives thereunder or issued in connection
therewith or in the implementation thereof, and (y) all requests, rules,
guidelines, requirements or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities, in
each case pursuant to Basel III, shall in each case be deemed to be a “Change in
Law”, regardless of the date enacted, adopted, issued or implemented.

 

“Charges” has the meaning assigned to such term in Section 9.17.

 

“Chase” means JPMorgan Chase Bank, N.A., a national banking association, in its
individual capacity, and its successors.

 

“Class”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term Loans,
or Swingline Loans.

 

“Closing Fee” means a fee payable to Chase on or prior to the Effective Date in
an amount equal to (i) the aggregate Revolving Commitment of all Lenders as of
the Effective Date multiplied by 0.05%, plus (ii) 0.15% multiplied by the
difference between (A) the aggregate Term Loan Commitment of all Lenders as of
the Effective Date and (B) the outstanding principal balance of the Term Loan
(as defined in the Existing Credit Agreement) under the Existing Credit
Agreement immediately prior to the effectiveness of this Agreement.

 

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

 

“Collateral” means any and all property owned, leased or operated by a Person
covered by the Collateral Documents and any and all other property of any Loan
Party, now existing or hereafter acquired, that may at any time be, become or
intended to be, subject to a security interest or Lien in favor of the
Administrative Agent, on behalf of itself and the Lenders and other Secured
Parties, to secure the Secured Obligations.

 

“Collateral Access Agreement” has the meaning assigned to such term in the
Security Agreement.

 

 6

 

 

“Collateral Documents” means, collectively, the Security Agreement, the
Mortgages and any other agreements, instruments and documents executed in
connection with this Agreement that are intended to create, perfect or evidence
Liens to secure the Secured Obligations, including, without limitation, all
other security agreements, pledge agreements, mortgages, deeds of trust, loan
agreements, notes, guarantees, subordination agreements, pledges, powers of
attorney, consents, assignments, contracts, fee letters, notices, leases,
financing statements and all other written matter whether theretofore, now or
hereafter executed by any Loan Party and delivered to the Administrative Agent.

 

“Collection Account” has the meaning assigned to such term in the Security
Agreement.

 

“Commercial LC Exposure” means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding commercial Letters of Credit plus (b) the
aggregate amount of all LC Disbursements relating to commercial Letters of
Credit that have not yet been reimbursed by or on behalf of the Borrowers. The
Commercial LC Exposure of any Revolving Lender at any time shall be its
Applicable Percentage of the aggregate Commercial LC Exposure at such time.

 

“Commitment” means, with respect to each Lender, the sum of such Lender’s
Revolving Commitment and Term Loan Commitment, as such Commitment may be reduced
or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04. The initial amount of each Lender’s Commitment is set
forth on the Commitment Schedule, or in the Assignment and Assumption pursuant
to which such Lender shall have assumed its Commitment, as applicable.

 

“Commitment Fee” has the meaning ascribed to such term in Section 2.12(a).

 

“Commitment Schedule” means the Schedule attached hereto identified as such.

 

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

 

“Communications” has the meaning assigned to such term in Section 9.01(d).

 

“Company” means Escalade, Incorporated, an Indiana corporation.

 

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

 

“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 meanings correlative thereto.

 

“Credit Exposure” means, as to any Lender at any time, the sum of (a) such
Lender’s Revolving Exposure at such time, plus (b) an amount equal to the
aggregate principal amount of its Term Loans outstanding at such time.

 

“Credit Party” means the Administrative Agent, the Issuing Bank, the Swingline
Lender or any other Lender.

 

“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.

 

 7

 

 

“Defaulting Lender” means any Lender that (a) has failed, within two Business
Days of the date required to be funded or paid, to (i) fund any portion of its
Loans, (ii) fund any portion of its participations in Letters of Credit or
Swingline Loans or (iii) pay over to any Credit Party any other amount required
to be paid by it hereunder, unless, in the case of clause (i) above, such Lender
notifies the Administrative Agent in writing that such failure is the result of
such Lender’s good faith determination that a condition precedent to funding
(specifically identified and including the particular default, if any) has not
been satisfied; (b) has notified any Borrower or any Credit Party in writing, or
has made a public statement, to the effect that it does not intend or expect to
comply with any of its funding obligations under this Agreement (unless such
writing or public statement indicates that such position is based on such
Lender’s good faith determination that a condition precedent to funding a Loan
under this Agreement (specifically identified and including the particular
Default, if any) cannot be satisfied) or generally under other agreements in
which it commits to extend credit, (c) has failed, within three Business Days
after request by a Credit Party, acting in good faith, to provide a
certification in writing from an authorized officer of such Lender that it will
comply with its obligations (and is financially able to meet such obligations)
to fund prospective Loans and participations in then outstanding Letters of
Credit and Swingline Loans under this Agreement, provided that such Lender shall
cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit
Party’s receipt of such certification in form and substance satisfactory to it
and the Administrative Agent, or (d) has become the subject of a Bankruptcy
Event.

 

“Deposit Account Control Agreement” has the meaning set forth in the Security
Agreement.

 

“Disclosed Matters” means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.

 

“Document” has the meaning assigned to such term in the Security Agreement.

 

“dollars” or “$” refers to lawful money of the U.S..

 

“Domestic Subsidiary” means a Subsidiary organized under the laws of a
jurisdiction located in the U.S.

 

“EBITDA” means, for any period, Net Income for such period plus (a) without
duplication and to the extent deducted in determining Net Income for such
period, the sum of (i) Interest Expense for such period, (ii) income tax expense
for such period, (iii) all amounts attributable to depreciation and amortization
expense for such period, (iv) any extraordinary charges for such period and (v)
any other non-cash charges for such period (but excluding any non-cash charge in
respect of an item that was included in Net Income in a prior period) minus (b)
without duplication and to the extent included in Net Income, any extraordinary
gains and any non-cash items of income for such period, all calculated for the
Company and its Subsidiaries on a consolidated basis in accordance with GAAP.

 

“ECP” means an “eligible contract participant” as defined in Section 1(a)(18) of
the Commodity Exchange Act or any regulations promulgated thereunder and the
applicable rules issued by the Commodity Futures Trading Commission and/or the
SEC.

 

“Effective Date” means the date on which the conditions specified in Section
4.01 are satisfied (or waived in accordance with Section 9.02).

 

“Electronic Signature” means an electronic sound, symbol, or process attached
to, or associated with, a contract or other record and adopted by a Person with
the intent to sign, authenticate or accept such contract or record.

 

“Electronic System” means any electronic system, including e-mail, e-fax,
Intralinks®, ClearPar®, Debt Domain, Syndtrak and any other Internet or
extranet-based site, whether such electronic system is owned, operated or hosted
by the Administrative Agent and the Issuing Bank and any of its respective
Related Parties or any other Person, providing for access to data protected by
passcodes or other security system.

 

 8

 

 

“Eligible Accounts” means, at any time, the Accounts of the Loan Parties, which
the Administrative Agent determines in its Permitted Discretion are eligible as
the basis for the extension of Revolving Loans and Swingline Loans and the
issuance of Letters of Credit. Without limiting the Administrative Agent’s
discretion provided herein, Eligible Accounts shall not include any Account:

 

(a)          which is not subject to a first priority perfected security
interest in favor of the Administrative Agent;

 

(b)          which is subject to any Lien other than (i) a Lien in favor of the
Administrative Agent and (ii) a Permitted Encumbrance which does not have
priority over the Lien in favor of the Administrative Agent;

 

(c)          (i) with respect to which the scheduled due date is more than 90
days after the date of the original invoice therefor, or (ii) which has been
written off the books of the Loan Parties or otherwise designated as
uncollectible;

 

(d)          which is owing by an Account Debtor for which more than 25% of the
Accounts owing from such Account Debtor and its Affiliates are ineligible
hereunder;

 

(e)          which (i) does not arise from the sale of goods or performance of
services in the ordinary course of business, (ii) is not evidenced by an invoice
or other documentation satisfactory to the Administrative Agent which has been
sent to the Account Debtor, (iii) which is evidenced by an promissory note,
chattel paper or instrument, (iv) represents a progress billing, (v) is
contingent upon the Loan Parties’ completion of any further performance, (vi)
represents a sale on a bill-and-hold, guaranteed sale, sale-and-return, sale on
approval, consignment, cash-on-delivery or any other repurchase or return basis
or (vii) relates to payments of interest;

 

(f)          for which the goods giving rise to such Account have not been
shipped to the Account Debtor or for which the services giving rise to such
Account have not been performed by the Loan Parties or if such Account was
invoiced more than once;

 

(g)          which is owed by an Account Debtor which has (i) applied for,
suffered, or consented to the appointment of any receiver, custodian, trustee,
or liquidator of its assets, (ii) has had possession of all or a material part
of its property taken by any receiver, custodian, trustee or liquidator, (iii)
filed, or had filed against it, any request or petition for liquidation,
reorganization, arrangement, adjustment of debts, adjudication as bankrupt,
winding-up, or voluntary or involuntary case under any state or federal
bankruptcy laws, (iv) has admitted in writing its inability, or is generally
unable to, pay its debts as they become due, (v) become insolvent, or (vi)
ceased operation of its business;

 

(h)          which is owed by an Account Debtor which (i) does not maintain its
chief executive office in the U.S. or Canada or (ii) is not organized under
applicable law of the U.S., any state of the U.S., Canada, or any province of
Canada unless, in either case, such Account is either (A) backed by a Letter of
Credit acceptable to the Administrative Agent in its Permitted Discretion which
is in the possession of, has been assigned to and is directly drawable by the
Administrative Agent, or (B) insured by a recognized international credit
insurer acceptable to the Administrative Agent in its Permitted Discretion (but
only up to the amount of such insurance and less any deductible);

 

 9

 

 

(i)          which is owed in any currency other than U.S. dollars;

 

(j)          which is owed by (i) any Governmental Authority of any country
other than the U.S. unless such Account is backed by a Letter of Credit
acceptable to the Administrative Agent in its Permitted Discretion which is in
the possession of and is directly drawable by the Administrative Agent; or (ii)
any Governmental Authority of the U.S., unless the Federal Assignment of Claims
Act of 1940, as amended (31 U.S.C. § 3727 et seq. and 41 U.S.C. § 15 et seq.)
and any other steps necessary to perfect the Lien of the Administrative Agent on
such Account have been complied with to the Administrative Agent’s satisfaction.

 

(k)          which is owed by any Affiliate of any Loan Party, or any employee,
officer, director, agent or stockholder of any Loan Party or any of its
Affiliates; or

 

(l)          which is owed by an Account Debtor or any Affiliate of such Account
Debtor to which the Loan Party owning such Account is indebted, but only to the
extent of such indebtedness or is subject to any security, deposit, progress
payment, retainage or other similar advance made by or for the benefit of an
Account Debtor, in each case to the extent thereof;

 

(m)          which is subject to any counterclaim, deduction, defense, setoff or
dispute but only to the extent of any such counterclaim, deduction, defense,
setoff or dispute;

 

(n)          with respect to which any covenant, representation or warranty
contained in this Agreement or the Security Agreement has been breached or is
not true;

 

(o)          with respect to which any check or other instrument of payment has
been returned uncollected for any reason;

 

(p)          which is owed by any Account Debtor which has sold all or
substantially all of its assets;

 

(q)          which is owed by an Account Debtor (i) located in any jurisdiction
which requires filing of a “Notice of Business Activities Report” or other
similar report in order to permit the Borrower to seek judicial enforcement in
such jurisdiction of payment of such Account, unless the Borrower has filed such
report or qualified to do business in such jurisdiction or (ii) which is a
Sanctioned Person;

 

(r)          with respect to which such Loan Party has made any agreement with
the Account Debtor for any reduction thereof, other than discounts and
adjustments given in the ordinary course of business, or any Account which was
partially paid such Loan Party created a new receivable for the unpaid portion
of such Account;

 

(s)          which does not comply in all material respects with the
requirements of all applicable laws and regulations, whether federal, state or
local, including without limitation the Federal Consumer Credit Protection Act,
the Federal Truth in Lending Act and Regulation Z of the Board;

 

(t)          which is for goods that have been sold under a purchase order or
pursuant to the terms of a contract or other agreement or understanding (written
or oral) that indicates or purports that any Person other than such Loan Party
has or has had an ownership interest in such goods, or which indicates any party
other than such Loan Party as payee or remittance party;

 

(u)          which was created on cash on delivery terms; or

 

 10

 

 

(v)         which the Administrative Agent determines may not be paid by reason
of the Account Debtor’s inability to pay or which the Administrative Agent
otherwise determines is unacceptable for any reason whatsoever.

 

In the event that an Account which was previously an Eligible Account ceases to
be an Eligible Account hereunder, the Borrower Representative shall notify the
Administrative Agent thereof on and at the time of submission to the
Administrative Agent of the next Borrowing Base Certificate. In determining the
amount of an Eligible Account, the face amount of an Account may, in the
Administrative Agent’s Permitted Discretion, be reduced by, without duplication,
to the extent not reflected in such face amount, (i) the amount of all accrued
and actual discounts, claims, credits or credits pending, promotional program
allowances, price adjustments, finance charges or other allowances (including
any amount that the Borrower may be obligated to rebate to an Account Debtor
pursuant to the terms of any agreement or understanding (written or oral)) and
(ii) the aggregate amount of all cash received in respect of such Account but
not yet applied by such Loan Party to reduce the amount of such Account.

 

“Eligible Finished Goods Inventory” means, at any time, Eligible Inventory
constituting finished goods to be sold by the Loan Parties in the ordinary
course of business of the Loan Parties.

 

“Eligible Inventory” means, at any time, the Inventory of the Loan Parties which
the Administrative Agent determines in its Permitted Discretion is eligible as
the basis for the extension of Revolving Loans and Swingline Loans and the
issuance of Letters of Credit. Without limiting the Administrative Agent’s
discretion provided herein, Eligible Inventory shall not include any Inventory:

 

(a)          which is not subject to a first priority perfected Lien in favor of
the Administrative Agent;

 

(b)          which is subject to any Lien other than (i) a Lien in favor of the
Administrative Agent and (ii) a Permitted Encumbrance which does not have
priority over the Lien in favor of the Administrative Agent;

 

(c)          which is, in the Administrative Agent’s Permitted Discretion, slow
moving, obsolete, unmerchantable, defective, used, unfit for sale, not salable
at prices approximating at least the cost of such Inventory in the ordinary
course of business or unacceptable due to age, type, category and/or quantity;

 

(d)          in which any Person other than the Loan Parties shall (i) have any
direct or indirect ownership, interest or title to such Inventory or (ii) be
indicated on any purchase order or invoice with respect to such Inventory as
having or purporting to have an interest therein;

 

(e)          which is not Eligible Finished Goods Inventory or which constitutes
work-in-process, spare or replacement parts, subassemblies, packaging and
shipping material, manufacturing supplies, samples, prototypes, displays or
display items, bill-and-hold or ship-in-place goods, goods that are returned or
marked for return, repossessed goods, defective or damaged goods, goods held on
consignment, or goods which are not of a type held for sale in the ordinary
course of business;

 

(f)          which is not located in the U.S. or is in transit with a common
carrier from vendors and suppliers provided that up to $500,000 of Inventory in
transit from Vendors and Suppliers may be included as Eligible Inventory despite
the foregoing provision of this clause (f) so long as such Inventory is insured
by an insurer acceptable to the Administrative Agent in its Permitted Discretion
and so long as

 

 11

 

 

(i)          if requested by the Administrative Agent in its Permitted
Discretion, the Administrative Agent shall have received (1) a true and correct
copy of the bill of lading and other shipping documents for such Inventory and
(2) evidence of satisfactory casualty insurance naming the Administrative Agent
as lender loss payee and otherwise covering such risks as the Administrative
Agent may reasonably request,

 

(ii)         if the bill of lading is non-negotiable, the Administrative Agent
may require in its Permitted Discretion that the inventory must be in transit
within the U.S., and the Administrative Agent shall have received, if requested,
a duly executed Collateral Access Agreement, in form and substance satisfactory
to the Administrative Agent in its Permitted Discretion, from the applicable
customs broker, freight forwarder or carrier for such Inventory,

 

(iii)        if the bill of lading is negotiable, the Administrative Agent may
require in its Permitted Discretion that the inventory must be in transit from
outside the U.S., and the Administrative Agent shall have received, if
requested, (1) confirmation that the bill is issued in the name of such Loan
Party and consigned to the order of the Administrative Agent, and an acceptable
agreement has been executed with such Loan Party’s customs broker, in which the
customs broker agrees that it holds the negotiable bill as agent for the
Administrative Agent and has granted the Administrative Agent access to the
Inventory, (2) confirmation that such Loan Party has paid for the goods, and (3)
an estimate from such Loan Party of the customs duties and customs fees
associated with the Inventory in order to establish an appropriate Reserve,

 

(iv)        if required by the Administrative Agent in its Permitted Discretion,
the common carrier is not an Affiliate of the applicable vendor or supplier, and

 

(v)         if required by the Administrative Agent in its Permitted Discretion,
the customs broker is not an Affiliate of any Loan Party;

 

(g)          which is not located in a location owned by a Loan Party or located
on a Permitted Third Party Location, but only to the extent that amount of such
Inventory exceeds $1,000,000 in the aggregate;

 

(h)          which is the subject of a consignment by any Loan Party as
consignor;

 

(i)          which is not reflected in a current perpetual inventory report of
the Loan Parties unless such Inventory is reflected in a report to the
Administrative Agent as “in transit” Inventory;

 

(j)          with respect to which any covenant, representation or warranty
contained in this Agreement or in the Security Agreement has been breached or is
not true and which does not conform to all standards imposed by any Governmental
Authority;

 

(k)          which is a discontinued product or component thereof;

 

(l)          which is perishable;

 

 12

 

 

(m)          which contains or bears any intellectual property rights licensed
to such Loan Party unless the Administrative Agent is satisfied that it may sell
or otherwise dispose of such Inventory without (i) infringing the rights of such
licensor, (ii) violating any contract with such licensor, or (iii) incurring any
liability with respect to payment of royalties, other than royalties incurred
pursuant to sale of such Inventory under the current licensing agreement;

 

(n)          for which reclamation rights have been asserted by the seller;

 

(o)          which has been acquired from a Sanctioned Person; or

 

(p)          which the Administrative Agent otherwise determines is unacceptable
for any reason whatsoever.

 

“Eligible In-Transit Inventory” means, at any time, Eligible Inventory in
transit with a common carrier from vendors and suppliers.

 

“Eligible Raw Material Inventory” means, at any time, Eligible Inventory
constituting raw materials used or consumed by the Loan Parties in the ordinary
course of business in the manufacture or production of other Inventory.

 

“Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, Release or threatened Release of any Hazardous Material or to health
and safety matters.

 

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) any violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) any exposure to any Hazardous
Materials, (d) the Release or threatened Release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

 

“Equipment” has the meaning assigned to such term in the Security Agreement.

 

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any of the
foregoing.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under Section
414 of the Code.

 

 13

 

 

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

 

“Escalade Insurance” means Escalade Insurance, Inc., a Nevada corporation.

 

“Eurodollar”, when used in reference to any Loan or Borrowing refers to whether
such Loan, or the Loans comprising such Borrowing, bear interest at a rate
determined by reference to the Adjusted LIBO Rate.

 

“Event of Default” has the meaning assigned to such term in Article VII.

 

“Excluded Swap Obligation” means, with respect to any Loan Guarantor, any Swap
Obligation if, and to the extent that, all or a portion of the Guarantee of such
Loan Guarantor of, or the grant by such Loan Guarantor of a security interest to
secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal
under the Commodity Exchange Act or any rule, regulation or order of the
Commodity Futures Trading Commission (or the application or official
interpretation of any thereof) by virtue of such Loan Guarantor’s failure for
any reason to constitute an ECP at the time the Guarantee of such Loan Guarantor
or the grant of such security interest becomes or would become effective with
respect to such Swap Obligation. If a Swap Obligation arises under a master
agreement governing more than one swap, such exclusion shall apply only to the
portion of such Swap Obligation that is attributable to swaps for which such
Guarantee or security interest is or becomes illegal.

 

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient: (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of any Lender, its applicable lending office located in,
the jurisdiction imposing such Tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes; (b) in the case of a Lender, U.S. Federal
withholding Taxes imposed on amounts payable to or for the account of such
Lender with respect to an applicable interest in a Loan, Letter of Credit or
Commitment pursuant to a law in effect on the date on which (i) such Lender
acquires such interest in the Loan, Letter of Credit or Commitment (other than
pursuant to an assignment request by the Borrowers under Section 2.19(b)) or
(ii) such Lender changes its lending office, except in each case to the extent
that, pursuant to Section 2.17, amounts with respect to such Taxes were payable
either to such Lender’s assignor immediately before such Lender acquired the
applicable interest in a Loan, Letter of Credit or Commitment or to such Lender
immediately before it changed its lending office; (c) Taxes attributable to such
Recipient’s failure to comply with Section 2.17(f); and (d) any U.S. Federal
withholding Taxes imposed under FATCA.

 

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

 

 14

 

 

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it; provided, that, if the Federal Funds
Effective Rate shall be less than zero, such rate shall be deemed to be zero for
purposes of this Agreement.

 

“Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of a Borrower.

 

“Fiscal Month” means, with respect to the Company and its Subsidiaries, one of
the 13 fiscal accounting periods in each Fiscal Year of the Company and its
Subsidiaries.

 

“Fiscal Quarter” means, with respect to the Company and its Subsidiaries, (a)
during a Fiscal Year consisting of 52 weeks, one of the four fiscal accounting
periods in such Fiscal Year of the Company and its Subsidiaries with the first,
third and fourth Fiscal Quarter consisting of 12 weeks and the second Fiscal
Quarter consisting of 16 weeks, and (b) during a Fiscal Year consisting of 53
weeks, one of the four fiscal accounting periods in such Fiscal Year of the
Company and its Subsidiaries with the first and third Fiscal Quarter consisting
of 12 weeks, the second Fiscal Quarter consisting of 16 weeks, and the fourth
Fiscal Quarter consisting of 13 weeks.

 

“Fiscal Year” means, with respect to the Company and its Subsidiaries, a 52-53
week tax year ending on the last Saturday of December each year.

 

“Fixed Charges” means, for any period, without duplication, cash Interest
Expense plus scheduled principal payments on Indebtedness actually made, plus
Capital Lease Obligation payments, all calculated for the Company and its
Subsidiaries on a consolidated basis in accordance with GAAP.

 

“Fixed Charge Coverage Ratio” means, for any period, the ratio of (a) EBITDA
less expenses for income taxes paid less Restricted Payments paid in such period
less the unfinanced portion of Capital Expenditures for such period to (b) Fixed
Charges for such period, all calculated for such period for the Company and its
Subsidiaries on a consolidated basis in accordance with GAAP.

 

“Fixtures” has the meaning assigned to such term in the Security Agreement.

 

“Foreign Lender” means (a) if a Borrower is a U.S. Person, a Lender, with
respect to such Borrower, that is not a U.S. Person, and (b) if a Borrower is
not a U.S. Person, a Lender, with respect to such Borrower, that is resident or
organized under the laws of a jurisdiction other than that in which such
Borrower is resident for tax purposes.

 

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

 

“Funded Debt to EBITDA Ratio” means on any date the ratio of (a) Total
Indebtedness to (b) EBITDA for the period of four consecutive Fiscal Quarters
ended on such date (or, if such date is not the last day of a Fiscal Quarter,
ended on the last day of the Fiscal Quarter most recently ended prior to such
date).

 

“Funding Account” has the meaning assigned to such term in Section 4.01(h).

 

“GAAP” means generally accepted accounting principles in the U.S.

 

 15

 

 

“Gainesville Facility” means the real property located at 4600 SW 41st Boulevard
in Gainesville, Florida and owned by Bear Archery, Inc. as of the Effective
Date.

 

“Governmental Authority” means the government of the U.S., any other nation or
any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

“Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

 

“Guaranteed Obligations” means the Secured Obligations and all costs and
expenses, including, without limitation, all court costs and attorneys’ and
paralegals’ fees (including allocated costs of in-house counsel and paralegals)
and expenses paid or incurred by the Administrative Agent, the Issuing Bank and
the Lenders in endeavoring to collect all or any part of the Secured Obligations
from, or in prosecuting any action against, the Borrowers, any Loan Guarantor or
any other guarantor of all or any part of the Secured Obligations; provided,
however, that the definition of “Guaranteed Obligations” shall not create any
guarantee by any Loan Guarantor of (or grant of security interest by any Loan
Guarantor to support, as applicable) any Excluded Swap Obligations of such Loan
Guarantor for purposes of determining any obligations of any Loan Guarantor.

 

“Hazardous Materials” means: (a) any substance, material, or waste that is
included within the definitions of “hazardous substances,” “hazardous
materials,” “hazardous waste,” “toxic substances,” “toxic materials,” “toxic
waste,” or words of similar import in any Environmental Law; (b) those
substances listed as hazardous substances by the United States Department of
Transportation (or any successor agency) (49 C.F.R. 172.101 and amendments
thereto) or by the Environmental Protection Agency (or any successor agency) (40
C.F.R. Part 302 and amendments thereto); and (c) any substance, material, or
waste that is petroleum, petroleum-related, or a petroleum by-product, asbestos
or asbestos-containing material, polychlorinated biphenyls, flammable,
explosive, radioactive, freon gas, radon, or a pesticide, herbicide, or any
other agricultural chemical.

 

“Impacted Interest Period” has the meaning assigned to such term in the
definition of “LIBO Rate”.

 

 16

 

 

“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person upon which interest
charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others,
(h) all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty, (j) all obligations, contingent or
otherwise, of such Person in respect of bankers’ acceptances, (k) obligations
under any liquidated earn-out and (l) any other Off-Balance Sheet Liability and
(m) obligations whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all Swap
Agreements, and (ii) any and all cancellations, buy backs, reversals,
terminations or assignments of any Swap Agreement transaction. The Indebtedness
of any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.

 

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of any Loan
Party under any Loan Document and (b) to the extent not otherwise described in
the foregoing clause (a), Other Taxes.

 

“Indemnitee” has the meaning assigned to such term in Section 9.03 of this
Agreement.

 

“Ineligible Institution” has the meaning assigned to such term in Section
9.04(b).

 

“Information” has the meaning assigned to such term in Section 9.12.

 

“Interest Election Request” means a request by the Borrower Representative to
convert or continue a Revolving Borrowing in accordance with Section 2.08.

 

“Interest Expense” means, for any period, total interest expense (including that
attributable to Capital Lease Obligations) of the Company and its Subsidiaries
for such period with respect to all outstanding Indebtedness of the Company and
its Subsidiaries (including all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers’ acceptances and net
costs under Swap Agreements in respect of interest rates to the extent such net
costs are allocable to such period in accordance with GAAP), calculated on a
consolidated basis for the Company and its Subsidiaries for such period in
accordance with GAAP.

 

“Interest Payment Date” means (a) with respect to a ABR Revolving Loan, the last
day of each calendar month and the Revolving Loan Maturity Date, (b) with
respect to a ABR Term Loan, March 31, June 30, September 30 and December 31 of
each year and the Term Loan Maturity Date, and (c) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a Eurodollar Loan with an
Interest Period of more than three months’ duration, each day prior to the last
day of such Interest Period that occurs at intervals of three months’ duration
after the first day of such Interest Period and the Maturity Date applicable to
such Loan.

 

“Interest Period” means, with respect to any Eurodollar Borrowing, the period
commencing on the date of such Eurodollar Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the Borrower may elect; provided, that (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period pertaining to a Eurodollar Borrowing that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period. For
purposes hereof, the date of a Borrowing initially shall be the date on which
such Borrowing is made and, in the case of a Revolving Borrowing, thereafter
shall be the effective date of the most recent conversion or continuation of
such Borrowing.

 

 17

 

 

“Interpolated Rate” means, at any time, for any Interest Period, the rate per
annum (rounded upward to the same number of decimal places as the LIBO Screen
Rate) determined by the Administrative Agent (which determination shall be
conclusive and binding absent manifest error) to be equal to the rate that
results from interpolating on a linear basis between: (a) the LIBO Screen Rate
for the longest period (for which the LIBO Screen Rate is available) that is
shorter than the Impacted Interest Period and (b) the LIBO Screen Rate for the
shortest period (for which the LIBO Screen Rate is available) that exceeds the
Impacted Interest Period, in each case, at such time.

 

“intimus” means intimus International GmbH, a German corporation.

 

“Inventory” has the meaning assigned to such term in the Security Agreement.

 

“IRS” means the United States Internal Revenue Service.

 

“Issuing Bank” means Chase, in its capacity as the issuer of Letters of Credit,
and its successors in such capacity as provided in Section 2.06(i). The Issuing
Bank may, in its discretion, arrange for one or more Letters of Credit to be
issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank”
shall include any such Affiliate with respect to Letters of Credit issued by
such Affiliate.

 

“Joinder Agreement” means a Joinder Agreement in substantially the form of
Exhibit E.

 

“LC Collateral Account” has the meaning assigned to such term in Section
2.06(j).

 

“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter
of Credit.

 

“LC Exposure” means, at any time, the sum of the Commercial LC Exposure and the
Standby LC Exposure at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the aggregate LC Exposure at such
time.

 

“Lenders” means the Persons listed on the Commitment Schedule and any other
Person that shall have become a Lender hereunder pursuant to Section 2.09 or an
Assignment and Assumption, other than any such Person that ceases to be a Lender
hereunder pursuant to an Assignment and Assumption. Unless the context otherwise
requires, the term “Lenders” includes the Swingline Lender and the Issuing Bank.

 

“Letters of Credit” means the letters of credit issued pursuant to this
Agreement and the term “Letter of Credit” means any one of them or each of them
singularly, as context may require.

