a50013388ex10-1.htm


Exhibit 10.1




REVOLVING CREDIT


 


AND


 


SECURITY AGREEMENT


 


 


 


PNC BANK, NATIONAL ASSOCIATION


 


(AS LENDER AND AS AGENT)


 


AND


 


SUCH OTHER LENDERS WHICH ARE NOW OR HEREAFTER A PARTY HERETO


 


WITH


 


HORSEHEAD CORPORATION, A DELAWARE CORPORATION


 


(AS BORROWER)


 


AND


 


THE GUARANTORS PARTY HERETO


 


 


 


 


September 28, 2011


 


 


 




  





  











  











TABLE OF CONTENTS


 




	
I.

	
DEFINITIONS.

	
1


	  	
1.1.

	
Accounting Terms.

	
1


	  	
1.2.

	
General Terms.

	
1


	  	
1.3.

	
Uniform Commercial Code Terms.

	
25


	  	
1.4.

	
Certain Matters of Construction.

	
26


	
II.

	
ADVANCES, PAYMENTS.

	
27


	  	
2.1.

	
Revolving Advances.

	
27


	  	
2.2.

	
Procedure for Revolving Advances Borrowing.

	
27


	  	
2.3.

	
Disbursement of Advance Proceeds.

	
30


	  	
2.4.

	
Maximum Advances.

	
30


	  	
2.5.

	
Repayment of Advances.

	
30


	  	
2.6.

	
Repayment of Excess Advances.

	
31


	  	
2.7.

	
Statement of Account.

	
31


	  	
2.8.

	
Letters of Credit.

	
31


	  	
2.9.

	
Issuance of Letters of Credit.

	
31


	  	
2.10.

	
Requirements For Issuance of Letters of Credit.

	
32


	  	
2.11.

	
Disbursements, Reimbursement.

	
33


	  	
2.12.

	
Repayment of Participation Advances.

	
34


	  	
2.13.

	
Documentation.

	
34


	  	
2.14.

	
Determination to Honor Drawing Request.

	
35


	  	
2.15.

	
Nature of Participation and Reimbursement Obligations.

	
35


	  	
2.16.

	
Indemnity.

	
36


	  	
2.17.

	
Liability for Acts and Omissions.

	
37


	  	
2.18.

	
Additional Payments.

	
38


	  	
2.19.

	
Manner of Borrowing and Payment.

	
38


	  	
2.20.

	
Use of Proceeds.

	
40


	  	
2.21.

	
Defaulting Lender.

	
40


	
III.

	
INTEREST AND FEES.

	
41


	  	
3.1.

	
Interest.

	
41


	  	
3.2.

	
Letter of Credit Fees.

	
42


	  	
3.3.

	
Facility Fee.

	
43


	  	
3.4.

	
Fee Letter.

	
43


	  	
3.5.

	
Computation of Interest and Fees.

	
43


	  	
3.6.

	
Maximum Charges.

	
44


	  	
3.7.

	
Increased Costs.

	
44


	  	
3.8.

	
Basis For Determining Interest Rate Inadequate or Unfair.

	
45


	  	
3.9.

	
Capital Adequacy.

	
45


	  	
3.10.

	
Gross Up for Taxes.

	
46


	  	
3.11.

	
Withholding Tax Exemption.

	
46


	
IV.

	
COLLATERAL:  GENERAL TERMS.

	
47


	  	
4.1.

	
Security Interest in the Collateral.

	
47


	  	
4.2.

	
Perfection of Security Interest.

	
47


	  	
4.3.

	
Disposition of Collateral.

	
48


	  	
4.4.

	
Preservation of Collateral.

	
48





 


 




  





- i -











  






 


 


	  	
4.5.

	
Ownership of Collateral.

	
49


	  	
4.6.

	
Defense of Agent's and Lenders' Interests.

	
49


	  	
4.7.

	
Books and Records.

	
50


	  	
4.8.

	
Intentionally Omitted.

	
50


	  	
4.9.

	
Compliance with Laws.

	
50


	  	
4.10.

	
Inspection of Premises; Appraisals.

	
50


	  	
4.11.

	
Insurance.

	
51


	  	
4.12.

	
Failure to Pay Insurance.

	
52


	  	
4.13.

	
Payment of Taxes.

	
52


	  	
4.14.

	
Payment of Leasehold Obligations.

	
52


	  	
4.15.

	
Receivables.

	
53


	  	
4.16.

	
Inventory.

	
55


	  	
4.17.

	
Maintenance of Equipment.

	
55


	  	
4.18.

	
Exculpation of Liability.

	
56


	  	
4.19.

	
Environmental Matters.

	
56


	  	
4.20.

	
Financing Statements.

	
56


	
V.

	
REPRESENTATIONS AND WARRANTIES.

	
57


	  	
5.1.

	
Authority.

	
57


	  	
5.2.

	
Formation and Qualification.

	
57


	  	
5.3.

	
Survival of Representations and Warranties.

	
57


	  	
5.4.

	
Tax Returns.

	
58


	  	
5.5.

	
Financial Statements.

	
58


	  	
5.6.

	
Entity Names.

	
59


	  	
5.7.

	
O.S.H.A. and Environmental Compliance.

	
59


	  	
5.8.

	
Solvency; No Litigation, Violation, Indebtedness or Default.

	
59


	  	
5.9.

	
Patents, Trademarks, Copyrights and Licenses.

	
61


	  	
5.10.

	
Licenses and Permits.

	
61


	  	
5.11.

	
Default of Indebtedness.

	
61


	  	
5.12.

	
No Default.

	
61


	  	
5.13.

	
No Burdensome Restrictions.

	
61


	  	
5.14.

	
No Labor Disputes.

	
62


	  	
5.15.

	
Margin Regulations.

	
62


	  	
5.16.

	
Investment Company Act.

	
62


	  	
5.17.

	
Disclosure.

	
62


	  	
5.18.

	
Swaps.

	62
	  	
5.19.

	
Conflicting Agreements.

	
62


	  	
5.20.

	
Application of Certain Laws and Regulations.

	
63


	  	
5.21.

	
Business and Property of Borrower Parties.

	
63


	  	
5.22.

	
Section 20 Subsidiaries.

	
63


	  	
5.23.

	
Anti-Terrorism Laws.

	
63


	  	
5.24.

	
Trading with the Enemy.

	
64


	  	
5.25.

	
Federal Securities Laws.

	
64


	
VI.

	
AFFIRMATIVE COVENANTS.

	
64


	  	
6.1.

	
Payment of Fees.

	
64


	  	
6.2.

	
Conduct of Business and Maintenance of Existence and Assets.

	
64


	  	
6.3.

	
Violations.

	
65





 


 




  





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6.4.

	
Government Receivables.

	
65


	  	
6.5.

	
Financial Covenants.

	
65


	  	
6.6.

	
Execution of Supplemental Instruments.

	
66


	  	
6.7.

	
Payment of Indebtedness.

	
66


	  	
6.8.

	
Standards of Financial Statements.

	
66


	  	
6.9.

	
Federal Securities Laws.

	
66


	
VII.

	
NEGATIVE COVENANTS.

	
66


	  	
7.1.

	
Merger, Consolidation, Acquisition and Sale of Assets.

	
66


	  	
7.2.

	
Creation of Liens.

	
68


	  	
7.3.

	
Guarantees.

	
68


	  	
7.4.

	
Investments.

	
68


	  	
7.5.

	
Loans.

	
69


	  	
7.6.

	
Dividends/Distributions.

	
69


	  	
7.7.

	
Indebtedness.

	
69


	  	
7.8.

	
Nature of Business.

	
70


	  	
7.9.

	
Transactions with Affiliates.

	
70


	  	
7.10.

	
Leases

	
70


	  	
7.11.

	
Subsidiaries.

	
70


	  	
7.12.

	
Fiscal Year and Accounting Changes.

	
71


	  	
7.13.

	
Pledge of Credit.

	
71


	  	
7.14.

	
Amendment of Organizational Documents.

	
71


	  	
7.15.

	
Compliance with ERISA.

	
71


	  	
7.16.

	
Prepayment of Indebtedness.

	
72


	  	
7.17.

	
Anti-Terrorism Laws.

	
72


	  	
7.18.

	
Membership/Partnership Interests.

	
72


	  	
7.19.

	
Trading with the Enemy Act.

	
72


	  	
7.20.

	
Other Agreements.

	
72


	  	
7.21.

	
Double Negative Pledge.

	
73


	
VIII.

	
CONDITIONS PRECEDENT.

	
73


	  	
8.1.

	
Conditions to Initial Advances.

	
73


	  	
8.2.

	
Conditions to Each Advance.

	
76


	
IX.

	
INFORMATION AS TO LOAN PARTIES.

	
76


	  	
9.1.

	
Disclosure of Material Matters.

	
77


	  	
9.2.

	
Schedules.

	
77


	  	
9.3.

	
Intentionally Omitted.

	
77


	  	
9.4.

	
Litigation.

	
77


	  	
9.5.

	
Material Occurrences.

	
77


	  	
9.6.

	
Government Receivables.

	
78


	  	
9.7.

	
Annual Financial Statements.

	
78


	  	
9.8.

	
Quarterly Financial Statements.

	
78


	  	
9.9.

	
Monthly Financial Statements.

	
79


	  	
9.10.

	
Other Reports.

	
79


	  	
9.11.

	
Additional Information.

	
79


	  	
9.12.

	
Projected Operating Budget.

	
79


	  	
9.13.

	
Environmental Matters.

	
79


	  	
9.14.

	
Notice of Suits, Adverse Events.

	
80





 


 




  





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9.15.

	
ERISA Notices and Requests.

	
80


	  	
9.16.

	
Additional Documents.

	
81


	
X.

	
EVENTS OF DEFAULT.

	
81


	  	
10.1.

	
Nonpayment.

	
81


	  	
10.2.

	
Breach of Representation.

	
81


	  	
10.3.

	
Financial Information.

	
81


	  	
10.4.

	
Judicial Actions.

	
81


	  	
10.5.

	
Noncompliance.

	
82


	  	
10.6.

	
Judgments.

	
82


	  	
10.7.

	
Bankruptcy.

	
82


	  	
10.8.

	
Inability to Pay.

	
82


	  	
10.9.

	
Affiliate Bankruptcy.

	
82


	  	
10.10.

	
Material Adverse Effect.

	
83


	  	
10.11.

	
Lien Priority.

	
83


	  	
10.12.

	
Cross Default - Indebtedness.

	
83


	  	
10.13.

	
Cross Default – Other Agreements.

	
83


	  	
10.14.

	
Breach of Guaranty.

	
83


	  	
10.15.

	
Change of Ownership.

	
84


	  	
10.16.

	
Invalidity.

	
84


	  	
10.17.

	
Licenses.

	
84


	  	
10.18.

	
Seizures.

	
84


	  	
10.19.

	
Holding.

	
84


	  	
10.20.

	
Pension Plans.

	
84


	
XI.

	
LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.

	
85


	  	
11.1.

	
Rights and Remedies.

	
85


	  	
11.2.

	
Agent's Discretion.

	
86


	  	
11.3.

	
Setoff.

	87
	  	
11.4.

	
Rights and Remedies not Exclusive.

	
87


	  	
11.5.

	
Allocation of Payments After Event of Default.

	
87


	
XII.

	
WAIVERS AND JUDICIAL PROCEEDINGS.

	
88


	  	
12.1.

	
Waiver of Notice.

	
88


	  	
12.2.

	
Delay.

	88
	  	
12.3.

	
Jury Waiver.

	
88


	
XIII.

	
EFFECTIVE DATE AND TERMINATION.

	
89


	  	
13.1.

	
Term.

	89
	  	
13.2.

	
Termination.

	
89


	
XIV.

	
REGARDING AGENT.

	
89


	  	
14.1.

	
Appointment.

	
89


	  	
14.2.

	
Nature of Duties.

	
90


	  	
14.3.

	
Lack of Reliance on Agent and Resignation.

	
90


	  	
14.4.

	
Certain Rights of Agent.

	
91


	  	
14.5.

	
Reliance.

	
91


	  	
14.6.

	
Notice of Default.

	
91


	  	
14.7.

	
Indemnification.

	
92


	  	
14.8.

	
Agent in its Individual Capacity.

	
92


	  	
14.9.

	
Delivery of Documents.

	
92





 


 




  





- iv -











  






 


 


	  	
14.10.

	
Borrower's Undertaking to Agent.

	
92


	  	
14.11.

	
No Reliance on Agent's Customer Identification Program.

	
92


	  	
14.12.

	
Other Agreements.

	
93


	
XV.

	
MISCELLANEOUS.

	
93


	  	
15.1.

	
Governing Law.

	
93


	  	
15.2.

	
Entire Understanding.

	
94


	  	
15.3.

	
Successors and Assigns; Participations; New Lenders.

	
96


	  	
15.4.

	
Application of Payments.

	
98


	  	
15.5.

	
Indemnity.

	
98


	  	
15.6.

	
Notice.

	99
	  	
15.7.

	
Survival.

	
100


	  	
15.8.

	
Severability.

	
101


	  	
15.9.

	
Expenses.

	
101


	  	
15.10.

	
Injunctive Relief.

	
101


	  	
15.11.

	
Consequential Damages.

	
101


	  	
15.12.

	
Captions.

	
101


	  	
15.13.

	
Counterparts; Facsimile Signatures.

	
102


	  	
15.14.

	
Construction.

	
102


	  	
15.15.

	
Confidentiality; Sharing Information.

	
102


	  	
15.16.

	
Publicity.

	
103


	  	
15.17.

	
Certifications From Banks and Participants; USA PATRIOT Act.

	
103


	  	
15.18.

	
Joinder of Guarantors.

	
103









 




 




  





- v -











  











LIST OF EXHIBITS AND SCHEDULES


 




	
Exhibits

	  
	  	  
	
Exhibit 1.2

	
Borrowing Base Certificate


	
Exhibit 2.1(a)

	
Revolving Credit Note


	
Exhibit 5.5(a)

	
Financial Projections


	
Exhibit 8.1(i)

	
Financial Condition Certificate


	
Exhibit 15.3

	
Commitment Transfer Supplement


	  	  
	
Schedules

	  
	  	  
	
Schedule 1.2(B)

	
Permitted Encumbrances


	
Schedule 1.2(E)

	
Existing Bank Accounts


	
Schedule 2.9

	
Existing Letters of Credit


	
Schedule 4.5

	
Equipment and Inventory Locations


	
Schedule 4.15(h)

	
Deposit and Investment Accounts


	
Schedule 4.19

	
Real Property


	
Schedule 5.1

	
Consents


	
Schedule 5.2(a)

	
States of Qualification and Good Standing


	
Schedule 5.2(b)

	
Subsidiaries


	
Schedule 5.4

	
Federal Tax Identification Number


	
Schedule 5.6

	
Prior Names


	
Schedule 5.8(b)

	
Litigation


	
Schedule 5.8(d)

	
Plans


	
Schedule 5.9

	
Intellectual Property, Source Code Escrow Agreements


	
Schedule 5.10

	
Licenses and Permits


	
Schedule 5.14

	
Labor Disputes


	
Schedule 7.1

	
Excluded Property


	
Schedule 7.3

	
Guarantees


	
Schedule 7.7

	
Indebtedness









 


 




  





- vi -











  


 


REVOLVING CREDIT


AND


SECURITY AGREEMENT


 


Revolving Credit and Security Agreement dated September 28, 2011, among Horsehead Corporation, a Delaware corporation (the "Borrower"), the Guarantors (as hereinafter defined), the financial institutions which are now or which hereafter become a party hereto (collectively, the "Lenders" and individually a "Lender") and PNC Bank, National Association ("PNC"), as agent for the Lenders (PNC, in such capacity, the "Agent").


 


IN CONSIDERATION of the mutual covenants and undertakings herein contained, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, Borrower, Guarantors, Lenders and Agent hereby agree as follows:


 


I.              DEFINITIONS.


 


1.1.          Accounting Terms.


 


As used in this Agreement, the Other Documents or any certificate, report or other document made or delivered pursuant to this Agreement, accounting terms not defined in Section 1.2 or elsewhere in this Agreement and accounting terms partly defined in Section 1.2 to the extent not defined, shall have the respective meanings given to them under GAAP; provided, however, whenever such accounting terms are used for the purposes of determining compliance with financial covenants in this Agreement, such accounting terms shall be defined in accordance with GAAP as applied in preparation of the audited financial statements of Holding for the fiscal year ended December 31, 2010.


 


1.2.          General Terms.


 


For purposes of this Agreement the following terms shall have the following meanings:


 


"Adjusted EBITDA" shall mean, as of any date of determination, EBITDA of the Borrower and its Subsidiaries, as adjusted (without duplication) to add-back all non-cash expense items and one-time non-recurring expenses or charges for discontinued operations, restructuring, impairment and other charges as reviewed and approved by the Agent, in each case, as consolidated and determined for the Borrower and its Subsidiaries in accordance with GAAP.


 


"Adjustment Date" shall have the meaning set forth in Section 3.1(b) hereof.


 


"Advance Rates" shall have the meaning set forth in Section 2.1 (a)(y)(ii) hereof.


 


"Advances" shall mean and include the Revolving Advances and Letters of Credit.


 




  





  











  






 


"Affiliate" of any Person shall mean (a) any Person which, directly or indirectly, is in control of, is controlled by, or is under common control with such Person, or (b) any Person who is a director, managing member, general partner or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person described in clause (a) above. For purposes of this definition, control of a Person shall mean the power, direct or indirect, (x) to vote five percent (5%) or more of the Equity Interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for any such Person, or (y) to direct or cause the direction of the management and policies of such Person whether by ownership of Equity Interests, contract or otherwise.


 


"Agent" shall have the meaning set forth in the preamble to this Agreement and shall include its successors and assigns.


 


"Agreement" shall mean this Revolving Credit and Security Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.


 


"Alternate Base Rate" shall mean, for any day, a rate per annum equal to the higher of (i) the Base Rate in effect on such day, (ii) the Federal Funds Open Rate in effect on such day plus one half of one percent (0.5%) and (iii) the Daily LIBOR Rate plus one percent (1%). For purposes of this definition, "Daily LIBOR Rate" shall mean, for any day, the rate per annum determined by Agent by dividing (x) the Published Rate by (y) a number equal to 1.00 minus the percentage prescribed by the Federal Reserve for determining the maximum reserve requirements with respect to any eurocurrency funding by banks on such day. For the purposes of this definition, "Published Rate" shall mean the rate of interest published each Business Day in The Wall Street Journal "Money Rates" listing under the caption "London Interbank Offered Rates" for a one month period (or, if no such rate is published therein for any reason, then the Published Rate shall be the eurodollar rate for a one month period as published in another publication determined by Agent).


 


"Alternate Source" shall have the meaning set forth in the definition of "Federal Funds Open Rate".


 


"Alternative Source" shall have the meaning set forth in the definition of "Eurodollar Rate".


 


"Anti-Terrorism Laws" shall mean any Applicable Laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA PATRIOT Act, the Applicable Laws comprising or implementing the Bank Secrecy Act, and the Applicable Laws administered by the United States Treasury Department's Office of Foreign Asset Control (as any of the foregoing Applicable Laws may from time to time be amended, renewed, extended, or replaced).


 


"Applicable Base Rate Margin" shall have the meaning set forth in Section 3.1(b) thereof.


 


"Applicable Eurodollar Rate Margin" shall have the meaning set forth in Section 3.1(b) thereof.


 


"Applicable Facility Fee Rate" shall have the meaning set forth in Section 3.3 thereof.


 




  





- 2 -











  






 


"Applicable Law" shall mean all laws, rules and regulations applicable to the Person, conduct, transaction, covenant, Other Document or contract in question, including all applicable common law and equitable principles; all provisions of all applicable state, federal and foreign constitutions, statutes, rules, regulations, treaties, directives and orders of any Governmental Body, and all orders, judgments and decrees of all courts and arbitrators.


 


"Applicable Letter of Credit Fee Percentage" shall have the meaning set forth in Section 3.2 hereof.


 


"Authority" shall mean any state agency or other Person responsible in whole or in part for environmental matters in the state in which any Real Property is located or the United States Environmental Protection Agency


 


"Average Undrawn Availability" shall mean, as of any date of determination, the average of Undrawn Availability for the fiscal quarter most recently ended.


 


"Base Rate" shall mean the base commercial lending rate of PNC as publicly announced to be in effect from time to time, such rate to be adjusted automatically, without notice, on the effective date of any change in such rate. This rate of interest is determined from time to time by PNC as a means of pricing some loans to its customers and is neither tied to any external rate of interest or index nor does it necessarily reflect the lowest rate of interest actually charged by PNC to any particular class or category of customers of PNC.


 


"Blocked Accounts" shall have the meaning set forth in Section 4.15(h).


 


"Blocked Account Agreement" shall mean the Blocked Account Agreement dated of even date herewith made by Borrower to Agent for the benefit of the Lenders with respect to Borrower's bank accounts described in Section 4.15, but in any case, excluding the Existing Bank Accounts.


 


"Blocked Account Bank" shall have the meaning set forth in Section 4.15(h).


 


"Blocked Person" shall have the meaning set forth in Section 5.23(b) hereof.


 


"Borrower" shall have the meaning set forth in the preamble to this Agreement and shall extend to all permitted successors and assigns of such Person.


 


"Borrower's Account" shall have the meaning set forth in Section 2.7.


 


"Borrower Party" or "Borrower Parties" shall mean, singularly or collectively, as the context may require, the Borrower and each of its Subsidiaries.


 


"Borrowing Base Certificate" shall mean a certificate in substantially the form of Exhibit 1.2 duly executed by the President, Chief Financial Officer or Controller of Borrower and delivered to Agent, appropriately completed, by which such officer shall certify to Agent the Formula Amount and calculation thereof as of the date of such certificate.


 




  





- 3 -











  






 


"Business Day" shall mean any day other than Saturday or Sunday or a legal holiday on which commercial banks are authorized or required by law to be closed for business in East Brunswick, New Jersey and, if the applicable Business Day relates to any Eurodollar Rate Loans, such day must also be a day on which dealings are carried on in the London interbank market.


 


"Capital Expenditures" shall mean expenditures made or liabilities incurred for the acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto which have a useful life of more than one year, including the total principal portion of Capitalized Lease Obligations, which, in accordance with GAAP, would be classified as capital expenditures; provided that expenditures made during such period in connection with the replacement, substitution, restoration or repair of assets to the extent financed with insurance proceeds paid on account of the loss or damage to the assets being replaced, substituted, restored or repaired shall not constitute Capital Expenditures.


 


"Capitalized Lease Obligation" shall mean any Indebtedness of any Borrower Party represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.


 


"Cash Dominion Event" shall mean either (a) an Event of Default shall have occurred and be continuing, or (b) a Testing Event shall have occurred and be continuing.


 


"Cash Equivalents" shall mean: (a) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within six (6) months from the date of acquisition thereof; (b) commercial paper maturing no more than six (6) months from the date issued and, at the time of acquisition, having a rating of at least A-1 from Standard & Poor's or at least P-1 from Moody's Investors Service, Inc.; and (c) certificates of deposit or bankers' acceptances maturing within six (6) months from the date of issuance thereof issued by, or overnight reverse repurchase agreements from any commercial bank organized under the laws of the United States of America, or any state thereof or the District of Columbia, whose obligations are rated A-1, A or the equivalent or better by Standard & Poor's on the date of acquisition and not subject to setoff rights in favor of such bank.


 


"CERCLA" shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.


 


"Change of Ownership" shall mean (a) one hundred percent (100%) of the Equity Interests of the Borrower is no longer owned or controlled by Holding, (b) one hundred percent (100%) of the Equity Interests of any Subsidiary of the Borrower (other than Horsehead Zinc Recycling, LLC, a South Carolina limited liability company ("Horsehead Zinc")) is no longer owned or controlled by the Borrower, (c) ninety-nine percent (99%) of the Equity Interests of Horsehead Zinc is no longer owned or controlled by the Borrower or (d) any merger, consolidation or sale of substantially all of the property or assets of any Borrower Party. For purposes of this definition, "controlled by" shall mean the power of any person, direct or indirect (i) to vote one hundred percent (100%) or more of the Equity Interests having ordinary voting power for the election of directors (or the individuals performing similar functions) of any Person or (ii) to direct or cause the direction of the management and policies of any Person by contract or otherwise.


 




  





- 4 -











  






 


"Charges" shall mean all taxes, charges, fees, imposts, levies or other assessments, including all net income, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation and property taxes, custom duties, fees, assessments, liens, claims and charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts, imposed by any taxing or other authority, domestic or foreign (including the Pension Benefit Guaranty Corporation or any environmental agency or superfund), upon the Collateral or the Borrower.


 


"CIP Regulations" shall have the meaning set forth in Section 14.11 hereof.


 


"Closing Date" shall mean September 28, 2011 or such other date as may be agreed to by the parties hereto.


 


"Code" shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.


 


"Collateral" shall mean and include:


 


(a) all Receivables;


 


(b) all Equipment;


 


(c) all General Intangibles;


 


(d) all Inventory;


 


(e) all Investment Property;


 


(f) all Subsidiary Stock;


 


(g) all of the Borrower's right, title and interest in and to, whether now owned or hereafter acquired and wherever located, (i) its respective goods and other property including all merchandise returned or rejected by Customers, relating to or securing any of the Receivables; (ii) all of the Borrower's rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in transit, setoff, detinue, replevin, reclamation and repurchase; (iii) all additional amounts due to the Borrower from any Customer relating to the Receivables; (iv) other property, including warranty claims, relating to any goods securing the Obligations; (v) all of the Borrower's contract rights, rights of payment which have been earned under a contract right, instruments (including promissory notes), documents, chattel paper (including electronic chattel paper), warehouse receipts, deposit accounts, letters of credit and money; (vi) all commercial tort claims (whether now existing or hereafter arising); (vii) if and when obtained by the Borrower, all real and personal property of third parties in which the Borrower has been granted a lien or security interest as security for the payment or enforcement of Receivables; (viii) all letter of credit rights (whether or not the respective letter of credit is evidenced by a writing); (ix) all supporting obligations; and (x) any other goods, personal property or real property now owned or hereafter acquired in which the Borrower has expressly granted a security interest or may in the future grant a security interest to Agent hereunder, or in any amendment or supplement hereto or thereto, or under any other agreement between Agent and the Borrower;


 




  





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(h) all of the Borrower's ledger sheets, ledger cards, files, correspondence, records, books of account, business papers, computers, computer software (owned by the Borrower or in which it has an interest), computer programs, tapes, disks and documents relating to (a), (b), (c), (d), (e), (f) or (g) of this Paragraph; and


 


(j) all proceeds and products of (a), (b), (c), (d), (e), (f), (g) and (h) in whatever form, including: cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), negotiable instruments and other instruments for the payment of money, chattel paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim proceeds;


 


in each case, other than Excluded Property of the Borrower, provided, however, that, if and when the prohibition which prevents the granting by the Borrower to the Agent of a security interest in such Excluded Property is removed or otherwise terminated, the Agent shall, to the extent permitted by applicable law, be deemed to have, and at all times from and after the date hereof to have had, a security interest in and pledge of such Excluded Property.


 


"Commitment Percentage" of any Lender shall mean the percentage set forth below such Lender's name on the signature page hereof as same may be adjusted upon any assignment by a Lender pursuant to Section 15.3(c) or (d) hereof.


 


"Commitment Transfer Supplement" shall mean a document in the form of Exhibit 15.3 hereto, properly completed and otherwise in form and substance satisfactory to Agent by which the Purchasing Lender purchases and assumes a portion of the obligation of Lenders to make Advances under this Agreement.


 


"Compliance Certificate" shall mean a compliance certificate to be signed by the Chief Financial Officer or Controller of Borrower, which shall state that, based on an examination sufficient to permit such officer to make an informed statement, no Default or Event of Default exists, or if such is not the case, specifying such Default or Event of Default, its nature, when it occurred, whether it is continuing and the steps being taken by the defaulting party with respect to such default and, such certificate shall have appended thereto calculations which set forth (i) compliance with the requirements or restrictions imposed by Sections 6.5, 7.4, 7.5, 7.6, 7.8 and 7.9, and (ii) with respect to any certificate delivered pursuant to Section 9.8, the calculation of Average Undrawn Availability.


 


"Consents" shall mean all filings and all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Bodies and other third parties, domestic or foreign, necessary to carry on any Borrower Party's business or necessary (including to avoid a conflict or breach under any agreement, instrument, other document, license, permit or other authorization) for the execution, delivery or performance of this Agreement or any Other Documents, including any Consents required under all applicable federal, state or other Applicable Law.


 




  





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"Consideration" shall mean with respect to any Permitted Acquisition, without duplication, the aggregate of (i) the cash paid by any of the Borrower Parties, directly or indirectly, to the seller in connection therewith, (ii) the Indebtedness incurred or assumed by any of the Borrower Parties, whether in favor of the seller or otherwise and whether fixed or contingent, in connection therewith, (iii) any guaranty given or incurred by any Borrower Party in connection therewith, and (iv) any other consideration given or obligation incurred by any of the Borrower Parties in connection therewith.


 


"Consigned Inventory" shall mean Inventory of the Borrower that is in the possession of another Person on a consignment, sale or return, or other basis that does not constitute a final sale and acceptance of such Inventory.


 


"Controlled Group" shall mean, at any time, each Borrower Party and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with any Borrower Party, are treated as a single employer under Section 414 of the Code.


 


"Current Liabilities" shall mean, with respect to Holding, on any date of determination, all amounts which would, in accordance with GAAP, be included under current liabilities on a balance sheet.


 


"Customer" shall mean and include the account debtor with respect to any Receivable and/or the prospective purchaser of goods, services or both with respect to any contract or contract right, and/or any party who enters into or proposes to enter into any contract or other arrangement with the Borrower, pursuant to which the Borrower is to deliver any personal property or perform any services.


 


"Customs" shall have the meaning set forth in Section 2.10(b) hereof.


 


"Default" shall mean an event, circumstance or condition which, with the giving of notice or passage of time or both, would constitute an Event of Default.


 


"Default Rate" shall have the meaning set forth in Section 3.1 hereof. 


 


"Defaulting Lender" shall have the meaning set forth in Section 2.2 1(a) hereof.


 


"Deposit Account Control Agreement" shall have the meaning set forth in Section 4.15(h).


 


"Depository Accounts" shall have the meaning set forth in Section 4.15(h) hereof. 


 


"Designated Lender" shall have the meaning set forth in Section 15.2(b) hereof.


 




  





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"Documents" shall have the meaning set forth in Section 8.1(c) hereof.


 


"Dollar" and the sign "$" shall mean lawful money of the United States of America.


 


"Domestic Person" shall mean any entity organized under the laws of any state of the United States of America or the District of Columbia.


 


"Domestic Rate Loan" shall mean any Advance that bears interest based upon the Alternate Base Rate.


 


"Drawing Date" shall have the meaning set forth in Section 2.11(b) hereof.


 


"Earnings Before Interest and Taxes" shall mean for any period the sum of (i) net income (or loss) of the Borrower and its Subsidiaries on a consolidated basis for such period (excluding extraordinary gains), plus (ii) all interest expense of the Borrower and its Subsidiaries on a consolidated basis for such period, plus (iii) all charges against income of the Borrower and its Subsidiaries on a consolidated basis for such period for federal, state and local taxes.


 


"EBITDA" shall mean for any period the sum of (i) Earnings Before Interest and Taxes for such period plus (ii) depreciation expenses, plus (iii) amortization expenses, plus (iv) non-cash stock based compensation expenses, plus (v) non-cash charges deducted from Earnings Before Interest and Taxes as a result of mark-to-market adjustments, plus (vi) non-cash charges deducted from Earnings Before Interest and Taxes for fixed asset write-downs/write-offs and any other non-recurring charges, plus (vii) any gains recognized in connection with the exercise of any options and not otherwise included in Earnings Before Interest and Taxes, less (viii) non-cash adjustments added to Earnings Before Interest and Taxes as a result of mark-to-market adjustments, less (ix) any losses incurred as a result of the expiration of any unexercised options and not otherwise deducted from Earnings Before Interest and Taxes, in each case of the Borrower and its Subsidiaries on a consolidated basis for such period.


 


"Eligible Inventory" shall mean and include Inventory, excluding work in process, with respect to the Borrower, valued at the lower of cost or market value, determined on a first­in-first-out basis, which is not, in Agent's commercially reasonable opinion, obsolete, slow moving or unmerchantable and which Agent, in its commercially reasonable discretion, shall not deem ineligible Inventory, based on such considerations as Agent may from time to time deem appropriate including whether the Inventory is subject to a perfected, first priority security interest in favor of Agent and no other Lien (other than a Permitted Encumbrance). In addition, Inventory shall not be Eligible Inventory if it (i) does not conform to all standards imposed by any Governmental Body which has regulatory authority over such goods or the use or sale thereof, (ii) is in transit unless such otherwise Eligible Inventory is in transit from a domestic location owned by the Borrower to a domestic location owned by the Borrower, (iii) is located outside the continental United States or at a location that is not otherwise in compliance with this Agreement, (iv) constitutes Consigned Inventory, unless the Borrower can establish with respect to an item of Consigned Inventory that: (x) all appropriate notices required by the Uniform Commercial Code have been given by the Borrower to any secured parties of such consignee having a security interest in Inventory of the consignee prior to delivery of such item of Inventory to such consignee, (y) all appropriate financing statements have been filed by the Borrower against such consignee prior to such delivery of such item of Inventory to the consignee and (z) access agreements, in form and substance satisfactory to the Agent, have been executed by the consignee and delivered to the Agent; provided, however, notwithstanding that such Inventory would otherwise be Eligible Inventory hereunder, such Inventory shall be deemed to not be Eligible Inventory if the regular reporting with respect to such Inventory provided by such third Person to the Borrower and the Agent is not acceptable to the Agent in its reasonable discretion, (v) is the subject of an Intellectual Property Claim; (vi) is subject to a License Agreement or other agreement that limits, conditions or restricts the Borrower's or Agent's right to sell or otherwise dispose of such Inventory, unless Agent is a party to a Licensor/Agent Agreement with the Licensor under such License Agreement; (vii) or is situated at a location not owned by a Borrower unless the owner or occupier of such location has executed in favor of Agent a Lien Waiver Agreement; or (viii) is not otherwise satisfactory to Agent as determined in good faith by Agent in the exercise of its discretion in a reasonable manner. Eligible Inventory shall not include Inventory being acquired pursuant to a trade Letter of Credit to the extent such trade Letter of Credit remains outstanding.


 




  





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"Eligible Receivables" shall mean and include with respect to the Borrower, each Receivable of the Borrower arising in the Ordinary Course of Business and which Agent, in its commercially reasonable discretion, shall deem to be an Eligible Receivable, based on such considerations as Agent may from time to time deem appropriate. A Receivable shall not be deemed eligible unless such Receivable is subject to Agent's first priority perfected security interest and no other Lien (other than Permitted Encumbrances), and is evidenced by an invoice or other documentary evidence satisfactory to Agent. In addition, no Receivable shall be an Eligible Receivable if:


 


(a) it arises out of a sale made by the Borrower to an Affiliate of the Borrower or to a Person controlled by an Affiliate of the Borrower, unless such sale was made on standard, fair and reasonable terms and conditions, no less favorable to the Borrower than the Borrower could obtain in a comparable arms length transaction with an unrelated third party; provided that the aggregate amount of Eligible Receivables based on such Affiliate sales shall not exceed Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) at any time;


 


(b) it is due or unpaid more than (i) sixty (60) days after the original due date or (ii) ninety (90) days after the original invoice date;


 


(c) fifty percent (50%) or more of the Receivables from such Customer are not deemed Eligible Receivables hereunder;


 


(d) any covenant, representation or warranty contained in this Agreement with respect to such Receivable has been breached;


 


(e) the Customer shall (i) apply for, suffer, or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or call a meeting of its creditors, (ii) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing;


 




  





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(f) the sale is to a Customer outside the continental United States of America or Canada, unless the sale is on letter of credit (subject to UCP Publication No. 600, and any amendments or revision thereof), guaranty or acceptance terms, in each case acceptable to Agent in its reasonable discretion, or otherwise on terms acceptable to Agent in its reasonable discretion;


 


(g) the sale to the Customer is on a bill-and-hold (unless pursuant to documentation in form and substance satisfactory to Agent), guaranteed sale, sale-and-return, sale on approval, consignment or any other repurchase or return basis or is evidenced by chattel paper;


 


(h) the Customer is the United States of America, any state or any department, agency or instrumentality of any of them, unless the Borrower assigns its right to payment of such Receivable to Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other applicable statutes or ordinances;


 


(i) the goods giving rise to such Receivable have not been delivered to and accepted by the Customer or the services giving rise to such Receivable have not been performed by the Borrower and accepted by the Customer or the Receivable otherwise does not represent a final sale;


 


(j) the Receivable arises with respect to a Customer whose aggregate amount of Receivables constitute fifteen percent (15%) or more of the aggregate amount of all Receivables owed to the Borrower, to the extent such Receivables exceed such limit;


 


(k) the Receivable is subject to any offset, deduction, defense, dispute, or counterclaim, only to the extent of such offset, deduction, defense, dispute or counterclaim,


 


(l) the Customer is also a creditor or supplier of a Borrower or the Receivable is contingent in any respect or for any reason, only to the extent of any offset, deduction, defense, dispute, counterclaim or contingency;


 


(m) the Borrower has made any agreement with any Customer for any deduction therefrom, except for discounts or allowances made in the Ordinary Course of Business for prompt payment, all of which discounts or allowances are reflected in the calculation of the face value of each respective invoice related thereto;


 


(n) any return, rejection or repossession of the merchandise has occurred or the rendition of services has been disputed;


 


(o) such Receivable is not payable to a Borrower; or


 




  





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(p) such Receivable is not otherwise satisfactory to Agent as determined in good faith by Agent in the exercise of its discretion in a reasonable manner.


 


"Environmental Laws" shall mean all federal, state and local environmental, occupational health and safety laws, statutes, ordinances and codes relating to the protection of the environment and/or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the rules, regulations, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto.


 


"Equipment" shall mean and include as to the Borrower all of the Borrower's goods (other than Inventory) whether now owned or hereafter acquired and wherever located including all equipment, machinery, apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all replacements and substitutions therefor or accessions thereto.


 


"Equity Interests" of any Person shall mean any and all shares, rights to purchase, options, warrants, general, limited or limited liability partnership interests, member interests, participation or other equivalents of or interest in (regardless of how designated) equity of such Person, whether voting or nonvoting, including common stock, preferred stock, convertible securities or any other "equity security" (as such term is defined in Rule 3a1 1-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).


 


"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time and the rules and regulations promulgated thereunder.


