Document:

CREDIT AND GUARANTY AGREEMENT

EXHIBIT 10.1

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  SUCH PORTIONS ARE DESIGNATED “[***].”

EXECUTION VERSION

CREDIT AND GUARANTY AGREEMENT

dated as of May 6, 2010

among

PHILLIPS-VAN HEUSEN CORPORATION, as U.S. Borrower, 

TOMMY HILFIGER B.V., as Foreign Borrower,

CERTAIN SUBSIDIARIES OF PHILLIPS-VAN HEUSEN CORPORATION, 

as Guarantors,

VARIOUS LENDERS,

BARCLAYS CAPITAL and DEUTSCHE BANK SECURITIES INC., 

as Joint Lead Arrangers,

BARCLAYS CAPITAL, DEUTSCHE BANK SECURITIES INC., BANC OF AMERICA SECURITIES LLC, CREDIT SUISSE SECURITIES (USA) LLC and RBC CAPITAL MARKETS, as Joint Lead Bookrunners,

BARCLAYS BANK PLC, 

as Administrative Agent and Collateral Agent,

DEUTSCHE BANK SECURITIES INC., as Syndication Agent,

and

BANC OF AMERICA SECURITIES LLC, CREDIT SUISSE SECURITIES (USA) LLC and RBC CAPITAL MARKETS, 

as Co-Documentation Agents 

________________________________________________________

Senior Secured Credit Facilities

________________________________________________________

TABLE OF CONTENTS

Page

ARTICLE I. DEFINITIONS AND INTERPRETATION

2

Section 1.01

Definitions

2

Section 1.02

Accounting Terms

62

Section 1.03

Interpretation, Etc.

62

Section 1.04

Exchange Rates; Currency Equivalents.

63

Section 1.05

Dutch Terms

64

ARTICLE II. LOANS AND LETTERS OF CREDIT

65

Section 2.01

Term Loans

65

Section 2.02

Revolving Loans

66

Section 2.03

Swing Line Loans

68

Section 2.04

Issuance of Letters of Credit and Purchase of Participations Therein

71

Section 2.05

Pro Rata Shares; Availability of Funds

79

Section 2.06

Use of Proceeds

80

Section 2.07

Evidence of Debt; Register; Notes

80

Section 2.08

Interest on Loans

81

Section 2.09

Conversion/Continuation

84

Section 2.10

Default Interest

84

Section 2.11

Fees

85

Section 2.12

Scheduled Payments/Commitment Reductions

87

Section 2.13

Voluntary Prepayments/Commitment Reductions

90

Section 2.14

Mandatory Prepayments/Commitment Reductions

93

Section 2.15

Application of Prepayments/Reductions; Application of Proceeds of Collateral  95

Section 2.16

General Provisions Regarding Payments

97

Section 2.17

Ratable Sharing

99

Section 2.18

Making or Maintaining Eurocurrency Rate Loans

99

Section 2.19

Increased Costs; Capital Adequacy

101

Section 2.20

Taxes; Withholding, Etc.

102

Section 2.21

Obligation to Mitigate

105

Section 2.22

Defaulting Lenders

105

Section 2.23

Removal or Replacement of a Lender

106

Section 2.24

Incremental Facilities

107

Section 2.25

Appointment of Borrower Representative

110

Section 2.26

Ancillary Facilities.

110

ARTICLE III. CONDITIONS PRECEDENT

114

Section 3.01

Closing Date

114

Section 3.02

Conditions to Each Credit Extension

120

i

 

ARTICLE IV. REPRESENTATIONS AND WARRANTIES

121

Section 4.01

Organization; Structure Chart; Requisite Power and Authority; Qualification  121

Section 4.02

Equity Interests and Ownership

121

Section 4.03

Due Authorization

121

Section 4.04

No Conflict

121

Section 4.05

Governmental Consents

122

Section 4.06

Binding Obligation

122

Section 4.07

Historical Financial Statements

122

Section 4.08

Projections

123

Section 4.09

No Material Adverse Change

123

Section 4.10

Adverse Proceedings, Etc.

123

Section 4.11

Payment of Taxes

123

Section 4.12

Properties

123

Section 4.13

Environmental Matters

124

Section 4.14

No Defaults

124

Section 4.15

Governmental Regulation

124

Section 4.16

Margin Stock

125

Section 4.17

Employee Benefit Plans

125

Section 4.18

Solvency

126

Section 4.19

Compliance with Statutes, Etc.

126

Section 4.20

Disclosure

126

Section 4.21

Intellectual Property

126

Section 4.22

Ranking; Security

128

Section 4.23

Centre of Main Interests and Establishments

128

Section 4.24

Dutch Loan Parties

129

Section 4.25

Shares

129

ARTICLE V. AFFIRMATIVE COVENANTS

129

Section 5.01

Financial Statements and Other Reports

129

Section 5.02

Existence

134

Section 5.03

Payment of Taxes and Claims

134

Section 5.04

Maintenance of Properties

134

Section 5.05

Insurance

134

Section 5.06

Books and Records; Inspections

135

Section 5.07

Lenders’ Calls

135

Section 5.08

Compliance with Material Contractual Obligations and Laws

135

Section 5.09

Environmental

135

Section 5.10

Maintenance of Ratings.

137

Section 5.11

Intellectual Property

137

Section 5.12

Subsidiaries

138

Section 5.13

Additional Material Real Estate Assets

139

Section 5.14

Additional Collateral

139

Section 5.15

Interest Rate Protection

140

Section 5.16

Further Assurances

140

Section 5.17

Foreign Bank Accounts and Cash held by Foreign Group Member

141

ii

Section 5.18

Guarantor Coverage Test

141

Section 5.19

Post-Closing Obligations

141

ARTICLE VI. NEGATIVE COVENANTS

141

Section 6.06

Investments

152

Section 6.15

Centre of Main Interests and Establishments

161

Section 6.16

Limitation in Relation to German Loan Parties

161

Section 6.17

UK Defined Benefit Pension Plan

162

Section 6.18

Financial Assistance

162

ARTICLE VII. GUARANTY

162

Section 7.01

Guaranty of the Obligations

162

Section 7.02

Limitation on Liability; Contribution by Guarantors

162

Section 7.03

Payment by Guarantors

164

Section 7.04

Liability of Guarantors Absolute

164

Section 7.05

Waivers by Guarantors

166

Section 7.06

Guarantors’ Rights of Subrogation, Contribution, Etc.

167

Section 7.07

Subordination of Other Obligations

168

Section 7.08

Continuing Guaranty

169

Section 7.09

Authority of Guarantors or the Borrowers

170

Section 7.10

Financial Condition of the Borrowers

170

Section 7.11

Bankruptcy, Etc.

170

Section 7.12

Discharge of Guaranty Upon Sale of Guarantor

171

Section 7.13

German Guarantor Limitations.

171

Section 7.14

Dutch Guarantor Limitations

174

Section 7.15

Subordination of the Guaranteed Obligations

174

ARTICLE VIII. EVENTS OF DEFAULT

174

Section 8.01

Events of Default

174

ARTICLE IX. AGENTS

178

Section 9.01

Appointment of Agents

178

Section 9.02

Powers and Duties

179

Section 9.03

General Immunity

179

Section 9.04

Agents Entitled to Act as Lender

181

Section 9.05

Lenders’ Representations, Warranties and Acknowledgment

182

Section 9.06

Right to Indemnity

182

Section 9.07

Successor Administrative Agent, Collateral Agent and Swing Line Lender

183

Section 9.08

Security Documents and Guaranty

184

Section 9.09

Withholding Taxes

186

Section 9.10

Administrative Agent May File Proofs of Claim

186

Section 9.11

Administrative Agent’s “Know Your Customer” Requirements

187

Section 9.12

German Collateral Agent

187

Section 9.13

Certain Canadian Matters

188

Section 9.14

Parallel Debt

189

iii

ARTICLE X. MISCELLANEOUS

192

Section 10.01

Notices

192

Section 10.02

Expenses

193

Section 10.03

Indemnity

194

Section 10.04

Set-Off

195

Section 10.05

Amendments and Waivers

196

Section 10.06

Successors and Assigns; Participations

199

Section 10.07

Independence of Covenants, Etc.

203

Section 10.08

Survival of Representations, Warranties and Agreements

204

Section 10.09

No Waiver; Remedies Cumulative

204

Section 10.10

Marshalling; Payments Set Aside

204

Section 10.11

Severability

204

Section 10.12

Obligations Several; Independent Nature of Lenders’ Rights

205

Section 10.13

Table of Contents and Headings

205

Section 10.14

APPLICABLE LAW

205

Section 10.15

CONSENT TO JURISDICTION

205

Section 10.16

WAIVER OF JURY TRIAL

206

Section 10.17

Confidentiality

206

Section 10.18

Usury Savings Clause

207

Section 10.19

Counterparts

208

Section 10.20

Effectiveness; Entire Agreement; No Third Party Beneficiaries

208

Section 10.21

PATRIOT Act

209

Section 10.22

“Know Your Customer” Checks

209

Section 10.23

Electronic Execution of Assignments

209

Section 10.24

No Fiduciary Duty

209

Section 10.25

Judgment Currency

210

Section 10.26

Ancillary Borrowers

210

iv

SCHEDULES:

1.01(a)

Tranche A Term Loan Commitments

1.01(b)

Tranche B Term Loan Commitments

1.01(c)

Revolving Commitments

1.01(d)

Notice Addresses

1.01(e) Agreed Security Principles

1.01(f) Mandatory Costs

1.01(g)

Material Companies

1.01(h)

Foreign Guarantors

1.01(i)

Existing Canadian Letters of Credit

1.01(j)

Existing Foreign Letters of Credit

1.01(k)

Existing U.S. Letters of Credit

3.01(c) Structure Chart

3.01(e)

Existing Ancillary Facilities

3.01(g)

Closing Date Mortgaged Properties

4.02

Equity Interests and Ownership

4.12

Real Estate Assets

4.21

Intellectual Property

5.12(b)

Excluded Subsidiaries 

5.19 

Post-Closing Items

6.01

Certain Indebtedness

6.02

Certain Liens

6.05

Certain Restrictions on Subsidiaries

6.06

Certain Investments

6.08(d)

Certain Asset Sale

6.11

Certain Affiliate Transactions

EXHIBITS:

A-1

Borrowing Notice

A-2

Conversion/Continuation Notice

A-3

Issuance Notice

B-1

Tranche A Term Loan Note

B-2

Tranche B Term Loan Note

B-3

Revolving Loan Note

B-4

Swing Line Note

B-5

Incremental Term Loan Note

C-1

Compliance Certificate

C-2

Guarantor Coverage Certificate

D

Certificate re Non-Bank Status

E-1

Closing Date Certificate

E-2

Solvency Certificate

F-1

Guarantor Counterpart Agreement

F-2

Ancillary Borrower Counterpart Agreement

G

U.S. Pledge and Security Agreement

H

Mortgage

I

Landlord Waiver and Consent Agreement

J

Joinder Agreement

v

CREDIT AND GUARANTY AGREEMENT

This CREDIT AND GUARANTY AGREEMENT, dated as of May 6, 2010, is entered into by and among PHILLIPS-VAN HEUSEN CORPORATION, a Delaware corporation (the “U.S. Borrower”), TOMMY HILFIGER B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), CERTAIN SUBSIDIARIES OF THE U.S. BORROWER, as Guarantors, the Lenders party hereto from time to time, and BARCLAYS BANK PLC (“Barclays Bank”), as Administrative Agent (together with its permitted successors in such capacity, the “Administrative Agent”) and as Collateral Agent (together with its permitted successors in such capacity, the “Collateral Agent”), with Deutsche Bank Securities Inc. (“DBSI”), as Syndication Agent (together with its permitted successors in such capacity, the “Syndication Agent”), and Banc of America Securities LLC (“BAS”), Credit Suisse Securities (USA) LLC (“CS Securities”) and Royal Bank of Canada (“RBC”), as Co-Documentation Agents (the “Co-Documentation Agents”).

RECITALS:

WHEREAS, capitalized terms used in these Recitals have the respective meanings set forth for such terms in Section 1.01 hereof;

WHEREAS, pursuant to that certain Purchase Agreement, dated as of March 15, 2010 (the “Acquisition Agreement”), by and among the U.S. Borrower, Tommy Hilfiger Corporation, a British Virgin Islands corporation (“Seller BVI”), Tommy Hilfiger Holding S.a.r.l., a Luxembourg limited liability company (together with Seller BVI, the “Seller”), Tommy Hilfiger B.V., a Dutch limited liability company (the “Acquired Business”), and the other parties thereto, the U.S. Borrower has acquired all of the equity interests (the “Acquisition”) of Tommy Hilfiger U.S.A., Inc. and the Acquired Business; 

WHEREAS, in connection with the Acquisition, the U.S. Borrower shall receive at least $400,000,000 in exchange for common equity issued to the public market or to private investors (the “Equity Contribution”);

WHEREAS, the Lenders have agreed to extend certain credit facilities to the Borrowers named herein, consisting of $367,700,000 aggregate principal amount of U.S. Tranche A Term Loans, €100,000,000 aggregate principal amount of Foreign Tranche A Term Loans, $1,003,100,000 aggregate principal amount of U.S. Tranche B Term Loans, €300,000,000 aggregate principal amount of Foreign Tranche B Term Loans, up to $265,000,000 aggregate principal amount of U.S. Revolving Commitments, up to $10,000,000 aggregate principal amount of Canadian Revolving Commitments and up to €132,275,132.28 aggregate principal amount of Foreign Revolving Commitments, the proceeds of which shall be used to finance, in part, the Acquisition (including refinancing or retiring certain existing Indebtedness of the U.S. Borrower, the Acquired Business and their respective Subsidiaries and paying Transaction Costs);

WHEREAS, the Borrowers have agreed to secure all of their Obligations by granting to the Collateral Agent, for the benefit of the Secured Parties, a First Priority Lien on substantially 

 

all of their respective assets, including a pledge of all of the Equity Interests of each of their respective Subsidiaries, subject to the exceptions and limitations described herein; and

WHEREAS, subject to the terms hereof and the limitations described herein, (i) the U.S. Guarantors have agreed to guarantee the obligations of the Borrowers hereunder and to secure their respective Obligations by granting to the Collateral Agent, for the benefit of the Secured Parties, a First Priority Lien on substantially all of their respective assets, including a pledge of all of the Equity Interests of each of their respective U.S. Subsidiaries and limited to 66% of all the Equity Interests of certain of their respective first tier Foreign Subsidiaries and U.S.-Owned DREs with respect to any grant of security in respect of the guarantee of obligations of the U.S. Borrower (provided, that if a U.S.-Owned DRE owns less than 100% of a Foreign Subsidiary, the granting of the securities in the Equity Interests of such U.S.-Owned DRE shall be adjusted so that the Equity Interests representing 66% (but not more than 66%) of the Equity Interests in such Foreign Subsidiary (in the aggregate) are pledged), but all of the Equity Interests of each of their Foreign Subsidiaries in respect of the guarantee of obligations of the Foreign Borrower, and (ii) the Foreign Guarantors have agreed to guarantee the obligations of the Foreign Borrower hereunder and to secure their respective Obligations by granting to the Collateral Agent, for the benefit of the Foreign Obligations Secured Parties, a First Priority Lien on certain of their respective assets, including a pledge of all of the Equity Interests of each of their respective Subsidiaries in each case of clauses (i) and (ii) subject to certain exceptions and limitations. 

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

ARTICLE I.

DEFINITIONS AND INTERPRETATION

Section 1.01

Definitions

.  The following terms used herein, including in the preamble, recitals, exhibits and schedules hereto, shall have the following meanings:

“2020 Notes” means the 7.375% senior unsecured notes due 2020 issued by the U.S. Borrower pursuant to the 2020 Notes Indenture.

“2020 Notes Documents” means the 2020 Notes, the 2020 Notes Indenture and all other instruments, agreements and other documents evidencing or governing the 2020 Notes or providing for any guarantee or other right in respect thereof

“2020 Notes Indenture” means that certain Indenture dated as of the date hereof, between the U.S. Borrower and U.S. Bank National Association, as trustee.

“2023 Debentures” means the 7-3/4% debentures due 2023 issued by the U.S. Borrower pursuant to the 2023 Debentures Indenture.

“2023 Debentures Indenture” means that certain Indenture dated as of November 1, 1993, between the U.S. Borrower and the 2023 Debentures Trustee.

2

“2023 Debentures Intercreditor Agreement” means that certain Intercreditor Agreement dated as of the date hereof between the U.S. Borrower, the Collateral Agent and The Bank of New York Mellon, as trustee under the 2023 Debentures Indenture.

“2023 Debentures Obligations” means all obligations of every nature of any Group Member under or with respect to the 2023 Debentures.

“2023 Debentures Trustee” means The Bank of New York, as trustee under the 2023 Debentures Indenture, and its successors in such capacity.

“Acceptable Bank” means (i) any bank or financial institution that has a rating for its long-term unsecured and non credit-enhanced debt obligations of A or higher by S&P or Fitch or A2 or higher by Moody’s or a comparable rating from an internationally recognized credit rating agency or (ii) any bank that is credit insured by a United States, United Kingdom, Swiss, Danish, Japanese or Canadian or member state of the European Union government agency (including the Federal Deposit Insurance Company in the United States).  

“Acquired Business” has the meaning specified in the recitals hereto.

“Acquired Permitted CapEx Amount” has the meaning set forth in Section 6.07(c).

“Acquisition” has the meaning specified in the recitals hereto.

“Acquisition Agreement” has the meaning specified in the recitals hereto.

 “Acquisition Consideration” means the purchase consideration for any Permitted Acquisition and all other payments by any Group Member in exchange for, or as part of, or in connection with, any Permitted Acquisition, whether paid in cash or by exchange of Equity Interests or of properties or otherwise and whether payable at or prior to the consummation of such Permitted Acquisition or deferred for payment at any future time, whether or not any such future payment is subject to the occurrence of any contingency, and includes any and all payments representing the purchase price and any assumptions of Indebtedness, “earn-outs” and other agreements to make any payment the amount of which is, or the terms of payment of which are, in any respect subject to or contingent upon the revenues, income, cash flow or profits (or the like) of any Person or business.  

“Acquisition Documents” means the Acquisition Agreement together with all other instruments and agreements entered into by any Group Member in connection therewith.

“Additional Assets” means (a) any property, plant or equipment used in any business in which any Group Member was engaged on the Closing Date and any extension of such businesses consistent with industry developments and any business ancillary, complementary or related to any of the foregoing, (b) the Equity Interests of a Person that becomes a Subsidiary as a result of the acquisition of such Equity Interests by (including by merger or consolidation with or into) any Group Member or (c) Equity Interests constituting a minority interest in any Person that at such time is a Subsidiary.

3

 “Adjusted Eurocurrency Rate” means, for any Interest Rate Determination Date with respect to an Interest Period for a Eurocurrency Rate Loan, the greater of (I) 1.75% per annum and (II) the rate per annum obtained by dividing (and rounding upward to the next whole multiple of 1/16 of 1.00%) (i) (a) the rate per annum (rounded to the nearest 1/100 of 1.00%) equal to the rate determined by the Administrative Agent to be the applicable Screen Rate for deposits (for delivery on the first day of such period) with a term equivalent to such period in the relevant currency, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (b) in the event the rates referenced in the preceding clause (a) are not available, the rate per annum (rounded to the nearest 1/100 of 1.00%) equal to the offered quotation rate to first class banks in the London interbank market by the Administrative Agent for deposits (for delivery on the first day of the relevant period) in such currency of amounts in same day funds comparable to the principal amount of the applicable Loan of the Administrative Agent, in its capacity as a Lender, for which the Adjusted Eurocurrency Rate is then being determined with maturities comparable to such period as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, by (ii) an amount equal to (a) one minus (b) the Applicable Reserve Requirement.

“Administrative Agent” has the meaning specified in the preamble hereto.

“Adverse Proceeding” means any action, suit or proceeding at law or in equity or, to the knowledge of any Authorized Officer of any Borrower, any hearing (whether administrative, judicial or otherwise), investigation before or by any Governmental Authority or arbitration (whether or not purportedly on behalf of any Group Member) against or affecting any Group Member or any property of any Group Member.

“Affected German Guarantor” has the meaning set forth in Section 7.13(a).

“Affected Lender” has the meaning set forth in Section 2.18(b).

“Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power (i) to vote 10.0% or more of the Securities having ordinary voting power for the election of directors of such Person or (ii) to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting Securities or by contract or otherwise; provided, that no Agent or Lender shall be deemed to be an Affiliate of any Loan Party.  

“Agent” means each of the Administrative Agent, the Syndication Agent, the Collateral Agent and the Co-Documentation Agents.

“Agent Affiliates” has the meaning set forth in Section 10.01(b)(iii).

“Aggregate Amounts Due” has the meaning set forth in Section 2.17.

“Aggregate Payments” has the meaning set forth in Section 7.02(b).

4

“Agreed Security Principles” means the security principles applicable to Foreign Loan Parties as set forth on Schedule 1.01(e).  

“Agreement” means this Credit and Guaranty Agreement, dated as of May 6, 2010, as it may be amended, restated, supplemented or otherwise modified from time to time.

“Agreement Currency” has the meaning set forth in Section 10.25.

“ALTA” means American Land Title Association, and any successor thereto.

“Ancillary Borrower” means, with respect to an Ancillary Facility, any Borrower or any Group Member that shall have acceded as a Borrower to this Agreement and become a Borrower under the Ancillary Facility pursuant to Section 10.26.

“Ancillary Commencement Date” means, in relation to an Ancillary Facility, the date on which that Ancillary Facility is first made available, which date shall be a Business Day within the Foreign Revolving Commitment Period.  

“Ancillary Commitment” means, in relation to an Ancillary Lender and an Ancillary Facility, the Euro Equivalent of the maximum amount of Approved Currency which that Ancillary Lender has agreed (whether or not subject to satisfaction of conditions precedent) to make available from time to time under an Ancillary Facility and which has been authorized as such under Section 2.26, to the extent that amount is not cancelled or reduced under this Agreement or the Ancillary Documents relating to that Ancillary Facility.  

“Ancillary Document” means each document relating to or evidencing the terms of an Ancillary Facility.  

“Ancillary Facility” means any ancillary facility made available by any Ancillary Lender in accordance with Section 2.26.

“Ancillary Lender” means each Lender (or Affiliate of a Lender) that makes available an Ancillary Facility in accordance with Section 2.26.  

“Ancillary Outstandings” means, at any time, in relation to an Ancillary Lender and an Ancillary Facility then in force, the aggregate of the Euro Equivalent of the following amounts outstanding under such Ancillary Facility: (a) the principal amount under each overdraft facility and on-demand short term loan facility (net of any credit balances on any account of any Borrower of an Ancillary Facility with the Ancillary Lender making available such Ancillary Facility to the extent that the credit balances are freely available to be set off by such Ancillary Lender against liabilities owed to it by that Borrower under such Ancillary Facility); (b) the face amount of each guaranty, bond and letter of credit under such Ancillary Facility and (c) the amount fairly representing the aggregate exposure (excluding interest and similar charges) of such Ancillary Lender under each other type of accommodation provided under such Ancillary Facility, in each of clauses (a) through (c), as determined by such Ancillary Lender, acting reasonably in accordance with its normal banking practice and in accordance with the relevant Ancillary Document.    

5

“Applicable Margin” means (i) (a) with respect to U.S. Tranche B Term Loans that are Eurocurrency Rate Loans, 3.00% per annum, (b) with respect to U.S. Tranche B Term Loans that are Base Rate Loans, 2.00% per annum and (c) with respect to Foreign Tranche B Term Loans, 3.25% per annum, (ii) with respect to Tranche A Term Loans and Revolving Loans that are Eurocurrency Rate Loans, (a) from the Closing Date until the date of delivery of the Compliance Certificate and the financial statements for the second full Fiscal Quarter after the Closing Date, a percentage, per annum, determined by reference to the following table as if the Leverage Ratio then in effect were 3.00:1.00; and (b) thereafter, a percentage, per annum, determined by reference to the Leverage Ratio in effect from time to time as set forth below:

			
	Leverage Ratio

	Applicable Margin for U.S. Tranche A Term Loans and  U.S. Revolving Loans and Canadian Revolving Loans that are Eurocurrency Rate Loans

	Applicable Margin for Foreign Tranche A Term Loans and Foreign Revolving Loans

	>3.00:1.00

	3.00%

	3.25%

	<3.00:1.00

 >2.50:1.00

	2.75%

	3.00%

	<2.50:1.00

	2.50%

	2.75%

and (iii) with respect to Swing Line Loans and U.S. Tranche A Term Loans and Revolving Loans that are Base Rate Loans or Canadian Prime Rate Loans, an amount equal to (a) the Applicable Margin for Eurocurrency Rate Loans as set forth in clause (ii)(a) or (ii)(b) above, as applicable, minus (b) 1.00% per annum.  No change in the Applicable Margin for Tranche A Term Loans and Revolving Loans shall be effective until three (3) Business Days after the date on which the Administrative Agent has received the applicable financial statements and a Compliance Certificate pursuant to Section 5.01(c) calculating the Leverage Ratio.  At any time the Borrower Representative has not submitted to the Administrative Agent the applicable information as and when required under Section 5.01(c), the Applicable Margin for Tranche A Term Loans and Revolving Loans shall be determined as if the Leverage Ratio were in excess of 3.00:1.00.  Promptly following receipt of the applicable information under Section 5.01(c), the Administrative Agent shall give each Lender telefacsimile or telephonic notice (confirmed in writing) of the Applicable Margin for Tranche A Term Loans and Revolving Loans in effect from such date.  In the event that any financial statement or certificate delivered pursuant to Section 5.01 is shown to be inaccurate, and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin for Tranche A Term Loans and Revolving Loans for any period (an “Applicable Period”) than the Applicable Margin for Tranche A Term Loans and Revolving Loans applied for such Applicable Period, then (i) the Borrower Representative shall immediately deliver to the Administrative Agent a correct certificate required by Section 5.01 for 

6

such Applicable Period, (ii) the Applicable Margin for Tranche A Term Loans and Revolving Loans shall be recalculated with the Leverage Ratio at the corrected level and (iii) each applicable Borrower shall immediately pay to the Administrative Agent the accrued additional interest owing as a result of such increased Applicable Margin for Tranche A Term Loans and Revolving Loans for such Applicable Period.  Nothing in this definition shall limit the right of the Administrative Agent or any Lender under Section 2.10 or Article VIII and the provisions of this definition shall survive the termination of this Agreement.  

“Applicable Reserve Requirement” means, at any time, for any Eurocurrency Rate Loan, the maximum rate, expressed as a decimal, at which reserves (including any basic marginal, special, supplemental, emergency or other reserves) are required to be maintained with respect thereto against “Eurocurrency liabilities” (as such term is defined in Regulation D) under regulations issued from time to time by the Board of Governors or other applicable banking regulator.  The rate of interest on Eurocurrency Rate Loans shall be adjusted automatically on and as of the effective date of any change in the Applicable Reserve Requirement.

“Applicable Revolving Commitment Fee Percentage” means (a) from the Closing Date until the date of delivery of the Compliance Certificate and the financial statements for the second full Fiscal Quarter after the Closing Date, a percentage, per annum, determined by reference to the following table as if the Leverage Ratio then in effect were 3.00:1.00; and (b) thereafter, a percentage, per annum, determined by reference to the Leverage Ratio in effect from time to time as set forth below:

			
	Leverage Ratio

	Applicable Revolving Commitment Fee Percentage for U.S. Revolving Loans and Canadian Revolving Loans

	Applicable Revolving Commitment Fee Percentage for Foreign Revolving Loans

	>3.00:1.00

	0.75%

	1.30%

	<3.00:1.00

 >2.50:1.00

	0.75%

	1.20%

	<2.50:1.00

	0.50%

	1.10%

No change in the Applicable Revolving Commitment Fee Percentage shall be effective until three (3) Business Days after the date on which the Administrative Agent has received the applicable financial statements and a Compliance Certificate pursuant to Section 5.01(c) calculating the Leverage Ratio.  At any time the Borrower Representative has not submitted to the Administrative Agent the applicable information as and when required under Section 5.01(c), the Applicable Revolving Commitment Fee Percentage shall be determined as if the Leverage Ratio were in excess of 3.00:1.00.  Promptly following receipt of the applicable information under Section 5.01(c), the Administrative Agent shall give each Lender telefacsimile or telephonic notice (confirmed in writing) of the Applicable Revolving Commitment Fee Percentage in effect from such date.  In the event that any financial statement or certificate 

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delivered pursuant to Section 5.01 is shown to be inaccurate, and such inaccuracy, if corrected, would have led to the application of a higher Applicable Revolving Commitment Fee Percentage for any Applicable Period than the Applicable Revolving Commitment Fee Percentage applied for such Applicable Period, then (i) the Borrower Representative shall immediately deliver to the Administrative Agent a correct certificate required by Section 5.01 for such Applicable Period, (ii) the Applicable Revolving Commitment Fee Percentage shall be recalculated with the Leverage Ratio at the corrected level and (iii) each applicable Borrower shall immediately pay to the Administrative Agent the accrued additional fees owing as a result of such increased Applicable Revolving Commitment Fee Percentage for such Applicable Period.  Nothing in this definition shall limit the right of the Administrative Agent or any Lender under Section 2.10 or Article VIII and the provisions of this definition shall survive the termination of this Agreement. 

“Appointer” has the meaning set forth in Section 9.13.

“Approved Currency” means each of Dollars, Euros, Canadian Dollars or any Other Foreign Currency.

“Approved Electronic Communications” means any notice, demand, communication, information, document or other material that any Loan Party provides to the Administrative Agent pursuant to any Loan Document or the transactions contemplated therein which is distributed to Agents or to Lenders by means of electronic communications pursuant to Section 10.01(b).

“Arrangers” means each of Barclays Capital and DBSI, in its capacity as joint lead arranger under the Commitment Letter.

“Asset Sale” means a sale, lease or sub-lease (as lessor or sublessor), sale and leaseback, assignment, conveyance, exclusive license (as licensor or sublicensor), transfer or other disposition to, or any exchange of property with, any Person (other than (a) any Loan Party or (b) any Restricted Subsidiary in the ordinary course of business), in one transaction or a series of transactions, of all or any part of any Group Member’s businesses, assets or properties of any kind, whether real, personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired, leased or licensed, including the Equity Interests of any of the U.S. Borrower’s Subsidiaries, other than (i) inventory (or other assets) sold, leased, licensed out or otherwise disposed of in the ordinary course of business, (ii) sales, leases, licenses out or other dispositions of worn out, obsolete, scrap or surplus assets or assets no longer useful in the conduct of the business of any Group Member, in each case, in the ordinary course of business and (iii) sales, leases, licenses out or other dispositions of other assets for aggregate consideration of less than $7,500,000 with respect to any transaction or series of related transactions. 

 “Assignment Agreement” means an assignment agreement in the form agreed to by the Administrative Agent and the Lenders on the Closing Date, with such amendments or modifications solely to reflect market practice as may be approved in writing by the Administrative Agent.

“Assignment Effective Date” has the meaning set forth in Section 10.06(b).  

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“Attributable Indebtedness” means, in respect of any Sale and Lease-Back, as at the time of determination, the present value (discounted at the interest rate borne by the 2020 Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the Capital Lease included in such Sale and Lease-Back (including any period for which such Capital Lease has been extended). 

“Auditor's Determination” has the meaning set forth in Section 7.13(f). 

“Authorized Officer” means, as applied to any Person, the chairman of the board (if an officer), principal executive officer, president or any corporate vice presidents (or the equivalent thereof), principal financial officer, principal accounting officer or any director of such Person. Unless otherwise specified, an Authorized Officer shall refer to an Authorized Officer of the Borrower Representative. 

“Available Amount” means, as of any date, the sum, without duplication, of: (i) the aggregate cumulative amount of any Consolidated Excess Cash Flow to the extent not otherwise required to be applied pursuant to Section 2.14(d), beginning with the Fiscal Year ending January 30, 2011, (ii) the Net Cash Proceeds received after the Closing Date and on or prior to the date of such determination of the Available Amount, of any sale of Equity Interests by, or capital contribution to, the U.S. Borrower (which, in the case of any such sale of Equity Interests is not Disqualified Equity Interests and are not issued in connection with the Transactions), and (iii) an amount equal to any returns (including dividends, interest, distributions, returns on principal, profits on sale, repayments, income and similar amounts) actually received in cash and Cash Equivalents by any Loan Party in respect of any Investments made pursuant to Section 6.06(m), less, the sum of any Available Amount used to make (w) Restricted Payments pursuant to Section 6.04(f) and 6.04(g), (x) Investments permitted by Section 6.06(m) and (y) below par purchases of Term Loans in accordance with Section 2.13(c).  For the avoidance of doubt, any Net Cash Proceeds from the sale of Equity Interests or any cash returns received in respect of any Investment pursuant to Section 6.06(m)(ii) or (n)(ii) received by any Group Member shall not be included in the Available Amount to the extent such Net Cash Proceeds or cash returns are utilized to make Restricted Payments pursuant to Section 6.04(f)(ii) or Investments pursuant to Section 6.06(m)(ii) or (n)(ii) as applicable, which are not specifically tied to the Available Amount.

“Bank Guarantee” means a direct guaranty issued for the account of the Foreign Borrower pursuant to this Agreement by an Issuing Bank, in form acceptable to such Issuing Bank, ensuring that a liability of the Foreign Borrower acceptable to such Issuing Bank and owing to a third party will be met.

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

“Barclays Bank” has the meaning specified in the preamble hereto.

“Barclays Capital” means Barclays Capital, the investment banking division of Barclays Bank.

“BAS” has the meaning specified in the preamble hereto.

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“Base Rate” means, for any day, a rate per annum equal to the greater of (i) the Prime Rate in effect on such day, (ii) the Federal Funds Effective Rate in effect on such day plus 1⁄2 of 1.00%, (iii) 2.75% and (iv) the Adjusted Eurocurrency Rate that would be payable on such day for a Eurocurrency Rate Loan with a one-month Interest Period plus 1.00%.  Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

“Base Rate Loan” means a Loan bearing interest at a rate determined by reference to the Base Rate.

“Board of Directors” means with respect to any Person, the board of directors, the board of managers or similar governing body of such Person, or if such Person is owned and/or managed by a single entity, the board of directors or similar governing body of such entity. 

“Board of Governors” means the Board of Governors of the United States Federal Reserve System, or any successor thereto.

“Bookrunners” means each of Barclays Capital, DBSI, BAS, CS Securities and RBC Capital Markets, in its capacity as joint bookrunner under the Commitment Letter.

“Borrower Financial Advisor” has the meaning set forth in Section 10.24.  

“Borrower Representative” means the U.S. Borrower in its capacity as representative of the other Borrowers as set forth in Section 2.25.

“Borrowers” means the Persons identified as the “Borrowers” in the preamble hereto or any other Person that may accede to this Agreement as an Ancillary Borrower hereunder.

“Borrowing Notice” means a notice substantially in the form of Exhibit A-1.

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, the state where the Administrative Agent’s Principal Office with respect to the Obligations denominated in Dollars is located and: 

(a)

if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in Dollars, any fundings, disbursements, settlements and payments in Dollars in respect of any such Eurocurrency Rate Loan, or any other dealings in Dollars to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan, means any such day on which dealings in deposits in Dollars are conducted by and between banks in the London interbank eurodollar market;

(b)

if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in Euro, any fundings, disbursements, settlements and payments in Euro in respect of any such Eurocurrency Rate Loan, or any other dealings in Euro to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan, means any day on 

10

which the Trans-European Automated Real-time Gross Settlement Express Transfer which utilizes a single shared platform and which was launched on 19 November 2007 (TARGET 2) payment system (or, if such payment system ceases to be operative, such other payment system (if any) determined by the Administrative Agent to be a suitable replacement) is open for the settlement of payments in Euro; 

(c)

if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in a currency other than Dollars or Euro, means any such day on which dealings in deposits in the relevant currency are conducted by and between banks in the London or other applicable offshore interbank market for such currency; 

(d)

if such day relates to any fundings, disbursements, settlements and payments in a currency other than Dollars or Euro in respect of a Eurocurrency Rate Loan denominated in a currency other than Dollars or Euro, or any other dealings in any currency other than Dollars or Euro to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan (other than any interest rate settings), means any such day on which banks are open for foreign exchange business in the principal financial center of the country of such currency; 

(e)

if such date relates to any interest rate settings, funding, disbursement, settlements and payments in Canadian Dollars, means any day other than a Saturday, Sunday or other day on which commercial banks in Toronto, Ontario are authorized or required by law to close; and

(f)

if such day relates to any actions, omissions or obligations pursuant to Section 7.13, means any day other than a Saturday, Sunday or other day on which banks in Düsseldorf, Germany, are closed. 

“Canadian Dollars” means the lawful money of Canada.

“Canadian Issuing Bank” means an Issuing Bank that has agreed to issue Canadian Letters of Credit.

“Canadian Letter of Credit” means any commercial or standby letter of credit issued or to be issued by an Issuing Bank for the account of the U.S. Borrower or any of its Subsidiaries pursuant to Section 2.04(a)(iii) of this Agreement, and any letter of credit listed on Schedule 1.01(i) issued and outstanding as of the Closing Date.  Each such letter of credit listed on Schedule 1.01(i) shall be deemed to constitute a Canadian Letter of Credit and a Letter of Credit issued hereunder on the Closing Date for all purposes under this Agreement and the other Loan Documents.

“Canadian Letter of Credit Sublimit” means the lesser of (a) $5,000,000 and (b) the aggregate unused amount of the Canadian Revolving Commitments then in effect.  

“Canadian Letter of Credit Usage” means, as at any date of determination, the sum of (i) the Dollar Equivalent of the maximum aggregate amount which is, or at any time thereafter may become, available for drawing under all Canadian Letters of Credit then outstanding, and (ii) the Dollar Equivalent of the aggregate amount of all drawings under 

11

Canadian Letters of Credit honored by the Issuing Bank and not theretofore reimbursed by or on behalf of the U.S. Borrower.

“Canadian Loan Party” means any Loan Party organized under the laws of Canada or any province or territory thereof. 

“Canadian Prime Rate” means, at any time, the greater of (i) the average of the rates of interest per annum equal to the per annum rate of interest quoted, published and commonly known in Canada as the “prime rate” or which Royal Bank of Canada establishes at its main office in Toronto, Ontario as the reference rate of interest in order to determine interest rates for loans in Canadian Dollars to its Canadian borrowers, adjusted automatically with each quoted or published change in such rate, all without the necessity of any notice to the U.S. Borrower or any other Person and (ii) the sum of (x) the average of the rates per annum for Canadial Dollar bankers’ acceptances having a term of one month that appears on the Reuters Screen CDOR Page as of 10:00 a.m. (Toronto time) on the date of determination, as reported by the Administrative Agent (and if such screen is not available, any successor or similar service as may be selected by the Administrative Agent), and (y) 1.00%.

“Canadian Prime Rate Loans” means Loans for which the applicable rate of interest is based upon the Canadian Prime Rate.

“Canadian Refunded Swing Line Loans” has the meaning set forth in Section 2.03(b)(iv).

“Canadian Revolving Commitment” means the commitment of a Lender to make or otherwise fund any Canadian Revolving Loan and to acquire participations in Canadian Letters of Credit and Swing Line Loans hereunder and “Canadian Revolving Commitments” means such commitments of all Lenders in the aggregate.  The amount of each Lender’s Canadian Revolving Commitment, if any, is set forth on Schedule 1.01(c) or in the applicable Assignment Agreement or Joinder Agreement, as applicable, subject to any adjustment or reduction pursuant to the terms and conditions hereof.  The aggregate amount of the Canadian Revolving Commitments as of the Closing Date is $10,000,000.

“Canadian Revolving Commitment Period” means the period from the Closing Date to but excluding the Canadian Revolving Commitment Termination Date.

“Canadian Revolving Commitment Termination Date” means the earliest to occur of (i) the fifth anniversary of the Closing Date, (ii) the date the Canadian Revolving Commitments are permanently reduced to zero pursuant to Section 2.13(b) or 2.14 and (iii) the date of the termination of the Canadian Revolving Commitments pursuant to Section 8.01. 

“Canadian Revolving Exposure” means, with respect to any Lender as of any date of determination, (i) prior to the termination of the Canadian Revolving Commitments, that Lender’s Canadian Revolving Commitment; and (ii) after the termination of the Canadian Revolving Commitments, the sum of (a) the Dollar Equivalent of the aggregate outstanding principal amount of the Canadian Revolving Loans of that Lender, (b) in the case of an Issuing Bank, the Dollar Equivalent of the aggregate Canadian Letter of Credit Usage in respect of all Canadian Letters of Credit issued by such Issuing Bank (net of any participations by Lenders in 

12

such Canadian Letters of Credit),  (c) the Dollar Equivalent of the aggregate amount of all participations by that Lender in any outstanding Canadian Letters of Credit or any unreimbursed drawing under any Canadian Letter of Credit, (d) in the case of the Canadian Swing Line Lender, the aggregate outstanding principal amount of all Canadian Swing Line Loans (net of any participations therein by other Lenders), and (e) the aggregate amount of all participations therein by that Lender in any outstanding Canadian Swing Line Loans.

“Canadian Revolving Loan” means Loans made by a Lender in respect of its Canadian Revolving Commitment to the U.S. Borrower pursuant to Section 2.02(c) and/or Section 2.24.

“Canadian Security Documents” means (i) the Ontario law governed general security agreements entered into by Tommy Hilfiger Canada Inc. and Tommy Hilfiger Retail Canada, Inc.; (ii) the Quebec law governed deeds of hypothec, bonds, delivery orders and bond pledges entered into by Tommy Hilfiger Canada Inc. and Tommy Hilfiger Retail Canada Inc., (iii) the New York law governed share pledge agreements over the shares in Tommy Hilfiger Canada Inc. entered into by Tomcan Investments Inc. as pledgor; and (iv) the Ontario law governed share pledge agreement over the shares in  Tommy Hilfiger Retail Canada Inc. entered into by Tommy Hilfiger Canada Inc. as pledgor.

“Canadian Swing Line Lender” means Barclays Bank in its capacity as the Canadian Swing Line Lender hereunder, together with its permitted successors and assigns in such capacity.

“Canadian Swing Line Loan” means a Loan made by the Canadian Swing Line Lender to the U.S. Borrower pursuant to Section 2.03(a)(ii).

“Canadian Swing Line Sublimit” means the lesser of (i) $5,000,000 and (ii) the aggregate unused amount of Canadian Revolving Commitments then in effect.

 “Capital Lease” means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person.

“Cash Collateralize” means either (a) the delivery of cash to the Collateral Agent as security for the payment of Obligations in respect of Letters of Credit in an amount equal to 102.0% of the aggregate face amount of such outstanding Letters of Credit or (b) the delivery to the applicable Issuing Bank of a customary back-to-back letter of credit in an amount equal to 102.0% of the aggregate face amount of the outstanding Letters of Credit issued by such Issuing Bank.  “Cash Collateralization” has a correlative meaning.

 “Cash Equivalents” means, as at any date of determination, any of the following: (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States or Canadian Government or (b) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States or Canada, in each case maturing within one year after such date; (ii) marketable direct obligations issued by any state or province of the United States of America or Canada, as the case may be, or any political subdivision of any such state, province or any public 

13

instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s or the equivalent rating from any other internationally recognized rating agency; (iii) certificates of deposit or bankers’ acceptances maturing within one year after such date and issued or accepted by any Lender or by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia or Canada that (a) is at least “adequately capitalized” (as defined in the regulations of its primary Federal banking regulator), (b) has Tier 1 capital (as defined in such regulations) of not less than $500,000,000 and (c) has a rating of at least AA- from S&P and Aa3 from Moody’s or the equivalent rating from any other internationally recognized rating agency; and (iv) shares of any money market mutual fund that (a) has substantially all of its assets invested continuously in the types of investments referred to in clauses (i) and (ii) above, (b) has net assets of not less than $5,000,000,000 and (c) has the highest rating obtainable from either S&P or Moody’s or the equivalent rating from any other internationally recognized rating agency; provided, that, in the case of any Investment by a Subsidiary that is not a U.S. Subsidiary, “Cash Equivalents” shall also include: (x) direct obligations of the sovereign nation (or any agency thereof) in which such Foreign Subsidiary is organized and is conducting business or in obligations fully and unconditionally guaranteed by such sovereign nation (or any agency thereof), in each case maturing within a year after such date, (y) investments of the type and maturity described in clauses (i) through (iv) above of Subsidiaries that are not U.S. Subsidiaries, which Investments have ratings described in such clauses or equivalent ratings from comparable foreign rating agencies and (z) shares of money market mutual or similar funds which invest exclusively in assets otherwise satisfying the requirements of this definition (including this proviso).

“Cash Management Agreement” means any agreement or arrangement to provide treasury, depository, overdraft, credit or debit card, purchase card, electronic funds transfer (including automated clearinghouse transfer services) and other cash management services entered into with a Lender Counterparty.

“Certificate re Non-Bank Status” means a certificate substantially in the form of Exhibit D.

“Change of Control” means, (i) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) (a) shall have acquired beneficial ownership or control of 35.0% or more on a fully diluted basis of the voting interest in the Equity Interests of the U.S. Borrower or (b) shall have obtained the power (whether or not exercised) to elect a majority of the members of the Board of Directors of the U.S. Borrower, (ii) the majority of the seats (other than vacant seats) on the Board of Directors of the U.S. Borrower cease to be occupied by Continuing Directors, (iii) the U.S. Borrower shall cease to own, directly or indirectly, 100% of the Equity Interests of the Foreign Borrower or (iv) any “change of control” (or similar event, however denominated) shall occur under and as defined in any indenture or agreement in respect of Material Indebtedness of any Borrower. 

“China JV” means that certain joint venture that the U.S. Borrower (or any of its Subsidiaries) and certain other persons may form after the date hereof to operate and use the Tommy Hilfiger brands or brands of the U.S. Borrower in the People’s Republic of China and, in certain circumstances, Hong Kong. 

14

“CK Distribution” means a CK Distribution as such term is defined in the CKI Intercreditor Agreement.

“CK Letter Agreement” means that certain letter agreement, dated April 7, 2010 by and between the U.S. Borrower and Mr. Calvin Klein. 

“CKI” means Calvin Klein, Inc., a New York corporation.

“CKI Affiliates” means CK Service Corp. and any Person that becomes a Subsidiary of CKI or CK Service Corp. after the date hereof.

“CKI Amount” means, for any period, the Design Services Purchase Payments, as defined in and paid or payable by any Group Member to Mr. Calvin Klein or the Klein heirs for such period pursuant to the CKI Stock Purchase Agreement.

“CKI and Debenture Obligations” means the “First Lien Obligations” as defined in the CKI Intercreditor Agreement. 

“CKI Blockage Event” means the commencement of a Blockage Period, as defined in the CKI Intercreditor Agreement. 

“CKI Collateral Agent” means The Bank of New York Mellon Trust Company, N.A., as collateral agent under the CKI Security Agreement, and its successors in such capacity.

“CKI Documents” means the CKI Stock Purchase Agreement, the CKI Security Agreement, the CKI Pledgor Guarantees and the CKI Intercreditor Agreement

“CKI Intercreditor Agreement” means that certain Intercreditor Agreement dated May 6, 2010, among the Collateral Agent and the CKI Collateral Agent, as such agreement may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.

“CKI Liquidated Damages Amount” means the Liquidated Damages Amount as such term is defined in the CKI Stock Purchase Agreement as of the date hereof.

“CKI Obligations” means all obligations of every nature of the U.S. Borrower, CKI and the CKI Affiliates under or with respect to the CKI Documents. 

“CKI Pledgor Guarantees” means the Pledgor Guarantees, as the same may be amended, restated, supplemented or otherwise modified from time to time, into which each of CKI and CK Service Corp. has entered, and certain CKI Affiliates may enter from time to time after the date hereof, pursuant to which CKI and CK Service Corp. and, if any, the CKI Affiliates party thereto have guaranteed the payment in full of the U.S. Borrower’s obligations under the CKI Stock Purchase Agreement.

“CKI Related Assets Pledge and Security Agreement” means the CKI Related Assets Pledge and Security Agreement to be executed by the U.S. Borrower, CKI and the CKI 

15

Affiliates in favor of the Collateral Agent substantially in the form of Exhibit G, as it may be amended, restated, supplemented or otherwise modified from time to time.

 “CKI Security Agreement” means that certain Amended and Restated Pledge and Security Agreement, dated as of the date hereof, among the U.S. Borrower, CKI, the CKI Affiliates, the CKI Collateral Agent and Mr. Calvin Klein, pursuant to which a First Priority Lien shall have been granted to the CKI Collateral Agent on the Equity Interests in CKI and the CKI Affiliates and on any other assets of CKI and the CKI Affiliates named therein, to secure the CKI Obligations as it may be amended, restated, supplemented or otherwise modified from time to time. 

“CKI Stock Purchase Agreement” means the Stock Purchase Agreement dated as of December 17, 2002, among the U.S. Borrower, CKI, the CKI Affiliates and the sellers named therein, as it may be amended, restated, supplemented or otherwise modified from time to time. 

“CKI Trust” means the trust established pursuant to the Delaware Business Trust Act, as amended, and the CKI Trust Agreement.

“CKI Trust Agreement” means the Trust Agreement dated as of March 14, 1994, between CKI and Wilmington Trust Company, relating to the CKI Trust, and the other agreements related thereto. 

“Class” means (i) with respect to Lenders, each of the following classes of Lenders: (a) Lenders having U.S. Tranche A Term Loan Exposure, (b) Lenders having Foreign Tranche A Term Loan Exposure, (c) Lenders having U.S. Tranche B Term Loan Exposure, (d) Lenders having Foreign Tranche B Term Loan Exposure, (e) Lenders having U.S. Revolving Exposure (including U.S. Swing Line Lender), (f) Lenders having Foreign Revolving Exposure, (g) Lenders having Canadian Revolving Exposure (including the Canadian Swing Line Lender) and (h) Lenders having Incremental Term Loan Exposure of each applicable Series, and (ii) with respect to Loans, each of the following classes of Loans: (a) U.S. Tranche A Term Loans, (b) Foreign Tranche A Term Loans, (c) U.S. Tranche B Term Loans, (d) Foreign Tranche B Term Loans, (e) U.S. Revolving Loans (including U.S. Swing Line Loans), (f) Foreign Revolving Loans, (g) Canadian Revolving Loans (including Canadian Swing Line Loans) and (h) each Series of Incremental Term Loans.

“Closing Date” means the date on which the Term Loans are made, which occurred on May 6, 2010.

“Closing Date Ancillary Facility” means that facility made available to the Foreign Borrower, Tommy Hilfiger Group B.V. and Tommy Hilfiger Europe B.V. pursuant to that certain Ancillary Facility Agreement, dated as of May 6, 2010, among the Foreign Borrower, Tommy Hilfiger Group B.V., Tommy Hilfiger Europe B.V. and Fortis Bank (Nederland) N.V.

“Closing Date Certificate” means a Closing Date Certificate substantially in the form of Exhibit E-1.

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“Closing Date Mortgaged Property” has the meaning set forth in Section 3.01(g)(1).

“Co-Documentation Agents” has the meaning specified in the preamble hereto.

“Collateral” means, collectively, all of the real, personal and mixed property (including Equity Interests) in which Liens are purported to be granted pursuant to the Security Documents as security for the Obligations.

“Collateral Agent” has the meaning specified in the preamble hereto.

“Commitment” means any Revolving Commitment or Term Loan Commitment.

“Commitment Letter” has the meaning set forth in Section 10.20.

“Compliance Certificate” means a Compliance Certificate substantially in the form of Exhibit C-1.

“Confidential Information Memorandum” means the Confidential Information Memorandum of the Borrowers dated as of April 14, 2010.

“Consolidated Adjusted EBITDA” means, for any period, an amount determined for the Group on a consolidated basis equal to (i) Consolidated Net Income, plus, to the extent reducing Consolidated Net Income, the sum, without duplication, of amounts for (a) consolidated interest expense, (b) provisions for taxes based on income, profits or capital, (c) total depreciation expense, (d) total amortization expense, (e) other non-cash charges (including, without limitation, any non-cash charges related to writing up inventory in connection with the Acquisition, but excluding any non-cash charge to the extent that it represents an accrual of or reserve for cash expenditures in any future period), (f) net cash charges associated with or related to any contemplated restructurings related to the Acquisition in an aggregate amount not to exceed $90,000,000, (g) all amounts in respect of extraordinary, unusual or non-recurring losses, expenses or charges (including, without limitation, (A) restructuring charges (other than those described in clause (f)), (B) any fees, expenses or charges relating to plant shutdowns and discontinued operations, (C) acquisition integration costs and (D) any expenses or charges relating to any offering of Equity Interests, Permitted Acquisition, or any Investment or Indebtedness permitted under this Agreement, in each case under this clause (D), whether or not successful), (h) any financial advisory fees, accounting fees, legal fees and other similar advisory and consulting fees and related out-of-pocket expenses incurred by any Group Member as a result of the Acquisition, in an aggregate amount not to exceed $55,000,000, (i) with respect to any four-Fiscal Quarter measurement period ending on or prior to the end of the eighth full Fiscal Quarter following the Closing Date, the amount of cost savings and other operating improvements and synergies projected by the U.S. Borrower in good faith to be realized as a result of the Acquisition (calculated on a pro forma basis as though such cost savings and other operating improvements and synergies had been realized on the first day of such period), without duplication of the amount of actual benefits realized during such period from such actions to the extent already included in the Consolidated Net Income for such period, in an aggregate amount not to exceed $40,000,000, (j) losses on agreements with respect to Hedge Agreements and any related tax gains, in each case incurred in connection with or as a result of the Acquisition, and 

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(k) non-cash losses on agreements with respect to Hedge Agreements, minus, (ii) to the extent included in calculating Consolidated Net Income, the sum of (a) all amounts in respect of extraordinary, unusual or nonrecurring gains, (b) gains on agreements with respect to Hedge Agreements and any related tax gains, in each case incurred in connection with or as a result of the Acquisition, (c) non-cash gains on agreements with respect to Hedge Agreements, (d) cash payments made during such period with respect to non-cash charges that were added back pursuant to clause (e) above in a prior period, and (e) other non-cash gains increasing Consolidated Net Income for such period (excluding any such non-cash gain to the extent it represents the reversal of an accrual or reserve for potential cash gain in any prior period).  For the avoidance of doubt, Consolidated Adjusted EBITDA shall be calculated to exclude any gain resulting from any debt repurchase (including, for the avoidance of doubt, repurchases of Loans under Section 2.13(c) or repurchases of the 2023 Debentures).

In addition, for purposes of making the calculation referred to above, acquisitions (including the Acquisition), Investments, dispositions, mergers, consolidations, operational improvements and discontinued operations (as determined in accordance with GAAP) that have been made by any Group Member, including through mergers or consolidations and including any related financing transactions, during the relevant period or subsequent to such period and on or prior to the date of such calculation (the “relevant transaction”), shall be deemed to have occurred on the first day of the relevant period and (without duplication of the pro forma adjustments provided for in the immediately preceding paragraph with respect to the Acquisition) such calculation shall be made giving pro forma effect to any cost savings and other operating improvements and synergies in connection with such relevant transaction (without duplication of actual benefits realized during such period from the same) that are (a) factually supportable and determined in good faith by the U.S. Borrower, as certified in an officer’s certificate signed by an Authorized Officer and (b) do not exceed the actual cost savings expected in good faith to be realized by the Group over the twelve-month period following such relevant transaction.

 “Consolidated Capital Expenditures” means, for any period, the aggregate of all expenditures of the Group during such period determined on a consolidated basis that, in accordance with GAAP, are or should be included in “purchase of property and equipment” or similar items reflected in the consolidated statement of cash flows of the Group; provided, that Consolidated Capital Expenditures shall not include any expenditures (i) for replacements and substitutions for fixed assets, capital assets or equipment to the extent made with Net Cash Proceeds invested pursuant to Section 2.14(a) or Section 2.14(b) or (ii) which constitute a Permitted Acquisition permitted under Section 6.08.

“Consolidated Cash Interest Expense” means, for any period, total interest expense payable in cash in such period (including that portion attributable to Capital Leases in accordance with GAAP and capitalized interest) of the Group on a consolidated basis with respect to all outstanding Indebtedness of the Group (net of cash interest income), excluding, however, any one time financing fees (to the extent included in such Person’s consolidated interest expense for such period).

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“Consolidated Current Assets” means, as at any date of determination, the total assets of the Group on a consolidated basis that may properly be classified as current assets in conformity with GAAP, excluding cash and Cash Equivalents.

“Consolidated Current Liabilities” means, as at any date of determination, the total liabilities of the Group on a consolidated basis that may properly be classified as current liabilities in conformity with GAAP, excluding the current portion of long term debt.

“Consolidated Excess Cash Flow” means, for any period, an amount (if positive) equal to:

(i) the sum, without duplication, of the amounts for such period of (a) Consolidated Net Income, (b) to the extent reducing Consolidated Net Income, the sum, without duplication, of amounts for non-cash charges reducing Consolidated Net Income, including for depreciation and amortization (excluding any such non-cash charge to the extent that it represents an accrual or reserve for potential cash charge in any future period or amortization of a prepaid cash charge that was paid in a prior period) and (c) the Consolidated Working Capital Adjustment, minus

(ii) the sum, without duplication, of (a) the amounts for such period paid in cash of (1) scheduled repayments of Indebtedness to the extent actually made (excluding for the avoidance of doubt, repayments of revolving loans or swing line loans except to the extent the related revolving commitments are permanently reduced in connection with such repayments and any purchases (or repayments in connection therewith) of Loans pursuant to Section 2.13(c)) and scheduled repayments of obligations under Capital Leases (excluding any interest expense portion thereof), (2) Consolidated Capital Expenditures, and (3) to the extent actually declared, Restricted Payments permitted by Section 6.04(d), and (b) other non-cash gains increasing Consolidated Net Income for such period (excluding any such non-cash gain to the extent it represents the reversal of an accrual or reserve for potential cash gain in any prior period).

“Consolidated Net Income” means, for any period, (i) the net income (or loss) of the Group on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP, minus (ii) (a) the income (or loss) of any Person (other than a Group Member) in which any other Person (other than a Group Member) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to any Group Member by such Person during such period, (b) to the extent included in net income, the income (or loss) of any Person accrued prior to the date it becomes a Group Member or is merged into or consolidated with the Group or that Person’s assets are acquired by any Group Member, (c) the income of any Subsidiary of the U.S. Borrower to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, (d) any after-tax non-cash gains (or losses) attributable to Asset Sales or returned surplus assets of any Pension Plan, (e) the CKI Amount and the Itochu Amount to the extent not already reducing net income; provided that, if during any period, the U.S. Borrower or any of its Subsidiaries repays the Itochu Amount in whole, then for such period, the excess of the amount of such amounts repaid over the regularly scheduled payment of the Itochu Amount for such period shall not reduce net income, 

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and (f) (to the extent not included in clauses (a) through (e) above) any net extraordinary gains or net extraordinary losses.  For the avoidance of doubt, cash amounts used by the Borrowers to make purchases of debt (including purchases of Loans under Section 2.13(c) and purchases of the 2023 Debentures) shall not reduce Consolidated Net Income, nor will any non-cash gain associated with the cancellation of such purchased debt increase Consolidated Net Income.  

“Consolidated Total Assets” means as of any date of determination, the total assets of the Group, determined in accordance with GAAP, as set forth on the consolidated balance sheet of the U.S. Borrower as of such date. 

“Consolidated Total Debt” means, as at any date of determination, (a) the aggregate stated balance sheet amount of all Indebtedness of the Group (or, if higher, the par value or stated face amount of all such Indebtedness (other than zero coupon Indebtedness) determined on a consolidated basis in accordance with GAAP, exclusive of any contingent liability in respect of any Letter of Credit, plus (b) to the extent not included in clause (a), Indebtedness relating to securitization of receivables generated by the Group (whether or not such Indebtedness is on the balance sheet of the Group).  For the avoidance of doubt, Consolidated Total Debt will be calculated to exclude all Indebtedness of the Group to ITOCHU Corporation pursuant to the Itochu Agreement or otherwise related to such agreement and all Indebtedness of the Group pursuant to the CKI Documents. 

“Consolidated Working Capital” means, as at any date of determination, the excess of Consolidated Current Assets of the Group over Consolidated Current Liabilities of the Group.

“Consolidated Working Capital Adjustment” means, for any period on a consolidated basis, the amount (which may be a negative number) by which Consolidated Working Capital as of the beginning of such period exceeds (or is less than) Consolidated Working Capital as of the end of such period.  In calculating the Consolidated Working Capital Adjustment there shall be excluded the effect of reclassification during such period of current assets to long term assets and current liabilities to long term liabilities and the effect of any Permitted Acquisition during such period; provided, that there shall be included with respect to any Permitted Acquisition during such period an amount (which may be a negative number) by which the Consolidated Working Capital acquired in such Permitted Acquisition as at the time of such acquisition exceeds (or is less than) Consolidated Working Capital at the end of such period.

“Contingent Liability” means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the Indebtedness of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the Equity Interests of any other Person. The amount of any Person’s obligation under any Contingent Liability shall (subject to any limitation with respect thereto) be deemed to be the outstanding principal amount of the debt, obligation or other liability guaranteed thereby.

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“Continuing Directors” means individuals who on the Closing Date constituted the Board of Directors of the U.S. Borrower (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the U.S. Borrower was approved by a vote of a majority of the directors of the U.S. Borrower then still in office who were either directors on the Closing Date or whose election or nomination for election was previously so approved). 

 “Contractual Obligation” means, as applied to any Person, any provision of any Security issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.

“Contributing Guarantors” has the meaning set forth in Section 7.02(b).

“Conversion/Continuation Date” means the effective date of a continuation or conversion, as the case may be, as set forth in the applicable Conversion/Continuation Notice.

“Conversion/Continuation Notice” means a Conversion/Continuation Notice substantially in the form of Exhibit A-2.

“Copyrights” has the meaning set forth in the U.S. Pledge and Security Agreement.

“Corresponding Debt” means, in respect of a Loan Party, its Foreign Corresponding Debt or its U.S. Corresponding Debt.

“Counterpart Agreement” means a Counterpart Agreement substantially in the form of Exhibit F-1 or Exhibit F-2, as applicable, delivered by a Loan Party pursuant to Section 5.12 or by an Ancillary Borrower pursuant to Section 10.26.

“Covenant Transaction” has the meaning set forth in Section 1.04(c).

“Credit Date” means the date of a Credit Extension.

“Credit Extension” means the making of a Loan or the issuing of a Letter of Credit.

“Crown” means the government of Canada, any provincial or territorial government therein and any of their political subdivisions.

 “CS Securities” has the meaning specified in the preamble hereto.

“Currency Agreement” means any foreign exchange contract, currency swap agreement, futures contract, option contract, synthetic cap or other similar agreement or arrangement, each of which is for the purpose of hedging the foreign currency risk of the Group and not for speculative purposes.

“DBSI” has the meaning specified in the preamble hereto.

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“Debtor Relief Law” means the Bankruptcy Code and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, examinership, reorganization or similar debtor relief laws of the United States or other Relevant Jurisdiction from time to time in effect and affecting the rights of creditors generally.

“Default” means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default.

“Default Rate” has the meaning set forth in Section 2.10.

“Defaulting Lender” means any Lender that has (a) failed to fund any portion of its Revolving Commitment within three (3) Business Days of the date required to be funded by it hereunder, (b) notified the Borrower Representative, the Administrative Agent or any Lender in writing, or has otherwise indicated through a public statement, that it does not intend to comply with its funding obligations hereunder and generally under agreements in which it commits to extend credit, (c) failed, within three Business Days after receipt of a written request from the Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Revolving Commitments, (d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute or (e) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, custodian, administrator, examiner, liquidator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, custodian, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment, provided that a Lender shall not qualify as a Defaulting Lender solely as a result of the acquisition or maintenance of an ownership interest in such Lender or its parent company, or of the exercise of control over such Lender or any Person controlling such Lender, by a Governmental Authority or instrumentality thereof; provided that if the Borrower Representative, the Administrative Agent, the applicable Swing Line Lender and the applicable Issuing Bank agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateralization of Letters of Credit and/or Swing Line Loans), that Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the obligations of the Swing Line Lender and/or the Issuing Bank and the funded and unfunded participations in Letters of Credit and Swing Line Loans to be held on a pro rata basis by the Lenders in accordance with their Pro Rata Shares (without giving effect to Section 2.22), whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrowers while that Lender was a Defaulting Lender; and 

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provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

“Defaulting Revolving Lender” has the meaning set forth in Section 2.22.

“Designated Gross Amount” has the meaning set forth in Section 2.26(b)(ii)

“Designated Net Amount” has the meaning set forth in Section 2.26(b)(ii)

“Disqualified Equity Interests” means any Equity Interest which, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (i) matures or is mandatorily redeemable (other than solely for Equity Interests which are not otherwise Disqualified Equity Interests), pursuant to a sinking fund obligation or otherwise, (ii) is redeemable at the option of the holder thereof (other than solely for Equity Interests which are not otherwise Disqualified Equity Interests), in whole or in part, (iii) provides for scheduled payments of dividends in cash or (iv) is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is 91 days after the Term Loan Maturity Date, except, in the case of clauses (i) and (ii), if as a result of a change of control or asset sale, so long as any rights of the holders thereof upon the occurrence of such a change of control or asset sale event are subject to the prior Payment in Full of all Obligations.

“Dollar Equivalent” means, with respect to an amount denominated in Dollars, such amount, and with respect to an amount denominated in any other Approved Currency, the equivalent in Dollars of such amount determined at the Exchange Rate on the applicable Valuation Date.  In making the determination of the Dollar Equivalent for purposes of determining the aggregate available U.S. Revolving Commitments on any Credit Date, the Administrative Agent shall use the Exchange Rate in effect at the date on which any U.S. Borrower requests the extension of credit for such Credit Date pursuant to the provisions of this Agreement. 

“Dollars” and the sign “$” mean the lawful money of the United States of America.

“Dutch Closing Security Documents” means:

(i)

the Foreign Law Partnership Pledge Agreement; 

(ii)

the Dutch law deed of pledge of shares in Prince 1 B.V. by, inter alios, Trumpet C.V. as pledgor, as well as the updated shareholders' register in which the pledge of shares has been registered;

(iii)

the Dutch law deed of pledge of shares in Prince 2 B.V. by, inter alios, Prince 1 B.V. as pledgor, as well as the updated shareholders' register in which the pledge of shares has been registered;

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(iv)

the Dutch law deed of pledge of shares in the Foreign Borrower by, inter alios, Prince 2 B.V. as pledgor, as well as the updated shareholders' register in which the pledge of shares has been registered;

(v)

the Dutch law deed of pledge of shares in Tommy Hilfiger Group B.V. by, inter alios, the Foreign Borrower as pledgor, as well as the updated shareholders' register in which the pledge of shares has been registered;

(vi)

the Dutch law deed of disclosed pledge bank accounts by, inter alios, Trumpet C.V., Prince 1 B.V., Prince 2 B.V. and the Foreign Borrower as pledgors, as well as fully executed notices to the respective account banks;

(vii)

the Dutch law deed of disclosed pledge of intercompany receivables by, inter alios, Trumpet C.V., Prince 1 B.V., Prince 2 B.V. and the Foreign Borrower as pledgors, as well as fully executed notices to the respective debtors;

(viii)

the Dutch law deed of disclosed pledge of insurance claims by, inter alios, Trumpet C.V., Prince 1 B.V., Prince 2 B.V. and the Foreign Borrower as pledgors, as well as fully executed notices to the respective debtors;

(ix)

the Dutch law deed of undisclosed pledge of third party receivables by, inter alios, Trumpet C.V., Prince 1 B.V., Prince 2 B.V. and the Foreign Borrower as pledgors; and

(x)

the Dutch law deed of pledge of moveable assets by, inter alios, Trumpet C.V., Prince 1 B.V., Prince 2 B.V. and the Foreign Borrower as pledgors.

“Dutch Loan Party” means any Loan Party incorporated in The Netherlands.

“Dutch Security” means the Collateral that is the subject of any Security Document governed by the laws of The Netherlands.

“Dutch Security Documents” means, in relation to each applicable Dutch Loan Party (or (a) in the case of a share pledge, each shareholder of the applicable Dutch Loan Party, or (b) in case of a pledge of an Intellectual Property Asset registered in The Netherlands (or, in respect of any trademark or design, the Benelux), the Loan Party that is the holder of that Intellectual Property Asset): (i) Dutch law notarial deeds of pledge of shares over the shares in each Dutch Loan Party as well as the updated shareholders' register in which the pledge of shares has been registered; (ii) Dutch law disclosed deeds of pledge of bank accounts as well as fully executed notices to the respective account banks; (iii) Dutch law disclosed deeds of pledge of intercompany receivables as well as fully executed notices to the respective debtors; (iv) Dutch law disclosed deeds of pledge of insurance receivables as well as fully executed notices to the respective debtors; (v) Dutch law undisclosed deeds of pledge of third party receivables (other than receivables subject to any Lien interest pursuant to another Security Document); (vi) Dutch law undisclosed deeds of pledge over movable assets; (vii) Dutch law notarial deeds of mortgage over any Real Estate Assets located in The Netherlands, and (viii) Dutch law deed of pledge over any Intellectual Property Assets registered in The Netherlands (or, in respect of any trademark or design, the Benelux).

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“Eligible Assignee” means any Person other than a natural Person that is (i) a Lender, an Affiliate of any Lender or a Related Fund (any two or more Related Funds being treated as a single Eligible Assignee for all purposes hereof), or (ii) a commercial bank, insurance company, investment or mutual fund, European Credit Management Limited (ECM) programmes or other entity that is an “accredited investor” (as defined in Regulation D under the Securities Act) and which extends credit or buys loans in the ordinary course of business; provided, that neither any Loan Party nor any Affiliate thereof, nor any Defaulting Lender, shall be an Eligible Assignee.

“Employee Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA which is or was sponsored, maintained or contributed to by, or required to be contributed by, the Group or any of their respective ERISA Affiliates or with respect to which the Group or any of their respective ERISA Affiliates has or would reasonably be expected to have liability, contingent or otherwise, under ERISA.

“Environmental Claim” means any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order, decree or directive (conditional or otherwise) by any Governmental Authority or any other Person, arising (i) pursuant to any Environmental Law, (ii) in connection with any actual or alleged violation of, or liability pursuant to, any Environmental Law, (iii) in connection with any Hazardous Material, including the presence or Release of, or exposure to, any Hazardous Materials and any abatement, removal, remedial, corrective or other response action related to Hazardous Materials or (iv) in connection with any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment.

“Environmental Laws” means any and all current or future foreign or domestic, federal, state or local laws (including any common law), statutes, ordinances, orders, rules, regulations, judgments or any other requirements of Governmental Authorities relating to or imposing liability or standards of conduct with respect to (i) environmental matters, (ii) the generation, use, storage, transportation or disposal of, or exposure to, Hazardous Materials; or (iii) occupational safety and health, industrial hygiene, land use or the protection of human, plant or animal health or welfare, in any manner applicable to any Group Member or any Facility.

“Equity Contribution” has the meaning set forth in the recitals hereto.

“Equity Interests” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, the regulations promulgated thereunder and any successor thereto.

“ERISA Affiliate” means, as applied to any Person, (i) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which that Person is a member; (ii) any trade or business (whether or 

25

not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which that Person is a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member.  Any former ERISA Affiliate of any Group Member shall continue to be considered an ERISA Affiliate of such Group Member within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of such Group Member and with respect to liabilities arising after such period for which such Group Member could be liable under the Internal Revenue Code or ERISA.

“ERISA Event” means (i) a “reportable event” within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for 30-day notice to the PBGC has been waived by a regulation in effect on the date hereof); (ii) the failure to meet the minimum funding standard of Sections 412 or 430 of the Internal Revenue Code or Sections 302 or 303 of ERISA with respect to any Pension Plan (whether or not waived in accordance with Section 412(c) of the Internal Revenue Code or Section 302(c) of ERISA) or the failure to make by its due date a required installment under Section 430(j) of the Internal Revenue Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (iii) a determination by the Pension Plan’s actuary that any Pension Plan is, or is expected to be, in “at risk” status (as defined in Section 430 of the Internal Revenue Code or Section 303 of ERISA); (iv) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (v) a determination under and in accordance with said sections that any Multiemployer Plan is, or is expected to be, in “critical” or “endangered” status under Section 432 of the Internal Revenue Code or Section 305 of ERISA; (vi) the withdrawal by any Group Member or any of its ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to any Group Member or any of its Affiliates pursuant to Section 4063 or 4064 of ERISA; (vii) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which is reasonably likely to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (viii) the imposition of liability on any Group Member or any of its ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (ix) the withdrawal of any Group Member or any of its ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefor, or the receipt by any Group Member or any of its ERISA Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (x) the imposition of a Lien pursuant to Section 430(k) of the Internal Revenue Code or Section 303(k) of ERISA or a violation of Section 436 of the Internal Revenue Code with respect to any Pension Plan; (xi) the occurrence of any Foreign Plan Event or (xii) any other event or condition with respect to an Employee Benefit Plan with respect to which any Group Member is likely to incur liability other than in the ordinary course.

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 “Euro” or “€” means the single currency of the European Union as constituted by the Treaty on European Union and as referred to in the legislative measures of the European Union for the introduction of, changeover to or operation of the Euro in one or more member states, being in part legislative measures to implement the European and Monetary Union as contemplated in the Treaty on European Union. 

“Euro Equivalent” means, with respect to an amount denominated in Euros, such amount, and with respect to an amount denominated in Dollars or any Other Foreign Currency, the equivalent in Euros of such amount determined at the Exchange Rate on the applicable Valuation Date.  In making the determination of the Euro Equivalent for purposes of determining the aggregate available Foreign Revolving Commitments on any Credit Date, the Administrative Agent shall use the Exchange Rate in effect at the date on which the Foreign Borrower requests the extension of credit for such Credit Date pursuant to the provisions of this Agreement.

“Eurocurrency Rate Loan” means a Loan bearing interest at a rate determined by reference to the Adjusted Eurocurrency Rate.

“Event of Default” means any of the conditions or events set forth in Section 8.01.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

“Exchange Rate” means the rate at which any currency (the “Original Currency”) may be exchanged into Dollars, Euros or another currency (the “Exchanged Currency”), as set forth on such date on the relevant Reuters screen at or about 11:00 a.m. (London, England time) on such date.  In the event that such rate does not appear on the Reuters screen, the “Exchange Rate” with respect to such Original Currency into such Exchanged Currency shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Administrative Agent and the Borrower Representative or, in the absence of such agreement, such “Exchange Rate” shall instead be the Administrative Agent’s spot rate of exchange in the interbank market where its foreign currency exchange operations in respect of such Original Currency are then being conducted, at or about 11:00 a.m., local time, on such date for the purchase of the Exchanged Currency, with such Original Currency for delivery two Business Days later; provided, that if at the time of any such determination, no such spot rate can reasonably be quoted, the Administrative Agent may use any reasonable method as it deems applicable to determine such rate, and such determination shall be conclusive absent manifest error.

“Excluded Taxes” means (i) any Tax imposed on the overall net income of a Person (or franchise tax or minimum tax imposed in lieu thereof) by the jurisdiction in which that Person is organized or in which that Person’s principal office (and/or, in the case of a Lender, its applicable lending office) is located or with which that Person has a present or former connection (other than any connection arising solely from the acquisition and holding of any Loan and/or Commitment (including entering into or being a party to this Agreement), the receipt of payments relating thereto, and/or the exercise of rights and remedies under this Agreement or any other Loan Document); (ii) with respect to any Lender to a U.S. Loan (other than a Lender that becomes a Lender pursuant to Section 2.23), any Tax imposed pursuant to the 

27

laws of the United States of America or any political subdivision thereof or therein that would apply if any payment were made under any of the Loan Documents to such Lender on the day such Lender becomes a Lender (or designates a new lending office), except to the extent such Lender’s assignor (or such Lender, when it designates a new lending office) was entitled to receive additional amounts pursuant to Section 2.20; (iii) with respect to any Lender, any withholding Tax that is imposed on any payment to such Lender on the day that such Lender becomes a Lender (or designates a new lending office) by any jurisdiction, excluding any jurisdiction (other than the United States of America or any political subdivision thereof, which shall be governed by clause (ii) hereof) that would not have imposed such Tax but for the fact that any of the Loan Parties is organized or has its principal office located in such jurisdiction, or has a present or former connection with, or makes or causes to be made any payment under any Loan Document through, such jurisdiction on behalf of any Loan Party, except to the extent such Lender’s assignor (or such Lender, when it designates a new lending office) was entitled to receive additional amounts pursuant to Section 2.20; (iv) any Tax that is attributable to a Lender’s failure to comply with Section 2.20(c) of this Agreement or (v) any U.S. federal Tax imposed by reason of a Lender’s failure to comply with the requirements of Sections 1471 through 1474 of the Code and any regulations promulgated thereunder (the “FATCA”). 

“Existing Credit Facilities Indebtedness” means (i) Indebtedness and other obligations outstanding under that certain Second Amended and Restated Credit Agreement, dated as of July 10, 2007, among the U.S. Borrower and certain of its Subsidiaries, as borrowers or guarantors, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, the lenders party thereto and the other agents party thereto, as amended prior to the Closing Date and (ii) the Existing Tommy Facilities.

“Existing Notes” means the U.S. Borrower’s 8-1/8% Senior Notes due 2013 issued pursuant to that certain Indenture dated as of May 5, 2003 between the U.S. Borrower and U.S. Bank, National Association, as trustee and the U.S. Borrower’s 7-1/4% Senior Notes due 2011 issued pursuant to that certain Indenture dated as of February 18, 2004 between the U.S. Borrower and U.S. Bank National Association, as trustee. 

“Existing Tommy Facilities” means that certain (i) Senior Facilities Agreement, dated as of April 27, 2006, as amended and restated on May 9, 2006, among the Acquired Business (formerly known as Elmira 1 B.V.) and certain Subsidiaries of the Acquired Business, as borrowers or guarantors, Citibank International PLC, as agent for certain financial institutions party thereto as lenders, and the other parties thereto and (ii) Mezzanine Facilities Agreement, dated as of April 28, 2006, as amended and restated on May 9, 2006, among the Acquired Business (formerly known as Elmira 1 B.V.) and certain Subsidiaries of the Acquired Business, as guarantors, Credit Suisse, London Branch, as agent for certain financial institutions party thereto as lenders, and the other parties thereto.

“Facility” means any real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by any Group Member or any of its predecessors or Affiliates.

“Fair Share” has the meaning set forth in Section 7.02(b).

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“Fair Share Contribution Amount” has the meaning set forth in Section 7.02(b).

“FATCA” has the meaning set forth in the definition of “Excluded Taxes”.

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

“Federal Funds Effective Rate” means for any day, the rate per annum (expressed, as a decimal, rounded upwards, if necessary, to the next higher 1/100 of 1.00%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided, that (i) if such day is not a Business Day, the Federal Funds Effective Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Effective Rate for such day shall be the average rate charged to the Administrative Agent, in its  capacity as a Lender, on such day on such transactions as determined by the Administrative Agent.

 “Financial Officer Certification” means, with respect to the financial statements for which such certification is required, the certification of the principal financial officer of the U.S. Borrower that such financial statements fairly present, in all material respects, the financial condition of the Group at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments.

“Financial Plan” has the meaning set forth in Section 5.01(h).

“First Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to any Security Document, that such Lien is the only Lien to which such Collateral is subject, other than any Permitted Lien.

“Fiscal Quarter” means a fiscal quarter of any Fiscal Year.

“Fiscal Year” means the fiscal year of the Group ending on the Sunday closest to February 1 of each calendar year.

“Fitch” means Fitch, Inc.

“Flood Certificate” means a “Standard Flood Hazard Determination Form” of the Federal Emergency Management Agency and any successor Governmental Authority performing a similar function.

“Flood Program” means the National Flood Insurance Program created by the U.S. Congress pursuant to the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973, the National Flood Insurance Reform Act of 1994 and the Flood Insurance Reform Act of 2004, in each case as amended from time to time, and any successor statutes.

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“Flood Zone” means areas having special flood hazards as described in the National Flood Insurance Act of 1968, as amended from time to time, and any successor statute.

“Foreign Borrower” has the meaning specified in the preamble hereto.

“Foreign Collateral Perfection Certificate” means a certificate to be provided in respect of foreign Collateral, in a form reasonably acceptable to the Administrative Agent. 

“Foreign Contributing Guarantors” has the meaning set forth in Section 7.02(b).

“Foreign Currency Equivalent” means, with respect to an amount denominated in Canadian Dollars or any Other Foreign Currency, such amount, and with respect to an amount denominated in Dollars or Euros, the equivalent in Canadian Dollars or such Other Foreign Currency of such amount determined at the Exchange Rate on the applicable Valuation Date. 

“Foreign Corresponding Debt” has the meaning set forth in Section 9.14(a)(i).

“Foreign Guaranteed Obligations” has the meaning set forth in Section 7.01(b).

“Foreign Guarantor” means any Guarantor that is not a U.S. Guarantor.  

“Foreign Issuing Bank” means an Issuing Bank that has agreed to issue Foreign Letters of Credit.

“Foreign Law Partnership Pledge Agreement” means the Dutch law governed deed of pledge of partnership interests in Trumpet C.V. by, inter alios, BassNet, Inc. and PVH Prince C.V. Holding Corporation, as pledgors, in support of the Foreign Guaranteed Obligations.

“Foreign Law Security Documents” means each of the Dutch Security Documents, the German Security Documents, the Canadian Security Documents and each Foreign Law Partnership Pledge Agreement.

“Foreign Letter of Credit” means any Bank Guarantee or any commercial or standby letter of credit issued or to be issued by an Issuing Bank for the account of the Foreign Borrower or any of its Subsidiaries pursuant to Section 2.04(a)(ii) of this Agreement, and any letter of credit listed on Schedule 1.01(j) issued and outstanding as of the Closing Date.  Each such letter of credit listed on Schedule 1.01(j) shall be deemed to constitute a Foreign Letter of Credit and a Letter of Credit issued hereunder on the Closing Date for all purposes under this Agreement and the other Loan Documents.

 “Foreign Letter of Credit Sublimit” means the lesser of (a) €75,585,790 and (b) the aggregate unused amount of the Foreign Revolving Commitments then in effect.  

“Foreign Letter of Credit Usage” means, as at any date of determination, the sum of (i) the Euro Equivalent of the maximum aggregate amount which is, or at any time thereafter may become, available for drawing under all Foreign Letters of Credit then outstanding, and (ii) the Euro Equivalent of the aggregate amount of all drawings under Foreign Letters of Credit 

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honored by an Issuing Bank and not theretofore reimbursed by or on behalf of the Foreign Borrower.

“Foreign Loan” means a Foreign Tranche A Term Loan, a Foreign Tranche B Term Loan and/or a Foreign Revolving Loan.

“Foreign Loan Party” means any Loan Party other than a U.S. Loan Party.

“Foreign Obligations” means the Obligations in respect of any Foreign Loan and any other Obligations of the Foreign Borrower and Foreign Guarantors. 

“Foreign Obligations Secured Parties” means the Agents, Lenders, Issuing Banks, the Lender Counterparties and the Ancillary Lenders in respect of any Foreign Obligations, and shall include, without limitation, all former Agents, Lenders, Issuing Banks, Lender Counterparties and Ancillary Lenders to the extent that any Foreign Obligations owing to such Persons were incurred while such Persons were Agents, Lenders, Issuing Banks, Lender Counterparties or Ancillary Lenders and such Foreign Obligations have not been paid or satisfied in full. 

“Foreign Offer” has the meaning set forth in Section 2.13(c).

“Foreign Offer Loans” has the meaning set forth in Section 2.13(c).

“Foreign Parallel Debt” means, in respect of a Foreign Loan Party, any amount which that Foreign Loan Party owes to the Collateral Agent under Section 9.14.

“Foreign Plan” shall mean any Employee Benefit Plan, program, policy, arrangement or agreement maintained or contributed to by any Foreign Loan Party or any of their respective Subsidiaries with respect to employees employed outside the United States.

“Foreign Plan Event” shall mean, with respect to any Foreign Plan, (a) the existence of unfunded liabilities in excess of the amount permitted under any applicable law, or in excess of the amount that would be permitted absent a waiver from a Governmental Authority, (b) the failure to make the required contributions or payments, under any applicable law, on or before the due date for such contributions or payments, (c) the receipt of a notice from a Governmental Authority relating to the intention to terminate any such Foreign Plan or to appoint a trustee or similar official to administer any such Foreign Plan, or alleging the insolvency of any such Foreign Plan, in each case which is reasonably likely to result, directly or indirectly, in material liability to a Loan Party, (d) the incurrence of any material liability by any Loan Party or any their respective Subsidiaries under applicable law on account of the complete or partial termination of such Foreign Plan or the complete or partial withdrawal of any participating employer therein, or (e) the occurrence of any transaction that is prohibited under any applicable law and that would reasonably be expected to result in the incurrence of any liability by any Loan Party or any of their respective Subsidiaries, or the imposition on any Loan Party or any of their respective Subsidiaries of any fine, excise tax or penalty resulting from any noncompliance with any applicable law.

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“Foreign Revolving Commitment” means the commitment of a Lender to make or otherwise fund any Foreign Revolving Loan and to acquire participations in Foreign Letters of Credit hereunder, as reduced by the amount of any Ancillary Commitment, and “Foreign Revolving Commitments” means such commitments of all Lenders in the aggregate.  The amount of each Lender’s Foreign Revolving Commitment, if any, is set forth on Schedule 1.01(c) or in the applicable Assignment Agreement or Joinder Agreement, as applicable, subject to any adjustment or reduction pursuant to the terms and conditions hereof.  The aggregate amount of the Foreign Revolving Commitments as of the Closing Date is €132,275,132.28.

“Foreign Revolving Commitment Period” means the period from the Closing Date to but excluding the Foreign Revolving Commitment Termination Date

“Foreign Revolving Commitment Termination Date” means the earliest to occur of (i) the fifth anniversary of the Closing Date, (ii) the date the Foreign Revolving Commitments are permanently reduced to zero pursuant to Section 2.13(b) or 2.14 and (iii) the date of the termination of the Foreign Revolving Commitments pursuant to Section 8.01.  

“Foreign Revolving Exposure” means, with respect to any Lender as of any date of determination, (i) prior to the termination of the Foreign Revolving Commitments, that Lender’s Foreign Revolving Commitment; and (ii) after the termination of the Foreign Revolving Commitments, the sum of (a) the Euro Equivalent of the aggregate outstanding principal amount of the Foreign Revolving Loans of that Lender, (b) in the case of an Issuing Bank, the Euro Equivalent of the aggregate Foreign Letter of Credit Usage in respect of all Foreign Letters of Credit issued by such Issuing Bank (net of any participations by Lenders in such Foreign Letters of Credit), (c) the Euro Equivalent of the aggregate amount of all participations by that Lender in any outstanding Foreign Letters of Credit or any unreimbursed drawing under any Foreign Letter of Credit and (d) the Euro Equivalent of the aggregate amount of all amounts borrowed from such Lender under any Ancillary Facility pursuant to Section 2.26.

“Foreign Revolving Loan” means Loans made by a Lender in respect of its Foreign Revolving Commitment to the Foreign Borrower pursuant to Section 2.02(b) and/or Section 2.24.

“Foreign Subsidiary” means (i) any Restricted Subsidiary that is not organized under the laws of the United States, any State thereof or the District of Columbia (other than any such Subsidiary that is treated as a partnership or disregarded as an entity separate from its owner for U.S. federal tax purposes and all of whose partners or whose owner (as the case may be) is (or are) treated as a domestic corporation(s) for U.S. federal tax purposes) and (ii) any Restricted Subsidiary of a Subsidiary described in clause (i). 

“Foreign Tranche A Term Loan” means a Tranche A Term Loan denominated in Euros and made by a Lender to the Foreign Borrower pursuant to Section 2.01(a)(i).

“Foreign Tranche A Term Loan Commitment” means the commitment of a Lender to make or otherwise fund a Foreign Tranche A Term Loan and “Foreign Tranche A Term Loan Commitments” means such commitments of all Lenders in the aggregate.  The amount of each Lender’s Foreign Tranche A Term Loan Commitment, if any, is set forth on 

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Schedule 1.01(a) or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof.  The aggregate amount of the Foreign Tranche A Term Loan Commitments as of the Closing Date is €100,000,000.

“Foreign Tranche A Term Loan Exposure” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Foreign Tranche A Term Loans of such Lender; provided, that at any time prior to the making of the Foreign Tranche A Term Loans, the Foreign Tranche A Term Loan Exposure of any Lender shall be equal to such Lender’s Foreign Tranche A Term Loan Commitment.

“Foreign Tranche B Term Loan” means a Tranche B Term Loan denominated in Euros and made by a Lender to the Foreign Borrower pursuant to Section 2.01(a)(ii).

“Foreign Tranche B Term Loan Commitment” means the commitment of a Lender to make or otherwise fund a Foreign Tranche B Term Loan and “Foreign Tranche B Term Loan Commitments” means such commitments of all Lenders in the aggregate.  The amount of each Lender’s Foreign Tranche B Term Loan Commitment, if any, is set forth on Schedule 1.01(b) or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof.  The aggregate amount of the Foreign Tranche B Term Loan Commitments as of the Closing Date is €300,000,000.

“Foreign Tranche B Term Loan Exposure” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Foreign Tranche B Term Loans of such Lender; provided, that at any time prior to the making of the Foreign Tranche B Term Loans, the Foreign Tranche B Term Loan Exposure of any Lender shall be equal to such Lender’s Foreign Tranche B Term Loan Commitment.

“FQ1”, “FQ2”, “FQ3” and “FQ4” mean, when used with a numerical year designation, the first, second, third or fourth Fiscal Quarters, respectively, of the designated Fiscal Year of any Borrower (e.g., FQ4 2010 means the fourth Fiscal Quarter of a Borrower’s 2010 Fiscal Year, which ends January 30, 2011).

“Funding Guarantor” has the meaning set forth in Section 7.02(b).

“GAAP” means, subject to the limitations on the application thereof set forth in Section 1.02, United States generally accepted accounting principles in effect as of the date of determination thereof consistently applied.

“German Group Member” has the meaning set forth in Section 6.16(a). 

“German Loan Party” means any Loan Party incorporated in Germany.

“German Security” means the Collateral that is subject of any Security Document governed by the laws of Germany.

“German Security Documents” means: 

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(i)

the German law governed share pledge agreements over the shares in T.H. Deutschland GmbH, Tommy Hilfiger Footwear Europe GmbH and Hilfiger Stores GmbH entered into by, inter alios, Hilfiger Holdings Germany GmbH & Co. KG as pledgor; 

(ii)

the German law governed share pledge agreement over the shares in Hilfiger Beteiligungsgesellschaft mbH, entered into by, inter alios, Tommy Hilfiger Europe B.V. as pledgor; 

(iii)

the German law governed interest pledge agreement over the interests in Hilfiger Holdings Germany GmbH & Co. KG, entered into by, inter alios, Tommy Hilfiger Europe B.V. and Hilfiger Beteiligungsgesellschaft mbH as pledgors;

(iv)

the German law governed account pledge agreements entered into by, inter alios, Tommy Hilfiger Footwear Europe GmbH, Hilfiger Stores GmbH, Hilfiger Holdings Germany GmbH & Co. KG, Hilfiger Beteiligungsgesellschaft mbH and T.H. Deutschland GmbH as pledgor; 

(v)

the German law governed global assignment agreements entered into by, inter alios, Tommy Hilfiger Footwear Europe GmbH, Hilfiger Stores GmbH, Hilfiger Holdings Germany GmbH & Co KG, Hilfiger Beteiligungsgesellschaft mbH and T.H. Deutschland GmbH as assignor; and

(vi) 

the German law governed security transfer agreements over fixed and current assets entered into by, inter alios, Tommy Hilfiger Footwear Europe GmbH, Hilfiger Stores GmbH, Hilfiger Holdings Germany GmbH & Co. KG, Hilfiger Beteiligungsgesellschaft mbH and T.H. Deutschland GmbH as transferor.

 “Governmental Acts” means any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority.

“Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity, officer or examiner exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government.

“Governmental Authorization” means any permit, license, authorization, certification, registration, approval, plan, directive, consent order or consent decree of or from any Governmental Authority.

“Group” means, collectively, the U.S. Borrower and its Restricted Subsidiaries; provided that, as used in Sections 5.01(a) and (b) with respect to the financial statements required to be delivered thereunder, it shall mean the U.S. Borrower and its consolidated Subsidiaries in accordance with GAAP.

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“Group Member” means any of the U.S. Borrower or any of its Restricted Subsidiaries.

“Group Member Adjusted EBITDA” means, for any period for any Group Member, the amount of Consolidated Adjusted EBITDA attributable to such Group Member for such period, calculated on an unconsolidated basis and by excluding all intercompany items (provided that, for the purpose of the determination of a Material Company solely as such term is used in Section 8.01(f), (g), (h) or (l), Group Member Adjusted EBITDA shall be calculated on a consolidated basis for such Group Member and its Subsidiaries).

“Group Member Assets” means, for any Group Member, as of any date of determination, the total assets of such Group Member, determined in accordance with GAAP, calculated on an unconsolidated basis and by excluding all intercompany items (provided that, for the purpose of the determination of a Material Company solely as such term is used in Section 8.01(f), (g), (h) or (l), Group Member Assets shall be calculated on a consolidated basis for such Group Member and its Subsidiaries). 

“Guaranteed Obligations” has the meaning set forth in Section 7.01(b).

“Guarantor” means (i) with respect to the Obligations of the U.S. Borrower, each U.S. Subsidiary and (ii) with respect to the Obligations of the Foreign Borrower, (v) the U.S. Borrower, (w) each U.S. Subsidiary, (x) any other Borrower (other than the U.S. Borrower), (y) each Foreign Subsidiary set forth on Schedule 1.01(h) and (z) each other Foreign Subsidiary guaranteeing the Obligations of the Foreign Borrower after the Closing Date.  For the avoidance of doubt, no Foreign Guarantor shall guarantee the Obligations of the U.S. Borrower or any other U.S. Loan Party. 

“Guarantor Coverage Certificate” means a Guarantor Coverage Certificate substantially in the form of Exhibit C-2.

“Guaranty” means the guaranty of each Guarantor set forth in Article VII.

“Hazardous Materials” means any pollutant, contaminant, chemical, waste, material or substance, exposure to which or Release of which is prohibited, limited or regulated by any Governmental Authority or which may or could pose a hazard to human health and safety or to the indoor or outdoor environment, including petroleum, petroleum products, asbestos, urea formaldehyde, radioactive materials, polychlorinated biphenyls (“PCBs”) and toxic mold.

“Hedge Agreement” means an Interest Rate Agreement or a Currency Agreement entered into with a Lender Counterparty.

“Highest Lawful Rate” means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow.

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“Historical Financial Statements of the Acquired Business” means as of the Closing Date, (i) audited special purpose consolidated financial statements of the Acquired Business for the Fiscal Years ended March 31, 2008 and 2009 and an unqualified audit report relating thereto; (ii) audited special purpose consolidated financial statements of the Acquired Business for the Fiscal Years ended March 31, 2007 and 2008 and an unqualified audit report relating thereto; (iii) unaudited special purpose consolidated interim financial statements of the Acquired Business for the nine months ended December 31, 2009, and (iii) unaudited financial statements of the Acquired Business for the twelve-month period ended December 31, 2009.