 

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any applicable
Interest Period, the London interbank offered rate administered by ICE Benchmark
Administration (or any other Person that takes over the administration of such
rate for Dollars) for a period equal in length to such Interest Period as
displayed on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such
rate or, in the event such rate does not appear on a Reuters page or screen, on
any successor or substitute page on such screen that displays such rate, or on
the appropriate page of such other information service that publishes such rate
as shall be selected by the Administrative Agent from time to time in its
reasonable discretion (in each case, the “LIBO Screen Rate”) at approximately
11:00 a.m., London time, two (2) Business Days prior to the commencement of such
Interest Period; provided that, (x) if any LIBO Screen Rate shall be less than
zero, such rate shall be deemed to be zero for purposes of this Agreement and
(y) if the LIBO Screen Rate shall not be available at such time for a period
equal in length to such Interest Period (an “Impacted Interest Period”), then
the LIBO Rate shall be the Interpolated Rate at such time, subject to Section
2.14 in the event that the Administrative Agent shall conclude that it shall not
be possible to determine such Interpolated Rate (which conclusion shall be
conclusive and binding absent manifest error); provided further, that, if any
Interpolated Rate shall be less than zero, such rate shall be deemed to be zero
for purposes of this Agreement. Notwithstanding the above, to the extent that
“LIBO Rate” or “Adjusted LIBO Rate” is used in connection with an ABR Borrowing,
such rate shall be determined as modified by the definition of Alternate Base
Rate.

 

 18

 

 

“LIBO Screen Rate” has the meaning assigned to such term in the definition of
“LIBO Rate”.

 

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.

 

“Loan Documents” means, collectively, this Agreement, the Revolving Notes, the
Term Loan Notes, any other promissory notes issued pursuant to this Agreement,
any Letter of Credit applications, the Collateral Documents, the Loan Guaranty,
and all other agreements, instruments, documents and certificates identified in
Section 4.01 executed and delivered to, or in favor of, the Administrative Agent
or any Lenders and including all other pledges, powers of attorney, consents,
assignments, contracts, notices, letter of credit agreements and all other
written matter whether heretofore, now or hereafter executed by or on behalf of
any Loan Party, or any employee of any Loan Party, and delivered to the
Administrative Agent or any Lender in connection with this Agreement or the
transactions contemplated hereby. Any reference in this Agreement or any other
Loan Document to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to this Agreement or such Loan Document
as the same may be in effect at any and all times such reference becomes
operative.

 

“Loan Guarantor” means each Loan Party (other than the Borrowers).

 

“Loan Guaranty” means each of (i) each separate Guarantee identified on Schedule
1.01 to this Agreement, and (ii) any other Guarantee of the Obligations entered
into, after the date of this Agreement by any other Person (as required by this
Agreement or any other Loan Document), in form and substance satisfactory to the
Administrative Agent, in each case as it may be amended or modified and in
effect from time to time.

 

“Loan Parties” means, collectively, the Borrowers, the Borrowers’ Domestic
Subsidiaries, and any other Person who becomes a party to this Agreement
pursuant to a Joinder Agreement and their successors and assigns, and the term
“Loan Party” shall mean any one of them or all of them individually, as the
context may require.

 

“Loans” means the loans and advances made by the Lenders pursuant to this
Agreement, including Swingline Loans.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, operations, prospects or condition, financial or otherwise, of the
Company and the Subsidiaries taken as a whole, (b) the ability of any Loan Party
to perform any of its obligations under the Loan Documents to which it is a
party, (c) the Collateral, or the Administrative Agent’s Liens (on behalf of
itself and other Secured Parties) on the Collateral or the priority of such
Liens, or (d) the rights of or benefits available to the Administrative Agent,
the Issuing Bank or the Lenders under any of the Loan Documents.

 

 19

 

 

“Material Indebtedness” means Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or
more of the Company and its Subsidiaries in an aggregate principal amount
exceeding $500,000. For purposes of determining Material Indebtedness, the
“principal amount” of the obligations of a Borrower or any Subsidiary in respect
of any Swap Agreement at any time shall be the maximum aggregate amount (giving
effect to any netting agreements) that such Borrower or such Subsidiary would be
required to pay if such Swap Agreement were terminated at such time.

 

“Maturity Date” means with respect to a Revolving Loan, the Revolving Loan
Maturity Date, and with respect to a Term Loan, the Term Loan Maturity Date.

 

“Maximum Rate” has the meaning assigned to such term in Section 9.17.

 

“Maximum Eligible In-Transit Inventory” means the lesser of (a) 50% of the
Eligible In-Transit Inventory of the Loan Parties at such date, or (b)
$5,000,000.

 

“Mexican Real Estate” means the real property located in Tijuana, Baja
California, Mexico and more particularly described in the Mexican Real Estate
Purchase Agreement.

 

“Mexican Real Estate Indebtedness” means the indebtedness, obligations and
liabilities of “Harvard California,” Sociedad De Responsabilidad Limitada De
Capital Variable to pay the remaining purchase price for the Mexican Real Estate
under the Mexican Real Estate Purchase Agreement.

 

“Mexican Real Estate Lien” means the Lien on the Mexican Real Estate in favor of
“Inmobiliaria Pedro Martin,” Sociedad Anonima De Capital Variable which is
security for the payment of the Mexican Real Estate Indebtedness.

 

“Mexican Real Estate Purchase Agreement” means the real estate purchase
agreement entered into by “Harvard California,” Sociedad De Responsabilidad
Limitada De Capital Variable and “Inmobiliaria Pedro Martin,” Sociedad Anonima
De Capital Variable, a fully executed copy of which was delivered to the
Administrative Agent in connection with the Ninth Amendment.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Mortgage” means each mortgage, deed of trust or other agreement which conveys
or evidences a Lien in favor of the Administrative Agent, for the benefit of the
Administrative Agent and the Secured Parties, on real property of a Loan Party,
including any amendment, restatement, modification or supplement thereto

 

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.

 

“Net Income” means, for any period, the consolidated net income (or loss) of the
Company and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP; provided that there shall be excluded (a) the income (or deficit) of
any Person accrued prior to the date it becomes a Subsidiary or is merged into
or consolidated with the Company or any of its Subsidiaries, (b) the income (or
deficit) of any Person (other than a Subsidiary) in which the Company or any of
its Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Company or such Subsidiary in the form of
dividends or similar distributions and (c) the undistributed earnings of any
Subsidiary to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation (other than under any Loan Document) or Requirement
of Law applicable to such Subsidiary.

 

 20

 

 

“Net Proceeds” means, with respect to any event, (a) the cash proceeds received
in respect of such event including (i) any cash received in respect of any
non-cash proceeds (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or purchase
price adjustment receivable or otherwise, but excluding any interest payments),
but only as and when received, (ii) in the case of a casualty, insurance
proceeds and (iii) in the case of a condemnation or similar event, condemnation
awards and similar payments, minus (b) the sum of (i) all reasonable fees and
out-of-pocket expenses paid to third parties (other than Affiliates) in
connection with such event, (ii) in the case of a sale, transfer or other
disposition of an asset (including pursuant to a sale and leaseback transaction
or a casualty or a condemnation or similar proceeding), the amount of all
payments required to be made as a result of such event to repay Indebtedness
(other than Loans) secured by such asset or otherwise subject to mandatory
prepayment as a result of such event and (iii) the amount of all taxes paid (or
reasonably estimated to be payable) and the amount of any reserves established
to fund contingent liabilities reasonably estimated to be payable, in each case
during the year that such event occurred or the next succeeding year and that
are directly attributable to such event (as determined reasonably and in good
faith by a Financial Officer of the Borrower Representative).

 

“Non-Consenting Lender” has the meaning assigned to such term in Section
9.02(d).

 

“Non-U.S. Lender” means a Lender that is not a U.S. Person.

 

“Obligations” means all unpaid principal of and accrued and unpaid interest on
the Loans, all LC Exposure, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations and indebtedness (including
interest and fees accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), obligations and liabilities of any of the Loan
Parties to any of the Lenders, the Administrative Agent, the Issuing Bank or any
indemnified party, individually or collectively, existing on the Effective Date
or arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Agreement or any of the other Loan Documents or in respect
of any of the Loans made or reimbursement or other obligations incurred or any
of the Letters of Credit or other instruments at any time evidencing any
thereof.

 

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

 

“Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by
such Person, (b) any indebtedness, liability or obligation under any so-called
“synthetic lease” transaction entered into by such Person, or (c) any
indebtedness, liability or obligation arising with respect to any other
transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the balance sheet of such
Person (other than operating leases).

 

“Olympia” means Olympia Business Systems, Inc., a Delaware corporation.

 

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

 

 21

 

 

“Other Taxes” means any 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, or from
the registration, receipt or perfection of a security interest under, or
otherwise with respect to, any Loan Document, except any such Taxes that are
Other Connection Taxes imposed with respect to an assignment (other than an
assignment made pursuant to Section 2.19).

 

“Parent” means, with respect to any Lender, any Person as to which such Lender
is, directly or indirectly, a subsidiary.

 

“Participant” has the meaning assigned to such term in Section 9.04(c).

 

“Participant Register” has the meaning assigned to such term in Section 9.04(c).

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

 

“Permitted Acquisition” means any Acquisition by any Loan Party in a transaction
that satisfies in all respects each of the following requirements:

 

(a)          such Acquisition is not a hostile or contested acquisition;

 

(b)          the business acquired in connection with such Acquisition is not
engaged, directly or indirectly, in any line of business other than the
businesses in which the Loan Parties are engaged on the Effective Date and any
business activities that are substantially similar, related, or incidental
thereto;

 

(c)          both before and after giving effect to such Acquisition and the
Loans (if any) requested to be made in connection therewith, each of the
representations and warranties in the Loan Documents is true and correct (except
(i) any such representation or warranty which relates to a specified prior date
and (ii) to the extent the Administrative Agent has been notified in writing by
the Loan Parties that any representation or warranty is not correct and the
Required Lenders have explicitly waived in writing compliance with such
representation or warranty) and no Default exists, will exist, or would result
therefrom;

 

(d)          as soon as available, but not less than thirty (30) days prior to
such Acquisition, the Borrower Representative has provided the Administrative
Agent (i) notice of such Acquisition, (ii) a copy of all business and financial
information reasonably requested by the Administrative Agent or the Lenders,
including pro forma financial statements, balance sheets, statements of cash
flow, and Revolving Loan Availability projections, and (iii) copies of the
purchase or other acquisition agreement with respect to such Acquisition and all
other material documents, instruments, and agreements with respect to such
Acquisition;

 

(e)          promptly upon the closing of such Acquisition, the Borrower
Representative has provided the Administrative Agent (i) evidence satisfactory
to the Administrative Agent of the closing of such Acquisition, (ii) copies of
the fully executed purchase or other acquisition agreement with respect to such
Acquisition and all other documents, instruments, and agreements with respect to
such Acquisition; and (iii) in connection with an Acquisition of the Equity
Interests of any Person, evidence that legal title to such Equity Interests is
vested in a Loan Party, and in connection with an Acquisition of the assets of
any Person, evidence that legal title to such assets is vested in a Loan Party;

 

 22

 

 

(f)          the total consideration (including Indebtedness assumed or
otherwise incurred in connection therewith) for each Acquisition shall not
exceed $15,000,000.00;

 

(g)          if such Acquisition is an acquisition of the Equity Interests of a
Person, the Acquisition is structured so that such Person shall become a
wholly-owned Subsidiary of a Borrower or any Loan Party and shall become a Loan
Party pursuant to the terms of this Agreement;

 

(h)          if such Acquisition is an acquisition of assets, such Acquisition
is structured so that a Borrower or another Loan Party shall acquire such
assets;

 

(i)          if such Acquisition is an acquisition of Equity Interests, such
Acquisition will not result in any violation of Regulation U;

 

(j)          if such Acquisition involves a merger or a consolidation involving
a Borrower or any other Loan Party, such Borrower or such Loan Party, as
applicable, shall be the surviving entity;

 

(k)          no Loan Party shall, as a result of or in connection with any such
Acquisition, assume or incur any direct or contingent liabilities or obligations
(whether relating to environmental, tax, litigation, or other matters) that
could reasonably be expected, in the Administrative Agent’s Permitted
Discretion, to have a Material Adverse Effect;

 

(l)          in connection with an Acquisition of the Equity Interests of any
Person, all Liens on any assets of such Person shall be terminated unless the
Required Lenders in their separate sole discretion consent otherwise, and in
connection with an Acquisition of the assets of any Person, all Liens on such
assets shall be terminated;

 

(m)          the Borrower Representative shall certify (and provide the
Administration Agent with pro forma calculations in form and substance
reasonably satisfactory to the Administrative Agent) to the Administrative Agent
that, after giving effect to the completion of such Acquisition, the Borrowers
will be in compliance with the financial covenants in Section 6.13 on a pro
forma basis which includes all consideration given in connection with such
Acquisition, other than Equity Interests of such Borrower delivered to the
seller(s) in such Acquisition, as having been paid in cash at the time of making
such Acquisition;

 

(n)          all actions required to be taken with respect to any newly acquired
or formed wholly-owned Subsidiary of a Borrower or a Loan Party, as applicable,
required under Section 5.14 shall have been taken; and

 

(o)          the Borrower Representative shall have delivered to the
Administrative Agent the final executed material documentation relating to such
Acquisition within five (5) days following the consummation thereof.

 

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

 

“Permitted Encumbrances” means:

 

(a)          Liens imposed by law for Taxes that are not yet due or are being
contested in compliance with Section 5.04;

 

 23

 

 

(b)          carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s
and other like Liens imposed by law, arising in the ordinary course of business
and securing obligations that are not overdue by more than thirty (30) days or
are being contested in compliance with Section 5.04;

 

(c)          pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security laws or regulations;

 

(d)          deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business;

 

(e)          judgment Liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article VII; and

 

(f)          easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of any Borrower or any Subsidiary;

 

provided that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness, except with respect to clause (e) above.

 

“Permitted Investments” means:

 

(a)          direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, the U.S. (or by any agency thereof
to the extent such obligations are backed by the full faith and credit of the
U.S.), in each case maturing within one year from the date of acquisition
thereof;

 

(b)          investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from S&P or from Moody’s;

 

(c)          investments in certificates of deposit, bankers’ acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic office of any commercial bank organized under the
laws of the U.S. or any State thereof which has a combined capital and surplus
and undivided profits of not less than $500,000,000;

 

(d)          fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria described in clause (c) above;
and

 

(e)          money market funds that (i) comply with the criteria set forth in
SEC Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by
S&P and Aaa by Moody’s and (iii) have portfolio assets of at least
$5,000,000,000.

 

“Permitted Third Party Location” means (i) any location leased by any Loan Party
for which, at the option of the Administrative Agent, either (A) the lessor has
delivered to the Administrative Agent a Collateral Access Agreement or (B) a
Reserve for rent, charges, and other amounts due or to become due with respect
to such facility has been established by the Administrative Agent in its sole
discretion; and (ii) any third party warehouse or bailee for which, at the
option of the Administrative Agent, either (A) such warehouseman or bailee has
delivered to the Administrative Agent a Collateral Access Agreement and such
other documentation as the Administrative Agent may require or (B) an
appropriate Reserve has been established by the Administrative Agent in its sole
discretion.

 

 24

 

 

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

 

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

 

“Prepayment Event” means:

 

(a)          any sale, transfer or other disposition (including pursuant to a
sale and leaseback transaction) of any property or asset of any Loan Party,
other than dispositions described in Section 6.05(a); or

 

(b)          any casualty or other insured damage to, or any taking under power
of eminent domain or by condemnation or similar proceeding of, any property or
asset of any Loan Party with a fair value immediately prior to such event equal
to or greater than $500,000; or

 

(c)          the issuance by the Company of any Equity Interests or the receipt
by the Borrower of any capital contribution in excess of $2,500,000; or

 

(d)          the incurrence by any Loan Party of any Indebtedness, other than
Indebtedness permitted under Section 6.01 or permitted by the Required Lenders
pursuant to Section 9.02.

 

“Prime Rate” means the rate of interest per annum publicly announced from time
to time by Chase as its prime rate in effect at its principal office in New York
City; each change in the Prime Rate shall be effective from and including the
date such change is publicly announced as being effective.

 

“Projections” has the meaning assigned to such term in Section 5.01(e).

 

“Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Loan
Party that has total assets exceeding $10,000,000 at the time the relevant Loan
Guaranty or grant of the relevant security interest becomes or would become
effective with respect to such Swap Obligation or such other person as
constitutes an “eligible contract participant” under the Commodity Exchange Act
or any regulations promulgated thereunder and can cause another person to
qualify as an “eligible contract participant” at such time by entering into a
keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

“Recipient” means, as applicable, (a) the Administrative Agent, (b) any Lender
and (c) the Issuing Bank or any of the foregoing or any combination thereof (as
the context requires).

 

“Refinance Indebtedness” has the meaning assigned to such term in
Section 6.01(f).

 

“Register” has the meaning assigned to such term in Section 9.04.

 

“Regulation U” means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.

 

 25

 

 

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

 

“Release” means any releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, migrating, disposing or
dumping of any substance into the environment.

 

“Report” means reports prepared by the Administrative Agent or another Person
showing the results of appraisals, field examinations or audits pertaining to
the assets of the Loan Parties from information furnished by or on behalf of the
Borrowers, after the Administrative Agent has exercised its rights of inspection
pursuant to this Agreement, which Reports may be distributed to the Lenders by
the Administrative Agent.

 

“Required Lenders” means, at any time, Lenders (other than Defaulting Lenders)
having Credit Exposure and unused Commitments representing more than 50% of the
sum of the Aggregate Credit Exposure and unused Commitments; provided that, for
purposes of declaring the Loans to be due and payable pursuant to Article VII,
and for all purposes after the Loans become due and payable pursuant to
Article VII or the Commitments expire or terminate, then, as to each Lender,
clause (a) of the definition of Swingline Exposure shall only be applicable for
purposes of determining its Revolving Exposure to the extent such Lender shall
have funded its participation in the outstanding Swingline Loans.

 

“Requirement of Law” means, with respect to any Person, (a) the charter,
articles or certificate of organization or incorporation and bylaws or other
organizational or governing documents of such Person and (b) any statute, law
(including common law), treaty, rule, regulation, code, ordinance, order,
decree, writ, judgment, injunction or determination of any arbitrator or court
or other Governmental Authority (including Environmental Laws), in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.

 

“Reserves” means any and all reserves which the Administrative Agent deems
necessary, in its Permitted Discretion, to maintain (including, without
limitation, reserves for accrued and unpaid interest on the Secured Obligations,
Banking Services Reserves, volatility reserves, reserves for rent at locations
leased by any Loan Party and for consignee’s, warehousemen’s and bailee’s
charges, reserves for dilution of Accounts, reserves for Inventory shrinkage,
reserves for customs charges and shipping charges related to any Inventory in
transit, reserves for Swap Agreement Obligations, reserves for contingent
liabilities of any Loan Party, reserves for uninsured losses of any Loan Party,
reserves for uninsured, underinsured, un-indemnified or under-indemnified
liabilities or potential liabilities with respect to any litigation and reserves
for taxes, fees, assessments, and other governmental charges) with respect to
the Collateral or any Loan Party.

 

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in any
Borrower or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such Equity Interests or any option, warrant or other right to acquire any
such Equity Interests.

 

“Revolving Commitment” means, with respect to each Lender, the commitment, if
any, of such Lender to make Revolving Loans and to acquire participations in
Letters of Credit, and Swingline Loans hereunder, expressed as an amount
representing the maximum aggregate permitted amount of such Lender’s Revolving
Exposure hereunder, as such commitment may be reduced or increased from time to
time pursuant to assignments by or to such Lender pursuant to Section 9.04. The
amount of each Lender’s Revolving Commitment as of the Effective Date is set
forth on the Commitment Schedule, or in the most recent Assignment and
Assumption executed by such Lender with respect to a Revolving Loan, as
applicable. The aggregate amount of the Lenders’ Revolving Commitments as of the
Effective Date is Thirty Five Million Dollars ($35,000,000).

 

 26

 

 

“Revolving Exposure” means, with respect to any Lender at any time, the sum of
the outstanding principal amount of such Lender’s Revolving Loans, LC Exposure
and Swingline Exposure, at such time.

 

“Revolving Lender” means, as of any date of determination, a Lender with a
Revolving Commitment or, if the Revolving Commitments have terminated or
expired, a Lender with Revolving Exposure.

 

“Revolving Loan” means a Loan made pursuant to Section 2.01(a).

 

“Revolving Loan Availability” means, at any date of determination, an amount
equal to (a) the lesser of (i) the Revolving Commitments at such date; and (ii)
the Borrowing Base at such date, minus (b) the Revolving Exposure of all
Revolving Lenders at such date (calculated with respect to any Defaulting
Lender, as if such Defaulting Lender had funded its Applicable Percentage of all
outstanding Borrowings).

 

“Revolving Loan Maturity Date” means January 21, 2019, or any earlier date on
which: (i) the Revolving Loan Commitments are reduced to zero or otherwise
terminated pursuant to the terms of this Agreement; or (ii) the maturity of the
Revolving Loans is accelerated pursuant to the terms of this Agreement.

 

“Revolving Notes” has the meaning ascribed to such term in Section 2.10(e).

 

“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial
Services LLC business.

 

“Sale and Leaseback Transaction” has the meaning assigned to such term in
Section 6.06.

 

“Sale or Casualty Prepayment Event” means any event described in clause (a) or
(b) of the definition of the term “Prepayment Event” hereunder.

 

“Sanctioned Country” means, at any time, a country or territory which is itself
the subject or target of any Sanctions (at the time of this Agreement, Cuba,
Iran, North Korea, Sudan and Syria).

 

“Sanctioned Person” means, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by the Office of Foreign
Assets Control of the U.S. Department of the Treasury, the U.S. Department of
State or by the United Nations Security Council, the European Union or any
European Union member state, (b) any Person operating, organized or resident in
a Sanctioned Country or (c) any Person owned or controlled by any such Person or
Persons described in the foregoing clauses (a) or (b).

 

“Sanctions” means economic or financial sanctions or trade embargoes imposed,
administered or enforced from time to time by (a) the U.S. government, including
those administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury or the U.S. Department of State, or (b) the United
Nations Security Council, the European Union, any European Union member state or
Her Majesty’s Treasury of the United Kingdom.

 

“SEC” means the Securities and Exchange Commission of the U.S.

 

 27

 

 

“Secured Obligations” means all Obligations, together with all (i) Banking
Services Obligations and (ii) Swap Agreement Obligations owing to one or more
Lenders or their respective Affiliates; provided, however, that the definition
of “Secured Obligations” shall not create any guarantee by any Guarantor of (or
grant of security interest by any Guarantor to support, as applicable) any
Excluded Swap Obligations of such Guarantor for purposes of determining any
obligations of any Guarantor.

 

“Secured Parties” means (a) the Administrative Agent, (b) the Lenders, (c) the
Issuing Bank, (d) each provider of Banking Services, to the extent the Banking
Services Obligations in respect thereof constitute Secured Obligations, (e) each
counterparty to any Swap Agreement, to the extent the obligations thereunder
constitute Secured Obligations, (f) the beneficiaries of each indemnification
obligation undertaken by any Loan Party under any Loan Document, and (g) the
successors and assigns of each of the foregoing.

 

“Security Agreement” means each of (i) that certain Pledge and Security
Agreement, dated as of April 30, 2009, between the Company and the
Administrative Agent, for the benefit of the Administrative Agent and the
Lenders, as amended to date, (ii) each security agreement identified on Schedule
1.01, and (iii) any other pledge or security agreement entered into, by any
other Loan Party (as required by this Agreement or any other Loan Document) or
any other Person, in each case as the same may be amended, restated or otherwise
modified from time to time.

 

“Settlement” has the meaning assigned to such term in Section 2.05(c).

 

“Settlement Date” has the meaning assigned to such term in Section 2.05(c).

 

“Standby LC Exposure” means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding standby Letters of Credit at such time plus (b) the
aggregate amount of all LC Disbursements relating to standby Letters of Credit
that have not yet been reimbursed by or on behalf of the Borrowers at such time.
The Standby LC Exposure of any Revolving Lender at any time shall be its
Applicable Percentage of the aggregate Standby LC Exposure at such time.

 

“Statements” has the meaning assigned to such term in Section 2.18(g).

 

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentage (including any
marginal, special, emergency or supplemental reserves) established by the Board
to which the Administrative Agent is subject with respect to the Adjusted LIBO
Rate, for Eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D of the Board. Eurodollar
Loans shall be deemed to constitute Eurocurrency funding and to be subject to
such reserve requirements without benefit of or credit for proration, exemptions
or offsets that may be available from time to time to any Lender under such
Regulation D of the Board or any comparable regulation. The Statutory Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.

 

“Subordinated Indebtedness” of a Person means any Indebtedness of such Person
the payment of which is subordinated to payment of the Secured Obligations to
the written satisfaction of the Administrative Agent.

 

“subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.

 

 28

 

 

“Subsidiary” means any direct or indirect subsidiary of the Company, a Borrower
or a Loan Party, as applicable.

 

“Swap Agreement” means any agreement with respect to any swap, forward, spot,
future, credit default or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions; provided that
no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Borrowers or their Subsidiaries shall be a Swap Agreement.

 

“Swap Agreement Obligations” of a Loan Party means any and all obligations of
such Loan Party, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all Swap
Agreements permitted hereunder with a Lender or an Affiliate of a Lender, and
(b) any and all cancellations, buy backs, reversals, terminations or assignments
of any such Swap Agreement transaction.

 

“Swap Obligation” means, with respect to any Guarantor, any obligation to pay or
perform under any agreement, contract or transaction that constitutes a “swap”
within the meaning of section 1a(47) of the Commodity Exchange Act or any rules
or regulations promulgated thereunder.

 

“Swingline Exposure” means, at any time, the sum of the aggregate undrawn amount
of all outstanding Swingline Loans. The Swingline Exposure of any Revolving
Lender at any time shall be its Applicable Percentage of the aggregate Swingline
Exposure.

 

“Swingline Lender” means JPMorgan Chase Bank, N.A., in its capacity as lender of
Swingline Loans hereunder. Any consent required of the Administrative Agent or
the Issuing Bank shall be deemed to be required of the Swingline Lender and any
consent given by Chase in its capacity as Administrative Agent or Issuing Bank
shall be deemed given by Chase in its capacity as Swingline Lender.

 

“Swingline Loan” has the meaning assigned to such term in Section 2.05(a).

 

“Taxes” means any and 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.

 

“Term Lenders” means, as of any date of determination, Lenders having a Term
Loan Commitment.

 

“Term Loan Collateral Block” means the balance of the Term Loans less 85% of the
Appraised Value of the Gainesville Facility.

 

“Term Loan Commitment” means (a) as to any Term Lender, the aggregate commitment
of such Term Lender to make Term Loans as set forth in the Commitment Schedule
or in the most recent Assignment and Assumption executed by such Term Lender, as
applicable, and (b) as to all Term Lenders, the aggregate commitment of all Term
Lenders to make Term Loans, which aggregate commitment shall be Seven Million
Five Hundred Thousand Dollars ($7,500,000) on the Effective Date. After
advancing the Term Loan, each reference to a Term Lender’s Term Loan Commitment
shall refer to such Term Lender’s Applicable Percentage of the Term Loans.

 

 29

 

 

“Term Loan Maturity Date” means January 21, 2021, or any earlier date on which
the maturity of the Term Loans is accelerated pursuant to the terms of this
Agreement.

 

“Term Loan Notes” has the meaning ascribed to such term in Section 2.10(e).

 

“Term Loans” means the Term Loans extended by the Term Lenders to the Borrower
pursuant to Section 2.01(b) hereof.

 

“Total Indebtedness” means, at any date, the aggregate principal amount of all
Indebtedness of the Loan Parties at such date, determined on a consolidated
basis in accordance with GAAP.

 

“Transactions” means the execution, delivery and performance by the Borrowers of
this Agreement and the other Loan Documents, the borrowing of Loans and other
credit extensions, the use of the proceeds thereof and the issuance of Letters
of Credit hereunder.

 

“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

 

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of Indiana or any other state the laws of which are required to be applied
in connection with the issue of perfection of security interests.

 

“Unliquidated Obligations” means, at any time, any Secured Obligations (or
portion thereof) that are contingent in nature or unliquidated at such time,
including any Secured Obligation that is: (i) an obligation to reimburse a bank
for drawings not yet made under a letter of credit issued by it; (ii) any other
obligation (including any guarantee) that is contingent in nature at such time;
or (iii) an obligation to provide collateral to secure any of the foregoing
types of obligations.

 

“U.S.” means the United States of America.

 

“U.S. Person” means a “United States person” within the meaning of Section
7701(a)(30) of the Code.

 

“U.S. Tax Compliance Certificate” has the meaning assigned to such term in
Section 2.17(f)(ii)(B)(3).

 

“USA PATRIOT Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001.

 

“Wedcor” means Wedcor Holdings, Inc., an Indiana corporation, formerly known as
Martin Yale Industries, Inc.

 

“Wedcor Contribution” means the contribution from Wedcor to intimus of all
repayment claims of Wedcor against intimus under a shareholder loan and a loan
provided by the Company to intimus.

 

“Wedcor Guaranty” shall mean the guaranty by the Company in favor of the Wedcor
Stock Buyer of the Wedcor Indemnification Obligations.

 

 30

 

 

“Wedcor Indemnification Obligations” shall mean (i) the indemnification
obligations of Wedcor to the Wedcor Stock Buyer pursuant to the Agreement for
the sale and purchase of all of the shares in intimus International GmbH and
Olympia Business Systems, Inc. executed in connection with the Wedcor Stock
Disposition and (ii) the indemnification obligations of Wedcor to Olympia 
pursuant to the Asset Sale and Purchase Agreement executed in connection with
the Wedcor Asset Disposition, up to an aggregate maximum amount of 750,000 Euros
with respect to both the Wedcor Stock Disposition and the Wedcor Asset
Disposition plus the amount of any indemnification obligations of Wedcor
relating to taxes triggered by the Wedcor Contribution, certain tax liabilities
relating to Olympia, the liquidation of certain intimus subsidiaries, and
certain payments by intimus to Wedcor or its U.S. affiliates subsequent to
December 31, 2013.

 

“Wedcor Stock Buyer” means Pitney Bowes España, S.A.U., a company incorporated
under the laws of Spain.

 

“Wedcor Stock Disposition” means the sale by Wedcor to Wedcor Stock Buyer of all
of the issued shares in intimus and Olympia.

 

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

 

SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving
Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a
“Eurodollar Revolving Loan”). Borrowings also may be classified and referred to
by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar
Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).