 


"Eurodollar Rate" shall mean for any Eurodollar Rate Loan for the then current Interest Period relating thereto the interest rate per annum (rounded upwards, if necessary, to the nearest one hundredth (1/100) of one percent (1%)) determined by Agent by dividing (i) the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which US dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected by Agent which has been approved by the British Bankers' Association as an authorized information vendor for the purpose of displaying rates at which US dollar deposits are offered by leading banks in the London interbank deposit market (an "Alternative Source"), at approximately 11:00 a.m., London time two (2) Business Days prior to the first day of such Interest Period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a comparable replacement rate determined by Agent at such time (which determination shall be conclusive absent manifest error)) for an amount comparable to such Eurodollar Rate Loan and having a borrowing date and a maturity comparable to such Interest Period by (ii) a number equal to 1.00 minus the Reserve Percentage.


 


The Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan that is outstanding on the effective date of any change in the Reserve Percentage as of such effective date. Agent shall give prompt notice to Borrower of the Eurodollar Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.


 




  





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"Eurodollar Rate Loan" shall mean an Advance at any time that bears interest based on the Eurodollar Rate.


 


"Event of Default" shall have the meaning set forth in Article X hereof.


 


"Exchange Act" shall have the mean the Securities Exchange Act of 1934, as amended.


 


"Excluded Property" shall mean the assets set forth on Schedule 7.1.


 


"Executive Order No. 13224" shall mean the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.


 


"Existing Bank Accounts" shall mean those bank accounts set forth on Schedule 1.2(E).


 


"Existing Letters of Credit" shall have the meaning set forth in Section 2.9.


 


"Federal Funds Effective Rate" for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed and rounded upward to the nearest one hundredth (1/100) of one percent (1%)) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the "Federal Funds Effective Rate" as of the date of this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the "Federal Funds Effective Rate" for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced.


 


"Federal Funds Open Rate" for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day opposite the caption "OPEN" (or on such other substitute Bloomberg Screen that displays such rate), or as set forth on such other recognized electronic source used for the purpose of displaying such rate as selected by PNC (an "Alternate Source") (or if such rate for such day does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there shall at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate Source, a comparable replacement rate determined by PNC at such time (which determination shall be conclusive absent manifest error); provided however, that if such day is not a Business Day, the Federal Funds Open Rate for such day shall be the "open" rate on the immediately preceding Business Day. If and when the Federal Funds Open Rate changes, the rate of interest with respect to any advance to which the Federal Funds Open Rate applies will change automatically without notice to Loan Parties, effective on the date of any such change.


 




  





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"Fee Letter" shall mean the fee letter dated of even date herewith among Borrower and Agent.


 


"Financial Statements" shall have the meaning set forth in Section 5.5(c).


 


"Fixed Charge Coverage Ratio" shall mean and include, with respect to the Borrower and its Subsidiaries on a consolidated basis for any fiscal period, the ratio of (a) Adjusted EBITDA minus the sum of (i) Unfinanced Capital Expenditures made during such period, (ii) cash taxes paid or required to be paid during such period, (iii) cash investments in Holding as permitted pursuant to Section 7.4 hereof, (iv) advances, loans and extensions of credit made in cash to Holding as permitted pursuant to Section 7.5 hereof and (v) dividends and distributions paid in cash as permitted pursuant to Section 7.6 hereof, to (b) the sum of (i) all cash expenses and charges for pension and benefit plans (to the extent not already included in Adjusted EBITDA) plus (ii) all Senior Debt Payments during such period.


 


"Foreign Subsidiary" of any Person, shall mean any Subsidiary of such Person that is not organized or incorporated in the United States or any State or territory thereof.


 


"Formula Amount" shall have the meaning set forth in Section 2.1(a).


 


"GAAP" shall mean generally accepted accounting principles in the United States of America in effect from time to time.


 


"General Intangibles" shall mean and include all of the Borrower's general intangibles, whether now owned or hereafter acquired, including all payment intangibles, all choses in action, causes of action, corporate or other business records, inventions, designs, patents, patent applications, equipment formulations, manufacturing procedures, quality control procedures, trademarks, trademark applications, service marks, trade secrets, goodwill, copyrights, design rights, software, computer information, source codes, codes, records and updates, registrations, licenses, franchises, customer lists, tax refunds, tax refund claims, computer programs, all claims under guaranties, security interests or other security held by or granted to the Borrower to secure payment of any of the Receivables by a Customer (other than to the extent covered by Receivables) all rights of indemnification and all other intangible property of every kind and nature (other than Receivables).


 


"Governmental Acts" shall have the meaning set forth in Section 2.16.


 


"Governmental Body" shall mean any nation or government, any state or other political subdivision thereof or any entity, authority, agency, division or department exercising the legislative, judicial, regulatory or administrative functions of or pertaining to a government.


 


"Guarantor" or "Guarantors" shall mean, singularly or collectively, as the context may require, Holding, each Person which joins this Agreement as a Guarantor after the date hereof pursuant to Section 15.18 and any other Person who may hereafter guarantee payment or performance of the whole or any part of the Obligations and shall extend to all permitted successors and assigns of such Persons.


 




  





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"Guaranty" shall mean (i) the Guaranty and Suretyship Agreement made by Holding in favor of Agent for its benefit and for the ratable benefit of Lenders, and (ii) any other guaranty of the obligations of Borrower executed by a Guarantor in favor of Agent for its benefit and for the ratable benefit of Lenders, in form and substance satisfactory to Agent, in each case together with all amendments, supplements, modifications, substitutions and replacements thereto and thereof, and "Guarantees" means collectively, all such Guarantees.


 


"Hazardous Discharge" shall mean any Release or threat of Release of any Hazardous Substance at the Real Property equal to or exceeding a reportable quantity for which notice must be provided to any Authority pursuant to any applicable Environmental Laws.


 


"Hazardous Substance" shall mean any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, hazardous materials, Hazardous Wastes, hazardous substances or Toxic Substances as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.) or any other applicable Environmental Law and in the regulations adopted pursuant thereto.


 


"Hazardous Wastes" shall mean all waste materials subject to regulation under CERCLA, RCRA and any other applicable Federal and state laws now in force or hereafter enacted relating to hazardous waste disposal.


 


"Hedge Liabilities" shall have the meaning provided in the definition of "Lender-Provided Interest Rate Hedge".


 


"Holding" shall mean Horsehead Holding Corp., a Delaware corporation.


 


"Holding Bond Issuances" shall mean any unsecured debt securities issuances by Holding.


 


"Horsehead Zinc" shall have the meaning set forth in the definition of "Change of Ownership".


 


"Indebtedness" of a Person at a particular date shall mean any and all indebtedness, obligations or liabilities (whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, or joint or several) of such Person for or in respect of: (i) borrowed money, (ii) amounts raised under or liabilities in respect of any note purchase or acceptance credit facility, (iii) reimbursement obligations (contingent or otherwise) under any letter of credit agreement, (iv) obligations under any currency swap agreement, interest rate swap, cap, collar or floor agreement or other interest rate management device, (v) Capitalized Lease Obligations, (vi) operating lease obligations, (vii) any other transaction (including forward sale or purchase agreements, and conditional sales agreements) having the commercial effect of a borrowing of money entered into by such Person to finance its operations or capital requirements (but not including trade payables and accrued expenses incurred in the ordinary course of business which are not represented by a promissory note or other evidence of indebtedness and which are not more than thirty (30) days past due), or (viii) any Guaranty of Indebtedness for borrowed money.


 




  





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"Ineligible Security" shall mean any security which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.


 


"Intellectual Property" shall mean property constituting under any Applicable Law a patent, patent application, copyright, trademark, service mark, trade name, mask work, trade secret or license or other right to use any of the foregoing.


 


"Intellectual Property Claim" shall mean the assertion by any Person of a claim (whether asserted in writing, by action, suit or proceeding or otherwise) that the Borrower's ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property or other property or asset is violative of any ownership of or right to use any Intellectual Property of such Person.


 


"Interest Period" shall mean the period provided for any Eurodollar Rate Loan pursuant to Section 2.2(b).


 


"Interest Rate Hedge" shall mean an interest rate exchange, collar, cap, swap, adjustable strike cap, adjustable strike corridor or similar agreements entered into by any Borrower Party or its Subsidiaries in order to provide protection to, or minimize the impact upon, such Borrower Party and/or its Subsidiaries of increasing floating rates of interest applicable to Indebtedness.


 


"Inventory" shall mean and include all of the Borrower's now owned or hereafter acquired goods, merchandise and other personal property, wherever located, to be furnished under any consignment arrangement, contract of service or held for sale or lease, all raw materials, work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed in the Borrower's business or used in selling or furnishing such goods, merchandise and other personal property, and all documents of title or other documents representing them.


 


"Inventory Advance Rate" shall have the meaning set forth in Section 2.1(a)(y)(ii) hereof.


 


"Investment Property" shall mean and include all of the Borrower's now owned or hereafter acquired securities (whether certificated or uncertificated), securities entitlements, securities accounts, commodities contracts and commodities accounts.


 


"IP Security Agreement" shall mean the Patent, Trademark and Copyright Security Agreement, dated of even date herewith executed and delivered by Borrower in connection with this Agreement, together with all amendments, supplements, modifications, substitutions and replacements thereto and thereof.


 


"Issuer" shall mean any Person who issues a Letter of Credit pursuant to the terms hereof.


 




  





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"Lender" and "Lenders" shall have the meaning ascribed to such term in the preamble to this Agreement and shall include each Person which becomes a transferee, successor or assign of any Lender.


 


"Lender-Provided Interest Rate Hedge" shall mean an Interest Rate Hedge which is provided by any Lender and with respect to which Agent confirms meets the following requirements: such Interest Rate Hedge (i) is documented in a standard International Swap Dealer Association Agreement or other similar agreement acceptable to Agent in its sole discretion, (ii) provides for the method of calculating the reimbursable amount of the provider's credit exposure in a reasonable and customary manner, and (iii) is entered into for hedging (rather than speculative) purposes. The liabilities of any Borrower Party to the provider of any Lender-Provided Interest Rate Hedge (the "Hedge Liabilities") shall be "Obligations" hereunder, guaranteed obligations under the Guaranty and otherwise treated as Obligations for purposes of each of the Other Documents. The Liens securing the Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this Agreement and the Other Documents.


 


"Letter of Credit Fees" shall have the meaning set forth in Section 3.2.


 


"Letter of Credit Borrowing" shall have the meaning set forth in Section 2.11(d).


 


"Letter of Credit Sublimit" shall mean Thirty Million and 00/100 Dollars ($30,000,000.00).


 


"Letters of Credit" shall have the meaning set forth in Section 2.8.


 


"License Agreement" shall mean any agreement between the Borrower and a Licensor pursuant to which the Borrower is authorized to use any Intellectual Property in connection with the manufacturing, marketing, sale or other distribution of any Inventory of the Borrower or otherwise in connection with the Borrower's business operations.


 


"Licensor" shall mean any Person from whom the Borrower obtains the right to use (whether on an exclusive or non-exclusive basis) any Intellectual Property in connection with the Borrower's manufacture, marketing, sale or other distribution of any Inventory or otherwise in connection with the Borrower's business operations.


 


"Licensor/Agent Agreement" shall mean an agreement between Agent and a Licensor, in form and content satisfactory to Agent, by which Agent is given the unqualified right, vis-a-vis such Licensor, to enforce Agent's Liens with respect to and to dispose of the Borrower's Inventory with the benefit of any Intellectual Property applicable thereto, irrespective of the Borrower's default under any License Agreement with such Licensor.


 


"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien (whether statutory or otherwise), Charge, claim or encumbrance, or preference, priority or other security agreement or preferential arrangement held or asserted in respect of any asset of any kind or nature whatsoever including any conditional sale or other title retention agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction.


 




  





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"Lien Waiver Agreement" shall mean an agreement which is executed in favor of Agent by a Person who owns or occupies premises at which any Collateral may be located from time to time and by which such Person shall waive any Lien that such Person may ever have with respect to any of the Collateral and shall authorize Agent from time to time to enter upon the premises to inspect or remove the Collateral from such premises or to use such premises to store or dispose of such Inventory.


 


"Loan Party" or "Loan Parties" shall mean, singularly or collectively, as the context may require, the Borrower and each Guarantor and shall extend to all permitted successors and assigns of each such Person.


 


"Material Adverse Effect" shall mean a material adverse effect on (a) the financial condition, results of operations, assets, business or properties of the Borrower Parties, taken as a whole, (b) any Borrower Party's ability to duly and punctually pay or perform the Obligations in accordance with the terms thereof, (c) the Agent's Liens on the Collateral or the priority of any such Lien or (d) the practical realization of the benefits of Agent's and each Lender's rights and remedies under this Agreement and the Other Documents.


 


"Maximum Face Amount" shall mean, with respect to any outstanding Letter of Credit, the face amount of such Letter of Credit including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective.


 


"Maximum Revolving Advance Amount" shall mean Sixty Million and 00/100 Dollars ($60,000,000.00).


 


"Maximum Undrawn Amount" shall mean with respect to any outstanding Letter of Credit, the amount of such Letter of Credit that is or may become available to be drawn, including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective.


 


"Modified Commitment Transfer Supplement" shall have the meaning set forth in Section 15.3(d).


 


"Month End Financial Statements" shall have the meaning set forth in Section 5.5(c).


 


"Multiemployer Plan" shall mean a "multiemployer plan" as defined in Sections 3(37) and 4001(a)(3) of ERISA.


 


"Multiple Employer Plan" shall mean a Plan which has two or more contributing sponsors (including any Borrower Party or any member of the Controlled Group) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.


 


"Net Orderly Liquidation Value" shall mean, at any time, the aggregate value of the Borrower's Inventory at such time in an orderly liquidation, taking into account all costs, fees and expenses estimated to be incurred by the Agent and the Lenders in connection with such liquidation, based upon the most recent appraisal of the Borrower's Inventory conducted by an appraiser selected by the Agent.


 




  





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"Note" shall mean each Revolving Credit Note and "Notes" shall collectively mean all of the Revolving Credit Notes.


 


"Notice of Waiver of Rights" shall mean the Notice of Waiver of Rights Regarding Warrants of Attorney, Execution Rights and Waiver of Rights to Prior Notice and Judicial Hearing, dated of even date herewith, made by Loan Parties to Agent, together with all amendments, supplements, modifications, substitutions and replacements thereto and thereof.


 


"Obligations" shall mean and include any and all loans, advances, debts, liabilities, obligations, covenants and duties owing by any Borrower Party to Lenders or Agent or to any other direct or indirect subsidiary or affiliate of Agent or any Lender of any kind or nature, present or future (including any interest or other amounts accruing thereon after maturity, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to any Borrower Party, whether or not a claim for post-filing or post-petition interest or other amounts is allowed in such proceeding), whether or not evidenced by any note, guaranty or other instrument, whether arising under any agreement, instrument or document, (including this Agreement and the Other Documents) whether or not for the payment of money, whether arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease or guarantee, under any interest or currency swap, future, option or other similar agreement, or in any other manner, whether arising out of overdrafts or deposit or other accounts or electronic funds transfers (whether through automated clearing houses or otherwise) or out of Agent's or any Lenders non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository transfer check or other similar arrangements, whether direct or indirect (including those acquired by assignment or participation), absolute or contingent, joint or several, due or to become due, now existing or hereafter arising, contractual or tortious, liquidated or unliquidated, regardless of how such indebtedness or liabilities arise or by what agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument, including any and all of any Borrower Party's Indebtedness and/or liabilities under this Agreement, the Other Documents or under any other agreement between Agent or Lenders and any Borrower Party and any amendments, extensions, renewals or increases and all costs and expenses of Agent and any Lender incurred in the documentation, negotiation, modification, enforcement, collection or otherwise in connection with any of the foregoing, including reasonable attorneys' fees and expenses and all obligations of any Borrower Party to Agent or Lenders to perform acts or refrain from taking any action.


 


"Ordinary Course of Business" shall mean with respect to any Borrower Party, operations in connection with environmental services, metals processing and metals reclamation and all related activities incidental thereto.


 


"Other Documents" shall mean the Notes, any Guaranty, any Pledge Agreement, any Lender-Provided Interest Rate Hedge, the IP Security Agreement, the Notice of Waiver of Rights, any Lien Waiver Agreement, the Fee Letter and any and all other agreements, instruments and documents, including guaranties, pledges, powers of attorney, consents, interest or currency swap agreements or other similar agreements and all other writings heretofore, now or hereafter executed by any Loan Party and/or delivered to Agent or any Lender in respect of the transactions contemplated by this Agreement.

 




  





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"Out-of-Formula Loans" shall have the meaning set forth in Section 15.2(b).


 


"Owned Real Property" shall mean all of each Borrower Party's right, title and interest in and to the owned premises identified on Schedule 4.19 hereto or which is hereafter owned by any Borrower Party.


 


"Parent" of any Person shall mean a corporation or other entity owning, directly or indirectly at least fifty percent (5 0%) of the shares of stock or other ownership interests having ordinary voting power to elect a majority of the directors of the Person, or other Persons performing similar functions for any such Person.


 


"Participant" shall mean each Person who shall be granted the right by any Lender to participate in any of the Advances and who shall have entered into a participation agreement in form and substance satisfactory to such Lender.


 


"Participation Advance" shall have the meaning set forth in Section 2.11(d).


 


"Participation Commitment" shall mean each Lender's obligation to buy a participation of the Letters of Credit issued hereunder.


 


"Payee" shall have the meaning set forth in Section 3.10.


 


"Payment Office" shall mean initially Two Tower Center Boulevard, East Brunswick, New Jersey 08816; thereafter, such other office of Agent, if any, which it may designate by notice to Borrower and to each Lender to be the Payment Office.


 


"PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.


 


"Pension Benefit Plan" shall mean at any time any employee pension benefit plan (including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code and either (i) is maintained by any member of the Controlled Group for employees of any member of the Controlled Group; or (ii) has at any time within the preceding five years been maintained by any entity which was at such time a member of the Controlled Group for employees of any entity which was at such time a member of the Controlled Group.


 


"Permitted Acquisition" shall have the meaning set forth in Section 7.1(a) hereof. 


 


"Permitted Encumbrances" shall mean:


 


(a) Liens in favor of Agent for the benefit of Agent and Lenders;


 


(b) Liens for taxes, assessments or other governmental charges not delinquent or being Properly Contested;


 


(c) Liens disclosed in the financial statements referred to in Section 5.5, the existence of which Agent has consented to in writing;


 




  





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(d) deposits or pledges to secure obligations under worker's compensation, social security or similar laws, or under unemployment insurance;


 


(e) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the Ordinary Course of Business;


 


(f) Liens arising by virtue of the rendition, entry or issuance against any Borrower Party or any Subsidiary, or any property of any Borrower Party or any Subsidiary, of any judgment, writ, order, or decree for so long as each such Lien (x) is in existence for less than twenty (20) consecutive days after it first arises or is being Properly Contested and (y) is at all times junior in priority to any Liens in favor of Agent;


 


(g) mechanics', workers', materialmen's or other like Liens arising in the Ordinary Course of Business with respect to obligations which are not due or which are being Properly Contested;


 


(h) Liens placed upon fixed assets hereafter acquired to secure a portion of the purchase price thereof, provided that (x) any such lien shall not encumber any other property of any Borrower Party and (y) the aggregate amount of Indebtedness secured by such Liens incurred as a result of such purchases during any fiscal year shall not exceed the amount provided for in Section 7.7(c);


 


(i) easements (including, without limitation, reciprocal easement agreements and utility agreements), encroachments, rights-of-way, covenants, consents, reservations, defects or irregularities in title, variations, zoning, and other restrictions, charges or encumbrances (whether or not recorded) affecting the Real Property, if applicable, and which do not, individually or in the aggregate (i) materially interfere with the occupation, use or enjoyment by the applicable Borrower Party of its business or property so encumbered and (ii) do not materially and adversely affect the value of such Real Property;


 


(j) Liens arising from the precautionary UCC financing statements filed under any lease or license permitted by this Agreement;


 


(k) Liens of local or state authorities for franchise or other like Taxes, provided that such liens do not exceed One Hundred Thousand and 00/100 Dollars ($100,000.00) in the aggregate at any time for the Borrower;


 


(l) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;


 


(m) customary rights of set-off, revocation, refund or chargeback under deposit agreements or under the Uniform Commercial Code of banks or other financial institutions where any Borrower Party maintains deposits (other than deposits intended as cash collateral) in the ordinary course of business;


 


(n) Liens disclosed on Schedule 1.2(B);


 




  





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(o) other Liens on assets securing Indebtedness not exceeding Five Hundred Thousand and 00/100 Dollars ($500,000.00) in the aggregate at any time for all Borrower Parties;


 


(p) Liens securing the Project Indebtedness to the extent such Liens are on Real Property or on assets acquired with the proceeds of the Project Indebtedness covering such Real Property securing such Indebtedness, provided that any such lien shall not encumber any other property of any Borrower Party (in furtherance of the Liens permitted under this clause (p), the parties hereto acknowledge and agree that such Liens, to the extent required by any applicable third-party lender, shall be first-priority Liens); and


 


(q) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Lien referred to in the foregoing clauses (a) through (n), provided that any such extension, renewal or replacement Lien shall be limited to all or a part of the property that was the subject to the Lien so extended, renewed or replaced (plus any improvements on such property) and provided that any such extension, renewal or replacement Lien shall not secure an amount (i.e., outstanding principal plus accrued and unpaid interest and fees and expenses in the case of Indebtedness permitted pursuant to this Agreement) greater than the amount outstanding immediately prior to such extension, renewal or replacement Lien.


 


"Person" shall mean any individual, sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated organization, association, limited liability company, limited liability partnership, institution, public benefit corporation, joint venture, entity or Governmental Body (whether federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof).


 


"Plan" shall mean any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Benefit Plan), maintained for employees of the Borrower or any member of the Controlled Group or any such Plan to which the Borrower or any member of the Controlled Group is required to contribute on behalf of any of its employees.


 


"Pledge Agreement" shall mean (i) the Pledge Agreement dated of even date herewith made by Holding to Agent for the benefit of Lenders, with respect to all of the issued and outstanding capital stock of the Borrower and (ii) any other Pledge Agreement executed and delivered by any Loan Party to Agent for the benefit of Lenders with respect to the Subsidiary Stock, in each case together with all amendments, supplements, modifications, substitutions and replacements thereto and thereof, and "Pledge Agreements" means collectively, all such Pledge Agreements.


 


"PNC" shall have the meaning set forth in the preamble to this Agreement and shall extend to all of its successors and assigns.


 


"Project Indebtedness" shall mean secured or unsecured Indebtedness of any Borrower Party, which does not exceed One Hundred Fifty Million and 00/100 Dollars ($150,000,000.00) in the aggregate at any time outstanding; provided that the proceeds of such Indebtedness shall be used exclusively by the applicable Borrower Party to complete construction of a manufacturing plant.


 




  





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"Projections" shall have the meaning set forth in Section 5.5(a) hereof.


 


"Properly Contested" shall mean, in the case of any Indebtedness or Lien, as applicable, of any Person (including any taxes) that is not paid as and when due or payable by reason of such Person's bona fide dispute concerning its liability to pay same or concerning the amount thereof, (i) such Indebtedness or Lien, as applicable, is being properly contested in good faith by appropriate proceedings promptly instituted and diligently conducted; (ii) such Person has established appropriate reserves as shall be required in conformity with GAAP; (iii) the non-payment of such Indebtedness will not have a Material Adverse Effect and will not result in the forfeiture of any assets of such Person; (iv) no Lien is imposed upon any of such Person's assets with respect to such Indebtedness unless such Lien is at all times junior and subordinate in priority to the Liens in favor of Agent (except only with respect to property taxes that have priority as a matter of applicable state law) and enforcement of such Lien is stayed during the period prior to the final resolution or disposition of such dispute; (v) if such Indebtedness or Lien, as applicable, results from, or is determined by the entry, rendition or issuance against a Person or any of its assets of a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review; and (vi) if such contest is abandoned, settled or determined adversely (in whole or in part) to such Person, such Person forthwith pays such Indebtedness and all penalties, interest and other amounts due in connection therewith.


 


"Purchasing CLO" shall have the meaning set forth in Section 15.3(d) hereof. 


 


"Purchasing Lender" shall have the meaning set forth in Section 15.3(c) hereof.


 


"RCRA" shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as same may be amended from time to time.


 


"Real Property" shall mean all of each Borrower Party's right, title and interest in and to the owned and leased premises identified on Schedule 4.19 hereto or which is hereafter owned or leased by any Borrower Party.


 


"Receivables" shall mean and include all of the Borrower's accounts, contract rights, instruments (including those evidencing indebtedness owed to the Borrower by its Affiliates), documents, chattel paper (including electronic chattel paper), general intangibles relating to accounts, drafts and acceptances, credit card receivables and all other forms of obligations owing to the Borrower arising out of or in connection with the sale or lease of Inventory or the rendition of services, all supporting obligations, guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically sold or assigned to Agent hereunder.


 


"Receivables Advance Rate" shall have the meaning set forth in Section 2.1 (a)(y)(i) hereof.


 


"Register" shall have the meaning set forth in Section 15.3(e).


 


"Reimbursement Obligation" shall have the meaning set forth in Section 2.11(b) hereof.


 




  





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"Release" shall mean any release, spill, discharge, leak or disposal of any Hazardous Substance.


 


"Reportable Event" shall mean a reportable event described in Section 4043(c) of ERISA or the regulations promulgated thereunder.


 


"Required Lenders" shall mean Lenders holding at least sixty-six and two-thirds of one percent (66 2/3%) of the Advances and, if no Advances are outstanding, shall mean Lenders holding at least sixty-six and two-thirds of one percent (66 2/3%) of the Commitment Percentages; provided, however, if there are fewer than three (3) Lenders, Required Lenders shall mean all Lenders.


 


"Reserve Percentage" shall mean as of any day the maximum percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as "Eurocurrency Liabilities".


 


"Revolving Advances" shall mean Advances made other than Letters of Credit.


 


"Revolving Credit Note" shall mean, collectively, the promissory notes referred to in Section 2.1(a) hereof.


 


"Revolving Interest Rate" shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus the Applicable Base Rate Margin with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus the Applicable Eurodollar Rate Margin with respect to Eurodollar Rate Loans.


 


"SEC" shall mean the Securities and Exchange Commission or any successor thereto.


 


"Section 20 Subsidiary" shall mean the Subsidiary of the bank holding company controlling PNC, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities.


 


"Securities Act" shall mean the Securities Act of 1933, as amended.


 


"Senior Debt Payments" shall mean and include all cash actually expended by the Borrower and its Subsidiaries on a consolidated basis to make (a) interest payments on any Advances hereunder, plus (b) payments for all fees, commissions and charges set forth herein and with respect to any Advances, excluding any fees or costs incurred in connection with the closing of this transaction or any amortization of such fees and costs, plus (c) capitalized lease payments, plus (d) payments with respect to any other Indebtedness for borrowed money.


 


"Settlement Date" shall mean the Closing Date and thereafter Wednesday or Thursday of each week or more frequently if Agent deems appropriate unless such day is not a Business Day in which case it shall be the next succeeding Business Day.


 




  





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"Standard & Poor's" shall mean Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc.


 


"Subsidiary" of any Person shall mean a corporation or other entity of whose Equity Interests having ordinary voting power (other than Equity Interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation, or other Persons performing similar functions for such entity, are owned, directly or indirectly, by such Person.


 


"Subsidiary Stock" shall mean all of the issued and outstanding Equity Interests of any Subsidiary owned by any Borrower Party (not to exceed sixty-five percent (65%) of the Equity Interests of any Foreign Subsidiary).


 


"Taxes" shall mean all federal, state, municipal and other governmental taxes, levies, charges, claims and assessments which are or may be owed or collected by any Borrower Party with respect to its business, operations, Collateral or otherwise.


 


"Term" shall have the meaning set forth in Section 13.1 hereof.


 


"Termination Event" shall mean (i) a Reportable Event with respect to any Plan or Multiemployer Plan; (ii) the withdrawal of the Borrower or any member of the Controlled Group from a Plan or Multiemployer Plan during a plan year in which such entity was a "substantial employer" as defined in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or Multiemployer Plan; (v) any event or condition (a) which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of the Borrower or any member of the Controlled Group from a Multiemployer Plan.


 


"Testing Event" shall mean (i) Undrawn Availability for any consecutive five (5) Business Day period is less than or equal to Twelve Million Five Hundred Thousand and 00/100 Dollars ($12,500,000.00), or (ii) Undrawn Availability on any Business Day is less than or equal to Ten Million and 00/100 Dollars ($10,000,000.00).


 


"Testing Event Cure" shall mean, following the occurrence of a Testing Event, Undrawn Availability for any consecutive thirty (30) day period exceeds Fifteen Million and 00/100 Dollars ($15,000,000.00)


 


"Toxic Substance" shall mean and include any material present on the Real Property which has been shown to have significant adverse effect on human health or which is subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., or any other applicable Federal or state laws now in force or hereafter enacted relating to toxic substances. "Toxic Substance" includes asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.


 




  





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"Trading with the Enemy Act" shall mean the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling legislation or executive order relating thereto.


 


"Transactions" shall have the meaning set forth in Section 5.8(a) hereof.


 


"Transferee" shall have the meaning set forth in Section 15.3(d) hereof.


 


"Undrawn Availability" at a particular date shall mean an amount equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance Amount, minus (b) the sum of (i) the outstanding amount of Advances plus (ii) all amounts due and owing to the Borrower's trade creditors which are sixty (60) days or more past due, plus (iii) fees and expenses for which Borrower is liable but which have not been paid or charged to Borrower's Account.


 


"Unfinanced Capital Expenditures" shall mean all Capital Expenditures of the Borrower and its Subsidiaries on a consolidated basis other than those made utilizing financing provided by the applicable seller or third party lenders. For the avoidance of doubt, Capital Expenditures made by the Borrower or any of its Subsidiaries utilizing Revolving Advances shall be deemed Unfinanced Capital Expenditures.


 


"Uniform Commercial Code" shall have the meaning set forth in Section 1.3 hereof.


 


"Unrestricted Cash" shall mean cash of Holding which is unrestricted, accessible and denominated in U.S. Dollars and on deposit in an account of Holding which is maintained at a domestic branch of a financial institution.


 


"USA PATRIOT Act" shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.


 


"Week" shall mean the time period commencing with the opening of business on a Wednesday and ending on the end of business the following Tuesday.


 


"Year End Financial Statements" shall have the meaning set forth in Section 5.5(b).


 


1.3.    Uniform Commercial Code Terms.


 


All terms used herein and defined in the Uniform Commercial Code as adopted in the Commonwealth of Pennsylvania from time to time (the "Uniform Commercial Code") shall have the meaning given therein unless otherwise defined herein. Without limiting the foregoing, the terms "accounts", "chattel paper", "commercial tort claims", "instruments", "general intangibles", "goods", "payment intangibles", "proceeds", "supporting obligations", "securities", "investment property", "documents", "deposit accounts", "software", "letter of credit rights", "inventory", "equipment" and "fixtures", as and when used in the description of Collateral (including in Section 4.1 hereto) shall have the meanings given to such terms in Articles 8 or 9 of the Uniform Commercial Code. To the extent the definition of any category or type of collateral is expanded by any amendment, modification or revision to the Uniform Commercial Code, such expanded definition will apply automatically as of the date of such amendment, modification or revision.


 




  





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1.4.          Certain Matters of Construction.


 


The terms "herein", "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. 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. Any pronoun used shall be deemed to cover all genders. Wherever appropriate in the context, terms used herein in the singular also include the plural and vice versa. All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations. Unless otherwise provided, all references to any instruments or agreements to which Agent is a party, including references to any of the Other Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof. All references herein to the time of day shall mean the time in Pittsburgh, Pennsylvania. Unless otherwise provided, all financial calculations shall be performed with Inventory valued on a first-in, first-out basis. Whenever the words "including" or "include" shall be used, such words shall be understood to mean "including, without limitation" or "include, without limitation". A Default or Event of Default shall be deemed to exist at all times during the period commencing on the date that such Default or Event of Default occurs to the date on which such Default or Event of Default is waived in writing pursuant to this Agreement or, in the case of a Default, is cured within any period of cure expressly provided for in this Agreement; and an Event of Default shall "continue" or be "continuing" until such Event of Default has been waived in writing by the Required Lenders. Any Lien referred to in this Agreement or any of the Other Documents as having been created in favor of Agent, any agreement entered into by Agent pursuant to this Agreement or any of the Other Documents, any payment made by or to or funds received by Agent pursuant to or as contemplated by this Agreement or any of the Other Documents, or any act taken or omitted to be taken by Agent, shall, unless otherwise expressly provided, be created, entered into, made or received, or taken or omitted, for the benefit or account of Agent and Lenders. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or otherwise within the limitations of, another covenant shall not avoid the occurrence of a default if such action is taken or condition exists. In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached will not affect the incorrectness of a breach of a representation or warranty hereunder.


 




  





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II.            ADVANCES, PAYMENTS.


 


2.1.          Revolving Advances.


 


(a) Amount of Revolving Advances. Subject to the terms and conditions set forth in this Agreement including Section 2.1(b), each Lender, severally and not jointly, will make Revolving Advances to Borrower in aggregate amounts outstanding at any time equal to such Lender's Commitment Percentage of the lesser of (x) the Maximum Revolving Advance Amount less the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit and (y) an amount equal to the sum of:


 


(i) up to eighty-five percent (85%), subject to the provisions of Section 2.1(b) hereof ("Receivables Advance Rate"), of Eligible Receivables, plus


 


(ii) subject to the provisions of Section 2.1(b) hereof, up to the lesser of (A) the lesser of (x) up to sixty-five percent (65%) ("Inventory Advance Rate" and together with the Receivables Advance Rate, the "Advance Rates") of the aggregate value of the Eligible Inventory, valued at the lower of weighted-average cost or market, or (y) up to eighty-five percent (85%) of the Net Orderly Liquidation Value of the Eligible Inventory, or (B) Thirty Million and 00/100 Dollars ($30,000,000.00) in the aggregate at any one time, minus


 


(iii) the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit, minus


 


(iv) such reserves as Agent may reasonably deem proper and necessary from time to time.


 


The amount derived from (x) the sum of Sections 2.1 (a)(y)(i) and (ii), minus (y) Section 2.1 (a)(y)(iv), at any time and from time to time shall be referred to as the "Formula Amount". The Revolving Advances shall be evidenced by one or more secured promissory notes (collectively, the "Revolving Credit Note") substantially in the form attached hereto as Exhibit 2.1(a).


 


(b) Discretionary Rights. The Advance Rates may be increased or decreased by Agent at any time and from time to time in the exercise of its reasonable discretion. Each Borrower consents to any such increases or decreases and acknowledges that decreasing the Advance Rates or increasing or imposing reserves may limit or restrict Advances requested by Borrower. The rights of Agent under this subsection are subject to the provisions of Section 15.2(b).


 


2.2.       Procedure for Revolving Advances Borrowing.


 


(a) Borrower may notify Agent prior to 12:00 p.m. on a Business Day of a Borrower's request to incur, on that day, a Revolving Advance hereunder. Should any amount required to be paid as interest hereunder, or as fees or other charges under this Agreement or any other agreement with Agent or Lenders, or with respect to any other Obligation, become due, same shall be deemed a request for a Revolving Advance maintained as a Domestic Rate Loan as of the date such payment is due, in the amount required to pay in full such interest, fee, charge or Obligation under this Agreement or any other agreement with Agent or Lenders, and such request shall be irrevocable.


 




  





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(b) Notwithstanding the provisions of subsection (a) above, in the event the Borrower desires to obtain a Eurodollar Rate Loan, Borrower shall give Agent written notice by no later than 12:00 p.m. on the day which is three (3) Business Days prior to the date such Eurodollar Rate Loan is to be borrowed, specifying (i) the date of the proposed borrowing (which shall be a Business Day), (ii) the type of borrowing and the amount on the date of such Advance to be borrowed, which amount shall be in an aggregate principal amount that is not less than One Million and 00/100 Dollars ($1,000,000.00) and integral multiples of One Million and 00/100 Dollars ($1,000,000.00) in excess thereof, and (iii) the duration of the first Interest Period therefor. Interest Periods for Eurodollar Rate Loans shall be for one, two or three months; provided, if an Interest Period would end on a day that is not a Business Day, it shall end on the next succeeding Business Day unless such day falls in the next succeeding calendar month in which case the Interest Period shall end on the next preceding Business Day. No Eurodollar Rate Loan shall be made available to the Borrower during the continuance of a Default or an Event of Default. After giving effect to each requested Eurodollar Rate Loan, including those which are converted from a Domestic Rate Loan under Section 2.2(d), there shall not be outstanding more than four (4) Eurodollar Rate Loans, in the aggregate.


 


(c) Each Interest Period of a Eurodollar Rate Loan shall commence on the date such Eurodollar Rate Loan is made and shall end on such date as Borrower may elect as set forth in subsection (b)(iii) above provided that the exact length of each Interest Period shall be determined in accordance with the practice of the interbank market for offshore Dollar deposits and no Interest Period shall end after the last day of the Term.


 


Borrower shall elect the initial Interest Period applicable to a Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section 2.2(d), as the case may be. Borrower shall elect the duration of each succeeding Interest Period by giving irrevocable written notice to Agent of such duration not later than 10:00 a.m. on the day which is three (3) Business Days prior to the last day of the then current Interest Period applicable to such Eurodollar Rate Loan. If Agent does not receive timely notice of the Interest Period elected by Borrower, Borrower shall be deemed to have elected to convert to a Domestic Rate Loan subject to Section 2.2(d) hereinbelow.


 


(d) Provided that no Event of Default shall have occurred and be continuing, Borrower may, on the last Business Day of the then current Interest Period applicable to any outstanding Eurodollar Rate Loan, or on any Business Day with respect to Domestic Rate Loans, convert any such loan into a loan of another type in the same aggregate principal amount provided that any conversion of a Eurodollar Rate Loan shall be made only on the last Business Day of the then current Interest Period applicable to such Eurodollar Rate Loan. If Borrower desires to convert a loan, Borrower shall give Agent written notice by no later than 10:00 a.m. (i) on the day which is three (3) Business Days' prior to the date on which such conversion is to occur with respect to a conversion from a Domestic Rate Loan to a Eurodollar Rate Loan, or (ii) on the day which is one (1) Business Day prior to the date on which such conversion is to occur with respect to a conversion from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying, in each case, the date of such conversion, the loans to be converted and if the conversion is from a Domestic Rate Loan to any other type of loan, the duration of the first Interest Period therefor.


