exhibit101.htm


   

Exhibit 10.1


EXECUTION VERSION


 













 









$400,000,000







CREDIT AGREEMENT


dated as of June 13, 2012,







by and among












KRONOS WORLDWIDE, INC.,







as Borrower,


the Lenders referred to herein,


as Lenders,


and







WELLS FARGO BANK, NATIONAL ASSOCIATION,


as Administrative Agent,












WELLS FARGO SECURITIES, LLC,


as Sole Lead Arranger and Sole Book Manager


 



















  





 











  








TABLE OF CONTENTS


 


Page


 


 


ARTICLE I


 


DEFINITIONS


 



	
  

	
SECTION 1.1

	
Definitions 

	
 








	
  

	
SECTION 1.2

	
Other Definitions and Provisions 

	
 








	
  

	
SECTION 1.3

	
Accounting Terms 

	
 








	
  

	
SECTION 1.4

	
UCC Terms 

	
 








	
  

	
SECTION 1.5

	
Rounding 

	
 








	
  

	
SECTION 1.6

	
References to Agreement and Laws 

	
 








	
  

	
SECTION 1.7

	
Times of Day 

	
 








	
  

	
SECTION 1.8

	
Guaranty Obligations 

	
 








	
  

	
SECTION 1.9

	
Covenant Compliance Generally 

	
 







 


ARTICLE II


 


TERM LOAN FACILITY


 



	
  

	
SECTION 2.1

	
Initial Term Loan 

	
 








	
  

	
SECTION 2.2

	
Procedure for Advance of Term Loan 

	
 








	
  

	
SECTION 2.3

	
Repayment of Term Loans. 

	
 








	
  

	
SECTION 2.4

	
Prepayments of Term Loans. 

	
 







 


ARTICLE III


 


GENERAL LOAN PROVISIONS


 



	
  

	
SECTION 3.1

	
Interest. 

	
 








	
  

	
SECTION 3.2

	
Notice and Manner of Conversion or Continuation of Loans 

	
 








	
  

	
SECTION 3.3

	
Fees 

	
 








	
  

	
SECTION 3.4

	
Manner of Payment 

	
 








	
  

	
SECTION 3.5

	
Evidence of Indebtedness 

	
 








	
  

	
SECTION 3.6

	
Adjustments 

	
 








	
  

	
SECTION 3.7

	
Obligations of Lenders. 

	
 








	
  

	
SECTION 3.8

	
Changed Circumstances. 

	
 








	
  

	
SECTION 3.9

	
Indemnity 

	
 








	
  

	
SECTION 3.10

	
Increased Costs. 

	
 








	
  

	
SECTION 3.11

	
Taxes. 

	
 








	
  

	
SECTION 3.12

	
Mitigation Obligations; Replacement of Lenders. 

	
 








	
  

	
SECTION 3.13

	
Incremental Loans. 

	
 







 


ARTICLE IV


 


CONDITIONS OF CLOSING AND BORROWING


 



	
  

	
SECTION 4.1

	
Conditions to Closing and Initial Extensions of Credit 

	
 







 




  





 











  






ARTICLE V


 


REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES


 



	
  

	
SECTION 5.1

	
Organization; Power; Qualification 

	
 








	
  

	
SECTION 5.2

	
Ownership 

	
 








	
  

	
SECTION 5.3

	
Authorization Enforceability 

	
 








	
  

	
SECTION 5.4

	
Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc 

	
 








	
  

	
SECTION 5.5

	
Compliance with Law; Governmental Approvals 

	
 








	
  

	
SECTION 5.6

	
Tax Returns and Payments 

	
 








	
  

	
SECTION 5.7

	
Intellectual Property Matters 

	
 








	
  

	
SECTION 5.8

	
Environmental Matters 

	
 








	
  

	
SECTION 5.9

	
Employee Benefit Matters. 

	
 








	
  

	
SECTION 5.10

	
Margin Stock 

	
 








	
  

	
SECTION 5.11

	
Government Regulation 

	
 








	
  

	
SECTION 5.12

	
Material Contracts 

	
 








	
  

	
SECTION 5.13

	
Employee Relations 

	
 








	
  

	
SECTION 5.14

	
Burdensome Provisions 

	
 








	
  

	
SECTION 5.15

	
Financial Projections 

	
 








	
  

	
SECTION 5.16

	
No Material Adverse Change 

	
 








	
  

	
SECTION 5.17

	
Solvency 

	
 








	
  

	
SECTION 5.18

	
Titles to Properties 

	
 








	
  

	
SECTION 5.19

	
Litigation 

	
 








	
  

	
SECTION 5.20

	
OFAC 

	
 








	
  

	
SECTION 5.21

	
Absence of Defaults 

	
 








	
  

	
SECTION 5.22

	
Senior Indebtedness Status 

	
 








	
  

	
SECTION 5.23

	
Investment Bankers’ and Similar Fees 

	
 








	
  

	
SECTION 5.24

	
Disclosure 

	
 








	
  

	
SECTION 5.25

	
Security Documents. 

	
 








	
  

	
SECTION 5.26

	
Insurance 

	
 







 


ARTICLE VI


 


AFFIRMATIVE COVENANTS


 



	
  

	
SECTION 6.1

	
Financial Statements 

	
 








	
  

	
SECTION 6.2

	
Certificates; Other Reports 

	
 








	
  

	
SECTION 6.3

	
Notice of Litigation and Other Matters 

	
 








	
  

	
SECTION 6.4

	
Preservation of Corporate Existence and Related Matters 

	
 








	
  

	
SECTION 6.5

	
Maintenance of Property and Licenses. 

	
 








	
  

	
SECTION 6.6

	
Insurance 

	
 








	
  

	
SECTION 6.7

	
Accounting Methods and Financial Records 

	
 








	
  

	
SECTION 6.8

	
Payment of Taxes and Other Obligations 

	
 








	
  

	
SECTION 6.9

	
Compliance with Laws and Approvals 

	
 








	
  

	
SECTION 6.10

	
Environmental Laws 

	
 








	
  

	
SECTION 6.11

	
Compliance with ERISA 

	
 








	
  

	
SECTION 6.12

	
Compliance with Agreements 

	
 








	
  

	
SECTION 6.13

	
Visits and Inspections 

	
 








	
  

	
SECTION 6.14

	
Additional Subsidiaries. 

	
 








	
  

	
SECTION 6.15

	
Use of Proceeds 

	
 








	
  

	
SECTION 6.16

	
Further Assurances 

	
 








	
  

	
SECTION 6.17

	
Material Contracts 

	
 








	
  

	
SECTION 6.18

	
Post-Closing Matters.. 

	
 







 




  





 











  






ARTICLE VII


 


NEGATIVE COVENANTS


 



	
  

	
SECTION 7.1

	
Indebtedness 

	
 








	
  

	
SECTION 7.2

	
Liens 

	
 








	
  

	
SECTION 7.3

	
Investments 

	
 








	
  

	
SECTION 7.4

	
Fundamental Changes 

	
 








	
  

	
SECTION 7.5

	
Asset Dispositions 

	
 








	
  

	
SECTION 7.6

	
Restricted Payments 

	
 








	
  

	
SECTION 7.7

	
Transactions with Affiliates 

	
 








	
  

	
SECTION 7.8

	
Accounting Changes; Organizational Documents. 

	
 








	
  

	
SECTION 7.9

	
Payments and Modifications of Subordinated Indebtedness. 

	
 








	
  

	
SECTION 7.10

	
No Further Negative Pledges; Restrictive Agreements. 

	
 








	
  

	
SECTION 7.11

	
Nature of Business 

	
 








	
  

	
SECTION 7.12

	
Sale Leasebacks 

	
 








	
  

	
SECTION 7.13

	
Disposal of Subsidiary Interests 

	
 








	
  

	
SECTION 7.14

	
Financial Covenant 

	
 







 


ARTICLE VIII


 


DEFAULT AND REMEDIES


 



	
  

	
SECTION 8.1

	
Events of Default 

	
 








	
  

	
SECTION 8.2

	
Remedies 

	
 








	
  

	
SECTION 8.3

	
Rights and Remedies Cumulative; Non-Waiver; Etc. 

	
 








	
  

	
SECTION 8.4

	
Crediting of Payments and Proceeds 

	
 








	
  

	
SECTION 8.5

	
Administrative Agent May File Proofs of Claim 

	
 








	
  

	
SECTION 8.6

	
Credit Bidding. 

	
 







 


ARTICLE IX


 


THE ADMINISTRATIVE AGENT


 



	
  

	
SECTION 9.1

	
Appointment and Authority. 

	
 








	
  

	
SECTION 9.2

	
Rights as a Lender 

	
 








	
  

	
SECTION 9.3

	
Exculpatory Provisions. 

	
 








	
  

	
SECTION 9.4

	
Reliance by the Administrative Agent 

	
 








	
  

	
SECTION 9.5

	
Delegation of Duties 

	
 








	
  

	
SECTION 9.6

	
Resignation of Administrative Agent. 

	
 








	
  

	
SECTION 9.7

	
Non-Reliance on Administrative Agent and Other Lenders 

	
 








	
  

	
SECTION 9.8

	
No Other Duties, Etc 

	
 








	
  

	
SECTION 9.9

	
Collateral and Guaranty Matters. 

	
 








	
  

	
SECTION 9.10

	
Secured Hedge Agreements and Secured Cash Management Agreements 

	
 








	
  

	
SECTION 9.11

	
Indemnification of the Administrative Agent 

	
 







 




  





 











  






ARTICLE X


 


MISCELLANEOUS


 



	
  

	
SECTION 10.1

	
Notices. 

	
 








	
  

	
SECTION 10.2

	
Amendments, Waivers and Consents 

	
 








	
  

	
SECTION 10.3

	
Expenses; Indemnity. 

	
 








	
  

	
SECTION 10.4

	
Right of Setoff 

	
 








	
  

	
SECTION 10.5

	
Governing Law; Jurisdiction, Etc. 

	
 








	
  

	
SECTION 10.6

	
Waiver of Jury Trial. 

	
 








	
  

	
SECTION 10.7

	
Reversal of Payments 

	
 








	
  

	
SECTION 10.8

	
Injunctive Relief 

	
 








	
  

	
SECTION 10.9

	
Accounting Matters 

	
 








	
  

	
SECTION 10.10

	
Successors and Assigns; Participations. 

	
 








	
  

	
SECTION 10.11

	
Treatment of Certain Information; Confidentiality 

	
 








	
  

	
SECTION 10.12

	
Performance of Duties 

	
 








	
  

	
SECTION 10.13

	
All Powers Coupled with Interest 

	
 








	
  

	
SECTION 10.14

	
Survival. 

	
 








	
  

	
SECTION 10.15

	
Titles and Captions 

	
 








	
  

	
SECTION 10.16

	
Severability of Provisions 

	
 








	
  

	
SECTION 10.17

	
Counterparts; Integration; Effectiveness; Electronic Execution. 

	
 








	
  

	
SECTION 10.18

	
Term of Agreement 

	
 








	
  

	
SECTION 10.19

	
USA PATRIOT Act 

	
 








	
  

	
SECTION 10.20

	
Independent Effect of Covenants 

	
 








	
  

	
SECTION 10.21

	
Inconsistencies with Other Documents 

	
 












EXHIBITS


 


Exhibit A                               -       Form of Term Note


Exhibit B                               -       Form of Notice of Borrowing


Exhibit C                               -       Form of Notice of Prepayment


Exhibit D                               -       Form of Notice of Conversion/Continuation


Exhibit E                               -       Form of Assignment and Assumption


Exhibit F                               -       Form of Intercreditor Agreement


Exhibit G                               -       Form of Officer’s Certificate


Exhibit H-1                               -       U.S. Tax Compliance Certificate


Exhibit H-2                               -       U.S. Tax Compliance Certificate


Exhibit H-3                               -       U.S. Tax Compliance Certificate


Exhibit H-4                               -       U.S. Tax Compliance Certificate


Exhibit I                               -       Form of Affiliated Lender Assumption


 


SCHEDULES


 


Schedule 5.1                               -       Jurisdictions of Organization and Qualification


Schedule 5.2                               -       Subsidiaries and Capitalization


Schedule 5.9                               -       ERISA Plans of Credit Parties and ERISA Affiliates


Schedule 5.12                               -       Material Contracts Relating to the Collateral


Schedule 5.13                               -       Labor and Collective Bargaining Agreements of Credit Parties


Schedule 5.19                               -       Litigation of Borrower and all Subsidiaries


Schedule 6.18                               -       Post Closing Matters


 




  





 











  






Schedule 7.1                               -       Existing Indebtedness of Borrower and all Subsidiaries


Schedule 7.2                               -       Existing Liens of Borrower and all Subsidiaries


Schedule 7.3                               -       Existing Loans, Advances and Investments of Borrower and all Subsidiaries


Schedule 7.7                               -       Transactions with Affiliates


Schedule 7.10(b)                               -       Existing Encumbrances and Restrictions of Borrower and All Subsidiaries






  





 











  








CREDIT AGREEMENT, dated as of June 13, 2012, by and among KRONOS WORLDWIDE, INC., a Delaware corporation, as Borrower, the lenders who are party to this Agreement and the lenders who may become a party to this Agreement pursuant to the terms hereof, as Lenders, and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Administrative Agent for the Lenders.


 


STATEMENT OF PURPOSE


 


The Borrower has requested, and, subject to the terms and conditions hereof, the Administrative Agent and the Lenders have agreed, to extend certain credit facilities to the Borrower on the terms and conditions of this Agreement.


 


NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, such parties hereby agree as follows:


 


ARTICLE I                      


 


DEFINITIONS


 


SECTION 1.1 Definitions.  The following terms when used in this Agreement shall have the meanings assigned to them below:


 


“ABL Administrative Agent” means Wells Fargo Bank, National Association and any successor under the ABL Credit Agreement, or if there is no ABL Credit Agreement, the “ABL Administrative Agent” designated pursuant to the terms of the ABL Debt.


 


“ABL Collateral Agent” means Wells Fargo Bank, National Association and any successor under the ABL Credit Agreement, or if there is no ABL Credit Agreement, the “ABL Collateral Agent” designated pursuant to the terms of the ABL Debt.


 


“ABL Debt” means any (1) Indebtedness outstanding from time to time under the ABL Facility, (2) all obligations with respect to such Indebtedness and any Hedging Obligations incurred with the ABL Lender (or its Affiliates) and secured by the ABL Priority Collateral and (3) any facilities or services provided under a Cash Management Agreement incurred with the ABL Lender (or its Affiliates) and secured by the ABL Priority Collateral.


 


“ABL Facility” means the Asset-Based Revolving Credit Agreement entered into by and among the Borrower, the subsidiary borrowers party thereto, the lenders party thereto in their capacities as lenders thereunder, and Wells Fargo Bank, National Association, as administrative agent and collateral agent thereunder, including any guarantees, collateral documents and account control agreements, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings or refinancings thereof and any credit, commercial paper or other facilities with banks or other institutional lenders or investors that replace, refund or refinance all or any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility that increases the amount borrowable thereunder or alters the maturity thereof; provided that the ABL Facility shall be at all times subject to, and the collateral agent thereunder party to, the Intercreditor Agreement.


 


“ABL Lender” means any lender or holder or agent or arranger of Indebtedness under the ABL Facility.


 




  





 











  






“ABL Priority Collateral” has the meaning assigned to “ABL Collateral” in the Intercreditor Agreement.


 


“Administrative Agent” means Wells Fargo, in its capacity as Administrative Agent hereunder, and any successor thereto appointed pursuant to Section 9.6.


 


“Administrative Agent’s Office” means the office of the Administrative Agent specified in or determined in accordance with the provisions of Section 10.1(c).


 


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


 


“Affiliate” means, with respect to any Person, any other Person (other than a Subsidiary of the Borrower) which directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified Person or any of its Subsidiaries.  The term “control” means the possession, directly or indirectly, of any other power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.  The terms “controlling” and “controlled” have meanings correlative thereto.


 


“Affiliated Lender” means a Lender that is an Affiliate of any Credit Party.


 


“Agent Parties” has the meaning assigned thereto in Section 10.1(e)(ii).


 


“Agreement” means this Credit Agreement, as amended, restated, supplemented or otherwise modified from time to time.


 


“Applicable Law” means all applicable provisions of constitutions, laws, statutes, ordinances, rules, treaties, regulations, permits, licenses, approvals, final nonappealable orders of Governmental Authorities and all final nonappealable and binding orders and decrees of all courts and arbitrators.


 


“Applicable Margin” means the percentages equal to 4.75% per annum for LIBOR Rate Loans and 3.75% per annum for Base Rate Loans.


 


“Approved Fund” means any Fund 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.


 


“Arranger” means Wells Fargo Securities, LLC, in its capacity as sole lead arranger and sole bookrunner, and its successors.


 


“Asset Disposition” means the disposition of any or all of the assets (including, without limitation, any Capital Stock owned thereby) of any Credit Party whether by sale, lease, transfer or otherwise for value to any Person.  The term “Asset Disposition” shall not include (a) any Equity Issuance, (b) the sale of inventory or any other property or assets in the ordinary course of business including disposals or replacements of obsolete surplus or unused assets, (c) any other transaction permitted pursuant to Section 7.4, (d) the write-off, discount, sale or other disposition, in each case without recourse, of receivables and similar obligations arising in the ordinary course of business and in connection with the compromise or collection thereof, (e) the disposition of any Hedge Agreement, (f) dispositions of Investments, (f) sales or grants of licenses to use patents, trade secrets, know-how and other intellectual property of any Credit Party to the extent that any such license does not prohibit any Credit Party from using any material technologies licensed, or required any Credit Party to pay fees (other than de minimus fees) for use of any material technologies, (g) any Restricted Payment permitted by the terms of this Agreement, (h) any transaction with Affiliates permitted by Section 7.7, and (i) (A) the transfer by any Credit Party of its assets to any other Credit Party, (B) the transfer by any Non-Guarantor Subsidiary of its assets to any Credit Party (provided that in connection with any such transfer, such Credit Party shall not pay more than an amount equal to the fair market value of such assets as determined in good faith at the time of such transfer) and (C) the transfer by any Non-Guarantor Subsidiary of its assets to any other Non-Guarantor Subsidiary.


 




  





 











  






“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.10), and accepted by the Administrative Agent, in substantially the form attached as Exhibit E or any other form approved by the Administrative Agent.


 


“Attributable Indebtedness” means, on any date of determination, (a) in respect of any Capital Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease, the capitalized amount or principal amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a Capital Lease.


 


“Available Amount” means as at any date, the sum of, without duplication:


 


(a)           $175.0 million, plus


 


(b)           50% of the Consolidated Net Income of the Borrower and its Subsidiaries for the period (taken as one accounting period) from the beginning of the first full fiscal quarter following the Closing Date to the end of the most recently ended fiscal quarter of the Borrower for which internal financial statements are available at the time of such determination (and if Consolidated Net Income for any such period is a deficit, 100% of such deficit), plus


 


(c)           Net Cash Proceeds from Equity Issuances of the Borrower to the extent received by the Borrower (other than, (i) Disqualified Capital Stock and (ii) sales to, or capital contributions by, another Credit Party), plus


 


(d)           Without duplication of any amounts included in Consolidated Net Income, any cash returns on Investments (including any dividends paid or capital returned), minus


 


(e)           (1) Any Restricted Payments made (without duplication) under Section 7.6(e) and 7.6(g) and (2) any Investments made under Section 7.3(l).


 


“Bankruptcy Proceeding” has the meaning specified in Section 10.10(b)(v)(D).


 


“Base Rate” means, at any time, the highest of (a) the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 1/2 of 1%, (b) the prime commercial lending rate of the Administrative Agent, as established from time to time at its principal U.S. office (which such rate is an index or base rate and will not necessarily be its lowest or best rate charged to its customers or other banks) and (c) the daily LIBOR for a one month Interest Period (as defined below) plus the difference between the Applicable Margin for LIBOR Rate Loans and the Applicable Margin for Base Rate Loans (which, for purposes of this clause (c), shall in no event exceed 1.0%).


 


“Base Rate Loan” means any Loan bearing interest at a rate based upon the Base Rate as provided in Section 3.1(a).


 




  





 











  






“Borrower” means Kronos Worldwide, Inc., a Delaware corporation.


 


“Borrower Materials” has the meaning assigned thereto in Section 6.2.


 


“Business Day” means (a) for all purposes other than as set forth in clause (b) below, any day other than a Saturday, Sunday or legal holiday on which banks in New York, New York, are open for the conduct of their commercial banking business, and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, any LIBOR Rate Loan, or any Base Rate Loan as to which the interest rate is determined by reference to LIBOR, any day that is a Business Day described in clause (a) and that is also a day for trading by and between banks in Dollar deposits in the London interbank market.


 


“Capital Asset” means, with respect to any Person, any asset that should, in accordance with GAAP, be classified and accounted for as a capital asset on a Consolidated balance sheet of such Person.


 


“Capital Expenditures” means, with respect to any Person for any period, the aggregate cost of all Capital Assets acquired by such Person during such period, as determined in accordance with GAAP, net of any Net Cash Proceeds received from all dispositions of Capital Assets during such period (to the extent permitted hereunder) that have been reinvested pursuant to Section 2.4(b)(iii); provided that Capital Expenditures shall not be less than zero.


 


“Capital Lease” means, at the time determination thereof is to be made, any lease of any property by any Person, as lessee, that should, in accordance with GAAP, be classified and accounted for as a capital lease on a Consolidated balance sheet of such Person.


 


“Capital Stock” means (a) in the case of a corporation, capital stock, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (c) in the case of a partnership, partnership interests (whether general or limited), (d) in the case of a limited liability company, membership interests, (e) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person and (f) any and all warrants, rights or options to purchase any of the foregoing.


 


“Cash Equivalents” means, collectively, (a) marketable direct obligations issued or unconditionally guaranteed by the United States or the government of any member of the European Union or the Kingdom of Norway or any agency of any of the foregoing maturing within one year from the date of acquisition thereof, (b) marketable direct obligations issued by any member of the European Union or the Kingdom of Norway or any state of the United States of America or  the District of Columbia or any political subdivision of any such state or District or any public instrumentality thereof maturing within one year from the date of the acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody’s, (c) commercial paper maturing no more than two hundred seventy (270) days from the date of creation thereof and currently having a rating of at least A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit or banker’ s acceptances maturing no more than one hundred eighty (180) days from the date of creation thereof issued by banks organized under the laws of any member of the European Union or the Kingdom of Norway or the United States or any state thereof or the District of Columbia or any U.S. branch of a foreign bank, each having combined capital and surplus of not less than $250,000,000 and having a rating of “A” or better by a nationally recognized rating agency; (e) time deposits maturing no more than one hundred eighty (180) days from the date of creation thereof with commercial banks or savings banks or savings and loan associations each having membership either in the FDIC or the deposits of which are insured by the FDIC and in amounts not exceeding the maximum amounts of insurance thereunder unless such bank meets the requirements in clause (d) above, (f) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (d) above; (g) Investments in money market funds which invest substantially all their assets in securities of the types described in clauses (a) through (f) above, or (h) any other readily tradeable fund approved by the Administrative Agent.


 




  





 











  






“Cash Management Agreement” means any agreement to provide cash management services, including treasury, depository, overdraft, credit or debit card, electronic funds transfer and other cash management arrangements.


 


“Cash Management Bank” means any Person that, at the time it enters into a Cash Management Agreement, is a Lender, an Affiliate of a Lender, the Administrative Agent or an Affiliate of the Administrative Agent, in its capacity as a party to such Cash Management Agreement.


 


“Change in Control” means an event or series of events by which (i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) other than the Permitted Investors becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a “person” or “group” shall be deemed to have “beneficial ownership” of all Capital Stock that such “person” or “group” has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of more than fifty percent (50%) of the Capital Stock of the Borrower entitled to vote in the election of members of the board of directors (or equivalent governing body) of the Borrower; (ii) the replacement of a majority of the Board of Directors of the Borrower over a two-year period from the directors who constituted the Board of Directors of the Borrower at the beginning of such period, and such replacement shall not have been (A) approved by a vote of at least a majority of the Board of Directors of the Borrower then still in office who either were members of such Board of Directors at the beginning of such period or whose election as a member of such Board of Directors was previously so approved or (B) approved by the Permitted Investors so long as the Permitted Investors then beneficially own a majority of the Capital Stock of the Borrower; or (iii) there shall have occurred under any indenture or other instrument evidencing any Indebtedness that is in excess of the Threshold Amount or Capital Stock of Borrower or any Subsidiary any “change in control” or similar provision (as set forth in the indenture, agreement or other evidence of such Indebtedness) obligating the Borrower or any of the Credit Parties to repurchase, redeem or repay all or any part of the Indebtedness or Capital Stock provided for therein.


 


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







“Claim” has the meaning specified in Section 10.10(b)(v)(D).


 




  





 











  






“Class” means, when used in reference to any Loan, whether such Loan is a Term Loan and, when used in reference to any Commitment, whether such Commitment is a Term Loan Commitment.


 


“Closing Date” means the date of this Agreement.


 


“Code” means the Internal Revenue Code of 1986.


 


“Collateral” means the collateral security for the Secured Obligations pledged or granted pursuant to the Security Documents.


 


“Collateral Agreement” means the collateral agreement of even date herewith executed by the Credit Parties in favor of the Administrative Agent, for the benefit of the Secured Parties, which shall be in form and substance acceptable to the Administrative Agent, as amended, restated, supplemented or otherwise modified from time to time.


 


“Commitment Percentage” means, as to any Lender, such Lender’s Term Loan Percentage, as applicable.


 


“Commitments” means, collectively, as to all Lenders, the Term Loan Commitments of such Lenders.


 


“Communications” has the meaning assigned thereto in Section 10.1(e)(ii).


 


“Consolidated” means, when used with reference to financial statements or financial statement items of any Person, such statements or items on a consolidated basis in accordance with applicable principles of consolidation under GAAP.


 


“Consolidated EBITDA” means, for any period, the sum of the following determined on a Consolidated basis, without duplication, for the Borrower and its Subsidiaries in accordance with GAAP:  (a) Consolidated Net Income for such period plus (b) the sum of the following, without duplication, to the extent deducted in determining Consolidated Net Income for such period:  (i) income and franchise taxes paid during such period, (ii) Consolidated Interest Expense for such period, and (iii) amortization, depreciation and other non-cash charges for such period (except to the extent that such non-cash charges are reserved for cash charges to be taken in the future), (iv) extraordinary losses during such period (excluding extraordinary losses from discontinued operations) and (v) Transaction Costs less (c)  any extraordinary gains during such period.


 


“Consolidated Interest Expense” means, for any period, the sum of the following determined on a Consolidated basis, without duplication, for the Borrower and its Subsidiaries in accordance with GAAP, interest expense (including, without limitation, interest expense attributable to Capital Leases and all net payment obligations pursuant to Hedge Agreements associated with Indebtedness) for such period.


 


“Consolidated Net Income” means, for any period, the net income (or loss) of the Borrower and its Subsidiaries for such period, determined on a Consolidated basis, without duplication, in accordance with GAAP; provided, that in calculating Consolidated Net Income of the Borrower and its Subsidiaries for any period, there shall be excluded (a) the net income (or loss) of any Person (other than a Subsidiary which shall be subject to clause (c) below), in which the Borrower or any of its Subsidiaries has a joint interest with a third party, except to the extent such net income is actually paid in cash to the Borrower or any of its Subsidiaries by dividend or other distribution during such period, (b) the net income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or any of its Subsidiaries or is merged into or consolidated with the Borrower or any of its Subsidiaries or that Person’s assets are acquired by the Borrower or any of its Subsidiaries except to the extent included pursuant to the foregoing clause (a), (c) the net income (if positive), of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary to the Borrower or any of its Subsidiaries of such net income is restricted by contract, operation of law or otherwise; provided, however, that if such Subsidiary is able despite such restriction to distribute income or transfer cash to the referent Person by way of an intercompany loan or otherwise, then such income or cash, to the extent of such ability, shall not be excluded pursuant to this clause (c), and (d) non-cash gains or losses attributable solely to fluctuations in currency values and related income tax effects, in either case related to intercompany notes and accounts payable existing prior to or as of the Closing Date and payable to Borrower or any of its Subsidiaries.


 




  





 











  






“Consolidated Senior Secured Indebtedness” means, as of any date of determination with respect to the Borrower and its Subsidiaries on a Consolidated Basis, the sum of Consolidated Total Indebtedness that is secured by a Lien on any assets of the Borrower or any of its Subsidiaries.


 


“Consolidated Senior Secured Leverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated Senior Secured Indebtedness on such date to (b) Consolidated EBITDA for the period of four (4) consecutive fiscal quarters ending on or immediately prior to such date.


 


“Consolidated Total Indebtedness” means, as of any date of determination with respect to the Borrower and its Subsidiaries on a Consolidated basis without duplication, the sum of all Indebtedness of the Borrower and its Subsidiaries that is set forth under clauses (a), (c), (e), (f) and (g) (with respect to (g) only to the extent the Guaranty Obligations are of Indebtedness under clauses (a), (c), (e) and (f)) of the definition of “Indebtedness”.


 


“Consolidated Total Leverage Ratio” means, as of any date of determination, the ratio of (a) an amount equal to (i) the Consolidated Total Indebtedness on such date minus (ii) the unrestricted cash and Cash Equivalents of the Borrower and its Subsidiaries on a Consolidated basis on such date in an aggregate principal amount not to exceed $100,000,000 to (b) Consolidated EBITDA for the period of four (4) consecutive fiscal quarters ending on or immediately prior to such date.


 


“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 Facility” means the Term Loan Facility.


 


“Credit Party” means, individually, the Borrower and each of the Subsidiary Guarantors


 


“Credit Parties” means the Borrower and the Subsidiary Guarantors, collectively.


 


“Debt Issuance” means the issuance of any Indebtedness for borrowed money by any Credit Party or any of its Subsidiaries excluding the European Revolving Credit Facility and excluding all Indebtedness permitted under Section 7.1.


 


“Debt Rating” means, as applicable, (a) the corporate family rating of the Borrower as determined by Moody’s as of the Closing Date, (b) the corporate rating of the Borrower as determined by S&P as of the Closing Date and (c) the ratings of the Credit Facility as determined by Moody’s and/or S&P as of the Closing Date.


 


“Debtor Relief Laws” means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.


 




  





 











  






“Default” means any of the events specified in Section 8.1 which with the passage of time, the giving of notice or any other condition, would constitute an Event of Default.


 


“Disqualified Capital Stock” means any Capital Stock that, by its terms (or by the terms of any security or other Capital Stock into which it is convertible or for which it is exchangeable) or upon the happening of any event or condition, (a)  matures or is mandatorily redeemable (other than solely for Qualified Capital Stock), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments), (b) is redeemable at the option of the holder thereof (other than solely for Qualified Capital Stock) (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments), in whole or in part, (c) provides for the scheduled payment of dividends in cash or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Capital Stock that would constitute Disqualified Capital Stock, in each case, prior to the date that is 91 days after the Term Loan Maturity Date; provided, that if such Capital Stock is issued pursuant to a plan for the benefit of the Borrower or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased by the Borrower or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations.


 


“Dollars” or “$” means, unless otherwise qualified, dollars in lawful currency of the United States.


 


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


 


“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.10(b)(iii), (v) and (vi) (subject to such consents, if any, as may be required under Section 10.10(b)(iii) and (v)).


 


“Employee Benefit Plan” means (a) any employee benefit plan within the meaning of Section 3(3) of ERISA that is maintained for employees of any Credit Party or any ERISA Affiliate or (b) any Pension Plan or Multiemployer Plan that has at any time within the preceding seven (7) years been maintained, funded or administered for the employees of any Credit Party or any current or former ERISA Affiliate.


 


“Engagement Letter” means the separate engagement letter agreement dated April 30, 2012 among the Borrower, the Administrative Agent and the Arranger.


 


“Environmental Claims” means any and all actions, suits, demands, orders, decrees, consent decrees, liens, notices of noncompliance or violation, investigations (other than internal reports prepared by any Person in the ordinary course of business) or proceedings relating in any way to any actual or alleged violation of or liability under any Environmental Law or relating to any permit issued, or any approval given, under any such Environmental Law, including, without limitation, such actions for enforcement, cleanup, removal, response, remedial or other actions or damages, contribution, indemnification cost recovery, compensation or injunctive relief resulting from the presence, release, or threatened release of Hazardous Materials or arising from alleged injury or threat of injury to human health, safety or the environment.


 




  





 











  






“Environmental Laws” means any and all federal, foreign, state, provincial and local laws, statutes, ordinances, codes, rules, standards and regulations, permits, licenses, approvals, interpretations and final nonappealable orders of courts or Governmental Authorities, relating to the protection of human health, safety, the environment or natural resources, including, but not limited to, requirements pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing, permitting, investigation or remediation of Hazardous Materials.


 


“Equity Issuance” means (a) any issuance by any Credit Party or any Subsidiary thereof to any Person that is not a Credit Party or a Subsidiary thereof, of (i) shares of its Capital Stock, (ii) any shares of its Capital Stock pursuant to the exercise of options or warrants under agreements not existing on the Closing Date, or (iii) any shares of its Capital Stock pursuant to the conversion of any debt securities to equity and (b) any capital contribution from any Person that is not a Credit Party into any Credit Party or any Subsidiary thereof.  The term “Equity Issuance” shall not include (A) any Asset Disposition or (B) any Debt Issuance.


 


“ERISA” means the Employee Retirement Income Security Act of 1974, and the rules and regulations thereunder, each as amended or modified from time to time.


 


“ERISA Affiliate” means any Person who together with any Credit Party or any of its Subsidiaries is treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA.


 


“Eurodollar Reserve Percentage” means, for any day, the percentage (expressed as a decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%) which is in effect for such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any basic, supplemental or emergency reserves) in respect of eurocurrency liabilities or any similar category of liabilities for a member bank of the Federal Reserve System in New York City.


 


“European Revolving Credit Facility” means the Revolving Credit Agreement entered into on June 25, 2002 (as amended by a first amendment agreement dated September 3, 2004, by a second amendment agreement dated June 14, 2005, by a third amendment agreement dated May 26, 2008, by a fourth amendment agreement dated September 15, 2009 and by a fifth amendment agreement dated October 28, 2010) by and among Kronos Titan GmbH, Kronos Europe S.A./N.V., Kronos Titan AS, Kronos Norge AS, Titania AS, and Kronos Denmark APS, each as borrowers and guarantors, the lenders party thereto in their capacities as lenders thereunder, and Deutsche Bank Luxembourg S.A., as agent thereunder, including any guarantees, collateral documents and account control agreements, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings or refinancings thereof and any credit, commercial paper or other facilities with banks or other institutional lenders or investors that replace, refund or refinance all or any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility that increases the amount borrowable thereunder or alters the maturity thereof.


 


“Event of Default” means any of the events specified in Section 8.1; provided that any requirement for passage of time, giving of notice, or any other condition, has been satisfied.


 




  





 











  






“Excess Cash Flow” means, for the Borrower and its Subsidiaries on a Consolidated basis, in accordance with GAAP for any Fiscal Year, the excess, if any, of:


 


(a)           the sum, without duplication, of (i) Consolidated Net Income for such Fiscal Year, (ii) an amount equal to the amount of all non-cash charges to the extent deducted in determining Consolidated Net Income for such Fiscal Year and (iii) decreases in Working Capital for such Fiscal Year, less


 


(b)           the sum, without duplication, of (i) the aggregate amount of cash (A) actually paid by the Borrower and its Subsidiaries during such Fiscal Year on account of Capital Expenditures and Permitted Acquisitions (other than any amounts that were committed during a prior Fiscal Year to the extent such amounts reduced Excess Cash Flow in such prior Fiscal Year per clause (b)(i)(B) below) and (B) committed during such Fiscal Year to be used to make Capital Expenditures or Permitted Acquisitions which in either case have been actually made or consummated or for which a binding agreement exists as of the time of determination of Excess Cash Flow for such Fiscal Year (in each case under this clause (i) other than to the extent any such Capital Expenditure or Permitted Acquisition is made or is expected to be made with the proceeds of Indebtedness, any Equity Issuance, casualty proceeds, condemnation proceeds or other proceeds that would not be included in Consolidated EBITDA), (ii) the aggregate amount of all scheduled or required principal payments or repayments of Indebtedness (other than mandatory prepayments of the Term Loans pursuant to Section 2.3(a)) made by the Borrower and its Subsidiaries during such Fiscal Year, but only to the extent that such payments or repayments cannot be reborrowed or redrawn, (iii) voluntary principal prepayments of the Term Loan pursuant to Section 2.4(a), (iv) an amount equal to the amount of all non-cash credits to the extent included in determining Consolidated Net Income for such Fiscal Year, (v) an amount equal to the aggregate cash dividends paid on the Borrower’s outstanding common stock, but in any event not to exceed a quarterly dividend rate of $.20 per share and (vii) increases to Working Capital for such Fiscal Year.


 


“Exchange Act” means the Securities Exchange Act of 1934, as amended.


 


“Excluded Taxes” means, with respect to a recipient of any payment to be made by or on account of any obligation of any Credit Party under any Loan Document, (a) Taxes imposed on or measured by such recipient’s net income or profits (or franchise Taxes imposed in lieu of a Tax on net income or profits), in each case imposed by a jurisdiction 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 in such jurisdiction or as a result of any other present or former connection between such recipient and such jurisdiction (other than connections arising solely 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 Documents), (b) any branch profits tax under Section 884(a) of the Code, or any similar tax, imposed by any jurisdiction described in (a), (c) in the case of a Foreign Lender (other than any Foreign Lender becoming a party hereto pursuant to an assignment request by the Borrower under Section 3.12(b)), any U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender pursuant to a law in effect on the date on which such Lender becomes a party hereto or changes its lending office, except in each case to the extent that, pursuant to Section 3.11(a), additional amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office (d) any withholding Taxes attributable to a Lender’s failure to comply with Section 3.11(e) and, (e) any U.S. federal withholding Taxes imposed under FATCA.


 




  





 











  






“Extensions of Credit” means, as to any Lender at any time, (a) the aggregate principal amount of the Term Loans made by such Lender then outstanding, or (b) the making of any Loan by such Lender, as the context requires.


 


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


 


“FDIC” means the Federal Deposit Insurance Corporation, or any successor thereto.


 


“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day (or, if such day is not a Business Day, for the immediately preceding Business Day), as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that if such rate is not so published for any day which is a Business Day, the average of the quotation for such day on such transactions received by the Administrative Agent from three Federal Funds brokers of recognized standing selected by the Administrative Agent.


 


“First Tier Foreign Subsidiary” means any Foreign Subsidiary owned directly by any Credit Party.


 


“Fiscal Year” means the fiscal year of the Borrower and its Subsidiaries ending on December 31.


 


“Forbearance Period” has the meaning set forth in Section 7.14(b).


 


“Foreign Lender” means any Lender that is not a “United States person” as defined in Section 7701(a)(30) of the Code.


 


“Foreign Plan” means any plan, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States by any Credit Party or any Subsidiary thereof primarily for the benefit of employees of any Credit Party or any Subsidiary thereof residing outside the United States, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code.


 


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


 


“Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.


 


“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.


 


“Governmental Approvals” means all authorizations, consents, approvals, permits, licenses and exemptions of, registrations and filings with, and reports to, all Governmental Authorities.


 




  





 











  






“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, 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 (including any supra-national bodies such as the European Union or the European Central Bank).


 


“Guarantors” means each Subsidiary Guarantor.


 


“Guaranty Agreements” means the Subsidiary Guaranty Agreement.


 


“Guaranty Obligation” means, with respect to the Borrower and the Subsidiary Guarantors, without duplication, any obligation, contingent or otherwise, of any such Person pursuant to which such Person has directly or indirectly guaranteed any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of any such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement condition or otherwise) or (b) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, that the term Guaranty Obligation shall not include endorsements for collection or deposit in the ordinary course of business.


 


“Hazardous Materials” means any substances or materials (a) which are or become defined as hazardous wastes, hazardous substances, pollutants, contaminants, chemical substances or mixtures or toxic substances regulated under any Environmental Law, (b) which are toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human health or the environment and are or become regulated by any Governmental Authority, (c) the presence of which require investigation or remediation under any Environmental Law, or (d) the discharge or emission or release of which requires a permit or license under any Environmental Law or other Governmental Approval.


 


“Hedge Agreement” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, all as amended, restated, supplemented or otherwise modified from time to time.


 


“Hedge Bank” means any Person that, at the time it enters into a Hedge Agreement permitted under Article VII, is a Lender, an Affiliate of a Lender, the Administrative Agent or an Affiliate of the Administrative Agent, in its capacity as a party to such Hedge Agreement.


 


“Hedge Termination Value” means, in respect of any one or more Hedge Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Hedge Agreements, (a) for any date on or after the date such Hedge Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Hedge Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Hedge Agreements (which may include a Lender or any Affiliate of a Lender).


 




  





 











  






“Increased Amount Date” has the meaning assigned thereto in Section 3.13(a).


 


“Incremental Lender” has the meaning assigned thereto in Section 3.13(a).


 


“Incremental Term Loan” has the meaning assigned thereto in Section 3.13(a).


 


“Incremental Term Loan Commitment” has the meaning assigned thereto in Section 3.13(a).


 


“Indebtedness” means, with respect to any Person at any date and without duplication, the sum of the following:


 


(a)           all liabilities, obligations and indebtedness for borrowed money including, but not limited to, obligations evidenced by bonds, debentures, notes or other similar instruments of any such Person;


 


(b)           all obligations to pay the deferred purchase price of property or services of any such Person (including, without limitation, all obligations under non-competition, earn-out or similar agreements), except trade payables and accrued liabilities arising in the ordinary course of business not more than one hundred eighty (180) days past due, or that are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided for on the books of such Person;


 


(c)           the Attributable Indebtedness of such Person with respect to such Person’s obligations in respect of Capital Leases and Synthetic Leases (regardless of whether accounted for as indebtedness under GAAP);


 


(d)           all Indebtedness of any other Person secured by a Lien on any asset owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements except trade payable arising in the ordinary course of business), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse provided so long as such Person is not personally liable for any such liability, the amount of such liability shall be the lesser of the fair market value of  the property subject to the Lien and the amount of the Indebtedness secured


 


(e)           all obligations of any such Person in respect of Disqualified Capital Stock;


 


(f)           all net obligations of such Person under any Hedge Agreements; and


 


(g)           all Guaranty Obligations of any such Person with respect to any of the foregoing.


 


For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person.  The amount of any net obligation under any Hedge Agreement on any date shall be deemed to be the Hedge Termination Value thereof as of such date.


 




  





 











  






“Indemnified Taxes” means all Taxes other than Excluded Taxes and Other Taxes.


 


“Indemnitee” has the meaning assigned thereto in Section 10.3(b).


 


“Initial Term Loan” means the term loan made, or to be made, to the Borrower by the Lenders pursuant to Section 2.1.


 


“Insurance and Condemnation Event” means the receipt by any Credit Party or any of its Subsidiaries of any cash insurance proceeds or condemnation award payable by reason of theft, loss, physical destruction or damage, taking or similar event with respect to any of their respective Property.


 


“Intercreditor Agreement” means the intercreditor agreement dated as of the Closing Date, substantially in the form attached as Exhibit F hereto, among the ABL Collateral Agent, the Collateral Agent, and acknowledged by the Borrower and each Guarantor, as it may be amended, supplemented, modified, replaced or restated from time to time in accordance with this Agreement.


 


“Interest Period” has the meaning assigned thereto in Section 3.1(b).


 


“Investments” has the meaning set forth in Section 7.3.


 


“IRS” means the United States Internal Revenue Service, or any successor thereto.


 


“Lender” means each Person executing this Agreement as a Lender on the Closing Date and any other Person that shall have become a party to this Agreement as a Lender pursuant to an Assignment and Assumption, other than any Person that ceases to be a party hereto as a Lender pursuant to an Assignment and Assumption.


 


“Lender Joinder Agreement” means a joinder agreement in form and substance reasonably satisfactory to the Administrative Agent delivered in connection with Section 3.13.


 


“Lending Office” means, with respect to any Lender, the office of such Lender maintaining such Lender’s Extensions of Credit.


 


“LIBOR” means,


 


(a)           for any interest rate calculation with respect to a LIBOR Rate Loan, the rate of interest per annum determined on the basis of the rate for deposits in Dollars for a period equal to the applicable Interest Period which appears on Reuters Screen LIBOR01 Page (or any applicable successor page) at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period (rounded upward, if necessary, to the nearest 1/100th of 1%).  If, for any reason, such rate does not appear on Reuters Screen LIBOR01 Page (or any applicable successor page), then “LIBOR” shall be determined by the Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars in minimum amounts of at least $5,000,000 would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period for a period equal to such Interest Period.


 




  





 











  






(b)           for any interest rate calculation with respect to a Base Rate Loan, the rate of interest per annum determined on the basis of the rate for deposits in Dollars in minimum amounts of at least $5,000,000 for a period equal to one month (commencing on the date of determination of such interest rate) which appears on the Reuters Screen LIBOR01 Page (or any applicable successor page) at approximately 11:00 a.m.  (London time) on such date of determination, or, if such date is not a Business Day, then the immediately preceding Business Day (rounded upward, if necessary, to the nearest 1/100th of 1%).  If, for any reason, such rate does not appear on Reuters Screen LIBOR01 Page (or any applicable successor page) then “LIBOR” for such Base Rate Loan shall be determined by the Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars in minimum amounts of at least $5,000,000 would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m.  (London time) on such date of determination for a period equal to one month commencing on such date of determination.


 


Each calculation by the Administrative Agent of LIBOR shall be conclusive and binding for all purposes, absent manifest error.


 


Notwithstanding the foregoing, in no event shall LIBOR be less than 1.00%.


 


“LIBOR Rate” means a rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) determined by the Administrative Agent pursuant to the following formula:


 



	
LIBOR Rate =

	
LIBOR


	  	
1.00-Eurodollar Reserve Percentage












“LIBOR Rate Loan” means any Loan bearing interest at a rate based upon the LIBOR Rate as provided in Section 3.1(a).


 


“Lien” means, with respect to any asset, any mortgage, leasehold mortgage, lien, pledge, charge, security interest, hypothecation or encumbrance of any kind in respect of such asset.  For the purposes of this Agreement, a Person shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, Capital Lease or other title retention agreement relating to such asset.


 


“Liquidity” means the sum of (a) the aggregate amount of unrestricted cash and Cash Equivalents of the Borrower and its Subsidiaries plus (b) the aggregate availability of the Borrower and its Subsidiaries under the Credit Facility, the ABL Credit Facility and the European Revolving Credit Facility.


 


“Loan Documents” means, collectively, this Agreement, each Note, the Security Documents, the Intercreditor Agreement, the Engagement Letter, and each other document, instrument, certificate and agreement executed and delivered by the Credit Parties or any of their respective Subsidiaries in favor of or provided to the Administrative Agent or any Secured Party in connection with this Agreement or otherwise referred to herein or contemplated hereby (excluding any Secured Hedge Agreement and any Secured Cash Management Agreement), all as may be amended, restated, supplemented or otherwise modified from time to time.


 


“Loans” means the reference to the Term Loan, and “Loan” means any of such Loans.


 


“Material Adverse Effect” means, with respect to the Borrower and its Subsidiaries, (a) a material adverse effect on the properties, business, operations or condition (financial or otherwise) of such Persons, taken as a whole, (b) a material impairment of the ability of any such Person to perform its obligations under the Loan Documents to which it is a party, (c) a material impairment of the rights and remedies of the Administrative Agent or any Lender under any Loan Document or (d) a material impairment of the legality, validity, binding effect or enforceability against any Credit Party of any Loan Document to which it is a party.


 




  





 











  






“Material Domestic Subsidiary” means a Domestic Subsidiary with (1) net sales that are equal to or greater than 5.0% of the Consolidated net sales of the Borrower and the Subsidiaries for the most recent fiscal quarter for which a consolidated income statement of the Borrower and the Subsidiaries is available or (2) assets that are equal to or greater than 5.0% of the total Consolidated assets of the Borrower and the Subsidiaries as of the end of the most recent fiscal quarter for which a consolidated balance sheet of the Borrower and the Subsidiaries is available


 


“Material Contract” means any contract or other agreement, written or oral, of any Credit Party the failure to comply with which could reasonably be expected to have a Material Adverse Effect.


 


“Material First Tier Foreign Subsidiary” shall mean a First Tier Foreign Subsidiary with (1) net sales that are equal to or greater than 5.0% of the Consolidated net sales of the Borrower and the Subsidiaries for the most recent fiscal quarter for which a consolidated income statement of the Borrower and the Subsidiaries is available or (2) assets that are equal to or greater than 5.0% of the total Consolidated assets of the Borrower and the Subsidiaries as of the end of the most recent fiscal quarter for which a consolidated balance sheet of the Borrower and the Subsidiaries is available.


 


“Material Foreign Subsidiary” shall mean a Foreign Subsidiary with (1) net sales that are equal to or greater than 5.0% of the Consolidated net sales of the Borrower and the Subsidiaries for the most recent fiscal quarter for which a consolidated income statement of the Borrower and the Subsidiaries is available or (2) assets that are equal to or greater than 5.0% of the total Consolidated assets of the Borrower and the Subsidiaries as of the end of the most recent fiscal quarter for which a consolidated balance sheet of the Borrower and the Subsidiaries is available.


 


“Material Subsidiary” means any Domestic Material Subsidiary or any Material Foreign Subsidiary.


 


“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.


 


“MNPI” has the meaning specified in Section 10.10(b)(v)(A)(I).