 

SECTION 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “law”
shall be construed as referring to all statutes, rules, regulations, codes and
other laws (including official rulings and interpretations thereunder having the
force of law or with which affected Persons customarily comply) and all
judgments, orders and decrees of all Governmental Authorities. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
restated, supplemented or otherwise modified (subject to any restrictions on
such amendments, restatements, supplements or modifications set forth herein),
(b) any definition of or reference to any statute, rule or regulation shall be
construed as referring thereto as from time to time amended, supplemented or
otherwise modified (including by succession of comparable successor laws), (c)
any reference herein to any Person shall be construed to include such Person’s
successors and assigns (subject to any restrictions on assignments set forth
herein) and, in the case of any Governmental Authority, any other Governmental
Authority that shall have succeeded to any or all functions thereof, (d) the
words “herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (e) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement, (f) any reference in any definition to the
phrase “at any time” or “for any period” shall refer to the same time or period
for all calculations or determinations within such definition, and (g) the words
“asset” and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.

 

 31

 

 

SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if after
the date hereof there occurs any change in GAAP or in the application thereof on
the operation of any provision hereof and the Borrower Representative notifies
the Administrative Agent that the Borrowers request an amendment to any
provision hereof to eliminate the effect of such change in GAAP or in the
application thereof (or if the Administrative Agent notifies the Borrower
Representative that the Required Lenders request an amendment to any provision
hereof for such purpose), regardless of whether any such notice is given before
or after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

 

ARTICLE II

 

The Credits

 

SECTION 2.01. Commitments. Subject to the terms and conditions set forth herein,
each Lender severally (and not jointly) agrees to make (a) Revolving Loans to
the Borrowers from time to time during the Availability Period in an aggregate
principal amount that will not result in (i) such Lender’s Revolving Exposure
exceeding such Lender’s Revolving Commitment or (ii) the Aggregate Revolving
Exposure exceeding the lesser of (x) the sum of the aggregate Revolving
Commitments and (y) the Borrowing Base and (b) a Term Loan to the Borrowers on
the Effective Date, in an amount equal to such Lender’s Term Loan Commitment, in
each case by making immediately available funds available to the Administrative
Agent’s designated account, not later than 11:00 a.m., Chicago time. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrowers may borrow, prepay and reborrow Revolving Loans. Amounts repaid or
prepaid in respect of Term Loans may not be reborrowed.

 

SECTION 2.02. Loans and Borrowings.

 

(a)          Each Loan (other than a Swingline Loan) shall be made as part of a
Borrowing consisting of Loans of the same Class and Type made by the Lenders
ratably in accordance with their respective Commitments of the applicable Class.
The failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the
Commitments of the Lenders are several and no Lender shall be responsible for
any other Lender’s failure to make Loans as required. Any Swingline Loan shall
be made in accordance with the procedures set forth in Section 2.05. The Term
Loans shall amortize as set forth in Section 2.10.

 

(b)          Subject to Section 2.14, each Borrowing shall be comprised entirely
of ABR Loans or Eurodollar Loans as the Borrower Representative may request in
accordance herewith. Each Swingline Loan shall be an ABR Loan. Each Lender at
its option may make any Eurodollar Loan by causing any domestic or foreign
branch or Affiliate of such Lender to make such Loan (and in the case of an
Affiliate, the provisions of Sections 2.14, 2.15, 2.16 and 2.17 shall apply to
such Affiliate to the same extent as to such Lender); provided that any exercise
of such option shall not affect the obligation of the Borrowers to repay such
Loan in accordance with the terms of this Agreement.

 

(c)          At the commencement of each Interest Period for any Eurodollar
Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $100,000 and not less than $1,000,000.00. ABR Revolving
Borrowings may be in any amount. Borrowings of more than one Type and Class may
be outstanding at the same time; provided that there shall not at any time be
more than a total of 6 Eurodollar Borrowings outstanding.

 

 32

 

 

(d)          Notwithstanding any other provision of this Agreement, the
Borrowers shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Maturity Date.

 

SECTION 2.03. Requests for Revolving Borrowings. To request a Revolving
Borrowing, the Borrower Representative shall notify the Administrative Agent of
such request either in writing (delivered by hand or facsimile) in a form
approved by the Administrative Agent and signed by the Borrower Representative
or by telephone not later than (a) in the case of a Eurodollar Borrowing, 10:00
a.m., Chicago time, three Business Days before the date of the proposed
Borrowing or (b) in the case of a ABR Borrowing, noon, Chicago time, on the date
of the proposed Borrowing; provided that any such notice of a ABR Borrowing to
finance the reimbursement of an LC Disbursement as contemplated by
Section 2.06(e) may be given not later than 9:00 a.m., Chicago time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or facsimile to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower Representative. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.01:

 

(i)          the aggregate amount of the requested Borrowing and a breakdown of
the separate wires comprising such Borrowing;

 

(ii)         the date of such Borrowing, which shall be a Business Day;

 

(iii)        whether such Borrowing is to be a ABR Borrowing or a Eurodollar
Borrowing; and

 

(iv)        in the case of a Eurodollar Borrowing, the initial Interest Period
to be applicable thereto, which shall be a period contemplated by the definition
of the term “Interest Period.”

 

If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested Eurodollar Revolving Borrowing, then
the Borrowers shall be deemed to have selected an Interest Period of one month’s
duration. Promptly following receipt of a Borrowing Request in accordance with
this Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender’s Loan to be made as part of the
requested Borrowing.

 

SECTION 2.04. RESERVED.

 

SECTION 2.05. Swingline Loan.

 

(a)         The Administrative Agent, the Swingline Lender and the Revolving
Lenders agree that in order to facilitate the administration of this Agreement
and the other Loan Documents, promptly after the Borrower Representative
requests a ABR Borrowing, the Swingline Lender may elect to have the terms of
this Section 2.05(a) apply to such Borrowing Request by advancing, on behalf of
the Revolving Lenders and in the amount requested, same day funds to the
Borrower on the applicable Borrowing date to the Funding Account (each such Loan
made solely by the Swingline Lender pursuant to this Section 2.05(a) is referred
to in this Agreement as a “Swingline Loan”), with settlement among them as to
the Swingline Loans to take place on a periodic basis as set forth in Section
2.05(c). Each Swingline Loan shall be subject to all the terms and conditions
applicable to other ABR Loans funded by the Revolving Lenders, except that all
payments thereon shall be payable to the Swingline Lender solely for its own
account.

 

 33

 

 

(b)          Upon the making of a Swingline Loan (whether before or after the
occurrence of a Default and regardless of whether a Settlement has been
requested with respect to such Swingline Loan), each Revolving Lender shall be
deemed, without further action by any party hereto, to have unconditionally and
irrevocably purchased from the Swingline Lender, without recourse or warranty,
an undivided interest and participation in such Swingline Loan in proportion to
its Applicable Percentage of the Revolving Commitment. The Swingline Lender may,
at any time, require the Revolving Lenders to fund their participations. From
and after the date, if any, on which any Revolving Lender is required to fund
its participation in any Swingline Loan purchased hereunder, the Administrative
Agent shall promptly distribute to such Lender, such Lender’s Applicable
Percentage of all payments of principal and interest and all proceeds of
Collateral received by the Administrative Agent in respect of such Swingline
Loan.

 

(c)          The Administrative Agent, on behalf of the Swingline Lender, shall
request settlement (a “Settlement”) with the Revolving Lenders on at least a
weekly basis or on any date that the Administrative Agent elects, by notifying
the Revolving Lenders of such requested Settlement by facsimile, telephone, or
e-mail no later than 12:00 noon Chicago time on the date of such requested
Settlement (the “Settlement Date”). Each Revolving Lender (other than the
Swingline Lender, in the case of the Swingline Loans) shall transfer the amount
of such Revolving Lender’s Applicable Percentage of the outstanding principal
amount of the applicable Loan with respect to which Settlement is requested to
the Administrative Agent, to such account of the Administrative Agent as the
Administrative Agent may designate, not later than 2:00 p.m., Chicago time, on
such Settlement Date. Settlements may occur during the existence of a Default
and whether or not the applicable conditions precedent set forth in Section 4.02
have then been satisfied. Such amounts transferred to the Administrative Agent
shall be applied against the amounts of the Swingline Lender’s Swingline Loans
and, together with Swingline Lender’s Applicable Percentage of such Swingline
Loan, shall constitute Revolving Loans of such Revolving Lenders, respectively.
If any such amount is not transferred to the Administrative Agent by any
Revolving Lender on such Settlement Date, the Swingline Lender shall be entitled
to recover from such Lender on demand such amount, together with interest
thereon, as specified in Section 2.07.

 

 34

 

 

SECTION 2.06. Letters of Credit.

 

(a)          General. Subject to the terms and conditions set forth herein, the
Borrower Representative on behalf of a Borrower may request the issuance of
Letters of Credit as the applicant thereof for the support of the obligations of
any Borrower or any Subsidiary thereof, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the Availability Period. In the event of any inconsistency between the
terms and conditions of this Agreement and the terms and conditions of any form
of letter of credit application or other agreement submitted by the Borrowers
to, or entered into by the Borrowers with, the Issuing Bank relating to any
Letter of Credit, the terms and conditions of this Agreement shall control. Each
Borrower unconditionally and irrevocably agrees that, in connection with any
Letter of Credit issued for the support of any Subsidiary’s obligations as
provided in the first sentence of this paragraph, such Borrower will be fully
responsible for the reimbursement of LC Disbursements in accordance with the
terms hereof, the payment of interest thereon and the payment of fees due under
Section 2.12(b) to the same extent as if it were the sole account party in
respect of such Letter of Credit (each Borrower hereby irrevocably waiving any
defenses that might otherwise be available to it as a guarantor or surety of the
obligations of such Subsidiary that is an account party in respect of any such
Letter of Credit). Notwithstanding anything herein to the contrary, the Issuing
Bank shall have no obligation hereunder to issue, and shall not issue, any
Letter of Credit (i) the proceeds of which would be made available to any Person
(A) to fund any activity or business of or with any Sanctioned Person, or in any
country or territory that, at the time of such funding, is the subject of any
Sanctions or (B) in any manner that would result in a violation of any Sanctions
by any party to this Agreement, (ii) if any order, judgment or decree of any
Governmental Authority or arbitrator shall by its terms purport to enjoin or
restrain the Issuing Bank from issuing such Letter of Credit, or any Requirement
of Law relating to the Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction over
the Issuing Bank shall prohibit, or request that the Issuing Bank refrain from,
the issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon the Issuing Bank with respect to such Letter of
Credit any restriction, reserve or capital requirement (for which the Issuing
Bank is not otherwise compensated hereunder) not in effect on the Effective
Date, or shall impose upon the Issuing Bank any unreimbursed loss, cost or
expense which was not applicable on the Effective Date and which the Issuing
Bank in good faith deems material to it, or (iii) if the issuance of such Letter
of Credit would violate one or more policies of the Issuing Bank applicable to
letters of credit generally; provided that, notwithstanding anything herein to
the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act
and all requests, rules, guidelines, requirements or directives thereunder or
issued in connection therewith or in the implementation thereof, and (y) all
requests, rules, guidelines, requirements or directives promulgated by the Bank
for International Settlements, the Basel Committee on Banking Supervision (or
any successor or similar authority) or the United States or foreign regulatory
authorities, in each case pursuant to Basel III, shall in each case be deemed
not to be in effect on the Effective Date for purposes of clause (ii) above,
regardless of the date enacted, adopted, issued or implemented.

 

(b)          Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower
Representative shall deliver by hand or facsimile (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank) to the Issuing Bank and the Administrative Agent prior to 9:00 am, Chicago
time, at least three Business Days prior to the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) of this Section), the amount of such
Letter of Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. If requested by the Issuing Bank, the applicable Borrower also shall
submit a letter of credit application on the Issuing Bank’s standard form in
connection with any request for a Letter of Credit. A Letter of Credit shall be
issued, amended, renewed or extended only if (and upon issuance, amendment,
renewal or extension of each Letter of Credit the Borrowers shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension (i) the LC Exposure shall not exceed the Approved LC
Amount, (ii) the aggregate Revolving Exposure of all Lenders after such
issuance, renewal or extension shall not exceed the lesser of (x) the aggregate
Revolving Commitments of all Lenders and (y) the Borrowing Base at such time.

 

 35

 

 

(c)          Expiration Date. Each Letter of Credit shall expire (or be subject
to termination by notice from the Issuing Bank to the beneficiary thereof) at or
prior to the close of business on the earlier of (i) the date one year after the
date of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, including, without limitation, any automatic renewal
provision, one year after such renewal or extension) and (ii) the date that is
five Business Days prior to the scheduled Revolving Loan Maturity Date; provided
that the Administrative Agent and the Issuing Bank, may in their sole discretion
permit a Letter of Credit to have a later expiration date so long as the
expiration date of such Letter of Credit is not later than the date which is one
year after the scheduled Revolving Loan Maturity Date and the Borrowers satisfy
such other conditions as the Administrative Agent or the Issuing Bank may
establish for such renewal or issuance. In addition to all requirements to be
satisfied pursuant to Section 2.06(j), Borrower agrees that with respect to all
Letters of Credit outstanding on the scheduled Revolving Loan Maturity Date,
Borrower shall, not later than the scheduled Revolving Loan Maturity Date,
either (A) cause such Letters of Credit to be fully supported by a clean letter
of credit issued by a financial institution having a rating of AAA or higher, or
(B) deposit with the Administrative Agent in the LC Collateral Account (as such
term is defined in Section 2.06(j) of this Agreement) cash in an amount equal to
one hundred five percent (105%) of the LC Exposure as of such date plus fees
that would be due thereunder through the applicable expiry date.  In each case
such letter of credit or cash collateral shall be held by the Administrative
Agent as security for the repayment of the LC Exposure until the expiry date of
all Letters of Credit or the return thereof for cancellation.

 

(d)          Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Revolving Lenders, the
Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender
hereby acquires from the Issuing Bank, a participation in such Letter of Credit
equal to such Lender’s Applicable Percentage of the aggregate amount available
to be drawn under such Letter of Credit. In consideration and in furtherance of
the foregoing, each Revolving Lender hereby absolutely and unconditionally
agrees to pay to the Administrative Agent, for the account of the Issuing Bank,
such Lender’s Applicable Percentage of each LC Disbursement made by the Issuing
Bank and not reimbursed by the Borrowers on the date due as provided in
paragraph (e) of this Section, or of any reimbursement payment required to be
refunded to the Borrowers for any reason. Each Revolving Lender acknowledges and
agrees that its obligation to acquire participations pursuant to this paragraph
in respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.

 

(e)          Reimbursement. If the Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, the Borrowers shall reimburse such LC
Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement (i) not later than 11:00 a.m., Chicago time, on the date that such
LC Disbursement is made, if the Borrower Representative shall have received
notice of such LC Disbursement prior to 9:00 a.m., Chicago time, on such date,
or, (ii) if such notice has not been received by the Borrower Representative
prior to such time on such date, then not later than 11:00 a.m., Chicago time,
on (a) the Business Day that the Borrower Representative receives such notice,
if such notice is received prior to 9:00 a.m., Chicago time, on the day of
receipt, or (b) the Business Day immediately following the day that the Borrower
Representative receives such notice, if such notice is not received prior to
such time on the day of receipt; provided that, if such LC Disbursement is not
less than $100,000, the Borrowers may, subject to the conditions to borrowing
set forth herein, request in accordance with Section 2.03 or 2.05 that such
payment be financed with a ABR Borrowing or Swingline Loan in an equivalent
amount and, to the extent so financed, the Borrower’s obligation to make such
payment shall be discharged and replaced by the resulting ABR Borrowing or
Swingline Loan. If the Borrowers fail to make such payment when due, the
Administrative Agent shall notify each Revolving Lender of the applicable LC
Disbursement, the payment then due from the Borrowers in respect thereof and
such Lender’s Applicable Percentage thereof. Promptly following receipt of such
notice, each Revolving Lender shall pay to the Administrative Agent its
Applicable Percentage of the payment then due from the Borrowers, in the same
manner as provided in Section 2.07 with respect to Loans made by such Lender
(and Section 2.07 shall apply, mutatis mutandis, to the payment obligations of
the Revolving Lenders), and the Administrative Agent shall promptly pay to the
Issuing Bank the amounts so received by it from the Revolving Lenders. Promptly
following receipt by the Administrative Agent of any payment from the Borrowers
pursuant to this paragraph, the Administrative Agent shall distribute such
payment to the Issuing Bank or, to the extent that Revolving Lenders have made
payments pursuant to this paragraph to reimburse the Issuing Bank, then to such
Lenders and the Issuing Bank as their interests may appear. Any payment made by
a Revolving Lender pursuant to this paragraph to reimburse the Issuing Bank for
any LC Disbursement (other than the funding of ABR Revolving Loans or a
Swingline Loan as contemplated above) shall not constitute a Loan and shall not
relieve the Borrowers of their obligation to reimburse such LC Disbursement.

 

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(f)          Obligations Absolute. The Borrowers’ joint and several obligation
to reimburse LC Disbursements as provided in paragraph (e) of this Section shall
be absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision therein or herein,
(ii) any draft or other document presented under a Letter of Credit proving to
be forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a
Letter of Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit, or (iv) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrowers’ obligations
hereunder. Neither the Administrative Agent, the Revolving Lenders nor the
Issuing Bank, nor any of their Related Parties, shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Bank; provided that the foregoing shall
not be construed to excuse the Issuing Bank from liability to the Borrowers to
the extent of any direct damages (as opposed to special, indirect, consequential
or punitive damages, claims in respect of which are hereby waived by the
Borrowers to the extent permitted by applicable law) suffered by any Borrower
that are caused by the Issuing Bank’s failure to exercise care when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof. The parties hereto expressly agree that, in the absence
of gross negligence or willful misconduct on the part of the Issuing Bank (as
finally determined by a court of competent jurisdiction), the Issuing Bank shall
be deemed to have exercised care in each such determination. In furtherance of
the foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

 

 37

 

 

(g)          Disbursement Procedures. The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower Representative by telephone (confirmed by
facsimile) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any failure to give or
delay in giving such notice shall not relieve the Borrowers of their obligation
to reimburse the Issuing Bank and the Revolving Lenders with respect to any such
LC Disbursement.

 

(h)          Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrowers shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrowers reimburse such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans; and
such interest shall be due and payable on the date when such reimbursement is
payable; provided that, if the Borrowers fail to reimburse such LC Disbursement
when due pursuant to paragraph (e) of this Section, then Section 2.13(d) shall
apply. Interest accrued pursuant to this paragraph shall be for the account of
the Issuing Bank, except that interest accrued on and after the date of payment
by any Revolving Lender pursuant to paragraph (e) of this Section to reimburse
the Issuing Bank shall be for the account of such Lender to the extent of such
payment.

 

(i)          Replacement of the Issuing Bank. The Issuing Bank may be replaced
at any time by written agreement among the Borrowers, the Administrative Agent,
the replaced Issuing Bank and the successor Issuing Bank. The Administrative
Agent shall notify the Revolving Lenders of any such replacement of the Issuing
Bank. At the time any such replacement shall become effective, the Borrowers
shall pay all unpaid fees accrued for the account of the replaced Issuing Bank
pursuant to Section 2.12(b). From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the Issuing Bank under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term “Issuing
Bank” shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require. After the replacement of an Issuing Bank hereunder, the replaced
Issuing Bank shall remain a party hereto and shall continue to have all the
rights and obligations of an Issuing Bank under this Agreement with respect to
Letters of Credit then outstanding and issued by it prior to such replacement,
but shall not be required to issue additional Letters of Credit.

 

(j)          Cash Collateralization. If any Default shall occur and be
continuing, on the Business Day that the Borrower Representative receives notice
from the Administrative Agent or the Required Lenders (or, if the maturity of
the Loans has been accelerated, Revolving Lenders with LC Exposure representing
greater than 50% of the aggregate LC Exposure) demanding the deposit of cash
collateral pursuant to this paragraph, the Borrowers shall deposit in an account
with the Administrative Agent, in the name of the Administrative Agent and for
the benefit of the Revolving Lenders (the “LC Collateral Account”), an amount in
cash equal to 105% of the amount of the LC Exposure as of such date plus accrued
and unpaid interest thereon; provided that the obligation to deposit such cash
collateral shall become effective immediately, and such deposit shall become
immediately due and payable, without demand or other notice of any kind, upon
the occurrence of any Event of Default with respect to any Borrower described in
clause (h) or (i) of Article VII. Such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
Secured Obligations. The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over the LC Collateral
Account and the Borrowers hereby grant the Administrative Agent a security
interest in the LC Collateral Account and all money or other assets on deposit
therein or credited thereto. Other than any interest earned on the investment of
such deposits, which investments shall be made at the option and sole discretion
of the Administrative Agent and at the Borrowers’ risk and expense, such
deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in the LC Collateral Account. Moneys in the LC
Collateral Account shall be applied by the Administrative Agent to reimburse the
Issuing Bank for LC Disbursements for which it has not been reimbursed and, to
the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrowers for the LC Exposure at such time or,
if the maturity of the Loans has been accelerated (but subject to the consent of
Revolving Lenders with LC Exposure representing greater than 50% of the
aggregate LC Exposure), be applied to satisfy other Secured Obligations. If the
Borrowers are required to provide an amount of cash collateral hereunder as a
result of the occurrence of a Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrowers within three (3) Business Days
after all such Defaults have been cured or waived as confirmed in writing by the
Administrative Agent.

 

 38

 

 

(k)          LC Exposure Determination. For all purposes of this Agreement, the
amount of a Letter of Credit that, by its terms or the terms of any document
related thereto, provides for one or more automatic increases in the stated
amount thereof shall be deemed to be the maximum stated amount of such Letter of
Credit after giving effect to all such increases, whether or not such maximum
stated amount is in effect at the time of determination.

 

SECTION 2.07. Funding of Borrowings.

 

(a)          Each Lender shall make each Loan to be made by such Lender
hereunder on the proposed date thereof by wire transfer of immediately available
funds by 1:00 p.m., Chicago time, to the account of the Administrative Agent
most recently designated by it for such purpose by notice to the Lenders in an
amount equal to such Lender’s Applicable Percentage; provided that, Term Loans
shall be made as provided in Sections 2.01(b) and 2.02(b) and Swingline Loans
shall be made as provided in Section 2.05. The Administrative Agent will make
such Loans available to the Borrowers by promptly crediting the amounts so
received, in like funds, to the Funding Account; provided that ABR Revolving
Loans made to finance the reimbursement of an LC Disbursement as provided in
Section 2.06(e) shall be remitted by the Administrative Agent to the Issuing
Bank.

 

(b)          Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender’s share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the applicable
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the applicable Lender and the Borrowers jointly and severally agree to pay
to the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the applicable Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrowers, the interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender’s Loan included in such Borrowing.

 

 39

 

 

SECTION 2.08. Interest Elections.

 

(a)          Each Borrowing initially shall be of the Type specified in the
applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall
have an initial Interest Period as specified in such Borrowing Request.
Thereafter, the Borrower Representative may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a Eurodollar
Borrowing, may elect Interest Periods therefor, all as provided in this Section.
The Borrower Representative may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing. This Section shall not apply to Swingline Loans which may
not be converted or continued.

 

(b)          To make an election pursuant to this Section, the Borrower
Representative shall notify the Administrative Agent of such election by
telephone by the time that a Borrowing Request would be required under Section
2.03 if the Borrowers were requesting a Borrowing of the Type resulting from
such election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed
promptly by hand delivery or facsimile to the Administrative Agent of a written
Interest Election Request in a form approved by the Administrative Agent and
signed by the Borrower.

 

(c)          Each telephonic and written Interest Election Request shall specify
the following information in compliance with Section 2.02:

 

(i)          the name of the applicable Borrower and the Borrowing to which such
Interest Election Request applies and, if different options are being elected
with respect to different portions thereof, the portions thereof to be allocated
to each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);

 

(ii)         the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;

 

(iii)        whether the resulting Borrowing is to be a ABR Borrowing or a
Eurodollar Borrowing; and

 

(iv)        if the resulting Borrowing is a Eurodollar Borrowing, the Interest
Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term “Interest Period”.

 

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrowers shall be deemed to have
selected an Interest Period of one month’s duration.

 

(d)          Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.

 

(e)          If the Borrower Representative fails to deliver a timely Interest
Election Request with respect to a Eurodollar Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to a ABR Borrowing. Notwithstanding any contrary provision hereof, if
a Default has occurred and is continuing and the Administrative Agent, at the
request of the Required Lenders, so notifies the Borrower Representative, then,
so long as a Default is continuing (i) no outstanding Borrowing may be converted
to or continued as a Eurodollar Borrowing and (ii) unless repaid, each
Eurodollar Borrowing shall be converted to a ABR Borrowing at the end of the
Interest Period applicable thereto.

 

 40

 

 

SECTION 2.09. Termination of Commitments.

 

(a)          Unless previously terminated, all Commitments shall terminate on
the Maturity Date.

 

(b)          The Borrowers may at any time terminate the Commitments upon (i)
the payment in full of all outstanding Loans, together with accrued and unpaid
interest thereon and on any Letters of Credit, (ii) the cancellation and return
of all outstanding Letters of Credit (or alternatively, with respect to each
such Letter of Credit, the furnishing to the Administrative Agent of a cash
deposit (or at the discretion of the Administrative Agent a backup standby
letter of credit satisfactory to the Administrative Agent and the Issuing Bank)
in an amount equal to 105% of the LC Exposure as of such date), (iii) the
payment in full of the accrued and unpaid fees, and (iv) the payment in full of
all reimbursable expenses and other Obligations, together with accrued and
unpaid interest thereon.

 

(c)          The Borrower Representative shall notify the Administrative Agent
of any election to terminate the Commitments under paragraph (b) of this Section
at least three (3) Business Days prior to the effective date of such termination
or reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower
Representative pursuant to this Section shall be irrevocable; provided that a
notice of termination of the Commitments delivered by the Borrower
Representative may state that such notice is conditioned upon the effectiveness
of other credit facilities, in which case such notice may be revoked by the
Borrower Representative (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied. Any
termination or reduction of the Commitments shall be permanent. Each reduction
of the Commitments shall be made ratably among the Lenders in accordance with
their respective Commitments.

 

SECTION 2.10. Repayment and Amortization of Loans; Evidence of Debt.

 

(a)          The Borrowers hereby unconditionally promise to pay (i) to the
Administrative Agent for the account of each Revolving Lender the then unpaid
principal amount of each Revolving Loan on the Maturity Date, (ii) to the
Administrative Agent for the account of each Term Lender ratably the principal
balance of the Term Loans in equal installments of $312,500, with each such
principal installment being due and payable on the last Business Day of each
calendar quarter beginning with the calendar quarter ending March 19, 2016, and
to the extent not previously paid, the entire remaining principal balance of all
Term Loans shall be paid in full in cash by the Borrower on the Term Loan
Maturity Date.

 

(b)          Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the Indebtedness of the Borrowers to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.

 

(c)          The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrowers to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender’s share thereof.

 

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(d)          The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.

 

(e)          The obligation of:

 

(i)          the Borrowers to pay the Revolving Loans shall be evidenced by
promissory notes executed, issued and delivered by the Borrowers to the order of
each of the Revolving Lenders in substantially the form and substance of Exhibit
G (as such promissory notes may be amended, modified, supplemented, replaced
and/or restated from time to time and at any time, the “Revolving Notes”); and

 

(ii)         the Borrowers to pay the Term Loans shall be evidenced by
promissory notes executed, issued and delivered by the Borrowers to the order of
each of the Term Lenders in substantially the form and substance of Exhibit H
(as such promissory notes may be amended, modified, supplemented, replaced
and/or restated from time to time and at any time, the “Term Loan Notes”).

 

SECTION 2.11. Prepayment of Loans.

 

(a)          The Borrowers shall have the right at any time and from time to
time to prepay any Borrowing in whole or in part, subject to prior notice in
accordance with paragraph (f) of this Section and, if applicable, payment of any
break funding expenses under Section 2.16.

 

(b)          In the event and on such occasion that the aggregate Revolving
Exposure of all Lenders exceeds the lesser of (i) the aggregate Revolving
Commitments as of such time and (ii) the Borrowing Base as of such time, the
Borrowers shall prepay the Revolving Loans, LC Exposure and/or Swingline Loans
in an aggregate amount equal to such excess.

 

(c)          In the event and on each occasion that any Net Proceeds are
received by or on behalf of any Loan Party in respect of any Prepayment Event,
the Borrowers shall, immediately after such Net Proceeds are received by any
Loan Party, prepay the Obligations as set forth in Section 2.11(e) below in an
aggregate amount equal to 100% of such Net Proceeds, provided that, in the case
of a Sale or Casualty Prepayment Event, if the Borrower Representative shall
deliver to the Administrative Agent a Capital Use Certificate, then either

 

(i)          so long as full cash dominion is not in effect, no prepayment shall
be required pursuant to clause (c) in respect of the Net Proceeds specified in
such Capital Use Certificate, or

 

(ii)         if full cash dominion is in effect, then, if the Net Proceeds
specified in such certificate are to be applied to acquire, replace or rebuild
such assets by (A) the Borrowers, such Net Proceeds shall be applied by the
Administrative Agent to reduce the outstanding principal balance of the
Revolving Loans (without a permanent reduction of the Revolving Commitment) and
upon such application, the Administrative Agent shall establish a Reserve
against the Borrowing Base in an amount equal to the amount of such proceeds so
applied and (B) any Loan Party that is not a Borrower, such Net Proceeds shall
be deposited in a cash collateral account, and in the case of either (A) or (B),
thereafter, such funds shall be made available to the applicable Loan Party as
follows: (x) Borrowers shall request a Borrowing (specifying that the request is
to use Net Proceeds pursuant to this Section) or the applicable Loan Party shall
request a release from the cash collateral account be made in the amount needed;
(y) so long as the conditions set forth in Section 4.02 have been met, the
Revolving Lenders shall make such Borrowing or the Administrative Agent shall
release funds from the cash collateral account; and (z) in the case of Net
Proceeds applied against the Borrowing, the Reserve established with respect to
such insurance proceeds shall be reduced by the amount of such Borrowing.

 

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To the extent any Net Proceeds from the Sale or Casualty Prepayment Event have
not been applied as set forth in the Capital Use Certificate, a prepayment shall
be required in an amount equal to such Net Proceeds that have not been so
applied. Notwithstanding anything in this clause (c) to the contrary, the
Borrowers shall not be permitted to make elections to use Net Proceeds to
acquire (or replace or rebuild) real property, Equipment or other tangible
assets (excluding Inventory) with respect to Net Proceeds in any Fiscal Year in
an aggregate amount in excess of the Net Proceeds in that Fiscal Year.

 

(d)          RESERVED.