 




  





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(e) At its option and upon written notice given prior to 10:00 a.m. at least three (3) Business Days' prior to the date of such prepayment, the Borrower may prepay the Eurodollar Rate Loans in whole at any time or in part from time to time with accrued interest on the principal being prepaid to the date of such repayment. Such Borrower shall specify the date of prepayment of Advances which are Eurodollar Rate Loans and the amount of such prepayment. In the event that any prepayment of a Eurodollar Rate Loan is required or permitted on a date other than the last Business Day of the then current Interest Period with respect thereto, the Borrower shall indemnify Agent and Lenders therefor in accordance with Section 2.2(f) hereof.


 


(f) Each Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless from and against any and all losses or expenses that Agent and Lenders may sustain or incur as a consequence of any prepayment, conversion of or any default by the Borrower in the payment of the principal of or interest on any Eurodollar Rate Loan or failure by the Borrower to complete a borrowing of, a prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof has been given, including, but not limited to, any interest payable by Agent or Lenders to lenders of funds obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder. A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Agent or any Lender to Borrower shall be conclusive absent manifest error.


 


(g) Notwithstanding any other provision hereof, if any Applicable Law, or any change therein or in the interpretation or application thereof, shall make it unlawful for any Lender (for purposes of this subsection (g), the term "Lender" shall include any Lender and the office or branch where any Lender or any corporation or bank controlling such Lender makes or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the obligation of Lenders to make Eurodollar Rate Loans hereunder shall forthwith be cancelled and Borrower shall, if any affected Eurodollar Rate Loans are then outstanding, promptly upon request from Agent, either pay all such affected Eurodollar Rate Loans or convert such affected Eurodollar Rate Loans into loans of another type; provided, however, it is understood and agreed that the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173), all Laws relating thereto, all interpretations and applications thereof and any compliance by the Agent or any Lender with any request or directive relating thereto shall, for the purposes of this Agreement, be deemed to be adopted subsequent to the date hereof. If any such payment or conversion of any Eurodollar Rate Loan is made on a day that is not the last day of the Interest Period applicable to such Eurodollar Rate Loan, Borrower shall pay Agent, upon Agent's request, such amount or amounts as may be necessary to compensate Lenders for any loss or expense sustained or incurred by Lenders in respect of such Eurodollar Rate Loan as a result of such payment or conversion, including, but not limited to, any interest or other amounts payable by Lenders to lenders of funds obtained by Lenders in order to make or maintain such Eurodollar Rate Loan. A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Lenders to Borrower shall be conclusive absent manifest error.


 




  





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2.3.       Disbursement of Advance Proceeds.


 


All Advances shall be disbursed from whichever office or other place Agent may designate from time to time and, together with any and all other Obligations of Borrower to Agent or Lenders, shall be charged to Borrower's Account on Agent's books. During the Term, Borrower may use the Revolving Advances by borrowing, prepaying and reborrowing, all in accordance with the terms and conditions hereof. The proceeds of each Revolving Advance requested by Borrower or deemed to have been requested by the Borrower under Section 2.2 hereof shall, with respect to requested Revolving Advances to the extent Lenders make such Revolving Advances, be made available to the Borrower on the day so requested by way of credit to the Borrower's operating account at PNC, or such other bank as Borrower may designate following notification to Agent, in immediately available federal funds or other immediately available funds or, with respect to Revolving Advances deemed to have been requested by the Borrower, be disbursed to Agent to be applied to the outstanding Obligations giving rise to such deemed request.


 


2.4.       Maximum Advances.


 


The aggregate balance of Revolving Advances outstanding at any time shall not exceed the lesser of (a) the Maximum Revolving Advance Amount or (b) the Formula Amount less, in each case, the aggregate Maximum Undrawn Amount of all issued and outstanding Letters of Credit.


 


2.5.       Repayment of Advances.


 


(a) The Revolving Advances shall be due and payable in full on the last day of the Term subject to earlier prepayment as herein provided.


 


(b) Each Borrower Party recognizes that the amounts evidenced by checks, notes, drafts or any other items of payment relating to and/or proceeds of Collateral may not be collectible by Agent on the date received. In consideration of Agent's agreement to conditionally credit Borrower's Account as of the next Business Day following the Agent's receipt of those items of payment, each Borrower Party agrees that, in computing the charges under this Agreement, all items of payment shall be deemed applied by Agent on account of the Obligations (i) on the Business Day Agent receives such payments via wire transfer or electronic depository check or (ii) in the case of payments received by Agent in any other form, one (1) Business Day after the Business Day such payment constitutes good funds in Agent's account. Agent is not, however, required to credit Borrower's Account for the amount of any item of payment which is unsatisfactory to Agent and Agent may charge Borrower's Account for the amount of any item of payment which is returned to Agent unpaid.


 


(c) All payments of principal, interest and other amounts payable hereunder, or under any of the Other Documents shall be made to Agent at the Payment Office not later than 1:00 P.M. on the due date therefor in lawful money of the United States of America in federal funds or other funds immediately available to Agent. Agent shall have the right to effectuate payment on any and all Obligations due and owing hereunder by charging Borrower's Account or by making Advances as provided in Section 2.2 hereof.


 




  





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(d) Borrower shall pay principal, interest, and all other amounts payable hereunder, or under any related agreement, without any deduction whatsoever, including any deduction for any setoff or counterclaim.


 


2.6.       Repayment of Excess Advances.


 


The aggregate balance of Advances outstanding at any time in excess of the maximum amount of Advances permitted hereunder shall be immediately due and payable without the necessity of any demand, at the Payment Office, whether or not a Default or Event of Default has occurred.


 


2.7.          Statement of Account.


 


Agent shall maintain, in accordance with its customary procedures, a loan account ("Borrower's Account") in the name of Borrower in which shall be recorded the date and amount of each Advance made by Agent and the date and amount of each payment in respect thereof; provided, however, the failure by Agent to record the date and amount of any Advance shall not adversely affect Agent or any Lender. Each month, Agent shall send to Borrower a statement showing the accounting for the Advances made, payments made or credited in respect thereof, and other transactions between Agent and Borrower during such month. The monthly statements shall be deemed correct and binding upon Borrower in the absence of manifest error and shall constitute an account stated between Lenders and Borrower unless Agent receives a written statement of Borrower's specific exceptions thereto within thirty (30) days after such statement is received by Borrower. The records of Agent with respect to the loan account shall be conclusive evidence absent manifest error of the amounts of Advances and other charges thereto and of payments applicable thereto.


 


2.8.          Letters of Credit.


 


Subject to the terms and conditions hereof, Agent shall issue or cause the issuance of standby and/or trade letters of credit (such letters of credit and the Existing Letters of Credit are collectively, the "Letters of Credit") for the account of the Borrower; provided, however, that Agent will not be required to issue or cause to be issued any Letters of Credit to the extent that the issuance thereof would then cause the sum of (i) the outstanding Revolving Advances plus (ii) the Maximum Undrawn Amount of all outstanding Letters of Credit to exceed the lesser of (x) the Maximum Revolving Advance Amount or (y) the Formula Amount. The Maximum Undrawn Amount of outstanding Letters of Credit shall not exceed in the aggregate at any time the Letter of Credit Sublimit. All disbursements or payments related to Letters of Credit shall be deemed to be Domestic Rate Loans consisting of Revolving Advances and shall bear interest at the Revolving Interest Rate for Domestic Rate Loans; Letters of Credit that have not been drawn upon shall not bear interest.


 




  





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2.9.          Issuance of Letters of Credit.


 


(a) Borrower may request Agent to issue or cause the issuance of a Letter of Credit by delivering to Agent at the Payment Office, prior to 12:00 p.m., at least five (5) Business Days' prior to the proposed date of issuance, Agent's form of Letter of Credit Application (the "Letter of Credit Application") completed to the satisfaction of Agent; and, such other certificates, documents and other papers and information as Agent may reasonably request. Borrower also has the right to give instructions and make agreements with respect to any application, any applicable letter of credit and security agreement, any applicable letter of credit reimbursement agreement and/or any other applicable agreement, any letter of credit and the disposition of documents, disposition of any unutilized funds, and to agree with Agent upon any amendment, extension or renewal of any Letter of Credit. As of the date hereof, those letters of credit set forth on Schedule 2.9 attached hereto and made a part hereof, which were issued by the Agent and are outstanding on the date hereof (the "Existing Letters of Credit"), are hereby deemed to be Letters of Credit issued and outstanding hereunder.


 


(b) Each Letter of Credit shall, among other things, (i) provide for the payment of sight drafts, other written demands for payment, or acceptances of usance drafts when presented for honor thereunder in accordance with the terms thereof and when accompanied by the documents described therein and (ii) have an expiry date not later than twenty-four (24) months after such Letter of Credit's date of issuance and in no event later than the last day of the Term. Each standby Letter of Credit shall be subject either to the Uniform Customs and Practice for Documentary Credits as most recently published by the International Chamber of Commerce at the time a Letter of Credit is issued (the "UCP") or the International Standby Practices (ISP98 International Chamber of Commerce Publication Number 590) (the "ISP98 Rules")), and any subsequent revision thereof at the time a standby Letter of Credit is issued, as determined by Agent, and each trade Letter of Credit shall be subject to the UCP.


 


(c) Agent shall use its reasonable efforts to notify Lenders of the request by Borrower for a Letter of Credit hereunder.


 


2.10.     Requirements For Issuance of Letters of Credit.


 


(a) Borrower shall authorize and direct any Issuer to name the Borrower as the "Applicant" or "Account Party" of each Letter of Credit. If Agent is not the Issuer of any Letter of Credit, Borrower shall authorize and direct the Issuer to deliver to Agent all instruments, documents, and other writings and property received by the Issuer pursuant to the Letter of Credit and to accept and rely upon Agent's instructions and agreements with respect to all matters arising in connection with the Letter of Credit or the application therefor.


 


(b) In connection with all Letters of Credit issued or caused to be issued by Agent under this Agreement, the Borrower hereby appoints Agent, or its designee, as its attorney, with full power and authority if an Event of Default shall have occurred, (i) to sign and/or endorse the Borrower's name upon any warehouse or other receipts, letter of credit applications and acceptances, (ii) to sign the Borrower's name on bills of lading; (iii) to clear Inventory through the United States of America Customs Department ("Customs") in the name of the Borrower or Agent or Agent's designee, and to sign and deliver to Customs officials powers of attorney in the name of the Borrower for such purpose; and (iv) to complete in the Borrower's name or Agent's, or in the name of Agent's designee, any order, sale or transaction, obtain the necessary documents in connection therewith, and collect the proceeds thereof. Neither Agent nor its attorneys will be liable for any acts or omissions nor for any error of judgment or mistakes of fact or law, except for Agent's or its attorney's willful misconduct. This power, being coupled with an interest, is irrevocable as long as any Letters of Credit remain outstanding.


 




  





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2.11.        Disbursements, Reimbursement.


 


(a) Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from Agent a participation in such Letter of Credit and each drawing thereunder in an amount equal to such Lender's Commitment Percentage of the Maximum Face Amount of such Letter of Credit and the amount of such drawing, respectively.


 


(b) In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, Agent will promptly notify Borrower. Provided that Borrower shall have received such notice, Borrower shall reimburse (such obligation to reimburse Agent shall sometimes be referred to as a "Reimbursement Obligation") Agent prior to 12:00 Noon on each date that an amount is paid by Agent under any Letter of Credit (each such date, a "Drawing Date") in an amount equal to the amount so paid by Agent. In the event Borrower fail to reimburse Agent for the full amount of any drawing under any Letter of Credit by 12:00 Noon on the Drawing Date, Agent will promptly notify each Lender thereof, and Borrower shall be deemed to have requested that a Revolving Advance maintained as a Domestic Rate Loan be made by Lenders to be disbursed on the Drawing Date under such Letter of Credit, subject to the amount of the unutilized portion of the lesser of Maximum Revolving Advance Amount or the Formula Amount and subject to Section 8.2 hereof. Any notice given by Agent pursuant to this Section 2.11(b) may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.


 


(c) Each Lender shall upon any notice pursuant to Section 2.11(b) make available to Agent an amount in immediately available funds equal to its Commitment Percentage of the amount of the drawing, whereupon the participating Lenders shall (subject to Section 2.11(d)) each be deemed to have made a Revolving Advance maintained as a Domestic Rate Loan to Borrower in that amount. If any Lender so notified fails to make available to Agent the amount of such Lender's Commitment Percentage of such amount by no later than 2:00 p.m. on the Drawing Date, then interest shall accrue on such Lender's obligation to make such payment, from the Drawing Date to the date on which such Lender makes such payment (i) at a rate per annum equal to the Federal Funds Effective Rate during the first three days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to Revolving Advances maintained as a Domestic Rate Loans on and after the fourth day following the Drawing Date. Agent will promptly give notice of the occurrence of the Drawing Date, but failure of Agent to give any such notice on the Drawing Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Lender from its obligation under this Section 2.11(c), provided that such Lender shall not be obligated to pay interest as provided in Section 2.1 1(c)(i) and (ii) until and commencing from the date of receipt of notice from Agent of a drawing.


 




  





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(d) With respect to any unreimbursed drawing that is not converted into a Revolving Advance maintained as a Domestic Rate Loan to Borrower in whole or in part as contemplated by Section 2.11(b), because of Loan Parties' failure to satisfy the conditions set forth in Section 8.2 (other than any notice requirements) or for any other reason, Borrower shall be deemed to have incurred from Agent a borrowing (each a "Letter of Credit Borrowing") in the amount of such drawing. Such Letter of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum applicable to a Revolving Advance maintained as a Domestic Rate Loan. Each Lender's payment to Agent pursuant to Section 2.11(c) shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing and shall constitute a "Participation Advance" from such Lender in satisfaction of its Participation Commitment under this Section 2.11.


 


(e) Each Lender's Participation Commitment shall continue until the last to occur of any of the following events: (x) Agent ceases to be obligated to issue or cause to be issued Letters of Credit hereunder; (y) no Letter of Credit issued or created hereunder remains outstanding and uncancelled and (z) all Persons (other than Loan Parties) have been fully reimbursed for all payments made under or relating to Letters of Credit.


 


2.12.    Repayment of Participation Advances.


 


(a) Upon (and only upon) receipt by Agent for its account of immediately available funds from Borrower (i) in reimbursement of any payment made by Agent under the Letter of Credit with respect to which any Lender has made a Participation Advance to Agent, or (ii) in payment of interest on such a payment made by Agent under such a Letter of Credit, Agent will pay to each Lender, in the same funds as those received by Agent, the amount of such Lender's Commitment Percentage of such funds, except Agent shall retain the amount of the Commitment Percentage of such funds of any Lender that did not make a Participation Advance in respect of such payment by Agent.


 


(b) If Agent is required at any time to return to the Borrower, or to a trustee, receiver, liquidator, custodian, or any official in any insolvency proceeding, any portion of the payments made by Borrower to Agent pursuant to Section 2.12(a) in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Lender shall, on demand of Agent, forthwith return to Agent the amount of its Commitment Percentage of any amounts so returned by Agent plus interest at the Federal Funds Effective Rate.


 


2.13.   Documentation.


 


The Borrower agrees to be bound by the terms of the Letter of Credit Application and by Agent's interpretations of any Letter of Credit issued on behalf of the Borrower and by Agent's written regulations and customary practices relating to letters of credit, though Agent's interpretations may be different from the Borrower's own. In the event of a conflict between the Letter of Credit Application and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), Agent shall not be liable for any error, negligence and/or mistakes, whether of omission or commission, in following Borrower's or the Borrower's instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.


 




  





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2.14.    Determination to Honor Drawing Request.


 


In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, Agent shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit and that any other drawing condition appearing on the face of such Letter of Credit has been satisfied in the manner so set forth.


 


2.15.   Nature of Participation and Reimbursement Obligations.


 


Each Lender's obligation in accordance with this Agreement to make the Revolving Advances or Participation Advances as a result of a drawing under a Letter of Credit, and the obligations of Borrower to reimburse Agent upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.15 under all circumstances, including the following circumstances:


 


(i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against Agent, any Loan Party or any other Person for any reason whatsoever;


 


(ii) the failure of any Loan Party or any other Person to comply, in connection with a Letter of Credit Borrowing, with the conditions set forth in this Agreement for the making of a Revolving Advance, it being acknowledged that such conditions are not required for the making of a Letter of Credit Borrowing and the obligation of Lenders to make Participation Advances under Section 2.10;


 


(iii) any lack of validity or enforceability of any Letter of Credit;


 


(iv) any claim of breach of warranty that might be made by Borrower or any Lender against the beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, cross-claim, defense or other right which the Borrower or any Lender may have at any time against a beneficiary, any successor beneficiary or any transferee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), Agent or any Lender or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between the Borrower or any Subsidiaries of the Borrower and the beneficiary for which any Letter of Credit was procured);


 


(v) the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provisions of services relating to a Letter of Credit, in each case even if Agent or any of Agent's Affiliates has been notified thereof;


 




  





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(vi)    payment by Agent under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit;


 


(vii)   the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;


 


(viii)  any failure by Agent or any of Agent's Affiliates to issue any Letter of Credit in the form requested by Borrower, unless Agent has received written notice from Borrower of such failure within three (3) Business Days after Agent shall have furnished Borrower a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;


 


(ix)     any Material Adverse Effect on any Loan Party;


 


(x)      any breach of this Agreement or any Other Document by any party thereto;                                 


 


(xi)     the occurrence or continuance of an insolvency proceeding with respect to any Loan Party;


 


(xii)    the fact that a Default or Event of Default shall have occurred and be continuing;


 


(xiii)   the fact that the Term shall have expired or this Agreement or the Obligations hereunder shall have been terminated; and


 


(xiv)   any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.


 


2.16.        Indemnity.


 


In addition to amounts payable as provided in Section 15.5, each Loan Party hereby agrees to protect, indemnify, pay and save harmless Agent and any of Agent's Affiliates that have issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which Agent or any of Agent's Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit, other than as a result of (A) the gross negligence or willful misconduct of Agent as determined by a final and non-appealable judgment of a court of competent jurisdiction or (b) the wrongful dishonor by Agent or any of Agent's Affiliates of a proper demand for payment made under any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Body (all such acts or omissions herein called "Governmental Acts").


 




  





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2.17.        Liability for Acts and Omissions.


 


As between Loan Parties and Agent and Lenders, each Loan Party assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the respective foregoing, Agent shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if Agent shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of the Borrower against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, facsimile, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of Agent, including any governmental acts, and none of the above shall affect or impair, or prevent the vesting of, any of Agent's rights or powers hereunder. Nothing in the preceding sentence shall relieve Agent from liability for Agent's gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment) in connection with actions or omissions described in such clauses (i) through (viii) of such sentence. In no event shall Agent or Agent's Affiliates be liable to any Loan Party for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including attorneys' fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.


 


Without limiting the generality of the foregoing, Agent and each of its Affiliates may rely on any oral or other communication believed in good faith by Agent or such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit, may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by Agent or its Affiliates; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on Agent or its Affiliate in any way related to any order issued at the applicant's request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an "Order") and honor any drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.


 




  





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In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by Agent under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith and without gross negligence (as determined by a court of competent jurisdiction in a final non-appealable judgment), shall not put Agent under any resulting liability to any Loan Party or any Lender.


 


2.18.   Additional Payments.


 


Any sums expended by Agent or any Lender due to any Loan Party's failure to perform or comply with its obligations under this Agreement or any Other Document including any Loan Party's obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be charged to Borrower's Account as a Revolving Advance and added to the Obligations.


 


2.19.   Manner of Borrowing and Payment.


 


(a) Each borrowing of Revolving Advances shall be advanced according to the applicable Commitment Percentages of Lenders.


 


(b) Each payment (including each prepayment) by the Borrower on account of the principal of and interest on the Revolving Advances, shall be applied to the Revolving Advances pro rata according to the applicable Commitment Percentages of Lenders. Except as expressly provided herein, all payments (including prepayments) to be made by the Borrower on account of principal, interest and fees shall be made without set off or counterclaim and shall be made to Agent on behalf of Lenders to the Payment Office, in each case on or prior to 1:00 P.M. in Dollars and in immediately available funds.


 


(c) (i) Notwithstanding anything to the contrary contained in Sections 2.19(a) and (b) hereof, commencing with the first Business Day following the Closing Date, each borrowing of Revolving Advances shall be advanced by Agent and each payment by the Borrower on account of Revolving Advances shall be applied first to those Revolving Advances advanced by Agent. On or before 1:00 P.M. on each Settlement Date commencing with the first Settlement Date following the Closing Date, Agent and Lenders shall make certain payments as follows: (I) if the aggregate amount of new Revolving Advances made by Agent during the preceding Week (if any) exceeds the aggregate amount of repayments applied to outstanding Revolving Advances during such preceding Week, then each Lender shall provide Agent with funds in an amount equal to its applicable Commitment Percentage of the difference between (w) such Revolving Advances and (x) such repayments and (II) if the aggregate amount of repayments applied to outstanding Revolving Advances during such Week exceeds the aggregate amount of new Revolving Advances made during such Week, then Agent shall provide each Lender with funds in an amount equal to its applicable Commitment Percentage of the difference between (y) such repayments and (z) such Revolving Advances.


 




  





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(ii) Each Lender shall be entitled to earn interest at the applicable Revolving Interest Rate on outstanding Advances which it has funded.


 


(iii) Promptly following each Settlement Date, Agent shall submit to each Lender a certificate with respect to payments received and Advances made during the Week immediately preceding such Settlement Date. Such certificate of Agent shall be conclusive in the absence of manifest error.


 


(d) If any Lender or Participant (a "Benefited Lender") shall at any time receive any payment of all or part of its Advances, or interest thereon, or receive any Collateral in respect thereof (whether voluntarily or involuntarily or by set-off) in a greater proportion than any such payment to and Collateral received by any other Lender, if any, in respect of such other Lender's Advances, or interest thereon, and such greater proportionate payment or receipt of Collateral is not expressly permitted hereunder, such benefited Lender shall purchase for cash from the other Lenders a participation in such portion of each such other Lender's Advances, or shall provide such other Lender with the benefits of any such Collateral, or the proceeds thereof, as shall be necessary to cause such benefited Lender to share the excess payment or benefits of such Collateral or proceeds ratably with each of the other Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. Each Lender so purchasing a portion of another Lender's Advances may exercise all rights of payment (including rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion.


 


(e) Unless Agent shall have been notified by telephone, confirmed in writing, by any Lender that such Lender will not make the amount which would constitute its applicable Commitment Percentage of the Advances available to Agent, Agent may (but shall not be obligated to) assume that such Lender shall make such amount available to Agent on the next Settlement Date and, in reliance upon such assumption, make available to Borrower a corresponding amount. Agent will promptly notify Borrower of its receipt of any such notice from a Lender. If such amount is made available to Agent on a date after such next Settlement Date, such Lender shall pay to Agent on demand an amount equal to the product of (i) the daily average Federal Funds Rate (computed on the basis of a year of 360 days) during such period as quoted by Agent, times (ii) such amount, times (iii) the number of days from and including such Settlement Date to the date on which such amount becomes immediately available to Agent. A certificate of Agent submitted to any Lender with respect to any amounts owing under this paragraph (e) shall be conclusive, in the absence of manifest error. If such amount is not in fact made available to Agent by such Lender within three (3) Business Days after such Settlement Date, Agent shall be entitled to recover such an amount, with interest thereon at the rate per annum then applicable to such Revolving Advances hereunder, on demand from Borrower; provided, however, that Agent's right to such recovery shall not prejudice or otherwise adversely affect Borrower's rights (if any) against such Lender.


 




  





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2.20.   Use of Proceeds.


 


(a) Borrower shall apply the proceeds of Advances to (i) pay fees and expenses relating to this transaction, (ii) provide for its working capital needs and reimburse drawings under Letters of Credit and (iii) provide for all other general corporate purposes.


 


(b) Without limiting the generality of Section 2.20(a) above, neither Borrower, the Guarantors nor any other Person which may in the future become party to this Agreement or the Other Documents as a Borrower or Guarantor, intends to use nor shall they use any portion of the proceeds of the Advances, directly or indirectly, for any purpose in violation of the Trading with the Enemy Act.


 


2.21.      Defaulting Lender.


 


(a) Notwithstanding anything to the contrary contained herein, in the event any Lender (x) has refused (which refusal constitutes a breach by such Lender of its obligations under this Agreement) to make available its portion of any Advance or (y) notifies either Agent or Borrower that it does not intend to make available its portion of any Advance (if the actual refusal would constitute a breach by such Lender of its obligations under this Agreement) (each, a "Lender Default"), all rights and obligations hereunder of such Lender (a "Defaulting Lender") as to which a Lender Default is in effect and of the other parties hereto shall be modified to the extent of the express provisions of this Section 2.21 while such Lender Default remains in effect.


 


(b) Advances shall be incurred pro rata from Lenders (the "Non-Defaulting Lenders") which are not Defaulting Lenders based on their respective Commitment Percentages, and no Commitment Percentage of any Lender or any pro rata share of any Advances required to be advanced by any Lender shall be increased as a result of such Lender Default. Amounts received in respect of principal of any type of Advances shall be applied to reduce the applicable Advances of each Lender (other than any Defaulting Lender) pro rata based on the aggregate of the outstanding Advances of that type of all Lenders at the time of such application; provided, that, Agent shall not be obligated to transfer to a Defaulting Lender any payments received by Agent for the Defaulting Lender's benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder (including any principal, interest or fees). Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may hold and, in its discretion, re-lend to a Borrower the amount of such payments received or retained by it for the account of such Defaulting Lender.


 


(c) A Defaulting Lender shall not be entitled to give instructions to Agent or to approve, disapprove, consent to or vote on any matters relating to this Agreement and the Other Documents. All amendments, waivers and other modifications of this Agreement and the Other Documents may be made without regard to a Defaulting Lender and, for purposes of the definition of "Required Lenders", a Defaulting Lender shall be deemed not to be a Lender and not to have either Advances outstanding or a Commitment Percentage.


 


(d) Other than as expressly set forth in this Section 2.21, the rights and obligations of a Defaulting Lender (including the obligation to indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in this Section 2.21 shall be deemed to release any Defaulting Lender from its obligations under this Agreement and the Other Documents, shall alter such obligations, shall operate as a waiver of any default by such Defaulting Lender hereunder, or shall prejudice any rights which the Borrower, Agent or any Lender may have against any Defaulting Lender as a result of any default by such Defaulting Lender hereunder.


 




  





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(e) In the event a Defaulting Lender retroactively cures to the satisfaction of Agent the breach which caused a Lender to become a Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender and shall be treated as a Lender under this Agreement.


 


III.        INTEREST AND FEES.


 


3.1.         Interest.


 


(a) Interest on Advances shall be payable in arrears on the first day of each month with respect to Domestic Rate Loans and, with respect to Eurodollar Rate Loans, at the end of each Interest Period. Interest charges shall be computed on the actual principal amount of Advances outstanding during the month at a rate per annum equal to the applicable Revolving Interest Rate. From the Closing Date through the day immediately preceding the first (1st) Adjustment Date, (x) Domestic Rate Loans shall bear interest for each day at a rate per annum equal to the Alternate Base Rate plus one percent (1.00%), and (y) Eurodollar Rate Loans shall bear interest for each applicable Interest Period at a rate per annum equal to the Eurodollar Rate plus two and one half of one percent (2.50%).


 


(b) Subject to the terms and conditions of this Agreement, during each fiscal quarter of the Borrower, in accordance with Section 9.8 hereof, the Borrower shall submit to Agent a Compliance Certificate calculating Average Undrawn Availability. Upon receipt by Agent of a Compliance Certificate as of September 30, 2011, and as of the last day of each fiscal quarter thereafter, Average Undrawn Availability shall be calculated. Any increase or decrease in the Applicable Base Rate Margin, the Applicable Eurodollar Rate Margin, the Applicable Letter of Credit Fee Percentage or the Applicable Facility Fee Rate computed as of a fiscal quarter end shall be effective on the date on which the Compliance Certificate calculating Average Undrawn Availability is due to be delivered under Section 9.8 hereof (each, an "Adjustment Date"). From each Adjustment Date until the next Adjustment Date, (x) Domestic Rate Loans shall bear interest for each day at a rate per annum equal to the Alternate Base Rate plus the applicable margin determined by reference to Borrower’s Average Undrawn Availability (the "Applicable Base Rate Margin") set forth below and (y) Eurodollar Rate Loans shall bear interest during each applicable Interest Period at a rate per annum equal to the Eurodollar Rate plus the applicable margin determined by reference to Borrower’s Average Undrawn Availability (the "Applicable Eurodollar Rate Margin") set forth below:


 




	
TIER

	
AVERAGE


UNDRAWN


AVAILABILITY

	
APPLICABLE


BASE RATE


MARGIN

	
APPLICABLE


EURODOLLAR


RATE


MARGIN

	
APPLICABLE


LETTER OF


CREDIT FEE


PERCENTAGE

	
APPLICABLE


FACILITY FEE


RATE


	
I

	
≤$10,000,000.00

	
1.00%

	
2.50%

	
2.50%

	
0.25%








	
II

	
>$10,000,000.00


≤$25,000,000.00

	
0.75%

	
2.25%

	
2.25%

	
0.25%


	
III

	
>$25,000,000.00


≤$40,000,000.00

	
0.50%

	
2.00%

	
2.00%

	
0.375%


	
IV

	
>$40,000,000.00

	
0.25%

	
1.75%

	
1.75%

	
0.375%







 


 




  





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(c) Subject to the terms and conditions of this Agreement, in the event that the Borrower fails to timely deliver any Compliance Certificate calculating Average Undrawn Availability in accordance with Section 9.8 hereof, the Applicable Base Rate Margin, the Applicable Eurodollar Rate Margin, the Applicable Letter of Credit Fee Percentage and the Applicable Facility Fee Rate shall be the amount corresponding to Tier I until the delivery of such Compliance Certificate calculating Average Undrawn Availability.


 


(d) Whenever, subsequent to the date of this Agreement, the Alternate Base Rate is increased or decreased, the Revolving Interest Rate for Domestic Rate Loans shall be similarly changed without notice or demand of any kind by an amount equal to the amount of such change in the Alternate Base Rate during the time such change or changes remain in effect. The Eurodollar Rate shall be adjusted with respect to Eurodollar Rate Loans without notice or demand of any kind on the effective date of any change in the Reserve Percentage as of such effective date. Upon and after the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent or at the direction of Required Lenders, the Obligations shall bear interest at the applicable Revolving Interest Rate (with an Applicable Base Rate Margin or Applicable Eurodollar Rate Margin corresponding to Tier I in the pricing grid set forth in Section 3.1(b) hereof) plus two percent (2.0%) per annum (the "Default Rate").


 


3.2.          Letter of Credit Fees.


 


Borrower shall pay (x) to Agent, for the ratable benefit of Lenders, fees for each Letter of Credit for the period from and excluding the date of issuance of same to and including the date of expiration or termination, equal to the average daily face amount of each outstanding Letter of Credit multiplied by (i) from the Closing Date until the first (1st) Adjustment Date, two and one half of one percent (2.50%) per annum and (ii) on and after the first (1st) Adjustment Date, the applicable percentage per annum determined by reference to Average Undrawn Availability as set forth in Section 3.1(b) hereof (the "Applicable Letter of Credit Fee Percentage"), such fees to be calculated on the basis of a 360-day year for the actual number of days elapsed and to be payable quarterly in arrears on the first day of each quarter and on the last day of the Term, and (y) to the Issuer, a fronting fee of one quarter of one percent (0.25%) per annum, together with any and all administrative, issuance, amendment, payment and negotiation charges with respect to Letters of Credit and all fees and expenses as agreed upon by Issuer and Borrower in connection with any Letter of Credit, including in connection with the opening, amendment or renewal of any such Letter of Credit and any acceptances created thereunder and shall reimburse Agent for any and all fees and expenses, if any, paid by Agent to the Issuer (all of the foregoing fees, the "Letter of Credit Fees"). All such charges shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or pro-ration upon the termination of this Agreement for any reason. Any such charge in effectat the time of a particular transaction shall be the charge for that transaction, notwithstanding any subsequent change in the Issuer's prevailing charges for that type of transaction. All Letter of Credit Fees payable hereunder shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or pro-ration upon the termination of this Agreement for any reason. Upon and after the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent or at the direction of Required Lenders, the Letter of Credit Fees described in clause (x) of this Section 3.2 (with an Applicable Letter of Credit Fee Percentage corresponding to Tier I in the pricing grid set forth in Section 3.1(b) hereof) shall be increased by an additional two percent (2.0%) per annum.


 




  





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On demand upon the occurrence and during the continuance of an Event of Default, Borrower will cause cash to be deposited and maintained in an account with Agent, as cash collateral, in an amount equal to one hundred five percent (105%) of the Maximum Undrawn Amount of all outstanding Letters of Credit, and the Borrower hereby irrevocably authorizes Agent, in its discretion, on the Borrower's behalf and in the Borrower's name, to open such an account and to make and maintain deposits therein, or in an account opened by the Borrower, in the amounts required to be made by the Borrower, out of the proceeds of Receivables or other Collateral or out of any other funds of the Borrower coming into any Lender's possession at any time. Agent will invest such cash collateral (less applicable reserves) in such short-term money-market items as to which Agent and the Borrower mutually agree and the net return on such investments shall be credited to such account and constitute additional cash collateral. The Borrower may not withdraw amounts credited to any such account except upon the occurrence of all of the following: (x) payment and performance in full of all Obligations, (y) expiration of all Letters of Credit and (z) termination of this Agreement.


 


3.3.   Facility Fee.


 


If, for any calendar quarter during the Term, the average daily unpaid balance of the Revolving Advances and undrawn amount of any outstanding Letters of Credit for each day of such calendar quarter does not equal the Maximum Revolving Advance Amount, then Borrower shall pay to Agent for the ratable benefit of Lenders a fee at a rate equal to (i) from the Closing Date until the first (1st) Adjustment Date, one quarter of one percent (0.25%) per annum and (ii) on and after the first (1st) Adjustment Date, the applicable percentage per annum determined by reference to Average Undrawn Availability as set forth in Section 3.1(b) hereof (the "Applicable Facility Fee Rate"), on the amount by which the Maximum Revolving Advance Amount exceeds such average daily unpaid balance. Such fee shall be payable to Agent in arrears on the first day of each calendar quarter with respect to the previous calendar quarter.


 


3.4.   Fee Letter.


 


Borrower shall pay the amounts required to be paid in the Fee Letter in the manner and at the times required by the Fee Letter.


 




  





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3.5.   Computation of Interest and Fees.


 


Interest and fees hereunder shall be computed on the basis of a year of 360 days and for the actual number of days elapsed. If any payment to be made hereunder becomes due and payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding Business Day and interest thereon shall be payable at the Revolving Interest Rate for Domestic Rate Loans during such extension.


 


 3.6.    Maximum Charges.


 


In no event whatsoever shall interest and other charges charged hereunder exceed the highest rate permissible under law. In the event interest and other charges as computed hereunder would otherwise exceed the highest rate permitted under law, such excess amount shall be first applied to any unpaid principal balance owed by Borrower, and if the then remaining excess amount is greater than the previously unpaid principal balance, Lenders shall promptly refund such excess amount to Borrower and the provisions hereof shall be deemed amended to provide for such permissible rate.


 


3.7.    Increased Costs.


 


In the event that any Applicable Law, or any change therein or in the interpretation or application thereof, or compliance by any Lender (for purposes of this Section 3.7, the term "Lender" shall include Agent or any Lender and any corporation or bank controlling Agent or any Lender) and the office or branch where Agent or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any request or directive (whether or not having the force of law) from any central bank or other financial, monetary or other authority, shall:


 


(a) subject Agent or any Lender to any tax of any kind whatsoever with respect to this Agreement or any Other Document or change the basis of taxation of payments to Agent or any Lender of principal, fees, interest or any other amount payable hereunder or under any Other Documents (except for changes in the rate of tax on the overall net income of Agent or any Lender by the jurisdiction in which it maintains its principal office);


 


(b) impose, modify or hold applicable any reserve, special deposit, assessment or similar requirement against assets held by, or deposits in or for the account of, advances or loans by, or other credit extended by, any office of Agent or any Lender, including pursuant to Regulation D of the Board of Governors of the Federal Reserve System; or


 


(c) impose on Agent or any Lender or the London interbank Eurodollar market any other condition with respect to this Agreement or any Other Document;


 


and the result of any of the foregoing is to increase the cost to Agent or any Lender of making, renewing or maintaining its Advances hereunder by an amount that Agent or such Lender deems to be material or to reduce the amount of any payment (whether of principal, interest or otherwise) in respect of any of the Advances by an amount that Agent or such Lender deems to be material, then, in any case Borrower shall promptly pay Agent or such Lender, upon its demand, such additional amount as will compensate Agent or such Lender for such additional cost or such reduction, as the case may be, provided that the foregoing shall not apply to increased costs which are reflected in the Eurodollar Rate, as the case may be. It is understood and agreed that the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173), all Laws relating thereto, all interpretations and applications thereof and any compliance by the Agent or any Lender with any request or directive relating thereto shall, for the purposes of this Agreement, be deemed to be adopted subsequent to the date hereof. Agent or such Lender shall certify the amount of such additional cost or reduced amount to Borrower, and such certification shall be conclusive absent manifest error.


 




  





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3.8.   Basis For Determining Interest Rate Inadequate or Unfair.


 


In the event that Agent or any Lender shall have determined that:


 


(a) reasonable means do not exist for ascertaining the Eurodollar Rate for any Interest Period; or


 


(b) Dollar deposits in the relevant amount and for the relevant maturity are not available in the London interbank Eurodollar market, with respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan,


 


then Agent shall give Borrower prompt written or telephonic of such determination. If such notice is given, (i) any such requested Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrower shall notify Agent no later than 10:00 a.m. two (2) Business Days prior to the date of such proposed borrowing, that its request for such borrowing shall be cancelled or made as an unaffected type of Eurodollar Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have been converted to an affected type of Eurodollar Rate Loan shall be continued as or converted into a Domestic Rate Loan, or, if Borrower shall notify Agent, no later than 10:00 a.m. two (2) Business Days prior to the proposed conversion, shall be maintained as an unaffected type of Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be converted into a Domestic Rate Loan, or, if Borrower shall notify Agent, no later than 10:00 a.m. two (2) Business Days prior to the last Business Day of the then current Interest Period applicable to such affected Eurodollar Rate Loan, shall be converted into an unaffected type of Eurodollar Rate Loan, on the last Business Day of the then current Interest Period for such affected Eurodollar Rate Loans. Until such notice has been withdrawn, Lenders shall have no obligation to make an affected type of Eurodollar Rate Loan or maintain outstanding affected Eurodollar Rate Loans and the Borrower shall not have the right to convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate Loan.


 




  





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3.9.   Capital Adequacy.