“Historical Financial Statements of the U.S. Borrower” means as of the Closing Date, audited consolidated financial statements of the U.S. Borrower consisting of balance sheets as of February 1, 2009 and January 31, 2010 and income statements and statements of stockholders' equity and cash flows for Fiscal Years 2007, 2008 and 2009 and an unqualified audit report relating thereto.

“IFRS” has the meaning set forth in Section 4.07.

“Increased Amount Date” has the meaning set forth in Section 2.24.

“Increased-Cost Lender” has the meaning set forth in Section 2.23.

“Incremental Revolving Commitments” has the meaning set forth in Section 2.24.

“Incremental Revolving Loan” has the meaning set forth in Section 2.24.

“Incremental Revolving Loan Lender” has the meaning set forth in Section 2.24.

“Incremental Term Loan” has the meaning set forth in Section 2.24.

“Incremental Term Loan Commitments” has the meaning set forth in Section 2.24.

“Incremental Term Loan Exposure” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Incremental Term Loans of such Lender.

“Incremental Term Loan Lender” has the meaning set forth in Section 2.24.

“Incremental Term Loan Maturity Date” means the date on which Incremental Term Loans of a Series shall become due and payable in full hereunder, as specified in the applicable Joinder Agreement, including by acceleration or otherwise.

“Incremental Term Loan Note” means a promissory note in the form of Exhibit B-5, as it may be amended, restated, supplemented or otherwise modified from time to time.

 “Incurrence Test” means that, as of the applicable test date, the Leverage Ratio as of such date, based on Consolidated Adjusted EBITDA for the most recently ended period of 

36

four consecutive Fiscal Quarters of the Group for which internal financial statements are available and Consolidated Total Debt as of the applicable test date, shall be 3.00:1.00 or less.

“Indebtedness” means, as applied to any Person, without duplication, (i) all indebtedness for borrowed money; (ii) that portion of obligations with respect to Capital Leases that is properly classified as a capitalized liability on a balance sheet in conformity with GAAP; (iii) obligations evidenced by bonds, debentures, notes or other similar instruments; (iv) any obligation owed for all or any part of the deferred purchase price of property or services (excluding trade accounts payable and accrued expenses in the ordinary course of business which are not overdue for a period of more than 90 days or, if overdue for more than 90 days, as to which a dispute exists and adequate reserves in conformity with GAAP have been established on the books of such Person and any such obligations incurred under ERISA), which purchase price is (a) due more than six (6) months from the date of incurrence of the obligation in respect thereof or (b) evidenced by a note or similar written instrument in each case to the extent that the same would be required to be shown as a long term liability on a balance sheet prepared in accordance with GAAP; (v) all indebtedness secured by any Lien on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person (provided that if the recourse to such Person in respect of such indebtedness is limited solely to the property subject to such Lien, the amount of such indebtedness shall be deemed to be the fair market value (as determined in good faith by such Person) of the property subject to such Lien or the amount of such indebtedness if less); (vi) the face amount of any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings; (vii) Disqualified Equity Interests, (viii) the net payments that such Person would have to make in the event of any early termination, on the date Indebtedness of such Person is being determined, in respect of any exchange traded or over the counter derivative transaction, including any Interest Rate Agreement and any Currency Agreement, in each case, whether entered into for hedging or speculative purposes; provided, that in no event shall obligations under any derivative transaction be deemed “Indebtedness” for any purpose under Section 6.07 or for the purpose of calculating the Incurrence Test or Leverage Ratio unless such obligations relate to a derivatives transaction which has been terminated, (ix) the full outstanding balance of trade receivables, notes or other instruments sold with full recourse in a factoring or similar transaction, other than in any such case any thereof sold solely for purposes of collection of delinquent accounts and (x) any Contingent Liability with respect to the foregoing.  The Indebtedness of any Person shall include the Indebtedness of any other Person (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such Person, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

 “Indemnified Liabilities” means, collectively, any and all liabilities, obligations, losses, damages (including natural resource damages), penalties, claims (including Environmental Claims), actions, judgments, suits, costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other necessary response action related to the Release or presence of any Hazardous Materials), expenses and disbursements of any kind or nature whatsoever (including any of the foregoing in connection with any investigative, administrative or judicial proceeding or hearing commenced or threatened by any Group Member, its Affiliates or any other Person, whether or not any such Indemnitee 

37

shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect, special or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of (i) this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby (including the Lenders’ agreement to make Credit Extensions, the syndication of the credit facilities provided for herein or the use or intended use of the proceeds thereof, or any enforcement of any of the Loan Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty)); (ii) the Commitment Letter (and any related fee or engagement letter) delivered by any Agent or any Lender to the U.S. Borrower with respect to the transactions contemplated by this Agreement; (iii) any Environmental Claim relating to or arising from, directly or indirectly, any past or present activity, operation, land ownership, or practice of any Group Member; or (iv) any Loan or the use of proceeds thereof.

“Indemnified Taxes” means any Taxes other than Excluded Taxes.

“Indemnitee” has the meaning set forth in Section 10.03(a).

“Installment” has the meaning set forth in Section 2.12(a).

“Installment Date” has the meaning set forth in Section 2.12(a).

“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under the United States, multinational or foreign laws or otherwise, including without limitation, Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks, Trademark Licenses, Trade Secrets, and Trade Secret Licenses (as each such term is defined in the U.S. Pledge and Security Agreement), and the right to sue or otherwise recover for any past, present and future infringement, dilution, misappropriation, or other violation or impairment thereof, including the right to receive all Proceeds therefrom, including without limitation license fees, royalties, income, payments, claims, damages and proceeds of suit, now or hereafter due and/or payable with respect thereto.

“Intellectual Property Asset” means, at the time of determination, any interest (fee, license or otherwise) then owned by any Loan Party in any Intellectual Property.

“Intellectual Property Security Agreements” has the meaning set forth in the U.S. Pledge and Security Agreement and the CKI Related Assets Pledge and Security Agreement, as applicable.

“Interest Coverage Ratio” means the ratio as of the last day of any Fiscal Quarter of (i) Consolidated Adjusted EBITDA for the four-Fiscal-Quarter period then ended to (ii) Consolidated Cash Interest Expense for such four-Fiscal-Quarter period.

“Intercreditor Agreements” means the CKI Intercreditor Agreement and the 2023 Debentures Intercreditor Agreement.

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“Interest Payment Date” means with respect to (i) any Loan that is a Base Rate Loan (including any Swing Line Loan), each March 31, June 30, September 30 and December 31 of each year, commencing on the first such date to occur after the Closing Date and the final maturity date of such Loan; and (ii) any Loan that is a Eurocurrency Rate Loan, the last day of each Interest Period applicable to such Loan; provided, that in the case of each Interest Period of longer than three (3) months “Interest Payment Date” shall also include each date that is three (3) months, or an integral multiple thereof, after the commencement of such Interest Period.  

“Interest Period” means, in connection with a Eurocurrency Rate Loan, an interest period of one-, two-, three- or six-months (or, if available to all of the Lenders, nine or twelve months and for the first twenty-eight (28) days following the Closing Date, such other period as the Administrative Agent and the Borrower Representative shall agree), as selected by the Borrowers in the applicable Borrowing Notice or Conversion/Continuation Notice, (i) initially, commencing on the Credit Date or Conver­sion/Continuation Date thereof, as the case may be; and (ii) thereafter, commencing on the day on which the immediately preceding Interest Period expires; provided, that (a) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day unless no further Business Day occurs in such month, in which case such Interest Period shall expire on the immediately preceding Business Day; (b) any Interest Period in respect of a Eurocurrency Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clauses (c) and (d), of this definition, end on the last Business Day of a calendar month; (c) no Interest Period with respect to any portion of any Class of Term Loans shall extend beyond such Class’s Term Loan Maturity Date; and (d) no Interest Period with respect to any portion of any Class of Revolving Loans shall extend beyond such Class’s Revolving Commitment Termination Date.

“Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement  or other similar agreement or arrangement, each of which is for the purpose of hedging the interest rate exposure associated with the operations of the Group and not for speculative purposes.

“Interest Rate Determination Date” means, with respect to any Interest Period, the date that is two (2) Business Days prior to the first day of such Interest Period.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter, and any successor statute.

“Investment” means (i) any direct or indirect purchase or other acquisition by any Group Member of, or of a beneficial interest in, any of the Securities of any other Person (other than a Loan Party); (ii) any direct or indirect loan, advance (other than advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contributions by any Group Member to any other Person (other than a Loan Party), including all Indebtedness and accounts receivable from that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business and (iii) all investments consisting of any exchange traded or over the counter derivative transaction, including any Interest Rate Agreement and Currency Agreement, whether 

39

entered into for hedging or speculative purposes.  The amount of any Investment of the type described in clauses (i) and (ii) shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment.

“Issuance Notice” means a notice substantially in the form of Exhibit A-3.

“Issuing Bank” means each of Barclays Bank PLC, Bank of America, N.A., JPMorgan Chase Bank, N.A. and Fortis Bank (Nederland) N.V., as Issuing Bank hereunder and any other Lender that has notified the Administrative Agent that it has agreed to a request by the Borrower Representative to become an Issuing Bank hereunder with respect to U.S. Letters of Credit, Foreign Letters of Credit or Canadian Letters of Credit, as applicable, together with their respective permitted successors and assigns in such capacity. Unless otherwise specified, in respect of any Letters of Credit, “Issuing Bank” shall refer to the applicable Issuing Bank which has issued such Letter of Credit. An Issuing Bank may perform its obligations hereunder through any applicable branch thereof and such branch shall be treated as the applicable Issuing Bank where applicable. 

“Itochu Agreement” means that certain Stockholders’ Agreement, dated as of December 27, 2007, among ITOCHU Corporation, Tommy Hilfiger Group B.V., Tommy Hilfiger Japan Corporation and certain other parties signatory thereto.

“Itochu Amount” means, for any period, the payments paid or payable by any Group Member for such period pursuant to the Itochu Agreement.

“Itochu Guarantee” means that certain Guarantee, dated as of January 23, 2008, by Fortis Bank (Nederland) N.V. of certain obligations of Tommy Hilfiger Group B.V. under the Itochu Agreement for the benefit of ITOCHU Corporation.

“Itochu Obligations” means all obligations of any nature of any Subsidiary of the U.S. Borrower under or with respect to the Itochu Guarantee, the Itochu Agreement and the preferred shares of Tommy Hilfiger Japan Corporation. 

“Japanese Yen” means the lawful currency of Japan.

“Joinder Agreement” means an agreement substantially in the form of Exhibit J.

“Joint Venture” means a joint venture, partnership or other similar arrangement, whether in corporate, partnership or other legal form; provided, that in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party.

“Judgment Currency” has the meaning set forth in Section 10.25.

“Landlord Consent” means, with respect to any Leasehold Property for which a landlord’s consent is required prior to a Loan Party’s granting of a Mortgage on such Leasehold Property, a letter, certificate or other instrument in writing from the lessor under the related lease, pursuant to which, among other things, the landlord consents to the granting of a Mortgage on 

40

such Leasehold Property by the Loan Party tenant, such Landlord Consent to be in form and substance acceptable to the Collateral Agent in its reasonable discretion and sufficient for the Collateral Agent to obtain a Title Policy with respect to such Mortgage.

 “Landlord Personal Property Collateral Access Agreement” means a Landlord Waiver and Consent Agreement substantially in the form of Exhibit I with such amendments or modifications as may be approved by the Collateral Agent.

“Leasehold Property” means any leasehold interest of any Loan Party as lessee under any lease of real property, other than any lease with respect to retail store locations and any such leasehold interest designated from time to time by the Collateral Agent in its sole discretion as not being required to be included in the Collateral.

“Lender” means each financial institution listed on the signature pages hereto as a Lender, and any other Person that becomes a party hereto pursuant to an Assignment Agreement or a Joinder Agreement.  Unless the context clearly indicates otherwise, the term “Lenders” shall include the Swing Line Lender.

“Lender Counterparty” means each Person counterparty to a Hedge Agreement, Cash Management Agreement or Treasury Transaction (who is (or at the time such Hedge Agreement, Cash Management Agreement or Treasury Transaction was entered into, was) a Lender, an Agent or an Affiliate of any thereof (including, for the avoidance of doubt, any Person who is an Agent or a Lender (and any Affiliate thereof) as of the Closing Date but subsequently, whether before or after entering into a Hedge Agreement, Cash Management Agreement or Treasury Transaction, ceases to be an Agent or a Lender, as the case may be).

“Letter of Credit” means a U.S. Letter of Credit, a Canadian Letter of Credit and/or a Foreign Letter of Credit, as applicable.  

“Letter of Credit Sublimit” means the U.S. Letter of Credit Sublimit, the Canadian Letter of Credit Sublimit or the Foreign Letter of Credit Sublimit, as applicable. 

“Leverage Ratio” means the ratio as of the last day of any Fiscal Quarter of (i) Consolidated Total Debt as of such day to (ii) Consolidated Adjusted EBITDA for the four-Fiscal-Quarter period ending on such date.

“Lien” means any lien, mortgage, pledge, assignment or transfer for security purpose, security interest, charge or similar encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale or other title (or extended title) retention agreement, and any lease or license in the nature thereof) and any option, trust or other preferential arrangement having the practical effect of any of the foregoing; provided that in no event shall an operating lease or an agreement to sell be deemed to constitute a Lien.

“Loan” means a Tranche A Term Loan, a Tranche B Term Loan, a Revolving Loan, a Swing Line Loan and an Incremental Term Loan, which (i) in the case of Loans denominated in Dollars, may be a Base Rate Loan or a Eurocurrency Rate Loan, (ii) in the case of Loans denominated in Euros or an Other Foreign Currency, shall be a Eurocurrency Rate 

41

Loan and (iii) in the case of Loans denominated in Canadian Dollars, may be a Canadian Prime Rate Loan or a Eurocurrency Rate Loan.

“Loan Document” means any of this Agreement, the Notes, if any, the Security Documents, the Intercreditor Agreements, each Joinder Agreement, any accession or joinder agreement to the 2023 Debentures Intercreditor Agreement, any documents or certificates executed by the Borrowers in favor of any Issuing Bank relating to Letters of Credit, any Ancillary Document, and all other documents, instruments or agreements executed and delivered by a Loan Party for the benefit of any Agent, any Issuing Bank or any Lender in connection herewith on or after the date hereof. 

“Loan Party” means each Borrower and each Guarantor; provided that each Subsidiary set forth on Schedule 1.01(h) shall be deemed on and after the Closing Date to be a “Loan Party”, a “Guarantor” and a “Foreign Guarantor” for purposes of the provisions contained in Article VI of this Agreement until such Subsidiary becomes a Guarantor hereunder by executing a Counterpart Agreement, upon which execution such Subsidiary shall become a Guarantor.

“Management Determination” has the meaning set forth in Section 7.13(f).

“Mandatory Costs” means the % rate per annum calculated by the Administrative Agent in accordance with Schedule 1.01(f) hereto.

“Margin Stock” has the meaning given in Regulation U of the Board of Governors as in effect from time to time.

“Market Disruption” means any Interest Rate Determination Date on which (i) the Administrative Agent shall have determined (which determination shall be final and conclusive and binding upon all parties hereto), with respect to any Eurocurrency Rate Loans, that by reason of circumstances affecting the London interbank market adequate and fair means do not exist for ascertaining the interest rate applicable to such Loans on the basis provided for in the definition of Adjusted Eurocurrency Rate, or (ii) before the close of business in London on such Interest Rate Determination Date, the Administrative Agent receives notifications from a Lender or Lenders (whose aggregate exposure in respect of any Class of Loans exceeds 50% of that Class of Loans)  that the cost to it of obtaining matching deposits in the London interbank market would be in excess of the Adjusted Eurocurrency Rate.  

“Material Adverse Effect” means any event, development or circumstance that has had or would reasonably be expected to have a material adverse effect on (i) the business, assets, operations or financial condition of the Group (other than any Securitization Subsidiary) taken as a whole; (ii) the ability of any Loan Party to fully and timely perform its Obligations, (iii) the legality, validity, binding effect or enforceability against the Loan Parties of the Loan Documents in a manner which would be prejudicial to the interests of the Secured Parties taken as a whole; or (iv) the rights and remedies available to, or conferred upon, any Agent and any Lender or any other Secured Party under any Loan Document in any manner that would be prejudicial to the interests of the Secured Parties, taken as a whole.

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“Material Company” means (i) any Loan Party, (ii) any Group Member that is listed in Schedule 1.01(g) or (iii) any Group Member that has (x) Group Member Adjusted EBITDA or (y) Group Member Assets representing, respectively, 5% or more of Consolidated Adjusted EBITDA or Consolidated Total Assets.  For this purpose:

(a)

the (i) Group Member Adjusted EBITDA and (ii) Group Member Assets will be determined from its financial statements upon which the latest audited financial statements of the Group have been based;

(b)

if a Subsidiary becomes a Group Member after the date on which the latest audited financial statements of the Group have been prepared, the (i) Group Member Adjusted EBITDA or (ii) Group Member Assets of that Subsidiary will be determined from its latest financial statements;

(c)

the (i) Consolidated Adjusted EBITDA and (ii) Consolidated Total Assets will be determined from its latest audited financial statements, adjusted (where appropriate), in the case of Consolidated Adjusted EBITDA, taking into account pro forma adjustments of the type described in the definition of “Consolidated Adjusted EBITDA” and, in the case of Consolidated Total Assets, to reflect the assets of any company or business subsequently acquired or disposed of; and

(d)

if a Material Company disposes of all or substantially all of its assets to another Group Member, it will immediately cease to be a Material Company and the other Group Member (if it is not already) will immediately become a Material Company.

 “Material Indebtedness” means Indebtedness (other than the Loans and Letters of Credit or, for the avoidance of doubt, any CKI Obligations) of any one or more of the Borrowers or any Subsidiary in an individual principal amount (or Net Mark-to-Market Exposure) of $50,000,000 or more.

“Material Intellectual Property” means any Intellectual Property included in the Collateral that is material to the business of any Group Member.

“Material Real Estate Asset” means any Real Estate Asset in respect of which a Loan Party has an ownership interest with a fair market value in excess of $10,000,000 as of the date of the acquisition thereof, but excluding all Leasehold Properties (i) that are retail store locations, (ii) with respect to which the aggregate payments under the terms of the applicable lease are less than $10,000,000 per annum or whose termination dates under the terms of the applicable lease are not greater than 5 years after the date of the acquisition thereof, (iii) that, by the terms of their respective leases are prohibited from, or the respective landlord does not otherwise grant consent to, recording a Record Document, or (iv) with respect to which, notwithstanding the U.S. Borrower’s commercially reasonable efforts to secure a Landlord Consent pursuant to the terms of Section 3.01(g)(3), such Landlord Consent shall not be forthcoming from the applicable Landlord.

 “Moody’s” means Moody’s Investor Services, Inc.

43

“Mortgage” means one or more instruments of mortgage or leasehold mortgage substantially in the form of Exhibit H, as it may be amended, restated, supplemented or otherwise modified from time to time.

“Multiemployer Plan” means any Employee Benefit Plan which is a “multiemployer plan” as defined in Section 3(37) or Section 4001(a)(3) of ERISA.

“NAIC” means The National Association of Insurance Commissioners, and any successor thereto.

“Narrative Report” means, with respect to the financial statements for which such narrative report is required, a narrative report describing the operations of the Group for the applicable Fiscal Quarter or Fiscal Year and for the period from the beginning of the then current Fiscal Year to the end of such period to which such financial statements relate.

“Net Assets” has the meaning set forth in Section 7.13(h).

“Net Cash Proceeds” means (a) with respect to any Asset Sale, an amount equal to:  (i) cash payments (including any cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) received by any Group Member from such Asset Sale, minus (ii) any bona fide direct costs incurred in connection with such Asset Sale, including (1) taxes paid or payable as a result thereof including transfer taxes and income or gains taxes payable as a result of any gain recognized in connection with such Asset Sale, (2) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Loans) that is secured by a Lien on the stock or assets in question and that is required to be repaid under the terms thereof as a result of such Asset Sale, (3) a reasonable reserve established in accordance with GAAP retained by the applicable Group Member, including, without limitation for any indemnification payments (fixed or contingent) attributable to seller’s indemnities and representa­tions and warranties to purchaser in respect of such Asset Sale undertaken by any Group Member in connection with such Asset Sale, (4) attorneys’ fees, accountants’ fees, investment banking fees, survey costs, title insurance premiums and related search and recording charges, transfer taxes, deed or mortgage recording taxes, other customary expenses and brokerage, consultant and other customary fees incurred in connection therewith and (5) in case of any such Asset Sale occurring in a jurisdiction other than the United States, the amount of all taxes paid (or reasonably estimated to be payable) by the Group Members that are directly attributable to the distribution of such cash proceeds from such jurisdiction or to the repatriation of such cash proceeds into the United States or The Netherlands, but only to the extent the Group Members have used commercially reasonable efforts to reduce or eliminate such taxes, including by electing to prepay Loans in such a manner that would result in the lowest possible amount of such taxes; (b) (i) any cash payments or proceeds received by any Group Member (1) under any casualty insurance policy in respect of a covered loss thereunder or (2) as a result of the taking of any assets of any Group Member by any Person pursuant to the power of eminent domain, condemnation or otherwise, or pursuant to a sale of any such assets to a purchaser with such power under threat of such a taking, minus (ii) (1) any actual and reasonable costs incurred by any Group Member in connection with the adjustment or settlement of any claims of such Group Member in respect thereof, (2) any bona fide direct costs incurred in connection with any sale of such assets as referred to in preceding 

44

clause (i)(2), including income taxes payable as a result of any gain recognized in connection therewith and (3) in case of any such event occurring in a jurisdiction other than the United States, the amount of all taxes paid (or reasonably estimated to be payable) by the Group Members that are directly attributable to the distribution of such cash proceeds from such jurisdiction or to the repatriation of such cash proceeds into the United States or The Netherlands, but only to the extent the Group Members have used commercially reasonable efforts to reduce or eliminate such taxes, including by electing to prepay Loans in such a manner that would result in the lowest possible amount of such taxes; (c) with respect to any issuance or incurrence of Indebtedness (other than in connection with a Qualified Securitization Financing) or any sale of Equity Interests, the cash proceeds thereof, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses; and (d) with respect to any issuance or incurrence of Indebtedness in connection with a Qualified Securitization Financing, the cash proceeds thereof, net of any related Securitization Fees and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses, received directly or indirectly from time to time in connection with such Qualified Securitization Financing from Persons that are not Securitization Subsidiaries, including any such cash proceeds received in connection with an increase in the outstanding program or facility amount with respect to such Qualified Securitization Financing, but excluding any cash collections from the Securitization Assets backing such Qualified Securitization Financing that are reinvested (or deemed to be reinvested) by such Persons in additional Securitization Assets without any increase in the Indebtedness outstanding in connection with such Qualified Securitization Financing.

“Net Mark-to-Market Exposure” of a Person means, as of any date of determination, the excess (if any) of all unrealized losses over all unrealized profits of such Person arising from Hedge Agreements or other Indebtedness of the type described in clause (viii) of the definition thereof.  As used in this definition, “unrealized losses” means the fair market value of the cost to such Person of replacing such Hedge Agreement or such other Indebtedness as of the date of determination (assuming the Hedge Agreement or such other Indebtedness were to be terminated as of that date), and “unrealized profits” means the fair market value of the gain to such Person of replacing such Hedge Agreement or such other Indebtedness as of the date of determination (assuming such Hedge Agreement or such other Indebtedness were to be terminated as of that date).

“Non-Consenting Lender” has the meaning set forth in Section 2.23. 

“Non-Public Information” means information which has not been disseminated in a manner making it available to investors generally, within the meaning of Regulation FD.

“Non-U.S. Lender” has the meaning set forth in Section 2.20(c).

“Note” means a Tranche A Term Loan Note, a Tranche B Term Loan Note, an Incremental Term Loan Note, a Revolving Loan Note or a Swing Line Note.

“Notice” means a Borrowing Notice, an Issuance Notice, or a Conversion/ Continuation Notice.

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“Obligations” means all obligations of every nature of each Loan Party, including obligations from time to time owed to Secured Parties, under any Loan Document, Hedge Agreement, Cash Management Agreement or Treasury Transaction whether for principal, interest (including interest which, but for the filing of a petition in bankruptcy with respect to such Loan Party, would have accrued on any Obligation, whether or not a claim is allowed against such Loan Party for such interest in the related bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit, payments for early termination of Hedge Agreements, fees, expenses, indemnification or otherwise. 

“Offer” has the meaning set forth in Section 2.13(c).

“Offer Loans” has the meaning set forth in Section 2.13(c).

“Organizational Documents” means with respect to any Person all formation, organizational and governing documents, instruments and agreements, including (i) with respect to any corporation, its certificate or articles of incorporation or organization, its by-laws, any memorandum of incorporation or other constitutional documents, (ii) with respect to any limited partnership, its certificate of limited partnership and its partnership agreement, (iii) with respect to any general partnership, its partnership agreement and (iv) with respect to any limited liability company, its certificate of incorporation or formation (and any amendments thereto), certificate of incorporation on change of name (if any), its memorandum and articles of association (if any), its articles of organization (if any), the shareholders’ list (if any) and its limited liability company agreement or operating agreement.  In the event any term or condition of this Agreement or any other Loan Document requires any Organizational Document to be certified by a secretary of state or similar governmental official, the reference to any such “Organizational Document” shall only be to a document of a type customarily certified by such governmental official.

“Other Foreign Currencies” means Japanese Yen and Pounds Sterling.

“Other Taxes” means any and all present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies (and interest, fines, penalties and additions related thereto) arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

“Parallel Debt” means, in respect of a Loan Party, its Foreign Parallel Debt or its U.S. Parallel Debt.

“Participant Register” has the meaning set forth in Section 10.06(g)(iv).

“Patents” has the meaning set forth in the U.S. Pledge and Security Agreement.

“PATRIOT Act” has the meaning set forth in Section 3.01(u).  

“Payment in Full” or “Paid in Full” means the payment in full of all Obligations (other than obligations under Hedge Agreements, Cash Management Agreements or Treasury Transactions not yet due and payable and contingent obligations not yet due and payable) and 

46

cancellation, expiration or Cash Collateralization of all Letters of Credit and termination of all Commitments to lend under this Agreement.

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

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 or Section 430 of the Internal Revenue Code or Section 302 or Section 303 of ERISA.

“Perfection Certificate” means a certificate in form satisfactory to the Collateral Agent that provides information with respect to the personal or mixed property of each U.S. Loan Party.

“Permitted Acquisition” means any acquisition by the U.S. Borrower and/or any of its Wholly-Owned Restricted Subsidiaries of, or any transaction that results in the U.S. Borrower and/or any of its Wholly-Owned Restricted Subsidiaries owning, whether by purchase, merger, exclusive inbound license, transfer of rights under Copyright or otherwise, all or substantially all of the assets of, all of the Equity Interests of, or a business line or unit or a division of, any Person; provided, that:

(a)

immediately prior to, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom;

(b)

all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable laws and in conformity with all applicable Governmental Authorizations;

(c)

in the case of the acquisition of Equity Interests, all of the Equity Interests (except for any such Securities in the nature of directors’ qualifying shares required pursuant to applicable law) acquired or otherwise issued by such Person or any newly formed Subsidiary of the U.S. Borrower in connection with such acquisition shall be owned 100.0% by the Loan Parties;

(d)

the Group shall be in compliance with the financial covenants set forth in Section 6.07(a) and (b) on a pro forma basis after giving effect to such acquisition as of the last day of the Fiscal Quarter most recently ended; 

(e)

the acquisition shall not result in the Group acquiring any interest, direct or indirect, in any Loan; and

(f)

in the case of an acquisition involving consideration in excess of $25,000,000, the Borrower Representative shall have delivered to the Administrative Agent at least five (5) Business Days prior to such acquisition, a Compliance Certificate evidencing compliance with Sections 6.07(a) and 6.07(b) as required under clause (d) above.

“Permitted Capital Expenditure Amount” has the meaning set forth in Section 6.07(c).   

47

“Permitted Liens” means each of the Liens permitted pursuant to Section 6.02.

“Permitted Refinancing” means, with respect to any Person, any modification, refinancing, refunding, renewal or extension of any Indebtedness of such Person; provided, that (i) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed or extended except by an amount equal to unpaid accrued interest and premium thereon plus other reasonable amounts paid, and fees and expenses reasonably incurred, in connection with such modification, refinancing, refunding, renewal or extension and by an amount equal to any existing commitments unutilized thereunder; (ii) (A) such modification, refinancing, refunding, renewal or extension has a final maturity date equal to or later than the earlier of (x) the final maturity date of the Indebtedness being modified, refinanced, refunded, renewed or extended and (y) the date that is 90 days after the final maturity date of the Term Loans, and (B) has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the earlier of (x) the Indebtedness being modified, refinanced, refunded, renewed or extended and (y) the Term Loans; (iii) at the time thereof, no Default or Event of Default shall have occurred and be continuing; (iv) to the extent such Indebtedness being modified, refinanced, refunded, renewed or extended is subordinated in right of payment to the Obligations, such modification, refinancing, refunding, renewal or extension is subordinated in right of payment to the Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being modified, refinanced, refunded, renewed or extended and (v) the obligors in respect of such Indebtedness being modified, refinanced, refunded, renewed or extended are the obligors thereon and to the extent an additional obligor would otherwise be permitted to incur such Indebtedness under another provision of Section 6.01, such additional obligor may be an obligor thereon.

“Permitted Sale and Lease-Back” has the meaning set forth in Section 6.10.

“Person” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and Governmental Authorities.

“Platform” has the meaning set forth in Section 5.01(n).

“Pounds Sterling” means the lawful currency of the United Kingdom.

“Prime Rate” means the rate of interest publicly announced from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City.  The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer.  The Administrative Agent or any other Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Rate.

“Principal Office” means, for each of the Administrative Agent, each Swing Line Lender and each Issuing Bank, such Person’s “Principal Office” which, in the case of the Administrative Agent, may include one or more separate offices with respect to Approved 

48

Currencies as set forth on Schedule 1.01(d), or such other office or office of a third party or sub-agent, as appropriate, as such Person may from time to time designate in writing to the Borrowers, the Administrative Agent and each Lender.

“Projections” has the meaning set forth in Section 4.08.

“Pro Rata Share” means (i) with respect to all payments, computations and other matters relating to the Tranche A Term Loans of any Lender, as the context requires, the percentage obtained by dividing (x) (1) the U.S. Tranche A Term Loan Exposure of that Lender by (2) the aggregate U.S. Tranche A Term Loan Exposure of all Lenders or (y) (1) the Foreign Tranche A Term Loan Exposure of that Lender by (2) the aggregate Foreign Tranche A Term Loan Exposure of all Lenders; (ii) with respect to all payments, computations and other matters relating to all of the Tranche B Term Loans of any Lender, as the context requires, the percentage obtained by dividing (x) (1) the U.S. Tranche B Term Loan Exposure of that Lender by (2) the aggregate U.S. Tranche B Term Loan Exposure of all Lenders or (y) (1) the Foreign Tranche B Term Loan Exposure of that Lender by (2) the aggregate Foreign Tranche B Term Loan Exposure of all Lenders; (iii) with respect to all payments, computations and other matters relating to the Revolving Commitment or Revolving Loans of any Lender or any Letters of Credit issued or participations purchased therein by any Lender or any participations in any Swing Line Loans purchased by any Lender, as the context requires, the percentage obtained by dividing (x) (1) the U.S. Revolving Exposure of that Lender by (2) the aggregate U.S. Revolving Exposure of all Lenders, (y) (1) the Foreign Revolving Exposure of that Lender by (2) the aggregate Foreign Revolving Exposure of all Lenders or (z) (1) the Canadian Revolving Exposure of that Lender by (2) the aggregate Canadian Revolving Exposure of all Lenders; and (iv) with respect to all payments, computations, and other matters relating to Incremental Term Loan Commitments or Incremental Term Loans of a particular Series, the percentage obtained by dividing (x) the Incremental Term Loan Exposure of that Lender with respect to that Series by (y) the aggregate Incremental Term Loan Exposure of all Lenders with respect to that Series.  For all other purposes with respect to each Lender, “Pro Rata Share” means the percentage obtained by dividing (i) an amount equal to the sum of the Tranche A Term Loan Exposure, the Tranche B Term Loan Exposure, the Revolving Exposure and the Incremental Term Loan Exposure of that Lender, by (ii) an amount equal to the sum of the aggregate Tranche A Term Loan Exposure, the aggregate Tranche B Term Loan Exposure, the aggregate Revolving Exposure and the aggregate Incremental Term Loan Exposure of all Lenders.

“Qualified Securitization Financing” means any transaction or series of transactions entered into by a Group Member  pursuant to which such Group Member, sells, conveys, contributes, assigns, grants an interest in or otherwise transfers to a Securitization Subsidiary, Securitization Assets (and/or grants a security interest in such Securitization Assets transferred or purported to be transferred to such Securitization Subsidiary), and which Securitization Subsidiary funds the acquisition of such Securitization Assets (i) with cash, (ii) through the issuance to such Group Member of Seller’s Retained Interests or an increase in such Seller’s Retained Interests, and/or (iii) with proceeds from the sale, pledge or collection of Securitization Assets.

“RBC” has the meaning specified in the preamble hereto.

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“Real Estate Asset” means, at any time of determination, any interest (fee or leasehold) then owned by any Loan Party in any real property.

“Record Document” means, with respect to any Leasehold Property, (i) the lease evidencing such Leasehold Property or a memorandum thereof, executed and acknowledged by the owner of the affected real property, as lessor, or (ii) if such Leasehold Property was acquired or subleased from the holder of a Recorded Leasehold Interest, the applicable assignment or sublease document, executed and acknowledged by such holder, in each case in form sufficient to give such constructive notice upon recordation and otherwise in form reasonably satisfactory to the Collateral Agent.

“Recorded Leasehold Interest” means a Leasehold Property with respect to which a Record Document has been recorded in all places necessary or desirable, in the Collateral Agent’s reasonable judgment, to give constructive notice of such Leasehold Property to third-party purchasers and encumbrances of the affected real property.

“Refunded Swing Line Loans” has the meaning set forth in Section 2.03(b)(iv).

“Register” has the meaning set forth in Section 2.07(b).

“Regulation” has the meaning set forth in Section 4.23.

“Regulation D” means Regulation D of the Board of Governors, as in effect from time to time.

“Regulation FD” means Regulation FD as promulgated by the SEC under the Securities Act and Exchange Act.

“Regulation U” means Regulation U of the Board of Governors, as in effect from time to time.

“Reimbursement Date” has the meaning set forth in Section 2.04(d)(i).

“Related Fund” means, with respect to any Lender that is an investment fund, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

“Release” means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater.

“Relevant Jurisdiction” means, in relation to a Loan Party: (i) its jurisdiction of organization; (ii) any jurisdiction where any asset subject to or intended to be subject to the Security Documents to be created by it is situated; and (iii) any jurisdiction where it conducts its business.

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“Relevant Restrictive Covenants” has the meaning set forth in Section 6.16(a).

“Replacement Lender” has the meaning set forth in Section 2.23.

“Required Lenders” means one or more Lenders having or holding Tranche A Term Loan Exposure, Tranche B Term Loan Exposure, Incremental Term Loan Exposure and/or Revolving Exposure and representing more than 50.0% of the sum of (i) the aggregate Tranche A Term Loan Exposure of all Lenders, (ii) the aggregate Tranche B Term Loan Exposure of all Lenders, (iii) the aggregate Revolving Exposure of all Lenders and (iv) the aggregate Incremental Term Loan Exposure of all Lenders.

“Required Prepayment Date” has the meaning set forth in Section 2.15(c).

“Restricted Payment” means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of any Group Member now or hereafter outstanding, except a dividend payable solely in shares of Equity Interests (other than Disqualified Equity Interests); (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock of any Group Member now or hereafter outstanding, except any such payment, purchase or acquisition payable solely in shares of Equity Interests (other than Disqualified Equity Interests); (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock of any Group Member now or hereafter outstanding, (iv) any payment or prepayment of principal of, premium, if any, or interest on, or redemption, purchase, retirement, defeasance (including in-substance or legal defeasance), sinking fund or similar payment with respect to, the 2020 Notes and (v) any payment or prepayment of principal of, premium, if any, or interest on, or redemption, purchase, retirement or similar payment with respect to Subordinated Indebtedness (other than if such Subordinated Indebtedness is owed by the U.S. Borrower to any Restricted Subsidiary or owed by any Restricted Subsidiary to the U.S. Borrower or any other Restricted Subsidiary and, with respect to amounts owing to Restricted Subsidiaries that are not Loan Parties, in the ordinary course of business). 

“Restricted Subsidiary” means any Subsidiary of the U.S. Borrower other than an Unrestricted Subsidiary.

“Revolving Commitment” means a U.S. Revolving Commitment, a Canadian Revolving Commitment and/or a Foreign Revolving Commitment, as applicable.

“Revolving Commitment Period” means the U.S. Revolving Commitment Period, the Canadian Revolving Commitment Period or the Foreign Revolving Commitment Period, as applicable.

“Revolving Commitment Termination Date” means the U.S. Revolving Commitment Termination Date, the Canadian Revolving Commitment Termination Date or the Foreign Revolving Commitment Termination Date, as applicable.

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“Revolving Exposure” means, with respect to any Lender as of any date of determination, the sum of such Lender’s U.S. Revolving Exposure, Canadian Revolving Exposure and Foreign Revolving Exposure.

“Revolving Loan” means a U.S. Revolving Loan, a Canadian Revolving Loan and/or a Foreign Revolving Loan, as applicable.  

“Revolving Loan Note” means a promissory note substantially in the form of Exhibit B-3, as it may be amended, restated, supplemented or otherwise modified from time to time.

“S&P” means Standard & Poor’s, a Division of The McGraw-Hill Companies, Inc.

“Sale and Lease-Back” has the meaning set forth in Section 6.10.

“Screen Rate” means, in relation to a Loan denominated in Dollars or Other Foreign Currency, the British Bankers’ Association Interest Settlement Rate for the relevant currency and Interest Period, in relation to a Loan denominated in Canadian Dollars, the British Bankers’ Association Canadian Dollar Rate for the relevant Interest Period and in relation to a Loan denominated in Euros, the percentage rate per annum determined by the Banking Federation of the European Union for the relevant period, in each case, displayed on the appropriate page of the Reuters screen. If the agreed page is replaced or service ceases to be available, the Administrative Agent may specify another page or service displaying the appropriate rate.

“SEC” means the United States Securities and Exchange Commission and any successor Governmental Authority performing a similar function.

“Secured Parties” means the Agents, Lenders, Issuing Banks, the Lender Counterparties and the Ancillary Lenders and shall include, without limitation, all former Agents, Lenders, Issuing Banks, Lender Counterparties and Ancillary Lenders to the extent that any Obligations owing to such Persons were incurred while such Persons were Agents, Lenders, Issuing Banks, Lender Counterparties or Ancillary Lenders and such Obligations have not been paid or satisfied in full.

“Securities” means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of Indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing. 

“Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor statute.

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“Securitization Assets” means any accounts receivable owed to a Group Member (whether now existing or arising or acquired in the future) arising in the ordinary course of business from the sale of goods or services, all collateral securing such accounts receivable, all contracts and contract rights and all guarantees or other obligations in respect of such accounts receivable, all proceeds of such accounts receivable and other assets (including contract rights) which are of the type customarily transferred or in respect of which security interests are customarily granted in connection with securitizations of accounts receivable and which are sold, conveyed, contributed, assigned, pledged or otherwise transferred by such Group Member to a Securitization Subsidiary.

“Securitization Fees” means, with respect to any Qualified Securitization Financing, distributions or payments made, or fees paid, directly or by means of discounts with respect to any Indebtedness issued or sold in connection with such Qualified Securitization Financing, to a Person that is not a Securitization Subsidiary in connection with such Qualified Securitization Financing.

“Securitization Repurchase Obligation” means any obligation of a seller of Securitization Assets in a Qualified Securitization Financing to repurchase Securitization Assets arising as a result of a breach of a representation, warranty or covenant with respect to such Securitization Assets, including as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, off set, counterclaim or other dilution of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller, but in each case, not as a result of such receivable being or becoming uncollectible for credit reasons. 

 “Securitization Subsidiary” means a wholly owned Subsidiary of the U.S. Borrower (or another Person formed for the purposes of engaging in a Qualified Securitization Financing in which any Group Member makes an Investment and to which such Group Member transfers, contributes, sells, conveys or grants a security interest in Securitization Assets) that engages in no activities other than in connection with the acquisition and/or financing of Securitization Assets of the Group, all proceeds thereof and all rights (contingent and other), collateral and other assets relating thereto, and any business or activities incidental or related to such business, and which is designated by the Board of Directors of the U.S. Borrower (or a duly authorized committee thereof) or such other Person (as provided below) as a Securitization Subsidiary and (a) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by any Group Member, other than another Securitization Subsidiary (excluding guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates any Group Member, other than another Securitization Subsidiary, in any way other than pursuant to Standard Securitization Undertakings or (iii) subjects any property or asset (other than Securitization Assets) of any Group Member, other than another Securitization Subsidiary, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings, (b) with which no Group Member, other than another Securitization Subsidiary, has any material contract, agreement, arrangement or understanding other than (i) the applicable receivables purchase agreements and related agreements, in each case, having reasonably customary terms, or (ii) on terms which the U.S. Borrower reasonably believes to be no less favorable to the applicable Group Member than those that might be obtained at the time from Persons that are not Affiliates of the Group and (c) to which no Group 

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Member other than another Securitization Subsidiary, has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results.  Any such designation by the Board of Directors of the U.S. Borrower (or a duly authorized committee thereof) or such other Person shall be evidenced to the Administrative Agent by delivery to the Administrative Agent of a certified copy of the resolution of the Board of Directors of the U.S. Borrower (or a duly authorized committee thereof) or such other Person giving effect to such designation and a certificate executed by an Authorized Officer certifying that such designation complied with the foregoing conditions.

 “Security Documents” means the U.S. Security Agreements, the Mortgages, the Intellectual Property Security Agreements, the Landlord Personal Property Collateral Access Agreements, if any, each Foreign Law Security Document, if any, and all other instruments, documents and agreements delivered by any Loan Party pursuant to this Agreement or any of the other Loan Documents in order to grant to the Collateral Agent, for the benefit of Secured Parties, a Lien on any assets or property of that Loan Party as security for all or certain of the Obligations, including UCC financing statements and amendments thereto and filings with the United States Patent and Trademark Office and the United States Copyright Office.

“Seller” has the meaning specified in the recitals hereto.

“Seller BVI” has the meaning specified in the recitals hereto.

“Seller’s Retained Interest” means the debt or equity interests held by any Group Member in a Securitization Subsidiary to which Securitization Assets have been transferred, including any such debt or equity received as consideration for or as a portion of the purchase price for the Securitization Assets transferred, or any other instrument through such Group Member has rights to or receives distributions in respect of any residual or excess interest in the Securitization Assets.

“Series” has the meaning set forth in Section 2.24.

“Series A Preferred Stock” means the Series A Convertible Preferred Stock of the U.S. Borrower issued and outstanding as of the Closing Date. 

“Software” means computer software of whatever kind or purpose, including code, tools, developers kits, utilities, graphical user interfaces, menus, images, icons, and forms, and all software stored or contained therein or transmitted thereby, and related documentation.

“Solvency Certificate” means a Solvency Certificate of the principal financial officer of the Borrower Representative substantially in the form of Exhibit E-2.

“Solvent” means, with respect to the Group on a consolidated basis, that as of the date of determination, (a) the sum of such Group’s debt (including contingent liabilities) does not exceed the present fair saleable value of such Group’s present assets; (b) such Group’s capital is not unreasonably small in relation to its business as of the date of determination; and (c) such Group has not incurred and does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due (whether at maturity or otherwise).  For purposes of this definition, the amount of any contingent liability at 

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any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5).

 “Standard Securitization Undertakings” means representations, warranties, covenants, Securitization Repurchase Obligations and indemnities entered into by any Group Member that are reasonably customary in accounts receivable securitization transactions. 

“Subordinated Foreign Intercompany Obligations” has the meaning set forth in Section 7.07(b). 

“Subordinated Indebtedness” means, with respect to the Obligations, any Indebtedness of any Loan Party that is by its terms subordinated in right of payment to any of the Obligations.

“Subordinated U.S. Intercompany Obligations” has the meaning set forth in Section 7.07(a).

 “Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than 50.0% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; provided, that in determining the percentage of ownership interests of any Person controlled by another Person, no ownership interest in the nature of a “qualifying share” of the former Person shall be deemed to be outstanding; provided, further, that for purposes of Article IV and V, no Securitization Subsidiary shall be considered a Subsidiary of the U.S. Borrower; provided, further, that, notwithstanding anything contained herein or otherwise, for purposes of this Agreement and any other Loan Document, the CKI Trust shall not be considered a Subsidiary of the U.S. Borrower; and provided, further, that unless the context otherwise requires, a Subsidiary shall mean a direct or indirect Subsidiary of the U.S. Borrower.

“Swing Line Lender” means each of the Canadian Swing Line Lender and the U.S. Swing Line Lender.  

“Swing Line Loan” means a Canadian Swing Line Loan or a U.S. Swing Line Loan, as applicable.

“Swing Line Note” means a promissory note substantially in the form of Exhibit B-4, as it may be amended, restated, supplemented or otherwise modified from time to time.

“Syndication Agent” has the meaning set forth in the preamble.

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“Tax” means any present or future tax, levy, impost, duty, assessment, charge, fee, deduction or withholding (and interest, fines, penalties and additions related thereto) of any nature and whatever called, by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or assessed.

“Term Lenders” means the Lenders having Tranche A Term Loan Exposure, Tranche B Exposure and Incremental Term Loan Exposure of each applicable Series.

“Term Loan” means a Tranche A Term Loan, a Tranche B Term Loan and an Incremental Term Loan.

“Term Loan Commitment” means the Tranche A Term Loan Commitment, the Tranche B Term Loan Commitment or the Incremental Term Loan Commitment of a Lender, and “Term Loan Commitments” means such commitments of all Lenders.

“Term Loan Maturity Date” means the Tranche A Term Loan Maturity Date, the Tranche B Term Loan Maturity Date and the Incremental Term Loan Maturity Date of any Series of Incremental Term Loans.

“Terminated Lender” has the meaning set forth in Section 2.23.

“TH Acknowledgment and Consent” means that certain Irrevocable Acknowledgment and Consent Agreement dated as of May 8, 2006 among Mr. Tommy Hilfiger, Tommy Hilfiger Licensing LLC, Tommy Hilfiger U.S.A., Inc. and Elmira (BVI) Unlimited (as the same shall have been amended, restated, supplemented or modified prior to the Closing Date).

“TH Documents” means the TH Employment Agreements and the TH Acknowledgment and Consent.

“TH Employment Agreements” means (i) that certain Amended and Restated Employment Agreement dated as of May 9, 2006 between Tommy Hilfiger U.S.A., Inc. and Mr. Tommy Hilfiger (as the same shall have been amended, restated, supplemented or modified prior to the Closing Date) and (ii) that certain Employment Agreement dated as of May 9, 2006 between the Acquired Business and Mr. Tommy Hilfiger (as the same shall have been amended, restated, supplemented or modified prior to the Closing Date).

“Title Company” has the meaning set forth in Section 3.01(g)(4).

“Title Policy” has the meaning set forth in Section 3.01(g)(4).

“Total Utilization of Canadian Revolving Commitments” means, as at any date of determination, the Dollar Equivalent of the sum of (i) the aggregate principal amount of all outstanding Canadian Revolving Loans (other than Canadian Revolving Loans made for the purpose of repaying any Refunded Swing Line Loans or reimbursing the applicable Issuing Bank for any amount drawn under any Canadian Letter of Credit, but not yet so applied), (ii) the aggregate principal amount of all outstanding Canadian Swing Line Loans and (iii) the Canadian Letter of Credit Usage.

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“Total Utilization of Foreign Revolving Commitments” means, as at any date of determination, the Euro Equivalent of the sum of (i) the aggregate principal amount of all outstanding Foreign Revolving Loans (other than Foreign Revolving Loans made for the purpose of reimbursing the applicable Issuing Bank for any amount drawn under any Foreign Letter of Credit, but not yet so applied) and (ii) the Foreign Letter of Credit Usage.

“Total Utilization of U.S. Revolving Commitments” means, as at any date of determination, the Dollar Equivalent of the sum of (i) the aggregate principal amount of all outstanding U.S. Revolving Loans (other than U.S. Revolving Loans made for the purpose of repaying any Refunded Swing Line Loans or reimbursing the applicable Issuing Bank for any amount drawn under any U.S. Letter of Credit, but not yet so applied), (ii) the aggregate principal amount of all outstanding U.S. Swing Line Loans and (iii) the U.S. Letter of Credit Usage.

“Total Utilization of Revolving Commitments” means, as at any date of determination, the sum of (i) the Total Utilization of U.S. Revolving Commitments, (ii) the Total Utilization of Canadian Revolving Commitments and (iii) the Total Utilization of Foreign Revolving Commitments.

“Trademarks” has the meaning set forth in the U.S. Pledge and Security Agreement.

“Tranche A Term Loan” means a U.S. Tranche A Term Loan and/or a Foreign Tranche A Term Loan, as applicable. 

“Tranche A Term Loan Commitment” means a U.S. Tranche A Term Loan Commitment and/or a Foreign Tranche A Term Loan Commitment, as applicable.  

“Tranche A Term Loan Exposure” means, with respect to any Lender, as of any date of determination, the sum of such Lender’s Foreign Tranche A Term Loan Exposure and U.S. Tranche A Term Loan Exposure.

“Tranche A Term Loan Maturity Date” means the earlier of (i) the fifth anniversary of the Closing Date and (ii) with respect to the Foreign Tranche A Term Loans or the U.S. Tranche A Term Loans, as applicable, the date on which all such Tranche A Term Loans shall become due and payable in full hereunder, whether by acceleration or otherwise.

“Tranche A Term Loan Note” means a promissory note substantially in the form of Exhibit B-1, as it may be amended, restated, supplemented or otherwise modified from time to time.

“Tranche B Term Loan” means a U.S. Tranche B Term Loan and/or a Foreign Tranche B Term Loan, as applicable.  

“Tranche B Term Loan Commitment” means a U.S. Tranche B Term Loan Commitment and/or a Foreign Tranche B Term Loan Commitment, as applicable.

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“Tranche B Term Loan Exposure” means, with respect to any Lender, as of any date of determination, the sum of such Lender’s Foreign Tranche B Term Loan Exposure and U.S. Tranche B Term Loan Exposure.

“Tranche B Term Loan Maturity Date” means the earlier of (i) the sixth anniversary of the Closing Date and (ii) with respect to the Foreign Tranche B Term Loans or the U.S. Tranche B Term Loans, as applicable, the date on which all such Tranche B Term Loans shall become due and payable in full hereunder, whether by acceleration or otherwise.

“Tranche B Term Loan Note” means a promissory note substantially in the form of Exhibit B-2, as it may be amended, restated, supplemented or otherwise modified from time to time.

“Transactions” means the Acquisition, the refinancing of the Existing Credit Facilities Indebtedness, the tender for and satisfaction and discharge of the Existing Notes, the issuance of the 2020 Notes, the entry into this Agreement and the initial borrowing of the Loans hereunder on the Closing Date, the Equity Contribution and the issuance of common equity of the U.S. Borrower to the Seller as required by the terms of the Acquisition Agreement.

“Transaction Costs” means the fees, costs and expenses payable by any Group Member on or before the Closing Date in connection with the Transactions.

“Treasury Transaction” means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and not for speculative purposes.

“Type of Loan” means (i) with respect to either Term Loans or Revolving Loans, a Base Rate Loan, a Eurocurrency Rate Loan or a Canadian Prime Rate Loan and (ii) with respect to Swing Line Loans, a Base Rate Loan or a Canadian Prime Rate Loan.

“UCC” means the Uniform Commercial Code (or any similar or equivalent legislation, including Personal Property Security legislation in Canada) as in effect in any applicable jurisdiction.

“UK” means the United Kingdom.

“Unrestricted Subsidiary” means any Subsidiary of the U.S. Borrower designated by the Board of Directors of the U.S. Borrower (or a duly authorized committee thereof) as an Unrestricted Subsidiary pursuant to Section 6.03 hereof subsequent to the date hereof, and any Subsidiary formed or acquired by an Unrestricted Subsidiary following such Unrestricted Subsidiary’s designation.

“Up-Stream or Cross-Stream Security” has the meaning set forth in Section 7.13(a).

“U.S. Borrower” has the meaning specified in the preamble hereto.

“U.S. Contributing Guarantors” has the meaning set forth in section 7.02(b).

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“U.S. Corresponding Debt” has the meaning set forth in Section 9.14(a)(ii).

“U.S. Guaranteed Obligations” has the meaning set forth in Section 7.01(a).

“U.S. Grantor” has the meaning specified in the U.S. Pledge and Security Agreement or the CKI Related Assets Pledge and Security Agreement, as applicable. 

“U.S. Guarantor” means each Guarantor that is a U.S. Subsidiary.

“U.S. Issuing Bank” means an Issuing Bank that has agreed to issue U.S. Letters of Credit. 

“U.S. Lender” has the meaning set forth in Section 2.20(c).

“U.S. Letter of Credit” means any commercial or standby letter of credit issued or to be issued by an Issuing Bank for the account of the U.S. Borrower or any of its Subsidiaries pursuant to Section 2.04(a)(i) of this Agreement, and any letter of credit listed on Schedule 1.01(k) issued and outstanding as of the Closing Date.  Each such letter of credit listed on Schedule 1.01(k) shall be deemed to constitute a U.S. Letter of Credit and a Letter of Credit issued hereunder on the Closing Date for all purposes under this Agreement and the other Loan Documents.

“U.S. Letter of Credit Sublimit” means the lesser of (a) $220,000,000 and (b) the aggregate unused amount of the U.S. Revolving Commitments then in effect.  

“U.S. Letter of Credit Usage” means, as at any date of determination, the sum of (i) the maximum aggregate amount which is, or at any time thereafter may become, available for drawing under all U.S. Letters of Credit then outstanding, and (ii) the aggregate amount of all drawings under U.S. Letters of Credit honored by an Issuing Bank and not theretofore reimbursed by or on behalf of the U.S. Borrower.

 “U.S. Loan” means a U.S. Tranche A Term Loan, a U.S. Tranche B Term Loan and/or a U.S. Revolving Loan.

“U.S. Loan Party” means the U.S. Borrower and each U.S. Guarantor.

“U.S. Offer” has the meaning set forth in Section 2.13(c).

“U.S. Offer Loans” has the meaning set forth in Section 2.13(c).

“U.S.-Owned DRE” means any entity that (A) is disregarded as an entity separate from its owner for U.S. federal tax purposes and is directly owned by the U.S. Borrower or a U.S. Subsidiary or (B) is treated as a partnership for U.S. federal tax purposes and all of the partners of which are domestic corporations for U.S. federal tax purposes, and, in the case of clause (A) or (B), that directly owns Equity Interests in a Foreign Subsidiary and does not own any significant asset other than Equity Interests and Securities of Foreign Subsidiaries.

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“U.S. Parallel Debt” means in respect of a Loan Party (other than a Foreign Loan Party), any amount which that Loan Party owes to the Collateral Agent under Section 9.14.

“U.S. Pledge Agreement” means the U.S. Pledge Agreement to be executed by the U.S. Borrower and certain U.S. Guarantors (other than CKI and the CKI Affiliates), as it may be amended, restated, supplemented or otherwise modified from time to time, pursuant to which  certain U.S. Loan Parties pledge shares in the stock of Foreign Subsidiaries in support of the Foreign Obligations.

“U.S. Pledge and Security Agreement” means the U.S. Pledge and Security Agreement to be executed by the U.S. Borrower and each U.S. Guarantor (other than CKI and the CKI Affiliates) substantially in the form of Exhibit G, as it may be amended, restated, supplemented or otherwise modified from time to time.

“U.S. Refunded Swing Line Loans” has the meaning set forth in Section 2.03(b)(iv).

“U.S. Revolving Commitment” means the commitment of a Lender to make or otherwise fund any U.S. Revolving Loan and to acquire participations in U.S. Letters of Credit and Swing Line Loans hereunder and “U.S. Revolving Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s U.S. Revolving Commitment, if any, is set forth on Schedule 1.01(c) or in the applicable Assignment Agreement or Joinder Agreement, as applicable, subject to any adjustment or reduction pursuant to the terms and conditions hereof.  The aggregate amount of the U.S. Revolving Commitments as of the Closing Date is $265,000,000.

“U.S. Revolving Commitment Period” means the period from the Closing Date to but excluding the U.S. Revolving Commitment Termination Date

“U.S. Revolving Commitment Termination Date” means the earliest to occur of (i) the fifth anniversary of the Closing Date, (ii) the date the U.S. Revolving Commitments are permanently reduced to zero pursuant to Section 2.13(b) or 2.14 and (iii) the date of the termination of the U.S. Revolving Commitments pursuant to Section 8.01.  

“U.S. Revolving Exposure” means, with respect to any Lender as of any date of determination, (i) prior to the termination of the U.S. Revolving Commitments, that Lender’s U.S. Revolving Commitment; and (ii) after the termination of the U.S. Revolving Commitments, the sum of (a) the aggregate outstanding principal amount of the U.S. Revolving Loans of that Lender, (b) in the case of an Issuing Bank, the aggregate U.S. Letter of Credit Usage in respect of all U.S. Letters of Credit issued by such Issuing Bank (net of any participations by Lenders in such U.S. Letters of Credit), (c) the aggregate amount of all participations by that Lender in any outstanding U.S. Letters of Credit or any unreimbursed drawing under any U.S. Letter of Credit, (d) in the case of the U.S. Swing Line Lender, the aggregate outstanding principal amount of all U.S. Swing Line Loans (net of any participations therein by other Lenders), and (e) the aggregate amount of all participations therein by that Lender in any outstanding U.S. Swing Line Loans.

“U.S. Revolving Loan” means Loans made by a Lender in respect of its U.S. Revolving Commitment to the U.S. Borrower pursuant to Section 2.02(a) and/or Section 2.24.

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“U.S. Security Agreements” means the U.S. Pledge and Security Agreement, the U.S. Pledge Agreement and the CKI Related Assets Pledge and Security Agreement.

“U.S. Subsidiary” means any Restricted Subsidiary other than a Foreign Subsidiary.

“U.S. Swing Line Lender” means Barclays Bank in its capacity as the U.S. Swing Line Lender hereunder, together with its permitted successors and assigns in such capacity.

“U.S. Swing Line Loan” means a Loan made by the U.S. Swing Line Lender to the U.S. Borrower pursuant to Section 2.03(a)(i).

“U.S. Swing Line Sublimit” means the lesser of (i) $25,000,000 and (ii) the aggregate unused amount of U.S. Revolving Commitments then in effect.

“U.S. Tranche A Term Loan” means a Tranche A Term Loan denominated in Dollars and made by a Lender to the U.S. Borrower pursuant to Section 2.01(a)(i).

“U.S. Tranche A Term Loan Commitment” means the commitment of a Lender to make or otherwise fund a U.S. Tranche A Term Loan and “U.S. Tranche A Term Loan Commitments” means such commitments of all Lenders in the aggregate.  The amount of each Lender’s U.S. Tranche A Term Loan Commitment, if any, is set forth on Schedule 1.01(a) or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof.  The aggregate amount of the U.S. Tranche A Term Loan Commitments as of the Closing Date is $367,700,000.

“U.S. Tranche A Term Loan Exposure” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the U.S. Tranche A Term Loans of such Lender; provided, that at any time prior to the making of the U.S. Tranche A Term Loans, the U.S. Tranche A Term Loan Exposure of any Lender shall be equal to such Lender’s U.S. Tranche A Term Loan Commitment.

“U.S. Tranche B Term Loan” means a Tranche B Term Loan denominated in Dollars and made by a Lender to the U.S. Borrower pursuant to Section 2.01(a)(ii).

“U.S. Tranche B Term Loan Commitment” means the commitment of a Lender to make or otherwise fund a U.S. Tranche B Term Loan and “U.S. Tranche B Term Loan Commitments” means such commitments of all Lenders in the aggregate.  The amount of each Lender’s U.S. Tranche B Term Loan Commitment, if any, is set forth on Schedule 1.01(b) or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof.  The aggregate amount of the U.S. Tranche B Term Loan Commitments as of the Closing Date is $1,003,100,000.

“U.S. Tranche B Term Loan Exposure” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the U.S. Tranche B Term Loans of such Lender; provided, that at any time prior to the making of the U.S. Tranche B Term Loans, the U.S. Tranche B Term Loan Exposure of any Lender shall be equal to such Lender’s U.S. Tranche B Term Loan Commitment.

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“Valuation Date” means (i) the date two (2) Business Days prior to the making, continuing or converting of any Revolving Loan or the date of issuance or continuation of any Letter of Credit and (ii) any other date designated by the Administrative Agent or Issuing Bank.

“Waivable Mandatory Prepayment” has the meaning set forth in Section 2.15(c).

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:  (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by (ii) the then outstanding principal amount of such Indebtedness.

“Wholly-Owned Restricted Subsidiary” means, with respect to any Person, any other Person all of the Equity Interests of which (other than (x) directors’ qualifying shares and (y) shares issued to foreign nationals to the extent required by applicable law) are owned by such Person directly and/or through other wholly-owned Restricted Subsidiaries of such Person.

Section 1.02

Accounting Terms

.  Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP.  Financial statements and other information required to be delivered by the Borrower Representative to Lenders pursuant to Section 5.01(a) and 5.01(b) shall be prepared in accordance with GAAP as in effect at the time of such preparation (and delivered together with the reconciliation statements provided for in Section 5.01(d), if applicable).  Subject to the foregoing, calculations in connection with the definitions, covenants and other provisions hereof shall utilize accounting principles and policies in conformity with those used to prepare the Historical Financial Statements of the U.S. Borrower; provided that if a change in GAAP would materially change the calculation of the financial covenants, standards or terms of this Agreement, (i) the Borrower Representative shall provide prompt notice of such change to the Administrative Agent and (ii) the Borrower Representative or the Administrative Agent may request that such calculations continue to be made in accordance with GAAP without giving effect to such change (in which case the Borrower Representative, the Administrative Agent and the Lenders agree to negotiate in good faith to amend the provisions hereof to eliminate the effect of such change in GAAP, but until such amendment is entered into, the calculations shall be made in accordance with those used to prepare the Historical Financial Statements of the U.S. Borrower without giving effect to such change).  

Section 1.03

Interpretation, Etc.

  Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference.  References herein to any Article, Section, Schedule or Exhibit shall be to an Article, a Section, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided.  The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer 

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to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. The word “will” shall be construed to have the same meaning and effect as the word “shall”; and the words “asset” and “property” shall be construed as having the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, Securities, accounts and contract rights.  The terms lease and license shall include sub-lease and sub-license, as applicable.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  Except as otherwise expressly provided herein or therein, any reference in this Agreement or any other Loan Document to any agreement, document or instrument shall mean such agreement, document or instrument as amended, restated, supplemented or otherwise modified from time to time, in each case, in accordance with the express terms of this Agreement or such Loan Document.

Section 1.04

Exchange Rates; Currency Equivalents.  

(a)

The Administrative Agent or the Issuing Bank, as applicable, shall determine the Exchange Rates as of each Valuation Date to be used for calculating Euro Equivalent and Dollar Equivalent amounts of Credit Extensions and amounts outstanding hereunder denominated in other Approved Currencies.  Such Exchange Rates shall become effective as of such Valuation Date and shall be the Exchange Rates employed in converting any amounts between the applicable currencies until the next Valuation Date to occur.  Except for purposes of financial statements delivered by the Borrower Representative hereunder or except as otherwise provided herein, the applicable amount of any currency (other than Dollars) for purposes of the Loan Documents shall be the Dollar Equivalent of such currency as so determined by the Administrative Agent or the Issuing Bank, as applicable.

(b)

Whenever in this Agreement in connection with a borrowing, conversion, continuation or prepayment of a Eurocurrency Rate Loan or the issuance, amendment or extension of a Letter of Credit, an amount, such as a required minimum or multiple amount, is expressed in Dollars or Euros, but such borrowing, Eurocurrency Rate Loan or Letter of Credit is denominated in another Approved Currency, such amount shall be the relevant Foreign Currency Equivalent of such Dollar or Euro amount (rounded to the nearest unit of such other Approved Currency, with 0.5 or a unit being rounded upward), as determined by the Administrative Agent or the Issuing Bank, as the case may be.  

(c)

Notwithstanding the foregoing, for purposes of determining compliance with Sections 5.17, 6.01, 6.02, 6.04, 6.06, 6.07(c), 6.08 and 6.10, (i) with respect to any amount of cash on deposit, Indebtedness, Investment, Restricted Payment, Lien, Asset Sale or Attributable Indebtedness (each, a “Covenant Transaction”) in a currency other than Dollars, no Default or Event of Default shall be deemed to have occurred solely as a result of changes in rates of exchange occurring after the time such Covenant Transaction is incurred or made, and (ii) with respect to any Covenant Transaction incurred or made in reliance on a provision that makes reference to a percentage of Consolidated Total Assets, no Default or Event of Default shall be deemed to have occurred solely as a result of changes in the amount of Consolidated Total Assets occurring after the time such Covenant Transaction is incurred or made in reliance on such provision.

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(d)

For purposes of determining compliance with the Leverage Ratio, the amount of any Indebtedness denominated in any currency other than Dollars will be converted into Dollars based on the relevant currency exchange rate in effect on the date of the financial statements on which the applicable Consolidated Adjusted EBITDA is calculated.  For purposes of determining compliance with Sections 5.17, 6.01, 6.02, 6.04, 6.06, 6.07(c), 6.08 and 6.10, with respect to the amount of any Covenant Transaction in a currency other than Dollars, such amount (i) if incurred or made in reliance on a fixed Dollar basket, will be converted into Dollars based on the relevant currency exchange rate in effect on the Closing Date, and (ii) if incurred in reliance on a percentage basket, will be converted into Dollars based on the relevant currency exchange rate in effect on the date such Covenant Transaction is incurred or made and such percentage basket will be measured at the time such Covenant Transaction is incurred or made.

(e)

For the avoidance of doubt, in the case of a Loan denominated in an Approved Currency other than Dollars, except as expressly provided herein, all interest and fees shall accrue and be payable thereon based on the actual amount outstanding in such Approved Currency (without any translation into the Dollar Equivalent thereof).

Section 1.05

Dutch Terms

.  In this Agreement, where it relates to a Dutch Loan Party, a reference to:

(a)

a necessary action to authorize where applicable, includes without limitation: any action requires to comply with the Dutch Works Councils Act (Wet op de ondernemingsraden);

(b)

gross negligence means grove schuld;

(c)

a Lien includes any mortgage (hypotheek), pledge (pandrecht), retention of title arrangement (eigendomsvoorbehoud), right of retention (recht van retentie), right to reclaim goods (recht van reclame), and, in general, any right in rem, created for the purpose of granting security (goederenrechtelijk zekerheidsrecht);

(d)

willful misconduct means opzet;

(e)

a dissolution includes a Dutch entity being dissolved (ontbonden);

(f)

a moratorium includes surseance van betaling and granted a moratorium includes surseance verleend;

(g)

any step or procedure taken in connection with insolvency proceedings includes a Dutch entity having filed a notice under section 36 of the 1990 Dutch Tax Collection Act (Invorderingswet 1990);

(h)

a receiver includes a curator;

(i)

an administrator includes a bewindvoerder; and

(j)

an attachment includes a beslag.

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ARTICLE II.

LOANS AND LETTERS OF CREDIT

Section 2.01

Term Loans

.

(a)

Loan Commitments.  Subject to the terms and conditions hereof,

(i)

each Lender severally agrees to make, on the Closing Date, (x) a U.S. Tranche A Term Loan to the U.S. Borrower in an amount equal to such Lender’s U.S. Tranche A Term Loan Commitment and (y) a Foreign Tranche A Term Loan to the Foreign Borrower in an amount equal to such Lender’s Foreign Tranche A Term Loan Commitment; and

(ii)

each Lender severally agrees to make, on the Closing Date, (x) a U.S. Tranche B Term Loan to the U.S. Borrower in an amount equal to such Lender’s U.S. Tranche B Term Loan Commitment and (y) a Foreign Tranche B Term Loan to the Foreign Borrower in an amount equal to such Lender’s Foreign Tranche B Term Loan Commitment.

the Borrowers may make only one borrowing under each of the Tranche A Term Loan Commitments and Tranche B Term Loan Commitments which shall be on the Closing Date.  Any amount borrowed under this Section 2.01(a) and subsequently repaid or prepaid may not be reborrowed.  Subject to Sections 2.13(a) and 2.14, all amounts owed hereunder with respect to the Tranche A Term Loans and the Tranche B Term Loans shall be paid in full no later than the Tranche A Term Loan Maturity Date and the Tranche B Term Loan Maturity Date, respectively.  Each Lender’s Tranche A Term Loan Commitments and Tranche B Term Loan Commitments shall terminate immediately and without further action on the Closing Date after giving effect to the funding of such Lender’s Tranche A Term Loan Commitments and Tranche B Term Loan Commitments on such date.

(b)

Borrowing Mechanics for Term Loans.

(i)

The Borrower Representative shall deliver to the Administrative Agent a fully executed Borrowing Notice no later than one (1) Business Days prior to the Closing Date, which notice may be conditional upon the occurrence of the consummation of the Acquisition.  Promptly upon receipt by the Administrative Agent of such Borrowing Notice, the Administrative Agent shall notify each Lender of the proposed borrowing.

(ii)

Each Lender shall make its Tranche A Term Loans and/or Tranche B Term Loans, as the case may be, available to the Administrative Agent not later than 12:00 p.m. (New York City time) and, with respect to Foreign Tranche B Term Loans and Foreign Tranche A Term Loans, 12:00 P.M. (London time) on the Closing Date, by wire transfer of same day funds in Dollars or Euros, as the case may be, at the Principal Office designated by the Administrative Agent.  Upon satisfaction or waiver of the conditions precedent specified herein, the Administrative Agent shall make the proceeds of the Term Loans available to the applicable Borrower on the Closing Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Loans 

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received by the Administrative Agent from Lenders to be credited to the account of the applicable Borrower at the Principal Office designated by the Administrative Agent or to such other account as may be designated in writing to the Administrative Agent by the applicable Borrower.

Section 2.02

Revolving Loans

.  

(a)

U.S. Revolving Commitments.  During the U.S. Revolving Commitment Period, subject to the terms and conditions hereof, each Lender severally agrees to make U.S. Revolving Loans to the U.S. Borrower in an aggregate amount up to but not exceeding such Lender’s U.S. Revolving Commitment; provided, that after giving effect to the making of any U.S. Revolving Loans in no event shall the Total Utilization of U.S. Revolving Commitments exceed the U.S. Revolving Commitments then in effect.  Loans in respect of the U.S. Revolving Commitments may be drawn in Dollars.  Amounts borrowed pursuant to this Section 2.02(a) may be repaid and reborrowed during the applicable Revolving Commitment Period.  Each Lender’s U.S. Revolving Commitments shall expire on the U.S. Revolving Commitment Termination Date and all U.S. Revolving Loans and all other amounts owed hereunder with respect to the U.S. Revolving Loans and the U.S. Revolving Commitments shall be paid in full no later than such date.

(b)

Foreign Revolving Commitments.  During the Foreign Revolving Commitment Period, subject to the terms and conditions hereof, each Lender severally agrees to make Foreign Revolving Loans to the Foreign Borrower in an aggregate amount up to but not exceeding such Lender’s Foreign Revolving Commitment; provided, that after giving effect to the making of any Foreign Revolving Loans in no event shall the Total Utilization of Foreign Revolving Commitments exceed the Foreign Revolving Commitments then in effect.  Loans in respect of the Foreign Revolving Commitments may be drawn in Euros, Japanese Yen or Pounds Sterling, as specified in the Borrowing Notice.  Amounts borrowed pursuant to this Section 2.02(b) may be repaid and reborrowed during the applicable Revolving Commitment Period.  Each Lender’s Foreign Revolving Commitments shall expire on the Foreign Revolving Commitment Termination Date and all Foreign Revolving Loans and all other amounts owed hereunder with respect to the Foreign Revolving Loans and the Foreign Revolving Commitments shall be paid in full no later than such date.  Subject to the terms of this Agreement and the Ancillary Documents, an Ancillary Lender may make available an Ancillary Facility to the Foreign Borrower or an Ancillary Borrower in place of all or part of its Foreign Revolving Commitments.

(c)

Canadian Revolving Commitments. During the Canadian Revolving Commitment Period, subject to the terms and conditions hereof, each Lender severally agrees to make Canadian Revolving Loans to the U.S. Borrower in an aggregate amount up to but not exceeding such Lender’s Canadian Revolving Commitment; provided, that after giving effect to the making of any Canadian Revolving Loans in no event shall the Total Utilization of Canadian Revolving Commitments exceed the Canadian Revolving Commitments then in effect.  Loans in respect of the Canadian Revolving Commitments may be drawn in Dollars or Canadian Dollars.  Amounts borrowed pursuant to this Section 2.02(c) may be repaid and reborrowed during the applicable Revolving Commitment Period.  Each Lender’s Canadian Revolving Commitments shall expire on the Canadian Revolving Commitment Termination Date and all Canadian 

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Revolving Loans and all other amounts owed hereunder with respect to the Canadian Revolving Loans and the Canadian Revolving Commitments shall be paid in full no later than such date.

(d)

Borrowing Mechanics for Revolving Loans.  

(i)

Except pursuant to 2.04(d), (x) U.S. Revolving Loans that are Base Rate Loans and Canadian Revolving Loans that are Base Rate Loans or Canadian Prime Rate Loans shall be made in a minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of that amount, (y) U.S. Revolving Loans and Canadian Revolving Loans that are Eurocurrency Rate Loans shall be in a minimum amount of $1,000,000 (or, with regard to Loans denominated in Canadian Dollars, the applicable Foreign Currency Equivalent) and integral multiples of $1,000,000 (or, with regard to Loans denominated in Canadian Dollars, the applicable Foreign Currency Equivalent) in excess of that amount and (z) Foreign Revolving Loans shall be in a minimum amount of €1,000,000 (or, with regard to Loans denominated in Other Foreign Currencies, the applicable Foreign Currency Equivalent) and integral multiples of €1,000,000 (or, with regard to Loans denominated in Other Foreign Currencies, the applicable Foreign Currency Equivalent) in excess of that amount.

(ii)

Whenever the U.S. Borrower desires that Lenders make Revolving Loans to it, it shall deliver to the Administrative Agent a fully executed and delivered Borrowing Notice no later than 10:00 a.m. (New York City time) (x) at least three (3) Business Days in advance of the proposed Credit Date in the case of a Eurocurrency Rate Loan denominated in Dollars or Canadian Dollars and (y) at least one Business Day in advance of the proposed Credit Date in the case of a Revolving Loan that is a Base Rate Loan denominated in Dollars or a Revolving Loan that is a Canadian Prime Rate Loan denominated in Canadian Dollars.  Whenever the Foreign Borrower desires that Lenders make Foreign Revolving Loans, it shall deliver to the Administrative Agent a fully executed and delivered Borrowing Notice no later than 10:00 a.m. (London, England time) at least three (3) Business Days in advance of the proposed Credit Date.  Except as otherwise provided herein, a Borrowing Notice for a Revolving Loan that is a Eurocurrency Rate Loan shall be irrevocable on and after the related Interest Rate Determination Date, and the applicable Borrower shall be bound to make a borrowing in accordance therewith.

(iii)

Notice of receipt of each Borrowing Notice in respect of U.S. Revolving Loans or Canadian Revolving Loans, together with the amount of each Lender’s Pro Rata Share thereof, if any, together with the applicable interest rate, shall be provided by the Administrative Agent to each applicable Lender by telefacsimile with reasonable promptness, but (provided the Administrative Agent shall have received such notice by 10:00 a.m. (New York City time)) not later than 2:00 p.m. (New York City time) on the same day as the Administrative Agent’s receipt of such Notice from the U.S. Borrower.  Each Lender shall make the amount of its U.S. Revolving Loan or Canadian Revolving Loan, as applicable, available to the Administrative Agent not later than 12:00 p.m. (New York City time) on the applicable Credit Date by wire transfer of same day funds in the requested Approved Currency, at the Principal Office designated by the Administrative Agent.  

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(iv)

Notice of receipt of each Borrowing Notice in respect of Foreign Revolving Loans, together with the amount of each Lender’s Pro Rata Share thereof, if any, together with the applicable interest rate, shall be provided by the Administrative Agent to each applicable Lender by telefacsimile with reasonable promptness, but (provided the Administrative Agent shall have received such notice by 10:00 a.m. (London, England time)) not later than 2:00 p.m. (London, England time) on the same day as the Administrative Agent’s receipt of such Notice from the applicable Foreign Borrower.  Each Lender shall make the amount of its Foreign Revolving Loan available to the Administrative Agent not later than 12:00 p.m. (London, England time) on the applicable Credit Date by wire transfer of same day funds in the requested Approved Currency, at the Principal Office designated by the Administrative Agent.

(v)

Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, the Administrative Agent shall make the proceeds of Revolving Loans available to the applicable Borrower on the applicable Credit Date by causing an amount of same day funds in the requested Approved Currency equal to the proceeds of all such Revolving Loans received by the Administrative Agent from Lenders to be credited to the account of the applicable Borrower at the Principal Office designated by the Administrative Agent or such other account as may be designated in writing to the Administrative Agent by the applicable Borrower or the Borrower Representative.

Section 2.03

Swing Line Loans

.  

(a)

Swing Line Loans Commitments. 

(i)

From time to time during the U.S. Revolving Commitment Period, subject to the terms and conditions hereof, the U.S. Swing Line Lender hereby agrees to make U.S. Swing Line Loans to the U.S. Borrower in the aggregate amount up to but not exceeding the U.S. Swing Line Sublimit; provided, that after giving effect to the making of any U.S. Swing Line Loan, in no event shall the Total Utilization of U.S. Revolving Commitments exceed the U.S. Revolving Commitments then in effect.  Amounts borrowed pursuant to this Section 2.03(a)(i) may be repaid and reborrowed during the U.S. Revolving Commitment Period.  The U.S. Swing Line Lender’s Revolving Commitment shall expire on the U.S. Revolving Commitment Termination Date.  All U.S. Swing Line Loans and all other amounts owed hereunder with respect to the U.S. Swing Line Loans shall be paid in full on the earlier of (i) the date which is three days after the incurrence thereof and (ii) the U.S. Revolving Commitment Termination Date; and

(ii)

From time to time during the Canadian Revolving Commitment Period, subject to the terms and conditions hereof, the Canadian Swing Line Lender hereby agrees to make Canadian Swing Line Loans to the U.S. Borrower in the aggregate amount up to but not exceeding the Canadian Swing Line Sublimit; provided, that after giving effect to the making of any Canadian Swing Line Loan, in no event shall the Total Utilization of Canadian Revolving Commitments exceed the Canadian Revolving Commitments then in effect.  Amounts borrowed pursuant to this Section 2.03(a)(ii) may 

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be repaid and reborrowed during the Canadian Revolving Commitment Period.  The Canadian Swing Line Lender’s Canadian Revolving Commitment shall expire on the Canadian Revolving Commitment Termination Date.  All Canadian Swing Line Loans and all other amounts owed hereunder with respect to the Canadian Swing Line Loans shall be paid in full on the earlier of (i) the date which is three days after the incurrence thereof and (ii) the Canadian Revolving Commitment Termination Date.

(b)

Borrowing Mechanics for Swing Line Loans.  

(i)

Swing Line Loans shall be made in a minimum amount of $500,000 and integral multiples of $100,000 in excess of that amount.

(ii)

Whenever the U.S. Borrower desires that the U.S. Swing Line Lender make a U.S. Swing Line Loan, the U.S. Borrower shall deliver to the Administrative Agent a Borrowing Notice no later than 10:30 a.m. (New York City time) on the proposed Credit Date.  Whenever the U.S. Borrower desires that the Canadian Swing Line Lender make a Canadian Swing Line Loan, the U.S. Borrower shall deliver to the Administrative Agent a Borrowing Notice no later than 10:00 a.m. (New York City time) on the proposed Credit Date.  

(iii)

The applicable Swing Line Lender shall make the amount of its Swing Line Loan available to the Administrative Agent not later than 1:00 p.m.(New York City time) on the applicable Credit Date by wire transfer of same day funds in Dollars or Canadian Dollars, at the Administrative Agent’s Principal Office.  Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, the Administrative Agent shall make the proceeds of such Swing Line Loans available to the U.S. Borrower promptly upon receipt from such Swing Line Lender on the applicable Credit Date by causing an amount of same day funds in Dollars or Canadian Dollars equal to the proceeds of all such Swing Line Loans received by the Administrative Agent from the applicable Swing Line Lender to be credited to the account of the U.S. Borrower at the Administrative Agent’s Principal Office, or to such other account as may be designated in writing to the Administrative Agent by the U.S. Borrower. 

(iv)

With respect to any Swing Line Loans which have not been voluntarily prepaid by the U.S. Borrower pursuant to Section 2.13(a) or repaid pursuant to clause (a) above, the applicable Swing Line Lender may at any time in its sole and absolute discretion, deliver to the Administrative Agent (with a copy to the U.S. Borrower), no later than 11:00 a.m. (New York City time) at least one Business Day in advance of the proposed Credit Date, a notice (which shall be deemed to be a Borrowing Notice given by the U.S. Borrower) requesting that (x) with regard to any U.S. Swing Line Loan, each Lender holding a U.S. Revolving Commitment make U.S. Revolving Loans that are Base Rate Loans to the U.S. Borrower on such Credit Date in an amount equal to the amount of such U.S. Swing Line Loans (the “U.S. Refunded Swing Line Loans”) outstanding on the date such notice is given which the U.S. Swing Line Lender requests Lenders to prepay, and (y) with regard to any Canadian Swing Line Loan, each Lender holding a Canadian Revolving Commitment make Canadian Revolving Loans that are Base Rate Loans or Canadian Prime Rate Loans, as applicable, to the U.S. 

69

Borrower on such Credit Date in an amount equal to the amount of such Canadian Swing Line Loans (the “Canadian Refunded Swing Line Loans” and, together with the U.S. Refunded Swing Line Loans, the “Refunded Swing Line Loans”) outstanding on the date such notice is given which the Canadian Swing Line Lender requests Lenders to prepay. Anything contained in this Agreement to the contrary notwithstanding, (1) the proceeds of such Revolving Loans made by the Lenders other than the applicable Swing Line Lender shall be immediately delivered by the Administrative Agent to the applicable Swing Line Lender (and not to the U.S. Borrower) and applied to repay a corresponding portion of the applicable Refunded Swing Line Loans and (2) on the day such Revolving Loans are made, the applicable Swing Line Lender’s Pro Rata Share of the Refunded Swing Line Loans shall be deemed to be paid with the proceeds of a Revolving Loan made by the applicable Swing Line Lender to the U.S. Borrower, and such portion of the Swing Line Loans deemed to be so paid shall no longer be outstanding as Swing Line Loans and shall no longer be due under the applicable Swing Line Note of the applicable Swing Line Lender but shall instead constitute part of the applicable Swing Line Lender’s outstanding Revolving Loans to the U.S. Borrower and shall be due under the applicable Revolving Loan Note issued by the U.S. Borrower to the applicable Swing Line Lender. If any portion of any such amount paid (or deemed to be paid) to the applicable Swing Line Lender should be recovered by or on behalf of the U.S. Borrower from the applicable Swing Line Lender in bankruptcy, by assignment for the benefit of creditors or otherwise, the loss of the amount so recovered shall be ratably shared among all Lenders in the manner contemplated by Section 2.17.

(v)

If for any reason Revolving Loans are not made pursuant to Section 2.03(b)(iv) in an amount sufficient to repay any amounts owed to the applicable Swing Line Lender in respect of any outstanding Swing Line Loans on or before the third Business Day after demand for payment thereof by the applicable Swing Line Lender, (x) each Lender holding a U.S. Revolving Commitment shall be deemed to, and hereby agrees to, have purchased a participation in such outstanding U.S. Swing Line Loans in an amount equal to its Pro Rata Share of the applicable unpaid amount together with accrued interest thereon, and (y) each Lender holding a Canadian Revolving Commitment shall be deemed to, and hereby agrees to, have purchased a participation in such outstanding Canadian Swing Line Loans in an amount equal to its Pro Rata Share of the applicable unpaid amount together with accrued interest thereon. Upon one Business Day’s notice from the applicable Swing Line Lender, each Lender holding a U.S. Revolving Commitment or a Canadian Revolving Commitment, as applicable, shall deliver to the applicable Swing Line Lender an amount equal to its respective participation in the applicable unpaid amount in same day funds at the Principal Office of such Swing Line Lender. In order to evidence such participation each Lender holding such a Revolving Commitment agrees to enter into a participation agreement at the request of the applicable Swing Line Lender in form and substance reasonably satisfactory to the applicable Swing Line Lender.  In the event any Lender holding such a Revolving Commitment fails to make available to the applicable Swing Line Lender the amount of such Lender’s participation as provided in this paragraph, the applicable Swing Line Lender shall be entitled to recover such amount on demand from such Lender together with interest thereon for three (3) Business Days at the rate customarily used by 

70

the applicable Swing Line Lender for the correction of errors among banks and thereafter at the Base Rate or the Canadian Prime Rate, as applicable.

(vi)

Notwithstanding anything contained herein to the contrary, (1) each Lender’s obligation to make Revolving Loans for the purpose of repaying any Refunded Swing Line Loans pursuant to Section 2.03(b)(iv) and each Lender’s obligation to purchase a participation in any unpaid Swing Line Loans pursuant to the immediately preceding paragraph shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the applicable Swing Line Lender, any Loan Party or any other Person for any reason whatsoever; (B) the occurrence or continuation of a Default or Event of Default; (C) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of any Loan Party; (D) any breach of this Agreement or any other Loan Document by any party thereto; or (E) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing; provided, that such obligations of each Lender are subject to the condition that the applicable Swing Line Lender had not received prior notice from the U.S. Borrower or the Required Lenders that any of the conditions under Section 3.02 to the making of the applicable Refunded Swing Line Loans or other unpaid Swing Line Loans were not satisfied at the time such Refunded Swing Line Loans or unpaid Swing Line Loans were made; and (2) no Swing Line Lender shall be obligated to make any Swing Line Loans (A) if it has elected not to do so after the occurrence and during the continuation of a Default or Event of Default, (B) it does not in good faith believe that all conditions under Section 3.02 to the making of such Swing Line Loan have been satisfied or waived by the Required Lenders or (C) at a time when any Lender is a Defaulting Revolving Lender with U.S. Revolving Commitments or Canadian Revolving Commitments, as applicable, unless the applicable Swing Line Lender has entered into arrangements satisfactory to it and the U.S. Borrower to eliminate the applicable Swing Line Lender’s risk with respect to the Defaulting Revolving Lender’s participation in such Swing Ling Loan, including by the U.S. Borrower cash collateralizing such Defaulting Revolving Lender’s Pro Rata Share of the outstanding Swing Line Loans.

Section 2.04

Issuance of Letters of Credit and Purchase of Participations Therein

.  

(a)

Letters of Credit.  

(i)

During the U.S. Revolving Commitment Period, subject to the terms and conditions hereof, each U.S. Issuing Bank agrees to issue U.S. Letters of Credit for the account of the U.S. Borrower or any Restricted Subsidiary thereof in the aggregate amount up to but not exceeding the U.S. Letter of Credit Sublimit; provided, that (i) each U.S. Letter of Credit shall be denominated in Dollars; (ii) the stated amount of each U.S. Letter of Credit shall not be less than $2,000 or such lesser amount as is acceptable to the applicable Issuing Bank; (iii) after giving effect to such issuance, in no event shall the Total Utilization of U.S. Revolving Commitments exceed the U.S. Revolving Commitments then in effect; (iv) after giving effect to such issuance, in no event shall the U.S. Letter of Credit Usage exceed the U.S. Letter of Credit Sublimit then in effect; (v) in 

71

no event shall any standby U.S. Letter of Credit have an expiration date later than the earlier of (1) the U.S. Revolving Commitment Termination Date and (2) the date which is one year from the date of issuance of such standby Letter of Credit; and (vi) in no event shall any commercial U.S. Letter of Credit have an expiration date later than the earlier of (1) the U.S. Revolving Commitment Termination Date and (2) the date which is 180 days from the date of issuance of such commercial Letter of Credit.  

(ii)

During the Foreign Revolving Commitment Period, subject to the terms and conditions hereof, each Foreign Issuing Bank agrees to issue Foreign Letters of Credit for the account of the Foreign Borrower or any Restricted Subsidiary thereof in the aggregate amount up to but not exceeding the Foreign Letter of Credit Sublimit; provided, that (i) each Foreign Letter of Credit shall be denominated in Euros, Japanese Yen or Pounds Sterling; (ii) the stated amount of each Foreign Letter of Credit shall not be less than €1500 (or the applicable Foreign Currency Equivalent) or such lesser amount as is acceptable to the applicable Issuing Bank; (iii) after giving effect to such issuance, in no event shall the Total Utilization of Foreign Revolving Commitments exceed the Foreign Revolving Commitments then in effect; (iv) after giving effect to such issuance, in no event shall the Foreign Letter of Credit Usage exceed the Foreign Letter of Credit Sublimit then in effect; (v) in no event shall any standby Foreign Letter of Credit have an expiration date later than the earlier of (1) the Foreign Revolving Commitment Termination Date and (2) the date which is one year from the date of issuance of such standby Letter of Credit; and (vi) in no event shall any commercial Foreign Letter of Credit have an expiration date later than the earlier of (1) the Foreign Revolving Commitment Termination Date and (2) the date which is 180 days from the date of issuance of such commercial Letter of Credit.

(iii)

During the Canadian Revolving Commitment Period, subject to the terms and conditions hereof, each Canadian Issuing Bank agrees to issue Canadian Letters of Credit for the account of the U.S. Borrower or any Restricted Subsidiary thereof in the aggregate amount up to but not exceeding the Canadian Letter of Credit Sublimit; provided, that (i) each Canadian Letter of Credit shall be denominated in Dollars or Canadian Dollars; (ii) the stated amount of each Canadian Letter of Credit shall not be less than $2,000 (or the applicable Foreign Currency Equivalent) or such lesser amount as is acceptable to the applicable Issuing Bank; (iii) after giving effect to such issuance, in no event shall the Total Utilization of Canadian Revolving Commitments exceed the Canadian Revolving Commitments then in effect; (iv) after giving effect to such issuance, in no event shall the Canadian Letter of Credit Usage exceed the Canadian Letter of Credit Sublimit then in effect; (v) in no event shall any standby Canadian Letter of Credit have an expiration date later than the earlier of (1) the Canadian Revolving Commitment Termination Date and (2) the date which is one year from the date of issuance of such standby Letter of Credit; and (vi) in no event shall any commercial Canadian Letter of Credit have an expiration date later than the earlier of (1) the Canadian Revolving Commitment Termination Date and (2) the date which is 180 days from the date of issuance of such commercial Letter of Credit.  

Subject to the foregoing, (i) an Issuing Bank may agree that a standby Letter of Credit shall automatically be extended for one or more successive periods not to exceed one year each; 

72

provided, that no Issuing Bank shall extend any such Letter of Credit if it has received written notice that an Event of Default has occurred and is continuing at the time such Issuing Bank must elect to allow such extension; (ii) if the applicable Issuing Bank and the Administrative Agent each consent in their sole discretion, the expiration date on any Letter of Credit may extend beyond the applicable Revolving Commitment Termination Date; provided, that if any such Letter of Credit is outstanding or the expiration date is extended to a date after the date that is five (5) Business Days prior to the applicable Revolving Commitment Termination Date, the applicable Borrower shall Cash Collateralize such Letter of Credit on or prior to the date that is five (5) Business Days prior to the applicable Revolving Commitment Termination Date; and (iii) in the event that any Lender is a Defaulting Revolving Lender, the applicable Issuing Bank shall not be required to issue any Letter of Credit under the applicable Revolving Commitment unless such Issuing Bank has entered into arrangements satisfactory to it and the applicable Borrower to eliminate such Issuing Bank’s risk with respect to the participation in Letters of Credit of the Defaulting Revolving Lender, including by cash collateralizing such Defaulting Revolving Lender’s Pro Rata Share of the applicable Letter of Credit Usage.  Notwithstanding the foregoing, Barclays Bank shall have no obligation to issue commercial Letters of Credit unless separately agreed to by Barclays Bank and the Borrower Representative.  

(b)

Notice of Issuance.  

(i)

Whenever the U.S. Borrower or any Restricted Subsidiary thereof desires the issuance of a Letter of Credit, the U.S. Borrower shall (x) in the case of standby Letters of Credit, deliver to the Administrative Agent and the applicable Issuing Bank an Issuance Notice (or such other notice as may be agreed by such Issuing Bank) no later than 12:00 p.m. (New York City time) at least three (3) Business Days in advance of the proposed date of issuance, or such shorter period as may be agreed to by the Issuing Bank in any particular instance and (y) in the case of commercial Letters of Credit, deliver to the applicable Issuing Bank an application therefor on the proposed date of issuance. Such Issuance Notice shall specify if such Letter of Credit is requested under the U.S. Revolving Commitments or the Canadian Revolving Commitments.  Upon satisfaction or waiver of the conditions set forth in Section 3.02, the Issuing Bank shall issue the requested Letter of Credit only in accordance with the Issuing Bank’s standard operating procedures.  Upon the issuance of any U.S. Letter of Credit or amendment or modification to a U.S. Letter of Credit, the Issuing Bank shall promptly notify the Administrative Agent, and the Administrative Agent shall promptly notify each Lender with a U.S. Revolving Commitment, of such issuance, or amendment or modification and the amount of such Lender’s respective participation in such U.S. Letter of Credit pursuant to Section 2.04(e). Upon the issuance of any Canadian Letter of Credit or amendment or modification to a Canadian Letter of Credit, the Issuing Bank shall promptly notify the Administrative Agent, and the Administrative Agent shall promptly notify each Lender with a Canadian Revolving Commitment, of such issuance, amendment or modification to such Canadian Letter of Credit and the amount of such Lender’s respective participation in such Canadian Letter of Credit pursuant to Section 2.04(e). 

(ii)

Whenever the Foreign Borrower or any Restricted Subsidiary thereof desires the issuance of a Letter of Credit, the Foreign Borrower or the Borrower 

73

Representative shall (x) in the case of standby Letters of Credit, deliver to the Administrative Agent and the applicable Issuing Bank an Issuance Notice (or such other notice as may be agreed by such Issuing Bank) no later than 12:00 p.m. (London, England time) at least three (3) Business Days in advance of the proposed date of issuance, or such shorter period as may be agreed to by the Issuing Bank in any particular instance and (y) in the case of commercial Letters of Credit, deliver to the applicable Issuing Bank an application therefor on the proposed date of issuance.  Upon satisfaction or waiver of the conditions set forth in Section 3.02, the Issuing Bank shall issue the requested Letter of Credit only in accordance with the Issuing Bank’s standard operating procedures.  Upon the issuance of any Foreign Letter of Credit or amendment or modification to a Foreign Letter of Credit, the Issuing Bank shall promptly notify the Administrative Agent and each Lender with a Foreign Revolving Commitment of such issuance, or amendment or modification and the amount of such Lender’s respective participation in such Letter of Credit pursuant to Section 2.04(e).