 


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


 


“Net Cash Proceeds” means, as applicable, (a) with respect to any Asset Disposition or Insurance and Condemnation Event, the gross proceeds received by any Credit Party or any of its Subsidiaries therefrom (including any cash, Cash Equivalents, deferred payment pursuant to, or by monetization of, a note receivable or otherwise, as and when received) less the sum of (i)  all income taxes and other taxes assessed by a Governmental Authority or reasonably reserved as a result of such transaction, (ii) all reasonable and customary out-of-pocket fees and expenses incurred in connection with such transaction or event, (iii) the principal amount of, premium, if any, and interest on any Indebtedness secured by a Lien on the asset (or a portion thereof) disposed of, which Indebtedness is required to be repaid in connection with such transaction or event or required to be repaid under the European Revolving Credit Facility, and (iv) appropriate amounts to be provided by any Credit Party or its Subsidiaries as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Disposition or Insurance and Condemnation Event that is retained by the Credit Party and its Subsidiaries, including without limitation obligations for pension, other postemployment benefits, liabilities related to Environmental Laws and liabilities under indemnification obligations associated with such Asset Disposition or Insurance and Condemnation Event, and (b) with respect to any Equity Issuance or Debt Issuance, the gross cash proceeds received by any Credit Party or any of its Subsidiaries therefrom less all reasonable and customary out-of-pocket legal, underwriting and other fees and expenses incurred in connection therewith and, with respect to issuance by any non-Guarantor Subsidiary, less any amounts required to be paid under the European Revolving Credit Facility in connection with such issuance.


 




  





 











  






“Non-Consenting Lender” means any Lender that does not approve any consent, waiver, amendment, modification or termination that (i) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 10.2 and (ii) has been approved by the Required Lenders.


 


“Non-Guarantor Subsidiary” means any Subsidiary that is not a Subsidiary Guarantor.


 


“Notes” means the Term Notes.


 


“Notice of Borrowing” has the meaning assigned thereto in Section 2.2(a).


 


“Notice of Conversion/Continuation” has the meaning assigned thereto in Section 3.2.


 


“Notice of Prepayment” has the meaning assigned thereto in Section 2.4(a).


 


“Obligations” means, in each case, whether now in existence or hereafter arising:  (a) the principal of and interest on (including interest accruing after the filing of any bankruptcy or similar petition, regardless of whether allowed or allowable in such proceeding) the Loans and (b) all other fees and commissions (including reasonable attorneys’ fees), charges, indebtedness, loans, liabilities, financial accommodations, obligations, covenants and duties owing by the Credit Parties to the Lenders or the Administrative Agent, in each case under any Loan Document, with respect to any Loan of every kind, nature and description, direct or indirect, absolute or contingent, due or to become due, contractual or tortious, liquidated or unliquidated, and whether or not evidenced by any note and including interest and fees that accrue after the commencement by or against any Credit Party or any Affiliate thereof of any proceeding under any federal bankruptcy laws (as now or hereafter in effect) or under any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or adjustment of debts, naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.


 


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


 


“Officer’s Certificate” means a certificate of the chief financial officer or treasurer of the Borrower substantially in the form attached as Exhibit G.


 


“OID” has the meaning assigned thereto in Section 3.13(a).


 


“Operating Lease” means, as to any Person as determined in accordance with GAAP, any lease of Property (whether real, personal or mixed) by such Person as lessee which is not a Capital Lease.


 


“Other Taxes” means all present or future stamp, court, documentary, excise, property, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document.


 


“Participant” has the meaning assigned thereto in Section 10.10(d).


 


“Participant Register” has the meaning specified in Section 10.10(e).


 




  





 











  






“PATRIOT Act” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), as amended.


 


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


 


“Perfection Certificate” means the perfection certificate executed by the Borrower as of the Closing Date.


 


“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of the Code and which (a) is maintained, funded or administered for the employees of any Credit Party or any ERISA Affiliate or (b) has at any time within the preceding seven (7) years been maintained, funded or administered for the employees of any Credit Party or any current or former ERISA Affiliates.


 


“Permitted Acquisition” means any acquisition by any Credit Party of all or substantially all of the business or a line of business (whether by the acquisition of Capital Stock, assets or any combination thereof) of any other Person if each such acquisition meets all of the following requirements:


 


(a)           no less than ten (10) Business Days prior to the proposed closing date of such acquisition, the Borrower shall have delivered written notice of such acquisition to the Administrative Agent, which notice shall include the proposed closing date of such acquisition;


 


(b)           the Borrower shall have certified on or before the closing date of such acquisition, in writing and in a form reasonably acceptable to the Administrative Agent, that such acquisition has been approved by the board of directors (or equivalent governing body) of the Person to be acquired;


 


(c)           the Person or business to be acquired shall be in a line of business permitted pursuant to Section 7.11;


 


(d)           if such transaction is a merger or consolidation, the Borrower or a Subsidiary Guarantor shall be the surviving Person and no Change of Control shall have been effected thereby;


 


(e)           if such transaction involves the acquisition of a Person, that becomes a Material Domestic Subsidiary then any such Person shall become a Subsidiary Guarantor and the Borrower shall have delivered to the Administrative Agent such documents reasonably requested by the Administrative Agent or the Required Lenders (through the Administrative Agent) pursuant to Section 6.14 to be delivered at the time required pursuant to Section 6.14;


 


(f)           no later than five (5) Business Days prior to the proposed closing date of such acquisition, the Borrower shall have delivered to the Administrative Agent a compliance certificate of the chief financial officer or treasurer for the most recent fiscal quarter end preceding such acquisition for which financial statements are available demonstrating, in form and substance reasonably satisfactory to the Administrative Agent, (A) that Liquidity of the Borrower and the Consolidated Subsidiaries is at least $150.0 million and (B) that the Consolidated Total Leverage Ratio of the Borrower and the Consolidated Subsidiaries is no greater than 2.75 to 1.00, in the case of each of clauses (A) and (B) calculated on a Pro Forma Basis after giving effect to such acquisition and the incurrence of any Indebtedness in connection therewith;


 




  





 











  






(g)           no Event of Default shall have occurred and be continuing both before and after giving effect to such acquisition and any Indebtedness incurred in connection therewith; and


 


(h)           the Borrower shall have (i) delivered to the Administrative Agent a certificate of a Responsible Officer certifying that all of the requirements set forth above have been satisfied or will be satisfied on or prior to the consummation of such purchase or other acquisition and (ii) provided such other documents and other information as may be reasonably requested by the Administrative Agent or the Required Lenders (through the Administrative Agent) in connection with such purchase or other acquisition.


 


“Permitted Investors” means (1) Harold C.  Simmons (“Simmons”), (2) any trust established primarily for the benefit of Simmons or members of his family (including his spouse and/or his descendants (whether natural or adopted)) or both, “Simmons Trust”), (3) trustees, acting in such capacity, or beneficiaries of a Simmons Trust to the extent of the beneficial interest therein and for so long as such Simmons Trust exists, (4) any employee plan or pension fund of the Borrower or any of its Subsidiaries, (5) any Person holding Capital Stock for or pursuant to the terms of any such plan or fund and (6) any Person controlled by, or any group made up of, any one or more of the Persons specified in (1) through (5) above.


 


“Permitted Liens” means the Liens permitted pursuant to Section 7.2.


 


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


 


“Platform” has the meaning assigned thereto in Section 6.2.


 


“Prime Rate” means, at any time, the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate.  Each change in the Prime Rate shall be effective as of the opening of business on the day such change in such prime rate occurs.  The parties hereto acknowledge that the rate announced publicly by the Administrative Agent as its prime rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks.


 


“Pro Forma Basis” means, for purposes of calculating Consolidated EBITDA for any period during which one or more Specified Transactions occurs, that such Specified Transaction (and all other Specified Transactions that have been consummated during the applicable period) shall be deemed to have occurred as of the first day of the applicable period of measurement and all income statement items (whether positive or negative) attributable to the Property or Person disposed of in a Specified Disposition shall be excluded and all income statement items (whether positive or negative) attributable to the Property or Person acquired in a Permitted Acquisition shall be included; provided that the foregoing pro forma adjustments may be applied to any such definition, test or financial covenant solely to the extent that such adjustments (i) are reasonably expected to be realized within twelve (12) months of such Specified Transaction as set forth in reasonable detail on a certificate of a Responsible Officer of the Borrower delivered to the Administrative Agent and (ii) are calculated on a basis consistent with GAAP and Regulation S-X of the Exchange Act; and provided further that the foregoing pro forma adjustment shall be without duplication of any cost savings or additional costs that are already included in the calculation of Consolidated EBITDA.


 


“Property” means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, including, without limitation, Capital Stock.


 


“Public Lenders” has the meaning assigned thereto in Section 6.2.


 




  





 











  






“Qualified Capital Stock” means any Capital Stock that is not Disqualified Capital Stock.


 


“Recipient” means (a) the Administrative Agent and (b) any Lender, as applicable.


 


“Register” has the meaning assigned thereto in Section 10.10(c).


 


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


 


“Repricing Transaction” has the meaning assigned thereto in Section 2.4(c).


 


“Required Lenders” means, at any time, Lenders having Total Credit Exposures representing more than 50% of the Total Credit Exposures of all Lenders; provided that for all purposes under this Agreement and each other Loan Document, the “Required Lenders” shall be calculated in accordance with Section 10.10(b)(v).


 


“Resignation Effective Date” has the meaning assigned thereto in Section 9.6(a).


 


“Responsible Officer” means, as to any Person, the chief executive officer, president, chief financial officer, controller, treasurer or assistant treasurer of such Person or any other officer of such Person reasonably acceptable to the Administrative Agent.  Any document delivered hereunder or under any other Loan Document that is signed by a Responsible Officer of a Person shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Person and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Person.


 


“Restricted Payment” has the meaning assigned thereto in Section 7.6.


 


“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.


 


“Sanctioned Country” means a country subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx, or as otherwise published from time to time.


 


“Sanctioned Person” means (a) a Person named on the list of “Specially Designated Nationals and Blocked Persons” maintained by OFAC available at http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx, or as otherwise published from time to time, or (b) (i) an agency of the government of a Sanctioned Country, (ii) an organization controlled by a Sanctioned Country, or (iii) a person resident in a Sanctioned Country, to the extent subject to a sanctions program administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control.


 


“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.


 


“Secured Cash Management Agreement” means any Cash Management Agreement that is entered into by and between any Credit Party and any Cash Management Bank that the Borrower specifically agrees at the time in writing to the Administrative Agent will be secured by the Collateral.


 




  





 











  






“Secured Hedge Agreement” means any Hedge Agreement permitted under Article IX, in each case that is entered into by and between any Credit Party and any Hedge Bank that the Borrower specifically agrees at the time in writing to the Administrative Agent will be secured by the Collateral.


 


“Secured Obligations” means, collectively, (a) the Obligations and (b) all existing or future payment and other obligations owing by any Credit Party under (i) any Secured Hedge Agreement and (ii) any Secured Cash Management Agreement.


 


“Secured Parties” means, collectively, the Administrative Agent, the Lenders, the Hedge Banks, that are parties to Secured Hedge Agreements, the Cash Management Banks that are parties to Secured Cash Management Agreements, each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to Section 9.5, any other holder from time to time of any of any Secured Obligations and, in each case, their respective successors and permitted assigns.


 


“Security Documents” means the collective reference to the Collateral Agreement, the Guaranty Agreements, and each other agreement or writing pursuant to which any Credit Party purports to pledge or grant a security interest in any Property or assets securing the Secured Obligations or any such Person purports to guaranty the payment and/or performance of the Secured Obligations, in each case, as amended, restated, supplemented or otherwise modified from time to time.


 


“Solvent” and “Solvency” mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital, and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business.  The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.


 


“Specified Disposition” means any disposition of all or substantially all of the assets or Capital Stock of any Subsidiary of the Borrower or any division, business unit, product line or line of business.


 


“Specified Transactions” means (a) any Specified Disposition, (b) any Permitted Acquisition and (c) the Transactions.


 


“Subordinated Indebtedness” means the collective reference to any Indebtedness incurred by the Borrower or any of the Subsidiary Guarantors that is subordinated in right and time of payment to the Obligations on terms and conditions satisfactory to the Administrative Agent.


 


“Subsidiary” means as to any Person, any corporation, partnership, limited liability company or other entity of which more than fifty percent (50%) of the outstanding Capital Stock having ordinary voting power to elect a majority of the board of directors (or equivalent governing body) or other managers of such corporation, partnership, limited liability company or other entity is at the time owned by (directly or indirectly) or the management is otherwise controlled by (directly or indirectly) such Person (irrespective of whether, at the time, Capital Stock of any other class or classes of such corporation, partnership, limited liability company or other entity shall have or might have voting power by reason of the happening of any contingency).  Unless otherwise qualified, references to “Subsidiary” or “Subsidiaries” herein shall refer to those of the Borrower.


 




  





 











  






“Subsidiary Guarantors” means, collectively, (i) as of the Closing Date, Kronos International, Inc., Kronos Louisiana, Inc. and Kronos (US), Inc. and (ii) following the Closing Date, all direct and indirect Subsidiaries of the Borrower created or acquired and required to become a Subsidiary Guarantor pursuant to Section 6.14.


 


“Subsidiary Guaranty Agreement” means the unconditional guaranty agreement of even date herewith executed by the Subsidiary Guarantors in favor of the Administrative Agent, for the benefit and the Secured Parties, which shall be in form and substance acceptable to the Administrative Agent, as amended, restated, supplemented or otherwise modified from time to time.


 


“Synthetic Lease” means any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an Operating Lease in accordance with GAAP.


 


“Taxes” means 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 Loan Commitment” means (a) as to any Lender, the obligation of such Lender to make a portion of the Initial Term Loan and/or Incremental Term Loans, as applicable, to the account of the Borrower hereunder on the Closing Date (in the case of the Initial Term Loan) or the applicable borrowing date (in the case of any Incremental Term Loan) in an aggregate principal amount not to exceed the amount set forth opposite such Lender’s name on the Register, as such amount may be increased, reduced or otherwise modified at any time or from time to time pursuant to the terms hereof and (b) as to all Lenders, the aggregate commitment of all Lenders to make such Term Loans.  The aggregate Term Loan Commitment with respect to the Initial Term Loan of all Lenders on the Closing Date shall be $400.0 million.


 


“Term Loan Facility” means the term loan facility established pursuant to Article II (including any new term loan facility established pursuant to Section 3.13).


 


“Term Loan Lender” means any Lender with a Term Loan Commitment.


 


“Term Loan Maturity Date” means the first to occur of (a) the sixth anniversary of the Closing Date, or (b) the date of acceleration of the Term Loans pursuant to Section 8.2(a).


 


“Term Loan Note” means a promissory note made by the Borrower in favor of a Term Loan Lender evidencing the portion of the Term Loans made by such Term Loan Lender, substantially in the form attached as Exhibit A, and any amendments, supplements and modifications thereto, any substitutes therefor, and any replacements, restatements, renewals or extension thereof, in whole or in part.


 


“Term Loan Percentage” means, as to any Term Loan Lender, after the applicable Term Loans are made, the ratio of (a) the outstanding principal balance of such Term Loan or Term Loans of such Term Loan Lender to (b) the aggregate outstanding principal balance of all such Term Loans of all Term Loan Lenders.


 


“Term Loans” means the Initial Term Loans and, if applicable, the Incremental Term Loans and “Term Loan” means any of such Term Loans.


 




  





 











  






“Termination Event” means the occurrence of any of the following which, individually or in the aggregate, has resulted or could reasonably be expected to result in liability of the Borrower in an aggregate amount in excess of the Threshold Amount:  (a) a “Reportable Event” described in Section 4043 of ERISA for which the thirty (30) day notice requirement has not been waived by the PBGC, or (b) the withdrawal of any Credit Party or any ERISA Affiliate from a Pension Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA, or (c) the termination of a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination, under Section 4041 of ERISA, if the plan assets are not sufficient to pay all plan liabilities, or (d) the institution of proceedings to terminate, or the appointment of a trustee with respect to, any Pension Plan by the PBGC, or (e) any other event or condition which would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, or (f) the imposition of a Lien pursuant to Section 430(k) of the Code or Section 303 of ERISA, or (g) the determination that any Pension Plan or Multiemployer Plan is considered an at-risk plan or plan in endangered or critical status with the meaning of Sections 430, 431 or 432 of the Code or Sections 303, 304 or 305 of ERISA] or (h) the partial or complete withdrawal of any Credit Party or any ERISA Affiliate from a Multiemployer Plan if withdrawal liability is asserted by such plan, or (i) any event or condition which results in the reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA, or (j) any event or condition which results in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution by PBGC of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA, or (k) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Credit Party or any ERISA Affiliate.


 


“Threshold Amount” means $50.0 million.


 


“Total Credit Exposure” means, as to any Lender at any time, the unused Commitments and outstanding Term Loans of such Lender at such time.


 


“Transaction Costs” means all transaction fees, charges, premiums and other amounts related to the Transactions and any Permitted Acquisitions (including, without limitation, any financing fees, merger and acquisition fees, call premiums, legal fees and expenses, due diligence fees or any other fees and expenses in connection therewith), in each case to the extent paid within six (6) months of the closing of the Credit Facility or such Permitted Acquisition, as applicable.


 


“Transactions” means, collectively, (a) the repayment of euro 80 million of Indebtedness under the European Revolving Credit Facility, (b) the redemption in full of all outstanding Senior Secured Notes due April 2013 of Kronos International, Inc., (c) the initial Extensions of Credit, (d) payment of a dividend in an aggregate amount of up to approximately $116.0 million to the direct or indirect equity holders of the Borrower, (e) the payment of the Transaction Costs incurred in connection with the foregoing, and (f) proceeds used for general corporate purposes of the Borrower.







“UCC” means the Uniform Commercial Code as in effect in the State of New York, as amended or modified from time to time; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.


 


“United States” means the United States of America.


 




  





 











  






“U.S. Lender” means any Lender that is a “United States person” as defined in Section 7701(a)(30) of the Code.


 


“U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 3.11(e).


 


“Wells Fargo” means Wells Fargo Bank, National Association, a national banking association, and its successors.


 


“Wholly-Owned” means, with respect to a Subsidiary, that all of the shares of Capital Stock of such Subsidiary are, directly or indirectly, owned or controlled by the Borrower and/or one or more of its Wholly-Owned Subsidiaries (except for directors’ qualifying shares or other shares required by Applicable Law to be owned by a Person other than the Borrower and/or one or more of its Wholly-Owned Subsidiaries).


 


“Working Capital” means, for the Borrower and its Subsidiaries on a Consolidated basis and calculated in accordance with GAAP, as of any date of determination, the excess of (a) current assets (other than cash and cash equivalents and taxes and deferred taxes) over (b) current liabilities, excluding, without duplication, (i) the current portion of any long-term Indebtedness, (ii) the current portion of current taxes and deferred income taxes and (ii) the current portion of accrued Consolidated Interest Expense.


 


SECTION 1.2 Other Definitions and Provisions.  With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:  (a) the definitions of terms herein shall apply equally to the singular and plural forms of the terms defined, (b) whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms, (c) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation,” (d) the word “will” shall be construed to have the same meaning and effect as the word “shall,” (e) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (f) 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, (g) 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, (h) 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, (i) the term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form, (j) in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including” and (k) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.


 


SECTION 1.3 Accounting Terms.  All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with GAAP, applied on a consistent basis, as in effect from time to time and in a manner consistent with that used in preparing the audited financial statements required by Section 6.1(a), except as otherwise specifically prescribed herein (including, without limitation, as prescribed by Section 10.9).  Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Borrower and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded.


 




  





 











  






SECTION 1.4 UCC Terms.  Terms defined in the UCC in effect on the Closing Date and not otherwise defined herein shall, unless the context otherwise indicates, have the meanings provided by those definitions.  Subject to the foregoing, the term “UCC” refers, as of any date of determination, to the UCC then in effect.


 


SECTION 1.5 Rounding.  Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio or percentage is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).


 


SECTION 1.6 References to Agreement and Laws.  Unless otherwise expressly provided herein, (a) references to formation documents, governing documents, agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Loan Document; and (b) references to any Applicable Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Applicable Law.


 


SECTION 1.7 Times of Day.  Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).


 


SECTION 1.8 Guaranty Obligations.  Unless otherwise specified, the amount of any Guaranty Obligation shall be the lessor of the principal amount of the obligations guaranteed and still outstanding and the maximum amount for which the guaranteeing Person may be liable pursuant to the terms of the instrument embodying such Guaranty Obligation.


 


SECTION 1.9 Covenant Compliance Generally.  For purposes of determining compliance under Sections 7.1, 7.2, 7.3, 7.5 and 7.6, any amount in a currency other than Dollars (unless specifically referred to in this Agreement in such other currency) will be converted to Dollars in a manner consistent with the preparation of the financial statements of  the Borrower and its Subsidiaries delivered pursuant to Section 6.1(a) or (b), as applicable.  Notwithstanding the foregoing, for purposes of determining compliance with Sections 7.1, 7.2 and 7.3, with respect to any amount of Indebtedness or Investment in a currency other than Dollars, no breach of any basket contained in such sections shall be deemed to have occurred solely as a result of changes in rates of exchange occurring after the time such Indebtedness or Investment is incurred; provided that for the avoidance of doubt, the foregoing provisions of this Section 1.9 shall otherwise apply to such Sections, including with respect to determining whether any Indebtedness or Investment may be incurred at any time under such Sections.


 


ARTICLE II                      


 


TERM LOAN FACILITY


 


SECTION 2.1 Initial Term Loan.  Subject to the terms and conditions of this Agreement, each Term Loan Lender severally agrees to make the Initial Term Loan to the Borrower on the Closing Date in a principal amount equal to such Lender’s Term Loan Commitment as of the Closing Date.


 


SECTION 2.2 Procedure for Advance of Term Loan.


 




  





 











  






(a) Initial Term Loan.  The Borrower shall give the Administrative Agent an irrevocable prior written notice substantially in the form of Exhibit B (a “Notice of Borrowing”) prior to 11:00 a.m.  on the Closing Date requesting that the Term Loan Lenders make the Initial Term Loan as a Base Rate Loan on such date (provided that the Borrower may request, no later than three (3) Business Days prior to the Closing Date, that the Lenders make the Initial Term Loan as a LIBOR Rate Loan if the Borrower has delivered to the Administrative Agent a letter in form and substance reasonably satisfactory to the Administrative Agent indemnifying the Lenders in the manner set forth in Section 3.9 of this Agreement).  Upon receipt of such Notice of Borrowing from the Borrower, the Administrative Agent shall promptly notify each Term Loan Lender thereof.  Not later than 1:00 p.m.  on the Closing Date, each Term Loan Lender will make available to the Administrative Agent for the account of the Borrower, at the Administrative Agent’s Office in immediately available funds, the amount of such Initial Term Loan to be made by such Term Loan Lender on the Closing Date.  The Borrower hereby irrevocably authorizes the Administrative Agent to disburse the proceeds of the Initial Term Loan in immediately available funds by wire transfer to such Person or Persons as may be designated by the Borrower in writing.


 


(b) Incremental Term Loans.  Any Incremental Term Loans shall be borrowed pursuant to, and in accordance with Section 3.13.


 


SECTION 2.3 Repayment of Term Loans.


 


(a) Initial Term Loan.  The Borrower shall repay the aggregate outstanding principal amount of the Initial Term Loan in consecutive quarterly installments on the last Business Day of each of March, June, September and December commencing September 30, 2012 as set forth below, except as the amounts of individual installments may be adjusted pursuant to Section 2.4 hereof:


 



	
FISCAL


YEAR

	
PAYMENT DATE

	
PRINCIPAL


INSTALLMENT ($)


	
2012

	
September 30

	
5,000,000


	
December 31

	
5,000,000


	
2013

	
March 31

	
5,000,000


	
June 30

	
5,000,000


	
September 30

	
5,000,000


	
December 31

	
5,000,000


	
2014

	
March 31

	
5,000,000


	
June 30

	
5,000,000


	
September 30

	
5,000,000


	
December 31

	
5,000,000


	
2015

	
March 31

	
5,000,000


	
June 30

	
5,000,000


	
September 30

	
5,000,000


	
December 31

	
5,000,000


	
2016

	
March 31

	
5,000,000


	
June 30

	
5,000,000


	
September 30

	
5,000,000


	
December 31

	
5,000,000


	
2017

	
March 31

	
5,000,000


	
June 30

	
5,000,000


	
September 30

	
5,000,000


	
December 31

	
5,000,000


	
2018

	
March 31

	
5,000,000


	
Maturity Date for Term Loan

	
285,000,000














  





 











  






If not sooner paid, the Initial Term Loan shall be paid in full, together with accrued interest thereon, on the Term Loan Maturity Date.


 


(b) Incremental Term Loans.  The Borrower shall repay the aggregate outstanding principal amount of each Incremental Term Loan (if any) as determined pursuant to, and in accordance with, Section 3.13.


 


SECTION 2.4 Prepayments of Term Loans. 


 


(a) Optional Prepayments.  The Borrower shall have the right at any time and from time to time, without premium (except as set forth in Section 2.4(c)) or penalty (except LIBOR breakage costs), to prepay the Term Loans, in whole or in part, with prior written notice to the Administrative Agent substantially in the form attached as Exhibit C (a “Notice of Prepayment”) not later than 11:00 a.m.  (i) on the same Business Day as each Base Rate Loan and (ii) at least three (3) Business Days before each LIBOR Rate Loan, specifying the date and amount of repayment, whether the repayment is of LIBOR Rate Loans or Base Rate Loans or a combination thereof, and if a combination thereof, the amount allocable to each and whether the repayment is of the Initial Term Loan, an Incremental Term Loan or a combination thereof, and if a combination thereof, the amount allocable to each.  Each optional prepayment of the Term Loans hereunder shall be in an aggregate principal amount of at least $5,000,000 or any whole multiple of $1,000,000 in excess thereof and shall be applied, on a pro rata basis, to the outstanding principal installments of the Initial Term Loan and, if applicable, any Incremental Term Loan, as directed by the Borrower.  Each repayment shall be accompanied by any amount required to be paid pursuant to Section 3.9 hereof.  A Notice of Prepayment received after 11:00 a.m. shall be deemed received on the next Business Day.  The Administrative Agent shall promptly notify the applicable Term Loan Lenders of each Notice of Prepayment.


 


(b) Mandatory Prepayments.


 


                (i)Debt Issuances.  The Borrower shall make mandatory principal prepayments of the Loans in the manner set forth in clause (vi) below in an amount equal to one hundred percent (100%) of the aggregate Net Cash Proceeds from any Debt Issuance by any Credit Party or any of its Subsidiaries or other Indebtedness not permitted pursuant to this Agreement.  Such prepayment shall be made within three (3) Business Days after the date of receipt of the Net Cash Proceeds of any such Debt Issuance; provided, that the Borrower shall not be required to comply with this Section 2.4(b)(i)  to the extent that such prepayment is prohibited by the ABL Facility.


 


                (ii)Equity Issuances.  The Borrower shall make mandatory principal prepayments of the Loans in the manner set forth in clause (vi) below in an amount equal to fifty percent (50%) of the aggregate Net Cash Proceeds from any Equity Issuance by any Credit Party or any of its Subsidiaries other than (a) with respect to any Equity Issuance to an Affiliate, (b) the exercise price on stock options issued or the value of stock awards made, in each case as part of employee or director compensation; provided that so long as no Default or Event of Default has occurred and is continuing, no prepayments shall be required from the Net Cash Proceeds from Equity Issuances the proceeds of which are used to finance a Permitted Acquisition.  Such prepayment shall be made within three (3) Business Days after the date of receipt of the Net Cash Proceeds of any such Equity Issuance.


 




  





 











  






                (iii)Asset Dispositions.  The Borrower shall make mandatory principal prepayments of the Loans in the manner set forth in clause (vi) below in amounts equal to one hundred percent (100%) of the aggregate Net Cash Proceeds in excess of $25.0 million from any Asset Disposition by any Credit Party or any of its Subsidiaries (other than any Asset Disposition permitted pursuant to, and in accordance with, Section 7.5(a), (b) or (c)).  Such prepayments shall be made within three (3) Business Days after the date of receipt of the Net Cash Proceeds of any such Asset Disposition by such Credit Party or any of its Subsidiaries; provided that, so long as no Event of Default has occurred and is continuing, no prepayment shall be required under this Section 2.4(b)(iii) to the extent that such Net Cash Proceeds are reinvested in assets used or useful in the business of the Borrower and its Subsidiaries within twelve (12) months after receipt of such Net Cash Proceeds by such Credit Party or such Subsidiary; provided further that any portion of such Net Cash Proceeds not actually reinvested within such twelve (12) month period shall be prepaid in accordance with this Section 2.4(b)(iii) on or before the last day of such twelve (12) month period; provided further that the Borrower shall not be required to comply with this Section 2.4(b) (iii) to the extent that such prepayment is prohibited by the ABL Facility.


 


                (iv)Insurance and Condemnation Events.  The Borrower shall make mandatory principal prepayments of the Loans in the manner set forth in clause (vi) below in an amount equal to one hundred percent (100%) of the aggregate Net Cash Proceeds in excess of $25.0 million from any Insurance and Condemnation Event by any Credit Party or any of its Subsidiaries.  Such prepayments shall be made within three (3) Business Days after the date of receipt of Net Cash Proceeds of any such Insurance and Condemnation Event by such Credit Party or such Subsidiary; provided that, so long as no Event of Default has occurred and is continuing, no prepayment shall be required under this Section 2.4(b)(iv) to the extent that the Net Cash Proceeds are reinvested in assets used or useful in the business of the Borrower and its Subsidiaries (a) within twelve (12) months after receipt of such Net Cash Proceeds by such Credit Party or such Subsidiary or ( b) if the Borrower enters into a legally binding commitment to reinvest such Net Cash Proceeds within six (6) months after the receipt thereof, then within twelve (12) months following the date of such legally binding commitment; provided further that any portion of the Net Cash Proceeds not actually reinvested according to the preceding shall be prepaid in accordance with this Section 2.4(b)(iv) within three (3) Business Days after receipt of the written demand of Administrative Agent; provided, that the Borrower shall not be required to comply with this Section 2.4(b)(iv) to the extent that such prepayment is prohibited by the ABL Facility.


 


                (v)Excess Cash Flow.  After the end of each Fiscal Year (commencing with the Fiscal Year ending December 31, 2012, provided that for such Fiscal Year the only periods applicable shall be the quarters ended September 30, 2012 and December 31, 2012), within five (5) Business Days after the earlier to occur of (x) the delivery of the financial statements for such Fiscal Year and (y) the date on which the financial statements for such fiscal year are required to be delivered pursuant to Section 6.1(a) and Section 6.2(a), the Borrower shall make mandatory principal prepayments of the Loans in the manner set forth in clause (vi) below in an amount equal to (a) fifty percent (50%) of Excess Cash Flow, if any, for such Fiscal Year (or such shorter period with respect to the Fiscal Year ending December 31, 2012)  if at the end of such Fiscal Year the Borrower and its Subsidiaries maintain a Consolidated Total Leverage Ratio that is greater than 2.50 to 1.00, (b) twenty five percent (25%) of Excess Cash Flow, if any, for such Fiscal Year (or such shorter period with respect to the Fiscal Year ending December 31, 2012) if at the end of such Fiscal Year  the Borrower and its Subsidiaries maintain a Consolidated Total Leverage Ratio that is equal to or less than 2.50 to 1.00 and greater than 1.75 to 1.00 and (c) zero percent (0%) of Excess Cash Flow, if any, for such Fiscal Year (or such shorter period with respect to the Fiscal Year ending December 31, 2012) if at the end of such Fiscal Year  the Borrower and its Subsidiaries maintain a Consolidated Total Leverage Ratio that is equal to or less than 1.75 to 1.00 ; provided, that the Borrower shall not be required to comply with this Section 2.4(b)(v) to the extent that such prepayment is prohibited by the ABL Facility.


 




  





 











  






                (vi)Notice; Manner of Payment.  Upon the occurrence of any event triggering the prepayment requirement under clauses (i) through and including (v) above, the Borrower shall promptly deliver a Notice of Prepayment to the Administrative Agent and upon receipt of such notice, the Administrative Agent shall promptly so notify the Lenders.  All such mandatory prepayments of the Term Loans shall be applied to the remaining scheduled amortization payments in direct order of maturity.


 


                (vii)No Reborrowings.  Amounts prepaid under the Term Loan pursuant to this Section may not be reborrowed.  Each prepayment shall be accompanied by any amount required to be paid pursuant to Section 3.9.


 


                (viii)No Adverse Tax Consequences.  (A) To the extent that any of or all the Net Cash Proceeds of any Asset Disposition by a Foreign Subsidiary giving rise to a prepayment pursuant to Section 2.4(b)(iii) (a “Foreign Asset Disposition”), the Net Cash Proceeds of any Insurance and Condemnation Event from a Foreign Subsidiary giving rise to a prepayment pursuant to Section 2.4( b)(iv) (a “Foreign Insurance and Condemnation Event”), or Excess Cash Flow from a Foreign Subsidiary giving rise to a prepayment pursuant to Section 2.4( b)(v) (a “Foreign Excess Cash Flow”) are prohibited or delayed by applicable local law from being repatriated to the Borrower obliged to make a payment hereunder, the portion of such Net Cash Proceeds or Excess Cash Flow so affected will not be required to be applied to prepay Loans at the times provided in the relevant clauses of this Section.  Instead, such amounts may be retained by the applicable Foreign Subsidiary so long, but only so long, as the applicable local law will not permit repatriation to the Borrower obliged to make a payment hereunder and once such repatriation of any of such affected Net Cash Proceeds or Excess Cash Flow is permitted under the applicable local law, such repatriation will be promptly effected and such repatriated Net Cash Proceeds or Excess Cash Flow will be promptly (and in any event not later than three (3) Business Days after such repatriation) applied (net of additional taxes payable or reserved against as a result thereof) to the prepayment of the Loans pursuant to this Section to the extent provided herein and (B) to the extent that Borrower has determined in good faith that repatriation of any of or all the Net Cash Proceeds of any Foreign Asset Disposition or any Foreign Insurance and Condemnation Event or Foreign Excess Cash Flow would have a material adverse tax cost consequence (taking into account any foreign tax credit or benefit received in connection with such repatriation) with respect to such Net Cash Proceeds or Excess Cash Flow, such Net Cash Proceeds or Excess Cash Flow so affected may be retained by the applicable Foreign Subsidiary; provided that in the case of this clause (B), on or before the date on which any Net Cash Proceeds from any Foreign Asset Disposition or Foreign Insurance and Condemnation Event or Excess Cash Flow so retained would otherwise have been required to be applied to reinvestments or prepayments pursuant to Section 2.4(b)(iii), (b)(iv) or ( b)(v), as applicable,  (x) the Borrower applies an amount equal to such Net Cash Proceeds or Excess Cash Flow less the amount of additional taxes that would have been payable or reserved against if such Net Cash Proceeds or Excess Cash Flow had been repatriated, to such reinvestments or prepayments less the amount of additional taxes that would have been payable or reserved against if such Net Cash Proceeds or Excess Cash Flow had been received by the Borrower rather than such Foreign Subsidiary, (or, if less, the Net Cash Proceeds or Excess Cash Flow that would be calculated if received by such Foreign Subsidiary) or (y) such Net Cash Proceeds or Excess Cash Flow shall be applied to the repayment of Indebtedness of a Subsidiary.


 


(c) Call Premium.  In the event that, on or prior to the first anniversary of the Closing Date, the Borrower (i) makes any voluntary prepayment of Term Loans in connection with any Repricing Transaction or (ii) effects any amendment of this Agreement resulting in a Repricing Transaction, the Borrower shall pay to the Administrative Agent, for the ratable account of each applicable Term Loan Lender, a fee in an amount equal to, (x) in the case of clause (i), a prepayment premium of 1.0% of the amount of the Term Loans being prepaid and (y) in the case of clause (ii), a payment equal to 1.0% of the aggregate amount of the applicable Term Loans outstanding immediately prior to such amendment.  Such fees shall be due and payable within three (3) Business Days of the date of the effectiveness of such Repricing Transaction.  For the purpose of this clause (c), “Repricing Transaction” means (a) any prepayment or repayment of Term Loans with the proceeds of, or any conversion of Term Loans into, any new or replacement tranche of term loans or Indebtedness bearing interest with an “effective yield” (taking into account, for example, upfront fees, interest rate spreads, interest rate benchmark floors and original issue discount, but excluding the effect of any arrangement, structuring, syndication or other fees payable in connection therewith that are not shared with all lenders or holders of such new or replacement loans) less than the “effective yield” applicable to the Term Loans (as such comparative yields are determined in the reasonable judgment of the Administrative Agent consistent with generally accepted financial practices) and (b) any amendment to the pricing terms of the Term Loans which reduces the “effective yield” applicable to the Term Loans.


 




  





 











  






ARTICLE III                                


 







 


GENERAL LOAN PROVISIONS


 


SECTION 3.1 Interest.


 


(a) Interest Rate Options.  Subject to the provisions of this Section, at the election of the Borrower, the Term Loans shall bear interest at (A) the Base Rate plus the Applicable Margin or (B) the LIBOR Rate plus the Applicable Margin (provided that the LIBOR Rate shall not be available until three (3) Business Days after the Closing Date unless the Borrower has delivered to the Administrative Agent a letter in form and substance reasonably satisfactory to the Administrative Agent indemnifying the Lenders in the manner set forth in Section 3.9 of this Agreement).  The Borrower shall select the rate of interest and Interest Period, if any, applicable to any Loan at the time a Notice of Borrowing is given or at the time a Notice of Conversion/Continuation is given pursuant to Section 3.2.  Any Loan or any portion thereof as to which the Borrower has not duly specified an interest rate as provided herein shall be deemed a Base Rate Loan.  Without limiting the foregoing, the Borrower may designate a portion of the Term Loan to be a Base Rate Loan, and the remaining portion of the Term Loan to be one or more Libor Rate Loans.


 


(b) Interest Periods.  In connection with each LIBOR Rate Loan, the Borrower, by giving notice at the times described in Section 3.2, as applicable, shall elect an interest period (each, an “Interest Period”) to be applicable to such Loan, which Interest Period shall be a period of one (1), two (2), three (3), six (6) or nine (9) months or, if agreed by all of the relevant Lenders, twelve (12) months; provided that:


 


(i) the Interest Period shall commence on the date of advance of or conversion to any LIBOR Rate Loan and, in the case of immediately successive Interest Periods, each successive Interest Period shall commence on the date on which the immediately preceding Interest Period expires;


 


(ii) if any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided, that if any Interest Period with respect to a LIBOR Rate Loan would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the immediately preceding Business Day;


 


(iii) any Interest Period with respect to a LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the relevant calendar month at the end of such Interest Period;


 




  





 











  






(iv) no Interest Period shall extend beyond the Term Loan Maturity Date, and Interest Periods shall be selected by the Borrower so as to permit the Borrower to make the quarterly principal installment payments pursuant to Section 2.3 without payment of any amounts pursuant to Section 3.9; and


 


(v) there shall be no more than ten (10) Interest Periods in effect at any time.


 


(c) Default Rate.  Subject to Section 8.3, (i) immediately upon the occurrence and during the continuance of an Event of Default under Section 8.1(a), (b), (i) or (j), or (ii) at the election of the Required Lenders, upon the occurrence and during the continuance of any other Event of Default, (A) the Borrower shall no longer have the option to request LIBOR Rate Loans, (B) all outstanding LIBOR Rate Loans shall bear interest at a rate per annum of two percent (2%) in excess of the rate (including the Applicable Margin) then applicable to LIBOR Rate Loans until the end of the applicable Interest Period and thereafter at a rate equal to two percent (2%) in excess of the rate (including the Applicable Margin) then applicable to Base Rate Loans, (C) all outstanding Base Rate Loans and other Obligations arising hereunder or under any other Loan Document shall bear interest at a rate per annum equal to two percent (2%) in excess of the rate (including the Applicable Margin) then applicable to Base Rate Loans or such other Obligations arising hereunder or under any other Loan Document and (D) all accrued and unpaid interest shall be due and payable on demand of the Administrative Agent.  Interest shall continue to accrue on the Obligations after the filing by or against the Borrower of any petition seeking any relief in bankruptcy or under any act or law pertaining to insolvency or debtor relief, whether state, federal or foreign.


 


(d) Interest Payment and Computation.  Interest on each Base Rate Loan shall be due and payable in arrears on the last Business Day of each calendar quarter commencing September 30, 2012; and interest on each LIBOR Rate Loan shall be due and payable on the last day of each Interest Period applicable thereto, and if such Interest Period extends over three (3) months, quarterly in arrears.  All computations of interest for Base Rate Loans when the Base Rate is determined by the Prime Rate shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed.  All other computations of fees and interest provided hereunder shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365/366-day year).


 


(e) Maximum Rate.  In no contingency or event whatsoever shall the aggregate of all amounts deemed interest under this Agreement charged or collected pursuant to the terms of this Agreement exceed the highest rate permissible under any Applicable Law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto.  In the event that such a court determines that the Lenders have charged or received interest hereunder in excess of the highest applicable rate, the rate in effect hereunder shall automatically be reduced to the maximum rate permitted by Applicable Law and the Lenders shall at the Administrative Agent’s option (i) promptly refund to the Borrower any interest received by the Lenders in excess of the maximum lawful rate or (ii) apply such excess to the principal balance of the Obligations on a pro rata basis.  It is the intent hereof that the Borrower not pay or contract to pay, and that neither the Administrative Agent nor any Lender receive or contract to receive, directly or indirectly in any manner whatsoever, interest in excess of that which may be paid by the Borrower under Applicable Law.


 


SECTION 3.2 Notice and Manner of Conversion or Continuation of Loans.  Provided that no Default or Event of Default has occurred and is then continuing, the Borrower shall have the option to (a) convert at any time following the third Business Day after the Closing Date all or any portion of any outstanding Base Rate Loans in a principal amount equal to $1,000,000 or any whole multiple of $1,000,000 in excess thereof into one or more LIBOR Rate Loans and (b) upon the expiration of any Interest Period, (i) convert all or any part of its outstanding LIBOR Rate Loans in a principal amount equal to $1,000,000 or a whole multiple of $1,000,000 in excess thereof into Base Rate Loans or (ii) continue such LIBOR Rate Loans as LIBOR Rate Loans.  Whenever the Borrower desires to convert or continue Loans as provided above, the Borrower shall give the Administrative Agent irrevocable prior written notice in the form attached as Exhibit D (a “Notice of Conversion/Continuation”) not later than 11:00 a.m.  three (3) Business Days before the day on which a proposed conversion or continuation of such Loan is to be effective specifying (A) the Loans to be converted or continued, and, in the case of any LIBOR Rate Loan to be converted or continued, the last day of the Interest Period therefor, (B) the effective date of such conversion or continuation (which shall be a Business Day), (C) the principal amount of such Loans to be converted or continued, and (D) the Interest Period to be applicable to such converted or continued LIBOR Rate Loan.  The Administrative Agent shall promptly notify the affected Lenders of such Notice of Conversion/Continuation.


 




  





 











  






SECTION 3.3 Fees.  (a) The Borrower shall pay to the Arranger and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Engagement Letter.


 


(b)           The Borrower shall pay to the Lenders, a fee equal to 1.50% of the stated principal amount of the Term Loans made on the Closing Date, which may take the form of upfront fees or original issue discount, for the ratable benefit of the Lenders. Such fee will be in all respects fully earned, due and payable on the Closing Date and non-refundable thereafter.


 


SECTION 3.4 Manner of Payment.  Each payment by the Borrower on account of the principal of or interest on the Loans or of any fee, commission or other amounts payable to the Lenders under this Agreement shall be made not later than 1:00 p.m.  on the date specified for payment under this Agreement to the Administrative Agent at the Administrative Agent’s Office for the account of the Lenders entitled to such payment in Dollars, in immediately available funds and shall be made without any set off, counterclaim or deduction whatsoever.  Any payment received after such time but before 2:00 p.m.  on such day shall be deemed a payment on such date for the purposes of Section 8.1, but for all other purposes shall be deemed to have been made on the next succeeding Business Day.  Any payment received after 2:00 p.m.  shall be deemed to have been made on the next succeeding Business Day for all purposes.  Upon receipt by the Administrative Agent of each such payment, the Administrative Agent shall distribute to each such Lender at its address for notices set forth herein its Commitment Percentage in respect of the relevant Credit Facility (or other applicable share as provided herein) of such payment and shall wire advice of the amount of such credit to each Lender.  Each payment to the Administrative Agent of Administrative Agent’s fees or expenses shall be made for the account of the Administrative Agent and any amount payable to any Lender under Section 3.9, 3.10, 3.11 or 10.3 shall be paid to the Administrative Agent for the account of the applicable Lender.  Subject to Section 3.1(b)(ii), if any payment under this Agreement shall be specified to be made upon a day which is not a Business Day, it shall be made on the next succeeding day which is a Business Day and such extension of time shall in such case be included in computing any interest if payable along with such payment.


 


SECTION 3.5 Evidence of Indebtedness.  The Extensions of Credit made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business.  The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Extensions of Credit made by the Lenders to the Borrower and the interest and payments thereon.  Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations.  In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.  Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Term Loan Note, which shall evidence such Lender’s Term Loans, in addition to such accounts or records.  Each Lender may attach schedules to its Notes and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.


 




  





 











  






SECTION 3.6 Adjustments.  If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other such obligations (other than pursuant to Section 3.9, 3.10, 3.11 or 10.3) greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, 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 other amounts owing them; 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 (A) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement, (B) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any of its Subsidiaries (as to which the provisions of this paragraph shall apply).


 


Each Credit Party 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 each Credit Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of each Credit Party in the amount of such participation.


 


SECTION 3.7 Obligations of Lenders.


 


(a) Funding by Lenders; Presumption by Administrative Agent.  Unless the Administrative Agent shall have received notice from a Lender (i) in the case of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing  and (ii) otherwise 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 Section 2.2 and may, in reliance upon such assumption, make available to the 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 Borrower 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 Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the daily average Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans.  If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period.  If such Lender pays its share of the applicable borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such borrowing.  Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.


 




  





 











  






(b) Nature of Obligations of Lenders Regarding Extensions of Credit.  The obligations of the Lenders under this Agreement to make the Loans are several and are not joint or joint and several.  The failure of any Lender to make available its Commitment Percentage of any Loan requested by the Borrower shall not relieve it or any other Lender of its obligation, if any, hereunder to make its Commitment Percentage of such Loan available on the borrowing date, but no Lender shall be responsible for the failure of any other Lender to make its Commitment Percentage of such Loan available on the borrowing date.


 


SECTION 3.8 Changed Circumstances.


 


(a) Circumstances Affecting LIBOR Rate Availability.  In connection with any request for a LIBOR Rate Loan or a Base Rate Loan as to which the interest rate is determined with reference to LIBOR or a conversion to or continuation thereof, if for any reason (i) the Administrative Agent shall determine (which determination shall be conclusive and binding absent manifest error) that Dollar deposits are not being offered to banks in the London interbank Eurodollar market for the applicable amount and Interest Period of such Loan, (ii) the Administrative Agent shall determine (which determination shall be conclusive and binding absent manifest error) that reasonable and adequate means do not exist for the ascertaining the LIBOR Rate for such Interest Period with respect to a proposed LIBOR Rate Loan or any Base Rate Loan as to which the interest rate is determined with reference to LIBOR or (iii) the Required Lenders shall reasonably determine (which determination shall be conclusive and binding absent manifest error) that the LIBOR Rate does not adequately and fairly reflect the cost to such Lenders of making or maintaining such Loans during such Interest Period, then the Administrative Agent shall promptly give notice thereof to the Borrower.  Thereafter, until the Administrative Agent notifies the Borrower that such circumstances no longer exist, the obligation of the Lenders to make LIBOR Rate Loans or Base Rate Loan as to which the interest rate is determined with reference to LIBOR and the right of the Borrower to convert any Loan to or continue any Loan as a LIBOR Rate Loan or a Base Rate Loan as to which the interest rate is determined with reference to LIBOR shall be suspended, and (i) in the case of LIBOR Rate Loans, the Borrower shall either (A) repay in full (or cause to be repaid in full) the then outstanding principal amount of each such LIBOR Rate Loan together with accrued interest thereon (subject to Section 3.1(d)), on the last day of the then current Interest Period applicable to such LIBOR Rate Loan; or (B) convert the then outstanding principal amount of each such LIBOR Rate Loan to a Base Rate Loan as to which the interest rate is not determined by reference to LIBOR as of the last day of such Interest Period; or (ii) in the case of Base Rate Loans as to which the interest rate is determined by reference to LIBOR, the Borrower shall convert the then outstanding principal amount of each such Loan to a Base Rate Loan as to which the interest rate is not determined by reference to LIBOR as of the last day of such Interest Period.


 


(b) Laws Affecting LIBOR Rate Availability.  If, after the date hereof, the introduction of, or any change in, any Applicable Law or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any of the Lenders (or any of their respective Lending Offices) with any request or directive (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, shall make it unlawful or impossible for any of the Lenders (or any of their respective Lending Offices) to honor its obligations hereunder to make or maintain any LIBOR Rate Loan or any Base Rate Loan as to which the interest rate is determined by reference to LIBOR, such Lender shall promptly give notice thereof to the Administrative Agent and the Administrative Agent shall promptly give notice to the Borrower and the other Lenders.  Thereafter, until the Administrative Agent notifies the Borrower that such circumstances no longer exist, (i) the obligations of the Lenders to make LIBOR Rate Loans or Base Rate Loans as to which the interest rate is determined by reference to LIBOR, and the right of the Borrower to convert any Loan to a LIBOR Rate Loan or continue any Loan as a LIBOR Rate Loan or a Base Rate Loan as to which the interest rate is determined by reference to LIBOR shall be suspended and thereafter the Borrower may select only Base Rate Loans as to which the interest rate is not determined by reference to LIBOR hereunder, (ii) all Base Rate Loans shall cease to be determined by reference to LIBOR and (iii) if any of the Lenders may not lawfully continue to maintain a LIBOR Rate Loan to the end of the then current Interest Period applicable thereto, the applicable Loan shall immediately be converted to a Base Rate Loan as to which the interest rate is not determined by reference to LIBOR for the remainder of such Interest Period.