 


(a) In the event that Agent or any Lender shall have determined that any Applicable Law or guideline regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Body, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by Agent or any Lender (for purposes of this Section 3.9, the term "Lender" shall include Agent or any Lender and any corporation or bank controlling Agent or any Lender) and the office or branch where Agent or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on Agent or any Lender's capital as a consequence of its obligations hereunder to a level below that which Agent or such Lender could have achieved but for such adoption, change or compliance (taking into consideration Agent's and each Lender's policies with respect to capital adequacy) by an amount deemed by Agent or any Lender to be material, then, from time to time, Borrower shall pay upon demand to Agent or such Lender such additional amount or amounts as will compensate Agent or such Lender for such reduction; provided, however, it is understood and agreed that the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173), all Laws relating thereto, all interpretations and applications thereof and any compliance by the Agent or any Lender with any request or directive relating thereto shall, for the purposes of this Agreement, be deemed to be adopted subsequent to the date hereof. In determining such amount or amounts, Agent or such Lender may use any reasonable averaging or attribution methods. The protection of this Section 3.9 shall be available to Agent and each Lender regardless of any possible contention of invalidity or inapplicability with respect to the Applicable Law or condition.


 


(b) A certificate of Agent or such Lender setting forth such amount or amounts as shall be necessary to compensate Agent or such Lender with respect to Section 3.9(a) hereof when delivered to Borrower shall be conclusive absent manifest error.


 


3.10.   Gross Up for Taxes.


 


If the Borrower shall be required by Applicable Law to withhold or deduct any taxes from or in respect of any sum payable under this Agreement or any of the Other Documents to Agent, or any Lender, assignee of any Lender, or Participant (each, individually, a "Payee" and collectively, the "Payees"), (a) the sum payable to such Payee or Payees, as the case may be, shall be increased as may be necessary so that, after making all required withholding or deductions, the applicable Payee or Payees receives an amount equal to the sum it would have received had no such withholding or deductions been made (the "Gross-Up Payment"), (b) the Borrower shall make such withholding or deductions, and (c) the Borrower shall pay the full amount withheld or deducted to the relevant taxation authority or other authority in accordance with Applicable Law. Notwithstanding the foregoing, the Borrower shall not be obligated to make any portion of the Gross-Up Payment that is attributable to any withholding or deductions that would not have been paid or claimed had the applicable Payee or Payees properly claimed a complete exemption with respect thereto pursuant to Section 3.11 hereof.


 


3.11.     Withholding Tax Exemption.


 


(a) Each Payee that is not incorporated under the Laws of the United States of America or a state thereof (and, upon the written request of Agent, each other Payee) agrees that it will deliver to Borrower and Agent two (2) duly completed appropriate valid Withholding Certificates (as defined under § 1.1441-1 (c)(1 6) of the Income Tax Regulations ("Regulations")) certifying its status (i.e., U.S. or foreign person) and, if appropriate, making a claim of reduced, or exemption from, U.S. withholding tax on the basis of an income tax treaty or an exemption provided by the Code. The term "Withholding Certificate" means a Form W-9; a Form W - 8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and certifications as required under § 1.1441-1 (e)(2) and/or (3) of the Regulations; a statement described in § 1.871 - 14(c)(2)(v) of the Regulations; or any other certificates under the Code or Regulations that certify or establish the status of a payee or beneficial owner as a U.S. or foreign person.


 




  





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(b) Each Payee required to deliver to Borrower and Agent a valid Withholding Certificate pursuant to Section 3.11(a) hereof shall deliver such valid Withholding Certificate as follows: (A) each Payee which is a party hereto on the Closing Date shall deliver such valid Withholding Certificate at least five (5) Business Days prior to the first date on which any interest or fees are payable by the Borrower hereunder for the account of such Payee; (B) each Payee shall deliver such valid Withholding Certificate at least five (5) Business Days before the effective date of such assignment or participation (unless Agent in its sole discretion shall permit such Payee to deliver such Withholding Certificate less than five (5) Business Days before such date in which case it shall be due on the date specified by Agent). Each Payee which so delivers a valid Withholding Certificate further undertakes to deliver to Borrower and Agent two (2) additional copies of such Withholding Certificate (or a successor form) on or before the date that such Withholding Certificate expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent Withholding Certificate so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by Borrower or Agent.


 


(c) Notwithstanding the submission of a Withholding Certificate claiming a reduced rate of or exemption from U.S. withholding tax required under Section 3.11(b) hereof, Agent shall be entitled to withhold United States federal income taxes at the full thirty percent (30%) withholding rate if in its reasonable judgment it is required to do so under the due diligence requirements imposed upon a withholding agent under §1.1441-7(b) of the Regulations. Further, Agent is indemnified under § 1.1461-1(e) of the Regulations against any claims and demands of any Payee for the amount of any tax it deducts and withholds in accordance with regulations under § 1441 of the Code.


 



IV.       COLLATERAL: GENERAL TERMS.




 



       4.1.          Security Interest in the Collateral.




 


To secure the prompt payment and performance to Agent and each Lender of the Obligations, the Borrower hereby assigns, pledges and grants to Agent for its benefit and for the ratable benefit of each Lender a continuing security interest in and to and Lien on all of its Collateral, whether now owned or existing or hereafter acquired or arising and wheresoever located. The Borrower shall mark its books and records as may be necessary or appropriate to evidence, protect and perfect Agent's security interest and shall cause its financial statements to reflect such security interest. The Borrower shall promptly provide Agent with written notice of all commercial tort claims to the extent that the damages sought for all commercial tort claims of the Borrower exceeds One Million and 00/100 Dollars ($1,000,000.00) in the aggregate, such notice to contain the case title together with the applicable court and a brief description of the claim(s). Upon delivery of each such notice, the Borrower shall be deemed to hereby grant to Agent a security interest and lien in and to such commercial tort claims and all proceeds thereof.


 




  





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4.2.       Perfection of Security Interest.


 


The Borrower shall take all action that may be necessary or desirable, or that Agent may request, so as at all times to maintain the validity, perfection, enforceability and priority of Agent's security interest in and Lien on the Collateral or to enable Agent to protect, exercise or enforce its rights hereunder and in the Collateral, including (i) immediately discharging all Liens other than Permitted Encumbrances, (ii) obtaining Lien Waiver Agreements, (iii) delivering to Agent, endorsed or accompanied by such instruments of assignment as Agent may specify, and stamping or marking, in such manner as Agent may specify, any and all chattel paper, instruments, letters of credits and advices thereof and documents evidencing or forming a part of the Collateral, (iv) entering into warehousing, lockbox and other custodial arrangements satisfactory to Agent, and (v) executing and delivering financing statements, control agreements, instruments of pledge, mortgages, notices and assignments, in each case in form and substance satisfactory to Agent, relating to the creation, validity, perfection, maintenance or continuation of Agent's security interest and Lien under the Uniform Commercial Code or other Applicable Law. By its signature hereto, the Borrower hereby authorizes Agent to file against the Borrower, one or more financing, continuation or amendment statements pursuant to the Uniform Commercial Code in form and substance satisfactory to Agent (which statements may have a description of collateral which is broader than that set forth herein). All charges, expenses and fees Agent may incur in doing any of the foregoing, and any local taxes relating thereto, shall be charged to Borrower's Account as a Revolving Advance of a Domestic Rate Loan and added to the Obligations, or, at Agent's option, shall be paid to Agent for its benefit and for the ratable benefit of Lenders promptly upon written demand but in any event no later than ten (10) days after such demand.


 


4.3.       Disposition of Collateral.


 


The Borrower will safeguard and protect all Collateral for Agent's general account and make no disposition thereof whether by sale, lease or otherwise except as otherwise permitted under this Agreement.


 


4.4.       Preservation of Collateral.


 


In addition to the rights and remedies set forth in Section 11.1 hereof, upon the occurrence and during the continuance of an Event of Default, Agent: (a) may at any time take such steps as Agent deems necessary to protect Agent's interest in and to preserve the Collateral, including the hiring of such security guards or the placing of other security protection measures as Agent may deem appropriate; (b) may employ and maintain at any of the Borrower's premises a custodian who shall have full authority to do all acts necessary to protect Agent's interests in the Collateral; (c) may lease warehouse facilities to which Agent may move all or part of the Collateral; (d) may use the Borrower's owned or leased lifts, hoists, trucks and other facilities or equipment for handling or removing the Collateral; and (e) shall have, and is hereby granted, a right of ingress and egress to the places where the Collateral is located, and may proceed over and through any of the Borrower's owned or leased property. The Borrower shall cooperate fully with all of Agent's efforts to preserve the Collateral and will take such actions to preserve the Collateral as Agent may direct. All of Agent's expenses of preserving the Collateral, including any expenses relating to the bonding of a custodian, shall be charged to Borrower's Account as a Revolving Advance maintained as a Domestic Rate Loan and added to the Obligations.


 




  





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4.5.          Ownership of Collateral.


 


(a) With respect to the Collateral, at the time the Collateral becomes subject to Agent's security interest: (i) the Borrower shall be the sole owner of and fully authorized and able to sell, transfer, pledge and/or grant a first priority security interest in each and every item of the its respective Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall be free and clear of all Liens and encumbrances whatsoever; (ii) each document and agreement executed by the Borrower or delivered to Agent or any Lender in connection with this Agreement shall be true and correct in all respects; (iii) all signatures and endorsements of the Borrower that appear on such documents and agreements shall be genuine and the Borrower shall have full capacity to execute same; and (iv) the Borrower's Equipment and Inventory shall be located as set forth on Schedule 4.5 and shall not be removed from such location(s) without the prior written consent of Agent except with respect to the sale of Inventory in the Ordinary Course of Business and except as otherwise permitted under this Agreement.


 


(b) (i) There is no location at which the Borrower has any Inventory (except for Inventory in transit) other than those locations listed on Schedule 4.5; (ii) Schedule 4.5 hereto contains a correct and complete list, as of the Closing Date, of the legal names and addresses of each warehouse at which Inventory of the Borrower is stored; none of the receipts received by the Borrower from any warehouse states that the goods covered thereby are to be delivered to bearer or to the order of a named Person or to a named Person and such named Person's assigns; (iii) Schedule 4.5 hereto sets forth a correct and complete list as of the Closing Date of (A) each place of business of the Borrower and (B) the chief executive office of the Borrower; and (iv) Schedule 4.5 hereto sets forth a correct and complete list as of the Closing Date of the location, by state and street address, of all Real Property owned or leased by the Borrower, together with the names and addresses of any landlords.


 


4.6.          Defense of Agent's and Lenders' Interests.


 


Until (a) payment and performance in full of all of the Obligations and (b) termination of this Agreement, Agent's interests in the Collateral shall continue in full force and effect. During such period the Borrower shall not, without Agent's prior written consent, pledge, sell (except as otherwise permitted under this Agreement), assign, transfer, create or suffer to exist a Lien upon or encumber or allow or suffer to be encumbered in any way except for Permitted Encumbrances, any part of the Collateral. The Borrower shall defend Agent's interests in the Collateral against any and all Persons whatsoever. At any time following demand by Agent for payment of all Obligations upon the occurrence and during the continuance of an Event of Default, Agent shall have the right to take possession of the indicia of the Collateral and the Collateral in whatever physical form contained, including: labels, stationery, documents, instruments and advertising materials. If Agent exercises this right to take possession of the Collateral, the Borrower shall, upon demand, assemble it in the best manner possible and make it available to Agent at a place reasonably convenient to Agent. In addition, with respect to all Collateral, Agent and Lenders shall be entitled to all of the rights and remedies set forth herein and further provided by the Uniform Commercial Code or other Applicable Law. The Borrower shall, and Agent may, at its option, instruct all suppliers, carriers, forwarders, warehousers or others receiving or holding cash, checks, Inventory, documents or instruments in which Agent holds a security interest to deliver same to Agent and/or subject to Agent's order and if they shall come into the Borrower's possession, they, and each of them, shall be held by the Borrower in trust as Agent's trustee, and the Borrower will immediately deliver them to Agent in their original form together with any necessary endorsement.


 




  





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4.7.          Books and Records.


 


The Borrower shall (a) keep proper books of record and account in which full, true and correct entries will be made of all dealings or transactions of or in relation to its business and affairs; (b) set up on its books accruals with respect to all taxes, assessments, charges, levies and claims; and (c) on a reasonably current basis set up on its books, from its earnings, allowances against doubtful Receivables, advances and investments and all other proper accruals (including by reason of enumeration, accruals for premiums, if any, due on required payments and accruals for depreciation, obsolescence, or amortization of properties), which should be set aside from such earnings in connection with its business. All determinations pursuant to this subsection shall be made in accordance with, or as required by, GAAP consistently applied in the opinion of such independent public accountant as shall then be regularly engaged by the Borrower.


 


4.8.          Intentionally Omitted.


 


4.9.          Compliance with Laws.


 


The Borrower shall comply with all Applicable Laws with respect to the Collateral or any part thereof or to the operation of the Borrower's business the non-compliance with which could reasonably be expected to have a Material Adverse Effect. The assets of the Borrower at all times shall be maintained in accordance with the requirements of all insurance carriers which provide insurance with respect to the assets of the Borrower so that such insurance shall remain in full force and effect.


 


    4.10.   Inspection of Premises; Appraisals.


 


At all reasonable times and upon prior notice to the Borrower if no Event of Default has occurred and is continuing, Agent and each Lender (at such Lender's sole expense) shall have full access to and the right to audit, check, inspect and make abstracts and copies from the Borrower's books, records, audits, correspondence and all other papers relating to the Collateral and the operation of the Borrower's business. Agent, any Lender (at such Lender's sole expense) and their agents may enter upon any premises of the Borrower at any time during business hours and at any other reasonable time, and from time to time, for the purpose of inspecting the Collateral and any and all records pertaining thereto and the operation of the Borrower's business. Further, at such times as Agent deems advisable or necessary, Agent shall cause to be conducted an appraisal of the Inventory of the Borrower and/or a field examination of the Borrower; provided that the Borrower shall be responsible for the expense of any such appraisal and/or field examination no more than (i) one (1) time per year with respect to the Borrower's Inventory, and (ii) one (1) time per year with respect to field examinations, unless in any case an Event of Default has occurred and is continuing, in which event no such frequency limitation shall apply and the Borrower shall be responsible for any expenses associated with any and all appraisals and field examinations conducted pursuant to this Section 4.10.


 




  





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4.11.    Insurance.


 


The assets and properties of the Borrower at all times shall be maintained in accordance with the requirements of all insurance carriers which provide insurance with respect to the assets and properties of the Borrower so that such insurance shall remain in full force and effect. The Borrower shall bear the full risk of any loss of any nature whatsoever with respect to the Collateral. At the Borrower's own cost and expense in amounts and with carriers reasonably acceptable to Agent, the Borrower shall (a) keep all its insurable properties and properties in which the Borrower has an interest insured against the hazards of fire, flood, sprinkler leakage, those hazards covered by extended coverage insurance and such other hazards, and for such amounts, as is customary in the case of companies engaged in businesses similar to the Borrower's including business interruption insurance; (b) maintain a bond in such amounts as is customary in the case of companies engaged in businesses similar to the Borrower insuring against larceny, embezzlement or other criminal misappropriation of insured's officers and employees who may either singly or jointly with others at any time have access to the assets or funds of the Borrower either directly or through authority to draw upon such funds or to direct generally the disposition of such assets; (c) maintain public and product liability insurance against claims for personal injury, death or property damage suffered by others; (d) maintain all such worker's compensation or similar insurance as may be required under the laws of any state or jurisdiction in which the Borrower is engaged in business; and (e) furnish Agent with (i) evidence of the maintenance of such policies by the renewal thereof before any expiration date, and (ii) appropriate loss payable endorsements in form and substance satisfactory to Agent, naming Agent as an additional named insured and lender loss payee as its interests may appear with respect to all insurance coverage referred to in clauses (a) and (c) above, and providing (A) that all proceeds thereunder shall be payable to Agent, (B) no such insurance shall be affected by any act or neglect of the insured or owner of the property described in such policy, and (C) that such policy and loss payable clauses may not be cancelled, amended or terminated unless prior written notice is given to Agent in accordance with the terms and provisions of the applicable insurance policy(ies). The Borrower shall provide copies of all such insurance policies (including the appropriate lender loss payee, mortgagee and additional insured endorsements) within thirty (30) days after Agent's reasonable request, however, only certificates of insurance shall be required on the Closing Date. In the event of any loss thereunder, the carriers named therein hereby are directed by Agent and the Borrower to make payment for such loss to Agent and not to the Borrower and Agent jointly. If any insurance losses are paid by check, draft or other instrument payable to the Borrower and Agent jointly, Agent may endorse the Borrower's name thereon and do such other things as Agent may deem advisable to reduce the same to cash. Agent is hereby authorized during the existence of an Event of Default to adjust and compromise claims under insurance coverage referred to in clauses (a) and (b) above. All loss recoveries received by Agent upon any such insurance may be applied to the Obligations, in such order as Agent in its sole discretion shall determine. Any surplus shall be paid by Agent to the Borrower or applied as may be otherwise required by law. Any deficiency thereon shall be paid by the Borrower to Agent, on demand. Anything hereinabove to the contrary notwithstanding, and subject to the fulfillment of the conditions set forth below, Agent shall remit to Borrower insurance proceeds received by Agent during any calendar year under insurance policies procured and maintained by the Borrower which insure the Borrower's insurable properties to the extent (i) no Event of Default or Default shall have occurred and be continuing and (ii) Undrawn Availability, both prior to and after giving effect to any such payment, is equal to or greater than Twenty Million and 00/100 Dollars ($20,000,000.00). In the event either (i) an Event of Default or Default shall have occurred and be continuing or (ii) Undrawn Availability, both prior to and after giving effect to any such payment, is less than Twenty Million and 00/100 Dollars ($20,000,000.00), then Agent may, in its sole discretion, either remit the insurance proceeds to Borrower upon Borrower providing Agent with evidence reasonably satisfactory to Agent that the insurance proceeds will be used by the Borrower to repair, replace or restore the insured property which was the subject of the insurable loss, or apply the proceeds to the Obligations, as aforesaid. The agreement of Agent to remit insurance proceeds in the manner above provided shall be subject in each instance to satisfaction of the condition that the Borrower shall use such insurance proceeds to repair, replace or restore the insurable property which was the subject of the insurable loss and for no other purpose.


 




  





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4.12.        Failure to Pay Insurance.


 


If the Borrower fails to obtain insurance as hereinabove provided, or to keep the same in force, Agent, if Agent so elects, may obtain such insurance and pay the premium therefor on behalf of the Borrower, and charge Borrower's Account therefor as a Revolving Advance of a Domestic Rate Loan and such expenses so paid shall be part of the Obligations.


 


4.13.         Payment of Taxes.


 


The Borrower will pay, when due, all taxes, assessments and other Charges lawfully levied or assessed upon the Borrower or any of the Collateral including real and personal property taxes, assessments and charges and all franchise, income, employment, social security benefits, withholding, and sales taxes. If any tax by any Governmental Body is or may be imposed on or as a result of any transaction between the Borrower and Agent or any Lender which Agent or any Lender may be required to withhold or pay or if any taxes, assessments, or other Charges remain unpaid after the date fixed for their payment, or if any claim shall be made which, in Agent's or any Lender's opinion, may possibly create a valid Lien on the Collateral, Agent may without notice to the Borrower pay the taxes, assessments or other Charges and the Borrower hereby indemnifies and holds Agent and each Lender harmless in respect thereof. Agent will not pay any taxes, assessments or Charges to the extent that the Borrower has Properly Contested those taxes, assessments or Charges. The amount of any payment by Agent under this Section 4.13 shall be charged to Borrower's Account as a Revolving Advance maintained as a Domestic Rate Loan and added to the Obligations and, until the Borrower shall furnish Agent with an indemnity therefor (or supply Agent with evidence satisfactory to Agent that due provision for the payment thereof has been made), Agent may hold without interest any balance standing to the Borrower' credit and Agent shall retain its security interest in and Lien on any and all Collateral held by Agent.


 


4.14.         Payment of Leasehold Obligations.


 


The Borrower shall at all times pay, when and as due, its rental obligations under all leases under which it is a tenant, and shall otherwise comply, in all material respects, with all other terms of such leases and keep them in full force and effect and, at Agent's request will provide evidence of having done so.


 




  





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4.15.    Receivables.


 


(a) Nature of Receivables. Each of the Receivables shall be a bona fide and valid account representing a bona fide indebtedness incurred by the Customer therein named, for a fixed sum as set forth in the invoice relating thereto (provided immaterial or unintentional invoice errors shall not be deemed to be a breach hereof) with respect to an absolute sale or lease and delivery of goods upon stated terms of the Borrower, or work, labor or services theretofore rendered by the Borrower as of the date each Receivable is created. Same shall be due and owing in accordance with the Borrower's standard terms of sale without dispute, setoff or counterclaim except as may be stated on the accounts receivable schedules delivered by the Borrower to Agent.


 


(b) Solvency of Customers. Each Customer, to the actual knowledge of the Borrower, as of the date each Receivable is created, is and will be solvent and able to pay all Receivables on which the Customer is obligated in full when due or with respect to such Customers of the Borrower who are not solvent the Borrower has set up on its books and in its financial records bad debt reserves adequate to cover such Receivables.


 


(c) Location of the Borrower. The Borrower's chief executive office is located at the address specified on Schedule 4.5 with respect to the Borrower. Until written notice is given to Agent by Borrower of any other office at which the Borrower keeps its books and records, all such books and records shall be kept at4955 Steubenville Pike, Suite 405, Pittsburgh, PA 15205.


 


(d) Collection of Receivables. Prior to a Cash Dominion Event, the Borrower will, at the Borrower's sole cost and expense, collect all amounts due on Receivables; provided, however, that to the extent the Borrower deposits such amounts in an account, such account shall be an account with respect to which a Blocked Account Agreement has been entered into but will not go into effect until the occurrence of a Cash Dominion Event. Upon the occurrence of a Cash Dominion Event and until, as applicable, no Event of Default shall have occurred and be continuing or upon the occurrence of a Testing Event Cure, the Borrower shall deliver to the Agent, or deposit in the Blocked Account, on Agent's behalf and for Agent's account, in original form and on the date of receipt thereof, all checks, drafts, notes, money orders, acceptances, cash and other evidences of Indebtedness payable to the Borrower on Receivables, and shall not commingle such collections with the Borrower's funds or use the same except to pay Obligations.


 


(e) Notification of Assignment of Receivables. At any time upon the occurrence and during the continuance of an Event of Default, Agent shall have the right to send notice of the assignment of, and Agent's security interest in and Lien on, the Receivables to any and all Customers or any third party holding or otherwise concerned with any of the Collateral. Thereafter, Agent shall have the sole right to collect the Receivables, take possession of the Collateral, or both. Agent's actual collection expenses, including, but not limited to, stationery and postage, telephone and telegraph, secretarial and clerical expenses and the salaries of any collection personnel used for collection, may be charged to Borrower's Account and added to the Obligations.


 




  





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(f) Power of Agent to Act on the Borrower's Behalf. At any time after the occurrence and during the continuance of an Event of Default, Agent shall have the right to receive, endorse, assign and/or deliver in the name of Agent or the Borrower any and all checks, drafts and other instruments for the payment of money relating to the Receivables, and the Borrower hereby waives notice of presentment, protest and non-payment of any instrument so endorsed. The Borrower hereby constitutes Agent or Agent's designee as the Borrower's attorney with power, at any time after the occurrence and during the continuance of an Event of Default, (i) to endorse the Borrower's name upon any notes, acceptances, checks, drafts, money orders or other evidences of payment or Collateral; (ii) to sign the Borrower's name on any invoice or bill of lading relating to any of the Receivables, drafts against Customers, assignments and verifications of Receivables; (iii) to send verifications of Receivables to any Customer; (iv) to sign the Borrower's name on all financing statements or any other documents or instruments deemed necessary or appropriate by Agent to preserve, protect, or perfect Agent's interest in the Collateral and to file same; (v) to demand payment of the Receivables; (vi) to enforce payment of the Receivables by legal proceedings or otherwise; (vii) to exercise all of the Borrower's rights and remedies with respect to the collection of the Receivables and any other Collateral; (viii) to settle, adjust, compromise, extend or renew the Receivables; (ix) to settle, adjust or compromise any legal proceedings brought to collect Receivables; (x) to prepare, file and sign the Borrower's name on a proof of claim in bankruptcy or similar document against any Customer; (xi) to prepare, file and sign the Borrower's name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables; and (xii) to do all other acts and things necessary to carry out this Agreement. All acts of said attorney or designee are hereby ratified and approved, and said attorney or designee shall not be liable for any acts of omission or commission nor for any error of judgment or mistake of fact or of law, unless done maliciously or with gross (not mere) negligence (as determined by a court of competent jurisdiction in a final non-appealable judgment); this power being coupled with an interest is irrevocable while any of the Obligations remain unpaid. Agent shall have the right at any time, after the occurrence and during the continuance of an Event of Default, to change the address for delivery of mail addressed to the Borrower to such address as Agent may designate and to receive, open and dispose of all mail addressed to the Borrower.


 


(g) No Liability. Neither Agent nor any Lender shall, under any circumstances or in any event whatsoever, have any liability for any error or omission or delay of any kind occurring in the settlement, collection or payment of any of the Receivables or any instrument received in payment thereof, or for any damage resulting therefrom, except to the extent that any of the foregoing arises out of the willful misconduct or gross negligence of Agent or any Lender. At any time after the occurrence and during the continuance of an Event of Default, Agent may, without notice or consent from the Borrower, sue upon or otherwise collect, extend the time of payment of, compromise or settle for cash, credit or upon any terms any of the Receivables or any other securities, instruments or insurance applicable thereto and/or release any obligor thereof. At any time after the occurrence and during the continuance of an Event of Default, Agent is authorized and empowered to accept the return of the goods represented by any of the Receivables, without notice to or consent by the Borrower, all without discharging or in any way affecting the Borrower's liability hereunder.


 




  





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(h) Establishment of a Lockbox Account, Dominion Account. Upon the occurrence of a Cash Dominion Event and until, as applicable, no Event of Default shall have occurred and be continuing or upon the occurrence of a Testing Event Cure, all proceeds of Collateral shall be remitted directly by the customers of the Borrower to (or, to the extent the Borrower received such proceeds directly, they shall be deposited by Borrower into) either a lockbox account, dominion account or such other "blocked account" ("Blocked Accounts") established at a bank or banks (each such bank, a "Blocked Account Bank") pursuant to an arrangement with such Blocked Account Bank as may be selected by Borrower and be acceptable to Agent. The Borrower, Agent and each Blocked Account Bank shall enter into a deposit account control agreement (each, a "Deposit Account Control Agreement") in form and substance satisfactory to Agent directing such Blocked Account Bank to transfer such funds so deposited to Agent, either to any account maintained by Agent at said Blocked Account Bank or by wire transfer to appropriate account(s) of Agent. All funds deposited in such Blocked Accounts shall immediately become the property of Agent and Borrower shall obtain the agreement by such Blocked Account Bank to waive any offset rights against the funds so deposited. Neither Agent nor any Lender assumes any responsibility for such blocked account arrangement, including any claim of accord and satisfaction or release with respect to deposits accepted by any Blocked Account Bank thereunder. Alternatively, upon the occurrence of a Cash Dominion Event and until, as applicable, no Event of Default shall have occurred and be continuing or upon the occurrence of a Testing Event Cure, Agent may establish depository accounts ("Depository Accounts") in the name of Agent at a bank or banks for the deposit of such funds and Borrower shall deposit all proceeds of Collateral or cause same to be deposited, in kind, in such Depository Accounts of Agent in lieu of depositing same to the Blocked Accounts. All deposit accounts and investment accounts of the Borrower and its Subsidiaries are set forth on Schedule 4.15(h).


 


(i) Adjustments. The Borrower shall not, without Agent's consent (which consent shall not be unreasonably withheld, conditioned or delayed), compromise or adjust any Receivables (or extend the time for payment thereof) or accept any returns of merchandise or grant any additional discounts, allowances or credits thereon except for those compromises, adjustments, returns, discounts, credits and allowances as have been heretofore customary in the business of the Borrower.


 


4.16.   Inventory.


 


To the extent Inventory held for sale or lease has been produced by the Borrower, it has been and will be produced by the Borrower in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and all rules, regulations and orders thereunder.


 


4.17.   Maintenance of Equipment.


 


The Equipment shall be maintained in good operating condition and repair (reasonable wear and tear excepted) and all necessary replacements of and repairs thereto shall be made so that the value and operating efficiency of the Equipment shall be maintained and preserved. The Borrower shall not use or operate the Equipment in violation of any law, statute, ordinance, code, rule or regulation.


 




  





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4.18.   Exculpation of Liability.


 


Nothing herein contained shall be construed to constitute Agent or any Lender as the Borrower's agent for any purpose whatsoever, nor shall Agent or any Lender be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part of the Collateral wherever the same may be located and regardless of the cause thereof. Neither Agent nor any Lender, whether by anything herein or in any assignment or otherwise, assume any of the Borrower's obligations under any contract or agreement assigned to Agent or such Lender, and neither Agent nor any Lender shall be responsible in any way for the performance by the Borrower of any of the terms and conditions thereof.


 


4.19.   Environmental Matters.


 


(a) The Borrower shall ensure that the Real Property and all operations and businesses conducted thereon remains in compliance with all Environmental Laws except to the extent any such failure to comply is not reasonably likely to have a Material Adverse Effect and they shall not place or permit to be placed any Hazardous Substances on any Real Property except as permitted by Applicable Law or appropriate governmental authorities.


 


(b) The Borrower shall defend and indemnify Agent and Lenders and hold Agent, Lenders and their respective employees, agents, directors and officers harmless from and against all loss, liability, damage and expense, claims, costs, judgments, suits, fines and penalties and disbursements of any kind, including reasonable attorney's fees, suffered or incurred by Agent or Lenders under or on account of any Environmental Laws, including the assertion of any Lien thereunder, with respect to any Hazardous Discharge, the presence of any Hazardous Substances affecting the Real Property, whether or not the same originates or emerges from the Real Property or any contiguous real estate, including any loss of value of the Real Property as a result of the foregoing except to the extent such loss, liability, damage and expense is attributable to any Hazardous Discharge or to the presence of any Hazardous Substances resulting from actions on the part of Agent or any Lender. The Borrower' obligations under this Section 4.19(b) shall arise upon the discovery of the presence of any Hazardous Substances at the Real Property, whether or not any federal, state, or local environmental agency has taken or threatened any action in connection with the presence of any Hazardous Substances. The Borrower's obligations and the indemnifications hereunder shall survive the termination of this Agreement for a period of five (5) years.


 


(c) For purposes of Section 4.19 and 5.7, all references to Real Property shall be deemed to include all of the Borrower's right, title and interest in and to its owned and leased premises.


 


4.20.   Financing Statements.


 


Except as respects the financing statements filed by Agent and the financing statements described on Schedule 1.2(B), no financing statement covering any of the Collateral or any proceeds thereof is on file in any public office.


 




  





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V.        REPRESENTATIONS AND WARRANTIES.


 


 Borrower represents and warrants as follows:


 





      5.1.       Authority.




 


Borrower has full power, authority and legal right to enter into this Agreement and the Other Documents and to perform all its respective Obligations hereunder and thereunder. This Agreement and the Other Documents have been duly executed and delivered by Borrower and this Agreement and the Other Documents constitute the legal, valid and binding obligation of Borrower, enforceable in accordance with their terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights generally. The execution, delivery and performance of this Agreement and of the Other Documents (a) are within Borrower's corporate powers, have been duly authorized by all necessary corporate action, are not in contravention of law or the terms of Borrower's by-laws, certificate or articles of incorporation or other applicable documents relating to Borrower's formation or to the conduct of Borrower's business or of any material agreement or undertaking to which Borrower is a party or by which Borrower is bound, (b) will not conflict with or violate any law or regulation, or any judgment, order or decree of any Governmental Body, (c) will not require the Consent of any Governmental Body or any other Person, except those Consents set forth on Schedule 5.1 hereto, all of which will have been duly obtained, made or compiled prior to the Closing Date and which are in full force and effect and (d) will not conflict with, nor result in any breach in any of the provisions of or constitute a default under or result in the creation of any Lien except Permitted Encumbrances upon any asset of Borrower under the provisions of any agreement, charter document, instrument, by-law or other instrument to which Borrower is a party or by which it or its property is a party or by which it may be bound.


 


5.2.          Formation and Qualification.


 


(a) Each Borrower Party is duly incorporated and in good standing under the laws of the state listed on Schedule 5.2(a) and is qualified to do business and is in good standing in the states listed on Schedule 5.2(a) which constitute all states in which qualification and good standing are necessary for such Borrower Party to conduct its business and own its property and where the failure to so qualify could reasonably be expected to have a Material Adverse Effect on such Borrower Party. Borrower has delivered to Agent true and complete copies of its certificate or articles of incorporation and by-laws, and will promptly notify Agent of any amendment or changes thereto.


 


(b) The only Subsidiaries of each Borrower Party are listed on Schedule 5.2(b).


 


5.3.          Survival of Representations and Warranties.


 


All representations and warranties of Borrower contained in this Agreement and the Other Documents shall be true at the time of Borrower's execution of this Agreement and the Other Documents, and shall survive the execution, delivery and acceptance thereof by the parties thereto and the closing of the transactions described therein or related thereto.


 




  





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5.4.          Tax Returns.


 


Each Borrower Party's federal tax identification number is set forth on Schedule 5.4. Each Borrower Party has filed all federal, state and local tax returns and other reports each is required by law to file and has paid all taxes, assessments, fees and other governmental charges that are due and payable. Federal, state and local income tax returns of each Borrower Party have been examined and reported upon by the appropriate taxing authority or closed by applicable statute and satisfied for all fiscal years prior to and including the fiscal year ending 2006. The provision for taxes on the books of each Borrower Party is adequate for all years not closed by applicable statutes, and for its current fiscal year, and no Borrower Party has any knowledge of any deficiency or additional assessment in connection therewith not provided for on its books.


 


5.5.          Financial Statements.


 


(a) The twelve-month cash flow projections of Holding and its Subsidiaries on a consolidated basis and the Borrower and its Subsidiaries on a consolidated and consolidating basis and their projected balance sheets as of the Closing Date, copies of which are annexed hereto as Exhibit 5.5(a) (the "Projections") were prepared by the Chief Financial Officer of Holding and/or the Borrower, are based on underlying assumptions which provide a reasonable basis for the projections contained therein and reflect Holding's and/or the Borrower's judgment based on present circumstances of the most likely set of conditions and course of action for the projected period.


 


(b) The balance sheets of Holding and its Subsidiaries on a consolidated basis as of the fiscal year ending December 31, 2010, and the related statements of income, changes in stockholder's equity, and changes in cash flow for the period ended on such date (collectively, the "Year End Financial Statements"),copies of which have been delivered to Agent, have been prepared in accordance with GAAP, consistently applied (except for changes in application in which such accountants concur) and present fairly the financial position of Holding and its Subsidiaries at such date and the results of their operations for such period. Since December 31, 2010 there has been no change in the condition, financial or otherwise, of Holding or its Subsidiaries as shown on the consolidated balance sheet as of such date and no change in the aggregate value of machinery, equipment and Real Property owned by Holding and its Subsidiaries, except changes in the Ordinary Course of Business, none of which individually or in the aggregate has been materially adverse.


 


(c) The balance sheets of Holding and its Subsidiaries on a consolidating basis as of the months ending January 31, 2011 through June 30, 2011, and the related statements of income, changes in stockholder's equity, and changes in cash flow for the period ended on such date (collectively, the "Month End Financial Statements" and together with the Year End Financial Statements, the "Financial Statements"), copies of which have been delivered to Agent, have been prepared in accordance with GAAP, consistently applied and present fairly the financial position of Holding and its Subsidiaries at such date and the results of their operations for such period.


 




  





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5.6.    Entity Names.


 


No Borrower Party has been known by any other corporate name in the past five years and no Borrower Party sells Inventory under any other name except as set forth on Schedule 5.6, nor has any Borrower Party been the surviving company of a merger or consolidation or acquired all or substantially all of the assets of any Person during the preceding five (5) years.


 


5.7.    O.S.H.A. and Environmental Compliance.


 


(a) Except as could not reasonably be expected to have a Material Adverse Effect, (i) none of the operations of any Borrower Party are the subject of any federal, state or local investigation to determine whether any remedial action is needed to address the presence or disposal of any environmental pollution, hazardous material or environmental removal, response or remedial action on any Borrower Party's owned or leased real property and no such investigations are, to the best of such Borrower Party's knowledge, threatened against such Borrower Party, and (ii) no enforcement proceeding, complaint, summons, citation, notice, order, claim, litigation, investigation, letter or other written communication from a federal, state or local authority has been filed against or delivered to such Borrower Party, regarding or involving any threat of release or release of any environmental pollution or hazardous material on any real property now or previously owned or operated by such Borrower Party or, to such Borrower Party’s knowledge, at any off-site location.


 


(b) Except as could not reasonably be expected to have a Material Adverse Effect, no Borrower Party has any known contingent liability with respect to any release or threat of release of any environmental pollution or hazardous material or other violation of Environmental Laws on any real property now or previously owned or operated by such Borrower Party or to such Borrower Party's knowledge, at any off-site location.


 


(c) Each Borrower Party is and has been in compliance with all Environmental Laws applicable to the operation of such Borrower Party's business, except to the extent that the failure to so comply could not reasonably be expected to have a Material Adverse Effect.


 


5.8.    Solvency; No Litigation, Violation, Indebtedness or Default.


 


(a) After giving effect to the transactions contemplated under this Agreement (collectively, the "Transactions"), each Borrower Party will be solvent, able to pay its debts as they mature, will have capital sufficient to carry on its business and all businesses in which it is about to engage, and (i) as of the Closing Date, the fair present saleable value of its assets, calculated on a going concern basis, is in excess of the amount of its liabilities and (ii) subsequent to the Closing Date, the fair saleable value of its assets (calculated on a going concern basis) will be in excess of the amount of its liabilities.


 


(b) Except as disclosed in Schedule 5.8(b), no Borrower Party has (i) any pending or threatened litigation, arbitration, actions or proceedings which involve the possibility of having a Material Adverse Effect, and (ii) any liabilities or indebtedness for borrowed money other than the Obligations.


 




  





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(c) No Borrower Party is in violation of any applicable statute, law, rule, regulation or ordinance in any respect which could reasonably be expected to have a Material Adverse Effect, nor is any Borrower Party in violation of any order of any court, Governmental Body or arbitration board or tribunal which could reasonably be expected to have a Material Adverse Effect.