(c)

Responsibility of the Issuing Bank With Respect to Requests for Drawings and Payments.  In determining whether to honor any drawing under any Letter of Credit by the beneficiary thereof, the applicable Issuing Bank shall be responsible only to examine the documents delivered under such Letter of Credit with reasonable care so as to ascertain whether they appear on their face to be in accordance with the terms and conditions of such Letter of Credit.  As between the Borrowers and the applicable Issuing Bank, each Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit issued by the applicable Issuing Bank by, the respective beneficiaries of such Letters of Credit.  In furtherance and not in limitation of the foregoing, the Issuing Bank 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 and 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; (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) failure of the beneficiary of any such Letter of Credit to comply fully with any conditions required in order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, 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 the Issuing Bank, including any Governmental Acts; none of the above shall affect or impair, or prevent the vesting of, any of the Issuing Bank’s rights or powers hereunder.  Without limiting the foregoing and in furtherance thereof, no action taken or omitted by an Issuing Bank under or in connection with the Letters of Credit or any documents and certificates delivered thereunder, if taken or omitted in good faith and in the absence of gross negligence or willful misconduct (as determined by a final, non-appealable judgment of a court of competent jurisdiction), shall give rise to any liability on the part of such Issuing Bank to any Borrower; provided that the foregoing shall not be construed to excuse such Issuing Bank from liability to the Borrowers to the extent of any direct damages suffered by the Borrowers or any of their Subsidiaries that are determined by a final, non-appealable judgment of a court of 

74

competent jurisdiction to have been caused by such Issuing Bank’s gross negligence or willful misconduct.

(d)

Reimbursement by the Borrowers of Amounts Drawn or Paid Under Letters of Credit.  

(i)

In the event an Issuing Bank has determined to honor a drawing under a U.S. Letter of Credit or Canadian Letter of Credit, it shall immediately notify the U.S. Borrower and the Administrative Agent, and the U.S. Borrower shall reimburse the applicable Issuing Bank on or before the Business Day immediately following the date on which such notice is received by the U.S. Borrower (the “Reimbursement Date”) in an amount in the Approved Currency in which such Letter of Credit was issued and in same day funds equal to the amount of such honored drawing; provided, that anything contained herein to the contrary notwithstanding, (x) unless the U.S. Borrower shall have notified the Administrative Agent and the applicable Issuing Bank prior to 10:00 a.m. (New York City time) on the Reimbursement Date that the U.S. Borrower intends to reimburse the applicable Issuing Bank for the amount of such honored drawing with funds other than the proceeds of Revolving Loans, the Borrower Representative shall be deemed to have given a timely Borrowing Notice to the Administrative Agent requesting (A) in the case of a U.S. Letter of Credit, Lenders with U.S. Revolving Commitments to make U.S. Revolving Loans that are Base Rate Loans on the Reimbursement Date in an amount in Dollars equal to the amount of such honored drawing and (B) in the case of a Canadian Letter of Credit, Lenders with Canadian Revolving Commitments to make Canadian Revolving Loans that are Canadian Prime Rate Loans on the Reimbursement Date in an amount in Canadian Dollars or Dollars, as applicable, equal to the amount of such honored drawing (provided that, in respect of any honored drawing in an amount less than $250,000 (or the Canadian Dollar equivalent), the U.S. Borrower shall reimburse the applicable Issuing Bank for such amount in cash and shall not be entitled to reimburse such drawing in accordance with this clause (x)) and (y) subject to satisfaction or waiver of the conditions specified in Section 3.02, (A) Lenders with U.S. Revolving Commitments shall, on the Reimbursement Date for any U.S. Letter of Credit, make U.S. Revolving Loans that are Base Rate Loans in the amount of such honored drawing and (B) Lenders with Canadian Revolving Commitments shall, on the Reimbursement Date for any Canadian Letter of Credit, make Canadian Revolving Loans that are Canadian Prime Rate Loans in an amount of such honored drawing, in each case, the proceeds of which shall be applied directly by the Administrative Agent to reimburse the applicable Issuing Bank for the amount of such honored drawing; provided, further, that if for any reason proceeds of Revolving Loans are not received by the applicable Issuing Bank on the Reimbursement Date in an amount equal to the amount of such honored drawing, the U.S. Borrower shall reimburse the Issuing Bank, on demand, in an amount in same day funds equal to the excess of the amount of such honored drawing over the aggregate amount of such Revolving Loans, if any, which are so received.  

(ii)

In the event the Issuing Bank has determined to honor a drawing under a Foreign Letter of Credit, it shall immediately notify the applicable Foreign Borrower and the Administrative Agent, and the applicable Foreign Borrower shall reimburse the Issuing Bank on or before the Reimbursement Date in an amount in the 

75

Approved Currency in which such Letter of Credit was issued and in same day funds equal to the amount of such honored drawing; provided, that anything contained herein to the contrary notwithstanding, (i) unless the applicable Foreign Borrower shall have notified the Administrative Agent and the Issuing Bank prior to 10:00 a.m. (London, England time) on the Reimbursement Date that the Foreign Borrower intends to reimburse the Issuing Bank for the amount of such honored drawing with funds other than the proceeds of Revolving Loans, the Borrower Representative shall be deemed to have given a timely Borrowing Notice to the Administrative Agent requesting Lenders with Foreign Revolving Commitments to make Foreign Revolving Loans that are Eurocurrency Rate Loans with an Interest Period of one month on the Reimbursement Date in an amount in the applicable Approved Currency equal to the amount of such honored drawing (provided that, in respect of any honored drawing in an amount less than €250,000, the Foreign Borrower shall reimburse the applicable Issuing Bank for such amount in cash and shall not be entitled to reimburse such drawing in accordance with this clause (i)), and (ii) subject to satisfaction or waiver of the conditions specified in Section 3.02, Lenders with Foreign Revolving Commitments shall, on the Reimbursement Date for any Foreign Letter of Credit, make Foreign Revolving Loans that are Eurocurrency Rate Loans with an Interest Period of one month in the amount of such honored drawing, the proceeds of which shall be applied directly by the Administrative Agent to reimburse the Issuing Bank for the amount of such honored drawing; provided, further, that if for any reason proceeds of Foreign Revolving Loans are not received by the Issuing Bank on the Reimbursement Date in an amount equal to the amount of such honored drawing, the applicable Foreign Borrower shall reimburse the Issuing Bank, on demand, in an amount in same day funds equal to the excess of the amount of such honored drawing over the aggregate amount of such Foreign Revolving Loans, if any, which are so received

Nothing in this Section 2.04(d) shall be deemed to relieve any Lender with a Revolving Commitment from its obligation to make Revolving Loans on the terms and conditions set forth herein, and each Borrower shall retain any and all rights it may have against any such Lender resulting from the failure of such Lender to make such Revolving Loans under this Section 2.04(d).  

(e)

Lenders’ Purchase of Participations in Letters of Credit.  Immediately upon the issuance of each U.S. Letter of Credit, each Lender having a U.S. Revolving Commitment shall be deemed to have purchased, and hereby agrees to irrevocably purchase, from the applicable Issuing Bank a participation in such U.S. Letter of Credit and any drawings honored thereunder in an amount equal to such Lender’s Pro Rata Share (with respect to the U.S. Revolving Commitments) of the maximum amount which is or at any time may become available to be drawn thereunder.  Immediately upon the issuance of each Canadian Letter of Credit, each Lender having a Canadian Revolving Commitment shall be deemed to have purchased, and hereby agrees to irrevocably purchase, from the applicable Issuing Bank a participation in such Canadian Letter of Credit and any drawings honored thereunder in an amount equal to such Lender’s Pro Rata Share (with respect to the Canadian Revolving Commitments) of the maximum amount which is or at any time may become available to be drawn thereunder.  Immediately upon the issuance of each Foreign Letter of Credit, each Lender having a Foreign Revolving Commitment shall be deemed to have purchased, and hereby agrees 

76

to irrevocably purchase, from the applicable Issuing Bank a participation in such Foreign Letter of Credit and any drawings honored thereunder in an amount equal to such Lender’s Pro Rata Share (with respect to the Foreign Revolving Commitments) of the maximum amount which is or at any time may become available to be drawn thereunder.  In the event that the applicable Borrower shall fail for any reason to reimburse the applicable Issuing Bank as provided in Section 2.04(d), such Issuing Bank shall promptly notify each Lender with an applicable Revolving Commitment of the unreimbursed amount of such honored drawing and of such Lender’s respective participation therein based on such Lender’s Pro Rata Share of the applicable Revolving Commitments.  Each Lender with a U.S. Revolving Commitment shall make available to the applicable Issuing Bank an amount equal to its respective participation, in Dollars and in same day funds, at the office of the Issuing Bank specified in such notice, not later than 12:00 p.m. (New York City time) on the first Business Day (under the laws of the jurisdiction in which such office of the Issuing Bank is located) after the date notified by the Issuing Bank.  Each Lender with a Canadian Revolving Commitment shall make available to the applicable Issuing Bank an amount equal to its respective participation, in Dollars or Canadian Dollars, as applicable, and in same day funds, at the office of the Issuing Bank specified in such notice, not later than 12:00 p.m. (New York City time) on the first Business Day (under the laws of the jurisdiction in which such office of the Issuing Bank is located) after the date notified by the Issuing Bank.  Each Lender with a Foreign Revolving Commitment shall make available to the applicable Issuing Bank an amount equal to its respective participation, in Euros or such Other Foreign Currency, as applicable, and in same day funds, at the office of the Issuing Bank specified in such notice, not later than 12:00 p.m. (London, England time) on the first Business Day (under the laws of the jurisdiction in which such office of the Issuing Bank is located) after the date notified by the Issuing Bank.  In the event that any Lender with a U.S. Revolving Commitment, Canadian Revolving Commitment or Foreign Revolving Commitment, as applicable, fails to make available to the applicable Issuing Bank on such Business Day the amount of such Lender’s participation in such Letter of Credit as provided in this Section 2.04(e), the applicable Issuing Bank shall be entitled to recover such amount on demand from such Lender together with interest thereon for three (3) Business Days at the rate customarily used by the Issuing Bank for the correction of errors among banks and thereafter, in respect of U.S. Letters of Credit, at the Base Rate, in respect of Canadian Letters of Credit denominated in Canadian Dollars, at the Canadian Prime Rate, in respect of Canadian Letters of Credit denominated in Dollars, at the Base Rate, and in respect of Foreign Letters of Credit, at the Eurocurrency Rate for an Interest Period of one month.  In the event the applicable Issuing Bank shall have been reimbursed by other Lenders pursuant to this Section 2.04(e) for all or any portion of any drawing honored by the Issuing Bank under a Letter of Credit, the Issuing Bank shall distribute to each Lender which has paid all amounts payable by it under this Section 2.04(e) with respect to such honored drawing such Lender’s Pro Rata Share (with respect to the applicable Revolving Commitments) of all payments subsequently received by the applicable Issuing Bank from the applicable Borrower in reimbursement of such honored drawing when such payments are received.  Any such distribution shall be made to a Lender at its primary address set forth below its name on Schedule 1.01(d) or at such other address as such Lender may request.

(f)

Obligations Absolute.  The obligation of (i) the U.S. Borrower to reimburse each applicable Issuing Bank for drawings honored under the U.S. Letters of Credit or Canadian Letters of Credit issued by it and to repay any U.S. Revolving Loans or Canadian 

77

Revolving Loans made by Lenders pursuant to Section 2.04(d), (ii) the Foreign Borrower to reimburse the Issuing Bank for drawings honored under the Foreign Letters of Credit issued by it to the Foreign Borrower and to repay any Foreign Revolving Loans made by Lenders pursuant to Section 2.04(d) and (iii) the Lenders under Section 2.04(e), in each case shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms hereof under all circumstances including any of the following circumstances: (i) any lack of validity or enforceability of any Letter of Credit; (ii) the existence of any claim, set-off, defense or other right which any Borrower or any Lender may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons for whom any such transferee may be acting), Issuing Bank, Lender or any other Person or, in the case of a Lender, against any Borrower, whether in connection herewith, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between any Borrower or one of its Subsidiaries and the beneficiary for which any Letter of Credit was procured); (iii) any draft or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) payment by the applicable Issuing Bank under any Letter of Credit against presentation of a draft or other document which does not substantially comply with the terms of such Letter of Credit; (v) any adverse change in the business, general affairs, assets, liabilities, operations, management, condition (financial or otherwise), stockholders’ equity, results of operations or value of any Loan Party; (vi) any breach hereof or any other Loan Document by any party thereto; (vii) the fact that an Event of Default or a Default shall have occurred and be continuing; or (viii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing; provided that in each case payment by the Issuing Bank under the applicable Letter of Credit shall not have been determined by a final, non-appealable judgment of a court of competent jurisdiction to have constituted gross negligence, bad faith or willful misconduct of the Issuing Bank under the circumstances in question.

(g)

Indemnification.  Without duplication of any obligation of the Borrowers under Section 10.02 or 10.03, in addition to amounts payable as provided herein, each Borrower hereby agrees to protect, indemnify, pay and save harmless the Issuing Bank from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel) which any Issuing Bank may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing Bank for the account of such Borrower, other than as a result of (1) the gross negligence, bad faith or willful misconduct of the Issuing Bank or (2) the dishonor by the Issuing Bank of a demand for payment made in compliance with the provisions hereunder or under the Letter of Credit, in each case, as determined by a final, non-appealable judgment of court of competent jurisdiction, or (ii) the failure of such Issuing Bank to honor a drawing under any such Letter of Credit as a result of any Governmental Act.

(h)

Resignation and Removal of Issuing Bank.  An Issuing Bank may resign as Issuing Bank upon 60 days prior written notice to the Administrative Agent, the Lenders and the Borrower Representative.  An Issuing Bank may be replaced at any time by written agreement among the Borrower Representative, the Administrative Agent, the replaced Issuing Bank (provided that no consent of the replaced Issuing Bank will be required if the replaced Issuing Bank has no Letters of Credit or reimbursement Obligations with respect thereto outstanding) and the successor Issuing Bank.  The Administrative Agent shall notify the Lenders 

78

of any such replacement of such Issuing Bank.  At the time any such replacement or resignation shall become effective, the applicable Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank.  From and after the effective date of any such replacement or resignation, (i) any successor Issuing Bank shall have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require.  After the replacement or resignation of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto to the extent that Letters of Credit issued by it remain outstanding and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement or resignation, but shall not be required to issue additional Letters of Credit or to renew existing Letters of Credit.

Section 2.05

Pro Rata Shares; Availability of Funds

.  

(a)

Pro Rata Shares.  All Loans shall be made, and all participations purchased, by Lenders simultaneously and proportionately to their respective Pro Rata Shares of the applicable Class of Loans, it being understood that no Lender shall be responsible for any default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or purchase a participation required hereby nor shall any Term Loan Commitments or any Revolving Commitments of any Lender be increased or decreased as a result of a default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or purchase a participation required hereby.

(b)

Availability of Funds.  Unless the Administrative Agent shall have been notified by any Lender prior to the applicable Credit Date that such Lender does not intend to make available to the Administrative Agent the amount of such Lender’s Loan requested on such Credit Date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such Credit Date and the Administrative Agent may, in its sole discretion, but shall not be obligated to, make available to the Borrowers a corresponding amount on such Credit Date.  If such corresponding amount is not in fact made available to the Administrative Agent by such Lender, the Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from such Credit Date until the date such amount is paid to the Administrative Agent, at the customary rate set by the Administrative Agent for the correction of errors among banks for three (3) Business Days and thereafter, if such Loan is in Dollars, at the Base Rate, if such Loan is in Canadian Dollars, at the Canadian Prime Rate, and if such Loan is in Euros or any Other Foreign Currency, at the rate certified by the Administrative Agent to be its cost of funds (from any source which it may reasonably select).  If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent shall promptly notify the Borrower Representative and the applicable Borrower shall immediately pay such corresponding amount to the Administrative Agent together with interest thereon, for each day from such Credit Date until the date such amount is paid to the Administrative Agent at the Base Rate if such Loan is in Dollars, at the Canadian Prime Rate if such Loan is in Canadian Dollars, and at the rate certified by the Administrative Agent to be its cost of funds (from any source which it may reasonably select) if such Loan is in Euros or any 

79

Other Foreign Currency.  Nothing in this Section 2.05(b) shall be deemed to relieve any Lender from its obligation to fulfill its Term Loan Commitments and Revolving Commitments hereunder or to prejudice any rights that the Borrowers may have against any Lender as a result of any default by such Lender hereunder.

Section 2.06

Use of Proceeds

.  The proceeds of the Term Loans shall be applied by the Borrowers to fund the Transactions. The proceeds of the Revolving Loans, Swing Line Loans, Letters of Credit and any loans under any Ancillary Facility made after the Closing Date shall be applied by the applicable Borrower for working capital or general corporate purposes of such Borrower or any of its Subsidiaries, including Permitted Acquisitions.  The proceeds of the Incremental Term Loans shall be applied by the applicable Borrower for working capital or general corporate purposes of such Borrower and its Subsidiaries, including Permitted Acquisitions.  No portion of the proceeds of any Credit Extension shall be used in any manner that causes or might cause such Credit Extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board of Governors or any other regulation thereof or to violate the Exchange Act.

Section 2.07

Evidence of Debt; Register; Notes

.  

(a)

Lenders’ Evidence of Debt.  Each Lender shall maintain on its internal records an account or accounts evidencing the Obligations of each Borrower to such Lender, including the amounts of the Loans made by it and each repayment and prepayment in respect thereof.  

(b)

Register.  The Administrative Agent (or its agent or sub-agent appointed by it) acting for this purpose as an agent of the Borrowers shall maintain at its Principal Office a register for the recordation of the names and addresses of Lenders and the Revolving Commitment and Loans of each Lender from time to time (the “Register”).  The Register shall be available for inspection by the Borrower Representative at any reasonable time and from time to time upon reasonable prior notice and upon request (which may not be made more than once per month) the Administrative Agent shall provide a copy of the information in the Register to the Borrower.  The Administrative Agent shall record, or shall cause to be recorded, in the Register the Revolving Commitments and the Loans in accordance with the provisions of Section 10.06, and each repayment or prepayment in respect of the principal amount of the Loans, and any such recordation shall be conclusive and binding on each Borrower and each Lender, absent manifest error.  Each Borrower hereby designates the Administrative Agent to serve as such Borrower’s agent solely for purposes of maintaining the Register as provided in this Section 2.07, and each Borrower hereby agrees that, to the extent the Administrative Agent serves in such capacity, the Administrative Agent and its officers, directors, employees, agents, sub-agents and Affiliates shall constitute “Indemnitees.”

(c)

Notes.  If so requested by any Lender by written notice to the Borrower Representative (with a copy to the Administrative Agent) at least five (5) Business Days prior to the Closing Date, or at any time thereafter, each applicable Borrower shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 10.06) on the Closing Date (or, if such notice is delivered after the Closing Date, promptly after such Borrower’s receipt of such notice) a Note 

80

or Notes to evidence such Lender’s Tranche A Term Loans, Tranche B Term Loans, Incremental Term Loan, Revolving Loans or Swing Line Loan, as the case may be.

Section 2.08

Interest on Loans

.  

(a)

Except as otherwise set forth herein, each Class of Loan shall bear interest on the unpaid principal amount thereof from the date made through repayment (whether by acceleration or otherwise) thereof as follows:

(i)

in the case of Tranche A Term Loans and Revolving Loans:

(A)

if a Base Rate Loan, at the Base Rate plus the Applicable Margin; 

(B)

if a Eurocurrency Rate Loan, at the Adjusted Eurocurrency Rate plus the Applicable Margin and plus Mandatory Costs, if any; or

(C)

if a Canadian Prime Rate Loan, at the Canadian Prime Rate plus the Applicable Margin; 

(ii)

in the case of Swing Line Loans, at the Base Rate or the Canadian Prime Rate, as applicable, plus the Applicable Margin; and

(iii)

in the case of Tranche B Term Loans:

(A)

if a Base Rate Loan, at the Base Rate plus the Applicable Margin; or

(B)

if a Eurocurrency Rate Loan, at the Adjusted Eurocurrency Rate plus the Applicable Margin and plus Mandatory Costs, if any.

(b)

The Type of Loan (except a Swing Line Loan, which can be made and maintained as a Base Rate Loan or Canadian Prime Rate Loan only), and the Interest Period with respect to any Eurocurrency Rate Loan shall be selected by the applicable Borrower and notified to the Administrative Agent and Lenders pursuant to the applicable Borrowing Notice or Conver­sion/Continuation Notice, as the case may be; provided, that until the date on which the Arrangers notify the Borrower Representative that the primary syndication of the Loans and Revolving Commitments has been completed (which date shall be not later than twenty-eight (28) days after the Closing Date), the Term Loans shall be maintained as either (1) Eurocurrency Rate Loans having an Interest Period of no longer than one month or (2) Base Rate Loans (or Canadian Prime Rate Loans) or such shorter period as the U.S. Borrower and the Administrative Agent may agree.  If on any day a Loan is outstanding with respect to which a Borrowing Notice or Conversion/Continuation Notice has not been delivered to the Administrative Agent in accordance with the terms hereof specifying the applicable basis for determining the rate of interest, then for that day such Loan, if a Loan denominated in Dollars or Canadian Dollars, shall be a Base Rate Loan or a Canadian Prime Rate Loan, as applicable, and, if a Loan denominated in any other Approved Currency, shall be a Eurocurrency Rate Loan having an Interest Period of one month.

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(c)

In connection with Eurocurrency Rate Loans there shall be no more than five (5) Interest Periods outstanding at any time in respect of each of the Tranche A Term Loans and the Tranche B Term Loans, no more than ten (10) Interest Periods outstanding at any time in respect of the U.S. Revolving Loans, no more than five (5) Interest Periods outstanding at any time in respect of the Canadian Revolving Loans, and no more than ten (10) Interest Periods outstanding at any time in respect of the Foreign Revolving Loans.  In the event the Borrower Representative fails to specify between a Base Rate Loan or a Eurocurrency Rate Loan in the applicable Borrowing Notice or Conversion/Continuation Notice for any Loan denominated in Dollars, such Loan (if outstanding as a Eurocurrency Rate Loan) shall be automatically converted into a Base Rate Loan on the last day of the then-current Interest Period for such Loan (or if outstanding as a Base Rate Loan shall remain as, or (if not then outstanding) shall be made as, a Base Rate Loan).  In the event the Borrower Representative fails to specify an Interest Period for any Eurocurrency Rate Loan in the applicable Borrowing Notice or Conversion/Continuation Notice, such Borrower shall be deemed to have selected an Interest Period of one month.  As soon as practicable after 10:00 a.m. (New York City time) or, with respect to Loans in respect of Foreign Revolving Commitments, 10:00 a.m. (London, England time), on each Interest Rate Determination Date, the Administrative Agent shall determine (which determination shall, absent manifest error, be final, conclusive and binding upon all parties) the interest rate that shall apply to the Eurocurrency Rate Loans for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to the Borrower Representative and each Lender.  In the event that the Borrower Representative fails to specify between a Canadian Prime Rate Loan and a Eurocurrency Rate Loan in the applicable Borrowing Notice or Conver­sion/Continuation Notice for any Loan denominated in Canadian Dollars, such Loan (if outstanding as a Eurocurrency Rate Loan) shall be automatically converted into a Canadian Prime Rate Loan on the last day of the then-current Interest Period for such Loan (or if outstanding as a Canadian Prime Rate Loan shall remain as, or (if not then outstanding) shall be made as, a Canadian Prime Rate Loan).  

(d)

Interest payable pursuant to Section 2.08(a) shall be computed (i) in the case of Base Rate Loans and Canadian Prime Rate Loans on the basis of a 365-day or 366-day year, as the case may be and (ii) in the case of Eurocurrency Rate Loans, on the basis of a 360-day year, in each case for the actual number of days elapsed in the period during which it accrues.  In computing interest on any Loan, the date of the making of such Loan or the first day of an Interest Period applicable to such Loan or, with respect to a Term Loan, the last Interest Payment Date with respect to such Term Loan or, with respect to a Base Rate Loan being converted from a Eurocurrency Rate Loan, the date of conversion of such Eurocurrency Rate Loan to such Base Rate Loan, as the case may be, shall be included, and the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted to a Eurocurrency Rate Loan, the date of conversion of such Base Rate Loan to such Eurocurrency Rate Loan, as the case may be, shall be excluded; provided, that if a Loan is repaid on the same day on which it is made, one day’s interest shall be paid on that Loan.

(e)

Except as otherwise set forth herein, interest on each Loan shall accrue on a daily basis and shall be payable in arrears (i) on each Interest Payment Date with respect to interest accrued on and to each such payment date; (ii) upon any prepayment of such Loan, 

82

whether voluntary or mandatory, to the extent accrued on the amount being prepaid; provided, that with respect to any voluntary prepayment of a Base Rate Loan and a Canadian Prime Rate Loans, accrued interest shall instead be payable on the applicable Interest Payment Date and (iii) at maturity of such Loan, including final maturity of such Loan. 

(f)

The applicable Borrower agrees to pay to the Issuing Bank, with respect to drawings honored under a Letter of Credit, interest on the amount paid by the Issuing Bank in respect of each such honored drawing from the date such drawing is honored to but excluding the date such amount is reimbursed by or on behalf of the applicable Borrower at a rate equal to (i) for the period from the date such drawing is honored to but excluding the applicable Reimbursement Date, the rate of interest otherwise payable hereunder with respect to Revolving Loans that are Base Rate Loans (or if such Letter of Credit is denominated in Canadian Dollars, the Canadian Prime Rate) or, with respect to Letters of Credit denominated in a currency other than Dollars or Canadian Dollars, Eurocurrency Rate Loans with an Interest Period of one month, and (ii) thereafter, a rate which is 2.00% per annum in excess of the rate of interest otherwise payable hereunder with respect to such Revolving Loans.

(g)

Interest payable pursuant to Section 2.08(f) shall be computed on the basis of a 365/366-day year for the actual number of days elapsed in the period during which it accrues, and shall be payable on demand or, if no demand is made, on the date on which the related drawing under a Letter of Credit is reimbursed in full.  Promptly upon receipt by the Issuing Bank of any payment of interest pursuant to Section 2.08(f), the Issuing Bank shall distribute to each Lender, out of the interest received by the Issuing Bank in respect of the period from the date such drawing is honored to but excluding the date on which the Issuing Bank is reimbursed for the amount of such drawing (including any such reimbursement out of the proceeds of any Revolving Loans), the amount that such Lender would have been entitled to receive in respect of the letter of credit fee that would have been payable in respect of such Letter of Credit for such period if no drawing had been honored under such Letter of Credit.  In the event the Issuing Bank shall have been reimbursed by Lenders for all or any portion of such honored drawing, the Issuing Bank shall distribute to each Lender which has paid all amounts payable by it under Section 2.04(e) with respect to such honored drawing such Lender’s Pro Rata Share of any interest received by the Issuing Bank in respect of that portion of such honored drawing so reimbursed by Lenders for the period from the date on which the Issuing Bank was so reimbursed by Lenders to but excluding the date on which such portion of such honored drawing is reimbursed by the applicable Borrower.

(h)

The rate and time of payment of interest in respect of any Ancillary Facility shall be determined by agreement between the relevant Ancillary Lender and the Borrower under such Ancillary Facility based on normal market rates and terms.

(i)

For purposes of disclosure pursuant to the Interest Act (Canada), (i) whenever any interest under this Agreement is calculated using a rate based on a year of 360 days or 365 days, as the case may be, the rate determined pursuant to such calculation, when expressed as an annual rate, is equivalent to (x) the applicable rate based on a year of 360 days or 365 days, as the case may be, (y) multiplied by the actual number of days in the calendar year in which the period for which such interest or fee is payable (or compounded) ends, and (z) divided by 360 or 365, as the case may be, (ii) the principle of deemed reinvestment of interest does not 

83

apply to any interest calculation under this Agreement, and (iii) the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields.

Section 2.09

Conversion/Continuation

.  

(a)

Subject to Section 2.18 and so long as no Default or Event of Default shall have occurred and then be continuing, the Borrowers shall have the option:

(i)

to convert at any time all or any part of any Term Loan or Revolving Loan denominated in Dollars or Canadian Dollars equal to $5,000,000 and integral multiples of $1,000,000 in excess of that amount from one Type of Loan to another Type of Loan; provided, that a Eurocurrency Rate Loan may only be converted on the expiration of the Interest Period applicable to such Eurocurrency Rate Loan unless the U.S. Borrower shall pay all amounts due under Section 2.18 in connection with any such conversion; or

(ii)

upon the expiration of any Interest Period applicable to any Eurocurrency Rate Loan, to continue all or any portion of such Loan equal to $5,000,000 and integral multiples of $1,000,000 in excess of that amount as a Eurocurrency Rate Loan;

provided that, for the avoidance of doubt, no conversion or continuation of any Loan pursuant to this Section shall affect the currency in which such Loan is denominated prior to any such conversion or continuation and each such Loan shall remain outstanding denominated in the currency originally issued.

(b)

The Borrower Representative shall deliver a Conversion/Continuation Notice to the Administrative Agent no later than 10:00 a.m. (New York City time) or, with respect to Loans in respect of Foreign Revolving Commitments, 10:00 a.m. (London, England time), at least one Business Day in advance of the proposed conversion date (in the case of a conversion to a Base Rate Loan or Canadian Prime Rate Loan) and at least three (3) Business Days in advance of the proposed Conversion/Continuation Date (in the case of a conversion to, or a continuation of, a Eurocurrency Rate Loan).  Except as otherwise provided herein, a Conversion/Continuation Notice for conversion to, or continuation of, any Eurocurrency Rate Loans, shall be irrevocable on and after the related Interest Rate Determination Date, and each Borrower shall be bound to effect a conversion or continuation in accordance therewith.

Section 2.10

Default Interest

.  Upon the occurrence and during the continuance of an Event of Default under Section 8.01(a), (c) (in the case of a failure to perform or comply with any term or condition contained in Section 6.07(a) or (b)), (f), (g), or (h) and, at the request of the Required Lenders, any other Event of Default, the principal amount of all Loans outstanding and, to the extent permitted by applicable law, any interest payments on the Loans or any fees or other amounts owed hereunder, shall thereafter bear interest (including post-petition interest in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws) payable on demand at a rate (the “Default Rate”) that is 2.00% per annum in excess of the interest rate otherwise payable hereunder with respect to the applicable Loans (or, in the case of any such fees and other amounts, at a rate which is 2.00% per annum in excess of 

84

the interest rate otherwise payable hereunder for Base Rate Loans that are Revolving Loans); provided, that in the case of Eurocurrency Rate Loans denominated in Dollars and Canadian Dollars, upon the expiration of the Interest Period in effect at the time any such increase in interest rate is effective such Eurocurrency Rate Loans shall thereupon become Base Rate Loans or Canadian Prime Rate Loans, as applicable, and shall thereafter bear interest payable upon demand at a rate which is 2.00% per annum in excess of the interest rate otherwise payable hereunder for Base Rate Loans.  Payment or acceptance of the increased rates of interest provided for in this Section 2.10 is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of the Administrative Agent or any Lender.

Section 2.11

Fees

.  

(a)

The U.S. Borrower agrees to pay to Lenders (other than Defaulting Lenders) having U.S. Revolving Exposure and Canadian Revolving Exposure, as applicable:

(i)

commitment fees equal to (1) the average of the daily difference between (a) the U.S. Revolving Commitments and (b) the aggregate principal amount of (x) all outstanding U.S. Revolving Loans plus (y) the U.S. Letter of Credit Usage, times (2) the Applicable Revolving Commitment Fee Percentage; 

(ii)

commitment fees equal to (1) the average of the daily difference between (a) the Canadian Revolving Commitments and (b) the Dollar Equivalent of the aggregate principal amount of (x) all outstanding Canadian Revolving Loans plus (y) the Canadian Letter of Credit Usage, times (2) the Applicable Revolving Commitment Fee Percentage; 

(iii)

letter of credit fees equal to (1) the Applicable Margin for U.S. Revolving Loans that are Eurocurrency Rate Loans, times (2) the average aggregate daily maximum amount available to be drawn under all such U.S. Letters of Credit (regardless of whether any conditions for drawing could then be met and determined as of the close of business on any date of determination); and

(iv)

letter of credit fees equal to (1) the Applicable Margin for Canadian Revolving Loans that are Eurocurrency Rate Loans, times (2) the Dollar Equivalent of the average aggregate daily maximum amount available to be drawn under all such Canadian Letters of Credit (regardless of whether any conditions for drawing could then be met and determined as of the close of business on any date of determination). 

All fees referred to in this Section 2.11(a) shall be paid in Dollars to the Administrative Agent at its Principal Office and upon receipt, the Administrative Agent shall promptly distribute to each Lender that has Revolving Exposure its Pro Rata Share thereof.

(b)

The Foreign Borrower agrees to pay to Lenders (other than Defaulting Lenders) having Foreign Revolving Exposure:

85

(i)

commitment fees equal to (1) the average of the daily difference between (a) the Foreign Revolving Commitments and (b) the Euro Equivalent of the aggregate principal amount of (x) all outstanding Foreign Revolving Loans plus (y) the Foreign Letter of Credit Usage, times (2) the Applicable Revolving Commitment Fee Percentage; and

(ii)

letter of credit fees equal to (1) the Applicable Margin for Foreign Revolving Loans, times (2) the Euro Equivalent of the average aggregate daily maximum amount available to be drawn under all such Foreign Letters of Credit (regardless of whether any conditions for drawing could then be met and determined as of the close of business on any date of determination). 

All fees referred to in this Section 2.11(b) shall be paid in Euros to the Administrative Agent at its applicable Principal Office and upon receipt, the Administrative Agent shall promptly distribute to each Lender that has Revolving Exposure its Pro Rata Share thereof.

(c)

Letter of Credit Fees.  

(i)

The U.S. Borrower agrees to pay directly to the applicable Issuing Bank, for its own account, with respect to any standby U.S. Letters of Credit and standby Canadian Letters of Credit a fronting fee in Dollars equal to 0.250%, per annum, times the average aggregate daily maximum amount available to be drawn under all such U.S. Letters of Credit and Canadian Letters of Credit (determined as of the close of business on any date of determination).

(ii)

The Foreign Borrower agrees to pay directly to the applicable Issuing Bank, for its own account, with respect to any standby Foreign Letters of Credit a fronting fee in Euros equal to 0.250%, per annum, times the average aggregate daily maximum amount available to be drawn under all such Foreign Letters of Credit (determined as of the close of business on any date of determination). 

(iii)

The applicable Borrower agrees to pay fees to be agreed with the applicable Issuing Bank in respect of all commercial Letters of Credit.

(iv)

The applicable Borrower agrees to pay such documentary and processing charges for any issuance, amendment, transfer or payment of a Letter of Credit as are in accordance with the applicable Issuing Bank’s standard schedule for such charges and as in effect at the time of such issuance, amendment, transfer or payment, as the case may be.

(d)

All fees referred to in Section 2.11(a), 2.11(b), 2.11(c)(i) and 2.11(c)(ii) shall be calculated on the basis of a 360-day year and the actual number of days elapsed and shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year during the applicable Revolving Commitment Period, commencing on the first such date to occur after the Closing Date, and on the applicable Revolving Commitment Termination Date.

(e)

In addition to any of the foregoing fees, the Borrowers agree to pay to Agents such other fees (such as administrative agency fees) in the amounts and at the times 

86

separately agreed upon.  The rate and timing of fees in respect of any Ancillary Facility shall be determined by agreement between the relevant Ancillary Lender and the Borrower under such Ancillary Facility based on normal market rates and terms.  Certain fees separately agreed shall be payable to the Lenders on the Closing Date as fee compensation for the funding of such Lender’s Loans as availability of such Lender’s unfunded Revolving Commitment.  Such closing fees shall be in all respect earned, due and payable on the Closing Date and non-refundable and non-creditable thereafter.

Section 2.12

Scheduled Payments/Commitment Reductions

.  

(a)

The principal amounts of the U.S. Tranche A Term Loans shall be repaid in consecutive quarterly installments (each, an “Installment”) in the aggregate amounts set forth below on the dates set forth below (each, an “Installment Date”), commencing on September 30, 2010:

		
	Amortization Date

	U.S. Tranche A Term Loan Installments

	September 30, 2010

	$4,596,250

	December 31, 2010

	$4,596,250

	March 31, 2011

	$4,596,250

	June 30, 2011

	$4,596,250

	September 30, 2011

	$9,192,500

	December 31, 2011

	$9,192,500

	March 31, 2012

	$9,192,500

	June 30, 2012

	$9,192,500

	September 30, 2012

	$13,788,750

	December 31, 2012

	$13,788,750

	March 31, 2013

	$13,788,750

	June 30, 2013

	$13,788,750

	September 30, 2013

	$22,981,250

	December 31, 2013

	$22,981,250

	March 31, 2014

	$22,981,250

	June 30, 2014

	$22,981,250

	September 30, 2014

	$41,366,250

	December 31, 2014

	$41,366,250

	March 31, 2015

	$41,366,250

	Tranche A Term Loan Maturity Date

	Remainder

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(b)

The principal amounts of the Foreign Tranche A Term Loans shall be repaid in Installments in the aggregate amounts set forth below on the Installment Dates set forth below, commencing on September 30, 2010:

		
	Amortization Date

	Foreign Tranche A Term Loan Installments

	September 30, 2010

	€1,250,000

	December 31, 2010

	€1,250,000

	March 31, 2011

	€1,250,000

	June 30, 2011

	€1,250,000

	September 30, 2011

	€2,500,000

	December 31, 2011

	€2,500,000

	March 31, 2012

	€2,500,000

	June 30, 2012

	€2,500,000

	September 30, 2012

	€3,750,000

	December 31, 2012

	€3,750,000

	March 31, 2013

	€3,750,000

	June 30, 2013

	€3,750,000

	September 30, 2013

	€6,250,000

	December 31, 2013

	€6,250,000

	March 31, 2014

	€6,250,000

	June 30, 2014

	€6,250,000

	September 30, 2014

	€11,250,000

	December 31, 2014

	€11,250,000

	March 31, 2015

	€11,250,000

	Tranche A Term Loan Maturity Date

	Remainder

(c)

The principal amounts of the U.S. Tranche B Term Loans shall be repaid in Installments in the aggregate amounts set forth below on the Installment Dates set forth below, commencing on September 30, 2010:

		
	Amortization Date

	U.S. Tranche B Term Loan Installments

	September 30, 2010

	$2,507,750

	December 31, 2010

	$2,507,750

	March 31, 2011

	$2,507,750

	June 30, 2011

	$2,507,750

88

		
	September 30, 2011

	$2,507,750

	December 31, 2011

	$2,507,750

	March 31, 2012

	$2,507,750

	June 30, 2012

	$2,507,750

	September 30, 2012

	$2,507,750

	December 31, 2012

	$2,507,750

	March 31, 2013

	$2,507,750

	June 30, 2013

	$2,507,750

	September 30, 2013

	$2,507,750

	December 31, 2013

	$2,507,750

	March 31, 2014

	$2,507,750

	June 30, 2014

	$2,507,750

	September 30, 2014

	$2,507,750

	December 31, 2014

	$2,507,750

	March 31, 2015

	$2,507,750

	June 30, 2015

	$2,507,750

	September 30, 2015

	$2,507,750

	December 30, 2015

	$2,507,750

	March 31, 2016

	$2,507,750

	Tranche B Term Loan Maturity Date

	Remainder

(d)

The principal amounts of the Foreign Tranche B Term Loans shall be repaid in Installments in the aggregate amounts set forth below on the Installment Dates set forth below, commencing on September 30, 2010:

		
	Amortization Date

	Foreign Tranche B Term Loan Installments

	September 30, 2010

	€750,000

	December 31, 2010

	€750,000

	March 31, 2011

	€750,000

	June 30, 2011

	€750,000

	September 30, 2011

	€750,000

	December 31, 2011

	€750,000

	March 31, 2012

	€750,000

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	June 30, 2012

	€750,000

	September 30, 2012

	€750,000

	December 31, 2012

	€750,000

	March 31, 2013

	€750,000

	June 30, 2013

	€750,000

	September 30, 2013

	€750,000

	December 31, 2013

	€750,000

	March 31, 2014

	€750,000

	June 30, 2014

	€750,000

	September 30, 2014

	€750,000

	December 31, 2014

	€750,000

	March 31, 2015

	€750,000

	June 30, 2015

	€750,000

	September 30, 2015

	€750,000

	December 30, 2015

	€750,000

	March 31, 2016

	€750,000

	Tranche B Term Loan Maturity Date

	Remainder

(e)

Notwithstanding the foregoing, (x) such Installments shall be reduced in connection with any voluntary or mandatory prepayments of the Tranche A Term Loans or the Tranche B Term Loans, as the case may be, in accordance with Sections 2.13, 2.14 and 2.15, as applicable; and (y) the Tranche A Term Loans and the Tranche B Term Loans, together with all other amounts owed hereunder with respect thereto, shall, in any event, be paid in full no later than the Tranche A Term Loan Maturity Date and the Tranche B Term Loan Maturity Date, respectively.

Section 2.13

Voluntary Prepayments/Commitment Reductions

.

(a)

Voluntary Prepayments.  

(i)

Any time and from time to time (1) with respect to Base Rate Loans or Canadian Prime Rate Loans, the U.S. Borrower may prepay any such Loans on any Business Day in whole or in part, in an aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of that amount; (2) with respect to Eurocurrency Rate Loans, the applicable Borrower may prepay any such Loans on any Business Day in whole or in part in an aggregate minimum amount of, with respect to Loans denominated in Dollars or Canadian Dollars and U.S. Revolving Loans or Canadian Revolving Loans, $5,000,000 and integral multiples of $1,000,000 in excess of 

90

that amount, and, with respect to Loans denominated in Euros and all Foreign Revolving Loans, €5,000,000 and integral multiples of €1,000,000 in excess of that amount; and (3) with respect to Swing Line Loans, the U.S. Borrower may prepay any such Loans on any Business Day in whole or in part in an aggregate minimum amount of $500,000, and in integral multiples of $100,000 in excess of that amount.

(ii)

All such prepayments shall be made (1) upon not less than one Business Day’s prior written notice in the case of Base Rate Loans or Canadian Prime Rate Loans; (2) upon not less than three (3) Business Days’ prior written notice in the case of Eurocurrency Rate Loans and (3) upon written notice on the date of prepayment, in the case of Swing Line Loans;

in each case given to the Administrative Agent or applicable Swing Line Lender, as the case may be, by 12:00 p.m. (New York City time) (or, with respect to repayments of Foreign Loans, 12:00 p.m. London, England time) on the date required (and the Administrative Agent or such Swing Line Lender, as the case may be, shall promptly transmit such original notice by telefacsimile or telephone to each Lender).  Upon the giving of any such notice, the principal amount of the Loans specified in such notice shall become due and payable on the prepayment date specified therein; provided that such a notice may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower Representative if such condition is not satisfied.  Any such voluntary prepayment shall be applied as specified in Section 2.15(a).

(b)

Voluntary Commitment Reductions.   

(i)

The Borrower Representative may, upon not less than three (3) Business Days’ prior written notice confirmed in writing to the Administrative Agent (which original written notice the Administrative Agent shall promptly transmit by telefacsimile or telephone to each applicable Lender), at any time and from time to time terminate in whole or permanently reduce in part, without premium or penalty, the U.S. Revolving Commitments, the Canadian Revolving Commitments and/or the Foreign Revolving Commitments in an amount up to the amount by which (x) the U.S. Revolving Commitments exceed the Total Utilization of U.S. Revolving Commitments, (y) the Canadian Revolving Commitments exceed the Total Utilization of Canadian Revolving Commitments or (z) the Foreign Revolving Commitments exceed the Total Utilization of Foreign Revolving Commitments, as applicable, at the time of such proposed termination or reduction; provided, that any such partial reduction of the Revolving Commitments shall be in an aggregate minimum amount of, with respect to U.S. Revolving Commitments and Canadian Revolving Commitments, $5,000,000 and integral multiples of $1,000,000 in excess of that amount, and, with respect to Foreign Revolving Commitments, €5,000,000 and integral multiples of €1,000,000 in excess of that amount.

(ii)

The Borrower Representative’s notice to the Administrative Agent shall designate the date (which shall be a Business Day) of such termination or reduction and the amount of any partial reduction, and such termination or reduction of the Revolving Commitments shall be effective on the date specified in the Borrower Representative’s notice and shall reduce the applicable Revolving Commitments of each 

91

Lender proportionately to its Pro Rata Share thereof; provided that such a notice may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower Representative if such conditions is not satisfied. 

(c)

Below-Par Purchases.  Notwithstanding anything to the contrary contained in this Section 2.13 or any other provision of this Agreement and without otherwise limiting the rights in respect of prepayments of the Loans of the U.S. Borrower and its Subsidiaries, so long as no Default or Event of Default has occurred and is continuing, either Borrower may repurchase outstanding Term Loans pursuant to this Section 2.13(c) on the following basis:

(i)

The U.S. Borrower may make one or more offers (each, a “U.S. Offer”) to repurchase all or any portion of the U.S. Tranche A Term Loans and U.S. Tranche B Term Loans (such Term Loans, the “U.S. Offer Loans”), and the Foreign Borrower may make one or more offers (each, a “Foreign Offer” and, together with each U.S. Offer, an “Offer”) to repurchase all or any portion of the Foreign Tranche A Term Loans and Foreign Tranche B Term Loans (such Term Loans, the “Foreign Offer Loans” and, together with the U.S. Offer Loans, the “Offer Loans”); provided that, (A) the applicable Borrower delivers notice of its intent to make such Offer to the Administrative Agent at least five Business Days in advance of the launch of any proposed Offer, (B) upon the launch of such proposed Offer, the applicable Borrower delivers an irrevocable notice of such Offer to all applicable Term Lenders (with a copy to the Administrative Agent) indicating (1) the last date on which such Offer may be accepted, (2) the maximum dollar amount of such U.S. Offer or maximum Euro amount of such Foreign Offer, as applicable, and (3) the repurchase price per dollar of principal amount of such U.S. Offer Loans or the repurchase price per Euro of principal amount of such Foreign Offer Loans, as applicable, at which the applicable Borrower is willing to repurchase such Offer Loans (which price shall be below par), (C) the maximum dollar amount of each U.S. Offer and the maximum Euro amount of each Foreign Offer shall be an amount reasonably determined by the applicable Borrower in consultation with the Administrative Agent prior to the making of any such Offer; (D) the Borrower shall hold such Offer open for a minimum period of days to be reasonably determined by the Administrative Agent and the applicable Borrower prior to the making of any such Offer; (E) a Term Lender who elects to participate in the Offer may choose to sell all or part of such Term Lender’s Offer Loans; (F) such Offer shall be made to all Term Lenders holding the Offer Loans on a pro rata basis in accordance with the respective principal amount then due and owing to the Term Lenders; provided, further that, if any Term Lender elects not to participate in the Offer, either in whole or in part, the amount of such Term Lender’s Offer Loans not being tendered shall be excluded in calculating the pro rata amount applicable to the balance of such Offer Loans and (G) such Offer shall be conducted pursuant to such procedures the Administrative Agent may establish in consultation with the applicable Borrower (which shall be consistent with this Section 2.13(c)) and that a Lender must follow in order to have its Offer Loans repurchased, which procedures may include a requirement that that the applicable Borrower represent and warrant that it does not have any material non-public information with respect to any Loan Party (or its Subsidiaries) that could be material to a Lender’s decision to participate in such Offer; 

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(ii)

With respect to all repurchases made by the applicable Borrower such repurchases shall be deemed to be voluntary prepayments pursuant to this Section 2.13 in an amount equal to the aggregate principal amount of such Term Loans, provided that such repurchases shall not be subject to the provisions of paragraphs (a) and (b) of this Section 2.13 or Section 2.17;

(iii)

Upon the purchase by the applicable Borrower of any Term Loans, (A) automatically and without the necessity of any notice or any other action, all principal and accrued and unpaid interest on the Term Loans so repurchased shall be deemed to have been paid for all purposes and shall be cancelled and no longer outstanding for all purposes of this Agreement and all other Loan Documents (and in connection with any Term Loan purchased pursuant to this Section 2.13(c), the Administrative Agent is authorized to make appropriate entries in the Register to reflect such cancellation) and (B) the applicable Borrower will promptly advise the Administrative Agent of the total amount of Offer Loans that were repurchased from each Lender who elected to participate in the Offer;

(iv)

Failure by the Borrowers to make any payment to a Lender required by an agreement permitted by this Section 2.13(c) shall not constitute an Event of Default under Section 8.01(a);

(v)

No proceeds of any Revolving Loans may be used to purchase any Offer Loans, and all amounts used to purchase Offer Loans shall be deemed to be a use of the Available Amount; and

(vi)

The amount of such repurchases (based on the face value of the Term Loans purchased thereby) shall be applied on a pro rata basis to reduce the remaining Installments on the applicable Class of Term Loans pursuant to Section 2.12.

Section 2.14

Mandatory Prepayments/Commitment Reductions

.  

(a)

Asset Sales.  No later than ten (10) Business Days following the date of receipt by any Group Member of any Net Cash Proceeds in respect of any Asset Sale pursuant to Section 6.08(d), 6.08(j)(ii) or 6.08(k), the Term Loans shall be repaid as set forth in Section 2.15(b) in an aggregate amount equal to such Net Cash Proceeds; provided, that so long as no Default or Event of Default shall have occurred and be continuing, the Borrower Representative shall have the option, upon written notice to the Administrative Agent, directly or through one or more of its Subsidiaries, to invest such Net Cash Proceeds within three hundred sixty-five (365) days of receipt thereof in Additional Assets, which investment may include the repair, restoration or replacement of the applicable assets thereof, to the extent such investments are otherwise permitted under this Agreement.

(b)

Insurance/Condemnation Proceeds.  No later than ten (10) Business Days following the date of receipt by any Group Member, or the Administrative Agent as loss payee, of any Net Cash Proceeds of the type described in clause (b) of the definition thereof, the Term Loans shall be repaid as set forth in Section 2.15(b) in an aggregate amount equal to such Net Cash Proceeds; provided, that so long as no Default or Event of Default shall have occurred and 

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be continuing, the Borrower Representative shall have the option, upon written notice to the Administrative Agent, directly or through one or more of its Subsidiaries to invest such Net Cash Proceeds within three hundred sixty-five (365) days of receipt thereof in Additional Assets, which Investment may include the repair, restoration or replacement of the applicable assets thereof.

(c)

Issuance or Incurrence of Debt.  No later than one (1) Business Day following the date of receipt by any Group Member of any Net Cash Proceeds from the issuance or incurrence of any Indebtedness of any Group Member (other than with respect to any Indebtedness permitted to be incurred pursuant to Section 6.01, but including Indebtedness permitted to be incurred pursuant to Sections 6.01(d)(1)(ii) (except for Indebtedness incurred for the purpose of repaying Revolving Loans), 6.01(n)(i) and 6.01(n)(ii), the Net Cash Proceeds of which are required to prepay Term Loans, which Net Cash Proceeds shall be applied not later than five (5) Business Days after receipt to the extent necessary to allow the Borrowers to comply with Section 2.15(c)), the Term Loans shall be prepaid by the applicable Borrower as set forth in Section 2.15(b) in an aggregate amount equal to 100.0% of such Net Cash Proceeds.

(d)

Consolidated Excess Cash Flow.  In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with the Fiscal Year ending January 30, 2011), no later than ninety (90) days after the end of such Fiscal Year, the Term Loans shall be prepaid by the applicable Borrower as set forth in Section 2.15(b) in an aggregate amount equal to (i) 50% of such Consolidated Excess Cash Flow minus (ii) voluntary repayments of the Term Loans pursuant to Section 2.13(a); provided, that if, as of the last day of the most recently ended Fiscal Year, the Leverage Ratio (determined for any such period by reference to the Compliance Certificate delivered pursuant to Section 5.01(c) calculating the Leverage Ratio as of the last day of such Fiscal Year) shall be (x) less than 2.50:1.00 but at least 2.00:1.00, the U.S. Borrower shall only be required to make the prepayments and/or reductions otherwise required hereby in an amount equal to (i) 25% of such Consolidated Excess Cash Flow minus (ii) voluntary repayments of the Loans (excluding repayments of Revolving Loans or Swing Line Loans except to the extent the Revolving Commitments are permanently reduced in connection with such repayments) or (y) less than 2.00:1.00, no such payment shall be required.

(e)

Revolving Loans, Swing Line Loans and Letters of Credit.  The applicable Borrower shall from time to time (i) prepay first, the Swing Line Loans, and second, the Revolving Loans and (ii) if all such Loans are prepaid without exhausting the excess referred to below, Cash Collateralize outstanding Letters of Credit, in each case, to the extent necessary so that (x) the Total Utilization of U.S. Revolving Commitments shall not at any time exceed the U.S. Revolving Commitments then in effect, (y) the Total Utilization of Canadian Revolving Commitments shall not at any time exceed the Canadian Revolving Commitments then in effect and (z) the Total Utilization of Foreign Revolving Commitments shall not at any time exceed the Foreign Revolving Commitments then in effect.  Notwithstanding the foregoing, mandatory prepayments of Swing Line Loans and Revolving Loans and Cash Collateralization of Letters of Credit that would otherwise be required pursuant to this Section 2.14(e) solely as a result of fluctuations in Exchange Rates from time to time shall only be required to be made on the last Business Day of each month on the basis of the Exchange Rate in effect on such Business Day.

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(f)

Prepayment Certificate.  Concurrently with any prepayment of the Term Loans pursuant to Sections 2.14(a) through 2.14(d), the Borrower Representative shall deliver to the Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the amount of the applicable Net Cash Proceeds or Consolidated Excess Cash Flow, as the case may be.  In the event that the Borrower Representative shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, the applicable Borrower shall promptly make an additional prepayment of the Term Loans in an amount equal to such excess, and the Borrower Representative shall concurrently therewith deliver to the Administrative Agent a certificate of an Authorized Officer describing such excess.

Section 2.15

Application of Prepayments/Reductions; Application of Proceeds of Collateral

.

(a)

Application of Voluntary Prepayments by Type of Loans.  Any prepayment of any Loan pursuant to Section 2.13(a) shall be applied as specified by the applicable Borrower in the applicable notice of prepayment; provided that any voluntary prepayment pursuant to Section 2.13(a) of Term Loans must be made pro rata to all Term Loans (but may be applied to the Installments thereof as determined by the Borrower Representative); provided, further, that in the event the applicable Borrower fails to specify the Loans to which any such prepayment shall be applied, such prepayment shall be applied as follows:

first, to repay outstanding Swing Line Loans to the full extent thereof;

second, to repay outstanding Revolving Loans to the full extent thereof; and

third, to prepay the Term Loans on a pro rata basis (in accordance with the respective outstanding principal amounts thereof); and applied to reduce in direct order of maturity the next four scheduled Installments of the Tranche A Term Loans and Tranche B Term Loans due and thereafter on a pro rata basis to reduce the scheduled remaining Installments of the Tranche A Term Loans and Tranche B Term Loans; 

in each case, for the avoidance of doubt, allocated on a pro rata basis among the applicable U.S. Loans and Foreign Loans.

(b)

Application of Mandatory Prepayments by Type of Loans.  Any amount required to be paid pursuant to Sections 2.14(a) through 2.14(d) shall be applied to prepay Term Loans on a pro rata basis in accordance with the respective outstanding principal amounts thereof and further applied to reduce in direct order of maturity the next four scheduled Installments due and thereafter on a pro rata basis to the remaining scheduled Installments of principal of the Tranche A Term Loans and Tranche B Term Loans, in each case, for the avoidance of doubt, allocated on a pro rata basis among the applicable U.S. Loans and Foreign Loans.

(c)

Waivable Mandatory Prepayment.  Anything contained herein to the contrary notwithstanding, so long as any Tranche A Term Loans are outstanding, in the event the Borrower Representative is required to make any mandatory prepayment (a “Waivable Mandatory Prepayment”) of the Tranche B Term Loans, pursuant to Section 2.14, not less than five (5) Business Days prior to the date (the “Required Prepayment Date”) on which the 

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Borrower Representative is required to make such Waivable Mandatory Prepayment, the Borrower Representative shall notify the Administrative Agent of the amount of such prepayment, and the Administrative Agent shall promptly thereafter notify each Lender holding an outstanding Tranche B Term Loan of the amount of such Lender’s Pro Rata Share of such Waivable Mandatory Prepayment and such Lender’s option to refuse such amount.  Each such Lender may exercise such option by giving written notice to the Borrower Representative and the Administrative Agent of its election to do so on or before the third Business Day prior to the Required Prepayment Date (it being understood that any Lender which does not notify the Borrower Representative and the Administrative Agent of its election to exercise such option on or before the third Business Day prior to the Required Prepayment Date shall be deemed to have elected, as of such date, not to exercise such option).  On the Required Prepayment Date, the applicable Borrower shall pay to the Administrative Agent the amount of the Waivable Mandatory Prepayment, which amount shall be applied (i) in an amount equal to that portion of the Waivable Mandatory Prepayment payable to those Lenders that have elected not to exercise such option, to prepay the Tranche B Term Loans of such Lenders (which prepayment shall be applied to the scheduled Installments of principal of the Tranche B Term Loans in accordance with Section 2.15(b)), and (ii) in an amount equal to that portion of the Waivable Mandatory Prepayment otherwise payable to those Lenders that have elected to exercise such option, to prepay the Tranche A Term Loans (which prepayment shall be applied to the scheduled Installments of principal of the Tranche A Term Loans in accordance with Section 2.15(b) and further applied to the scheduled Installments of principal of the Tranche B Term Loans in accordance with Section 2.15(b)).

(d)

Application of Prepayments of Loans to Base Rate Loans and Eurocurrency Rate Loans.  Considering each Class of Loans being prepaid separately, any prepayment of U.S. Loans shall be applied first to Base Rate Loans and Canadian Prime Rate Loans to the full extent thereof before application to Eurocurrency Rate Loans, in each case in a manner which minimizes the amount of any payments required to be made by the U.S. Borrower pursuant to Section 2.18(c).

(e)

Application of Proceeds of Collateral.  

(i)

Except as expressly set forth in clause (ii) below, all proceeds received by the Administrative Agent from the Collateral Agent in respect of any sale of, any collection from, or other realization upon all or any part of the Collateral shall be applied in full or in part by the Administrative Agent against, the Obligations in the following order of priority:  first, to the payment of all costs and expenses of such sale, collection or other realization, including reasonable compensation to the Administrative Agent and its agents and counsel, and all other expenses, liabilities and advances made or incurred by the Administrative Agent in connection therewith, and all amounts for which the Administrative Agent is entitled to indemnification hereunder (in its capacity as the Administrative Agent and not as a Lender) and all advances made by the Administrative Agent hereunder for the account of the applicable Loan Party, and to the payment of all costs and expenses paid or incurred by the Administrative Agent in connection with the exercise of any right or remedy hereunder or under the Credit Agreement, all in accordance with the terms hereof or thereof; second, to the extent of any excess of such proceeds, to repay any outstanding Swing Line Loans and amounts drawn under Letters 

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of Credit and not reimbursed by the applicable Borrower or the applicable Revolving Lenders; third, to the extent of any excess of such proceeds, to the payment of all other Obligations for the ratable benefit of the Lenders and the Lender Counterparties holding such Obligations; and fourth, to the extent of any excess of such proceeds, to the payment to or upon the order of the applicable Loan Party or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

(ii)

All proceeds received by the Administrative Agent from the Collateral Agent in respect of any sale of, any collection from, or other realization upon all or any part of the Collateral of the Foreign Borrower or Foreign Guarantors shall be applied in full or in part by the Administrative Agent against, the Foreign Obligations in the following order of priority:  first, to the payment of all costs and expenses of such sale, collection or other realization, including reasonable compensation to the Administrative Agent and its agents and counsel, and all other expenses, liabilities and advances made or incurred by the Administrative Agent in connection therewith, and all amounts for which the Administrative Agent is entitled to indemnification hereunder (in its capacity as the Administrative Agent and not as a Lender) and all advances made by the Administative Agent hereunder for the account of the applicable Loan Party, and to the payment of all costs and expenses paid or incurred by the Administrative Agent in connection with the exercise of any right or remedy hereunder or under the Credit Agreement, all in accordance with the terms hereof or thereof; second, to the extent of any excess of such proceeds, to repay any outstanding amounts drawn under Foreign Letters of Credit and not reimbursed by the applicable Borrower or the applicable Revolving Lenders; third, to the extent of any excess of such proceeds, to the payment of all other Foreign Obligations for the ratable benefit of the Lenders and the Lender Counterparties holding such Foreign Obligations; and fourth, to the extent of any excess of such proceeds, to the payment to or upon the order of the applicable Loan Party or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

(iii)

It is acknowledged and agreed that the Collateral Agent will distribute proceeds of Collateral to the Administrative Agent and, as applicable, the 2023 Debentures Trustee, as required by the terms of the Security Documents or the 2023 Debentures Intercreditor Agreement.  

Section 2.16

General Provisions Regarding Payments

.  

(a)

All payments by the Borrowers of principal, interest, fees and other Obligations shall be made, with respect to the U.S. Loans or the U.S. Revolving Commitments,   in Dollars, and, with respect to the Foreign Loans or the Foreign Revolving Commitments, in Euros, in each case in same day funds, without defense, setoff or counterclaim, free of any restriction or condition, and delivered to the Administrative Agent not later than 12:00 p.m. (New York City time) or, with respect to Foreign Loans or Foreign Revolving Commitments, 12:00 p.m. (London, England time), on the date due at the Principal Office designated by the Administrative Agent for the account of Lenders.  For purposes of computing interest and fees, funds received by the Administrative Agent after that time on such due date shall be deemed to have been paid by the Borrowers on the next succeeding Business Day.

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(b)

All payments in respect of the principal amount of any Loan (other than voluntary prepayments of Revolving Loans, Base Rate Loans or Canadian Prime Rate Loans) shall be accompanied by payment of accrued interest on the principal amount being repaid or prepaid, and all such payments (and, in any event, any payments in respect of any Loan on a date when interest is due and payable with respect to such Loan) shall be applied to the payment of interest then due and payable before application to principal.

(c)

The Administrative Agent (or its agent or sub-agent appointed by it) shall promptly distribute to each Lender at such address as such Lender shall indicate in writing, such Lender’s applicable Pro Rata Share of all payments and prepayments of principal and interest due hereunder, together with all other amounts due thereto, including all fees payable with respect thereto, to the extent received by the Administrative Agent.

(d)

Notwithstanding the foregoing provisions hereof, if any Conversion/ Continuation Notice is withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any Eurocurrency Rate Loans, the Administrative Agent shall give effect thereto in apportioning payments received thereafter.

(e)

Subject to the provisos set forth in the definition of “Interest Period” as they may apply to Revolving Loans, whenever any payment to be made hereunder with respect to any Loan shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and, with respect to Revolving Loans only, such extension of time shall be included in the computation of the payment of interest hereunder or of the Revolving Commitment fees hereunder.

(f)

The Administrative Agent shall deem any payment by or on behalf of any Borrower hereunder that is not made in same day funds prior to 12:00 p.m. (New York City time) or, with respect to Foreign Loans or Foreign Revolving Commitments, 12:00 p.m. (London, England time), to be a non-conforming payment.  Any such payment shall not be deemed to have been received by the Administrative Agent until the later of (i) the time such funds become available funds, and (ii) the applicable next Business Day.  The Administrative Agent shall give prompt telephonic notice to the Borrower Representative and each applicable Lender (confirmed in writing) if any payment is non-conforming.  Any non-conforming payment may constitute or become a Default or Event of Default in accordance with the terms of Section 8.01(a).  

(g)

If an Event of Default shall have occurred and not otherwise been waived, and the maturity of the Obligations shall have been accelerated pursuant to Section 8.01, all payments or proceeds received by Agents hereunder in respect of any of the Obligations, shall be applied in accordance with the application arrangements described in Section 2.15(e). 

(h)

If a CKI Blockage Event has occurred and is continuing, any payment, including any prepayments or distribution of any kind or character (whether required by this Agreement or optionally made by any Loan Party) shall be accompanied by a certificate, duly executed by an Authorized Officer of the U.S. Borrower stating that no part of such payment or distribution constitutes a CK Distribution, and such reasonable evidence as the Administrative Agent may reasonably request supporting such certification. 

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Section 2.17

Ratable Sharing

.  The Lenders to the U.S. Borrower agree among themselves, on the one hand, and the Lenders to the Foreign Borrower hereby agree among themselves, on the other hand, that, except as otherwise provided in the Security Documents with respect to amounts realized from the exercise of rights with respect to Liens on the Collateral, if any of them shall, whether by voluntary payment (other than a voluntary prepayment of Loans made and applied in accordance with the terms hereof), through the exercise of any right of set-off or banker’s lien, by counterclaim or cross action or by the enforcement of any right under the Loan Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, amounts payable in respect of Letters of Credit, fees and other amounts then due and owing to such Lender hereunder or under the other Loan Documents (collectively, the “Aggregate Amounts Due” to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (a) notify the Administrative Agent and each other Lender of the receipt of such payment and (b) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided, that if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of any Borrower or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest.  The provisions of this Section 2.17 shall not be construed to apply to (a) any payment made by any Borrower pursuant to and in accordance with the express terms of this Agreement or payments made with proceeds of Collateral applied as set forth in Section 2.15(e) or (b) any payment obtained by any Lender as consideration for the assignment or sale of a participation in any of its Loans or other Obligations owed to it.  For the avoidance of doubt no Lender to the Foreign Borrower shall make payments to a Lender to the U.S. Borrower pursuant to this Section 2.17. 

Section 2.18

Making or Maintaining Eurocurrency Rate Loans

.  

(a)

Inability to Determine Applicable Interest Rate.  In the event of any Market Disruption, the Administrative Agent shall on such date give notice (by telefacsimile or by telephone confirmed in writing) to the Borrower Representative and each Lender of such determination, whereupon (i) with respect to Loans denominated in Dollars or Canadian Dollars, (x) no Loans may be made as, or converted to, Eurocurrency Rate Loans until such time as the Administrative Agent notifies the Borrower Representative and Lenders that the circumstances giving rise to such notice no longer exist and (y) any Borrowing Notice or Conversion/Continuation Notice given by the Borrower Representative with respect to the Loans in respect of which such determination was made shall be deemed to be rescinded by the Borrower Representative, and (ii) with respect to Loans denominated in Euros or Other Foreign Currency, if the Administrative Agent or the Borrower Representative so require, the Administrative Agent and the Borrower Representative will negotiate in good faith for a period of not more than 30 days in order to agree on a mutually acceptable substitute basis for calculating the interest payable on the affected Eurocurrency Rate Loans and, (x) if a substitute 

99

basis is agreed within that period between the Administrative Agent and the Borrower Representative, then it shall apply in accordance with its terms (and may be retrospective to the beginning of the relevant Interest Period) and (y) unless and until a substitute basis is so agreed, the interest payable to such Lenders on the applicable Eurocurrency Rate Loans for the relevant Interest Period will be the rate notified to the Administrative Agent by that Lender to be its cost of funds (from any source which it may reasonably select) plus the Applicable Margin and, if applicable, Mandatory Costs.

(b)

Illegality.  Notwithstanding any other provision herein, if the adoption of or any change in any law, treaty, governmental rules, regulation or guideline or order, or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain Eurocurrency Rate Loans as contemplated by this Agreement (such Lender an “Affected Lender”), (i) the Commitment of such Lender hereunder to make Eurocurrency Rate Loans, continue Eurocurrency Rate Loans as such and convert Base Rate Loans or Canadian Prime Rate Loans to Eurocurrency Rate Loans shall forthwith be canceled until such time as it shall no longer be unlawful for such Lender to make or maintain the affected Loan and (ii) with respect to any such Lender’s Loans then outstanding as Eurocurrency Rate Loans denominated in Dollars or Canadian Dollars, if any, shall be converted automatically to Base Rate Loans or Canadian Prime Rate Loans, respectively, on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law.  If any such conversion of a Eurocurrency Rate Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the applicable Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to Section 2.18(c).

(c)

Compensation for Breakage or Non-Commencement of Interest Periods.  The applicable Borrower shall compensate each Lender, upon written request by such Lender (which request shall set forth the basis for requesting such amounts), for all reasonable losses, expenses and liabilities (including any interest paid by such Lender to Lenders of funds borrowed by it to make or carry its Eurocurrency Rate Loans and any loss, expense or liability sustained by such Lender in connection with the liquidation or re-employment of such funds but excluding loss of anticipated profits) which such Lender actually sustains as a direct result of any of the following circumstances: (i) if for any reason (other than a default by such Lender) a borrowing of any Eurocurrency Rate Loan does not occur on a date specified therefor in a Borrowing Notice, or a conversion to or continuation of any Eurocurrency Rate Loan does not occur on a date specified therefor in a Conversion/Continuation Notice; (ii) if any prepayment or other principal payment of, or any conversion of, any of its Eurocurrency Rate Loans occurs on a date prior to the last day of an Interest Period applicable to that Loan; or (iii) if any prepayment of any of its Eurocurrency Rate Loans is not made on any date specified in a notice of prepayment given by the applicable Borrower or the Borrower Representative.

(d)

Booking of Eurocurrency Rate Loans.  Any Lender may make, carry or transfer Eurocurrency Rate Loans at, to or for the account of any of its branch offices or the office of an Affiliate of such Lender.

(e)

Assumptions Concerning Funding of Eurocurrency Rate Loans.  Calculation of all amounts payable to a Lender under this Section 2.18 and under Section 2.19 shall be made as though such Lender had actually funded each of its relevant Eurocurrency Rate 

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Loans through the purchase of a Eurocurrency deposit bearing interest at the rate obtained pursuant to clause (i) of the definition of Adjusted Eurocurrency Rate in an amount equal to the amount of such Eurocurrency Rate Loan and having a maturity comparable to the relevant Interest Period and through the transfer of such Eurocurrency deposit from an offshore office of such Lender to the relevant office of such Lender; provided, that each Lender may fund each of its Eurocurrency Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this Section 2.18 and under Section 2.19.

Section 2.19

Increased Costs; Capital Adequacy

.  

(a)

Compensation For Increased Costs.  In the event that any Lender (which term shall include the Issuing Bank for purposes of this Section 2.19(a)) shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or Governmental Authority, in each case that becomes effective after the date hereof, or compliance by such Lender with any guideline, request or directive issued or made after the date hereof by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or other requirements with respect to Eurocurrency Rate Loans that are reflected in the definition of Adjusted Eurocurrency Rate); or (ii) imposes any other condition on or affecting such Lender (or its applicable lending office) or its obligations hereunder or the London interbank market or the relevant off-shore interbank market for any Approved Currency; and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans hereunder or acquiring participations in, issuing or maintaining Letters of Credit hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, the applicable Borrower shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder.  Such Lender shall deliver to the Borrower Representative (with a copy to the Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this Section 2.19(a), which statement shall be conclusive and binding upon all parties hereto absent manifest error.  For the avoidance of doubt, this Section 2.19(a) shall not apply to any Taxes, which shall be governed by Section 2.20.  

(b)

Capital Adequacy Adjustment.  In the event that any Lender (which term shall include the Issuing Bank for purposes of this Section 2.19(b)) shall have determined that the adoption, effectiveness, phase-in or applicability after the Closing Date of any law, rule or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the 

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interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof in each case that becomes effective after the date hereof, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive issued or made after the date hereof regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender’s Loans or Revolving Commitment or Letters of Credit, or participations therein or other obligations hereunder with respect to the Loans or the Letters of Credit, to a level below that which such Lender or such controlling corporation could have achieved but for such adoption, effectiveness, phase-in, applicability, change or compliance (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy), then from time to time, within five (5) Business Days after receipt by the Borrower Representative from such Lender of the statement referred to in the next sentence, the applicable Borrower shall pay to such Lender such additional amount or amounts as shall compensate such Lender or such controlling corporation on an after-tax basis for such reduction. Such Lender shall deliver to the Borrower Representative (with a copy to the Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this Section 2.19(b), which statement shall be conclusive and binding upon all parties hereto absent manifest error.

Section 2.20

Taxes; Withholding, Etc.

 

(a)

Payments to Be Free and Clear.  All sums payable by or on behalf of any Loan Party hereunder and under any other Loan Document shall (except to the extent required by law) be paid free and clear of, and without any deduction or withholding for or on account of, any Indemnified Tax or Other Tax imposed, levied, collected, withheld or assessed by any Governmental Authority.

(b)

Withholding of Taxes.  If any Loan Party or any other Person is required by law to make any deduction or withholding for or on account of any Indemnified Tax from any sum paid or payable by or on behalf of any Loan Party to the Administrative Agent or any Lender (which term shall include the Issuing Bank for purposes of this Section 2.20(b)) under any of the Loan Documents: (i) the applicable Loan Party shall notify the Administrative Agent in writing of any such requirement or any change in any such requirement as soon as the applicable Loan Party becomes aware of it; (ii) the applicable Borrower shall pay any such Indemnified Tax before the date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed on any Loan Party) for its own account or (if that liability is imposed on the Administrative Agent or such Lender) on behalf of and in the name of the Administrative Agent or such Lender, as the case may be; (iii) the sum payable by such Loan Party in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, the Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made (after taking into account any additional deduction, withholding or payment of any Indemnified Taxes on such increased payment); and (iv) within thirty (30) days after the due date of payment of any Indemnified Tax which it is required by clause (ii) 

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above to pay, the applicable Loan Party shall deliver to the Administrative Agent evidence satisfactory to the Administrative Agent and other affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority. 

(c)

Evidence of Exemption From Withholding Tax.  Any Lender (which term shall include the Issuing Bank for purposes of this Section 2.20(c)) that is entitled to an exemption from or reduction of withholding Tax under the law of the jurisdiction in which any Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall, to the extent it may lawfully do so, deliver to such Borrower and the Administrative Agent, at the time or times prescribed by applicable requirements of law and reasonably requested by such Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable requirements of law and any other information (including whether such Lender has complied with the FATCA) as will permit such payments to be made without withholding or at a reduced rate of withholding.  Without limiting the generality of the foregoing, each Lender that is not a United States person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for U.S. federal income tax purposes and that is a Lender to a U.S. Loan (a “Non-U.S. Lender”) (for this purpose, including any Commitment with respect thereto) shall, to the extent it is legally entitled to do so, deliver to the Administrative Agent for transmission to the Borrower Representative, on or prior to the Closing Date (in the case of each Lender listed on the signature pages hereof on the Closing Date) or on or prior to the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), and at such other times as may be prescribed by law or as may be necessary in the determination of the Borrower Representative or the Administrative Agent (each in the reasonable exercise of its discretion), (i) two (2) original copies of Internal Revenue Service Form W-8BEN (claiming the benefits of any applicable income tax treaty), W-8ECI, W-8EXP and/or W-8IMY (or, in each case, any successor forms), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code or reasonably requested by the Borrower Representative or the Administrative Agent to establish that such Lender is not subject to (or is subject to a reduced rate of) deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Loan Documents or (ii) if such Lender is not a “bank” or other Person described in Section 881(c)(3) of the Internal Revenue Code and is relying on the so-called “portfolio interest exemption,” a Certificate re Non-Bank Status together with two (2) original copies of Internal Revenue Service Form W-8BEN (or any successor form), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code or reasonably requested by the Borrower Representative or the Administrative Agent to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of interest payable under any of the Loan Documents.  Each Lender that is a United States person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for United States federal income tax purposes (a “U.S. Lender”) shall deliver to the Administrative Agent and the Borrower Representative on or prior to the Closing Date (or, if later, on or prior to the date on which such Lender becomes a party to this Agreement) two (2) original copies of Internal Revenue Service Form W-9 (or any successor form), properly completed and duly executed by such Lender, certifying that such U.S. Lender is entitled to an exemption from United States backup withholding tax, or otherwise prove that it is entitled to such an exemption. Each Lender required to deliver any forms, 

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certificates or other evidence with respect to United States federal income tax withholding matters pursuant to this Section 2.20(c) hereby agrees, from time to time after the initial delivery by such Lender of such forms, certificates or other evidence, whenever a lapse in time or change in circumstances renders such forms, certificates or other evidence obsolete or inaccurate in any material respect, that such Lender shall promptly deliver to the Administrative Agent and the Borrower Representative two (2) new original copies of Internal Revenue Service Form W-8BEN, W-8ECI, W-8IMY, W-8EXP and/or W-9 (or, in each case, any successor form), or a Certificate re Non-Bank Status, as the case may be, properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by the Borrower Representative or the Administrative Agent to confirm or establish that such Lender is not subject to (or is subject to a reduced rate of) deduction or withholding of United States federal income tax with respect to payments to such Lender under the Loan Documents, or notify the Administrative Agent and the Borrower Representative of its inability to deliver any such forms, certificates or other evidence.  No Borrower shall be required to pay any additional amount to any Non-U.S. Lender under Section 2.20(b)(iii) with respect to Indemnified Taxes imposed by reason of such Lender’s failure (1) to deliver the forms, certificates or other evidence required by this Section 2.20(c) or (2) to notify the Administrative Agent and the Borrower Representative of its inability to deliver any such forms, certificates or other evidence, as the case may be; provided, that if such Lender shall have satisfied the requirements to deliver forms, certificates or other evidence under this Section 2.20(c) on the Closing Date or on the date of the Assignment Agreement pursuant to which it became a Lender, as applicable, nothing in this last sentence of Section 2.20(c) shall relieve any Loan Party of its obligation to pay any additional amounts pursuant to this Section 2.20 in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof that becomes effective after such date, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender is not subject to withholding as described herein.

(d)

Without limiting the provisions of Section 2.20(b), each Loan Party shall timely pay all Other Taxes to the relevant Governmental Authorities in accordance with applicable law.  Each Loan Party or the Borrower Representative shall deliver to the Administrative Agent official receipts or other evidence of such payment reasonably satisfactory to the Administrative Agent in respect of any Other Taxes payable hereunder promptly after payment of such Other Taxes.

(e)

If the Administrative Agent or a Lender (which term shall include the Issuing Bank for purposes of this Section 2.20(e)) receives a refund of any amount as to which a Borrower has made any payments pursuant to this Section 2.20, the Administrative Agent or such Lender shall pay over any such refund to such Borrower, net of such Lender’s expenses and out-of-pocket costs; provided that such Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (including any applicable interest, fees and penalties) in the event that the Administrative Agent or such Lender is required to repay such refund to the relevant Governmental Authority.

(f)

The Loan Parties shall jointly and severally indemnify the Administrative Agent and any Lender (which term shall include Issuing Bank for purposes of this Section 

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2.20(f)) for the full amount of Indemnified Taxes for which additional amounts are required to be paid pursuant to Section 2.20(b) and Other Taxes, in each case arising in connection with this Agreement or any other Loan Document (including any such Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.20) paid by the Administrative Agent or Lender or any of their respective Affiliates and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to such Loan Party shall be conclusive absent manifest error.  Such payment shall be due within thirty (30) days of such Loan Party’s receipt of such certificate.

Section 2.21

Obligation to Mitigate

.  Each Lender (which term shall include the Issuing Bank for purposes of this Section 2.21) agrees that, as promptly as practicable after the officer of such Lender responsible for administering its Loans or Letters of Credit, as the case may be, becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender to become an Affected Lender or that would entitle such Lender to receive payments under Section 2.18, 2.19 or 2.20, it shall, to the extent not inconsistent with the internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts to (a) make, issue, fund or maintain its Credit Extensions through another office of such Lender or (b) take such other measures as such Lender may deem reasonable, if as a result thereof the circumstances which would cause such Lender to be an Affected Lender would cease to exist or the additional amounts which would otherwise be required to be paid to such Lender pursuant to Section 2.18, 2.19 or 2.20 would be materially reduced and if, as determined by such Lender in its sole discretion, the making, issuing, funding or maintaining of such Revolving Commitments, Loans or Letters of Credit through such other office or in accordance with such other measures, as the case may be, would not otherwise adversely affect the interests of such Lender in any material respect; provided, that such Lender shall not be obligated to utilize such other office pursuant to this Section 2.21 unless the Borrower Representative agrees to pay all incremental expenses incurred by such Lender as a result of utilizing such other office as described above.  A certificate as to the amount of any such expenses payable by the Borrower Representative pursuant to this Section 2.21 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender to the Borrower Representative (with a copy to the Administrative Agent) shall be conclusive absent manifest error.  For the avoidance of doubt, nothing in this Section 2.21 shall relieve any Lender from its obligations pursuant to Section 2.20(c) of this Agreement. 

Section 2.22

Defaulting Lenders

.  Notwithstanding anything to the contrary contained in this Agreement, if any obligations of any Lender to purchase participations in or otherwise refinance or support any Swing Line Loans or Letters of Credit exist at the time any Lender having a Revolving Commitment becomes a Defaulting Lender (such Lender, a “Defaulting Revolving Lender”) then:  

(a)

all obligations of the applicable Defaulting Revolving Lender to purchase participations in or otherwise refinance or support such Swing Line Loans and Letters of Credit shall be reallocated among the non-Defaulting Revolving Lenders of the applicable Class in accordance with their respective Pro Rata Share thereof, but only to the extent (i) (x) with respect to U.S. Swing Line Loans and U.S. Letters of Credit, the sum of the non-Defaulting Revolving 

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Lenders’ Pro Rata Shares of the Total Utilization of U.S. Revolving Commitments plus such Defaulting Revolving Lender’s Pro Rata Share of U.S. Revolving Exposure do not exceed the total of all non-Defaulting Revolving Lenders’ U.S. Revolving Commitments, (y) with respect to Canadian Swing Line Loans and Canadian Letters of Credit, the sum of the non-Defaulting Revolving Lenders’ Pro Rata Shares of the Total Utilization of Canadian Revolving Commitments plus such Defaulting Revolving Lender’s Pro Rata Share of Canadian Revolving Exposure do not exceed the total of all non-Defaulting Revolving Lenders’ Canadian Revolving Commitments and (z) with respect to Foreign Letters of Credit, the sum of the non-Defaulting Revolving Lenders’ Pro Rata Shares of the Total Utilization of Foreign Revolving Commitments plus such Defaulting Revolving Lender’s Pro Rata Share of Foreign Revolving Exposure do not exceed the total of all non-Defaulting Revolving Lenders’ Foreign Revolving Commitments and (ii) in each case, the conditions set forth in Section 3.02 are satisfied at such time; 

(b)

if the reallocation described in clause (a) above cannot, or can only partially, be effected, the applicable Borrower shall (i) first, within one Business Day following notice by the Administrative Agent, prepay any outstanding Swing Line Loans to the extent the obligations of the applicable Defaulting Revolving Lender to purchase participations in or otherwise refinance or support Swing Line Loans have not been reallocated pursuant to clause (a) above and (ii) second, within three Business Days following notice by the Administrative Agent, Cash Collateralize such Defaulting Revolving Lender’s Pro Rata Share of the obligations to purchase participations in or otherwise refinance or support Letters of Credit (after giving effect to any partial reallocation pursuant to clause (a) above) for so long as such obligations are outstanding; and

(c)

if the obligations of the applicable Defaulting Revolving Lender to purchase participations in or otherwise refinance or support Letters of Credit are reallocated among the non-Defaulting Revolving Lenders pursuant to clause (a) above, then the fees payable to the Lenders pursuant to Section 2.11 shall be adjusted in accordance with such non-Defaulting Revolving Lenders’ Pro Rata Shares.

Section 2.23

Removal or Replacement of a Lender

.  Anything contained herein to the contrary notwithstanding, in the event that: (a) (i) any Lender (an “Increased-Cost Lender”) shall give notice to the Borrower Representative that such Lender is an Affected Lender or that such Lender is entitled to receive payments under Section 2.18, 2.19 or 2.20, (ii) the circumstances which have caused such Lender to be an Affected Lender or which entitle such Lender to receive such payments remain in effect, and (iii) such Lender shall fail to withdraw such notice within five (5) Business Days after the Borrower Representative’s request for such withdrawal; or (b) (i) any Lender shall become a Defaulting Lender, (ii) such Defaulting Lender’s default remains in effect and (iii) such Defaulting Lender shall fail to cure the default as a result of which it has become a Defaulting Lender within five (5) Business Days thereafter; or (c) in connection with any proposed amendment, modification, termination, waiver or consent with respect to any of the provisions hereof as contemplated by Section 10.05(b), the consent of Required Lenders shall have been obtained but the consent of one or more of such other Lenders (each, a “Non-Consenting Lender”) whose consent is required shall not have been obtained; then, with respect to each such Increased-Cost Lender, Defaulting Lender or Non-Consenting Lender (the “Terminated Lender”), the Borrower Representative may, by giving written notice to the Administrative Agent and any Terminated Lender of its election to do so, elect to cause such 

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Terminated Lender (and such Terminated Lender hereby irrevocably agrees) to assign its outstanding Loans and its Revolving Commitments, if any, in full to one or more Eligible Assignees (each, a “Replacement Lender”) in accordance with the provisions of Section 10.06 and the applicable Borrower shall pay the fees, if any, payable thereunder in connection with any such assignment from an Increased-Cost Lender, a Non-Consenting Lender or a Defaulting Lender; provided, that (1) on the date of such assignment, the Replacement Lender shall pay to the Terminated Lender an amount equal to the sum of (A) an amount equal to the principal of, and all accrued interest on, all outstanding Loans of the Terminated Lender, (B) an amount equal to all unreimbursed drawings on Letters of Credit that have been funded by such Terminated Lender, together with all then unpaid interest with respect thereto at such time and (C) an amount equal to all accrued but theretofore unpaid fees owing to such Terminated Lender pursuant to Section 2.11, such amounts to be calculated based on the Dollar Equivalent thereof with respect to the U.S. Term Loans, U.S. Revolving Commitments or Canadian Revolving Commitments and based on the Euro Equivalent thereof with respect to the Foreign Term Loans or Foreign Revolving Commitments; (2) on the date of such assignment, the applicable Borrower shall pay any amounts payable to such Terminated Lender pursuant to Section 2.18(c), 2.19 or 2.20; or otherwise as if it were a prepayment and (3) in the event such Terminated Lender is a Non-Consenting Lender, each Replacement Lender shall consent, at the time of such assignment, to each matter in respect of which such Terminated Lender was a Non-Consenting Lender; provided, that the applicable Borrower may not make such election with respect to any Terminated Lender that is also the Issuing Bank unless, prior to the effectiveness of such election, the applicable Borrower shall have caused each outstanding Letter of Credit issued thereby to be cancelled, replaced or Cash Collateralized. Upon the prepayment of all amounts owing to any Terminated Lender and the termination of such Terminated Lender’s Revolving Commitments, if any, such Terminated Lender shall no longer constitute a “Lender” for purposes hereof; provided, that any rights of such Terminated Lender to indemnification hereunder shall survive as to such Terminated Lender.  Each Lender agrees that if a Borrower exercises its option hereunder to cause an assignment by such Lender as a Terminated Lender, such Lender shall, promptly after receipt of written notice of such election, execute and deliver all documentation necessary to effectuate such assignment in accordance with Section 10.06.  In the event that a Lender does not comply with the requirements of the immediately preceding sentence within one Business Day after receipt of such notice, each Lender hereby authorizes and directs the Administrative Agent to execute and deliver such documentation as may be required to give effect to an assignment in accordance with Section 10.06 on behalf of a Terminated Lender and any such documentation so executed by the Administrative Agent shall be effective for purposes of documenting an assignment pursuant to Section 10.06.

Section 2.24

Incremental Facilities

.  The Borrower Representative may by written notice to the Administrative Agent at any time more than 90 days after the Closing Date elect to request (A) prior to the Revolving Commitment Termination Date, an increase to the existing Revolving Commitments (any such increase, the “Incremental Revolving Commitments”) and/or (B) the establishment of one or more new term loan commitments (the “Incremental Term Loan Commitments”), by an amount not in excess of $250,000,000 in the aggregate and not less than $25,000,000 individually (or such lesser amount which shall be approved by the Administrative Agent or such lesser amount that shall constitute the difference between $250,000,000 and all such Incremental Revolving Commitments and Incremental Term Loan Commitments obtained prior to such date), and integral multiples of $10,000,000 in excess 

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of that amount.  Each such notice shall specify (A) the date (each, an “Increased Amount Date”) on which the Borrower Representative proposes that the Incremental Revolving Commitments or Incremental Term Loan Commitments, as applicable, shall be effective, which shall be a date not less than 10 Business Days after the date on which such notice is delivered to the Administrative Agent and (B) the identity of each Lender or other Person that is an Eligible Assignee (each, an “Incremental Revolving Loan Lender” or “Incremental Term Loan Lender”, as applicable) to whom the Borrower Representative proposes any portion of such Incremental Revolving Commitments or Incremental Term Loan Commitments, as applicable, be allocated and the amounts of such allocations; provided that the Administrative Agent may elect or decline to arrange such Incremental Revolving Commitments or Incremental Term Loan Commitments in its sole discretion and any Lender approached to provide all or a portion of the Incremental Revolving Commitments or Incremental Term Loan Commitments may elect or decline, in its sole discretion, to provide an Incremental Revolving Commitment or an Incremental Term Loan Commitment.  Such Incremental Revolving Commitments or Incremental Term Loan Commitments shall become effective as of such Increased Amount Date; provided that (1) no Default or Event of Default shall exist on such Increased Amount Date before or after giving effect to such Incremental Revolving Commitments or Incremental Term Loan Commitments, as applicable; (2) both before and after giving effect to the making of any Series of Incremental Term Loans, each of the conditions set forth in Section 3.02 shall be satisfied; (3) the U.S. Borrower shall be in pro forma compliance with each of the covenants set forth in Section 6.07 as of the last day of the most recently ended Fiscal Quarter after giving effect to such Incremental Revolving Commitments or Incremental Term Loan Commitments, as applicable; (4) the Incremental Revolving Commitments or Incremental Term Loan Commitments, as applicable, shall be effected pursuant to one or more Joinder Agreements executed and delivered by the applicable Borrower, the Incremental Revolving Loan Lender or Incremental Term Loan Lender, as applicable, and the Administrative Agent, and each of which shall be recorded in the Register and each Incremental Revolving Loan Lender and Incremental Term Loan Lender shall be subject to the requirements set forth in Section 2.20(c); (5) the applicable Borrower shall make any payments required pursuant to Section 2.18(c) in connection with the Incremental Revolving Commitments; (6) the applicable Borrower shall deliver or cause to be delivered any legal opinions or other documents (including modifications of Mortgages and title insurance endorsements or policies) as reasonably requested by the Administrative Agent in connection with any such transaction and (7) the applicable Borrower shall have paid all fees and expenses owing to the Agents and the Lenders in respect of such Incremental Revolving Commitments or Incremental Term Loan Commitments.  Any Incremental Term Loans made on an Increased Amount Date shall be designated a separate series (a “Series”) of Incremental Term Loans for all purposes of this Agreement.

On any Increased Amount Date on which Incremental Revolving Commitments are effected, subject to the satisfaction of the foregoing terms and conditions, (a) each of the Lenders with Revolving Commitments of the same Class shall assign to each of the Incremental Revolving Loan Lenders, and each of the Incremental Revolving Loan Lenders shall purchase from each of such Lenders, at the principal amount thereof (together with accrued interest), such interests in the applicable Revolving Loans outstanding on such Increased Amount Date as shall be necessary in order that, after giving effect to all such assignments and purchases, such Revolving Loans will be held by existing Lenders with Revolving Commitments of the same Class and Incremental Revolving Loan Lenders ratably in accordance with their Revolving 

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Commitments after giving effect to the addition of such Incremental Revolving Commitments to the Revolving Commitments of the applicable Class, (b) each Incremental Revolving Commitment shall be deemed for all purposes a Revolving Commitment of the applicable Class and each Loan made thereunder (an “Incremental Revolving Loan”) shall be deemed, for all purposes, a Revolving Loan of the applicable Class and (c) each Incremental Revolving Loan Lender shall become a Lender with respect to the Incremental Revolving Commitment and all matters relating thereto.

On any Increased Amount Date on which any Incremental Term Loan Commitments of any Series are effective, subject to the satisfaction of the foregoing terms and conditions, (i) each Incremental Term Loan Lender of any Series shall make a Loan to the Borrowers (an “Incremental Term Loan”) in an amount equal to its Incremental Term Loan Commitment of such Series and (ii) each Incremental Term Loan Lender of any Series shall become a Lender hereunder with respect to the Incremental Term Loan Commitment of such Series and the Incremental Term Loans of such Series made pursuant thereto.

The Administrative Agent shall notify the Lenders promptly upon receipt of the Borrower Representative’s notice of each Increased Amount Date and in respect thereof (y) the Incremental Revolving Commitments and the Incremental Revolving Loan Lenders or the Series of Incremental Term Loan Commitments and the Incremental Term Loan Lenders of such Series, as applicable and (z) in the case of each notice to any applicable Lender with Revolving Commitments, the respective interests in such Lender’s Revolving Loans, in each case subject to the assignments contemplated by this Section.

The terms and provisions of the Incremental Term Loans and Incremental Term Loan Commitments of any Series shall be, except as otherwise set forth herein or in the Joinder Agreement, identical to the Tranche B Term Loans of the same Class.  The terms and provisions of the Incremental Revolving Loans shall be identical to the Revolving Loans of the same Class.  In the case of any Incremental Term Loans, (i) the Weighted Average Life to Maturity of all Incremental Term Loans of any Series shall be no shorter than the Weighted Average Life to Maturity of the Tranche B Terms Loans, (ii) the applicable Incremental Term Loan Maturity Date of each Series shall be no earlier than the final maturity of the Term Loans, and (iii) the yield and all other terms applicable to the Incremental Term Loans of each Series shall be determined by the Borrower Representative and the applicable new Lenders and shall be set forth in each applicable Joinder Agreement; provided, however, that the yield applicable to the Incremental Term Loans (after giving effect to all rate floors and all fees or original issue discount payable with respect to such Incremental Term Loans), as reasonably determined by the Administrative Agent, shall not be greater than the applicable interest rate (including the Applicable Margin and rate floor) payable pursuant to the terms of this Agreement as amended through the date of such calculation with respect to the Tranche B Term Loans, plus 0.25% per annum unless (i) the interest rate with respect to the Tranche B Term Loans is increased so as to cause the then applicable interest rate under this Agreement on the Tranche B Term Loans to be not more than 0.25% less than the yield then applicable to the Incremental Term Loans (after giving effect to all rate floors and all fees or original issue discount payable with respect to such Incremental Term Loans) and (ii) the interest rate with respect to Tranche A Term Loans is increased by an amount equal to the amount of any increase in the interest rate for Tranche B Term Loans pursuant to clause (i).  Any Incremental Revolving Loans will be documented solely 

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as an increase to the Revolving Commitments of the same Class without any change in terms, other than any change that is more favorable to the Revolving Lenders and applies equally to all Revolving Loans and Revolving Commitments of the same Class.  Each Joinder Agreement may, without the consent of any Lender other than the applicable Incremental Revolving Loan Lender or Incremental Term Loan Lender, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the Administrative Agent to effect the provisions of this Section 2.24.  