 




  





 











  






SECTION 3.9 Indemnity.  The Borrower hereby indemnifies each of the Lenders against any loss or expense (including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain a LIBOR Rate Loan or from fees payable to terminate the deposits from which such funds were obtained) which may arise or be attributable to each Lender’s obtaining, liquidating or employing deposits or other funds acquired to effect, fund or maintain any Loan (a) as a consequence of any failure by the Borrower to make any payment when due of any amount due hereunder in connection with a LIBOR Rate Loan, (b) due to any failure of the Borrower to borrow, continue or convert on a date specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation or (c) due to any payment, prepayment or conversion of any LIBOR Rate Loan on a date other than the last day of the Interest Period therefor.  The amount of such loss or expense shall be determined, in the applicable Lender’s reasonable sole discretion, based upon the assumption that such Lender funded its Commitment Percentage of the LIBOR Rate Loans in the London interbank market and using any reasonable attribution or averaging methods which such Lender deems reasonably appropriate and practical.  A certificate of such Lender setting forth the basis for determining such amount or amounts necessary to compensate such Lender shall be forwarded to the Borrower through the Administrative Agent and shall be conclusively presumed to be correct save for manifest error.


 


SECTION 3.10 Increased Costs.


 


(a) Increased Costs Generally.  If any Change in Law shall:


 


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


 


(ii) subject any Recipient to any Taxes (other than Excluded Taxes, or any Indemnified Taxes or Other Taxes indemnifiable under Section 3.11) or


 


(iii) impose on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender therein;


 


and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Loan (or of maintaining its obligation to make any such Loan), or to reduce the amount of any sum received or receivable by such Lender or such other Recipient hereunder (whether of principal, interest or any other amount) then, upon written request of such Lender or other Recipient, the Borrower shall promptly pay to any such Lender or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered; provided that any such Lender or Recipient will not be entitled to compensation for any such additional costs incurred or reduction suffered if it is not the general policy or practice of such Lender or Recipient to demand it in similar circumstances under comparable provisions of other credit agreements.


 




  





 











  






(b) Capital Requirements.  If any Lender determines that any Change in Law affecting such Lender or any lending office of such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender, to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time upon written request of such Lender the Borrower shall promptly pay to such Lender, such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered; provided that any such Lender or Lender’s holding company will not be entitled to compensation for any such reduction suffered if it is not the general policy or practice of such Lender or such Lender’s holding company to demand it in similar circumstances under comparable provisions of other credit agreements


 







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


 


(d) Delay in Requests.  Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions, and of such Lender’s intention to claim compensation therefor (except that if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).


 


SECTION 3.11 Taxes.


 


(a) Payments Free of Taxes.  Any and all payments by any Credit Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law.  If any Applicable Law requires the deduction or withholding of any Tax from any such payment (as determined in the good faith discretion of any Credit Party or an applicable withholding agent), then the applicable Credit Party or other 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 or an Other Tax, then the sum payable by the applicable Credit Party shall be increased as necessary so that after such deduction or withholding has been made (including any such deductions or withholdings applicable to additional sums payable under this Section 3.11) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.


 


(b) Payment of Other Taxes by the Borrower.  The Borrower 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 the payment of, any Other Taxes.


 




  





 











  






(c) Indemnification by the Credit Parties.  The Credit Parties shall jointly and severally indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes payable or paid by such Recipient on or attributable to any payment under or with respect to any Loan Document, and any Other Taxes payable or paid by such Recipient (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 3.11), and any reasonable expenses arising therefrom or with respect thereto.  A certificate as to the amount of such payment or liability prepared in good faith and delivered to the Borrower by a Recipient (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of another Recipient, shall be conclusive absent manifest error.


 


(d) Evidence of Payments.  As soon as practicable after any payment of Indemnified Taxes or Other Taxes by any Credit Party to a Governmental Authority, the Credit Party making such payment 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.


 


(e) Status of Lenders.  (i)  Each Lender shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, any properly completed and executed documentation reasonably requested by the Borrower 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 or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.


 


                (ii)Without limiting the generality of the foregoing,


 


(A)           any U.S. Lender shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a U.S. Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), two executed originals (or more if reasonably requested by the Borrower or the Administrative Agent) of IRS Form W-9 (or any successor forms) certifying that such Lender is exempt from U.S. federal backup withholding;


 


(B)           any Foreign Lender shall deliver to the Borrower and the Administrative Agent 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 or the Administrative Agent), two executed originals of whichever of the following is applicable:


 


                (i)in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party, executed originals of IRS Form W-8BEN (or any successor forms) establishing an exemption from, or reduction in, U.S. federal withholding Tax;


 


                (ii)executed originals of IRS Form W-8ECI (or any successor forms);


 


                (iii)in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 871(h) or Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit H-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 and that no interest payments are considered effectively connected with a U.S. trade or business of such Foreign Lender (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN (or any successor forms); or


 




  





 











  






                (iv)to the extent a Foreign Lender is not the beneficial owner (e.g., where the Foreign Lender is a partnership or has assigned its beneficial ownership to a Participant), executed originals of IRS Form W-8IMY (or any successor forms), accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit H-2 or Exhibit H-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 not a participating Lender 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 H-4 on behalf of each such direct and indirect partner;


 


(C)           any Lender shall, to the extent it is legally eligible to do so, deliver to the Borrower 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 or the Administrative Agent), two executed originals (or more if reasonably requested by the Borrower or the Administrative Agent) 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 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 and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower 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 and the Administrative Agent to comply with their obligations under FATCA, to determine whether such Lender has complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment.


 


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


 


                (iv)Notwithstanding any other provision of this Section 3.11(e), a Lender shall not be required to deliver any documentation that such Lender is not legally eligible to deliver.


 




  





 











  






(f) Treatment of Certain Refunds.  If any Recipient determines, in its sole discretion exercised in good faith, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified pursuant to this Section 3.11 (including by the payment of additional amounts pursuant to this Section 3.11), 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 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 (f) (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 (f), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (f) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid.  This paragraph 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.


 


(g) Survival.  Each party’s obligations under this Section 3.11 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.


 


SECTION 3.12 Mitigation Obligations; Replacement of Lenders.


 


(a) Designation of a Different Lending Office.  If any Lender requests compensation under Section 3.10, or requires the Borrower to pay additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.11, then such Lender shall, at the request of the Borrower, 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 Section 3.10 or Section 3.11, 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 Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.


 


(b) Replacement of Lenders.  If any Lender requests compensation under Section 3.10, or if the Borrower is required to pay additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.11, and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 3.12(a), or if any Lender is a Non-Consenting Lender, then the Borrower may, at its 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, and consents required by, Section 10.10), all of its interests, rights (other than its existing rights to payments pursuant to Section 3.10 or 3.11) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:


 


(i) the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 10.10;


 


(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.9) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);


 




  





 











  






(iii) in the case of any such assignment resulting from a claim for compensation under Section 3.10 or payments required to be made pursuant to Section 3.11, such assignment will result in a reduction in such compensation or payments thereafter;


 


(iv) such assignment does not conflict with Applicable Law; and


 


(v) in the case of any assignment resulting from  a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.


 


A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.


 


SECTION 3.13 Incremental Loans.


 


(a) At any time, the Borrower may by written notice to the Administrative Agent elect to request the establishment of one or more incremental term loan commitments (any such incremental term loan commitment, an “Incremental Term Loan Commitment”) to make an incremental term loan (any such incremental term loan, an “Incremental Term Loan”); provided that the total aggregate amount for all such Incremental Term Loan Commitments shall not (as of any date of incurrence thereof) exceed $100.0 million.  Each such notice shall specify the date (each, an “Increased Amount Date”) on which the Borrower proposes that any Incremental Term Loan Commitment shall be effective, which shall be a date not less than ten (10) Business Days after the date on which such notice is delivered to Administrative Agent.  The Borrower may invite any Lender, any Affiliate of any Lender and/or any Approved Fund, and/or any other Person reasonably satisfactory to the Administrative Agent, to provide an Incremental Term Loan Commitment (any such Person, an “Incremental Lender”).  Any Lender or any Incremental Lender offered or approached to provide all or a portion of any Incremental Term Loan Commitment may elect or decline, in its sole discretion, to provide such Incremental Term Loan Commitment.  Any Incremental Term Loan Commitment shall become effective as of such Increased Amount Date; provided that:


 


(i) no Default or Event of Default shall exist on such Increased Amount Date before or after giving effect to (1) any Incremental Term Loan Commitment, (2) the making of any Incremental Loans  pursuant thereto and (3) any Permitted Acquisition consummated in connection therewith;


 


(ii) the Administrative Agent and the Lenders shall have received from the Borrower a compliance certificate of the chief financial officer or treasurer in form reasonably acceptable to the Administrative Agent demonstrating that the Borrower will be in compliance on a Pro Forma Basis with  a Consolidated Senior Secured Leverage Ratio of 2.50 to 1.00 both before and after giving effect to (1) any Incremental Term Loan Commitment, (2) the making of any Incremental Loans pursuant thereto and (3) any Permitted Acquisition consummated in connection therewith;


 


(iii) the proceeds of any Incremental Loans  shall be used for general corporate purposes of the Borrower and its Subsidiaries (including Permitted Acquisitions);


 


(iv) each Incremental Term Loan Commitment (and the Incremental Loans made thereunder) shall constitute Obligations of the Borrower and shall be secured and guaranteed with the other Extensions of Credit on a pari passu basis;


 




  





 











  






(v) in the case of each Incremental Term Loan (the terms of which shall be set forth the relevant Lender Joinder Agreement):


 


(x)           such Incremental Term Loan will mature and amortize in a manner reasonably acceptable to the Administrative Agent, the Incremental Lenders making such Incremental Term Loan and the Borrower, but will not in any event have a shorter average life to maturity than the remaining average life to maturity of the Initial Term Loan or a maturity date earlier than the Term Loan Maturity Date;


 


(y)           the Applicable Margin and pricing grid, if applicable, for such Incremental Term Loan shall be determined by the Administrative Agent, the applicable Incremental Lenders and the Borrower on the applicable Increased Amount Date; provided that if the Applicable Margin in respect of any Incremental Term Loan exceeds the Applicable Margin for the Initial Term Loan by more than 0.50%, then the Applicable Margin for the Initial Term Loan shall be increased so that the Applicable Margin in respect of such Initial Term Loan is equal to the Applicable Margin for the Incremental Term Loan minus 0.50%; provided further in determining the Applicable Margin(s) applicable to each Incremental Term Loan and the Applicable Margin(s) for the Initial Term Loan, (1) original issue discount (“OID”) or upfront fees (which shall be deemed to constitute like amounts of OID) payable by the Borrower to the Lenders under such Incremental Term Loan or the Initial Term Loan in the initial primary syndication thereof shall be included (with OID being equated to interest based on assumed four-year life to maturity) and (2) customary arrangement or commitment fees payable to any Lead Arranger (or its affiliates) in connection with the Initial Term Loan or to one or more arrangers (or their affiliates) of any Incremental Term Loan shall be excluded (it being understood that the effects of any and all interest rate floors shall be included in determining Applicable Margin(s) under this provision); and


 


(z)           except as provided above, all other terms and conditions applicable to any such Incremental Term Loan shall, except to the extent otherwise provided in this Section 3.13, be identical to the terms and conditions applicable to the Initial Term Loan;


 


(vi) any Incremental Lender making any Incremental Term Loan shall be entitled to the same voting rights as the existing Term Loan Lenders under the Term Loan Facility and each Incremental Term Loan shall receive proceeds of prepayments on the same basis as the Initial Term Loan (such prepayments to be shared pro rata on the basis of the original aggregate funded amount thereof among the Initial Term Loan and the Incremental Term Loans);


 


(vii) such Incremental Term Loan Commitments shall be effected pursuant to one or more Lender Joinder Agreements executed and delivered by the Borrower, the Administrative Agent and the applicable Incremental Lenders (which Lender Joinder Agreement may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the Administrative Agent, to effect the provisions of this Section 3.13); and


 


(viii) the Borrower shall deliver or cause to be delivered any customary legal opinions or other documents (including, without limitation, a resolution duly adopted by the board of directors (or equivalent governing body) of each Credit Party authorizing such Incremental Loan) reasonably requested by Administrative Agent in connection with any such transaction.


 




  





 











  






(b) (i)  The Incremental Term Loans shall be deemed to be Term Loans; provided that such Incremental Term Loan shall be designated as a separate tranche of Term Loans for all purposes of this Agreement.


 


                (ii)The Incremental Lenders shall be included in any determination of the Required Lenders, and the Incremental Lenders will not constitute a separate voting class for any purposes under this Agreement.


 


(c) On any Increased Amount Date on which any Incremental Term Loan Commitment becomes effective, subject to the foregoing terms and conditions, each Incremental Lender with an Incremental Term Loan Commitment shall make an Incremental Term Loan to the Borrower in an amount equal to its Incremental Term Loan Commitment and shall become a Term Loan Lender hereunder with respect to such Incremental Term Loan Commitment and the Incremental Term Loan made pursuant thereto.


 


ARTICLE IV                                


 


CONDITIONS OF CLOSING AND BORROWING


 


SECTION 4.1 Conditions to Closing and Initial Extensions of Credit.  The obligation of the Lenders to close this Agreement and to make the initial Loan is subject to the satisfaction of each of the following conditions:


 


(a) Executed Loan Documents.  This Agreement, a Term Loan Note in favor of each Lender requesting a Term Loan Note, the Security Documents and the Perfection Certificate, together with any other applicable Loan Documents, shall have been duly authorized, executed and delivered to the Administrative Agent by the parties thereto, shall be in full force and effect and no Default or Event of Default shall exist hereunder or thereunder.


 


(b) Closing Certificates; Etc.  The Administrative Agent shall have received each of the following in form and substance reasonably satisfactory to the Administrative Agent:


 


(i) Officer’s Certificate.  A certificate from a Responsible Officer of the Borrower to the effect that (A) all representations and warranties of the Credit Parties contained in this Agreement and the other Loan Documents are true, correct and complete in all material respects (except to the extent any such representation and warranty is qualified by materiality or reference to Material Adverse Effect, in which case, such representation and warranty shall be true, correct and complete in all respects); (B) none of the Credit Parties is in violation of any of the covenants contained in this Agreement and the other Loan Documents; (C) after giving effect to the Transactions, no Default or Event of Default has occurred and is continuing; (D) since December 31, 2011, no event has occurred or condition arisen, either individually or in the aggregate, that could reasonably be expected to have a Material Adverse Effect; and (E)  each of the Credit Parties, as applicable, has satisfied each of the conditions set forth in Section 4.1.


 


(ii) Certificate of Secretary of each Credit Party.  A certificate of a Responsible Officer of each Credit Party certifying as to the incumbency and genuineness of the signature of each officer of such Credit Party executing Loan Documents to which it is a party and certifying that attached thereto is a true, correct and complete copy of (A) the articles or certificate of incorporation or formation of such Credit Party and all amendments thereto, certified as of a recent date by the appropriate Governmental Authority in its jurisdiction of incorporation or formation, (B) the bylaws or other governing document of such Credit Party as in effect on the Closing Date, (C) resolutions duly adopted by the board of directors (or other governing body) of such Credit Party authorizing and approving the transactions contemplated hereunder and the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party, and (D) each certificate required to be delivered pursuant to Section 4.1(b)(iii).


 




  





 











  






(iii) Certificates of Good Standing.  Certificates as of a recent date of the good standing of each Credit Party under the laws of its jurisdiction of organization and, to the extent requested by the Administrative Agent, each other jurisdiction where such Credit Party is qualified to do business and, to the extent available, a certificate of the relevant taxing authorities of such jurisdictions certifying that such Credit Party has filed required tax returns and owes no delinquent taxes.


 


(iv) Opinions of Counsel.  Favorable opinions of counsel to the Credit Parties addressed to the Administrative Agent and the Lenders with respect to the Credit Parties, the Loan Documents and such other matters as the Lenders shall request (which such opinions shall expressly permit reliance by permitted successors and assigns of the addressees thereof).


 


(c) Personal Property Collateral.


 


(i) Filings and Recordings.  The Administrative Agent shall have received all filings (including UCC financing statements in appropriate form for filing under the UCC) and recordations that are necessary to perfect the security interests of the Administrative Agent, on behalf of the Secured Parties, in the Collateral and the Administrative Agent shall have received evidence reasonably satisfactory to the Administrative Agent that upon such filings and recordations such security interests constitute valid and perfected Liens thereon .


 


(ii) Pledged Collateral.  The Administrative Agent shall have received (A) original stock certificates or other certificates evidencing the Capital Stock pledged pursuant to the Security Documents, together with an undated stock power for each such certificate duly executed in blank by the registered owner thereof and (B) each original promissory note pledged pursuant to the Security Documents together with an undated endorsement for each such promissory note duly executed in blank by the holder thereof.


 


(iii) Lien Search.  The Administrative Agent shall have received the results of a Lien search (including a search as to judgments, pending litigation, bankruptcy, tax and intellectual property matters), in form and substance reasonably satisfactory to the Administrative Agent as of a recent date, made against the Credit Parties under the UCC (or applicable judicial docket) as in effect in each jurisdiction in which filings or recordations under the Uniform Commercial Code should be made to evidence or perfect security interests in all assets of such Credit Party indicating among other things that the assets of each such Credit Party are free and clear of any Lien (except for Permitted Liens).


 


(iv) Hazard and Liability Insurance.  The Administrative Agent shall have received evidence of property hazard, business interruption and general liability insurance, confirmation of payment of all insurance premiums for the current policy year of each (with appropriate endorsements naming the Administrative Agent as lender’s loss payee as its interest may appear on all policies for property hazard insurance and as additional insured on all policies for general liability insurance.


 




  





 











  






(d) Consents; Defaults.


 


(i) Governmental and Third Party Approvals.  The Credit Parties shall have received all material governmental, shareholder and third party consents and approvals reasonably necessary (or any other material consents as determined in the reasonable discretion of the Administrative Agent) in connection with the transactions contemplated by this Agreement and the other Loan Documents and the other transactions contemplated hereby and all applicable waiting periods shall have expired without any action being taken by any Person that could reasonably be expected to restrain, prevent or impose any material adverse conditions on any of the Credit Parties or such other transactions or that could seek or threaten any of the foregoing, and no law or regulation shall be applicable which in the reasonable judgment of the Administrative Agent could reasonably be expected to have such effect.


 


(ii) No Injunction, Etc.  No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain substantial damages in respect of, or which is related to or arises out of this Agreement or the other Loan Documents or the consummation of the transactions contemplated hereby or thereby, or which, in the Administrative Agent’s sole discretion, would make it inadvisable to consummate the transactions contemplated by this Agreement or the other Loan Documents or the consummation of the transactions contemplated hereby or thereby.


 


(e) Financial Matters.


 


(i) Financial Condition/Solvency Certificate.  The Borrower shall have delivered to the Administrative Agent a certificate, in form and substance satisfactory to the Administrative Agent, and certified as accurate by the chief financial officer of the Borrower, that (A) after giving effect to the Transactions, each Credit Party and each Subsidiary thereof is each Solvent and (B) the financial projections previously delivered to the Administrative Agent represent the good faith estimates (utilizing reasonable assumptions) of the financial condition and operations of the Borrower and its Subsidiaries.


 


(ii) Payment at Closing.  The Borrower shall have paid (A) to the Administrative Agent, the Arranger and the Lenders the fees set forth or referenced in Section 3.3 and any other accrued and unpaid fees or commissions due hereunder, (B) all reasonable fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent accrued and unpaid prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent) and (C) to any other Person such amount as may be due thereto in connection with the transactions contemplated hereby, including all taxes, fees and other charges in connection with the execution, delivery, recording, filing and registration of any of the Loan Documents.


 


(f) Miscellaneous.


 


(i) Notice of Borrowing.  The Administrative Agent shall have received a Notice of Borrowing from the Borrower in accordance with Section 2.2.


 


(ii) Existing Indebtedness.  As of the Closing Date Kronos International, Inc. shall have irrevocably notified the trustee to call for redemption all of its Senior Secured Notes due 2013 then outstanding and shall have complied with Article X of the indenture in respect of the Senior Secured Notes due 2013  in order to satisfy and discharge such Senior Secured Notes due 2013.  Promptly following the Closing Date, Kronos International, Inc. may apply a portion of Loan proceeds to repay euro 80 million of indebtedness under the European Revolving Credit Facility.


 




  





 











  






(iii) PATRIOT Act.  The Borrower and each of the Subsidiary Guarantors shall have provided to the Administrative Agent and the Lenders the documentation and other information requested by the Administrative Agent in order to comply with requirements of the PATRIOT Act.


 


(iv) Other Documents.  All opinions, certificates and other instruments and all proceedings in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to the Administrative Agent.  The Administrative Agent shall have received copies of all other documents, certificates and instruments reasonably requested thereby, with respect to the transactions contemplated by this Agreement.


 


Without limiting the generality of the provisions of the last paragraph of Section 9.3, for purposes of determining compliance with the conditions specified in this Section 4.1, the Administrative Agent and each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.


 


ARTICLE V                      


 


REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES


 


To induce the Administrative Agent and Lenders to enter into this Agreement and to induce the Lenders to make Extensions of Credit, the Credit Parties hereby represent and warrant to the Administrative Agent and the Lenders both before and after giving effect to the transactions contemplated hereunder, which representations and warranties shall be deemed made on the Closing Date, that:


 


SECTION 5.1 Organization; Power; Qualification.  Each Credit Party and each Subsidiary thereof (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation, (b) has the power and authority to own its Properties and to carry on its business as now being and hereafter proposed to be conducted and (c) is duly qualified and authorized to do business in each jurisdiction in which the character of its Properties or the nature of its business requires such qualification and authorization.  The jurisdictions in which each Credit Party is organized and qualified to do business as of the Closing Date are described on Schedule 5.1.


 


SECTION 5.2 Ownership.  Each Subsidiary of each Credit Party as of the Closing Date is listed on Schedule 5.2.  All outstanding shares that are part of the Collateral have been duly authorized and validly issued and are fully paid and nonassessable and not subject to any preemptive or similar rights, except as described in Schedule 5.2.  The shareholders or other owners, as applicable, of each Credit Party and its Subsidiaries and the number of shares that are part of the Collateral that are owned by each as of the Closing Date are described on Schedule 5.2.  As of the Closing Date, there are no outstanding stock purchase warrants, subscriptions, options, securities, instruments or other rights of any type or nature whatsoever, which are convertible into, exchangeable for or otherwise provide for or require the issuance of Capital Stock of any Credit Party or any Subsidiary thereof, except as described on Schedule 5.2.


 




  





 











  






SECTION 5.3 Authorization Enforceability.  Each Credit Party has the right, power and authority and has taken all necessary corporate and other action to authorize the execution, delivery and performance of this Agreement and each of the other Loan Documents to which it is a party in accordance with their respective terms.  This Agreement and each of the other Loan Documents have been duly executed and delivered by the duly authorized officers of each Credit Party that is a party thereto, and each such document constitutes the legal, valid and binding obligation of each Credit Party that is a party thereto, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors’ rights in general and the availability of equitable remedies.


 


SECTION 5.4 Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc.  The execution, delivery and performance by each Credit Party of the Loan Documents to which each such Person is a party, in accordance with their respective terms, the Extensions of Credit hereunder and the transactions contemplated hereby do not and will not, by the passage of time, the giving of notice or otherwise, (a) require any Governmental Approval or violate any Applicable Law relating to any Credit Party where the failure to obtain such Governmental Approval or such violation could reasonably be expected to have a Material Adverse Effect, (b) conflict with, result in a breach of or constitute a default under the articles of incorporation, bylaws or other organizational documents of any Credit Party, (c) conflict with, result in a breach of or constitute a default under any indenture, agreement or other instrument to which such Person is a party or by which any of its properties may be bound or any Governmental Approval relating to such Person, which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (d) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by such Person other than Permitted Liens or (e) require any consent or authorization of, filing with, or other act in respect of, an arbitrator or Governmental Authority and no consent of any other Person is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement other than (i) consents, authorizations, filings or other acts or consents for which the failure to obtain or make could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (ii) consents or filings under the UCC and (iii) filings with the United States Copyright Office and/or the United States Patent and Trademark Office.


 


SECTION 5.5 Compliance with Law; Governmental Approvals.  Each Credit Party and each Subsidiary thereof (a) has all Governmental Approvals required by any Applicable Law for it to conduct its business, each of which is in full force and effect, is final and not subject to review on appeal and is not the subject of any pending or, to its knowledge, threatened attack by direct or collateral proceeding, (b) is in compliance with each Governmental Approval applicable to it and in compliance with all other Applicable Laws relating to it or any of its respective properties and (c) has timely filed all material reports, documents and other materials required to be filed by it under all Applicable Laws with any Governmental Authority and has retained all material records and documents required to be retained by it under Applicable Law except in each case (a), (b) or (c) where the failure to have, comply or file could not reasonably be expected to have a Material Adverse Effect.


 


SECTION 5.6 Tax Returns and Payments.  Except for failures that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.


 


Each Credit Party and each Subsidiary thereof has duly filed or caused to be filed all federal, state, local and other Tax returns and information reports required by Applicable Law to be filed, and has paid, or made adequate provision for the payment of, all federal, state, local and other Taxes upon it and its property, income, profits and assets which are due and payable (including in its capacity as withholding agent) (other than any amount the validity of which is currently being contested in good faith by appropriate proceedings diligently conducted that stay the enforcement of the tax in question and with respect to which adequate reserves in accordance with GAAP have been provided for on the books of the relevant Credit Party).  There is no ongoing or proposed or, to the knowledge of the Borrower pending Tax audit, examination, assessment, deficiency or other claim or proceeding of any Credit Party or any Subsidiary thereof, except in each case, for any audit, examination, assessment, deficiency or other claim or proceeding which could not reasonably be expected to have a Material Adverse Effect.  There are adequate charges, accruals and reserves (in accordance with GAAP) on the books of each Credit Party in respect of all Taxes.


 




  





 











  






SECTION 5.7 Intellectual Property Matters.  Each Credit Party and each Subsidiary thereof owns or possesses rights to use all material franchises, licenses, copyrights, copyright applications, patents, patent rights or licenses, patent applications, trademarks, trademark rights, service mark, service mark rights, trade names, trade name rights, copyrights and other rights with respect to the foregoing which are reasonably necessary to conduct its business.  No event has occurred which permits, or after notice or lapse of time or both would permit, the revocation or termination of any such rights, and no Credit Party nor any Subsidiary thereof is liable to any Person for infringement under Applicable Law with respect to any such rights as a result of its business operations except as could not reasonably be expected to have a Material Adverse Effect.


 


SECTION 5.8 Environmental Matters.  Except as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect:


 


(a) The properties owned, leased or operated by each Credit Party and each Subsidiary thereof now or in the past do not contain any Hazardous Materials in amounts or concentrations which constitute a violation of applicable Environmental Laws;


 


(b) Each Credit Party and each Subsidiary thereof and such properties and all operations conducted in connection therewith are in compliance and have been in compliance with all applicable Environmental Laws;


 


(c) No Credit Party nor any Subsidiary thereof has received any written notice of an Environmental Claim, nor does any Credit Party or any Subsidiary thereof have knowledge or reason to believe that any such notice will be received or is being threatened; and


 


(d) Hazardous Materials have not been transported or disposed of to or from the properties owned, leased or operated by any Credit Party or any Subsidiary thereof in violation of, or in a manner or to a location which could give rise to liability under applicable Environmental Laws, nor have any Hazardous Materials been released, discharged, generated, treated, stored or disposed of at, on or under any of such properties in violation of, or in a manner that could give rise to liability under any applicable Environmental Laws.


 


SECTION 5.9 Employee Benefit Matters.


 


(a) As of the Closing Date, no Credit Party nor any ERISA Affiliate maintains or contributes to, or has any obligation under, any Employee Benefit Plans other than those identified on Schedule 5.9;


 


(b) Each Credit Party and each ERISA Affiliate is in compliance with all applicable provisions of ERISA, the Code and the regulations and published interpretations thereunder with respect to all Employee Benefit Plans except for any required amendments for which the remedial amendment period as defined in Section 401(b) of the Code has not yet expired and except where a failure to so comply could not reasonably be expected to have a Material Adverse Effect.  Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has been determined by the IRS to be so qualified, and each trust related to such plan has been determined to be exempt under Section 501(a) of the Code except for such plans that have not yet received determination letters but for which the remedial amendment period for submitting a determination letter has not yet expired.  No liability has been incurred by any Credit Party or any ERISA Affiliate which remains unsatisfied for any taxes or penalties assessed with respect to any Employee Benefit Plan or any Multiemployer Plan except for a liability that could not reasonably be expected to have a Material Adverse Effect;


 




  





 











  






(c) As of the Closing Date, no Pension Plan has been terminated, nor has any Pension Plan become subject to funding based benefit restrictions under Section 436 of the Code, nor has any funding waiver from the IRS been received or requested with respect to any Pension Plan, nor has any Credit Party or any ERISA Affiliate failed to make any contributions or to pay any amounts due and owing as required by Sections 412 or 430 of the Code, Section 302 of ERISA or the terms of any Pension Plan prior to the due dates of such contributions under Sections 412 or 430 of the Code or Section 302 of ERISA, nor has there been any event requiring any disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension Plan;


 


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


 


(e) No Termination Event or similar event with respect to a Foreign Plan has occurred or is reasonably expected to occur;


 


(f) Except where the failure of any of the following representations to be correct could not reasonably be expected to have a Material Adverse Effect, no proceeding, claim (other than a benefits claim in the ordinary course of business), lawsuit and/or investigation is existing or, to the best of the knowledge of the Borrower after due inquiry, threatened concerning or involving (i) any employee welfare benefit plan (as defined in Section 3(1) of ERISA) currently maintained or contributed to by any Credit Party or any ERISA Affiliate, (ii) any Pension Plan or (iii) any Multiemployer Plan;


 


(g) Each Foreign Plan has been maintained in compliance with its terms and with the requirements of any and all Applicable Law and has been maintained, where required, in good standing with applicable Governmental Authorities except to the extent that the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.  Neither any Credit Party nor any Subsidiary thereof has incurred any obligation in an amount that could reasonably be expected to have a Material Adverse Effect in connection with the termination of or withdrawal from any Foreign Plan.


 


SECTION 5.10 Margin Stock.  No Credit Party thereof is engaged principally or as one of its activities in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” (as each such term is defined or used, directly or indirectly, in Regulation U of the Board of Governors of the Federal Reserve System).  No part of the proceeds of any of the Loans will be used for purchasing or carrying margin stock or for any purpose which violates, or which would be inconsistent with, the provisions of Regulation T, U or X of such Board of Governors.  Following the application of the proceeds of each Extension of Credit, not more than twenty-five percent (25%) of the value of the assets (either of the Borrower only or of the Borrower and its Subsidiaries on a Consolidated basis) subject to the provisions of Section 5.2 or Section 5.5 or subject to any restriction contained in any agreement or instrument between the Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness in excess of the Threshold Amount will be “margin stock.”  If requested by any Lender (through the Administrative Agent) or the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1 referred to in Regulation U.


 




  





 











  






SECTION 5.11 Government Regulation.  No Credit Party nor any Subsidiary thereof is an “investment company” or a company “controlled” by an “investment company” (as each such term is defined or used in the Investment Company Act of 1940, as amended) and no Credit Party nor any Subsidiary thereof is, or after giving effect to any Extension of Credit will be, subject to regulation under the Interstate Commerce Act, as amended, or any other Applicable Law which limits its ability to incur or consummate the transactions contemplated hereby.


 


SECTION 5.12 Material Contracts.  Schedule 5.12 sets forth a complete and accurate list of all Material Contracts of each Credit Party and each Subsidiary thereof in effect as of the Closing Date relating to the Collateral.  Other than as set forth in Schedule 5.12, each such Material Contract is, and after giving effect to the consummation of the transactions contemplated by the Loan Documents will be, in full force and effect in accordance with the terms thereof.  To the extent requested by the Administrative Agent, each Credit Party and each Subsidiary thereof has delivered to the Administrative Agent a true and complete copy of each Material Contract required to be listed on Schedule 5.12 or any other Schedule hereto.  No Credit Party nor any Subsidiary thereof (nor, to the knowledge of the Borrower, any other party thereto) is in breach of or in default under any Material Contract in any material respect.


 


SECTION 5.13 Employee Relations.  No Credit Party is party to any collective bargaining agreement nor has any labor union been recognized as the representative of its employees except as set forth on Schedule 5.13.  The Borrower knows of no pending, threatened or contemplated strikes, work stoppage or other collective labor disputes involving its employees or those of its Subsidiaries that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.


 


SECTION 5.14 Burdensome Provisions.  The Credit Parties and their respective Subsidiaries do not presently anticipate that future expenditures needed to meet the provisions of any statutes, orders, rules or regulations of a Governmental Authority will be so burdensome as to have a Material Adverse Effect.  No Subsidiary is party to any agreement or instrument or otherwise subject to any restriction or encumbrance that restricts or limits its ability to make dividend payments or other distributions in respect of its Capital Stock to the Borrower or any Subsidiary or to transfer any of its assets or properties to the Borrower or any other Subsidiary, in each case other than existing under or by reason of the European Revolving Credit Facility and the Loan Documents, or Applicable Law.


 


SECTION 5.15 Financial Projections.  The projections delivered pursuant to Section 4.1(e)(i) were prepared in good faith on the basis of the assumptions stated therein, which assumptions are believed to be reasonable in light of then existing conditions, it being recognized by the Lenders that such financial information as it relates to future events is not to be viewed as fact and  that actual results may differ from the projected results.


 


SECTION 5.16 No Material Adverse Change.  Since December 31, 2011, there has been no material adverse change in the properties, business, operations, prospects, or condition (financial or otherwise) of the Borrower and its Subsidiaries and no event has occurred or condition arisen, either individually or in the aggregate, that could reasonably be expected to have a Material Adverse Effect.


 


SECTION 5.17 Solvency.  The Credit Parties, on a Consolidated basis, are Solvent.


 




  





 











  






 


    SECTION 5.18 Titles to Properties.  Each Credit Party has such title to the real property owned or leased by it as is necessary or desirable to the conduct of its business and valid and legal title to all of its personal property and assets.


 


SECTION 5.19 Litigation.  Except as set forth on Schedule 5.19, there are no actions, suits or proceedings pending nor, to the knowledge of the Borrower, threatened against or in any other way relating adversely to or affecting any Credit Party or any of their respective properties in any court or before any arbitrator of any kind or before or by any Governmental Authority that could reasonably be expected to have a Material Adverse Effect.


 


SECTION 5.20 OFAC.  No Credit Party nor any of its Subsidiaries (i) is an “enemy” or an “ally of the enemy” within the meaning of Section 2 of the Trading with the Enemy Act of the United States (50 U.S.C. App. §§ 1 et seq.), as amended, (ii) is in violation of (A) the Trading with the Enemy Act, as amended, (B) any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto or (C) the PATRIOT Act, (iii) is a Sanctioned Person, (ii) has more than 10% of its assets in Sanctioned Countries, or (iii) derives more than 10% of its operating income from investments in, or transactions with Sanctioned Persons or Sanctioned Countries.  No part of the proceeds of any Extension of Credit hereunder will be used directly or indirectly to fund any operations in, finance any investments or activities in or make any payments to, a Sanctioned Person or a Sanctioned Country.


 


SECTION 5.21 Absence of Defaults.  No event has occurred or is continuing (a) which constitutes a Default or an Event of Default, or (b) which constitutes, or which with the passage of time or giving of notice or both would constitute, a default or event of default by any Credit Party or any Subsidiary thereof under any Material Contract or judgment, decree or order to which any Credit Party or any Subsidiary thereof is a party or by which any Credit Party or any Subsidiary thereof or any of their respective properties may be bound or which would require any Credit Party or any Subsidiary thereof to make any payment thereunder prior to the scheduled maturity date therefor.


 


SECTION 5.22 Senior Indebtedness Status.  The Obligations of each Credit Party under this Agreement and each of the other Loan Documents ranks and shall continue to rank at least senior in priority of payment to all Subordinated Indebtedness and all senior unsecured Indebtedness of each such Person and is designated as “Senior Indebtedness” under all instruments and documents, now or in the future, relating to all Subordinated Indebtedness and all senior unsecured Indebtedness of such Person.


 


SECTION 5.23 Investment Bankers’ and Similar Fees.  No Credit Party has any material obligation to any Person in respect of any finders’, brokers’, investment banking or other similar fee in connection with any of the Transactions.


 


SECTION 5.24 Disclosure.  The Borrower and/or its Subsidiaries have disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which any Credit Party and any Subsidiary thereof are subject, and all other matters known to them, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  No financial statement, material report, material certificate or other material information furnished (whether in writing or orally) by or on behalf of any Credit Party or any Subsidiary thereof to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished), taken together as a whole, contains any untrue statement of a material 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, pro forma financial information, estimated financial information and other projected or estimated information, such information was prepared in good faith based upon assumptions believed to be reasonable at the time, it being recognized by the Lenders that such financial information as it relates to future events is not to be viewed as fact and  that actual results may differ from the projected results.


 




  





 











  






SECTION 5.25 Security Documents.


 


(a) Collateral Agreement.  The Collateral Agreement is effective to create in favor of the Administrative Agent for the benefit of the Secured Parties, legal, valid and enforceable Liens on, and security interests in, the Collateral pledged or granted pursuant to the Collateral Agreement (the “Collateral Agreement Collateral”) and, when (i) financing statements and other filings in appropriate form are filed in the offices specified on Schedule 7 to the Perfection Certificate and (ii) upon the taking of possession or control by the Administrative Agent of the Collateral Agreement Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Administrative Agent to the extent possession or control by the Administrative Agent is required by the Collateral Agreement), the Liens created by the Collateral Agreement shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the grantors in the Collateral Agreement Collateral (other than such Collateral Agreement Collateral in which a security interest cannot be perfected under the UCC as in effect at the relevant time in the relevant jurisdiction), in each case subject to no Liens other than Permitted Liens.


 


(b) Valid Liens.  Each Security Document delivered pursuant to Section 4.1(a) will, upon execution and delivery thereof, be effective to create in favor of the Administrative Agent, for the benefit of the Secured Parties, legal, valid and enforceable Liens on, and security interests in, all of the Credit Parties’ right, title and interest in and to the Collateral thereunder, and (i) when all appropriate filings or recordings are made in the appropriate offices as may be required under applicable law and (ii) upon the taking of possession or control by the Administrative Agent of such Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Administrative Agent to the extent required by any Security Document), such Security Document will constitute fully perfected Liens on, and security interests in, all right, title and interest of the Credit Parties in such Collateral, in each case subject to no Liens other than the applicable Permitted Liens.


 


SECTION 5.26 Insurance.  The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrower or, to the extent the Borrower and Subsidiary Guarantors are insured by insurance companies that are Affiliates of the Borrower, said insurance is backed by financially sound and reputable reinsurers, in each case in such amounts with such deductibles and covering such risks as is deemed appropriate by Borrower.


 


ARTICLE VI                                


 


AFFIRMATIVE COVENANTS


 


Until all of the Obligations (other than contingent indemnification obligations not then due) have been paid and satisfied in full in cash and the Commitments terminated, each Credit Party will, and will cause each of its Subsidiaries to:


 


SECTION 6.1 Financial Statements.  The Borrower shall deliver to the Administrative Agent, in form and detail satisfactory to the Administrative Agent (which shall promptly make such information available to the Lenders in accordance with its customary practice):


 




  





 











  






(a) Annual Financial Statements.  As soon as practicable and in any event within ninety (90) days (or, if earlier, on the date of any required public filing thereof or no later than the date of any required public filing thereof, including any extension, if such date is more than ninety (90) days) after the end of each Fiscal Year (commencing with the Fiscal Year ended December 31, 2012), an audited Consolidated balance sheet of the Borrower and its Subsidiaries as of the close of such Fiscal Year and audited Consolidated statements of income, retained earnings and cash flows including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the preceding Fiscal Year and prepared in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the year.  Such annual financial statements shall be audited by an independent certified public accounting firm of recognized national standing, and accompanied by a report and opinion thereon by such certified public accountants prepared in accordance with generally accepted auditing standards that is not subject to any “going concern” or similar qualification or exception or any qualification as to the scope of such audit or with respect to accounting principles followed by the Borrower or any of its Subsidiaries not in accordance with GAAP.


 


(b) Quarterly Financial Statements.  As soon as practicable and in any event within forty-five (45) days (or, if earlier, on the date of any required public filing thereof, or no later than the date of any required public filing thereof, including any extension, if such date is more than forty-five (45) days) after the end of the first three fiscal quarters of each Fiscal Year (commencing with the fiscal quarter ended June 30, 2012), an unaudited Consolidated balance sheet of the Borrower and its Subsidiaries as of the close of such fiscal quarter and unaudited Consolidated statements of income, retained earnings and cash flows, including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the corresponding period in the preceding Fiscal Year and prepared by the Borrower in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the period, and certified by the chief financial officer or treasurer of the Borrower to present fairly in all material respects the financial condition of the Borrower and its Subsidiaries on a Consolidated basis as of their respective dates and the results of operations of the Borrower and its Subsidiaries for the respective periods then ended, subject to normal year-end adjustments and the absence of footnotes.


 


SECTION 6.2 Certificates; Other Reports.  The Borrower shall deliver to the Administrative Agent (which shall promptly make such information available to the Lenders in accordance with its customary practice):


 


(a) at each time financial statements are delivered pursuant to Section 6.1(a) or (b) and at such other times as the Administrative Agent shall reasonably request, a duly completed Officer’s Certificate with respect to the Borrower and its Subsidiaries;


 


(b) concurrently with the delivery of financial statements pursuant to Section 6.1(a), deliver to the Administrative Agent and the Collateral Agent a certificate of a Financial Officer providing notice of the creation or acquisition of any Subsidiary and which sets forth any Capital Stock that shall be, or which has been, pledged pursuant to Section 6.14 and, to the extent relating to ABL Priority Collateral, any perfection certificate supplement or other notification that has been delivered to the ABL Collateral Agent with respect thereto.;


 


(c) promptly upon receipt thereof, copies of all final reports, if any, submitted to Borrower or its Board of Directors by its independent public accountants in connection with their auditing function, including, without limitation, any management report and any management responses thereto;


 




  





 











  






(d) promptly after the furnishing thereof, copies of any material statement or report furnished to any holder of Indebtedness of any Credit Party in excess of the Threshold Amount (other than with respect to the European Revolving Credit Facility) pursuant to the terms of any indenture, loan or credit or similar agreement;


 


(e) promptly after the assertion or occurrence thereof, notice of any Environmental Claims related in any way to any Credit Party or any Subsidiary that could reasonably be expected to have a Material Adverse Effect;


 


(f) promptly, and in any event within five (5) Business Days after receipt thereof by any Credit Party or any Subsidiary thereof, copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Credit Party or any Subsidiary thereof that could reasonably be expected to have a Material Adverse Effect;


 


(g) promptly upon the request thereof, such other information and documentation required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations (including, without limitation, the PATRIOT Act), as from time to time reasonably requested by the Administrative Agent or any Lender; and


 


(h) such other information regarding the operations, business affairs and financial condition of any Credit Party or any Subsidiary thereof as the Administrative Agent or any Lender may reasonably request.  Documents required to be delivered pursuant to Section 6.1(a) or (b) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed in Section 10.1; or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that (i) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower shall notify the Administrative Agent and each Lender (by facsimile or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions of such documents.


 


The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arranger will make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on SyndTrak Online or another similar electronic system (the “Platform”) and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Borrower or its securities) (each, a “Public Lender”).  The Borrower hereby agrees that so long as the Borrower is the issuer of any outstanding debt or equity securities that are registered or issued pursuant to a private offering or is actively contemplating issuing any such securities it will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (w) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Arranger and the Lenders to treat such Borrower Materials as not containing any material non-public information (although it may be sensitive and proprietary) with respect to the Borrower or its securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.11); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Investor”; and (z) the Administrative Agent and the Arranger shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Investor.” Notwithstanding the foregoing, the Borrower shall be under no Obligation to mark any Borrower Materials “PUBLIC.”


 




  





 











  






SECTION 6.3 Notice of Litigation and Other Matters.  Promptly (but in no event later than ten (10) Business Days after any Responsible Officer of any Credit Party obtains knowledge thereof) the Borrower shall notify the Administrative Agent in writing of (which shall promptly make such information available to the Lenders in accordance with its customary practice):


 


(a) the occurrence of any Default or Event of Default;


 


(b) the commencement of all proceedings and investigations by or before any Governmental Authority and all actions and proceedings in any court or before any arbitrator against or involving any Credit Party or any Subsidiary thereof or any of their respective properties, assets or businesses in each case that if adversely determined could reasonably be expected to result in a Material Adverse Effect;


 


(c) any notice of any violation received by any Credit Party or any Subsidiary thereof from any Governmental Authority including, without limitation, any Environmental Claims which in any such case could reasonably be expected to have a Material Adverse Effect;


 


(d) any attachment, judgment, lien, levy or order exceeding the Threshold Amount that may be assessed against any Credit Party or any Subsidiary thereof;


 


(e) any event which constitutes or which with the passage of time or giving of notice or both would constitute a default or event of default under any Material Contract to which the Borrower or any of its Subsidiaries is a party or by which the Borrower or any Subsidiary thereof or any of their respective properties may be bound which could reasonably be expected to have a Material Adverse Effect;


 


(f) (i) any unfavorable determination letter from the IRS regarding the qualification of an Employee Benefit Plan under Section 401(a) of the Code (along with a copy thereof), (ii) with respect to any Pension Plan, a failure to satisfy the minimum funding standard under Section 412 of the Code or Section 302 of ERISA, (iii) all notices received by any Credit Party or any ERISA Affiliate of the PBGC’s intent to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan, (iv) all notices received by any Credit Party or any ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA and (v) the Borrower obtaining knowledge or reason to know that any Credit Party or any ERISA Affiliate has filed or intends to file a notice of intent to terminate any Pension Plan under a distress termination within the meaning of Section 4041(c) of ERISA; and


 


(g) any event which makes any of the representations set forth in Article VII that is subject to materiality or Material Adverse Effect qualifications inaccurate in any respect or any event which makes any of the representations set forth in Article VII that is not subject to materiality or Material Adverse Effect qualifications inaccurate in any material respect.


 


SECTION 6.4 Preservation of Corporate Existence and Related Matters.  Except as permitted by Section 7.4, preserve and maintain its separate corporate existence and all rights, franchises, licenses and privileges necessary to the conduct of its business, and qualify and remain qualified as a foreign corporation or other entity and authorized to do business in each jurisdiction in which the failure to so qualify could reasonably be expected to have a Material Adverse Effect.


 


SECTION 6.5 Maintenance of Property and Licenses.


 


(a) In addition to the requirements of any of the Security Documents, protect and preserve all Properties necessary in and material to its business, including copyrights, patents, trade names, service marks and trademarks; maintain in good working order and condition, ordinary wear and tear and casualty excepted, all buildings, equipment and other tangible real and personal property; and from time to time make or cause to be made all repairs, renewals and replacements thereof and additions to such Property necessary for the conduct of its business, so that the business carried on in connection therewith may be conducted in a commercially reasonable manner, in each case except as such action or inaction would not reasonably be expected to result in a Material Adverse Effect.


 


(b) Maintain, in full force and effect in all material respects, each and every material license, permit, certification, qualification, approval or franchise issued by any Governmental Authority (each a “License”) required for each of them to conduct their respective businesses as presently conducted.


 


SECTION 6.6 Insurance.  Maintain property hazard and business interruption insurance with financially sound and reputable insurance companies against at least such risks and in at least such amounts as is deemed appropriate by Borrower and as may be required by Applicable Law.  All such insurance shall, (a) provide that no cancellation or material modification thereof shall be effective until at least 30 days after receipt by the Administrative Agent of written notice thereof, (b) name the Administrative Agent as an additional insured party thereunder as its interest may appear and (c)  name the Administrative Agent as lender’s loss payee as its interest may appear.  On the Closing Date and from time to time thereafter deliver to the Administrative Agent upon its request information in reasonable detail as to the insurance then in effect, stating the names of the insurance companies, the amounts of the insurance, the dates of the expiration thereof and the properties and risks covered thereby.


 


SECTION 6.7 Accounting Methods and Financial Records.  Maintain a system of accounting, and keep proper books, records and accounts (which shall be true and complete in all material respects) as may be required or as may be necessary to permit the preparation of financial statements in accordance with GAAP and in compliance in all material respects with the regulations of any Governmental Authority having jurisdiction over it or any of its Properties.


 


SECTION 6.8 Payment of Taxes and Other Obligations.  Pay (a) all Taxes (whether or not shown on a Tax return) that may be levied or assessed upon it or any of its Property and (b) all other indebtedness, obligations and liabilities in accordance with customary trade practices; provided, that the Credit Parties may contest any item described in clauses (a) or (b) of this Section in good faith by appropriate proceedings diligently conducted so long as adequate reserves are maintained with respect thereto in accordance with GAAP and the failure to make payment pending such contest could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.


 




  





 











  






SECTION 6.9 Compliance with Laws and Approvals.  Observe and remain in compliance in all material respects with all Applicable Laws and maintain in full force and effect all Governmental Approvals, in each case applicable to the conduct of its business except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.