 


(d) No Borrower Party nor any member of the Controlled Group maintains or contributes to any Plan other than (i) as of the Closing Date, those listed on Schedule 5.8(d) hereto and (ii) thereafter, as permitted under this Agreement. (i) No Plan has incurred any "accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA and Section 4 12(a) of the Code, whether or not waived, and each Borrower Party and each member of the Controlled Group has met all applicable minimum funding requirements under Section 302 of ERISA in respect of each Plan; (ii) each Plan which is intended to be a qualified plan under Section 401(a) of the Code as currently in effect has been determined by the Internal Revenue Service to be qualified under Section 401(a) of the Code and the trust related thereto is exempt from federal income tax under Section 501(a) of the Code; (iii) neither any Borrower Party nor any member of the Controlled Group has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due which are unpaid; (iv) no Plan has been terminated by the plan administrator thereof nor by the PBGC, and there is no occurrence which would cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Plan; (v) at this time, the current value of the assets of each Plan exceeds the present value of the accrued benefits and other liabilities of such Plan and neither any Borrower Party nor any member of the Controlled Group knows of any facts or circumstances which would materially change the value of such assets and accrued benefits and other liabilities; (vi) neither any Borrower Party nor any member of the Controlled Group has breached any of the responsibilities, obligations or duties imposed on it by ERISA with respect to any Plan; (vii) neither any Borrower Party nor any member of a Controlled Group has incurred any liability for any excise tax arising under Section 4972 or 4980B of the Code, and no fact exists which could give rise to any such liability; (viii) neither any Borrower Party nor any member of the Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has engaged in a "prohibited transaction" described in Section 406 of the ERISA or Section 4975 of the Code nor taken any action which would constitute or result in a Termination Event with respect to any such Plan which is subject to ERISA; (ix) each Borrower Party and each member of the Controlled Group has made all contributions due and payable with respect to each Plan; (x) there exists no event described in Section 4043(b) of ERISA, for which the thirty (30) day notice period has not been waived; (xi) neither any Borrower Party nor any member of the Controlled Group has any fiduciary responsibility for investments with respect to any plan existing for the benefit of persons other than employees or former employees of the Borrower and any member of the Controlled Group; (xii) neither any Borrower Party nor any member of the Controlled Group maintains or contributes to any Plan which provides health, accident or life insurance benefits to former employees, their spouses or dependents, other than in accordance with Section 4980B of the Code; (xiii) neither any Borrower Party nor any member of the Controlled Group has withdrawn, completely or partially, from any Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan Amendments Act of 1980 and there exists no fact which would reasonably be expected to result in any such liability; and (xiv) no Plan fiduciary (as defined in Section 3(2 1) of ERISA) has any liability for breach of fiduciary duty or for any failure in connection with the administration or investment of the assets of a Plan.


 




  





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5.9.          Patents, Trademarks, Copyrights and Licenses.


 


All patents, patent applications, trademarks, trademark applications, service marks, service mark applications, copyrights, copyright applications, design rights, tradenames, assumed names, trade secrets and licenses owned or utilized by any Borrower Party are set forth on Schedule 5.9, are valid and have been duly registered or filed with all appropriate Governmental Bodies and constitute all of the intellectual property rights which are necessary for the operation of its business; there is no objection to or pending challenge to the validity of any such patent, trademark, copyright, design rights, tradename, trade secret or license and no Borrower Party is aware of any grounds for any challenge, except as set forth in Schedule 5.9 hereto. Each patent, patent application, patent license, trademark, trademark application, trademark license, service mark, service mark application, service mark license, design rights, copyright, copyright application and copyright license owned or held by any Borrower Party and all trade secrets used by any Borrower Party consist of original material or property developed by such Borrower Party or was lawfully acquired by such Borrower Party from the proper and lawful owner thereof. Each of such items has been maintained so as to preserve the value thereof from the date of creation or acquisition thereof. With respect to all software used by any Borrower Party, such Borrower Party is in possession of all source and object codes related to each piece of software or is the beneficiary of a source code escrow agreement, each such source code escrow agreement being listed on Schedule 5.9 hereto.


 


5.10.   Licenses and Permits.


 


Except as set forth in Schedule 5.10, each Borrower Party (a) is in material compliance with and (b) has procured and is now in possession of, all material licenses or permits required by any applicable federal, state or local law, rule or regulation for the operation of its business in each jurisdiction wherein it is now conducting or proposes to conduct business and where the failure to procure such licenses or permits could have a Material Adverse Effect.


 


5.11.   Default of Indebtedness.


 


No Borrower Party is in default in the payment of the principal of or interest on any Indebtedness or under any instrument or agreement under or subject to which any Indebtedness has been issued and no event has occurred under the provisions of any such instrument or agreement which with or without the lapse of time or the giving of notice, or both, constitutes or would constitute an event of default thereunder.


 


5.12.   No Default.


 


No Borrower Party is in default in the payment or performance of any of its contractual obligations which could reasonably be expected to have a Material Adverse Effect and no Default has occurred.


 


5.13.   No Burdensome Restrictions.


 


No Borrower Party is party to any contract or agreement the performance of which could have a Material Adverse Effect. Each Borrower Party has heretofore delivered to Agent true and complete copies of all material contracts to which it is a party or to which it or any of its properties is subject. No Borrower Party has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien which is not a Permitted Encumbrance.


 




  





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5.14.   No Labor Disputes.


 


No Borrower Party is involved in any labor dispute; there are no strikes or walkouts or union organization of any Borrower Party's employees threatened or in existence and all labor contracts of each Borrower Party are set forth on Schedule 5.14 hereto.


 


5.15.   Margin Regulations.


 


No Borrower Party is engaged, nor will it engage, principally or as one of its important activities, in the business of extending credit for the purpose of "purchasing" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. No part of the proceeds of any Advance will be used for "purchasing" or "carrying" "margin stock" as defined in Regulation U of such Board of Governors.


 


5.16.   Investment Company Act.


 


No Borrower Party is an "investment company" registered or required to be registered under the Investment Company Act of 1940, as amended, nor is it controlled by such a company.


 


5.17.   Disclosure.


 


No representation or warranty made by any Borrower Party in this Agreement, any Other Document or in any financial statement, report, certificate or any other document furnished in connection herewith or therewith contains any untrue statement of fact or omits to state any fact necessary to make the statements herein or therein not misleading. There is no fact known to any Borrower Party or which reasonably should be known to such Borrower Party which such Borrower Party has not disclosed to Agent in writing with respect to the transactions contemplated by this Agreement or any Other Document which could reasonably be expected to have a Material Adverse Effect.


 


5.18.   Swaps.


 


No Borrower Party is a party to, nor will it be a party to, any swap agreement whereby such Borrower Party has agreed or will agree to swap interest rates or currencies unless same provides that damages upon termination following an event of default thereunder are payable on an unlimited "two-way basis" without regard to fault on the part of either party.


 


5.19.   Conflicting Agreements.


 


No provision of any mortgage, indenture, contract, agreement, judgment, decree or order binding on any Borrower Party or affecting the Collateral conflicts with, or requires any Consent which has not already been obtained to, or would in any way prevent the execution, delivery or performance of, the terms of this Agreement or the Other Documents.


 




  





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5.20.   Application of Certain Laws and Regulations.


 


Neither any Borrower Party nor any Affiliate of any Borrower Party is subject to any law, statute, rule or regulation which prohibits the incurrence of any Indebtedness under this Agreement, including laws, statutes, rules or regulations relative to common or interstate carriers or to the sale of electricity, gas, steam, water, telephone, telegraph or other public utility services.


 


5.21.   Business and Property of Borrower Parties.


 


Upon and after the Closing Date, Borrower Parties do not propose to engage in any business other than its Ordinary Course of Business and activities necessary to conduct the foregoing. On the Closing Date, each Borrower Party will own all the property and possess all of the rights and Consents necessary for the conduct of the business of such Borrower Party.


 


5.22.   Section 20 Subsidiaries.


 


Borrower Parties do not intend to use and shall not use any portion of the proceeds of the Advances, directly or indirectly, to purchase during the underwriting period, or for 30 days thereafter, Ineligible Securities being underwritten by a Section 20 Subsidiary.


 


5.23.    Anti-Terrorism Laws.


 


(a) General. Neither any Loan Party nor any Affiliate of any Loan Party is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.


 


(b) Executive Order No. 13224. Neither any Loan Party nor any Affiliate of any Loan Party or their respective agents acting or benefiting in any capacity in connection with the Advances or other transactions hereunder, is any of the following (each a "Blocked Person"):


 


(i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;


 


(ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;


 


(iii) a Person or entity with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;


 


(iv) a Person or entity that commits, threatens or conspires to commit or supports "terrorism" as defined in the Executive Order No. 13224;


 




  





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(v) a Person or entity that is named as a "specially designated national" on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list, or


 


(vi) a Person or entity who is affiliated or associated with a Person or entity listed above.


 


Neither any Loan Party nor to the knowledge of any Loan Party, any of its agents acting in any capacity in connection with the Advances or other transactions hereunder (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224.


 


5.24.    Trading with the Enemy.


 


No Loan Party has engaged, nor does it intend to engage, in any business or activity prohibited by the Trading with the Enemy Act.


 


5.25.    Federal Securities Laws.


 


Neither any Borrower Party nor any of its Subsidiaries (i) is required to file periodic reports under the Exchange Act, (ii) has any securities registered under the Exchange Act or (iii) has filed a registration statement that has not yet become effective under the Securities Act.


 


VI.       AFFIRMATIVE COVENANTS.


 


Borrower shall, and shall cause each other Borrower Party to, until payment in full of the Obligations and termination of this Agreement:


 


6.1.       Payment of Fees.


 


Pay to Agent on demand all usual and customary fees and expenses which Agent incurs in connection with (a) the forwarding of Advance proceeds and (b) the establishment and maintenance of any Blocked Accounts or Depository Accounts as provided for in Section 4.15(h). Agent may, without making demand, charge Borrower's Account for all such fees and expenses.


 


6.2.       Conduct of Business and Maintenance of Existence and Assets.


 


(a) Conduct continuously and operate actively its business according to good business practices and maintain all of its properties useful or necessary in its business in good working order and condition (reasonable wear and tear excepted and except as may be disposed of in accordance with the terms of this Agreement), including all licenses, patents, copyrights, design rights, tradenames, trade secrets and trademarks and take all actions necessary to enforce and protect the validity of any intellectual property right or other right included in the Collateral; (b) keep in full force and effect its existence and comply in all material respects with the laws and regulations governing the conduct of its business where the failure to do so could reasonably be expected to have a Material Adverse Effect; and (c) make all such reports and pay all such franchise and other taxes and license fees and do all such other acts and things as may be lawfully required to maintain its rights, licenses, leases, powers and franchises under the laws of the United States or any political subdivision thereof.


 




  





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6.3.          Violations.


 


Promptly notify Agent in writing of any violation of any law, statute, regulation or ordinance of any Governmental Body, or of any agency thereof, applicable to any Borrower Party which could reasonably be expected to have a Material Adverse Effect.


 


6.4.          Government Receivables.


 


Take all steps necessary to protect Agent's interest in the Collateral under the Federal Assignment of Claims Act, the Uniform Commercial Code and all other applicable state or local statutes or ordinances and deliver to Agent appropriately endorsed, any instrument or chattel paper connected with any Receivable arising out of contracts between the Borrower and the United States, any state or any department, agency or instrumentality of any of them.


 


6.5.          Financial Covenants.


 


(a) Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage Ratio of not less than 1.15 to 1.00 calculated as of the last day of the month ending September 30, 2011 and as of the last day of each month thereafter for the period equal to the twelve (12) consecutive months then ending.


 


(b) Without limiting any other term or provision of this Agreement, the Borrower Parties shall not be required to comply with the financial covenant set forth in clause (a) above unless and until, beginning on the Closing Date through the end of the Term, a Testing Event occurs, in which case the Borrower Parties shall be required to have complied with such financial covenant for the relevant period ended as of the last day of the prior month and to comply with such financial covenant for the relevant period ending as of the last day of the current month and for each relevant period thereafter; provided, however, following the occurrence of a Testing Event, if a Testing Event Cure occurs, then such Testing Event shall thereafter cease to exist and the Borrower Parties shall not be required to comply with such financial covenant for any relevant period ending after the last day of the month during which the last day of such thirty (30) day period occurred (it being agreed for avoidance of doubt that the Borrower Parties shall be required to comply with such financial covenant for the relevant period ending on the last day of such month) unless and until a subsequent Testing Event occurs, in which case the Borrower Parties shall be required to have complied and to comply with such financial covenant in accordance with the foregoing provisions so long as such subsequent Testing Event continues (it being agreed that any Testing Event shall continue unless and until it ceases to exist in accordance with this proviso).


 




  





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 6.6.           Execution of Supplemental Instruments.


 


Execute and deliver to Agent from time to time, upon demand, such supplemental agreements, statements, assignments and transfers, or instructions or documents relating to the Collateral, and such other instruments as Agent may request, in order that the full intent of this Agreement may be carried into effect.


 


 6.7.            Payment of Indebtedness.


 


Pay, discharge or otherwise satisfy at or before maturity (subject, where applicable, to specified grace periods and, in the case of the trade payables, to normal payment practices) all its obligations and liabilities of whatever nature, except when the failure to do so could not reasonably be expected to have a Material Adverse Effect or when the amount or validity thereof is currently being contested in good faith by appropriate proceedings and the applicable Borrower Party shall have provided for such reserves as Agent may reasonably deem proper and necessary, subject at all times to any applicable subordination arrangement in favor of Lenders.


 


 6.8.            Standards of Financial Statements.


 


Cause all financial statements referred to in Sections 9.7, 9.8, 9.9, and 9.12 as to which GAAP is applicable to be complete and correct in all material respects (subject, in the case of interim financial statements, to normal year-end audit adjustments) and to be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein (except as concurred in by such reporting accountants or officer, as the case may be, and disclosed therein).


 


 6.9.           Federal Securities Laws.


 


Promptly notify Agent in writing if any Borrower Party or any of its Subsidiaries (i) is required to file periodic reports under the Exchange Act, (ii) registers any securities under the Exchange Act or (iii) files a registration statement under the Securities Act.


 


VII.      NEGATIVE COVENANTS.


 


No Borrower Party shall, until satisfaction in full of the Obligations and termination of this Agreement:


 


 7.1.         Merger, Consolidation, Acquisition and Sale of Assets.


 


(a) Enter into any merger, consolidation or other reorganization with or into any other Person or acquire all or a substantial portion of the assets or Equity Interests of any Person or permit any other Person to consolidate with or merge with it; provided however, that any Borrower Party may purchase or acquire all or a substantial portion of the assets or Equity Interests of any Domestic Person or a business or division of another Domestic Person (a "Permitted Acquisition"), provided that, each of the following requirements is met:


 




  





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(i) if such Borrower Party is acquiring the ownership interests in such Person, such Person shall on or before the date of such Permitted Acquisition join this Agreement as a Guarantor pursuant to Section 15.18 and the Agent shall have received all documents, including organizational documents and legal opinions, it may reasonably require in connection therewith (including, without limitation, such documentation as is required pursuant to Section 15.18);


 


(ii) such Borrower Party, such Person and its owners, as applicable, shall grant and cause to be perfected first priority Liens to the Agent for the benefit of the Lenders in the assets of or acquired from such Person covering the same type of assets as the Collateral in accordance with the terms and provisions of Section 15.18, subject to no other Liens except Permitted Encumbrances, on or before the date of such Permitted Acquisition;


 


(iii) the applicable Borrower Party shall pledge all of the capital stock, shares of beneficial interest, partnership interests or limited liability company interests, as applicable, of such Person owned by such Borrower Party to the Agent for the benefit of the Lenders pursuant to a Pledge Agreement;


 


(iv) the board of directors or other equivalent governing body of such Person shall have approved such Permitted Acquisition and the Borrower Parties also shall have delivered to the Lenders written evidence of the approval of the board of directors (or equivalent body) of such Person for such Permitted Acquisition;


 


(v) each applicable Governmental Body shall have approved such Permitted Acquisition and the Borrower Parties shall have delivered to the Lenders written evidence of the approval of such Governmental Body or such Permitted Acquisition;


 


(vi) the business acquired, or the business conducted by the Person whose ownership interests are being acquired, as applicable, shall be substantially the same as one or more line or lines of business conducted by the Loan Parties and shall comply with Section 7.8;


 


(vii) the Borrower shall demonstrate the following, each after giving effect to such Permitted Acquisition, by delivering at least five (5) Business Days prior to such Permitted Acquisition a certificate in the form of Exhibit 7.1 evidencing such compliance: (y) the aggregate Consideration paid for all Permitted Acquisitions does not exceed Five Million and 00/100 Dollars ($5,000,000.00), and (z) Undrawn Availability of at least Twenty Million and 00/100 Dollars ($20,000,000.00);


 


(viii) the Borrower Parties shall deliver to the Agent at least ten (10) Business Days before such Permitted Acquisition copies of (x) any agreements entered into or proposed to be entered into by such Borrower Parties in connection with such Permitted Acquisition, (y) such other information about such Person or its assets as any Loan Party may reasonably require, and (z) pro forma projections (including a pro forma balance sheet, statements of operations and cash flow) and assumptions used by the Borrower Parties to prepare such projections and all such items shall be in form and substance satisfactory to the Agent; and


 




  





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(ix)            no Event of Default or Default shall exist immediately prior to or after giving effect to such Permitted Acquisition.


 


(b) Except for Excluded Property in which Agent does not have a security interest in accordance with the terms of this Agreement, sell, lease, transfer or otherwise dispose of any of its properties or assets, except (i) dispositions of Inventory in the Ordinary Course of Business, (ii) the disposition or transfer of obsolete and worn-out Equipment in the Ordinary Course of Business during any fiscal year having an aggregate fair market value of not more than Five Hundred Thousand and 00/100 Dollars ($500,000.00) and only to the extent that the proceeds of any such disposition are used to acquire replacement Equipment which is subject to Agent's first priority security interest and (iii) any other sales or dispositions expressly permitted by this Agreement.


 


7.2.          Creation of Liens.


 


Create or suffer to exist any Lien or transfer upon or against any of its property or assets now owned or hereafter acquired, except Permitted Encumbrances.


 


7.3.          Guarantees.


 


Become liable upon the obligations or liabilities of any Person by assumption, endorsement or guaranty thereof or otherwise (other than to Lenders) except (a) as disclosed on Schedule 7.3, (b) guarantees in respect of any Indebtedness or obligations of a Borrower Party to the extent that such Indebtedness or other obligations would not otherwise be prohibited by Section 7.7, (c) the endorsement of checks in the Ordinary Course of Business, (d) so long as such guarantee is unsecured, the guaranty of the Indebtedness of Holding under any Holding Bond Issuances by any Borrower Party and (e) the guaranty of the Project Indebtedness by any Borrower Party.


 


7.4.          Investments.


 


Purchase or acquire obligations or Equity Interests of, or any other interest in, any Person, except (a) obligations issued or guaranteed by the United States of America or any agency thereof, (b) commercial paper with maturities of not more than 180 days and a published rating of not less than A-1 or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers' acceptances having maturities of not more than 180 days and repurchase agreements backed by United States government securities of a commercial bank if (i) such bank has a combined capital and surplus of at least Five Hundred Million and 00/100 Dollars ($500,000,000.00), or (ii) its debt obligations, or those of a holding company of which it is a Subsidiary, are rated not less than A (or the equivalent rating) by a nationally recognized investment rating agency, (d) U.S. money market funds that invest solely in obligations issued or guaranteed by the United States of America or an agency thereof, (e) investments by a Borrower Party in a Borrower Party, (f) investments by any Borrower Party in Holding permitted under Sections 7.3 and 7.5 hereof, (g) investments consisting of promissory notes acquired as non-cash consideration in connection with the Excluded Property, obsolete or surplus Equipment or surplus real estate, (h) investments received in connection with good faith settlement of delinquent accounts and disputes with any customer or supplier arising in the Ordinary Course of Business, (i) Permitted Acquisitions and (j) other investments not to exceed Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00) in the aggregate at any time for all Borrower Parties.


 




  





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7.5.          Loans.


 


Make advances, loans or extensions of credit to any Person, including any Parent, Subsidiary or Affiliate, except with respect to (a) the extension of commercial trade credit in connection with the sale of Inventory in the Ordinary Course of Business, (b) advances, loans or extensions of credit to a Borrower Party, (c) loans to its employees in the Ordinary Course of Business not to exceed the aggregate amount of Fifty Thousand and 00/100 Dollars ($50,000.00) at any time outstanding, (d) advances, loans and extensions of credit from any Borrower Party to Holding to enable Holding to make payments and/or prepayments as required or permitted under the terms and provisions of any applicable Holding Bond Issuances or under the Project Indebtedness so long as no Event of Default shall have occurred or shall occur as a result of giving effect to any such advance, loan or extension of credit and (e) other advances, loans or extensions of credit in an aggregate amount at any time not to exceed Five Hundred Thousand and 00/1 00 Dollars ($500,000.00) for all Borrower Parties.


 


7.6.          Dividends/Distributions.


 


Declare, pay or make any dividend or distribution on any shares of the common stock, preferred stock, membership interests or partnership interests of any Borrower Party or apply any of its funds, property or assets to the purchase, redemption or other retirement of any common stock, preferred stock, membership interests or partnership interests or of any options to purchase or acquire any such shares of common or preferred stock, membership interests or partnership interests of any Borrower Party, except that (i) any Borrower Party may make any such payment or distribution to another Borrower Party, (ii) so long as no Event of Default shall have occurred and be continuing or shall occur as a result of giving effect to any such payment, the Borrower Parties shall be permitted to pay dividends or distributions to Holding to enable Holding to make payments as required or permitted under any Holding Bond Issuance or under the Project Indebtedness and (iii) so long as (y) no Event of Default or Default shall have occurred and be continuing or shall occur as a result of giving effect to any such payment and (z) Undrawn Availability, both prior to and after giving effect to any such payment, is equal to or greater than Twenty Million and 00/100 Dollars ($20,000,000.00), the Borrower Parties shall be permitted to pay dividends or distributions.


 


7.7.          Indebtedness.


 


Create, incur, assume or suffer to exist any Indebtedness (exclusive of trade debt) except in respect of:


 


(a) Indebtedness existing on the Closing Date and set forth on Schedule 7.7 (including any extensions or renewals thereof), provided that the principal amount of such Indebtedness shall not be increased without the prior written consent of the Required Lenders;


 


(b) Indebtedness to Agent or Lenders under or pursuant to this Agreement or the Other Documents;


 




  





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(c)  Indebtedness incurred for Capital Expenditures in an aggregate principal amount not to exceed Five Million and 00/100 Dollars ($5,000,000.00) at any time;


 


(d) the Project Indebtedness;


 


(e) any guarantee permitted under Section 7.3 hereof; and


 



(f) any Indebtedness of any Borrower Party owed to a Loan Party.




 


7.8.          Nature of Business.


 


Substantially change the nature of the business in which it is presently engaged, nor except as specifically permitted hereby purchase or invest, directly or indirectly, in any assets or property other than in the Ordinary Course of Business for assets or property which are useful in, necessary for and are to be used in its business as presently conducted.


 


7.9.          Transactions with Affiliates.


 


Directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or lease any property to, or otherwise enter into any transaction or deal with, any Affiliate, except transactions: (i) between or among the Loan Parties and/or their respective Subsidiaries not otherwise prohibited hereunder; and (ii) disclosed to Agent, which are in the Ordinary Course of Business, on an arm's-length basis on terms and conditions no less favorable than terms and conditions which would have been obtainable from a Person other than an Affiliate.


 


7.10.        Leases.


 


Enter as lessee into any operating lease arrangement for real or personal property (except for rail car leases) if after giving effect thereto, aggregate annual rental payments for all such leased property would exceed One Million and 00/100 Dollars ($1,000,000.00) in any one fiscal year in the aggregate for all Borrower Parties.


 


7.11.        Subsidiaries.


 


(a) Form any Subsidiary unless (i) such Subsidiary becomes a Guarantor for the Obligations and among other things, executes a Guaranty in form and substance satisfactory to Agent, (ii) Agent shall have received all documents, including organizational documents and legal opinions, it may reasonably require in connection therewith and (iii) the Subsidiary created by such Borrower Party shall grant first priority, perfected Liens in its assets to Agent for the benefit of Lenders covering the same type of assets as the Collateral, and the applicable Borrower Party shall pledge all of the Equity Interests in such Subsidiary owned by such Borrower Party to Agent for the benefit of Lenders pursuant to a Pledge Agreement; provided, however, to the extent any such Subsidiary is formed for the exclusive purpose of incurring the Project Indebtedness, such Subsidiary shall become a Guarantor and otherwise comply with the requirements of this Section 7.11(a); provided, however, if such Guaranty and/or any such grant of a security interest in the assets of such Subsidiary is prohibited by, or constitutes a breach or default under or results in the termination of any contract, license, agreement, instrument or other document evidencing the Project Indebtedness, then such Subsidiary shall not be required to become a Guarantor and otherwise comply with the requirements of this Section 7.11(a); provided further, however, that upon either the payment in full and termination of the Project Indebtedness or the elimination otherwise of any such prohibition, breach or default, such Subsidiary shall immediately become a Guarantor and otherwise comply with the requirements of this Section 7.11(a).


 




  





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(b)            Enter into any partnership, joint venture or similar arrangement.


 


7.12.        Fiscal Year and Accounting Changes.


 


Change its fiscal year from the twelve-month period beginning January 1 and ending December 31 or make any change (i) in accounting treatment and reporting practices except as required by GAAP or (ii) in tax reporting treatment except as required by law.


 


7.13.        Pledge of Credit.


 


Now or hereafter (i) pledge Agent's or any Lender's credit on any purchases or for any purpose whatsoever or (ii) use any portion of any Advance in or for any business other than in the Ordinary Course of Business or as permitted under Sections 7.3, 7.4, 7.5 and 7.6 of this Agreement).


 


7.14.        Amendment of Organizational Documents.


 


Amend, modify or waive any term or provision of its Certificate or Articles of Incorporation or By-Laws unless required by law.


 


7.15.        Compliance with ERISA.


 


(i) (x) Maintain, or permit any member of the Controlled Group to maintain, or (y) become obligated to contribute, or permit any member of the Controlled Group to become obligated to contribute, to any Plan, other than those Plans disclosed on Schedule 5.8(d) or any other Plan for which Agent has provided its prior written consent, (ii) engage, or permit any member of the Controlled Group to engage, in any non-exempt "prohibited transaction", as that term is defined in section 406 of ERISA and Section 4975 of the Code, (iii) incur, or permit any member of the Controlled Group to incur, any "accumulated funding deficiency", as that term is defined in Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any member of the Controlled Group to terminate, any Plan where such event could result in any liability of any Borrower Party or any member of the Controlled Group or the imposition of a lien on the property of any Borrower Party or any member of the Controlled Group pursuant to Section 4068 of ERISA, (v) assume, or permit any member of the Controlled Group to assume, any obligation to contribute to any Multiemployer Plan not disclosed on Schedule 5.8(d), (vi) incur, or permit any member of the Controlled Group to incur, any withdrawal liability to any Multiemployer Plan; (vii) fail promptly to notify Agent of the occurrence of any Termination Event, (viii) fail to comply, or permit a member of the Controlled Group to fail to comply, with the requirements of ERISA or the Code or other Applicable Laws in respect of any Plan, (ix) fail to meet, or permit any member of the Controlled Group to fail to meet, all minimum funding requirements under ERISA or the Code or postpone or delay or allow any member of the Controlled Group to postpone or delay any funding requirement with respect of any Plan.


 




  





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7.16.        Prepayment of Indebtedness.


 


At any time, directly or indirectly, prepay any Indebtedness (other than Indebtedness to Agent or Lenders pursuant to this Agreement or the Other Documents), or repurchase, redeem, retire or otherwise acquire any Indebtedness, in each case of any Borrower Party, if any Event of Default shall have occurred and be continuing or shall occur as a result of giving effect to any such payment.


 


7.17.        Anti-Terrorism Laws.


 


No Borrower Party shall, until satisfaction in full of the Obligations and termination of this Agreement, nor shall it permit any Affiliate or agent to:


 


(a) Conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person.


 


(b) Deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224.


 


(c) Engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the Executive Order No. 13224, the USA PATRIOT Act or any other Anti-Terrorism Law. Each Borrower Party shall deliver or shall cause to be delivered to Lenders any certification or other evidence requested from time to time by any Lender in its sole discretion, confirming such Borrower Party's compliance with this Section 7.17.


 


7.18.        Membership/Partnership Interests.


 


Elect to treat or permit any of its Subsidiaries to (x) treat its limited liability company membership interests or partnership interests, as the case may be, as securities as contemplated by the definition of "security" in Section 8-102(15) and by Section 8-103 of Article 8 of Uniform Commercial Code or (y) certificate its limited liability company membership interests or partnership interests, as the case may be.







7.19.        Trading with the Enemy Act.







Engage in any business or activity in violation of the Trading with the Enemy Act.


 


7.20.        Other Agreements.


 


Enter into any amendment, waiver or modification of any contract, document or agreement in a manner that would be materially adverse to Agent or any Lender.


 




  





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7.21.        Double Negative Pledge.


 


Enter into or suffer to exist any agreement with any Person, other than in connection with this Agreement, any Holding Bond Issuances or the Project Indebtedness, which prohibits or limits the ability of such Borrower Party to create, incur, assume or suffer to exist any Lien upon or with respect to any property or assets of any kind, real or personal, tangible or intangible (including, but not limited to, stock or other equity interests, as the case may be) of such Borrower Party.


 


VIII.        CONDITIONS PRECEDENT.


 


8.1.          Conditions to Initial Advances.


 


The agreement of Lenders to make the initial Advances requested to be made on the Closing Date is subject to the satisfaction, or waiver by Agent, immediately prior to or concurrently with the making of such Advances, of the following conditions precedent:


 


(a) Credit Agreement and Other Documents. Agent shall have received this Agreement and each Other Document duly executed and delivered by an authorized officer of each Loan Party and any third parties, as applicable (including, without limitation, all original stock certificates or other certificates evidencing the Subsidiary Stock and appropriate transfer powers with respect thereto);


 


(b) Filings, Registrations and Recordings. (i) Each document (including any Uniform Commercial Code financing statement) required by this Agreement, any related agreement or under law or reasonably requested by Agent to be filed, registered or recorded in order to create, in favor of Agent, a perfected security interest in or lien upon the Collateral shall have been properly filed, registered or recorded in each jurisdiction in which the filing, registration or recordation thereof is so required or requested, and Agent shall have received an acknowledgment copy, or other evidence satisfactory to it, of each such filing, registration or recordation and satisfactory evidence of the payment of any necessary fee, tax or expense relating thereto; and (ii) Agent shall have received the results of searches listing all effective financing statements which name any of the Loan Parties as debtor, together with copies of such financing statements, none of which, except for Permitted Encumbrances, shall cover any of the Collateral;


 


(c) Authorization Proceedings of Loan Parties. Agent shall have received a copy of the resolutions in form and substance reasonably satisfactory to Agent, of the Board of Directors of each Loan Party authorizing (i) the execution, delivery and performance of this Agreement, the Notes, and any other Other Document and (ii) with respect to the Borrower, the granting by the Borrower of the security interests in and liens upon the Collateral certified by the Secretary or an Assistant Secretary of the Borrower as of the Closing Date; and, such certificate shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded as of the date of such certificate;


 


(d) Incumbency Certificates of Loan Parties. Agent shall have received a certificate of the Secretary or an Assistant Secretary of each Loan Party, dated the Closing Date, as to the incumbency and signature of the officers of each Loan Party executing this Agreement, the Other Documents, any certificate or other documents to be delivered by it pursuant hereto, together with evidence of the incumbency of such Secretary or Assistant Secretary;


 




  





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(e) Certificates. Agent shall have received a copy of the Certificate or Articles of Incorporation of each Loan Party, and all amendments thereto, certified by the Secretary of State or other appropriate official of its jurisdiction of incorporation together with copies of the By-Laws of each Loan Party and all agreements of the Borrower's shareholders, in each case certified as accurate and complete by the Secretary of each Loan Party;


 


(f) Good Standing and Tax Lien Certificates. Agent shall have received good standing and tax lien certificates for each Loan Party dated not more than thirty (30) days prior to the Closing Date, issued by the Secretary of State or other appropriate official of each Loan Party's jurisdiction of incorporation and each jurisdiction where the conduct of each Loan Party's business activities or the ownership of its properties necessitates qualification;


 


(g) Legal Opinion. Agent shall have received the executed legal opinion of Buchanan Ingersoll & Rooney P.C. and local counsel opinions in form and substance satisfactory to Agent which shall cover such matters incident to the transactions contemplated by this Agreement, the Notes and any other Other Document as Agent may reasonably require and each Loan Party hereby authorizes and directs such counsel to deliver such opinions to Agent and Lenders;


 


(h) No Litigation. (i) No litigation, investigation or proceeding before or by any arbitrator or Governmental Body shall be continuing or threatened against any Loan Party or against the respective officers or directors of any Loan Party in connection with this Agreement, the Other Documents or any of the transactions contemplated thereby and which could reasonably be expected to have a Material Adverse Effect; and (ii) no injunction, writ, restraining order or other order of any nature materially adverse to any Borrower Party or the conduct of its respective business or inconsistent with the due consummation of the Transactions shall have been issued by any Governmental Body;


 


(i) Financial Condition Certificates. Agent shall have received an executed Financial Condition Certificate in the form of Exhibit 8.1(i);


 


(j) Collateral Examination. Agent shall have completed Collateral examinations and received appraisals, the results of which shall be satisfactory in form and substance to Lenders, of the Receivables, Inventory and Equipment of the Borrower and all books and records in connection therewith;


 


(k) Fees. Agent shall have received all fees payable to Agent and Lenders on or prior to the Closing Date hereunder, including pursuant to Article III hereof and the Fee Letter;


 


(l) Existing Indebtedness. Agent shall have received (i) a payoff letter, in form and substance satisfactory to Agent, pursuant to which any existing Indebtedness that is to be paid by initial Advances hereunder will be paid in full, and (ii) evidence satisfactory to Agent that all necessary termination statements, satisfaction documents and any other applicable releases in connection with any existing Indebtedness and all other Liens with respect to Borrower that are not Permitted Encumbrances have been filed or arrangements satisfactory to Agent have been made for such filing;


 




  





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(m) Financial Statements. Agent shall have received a copy of (i) the Financial Statements, and (ii) the Projections, which in each case shall be satisfactory in all respects to Agent and Lenders;


 


(n) Insurance. Agent shall have received in form and substance satisfactory to Agent, certified copies of Borrower Parties' casualty insurance policies, together with loss payable endorsements on Agent's standard form of loss payee endorsement naming Agent as lender loss payee, and certified copies of Borrower Parties' liability insurance policies, together with endorsements naming Agent as a co-insured;


 


(o) Payment Instructions. Agent shall have received written instructions from Borrower directing the application of proceeds of the initial Advances made pursuant to this Agreement;


 


(p) Blocked Accounts. Agent shall have received duly executed agreements establishing the Blocked Accounts or Depository Accounts with financial institutions acceptable to Agent for the collection or servicing of the Receivables and proceeds of the Collateral or, alternatively, the Borrower shall have established with Agent all of its bank accounts with Agent, all in a manner to the satisfaction of Agent in its sole discretion;


 


(q) Consents. Agent shall have received any and all Consents necessary to permit the effectuation of the transactions contemplated by this Agreement and the Other Documents; and, Agent shall have received such Consents and waivers of such third parties as might assert claims with respect to the Collateral, as Agent and its counsel shall deem necessary;


 


(r) No Adverse Material Change. (i) Since December 31, 2010, there shall not have occurred any event, condition or state of facts which could reasonably be expected to have a Material Adverse Effect and (ii) no representations made or information supplied to Agent or Lenders shall have been proven to be inaccurate or misleading in any material respect;


 


(s) Waivers. Agent shall have received fully executed copies of all Lien Waiver Agreements required by the Agent to be executed on or prior to the Closing Date;


 


(t) Contract Review. Agent shall have reviewed all material contracts of Borrower Parties including leases, union contracts, labor contracts, vendor supply contracts, license agreements and distributorship agreements and such contracts and agreements shall be satisfactory in all respects to Agent;


 


(u) Closing Certificate. Agent shall have received a closing certificate signed by the Chief Financial Officer of each Loan Party dated as of the date hereof, stating that (i) all representations and warranties set forth in this Agreement and the Other Documents are true and correct on and as of such date, (ii) each Loan Party is on such date in compliance with all the terms and provisions set forth in this Agreement and the Other Documents and (iii) on such date no Default or Event of Default has occurred or is continuing;









  





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(v) Borrowing Base. Agent shall have received evidence from Borrower that the aggregate amount of Eligible Inventory and Eligible Receivables is sufficient in value and amount to support Advances in the amount requested by Borrower on the Closing Date;


 


(w) Undrawn Availability. After giving effect to the initial Advances hereunder, Borrower shall have Undrawn Availability of at least Twenty-Five Million and 00/100 Dollars ($25,000,000.00);


 


(x) Compliance with Laws. Agent shall be reasonably satisfied that the Borrower is in compliance with all pertinent federal, state, local or territorial regulations, including those with respect to the Federal Occupational Safety and Health Act, the Environmental Protection Act, ERISA and the Trading with the Enemy Act; and


 


(y) Other. All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the Transactions shall be satisfactory in form and substance to Agent and its counsel.


 


8.2.          Conditions to Each Advance.


 


The agreement of Lenders to make any Advance requested to be made on any date (including the initial Advance), is subject to the satisfaction of the following conditions precedent as of the date such Advance is made:


 


(a) Representations and Warranties. Each of the representations and warranties made by any Loan Party in or pursuant to this Agreement, the Other Documents and any related agreements to which it is a party, and each of the representations and warranties contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement, the Other Documents or any related agreement shall be true and correct in all material respects on and as of such date as if made on and as of such date;


 


(b) No Default. No Event of Default or Default shall have occurred and be continuing on such date, or would exist after giving effect to the Advances requested to be made, on such date; provided, however that Agent, in its sole discretion, may continue to make Advances notwithstanding the existence of an Event of Default or Default and that any Advances so made shall not be deemed a waiver of any such Event of Default or Default; and


 


(c) Maximum Advances. In the case of any type of Advance requested to be made, after giving effect thereto, the aggregate amount of such type of Advance shall not exceed the maximum amount of such type of Advance permitted under this Agreement.


 


Each request for an Advance by the Borrower hereunder shall constitute a representation and warranty by each Loan Party as of the date of such Advance that the conditions contained in this subsection shall have been satisfied.


 


IX.           INFORMATION AS TO LOAN PARTIES.


 


Until satisfaction in full of the Obligations and the termination of this Agreement:


 




  





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9.1.           Disclosure of Material Matters.


 


Each Borrower Party shall, immediately upon learning thereof, report to Agent all matters materially affecting the value, enforceability or collectibility of any portion of the Collateral, including the Borrower's reclamation or repossession of, or the return to the Borrower of, a material amount of goods or claims or disputes asserted by any Customer or other obligor.