Section 2.25

Appointment of Borrower Representative

.  Each Borrower hereby appoints the Borrower Representative as its agent, attorney-in-fact and representative for the purpose of (i) making any borrowing requests or other requests required under this Agreement, (ii) the giving and receipt of notices by and to Borrowers under this Agreement, (iii) the delivery of all documents, reports, financial statements and written materials required to be delivered by Borrowers under this Agreement, and (iv) all other purposes incidental to any of the foregoing.  Each Borrower agrees that any action taken by the Borrower Representative as the agent, attorney-in-fact and representative of the Borrowers shall be binding upon each Borrower to the same extent as if directly taken by such Borrower. 

Section 2.26

Ancillary Facilities.

(a)

Type of Facility.  An Ancillary Facility may be by way of: (i) an overdraft facility; (ii) a guarantee, bonding, documentary or stand-by letter of credit facility; (iii) a term loan facility; (iv) a derivatives facility; (v) a foreign exchange facility; or (vi) any other facility or accommodation reasonably necessary or useful in connection with the business of the Group or any member thereof and which is agreed by the Borrower Representative with an Ancillary Lender.

(b)

Availability.

(i)

If the Foreign Borrower or any other Ancillary Borrower and a Lender agree and except as otherwise provided in this Agreement, such Lender may provide an Ancillary Facility on a bilateral basis in place of all or part of that Lender's unutilized Foreign Revolving Commitment (which, except for the purposes of determining the Required Lenders and for the purpose of Section 2.23, shall be reduced by the amount of the Ancillary Commitment under that Ancillary Facility).  

(ii)

An Ancillary Facility shall not be made available unless, not later than five (5) Business Days prior to the Ancillary Commencement Date for such Ancillary Facility, the Administrative Agent has been notified in writing by the Borrower Representative that such Ancillary Facility has been established and specifying (1) the proposed Ancillary Commencement Date and expiration date of the Ancillary Facility; (2) the proposed type of Ancillary Facility to be provided, (3) the proposed Ancillary Lender and Ancillary Borrower, (4) the proposed Ancillary Commitment, the maximum amount of the Ancillary Facility and, if the Ancillary Facility is an overdraft facility comprising more than one account, its maximum gross amount (that amount being the "Designated Gross Amount") and its maximum net amount (that amount being the 

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"Designated Net Amount"); and (5) the proposed currency of the Ancillary Facility (if not denominated in Euros).

(iii)

The Administrative Agent shall promptly notify the Ancillary Lender and the other Lenders of the establishment of an Ancillary Facility.  Subject to compliance with clause (b)(ii) above, (x) the Lender concerned will become an Ancillary Lender and (y) the Ancillary Facility will be available, with effect from the date agreed by the Borrower Representative, the applicable Ancillary Borrower and the Ancillary Lender.

(iv)

No amendment or waiver of a term of any Ancillary Facility shall require the consent of any Lender other than the relevant Ancillary Lender unless such amendment or waiver itself relates to or gives rise to a matter which would require an amendment of or under this Agreement (including, for the avoidance of doubt, under this Section 2.26).  In such a case, the provisions of this Agreement with regard to amendments and waivers will apply.

(c)

Terms of Ancillary Facilities.

(i)

Except as provided below, the terms of any Ancillary Facility will be those agreed by the applicable Ancillary Lender and the applicable Ancillary Borrower; provided that such terms (1) must be based upon normal commercial terms at that time (except as varied by this Agreement); (2) may allow only the applicable Ancillary Borrower to use the Ancillary Facility; (3) may not allow the Ancillary Outstandings to exceed the Ancillary Commitment; (4) may not allow the Ancillary Commitment of a Lender to exceed the Foreign Revolving Commitment of that Lender; and (5) shall require that the Ancillary Commitment shall be reduced to zero, and that all Ancillary Outstandings shall be repaid (or cash collateralized in a manner acceptable to the applicable Ancillary Lender) not later than the Foreign Revolving Commitment Termination Date (or such earlier date as the Foreign Revolving Commitment of the relevant Ancillary Lender is reduced to zero).

(ii)

If there is any inconsistency between any term of an Ancillary Facility and any term of this Agreement, this Agreement shall prevail except for (x) Sections 2.08(d), 2.08(g), and 2.11(d) which shall not prevail for the purposes of calculating fees, interest or commission relating to an Ancillary Facility; (y) an Ancillary Facility comprising more than one account where the terms of the Ancillary Documents shall prevail to the extent required to permit the netting of balances on those accounts; and (z) where the relevant term of this Agreement would be contrary to, or inconsistent with, the law governing the relevant Ancillary Document, in which case that term of this Agreement shall not prevail.

(iii)

Interest, commission and fees on Ancillary Facilities are dealt with in Sections 2.08(h) and 2.11(e).

(d)

Repayment of Ancillary Facility.

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(i)

An Ancillary Facility shall cease to be available on the Foreign Revolving Commitment Termination Date or such earlier date on which its expiration occurs or on which it is cancelled in accordance with the terms of this Agreement or the applicable Ancillary Facility.

(ii)

If an Ancillary Facility expires in accordance with its terms, the Ancillary Commitment of the Ancillary Lender shall be reduced to zero (and such Lender’s Foreign Revolving Commitment shall be increased accordingly).

(iii)

No Ancillary Lender may demand repayment or prepayment of any amounts or demand cash collateralization for any liabilities made available or incurred by it under its Ancillary Facility (except where the Ancillary Facility is provided on a net limit basis to the extent required to bring any gross outstandings down to the net limit) unless (x) the Foreign Revolving Commitments have been cancelled in full, or all outstanding Foreign Revolving Loans have become due and payable in accordance with the terms of this Agreement, or the Administrative Agent has declared all outstanding Foreign Revolving Loans immediately due and payable, or the expiration date of the Ancillary Facility occurs; (y) it becomes unlawful in any applicable jurisdiction for the Ancillary Lender to perform any of its obligations as contemplated by this Agreement or to fund, issue or maintain its participation in its Ancillary Facility; or (z) the Ancillary Outstandings (if any) under that Ancillary Facility can be refinanced by a Foreign Revolving Loan and the Ancillary Lender gives sufficient notice to enable a Foreign Revolving Loan to be made to refinance those Ancillary Outstandings.

(iv)

For the purposes of determining whether or not the Ancillary Outstandings under an Ancillary Facility mentioned in clause (c)(iii)(z) above can be refinanced by a Foreign Revolving Loan, (x) the Foreign Revolving Commitment of the Ancillary Lender will be increased by the amount of its Ancillary Commitment; and (y) the Foreign Revolving Loan may (so long as clause (c)(iii)(x) above does not apply) be made irrespective of whether a Default is outstanding or any other applicable condition precedent is not satisfied (but only to the extent that the proceeds are applied in refinancing those Ancillary Outstandings) and irrespective of whether the applicable Foreign Borrower or the Borrower Representative shall have delivered a Borrowing Notice. 

(v)

On the making of a Foreign Revolving Loan to refinance Ancillary Outstandings, (x) each Lender will participate in such Foreign Revolving Loan on a pro rata basis in accordance with its respective Foreign Revolving Commitment (as determined by the Administrative Agent); and (y) the relevant Ancillary Facility shall be cancelled. 

(vi)

In relation to an Ancillary Facility which comprises an overdraft facility where a Designated Net Amount has been established, the Ancillary Lender providing that Ancillary Facility shall only be obliged to take into account for the purposes of calculating compliance with the Designated Net Amount those credit balances which it is permitted to take into account by the then current law and regulations 

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in relation to its reporting of exposures to applicable regulatory authorities as netted for capital adequacy purposes.

(e)

Ancillary Outstandings.

Each Ancillary Borrower and each Ancillary Lender agrees with and for the benefit of each Lender that (i) the Ancillary Outstandings under any Ancillary Facility provided by that Ancillary Lender shall not exceed the Ancillary Commitment applicable to that Ancillary Facility and where the Ancillary Facility is an overdraft facility comprising more than one account, Ancillary Outstandings under that Ancillary Facility shall not exceed the Designated Net Amount in respect of that Ancillary Facility; and (ii) where all or part of the Ancillary Facility is an overdraft facility comprising more than one account, the Ancillary Outstandings (calculated on the basis that the words in parentheses in paragraph (a) of the definition of that term were deleted) shall not exceed the Designated Gross Amount applicable to that Ancillary Facility.

(f)

Information.

Each Ancillary Borrower and each Ancillary Lender shall, promptly upon request by the Administrative Agent, supply the Administrative Agent with any information relating to the operation of an Ancillary Facility (including the Ancillary Outstandings) as the Administrative Agent may reasonably request from time to time. The Ancillary Borrowers consents to all such information being released to the Administrative Agent and the Lenders.

(g)

Foreign Revolving Facility Commitment Amounts. Notwithstanding any other term of this Agreement, each Lender shall ensure that at all times its Foreign Revolving Commitment (excluding for these purposes any reduction in a Lender’s Foreign Revolving Commitment attributable to the relevant Ancillary Commitment) is not less than its Ancillary Commitment. 

(h)

Affiliates of Lenders as Ancillary Lenders.

(i)

Subject to the terms of this Agreement, an Affiliate of a Lender may become an Ancillary Lender.  In such case, the Lender and its Affiliate shall be treated as a single Lender having a Foreign Revolving Commitment of the relevant Lender. 

(ii)

To become an Ancillary Lender hereunder, an Affiliate of a Lender must be designated in the notice required in respect of the applicable Ancillary Facility pursuant to Section 2.26(b)(ii) hereof or otherwise in a writing signed by an Authorized Officer of the applicable Ancillary Borrower and delivered to the Administrative Agent, and shall deliver to the Administrative Agent such documentation as the Administrative Agent shall reasonably require.  

(iii)

Each Lender shall ensure that each of its Affiliates that becomes an Ancillary Lender will comply with any obligations imposed upon it pursuant to this Agreement.  Where this Agreement imposes an obligation on an Ancillary Lender and the relevant Ancillary Lender is an Affiliate of a Lender which is not a party to this Agreement, the relevant Lender shall ensure that the obligation is performed by its Affiliate.

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(i)

Closing Date Ancillary Facility.  The parties agree, notwithstanding anything herein to the contrary, that (i) on the Closing Date, the Closing Date Ancillary Facility shall be an Ancillary Facility, the Foreign Borrower shall be an Ancillary Borrower and Fortis Bank (Nederland) N.V. shall be an Ancillary Lender, in each case for all purposes hereunder, and (ii) upon becoming a Guarantor hereunder pursuant to the execution and delivery of a Counterpart Agreement, each of Tommy Hilfiger Group B.V. and Tommy Hilfiger Europe B.V. shall be an Ancillary Borrower for all purposes hereunder.  

ARTICLE III.

CONDITIONS PRECEDENT

Section 3.01

Closing Date

.  The obligation of each Lender to make a Credit Extension on the Closing Date is subject to the satisfaction, or waiver of the following conditions on or before the Closing Date:

(a)

Loan Documents.  The Administrative Agent shall have received each of the Credit Agreement, the U.S. Security Agreements, the Dutch Closing Security Documents, the Intercreditor Agreements, a Mortgage in respect of each Closing Date Mortgaged Property and the Intellectual Property Security Agreements, in each case, executed and delivered by each applicable Loan Party.  

(b)

Organizational Documents; Incumbency.  The Administrative Agent shall have received in relation to each U.S. Loan Party, the Foreign Borrower, Tommy Hilfiger Group B.V. (but solely with respect to clause (1) and (4) below), Trumpet C.V., Prince 1 B.V. and Prince 2 B.V. (1) copies of each Organizational Document and, to the extent applicable, certified as of a recent date by the appropriate governmental official; (2) corporate or entity certificates incorporating, without limitation, signature and incumbency certificates of the officers, managers, members and/or directors of such Person executing the Loan Documents to which it is a party; (3) to the extent applicable, resolutions of the Board of Directors (which, in the case of each Dutch Loan Party other than Trumpet C.V., shall be its board of managing directors) approving and authorizing the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party or by which it or its assets may be bound as of the Closing Date, certified (to the extent required under applicable law or customary in accordance with local law or practice) as of the Closing Date by its secretary, its assistant secretary, director or any other competent officer or appropriate person as being in full force and effect without modification or amendment; (4) to the extent required under applicable law, the relevant entity’s Organizational Documents or internal regulations or, customary in accordance with local law or practice, a copy of resolutions from the general meeting of shareholders or its partners approving and authorizing the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party or by which it or its assets may be bound as of the Closing Date, certified as of the Closing Date by its secretary or an assistant secretary as being in full force and effect without modification or amendment and (5) to the extent required under applicable law or customary in accordance with local law or practice, a good standing certificate from the applicable Governmental Authority of its jurisdiction of incorporation, organization or formation, dated a recent date prior to the Closing Date.

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(c)

Organizational and Capital Structure Chart.  The organizational structure and capital structure of the Group, after giving effect to the Acquisition, shall be as set forth on Schedule 3.01(c).

(d)

Capitalization of the Group; Concurrent Transactions.  On or before the Closing Date:

(i)

the Administrative Agent shall have received evidence that the Equity Contribution shall have been made and that the U.S. Borrower shall have received the proceeds of the Equity Contribution (or, with respect to the equity issued to private investors, all conditions precedent to the initial funding of such Equity Contribution shall have been satisfied); 

(ii)

the 2020 Note Documents and all other agreements and documents contemplated thereby shall have been entered into and shall be effective and the U.S. Borrower shall have received, or substantially concurrently with the initial borrowings under this Agreement shall receive, gross proceeds of the 2020 Notes on the Closing Date in an aggregate amount of not less than $600,000,000 (or the conditions to the issuance of the 2020 Notes, other than the funding of the initial borrowings under this Agreement or the satisfaction of the conditions set forth in this Section 3.01, shall have been satisfied or substantially concurrently with the initial borrowings under this Agreement shall be satisfied);

(iii)

(x) the aggregate proceeds of the Equity Contribution, together with the proceeds of the 2020 Notes, the initial borrowings under this Agreement and available cash of the U.S. Borrower and the Acquired Business shall be sufficient to consummate the Acquisition, refinance all Existing Credit Facilities Indebtedness, tender for and satisfy and discharge the Existing Notes and to pay the Transaction Costs, (y) the Acquisition shall have been consummated, or shall be consummated substantially concurrently with the initial borrowings under this Agreement, including the issuance of common equity to the Seller as required by the terms of the Acquisition Agreement, in accordance with the terms of the Acquisition Documents and (z) all conditions to the Acquisition set forth in the Acquisition Agreement shall have been satisfied or duly waived; provided, that no material amendment, modification or waiver of any term of the Acquisition Agreement or any condition to the U.S. Borrower’s obligation to consummate the Acquisition thereunder shall be made or granted, as the case may be, without the prior written consent of the Administrative Agent (it being understood that any change in the price (including any price decrease) or structure of the Acquisition and any changes to the waiver of jury trial, jurisdiction or third party beneficiary language affecting the Lenders shall be deemed to be material and shall require the prior written consent of the Administrative Agent);

(e)

Existing Indebtedness.  On the Closing Date, substantially concurrently with the initial borrowings under this Agreement, the Group shall have (1) repaid in full all Existing Credit Facilities Indebtedness, (2) terminated any commitments to lend or make other extensions of credit thereunder (in the cases of clauses (1) and (2), other than the ancillary facilities thereunder as set forth on Schedule 3.01(e) that will become Ancillary Facilities 

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hereunder), (3) delivered to the Administrative Agent all documents or instruments necessary to release all Liens securing Existing Credit Facilities Indebtedness or other obligations of the Group thereunder being repaid on the Closing Date, and (4) made arrangements satisfactory to the Administrative Agent with respect to any letters of credit outstanding thereunder.  The Existing Notes shall have substantially all restrictive covenants contained in such Existing Notes removed therefrom and a notice of redemption shall have been irrevocably delivered for such Existing Notes and all funds necessary for such redemption shall have been irrevocably deposited into escrow to fund such redemption.

(f)

Governmental Authorizations and Consents.  Each Loan Party (other than the Foreign Guarantors) shall have obtained all material Governmental Authorizations and all material consents of other Persons, in each case that are necessary in connection with the transactions contemplated by the Loan Documents and the Acquisition Agreement, and each of the foregoing shall be in full force and effect.

(g)

U.S. Real Estate Assets.  In order to create in favor of the Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein, perfected First Priority security interest in certain Real Estate Assets located in the United States, the Collateral Agent shall have received from each applicable Loan Party:

(1)

fully executed and notarized Mortgages, in proper form for recording in all appropriate places in all applicable jurisdictions, encumbering each Real Estate Asset listed in Schedule 3.01(g) (each, a “Closing Date Mortgaged Property”);

(2)

an opinion of counsel (which counsel shall be reasonably satisfactory to the Collateral Agent) in each state in which a Closing Date Mortgaged Property is located with respect to the enforceability of the form(s) of Mortgages to be recorded in such state and such other matters as the Collateral Agent may reasonably request, in each case in form and substance reasonably satisfactory to the Collateral Agent;

(3)

in the case of each Leasehold Property that is a Closing Date Mortgaged Property, (A) a Landlord Consent if the applicable landlord has delivered such Landlord Consent (it being agreed that the U.S. Borrower shall use commercially reasonable efforts to obtain a Landlord Consent; provided that the U.S. Borrower shall not be required to expend any funds or grant any concession to obtain such Landlord Consent), and (B) evidence that such Leasehold Property is a Recorded Leasehold Interest;

(4)

ALTA mortgagee title insurance policies or unconditional commitments therefor issued by one or more title companies (the “Title Company”) reasonably satisfactory to the Collateral Agent with respect to each Closing Date Mortgaged Property (each, a “Title Policy”), in amounts not less than 110% of the fair market value of each Closing Date Mortgaged Property insuring the title to each of the Closing Date Mortgaged Properties vested in the applicable Loan Party and insuring the Collateral Agent that the relevant 

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Mortgage creates a valid and enforceable First Priority mortgage Lien on the Closing Date Mortgaged Property encumbered thereby, each of which Title Policy (A) shall include all endorsements reasonably requested by the Collateral Agent and (B) shall provide for affirmative insurance and such reinsurance as the Collateral Agent may reasonably request, all of the foregoing in form and substance reasonably satisfactory to the Collateral Agent; and evidence satisfactory to the Collateral Agent that the applicable Loan Party has (i) delivered to the Title Company all certificates, consents and affidavits required by the Title Company in connection with the issuance of the applicable Title Policy and (ii) paid to the Title Company or to the appropriate Governmental Authorities all expenses and premiums of the Title Company and all other sums required in connection with the issuance of the Title Policies and all recording and stamp taxes (including mortgage recording and intangible taxes) payable in connection with recording the Mortgages in the applicable real property records; together with a title report issued by a title company with respect thereto, dated not more than thirty (30) days prior to the Closing Date (or such earlier date as the Collateral Agent may agree) and copies of all recorded documents listed as exceptions to title or otherwise referred to therein, each in form and substance reasonably satisfactory to the Collateral Agent; and

(5)

(A) a completed Flood Certificate with respect to each Closing Date Mortgaged Property, which Flood Certificate shall (i) be addressed to the Collateral Agent, (ii) be completed by a company which has guaranteed the accuracy of the information contained therein, and (iii) otherwise comply with the Flood Program; (B) evidence describing whether the community in which each Closing Date Mortgaged Property is located participates in the Flood Program; (C) if any Flood Certificate states that a Closing Date Mortgaged Property is located in a Flood Zone, the Borrower Representative’s written acknowledgement of receipt of written notification from the Collateral Agent (i) as to the existence of each such Closing Date Mortgaged Property, and (ii) as to whether the community in which each such Closing Date Mortgaged Property is located is participating in the Flood Program; and (D) if any Closing Date Mortgaged Property is located in a Flood Zone and is located in a community that participates in the Flood Program, evidence that the applicable Loan Party has obtained a policy of flood insurance that is in compliance with all applicable regulations of the Board of Governors.

(h)

U.S. Personal Property Collateral.  In order to create in favor of the Collateral Agent, for the benefit of Secured Parties, a valid, perfected First Priority security interest in the personal property Collateral of each U.S. Loan Party, each U.S. Loan Party shall have delivered to the Collateral Agent:  

(1)

evidence satisfactory to the Collateral Agent of the compliance by each such Loan Party of their obligations under the U.S. Security Agreements (including their obligations to execute and deliver UCC financing statements and originals of securities, instruments and chattel paper as provided therein); provided that in no event shall more than 66% of the Equity Interests in a U.S-

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Owned DRE be pledged by any Loan Party, except that if such U.S.-Owned DRE owns less than 100% of the Equity Interests of a Foreign Subsidiary, appropriate adjustments shall be made such that 66% of the Equity Interests of such Foreign Subsidiary (but no more than 66%) are pledged;

(2)

a completed Perfection Certificate dated the Closing Date and executed by an Authorized Officer of each such Loan Party, together with all attachments contemplated thereby; and

(3)

fully executed and notarized Intellectual Property Security Agreements, in proper form for filing or recording in the United States Copyright Office or the United States Patent and Trademark Office, as applicable, memorializing and recording the encumbrance of the registrations and applications for United States Trademarks, Copyrights and Patents listed in Schedule 4.21 (excluding, for the avoidance of doubt, those Trademarks, Copyrights and Patents, if any, in the name of the CKI Trust).

(i)

Dutch Security.  The Collateral Agent shall have received a fully executed copy of each Dutch Closing Security Document (other than any notarial deed of pledge of shares), fully executed notices and/or other documents required to be delivered in order to ensure the validity and perfection of each Dutch Closing Security Document.

(j)

[Reserved].    

(k)

Financial Statements.  The Administrative Agent shall have received from the U.S. Borrower (1) the Historical Financial Statements of the U.S. Borrower and the Historical Financial Statements of the Acquired Business and (2) pro forma consolidated balance sheets of the Group as filed with the SEC on April 26, 2010.

(l)

Evidence of Insurance.  The Collateral Agent shall have received a certificate from the Borrower’s insurance broker or other evidence satisfactory to it that all insurance required to be maintained pursuant to Section 5.05 is in full force and effect, together with endorsements to the extent required under Section 5.05.

(m)

Opinions of Counsel to Loan Parties.  The Agents and the Lenders and their respective counsel shall have received originally executed copies of the favorable written opinions of Wachtell, Lipton, Rosen & Katz, as New York counsel to the Loan Parties, Prickett, Jones & Elliot, P.A. as Delaware counsel to the Loan Parties, Katten Muchin Rosenman, as California counsel to the Loan Parties, De Brauw Blackstone Westbroek N.V., as Dutch counsel to the Loan Parties, and Loyens & Loeff (USA) B.V., as Dutch counsel to the Administrative Agent, the Lenders and the other Secured Parties, as to such matters as the Administrative Agent may reasonably request, dated as of the Closing Date and otherwise in form and substance reasonably satisfactory to the Administrative Agent (and each Loan Party hereby instructs such counsel to deliver such opinions to the Agents and the Lenders).

(n)

Fees.  The Borrowers shall have paid to the Agents, concurrent with the consummation of the Acquisition on the Closing Date, the fees payable on the Closing Date pursuant to that certain Fee Letter, dated March 15, 2010, between the Arrangers, the 

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Bookrunners and the U.S. Borrower, including expenses to the extent invoiced at least one (1) Business Day prior to the Closing Date. 

(o)

Solvency Certificate.  The Administrative Agent shall have received a Solvency Certificate from the U.S. Borrower in the form of Exhibit E-2.

(p)

Closing Date Certificate.  The Borrower Representative shall have delivered to the Administrative Agent an executed Closing Date Certificate, together with all attachments thereto, and which shall include certifications to the effect that:

(i)

since (i) January 31, 2010 with respect to the U.S. Borrower and its Subsidiaries (taken as a whole) and (ii) March 31, 2009 with respect to the Acquired Business, no event, circumstance or change has occurred that has caused, either individually or in the aggregate, a Material Adverse Effect; 

(ii)

each of the conditions precedent described in this Section 3.01 shall have been satisfied on the Closing Date (except that no opinion need be expressed as to Administrative Agent’s or Required Lenders’ satisfaction with any document, instrument or other matter); and

(iii)

no terms or conditions of the Acquisition Agreement have been amended, waived or terminated without the consent of the Administrative Agent, except to the extent it does not materially affect the interests of the Lenders.

(q)

Ancillary Documents.  The Administrative Agent shall have received true and correct copies of the CKI Documents, the TH Documents, the Acquisition Agreement and the 2020 Notes Documents.

(r)

Credit Rating.  The U.S. Borrower shall have been assigned a public corporate family rating from Moody’s and a public corporate credit rating from S&P and the credit facilities hereunder shall have been assigned a public credit rating from each of Moody’s and S&P.

(s)

No Litigation.  There shall not exist any Adverse Proceeding pending or, to the knowledge of any Authorized Officer of any Borrower, threatened in writing, that, singly or in the aggregate, materially impairs the Acquisition, the financing thereof or any of the other transactions contemplated by the Acquisition Agreement or the Loan Documents.

(t)

Flow of Funds; Letter of Direction.  The Administrative Agent shall have received a funds flow memorandum and duly executed letter of direction from the Borrower Representative addressed to the Administrative Agent, on behalf of itself and Lenders, directing the disbursement on the Closing Date of the proceeds of the Loans made on such date.

(u)

Bank Regulatory Information.  To the extent requested in writing to the U.S. Borrower at least 20 days prior to the Closing Date, the Lenders shall have received at least 5 days prior to the Closing Date all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the Uniting and Strengthening America by Providing Appropriate 

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Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Pub. L. No. 107-56 the “PATRIOT Act”).

(v)

Base Case Model.  The Lenders shall have received the base case model included in the Confidential Information Memorandum or with such amendments or modifications as do not materially and adversely affect the interests of the Lenders or which have been made with the consent of the Administrative Agent, such consent not to be unreasonably withheld.

(w)

Structure Diagram.  The Lenders shall have received a structure diagram prepared by the U.S. Borrower describing the Group and the Acquisition, in a form reasonably satisfactory to the Administrative Agent.

Section 3.02

Conditions to Each Credit Extension

.  

(a)

Conditions Precedent.  The obligation of each Lender to make any Loan, or each Issuing Bank to issue any Letter of Credit, on any Credit Date, including the Closing Date, are subject to the satisfaction, or waiver in accordance with Section 10.05, of the following conditions precedent:

(i)

the Administrative Agent shall have received a fully executed and delivered Borrowing Notice or Issuance Notice, as the case may be;

(ii)

after making the Credit Extensions requested on such Credit Date, (x) the Total Utilization of U.S. Revolving Commitments shall not exceed the U.S. Revolving Commitments then in effect, (y) the Total Utilization of Foreign Revolving Commitments shall not exceed the Foreign Revolving Commitments then in effect and (z) the Total Utilization of Canadian Revolving Commitments shall not exceed the Canadian Revolving Commitments then in effect;

(iii)

as of such Credit Date, the representations and warranties contained herein and in the other Loan Documents shall be true and correct in all material respects on and as of that Credit Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date; provided, that to the extent any such representation or warranty is already qualified by materiality or Material Adverse Effect, such representation or warranty shall be true and correct in all respects;

(iv)

as of such Credit Date, no event shall have occurred and be continuing or would result from the consummation of the applicable Credit Extension that would constitute a Default or an Event of Default; and

(b)

Notices.  Any Notice shall be executed by an Authorized Officer of the Borrower Representative or the applicable Borrower in a writing delivered to the Administrative Agent.  

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ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

In order to induce the Lenders and the Issuing Bank to enter into this Agreement and to make each Credit Extension to be made thereby, each Borrower and each other Loan Party (in the case of each Loan Party, solely with respect to itself) represents and warrants to each Lender and the Issuing Bank, on the Closing Date and on each Credit Date that the following statements are true and correct:  

Section 4.01

Organization; Structure Chart; Requisite Power and Authority; Qualification

.  Each Group Member (a) is duly organized, duly incorporated or formed, validly existing and, if applicable, in good standing under the laws of its jurisdiction of organization, (b) has all requisite power and authority to enter into the Loan Documents to which it is a party and to carry out the transactions contemplated thereby and, except where failure to have such power and authority would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, to own and operate its properties and assets, to carry on its business as now conducted and as proposed to be conducted, and (c) is qualified to do business and, if applicable, in good standing in every jurisdiction where any material portion of its assets are located and wherever necessary to carry out its material business and operations, except where the failure to be so qualified would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 4.02

Equity Interests and Ownership

.  The Equity Interests of each Group Member have been duly authorized and validly issued and are fully paid and non-assessable.  Except as set forth on Schedule 4.02, as of the date hereof, there is no existing option, warrant, call, right, commitment or other agreement to which any Group Member is a party requiring, and there is no membership interest or other Equity Interests of any Group Member outstanding which upon conversion or exchange would require, the issuance by any Group Member of any additional membership interests or other Equity Interests of any Group Member or other Securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase, a membership interest or other Equity Interests of any Group Member.  Schedule 4.02 sets forth the ownership interest of each Group Member in their respective Subsidiaries as of the Closing Date after giving effect to the Acquisition.

Section 4.03

Due Authorization

.  The execution, delivery and performance by each Loan Party of the Loan Documents to which it is a party have been duly authorized by all necessary action on the part of each such Loan Party.

Section 4.04

No Conflict

.  The execution, delivery and performance by each Loan Party of the Loan Documents to which it is a party and the consummation of the transactions contemplated by the Loan Documents do not and will not (a) violate (i) any provision of any law or any governmental rule or regulation applicable to any such Loan Party, (ii) any of the Organizational Documents of any such Loan Party or (iii) any order, judgment or decree of any court or other agency of government binding on such Loan Party, except to the extent any such violation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (b) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of such Loan Party 

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except to the extent such conflict, breach or default would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (c) result in or require the creation or imposition of any Lien upon any of the properties or assets of such Loan Party (other than any Permitted Liens); or (d) require any approval or consent of the stockholders, members or partners, except for such approvals or consents which have been obtained and except for any such approvals or consents the failure of which to obtain would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 4.05

Governmental Consents

.  The execution, delivery and performance by each Loan Party of the Loan Documents to which it is a party and the incurrence by the Loan Parties of their Obligations thereunder, the issuance of Letters of Credit and the granting of security with respect to their Obligations thereunder do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority except for (i) filings and recordings with respect to the Collateral to be made, or otherwise delivered to the Collateral Agent for filing and/or recordation, as of the Closing Date, (ii) the registration with the Dutch tax authorities of any Security Documents providing for the creation of Dutch Security in the form of an undisclosed pledge of receivables or an undisclosed pledge of movable assets, (iii) the registration with the appropriate Dutch registry of any Security Document providing for the creation of Dutch Security in the form of a mortgage over any Real Estate Asset, (iv) such has been obtained or made and are in full force and effect and (v) those the failure of which to obtain or make, would not individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 

Section 4.06

Binding Obligation

.  Each Loan Document has been duly executed and delivered by each Loan Party that is a party thereto and, assuming due execution by each of the other parties to such Loan Agreement, is the legally valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its respective terms, except as may be limited by (i) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally, (ii) equitable principles relating to enforceability or (iii) any general rules of law referred to in any legal opinion provided to any Agent or any Lender (or its respective counsel) with respect to such Loan Document pursuant to the Agreement or any other Loan Document. 

Section 4.07

Historical Financial Statements

.  The Historical Financial Statements of the U.S. Borrower were prepared in conformity with GAAP and fairly present, in all material respects, the consolidated financial position, of the U.S. Borrower and its consolidated Subsidiaries as of the dates thereof and their consolidated results of operations and cash flows, for the periods then ended. To the knowledge of any Authorized Officer of the U.S. Borrower, the Historical Financial Statements of the Acquired Business were prepared in conformity with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (or, with respect to December 31, 2008, follow IFRS principles) and have been prepared by management of the Acquired Business in a manner consistent with the principles applied to the nine-month period as of and ending on December 31, 2009, and fairly present in all material respects the consolidated financial position of the Acquired Business as of the dates thereof and its consolidated results of operations and cash flows for the periods then ended (subject in the case of the unaudited financial statements, to the absence of footnotes and to normal year-end adjustments not expected to be material in amount 

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and to any other adjustments described therein including the notes thereto). As of the Closing Date, no Group Member has any contingent liability or liability for Taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the Historical Financial Statements of the U.S. Borrower or Historical Financial Statements of the Acquired Business, respectively, or the notes thereto and which in any such case is material in relation to the business, operations, properties, assets, or financial condition of the Group taken as a whole.

Section 4.08

Projections

.  On and as of the Closing Date, the projections of the Group for each Fiscal Quarter of Fiscal Year 2010 and each Fiscal Year thereafter through and including Fiscal Year 2016 (the “Projections”) are based on good faith estimates by the management of the U.S. Borrower and the assumptions set forth therein; provided, that the Projections are not to be viewed as facts and that actual results during the period or periods covered by the Projections may differ from such Projections and that the differences may be material.  

Section 4.09

No Material Adverse Change

.  Since (i) January 31, 2010 with respect to the U.S. Borrower and any Subsidiary of the U.S. Borrower prior to giving effect to the Acquisition and (ii) March 31, 2009 with respect to the Acquired Business, no event, circumstance or change has occurred that has caused, either individually or in the aggregate, a Material Adverse Effect.

Section 4.10

Adverse Proceedings, Etc.

  There are no Adverse Proceedings pending or, to the knowledge of any Authorized Officer of any Borrower, threatened in writing, individually or in the aggregate, that would reasonably be expected to have a Material Adverse Effect.  No Group Member (a) is in violation of any applicable laws (but excluding any Environmental Laws, which are subject to Section 4.13) that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect or (b) is in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

Section 4.11

Payment of Taxes

.  All material Tax returns and reports of the Group required to be filed by any of them have been accurately and timely filed, and all material Taxes due and payable and all assessments, fees, Taxes and other governmental charges upon any Group Members and their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable, except Taxes that are being contested in good faith by appropriate proceedings and for which reserves or other appropriate provisions, if any, have been made in accordance with GAAP.

Section 4.12

Properties

.  

(a)

Title.  Each Group Member has (i) good, sufficient and legal title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of leasehold interests in real or personal property), (iii) valid licensed rights in (in the case of licensed interests in Material Intellectual Property) and (iv) good title to (in the case of all other personal property), all of their respective properties and assets reflected in the Historical Financial 

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Statements of the U.S. Borrower or, to the knowledge of any Authorized Officer of any Borrower, the Historical Financial Statements of the Acquired Business, as applicable, referred to in Section 4.07 and in the most recent financial statements delivered pursuant to Section 5.01, in each case except for (A) assets disposed of since the date of such financial statements in the ordinary course of business or as otherwise permitted under Section 6.08, (B) minor defects in title that do not materially interfere with its ability to conduct its business as currently conducted or to utilized such properties for their intended purposes or (C) where the failure to have such title, interest or rights would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Except as permitted by this Agreement, all such properties and assets are free and clear of Liens other than Permitted Liens.

(b)

Real Estate.  As of the Closing Date, Schedule 4.12 contains a true and complete list of all material Real Estate Assets (other than retail store locations) and a description of each material lease or sublease affecting each Closing Date Mortgaged Property of any Loan Party, of which such Loan Party is the landlord.  

(c)

Flood Zone Properties.  No Mortgage on a Closing Date Mortgaged Property encumbers improved real property that is located in a Flood Zone (except any such property as to which flood insurance has been obtained and is in full force and effect as required by this Agreement).

Section 4.13

Environmental Matters

.  Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect: (a) each Group Member is in compliance with all applicable Environmental Laws; (b) each Group Member has obtained and maintained in full force and effect all Governmental Authorizations required pursuant to Environmental Laws for the operation of their respective business; (c) there are no conditions, occurrences, violations of Environmental Law, or presence or Releases of Hazardous Materials which would reasonably be expected to form the basis of an Environmental Claim against any Group Member or related to any Real Estate Assets; (d) there are no pending Environmental Claims against any Group Member, and no Group Member has received any written notification of any alleged violation of, or liability pursuant to, Environmental Law or responsibility for the Release or threatened Release of, or exposure to, any Hazardous Materials; and (e) no Lien (other than a Permitted Lien) imposed pursuant to any Environmental Law has attached to any Collateral and, to the knowledge of any Authorized Officer of any Borrower, no conditions exist that would reasonably be expected to result in the imposition of such a Lien on any Collateral.

Section 4.14

No Defaults

.  No Group Member is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any of its Contractual Obligations, except where the consequences, direct or indirect, of such default or defaults, if any, would not reasonably be expected to have a Material Adverse Effect.  No Default or Event of Default has occurred and is continuing or would reasonably be expected to occur as a result of any Credit Extension or performance of any transaction under the Loan Documents.

Section 4.15

Governmental Regulation

.  No Group Member is subject to regulation under the Investment Company Act of 1940. No Group Member is a “registered 

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investment company” or a company “controlled” by a “registered investment company” or a “principal underwriter” of a “registered investment company” as such terms are defined in the Investment Company Act of 1940.

Section 4.16

Margin Stock

.  No Group Member is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock.  No part of the proceeds of the Loans will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock or for any purpose that violates, or is inconsistent with, the provisions of Regulation T, U or X of the Board of Governors.  

Section 4.17

Employee Benefit Plans

.  Each Group Member and each of their respective ERISA Affiliates are in compliance with all applicable provisions and requirements of ERISA and the Internal Revenue Code and the regulations and published interpretations thereunder with respect to each Employee Benefit Plan, and have performed all their obligations under each Employee Benefit Plan, other than as would not reasonably be expected to have a Material Adverse Effect.  Each Employee Benefit Plan which is intended to qualify under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the Internal Revenue Service indicating that such Employee Benefit Plan is so qualified and nothing has occurred subsequent to the issuance of such determination letter which would cause such Employee Benefit Plan to lose its qualified status, in each case, other than as would not reasonably be expected to have a Material Adverse Effect. No material liability to the PBGC (other than required premium payments), the Internal Revenue Service, any Employee Benefit Plan (other than in the ordinary course) or any trust established under Title IV of ERISA has been or is expected to be incurred by any Group Member or any of their respective ERISA Affiliates with respect to any Employee Benefit Plan.  No ERISA Event or Foreign Plan Event has occurred or is reasonably expected to occur where such ERISA Event or Foreign Plan Event would reasonably be expected to have a Material Adverse Effect.  The present value of the aggregate benefit liabilities under each Pension Plan sponsored, maintained or contributed to by any Group Member or any of their respective ERISA Affiliates (determined as of the end of the most recent plan year on the basis of the actuarial assumptions specified for funding purposes in the most recent actuarial valuation for such Pension Plan) did not exceed the aggregate current fair market value of the assets of such Pension Plan, where such circumstance would reasonably be expected to have a Material Adverse Effect. As of the most recent valuation date for each Multiemployer Plan, the potential liability of the Group and its ERISA Affiliates for a complete withdrawal from such Multiemployer Plan (within the meaning of Section 4203 or Section 4205 of ERISA), when aggregated with such potential liability for a complete withdrawal from all Multiemployer Plans, does not exceed $25,000,000.  Each Group Member and each of their ERISA Affiliates have materially complied with the requirements of Section 515 of ERISA with respect to each Multiemployer Plan and are not in material “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan.  To the extent applicable, each Foreign Plan has been maintained in substantial compliance with its terms and with the requirements of any and all applicable all laws, rules, regulations and orders of any Governmental Authority and has been maintained, where required, in good standing with applicable regulatory authorities, other than as would reasonably be expected to have a Material Adverse Effect. Each Foreign Plan which is required under all applicable laws, rules, regulations and orders of any Governmental Authority to be funded satisfies in all material respects any 

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applicable funding standard under all applicable laws, rules, regulations and orders of any Governmental Authority. For each Foreign Plan which is not funded or which is not required to be fully funded under all applicable laws, rules regulations and orders of any Governmental Authority, the unfunded obligations of such Foreign Plan are properly accrued in all material respects.  Neither any Loan Party nor any of its Subsidiaries is or has at any time been the employer, or connected or associated with the employer (as those terms are used in the UK Pensions Act 2004) in relation to a UK defined benefit pension plan. 

Section 4.18

Solvency

.  The Group Members are and, upon the incurrence of any Obligation on any date on which this representation and warranty is made, shall be, on a consolidated basis, Solvent.  

Section 4.19

Compliance with Statutes, Etc.

  Each Group Member is in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities, in respect of the conduct of its business and the ownership of its assets and property (but excluding any Environmental Laws, which are subject to Section 4.13), except such non-compliance that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.  To the extent applicable, each Loan Party is in compliance, in all material respects, with (i) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto.  No part of the proceeds of the Loans shall be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

Section 4.20

Disclosure

.  No representation or warranty of any Loan Party contained in any Loan Document or in any other documents, certificates or written statements furnished to any Agent or Lender by any Group Member (or by its agents on its behalf) for use in connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state a material fact (known to it, or to the Borrower Representative in the case of any document not furnished by it) necessary in order to make the statements contained herein or therein (when furnished and taken as a whole) not materially misleading in light of the circumstances in which the same were made.  Any projections and pro forma financial information contained in such materials are based upon good faith estimates and assumptions believed by the U.S. Borrower to be reasonable at the time made, it being recognized by Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material. 

Section 4.21

Intellectual Property

.  

(a)

Except where the failure to do so would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or except where the failure to do so is a result of a transaction or transactions permitted by this Agreement, each of the Loan Parties (i) is the sole and exclusive owner of the entire right, title, and interest in and to all of the 

126

Intellectual Property listed on Schedule 4.21 (as such schedule may be amended or supplemented from time to time pursuant to a Counterpart Agreement or pursuant to Section 5.01(k)(ii), 5.14 or otherwise), and possesses all rights to sue at law or in equity for any infringement, misappropriation or other impairment thereof, including the right to receive all royalties, license fees, proceeds and damages therefrom, free and clear of all Liens, claims and licenses, except for Permitted Liens and (ii) owns or, pursuant to written agreement, has the valid right to use and, where such Loan Party does so, sublicense others to use, all other Intellectual Property used in or necessary to conduct its business (including granting of outbound licenses of such rights).  All Material Intellectual Property of each Loan Party is subsisting and has not been adjudged invalid or unenforceable, in whole or in part, nor, in the case of Patents, is any of the Intellectual Property the subject of a reexamination proceeding, and each Loan Party has performed all acts and has paid all renewal, maintenance, and other fees and taxes required to maintain each and every registration and application of Copyrights, Patents and Trademarks of such Loan Party constituting Material Intellectual Property in full force and effect.  No holding, decision, ruling, or judgment has been rendered in any action or proceeding before any court or administrative authority challenging the validity, enforceability, or scope of, or any Loan Party’s right to register, own or use, any Material Intellectual Property of such Loan Party, and no such action or proceeding is pending or, to the knowledge of any Authorized Officer of any Borrower, threatened, nor does any Loan Party know of any valid basis for any such action, except as would not reasonably be expected to have a Material Adverse Effect.  Except where the failure to do so would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) all registrations, issuances and applications for Copyrights, Patents and Trademarks of each Loan Party are standing in the name of such Loan Party (or the CKI Trust), and (ii) all exclusive Copyright Licenses constituting Material Intellectual Property in respect of registered Copyrights, if any, have been properly recorded in the United States Copyright Office or, where appropriate, any foreign counterpart.  To the knowledge of any Authorized Officer of any Borrower, the use of Material Intellectual Property by such Loan Party does not infringe or misappropriate the rights of any person, except as would not reasonably be expected to have a Material Adverse Effect. 

(b)

Except where the failure to do so would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, each Loan Party has been using appropriate statutory notice of registration in connection with its use of registered Trademarks, proper marking practices in connection with its use of Patents, and appropriate notice of copyright in connection with the publication of Copyrights.  Except where the failure to do so would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, each Loan Party has taken commercially reasonable steps to protect the confidentiality of its Trade Secrets in accordance with industry standards.  Except where the failure to do so would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, each Loan Party controls the nature and quality of all products sold and all services rendered by it under or in connection with its Trademarks, in each case consistent with industry practices, and has taken all commercially reasonable actions necessary to ensure that all licensees of the Trademarks owned by such Loan Party comply with such Loan Party’s standards of quality, in each case, to the extent such Trademarks constitute Material Intellectual Property.

127

(c)

To the knowledge of any Authorized Officer of any Borrower, (i) the conduct of such Loan Party’s business does not infringe, misappropriate, dilute or otherwise violate any Intellectual Property right of any other Person, except where such infringement, misappropriation, dilution or other violation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and (ii) no claim exists that the use of any Material Intellectual Property owned or used by any Loan Party (or any of its respective licensees) infringes, misappropriates, dilutes or otherwise violates the asserted rights of any other Person.  To the knowledge of any Authorized Officer of any Borrower, no Person is infringing, misappropriating, diluting or otherwise violating any rights in any Intellectual Property owned, licensed or used by such Loan Party, or any of its respective licensees, except where such infringement, misappropriation, dilution or other violation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  No settlement or consents, covenants not to sue, co-existence agreements, non-assertion assurances, or releases have been entered into by any Loan Party or bind any Loan Party in a manner that could adversely affect such Loan Party’s rights to own, license, transfer, or use any of the Material Intellectual Property in a manner consistent with the way such Loan Party conducts its business as of the date hereof.

(d)

Except as may be provided under the CKI Documents, neither the execution, delivery or performance of this Agreement and the other Loan Documents, nor the consummation of the Transactions and the other transactions contemplated hereby and thereby, will alter, impair or otherwise affect or require the consent, approval or other authorization of any other person in respect of any ownership, contractual or other right of any Loan Party in any Material Intellectual Property.

(e)

Except where the failure to do so would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, each Loan Party has taken commercially reasonable actions to maintain the secrecy and security of its and its Subsidiaries material Software, networks and databases, and to the knowledge of any Authorized Officer of any Borrower, none of the Software owned by the Loan Party or its Subsidiaries and material to their businesses contains any open source code where the consequences of containing such code would reasonably be expected to have a Material Adverse Effect.

Section 4.22

Ranking; Security

.  

(a)

Each Loan Party’s obligations under the Loan Documents ranks at least equally in right of payment with all of its unsecured and unsubordinated obligations, other than those that are mandatorily preferred by law applying to companies generally and other than with respect to the CKI Obligations and the 2023 Debentures Obligations to the extent set forth in the CKI Intercreditor Agreement.

(b)

Each Security Document creates the security interest that it purports to create and such security interests are valid and effective in all material respects to the extent required therein. 

Section 4.23

Centre of Main Interests and Establishments

.  Each Loan Party whose jurisdiction of incorporation is in a member state of the European Union has its “centre of main interest” (as that term is used in Article 3(l) of The Council of the European 

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Union Regulation No. 1346/2000 on Insolvency Proceedings (the “Regulation”) in its jurisdiction of incorporation and has no “establishment” (as that term is used in Article 2(h) of the Regulation) in any other jurisdiction.  

Section 4.24

Dutch Loan Parties

.  As of the Closing Date, no Dutch Loan Party has established a Works Council (ondernemingsraad) nor has it received any request to establish a Works Council, nor is it in the process of establishing one.

Section 4.25

Shares

.  

(a)

The shares of any Group Member which are subject to the German Security are fully paid in and not subject to any option to purchase or similar rights. The constitutional documents of companies whose shares are subject to the German Security do not restrict or inhibit any transfer of those shares on creation or enforcement of the German Security, unless appropriate resolutions to overcome such restrictions and/or inhibitions are taken to the satisfaction of the Collateral Agent. There are no agreements in force which provide for the issue or allotment of, or grant any person the right to call for the issue or allotment of, any share or loan capital of any member of the Group (including any option or right of pre-emption or conversion).

(b)

The shares of any Group Member which are subject to the Dutch Security are fully paid in and not subject to any option to purchase or similar rights. The constitutional documents of companies whose shares are subject to the Dutch Security do not restrict or inhibit any transfer of those shares on creation or enforcement of the Dutch Security save for any share transfer restrictions (blokkeringsregeling) pursuant to section 2:195 of the Dutch Civil Code, unless appropriate resolutions to overcome such restrictions and/or inhibitions are taken to the satisfaction of the Collateral Agent. There are no agreements in force which provide for the issue or allotment of, or grant any person the right to call for the issue or allotment of, any share or loan capital of any member of the Group (including any option or right of pre-emption or conversion). 

ARTICLE V.

AFFIRMATIVE COVENANTS

Each Loan Party covenants and agrees that, so long as any Commitment is in effect and until Payment in Full of the Obligations, such Loan Party shall, and shall cause each of its Restricted Subsidiaries to:

Section 5.01

Financial Statements and Other Reports

.  In the case of the Borrower Representative, deliver to the Administrative Agent (which shall furnish to each Lender):

(a)

Quarterly Financial Statements.  As soon as available, and in any event within 45 days after the end of each Fiscal Quarter of each Fiscal Year (or, if earlier, the date required to be filed with the SEC, giving effect to any extension permitted by the SEC), commencing with the Fiscal Quarter in which the Closing Date occurs, the consolidated balance sheets of the Group as at the end of such Fiscal Quarter and the related consolidated statements of income, stockholders’ equity and cash flows of the Group for such Fiscal Quarter and for the 

129

period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year, commencing with the first Fiscal Quarter for which such corresponding figures are available, and a Narrative Report with respect thereto, and the correspond­ing figures from the Financial Plan for the current Fiscal Year, all in reasonable detail, together with a Financial Officer Certification (the Borrower Representative being permitted to satisfy the requirements of this clause (a) (other than the requirement for a comparison to the Financial Plan) by delivery of the U.S. Borrower’s quarterly report on Form 10-Q (or any successor form), and all supplements or amendments thereto, as filed with the SEC);

(b)

Annual Financial Statements.  As soon as available, and in any event within 90 days after the end of each Fiscal Year (or, if earlier, the date required to be filed with the SEC, giving effect to any extension permitted by the SEC), commencing with the Fiscal Year in which the Closing Date occurs, (i) the consolidated balance sheets of the Group as at the end of such Fiscal Year and the related consolidated statements of income, stockholders’ equity and cash flows of the Group for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year, commencing with the first Fiscal Year for which such corresponding figures are available, and a Narrative Report with respect thereto, and the corresponding figures from the Financial Plan for the Fiscal Year covered by such financial statements, in reasonable detail, together with a Financial Officer Certification (the Borrower Representative being permitted to satisfy the requirements of this clause (i) (other than the requirement for a comparison to the Financial Plan) by delivery of the U.S. Borrower’s annual report on Form 10-K (or any successor form), and all supplements or amendments thereto, as filed with the SEC); and (ii) with respect to such consolidated financial statements a report thereon of Ernst & Young LLP or another independent certified public accountant of recognized national standing selected by the U.S. Borrower (which report and/or the accompanying financial statements shall be unqualified as to going concern and scope of audit, and shall state that such consoli­dated financial statements fairly present, in all material respects, the consolidated financial position of the Group as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise disclosed in such financial state­ments) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards) together, to the extent available pursuant to such accountant’s internal policies, with a written statement by such independent certified public accountants (which statement may be limited to accounting matters and disclaim responsibility for legal interpretations) that to the best of such accountant’s knowledge, as of the dates of the financial statements being furnished, no Default has occurred under the covenants set forth in Section 6.07 and if such a Default has occurred, specifying the nature and extent thereof.

(c)

Compliance Certificate; Guarantor Coverage Certificate.  (i) On the date that is 60 days following the Closing Date, a duly executed and completed Guarantor Coverage Certificate, (ii) together with each delivery of financial statements of the Group pursuant to Section 5.01(a), a duly executed and completed Compliance Certificate, (iii) together with each delivery of financial statements of the Group pursuant to Section 5.01(b), a duly executed and completed Compliance Certificate, (iv) together with each delivery of financial statements pursuant to Section 5.01(a) and (b), consolidated financial statements of income and cash flows 

130

and the related consolidated balance sheet covering the same periods reflecting adjustments necessary to eliminate the accounts of Unrestricted Subsidiaries, if any, from such financial statements delivered pursuant to Section 5.01(a) and (b), (v) within fifteen (15) days following each delivery of financial statements of the Group pursuant to Section 5.01(b), a duly executed and completed Guarantor Coverage Certificate and (vi) within ten (10) Business Days following any CKI Blockage Event, a duly executed and completed Compliance Certificate with respect to the most recently ended Fiscal Quarter for which a Compliance Certificate has been delivered that shall, in the case of this clause (vi), exclude CKI and any CKI Affiliate from any calculation of Consolidated Adjusted EBITDA; 

(d)

Statements of Reconciliation after Change in Accounting Principles.  If, as a result of any change in accounting principles and policies from those used in the preparation of the Historical Financial Statements of the U.S. Borrower prior to giving effect to the Transactions, the consolidated financial statements of the Group delivered pursuant to Section 5.01(a) or 5.01(b) shall differ in any material respect from the consolidated financial statements that would have been delivered pursuant to such subdivisions had no such change in accounting principles and policies been made, then, together with the first delivery of such financial statements after such change (or as promptly as practicable thereafter), one or more statements of reconciliation for all such prior financial statements in form and substance reasonably satisfactory to the Administrative Agent;

(e)

Notice of Default.  Promptly upon any Authorized Officer of any Borrower obtaining knowledge (i) of any condition or event that constitutes a Default or an Event of Default or that notice has been given to any Loan Party with respect thereto; (ii) that any Person has given any notice to any Loan Party or any of its Subsidiaries or taken any other action with respect to any event or condition set forth in Section 8.01(b); (iii) of the occurrence of any event or change that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect, a certificate of an Authorized Officer specifying the nature and period of existence of such condition, event or change, or specifying the notice given and action taken by any such Person and the nature of such claimed Event of Default, Default, default, event or condition, and what action the applicable Group Member has taken, is taking and proposes to take with respect thereto; or (iv) the occurrence of any CKI Blockage Event;

(f)

Notice of Litigation.  Promptly upon any Authorized Officer of any Borrower obtaining knowledge of (i) any Adverse Proceeding not previously disclosed in writing by the Borrower Representative to the Lenders or (ii) any development in any Adverse Proceeding that, in the case of either clause (i) or (ii), would be reasonably expected to have a Material Adverse Effect, or seeks to enjoin or otherwise prevent the consumma­tion of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby, or the exercise of rights or performance of obligations under any Loan Document written notice thereof together with such other information as may be reasonably available to the U.S. Borrower to enable the Lenders and their counsel to evaluate such matters;

(g)

Pension Plans; ERISA.  Promptly (but in any event within three (3) days) upon the occurrence of or upon any Authorized Officer of any Loan Party becoming aware of the forthcoming occurrence of (A) any material ERISA Event, (B) the adoption of any new Pension Plan or Foreign Plan that provides pension benefits by any Loan Party, any of its Subsidiaries or 

131

any of their respective ERISA Affiliates, (C) the adoption of an amendment to a Pension Plan or Foreign Plan that provides pension benefits if such amendment results in a material increase in benefits or unfunded liabilities or (D) the commencement of contributions by any Loan Party, any of its Subsidiaries or any of their respective ERISA Affiliates to a Multiemployer Plan or Pension Plan or Foreign Plan that provides pension benefits, a written notice specifying the nature thereof, what action any Loan Party, any of its Subsidiaries or any of their respective ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; (ii) with reasonable promptness (but in any event within three (3) days after filing), copies of all notices received by any Loan Party, any of its Subsidiaries or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (iii) copies of such other documents or governmental reports or filings relating to any Employee Benefit Plan as the Administrative Agent shall reasonably request;

(h)

Financial Plan.  As soon as practicable and in any event no later than sixty (60) days after the beginning of each Fiscal Year, a consolidated plan and financial forecast for such Fiscal Year and each Fiscal Year (or portion thereof) thereafter through the final maturity date of the Loans (a “Financial Plan”), including a forecasted consolidated balance sheet and forecasted consolidated statements of income and cash flows of the Group for each Fiscal Quarter of such Fiscal Year and each other Fiscal Year, and an explanation of the assumptions on which such forecasts are based; 

(i)

Insurance Report.  As soon as practicable and in any event within 90 days after the end of each Fiscal Year, a certificate from the Loan Parties’ insurance broker(s) in form and substance reasonably satisfactory to the Administrative Agent outlining all material insurance coverage maintained as of the date of such certificate by the Loan Parties and their Restricted Subsidiaries;

(j)

Notice Regarding CKI Documents.  Promptly, and in any event within ten (10) Business Days after any CKI Document is amended in any material respect, provide copies of such amendment to the Administrative Agent;

(k)

Information Regarding Collateral.  

(i)

the Borrower Representative shall furnish to the Collateral Agent prompt written notice of any change (A) in any Loan Party’s corporate or entity name, (B) in any Loan Party’s type of organization, (C) in any Loan Party’s jurisdiction of organization or (D) in any Loan Party’s Federal Taxpayer Identification Number or state organizational identification number.  Each Loan Party agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made (or will be made under any statutory period) under the UCC or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral as contemplated in the Security Documents; 

(ii)

at the time of delivery of annual financial statements pursuant to Section 5.01(b), each Loan Party shall deliver (which delivery may be by electronic 

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means) to the Collateral Agent a supplement to Schedule 4.21 which shall list any registrations or applications for registration of Intellectual Property that was acquired after the later of the Closing Date and the date of the most recent supplement (if any) delivered pursuant to this Section by any Group Member that is, or pursuant to Section 5.12 becomes, a Loan Party; provided that this Section shall not limit the requirements of Section 5.14; and

(iii)

each Loan Party also agrees promptly to notify (or to have the Borrower Representative notify on its behalf) the Collateral Agent if any material portion of the Collateral is damaged or destroyed;

(l)

Annual Collateral Verification.  Each year, at the time of delivery of annual financial statements with respect to the preceding Fiscal Year pursuant to Section 5.01(b), each Loan Party shall deliver to the Collateral Agent a certificate of its Authorized Officer confirming that there has been no change in the information set forth in the Foreign Collateral Perfection Certificate or in the Perfection Certificate since the Closing Date or the date of the most recent certificate delivered pursuant to this Section and/or identifying such changes; 

(m)

Management Letters.  Promptly after the receipt thereof by the U.S. Borrower, a copy of any “management letter” received by the U.S. Borrower from its certified public accountants and the management’s response thereto;

(n)

Certification of Public Information.  Each Borrower and each Lender acknowledge that certain of the Lenders may be “public-side” Lenders (Lenders that do not wish to receive material non-public information with respect to any Group Member or its Securities) and, if documents or notices required to be delivered pursuant to this Section 5.01 or otherwise are being distributed through IntraLinks/IntraAgency, SyndTrak or another relevant website or other information platform (the “Platform”), any document or notice that the Borrower Representative has indicated contains Non-Public Information shall not be posted on that portion of the Platform designated for such public-side Lenders.  The Borrower Representative agrees to clearly designate all Information provided to the Administrative Agent by or on behalf of the Borrowers which is suitable to make available to Public Lenders.  If the Borrower Representative has not indicated whether a document or notice delivered pursuant to this Section 5.01 contains Non-Public Information, the Administrative Agent reserves the right to post such document or notice solely on that portion of the Platform designated for Lenders who wish to receive material non-public information with respect to any Group Member and its Securities; and

(o)

Other Information.  (A) Promptly upon their becoming available, copies of (i) all financial statements, reports, notices and proxy statements sent or made available generally by any Group Member to their security holders acting in such capacity and (ii) all regular, periodic and current reports and all registration statements and prospectuses, if any, filed by any Group Member with any Securities exchange or with the SEC; provided that to the extent such information is filed with the SEC such information shall be deemed to have been provided under this subclause and (B) such other information and data with respect to any Group Member as from time to time may be reasonably requested by the Administrative Agent or any Lender through the Administrative Agent. 

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Section 5.02

Existence

.  Except as otherwise permitted under Section 6.08, at all times preserve and keep in full force and effect its existence and all rights and franchises, licenses and permits material to its business; provided, that no Loan Party (other than any Borrower with respect to existence) or any of its Subsidiaries shall be required to preserve any such existence, right or franchise, licenses and permits if (a) failure to do so would not reasonably be expected to result in a Material Adverse Effect, or (b) such Person’s management shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Person.

Section 5.03

Payment of Taxes and Claims

.  Pay all Taxes imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises before any penalty or fine accrues thereon, and all claims (including claims for labor, services, materials and supplies) for sums that have become due and payable and that by law have or may become a Lien upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided, that no such Tax or claim need be paid to the extent it is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as adequate reserves or other appropriate provisions as shall be required in conformity with GAAP shall have been made therefor.

Section 5.04

Maintenance of Properties

.  (a) In the case of material tangible properties used in the business of the Loan Parties and their Restricted Subsidiaries, maintain or cause to be maintained such tangible properties in good repair, working order and condition, ordinary wear and tear excepted, and from time to time shall make or cause to be made all appropriate repairs, renewals and replacements thereof; and (b) in the case of intangible material properties that are used or useful in the business of the Loan Parties and their Restricted Subsidiaries, maintain such intangible properties as valid and enforceable, in each case except as would not reasonably be expected to result in a Material Adverse Effect.

Section 5.05

Insurance

.  

(a)

In the case of the Borrower Representative, maintain or cause to be maintained, with financially sound and reputable insurers, such public liability insurance, third party property damage insurance, business interruption insurance and casualty insurance with respect to liabilities, losses or damage in respect of the assets, properties and businesses of the Loan Parties and their Restricted Subsidiaries as may customarily be carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses, in each case in such amounts (giving effect to self-insurance), with such deductibles, covering such risks and otherwise on such terms and conditions as are customary for such Persons.  Without limiting the generality of the foregoing, the Borrower Representative shall maintain or cause to be maintained (i) flood insurance that covers each Real Estate Asset subject to a mortgage in favor of Collateral Agent, for the benefit of Secured Parties, that is located in a Flood Zone, in each case in compliance with any applicable regulations of the Board of Governors, (ii) replacement value casualty insurance on the Collateral under such policies of insurance, with such insurance companies, in such amounts, with such deductibles, and covering such risks as are at all times carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses.  Each such policy of insurance with respect to a Loan Party shall (i) name the Secured Parties as additional insured parties thereunder as their interests may appear, (ii) in 

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the case of each casualty insurance policy, contain a loss payable clause or endorsement, satisfactory in form and substance to the Collateral Agent, that names the Collateral Agent, on behalf of the Secured Parties, as the loss payee thereunder and (iii) provide that the insurer affording coverage (with respect to property and liability insurance) will provide for at least thirty (30) days’ prior written notice to the Collateral Agent of any material modification or cancellation of such policy. 

Section 5.06

Books and Records; Inspections

.  Maintain proper books of record and accounts in conformity in all material respects with GAAP.  Each Loan Party shall, and shall cause each of its Subsidiaries to, permit any authorized representatives designated by the Administrative Agent to visit and inspect any of the properties of any Loan Party and any of its respective Subsidiaries, to examine and inspect, its and their financial and accounting records and, with the prior consent of an Authorized Officer of the Loan Party, to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants, all upon reasonable notice and at such reasonable times during normal business hours and as often as may reasonably be requested (but, so long as no Default or Event of Default shall have occurred or be continuing, no more often than once per Fiscal Quarter).

Section 5.07

Lenders’ Calls

.  In the case of the Borrowers, upon the request of the Administrative Agent or the Required Lenders, participate in a conference call with the Administrative Agent and the Lenders once during each Fiscal Year at such time as may be agreed to by the Borrower Representative and the Administrative Agent.

Section 5.08

Compliance with Material Contractual Obligations and Laws

.  Comply with the requirements of all material Contractual Obligations (including the Acquisition Documents) and all applicable laws, rules, regulations and orders of any Governmental Authority (including all Environmental Laws), noncompliance with which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  

Section 5.09

Environmental

.  

(a)

Environmental Disclosure.  In the case of the Borrower Representative, deliver to the Administrative Agent and the Lenders:

(i)

as soon as practicable following receipt thereof, copies of all environmental assessments, audits, investigations, analyses and reports of any kind or character, whether prepared by personnel of any Group Member or by any independent consultants, Governmental Authorities or other Persons, with respect to significant environmental matters at any Facility or with respect to any Environmental Claims;

(ii)

promptly upon knowledge of any Authorized Officer of any Borrower thereof, written notice relating to (1) any Release required to be reported to Governmental Authority under any applicable Environmental Laws, (2) any remedial action taken by any Loan Party or any other Person in response to (A) any Hazardous Materials the existence of which has a reasonable possibility of resulting in one or more Environmental Claims having, individually or in the aggregate, a Material Adverse Effect 

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or (B) any Environmental Claims that, individually or in the aggregate, have a reasonable possibility of resulting in a Material Adverse Effect, (3) any occurrence or condition on any real property adjoining or in the vicinity of any Facility that could cause such Facility or any part thereof to be subject to any material restrictions on the ownership, occupancy, transferability or use thereof under any Environmental Laws in a manner that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect or (4) the imposition or written threat of any imposition of any Lien (other than a Permitted Lien) on any Collateral pursuant to any Environmental Law;

(iii)

as soon as practicable following the sending or receipt thereof by any Group Member, a copy of (1) any and all material written communications with respect to any Environmental Claims that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect, (2) any report sent to any Governmental Authority or other material written communications regarding a Release required to be reported to such Governmental Authority that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect and (3) any material written communications responding to any request for information from any Governmental Authority that suggests such Governmental Authority is investigating whether any Group Member may be potentially responsible for any Hazardous Materials Activity that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect;

(iv)

written notice (delivered in each instance as soon as practicable) describing in reasonable detail (1) any proposed acquisition of stock, assets, or other property by any Group Member that would reasonably be expected to expose any Group Member to, or result in, Environmental Claims that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and (2) any proposed action to be taken by any Group Member to modify current operations in a manner that would reasonably be expected to subject any Group Member to Environmental Claims that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect; and

(v)

with reasonable promptness, such other documents and information as from time to time may be reasonably requested by the Administrative Agent in relation to any matters disclosed pursuant to this Section 5.09(a).

(b)

Environmental Claims, Etc.  Promptly take any and all actions necessary to (i) cure any violation of applicable Environmental Laws by such Group Member that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (ii) conduct any investigative or remedial action that may be required pursuant to applicable Environmental Laws by such Group Member that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and (iii) make an appropriate response to any Environmental Claim against such Group Member and discharge any obligations it may have to any Person thereunder where failure to do so would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

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(c)

Environmental Compliance.  Use and operate all of its Facilities in compliance with all Environmental Laws, keep all necessary Governmental Authorizations required pursuant to any Environmental Laws, and handle all Hazardous Materials in compliance with all Environmental Laws, in each case except where the failure to comply with the terms of this clause would not reasonably be expected to have a Material Adverse Effect.

Section 5.10

Maintenance of Ratings.

  In the case of the U.S. Borrower, at all times use commercially reasonable efforts to maintain public corporate family and public corporate credit ratings issued by Moody’s and S&P and public ratings issued by Moody’s and S&P with respect to the credit facilities hereunder.

Section 5.11

Intellectual Property

.  

(a)

No Loan Party shall do any act or omit to do any act which would reasonably be expected to cause any Material Intellectual Property, so long as it remains Material Intellectual Property, to lapse, or become abandoned, canceled, dedicated to the public, forfeited, unenforceable or otherwise impaired, or which would adversely affect the validity, grant, or enforceability of the security interest granted therein.  No Loan Party shall, with respect to any Trademarks constituting Material Intellectual Property, cease the use of any of such Trademarks, except in the ordinary course of business, or fail to maintain the level of the quality of products sold and services rendered under any of such Trademark at a level at least substantially consistent with the quality of such products and services as of the date hereof, and such Loan Party shall take all commercially reasonable steps necessary to insure that licensees of such Trademarks use such consistent standards of quality.  Each Loan Party shall, within thirty (30) days of the creation or acquisition or exclusive license of any copyrightable work that is included in the Material Intellectual Property, apply to register the Copyright in the United States Copyright Office or, where appropriate, any foreign counterpart and, in the case of an exclusive Copyright License in respect of a registered Copyright constituting Material Intellectual Property, record such license, in the United States Copyright Office or, where appropriate, any foreign counterpart.  Each Loan Party shall take all reasonable steps, including in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office, any state registry or any foreign counterpart of the foregoing, to pursue any application and maintain any registration or issuance of each Trademark, Patent, and Copyright owned by any Loan Party and constituting Material Intellectual Property.

(b)

Each Loan Party shall promptly notify the Collateral Agent if it knows that any item of Material Intellectual Property, so long as it remains Material Intellectual Property, has become (i) abandoned or dedicated to the public or placed in the public domain, (ii) invalid or unenforceable, (iii) subject to any adverse determination or development regarding any Loan Party’s ownership, registration or use or the validity or enforceability of such item of Intellectual Property (including any adverse development with respect to any action or proceeding in the United States Patent and Trademark Office, the United States Copyright Office, any state registry, any foreign counterpart of the foregoing, or any court) or (iv) the subject of any reversion or termination rights.  

(c)

Except as provided in or permitted under Section 6.02, each Loan Party shall use best efforts so as not to permit the inclusion in any contract to which it hereafter 

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becomes a party of any provision that could or may in any way materially impair or prevent the creation of a security interest in, or the assignment of, such Loan Party’s ownership interests in any Intellectual Property acquired under such contracts that would become Material Intellectual Property.

(d)

In the event that any Material Intellectual Property owned by any Loan Party is infringed, misappropriated, diluted or otherwise violated by a third party and such infringement, misappropriation, dilution or other violation would reasonably be expected to have a Material Adverse Effect, such Loan Party shall promptly take all commercially reasonable actions to stop such infringement, misappropriation, dilution or other violation and protect its rights in such Material Intellectual Property including, but not limited to, the initiation of a suit for injunctive relief and to recover damages. 

Section 5.12

Subsidiaries

.  

(a)

In the case of the Borrower Representative, in the event that any Person becomes a U.S. Subsidiary of the U.S. Borrower after the date hereof, (a) promptly cause such U.S. Subsidiary to become a Guarantor hereunder and a U.S. Grantor under the U.S. Pledge and Security Agreement or the CKI Related Assets Pledge and Security Agreement, as applicable, by executing and delivering to the Administrative Agent and the Collateral Agent a Counterpart Agreement, and (b) promptly take all such actions and execute and deliver, or cause to be executed and delivered, all such documents, instruments, agreements, and certificates as are similar to those described in Sections 3.01(b) and 3.01(h), and the Borrower Representative shall promptly take or cause to be taken all of the actions referred to in Section 3.01(h) necessary to grant and to perfect a First Priority Lien in favor of the Collateral Agent, for the benefit of the Secured Parties, under the applicable Security Documents, in the Equity Interests of any such new U.S. Subsidiary (provided that in no event shall (1) more than 66% of the voting Equity Interests of any Foreign Subsidiary directly owned by a U.S. Subsidiary or more than 66% of the Equity Interests of any U.S.-Owned DRE be required to be so pledged as security for the Obligations of the U.S. Borrower and (2) no pledge of the Equity Interests of any other Foreign Subsidiary shall be required as security for the Obligations of the U.S. Borrower). 

(b)

In the case of the Borrower Representative, with respect to any Foreign Subsidiary formed or acquired after the Closing Date that is, or any Foreign Subsidiary acquired pursuant to the Acquisition that becomes, after the Closing Date (but, for the avoidance of doubt, excluding any Subsidiary of the U.S. Borrower prior to the Acquisition as listed on Schedule 5.12(b)), (i) a Material Company (excluding any Material Company organized under the laws of Japan), (ii) the direct or indirect parent of any Borrower or Material Company or (iii) to the extent required in order to comply with Section 5.18, any other Foreign Subsidiary that the U.S. Borrower shall select in its sole discretion, including, if so selected, any Material Company organized under the laws of Japan, (x) subject to the Agreed Security Principles, promptly cause such Foreign Subsidiary to become a Guarantor hereunder solely in respect of the Obligations of the Foreign Borrower by executing and delivering to the Administrative Agent a Counterpart Agreement and a party to any applicable Foreign Law Security Document (provided that any Material Company organized under the laws of Japan shall not be under an obligation to provide any Foreign Law Security Document) and (y) subject to the Agreed Security Principles, promptly take all such actions and execute and deliver, or cause to be executed and delivered, all 

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such documents, instruments, agreements, and certificates as are necessary to grant a perfected First Priority Lien in favor of the Collateral Agent, for the benefit of the applicable Foreign Obligations Secured Parties, in substantially all of such Foreign Subsidiary’s assets (subject always to the Agreed Security Principles), and the Borrower Representative shall promptly take or shall cause the applicable Group Member to take all of the actions necessary to grant and to perfect a First Priority Lien in favor of the Collateral Agent, for the benefit of the Foreign Obligations Secured Parties, under the applicable Security Documents, in the Equity Interests of any such new Foreign Subsidiary.  In addition, if any Foreign Subsidiary becomes an Ancillary Borrower hereunder, subject to the Agreed Security Principles, it shall take all such actions and execute and deliver, or cause to be executed and delivered, all such documents, instruments, agreements and certificates as are necessary to grant a perfected First Priority Lien in favor of the Collateral Agent, for the benefit of the Foreign Obligations Secured Parties, in substantially all of such Foreign Subsidiary’s assets (subject to the Agreed Security Principles).  Notwithstanding the foregoing, any Obligations with respect to Real Estate Assets shall be governed by Section 5.13.  

(c)

With respect to each new Restricted Subsidiary, the Borrower Representative shall promptly send to the Collateral Agent written notice setting forth with respect to such Person (i) the date on which such Person became a Group Member and (ii) all of the data required to be set forth in Schedules 3.01(c) and 4.02 with respect to all Subsidiaries of the U.S. Borrower; and such written notice shall be deemed to supplement Schedule 3.01(c) and 4.02 for all purposes hereof. 

(d)

No Subsidiary listed on Schedule 5.12(b) shall under any circumstance be required to become a Guarantor or otherwise guaranty the Obligations of any Borrower, it being understood and agreed that nothing in this Section 5.12(d) shall affect the obligation of the Loan Parties to comply with the requirements of Section 5.18.

Section 5.13

Additional Material Real Estate Assets

.  In the event that any Loan Party acquires a Material Real Estate Asset or a Real Estate Asset owned or leased on the Closing Date becomes a Material Real Estate Asset and such interest has not otherwise been made subject to the Lien of the Security Documents in favor of the Collateral Agent, for the benefit of Secured Parties, in the case of such Loan Party, promptly take to the fullest extent commercially practical all such actions and execute and deliver, or cause to be executed and delivered, all such mortgages, documents, instruments, agreements, opinions and certificates similar to those described in Section 3.01(g) with respect to each such Material Real Estate Asset that the Collateral Agent shall reasonably request to create in favor of the Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein, perfected First Priority security interest in such Material Real Estate Assets.  

Section 5.14

Additional Collateral

.  With respect to any assets or property acquired after the Closing Date by any Group Member that is, or pursuant to Section 5.12 becomes, a Loan Party (other than (x) any assets or property described in Section 5.12 or Section 5.13 and (y) any assets or property subject to a Lien expressly permitted by Section 6.02) as to which the Collateral Agent, for the benefit of the Secured Parties, does not have a perfected First Priority Lien, promptly (i) execute and deliver to the Collateral Agent such amendments to the Security Documents or such new Security Documents as the Collateral Agent deems 

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necessary or advisable to grant to the Collateral Agent, for the benefit of the applicable Secured Parties, a perfected First Priority Lien in such assets or property and (ii) take all actions necessary or advisable to grant to the Collateral Agent, for the benefit of the applicable Secured Parties, a perfected First Priority Lien in such assets or property, including without limitation, authorizing the Collateral Agent to file UCC financing statements in such jurisdictions as may be required by the U.S. Security Agreements, or by law or as may be requested by the Collateral Agent (subject, in the case of Foreign Loan Parties, to the Agreed Security Principles).  Notwithstanding anything in this Section 5.14 or in Sections 5.12, 5.13 or 5.16 to the contrary, Sections 5.12, 5.13, 5.14 and 5.16 shall not (x) apply to any property or Subsidiary created or acquired after the Closing Date, as applicable, as to which the Administrative Agent has determined in its sole discretion that the collateral value thereof is insufficient to justify the difficulty, time and/or expense of obtaining a perfected security interest therein or (y) require a grant or perfection of a security interest (i) in any asset excluded by the applicable security document, or (ii) in violation of the Agreed Security Principles.  

Section 5.15

Interest Rate Protection

.  In the case of the U.S. Borrower, no later than ninety (90) days following the Closing Date and at all times thereafter until the third anniversary of the Closing Date, obtain and cause to be maintained protection against fluctuations in interest rates pursuant to one or more Interest Rate Agreements in form and substance reasonably satisfactory to the Administrative Agent, in order to ensure that no less than 25% of the aggregate principal amount of the total Indebtedness for borrowed money of the Group then outstanding is either (i) subject to such Interest Rate Agreements or (ii) Indebtedness that bears interest at a fixed rate. 

Section 5.16

Further Assurances

.  At any time or from time to time upon the request of the Administrative Agent, at the expense of the Loan Parties, promptly execute, acknowledge and deliver such further documents and do such other acts and things as the Administrative Agent or the Collateral Agent may reasonably request in order to effect fully the purposes of the Loan Documents or to more fully perfect or renew the rights of the Administrative Agent or the Lenders with respect to the Collateral (or with respect to any additions thereto or replacements or proceeds thereof or with respect to any other property or assets hereafter acquired by any Group Member which may be deemed to be part of the Collateral), subject, in the case of Foreign Loan Parties, to the Agreed Security Principles.  In furtherance and not in limitation of the foregoing, each Loan Party shall take such actions as the Administrative Agent or the Collateral Agent may reasonably request from time to time to ensure that the Obligations are guarantied by the Guarantors and are secured by the assets of each Loan Party in each case, to the extent otherwise required by this Agreement and subject to the Agreed Security Principles.  Upon the exercise by the Administrative Agent or the Collateral Agent of any power, right, privilege or remedy pursuant to this Agreement or the other Loan Documents which required any consent, approval, recording, qualification or authorization of any Governmental Authority, the U.S. Borrower or the applicable Loan Party will execute and deliver, or will cause the execution and delivery of, all applications, certifications, instruments and other documents and papers that the Administrative Agent or the Collateral Agent may be required to obtain from such Loan Party for such consent, approval, recording, qualification or authorization. 

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Section 5.17

Foreign Bank Accounts and Cash held by Foreign Group Member

.  

(a)

Subject to paragraph (b) below, no Foreign Loan Party will or will permit any of its Subsidiaries to maintain, at any time, any cash in excess of $7,500,000 in the aggregate on deposit with a bank other than an Acceptable Bank.   

(b)

No Foreign Loan Party shall be required to cause any Subsidiary to transfer any cash under clause (a) if doing so would cause such Foreign Loan Party or such Subsidiary to (i) incur a material U.S. federal income Tax liability by reason of Section 956 of the Internal Revenue Code (except to the extent such liability is avoidable through use of commercially reasonable efforts) or other material cost or expense or (ii) breach any applicable law or Contractual Obligation or result in personal liability for such Foreign Loan Party or such Subsidiary or any of their respective directors (managing or otherwise) or management (except to the extent such breach or liability is avoidable through use of commercially reasonable efforts).

Section 5.18

Guarantor Coverage Test

.  As of (i) any one date between the Closing Date and the date that is 60 days after the Closing Date, and (ii) any one date between the date that financial statements are delivered pursuant to Section 5.01(b) and the date that is 45 days following such date, in each case, as demonstrated by a Guarantor Coverage Certificate dated as of such date,

(i)

the aggregate (without duplication) Group Member Adjusted EBITDA attributable to the Loan Parties as a group is no less than 80% of Consolidated Adjusted EBITDA; and

(ii)

the aggregate (without duplication) Group Member Assets of the Loan Parties as a group is no less than 80% of Consolidated Total Assets.

Section 5.19

Post-Closing Obligations

.  Satisfy the requirements set forth on Schedule 5.19 on the earlier of (i) the date specified for such requirement and (ii) 60 days after the Closing Date (or, in each case, such later date as the Administrative Agent shall agree in its reasonable discretion). 

ARTICLE VI.

NEGATIVE COVENANTS

Each Loan Party covenants and agrees that, so long as any Commitment is in effect and until Payment in Full of the Obligations, such Loan Party shall not, nor shall it cause or permit any of its Restricted Subsidiaries to:

Section 6.01

Indebtedness

.  Create, incur, assume or guaranty, or otherwise become or remain liable with respect to any Indebtedness, except:

(a)

the Obligations;

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(b)

(i) Indebtedness in respect of the 2023 Debentures, (ii) Indebtedness of the U.S. Borrower in respect of the 2020 Notes in an aggregate principal amount not to exceed $600,000,000 and guaranty obligations of any U.S. Guarantor in respect of such Indebtedness, (iii) any Permitted Refinancing of the Indebtedness described in clause (i) or (ii), and (iv) Indebtedness in respect of the Existing Notes to the extent such Existing Notes remain outstanding after consummation of the tender offer therefor; 

(c)

Indebtedness of any Restricted Subsidiary owed to any Borrower or to any other Restricted Subsidiary, or of any Borrower owed to any Restricted Subsidiary or any other Borrower; provided, that (i) all such Indebtedness shall be evidenced by an intercompany note, and, if owed to a Loan Party, shall (subject to the Agreed Security Principles) be subject to a First Priority Lien pursuant to the Security Documents, (ii) all such Indebtedness shall be unsecured and subordinated in right of payment to the payment in full of the Obligations in a manner consistent with the subordination provisions set forth in Section 7.07 and shall be Subordinated Indebtedness hereunder, (iii) any payment by any such Guarantor under any guaranty of the Obligations shall result in a pro tanto reduction of the amount of any Indebtedness owed by such Subsidiary to such Borrower or to any of its Subsidiaries for whose benefit such payment is made and (iv) such Indebtedness is permitted as an Investment under Section 6.06;

(d)

(1) unsecured Indebtedness of U.S. Borrower, the net proceeds of which are used solely to (i) consummate Permitted Acquisitions or (ii) repay the Term Loans (or repay Revolving Loans with a permanent equivalent reduction in the Revolving Commitments); provided, in each case, that such Indebtedness (a) matures at least three months after the maturity date of the Term Loans, (b) has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Term Loans, (c) does not contain maintenance covenants that are more restrictive than Sections 6.07(a) and (b) and (d) if guaranteed, is guaranteed only by U.S. Guarantors; provided, that both immediately prior and after giving effect to the incurrence thereof, (x) no Default or Event of Default shall exist or result therefrom and (y) the U.S. Borrower shall be in compliance with the covenants set forth in Sections 6.07(a) and (b) after giving pro forma effect to the incurrence of such Indebtedness and the consummation of such Permitted Acquisition or repayment of such Loans, as applicable and (2) any Permitted Refinancings of such Indebtedness;

(e)

Indebtedness incurred by any Group Member arising from agreements providing for indemnification, adjustment of purchase price, other compensation or similar obligations (including, Indebtedness consisting of the deferred purchase price of assets or property acquired in a Permitted Acquisition), in connection with Permitted Acquisitions, permitted Investments or permitted dispositions of any business, assets or Subsidiary of any Group Member;

(f)

Indebtedness which may be deemed to exist pursuant to any guaranties, performance, surety, statutory, appeal bonds or similar obligations incurred in the ordinary course of business;

(g)

Indebtedness in respect of netting services, overdraft protections and otherwise in connection with deposit accounts;

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(h)

guaranties in the ordinary course of business of the obligations of suppliers, customers, franchisees and licensees of any Group Member;

(i)

guaranties by (i) any Borrower of Indebtedness of a Guarantor or any other Borrower or guaranties by a Guarantor of Indebtedness of any Borrower or any other Guarantor with respect, in each case, to Indebtedness otherwise permitted to be incurred by such Borrower or such Guarantor pursuant to this Section 6.01 (other than clauses (b) and (c) of this Section); provided, that if the Indebtedness that is being guarantied is unsecured and/or subordinated to the Obligations, the guaranty shall also be unsecured and/or subordinated to the Obligations, (ii) any Group Member that is not a Loan Party of Indebtedness of any other Group Member that is not a Loan Party and (iii) the U.S. Borrower of Indebtedness of any Group Member that is not a Loan Party incurred in the ordinary course of business on ordinary business terms so long as such Indebtedness is otherwise permitted to be incurred under Section 6.01(r) to the extent such guaranties are unsecured and otherwise permitted as an Investment under Section 6.06 (other than Section 6.06(q)); 

(j)

Indebtedness existing on the Closing Date which is described in Schedule 6.01 and any Permitted Refinancing thereof;

(k)

Indebtedness (i) in an amount not to exceed at any one time outstanding $40,000,000 (or, if the Incurrence Test is satisfied on a pro forma basis, 0.75% of Consolidated Total Assets, if greater), which is incurred with respect to Capital Leases or constitutes purchase money Indebtedness to finance the acquisition, lease, construction or improvement of assets or property and any Permitted Refinancing in respect thereof; provided, that any such Indebtedness shall be secured only by the asset acquired, leased, constructed or improved in connection with the incurrence of such Indebtedness, be incurred within 270 days of the acquisition, lease, construction or improvement of the relevant equipment or other asset and constitute not less than 75.0% of the aggregate consideration paid with respect to such acquisition, lease, construction or improvement and (ii) constituting Attributable Indebtedness with respect to any Sale and Lease-Back permitted under Section 6.10 in an amount not to exceed at any one time outstanding $35,000,000; 

(l)

(i) (1) Indebtedness of a Person or Indebtedness attaching to assets of a Person that, in either case, becomes a Loan Party or becomes or is merged into or consolidated with a Subsidiary after the Closing date or (2) Indebtedness attaching to assets that are acquired by any Group Member after the Closing Date as the result of a Permitted Acquisition; provided, that (x) such Indebtedness existed at the time such Person became a Loan Party or became or was merged into or consolidated with a Subsidiary or at the time such assets were acquired and, in each case, was not created in contemplation thereof and (y) such Indebtedness is not guaranteed in any respect by any Group Member (other than (A) by any such Person that so becomes a Subsidiary or (B) to the extent any Group Member is otherwise permitted to guaranty such Indebtedness under another provision under this Section 6.01) and (ii) any Permitted Refinancing thereof;

(m)

Indebtedness of the type described in clause (viii) of the definition thereof with respect to interest rates or foreign exchange rates, or any Treasury Transaction; provided that in each case such Indebtedness shall not have been entered into for speculation purposes; 

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(n)

(i) Indebtedness incurred by a Securitization Subsidiary in a Qualified Securitization Financing that is not recourse (except for Standard Securitization Undertakings) to any of the Borrowers or the Guarantors, (ii) Indebtedness of a Group Member consisting of Standard Securitization Undertakings provided that, in each case, the Net Cash Proceeds with respect to such Indebtedness are used to repay Term Loans and will be applied as set forth in Section 2.15(b) and (iii) Indebtedness incurred with respect to any disposition of accounts receivable in connection with receivables factoring arrangements in the ordinary course of business; 

(o)

Indebtedness owing to any insurance company in connection with the financing of any insurance premiums permitted by such insurance company in the ordinary course of business; 

(p)

Indebtedness incurred in the ordinary course of business with respect to surety and appeal bonds, performance and insurance bonds and similar obligations; 

(q)

Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business or other cash management services in the ordinary course of business; provided that such Indebtedness (i) is extinguished within five Business Days of its incurrence or (ii) if in respect of credit or purchase cards, is extinguished within 60 days of its incurrence; 

(r)

other Indebtedness of Subsidiaries (other than a Securitization Subsidiary) that are not Loan Parties and Indebtedness incurred on behalf of or representing guaranties of Indebtedness of Joint Ventures in an amount not to exceed at any one time outstanding $125,000,000 (or, if the Incurrence Test is satisfied on a pro forma basis, 2.0% of Consolidated Total Assets, if greater); 

(s)

other Indebtedness of any Group Member (other than a Securitization Subsidiary) in an aggregate amount not to exceed at any one time outstanding $150,000,000; 

(t)

Indebtedness arising as a result of (the establishment of) a fiscal unity (fiscale eenheid) between the Dutch Loan Parties;

(u)

Indebtedness pursuant to a declaration of joint and several liability used for the purpose of Section 2:403 of the Dutch Civil Code (and any residual liability under such declaration arising pursuant to section 2:404(2) of the Dutch Civil Code);

(v)

Indebtedness representing the deferred obligation to purchase common stock or common stock options permitted under Section 6.04(c);

(w)

Indebtedness arising under any domination and/or profit transfer agreement (Beherrschungs und/oder Gewinnabführungsvertrag) with a German Loan Party which is in force on the Closing Date;

(x)

Indebtedness in respect of letters of credit, bank guarantees, warehouse receipts or similar instruments issued to support performance obligations and trade-related letters 

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of credit (other than obligations in respect of other Indebtedness) in the ordinary course of business;

(y)

Indebtedness of the U.S. Borrower in respect of letters of credit issued by the U.S. Borrower for its own account or for the account of any other Group Member; provided that neither the Administrative Agent nor any Lender shall have any direct or indirect liability with respect to any such letter of credit, whether as a guarantor, confirming bank or otherwise;

(z)

Indebtedness, if any, in respect of the CKI Obligations and the Itochu Obligations and any Permitted Refinancing of the Itochu Obligations; 

(aa)

unsecured Indebtedness in respect of obligations of any Group Member to pay the deferred purchase price of goods or services or progress payments in connection with such goods and services; provided that such obligations are incurred in connection with open accounts extended by suppliers on customary trade terms (which require that all such payments be made within 60 days after the incurrence of the related obligations) in the ordinary course of business, and not in connection with the borrowing of money or any Currency Agreement, Interest Rate Agreement or Treasury Transaction;

(bb)

Indebtedness representing deferred compensation to employees of any Group Member incurred in the ordinary course of business; and

(cc)

all premium (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in paragraphs (a) through (bb) above. 

Section 6.02

Liens

.  Create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind (including any document or instrument in respect of goods or accounts receivable) of any Loan Party or any of its Restricted Subsidiaries, whether now owned or hereafter acquired or licensed, or any income, profits or royalties therefrom, except:

(a)

Liens granted pursuant to any Loan Document in favor of the Collateral Agent for the benefit of Secured Parties;

(b)

Liens for Taxes to the extent obligations with respect to such Taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and so long as adequate reserves or other appropriate provisions as shall be required in conformity with GAAP shall have been made therefore and Liens for Taxes not yet due and payable;

(c)

statutory Liens of landlords, banks (and rights of set-off), of carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens imposed by law (other than any such Lien imposed pursuant to Section 430(k) of the Internal Revenue Code or Section 303(k) of ERISA or a violation of Section 436 of the Internal Revenue Code), in each case incurred in the ordinary course of business (i) for amounts not yet overdue or (ii) for amounts that are overdue and that (in the case of any such amounts overdue for a period in excess of ten (10) days) are being contested in good faith by appropriate proceedings, so long as 

145

such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts;

(d)

Liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money or other Indebtedness), so long as no foreclosure, sale or similar proceedings have been commenced with respect to any portion of the Collateral on account thereof;

(e)

easements, rights-of-way, restrictions, encroachments, and other defects or irregularities in title, in each case which do not and will not interfere in any material respect with the ordinary conduct of the business of any Group Member;

(f)

any interest or title of a lessor or sublessor under any lease of real estate permitted hereunder and covering only the assets so leased;

(g)

Liens solely on any cash earnest money deposits made by any Group Member in connection with any letter of intent or purchase agreement permitted hereunder;

(h)

Liens evidenced by the filing of precautionary UCC financing statements relating solely to operating leases of personal property entered into in the ordinary course of business;

(i)

Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

(j)

any zoning or similar law or right reserved to or vested in any governmental office or agency to control or regulate the use of any real property;

(k)

any reservations, limitations, exceptions, provisos and conditions, if any, expressed in any original grants from the Crown, including, without limitation, the reservation of any mines and minerals in the Crown or in any other Person; 

(l)

licenses or sublicenses (including licenses or sublicenses of Patents, Copyrights, Trademarks and other Intellectual Property rights), leases or subleases granted by any Group Member in the ordinary course of business which does not materially interfere with the business of the Group Members taken as a whole;

(m)

Liens in favor of vendors of goods arising as a matter of law securing the payment of the purchase price therefor so long as such Liens attach only to the purchased goods or, where customary in the local market, Liens arising from a contract securing (i) the payment of the purchase price of goods, (ii) the performance of any work or (iii) the fulfillment of any obligation arising out of the non-compliance with such contract;

(n)

Liens existing on the Closing Date which are described in Schedule 6.02 and replacements, renewals or extensions of such Liens; provided, that such Lien shall not apply 

146

to additional property other than (A) after-acquired property that is related to the property covered by such Lien and (B) proceeds and products thereof and such Lien shall secure only those obligations it secures on the Closing Date and extensions, renewals and replacements thereof that, to the extent constituting Indebtedness, qualify as a Permitted Refinancing thereof; 

(o)

Liens arising under any retention of title, hire purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied to a Group Member in the ordinary course of trading and on the supplier’s standard or usual terms and arising as a result or omission by any Group Member, including, for the avoidance of doubt, verlängerte Eigentumsvorbehalte and erweiterte Eigentumsvorbehalte; 

(p)

Liens securing Indebtedness permitted pursuant to Section 6.01(k); provided, that any such Lien shall encumber only the property subject to the underlying lease, after-acquired property that is required to be pledged pursuant to such underlying lease on customary terms and proceeds and products thereof; 

(q)

Liens securing Indebtedness permitted by Section 6.01(l) and any extensions, renewals and replacements thereof that, to the extent constituting Indebtedness, qualify as a Permitted Refinancing thereof, provided, that any such Lien shall encumber only assets and property of the Person so acquired or only attach to those assets which secured such Indebtedness at the time such assets were acquired by the Group other than (A) after-acquired property that is directly related to the property secured by such Lien and (B) proceeds and products thereof; 

(r)

Liens arising from judgments in circumstances not constituting an Event of Default under Section 8.01(i); 

(s)

Liens on Securitization Assets or a Securitization Subsidiary’s other assets arising in connection with a Qualified Securitization Financing; 

(t)

Liens arising by virtue of any statutory, contractual or common law provision relating to banker’s liens, rights of set-off or similar rights (i) relating to the establishment of depository relations in the ordinary course of business with banks not given in connection with the issuance of Indebtedness and (ii) relating to pooled deposit or sweep accounts of any Group Member to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Group; 

(u)

any Lien created pursuant to the general conditions of a bank operating in The Netherlands based on the general conditions drawn up by the Netherlands Bankers' Association (Nederlandse Vereniging van Banken) and the Consumers Union (Consumentenbond) or pursuant to any other general conditions of, or any contractual arrangement with, any such bank to substantially the same effect;

(v)

Liens arising out of consignment or similar arrangements for the sale by any Group Member of goods through third parties in the ordinary course of business;

(w)

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

147

(x)

Liens granted pursuant to the CKI Security Agreement to secure the CKI Obligations, which are senior to the Lien in favor of the Collateral Agent pursuant to the terms of the CKI Intercreditor Agreement; 

(y)

Liens that are disclosed in (i) a Title Policy or (ii) any other title insurance policies delivered to the Collateral Agent in connection with mortgages on Material Real Estate Assets executed pursuant to Section 5.13 after the Closing Date  (unless the Lien described in this clause (ii) is otherwise prohibited under this Agreement and is capable of being discharged by a Loan Party in a commercially practicable manner) and any replacement, extension or renewal of any such Lien; provided, that such replacement, extension or renewal Lien shall not cover any property other than the property that was subject to such Lien prior to such replacement, extension or renewal; provided, further, that the Indebtedness and other obligations secured by such replacement, extension or renewal Lien are permitted by this Agreement;

(z)

Liens securing Attributable Indebtedness incurred under Section 6.01(k) pursuant to any Sale and Lease-Back permitted under Section 6.10; 

(aa)

Liens securing obligations in respect of letters of credit, bank guarantees, warehouse receipts or similar instruments issued to support performance obligations (other than Obligations in respect of Indebtedness) and trade-related letters of credit, in each case, outstanding on the Closing Date or issued thereafter in the ordinary course of business and covering the goods (or the documents of title in respect of such goods) financed by such letters of credit, banker’s acceptances or bank guarantees and the proceeds and products thereof;

(bb)

Liens securing Indebtedness permitted by Section 6.01(r); provided that any such Liens shall only attach to the assets of the entity incurring such Indebtedness;

(cc)

Liens in favor of the U.S. Borrower or any other Loan Party; provided that if any such Lien shall cover any Collateral, the holder of such Lien shall execute and deliver to the Administrative Agent a subordination agreement in form and substance reasonably satisfactory to the Administrative Agent; 

(dd)

(i) solely to the extent equal and ratable Liens are required pursuant to the terms of the 2023 Debentures Indenture, Liens securing the 2023 Debentures Obligations which Liens are granted pursuant to the Loan Documents, the CKI Security Agreement or any other security agreement the terms of which are no more favorable to the holders of the 2023 Debentures Obligations than the terms of the U.S. Pledge and Security Agreement and (ii) Liens securing any Permitted Refinancing of the 2023 Debentures Obligations, which Liens are granted pursuant to the Loan Documents, the CKI Security Agreement or any other security agreement the terms of which are no more favorable to the holders of the 2023 Debentures Obligations than the terms of the U.S. Pledge and Security Agreement; it being agreed that in the case of clauses (i) and (ii), with respect to such Loan Documents or other security agreements contemplated by such clauses entered into after the date hereof, the Administrative Agent and the Collateral Agent shall enter into intercreditor agreements as may be reasonably requested by the Borrower Representative and acceptable to the Administrative Agent and the Collateral Agent to give effect to the requirements of clause (i) or (ii) above, as applicable; and   

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(ee)

other Liens securing Indebtedness or other obligations in an aggregate amount not to exceed at any one time outstanding $150,000,000; provided that if such Liens secure Indebtedness and are on assets constituting Collateral, such Liens are subordinated to the Liens securing the Obligations pursuant to intercreditor agreement(s) reasonably satisfactory to the Administrative Agent. 