 


SECTION 6.10 Environmental Laws.  In addition to and without limiting the generality of Section 6.9 and except where the failure to so comply could not reasonably be expected  to have a Material Adverse Effect, (a) comply with all applicable Environmental Laws and obtain and comply with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws, and (b) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws, and promptly comply with all final nonappealable orders and directives of any Governmental Authority under applicable Environmental Laws.


 


SECTION 6.11 Compliance with ERISA.  In addition to and without limiting the generality of Section 6.9, except where the failure to so comply could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) comply with applicable provisions of ERISA, the Code and the regulations and published interpretations thereunder with respect to all Employee Benefit Plans, (ii) not take any action or fail to take action the result of which could reasonably be expected to result in a liability to the PBGC or to a Multiemployer Plan, (iii) not participate in any prohibited transaction that could result in any civil penalty under ERISA or tax under the Code and (iv) operate each Employee Benefit Plan in such a manner that will not incur any tax liability under Section 4980B of the Code or any liability to any qualified beneficiary as defined in Section 4980B of the Code.


 


SECTION 6.12 Compliance with Agreements.  Comply in all respects with each term, condition and provision of all leases, agreements and other instruments entered into in the conduct of its business including, without limitation, any Material Contract, except as could not reasonably be expected to have a Material Adverse Effect.


 


SECTION 6.13 Visits and Inspections.  Permit representatives of the Administrative Agent or any Lender, from time to time upon prior reasonable notice and at such times during normal business hours, to visit and inspect its properties; inspect, audit and make extracts from its books, records and files, including, but not limited to, final management letters prepared by independent accountants; and discuss with its principal officers, and its independent accountants, its business, assets, liabilities, financial condition, results of operations and business prospects; provided that upon the occurrence and during the continuance of an Event of Default, the Administrative Agent or any Lender may do any of the foregoing at the expense of the Borrower at any time without advance notice.  Upon the request of the Administrative Agent or the Required Lenders, participate in a meeting of the Administrative Agent and Lenders once during each Fiscal Year, which meeting will be held at the Borrower’s corporate offices (or such other location as may be agreed to by the Borrower and the Administrative Agent) at such time as may be agreed by the Borrower and the Administrative Agent.


 


SECTION 6.14 Additional Subsidiaries.


 


(a) Additional Subsidiaries.


 


                (i)(A) deliver a notice to the Administrative Agent of the creation or acquisition of any Subsidiary and (B) promptly thereafter (and in any event within thirty (30) days after such creation or acquisition) cause such Person that is a Material Domestic Subsidiary to become a Subsidiary Guarantor by delivering to the Administrative Agent a duly executed supplement to the Subsidiary Guaranty Agreement or such other document as the Administrative Agent shall deem reasonably appropriate for such purpose; provided that clause (i)(B) shall not be applicable where a Guarantee Obligation of the Term Loan Facility by such Subsidiary would result in material adverse tax consequences to the Borrower or its Subsidiaries as reasonably determined by the Borrower;


 




  





 











  






                (ii)(A) with respect to any Person that becomes a Material Domestic Subsidiary, deliver to the Administrative Agent such original Capital Stock or other certificates and stock or other transfer powers evidencing 100% of the Capital Stock of such Person duly executed in blank by a duly authorized officer of the holder of such Capital Stock and all intercompany notes owing from such Subsidiary to any Credit Party, together with instruments of transfer executed in blank by a duly authorized officer of such Credit Party and (B) with respect to any person that becomes a Material First Tier Foreign Subsidiary, cause the applicable Credit Party to deliver to the Administrative Agent Security Documents pledging sixty-five percent (65%) of the total outstanding voting Capital Stock (and one hundred percent (100%) of the non-voting Capital Stock) of any such new Material First Tier Foreign Subsidiary and a consent thereto executed by such new Material First Tier Foreign Subsidiary (including, without limitation, if applicable, original stock certificates (or the equivalent thereof pursuant to the Applicable Laws and practices of any relevant foreign jurisdiction) evidencing the Capital Stock of such new Material First Tier Foreign Subsidiary, together with an appropriate undated stock power for each certificate duly executed in blank by the registered owner thereof);


 


                (iii)grant a security interest in all Collateral (subject to the exceptions specified in the Collateral Agreement and not more expansive than the categories in the Collateral Agreement unless otherwise agreed in writing by the Borrower and such Subsidiary) owned by any such Subsidiary that becomes a Guarantor pursuant to clause (i) above by delivering to the Administrative Agent a duly executed supplement to each Security Document or such other document as the Administrative Agent shall reasonably deem appropriate for such purpose and comply with the terms of each Security Document, including the perfection requirements contained therein and the filing of financing statements in such jurisdictions as may be reasonably requested by the Administrative Agent;


 


                (iv)deliver to the Administrative Agent such documents and certificates referred to in Section 4.1 as may be reasonably requested by the Administrative Agent;


 


                (v)deliver to the Administrative Agent such original Capital Stock or other certificates and stock or other transfer powers evidencing the Capital Stock of such Person duly executed in blank by a duly authorized officer of the holder of such Capital Stock, together with instruments of transfer executed in blank by a duly authorized officer of such Credit Party;


 


                (vi)deliver to the Administrative Agent such updated Schedules to the Loan Documents as requested by the Administrative Agent with respect to such Person, and


 


                (vii)deliver to the Administrative Agent such other documents (including opinions of counsel) and take such actions as may be reasonably requested by the Administrative Agent, all in form, content and scope reasonably satisfactory to the Administrative Agent.


 


(b) Merger Subsidiaries.  Notwithstanding the foregoing, to the extent any new Subsidiary is created solely for the purpose of consummating a merger transaction pursuant to a Permitted Acquisition, and such new Subsidiary at no time holds any assets or liabilities other than any merger consideration contributed to it contemporaneously with the closing of such merger transaction, such new Subsidiary shall not be required to take the actions set forth in Section 6.14(a) until the consummation of such Permitted Acquisition (at which time, the surviving entity of the respective merger transaction shall be required to so comply with Section 6.14(a), within ten (10) Business Days of the consummation of such Permitted Acquisition).


 


SECTION 6.15 Use of Proceeds.  The Borrower shall be permitted to use the proceeds of the Extensions of Credit (a) to refinance euro 80 million of Indebtedness under the European Revolving Credit Facility, (b) to redeem in full all outstanding Senior Secured Notes due April 2013 of Kronos International, Inc., (c) to make payment of a dividend to the direct or indirect equity holders of the Borrower in an amount of up to approximately $116.0 million, (d) to pay Transaction Costs incurred in connection with the foregoing and (e) for other general corporate purposes of the Borrower, but for no other purpose.


 


SECTION 6.16 Further Assurances.  Maintain the security interest created by the Security Documents in accordance with Section 3 of the Collateral Agreement as a perfected Security interest, with the priority required by the Intercreditor Agreement, subject to the rights of the Credit Parties to dispose of the Collateral pursuant to the Loan Documents; and promptly make, execute and deliver, at the Borrower’s expense, all such additional and further acts, things, deeds, instruments and documents as the Administrative Agent or the Required Lenders (through the Administrative Agent) may reasonably require for the purposes of implementing or effectuating the provisions of this Agreement and the other Loan Documents, or of creating, maintaining, perfecting or renewing the rights of the Secured Parties with respect to the Collateral as to which the Administrative Agent, for the benefit of the Secured Parties, has a perfected Lien pursuant hereto or thereto, including, without limitation, filing any financing or continuation statements under the UCC (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby or by the other Loan Documents.


 


SECTION 6.17 Material Contracts.  Perform and observe all the terms and provisions of each Material Contract to be performed or observed by it, maintain each such Material Contract in full force and effect, enforce each such Material Contract in accordance with its terms, take all such action to such end as may be from time to time requested by the Administrative Agent and, upon request of the Administrative Agent, make to each other party to each such Material Contract such demands and requests for information and reports or for action as any Credit Party or any of its Subsidiaries is entitled to make under such Material Contract, and cause each of its Subsidiaries to do so, except, in any case, where the failure to do so, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.


 


SECTION 6.18 Post-Closing Matters.  The Credit Parties shall execute and deliver the documents and complete the tasks set forth on Schedule 6.18, in each case within the time limits specified on such schedule subject to the extension by the Administrative Agent in its sole discretion.


 


ARTICLE VII                                


 


NEGATIVE COVENANTS


 


Until all of the Obligations (other than contingent, indemnification obligations not then due) have been paid and satisfied in full in cash and the Commitments terminated, the Credit Parties will not, and will not permit any of their respective Subsidiaries to:


 


SECTION 7.1 Indebtedness.  Create, incur, assume or suffer to exist any Indebtedness except for any or all of the following:


 


(a) the Obligations;


 


(b) Indebtedness incurred pursuant to the ABL Facility in an amount not to exceed $150.0 million at any one time outstanding;


 




  





 











  






(c) Indebtedness incurred pursuant to the European Revolving Credit Facility in an amount not to exceed €120.0 million at any one time outstanding;


 


(d) Indebtedness and obligations owing under Hedge Agreements entered into in order to manage existing or anticipated interest rate, exchange rate or commodity price risks or other risk management purposes and not for speculative purposes;


 


(e) Indebtedness existing on the Closing Date and listed on Schedule 7.1 (other than Indebtedness incurred under Section 7.1(b) and Section 7.1(c)) and any refinancings, refundings, renewals or extensions thereof; provided that (i) the principal amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder, (ii) the final maturity date and weighted average life of such refinancing, refunding, renewal or extension shall not be prior to or shorter than that applicable to the Indebtedness prior to such refinancing, refunding, renewal or extension and (iii) any refinancing, refunding, renewal or extension of any Subordinated Indebtedness shall be (A) on subordination terms at lease as favorable to the Lenders, (B) no more restrictive on the Borrower and its Subsidiaries than the Subordinated Indebtedness being refinanced, refunded, renewed or extended and (C) in an amount not less than the amount outstanding at the time of such refinancing, refunding, renewal or extension; provided further, that for the avoidance of doubt, nothing in this Section 7.1(e) shall limit the Borrower’s ability to incur Indebtedness under any other subsection of Section 7.1;


 


(f) Indebtedness of any Credit Party incurred in connection with Capital Leases and purchase money Indebtedness in an aggregate amount not to exceed $50.0 million at any time outstanding;


 


(g) Indebtedness of a Person existing at the time such Person became a Subsidiary Guarantor or assets were acquired from such Person in connection with an Investment permitted pursuant to Section 7.3, to the extent that (i) such Indebtedness was not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary Guarantor or the acquisition of such assets and (ii) neither the Borrower nor any Subsidiary Guarantor (other than such Person or any other Person that such Person merges with or that acquires the assets of such Person) shall have any liability or other obligation with respect to such Indebtedness, and any refinancing, renewal, extension or replacement in respect thereto;


 


(h) Guaranty Obligations with respect to Indebtedness permitted pursuant to subsections (a) through (g) of this Section;


 


(i) Unsecured intercompany Indebtedness (i) owed by any Credit Party to another Credit Party, (ii) owed by any Non-Guarantor Subsidiary to any Credit Party in an aggregate principal amount not to exceed $30.0 million at any time outstanding (provided that any Indebtedness owed by such Non-Guarantor Subsidiary to any Credit Party pursuant to this clause (ii) shall be evidenced by a demand note in form and substance reasonably satisfactory to the Administrative Agent and shall be pledged and delivered to the Administrative Agent pursuant to the Security Documents and (iii) owed by any Credit Party to any Non-Guarantor Subsidiary (provided that such Indebtedness shall be subordinated to the Obligations in a manner reasonably satisfactory to the Administrative Agent);


 




  





 











  






(j) unsecured Indebtedness owed by any Credit Party; provided that the Consolidated Total Leverage Ratio at such time shall be no greater than 3.0 to 1.0 calculated on a Pro Forma Basis after giving effect to such incurrence of Indebtedness;


 


(k) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or other similar instrument drawn against insufficient funds in the ordinary course of business;


 


(l) Indebtedness under bid, payment performance bonds, surety bonds, release, appeal and similar bonds, statutory obligations or with respect to workers’ compensation claims or self-insurance obligations, bank overdrafts, and commercial letters of credit, in each case incurred in the ordinary course of business, and reimbursement obligations in respect of any of the foregoing;


 


(m) Indebtedness of any Credit Party incurred in connection with Capital Expenditures or Permitted Acquisitions, and any refinancing, renewal, extension or replacement in respect thereof; provided that the Consolidated Total Leverage Ratio at such time shall be no greater than 2.75 to 1.0, calculated on a Pro Forma Basis after giving effect to such incurrence of Indebtedness;


 


(n) Indebtedness of any Credit Party not otherwise permitted pursuant to this Section in an aggregate principal amount not to exceed $30.0 million at any time outstanding; and


 


(o) Indebtedness of any Non-Guarantor Subsidiary not otherwise permitted by this Section in an aggregate principal amount not to exceed $30.0 million at any time outstanding, which may include without limitation, Capital Leases and purchase money Indebtedness.


 


SECTION 7.2 Liens.  Create, incur, assume or suffer to exist, any Lien on or with respect to any of its Property, whether now owned or hereafter acquired, except for any or all of the following:


 


(a) Liens incurred to secure obligations in respect of the Indebtedness permitted to be incurred pursuant to clauses (a) and (b) of Section 7.1; provided that such Liens are subject at all times to the Intercreditor Agreement;


 


(b) Liens in existence on the Closing Date and described on Schedule 7.2, including Liens incurred in connection with any refinancing, refunding, renewal or extension of Indebtedness pursuant to Section 7.1(e) (solely to the extent that such Liens were in existence on the Closing Date and described on Schedule 7.2); provided that the scope of any such Lien shall not be increased, or otherwise expanded, to cover any additional property or type of asset, as applicable, beyond that in existence on the Closing Date, except for products and proceeds of the foregoing;


 


(c) Liens for Taxes (excluding any Lien imposed pursuant to any of the provisions of ERISA) (i) not yet due or (ii) which are being contested in good faith and by appropriate proceedings if such contest effectively suspends enforcement of the contested obligation and the enforcement of any Liens securing the obligation and if adequate reserves are maintained in accordance with GAAP;


 


(d) the claims of materialmen, mechanics, carriers, warehousemen, processors or landlords for labor, materials, supplies or rentals incurred in the ordinary course of business, which (i) are not overdue for a period of more than thirty (30) days, or if more than thirty (30) days overdue, and such Liens are being contested in good faith and by appropriate proceedings if adequate reserves are maintained to the extent required by GAAP and (ii) do not, individually or in the aggregate, materially impair the use thereof in the operation of the business of the Borrower or any of its Subsidiaries;


 




  





 











  






(e) deposits or pledges made in the ordinary course of business in connection with, or to secure payment of, obligations under workers’ compensation, unemployment insurance and other types of social security or similar legislation, or to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds, payment obligations in connection with self-insurance and similar obligations, and other obligations of a like nature incurred in the ordinary course of business, in each case, so long as no foreclosure sale or similar proceeding has been commenced with respect to any portion of the Collateral on account thereof;


 


(f) encumbrances in the nature of zoning restrictions, easements and rights or restrictions of record on the use of real property, which in the aggregate are not substantial in amount and which do not, in any case, materially detract from the value of such property or materially impair the use thereof in the ordinary conduct of business;


 


(g) Liens arising from the filing of precautionary UCC financing statements relating solely to personal property leased pursuant to Operating Leases entered into in the ordinary course of business of the Borrower and its Subsidiaries;


 


(h) Liens securing Indebtedness permitted under Section 7.1(f); provided that (i) such Liens shall be created substantially simultaneously with the acquisition, repair, improvement or lease, as applicable, of the related Property, (ii) such Liens do not at any time encumber any property other than the Property financed by such Indebtedness, (iii) the amount of Indebtedness secured thereby is not increased and (iv) the principal amount of Indebtedness secured by any such Lien shall at no time exceed one hundred percent (100%) of the original price for the purchase, repair improvement or lease amount (as applicable) of such Property at the time of purchase, repair, improvement or lease (as applicable);


 


(i) Liens securing judgments for the payment of money not constituting an Event of Default under Section 8.1(m) or securing appeal or other surety bonds relating to such judgments;


 


(j) Liens on Property (i) of any Subsidiary which are in existence at the time that such Subsidiary is acquired pursuant to a Permitted Acquisition and (ii) of the Borrower or any of its Subsidiaries existing at the time such tangible property or tangible assets are purchased or otherwise acquired by the Borrower or such Subsidiary thereof pursuant to a transaction permitted pursuant to this Agreement; provided that, with respect to each of the foregoing clauses (i) and (ii), (A) such Liens are not incurred in connection with, or in anticipation of, such Permitted Acquisition, purchase or other acquisition, (B) such Liens are applicable only to specific Property, (C) such Liens are not “blanket” or all asset Liens and (D) such Liens do not attach to any other Property of the Borrower or any of its Subsidiaries and (E) the Indebtedness and any refinancing, renewal, extension or replacement in respect thereto secured by such Liens is permitted under Section 7.1(g) of this Agreement);


 


(k) Liens on assets of Foreign Subsidiaries; provided that (i) such Liens do not extend to, or encumber, assets that constitute Collateral or the Capital Stock of the Borrower or any of the Subsidiaries and (ii) such Liens extending to the assets of any Foreign Subsidiary secure only Indebtedness incurred by such Foreign Subsidiary pursuant to Sections 7.1(b), (c) and (o);


 




  





 











  






(l) (i) Liens of a collecting bank arising in the ordinary course of business under Section 4-210 of the UCC in effect in the relevant jurisdiction and (ii) Liens of any depositary bank in connection with statutory, common law and contractual rights of set-off and recoupment with respect to any deposit account of any Borrower or any Subsidiary thereof;


 


(m) (i) contractual or statutory Liens of landlords to the extent relating to the property and assets relating to any lease agreements with such landlord, and (ii) contractual Liens of suppliers (including sellers of goods) or customers granted in the ordinary course of business to the extent limited to the property or assets relating to such contract;


 


(n) any interest or title of a licensor, sublicensor, lessor or sublessor with respect to any assets under any license or lease agreement entered into in the ordinary course of business which do not (i) interfere in any material respect with the business of the Borrower or its Subsidiaries or materially detract from the value of the relevant assets of the Borrower or its Subsidiaries or (ii) secure any Indebtedness;


 


(o) Liens securing Indebtedness permitted under Section 7.1(n);


 


(p) Liens on Collateral securing Secured Hedge Agreements and Secured Cash Management Agreements that are entered into in accordance with Section 7.1; and


 


(q) subordinated Liens securing Indebtedness permitted under Section 7.1(m); provided that (i) concurrently with creating any such subordinated Lien the Credit Party shall have granted to the Administrative Agent for the benefit of the Secured Parties a Lien in the assets acquired with such Indebtedness that is senior in priority to such subordinated Lien; (ii)  any such subordinated Lien shall only encumber the assets acquired with such Indebtedness, and (iv) any such subordinated Lien shall be subject at all times to an intercreditor agreement, the terms of which shall be no less favorable to the Agent and the Secured Parties than the terms of the Intercreditor Agreement that are applicable to the “ABL Agent” and the “ABL Claimholders,” in each case as defined in the Intercreditor Agreement, in their capacity has holders of the first-priority Lien on the ABL Collateral thereunder. 


 


SECTION 7.3 Investments.  Purchase, own, invest in or otherwise acquire (in one transaction or a series of transactions), directly or indirectly, any Capital Stock, interests in any partnership or joint venture (including, without limitation, the creation or capitalization of any Subsidiary), evidence of Indebtedness or other obligation or security, substantially all or a portion of the business or assets of any other Person or any other investment or interest whatsoever in any other Person, or make or permit to exist, directly or indirectly, any loans, advances or extensions of credit to, or any investment in cash or by delivery of Property in, any Person (all the foregoing, “Investments”) except for any or all of the following:


 


(a) (i) Investments existing on the Closing Date in Subsidiaries existing on the Closing Date, (ii) Investments existing on the Closing Date (other than Investments in Subsidiaries existing on the Closing Date) and described on Schedule 7.3, (iii) Investments made after the Closing Date by any Credit Party in any other Credit Party and (iv) Investments made after the Closing Date by any Non-Guarantor Subsidiary in any other Non-Guarantor Subsidiary;


 


(b) Investments in cash and Cash Equivalents;


 




  





 











  






(c) Investments by the Borrower or any of its Subsidiaries in the form of Capital Expenditures permitted pursuant to this Agreement;


 


(d) deposits made in the ordinary course of business to secure the performance of leases or other obligations as permitted by Section 7.2;


 


(e) Hedge Agreements permitted pursuant to Section 7.1;


 


(f) purchases of assets in the ordinary course of business;


 


(g) Investments by the Borrower or any Subsidiary thereof in the form of Permitted Acquisitions;


 


(h) Investments in the form of loans and advances to officers, directors and employees and other Affiliates in the ordinary course of business in an aggregate amount not to exceed at any time outstanding $5.0 million (determined without regard to any write-downs or write-offs of such loans or advances);


 


(i) Investments in the form of intercompany Indebtedness permitted pursuant to Section 7.1(i) or (j);


 


(j) Guaranty Obligations permitted pursuant to Section 7.1;


 


(k) all other Investments by the Borrower or any of its Subsidiaries; provided that both immediately prior to and after making such Investment, (i) Liquidity shall be at least $150.0 million and (ii) the Consolidated Total Leverage Ratio, as of the time of such Investment, shall be no greater than 2.75 to 1.00, in the case of each of clauses (i) and (ii) calculated on a Pro Forma Basis after giving effect to such Investment and the incurrence of any Indebtedness in connection therewith; and


 


(l) any Investment in an amount, when aggregated with the aggregate amount of Restricted Payments made pursuant to Section 7.6(g), not to exceed at any time an amount equal to the Available Amount at such time; provided, however, that at the time each such Investment is made, no Event of Default shall have occurred or be continuing.


 


For purposes of determining the amount of any Investment outstanding for purposes of this Section 7.3, such amount shall be deemed to be the amount of such Investment when made, purchased or acquired (without adjustment for subsequent increases or decreases in the value of such Investment) less any amount realized in respect of such Investment upon the sale, collection or return of capital (not to exceed the original amount invested).


 


SECTION 7.4 Fundamental Changes.  Merge, consolidate or enter into any similar combination with any other Person or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution) except for any or all of the following:


 


(a) (i) any Wholly-Owned Subsidiary of the Borrower may be merged, amalgamated or consolidated with or into the Borrower (provided that the Borrower shall be the continuing or surviving entity) or (ii) any Wholly-Owned Subsidiary of the Borrower may be merged, amalgamated or consolidated with or into any Subsidiary Guarantor (provided that the Subsidiary Guarantor shall be the continuing or surviving entity or simultaneously with such transaction, the continuing or surviving entity shall become a Subsidiary Guarantor and the Borrower shall comply with Section 6.14 in connection therewith);


 




  





 











  






(b) (i) any Non-Guarantor Subsidiary that is a Foreign Subsidiary may be merged, amalgamated or consolidated with or into, or be liquidated into, any other Non-Guarantor Subsidiary and (ii) any Non-Guarantor Subsidiary that is a Domestic Subsidiary may be merged, amalgamated or consolidated with or into, or be liquidated into, any other Non-Guarantor Subsidiary that is a Domestic Subsidiary;


 


(c) any Subsidiary may dispose of all or substantially all of its assets (upon voluntary liquidation, dissolution, winding up or otherwise) to the Borrower or any Subsidiary Guarantor; provided that, with respect to any such disposition by any Non-Guarantor Subsidiary, the consideration for such disposition shall not exceed the fair value of such assets;


 


(d) (i) any Non-Guarantor Subsidiary that is a Foreign Subsidiary may dispose of all or substantially all of its assets (upon voluntary liquidation, dissolution, winding up or otherwise) to any other Non-Guarantor Subsidiary and (ii) any Non-Guarantor Subsidiary that is a Domestic Subsidiary may dispose of all or substantially all of its assets (upon voluntary liquidation, dissolution, winding up or otherwise) to any other Non-Guarantor Subsidiary that is a Domestic Subsidiary;


 


(e) dispositions permitted by Section 7.5;


 


(f) any Wholly-Owned Subsidiary of the Borrower may merge with or into the Person such Wholly-Owned Subsidiary was formed to acquire in connection with a Permitted Acquisition, provided that (i) a Subsidiary Guarantor shall be the continuing or surviving entity or (ii) simultaneously with such transaction, the continuing or surviving entity shall become a Subsidiary Guarantor if required by Section 6.14 and the Borrower shall comply with Section 6.14 in connection therewith); and


 


(g) any Person may merge into the Borrower or any of its Wholly-Owned Subsidiaries in connection with a Permitted Acquisition; provided that (i) in the case of a merger involving the Borrower or a Subsidiary Guarantor, the continuing or surviving Person shall be the Borrower or such Subsidiary Guarantor and (ii) the continuing or surviving Person shall be the Borrower or a Wholly-Owned Subsidiary of the Borrower.


 


SECTION 7.5 Asset Dispositions.  Make any Asset Disposition except for any or all of the following:


 


(a) leases, subleases, licenses or sublicenses of real or personal property granted by any Borrower or any of its Subsidiaries to others in the ordinary course of business not interfering in any material respect with the business of the Borrower or any of its Subsidiaries;


 


(b) dispositions in connection with Insurance and Condemnation Events; provided that the requirements of Section 2.4(b) are complied with in connection therewith;


 


(c) Asset Dispositions not otherwise permitted pursuant to this Section; provided that (i) at the time of such Asset Disposition, no Event of Default shall exist or would result from such Asset Disposition and (ii) such Asset Disposition is made for fair market value and the consideration received shall be no less than 75% in cash or Cash Equivalents; provided that the requirements of Section 2.4(b) are complied with in connection therewith; and


 




  





 











  






(d) a transaction or series of transactions in which any Credit Party or any Subsidiary thereof receive aggregate consideration of less than $25 million.


 


SECTION 7.6 Restricted Payments.  Declare or pay any dividend on, or make any payment or other distribution on account of, or purchase, redeem, retire or otherwise acquire (directly or indirectly), or set apart assets for a sinking or other analogous fund for the purchase, redemption, retirement or other acquisition of, any class of Capital Stock of any Credit Party or any Subsidiary thereof or make any distribution of cash, property or assets to the holders of shares of any Capital Stock of any Credit Party or any Subsidiary thereof (all of the foregoing, the “Restricted Payments”), except for any or all of the following:


 


(a) the Borrower or any Subsidiary thereof may pay dividends in shares of its own Qualified Capital Stock and may make Restricted Payments under the Credit Parties’ existing stock repurchase programs as in effect as of the Closing Date;


 


(b) any Subsidiary of the Borrower or any Subsidiary of a Subsidiary Guarantor may pay cash dividends to the Borrower or any Subsidiary Guarantor or ratably to all holders of its outstanding Qualified Capital Stock;


 


(c) (i) Non-Guarantor Subsidiaries that are Domestic Subsidiaries may make Restricted Payments to other Non-Guarantor Subsidiaries that are Domestic Subsidiaries and (ii) Non-Guarantor Subsidiaries that are Foreign Subsidiaries may make Restricted Payments to other Non-Guarantor Subsidiaries that are Foreign Subsidiaries;


 


(d) the Borrower or its Subsidiaries may make Restricted Payments in connection with the Transactions pursuant to Section 6.15;


 


(e) Restricted Payments may be made by the Borrower or any of its Subsidiaries; provided that both immediately prior to and after making such Restricted Payment (i) Liquidity shall be at least $150.0 million and (ii) the Consolidated Total Leverage Ratio at such time shall be no greater than 2.75 to 1.00, in the case of each of clauses (i) and (ii) calculated on a Pro Forma Basis after giving effect to such Restricted Payment and the incurrence of any Indebtedness in connection therewith;


 


(f) so long as no Event of Default has occurred and is continuing or would result therefrom, redeem, retire or otherwise acquire shares of its Capital Stock or options or other equity or phantom equity in respect of its Capital Stock from present or former officers, employees, directors or consultants (or their family members or trusts or other entities for the benefit of any of the foregoing) or make severance payments to such Persons in connection with the death, disability or termination of employment or consultancy of any such officer, employee, director or consultant in an aggregate amount not to exceed $5.0 million in any Fiscal Year; and


 


(g) any Restricted Payment in an amount, when aggregated with the aggregate amount of Investments made pursuant to Section 7.3(l), not to exceed at any time the amount equal to the Available Amount at such time; provided, however, that at the time each such Restricted Payment is made, no Event of Default shall be continuing.


 


SECTION 7.7 Transactions with Affiliates.  Directly or indirectly enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of Property, the rendering of any service or the payment of any management, advisory or similar fees, with (a) any officer, director, Affiliate holder of any Capital Stock or other Affiliate of the Borrower or any of its Subsidiaries or (b) any Affiliate of any such officer, director or holder, except for any or all of the following:


 


(i) transactions permitted by Sections 7.1, 7.3, 7.4, 7.5, 7.6 and 7.12;


 


(ii) transactions existing on the Closing Date and described on Schedule 7.7;


 


(iii) other transactions in the ordinary course of business on terms as favorable as would be obtained by it on a comparable arm’s-length transaction with an independent, unrelated third party as determined in good faith by the board of directors (or equivalent governing body) of the Borrower;


 


(iv) employment and severance arrangements (including equity incentive plans and employee benefit plans and arrangements) with their respective officers and employees in the ordinary course of business; and


 


(v) payment of customary fees and reasonable out of pocket costs to, and indemnities for the benefit of, directors, officers and employees of the Borrower and its Subsidiaries in the ordinary course of business to the extent attributable to the ownership or operation of the Borrower and its Subsidiaries.


 


SECTION 7.8 Accounting Changes; Organizational Documents.


 


(a) Change its Fiscal Year end, or make (without the consent of the Administrative Agent) any material change in its accounting treatment and reporting practices except as required by GAAP.


 


(b) Amend, modify or change its articles of incorporation (or corporate charter or other similar organizational documents) or amend, modify or change its bylaws (or other similar documents) in any manner materially adverse to the rights or interests of the Lenders.


 


SECTION 7.9 Payments and Modifications of Subordinated Indebtedness.


 


(a) Amend, modify, waive or supplement (or permit the modification, amendment, waiver or supplement of) any of the terms or provisions of any Subordinated Indebtedness in any respect which would materially and adversely affect the rights or interests of the Administrative Agent and Lenders hereunder.


 


(b) Cancel, forgive, make any payment or prepayment on, or redeem or acquire for value (including, without limitation, (i) by way of depositing with any trustee with respect thereto money or securities before due for the purpose of paying when due and (ii) at the maturity thereof) any Subordinated Indebtedness, except:


 


(i) prepayments, refinancings, refundings, renewals, extensions or exchange of any Subordinated Indebtedness permitted by Section 7.1 and by any subordination agreement applicable thereto; and


 


(ii) the payment of regularly scheduled interest payments, expenses and indemnities in respect of Subordinated Indebtedness incurred under Section 7.1 (other than any such payments prohibited by the subordination provisions thereof).


 




  





 











  






SECTION 7.10 No Further Negative Pledges; Restrictive Agreements.


 


(a) Enter into, assume or be subject to any agreement prohibiting or otherwise restricting the creation or assumption of any Lien upon the properties or assets of the Credit Parties, whether now owned or hereafter acquired, or requiring the grant of any security for such obligation if security is given for some other obligation, except (i) pursuant to this Agreement and the other Loan Documents, the ABL Facility, and the European Revolving Credit Facility (ii) pursuant to any document or instrument governing Indebtedness incurred pursuant to Section 7.1(f); provided that any such restriction contained therein relates only to the asset or assets acquired in connection therewith, (iii) restrictions contained in the organizational documents of any Credit Party as of the Closing Date and (iv) restrictions in connection with any Permitted Lien or any document or instrument governing any Permitted Lien (provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien).


 


(b) Create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Credit Party or any Subsidiary thereof to (i) pay dividends or make any other distributions to any Credit Party or any Subsidiary on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits, (ii) pay any Indebtedness or other obligation owed to the Borrower or any Subsidiary Guarantor, (iii) make loans or advances to the Borrower or any Subsidiary Guarantor, (iv) sell, lease or transfer any of its properties or assets to the Borrower or any Subsidiary Guarantor or (v) act as a Guarantor pursuant to the Loan Documents or any renewals, refinancings, exchanges, refundings or extension thereof, except (in respect of any of the matters referred to in clauses (i) through (v) above) for such encumbrances or restrictions existing as of the Closing Date and listed on Schedule 7.10(b), or such encumbrances or restrictions existing under or by reason of (A) this Agreement and the other Loan Documents, the ABL Facility, or the European Credit Facility , (B) Applicable Law, (C) any document or instrument governing Indebtedness incurred pursuant to Section 7.1(f) (provided that any such restriction contained therein relates only to the asset or assets acquired in connection therewith), (D) any Permitted Lien or any document or instrument governing any Permitted Lien (provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien), (E) obligations that are binding on a Subsidiary at the time such Subsidiary first becomes a Subsidiary of the Borrower, so long as such obligations are not entered into in contemplation of such Person becoming a Subsidiary, (F) customary restrictions contained in an agreement related to the sale of Property (to the extent such sale is permitted pursuant to Section 7.5) that limit the transfer of such Property pending the consummation of such sale, (G) customary restrictions in leases, subleases, licenses and sublicenses or asset sale agreements otherwise permitted by this Agreement so long as such restrictions relate only to the assets subject thereto and (H) customary provisions restricting assignment of any agreement entered into in the ordinary course of business.


 


SECTION 7.11 Nature of Business.  Engage in any business other than the business conducted by the Borrower and its Subsidiaries as of the Closing Date and business activities reasonably related, complementary, or ancillary thereto or that are reasonable extensions thereof.


 


SECTION 7.12 Sale Leasebacks.  Directly or indirectly become or remain liable as lessee or as guarantor or other surety with respect to any lease, whether an Operating Lease or a Capital Lease, of any Property (whether real, personal or mixed), whether now owned or hereafter acquired, (a) which any Credit Party or any Subsidiary thereof has sold or transferred or is to sell or transfer to a Person which is not another Credit Party or Subsidiary of a Credit Party or (b) which any Credit Party or any Subsidiary of a Credit Party intends to use for substantially the same purpose as any other Property that has been sold or is to be sold or transferred by such Credit Party or such Subsidiary to another Person which is not another Credit Party or Subsidiary of a Credit Party in connection with such lease.


 




  





 











  






SECTION 7.13 Disposal of Subsidiary Interests.  The Borrower will not permit any Domestic Subsidiary to be a non-Wholly-Owned Subsidiary except (a) as a result of or in connection with a dissolution, merger, amalgamation, consolidation or disposition permitted by Section 7.4 or 7.5 or (b) so long as such Domestic Subsidiary continues to be a Subsidiary Guarantor.


 


SECTION 7.14 Financial Covenant.


 


(a) Maximum Consolidated Total Leverage Ratio. As of the last day of any fiscal quarter, permit the Consolidated Total Leverage Ratio to be greater than 3.5:1.0.


 


(b) Forbearance.  In the event that Borrower has not satisfied the covenant set forth in Section 7.14(a) above, each Lender agrees to forbear from exercising any of its rights or remedies in respect of noncompliance under such Section 7.14(a), including without limitation taking any such action to accelerate the Obligations and all other amounts owed to the Lenders and to the Administrative Agent under this Agreement or under any of the other Loan Documents, for a period not to exceed the date upon which the Borrower is required to report compliance with Section 7.14(a) pursuant to the terms of Section 6.2(a) for the second fiscal quarter following the end of the fiscal quarter from which such noncompliance resulted (the “Forbearance Period”); provided that if as of the last day of the fiscal quarter from which such noncompliance resulted or as of the last day of any subsequent fiscal quarter that falls within the Forbearance Period the Consolidated Total Leverage Ratio (i) is less than 4.5:1.0, then (x) all outstanding LIBOR Rate Loans shall bear interest at a rate per annum of two percent (2%) in excess of the rate (including the Applicable Margin) then otherwise applicable to LIBOR Rate Loans and (y) all outstanding Base Rate Loans shall bear interest at a rate per annum equal to two percent (2%) in excess of the rate (including the Applicable Margin) then otherwise applicable to Base Rate Loans or (ii) is equal to or greater than 4.5:1.0, then (x) all outstanding LIBOR Rate Loans shall bear interest at a rate per annum of three percent (3%) in excess of the rate (including the Applicable Margin) then otherwise applicable to LIBOR Rate Loans and (y) all outstanding Base Rate Loans shall bear interest at a rate per annum equal to three percent (3%) in excess of the rate (including the Applicable Margin) then otherwise applicable to Base Rate Loans.  If the Borrower is in compliance with Section 7.14(a) as of the last day of any fiscal quarter that falls within the Forbearance Period then such noncompliance shall be deemed to be cured and the aforementioned two percent (2%) or three percent (3%) interest premium shall cease.


 


ARTICLE VIII                                


 


DEFAULT AND REMEDIES


 


SECTION 8.1 Events of Default.  Each of the following shall constitute an Event of Default:


 


(a) Default in Payment of Principal of Loans.  The Borrower shall default in any payment of principal of any Loan when and as due (whether at maturity, by reason of acceleration or otherwise).


 


(b) Other Payment Default.  The Borrower or any other Credit Party shall default in the payment when and as due (whether at maturity, by reason of acceleration or otherwise) of interest on any Loan or the payment of any other Obligation, and such default shall continue for a period of three (3) Business Days after notice.


 


(c) Misrepresentation.  Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Credit Party in this Agreement, in any other Loan Document, or in any document delivered in connection herewith or therewith that is subject to materiality or Material Adverse Effect qualifications, shall be incorrect or misleading in any respect when made or deemed made or any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Credit Party in this Agreement, any other Loan Document, or in any document delivered in connection herewith or therewith that is not subject to materiality or Material Adverse Effect qualifications, shall be incorrect or misleading in any material respect when made or deemed made.


 




  





 











  






(d) Default in Performance of Certain Covenants.  (i) Any Credit Party shall default in the performance or observance of any covenant or agreement contained in Section 6.1, 6.2(a), 6.3(a), 6.4 (with respect to the Borrower’s existence), 6.14 or 6.15 or Article VII (subject to Section 7.14(b)) and (ii) any Non-Guarantor Subsidiary shall default in the performance or observance of any covenant or agreement contained in Section 6.14 or Article VII (subject to Section 7.14(b)) and such default shall continue for a period of fifteen (15) days.


 


(e) Default in Performance of Other Covenants and Conditions.  Any Credit Party or any Subsidiary thereof shall default in the performance or observance of any other term, covenant, condition or agreement contained in this Agreement (other than as specifically provided for in this Section) or any other Loan Document and such default shall continue for a period of thirty (30) days after the earlier of (i) the Administrative Agent’s delivery of written notice thereof to the Borrower and (ii) a Responsible Officer of the Borrower having obtained actual knowledge thereof.


 


(f) Indebtedness Cross-Default.  Any Credit Party or any Subsidiary thereof shall (i) default in the payment of any Indebtedness (other than the Loans) the aggregate outstanding amount of which Indebtedness is in excess of the Threshold Amount beyond the period of grace if any, provided in the instrument or agreement under which such Indebtedness was created, or (ii) default in the observance or performance of any other agreement or condition relating to any Indebtedness (other than the Loans) the aggregate outstanding amount (or, with respect to any Hedge Agreement, the Hedge Termination Value) of which Indebtedness is in excess of the Threshold Amount or contained in any instrument or agreement evidencing, securing or relating thereto or any other event shall occur or condition exist, the effect of which default or other event or condition in (i) or (ii) is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice and/or lapse of time, if required, any such Indebtedness to become due prior to its stated maturity (any applicable grace period having expired).


 


(g) Other Cross-Defaults.  Any Credit Party or any Subsidiary thereof shall default in the payment when due, or in the performance or observance, of any obligation or condition of any Material Contract unless, but only as long as, the existence of any such default is being contested by such Credit Party or any such Subsidiary in good faith by appropriate proceedings and adequate reserves in respect thereof have been established on the books of the Borrower or such Credit Party to the extent required by GAAP.


 


(h) Change in Control.  Any Change in Control shall occur.


 


(i) Voluntary Bankruptcy Proceeding.  Any Credit Party or any Material Subsidiary thereof shall (i) commence a voluntary case under the federal bankruptcy laws (as now or hereafter in effect), (ii) file a petition seeking to take advantage of any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or composition for adjustment of debts, (iii) consent to or fail to contest in a timely and appropriate manner any petition filed against it in an involuntary case under such bankruptcy laws or other laws, (iv) apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee, or liquidator of itself or of a substantial part of its property, domestic or foreign, (v) admit in writing its inability to pay its debts as they become due, (vi) make a general assignment for the benefit of creditors, or (vii) take any corporate action for the purpose of authorizing any of the foregoing.


 




  





 











  






(j) Involuntary Bankruptcy Proceeding.  A case or other proceeding shall be commenced against any Credit Party or any Material Subsidiary thereof in any court of competent jurisdiction seeking (i) relief under the federal bankruptcy laws (as now or hereafter in effect) or under any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or adjustment of debts, or (ii) the appointment of a trustee, receiver, custodian, liquidator or the like for any Credit Party or any Subsidiary thereof or for all or any substantial part of their respective assets, domestic or foreign, and such case or proceeding shall continue without dismissal or stay for a period of sixty (60) consecutive days, or an order granting the relief requested in such case or proceeding (including, but not limited to, an order for relief under such federal bankruptcy laws) shall be entered.


 


(k) Failure of Agreements.  Any material provision of this Agreement or of any other Loan Document shall for any reason cease to be valid and binding on any Credit Party thereto or any such Person shall so state in writing, or any Loan Document shall for any reason cease to create a valid and perfected first priority Lien (other than with respect to the ABL Priority Collateral (as to which the Lien thereon shall be junior to the extent set forth in the Intercreditor Agreement)) (subject to Permitted Liens) on, or security interest in, any of the material Collateral purported to be covered thereby or any Credit Party shall so state in writing, in each case other than in accordance with the express terms hereof or thereof.


 


(l) ERISA Events.  The occurrence of any of the following events:  (i) any Credit Party or any ERISA Affiliate fails to make full payment when due of all amounts which, under the provisions of any Pension Plan or Sections 412 or 430 of the Code, any Credit Party or any ERISA Affiliate is required to pay as contributions thereto and are in excess of the Threshold Amount, (ii) a Termination Event or similar event with respect to a Foreign Plan or (iii) any Credit Party or any ERISA Affiliate as employers under one or more Multiemployer Plans makes a complete or partial withdrawal from any such Multiemployer Plan and the plan sponsor of such Multiemployer Plans notifies such withdrawing employer that such employer has incurred a withdrawal liability requiring payments in an amount exceeding the Threshold Amount.


 


(m) Judgment.  A final judgment or order for the payment of money which causes the aggregate amount of all such judgments or orders (net of any amounts paid or fully covered by independent third party insurance as to which the relevant insurance company does not dispute coverage) to exceed the Threshold Amount shall be entered against any Credit Party or any Subsidiary thereof by any court and such judgment or order shall continue without having been discharged, vacated or stayed for a period of sixty (60) consecutive days after the entry thereof.


 


SECTION 8.2 Remedies.  Upon the occurrence of an Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower:


 


(a) Acceleration; Termination of Credit Facility.  Declare the principal of and interest on the Loans at the time outstanding, and all other amounts owed to the Lenders and to the Administrative Agent under this Agreement or any of the other Loan Documents and all other Obligations, to be forthwith due and payable, whereupon the same shall immediately become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by each Credit Party, anything in this Agreement or the other Loan Documents to the contrary notwithstanding, and terminate the Credit Facility and any right of the Borrower to request borrowings thereunder; provided, that upon the occurrence of an Event of Default specified in Section 8.1(i) or (j), the Credit Facility shall be automatically terminated and all Obligations shall automatically become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by each Credit Party, anything in this Agreement or in any other Loan Document to the contrary notwithstanding.


 




  





 











  






(b) General Remedies.  Exercise on behalf of the Secured Parties all of its other rights and remedies under this Agreement, the other Loan Documents and Applicable Law, in order to satisfy all of the Obligations.


 


SECTION 8.3 Rights and Remedies Cumulative; Non-Waiver; Etc.


 


(a) The enumeration of the rights and remedies of the Administrative Agent and the Lenders set forth in this Agreement is not intended to be exhaustive and the exercise by the Administrative Agent and the Lenders of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative, and shall be in addition to any other right or remedy given hereunder or under the other Loan Documents or that may now or hereafter exist at law or in equity or by suit or otherwise.  No delay or failure to take action on the part of the Administrative Agent or any Lender in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege or shall be construed to be a waiver of any Event of Default.  No course of dealing between the Borrower, the Administrative Agent and the Lenders or their respective agents or employees shall be effective to change, modify or discharge any provision of this Agreement or any of the other Loan Documents or to constitute a waiver of any Event of Default.


 


(b) Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Credit Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.2 for the benefit of all the Lenders; provided that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) any Lender from exercising setoff rights in accordance with Section 10.4 (subject to the terms of Section 3.4), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Credit Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.2 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.


 


SECTION 8.4 Crediting of Payments and Proceeds.  In the event that the Obligations have been accelerated pursuant to Section 8.2 or the Administrative Agent or any Lender has exercised any remedy set forth in this Agreement or any other Loan Document, all payments received by the Lenders upon the Secured Obligations and all net proceeds from the enforcement of the Secured Obligations shall be applied:


 




  





 











  






First, to payment of that portion of the Secured Obligations constituting fees, indemnities, expenses and other amounts, including reasonable attorney fees, payable to the Administrative Agent in its capacity as such;


 


Second, to payment of that portion of the Secured Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders under the Loan Documents, including reasonable attorney fees, ratably among the Lenders in proportion to the respective amounts described in this clause Second payable to them;


 


Third, to payment of that portion of the Secured Obligations constituting accrued and unpaid interest on the Loans, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;


 


Fourth, to payment of that portion of the Secured Obligations constituting unpaid principal of the Loans and payment obligations then owing under Secured Hedge Agreements and Secured Cash Management Agreements, ratably among the Lenders, the Hedge Banks and the Cash Management Banks in proportion to the respective amounts described in this clause Fourth held by them; and


 


Last, the balance, if any, after all of the Secured Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Applicable Law.


 


Notwithstanding the foregoing, Secured Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements shall be excluded from the application described above if the Administrative Agent has not received written notice thereof, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be.  Each Cash Management Bank or Hedge Bank not a party to this Agreement that has given the notice contemplated by the preceding sentence shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of Article IX for itself and its Affiliates as if a “Lender” party hereto.


 


SECTION 8.5 Administrative Agent May File Proofs of Claim.  In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Credit Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:


 


(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 3.3 and 10.3) allowed in such judicial proceeding; and


 


(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;


 


and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 3.3 and 10.3.


 




  





 











  






SECTION 8.6 Credit Bidding.


 


(a) The Administrative Agent, on behalf of itself and the Lenders, shall have the right to credit bid and purchase for the benefit of the Administrative Agent and the Lenders all or any portion of Collateral at any sale thereof conducted by the Administrative Agent under the provisions of the UCC, including pursuant to Sections 9-610 or 9-620 of the UCC, at any sale thereof conducted under the provisions of the United States Bankruptcy Code, including Section 363 thereof, or a sale under a plan of reorganization, or at any other sale or foreclosure conducted by the Administrative Agent (whether by judicial action or otherwise) in accordance with Applicable Law.


 


(b) Each Lender hereby agrees that, except as otherwise provided in any Loan Documents or with the written consent of the Administrative Agent and the Required Lenders, it will not take any enforcement action, accelerate obligations under any Loan Documents, or exercise any right that it might otherwise have under applicable law to credit bid at foreclosure sales, UCC sales or other similar dispositions of Collateral.


 


ARTICLE IX                                


 


THE ADMINISTRATIVE AGENT


 


SECTION 9.1 Appointment and Authority.


 


(a) Each of the Lenders hereby irrevocably designates and appoints Wells Fargo to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are solely for the benefit of the Administrative Agent and the Lenders, and neither the Borrower nor any Subsidiary thereof shall have rights as a third party beneficiary of any of such provisions.  It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other 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 contracting parties.


 


(b) The Administrative Agent shall also act as the “collateral agent” under the Loan Documents, and each of the Lenders (including in its capacity as a potential Hedge Bank or Cash Management Bank) hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Credit Parties to secure any of the Secured Obligations, together with such powers and discretion as are reasonably incidental thereto (including, without limitation, to enter into additional Loan Documents or supplements to existing Loan Documents on behalf of the Secured Parties).  In this connection, the Administrative Agent, as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to this Article IX for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this Articles IX and X (including Section 10.3, as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto.


 




  





 











  






SECTION 9.2 Rights as a Lender.  The Person 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 the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.


 


SECTION 9.3 Exculpatory Provisions.


 


(a) The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing, the Administrative Agent:


 


(i) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;


 


(ii) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that 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 expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or Applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law; and


 


(iii) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.


 


(b) The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 10.2 and Section 8.2) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final nonappealable judgment.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Borrower or a Lender.


 


(c) 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 this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article VI or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.


 




  





 











  






SECTION 9.4 Reliance by the Administrative Agent.  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 (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated 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 have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan.  The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), 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 9.5 Delegation of Duties.  The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document 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 by or through their respective Related Parties.  The exculpatory provisions of this Article 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 Facility as well as activities as Administrative Agent.  The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub agents.


 


SECTION 9.6 Resignation of Administrative Agent.


 


(a) The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower and with the agreement of the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring Administrative Agent may (but shall not be obligated to), on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above.  Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.