 

(e)          All such amounts pursuant to Section 2.11(c) (as to any insurance
or condemnation proceeds, to the extent they arise from casualties or losses to
Equipment, Fixtures and real property) shall be applied, to the Obligations of
the Borrowers as follows: first to prepay the Term Loans (to be applied to
installments of the Term Loans in inverse order of maturity and ratably in
accordance with the then outstanding amounts thereof), second to prepay the
Revolving Loans (including Swingline Loans) (ratably in accordance with the then
outstanding amounts thereof) without a corresponding reduction in the Revolving
Commitment and to cash collateralize outstanding LC Exposure with respect to
Letters of Credit, third, to any outstanding obligations of the Borrower owing
to the Lenders arising under any Guarantee executed by the Borrowers in
connection with this Agreement, and fourth, any remaining amounts shall be
applied as determined by the Administrative Agent in its Permitted Discretion.
All such amounts pursuant to Section 2.11(c) (as to any insurance or
condemnation proceeds, to the extent they arise from casualties or losses to
cash or Inventory) shall be applied, first to prepay the Revolving Loans
(including Swingline Loans) (ratably in accordance with the then outstanding
amounts thereof) without a corresponding reduction in the Revolving Commitments
and to cash collateralize outstanding LC Exposure with respect to Letters of
Credit. If the precise amount of insurance or condemnation proceeds allocable to
Inventory as compared to Equipment, Fixtures and real property is not otherwise
determined, the allocation and application of those proceeds shall be determined
by the Administrative Agent, in its Permitted Discretion.

 

(f)          The Borrower Representative shall notify the Administrative Agent
(and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by
telephone (confirmed by facsimile) of any prepayment hereunder not later than
10:00 a.m., Chicago time, (A) in the case of prepayment of a Eurodollar
Borrowing, three Business Days before the date of prepayment, or (B) in the case
of prepayment of a ABR Borrowing, on the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid; provided that, if a
notice of prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.09, then such notice
of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.09. Promptly following receipt of any such notice
relating to a Borrowing, the Administrative Agent shall advise the Lenders of
the contents thereof. Each partial prepayment of any Borrowing shall be in an
amount that would be permitted in the case of an advance of a Borrowing of the
same Type as provided in Section 2.02. Each prepayment of a Borrowing shall be
applied ratably to the Revolving Loans included in the prepaid Borrowing.
Prepayments shall be accompanied by (i) accrued interest to the extent required
by Section 2.13 and (ii) break funding payments pursuant to Section 2.16.

 

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SECTION 2.12. Fees.

 

(a)          The Borrowers agree to pay to the Administrative Agent for the
account of each Lender a Commitment Fee, which shall accrue at the Applicable
Rate on the average daily amount of the Available Revolving Commitment of such
Lender during the period from and including the Effective Date to but excluding
the date on which the Revolving Commitments terminate. Accrued commitment fees
shall be payable in arrears on the first day of each Fiscal Quarter and on the
date on which the Revolving Commitments terminate, commencing on the first such
date to occur after the date hereof. All commitment fees shall be computed on
the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).

 

(b)          The Borrowers agree to pay (i) to the Administrative Agent for the
account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the same Applicable
Rate used to determine the interest rate applicable to Eurodollar Loans on the
average daily amount of such Lender’s LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date on which
such Lender’s Revolving Commitment terminates and the date on which such Lender
ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee,
which shall accrue at the rate of 0.25% per annum on the average daily amount of
the LC Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) attributable to Letters of Credit issued by the Issuing Bank
during the period commencing when there is more than one Required Lender under
this Agreement and running to but excluding the later of the date of termination
of the Revolving Commitments and the date on which there ceases to be any LC
Exposure or more than one Revolving Lender as well as the Issuing Bank’s
standard fees and commissions with respect to the issuance, amendment,
cancellation, negotiation, transfer, presentment, renewal or extension of any
Letter of Credit or processing of drawings thereunder. Participation fees and
fronting fees accrued through and including the last day of each Fiscal Quarter
shall be payable on the first day of the succeeding Fiscal Quarter, commencing
on the first such date to occur after the Effective Date; provided that all such
fees shall be payable on the date on which the Revolving Commitments terminate
and any such fees accruing after the date on which the Revolving Commitments
terminate shall be payable on demand. Any other fees payable to the Issuing Bank
pursuant to this paragraph shall be payable within 10 days after demand. All
participation fees and fronting fees shall be computed on the basis of a year of
360 days and shall be payable for the actual number of days elapsed (including
the first day but excluding the last day).

 

(c)          The Borrowers agree to pay the Closing Fee to Chase, for its own
account, on the Effective Date.

 

(d)          The Borrowers agree to pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon
between the Borrowers and the Administrative Agent.

 

(e)          All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of the
Closing Fee, commitment fees and participation fees, to the Lenders. Fees paid
shall not be refundable under any circumstances.

 

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SECTION 2.13. Interest.

 

(a)          The Loans comprising each ABR Borrowing (including each Swingline
Loan) shall bear interest at the Alternate Base Rate plus the Applicable Rate.

 

(b)          The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Rate.

 

(c)          RESERVED.

 

(d)          Notwithstanding the foregoing, during the occurrence and
continuance of a Default, the Administrative Agent or the Required Lenders may,
at their option, by notice to the Borrower (which notice may be revoked at the
option of the Required Lenders notwithstanding any provision of Section 9.02
requiring the consent of “each Lender affected thereby” for reductions in
interest rates), declare that (i) all Loans shall bear interest at 2% per annum
plus the rate otherwise applicable to such Loans as provided in the preceding
paragraphs of this Section or (ii) in the case of any other amount outstanding
hereunder, such amount shall accrue at 2% per annum plus the rate applicable to
such fee or other obligation as provided hereunder. Notwithstanding the
foregoing to the contrary, upon the occurrence of any Event of Default with
respect to any Borrower described in clause (h) or (i) of Article VII, all Loans
and fees automatically shall bear interest at 2% per annum plus the rate
otherwise applicable to such Loans or fees.

 

(e)          Accrued interest on each Loan (for ABR Loans, accrued through the
last day of the prior calendar month) shall be payable in arrears on each
Interest Payment Date for such Loan and upon termination of the Commitments;
provided that (i) interest accrued pursuant to paragraph (d) of this Section
shall be payable on demand, (ii) in the event of any repayment or prepayment of
any Loan (other than a prepayment of a ABR Revolving Loan prior to the end of
the Availability Period), accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment and (iii)
in the event of any conversion of any Eurodollar Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be payable
on the effective date of such conversion.

 

(f)          All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case, shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable Alternate
Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.

 

SECTION 2.14. Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:

 

(a)          the Administrative Agent determines (which determination shall be
conclusive and binding absent manifest error) that adequate and reasonable means
do not exist for ascertaining (including, without limitation, by means of an
Interpolated Rate) the Adjusted LIBO Rate or the LIBO Rate, as applicable, for
such Interest Period; or

 

(b)          the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Loans (or its Loan) included in such Borrowing for
such Interest Period;

 

 45

 

 

then the Administrative Agent shall give notice thereof to the Borrower
Representative and the Lenders by electronic communication as provided in
Section 9.01 as promptly as practicable thereafter and, until the Administrative
Agent notifies the Borrower Representative and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and any such Eurodollar Borrowing shall be repaid on the last day of the then
current Interest Period applicable thereto, and (ii) if any Borrowing Request
requests a Eurodollar Borrowing, such Borrowing shall be made as a ABR
Borrowing.

 

SECTION 2.15. Increased Costs.

 

(a)          If any Change in Law shall:

 

(i)          impose, modify or deem applicable any reserve, special deposit,
liquidity or similar requirement (including any compulsory loan requirement,
insurance charge or other assessment) against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank;

 

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

 

(iii)        subject any Recipient to any Taxes (other than (A) Indemnified
Taxes, (B) Taxes described in clauses (b) through (d) of the definition of
Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal,
letters of credit, commitments, or other obligations, or its deposits, reserves,
other liabilities or capital attributable thereto;

 

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

 

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

 

 46

 

 

(c)          A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower Representative and shall be
conclusive absent manifest error. The Borrowers shall pay such Lender or the
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.

 

(d)          Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender’s or the Issuing Bank’s right to demand such compensation; provided
that the Borrowers shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that such Lender or the Issuing Bank, as
the case may be, notifies the Borrower Representative of the Change in Law
giving rise to such increased costs or reductions and of such Lender’s or the
Issuing Bank’s intention to claim compensation therefor; provided further that,
if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 270-day period referred to above shall be extended to
include the period of retroactive effect thereof.

 

SECTION 2.16. Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default or as a
result of any prepayment pursuant to Section 2.11), (b) the conversion of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar
Loan on the date specified in any notice delivered pursuant hereto (regardless
of whether such notice may be revoked under Section 2.09(c) and is revoked in
accordance therewith), or (d) the assignment of any Eurodollar Loan other than
on the last day of the Interest Period applicable thereto as a result of a
request by the Borrower Representative pursuant to Section 2.19 or 9.02(d),
then, in any such event, the Borrowers shall compensate each Lender for the
loss, cost and expense attributable to such event. In the case of a Eurodollar
Loan, such loss, cost or expense to any Lender shall be deemed to include an
amount determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Eurodollar
Loan had such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Eurodollar Loan, for the period from the date of such event
to the last day of the then current Interest Period therefor (or, in the case of
a failure to borrow, convert or continue, for the period that would have been
the Interest Period for such Eurodollar Loan), over (ii) the amount of interest
which would accrue on such principal amount for such period at the interest rate
which such Lender would bid were it to bid, at the commencement of such period,
for dollar deposits of a comparable amount and period from other banks in the
Eurodollar market. A certificate of any Lender setting forth any amount or
amounts that such Lender is entitled to receive pursuant to this Section shall
be delivered to the Borrower and shall be conclusive absent manifest error. The
Borrowers shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.

 

SECTION 2.17. Taxes.

 

(a)          Withholding of Taxes; Gross-Up. Any and all payments by or on
account of any obligation of the Borrowers under any Loan Document shall be made
without deduction or withholding for any Taxes, except as required by applicable
law. If any applicable law (as determined in the Permitted Discretion of an
applicable withholding agent) requires the deduction or withholding of any Tax
from any such payment by a withholding agent, then the applicable withholding
agent shall be entitled to make such deduction or withholding and shall timely
pay the full amount deducted or withheld to the relevant Governmental Authority
in accordance with applicable law and, if such Tax is an Indemnified Tax, then
the sum payable by the applicable Borrower shall be increased as necessary so
that after such deduction or withholding has been made (including such
deductions and withholdings applicable to additional sums payable under this
Section 2.17) the applicable Recipient receives an amount equal to the sum it
would have received had no such deduction or withholding been made.

 

 47

 

 

(b)          Payment of Other Taxes by the Borrowers. The Borrowers shall timely
pay to the relevant Governmental Authority in accordance with applicable law, or
at the option of the Administrative Agent timely reimburse it for, Other Taxes.

 

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

 

(d)          Indemnification by the Borrowers. The Borrowers shall, jointly and
severally, indemnify each Recipient within ten (10) days after demand therefor,
for the full amount of any Indemnified Taxes (including Indemnified Taxes
imposed or asserted on or attributable to amounts payable under this Section
payable or paid by such Recipient or required to be withheld or deducted from a
payment to such Recipient and any reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to the Borrower Representative
by a Lender (with a copy to the Administrative Agent), or by the Administrative
Agent on its own behalf or on behalf of a Lender, shall be conclusive absent
manifest error.

 

(e)          Indemnification by the Lenders. Each Lender shall severally
indemnify the Administrative Agent, within ten (10) days after demand therefor,
for (i)  any Indemnified Taxes attributable to such Lender (but only to the
extent that the Borrowers have not already indemnified the Administrative Agent
for such Indemnified Taxes and without limiting the obligation of the Borrowers
to do so), (ii) any Taxes attributable to such Lender’s failure to comply with
the provisions of Section 9.04(c) relating to the maintenance of a Participant
Register and (iii) any Excluded Taxes attributable to such Lender, in each case,
that are payable or paid by the Administrative Agent in connection with any Loan
Document and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount of such payment
or liability delivered to any Lender by the Administrative Agent shall be
conclusive absent manifest error. Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to such Lender from any other source against any amount due
to the Administrative Agent under this paragraph (e).

 

(f)          Status of Lenders.

 

(i) Any Lender that is entitled to an exemption from or reduction of withholding
Tax with respect to payments made under any Loan Document shall deliver to the
Borrower Representative and the Administrative Agent, at the time or times
reasonably requested by the Borrower Representative or the Administrative Agent,
such properly completed and executed documentation reasonably requested by the
Borrower Representative or the Administrative Agent as will permit such payments
to be made without withholding or at a reduced rate of withholding. In addition,
any Lender, if reasonably requested by the Borrower Representative or the
Administrative Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by the Borrower Representative or the
Administrative Agent as will enable the Borrower Representative or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements. Notwithstanding
anything to the contrary in the preceding two sentences, the completion,
execution and submission of such documentation (other than such documentation
set forth in Section 2.17(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be
required if in the Lender’s reasonable judgment such completion, execution or
submission would subject such Lender to any material unreimbursed cost or
expense or would materially prejudice the legal or commercial position of such
Lender.

 

 48

 

 

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

 

(A) any Lender that is a U.S. Person shall deliver to the Borrower
Representative and the Administrative Agent on or prior to the date on which
such Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Borrower Representative or the
Administrative Agent), executed originals of IRS Form W-9 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 the Borrower Representative and the Administrative Agent (in such
number of copies as shall be requested by the recipient) on or prior to the date
on which such Foreign Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the reasonable request of the Borrower
Representative or the Administrative Agent), whichever of the following is
applicable:

 

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

 

(2) in the case of a Foreign Lender claiming that its extension of credit will
generate U.S. effectively connected income, executed originals of IRS Form
W-8ECI;

 

(3) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit F-1 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 the 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 (a “U.S. Tax Compliance Certificate”) and (y) executed
originals of IRS Form W-8BEN; or

 

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

 

 49

 

 

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

 

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

 

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

 

(g)          Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 2.17 (including by
the payment of additional amounts pursuant to this Section 2.17), it shall pay
to the indemnifying party an amount equal to such refund (but only to the extent
of indemnity payments made under this Section 2.17 with respect to the Taxes
giving rise to such refund), net of all out-of-pocket expenses (including Taxes)
of such indemnified party and without interest (other than any interest paid by
the relevant Governmental Authority with respect to such refund). Such
indemnifying party, upon the request of such indemnified party, shall repay to
such indemnified party the amount paid over pursuant to this paragraph (g) (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such
refund to such Governmental Authority. Notwithstanding anything to the contrary
in this paragraph (g), in no event will the indemnified party be required to pay
any amount to an indemnifying party pursuant to this paragraph (g) the payment
of which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or additional amounts
giving rise to such refund had never been paid. This paragraph (g) shall not be
construed to require any indemnified party to make available its Tax returns (or
any other information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.

 

(h)          Survival. Each party’s obligations under this Section 2.17 shall
survive the resignation or replacement of the Administrative Agent or any
assignment of rights by, or the replacement of, a Lender, the termination of the
Commitments and the repayment, satisfaction or discharge of all obligations
under any Loan Document.

 

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(i)          Defined Terms. For purposes of this Section 2.17, the term “Lender”
includes any Issuing Bank and the term “applicable law” includes FATCA.

 

SECTION 2.18. Payments Generally; Allocation of Proceeds; Sharing of Set-offs.

 

(a)          The Borrowers shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or reimbursement of LC
Disbursements, or of amounts payable under Sections 2.15, 2.16 or 2.17, or
otherwise) prior to 2:00 p.m., Chicago time, on the date when due, in
immediately available funds, without set-off or counterclaim. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 10 South Dearborn
Street, 22nd Floor, Chicago, Illinois, except payments to be made directly to
the Issuing Bank or Swingline Lender as expressly provided herein and except
that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made
directly to the Persons entitled thereto. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in dollars.

 

(b)          Any proceeds of Collateral received by the Administrative Agent (i)
not constituting either (A) a specific payment of principal, interest, fees or
other sum payable under the Loan Documents (which shall be applied as specified
by the Borrowers), (B) a mandatory prepayment (which shall be applied in
accordance with Section 2.11) or (C) amounts to be applied from the Collection
Account when full cash dominion is in effect (which shall be applied in
accordance with Section 2.10(b)) or (ii) after an Event of Default has occurred
and is continuing and the Administrative Agent so elects or the Required Lenders
so direct, shall be applied ratably first, to pay any fees, indemnities, or
expense reimbursements including amounts then due to the Administrative Agent
and the Issuing Bank from the Borrowers (other than in connection with Banking
Services Obligations or Swap Agreement Obligations), second, to pay any fees or
expense reimbursements then due to the Lenders from the Borrowers (other than in
connection with Banking Services Obligations or Swap Agreement Obligations),
third, to pay interest then due and payable on the Loans ratably, fourth, to
prepay principal on the Loans and unreimbursed LC Disbursements and to pay any
amounts owing with respect to Swap Agreement Obligations up to and including the
amount most recently provided to the Administrative Agent pursuant to Section
2.22, for which Reserves have been established, ratably (with amounts applied to
the Term Loans applied to installments of the Term Loans, ratably in accordance
with the then outstanding amounts thereof, fifth, to pay an amount to the
Administrative Agent equal to one hundred five percent (105%) of the aggregate
undrawn face amount of all outstanding Letters of Credit and the aggregate
amount of any unpaid LC Disbursements, to be held as cash collateral for such
Obligations, sixth, to payment of any amounts owing with respect to Banking
Services and Swap Agreement Obligations up to and including the amount most
recently provided to the Administrative Agent pursuant to Section 2.22, and
seventh, to the payment of any other Secured Obligation due to the
Administrative Agent or any Lender by the Borrowers. Notwithstanding the
foregoing, amounts received from any Loan Party shall not be applied to any
Excluded Swap Obligation of such Loan Party. Notwithstanding anything to the
contrary contained in this Agreement, unless so directed by the Borrower
Representative, or unless a Default is in existence, neither the Administrative
Agent nor any Lender shall apply any payment which it receives to any Eurodollar
Loan of a Class, except (a) on the expiration date of the Interest Period
applicable thereto or (b) in the event, and only to the extent, that there are
no outstanding ABR Loans of the same Class and, in any such event, the Borrowers
shall pay the break funding payment required in accordance with Section 2.16.
The Administrative Agent and the Lenders shall have the continuing and exclusive
right to apply and reverse and reapply any and all such proceeds and payments to
any portion of the Secured Obligations.

 

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(c)          At the election of the Administrative Agent, all payments of
principal, interest, LC Disbursements, fees, premiums, reimbursable expenses
(including, without limitation, all reimbursement for fees, costs and expenses
pursuant to Section 9.03), and other sums payable under the Loan Documents, may
be paid from the proceeds of Borrowings made hereunder whether made following a
request by the Borrower Representative pursuant to Section 2.03 or a deemed
request as provided in this Section or may be deducted from any deposit account
of the Borrower maintained with the Administrative Agent. The Borrowers hereby
irrevocably authorize (i) the Administrative Agent to make a Borrowing for the
purpose of paying each payment of principal, interest and fees as it becomes due
hereunder or any other amount due under the Loan Documents and agree that all
such amounts charged shall constitute Loans (including Swingline Loans), and
that all such Borrowings shall be deemed to have been requested pursuant to
Sections 2.03, 2.04 or 2.05, as applicable, and (ii) the Administrative Agent to
charge any deposit account of any Borrower maintained with the Administrative
Agent for each payment of principal, interest and fees as it becomes due
hereunder or any other amount due under the Loan Documents.

 

(d)          If, except as otherwise expressly provided herein, any Lender
shall, by exercising any right of set-off or counterclaim or otherwise, obtain
payment in respect of any principal of or interest on any of its Loans or
participations in LC Disbursements resulting in such Lender receiving payment of
a greater proportion of the aggregate amount of its Loans and participations in
LC Disbursements and accrued interest thereon than the proportion received by
any other similarly situated Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
and participations in LC Disbursements of other Lenders to the extent necessary
so that the benefit of all such payments shall be shared by the Lenders ratably
in accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and participations in LC Disbursements; provided that (i)
if any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrowers pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to
the Borrowers or any Subsidiary or Affiliate thereof (as to which the provisions
of this paragraph shall apply). Each Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against such Borrower rights of set-off and counterclaim with respect
to such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.

 

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

 

(f)          If any Lender shall fail to make any payment required to be made by
it pursuant to Section 2.05, 2.06(d) or (e), 2.07(b), 2.18(e) or 9.03(c) then
the Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), (i) apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender’s
obligations under such Sections until all such unsatisfied obligations are fully
paid and/or (ii) hold any such amounts in a segregated account as cash
collateral for, and application to, any future funding obligations of such
Lender under such Sections; application of amounts pursuant to (i) and (ii)
above shall be made in such order as may be determined by the Administrative
Agent in its discretion.

 

(g)          The Administrative Agent may from time to time provide the
Borrowers with account statements or invoices with respect to any of the Secured
Obligations (the “Statements”). The Administrative Agent is under no duty or
obligation to provide Statements, which, if provided, will be solely for the
Borrowers’ convenience. Statements may contain estimates of the amounts owed
during the relevant billing period, whether of principal, interest, fees or
other Secured Obligations. If the Borrowers pay the full amount indicated on a
Statement on or before the due date indicated on such Statement, the Borrowers
shall not be in default of payment with respect to the billing period indicated
on such Statement; provided, that acceptance by the Administrative Agent, on
behalf of the Lenders, of any payment that is less than the total amount
actually due at that time (including but not limited to any past due amounts)
shall not constitute a waiver of the Administrative Agent’s or the Lenders’
right to receive payment in full at another time.

 

SECTION 2.19. Mitigation Obligations; Replacement of Lenders.

 

(a)          If any Lender requests compensation under Section 2.15, or if the
Borrowers are required to pay any Indemnified Taxes or additional amounts to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.17, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Sections 2.15 or 2.17,
as the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrowers hereby agree to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

 

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(b)          If any Lender requests compensation under Section 2.15, or if the
Borrowers are required to pay any Indemnified Taxes or additional amounts to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.17, or if any Lender becomes a Defaulting Lender, then the Borrowers
may, at their sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights (other than its existing rights to
payments pursuant to Section 2.15 or 2.17 and obligations under this Agreement
and other Loan Documents to an assignee that shall assume such obligations
(which assignee may be another Lender, if a Lender accepts such assignment);
provided that (i) the Borrowers shall have received the prior written consent of
the Administrative Agent (and in circumstances where its consent would be
required under Section 9.04, the Issuing Bank and the Swingline Lender), which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and funded
participations in LC Disbursements and Swingline Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrowers (in the case of all other amounts) and (iii) in the case
of any such assignment resulting from a claim for compensation under
Section 2.15 or payments required to be made pursuant to Section 2.17, such
assignment will result in a reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrowers to require such assignment and delegation cease to
apply.

 

SECTION 2.20. Defaulting Lenders. Notwithstanding any provisions of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the
following provisions shall apply for so long as such Lender is a Defaulting
Lender:

 

(a)          fees shall cease to accrue on the unfunded portion of the Revolving
Commitment of such Defaulting Lender pursuant to Section 2.12(a);

 

(b)          such Defaulting Lender shall not have the right to vote on any
issue on which voting is required (other than to the extent expressly provided
in Section 9.02(b)) and the Commitment and Revolving Exposure of such Defaulting
Lender shall not be included in determining whether the Required Lenders have
taken or may take any action hereunder (including any consent to any amendment,
waiver or other modification pursuant to Section 9.02) or under any other Loan
Document; provided, that, except as otherwise provided in Section 9.02, this
clause (b) shall not apply to the vote of a Defaulting Lender in the case of an
amendment, waiver or other modification requiring the consent of such Lender or
each Lender directly affected thereby;

 

(c)          if any Swingline Exposure or LC Exposure exists at the time such
Lender becomes a Defaulting Lender then:

 

(i)          all or any part of the Swingline Exposure and LC Exposure of such
Defaulting Lender shall be reallocated among the non-Defaulting Lenders in
accordance with their respective Applicable Percentages but only to the extent
that (x) the conditions set forth in Section 4.02 are satisfied at the time of
such reallocation (and, unless any Borrower shall have otherwise notified the
Administrative Agent at such time, such Borrower shall be deemed to have
represented and warranted that such conditions are satisfied at such time) and
(y) the sum of all non-Defaulting Lenders’ Revolving Exposures plus such
Defaulting Lender’s Swingline Exposure and LC Exposure does not exceed the total
of all non-Defaulting Lenders’ Revolving Commitments;

 

(ii)         if the reallocation described in clause (i) above cannot, or can
only partially, be effected, the Borrowers shall within one (1) Business Day
following notice by the Administrative Agent (x) first, prepay such Swingline
Exposure and (y) second, cash collateralize, for the benefit of the Issuing
Bank, the Borrowers’ obligations corresponding to such Defaulting Lender’s LC
Exposure (after giving effect to any partial reallocation pursuant to clause (i)
above) in accordance with the procedures set forth in Section 2.06(j) for so
long as such LC Exposure is outstanding;

 

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(iii)        if the Borrowers cash collateralize any portion of such Defaulting
Lender’s LC Exposure pursuant to clause (ii) above, the Borrowers shall not be
required to pay any fees to such Defaulting Lender pursuant to Section 2.12(b)
with respect to such Defaulting Lender’s LC Exposure during the period such
Defaulting Lender’s LC Exposure is cash collateralized;

 

(iv)        if the LC Exposure of the non-Defaulting Lenders is reallocated
pursuant to clause (i) above, then the fees payable to the Lenders pursuant to
Sections 2.12(a) and 2.12(b) shall be adjusted in accordance with such
non-Defaulting Lenders’ Applicable Percentages; and

 

(v)         if all or any portion of such Defaulting Lender’s LC Exposure is
neither reallocated nor cash collateralized pursuant to clause (i) or (ii)
above, then, without prejudice to any rights or remedies of the Issuing Bank or
any other Lender hereunder, all letter of credit fees payable under Section
2.12(b) with respect to such Defaulting Lender’s LC Exposure shall be payable to
the Issuing Bank until and to the extent that such LC Exposure is reallocated
and/or cash collateralized; and

 

(d)          so long as such Lender is a Defaulting Lender, the Issuing Bank
shall not be required to issue, amend, renew, extend or increase any Letter of
Credit, unless it is satisfied that such Defaulting Lender’s then outstanding LC
Exposure will be 100% covered by the Commitments of the non-Defaulting Lenders
and/or cash collateral will be provided by the Borrowers in accordance with
Section 2.20(c), and LC Exposure related to any such newly issued or increased
Letter of Credit shall be allocated among non-Defaulting Lenders in a manner
consistent with Section 2.20(c)(i) (and such Defaulting Lender shall not
participate therein).

 

If (i) a Bankruptcy Event with respect to the Parent of any Lender shall occur
following the date hereof and for so long as such event shall continue or (ii)
the Issuing Bank has a good faith belief that any Lender has defaulted in
fulfilling its obligations under one or more other agreements in which such
Lender commits to extend credit, the Issuing Bank shall not be required to
issue, amend or increase any Letter of Credit, unless the Issuing Bank shall
have entered into arrangements with the Borrowers or such Lender, satisfactory
to the Issuing Bank to defease any risk to it in respect of such Lender
hereunder.

 

In the event that each of the Administrative Agent, the Borrowers and the
Issuing Bank agrees that a Defaulting Lender has adequately remedied all matters
that caused such Lender to be a Defaulting Lender, then the LC Exposure of the
Lenders shall be readjusted to reflect the inclusion of such Lender’s Revolving
Commitment and on the date of such readjustment such Lender shall purchase at
par such of the Loans of the other Lenders (other than Swingline Loans) as the
Administrative Agent shall determine may be necessary in order for such Lender
to hold such Loans in accordance with its Applicable Percentage.

 

SECTION 2.21. Returned Payments. If after receipt of any payment which is
applied to the payment of all or any part of the Obligations (including a
payment effected through exercise of a right of setoff), the Administrative
Agent or any Lender is for any reason compelled to surrender such payment or
proceeds to any Person because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, impermissible setoff, or a diversion of trust funds, or for any
other reason (including pursuant to any settlement entered into by the
Administrative Agent or such Lender in its discretion), then the Obligations or
part thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the Administrative Agent or such Lender. The provisions of this
Section 2.21 shall be and remain effective notwithstanding any contrary action
which may have been taken by the Administrative Agent or any Lender in reliance
upon such payment or application of proceeds. The provisions of this Section
2.21 shall survive the termination of this Agreement.

 

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SECTION 2.22. Banking Services and Swap Agreements. Each Lender or Affiliate
thereof providing Banking Services for, or having Swap Agreements with, any Loan
Party shall deliver to the Administrative Agent, promptly after entering into
such Banking Services or Swap Agreements, written notice setting forth the
aggregate amount of all Banking Services Obligations and Swap Agreement
Obligations of such Loan Party to such Lender or Affiliate (whether matured or
unmatured, absolute or contingent). In addition, each such Lender or Affiliate
thereof shall deliver to the Administrative Agent, from time to time after a
significant change therein or upon a request therefor, a summary of the amounts
due or to become due in respect of such Banking Services Obligations and Swap
Agreement Obligations. The most recent information provided to the
Administrative Agent shall be used in determining the amounts to be applied in
respect of such Banking Services Obligations and/or Swap Agreement Obligations
pursuant to Section 2.18(b) and which tier of the waterfall, contained in
Section 2.18(b), such Banking Services Obligations and/or Swap Agreement
Obligations will be placed.

 

ARTICLE III

 

Representations and Warranties

 

Each Loan Party represents and warrants to the Lenders that:

 

SECTION 3.01. Organization; Powers. Each Loan Party and its Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted and is qualified to do business in, and is in
good standing in, every jurisdiction where such qualification is required.

 

SECTION 3.02. Authorization; Enforceability. The Transactions are within each
Loan Party’s organizational powers and have been duly authorized by all
necessary organizational actions and, if required, actions by equity holders.
The Loan Documents to which each Loan Party is a party have been duly executed
and delivered by such Loan Party and constitute a legal, valid and binding
obligation of such Loan Party, enforceable in accordance with its terms, subject
to applicable bankruptcy, 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.

 

SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority, except such as have been obtained or made
and are in full force and effect and except for filings necessary to perfect
Liens created pursuant to the Loan Documents, (b) will not violate any
Requirement of Law applicable to any Loan Party or any of its Subsidiaries, (c)
will not violate or result in a default under any indenture, agreement or other
instrument binding upon any Loan Party or any of its Subsidiaries or the assets
of any Loan Party or any of its Subsidiaries, or give rise to a right thereunder
to require any payment to be made by any Loan Party or any of its Subsidiaries,
and (d) will not result in the creation or imposition of any Lien on any asset
of any Loan Party or any of its Subsidiaries, except Liens created pursuant to
the Loan Documents.