Section 6.03

Designation of Subsidiaries

.  Designate any Subsidiary as an Unrestricted Subsidiary or any Unrestricted Subsidiary as a Restricted Subsidiary, except that the U.S. Borrower may at any time designate any Subsidiary as an Unrestricted Subsidiary or any Unrestricted Subsidiary as a Restricted Subsidiary; provided that:

(a)

immediately after such designation, no Default or Event of Default shall have occurred and be continuing or shall be caused thereby and the Group shall be in compliance with the financial covenants set forth in Section 6.07(a) and (b) on a pro forma basis; 

(b)

with respect to any Subsidiary to be designated as an Unrestricted Subsidiary, such Subsidiary or any of its Subsidiaries does not own any Equity Interests or Indebtedness of or have any Investment in, or own or hold any Lien on any property of, any other Subsidiary of the U.S. Borrower which is not a Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary, 

(c)

such Subsidiary is not party to any agreement, contract, arrangement or understanding with any Borrower or any Restricted Subsidiary unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to such Borrower or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Borrowers; 

(d)

such Subsidiary is a Person with respect to which neither any Borrower nor any Restricted Subsidiaries has any direct or indirect obligation (1) to subscribe for additional Equity Interests or (2) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; 

(e)

such Subsidiary has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of any Borrower or any Restricted Subsidiaries;

(f)

neither any Borrower nor any Restricted Subsidiary will at any time (i) provide a guarantee of, or similar credit support to, any Indebtedness of such Subsidiary (including any undertaking, agreement or instrument evidencing such Indebtedness), (ii) be directly or indirectly liable for any Indebtedness of such Subsidiary or (iii) be directly or indirectly liable for any other Indebtedness which provides that the holder thereof may (upon notice, lapse of time or both) declare a default thereon (or cause the payment thereof to be accelerated or payable prior to its final scheduled maturity) upon the occurrence of a default with respect to any other Indebtedness that is Indebtedness of such Subsidiary (including any corresponding right to take enforcement action against such Subsidiary); 

(g)

no Restricted Subsidiary may be designated as an Unrestricted Subsidiary if it was previously designated as an Unrestricted Subsidiary; 

149

(h)

at no time shall any Subsidiary be designated as an Unrestricted Subsidiary or maintained as an Unrestricted Subsidiary more than ten (10) Business Days after the time of delivery of the quarterly financial statements pursuant to Section 5.01(a) if (x) the Consolidated Adjusted EBITDA attributable to such Subsidiary, calculated on an unconsolidated basis, exceeds 5.0% of Consolidated Adjusted EBITDA or (y) the total assets of such Subsidiary, determined in accordance with GAAP and calculated on an unconsolidated basis, exceeds 5.0% of Consolidated Total Assets; and

(i)

any designation of a Restricted Subsidiary to an Unrestricted Subsidiary shall be deemed an Investment under Section 6.06 in an amount equal to the fair market value of the Subsidiary so designated.

(j)

Any such designation shall be evidenced by providing notice to the Administrative Agent of the copy of the resolution of the U.S. Borrower's Board or Directors (or duly authorized committee thereof) giving effect to such designation and a certificate of an Authorized Officer certifying that such designation complies with the foregoing requirements.  Any designation of an Unrestricted Subsidiary as a Restricted Subsidiary solely as a result of the application of Section 6.03(h), for purposes of determining compliance with Article VI, shall be treated as a Permitted Acquisition (without any requirement to satisfy the definition thereof and without utilizing any portion of the amount specified in the proviso to Section 6.08(i)), and all Indebtedness, Liens, Investments and any consensual encumbrance or restriction of the type described in Section 6.05 of such Unrestricted Subsidiary shall be treated as Indebtedness, Liens, Investments and consensual encumbrances and restrictions of the type described in Section 6.05 of an entity acquired in a Permitted Acquisition. For the avoidance of doubt, such designation shall not reduce the Group’s ability to consummate Permitted Acquisitions. 

Section 6.04

Restricted Payments

.  Directly or indirectly declare, order, pay, make or set apart any sum for any Restricted Payment except that:

(a)

any Subsidiary of any Borrower may declare and pay dividends, repurchase its Equity Interests, or make other distributions to each direct owner of Equity Interests of such Subsidiary; provided that, in the case of a Subsidiary that is a not a Wholly-Owned Restricted Subsidiary, such dividends, repurchases or other distributions are made to all owners of such Subsidiary’s Equity Interests on a pro rata basis (or more favorable basis from the perspective of the Group Members) based on their relative ownership interests; 

(b)

the U.S. Borrower may make regularly scheduled payments of principal and interest in respect of the 2020 Notes and any Subordinated Indebtedness in accordance with the terms of and only to the extent required by the 2020 Notes Documents or the documentation governing such Subordinated Indebtedness, as applicable, and the 2020 Notes and any Subordinated Indebtedness may be refinanced pursuant to a Permitted Refinancing thereof; 

(c)

the U.S. Borrower may purchase, repurchase, retire, redeem or otherwise acquire its common stock or common stock options from present or former officers, directors or employees of the Group in connection with any management equity subscription agreement, any compensation, retirement, disability, severance or benefit plan or agreement, any employment agreement or any other similar plans or agreements, provided, that the aggregate amount of 

150

payments under this paragraph (net of any proceeds received by the U.S. Borrower subsequent to the Closing Date in connection with resales of any common stock or common stock options so purchased or acquired) shall not exceed $15,000,000 in any calendar year; 

(d)

so long as no Default or Event of Default shall have occurred and be continuing or shall be caused thereby, the U.S. Borrower may declare and pay cash dividends with respect to (i) its common stock in an annual amount not to exceed $0.20 per outstanding share of common stock and (ii) its Series A Preferred Stock in an annual amount of up to $0.20 per share of common stock that would be issuable upon conversion of any outstanding share of Series A Preferred Stock (subject, in the case of each of clause (i) and (ii), to adjustment for any stock split, reverse stock split, stock dividend or similar occurrence so that the aggregate amount of dividends payable after such transaction is the same as the amount payable immediately prior to such transaction); 

(e)

the U.S. Borrower may pay any dividend or distribution within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of this Agreement (including the other provisions of this Section 6.04); 

(f)

the U.S. Borrower may make Restricted Payments in respect of the 2020 Notes and Subordinated Indebtedness; provided that (i) the amount of such Restricted Payments pursuant to this clause (f) does not exceed (x) $50,000,0000 during the term of this Agreement (or, if the Incurrence Test is satisfied on a pro forma basis, 1.0% of Consolidated Total Assets, if greater) plus (y) if the Incurrence Test is satisfied on a pro forma basis, an amount equal to the Available Amount, (ii) such Restricted Payments are made from proceeds from the substantially concurrent issuance, sale or exchange by the U.S. Borrower of Equity Interests, or (iii) such Restricted Payment results from the conversion of all or any portion of the 2020 Notes or Subordinated Indebtedness, as applicable, to Equity Interests of the U.S. Borrower; 

(g)

so long as no Default or Event of Default shall have occurred and be continuing or shall be caused thereby, other Restricted Payments in an aggregate amount not to exceed (i) $100,000,000 (or, if the Incurrence Test is satisfied on a pro forma basis, 1.75% of Consolidated Total Assets, if greater) during the term of this Agreement plus (ii) if the Incurrence Test is satisfied on a pro forma basis, an amount equal to the Available Amount, provided that after giving effect to the consummation of such Restricted Payment and any financing thereof, the Group shall be in compliance with the financial covenants set forth in Sections 6.07(a) and (b); and

(h)

any Group Member may make Restricted Payments in respect of the Itochu Obligations; and

(i)

the U.S. Borrower may make repurchases of Equity Interests deemed to occur upon exercise of options, warrants, restricted stock units or similar rights if such Equity Interests represents all or a portion of the exercise price thereof or deemed to occur in connection with the satisfaction of any withholding tax obligation incurred relating to the vesting or exercise of such options, warrants, restricted stock units or similar rights. 

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Section 6.05

Restrictions on Subsidiary Distributions; No Further Negative Pledges

.  Except as arising under any Loan Document, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Restricted Subsidiary of any Borrower to (a) pay dividends or make any other distributions on any of such Subsidiary’s Equity Interests owned by such Borrower or any other Restricted Subsidiary of any Borrower, (b) repay or prepay any Indebtedness owed by such Restricted Subsidiary to any Borrower or any other Restricted Subsidiary of any Borrower, (c) make loans or advances to any Borrower or any other Restricted Subsidiary of any Borrower, (d) transfer, lease or license any of its property or assets to any Borrower or any other Restricted Subsidiary of any Borrower or (e) create or assume any Lien upon any of its properties or assets, whether now owned or hereafter acquired, to secure the Obligations, other than encumbrances and restrictions (i) in agreements evidencing Indebtedness permitted by Section 6.01 and agreements relating to Liens permitted by Section 6.02 that impose restrictions on the property subject to such Liens, (ii) by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses, joint venture agreements and agreements similar to any of the foregoing (provided that such restrictions are limited to the assets or property subject to such leases, licenses, joint venture or similar agreements), (iii) created by virtue of any sale, transfer, lease or other disposition of, or any agreement with respect thereto, any specific property, assets or Equity Interests permitted to be so transferred under this Agreement, (iv) contained in the 2023 Debentures Indenture, the CKI Documents, the Itochu Agreement, and any agreement related to the China JV Obligations, (v) with respect to any Restricted Subsidiary organized under the laws of Japan, imposed pursuant to an agreement restricting (A) the creation or assumption of any Lien upon such Restricted Subsidiary’s inventory and receivables or (B) the transfer of assets of any such Restricted Subsidiary, in each case in the ordinary course of business, (vi) existing under or by reason of applicable law, rule or regulation, (vii) on the use of cash or other deposits imposed by customers under contracts entered into in the ordinary course of business, (viii) in any agreement in effect at the time a Person becomes a Subsidiary of the U.S. Borrower, provided that the agreement in which such restrictions are contained was not entered into in contemplation of such Person becoming a Subsidiary of the U.S. Borrower, (ix) contained in agreements in effect on the Closing Date and described in Schedule 6.05 and (x) in any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (i) through (ix) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the U.S. Borrower, no more restrictive with respect to the restrictions referred to in clauses (a) through (e) above than prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

Section 6.06

Investments

.  Make or own any Investment in any Person, including any Joint Venture, except:

(a)

Investments in cash and Cash Equivalents and Investments that were Cash Equivalents when made;

(b)

Investments owned as of the Closing Date in any Restricted Subsidiary and Investments made after the Closing Date in any Loan Party;

152

(c)

deposits, prepayments, advances in the form of a prepayment of expenses and other credits to suppliers made in the ordinary course of business consistent with the past practices of the Group;

(d)

Investments to the extent that payment for such Investments is made with Equity Interests of the U.S. Borrower; 

(e)

Investments that are acquired by any Group Member as a result of a Permitted Acquisition; provided that such Investments existed at the time of the Permitted Acquisition and were not made in contemplation thereof; 

(f)

Consolidated Capital Expenditures with respect to the Loan Parties permitted by Section 6.07(c);

(g)

loans and advances to employees, consultants or directors (managing or otherwise) of the Group made in the ordinary course of business in an aggregate principal amount at any one time outstanding not to exceed $15,000,000;

(h)

Permitted Acquisitions permitted pursuant to Section 6.08;

(i)

Investments in existence on, or pursuant to legally binding written commitments in existence on, the Closing Date as described in Schedule 6.06 and, in each case, any extensions, modifications or renewals thereof so long as the amount of any Investment made pursuant to this clause (i) is not increased at any time above the amount of such Investment existing or committed, as applicable, on the Closing Date; 

(j)

Currency Agreements, Interest Rate Agreements and Treasury Transactions which constitute Investments; 

(k)

accounts, chattel paper and notes receivable arising from the sale or lease of goods or the performance of services in the ordinary course of business; 

(l)

Investments received in the ordinary course of business by any Group Member in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, suppliers and customers arising in the ordinary course of business;

(m)

so long as no Default or Event of Default shall have occurred and be continuing or shall be caused thereby, other Investments in an aggregate amount not to exceed at any one time outstanding (i) $135,000,000 (or, if the Incurrence Test is satisfied on a pro forma basis, 2.25% of Consolidated Total Assets, if greater), plus (ii) to the extent not included in the Available Amount, 100.0% of the aggregate cash dividends and distributions received by any Group Member from such Investments, plus (iii) if the Incurrence Test is satisfied on a pro forma basis, an amount equal to the Available Amount at such time;

(n)

Investments in the China JV in an aggregate amount not to exceed at any one time outstanding (i) $50,000,000, plus, (ii) to the extent not included in the Available 

153

Amount, 100.0% of the aggregate cash dividends and distributions received by any Group Member from the China JV;

(o)

Investments arising out of the receipt by any Group Member of noncash consideration for the sale of assets permitted under Section 6.08;

(p)

guaranties by any Group Member of operating leases (other than obligations with respect to Capital Leases) or of other obligations, that do not constitute Indebtedness, in each case entered into by the applicable Group Member in the ordinary course of business; 

(q)

guaranties permitted under Section 6.01 (except to the extent such guaranty is expressly subject to Section 6.06);

(r)

Investments made pursuant to the CKI Trust Agreement; and

(s)

Investments consisting of the redemption, purchase, repurchase or retirement of any Equity Interests permitted under Section 6.04.

Section 6.07

Financial Covenants

.  In the case of the U.S. Borrower:

(a)

Interest Coverage Ratio.  Permit the Interest Coverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending October 31, 2010, to be less than the correlative ratio indicated:   

		
	Fiscal Quarter

	Interest Coverage Ratio

	FQ3 2010

	3.00:1.00

	FQ4 2010

	3.00:1.00

	FQ1 2011

	3.00:1.00

	FQ2 2011

	3.00:1.00

	FQ3 2011

	3.00:1.00

	FQ4 2011

	3.00:1.00

	FQ1 2012

	3.50:1.00

	FQ2 2012

	3.50:1.00

	FQ3 2012

	3.50:1.00

	FQ4 2012

	3.50:1.00

	FQ1 2013

	3.75:1.00

	FQ2 2013

	3.75:1.00

	FQ3 2013

	3.75:1.00

	FQ4 2013

	3.75:1.00

	FQ1 2014

	4.00:1.00

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	FQ2 2014

	4.00:1.00

	FQ3 2014

	4.00:1.00

	FQ4 2014 

	4.00:1.00

	FQ1 2015 and thereafter

	4.50:1.00

(b)

Leverage Ratio.  Permit the Leverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending October 31, 2010, to exceed the correlative ratio indicated: 

		
	Fiscal Quarter

	Leverage Ratio

	FQ3 2010

	4.90:1.00

	FQ4 2010

	4.90:1.00

	FQ1 2011

	4.75:1.00

	FQ2 2011

	4.75:1.00

	FQ3 2011

	4.75:1.00

	FQ4 2011

	4.75:1.00

	FQ1 2012

	4.00:1.00

	FQ2 2012

	4.00:1.00

	FQ3 2012

	4.00:1.00

	FQ4 2012

	4.00:1.00

	FQ1 2013 

	3.50:1.00

	FQ2 2013

	3.50:1.00

	FQ3 2013

	3.50:1.00

	FQ4 2013 

	3.50:1.00

	FQ1 2014

and thereafter

	3.00:1.00

(c)

Maximum Consolidated Capital Expenditures.  

Make or incur Consolidated Capital Expenditures, in any Fiscal Year indicated below, in an aggregate amount for the Group in excess of the corresponding amount set forth below opposite such Fiscal Year (the “Permitted Capital Expenditure Amount”); provided, that such amount for any Fiscal Year shall be increased by (i) an amount equal to the excess, if any, of such amount for the 

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immediately preceding Fiscal Year (with the amount of any rollover from the prior Fiscal Year being deemed to be used first) over the actual amount of Consolidated Capital Expenditures for such previous Fiscal Year and (ii) to the extent that a Permitted Acquisition is consummated during or prior to such Fiscal Year (but after the Closing Date), an amount equal to 5% of the Acquisition Consideration paid with respect to such Permitted Acquisition (the “Acquired Permitted CapEx Amount”) (provided, however, that with respect to the Fiscal Year during which any such Permitted Acquisition occurs, the amount of additional Consolidated Capital Expenditures permitted as a result of this clause (ii) shall be an amount equal to the product of (x) the Acquired Permitted CapEx Amount and (y) a fraction, the numerator of which is the number of days remaining in such Fiscal Year after the date such Permitted Acquisition is consummated and the denominator of which is the actual number of days in such Fiscal Year): 

		
	Fiscal Year

	Consolidated Capital Expenditures

	2010

	$215,000,000

	2011

	$220,000,000

	2012

	$210,000,000

	2013

	$240,000,000

	2014

	$250,000,000

	2015

	$270,000,000

	2016

	$280,000,000

Notwithstanding the foregoing, for purposes of determining compliance with this Section 6.07(c) for any given Fiscal Year, the actual amount of Consolidated Capital Expenditures that are made or incurred in such Fiscal Year and that are denominated in any currency other than Dollars will be converted into Dollars based on the relevant currency exchange rate in effect on the Closing Date.

Section 6.08

Fundamental Changes; Disposition of Assets; Acquisitions

.  Enter into any transaction of merger or consolidation, or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution) or convey, sell, lease or license, exchange, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any part of its business, assets or property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, whether now owned or hereafter acquired, leased or licensed, or acquire by purchase or otherwise (other than purchases or other acquisitions of inventory, materials and equipment and Consolidated Capital Expenditures in the ordinary course of business) all or substantially all of the assets of, all of the Equity Interests of, or a business line or unit or a division of, any Person, except:

(a)

(i) any Group Member may be merged or consolidated with or into any other Group Member, or be liquidated, wound up or dissolved, or all or any part of its business, assets or property may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction or a series of transactions, to any other Group Member; provided, that (x) in the case 

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of a merger or consolidation of a Group Member that is not a Loan Party with or into a Borrower or Guarantor, such Borrower or such Guarantor, as applicable, shall be the continuing or surviving Person, (y) in the case of a merger or consolidation of a Guarantor with or into another Guarantor, a Guarantor shall be the continuing or surviving Person and (z) in the case of a merger or consolidation of a Guarantor with or into a Borrower, such Borrower shall be the continuing or surviving Person, and (ii) any Restricted Subsidiary may merge with any other person in order to effect an Investment permitted pursuant to Section 6.06 so long as the continuing or surviving person shall be a Restricted Subsidiary, which shall be a Loan Party if the merging Restricted Subsidiary was a Loan Party and which together with each of its Restricted Subsidiaries shall have complied with the requirements of Section 5.12, 5.13 and 5.14, as applicable and if such transaction involves the U.S. Borrower, the U.S. Borrower shall be the continuing or surviving Person;

(b)

any Group Member (other than the U.S. Borrower in the case of a disposition of all of its assets) may dispose of any or all of its assets (upon voluntary liquidation or otherwise) to a Borrower or any other Loan Party, and any Group Member that is not a Loan Party may dispose of any or all of its assets (upon voluntary liquidation or otherwise) to another Group Member that is not a Loan Party;

(c)

sales or other dispositions of assets that do not constitute Asset Sales; 

(d)

(i) Asset Sales, the proceeds of which (valued at the principal amount thereof in the case of non-cash proceeds consisting of notes or other debt Securities and valued at fair market value in the case of other non-cash proceeds) when aggregated with the proceeds of all other Asset Sales made pursuant to this clause (d)(i) in any Fiscal Year, are less than (x) 2.0% of Consolidated Total Assets plus (y) an amount equal to any unutilized portion of the amount permitted under subclause (x) for any preceding Fiscal Year; provided that in no event shall the proceeds of any Asset Sale, when aggregated with the proceeds of all other Asset Sales made pursuant to this clause (d)(i) in any Fiscal Year, exceed 5.0% of Consolidated Total Assets; and (ii) the Asset Sale described on Schedule 6.08(d); provided that, in the case of each of clause (i) and (ii), (1) the consideration received for such assets shall be in an amount at least equal to the fair market value thereof (determined in good faith by the Board of Directors of the U.S. Borrower (or a duly authorized committee thereof)), (2) except in the case of any Asset Sale to any Restricted Subsidiary, no less than 75.0% thereof shall be paid in cash or Cash Equivalents, and (3) except in the case of any Asset Sale to any Restricted Subsidiary, the Net Cash Proceeds thereof shall be applied as required by Section 2.14(a); 

(e)

any Group Member may sell or discount, in each case without recourse and in the ordinary course of business, accounts receivable arising in the ordinary course of business (x) which are overdue, or (y) which such Group Member may reasonably determine are difficult to collect but only in connection with the compromise or collection thereof consistent with prudent business practice (and not as part of any bulk sale or financing of receivables);

(f)

any Group Member may enter into licenses or sublicenses of Software, 

Trademarks and other Intellectual Property and general intangibles in the ordinary course of business and which do not materially interfere with the business of the Group Members taken as a whole;

157

(g)

(i) any disposition of Securitization Assets to a Securitization Subsidiary in connection with a Qualified Securitization Financing and (ii) any disposition of accounts receivable in connection with receivables factoring arrangements in the ordinary course of business;

(h)

dispositions of cash and Cash Equivalents;

(i)

Permitted Acquisitions; provided, that in respect of acquisitions of Persons which do not become Loan Parties or of assets which are not acquired by Loan Parties, the consideration for such Persons or assets shall not exceed an aggregate amount of 5.0% of Consolidated Total Assets over the term of this Agreement; and

(j)

(i) Permitted Sale and Lease-Backs and (ii) Sale and Lease-Backs otherwise permitted by Section 6.10(ii), provided that the Net Cash Proceeds of Sale and Lease-Backs (other than Permitted Sale and Lease-Backs) shall be applied as required by Section 2.14(a); provided, further, that, the case of clause (ii), the net proceeds received by the applicable Group Member are at least equal to the fair market value of such asset or Investment (as determined by the U.S. Borrower’s Board of Directors (or a duly authorized committee thereof));

(k)

sales or other dispositions of the Equity Interests of, or other ownership interests in or assets or property, including Indebtedness, or other securities of, any Joint Venture (including the China JV); provided that, in each case, the net proceeds received by the applicable Group Member are at least equal to the fair market value of such asset or Investment (as determined by the U.S. Borrower’s Board of Directors (or a duly authorized committee thereof);

(l)

any lease, assignment or sublease in the ordinary course of business which does not materially interfere with the business of the Group Members taken as a whole; and

(m)

Investments made in accordance with Section 6.06 and Restricted Payments made in accordance with Section 6.04. 

Section 6.09

Disposal of Subsidiary Interests

.  Except for any sale of all of its interests in the Equity Interests of any of its Subsidiaries in compliance with the provisions of Section 6.08, or any transfer to a Group Member otherwise permitted under Section 6.08, (a) sell, assign, or otherwise dispose of any Equity Interests of any of its Restricted Subsidiaries, except to qualify directors if required by applicable law; or (b) permit any of its Restricted Subsidiaries to sell, assign, or otherwise dispose of any Equity Interests of any of its Restricted Subsidiaries, except to qualify directors if required by applicable law.

Section 6.10

Sales and Lease-Backs

.  Become or remain liable as lessee or as a guarantor or other surety with respect to any lease of any property (whether real, personal or mixed), whether now owned or hereafter acquired, which such Loan Party (a) has sold or transferred or is to sell or to transfer to any other Person (other than to any Group Member), (b) intends to use for substantially the same purpose as any other property which has been or is to be sold or transferred by such Loan Party to any Person (other than to any Group Member) in connection with such lease or (c) is to be sold or transferred by such Loan Party to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of such Loan Party (a “Sale and Lease-Back”), 

158

excluding (i) any such arrangement to the extent that any Attributable Indebtedness incurred in connection therewith does not exceed $35,000,000 (such transaction, a “Permitted Sale and Lease-Back”) and (ii) any other Sale and Lease-Back so long as such Group Member would be entitled to incur the Attributable Indebtedness with respect to such Sale and Lease-Back under Section 6.01, create a Lien on the property securing such Attributable Indebtedness under Section 6.02 and the proceeds of such transaction are applied in accordance with Section 2.14(a).

Section 6.11

Transactions with Shareholders and Affiliates

. Enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property, the rendering of any service or the payment of any management, advisory or similar fees) with any Affiliate of any Group Member on terms that are less favorable to such Group Member than those that might be obtained in a comparable arm’s length transaction at the time from a Person who is not such a holder or Affiliate; provided, that the foregoing restriction shall not apply to (a) any transaction between or among any Group Members; (b) reasonable and customary fees and indemnities paid to directors, officers and employees of any Group Member and compensation arrangements for directors, officers and other employees of any Group Member entered into in the ordinary course of business; (c) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans in the ordinary course of business; (d) (x) any employment agreements entered into by any Group Member in the ordinary course of business and any transaction pursuant thereto and (y) any employee compensation, benefit plan or arrangement, any health, disability or similar insurance plan which covers employees, and any reasonable employment contract and transaction pursuant thereto; (e) any Restricted Payment permitted by Section 6.04; (f) any Investment permitted under Section 6.06; (g) any transactions pursuant to agreements in existence on the Closing Date and set forth  in Schedule 6.11 and any amendment thereto to the extent such amendment is not adverse to the Lenders in any material respect, (h) any transactions between any Group Member and the China JV or any of its Affiliates; (i) any transaction between any Group Member and Apax Partners L.P. or any of its Affiliates; (j) any transaction with a Joint Venture for the purchase or sale of goods, equipment and services entered into in the ordinary course of business and in a manner consistent with past practice, (k) any transaction entered into by a Person prior to the time such Person becomes a Group Member or is merged or consolidated into a Group Member (provided such transaction is not entered into in contemplation of such event); (l) any transactions between any Group Member and Pepe Jeans SL (or any successor or replacement sales and collection agent and franchisee in Spain and Portugal); (m) any transaction between a Group Member and a Securitization Subsidiary pursuant to a Qualified Securitization Financing; (n) any satisfaction or discharge of the Itochu Obligations; (o) any transactions between any Group Member and ITOCHU Corporation or any Joint Venture of any Group Member, in each case in the ordinary course of business; (p) any transactions between any Group Member and the CKI Trust pursuant to the CKI Trust Agreement; and (q) cost sharing arrangements deemed appropriate by the U.S. Borrower to allocate properly the costs of future maintenance and development of Intellectual Property of any Group Member.

Section 6.12

Conduct of Business

.  From and after the Closing Date, engage in any business (either directly or through a Restricted Subsidiary) other than the businesses engaged in by the Group Members on the Closing Date or any extension of such 

159

businesses consistent with industry developments and any business ancillary, complementary or related thereto.

Section 6.13

Amendments or Waivers of Organizational Documents and Certain Other Documents

.  Agree to (a) any material amendment, restatement, supplement or other modification to or waiver of any of its Organizational Documents which would be materially adverse to the interests of the Lenders, taken as a whole, (b) any amendment, restatement, supplement or other modification to or waiver (other than any such amendment, restatement, supplement or other modification or waiver as may be required pursuant to the CK Letter Agreement as in effect on the Closing Date) (i) of Section 4.17(c)(iv) or Section 4.18 of the CKI Security Agreement (or any definition in the CKI Security Agreement that would have the effect of amending, supplementing or otherwise modifying such Sections or the effect or existence of a CKI Blockage Event), in each case that would be materially adverse to the interests of the U.S. Borrower and its Subsidiaries, taken as a whole, or (ii) of any provision of any CKI Document that has the effect of (w) requiring any Person to become a CK Grantor (as defined in the CKI Intercreditor Agreement as of the date hereof) that would not be required to become a CK Grantor in accordance with the terms of the First Lien Collateral Documents (as defined in the CKI Intercreditor Agreement as of the date hereof), (x) adding additional CK Collateral (as defined in the CKI Intercreditor Agreement as of the date hereof) that would not be required to become CK Collateral (as defined in the CKI Intercreditor Agreement as of the date hereof) pursuant to the terms of the First Lien Collateral Documents (as defined in the CKI Intercreditor Agreement as of the date hereof), (y) increasing the amount of, or adjusting the calculation of, the Klein Obligations (as defined in the CKI Intercreditor Agreement as of the date hereof) in any manner unless such adjustment could only decrease the amount of the Klein Obligations as of such date (it being understood that this Section 6.13 shall not prohibit the making of any one-time consent payment by any Group Member in respect of any amendment, restatement, supplement or other modification or waiver to any CKI Documents) or (z) decreasing the amount of the Maximum Second Lien Amount (as defined in the CKI Intercreditor Agreement as of the date hereof), or (c) any amendment, restatement, supplement, waiver or other modification of the terms of the 2020 Notes which would be materially adverse to the Lenders.

Section 6.14

Fiscal Year

.  Change its Fiscal Year-end from the Sunday closest to February 1 of each calendar year or change its method of determining Fiscal Quarters; provided that the Loan Parties may, at any time prior to the end of FQ4 2011, change their Fiscal Year-end upon prior notice to the Administrative Agent; provided, further, that (i) the U.S. Borrower will provide to the Administrative Agent such audited financials as are required to be submitted to the SEC and at the times required thereby, (ii) such change in Fiscal Year end shall not relieve the U.S. Borrower from its obligation to provide to the Lenders comparative figures to the corresponding periods from the prior Fiscal Year or to the Financial Plan previously provided to the Lenders for such Fiscal Year and (iii) notwithstanding any change in Fiscal Year end, the U.S. Borrower will make a payment on or prior to April 30, 2011 pursuant to Section 2.14(d), calculated as if no change in Fiscal Year had occurred, and, without duplication of any amounts already paid with respect to such period, an additional payment pursuant to Section 2.14(d) payable at the time the audited financial statements are delivered for the transition period as set forth in clause (i) of this Section (it being understood and agreed that subsequent to such payment (or in the event that no such financial statements are required to be delivered), further 

160

payments pursuant to Section 2.14(d) will occur with the delivery of annual financial statements).

Section 6.15

Centre of Main Interests and Establishments

.  No Loan Party whose jurisdiction is in a member state of the European Union shall deliberately change its “centre of main interest” (as that term is used in the Regulation) in a manner that would reasonably be expected to result in a Material Adverse Effect.  

Section 6.16

Limitation in Relation to German Loan Parties

.  

(a)

The provisions of Sections 6.02, 6.03, 6.04, 6.05, 6.08, 6.11, 6.12 and 6.13 (the “Relevant Restrictive Covenants”) shall not apply to any German Loan Party or any of its Subsidiaries from time to time which is incorporated in Germany (a “German Group Member”).

(b)

With respect to any transactions not permitted under the Relevant Restrictive Covenants (ignoring for this purpose clause (a) above), each German Loan Party shall give the Administrative Agent notice in writing and in good time of the intention of it or of any German Group Member to carry out any of the acts or take any of the steps referred to in the Relevant Restrictive Covenant, explaining if and how such steps might affect the financial situation of the company or the Group, or the Lenders’ risk and security position. Any such notification shall not be made later than twenty (20) Business Days before such measure shall be implemented, or in case of urgent matters requiring an implementation on shorter notice immediately after the need for the relevant measure arises, provided that, the reasons for such urgent implementation are described in the notification.

(c)

The Administrative Agent shall be entitled within ten (10) Business Days of receipt of the relevant German Loan Party’s notice under clause (b) above to request the relevant German Loan Party to supply to the Administrative Agent in sufficient copies for the Lenders any relevant information in connection with the proposed action or steps referred to in such notice.

(d)

The Administrative Agent shall notify the relevant German Loan Party, within ten (10) Business Days of receipt of the relevant German Loan Party’s notice under clause (b) above or, if additional information has been requested by the Administrative Agent under clause (c) above, within ten (10) Business Days of receipt of such information, whether the proposed action or steps under clause (b) above is, or is in the reasonable opinion of the Administrative Agent (acting on the instructions of the Required Lenders), likely to have a Material Adverse Effect or a material adverse consequences for the Lenders’ risk or security position.

(e)

If the proposed action or steps under clause (b) above is considered by the Administrative Agent (acting reasonably and in accordance with clause (d) above) to have a Material Adverse Effect or a material adverse consequences for the Lenders’ risk or security position and the relevant German Loan Party or German Group Member nevertheless takes such action or steps, this shall constitute an Event of Default pursuant 

161

to clause (m) of Section 8.01 and the Administrative Agent shall consequently be entitled to take (and, if so instructed by the Required Lenders, shall take) any of the steps set out in Section 8.01.

Section 6.17

UK Defined Benefit Pension Plan

.  Within the meaning of the UK Pensions Act 2004: (a) Become the employer in relation to a UK defined benefit pension plan irrespective of the funded status of such pension plan, or (b) become connected or associated with the employer in relation to a UK defined benefit pension plan if, at the time of connection or association, the liabilities of such pension plan, as calculated using the actuarial methods and assumptions used for funding as set forth on the most recent actuarial report for such pension plan, exceed the fair market value of the assets of such plan by more than $50 million.

Section 6.18

Financial Assistance

.  Each Loan Party shall comply, where applicable, in all respects with any financial assistance legislation in any Relevant Jurisdiction, including as related to execution of the Security Documents and payment of amounts due under this Agreement.  

ARTICLE VII.

GUARANTY

Section 7.01

Guaranty of the Obligations

.  

(a)

Subject to the provisions of Section 7.02, each U.S. Guarantor jointly and severally hereby irrevocably and unconditionally guaranties to the Administrative Agent for the ratable benefit of the Secured Parties the due and punctual payment in full of all Obligations of the Borrowers (or, in the case of the U.S. Borrower, all Obligations of the Foreign Borrower) when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a) or any comparable provision of any other Debtor Relief Law) (the “U.S. Guaranteed Obligations”). 

(b)

Subject to the provisions of Sections 7.02, 7.13 and 7.14, each Foreign Guarantor, jointly and severally hereby irrevocably and unconditionally guaranties to the Administrative Agent for the ratable benefit of the Secured Parties the due and punctual payment in full of all Obligations of the Foreign Borrower on demand when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)) (the “Foreign Guaranteed Obligations” and, together with the U.S. Guaranteed Obligations, the “Guaranteed Obligations”).

Section 7.02

Limitation on Liability; Contribution by Guarantors

.  

(a)

Notwithstanding the foregoing, each Guarantor, and by acceptance of the benefits hereof, the Administrative Agent and each other Secured Party hereby confirms that it is the intention of all such Persons that each Guaranty and the Guaranteed Obligations of each Guarantor hereunder not constitute a fraudulent conveyance for purposes of the Bankruptcy 

162

Code or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or state law to the extent applicable to each Guaranty and the Guaranteed Obligations of each Guarantor hereunder.  To effectuate the foregoing intention, the Administrative Agent and the Secured Parties hereby irrevocably agree that the Guaranteed Obligations of each Guarantor hereunder at any time shall be limited to the maximum amount as will result in the Guaranteed Obligations of such Guarantor hereunder not constituting a fraudulent transfer or conveyance.

(b)

The U.S. Guarantors (the “U.S. Contributing Guarantors”) and Foreign Guarantors (the “Foreign Contributing Guarantors,” and collectively with the U.S. Contributing Guarantors, the “Contributing Guarantors”) desire to allocate among themselves, in a fair and equitable manner, the U.S. Guaranteed Obligations and Foreign Guaranteed Obligations, respectively, arising under this Guaranty; provided that nothing in this Section 7.02 shall operate or be construed to allocate to any Foreign Contributing Guarantor any Obligation of the U.S. Borrower or to permit any payment by a Foreign Guarantor to reduce any Obligations of the U.S. Borrower.  Accordingly, in the event any payment or distribution is made on any date by a Guarantor (a “Funding Guarantor”) under this Guaranty such that its Aggregate Payments exceed its Fair Share as of such date, such Funding Guarantor shall be entitled to a contribution from each of the other applicable Contributing Guarantors in an amount sufficient to cause each such Contributing Guarantor’s Aggregate Payments to equal its Fair Share as of such date.  “Fair Share” means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the Fair Share Contribution Amount with respect to such Contributing Guarantor to (ii) the aggregate of the Fair Share Contribution Amounts with respect to all Contributing Guarantors multiplied by (b) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under this Guaranty in respect of the U.S. Guaranteed Obligations or Foreign Guaranteed Obligations, as applicable.  “Fair Share Contribution Amount” means, with respect to a Contributing Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Contributing Guarantor under this Guaranty that would not render its obligations hereunder or thereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any comparable applicable provisions of any Debtor Relief Law; provided, that solely for purposes of calculating the Fair Share Contribution Amount with respect to any Contributing Guarantor for purposes of this Section 7.02, any assets or liabilities of such Contributing Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder shall not be considered as assets or liabilities of such Contributing Guarantor. “Aggregate Payments” means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (1) the aggregate amount of all payments and distributions made on or before such date by such Contributing Guarantor in respect of this Guaranty (including in respect of this Section 7.02), minus (2) the aggregate amount of all payments received on or before such date by such Contributing Guarantor from the other applicable Contributing Guarantors as contributions under this Section 7.02.  The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor.  The allocation among the applicable Contributing Guarantors of their obligations as set forth in this Section 7.02 shall not be construed in any way to limit the liability of any Contributing 

163

Guarantor hereunder.  Each Guarantor is a third party beneficiary to the contribution agreement set forth in this Section 7.02.

Section 7.03

Payment by Guarantors

.  

(a)

Subject to Sections 7.02, 7.13 and 7.14, the U.S. Guarantors hereby jointly and severally agree, in furtherance of the foregoing and not in limitation of any other right which any Secured Party may have at law or in equity against any U.S. Guarantor by virtue hereof, that upon the failure of any Borrower to pay any of the U.S. Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a) or any comparable provision of any other Debtor Relief Law), the U.S. Guarantors shall upon demand pay, or cause to be paid, in cash, to the Administrative Agent for the ratable benefit of the Secured Parties, an amount equal to the sum of the unpaid principal amount of all U.S. Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such U.S. Guaranteed Obligations (including interest which, but for any Borrower’s becoming the subject of a case under the Bankruptcy Code or any other Debtor Relief Law, would have accrued on such U.S. Guaranteed Obligations, whether or not a claim is allowed against such Borrower for such interest in the related bankruptcy case or analogous proceeding under any Debtor Relief Law) and all other U.S. Guaranteed Obligations then owed to the Secured Parties as aforesaid.

(b)

Subject to Sections 7.02, 7.13 and 7.14, the Foreign Guarantors hereby jointly and severally agree, in furtherance of the foregoing and not in limitation of any other right which any Secured Party may have at law or in equity against any Foreign Guarantor by virtue hereof, that upon the failure of the Foreign Borrower to pay any of the Foreign Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a) or any comparable provision of any other Debtor Relief Law), the Foreign Guarantors shall upon demand pay, or cause to be paid, in cash, to the Administrative Agent for the ratable benefit of the Secured Parties, an amount equal to the sum of the unpaid principal amount of all Foreign Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such Foreign Guaranteed Obligations (including interest which, but for the Foreign Borrower’s becoming the subject of a case under the Bankruptcy Code or any other Debtor Relief Law, would have accrued on such Foreign Guaranteed Obligations, whether or not a claim is allowed against the Foreign Borrower for such interest in the related bankruptcy case or analogous proceeding under any Debtor Relief Law) and all other Foreign Guaranteed Obligations then owed to the Secured Parties as aforesaid.

Section 7.04

Liability of Guarantors Absolute

.  Each Guarantor agrees that, to the maximum extent permitted by applicable law, its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a Guarantor or surety other than Payment in Full of the applicable Guaranteed Obligations.  In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees, to the maximum extent permitted by applicable law, as follows:

164

(a)

this Guaranty is a guaranty of payment when due and not of collectability.  This Guaranty is a primary obligation of each Guarantor and not merely a contract of surety;

(b)

the Administrative Agent may enforce this Guaranty upon the occurrence of an Event of Default notwithstanding the existence of any dispute between any Borrower and any Secured Party with respect to the existence of such Event of Default;

(c)

the obligations of each Guarantor hereunder are independent of the obligations of each Borrower and the obligations of any other Guarantor (including any other Guarantor) of the obligations of each Borrower, and a separate action or actions may be brought and prosecuted against such Guarantor whether or not any action is brought against such Borrower or any of such other Guarantors and whether or not such Borrower is joined in any such action or actions;

(d)

payment by any Guarantor of a portion, but not all, of the applicable Guaranteed Obligations shall in no way limit, affect, modify or abridge any Guarantor’s liability for any portion of the applicable Guaranteed Obligations which has not been paid.  Without limiting the generality of the foregoing, if the Administrative Agent is awarded a judgment in any suit brought to enforce any Guarantor’s covenant to pay a portion of the applicable Guaranteed Obligations, such judgment shall not be deemed to release such Guarantor from its covenant to pay the portion of the applicable Guaranteed Obligations that is not the subject of such suit, and such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect, modify or abridge any other Guarantor’s liability hereunder in respect of the applicable Guaranteed Obligations;

(e)

any Secured Party, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability hereof or giving rise to any reduction, limitation, impairment, discharge or termination of any Guarantor’s liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guaranteed Obligations; (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guaranteed Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guaranteed Obligations and take and hold security for the payment hereof or the Guaranteed Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation of any Person (including any other Guarantor) with respect to the Guaranteed Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of such Secured Party in respect hereof or the Guaranteed Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that such Secured Party may have against any such security, in each case as such Secured Party in its discretion may determine consistent herewith, the applicable Hedge Agreement, Cash Management Agreement or Treasury Transaction and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor 

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against any Borrower or any security for the Guaranteed Obligations; and (vi) exercise any other rights available to it under the Loan Documents or any Hedge Agreements, Cash Management Agreements or Treasury Transactions; and

(f)

this Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than Payment in Full of the applicable Guaranteed Obligations), including the occurrence of any of the following, whether or not any Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Loan Documents, any Hedge Agreements, any Cash Management Agreements or any Treasury Transactions, at law, in equity or otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guaranteed Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) hereof, any of the other Loan Documents, any of the Hedge Agreements, Cash Management Agreements or Treasury Transactions or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guaranteed Obligations, in each case whether or not in accordance with the terms hereof or such Loan Document, such Hedge Agreement, such Cash Management Agreement, such Treasury Transaction or any agreement relating to such other guaranty or security; (iii) the Guaranteed Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect (other than with respect to defense of payment or performance in full); (iv) the application of payments received from any source (other than payments received pursuant to the other Loan Documents, any of the Hedge Agreements, any of the Cash Management Agreements, any Treasury Transaction or from the proceeds of any security for the Guaranteed Obligations, except to the extent such security also serves as Collateral for Indebtedness other than the Guaranteed Obligations) to the payment of Indebtedness other than the Guaranteed Obligations, even though any Secured Party might have elected to apply such payment to any part or all of the Guaranteed Obligations; (v) any Secured Party’s consent to the change, reorganization or termination of the corporate structure or existence of any Group Member and to any corresponding restructuring of the Guaranteed Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guaranteed Obligations; (vii) any defenses (other than defense of payment or performance in full), set-offs or counterclaims which any Borrower may allege or assert against any Secured Party in respect of the Guaranteed Obligations, including failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or omission, or delay to do any other act, which may or might in any manner or to any extent vary the risk of any Guarantor as an obligor in respect of the Guaranteed Obligations.

Section 7.05

Waivers by Guarantors

.  Each Guarantor hereby waives, for the benefit of the Secured Parties: (a) any right to require any Secured Party, as a condition of payment or performance by such Guarantor, to (i) proceed against any Borrower, any other Guarantor (including any other Guarantor) of the applicable Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security held from any Borrower, any such other 

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Guarantor or any other Person, (iii) proceed against or have resort to any balance of any deposit account or credit on the books of any Secured Party in favor of any Borrower or any other Person, or (iv) pursue any other remedy in the power of any Secured Party whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of any Borrower or any other Guarantor including any defense based on or arising out of the lack of validity or the unenforceability of the Guaranteed Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of any Borrower or any other Guarantor from any cause other than Payment in Full of the applicable Guaranteed Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Secured Party’s errors or omissions in the administration of the Guaranteed Obligations, except behavior which amounts to bad faith; (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal or equitable discharge of such Guarantor’s obligations hereunder, (ii) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any Secured Party protect, secure, perfect or insure any security interest or Lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of default hereunder, or under any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto, notices of any extension of credit to any Borrower and notices of any of the matters referred to in Section 7.04 and any right to consent to any thereof; and (g) any defenses (other than defense of payment or performance in full) or benefits that may be derived from or afforded by law which limit the liability of or exonerate Guarantors or sureties, or which may conflict with the terms hereof.

Section 7.06

Guarantors’ Rights of Subrogation, Contribution, Etc.

  Until the applicable Guaranteed Obligations shall have been Paid in Full, each Guarantor hereby waives any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against any applicable Borrower or any other Guarantor or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and including (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against any applicable Borrower with respect to the Guaranteed Obligations, (b) any right to enforce, or to participate in, any claim, right or remedy that any Secured Party now has or may hereafter have against any Borrower, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Secured Party.  In addition, until the applicable Guaranteed Obligations shall have been Paid in Full, each Guarantor shall withhold exercise of any right of contribution such Guarantor may have against any other Guarantor (including any other Guarantor) of the applicable Guaranteed Obligations, including any such right of contribution as contemplated by Section 7.02.  Each Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor may have against any Borrower or against any collateral or 

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security, and any rights of contribution such Guarantor may have against any such other Guarantor, shall be junior and subordinate to any rights any Secured Party may have against any Borrower, to all right, title and interest any Secured Party may have in any such collateral or security, and to any right any Secured Party may have against such other Guarantor.  If any amount shall be paid to any Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all applicable Guaranteed Obligations shall not have been finally and Paid in Full, such amount shall be held in trust for the Administrative Agent on behalf of the Secured Parties and shall forthwith be paid over to the Administrative Agent for the benefit of the Secured Parties to be credited and applied against the applicable Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof.

Section 7.07

Subordination of Other Obligations

(a)

Each U.S. Guarantor hereby subordinates any and all debts, liabilities and other obligations owed to such U.S. Guarantor by each other Loan Party (the “Subordinated U.S. Intercompany Obligations”) to the Guaranteed Obligations to the extent and in the manner hereinafter set forth in this Section 7.07(a):

(i)

Prohibited Payments, Etc.  So long as no Event of Default shall have occurred and be continuing, each U.S. Guarantor may receive payments from any other Loan Party on account of the Subordinated U.S. Intercompany Obligations (provided that the making of such payments by the applicable obligor are not prohibited by the terms of this Agreement) and demand, accept or take any action to collect any payment on account of the Subordinated U.S. Intercompany Obligations.

(ii)

Prior Payment of Guarantied Obligations.  In any proceeding under the Bankruptcy Code or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law relating to any other Loan Party, each U.S. Guarantor agrees that the Secured Parties shall be entitled to receive Payment in Full in cash of all Guaranteed Obligations before such U.S. Guarantor receives payment of any Subordinated U.S. Intercompany Obligations.

(iii)

Turn-Over.  After the occurrence and during the continuation of any Event of Default, each U.S. Guarantor shall, if the Administrative Agent so requests, collect, enforce and receive payments on account of the Subordinated U.S. Intercompany Obligations as trustee for the Secured Parties and deliver such payments to the Administrative Agent (for the benefit of the applicable Secured Parties) on account of the Guaranteed Obligations, together with any necessary endorsements or other instruments of transfer, but without reducing or affecting in any manner the liability of such U.S. Guarantor under the other provisions of this Agreement.

(iv)

Administrative Agent Authorization.  After the occurrence and during the continuation of any Event of Default, the Administrative Agent is authorized and empowered (but under no obligation), in its discretion, (i) in the name of each U.S. Guarantor, to collect and enforce, and to submit claims in respect of, the Subordinated U.S. Intercompany Obligations and to apply any amounts received thereon to the 

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Guaranteed Obligations, and (ii) to require each U.S. Guarantor to (A) collect and enforce, and to submit claims in respect of, the Subordinated Intercompany U.S. Obligations and (B) pay any amounts received on such Subordinated Intercompany U.S. Obligations to the Administrative Agent for application to the Guaranteed Obligations.  

(b)

Each Foreign Guarantor hereby subordinates any and all debts, liabilities and other obligations owed to such Foreign Guarantor by each other Loan Party (the “Subordinated Foreign Intercompany Obligations”) to the Guaranteed Obligations to the extent and in the manner hereinafter set forth in this Section 7.07(b):

(i)

Prohibited Payments, Etc.  So long as no Event of Default shall have occurred and be continuing, each Foreign Guarantor may receive payments from any other Loan Party on account of the Subordinated Foreign Intercompany Obligations (provided that the making of such payments by the applicable obligor are not prohibited by the terms of this Agreement) and demand, accept or take any action to collect any payment on account of the Subordinated Foreign Intercompany Obligations.

(ii)

Prior Payment of Guarantied Obligations.  In any proceeding under the Bankruptcy Code or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law relating to any other Loan Party, each Foreign Guarantor agrees that the Secured Parties shall be entitled to receive Payment in Full in cash of all Guaranteed Obligations before such Guarantor receives payment of any Subordinated Foreign Intercompany Obligations.

(iii)

Turn-Over.  After the occurrence and during the continuation of any Event of Default, each Foreign Guarantor shall, if the Administrative Agent so requests, collect, enforce and receive payments on account of the Subordinated Foreign Intercompany Obligations as trustee for the Secured Parties and deliver such payments to the Administrative Agent (for the benefit of the applicable Secured Parties) on account of the Guaranteed Obligations, together with any necessary endorsements or other instruments of transfer, but without reducing or affecting in any manner the liability of such Foreign Guarantor under the other provisions of this Agreement.

(iv)

Administrative Agent Authorization.  After the occurrence and during the continuation of any Event of Default, the Administrative Agent is authorized and empowered (but under no obligation), in its discretion, (i) in the name of each Foreign Guarantor, to collect and enforce, and to submit claims in respect of, the Subordinated Foreign Intercompany Obligations and to apply any amounts received thereon to the Guaranteed Obligations, and (ii) to require each Foreign Guarantor to (A) collect and enforce, and to submit claims in respect of, the Subordinated Intercompany Foreign Obligations and (B) pay any amounts received on such Subordinated Intercompany Foreign Obligations to the Administrative Agent for application to the Guaranteed Obligations.

Section 7.08

Continuing Guaranty

.  This Guaranty is a continuing guaranty and shall remain in effect until all of the U.S. Guaranteed Obligations and Foreign Guarantee Obligations, respectively, shall have been Paid in Full.  Each Guarantor hereby 

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irrevocably waives any right to revoke this Guaranty as to future transactions giving rise to any Guaranteed Obligations.

Section 7.09

Authority of Guarantors or the Borrowers

.  It is not necessary for any Secured Party to inquire into the capacity or powers of any Guarantor or any Borrower or the officers, directors or any agents acting or purporting to act on behalf of any of them.

Section 7.10

Financial Condition of the Borrowers

.  Any Credit Extension may be made to any Borrower or continued from time to time, and any Hedge Agreements, Cash Management Agreements and Treasury Transactions may be entered into from time to time, in each case without notice to or authorization from any Guarantor regardless of the financial or other condition of such Borrower at the time of any such grant or continuation or at the time such Hedge Agreement is entered into, as the case may be.  No Secured Party shall have any obligation to disclose or discuss with any Guarantor its assessment, or any Guarantor’s assessment, of the financial condition of such Borrower.  Each Guarantor has adequate means to obtain information from each Borrower on a continuing basis concerning the financial condition of each Borrower and its ability to perform its obligations under the Loan Documents, any Hedge Agreements, any Cash Management Agreements or any Treasury Transactions, and each Guarantor assumes the responsibility for being and keeping informed of the financial condition of each Borrower and of all circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations.  Each Guarantor hereby waives and relinquishes any duty on the part of any Secured Party to disclose any matter, fact or thing relating to the business, operations or conditions of any Borrower now known or hereafter known by any Secured Party.

Section 7.11

Bankruptcy, Etc.  

(a)

The obligations of the Guarantors hereunder shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any case or proceeding (or analogous proceeding under any Debtor Relief Law), voluntary or involuntary, involving the bankruptcy, insolvency, examinership, receivership, reorganization, liquidation or arrangement of any Borrower or any other Guarantor or by any defense which any Borrower or any other Guarantor may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding.

(b)

Each Guarantor acknowledges and agrees that any interest on any portion of the applicable Guaranteed Obligations which accrues after the commencement of any case or proceeding referred to in clause (a) above (or, if interest on any portion of the applicable Guaranteed Obligations ceases to accrue by operation of law by reason of the commencement of such case or proceeding, such interest as would have accrued on such portion of the applicable Guaranteed Obligations if such case or proceeding had not been commenced) shall be included in the applicable Guaranteed Obligations because it is the intention of Guarantors and Secured Parties that the Guaranteed Obligations which are guaranteed by Guarantors pursuant hereto should be determined without regard to any rule of law or order which may relieve any Borrower of any portion of such Guaranteed Obligations.  Guarantors shall permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar Person under any Debtor Relief Law to pay the Administrative Agent, or allow the claim of the 

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Administrative Agent in respect of, any such interest accruing after the date on which such case or proceeding is commenced.

(c)

In the event that all or any portion of the Guaranteed Obligations are paid by any Borrower, the obligations of the Guarantors with respect to such amounts hereunder shall be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from any Secured Party as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed Obligations for all purposes hereunder.

Section 7.12

Discharge of Guaranty Upon Sale of Guarantor

.  If all of the Equity Interests of any Guarantor or any of its successors in interest hereunder shall be sold or otherwise disposed of or such Guarantor ceases to be a Restricted Subsidiary, in each case in accordance with the terms hereof or as otherwise consented to by the Required Lenders (or such other Lenders as may be required to give such consent under Section 10.05), the Guaranty of such Guarantor or such successor in interest, as the case may be, hereunder shall automatically be discharged and released without any further action by any Secured Party or any other Person effective as of the time of such transaction.  Upon request of the Borrower Representative, the Administrative Agent and the Collateral Agent shall take, and the Lenders hereby authorize the Administrative Agent and the Collateral Agent to take, such actions as shall be reasonably requested to evidence the termination and release of such Guaranty. 

Section 7.13

German Guarantor Limitations.  

(a)

To the extent a Guarantor which is a German limited liability company (Gesellschaft mit beschränkter Haftung – GmbH) (the “Affected German Guarantor”) guarantees Obligations of the Foreign Borrower under the Agreement (such guarantee an “Up-Stream or Cross-Stream Security”), the parties hereto agree that enforcement of that guaranty shall be limited to the extent that such payment under this guaranty has the effect of (i) reducing the Affected German Guarantor’s Net Assets (Reinvermögen) to an amount less than its share capital (Stammkapital) (Begründung einer Unterbilanz) or (ii) if its Net Assets are already an amount less than its share capital (Stammkapital), causing such Net Assets to be further reduced (Vertiefung einer Unterbilanz), and, as a result, cause a violations of sections 30 and 31 German Limited Liability Companies Act (GmbH-Gesetz) (as amended from time to time). 

(b)

No reduction of the amount enforceable under this guarantee in accordance with this Section 7.13 will prejudice the rights of the Collateral Agent or any Lender to claim to continue enforcing this guaranty until full satisfaction of the guaranteed claims (subject always to the operation of the limitation set out above at the time of such enforcement).

(c)

For the purposes of the calculation of the amount to be paid under Section 7.13(a) the following balance sheet items shall be adjusted as follows:

(i)

the amount of any increase of the Affected German Guarantor’s share capital (Stammkapital) effected in violation of the Agreement shall be deducted from the share capital (Stammkapital); 

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(ii)

loans provided to the Affected German Guarantor after the date hereof by any Group Member shall be disregarded insofar as such loans are or will in an insolvency scenario be subordinated by law or by contract at least to the rank pursuant to Section 39 (1) Nr. 5 of the German Insolvency Code (InsO);

(iii)

loans and other contractual liabilities incurred by the Affected German Guarantor in violation of the provisions of the Agreement shall be disregarded;

(iv)

the Net Assets shall take into account the costs of the Auditor’s Determination (as defined below), either as a reduction of assets or an increase of liabilities; and

(v)

for the determination of Net Assets, the assets and liabilities of the Affected German Guarantor shall be calculated on the basis of liquidation values (Liquidationsbewertung) unless a continuation of the Affected German Guarantor’s business, taking into account, for the avoidance of doubt, any payments to be made by the Affected German Guarantor under the guaranty, is deemed more likely than not pursuant to Section 19(2)1 of the German Insolvency Code (InsO) (positive Fortführungsprognose) and justifies a valuation as going concern at book values (Buchwerten). 

(d)

The Affected German Guarantor shall realize, to the extent legally permitted and commercially reasonable, in a situation where it does not have sufficient Net Assets to maintain its stated share capital, any and all of its assets that are shown in its balance sheet with a book value (Buchwert) that is significantly lower than the market value of the assets if the relevant asset is not necessary for its business (betriebsnotwendig).

(e)

Notwithstanding the above, this Section 7.13 shall not apply to any amounts due and payable relating to funds made available and still outstanding under the Agreement which have been made available by a Borrower or another member of the Group to the Affected German Guarantor or its Subsidiaries in any form (including, without limitation, by way of on-lending under an intercompany-loan (weitergeleitetes Gesellschafterdarlehen), a capital infusion or otherwise.

(f)

The limitations set out in this Section 7.13 shall not apply:

(i)

if and to the extent that within 10 Business Days following the demand against an Affected German Guarantor under this guarantee (the “Guarantee Demand”) the managing directors of the Affected German Guarantor have not confirmed in writing to the Collateral Agent (x) to what extent this guarantee is an Up-Stream or Cross-Stream Security and (y) the amount which can be enforced without causing the Net Assets of the Affected German Guarantor to fall below its stated share capital, such confirmation to be supported by evidence reasonably satisfactory to the Collateral Agent including unaudited interim financial statements up to the end of the last completed calendar month (taking into account the adjustments set out in Section 7.13(c)) (the “Management Determination”); or

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(ii)

if the Collateral Agent notifies the Affected German Guarantor that he contests the Management Determination within ten Business Days of the Collateral Agent’s receipt of the Management Determination and the Affected German Guarantor does not deliver, or cause to be delivered, to the Collateral Agent within 30 Business Days from receipt of such notification a determination by auditors of international standard and reputation as appointed by the Affected German Guarantor of the amount that can be enforced without causing the Net Assets of the Affected German Guarantor to fall below its stated share capital based on a financial statement up to the end of the last completed calendar month which shall be based on the same accounting principles that were applied when establishing the previous year's financial statement and calculated and adjusted in accordance with Section 7.13(a) and (c) (the “Auditor's Determination”).

(g)

If the Collateral Agent disagrees with the Management Determination and/or the Auditor's Determination, this guarantee shall be enforceable up to the amount which is undisputed. In relation to the amount which is disputed, the Collateral Agent shall be entitled to further pursue its claims and enforce this guarantee always subject to Section 7.13(a) up to and including Section 7.13(e) above if it determines in good faith that the financial condition of the Affected German Guarantor as set forth in the Auditor's Determination and/or the Management Determination has substantially improved (in particular, if the Affected German Guarantor has performed any actions in accordance with Section 7.13(d) which have not been taken into account in the Management Determination and/or the Auditor's Determination) and that all or part of the amount which is disputed is no longer necessary for maintaining the stated share capital of the Affected German Guarantor (calculated as of the date the Guarantee Demand was made), and notifies the Affected German Guarantor of such amount setting out in reasonable detail the reasons why this amount is no longer necessary for maintaining the stated share capital of the Affected German Guarantor, for the avoidance of doubt it being understood that the Affected German Guarantor shall not be obliged to pay such amount on demand. From receipt of such notification by the Affected German Guarantor, Section 7.13(f) and Section 7.13(g) shall apply accordingly to the enforcement of the relevant amount. Furthermore, in relation to the amount which is disputed, the Collateral Agent or any Lender shall be entitled to further pursue (including, but not limited in court) their payment claims under the guarantee granted by the Affected German Guarantor (if any) in excess of the amounts paid or payable pursuant to Section 7.13(g) above, for the avoidance of doubt it being understood that the Affected German Guarantor shall not be obliged to pay such amount on demand. 

(h)

For purposes of this Section 7.13, “Net Assets” shall mean the assets pursuant to section 266 (2) (A), (B) and (C) of German Commercial Code (Handelsgesetzbuch) less the sum of the non-subordinated liabilities pursuant to section 266 (3) (B), (C) and (D) of German Commercial Code (Handelsgesetzbuch), taking into account the items set out in Section 7.13(c).

(i)

The provisions set out in this Section 7.13 shall apply mutatis mutandis to any security granted by an Affected German Guarantor being a German limited partnership (Kommanditgesellschaft, “GmbH & Co. KG”) if the enforcement would lead to a violation of Sections 30, 31 German Limited Liability Companies Act (GmbH-Gesetz) with regard to its general partner (Komplementär).

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Section 7.14

Dutch Guarantor Limitations

.  In respect of a Dutch Loan Party, the guarantee under this Article VII (including the contribution requirements under Section 7.02) does not apply to (or, in the case of Section 7.02, will not create) any liability to the extent that it would result in this guarantee constituting unlawful financial assistance prohibited by section 2:98c or 2:207c of the Dutch Civil Code. 

Section 7.15

Subordination of the Guaranteed Obligations

.  Notwithstanding anything herein to the contrary, the Collateral Agent, for itself and on behalf of each Secured Party, and each Guarantor hereby agrees that the Guaranteed Obligations of CKI and the CKI Affiliates shall be subordinated in right of payment to the CKI and Debenture Obligations to the extent set forth in Section 2.3 of the CKI Intercreditor Agreement.

ARTICLE VIII.

EVENTS OF DEFAULT

Section 8.01

Events of Default

.  If any one or more of the following conditions or events occur:

(a)

Failure to Make Payments When Due.  Failure by any Borrower to pay (i) when due any installment of principal of any Loan, whether at stated maturity, by acceleration, by notice of voluntary prepayment, by mandatory prepayment or otherwise unless the failure to make such a payment is caused solely by administrative or technical error and payment is made within 3 Business Days of the due date therefor; (ii) within five (5) Business Days after the date when due any amount payable to the Issuing Bank in reimbursement of any drawing under a Letter of Credit; or (iii) any interest on any Loan or any fee or any other amount due hereunder within five (5) Business Days after the date due; or

(b)

Default Under Other Agreements.  (i) Failure of any Loan Party or any of their respective Subsidiaries (other than a Securitization Subsidiary or an Unrestricted Subsidiary) to pay when due any principal of or interest on or any other amount (other than customary reimbursement of fees and expenses), including any payment in settlement, payable in respect of one or more items of Material Indebtedness (other than Indebtedness referred to in Section 8.01(a), or the CKI Obligations, which are the subject of Section 8.01(o)) beyond the grace period, if any, provided therefor; or (ii) breach or default by any Loan Party with respect to any other material term of (1) one or more items of Material Indebtedness or (2) any loan agreement, mortgage, indenture or other agreement relating to such item(s) of Material Indebtedness, in each case beyond the grace period, if any, provided therefor, if the effect of such breach or default is to cause, or to permit the holder or holders of that Indebtedness (or a trustee on behalf of such holder or holders), to cause, that Indebtedness to become or be declared due and payable (or redeemable) prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be; or

(c)

Breach of Certain Covenants.  (i) Failure of any Loan Party to perform or comply with any term or condition contained in Section 2.06, Section 5.01(e), Section 5.02 (solely as to the existence of any Borrower) or Article VI, or (ii) failure of any Loan Party to 

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perform or comply with any term or condition in Sections 5.01(a), 5.01(b) or 5.01(c), and in the case of this clause (ii), such default shall not have been remedied or waived within fifteen (15) days; or

(d)

Breach of Representations, Etc.  Any representation, warranty, certification or other statement made or deemed made by any Loan Party in any Loan Document or in any statement or certificate at any time given by any Loan Party or any of its Subsidiaries in writing pursuant hereto or thereto or in connection herewith or therewith shall be false in any material respect as of the date made or deemed made; or

(e)

Other Defaults Under Loan Documents.  Any Loan Party shall default in the performance of or compliance with any term contained herein or any of the other Loan Documents, other than any such term referred to in any other subsection of this Section 8.01, and such default shall not have been remedied or waived within thirty (30) days after receipt by the Borrower Representative of notice from the Administrative Agent or any Lender of such default; or

(f)

Involuntary Bankruptcy, Appointment of Receiver, Creditor’s Process, Etc.  (i) A court of competent jurisdiction shall enter a decree or order for relief in respect of any Material Company, other than any Material Company organized under the laws of Germany, in an involuntary case (or analogous proceeding under any Debtor Relief Law) under the Bankruptcy Code or under any other Debtor Relief Law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable federal or state law; (ii) (x) an involuntary case (or analogous proceeding under any Debtor Relief Law) shall be commenced against any Material Company (other than any Material Company organized under the laws of Germany) under the Bankruptcy Code or under any other applicable Debtor Relief Law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, examiner, liquidator, conservator, custodian or other officer having similar powers over any Material Company (other than any Material Company organized under the laws of Germany), or over all or a substantial part of its property, shall have been entered; or (y) there shall have occurred the involuntary appointment of an interim receiver, trustee, examiner, liquidator, conservator or other custodian of any Material Company (other than any Material Company organized under the laws of Germany) for all or a substantial part of its property; or a warrant of or order for attachment, execution or similar process shall have been issued against any substantial part of the property of any Material Company (other than any Material Company organized under the laws of Germany), and any such event described in this clause (ii) shall continue for sixty (60) days without having been dismissed or discharged; or (iii) any expropriation, attachment, sequestration, distress or execution (including by way of executory attachment (executioriaal beslag) or interlocutory attachment (conservatoir beslag) or any analogous process in any jurisdiction affects any asset or assets of a Material Company (other than any Material Company organized under the laws of Germany) exceeding an aggregate value of €37,792,895 (or its equivalent) unless such process is either being contested in good faith and/or proven to be frivolous or vexatious and is discharged within twenty (20) Business Days after commencement; or

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(g)

Voluntary Bankruptcy; Appointment of Receiver, Etc.  (i) Any Material Company shall have an order for relief entered with respect to it or shall commence a voluntary case (or analogous proceeding under any Debtor Relief Law) under the Bankruptcy Code or under any other Debtor Relief Law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case (or analogous proceeding under any Debtor Relief Law), or to the conversion of an involuntary case to a voluntary case (or analogous proceeding under any Debtor Relief Law), under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee, examiner, liquidator, conservator or other custodian for all or a substantial part of its property; or any Material Company shall make a general assignment for the benefit of creditors; (ii) any Material Company shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due; or the Board of Directors (or similar governing body) or shareholders of any Loan Party or any of its Subsidiaries, or any committee thereof shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to herein or in Section 8.01(f); or (iii) a Dutch Loan Party shall have filed a notice under Section 36 of the Dutch Tax Collection Act (Invorderingswet 1990); or

(h)

German Proceedings.  Without limitation of clauses (f) and (g) of this Article VIII, with respect to any Material Company organized under the laws of Germany: (i) an involuntary petition for insolvency proceedings in respect of its assets (Antrag auf Eröffnung eines Insolvenzverfahrens) is filed and not dismissed within 60 days; (ii) any event occurs which constitutes a cause for the initiation of insolvency proceedings (Eröffnungsgrund) as set forth in Section 17 (Zahlungsunfähigkeit) or 19 (Überschuldung) of the German Insolvency Act (Insolvenzordnung); (iii) the commencing of negotiations with one or more of its creditors with a view to the general readjustment or rescheduling of its Indebtedness (other than customary adjustments of payment terms with suppliers); (iv) an insolvency court taking steps as set out in Section 21 of the German Insolvency Act (Insolvenzordnung); or (v) a court order for commencement of insolvency proceedings (Insolvenzeröffnungsbeschluss) or for rejection of insolvency proceedings due to lack of funds (Abweisungsbeschluss mangels Masse) is made; or

(i)

Judgments and Attachments.  Any money judgment, writ or warrant of attachment or similar process involving (i) in any individual case an amount in excess of $50,000,000 or (ii) in the aggregate at any time an amount in excess of $50,000,000 (in either case to the extent not covered by insurance by a solvent and unaffiliated insurance company) shall be entered or filed against any Loan Party or any of its Restricted Subsidiaries or any of their respective assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days thereafter (or in any event later than five (5) days prior to the date of any proposed sale thereunder); or

(j)

Employee Benefit Plans.  (i) There shall occur one or more ERISA Events which individually or in the aggregate results in or would reasonably be expected to result in a Material Adverse Effect; or (ii) there exists any fact or circumstance that reasonably could be expected to result in the imposition of a Lien or security interest pursuant to Section 430(k) of the Internal Revenue Code or Section 303(k) of ERISA or a violation of Section 436 of the Internal Revenue Code; or

(k)

Change of Control.  A Change of Control occurs; or

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(l)

Guaranties, Security Documents and other Loan Documents.  At any time after the execution and delivery thereof, (i) the Guaranty for any reason, other than the satisfaction in full of all Obligations, shall cease to be in full force and effect with respect to a Material Company (other than in accordance with its terms) or, with respect to a Material Company, shall become null and void or any Guarantor shall repudiate its obligations thereunder, (ii) this Agreement or any Security Document ceases to be in full force and effect (other than by reason of a release of Collateral in accordance with the terms hereof or thereof or the satisfaction in full of the Obligations in accordance with the terms hereof) or shall become null and void, or the Collateral Agent shall not have or shall cease to have a valid and perfected Lien in any Collateral purported to be covered by the Security Documents with the priority required by the relevant Security Document, in each case for any reason other than the failure of the Collateral Agent or any Secured Party to take any action within its control; provided that this clause (ii) shall not apply to any Security Document the invalidity of which would not reasonably be considered prejudicial to the interests of the Secured Parties taken as a whole, or (iii) any Loan Party shall contest the validity or enforceability of any Loan Document in writing or deny in writing that it has any further liability, including with respect to future advances by Lenders, under any Loan Document to which it is a party or shall contest the validity or perfection of any Lien in any Collateral purported to be covered by the Security Documents; or 

(m)

German Loan Parties’ Breach of Relevant Restrictive Covenants.  A German Loan Party or German Group Member does not comply with a Relevant Restrictive Covenant after the Collateral Agent has confirmed in accordance with Section 6.16 that it considers the relevant action or step to have a Material Adverse Effect or material adverse consequences for the Lenders’ risk or security position; or

(n)

Expropriation.  There occurs any seizure, expropriation, nationalization, intervention or other action by or on behalf of any governmental, regulatory or other authority or other person in relation to any Group Member or any of its assets that would reasonably be expected to have a Material Adverse Effect; or

(o)

CKI Related Matters. (i) An event described in subsections (f) or (g) shall occur with respect to the CKI Trust, (ii) the CKI Trust or the CKI Trust Agreement or other operative documents with respect to the CKI Trust shall be modified, amended or altered in any manner which would have a material adverse effect on the CKI Trust or otherwise be materially disadvantageous to the interests of the Lenders, taken as a whole, (iii) the CKI Intercreditor Agreement shall cease to be in full force and effect (other than in accordance with its terms or with the consent of the Required Lenders), (iv) the Design Services Purchase Payment (as defined in the CKI Stock Purchase Agreement) shall not be paid when due (beyond any applicable grace period) or the CKI Liquidated Damages Amount under the CKI Stock Purchase Agreement shall become due and payable (provided that, if such CKI Liquidated Damages Amount has become due and payable solely arising from an Event of Default under the CKI Security Agreement with respect to which no cure period applies, such acceleration of the CKI Liquidated Damages Amount shall not be an Event of Default hereunder unless such amount remains unpaid for thirty (30) days); or (v) a CKI Blockage Event shall have occurred and pro forma for such occurrence, the U.S. Borrower would not be in compliance with the financial covenants set forth in Section 6.07 after excluding CKI and the CKI Affiliates from Consolidated Adjusted EBTIDA (provided that such Event of Default may be cured upon delivery by the 

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Borrower Representative of a Compliance Certificate in accordance with Section 5.01(c)(vi) demonstrating compliance with the financial covenants set forth in Section 6.07 after excluding CKI and the CKI Affiliates from Consolidated Adjusted EBITDA);

THEN, (1) upon the occurrence of any Event of Default described in Sections 8.01(f), (g) or (h), automatically, and (2) upon the occurrence and during the continuance of any other Event of Default, at the request of (or with the consent of) Required Lenders, (A) the Revolving Commitments, if any, of each Lender having such Revolving Commitments, the obligation of each Issuing Bank to issue any Letter of Credit, the obligation of the Swing Line Lender to make any Swing Line Loan and the obligation to make loans under any Ancillary Facility shall immediately terminate; (B) each of the following shall immediately become due and payable, in each case without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by each Loan Party: (I) the unpaid principal amount of and accrued interest on the Loans, (II) an amount equal to the maximum amount that may at any time be drawn under all Letters of Credit then outstanding (regardless of whether any beneficiary under any such Letter of Credit shall have presented, or shall be entitled at such time to present, the drafts or other documents or certificates required to draw under such Letters of Credit), (III) all amounts due under any Ancillary Facility and (IV) all other Obligations; provided, that the foregoing shall not affect in any way the obligations of Lenders under Section 2.03(b)(v) or Section 2.04(e); (C) the Administrative Agent may cause the Collateral Agent to enforce any and all Liens and security interests created pursuant to Security Documents; (D) the Administrative Agent shall direct the Borrower Representative to pay (and each Borrower hereby agrees upon receipt of such notice, or upon the occurrence of any Event of Default specified in Sections 8.01(f), (g) and (h) to pay) to the Administrative Agent such additional amounts of cash as reasonably requested by the Issuing Bank, to be held as security for each Borrower’s reimbursement Obligations in respect of Letters of Credit then outstanding; and (E) the Administrative Agent and the Collateral Agent may exercise on behalf of themselves, the Lenders, the Issuing Bank and the other Secured Parties all rights and remedies available to the Administrative Agent, the Collateral Agent, the Lenders and the Issuing Bank under the Loan Documents or under applicable law or in equity.

ARTICLE IX.

AGENTS

Section 9.01

Appointment of Agents

.  DBSI is hereby appointed the Syndication Agent hereunder, and each Lender hereby authorizes DBSI to act as the Syndication Agent in accordance with the terms hereof and the other Loan Documents.  Barclays Bank is hereby appointed the Administrative Agent and the Collateral Agent hereunder and under the other Loan Documents and each Lender hereby authorizes Barclays Bank to act as the Administrative Agent and the Collateral Agent in accordance with the terms hereof and the other Loan Documents.  Each of BAS, CS Securities and RBC is hereby appointed a Co-Documentation Agent hereunder, and each Lender hereby authorizes each of BAS, CS Securities and RBC to act as a Co-Documentation Agent in accordance with the terms hereof and the other Loan Documents.  Each Agent hereby agrees to act in its capacity as such upon the express conditions contained herein and the other Loan Documents, as applicable.  The provisions of this Article IX (other than as expressly provided herein) are solely for the benefit of the Agents and the Lenders and no Loan Party shall have any rights as a third party beneficiary of any of the 

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provisions of this Article IX (other than as expressly provided herein).  In performing its functions and duties hereunder, each Agent shall act solely as an agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for any Group Member.  Each of the Syndication Agent and each Co-Documentation Agent, without consent of or notice to any party hereto, may assign any and all of its rights or obligations hereunder to any of its Affiliates.  Each of the Syndication Agent and each Co-Documentation Agent shall be released from the restrictions of Section 181 German Civil Code (BGB - Bürgerliches Gesetzbuch), and similar restrictions under any other applicable law, and shall be authorized to delegate this power of attorney, including the release from such restrictions.  Notwithstanding any other provision of this Agreement or any provision of any other Loan Document, each of the Arrangers, the Bookrunners, the Syndication Agent and the Co-Documentation Agents are named as such for recognition purposes only, and in their respective capacities as such shall have no duties, responsibilities or liabilities with respect to this Agreement or any other Loan Document; it being understood and agreed that each of the Arrangers, the Bookrunners, the Syndication Agent and the Co-Documentation Agent shall be entitled to all indemnification and reimbursement rights in favor of the Agents provided herein and in the other Loan Documents and all of the other benefits of this Article IX.  

Section 9.02

Powers and Duties

.  Each Lender irrevocably authorizes each Agent to take such action on such Lender’s behalf and to exercise such powers, rights and remedies hereunder and under the other Loan Documents as are specifically delegated or granted to such Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto.  In the event that any obligations (other than the Obligations) are permitted to be incurred hereunder and secured by Liens permitted to be incurred hereunder on all or a portion of the Collateral, each Lender authorizes the Administrative Agent and the Collateral Agent to enter into Intercreditor Agreements, subordination agreements and amendments to the Security Documents to reflect such arrangements on terms acceptable to the Administrative Agent and Collateral Agent.  Each Agent shall have only those duties and responsibilities that are expressly specified herein and the other Loan Documents.  Each Agent may exercise such powers, rights and remedies and perform such duties by or through its agents or employees.  No Agent shall have, by reason hereof or any of the other Loan Documents, a fiduciary relationship or other implied duties in respect of any Lender, any Loan Party or any other Person; and nothing herein or any of the other Loan Documents, expressed or implied, is intended to or shall be so construed as to impose upon any Agent any obligations in respect hereof or any of the other Loan Documents except as expressly set forth herein or therein.  Without limiting the generality of the foregoing sentence, the use of the term “agent” in this Agreement and in the other Loan Documents with reference to any Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under the agency doctrine of any applicable law.  Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.  

Section 9.03

General Immunity

.  

(a)

No Responsibility for Certain Matters.  No Agent shall be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency hereof or any other Loan Document, or for the creation, perfection or priority of 

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any Lien, or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by any Agent to the Lenders or by or on behalf of any Loan Party or to any Agent or Lender in connection with the Loan Documents and the transactions contemplated thereby or for the financial condition or business affairs of any Loan Party or any other Person liable for the payment of any Obligations, nor shall any Agent be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Loan Documents or as to the use of the proceeds of the Loans or as to the existence or possible existence of any Event of Default or Default or as to the value or sufficiency of any Collateral or as to the satisfaction of any condition set forth in Article III or elsewhere herein (other than confirm receipt of items expressly required to be delivered to such Agent) or to inspect the properties, books or records of any Group Member or to make any disclosures with respect to the foregoing.  Anything contained herein to the contrary notwithstanding, the Administrative Agent shall not have any liability arising from confirmations of the amount of outstanding Loans or the Letter of Credit Usage or the component amounts thereof.

(b)

Exculpatory Provisions.  No Agent nor any of its officers, partners, directors, employees or agents shall be liable to the Lenders (i) for any action taken or omitted by any Agent (A) under or in connection with any of the Loan Documents or (B) with the consent or at the request of the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement) except to the extent caused by such Agent’s gross negligence or willful misconduct, as determined by a final, non-appealable judgment of a court of competent jurisdiction or (ii) for any failure of any Loan Party to perform its obligations under this Agreement or any other Loan Document.  No Agent shall, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose or be liable for the failure to disclose, any information relating to any Borrower or any of its Affiliates that is communicated to or obtained by such Agent or any of its Affiliates in any capacity.  Each Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection herewith or any of the other Loan Documents or from the exercise of any power, discretion or authority vested in it hereunder or thereunder unless and until such Agent shall have received instructions in respect thereof from Required Lenders (or such other Lenders as may be required to give such instructions under Section 10.05) and, upon receipt of such instructions from Required Lenders (or such other Lenders, as the case may be), such Agent shall be entitled to act or (where so instructed) refrain from acting, or to exercise such power, discretion or authority, in accordance with such instructions and shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent to liability or that is contrary to any Loan Document or applicable law.  Without prejudice to the generality of the foregoing, (i) each Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and shall be entitled to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for a Group Member), accountants, experts and other professional advisors selected by it; and (ii) no Lender shall have any right of action whatsoever against any Agent as a result of such Agent acting or (where so instructed) refraining from acting hereunder or any of the other Loan Documents in accordance with the instructions of Required Lenders (or such other Lenders as may be required to give such instructions under Section 10.05).

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(c)

Delegation of Duties. Each of the Administrative Agent and the Collateral Agent may perform any and all of its duties and exercise its rights and powers under this Agreement or under any other Loan Document by or through any one or more sub-agents appointed by it and to grant an exemption from any restrictions to any sub-delegate.  Each of the Administrative Agent, the Collateral Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates. The exculpatory, indemnification and other provisions of this Section 9.03 and of Section 9.06 shall apply to any of the Affiliates of the Administrative Agent or the Collateral Agent and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as the Administrative Agent or Collateral Agent, as applicable.  All of the rights, benefits, and privileges (including the exculpatory and indemnification provisions) of this Section 9.03 and of Section 9.06 shall apply to any such sub-agent and to the Affiliates of any such sub-agent, and shall apply to their respective activities as sub-agent as if such sub-agent and Affiliates were named herein.  Notwithstanding anything herein to the contrary, with respect to each sub-agent appointed by the Administrative Agent or the Collateral Agent, (i) such sub-agent shall be a third party beneficiary under this Agreement with respect to all such rights, benefits and privileges (including exculpatory rights and rights to indemnification) and shall have all of the rights and benefits of a third party beneficiary, including an independent right of action to enforce such rights, benefits and privileges (including exculpatory rights and rights to indemnification) directly, without the consent or joinder of any other Person, against any or all of Loan Parties and the Lenders, (ii) such rights, benefits and privileges (including exculpatory rights and rights to indemnification) shall not be modified or amended without the consent of such sub-agent, and (iii) such sub-agent shall only have obligations to the Administrative Agent and not to any Loan Party, Lender or any other Person and no Loan Party, Lender or any other Person shall have any rights, directly or indirectly, as a third party beneficiary or otherwise, against such sub-agent; provided, that the Administrative Agent and Collateral Agent shall be responsible for all acts of each of their respective sub-agents, and each Loan Party, Secured Party and other Person shall have the same rights against the Administrative Agent or Collateral Agent, as applicable, as if the Administrative Agent or Collateral Agent, as applicable, had performed the duties and exercised the rights and powers under this Agreement or any other Loan Document that its sub-agent performed or exercised.

(d)

Notice of Default or Event of Default.  No Agent shall be deemed to have knowledge of any Default or Event of Default unless and until written notice describing such Default or Event of Default is given to such Agent by a Loan Party or a Lender.  In the event that the Administrative Agent shall receive such a notice, the Administrative Agent shall give notice thereof to the Lenders, provided that failure to give such notice shall not result in any liability on the part of the Administrative Agent.

Section 9.04

Agents Entitled to Act as Lender

.  The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, any Agent in its individual capacity as a Lender hereunder.  With respect to its participation in the Loans and the Letters of Credit, each Agent shall have the same rights and powers hereunder in its capacity as a Lender as any other Lender and may exercise the same as if it were not performing the duties and functions delegated to it hereunder, and the term “Lender” shall, unless the context clearly otherwise indicates, include each Agent in its individual capacity.  Any Agent and its Affiliates may accept deposits from, lend money to, own securities 

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of, and generally engage in any kind of banking, trust, financial advisory or other business with the U.S. Borrower or any of its Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from the U.S. Borrower for services in connection herewith and otherwise without having to account for the same to Lenders.  The Lenders acknowledge that pursuant to such activities, the Agents or their Affiliates may receive information regarding any Loan Party or any Affiliate of any Loan Party (including information that may be subject to confidentiality obligations in favor of such Loan Party or such Affiliate) and acknowledge that the Agents and their Affiliates shall be under no obligation to provide such information to them.

Section 9.05

Lenders’ Representations, Warranties and Acknowledgment

.  

(a)

Each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of the Group in connection with Credit Extensions hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of the Group.  No Agent shall have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and no Agent shall have any responsibility with respect to the accuracy of or the completeness of any information provided to Lenders.

(b)

Each Lender, by delivering its signature page to this Agreement, an Assignment Agreement or a Joinder Agreement and funding its Tranche A Term Loan, Tranche B Term Loan and/or Revolving Loans on the Closing Date or by the funding of any Incremental Term Loans or Incremental Revolving Loans, as the case may be, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be approved by any Agent, Required Lenders or Lenders, as applicable on the Closing Date or as of the date of funding of such Loans.

Section 9.06

Right to Indemnity

.  Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify each Agent to the extent that such Agent shall not have been reimbursed by any Loan Party (and without limiting its obligation to do so), for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Agent in exercising its powers, rights and remedies or performing its duties hereunder or under the other Loan Documents or otherwise in its capacity as Agent in any way relating to or arising out of this Agreement or the other Loan Documents; provided, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent’s gross negligence or willful misconduct, as determined by a final, non-appealable judgment of a court of competent jurisdiction.  If any indemnity furnished to any Agent for any purpose shall, in the opinion of such Agent, be insufficient or become impaired, such Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided, that in no event shall this sentence require any Lender to indemnify any Agent against 

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any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Lender’s Pro Rata Share thereof; and provided, further, that this sentence shall not be deemed to require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding sentence.

Section 9.07

Successor Administrative Agent, Collateral Agent and Swing Line Lender

.  

(a)

The Administrative Agent shall have the right to resign at any time by giving prior written notice thereof to the Lenders and the Borrower Representative.  The Administrative Agent shall have the right to appoint a financial institution to act as the Administrative Agent and/or the Collateral Agent hereunder, subject to the reasonable satisfaction of the Borrower Representative and the Required Lenders, and the Administrative Agent’s resignation shall become effective on the earlier of (i) the acceptance of such successor Administrative Agent by the Borrower Representative and the Required Lenders or (ii) the thirtieth day after such notice of resignation.  Upon any such notice of resignation, if a successor Administrative Agent has not already been appointed by the retiring Administrative Agent, Required Lenders shall have the right, upon five (5) Business Days’ notice to the Borrower Representative, to appoint a successor Administrative Agent.  If neither Required Lenders nor the Administrative Agent have appointed a successor Administrative Agent, then the Required Lenders shall be deemed to have succeeded to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent; provided, that until a successor Administrative Agent is so appointed by Required Lenders or the Administrative Agent, the Administrative Agent, by notice to the Borrower Representative and Required Lenders, may retain its role as the Collateral Agent under any Security Document.  Except as provided in the preceding sentence, any resignation of Barclays Bank or its successor as the Administrative Agent pursuant to this Section shall also constitute the resignation of Barclays Bank or its successor as the Collateral Agent.  After any retiring Administrative Agent’s resignation hereunder as the Administrative Agent, the provisions of this Section 9.07 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent hereunder.  Upon the acceptance of any appointment as the Administrative Agent hereunder by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent and the retiring Administrative Agent shall promptly (i) transfer to such successor Administrative Agent all sums, Securities and other items of Collateral held under the Security Documents, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Administrative Agent under the Loan Documents, and (ii) execute and deliver to such successor Administrative Agent such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Administrative Agent of the security interests created under the Security Documents, whereupon such retiring Administrative Agent shall be discharged from its duties and obligations hereunder.  If the Administrative Agent is retaining its role as Collateral Agent, the actions enumerated in the preceding sentence will be modified to account for such retained role.  Any successor Administrative Agent appointed pursuant to this Section shall, upon its acceptance of such appointment, become the successor Collateral Agent for all purposes hereunder.  If Barclays Bank or its successor as the 

183

Administrative Agent pursuant to this Section has resigned as the Administrative Agent but retained its role as the Collateral Agent and no successor Collateral Agent has become the Collateral Agent pursuant to the immediately preceding sentence, Barclays Bank or its successor may resign as the Collateral Agent upon notice to the Borrower Representative and Required Lenders at any time.  

(b)

In addition to the foregoing, the Collateral Agent may resign at any time by giving thirty (30) days’ prior written notice thereof to Lenders and the Loan Parties.  The Administrative Agent shall have the right to appoint a financial institution as the Collateral Agent hereunder, subject to the reasonable satisfaction of the Borrower Representative and the Required Lenders and the Collateral Agent’s resignation shall become effective on the earlier of (i) the acceptance of such successor Collateral Agent by the Borrower Representative and the Required Lenders or (ii) the thirtieth day after such notice of resignation.  Upon any such notice of resignation, Required Lenders shall have the right, upon five (5) Business Days’ notice to the Administrative Agent, to appoint a successor Collateral Agent.  Upon the acceptance of any appointment as the Collateral Agent hereunder by a successor Collateral Agent, the successor Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent under this Agreement and the Security Documents, and the retiring Collateral Agent under this Agreement shall promptly (i) transfer to such successor Collateral Agent all sums, Securities and other items of Collateral held hereunder or under the Security Documents, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Collateral Agent under this Agreement and the Security Documents, and (ii) execute and deliver to such successor Collateral Agent or otherwise authorize the filing of such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Collateral Agent of the security interests created under the Security Documents, whereupon such retiring Collateral Agent shall be discharged from its duties and obligations under this Agreement and the Security Documents.  After any retiring Collateral Agent’s resignation hereunder as the Collateral Agent, the provisions of this Agreement and the Security Documents shall inure to its benefit as to any actions taken or omitted to be taken by it under this Agreement or the Security Documents while it was the Collateral Agent hereunder.

(c)

Any resignation of Barclays Bank or its successor as the Administrative Agent pursuant to this Section shall also constitute the resignation of Barclays Bank or its successor as the Swing Line Lender and Issuing Bank, and any successor Administrative Agent appointed pursuant to this Section shall, upon its acceptance of such appointment, become the successor the Swing Line Lender and an Issuing Bank (in accordance with Section 2.04(h)) for all purposes hereunder.  In such event (i) the U.S. Borrower shall prepay any outstanding Swing Line Loans made by the retiring Administrative Agent in its capacity as Swing Line Lender, (ii) upon such prepayment, the retiring Administrative Agent and Swing Line Lender shall surrender any Swing Line Note held by it to the U.S. Borrower for cancellation and (iii) the U.S. Borrower shall issue, if so requested by the successor Administrative Agent and the Swing Line Lender, a new Swing Line Note to the successor Administrative Agent and the successor Swing Line Lender, in the principal amount of the Swing Line Sublimit then in effect and with other appropriate insertions. 

Section 9.08

Security Documents and Guaranty

.  

184

(a)

Agents under Security Documents and Guaranty.  Each Secured Party hereby further authorizes the Administrative Agent or the Collateral Agent, as applicable, on behalf of and for the benefit of Secured Parties, to be the agent for and representative of Secured Parties with respect to the Guaranty, the Collateral and the Security Documents which are not German Security Documents; provided, that, except as expressly set forth herein, neither the Administrative Agent nor the Collateral Agent shall owe any fiduciary duty, duty of loyalty, duty of care, duty of disclosure or any other obligation whatsoever to any holder of Obligations.  Subject to Section 10.05, without further written consent or authorization from any Secured Party, the Administrative Agent or the Collateral Agent, as applicable may execute any documents or instruments necessary (i) in connection with a sale or disposition of assets permitted by this Agreement, to release any Lien encumbering any item of Collateral that is the subject of such sale or other disposition of assets or to which Required Lenders (or such other Lenders as may be required to give such consent under Section 10.05) have otherwise consented or (ii) to release any Guarantor from the Guaranty pursuant to Section 7.12 or with respect to which Required Lenders (or such other Lenders as may be required to give such consent under Section 10.05) have otherwise consented.

(b)

Right to Realize on Collateral and Enforce Guaranty.  Anything contained in any of the Loan Documents to the contrary notwithstanding, the Borrowers, the Administrative Agent, the Collateral Agent and each Secured Party hereby agree that (i) no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Guaranty, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by the Administrative Agent, on behalf of the Secured Parties in accordance with the terms hereof and all powers, rights and remedies under the Security Documents may be exercised solely by the Collateral Agent and (ii) in the event of a foreclosure by the Collateral Agent on any of the Collateral pursuant to a public or private sale or other disposition, the Collateral Agent or any Lender may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition and the Collateral Agent, as agent for and representative of Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless Required Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by the Collateral Agent at such sale or other disposition.

(c)

Rights under Hedge Agreements.  No Hedge Agreement shall create (or be deemed to create) in favor of any Lender Counterparty that is a party thereto any rights in connection with the management or release of any Collateral or of the obligations of any Guarantor under the Loan Documents except as expressly provided in Sections 2.15(e) and 10.05(c)(v) of this Agreement.  By accepting the benefits of the Collateral, such Lender Counterparty shall be deemed to have appointed the Collateral Agent as its agent and agreed to be bound by the Loan Documents as a Secured Party, subject to the limitations set forth in this clause (c).

(d)

Release of Collateral and Guarantees, Termination of Loan Documents.  

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(i)

Notwithstanding anything to the contrary contained herein or any other Loan Document, when all Obligations have been Paid in Full, this Agreement and all other Loan Documents, all guarantee obligations provided for in any Loan Document and all security interests granted pursuant to any Loan Document shall automatically terminate, and upon request of the Borrower Representative, the Administrative Agent and the Collateral Agent shall (without notice to, or vote or consent of, any Lender or any Lender Counterparty) take such actions as shall be reasonably requested to evidence the release of its security interest in all Collateral, and to evidence the release of all guarantee obligations provided for in any Loan Document.  Any such release of guarantee obligations shall be deemed subject to the provision that such guarantee obligations shall be reinstated if after such release any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation, examinership, receivership or reorganization of any Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor, liquidator, examiner or conservator of, or trustee or similar officer for, any Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payment had not been made.  