 




  





 











  






(b) With effect from the Resignation Effective Date, (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) except for any indemnity payments owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Administrative Agent (other than any rights to indemnity payments owed to the retiring or removed Administrative Agent), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents.  The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 10.3 shall continue in effect for the benefit of such retiring or removed 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 the retiring or removed Administrative Agent was acting as Administrative Agent.


 


SECTION 9.7 Non-Reliance on Administrative Agent and Other Lenders.  Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information 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 or any related agreement or any document furnished hereunder or thereunder.


 


SECTION 9.8 No Other Duties, Etc.  Anything herein to the contrary notwithstanding, none of the syndication agents, documentation agents, co-agents, book managers, lead managers, arrangers, lead arrangers or co-arrangers listed on the cover page or signature pages hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder.


 


SECTION 9.9 Collateral and Guaranty Matters.


 


(a) Each of the Lenders (including in its or any of its Affiliate’s capacities as a potential Hedge Bank or Cash Management Bank) irrevocably authorize the Administrative Agent, at its option and in its discretion:


 


(i) to release any Lien on any Collateral granted to or held by the Administrative Agent, for the benefit of the Secured Parties, under any Loan Document (A) upon the payment in full of all Secured Obligations (other than (1) contingent indemnification obligations and (2) obligations and liabilities under Secured Cash Management Agreements or Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made), (B) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document to a Person that is not a Credit Party or (C) if approved, authorized or ratified in writing in accordance with Section 10.2;


 


(ii) to subordinate any Lien on any Collateral granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property is permitted by Section 7.2; and


 




  





 











  






(iii) to release any Subsidiary Guarantor from its obligations under any Loan Documents if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.


 


Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Subsidiary Guarantor from its obligations under the Subsidiary Guaranty Agreement pursuant to this Section 9.9.  In each case as specified in this Section 9.9, the Administrative Agent will, at the Borrower’s expense, execute and deliver to the applicable Credit Party such documents as such Credit Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Security Documents or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Subsidiary Guaranty Agreement, in each case in accordance with the terms of the Loan Documents and this Section 9.9.  In the case of any such sale, transfer or disposal of any property constituting Collateral in a transaction constituting an Asset Disposition permitted pursuant to Section 7.5 to a person that is not a Credit Party, the Liens created by any of the Security Documents on such property shall be automatically released without need for further action by any person.


 


(b) The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Administrative Agent’s Lien thereon, or any certificate prepared by any Credit Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.


 


SECTION 9.10 Secured Hedge Agreements and Secured Cash Management Agreements.  No Cash Management Bank or Hedge Bank that obtains the benefits of Section 8.4 or any Collateral by virtue of the provisions hereof or of any Security Document shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents.  Notwithstanding any other provision of this Article IX to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Secured Cash Management Agreements and Secured Hedge Agreements unless the Administrative Agent has received written notice of such Secured Cash Management Agreements and Secured Hedge Agreements, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be.


 


SECTION 9.11 Indemnification of the Administrative Agent.  To the extent required by any Applicable Laws, the Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax.  Without limiting or expanding the provisions of Section 3.11, each Lender shall indemnify and hold harmless the Administrative Agent against, and shall make payable in respect thereof within 10 days after demand therefor, any and all Taxes and any and all related losses, claims, liabilities and expenses (including fees, charges and disbursements of any counsel for the Administrative Agent) incurred by or asserted against the Administrative Agent by the IRS or any other Governmental Authority as a result of the failure of the Administrative Agent to properly withhold Tax from amounts paid to or for the account of such Lender for any reason (including, without limitation, because the appropriate form was not delivered or not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstances that rendered the exemption from, or reduction of withholding Tax ineffective).  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 this Agreement or any other Loan Document against any amount due the Administrative Agent under this paragraph.  The agreements in this paragraph shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.


 




  





 











  






ARTICLE X                      


 


MISCELLANEOUS


 


SECTION 10.1 Notices.


 


(a) Notices Generally.  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in 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:


 


If to the Borrower:


 


Kronos Worldwide, Inc.


5430 LBJ Freeway, Suite 1706


Dallas, Texas  75240-2697


Attention of:                       John A. St. Wrba, Treasurer


Telephone No.:                   (972) 450-4207


Facsimile No.:                      (972) 448-1445


E-mail:                                   jstwrba@valhi.net


 


With copies to:


 


Kronos Worldwide, Inc.


5430 LBJ Freeway, Suite 1706


Dallas, Texas  75240-2697


Attention of:                       Robert D.  Graham, General Counsel


Telephone No.:                   (972) 450-4289


Facsimile No.:                      (972) 448-1445


E-mail:                                    rgraham@vahli.net


 


Locke Lord LLP


2200 Ross Avenue, Suite 2200


Dallas, Texas  75201


Attention of:                       Vicky Gunning


Telephone No.:                   (214) 740-8638


Facsimile No.:                      (214) 756-8638


E-mail:                                   vgunning@lockelord.com


 




  





 











  






If to Wells Fargo as Administrative Agent:


 


Wells Fargo Bank, National Association


MAC D1109-019


1525 West W.T. Harris Blvd.


Charlotte, NC  28262


Attention of:                       Syndication Agency Services


Telephone No.:                   (704) 590-2703


Facsimile No.:                      (704) 590-3481


 


If to any Lender:


 


To the address set forth on the Register


 


Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).  Notices delivered through electronic communications to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).


 


(b) Electronic Communications.  Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent.  The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications 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 prescribes, (i) notices and other communications 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), and (ii) notices or communications 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, email or other communication is not sent during the normal business hours of the recipient, such notice, email or other communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.


 


(c) Administrative Agent’s Office.  The Administrative Agent hereby designates its office located at the address set forth above, or any subsequent office which shall have been specified for such purpose by written notice to the Borrower and Lenders, as the Administrative Agent’s Office referred to herein, to which payments due are to be made and at which Loans will be disbursed.


 


(d) Change of Address, Etc.  Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.


 


(e) Platform.


 


                (i)Each Credit Party agrees that the Administrative Agent may, but shall not be obligated to, make the Communications (as defined below) available to the Lenders by posting the Communications on Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system (the “Platform”).


 




  





 











  






                (ii)The Platform is provided “as is” and “as available.”  The Agent Parties (as defined below) do not warrant the adequacy of the Platform and expressly disclaim liability for errors or omissions in the Communications.  No warranty of any kind, express, implied or statutory, including, without limitation, 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 the Platform.  In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the any Credit Party, any Lender or any other Person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Credit Party’s or the Administrative Agent’s transmission of communications through the Platform.  “Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Credit Party pursuant to any Loan Document or the transactions contemplated therein which is distributed to the Administrative Agent or any Lender by means of electronic communications pursuant to this Section, including through the Platform.


 


(f) Private Side Designation.  Each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and Applicable Law, including United States Federal and state securities Applicable Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities Applicable Laws.


 


SECTION 10.2 Amendments, Waivers and Consents.  Except as set forth below or as specifically provided in any Loan Document, any term, covenant, agreement or condition of this Agreement or any of the other Loan Documents may be amended or waived by the Lenders, and any consent given by the Lenders, if, but only if, such amendment, waiver or consent is in writing signed by the Required Lenders (or by the Administrative Agent with the consent of the Required Lenders) and delivered to the Administrative Agent and, in the case of an amendment, signed by the Borrower; provided, that no amendment, waiver or consent shall:


 


(a) waive, extend or postpone any date fixed by this Agreement or any other Loan Document for any payment or mandatory prepayment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly and adversely affected thereby;


 


(b) reduce the principal of, or the rate of interest specified herein on, any Loan, or (subject to clause (iv) of the second proviso to this Section) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly and adversely affected thereby; provided that only the consent of the Required Lenders shall be necessary (i) to waive any obligation of the Borrower to pay interest at the rate set forth in Section 3.1(c) during the continuance of an Event of Default or (ii) to amend any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Loan or to reduce any fee payable hereunder;


 


(c) change Section 3.6 or Section 8.4 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender directly and adversely affected thereby;


 




  





 











  






(d) change Section 2.4(b)(vi) in a manner that would alter the order of application of amounts prepaid pursuant thereto without the written consent of each Lender directly and adversely affected thereby;


 


(e) except as otherwise permitted by this Section 10.2 change any provision of this Section or reduce the percentages specified in the definitions of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender directly affected thereby;


 


(f) consent to the assignment or transfer by any Credit Party of such Credit Party’s rights and obligations under any Loan Document to which it is a party (except as permitted pursuant to Section 7.4), in each case, without the written consent of each Lender;


 


(g) release (i) all of the Subsidiary Guarantors or (ii) Subsidiary Guarantors comprising substantially all of the credit support for the Secured Obligations, in any case, from any Guaranty Agreement (other than as authorized in Section 9.9), without the written consent of each Lender;


 


(h) release all or substantially all of the Collateral or release any Security Document (other than as authorized in Section 9.9 or as otherwise specifically permitted or contemplated in this Agreement or the applicable Security Document) without the written consent of each Lender; or


 


(i) change any provision of Section 10.10(b)(v) without the written consent of each Lender;


 


provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; (ii) the Engagement Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto, (iii) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of Lenders holding Loans or Commitments of a particular Class (but not the Lenders holding Loans or Commitments of any other Class) may be effected by an agreement or agreements in writing entered into by the Borrower and the requisite percentage in interest of the 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, (iv) the Administrative Agent and the Borrower shall be permitted to amend any provision of the Loan Documents (and such amendment shall become effective without any further action or consent of any other party to any Loan Document) if the Administrative Agent and the Borrower shall have jointly identified an obvious error or any error or omission of a technical or immaterial nature in any such provision, and (v) any waiver, amendment or modification of the Intercreditor Agreement (and any related definitions) may be effected by an agreement or agreements in writing entered into among the Administrative Agent and the ABL Administrative Agent (with the consent of the Required Lenders but without the consent of any Credit Party, so long as such amendment, waiver or modification does not impose any additional duties or obligations on the Credit Parties or alter or impair any right of any Credit Party under the Loan Documents).


 


Notwithstanding anything in this Agreement to the contrary, each Lender hereby irrevocably authorizes the Administrative Agent on its behalf, and without further consent, to enter into amendments or modifications to this Agreement (including, without limitation, amendments to this Section 10.2) or any of the other Loan Documents or to enter into additional Loan Documents as the Administrative Agent reasonably deems appropriate in order to effectuate the terms of Section 3.13 (including, without limitation, as applicable, (1) to permit the Incremental Term Loans to share ratably in the benefits of this Agreement and the other Loan Documents and (2) to include the Incremental Term Loan Commitments or outstanding Incremental Term Loans in any determination of (i) Required Lenders or (ii) similar required lender terms applicable thereto); provided that no amendment or modification shall result in any increase in the amount of any Lender’s Commitment or any increase in any Lender’s Commitment Percentage, in each case, without the written consent of such affected Lender.


 




  





 











  






Without the consent of any other person, the applicable Credit Party and the Administrative Agent may (in its or their respective sole discretion, or shall, to the extent required by any Loan Document) enter into any amendment or waiver of any Loan Document, or enter into any new agreement or instrument, to effect the granting, perfection, protection, expansion or enhancement of any security interest in any Collateral or additional property to become Collateral for the benefit of the Secured Parties, or as required by local law to give effect to, or protect any security interest for the benefit of the Secured Parties, in any property or so that the security interests therein comply with requirements of Applicable Law.


 


SECTION 10.3 Expenses; Indemnity.


 


(a) Costs and Expenses.  The Borrower and any other Credit Party, jointly and severally, shall 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 of the Credit Facility, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), and (ii)  all out of pocket expenses incurred by the Administrative Agent or any Lender (including the reasonable fees, charges and disbursements of any counsel for the Administrative Agent or any Lender), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made hereunder, including all such out of pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.


 


(b) Indemnification by the Borrower.  The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), 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, and shall pay or reimburse any such Indemnitee for, any and all losses, claims (including, without limitation, any Environmental Claims), damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless, each Indemnitee from, and shall pay or reimburse any such Indemnitee for, all fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the Borrower or any other Credit Party), other than such Indemnitee and its Related Parties, arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby (including, without limitation, the Transactions), (ii) any Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence, release or threatened release of Hazardous Materials on or from any property owned, leased or operated by any Credit Party or any Subsidiary thereof, or any Environmental Claim to the extent related in any way to any Credit Party or any Subsidiary, (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Credit Party or any Subsidiary thereof, and regardless of whether any Indemnitee is a party thereto, or (v) any claim (including, without limitation, any Environmental Claims), investigation, litigation or other proceeding (whether or not the Administrative Agent or any Lender is a party thereto) and the prosecution and defense thereof, arising out of or in any way connected with the Loans, this Agreement, any other Loan Document, or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby, including without limitation, reasonable attorneys and consultant’s fees, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) 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 or (y) result from a claim brought by any Credit Party or any Subsidiary thereof against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if such Credit Party or such Subsidiary has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.


 




  





 











  






(c) Reimbursement by Lenders.  To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under clause (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the Total Credit Exposure at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender); provided, that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or against any Related Party acting for the Administrative Agent (or any such sub-agent).  The obligations of the Lenders under this clause (c) are subject to the provisions of Section 3.7.


 


(d) Waiver of Consequential Damages, Etc.  To the fullest extent permitted by Applicable Law, the Borrower and each other Credit Party shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof.  No Indemnitee referred to in clause (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.


 


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


 


(f) Survival.  Each party’s obligations under this Section shall survive the termination of the Loan Documents and payment of the obligations hereunder.


 


SECTION 10.4 Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of the Borrower or any other Credit Party against any and all of the obligations of the Borrower or such Credit Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or any of their respective Affiliates, irrespective of whether or not such Lender or any such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower or such Credit Party may be contingent or unmatured or are owed to a branch or office of such Lender or such Affiliate different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness.


 




  





 











  






SECTION 10.5 Governing Law; Jurisdiction, Etc.


 


(a) Governing Law.  This Agreement and the other Loan Documents and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the law of the State of New York.


 


(b) Submission to Jurisdiction.  The Borrower and each other Credit Party irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, any Lender, or any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in New York County, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by Applicable Law, in such federal court.  Each of the parties hereto agrees that a final judgment in any such action, litigation 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 in any other Loan Document shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against the Borrower or any other Credit Party or its properties in the courts of any jurisdiction.


 


(c) Waiver of Venue.  The Borrower and each other Credit Party irrevocably and unconditionally waives, to the fullest extent permitted by Applicable Law, any objection that it may now or hereafter have to the laying of venue of any 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 Applicable Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.


 


(d) Service of Process.  Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 10.1.  Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by Applicable Law.


 


SECTION 10.6 Waiver of Jury Trial.


 


(a) EACH PARTY HERETO HEREBY IRREVOCABLY 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 OR 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, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON 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 AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.


 




  





 











  






SECTION 10.7 Reversal of Payments.  To the extent any Credit Party makes a payment or payments to the Administrative Agent for the ratable benefit of the Lenders or the Administrative Agent receives any payment or proceeds of the Collateral which payments or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds repaid, the Obligations or part thereof intended to be satisfied shall be revived and continued in full force and effect as if such payment or proceeds had not been received by the Administrative Agent.


 


SECTION 10.8 Injunctive Relief.  The Borrower recognizes that, in the event the Borrower fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, any remedy of law may prove to be inadequate relief to the Lenders.  Therefore, the Borrower agrees that the Lenders, at the Lenders’ option, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.


 


SECTION 10.9 Accounting Matters.  If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders) without the requirement of an amendment fee; provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.


 


SECTION 10.10 Successors and Assigns; Participations.


 


(a) Successors and Assigns Generally.  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, except that neither the Borrower nor any other Credit Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of paragraph (b) of this Section, (ii) by way of participation in accordance with the provisions of paragraph (d) of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of paragraph (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void).  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, Participants to the extent provided in paragraph (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.


 


(b) Assignments by Lenders.  Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including the Loans at the time owing to it); provided that, in each case with respect to any Credit Facility, any such assignment shall be subject to the following conditions:


 




  





 











  






(i) Minimum Amounts.


 


(A)           in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and/or the Loans at the time owing to it (in each case with respect to any Facility) or contemporaneous assignments to related Approved Funds that equal at least the amount specified in paragraph (b)(i)(B) of this Section in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and


 


(B)           in any case not described in paragraph (b)(i)(A) of this Section, the principal outstanding balance of the 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 or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $1,000,000, in the case of any assignment in respect of the Term Loan Facility, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided that the Borrower shall be deemed to have given its consent five (5) Business Days after the date written notice thereof has been delivered by the assigning Lender (through the Administrative Agent) unless such consent is expressly refused by the Borrower prior to such fifth (5th) Business Day.


 


(ii) Proportionate Amounts.  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 with respect to the Loan assigned, except that this clause (ii) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate classes on a non-pro rata basis.


 


(iii) Required Consents.  No consent shall be required for any assignment except to the extent required by paragraph (b)(i)(B) of this Section and, in addition:


 


(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Default has occurred and is continuing at the time of such assignment or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided, that the Borrower 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 the Borrower’s consent shall not be required during the primary syndication of the Credit Facility unless the proposed Lender is a competitor of the Credit Parties; and


 


(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of the Term Loans to a Person who is not a Lender, an Affiliate of a Lender or an Approved Fund.


 


(iv) Assignment and Assumption.  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 for each assignment; provided that (A) only one such fee will be payable in connection with simultaneous assignments to two or more Approved Funds by a Lender and (B) the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment.  The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.


 




  





 











  






(v) Assignment to Affiliated Lenders.


 


(A)           Notwithstanding the definition of “Eligible Assignee” or anything else to the contrary contained in this Agreement, any Lender may assign all or a portion of its Term Loans to any Person who, after giving effect to such assignment, would be an Affiliated Lender (without the consent of any Person but subject to acknowledgment by the Administrative Agent); provided that:


 


                 (I)except as previously disclosed in writing to the Administrative Agent and the Term Lenders, each Affiliated Lender represents and warrants as of the date of any assignment to such Affiliated Lender pursuant to this Section 10.10(b)(v), that the Affiliated Lender has no material non-public information (“MNPI”) with respect to any Credit Party or any of their respective Subsidiaries or securities that both (a) has not been disclosed to the assigning Lender (other than because such assigning Lender does not wish to receive MNPI with respect to any Credit Party or any of their respective Subsidiaries or securities) prior to such date and (b) could reasonably be expected to have a material effect upon, or otherwise be material, to a Term Lender’s decision to assign Term Loans to such Affiliated Lender;


 


                (II)the assigning Lender and the Affiliated Lender purchasing such Lender’s Term Loans shall execute and deliver to the Administrative Agent an assignment agreement substantially in the form of Exhibit I hereto (an “Affiliated Lender Assignment and Assumption”); and


 


                (III)at the time of such assignment after giving effect to such assignment, the aggregate principal amount of all Loans held by Affiliated Lenders shall not exceed 15% of the aggregate principal amount of all Loans and Commitments outstanding under this Agreement.


 


(B)           Notwithstanding anything to the contrary in this Agreement, no Affiliated Lender shall have any right to (i) attend (including by telephone) any meeting or discussions (or portion thereof) among the Administrative Agent or any Lender to which representatives of the Credit Parties are not invited, or (ii) receive any information or material prepared by Administrative Agent or any Lender or any communication by or among Administrative Agent and/or one or more Lenders, except to the extent such information or materials have been made available to any Credit Party or its representatives.


 




  





 











  






(C)           Notwithstanding anything in Section 10.2 or the definition of “Required Lenders” to the contrary, for purposes of determining whether the Required Lenders, all affected Lenders or all Lenders have (i) consented (or not consented) to any amendment, modification, waiver, consent or other action with respect to any of the terms of any Loan Document or any departure by any Credit Party therefrom, (ii) otherwise acted on any matter related to any Loan Document, or (iii) directed or required the Administrative Agent or any Lender to undertake any action (or refrain from taking any action) with respect to or under any Loan Document, an Affiliated Lender shall be deemed to have voted its interest as a Lender without discretion in the same proportion as the allocation of voting with respect to such matter by Lenders who are not Affiliated Lenders; provided that no amendment, modification, waiver, consent or other action with respect to any Loan Document shall deprive such Affiliated Lender of its Pro Rata Share of any payments to which such Affiliated Lender is entitled under the Loan Documents without such Affiliated Lender providing its consent; provided, further, that such Affiliated Lender shall have the right to approve any amendment, modification, waiver or consent of the type described in Section 10.2(i) of this Agreement to the extent that such Affiliated Lender is directly and adversely affected thereby; and in furtherance of the foregoing, (x) the Affiliated Lender agrees to execute and deliver to the Administrative Agent any instrument reasonably requested by the Administrative Agent to evidence the voting of its interest as a Lender in accordance with the provisions of this Section 10.10(b)(v); provided that if the Affiliated Lender fails to promptly execute such instrument such failure shall in no way prejudice any of the Administrative Agent’s rights under this paragraph and (y) the Administrative Agent is hereby appointed (such appointment being coupled with an interest) by the Affiliated Lender as the Affiliated Lender’s attorney-in-fact, with full authority in the place and stead of the Affiliated Lender and in the name of the Affiliated Lender, from time to time in Administrative Agent’s discretion to take any action and to execute any instrument that Administrative Agent may deem reasonably necessary to carry out the provisions of this paragraph (v)(C).


 


(D)           Each Affiliated Lender, solely in its capacity as a Term Lender, hereby agrees, and each Affiliated Lender Assignment Agreement shall provide a confirmation that, if any Credit Party shall be subject to any voluntary or involuntary proceeding commenced under any Debtor Relief Laws (“Bankruptcy Proceedings”), (i) such Affiliated Lender shall not take any step or action in such Bankruptcy Proceeding to object to, impede, or delay the exercise of any right or the taking of any action by the Administrative Agent (or the taking of any action by a third party that is supported by the Administrative Agent) in relation to such Affiliated Lender’s claim with respect to its Loans (a “Claim”) (including, without limitation, objecting to any debtor in possession financing, use of cash collateral, grant of adequate protection, sale or disposition, compromise, or plan of reorganization) so long as such Affiliated Lender is treated in connection with such exercise or action on the same or better terms as the other Term Lenders and (ii) with respect to any matter requiring the vote of Term Lenders during the pendency of a Bankruptcy Proceeding (including, without limitation, voting on any plan of reorganization), the Loans held by such Affiliated Lender (and any Claim with respect thereto) shall be deemed to be voted in accordance with clause (C) of this Section 10.10(b)(v), so long as such Affiliate Lender is treated in connection with the exercise of such right or taking of such action on the same or better terms as the other Term Lenders.  For the avoidance of doubt, the Lenders and each Affiliated Lender agree and acknowledge that the provisions set forth in this clause (D) of Section 10.10(b)(v), and the related provisions set forth in each Affiliated Lender Assignment and Assumption, constitute a “subordination agreement” as such term is contemplated by, and utilized in, Section 510(a) of the United States Bankruptcy Code, and, as such, would be enforceable for all purposes in any case where a Credit Party has filed for protection under any Debtor Relief Law applicable to such Credit Party.


 


(E)           The Borrower, each other Credit Party and the Lenders hereby acknowledge that the Administrative Agent shall have no obligation to, and shall not be liable for any failure to, monitor the compliance by the Borrower, the Lenders or any Affiliated Lender.


 


(vi) No Assignment to Natural Persons.  No such assignment shall be made to a natural Person.


 


Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement 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 3.8, 3.9, 3.10, 3.11 and 10.3 with respect to facts and circumstances occurring prior to the effective date of such assignment.


 




  





 











  






(c) Register.  The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices in Charlotte, North Carolina, a copy of each Assignment and Assumption and each Lender Joinder Agreement delivered to it and a register for the recordation of the names and addresses of the Lenders and principal amounts of (and interest on) the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, absent manifest error, and the Borrower, the Administrative Agent 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 Borrower and any Lender (but only to the extent of entries in the Register that are applicable to such Lender), at any reasonable time and from time to time upon reasonable prior notice.


 


(d) Participations.  Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural Person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent 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.  For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 10.3(c) with respect to any payments made by such Lender to its Participant(s).


 


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 or modification described in Section 10.2 that directly affects such Participant and could not be affected by a vote of the Required Lenders.  The Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.8, 3.9, 3.10 and 3.11 (subject to the requirements of such Sections and Section 3.12) 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 shall not be entitled to receive any greater payment under Sections 3.10 and 3.11, with respect to such 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 Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 3.12(b) with respect to any Participant.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.4 as though it were a Lender; provided that such Participant agrees to be subject to Section 3.6 as though it were a Lender.


 




  





 











  






(e) Participant Register.  Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and interest amounts) of each Participant’s interest in the Loans or other obligations under the Loan Documents (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 or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary in connection with a Tax audit or other Tax proceeding to establish that such commitment, loan 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 the Borrower and the Lenders 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.


 


(f) Certain Pledges.  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; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.


 


SECTION 10.11 Treatment of Certain Information; Confidentiality.  Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Related Parties (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 required or requested by, or required to be disclosed to, any rating agency, or regulatory or similar authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by Applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies under this Agreement, under any other Loan Document or under any Secured Hedge Agreement or Secured Cash Management Agreement, or any action or proceeding relating to this Agreement, any other Loan Document or any Secured Hedge Agreement or Secured Cash Management Agreement, 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 and obligations under this Agreement, (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder, (iii) to an investor or prospective investor in an Approved Fund that also agrees that Information shall be used solely for the purpose of evaluating an investment in such Approved Fund, (iv) to a trustee, collateral manager, servicer, backup servicer, noteholder or secured party in an Approved Fund in connection with the administration, servicing and reporting on the assets serving as collateral for an Approved Fund, or (v) to a nationally recognized rating agency that requires access to information regarding the Borrower and its Subsidiaries, the Loans and the Loan Documents in connection with ratings issued with respect to an Approved Fund; (g) on a confidential basis to (i) any rating agency in connection with rating the Borrower or its Subsidiaries or the Credit Facility or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the Credit Facility; (h) with the consent of the Borrower, (i) to Gold Sheets and other similar bank trade publications, such information to consist of deal terms and other information customarily found in such publications, (j) 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, any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower or (k) to governmental regulatory authorities in connection with any regulatory examination of the Administrative Agent or any Lender or in accordance with the Administrative Agent’s or any Lender’s regulatory compliance policy if the Administrative Agent or such Lender deems necessary for the mitigation of claims by those authorities against the Administrative Agent or such Lender or any of its subsidiaries or affiliates.  For purposes of this Section, “Information” means all information received from any Credit Party or any Subsidiary thereof relating to any Credit Party or any Subsidiary thereof or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by any Credit Party or any Subsidiary thereof; provided that, in the case of information received from a Credit Party or any Subsidiary thereof 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.


 




  





 











  






SECTION 10.12 Performance of Duties.  Each of the Credit Party’s obligations under this Agreement and each of the other Loan Documents shall be performed by such Credit Party at its sole cost and expense.


 


SECTION 10.13 All Powers Coupled with Interest.  All powers of attorney and other authorizations granted to the Lenders, the Administrative Agent and any Persons designated by the Administrative Agent or any Lender pursuant to any provisions of this Agreement or any of the other Loan Documents shall be deemed coupled with an interest and shall be irrevocable so long as any of the Obligations remain unpaid or unsatisfied, any of the Commitments remain in effect or the Credit Facility has not been terminated.


 


SECTION 10.14 Survival.


 


(a) All representations and warranties set forth in Article V and all representations and warranties contained in any certificate, or any of the Loan Documents (including, but not limited to, any such representation or warranty made in or in connection with any amendment thereto) shall constitute representations and warranties made under this Agreement.  All representations and warranties made under this Agreement shall be made or deemed to be made at and as of the Closing Date (except those that are expressly made as of a specific date), shall survive the Closing Date and shall not be waived by the execution and delivery of this Agreement, any investigation made by or on behalf of the Lenders or any borrowing hereunder.


 


(b) Notwithstanding any termination of this Agreement, the indemnities to which the Administrative Agent and the Lenders are entitled under the provisions of this Article X and any other provision of this Agreement and the other Loan Documents shall continue in full force and effect and shall protect the Administrative Agent and the Lenders against events arising after such termination as well as before.


 


SECTION 10.15 Titles and Captions.  Titles and captions of Articles, Sections and subsections in, and the table of contents of, this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement.


 


SECTION 10.16 Severability of Provisions.  Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.


 




  





 











  






SECTION 10.17 Counterparts; Integration; Effectiveness; Electronic Execution.


 


(a) Counterparts; Integration; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement and 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 4.1, 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 that, when taken together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement


 


(b) Electronic Execution of Assignments.  The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures 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 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 10.18 Term of Agreement.  This Agreement shall remain in effect from the Closing Date through and including the date upon which all Obligations (other than contingent indemnification obligations not then due) arising hereunder or under any other Loan Document shall have been indefeasibly and irrevocably paid and satisfied in full.  No termination of this Agreement shall affect the rights and obligations of the parties hereto arising prior to such termination or in respect of any provision of this Agreement which survives such termination.


 


SECTION 10.19 USA PATRIOT Act.  The Administrative Agent and each Lender hereby notifies the Borrower that pursuant to the requirements of the PATRIOT Act, it is required to obtain, verify and record information that identifies the Borrower and the Subsidiary Guarantors, which information includes the name and address of the Borrower and each Subsidiary Guarantor and other information that will allow such Lender to identify the Borrower or such Subsidiary Guarantor in accordance with the PATRIOT Act.


 


SECTION 10.20 Independent Effect of Covenants.  The Borrower expressly acknowledges and agrees that each covenant contained in Article VIII or IX hereof shall be given independent effect.  Accordingly, the Borrower shall not engage in any transaction or other act otherwise permitted under any covenant contained in Article VI or VII, before or after giving effect to such transaction or act, the Borrower shall or would be in breach of any other covenant contained in Article VI or VII.


 


SECTION 10.21 Inconsistencies with Other Documents.  In the event there is a conflict or inconsistency between this Agreement, the Intercreditor Agreement and any other Loan Document, the terms of this Agreement shall control; provided that any provision of the Security Documents which imposes additional burdens on the Borrower or any of its Subsidiaries or further restricts the rights of the Borrower or any of its Subsidiaries or gives the Administrative Agent or Lenders additional rights shall not be deemed to be in conflict or inconsistent with this Agreement and shall be given full force and effect; provided further that the Intercreditor Agreement governs and controls in the event of any conflict with any other Loan Document.


 




  





 











  






[Signature pages to follow]






  





 











  








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


 


 


KRONOS WORLDWIDE, INC.,


 


 


as Borrower


 


 


By:/s/John A. St. Wrba        


      Vice President and Treasurer


 


 






  





 











  













 


AGENTS AND LENDERS:


 


WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent and Lender


 


 


By:  /s/Jacob Petkovich                 


      Director






  





 











  








EXHIBIT A


 







 


to


 


Credit Agreement


dated as of June 13, 2012


by and among


Kronos Worldwide, Inc.,


as Borrower,


the Lenders party thereto,


as Lenders,


and


Wells Fargo Bank, National Association,


as Administrative Agent


 


FORM OF TERM LOAN NOTE


 






  





 











  








TERM LOAN NOTE


 


$__________                                                                                                                                                                                      __________, 2012


 


FOR VALUE RECEIVED, the undersigned, KRONOS WORLDWIDE, INC., a Delaware corporation (the “Borrower”), promises to pay to _______________ (the “Lender”), at the place and times provided in the Credit Agreement referred to below, the principal sum of _______________ DOLLARS ($__________) or, if less, the principal amount of all Term Loans made by the Lender pursuant to that certain Credit Agreement, dated as of __________, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) by and among the Borrower, the Lenders who are or may become a party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent.  Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.


 


The unpaid principal amount of this Term Loan Note from time to time outstanding is subject to mandatory repayment from time to time as provided in the Credit Agreement and shall bear interest as provided in Section 3.1 of the Credit Agreement.  All payments of principal and interest on this Term Loan Note shall be payable in lawful currency of the United States of America in immediately available funds to the account designated in the Credit Agreement.


 


This Term Loan Note is entitled to the benefits of, and evidences Obligations incurred under, the Credit Agreement, to which reference is made for a description of the security for this Term Loan Note and for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Obligations evidenced by this Term Loan Note and on which such Obligations may be declared to be immediately due and payable.


 


THIS TERM LOAN NOTE SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 AND SECTION 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ANY OTHER CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.


 


The Indebtedness evidenced by this Term Loan Note is senior in right of payment to all Subordinated Indebtedness referred to in the Credit Agreement.


 


The Borrower hereby waives all requirements as to diligence, presentment, demand of payment, protest and (except as required by the Credit Agreement) notice of any kind with respect to this Term Loan Note.


 






  





 











  








IN WITNESS WHEREOF, the undersigned has executed this Term Loan Note under seal as of the day and year first above written.


 


 


KRONOS WORLDWIDE, INC.


 


 


By:                       


 


Name:                      


  


Title:                    






  





 











  








EXHIBIT B


to


Credit Agreement


dated as of June 13, 2012


by and among


Kronos Worldwide, Inc.,


as Borrower,


the Lenders party thereto,


as Lenders,


and


Wells Fargo Bank, National Association,


as Administrative Agent


 


FORM OF NOTICE OF BORROWING


 






  





 











  








NOTICE OF BORROWING


 


Dated as of:  _____________


 


Wells Fargo Bank, National Association,


   as Administrative Agent


[MAC D 1109-019


1525 West W.T. Harris Blvd.


Charlotte, North Carolina  28262


Attention:  Syndication Agency Services]


 


Ladies and Gentlemen:


 


This irrevocable Notice of Borrowing is delivered to you pursuant to Section 2.2(a) of the Credit Agreement dated as of __________, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Kronos Worldwide, Inc., a Delaware corporation (the “Borrower”), the lenders who are or may become party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent.  Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.


 


1.           The Borrower hereby requests that the Lenders make [the Initial Term Loan] [an Incremental Term Loan] to the Borrower in the aggregate principal amount of $___________.


 


2.           The Borrower hereby requests that such Loan be made on the following Business Day:  _____________________.


 


3.           The Borrower hereby requests that such Loan bear interest at the following interest rate, plus the Applicable Margin, as set forth below:


 



	

Component of Loan



	

Interest Rate



	

Interest Period (LIBOR Rate only)



	

Termination Date for Interest Period


(if applicable)




	  	
(Base Rate or LIBOR Rate)

	  	  










4.           The aggregate principal amount of all Loans outstanding as of the date hereof (including the Loan requested herein) does not exceed the maximum amount permitted to be outstanding pursuant to the terms of the Credit Agreement.


 


5.           All of the conditions applicable to the Loan requested herein as set forth in the Credit Agreement have been satisfied as of the date hereof and will remain satisfied to the date of such Loan.


 


[Signature Page Follows]






  





 











  








IN WITNESS WHEREOF, the undersigned has executed this Notice of Borrowing as of the day and year first written above.


 


 


KRONOS WORLDWIDE, INC.


 


 


By:                    


 


Name:                 


 


Title:                 






  





 











  








EXHIBIT C


to


Credit Agreement


dated as of June 13, 2012


by and among


Kronos Worldwide, Inc.,


as Borrower,


the Lenders party thereto,


as Lenders,


and


Wells Fargo Bank, National Association,


as Administrative Agent


 


FORM OF NOTICE OF PREPAYMENT


 






  





 











  








NOTICE OF PREPAYMENT


 


Dated as of:  _____________


 


Wells Fargo Bank, National Association,


   as Administrative Agent


[MAC D 1109-019


1525 West W.T. Harris Blvd.


Charlotte, North Carolina  28262


Attention:  Syndication Agency Services]


 


Ladies and Gentlemen:


 


This irrevocable Notice of Prepayment is delivered to you pursuant to Section 2.4 of the Credit Agreement dated as of __________, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Kronos Worldwide, Inc., a Delaware corporation (the “Borrower”), the lenders who are or may become party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent.  Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.


 


1.           The Borrower hereby provides notice to the Administrative Agent that it shall repay the following [Base Rate Loans] and/or [LIBOR Rate Loans]:  _______________.


 


2.           The Loan to be prepaid is [check each applicable box]


 


the Initial Term Loan


 


an Incremental Term Loan


 


3.           The Borrower shall repay the above-referenced Loans on the following Business Day:  _______________.1


 


[Signature Page Follows]









  


	
  

	
1 Complete with a date no earlier than (i) the same Business Day as of the date of this Notice of Prepayment with respect to any Base Rate Loan and (ii) three (3) Business Days subsequent to date of this Notice of Prepayment with respect to any LIBOR Rate Loan.







 








  





 











  








IN WITNESS WHEREOF, the undersigned has executed this Notice of Prepayment as of the day and year first written above.


 


 


KRONOS WORLDWIDE, INC.


 


 


By:                       


 


Name:                    


 


Title:                    






  





 











  








EXHIBIT D


to


Credit Agreement


dated as of June 13, 2012


by and among


Kronos Worldwide, Inc.


as Borrower,


the Lenders party thereto,


as Lenders,


and


Wells Fargo Bank, National Association,


as Administrative Agent


 


FORM OF NOTICE OF CONVERSION/CONTINUATION


 






  





 











  








NOTICE OF CONVERSION/CONTINUATION


 


Dated as of:  _____________


 


Wells Fargo Bank, National Association,


   as Administrative Agent


[MAC D 1109-019


1525 West W.T. Harris Blvd.


Charlotte, North Carolina  28262


Attention:  Syndication Agency Services]


 


Ladies and Gentlemen:


 


This irrevocable Notice of Conversion/Continuation (this “Notice”) is delivered to you pursuant to Section 3.2 of the Credit Agreement dated as of __________, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Kronos Worldwide, Inc., a Delaware corporation (the “Borrower”), the lenders who are or may become party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent.  Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.


 


1.           The Loan to which this Notice relates is [the Initial Term Loan] [an Incremental Term Loan].


 


2.           This Notice is submitted for the purpose of:


 


Converting all or a portion of a Base Rate Loan into a LIBOR Rate Loan


 


Outstanding principal balance:                                                                                           $______________


 


Principal amount to be converted:                                                                                           $______________


 


Requested effective date of conversion:                                                                                           _______________


 


Requested new Interest Period:                                                                                           _______________


 


Converting a portion of LIBOR Rate Loan into a Base Rate Loan


 


Outstanding principal balance:                                                                                           $______________


 


Principal amount to be converted:                                                                                           $______________


 


Last day of the current Interest Period:                                                                                           _______________


 


Requested effective date of conversion:                                                                                           _______________


 


Continuing all or a portion of a LIBOR Rate Loan as a LIBOR Rate Loan


 


Outstanding principal balance:                                                                                           $______________


 


Principal amount to be continued:                                                                                           $______________


 


Last day of the current Interest Period:                                                                                           _______________


 


Requested effective date of continuation:                                                                                           _______________


 


Requested new Interest Period:                                                                                           _______________


 


3.           The aggregate principal amount of all Loans outstanding as of the date hereof does not exceed the maximum amount permitted to be outstanding pursuant to the terms of the Credit Agreement.


 


[Signature Page Follows]






  





 











  








IN WITNESS WHEREOF, the undersigned has executed this Notice of Conversion/Continuation as of the day and year first written above.


 


 


KRONOS WORLDWIDE, INC.


 


 


By:                          


 


Name:                       


 


Title:                       






  





 











  








EXHIBIT E


to


Credit Agreement


dated as of June 13, 2012


by and among


Kronos Worldwide, Inc.,


as Borrower,


the Lenders party thereto,


as Lenders,


and


Wells Fargo Bank, National Association,


as Administrative Agent


 


FORM OF ASSIGNMENT AND ASSUMPTION


 






  





 











  








ASSIGNMENT AND ASSUMPTION


 


This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [INSERT NAME OF ASSIGNOR] (the “Assignor”) and the parties identified on the Schedules hereto and [the] [each]2 Assignee identified on the Schedules hereto as “Assignee” or as “Assignees” (collectively, the “Assignees” and each an “Assignee”).  [It is understood and agreed that the rights and obligations of [the Assignees][the Assignors]3 hereunder are several and not joint.]4  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by [the] [each] Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.


 


For an agreed consideration, the Assignor hereby irrevocably sells and assigns to [the Assignee] [the respective Assignees], and [the] [each] Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including without limitation any guarantees included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned to [the] [any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as, [the] [an] “Assigned Interest”).  Each such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.


 



	
  

	
1.

	
Assignor:

	
[INSERT NAME OF ASSIGNOR]







 



	
  

	
2.

	
Assignee(s):

	
See Schedules attached hereto







  





	
2

	
For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language.  If the assignment is to multiple Assignees, choose the second bracketed language.







 




  


	
3

	
Select as appropriate.







 




  


	
4

	
Include bracketed language if there are either multiple Assignors or multiple Assignees.







 








  





  











  







	
  

	
3.

	
Borrower:

	
______________________________







 



	
  

	
4.

	
Administrative Agent:

	
Wells Fargo Bank, National Association, as the administrative agent under the Credit Agreement







 



	
  

	
5.

	
Credit Agreement:

	
The Credit Agreement dated as of ___________________, 2012 among Kronos Worldwide, Inc., as Borrower, the Lenders parties thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent (as amended, restated, supplemented or otherwise modified)







 



	
  

	
6.

	
Assigned Interest:

	
See Schedules attached hereto







 



	
  

	
[7.

	
Trade Date:

	
______________]5







 


[Remainder of Page Intentionally Left Blank]









  


	
5

	
To be completed if the Assignor and the Assignees intend that the minimum assignment amount is to be determined as of the Trade Date.







 








  





 











  








Effective Date:  _____________ ___, 2___ [TO BE INSERTED BY THE ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR]


 


The terms set forth in this Assignment and Assumption are hereby agreed to:


 


 


ASSIGNOR


 


 


[NAME OF ASSIGNOR]


 


 


By:                       


 


Title:


 


 


ASSIGNEES


 


 


See Schedules attached hereto






  





 











  








[Consented to and]6 Accepted:


 


WELLS FARGO BANK, NATIONAL ASSOCIATION,


as Administrative Agent


 


By:                         


Title:


 


[Consented to:]7


 


KRONOS WORLDWIDE, INC.


 


By:                         


Title:









  


	
6

	
To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.  May also use a Master Consent.







 




  


	
7

	
To be added only if the consent of the Borrower is required by the terms of the Credit Agreement.  May also use a Master Consent.







 








  





 











  








SCHEDULE 1


 


To Assignment and Assumption


 


By its execution of this Schedule, the Assignee identified on the signature block below agrees to the terms set forth in the attached Assignment and Assumption.


 


Assigned Interests:


 



	
Facility


Assigned

	
Aggregate


Amount of


Loans for all


Lenders8

	
Amount of


Loans Assigned9

	
Percentage


Assigned of


Loans10

	
CUSIP Number


	  	
$

	
$

	
%

	  
	  	
$

	
$

	
%

	  
	  	
$

	
$

	
%

	  










 


 


[NAME OF ASSIGNEE]


[and is an Affiliate/Approved Fund of [identify Lender]11]


 


 


By     


 


Title:









  

8Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.




  

9Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.




  

10Set forth, to at least 9 decimals, as a percentage of the Loans of all Lenders thereunder.




  


	
11

	
Select as applicable.







 








  





 











  








ANNEX 1


to Assignment and Assumption


 


STANDARD TERMS AND CONDITIONS FOR


ASSIGNMENT AND ASSUMPTION


 


1.           Representations and Warranties.


 


1.1           Assignor.  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.


 


1.2.           Assignee[s].  [The] [Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 10.10(b)(iii), (v) and (vi) of the Credit Agreement (subject to such consents, if any, as may be required under Section 10.10(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the] [the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 6.1 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the] [such] Assigned Interest, (vi) it 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 Assignment and Assumption and to purchase [the] [such] Assigned Interest, and (vii) if it is a Foreign Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, [the] [any] the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.


 


2.           Payments.  From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the] [each] Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to [the] [the relevant] Assignee for amounts which have accrued from and after the Effective Date.


 




  





  











  






3.           General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.


 











  





 











  























EXHIBIT F




 


to


Credit Agreement


dated as of June 13, 2012


by and among


Kronos Worldwide, Inc.,


as Borrower,


the Lenders party thereto,


as Lenders,


and


Wells Fargo Bank, National Association,


as Administrative Agent


 


FORM OF INTERCREDITOR AGREEMENT


 






  





 











  













 


INTERCREDITOR AGREEMENT


 


This INTERCREDITOR AGREEMENT (this "Agreement") is dated as of ___________, 2012 and entered into by and between WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company, in its capacity as agent under the ABL Documents, including its successors and assigns in such capacity from time to time ("ABL Agent"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as agent under the Term Loan Documents, including its successors and assigns in such capacity from time to time ("Term Loan Agent").


 


RECITALS


 


Kronos Worldwide, Inc. ("Parent"), Kronos Louisiana, Inc. ("KL"), Kronos (US), Inc. ("KUS") and Kronos Canada, Inc. ("KC", and together with Parent, KL and KUS, each a "Borrower" and collectively "Borrowers"), the lenders party thereto, and ABL Agent, have entered into that certain Credit Agreement dated as of the date hereof (the "ABL Credit Agreement") providing for a revolving credit facility pursuant to which such lenders have or may, from time to time, make loans and provide other financial accommodations to Borrowers.  The obligation of Borrowers to repay such loans and other financial accommodations under the ABL Credit Agreement is guaranteed by the Subsidiaries of Borrowers identified in the ABL Security Agreement (as defined below) as guarantors (such Subsidiaries, the "ABL Guarantors");


 


Parent, the lenders party thereto, and Term Loan Agent, have entered into that certain Credit Agreement dated as of the date hereof (the "Term Loan Credit Agreement") pursuant to which such lenders have agreed to make term loans to Parent.  The obligation of Parent to repay such term loans under the Term Loan Credit Agreement is guaranteed by KL, KUS and Kronos International, Inc. ("KII" and together with KL and KUS, the Term Loan Guarantors);


 


The obligations of Borrowers and the ABL Guarantors under the ABL Documents are to be secured on a first priority basis by Liens on the ABL Collateral (defined below);


 


The obligations of Parent and the Term Loan Guarantors under the Term Loan Documents are to be secured on a first priority basis by Liens on the Term Loan Priority Collateral (defined below) and on a second priority basis by Liens on the ABL Collateral; and


 


ABL Agent, for itself and on behalf of the ABL Claimholders, and Term Loan Agent, for itself and on behalf of the Term Loan Claimholders, desire to enter into this Agreement to (a) confirm the relative priority of their respective security interests in the assets of Borrowers and the Guarantors, (b) provide for the application, in accordance with such priorities, of proceeds of such assets and properties, and (c) address certain other matters.


 


AGREEMENT


 


In consideration of the foregoing, the mutual covenants and obligations herein set forth, and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:


 




  





  











  






SECTION 1.   Definitions; Rules of Construction.


 


1.1 Defined Terms.  Any terms (whether capitalized or lower case) used in this Agreement that are defined in the UCC shall be construed and defined as set forth in the UCC unless otherwise defined herein; provided, that to the extent that the UCC is used to define any term used herein and if such term is defined differently in different Articles of the UCC, the definition of such term contained in Article 9 of the UCC shall govern.  As used in the Agreement, the following terms shall have the following meanings:


 


"ABL Agent" has the meaning set forth in the preamble to this Agreement.


 


"ABL Canadian Obligations" means all ABL Debt of Foreign Subsidiaries that constitute “Canadian Obligations” as defined in the ABL Credit Agreement as in effect on the date hereof.


 


"ABL Cap" means, as of any date of determination, the result of:


 


(a)           the sum of (which amount shall be increased by the amount of all interest, fees, costs, expenses, indemnities, and other amounts accrued or charged with respect to any of the ABL Debt (other than Excess ABL Debt) as and when the same accrues or becomes due and payable, irrespective of whether the same is added to the principal amount of the ABL Loan Debt and including the same as would accrue and become due but for the commencement of an Insolvency Proceeding, whether or not such amounts are allowed or allowable, in whole or in part, in any such Insolvency Proceeding):


 


(i)           $150,000,000, plus


 


(ii)           the amount of the Bank Product Obligations, plus


 


(iv)           the ABL DIP Amount, minus


 


(b)           the amount of all payments of revolving loan obligations under the ABL Credit Agreement that result in a permanent reduction of the revolving credit commitments under the ABL Credit Agreement (other than payments of such revolving loan obligations in connection with a Refinancing thereof).


 


Any net increase in the aggregate principal amount of a loan or Letter of Credit (on a U.S. Dollar equivalent basis) after the loan is made or the Letter of Credit issued that is caused by a fluctuation in the exchange rate of the currency in which the loan or Letter of Credit is denominated will be ignored in determining whether the ABL Cap has been exceeded.


 


"ABL Claimholders" means, as of any date of determination, the holders of the ABL Debt at that time, including (a) ABL Agent, (b) the ABL Lenders, (c) the Underlying Issuer (as that term is defined in the ABL Credit Agreement), and (d) the Bank Product Providers.


 


"ABL Collateral" means the assets of each and every Grantor, whether real, personal or mixed, with respect to which a Lien is granted (or purported to be granted) as security for any ABL Debt, including all proceeds and products thereof; provided, that, in no event shall ABL Collateral include Term Loan Priority Collateral.


 


"ABL Collateral Documents" means the ABL Security Agreement, and any other agreement, document, or instrument pursuant to which a Lien is granted (or purported to be granted) securing any ABL Debt or under which rights or remedies with respect to such Liens are governed.


 


"ABL Credit Agreement" has the meaning set forth in the recitals to this Agreement.