 

SECTION 3.04. Financial Condition; No Material Adverse Change.

 

(a)          The Company has heretofore furnished to the Lenders its
consolidated balance sheet and statements of income, stockholders equity and
cash flows (i) as of and for the Fiscal Year ended December 27, 2014, and (ii)
as of and for the Fiscal Quarter ended October 3, 2015, certified by its
Financial Officer. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of the
Company and its consolidated Subsidiaries as of such dates and for such periods
in accordance with GAAP, subject to year-end audit adjustments and the absence
of footnotes in the case of the statements referred to in clause (ii) above.

 

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(b)          Since October 3, 2015, there has been no event, change or condition
has occurred that has had, or could reasonably be expected to have, a Material
Adverse Effect.

 

SECTION 3.05. Properties.

 

(a)          As of the date of this Agreement, Schedule 3.05 sets forth the
address of each parcel of real property that is owned or leased by each Loan
Party. Each of such leases and subleases is valid and enforceable in accordance
with its terms and is in full force and effect, and no default by any party to
any such lease or sublease exists. Each of the Loan Parties and its Subsidiaries
has good and indefeasible title to, or valid leasehold interests in, all of its
real and personal property, free of all Liens other than those permitted by
Section 6.02.

 

(b)          Each Loan Party and its Subsidiaries owns, or is licensed to use,
all trademarks, trade names, copyrights, patents and other intellectual property
necessary to its business as currently conducted, and the use thereof by each
Loan Party and its Subsidiaries does not infringe in any material respect upon
the rights of any other Person, and each Loan Party’s rights thereto are not
subject to any licensing agreement or similar arrangement. Schedule 3.05 is a
correct and complete list of all trademarks, trade names, copyrights, patents
and other intellectual property owned or licensed by the Loan Parties as of the
date of this Agreement.

 

SECTION 3.06. Litigation and Environmental Matters.

 

(a)          There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the knowledge of any
Loan Party, threatened against or affecting any Loan Party or any of its
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters) or (ii) that involve this Agreement or the
Transactions.

 

(b)          To its knowledge, except for the Disclosed Matters (i) no Loan
Party or any of its Subsidiaries has received notice of any claim with respect
to any Environmental Liability or knows of any basis for any Environmental
Liability and (ii) except with respect to any other matters that, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, no Loan Party or any of its Subsidiaries (A) has failed to
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, or (B) 
has become subject to any Environmental Liability.

 

(c)          Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.

 

SECTION 3.07. Compliance with Laws and Agreements; No Default. Except where the
failure to do so, individually or in the aggregate could not reasonably be
expected to result in a Material Adverse Effect, each Loan Party and each
Subsidiary is in compliance with (i) all Requirement of Law applicable to it or
its property and (ii) all indentures, agreements and other instruments binding
upon it or its property. No Default has occurred and is continuing.

 

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SECTION 3.08. Investment Company Status. No Loan Party or any of its
Subsidiaries is an “investment company” as defined in, or subject to regulation
under, the Investment Company Act of 1940.

 

SECTION 3.09. Taxes. Each Loan Party and its Subsidiaries has timely filed or
caused to be filed all Tax returns and reports required to have been filed and
has paid or caused to be paid all Taxes required to have been paid by it, except
Taxes that are being contested in good faith by appropriate proceedings and for
which such Loan Party or such Subsidiary, as applicable, has set aside on its
books adequate reserves. No tax liens have been filed and no claims are being
asserted with respect to any such taxes.

 

SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $100,000 the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $100,000, the fair market value of
the assets of all such underfunded Plans.

 

SECTION 3.11. Disclosure. Each Loan Party has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the reports, financial statements, certificates
or other information furnished by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or any other Loan Document (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, each Loan Party represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time delivered and, if such projected financial
information was delivered prior to the Effective Date, as of the Effective Date.

 

SECTION 3.12. Material Agreements. Except as set forth in Schedule 3.12, no Loan
Party is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in (i) any material agreement to
which it is a party or (ii) any agreement or instrument evidencing or governing
Indebtedness.

 

SECTION 3.13. Solvency.

 

(a)          Immediately after the consummation of the Transactions to occur on
the Effective Date, (i) the fair value of the assets of each Loan Party, at a
fair valuation, will exceed its debts and liabilities, subordinated, contingent
or otherwise; (ii) the present fair saleable value of the property of each Loan
Party will be greater than the amount that will be required to pay the probable
liability of its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured;
(iii) each Loan Party will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (iv) no Loan Party will have unreasonably small
capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted after the Effective
Date.

 

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(b)          No Loan Party intends to, or will permit any of its Subsidiaries
to, and no Loan Party believes that it or any of its Subsidiaries will, incur
debts beyond its ability to pay such debts as they mature, taking into account
the timing of and amounts of cash to be received by it or any such Subsidiary
and the timing of the amounts of cash to be payable on or in respect of its
Indebtedness or the Indebtedness of any such Subsidiary.

 

SECTION 3.14. Insurance. Schedule 3.14 sets forth a description of all insurance
maintained by or on behalf of the Loan Parties and their Subsidiaries as of the
Effective Date. As of the Effective Date, all premiums due and payable in
respect of such insurance have been paid. The Company maintains, and has caused
each Subsidiary to maintain, with financially sound and reputable insurance
companies, insurance on all their real and personal property in such amounts,
subject to such deductibles and self-insurance retentions and covering such
properties and risks as are adequate and customarily maintained by companies
engaged in the same or similar businesses operating in the same or similar
locations.

 

SECTION 3.15. Capitalization and Subsidiaries. Schedule 3.15 sets forth (a) a
correct and complete list of the name and relationship to the Company of each
Subsidiary of the Company, (b) a true and complete listing of each class of each
of the Company’s authorized Equity Interests, of which all of such issued Equity
Interests are validly issued, outstanding, fully paid and non-assessable, and
owned beneficially and of record by the Persons identified on Schedule 3.15, and
(c) the type of entity of the Company and each of its Subsidiaries. All of the
issued and outstanding Equity Interests owned by any Loan Party have been (to
the extent such concepts are relevant with respect to such ownership interests)
duly authorized and issued and are fully paid and non-assessable. There are no
outstanding commitments or other obligations of any Loan Party to issue, or no
options, warrants or other rights of any Person to acquire, any shares of any
class of capital stock or other equity interests of any Loan Party, except for
outstanding rights to acquire Equity Interests in the Company pursuant to
shareholder-approved equity incentive plans identified in the Company’s public
filings with the SEC.

 

SECTION 3.16. Regulation U. Margin Stock (as defined in Regulation U)
constitutes less than 25% of the value of those assets of the Company and its
Subsidiaries, which are subject to any limitation on sale, pledge, or other
restriction hereunder.

 

SECTION 3.17. Security Interest in Collateral. The provisions of this Agreement
and the other Loan Documents create legal and valid Liens on all the Collateral
in favor of the Administrative Agent, for the benefit of the Secured Parties,
and such Liens constitute perfected and continuing Liens on the Collateral,
securing the Secured Obligations, enforceable against the applicable Loan Party
and all third parties, and having priority over all other Liens on the
Collateral except in the case of (a) Permitted Encumbrances, to the extent any
such Permitted Encumbrances would have priority over the Liens in favor of the
Administrative Agent pursuant to any applicable law and (b) Liens perfected only
by possession (including possession of any certificate of title) to the extent
the Administrative Agent has not obtained or does not maintain possession of
such Collateral.

 

SECTION 3.18. Employment Matters. As of the Effective Date, there are no
strikes, lockouts or slowdowns against any Loan Party or any Subsidiary pending
or, to the knowledge of any Loan Party, threatened. The hours worked by and
payments made to employees of the Loan Parties and their Subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable
Federal, state, local or foreign law dealing with such matters. All payments due
from any Loan Party or any Subsidiary, or for which any claim may be made
against any Loan Party or any Subsidiary, on account of wages and employee
health and welfare insurance and other benefits, have been paid or accrued as a
liability on the books of such Loan Party or Subsidiary.

 

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SECTION 3.19. Federal Reserve Regulations. No part of the proceeds of any Loan
or Letter of Credit has been used or will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the Regulations
of the Board, including Regulations T, U and X.

 

SECTION 3.20. Use of Proceeds. The proceeds of the Loans have been used and will
be used, whether directly or indirectly as set forth in Section 5.08.

 

SECTION 3.21. No Burdensome Restrictions. No Loan Party is subject to any
Burdensome Restrictions except Burdensome Restrictions permitted under Section
6.10.

 

SECTION 3.22. Sanctions Laws and Regulations. Each Loan Party has implemented
and maintains in effect policies and procedures designed to ensure compliance by
such Loan Party, its Subsidiaries and their respective directors, officers,
employees and agents with Anti-Corruption Laws and applicable Sanctions, and
such Loan Party, its Subsidiaries and their respective officers and employees
and, to the knowledge of such Loan Party, its directors and agents, are in
compliance with Anti-Corruption Laws and applicable Sanctions in all material
respects. None of (a) any Loan Party, any Subsidiary or any of their respective
directors, officers or employees, or (b) to the knowledge of any such Loan Party
or Subsidiary, any agent of such Loan Party or any Subsidiary that will act in
any capacity in connection with or benefit from the credit facility established
hereby, is a Sanctioned Person. No Borrowing or Letter of Credit, use of
proceeds, Transaction or other transaction contemplated by this Agreement or the
other Loan Documents will violate Anti-Corruption Laws or applicable Sanctions.

 

SECTION 3.23. Affiliate Transactions. Except as set forth on Schedule 3.23, as
of the date of this Agreement, there are no existing or proposed agreements,
arrangements, understandings, or transactions between any Loan Party and any of
the officers, members, managers, directors, stockholders, parents, holders of
other Equity Interests, employees, or Affiliates (other than Subsidiaries) of
any Loan Party or any members of their respective immediate families, and none
of the foregoing Persons are directly or indirectly indebted to or have any
direct or indirect ownership, partnership, or voting interest in any Affiliate
of any Loan Party or any Person with which any Loan Party has a business
relationship or which competes with any Loan Party (except that any such Persons
may own Equity Interests in (but not exceeding 2.0% of the outstanding Equity
Interests of) any publicly traded company that may compete with a Loan Party.

 

ARTICLE IV

 

Conditions

 

SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):

 

(a)          Credit Agreement and Loan Documents. The Administrative Agent (or
its counsel) shall have received (i) from each party hereto either (A) a
counterpart of this Agreement signed on behalf of such party or (B) written
evidence satisfactory to the Administrative Agent (which may include facsimile
or other electronic transmission of a signed signature page of this Agreement)
that such party has signed a counterpart of this Agreement, (ii) either (A) a
counterpart of each other Loan Document signed on behalf of each party thereto
or (B) written evidence satisfactory to the Administrative Agent (which may
include facsimile or other electronic transmission of a signed signature page
thereof) that each such party has signed a counterpart of such Loan Document and
(iii) such other certificates, documents, instruments and agreements as the
Administrative Agent shall reasonably request in connection with the
transactions contemplated by this Agreement and the other Loan Documents,
including any promissory notes requested by a Lender pursuant to Section 2.10
payable to the order of each such requesting Lender and a written opinion of the
Loan Parties’ counsel, addressed to the Administrative Agent, the Issuing Bank
and the Lenders in substantially the form of Exhibit B (together with any other
real estate related opinions separately described herein), all in form and
substance satisfactory to the Administrative Agent and its counsel.

 

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(b)          Financial Statements. The Lenders shall have received (i) audited
consolidated financial statements of the Loan Parties for the two most recent
Fiscal Years ended prior to the Effective Date as to which such financial
statements are available, (ii) unaudited interim consolidated financial
statements of the Loan Parties for each Fiscal Quarter ended after the date of
the latest applicable financial statements delivered pursuant to clause (i) of
this paragraph as to which such financial statements are available, and such
financial statements shall not, in the reasonable judgment of the Administrative
Agent, reflect any material adverse change in the consolidated financial
condition of the Loan Parties, as reflected in the audited, consolidated
financial statements described in clause (i) of this paragraph.

 

(c)          Closing Certificates; Certified Certificate of Incorporation; Good
Standing Certificates. The Administrative Agent shall have received (i) a
certificate of each Loan Party, dated the Effective Date and executed by its
Secretary or Assistant Secretary, which shall (A) certify the resolutions of its
Board of Directors, members or other body authorizing the execution, delivery
and performance of the Loan Documents to which it is a party, (B) identify by
name and title and bear the signatures of the Financial Officers and any other
officers of such Loan Party authorized to sign the Loan Documents to which it is
a party, and (C) contain appropriate attachments, including the certificate or
articles of incorporation or organization of each Loan Party certified by the
relevant authority of the jurisdiction of organization of such Loan Party and a
true and correct copy of its by-laws or operating, management or partnership
agreement, or other organizational or governing documents, and (ii) a good
standing certificate for each Loan Party from its jurisdiction of organization
or the substantive equivalent available in the jurisdiction of organization for
each Loan Party from the appropriate governmental officer in such jurisdiction.

 

(d)          No Default Certificate. The Administrative Agent shall have
received a certificate, signed by the chief financial officer of each Borrower
and each other Loan Party, dated as of the Effective Date (i) stating that no
Default has occurred and is continuing, (ii) stating that the representations
and warranties contained in the Loan Documents are true and correct as of such
date, and (iii) certifying as to any other factual matters as may be reasonably
requested by the Administrative Agent.

 

(e)          Fees. The Lenders and the Administrative Agent shall have received
all fees required to be paid, and all expenses for which invoices have been
presented (including the reasonable fees and expenses of legal counsel), on or
before the Effective Date. All such amounts will be paid with proceeds of Loans
made on the Effective Date and will be reflected in the funding instructions
given by the Borrower Representative to the Administrative Agent on or before
the Effective Date.

 

(f)          Lien Searches. The Administrative Agent shall have received the
results of a recent lien search in each jurisdiction where the Loan Parties are
organized and where the assets of the Loan Parties are located, and such search
shall reveal no Liens on any of the assets of the Loan Parties except for Liens
permitted by Section 6.02 or discharged on or prior to the Effective Date
pursuant to a pay-off letter or other documentation satisfactory to the
Administrative Agent.

 

(g)         RESERVED.

 

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(h)         Funding Account. The Administrative Agent shall have received a
notice setting forth the deposit account of the Borrowers (the “Funding
Account”) to which the Administrative Agent is authorized by the Borrowers to
transfer the proceeds of any Borrowings requested or authorized pursuant to this
Agreement.

 

(i)          RESERVED.

 

(j)          RESERVED.

 

(k)         Solvency. The Administrative Agent shall have received a solvency
certificate from a Financial Officer of the Company.

 

(l)          Borrowing Base Certificate. The Administrative Agent shall have
received a Borrowing Base Certificate which calculates the Borrowing Base as of
the end of the Fiscal Month immediately preceding the Effective Date.

 

(m)        RESERVED.

 

(n)         Pledged Equity Interests; Stock Powers; Pledged Notes. The
Administrative Agent shall have received (i) the certificates representing the
Equity Interests pledged pursuant to the Security Agreement, together with an
undated stock power for each such certificate executed in blank by a duly
authorized officer of the pledgor thereof and (ii) each promissory note (if any)
pledged to the Administrative Agent pursuant to the Security Agreement endorsed
(without recourse) in blank (or accompanied by an executed transfer form in
blank) by the pledgor thereof.

 

(o)         Filings, Registrations and Recordings. Each document (including any
Uniform Commercial Code financing statement) required by the Collateral
Documents or under law or reasonably requested by the Administrative Agent to be
filed, registered or recorded in order to create in favor of the Administrative
Agent, for the benefit of itself, the Lenders and the other Secured Parties, a
perfected Lien on the Collateral described therein, prior and superior in right
to any other Person (other than with respect to Liens expressly permitted by
Section 6.02), shall be in proper form for filing, registration or recordation.

 

(p)         Insurance. The Administrative Agent shall have received evidence of
insurance coverage in form, scope, and substance reasonably satisfactory to the
Administrative Agent and otherwise in compliance with the terms of Section 5.09
and Section 4.12 of the Security Agreement.

 

(q)         RESERVED.

 

(r)          Tax Withholding. The Administrative Agent shall have received a
properly completed and signed IRS Form W-8 or W-9, as applicable, for each Loan
Party.

 

(s)          Corporate Structure. The corporate structure, capital structure and
other material debt instruments, material accounts and governing documents of
the Loan Parties shall be acceptable to the Administrative Agent in its
Permitted Discretion.

 

(t)          RESERVED.

 

(u)         Legal Due Diligence. The Administrative Agent and its counsel shall
have completed all legal due diligence, the results of which shall be
satisfactory to Administrative Agent in its Permitted Discretion.

 

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(v)         RESERVED.

 

(w)        USA PATRIOT Act, Etc. The Administrative Agent and the Lenders shall
have received all documentation and other information required by bank
regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including the USA PATRIOT Act, for each Loan
Party.

 

(x)          Other Documents. The Administrative Agent shall have received such
other documents as the Administrative Agent, the Issuing Bank, any Lender or
their respective counsel may have reasonably requested.

 

The Administrative Agent shall notify the Borrowers and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at
or prior to 2:00 p.m., Chicago time, on the date that is five (5) Business Days
after the Effective Date (and, in the event such conditions are not so satisfied
or waived, the Commitments shall terminate at such time).

 

SECTION 4.02. Each Credit Event. The obligation of each Lender to make a Loan on
the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or
extend any Letter of Credit, is subject to the satisfaction of the following
conditions:

 

(a)         The representations and warranties of the Loan Parties set forth in
this Agreement shall be true and correct with the same effect as though made on
and as of the date of such Borrowing or the date of issuance, amendment, renewal
or extension of such Letter of Credit, as applicable (it being understood and
agreed that any representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct only as of such
specified date.

 

(b)         At the time of and immediately after giving effect to such Borrowing
or the issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing.

 

(c)         After giving effect to any Borrowing or the issuance, amendment,
renewal or extension of any Letter of Credit, Revolving Loan Availability shall
not be less than zero.

 

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrowers on the date thereof as to the matters specified in paragraphs (a),
(b), and (c) of this Section.

 

SECTION 4.03. Post-Closing Conditions. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to the Administrative Agent’s
receipt within thirty (30) calendar days of the Effective Date of each (i)
Collateral Access Agreement required to be provided pursuant to Section 4.13 of
the Security Agreement; (ii) Deposit Account Control Agreement required to be
provided pursuant to Section 4.14 of the Security Agreement; and (iii) each of
(a) an appraisal, (b) a survey, (c) a flood certificate, and (d) a Phase I
Environmental Site Assessment, for the Gainesville Facility from a firm(s)
acceptable to the Administrative Agent, which reports and documents shall be
satisfactory to the Administrative Agent in its Permitted Discretion.

 

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ARTICLE V

 

Affirmative Covenants

 

Until the Commitments shall have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired or terminated in each case
without any pending draw and all LC Disbursements have been reimbursed, each
Loan Party executing this Agreement covenants and agrees, jointly and severally
with all of the other Loan Parties, with the Lenders that:

 

SECTION 5.01. Financial Statements; Borrowing Base and Other Information. The
Borrowers will furnish to the Administrative Agent and each Lender:

 

(a)          within 90 days after the end of each Fiscal Year of the Company,
its audited consolidated and consolidating balance sheet and related statements
of operations, stockholders’ equity and cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous Fiscal Year, all reported on by independent public accountants
acceptable to the Required Lenders (without a “going concern” or like
qualification, commentary or exception and without any qualification, or
exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Company and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, accompanied by any management letter prepared by said accountants;

 

(b)          within 45 days after the end of each Fiscal Quarter, its
consolidated and consolidating balance sheet and related statements of
operations, stockholders’ equity and cash flows as of the end of such Fiscal
Quarter, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous Fiscal Year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Company and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;

 

(c)          concurrently with any delivery of financial statements under clause
(a) or (b) above, a certificate of a Financial Officer of the Borrower
Representative in substantially the form of Exhibit D (i) certifying, in the
case of the financial statements delivered under clause (b), as presenting
fairly in all material respects the financial condition and results of
operations of the Company and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes, (ii) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto,
(iii) setting forth reasonably detailed calculations demonstrating compliance
with Section 6.13 and (iv) stating whether any change in GAAP or in the
application thereof has occurred since the date of the audited financial
statements referred to in Section 3.04 and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such certificate;

 

(d)          RESERVED.

 

(e)          as soon as available but in any event no later than 45 days
following the end of each Fiscal Year of the Company, a copy of the plan and
forecast (including a projected consolidated and consolidating balance sheet,
income statement and funds flow statement) of the Company for each month of the
upcoming Fiscal Year (the “Projections”) in form reasonably satisfactory to the
Administrative Agent;

 

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(f)          as soon as available but in any event within 30 days of the end of
each Fiscal Month, and at such other times as may be requested by the
Administrative Agent, as of the Fiscal Month then ended, a Borrowing Base
Certificate and supporting information in connection therewith, together with
any additional reports with respect to the Borrowing Base as the Administrative
Agent may reasonably request;

 

(g)          as soon as available but in any event within 30 days of the end of
each Fiscal Month and at such other times as may be requested by the
Administrative Agent, as of the period then ended, all delivered electronically
in a text formatted file acceptable to the Administrative Agent;

 

(i)          a detailed aging of the Loan Parties’ Accounts, including all
invoices aged by invoice date and due date (with an explanation of the terms
offered), prepared in a manner reasonably acceptable to the Administrative
Agent, together with a summary specifying the name, address, and balance due for
each Account Debtor;

 

(ii)         a schedule detailing the Loan Parties’ Inventory, in form
satisfactory to the Administrative Agent, (1) by location (showing Inventory in
transit and any Inventory located with a third party under any consignment,
bailee arrangement or warehouse agreement), by class (raw material,
work-in-process and finished goods), by product type, and by volume on hand,
which Inventory shall be valued at the lower of cost (determined on a first-in,
first-out basis) or market and adjusted for Reserves as the Administrative Agent
has previously indicated to the Borrowers are deemed by the Administrative Agent
to be appropriate; and (2) including a report of any variances or other results
of Inventory counts performed by the Borrowers since the last Inventory schedule
(including information regarding sales or other reductions, additions, returns,
credits issued by the Borrowers and complaints and claims made against the
Borrowers);

 

(iii)        a worksheet of calculations prepared by the Borrowers to determine
Eligible Accounts and Eligible Inventory, such worksheets detailing the Accounts
and Inventory excluded from Eligible Accounts and Eligible Inventory and the
reason for such exclusion;

 

(iv)        a reconciliation of the Loan Parties’ Accounts and Inventory between
(A) the amounts shown in the Company’s general ledger and financial statements
and the reports delivered pursuant to clauses (i) and (ii) above and (B) the
amounts and dates shown in the reports delivered pursuant to clauses (i) and
(ii) above and the Borrowing Base Certificate delivered pursuant to clause (f)
above as of such date; and

 

(v)         a reconciliation of the loan balance per the Company’s general
ledger to the loan balance under this Agreement;

 

(h)          RESERVED;

 

(i)          RESERVED;

 

(j)          promptly upon the Administrative Agent’s request:

 

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(i)          copies of invoices issued by the Loan Parties in connection with
any Accounts, credit memos, shipping and delivery documents, and other
information related thereto;

 

(ii)         copies of purchase orders, invoices, and shipping and delivery
documents in connection with any Inventory or Equipment purchased by any Loan
Party; and

 

(iii)        a schedule detailing the balance of all intercompany accounts of
the Loan Parties;

 

(k)          RESERVED;

 

(l)          promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Company or any Subsidiary with the SEC, or any Governmental Authority succeeding
to any or all of the functions of the SEC, or with any national securities
exchange, as the case may be; and

 

(m)          promptly following any request therefor, such other information
regarding the operations, changes in ownership of Equity Interests, business
affairs and financial condition of any Loan Party or any Subsidiary, or
compliance with the terms of this Agreement, as the Administrative Agent or any
Lender may reasonably request.

 

SECTION 5.02. Notices of Material Events. The Borrowers will furnish to the
Administrative Agent and each Lender prompt (but in any event within any time
period that may be specified below) written notice of the following:

 

(a)          the occurrence of any Default;

 

(b)          receipt of any notice of any investigation by a Governmental
Authority or any litigation or proceeding commenced or threatened against any
Loan Party that (i) seeks damages in excess of $750,000, (ii) seeks injunctive
relief that could, if adversely determined, reasonably be expected to result in
a Material Adverse Effect, (iii) is asserted or instituted against any Plan, its
fiduciaries or its assets, (iv) alleges criminal misconduct by any Loan Party,
(v) alleges the violation of any law regarding, or seeks remedies in connection
with, any Environmental Laws or related Requirements of Law, or seeks to impose
Environmental Liability, (vi) contests any tax, fee, assessment, or other
governmental charge in excess of $500,000, or (vii) involves any product recall;

 

(c)          any Lien (other than Permitted Encumbrances) or claim made or
asserted against any of the Collateral;

 

(d)          any loss, damage, or destruction to the Collateral in the amount of
$500,000 or more, whether or not covered by insurance;

 

(e)          within two Business Days of receipt thereof, any and all default
notices received under or with respect to any leased location or public
warehouse where Collateral in excess of $500,000 is located;

 

(f)          within two Business Days after the occurrence thereof, any Loan
Party entering into a Swap Agreement or an amendment thereto, together with
copies of all agreements evidencing such Swap Agreement or amendment;

 

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(g)          the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Company and its Subsidiaries in an aggregate amount exceeding
$500,000; and

 

(h)          any other development that results, or could reasonably be expected
to result, in a Material Adverse Effect.

 

Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower Representative
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.

 

SECTION 5.03. Existence; Conduct of Business. Each Loan Party will, and will
cause each Subsidiary to, (a) do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, qualifications, licenses, permits, franchises, governmental
authorizations, intellectual property rights, licenses and permits material to
the conduct of its business, and maintain all requisite authority to conduct its
business in each jurisdiction in which its business is conducted, provided that
the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03, and (b) carry on and conduct its
business in substantially the same manner and in substantially the same fields
of enterprise as it is presently conducted.

 

SECTION 5.04. Payment of Obligations. Each Loan Party will, and will cause each
Subsidiary to, pay or discharge all Material Indebtedness and all other material
liabilities and obligations, including Taxes, before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) such Loan Party or
Subsidiary has set aside on its books adequate reserves with respect thereto in
accordance with GAAP and (c) the failure to make payment pending such contest
could not reasonably be expected to result in a Material Adverse Effect;
provided, however, that each Loan Party will, and will cause each Subsidiary to,
remit withholding taxes and other payroll taxes to appropriate Governmental
Authorities as and when claimed to be due, notwithstanding the foregoing
exceptions.

 

SECTION 5.05. Maintenance of Properties. Each Loan Party will, and will cause
each Subsidiary to, keep and maintain all property material to the conduct of
its business in good working order and condition, ordinary wear and tear
excepted.

 

SECTION 5.06. Books and Records; Inspection Rights. Each Loan Party will, and
will cause each Subsidiary to, (a) keep proper books of record and account in
which full, true and correct entries are made of all dealings and transactions
in relation to its business and activities and (b) permit any representatives
designated by the Administrative Agent or any Lender (including employees of the
Administrative Agent, any Lender or any consultants, accountants, lawyers and
appraisers retained by the Administrative Agent), upon reasonable prior notice,
to visit and inspect its properties, conduct at the Loan Party’s premises, field
examinations of the Loan Party’s assets, liabilities, books and records,
including examining and making extracts from its books and records,
environmental assessment reports and Phase I or Phase II studies, and to discuss
its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.
After the occurrence and during the continuance of any Event of Default, each
Loan Party shall provide the Administrative Agent and each Lender with access to
its suppliers. The Loan Parties acknowledge that the Administrative Agent, after
exercising its rights of inspection, may prepare and distribute to the Lenders
certain Reports pertaining to the Loan Parties’ assets for internal use by the
Administrative Agent and the Lenders.

 

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SECTION 5.07. Compliance with Laws and Material Contractual Obligations. Each
Loan Party will, and will cause each Subsidiary to, (i) comply with all
Requirement of Law applicable to it or its property (including without
limitation Environmental Laws) and (ii) perform in all material respects its
obligations under material agreements to which it is a party, except, in each
case, where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. Each Loan Party
will maintain in effect and enforce policies and procedures designed to ensure
compliance by such Loan Party, its Subsidiaries and their respective directors,
officers, employees and agents with Anti-Corruption Laws and applicable
Sanctions.

 

SECTION 5.08. Use of Proceeds.

 

(a)          The proceeds of the Loans will be used only (i) to repay the
indebtedness, liability and obligations on the Effective Date of the Borrowers
under the Existing Credit Agreement; and (ii) to supplement working capital and
for other general business purposes (not otherwise prohibited by this
Agreement). No part of the proceeds of any Loan and no Letter of Credit will be
used, whether directly or indirectly, (i) for any purpose that entails a
violation of any of the Regulations of the Board, including Regulations T, U and
X or (ii) to make any Acquisition other than the Permitted Acquisitions. Letters
of Credit will be used only to support general business purposes (not otherwise
provided by this Agreement).

 

(b)          The Borrowers will not request any Borrowing or Letter of Credit,
and no Borrower shall use, and each Borrower shall procure that its Subsidiaries
and its and their respective directors, officers, employees and agents shall not
use, the proceeds of any Borrowing or Letter of Credit (a) in furtherance of an
offer, payment, promise to pay, or authorization of the payment or giving of
money, or anything else of value, to any Person in violation of any
Anti-Corruption Laws, (b) for the purpose of funding, financing or facilitating
any activities, business or transaction of or with any Sanctioned Person, or in
any Sanctioned Country, or (c) in any manner that would result in the violation
of any Sanctions applicable to any party hereto.

 

SECTION 5.09. Insurance. Each Loan Party will, and will cause each Subsidiary
to, maintain with financially sound and reputable carriers having a financial
strength rating of at least A- by A.M. Best Company (a) insurance in such
amounts (with no greater risk retention) and against such risks (including,
without limitation, loss or damage by fire and loss in transit; theft, burglary,
pilferage, larceny, embezzlement, and other criminal activities; business
interruption; and general liability) and such other hazards, as is customarily
maintained by companies of established repute engaged in the same or similar
businesses operating in the same or similar locations and (b) all insurance
required pursuant to the Collateral Documents. The Borrower will furnish to the
Lenders, upon request of the Administrative Agent, information in reasonable
detail as to the insurance so maintained.