(ii)

Upon any disposition of property permitted by this Agreement, any security interest in such property provided for in any Security Document shall be deemed to be automatically released and such property shall automatically revert to the applicable Loan Party with no further action on the part of any Person.  The Collateral Agent shall, at the applicable Loan Party's expense, execute and deliver or otherwise authorize the filing of such documents as such Loan Party shall reasonably request, in form and substance reasonably satisfactory to the Collateral Agent, including financing statement amendments to evidence such release.

Section 9.09

Withholding Taxes

.  To the extent required by any applicable law, the Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax.  If any payment has been made to any Lender by the Administrative Agent without the applicable withholding Tax being withheld from such payment and the Administrative Agent has paid over the applicable withholding Tax to the Internal Revenue Service or any other Governmental Authority, or the Internal Revenue Service or any other Governmental Authority asserts a claim that the Administrative Agent did not properly withhold Tax from amounts paid to or for the account of any Lender because the appropriate form was not delivered or was not properly executed or because such Lender failed to notify the Administrative Agent of a change in circumstance which rendered the exemption from, or reduction of, withholding Tax ineffective or for any other reason, such Lender shall indemnify the Administrative Agent fully for all amounts paid, directly or indirectly, by the Administrative Agent as Tax or otherwise, including any penalties or interest and together with all expenses (including legal expenses, allocated internal costs and out-of-pocket expenses) incurred, provided that nothing in this Section 9.09 shall impose any obligation on any Loan Party. 

Section 9.10

Administrative Agent May File Proofs of Claim

.  In case of the pendency of any proceeding under the Bankruptcy Code or other applicable law or any other judicial proceeding relative to any Borrower, the Administrative Agent (irrespective of whether 

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the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on any Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the other Secured Parties (including fees, disbursements and other expenses of counsel) allowed in such judicial proceeding and (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same.  Any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and other Secured Party to make such payments to the Administrative Agent.  Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or other Secured Party any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or other Secured Party to authorize the Administrative Agent to vote in respect of the claim of such Person or in any such proceeding.

Section 9.11

Administrative Agent’s “Know Your Customer” Requirements

.  Each Lender shall promptly, upon the request of the Administrative Agent, provide such documentation and other evidence as is reasonably requested by the Administrative Agent (for itself) in order for the Administrative Agent to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Loan Documents.  

Section 9.12

German Collateral Agent

.  Notwithstanding the generality of this Article IX:

(a)

Each of the Secured Parties confirms the appointment of the Collateral Agent as agent, administrator and trustee (Treuhänder) for the purpose of accepting, holding on trust (Treuhand), administering and enforcing remedies with respect to the German Security that is subject of any German Security Document for and on behalf of the Secured Parties pursuant to the provisions of this Agreement.

(b)

The Collateral Agent accepts such appointments and, in particular, accepts its appointment as a trustee (Treuhänder), agent and administrator of the German Security on the terms and subject to the conditions set forth in this Agreement.

(c)

The Collateral Agent, as applicable, shall:

(i)

hold, administer and, as the case may be, enforce any German Security which is security assigned or otherwise transferred (Sicherungsübereignung/ Sicherungsabtretung) under the laws of Germany under a non-accessory security right (nicht akzessorische Sicherheit) to it as a trustee (Treuhänder) in its own name but for the benefit of the Secured Parties; and

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(ii)

as applicable, administer and, as the case may be, enforce, any German Security which is pledged under the laws of Germany (Verpfändung) or otherwise transferred in accordance with the laws of Germany to (i) it in its own name but for the benefit of the Secured Parties as well as (ii) any of the Secured Parties under an accessory security right (akzessorische Sicherheit) in the name and for and on behalf of the Secured Parties.

(d)

Each Secured Party hereby authorizes the Collateral Agent to accept, as its representative (Stellvertreter), any German Security created in favor of such Secured Party.

(e)

Each Secured Party hereby authorizes (bevollmächtigt) the Collateral Agent (with the right of sub-delegation) to enter into any Security Document evidencing German Security and to make and accept all declarations and take all actions as it considers necessary or useful in connection with such German Security on behalf of such Secured Party.  The Collateral Agent shall further be entitled to rescind, amend and/or execute new and different documents securing such German Security.

(f)

For the purposes of performing its rights and obligations as Collateral Agent hereunder, each Secured Party hereby authorizes the Collateral Agent to act as its agent (Stellvertreter), and releases the Collateral Agent from the restrictions imposed by Section 181 German Civil Code (BGB), and similar restrictions under any other applicable law. The Collateral Agent is hereby authorized to delegate this power of attorney, including the release from such restrictions. At the request of the Collateral Agent, each Secured Party shall provide the Collateral Agent with a separate written power of attorney (Spezialvollmacht) for the purposes of executing any relevant agreements and documents on their behalf.

(g)

Each Secured Party hereby ratifies and approves all acts previously done by the Collateral Agent on such Secured Party’s behalf.

Section 9.13

Certain Canadian Matters

.  For greater certainty, and without limiting the powers of the Administrative Agent, the Collateral Agent or any other person acting as an agent or mandatary for such agent hereunder or under any of the other Loan Documents,  each of the Loan Parties, including each of the Canadian Loan Parties, hereby acknowledges that, for purposes of holding any security granted by any Loan Party on property pursuant to the laws of the Province of Quebec to secure obligations of any Borrower or any other Loan Party under any bond or debenture issued by any Borrower or any other Loan Party, the Collateral Agent is and shall be the holder of an irrevocable power of attorney (fondé de pouvoir within the meaning of Article 2692 of the Civil Code of Quebec) for all present and future Secured Parties, and in particular for all present and future holders of any such bond or debenture.  Each Secured Party, on its own behalf and on behalf of its Affiliates that may from time to time be Secured Parties (each, an “Appointer”) hereby: (i) irrevocably constitutes, ratifies and confirms, to the extent necessary, the Collateral Agent as the holder of an irrevocable power of attorney (fondé de pouvoir within the meaning of Article 2692 of the Civil Code of Québec) in order to hold hypothecs and security granted by any Borrower or any other Loan Party on property pursuant to the laws of the Province of Quebec to secure obligations of any Borrower or any other Loan Party under any bond issued by any Borrower or any other Loan Party; and (ii) appoints, ratifies and confirms and agrees that the Collateral Agent may act as the bondholder 

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or debentureholder and mandatary, custodian and depository with respect to any bond or debenture that may be issued by any Borrower or any Loan Party and pledged in their favour from time to time.  Each assignee of an Appointer on its own behalf and on behalf of its Affiliates that may from time to time be Secured Parties shall be deemed to have confirmed and ratified the constitution of the Collateral Agent as the holder of such irrevocable power of attorney (fondé de pouvoir) and shall be deemed to have confirmed and ratified the constitution of the Collateral Agent as bondholder or debentureholder and mandatary, custodian and depositary with respect to any bond or debenture that may be issued by any Borrower or any Loan Party and pledged from time to time in favour of the Collateral Agent by the execution of an Assignment and Acceptance or by otherwise becoming a party hereto.  Notwithstanding the provisions of Section 32 of the An Act respecting the special powers of legal persons (Quebec), the Collateral Agent may acquire and be the holder of any bond or debenture issued by any Borrower or any other Loan Party (i.e., the fondé de pouvoir may acquire and hold the first bond or debenture issued under any deed of hypothec by any Borrower or any Loan Party).  Each Borrower and each Loan Party hereby acknowledges that such bond or debenture constitutes a title of indebtedness, as such term is used in Article 2692 of the Civil Code of Quebec.  The Collateral Agent, acting as fondé de pouvoir shall have the same rights, powers, immunities and exclusions from liability as are prescribed in favor of the Collateral Agent in this Agreement, which shall apply mutatis mutandis to the Collateral Agent acting as fondé de pouvoir.  

Section 9.14

Parallel Debt

. 

(a)

For the purpose of establishing a valid Lien pursuant to any Security Document governed by Dutch or German law: 

(i)

each Foreign Loan Party irrevocably and unconditionally undertakes (and to the extent necessary undertakes in advance (bij voorbaat)) (where applicable, by way of an abstract acknowledgement of debt (abstraktes Schuldanerkenntnis)) to pay to the Collateral Agent amounts equal to any amounts owing from time to time by that Foreign Loan Party to any Foreign Obligations Secured Party under the Loan Documents, any Hedge Agreement, any Cash Management Agreement or any Treasury Transaction (as each may be amended, varied, supplemented or extended from time to time) whether for principal, interest, (including interest which, but for the filing of a petition in bankruptcy with respect to such Foreign Loan Party, would have accrued on any Obligation, whether or not a claim is allowed against such Foreign Loan Party for such interest in the related bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit, payments for early termination of Hedge Agreements, fees, expenses, indemnification or otherwise, as and when those amounts are due (its "Foreign Corresponding Debt"), and each Foreign Obligations Secured Party consents to each Foreign Loan Party’s undertaking pursuant to this paragraph (i); and

(ii)

each Loan Party (other than any Foreign Loan Party) irrevocably and unconditionally undertakes (and to the extent necessary undertakes in advance (bij voorbaat)) (where applicable, by way of an abstract acknowledgement of debt (abstraktes Schuldanerkenntnis)) to pay to the Collateral Agent amounts equal to any amounts owing from time to time by that Loan Party to any Secured Party (other than any Foreign Obligations Secured Party) under the Loan Documents, any Hedge Agreement, any Cash 

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Management Agreement or any Treasury Transaction (as each may be amended, varied, supplemented or extended from time to time) whether for principal, interest, (including interest which, but for the filing of a petition in bankruptcy with respect to such Loan Party, would have accrued on any Obligation, whether or not a claim is allowed against such Loan Party for such interest in the related bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit, payments for early termination of Hedge Agreements, fees, expenses, indemnification or otherwise, as and when those amounts are due (its "U.S. Corresponding Debt"), and each Secured Party (other than any Foreign Obligations Secured Party) consents to the undertaking of each Loan Party (other than any Foreign Loan Party) pursuant to this paragraph (ii).

(b)

Each party to this Agreement acknowledges that the obligations of each Loan Party under a Parallel Debt are several and are separate and independent (eigen zelfstandige verplichting) from, and shall not in any way limit or affect, the relevant Corresponding Debt under any Loan Document, any Hedge Agreement, any Cash Management Agreement or any Treasury Transaction nor shall the amounts for which each Loan Party is liable under a Parallel Debt be limited or affected in any way by its relevant Corresponding Debt provided that:

(i)

a Parallel Debt of a Loan Party shall be decreased to the extent that its relevant Corresponding Debt has been irrevocably paid or (in the case of guarantee obligations) discharged; 

(ii)

a Corresponding Debt of a Loan Party shall be decreased to the extent its relevant Parallel Debt has been irrevocably paid or (in the case of guarantee obligations) discharged; and

(iii)

the amount of a Parallel Debt of a Loan Party shall at all times be equal to the amount of its relevant Corresponding Debt.

(c)

For the purpose of this Section 9.14, the Collateral Agent acts in its own name and on behalf of itself and not as agent, representative or trustee of any other Secured Party and its claims in respect of a Parallel Debt shall not be held on trust. Any Lien granted to the Collateral Agent to secure a Parallel Debt is granted to the Collateral Agent in its capacity as sole creditor of a Parallel Debt and shall not be held on trust.

(d)

All monies received or recovered by the Collateral Agent pursuant to this Section 9.14, and all amounts received or recovered by the Collateral Agent from or by the enforcement of any Liens granted to secure a Parallel Debt, shall be applied in accordance with the terms of this Agreement.

(e)

Without limiting or affecting the Collateral Agent’s rights against any Loan Party (whether under this Section 9.14 or under any other provision of the Loan Documents), the Collateral Agent agrees with each other Secured Party (on a several and divided basis) that, subject as set out in the next sentence, it will not exercise its rights under any Parallel Debt in relation to a Secured Party except with the consent of the relevant Secured Party. However, for the avoidance of doubt, nothing in the previous sentence shall in any way limit the Collateral Agent’s right to act in the protection or preservation of rights under or to enforce any 

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Security Document as contemplated by this Agreement, the relevant Security Document or any other Loan Document, any Hedge Agreement, any Cash Management Agreement or any Treasury Transaction (or to do any act reasonably incidental to the foregoing).

(f)

Without limiting or affecting the Collateral Agent's rights against a Loan Party (whether under this Section 9.14  or under any other provision of this Agreement), each Loan Party acknowledges that:

(i)

nothing in this Section 9.14 shall impose any obligation on the Collateral Agent to advance any sum to a Loan Party or otherwise under a Loan Document, except in its capacity as Lender; and

(ii)

for the purpose of any vote taken under a Loan Document, the Collateral Agent shall not be regarded as having any participation or commitment other than those which it has in its capacity as a Lender.

(g)

For the avoidance of doubt, a Parallel Debt will become due and payable (opeisbaar) at the same time the relevant Corresponding Debt becomes due and payable.

(h)

For the purpose of any Security Document governed by Dutch law, each party to this Agreement confirms that, in accordance with this Section 9.14 a claim of the Collateral Agent against a Loan Party in respect of a Parallel Debt does not constitute common property (een gemeenschap) within the meaning of Section 3:166 of the Dutch Civil Code and that the provisions relating to such common property shall not apply. If, however, it shall be held that such claim of the Collateral Agent does constitute such common property and such provisions do apply, the parties to this Agreement agree that this Agreement shall constitute the administration agreement (beheersregeling) within the meaning of Section 3:168 of the Dutch Civil Code.

(i)

For the purpose of any Security Document governed by German law, the Collateral Agent, the Loan Parties and each of the other Secured Parties agree that the Collateral Agent shall be the joint and several creditor (Gesamtgläubiger) (together with the relevant other Secured Party) of each and every obligation of the Loan Parties towards that other Secured Party under any Loan Document, any Hedge Agreement, any Cash Management Agreement or any Treasury Transaction, and that accordingly the Collateral Agent will have its own and independent right to demand performance by the Loan Parties of those obligations (Gesamtgläubigerschaft) in full. 

(j)

Notwithstanding anything to the contrary herein, nothing in this Section 9.14 shall impose any obligation on any Foreign Loan Party to make any payment, or provide any security for, any Obligation of a U.S. Loan Party, or be construed as a guaranty by any Foreign Loan Party of any Obligation of a U.S. Loan Party.

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ARTICLE X.

MISCELLANEOUS

Section 10.01

Notices

.  

(a)

Notices Generally.  Any notice or other communication herein required or permitted to be given to a Loan Party, the Collateral Agent, the Administrative Agent, the Swing Line Lender or the Issuing Bank, shall be sent to such Person’s address as set forth on Schedule 1.01(d) or in the other relevant Loan Document, and in the case of any Lender, the address as indicated on Schedule 1.01(d) or otherwise indicated to the Administrative Agent in writing.  Except as otherwise set forth in paragraph (b) below, each notice hereunder shall be in writing and may be personally served or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile, ordinary or registered post, or three (3) Business Days after depositing it in the ordinary or prepaid post or United States mail with postage prepaid and properly addressed; provided, that no notice to any Agent shall be effective until received by such Agent; provided, further, that any such notice or other communication shall at the request of the Administrative Agent be provided to any sub-agent appointed pursuant to Section 9.03(c) hereto as designated by the Administrative Agent from time to time.

(b)

Electronic Communications.  

(i)

Notices and other communications to the Administrative Agent, the Collateral Agent, the Swing Line Lender, the Lenders and any Issuing Bank hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites, including the Platform) pursuant to procedures approved by the Administrative Agent, the Collateral Agent, the Swing Line Lender, each Lender and each Issuing Bank, as applicable; provided, that the foregoing shall not apply to notices to any Lender or the Issuing Bank pursuant to Article II if such Lender or the Issuing Bank, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.  The Administrative Agent, each other Agent and the Borrower Representative hereby agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided, that any Borrowing Notice or notice of an Event of Default shall be promptly confirmed by fascimile.  Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement); provided, that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient and (ii) notices or communications posted to an internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

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(ii)

Each Loan Party understands that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution and agrees and assumes the risks associated with such electronic distribution, except to the extent caused by the willful misconduct or gross negligence of the Administrative Agent, as determined by a final, non-appealable judgment of a court of competent jurisdiction.

(iii)

The Platform and any Approved Electronic Communications are provided “as is” and “as available”.  None of the Agents nor any of their respective officers, directors, employees, agents, advisors or representatives (the “Agent Affiliates”) warrant the accuracy, adequacy, or completeness of the Approved Electronic Communications or the Platform and each expressly disclaims liability for errors or omissions in the Platform and the Approved Electronic Communications.  No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects is made by the Agent Affiliates in connection with the Platform or the Approved Electronic Communications.  Each party hereto agrees that no Agent has any responsibility for maintaining or providing any equipment, Software, services or any testing required in connection with any Approved Electronic Communication or otherwise required for the Platform.  In no event shall any Agent nor any of the Agent Affiliates have any liability to any Loan Party, any Lender or any other Person for damages of any kind, whether or not based on strict liability and including (A) direct damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Loan Party’s or any Agent’s transmission of communications through the internet, except to the extent the liability of any such Person if found in a final ruling by a court of competent jurisdiction to have resulted from such Person’s gross negligence or willful misconduct or (B) indirect, special, incidental or consequential damages.

(iv)

Each Loan Party, each Lender, the Issuing Bank and each Agent agrees that the Administrative Agent may, but shall not be obligated to, store any Approved Electronic Communications on the Platform in accordance with the Administrative Agent’s customary document retention procedures and policies.

(v)

All uses of the Platform shall be governed by and subject to, in addition to this Section 10.01, separate terms and conditions posted or referenced in such Platform and related agreements executed by the Lenders and their Affiliates in connection with the use of such Platform.

(c)

Change of Address.  Any party hereto may changes its address or telecopy number for notices and other communications hereunder by written notice to the other parties hereto.

Section 10.02

Expenses

.  Whether or not the transactions contemplated hereby are consummated, each Borrower agrees to pay promptly (a) all the actual and reasonable out-of-pocket costs and expenses incurred by the Agents and the Arrangers in connection with the negotiation, preparation and execution of the Loan Documents and any consents, amendments, supplements, waivers or other modifications thereto; (b) the reasonable fees, 

193

expenses and disbursements of counsel to the Agents (in each case including allocated costs of internal counsel) in connection with the negotiation, preparation, execution and administration of the Loan Documents and any consents, amendments, supplements, waivers or other modifications thereto and any other documents or matters requested by any Borrower; provided that so long as a Default or Event of Default shall not have occurred and be continuing, reasonable attorney’s fees shall be limited to one primary counsel and, if reasonably required by the Administrative Agent, one local counsel per jurisdiction and one specialist counsel per specialty, provided, further, that no such limitation shall apply if counsel for the Administrative Agent determines in good faith that there is a conflict of interest that requires separate representation for any Agent or Lender; (c) all the actual costs and reasonable out-of-pocket expenses of creating, perfecting, recording, maintaining and preserving Liens in favor of the Collateral Agent, for the benefit of Secured Parties, including filing and recording fees, expenses and Taxes, stamp or documentary Taxes, search fees, title insurance premiums and reasonable fees, expenses and disbursements of counsel to the Collateral Agent and the Administrative Agent; (d) all the actual costs and reasonable out-of-pocket expenses (including the reasonable fees, expenses and disbursements of any appraisers, consultants, advisors and agents employed or retained by the Collateral Agent and its counsel) in connection with the custody or preservation of any of the Collateral; (e) all other actual costs and reasonable out-of-pocket expenses incurred by each Agent in connection with the syndication of the Loans and Commitments and the transactions contemplated by the Loan Documents and any consents, amendments, supplements, waivers or other modifications thereto; and (f) all actual costs and reasonable out-of-pocket expenses, including reasonable attorneys’ fees (including allocated costs of internal counsel) and costs of settlement, incurred by any Agent or any Lender in enforcing any Obligations of or in collecting any payments due from any Loan Party hereunder or under the other Loan Documents (including in connection with the sale, lease or license of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty) or in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a “work-out” or pursuant to any insolvency or bankruptcy cases or proceedings.  All amounts due under this Section 10.02 shall be due and payable promptly after demand therefor.

Section 10.03

Indemnity

.  

(a)

In addition to the payment of expenses pursuant to Section 10.02, whether or not the transactions contemplated hereby are consummated, each Loan Party agrees to defend (subject to Indemnitees’ rights to selection of counsel), indemnify, pay and hold harmless, each Agent, Arranger, Bookrunner, Issuing Bank, Swing Line Lender and Lender and the officers, partners, members, directors, trustees, shareholders, advisors, employees, representatives, attorneys, controlling persons, agents, sub-agents and Affiliates of each Agent, Arranger, Bookrunner, Issuing Bank, Swing Line Lender and Lender, as well as the respective heirs, successors and assigns of the foregoing (each, an “Indemnitee”), from and against any and all Indemnified Liabilities; provided, that no Loan Party shall have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities (a) arise from the gross negligence, bad faith or willful misconduct of such Indemnitee, in each case, as determined by a final, non-appealable judgment of a court of competent jurisdiction or (b) arise out of any dispute among Indemnified Persons (other than a dispute involving claims against the Administrative Agent, the Collateral Agent, the Arrangers or any other agent or co-

194

agent (if any) designated by the Arrangers with respect to the Facilities, in each case in their respective capacities as such, or any Arranger, solely in connection with its syndication activities as contemplated hereunder) that a court of competent jurisdiction has determined in a final and non-appealable decision did not involve actions or omissions of the Loan Parties; and provided, further, that in respect of a Dutch Loan Party, the Guaranty of such Dutch Loan Party (including the contribution requirements in respect of the indemnity in this Section 10.03) does not apply to any Indemnified Liability to the extent that it would result in this indemnity constituting unlawful financial assistance prohibited by section 2:98c or 2:207c of the Dutch Civil Code.  To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Section 10.03 may be unenforceable in whole or in part because they are violative of any law or public policy, the applicable Loan Party shall to the extent permitted by law contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them. 

(b)

To the extent permitted by applicable law, no Loan Party shall assert, and each Loan Party hereby waives, any claim against each Agent, Arranger, Bookrunner, Issuing Bank, Swing Line Lender and Lender and their respective Affiliates, officers, partners, members, directors, trustees, shareholders, advisors, employees, representatives, attorneys, controlling persons, agents and sub-agents on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, as a result of or in any way related to this Agreement or any Loan Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, the transmission of information through the Internet, any Loan or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, and each Loan Party hereby waives, releases and agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

(c)

All amounts due under this Section 10.03 shall be due and payable within five days after demand therefor.

Section 10.04

Set-Off

.  In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuation of any Event of Default each Lender is hereby authorized by each Loan Party at any time or from time to time to the fullest extent permitted by law and subject to the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed), without notice to any Loan Party or to any other Person (other than the Administrative Agent), any such notice being hereby expressly waived to the fullest extent permitted by applicable law, to set off and to appropriate and to apply any and all deposits (time or demand, provisional or final, general or special, including Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts) and any other Indebtedness at any time held or owing by such Lender to or for the credit or the account of any Loan Party against and on account of the obligations and liabilities of any Loan Party to such Lender hereunder, the Letters of Credit and participations therein and under the other Loan Documents, including all claims of any nature or description arising out of or connected hereto, the Letters of Credit and participations therein or with any other Loan Document, irrespective of whether or not (a) such 

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Lender shall have made any demand hereunder or (b) such obligations and liabilities, or any of them, may be contingent or unmatured.  

Section 10.05

Amendments and Waivers

.  

(a)

Required Lenders’ Consent.  Subject to the additional requirements of Sections 10.05(b) and 10.05(c), no amendment, supplement, modification, termination or waiver of any provision of the Loan Documents, or consent to any departure by any Loan Party therefrom, shall in any event be effective without the written concurrence of the Required Lenders and the U.S. Borrower (delivery of an executed counterpart of a signature page to the applicable amendment, supplement, modification, termination or waiver by facsimile or other electronic transmission will be effective as delivery of a manually executed counterpart thereof); provided that any Defaulting Lender shall be deemed not to be a “Lender” for purposes of calculating the Required Lenders (including the granting of any consents or waivers) with respect to any of the Loan Documents.

(b)

Affected Lenders’ Consent.  Without the written consent of each Lender (other than a Defaulting Lender) that would be directly and adversely affected thereby, no amendment, supplement, modification, termination, or consent shall be effective if the effect thereof would:

(i)

extend the scheduled final maturity of any Loan or Note;

(ii)

waive, reduce or postpone any scheduled repayment (but not prepayment) of principal;

(iii)

[reserved];

(iv)

reduce the rate of interest on any Loan (other than any waiver of any increase in the interest rate applicable to any Loan pursuant to Section 2.10) or any fee or any premium payable hereunder (it being understood that any change to the definition of Leverage Ratio or in the component definitions thereof shall not constitute a reduction in the rate of interest); provided, further, that only the consent of the Required Lenders shall be necessary to amend the Default Rate in Section 2.10 or to waive any obligation of any Borrower to pay interest at the Default Rate;

(v)

waive or extend the time for payment of any such interest, fees or premiums, it being understood that only the consent of the Required Lenders shall be necessary to rescind an acceleration of Obligations after acceleration thereof pursuant to Section 8.01 hereof;

(vi)

reduce or forgive the principal amount of any Loan or any reimbursement Obligation in respect of any Letter of Credit;

(vii)

amend, modify, terminate or waive any provision of Section 2.13(b)(ii), Section 2.13(c)(i) to the extent relating to the requirement to make Offers to all Lenders in a Class, Section 2.15 (except to the extent provided for in 10.05(c)(iii)), Section 2.16(c), Section 2.17, this Section 10.05(b), Section 10.05(c) or any other 

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provision of this Agreement that expressly provides that the consent of all Lenders is required;

(viii)

consent to the assignment or transfer by any Loan Party of any of its rights and obligations under any Loan Document except as expressly provided in any Loan Document; 

(ix)

amend the definition of “Required Lenders” or amend Section 10.5(a) in a manner that has the same effect as an amendment to such definition or the definition of “Pro Rata Share”; provided that with the consent of Required Lenders, additional extensions of credit pursuant hereto may be included in the determination of “Required Lenders” or “Pro Rata Share” on substantially the same basis as the Term Loan Commitments, the Term Loans, the Revolving Commitments and the Revolving Loans are included on the Closing Date;

(x)

release all or substantially all of the Collateral or all or substantially all of the Guarantors (by value) from the Guaranty except as expressly provided in the Loan Documents or any Intercreditor Agreement; 

(xi)

amend or modify any provision of Section 10.06 in a manner that further restricts assignments thereunder; 

(xii)

amend or modify any Intercreditor Agreement in a manner that would adversely affect the priority of the Liens of the Collateral Agent or the Subordination of any Indebtedness to the Obligations; or

(xiii)

change the stated currency in which any Borrower is required to make payments of principal, interest, fees or other amounts hereunder or under any other Loan Document; 

provided that, for the avoidance of doubt, all Lenders shall be deemed directly and adversely affected thereby with respect to any amendment described in clauses (vii), (viii), (ix), (x) and (xii).

(c)

Other Consents.  No amendment, modification, termination or waiver of any provision of the Loan Documents, or consent to any departure by any Loan Party therefrom, shall:

(i)

increase any Commitment of any Lender over the amount thereof then in effect or extend the outside date for such Commitment without the consent of such Lender; provided that no amendment, modification or waiver of any condition precedent, covenant, Default or Event of Default shall be deemed to constitute an increase in any Commitment of any Lender;

(ii)

amend, modify, terminate or waive any provision hereof relating to (x) the U.S. Swing Line Sublimit or the U.S. Swing Line Loans without the consent of the U.S. Swing Line Lender, or (y) the Canadian Swing Line Sublimit or the Canadian Swing Line Loans without the consent of the Canadian Swing Line Lender;

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(iii)

alter the required application of any repayments or prepayments as between Classes pursuant to Section 2.15 without the consent of Lenders holding more than 50.0% of the aggregate Tranche A Term Loan Exposure of all Lenders, Tranche B Term Loan Exposure of all Lenders, Revolving Exposure of all Lenders or Incremental Term Loan Exposure of all Lenders, as applicable, of each Class which is being allocated a lesser repayment or prepayment as a result thereof; provided, that Required Lenders may waive, in whole or in part, any prepayment so long as the application, as between Classes, of any portion of such prepayment which is still required to be made is not altered;

(iv)

amend, modify, terminate or waive any obligation of Lenders relating to the purchase of participations in Letters of Credit as provided in Section 2.04(e) without the written consent of the Administrative Agent and of the Issuing Bank; 

(v)

amend, modify or waive this Agreement or any Security Document so as to alter the ratable treatment of Obligations arising under the Loan Documents and Obligations arising under Hedge Agreements or the definition of “Lender Counterparty,” “Hedge Agreement,” “Obligations,” or “Secured Obligations” (as defined in any applicable Security Document) in each case in a manner adverse to any Lender Counterparty with Obligations then outstanding without the written consent of any such Lender Counterparty;

(vi)

amend, modify, terminate or waive any provision of Article IX as the same applies to any Agent, or any other provision hereof as the same applies to the rights or obligations of any Agent, in each case without the consent of such Agent; 

(vii)

amend any condition for Credit Extensions set forth in Section 3.02 without the consent of Lenders holding more than 50% of the aggregate Revolving Exposure of all Lenders; 

(viii)

without limiting the provisions of Section 10.05(b), amend, modify, terminate or waive any provision hereof that would materially, disproportionately and adversely affect the obligation of any Borrower to make any payment of Revolving Loans without the consent of Lenders holding more than 50% of the aggregate Revolving Exposure of all Lenders (or if such amendment, modification or waiver affects only the Foreign Revolving Loans or only the U.S. Revolving Loans, 50% of the aggregate Revolving Exposure of the relevant Class); 

(ix)

without limiting the provisions of Section 10.05(b), amend, modify, terminate or waive any provision hereof that would materially, disproportionately and adversely affect the obligation of any Borrower to make payment of Term Loans without the consent of Lenders holding more than 50.0% of the aggregate Term Loans of all Lenders (or if such amendment, modification or waiver affects only the Foreign Tranche A Term Loans. the Foreign Tranche B Term Loans, the U.S. Tranche A Term Loans or the U.S. Tranche B Term Loans, 50% of the aggregate Term Loans of the relevant Class); and

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(x)

(i) the Commitment or Loan of any Defaulting Lender may not be increased or extended and the principal of any Loan of a Defaulting Lender may not be reduced, in each case without the consent of such Lender and (ii) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of each such Defaulting Lender.

(d)

Execution of Amendments, Etc.  The Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, supplements, modifications, waivers or consents on behalf of such Lender.  Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. In the case of any waiver, subject to any conditions or qualifications set forth therein, the parties hereto shall be restored to their former positions and rights hereunder and under the other Loan Documents, and, subject to any conditions or qualifications set forth therein, any Default or Event of Default waived shall be deemed to be cured and not continuing, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right or consequence in respect thereof.  No notice to or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances.  Any amendment, modification, termination, waiver or consent effected in accordance with this Section 10.05 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by a Loan Party, on such Loan Party.

Notwithstanding anything to the contrary provided herein, no consent of any Lender shall be required in connection with the marking of any amendment to any Loan Document of the type described in Section 2.24 hereof which states in such Section that no consent of any Lender, other than the applicable Incremental Revolving Loan Lender or Incremental Term Loan Lender, is required. 

Section 10.06

Successors and Assigns; Participations

.  

(a)

Generally.  This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders.  No Loan Party’s rights or obligations hereunder nor any interest therein may be assigned or delegated by any Loan Party without the prior written consent of all Lenders (and any purported assignment or delegation without such consent shall be null and void) and no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 10.06.

(b)

Register.  Each Borrower, each Guarantor, the Administrative Agent and Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the corresponding Commitments and Loans listed therein for all purposes hereof, and no assignment or transfer of any such Commitment or Loan shall be effective, in each case, unless and until recorded in the Register following receipt of a fully executed Assignment Agreement effecting the assignment or transfer thereof, together with the required forms and certificates regarding Tax matters and any fees payable in connection with such assignment, in each case, as provided in Section 10.06(d).  Each assignment shall be recorded in the Register promptly following receipt by the Administrative Agent of the fully executed Assignment 

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Agreement and all other necessary documents and approvals, prompt notice thereof shall be provided to the Borrower and a copy of such Assignment Agreement shall be maintained, as applicable.  The date of such recordation of a transfer shall be referred to herein as the “Assignment Effective Date.”  Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Commitments or Loans.

(c)

Right to Assign.  Each Lender shall have the right at any time to sell, assign or transfer all or a portion of its rights and obligations under this Agreement, including all or a portion of its Commitment or Loans owing to it or other Obligations (provided, that pro rata assignments shall not be required and each assignment shall be of a uniform, and not varying, percentage of all rights and obligations under and in respect of any applicable Loan and any related Commitments):

(i)

to any Person meeting the criteria of clause (i) of the definition of the term of “Eligible Assignee” upon the giving of notice to the Administrative Agent; and

(ii)

to any Person meeting the criteria of clause (ii) of the definition of the term of “Eligible Assignee” upon giving of notice to the Borrower Representative and the Administrative Agent and, in the case of assignments of Revolving Loans or Revolving Commitments to any such Person, consented to by the Borrower Representative (provided that the Borrower Representative shall be deemed to have consented to assignments made during the initial syndication of the Revolving Commitments to Lenders previously approved by the Borrower Representative and to any other such assignment unless it shall object thereto by written notice to the Administrative Agent within 5 Business Days after having received notice thereof, the Administrative Agent, the applicable Issuing Bank and the applicable Swing Line Lender (each such consent not to be (x) unreasonably withheld or delayed or (y) in the case of the Borrower Representative, required at any time an Event of Default described in clause (a), (f), (g) or (h) of Section 8.01 has occurred and is continuing); provided, that each such assignment pursuant to this Section 10.06(c)(ii) shall be in an aggregate amount of not less than (A) $2,500,000 (or such lesser amount as may be agreed to by the Borrower Representative and the Administrative Agent or as shall constitute the aggregate amount of the Revolving Commitments and Revolving Loans of the assigning Lender) with respect to the assignment of the Revolving Commitments and Revolving Loans and (B) $1,000,000 (or such lesser amount as may be agreed to by the Borrower Representative and the Administrative Agent or as shall constitute the aggregate amount of the Tranche A Term Loan, Tranche B Term Loan or Incremental Term Loans of a Series of the assigning Lender) with respect to the assignment of Term Loans; provided, that the Related Funds of any individual Lender may aggregate their Loans for purposes of determining compliance with such minimum assignment amounts.

(d)

Mechanics.  Assignments and assumptions of Loans and Commitments by Lenders shall be effected by manual execution and delivery to the Administrative Agent of an Assignment Agreement.  Assignments made pursuant to the foregoing provision shall be 

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effective as of the Assignment Effective Date.  In connection with all assignments there shall be delivered to the Administrative Agent such forms, certificates or other evidence, if any, with respect to United States federal income Tax withholding matters as the assignee under such Assignment Agreement may be required to deliver pursuant to Section 2.20(c), together with payment to the Administrative Agent of a registration and processing fee of $3,500 (except that no such registration and processing fee shall be payable (x) in connection with an assignment elected or caused by a Borrower pursuant to Section 2.23, (y) in connection with an assignment by or to Barclays Bank or any Affiliate thereof or (z) in the case of an assignee which is already a Lender or is an Affiliate or Related Fund of a Lender or a Person under common management with a Lender).  

(e)

Representations and Warranties of Assignee.  Each Lender, upon execution and delivery hereof or upon succeeding to an interest in the Commitments and Loans, as the case may be, represents and warrants as of the Closing Date or as of the Assignment Effective Date that (i) it is an Eligible Assignee; (ii) it has experience and expertise in the making of or investing in commitments or  loans such as the applicable Commit­ments or Loans, as the case may be; and (iii) it shall make or invest in, as the case may be, its Commitments or Loans for its own account in the ordinary course and without a view to distribution of such Commitments or Loans within the meaning of the Securities Act or the Exchange Act or other federal securities laws (it being understood that, subject to the provisions of this Section 10.06, the disposition of such Commitments or Loans or any interests therein shall at all times remain within its exclusive control).

(f)

Effect of Assignment.  Subject to the terms and conditions of this Section 10.06, as of the “Assignment Effective Date” (i) the assignee thereunder shall have the rights and obligations of a “Lender” hereunder to the extent of its interest in the Loans and Commitments as reflected in the Register and shall thereafter be a party hereto and a “Lender” for all purposes hereof; (ii) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned to the assignee, relinquish its rights (other than any rights which survive the termination hereof, including under Section 10.08) and be released from its obligations hereunder (and, in the case of an assignment covering all or the remaining portion of an assigning Lender’s rights and obligations hereunder, such Lender shall cease to be a party hereto on the Assignment Effective Date; provided, that anything contained in any of the Loan Documents to the contrary notwithstanding, (y) the Issuing Bank shall continue to have all rights and obligations thereof with respect to such Letters of Credit until the cancellation or expiration of such Letters of Credit and the reimbursement of any amounts drawn thereunder and (z) such assigning Lender shall continue to be entitled to the benefit of all indemnities hereunder as specified herein with respect to matters arising out of the prior involvement of such assigning Lender as a Lender hereunder); (iii) the Commitments shall be modified to reflect any Commitment of such assignee and any Revolving Commitment of such assigning Lender, if any; and (iv) if any such assignment occurs after the issuance of any Note hereunder, the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes to the Administrative Agent for cancellation, and thereupon the applicable Borrower shall issue and deliver new Notes, if so requested by the assignee and/or assigning Lender, to such assignee and/or to such assigning Lender, with appropriate insertions, to reflect the new Revolving Commitments and/or outstanding Loans of the assignee and/or the assigning Lender.  Any assignment or transfer by a Lender of rights or obligations under this 

201

Agreement that does not comply the requirements of this Section 10.06 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.06(g).  Any assignment by a Lender pursuant to this Section 10.06 shall not in any way constitute or be deemed to constitute a novation, discharge, rescission, extinguishment or substitution of the Indebtedness hereunder, and any Indebtedness so assigned shall continue to be the same obligation and not a new obligation.

(g)

Participations.

(i)

Each Lender shall have the right at any time to sell one or more participations to any Person (other than any Group Member or any of their respective Affiliates) in all or any part of its Commitments, Loans or in any other Obligation: provided, that (A) such Lender’s obligations shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (C) each Borrower, the Administrative Agent, each Issuing Bank and Each of the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s agreements and obligations. 

(ii)

The holder of any such participation, other than an Affiliate of the Lender granting such participation, shall not be entitled to require such Lender to take or omit to take any action hereunder except with respect to any amendment, modification or waiver that would (A) extend the final scheduled maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is not extended beyond the Revolving Commitment Termination Date) in which such participant is participating or the amortization schedule therefor, or reduce the rate or extend the time of payment of interest or fees thereon (except in connection with a waiver of applicability of any post-default increase in interest rates) or reduce the principal amount thereof, or increase the amount of the participant’s participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory reduction in the Commitment shall not constitute a change in the terms of such participation, and that an increase in any Commitment or Loan shall be permitted without the consent of any participant if the participant’s participation is not increased as a result thereof), (B) consent to the assignment or transfer by any Loan Party of any of its rights and obligations under this Agreement or (C) release all or substantially all of the Guarantors or the Collateral under the Security Documents (except as expressly provided in the Loan Documents) supporting the Loans hereunder in which such participant is participating.

(iii)

Each Borrower agrees that each participant shall be entitled to the benefits of Sections 2.18(c), 2.19 and 2.20 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (c) of this Section; provided, that such participant agrees to be subject to Sections 2.19 and 2.20 as if it were a Lender; provided, further, that (x) a participant shall not be entitled to receive any greater payment under Section 2.19 or 2.20 than the applicable Lender would have been entitled to receive with respect to the participation sold to such participant, unless the sale of the participation to such participant is made with the Borrower Representative’s prior written consent and (y) a participant shall not be entitled to the benefits of Section 2.20 unless such participant agrees, for the benefit of the Borrowers, to comply with Section 

202

2.20 as though it were a Lender; provided, further, that, except as specifically set forth in clause (x) of this sentence, nothing herein shall require any notice to the Borrower Representative or any other Person in connection with the sale of any participation.  To the extent permitted by law, each participant also shall be entitled to the benefits of Section 10.04 as though it were a Lender; provided, that such participant agrees to be subject to Section 2.17 as though it were a Lender.  A participant shall not be entitled to the benefits of Section 2.20 to the extent such participant fails to comply with Section 2.20(c). 

(iv)

Each Lender that sells a participation shall maintain a register on which it enters the name and address of each participant and the principal amounts of each participant’s interest in the Commitments, Loans and other Obligations held by it (the “Participant Register”).  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such Commitments, Loans and other Obligations as the owner thereof for all purposes of this Agreement notwithstanding any notice to the contrary.  Any such Participant Register shall be available for inspection by the Administrative Agent at any reasonable time and from time to time upon reasonable prior notice.

(h)

Certain Other Assignments and Participations.  In addition to any other assignment or participation permitted pursuant to this Section 10.06 any Lender may pledge (without the consent of any Borrower or the Administrative Agent) all or any portion of its Loans, the other Obligations owed by or to such Lender, and its Notes, if any, to secure obligations of such Lender including any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors and any operating circular issued by such Federal Reserve Bank; provided, that no Lender, as between any Borrower and such Lender, shall be relieved of any of its obligations hereunder as a result of any such assignment and pledge; provided, further, that in no event shall the applicable Federal Reserve Bank, pledgee or trustee, be considered to be a “Lender” or be entitled to require the assigning Lender to take or omit to take any action hereunder.

(i)

Act on the Financial Supervision.  In order to comply with the Dutch Financial Supervision Act (Wet op het financieel toezicht), the amount transferred under this Section 10.06 shall include a portion outstanding from the Foreign Borrower of at least € 50,000 (or its equivalent in other currencies) or such other amount as may be required from time to time by the Dutch Financial Supervision Act (or implementing legislation) or if less, the new Lender shall confirm in writing to the Loan Parties that it is a professional market party (professionele marktpartij) within the meaning of the Dutch Financial Supervision Act.

Section 10.07

Independence of Covenants, Etc.

.  All covenants, conditions and other terms hereunder and under the other Loan Documents shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, conditions or other terms, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant, condition or other term shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists.

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Section 10.08

Survival of Representations, Warranties and Agreements

.  All representations, warranties and agreements made herein shall survive the execution and delivery hereof and the making of any Credit Extension.  Notwithstanding anything herein or implied by law to the contrary, the agreements of each Loan Party set forth in Sections 2.18(c), 2.19, 2.20, 10.02 and 10.03 and the agreements of Lenders set forth in Sections 2.17, 9.03(b), 9.06 and 9.09 shall survive the payment of the Loans, the cancellation or expiration of the Letters of Credit and the reimbursement of any amounts drawn thereunder, and the termination hereof.

Section 10.09

No Waiver; Remedies Cumulative

.  No failure or delay or course of dealing on the part of any Agent or any Lender in the exercise of any power, right or privilege hereunder or under any other Loan Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege.  The rights, powers and remedies given to each Agent and each Lender hereby are cumulative and shall be in addition to and independent of all rights, powers and remedies existing by virtue of any statute or rule of law or in any of the other Loan Documents or any of the Hedge Agreements.  Any forbearance or failure to exercise, and any delay in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy.  Without limiting the generality of the foregoing, the making of any Credit Extension shall not be construed as a waiver of any Default or Event of Default, regardless of whether any Agent, Issuing Bank or Lender may have had notice or knowledge of such Default or Event of Default at the time of the making of any such Credit Extension.

Section 10.10

Marshalling; Payments Set Aside

.  Neither any Agent nor any Lender shall be under any obligation to marshal any assets in favor of any Loan Party or any other Person or against or in payment of any or all of the Obligations.  To the extent that any Loan Party makes a payment or payments to the Administrative Agent or Lenders (or to the Administrative Agent, on behalf of Lenders), or any Agent or Lenders enforce any security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or setoff had not occurred.

Section 10.11

Severability

.  In case any provision in or obligation hereunder or under any other Loan Document shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby (it being understood that the invalidity, illegality or unenforceability of a particular provision in a particular jurisdiction shall not in and of itself affect the validity, legality or enforceability of such provision in any other jurisdiction).  The parties hereto shall endeavor in good faith negotiations to replace any invalid, illegal or unenforceable provisions with valid, 

204

legal and enforceable provisions the economic effect of which comes as close as reasonably possible to that of the invalid, illegal or unenforceable provisions.

Section 10.12

Obligations Several; Independent Nature of Lenders’ Rights

.  The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitment of any other Lender hereunder.  Nothing contained herein or in any other Loan Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and each Lender shall be entitled to protect and enforce its rights arising out hereof and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose.

Section 10.13

Table of Contents and Headings

.  The Table of Contents hereof and Article and Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose, modify or amend the terms or conditions hereof, be used in connection with the interpretation of any term or condition hereof or be given any substantive effect.

Section 10.14

APPLICABLE LAW

.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.

Section 10.15

CONSENT TO JURISDICTION

.  SUBJECT TO CLAUSE (E) OF THE FOLLOWING SENTENCE, ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY ARISING OUT OF OR RELATING HERETO OR ANY OTHER LOAN DOCUMENT, OR ANY OF THE OBLIGATIONS, SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK.  BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH LOAN PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, HEREBY EXPRESSLY AND IRREVOCABLY (A) ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS (OTHER THAN WITH RESPECT TO ACTIONS BY ANY AGENT IN RESPECT OF RIGHTS UNDER ANY SECURITY AGREEMENT GOVERNED BY A LAWS OTHER THAN THE LAWS OF THE STATE OF NEW YORK OR WITH RESPECT TO ANY COLLATERAL SUBJECT THERETO); (B) WAIVES (I) JURISDICTION AND VENUE OF COURTS IN ANY OTHER JURISDICTION IN WHICH IT MAY BE ENTITLED TO BRING SUIT BY REASON OF ITS PRESENT OR FUTURE DOMICILE OR OTHERWISE AND (II) ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE LOAN PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.01; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) 

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ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE LOAN PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES THAT THE AGENTS AND THE LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION IN CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER ANY SECURITY DOCUMENT OR THE ENFORCEMENT OF ANY JUDGMENT.

Section 10.16

WAIVER OF JURY TRIAL

.  EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS.  EACH PARTY HERETO FURTHER WAR­RANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.16 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER WILL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

Section 10.17

Confidentiality

.  Each Agent and each Lender (which term shall for the purposes of this Section 10.17 include the Issuing Bank) shall hold all non-public information regarding the Group and their businesses identified as such by the Borrower Representative and obtained by such Agent or such Lender pursuant to the requirements hereof in accordance with such Agent’s and such Lender’s customary procedures for handling confidential information of such nature, it being understood and agreed by the Borrower Representative that, in any event, the Administrative Agent may disclose such information to the 

206

Lenders and each Agent and each Lender may make (i) disclosures of such information to Affiliates or Related Funds of such Lender or Agent and to their respective officers, directors, employees, representatives, agents and advisors (and to other Persons authorized by a Lender or Agent to organize, present or disseminate such information in connection with disclosures otherwise made in accordance with this Section 10.17); provided, that, prior to any disclosure, such Affiliates, Related Funds, officers, directors, employees, representatives, agents and advisors and other persons be instructed to preserve the confidentiality of any confidential information relating to the Loan Parties received by it from any Agent or any Lender, (ii) disclosures of such information reasonably required by (A) any pledgee referred to in Section 10.06(h), (B) any bona fide or potential assignee, transferee or participant in connection with the contemplated assignment, transfer or participation of any Loans or any participations therein, (C) any bona fide or potential direct or indirect contractual counterparties (or the professional advisors thereto) to any swap or derivative transaction relating to any Borrower and its obligations or (D) any direct or indirect investor or prospective investor in a Related Fund; provided, that such pledgees, assignees, transferees, participants, counterparties, advisors and investors are advised of and agree to be bound by either the provisions of this Section 10.17 or other provisions at least as restrictive as this Section 10.17, (iii) disclosure to any rating agency when required by it; provided, that, prior to any disclosure, such rating agency be instructed to preserve the confidentiality of any confidential information relating to the Loan Parties received by it from any Agent or any Lender, (iv) disclosures in connection with the exercise of any remedies hereunder or under any other Loan Document and (v) disclosures required or requested by any governmental agency or representative thereof or by the NAIC or pursuant to legal or judicial process; provided, that unless specifically prohibited by applicable law or court order, each Lender and each Agent shall make reasonable efforts to notify the Borrower Representative of any request by any governmental agency or representative thereof (other than any such request in connection with any examination of the financial condition or other routine examination of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information.  In addition, each Agent and each Lender may disclose the existence of this Agreement and the information about this Agreement to market data collectors, similar services providers to the lending industry, and service providers to the Agents and the Lenders in connection with the administration and management of this Agreement and the other Loan Documents.  

Section 10.18

Usury Savings Clause

.  Notwithstanding any other provision herein, the aggregate interest rate charged with respect to any of the Obligations, including all charges or fees in connection therewith deemed in the nature of interest under applicable law, shall not exceed the Highest Lawful Rate.  If the rate of interest (determined without regard to the preceding sentence) under this Agreement at any time exceeds the Highest Lawful Rate, the outstanding amount of the Loans made hereunder shall bear interest at the Highest Lawful Rate until the total amount of interest due hereunder equals the amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect; provided, that in no event shall the amount paid pursuant hereto be in excess of the amount of interest that would have been due if the state rates of interest set forth in this Agreement had at all times been in effect. In addition, if when the Loans made hereunder are repaid in full the total interest due hereunder (taking into account the increase provided for above) is less than the total amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect, 

207

then to the extent permitted by law, such Borrower shall pay to the Administrative Agent an amount equal to the difference between the amount of interest paid and the amount of interest which would have been paid if the Highest Lawful Rate had at all times been in effect.  Notwithstanding the foregoing, it is the intention of Lenders and each Borrower to conform strictly to any applicable usury laws.  Accordingly, if any Lender contracts for, charges, or receives any consideration which constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be cancelled automatically and, if previously paid, shall at such Lender’s option be applied to the outstanding amount of the Loans made hereunder or be refunded to the applicable Borrower. 

Section 10.19

Counterparts

.  This Agreement may be executed in any number of counterparts (and by different parties hereto on different counterparts), each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile or other electronic transmission will be effective as delivery of a manually executed counterpart thereof.

Section 10.20

Effectiveness; Entire Agreement; No Third Party Beneficiaries

.  This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by the Borrowers and the Administrative Agent of written notification of such execution and authorization of delivery thereof.  With the exception of those terms contained in Sections 3, 5, 8 and 9 of the Commitment Letter, dated March 15, 2010, between the Arrangers, the Bookrunners and the U.S. Borrower (the “Commitment Letter”), which by the terms of the Commitment Letter remain in full force and effect, all of the Arrangers’, the Bookrunners’ and their respective Affiliates’ obligations under the Commitment Letter shall terminate and be superseded by the Loan Documents and the Arrangers, the Bookrunners and their respective Affiliates shall be released from all liability in connection therewith, including any claim for injury or damages, whether consequential, special, direct, indirect, punitive or otherwise.  This Agreement, the other Loan Documents and any fee letter entered into in connection with the Commitment Letter represent the entire agreement of the Group, the Agents, the Issuing Bank, the Swing Line Lender, the Arrangers, the Bookrunners and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by any Agent, Issuing Bank, Swing Line Lender, Arranger, Bookrunner or Lender relative to the subject matter hereof or thereof not expressly set forth or referred to herein or in the other Loan Documents.  Nothing in this Agreement or in the other Loan Documents, express or implied, shall be construed to confer upon any Person (other than the parties hereto and thereto, their respective successors and assigns permitted hereunder and, to the extent expressly contemplated hereby, Affiliates of each of the Agents and Lenders, holders of participations in all or any part of a Lender’s Commitments, Loans or in any other Obligations, and the Indemnitees) any rights, remedies, obligations, claims or liabilities under or by reason of this Agreement or the other Loan Documents.  In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of any Agent, the Issuing Bank or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement.

208

Section 10.21

PATRIOT Act

.  Each Lender and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies each Loan Party that pursuant to the requirements of the PATRIOT Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that shall allow such Lender or the Administrative Agent, as applicable, to identify such Loan Party in accordance with the PATRIOT Act.

Section 10.22

“Know Your Customer” Checks

.  If in connection with (a) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date hereof, (b) any change in the status of a Loan Party after the date hereof, (c) the addition of any Guarantor pursuant to Section 5.12 or (d) any proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that was not previously a Lender hereunder, the Administrative Agent or any Lender (or, in the case of clause (d) above, any prospective Lender) requires additional information in order to comply with "know your customer" or similar identification procedures, each Loan Party shall, promptly upon the request of the Administrative Agent or such Lender, provide such documentation and other evidence as is reasonably requested by the Administrative Agent (for itself or on behalf of any Lender) or such Lender (for itself or, in the case of the event described in clause (d) above, on behalf of any prospective Lender) in order for the Administrative Agent, such Lender or such prospective Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Loan Documents.

Section 10.23

Electronic Execution of Assignments

.  The words “execution,” “signed,” “signature,” and words of like import in any Assignment Agreement shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

Section 10.24

No Fiduciary Duty

.  Each Agent, each Lender, each Arranger, each Bookrunner, each Issuing Bank, the Swing Line Lender and their respective Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”), may have economic interests that conflict with those of each Borrower, its stockholders and/or its Affiliates.  Each Borrower agrees that nothing in the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and such Borrower, its stockholders or its Affiliates, on the other; provided that each Loan Party acknowledges that one or more Affiliates of Barclays Bank, DBSI and BAS (collectively, the “Borrower Financial Advisor”) has been retained by the Borrower as a buy-side financial advisor in connection with the Acquisition.  The Borrowers, on behalf of themselves and their respective Subsidiaries and Affiliates, agree not to assert any claim that the Borrowers and their respective Subsidiaries and Affiliates might allege based on any actual or potential conflict of interest that might be asserted to arise or result from, on the one hand, the engagement of the Borrower Financial Advisor and, on the other hand, Barclays Bank’s, DBSI’s or BAS’s or their respective Affiliates’ respective relationships as Agent, 

209

Lender, Arranger, Bookrunner, Issuing Bank or Swing Line Lender, as applicable, described herein.  The Loan Parties acknowledge and agree that (i) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Borrowers, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of any Borrower, its stockholders or its Affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise any Borrower, its stockholders or its Affiliates on other matters) or any other obligation to any Borrower except the obligations expressly set forth in the Loan Documents and (y) each Lender is acting solely as principal and not as the agent or fiduciary of any Borrower, its management, stockholders, creditors or any other Person.  Each Borrower acknowledges and agrees that such Borrower has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto.  Each Borrower agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Borrower, in connection with such transaction or the process leading thereto.

Section 10.25

Judgment Currency

.  If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment in given.  The obligation of any Borrower in respect of such sum due from it to the Administrative Agent or the Lenders hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency.  If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent from the applicable Borrower in the Agreement Currency, such Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or the Person to whom such obligation was owing against such loss.  If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent in such currency, the Administrative Agent agrees to return the amount of any excess to such Borrower (or to any other Person who may be entitled thereto under applicable Law). 

Section 10.26

Ancillary Borrowers

.  Subject to the terms of this Agreement, a Restricted Subsidiary of the Foreign Borrower may, with the approval of any relevant Ancillary Lender, become a borrower with respect to an Ancillary Facility.  The Borrower Representative shall specify the relevant Restricted Subsidiary in a written notice delivered by it to the Administrative Agent pursuant to Section 2.26.  Such Restricted Subsidiary shall become an Ancillary Borrower when such Restricted Subsidiary has delivered the following to the Administrative Agent and the relevant Ancillary Lender: (i) a Counterpart 

210

Agreement in the form of Exhibit F-2, (ii) all such information required by the Administrative Agent or the relevant Lender with respect to the regulations described in Section 10.21 or 10.22 and (iii) such documentation and certificates as are similar to those described in Sections 3.01(b), 3.01(h) and 3.01(m) and such other legal opinions as the Administrative Agent or the relevant Ancillary Lender may request.  

[Remainder of page intentionally left blank]

211

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

PHILLIPS-VAN HEUSEN CORPORATION, as U.S. Borrower

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

TOMMY HILFIGER B.V., as Foreign Borrower

By:

/s/ Ludo Onnink

/s/ Fred Gehring

Name:

Ludo Onnink 

Fred Gehring

Title:

Amsterdam

Credit and Guaranty Agreement

Guarantor: 

PVH PUERTO RICO, INC.

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Guarantor: 

PHILLIPS VAN HEUSEN PUERTO RICO LLC

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Guarantor: 

PVH PRINCE C.V. HOLDING CORPORATION

By:

/s/ Michael Shaffer

Name:

Michael Shaffer

Title:

Executive Vice President

Guarantor: 

BASSNET, INC.

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Guarantor: 

PVH RETAIL STORES, INC.

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Credit and Guaranty Agreement

Guarantor: 

IZOD.COM INC.

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Guarantor: 

PVH WHOLESALE CORP.

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Guarantor: 

PVH FOREIGN HOLDINGS CORP.

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Guarantor: 

PVH WHOLESALE NEW JERSEY, INC.

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Guarantor: 

CALVIN KLEIN, INC.

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Credit and Guaranty Agreement

Guarantor: 

CK SERVICE CORP.

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Guarantor: 

CLUETT PEABODY RESOURCES CORPORATION

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Guarantor: 

CLUETT, PEABODY & CO., INC.

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Guarantor: 

PVH EUROPE, INC.

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Credit and Guaranty Agreement

Guarantor: 

PVH REALTY CORP.

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Guarantor: 

PVH NECKWEAR, INC.

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Guarantor: 

KARL LAGERFELD LLC

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Guarantor: 

TOMMY HILFIGER U.S.A., INC.

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Guarantor: 

TOMMY HILFIGER RETAIL, LLC

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Credit and Guaranty Agreement

Guarantor: 

TOMMY HILFIGER WHOLESALE, INC.

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Guarantor: 

TOMMY HILFIGER LICENSING LLC

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Guarantor: 

TOMCAN INVESTMENTS INC.

By:

/s/ Mark D. Fischer

Name:

Mark D. Fischer

Title:

Senior Vice President

Credit and Guaranty Agreement

Guarantor: 

TRUMPET C.V.

Represented by its general partner

BassNet, Inc.

By:

/s/ Mark D. Fischer

Name:

Title:

Credit and Guaranty Agreement

PRINCE 1 B.V.

By:

/s/ A.R. van der Veen

/s/ J. Haneveer

Name:

A.R. van der Veen

J. Haneveer

Title:  Managing Director

Proxyholder 

of ATC

of ATC 

Management B.V.

Management B.V.

Credit and Guaranty Agreement

PRINCE 2 B.V.

By:

/s/ A.R. van der Veen

/s/ J. Haneveer

Name:

A.R. van der Veen

J. Haneveer

Title:  Managing Director

Proxyholder 

of ATC

of ATC 

Management B.V.

Management B.V.

Credit and Guaranty Agreement

BARCLAYS BANK PLC,

as Administrative Agent, Collateral Agent, Swing Line Lender, Issuing Bank and a Lender

By:

/s/ Diane Rolfe

Name:

Diane Rolfe

Title:

Director

Credit and Guaranty Agreement

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,

as a Lender

By:

/s/ Shaheen Malik

Name:

Shaheen Malik

Title:

Vice President

By:

/s/ Kevin Buddhdew

Name:

Kevin Buddhdew

Title:

Associate

Credit and Guaranty Agreement

Royal Bank of Canada,

as a Lender

By:

/s/ Gordon MacArthur

Name:

Gordon MacArthur

Title:

Authorized Signatory

Credit and Guaranty Agreement

DEUTSCHE BANK AG NEW YORK BRANCH,

as a Lender

By:

/s/ Mary Kay Coyle

Name:

Mary Kay Coyle

Title:

Managing Director

Credit and Guaranty Agreement

DEUTSCHE BANK AG NEW YORK BRANCH,

as a Lender

By:

/s/ Scottye Lindsey

Name:

Scottye Lindsey

Title:

Director

Credit and Guaranty Agreement

BANK OF AMERICA, N.A.,

as Issuing Bank and a Lender

By:

/s/ Thomas Kainamura

Name:

Thomas Kainamura

Title:

VP, Bank of America, N.A.

Credit and Guaranty Agreement

JPMorgan Chase Bank, N.A.,

as Issuing Bank and a Lender

By:

/s/ James A. Knight

Name:

James A. Knight

Title:

Vice President

Credit and Guaranty Agreement

FORTIS BANK (NEDERLAND), N.V.,

as Issuing Bank and a Lender

By:

/s/ P. Booij

Name:

P. Booij

Title:

Senior Banker

Credit and Guaranty Agreement

Compass Bank,

as a Lender

By:

/s/ Ramon Garcia

Name:

Ramon Garcia

Title:

Vice President

Credit and Guaranty Agreement

Caja De Ahorros Y Monte de Piedad de Madrid,

as a Lender

By:

/s/ Manuel Nunez Fernandez

Name:

Manuel Nunez Fernandez

Title:

General Manager

By:

/s/ Juan Pablo Hernandez de la Merced

Name:

Juan Pablo Hernandez de la Merced

Title:

Director – North American Corporate Banking

Credit and Guaranty Agreement

Crédit Agricole Corporate & Investment Bank

By:

/s/ Pamela Donnelly

Name:

Pamela Donnelly

Title:

Managing Director

By:

/s/ Yuri Muzichenko

Name:

Yuri Muzichenko

Title:

Director

Credit and Guaranty Agreement

HSBC Bank USA, N.A.

By:

/s/ Darren Pinsker

Name:

Darren Pinsker

Title:

Senior Vice President

Credit and Guaranty Agreement

THE BANK OF NOVA SCOTIA,

as a Lender

By:

/s/ Todd S. Miller

Name:

Todd S. Miller

Title:

Managing Director

Credit and Guaranty Agreement

Sumitomo Mitsui Banking Corporation,

as a Lender

By:

/s/ Yasuhiko Imai

Name:

Yasuhiko Imai

Title:

Senior Vice President

Credit and Guaranty Agreement

SunTrust Bank,

as a Lender

By:

/s/ Donald Besch Jr.

Name:

Donald Besch Jr.

Title:

Managing Director

Credit and Guaranty Agreement

U.S. Bank National Association,

as a Lender

By:

/s/ Blake Malia

Name:

Blake Malia

Title:

Vice President

Credit and Guaranty Agreement

General Electric Capital Corporation,

as a Lender

By:

/s/ Marie G. Mollo

Name:

Marie G. Mollo

Title:

Duly Authorized Signatory

Credit and Guaranty Agreement

Mediobanca International (Luxembourg) S.A.,

as a Lender

By:

/s/ Andrew O’Rourke

Name:

Andrew O’Rourke

Title:

Associate

Credit and Guaranty Agreement

DZ Bank AG - Deutsche Zentral-Genossenschaftsbank,

as a Lender

By:

/s/ Spangenberg

/s/ Romer

Name:

(Spangenberg)

Romer

Title:

Vice President

Credit and Guaranty Agreement

ICBC (London) Ltd,

as a Lender

By:

/s/ Ko Jung

/s/ Junlei Xu

Name:

Ko Jiang

Junlei Xu

Title:

DGM

MD

Credit and Guaranty Agreement

TORONTO DOMINION (NEW YORK) LLC,

as a Lender

By:

/s/ Jackie Barrett

Name:

Jackie Barrett

Title:

Authorized Signatory

Credit and Guaranty Agreement

DBS Bank Ltd., Los Angeles Agency,

as a Lender

By:

/s/ James McWalters

Name:

James McWalters

Title:

General Manager

Credit and Guaranty Agreement

RAYMOND JAMES BANK, FSB,

as a Lender

By:

/s/ Thomas F. Macina

Name:

Thomas F. Macina

Title:

Executive Vice President

Credit and Guaranty Agreement

PNC Bank, National Assoc.,

as a Lender

By:

/s/ Edward M. Tessalune

Name:

Edward M. Tessalune

Title:

Senior Vice President

Credit and Guaranty Agreement

CREDIT INDUSTRIEL ET COMMERCIAL,

as a Lender

By:

/s/ Brian O’Leary

Name:

Brian O’Leary.

Title:

Managing Director

By:

/s/ Anthony Rock

Name:

Anthony Rock.

Title:

Managing Director

Credit and Guaranty Agreement

Israel Discount Bank of New York,

as a Lender

By:

/s/ George Commander

Name:

George Commander

Title:

Senior Vice President

By:

/s/ Esther Lainis

Name:

Esther Lainis

Title:

First Vice President

Credit and Guaranty Agreement

State Bank of India,

as a Lender

By:

/s/ Mr. Ashok Gulia

Name:

Mr. Ashok Gulia

Title:

Vice President & Head (Credit)

Credit and Guaranty Agreement

BANK LEUMI USA,

as a Lender

By:

/s/ Joung Hee Hong

Name:

Joung Hee Hong

Title: 

Vice President

Credit and Guaranty Agreement

SCHEDULE 1.01(a)

Tranche A Term Loan Commitments

US Tranche A Term Loan Commitments

			
	Lender

	Tranche A

Term Loan Commitment

	Pro

Rata Share

	Barclays Bank PLC

	$19,609,181.32

	5.33%

	Deutsche Bank AG New York Branch

	$19,368,421.04

	5.27%

	Bank of America, N.A.

	$16,105,263.15

	4.38%

	Credit Suisse AG, Cayman Islands Branch

	$16,105,263.15

	4.38%

	Royal Bank of Canada

	$16,105263.15

	4.38%

	Compass Bank

	$21,594,853.80

	5.87%

	Caja de Ahorros y Monte de Piedad de Madrid

	$21,594,853.80

	5.87%

	Crédit Agricole Corporate & Investment Bank

	$10,796,315.79

	2.94%

	HSBC Bank USA, N.A.

	$10,796,315.79

	2.94%

	JPMorgan Chase Bank, N.A.

	$21,594,853.80

	5.87%

	Sumitomo Mitsui Banking Corporation, New York

	$21,594,853.80

	5.87%

	SunTrust Bank

	$21,594,853.80

	5.87%

	U.S. Bank National Association

	$21,594,853.80

	5.87%

	The Bank of Nova Scotia

	$21,594,853.80

	5.87%

	General Electric Capital Corporation

	$20,807,894.75

	5.66%

	Toronto Dominion (New York) LLC     

	$14,473,684.21

	3.94%

	DBS Bank Ltd., Los Angeles Agency

	$14,473,684.21

	3.94%

	Raymond James Bank, FSB

	$13,157,894.74

	3.58%

	PNC Bank, National Association

	$10,526,315.79

	2.86%

	Credit Industriel et Commercial

	$10,526,315.79

	2.86%

	Israel Discount Bank of New York

	$7,894,736.84

	2.15%

	State Bank of India

	$7,894,736.84

	2.15%

	Bank Leumi USA

	$7,894,736.84

	2.15%

	Total

	$367,700,000.00

	100%

Schedule 1.01(a) - 1

Foreign Tranche A Term Loan Commitments

			
	Lender

	Tranche A

Term Loan Commitment

	Pro

Rata Share

	Barclays Bank PLC

	€13,413,692.96

	13.41%

	Deutsche Bank AG New York Branch

	€5,251,223.30

	5.25%

	Bank of America, N.A.

	€3,739,507.50

	3.74%

	Credit Suisse AG, Cayman Islands Branch

	€3,739,507.50

	3.74%

	Royal Bank of Canada

	€3,739,507.50

	3.74%

	HSBC Bank USA, N.A.

	€8,160,480.57

	8.16%

	Fortis Bank (Nederland) N.V.

	€20,000,000.00

	20.00%

	General Electric Capital Corporation

	€4,163,185.74

	4.16%

	Mediobanca International (Luxembourg) S.A.

	€13,923,698.13

	13.92%

	DZ Bank AG - Deutsche Zentral-Genossenschaftsbank 

	€11,934,598.40

	11.93%

	ICBC (London) Limited  

	€11,934,598.40

	11.93%

	Total

	€100,000,000.00

	100%

Schedule 1.01(a) - 2

SCHEDULE 1.01(b)

Tranche B Term Loan Commitments

US Tranche B Term Loan Commitments

			
	Lender

	Tranche B Term

Loan Commitment

	ProRata

Share

	Barclays Bank PLC

	$1,003,100,000.00

	100%

	Total

	$1,003,100,000.00

	100%

Foreign Tranche B Term Loan Commitments

			
	Lender

	Tranche B Term

Loan Commitment

	ProRata

Share

	Barclays Bank PLC

	€300,000,000.00

	100%

	Total

	€300,000,000.00

	100%

Schedule 1.01(b) - 1

SCHEDULE 1.01(c)

Revolving Commitments

US Revolving Commitments

			
	Lender

	Revolving Commitment

	Pro Rata Share

	Barclays Bank PLC

	$12,610,526.29

	4.76%

	Deutsche Bank AG New York Branch

	$12,473,684.21

	4.71%

	Bank of America, N.A.

	$9,578,947.37

	3.61%

	Credit Suisse AG, Cayman Islands Branch

	$9,578,947.37

	3.61%

	Royal Bank of Canada

	$9,578,947.37

	3.61%

	Compass Bank

	$12,645,614.04

	4.77%

	Caja de Ahorros y Monte de Piedad de Madrid

	$12,645,614.04

	4.77%

	Crédit Agricole Corporate & Investment Bank

	$12,645,614.04

	4.77%

	HSBC Bank USA, N.A.

	$12,645,614.04

	4.77%

	JPMorgan Chase Bank, N.A.

	$12,645,614.04

	4.77%

	The Bank of Nova Scotia

	$12,645,614.04

	4.77%

	Sumitomo Mitsui Banking Corporation, New York

	$12,645,614.04

	4.77%

	SunTrust Bank

	$12,645,614.04

	4.77%

	U.S. Bank National Association

	$12,645,614.04

	4.77%

	General Electric Capital Corporation

	$19,210,526.32

	7.25%

	Toronto Dominion (New York) LLC      

	$13,026,315.79

	4.92%

	DBS Bank Ltd., Los Angeles Agency

	$13,026,315.79

	4.92%

	Raymond James Bank, FSB

	$11,842,105.26

	4.47%

	PNC Bank, National Association

	$9,473,684.21

	3.57%

	Credit Industriel et Commercial

	$9,473,684.21

	3.57%

	Israel Discount Bank of New York

	$7,105,263.15

	2.68%

	State Bank of India

	$7,105,263.15

	2.68%

	Bank Leumi USA

	$7,105,263.15

	2.68%

	Total Commitments

	$265,000,000.00

	100%

Schedule 1.01(c) - 1

Foreign Revolving Commitments

			
	Lender

	Revolving Commitment

	Pro Rata Share

	Barclays Bank PLC

	€7,025,920.18

	5.31%

	Deutsche Bank AG New York Branch

	€6,961.849.07

	5.26%

	Bank of America, N.A.

	€5,569,479.25

	4.21%

	Credit Suisse AG, Cayman Islands Branch

	€5,569,479.25

	4.21%

	Royal Bank of Canada

	€5,569,479.25

	4.21%

	Compass Bank

	€4,353,387.88

	3.29%

	Caja de Ahorros y Monte de Piedad de Madrid

	€4,353,387.88

	3.29%

	Crédit Agricole Corporate & Investment Bank

	€4,355,067.56

	3.29%

	HSBC Bank USA, N.A.

	€4,355,067.56

	3.29%

	JPMorgan Chase Bank, N.A.

	€4,353,387.88

	3.29%

	The Bank of Nova Scotia

	€4,353,387.88

	3.29%

	Sumitomo Mitsui Banking Corporation, New York

	€4,353,387.88

	3.29%

	SunTrust Bank

	€4,353,387.88

	3.29%

	U.S. Bank National Association

	€4,353,387.88

	3.29%

	Fortis Bank (Nederland) N.V.

	€25,000,000.00

	18.90%

	General Electric Capital Corporation

	€3,381,469.54

	2.56%

	Mediobanca International (Luxembourg) S.A.

	€12,531,328.32

	9.47%

	DZ Bank AG - Deutsche Zentral-Genossenschaftsbank

	€10,741,138.57

	8.12%

	ICBC (London) Limited      

	€10,741,138.57

	8.12%

	Total

	€132,275,132.28

	100%

Schedule 1.01(c) - 2

Canadian Revolving Commitments

			
	Lender

	Revolving Commitment

	Pro Rata Share

	Barclays Bank PLC

	$2,000,000.00

	20.00%

	Deutsche Bank AG New York Branch

	$2,000,000.00

	20.00%

	Bank of America, N.A.

	$2,000,000.00

	20.00%

	Credit Suisse AG, Cayman Islands Branch

	$2,000,000.00

	20.00%

	Royal Bank of Canada

	$2,000,000.00

	20.00%

	Total Commitments

	$10,000,000.00

	100%

Schedule 1.01(c) - 3

SCHEDULE 1.01(d)

Notice Addresses

LOAN PARTIES

c/o Phillips-Van Heusen Corporation

200 Madison Avenue

New York, NY 10016

United States

Attention: 

Mark D. Fischer

Phone:

(212) 381-3509

Fax: 

(212) 381-3993

Email:

markfischer@pvh.com

Attention:

Pamela N. Hootkin

Phone:

(212) 381-3507

Fax:

(212) 381-3950

Email:

pamelahootkin@pvh.com

Schedule 1.01(d) - 1

BARCLAYS BANK PLC,

as Administrative Agent, Collateral Agent, Syndication Agent,

Swing Line Lender, Issuing Bank and a Lender:

For Notices to the New York Office:

Barclays Bank PLC

745 Seventh Avenue, 26th Floor

New York, NY 10019

Attention: Diane F. Rolfe 

Facsimile: (212) 526-5115

Telephone:  (212) 526-1109

Email: diane.rolfe@barcap.com

 with a copy to:

Agency Services

600 E. Las Colinas Blvd., Suite #1300

Irving, TX 75039

Attention: Tequella English

Facsimile: (972) 401-8557

Telephone:  (972) 401-8569

Email:  tequellaenglish@loan-agents.com

For Notices to the London Office:

Barclays Bank PLC

5 The North Colonnade

London E14 4BB

United Kingdom

Attention: Antony Girling

Facsimile: +44 (0)20 773 1045

Telephone:  +44 (0)20 773 4893

Email: antony.girling@barcap.com

Schedule 1.01(d) - 2

DEUTSCHE BANK SECURITIES INC., 

as Syndication Agent

Mary Kay Coyle

Managing Director

Deutsche Bank

60 Wall Street

New York, NY 10005

Telephone: 212-250-6039

Fax: 212-797-5690

DEUTSCHE BANK AG, NEW YORK BRANCH, 

as a Lender

Mary Kay Coyle

Managing Director

Deutsche Bank

60 Wall Street

New York, NY 10005

Telephone: 212-250-6039

Fax: 212-797-5690

Schedule 1.01(d) - 3

BANC OF AMERICA SECURITIES LLC as

Co-Documentation Agent

c/o Bank of America, N.A.

2001 Clayton Road

Concord, CA 94520

Attention: Anthony Salvador

Phone: (925) 675-8101

Fax: (888) 969-9226

Email: Anthony.salvador@baml.com

BANK OF AMERICA, N.A., as

Lender

Bank of America, N.A.

2001 Clayton Road

Concord, CA 94520

Attention: Anthony Salvador

Phone: (925) 675-8101

Fax: (888) 969-9226

Email: Anthony.salvador@baml.com

Schedule 1.01(d) - 4

CREDIT SUISSE SECURITIES (USA) LLC, 

as Co-Documentation Agent 

Credit Suisse Securities (USA) LLC

Eleven Madison Avenue

New York, NY 10010

Attention: Sanjay Rijhwani

Phone: (212) 325-8633

Facsimile: (212) 743-5223

Email: sanjay.rijhwani@credit-suisse.com

CREDIT SUISSE AG, 

as Lender 

c/o Credit Suisse AG, Cayman Islands Branch

Eleven Madison Avenue

New York, NY  10010

Attention: Shaheen Malik

Phone:  212-538-4047

Facsimile: 212-322-0420

Email: shaheen.malik@credit-suisse.com

Attention: Fay Rollins

Phone:  212-325-9041

Facsimile: 866-469-3871

Email: fay.rollins@credit-suisse.com

Schedule 1.01(d) - 5

ROYAL BANK OF CANADA, 

as Co-Documentation Agent and a Lender

Royal Bank of Canada

Loans Administration

One Liberty Plaza

4th Floor

New York, NY, 10006-1404

Attention: Manager, Loans Administration

Phone: (877) 332-7455

Fax: (212) 428-2372

Schedule 1.01(d) - 6

SCHEDULE 1.01(e)

		
	 
	Agreed Security Principles

	The Principles:

	The guarantees and security to be provided in support of the Foreign Tranche A Term Loans, the Foreign Tranche B Term Loans and the Foreign Revolving Commitment will be given in accordance with the agreed security principles set out in this Schedule 1.01(e).

	Potential restrictions on credit support:

	The Agreed Security Principles recognize there may be legal and practical difficulties in obtaining security from the Foreign Borrower and Foreign Guarantors (the “Foreign Obligors”) in every jurisdiction in which Foreign Obligors are incorporated or operate.  In particular:

	 
	(i)

general, statutory limitations, financial assistance, corporate benefit, fraudulent preference, thin capitalization rules, retention of title claims and similar principles may limit the ability of a Foreign Obligor to provide a guarantee or, grant security or may require that its guarantee be limited in amount or scope.  The U.S. Borrower will use commercially reasonable efforts to assist in demonstrating that adequate corporate benefit accrues to the Foreign Borrower and each Foreign Obligor;

	 
	(ii)

the guarantees and collateral (and extent of its perfection) shall exclude such guarantees and collateral as to which the parties shall reasonably determine that the costs of obtaining such guarantees and collateral are excessive in relation to the value of the guarantee and collateral to be afforded thereby); and

Schedule 1.01(e) - 1

		
	 
	(iii)

Foreign Obligors will not be required to give guarantees or enter into Security Documents if doing so would conflict with the fiduciary duties of their directors or contravene any legal prohibition or result in a material risk of personal or criminal liability on the part of any officer, provided that each Foreign Obligor must use commercially reasonable efforts to overcome any such obstacle, and provided further that if a Foreign Guarantor can give a limited guarantee, it will grant such a limited guarantee.

	Guarantees:

	To the extent legally permitted and subject to paragraphs (a), (b) and (c) above, each guarantee and security will be an upstream, cross-stream and downstream guarantee and each guarantee and security will be for all liabilities of the Foreign Obligors under the Loan Documents.

	Security Perfection:

	Perfection of security (when required) and other legal formalities will be completed as soon as practicable and, in any event, within the time periods specified by applicable law or, if earlier, the applicable Loan Document in order to ensure due perfection.  Perfection of security will not be required if it would have a material adverse effect on the ability of the relevant Foreign Obligor to conduct its operations and business in the ordinary course as permitted by the Loan Documents.  No notice of receivables security may be given to third party debtors until an Event of Default has occurred (and for so long as it is continuing) unless such notice is required to perfect the security.  Notification of any Lien over insurance policies will be given (subject to local law advice) to the relevant insurer without undue delay.   The Collateral Agent may register security interests in Intellectual Property provided such registration does not interfere with the business of the Foreign Subsidiaries.

	Security Enforcement:

	The Security Documents and other Loan Documents will allow the Lenders to enforce their Lien without any restriction from (i) the constitutional documents of the relevant Foreign Obligor, (ii) any company which is or whose assets are the subject of such Security Document (but subject to any inalienable statutory rights which the Borrowers may have to challenge such enforcement) or (iii) any shareholders of the foregoing not party to the relevant Security Document.

Schedule 1.01(e) - 2

		
	Terms of Security Documents:

	The following principles will be reflected in the terms of any Lien taken as part of this transaction:

	 
	(i)

the Lien will be first ranking, if commercially feasible;

	 
	(ii)

the Lien will not be enforceable until an Event of Default has occurred;

	 
	(iii)

in respect of the share pledges, customary limitations on the exercise of voting rights by the pledgor to protect the validity and enforceability of the Lien over shares shall apply;

	 
	(iv)

until an Event of Default occurs, (i) the pledgor shall retain and exercise voting rights to any shares pledged in a manner that does not adversely affect the validity or enforceability of the Lien or cause an Event of Default to occur, and (ii) prior to an Event of Default, the pledgor will be permitted to receive dividends upstream to the extent permitted under the Loan Documents with the proceeds to be available to the U.S. Borrower and its Subsidiaries;

	 
	(v)

the Lenders shall only be able to exercise a power of attorney following the occurrence of an Event of Default that is continuing or if the relevant Foreign Obligor has failed to comply with a further assurance or perfection obligation; and

	 
	(vi)

to the extent required for the purpose of granting Liens under the laws of a relevant jurisdiction, the Foreign Obligor shall grant a parallel debt to the Collateral Agent.

Schedule 1.01(e) - 3

SCHEDULE 1.01(f)

Mandatory Costs

1.

The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank.

2.

On the first day of each Interest Period (or as soon as possible thereafter) the Administrative Agent shall calculate, as a percentage rate, a rate (the “Additional Cost Rate”) for each Lender, in accordance with the paragraphs set out below.  The Mandatory Cost will be calculated by the Administrative Agent as a weighted average of the Lenders’ Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the relevant Loan) and will be expressed as a percentage rate per annum. 

3.

The Additional Cost Rate for any Lender lending from a Facility Office in a Participating Member State will be the percentage notified by that Lender to the Administrative Agent.  This percentage will be certified by that Lender in its notice to the Administrative Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender's participation in all Loans made from that Facility Office) of complying with the minimum reserve requirements of the European Central Bank in respect of loans made from that Facility Office. 

4.

The Additional Cost Rate for any Lender lending from a Facility Office in the United Kingdom will be calculated by the Administrative Agent as follows: 

(a)

in relation to a sterling Loan: 

		
	AB + C(B – D) + E x 0.01

	   per cent. per annum

	100 – (A + C)

(b)

in relation to a Loan in any currency other than sterling: 

		
	E x 0.01

	   per cent. per annum.

	300

	 
	 

Where:

A

is the percentage of Eligible Liabilities (assuming these to be in excess of any stated minimum) which that Lender is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements.

B

is the percentage rate of interest (excluding the Applicable Margin and the Mandatory Cost and any additional rate of interest specified in Section 2.10) payable for the relevant Interest Period on the Loan. 

Schedule 1.01(f) - 1

C

is the percentage (if any) of Eligible Liabilities which that Lender is required from time to time to maintain as interest bearing Special Deposits with the Bank of England. 

D

is the percentage rate per annum payable by the Bank of England to the Administrative Agent on interest bearing Special Deposits. 

E

is designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by the Administrative Agent as being the average of the Fee Tariffs applicable to the Administrative Agent in its capacity as a Lender for that financial year and expressed in pounds per £1,000,000 of the Tariff Base of the Administrative Agent in its capacity as a Lender. 

5.

For the purposes of this Schedule: 

(a)

“Eligible Liabilities” and “Special Deposits” have the meanings given to them from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England; 

(b)

“Facility Office” means:

(i)

in respect of a Lender or Issuing Bank, the office or offices notified 

by that Lender or Issuing Bank to the Administrative Agent in writing on   or before the date it becomes a Lender or Issuing Bank (or, following   that date, by not less than five Business Days’ written notice) as the office   or offices through which it will perform its obligations under the Credit   Agreement; or 

(ii)

in respect of any other Agent or Secured Party, the office in the 

jurisdiction in   which it is resident for tax purposes. 

(c)

“Fees Rules” means the rules on periodic fees contained in the Financial Services Authority Fees Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits; 

(d)

“Fee Tariffs” means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate); and

(e)

“Financial Services Authority” means the Financial Services Authority in the United Kingdom.

(f)

“Mandatory Cost” means the percentage rate per annum calculated by the Administrative Agent in accordance with the formula set forth above.

Schedule 1.01(f) - 2

(g)

“Participating Member State” means any member state of the EMU that adopts or has adopted the euro as its lawful currency in accordance with legislation of the EMU relating to Economic and Monetary Union. 

(h)

“Tariff Base” has the meaning given to it in, and will be calculated in accordance with, the Fees Rules.  

6.

In application of the above formulae, A, B, C and D will be included in the formulae as percentages (i.e. 5 per cent. will be included in the formula as 5 and not as 0.05).  A negative result obtained by subtracting D from B shall be taken as zero.  The resulting figures shall be rounded to four decimal places. 

7.

Each Lender shall supply any information required by the Administrative Agent for the purpose of calculating its Additional Cost Rate.  In particular, but without limitation, each Lender shall supply the following information on or prior to the date on which it becomes a Lender: 

(a)

the jurisdiction of its Facility Office; and

(b)

any other information that the Administrative Agent may reasonably require for 

    such purpose. 

Each Lender shall promptly notify the Administrative Agent of any change to the information provided by it pursuant to this paragraph. 

8.

The percentages of each Lender for the purpose of A and C above shall be determined by the Administrative Agent based upon the information supplied to it pursuant to paragraph 7 above and on the assumption that, unless a Lender notifies the Administrative Agent to the contrary, each Lender’s obligations in relation to cash ratio deposits and Special Deposits are the same as those of a typical bank from its jurisdiction of incorporation with a Facility Office in the same jurisdiction as its Facility Office. 

9.

The Administrative Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to assume that the information provided by any Lender pursuant to paragraphs 3 and 7 above is true and correct in all respects.  

10.

The Administrative Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender pursuant to paragraphs 3 and 7 above. 

11.

Any determination by the Administrative Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all parties to the Credit Agreement. 

12.

The Administrative Agent may from time to time, after consultation with the Borrower Representative and the Lenders, determine and notify to all parties any amendments which 

Schedule 1.01(f) - 3

are required to be made to this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all parties to the Credit Agreement. 

Schedule 1.01(f) - 4

SCHEDULE 1.01(g)

Material Companies

Tommy Hilfiger Japan Corporation 

Tommy Hilfiger Japan Holdings GK 

Tommy Hilfiger Canada Inc. 

Tommy Hilfiger Canada Retail Inc.

Hilfiger Beteiligungsgesellschaft mbH 

Hilfiger Holdings Germany GmbH & Co. KG 

Hilfiger Stores GmbH 

T.H. Deutschland GmbH 

Tommy Hilfiger Footwear Europe GmbH 

Tommy Hilfiger Group B.V. 

Tommy Hilfiger Europe B.V. 

Hilfiger Stores B.V. 

TH Monument B.V. 

Schedule 1.01(g) - 1

SCHEDULE 1.01(h)

Foreign Guarantors

Tommy Hilfiger Canada Inc. 

Tommy Hilfiger Canada Retail Inc. 

Hilfiger Beteiligungsgesellschaft mbH 

Hilfiger Holdings Germany GmbH & Co. KG 

Hilfiger Stores GmbH 

T.H. Deutschland GmbH 

Tommy Hilfiger Footwear Europe GmbH 

Trumpet C.V.

Prince 1 B.V.

Prince 2 B.V.

Tommy Hilfiger Group B.V. 

Tommy Hilfiger Europe B.V. 

Hilfiger Stores B.V. 

TH Monument B.V. 

Schedule 1.01(h) - 1

SCHEDULE 1.01(i)

Existing Canadian Letters of Credit

NONE

Schedule 1.01(i) - 1

SCHEDULE 1.01(j)

Existing Foreign Letters of Credit

							
	Issuer

	Issuing Bank

	Beneficiary

	Currency

	Amount

	Start Date

	Maturity

	Tommy Hilfiger Group B.V.

	Fortis Bank (Nederland) N.V.

	[***]

	JPY

	[***]

	23-Jan-08

	Mar-13

[***] Redacted pursuant to a request for confidential treatment.

Schedule 1.01(j) - 1

SCHEDULE 1.01(k)

Existing U.S. Letters of Credit

See Annex to this Schedule 1.01(k). 