 




  





  











  






"ABL Debt" means all Obligations (as that term is defined in the ABL Credit Agreement) and all other amounts owing, due, or secured under the terms of the ABL Credit Agreement or any other ABL Document, whether now existing or arising hereafter, including all principal, premium, interest, fees, reasonable attorneys' fees, costs, charges, expenses, reimbursement obligations, obligations with respect to loans, Letters of Credit, Bank Product Obligations, obligations to provide cash collateral in respect of Letters of Credit or Bank Product Obligations or indemnities in respect thereof, any other indemnities or guarantees, and all other amounts payable under or secured by any ABL Document (including, in each case, all amounts accruing on or after the commencement of any Insolvency Proceeding relating to any ABL Grantor, or that would have accrued or become due under the terms of the ABL Documents but for the effect of the Insolvency Proceeding and irrespective of whether a claim for all or any portion of such amounts is allowable or allowed in such Insolvency Proceeding), in each case whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured.


 


"ABL Default" means any "Event of Default", as such term is defined in any ABL Document.


 


"ABL DIP Amount" means, after the commencement of an Insolvency Proceeding by any Grantor, $12,500,000.


 


"ABL Documents" means the ABL Collateral Documents, the ABL Credit Agreement, and each of the other Loan Documents (as that term is defined in the ABL Credit Agreement).


 


“ABL Foreign Collateral” means all assets and properties of the Foreign Subsidiaries of Parent which are subject to Liens securing the ABL Canadian Obligations.


 


"ABL Grantor" means Borrower and each ABL Guarantor.


 


"ABL Lenders" means the "Lenders" as that term is defined in the ABL Credit Agreement (including the Issuing Lender and the Swing Lender (as those terms are defined in the ABL Credit Agreement)).


 


"ABL Priority Debt" means all ABL Debt other than Excess ABL Debt.


 


"ABL Security Agreement" means the "Guaranty and Security Agreement" as that term is defined in the ABL Credit Agreement.


 


"Agreement" has the meaning set forth in the preamble hereto.


 


"Bank Product Agreements" means the "Bank Product Agreements," as that term is defined in the ABL Credit Agreement.


 


"Bank Product Obligations" means the "Bank Product Obligations," as that term is defined in the ABL Credit Agreement.


 


"Bank Product Providers" means the "Bank Product Providers," as that term is defined in the ABL Credit Agreement.


 


"Bankruptcy Code" means Title 11 of the United States Code entitled "Bankruptcy," as now or hereafter in effect, or any successor statute.


 


"Bankruptcy Law" means the Bankruptcy Code and any other federal, state, or foreign law for the relief of debtors or affecting creditors' rights generally.


 




  





  











  






"Borrowers" has the meaning set forth in the recitals to this Agreement.


 


"Business Day" means any day other than a Saturday, Sunday, or day on which banks in New York City and Chicago, Illinois are authorized or required by law to close.


 


"Cash Collateral" has the meaning set forth in Section 6.2.


 


"Claimholders" means the ABL Claimholders and the Term Loan Claimholders, or any one of them.


 


"Collateral" means ABL Collateral and Term Loan Priority Collateral.


 


"Conforming Amendment" means any amendment to any Term Loan Document that is substantively identical to a corresponding amendment to a comparable provision of an ABL Document.


 


"Debt" means ABL Debt or Term Loan Debt, as the context requires.


 


"Default Disposition" has the meaning set forth in Section 5.1(d).


 


"DIP Financing" has the meaning set forth in Section 6.2.


 


"DIP Financing Conditions" means (a) that Term Loan Agent retains its Liens with respect to the Collateral that existed as of the date of the commencement of the applicable Insolvency Proceeding (including proceeds thereof arising after the commencement of such Insolvency Proceeding), (b) in the case of DIP Financing, that the principal amount of such DIP Financing plus the outstanding principal amount of other ABL Debt does not exceed the ABL Cap, (c) the proposed Cash Collateral use or DIP Financing does not compel any ABL Grantor to seek confirmation of a specific plan of reorganization for which all or substantially all of the material terms are set forth in the Cash Collateral order or DIP Financing documentation, as applicable, (d) the proposed Cash Collateral order or DIP Financing documentation does not expressly require the sale of all or substantially all of the Collateral prior to a default under the Cash Collateral order or DIP financing documentation, and (e) in the case of DIP Financing, that the DIP Financing is otherwise subject to the terms of this Agreement.


 


"Disposition" or "Dispose" means the sale, assignment, transfer, license, lease (as lessor), exchange, or other disposition (including any sale and leaseback transaction) of any property by any person (or the granting of any option or other right to do any of the foregoing).


 


"Enforcement Action" means


 


(a)           the taking of any action to enforce any Lien in respect of the Collateral, including the institution of any foreclosure proceedings or, the noticing of any public or private sale or other disposition pursuant to Article 9 of the UCC or other applicable law, or the taking of any action in an attempt to vacate or obtain relief from a stay or other injunction restricting any other action described in this definition,


 


(b)           the exercise of any right or remedy provided to a secured creditor under the ABL Documents or the Term Loan Documents (including, in either case, any delivery of any notice to seek to obtain payment directly from any account debtor of any Grantor or any depositary bank, securities intermediary, or other person obligated on any Collateral of any Grantor, the taking of any action or the exercise of any right or remedy in respect of the Collateral, or the exercise of any right of setoff or recoupment with respect to obligations owed to any Grantor), under applicable law, at equity, in an Insolvency Proceeding or otherwise, including the acceptance of Collateral in full or partial satisfaction of an obligation,


 




  





  











  






(c)           the Disposition of all or any portion of the Collateral, by private or public sale or any other means,


 


(d)           the solicitation of bids from third parties to conduct the Disposition of all or a material portion of the Collateral to the extent undertaken and being diligently pursued in good faith to consummate the Disposition of such Collateral within a commercially reasonable time,


 


(e)           the engagement or retention of sales brokers, marketing agents, investment bankers, accountants, appraisers, auctioneers, or other third parties for the purpose of valuing, marketing, or Disposing of all or a material portion of the Collateral to the extent undertaken and being diligently pursued in good faith to consummate the Disposition of such Collateral within a commercially reasonable time,


 


(f)           the exercise of any other enforcement right relating to the Collateral (including the exercise of any voting rights relating to any Equity Interests composing a portion of the Collateral) whether under the ABL Documents, the Term Loan Documents, under applicable law of any jurisdiction, in equity, in an Insolvency Proceeding, or otherwise (including the commencement of applicable legal proceedings or other actions with respect to all or any material portion of the Collateral to facilitate the actions described in the preceding clauses), and


 


(g)           the pursuit of Default Dispositions relative to all or a material portion of the Collateral to the extent undertaken and being diligently pursued in good faith to consummate the Disposition of such Collateral within a commercially reasonable time.


 


“Enforcement Notice” means a written notice delivered, at a time when an Event of Default has occurred and is continuing, by either the ABL Agent with respect to the ABL Collateral or the Term Loan Agent with respect to the Term Loan Priority Collateral to the other specifying that it is an Enforcement Notice and the relevant Event of Default.


 


"Equity Interests" means with respect to a person, all of the shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in such person, whether voting or nonvoting, including capital stock (or other ownership or profit interests or units), preferred stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).


 


“Event of Default” means an “Event of Default” under and as defined in the ABL Credit Agreement or any ABL Collateral Document or the Term Loan Credit Agreement or any Term Loan Collateral Document, as the context may require.


 


"Excess ABL Debt" means the sum of (a) the portion of the principal amount of the loans outstanding under the ABL Documents and the undrawn amount of outstanding Letters of Credit that is in excess of the ABL Cap, plus (b) the portion of interest and fees that accrues or is charged with respect to that portion of the principal amount of the loans and Letters of Credit described in clause (a) of this definition.


 


"Excess Term Loan Debt" means the sum of (a) the portion of the principal amount of the loans outstanding under the Term Loan Documents that is in excess of the Term Loan Cap, plus (b) the portion of interest and fees that accrues or is charged with respect to that portion of the loans described in clause (a) of this definition.


 




  





  











  






"Final Order" means an order of a court of competent jurisdiction as to which the time to appeal, petition for certiorari, or move for re-argument or rehearing has expired and as to which no appeal, petition for certiorari, or other proceedings for re-argument or rehearing shall then be pending or, in the event that an appeal, writ of certiorari, or re-argument or rehearing thereof has been filed or sought, such order shall have been affirmed or confirmed by the highest court to which such order was appealed, or from which certiorari, re-argument or rehearing was sought and the time to take any further appeal, petition for certiorari or move for re-argument or rehearing shall have expired; provided, that the possibility that a motion under Rule 59 or Rule 60 of the Federal Rules of Civil Procedure or any analogous rule under the Federal Rules of Bankruptcy Procedure or applicable state court rules of civil procedure, may be filed with respect to such order shall not cause such order not to be a Final Order.


 


“Foreign Subsidiary” means any subsidiary of KC and any other Subsidiary of Parent that is a controlled foreign corporation (as that term is defined in the IRC).


 


"Governmental Authority" means the government of the United States of America or any other nation, any political subdivision thereof, whether state, provincial, 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.


 


"Grantors" means the ABL Grantors and the Term Loan Grantors, and each other person that may, from time to time, execute and deliver a ABL Collateral Document or a Term Loan Collateral Document as a "debtor," "grantor," "obligor," or "pledgor" (or the equivalent thereof) or that may, from time to time, be (or whose assets may be) subject to a judgment lien in favor of any of the ABL Claimholders or any of the Term Loan Claimholders in respect of the ABL Debt or the Term Loan Debt, as applicable, and "Grantor" means any one of them.


 


"Guarantors" has the meaning set forth in the recitals to this Agreement and "Guarantor" means any one of them.


 


"Inalienable Interests" has the meaning set forth in Section 4.4.


 


"Insolvency Proceeding" means:


 


(a)           any voluntary or involuntary case or proceeding under any Bankruptcy Law with respect to any Grantor;


 


(b)           any other voluntary or involuntary insolvency or bankruptcy case or proceeding, or any receivership, liquidation or other similar case or proceeding with respect to any Grantor or with respect to a material portion of its assets;


 


(c)           any liquidation, dissolution, or winding up of any Grantor whether voluntary or involuntary and whether or not involving insolvency or bankruptcy; or


 


(d)           any assignment for the benefit of creditors or any other marshaling of assets or liabilities of any Grantor.


 


"Letters of Credit" means the "Letters of Credit" as that term is defined in the ABL Credit Agreement.


 


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


 




  





  











  






"Ordinary Course Collections" has the meaning set forth in Section 4.1.


 


"Parent" has the meaning set forth in the recitals to this Agreement.


 


"Payment in Full of ABL Priority Debt" means, except to the extent otherwise expressly provided in Section 5.5 or in Section 6.8:


 


(a)           payment in U.S. Dollars in full in cash or immediately available funds of all of the ABL Priority Debt (other than outstanding Letters of Credit and Bank Product Obligations and other than unasserted contingent indemnification obligations);


 


(b)           termination or expiration of all commitments, if any, of the ABL Lenders to extend credit to Borrowers;


 


(c)           termination of, or providing cash collateral (in an amount, to the extent, and in the manner required by the ABL Credit Agreement) in respect of, all outstanding Letters of Credit that compose a portion of the ABL Priority Debt; and


 


(d)           termination of, or providing cash collateral (in an amount, to the extent, and in the manner required by the ABL Credit Agreement) in respect of, all Bank Product Obligations, and


 


(e)           providing cash collateral to ABL Agent in such amount as ABL Agent determines is reasonably necessary to secure the ABL Claimholders in accordance with the ABL Credit Agreement in respect of any asserted or threatened (in writing) claims, demands, actions, suits, proceedings, investigations, liabilities, fines, costs, penalties, or damages for which any of the ABL Claimholders may be entitled to indemnification by any ABL Grantor pursuant to the indemnification provisions in the ABL Loan Documents.


 


"person" means any natural person, corporation, trust, business trust, joint venture, joint stock company, association, company, limited liability company, partnership, Governmental Authority, or other entity.


 


"Pledged Collateral" has the meaning set forth in Section 5.4(a).


 


"Purchase Notice" has the meaning set forth in Section 5.6(a).


 


"Recovery" has the meaning set forth in Section 6.8.


 


"Refinance" means, in respect of any indebtedness, to refinance, extend, renew,  supplement, restructure, replace, refund, or repay, or to issue other indebtedness in exchange or replacement for such indebtedness, in whole or in part, whether with the same or different lenders, arrangers, or agents.  "Refinanced" and "Refinancing" shall have correlative meanings.


 


"Retained Interest" has the meaning set forth in Section 5.6(h).


 


“Standstill Notice” means a written notice from Term Loan Agent to ABL Agent identified by its terms as a “Standstill Notice” for purposes of this Agreement and stating that an Term Loan Default has occurred and is continuing and that, as a consequence thereof, Term Loan Agent has declared all of the Term Loan Priority Debt to be immediately due and payable.


 


“Standstill Period” means the period of 180 days commencing on the date on which ABL Agent receives the applicable Standstill Notice.


 




  





  











  






"Subsidiary" of a person means a corporation, partnership, limited liability company, or other entity as to which that person directly or indirectly owns or controls the Equity Interests having ordinary voting power to elect a majority of the board of directors (or appoint other comparable managers) of such corporation, partnership, limited liability company, or other entity.


 


"Term Loan Agent" has the meaning set forth in the preamble to this Agreement.


 


"Term Loan Cap" means the result of (a) $500,000,000, minus (b) the aggregate amount of all payments of the principal of the term loan obligations under the Term Loan Credit Agreement (other than payments of such term loan obligations in connection with a Refinancing thereof), plus (c) any increase in the principal amount by payment-in-kind of interest accrued on the amount set forth in clause (a).


 


"Term Loan Claimholders" means, as of any date of determination, the holders of the Term Loan Debt at that time, including (a) Term Loan Agent, and (b) the Term Loan Lenders.


 


"Term Loan Collateral" means all of the assets of each and every Term Loan Grantor, whether real, personal, or mixed, with respect to which a Lien is granted (or purported to be granted) as security for any Term Loan Debt, including all proceeds and products thereof.


 


"Term Loan Collateral Documents" means the Term Loan Security Agreement, and any other agreement, document, or instrument pursuant to which a Lien is granted (or purported to be granted) securing any Term Loan Debt or under which rights or remedies with respect to such Liens are governed.


 


"Term Loan Credit Agreement" has the meaning set forth in the recitals to this Agreement.


 


"Term Loan Debt" means all Obligations (as that term is defined in the Term Loan Credit Agreement) and all other amounts owing, due, or secured under the terms of the Term Loan Credit Agreement or any other Term Loan Document, whether now existing or arising hereafter, including all principal, premium, interest, fees, reasonable attorneys' fees, costs, charges, expenses, reimbursement obligations, obligations with respect to loans, indemnities, guarantees, and all other amounts payable under or secured by any Term Loan Document (including, in each case, all amounts accruing on or after the commencement of any Insolvency Proceeding relating to any Term Loan Grantor, or that would have accrued or become due under the terms of the Term Loan Documents but for the effect of the Insolvency Proceeding and irrespective of whether a claim for all or any portion of such amounts is allowable or allowed in such Insolvency Proceeding), in each case whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured.


 


 "Term Loan Default" means any "Event of Default", as such term is defined in any Term Loan Document.


 


"Term Loan Deficiency Claim" means any portion of the Term Loan Debt consisting of an allowed unsecured claim under Section 506(a) of the Bankruptcy Code (or any similar provision under any other law governing an Insolvency Proceeding).


 


"Term Loan Documents" means the Term Loan Collateral Documents, the Term Loan Credit Agreement, and each of the other Loan Documents (as that term is defined in the Term Loan Credit Agreement).


 


"Term Loan Grantor" means Parent and the Term Loan Guarantors.


 




  





  











  






"Term Loan Lenders" means the "Lenders" as that term is defined in the Term Loan Credit Agreement.


 


"Term Loan Priority Collateral" means the following:


 


(i) (a) 100% of the Equity Interests of Kronos Louisiana, Inc. (and any successor entity) and Kronos International, Inc. (and any successor entity) and (b) (x) 65% of the Equity Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2) or any successor regulation thereto) and (y) 100% of all other Equity Interests of KC (and any successor entity), Kronos Titan GmbH (and any successor entity) and Kronos Denmark ApS (and any successor entity);


 


(ii) all of the Equity Interests required to be pledged by any Term Loan Grantor pursuant to Section 6.14 of the Term Loan Credit Agreement;


 


(iii) the intercompany note described in Schedule 3 to the Term Loan Security Agreement and issued by KII to Parent and all assignments, amendments, restatements, supplements, extensions, renewals, replacements or modifications thereof;


 


(iv) all dividends, cash, options, warrants, rights, instruments, distributions, returns of capital or principal, income, interest, profits and other property, interests (debt or equity) or proceeds, including as a result of a split, revision, reclassification or other like change of any of the assets referred to in the foregoing clauses (i) through (iii), from time to time received, receivable or otherwise distributed to a Term Loan Grantor in respect of or in exchange for any or all of the assets referred to in the foregoing clauses (i) through (iii);


 


(v) all books and records evidencing, relating to, or referring to any of the foregoing (excluding books and records evidencing, relating to, or referring ABL Collateral); and


 


(vi) all of the proceeds (as such term is defined in the UCC) and products, whether tangible or intangible, of any of the foregoing.


 


"Term Loan Priority Debt" means all Term Loan Debt other than Excess Term Loan Debt.


 


"Term Loan Secured Claim" means any portion of the Term Loan Debt not constituting a Term Loan Deficiency Claim.


 


"Term Loan Security Agreement" means the "Security Documents" as that term is defined in the Term Loan Credit Agreement.


 


"Triggering Event" means (a) the acceleration of any ABL Priority Debt, (b) ABL Agent's taking of any Enforcement Action with respect to all or a material portion of the ABL Collateral, (c) the occurrence of a Term Loan Default as a result of a failure to make payment of any Term Loan Priority Debt when due under the terms of the Term Loan Documents, or (d) the commencement of an Insolvency Proceeding with respect to any ABL Grantor.


 


"UCC" means the Uniform Commercial Code (or any similar or comparable legislation) as in effect in any applicable jurisdiction.


 


1.2 Construction.  The definitions of terms in this Agreement 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 "will" shall be construed to have the same meaning and effect as the word "shall."  The term "or" shall be construed to have, except where otherwise indicated, the inclusive meaning represented by the phrase "and/or."  Any term used in this Agreement and not defined in this Agreement shall have the meaning set forth in the ABL Credit Agreement.  Unless the context requires otherwise:


 




  





  











  






(a) except as otherwise provided herein, 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, modified, renewed, extended, Refinanced, refunded, or replaced;


 


(b) any reference to a definition in a ABL Document shall be construed to also refer to any comparable term in any agreement, instrument, or other document the debt under which Refinances the ABL Debt);


 


(c) any reference to a definition in a Term Loan Document shall be construed to also refer to any comparable term in any agreement, instrument, or other document the debt under which Refinances the Term Loan Debt);


 


(d) any reference to any agreement, instrument, or other document herein "as in effect on the date hereof" shall be construed as referring to such agreement, instrument, or other document without giving effect to any amendment, restatement, supplement, modification, or Refinancing thereto or thereof occurring after the date hereof;


 


(e) any definition of, or reference to, ABL Debt or the Term Loan Debt herein shall be construed as referring to the ABL Debt or the Term Loan Debt (as applicable) as from time to time amended, restated, supplemented, modified, renewed, extended, Refinanced, refunded, or replaced in accordance with the terms of this Agreement;


 


(f) any reference herein to any person shall be construed to include such person's successors and assigns and as to any Grantor shall be deemed to include a receiver, trustee, or debtor-in-possession on behalf of any of such person or on behalf of any such successor or assignee of such person;


 


(g) except as otherwise expressly provided herein, any reference to ABL Agent agreeing to or having the right to do, or refraining from or having the right to refrain from doing, an act shall be construed as binding on each of the ABL Claimholders, any reference to ABL Agent shall be construed as referring to ABL Agent, for itself and on behalf of the other ABL Claimholders, any reference to Term Loan Agent agreeing to or having the right to do, or refraining from or having the right to refrain from doing, an act shall be construed as binding upon each of the Term Loan Claimholders, any reference to Term Loan Agent shall be construed as referring to Term Loan Agent, for itself and on behalf of the other Term Loan Claimholders, any reference to the ABL Claimholders shall be construed as including ABL Agent, and any reference to the Term Loan Claimholders shall be construed as referring to Term Loan Agent;


 


(h) 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;


 


(i) all references herein to Sections shall be construed to refer to Sections of this Agreement unless otherwise specified; and


 


(j) 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.


 




  





  











  






SECTION 2.   Lien Priorities.


 


2.1 Relative Priorities.


 


(a) Notwithstanding the date, time, method, manner, or order of grant, attachment, or perfection of any Liens in the ABL Collateral securing the Term Loan Debt or of any Liens in the ABL Collateral securing the ABL Debt (including, in each case, notwithstanding whether any such Lien is granted (or secures Debt relating to the period) before or after the commencement of any Insolvency Proceeding) with respect to an ABL Grantor and notwithstanding any contrary provision of the UCC or any other applicable law, the Term Loan Documents or the ABL Documents or any defect or deficiencies in, or failure to attach or perfect, the Liens securing the ABL Debt, or any other circumstance whatsoever, ABL Agent and Term Loan Agent hereby agree that:


 


(i) any Lien with respect to the ABL Collateral securing any ABL Priority Debt, whether such Lien is now or hereafter held by or on behalf of, or created for the benefit of, ABL Agent or any other ABL Claimholder or any agent or trustee therefor, regardless of how or when acquired, whether by grant, possession, statute, operation of law, subrogation, or otherwise, shall be senior in all respects and prior to any Lien with respect to the ABL Collateral securing (A) any Term Loan Debt or (B) any Excess ABL Debt;


 


(ii) any Lien with respect to the ABL Collateral securing any Term Loan Priority  Debt, whether such Lien is now or hereafter held by or on behalf of, or created for the benefit of, Term Loan Agent or any other Term Loan Claimholder or any agent or trustee therefor, regardless of how or when acquired, whether by grant, possession, statute, operation of law, subrogation, or otherwise, shall be (A) junior and subordinate in all respects to all Liens with respect to the ABL Collateral securing any ABL Priority Debt and (B) senior in all respects and prior to any Lien with respect to the ABL Collateral securing (1) any Excess ABL Debt or (2) any Excess Term Loan Debt;


 


(iii) any Lien with respect to the ABL Collateral securing any Excess ABL Debt, whether such Lien is now or hereafter held by or on behalf of, or created for the benefit of, ABL Agent or any other ABL Claimholder or any agent or trustee therefor, regardless of how or when acquired, whether by grant, possession, statute, operation of law, subrogation, or otherwise, shall be (A) junior and subordinate in all respects to all Liens with respect to the ABL Collateral securing (1) any ABL Priority Debt or (2) any Term Loan Priority Debt and (B) be senior in all respects and prior to any Lien with respect to the ABL Collateral securing any Excess Term Loan Debt; and


 


(iv) any Lien with respect to the ABL Collateral securing any Excess Term Loan Debt, whether such Lien is now or hereafter held by or on behalf of, or created for the benefit of, Term Loan Agent or any other Term Loan Claimholder or any agent or trustee therefor, regardless of how or when acquired, whether by grant, possession, statute, operation of law, subrogation, or otherwise, shall be junior and subordinate in all respects to all Liens with respect to the ABL Collateral securing (A) any ABL Priority Debt, (B) any Term Loan Priority Debt, or (C) any Excess ABL Debt.


 


(b) All Liens with respect to the ABL Collateral securing any ABL Priority Debt shall be and remain senior in all respects and prior to all Liens with respect to the ABL Collateral securing any Term Loan Debt or any Excess ABL Debt, in each case, for all purposes, whether or not such Liens securing any ABL Priority Debt are subordinated to any Lien securing any other obligation of any ABL Grantor or any other person (but only to the extent that such subordination is permitted pursuant to the terms of the ABL Credit Agreement and the Term Loan Credit Agreement, or as contemplated in Section 6.2).  All Liens with respect to the ABL Collateral securing any Term Loan Priority Debt shall be and remain senior in all respects and prior to all Liens with respect to the ABL Collateral securing any Excess ABL Debt or any Excess Term Loan Debt, in each case, for all purposes, whether or not such Liens securing any Term Loan Priority Debt are subordinated to any Lien securing any other obligation of any Term Loan Grantor or any other person (but only to the extent that such subordination is permitted pursuant to the terms of the ABL Credit Agreement and the Term Loan Credit Agreement, or as contemplated in Section 6.2). All Liens with respect to the ABL Collateral securing any Excess ABL Debt shall be and remain senior in all respects and prior to all Liens with respect to the ABL Collateral securing any Excess Term Loan Debt for all purposes, whether or not such Liens securing any Excess ABL Debt are subordinated to any Lien securing any other obligation of any ABL Grantor or any other person (but only to the extent that such subordination is permitted pursuant to the terms of the ABL Credit Agreement and the Term Loan Credit Agreement, or as contemplated in Section 6.2).


 




  





  











  






2.2 Prohibition on Contesting Liens or Claims.  Each of Term Loan Agent and ABL Agent agrees that it will not (and hereby waives any right to), directly or indirectly, contest, or support any other person in contesting, in any proceeding (including any Insolvency Proceeding), (a) the extent, validity, attachment, perfection, priority, or enforceability of a Lien held by or on behalf of any of the  ABL Claimholders in the ABL Collateral (or the extent, validity, allowability, or enforceability of any ABL Debt secured thereby or purported to be secured thereby) or by or on behalf of any of the Term Loan Claimholders in the Term Loan Collateral (or the extent, validity, allowability, or enforceability of any Term Loan Debt secured thereby or purported to be secured thereby), as the case may be, or the provisions of this Agreement; provided, that nothing in this Agreement shall be construed to prevent or impair the rights of ABL Agent, any other ABL Claimholder, Term Loan Agent, or any other Term Loan Claimholder to enforce the terms of this Agreement, including the provisions of this Agreement relating to the priority of the Liens securing the ABL Debt and the Term Loan Debt as provided in Sections 2.1 and 3.


 


2.3 New Liens.


 


(a) So long as the Payment in Full of ABL Priority Debt has not occurred, and so long as no Insolvency Proceeding has been commenced by or against any ABL Grantor, the parties hereto agree that no ABL Grantor shall:


 


(i) grant or permit any additional Liens on any asset (other than Term Loan Priority Collateral) to secure any Term Loan Debt unless such Grantor gives ABL Agent at least 5 Business Days prior written notice thereof and unless such notice also offers to grant a Lien on such asset to secure the ABL Debt concurrently with the grant of a Lien thereon in favor of Term Loan Agent; or


 


(ii) grant or permit any additional Liens on any asset that would constitute ABL Collateral (other than ABL Foreign Collateral) to secure any ABL Debt unless such ABL Grantor gives Term Loan Agent at least 5 Business Days prior written notice thereof and unless such notice also offers to grant a Lien on such asset to secure the Term Loan Debt concurrently with the grant of a Lien thereon in favor of ABL Agent.


 


(b) To the extent that the foregoing provisions are not complied with for any reason, without limiting any other rights and remedies available to ABL Agent or the other ABL Claimholders, Term Loan Agent agrees that any amounts received by or distributed to any of them pursuant to or as a result of Liens granted in contravention of this Section 2.3 shall be subject to Section 4.2.  To the extent that the foregoing provisions are not complied with for any reason, without limiting any other rights and remedies available to Term Loan Agent or the other Term Loan Claimholders, ABL Agent agrees that any amounts received by or distributed to any of them pursuant to or as a result of Liens granted in contravention of this Section 2.3 shall be subject to Section 4.2.


 




  





  











  






2.4 Similar Liens and Agreements.  The parties hereto agree that it is their intention that the ABL Collateral (other than ABL Foreign Collateral) granted to ABL Agent and to Term Loan Agent be identical in all material respects.  In furtherance of the foregoing and of Section 9.8, the parties hereto agree, subject to the other provisions of this Agreement:


 


(i) upon the reasonable request by ABL Agent or Term Loan Agent, to cooperate in good faith (and to direct their counsel to cooperate in good faith) from time to time in order to determine the specific items included in the ABL Collateral (other than ABL Foreign Collateral) and the steps taken or to be taken to perfect their respective Liens thereon and the identity of the respective parties obligated under the ABL Documents and the Term Loan Documents with respect thereto; and


 


(ii) that the ABL Collateral Documents with respect to the ABL Collateral (other than with respect to ABL Foreign Collateral) and Term Loan Collateral Documents with respect to the ABL Collateral, shall be, in all material respects, the same forms of documents other than with respect to the ABL and the Term Loan nature thereof and with respect to the Term Loan Priority Collateral;


 


(b) The foregoing to the contrary notwithstanding, each of the parties agrees that to the extent that ABL Agent or Term Loan Agent obtains a Lien in an asset (of a type that is not included in the types of assets included in the ABL Collateral as of the date hereof or which would not constitute ABL Collateral without a grant of a security interest or lien separate from the ABL Documents or Term Loan Documents, as applicable, as in effect immediately prior to obtaining such Lien on such asset) which the other party to this Agreement elects not to obtain after receiving prior written notice thereof in accordance with the provisions of Section 2.3, the ABL Collateral securing the ABL Debt and the Term Loan Debt will not be identical, and the provisions of the documents, agreements and instruments evidencing such Liens also will not be substantively similar, and any such difference in the scope or extent of perfection with respect to the ABL Collateral resulting therefrom are hereby expressly permitted by this Agreement.


 


(c) The parties hereto acknowledge that the ABL Agent has a first priority Lien on the ABL Foreign Collateral to secure the ABL Canadian Obligations, and that the Term Loan Claimholders do not have a Lien on the ABL Foreign Collateral.  The parties hereto acknowledge that the Term Loan Agent has a first priority Lien on the Term Loan Priority Collateral to secure the Term Loan Debt, and that the ABL Claimholders do not have a Lien on the Term Loan Priority Collateral.


 


SECTION 3.   Exercise of Remedies.


 


3.1 Standstill.  Until the Payment in Full of ABL Priority Debt has occurred, whether or not any Insolvency Proceeding has been commenced by or against any ABL Grantor, Term Loan Agent and the other Term Loan Claimholders will not, except to the extent expressly permitted by Section 3.3 or Section 6:


 


(a) take any Enforcement Action with respect to any ABL Collateral; provided, that (i) if a Term Loan Default has occurred and is continuing, Term Loan Agent may take Enforcement Actions after the expiration of the applicable Standstill Period (it being understood that if at any time after the delivery of a Standstill Notice that commences a Standstill Period, the Term Loan Default which gave rise to such Standstill Period is no longer continuing, Term Loan Agent may not take Enforcement Actions until the expiration of a new Standstill Period commenced by a new Standstill Notice relative to the occurrence of a new Term Loan Default that was not continuing as of the date of the delivery of the immediately prior Standstill Notice, and (ii) in no event shall Term Loan Agent or any other Term Loan Claimholder take any Enforcement Action with respect to the ABL Collateral if, notwithstanding the expiration of the most recent Standstill Period, ABL Agent or any other ABL Claimholder shall have commenced prior to the expiration of such most recent Standstill Period (or thereafter but prior to the commencement of any Enforcement Action by Term Loan Agent with respect to all or any material portion of the ABL Collateral) and be diligently pursuing in good faith an Enforcement Action with respect to all or any material portion of the ABL Collateral, and (iii) prior to taking any Enforcement Action, or action to commence or petition for any Insolvency Proceeding after the end of the most recent Standstill Period, Term Loan Agent shall give ABL Agent not more than 20 Business Days and not less than 5 Business Days prior written notice of the intention of Term Loan Agent or any other Term Loan Claimholder to exercise such rights and remedies, including specifying the rights and remedies that it intends to exercise, which notice may be sent prior to the end of the then existing Standstill Period (provided that the failure to give such notice shall only affect Term Loan Agent's right to commence an Enforcement Action but shall otherwise not affect Term Loan Agent's other rights under this Agreement).


 




  





  











  






(b) commence or join with any person (other than ABL Agent) in commencing, or filing a petition for, any Insolvency Proceeding against any ABL Grantor until after the expiration of the Standstill Period;


 


(c) contest, protest, or object to any Enforcement Action by ABL Agent or any other ABL Claimholder and has no right to direct ABL Agent to take any Enforcement Actions or take any other action under the ABL Documents, in each case with respect to the ABL Collateral; and


 


(d) object to (and waive any and all claims with respect to) the forbearance by ABL Agent or the ABL Claimholders from taking any Enforcement Action with respect to the ABL Collateral.


 


3.2 Exclusive Enforcement Rights.  Until the Payment in Full of ABL Priority Debt has occurred, whether or not any Insolvency Proceeding has been commenced by or against any ABL Grantor, but subject to the first proviso to Sections 3.1(a), Section 3.1(b), Section 3.3 and Section 6, the ABL Claimholders shall have the exclusive right to take Enforcement Actions with respect to the ABL Collateral without any consultation with or the consent of any Term Loan Claimholder; provided however, that the Liens of Term Loan Agent shall attach to any proceeds (other than proceeds applied to the ABL Priority Debt) of any ABL Collateral released or disposed of, subject to the relative priorities described in Section 2 and the application of proceeds otherwise provided in Section 4.1.  In connection with any Enforcement Action with respect to ABL Collateral, the ABL Claimholders may enforce the provisions of the ABL Documents and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their sole discretion.  Such exercise and enforcement shall include the rights of an agent appointed by them to Dispose of ABL Collateral, to incur expenses in connection with such Disposition, and to exercise all the rights and remedies of a secured creditor under applicable law.  After the Payment in Full of ABL Priority Debt or the expiration of the applicable Standstill Period, whether or not any Insolvency Proceeding has been commenced by or against any ABL Grantor, but subject to the first proviso to Section 3.1(a), Section 3.1(b), Section 3.3 and Section 6, the Term Loan Agent shall have the right to take Enforcement Actions with respect to the ABL Collateral without any consultation with or the consent of any ABL Claimholder but otherwise subject to the other terms and provisions of this Agreement including the relative priorities in the ABL Collateral described in Section 2 and the application of proceeds provided in Section 4.1.  In connection with any Enforcement Action with respect to the ABL Collateral by Term Loan Agent, the Term Loan Agent may enforce the provisions of the Term Loan Documents and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their sole discretion, subject to the other terms and provisions of this Agreement.  Such exercise and enforcement shall include the rights of an agent appointed by them to Dispose of ABL Collateral, to incur expenses in connection with such Disposition, and to exercise all the rights and remedies of a secured creditor under applicable law.


 




  





  











  






3.3 Term Loan Permitted Actions.  Anything to the contrary in this Section 3 notwithstanding, any Term Loan Claimholder may:


 


(a) if an Insolvency Proceeding has been commenced by or against any Term Loan Grantor, file a proof of claim or statement of interest with respect to the Term Loan Debt;


 


(b) take any action (not adverse to the priority status of the Liens on the ABL Collateral securing the ABL Priority Debt, or the rights of ABL Agent or any other ABL Claimholder to undertake Enforcement Actions with respect to the ABL Collateral) in order to create, perfect, preserve or protect its Lien in and to the Collateral;


 


(c) file any necessary or appropriate responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding, or other pleading made by any person objecting to or otherwise seeking the disallowance of the claims of the Term Loan Claimholders, including any claims secured by the Collateral, if any;


 


(d) vote on any plan of reorganization and make any filings and motions that are, in each case, not in contravention of the provisions of this Agreement, with respect to the Term Loan Debt and the ABL Collateral;


 


(e) join (but not exercise any control with respect to) any judicial foreclosure proceeding or other judicial lien enforcement proceeding with respect to the ABL Collateral initiated by ABL Agent to the extent that any such action could not reasonably be expected, in any material respect, to restrain, hinder, limit, delay for any material period or otherwise interfere with an Enforcement Action by ABL Agent (it being understood that neither Term Loan Agent nor any Term Loan Claimholder shall be entitled to receive any proceeds thereof unless otherwise expressly permitted herein);


 


(f) file any pleadings, objections, motions or agreements that assert rights or interests available to unsecured creditors of the Term Loan Grantors arising under either any Insolvency Proceeding or applicable non-bankruptcy law, in each case not inconsistent with the terms of this Agreement;


 


(g) exercise any of its rights or remedies (including acceleration of the Term Loan Debt) with respect to any of the ABL Collateral after the termination of the Standstill Period to the extent permitted by Section 3.1;


 


(h) make a cash bid on all or any portion of the ABL Collateral in any foreclosure proceeding or action;


 


(i) credit bid on all or any portion of the ABL Collateral, provided Payment in Full of ABL Priority Debt occurs prior to or in connection with any such credit bid; and


 


(j) engage consultants, valuation firms, investment bankers, and perform or engage third parties to perform audits, examinations and appraisals of the ABL Collateral for the sole purpose of valuing the ABL Collateral and not for the purpose of marketing or conducting a disposition of such ABL Collateral, in each case in accordance with the Term Loan Documents; provided, however, that the Term Loan Agent shall not take any of the foregoing actions if they would interfere in any material respect with any Enforcement Actions with respect to the ABL Collateral by the ABL Agent.


 


3.4 Retention of Proceeds.  Neither Term Loan Agent nor any other Term Loan Claimholder shall be permitted to retain any proceeds of ABL Collateral in connection with any Enforcement Action unless and until the Payment in Full of ABL Priority Debt has occurred, and any such proceeds received or retained in any other circumstance will be subject to Section 4.2.


 




  





  











  






3.5 Non-Interference.  Subject to any specific provision of this Agreement to the contrary, Term Loan Agent hereby:


 


(a) agrees that Term Loan Agent and the other Term Loan Claimholders will not take any action that would restrain, hinder, limit, delay, or otherwise interfere with in any material respect any Enforcement Action by ABL Agent or any other ABL Claimholder with respect to the ABL Collateral, or that is otherwise not prohibited hereunder, including any Disposition of the ABL Collateral, whether by foreclosure or otherwise;


 


(b) until the Payment in Full of ABL Priority Debt has occurred and subject to Section 3.7, waives any and all rights it or the Term Loan Claimholders may have as a junior lien creditor or otherwise to object to the manner in which ABL Agent or the ABL Claimholders seek to enforce or collect the ABL Debt or the Liens securing the ABL Debt granted in any of the ABL Collateral, regardless of whether any action or failure to act by or on behalf of ABL Agent or the ABL Claimholders is adverse to the interest of the Term Loan Claimholders;


 


(c) waives any and all rights it or any other Term Loan Claimholders may have to oppose, object to, or seek to restrict the ABL Agent or the other ABL Claimholders from exercising their rights to set off or credit bid ABL Priority Debt in connection with the Disposition of any ABL Collateral; and


 


(d) acknowledges and agrees that no covenant, agreement or restriction contained in the Term Loan Collateral Documents or any other Term Loan Document (other than this Agreement) shall be deemed to restrict in any way the rights and remedies of ABL Agent or the ABL Claimholders with respect to the ABL Collateral as set forth in this Agreement and the ABL Credit Documents (provided that the foregoing shall not be deemed a waiver of any Term Loan Default or any rights against the Term Loan Grantors).


 


3.6 Unsecured Creditor Remedies.  Except as set forth in Sections 2.2, 3.1, 3.5, and 6, Term Loan Agent and the other Term Loan Claimholders may exercise rights and remedies as unsecured creditors generally against any Term Loan Grantor in accordance with the terms of the Term Loan Documents and applicable law so long as doing so is not, directly or indirectly, inconsistent with the terms of this Agreement; provided, that in the event that any Term Loan Claimholder becomes a judgment Lien creditor in respect of ABL Collateral as a result of its enforcement of its rights as an unsecured creditor with respect to the Term Loan Debt, such judgment Lien shall be subject to the terms of this Agreement for all purposes as the other Liens in the ABL Collateral securing the Term Loan Debt.


 


3.7 Commercially Reasonable Dispositions; Notice of Exercise.  ABL Agent agrees that any Enforcement Action by ABL Agent with respect to ABL Collateral subject to Article 9 of the UCC shall be conducted by ABL Agent in a commercially reasonable manner.  Term Loan Agent agrees that any Enforcement Action by Term Loan Agent with respect to ABL Collateral subject to Article 9 of the UCC shall be conducted by Term Loan Agent in a commercially reasonable manner.  ABL Agent shall provide reasonable prior notice to Term Loan Agent of its initial material Enforcement Action taken after the delivery of each Standstill Notice that commences a Standstill Period.  Term Loan Agent shall provide reasonable prior notice to ABL Agent of its initial material Enforcement Action at any time permitted after the expiration of each Standstill Period.


 


SECTION 4.   Proceeds.


 


4.1 Application of Proceeds.


 


(a) Regardless of whether an Insolvency Proceeding has been commenced by or against any ABL Grantor, any ABL Collateral, or proceeds thereof, received in connection with any Enforcement Action and, except as otherwise provided in Sections 6.5 and 6.9(c), any ABL Collateral or proceeds thereof (or amounts distributed on account of a Lien in the ABL Collateral or the proceeds thereof) received in connection with any Insolvency Proceeding involving an ABL Grantor shall (at such time as such ABL Collateral or proceeds or other amounts have been monetized) be applied:


 


(i) first, to the payment in full in cash of costs and expenses of ABL Agent in connection with such Enforcement Action or Insolvency Proceeding,


 


(ii) second, to the payment in full in cash or cash collateralization of the ABL Priority Debt in accordance with the ABL Documents,


 


(iii) third, to the payment in full in cash of costs and expenses of Term Loan Agent in connection with such Enforcement Action or Insolvency Proceeding (to the extent Term Loan Agent's Enforcement Action or action in the Insolvency Proceeding was permitted hereunder),


 


(iv) fourth, to the payment in full in cash of the Term Loan Priority Debt in accordance with the Term Loan Documents,


 


(v) fifth, to the payment in full in cash of the Excess ABL Debt in accordance with the ABL Documents, and


 


(vi) sixth, to the payment in full in cash of the Excess Term Loan Debt in accordance with the Term Loan Documents.


 


(b) Notwithstanding the foregoing, if any Enforcement Action with respect to the ABL Collateral produces non-cash proceeds that constitute ABL Collateral, then such non-cash proceeds shall be held by the ABL Agent as additional collateral and, at such time as such non-cash proceeds are monetized, shall be applied in the order of application set forth above. ABL Agent shall have no duty or obligation to Dispose of such non-cash proceeds and may Dispose of such non-cash proceeds or continue to hold such non-cash proceeds, in each case, in its discretion; provided, that any non-cash proceeds received by ABL Agent that constitute ABL Collateral (other than any non-cash proceeds received on account of any Term Loan Secured Claim) may be distributed by ABL Agent to the ABL Claimholders in full or partial satisfaction of ABL Priority Debt in an amount determined by ABL Agent acting at the direction of the requisite ABL Claimholders or as a court of competent jurisdiction may direct pursuant to a Final Order, including an order confirming a plan of reorganization in an Insolvency Proceeding.  No receipt and application of any ABL Collateral, or proceeds thereof, received in the ordinary course of business and absent any affirmative enforcement action or remedies (other than the exercise of control with respect to any deposit account or securities account collateral and any notification to account debtors) by ABL Agent to collect or otherwise realize upon such ABL Collateral (such ABL Collateral, and the proceeds thereof, "Ordinary Course Collections") shall constitute an Enforcement Action for purposes of this Agreement and all Ordinary Course Collections received by ABL Agent may be applied, reversed, reapplied, credited, or reborrowed, in whole or in part, pursuant to the ABL Credit Agreement.


 


4.2 Turnover.


 


(a) Unless and until the Payment in Full of ABL Priority Debt has occurred (irrespective of whether any Insolvency Proceeding has been commenced by or against any ABL Grantor), any ABL Collateral, or proceeds thereof (including assets or proceeds subject to Liens referred to in the final sentence of Section 2.3 or the proviso in Section 3.6), received by Term Loan Agent or any Term Loan Claimholder (i) in connection with an Enforcement Action with respect to the ABL Collateral by Term Loan Agent or any Term Loan Claimholder, or (ii) as a result of the collusion by Term Loan Agent or any Term Loan Claimholder with any ABL Grantor in violating the rights of ABL Agent or any other ABL Claimholder (within the meaning of Section 9-332 of the UCC), shall be segregated and held in trust and promptly (and in no event later than three Business Days) paid over to ABL Agent for the benefit of the ABL Claimholders in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct.  ABL Agent is hereby authorized to make any such endorsements as agent for the Term Loan Claimholders and this authorization is coupled with an interest and is irrevocable until the Payment in Full of ABL Priority Debt.


 




  





  











  






(b) Unless and until the Payment in Full of ABL Priority Debt has occurred and except as otherwise expressly provided in Section 2.1, Section 6.5 or  Section 6.9, if an ABL Grantor (or any of its assets) is the subject of an Insolvency Proceeding and if any distribution is received by Term Loan Agent or any Term Loan Claimholder on account of their Term Loan Secured Claims solely in respect of the ABL Collateral in connection with such Insolvency Proceeding (unless such distribution is made under a confirmed plan of reorganization of such ABL Grantor that is accepted by the requisite affirmative vote of all classes composed of the secured claims of the ABL Claimholders or otherwise provides for the Payment in Full of ABL Priority Debt), then such distribution shall be segregated and held in trust and promptly (and in no event later than three Business Days) paid over to ABL Agent for the benefit of the ABL Claimholders in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct.  For the avoidance of doubt, unless and until the Payment in Full of ABL Priority Debt has occurred, the Term Loan Agent shall be required to turnover to the ABL Agent and the ABL Agent shall be entitled to apply (or, in the case of non-cash proceeds, hold) in accordance with Section 4.1 any cash or non-cash distribution received by the Term Loan Claimholders on account of their Term Loan Secured Claims solely in respect of the ABL Collateral pursuant to a confirmed plan of reorganization of an ABL Grantor (unless such distribution is made under a confirmed plan of reorganization of such ABL Grantor that is accepted by the requisite affirmative vote of all classes composed of the secured claims of the ABL Claimholders or otherwise provides for the Payment in Full of ABL Priority Debt) irrespective of whether such plan of reorganization (or any Final Order in respect thereof) purports to find that the distribution to the ABL Claimholders pays the ABL Priority Debt in full.  ABL Agent is hereby authorized to make any such endorsements as agent for the Term Loan Claimholders and this authorization is coupled with an interest and is irrevocable until the Payment in Full of ABL Debt.


 


(c) Notwithstanding the foregoing, nothing in this Agreement shall prohibit (i) the receipt by the Term Loan Agent or any Term Loan Claimholder of the required payments of interest, principal (including scheduled amortization payments under the Term Loan Credit Agreement as in effect on the date hereof) and other amounts owed in respect of the Term Loan Priority Debt so long as such receipt is not (a) the direct or indirect result of the exercise by Term Loan Agent or any Term Loan Claimholder of rights or remedies as a secured creditor (including set-off) with respect to ABL Collateral or enforcement in contravention of this Agreement of any Lien on the ABL Collateral held by any of them or (b) as a result of any Term Loan Claimholder's collusion with any ABL Grantor in violating the rights of the ABL Claimholders (within the meaning of Section 9-332 of the UCC or any similar applicable law) with respect to ABL Collateral or (ii) the receipt by the ABL Agent or any ABL Claimholder of the required payments of interest, principal and other amounts owed in respect of the ABL Priority Debt so long as such receipt is not (a) the direct or indirect result of the exercise by the ABL Agent or any ABL Claimholder of rights or remedies as a secured creditor (including set-off) with respect to Term Loan Priority Collateral or enforcement in contravention of this Agreement of any Lien held by any of them or (b) as a result of any ABL Claimholder's collusion with any Term Loan Grantor in violating the rights of the Term Loan Claimholders (within the meaning of Section 9-332 of the UCC or any similar applicable law) with respect to Term Loan Priority Collateral.


 


4.3 No Subordination of the Relative Priority of Claims.  The parties agree that the subordination of Liens set forth herein is with respect to the priority of their respective Liens in and to the ABL Collateral only and shall not constitute a subordination of the Term Loan Debt to the ABL Debt or a subordination of the ABL Debt to the Term Loan Debt.


 




  





  











  






4.4 Non-Lienable Assets.  Notwithstanding anything to the contrary contained herein (including Section 4.3), if any assets, licenses, rights, or privileges of any Grantor are incapable of being the subject of a Lien in favor of a secured party (including because of restrictions under applicable law, the nature of the rights or interests of such Grantor, or the absence of a consent to such Lien by a third party and irrespective of whether the applicable collateral documents attempt (or purport) to encumber such assets, licenses, rights, or privileges (excluding any Term Loan Priority Collateral, the "Inalienable Interests"), then the ABL Agent and the Term Loan Agent agree that any distribution or recovery ABL Agent, or the other ABL Claimholders, or Term Loan Agent, or the other Term Loan Claimholders, may receive with respect to, or that is allocable to, the value of any such Inalienable Interests, or any proceeds thereof, whether received in their capacity as unsecured creditors or otherwise, shall be turned over and applied in accordance with Sections 4.1 and 4.2 as if such distribution or recovery were, or were on account of, ABL Collateral or the proceeds of ABL Collateral.  Until the Payment in Full of ABL Priority Debt occurs, the Term Loan Agent hereby appoints the ABL Agent, and any officer or agent of the ABL Agent, with full power of substitution, the attorney-in-fact of each Term Loan Claimholder for the limited purpose of carrying out the provisions of this Section 4.4 and taking any action and executing any instrument that the ABL Agent may reasonably deem necessary or advisable to accomplish the purposes of this Section 4.4, which appointment is irrevocable and coupled with an interest.


 


4.5 Prepayments.  Except as permitted by Sections 6.6(a)(i) and (ii) of the ABL Credit Agreement (as in effect on the date hereof or as such provisions may be amended or modified with the written consent of Term Loan Agent), without the prior written consent of ABL Agent, no Term Loan Claimholder will take, demand, or receive from any Grantor any prepayment of principal (whether optional, voluntary, mandatory, or otherwise or by set-off, redemption, defeasance, or other payment or distribution) with respect to any Term Loan Debt; provided, that the foregoing shall not be deemed to restrict any scheduled amortization payments required by the Term Loan Credit Agreement as in effect on the date hereof.  If any such prepayments are received at any time before the Payment in Full of ABL Priority Debt by one or more of the Term Loan Claimholders, then such amounts shall be held in trust for the benefit of the ABL Claimholders and promptly (but in no event later than three Business Days) paid over to ABL Agent for application in accordance with Section 4.1.