 

SECTION 5.10. Accuracy of Information. The Loan Parties will ensure that any
information, including financial statements or other documents, furnished to the
Administrative Agent or the Lenders in connection with this Agreement or any
other Loan Document or any amendment or modification hereof or thereof or waiver
hereunder or thereunder contains no material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and the
furnishing of such information shall be deemed to be a representation and
warranty by the Borrowers on the date thereof as to the matters specified in
this Section 5.10; provided that, with respect to projected financial
information, the Loan Parties will only ensure that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time.

 

SECTION 5.11. Casualty and Condemnation. The Borrowers will (a) furnish to the
Administrative Agent and the Lenders prompt written notice of any casualty or
other insured damage to any material portion of the Collateral or the
commencement of any action or proceeding for the taking of any material portion
of the Collateral or interest therein under power of eminent domain or by
condemnation or similar proceeding and (b) ensure that the Net Proceeds of any
such event (whether in the form of insurance proceeds, condemnation awards or
otherwise) are collected and applied in accordance with the applicable
provisions of this Agreement and the Collateral Documents.

 

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SECTION 5.12. Appraisals. At any time that the Administrative Agent requests,
the Borrowers will, and will cause each Subsidiary to provide the Administrative
Agent with appraisals or updates thereof of their real property from an
appraiser selected and engaged by the Administrative Agent, and prepared on a
basis satisfactory to the Administrative Agent, such appraisals and updates to
include, without limitation, information required by any applicable Requirement
of Law; provided, however, that each such appraisal shall be at the sole expense
of the Borrowers.

 

SECTION 5.13. Depository Banks. The Loan Parties and their Subsidiaries will
maintain the Administrative Agent as its principal depository bank, including
for the maintenance of operating, administrative, cash management, collection
activity, and other deposit accounts for the conduct of its business.

 

SECTION 5.14. Additional Collateral; Further Assurances.

 

(a)          Subject to applicable Requirement of Law, the Borrowers and each
Subsidiary that is a Loan Party will cause each of its Domestic Subsidiaries
formed or acquired after the date of this Agreement in accordance with the terms
of this Agreement to become a Loan Party by executing a Joinder Agreement. Upon
execution and delivery thereof, each such Person (i) shall automatically become
a Loan Guarantor hereunder and thereupon shall have all of the rights, benefits,
duties and obligations in such capacity under the Loan Documents and (ii) will
grant Liens to the Administrative Agent, for the benefit of the Administrative
Agent, the Lenders and the other Secured Parties, in any property of such Loan
Party which constitutes Collateral, including any parcel of real property
located in the U.S. owned by any Loan Party.

 

(b)          The Borrowers and each Subsidiary that is a Loan Party will cause
(i) 100% of the issued and outstanding Equity Interests of each of its Domestic
Subsidiaries and (ii) 65% of the issued and outstanding Equity Interests
entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and
100% of the issued and outstanding Equity Interests not entitled to vote (within
the meaning of Treas. Reg. Section 1.956-2(c)(2)) in each Foreign Subsidiary
directly owned by a Borrower or any Domestic Subsidiary to be subject at all
times to a first priority, perfected Lien in favor of the Administrative Agent,
for the benefit of the Administrative Agent and the other Secured Parties,
pursuant to the terms and conditions of the Loan Documents or other security
documents as the Administrative Agent shall reasonably request. Notwithstanding
the foregoing, at any time after an Event of Default has occurred and is
continuing, each Loan Party will, upon the request of the Administrative Agent,
cause each foreign Subsidiary to become a Loan Party and a Loan Guarantor and to
grant Liens to the Administrative Agent on its assets and have the balance of
its stock pledged to the Administrative Agent.

 

(c)          Without limiting the foregoing, each Loan Party will, and will
cause each Subsidiary to, execute and deliver, or cause to be executed and
delivered, to the Administrative Agent such documents, agreements and
instruments, and will take or cause to be taken such further actions (including
the filing and recording of financing statements, fixture filings, mortgages,
deeds of trust and other documents and such other actions or deliveries of the
type required by Section 4.01, as applicable), which may be required by any
Requirement of Law or which the Administrative Agent may, from time to time,
reasonably request to carry out the terms and conditions of this Agreement and
the other Loan Documents and to ensure perfection and priority of the Liens
created or intended to be created by the Collateral Documents, all in form and
substance reasonably satisfactory to the Administrative Agent and all at the
expense of the Loan Parties.

 

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(d)          If any material assets (including any real property or improvements
thereto or any interest therein) are acquired by any Borrower or any Subsidiary
that is a Loan Party after the Effective Date (other than assets constituting
Collateral under the Security Agreement that become subject to the Lien under
the Security Agreement upon acquisition thereof), the Borrower Representative
will (i) notify the Administrative Agent and the Lenders thereof and, if
requested by the Administrative Agent or the Required Lenders, cause such assets
to be subjected to a Lien securing the Secured Obligations and (ii) take, and
cause each Subsidiary that is a Loan Party to take, such actions as shall be
necessary or reasonably requested by the Administrative Agent to grant and
perfect such Liens, including actions described in paragraph (c) of this
Section, all at the expense of the Loan Parties.

 

SECTION 5.15. Hazardous Materials. Within thirty (30) Business Days after
request by the Administrative Agent, each Loan Party shall provide to the
Administrative Agent written information regarding all Hazardous Materials that
are used, generated, transported, stored or disposed of by the Loan Party, in
reportable quantities. If any Loan Party should commence the use, treatment,
transportation, generation, storage, or disposal of any Hazardous Substance in
reportable quantities in its operations in addition to those noted in such
information, such Loan Party shall immediately notify the Administrative Agent
of the commencement of such activity with respect to each such Hazardous
Substance within thirty (30) Business Days of commencing such activity. Each
Loan Party shall cause any Hazardous Materials which are now or may hereafter be
used or generated in the operations of the Loan Party in reportable quantities
to be accounted for and disposed of in compliance with all Environmental Laws
and other applicable federal, state and local laws and regulations. No Loan
Party shall allow or permit to continue the release or threatened release of any
Hazardous Materials on any premises owned or occupied by or under lease to the
Loan Party. Each Loan Party shall notify the Administrative Agent within five
(5) Business Days after obtaining knowledge of any of the events described below
and shall, simultaneously with providing such notice, provide the Administrative
Agent with copies of any correspondence regarding such event:

 

(i)          any premises which have at any time been owned or occupied by or
have been under lease to the Loan Party are the subject of an environmental
investigation by any federal, state or local governmental agency having
jurisdiction over the regulation of any Hazardous Materials, the purpose of
which investigation is to quantify the levels of Hazardous Materials located on
such premises;

 

(ii)         the Loan Party has been named or is threatened to be named as a
party responsible for the possible contamination of any real property or ground
water with Hazardous Materials, including, but not limited to the contamination
of past and present waste disposal sites; or

 

(iii)        any notice or claim to the effect that any Borrower or any of its
Subsidiaries is or may be liable to any Person as a result of the release by any
Borrower, any of its Subsidiaries, or any other Person of any toxic or hazardous
waste or substance into the environment, and any notice alleging any violation
of any federal, state or local environmental, health or safety law or regulation
by any Borrower or any of its Subsidiaries, which, in either case, could
reasonably be expected to have a Material Adverse Effect.

 

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If any Loan Party is notified of any event described in (i) or (ii) above, such
Loan Party shall within thirty (30) Business Days of such notice engage a firm
or firms of engineers or environmental consultants appropriately qualified to
determine as quickly as practical the extent of contamination and the potential
financial liability of the Loan Party with respect thereto, and the
Administrative Agent shall be provided with a copy of any report prepared by
such firm or by any governmental agency as to such matters as soon as any such
report becomes available to the Loan Party, and the Loan Party shall immediately
establish reserves in the amount of the potential financial liability of the
Loan Party identified by such environmental consultants or engineers. The
selection of any engineers or environmental consultants engaged pursuant to the
requirements of this Section 5.15 shall be subject to the approval of the
Administrative Agent, which approval shall not be unreasonably withheld. Each
Loan Party shall provide an adequate reserve for the payment of all potential
financial liability not covered by insurance upon the occurrence of any event
described in this Section 5.15.

 

ARTICLE VI

 

Negative Covenants

 

Until the Commitments shall have expired or been terminated and the principal of
and interest on each Loan and all fees, expenses and other amounts payable under
any Loan Document shall have been paid in full and all Letters of Credit shall
have expired or terminated, in each case without any pending draw, and all LC
Disbursements shall have been reimbursed, each Loan Party executing this
Agreement covenants and agrees, jointly and severally with all of the other Loan
Parties, with the Lenders that:

 

SECTION 6.01. Indebtedness. No Loan Party will, nor will it permit any
Subsidiary to, create, incur, assume, or suffer to exist any Indebtedness,
except:

 

(a)          the Secured Obligations;

 

(b)          Indebtedness existing on the date hereof and set forth in
Schedule 6.01 and any extensions, renewals, refinancings and replacements of any
such Indebtedness in accordance with clause (f) hereof;

 

(c)          Indebtedness of any Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary, provided that (i)
Indebtedness of any Subsidiary that is not a Loan Party to the Borrower or any
Subsidiary that is a Loan Party shall be subject to Section 6.04 and (ii)
Indebtedness of any Loan Party to any Subsidiary that is not a Loan Party shall
be subordinated to the Secured Obligations on terms reasonably satisfactory to
the Administrative Agent;

 

(d)          Guarantees by the Borrower of Indebtedness of any Subsidiary and by
any Subsidiary of Indebtedness of the Borrower or any other Subsidiary, provided
that (i) the Indebtedness so Guaranteed is permitted by this Section 6.01, (ii)
Guarantees by the Borrower or any Subsidiary that is a Loan Party of
Indebtedness of any Subsidiary that is not a Loan Party shall be subject to
Section 6.04 and (iii) Guarantees permitted under this clause (d) shall be
subordinated to the Secured Obligations of the applicable Subsidiary on the same
terms as the Indebtedness so Guaranteed is subordinated to the Secured
Obligations;

 

(e)          Indebtedness of the Borrower or any Subsidiary incurred to finance
the acquisition, construction or improvement of any fixed or capital assets
including Equipment (whether or not constituting purchase money Indebtedness),
including Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and replacements of
any such Indebtedness in accordance with clause (f) below; provided that (i)
such Indebtedness is incurred prior to or within 90 days after such acquisition
or the completion of such construction or improvement and (ii) the aggregate
principal amount of Indebtedness permitted by this clause (e) together with any
Refinance Indebtedness in respect thereof permitted by clause (f) below, shall
not exceed $500,000 at any time outstanding;

 

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(f)          Indebtedness which represents extensions, renewals, refinancing or
replacements (such Indebtedness being so extended, renewed, refinanced or
replaced being referred to herein as the “Refinance Indebtedness”) of any of the
Indebtedness described in clauses (b) and (e) and (i) and (j) hereof (such
Indebtedness being referred to herein as the “Original Indebtedness”); provided
that (i) such Refinance Indebtedness does not increase the principal amount or
interest rate of the Original Indebtedness, (ii) any Liens securing such
Refinance Indebtedness are not extended to any additional property of any Loan
Party or any of its Subsidiaries, (iii) no Loan Party or any of its Subsidiaries
that is not originally obligated with respect to repayment of such Original
Indebtedness is required to become obligated with respect to such Refinance
Indebtedness, (iv) such Refinance Indebtedness does not result in a shortening
of the average weighted maturity of such Original Indebtedness, (v) the terms of
such Refinance Indebtedness are not less favorable to the obligor thereunder
than the original terms of such Original Indebtedness and (vi) if such Original
Indebtedness was subordinated in right of payment to the Secured Obligations,
then the terms and conditions of such Refinance Indebtedness must include
subordination terms and conditions that are at least as favorable to the
Administrative Agent and the Lenders as those that were applicable to such
Original Indebtedness;

 

(g)          Indebtedness owed to any Person providing workers’ compensation,
health, disability or other employee benefits or property, casualty or liability
insurance, pursuant to reimbursement or indemnification obligations to such
Person, in each case incurred in the ordinary course of business;

 

(h)          Indebtedness of any Loan Party in respect of performance bonds, bid
bonds, appeal bonds, surety bonds and similar obligations, in each case provided
in the ordinary course of business;

 

(i)          Mexican Real Estate Indebtedness in an amount not to exceed
$1,500,000;

 

(j)          Indebtedness of any Person that becomes a Subsidiary after the date
hereof; provided that (i) such Indebtedness exists at the time such Person
becomes a Subsidiary and is not created in contemplation of or in connection
with such Person becoming a Subsidiary and (ii) the aggregate principal amount
of Indebtedness permitted by this clause (j) shall not exceed $500,000 at any
time outstanding;

 

(k)          other unsecured Indebtedness in an aggregate principal amount not
exceeding $1,000,000 at any time outstanding; provided that the aggregate
principal amount of Indebtedness of the Borrowers’ Subsidiaries permitted by
this clause (k) shall not exceed $1,000,000 at any time outstanding; and

 

(l)          the Wedcor Indemnification Obligations.

 

SECTION 6.02. Liens. No Loan Party will, nor will it permit any Subsidiary to,
create, incur, assume or permit to exist any Lien on any property or asset now
owned or hereafter acquired by it, or assign or sell any income or revenues
(including Accounts) or rights in respect of any thereof, except:

 

(a)          Liens created pursuant to any Loan Document;

 

(b)          Permitted Encumbrances;

 

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(c)          any Lien on any property or asset of any Borrower or any Subsidiary
existing on the date hereof and set forth in Schedule 6.02; provided that (i)
such Lien shall not apply to any other property or asset of such Borrower or any
Subsidiary and (ii) such Lien shall secure only those obligations which it
secures on the date hereof;

 

(d)          Liens on fixed or capital assets including Equipment acquired,
constructed or improved by any Borrower or any Subsidiary; provided that
(i) such Liens secure Indebtedness permitted by clause (e) of Section 6.01,
(ii) such Liens and the Indebtedness secured thereby are incurred prior to or
within 90 days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed 100% of the
cost of acquiring, constructing or improving such fixed or capital assets and
(iv) such Liens shall not apply to any other property or assets of any Borrower
or such Subsidiary;

 

(e)          any Lien existing on any property or asset (other than Accounts and
Inventory) prior to the acquisition thereof by any Borrower or any Subsidiary or
existing on any property or asset (other than Accounts and Inventory) of any
Person that becomes a Loan Party after the date hereof prior to the time such
Person becomes a Loan Party; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Loan Party, as the case may be, (ii) such Lien shall not apply to any other
property or assets of the Loan Party and (iii) such Lien shall secure only those
obligations which it secures on the date of such acquisition or the date such
Person becomes a Loan Party, as the case may be;

 

(f)          Liens of a collecting bank arising in the ordinary course of
business under Section 4-208 of the UCC in effect in the relevant jurisdiction
covering only the items being collected upon;

 

(g)          Liens arising out of Sale and Leaseback Transactions permitted by
Section 6.06;

 

(h)          The Mexican Real Estate Lien; and

 

(i)          Liens granted by a Subsidiary that is not a Loan Party in favor of
a Borrower or another Loan Party in respect of Indebtedness owed by such
Subsidiary.

 

Notwithstanding the foregoing, none of the Liens permitted pursuant to this
Section 6.02 may at any time attach to any Loan Party’s (1) Accounts, other than
those permitted under clause (a) of the definition of Permitted Encumbrances and
clause (a) above and (2) Inventory, other than those permitted under clauses (a)
and (b) of the definition of Permitted Encumbrances and clause (a) above.

 

SECTION 6.03. Fundamental Changes.

 

(a)          No Loan Party will, nor will it permit any Subsidiary to, merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or liquidate or dissolve, except that, if at the
time thereof and immediately after giving effect thereto no Event of Default
shall have occurred and be continuing (i) any Subsidiary of any Borrower may
merge into a Borrower in a transaction in which a Borrower is the surviving
entity, (ii) any Loan Party (other than any Borrower) may merge into any other
Loan Party in a transaction in which the surviving entity is a Loan Party and
(iii) any Subsidiary that is not a Loan Party may liquidate or dissolve if the
Borrowers determine in good faith that such liquidation or dissolution is in the
best interests of the Borrowers and is not materially disadvantageous to the
Lenders; provided that any such merger involving a Person that is not a wholly
owned Subsidiary immediately prior to such merger shall not be permitted unless
also permitted by Section 6.04.

 

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(b)          No Loan Party will, nor will it permit any Subsidiary to, engage to
any material extent in any business other than businesses of the type conducted
by the Borrowers and their Subsidiaries on the date hereof and businesses
reasonably related thereto.

 

(c)          No Loan Party will change its Fiscal Year without the advance
written consent of the Administrative Agent.

 

(d)          No Loan Party shall (i) change its name as it appears in official
filings in the state of its incorporation or organization, (ii) change its chief
executive office, principal place of business, mailing address, or corporate
offices, (iii) change the type of entity that it is, or (iv) change its
organization identification number, if any, issued by its state of incorporation
or other organization, (v) change its state of incorporation or organization, in
each case, unless the Administrative Agent shall have received at least thirty
days prior written notice of such change and the Administrative Agent shall have
acknowledged in writing that either (1) the Administrative Agent has determined,
in its Permitted Discretion, that such change will not adversely affect the
validity, perfection or priority of any Lien in favor of the Administrative
Agent or any Lender in the Collateral, or (2) any reasonable action requested by
the Administrative Agent in connection therewith has been completed or taken
(including any action to continue the perfection of any Liens in favor of the
Administrative Agent or any Lender in any Collateral), provided that, any new
location shall be in the continental U.S.

 

SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. No Loan
Party will, nor will it permit any Subsidiary to, form any subsidiary after the
Effective Date, or purchase, hold or acquire (including pursuant to any merger
with any Person that was not a Loan Party and a wholly owned Subsidiary prior to
such merger) any Equity Interests, evidences of Indebtedness or other securities
(including any option, warrant or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, Guarantee any obligations
of, or make or permit to exist any investment or any other interest in, any
other Person, or purchase or otherwise acquire (in one transaction or a series
of transactions) any assets of any other Person constituting a business unit
(whether through purchase of assets, merger or otherwise), except:

 

(a)          Permitted Investments;

 

(b)          investments and loans in existence on the date hereof and described
in Schedule 6.04;

 

(c)          investments by the Loan Parties in the Equity Interests of their
respective Subsidiaries, provided that any Equity Interests held by a Loan Party
shall be pledged pursuant to the applicable Security Agreement (subject to the
limitations applicable to Equity Interests of a Foreign Subsidiary referred to
in Section 5.14);

 

(d)          loans or advances made by any Loan Party to any Subsidiary and made
by any Subsidiary to a Loan Party or any other Subsidiary, provided that any
such loans and advances made by a Loan Party shall be evidenced by a promissory
note pledged pursuant to the applicable Security Agreement;

 

(e)          Guarantees constituting Indebtedness permitted by Section 6.01;

 

(f)          loans or advances made by a Loan Party to its employees on an
arms-length basis in the ordinary course of business consistent with past
practices for travel and entertainment expenses, relocation costs and similar
purposes up to a maximum of $100,000 in the aggregate at any one time
outstanding;

 

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(g)          notes payable, or stock or other securities issued by Account
Debtors to a Loan Party pursuant to negotiated agreements with respect to
settlement of such Account Debtor’s Accounts in the ordinary course of business,
consistent with past practices;

 

(h)          investments in the form of Swap Agreements permitted by
Section 6.07;

 

(i)          investments of any Person existing at the time such Person becomes
a Subsidiary of a Borrower or consolidates or merges with a Borrower or any of
the Subsidiaries (including in connection with a permitted acquisition) so long
as such investments were not made in contemplation of such Person becoming a
Subsidiary or of such merger;

 

(j)          investments received in connection with the disposition of assets
permitted by Section 6.05;

 

(k)          investments constituting deposits described in clauses (c) and (d)
of the definition of the term “Permitted Encumbrances”;

 

(l)          extensions of credit or credit accommodations to customers or
vendors made by a Borrower or a Subsidiary in the ordinary course of its
business as conducted on the Effective Date;

 

(m)          other investments, loans, advances and warranties and recourse
obligations up to an aggregate amount not exceeding $250,000 outstanding at any
time;

 

(n)          investments of Escalade Insurance, that (i) are investments of the
same type and character as those investments of Escalade Insurance that exist on
the Effective Date, (ii) comply with the investment policies of Escalade
Insurance; and (iii) comply with all laws regulating the investments of Escalade
Insurance; provided, however, as of the Effective Date, all investments of
Escalade Insurance in excess of $500,000 shall be at least NAIC Class 1 and
Class 2 investments;

 

(o)          other investments of Subsidiaries, provided that investments
permitted under this Section 6.04(o) shall not exceed $500,000;

 

(p)          Permitted Acquisitions;

 

(q)          purchases of Equity Interests of a Borrower to the extent permitted
by Section 6.08 of this Agreement; and

 

(r)          the Wedcor Guaranty.

 

SECTION 6.05. Asset Sales. No Loan Party will, nor will it permit any Subsidiary
to, sell, transfer, lease or otherwise dispose of any asset, including any
Equity Interest owned by it, nor will the Borrowers permit any Subsidiary to
issue any additional Equity Interest in such Subsidiary (other than to a
Borrower or another Subsidiary in compliance with Section 6.04), except:

 

(a)          sales, transfers and dispositions of (i) Inventory in the ordinary
course of business and (ii) used, obsolete, worn out or surplus Equipment or
property in the ordinary course of business;

 

(b)          sales, transfers and dispositions of assets to any Borrower or any
Subsidiary, provided that any such sales, transfers or dispositions involving a
Subsidiary that is not a Loan Party shall be made in compliance with
Section 6.09;

 

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(c)          sales, transfers and dispositions of Accounts in connection with
the compromise, settlement or collection thereof;

 

(d)          sales, transfers and dispositions of Permitted Investments and
other investments permitted by clauses (i) and (k) of Section 6.04;

 

(e)          Sale and Leaseback Transactions permitted by Section 6.06;

 

(f)          dispositions resulting from any casualty or other insured damage
to, or any taking under power of eminent domain or by condemnation or similar
proceeding of, any property or asset of any Borrower or any Subsidiary;

 

(g)          sales, transfers and other dispositions of assets (other than
Equity Interests in a Subsidiary unless all Equity Interests in such Subsidiary
are sold) that are not permitted by any other paragraph of this Section,
provided that the aggregate fair market value of all assets sold, transferred or
otherwise disposed of in reliance upon this paragraph (g) shall not exceed
$750,000 during any Fiscal Year of the Company; and

 

(h)          sale of the real estate and improvements located in Reynosa,
Mexico; provided that the Net Proceeds of such sale shall be applied to the
Obligations as provided in Section 2.11(c) of this Agreement.

 

provided that all sales, transfers, leases and other dispositions permitted
hereby (other than those permitted by paragraphs (b), (f), (h) and (i) above)
shall be made for fair value and for at least 75% cash consideration.

 

SECTION 6.06. Sale and Leaseback Transactions. No Loan Party will, nor will it
permit any Subsidiary to, enter into any arrangement, directly or indirectly,
whereby it shall sell or transfer any property, real or personal, used or useful
in its business, whether now owned or hereafter acquired, and thereafter rent or
lease such property or other property that it intends to use for substantially
the same purpose or purposes as the property sold or transferred a “Sale and
Leaseback Transaction”), except for any such sale of any fixed or capital assets
by any Borrower or any Subsidiary that is made for cash consideration in an
amount not less than the fair value of such fixed or capital asset and is
consummated within 90 days after such Borrower or such Subsidiary acquires or
completes the construction of such fixed or capital asset.

 

SECTION 6.07. Swap Agreements. No Loan Party will, nor will it permit any
Subsidiary to, enter into any Swap Agreement, except (a) Swap Agreements entered
into to hedge or mitigate risks to which the Borrower or any Subsidiary has
actual exposure (other than those in respect of Equity Interests of any Borrower
or any Subsidiary), and (b) Swap Agreements entered into in order to effectively
cap, collar or exchange interest rates (from floating to fixed rates, from one
floating rate to another floating rate or otherwise) with respect to any
interest-bearing liability or investment of any Borrower or any Subsidiary.

 

SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness.

 

(a)          No Loan Party will, nor will it permit any Subsidiary to, declare
or make, or agree to declare or make, directly or indirectly, any Restricted
Payment, or enter into any transaction that has a substantially similar effect
or incur any obligation (contingent or otherwise) to do so, except (i) the
Borrowers may declare and pay dividends with respect to its common stock payable
solely in additional shares of its common stock, and, with respect to its
preferred stock, payable solely in additional shares of such preferred stock or
in shares of its common stock, (ii) so long as there exists no Event of Default,
the Borrowers may, to the extent required by law, repurchase fractional shares
of Borrowers’ Equity Interests up to an aggregate repurchase total for all
fractional shares repurchased of $500,000, (iii) the Borrowers may issue its
common stock pursuant to the Borrowers’ stock option plan existing on the
Effective Date, (iv) so long as there exists no Event of Default, during the
period beginning on the Effective Date and continuing to and including the
Maturity Date, the Borrowers may purchase shares of Borrowers’ Equity Interests
up to an aggregate purchase total for all shares repurchased of $3,000,000; and
(v) the Borrowers may declare and pay dividends so long as there exists no Event
of Default.

 

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(b)          No Loan Party will, nor will it permit any Subsidiary to, make or
agree to pay or make, directly or indirectly, any payment or other distribution
(whether in cash, securities or other property) of or in respect of principal of
or interest on any Indebtedness, or any payment or other distribution (whether
in cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any Indebtedness, except:

 

(i)          payment of Indebtedness created under the Loan Documents;

 

(ii)         payment of regularly scheduled interest and principal payments as
and when due in respect of any Indebtedness permitted under Section 6.01, other
than payments in respect of the Subordinated Indebtedness prohibited by the
subordination provisions thereof;

 

(iii)        refinancings of Indebtedness to the extent permitted by
Section 6.01; and

 

(iv)        payment of secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the property or assets securing such Indebtedness.

 

SECTION 6.09. Transactions with Affiliates. No Loan Party will, nor will it
permit any Subsidiary to, sell, lease or otherwise transfer any property or
assets to, or purchase, lease or otherwise acquire any property or assets from,
or otherwise engage in any other transactions with, any of its Affiliates,
except (a) transactions that (i) are in the ordinary course of business and (ii)
are at prices and on terms and conditions not less favorable to such Loan Party
or such Subsidiary than could be obtained on an arm’s-length basis from
unrelated third parties, (b) transactions between or among the Loan Parties not
involving any other Affiliate, (c) any investment permitted by Sections 6.04(c)
or 6.04(d), (d) any Indebtedness permitted under Section 6.01(c), (e) any
Restricted Payment permitted by Section 6.08, (f) loans or advances to employees
permitted under Section 6.04, (g) the payment of reasonable fees to directors of
any Borrower or any Subsidiary who are not employees of such Borrower or any
Subsidiary, and compensation and employee benefit arrangements paid to, and
indemnities provided for the benefit of, directors, officers or employees of the
Borrowers or their Subsidiaries in the ordinary course of business, and (h) any
issuances of securities or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment agreements, stock
options and stock ownership plans approved by a Borrower’s board of directors.
Notwithstanding the foregoing, no Loan Party shall, nor shall it permit any
Subsidiary to make any payment, dividend or transfer any money to Escalade
Insurance except that the Loan Parties and their Subsidiaries may pay insurance
premiums which are due and payable to Escalade Insurance for insurance provided
in the ordinary course of business by or through Escalade Insurance to the Loan
Parties or their Subsidiaries.

 

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SECTION 6.10. Restrictive Agreements. No Loan Party will, nor will it permit any
Subsidiary to, directly or indirectly, enter into, incur or permit to exist any
agreement or other arrangement that prohibits, restricts or imposes any
condition upon (a) the ability of such Loan Party or any of its Subsidiaries to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Subsidiary to pay dividends or other distributions with
respect to any of its Equity Interests or to make or repay loans or advances to
any Borrower or any other Subsidiary or to Guarantee Indebtedness of any
Borrower or any other Subsidiary; provided that (i) the foregoing shall not
apply to restrictions and conditions imposed by any Requirement of Law or by any
Loan Document, (ii) the foregoing shall not apply to restrictions and conditions
existing on the date hereof identified on Schedule 6.10 (but shall apply to any
extension or renewal of, or any amendment or modification expanding the scope
of, any such restriction or condition), (iii) the foregoing shall not apply to
customary restrictions and conditions contained in agreements relating to the
sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, (iv) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness, (v) clause (a)
of the foregoing shall not apply to customary provisions in leases restricting
the assignment thereof, and (vi) clause (a) of the foregoing shall not apply to
restrictions in the Mexican Real Estate Purchase Agreement so long as such
restrictions apply only to “Harvard California,” Sociedad De Responsabilidad
Limitada De Capital Variable.

 

SECTION 6.11. Amendment of Material Documents. No Loan Party will, nor will it
permit any Subsidiary to, amend, modify or waive any of its rights under (a) any
agreement relating to any Subordinated Indebtedness, (b) its charter,
certificate or articles of incorporation or organization, by-laws, operating,
management or partnership agreement or other organizational or governing
documents or (c) to the extent any such amendment, modification or waiver would
be adverse to the Lenders.

 

SECTION 6.12. RESERVED.

 

SECTION 6.13. Financial Covenants.

 

(a)          Fixed Charge Coverage Ratio. As of the end of each fiscal quarter
closing after the Effective Date, the Company and its Subsidiaries shall achieve
a Fixed Charge Coverage Ratio for the four (4) successive Fiscal Quarters of the
Company ending on the date of determination of not less than 1.25 to 1.00.

 

(b)          RESERVED.

 

(c)          Funded Debt to EBITDA Ratio. The Loan Parties shall achieve, at the
end of each Fiscal Quarter which closes after the Effective Date, a Funded Debt
to EBITDA Ratio of not more than 2.75 to 1.0 for the 12-month period then ended.