Schedule 1.01(k) - 1

	
	May 04, 2010

Standby Letters of Credit Outstanding

JPMorganChase

by Applicant & Expiry Date

											
	JP Morgan

Reference

	Client Reference

	Beneficiary Name

	Beneficiary City

	Beneficiary State/

Country

	Date

LC Open

	Expiry

Date

	Currency

	LC

Amount

	Available

Amount

In LC Curr

	USD Outstanding

Liability

	
Applicant:

CALVIN KLEIN TRADEMARK TRUST

	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	226827

	T-226827

	[***]

	 
	GERMANY

	06/20/02

	06/18/11

	EUR

	[***]

	[***]

	[***]

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	Grand Total for Applicant:

	 
	[***]

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	
Applicant:

PHILLIPS-VAN HEUSEN CORP

	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	236329

	T-236329

	[***]

	 
	UNITED KINGDOM

	04/08/03

	08/01/10

	GBP

	[***]

	[***]

	[***]

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	Grand Total for Applicant:

	 
	[***]

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	
Applicant:

PHILLIPS-VAN HEUSEN CORPORATION

	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	TPTS-302990

	TPTS-302990

	[***]

	 
	UNITED STATES

	01/02/07

	01/06/11

	USD

	[***]

	[***]

	[***]

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	Grand Total for Applicant:

	 
	[***]

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	USD Total All:

	 
	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 2

  Date Format: MM/DD/YY

May 04, 2010 

JPMorganChase

Phillips-Van Heusen Corporation

Letters of Credit Outstanding

By Importer Reference Number

									
	Reference Numbers

	 
	 
	 
	 
	 
	 
	 

	PVH Corp

Reference

	JP Morgan

Reference

	Beneficiary Name

	Open

Date

	Expiry

Date

	Latest

Ship Date

	Curr

	Outstanding

	Outstanding

USD Equivalent

	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 

	ARROWSPORT/491272

	HLHI-491272

	[***]

	12/03/09

	04/16/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/491323

	HLHI-491323

	[***]

	12/15/09

	04/06/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/491363

	HLHI-491363

	[***]

	12/22/09

	04/19/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/491492

	HLHI-491492

	[***]

	01/18/10

	05/04/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/491688

	HLHI-491688

	[***]

	02/19/10

	06/06/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/491701

	HLHI-491701

	[***]

	02/23/10

	06/30/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/491703

	HLHI-491703

	[***]

	02/23/10

	06/21/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/491730

	HLHI-491730

	[***]

	03/02/10

	07/06/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/491758

	HLHI-491758

	[***]

	03/03/10

	06/21/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/491800

	HLHI-491800

	[***]

	03/09/10

	06/21/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/491842

	HLHI-491842

	[***]

	03/16/10

	07/05/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/491845

	HLHI-491845

	[***]

	03/16/10

	08/15/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/491879

	HLHI-491879

	[***]

	03/22/10

	06/21/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/491882

	HLHI-491882

	[***]

	03/22/10

	09/09/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/491993

	HLHI-491993

	[***]

	04/07/10

	07/19/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/492021

	HLHI-492021

	[***]

	04/08/10

	08/02/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/492078

	HLHI-492078

	[***]

	04/15/10

	08/16/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/492081

	HLHI-492081

	[***]

	04/15/10

	08/02/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/492179

	HLHI-492179

	[***]

	04/30/10

	08/23/10

	 
	USD

	[***]

	[***]

	ARROWSPORT/492182

	HLHI-492182

	[***]

	04/30/10

	08/23/10

	 
	USD

	[***]

	[***]

	BASS APP/490744

	HLHI-490744

	[***]

	09/16/09

	04/17/10

	 
	USD

	[***]

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 3

Date Format: MM/DD/YY

May 04, 2010 

JPMorganChase

Phillips-Van Heusen Corporation

Letters of Credit Outstanding

By Importer Reference Number

									
	BASS APP/490872

	HLHI-490872

	[***]

	10/09/09

	04/20/10

	 
	USD

	[***]

	[***]

	BASS APP/491250

	HLHI-491250

	[***]

	12/02/09

	05/15/10

	 
	USD

	[***]

	[***]

	BASS APP/491400

	HLHI-491400

	[***]

	12/31/09

	04/17/10

	 
	USD

	[***]

	[***]

	BASS APP/491402

	HLHI-491402

	[***]

	12/31/09

	04/17/10

	 
	USD

	[***]

	[***]

	BASS APP/491404

	HLHI-491404

	[***]

	12/31/09

	05/15/10

	 
	USD

	[***]

	[***]

	BASS APP/491547

	HLHI-491547

	[***]

	01/27/10

	05/24/10

	 
	USD

	[***]

	[***]

	BASS APP/491600

	HLHI-491600

	[***]

	02/02/10

	05/17/10

	 
	USD

	[***]

	[***]

	BASS APP/491603

	HLHI-491603

	[***]

	02/02/10

	05/20/10

	 
	USD

	[***]

	[***]

	BASS APP/491733

	HLHI-491733

	[***]

	03/02/10

	05/22/10

	 
	USD

	[***]

	[***]

	BASS APP/491752

	HLHI-491752

	[***]

	03/03/10

	07/05/10

	 
	USD

	[***]

	[***]

	BASS APP/491753

	HLHI-491753

	[***]

	03/03/10

	06/19/10

	 
	USD

	[***]

	[***]

	BASS APP/491756

	HLHI-491756

	[***]

	03/03/10

	07/19/10

	 
	USD

	[***]

	[***]

	BASS APP/492005

	HLHI-492005

	[***]

	04/07/10

	08/16/10

	 
	USD

	[***]

	[***]

	BASS APP1492006

	HLHI-492006

	[***]

	04/07/10

	08/14/10

	 
	USD

	[***]

	[***]

	BASS APP/492010

	HLHI-492010

	[***]

	04/07/10

	07/17/10

	 
	USD

	[***]

	[***]

	BASS APP/492165

	HLHI-492165

	[***]

	04/29/10

	08/16/10

	 
	USD

	[***]

	[***]

	BASS APP/492174

	HLHI-492174

	[***]

	04/30/10

	07/16/10

	 
	USD

	[***]

	[***]

	BASS APP/492176

	HLHI-492176

	[***]

	04/30/10

	08/22/10

	 
	USD

	[***]

	[***]

	CK SP CAN/491133

	HLHI-491133

	[***]

	11/17/09

	04/05/10

	 
	USD

	[***]

	[***]

	CK SP CAN/491574

	HLHI-491574

	[***]

	02/01/10

	04/26/10

	 
	USD

	[***]

	[***]

	CK SP CAN/492053

	HLHI-492053

	[***]

	04/13/10

	07/25/10

	 
	USD

	[***]

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 4

Date Format: MM/DD/YY

May 04, 2010 

JPMorganChase

Phillips-Van Heusen Corporation

Letters of Credit Outstanding

By Importer Reference Number

									
	CK SP CAN/492121

	HLHI-492121

	[***]

	04/23/10

	08/15/10

	 
	USD

	[***]

	[***]

	CK-SPORT/491134

	HLHI-491134

	[***]

	11/17/09

	04/05/10

	 
	USD

	[***]

	[***]

	CK-SPORT/491554

	HLHI-491554

	[***]

	01/28/10

	04/26/10

	 
	USD

	[***]

	[***]

	CK-SPORT/491575

	HLHI-491575

	[***]

	02/01/10

	04/26/10

	 
	USD

	[***]

	[***]

	CK-SPORT/491802

	HLHI-491802

	[***]

	03/09/10

	07/12/10

	 
	USD

	[***]

	[***]

	CK-SPORT/491840

	HLHI-491840

	[***]

	03/16/10

	07/05/10

	 
	USD

	[***]

	[***]

	CK-SPORT/492055

	HLHI-492055

	[***]

	04/13/10

	07/18/10

	 
	USD

	[***]

	[***]

	CK-SPORT/492122

	HLHI-492122

	[***]

	04/23/10

	09/10/10

	 
	USD

	[***]

	[***]

	IZ SP CAN/491364

	HLHI-491364

	[***]

	12/22/09

	04/09/10

	 
	USD

	[***]

	[***]

	IZ SP CAN/491406

	HLHI-491406

	[***]

	01/05/10

	04/20/10

	 
	USD

	[***]

	[***]

	IZ SP CAN/491458

	HLHI-491458

	[***]

	01/11/10

	05/10/10

	 
	USD

	[***]

	[***]

	IZ SP CAN/491826

	HLHI-491826

	[***]

	03/12/10

	07/05/10

	 
	USD

	[***]

	[***]

	IZ SP CAN/491921

	HLHI-491921

	[***]

	03/25/10

	08/14/10

	 
	USD

	[***]

	[***]

	IZ SP CAN/491947

	HLHI-491947

	[***]

	03/29/10

	07/12/10

	 
	USD

	[***]

	[***]

	IZ SP CAN/491954

	HLHI-491954

	[***]

	03/30/10

	07/12/10

	 
	USD

	[***]

	[***]

	IZ SP CAN/491957

	HLHI-491957

	[***]

	03/30/10

	08/09/10

	 
	USD

	[***]

	[***]

	IZ SP CAN/492039

	HLHI-492039

	[***]

	04/12/10

	08/02/10

	 
	USD

	[***]

	[***]

	IZ SP CAN/492050

	HLHI-492050

	[***]

	04/12/10

	08/09/10

	 
	USD

	[***]

	[***]

	IZ SP CAN/492178

	HLHI-492178

	[***]

	04/30/10

	08/19/10

	 
	USD

	[***]

	[***]

	IZ W SP CAN/491344

	HLHI-491344

	[***]

	12/17/09

	04/18/10

	 
	USD

	[***]

	[***]

	IZ W SP CAN/491464

	HLHI-491464

	[***]

	01/12/10

	04/26/10

	 
	USD

	[***]

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 5

Date Format: MM/DD/YY

May 04, 2010 

JPMorganChase

Phillips-Van Heusen Corporation

Letters of Credit Outstanding

By Importer Reference Number

									
	IZ W SP CAN/491855

	HLHI-491855

	[***]

	03/17/10

	07/10/10

	 
	USD

	[***]

	[***]

	IZ W SP CAN/491955

	HLHI-491955

	[***]

	03/30/10

	07/15/10

	 
	USD

	[***]

	[***]

	IZ WOMEN/491348

	HLHI-491348

	[***]

	12/18/09

	04/19/10

	 
	USD

	[***]

	[***]

	IZ WOMEN/491700

	HLHI-491700

	[***]

	02/23/10

	06/14/10

	 
	USD

	[***]

	[***]

	IZ WOMEN/491779

	HLHI-491779

	[***]

	03/04/10

	07/10/10

	 
	USD

	[***]

	[***]

	IZ WOMEN/491956

	HLHI-491956

	[***]

	03/30/10

	07/15/10

	 
	USD

	[***]

	[***]

	IZ WOMEN/492085

	HLHI-492085

	[***]

	04/15/10

	08/16/10

	 
	USD

	[***]

	[***]

	IZ WOMEN/492104

	HLHI-492104

	[***]

	04/20/10

	08/16/10

	 
	USD

	[***]

	[***]

	IZOD RET/491178

	HLHI-491178

	[***]

	11/20/09

	04/10/10

	 
	USD

	[***]

	[***]

	IZOD RET/491179

	HLHI-491179

	[***]

	11/20/09

	04/10/10

	 
	USD

	[***]

	[***]

	IZOD RET/491288

	HLHI-491288

	[***]

	12/07/09

	05/05/10

	 
	USD

	[***]

	[***]

	IZOD RET/491513

	HLHI-491513

	[***]

	01/20/10

	05/27/10

	 
	USD

	[***]

	[***]

	IZOD RET/491529

	HLHI-491529

	[***]

	01/22/10

	05/08/10

	 
	USD

	[***]

	[***]

	IZOD RET/491530

	HLHI-491530

	[***]

	01/22/10

	05/15/10

	 
	USD

	[***]

	[***]

	IZOD RET/491681

	HLHI-491681

	[***]

	02/17/10

	07/03/10

	 
	USD

	[***]

	[***]

	IZOD RET/491698

	HLHI-491698

	[***]

	02/23/10

	06/14/10

	 
	USD

	[***]

	[***]

	IZOD RET/491808

	HLHI-491808

	[***]

	03/10/10

	07/01/10

	 
	USD

	[***]

	[***]

	IZOD RET/491823

	HLHI-491823

	[***]

	03/12/10

	07/05/10

	 
	USD

	[***]

	[***]

	IZOD RET1491846

	HLHI-491846

	[***]

	03/16/10

	07/03/10

	 
	USD

	[***]

	[***]

	IZOD RET/491847

	HLHI-491847

	[***]

	03/16/10

	07/03/10

	 
	USD

	[***]

	[***]

	IZOD RET/492123

	HLHI-492123

	[***]

	04/23/10

	10/18/10

	 
	USD

	[***]

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 6

Date Format: MM/DD/YY

May 04, 2010 

JPMorganChase

Phillips-Van Heusen Corporation

Letters of Credit Outstanding

By Importer Reference Number

									
	IZOD RET/492166

	HLHI-492166

	[***]

	04/29/10

	08/16/10

	 
	USD

	[***]

	[***]

	IZOD RET/492167

	HLHI-492167

	[***]

	04/29/10

	08/16/10

	 
	USD

	[***]

	[***]

	IZOD RET/492175

	HLHI-492175

	[***]

	04/30/10

	08/16/10

	 
	USD

	[***]

	[***]

	IZOD WOMENS/491624

	HLHI-491624

	[***]

	02/03/10

	04/18/10

	 
	USD

	[***]

	[***]

	IZOD/491071

	HLHI-491071

	[***]

	11/06/09

	04/12/10

	 
	USD

	[***]

	[***]

	IZOD/491074

	HLHI-491074

	[***]

	11/09/09

	04/14/10

	 
	USD

	[***]

	[***]

	IZOD/491205

	HLHI-491205

	[***]

	11/25/09

	04/06/10

	 
	USD

	[***]

	[***]

	IZOD/491248

	HLHI-491248

	[***]

	12/02/09

	04/14/10

	 
	USD

	[***]

	[***]

	IZOD/491329

	HLHI-491329

	[***]

	12/15/09

	04/12/10

	 
	USD

	[***]

	[***]

	IZOD/491352

	HLHI-491352

	[***]

	12/21/09

	05/10/10

	 
	USD

	[***]

	[***]

	IZOD/491366

	HLHI-491366

	[***]

	12/22/09

	04/12/10

	 
	USD

	[***]

	[***]

	IZOD/491405

	HLHI-491405

	[***]

	01/05/10

	04/20/10

	 
	USD

	[***]

	[***]

	IZOD/491407

	HLHI-491407

	[***]

	01/05/10

	05/07/10

	 
	USD

	[***]

	[***]

	IZOD/491457

	HLHI-491457

	[***]

	01/11/10

	05/10/10

	 
	USD

	[***]

	[***]

	IZOD/491512

	HLHI-491512

	[***]

	01/20/10

	05110/10

	 
	USD

	[***]

	[***]

	IZOD/491535

	HLHI-491535

	[***]

	01/25/10

	05/10/10

	 
	USD

	[***]

	[***]

	IZOD/491548

	HLHI-491548

	[***]

	01/27/10

	05/10/10

	 
	USD

	[***]

	[***]

	IZOD/491599

	HLHI-491599

	[***]

	02/02/10

	06/09/10

	 
	USD

	[***]

	[***]

	IZOD/491692

	HLHI-491692

	[***]

	02/19/10

	07/05/10

	 
	USD

	[***]

	[***]

	IZOD/491699

	HLHI-491699

	[***]

	02/23/10

	06/14/10

	 
	USD

	[***]

	[***]

	IZOD/491702

	HLHI-491702

	[***]

	02/23/10

	07/15/10

	 
	USD

	[***]

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 7

Date Format: MM/DD/YY

May 04, 2010 

JPMorganChase

Phillips-Van Heusen Corporation

Letters of Credit Outstanding

By Importer Reference Number

									
	IZOD/491707

	HLHI-491707

	[***]

	02/24/10

	05/15/10

	 
	USD

	[***]

	[***]

	IZOD/491801

	HLHI-491801

	[***]

	03/09/10

	07/05/10

	 
	USD

	[***]

	[***]

	IZOD1491803

	HLHI-491803

	[***]

	03/10/10

	09/07/10

	 
	USD

	[***]

	[***]

	IZOD/491809

	HLHI-491809

	[***]

	03/10/10

	07/21/10

	 
	USD

	[***]

	[***]

	IZOD/491810

	HLHI-491810

	[***]

	03/10/10

	07/12/10

	 
	USD

	[***]

	[***]

	IZOD/491811

	HLHI-491811

	[***]

	03/10/10

	07/15/10

	 
	USD

	[***]

	[***]

	IZOD/491812

	HLHI-491812

	[***]

	03/10/10

	07/05/10

	 
	USD

	[***]

	[***]

	IZOD/491819

	HLHI-491819

	[***]

	03/11/10

	08/14/10

	 
	USD

	[***]

	[***]

	IZOD/491848

	HLHI-491848

	[***]

	03/16/10

	09/09/10

	 
	USD

	[***]

	[***]

	IZOD1491881

	HLHI-491881

	[***]

	03/22/10

	07/17/10

	 
	USD

	[***]

	[***]

	IZOD/491920

	HLHI-491920

	[***]

	03/24/10

	10/16/10

	 
	USD

	[***]

	[***]

	IZOD/491949

	HLHI-491949

	[***]

	03/29/10

	07/26/10

	 
	USD

	[***]

	[***]

	IZOD/491950

	HLHI-491950

	[***]

	03/29/10

	07/12/10

	 
	USD

	[***]

	[***]

	IZOD/491958

	HLHI-491958

	[***]

	03/31/10

	07/19/10

	 
	USD

	[***]

	[***]

	IZOD/491992

	HLHI-491992

	[***]

	04/07/10

	07/19/10

	 
	USD

	[***]

	[***]

	IZOD/491995

	HLHI-491995

	[***]

	04/07/10

	08/16/10

	 
	USD

	[***]

	[***]

	IZOD/491999

	HLHI-491999

	[***]

	04/07/10

	08/16/10

	 
	USD

	[***]

	[***]

	IZOD/492051

	HLHI-492051

	[***]

	04/12/10

	08/09/10

	 
	USD

	[***]

	[***]

	IZOD/492080

	HLHI-492080

	[***]

	04/15/10

	08/02/10

	 
	USD

	[***]

	[***]

	IZOD/492082

	HLHI-492082

	[***]

	04/15/10

	08/27/10

	 
	USD

	[***]

	[***]

	OUTLET/491249

	HLHI-491249

	[***]

	12/02/09

	05/15/10

	 
	USD

	[***]

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 8

Date Format: MM/DD/YY

May 04, 2010 

JPMorganChase

Phillips-Van Heusen Corporation

Letters of Credit Outstanding

By Importer Reference Number

									
	outlet/491261

	HLHI-491261

	[***]

	12/03/09

	04/17/10

	 
	USD

	[***]

	[***]

	outlet/491263

	HLHI-491263

	[***]

	12/03/09

	04/17/10

	 
	USD

	[***]

	[***]

	OUTLET/491401

	HLHI-491401

	[***]

	12/31/09

	04/17/10

	 
	USD

	[***]

	[***]

	OUTLET/491403

	HLHI-491403

	[***]

	12/31/09

	05/15/10

	 
	USD

	[***]

	[***]

	OUTLET/491438

	HLHI-491438

	[***]

	01/07/10

	05/15/10

	 
	USD

	[***]

	[***]

	OUTLET/491446

	HLHI-491446

	[***]

	01/08/10

	05/15/10

	 
	USD

	[***]

	[***]

	outlet/491447

	HLHI-491447

	[***]

	01/08/10

	04/17/10

	 
	USD

	[***]

	[***]

	outlet/491516

	HLHI-491516

	[***]

	01/21/10

	06/19/10

	 
	USD

	[***]

	[***]

	OUTLET/491601

	HLHI-491601

	[***]

	02/02/10

	07/07/10

	 
	USD

	[***]

	[***]

	outlet/491604

	HLHI-491604

	[***]

	02/02/10

	05/22/10

	 
	USD

	[***]

	[***]

	OUTLET/491626

	HLHI-491626

	[***]

	02/04/10

	04/24/10

	 
	USD

	[***]

	[***]

	OUTLET/491751

	HLHI-491751

	[***]

	03/03/10

	06/19/10

	 
	USD

	[***]

	[***]

	OUTLET/491754

	HLHI-491754

	[***]

	03/03/10

	06/22/10

	 
	USD

	[***]

	[***]

	OUTLET/491798

	HLHI-491798

	[***]

	03/09/10

	06/19/10

	 
	USD

	[***]

	[***]

	OUTLET/491822

	HLHI-491822

	[***]

	03/12/10

	05/30/10

	 
	USD

	[***]

	[***]

	outlet/491831

	HLHI-491831

	[***]

	03/12/10

	06/19/10

	 
	USD

	[***]

	[***]

	OUTLET/492001

	HLHI-492001

	[***]

	04/07/10

	08/16/10

	 
	USD

	[***]

	[***]

	outlet/492002

	HLHI-492002

	[***]

	04/07/10

	08/16/10

	 
	USD

	[***]

	[***]

	OUTLET/492003

	HLHI-492003

	[***]

	04/07/10

	08/16/10

	 
	USD

	[***]

	[***]

	OUTLET/492004

	HLHI-492004

	[***]

	04/07/10

	08/16/10

	 
	USD

	[***]

	[***]

	RTCO/491374

	HLHI-491374

	[***]

	12/22/09

	04/12/10

	 
	USD

	[***]

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 9

Date Format: MM/DD/YY

May 04, 2010 

JPMorganChase

Phillips-Van Heusen Corporation

Letters of Credit Outstanding

By Importer Reference Number

									
	RTCO/491392

	HLHI-491392

	[***]

	12/30/09

	04/12/10

	 
	USD

	[***]

	[***]

	RTCO/491448

	HLHI-491448

	[***]

	01/08/10

	05/13/10

	 
	USD

	[***]

	[***]

	RTCO/491517

	HLHI-491517

	[***]

	01/21/10

	05/03/10

	 
	USD

	[***]

	[***]

	RTCO/491581

	HLHI-491581

	[***]

	02/01/10

	05/10/10

	 
	USD

	[***]

	[***]

	RTCO/491623

	HLHI-491623

	[***]

	02/03/10

	05/02/10

	 
	USD

	[***]

	[***]

	RTCO/491627

	HLHI-491627

	[***]

	02/04/10

	04/29/10

	 
	USD

	[***]

	[***]

	RTCO/491729

	HLHI-491729

	[***]

	03/02/10

	06/13/10

	 
	USD

	[***]

	[***]

	RTCO/491732

	HLHI-491732

	[***]

	03/02/10

	05/27/10

	 
	USD

	[***]

	[***]

	RTCO/491757

	HLHI-491757

	[***]

	03/03/10

	08/12/10

	 
	USD

	[***]

	[***]

	RTCO/491922

	HLHI-491922

	[***]

	03/25/10

	07/05/10

	 
	USD

	[***]

	[***]

	RTCO/492096

	HLHI-492096

	[***]

	04/16/10

	07/25/10

	 
	USD

	[***]

	[***]

	RTCO/492112

	HLHI-492112

	[***]

	04/22/10

	07/02/10

	 
	USD

	[***]

	[***]

	SPORT-CAN/491324

	HLHI-491324

	[***]

	12/15/09

	04/05/10

	 
	USD

	[***]

	[***]

	SPORT-CAN/491491

	HLHI-491491

	[***]

	01/18/10

	04/26/10

	 
	USD

	[***]

	[***]

	SPORT-CAN/491689

	HLHI-491689

	[***]

	02/19/10

	06/06/10

	 
	USD

	[***]

	[***]

	SPORT-CAN/491712

	HLHI-491712

	[***]

	02/25/10

	07/10/10

	 
	USD

	[***]

	[***]

	SPORT-CAN/491764

	HLHI-491764

	[***]

	03/03/10

	06/16/10

	 
	USD

	[***]

	[***]

	SPORT-CAN/491841

	HLHI-491841

	[***]

	03/16/10

	07/05/10

	 
	USD

	[***]

	[***]

	SPORT-CAN/491996

	HLHI-491996

	[***]

	04/07/10

	07/19/10

	 
	USD

	[***]

	[***]

	SPORT-CAN/492137

	HLHI-492137

	[***]

	04/28/10

	08/16/10

	 
	USD

	[***]

	[***]

	SPORT-CAN/492177

	HLHI-492177

	[***]

	04/30/10

	08/22/10

	 
	USD

	[***]

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 10

Date Format: MM/DD/YY

May 04, 2010 

JPMorganChase

Phillips-Van Heusen Corporation

Letters of Credit Outstanding

By Importer Reference Number

									
	TIM M CAN/491182

	HLHI-491182

	[***]

	11/20/09

	04/12/10

	 
	USD

	[***]

	[***]

	TIMB M CAN/491186

	HLHI-491186

	[***]

	11/20/09

	04/12/10

	 
	USD

	[***]

	[***]

	TIMB M CAN/491463

	HLHI-491463

	[***]

	01/12/10

	04/20/10

	 
	USD

	[***]

	[***]

	TIMB M CAN/491549

	HLHI-491549

	[***]

	01/27/10

	05/10/10

	 
	USD

	[***]

	[***]

	TIMB M CAN/491818

	HLHI-491818

	[***]

	03/11/10

	08/09/10

	 
	USD

	[***]

	[***]

	TIMB M CAN/491829

	HLHI-491829

	[***]

	03/12/10

	07/05/10

	 
	USD

	[***]

	[***]

	TIMB M CAN/491991

	HLHI-491991

	[***]

	04/07/10

	08/16/10

	 
	USD

	[***]

	[***]

	TIMB M CAN/491998

	HLHI-491998

	[***]

	04/07/10

	07/20/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/490729

	HLHI-490729

	[***]

	09/16/09

	05/10/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/491079

	HLHI-491079

	[***]

	11/10/09

	04/12/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/491185

	HLHI-491185

	[***]

	11/20/09

	04/12/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/491408

	HLHI-491408

	[***]

	01/05/10

	05/07/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/491534

	HLHI-491534

	[***]

	01/25/10

	05/10/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/491602

	HLHI-491602

	[***]

	02/02/10

	05/21/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/491763

	HLHI-491763

	[***]

	03/03/10

	08/09/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/491778

	HLHI-491778

	[***]

	03/04/10

	08/12/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/491804

	HLHI-491804

	[***]

	03/10/10

	07/05/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/491817

	HLHI-491817

	[***]

	03/11/10

	07/12/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/491844

	HLHI-491844

	[***]

	03/16/10

	07/05/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/491888

	HLHI-491888

	[***]

	03/23/10

	07/16/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/491890

	HLHI-491890

	[***]

	03/23/10

	07/10/10

	 
	USD

	[***]

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 11

Date Format: MM/DD/YY

May 04, 2010 

JPMorganChase

Phillips-Van Heusen Corporation

Letters of Credit Outstanding

By Importer Reference Number

									
	TIMBER SPM/491960

	HLHI-491960

	[***]

	03/31/10

	08/02/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/491961

	HLHI-491961

	[***]

	03/31/10

	08/21/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/492000

	HLHI-492000

	[***]

	04/07/10

	08/16/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/492037

	HLHI-492037

	[***]

	04/12/10

	08/09/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/492075

	HLHI-492075

	[***]

	04/14/10

	08/02/10

	 
	USD

	[***]

	[***]

	TIMBER SPM/492084

	HLHI-492084

	[***]

	04/15/10

	08/03/10

	 
	USD

	[***]

	[***]

	TIMBERMSPORT/491119

	HLHI-491119

	[***]

	11/16/09

	04/12/10

	 
	USD

	[***]

	[***]

	TIMBERMSPORT/491409

	HLHI-491409

	[***]

	01/05/10

	04/19/10

	 
	USD

	[***]

	[***]

	TIMBERMSPORT/491533

	HLHI-491533

	[***]

	01/25/10

	05/10/10

	 
	USD

	[***]

	[***]

	TIMBERMSPORT/491631

	HLHI-491631

	[***]

	02/05/10

	05/25/10

	 
	USD

	[***]

	[***]

	TIMBERMSPORT/491783

	HLHI-491783

	[***]

	03/05/10

	08/09/10

	 
	USD

	[***]

	[***]

	TIMBERMSPORT/492020

	HLHI-492020

	[***]

	04/08/10

	08/09/10

	 
	USD

	[***]

	[***]

	TIMM M/491183

	HLHI-491183

	[***]

	11/20/09

	04/05/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491356

	HLHI-491356

	[***]

	12/22/09

	04/06/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491357

	HLHI-491357

	[***]

	12/22/09

	04/06/10

	03/22/10

	USD

	[***]

	[***]

	VANHEUSEN/491358

	HLHI-491358

	[***]

	12/22/09

	04/06/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491359

	HLHI-491359

	[***]

	12/22/09

	04/06/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491360

	HLHI-491360

	[***]

	12/22/09

	04/06/10

	03/22/10

	USD

	[***]

	[***]

	VANHEUSEN/491361

	HLHI-491361

	[***]

	12/22/09

	04/06/10

	03/22/10

	USD

	[***]

	[***]

	VANHEUSEN/491365

	HLHI-491365

	[***]

	12/22/09

	04/06/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491367

	HLHI-491367

	[***]

	12/22/09

	04/06/10

	 
	USD

	[***]

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 12

Date Format: MM/DD/YY

May 04, 2010 

JPMorganChase

Phillips-Van Heusen Corporation

Letters of Credit Outstanding

By Importer Reference Number

									
	VANHEUSEN/491368

	HLHI-491368

	[***]

	12/22/09

	04/06/10

	03/22/10

	USD

	[***]

	[***]

	VANHEUSEN/491425

	HLHI-491425

	[***]

	01/06/10

	05/03/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491426

	HLHI-491426

	[***]

	01/06/10

	04/20/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491427

	HLHI-491427

	[***]

	01/06/10

	04/20/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491428

	HLHI-491428

	[***]

	01/06/10

	04/20/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491429

	HLHI-491429

	[***]

	01/06/10

	04/20/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491430

	HLHI-491430

	[***]

	01/06/10

	04/20/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491431

	HLHI-491431

	[***]

	01/06/10

	04/25/10

	04/05/10

	USD

	[***]

	[***]

	VANHEUSEN/491432

	HLHI-491432

	[***]

	01/06/10

	04/20/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491433

	HLHI-491433

	[***]

	01/06/10

	04/20/10

	 
	USD

	[***]

	[***]

	VAN HEUSEN/491494

	HLHI-491494

	[***]

	01/18/10

	05/07/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491495

	HLHI-491495

	[***]

	01/18/10

	05/07/10

	04/22/10

	USD

	[***]

	[***]

	VANHEUSEN/491496

	HLHI-491496

	[***]

	01/18/10

	05/07/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491497

	HLHI-491497

	[***]

	01/18/10

	05/07/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491498

	HLHI-491498

	[***]

	01/18/10

	05/07/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491499

	HLH1-491499

	[***]

	01/18/10

	05/07/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491582

	HLHI-491582

	[***]

	02/01/10

	05/07/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491594

	HLHI-491594

	[***]

	02/02/10

	05/21/10

	 
	USD

	[***]

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 13

Date Format: MM/DD/YY

May 04, 2010 

JPMorganChase

Phillips-Van Heusen Corporation

Letters of Credit Outstanding

By Importer Reference Number

									
	VANHEUSEN/491595

	HLHI-491595

	[***]

	02/02/10

	05/21/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491596

	HLHI-491596

	[***]

	02/02/10

	05/21/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491597

	HLHI-491597

	[***]

	02/03/10

	05/21/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491598

	HLHI-491598

	[***]

	02/02/10

	05/21/10

	05/06/10

	USD

	[***]

	[***]

	VANHEUSEN/491632

	HLHI-491632

	[***]

	02/05/10

	06/21/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491643

	HLHI-491643

	[***]

	02/10/10

	05/15/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491670

	HLHI-491670

	[***]

	02/17/10

	06/13/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491671

	HLHI-491671

	[***]

	02/17/10

	06/06/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491673

	HLHI-491673

	[***]

	02/17/10

	06/13/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491674

	HLHI-491674

	[***]

	02/17/10

	06/06/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491675

	HLHI-491675

	[***]

	02/17/10

	06/06/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491676

	HLHI-491676

	[***]

	02/17/10

	06/06/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491677

	HLHI-491677

	[***]

	02/17/10

	06/06/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491678

	HLHI-491678

	[***]

	02/17/10

	06/06/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491683

	HLHI-491683

	[***]

	02/18/10

	05/17/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491704

	HLHI-491704

	[***]

	02/23/10

	05/17/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491734

	HLHI-491734

	[***]

	03/02/10

	06/21/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491735

	HLHI-491735

	[***]

	03/02/10

	06/21/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491736

	HLHI-491736

	[***]

	03/02/10

	06/21/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491737

	HLHI-491737

	[***]

	03/02/10

	06/21/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491738

	HLHI-491738

	[***]

	03/02/10

	06/21/10

	 
	USD

	[***]

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 14

Date Format: MM/DD/YY

May 04, 2010 

JPMorganChase

Phillips-Van Heusen Corporation

Letters of Credit Outstanding

By Importer Reference Number

									
	VANHEUSEN/491739

	HLHI-491739

	[***]

	03/02/10

	06/21/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491740

	HLHI-491740

	[***]

	03/02/10

	06/21/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491741

	HLHI-491741

	[***]

	03/02/10

	06/21/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491742

	HLHI-491742

	[***]

	03/02/10

	06/21/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491743

	HLHI-491743

	[***]

	03/02/10

	06/21/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491858

	HLHI-491858

	[***]

	03/18/10

	07/05/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491859

	HLHI-491859

	[***]

	03/18/10

	07/05/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491860

	HLHI-491860

	[***]

	03/18/10

	07/05/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491861

	HLHI-491861

	[***]

	03/18/10

	07/05/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491862

	HLHI-491862

	[***]

	03/18/10

	07/05/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491863

	HLHI-491863

	[***]

	03/18/10

	07/05/10

	06/20/10

	USD

	[***]

	[***]

	VANHEUSEN/491864

	HLHI-491864

	[***]

	03/18/10

	07/05/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491865

	HLHI-491865

	[***]

	03/18/10

	07/05/10

	06/20/10

	USD

	[***]

	[***]

	VANHEUSEN/491866

	HLHI-491866

	[***]

	03/18/10

	07/05/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491933

	HLHI-491933

	[***]

	03/26/10

	07/19/10

	07/04/10

	USD

	[***]

	[***]

	VANHEUSEN/491934

	HLHI-491934

	[***]

	03/26/10

	07/19/10

	07/04/10

	USD

	[***]

	[***]

	VANHEUSEN/491935

	HLHI-491935

	[***]

	03/26/10

	07/19/10

	07/04/10

	USD

	[***]

	[***]

	VANHEUSEN/491936

	HLHI-491936

	[***]

	03/26/10

	07/19/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491937

	HLHI-491937

	[***]

	03/26/10

	07/19/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/491938

	HLHI-491938

	[***]

	03/26/10

	07/19/10

	07/04/10

	USD

	[***]

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 15

Date Format: MM/DD/YY

May 04, 2010 

JPMorganChase

Phillips-Van Heusen Corporation

Letters of Credit Outstanding

By Importer Reference Number

									
	VANHEUSEN/491939

	HLHI-491939

	[***]

	03/26/10

	07/19/10

	07/04/10

	USD

	[***]

	[***]

	VANHEUSEN/491940

	HLHI-491940

	[***]

	03/26/10

	07/19/10

	07/04/10

	USD

	[***]

	[***]

	VANHEUSEN/491941

	HLHI-491941

	[***]

	03/26/10

	07/19/10

	07/04/10

	USD

	[***]

	[***]

	VANHEUSEN/491942

	HLHI-491942

	[***]

	03/26/10

	07/19/10

	07/04/10

	USD

	[***]

	[***]

	VANHEUSEN/492028

	HLHI-492028

	[***]

	04/09/10

	07/19/10

	07/04/10

	USD

	[***]

	[***]

	VANHEUSEN/492029

	HLHI-492029

	[***]

	04/09/10

	07/19/10

	07/04/10

	USD

	[***]

	[***]

	VANHEUSEN/492064

	HLHI-492064

	[***]

	04/14/10

	08/02/10

	07/18/10

	USD

	[***]

	[***]

	VANHEUSEN/492065

	HLHI-492065

	[***]

	04/14/10

	08/02/10

	07/18/10

	USD

	[***]

	[***]

	VANHEUSEN/492066

	HLHI-492066

	[***]

	04/14/10

	08/02/10

	07/18/10

	USD

	[***]

	[***]

	VANHEUSEN/492067

	HLHI-492067

	[***]

	04/15/10

	08/02/10

	07/18/10

	USD

	[***]

	[***]

	VANHEUSEN/492068

	HLHI-492068

	[***]

	04/14/10

	08/02/10

	07/18/10

	USD

	[***]

	[***]

	VANHEUSEN/492069

	HLHI-492069

	[***]

	04/14/10

	08/02/10

	07/18/10

	USD

	[***]

	[***]

	VANHEUSEN/492070

	HLHI-492070

	[***]

	04/14/10

	08/02/10

	07/18/10

	USD

	[***]

	[***]

	VANHEUSEN/492071

	HLHI-492071

	[***]

	04/14/10

	08/02/10

	07/18/10

	USD

	[***]

	[***]

	VANHEUSEN/492072

	HLHI-492072

	[***]

	04/14/10

	08/02/10

	07/18/10

	USD

	[***]

	[***]

	VANHEUSEN/492073

	HLHI-492073

	[***]

	04/14/10

	08/02/10

	07/18/10

	USD

	[***]

	[***]

	VANHEUSEN/492074

	HLHI-492074

	[***]

	04/15/10

	08/02/10

	07/18/10

	USD

	[***]

	[***]

	VANHEUSEN/492076

	HLHI-492076

	[***]

	04/14/10

	08/09/10

	 
	USD

	[***]

	[***]

	VANHEUSEN/492132

	HLHI-492132

	[***]

	04/28/10

	08/16/10

	08/01/10

	USD

	[***]

	[***]

	VANHEUSEN/492133

	HLHI-492133

	[***]

	04/28/10

	08/16/10

	08/01/10

	USD

	[***]

	[***]

	VANHEUSEN/492134

	HLHI-492134

	[***]

	04/28/10

	08/16/10

	08/01/10

	USD

	[***]

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 16

Date Format: MM/DD/YY

May 04, 2010 

JPMorganChase

Phillips-Van Heusen Corporation

Letters of Credit Outstanding

By Importer Reference Number

									
	VANHEUSEN/492135

	HLHI-492135

	[***]

	04/28/10

	08/16/10

	08/01/10

	USD

	[***]

	[***]

	VANHEUSEN/492136

	HLHI -492136

	[***]

	04/28/10

	08/16/10

	08/01/10

	USD

	[***]

	[***]

	VANHEUSEN/492138

	HLHI-492138

	[***]

	04/28/10

	08/16/10

	08/01/10

	USD

	[***]

	[***]

	VANHEUSEN/492139

	HLHI-492139

	[***]

	04/28/10

	08/16/10

	08/01/10

	USD

	[***]

	[***]

	VANHEUSEN/492140

	HLHI-492140

	[***]

	04/28/10

	08/16/10

	08/01/10

	USD

	[***]

	[***]

	VANHEUSEN/492141

	HLHI-492141

	[***]

	04/28/10

	08/16/10

	08/01/10

	USD

	[***]

	[***]

	VANHEUSEN/492142

	HLHI-492142

	[***]

	04/28/10

	08/16/10

	08/01/10

	USD

	[***]

	[***]

	VANHEUSEN/492143

	HLHI-492143

	[***]

	04/28/10

	08/16/10

	08/01/10

	USD

	[***]

	[***]

	VANHEUSEN/492144

	HLHI-492144

	[***]

	04/28/10

	08/16/10

	08/01/10

	USD

	[***]

	[***]

	VANHEUSEN/492181

	HLHI-492181

	[***]

	04/30/10

	08/16/10

	 
	USD

	[***]

	[***]

	VH SPORT/490959

	HLHI-490959

	[***]

	10/22/09

	05/25/10

	 
	USD

	[***]

	[***]

	VH SPORT/491271

	HLHI-491271

	[***]

	12/03/09

	04/06/10

	 
	USD

	[***]

	[***]

	VH SPORT/491290

	HLHI-491290

	[***]

	12/08/09

	04/20/10

	 
	USD

	[***]

	[***]

	VH SPORT/491299

	HLHI-491299

	[***]

	12/09/09

	04/12/10

	 
	USD

	[***]

	[***]

	VH SPORT/491325

	HLHI-491325

	[***]

	12/15/09

	04/12/10

	 
	USD

	[***]

	[***]

	VH SPORT/491413

	HLHI-491413

	[***]

	01/05/10

	05/04/10

	 
	USD

	[***]

	[***]

	VH SPORT/491493

	HLHI-491493

	[***]

	01/18/10

	05/04/10

	 
	USD

	[***]

	[***]

	VH SPORT/491511

	HLHI-491511

	[***]

	01/20/10

	05/06/10

	 
	USD

	[***]

	[***]

	VH SPORT/491690

	HLHI-491690

	[***]

	02/19/10

	06/20/10

	 
	USD

	[***]

	[***]

	VH SPORT/491691

	HLHI-491691

	[***]

	02/19/10

	06/09/10

	 
	USD

	[***]

	[***]

	VH SPORT/491713

	HLHI-491713

	[***]

	02/25/10

	07/12/10

	 
	USD

	[***]

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 17

Date Format: MM/DD/YY

May 04, 2010 

JPMorganChase

Phillips-Van Heusen Corporation

Letters of Credit Outstanding

By Importer Reference Number

									
	VH SPORT/491715

	HLHI-491715

	[***]

	02/25/10

	06/06/10

	 
	USD

	[***]

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 18

Date Format: MM/DD/YY

May 04, 2010 

JPMorganChase

Phillips-Van Heusen Corporation

Letters of Credit Outstanding

By Importer Reference Number

									
	VH SPORT/491731

	HLHI-491731

	[***]

	03/02/10

	07/15/10

	 
	USD

	[***]

	[***]

	VH SPORT/491759

	HLHI-491759

	[***]

	03/03/10

	08/02/10

	 
	USD

	[***]

	[***]

	VH SPORT/491843

	HLHI-491843

	[***]

	03/16/10

	08/20/10

	 
	USD

	[***]

	[***]

	VH SPORT/491880

	HLHI-491880

	[***]

	03/22/10

	09/09/10

	 
	USD

	[***]

	[***]

	VH SPORT/491889

	HLHI-491889

	[***]

	03/23/10

	07/10/10

	 
	USD

	[***]

	[***]

	VH SPORT/491932

	HLHI-491932

	[***]

	03/29/10

	07/18/10

	 
	USD

	[***]

	[***]

	VH SPORT/491948

	HLHI-491948

	[***]

	03/29/10

	07/12/10

	 
	USD

	[***]

	[***]

	VH SPORT/491959

	HLHI-491959

	[***]

	03/31/10

	08/26/10

	 
	USD

	[***]

	[***]

	VH SPORT/491964

	HLHI-491964

	[***]

	04/01/10

	08/16/10

	 
	USD

	[***]

	[***]

	VH SPORT/492079

	HLHI-492079

	[***]

	04/15/10

	08/16/10

	 
	USD

	[***]

	[***]

	VH SPORT/492083

	HLHI-492083

	[***]

	04/15/10

	08/02/10

	 
	USD

	[***]

	[***]

	VH SPORT/492192

	HLHI-492192

	[***]

	05/04/10

	08/09/10

	 
	USD

	[***]

	[***]

	VHS CAN/491141

	HLHI-491141

	[***]

	11/18/09

	04/16/10

	 
	USD

	[***]

	[***]

	VHS CAN/491655

	HLHI-491655

	[***]

	02/12/10

	06/06/10

	 
	USD

	[***]

	[***]

	VHS CAN/491760

	HLHI-491760

	[***]

	03/03/10

	06/20/10

	 
	USD

	[***]

	[***]

	VHS CAN/492052

	HLHI-492052

	[***]

	04/12/10

	07/26/10

	 
	USD

	[***]

	[***]

	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	USD Total All:

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Trade Channel

Schedule 1.01(k) - 19

Date Format: MM/DD/YY

Outstanding L/C’s:  Short List By Applicant

04 May 2010

PVH

8:27 PM

							
	
PVH Reference

L/C Number

Issue Date

Expiry Date

Beneficiary Name

Outstanding Amount

in USD

	
Applicant:  ARROW CANADA – HK

Bank Host ID:  5007761

	0000064544991

	64544991

	02/03/2010

	07/26/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  ARROW CANADA - HK   Count:

	1

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  ARROW SPORT – HK

Bank Host ID:  50066040

	0000064544989

	64544989

	02/03/2010

	07/26/2010

	[***]

	 
	[***]

	0000064544992

	64544992

	02/03/2010

	09/12/2010

	[***]

	 
	[***]

	0000064545095

	64545095

	03/29/2010

	08/20/2010

	[***]

	 
	[***]

	0000064545099

	64545099

	04/01/2010

	07/11/2010

	[***]

	 
	[***]

	0000064545117

	64545117

	04/07/2010

	07/03/2010

	[***]

	 
	[***]

	0000064545125

	64545125

	04/08/2010

	07/05/2010

	[***]

	 
	[***]

	0000064545129

	64545129

	04/14/2010

	06/17/2010

	[***]

	 
	[***]

	0000064545158

	64545158

	04/21/2010

	09/12/2010

	[***]

	 
	[***]

	0000064544983

	64544983

	05/03/2010

	07/13/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  ARROW SPORT - HK   Count:

	9

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  ARROW SPORT – US

Bank Host ID:  01437610

	0000064545166

	64545166

	04/27/2010

	07/07/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  ARROW SPORT - US   Count:

	1

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  BASS APPAREL – HK

Bank Host ID:  50065790

	0000064544936

	64544936

	01/07/2010

	04/21/2010

	[***]

	 
	[***]

	0000064544978

	64544978

	01/29/2010

	05/26/2010

	[***]

	 
	[***]

	0000064544996

	64544996

	02/04/2010

	05/14/2010

	[***]

	 
	[***]

	0000064545014

	64545014

	02/17/2010

	07/29/2010

	[***]

	 
	[***]

	0000064545036

	64545036

	02/25/2010

	05/13/2010

	[***]

	 
	[***]

	0000064545037

	64545037

	02/25/2010

	05/19/2010

	[***]

	 
	[***]

	0000064545046

	64545046

	03/04/2010

	05/17/2010

	[***]

	 
	[***]

	0000064545056

	64545056

	03/10/2010

	05/24/2010

	[***]

	 
	[***]

	0000064545082

	64545082

	03/24/2010

	07/21/2010

	[***]

	 
	[***]

	0000064545108

	64545108

	04/07/2010

	07/07/2010

	[***]

	 
	[***]

	0000064545111

	64545111

	04/07/2010

	07/21/2010

	[***]

	 
	[***]

	0000064545118

	64545118

	04/07/2010

	07/15/2010

	[***]

	 
	[***]

	0000064545150

	64545150

	04/19/2010

	07/07/2010

	[***]

	 
	[***]

	0000064545169

	64545169

	04/29/2010

	07/15/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  BASS APPAREL - HK   Count:

	14

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  CALVIN KLEIN COLLECTION WHOLESALE – HK

Bank Host ID:  5007745

	0000064544965

	64544965

	01/27/2010

	06/29/2010

	[***]

	 
	[***]

	0000064544979

	64544979

	02/01/2010

	04/29/2010

	[***]

	 
	[***]

	0000064545029

	64545029

	02/24/2010

	06/28/2010

	[***]

	 
	[***]

	0000064545049

	64545049

	03/05/2010

	07/07/2010

	[***]

	 
	[***]

	0000064545068

	64545068

	03/15/2010

	06/01/2010

	[***]

	 
	[***]

	0000064545096

	64545096

	03/30/2010

	06/20/2010

	[***]

	 
	[***]

	0000064545131

	64545131

	04/12/2010

	07/20/2010

	[***]

	 
	[***]

	0000064545136

	64545136

	04/15/2010

	07/07/2010

	[***]

	 
	[***]

	0000064545137

	64545137

	04/15/2010

	06/29/2010

	[***]

	 
	[***]

	0000064545157

	64545157

	04/21/2010

	07/06/2010

	[***]

	 
	[***]

	0000064545165

	64545165

	04/27/2010

	08/09/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  CALVIN KLEIN COLLECTION WHOLESALE - HK   Count:

	11

	[***]

	 
	 
	 
	 
	 
	 
	 

[***] Redacted pursuant to a request for confidential treatment.

Schedule 1.01(k) - 20

impmdsht.rpt

Outstanding L/C’s:  Short List By Applicant04

May 2010

PVH

8:27 PM

							
	
Applicant:  CALVIN KLEIN OUTLET – HK

Bank Host ID:  5007737

	0000064544997

	64544997

	02/04/2010

	05/09/2010

	[***]

	 
	[***]

	0000064545006

	64545006

	02/05/2010

	05/15/2010

	[***]

	 
	[***]

	0000064545007

	64545007

	02/05/2010

	05/10/2010

	[***]

	 
	[***]

	0000064545017

	64545017

	02/17/2010

	05/13/2010

	[***]

	 
	[***]

	0000064545012

	64545012

	02/18/2010

	05/05/2010

	[***]

	 
	[***]

	0000064545019

	64545019

	02/18/2010

	06/15/2010

	[***]

	 
	[***]

	0000064545038

	64545038

	02/25/2010

	05/10/2010

	[***]

	 
	[***]

	0000064545041

	64545041

	03/04/2010

	05/31/2010

	[***]

	 
	[***]

	0000064545042

	64545042

	03/04/2010

	05/18/2010

	[***]

	 
	[***]

	0000064545043

	64545043

	03/04/2010

	05/27/2010

	[***]

	 
	[***]

	0000064545057

	64545057

	03/10/2010

	06/02/2010

	[***]

	 
	[***]

	0000064545072

	64545072

	03/18/2010

	07/06/2010

	[***]

	 
	[***]

	0000064545094

	64545094

	03/29/2010

	06/06/2010

	[***]

	 
	[***]

	0000064545098

	64545098

	03/30/2010

	06/19/2010

	[***]

	 
	[***]

	0000064545106

	64545106

	04/07/2010

	07/08/2010

	[***]

	 
	[***]

	0000064545107

	64545107

	04/07/2010

	07/14/2010

	[***]

	 
	[***]

	0000064545122

	64545122

	04/07/2010

	06/28/2010

	[***]

	 
	[***]

	0000064545123

	64545123

	04/07/2010

	08/03/2010

	[***]

	 
	[***]

	0000064545138

	64545138

	04/15/2010

	04/20/2010

	[***]

	 
	[***]

	0000064545140

	64545140

	04/15/2010

	07/13/2010

	[***]

	 
	[***]

	0000064545163

	64545163

	04/26/2010

	07/05/2010

	[***]

	 
	[***]

	0000064545168

	64545168

	04/29/2010

	07/16/2010

	[***]

	 
	[***]

	0000064544818

	64544818

	04/30/2010

	07/20/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  CALVIN KLEIN OUTLET - HK   Count:

	23

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  CALVIN KLEIN OUTLET – US

Bank Host ID:  01437618

	0000064544985

	64544985

	02/03/2010

	05/15/2010

	[***]

	 
	[***]

	0000064544998

	64544998

	02/04/2010

	04/22/2010

	[***]

	 
	[***]

	0000064545145

	64545145

	04/16/2010

	07/14/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  CALVIN KLEIN OUTLET - US   Count:

	3

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  CK SPORT – HK

Bank Host ID:  50066120

	0000064544892

	64544892

	12/17/2009

	04/21/2010

	[***]

	 
	[***]

	0000064544940

	64544940

	01/11/2010

	05/04/2010

	[***]

	 
	[***]

	0000064544962

	64544962

	01/25/2010

	05/03/2010

	[***]

	 
	[***]

	0000064544963

	64544963

	01/26/2010

	05/08/2010

	[***]

	 
	[***]

	0000064544968

	64544968

	01/28/2010

	06/20/2010

	[***]

	 
	[***]

	0000064544975

	64544975

	01/28/2010

	05/05/2010

	[***]

	 
	[***]

	0000064545061

	64545061

	03/10/2010

	07/17/2010

	[***]

	 
	[***]

	0000064545067

	64545067

	03/15/2010

	08/17/2010

	[***]

	 
	[***]

	0000064545081

	64545081

	03/24/2010

	08/24/2010

	[***]

	 
	[***]

	0000064545089

	64545089

	03/25/2010

	07/07/2010

	[***]

	 
	[***]

	0000064545052

	64545052

	03/26/2010

	07/13/2010

	[***]

	 
	[***]

	0000064545102

	64545102

	04/01/2010

	07/05/2010

	[***]

	 
	[***]

	0000064545128

	64545128

	04/08/2010

	07/02/2010

	[***]

	 
	[***]

	0000064545132

	64545132

	04/12/2010

	06/22/2010

	[***]

	 
	[***]

	0000064545144

	64545144

	04/16/2010

	07/11/2010

	[***]

	 
	[***]

	0000064545156

	64545156

	04/21/2010

	07/02/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  CK SPORT - HK Count:

	16

	[***]

	 
	 
	 
	 
	 
	 
	 

[***] Redacted pursuant to a request for confidential treatment.

Schedule 1.01(k) - 21

impmdsht.rpt

Outstanding L/C’s:  Short List By Applicant04

May 2010

PVH

8:27 PM

							
	
Applicant:  CK SPORT – US

Bank Host ID:  01437624

	0000064544973

	64544973

	01/28/2010

	06/09/2010

	[***]

	 
	[***]

	0000064545159

	64545159

	04/21/2010

	06/30/2010

	[***]

	 
	[***]

	0000064545167

	64545167

	04/28/2010

	08/04/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  CK SPORT - US   Count:

	3

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  GB SPORT – HK

Bank Host ID:  50066470

	0000064545076

	64545076

	03/23/2010

	06/15/2010

	[***]

	 
	[***]

	0000064545085

	64545085

	03/26/2010

	08/15/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  GB SPORT - HK   Count:

	2

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  IZOD – HK

Bank Host ID:  50066550

	0000064544852

	64544852

	11/26/2009

	04/21/2010

	[***]

	 
	[***]

	0000064544888

	64544888

	12/15/2009

	04/26/2010

	[***]

	 
	[***]

	0000064544919

	64544919

	01/06/2010

	05/12/2010

	[***]

	 
	[***]

	0000064544986

	64544986

	02/03/2010

	05/23/2010

	[***]

	 
	[***]

	0000064544987

	64544987

	02/03/2010

	07/21/2010

	[***]

	 
	[***]

	0000064545013

	64545013

	02/17/2010

	06/17/2010

	[***]

	 
	[***]

	0000064545015

	64545015

	02/17/2010

	07/11/2010

	[***]

	 
	[***]

	0000064545080

	64545080

	03/24/2010

	06/09/2010

	[***]

	 
	[***]

	0000064545084

	64545084

	03/26/2010

	08/29/2010

	[***]

	 
	[***]

	0000064545092

	64545092

	03/26/2010

	06/27/2010

	[***]

	 
	[***]

	0000064545103

	64545103

	04/01/2010

	06/25/2010

	[***]

	 
	[***]

	0000064545097

	64545097

	04/07/2010

	07/13/2010

	[***]

	 
	[***]

	0000064545127

	64545127

	04/08/2010

	07/12/2010

	[***]

	 
	[***]

	0000064545152

	64545152

	04/20/2010

	06/30/2010

	[***]

	 
	[***]

	0000064545171

	64545171

	05/03/2010

	07/10/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  IZOD - HK Count:

	15

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  IZOD – US

Bank Host ID:  01437608

	0000064544961

	64544961

	01/22/2010

	05/21/2010

	[***]

	 
	[***]

	0000064544974

	64544974

	01/28/2010

	05/12/2010

	[***]

	 
	[***]

	0000064544939

	64544939

	02/04/2010

	04/21/2010

	[***]

	 
	[***]

	0000064545003

	64545003

	02/05/2010

	06/02/2010

	[***]

	 
	[***]

	0000064545026

	64545026

	02/18/2010

	04/30/2010

	[***]

	 
	[***]

	0000064545053

	64545053

	03/10/2010

	07/21/2010

	[***]

	 
	[***]

	0000064545083

	64545083

	03/25/2010

	06/02/2010

	[***]

	 
	[***]

	0000064545155

	64545155

	04/21/2010

	07/07/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  IZOD –  US   Count:

	8

	[***]

	 
	 
	 
	 
	 
	 
	 

[***] Redacted pursuant to a request for confidential treatment.

Schedule 1.01(k) - 22

impmdsht.rpt

Outstanding L/C’s:  Short List By Applicant04

May 2010

PVH

8:27 PM

							
	
Applicant:  IZOD RETAIL – HK

Bank Host ID:  50066630

	0000064544946

	64544946

	01/18/2010

	05/12/2010

	[***]

	 
	[***]

	0000064544980

	64544980

	02/01/2010

	09/27/2010

	[***]

	 
	[***]

	0000064545020

	64545020

	02/18/2010

	05/13/2010

	[***]

	 
	[***]

	0000064545021

	64545021

	02/18/2010

	05/12/2010

	[***]

	 
	[***]

	0000064545022

	64545022

	02/18/2010

	05/06/2010

	[***]

	 
	[***]

	0000064545028

	64545028

	02/23/2010

	05/10/2010

	[***]

	 
	[***]

	0000064545048

	64545048

	03/05/2010

	07/07/2010

	[***]

	 
	[***]

	0000064545146

	64545146

	04/19/2010

	07/07/2010

	[***]

	 
	[***]

	0000064545147

	64545147

	04/19/2010

	07/02/2010

	[***]

	 
	[***]

	0000064545148

	64545148

	04/19/2010

	07/08/2010

	[***]

	 
	[***]

	0000064545149

	64545149

	04/19/2010

	07/15/2010

	[***]

	 
	[***]

	0000064545153

	64545153

	04/20/2010

	07/05/2010

	[***]

	 
	[***]

	0000064545154

	64545154

	04/20/2010

	07/05/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  IZOD RETAIL - HK Count:

	13

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  IZOD WOMEN – HK

Bank Host ID:  5007753

	0000064544942

	64544942

	01/11/2010

	05/06/2010

	[***]

	 
	[***]

	0000064544981

	64544981

	02/02/2010

	05/03/2010

	[***]

	 
	[***]

	0000064545025

	64545025

	02/18/2010

	05/03/2010

	[***]

	 
	[***]

	0000064545051

	64545051

	03/09/2010

	07/15/2010

	[***]

	 
	[***]

	0000064545100

	64545100

	04/01/2010

	07/10/2010

	[***]

	 
	[***]

	0000064545101

	64545101

	04/01/2010

	06/14/2010

	[***]

	 
	[***]

	0000064545130

	64545130

	04/12/2010

	06/20/2010

	[***]

	 
	[***]

	0000064545133

	64545133

	04/12/2010

	07/10/2010

	[***]

	 
	[***]

	0000064544815

	64544815

	04/29/2010

	07/12/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  IZOD WOMEN - HK Count:

	9

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  OUTLET STORES – HK

Bank Host ID:  50066710

	0000064544952

	64544952

	01/20/2010

	05/19/2010

	[***]

	 
	[***]

	0000064544999

	64544999

	02/04/2010

	05/14/2010

	[***]

	 
	[***]

	0000064545008

	64545008

	02/08/2010

	09/20/2010

	[***]

	 
	[***]

	0000064545027

	64545027

	02/23/2010

	07/21/2010

	[***]

	 
	[***]

	0000064545030

	64545030

	02/25/2010

	05/19/2010

	[***]

	 
	[***]

	0000064545031

	64545031

	02/25/2010

	05/13/2010

	[***]

	 
	[***]

	0000064545040

	64545040

	03/04/2010

	05/17/2010

	[***]

	 
	[***]

	0000064545044

	64545044

	03/04/2010

	05/17/2010

	[***]

	 
	[***]

	0000064545045

	64545045

	03/04/2010

	05/17/2010

	[***]

	 
	[***]

	0000064545058

	64545058

	03/10/2010

	06/20/2010

	[***]

	 
	[***]

	0000064545073

	64545073

	03/18/2010

	06/06/2010

	[***]

	 
	[***]

	0000064545109

	64545109

	04/07/2010

	07/15/2010

	[***]

	 
	[***]

	0000064545110

	64545110

	04/07/2010

	07/21/2010

	[***]

	 
	[***]

	0000064545119

	64545119

	04/07/2010

	07/13/2010

	[***]

	 
	[***]

	0000064545120

	64545120

	04/07/2010

	07/13/2010

	[***]

	 
	[***]

	0000064545121

	64545121

	04/07/2010

	06/21/2010

	[***]

	 
	[***]

	0000064545141

	64545141

	04/15/2010

	08/18/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  OUTLET STORES - HK Count:

	17

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  OUTLET STORES – US

Bank Host ID:  01437604

	0000064545065

	64545065

	03/16/2010

	07/06/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  OUTLET STORES - US   Count:

	1

	[***]

	 
	 
	 
	 
	 
	 
	 

[***] Redacted pursuant to a request for confidential treatment.

Schedule 1.01(k) - 23

impmdsht.rpt

Outstanding L/C’s:  Short List By Applicant04

May 2010

PVH

8:27 PM

							
	
Applicant:  PHILLIPS VAN HEUSEN CORPORATION

Bank Host ID:  B7750673

	0000064544723

	64544723

	10/09/2009

	04/21/2010

	[***]

	 
	[***]

	0000064544917

	64544917

	01/06/2010

	04/25/2010

	[***]

	 
	[***]

	0000064544921

	64544921

	01/07/2010

	05/03/2010

	[***]

	 
	[***]

	0000064544988

	64544988

	02/03/2010

	08/01/2010

	[***]

	 
	[***]

	0000064545016

	64545016

	02/17/2010

	06/06/2010

	[***]

	 
	[***]

	0000064545033

	64545033

	02/25/2010

	07/18/2010

	[***]

	 
	[***]

	0000064545071

	64545071

	03/18/2010

	07/18/2010

	[***]

	 
	[***]

	0000064545093

	64545093

	03/29/2010

	07/18/2010

	[***]

	 
	[***]

	0000064545124

	64545124

	04/07/2010

	06/27/2010

	[***]

	 
	[***]

	0000064545088

	64545088

	04/20/2010

	06/15/2010

	[***]

	 
	[***]

	0000064545170

	64545170

	05/03/2010

	07/10/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  PHILLIPS VAN HEUSEN CORPORATION   Count:

	11

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  PHILLIPS-VAN HEUSEN

Bank Host ID:  B0131144

	0000064545160

	64545160

	04/21/2010

	06/30/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  PHILLIPS-VAN HEUSEN   Count:

	1

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  PVH FOOTWEAR – HK

Bank Host ID:  5008819

	0000064545032

	64545032

	02/25/2010

	05/19/2010

	[***]

	 
	[***]

	0000064545075

	64545075

	03/22/2010

	05/20/2010

	[***]

	 
	[***]

	0000064545077

	64545077

	03/23/2010

	06/27/2010

	[***]

	 
	[***]

	0000064545091

	64545091

	03/26/2010

	07/21/2010

	[***]

	 
	[***]

	0000064545104

	64545104

	04/01/2010

	06/23/2010

	[***]

	 
	[***]

	0000064545162

	64545162

	04/29/2010

	07/21/2010

	[***]

	 
	[***]

	0000064544858

	64544858

	05/03/2010

	06/14/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  PVH FOOTWEAR - HK   Count:

	7

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  PVH FOOTWEAR – US

Bank Host ID:  01437603

	0000064544953

	64544953

	01/21/2010

	05/14/2010

	[***]

	 
	[***]

	0000064545047

	64545047

	03/04/2010

	06/13/2010

	[***]

	 
	[***]

	0000064545074

	64545074

	03/22/2010

	07/12/2010 

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  PVH FOOTWEAR – US   Count:

	3

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  PVH PIECE GOODS - HK

Bank Host ID:  50068260

	0000064545134 

	64545134

	04/13/2010

	08/05/2010 

	[***]

	 
	[***]

	0000064545135

	64545135

	04/13/2010

	07/29/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  PVH PIECE GOODS – HK   Count:

	2

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  SOMERSET - HK

Bank Host ID:  5006680

	0000064544903

	64544903

	12/24/2009

	05/19/2010

	[***]

	 
	[***]

	0000064545034

	64545034

	02/25/2010

	07/18/2010

	[***]

	 
	[***]

	0000064545054

	64545054

	03/10/2010

	07/26/2010

	[***]

	 
	[***]

	0000064545078

	64545078

	03/23/2010

	07/10/2010

	[***]

	 
	[***]

	0000064545079

	64545079

	03/23/2010

	06/11/2010

	[***]

	 
	[***]

	0000064545086

	64545086

	03/26/2010

	08/18/2010

	[***]

	 
	[***]

	0000064545161

	64545161

	04/23/2010

	07/09/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  SOMERSET- HK   Count:

	7

	[***]

	 
	 
	 
	 
	 
	 
	 

[***] Redacted pursuant to a request for confidential treatment.

Schedule 1.01(k) - 24

impmdsht.rpt

Outstanding L/C’s:  Short List By Applicant04

May 2010

PVH

8:27 PM

							
	
Applicant:  VAN HEUSEN - HK

Bank Host ID:  50066980

	0000064544886

	64544886

	12/14/2009

	04/21/2010

	[***]

	 
	[***]

	0000064544916

	64544916

	01/05/2010

	04/25/2010

	[***]

	 
	[***]

	0000064544943

	64544943

	01/12/2010

	05/16/2010

	[***]

	 
	[***]

	0000064545001

	64545001

	02/04/2010

	05/03/2010

	[***]

	 
	[***]

	0000064545002

	64545002

	02/04/2010

	05/07/2010

	[***]

	 
	[***]

	0000064545005

	64545005

	02/05/2010

	05/30/2010

	[***]

	 
	[***]

	0000064545009

	64545009

	02/10/2010

	05/02/2010

	[***]

	 
	[***]

	0000064545010

	64545010

	02/10/2010

	05/13/2010

	[***]

	 
	[***]

	0000064545023

	64545023

	02/18/2010

	05/06/2010

	[***]

	 
	[***]

	0000064545024

	64545024

	02/18/2010

	05/11/2010

	[***]

	 
	[***]

	0000064545039

	64545039

	03/04/2010

	06/03/2010

	[***]

	 
	[***]

	0000064545059

	64545059

	03/10/2010

	06/12/2010

	[***]

	 
	[***]

	0000064545060

	64545060

	03/10/2010

	06/06/2010

	[***]

	 
	[***]

	0000064545062

	64545062

	03/12/2010

	06/12/2010

	[***]

	 
	[***]

	0000064545064

	64545064

	03/12/2010

	06/01/2010

	[***]

	 
	[***]

	0000064545063

	64545063

	03/15/2010

	06/12/2010

	[***]

	 
	[***]

	0000064545066

	64545066

	03/15/2010

	06/19/2010

	[***]

	 
	[***]

	0000064545069

	64545069

	03/16/2010

	06/12/2010

	[***]

	 
	[***]

	0000064545090

	64545090

	03/26/2010

	08/15/2010

	[***]

	 
	[***]

	0000064545105

	64545105

	04/01/2010

	07/17/2010

	[***]

	 
	[***]

	0000064545112

	64545112

	04/07/2010

	07/13/2010

	[***]

	 
	[***]

	0000064545113

	64545113

	04/07/2010

	07/17/2010

	[***]

	 
	[***]

	0000064545114

	64545114

	04/07/2010

	07/13/2010

	[***]

	 
	[***]

	0000064545115

	64545115

	04/07/2010

	07/13/2010

	[***]

	 
	[***]

	0000064545116

	64545116

	04/07/2010

	07/16/2010

	[***]

	 
	[***]

	0000064545126

	64545126

	04/08/2010

	07/13/2010

	[***]

	 
	[***]

	0000064545139

	64545139

	04/15/2010

	07/07/2010

	[***]

	 
	[***]

	0000064545142

	64545142

	04/15/2010

	07/02/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for: VAN HEUSEN - HK   Count:

	28

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  VAN HEUSEN - US

Bank Host ID:  01437605

	 
	 
	 
	 
	 
	 
	 

	0000064545018

	64545018

	02/17/2010

	05/12/2010

	[***]

	 
	[***]

	0000064545070

	64545070

	03/17/2010

	06/15/2010

	[***]

	 
	[***]

	0000064545143

	64545143

	04/16/2010

	07/13/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  VAN HEUSEN - US   Count:

	3

	[***]

	 
	 
	 
	 
	 
	 
	 

	
Applicant:  VH SPORT - HK

Bank Host ID:  50067070

	0000064544909

	64544909

	12/29/2009

	04/25/2010

	[***]

	 
	[***]

	0000064544918

	64544918

	01/06/2010 

	05/16/2010

	[***]

	 
	[***]

	0000064544990

	64544990

	02/03/2010 

	06/14/2010

	[***]

	 
	[***]

	0000064544993

	64544993

	02/03/2010 

	07/11/2010

	[***]

	 
	[***]

	0000064545004

	64545004

	02/05/2010 

	06/12/2010

	[***]

	 
	[***]

	0000064545035

	64545035

	02/25/2010 

	07/18/2010

	[***]

	 
	[***]

	0000064545050

	64545050

	03/09/2010 

	07/13/2010

	[***]

	 
	[***]

	0000064545087

	64545087

	03/26/2010 

	09/05/2010

	[***]

	 
	[***]

	0000064545151

	64545151

	04/19/2010 

	07/20/2010

	[***]

	 
	[***]

	0000064545164

	64545164

	04/27/2010

	07/10/2010

	[***]

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  VH SPORT - HK   Count:

	10

	[***]

	 
	 
	 
	 
	 
	 
	 

[***] Redacted pursuant to a request for confidential treatment.

Schedule 1.01(k) - 25

impmdsht.rpt

Outstanding L/C’s:  Short List By Applicant04

May 2010

PVH

8:27 PM

							
	
Applicant:  VH SPORT - US

Bank Host ID:  01437614

	0000064544938

	64544938

	01/11/2010

	07/14/2010

	[***].

	 
	[***]

	 
	 
	 
	 
	 
	 
	 

	Totals for:  VH SPORT - US Count:

	1

	[***]

	 
	 
	 
	 
	 
	 
	 

	Grand Totals:  Count:

	219

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Schedule 1.01(k) - 26

impmdsht.rpt

SCHEDULE 3.01(c)

Structure Chart

See Schedule 4.02 for a list of each subsidiary of Phillips-Van Heusen Corporation, along with its parent and the parent's ownership interest.

Schedule 3.01(c) - 1

SCHEDULE 3.01(e)

Existing Ancillary Facilities

NONE

Schedule 3.01(e) - 1

SCHEDULE 3.01(g)

Closing Date Mortgaged Properties

Phillips-Van Heusen Corporation:

1.

1000 PVH Quality Way, Jonesville, NC  28642-9389, United States

2.

3915 Volunteer Drive, Chattanooga, TN  37416, United States

3.

1062 MacArthur Road, Reading, PA  19605-9404, United States

Schedule 3.01(g) - 1

SCHEDULE 4.02

Equity Interests and Ownership

Existing Equity Purchase Rights:

1.

Stockholders’ Agreement, dated as of December 27, 2007, among ITOCHU Corporation, Novel Sportswear Holdings (Japan) Limited, HHS Investments (Japan) Limited, Loong San Holdings Limited, Tommy Hilfiger Group B.V. and Tommy Hilfiger Japan Corporation (as amended, amended and restated, supplemented or otherwise modified from time to time).

2.

Phillips-Van Heusen Corporation issued to Mr. Calvin Klein a nine-year warrant to purchase 320,000 shares of the its common stock at $28.00 per share in connection with the its acquisition of Calvin Klein in 2003.

3.

There are outstanding stock options, restricted stock units and performance shares issued under employee compensation plans.

4.

On the closing date, Phillips-Van Heusen Corporation will issue 8,000 shares of Series A Convertible Preferred Stock, par value $100.00 per share.  The Series A Preferred Stock will be convertible at any time into shares of Common Stock.

Subsidiary Equity Ownership:

				
	Owner

	Issuer

	# of Shares Owned or %of Shares Owned

	Total Shares Outstanding

Schedule 4.02 - 1

				
	Phillips-Van Heusen Corporation

	PVH Puerto Rico, Inc.

	100

	100

	Phillips-Van Heusen Puerto Rico LLC

	100%

	 

	BassNet, Inc.

	100

	100

	PVH Retail Stores, Inc.

	10

	10

	izod.com inc. 

	10

	10

	PVH Wholesale Corp.

	10

	10

	PVH Foreign Holdings Corp.

	10

	10

	PVH Wholesale New Jersey, Inc.

	10

	10

	Calvin Klein, Inc.

	4,312,500

	4,312,500

	CK Service Corp.

	10

	10

	Cluett Peabody Resources Corporation

	1,000

	1,000

	Cluett, Peabody & Co., Inc.

	100

	100

	PVH Europe, Inc.

	10

	10

	PVH Realty Corp.

	10

	10

	PVH Neckwear, Inc.

	10

	10

	PVH Prince C.V. Holding Corporation

	10

	10

	Tommy Hilfiger U.S.A., Inc.

	100

	100

	Phillips-Van Heusen Far East Ltd.

	100%

	

	Camisas Modernas, S.A.1

	1000

	1000

	Confezioni Moda Italia S.r.l.

	10,000

	10,000

	PVH Prince C.V. Holding Corporation

	Trumpet C.V.

	99.9% (LP)

	 

	BassNet, Inc.

	Trumpet C.V.

	0.1% (GP)

	 

	Phillips-Van Heusen Foreign Holdings Corp.

	PVH Limited

	360

	360

	Phillips-Van Heusen Canada, Inc.

	10

	10

	Tommy Hilfiger U.S.A., Inc.

	Tommy Hilfiger Wholesale, Inc.

	100%

	50,000

1 Inactivity entity.

Schedule 4.02 - 2

				
	 
	Tommy Hilfiger Licensing, LLC

	100%

	n/a

	Tommy Hilfiger Retail, LLC

	100%

	n/a

	Karl Lagerfeld LLC

	100%

	n/a

	Tommy Hilfiger Canada Inc.

	Tommy Hilfiger Canada Retail Inc.

	100%

	100 common; 3,807,006.31 preferred

	Tommy Hilfiger Wholesale, Inc.

	Tomcan Investments Inc.

	1,000

	1,000

	Tomcan Investments Inc.

	Tommy Hilfiger Canada Inc.

	1,000

	1,000

	Trumpet C.V.

	Prince 1 B.V.

	100%

	 

	Prince 1 B.V.

	Prince 2 B.V.

	100%

	 

	Prince 2 B.V.

	Tommy Hilfiger B.V.

	100%

	 

	Tommy Hilfiger B.V.

	Tommy Hilfiger Group B.V.

	100%

	 

Schedule 4.02 - 3

				
	Tommy Hilfiger Group B.V.

	HHS Investments (Japan) Ltd.

	100%

	 

	Novel Sportswear Holdings Ltd.

	100%

	 

	Tommy Hilfiger Japan Holdings Godo Kaisha

	100%

	 

	Tommy Hilfiger Corporation

	100%

	 

	Tommy Hilfiger Japan Corporation

	23.6% (common stock)

	 

	TH Monument B.V.

	Ordinary shares

	 

	Tommy Hilfiger Europe B.V.

	100%

	 

	Tommy Hilfiger (HK) Ltd.

	100%

	 

	Tommy Hilfiger Marka dvtas

	0.01%

	 

	HHS Investments (Japan) Ltd.

	Tommy Hilfiger Japan Corporation

	25.4% (common stock)

	 

	Tommy Hilfiger Japan Holdings Godo Kaisha

	Tommy Hilfiger Japan Corporation

	51% (common stock)

	 

	Tommy Hilfiger Corporation

	TH Monument B.V.

	Priority share

	 

	Elmira Canada ULC

	100%

	 

	Elmira 3 B.V.

	100%

	 

	Hilfiger Stores Ltd.

	Special Share

	 

	TH Monument B.V.

	Elmira 4 B.V.

	100%

	 

	Tommy Hilfiger Marka dvtas

	0.01%

	 

	Elmira 3 B.V.

	T.H. 1 Holding (Cyprus) Ltd.

	100%

	 

	Tommy Hilfiger Marka dvtas

	0.01%

	 

	T.H. 1 Holding (Cyprus) Ltd.

	Tommy Hilfiger (Eastern Hemisphere) Ltd.

	100%

	 

	T.H. International N.V.

	100%

	 

	Tommy Hilfiger (India) Ltd.

	100%

	 

	Tommy Hilfiger (HK) Ltd.

	Wellrose Ltd.

	100%

	 

Schedule 4.02 - 4

				
	Tommy Hilfiger Europe B.V.

	Tommy Hilfiger Marka dvtas

	99.96%

	 

	Hilfiger Stores B.V.

	100%

	 

	Hilfiger Stores SpZoo

	0.1%

	 

	TH Italia S.r.l.

	100%

	 

	TH Denmark A/S

	100%

	 

	TH Belgium N.V.

	100%

	 

	Hilfiger Beteiligungsgesellschaft mbH

	100%

	 

	TH Sweden AB

	100%

	 

	TH UK Ltd.

	100%

	 

	TH France SAS

	100%

	 

	Hilfiger Stores SRO

	20%

	 

	TH Schweiz AG

	100%

	 

	Tommy Hilfiger Norway AS

	100%

	 

	Hilfiger Holdings Germany GmbH & Co. KG

	Limited partnership interest

	 

	TH Schweiz AG

	TH Ostenreich Gesmbh

	100%

	 

	Hilfiger Beteiligungsgesellschaft mbH

	Hilfiger Holdings Germany GmbH & Co. KG

	General partnership interest

	 

	Hilfiger Holdings Germany GmbH & Co. KG

	Tommy Hilfiger Footwear Europe GmbH

	100%

	 

	Hilfiger Stores GmbH

	100%

	 

	T.H. Deutschland GmbH

	100%

	 

Schedule 4.02 - 5

				
	Hilfiger Stores B.V.

	Hilfiger Stores Gesmbh

	100%

	 

	Hilfiger Stores SpZoo

	99.9%

	 

	Hilfiger Stores SAS

	100%

	 

	Hilfiger Stores Sweden AB

	100%

	 

	Hilfiger Stores N.V.

	100%

	 

	Hilfiger Stores Denmark A/S

	100%

	 

	Hilfiger Stores SRO

	80%

	 

	Hilfiger Stores AG

	100%

	 

	Hilfiger Stores Italy S.r.l.

	100%

	 

	Hilfiger Stores Ireland Ltd.

	100%

	 

	Tommy Hilfiger Stores Norge AS

	100%

	 

	Hilfiger Stores Ltd.

	Ordinary shares

	 

	Tommy Hilfiger Marka dvtas

	0.01%

	 

	Hilfiger Stores Ltd.

	Elmira 5 Limited

	100%

	 

Schedule 4.02 - 6

SCHEDULE 4.12

Real Estate Assets

Owned Properties

Phillips-Van Heusen Corporation:

1.

601 North Grand Avenue, Brinkley, AR  72021-2527, United States

2.

1000 PVH Quality Way, Jonesville, NC  28642-9389, United States

3.

3915 Volunteer Drive, Chattanooga, TN  37416, United States

TH Monument B.V.:

1.

Rokin 102/Watersteeg 3, Amsterdam (reg. no. section F no. 5531), The Netherlands

Leased Properties

Phillips-Van Heusen Corporation:

1.

1062 MacArthur Road, Reading, PA  19605-9404, United States (building owned; property leased)

2.

1735 South Santa Fe Avenue, Los Angeles, CA  90021, United States

3.

7507 Kingspointe Parkway, Suite 106A, Orlando, FL  32819, United States

4.

420 Lee Industrial Boulevard, Austell, GA  30168-7408, United States (Buildings 1,2,3,4)

5.

6065 Roswell Road, Suite 510, Atlanta, GA  30328, United States

6.

Highway 67, Jonesville, NC  28642, United States

7.

The Strateford at Hillcreast, 2442-105 Southmont Drive, Winston-Salem, NC  27103-3047, United States

8.

Suite 100, 1001 Frontier Road, Bridgewater, NJ  08807, United States

9.

7300 Westside Avenue, North Bergen, NJ  07047, United States

10.

200 Madison Avenue, New York, NY  10016, United States

11.

205 West 39th Street, New York , NY  10018, United States

12.

99 Park Avenue, New York, NY  10055, United States

13.

218 West 40th Street, 6th & 8th Floors, New York, NY  10018, United States

Schedule 4.12 - 1

14.

3917 Volunteer Drive, Chattanooga, TN  37416, United States

15.

4975 Preston Park Road, Suite 640, Plano, TX  75093, United States

16.

World Trade Center, 2050 North Stemmons Freeway, Dallas, TX  75207-3101, United States

17.

7635 Dean Martin Drive, Las Vegas, NV  89139, United States

Tommy Hilfiger U.S.A., Inc.:

1.

200 Liberty Way, Cranbury, NJ  08512, United States

2.

601 West 26th Street, New York, NY  10001, United States (Two leases)

3.

129 Lafayette Street, New York, NY  10013, United States

Tommy Hilfiger Retail, LLC:

1.

7505 Exchange Drive, Orlando, FL 32809, United States

2.

1073 Route 94, Cornwall/New Windsor, NY  12553, United States

3.

950 Pilot Road, Las Vegas, NV  89119, United States

4.

10173 USA Today Way, Miramar, FL  33025, United States

Tommy Hilfiger Canada, Inc.:

1.

7445 Cote de Liesse, St-Laurent, QC  H4T 1G2, Canada

Tommy Hilfiger Europe B.V.:

1.

Tesselschadest 18-22, Amsterdam, The Netherlands

2.

Stadhouderskade 6, 1054 ES, Amsterdam, The Netherlands

3.

Trappistenweg 8, Tegelen, The Netherlands

4.

Basisweg 59a, 59b, Zotrans 2, Amsterdam, The Netherlands

5.

Viejo de Sant Celoni s/n Santa Maria de Palautordera 08460, Spain

T.H. Deutschland GmbH:

1.

Speditionstrasse 7, 40221 Düsseldorf, Germany

2.

Neue Elbstrasse 277 - 279, 22767 Hamburg, Germany

3.

Osterwaldstrasse 9/10, 80805 München, Germany

Schedule 4.12 - 2

SCHEDULE 4.21

Schedule 4.21 consists of over 1,100 pages, listing all of the copyright registrations and applications, patent registrations and applications, trademark registrations and applications and industrial design registrations of Phillips-Van Heusen Corporation, its subsidiaries and the Calvin Klein Trademark Trust, of which Calvin Klein, Inc., a subsidiary Phillips-Van Heusen Corporation, is the beneficial owner of by virtue of its Class A Ownership Interests in the Calvin Klein Trademark Trust.  Phillips-Van Heusen Corporation undertakes to provide supplementally to the Commission, upon request, a copy of Schedule 4.21.

 

Schedule 4.21 - 1

SCHEDULE 5.12(b)

Excluded Subsidiaries

PVH Limited

Phillips-Van Heusen Canada Inc.

Confezioni Moda Italia S.r.l.

Camisas Modernas S.A.

Phillips-Van Heusen Far East Ltd.

Schedule 5.12(b) - 1

SCHEDULE 5.19

Post-Closing Items

Part A

(to be delivered within one (1) Business Day following the Closing Date)

Security Documents

In order to create in favor of the Collateral Agent, for the benefit of Secured Parties, a valid and perfected First Priority security interest in shares in each of Prince 1 B.V., Prince 2 B.V., the Foreign Borrower and Tommy Hilfiger Group B.V., the Collateral Agent shall have received notarial copies of each notarial deed of pledge of shares over the shares in Prince 1 B.V., Prince 2 B.V., the Foreign Borrower and Tommy Hilfiger Group B.V. and updated shareholders’ registers evidencing the pledges of shares.

Legal opinions

A legal opinion of the following legal advisers to the Loan Parties or the Administrative Agent, Lenders and the other Secured Parties (in accordance with local practice), in each case in form and substance reasonably satisfactory to the Collateral Agent, in respect of the following

(a)

Loyens & Loeff (USA) B.V., legal counsel to the Administrative Agent, Lenders and the other Secured Parties as to matters of Dutch law (in respect of validity and enforceability); and

(b)

De Brauw Blackstone Westbroek N.V., legal counsel to Loan Parties as to matters of Dutch law (in respect of due authorisation and execution).

Part B

(to be delivered as soon as reasonably practicable, 

but in any event within sixty (60) days following the Closing Date)

Loan Documents

A Counterpart Agreement, duly executed by each Foreign Guarantor (other than the Foreign Borrower, Trumpet C.V., Prince 1, B.V. and Prince 2, B.V. (the “Closing Date Dutch Parties”)), the Administrative Agent and the Collateral Agent. 

Organizational Documents, Incumbency

The Administrative Agent shall have received in relation to each Foreign Guarantor (other than the Closing Date Dutch Parties): 

(a)

copies of each Organizational Document (which, in the case of any German Loan Party, shall be its articles of association (Gesellschaftsvertrag or Satzung), extract from the 

Schedule 5.19 - 1

commercial register (Handelsregister) and, in case of a German Loan Party in the legal form of a German limited liability companies (GmbH), latest shareholders’ list filed with the commercial register), as applicable, and, to the extent applicable, certified as of a recent date by the appropriate governmental official, or in the case of copies of the Organizational Documents for each of the Canadian Loan Parties, certified by their respective secretary, assistant secretary, director or any other competent officer or appropriate person as being in full force and effect without modification or amendment;

(b)

corporate or entity certificates incorporating, without limitation, signature and incumbency certificates of the officers, managers, members and/or directors of such Person executing the Loan Documents (or powers of attorney authorising such execution, as the case may be) to which it is a party; 

(c)

to the extent applicable, resolutions of the Board of Directors or similar governing body of each Foreign Guarantor (other than the Closing Date Dutch Parties) (which, in the case of any Dutch Loan Party, shall be its board of managing directors, and in the case of any German Loan Party, a shareholder resolution as described under paragraph (d) below) approving and authorizing the execution, delivery and performance of, the Agreement, the Counterpart Agreement and the other Loan Documents to which it is a party or by which it or its assets may be bound and also, in the case of the Canadian Loan Parties, authorizing the pledge of its shares by its shareholder, certified (to the extent required under applicable law or customary in accordance with local law or practice) by its secretary, its assistant secretary, director or any other competent officer or appropriate person as being in full force and effect without modification or amendment; 

(d)

to the extent required under applicable law, the relevant Foreign Guarantor’s Organizational Documents or internal regulations or customary in accordance with local law or practice, a copy of resolutions from the general meeting of shareholders of each Foreign Guarantor (other than the Closing Date Dutch Parties) approving and authorizing the execution, delivery and performance of the Agreement, the Counterpart Agreement and the other Loan Documents to which it is a party or by which it or its assets may be bound, certified by its secretary,  an assistant secretary, director, any other competent officer or appropriate person as being in full force and effect without modification or amendment; 

(e)

to the extent required under applicable law or customary in accordance with local law or practice, a good standing certificate from the applicable Governmental Authority of its jurisdiction of incorporation, organization or formation, dated a recent date; and 

(f)

to the extent required under applicable law, the relevant Foreign Guarantor’s Organizational Documents or internal regulations or customary in accordance with local law or practice,  a copy of resolutions of the supervisory board of each Foreign Guarantor (other than the Closing Date Dutch Parties) incorporated under the law of The Netherlands, approving its execution, delivery and performance of the Agreement, the Counterpart Agreement and the other Loan Documents to which it is a party or by which 

Schedule 5.19 - 2

it or its assets may be bound, certified by its secretary or an assistant secretary, director or any other competent officer or appropriate person as being in full force and effect without modification or amendment.

The Canadian Loan Parties

In order to create in favor of the Collateral Agent, for the benefit of Secured Parties, a valid and perfected or opposable to third parties First Priority security interest or hypothec in certain assets of each Canadian Loan Party or shares in each Canadian Loan Party, the Collateral Agent shall have received from each Canadian Loan Party (or, in case of a share pledge, each shareholder of the applicable Canadian Loan Party):

(a)

fully executed originals, and if required under Québec law, notarised copies, of each Canadian Security Document;

(b)

a completed Perfection Certificate executed by an Authorized Officer of each Canadian Loan Party, together with all attachments contemplated thereby;

(c)

evidence that each Canadian Loan Party shall have taken or caused to be taken any other action, executed and delivered or caused to be executed and delivered any other agreement, document and instrument and made or caused to be made any other filing and recording (other than as set forth herein) or other security perfection required under the Canadian Security Documents;

(d)

a copy of a certificate of compliance and status issued by the appropriate government body, dated on or about the date of the Canadian Security Documents; 

(e)

delivery of original bonds, share certificates and related stock powers, as applicable; and

(f)

evidence of all PPSA registration statements and RDPRM registration (Québec) required in connection with the Canadian Security Documents, discharges of previous PPSA registration statements and RDPRM registrations in favor of Citicorp Trustee Company Limited and GMAC Commercial Finance Corporation and discharges of the hypothecs registered at the RDPRM under numbers 05-0531477-0002, 05-0404402-0001 and 02-0029310-0015, and any other documents as may be required to ensure the priority of the Canadian Security Documents.

The German Loan Parties

(a)

In order to create in favor of the Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein, perfected First Priority security interest in certain assets of each German Loan Party or the shares in each German Loan Party, the Collateral Agent shall have received from each applicable German Loan Party (or, in case of a share pledge, each shareholder of the applicable German Loan Party):

(a)

fully executed and, if applicable, notarized originals of each German Security Document;

Schedule 5.19 - 3

(b)

in relation to any German law share pledge agreement over the shares in any German Loan Party and all notices of pledge (unless the relevant companies become parties to the respective share pledge agreements); and 

(c)

in respect of any German law account pledge agreement, a fully executed notice to the respective account bank. 

The Dutch Loan Parties

In order to create in favor of the Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein, perfected First Priority security interest in certain assets of each Dutch Loan Party (other than the Closing Date Dutch Parties) or shares in each Dutch Loan Party (other than the Closing Date Dutch Parties and Tommy Hilfiger Group B.V.), the Collateral Agent shall have received from each applicable Dutch Loan Party (or, in case of a share pledge, each shareholder of the applicable Dutch Loan Party):

(a)

fully executed originals (or, in the case of Dutch Security Documents in the form of a notarial deed, notarial copies) of each Dutch Security Document (other than the notarial deeds of pledge delivered under Part A of this Schedule 5.19); 

(b)

in relation to any Dutch law share pledge agreement over the shares in any Dutch Loan Party, an updated shareholders' register evidencing the pledge of shares;

(c)

in respect of any Dutch law account pledge agreement, a fully executed notice to the respective account bank; and 

(d)

in respect of any Dutch law disclosed deeds of pledge of intercompany receivables and insurance receivables, an executed notice to the respective debtors.

Legal opinions 

A legal opinion of the following legal advisers to the Loan Parties or the Administrative Agent, Lenders and the other Secured Parties (in accordance with local practice), in each case in form and substance reasonably satisfactory to the Collateral Agent, in respect of the following:

(a)

Wachtell, Lipton, Rosen & Katz, legal counsel to the Loan Parties as to matters of New York law (in respect of validity and enforceability of the Counterpart Agreements);

(b)

Goodman LLP, legal counsel to Loan Parties as to matters of Ontario law (in respect of due authorisation, execution, validity and enforceability);

(c)

BFC LLP, legal counsel to the Loan Parties as to matters of Quebec law (in respect of validity and enforceability);

(d)

Opinions of local counsel to the Loan Parties in British Columbia, Alberta, Manitoba, New Brunswick and Nova Scotia (in respect of perfection of security interests in those provinces);

Schedule 5.19 - 4

(e)

Latham & Watkins, as German legal counsel to the Administrative Agent, Lenders and the other Secured Parties as to matters of German law (in respect of validity and enforceability);

(f)

Hengeler Mueller, legal counsel to Loan Parties as to matters of German law (in respect of due authorisation and execution);

(g)

Loyens & Loeff (USA) B.V., legal counsel to the Administrative Agent, Lenders and the other Secured Parties as to matters of Dutch law (in respect of validity and enforceability); and

(h)

De Brauw Blackstone Westbroek N.V., legal counsel to Loan Parties as to matters of Dutch law (in respect of due authorisation and execution). 

Other documents and evidence

Each Foreign Guarantor (other than the Closing Date Dutch Parties) shall have obtained all material Governmental Authorizations and all material consents of other Persons, in each case that are necessary in connection with the transactions contemplated by the Loan Documents to which it is a party, and each of the foregoing shall be in full force and effect.

Share Certificates

The applicable Loan Party shall have delivered to the Collateral Agent a certificate evidencing the following capital stock duly indorsed by an effective indorsement, or accompanied by a share transfer power or other instrument of transfer duly endorsed by such an effective endorsement, in each case, to the Collateral Agent or in blank:

		
	Owner

	Issuer

	Tomcan Investments Inc.

	Tommy Hilfiger Canada Inc.

Schedule 5.19 - 5

SCHEDULE 6.01

Certain Indebtedness

1.

Guaranty by Phillips-Van Heusen Corporation (“PVH”) of the obligations of PVH Limited under the Concession Agreements between Harvey Nichols and Company Limited ("HN") and PVH Limited relating to PVH Limited's concessions to operate shops within HN's stores in the United Kingdom at Knightsbridge, Edinburgh and Manchester

2.

Guaranty by PVH of the obligations of Egypt Clothing Co. to Penfabric Sdn. Berhad

3.

Guaranty by PVH to American Express Travel Related Services, Inc. regarding corporate credit cards held by PVH employees

4.

Guaranty by PVH to American Express International Inc. regarding corporate credit cards held by PVH employees

5.

Guaranty by PVH of Fenwick Limited's obligations to Dolce & Gabanna

6.

Indebtedness with respect to that certain Asset Sale and Transfer Agreement, dated as of February 27, 2009, among Unitim Marka Magazacilik Anonim Sirketi, Tommy Hilfiger Marka Dagitim Ve Ticaret Anonim Serketi, Mr. Burchan Cemiloglu and Tommy Hilfiger Europe B.V. (as amended, amended and restated, supplemented or otherwise modified from time to time)

7.

Indebtedness with respect to that certain Amended and Restated Factoring Agreement, dated as of April 1, 2005, between Tommy Hilfiger U.S.A., Inc. and Wells Fargo Century, Inc. (as amended, amended and restated, supplemented or otherwise modified from time to time)

8.

Indebtedness with respect to that certain Facility Letter, dated as of January 26, 2010, among Tommy Hilfiger Canada Inc., Tommy Hilfiger Canada Retail Inc. and HSBC Bank Canada (as amended, amended and restated, supplemented or otherwise modified from time to time), Guaranty, dated as of January 24, 2008, by Tommy Hilfiger Canada Inc. of the obligations of Les Detailllants Tommy Hilfiger Canada Inc. / Tommy Hilfiger Canads Retail Inc. to HSBC Bank Canada (as amended, amended and restated, supplemented or otherwise modified from time to time) and Guaranty, dated as of January 24, 2008, by Les Detailllants Tommy Hilfiger Canada Inc. / Tommy Hilfiger Canads Retail Inc. of the obligations of Tommy Hilfiger Canada Inc.to HSBC Bank Canada (as amended, amended and restated, supplemented or otherwise modified from time to time)

9.

Intercompany loans:

			
	Borrower

	Balance

	Lender

	Confezioni Moda Italia S.R.L.

	$34,202,527

	Phillips-Van Heusen Corporation

	PVH Limited

	$8,752,234

	Phillips-Van Heusen Corporation

Schedule 6.01 - 1

			
	Tommy Hilfiger Group B.V.

	$26,000,000 (Up to $50,000,000 available under a revolving credit facility)

	Tommy Hilfiger U.S.A., Inc.

	Tommy Hilfiger Group B.V.

	€21,470,520

	Tommy Hilfiger Europe B.V.

	Hilfiger Stores GmbH

	€13,500,000

	Tommy Hilfiger Europe B.V.

	Tommy Hilfiger Marka Dagitim Ve Ticaret Anonim Serketi

	TRY 4,828,000

	Tommy Hilfiger Group B.V.

	Tommy Hilfiger France SAS

	€6,678,000

	Tommy Hilfiger Europe B.V.

	Hilfiger Stores France SAS

	€9,523,000

	Tommy Hilfiger Europe B.V.

	Trumpet C.V.

	€500,000,000

	Phillips-Van Heusen Corporation 

	Trumpet C.V.

	€100,000,000

	Phillips-Van Heusen Corporation 

	Prince 2 B.V.

	€500,000,000

	Trumpet C.V.

	Prince 2 B.V.

	€100,000,000

	Trumpet C.V.

	Tommy Hilfiger U.S.A., Inc.

	$75,000,000

	Tommy Hilfiger B.V.

	Tommy Hilfiger Group B.V.

	Approx. €399,578,354

	Tommy Hilfiger B.V.

10.

Outstanding LCs:

						
	Issuer

	Issuing Bank

	Currency

	Amount

	Start Date

	Maturity

	Tommy Hilfiger Canada Inc.

	HSBC Canada

	CAD

	4,000.00

	3/13/2010

	3/12/2011

	Tommy Hilfiger Canada Inc.

	HSBC Canada

	CAD

	3,500.00

	8/16/2009

	8/16/2010

	Tommy Hilfiger Canada Inc.

	HSBC Canada

	CAD

	5,437.50

	8/24/2009

	8/24/2010

	Tommy Hilfiger Canada Inc.

	HSBC Canada

	CAD

	1,510.00

	11/13/2009

	11/13/2010

	Tommy Hilfiger Canada Inc.

	HSBC Canada

	CAD

	7,230.00

	12/24/2009

	12/24/2010

	Tommy Hilfiger Canada Inc.

	HSBC Canada

	CAD

	100,000.00

	1/8/2010

	1/8/2011

	Tommy Hilfiger U.S.A, Inc.

	Citibank

	$

	1,147,000.00

	12/5/2006

	12/31/2010

	Tommy Hilfiger U.S.A, Inc.

	Citibank

	$

	100,000.00

	12/13/2006

	12/31/2010

	Tommy Hilfiger U.S.A, Inc.

	Citibank

	$

	6,658,362.78

	5/4/2009

	12/31/2010

	Phillips-Van Heusen Corporation

	The Bank of New York Mellon

	$

	1,000,000.00

	2/17/1995

	2/17/2010

	Phillips-Van Heusen Corporation

	The Bank of New York Mellon

	$

	419,262.00

	3/23/1995

	3/19/2010

Schedule 6.01 - 2

						
	Phillips-Van Heusen Corporation

	The Bank of New York Mellon

	$

	440,657.00

	5/16/1997

	5/9/2010

	Phillips-Van Heusen Corporation

	The Bank of New York Mellon

	$

	594,357.00

	1/30/2003

	1/30/2010

	Phillips-Van Heusen Corporation

	The Bank of New York Mellon

	$

	4,800,045.00

	4/4/2003

	3/20/2010

11.

Capital Leases (including any and all guaranties given in connection therewith):

				
	Entity

	Description

	Lessor

	Date of Lease

	Tommy Hilfiger Canada Inc.

	7445 Cote de Liesse, St-Laurent, QC  H4T 1G2, Canada

	Sun Life Assurance Company of Canada

	6/1/2007

	Tommy Hilfiger Japan Corporation

	Fixtures and furniture for various retail stores

	 
	 

12.

Foreign exchange arrangements identified on Annex to this Schedule 6.01.  

Schedule 6.01 - 3

TOMMY HILFIGER CANADA

FORWARD CONTRACTS

AS OF MAY 2, 2010

													
	Month

	May-10

	Jun-10

	Jul-10

	Aug-10

	Sep-10

	Oct-10

	Nov-10

	Dec-10

	Jan-11

	Feb-11

	Mar-11

	Outstanding Total

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Date entered into

	 
	4-Sep-2009

	4.-Sep-2009

	4-Sep-2009

	14-Oct-2009

	9-Nov-2009

	 
	6-Jan-2010

	18-Feb-2010

	2-Mar-2010

	20-Apr-2010

	 

	Maturity date

	 
	30-Jun-2010

	30-Jul-2010

	31-Aug-2010

	30-Sep-2010

	29-Oct-2010

	 
	31-Dec-2010

	31-Jan-2011

	28-Feb-2011

	31-Mar-2011

	 

	Rates

	 
	[***]

	[***]

	[***]

	[***]

	[***]

	 
	[***]

	[***]

	[***]

	[***]

	 

	Notional amounts (USD)

	 
	[***]

	[***]

	[***]

	[***]

	[***]

	 
	[***]

	[***]

	[***]

	[***]

	 

	Contract value

	 
	[***]

	[***]

	[***]

	[***]

	[***]

	 
	[***]

	[***]

	[***]

	[***]

	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Date entered into

	4-Aug-2009

	16-Sep-2009

	16-Sep-2009

	16-Sep-2009

	 
	1-Dec-2009

	1-Dec-2009

	11-Jan-2010

	19-Feb-2010

	3-Mar-2010

	21-Apr-2010

	 

	Maturity date

	28-May-2010

	30-Jun-2010

	30-Jul-2010

	31-Aug-2010

	 
	29-Oct-2010

	30-Nov-2010

	31-Dec-2010

	31-Jan-2011

	28-Feb-2011

	31-Mar-2011

	 

	Rates

	[***]

	[***]

	[***]

	[***]

	 
	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	 

	Notional amounts (USD)

	[***]

	[***]

	[***]

	[***]

	 
	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	 

	Contract value

	[***]

	[***]

	[***]

	[***]

	 
	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Date entered into

	24-Aug-2009

	2-Oct-2009

	2-Oct-2009

	2-Oct-2009

	 
	 
	10-Dec-2009

	9-Feb-2010

	19-Feb-2010

	20-Apr-2010

	 
	 

	Maturity date

	28-May-2010

	30-Jun-2010

	30-Jul-2010

	31-Aug-2010

	 
	 
	30-Nov-2010

	31-Dec-2010

	31-Jan-2011

	28-Feb-2011

	 
	 

	Rates

	[***]

	[***]

	[***]

	[***]

	 
	 
	[***]

	[***]

	[***]

	[***]

	 
	 

	Notional amounts (USD)

	[***]

	[***]

	[***]

	[***]

	 
	 
	[***]

	[***]

	[***]

	[***]

	 
	 

	Contract value

	[***]

	[***]

	[***]

	[***]

	 
	 
	[***]

	[***]

	[***]

	[***]

	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Date entered into

	 
	5-Oct-2009

	5-Oct-2009

	5-Oct-2009

	 
	23-Dec-2009

	23-Dec-2009

	 
	22-Feb-2010

	 
	 
	 

	Maturity date

	 
	30-Jun-2010

	30-Jul-2010

	31-Aug-2010

	 
	29-Oct-2010

	30-Nov-2010

	 
	31-Jan-2011

	 
	 
	 

	Rates

	 
	[***]

	[***]

	[***]

	 
	[***]

	[***]

	 
	[***]

	 
	 
	 

	Notional amounts (USD)

	 
	[***]

	[***]

	[***]

	 
	[***]

	[***]

	 
	[***]

	 
	 
	 

	Contract value

	 
	[***]

	[***]

	[***]

	 
	[***]

	[***]

	 
	[***]

	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Date entered into

	 
	7-Oct-2009

	7-Oct-2009

	7-Oct-2009

	 
	 
	 
	 
	 
	 
	 
	 

	Maturity date

	 
	30-Jun-2010

	30-Jul-2010

	31-Aug-2010

	 
	 
	 
	 
	 
	 
	 
	 

	Rates

	 
	[***]

	[***]

	[***]

	 
	 
	 
	 
	 
	 
	 
	 

	Notional amounts (USD)

	 
	[***]

	[***]

	[***]

	 
	 
	 
	 
	 
	 
	 
	 

	Contract value

	 
	[***]

	[***]

	[***]

	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Date entered into

	 
	11-Feb-2010

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Maturity date

	 
	29-Jun-2010

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Rates

	 
	[***]

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Notional amounts (USD)

	 
	[***]

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Contract value

	 
	[***]

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Date entered into

	 
	15-Feb-2010

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Maturity date

	 
	2-Jul-2010

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Rates

	 
	[***]

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Notional amounts (USD)

	 
	[***]

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Contract value

	 
	[***]

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	TOTALS

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Maturity date

	31-May-2010

	30-Jun-2010

	31-Jul-2010

	31-Aug-2010

	30-Sep-2010

	29-Oct-2010

	30-Nov-2010

	31-Dec-2010

	31-Jan-2011

	28-Feb-2011

	31-Mar-2011

	 

	Rates

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	Notional amounts (USD)

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	Contract value

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Spot rate

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	Gain/(loss)

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

	[***]

[***] Redacted pursuant to a request for confidential treatment.