 


9.2.           Schedules.


 


The Borrower shall, deliver to Agent on or before the twenty-fifth (25th) day of each month as and for the prior month (a) accounts receivable agings inclusive of reconciliations to the general ledger, (b) accounts payable schedules inclusive of reconciliations to the general ledger, (c) Inventory reports and (d) a Borrowing Base Certificate in form and substance satisfactory to Agent, (which shall be calculated as of the last day of the prior month and which shall not be binding upon Agent or restrictive of Agent's rights under this Agreement); provided, however, for any period when a Cash Dominion Event has occurred and is continuing, then, during all such periods the Borrower shall deliver a Borrowing Base Certificate in form and substance satisfactory to the Agent on a weekly basis as and for the prior week (consisting of the seven (7) days commencing on Monday of such prior week and ending on Sunday of such prior week).  In addition, the Borrower will deliver to Agent at such intervals as Agent may require:  (i) confirmatory assignment schedules, (ii) copies of Customer's invoices, (iii) evidence of shipment or delivery, and (iv) such further schedules, documents and/or information regarding the Collateral as Agent may require including trial balances and test verifications.  Agent shall have the right to confirm and verify all Receivables by any manner and through any medium it considers advisable during the course of any field examination conducted pursuant to Section 4.10 and do whatever it may deem reasonably necessary to protect its interests hereunder.  The items to be provided under this Section 9.2 are to be in form satisfactory to Agent and executed by the Borrower and delivered to Agent from time to time solely for Agent's convenience in maintaining records of the Collateral, and the Borrower's failure to deliver any of such items to Agent shall not affect, terminate, modify or otherwise limit Agent's Lien with respect to the Collateral.


 


9.3.           Intentionally Omitted.


 


9.4.           Litigation.


 


Each Borrower Party shall promptly notify Agent in writing of any claim, litigation, suit or administrative proceeding affecting any Loan Party whether or not the claim is covered by insurance, and of any litigation, suit or administrative proceeding, which in any such case affects a material portion of the Collateral or which could reasonably be expected to have a Material Adverse Effect.


 




  





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9.5.           Material Occurrences.


 


Each Borrower Party shall promptly notify Agent in writing upon the occurrence of (a) any Event of Default or Default; (b) any event, development or circumstance whereby any financial statements or other reports furnished to Agent fail in any material respect to present fairly, in accordance with GAAP consistently applied, the financial condition or operating results of any Loan Party as of the date of such statements; (c) any accumulated retirement plan funding deficiency which, if such deficiency continued for two plan years and was not corrected as provided in Section 4971 of the Code, could subject any Loan Party to a tax imposed by Section 4971 of the Code; (d) each and every default by any Loan Party which might result in the acceleration of the maturity of any Indebtedness, including the names and addresses of the holders of such Indebtedness with respect to which there is a default existing or with respect to which the maturity has been or could be accelerated, and the amount of such Indebtedness and which could reasonably be expected to have a Material Adverse Effect; and (e) any other development in the business or affairs of any Loan Party, which could reasonably be expected to have a Material Adverse Effect; in each case describing the nature thereof and the action Loan Parties propose to take with respect thereto.


 


9.6.           Government Receivables.


 


Each Borrower Party shall notify Agent immediately if any of its Receivables arise out of contracts between any Borrower Party and the United States, any state, or any department, agency or instrumentality of any of them.


 


9.7.           Annual Financial Statements.


 


Each Loan Party, as applicable, shall furnish Agent and Lenders within one hundred five (105) days after the end of each fiscal year of Holding, financial statements of Holding and its Subsidiaries on a consolidated basis and the Borrower and its Subsidiaries on a consolidated and consolidating basis including statements of income and stockholders' equity and cash flow from the beginning of the current fiscal year to the end of such fiscal year and the balance sheet as at the end of such fiscal year, all prepared in accordance with GAAP applied on a basis consistent with prior practices, and in reasonable detail and reported upon without qualification by Grant Thornton LLP, or such other independent certified public accounting firm selected by Loan Parties and satisfactory to Agent.  In addition, the reports shall be accompanied by a Compliance Certificate.


 


9.8.           Quarterly Financial Statements.


 


Each Loan Party, as applicable, shall furnish Agent and Lenders within forty-five (45) days after the end of each fiscal quarter, an unaudited balance sheet of Holding and its Subsidiaries on a consolidated basis and the Borrower and its Subsidiaries on a consolidated and consolidating basis and unaudited statements of income and stockholders' equity and cash flow of Holding and its Subsidiaries on a consolidated basis and the Borrower and its Subsidiaries on a consolidated and consolidating basis reflecting results of operations from the beginning of the fiscal year to the end of such quarter and for such quarter, prepared on a basis consistent with prior practices and complete and correct in all material respects, subject to normal and recurring year end adjustments that individually and in the aggregate are not material to Loan Parties' business or Borrower Parties' business, as applicable, and accompanied by comparative financial statements of Holding and its Subsidiaries and the Borrower and its Subsidiaries, as applicable, for the same quarter and same fiscal year-to-date period in the prior fiscal year.  The reports shall be accompanied by a Compliance Certificate.


 




  





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9.9.           Monthly Financial Statements.


 


The Borrower shall, furnish Agent and Lenders within thirty (30) days after the end of each month, an unaudited balance sheet of the Borrower and its Subsidiaries on a consolidated and consolidating basis and unaudited statements of income and stockholders' equity and cash flow of the Borrower and its Subsidiaries on a consolidated and consolidating basis reflecting results of operations from the beginning of the fiscal year to the end of such month and for such month, prepared on a basis consistent with prior practices and complete and correct in all material respects, subject to normal and recurring year end adjustments that individually and in the aggregate are not material to the Borrower or any of its Subsidiaries' business, and accompanied by comparative financial statements of the Borrower and its Subsidiaries for the same month and same fiscal year-to-date period in the prior fiscal year.


 


9.10.        Other Reports.


 


Each Borrower Party shall furnish Agent as soon as available, but in any event within ten (10) days after the written request of the Agent, with copies of such financial statements, reports and returns as each Borrower Party shall send to its stockholders, members or partners, as applicable.


 


9.11.        Additional Information.


 


Each Borrower Party shall furnish Agent with such additional information as Agent shall reasonably request in order to enable Agent to determine whether the terms, covenants, provisions and conditions of this Agreement, the Notes and any other Other Document have been complied with by Loan Parties including, without the necessity of any request by Agent, (a) at least thirty (30) days prior thereto, notice of any Borrower Party's opening of any new principal office or any Borrower Party's closing of any principal office, and (b) promptly upon any Borrower Party's learning thereof, notice of any labor dispute to which any Borrower Party may become a party, any strikes or walkouts relating to any of its plants or other facilities, and the expiration of any labor contract to which any Borrower Party is a party or by which any Borrower Party is bound.


 


9.12.        Projected Operating Budget.


 


The Borrower shall furnish Agent and Lenders, no later than January 31st of each fiscal year of the Borrower and its Subsidiaries during the Term a month by month projected operating budget and cash flow of the Borrower and its Subsidiaries on a consolidated and consolidating basis for such fiscal year (including an income statement for each month and a balance sheet as at the end of the last month in each fiscal quarter), such projections to be accompanied by a certificate signed by the President or Chief Financial Officer of the Borrower to the effect that such projections have been prepared on the basis of sound financial planning practice consistent with past budgets and financial statements.


 




  





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9.13.        Environmental Matters.


 


 Each Borrower Party shall promptly notify Agent in writing upon the occurrence of (a) any expenditure (actual or anticipated, individually or in the aggregate during a fiscal year) in excess of One Hundred Seventy Five Thousand and 00/100 Dollars ($175,000.00) for environmental response, removal or remedial action or for responses to environmental violations or environmental testing and the impact of said expenses on the affected Borrower Party's working capital, which expenditure is not identified in any Phase I or other environmental report previously delivered to the Agent, and (b) any Borrower Party's receipt of written notice from any local, state or federal authority advising such Borrower Party of any environmental liability (real or potential) arising from such Borrower Party's operations, its owned or leased real property, its environmental management practices, or off-site waste disposal sites used by such Borrower Party, which liability could reasonably be expected to result in expenditures in excess of One Hundred Seventy Five Thousand and 00/100 Dollars ($175,000.00).


 


9.14.        Notice of Suits, Adverse Events.


 


Each Borrower Party shall furnish Agent with prompt written notice of (i) any lapse or other termination of any Consent issued to any Loan Party by any Governmental Body or any other Person that could reasonably be expected to have a Material Adverse Effect, (ii) any refusal by any Governmental Body or any other Person to renew or extend any such Consent that could reasonably be expected to have a Material Adverse Effect; and (iii) copies of any periodic or special reports filed by any Borrower Party with any Governmental Body or Person, if such reports indicate any material change in the business, operations, affairs or condition of any Borrower Party, or if copies thereof are requested by Lender, and (iv) copies of any material notices and other communications from any Governmental Body or Person which specifically relate to any Loan Party that could reasonably be expected to have a Material Adverse Effect.


 


9.15.        ERISA Notices and Requests.


 


Each Borrower Party shall furnish Agent with immediate written notice in the event that (i) any Borrower Party or any member of the Controlled Group knows or has reason to know that a Termination Event has occurred, together with a written statement describing such Termination Event and the action, if any, which such Borrower Party or any member of the Controlled Group has taken, is taking, or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, Department of Labor or PBGC with respect thereto, (ii) any  Borrower Party or any member of the Controlled Group knows or has reason to know that a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has occurred together with a written statement describing such transaction and the action which such Borrower Party or any member of the Controlled Group has taken, is taking or proposes to take with respect thereto, (iii) a funding waiver request has been filed with respect to any Plan together with all communications received by any Borrower Party or any member of the Controlled Group with respect to such request, (iv) any increase in the benefits of any existing Plan or the establishment of any new Plan or the commencement of contributions to any Plan to which any Borrower Party or any member of the Controlled Group was not previously contributing shall occur, (v) any Borrower Party or any member of the Controlled Group shall receive from the PBGC a notice of intention to terminate a Plan or to have a trustee appointed to administer a Plan, together with copies of each such notice, (vi) any Borrower Party or any member of the Controlled Group shall receive any favorable or unfavorable determination letter from the Internal Revenue Service regarding the qualification of a Plan under Section 401(a) of the Code, together with copies of each such letter; (vii) any Borrower Party or any member of the Controlled Group shall receive a notice regarding the imposition of withdrawal liability, together with copies of each such notice; (viii) any Borrower Party or any member of the Controlled Group shall fail to make a required installment or any other required payment under Section 412 of the Code on or before the due date for such installment or payment; or (ix) any Borrower Party or any member of the Controlled Group knows that (a) a Multiemployer Plan has been terminated, (b) the administrator or plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan.


 




  





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9.16.        Additional Documents.


 


Each Borrower Party shall execute and deliver to Agent, upon request, such documents and agreements as Agent may, from time to time, reasonably request to carry out the purposes, terms or conditions of this Agreement.


 


X.            EVENTS OF DEFAULT.


 


The occurrence of any one or more of the following events shall constitute an "Event of Default":


 


10.1.        Nonpayment.


 


Failure by the Borrower to pay any principal or interest on the Obligations when due, whether at maturity or by reason of acceleration pursuant to the terms of this Agreement or by notice of intention to prepay, or by required prepayment or failure to pay any other liabilities or make any other payment, fee or charge provided for herein when due or in any Other Document;


 


10.2.        Breach of Representation.


 


Any representation or warranty made or deemed made by any Loan Party in this Agreement, any Other Document or any related agreement or in any certificate, document or financial or other statement furnished at any time in connection herewith or therewith shall prove to have been misleading in any material respect on the date when made or deemed to have been made;


 


10.3.        Financial Information.


 


Failure by any Loan Party to (i) furnish financial information when due or when otherwise required to do so pursuant to the terms and conditions of this Agreement and any of the Other Documents, or (ii) permit the inspection of its books or records in accordance with this Agreement;


 


10.4.        Judicial Actions.


 


Issuance of a notice of Lien, levy, assessment, injunction or attachment against the Borrower's Inventory or Receivables or against a material portion of the Borrower's other property, other than Permitted Encumbrances, which is not stayed or lifted within thirty (30) days;


 




  





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10.5.        Noncompliance.


 


Except as otherwise provided for in Sections 10.1, 10.3 and 10.5(ii), (i) failure or neglect of any Loan Party to perform, keep or observe any term, provision, condition, covenant herein contained, or contained in any Other Document or any other agreement or arrangement, now or hereafter entered into between any Loan Party and Agent or any Lender related to the transactions described herein, or (ii) failure or neglect of any Borrower Party to perform, keep or observe any term, provision, condition or covenant, contained in Sections 4.6, 4.7, 4.9, 6.1, 6.3, 6.4, 9.4 or 9.6 hereof which is not cured within thirty (30) days from the occurrence of such failure or neglect;


 


10.6.        Judgments.


 


Any judgment or judgments are rendered against (a) all Loan Parties (excluding Holding), collectively, for an aggregate amount in excess of Five Hundred Thousand and 00/100 Dollars ($500,000.00) or (b) Holding to the extent that the collective amount of such judgment or judgments, multiplied by 1.25, exceeds the positive difference between (y) the sum of Unrestricted Cash and Cash Equivalents of Holding, and (z) Current Liabilities, and, in either case, (i) enforcement proceedings shall have been commenced by a creditor upon such judgment, (ii) there shall be any period of thirty (30) consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, shall not be in effect, or (iii) any such judgment results in the creation of a Lien upon any of the Collateral (other than a Permitted Encumbrance);


 


10.7.        Bankruptcy.


 


Any Loan Party shall (i) apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of creditors, (iii) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any petition filed against it in any involuntary case under such bankruptcy laws,  or (vii) take any action for the purpose of effecting any of the foregoing;


 


10.8.        Inability to Pay.


 


Any Loan Party shall admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its business as permitted hereunder;


 




  





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10.9.        Affiliate Bankruptcy.


 


Holding or any Borrower Party shall (i) apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of its property, (ii) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, within thirty (30) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing;


 


10.10.      Material Adverse Effect.


 


Any change in any Loan Party's results of operations or financial condition which in Agent's opinion has a Material Adverse Effect;


 


10.11.      Lien Priority.


 


Any Lien created hereunder or provided for hereby or under any related agreement for any reason ceases to be or is not a valid and perfected Lien having a first priority interest;


 


10.12.      Cross Default - Indebtedness.


 


A default or event of default has occurred under any document relating to any other Indebtedness of (a) any of the Loan Parties (excluding Holding) in the aggregate principal amount of Five Hundred Thousand and 00/100 Dollars ($500,000.00) or greater or (b) Holding to the extent that the aggregate principal amount of Indebtedness under such document or documents, multiplied by 1.25, exceeds the positive difference between (y) the sum of Unrestricted Cash and Cash Equivalents of Holding, and (z) Current Liabilities, and such default or event of default consists of the failure to pay (beyond any period of grace permitted with respect thereto, whether waived or not) any Indebtedness when due (whether at stated maturity, by acceleration or otherwise) or if such breach or default permits or causes the acceleration of any Indebtedness (whether or not such right shall have been waived) or the termination of any commitment to lend;


 


10.13.      Cross Default – Other Agreements.


 


A default of the obligations of (a) any Loan Party (excluding Holding) under any other agreement to which it is a party shall occur which could reasonably be expected to have a Material Adverse Effect or (b) Holding to the extent that the aggregate amount of monetary obligations subject to such default or defaults, multiplied by 1.25, exceeds the positive difference between (y) the sum of Unrestricted Cash and Cash Equivalents of Holding, and (z) Current Liabilities and which default is not cured within any applicable grace period;


 


10.14.      Breach of Guaranty.


 


Termination or breach of any Guaranty or similar agreement executed and delivered to Agent in connection with the Obligations of any Loan Party, or if any Guarantor attempts to terminate, challenges the validity of, or its liability under, any such Guaranty or similar agreement;


 




  





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10.15.      Change of Ownership.


 


Any Change of Ownership shall occur;


 


10.16.      Invalidity.


 


Any material provision of this Agreement or any Other Document shall, for any reason, cease to be valid and binding on any Loan Party, or any Loan Party shall so claim in writing to Agent or any Lender;


 


10.17.      Licenses.


 


(i) Any Governmental Body shall (A) revoke, terminate, suspend or adversely modify any license, permit, patent trademark or tradename of the Borrower, the continuation of which is material to the continuation of the Borrower's business, or (B) commence proceedings to suspend, revoke, terminate or adversely modify any such license, permit, trademark, tradename or patent and such proceedings shall not be dismissed or discharged within sixty (60) days, or (C) schedule or conduct a hearing on the renewal of any license, permit, trademark, tradename or patent necessary for the continuation of the Borrower's business and the staff of such Governmental Body issues a report recommending the termination, revocation, suspension or material, adverse modification of such license, permit, trademark, tradename or patent; (ii) any agreement which is necessary or material to the operation of the Borrower's business shall be revoked or terminated and not replaced by a substitute acceptable to Agent within thirty (30) days after the date of such revocation or termination, and such revocation or termination and non-replacement would reasonably be expected to have a Material Adverse Effect;


 


10.18.      Seizures.


 


Any material portion of the Collateral shall be seized or taken by a Governmental Body, or any Borrower Party or the title and rights of any Borrower Party which is the owner of any material portion of the Collateral shall have become the subject matter of claim, litigation, suit or other proceeding which, in the opinion of Agent, upon final determination, could reasonably be expected to result in impairment or loss of the security provided by this Agreement or the Other Documents;


 


10.19.      Holding.


 


At any time, Holding ceases to be a publicly held corporation; or


 


10.20.      Pension Plans.


 


An event or condition specified in Sections 7.15 or 9.15 hereof shall occur or exist with respect to any Plan and, as a result of such event or condition, together with all other such events or conditions, any Borrower Party or any member of the Controlled Group shall incur, or in the opinion of Agent be reasonably likely to incur, a liability to a Plan or the PBGC (or both) which, in the reasonable judgment of Agent, would have a Material Adverse Effect.


 




  





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XI.           LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.


 


11.1.        Rights and Remedies.


 


(a)           Upon the occurrence of (i) an Event of Default pursuant to Section 10.7 all Obligations shall be immediately due and payable and this Agreement and the obligation of Lenders to make Advances shall be deemed terminated; and, (ii) any of the other Events of Default and at any time thereafter (such default not having previously been cured), at the option of Required Lenders all Obligations shall be immediately due and payable and Lenders shall have the right to terminate this Agreement and to terminate the obligation of Lenders to make Advances and (iii) a filing of a petition against any Loan Party in any involuntary case under any state or federal bankruptcy laws, all Obligations shall be immediately due and payable and the obligation of Lenders to make Advances hereunder shall be terminated other than as may be required by an appropriate order of the bankruptcy court having jurisdiction over such Loan Party.  Upon the occurrence of any Event of Default, Agent shall have the right to exercise any and all rights and remedies provided for herein, under the Other Documents, under the Uniform Commercial Code and at law or equity generally, including the right to foreclose the security interests granted herein and to realize upon any Collateral by any available judicial procedure and/or to take possession of and sell any or all of the Collateral with or without judicial process.  Agent may enter any of the Borrower's premises or other premises without legal process and without incurring liability to the Borrower therefor, and Agent may thereupon, or at any time thereafter, in its discretion without notice or demand, take the Collateral and remove the same to such place as Agent may deem advisable and Agent may require the Borrower to make the Collateral available to Agent at a convenient place.  With or without having the Collateral at the time or place of sale, Agent may sell the Collateral, or any part thereof, at public or private sale, at any time or place, in one or more sales, at such price or prices, and upon such terms, either for cash, credit or future delivery, as Agent may elect.  Except as to that part of the Collateral which is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Agent shall give the Borrower reasonable notification of such sale or sales, it being agreed that in all events written notice mailed to Borrower at least ten (10) days prior to such sale or sales is reasonable notification.  At any public sale Agent or any Lender may bid for and become the purchaser, and Agent, any Lender or any other purchaser at any such sale thereafter shall hold the Collateral sold absolutely free from any claim or right of whatsoever kind, including any equity of redemption and all such claims, rights and equities are hereby expressly waived and released by the Borrower.  In connection with the exercise of the foregoing remedies, including the sale of Inventory, Agent is granted a perpetual nonrevocable, royalty free, nonexclusive license and Agent is granted permission to use all of the Borrower's (a) trademarks, trade styles, trade names, patents, patent applications, copyrights, service marks, licenses, franchises and other proprietary rights which are used or useful in connection with Inventory for the purpose of marketing, advertising for sale and selling or otherwise disposing of such Inventory and (b) Equipment for the purpose of completing the manufacture of unfinished goods and, in furtherance of the foregoing grant, to the extent any such trademarks, trade styles, trade names, patents, patent applications, copyrights, service marks, licenses, franchises and other proprietary rights which are used or useful in connection with Inventory for the purpose of marketing, advertising for sale and selling or otherwise disposing of such Inventory consist of Excluded Property, or are otherwise not able to be licensed by the Borrower to the Agent, the Borrower shall use its best commercial efforts to cause all necessary consents to be given for the  purposes set forth above.  The cash proceeds realized from the sale of any Collateral shall be applied to the Obligations in the order set forth in Section 11.5 hereof.  Noncash proceeds will only be applied to the Obligations as they are converted into cash.  If any deficiency shall arise, Loan Parties shall remain liable to Agent and Lenders therefor.


 




  





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(b)           To the extent that Applicable Law imposes duties on Agent to exercise remedies in a commercially reasonable manner, the Borrower acknowledges and agrees that it is not commercially unreasonable for Agent (i) to fail to incur expenses reasonably deemed significant by Agent to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Customers or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against Customers and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as the Borrower, for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure Agent against risks of loss, collection or disposition of Collateral or to provide to Agent a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Agent in the collection or disposition of any of the Collateral.  The Borrower acknowledges that the purpose of this Section 11.1(b) is to provide non-exhaustive indications of what actions or omissions by Agent would not be commercially unreasonable in Agent's exercise of remedies against the Collateral and that other actions or omissions by Agent shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 11.1(b).  Without limitation upon the foregoing, nothing contained in this Section 11.1(b) shall be construed to grant any rights to any Loan Party or to impose any duties on Agent that would not have been granted or imposed by this Agreement or by Applicable Law in the absence of this Section 11.1(b).


 


11.2.        Agent's Discretion.


 


Agent shall have the right in its sole discretion to determine which rights, Liens, security interests or remedies Agent may at any time pursue, relinquish, subordinate, or modify or to take any other action with respect thereto and such determination will not in any way modify or affect any of Agent's or Lenders' rights hereunder.


 




  





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11.3.        Setoff.


 


Subject to Section 14.12, in addition to any other rights which Agent or any Lender may have under Applicable Law, upon the occurrence of an Event of Default hereunder, Agent and such Lender shall have a right, immediately and without notice of any kind, to apply any Borrower Party's property held by Agent and such Lender to reduce the Obligations.


 


11.4.        Rights and Remedies not Exclusive.


 


The enumeration of the foregoing rights and remedies is not intended to be exhaustive and the exercise of any rights or remedy shall not preclude the exercise of any other right or remedies provided for herein or otherwise provided by law, all of which shall be cumulative and not alternative.


 


11.5.        Allocation of Payments After Event of Default.


 


Notwithstanding any other provisions of this Agreement to the contrary, after the occurrence and during the continuance of an Event of Default, all amounts collected or received by Agent on account of the Obligations or any other amounts outstanding under any of the Other Documents or in respect of the Collateral may, at Agent's discretion, be paid over or delivered as follows:


 


FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys' fees) of Agent in connection with enforcing its rights and the rights of Lenders under this Agreement and the Other Documents and any protective advances made by Agent with respect to the Collateral under or pursuant to the terms of this Agreement;


 


SECOND, to payment of any fees owed to Agent;


 


THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys' fees) of each of Lenders to the extent owing to such Lender pursuant to the terms of this Agreement;


 


FOURTH, to the payment of all of the Obligations consisting of accrued fees and interest;


 


FIFTH, to the payment of the outstanding principal amount of the Obligations (including the payment or cash collateralization of any outstanding Letters of Credit);


 


SIXTH, to all other Obligations and other obligations which shall have become due and payable under the Other Documents or otherwise and not repaid pursuant to clauses "FIRST" through "FIFTH" above; and


 


SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive such surplus.


 




  





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In carrying out the foregoing, (i) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; (ii) each of Lenders shall receive (so long as it is not a Defaulting Lender) an amount equal to its pro rata share (based on the proportion that the then outstanding Advances held by such Lender bears to the aggregate then outstanding Advances) of amounts available to be applied pursuant to clauses "FOURTH", "FIFTH" and "SIXTH" above; and (iii) to the extent that any amounts available for distribution pursuant to clause "FIFTH" above are attributable to the issued but undrawn amount of outstanding Letters of Credit, such amounts shall be held by Agent in a cash collateral account and applied (A) first, to reimburse the Issuer from time to time for any drawings under such Letters of Credit and (B) then, following the expiration of all Letters of Credit, to all other obligations of the types described in clauses "FIFTH" and "SIXTH" above in the manner provided in this Section 11.5.


 


XII.          WAIVERS AND JUDICIAL PROCEEDINGS.


 


12.1.        Waiver of Notice.


 


Each Loan Party hereby waives notice of non-payment of any of the Receivables, demand, presentment, protest and notice thereof with respect to any and all instruments, notice of acceptance hereof, notice of loans or advances made, credit extended, Collateral received or delivered, or any other action taken in reliance hereon, and all other demands and notices of any description, except such as are expressly provided for herein.


 


12.2.        Delay.


 


No delay or omission on Agent's or any Lender's part in exercising any right, remedy or option shall operate as a waiver of such or any other right, remedy or option or of any Default or Event of Default.


 


12.3.        Jury Waiver.


 


EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.


 




  





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XIII.        EFFECTIVE DATE AND TERMINATION.


 


13.1.        Term.


 


This Agreement, which shall inure to the benefit of and shall be binding upon the respective successors and permitted assigns of each Loan Party, Agent and each Lender, shall become effective on the date hereof and shall continue in full force and effect until September 28, 2016 (the "Term") unless sooner terminated as herein provided.  Borrower may terminate this Agreement at any time upon ninety (90) days' prior written notice upon payment in full of the Obligations.


 


13.2.        Termination.


 


The termination of the Agreement shall not affect any Loan Party's, Agent's or any Lender's rights, or any of the Obligations having their inception prior to the effective date of such termination, and the provisions hereof shall continue to be fully operative until all transactions entered into, rights or interests created or Obligations have been fully and indefeasibly paid, disposed of, concluded or liquidated.  The security interests, Liens and rights granted to Agent and Lenders hereunder and the financing statements filed hereunder shall continue in full force and effect, notwithstanding the termination of this Agreement or the fact that Borrower's Account may from time to time be temporarily in a zero or credit position, until all of the Obligations of the Borrower have been indefeasibly paid and performed in full after the termination of this Agreement or the Borrower has furnished Agent and Lenders with an indemnification satisfactory to Agent and Lenders with respect thereto.  Accordingly, the Borrower waives any rights which it may have under the Uniform Commercial Code to demand the filing of termination statements with respect to the Collateral, and Agent shall not be required to send such termination statements to the Borrower, or to file them with any filing office, unless and until this Agreement shall have been terminated in accordance with its terms and all Obligations have been indefeasibly paid in full in immediately available funds.  All representations, warranties, covenants, waivers and agreements contained herein shall survive termination hereof until all Obligations are indefeasibly paid and performed in full.


 


XIV.        REGARDING AGENT.


 


14.1.        Appointment.


 


Each Lender hereby designates PNC to act as Agent for such Lender under this Agreement and the Other Documents.  Each Lender hereby irrevocably authorizes Agent to take such action on its behalf under the provisions of this Agreement and the Other Documents and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto and Agent shall hold all Collateral, payments of principal and interest, fees (except the fees set forth in the Fee Letter), charges and collections (without giving effect to any collection days) received pursuant to this Agreement, for the ratable benefit of Lenders.  Agent may perform any of its duties hereunder by or through its agents or employees.  As to any matters not expressly provided for by this Agreement (including collection of the Notes) Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding; provided, however, that Agent shall not be required to take any action which exposes Agent to liability or which is contrary to this Agreement or the Other Documents or Applicable Law unless Agent is furnished with an indemnification reasonably satisfactory to Agent with respect thereto.


 




  





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14.2.        Nature of Duties.


 


Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and the Other Documents.  Neither Agent nor any of its officers, directors, employees or agents shall be (i) liable for any action taken or omitted by them as such hereunder or in connection herewith, unless caused by their gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), or (ii) responsible in any manner for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement, or in any of the Other Documents or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any of the Other Documents or for the value, validity, effectiveness, genuineness, due execution, enforceability or sufficiency of this Agreement, or any of the Other Documents or for any failure of any Loan Party to perform its obligations hereunder.  Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any of the Other Documents, or to inspect the properties, books or records of any Loan Party.  The duties of Agent as respects the Advances to Borrower shall be mechanical and administrative in nature; Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Agent any obligations in respect of this Agreement except as expressly set forth herein.


 


14.3.        Lack of Reliance on Agent and Resignation.


 


Independently and without reliance upon Agent or any other Lender, each Lender has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of each Loan Party in connection with the making and the continuance of the Advances hereunder and the taking or not taking of any action in connection herewith, and (ii) its own appraisal of the creditworthiness of each Loan Party.  Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before making of the Advances or at any time or times thereafter except as shall be provided by any Loan Party pursuant to the terms hereof.  Agent shall not be responsible to any Lender for any recitals, statements, information, representations or warranties herein or in any agreement, document, certificate or a statement delivered in connection with or for the execution, effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Agreement or any Other Document, or of the financial condition of any Loan Party, or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement, the Notes, the other Other Documents or the financial condition of any Loan Party, or the existence of any Event of Default or any Default.


 




  





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Agent may resign on sixty (60) days' written notice to each of Lenders and Borrower and upon such resignation, the Required Lenders will promptly designate a successor Agent reasonably satisfactory to Loan Parties.


 


Any such successor Agent shall succeed to the rights, powers and duties of Agent, and the term "Agent" shall mean such successor agent effective upon its appointment, and the former Agent's rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such former Agent.  After any Agent's resignation as Agent, the provisions of this Article XIV shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.


 


14.4.        Certain Rights of Agent.


 


If Agent shall request instructions from Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any Other Document, Agent shall be entitled to refrain from such act or taking such action unless and until Agent shall have received instructions from the Required Lenders; and Agent shall not incur liability to any Person by reason of so refraining.  Without limiting the foregoing, Lenders shall not have any right of action whatsoever against Agent as a result of its acting or refraining from acting hereunder in accordance with the instructions of the Required Lenders.


 


14.5.        Reliance.


 


Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, order or other document or telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper person or entity, and, with respect to all legal matters pertaining to this Agreement and the Other Documents and its duties hereunder, upon advice of counsel selected by it.  Agent may employ agents and attorneys-in-fact and shall not be liable for the default or misconduct of any such agents or attorneys-in-fact selected by Agent with reasonable care.


 


14.6.        Notice of Default.


 


Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder or under the Other Documents, unless Agent has received notice from a Lender or Borrower referring to this Agreement or the Other Documents, describing such Default or Event of Default and stating that such notice is a "notice of default".  In the event that Agent receives such a notice, Agent shall give notice thereof to Lenders.  Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided, that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of Lenders.


 




  





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14.7.        Indemnification.


 


To the extent Agent is not reimbursed and indemnified by Loan Parties, each Lender will reimburse and indemnify Agent in proportion to its respective portion of the Advances (or, if no Advances are outstanding, according to its Commitment Percentage), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Agent in performing its duties hereunder, or in any way relating to or arising out of this Agreement or any Other Document; provided that, Lenders shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent's gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment).


 


14.8.        Agent in its Individual Capacity.


 


With respect to the obligation of Agent to lend under this Agreement, the Advances made by it shall have the same rights and powers hereunder as any other Lender and as if it were not performing the duties as Agent specified herein; and the term "Lender" or any similar term shall, unless the context clearly otherwise indicates, include Agent in its individual capacity as a Lender.  Agent may engage in business with any Loan Party as if it were not performing the duties specified herein, and may accept fees and other consideration from any Loan Party for services in connection with this Agreement or otherwise without having to account for the same to Lenders.


 


14.9.        Delivery of Documents.


 


To the extent Agent receives financial statements required under Sections 9.7, 9.8, 9.9,  9.12 and 9.13 or Borrowing Base Certificates from the Borrower pursuant to the terms of this Agreement which the Borrower is not obligated to deliver to each Lender, Agent will promptly furnish such documents and information to Lenders.


 


14.10.      Borrower's Undertaking to Agent.


 


Without prejudice to their respective obligations to Lenders under the other provisions of this Agreement, the Borrower hereby undertakes with Agent to pay to Agent from time to time on demand all amounts from time to time due and payable by it for the account of Agent or Lenders or any of them pursuant to this Agreement to the extent not already paid.  Any payment made pursuant to any such demand shall pro tanto satisfy the relevant Borrower's obligations to make payments for the account of Lenders or the relevant one or more of them pursuant to this Agreement.


 


14.11.      No Reliance on Agent's Customer Identification Program.


 


Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on Agent to carry out such Lender's, Affiliate's, participant's or assignee's customer identification program, or other obligations required or imposed under or pursuant to the USA PATRIOT Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the "CIP Regulations"), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with any Loan Party, its Affiliates or its agents, this Agreement, the Other Documents or the transactions hereunder or contemplated hereby: (1) any identity verification procedures, (2) any record-keeping, (3) comparisons with government lists, (4) customer notices or (5) other procedures required under the CIP Regulations or such other laws.


 




  





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14.12.      Other Agreements.


 


Each Lender agrees that it shall not, without the express consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the request of Agent, set off against the Obligations, any amounts owing by such Lender to any Loan Party or any deposit accounts of any Loan Party now or hereafter maintained with such Lender.  Anything in this Agreement to the contrary notwithstanding, each Lender further agrees that it shall not, unless specifically requested to do so by Agent, take any action to protect or enforce its rights arising out of this Agreement or the Other Documents, it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and the Other Documents shall be taken in concert and at the direction or with the consent of Agent or Required Lenders.


 


XV.         MISCELLANEOUS.


 


15.1.        Governing Law.


 


This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania applied to contracts to be performed wholly within the Commonwealth of Pennsylvania.  Any judicial proceeding brought by or against any Loan Party with respect to any of the Obligations, this Agreement, the Other Documents or any related agreement may be brought in any court of competent jurisdiction in the Commonwealth of Pennsylvania, United States of America, and, by execution and delivery of this Agreement, each Loan Party accepts for itself and in connection with its properties, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement.  Each Loan Party hereby waives personal service of any and all process upon it and consents that all such service of process may be made by registered mail (return receipt requested) directed to Borrower at its address set forth in Section 15.6 and service so made shall be deemed completed five (5) days after the same shall have been so deposited in the mails of the United States of America, or, at Agent's option, by service upon Borrower which each Loan Party irrevocably appoints as the Borrower's Agent for the purpose of accepting service within the Commonwealth of Pennsylvania.  Nothing herein shall affect the right to serve process in any manner permitted by law or shall limit the right of Agent or any Lender to bring proceedings against any Loan Party in the courts of any other jurisdiction.  Each Loan Party waives any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens.  Each Loan Party waives the right to remove any judicial proceeding brought against such Loan Party in any state court to any federal court.  Any judicial proceeding by any Loan Party against Agent or any Lender involving, directly or indirectly, any matter or claim in any way arising out of, related to or connected with this Agreement or any related agreement, shall be brought only in a federal or state court located in the County of Allegheny, Commonwealth of Pennsylvania.


 




  





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15.2.        Entire Understanding.


 


(a)           This Agreement and the documents executed concurrently herewith contain the entire understanding between each Loan Party, Agent and each Lender and supersedes all prior agreements and understandings, if any, relating to the subject matter hereof.  Any promises, representations, warranties or guarantees not herein contained and hereinafter made shall have no force and effect unless in writing, signed by each Loan Party's, Agent's and each Lender's respective officers.  Neither this Agreement nor any portion or provisions hereof may be changed, modified, amended, waived, supplemented, discharged, cancelled or terminated orally or by any course of dealing, or in any manner other than by an agreement in writing, signed by the party to be charged.  Each Loan Party acknowledges that it has been advised by counsel in connection with the execution of this Agreement and Other Documents and is not relying upon oral representations or statements inconsistent with the terms and provisions of this Agreement.


 


(b)           The Required Lenders, Agent with the consent in writing of the Required Lenders, and Loan Parties may, subject to the provisions of this Section 15.2(b), from time to time enter into written supplemental agreements to this Agreement or the Other Documents executed by Loan Parties, for the purpose of adding or deleting any provisions or otherwise changing, varying or waiving in any manner the rights of Lenders, Agent or Loan Parties thereunder or the conditions, provisions or terms thereof or waiving any Event of Default thereunder, but only to the extent specified in such written agreements; provided, however, that no such supplemental agreement shall, without the consent of all Lenders:


 


(i)           increase the Commitment Percentage, the maximum dollar commitment of any Lender or the Maximum Revolving Advance Amount.


 


(ii)           extend the maturity of any Note or the due date for any amount payable hereunder, or decrease the rate of interest or reduce any fee payable by Loan Parties to Lenders pursuant to this Agreement.


 


(iii)           alter the definition of the term Required Lenders or alter, amend or modify this Section 15.2(b).


 


(iv)           release any Collateral during any calendar year (other than in accordance with the provisions of this Agreement) having an aggregate value in excess of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00).


 


(v)           change the rights and duties of Agent.


 


(vi)           permit any Advance to be made or issued if after giving effect thereto the total of Advances outstanding hereunder would exceed the Formula Amount for more than sixty (60) consecutive Business Days or exceed one hundred ten percent (110%) of the Formula Amount.


 




  





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(vii)           increase the Advance Rates above the Advance Rates in effect on the Closing Date.


 


(viii)           release any Guarantor.


 


Any such supplemental agreement shall apply equally to each Lender and shall be binding upon Loan Parties, Lenders and Agent and all future holders of the Obligations.  In the case of any waiver, Loan Parties, Agent and Lenders shall be restored to their former positions and rights, and any Event of Default waived shall be deemed to be cured and not continuing, but no waiver of a specific Event of Default shall extend to any subsequent Event of Default (whether or not the subsequent Event of Default is the same as the Event of Default which was waived), or impair any right consequent thereon.


 


In the event that Agent requests the consent of a Lender pursuant to this Section 15.2 and such consent is denied, then PNC may, at its option, require such Lender to assign its interest in the Advances to PNC or to another Lender or to any other Person designated by Agent (the "Designated Lender"), for a price equal to (i) the then outstanding principal amount thereof plus (ii) accrued and unpaid interest and fees due such Lender, which interest and fees shall be paid when collected from Borrower.  In the event PNC elects to require any Lender to assign its interest to PNC or to the Designated Lender, PNC will so notify such Lender in writing within forty five (45) days following such Lender's denial, and such Lender will assign its interest to PNC or the Designated Lender no later than five (5) days following receipt of such notice pursuant to a Commitment Transfer Supplement executed by such Lender, PNC or the Designated Lender, as appropriate, and Agent.