 

ARTICLE VII

 

Events of Default

 

If any of the following events (“Events of Default”) shall occur:

 

(a)          the Borrowers shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise and such failure shall continue unremedied
for a period of three (3) Business Days;

 

(b)          the Borrowers shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement or any other Loan Document, when and as
the same shall become due and payable, and such failure shall continue
unremedied for a period of three Business Days;

 

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(c)          any representation or warranty made or deemed made by or on behalf
of any Loan Party or any Subsidiary in, or in connection with, this Agreement or
any other Loan Document or any amendment or modification hereof or thereof or
waiver hereunder or thereunder, or in any report, certificate, financial
statement or other document furnished pursuant to or in connection with this
Agreement or any other Loan Document or any amendment or modification hereof or
thereof or waiver hereunder or thereunder, shall prove to have been materially
incorrect when made or deemed made;

 

(d)          any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02(a), 5.03 (with respect to a
Loan Party’s existence) or 5.08 or in Article VI;

 

(e)          any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those which
constitute a default under another Section of this Article), and such failure
shall continue unremedied for a period of (i) 5 days after the earlier of
knowledge of such breach or notice thereof from the Administrative Agent (which
notice will be given at the request of any Lender) if such breach relates to
terms or provisions of Section 5.10 of this Agreement or (ii) 15 days after the
earlier of knowledge of such breach or notice thereof from the Administrative
Agent (which notice will be given at the request of any Lender) if such breach
relates to terms or provisions of any other Section of this Agreement;

 

(f)          any Loan Party or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable after
the expiration of any applicable notice and cure period;

 

(g)          any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (g) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the property
or assets securing such Indebtedness;

 

(h)          an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of a Loan Party or any Subsidiary of any Loan Party or its debts, or
of a substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Loan Party or any Subsidiary of any Loan
Party or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;

 

(i)          any Loan Party or any Subsidiary of any Loan Party shall
(i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of this
Article, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for such Loan Party or
Subsidiary of any Loan Party or for a substantial part of its assets, (iv) file
an answer admitting the material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment for the benefit of creditors
or (vi) take any action for the purpose of effecting any of the foregoing;

 

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(j)          any Loan Party or any Subsidiary of any Loan Party shall become
unable, admit in writing its inability, or publicly declare its intention not
to, or fail generally to pay its debts as they become due;

 

(k)          (i) one or more judgments for the payment of money in an aggregate
amount in excess of $100,000 shall be rendered against any Loan Party, any
Subsidiary of any Loan Party or any combination thereof and the same shall
remain undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor with a judgment in excess of $20,000 to attach or levy upon
any assets of any Loan Party or any Subsidiary of any Loan Party to enforce any
such judgment; or (ii) any Loan Party or any Subsidiary of any Loan Party shall
fail within 30 days to discharge one or more non-monetary judgments or orders
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, which judgments or orders, in any such case, are not
stayed on appeal or otherwise being appropriately contested in good faith by
proper proceedings diligently pursued;

 

(l)          an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse Effect;

 

(m)          a Change in Control shall occur;

 

(n)          the occurrence of any “default”, as defined in any Loan Document
(other than this Agreement) or the breach of any of the terms or provisions of
any Loan Document (other than this Agreement), which default or breach continues
beyond any period of grace therein provided;

 

(o)          the Loan Guaranty shall fail to remain in full force or effect or
any action shall be taken to discontinue or to assert the invalidity or
unenforceability of the Loan Guaranty, or any Loan Guarantor shall fail to
comply with any of the terms or provisions of the Loan Guaranty to which it is a
party, or any Loan Guarantor shall deny that it has any further liability under
the Loan Guaranty to which it is a party, or shall give notice to such effect,
including, but not limited to notice of termination delivered pursuant to the
terms of any Loan Guaranty;

 

(p)          except as permitted by the terms of any Collateral Document, (i)
any Collateral Document shall for any reason fail to create a valid security
interest in any Collateral purported to be covered thereby, or (ii) any Lien
securing any Secured Obligation shall cease to be a perfected, first priority
Lien; or

 

(q)          any Collateral Document shall fail to remain in full force or
effect or any action shall be taken to discontinue or to assert the invalidity
or unenforceability of any Collateral Document; and

 

(r)          any material provision of any Loan Document for any reason ceases
to be valid, binding and enforceable in accordance with its terms (or any Loan
Party shall challenge the enforceability of any Loan Document or shall assert in
writing, or engage in any action or inaction based on any such assertion, that
any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms);

 

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then, and in every such event (other than an event with respect to the Borrowers
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower Representative,
take either or both of the following actions, at the same or different
times:  (i) terminate the Commitments, whereupon the Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, but ratably as among the Classes of Loans and the Loans of
each Class at the time outstanding, in which case any principal not so declared
to be due and payable may thereafter be declared to be due and payable),
whereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and all fees and other obligations of the
Borrowers accrued hereunder, shall become due and payable immediately, in each
case without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrowers; and in the case of any event with
respect to the Borrowers described in clause (h) or (i) of this Article, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrowers accrued hereunder, shall automatically become due
and payable, in each case without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrowers. Upon the
occurrence and during the continuance of an Event of Default, the Administrative
Agent may, and at the request of the Required Lenders shall, increase the rate
of interest applicable to the Loans and other Obligations as set forth in this
Agreement and exercise any rights and remedies provided to the Administrative
Agent under the Loan Documents or at law or equity, including all remedies
provided under the UCC.

 

ARTICLE VIII

 

The Administrative Agent

 

SECTION 8.01. Appointment. Each of the Lenders, on behalf of itself and any of
its Affiliates that are Secured Parties and the Issuing Bank hereby irrevocably
appoints the Administrative Agent as its agent and authorizes the Administrative
Agent to take such actions on its behalf, including execution of the other Loan
Documents, and to exercise such powers as are delegated to the Administrative
Agent by the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto. In addition, to the extent required under
the laws of any jurisdiction other than the U.S., each of the Lenders and the
Issuing Bank hereby grants to the Administrative Agent any required powers of
attorney to execute any Collateral Document governed by the laws of such
jurisdiction on such Lender’s or Issuing Bank’s behalf. The provisions of this
Article are solely for the benefit of the Administrative Agent and the Lenders
(including the Swingline Lender and the Issuing Bank), and the Loan Parties
shall not have rights as a third party beneficiary of any of such provisions. It
is understood and agreed that the use of the term “agent” as used herein or in
any other Loan Documents (or any similar term) with reference to the
Administrative Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used as a matter of market custom, and is intended to
create or reflect only an administrative relationship between independent
contracting parties.

 

SECTION 8.02. Rights as a Lender. The bank serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the
Administrative Agent, and such bank and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with the Loan Parties
or any Subsidiary of a Loan Party or other Affiliate thereof as if it were not
the Administrative Agent hereunder.

 

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SECTION 8.03. Duties and Obligations. The Administrative Agent shall not have
any duties or obligations except those expressly set forth in the Loan
Documents. Without limiting the generality of the foregoing, (a) the
Administrative Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing, (b) the
Administrative Agent shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated by the Loan Documents that the Administrative Agent is
required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02), and (c) except as expressly set
forth in the Loan Documents, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to any Loan Party or any of its Subsidiaries that is communicated to or
obtained by the bank serving as Administrative Agent or any of its Affiliates in
any capacity. The Administrative Agent shall not be liable for any action taken
or not taken by it with the consent or at the request of the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 9.02) or in the absence of its own
gross negligence or willful misconduct as determined by a final nonappealable
judgment of a court of competent jurisdiction. The Administrative Agent shall be
deemed not to have knowledge of any Default unless and until written notice
thereof is given to the Administrative Agent by the Borrower Representative or a
Lender, and the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with any Loan Document, (ii) the contents of any
certificate, report or other document delivered hereunder or in connection with
any Loan Document, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Loan Document, (iv) the
validity, enforceability, effectiveness or genuineness of any Loan Document or
any other agreement, instrument or document, (v) the creation, perfection or
priority of Liens on the Collateral or the existence of the Collateral, or
(vi) the satisfaction of any condition set forth in Article IV or elsewhere in
any Loan Document, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.

 

SECTION 8.04. Reliance. The Administrative Agent shall be entitled to rely upon,
and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Administrative Agent may consult
with legal counsel (who may be counsel for the Borrowers), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

 

SECTION 8.05. Actions through Sub-Agents. The Administrative Agent may perform
any and all of its duties and exercise its rights and powers by or through any
one or more sub-agents appointed by the Administrative Agent. The Administrative
Agent and any such sub-agent may perform any and all of its duties and exercise
its rights and powers through their respective Related Parties. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related Parties of the Administrative Agent and any such sub-agent, and
shall apply to their respective activities in connection with the syndication of
the credit facilities provided for herein as well as activities as the
Administrative Agent.

 

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SECTION 8.06. Resignation. Subject to the appointment and acceptance of a
successor Administrative Agent as provided in this paragraph, the Administrative
Agent may resign at any time by notifying the Lenders, the Issuing Bank and the
Borrower Representative. Upon any such resignation, the Required Lenders shall
have the right, in consultation with the Borrowers, to appoint a successor. If
no successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within thirty (30) days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint
a successor Administrative Agent which shall be a bank with an office in New
York, New York, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Administrative Agent hereunder by its successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents. The fees payable by the Borrowers to a successor
Administrative Agent shall be the same as those payable to its predecessor,
unless otherwise agreed by the Borrowers and such successor. Notwithstanding the
foregoing, in the event no successor Administrative Agent shall have been so
appointed and shall have accepted such appointment within thirty (30) days after
the retiring Administrative Agent gives notice of its intent to resign, the
retiring Administrative Agent may give notice of the effectiveness of its
resignation to the Lenders, the Issuing Bank and the Borrowers, whereupon, on
the date of effectiveness of such resignation stated in such notice, (a) the
retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents, provided that, solely
for purposes of maintaining any security interest granted to the Administrative
Agent under any Collateral Document for the benefit of the Secured Parties, the
retiring Administrative Agent shall continue to be vested with such security
interest as collateral agent for the benefit of the Secured Parties and, in the
case of any Collateral in the possession of the Administrative Agent, shall
continue to hold such Collateral, in each case until such time as a successor
Administrative Agent is appointed and accepts such appointment in accordance
with this paragraph (it being understood and agreed that the retiring
Administrative Agent shall have no duly or obligation to take any further action
under any Collateral Document, including any action required to maintain the
perfection of any such security interest), and (b) the Required Lenders shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, provided that (i) all payments required to
be made hereunder or under any other Loan Document to the Administrative Agent
for the account of any Person other than the Administrative Agent shall be made
directly to such Person and (ii) all notices and other communications required
or contemplated to be given or made to the Administrative Agent shall also
directly be given or made to each Lender and the Issuing Bank. Following the
effectiveness of the Administrative Agent’s resignation from its capacity as
such, the provisions of this Article, Section 2.17(d) and Section 9.03, as well
as any exculpatory, reimbursement and indemnification provisions set forth in
any other Loan Document, shall continue in effect for the benefit of such
retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as Administrative Agent and in respect of the matters
referred to in the proviso under clause (a) above.

 

SECTION 8.07. Non-Reliance.

 

(a)          Each Lender acknowledges and agrees that the extensions of credit
made hereunder are commercial loans and letters of credit and not investments in
a business enterprise or securities. Each Lender further represents that it is
engaged in making, acquiring or holding commercial loans in the ordinary course
of its business and has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement as a Lender, and to make, acquire or hold
Loans hereunder. Each Lender shall, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information (which may contain material, non-public information within the
meaning of the United States securities laws concerning the Borrowers and their
Affiliates) as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document, any related agreement or any document furnished
hereunder or thereunder and in deciding whether or to the extent to which it
will continue as a Lender or assign or otherwise transfer its rights, interests
and obligations hereunder.

 

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(b)          Each Lender hereby agrees that (i) it has requested a copy of each
Report prepared by or on behalf of the Administrative Agent; (ii) the
Administrative Agent (A) makes no representation or warranty, express or
implied, as to the completeness or accuracy of any Report or any of the
information contained therein or any inaccuracy or omission contained in or
relating to a Report and (B) shall not be liable for any information contained
in any Report; (iii) the Reports are not comprehensive audits or examinations,
and that any Person performing any field examination will inspect only specific
information regarding the Loan Parties and will rely significantly upon the Loan
Parties’ books and records, as well as on representations of the Loan Parties’
personnel and that the Administrative Agent undertakes no obligation to update,
correct or supplement the Reports; (iv) it will keep all Reports confidential
and strictly for its internal use, not share the Report with any Loan Party or
any other Person except as otherwise permitted pursuant to this Agreement; and
(v) without limiting the generality of any other indemnification provision
contained in this Agreement, (A) it will hold the Administrative Agent and any
such other Person preparing a Report harmless from any action the indemnifying
Lender may take or conclusion the indemnifying Lender may reach or draw from any
Report in connection with any extension of credit that the indemnifying Lender
has made or may make to the Borrower, or the indemnifying Lender’s participation
in, or the indemnifying Lender’s purchase of, a Loan or Loans; and (B) it will
pay and protect, and indemnify, defend, and hold the Administrative Agent and
any such other Person preparing a Report harmless from and against, the claims,
actions, proceedings, damages, costs, expenses, and other amounts (including
reasonable attorneys’ fees) incurred by the Administrative Agent or any such
other Person as the direct or indirect result of any third parties who might
obtain all or part of any Report through the indemnifying Lender.

 

SECTION 8.08. RESERVED.

 

SECTION 8.09. Not Partners or Co-Venturers; Administrative Agent as
Representative of the Secured Parties.

 

(a)          The Lenders are not partners or co-venturers, and no Lender shall
be liable for the acts or omissions of, or (except as otherwise set forth herein
in case of the Administrative Agent) authorized to act for, any other Lender.
The Administrative Agent shall have the exclusive right on behalf of the Lenders
to enforce the payment of the principal of and interest on any Loan after the
date such principal or interest has become due and payable pursuant to the terms
of this Agreement.

 

(b)          In its capacity, the Administrative Agent is a “representative” of
the Secured Parties within the meaning of the term “secured party” as defined in
the New York Uniform Commercial Code. Each Lender authorizes the Administrative
Agent to enter into each of the Collateral Documents to which it is a party and
to take all action contemplated by such documents. Each Lender agrees that no
Secured Party (other than the Administrative Agent) shall have the right
individually to seek to realize upon the security granted by any Collateral
Document, it being understood and agreed that such rights and remedies may be
exercised solely by the Administrative Agent for the benefit of the Secured
Parties upon the terms of the Collateral Documents. In the event that any
Collateral is hereafter pledged by any Person as collateral security for the
Secured Obligations, the Administrative Agent is hereby authorized, and hereby
granted a power of attorney, to execute and deliver on behalf of the Secured
Parties any Loan Documents necessary or appropriate to grant and perfect a Lien
on such Collateral in favor of the Administrative Agent on behalf of the Secured
Parties.

 

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ARTICLE IX

 

Miscellaneous

 

SECTION 9.01. Notices.

 

(a)          Except in the case of notices and other communications expressly
permitted to be given by telephone or Electronic Systems (and subject in each
case to paragraph (b) below), all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by facsimile, as
follows:

 

(i)          if to any Loan Party, in care of the Borrower Representative at:

 

Escalade, Incorporated

817 Maxwell Ave.

Evansville, IN 47711

Attention: Stephen R. Wawrin, Vice President and CFO

Facsimile No: 812-467-1303

 

(ii)          if to the Administrative Agent, the Issuing Bank or the Swingline
Lender, to JPMorgan Chase Bank, N.A. at:

 

JPMorgan Chase Bank, N.A.

1 East Ohio Street, 4th Floor

Indianapolis, IN 46277

Attention: Andrew Hedegard, Vice President

Facsimile No: (317) 767-8007; and

 

JPMorgan Chase Bank, N.A.

1 East Ohio Street, 4th Floor

Indianapolis, IN 46277

Attention: Thomas W. Harrison, Senior Vice President

Facsimile No: (317) 767-8006

 

(iii)        if to any other Lender, to it at its address or facsimile number
set forth in its Administrative Questionnaire.

 

All such notices and other communications (i) sent by hand or overnight courier
service, or mailed by certified or registered mail, shall be deemed to have been
given when received or (ii) sent by facsimile shall be deemed to have been given
when sent, provided that if not given during normal business hours of the
recipient, such notice or communication shall be deemed to have been given at
the opening of business on the next Business Day of the recipient, or
(iii) delivered through Electronic Systems to the extent provided in paragraph
(b) below shall be effective as provided in such paragraph.

 

(b)          Notices and other communications to the Lenders hereunder may be
delivered or furnished by Electronic Systems pursuant to procedures approved by
the Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II or to compliance and no Default certificates delivered
pursuant to Section 5.01(c) unless otherwise agreed by the Administrative Agent
and the applicable Lender. Each of the Administrative Agent and the Borrower
Representative (on behalf of the Loan Parties) may, in its discretion, agree to
accept notices and other communications to it hereunder by Electronic Systems
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications. Unless the
Administrative Agent otherwise proscribes, all such notices and other
communications (i) sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if not given during the normal business
hours of the recipient, such notice or communication shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient, and (ii) posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address
as described in the foregoing clause (i) of notification that such notice or
communication is available and identifying the website address therefor;
provided that, for both clauses (i) and (ii) above, if such notice, e-mail or
other communication is not sent during the normal business hours of the
recipient, such notice or communication shall be deemed to have been sent at the
opening of business on the next Business Day of the recipient.

 

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(c)          Any party hereto may change its address, facsimile number or e-mail
address for notices and other communications hereunder by notice to the other
parties hereto. All notices and other communications given to any party hereto
in accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.

 

(d)          Electronic Systems.

 

(i)          Each Loan Party agrees that the Administrative Agent may, but shall
not be obligated to, make Communications (as defined below) available to the
Issuing Bank and the other Lenders by posting the Communications on Debt Domain,
Intralinks, Syndtrak, ClearPar or a substantially similar Electronic System.

 

(ii)         Any Electronic System used by the Administrative Agent is provided
“as is” and “as available.” The Agent Parties (as defined below) do not warrant
the adequacy of such Electronic Systems and expressly disclaim liability for
errors or omissions in the Communications. 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 any Agent Party in connection with the
Communications or any Electronic System. In no event shall the Administrative
Agent or any of its Related Parties (collectively, the “Agent Parties”) have any
liability to any Borrower or the other Loan Parties, any Lender, the Issuing
Bank or any other Person or entity for damages of any kind, including direct or
indirect, special, incidental or consequential damages, losses or expenses
(whether in tort, contract or otherwise) arising out of any Borrower’s, any Loan
Party’s or the Administrative Agent’s transmission of Communications through an
Electronic System. “Communications” means, collectively, any notice, demand,
communication, information, document or other material provided by or on behalf
of any Loan Party pursuant to any Loan Document or the transactions contemplated
therein which is distributed by the Administrative Agent, any Lender or the
Issuing Bank to any parties hereto or to any of their Related Parties by means
of electronic communications pursuant to this Section, including through an
Electronic System.

 

SECTION 9.02. Waivers; Amendments.

 

(a)          No failure or delay by the Administrative Agent, the Issuing Bank
or any Lender in exercising any right or power hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Administrative Agent, the Issuing Bank and the Lenders hereunder and under
any other Loan Document are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of any Loan
Document or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.

 

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(b)          Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except (i) in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders or (ii) in the case of
any other Loan Document, pursuant to an agreement or agreements in writing
entered into by the Administrative Agent and the Loan Party or Loan Parties that
are parties thereto, with the consent of the Required Lenders; provided that no
such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender (including any such Lender that is a Defaulting
Lender), (ii) reduce or forgive the principal amount of any Loan or LC
Disbursement or reduce the rate of interest thereon, or reduce or forgive any
interest or fees payable hereunder, without the written consent of each Lender
(including any such Lender that is a Defaulting Lender) directly affected
thereby, (iii) postpone any scheduled date of payment of the principal amount of
any Loan or LC Disbursement, or any date for the payment of any interest, fees
or other Obligations payable hereunder, or reduce the amount of, waive or excuse
any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender (including any such
Lender that is a Defaulting Lender) directly affected thereby, (iv) change
Section 2.18(b) or (d) in a manner that would alter the manner in which payments
are shared, without the written consent of each Lender (other than any
Defaulting Lender), (v) increase the advance rates set forth in the definition
of Borrowing Base or add new categories of eligible assets, without the written
consent of each Revolving Lender (other than any Defaulting Lender), (vi) change
any of the provisions of this Section or the definition of “Required Lenders” or
any other provision of any Loan Document specifying the number or percentage of
Lenders (or Lenders of any Class) required to waive, amend or modify any rights
thereunder or make any determination or grant any consent thereunder, without
the written consent of each Lender (other than any Defaulting Lender), (vii)
release any Loan Guarantor from its obligation under its Loan Guaranty (except
as otherwise permitted herein or in the other Loan Documents), without the
written consent of each Lender (other than any Defaulting Lender), or
(viii) except as provided in clause (d) of this Section or in any Collateral
Document, release all or substantially all of the Collateral, without the
written consent of each Lender (other than any Defaulting Lender); provided
further that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent, the Issuing Bank or the Swingline
Lender hereunder without the prior written consent of the Administrative Agent,
the Issuing Bank or the Swingline Lender, as the case may be (it being
understood that any change to Section 2.20 shall require the consent of the
Administrative Agent, the Issuing Bank and the Swingline Lender). The
Administrative Agent may also amend the Commitment Schedule to reflect
assignments entered into pursuant to Section 9.04. Any amendment, waiver or
other modification of this Agreement or any other Loan Document that by its
terms affects the rights or duties under this Agreement of the Lenders of one or
more Classes (but not the Lenders of any other Class), may be effected by an
agreement or agreements in writing entered into by the Borrowers and the
requisite number or percentage in interest of each affected Class of Lenders
that would be required to consent thereto under this Section if such Class of
Lenders were the only Class of Lenders hereunder at the time.

 

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(c)          The Lenders and the Issuing Bank hereby irrevocably authorize the
Administrative Agent, at its option and in its sole discretion, to release any
Liens granted to the Administrative Agent by the Loan Parties on any Collateral
(i) upon the termination of all of the Commitments, payment and satisfaction in
full in cash of all Secured Obligations (other than Unliquidated Obligations),
and the cash collateralization of all Unliquidated Obligations in a manner
satisfactory to each affected Lender, (ii) constituting property being sold or
disposed of if the Loan Party disposing of such property certifies to the
Administrative Agent that the sale or disposition is made in compliance with the
terms of this Agreement (and the Administrative Agent may rely conclusively on
any such certificate, without further inquiry), (iii) constituting property
leased to a Loan Party under a lease which has expired or been terminated in a
transaction permitted under this Agreement, or (iv) as required to effect any
sale or other disposition of such Collateral in connection with any exercise of
remedies of the Administrative Agent and the Lenders pursuant to Article VII.
Except as provided in the preceding sentence, the Administrative Agent will not
release any Liens on Collateral without the prior written authorization of the
Required Lenders; provided that, the Administrative Agent may in its discretion,
release its Liens on Collateral valued in the aggregate not in excess of
$250,000 during any calendar year without the prior written authorization of the
Required Lenders (it being agreed that the Administrative Agent may rely
conclusively on one or more certificates of the Borrower Representative as to
the value of the Collateral to be so released, without further inquiry).
Any such release shall not in any manner discharge, affect or impair the
Obligations or any Liens (other than those expressly being released) upon (or
obligations of the Loan Parties in respect of) all interests retained by the
Loan Parties, including the proceeds of any sale, all of which shall continue to
constitute part of the Collateral. Any execution and delivery by the
Administrative Agent of documents in connection with any such release shall be
without recourse to or warranty by the Administrative Agent.

 

(d)          If, in connection with any proposed amendment, waiver or consent
requiring the consent of “each Lender” or “each Lender affected thereby,” the
consent of the Required Lenders is obtained, but the consent of other necessary
Lenders is not obtained (any such Lender whose consent is necessary but not
obtained being referred to herein as a “Non-Consenting Lender”), then the
Borrowers may elect to replace a Non-Consenting Lender as a Lender party to this
Agreement, provided that, concurrently with such replacement, (i) another bank
or other entity which is reasonably satisfactory to the Borrowers, the
Administrative Agent and the Issuing Bank shall agree, as of such date, to
purchase for cash the Loans and other Obligations due to the Non-Consenting
Lender pursuant to an Assignment and Assumption and to become a Lender for all
purposes under this Agreement and to assume all obligations of the
Non-Consenting Lender to be terminated as of such date and to comply with the
requirements of clause (b) of Section 9.04, and (ii) the Borrowers shall pay to
such Non-Consenting Lender in same day funds on the day of such replacement (1)
all interest, fees and other amounts then accrued but unpaid to such
Non-Consenting Lender by the Borrowers hereunder to and including the date of
termination, including without limitation payments due to such Non-Consenting
Lender under Sections 2.15 and 2.17, and (2) an amount, if any, equal to the
payment which would have been due to such Lender on the day of such replacement
under Section 2.16 had the Loans of such Non-Consenting Lender been prepaid on
such date rather than sold to the replacement Lender.

 

(e)          Notwithstanding anything to the contrary herein the Administrative
Agent may, with the consent of the Borrower Representative only, amend, modify
or supplement this Agreement or any of the other Loan Documents to cure any
ambiguity, omission, mistake, defect or inconsistency.

 

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SECTION 9.03. Expenses; Indemnity; Damage Waiver.

 

(a)          The Loan Parties shall, jointly and severally, pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent and its
Affiliates, including the reasonable fees, charges and disbursements of counsel
for the Administrative Agent, in connection with the syndication and
distribution (including, without limitation, via the internet or through an
Electronic System) of the credit facilities provided for herein, the preparation
and administration of the Loan Documents or any amendments, modifications or
waivers of the provisions of the Loan Documents (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by the Issuing Bank in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any demand
for payment thereunder and (iii) all reasonable out-of-pocket expenses incurred
by the Administrative Agent, the Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for the Administrative Agent, the
Issuing Bank or any Lender, in connection with the enforcement, collection or
protection of its rights in connection with the Loan Documents, including its
rights under this Section, or in connection with the Loans made or Letters of
Credit issued hereunder, including all such out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of such Loans or
Letters of Credit. Expenses being reimbursed by the Loan Parties under this
Section include, without limiting the generality of the foregoing fees,
out-of-pocket costs and expenses incurred in connection with:

 

(i)          appraisals and insurance reviews;

 

(ii)         RESERVED;

 

(iii)        background checks regarding senior management and/or key investors,
as deemed necessary or appropriate in the sole discretion of the Administrative
Agent;

 

(iv)        Taxes, fees and other charges for (A) lien and title searches and
title insurance and (B) recording the Mortgages, filing financing statements and
continuations, and other actions to perfect, protect, and continue the
Administrative Agent’s Liens;

 

(v)         sums paid or incurred to take any action required of any Loan Party
under the Loan Documents that such Loan Party fails to pay or take; and

 

(vi)        forwarding loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the accounts and lock boxes, and costs
and expenses of preserving and protecting the Collateral.

 

All of the foregoing fees, costs and expenses may be charged to the Borrowers as
Revolving Loans or to another deposit account, all as described in
Section 2.18(c).

 

(b)          The Loan Parties shall, jointly and severally, indemnify the
Administrative Agent, the Issuing Bank and each Lender, and each Related Party
of any of the foregoing Persons (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, penalties, incremental taxes, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (i) the execution or delivery of the Loan Documents or
any agreement or instrument contemplated thereby, the performance by the parties
hereto of their respective obligations thereunder or the consummation of the
Transactions or any other transactions contemplated hereby, (ii) any Loan or
Letter of Credit or the use of the proceeds therefrom (including any refusal by
the Issuing Bank to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit), (iii) any actual or alleged presence or
Release of Hazardous Materials on or from any property owned or operated by the
Borrowers or any of their Subsidiaries, or any Environmental Liability related
in any way to the Borrowers or any of their Subsidiaries, (iv) the failure of a
Loan Party to deliver to the Administrative Agent the required receipts or other
required documentary evidence with respect to a payment made by a Loan Party for
Taxes pursuant to Section 2.17, or (v) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not such claim, litigation, investigation or proceeding is brought by
any Loan Party or their respective equity holders, Affiliates, creditors or any
other third Person and whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, penalties, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee. This Section 9.03(b) shall not apply with respect to Taxes
other than any Taxes that represent losses or damages arising from any non-Tax
claim.

 

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(c)          To the extent that the Loan Party fails to pay any amount required
to be paid by it to the Administrative Agent, the Issuing Bank or the Swingline
Lender (or any Related Party of any of the foregoing) under paragraph (a) or (b)
of this Section, each Lender severally agrees to pay to the Administrative
Agent, the Issuing Bank or the Swingline Lender (or any Related Party of any of
the foregoing), as the case may be, such Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount (it being understood that the Loan
Parties’ failure to pay any such amount shall not relieve any Loan Party of any
default in the payment thereof); provided that the unreimbursed expense or
indemnified loss, claim, damage, penalty, liability or related expense, as the
case may be, was incurred by or asserted against the Administrative Agent, the
Issuing Bank or the Swingline Lender in its capacity as such.

 

(d)          To the extent permitted by applicable law, no party hereto shall
assert, and each such party hereby waives, any claim against any other party
hereto (i) for any damages arising from the use by others of information or
other materials improperly or illegally obtained by third parties through
telecommunications, electronic or other information transmission systems
(including the Internet) or (ii) on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby or
thereby, the Transactions, any Loan or Letter of Credit or the use of the
proceeds thereof; provided that, nothing in this paragraph (d) shall relieve any
Loan Party of any obligation it may have to indemnify an Indemnitee against
special, indirect, consequential or punitive damages asserted against such
Indemnitee by a third party.

 

(e)          All amounts due under this Section shall be payable promptly after
written demand therefor.

 

SECTION 9.04. Successors and Assigns.

 

(a)          The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit), except that (i) no Borrower may assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
each Lender (and any attempted assignment or transfer by a Borrower without such
consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section. Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit), Participants (to the extent provided in
paragraph (c) of this Section) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, the Issuing Bank and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

 

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(b)          (i) Subject to the conditions set forth in paragraph (b)(ii) below,
any Lender may assign to one or more Persons (other than an Ineligible
Institution) all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment, participations in Letters of
Credit and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld) of:

 

(A)         the Borrower Representative, provided that the Borrower
Representative shall be deemed to have consented to any such assignment unless
it shall object thereto by written notice to the Administrative Agent within 5
Business Days after having received notice thereof, and provided further that no
consent of the Borrower Representative shall be required for an assignment to a
Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default
has occurred and is continuing, any other assignee; 

 

(B)         the Administrative Agent; and

 

(C)         the Issuing Bank.