 


SECTION 5.   Releases; Dispositions; Other Agreements.


 


5.1 Releases.


 


(a)   Until the Payment in Full of ABL Priority Debt occurs, ABL Agent shall have the exclusive right to make determinations regarding the release or Disposition of any ABL Collateral pursuant to the terms of the ABL Documents or in accordance with the provisions of this Agreement, in each case without any consultation with, consent of, or notice to Term Loan Agent or any Term Loan Claimholder.


 


(b) If, in connection with an Enforcement Action by ABL Agent as provided for in Section 3, ABL Agent releases any of its Liens on any part of the ABL Collateral (or such Liens are released by operation of law) or releases any ABL Grantor from its obligations in respect of the ABL Debt, then the Liens of Term Loan Agent on such ABL Collateral shall be automatically, unconditionally, and simultaneously released; provided, that no release of the Liens of Term Loan Agent with respect to any ABL Collateral will be deemed to have occurred (a) upon the Payment in Full of ABL Priority Debt (other than a Payment in Full of ABL Priority Debt occurring as a result of the application of the proceeds of the Disposition of such property to the ABL Priority Debt) or (b) in a Refinancing of ABL Priority Debt with secured indebtedness that is incurred contemporaneously with or promptly after the payment or discharge of such pre-existing ABL Priority Debt and that constitutes ABL Priority Debt.


 




  





  











  






(c) If, in connection with any Disposition of any ABL Collateral permitted under the terms of the ABL Documents and Term Loan Documents, ABL Agent releases any of its Liens on the portion of the ABL Collateral that is the subject of such Disposition, or releases any ABL Grantor from its obligations in respect of the ABL Debt (if such ABL Grantor is the subject of such Disposition), in each case other than (i) in connection with the Payment in Full of ABL Priority Debt, or (ii) after the occurrence and during the continuance of any Term Loan Default, then the Liens of Term Loan Agent on such ABL Collateral, and the obligations of such Grantor in respect of the Term Loan Debt, shall be automatically, unconditionally, and simultaneously released; provided, that no release of the Liens of Term Loan Agent with respect to any ABL Collateral will be deemed to have occurred in a Refinancing of ABL Priority Debt with secured indebtedness that is incurred contemporaneously with or promptly after the payment or discharge of such pre-existing ABL Priority Debt and that constitutes ABL Priority Debt.


 


(d) In the event of any private or public Disposition of all or any material portion of the ABL Collateral by one or more ABL Grantors with the consent of ABL Agent after the occurrence and during the continuance of a ABL Default (and prior to the Payment in Full of ABL Priority Debt), which Disposition is conducted by such ABL Grantors with the consent of ABL Agent in connection with good faith efforts by ABL Agent to collect the ABL Priority Debt through the Disposition of ABL Collateral (any such Disposition, a "Default Disposition"), then the Liens of Term Loan Agent on such ABL Collateral shall be automatically, unconditionally, and simultaneously released so long as (i) ABL Agent also releases its Liens on such ABL Collateral, (ii) the net cash proceeds of any such Default Disposition are applied in accordance with Section 4.1 (as if they were proceeds received in connection with an Enforcement Action), and (iii) with respect to ABL Collateral that is subject to Article 9 of the UCC, the ABL Grantors consummating such Default Disposition have conducted such Default Disposition in a commercially reasonable manner as if such Default Disposition were a disposition of collateral by a secured creditor in accordance with Article 9 of the UCC.


 


(e) To the extent that the Liens of Term Loan Agent in and to any ABL Collateral are to be released as provided in this Section 5.1,


 


(i) Term Loan Agent shall promptly, upon the written request of ABL Agent, execute and deliver such release documents and confirmations of the authorization to file UCC amendments, in each case, as ABL Agent may reasonably require in connection with such Disposition to evidence and effectuate such release; provided, that any such release or UCC amendment by Term Loan Agent shall not extend to or otherwise affect any of the rights, if any, of Term Loan Agent to the proceeds from any such Disposition of any ABL Collateral,


 


(ii) from and after the time that the Liens of Term Loan Agent in and to the ABL Collateral are released, Term Loan Agent shall be automatically and irrevocably deemed to have authorized ABL Agent to file UCC amendments releasing the ABL Collateral subject to such Disposition as to UCC financing statements between any ABL Grantor and Term Loan Agent or any other Term Loan Claimholder to evidence such release, and


 


(iii) in accordance with the provisions of applicable law, the Liens of Term Loan Agent shall automatically attach to any proceeds of any ABL Collateral subject to any such Disposition to the extent not used to repay ABL Priority Debt in accordance with the terms of this Agreement.


 


(f) Until the Payment in Full of ABL Priority Debt occurs, Term Loan Agent hereby irrevocably constitutes and appoints ABL Agent and any officer or agent of ABL Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Term Loan Agent or such holder or in ABL Agent's own name, from time to time in ABL Agent's discretion, for the purpose of carrying out the terms of this Section 5.1, to take any and all appropriate action and to execute any and all documents and instruments that may be necessary to accomplish the purposes of this Section 5.1, including any financing statement amendments (form UCC3) or any other endorsements or other instruments of transfer or release.


 




  





  











  






(g) Until the Payment in Full of ABL Priority Debt occurs, to the extent that ABL Agent or the ABL Claimholders (i) have released any Lien on ABL Collateral or any ABL Grantor with respect to the ABL Priority Debt, and any such Liens or obligations are later reinstated, or (ii) obtain any new Liens from any Grantor (other than with respect to ABL Foreign Collateral) or obtain a guaranty from any Grantor of the ABL Debt (other than with respect to the ABL Canadian Obligations), then Term Loan Agent, for itself and for the Term Loan Claimholders, shall be entitled to obtain a Lien on any such Collateral, subject to the terms (including the lien subordination provisions to the extent constituting ABL Collateral) of this Agreement, and a guaranty from such Grantor, as the case may be.


 


(h) Notwithstanding anything contained in this Agreement to the contrary, in the event of any Disposition or series of related Dispositions that includes ABL Collateral and Term Loan Priority Collateral free and clear of the Liens on such Collateral, then solely for purposes of this Agreement, unless otherwise agreed by ABL Agent and Term Loan Agent, the proceeds of any such Disposition shall be allocated to the ABL Collateral in an amount not less than the sum of (A) the book value determined in accordance with GAAP, but not less than cost, of any ABL Collateral consisting of inventory that is the subject of such Disposition (or, in the case of a Disposition of Equity Interests issued by a Grantor, any ABL Collateral consisting of inventory in which such Grantor has an interest), determined as of the date of such Disposition and (B) the book value determined in accordance with GAAP of any ABL Collateral consisting of accounts that are the subject of such Disposition (or, in the case of a Disposition of Equity Interests issued by a Grantor, any ABL Collateral consisting of accounts in which such Grantor has an interest), determined as of the date of such Disposition.


 


5.2 Insurance.  Unless and until the Payment in Full of ABL Priority Debt has occurred:


 


(a) (i) ABL Agent and the ABL Claimholders shall have the sole and exclusive right, subject to the rights of ABL Grantors under the ABL Documents, to adjust and settle any claim under any insurance policy covering the ABL Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding (or any deed in lieu of condemnation) affecting the ABL Collateral; and (ii) all proceeds of any such insurance policy and any such award (or any payments with respect to a deed in lieu of condemnation) shall be paid, subject to the rights of ABL Grantors under the ABL Documents and the Term Loan Documents, first to the ABL Claimholders and the Term Loan Claimholders in accordance with the priorities set forth in Section 4.1, until paid in full in cash, and second, to the owner of the subject property, such other person as may be entitled thereto, or as a court of competent jurisdiction may otherwise direct; and


 


(b) if Term Loan Agent or any other Term Loan Claimholder shall, at any time, receive any proceeds of any such insurance policy or any such award or payment in contravention of this Section 5.2, it shall pay such proceeds over to ABL Agent in accordance with the terms of Section 4.2.


 


(c) To effectuate the foregoing, each of the Agents will receive separate lender's loss payable endorsements naming themselves as loss payee and additional insured, as their interests may appear, with respect to policies which insure ABL Collateral hereunder.  If any insurance claim includes both ABL Collateral and Term Loan Priority Collateral, the insurer will not settle such claim separately with respect to ABL Collateral and Term Loan Priority Collateral, then, solely for the purposes of this Agreement and subject to the rights of the Grantors under the ABL Documents and the Term Loan Documents, the allocation of proceeds of such insurance policy shall be allocated to the ABL Collateral in an amount equal to the sum of (A) the book value determined in accordance with GAAP, but not less than cost, of any ABL Collateral consisting of inventory that is the subject of such loss, determined as of the date of such loss, (B) the book value determined in accordance with GAAP of any ABL Collateral consisting of accounts that are the subject of such loss, determined as of the date of such loss, and (C) the fair market value of all other ABL Collateral that is the subject of such loss, determined as of the date of such loss.


 




  





  











  






5.3 Amendments; Refinancings; Legend.


 


(a) The ABL Documents may be amended, supplemented, or otherwise modified in accordance with their terms (including any covenant with the ABL Grantors that restrict modification and amendment of the Term Loan Documents) and the ABL Debt may be Refinanced, in each case without notice to, or the consent of, Term Loan Agent or any other Term Loan Claimholder, all without affecting the lien subordination or other provisions of this Agreement; provided, that, in the case of a Refinancing, the holders of such Refinancing debt bind themselves (in a writing addressed to Term Loan Agent) to the terms of this Agreement; provided further, that any such amendment, supplement, modification, or Refinancing shall not, without the prior written consent of Term Loan Agent (which it shall be authorized to consent to based upon an affirmative vote of the Term Loan Claimholders holding no more than a majority of the debt under the Term Loan Credit Agreement) contravene the provisions of this Agreement.


 


(b) The Term Loan Documents may be amended, supplemented, or otherwise modified in accordance with their terms (including any covenant with the Term Loan Grantors that restrict modification and amendment of the ABL Documents) and the Term Loan Debt may be Refinanced, in each case without notice to, or the consent of, ABL Agent or the ABL Claimholders, all without affecting the lien subordination or other provisions of this Agreement; provided, that, in the case of a Refinancing, the holders of such Refinancing debt bind themselves (in a writing addressed to ABL Agent) to the terms of this Agreement; provided further, that any such amendment, supplement, modification, or Refinancing shall not, without the prior written consent of ABL Agent (which it shall be authorized to consent to based upon an affirmative vote of the ABL Claimholders holding no more than a majority of the debt under the ABL Credit Agreement) contravene the provisions of this Agreement.


 


(c) Grantors agree that any Term Loan Collateral Documents shall at all times include the following language (or language to similar effect approved by ABL Agent):


 


"Anything herein to the contrary notwithstanding, the liens and security interests granted herein, the exercise of any right or remedy with respect thereto, and certain of the rights of the holder hereof are subject to the provisions of the Intercreditor Agreement dated as of ______, 2012, (as amended, restated, supplemented, or otherwise modified from time to time, the "Intercreditor Agreement"), by and between Wells Fargo Capital Finance, LLC, as ABL Agent, and Wells Fargo Bank, National Association, as Term Loan Agent.  In the event of any conflict between the terms of the Intercreditor Agreement and this agreement, the terms of the Intercreditor Agreement shall govern and control."


 


(d) ABL Agent and Term Loan Agent each (i) will use its commercially reasonable efforts to notify the other parties of any written amendment or modification to any ABL Document or any Term Loan Document, as applicable, but the failure to do so will not create a cause of action against the party failing to give such notice or create any claim or right on behalf of any third party or impact the effectiveness of any such amendment or modification, and (ii) will, upon request of the other party, provide copies of all such modifications or amendments and copies of all other relevant documentation to the other Persons.


 


5.4 Bailee for Perfection.


 


(a) ABL Agent and Term Loan Agent each agree to hold or control that part of the ABL Collateral that is in its possession or control (or in the possession or control of its agents or bailees) to the extent that possession or control thereof is taken to perfect a Lien thereon under the UCC or other applicable law (such ABL Collateral being referred to as the "Pledged Collateral"), as bailee and as a non-fiduciary representative for Term Loan Agent or ABL Agent, as applicable (such bailment and agency being intended, among other things, to satisfy the requirements of Sections 8-301(a)(2), 9-313(c), 9-104, 9-105, 9-106, and 9-107 of the UCC), solely for the purpose of perfecting the security interest granted under the Term Loan Documents or the ABL Documents, as applicable, subject to the terms and conditions of this Section 5.4.  Unless and until the Payment in Full of ABL Priority Debt, Term Loan Agent agrees to promptly notify ABL Agent of any Pledged Collateral held by it or by any other Term Loan Claimholder, and, immediately upon the request of ABL Agent at any time prior to the Payment in Full of ABL Priority Debt, Term Loan Agent agrees to deliver to ABL Agent any such Pledged Collateral held by it or by any other Term Loan Claimholder, together with any necessary endorsements (or otherwise allow ABL Agent to obtain control of such Pledged Collateral).


 




  





  











  






(b) ABL Agent shall have no obligation whatsoever to Term Loan Agent or any other Term Loan Claimholder to ensure that the Pledged Collateral is genuine or owned by any of ABL Grantors or to preserve rights or benefits of any person except as expressly set forth in this Section 5.4.  Term Loan Agent shall have no obligation whatsoever to ABL Agent or any other ABL Claimholder to ensure that the Pledged Collateral is genuine or owned by any of ABL Grantors or to preserve rights or benefits of any person except as expressly set forth in this Section 5.4.  The duties or responsibilities of ABL Agent under this Section 5.4 shall be limited solely to holding or controlling the Pledged Collateral as bailee and non-fiduciary representative in accordance with this Section 5.4 and delivering the Pledged Collateral upon a Payment in Full of ABL Priority Debt as provided in Section 5.8.  The duties or responsibilities of Term Loan Agent under this Section 5.4 shall be limited solely to holding or controlling the Pledged Collateral as bailee and non-fiduciary representative in accordance with this Section 5.4.


 


(c) ABL Agent acting pursuant to this Section 5.4 shall not have by reason of the ABL Collateral Documents, the Term Loan Collateral Documents, or this Agreement a fiduciary relationship in respect of Term Loan Agent or any other Term Loan Claimholder.  Term Loan Agent acting pursuant to this Section 5.4 shall not have by reason of the ABL Collateral Documents, the Term Loan Collateral Documents, or this Agreement a fiduciary relationship in respect of ABL Agent or any other ABL Claimholder.


 


(d) Upon the payment (or cash collateralization, as applicable) in full in cash of all ABL Debt, ABL Agent shall, to the extent permitted by applicable law, deliver the remaining tangible Pledged Collateral (if any) together with any necessary endorsements, first, to Term Loan Agent to the extent Term Loan Debt remain outstanding as confirmed in writing by Term Loan Agent, and, to the extent that Term Loan Agent confirms no Term Loan Debt are outstanding, second, to Borrowers to the extent no ABL Debt or Term Loan Debt remain outstanding (in each case, so as to allow such person to obtain possession or control of such Pledged Collateral).  At such time, ABL Agent further agrees to take all other action reasonably requested by Term Loan Agent at the expense of Borrowers (including amending any outstanding control agreements) to enable Term Loan Agent to obtain a first priority security interest in the Pledged Collateral.


 


5.5 When Payment in Full of ABL Debt Deemed to Not Have Occurred.  If Borrowers enter into any Refinancing of the ABL Debt, then neither a Payment in Full of ABL Priority Debt nor a discharge or payment in full of the Excess ABL Debt shall be deemed to have occurred for all purposes of this Agreement, and the obligations under such Refinancing of such ABL Debt shall be treated as ABL Debt for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of ABL Collateral set forth herein, and ABL Agent under the ABL Documents effecting such Refinancing shall be ABL Agent for all purposes of this Agreement.  ABL Agent under such ABL Documents shall agree (in a writing addressed to Term Loan Agent accompanied by a complete copy of the relevant new ABL Documents) to be bound by the terms of this Agreement and Term Loan Agent agrees to acknowledge and accept such writing.


 


5.6 Purchase Option.


 


(a) Upon the occurrence and during the continuation of a Triggering Event, then, in any such case, any one or more of the Term Loan Claimholders (acting in their individual capacity or through one or more affiliates) shall have the right, but not the obligation (each Term Loan Claimholder having a ratable right to make the purchase, with each Term Loan Claimholder's right to purchase being automatically proportionately increased by the amount not purchased by another Term Loan Claimholder), upon 5 Business Days prior written notice from (or on behalf of) such Term Loan Claimholders (a "Purchase Notice") to ABL Agent to acquire from the ABL Claimholders all (but not less than all) of the right, title, and interest of the ABL Claimholders in and to the ABL Priority Debt and the ABL Documents.  The Purchase Notice, if given, shall be irrevocable.


 


(b) On the date specified by Term Loan Agent in the Purchase Notice (which shall not be more than 5 Business Days after the receipt by ABL Agent of the Purchase Notice), the ABL Claimholders shall sell to the purchasing Term Loan Claimholders and the purchasing Term Loan Claimholders shall purchase from the ABL Claimholders, the ABL Priority Debt.


 


(c) On the date of such purchase and sale, the purchasing Term Loan Claimholders shall


 


(i) pay to ABL Agent, for the benefit of the ABL Claimholders, as the purchase price therefor, the full amount of all the ABL Priority Debt, other than indemnification obligations for which no claim or demand for payment has been made at such time, and other than ABL Priority Debt cash collateralized in accordance with clause (c)(ii) below) then outstanding and unpaid,


 


(ii) furnish cash collateral to ABL Agent in such amounts as ABL Agent determines is reasonably necessary to secure ABL Agent and the ABL Claimholders in respect of (A) any issued and outstanding Letters of Credit (but not in any event in an amount greater than the amount required under the ABL Credit Agreement as in effect on the date hereof) of the aggregate undrawn amount of such Letters of Credit) (such cash collateral shall be applied to the reimbursement of any drawing under a Letter of Credit as and when such drawing is paid and, if a Letter of Credit expires undrawn, the cash collateral held by ABL Agent in respect of such Letter of Credit shall be remitted to the Term Loan Agent for the benefit of the purchasing Term Loan Claimholders) and (B) Bank Product Obligations (such cash collateral shall be applied to the reimbursement of the Bank Product Obligations as and when such obligations become due and payable and, at such time as all of the Bank Product Obligations are paid in full, the remaining cash collateral held by ABL Agent in respect of Bank Product Obligations shall be remitted to the Term Loan Agent for the benefit of the purchasing Term Loan Claimholders), and (C) any asserted or threatened (in writing) claims, demands, actions, suits, proceedings, investigations, liabilities, fines, costs, penalties, or damages that are the subject of the indemnification provisions of the ABL Credit Agreement (such cash collateral shall be applied to the reimbursement of such obligations as and when they become due and payable and, at such time as all of such obligations are paid in full, the remaining cash collateral held by ABL Agent in respect of indemnification obligations shall be remitted to the Term Loan Agent for the benefit of the purchasing Term Loan Claimholders), in each case in respect of ABL Priority Debt, and


 


(iii) pay to ABL Agent and the other ABL Claimholders the amount of all expenses to the extent earned or due and payable in accordance with the ABL Documents (including the reimbursement of attorneys' fees, financial examination expenses, and appraisal fees) and incurred through the date of such purchase.


 




  





  











  






(d) Such purchase price and cash collateral shall be remitted by wire transfer of federal funds to such bank account of ABL Agent as ABL Agent may designate in writing to Term Loan Agent for such purpose.  Interest shall be calculated to but excluding the Business Day on which such purchase and sale shall occur if the amounts so paid by the purchasing Term Loan Claimholders to the bank account designated by ABL Agent are received in such bank account prior to 2:00 p.m., New York City time, and interest shall be calculated to and including such Business Day if the amounts so paid by the purchasing Term Loan Claimholders to the bank account designated by ABL Agent are received in such bank account later than 2:00 p.m., New York City time.


 


(e) Anything contained in this paragraph to the contrary notwithstanding, in the event that (i) the purchasing Term Loan Claimholders receive all or a portion of any prepayment premium, make-whole obligation, or early termination fee payable pursuant to any the ABL Documents in cash, (ii) all ABL Debt purchased by such purchasing Term Loan Claimholders including principal, interest and fees thereon and costs and expenses of collection thereof (including reasonable attorneys' fees and legal expenses), is repaid in full in cash, and (iii) the ABL Credit Agreement is terminated, in each case, within 180 days following the date on which the purchasing Term Loan Claimholders pay the purchase price described in clauses (c)(i)-(iii) of this Section 5.6, then, within 3 Business Days after receipt by such Term Loan Claimholders of such amounts, the purchasing Term Loan Claimholders shall pay a supplemental purchase price to ABL Agent, for the benefit of the ABL Claimholders, in respect of their purchase under this Section 5.6 in an amount equal to the portion of the prepayment premium, make-whole obligation or early termination fee received by the purchasing Term Loan Claimholders to which the ABL Claimholders would have been entitled to receive had the purchase under this Section 5.6 not occurred.


 


(f) Such purchase shall be effected by the execution and delivery of a customary form of assignment and acceptance agreement and shall be expressly made without representation or warranty of any kind by ABL Agent and the other ABL Claimholders as to the ABL Debt so purchased, or otherwise, and without recourse to ABL Agent or any other ABL Claimholder, except that each ABL Claimholder shall represent and warrant:  (i) that the amount quoted by such ABL Claimholder as its portion of the purchase price represents the amount shown as owing with respect to the claims transferred as reflected on its books and records, (ii) it owns, or has the right to transfer to the purchasing Term Loan Claimholders, the rights being transferred, and (iii) such transfer will be free and clear of Liens.


 


(g) In the event that any one or more of the Term Loan Claimholders exercises and consummates the purchase option set forth in this Section 5.6, (i) ABL Agent shall have the right, but not the obligation, to immediately resign under the ABL Credit Agreement, and (ii) the purchasing Term Loan Claimholders shall have the right, but not the obligation, to require ABL Agent to immediately resign under the ABL Credit Agreement.


 


(h) In the event that any one or more of the Term Loan Claimholders exercises and consummates the purchase option set forth in this Section 5.6, (i) the ABL Claimholders shall retain their indemnification rights under the ABL Credit Agreement for actions or other matters arising on or prior to the date of such purchase, and (ii) and in the event that, at the time of such purchase, there exists Excess ABL Debt, the consummation of such purchase option shall not include (nor shall the purchase price be calculated with respect to) such Excess ABL Debt (clauses (i) and (ii), the "Retained Interest").


 


(i) In the event that a Retained Interest exists, each ABL Claimholder shall, at the request of the purchasing Term Loan Claimholders, execute an amendment to the ABL Credit Agreement acknowledging that such Retained Interest consisting of Excess ABL Debt is a last-out tranche, payable after Payment in Full of all ABL Priority Debt and payment in full in cash of all of the Term Loan Priority Debt.  Interest with respect to such Retained Interest consisting of Excess ABL Debt shall continue to accrue and be payable in accordance with the terms of the ABL Documents, the Retained Interest shall continue to be secured by the ABL Collateral, and the Retained Interest shall be paid (or cash collateralized, as applicable) in accordance with the terms of the ABL Credit Agreement and this Agreement.  Each ABL Claimholder shall continue to have all rights and remedies of a lender under the ABL Credit Agreement and the other ABL Documents; provided, that no ABL Claimholder shall have any right to vote on or otherwise consent to any amendment, waiver, departure from, or other modification of any provision of any ABL Document except that the consent of ABL Agent shall be required for (i) those matters that require the agreement of all lenders under Section 14.1 of the ABL Credit Agreement as in effect on the date hereof and (ii) matters in contravention of the provisions and priorities set forth in this Agreement.


 




  





  











  






(j) Each ABL Grantor irrevocably consents to any assignment effected to one or more Term Loan Claimholder pursuant to this Section 5.6 for purposes of all ABL Documents and hereby agrees that no further consent from such ABL Grantor shall be required.


 


5.7 Injunctive Relief.  Should any Term Loan Claimholder in any way take, attempt to, or threaten to take any action contrary to terms of this Agreement with respect to the ABL Collateral, or fail to take any action required by this Agreement, ABL Agent or any other ABL Claimholder may obtain relief against such Term Loan Claimholder by injunction, specific performance, or other appropriate equitable relief, it being understood and agreed by Term Loan Agent that (a) the ABL Claimholders' damages from such actions may at that time be difficult to ascertain and may be irreparable, and (b) each Term Loan Claimholder waives any defense that such ABL Grantor or the ABL Claimholders cannot demonstrate damage or be made whole by the awarding of damages.  Should any other ABL Claimholder in any way take, attempt to, or threaten to take any action contrary to terms of this Agreement with respect to the ABL Collateral, or fail to take any action required by this Agreement, Term Loan Agent or any Term Loan Claimholder (in its or their own name or in the name of any ABL Grantor) or any ABL Grantor may obtain relief against such ABL Claimholder by injunction, specific performance, or other appropriate equitable relief, it being understood and agreed by ABL that (i) the Term Loan Claimholders' damages from such actions may at that time be difficult to ascertain and may be irreparable, and (ii) each ABL Claimholder waives any defense that such ABL Grantor or the Term Loan Claimholders cannot demonstrate damage or be made whole by the awarding of damages. ABL Agent and Term Loan Agent hereby irrevocably waive any defense based on the adequacy of a remedy at law and any other defense which might be asserted to bar the remedy of specific performance in any action which may be brought by ABL Agent or the other ABL Claimholders or Term Loan Agent or the other Term Loan Claimholders, as the case may be.


 


5.8 Transfer of Pledged Collateral to Term Loan Agent.


 


(a) ABL Agent hereby agrees that upon the Payment in Full of ABL Priority Debt, to the extent permitted by applicable law, upon the written request of Term Loan Agent (with all costs and expenses in connection therewith to be for the account of Term Loan Agent and to be paid by ABL Grantors):


 


(i) ABL Agent shall, without recourse or warranty, take commercially reasonable steps to transfer the possession and control of the Pledged Collateral, if any, then in its possession or control to Term Loan Agent, except in the event and to the extent (A) such ABL Collateral is sold, liquidated, or otherwise disposed of by ABL Agent or any other ABL Claimholder or by an ABL Grantor as provided herein in full or partial satisfaction of any of the ABL Priority Debt or (B) it is otherwise required by any order of any court or other governmental authority or applicable law;  and


 


(ii) in connection with the terms of any collateral access agreement, whether with a landlord, processor, warehouseman, or other third party or any control agreement, ABL Agent shall notify the other parties thereto that its rights thereunder have been assigned to Term Loan Agent (to the extent such assignment is not prohibited by the terms of such agreement) and shall confirm to such parties that Term Loan Agent is thereafter the "Agent" (or other comparable term) as such term is used in any such agreement and is otherwise entitled to the rights of the secured party under such agreement.


 




  





  











  






(b) The foregoing provision shall not impose on ABL Agent or any other ABL Claimholder any obligations which would conflict with prior perfected claims therein in favor of any other person or any order or decree of any court or other governmental authority or any applicable law or give rise to risk of legal liability.


 


5.9 Set-Off and Tracing of Priority in Proceeds.  ABL Agent and Term Loan Agent, on behalf of the applicable Claimholders, acknowledges and agrees that, to the extent such Agent or any Claimholder for which it is acting as Agent exercises its rights of set-off against any ABL Collateral, the amount of such set-off shall be held and distributed pursuant to Section 4.2.  Each Agent, for itself and on behalf of the applicable Claimholders, further agrees that, notwithstanding anything herein to the contrary, prior to an issuance of an Enforcement Notice or the commencement of any Insolvency Proceeding, any proceeds of Collateral, whether or not deposited under account control agreements, which are used by any Grantor to acquire other property which is Collateral shall not (solely as between the Agents and the Claimholders) be treated as proceeds of Collateral for purposes of determining the relative priorities in the Collateral which was so acquired.


 


SECTION 6.   Insolvency Proceedings.


 


6.1 Enforceability and Continuing Priority.   This Agreement shall be applicable both before and after the commencement of any Insolvency Proceeding and all converted or succeeding cases in respect thereof.  The relative rights of Claimholders in or to any distributions from or in respect of any Collateral or proceeds of Collateral, shall continue after the commencement of any Insolvency Proceeding.  Accordingly, the provisions of this Agreement are intended to be and shall be enforceable as a subordination agreement within the meaning of Section 510 of the Bankruptcy Code.


 


6.2 Financing.  If any ABL Grantor shall be subject to any Insolvency Proceeding and if ABL Agent consents to the use of cash collateral (as such term is defined in Section 363(a) of the Bankruptcy Code; herein, "Cash Collateral"), on which ABL Agent has a Lien or consents to such ABL Grantor obtaining financing provided under Section 364 of the Bankruptcy Code or any similar provision of any other Bankruptcy Law to be secured by ABL Collateral (such financing, a "DIP Financing"), and if such Cash Collateral use or DIP Financing, as applicable, meets the applicable DIP Financing Conditions, then Term Loan Agent unconditionally agrees that it will consent to such Cash Collateral use or raise no objection to such DIP Financing, as applicable, and, if DIP Financing is involved, Term Loan Agent will subordinate its Liens in the ABL Collateral (and in any other assets of the ABL Grantors that may serve as collateral (including avoidance actions, or the proceeds thereof) for such DIP Financing) to the Liens securing such DIP Financing.  If such Cash Collateral use or DIP Financing, as applicable, meets some, but not all, of the applicable DIP Financing Conditions, then Term Loan Agent unconditionally agrees that it will only withhold its consent to such Cash Collateral use or will only raise an objection to such DIP Financing based upon the DIP Financing Condition(s) which are not met and will not withhold its consent or object on any other basis and, if DIP Financing is involved and any permitted objection of Term Loan Agent is withdrawn, overruled, or otherwise eliminated,  Term Loan Agent will subordinate its Liens in the ABL Collateral (and in any other assets of the ABL Grantors that may serve as collateral (including avoidance actions, or the proceeds thereof) for such DIP Financing) to the Liens securing such DIP Financing.  Term Loan Agent agrees that it shall not, and nor shall any of the Term Loan Claimholders, directly or indirectly, provide, offer to provide, or support any DIP Financing secured by a Lien on the ABL Collateral senior to or pari passu with the Liens securing the ABL Priority Debt.  If, in connection with any Cash Collateral use or DIP Financing, any Liens on the ABL Collateral held by the ABL Claimholders to secure the ABL Debt are subject to a surcharge or are subordinated to an administrative priority claim, a professional fee "carve-out," or fees owed to the United States Trustee, then the Liens on the ABL Collateral of the Term Loan Claimholders securing the Term Loan Debt shall also be subordinated to such interest or claim and shall remain subordinated to the Liens on the ABL Collateral of the ABL Claimholders consistent with this Agreement.


 




  





  











  






6.3 Sales.  Term Loan Agent agrees that it will consent to, and will not object or oppose a motion to Dispose of any ABL Collateral free and clear of the Liens of Term Loan Agent thereon under Section 363 or Section 1129 of the Bankruptcy Code if (a) the ABL Agent has consented to the sale of such ABL Collateral free and clear of the Liens of the ABL Agent, (b) such motion does not impair, subject to the priorities set forth in this Agreement, the rights of the Term Loan Claimholders under Section 363(k) of the Bankruptcy Code (so long as the right of the Term Loan Claimholders to offset its claim against the purchase price only arises after the ABL Priority Debt has been paid in full in cash), and (c) either (i) pursuant to court order, the Liens of the Term Loan Claimholders attach to the net proceeds of the Disposition with the same priority and validity as the Liens held by the Term Loan Claimholders on such ABL Collateral, and the Liens remain subject to the terms of this Agreement, or (ii) the proceeds of the Disposition are applied in accordance with Section 4.1.  The foregoing to the contrary notwithstanding, the Term Loan Claimholders may raise any objections to such Disposition of the ABL Collateral that could be raised by a creditor of ABL Grantors whose claims are not secured by Liens on such ABL Collateral, provided such objections are not inconsistent with any other term or provision of this Agreement, do not include an objection to the proposed bidding procedures, and are not based on their status as secured creditors (without limiting the foregoing, Term Loan Creditors may not raise any objections based on rights afforded by Sections 363(e) and (f) of the Bankruptcy Code to secured creditors (or any comparable provision of any other Bankruptcy Law) with respect to the Liens granted to Term Loan Agent in respect of such assets).


 


6.4 Relief from the Automatic Stay.  Until the Payment in Full of ABL Priority Debt has occurred, Term Loan Agent agrees not to (a) seek (or support any other person seeking) relief from the automatic stay or any other stay in any Insolvency Proceeding in respect of the ABL Collateral, without the prior written consent of ABL Agent; provided, that Term Loan Agent may seek relief from the automatic stay or any other stay in any Insolvency Proceeding in respect of the ABL Collateral if and to the extent that ABL Agent has obtained relief from or modification of such stay in respect of the ABL Collateral, or (b) oppose any request by the ABL Agent or any other ABL Claimholder to seek relief from the automatic stay or any other stay in any Insolvency Proceeding in respect of the ABL Collateral.


 


6.5 Adequate Protection.


 


(a) In any Insolvency Proceeding involving a Grantor,


 


(i) Term Loan Claimholder agrees that it shall not object to or contest, or support any other person objecting or contesting (and instead shall be deemed to have hereby irrevocably, absolutely, and unconditionally waived any right to do so):


 


(A)           any request by any ABL Claimholder prior to the Payment in Full of ABL Priority Debt for adequate protection of their interest in the ABL Collateral, including replacement or additional Liens on post-petition assets; or


 


(B)           any (x) objection by any ABL Claimholder to any motion, relief, action, or proceeding based on any such ABL Claimholders claiming a lack of adequate protection of its interest in the ABL Collateral, or (y) request by any ABL Claimholder for relief from the automatic stay in respect of the ABL Collateral;


 


(ii) if any one or more ABL Claimholders are granted adequate protection in the form of an additional or replacement Lien (on existing or future assets of Grantors) in connection with any DIP Financing or use of Cash Collateral, then ABL Agent agrees that Term Loan Agent shall also be entitled to seek, without objection from ABL Claimholders, adequate protection of their interest in the ABL Collateral in the form of an additional or replacement Lien (on such existing or future assets of Grantors), which additional or replacement Lien, if obtained, shall be subordinate to the Liens on such assets securing the ABL Debt (including those under a DIP Financing) on the same basis as the other Liens securing the Term Loan Debt are subordinate to the ABL Debt under this Agreement;


 




  





  











  






(iii) except as my otherwise be consented to by ABL Agent (acting at the instruction of the requisite ABL Claimholders), no Term Loan Claimholder may seek adequate protection in respect of any interest in the ABL Collateral except for adequate protection permitted pursuant to Section 6.5(a)(iv) or adequate protection in the form of an additional or replacement Lien in and to existing or future assets of Grantors, and Term Loan Agent further agrees that ABL Agent shall also be entitled to seek, without objection from the Term Loan Claimholders, a senior adequate protection Lien in and to such existing or future assets of Grantors as security for the ABL Debt (junior to any Lien in favor of Term Loan Agent to the extent such additional or replace Lien is with respect to the Term Loan Priority Collateral) and that any adequate protection Lien securing the Term Loan Debt shall be subordinated to such senior adequate protection Lien securing the ABL Debt on the same basis as the other Liens securing the Term Loan Debt are subordinated to the Liens securing the ABL Debt under this Agreement;


 


(iv) if any one or more ABL Claimholders are granted adequate protection in the form of a superpriority or other administrative expense claim in connection with any DIP Financing or use of Cash Collateral, then ABL Agent agrees that Term Loan Agent shall also be entitled to seek, without objection from ABL Claimholders, adequate protection of its interest in the ABL Collateral in the form of a superpriority or other administrative expense claim (as applicable), which superpriority or other administrative expense claim, if obtained, shall be subordinate to the superpriority or other administrative expense claim of the ABL Claimholders; provided however, that the Term Loan Agent shall have irrevocably agreed on behalf of the Term Loan Claimholders, pursuant to Section 1129(a)(9) of the Bankruptcy Code (or similar Bankruptcy Law), in any stipulation and/or order granting such adequate protection, that any such subordinated superpriority or other administrative claim granted thereto with respect to their interests in the ABL Collateral may be paid under any plan of reorganization that is accepted by the requisite affirmative vote of all classes composed of the secured claims of ABL Claimholders in any combination of cash, debt, equity or other property having a value as of the effective date of such plan equal to the allowed amount of such claims; and


 


(v) if any one or more Term Loan Claimholders are granted adequate protection with respect to their interests in the ABL Collateral in the form of a superpriority or other administrative expense claim in connection with any DIP Financing or use of Cash Collateral, then Term Loan Agent agrees that ABL Agent shall also be entitled to seek, without objection from Term Loan Claimholders, adequate protection in the form of a superpriority or other administrative expense claim (as applicable), which superpriority or other administrative expense claim, if obtained, shall be senior to the superpriority or other administrative expense claim of the Term Loan Claimholders granted with respect to their interests in the ABL Collateral; and


 


(b) Nothing herein shall prohibit or restrict Term Loan Agent from seeking adequate protection with respect to the interests of Term Loan Claimholders in the Term Loan Priority Collateral, provided that nothing herein shall prohibit or restrict the ABL Agent from objecting to the use of any ABL Collateral or proceeds of any DIP Financing in making any such adequate protection payment in respect of the Term Loan Priority Collateral.


 


(c) Neither Term Loan Agent nor any other Term Loan Claimholder shall object to, oppose, or challenge the determination of the extent of any Liens held by any of the ABL Claimholders or the value of any claims of ABL Claimholders under Section 506(a) of the Bankruptcy Code or any claim by any ABL Claimholder for allowance in any Insolvency Proceeding of ABL Debt consisting of post-petition interest, fees, or expenses.


 




  





  











  






(d) Neither ABL Agent nor any other ABL Claimholder shall object to, oppose, or challenge the determination of the extent of any Liens held by any of the Term Loan Claimholders or the value of any claims of Term Loan Claimholders under Section 506(a) of the Bankruptcy Code or any claim by any Term Loan Claimholder for allowance in any Insolvency Proceeding of Term Loan Debt consisting of post-petition interest, fees, or expenses.


 


6.6 Specific Sections of the Bankruptcy Code.  Term Loan Agent shall not object to, oppose, support any objection, or take any other action to impede, the right of any ABL Claimholder to make an election under Section 1111(b)(2) of the Bankruptcy Code with respect to the ABL Collateral.  The Term Loan Claimholders waive any claim they may hereafter have against any ABL Claimholder arising out of the election by any ABL Claimholder of the application of Section 1111(b)(2) of the Bankruptcy Code with respect to the ABL Collateral.  The Term Loan Claimholders agree that they will not, directly or indirectly, assert or support the assertion of, and hereby waive any right that they may to assert or support the assertion of any claim under Section 506(c) or the "equities of the case" exception of Section 552(b) of the Bankruptcy Code as against any ABL Claimholder or any of the ABL Collateral to the extent securing the ABL Debt.


 


6.7 No Waiver.  Subject to Section 3.1(a) and the other provisions of this Section 6, nothing contained herein shall prohibit or in any way limit any ABL Claimholder from objecting in any Insolvency Proceeding involving any Grantor to any action taken by any Term Loan Claimholder with respect to ABL Collateral.  Except as may otherwise be expressly set forth herein, nothing herein shall prohibit or in any way limit any Term Loan Claimholder from taking any action with respect to the Term Loan Priority Collateral in any Insolvency Proceeding involving any Grantor, including the seeking by any Term Loan Claimholder of adequate protection or the assertion by any Term Loan Claimholder of any of its rights and remedies under the Term Loan Documents with respect to the Term Loan Priority Collateral.


 


6.8 Avoidance Issues.  If any ABL Claimholder is required in any Insolvency Proceeding or otherwise to turn over, disgorge, or otherwise pay to the estate of any Grantor any amount paid in respect of ABL Debt (or if any ABL Claimholder elects to do so upon the advice of counsel) (a "Recovery"), then such ABL Claimholder shall be entitled to a reinstatement of the ABL Debt with respect to all such amounts, and all rights, interests, priorities, and privileges recognized in this Agreement shall apply with respect to any such Recovery.  If this Agreement shall have been terminated prior to such Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair, or otherwise affect the obligations of the parties hereto from such date of reinstatement and, to the extent the ABL Cap was decreased in connection with such payment of the ABL Debt, the ABL Cap shall be increased to such extent.


 


6.9 Plan of Reorganization.


 


(a) If, in any Insolvency Proceeding involving a Grantor, debt obligations of the reorganized debtor secured by Liens upon any property of the reorganized debtor are distributed pursuant to a confirmed plan of reorganization or similar dispositive restructuring plan, both on account of ABL Debt and on account of Term Loan Debt, then, to the extent the debt obligations distributed on account of the ABL Debt and on account of the Term Loan Debt are secured by Liens upon the same property, the provisions of this Agreement will survive the distribution of such debt obligations pursuant to such plan and will apply with like effect to the Liens securing such debt obligations; provided, however, that to the extent any such debt obligations are secured by Term Loan Priority Collateral, then the Liens securing the ABL Debt shall be junior to the Liens securing the Term Loan Debt on the same basis that the Lien in the ABL Collateral securing the Term Loan Debt are junior to the Liens in the ABL Collateral securing the ABL Priority Debt hereunder.


 




  





  











  






(b) The provisions of Section 1129(b)(1) of the Bankruptcy Code notwithstanding, the Term Loan Claimholders agree that they will not propose, support, or vote in favor of any plan of reorganization of a Grantor that is inconsistent with the priorities or other provisions of this Agreement.


 


(c) Unless and until the Payment in Full of ABL Priority Debt has occurred and except as otherwise expressly provided in Section 2.1 and this Section 6.9, if a Grantor (or any of its assets) is the subject of an Insolvency Proceeding and if any distribution is received by Term Loan Agent or any other Term Loan Claimholder on account of their interest in the ABL Collateral and constituting Term Loan Secured Claims in connection with such Insolvency Proceeding, then such distribution shall be segregated and held in trust and forthwith paid over to ABL Agent for the benefit of the ABL Claimholders in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct.  Except as otherwise provided in Section 6.5 and Section 6.9(a) hereof, unless and until the Payment in Full of ABL Priority Debt  has occurred, the Term Loan Agent and each other Term Loan Claimholder shall be required to turnover to the ABL Agent and the ABL Agent shall be entitled to apply (or, in the case of non-cash proceeds, hold) in accordance with Section 4.1 any cash or non-cash distribution received by the Term Loan Claimholders on account of their interests in the ABL Collateral and constituting Term Loan Secured Claims pursuant to a confirmed plan of reorganization of a Grantor irrespective of whether such plan of reorganization (or any Final Order in respect thereof) purports to find that the distribution to the ABL Claimholders pays the ABL Priority Debt in full, unless such distribution is made under a confirmed plan of reorganization of such Grantor that is accepted by the requisite affirmative vote of all classes composed of the secured claims of the ABL Claimholders or otherwise provides for the Payment in Full of ABL Priority Debt.  Term Loan Agent irrevocably authorizes and empowers ABL Agent, in the name of each Term Loan Claimholder, to demand, sue for, collect, and receive any and all such distributions on account of the interests of the Term Loan Claimholders in the ABL Collateral and constituting Term Loan Secured Claim to which the ABL Claimholders are entitled hereunder.  In furtherance of the foregoing, ABL Agent is hereby authorized to make any such endorsements as agent for Term Loan Agent or any such Term Loan Claimholders.  This authorization is coupled with an interest and is irrevocable until the Payment in Full of ABL Priority Debt.  Nothing in this Agreement prohibits or limits the right of a Term Loan Claimholder to receive and retain any cash, debt, or equity securities on account of Term Loan Deficiency Claims or otherwise from the Term Loan Priority Collateral. To the extent that the confirmed plan of reorganization does not specify whether the Term Loan Claimholders are receiving any particular distribution, in whole or in part, on account of their Term Loan Deficiency Claims, such distribution shall be conclusively presumed to be on account of their Term Loan Secured Claims.


 


SECTION 7.   Reliance; Waivers; Etc.


 


7.1 Reliance.  Other than any reliance on the terms of this Agreement, ABL Agent acknowledges that it and such ABL Claimholders have, independently and without reliance on Term Loan Agent or any other Term Loan Claimholder, and based on documents and information deemed by them appropriate, made their own credit analysis and decision to enter into such ABL Documents and be bound by the terms of this Agreement and they will continue to make their own credit decision in taking or not taking any action under the ABL Credit Agreement or this Agreement.  Term Loan Agent acknowledges that it and the Term Loan Claimholders have, independently and without reliance on ABL Agent or any other ABL Claimholder, and based on documents and information deemed by them appropriate, made their own credit analysis and decision to enter into each of the Term Loan Documents and be bound by the terms of this Agreement and they will continue to make their own credit decision in taking or not taking any action under the Term Loan Documents or this Agreement.


 




  





  











  






7.2 No Warranties or Liability.  ABL Agent acknowledges and agrees that each of Term Loan Agent and the other Term Loan Claimholders have made no express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectibility, or enforceability of any of the Term Loan Documents, the ownership of any Collateral, or the perfection or priority of any Liens thereon.  Except as otherwise expressly provided herein, the Term Loan Claimholders will be entitled to manage and supervise their respective loans and extensions of credit under the Term Loan Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate.  Term Loan Agent acknowledges and agrees that ABL Agent and the other ABL Claimholders have made no express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectability, or enforceability of any of the ABL Documents, the ownership of any Collateral, or the perfection or priority of any Liens thereon.  Except as otherwise expressly provided herein, the ABL Claimholders will be entitled to manage and supervise their respective loans and extensions of credit under their respective ABL Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate.  Term Loan Agent and the other Term Loan Claimholders shall have no duty to ABL Agent or any other ABL Claimholder, and ABL Agent and the other ABL Claimholders shall have no duty to Term Loan Agent or any other Term Loan Claimholder, to act or refrain from acting in a manner that allows, or results in, the occurrence or continuance of an event of default or default under any agreements with any Grantor (including the ABL Documents and the Term Loan Documents), regardless of any knowledge thereof which they may have or be charged with.


 


7.3 No Waiver of Lien Priorities.


 


(a) No right of ABL Agent or any other ABL Claimholder to enforce any provision of this Agreement or any ABL Document shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Grantor or by any act or failure to act by ABL Agent or any other ABL Claimholder, or by any noncompliance by any person with the terms, provisions, and covenants of this Agreement, any of the ABL Documents or any of the Term Loan Documents, regardless of any knowledge thereof which ABL Agent or any other ABL Claimholder may have (or be otherwise charged with).


 


(b) Without in any way limiting the generality of the foregoing paragraph (but subject to any rights of ABL Grantors under the ABL Documents and subject to the provisions of Section 5.3(a)), ABL Agent and the other ABL Claimholders may, at any time and from time to time in accordance with the ABL Documents or applicable law, without the consent of, or notice to, Term Loan Agent or any other Term Loan Claimholder, without incurring any liabilities to Term Loan Agent or any other Term Loan Claimholder and without impairing or releasing the Lien priorities and other benefits provided in this Agreement (even if any right of subrogation or other right or remedy of Term Loan Agent or any other Term Loan Claimholder is affected, impaired, or extinguished thereby) do any one or more of the following without the prior written consent of Term Loan Agent:


 


(i) change the manner, place, or terms of payment or change or extend the time of payment of, or amend, renew, exchange, increase, or alter, the terms of any of the ABL Debt or any Lien on any ABL Collateral or guarantee thereof or any liability of any ABL Grantor, or any liability incurred directly or indirectly in respect thereof (including any increase in or extension of the ABL Debt, without any restriction as to the tenor or terms of any such increase or extension) or otherwise amend, renew, exchange, extend, modify, or supplement in any manner any Liens held by ABL Agent or any other ABL Claimholder, the ABL Debt, or any of the ABL Documents;


 


(ii) sell, exchange, release, surrender, realize upon, enforce or otherwise deal with in any manner and in any order any part of the ABL Collateral or any liability of any ABL Grantor to ABL Agent or any other ABL Claimholders, or any liability incurred directly or indirectly in respect thereof;


 


(iii) settle or compromise any ABL Debt or any other liability of any Grantor or any security therefor or any liability incurred directly or indirectly in respect thereof and apply any sums by whomsoever paid and however realized to any liability (including the ABL Debt) in any manner or order; and


 




  





  











  






(iv) exercise or delay in or refrain from exercising any right or remedy against any ABL Grantor or any other person, elect any remedy and otherwise deal freely with any ABL Grantor or any ABL Collateral and any security and any guarantor or any liability of any ABL Grantor to ABL Agent or any other ABL Claimholder or any liability incurred directly or indirectly in respect thereof.


 


(c) Except as otherwise provided herein, Term Loan Agent also agrees that ABL Agent and the other ABL Claimholders shall have no liability to Term Loan Agent or any other Term Loan Claimholder, and Term Loan Agent hereby waives any claim against ABL Agent or any other ABL Claimholder arising out of any and all actions which ABL Agent or any other ABL Claimholder may, pursuant to the terms hereof, take, permit or omit to take with respect to:


 


(i) the ABL Documents;


 


(ii) the collection of the ABL Debt; or


 


(iii) the foreclosure upon, or sale, liquidation, or other disposition of, or the failure to foreclose upon, or sell, liquidate, or otherwise dispose of, any ABL Collateral.  Term Loan Agent agrees that ABL Agent and the other ABL Claimholders have no duty to them in respect of the maintenance or preservation of the ABL Collateral, the ABL Debt, or otherwise.