 


Notwithstanding (a) the existence of a Default or an Event of Default, (b) that any of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied or (c) any other provision of this Agreement, Agent may at its discretion and without the consent of the Required Lenders, voluntarily permit the sum of the outstanding Revolving Advances and the Maximum Undrawn Amount at any time to exceed the Formula Amount hereof at such time by up to ten percent (10%) of the Formula Amount for up to sixty (60) consecutive Business Days (the "Out-of-Formula Loans"); provided, that, such outstanding Advances do not exceed the Maximum Revolving Advance Amount.  If Agent is willing in its sole and absolute discretion to make such Out-of-Formula Loans, such Out-of-Formula Loans shall be payable on demand and shall bear interest at the Default Rate for Revolving Advances consisting of Domestic Rate Loans; provided that, if Lenders do make Out-of-Formula Loans, neither Agent nor Lenders shall be deemed thereby to have changed the limits of Section 2.1(a).  For purposes of this paragraph, the discretion granted to Agent hereunder shall not preclude involuntary overadvances that may result from time to time due to the fact that the Formula Amount was unintentionally exceeded for any reason, including Collateral previously deemed to be "Eligible Inventory", or "Eligible Receivable", as applicable, becomes ineligible, collections of Receivables applied to reduce outstanding Revolving Advances are thereafter returned for insufficient funds or overadvances are made to protect or preserve the Collateral.  In the event Agent involuntarily permits the outstanding Revolving Advances to exceed the Formula Amount by more than ten percent (10%), Agent shall use its efforts to have Borrower decrease such excess in as expeditious a manner as is practicable under the circumstances and not inconsistent with the reason for such excess.  Revolving Advances made after Agent has determined the existence of involuntary overadvances shall be deemed to be involuntary overadvances and shall be decreased in accordance with the preceding sentence.


 




  





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In addition to (and not in substitution of) the discretionary Revolving Advances permitted above in this Section 15.2, Agent is hereby authorized by Loan Parties and Lenders, from time to time in Agent's sole discretion, (A) after the occurrence and during the continuation of a Default or an Event of Default, or (B) at any time that any of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied, to make Revolving Advances to Borrower on behalf of Lenders which Agent, in its reasonable business judgment, deems necessary or desirable (a) to preserve or protect the Collateral, or any portion thereof, (b) to enhance the likelihood of, or maximize the amount of, repayment of the Advances and other Obligations, or (c) to pay any other amount chargeable to Borrower pursuant to the terms of this Agreement; provided, that at any time after giving effect to any such Revolving Advances the outstanding Revolving Advances do not exceed one hundred percent (100%) of the Formula Amount.


 


15.3.        Successors and Assigns; Participations; New Lenders.


 


(a)           This Agreement shall be binding upon and inure to the benefit of Loan Parties, Agent, each Lender, all future holders of the Obligations and their respective successors and permitted assigns, except that no Loan Party may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of Agent and each Lender.


 


(b)           Each Loan Party acknowledges that in the regular course of commercial banking business one or more Lenders may at any time and from time to time sell participating interests in the Advances to other financial institutions (each such transferee or purchaser of a participating interest, a "Participant").  Each Participant may exercise all rights of payment (including rights of set-off) with respect to the portion of such Advances held by it or other Obligations payable hereunder as fully as if such Participant were the direct holder thereof provided that Borrower shall not be required to pay to any Participant more than the amount which it would have been required to pay to Lender which granted an interest in its Advances or other Obligations payable hereunder to such Participant had such Lender retained such interest in the Advances hereunder or other Obligations payable hereunder and in no event shall Borrower be required to pay any such amount arising from the same circumstances and with respect to the same Advances or other Obligations payable hereunder to both such Lender and such Participant.  Each Loan Party hereby grants to any Participant a continuing security interest in any deposits, moneys or other property actually or constructively held by such Participant as security for the Participant's interest in the Advances.


 


(c)           Any Lender, with the consent of Agent which shall not be unreasonably withheld or delayed, may sell, assign or transfer all or any part of its rights and obligations under or relating to Revolving Advances under this Agreement and the Other Documents to one or more additional banks or financial institutions and one or more additional banks or financial institutions may commit to make Advances hereunder (each a "Purchasing Lender"), in minimum amounts of not less than Five Million and 00/100 Dollars ($5,000,000.00), pursuant to a Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor Lender, and Agent and delivered to Agent for recording.  Upon such execution, delivery, acceptance and recording, from and after the transfer effective date determined pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder with a Commitment Percentage as set forth therein, and (ii) the transferor Lender thereunder shall, to the extent provided in such Commitment Transfer Supplement, be released from its obligations under this Agreement, the Commitment Transfer Supplement creating a novation for that purpose.  Such Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender and the resulting adjustment of the Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Other Documents.  Each Loan Party hereby consents to the addition of such Purchasing Lender and the resulting adjustment of the Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Other Documents.  Loan Parties shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing.


 




  





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(d)           Any Lender, with the consent of Agent which shall not be unreasonably withheld or delayed, may directly or indirectly sell, assign or transfer all or any portion of its rights and obligations under or relating to Revolving Advances under this Agreement and the Other Documents to an entity, whether a corporation, partnership, trust, limited liability company or other entity that (i) is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and (ii) is administered, serviced or managed by the assigning Lender or an Affiliate of such Lender (a "Purchasing CLO" and together with each Participant and Purchasing Lender, each a "Transferee" and collectively the "Transferees"), pursuant to a Commitment Transfer Supplement modified as appropriate to reflect the interest being assigned ("Modified Commitment Transfer Supplement"), executed by any intermediate purchaser, the Purchasing CLO, the transferor Lender, and Agent as appropriate and delivered to Agent for recording.  Upon such execution and delivery, from and after the transfer effective date determined pursuant to such Modified Commitment Transfer Supplement, (i) Purchasing CLO thereunder shall be a party hereto and, to the extent provided in such Modified Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder and (ii) the transferor Lender thereunder shall, to the extent provided in such Modified Commitment Transfer Supplement, be released from its obligations under this Agreement, the Modified Commitment Transfer Supplement creating a novation for that purpose.  Such Modified Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing CLO.  Each Loan Party hereby consents to the addition of such Purchasing CLO.  Loan Parties shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing.


 


(e)           Agent shall maintain at its address a copy of each Commitment Transfer Supplement and Modified Commitment Transfer Supplement delivered to it and a register (the "Register") for the recordation of the names and addresses of each Lender and the outstanding principal, accrued and unpaid interest and other fees due hereunder.  The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, Agent and Lenders may treat each Person whose name is recorded in the Register as the owner of the Advance recorded therein for the purposes of this Agreement.  The Register shall be available for inspection by Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice.  Agent shall receive a fee in the amount of Three Thousand Five Hundred and 00/100 Dollars ($3,500.00) payable by the applicable Purchasing Lender and/or Purchasing CLO upon the effective date of each transfer or assignment (other than to an intermediate purchaser) to such Purchasing Lender and/or Purchasing CLO.


 




  





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(f)           Each Loan Party authorizes each Lender to disclose to any Transferee and any prospective Transferee any and all financial information in such Lender's possession concerning such Loan Party which has been delivered to such Lender by or on behalf of such Loan Party pursuant to this Agreement or in connection with such Lender's credit evaluation of such Loan Party.


 


15.4.        Application of Payments.


 


Agent shall have the continuing and exclusive right to apply or reverse and re-apply any payment and any and all proceeds of Collateral to any portion of the Obligations.  To the extent that any Loan Party makes a payment or Agent or any Lender receives any payment or proceeds of the Collateral for any Loan Party's benefit, which are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver, custodian or any other party under any bankruptcy law, common law or equitable cause, then, to such extent, the Obligations or part thereof intended to be satisfied shall be revived and continue as if such payment or proceeds had not been received by Agent or such Lender.


 


15.5.        Indemnity.


 


Each Loan Party shall indemnify Agent, each Lender and each of their respective officers, directors, Affiliates, attorneys, employees and agents from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including fees and disbursements of counsel) which may be imposed on, incurred by, or asserted against Agent or any Lender in any claim, litigation, proceeding or investigation instituted or conducted by any Governmental Body or instrumentality or any other Person with respect to any aspect of, or any transaction contemplated by, or referred to in, or any matter related to, this Agreement or the Other Documents, whether or not Agent or any Lender is a party thereto, except to the extent that any of the foregoing arises out of the willful misconduct or gross negligence of the party being indemnified (as determined by a court of competent jurisdiction in a final and non-appealable judgment).  Additionally, if any taxes (excluding taxes imposed upon or measured solely by the net income of Agent and Lenders, but including any intangibles taxes, stamp tax, recording tax or franchise tax) shall be payable by Agent, Lenders or Loan Parties on account of the execution or delivery of this Agreement, or the execution, delivery, issuance or recording of any of the Other Documents, or the creation or repayment of any of the Obligations hereunder, by reason of any Applicable Law now or hereafter in effect, Loan Parties will pay (or will promptly reimburse Agent and Lenders for payment of) all such taxes, including interest and penalties thereon, and will indemnify and hold the indemnitees described above in this Section 15.5 harmless from and against all liability in connection therewith.


 




  





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15.6.        Notice.


 


Any notice or request hereunder may be given to Borrower or any Loan Party or to Agent or any Lender at their respective addresses set forth below or at such other address as may hereafter be specified in a notice designated as a notice of change of address under this Section 15.6.  Any notice, request, demand, direction or other communication (for purposes of this Section 15.6 only, a "Notice") to be given to or made upon any party hereto under any provision of this Loan Agreement shall be given or made by telephone or in writing (which includes by means of electronic transmission (i.e., "e-mail") or facsimile transmission or by setting forth such Notice on a site on the World Wide Web (a "Website Posting") if Notice of such Website Posting (including the information necessary to access such site) has previously been delivered to the applicable parties hereto by another means set forth in this Section 15.6) in accordance with this Section 15.6.  Any such Notice must be delivered to the applicable parties hereto at the addresses and numbers set forth under their respective names on Section 15.6 hereof or in accordance with any subsequent unrevoked Notice from any such party that is given in accordance with this Section 15.6.  Any Notice shall be effective:


 


(a)           In the case of hand-delivery, when delivered;


 


(b)           If given by mail, four days after such Notice is deposited with the United States Postal Service, with first-class postage prepaid, return receipt requested;


 


(c)           In the case of a telephonic Notice, when a party is contacted by telephone, if delivery of such telephonic Notice is confirmed no later than the next Business Day by hand delivery, a facsimile or electronic transmission, a Website Posting or an overnight courier delivery of a confirmatory Notice (received at or before noon on such next Business Day);


 


(d)           In the case of a facsimile transmission, when sent to the applicable party's facsimile machine's telephone number, if the party sending such Notice receives confirmation of the delivery thereof from its own facsimile machine;


 


(e)           In the case of electronic transmission, when actually received;


 


(f)           In the case of a Website Posting, upon delivery of a Notice of such posting (including the information necessary to access such site) by another means set forth in this Section 15.6; and


 


(g)           If given by any other means (including by overnight courier), when actually received.


 


Any Lender giving a Notice to Borrower or any Loan Party shall concurrently send a copy thereof to Agent, and Agent shall promptly notify the other Lenders of its receipt of such Notice.


 




  





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(A)          If to Agent or PNC at:


 


PNC Bank, National Association


Three PNC Plaza, 6th Floor


225 Fifth Avenue


Pittsburgh, Pennsylvania  15222


Attention:         Douglas Hoffman,


Telephone:       (412) 768-1333


Facsimile:          (412) 768-4369







with an additional copy to:







Thorp Reed & Armstrong LLP


One Oxford Centre


301 Grant Street, 14th Floor


Pittsburgh, PA  15219-1425


Attention:         Sean M. Girdwood


Telephone:       (412) 394-2567


Facsimile:          (412) 394-2555


 


(B)          If to a Lender other than Agent, as specified on the signature pages hereof.


 


(C)          If to Borrower or any Loan Party:


 


Horsehead Corporation


4955 Steubenville Pike, Suite 405


Pittsburgh, Pennsylvania 15205


Attention:         Robert Scherich


Telephone:       (724) 773-9000


Facsimile:          (724) 774-4348







with a copy to:







Buchanan Ingersoll & Rooney P.C.


One Oxford Centre, 20th Floor


Pittsburgh, Pennsylvania 15219-1040


Attention:         Jason A. D'Amico, Esquire


Telephone:       412-392-2152


Facsimile:          412-562-1041


 



15.7.        Survival.


 


The obligations of Loan Parties under Sections 2.2(f), 3.7, 3.8, 3.9, 4.19(b) and 15.5 and the obligations of Lenders under Section 14.7, shall survive termination of this Agreement and the Other Documents and payment in full of the Obligations for a period of five (5) years.


 




  





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15.8.        Severability.


 


If any part of this Agreement is contrary to, prohibited by, or deemed invalid under Applicable Laws, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible.


 


15.9.        Expenses.


 


All costs and expenses including reasonable attorneys' fees and disbursements incurred by Agent on its behalf or on behalf of Lenders (a) in all efforts made to enforce payment of any Obligation or effect collection of any Collateral, or (b) in connection with the entering into, modification, amendment, administration and enforcement of this Agreement and any Other Document or any consents or waivers hereunder or thereunder and all related agreements, documents and instruments, or (c) in instituting, maintaining, preserving, enforcing and foreclosing on Agent's security interest in or Lien on any of the Collateral, or maintaining, preserving or enforcing any of Agent's or any Lender's rights hereunder and under any Other Document and under all related agreements, documents and instruments, whether through judicial proceedings or otherwise, or (d) in defending or prosecuting any actions or proceedings arising out of or relating to Agent's or any Lender's transactions with any Loan Party and any third party that is a party to any Other Document or (e) in connection with any advice given to Agent or any Lender with respect to its rights and obligations under this Agreement and any Other Document and all related agreements, documents and instruments, may be charged to Borrower's Account and shall be part of the Obligations.


 


15.10.      Injunctive Relief.


 


Each Loan Party recognizes that, in the event any Loan Party fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, or threatens to fail to perform, observe or discharge such obligations or liabilities, any remedy at law may prove to be inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving that actual damages are not an adequate remedy.


 


15.11.      Consequential Damages.


 


Neither Agent nor any Lender, nor any agent or attorney for any of them, shall be liable to any Loan Party (or any Affiliate of any such Person) for indirect, punitive, exemplary or consequential damages arising from any breach of contract, tort or other wrong relating to the establishment, administration or collection of the Obligations or as a result of any transaction contemplated under this Agreement or any Other Document.


 


15.12.      Captions.


 


The captions at various places in this Agreement are intended for convenience only and do not constitute and shall not be interpreted as part of this Agreement.


 




  





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15.13.      Counterparts; Facsimile Signatures.


 


This Agreement may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement.  Any signature delivered by a party by facsimile transmission shall be deemed to be an original signature hereto.


 


15.14.      Construction.


 


The parties acknowledge that each party and its counsel have reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments, schedules or exhibits thereto.


 


15.15.      Confidentiality; Sharing Information.


 


Agent, each Lender and each Transferee shall hold all non-public information obtained by Agent, such Lender or such Transferee pursuant to the requirements of this Agreement in accordance with Agent's, such Lender's and such Transferee's customary procedures for handling confidential information of this nature; provided, however, Agent, each Lender and each Transferee may disclose such confidential information (a) to its examiners, Affiliates, outside auditors, counsel and other professional advisors, (b) to Agent, any Lender or to any prospective Transferees, and (c) as required or requested by any Governmental Body or representative thereof or pursuant to legal process; provided, further that (i) unless specifically prohibited by Applicable Law, Agent, each Lender and each Transferee shall use its reasonable best efforts prior to disclosure thereof, to notify the applicable Loan Party of the applicable request for disclosure of such non-public information (A) by a Governmental Body or representative thereof (other than any such request in connection with an examination of the financial condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant to legal process and (ii) in no event shall Agent, any Lender or any Transferee be obligated to return any materials furnished by any Loan Party other than those documents and instruments in possession of Agent or any Lender in order to perfect its Lien on the Collateral once the Obligations have been paid in full and this Agreement has been terminated.  Each Loan Party acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to such Loan Party or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender and each Loan Party hereby authorizes each Lender to share any information delivered to such Lender by such Loan Party and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of such Lender, it being understood that any such Subsidiary or Affiliate of any Lender receiving such information shall be bound by the provisions of this Section 15.15 as if it were a Lender hereunder.  Such authorization shall survive the repayment of the other Obligations and the termination of this Agreement.


 




  





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15.16.      Publicity.


 


Each Loan Party and each Lender hereby authorizes Agent to make appropriate announcements of the financial arrangement entered into among Loan Parties, Agent and Lenders, including announcements which are commonly known as tombstones, in such publications and to such selected parties as Agent shall in its sole and absolute discretion deem appropriate.


 


15.17.      Certifications From Banks and Participants; USA PATRIOT Act.


 


Each Lender or assignee or participant of a Lender that is not incorporated under the Laws of the United States of America or a state thereof (and is not excepted from the certification requirement contained in Section 313 of the USA PATRIOT Act and the applicable regulations because it is both (i) an affiliate of a depository institution or foreign bank that maintains a physical presence in the United States or foreign country, and (ii) subject to supervision by a banking authority regulating such affiliated depository institution or foreign bank) shall deliver to Agent the certification, or, if applicable, recertification, certifying that such Lender is not a "shell" and certifying to other matters as required by Section 313 of the USA PATRIOT Act and the applicable regulations: (1) within 10 days after the Closing Date, and (2) as such other times as are required under the USA PATRIOT Act.


 


15.18.      Joinder of Guarantors.


 


Any Subsidiary of any Borrower Party which is required to join this Agreement as a Guarantor pursuant to Section 7.1(a) and which has not yet done so shall execute and deliver to the Agent (i) a joinder agreement, in form and substance satisfactory to the Bank, pursuant to which it shall join as a Guarantor each of the documents to which the Guarantors are parties; (ii) documents in the forms described in Section 8.1 modified as appropriate to relate to such Subsidiary; and (iii) documents necessary to grant and perfect first priority security interests to the Agent for the benefit of the Lenders in all Collateral held by such Subsidiary.  The Borrower Parties shall deliver such joinder agreement and related documents to the Agent within five (5) Business Days after the date of the filing of such Subsidiary's articles of incorporation if the Subsidiary is a corporation, the date of the filing of its certificate of limited partnership if it is a limited partnership or the date of its organization if it is an entity other than a limited partnership or corporation.


 


[INTENTIONALLY LEFT BLANK]


 




  





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Each of the parties, with the intent to be legally bound, has signed this Agreement as of the day and year first above written, as a document under seal.


 




	  	
BORROWER:


	  	  
	  	
Horsehead Corporation


	  	  
	 	 
	  	
By:  /s/ James M. Hensler                (SEAL)


	  	
Name: James M. Hensler                               


	  	  
	  	
Title: President and CEO                               


	  	  
	  	
 


	  	
GUARANTOR:


	  	  
	  	
Horsehead Holding Corp.


	  	  
	 	 
	  	
By:  /s/ James M. Hensler                (SEAL)


	  	
Name: James M. Hensler                               


	  	  
	  	
Title: President and CEO                               













 




  





  











  






 




	  	
Agent and Lenders:


	  	  
	  	
PNC Bank, National Association, as Agent and as Lender


	  	  
	  	
By:   /s/ Douglas Hoffman                           


	  	
Name:  Douglas Hoffman


	  	
Title:  Vice President


	  	  
	  	
Commitment Percentage:  100%









 




  





  











  






 



EXHIBIT 1.2


 


FORM OF BORROWING BASE CERTIFICATE


 


This Borrowing Base Certificate (the "Certificate") is delivered pursuant to Section 9.2 of the Revolving Credit and Security Agreement, dated September 28, 2011, (as the same may hereafter be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), by and among Horsehead Corporation, a Delaware corporation (the "Borrower"), the Guarantors (as defined therein) party thereto, PNC Bank, National Association ("PNC Bank") and various other financial institutions from time to time (PNC Bank and such other financial institutions are each a "Lender" and collectively, the "Lenders"), and PNC Bank, as administrative and collateral agent for the Lenders (in such capacity, the "Agent").  Unless otherwise defined herein, capitalized terms used herein have the meanings provided in the Credit Agreement.


 


The undersigned hereby certifies that [he/she] is the [President] [Chief Financial Officer] [Controller] of the Borrower and that, as such, [he/she] is authorized to execute this Certificate on behalf of the Borrower and further certifies that:


 


For purposes of this Certificate, the date for which the Formula Amount is being calculated is _______________, 201_ (the "Calculation Date").


 


1.           The calculation of the Formula Amount is attached hereto as Exhibit A.


 


2.           As of the Calculation Date, the aggregate outstanding principal amount of all Revolving Advances on such date does not (and, after giving effect to any Advance being requested in conjunction with the delivery of this Certificate, will not) exceed the lesser of (a) the Maximum Revolving Advance Amount less the aggregate Maximum Undrawn Amount of outstanding Letters of Credit or (b) the Formula Amount.


 


3.           All Receivables set forth herein as Eligible Receivables meet each of the requirements of Eligible Receivables as set forth in the Credit Agreement.  All Inventory set forth herein as Eligible Inventory meet each of the requirements of Eligible Inventory as set forth in the Credit Agreement.


 


[INTENTIONALLY LEFT BLANK]


 




  





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IN WITNESS WHEREOF, the undersigned has hereunto set [his/her] hand this _____ day of ______________, 201_.


 



	  	
BORROWER:


	  	  
	  	
Horsehead Corporation,


	  	
a Delaware corporation


	  	  
	  	  
	  	
By:                                                                    


	  	
Name:                                                              


	  	
Title:                                                                









 




  





  











  






 



EXHIBIT A







FORMULA AMOUNT







(see attached)




 


 




  





  











  






 



EXHIBIT 2.1(a)


 


FORM OF


REVOLVING CREDIT NOTE


 



	
$___________.00

	
Date:___________ ___, 201_


	  	
Pittsburgh, Pennsylvania







 


This Revolving Credit Note (this "Note") is executed and delivered under and pursuant to the terms of that certain Revolving Credit and Security Agreement, dated September 28, 2011 (as amended, restated, supplemented or modified from time to time, the "Credit Agreement"), by and among Horsehead Corporation, a Delaware corporation (the "Borrower"), the Guarantors party thereto, PNC Bank, National Association ("PNC") and various other financial institutions from time to time (PNC and such other financial institutions are each, a "Lender" and collectively, the "Lenders"), and PNC, as agent for the Lenders (in such capacity, the "Agent").  Capitalized terms not otherwise defined herein shall have the meanings provided in the Credit Agreement.


 


FOR VALUE RECEIVED, the Borrower hereby promises to pay to the order of [_______________], at the office of Agent located at Two Tower Center Boulevard, East Brunswick, New Jersey  08816, or at such other place as Agent may from time to time designate to the Borrower in writing:


 


(i)           the principal sum of [_________________ and 00/100 Dollars ($______________.00)] or, if different from such amount, the unpaid principal balance of [_________________'s] Commitment Percentage of the Revolving Advances as may be due and owing under the Credit Agreement, payable in accordance with the provisions of the Credit Agreement and subject to acceleration upon the occurrence of an Event of Default under the Credit Agreement or earlier termination of the Credit Agreement pursuant to the terms thereof; and


 


(ii)           interest on the principal amount of this Note from time to time outstanding until such principal amount is paid in full at the applicable Revolving Interest Rate in accordance with the provisions of the Credit Agreement.  In no event, however, shall interest exceed the maximum interest rate permitted by law.  Upon and after the occurrence of an Event of Default, and during the continuance thereof, at the option of Agent or at the direction of Required Lenders, interest shall be payable at the Default Rate.


 


This Note is one of the Notes referred to in the Credit Agreement and is secured by the Liens granted pursuant to the Credit Agreement and the Other Documents, is entitled to the benefits of the Credit Agreement and the Other Documents and is subject to all of the agreements, terms and conditions therein contained.


 


This Note may be voluntarily prepaid, in whole or in part, on the terms and conditions set forth in the Credit Agreement.


 




  





- 3 -











  






 


If an Event of Default under Section 10.7 of the Credit Agreement shall occur or a petition against any Loan Party in any involuntary case under any state or federal bankruptcy laws shall be filed, then this Note shall become immediately due and payable, without notice, together with reasonable attorneys' fees if the collection hereof is placed in the hands of an attorney to obtain or enforce payment hereof.  If any other Event of Default shall occur under the Credit Agreement or any of the Other Documents, then this Note may, as provided in the Credit Agreement, be declared to be immediately due and payable, without notice, together with reasonable attorneys' fees, if the collection hereof is placed in the hands of an attorney to obtain or enforce payment hereof.


 


This Note shall be construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania.


 


The Borrower expressly waives any presentment, demand, protest, notice of protest, or notice of any kind except as expressly provided in the Credit Agreement.


 


[____________] may at any time pledge all or any portion of its rights under the Credit Agreement or any of the Other Documents including any portion of this Note to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. § 341.  No such pledge or enforcement thereof shall release [____________] from its obligations under the Credit Agreement or any of the Other Documents.


 


WARRANT OF ATTORNEY TO CONFESS JUDGMENT.  THE BORROWER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS THE PROTHONOTARY, ANY ATTORNEY OR ANY CLERK OF ANY COURT OF RECORD, FOLLOWING THE OCCURRENCE OF AN EVENT OF DEFAULT, TO APPEAR FOR AND CONFESS JUDGMENT AGAINST THE BORROWER FOR SUCH SUMS AS ARE DUE AND/OR MAY BECOME DUE UNDER THIS NOTE, WITH OR WITHOUT DECLARATION, WITH COSTS OF SUIT, WITHOUT STAY OF EXECUTION AND WITH AN AMOUNT EQUAL TO FIFTEEN PERCENT (15%) OF THE AMOUNT OF SUCH JUDGMENT, BUT NOT LESS THAN TEN THOUSAND DOLLARS ($10,000.00), ADDED FOR ATTORNEYS' COLLECTION FEES.  TO THE EXTENT PERMITTED BY LAW, THE BORROWER RELEASES ALL ERRORS IN SUCH PROCEEDINGS.  IF A COPY OF THIS NOTE, VERIFIED BY AFFIDAVIT BY OR ON BEHALF OF THE HOLDER OF THIS NOTE SHALL HAVE BEEN FILED IN SUCH ACTION, IT SHALL NOT BE NECESSARY TO FILE THE ORIGINAL NOTE AS A WARRANT OF ATTORNEY.  THE AUTHORITY AND POWER TO APPEAR FOR AND CONFESS JUDGMENT AGAINST THE BORROWER SHALL NOT BE EXHAUSTED BY THE INITIAL EXERCISE THEREOF AND MAY BE EXERCISED AS OFTEN AS THE HOLDER SHALL FIND IT NECESSARY AND DESIRABLE AND THIS NOTE SHALL BE A SUFFICIENT WARRANT THEREFOR.  THE HOLDER HEREOF MAY CONFESS ONE OR MORE JUDGMENTS IN THE SAME OR DIFFERENT JURISDICTIONS FOR ALL OR ANY PART OF THE AMOUNT OWING HEREUNDER, WITHOUT REGARD TO WHETHER JUDGMENT HAS THERETOFORE BEEN CONFESSED ON MORE THAN ONE OCCASION FOR THE SAME AMOUNT.  IN THE EVENT ANY JUDGMENT CONFESSED AGAINST THE BORROWER HEREUNDER IS STRICKEN OR OPENED UPON APPLICATION BY OR ON THE BORROWER'S BEHALF FOR ANY REASON, THE HOLDER IS HEREBY AUTHORIZED AND EMPOWERED TO AGAIN APPEAR FOR AND CONFESS JUDGMENT AGAINST THE BORROWER FOR ANY PART OR ALL OF THE AMOUNTS OWING HEREUNDER, AS PROVIDED FOR HEREIN, IF DOING SO WILL CURE ANY ERRORS OR DEFECTS IN SUCH PRIOR PROCEEDINGS.


 




  





- 4 -











  






 


WITH RESPECT TO THE ATTORNEYS' COLLECTION FEES PROVIDED FOR IN THE FOREGOING WARRANT OF ATTORNEY TO CONFESS JUDGMENT, THE HOLDER WILL NOT HOLD THE BORROWER RESPONSIBLE FOR LEGAL FEES, COSTS OR EXPENSES IN CONNECTION WITH ANY EVENT OF DEFAULT UNDER THE CREDIT AGREEMENT OR ANY OF THE OTHER DOCUMENTS AND ANY COLLECTION PROCEEDINGS RELATED THERETO, IN EXCESS OF THOSE ACTUALLY AND REASONABLY INCURRED.  ANY ASSESSMENT IN EXCESS THEREOF SET FORTH IN THE FOREGOING WARRANT OF ATTORNEY TO CONFESS JUDGMENT WILL BE HELD AS ADDITIONAL COLLATERAL FOR THE OBLIGATIONS, LEGAL FEES, COSTS AND EXPENSES AND UPON PAYMENT OF SUCH OBLIGATIONS, LEGAL FEES, COSTS AND EXPENSES IN FULL, THE HOLDER WILL CAUSE THE JUDGMENT SO CONFESSED TO BE SATISFIED, AND, TO THE EXTENT HELD BY THE HOLDER, REMIT TO THE BORROWER ANY SUCH EXCESS.  IF SUCH ASSESSMENT IS LESS THAN THE LEGAL FEES, COSTS, AND EXPENSES ACTUALLY INCURRED, THE HOLDER SHALL NOT BE DEEMED TO HAVE WAIVED ANY RIGHT TO SEEK TO REASSESS OR OTHERWISE INITIATE ACTION FOR PAYMENT OF ADDITIONAL LEGAL FEES, COSTS AND EXPENSES.


 


WAIVER OF TRIAL BY JURY.  THE UNDERSIGNED HEREBY EXPRESSLY, KNOWINGLY AND VOLUNTARILY WAIVES ALL BENEFIT AND ADVANTAGE OF ANY RIGHT TO A TRIAL BY JURY, AND THE UNDERSIGNED WILL NOT AT ANY TIME INSIST UPON, OR PLEAD OR IN ANY MANNER WHATSOEVER CLAIM OR TAKE THE BENEFIT OR ADVANTAGE OF A TRIAL BY JURY IN ANY ACTION ARISING IN CONNECTION WITH THIS NOTE, THE CREDIT AGREEMENT OR ANY OF THE OTHER DOCUMENTS.


 


[INTENTIONALLY LEFT BLANK]


 




  





- 5 -











  






 


IN WITNESS WHEREOF, and intending to be legally bound, the undersigned hereby executed this Revolving Credit Note on the date set forth above.


 


 



	
WITNESS:

	
Horsehead Corporation


	 	 
	 	 
	                                                                   	By:                                                                          
	 	
Name:                                                                     


	 	Title:                                                                       





 




  





  











  








 



EXHIBIT 5.5(a)


 


FINANCIAL PROJECTIONS


 




 




  





- 7 -











  






 



EXHIBIT 8.1(i)


 


FORM OF FINANCIAL CONDITION CERTIFICATE


 


The undersigned, as the Chief Financial Officer of Horsehead Corporation, a Delaware corporation (the "Borrower"), hereby certifies that:


 


I am the Chief Financial Officer of the Borrower, as indicated above.  Each Loan Party (as defined in the Credit Agreement (as hereinafter defined)) is duly organized, existing and in good standing under the laws of the jurisdiction of its organization.


 


I am familiar with the business and financial affairs of Loan Parties including, without limiting the generality of the foregoing, all of the matters hereinafter described.


 


This Certificate is made and delivered to PNC Bank, National Association ("PNC"), and various other financial institutions from time to time (PNC and such other financial institutions are each a "Lender" and collectively, the "Lenders"), and PNC, as agent for the Lenders (in such capacity, the "Agent"), pursuant to the terms of that Revolving Credit and Security Agreement, dated of even date herewith, by and among the Borrower, the Guarantors party thereto, Lenders and Agent (as amended, restated, supplemented or modified from time to time, the "Credit Agreement"), for the purpose of inducing Lenders, now and from time to time hereafter, to make Advances to Borrower pursuant to the Credit Agreement together with all notes, security agreements, agreements, guarantees, instruments and documents heretofore now and from time to time hereafter executed by any Loan Party and delivered to Agent and/or Lenders (all hereinafter collectively referred to as the "Other Documents").  I understand that you are relying on this Certificate.  All capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Credit Agreement.


 


I have reviewed the twelve month cash flow projections of the Borrower and its Subsidiaries on a consolidated basis and their projected balance sheets, copies of which are attached hereto as Exhibit A (the "Projections"), and am familiar with the process pursuant to which they were generated.  The Projections are based on underlying assumptions which provide a reasonable basis for the Projections and which reflect Loan Parties' judgment at the time prepared, based on present circumstances of the most likely set of conditions and course of action for the period projected.


 


Immediately following the execution of the Credit Agreement and the Other Documents, the assets of each Loan Party, at a fair valuation, will be in excess of the total amount of such Loan Party's liabilities (including contingent and unmatured liabilities), each Loan Party will be able to pay its respective debts as they become due and no Loan Party will  have unreasonably small capital in order to carry on its respective businesses.  All material undisputed debts owing to third parties by each Loan Party are current and not past due.


 


The Credit Agreement was and the Other Documents were and will be executed and delivered by Loan Parties to Agent and Lenders in good faith and in exchange for reasonably equivalent value and fair consideration.


 




  





- 8 -











  






 


I have reviewed the relevant terms of the Credit Agreement and the Other Documents and have made or have caused to be made under our supervision a review of the transactions and conditions of the Borrower and its Subsidiaries from April 1, 2011 to the date of this Certificate and such review has not disclosed the existence during such period of any condition or event which constitutes or would constitute a Default or Event of Default.


 












[INTENTIONALLY LEFT BLANK]


 




  





- 9 -











  








 



Dated: September 28, 2011




 



 



	
WITNESS:

	
Horsehead Corporation


	 	 
	 	 
	                                                                   	By:                                                                          
	 	
Name:                                                                     


	 	Title: Chief Financial Officer





 




  





  











  








 



EXHIBIT 15.3


 


COMMITMENT TRANSFER SUPPLEMENT


 


COMMITMENT TRANSFER SUPPLEMENT, dated as of ______________ __, 201_, among ________________ (the "Transferor Lender"), each Purchasing Lender executing this Commitment Transfer Supplement (each, a "Purchasing Lender"), and PNC Bank, National Association ("PNC") as agent for the Lenders (as defined below) under the Credit Agreement (as defined below).


 


W I T N E S S E T H:


 


WHEREAS, in accordance with Section 15.3 of the Revolving Credit and Security Agreement dated September 28, 2011 (as from time to time amended, restated, supplemented or otherwise modified in accordance with the terms thereof, the "Credit Agreement") among Horsehead Corporation, a Delaware corporation (the "Borrower"), the Guarantors party thereto (the Borrower and the Guarantors are collectively, the "Loan Parties"), PNC and the various other financial institutions named in or which hereafter become a party to the Credit Agreement (collectively, the "Lenders") and PNC as agent for Lenders (in such capacity, "Agent"), this Commitment Transfer Supplement is being executed and delivered by the Transferor Lender and each Purchasing Lender, and consented to by Agent in accordance with Section 15.3(c) of the Credit Agreement;


 


WHEREAS, each Purchasing Lender wishes to become a Lender party to the Credit Agreement; and


 


WHEREAS, the Transferor Lender is selling and assigning to each Purchasing Lender, rights, obligations and commitments under the Credit Agreement.


 


NOW, THEREFORE, the parties hereto hereby agree as follows:


 


1.           All capitalized terms used herein which are not defined shall have the meanings given to them in the Credit Agreement,


 


2.           Upon receipt by Agent of four (4) counterparts of this Commitment Transfer Supplement, to each of which is attached a fully completed Schedule I, and each of which has been executed by the Transferor Lender and Agent, Agent will transmit to Transferor Lender and each Purchasing Lender a Transfer Effective Notice, substantially in the form of Schedule II to this Commitment Transfer Supplement (a "Transfer Effective Notice"). Such Transfer Effective Notice shall set forth, inter alia, the date on which the transfer effected by this Commitment Transfer Supplement shall become effective (the "Transfer Effective Date"), which date shall not be earlier than the first (1st) Business Day following the date such Transfer Effective Notice is received. From and after the Transfer Effective Date, each Purchasing Lender shall be a Lender party to the Credit Agreement for all purposes thereof.


 




  





- 2 -











  






 


3.           At or before 12:00 Noon (Pittsburgh, Pennsylvania time) on the Transfer Effective Date each Purchasing Lender shall pay to Transferor Lender, in immediately available funds, an amount equal to the purchase price, as agreed between Transferor Lender and such Purchasing Lender (the "Purchase Price"), of the portion of the Advances being purchased by such Purchasing Lender (such Purchasing Lender's "Purchased Percentage") of the outstanding Advances and other amounts owing to the Transferor Lender under the Credit Agreement and the Other Documents. Effective upon receipt by Transferor Lender of the Purchase Price from a Purchasing Lender, Transferor Lender hereby irrevocably sells assigns and transfers to such Purchasing Lender, without recourse, representation or warranty, and each Purchasing Lender hereby irrevocably purchases, takes and assumes from Transferor Lender, such Purchasing Lender's Purchased Percentage of the Advances and other amounts owing to the Transferor Lender under the Credit Agreement and the Other Documents together with all instruments, documents and collateral security pertaining thereto.


 


4.           Transferor Lender has made arrangements with each Purchasing Lender with respect to (i) the portion, if any, to be paid, and the date or dates for payment, by Transferor Lender to such Purchasing Lender of any fees heretofore received by Transferor Lender pursuant to the Credit Agreement prior to the Transfer Effective Date and (ii) the portion, if any, to be paid, and the date or dates for payment, by such Purchasing Lender to Transferor Lender of fees or interest received by such Purchasing Lender pursuant to the Credit Agreement from and after the Transfer Effective Date.


 


5.           (a)  All principal payments that would otherwise be payable from and after the Transfer Effective Date to or for the account of Transferor Lender pursuant to the Credit Agreement and the Other Documents shall, instead, be payable to or for the account of Transferor Lender and Purchasing Lender, as the case may be, in accordance with their respective interests as reflected in this Commitment Transfer Supplement.