 

(ii)         Assignments shall be subject to the following additional
conditions:

 

(A)         except in the case of an assignment to a Lender or an Affiliate of a
Lender or an Approved Fund or an assignment of the entire remaining amount of
the assigning Lender’s Commitment or Loans of any Class, the amount of the
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 unless each of the Borrower Representative and the Administrative
Agent otherwise consent, provided that no such consent of the Borrower
Representative shall be required if an Event of Default has occurred and is
continuing;

 

(B)         each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement, provided that this clause shall not be construed to prohibit the
assignment of a proportionate part of all the assigning Lender’s rights and
obligations in respect of one Class of Commitments or Loans;

 

(C)         the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; and

 

(D)         the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire in which the assignee
designates one or more credit contacts to whom all syndicate-level information
(which may contain material non-public information about the Company; the other
Loan Parties and their Related Parties or their respective securities) will be
made available and who may receive such information in accordance with the
assignee’s compliance procedures and applicable laws, including Federal and
state securities laws.

 

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For the purposes of this Section 9.04(b), the terms “Approved Fund” and
“Ineligible Institution” have the following meanings:

 

“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.

 

“Ineligible Institution” means a (a) natural person, (b) a Defaulting Lender or
its Parent, (c) company, investment vehicle or trust for, or owned and operated
for the primary benefit of, a natural person or relative(s) thereof; provided
that, such company, investment vehicle or trust shall not constitute an
Ineligible Institution if it (x) has not been established for the primary
purpose of acquiring any Loans or Commitments, (y) is managed by a professional
advisor, who is not such natural person or a relative thereof, having
significant experience in the business of making or purchasing commercial loans,
and (z) has assets greater than $25,000,000 and a significant part of its
activities consist of making or purchasing commercial loans and similar
extensions of credit in the ordinary course of its business; or (d) a Loan Party
or a Subsidiary or other Affiliate of a Loan Party, unless such Loan Party,
Subsidiary, or Affiliate is obtaining 100% of the Commitment and outstanding
Loans.

 

(iii)        Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date specified
in each Assignment and Assumption the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 9.04 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section.

 

(iv)        The Administrative Agent, acting for this purpose as a non-fiduciary
agent of the Borrowers, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitment of, and principal
amount of the Loans and LC Disbursements owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”). The entries in the Register
shall be conclusive, and the Borrowers, the Administrative Agent, the Issuing
Bank and the Lenders shall treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrowers, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

 

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(v)         Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee, the assignee’s completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register;
provided that if either the assigning Lender or the assignee shall have failed
to make any payment required to be made by it pursuant to Section 2.05, 2.06(d)
or (e), 2.07(b), 2.18(d) or 9.03(c), the Administrative Agent shall have no
obligation to accept such Assignment and Assumption and record the information
therein in the Register unless and until such payment shall have been made in
full, together with all accrued interest thereon. No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.

 

(c)          Any Lender may, without the consent of the Borrowers, the
Administrative Agent, the Issuing Bank or the Swingline Lender, sell
participations to one or more banks or other entities (a “Participant”) in all
or a portion of such Lender’s rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided that (A) such Lender’s obligations under this Agreement shall remain
unchanged; (B) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations; and (C) the Borrowers, the
Administrative Agent, the Issuing Bank and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
The Borrowers agree that each Participant shall be entitled to the benefits of
Sections 2.15, 2.16 and 2.17 (subject to the requirements and limitations
therein, including the requirements under Sections 2.17(f) and (g) (it being
understood that the documentation required under Section 2.17(f) shall be
delivered to the participating Lender and the information and documentation
required under Section 2.17(g) will be delivered to the Borrower Representative
and the Administrative Agent)) to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section;
provided that such Participant (A) agrees to be subject to the provisions of
Sections 2.18 and 2.19 as if it were an assignee under paragraph (b) of this
Section; and (B) shall not be entitled to receive any greater payment under
Sections 2.15 or 2.17, with respect to any participation, than its participating
Lender would have been entitled to receive, except to the extent such
entitlement to receive a greater payment results from a Change in Law that
occurs after the Participant acquired the applicable participation.

 

Each Lender that sells a participation agrees, at the Borrowers’ request and
expense, to use reasonable efforts to cooperate with the Borrowers to effectuate
the provisions of Section 2.19(b) with respect to any Participant. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 9.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.18(d) as though it were a Lender. Each Lender that sells a
participation shall, acting solely for this purpose as an agent of the
Borrowers, maintain a register on which it enters the name and address of each
Participant and the principal amounts (and stated interest) of each
Participant’s interest in the Loans or other obligations under this Agreement or
any other Loan Document (the “Participant Register”); provided that no Lender
shall have any obligation to disclose all or any portion of the Participant
Register (including the identity of any Participant or any information relating
to a Participant’s interest in any Commitments, Loans, Letters of Credit or its
other obligations under any Loan Document) to any Person except to the extent
that such disclosure is necessary to establish that such Commitment, Loan,
Letter of Credit or other obligation is in registered form under Section
5f.103-1(c) of the United States Treasury Regulations. The entries in the
Participant Register shall be conclusive absent manifest error, and such Lender
shall treat each Person whose name is recorded in the Participant Register as
the owner of such participation for all purposes of this Agreement
notwithstanding any notice to the contrary. For the avoidance of doubt, the
Administrative Agent (in its capacity as Administrative Agent) shall have no
responsibility for maintaining a Participant Register.

 

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(d)          Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

 

SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the Issuing
Bank or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any other Loan Document or any provision hereof or thereof.

 

SECTION 9.06. Counterparts; Integration; Effectiveness; Electronic Execution.

 

(a)          This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract. This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Except as provided in Section 4.01, this
Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
facsimile or other electronic transmission shall be effective as delivery of a
manually executed counterpart of this Agreement.

 

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(b)          Delivery of an executed counterpart of a signature page of this
Agreement by telecopy, emailed pdf. or any other electronic means that
reproduces an image of the actual executed signature page shall be effective as
delivery of a manually executed counterpart of this Agreement. The words
“execution,” “signed,” “signature,” “delivery,” and words of like import in or
relating to any document to be signed in connection with this Agreement and the
transactions contemplated hereby or thereby shall be deemed to include
Electronic Signatures, deliveries or the keeping of records in electronic form,
each of which shall be of the same legal effect, validity or enforceability as a
manually executed signature, physical delivery thereof or the use of a
paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform Electronic
Transactions Act.

 

SECTION 9.07. Severability. Any provision of any Loan Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 

SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by such
Lender or Affiliate to or for the credit or the account of any Borrower or such
Loan Party against any of and all the Secured Obligations held by such Lender,
irrespective of whether or not such Lender shall have made any demand under the
Loan Documents and although such obligations may be unmatured. The applicable
Lender shall notify the Borrower Representative and the Administrative Agent of
such set-off or application, provided that any failure to give or any delay in
giving such notice shall not affect the validity of any such set-off or
application under this Section. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.

 

SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.

 

(a)          The Loan Documents (other than those containing a contrary express
choice of law provision) shall be governed by and construed in accordance with
the internal laws (and not the law of conflicts) of the State of Indiana, but
giving effect to federal laws applicable to national banks.

 

(b)          Each Loan Party hereby irrevocably and unconditionally submits, for
itself and its property, to the exclusive jurisdiction of any U.S. Federal or
Indiana State court sitting in Indianapolis, Indiana in any action or proceeding
arising out of or relating to any Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such Indiana State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan Document shall
affect any right that the Administrative Agent, the Issuing Bank or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
or any other Loan Document against any Loan Party or its properties in the
courts of any jurisdiction.

 

(c)          Each Loan Party hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (b) of this Section. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

 

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(d)          Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

 

SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OR OTHER AGENT (INCLUDING ANY
ATTORNEY) OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 9.11. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

 

SECTION 9.12. Confidentiality. Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any Governmental Authority (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by any Requirement of Law or by any subpoena or similar
legal process, (d) to any other party to this Agreement, (e) in connection with
the exercise of any remedies under this Agreement or any other Loan Document or
any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to (i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii)
any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Loan Parties and their obligations, (g)
with the consent of the Borrower Representative, or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent, the Issuing
Bank or any Lender on a non-confidential basis from a source other than the
Borrowers. For the purposes of this Section, “Information” means all information
received from the Borrowers relating to the Borrowers or their business, other
than any such information that is available to the Administrative Agent, the
Issuing Bank or any Lender on a non-confidential basis prior to disclosure by
the Borrower and other than information pertaining to this Agreement routinely
provided by arrangers to data service providers, including league table
providers, that serve the lending industry; provided that, in the case of
information received from the Borrowers after the date hereof, such information
is clearly identified at the time of delivery as confidential. Any Person
required to maintain the confidentiality of Information as provided in this
Section shall be considered to have complied with its obligation to do so if
such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

 

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SECTION 9.13. Several Obligations; Nonreliance; Violation of Law. The respective
obligations of the Lenders hereunder are several and not joint and the failure
of any Lender to make any Loan or perform any of its obligations hereunder shall
not relieve any other Lender from any of its obligations hereunder. Each Lender
hereby represents that it is not relying on or looking to any margin stock (as
defined in Regulation U of the Board) for the repayment of the Borrowings
provided for herein. Anything contained in this Agreement to the contrary
notwithstanding, neither the Issuing Bank nor any Lender shall be obligated to
extend credit to the Borrowers in violation of any Requirement of Law.

 

SECTION 9.14. USA PATRIOT Act. Each Lender that is subject to the requirements
of the USA PATRIOT Act hereby notifies each Loan Party that pursuant to the
requirements of the USA PATRIOT Act, it is required to obtain, verify and record
information that identifies such Loan Party, which information includes the name
and address of such Loan Party and other information that will allow such Lender
to identify such Loan Party in accordance with the USA PATRIOT Act.

 

SECTION 9.15. Disclosure. Each Loan Party, each Lender and the Issuing Bank
hereby acknowledges and agrees that the Administrative Agent and/or its
Affiliates from time to time may hold investments in, make other loans to or
have other relationships with any of the Loan Parties and their respective
Affiliates.

 

SECTION 9.16. Appointment for Perfection. Each Lender hereby appoints each other
Lender as its agent for the purpose of perfecting Liens, for the benefit of the
Administrative Agent and the other Secured Parties, in assets which, in
accordance with Article 9 of the UCC or any other applicable law can be
perfected only by possession or control. Should any Lender (other than the
Administrative Agent) obtain possession or control of any such Collateral, such
Lender shall notify the Administrative Agent thereof and, promptly upon the
Administrative Agent’s request therefor, shall deliver such Collateral to the
Administrative Agent or otherwise deal with such Collateral in accordance with
the Administrative Agent’s instructions.

 

SECTION 9.17. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.

 

SECTION 9.18. No Advisory or Fiduciary Responsibility. In connection with all
aspects of each transaction contemplated hereby (including in connection with
any amendment, waiver or other modification hereof or of any other Loan
Document), the Borrowers acknowledge and agree that: (i) (A) the arranging and
other services regarding this Agreement provided by the Lenders are arm’s-length
commercial transactions between the Borrowers and their Affiliates, on the one
hand, and the Lenders and their Affiliates, on the other hand, (B) the Borrowers
have consulted their own legal, accounting, regulatory and tax advisors to the
extent it has deemed appropriate, and (C) the Borrowers are capable of
evaluating, and understands and accepts, the terms, risks and conditions of the
transactions contemplated hereby and by the other Loan Documents; (ii) (A) each
of the Lenders and their Affiliates 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 any
Borrower or any of their Affiliates, or any other Person and (B) no Lender or
any of its Affiliates has any obligation to the Borrowers or any of their
Affiliates with respect to the transactions contemplated hereby except, in the
case of a Lender, those obligations expressly set forth herein and in the other
Loan Documents; and (iii) each of the Lenders and their respective Affiliates
may be engaged in a broad range of transactions that involve interests that
differ from those of the Borrowers and their Affiliates, and no Lender or any of
its Affiliates has any obligation to disclose any of such interests to the
Borrowers or their Affiliates. To the fullest extent permitted by law, the
Borrower hereby waives and releases any claims that it may have against each of
the Lenders and their Affiliates with respect to any breach or alleged breach of
agency or fiduciary duty in connection with any aspect of any transaction
contemplated hereby.

 

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SECTION 9.19. RESERVED.

 

SECTION 9.20. Amendment. This Agreement amends and, as so amended, restates in
its entirety the Existing Credit Agreement. All references to the Existing
Credit Agreement in the other Loan Documents shall be deemed to mean the
Existing Credit Agreement as amended, restated and replaced by this Agreement,
as it may be further amended, modified, extended, renewed, supplemented and/or
restated from time to time and at any time. The other Loan Documents are hereby
modified and amended to the extent necessary to confirm them to, or to cause
them to accurately reflect the terms of this Agreement.

 

SECTION 9.21. Consent and Affirmation. Each Loan Party expressly and
unconditionally consents to (i) the execution and performance of this Agreement
by Borrowers and the Administrative Agent, and (ii) the amendment and
restatement of the Existing Credit Agreement pursuant to the terms and
conditions set forth in this Agreement. Each Loan Party agrees that neither the
provisions of this Agreement nor any action taken or not taken in accordance
with or in connection with this Agreement shall constitute a termination,
extinguishment, release, or discharge of any of such Loan Party’s obligations or
provide a defense, set off or counterclaim to any of the Loan Parties with
respect to any of the Loan Parties’ obligations under their respective Loan
Guaranties. Each Loan Party affirms to the Administrative Agent that their
respective Loan Guaranties remain in full force and effect and are such Loan
Party’s valid and binding obligation.

 

ARTICLE X

 

[Reserved] 

 

ARTICLE XI

 

The Borrower Representative 

 

SECTION 11.01. Appointment; Nature of Relationship. Escalade, Incorporated is
hereby appointed by each of the Borrowers as its contractual representative
(herein referred to as the “Borrower Representative”) hereunder and under each
other Loan Document, and each of the Borrowers irrevocably authorizes the
Borrower Representative to act as the contractual representative of such
Borrower with the rights and duties expressly set forth herein and in the other
Loan Documents. The Borrower Representative agrees to act as such contractual
representative upon the express conditions contained in this Article XI.
Additionally, the Borrowers hereby appoint the Borrower Representative as their
agent to receive all of the proceeds of the Loans in the Funding Account(s), at
which time the Borrower Representative shall promptly disburse such Loans to the
appropriate Borrower(s), provided that, in the case of a Revolving Loan, such
amount shall not exceed Revolving Loan Availability. The Administrative Agent
and the Lenders, and their respective officers, directors, agents or employees,
shall not be liable to the Borrower Representative or any Borrower for any
action taken or omitted to be taken by the Borrower Representative or the
Borrowers pursuant to this Section 11.01.

 

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SECTION 11.02. Powers. The Borrower Representative shall have and may exercise
such powers under the Loan Documents as are specifically delegated to the
Borrower Representative by the terms of each thereof, together with such powers
as are reasonably incidental thereto. The Borrower Representative shall have no
implied duties to the Borrowers, or any obligation to the Lenders to take any
action thereunder except any action specifically provided by the Loan Documents
to be taken by the Borrower Representative.

 

SECTION 11.03. Employment of Agents. The Borrower Representative may execute any
of its duties as the Borrower Representative hereunder and under any other Loan
Document by or through authorized officers.

 

SECTION 11.04. Notices. Each Borrower shall immediately notify the Borrower
Representative of the occurrence of any Default or Event of Default hereunder
referring to this Agreement describing such Default or Event of Default and
stating that such notice is a “notice of default”. In the event that the
Borrower Representative receives such a notice, the Borrower Representative
shall give prompt notice thereof to the Administrative Agent and the Lenders.
Any notice provided to the Borrower Representative hereunder shall constitute
notice to each Borrower on the date received by the Borrower Representative.

 

SECTION 11.05. Successor Borrower Representative. Upon the prior written consent
of the Administrative Agent, the Borrower Representative may resign at any time,
such resignation to be effective upon the appointment of a successor Borrower
Representative. The Administrative Agent shall give prompt written notice of
such resignation to the Lenders.

 

SECTION 11.06. Execution of Loan Documents; Borrowing Base Certificate. The
Borrowers hereby empower and authorize the Borrower Representative, on behalf of
the Borrowers, to execute and deliver to the Administrative Agent and the
Lenders the Loan Documents and all related agreements, certificates, documents,
or instruments as shall be necessary or appropriate to effect the purposes of
the Loan Documents, including, without limitation, the Borrowing Base
Certificates and the Compliance Certificates. Each Borrower agrees that any
action taken by the Borrower Representative or the Borrowers in accordance with
the terms of this Agreement or the other Loan Documents, and the exercise by the
Borrower Representative of its powers set forth therein or herein, together with
such other powers that are reasonably incidental thereto, shall be binding upon
all of the Borrowers.

 

SECTION 11.07. Reporting. Each Borrower hereby agrees that such Borrower shall
furnish promptly after each fiscal quarter to the Borrower Representative a copy
of its Borrowing Base Certificate (or provide similar information deemed
necessary by the Borrower Representative) and any other certificate or report
required hereunder or requested by the Borrower Representative on which the
Borrower Representative shall rely to prepare the Borrowing Base Certificates
and Compliance Certificates required pursuant to the provisions of this
Agreement.

 

[Signature Pages Follow]

 

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Signature Pages to Second Amended and Restated Credit Agreement

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

  ESCALADE, INCORPORATED, as a Borrower and Borrower Representative         By
/s/ STEPHEN R. WAWRIN     Stephen R. Wawrin,     Vice President, Chief Financial
Officer and Secretary       INDIAN INDUSTRIES, INC., as a Borrower         By
/s/ STEPHEN R. WAWRIN     Stephen R. Wawrin,     Vice President, Chief Financial
Officer and Secretary       OTHER LOAN PARTIES:       BEAR ARCHERY, INC.        
By /s/ STEPHEN R. WAWRIN     Stephen R. Wawrin,     Vice President, Chief
Financial Officer and Secretary       EIM COMPANY, INC.         By /s/ STEPHEN
R. WAWRIN     Stephen R. Wawrin,     Vice President, Chief Financial Officer and
Secretary       ESCALADE INSURANCE, INC.         By /s/ STEPHEN R. WAWRIN    
Stephen R. Wawrin,     Vice President, Chief Financial Officer and Secretary    
  ESCALADE SPORTS PLAYGROUND, INC.         By /s/ STEPHEN R. WAWRIN     Stephen
R. Wawrin,     Vice President, Chief Financial Officer and Secretary

 

 

 

 

Signature Pages to Second Amended and Restated Credit Agreement

 

  HARVARD SPORTS, INC.         By /s/ STEPHEN R. WAWRIN     Stephen R. Wawrin,  
  Vice President, Chief Financial Officer and Secretary       WEDCOR HOLDINGS,
INC.         By /s/ STEPHEN R. WAWRIN     Stephen R. Wawrin,     Vice President,
Chief Financial Officer and Secretary       SOP SERVICES, INC.         By /s/
STEPHEN R. WAWRIN     Stephen R. Wawrin,     Vice President, Chief Financial
Officer and Secretary       U. S. WEIGHT, INC.         By /s/ STEPHEN R. WAWRIN
    Stephen R. Wawrin,     Vice President, Chief Financial Officer and Secretary
      GOALSETTER SYSTEMS, INC.         By /s/ STEPHEN R. WAWRIN     Stephen R.
Wawrin,     Vice President, Chief Financial Officer and Secretary

 

 

 

 

Signature Pages to Second Amended and Restated Credit Agreement

 

  JPMORGAN CHASE BANK, N.A., individually and as Administrative Agent, Issuing
Bank and Swingline Lender         By /s/ THOMAS W. HARRISON     Thomas W.
Harrison,     Senior Vice President

 

 

 

 

COMMITMENT SCHEDULE

 

Lender

  Revolving
Commitment   Term Loan
Commitment   Commitment  JPMorgan Chase Bank, N.A.  $35,000,000.00  
$7,500,000.00   $42,500,000.00  Total  $35,000,000.00   $7,500,000.00  
$42,500,000.00 

 

Exhibit G

 

 

EXHIBIT G

 

[FORM OF]

 

THIRD AMENDED AND RESTATED REVOLVING NOTE

 

U.S. $35,000,000.00 January ___, 2016

 

FOR VALUE RECEIVED, on or before the Revolving Loan Maturity Date, ESCALADE,
INCORPORATED, an Indiana corporation, and INDIAN INDUSTRIES, INC., an Indiana
corporation (collectively, “Makers”), jointly and severally, unconditionally
promise to pay to the order of JPMorgan Chase Bank, N.A. (“Bank”) at the offices
of the Administrative Agent, at 1 East Ohio Street, Indianapolis, Indiana 46247,
the principal sum of Thirty Five Million and 00/100 Dollars ($35,000,000.00)
(or, if less, the unpaid principal balance thereof), together with interest
thereon as provided in the Credit Agreement (as defined below). Capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
them in the Credit Agreement (as defined below).

 

The principal of this Third Amended and Restated Revolving Note (this “Revolving
Note”) and all interest accruing thereon shall be due and payable by Makers on
such dates and in accordance with the terms of the Credit Agreement. All amounts
received on this Revolving Note shall be applied in accordance with the terms of
the Credit Agreement.

 

This Revolving Note is one of the “Revolving Notes” referred to in the Second
Amended and Restated Credit Agreement, dated as of January ___, 2016, by and
among Makers, the Loan Parties thereto, the Lenders party thereto and JPMorgan
Chase Bank, N.A., as Administrative Agent, Issuing Bank, a Swingline Lender, and
a Lender (as amended, restated or modified from time to time, the “Credit
Agreement”), to which reference is made for the conditions and procedures under
which advances, payments, readvances and repayments may be made prior to the
Revolving Loan Maturity Date, for the terms upon which Makers may make and are
required to make prepayments from time to time and at any time prior to the
Revolving Loan Maturity Date, and for the terms and conditions upon which the
maturity of this Revolving Note may be accelerated and the unpaid balance of
principal and accrued interest thereon declared immediately due and payable.
This Revolving Note amends and, as so amended, restates in its entirety a Second
Amended and Restated Revolving Note dated as of November 13, 2013, issued by
Escalade, Incorporated to the order of Bank in the principal amount of
$31,000,000.00.

 

If any installment of principal or interest due under the terms of this
Revolving Note falls due on a day which is not a Business Day, the due date
shall be extended to the next succeeding Business Day and interest will be
payable at the applicable rate for the period of such extension.

 

All amounts payable under this Revolving Note shall be payable without relief
from valuation and appraisement laws, and with all collection costs and
attorneys’ fees.

 

The holder of this Revolving Note may make extensions of time for payment of the
indebtedness evidenced by this Revolving Note, or reduce the payments thereon,
release any collateral securing payment of such indebtedness or accept a renewal
note or notes therefor, all without notice to Makers or any endorser(s) and
Makers and all endorsers hereby severally consent to any such extensions,
reductions, releases and renewals, all without notice, and agree that any such
action shall not release or discharge any of them from any liability hereunder.
Makers and endorser(s), jointly and severally, waive demand, presentment for
payment, protest, notice of protest and notice of nonpayment or dishonor of this
Revolving Note and each of them consents to all extensions of the time of
payment thereof.

 

Exhibit G

 

 

MAKERS AND BANK (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN
OR AMONG ANY MAKER AND BANK ARISING OUT OF OR IN ANY WAY RELATED TO THIS
REVOLVING NOTE OR ANY OTHER LOAN DOCUMENT. THIS PROVISION IS A MATERIAL
INDUCEMENT TO BANK TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE LOAN
DOCUMENTS. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS REVOLVING NOTE
SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF INDIANA WITHOUT REGARD TO
ITS CHOICE OR CONFLICTS OF LAWS PROVISIONS. EACH MAKER AGREES THAT THE COURTS OF
THE STATE OF INDIANA LOCATED IN INDIANAPOLIS, INDIANA, AND THE FEDERAL COURTS
LOCATED IN THE SOUTHERN DISTRICT OF INDIANA, MARION COUNTY, HAVE JURISDICTION
OVER ANY AND ALL ACTIONS AND PROCEEDINGS INVOLVING THIS REVOLVING NOTE OR ANY
OTHER AGREEMENT MADE IN CONNECTION HEREWITH AND EACH MAKER HEREBY IRREVOCABLY
AND UNCONDITIONALLY AGREES TO SUBMIT TO THE JURISDICTION OF SUCH COURTS FOR
PURPOSES OF ANY SUCH ACTION OR PROCEEDING. EACH MAKER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH ACTION OR PROCEEDING, INCLUDING ANY CLAIM THAT SUCH COURT IS
AN INCONVENIENT FORUM, AND CONSENTS TO SERVICE OF PROCESS PROVIDED THE SAME IS
IN ACCORDANCE WITH THE TERMS HEREOF. FINAL JUDGMENT IN ANY SUCH PROCEEDING AFTER
ALL APPEALS HAVE BEEN EXHAUSTED OR WAIVED SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT.

 

Executed and delivered as of January ___, 2016.

 

  ESCALADE, INCORPORATED,   an Indiana corporation         By:       Stephen R.
Wawrin, Vice President, Chief Financial Officer and Secretary       INDIAN
INDUSTRIES, INC.,   an Indiana corporation         By:       Stephen R. Wawrin,
Vice President, Chief Financial Officer and Secretary

 

Exhibit G

 

 

EXHIBIT H

 

[FORM OF]

 

THIRD AMENDED AND RESTATED TERM LOAN NOTE

 

U.S. $7,500,000.00 January ___, 2016

 

FOR VALUE RECEIVED, on or before the Term Loan Maturity Date, ESCALADE,
INCORPORATED, an Indiana corporation, and INDIAN INDUSTRIES, INC., an Indiana
corporation (collectively, “Makers”), jointly and severally, unconditionally
promise to pay to the order of JPMorgan Chase Bank, N.A. (“Bank”) at the offices
of the Administrative Agent, at 1 East Ohio Street, Indianapolis, Indiana 46247,
the principal sum of Seven Million Five Hundred Thousand and 00/100 Dollars
($7,500,000.00) (or, if less, the unpaid principal balance thereof), together
with interest thereon as provided in the Credit Agreement (as defined below).
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in the Credit Agreement (as defined below).

 

The principal of this Third Amended and Restated Term Loan Note (this “Term Loan
Note”) and all interest accruing thereon shall be due and payable by Makers on
such dates and in accordance with the terms of the Credit Agreement. All amounts
received on this Term Loan Note shall be applied in accordance with the terms of
the Credit Agreement.

 

This Term Loan Note is one of the “Term Loan Notes” referred to in the Second
Amended and Restated Credit Agreement, dated as of January ___, 2016, by and
among Makers, the other Loan Parties thereto, the Lenders party thereto and
JPMorgan Chase Bank, N.A., as Administrative Agent, Issuing Bank, Swingline
Lender and a Lender (the “Credit Agreement”), to which reference is made for the
conditions and procedures under which advances may be made on this Term Loan
Note, for the terms upon which Makers may make and are required to make payments
from time to time and at any time prior to the Term Loan Maturity Date, and for
the terms and conditions upon which the maturity of this Term Loan Note may be
accelerated and the unpaid balance of principal and accrued interest declared
immediately due and payable. This Term Loan Note amends and, as so amended,
restates in its entirety a Second Amended and Restated Term Loan Note dated as
of November 13, 2013, issued by Escalade, Incorporated to the order of Bank in
the principal amount of $5,000,000.00.

 

If any installment of principal or interest due under the terms of this Term
Loan Note falls due on a day which is not a Business Day, the due date shall be
extended to the next succeeding Business Day and interest will be payable at the
applicable rate for the period of such extension.

 

All amounts payable under this Term Loan Note shall be payable without relief
from valuation and appraisement laws, and with all collection costs and
attorneys’ fees.

 

The holder of this Term Loan Note may make extensions of time for payment of the
indebtedness evidenced by this Term Loan Note, or reduce the payments thereon,
release any collateral securing payment of such indebtedness or accept a renewal
note or notes therefor, all without notice to Makers or any endorser(s) and
Makers and all endorsers hereby severally consent to any such extensions,
reductions, releases and renewals, all without notice, and agree that any such
action shall not release or discharge any of them from any liability hereunder.
Makers and endorser(s), jointly and severally, waive demand, presentment for
payment, protest, notice of protest and notice of nonpayment or dishonor of this
Term Loan Note and each of them consents to all extensions of the time of
payment thereof.

 

Exhibit H

 

 

MAKERS AND BANK (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN
OR AMONG ANY MAKER AND BANK ARISING OUT OF OR IN ANY WAY RELATED TO THIS TERM
LOAN NOTE OR ANY OTHER LOAN DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT TO
BANK TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE LOAN DOCUMENTS. THE
VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS TERM LOAN NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF INDIANA WITHOUT REGARD TO ITS
CHOICE OR CONFLICTS OF LAWS PROVISIONS. EACH MAKER AGREES THAT THE COURTS OF THE
STATE OF INDIANA LOCATED IN INDIANAPOLIS, INDIANA, AND THE FEDERAL COURTS
LOCATED IN THE SOUTHERN DISTRICT OF INDIANA, MARION COUNTY, HAVE JURISDICTION
OVER ANY AND ALL ACTIONS AND PROCEEDINGS INVOLVING THIS TERM LOAN NOTE OR ANY
OTHER AGREEMENT MADE IN CONNECTION HEREWITH AND EACH MAKER HEREBY IRREVOCABLY
AND UNCONDITIONALLY AGREES TO SUBMIT TO THE JURISDICTION OF SUCH COURTS FOR
PURPOSES OF ANY SUCH ACTION OR PROCEEDING. EACH MAKER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH ACTION OR PROCEEDING, INCLUDING ANY CLAIM THAT SUCH COURT IS
AN INCONVENIENT FORUM, AND CONSENTS TO SERVICE OF PROCESS PROVIDED THE SAME IS
IN ACCORDANCE WITH THE TERMS HEREOF. FINAL JUDGMENT IN ANY SUCH PROCEEDING AFTER
ALL APPEALS HAVE BEEN EXHAUSTED OR WAIVED SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT.

 

Executed and delivered as of January ___, 2016.

 

  ESCALADE, INCORPORATED,   an Indiana corporation         By:       Stephen R.
Wawrin, Vice President, Chief Financial Officer and Secretary         INDIAN
INDUSTRIES, INC.,   an Indiana corporation         By:       Stephen R. Wawrin,
Vice President, Chief Financial Officer and Secretary

 

Exhibit H