 


(d) Until the Payment in Full of ABL Priority Debt, Term Loan Agent agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead, or otherwise assert, or otherwise claim the benefit of, any marshaling, appraisal, valuation, or other similar right that may otherwise be available under applicable law with respect to the ABL Collateral or any other similar rights a junior secured creditor may have under applicable law.


 


7.4 Obligations Unconditional.  For so long as this Agreement is in full force and effect, all rights, interests, agreements, and obligations of ABL Agent and the other ABL Claimholders and Term Loan Agent and the other Term Loan Claimholders, respectively, hereunder shall remain in full force and effect irrespective of:


 


(a) any lack of validity or enforceability of any ABL Documents or any Term Loan Documents;


 


(b) except as otherwise expressly restricted in this Agreement, any change in the time, manner, or place of payment of, or in any other terms of, all or any of the ABL Debt or Term Loan Debt, or any amendment or waiver or other modification, including any increase in the amount thereof, whether by course of conduct or otherwise, of the terms of any ABL Document or any Term Loan Document;


 


(c) except as otherwise expressly restricted in this Agreement, any exchange of any security interest in any Collateral or any other collateral, or any amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the ABL Debt or Term Loan Debt or any guarantee thereof;


 


(d) the commencement of any Insolvency Proceeding in respect of any Grantor; or


 




  





  











  






(e) any other circumstances which otherwise might constitute a defense available to any Grantor in respect of the ABL Debt, the ABL Agent, any other ABL Claimholder, the Term Loan Debt, the Term Loan Agent, or any other Term Loan Claimholder.


 


SECTION 8.   Representations and Warranties.


 


8.1 Representations and Warranties of Each Party.  Each party hereto represents and warrants to the other parties hereto as follows:


 


(a)           Such party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder.


 


(b)           This Agreement has been duly executed and delivered by such party and constitutes a legal, valid and binding obligation of such party, enforceable in accordance with its terms.


 


(c)           The execution, delivery, and performance by such party of this Agreement (i) do not require any consent or approval of, registration or filing with or any other action by any governmental authority and (ii) will not violate any provision of law, statute, rule or regulation, or of the certificate or articles of incorporation or other constitutive documents or by-laws of such party or any order of any governmental authority or any provision of any indenture, agreement or other instrument binding upon such party.


 


8.2 Representations and Warranties of Each Agent.  ABL Agent and Term Loan Agent each represents and warrants to the other that it has been authorized by the ABL Claimholders or the Term Loan Claimholders, as applicable, under the ABL Credit Agreement or the Term Loan Credit Agreement, as applicable, to enter into this Agreement and that each of the agreements, covenants, waivers, and other provisions hereof is valid, binding, and enforceable against the ABL Lenders or Term Loan Lenders, as applicable, as fully as if they were parties hereto.


 


8.3 Survival.  All representations and warranties made by one party hereto in this Agreement shall be considered to have been relied upon by the other party hereto and shall survive the execution and delivery of this Agreement, regardless of any investigation made by any such other party.


 


SECTION 9.   Miscellaneous.


 


9.1 Conflicts.  In the event of any conflict between the provisions of this Agreement and the provisions of any of the ABL Documents or any of the Term Loan Documents, the provisions of this Agreement shall govern and control.


 


9.2 Effectiveness; Continuing Nature of this Agreement; Severability.  This Agreement shall become effective when executed and delivered by the parties hereto.  This is a continuing agreement of lien subordination and the ABL Claimholders may continue, at any time and without notice to Term Loan Agent or any other Term Loan Claimholder, to extend credit and other financial accommodations to or for the benefit of any ABL Grantor constituting ABL Priority Debt in reliance hereof.  Term Loan Agent hereby waives any right it may have under applicable law to revoke this Agreement or any of the provisions of this Agreement.  The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency Proceeding.  Any provision of this Agreement that is prohibited or unenforceable shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  All references to any Grantor shall include such Grantor as debtor and debtor-in-possession and any receiver or trustee for such Grantor in any Insolvency Proceeding.  This Agreement shall terminate and be of no further force and effect:


 




  





  











  






(a) with respect to ABL Agent, the other ABL Claimholders, and the ABL Debt, on the date that the ABL Debt is paid in U.S. Dollars in full in cash or immediately available funds and all commitments, if any, to extend credit to Borrowers are terminated or have expired; and


 


(b) with respect to Term Loan Agent, the other Term Loan Claimholders, and the Term Loan Debt, on the date that the Term Loan Debt is paid in U.S. Dollars in full in cash or immediately available funds and all commitments, if any, to extend credit to Parent is terminated or have expired.


 


9.3 Amendments; Waivers.  No amendment, modification, or waiver of any of the provisions of this Agreement shall be effective unless the same shall be in writing signed on behalf of ABL Agent and Term Loan Agent and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of the parties making such waiver or the obligations of the other parties to such party in any other respect or at any other time.


 


9.4 Information Concerning Financial Condition of the Parent and its Subsidiaries.  ABL Agent and the other ABL Claimholders, on the one hand, and Term Loan Agent and the other Term Loan Claimholders, on the other hand, shall each be responsible for keeping themselves informed of (a) the financial condition of the Parent and its Subsidiaries and all endorsers or guarantors of the ABL Debt or the Term Loan Debt and (b) all other circumstances bearing upon the risk of nonpayment of the ABL Debt or the Term Loan Debt.  ABL Agent and the other ABL Claimholders shall have no duty to advise Term Loan Agent or any other Term Loan Claimholder of information known to it or them regarding such condition or any such circumstances or otherwise.  Term Loan Agent and the other Term Loan Claimholders shall have no duty to advise ABL Agent or any other ABL Claimholder of information known to it or them regarding such condition or any such circumstances or otherwise.  In the event ABL Agent or any other ABL Claimholder, in its or their sole discretion, undertakes at any time or from time to time to provide any such information to Term Loan Agent or any other Term Loan Claimholder, it or they shall be under no obligation:


 


(a) to make, and ABL Agent and the other ABL Claimholders shall not make, any express or implied representation or warranty, including with respect to the accuracy, completeness, truthfulness, or validity of any such information so provided;


 


(b) to provide any additional information or to provide any such information on any subsequent occasion;


 


(c) to undertake any investigation; or


 


(d) to disclose any information, which pursuant to accepted or reasonable commercial practices, such party wishes to maintain confidential or is otherwise required to maintain confidential.


 


9.5 Subrogation.  With respect to any payments or distributions in cash, property, or other assets that Term Loan Agent or any other Term Loan Claimholder pays over to ABL Agent or any other ABL Claimholder under the terms of this Agreement, Term Loan Agent and the other Term Loan Claimholders shall be subrogated to the rights of ABL Agent and the other ABL Claimholders; provided, that Term Loan Agent hereby agrees not to assert or enforce any such rights of subrogation it may acquire as a result of any payment hereunder until the Payment in Full of all ABL Priority Debt has occurred.  Any payments or distributions in cash, property or other assets received by Term Loan Agent or any other Term Loan Claimholder that are paid over to ABL Agent or the ABL Claimholders pursuant to this Agreement shall not reduce any of the Term Loan Debt.


 




  





  











  






9.6 SUBMISSION TO JURISDICTION; WAIVERS.


 


(a) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY ARISING OUT OF OR RELATING HERETO SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF ILLINOIS, COUNTY OF COOK, AND CITY OF CHICAGO.  BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY:


 


(i) ACCEPTS GENERALLY AND UNCONDITIONALLY THE JURISDICTION AND VENUE OF SUCH COURTS;


 


(ii) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;


 


(iii) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 9.7; AND


 


(iv) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (iii) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE PARTY IN ANY SUCH PROCEED­ING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.


 


(b) EACH OF THE PARTIES HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER HEREOF, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS.  EACH PARTY HERETO FURTHER WAR­RANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE; MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 9.6(b) AND EXECUTED BY ABL AGENT AND TERM LOAN AGENT), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS HERETO.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.


 


9.7 Notices.  All notices to the Term Loan Claimholders and the ABL Claimholders permitted or required under this Agreement shall also be sent to Term Loan Agent and ABL Agent, respectively.  Unless otherwise specifically provided herein, any notice hereunder shall be in writing and may be personally served or sent by telefacsimile or United States mail or courier service or electronic mail and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile or electronic mail, or 3 Business Days after depositing it in the United States mail with postage prepaid and properly addressed.  For the purposes hereof, the addresses of the parties hereto shall be as may be designated by such party in a written notice to all of the other parties.


 




  





  











  






9.8 Further Assurances.  ABL Agent and Term Loan Agent each agrees to take such further action and shall execute and deliver such additional documents and instruments (in recordable form, if requested) as ABL Agent or Term Loan Agent may reasonably request to effectuate the terms of and the Lien priorities contemplated by this Agreement, all at the expense of Borrowers.  In furtherance of the foregoing, (a) the ABL Agent agrees that, if there is a Refinancing of the Term Loan Debt and if the agent or other representative of the holders of the indebtedness that Refinances the Term Loan Debt so requests, it will execute and deliver either an acknowledgement of the joinder of such agent or representative to this Agreement or an agreement with such agent or representative identical to this Agreement (subject to changing names of parties, documents and addresses, as appropriate) in favor of any such agent or representative, and (b) the Term Loan Agent agrees that  if there is a Refinancing of the ABL Debt and if the agent or other representative of the holders of the indebtedness that Refinances the ABL Debt so requests, it will execute and deliver either an acknowledgement of the joinder of such agent or representative to this Agreement or an agreement with such agent or representative identical to this Agreement (subject to changing names of parties, documents and addresses, as appropriate) in favor of any such agent or representative.


 


9.9 APPLICABLE LAW.  THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF ILLINOIS.  EACH OF THE PARTIES HERETO AGREES THAT THIS AGREEMENT RELATES TO A TRANSACTION COVERING IN THE AGGREGATE NOT LESS THAN $250,000.


 


9.10 Binding on Successors and Assigns.  This Agreement shall be binding upon ABL Agent, the ABL Claimholders, Term Loan Agent, the Term Loan Claimholders, and their respective successors and assigns.


 


9.11 Headings.  Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.


 


9.12 Counterparts.  This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page of this Agreement or any document or instrument delivered in connection herewith by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement or such other document or instrument, as applicable.


 


9.13 No Third Party Beneficiaries.  This Agreement and the rights and benefits hereof shall inure to the benefit of each of the parties hereto and its respective successors and assigns and shall inure to the benefit of and bind each of the ABL Claimholders and the Term Loan Claimholders.  In no event shall any Grantor be a third party beneficiary of this Agreement.


 


9.14 Provisions Solely to Define Relative Rights.  The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of ABL Agent and the other ABL Claimholders, on the one hand, and Term Loan Agent and the other Term Loan Claimholders on the other hand.  No Grantor or any other creditor thereof shall have any rights hereunder and no Grantor may rely on the terms hereof.  Nothing in this Agreement shall impair, as between ABL Grantors and ABL Agent and the other ABL Claimholders, or as between Term Loan Grantors and Term Loan Agent and the other Term Loan Claimholders, the obligations of the respective Grantors to pay principal, interest, fees and other amounts as provided in the ABL Documents and the Term Loan Documents, respectively.


 




  





  











  






9.15 Costs and Attorneys' Fees.  In the event it becomes necessary for ABL Agent, any other ABL Claimholder, Term Loan Agent, or any other Term Loan Claimholder to commence or become a party to any proceeding or action to enforce the provisions of this Agreement, the court or body before which the same shall be tried shall award to the prevailing party all costs and expenses thereof, including reasonable attorneys' fees, the usual and customary and lawfully recoverable court costs, and all other expenses in connection therewith.


 


9.16 Integration.  This Agreement reflects the entire understanding of the parties with respect to the subject matter hereof and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.


 


9.17 Reciprocal Rights.    The parties agree that the provisions of Sections 2.3, 2.4(b), 3, 4.2, 5.1, 5.2, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.9(b) and 9.5, including, as applicable, the defined terms referenced therein (but only to the extent used therein), which govern the relationship, and certain rights, restrictions, and agreements, between the ABL Agent and the other ABL Claimholders with respect to the ABL Debt, on the one hand, and the Term Loan Agent and the other Term Loan Claimholders with respect to the Term Loan Debt, on the other hand, (a) shall, from and after the Payment in Full of ABL Priority Debt and until the payment in full in cash of the Term Loan Priority Debt, apply to and govern, mutatis mutandis, the relationship between the Term Loan Agent and the other Term Loan Claimholders with respect to the Term Loan Priority Debt, on the one hand, and the ABL Agent and the other ABL Claimholders with respect to the Excess ABL Debt, on the other hand, and (b) shall, from and after both the Payment in Full of ABL Priority Debt and the payment in full in cash of Term Loan Priority Debt, and until the payment in full in cash of the Excess ABL Debt and the termination or expiration of all commitments, if any, to extend credit that would constitute Excess ABL Debt, apply to and govern, mutatis mutandis, the relationship between the ABL Agent and the other ABL Claimholders with respect to the Excess ABL Debt, on the one hand, and the Term Loan Agent and the other Term Loan Claimholders with respect to the Excess Term Loan Debt, on the other hand.


 


[signature pages follow]


 






  





 











  








IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.


 



	  	
WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company, as ABL Agent


 


 


By:                                                                                         


Name:                                                                                         


Title:                                                                                         


	  	
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Term Loan Agent


 


 


By:                                                                                         


Name:                                                                                         


Title:                                                                                         











  





 











  








ACKNOWLEDGMENT


 


Parent and each of Parent's undersigned Subsidiaries each hereby acknowledge that they have received a copy of the foregoing Intercreditor Agreement (as in effect on the date hereof, the "Initial Intercreditor Agreement") and agree to recognize all rights granted by the Initial Intercreditor Agreement to ABL Agent, the other ABL Claimholders, Term Loan Agent, and the other Term Loan Claimholders, waive the provisions of Section 9-615(a) of the UCC in connection with the application of proceeds of ABL Collateral in accordance with the provisions of the Initial Intercreditor Agreement, agree that they will not do any act or perform any obligation which is not in accordance with the agreements set forth in the Initial Intercreditor Agreement.  Parent and each of Parent's undersigned Subsidiaries each further acknowledge and agree that they are not an intended beneficiary or third party beneficiary under the Initial Intercreditor Agreement, as amended, restated, supplemented, or otherwise modified hereafter.


 



	
  

	
ACKNOWLEDGED AS OF THE DATE FIRST WRITTEN ABOVE:







 



	
KRONOS WORLDWIDE, INC.,


a Delaware corporation


 


 


By:                                                                                  


Name:


Title:

	  
	
KRONOS LOUISIANA, INC.,


a Delaware corporation


 


 


By:                                                                                  


Name:


Title:

	  
	
KRONOS (US), INC.,


a Delaware corporation


 


 


By:                                                                                  


Name:


Title:

	  









  





 











  













 







EXHIBIT G


to


Credit Agreement


dated as of June 13, 2012


by and among


Kronos Worldwide, Inc.,


as Borrower,


the Lenders party thereto,


as Lenders,


and


Wells Fargo Bank, National Association,


as Administrative Agent


 


FORM OF OFFICER’S CERTIFICATE


 






  





 











  








OFFICER’S CERTIFICATE


 


The undersigned, on behalf of Kronos Worldwide, Inc., a corporation organized under the laws of Delaware (the “Borrower”), hereby certifies to the Administrative Agent and the Lenders, each as defined in the Credit Agreement referred to below, as follows:


 


1.           This certificate is delivered to you pursuant to Section 6.2 of the Credit Agreement dated as of __________, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the Borrower, the lenders who are or may become party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent.  Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.


 


2.           I have reviewed the financial statements of the Borrower and its Subsidiaries dated as of _______________ and for the _______________ period[s] then ended and such statements present fairly in all material respects the financial condition of the Borrower and its Subsidiaries as of the dates indicated and the results of their operations and cash flows for the period[s] indicated in conformity with GAAP.


 


3.           The Borrower and its Subsidiaries are in compliance with the financial covenant contained in Section 7.14 of the Credit Agreement and the calculations determining such compliance are as set forth on such Schedule 1 hereto.


 


4.           I have reviewed the terms of the Credit Agreement, and the related Loan Documents and have made, or caused to be made under my supervision, a review in reasonable detail of the transactions and the condition of the Borrower and its Subsidiaries during the accounting period covered by the financial statements referred to in Paragraph 2 above.  Such review has not disclosed the existence during or at the end of such accounting period of any condition or event that constitutes a Default or an Event of Default, nor do I have any knowledge of the existence of any such condition or event as at the date of this certificate [except, if such condition or event existed or exists, describe the nature and period of existence thereof and what action the Borrower has taken, is taking and proposes to take with respect thereto].


 


[Signature Page Follows]






  





 











  








WITNESS the following signature as of the day and year first written above.


 


 


KRONOS WORLDWIDE, INC.


 


 


By:           ___________


 


Name:           ___________


 


Title:           ___________






  





 











  













 


Schedule 1


to


Officer’s Certificate


 


[To be provided in a form acceptable to the Administrative Agent]


 






  





 











  













 






  





 











  








EXHIBIT H-1


to


Credit Agreement


dated as of June 13, 2012


by and among


Kronos Worldwide, Inc.,


as Borrower,


the Lenders party thereto,


as Lenders,


and


Wells Fargo Bank, National Association,


as Administrative Agent


 


FORM OF U.S. TAX COMPLIANCE CERTIFICATE


 






  





 











  













 


U.S. TAX COMPLIANCE CERTIFICATE


(For Foreign Lenders That Are Not Treated As Partnerships For


U.S. Federal Income Tax Purposes)


 


Reference is made to the Credit Agreement dated as of [     ], 2012 (as amended, supplemented or otherwise modified from time to time) (the “Credit Agreement”), among Kronos Worldwide, Inc., a Delaware corporation (the “Borrower”), each lender from time to time party thereto (collectively, the “Lenders”), and Wells Fargo Bank, N.A. as Administrative Agent.  Terms defined in the Credit Agreement are used herein with the same meanings.  Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.


 


Pursuant to the provisions of Section 3.11(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) no payments in connection with any Loan Document are effectively connected with the undersigned’s conduct of a U.S. trade or business.


 


The undersigned has furnished the Administrative Agent with a certificate of its non-U.S. person status on IRS Form W-8BEN.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent in writing and (2) the undersigned shall furnish the Borrower and the Administrative Agent a properly completed and currently effective certificate in either the calendar year in which payment is to be made by the Borrower or the Administrative Agent to the undersigned, or in either of the two calendar years preceding each such payment.


 







 







[Foreign Lender]


 


 



	
  

	
By:

	                         	 





 


 



	
  

	
Name:







 


 



	
  

	
Title:







 


[Address]


 


Dated:           ______________________, 20[  ]






  





 











  













EXHIBIT H-2


to


Credit Agreement


dated as of June 13, 2012


by and among


Kronos Worldwide, Inc.,


as Borrower,


the Lenders party thereto,


as Lenders,


and


Wells Fargo Bank, National Association,


as Administrative Agent


 


FORM OF U.S. TAX COMPLIANCE CERTIFICATE


 






  





 











  








U.S. TAX COMPLIANCE CERTIFICATE


(For Foreign Lenders That Are Treated As Partnerships For


U.S. Federal Income Tax Purposes)


 


Reference is made to the Credit Agreement dated as of [     ], 2012 (as amended, supplemented or otherwise modified from time to time) (the “Credit Agreement”), among Kronos Worldwide, Inc., a Delaware corporation (the “Borrower”), each lender from time to time party thereto (collectively, the “Lenders”), and Wells Fargo Bank, N.A. as Administrative Agent.  Terms defined in the Credit Agreement are used herein with the same meanings.  Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.


 


Pursuant to the provisions of Section 3.11(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) neither the undersigned nor any of its partners/members is a bank within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (v) none of its partners/members is a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) no payments in connection with any Loan Document are effectively connected with the undersigned’s or its partners/members’ conduct of a U.S. trade or business.


 


The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of its partners/members claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent in writing and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding each such payment.


 


[Foreign Lender]


 


 



	
  

	
By:

	             	 





 


 



	
  

	
Name:







 


 



	
  

	
Title:







 


 


[Address]


 


Dated:           ______________________, 20[  ]






  





 











  








EXHIBIT H-3


to


Credit Agreement


dated as of June 13, 2012


by and among


Kronos Worldwide, Inc.,


as Borrower,


the Lenders party thereto,


as Lenders,


and


Wells Fargo Bank, National Association,


as Administrative Agent


 


FORM OF U.S. TAX COMPLIANCE CERTIFICATE


 






  





 











  








U.S. TAX COMPLIANCE CERTIFICATE


(FOR FOREIGN LENDERS THAT ARE TREATED AS PARTNERSHIPS FOR


U.S. FEDERAL INCOME TAX PURPOSES)


 


Reference is made to the Credit Agreement dated as of [     ], 2012 (as amended, supplemented or otherwise modified from time to time) (the “Credit Agreement”), among Kronos Worldwide, Inc., a Delaware corporation (the “Borrower”), each lender from time to time party thereto (collectively, the “Lenders”), and Wells Fargo Bank, N.A. as Administrative Agent.  Terms defined in the Credit Agreement are used herein with the same meanings.  Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.


 


Pursuant to the provisions of Section 3.11(e) and Section 10.10(d) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) neither the undersigned nor any of its partners/members is a bank within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (v) none of its partners/members is a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) no payments in connection with any Loan Document are effectively connected with the undersigned’s or its partners/members’ conduct of a U.S. trade or business.


 


The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of its partners/members claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent in writing and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding each such payment.


 


[Foreign Lender]


 


 



	
  

	
By:

	             	 





 


 



	
  

	
Name:







 


 



	
  

	
Title:







 


 


[Address]


 


Dated:           ______________________, 20[  ]






  





 











  








EXHIBIT H-4


to


Credit Agreement


dated as of June 13, 2012


by and among


Kronos Worldwide, Inc.,


as Borrower,


the Lenders party thereto,


as Lenders,


and


Wells Fargo Bank, National Association,


as Administrative Agent


 


FORM OF U.S. TAX COMPLIANCE CERTIFICATE


 






  





 











  








U.S. TAX COMPLIANCE CERTIFICATE


(For Foreign Participants That Are Not Treated As Partnerships For


U.S. Federal Income Tax Purposes)


 


Reference is made to the Credit Agreement dated as of [     ], 2012 (as amended, supplemented or otherwise modified from time to time) (the “Credit Agreement”), among Kronos Worldwide, Inc., a Delaware corporation (the “Borrower”), each lender from time to time party thereto (collectively, the “Lenders”), and Wells Fargo Bank, N.A. as Administrative Agent.  Terms defined in the Credit Agreement are used herein with the same meanings.  Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.


 


Pursuant to the provisions of Section 3.11(e) and Section 10.10(d) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) no payments in connection with any Loan Document are effectively connected with the undersigned’s conduct of a U.S. trade or business.


 


The undersigned has furnished its participating Lender with a certificate of its non-U.S. person status on IRS Form W-8BEN.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding each such payment.


 


[Foreign Participant]


 


 



	
  

	
By:

	             	 





 


 



	
  

	
Name:







 


 



	
  

	
Title:







 


 


[Address]


 


Dated:           ______________________, 20[  ]











  





 











  













EXHIBIT I


to


Credit Agreement


dated as of June 13, 2012


by and among


Kronos Worldwide, Inc.,


as Borrower,


the Lenders party thereto,


as Lenders,


and


Wells Fargo Bank, National Association,


as Administrative Agent


 


FORM OF AFFILIATED LENDER ASSIGNMENT AND ASSUMPTION


 






  





 











  













AFFILIATED LENDER ASSIGNMENT AND ASSUMPTION


 


Reference is made to the Credit Agreement, dated as of [                ], 2012 (as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Kronos Worldwide, Inc., a Delaware corporation (the “Borrower”), the lenders who are party to thereto, as Lenders, and Wells Fargo Bank, National Association, a national banking association, as Administrative Agent for the Lenders.  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.


 


The Assignor identified on Schedule I hereto (the “Assignor”) and the Assignee identified on Schedule I hereto (the “Assignee”) agree as follows:


 


1.           The Assignor hereby irrevocably sells and assigns to the Assignee without recourse to the Assignor, and the Assignee hereby irrevocably purchases and assumes from the Assignor without recourse to the Assignor, as of the Effective Date (as defined below), the interest described in Schedule I hereto (the “Assigned Interest”) in and to the Assignor’s rights and obligations under the Credit Agreement with respect to those credit facilities contained in the Credit Agreement as are set forth on Schedule I hereto (individually, an “Assigned Facility”; collectively, the “Assigned Facilities”), in a principal amount for each Assigned Facility as set forth on Schedule I hereto.


 


2.           The Assignor (a) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document or with respect to the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto, other than that the Assignor has not created any adverse claim upon the interest being assigned by it hereunder and that such interest is free and clear of any such adverse claim and (b) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower, any of its Affiliates or any other obligor or the performance or observance by the Borrower, any of its Affiliates or any other obligor of any of their respective obligations under the Credit Agreement or any other Loan Document or any other instrument or document furnished pursuant hereto or thereto.


 


3.           The Assignee represents and warrants that (a) it is legally authorized to enter into this Assignment and Assumption, (b) it is an Affiliated Lender in accordance with Section 10.10(b)(v) of the Credit Agreement, (c) the sale and assignment of the Assigned Interest satisfies the requirements of Section 10.10(b)(v) of the Credit Agreement and (d) neither it nor any of its Affiliates has any Material Non-Public Information.


 


4.           The Assignee (a) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements delivered pursuant to Section 6.1 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption; (b) agrees that it will, independently and without reliance upon the Assignor, the Agents or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (c) appoints and authorizes the Agents to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto as are delegated to the Agents by the terms thereof, together with such powers as are incidental thereto; and (d) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender including its obligations pursuant to Section 10.10 of the Credit Agreement.


 




  





  











  






5.           The effective date of this Assignment and Assumption shall be the Effective Date of Assignment described in Schedule I hereto (the “Effective Date”).  Following the execution of this Assignment and Assumption, it will be delivered to the Administrative Agent for acceptance by it and recording by the Administrative Agent pursuant to the Credit Agreement, effective as of the Effective Date (which shall not, unless otherwise agreed to by the Administrative Agent, be earlier than five Business Days after the date of such acceptance and recording by the Administrative Agent).


 


6.           Upon such acceptance and recording, from and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to the Effective Date and to the Assignee for amounts which have accrued subsequent to the Effective Date.


 


7.           From and after the Effective Date, (a) the Assignee shall be a party to the Credit Agreement, to the extent provided in this Assignment and Assumption, have the rights and obligations of a Lender under the Credit Agreement and under the other Loan Documents and shall be bound by the provisions thereof and (b) the Assignor shall, to the extent provided in this Assignment and Assumption, relinquish its rights and be released from its obligations under the Credit Agreement.


 


8.           This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York without regard to any conflicts of laws principles that would result in the application of any other laws.


 


[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]


 






  





 











  








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


 


Accepted for Recordation in the Register:                                                                           Required Consents (if any):


 


WELLS FARGO BANK, NATIONAL                                                                           KRONOS WORLDWIDE, INC.


ASSOCIATION, as Administrative


Agent


 


By:                     By:                                                                           


Name:                                                                           Name:


 


Title:                                                                           Title:


 












[Name of Assignee]                                                                           [Name of Assignor]


 



	
By:  ______________________________

	
By:  ______________________________







Title:                                                                           Title:
















  





 











  








Schedule I


 


Affiliated Lender Assignment and Assumption with respect to


the Credit Agreement, dated as of [               ], 2012


among Kronos Worldwide, Inc., a Delaware corporation, the lenders who are party to thereto, as Lenders, and Wells Fargo Bank, National Association, a national banking association, as Administrative Agent for the Lenders.


 


Name of Assignor:                                                                          


 


Name of Assignee:                                                                          


 


Effective Date of Assignment:12                                                                          


 



	

Credit Facility Assigned


 



	

Principal


Amount Assigned


 



	

Commitment Percentage


Assigned


 




	
Term Loan Facility

	
$______________

	
_____.__________%












[Name of Assignee]                                                                           [Name of Assignor]


 



	
By:  ______________________________

	
By:  ______________________________







Title:                                                                           Title:
























  


	
12

	
Effective Date of Assignment to be after Closing Date.







 








  





 











  










Schedule 5.1


 


 


Jurisdictions of Organization and Qualification


 



	
Legal Name

	
Type of Entity

	
Registered Organization


(Yes/No)

	
Organizational Number1

	
Federal Taxpayer


Identification Number

	
Jurisdiction of Formation


	
Kronos International, Inc.

	
For-profit corporation

	
Yes

	
File No:  2182484

	
22-2949593

	
Delaware (1)


	
Kronos Louisiana, Inc.

	
For-profit corporation

	
Yes

	
File No:  22014957

	
76-0294961

	
Delaware


	
Kronos (US), Inc.

	
For-profit corporation

	
Yes

	
File No:  2087814

	
13-334636

	
Delaware


	
Kronos Worldwide, Inc.

	
For-profit corporation

	
Yes

	
File No:  2210471

	
76-0294959

	
Delaware












States in which a Credit Party is Qualified to Do Business in the United States of America








	

Kronos International, Inc.



	

Kronos Louisiana, Inc.



	

Kronos (US), Inc.



	

Kronos Worldwide, Inc.




	  	  	  	  
	
Texas

	
Louisiana

	
Alabama

	
Michigan

	
Oregon

	
New Jersey


	  	
Texas

	
California

	
Mississippi

	
Pennsylvania

	
Texas


	  	  	
Florida

	
Missouri

	
Tennessee

	  
	  	  	
Georgia

	
New Jersey

	
Texas

	  
	  	  	
Illinois

	
New York

	
Virginia

	  
	  	  	
Indiana

	
North Carolina

	
Washington

	  
	  	  	
Kentucky

	
Ohio

	
Wisconsin

	  
	  	  	
Louisiana

	
Oklahoma

	  	  















(1)           Kronos International, Inc. is also registered in the commercial register in the local court in Cologne, North Rhine-Westphalia, Federal Republic of Germany.














  

1If none, so state.








  





 











  













 


Schedule 5.2


 


Subsidiaries and Capitalization


 


Credit Party Subsidiaries








	

Kronos International, Inc.



	

Kronos Louisiana, Inc.



	

Kronos (US), Inc.



	

Kronos Worldwide, Inc.




	  	  	  	  
	
Kronos Limited Societe Industrielle Du Titane, S.A.


Kronos Denmark ApS


Kronos Titan GmbH


 

	
Kronos (US), Inc.


 

	  	  	  	
Kronos Canada Inc.


Kronos Louisiana, Inc.


Kronos International, Inc.


 


	
Credit Party/Subsidiary

	
Record Owner

	
Collateral Shares/Interest

	  
	
Kronos International, Inc.

	
Kronos Worldwide, Inc.

	
2,968 shares of the common stock, par value $100 per share, issued and outstanding and registered to Kronos Worldwide, Inc. (formerly Kronos, Inc.) representing 100% of the outstanding equity of Kronos International, Inc. (represented by stock certificate no. 7).

	  
	
Kronos Louisiana, Inc.

	
Kronos Worldwide, Inc.

	
375 shares of the common stock, par value $0.01per share, issued and outstanding and registered to Kronos Worldwide, Inc. representing 100% of the outstanding equity of Kronos Louisiana, Inc. (represented by stock certificate no. 5).

	  
	
Kronos (US), Inc.

	
Kronos Louisiana, Inc.

	
None

	  
	
Kronos Worldwide, Inc.

	
Publically Traded

	
None

	  
	
Kronos Canada Inc.

	
Kronos Worldwide, Inc.

	
137,026 shares of the capital stock issued and outstanding and registered to Kronos Worldwide, Inc. representing 65% of the outstanding equity of Kronos Canada Inc. (represented by stock certificate no. 8).

	  
	
Kronos Titan GmbH

	
Kronos International, Inc.

	
Capital of €6.5 million and €0.65 thousand, both owned entirely by Kronos International, Inc. representing 65% of the capital interests, which capital interests are not represented by certificates.

	  
	
Kronos Denmark ApS

	
Kronos International, Inc.

	
6,506 shares of the shares of capital stock, of which the nominal amount of each share is DKK 100, issued and outstanding and registered to Kronos International, Inc. representing 65% of the outstanding equity of Kronos Denmark ApS (which shares are not represented by a stock certificate).

	  
	
Kronos Limited

	
Kronos International, Inc.

	
None

	  
	
Societe Industrielle Du Titane, S.A.

	
Kronos International, Inc.

	
None

	  









  





 











  













 


Schedule 5.9


 


 


ERISA Plans of Credit Parties and ERISA Affiliates


 


The Combined Master Retirement Trust


The Combined Master Retirement Subtrust


The Combined Master Retirement Subtrust #3


The Employee 401(K) Retirement Plan


Contran Corp. Pension Plan


CompX Capital Accumulation Pension Plan


CompX International Welfare Benefit Plan


Keystone Employees Retirement Plan


Keystone-Bartonville 401(K) Retirement Plan


Keystone EMP Welfare Benefit Plan I


Keystone EMP Welfare Benefit Plan II


Keystone Inactive Employees Retirement Plan


Retirement Programs of NL Industries, Inc.


NL Industries, Inc. Comprehensive Welfare Plan


WCS Caprock Health


Restated Amalgamated Sugar Company LLC Salaried Employee Retirement Savings Plan


The Restated Amalgamated Sugar Company LLC Retirement Plan for Salaried Employees


The Restated Amalgamated Sugar Company LLC Retirement Plan for Hourly Production Employees


The Restated Amalgamated Sugar Company LLC Hourly Production Employee Retirement Savings Plan


The Amalgamated Sugar Company LLC Medical and Dental Benefits for Hourly Employees


The Amalgamated Sugar Company LLC Hourly Group Life Accidental Death and Dismemberment Insurance Plan


The Amalgamated Sugar Company LLC Medical and Dental Benefits for Salaried Employees


The Amalgamated Sugar Company LLC Salaried Group Life Accidental Death and Dismemberment Insurance Plan


The Amalgamated Sugar Company LLC Group Long Term Disability Plan







 

 







 







 







 











  





 











  








 


Schedule 5.12


 


 


Material Contracts Relating to the Collateral


 


 



	
1.  

	
Form of Tax Agreement between Valhi, Inc. and Kronos Worldwide, Inc.







 


 



	
2.  

	
Intercorporate Services Agreement by and between Contran Corporation and Kronos Worldwide, Inc., effective as of January 1, 2004.







 


 



	
3.  

	
€80,000,000 Facility Agreement, dated June 25, 2002, among Kronos Titan GmbH & Co. OHG, Kronos Europe S.A./N.V., Kronos Titan A/S and Titania A/S, as borrowers, Kronos Titan GmbH & Co. OHG, Kronos Europe S.A./N.V. and Kronos Norge AS, as guarantors, Kronos Denmark ApS, as security provider, Deutsche Bank AG, as mandated lead arranger, Deutsche Bank Luxembourg S.A., as agent and security agent, and KBC Bank NV, as fronting bank, and the financial institutions listed in Schedule 1 thereto, as lenders.







 


 



	
4.  

	
First Amendment Agreement, dated September 3, 2004, Relating to a Facility Agreement dated June 25, 2002 among Kronos Titan GmbH, Kronos Europe S.A./N.V., Kronos Titan AS and Titania A/S, as borrowers, Kronos Titan GmbH, Kronos Europe S.A./N.V. and Kronos Norge AS, as guarantors, Kronos Denmark ApS, as security provider, with Deutsche Bank Luxembourg S.A., acting as agent.







 


 



	
5.  

	
Second Amendment Agreement Relating to a Facility Agreement dated June 25, 2002 executed as of June 14, 2005 by and among Deutsche Bank AG, as mandated lead arranger, Deutsche Bank Luxembourg S.A. as agent, the participating lenders, Kronos Titan GmbH, Kronos Europe S.A./N.V, Kronos Titan AS, Kronos Norge AS, Titania AS and Kronos Denmark ApS.







 


 



	
6.  

	
Third Amendment Agreement Relating to a Facility Agreement dated June 25, 2002 executed as of May 26, 2008 by and among Deutsche Bank AG, as mandated lead arranger, Deutsche Bank Luxembourg S.A., as agent, the participating lenders, Kronos Titan GmbH, Kronos Europe S.A.,/N.V, Kronos Titan AS, Kronos Norge AS, Titania AS and Kronos Denmark ApS.







 


 



	
7.  

	
Fourth Amendment Agreement Relating to a Facility Agreement dated June 25, 2002 executed as of September 15, 2009 by and among Deutsche Bank AG, as mandated lead arranger, Deutsche Bank Luxembourg S.A., as agent, the participating lenders, Kronos Titan GmbH, Kronos Europe S.A./N.V., Kronos Titan AS, Kronos Norge AS, Titania AS and Kronos Denmark ApS.







 


 



	
8.  

	
Fifth Amendment Agreement Relating to a Facility Agreement dated June 25, 2002 executed as of October 28, 2010 by and among Deutsche Bank AG, as mandated lead arranger, Deutsche Bank Luxembourg S.A., as agent, the participating lenders, Kronos Titan GmbH, Kronos Europe S.A./N.V., Kronos Titan AS, Kronos Norge AS, Titania AS and Kronos Denmark ApS.







 


 



	
9.  

	
Lease Contract, dated June 21, 1952, between Farbenfabriken Bayer Aktiengesellschaft and Titangesellschaft mit beschrankter Haftung (German language version and English translation thereof).







 


 



	
10.  

	
Master Technology Exchange Agreement, dated as of October 18, 1993, among Kronos Worldwide, Inc. (f/k/a Kronos, Inc.), Kronos Louisiana, Inc., Kronos International, Inc., Tioxide Group Limited and Tioxide Group Services Limited.







 


 




  





  











  







	
11.  

	
Form of Assignment and Assumption Agreement, dated as of January 1, 1999, between Kronos Inc. (formerly known as Kronos (USA), Inc.) and Kronos International, Inc.







 


 



	
12.  

	
Form of Cross License Agreement, effective as of January 1, 1999, between Kronos Inc. (formerly known as Kronos (USA), Inc.) and Kronos International, Inc.







 


 



	
13.  

	
Formation Agreement dated as of October 18, 1993 among Tioxide Americas Inc., Kronos Louisiana, Inc. and Louisiana Pigment Company, L.P.







 


 



	
14.  

	
Joint Venture Agreement dated as of October 18, 1993 between Tioxide Americas Inc. and Kronos Louisiana, Inc.







 


 



	
15.  

	
Kronos Offtake Agreement dated as of October 18, 1993 between Kronos Louisiana, Inc. and Louisiana Pigment Company, L.P.







 


 



	
16.  

	
Amendment No. 1 to Kronos Offtake Agreement dated as of December 20, 1995 between Kronos Louisiana, Inc. and Louisiana Pigment Company, L.P.







 


 



	
17.  

	
Tioxide Americas Offtake Agreement dated as of October 18, 1993 between Tioxide Americas Inc. and Louisiana Pigment Company, L.P.







 


 



	
18.  

	
Amendment No. 1 to Tioxide Americas Offtake Agreement dated as of December 20, 1995 between Tioxide Americas Inc. and Louisiana Pigment Company, L.P.







 


 



	
19.  

	
Parents’ Undertaking dated as of October 18, 1993 between ICI American Holdings Inc. and Kronos Worldwide, Inc. (f/k/a Kronos, Inc.).







 


 



	
20.  

	
Allocation Agreement dated as of October 18, 1993 between Tioxide Americas Inc., ICI American Holdings, Inc., Kronos Worldwide, Inc. (f/k/a Kronos, Inc.) and Kronos Louisiana, Inc.







 


 



	
21.  

	
Insurance sharing agreement dated October 30, 2003 by and among CompX International Inc., Contran Corporation, Keystone Consolidated Industries, Inc., Titanium Metals Corp., Valhi, Inc., NL Industries, Inc. and Kronos Worldwide, Inc.







 


 



	
22.  

	
Services Agreement, dated as of January 1, 2004, among Kronos International, Inc., Kronos Europe S.A./N.V., Kronos (US), Inc., Kronos Titan GmbH, Kronos Denmark ApS, Kronos Canada, Inc., Kronos Limited, Societe Industrielle Du Titane, S.A., Kronos B.V., Kronos Titan AS and Titania AS.







 


 



	
23.  

	
Form of Assignment and Assumption Agreement, dated as of January 1, 1999, between Kronos, Inc. (formerly known as Kronos (USA), Inc.) and Kronos International, Inc.







 


 



	
24.  

	
Form of Cross License Agreement, effective as of January 1, 1999, between Kronos Inc. (formerly known as Kronos (USA), Inc.) and Kronos International, Inc.







 


 



	
25.  

	
Agency Agreement, dated as of January 1, 2004, among Kronos International, Inc., Kronos Titan GmbH, Kronos Europe S.A./N.V., Kronos Canada, Inc., Kronos Titan AS and Societe Indutrielle Du Titane, S.A.







 


 




  





  











  







	
26.  

	
Titanium Dioxide Products and Titanium Chemicals Distribution Agreement, dated as of January 1, 2005, among Kronos Titan GmbH, Kronos Europe S.A./N.V., Kronos Canada, Inc., Kronos Titan AS, Kronos (US), Inc., Kronos Denmark ApS, Kronos Titan GmbH, Kronos Limited, Societe Industrielle Du Titane, S.A. and Kronos B.V.







 


 



	
27.  

	
Raw Material Purchase and Sale Agreement, dated as of January 1, 2004, among Kronos (US), Inc., Kronos Titan GmbH, Kronos Europe S.A./N.V. and Kronos Canada, Inc.







 






  





 











  













 


Schedule 5.13


 


 


Labor and Collective Bargaining Agreements of Credit Parties


 


Kronos International, Inc. agreements with its Worker’s Council


 



	
Arrangement for the implementation of vocational preventive medical check-ups within the framework of health management


	
Reorganization of the salary accounting system and remuneration


	
Old age working time reduction


	
Internal education and assessment of the tariff group classifications into the pay grades E6


	
Targeted achievements / bonus


	
Corporate proposal system


	
Jubilee / anniversary


	
Payment of the clearance action and on-call service


	
Regulation of the payment for on-call service for the managerial employees


	
Reorganization of the above general pay scale


	
Adaption of the company base (Firmensockel) as a result of collective agreement changes


	
Reimbursement of the travel expenses and time for the participation at works (staff) meetings


	
Working time regulation for tariff, managerial employees and managing executives


	
Working time regulation on New Year ́s Eve and Christmas Eve


	
In-company advertisement


	
Extra allowances for extreme working conditions


	
Introduction of a long term account


	
Complex Technical Systems, especially new technologies, working processes and process flows


	
Using of personnel questionnaire


	
Application of the collective agreement on one-off payments and retirement provision


	
Appointment of safety officer (inspector)


	
Equal opportunities and  treatments of disabled (severely handicapped) and equal persons


	
Implementation and use of the "Chemical Industry Park ID card" as "KRONOS ID card"












 






  





 











  








 


Schedule 5.19


 


 


Litigation of Borrower


 


 


Haley Paint et al. v. E.I. Du Pont de Nemours and Company, et al. (United States District Court, for the District of Maryland, Case No. 1:10-cv-00318-RDB). The defendants include Kronos Worldwide, Inc., E.I. Du Pont de Nemours & Company, Huntsman International LLC, Millennium Inorganic Chemicals, Inc. and the National Titanium Dioxide Company Limited (d/b/a Cristal).






  





 











  








 


Schedule 6.18


 


 


Post Closing Matters


 



	
1.  

	
With respect to each of the accounts set forth below, the Administrative Agent shall have (i) received duly executed Control Agreements (as defined in the Collateral Agreement); provided that if the ABL Facility is then outstanding the requirements of this clause (i) shall be deemed satisfied by entering into Control Agreements granting “control” (as defined in the UCC) over such accounts to the ABL Collateral Agent as bailee for the Administrative Agent pursuant to the Intercreditor Agreement or (ii) evidence reasonably satisfactory to it that the Borrower and each other applicable Credit Party shall have closed such account and transferred the amounts on deposit therein or credited thereto to an account maintained with the ABL Collateral Agent, in each case within ninety (90) days of the Closing Date (which, at the discretion of the Administrative Agent, may be extended and shall be deemed extended if extended by the ABL Collateral Agent):












 



	
OWNER

	
TYPE OF ACCOUNT

	
BANK OR INTERMEDIARY

	
ACCOUNT NUMBERS


	
Kronos Louisiana, Inc.

	
Master

	
US Bank

	
130103005133


	  	  	  	  
	
Kronos (US), Inc.

	
Lockbox

	
Comerica Bank

	
1852261708


	
Kronos (US), Inc.

	
Investment

	
Comerica Bank

	
1080033299


	
Kronos (US), Inc.

	
Investment

	
JP Morgan

	
3241767000


	
Kronos (US), Inc.

	
Master

	
US Bank

	
130103005141


	
Kronos (US), Inc.

	
Accounts Payable

	
US Bank

	
130103009671


	  	  	  	  
	
Kronos Worldwide, Inc.

	
Investment

	
Comerica Bank

	
1080034252


	
Kronos Worldwide, Inc.

	
Investment

	
JP Morgan

	
3241317004


	
Kronos Worldwide, Inc.

	
Master

	
US Bank

	
130103046889


	  	  	  	  
	  	  	  	  





























  





 











  













 


Schedule 7.1


 


 


Existing Indebtedness of Borrower and all Subsidiaries


 



	
·  

	
Kronos International 6.5% Senior Secured Notes – €279.2 million principal amount







 



	
·  

	
€80 million European Revolver







 



	
·  

	
Capital lease obligations of Titania AS - ~ $4.1 million principal balance remaining







 



	
·  

	
Cdn $10 million loan agreement – Bank of Montreal – limited to issuance of letters of credit







 



	
·  

	
Agreement with the Economic Development Agency of the Province of Quebec, Canada providing for borrowings of up to Cdn $7.1 million







 



	
·  

	
Kronos Norge A/S NOK 10 million overdraft line with Den Norske Bank







 


























  





 











  













 


 


Schedule 7.2


 


 


Existing Liens of Borrower and all Subsidiaries


 



	
·  

	
Liens associated with KII Senior Secured Notes







 



	
·  

	
Liens associated with €80 million European Revolver







 



	
·  

	
Liens on Capital Lease obligations of Titania AS







 



	
·  

	
Liens associated with Cdn $10 million Bank of Montreal loan/LC facility







 



	
·  

	
Liens associated with Economic Development Agency of the Province of Quebec, Canada providing for borrowings of up to Cdn $7.1 million







 


 







 






  





 











  








 


Schedule 7.3


 


 


Existing Loans, Advances and Investments of Borrower and all Subsidiaries


 



	
·  

	
4,245,769 shares of Titanium Metals Corporation common stock







 



	
·  

	
1,724,916 shares of Valhi, Inc. common stock







 



	
·  

	
2,000 shares of NL Industries, Inc. common stock







 



	
·  

	
3,000 shares of CompX International Inc. Class A common stock







 



	
·  

	
50% interest in Louisiana Pigment Company, L.P.







 



	
·  

	
76,470,588 shares of Austpac Resources N.L. common stock







 



	
·  

	
$225 million Kronos Worldwide, Inc. Revolving Promissory Note receivable from Valhi, Inc.







 






  





 











  








 


Schedule 7.7


 


 


Transactions with Affiliates


 



	
·  

	
$225 million Kronos Worldwide, Inc. Revolving Promissory Note receivable from Valhi, Inc.







 



	
·  

	
Any intra-Kronos Worldwide, Inc. group Existing Indebtedness and Existing Investments







 



	
·  

	
Purchase of TiO2 from Louisiana Pigment Company







 



	
·  

	
Purchases and sales of TiO2 and other products amongst the Credit Parties and their Subsidiaries, consistent with transfer pricing policies







 



	
·  

	
Commission sales/payment of agency fees amongst the Credit Parties and their Subsidiaries, consistent with transfer pricing policies







 



	
·  

	
 Sales of feedstock ore to Louisiana Pigment Company







 



	
·  

	
Purchases and sales of feedstock ore amongst the Credit Parties and their Subsidiaries, consistent with transfer pricing policies







 



	
·  

	
Royalty payments paid amongst Credit Parties and their Subsidiaries, consistent with transfer pricing policies







 



	
·  

	
Intercorporate Services Agreements with Contran Corporation whereby Contran provides certain management, tax planning, financial and other administrative services to Kronos Worldwide, Inc. and Subsidiaries on a fee basis; as described in KWI’s periodic SEC filings







 



	
·  

	
Cost sharing agreements amongst the Credit Parties and their Subsidiaries whereby one party provides other parties with certain management, tax planning, financial and other administrative services on a fee basis; as in part described in KII’s periodic SEC filings, consistent with transfer pricing policies







 



	
·  

	
The Contran group risk management program pursuant to which certain insurance policies are purchased for the benefit of the Contran group, including Kronos Worldwide, Inc. and Subsidiaries, and the cost of such policies are allocated amongst the participants; related Loss Sharing Agreement amongst members of the Contran group, including Kronos Worldwide, Inc.; as described in KWI’s periodic SEC filings







 



	
·  

	
Accounts receivable factoring program between the Foreign Subsidiaries of KWI







 


 







 






  





 











  








 


Schedule 7.10(b)


 


 


Existing Encumbrances and Restrictions of Borrower and all Subsidiaries


 



	
·  

	
Restrictions under the €80 million European Revolver







 



	
·  

	
Restrictions under Cdn $10 million loan agreement – Bank of Montreal







 



	
·  

	
Restrictions under Agreement with the Economic Development Agency of the Province of Quebec, Canada providing for borrowings of up to Cdn $7.1 million







 



	
·  

	
Restrictions under forward currency contracts entered into in the ordinary course of business to hedge currency exposure