 


(b)  All interest, fees and other amounts that would otherwise accrue for the account of Transferor Lender from and after the Transfer Effective Date pursuant to the Credit Agreement and the Other Documents shall, instead, accrue for the account of, and be payable to, Transferor Lender and Purchasing Lender, as the case may be, in accordance with their respective interests as reflected in this Commitment Transfer Supplement. In the event that any amount of interest, fees or other amounts accruing prior to the Transfer Effective Date was included in the Purchase Price paid by any Purchasing Lender, Transferor Lender and each Purchasing Lender will make appropriate arrangements for payment by Transferor Lender to such Purchasing Lender of such amount upon receipt thereof from the Borrower.


 


6.           Concurrently with the execution and delivery hereof, Transferor Lender will provide to each Purchasing Lender conformed copies of the Credit Agreement and all related documents delivered to Transferor Lender.


 


7.           Each of the parties to this Commitment Transfer Supplement agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Commitment Transfer Supplement.


 




  





- 3 -











  






 


8.           By executing and delivering this Commitment Transfer Supplement, Transferor Lender and each Purchasing Lender confirm to and agree with each other and Agent and Lenders as follows: (i) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned hereby free and clear of any adverse claim, Transferor Lender 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 the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, the Other Documents or any other instrument or document furnished pursuant thereto; (ii) Transferor Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Loan Parties or the performance or observance by Loan Parties of any of their Obligations under the Credit Agreement, the Other Documents or any other instrument or document furnished pursuant hereto; (iii) each Purchasing Lender confirms that it has received a copy of the Credit Agreement, together with copies of such financial statements and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Commitment Transfer Supplement; (iv) each Purchasing Lender will, independently and without reliance upon Agent, Transferor Lender or any other Lenders 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; (v) each Purchasing Lender appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to Agent by the terms thereof; (vi) each Purchasing Lender agrees that it will perform all of its respective obligations as set forth in the Credit Agreement to be performed by each as a Lender; and (vii) each Purchasing Lender represents and warrants to Transferor Lender, Lenders, Agent and the Borrower that it is either (x) entitled to the benefits of an income tax treaty with the United States of America that provides for an exemption from the United States withholding tax on interest and other payments made by Loan Parties under the Credit Agreement and the Other Documents or (y) is engaged in trade or business within the United States of America.


 


9.           Schedule I hereto sets forth the revised Commitment Percentages of Transferor Lender and the Commitment Percentage of each Purchasing Lender as well as administrative information with respect to each Purchasing Lender.


 


10.         This Commitment Transfer Supplement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Pennsylvania.


 


[remainder of page intentionally left blank; signature page immediately follows]


 




  





- 4 -











  






 


IN WITNESS WHEREOF, the parties hereto have caused this Commitment Transfer Supplement to be executed and delivered by their respective duly authorized officers on the date set forth above.


 




	  	                                                                           
	  	
as Transferor Lender


	  	  
	  	
By:                                                                    


	  	
Name:                                                               


	  	
Title:                                                                 


	  	  
	  	                                                                           
	  	
as a Purchasing Lender


	  	  
	  	
By:                                                                    


	  	
Name:                                                               


	  	
Title:                                                                 











 



Consented to as of the date set forth above:


 


PNC BANK, NATIONAL ASSOCIATION


as Agent


 


By:                                                                                


Name:                                                                           


Title:                                                                             


 




  





  











  








 



SCHEDULE I TO COMMITMENT TRANSFER SUPPLEMENT


 


LIST OF OFFICES, ADDRESSES FOR NOTICES AND COMMITMENT AMOUNTS


 



	(Transferor Lender)	
Revised Commitment Amount       $                                       


 


	 	
Revised Commitment Percentage                                       %


 


	(Purchasing Lender) 	
Commitment Amount                       $                                      


                                                                                      


	 	
Commitment Percentage                                                       %


 


	 
Purchasing Lender's Address for Notices


 


                                                                   


                                                                    


                                                                    


 


Attention:


Telephone:


Telecopier:


 

	
 









 




  





  











  






 



SCHEDULE II TO COMMITMENT TRANSFER SUPPLEMENT


 


(Form of Transfer Effective Notice)


 


To:  ___________________________________________, as Transferor Lender and ________________________________, as Purchasing Lender:


 


The undersigned, as Agent under the Revolving Credit and Security Agreement dated September 28, 2011 (as from time to time amended, restated, supplemented or otherwise modified in accordance with the terms thereof, the "Credit Agreement") among Horsehead Corporation, a Delaware corporation (the "Borrower"), the Guarantors party thereto (the Borrower and the Guarantors are collectively, the "Loan Parties"), PNC BANK, NATIONAL ASSOCIATION and the various other financial institutions named in or which hereafter become a party to the Credit Agreement (collectively, the "Lenders") and PNC BANK, NATIONAL ASSOCIATION, as agent for the Lenders (in such capacity, "Agent"), acknowledges receipt of four (4) executed counterparts of a completed Commitment Transfer Supplement in the form attached hereto. [Note: Attach copy of Commitment Transfer Supplement].  Terms defined in such Commitment Transfer Supplement are used herein as therein defined.


 


Pursuant to such Commitment Transfer Supplement, you are advised that the Transfer Effective Date will be ___________ ___, 201__.


 


[remainder of page intentionally left blank; signature page immediately follows]


 




  





  











  








 




	  	
PNC BANK, NATIONAL ASSOCIATION


	  	
as Agent


	  	  
	  	  
	  	
By:                                                                      


	  	
Name:                                                                


	  	
Title:                                                                   









 



ACCEPTED FOR RECORDATION


IN REGISTER:  __________________


 




  





  











  








 



Schedule 1.2(B)


 


Permitted Encumbrances


 



	
1.

	
Mortgage from Horsehead Zinc Recycling, LLC, to CCM Community Development IV LLC, dated as of May 29, 2009 and recorded June 4, 2009 in the Office of the Clerk of Court for Barnwell County, South Carolina, in Book 886, at page 126 for the facility owned by Horsehead Zinc Recycling, LLC and located at 941 Technology Drive, Barnwell, South Carolina, 29812-8650.







 




  





  











  








 



Schedule 1.2(E)


 


Existing Bank Accounts


 



	
ENTITY


 

	
BANK NAME

	
ACCT NUMBER

	
PURPOSE


	
Horsehead Corporation


 

	
PNC Bank

	
80-2622-7525

	
Collection Account


	
Horsehead Corporation


 

	
PNC Bank

	
10-1929-3127

	
Controlled Disbursements


	
Horsehead Corporation


 

	
PNC Bank

	
80-2622-7509

	
Payroll Account


	
Horsehead Corporation


 

	
PNC Bank

	
80-2622-7517

	
Operating Account


	
Horsehead Corporation


 

	
Huntington Bank

	
01059748150

	
Superintendent Account


	
Chestnut Ridge Railroad Corp.


 

	
Huntington Bank

	
01059709270

	
Overnight Investment and Payroll Account









 




  





  











  






 



Schedule 4.5


 


Equipment and Inventory Locations


 


(All owned or leased by Borrower)


 



	
Location


 

	
Address

	
Owned or Leased or Third


Party Warehouse


	
Monaca, PA

	
300 Frankfort Road


Monaca, PA  15061-2210


 

	
Owned


	
Pittsburgh, PA


(Chief Executive Office)

	
4955 Steubenville Pike, Suite 405


Pittsburgh, PA  15205


 

	
Leased (Massaro Corporation)


	
Calumet, IL

	
2701 E. 114th Street


Chicago, IL  60617-6449


 

	
Owned


	
Barnwell, SC

	
941 Technology Drive


Barnwell, SC 29812-8650


 

	
Owned


	
Rockwood, TN

	
P.O. Box 5


Rockwood, TN 37854


 

	
Owned


	
Palmerton, PA

	
900 Delaware Avenue


Palmerton, PA 18071-2008


 

	
Owned


	
Buena Park, CA

	
P.O. Box 6798, Buena Park, CA 90622


 

	
Third Party Warehouse (H.M. Royal)


	
Valley, NE

	
P.O. Box 358, Highway 275, Valley, NE 68064


 

	
Third Party Warehouse (Valmont Industries)


	
Sandy Springs, SC

	
6301 Highway 76, Sandy Springs, SC  29677


 

	
Third Party Warehouse (Michelin)


	
Anderson, SC

	
1 Bib Way, Anderson, SC  29626


 

	
Third Party Warehouse (Michelin)


	
Bartlesville, OK

	
Old Highway 90, PO Box 3467,


Beaumont, Texas 77704-3467


 

	
Owned


	
Beaumont, TX

	
Highway 123 & West 11th Street,


Bartlesville, Oklahoma 74003


 

	
Owned









 




  





  











  






 



Schedule 4.15(h)


 


Deposit and Investment Accounts


 



	
ENTITY


 

	
BANK NAME

	
ACCT NUMBER

	
PURPOSE


	
Horsehead Corporation


 

	
PNC Bank

	
80-2622-7525

	
Collection Account


	
Horsehead Corporation


 

	
PNC Bank

	
10-1929-3127

	
Controlled Disbursements


	
Horsehead Corporation


 

	
PNC Bank

	
80-2622-7509

	
Payroll Account


	
Horsehead Corporation


 

	
PNC Bank

	
80-2622-7517

	
Operating Account


	
Horsehead Corporation


 

	
Huntington Bank

	
01059748150

	
Superintendent Account


	
Chestnut Ridge Railroad Corp.


 

	
Huntington Bank

	
01059709270

	
Overnight Investment and Payroll Account









 




  





  











  






 



Schedule 4.19


 


Owned and Leased Real Property


 


(All owned or leased by Borrower)


 



	
Location


 

	
Address

	
Owned or Leased


	
Monaca

	
300 Frankfort Road


Monaca, PA  15061-2210


 

	
Owned


	
Pittsburgh

	
4955 Steubenville Pike, Suite 405


Pittsburgh, PA  15205


 

	
Leased


	
Calumet

	
2701 E. 114th Street


Chicago, IL  60617-6449


 

	
Owned


	
Barnwell

	
941 Technology Drive


Barnwell, SC  29812-8650


 

	
Owned


	
Rockwood

	
P.O. Box 5


Rockwood, TN  37854


 

	
Owned


	
Palmerton

	
900 Delaware Avenue


Palmerton, PA  18071-2008


 

	
Owned


	
Bartlesville, OK

	
Old Highway 90, PO Box 3467,


Beaumont, Texas 77704-3467


 

	
Owned


	
Beaumont, TX

	
Highway 123 & West 11th Street,


Bartlesville, Oklahoma 74003


 

	
Owned









 




  





  











  






 



Schedule 5.1


 


Consents


 


None.


 






  





  











  






 



Schedule 5.2(a)


 


States of Formation and Foreign Qualifications


 



	
Borrower Party


 

	
State of Formation

	
Foreign Qualifications


	
Horsehead Corporation

	
Delaware

	
Pennsylvania, Illinois,


Oklahoma, Texas,


Tennessee and South Carolina


 


	
Chestnut Ridge Railroad Corp.

	
Delaware

	
Pennsylvania


 


	
Horsehead Zinc Recycling, LLC

	
South Carolina

	
None


 









 




  





  











  






 



Schedule 5.2(b)


 


Borrower's Subsidiaries


 



	
Entity Name


 

	
% Owned by Borrower

	
State of Organization


	
Chestnut Ridge Railroad Corp.


 

	
100%

	
DE


	
Horsehead Zinc Recycling, LLC


 

	
99.99%

	
SC









 




  





  











  






 



Schedule 5.4


 


Federal Tax Identification Numbers


 



	
Borrower Party


 

	
Federal Tax Identification Number


	
Horsehead Corporation


 

	
20-0447346


	
Chestnut Ridge Railroad Corp.


 

	
20-0689642


	
Horsehead Zinc Recycling, LLC


 

	
26-3478617









 




  





  











  






 



Schedule 5.6


 


Prior and Other Names


 



	
1.

	
Horsehead Corporation was formerly known as Horsehead Corp.; and







 



	
2.

	
Horsehead Corporation operates (d/b/a) in South Carolina as Horsehead Recycling.







 




  





  











  








 



Schedule 5.8(b)


 


Litigation


 


None.


 






  





  











  






 



Schedule 5.8(d)


 


Plans


 



	
1.

	
Salaried Plan #610999 – Horsehead Corporation Retirement Savings Plan; and







 



	
2.

	
Hourly Plan #515169 & 614240 (Palmerton) – Horsehead Corporation Retirement and Savings Plan for Hourly Paid Employees.







 




  





  











  








 



Schedule 5.9


 


Intellectual Property, Source Code Escrow Agreements


 


 


PATENTS


 


NONE


 


 


TRADEMARKS


 


U.S. TRADEMARK REGISTRATIONS


 


(All owned by Borrower)


 



	
MARK


 

	
REG. NO.

	
ISSUED


	
ECOLOAM


 

	
1,834,219

	
05/03/1994


	
ECOTITE


 

	
3,573,990

	
02/10/2009


	
FLORENCE


 

	
521,196

	
02/21/1950


	
FLORENCE


 

	
544,503

	
07/03/1951


	
HORSEHEAD CORPORATION AND DESIGN


Leading the World in Zinc Recycling


 

	
3,511,090

	
10/07/2008


	
KADOX


 

	
174,809

	
10/23/1923


	
XX


 

	
534,629

	
12/12/1950


	
ZINSTABE


 

	
1,033,496

	
02/17/1976


	
ZINVISIBLE


 

	
2,798,379

	
12/23/2003









 




  





  











  






 



FOREIGN TRADEMARK REGISTRATIONS


 



	
MARK


 

	
COUNTRY

	
REG. NO.

	
ISSUED


	
HORSEHEAD CORPORATION AND DESIGN


Leading the World in Zinc Recycling


 

	
Canada

	
TMA756445

	
01/05/2010


	
HORSEHEAD CORPORATION AND DESIGN


Leading the World in Zinc Recycling


 

	
Costa Rica

	
180611

	
10/07/2008


	
HORSEHEAD CORPORATION AND DESIGN


Leading the World in Zinc Recycling


 

	
Costa Rica

	
180612

	
10/07/2008


	
HORSEHEAD CORPORATION AND DESIGN


Leading the World in Zinc Recycling


 

	
Costa Rica

	
180613

	
10/07/2008


	
HORSEHEAD CORPORATION AND DESIGN


Leading the World in Zinc Recycling


 

	
El Salvador

	
N/A (Serial No. 2008074013)

	
11/25/2009


	
HORSEHEAD CORPORATION AND DESIGN


Leading the World in Zinc Recycling


 

	
European Community

	
006674469

	
01/29/2009


	
HORSEHEAD CORPORATION AND DESIGN


Leading the World in Zinc Recycling


 

	
Honduras

	
106631

	
09/22/2008


	
HORSEHEAD CORPORATION AND DESIGN


Leading the World in Zinc Recycling


 

	
Honduras

	
106853

	
10/21/2008


	
HORSEHEAD CORPORATION AND DESIGN


Leading the World in Zinc Recycling


 

	
Honduras

	
13907

	
09/22/2008


	
HORSEHEAD CORPORATION AND DESIGN


Leading the World in Zinc Recycling


 

	
Japan

	
5,313,135

	
04/02/2010


	
HORSEHEAD CORPORATION AND DESIGN


Leading the World in Zinc Recycling


 

	
Korea

	
45-0028551

	
08/10/2009









 




  





  











  






 




	
MARK


 

	
COUNTRY

	REG. NO.	
ISSUED


	
HORSEHEAD CORPORATION AND DESIGN 


Leading the World in Zinc Recycling


 

	
Mexico

	
1043019

	
05/29/2008


	
HORSEHEAD CORPORATION AND DESIGN 


Leading the World in Zinc Recycling


 

	
Mexico

	
1043735

	
05/30/2008


	
HORSEHEAD CORPORATION AND DESIGN 


Leading the World in Zinc Recycling


 

	
Mexico

	
1046166

	
06/24/2008


	
HORSEHEAD CORPORATION AND DESIGN 


Leading the World in Zinc Recycling


 

	
Nicaragua

	
0900867

	
06/15/2009


	
HORSEHEAD CORPORATION AND DESIGN 


Leading the World in Zinc Recycling


 

	
Nicaragua

	
0900865

	
06/15/2009


	
HORSEHEAD CORPORATION AND DESIGN 


Leading the World in Zinc Recycling


 

	
Nicaragua

	
0900866

	
06/15/2009


	
HORSEHEAD CORPORATION AND DESIGN 


Leading the World in Zinc Recycling


 

	
Saudi Arabia

	
1060/37

	
04/15/2009


	
HORSEHEAD CORPORATION AND DESIGN 


Leading the World in Zinc Recycling


 

	
Saudi Arabia

	
1060/38

	
04/15/2009


	
HORSEHEAD CORPORATION AND DESIGN 


Leading the World in Zinc Recycling


 

	
Saudi Arabia

	
1062/38

	
04/22/2009


	
KADOX


 

	
Canada

	
TMDA041803

	
07/11/1927


	
ZINVISIBLE


 

	
Canada

	
TMA631638

	
02/01/2005


	
ZINVISIBLE


 

	
European Community

	
2,377,836

	
07/27/2004


	
ZINVISIBLE


 

	
Switzerland

	
494,253

	
01/31/2002









 




  





  











  






 



FOREIGN TRADEMARK APPLICATIONS


 



	
MARK


 

	
COUNTRY

	
SER. NO.

	
FILED


	
ECOTITE


 

	
Canada

	
1,283,174

	
12/15/2005


	
HORSEHEAD CORPORATION AND DESIGN 


Leading the World in Zinc Recycling


 

	
Brazil

	
829605509

	
02/19/2008


	
HORSEHEAD CORPORATION AND DESIGN 


Leading the World in Zinc Recycling


 

	
Brazil

	
829605460

	
02/19/2008


	
HORSEHEAD CORPORATION AND DESIGN 


Leading the World in Zinc Recycling


 

	
Brazil

	
900745380

	
02/18/2008


	
HORSEHEAD CORPORATION AND DESIGN 


Leading the World in Zinc Recycling


 

	
El Salvador

	
2008074015

	
02/15/2008


	
HORSEHEAD CORPORATION AND DESIGN 


Leading the World in Zinc Recycling


 

	
El Salvador

	
2008074014

	
02/15/2008


	
HORSEHEAD CORPORATION AND DESIGN 


Leading the World in Zinc Recycling


 

	
Guatemala

	
2599-2010

	
04/15/2010


	
HORSEHEAD CORPORATION AND DESIGN 


Leading the World in Zinc Recycling


 

	
Guatemala

	
2598-2010

	
04/15/2010


	
HORSEHEAD CORPORATION AND DESIGN 


Leading the World in Zinc Recycling


 

	
Guatemala

	
1302-2007

	
02/15/2008







 


COPYRIGHT REGISTRATIONS


 


NONE


 


SOURCE CODE ESCROW AGREEMENTS


 


NONE


 




  





  











  








 



Schedule 5.10


 


Licenses and Permits


 


None.


 






  





  











  






 



Schedule 5.14


 


Labor Contracts


 



	
1.

	
Agreement between Monaca Division Horsehead Corporation and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union Local 8183 dated May 1, 2011.


	  	  
	
2.

	
Memorandum of Agreement for the Monaca Power Plant between Horsehead Corporation and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union Local 8183-25 dated September 1, 2007, including supplemental Memorandum of Agreement between Horsehead Corporation and USW Local 8183-25 dated March 14, 2011.


	  	  
	
3.

	
Articles of Agreement for the Calumet Plant between Horsehead Corporation and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union and its Local 7-209 dated August 2, 2011, expiring August 3, 2014.


	  	  
	
4.

	
Articles of Agreement for Rockwood, Tennessee between Horsehead Corporation and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union and its Local 9-990 dated July 1, 2011, expiring July 1, 2015.


	  	  
	
5.

	
Agreement for Palmerton, PA between Horsehead Corporation and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union and Local Union 2599-16 dated April 27, 2011, expiring April 27, 2015.


	  	  
	
6.

	
Agreement between Chestnut Ridge Railroad Corp. and United Transportation Union dated December 10, 2007.









 




  





  











  






 



Schedule 7.1


 


Excluded Property


 



	
1.

	
(A) All real property, improvements and fixtures owned by Horsehead Corporation and located in Potter and Center Townships, Beaver County, Pennsylvania and identified by the following tax parcel numbers:







 




	
a)

	
73-163-0188-000-1;


 


	
b)

	
73-163-0189-000-1;


 


	
c)

	
73-163-0190-000-1;


 


	
d)

	
73-163-0191-000-1;


 


	
e)

	
73-163-0192-000-1;


 


	
f)

	
73-163-0193-000-1;


 


	
g)

	
73-163-0194-000-1;


 


	
h)

	
73-163-0197-000-1;


 


	
i)

	
73-163-0199-000-1;


 


	
j)

	
73-163-0201-003-1;


 


	
k)

	
73-163-0202-001-1;


 


	
l)

	
73-172-0189-002-1;


 


	
m)

	
73-172-0201-000-1;


 


	
n)

	
73-172-0203-000-1;


 


	
o)

	
73-172-0203-001-1;


 


	
p)

	
73-172-0203-002-1;


 


	
q)

	
73-172-0203-003-1;


 


	
r)

	
73-172-0203-004-1;


 


	
s)

	
73-172-0213-000-1;


 


	
t)

	
73-173-0249-002-1;


 


	
u)

	
73-173-0250-000-1;


 


	
v)

	
73-173-0250-005-1; and


 


	
w)

	
73-173-0308-000-1.









 



	 	(B)        The following Equipment located at the foregoing tax parcels:





 



	
Sys No

	
Ext


	
000168

	
No 1 Unit Primary Precipitator


000









 




  





  











  






 




	
Sys No

	
Ext


	
000203

	
#2 Unit Power Plant Long D


000


	
000408

	
Power Plt NOX Compliance


000


	
000436

	
Replace #2 Unit Cyclotrell Tub


000


	
000438

	
Replace #6 Coal Bin


000


	
000441

	
Replace 2 Coal Bins


000


	
000442

	
Coal Bins


000


	
000444

	
Power Plt Asbestos encap


000


	
000535

	
PRB Coal Phase 1 (Pwr Plt)


000


	
000536

	
PRB Coal Phase 2 (Pwr Plt)


000


	
000549

	
#1 unit ID Fan Wheel


000


	
000575

	
Pwr Plt Unit #1 Improvements


000


	
000604

	
Repl Fork Truck (PPlt)


000


	
000652

	
#1 Main Feed Pump


000


	
000653

	
#1 Boiler Backpass


000


	
000654

	
#1 Turbine Repairs


000


	
000655

	
Rebid Coal Barge Unloader Motor


000


	
000656

	
Rebld Condensate Pump


000


	
000662

	
#2 Main Boiler Pump Rebld (PPlt)


000


	
000663

	
3 New Air Compressors (PPlt)


000


	
001299

	
Spare ID Fan Motor Power Plant


000


	
001314

	
Computer Hdwe - Pwr Plt


000


	
001320

	
South Traveling Screen - Pwr Plt


000









 




  





  











  






 




	Sys No	Ext
	
001321

	
Repl Stack Cap - Pwr Plt


000


	
001324

	
Recondition T-2 Transformer (PPlt)


000


	
001325

	
Repl #1 Coal Belt - Pwr Plt


000


	
001338

	
#2 Burner Ignition Sys - Pwr Plt


000


	
001341

	
Upgrade Instrumentation (PPlt)


000


	
001362

	
Bottom Ash Pump - Pwr Plt


000


	
001363

	
Condensate Pump O'haul - Pwr Plt


000


	
001364

	
Condenser Expansion - Pwr Plt


000


	
001365

	
Drip Pump - Pwr Plt


000


	
001366

	
Unit #2 Precip Wire Repl - Pwr Plt


000


	
001461

	
Clinker Grinder - PPlt


000


	
001462

	
Bucket for Coal Barge Unloader


000


	
001465

	
Unit #2 ID Fan Expan Joints - PPlt


000


	
001479

	
Turbine Oil Purification - Pwr Plt


000


	
001562

	
HV Line Support (Compr Hse)


000


	
001576

	
Accoustic Cleaners #1 Unit - Pwr Plt


000


	
001577

	
Unit #2 Valve Overhauls - Pwr Plt


000


	
001583

	
Barge Unloader Safety Work - PPlt


000


	
001584

	
Unit #1 Upper Arch Tube Repl - Pwr Plt


000


	
001585

	
Unit #1 Air Preheater Baskets & Seals


000


	
001586

	
Unit #1 ID Fan Expan Joints - PPlt


000


	
001587

	
#2 Sluice Pump Assmbly - PPlt


000









 




  





  











  






 




	Sys No	Ext
	
001594

	
Bulldozer Overhaul - Pwr Plt


000


	
001598

	
#83 Auto Transfer Switch - Pwr Plt


000


	
001709

	
Barge Unloader Controls - Pwr Plt


000


	
001710

	
Unit #1 Precip Wire Repl - Pwr Plt


000


	
001711

	
Precipitator Vibr Controls - Pwr Plt


000


	
001712

	
Coal Mill Rebuild - Pwr Plt


000


	
001713

	
Bearing & Oil Seals - #1 Turb Generator


000


	
001744

	
Bulk Storage Tank - Pwr Plt


000


	
001746

	
New Coal Bucket for Barge Unloader


000


	
001755

	
Rewind #2 ID Fan Motor Drive - Pwr Plt


000


	
001757

	
Repr Unit#2 Boiler feed Pumps-PwrPlt


000


	
001758

	
Condensate Booster Assembly -Pwr Plt


000


	
001764

	
Repl #2 Traveling Screen - Pwr Plt


000


	
001765

	
Rebuild of #5 Coal Mill


000


	
001772

	
Refurb 2 Circulating H20 Pumps -PPlt


000


	
001774

	
138 KV Substation Reprs - Pwr Plt


000


	
001779

	
Refurbish #2 Circ H20 Pump - Pwr Plt


000


	
001780

	
13.5 KV Auxiliary Disconnects - Pwr Plt


000


	
001812

	
Flyash Pond Pipe Supports - Pwr Plt


000


	
001837

	
Unit #2 Coal Mill Refurbishments - PPlt


000


	
001846

	
Unit 2 Planned Outage


000


	
001850

	
Unit #2 Turbine Emergency Reprs


000









 




  





  











  






 




	Sys No	Ext
	
001863

	
Unit #1 Generator Repair - Pwr Plt


000


	
001884

	
Reprs to #1 & #2 Flyash Ponds - Pwr Plt


000


	
001893

	
Truck - Pwr Plt


000


	
001904

	
CEC Environ Controls - Pwr Plt


000


	
001905

	
100 KW Diesel Control Power - Pwr Plt


000


	
001942

	
Repr Motor on Coal Unloader Pwr Plt


000


	
001943

	
Hi-Vac (for coal rejects) Pwr Plt


000


	
001955

	
Rebuild Spare Exciter Pwr Plt


000


	
001972

	
Repl Bulldozer Drive Assmbly- Pwr Plt


000


	
001974

	
Air Preheater Baskets & Seals - PPlt


000


	
001975

	
Rebid Coal Unloader Motor - Pwr Plt


000


	
002003

	
Lifting Equip Pwr Plt


000


	
002007

	
Industrial Engraver Pwr Plt


000


	
002025

	
Repr Unit #1 Exciter Pwr Plt


000


	
002028

	
#2 Boiler Safety Valve - Pwr Plt


000


	
002037

	
Rehab #1 Unit Aux Boiler Pwr Plt


000


	
002049

	
Water Truck Pwr Plt


000


	
002050

	
Trailer Archive Center Pwr Plt


000


	
002051

	
Repair work to Boiler Tubes - Pwr Plt


000


	
002138

	
Repl Unit 1 Pressure Cntrl Valve - PPlt


000


	
002153

	
Rbld #6 Coal Pulverizer Pwr Plt


000


	
002154

	
KL-30 Oil Filtration System Pwr Plt


000









 




  





  











  






 




	Sys No	Ext
	
002158

	
Modular Office Space Pwr Plt


000


	
002199

	
Capacity Improvements - Pwr Plt


000


	
002201

	
Repr 4 Westinghouse Controllers PPlt


000


	
002234

	
STP Repl Blower Pwr Plt


000


	
002235

	
Sewage Plant Upgrade - Pwr Plt


000









 



(C)           All proceeds and products of (A) and (B) in whatever form, including:  cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), negotiable instruments and other instruments for the payment of money, chattel paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim proceeds.


 



	
2.

	
(A) All real property, improvements and fixtures owned by Horsehead Corporation and located in Bartlesville, Oklahoma and having a mailing address of Highway 123 & West 11th Street, Bartlesville, Oklahoma 74003, and the following Equipment at such location:







 




	
Sys No

	
Ext

	 
	
Class = BUILDINGS

	 
	
001277

	
Equidae 2003 Buildings Total


000

	 
	
001278

	
Roofing/crane girder repair


000

	 
	
001520

	
Roofing/Siding


000

	 
	
001995

	
RPL ROOF ON BVILLE PROCESS BDG


000

	 
	
Class = MACHINERY AND EQUIPMENT

	 
	
001279

	
Equidae 2003 Equipment Total


000

	 
	
001281

	
Air-ox circuit


000

	 
	
001283

	
Mix tank replacement


000

	 
	
001284

	
WWTP aa replacement


000

	 
	
001285

	
Wet circuit crane


000

	 
	
001286

	
Varian spectra replacement


000

	 
	
001288

	
Wet circuit attrition machine


000

	 





 




  





  











  






 



	Sys No	Ext	 
	
001289

	
Forklift


000

	 
	
001290

	
PLC data acquisition system


000

	 
	
001381

	
Replace Wet Side Ball Mill


000

	 
	
001382

	
Replace Wet Side Hammer


000

	 
	
001383

	
SP-65 Hose Pumps


000

	 
	
001384

	
SP-40 Hose Pumps


000

	 
	
001572

	
Water truck replacement


000

	 
	
001624

	
Larox Filter Control system


000

	 
	
Class = RAILCARS

	 
	
001291

	
Equidae 2003 Rail Cars Total


000

	 







 


(B) All proceeds and products of (A) in whatever form, including:  cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), negotiable instruments and other instruments for the payment of money, chattel paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim proceeds.


 


 



	
3.

	
All real property leased and all improvements and fixtures owned by Horsehead Corporation and located in Beaumont, Texas and having a mailing address of Old Highway 90, PO Box 3467, Beaumont, Texas 77704-3467, and the following Equipment at such location:







 



	
Sys No

	
Ext

	 
	
Class = BUILDINGS

	 
	
000693

	
OFFICE EXPANSION


000

	 
	
000694

	
ELECTRICAL/INSTALLATION


000

	 
	
000695

	
FOUNDATIONS/CONCRETE


000

	 
	
000696

	
PROCESS BUILDING


000

	 
	
000697

	
RAIL SPUR


000

	 
	
000698

	
M/S STACK


000

	 



 




  





  











  






 



	
Sys No

	
Ext

	 
	
000699

	
M/S IRM BUILDING


000

	 
	
000700

	
M/S FEED BINS


000

	 
	
000701

	
M/S BLENDING BINS


000

	 
	
000702

	
BMT FIRE DAMAGE REPLACEMENT


000

	 
	
Class = LAND IMPROVEMENTS

	 
	
001506

	
Contour&Asphalt w Drain Ditch


000

	 
	
001507

	
East Side RR Containmnt


000

	 
	
Class = MACHINERY AND EQUIPMENT

	 
	
000703

	
PROCESS AIR COMPRESSOR


000

	 
	
000705

	
COOLING WTR SIDE STREAM


000

	 
	
000707

	
PD UNLOADING SCREEN


000

	 
	
000708

	
OIL SEPARATOR


000

	 
	
000709

	
REMOVE & REPLACE REFR LIN


000

	 
	
000710

	
RELOCATE GAS LINE & PLOT


000

	 
	
Class = ME

	 
	
000711

	
SPARE COOLING WATER PUMP


000

	 
	
000712

	
ELEVATE CZO RAILCAR SCREW


000

	 
	
000714

	
PROCESS AIR COMP DRYER


000

	 
	
000715

	
CPU SYSTEM


000

	 
	
000716

	
REACTOR TOWER LEAN TO EXT


000

	 
	
000717

	
PD RAIL UNLOADING SYSTEM


000

	 
	
000718

	
PROCESS EQUIP COOLING


000

	 
	
000719

	
M/S PIPE & CONTROL


000

	 
	
000720

	
PROCESS EQUIPMENT AIR


000

	 









 




  





  











  






 




	
Sys No

	
Ext

	 
	
000723

	
PROCESS EQUIPMENT FLUX


000

	 
	
000724

	
PRODUCT BAGHOUSE


000

	 
	
000725

	
M/S MISC FAB & FREIGHT


000

	 
	
000726

	
M/S COMBUSTION CHAMBER


000

	 
	
000727

	
SCADA COMPUTER RPLCEMENT


000

	 
	
000728

	
CAT 100 FORKLIFT REPLACEMENT


000

	 
	
001392

	
Process Coke Burner Trial


000

	 
	
001393

	
Bag House Duct Work


000

	 
	
001527

	
Asphalt Railcar loading / unloading area


000

	 
	
001528

	
Install Duct section btwn reactor/baghs


000

	 
	
001924

	
Rplce Railcar Loading Screw Conveyor


000

	 
	
001925

	
Install Car Puller


000

	 





 


(B) All proceeds and products of (A) in whatever form, including:  cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), negotiable instruments and other instruments for the payment of money, chattel paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim proceeds.


 



	
4.

	
All real property, improvements and fixtures owned by Horsehead Corporation and located in Rockwood Tennessee, having a mailing address of 199 Truck Route, Rockwood, Tennessee 37854 and identified by the following identification numbers:









 




	
No.


 

	
Map No.

	
GP

	
CTL Map

	
Parcel


	
(a)


 

	
054J

	
A

	
54O

	
2400


	
(b)


 

	
054J

	
A

	
54O

	
2300


	
(c)


 

	
054J

	
A

	
54O

	
2200


	
(d)


 

	
054K

	
A

	
054K

	
2200









 




  





  











  






 




	
(d)


 

	
054K

	
A

	
054K

	
2200


	
(e)


 

	
054K

	
A

	
054K

	
2000


	
(f)


 

	
054F

	
A

	
054K

	
1600


	
(g)


 

	
054F

	
A

	
054K

	
1501


	
(h)


 

	
054F

	
A

	
054K

	
1500


	
(i)


 

	
054F

	
A

	
054K

	
1400


	
(j)


 

	
054K

	
A

	
054K

	
1200


	
(k)


 

	
054K

	
A

	
054K

	
800


	
(l)


 

	
054K

	
A

	
054K

	
700


	
(m)


 

	
054J

	
A

	
054J

	
902


	
(n)


 

	
054J

	
A

	
054J

	
901


	
(o)


 

	
054K

	
A

	
054K

	
2201


	
(p)


 

	
054K

	
A

	
054K

	
2100


	
(q)


 

	
054K

	
A

	
054K

	
500


	
(r)


 

	
054J

	
A

	
054J

	
100


	
(s)


 

	
054L

	
B

	
054L

	
100









 








 



	
  

	
(B) All proceeds and products of (A) in whatever form, including:  cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), negotiable instruments and other instruments for the payment of money, chattel paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim proceeds.







 


 



	
5.

	
All intellectual property related to TR and AZSA technology.







 


6.           All, Equipment the purchase of which has been directly financed by Project Indebtedness, but only to the extent that and for so long as either (i) such Equipment is encumbered by a perfected Lien securing the Project Indebtedness or (ii) any grant of a security interest in such Equipment is prohibited by, or constitutes a breach or default under or results in the termination of or requires any consent not obtained under, any contract, license, agreement, instrument or other document evidencing the Project Indebtedness; provided, however, that upon either the payment in full and termination of the Project Indebtedness or the release of any perfected Lien against the applicable Equipment securing the Project Indebtedness, such applicable Equipment shall immediately cease to be Excluded Property hereunder.


 




  





  











  






 



	
  

	
FOR THE AVOIDANCE OF DOUBT, NO INVENTORY OF THE BORROWER SHALL AT ANY TIME BE INCLUDED AS EXCLUDED PROPERTY.







 


 




  





  











  








 



Schedule 7.3


 


Guarantees


 


None.


 




 




  





  











  






 



Schedule 7.7


 


Indebtedness


 



	
1.

	
Indebtedness under that certain Promissory Note dated May 29, 2009 in the original principal amount of $6,880,000 made by Horsehead Zinc Recycling, LLC to the order of Banc of America CDE III, LLC and any other Indebtedness of Horsehead Zinc Recycling owing under any documents executed in connection with such Promissory Note.







 




  





  











  








 





	 	
September 28, 2011







 




Horsehead Corporation


4955 Steubenville Pike, Suite 405


Pittsburgh, Pennsylvania 15205


 


Attention: Robert Scherich


 



	
Re:

	
Credit facility provided to Horsehead Corporation, a Delaware corporation (the "Borrower"), by PNC Bank, National Association ("PNC") and various other financial institutions from time to time (PNC and such other financial institutions are each, a "Lender" and collectively, the "Lenders"), and PNC, as agent for Lenders (in such capacity, the "Agent")







 


Dear Mr. Scherich:


 


Reference is made to the Credit Agreement, dated of even date herewith, by and among the Borrower, the Guarantors (as defined therein) party thereto, the Lenders party thereto and the Agent (the "Credit Agreement"). Capitalized teems used herein and not otherwise defined shall have the meanings assigned to them in the Credit Agreement.


 


Pursuant to the terms of the Credit Agreement, it is a condition precedent to the Lenders' obligations to make the initial Advances under the Credit Agreement that the Loan Parties deliver to Agent, among other things, each in form and substance satisfactory to Agent: (i) a tax lien certificate of the Borrower from the State of South Carolina (the "Tax Lien Certificate"), and (ii) a certificate of liability insurance of the Borrower that, among other things, names the Agent, on behalf of the Lenders, as an additional insured (the "Insurance Certificate") (the Tax Lien Certificate and the Insurance Certificate are each, an "Open Item" and collectively, the "Open Items").


 


As of the date hereof, Agent has not received, in form and substance satisfactory to Agent, the Open Items.


 


Notwithstanding the failure of Loan Parties to satisfy the above conditions with respect to the Open Items, if (i) all of the other conditions precedent to the Credit Agreement are met, and (ii) an Event of Default or Default has not occurred under the Credit Agreement or any of the Other Documents, the Lenders will make the Advances in accordance with the terms of the Credit Agreement; provided, however, that if the Loan Parties fail to provide either Open Item on or before October 28, 2011, any such failure may, at the option of the Agent, be deemed to be an Event of Default by the Loan Parties under the Credit Agreement.


 


This letter agreement shall constitute a rider to and form a part of the Credit Agreement, as the same may be amended, restated, modified or supplemented from time to time.









  





  











  






 


If the foregoing terms and conditions are acceptable to you, please indicate your acceptance by signing in the space indicated below.


 



	 	
PNC Bank, National Association,


	 	
as a Agent and as Lender


	 	By: 
	 	
Name: Douglas Hoffman


	 	
Title: Vice President