Schedule 6.01 - Annex 1

																		
	Season

	Counterparty

	Trade Date

	Product

	Buy

	Buy Amount

	Sell

	Sell Amount

	Cross

	Spot 

Rate

	Forward 

Points

	Forward Rate

	Trigger

	Exercised

	Maturity Date

	Buy / Sell

	Account

	Counterpart Exposure

	Fall10

	[***]

	10/2/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	 
	 
	[***]

	 
	 
	06/05/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	UK

	[***]

	2/18/2010

	FWD

	EUR

	[***]

	GBP

	[***]

	EURGBP

	[***]

	[***]

	[***]

	 
	 
	26/05/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Fall10

	[***]

	10/27/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	

	

	[***]

	 
	 
	28/05/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Marketing

	[***]

	8/27/2009

	CF

	USD

	[***]

	EUR

	[***]

	EURUSD

	

	

	[***]

	[***]

	 
	15/06/2010

	S

	TOMMY HILFIGER EUROPE BV

	 

	Fall10

	[***]

	10/26/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	

	

	[***]

	 
	 
	28/06/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Fall10

	[***]

	9/23/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	

	

	[***]

	 
	 
	26/07/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Fall10

	[***]

	9/24/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	

	

	[***]

	 
	 
	26/07/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Fall10

	[***]

	11/3/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	

	

	[***]

	 
	 
	19/08/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Fall10

	[***]

	11/2/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	

	

	[***]

	 
	 
	07/09/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Spring11

	[***]

	11/19/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	

	

	[***]

	 
	 
	25/10/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Spring11

	[***]

	12/11/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	[***]

	[***]

	[***]

	 
	 
	15/11/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Spring11

	[***]

	11/26/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	[***]

	[***]

	[***]

	 
	 
	30/11/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Spring11

	[***]

	11/26/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	[***]

	[***]

	[***]

	 
	 
	30/11/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Spring11

	[***]

	12/9/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	[***]

	[***]

	[***]

	 
	 
	13/12/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Fall10

	[***]

	9/23/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	

	

	[***]

	 
	 
	25/06/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Fall10

	[***]

	12/17/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	[***]

	[***]

	[***]

	 
	 
	26/08/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Fall10

	[***]

	1/28/2010

	FWD

	USD

	[***]

	EUR

	[***]

	eurusd

	[***]

	[***]

	[***]

	 
	 
	02/09/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Fall10

	[***]

	1/28/2010

	FWD

	USD

	[***]

	EUR

	[***]

	eurusd

	[***]

	[***]

	[***]

	 
	 
	16/09/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Fall10

	[***]

	10/15/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	

	

	[***]

	 
	 
	20/09/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Spring11

	[***]

	11/17/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	

	

	[***]

	 
	 
	19/10/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Spring11

	[***]

	11/25/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	

	

	[***]

	 
	 
	29/11/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	spring11

	[***]

	11/30/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	[***]

	[***]

	[***]

	 
	 
	02/12/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	spring11

	[***]

	12/4/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	[***]

	[***]

	[***]

	 
	 
	08/12/2010

	 
	TOMMY HILFIGER EUROPE BV

	 

	Spring11

	[***]

	1/28/2010

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	[***]

	[***]

	[***]

	 
	 
	06/01/2011

	 
	TOMMY HILFIGER EUROPE BV

	 

	Spring11

	[***]

	12/15/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	[***]

	[***]

	[***]

	 
	 
	18/01/2011

	 
	TOMMY HILFIGER EUROPE BV

	 

	Spring11

	[***]

	12/18/2009

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	[***]

	[***]

	[***]

	 
	 
	18/01/2011

	 
	TOMMY HILFIGER EUROPE BV

	 

	Spring11

	[***]

	1/15/2010

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	[***]

	[***]

	[***]

	 
	 
	19/01/2011

	 
	TOMMY HILFIGER EUROPE BV

	 

	spring11

	[***]

	1/20/2010

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	[***]

	[***]

	[***]

	 
	 
	24/01/2011

	 
	TOMMY HILFIGER EUROPE BV

	 

	spring11

	[***]

	1/20/2010

	FWD

	USD

	[***]

	EUR

	[***]

	EURUSD

	[***]

	[***]

	[***]

	 
	 
	24/01/2011

	 
	TOMMY HILFIGER EUROPE BV

	 

[***] Redacted pursuant to a request for confidential treatment.

Schedule 6.01 - Annex 2

SCHEDULE 6.02

Certain Liens

1.

The following non-IP Liens:

							
	Debtor

	Secured Party

	Collateral

	State

	Jurisdiction

	Original File Date and Number

	Related Filings

	Calvin Klein (Europe II), Corp.

	Klein, Calvin

	All assets

	DE

	Secretary of State

	3/4/2010

#2010 0732432

	 

	Calvin Klein (Europe), Inc.

	Klein, Calvin

	All assets

	DE

	Secretary of State

	3/4/2010

#2010 0732168

	 

	Calvin Klein, Inc.

	Klein, Calvin

	All assets

	NY

	Secretary of State

	3/5/2010

#201003050115583

	 

	Calvin Klein, Inc

	Union Transport Corp.

	Judgment $77,810.11

	NY

	New York County

	5/1/2000

#001276294-02

	 

	Calvin Klein, Inc. d/b/a Calvin Klein Jeanswear Company

Additional Debtor:  Denim Holdings Inc.

	Union Transport Corp.

	Judgment $77,810.11

	NY

	New York County Supreme Court

	5/1/2000

#603702-1999

	 

	CD Group Inc.

	Dell Financial Services, L.P.

	Leased computer equipment

	DE

	Secretary of State

	5/20/2005

#5157295 8

	Continuation filed 4/20/10

	CD Group

	IOS Capital

	Leased equipment 

	DE

	Secretary of State

	8/22/2005

#5260078 2

	 

	CD Group

	IOS Capital

	Leased equipment 

	DE

	Secretary of State

	8/22/2005

#5260192 1

	 

	CD Group Inc

	Commissioner of Labor State of New York

	Judgment $1,034.78

	NY

	New York County

	4/2/2010

#002679123-01

	 

	CK Service Corp.

	Klein, Calvin

	All assets

	DE

	Secretary of State

	3/4/2010

#2010 0732705

	 

	CK Services Inc.

	New York State Department of State

	State Tax Lien $709.66

	NY

	Department of State

(Queens County)

	7/16/2002

#E-019126065-W001-3

	 

	CK Service

	New York State Department of State

	State Tax Lien $627.54

	NY

	Department of State

(New York County)

	8/24/2005

#E-024836696-W001-2

	 

Schedule 6.02 - 1

							
	CK Service

	NY State Dep't of Taxation and Finance

	State Tax Lien $627.54

	NY

	New York County

	8/24/2005

#002036404-01

	 

	Cluett, Peabody & Co., Inc.

	New York State Department of State

	State Tax Lien $1,871.20

	NY

	Department of State

(Albany County)

	3/11/2003

#E-002949322-W002-7

	 

	Cluett, Peabody & Co Inc

	NY State Dep't of Taxation and Finance

	State Tax Lien $2,564.90

	NY

	New York County

	3/4/1993

#000522111-01

	 

	Cluett, Peabody & Co Inc

	NY State Dep't of Taxation and Finance

	State Tax Lien $807.74

	NY

	New York County

	12/21/1988

#000131668-01

	 

	Mulberry Thai Silks, Inc.

	Winthrop Resources Corporation

	Leased equipment

	CA

	Secretary of State

	7/6/2005

#05-7033279753

	 

	Mulberry Thai Silks, Inc.

	Wells Fargo Bank, National Association

	 
	CA

	Secretary of State

	7/17/2006

#06-7077912271

	Termination filed 4/25/08

	Mulberry Thai Silks, Inc.

	The Central Valley Fund, L.P.

	 
	CA

	Secretary of State

	9/5/2006

#06-7083864698

	Termination filed 4/25/08

	Phillips-Van Heusen Corporation

	Cisco Systems Capital Corporation

	Leased equipment

	DE

	Secretary of State

	4/9/2001

#1033512 0

	Amendment filed 11/14/03

Continuation filed 11/29/05

	Phillips-Van Heusen Corporation

	Forsythe/McArthur Associates, Inc.

	Leased computer, telecommunications equipment

	DE

	Secretary of State

	7/2/2003

#3168392 2

	Amendment filed 7/29/03

Continuation filed 1/11/08

	Phillips-Van Heusen Corporation

	First Bank of Highland Park

	Leased equipment

	DE

	Secretary of State

	5/19/2005

#5155620 9

	Amendment filed 9/30/05

Assignment filed 9/30/05

	Phillips Van Heusen

	IOS Capital

	Leased equipment

	DE

	Secretary of State

	5/20/2005

#5156076 3

	 

	Phillips-Van Heusen Corporation

	General Electric Capital Corporation

	Leased equipment

	DE

	Secretary of State

	5/27/2005

#5164355 1

	 

	Phillips-Van Heusen Corporation

	General Electric Capital Corporation

	Leased equipment

	DE

	Secretary of State

	5/27/2005

#5164357 7

	 

	Phillips Van Heusen

	IOS Capital

	Leased equipment

	DE

	Secretary of State

	7/11/2005

#5211487 5

	 

	Phillips Van Heusen

	IOS Capital

	Leased equipment

	DE

	Secretary of State

	7/14/2005

#5216268 4

	 

Schedule 6.02 - 2

							
	Phillips-Van Heusen Corporation

	Cisco Systems Capital Corporation

	In lieu continuation NYSOS 2001 filing/ leased equipment

	DE

	Secretary of State

	11/29/2005

#5366969 5

	 

	Phillips Van Heusen

	IOS Capital

	Leased equipment

	DE

	Secretary of State

	12/15/2005

#5388360 1

	 

	Phillips-Van Heusen Corporation

	First Bank of Highland Park

	Leased equipment

	DE

	Secretary of State

	12/21/2005

#5404820 4

	 

	Phillips-Van Heusen Corporation

	First Bank of Highland Park

	Leased equipment

	DE

	Secretary of State

	1/13/2006

#6015453 4

	 

	Phillips-Van Heusen Corporation

	First Bank of Highland Park

	Leased equipment

	DE

	Secretary of State

	1/27/2006

#6045552 7

	 

	Phillips Van Heusen

	IOS Capital

	Leased equipment

	DE

	Secretary of State

	2/9/2006

#6048273 7

	 

	Phillips-Van Heusen Corporation

	Bank Financial, F.S.B.

	Leased computer equipment

	DE

	Secretary of State

	2/15/2006

#6061660 7

	Assignment filed 2/22/06

	Phillips-Van Heusen Corporation

	First Bank of Highland Park

	Leased equipment

	DE

	Secretary of State

	5/3/2006

#6155758 6

	 

	Phillips-Van Heusen Corporation

	First Bank of Highland Park

	Leased equipment

	DE

	Secretary of State

	6/26/2006

#6221784 2

	 

	Phillips-Van Heusen Corporation

	First Bank of Highland Park

	Leased computer equipment

	DE

	Secretary of State

	7/25/2006

#6256082 9

	Amendment filed 12/13/06

Assignment filed 1/26/07

	Phillips-Van Heusen Corporation

	CIT Technologies Corporation

	Leased computer equipment

	DE

	Secretary of State

	7/26/2006

#6257783 1

	 

	Phillips-Van Heusen Corporation

	IBM Credit LLC

	Leased IBM equipment

	DE

	Secretary of State

	11/7/2006

#6388652 0

	 

	Phillips-Van Heusen Corporation

	First United Bank

	Leased computer equipment

	DE

	Secretary of State

	11/6/2006

#6415059 5

	Assignment filed 12/12/06

	Phillips-Van Heusen Corporation

	EMC Corporation

	 
	DE

	Secretary of State

	1/3/2007

#2007 0020999

	Termination filed 1/5/07

	Phillips-Van Heusen Corporation

	General Electric Capital Corporation

	Leased equipment

	DE

	Secretary of State

	1/3/2007

#2007 0021096

	 

	Phillips Van Heusen

	IOS Capital

	Leased equipment

	DE

	Secretary of State

	1/4/2007

#2007 0031624

	 

Schedule 6.02 - 3

							
	Phillips-Van Heusen Corporation

	Comsource, Inc.

	Leased equipment

	DE

	Secretary of State

	1/23/2007

#2007 0276013

	Assignments filed 2/6/07 (2x), 3/24/08, 6/9/09, 10/26/09, 4/5/10

	Phillips Van Heusen

	IOS Capital

	Leased equipment

	DE

	Secretary of State

	2/2/2007

#2007 0426063

	 

	Phillips-Van Heusen Corporation

	First United Bank

	Leased computer equipment

	DE

	Secretary of State

	5/24/2007

#2007 1972321

	Assignment filed 6/7/07

	Phillips Van Heusen

	IOS Capital

	Leased equipment

	DE

	Secretary of State

	6/5/2007

#2007 2102522

	 

	Phillips Van Heusen

	Ikon Financial Svcs

	Leased equipment

	DE

	Secretary of State

	7/4/2007

#2007 2530656

	 

	Phillips Van Heusen

	Ikon Financial Svcs

	Leased equipment

	DE

	Secretary of State

	9/11/2007

#2007 3439030

	 

	Phillips Van Heusen

	Ikon Financial Svcs

	Leased equipment

	DE

	Secretary of State

	9/11/2007

#2007 3439048

	 

	Phillips Van Heusen

	Ikon Financial Svcs

	Leased equipment

	DE

	Secretary of State

	9/11/2007

#2007 3439055

	 

	Phillips Van Heusen

	Ikon Financial Svcs

	Leased equipment

	DE

	Secretary of State

	9/13/2007

#2007 3466165

	 

	Phillips Van Heusen

	Ikon Financial Svcs

	Leased equipment

	DE

	Secretary of State

	9/22/2007

#2007 3587713

	 

	Phillips Van Heusen

	Ikon Financial Svcs

	Leased equipment

	DE

	Secretary of State

	10/19/2007

#2007 3942736

	 

	Phillips-Van Heusen Corporation

	IBM Credit LLC

	Leased IBM equipment

	DE

	Secretary of State

	10/31/2007

#2007 4139944

	 

	Phillips Van Heusen

	Ikon Financial Svcs

	Leased equipment

	DE

	Secretary of State

	1/1/2008

#2008 0000669

	 

	Phillips Van Heusen

	Ikon Financial Svcs

	Leased equipment

	DE

	Secretary of State

	6/24/2008

#2008 2151171

	 

	Phillips Van Heusen

	Ikon Financial Svcs

	Leased equipment

	DE

	Secretary of State

	6/24/2008

#2008 2151189

	 

	Phillips-Van Heusen Corporation

	IBM Credit LLC

	Leased equipment

	DE

	Secretary of State

	7/1/2008

#2008 2262812

	 

	Phillips-Van Heusen Corporation

	CSI Leasing, Inc.

	Leased equipment

	DE

	Secretary of State

	7/11/2008

#2008 2392056

	 

Schedule 6.02 - 4

							
	Phillips-Van Heusen Corporation

	DDI Leasing, Inc.

	Leased equipment

	DE

	Secretary of State

	7/14/2008

#2008 2399317

	 

	Phillips-Van Heusen Corporation

	DDI Leasing, Inc.

	Leased equipment

	DE

	Secretary of State

	7/14/2008

#2008 2399440

	 

	Phillips-Van Heusen Corporation

	BankFinancial F.S.B.

	Leased equipment

	DE

	Secretary of State

	8/1/2008

#2008 2636106

	Amendment filed 11/19/08

Assignment filed 11/19/08

	Phillips Van Heusen Corporation

	US Bancorp

	Specific equipment

	DE

	Secretary of State

	2/11/2009

#2009 0468261

	 

	Phillips-Van Heusen Corporation

	Klein, Calvin

	All capital stock of 

Calvin Klien, Inc. Calvin Klein (Europe), Inc. Calvin Klein (Europe II) Corp. and CK Service Corp.and 65% of Calvin Klein Europe S.R.L.

	DE

	Secretary of State

	3/4/2010

#2010 0732002

	 

	Phillips-Van Heusen

	CSI Leasing, Inc.

	Leased computer equipment

	DE

	Secretary of State

	3/17/2010

#2010 0920862

	 

	Phillips-Van Heusen Corporation

	CSI Leasing, Inc.

	Leased equipment

	DE

	Secretary of State

	3/22/2010

#2010 0978522

	 

	Phillips Van Heusen

	Ikon Financial Svcs

	Leased equipment

	DE

	Secretary of State

	4/13/2010

#2010 1265960

	 

	Phillips-Van Heusen Corporation

	New York State Department of State

	State Tax Lien $122,616.00

	NY

	Department of State

(New York County)

	4/6/2010

#E-005430632-W003-6

	 

	Phillips-Van Heusen Corporation

	NY State Dep't of Taxation and Finance

	State Tax Lien $122,616.00

	NY

	New York County

	4/6/2010

#002680374-01

	 

	PVH Wholesale Corp.

	The Chase Manhattan Bank, as Collateral Agent

	 
	DE

	Secretary of State

	2/13/2001

#1012789 9

	Termination filed 10/18/02

Continuation filed 11/14/05

	PVH Wholesale Corp.

	The Chase Manhattan Bank, as Collateral Agent

	In lieu continuation of 2001 and 2002 NY & NJ filings

Blanket lien

	DE

	Secretary of State

	11/16/2005

#5363517 5

	 

	Tommy Hilfiger USA, Inc.

	Fidelity Leasing A Division of EAB Leasing Corp

	Leased equipment

	DE

	Secretary of State

	2/28/2002

#2071274 9

	Continuation filed 1/26/07

Schedule 6.02 - 5

							
	Tommy Hilfiger U.S.A., Inc.

	Cisco Systems Capital Corporation

	Leased equipment

	DE

	Secretary of State

	3/28/2002

#2094883 0

	Continuation filed 3/21/07

Amendment filed 1/27/09

	Tommy Hilfiger USA Inc.

	Fidelity Leasing A Div of EAB Leasing Corp

	Leased equipment

	DE

	Secretary of State

	4/26/2002

#2120619 6

	Continuation filed 4/4/07

	Tommy Hilfiger USA Inc.

	Fidelity Leasing A Div of EAB Leasing Corp

	Leased equipment

	DE

	Secretary of State

	4/26/2002

#2121611 2

	Continuation filed 4/4/07

	Tommy Hilfiger U.S.A., Inc.

	Wells Fargo Century, Inc.

	All Receivables, all credit balances with Wells Fargo, all claims against Wells Fargo and all property of every kind and description, tangible or intangible, at any time in Wells Fargo’s possession or subject to its control

	DE

	Secretary of State

	2/11/2005

#5048606 9

	Amendments filed 6/20/05, 3/29/06

Continuation filed 8/11/09

	Tommy Hilfiger USA Inc

	Banc of America Leasing & Capital, LLC

	copiers

	DE

	Secretary of State

	8/1/2005

#5235975 1

	 

	Tommy Hilfiger U.S.A., Inc.

	IBM Credit LLC

	Leased IBM equipment

	DE

	Secretary of State

	12/14/2006

#6437504 4

	 

	Tommy Hilfiger U.S.A., Inc.

	De Lage Landen Financial Services, Inc.

	Leased equipment

	DE

	Secretary of State

	8/15/2007

#2007 3110136

	Assignment filed 10/15/07

Amendment filed 10/15/07

	Tommy Hilfiger U.S.A., Inc.

	De Lage Landen Financial Services, Inc.

	Leased equipment

	DE

	Secretary of State

	4/25/2008

#2008 1444494

	Assignment filed 9/25/08

Amendment filed 9/26/08

	Tommy Hilfiger U.S.A., Inc.

	Banc of America Leasing & Capital, LLC

	copiers

	DE

	Secretary of State

	5/28/2008

#2008 1827821

	 

	Tommy Hilfiger U.S.A., Inc.

	The Huntington National Bank

	Purchase Money Security Interest in attached equipment

	DE

	Secretary of State

	8/7/2008

#2008 2712162

	 

	Tommy Hilfiger U.S.A., Inc.

	Banc of America Leasing & Capital, LLC

	Copier

	DE

	Secretary of State

	10/23/2008

#2008 3574215

	 

	Tommy Hilfiger U.S.A., Inc.

	Banc of America Leasing & Capital, LLC

	Copiers

	DE

	Secretary of State

	10/24/2008

#2008 3592555

	 

	Tommy Hilfiger U.S.A., Inc.

	Crown Credit Company

	Leased equipment 

	DE

	Secretary of State

	12/8/2008

#2008 4060354

	 

Schedule 6.02 - 6

							
	Tommy Hilfiger U.S.A., Inc.

	Banc of America Leasing & Capital, LLC

	Copiers

	DE

	Secretary of State

	12/10/2008

#2008 4097430

	 

	Tommy Hilfiger U.S.A., Inc.

	Presidio Technology Capital, LLC

	Leased equipment 

	DE

	Secretary of State

	8/24/2009

#2009 2711247

	Amendment filed 10/27/09

Assignment filed 10/28/09

	Tommy Hilfiger U.S.A., Inc.

	Presidio Technology Capital, LLC and Wells Fargo Financial Leasing, Inc.

	Leased equipment

	DE

	Secretary of State

	10/29/2009

#2009 3482947

	Amendment filed 11/10/09

	Tommy Hilfiger U.S.A., Inc.

	Western Finance & Lease Inc

	Leased technology equipment or inventory

	DE

	Secretary of State

	3/18/2010

#2010 0946388

	 

	Tommy Hilfiger U.S.A. Inc.

	New York State Department of State

	State Tax Lien $2,760.00

	NY

	Department of State

(Albany County)

	2/23/2010

#E-003686029-W005-8

	 

	Tommy Hilfiger U.S.A. Inc.

	New York State Department of State

	State Tax Lien $85,157.35

	NY

	Department of State

(Albany County)

	2/23/2010

#E-003686029-W006-3

	 

Schedule 6.02 - 7

							
	Tommy Hilfiger Canada Inc.

	142557 Canada Inc.

159050 Canada Inc.

2745-4669 Quebec Inc.

Impex A & L Inc.

Roseland Developments Inc.

Samfish Investment (Canada) Inc.

Jayfish Investments (1987) Inc.

Miland Developments Inc.

Samdev Investments Inc.

Rachro Investments Inc. all carrying on business 

under the name:

Place Jean-Talon Enr.

	Charged property:  The universality of all movable improvements, equipment, machinery, furniture and trade fixtures of every kind, present and future, located on or upon the leased premises or used directly or indirectly in connection with the business of the tenant carried on at the leased premises, including all indemnities or proceeds paid under insurance contracts or policies pertaining to or covering such movables.

The universality of all property in stock, raw materials, work in progress and inventory, present and future, situated on or upon the leased premises or used directly or indirectly in connection with the business of the tenant carried on at the additional premises, including all indemnities or proceeds paid under insurance contracts or policies pertaining to or covering such movables.

The lease premises are located at 7077 Park Avenue, Montreal, Quebec, H3N 1X7 consisting of the following usable area:  1st, 2nd, 3rd, 5th and 6th floors.

Amount:  $500,000 plus interest as stipulated in the lease.

Expiry date:  January 2, 2012

	 
	Canada

	January 24, 2002

at 10:38 a.m.

02-0029310-0015

	 

Schedule 6.02 - 8

							
	Tommy Hilfiger Canada Inc.

	142557 Canada Inc.

Samfish Investment (Canada) Inc.

159050 Canada Inc.

Impex A&L Incorporated

Samdev Investments Inc.

2745-4669 Quebec Inc.

Roseland Developments Inc.

Miland Developments Inc.

Jayfish Investments (1987) Inc.

Rachro Investments Inc. all carrying on

business under the name:

Place Jean-Talon Enr.

	Charged property:  The universality of all movable improvements, equipment, machinery, furniture and trade fixtures of every kind, present and future, located on or upon the leased premises or used directly or indirectly in connection with the business of the tenant carried on at the leased premises, including all indemnities or proceeds paid under insurance contracts or policies pertaining to or covering such movables.

The leased premises are located at 7077 Park Avenue, Suite 303, Montreal, Quebec, H3N 1X7

.

Amount:  $8,000 plus interest as stipulated in the lease

.

Expiry date:  December 1st, 2014

	 
	Canada

	July 13, 2005

at 10:30 a.m.

05-0404402-0001

	 

Schedule 6.02 - 9

							
	Tommy Hilfiger Canada Inc.

	142557 Canada Inc.

Samfish Investment (Canada) Inc.

159050 Canada Inc.

Impex A&L Incorporated

Samdev Investments Inc.

2745-4669 Quebec Inc.

Roseland Developments Inc.

Jayfish Investments (1987) Inc.

Rachro Investments Inc. all carrying on

business under the name:

Place Jean-Talon Enr.

	Charged property:  The universality of all movable improvements, equipment, machinery, furniture and trade fixtures of every kind, present and future, located on or upon the additional premises or used directly or indirectly in connection with the business of the tenant carried on at the additional premises, including all indemnities or proceeds paid under insurance contracts or policies pertaining to or covering such movables.

The universality of all property in stock, raw materials, work in progress and inventory, present and future, situated on or upon the additional premises or used directly or indirectly in connection with the business of the tenant carried on at the additional premises, including all indemnities or proceeds paid under insurance contracts or policies pertaining to or covering such movables. The additional premises are located at 7077 Park Avenue, Suite 303, Montreal, Quebec, H3N 1X7.

Amount: $10,000 plus interest as stipulated in the offer.

Expiry date: September 7, 2015

	 
	Canada

	September 15, 2005

at 10:30 a.m.

05-0531477-0002

	 

	Tommy Hilfiger Canada Inc.

	YKK Canada Inc.

	Property: Specific equipment

.

Date of the agreement:  –

Expiry date:  May 20, 2010

	 
	Canada

	May 24, 2005

at 11:43 a.m.

05-0297442-0002

	 

Schedule 6.02 - 10

							
	Tommy Hilfiger Canada Inc.

	Holand Leasing 1995 Ltd.

	Property:  Specific vehicle (BMW 530XI, 2007).

Date of the agreement:  February 21, 2007

Expiry date:  July 31, 2010

	 
	Canada

	March 27, 2007

at 10:07 a.m.

07-0155013-0001

	 

	Tommy Hilfiger Canada Inc.

	Holand Leasing 1995 Ltd.

	Property:  Specific vehicle (BMW X5 4.81, 2008).

Date of the agreement:  October 30, 2007

Expiry date:  January 31, 2011

	 
	Canada

	November 5, 2007

at 11:06 a.m.

07-0635469-0031

	 

	Tommy Hilfiger Canada Inc.

	Holand Leasing 1995 Ltd.

	Property:  Specific vehicle (Porsche Cayenne S, 2008).

Date of the agreement:  December 19, 2007

Expiry date:  May 31, 2011

	 
	Canada

	January 10, 2008

at 9:00 a.m.

08-0012410-0017

	 

	Tommy Hilfiger Canada Inc.

	Holand Leasing 1995 Ltd.

	Property:  Specific vehicle (Mercedes E350 4Matic, 2008)

.

Date of the agreement:  May 15, 2008

Expiry date:  October 31, 2011

	 
	Canada

	May 20, 2008

at 9:00 a.m.

08-0286676-0009

	 

	Tommy Hilfiger Canada Inc.

	Prestige Audi; VW Credit Canada Inc.

	Property:  Specific vehicle (Audi Q7 3.6L PREM, 2009).

Date of the agreement:  October 23, 2008

	 
	Canada

	October 28, 2008

at 10:27 a.m.

08-0620776-0032

	 

Schedule 6.02 - 11

							
	Tommy Hilfiger Canada Inc.

	Équipements G. N. Johnston Ltée

	1 Chariot Raymond Modèle: 7400-R45TT N/S: 740-10-CB20269 

1 Batterie Oldham Modèle: 18-125F15 N/S: PL101101705 

1 Chargeur Oldham Modèle: PH3R18865 N/S: IB59115 

	 
	Canada

	10-0199538-0001 2010-04-06  10:06 

2012-04-01

	 

	Tommy Hilfiger Canada Retail Inc.

Les Détaillants Tommy Hilfiger Canada Inc.

	Canon Canada Inc.

	Property:  (image runner) All goods supplied by the Lessor to the Lessee, together with all attachments, accessories, accessions, replacements, substitutions, additions and improvements to the foregoing and all proceeds therefrom.

Date of the agreement:  May 29, 2009

Expiry date:  May 29, 2014

	 
	Canada

	June 2, 2009

at 9:00 a.m.

09-0318878-0006

	 

	Tommy Hilfiger Canada Retail Inc.

	CBSC Capital Inc.

	Specific photo copies

	 
	Ontario

	654773256- 20090708 1948 1531 8162 (5 years)

	 

2.

Liens arising under the Guarantee, dated as of January 23, 2008, by Fortis Bank (Nederland) N.V. of certain obligations of Tommy Hilfiger Group B.V. to ITOCHU Corporation (as amended, amended and restated, supplemented or otherwise modified from time to time) and Letter, dated as of January 25, 2008, from Tommy Hilfiger Group B.V. to Fortis Bank (Nederland) N.V. (as amended, amended and restated, supplemented or otherwise modified from time to time)

3.

The following IP liens:

Schedule 6.02 - 12

				
	Mark

	Application No. / Filing Date

	Registration No. / Registration Date

	Liens

	Calvin

	72379595

12/28/1970

	0933999

05/16/1972

	Transamerica Business Credit Corporation security interest recorded 08/12/1993 at Reel/Frame No. 1043/0001.

Transamerica Business Credit Corporation security interest recorded 02/08/95 at Reel/Frame No. 1282/0110.

The CIT Group/Commercial Services, Inc. UCC-1 financing statement recorded 12/29/1995 at Reel/Frame No. 1385/0078.

Phillips-Van Heusen Corporation security interest recorded 12/21/2006 at Reel/Frame No. 3449/0151.

Schedule 6.02 - 13

SCHEDULE 6.05

Certain Agreements

1.

Indenture dated as of November 1, 1993, between Phillips-Van Heusen Corporation (“PVH”) and The Bank of New York Mellon, as trustee (as amended, amended and restated, supplemented or otherwise modified from time to time)

2.

Indenture, dated as of May 6, 2010, between PVH and U.S. Bank National Association, as trustee (as amended, amended and restated, supplemented or otherwise modified from time to time)

3.

Stock Purchase Agreement dated as of December 17, 2002, among PVH, the CK Companies and the sellers named therein (as amended, amended and restated, supplemented or otherwise modified from time to time)

4.

Amended and Restated Pledge and Security Agreement, dated as of May 6, 2010, among PVH, the CK Companies, Mr. Calvin Klein and The Bank of New York Mellon Trust Company, N.A., as collateral agent (as amended, amended and restated, supplemented or otherwise modified from time to time)

5.

Pledgor Guarantee, dated as of February 12, 2003, among the CK Companies and Mr. Calvin Klein (as amended, amended and restated, supplemented or otherwise modified from time to time)

6.

CK Intercreditor Agreement, dated as of May 6, 2010, between The Bank of New York Mellon Trust Company, N.A., as first lien collateral agent, and Barclays Bank PLC, as second lien collateral agent (as amended, amended and restated, supplemented or otherwise modified from time to time)

7.

Stock Purchase Agreement, dated as of December 27, 2007, between Tommy Hilfiger Group B.V. and ITOCHU Corporation (as amended, amended and restated, supplemented or otherwise modified from time to time)

8.

Stockholders’ Agreement, dated as of December 27, 2007, among ITOCHU Corporation, Novel Sportswear Holdings (Japan) Limited, HHS Investments (Japan) Limited, Loong San Holdings Limited, Tommy Hilfiger Group B.V. and Tommy Hilfiger Japan Corporation (as amended, amended and restated, supplemented or otherwise modified from time to time)

9.

Guarantee, dated as of January 23, 2008, by Fortis Bank (Nederland) N.V. of certain obligations of Tommy Hilfiger Group B.V. to ITOCHU Corporation (as amended, amended and restated, supplemented or otherwise modified from time to time) and Letter, dated as of January 25, 2008, from Tommy Hilfiger Group B.V. to Fortis Bank (Nederland) N.V. (as amended, amended and restated, supplemented or otherwise modified from time to time)

10.

Amended and Restated Factoring Agreement, dated as of April 1, 2005, between Tommy Hilfiger U.S.A., Inc. and Wells Fargo Century, Inc. (as amended, amended and restated, supplemented or otherwise modified from time to time)

Schedule 6.05 - 1

11.

Facility Letter, dated as of January 26, 2010, among Tommy Hilfiger Canada Inc., Tommy Hilfiger Canada Retail Inc. and HSBC Bank Canada, Guaranty, dated as of January 24, 2008, by Tommy Hilfiger Canada Inc. of the obligations of Les Detailllants Tommy Hilfiger Canada Inc. / Tommy Hilfiger Canada Retail Inc. to HSBC Bank Canada and Guaranty, dated as of January 24, 2008, by Les Detailllants Tommy Hilfiger Canada Inc. / Tommy Hilfiger Canada Retail Inc. of the obligations of Tommy Hilfiger Canada Inc. to HSBC Bank Canada

12.

Tommy Hilfiger Japan Corporation is restricted from pledging receivables and inventory. Several department stores and fashion houses have a negative pledge clause in their contracts with Tommy Hilfiger Japan Corporation as security for the payment of rent owing under lease agreements. These restrictions were in place prior to the acquisition of Tommy Hilfiger Japan Corporation.

13.

General Credit Arrangements, dated as of June 17, 2009, among Tommy Hilfiger Group B.V., Tommy Hilfiger Europe B.V., Tommy Hilfiger U.S.A., Inc. and Fortis Bank (Nederland) N.V.

14.

Trust Agreement, dated as of March 14, 1994, between Calvin Klein, Inc. and Wilmington Trust Company, as trustee, and related agreements

15.

Quality Assurance Agreement, dated as of March 14, 1994, among Calvin Klein, Inc., Calvin Klein Trademark Trust and Warnaco Inc.

Schedule 6.05 - 2

SCHEDULE 6.06

Certain Investments

1.

Intercompany loans as described in item 9 on Schedule 6.01 and any capitalization of any such Indebtedness.

2.

Non-Subsidiary Equity Investments

			
	Debtor/Grantor

	Issuer

	# of Shares Owned or %of Shares Owned

	Phillips-Van Heusen Corporation

	New Sidney’s, Inc.

	81

	EBS Building, L.L.C.

	208

	EBS Litigation, L.L.C.

	207

	EBS Pension, L.L.C.

	208

	Calvin Klein, Inc.

	Manulife Financial

	692

	Calvin Klein Trademark Trust

	100% of Class A Interests

	Cluett, Peabody & Co., Inc.

	Beijing Innovative Garment Co., Ltd.

	5%

	Industrias Jatu, S.A.

	10.11%

3.

Guaranty by Phillips-Van Heusen Corporation of the obligations of PVH Limited under the Concession Agreements between Harvey Nichols and Company Limited ("HN") and PVH Limited relating to PVH Limited's concessions to operate shops within HN's stores in the United Kingdom at Knightsbridge, Edinburgh and Manchester

4.

Guaranty by Phillips-Van Heusen Corporation of the obligations of Egypt Clothing Co. to Penfabric Sdn. Berhad

5.

Guaranty by Phillips-Van Heusen Corporation to American Express Travel Related Services, Inc. regarding corporate credit cards held by PVH employees

6.

Guaranty by Phillips-Van Heusen Corporation to American Express International Inc. regarding corporate credit cards held by Phillips-Van Heusen Corporation employees

7.

Guaranty by Phillips-Van Heusen Corporation of Fenwick Limited's obligations to Dolce & Gabanna

Schedule 6.06 - 1

8.

Trust Agreement, dated as of March 14, 1994, between Calvin Klein, Inc. and Wilmington Trust Company, as trustee

9.

Worldwide Transfer Agreement, dated as of March 14, 1994, among Calvin Klein, Inc., Calvin Klein Trademark Trust and Warnaco Inc.

10. Foreign exchange arrangements identified in item 12 of Schedule 6.01

Schedule 6.06 - 2

SCHEDULE 6.08(d)

Certain Asset Sale

[***]

[***] Redacted pursuant to a request for confidential treatment.

Schedule 6.08(d) - 1

SCHEDULE 6.11

Certain Affiliate Transactions 

1.

Sale and Purchase Agreement of the Entire Interest of Hilfiger Stores Spain, S.L., dated as of May 26, 2008, between Pepe Jeans SL and Hilfiger Stores B.V. (as amended, amended and restated, supplemented or otherwise modified from time to time)

2.

Affiliate Agreement, dated as of June 29, 2009, between Pepe Jeans SL and Hilfiger Stores B.V. (as amended, amended and restated, supplemented or otherwise modified from time to time)

3.

Agency Agreement, effective January 1, 2007, between Tommy Hilfiger Europe B.V. and Pepe Jeans SL (as amended, amended and restated, supplemented or otherwise modified from time to time)

4.

Stock Purchase Agreement, dated as of December 27, 2007, between Tommy Hilfiger Group B.V. and ITOCHU Corporation (as amended, amended and restated, supplemented or otherwise modified from time to time)

5.

Stockholders’ Agreement, dated as of December 27, 2007, among ITOCHU Corporation, Novel Sportswear Holdings (Japan) Limited, HHS Investments (Japan) Limited, Loong San Holdings Limited, Tommy Hilfiger Group B.V. and Tommy Hilfiger Japan Corporation (as amended, amended and restated, supplemented or otherwise modified from time to time)

6.

The shares of Madison Clothing Ltd. are owned 50% by Thomas Rieffel and 50% by Daniel Grieder.  Daniel Grieder stepped down as President of the Board of Madison Clothing Ltd. on July 28, 2004. Since then, Daniel Grieder has not been involved at all in the business of Madison Clothing Ltd.

7.

Insurance policies with Hub International

8.

E-Commerce Agreement, dated as of April 22, 2009, between Tommy Hilfiger Europe B.V. and Heycom (renamed D+S Netrada)

9.

Trust Agreement, dated as of March 14, 1994, between Calvin Klein, Inc. and Wilmington Trust Company, as trustee

10.

Servicing Agreement, dated as of March 14, 1994, between Calvin Klein, Inc. and Calvin Klein Trademark Trust

11.

Quality Assurance Agreement, dated as of March 14, 1994, among Calvin Klein, Inc., Calvin Klein Trademark Trust and Warnaco Inc.

12.

Worldwide Transfer Agreement, dated as of March 14, 1994, among Calvin Klein, Inc., Calvin Klein Trademark Trust and Warnaco Inc.

Schedule 6.11 - 1

13.

Stockholders’ Agreement, dated as of May 6, 2010, among Phillips-Van Heusen Corporation, Tommy Hilfiger Holdings S.a.r.l., Stichting Administratiekantoor Elmira, Apax Europe VI-A, L.P., Apax Europe VI-1, L.P., and certain other parties signatory thereto

14.

Stockholders’ Agreement, dated as of May 6, 2010, among Phillips-Van Heusen Corporation, LNK Partners, L.P. and LNK Partners (Parallel), L.P.

15.

Stockholders’ Agreement, dated as of May 6, 2010, between Phillips-Van Heusen Corporation and MSD Brand Investments, LLC

16.

David Sirkin, the son of Allen E. Sirkin, President and Chief Operating Officer of Phillips-Van Heusen Corporation, has worked for Phillips-Van Heusen Corporation since July 2007

Schedule 6.11 - 2

EXHIBIT A-1 TO

CREDIT AND GUARANTY AGREEMENT

BORROWING NOTICE

Reference is made to the Credit and Guaranty Agreement, dated as of May 6, 2010 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”), Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), certain subsidiaries of the U.S. Borrower, as Guarantors, the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents.

Pursuant to Section(s) [2.01] [2.02] [2.03] [2.24]1 of the Credit Agreement, [Borrower Representative] [U.S. Borrower] [Foreign Borrower] desires that Lenders make the following Loans to [U.S. Borrower] [Foreign Borrower] in accordance with the applicable terms and conditions of the Credit Agreement on [mm/dd/yy] (the “Credit Date”):

		
	U.S. Tranche A Term Loans

□  

Base Rate Loans:

□

Eurocurrency Rate Loans, with an initial Interest Period of ________ month(s):

	

$ [___,___,___]

$ [___,___,___]

	Foreign Tranche A Term Loans

□

Eurocurrency Rate Loans, with an initial Interest Period of ________ month(s):

	

€ [___,___,___]

	

U.S. Tranche B Term Loans

□  

Base Rate Loans:

□

Eurocurrency Rate Loans, with an initial Interest Period of ________ month(s):

	

$ [___,___,___]

$ [___,___,___]

	

Foreign Tranche B Term Loans

□

Eurocurrency Rate Loans, with an initial Interest Period of ________ month(s):

	

€ [___,___,___]

	U.S. Revolving Loans

□  

Base Rate Loans:

□

Eurocurrency Rate Loans, with an initial Interest Period of ________ month(s):

	

$ [___,___,___]

$ [___,___,___] 

1 Indicate below Incremental Term Loan or Incremental Revolving Loan as applicable.

EXHIBIT A-1-1

		
	Canadian Revolving Loans

□  

Base Rate Loans or Canadian Prime Rate Loans:

□

Eurocurrency Rate Loans, with an initial Interest Period of ________ month(s):

	

[$][CAD] [___,___,___]

[$][CAD] [___,___,___] 

	Foreign Revolving Loans

□

Eurocurrency Rate Loans, with an initial Interest Period of ________ month(s):

	

[€] [£] [¥] [___,___,___] 

	U.S. Swing Line Loans:

	$ [___,___,___] 

	Canadian Swing Line Loans:

	[$][CAD] [___,___,___] 

The proceeds of the Loans under this Borrowing Notice should be credited to [account defaults to be inserted]. This Borrowing Notice is irrevocable. [U.S. Borrower] [Foreign Borrower] [Borrower Representative] hereby certifies that:

(i)

after making the Loans requested on the Credit Date, (x) the Total Utilization of U.S. Revolving Commitments shall not exceed the U.S. Revolving Commitments then in effect, (y) the Total Utilization of Foreign Revolving Commitments shall not exceed the Foreign Revolving Commitments then in effect and (z) the Total Utilization of Canadian Revolving Commitments shall not exceed the Canadian Revolving Commitments then in effect;

(ii)

as of the Credit Date, the representations and warranties contained in each of the Loan Documents are true, correct and complete in all material respects on and as of such Credit Date to the same extent as though made on and as of such date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties are true, correct and complete in all material respects on and as of such earlier date, provided that, in each case, to the extent that any such representation and warranty is already qualified by materiality or Material Adverse Effect, such representation and warranty shall be true and correct in all respects; and

(iii)

as of the Credit Date, no event has occurred and is continuing or would result from the consummation of the borrowing contemplated hereby that would constitute an Event of Default or a Default.

Date: [mm/dd/yy]

[PHILLIPS-VAN HEUSEN CORPORATION, as Borrower Representative

By: ___________________________________

Name:

Title: ]

[PHILLIPS-VAN HEUSEN CORPORATION

By: ___________________________________

Name:

Title: ]

EXHIBIT A-1-2

[TOMMY HILFIGER B.V.

By: ___________________________________

Name:

Title: ]

EXHIBIT A-1-3

EXHIBIT A-2 TO

CREDIT AND GUARANTY AGREEMENT

CONVERSION/CONTINUATION NOTICE

Reference is made to the Credit and Guaranty Agreement, dated as of May 6, 2010 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”), Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), certain subsidiaries of the U.S. Borrower, as Guarantors, the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents.

Pursuant to Section 2.09 of the Credit Agreement, the Borrower Representative desires to convert or to continue the following Loans, each such conversion and/or continuation to be effective as of [mm/dd/yy]:

1.  U.S. Tranche A Term Loans:

		
	$[___,___,___]

	Eurocurrency Rate Loans to be continued with Interest Period of [____] month(s)

	 
	 

	$[___,___,___]

	Base Rate Loans to be converted to Eurocurrency Rate Loans with Interest Period of ____ month(s)

	 
	 

	$[___,___,___]

	Eurocurrency Rate Loans to be converted to Base Rate Loans 

	 
	 

2.  Foreign Tranche A Term Loans:

			
	€ [___,___,___]

	Eurocurrency Rate Loans to be continued with Interest Period of [____] month(s)

	 

3.  U.S. Tranche B Term Loans:

		
	$[___,___,___]

	Eurocurrency Rate Loans to be continued with Interest Period of [____] month(s)

	 
	 

	$[___,___,___]

	Base Rate Loans to be converted to Eurocurrency Rate Loans with Interest Period of ____ month(s)

	 
	 

	$[___,___,___]

	Eurocurrency Rate Loans to be converted to Base Rate Loans 

	 
	 

4.  Foreign Tranche B Term Loans:

		
	€ [___,___,___]

	Eurocurrency Rate Loans to be continued with Interest Period of [____] month(s)

	 
	 

5.  U.S. Revolving Loans

		
	$[___,___,___]

	Eurocurrency Rate Loans to be continued with Interest Period of [____] month(s)

	 
	 

EXHIBIT A-2-1

		
	 $[___,___,___]

	Base Rate Loans to be converted to Eurocurrency Rate Loans with Interest Period of ____ month(s)

	 
	 

	 $[___,___,___]

	Eurocurrency Rate Loans to be converted to Base Rate Loans 

	 
	 

	6.  Canadian Revolving Loans

	 [$][CAD] [___,___,___]

	Eurocurrency Rate Loans to be continued with Interest Period of [____] month(s)

	 
	 

	 [$][CAD] [___,___,___]

	Base Rate Loans or Canadian Prime Rate Loans to be converted to Eurocurrency Rate Loans with Interest Period of ____ month(s)

	 
	 

	 [$][CAD] [___,___,___]

	Eurocurrency Rate Loans to be converted to Base Rate Loans or Canadian Prime Rate Loans 

7.  Foreign Revolving Loans:

		
	  [€] [£] [¥] [___,___,___]

	Eurocurrency Rate Loans to be continued with Interest Period of [____] month(s)

This Conversion/Continuation Notice is irrevocable. Borrower Representative hereby certifies that as of the date hereof, no event has occurred and is continuing or would result from the consummation of the conversion and/or continuation contemplated hereby that would constitute an Event of Default or a Default.

Date: [mm/dd/yy]

PHILLIPS-VAN HEUSEN CORPORATION, 

as Borrower Representative

By: __________________________

Name:

Title:

EXHIBIT A-2-2

EXHIBIT A-3 TO

CREDIT AND GUARANTY AGREEMENT

ISSUANCE NOTICE

Reference is made to the Credit and Guaranty Agreement, dated as of May 6, 2010 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”), Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), certain subsidiaries of the U.S. Borrower, as Guarantors, the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents.

Pursuant to Section 2.04(a)[(i)][(ii)][(iii)] of the Credit Agreement, the [U.S. Borrower] [Foreign Borrower] or one of its Restricted Subsidiaries desires a [U.S. Letter of Credit] [Canadian Letter of Credit] [Foreign Letter of Credit] to be issued in accordance with the terms and conditions of the Credit Agreement on [mm/dd/yy] (the “Credit Date”) in an aggregate face amount of [___,___,___]1.

Attached hereto for each such Letter of Credit are the following:

(a)

the stated amount of such Letter of Credit;

(b)

the name and address of the beneficiary; 

(c)

the expiration date; and 

(d)

either (i) the verbatim text of such proposed Letter of Credit, or (ii) a description of the proposed terms and conditions of such Letter of Credit, including a precise description of any documents to be presented by the beneficiary which, if presented by the beneficiary prior to the expiration date of such Letter of Credit, would require the Issuing Lender to make payment under such Letter of Credit.

This Issuance Notice is irrevocable. [U.S. Borrower] [Foreign Borrower] hereby certifies that:

(i)

after issuing such Letter of Credit requested on the Credit Date, (x) the Total Utilization of U.S. Revolving Commitments shall not exceed the U.S. Revolving Commitments then in effect, (y) the Total Utilization of Foreign Revolving Commitments shall not exceed the Foreign Revolving Commitments then in effect and (z) the Total Utilization of Canadian Revolving Commitments shall not exceed the Canadian Revolving Commitments then in effect;

(ii)

as of the Credit Date, the representations and warranties contained in each of the Loan Documents are true, correct and complete in all material respects on and as of such Credit Date to the same extent as though made on and as of such date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties are true, correct and complete in all material respects on and as of such earlier date, provided that, in each case, to the extent that 

1 Indicate currency denomination: Dollars or Canadian Dollars for U.S. Letters of Credit; Euros, Japanese Yen or Pounds Sterling for Foreign Letters of Credit.

EXHIBIT A-3-1

any such representation and warranty is already qualified by materiality or Material Adverse Effect, such representation and warranty shall be true and correct in all respects; and

(iii)

as of such Credit Date, no event has occurred and is continuing or would result from the consummation of the issuance contemplated hereby that would constitute an Event of Default or a Default.

Date: [mm/dd/yy]

[PHILLIPS-VAN HEUSEN CORPORATION

By: ___________________________________

Name:

Title: ]

[TOMMY HILFIGER B.V.

By: ___________________________________

Name:

Title: ]

EXHIBIT A-3-2

EXHIBIT B-1 TO

CREDIT AND GUARANTY AGREEMENT

TRANCHE A TERM LOAN NOTE

[$][€][___,___,___]

[______], 2010

New York, New York

[FOR VALUE RECEIVED, Phillips-Van Heusen Corporation, a Delaware corporation (“U.S. Borrower”), promises to pay [Name of Lender] (“Payee”) or its registered assigns the principal amount of [_________] ($[___,___,___])  in the installments referred to below.]

[FOR VALUE RECEIVED, Tommy Hilfiger B.V., a Dutch private limited liability company (“Foreign Borrower”), promises to pay [Name of Lender] (“Payee”) or its registered assigns the principal amount of [_________] (€[___,___,___])  in the installments referred to below.]

[U.S. Borrower] [Foreign Borrower] also promises to pay interest on the unpaid principal amount hereof, from the date hereof until paid in full, at the rates and at the times which shall be determined in accordance with the provisions of that certain Credit and Guaranty Agreement, dated as of May 6, 2010 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”), Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), certain subsidiaries of the U.S. Borrower, as Guarantors, the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents.

[U.S. Borrower] [Foreign Borrower] shall make principal payments on this Note as set forth in Section 2.12 of the Credit Agreement.

This Note is one of the Tranche A Term Loan Notes for [U.S.] [Foreign] Tranche A Term Loans in the aggregate principal amount of [$367,700,000] [€100,000,000] and is issued pursuant to and entitled to the benefits of the Credit Agreement, to which reference is hereby made for a more complete statement of the terms and conditions under which the Loan evidenced hereby was made and is to be repaid.

All payments of principal and interest in respect of this Note shall be made in [lawful money of the United States of America] [the single currency of the European Union] in same day funds at the Principal Office of Administrative Agent designated for [U.S. Tranche A Term Loans] [Foreign Tranche A Term Loans] or at such other place as shall be designated in writing for such purpose in accordance with the terms of the Credit Agreement.  Unless and until an Assignment Agreement effecting the assignment or transfer of the obligations evidenced hereby shall have been accepted by Administrative Agent and recorded in the Register, [U.S. Borrower] [Foreign Borrower], each Agent and Lenders shall be entitled to deem and treat Payee as the owner and holder of this Note and the obligations evidenced hereby.  Payee hereby agrees, by its acceptance hereof, that before disposing of this Note or any part hereof it will make a notation hereon of all principal payments previously made hereunder and of the date to which interest hereon has been paid; provided, the failure to make a notation of any payment made on this Note shall not limit or otherwise affect the obligations of the [U.S. Borrower] [Foreign Borrower] hereunder with respect to payments of principal of or interest on this Note.

This Note is subject to mandatory prepayment and to prepayment at the option of [U.S. Borrower] [Foreign Borrower], each as provided in the Credit Agreement.

EXHIBIT B-1-1

THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF [U.S. BORROWER] [FOREIGN BORROWER] AND PAYEE HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

Upon the occurrence of an Event of Default, the unpaid balance of the principal amount of this Note, together with all accrued and unpaid interest thereon, may become, or may be declared to be, due and payable in the manner, upon the conditions and with the effect provided in the Credit Agreement.

The terms of this Note are subject to amendment only in the manner provided in the Credit Agreement.

No reference herein to the Credit Agreement and no provision of this Note or the Credit Agreement shall alter or impair the obligations of [U.S. Borrower] [Foreign Borrower], which are absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed.

The [U.S. Borrower] [Foreign Borrower] promises to pay all costs and expenses, including reasonable attorneys’ fees, all as provided in the Credit Agreement, incurred in the collection and enforcement of this Note.  The [U.S. Borrower] [Foreign Borrower] and any endorsers of this Note hereby consent to renewals and extensions of time at or after the maturity hereof, without notice, and hereby waive diligence, presentment, protest, demand notice of every kind and, to the full extent permitted by law, the right to plead any statute of limitations as a defense to any demand hereunder.

[Remainder of page intentionally left blank]

EXHIBIT B-1-2

IN WITNESS WHEREOF, [U.S. Borrower] [Foreign Borrower] has caused this Note to be duly executed and delivered by its officer thereunto duly authorized as of the date and at the place first written above.

[PHILLIPS-VAN HEUSEN CORPORATION

By: ___________________________________

Name:

Title: ]

[TOMMY HILFIGER B.V.

By: ___________________________________

Name:

Title: ]

EXHIBIT B-1-3

EXHIBIT B-2 TO

CREDIT AND GUARANTY AGREEMENT

TRANCHE B TERM LOAN NOTE

[$][€][___,___,___]

[______], 2010

New York, New York

[FOR VALUE RECEIVED, Phillips-Van Heusen Corporation, a Delaware corporation (“U.S. Borrower”), promises to pay [Name of Lender] (“Payee”) or its registered assigns the principal amount of [_________] ($[___,___,___])  in the installments referred to below.]

[FOR VALUE RECEIVED, Tommy Hilfiger B.V., a Dutch private limited liability company (“Foreign Borrower”), promises to pay [Name of Lender] (“Payee”) or its registered assigns the principal amount of [_________] (€[___,___,___])  in the installments referred to below.]

[U.S. Borrower] [Foreign Borrower] also promises to pay interest on the unpaid principal amount hereof, from the date hereof until paid in full, at the rates and at the times which shall be determined in accordance with the provisions of that certain Credit and Guaranty Agreement, dated as of May 6, 2010 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”), Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), certain subsidiaries of the U.S. Borrower, as Guarantors, the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents.

[U.S. Borrower] [Foreign Borrower] shall make principal payments on this Note as set forth in Section 2.12 of the Credit Agreement.

This Note is one of the Tranche B Term Loan Notes for [U.S.] [Foreign] Tranche B Term Loans in the aggregate principal amount of [$1,003,100,000] [€300,000,000] and is issued pursuant to and entitled to the benefits of the Credit Agreement, to which reference is hereby made for a more complete statement of the terms and conditions under which the Loan evidenced hereby was made and is to be repaid.

All payments of principal and interest in respect of this Note shall be made in [lawful money of the United States of America] [the single currency of the European Union] in same day funds at the Principal Office of Administrative Agent designated for [U.S. Tranche B Term Loans] [Foreign Tranche B Term Loans] or at such other place as shall be designated in writing for such purpose in accordance with the terms of the Credit Agreement.  Unless and until an Assignment Agreement effecting the assignment or transfer of the obligations evidenced hereby shall have been accepted by Administrative Agent and recorded in the Register, [U.S. Borrower] [Foreign Borrower], each Agent and Lenders shall be entitled to deem and treat Payee as the owner and holder of this Note and the obligations evidenced hereby.  Payee hereby agrees, by its acceptance hereof, that before disposing of this Note or any part hereof it will make a notation hereon of all principal payments previously made hereunder and of the date to which interest hereon has been paid; provided, the failure to make a notation of any payment made on this Note shall not limit or otherwise affect the obligations of the [U.S. Borrower] [Foreign Borrower] hereunder with respect to payments of principal of or interest on this Note.

This Note is subject to mandatory prepayment and to prepayment at the option of [U.S. Borrower] [Foreign Borrower], each as provided in the Credit Agreement.

EXHIBIT B-2-1

THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF [U.S. BORROWER] [FOREIGN BORROWER] AND PAYEE HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

Upon the occurrence of an Event of Default, the unpaid balance of the principal amount of this Note, together with all accrued and unpaid interest thereon, may become, or may be declared to be, due and payable in the manner, upon the conditions and with the effect provided in the Credit Agreement.

The terms of this Note are subject to amendment only in the manner provided in the Credit Agreement.

No reference herein to the Credit Agreement and no provision of this Note or the Credit Agreement shall alter or impair the obligations of [U.S. Borrower] [Foreign Borrower], which are absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed.

The [U.S. Borrower] [Foreign Borrower] promises to pay all costs and expenses, including reasonable attorneys’ fees, all as provided in the Credit Agreement, incurred in the collection and enforcement of this Note.  The [U.S. Borrower] [Foreign Borrower] and any endorsers of this Note hereby consent to renewals and extensions of time at or after the maturity hereof, without notice, and hereby waive diligence, presentment, protest, demand notice of every kind and, to the full extent permitted by law, the right to plead any statute of limitations as a defense to any demand hereunder.

 [Remainder of page intentionally left blank]

EXHIBIT B-2-2

IN WITNESS WHEREOF, [U.S. Borrower] [Foreign Borrower] has caused this Note to be duly executed and delivered by its officer thereunto duly authorized as of the date and at the place first written above.

[PHILLIPS-VAN HEUSEN CORPORATION

By: ___________________________________

Name:

Title: ]

[TOMMY HILFIGER B.V.

By: ___________________________________

Name:

Title: ]

EXHIBIT B-2-3

EXHIBIT B-3 TO

CREDIT AND GUARANTY AGREEMENT

REVOLVING LOAN NOTE

[$][€][___,___,___]

[______], 2010.

New York, New York

[FOR VALUE RECEIVED, Phillips-Van Heusen Corporation, a Delaware corporation (“U.S. Borrower”), promises to pay [Name of Lender] (“Payee”) or its registered assigns, on or before [mm/dd/yy], the lesser of (a) [_________] ([$][___,___,___]) [(or its Canadian Dollar equivalent, as applicable)] and (b) the unpaid principal amount of all advances made by Payee to the U.S. Borrower as Revolving Loans under the Credit Agreement referred to below.]

[FOR VALUE RECEIVED, Tommy Hilfiger B.V., a Dutch private limited liability company (“Foreign Borrower”), promises to pay [Name of Lender] (“Payee”) or its registered assigns, on or before [mm/dd/yy], the lesser of (a) [_________] ([€][___,___,___]) (or its equivalent in any Other Foreign Currency, as applicable) and (b) the unpaid principal amount of all advances made by Payee to the Foreign Borrower as Revolving Loans under the Credit Agreement referred to below.]

[U.S. Borrower] [Foreign Borrower] also promises to pay interest on the unpaid principal amount hereof, from the date hereof until paid in full, at the rates and at the times which shall be determined in accordance with the provisions of that certain Credit and Guaranty Agreement, dated as of May 6, 2010 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”), Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), certain subsidiaries of the U.S. Borrower, as Guarantors, the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents.

This Note is one of the Revolving Loan Notes for [U.S.] [Canadian] [Foreign] Revolving Loans in the aggregate principal amount of [$265,000,000] [$10,000,000 (or its Canadian Dollar equivalent)] [€132,275,132.28] and is issued pursuant to and entitled to the benefits of the Credit Agreement, to which reference is hereby made for a more complete statement of the terms and conditions under which the Loans evidenced hereby were made and are to be repaid.

All payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America in same day funds at the Principal Office of Administrative Agent or at such other place as shall be designated in writing for such purpose in accordance with the terms of the Credit Agreement.  Unless and until an Assignment Agreement effecting the assignment or transfer of the obligations evidenced hereby shall have been accepted by Administrative Agent and recorded in the Register, [U.S. Borrower] [Foreign Borrower], each Agent and Lenders shall be entitled to deem and treat Payee as the owner and holder of this Note and the obligations evidenced hereby.  Payee hereby agrees, by its acceptance hereof, that before disposing of this Note or any part hereof it will make a notation hereon of all principal payments previously made hereunder and of the date to which interest hereon has been paid; provided, the failure to make a notation of any payment made on this Note shall not limit or otherwise affect the obligations of the [U.S. Borrower] [Foreign Borrower] hereunder with respect to payments of principal of or interest on this Note.

EXHIBIT B-3-1

This Note is subject to mandatory prepayment and to prepayment at the option of [U.S. Borrower] [Foreign Borrower], each as provided in the Credit Agreement.

THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF [U.S. BORROWER] [FOREIGN BORROWER] AND PAYEE HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

Upon the occurrence of an Event of Default, the unpaid balance of the principal amount of this Note, together with all accrued and unpaid interest thereon, may become, or may be declared to be, due and payable in the manner, upon the conditions and with the effect provided in the Credit Agreement.

The terms of this Note are subject to amendment only in the manner provided in the Credit Agreement.

No reference herein to the Credit Agreement and no provision of this Note or the Credit Agreement shall alter or impair the obligations of [U.S. Borrower] [Foreign Borrower], which are absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed.

The [U.S. Borrower] [Foreign Borrower] promises to pay all costs and expenses, including reasonable attorneys’ fees, all as provided in the Credit Agreement, incurred in the collection and enforcement of this Note.  The [U.S. Borrower] [Foreign Borrower] and any endorsers of this Note hereby consent to renewals and extensions of time at or after the maturity hereof, without notice, and hereby waive diligence, presentment, protest, demand notice of every kind and, to the full extent permitted by law, the right to plead any statute of limitations as a defense to any demand hereunder.

 [Remainder of page intentionally left blank]

EXHIBIT B-3-2

IN WITNESS WHEREOF, [U.S. Borrower] [Foreign Borrower] has caused this Note to be duly executed and delivered by its officer thereunto duly authorized as of the date and at the place first written above.

[PHILLIPS-VAN HEUSEN CORPORATION

By: ___________________________________

Name:

Title: ]

TOMMY HILFIGER B.V.

By: ___________________________________

Name:

Title: ]

EXHIBIT B-3-3

					
	TRANSACTIONS ON

REVOLVING LOAN NOTE

	

Date

	Amount of Loan Made This Date  

	Amount of Principal Paid This Date   

	Outstanding Principal

Balance This Date 

	Notation

Made By

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

					
	

	

	

	

	

	

	

	

	

	

EXHIBIT B-3-4

  

        

EXHIBIT B-4 TO

CREDIT AND GUARANTY AGREEMENT

SWING LINE NOTE

[$][___,___,___]

[______], 2010

New York, New York

FOR VALUE RECEIVED, Phillips-Van Heusen Corporation, a Delaware corporation (“U.S. Borrower”), promises to pay Barclays Bank PLC, as Swing Line Lender (“Payee”), on or before [mm/dd/yy], the lesser of (a) [_________] ([$][___,___,___]) [(or its Canadian Dollar equivalent, as applicable)] and (b) the unpaid principal amount of all advances made by Payee to U.S. Borrower as Swing Line Loans under the Credit Agreement referred to below.

The U.S. Borrower also promises to pay interest on the unpaid principal amount hereof, from the date hereof until paid in full, at the rates and at the times which shall be determined in accordance with the provisions of that certain Credit and Guaranty Agreement, dated as of May 6, 2010 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”), Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), certain subsidiaries of the U.S. Borrower, as Guarantors, the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents.

This Note is the “Swing Line Note” and is issued pursuant to and entitled to the benefits of the Credit Agreement, to which reference is hereby made for a more complete statement of the terms and conditions under which the Swing Line Loans evidenced hereby were made and are to be repaid.

All payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America in same day funds at the Principal Office of Swing Line Lender or at such other place as shall be designated in writing for such purpose in accordance with the terms of the Credit Agreement. 

This Note is subject to mandatory prepayment and to prepayment at the option of the U.S. Borrower, each as provided in the Credit Agreement.

THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE U.S. BORROWER AND PAYEE HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

Upon the occurrence of an Event of Default, the unpaid balance of the principal amount of this Note, together with all accrued and unpaid interest thereon, may become, or may be declared to be, due and payable in the manner, upon the conditions and with the effect provided in the Credit Agreement.

The terms of this Note are subject to amendment only in the manner provided in the Credit Agreement.

No reference herein to the Credit Agreement and no provision of this Note or the Credit Agreement shall alter or impair the obligations of the U.S. Borrower, which are absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed.

EXHIBIT B-4-1

  

        

The U.S. Borrower promises to pay all costs and expenses, including reasonable attorneys’ fees, all as provided in the Credit Agreement, incurred in the collection and enforcement of this Note.  The U.S. Borrower and any endorsers of this Note hereby consent to renewals and extensions of time at or after the maturity hereof, without notice, and hereby waive diligence, presentment, protest, demand notice of every kind and, to the full extent permitted by law, the right to plead any statute of limitations as a defense to any demand hereunder.

[Remainder of page intentionally left blank]

EXHIBIT B-4-2

  

        

IN WITNESS WHEREOF, U.S. Borrower has caused this Note to be duly executed and delivered by its officer thereunto duly authorized as of the date and at the place first written above.

PHILLIPS-VAN HEUSEN CORPORATION

By:_______________________________

Name:

Title:

EXHIBIT B-4-3

  

        

					
	TRANSACTIONS ON

SWING LINE NOTE

	

Date

	Amount of Loan Made This Date  

	Amount of Principal Paid This Date   

	Outstanding Principal

Balance This Date 

	Notation

Made By

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

					
	

	

	

	

	

	

	

	

	

	

EXHIBIT B-4-4

EXHIBIT B-5 TO

CREDIT AND GUARANTY AGREEMENT

INCREMENTAL TERM LOAN NOTE

[$][€][___,___,___]

[_________], 20[_]

New York, New York

[FOR VALUE RECEIVED, Phillips-Van Heusen Corporation, a Delaware corporation (“U.S. Borrower”), promises to pay [Name of Lender] (“Payee”) or its registered assigns the principal amount of [_________] ($[___,___,___])  in the installments referred to below.]

[FOR VALUE RECEIVED, Tommy Hilfiger B.V., a Dutch private limited liability company (“Foreign Borrower”), promises to pay [Name of Lender] (“Payee”) or its registered assigns the principal amount of [_________] (€[___,___,___])  in the installments referred to below.]

[U.S. Borrower] [Foreign Borrower] also promises to pay interest on the unpaid principal amount hereof, from the date hereof until paid in full, at the rates and at the times which shall be determined in accordance with the provisions of that certain Credit and Guaranty Agreement, dated as of May 6, 2010 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”), Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), certain subsidiaries of the U.S. Borrower, as Guarantors, the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents. 

[U.S. Borrower] [Foreign Borrower] shall make principal payments on this Note as set forth in Section 2.24 of the Credit Agreement.

This Note is one of the “Incremental Term Loan Notes” made to the [U.S. Borrower] [Foreign Borrower] in the aggregate principal amount of [$[___,___,___]][€[___,___,___]] and is issued pursuant to and entitled to the benefits of the Credit Agreement, to which reference is hereby made for a more complete statement of the terms and conditions under which the Term Loan evidenced hereby was made and is to be repaid.

All payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America in same day funds at the Principal Office of Administrative Agent or at such other place as shall be designated in writing for such purpose in accordance with the terms of the Credit Agreement.  Unless and until an Assignment Agreement effecting the assignment or transfer of the obligations evidenced hereby shall have been accepted by Administrative Agent and recorded in the Register, the Borrowers, each Agent and Lenders shall be entitled to deem and treat Payee as the owner and holder of this Note and the obligations evidenced hereby.  Payee hereby agrees, by its acceptance hereof, that before disposing of this Note or any part hereof it will make a notation hereon of all principal payments previously made hereunder and of the date to which interest hereon has been paid; provided, the failure to make a notation of any payment made on this Note shall not limit or otherwise affect the obligations of the [U.S. Borrower] [Foreign Borrower] hereunder with respect to payments of principal of or interest on this Note.

This Note is subject to mandatory prepayment and to prepayment at the option of [U.S. Borrower] [Foreign Borrower], each as provided in the Credit Agreement.

EXHIBIT B-5-1

THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF [U.S. BORROWER] [FOREIGN BORROWER] AND PAYEE HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

Upon the occurrence of an Event of Default, the unpaid balance of the principal amount of this Note, together with all accrued and unpaid interest thereon, may become, or may be declared to be, due and payable in the manner, upon the conditions and with the effect provided in the Credit Agreement.

The terms of this Note are subject to amendment only in the manner provided in the Credit Agreement.

No reference herein to the Credit Agreement and no provision of this Note or the Credit Agreement shall alter or impair the obligations of [U.S. Borrower] [Foreign Borrower], which are absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed.

The [U.S. Borrower] [Foreign Borrower] promises to pay all costs and expenses, including reasonable attorneys’ fees, all as provided in the Credit Agreement, incurred in the collection and enforcement of this Note.  The [U.S. Borrower] [Foreign Borrower] and any endorsers of this Note hereby consent to renewals and extensions of time at or after the maturity hereof, without notice, and hereby waive diligence, presentment, protest, demand notice of every kind and, to the full extent permitted by law, the right to plead any statute of limitations as a defense to any demand hereunder.

 [Remainder of page intentionally left blank]

EXHIBIT B-5-2

IN WITNESS WHEREOF, the [U.S. Borrower] [Foreign Borrower] has caused this Note to be duly executed and delivered by its officer thereunto duly authorized as of the date and at the place first written above.

[PHILLIPS-VAN HEUSEN CORPORATION

By: ___________________________________

Name:

Title: ]

[TOMMY HILFIGER B.V.

By: ___________________________________

Name:

Title: ]

EXHIBIT B-5-3

EXHIBIT C-1 TO

CREDIT AND GUARANTY AGREEMENT

COMPLIANCE CERTIFICATE

THE UNDERSIGNED HEREBY CERTIFIES AS FOLLOWS:

1.

I am the Principal Financial Officer of the Phillips-Van Heusen Corporation, a Delaware corporation (the “Borrower Representative”).

2.

I have reviewed the terms of that certain Credit and Guaranty Agreement, dated as of May 6, 2010 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein (including in Annex A hereto) being used herein (and in Annex A hereto) as therein defined), by and among Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”), Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), certain subsidiaries of the U.S. Borrower, as Guarantors, the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents.

3.

The examination described in paragraph 2 above did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes an Event of Default or Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth in a separate attachment, if any, to this Certificate, describing in detail, the nature of the condition or event, the period during which it has existed and the action which any Borrower has taken, is taking, or proposes to take with respect to each such condition or event.

The foregoing certifications, together with the computations set forth in Annex A hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered [mm/dd/yy] pursuant to Section 5.01(c) of the Credit Agreement.

PHILLIPS-VAN HEUSEN CORPORATION, as Borrower Representative

By: ______________________________

Name:

Title: Principal Financial Officer

ANNEX A TO

COMPLIANCE CERTIFICATE

FOR THE FISCAL [QUARTER] [YEAR] ENDING [mm/dd/yy].

EXHIBIT C-1-1

1. Consolidated Net Income1:  (i) - (ii) =

$[___,___,___]

(i)

the net income (or loss) of the Group on a consolidated basis

for the applicable period taken as a single accounting period 

determined in conformity with GAAP:

$[___,___,___]

(ii)

minus

(a) + (b) + (c) + (d) + (e) + (f) =

$[___,___,___]

(a)

the income (or loss) of any Person (other than a Group Member)

in which any other Person (other than a Group Member) has a joint 

interest, except to the extent of the amount of dividends or other 

distributions actually paid to any Group Member by such Person

during the applicable period: 

$[___,___,___]

(b)

to the extent included in net income, the income (or loss) 

of any Person accrued prior to the date it becomes a Group Member 

or is merged into or consolidated with the Group or that Person’s 

assets are acquired by any Group Member:

$[___,___,___]

(c)

the income of any Subsidiary of the U.S. Borrower to the extent 

that the declaration or payment of dividends or similar distributions 

by that Subsidiary of that income is not at the time permitted by 

operation of the terms of its charter or any agreement, instrument, 

judgment, decree, order, statute, rule or governmental regulation 

applicable to that Subsidiary:

$[___,___,___]

(d)

any after-tax non-cash gains (or losses) attributable to 

Asset Sales or returned surplus assets of any Pension Plan:

$[___,___,___]

(e)

the CKI Amount and the Itochu Amount to the extent not already 

reducing net income; provided that, if during the applicable period, the 

U.S. Borrower or any of its Subsidiaries repaid the Itochu Amount in 

whole, then for the applicable period, this amount shall be calculated 

to exclude the excess of the amount of such amounts repaid over the 

regularly scheduled payment of the Itochu Amount for the applicable 

period:

$[___,___,___]

(f)

to the extent not included in clauses (ii)(a) through (ii)(e) above, 

any net extraordinary gains or net extraordinary losses:

$[___,___,___]

2.

Consolidated Adjusted EBITDA2:  (i) + (ii) - (iii) =

$[___,___,___]

1 For the avoidance of doubt, cash amounts used by the Borrowers to make purchases of debt (including purchases of Loans under Section 2.13(c) of the Credit Agreement and purchases of the 2023 Debentures) shall not reduce Consolidated Net Income, nor will any non-cash gain associated with the cancellation of such purchased debt increase Consolidated Net Income.

2  Determined for the Group on a consolidated basis. For the avoidance of doubt, Consolidated Adjusted EBITDA shall be calculated to exclude any gain resulting from any debt repurchase (including, for the avoidance of doubt, repurchases of Loans under Section 2.13(c) of the Credit Agreement or repurchases of the 2023 Debentures).

EXHIBIT C-1-A-2

(i)

Consolidated Net Income (see Section 1 above):

$[___,___,___]

(ii)

plus, to the extent reducing Consolidated Net Income, 

the sum without duplication, of amounts for:

(a)

consolidated interest expense:

$[___,___,___]

(b)

provisions for taxes based on income, profits or capital:

$[___,___,___]

(c)

total depreciation expense:

$[___,___,___]

(d)

total amortization expense:

$[___,___,___]

(e)

other non-cash charges (including, without limitation, 

any non-cash charges related to writing up inventory in

connection with the Acquisition, but excluding any 

non-cash charge to the extent that it represents an 

accrual of or reserve for cash expenditures in any future period):

$[___,___,___]

(f)

net cash charges associated with or related to any contemplated 

restructurings related to the Acquisition in an aggregate amount not to 

exceed $90,000,000:

$[___,___,___]

(g)

all amounts in respect of extraordinary, unusual or non-recurring 

losses, expenses or charges (including, without limitation, 

(A) restructuring charges (other than those described in clause (ii)(f)), 

(B) any fees, expenses or charges relating to plant shutdowns and 

discontinued operations, (C) acquisition integration costs and (D) any 

expenses or charges relating to any offering of Equity Interests, 

Permitted Acquisition, or any Investment or Indebtedness permitted 

under the Credit Agreement, in each case under clause (D), whether 

or not successful):

$[___,___,___]

(h)

any financial advisory fees, accounting fees, legal fees and 

other similar advisory and consulting fees and related 

out-of-pocket expenses incurred by any Group Member as a 

result of the Acquisition, in an aggregate amount not to 

exceed $55,000,000:

$[___,___,___]

(i)

with respect to any four-Fiscal Quarter measurement period 

ending on or prior to the end of the eighth full Fiscal Quarter 

following the Closing Date, the amount of cost savings 

and other operating improvements and synergies projected 

by the U.S. Borrower in good faith to be realized as a result of 

the Acquisition (calculated on a pro forma basis as though 

such cost savings and other operating improvements and 

synergies had been realized on the first day of the applicable period), 

without duplication of the amount of actual benefits realized 

during the applicable period from such actions to the extent already 

included in the Consolidated Net Income for the applicable period, 

in an aggregate amount not to exceed $40,000,000:

$[___,___,___]

EXHIBIT C-1-A-3

(j)

losses on agreements with respect to Hedge Agreements 

and any related tax gains, in each case incurred in connection 

with or as a result of the Acquisition:

$[___,___,___]

(k)

non-cash losses on agreements with respect to Hedge Agreements:

$[___,___,___]

(l)

pro forma adjustments1:

$[___,___,___]

(iii)

minus, to the extent included in calculating Consolidated Net Income, the sum of:

(a)

all amounts in respect of extraordinary, unusual or 

nonrecurring gains:

$[___,___,___]

(b)

gains on agreements with respect to Hedge Agreements 

and any related tax gains, in each case incurred in connection 

with or as a result of the Acquisition:

$[___,___,___]

(c)

non-cash gains on agreements with respect to 

Hedge Agreements:

$[___,___,___]

(d)

cash payments made during the applicable period with respect 

to non-cash charges that were added back pursuant to 

clause (ii)(e) above in a prior period:

$[___,___,___]

(e)

other non-cash gains increasing Consolidated Net Income 

for the applicable period (excluding any such non-cash gain to the 

extent it represents the reversal of an accrual or reserve 

for potential cash gain in any prior period):

$[___,___,___]

3.  Consolidated Cash Interest Expense:  (i) – (ii) =

$[___,___,___]

(i)

total interest expense payable in cash in the applicable period (including that 

portion attributable to Capital Leases in accordance with GAAP 

and capitalized interest) of the Group on a consolidated basis with 

respect to all outstanding Indebtedness of the Group (net of cash 

interest income): 

$[___,___,___]

1  For purposes of making the calculation of Consolidated Adjusted EBITDA, acquisitions (including the Acquisition), Investments, dispositions, mergers, consolidations, operational improvements and discontinued operations (as determined in accordance with GAAP) that have been made by any Group Member, including through mergers or consolidations and including any related financing transactions, during the relevant period or subsequent to such period and on or prior to the date of such calculation (the “relevant transaction”), shall be deemed to have occurred on the first day of the relevant period and (without duplication of the pro forma adjustments provided for in the immediately preceding paragraph with respect to the Acquisition) such calculation shall be made giving pro forma effect to any cost savings and other operating improvements and synergies in connection with such relevant transaction (without duplication of actual benefits realized during such period from the same) that are (a) factually supportable and determined in good faith by the U.S. Borrower, as certified in an officer’s certificate signed by an Authorized Officer and (b) do not exceed the actual cost savings expected in good faith to be realized by the Group over the twelve-month period following such relevant transaction.

EXHIBIT C-1-A-4

(ii)

less, to the extent included in clause (i) for the applicable period, any one 

time financing fees:

$[___,___,___]

4.  Consolidated Total Debt1:  (i) + (ii) = 

$[___,___,___]

(i)

the aggregate stated balance sheet amount of all Indebtedness of the Group 

(or, if higher, the par value or stated face amount of all such Indebtedness 

(other than zero coupon Indebtedness) determined on a consolidated basis 

in accordance with GAAP, exclusive of any contingent liability in respect of 

any Letter of Credit:

$[___,___,___]

(ii)

plus, to the extent not included in clause (i), Indebtedness relating to securitization 

of receivables generated by the Group (whether or not such Indebtedness is 

on the balance sheet of the Group):

$[___,___,___]

5.  Interest Coverage Ratio:  (i)/(ii) =

(i)

Consolidated Adjusted EBITDA:

$[___,___,___]

(ii)

Consolidated Cash Interest Expense:

$[___,___,___]

Actual:

_.__:1.00

Required:

_.__:1.00

6.  Leverage Ratio:  (i)/(ii) =

(i)

Consolidated Total Debt:

$[___,___,___]

(ii)

Consolidated Adjusted EBITDA:

$[___,___,___]

Actual:

_.__:1.00

Required:

_.__:1.00

Include the following calculations for the annual Compliance Certificate:

7.  Material Companies:  [to be provided]

8.  Consolidated Capital Expenditures:  (i) – (ii) =

$[___,___,___]

(i)

aggregate expenditures of the Group during the applicable Fiscal Year determined on 

a consolidated basis that, in accordance with GAAP, are or should be 

included in “purchase of property and equipment” or similar items 

reflected in the consolidated statement of cash flows of the Group: 

$[___,___,___]

(ii)

less, to the extent included in clause (i):  (a) + (b) =

$[___,___,___]

1  For the avoidance of doubt, Consolidated Total Debt will be calculated to exclude all Indebtedness of the Group to ITOCHU Corporation pursuant to the Itochu Agreement or otherwise related to such agreement and all Indebtedness of the Group pursuant to the CKI Documents.

EXHIBIT C-1-A-5

(a)

expenditures for replacements and substitutions for fixed assets, capital 

assets or equipment to the extent made with Net Cash Proceeds invested 

pursuant to Section 2.14(a) or 2.14(b) of the Credit Agreement:

$[___,___,___]

(b)

expenditures which constitute a Permitted Acquisition permitted 

under Section 6.08 of the Credit Agreement:

$[___,___,___]

9.  Maximum Consolidated Capital Expenditures1:

Actual:

$[___,___,___]

Permitted:2 

$[___,___,___]

(a)

Rollover Amount:

the excess, if any, of the scheduled amount for the immediately 

preceding Fiscal Year (with the amount of any rollover 

from the prior Fiscal Year being deemed to be used first) 

over the actual amount of Consolidated Capital Expenditures 

for such previous Fiscal Year:

$[___,___,___]

(b)

Acquired Permitted CapEx Amount:  (i) + (ii) =

$[___,___,___]

(i)

an amount equal to 5% of the Acquisition Consideration 

with respect to any Permitted Acquisition  prior to the 

applicable Fiscal Year:

$[___,___,___]

(ii)

plus, an amount equal to 5% of the Acquisition Consideration

with respect to any Permitted Acquisition during the applicable

Fiscal Year, multiplied by the fraction (a) / (b) with respect to

such Permitted Acquisition:  (ii) x (a) / (b) = 

$[___,___,___]

(a)

the number of days remaining in such Fiscal Year after 

the date such Permitted Acquisition is consummated 

(b)

the actual number of days in such Fiscal Year

10.  Consolidated Current Assets:

the total assets of the Group on a consolidated 

basis that may properly be classified as current assets in 

conformity with GAAP, excluding cash and Cash Equivalents:

$[___,___,___]

11.  Consolidated Current Liabilities:

1  Notwithstanding the foregoing, for purposes of determining compliance with Section 6.07(c) of the Credit Agreement for any given Fiscal Year, the actual amount of Consolidated Capital Expenditures that are made or incurred in such Fiscal Year and that are denominated in any currency other than Dollars will be converted into Dollars based on the relevant currency exchange rate in effect on the Closing Date.

2  Including Rollover Amount and the Acquired Permitted CapEx Amount calculated below.

EXHIBIT C-1-A-6

the total liabilities of the Group on a consolidated 

basis that may properly be classified as current liabilities in conformity 

with GAAP, excluding the current portion of long term debt:

$[___,___,___]

12.  Consolidated Working Capital as of the beginning of the applicable period:  (i) - (ii) =

$[___,___,___]

(i)

Consolidated Current Assets of the Group:

$[___,___,___]

(ii)

Consolidated Current Liabilities of the Group: 

$[___,___,___]

13.  Consolidated Working Capital as of the end of the applicable period:  (i) - (ii) =

$[___,___,___]

(i)

Consolidated Current Assets of the Group:

$[___,___,___]

(ii)

Consolidated Current Liabilities of the Group: 

$[___,___,___]

14.  Consolidated Working Capital Adjustment1:  (i) - (ii) =

$[___,___,___]

(i)

Consolidated Working Capital as of the beginning of such period:

$[___,___,___]

(ii)

Consolidated Working Capital as of the end of such period: 

$[___,___,___]

15.  Consolidated Excess Cash Flow:  (i) - (ii) =

$[___,___,___]

(i)

the sum, without duplication, for the applicable period of (a) + (b) + (c) = 

$[___,___,___]

(a)

Consolidated Net Income:

$[___,___,___]

(b) 

to the extent reducing Consolidated Net Income, 

the sum, without duplication, of amounts for non cash 

charges reducing Consolidated Net Income, including for 

depreciation and amortization (excluding any such non cash 

charge to the extent that it represents an accrual or reserve 

for potential cash charge in any future period or amortization 

of a prepaid cash charge that was paid in a prior period): 

$[___,___,___]

(c)

Consolidated Working Capital Adjustment:

$[___,___,___]

(ii)

less, the sum without duplication, of:  (a) + (b) =

$[___,___,___]

(a)

the amounts for the applicable period paid in cash of: (1) + (2) + (3) = 

$[___,___,___]

1 In calculating the Consolidated Working Capital Adjustment there shall be excluded the effect of reclassification during such period of current assets to long term assets and current liabilities to long term liabilities and the effect of any Permitted Acquisition during such period; provided, that there shall be included with respect to any Permitted Acquisition during such period an amount (which may be a negative number) by which the Consolidated Working Capital acquired in such Permitted Acquisition as at the time of such acquisition exceeds (or is less than) Consolidated Working Capital at the end of such period.

EXHIBIT C-1-A-7

(1)

scheduled repayments of Indebtedness to the extent actually 

made (excluding for the avoidance of doubt, repayments of 

revolving loans or swing line loans except to the extent the related 

revolving commitments are permanently reduced in connection 

with such repayments and any purchases (or repayments in 

connection therewith) of Loans pursuant to Section 2.13(c) of 

the Credit Agreement) and scheduled repayments of obligations 

under Capital Leases (excluding any interest expense 

portion thereof): 

$[___,___,___]

(2)

Consolidated Capital Expenditures:

$[___,___,___]

(3)

to the extent actually declared, Restricted Payments permitted 

by Section 6.04(d) of the Credit Agreement:

$[___,___,___]

(b)

other non-cash gains increasing Consolidated Net Income for such 

period (excluding any such non-cash gain to the extent it represents 

the reversal of an accrual or reserve for potential cash gain in 

any prior period):

$[___,___,___]

EXHIBIT C-1-A-8

  

        

EXHIBIT C-2 TO

CREDIT AND GUARANTY AGREEMENT

GUARANTOR COVERAGE CERTIFICATE

To:  Barclays Bank PLC as Administrative Agent (as defined below)

THE UNDERSIGNED HEREBY CERTIFIES AS FOLLOWS:

1.

I am the principal financial officer of the Phillips-Van Heusen Corporation, a Delaware corporation (the “Borrower Representative”).

2.

I have reviewed the terms of the Credit and Guaranty Agreement, dated as of May 6, 2010 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”), Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), certain subsidiaries of the U.S. Borrower, as Guarantors, the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents.

3.

Terms defined in the Credit and Guaranty Agreement and not otherwise defined herein shall have the meaning given to them in the Credit and Guaranty Agreement.

4.

Reference is made to Sections 5.01(c) and 5.18 of the Credit and Guaranty Agreement, and in accordance with such sections, pursuant to which the undersigned hereby certifies as follows:

(a)

as at [______], the aggregate (without duplication) Group Member Adjusted EBITDA attributable to the Loan Parties as a group is [______], being [__] percent of the Consolidated Adjusted EBITDA; and  

(b)

as at [______], the aggregate (without duplication) Group Member Assets of the Loan Parties as a group are [______], being [__] percent of the Consolidated Total Assets.

The foregoing certifications, are made and delivered [mm/dd/yy] pursuant to Section 5.01(c) of the Credit Agreement.

PHILLIPS-VAN HEUSEN CORPORATION, as Borrower Representative

By: ______________________________

Name:

Title: Principal Financial Officer

EXHIBIT C-2-1

EXHIBIT D TO

CREDIT AND GUARANTY AGREEMENT

CERTIFICATE RE NON-BANK STATUS

Reference is made to the Credit and Guaranty Agreement, dated as of May 6, 2010 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”), Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), certain subsidiaries of the U.S. Borrower, as Guarantors, the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents.  Pursuant to Section 2.20(c) of the Credit Agreement, the undersigned hereby certifies that it is not a “bank” or other Person described in Section 881(c)(3) of the Internal Revenue Code of 1986, as amended.

[NAME OF LENDER]

By: ____________________________

Name:

Title:

EXHIBIT D-1

  

        

EXHIBIT E-1 TO

CREDIT AND GUARANTY AGREEMENT

CLOSING DATE CERTIFICATE

THE UNDERSIGNED HEREBY CERTIFY AS FOLLOWS:

1.  I am an Authorized Officer of Phillips-Van Heusen Corporation, a Delaware corporation (the “Borrower Representative”).

2.  I have reviewed the terms of Section 3 of the Credit and Guaranty Agreement, dated as of May 6, 2010 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”), Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), certain subsidiaries of the U.S. Borrower, as Guarantors, the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents, and the definitions and provisions contained in such Credit Agreement relating thereto, and in our opinion we have made, or have caused to be made under our supervision, such examination or investigation as is necessary to enable us to express an informed opinion as to the matters referred to herein.

3.  Based upon my review and examination described in paragraph 2 above, I certify, on behalf of each Borrower, that as of the date hereof:

(i)

since (a) January 31, 2010, with respect to the U.S. Borrower and any Subsidiary of the U.S. Borrower prior to giving effect to the Acquisition and (b) March 31, 2009 with respect to the Acquired Business, no event, circumstance or change has occurred that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect; 

(ii)

each of the conditions precedent described in Section 3.01 and Section 3.02 of the Credit Agreement has been satisfied on the Closing Date (except that no opinion is hereby expressed as to Administrative Agent’s or Required Lenders’ satisfaction with any document, instrument or other matter); and

(iii)

no terms or conditions of the Acquisition Agreement have been amended, waived or terminated without the consent of the Administrative Agent, except to the extent it does not materially affect the interests of the Lenders. 

The foregoing certifications are made and delivered as of [______], 2010.

PHILLIPS-VAN HEUSEN CORPORATION, as  

Borrower Representative

_______________________

Name:

Title: 

EXHIBIT E-1-1

  

        

EXHIBIT E-2 TO

CREDIT AND GUARANTY AGREEMENT

SOLVENCY CERTIFICATE

THE UNDERSIGNED HEREBY CERTIFIES AS FOLLOWS:

1.  I am the chief financial officer of the U.S. Borrower.

2.  Reference is made to that certain Credit and Guaranty Agreement, dated as of May 6, 2010 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”), Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), certain subsidiaries of the U.S. Borrower, as Guarantors, the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents.

3.  I have reviewed the terms of Sections 3 and 4 of the Credit Agreement and the definitions and provisions contained in the Credit Agreement relating thereto, and, in my opinion, have made, or have caused to be made under my supervision, such examination or investigation as is necessary to enable me to express an informed opinion as to the matters referred to herein.

4.  Based upon my review and examination described in paragraph 3 above, I certify that as of the date hereof, after giving effect to the consummation of the Transactions, the related financings and the other transactions contemplated by the Loan Documents, the Group Members are, on a consolidated basis, Solvent.

The foregoing certifications are made and delivered as of [______], 2010.

PHILLIPS-VAN HEUSEN CORPORATION

________________________

Name:  Michael Shaffer

Title:  Chief Financial Officer

EXHIBIT E-2-1

EXHIBIT F-1 TO

CREDIT AND GUARANTY AGREEMENT

COUNTERPART AGREEMENT 

(Guarantor)

This COUNTERPART AGREEMENT, dated [mm/dd/yy] (this “Counterpart Agreement”) is delivered pursuant to that certain Credit and Guaranty Agreement, dated as of May 6, 2010 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”), Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), certain subsidiaries of the U.S. Borrower, as Guarantors, the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents.

Section 1.  Pursuant to Section 5.12 of the Credit Agreement, the undersigned hereby:

(a) 

agrees that this Counterpart Agreement may be attached to the Credit Agreement and that by the execution and delivery hereof, the undersigned becomes a Guarantor under the Credit Agreement and agrees to be bound by all of the terms thereof;

(b)

represents and warrants that each of the representations and warranties set forth in the Credit Agreement and each other Loan Document and applicable to the undersigned is true and correct both before and after giving effect to this Counterpart Agreement, except to the extent that any such representation and warranty relates solely to any earlier date, in which case such representation and warranty is true and correct as of such earlier date;

(c)

hereby irrevocably and unconditionally guarantees the due and punctual payment in full of all Obligations (or, in the case of any Foreign Subsidiary part hereto, solely in respect of the Foreign Obligations) when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)) and in accordance with Article VII of the Credit Agreement (subject, in the case of any Foreign Subsidiary party hereto, to the limitations applicable to certain Foreign Guarantors set forth in the Credit Agreement or as set forth below [insert relevant guarantee limitation language for any jurisdictions not referenced in the Credit Agreement]) subject to the terms and conditions of the Credit Agreement; and 

(d)

[the undersigned hereby (i) agrees that this counterpart may be attached to the U.S. Pledge and Security Agreement, (ii) agrees that the undersigned will comply with all the terms and conditions of the U.S. Pledge and Security Agreement as if it were an original signatory thereto, (iii) grants to Collateral Agent a security interest in all of the undersigned’s right, title and interest in and to all “Collateral” (as such term is defined in the U.S. Pledge and Security Agreement) of the undersigned, subject to the terms of Section 2 of the U.S. Pledge and Security Agreement, in each case whether now or hereafter existing or in which the undersigned now has or hereafter acquires an interest and wherever the same may be located and (iv) delivers to Collateral Agent supplements to all schedules attached to the U.S. Pledge and Security Agreement with respect to assets owned by it.  All such Collateral shall be deemed to be part of the “Collateral” as defined in and hereafter subject to each of the terms and conditions of the U.S. Pledge and Security Agreement.][the undersigned hereby acknowledges that it has executed and delivered or is, simultaneously with the execution of this Counterpart Agreement, executing and delivering such other Security Documents, if any, as shall be required pursuant to the terms of the Credit Agreement.]

EXHIBIT F-1-1

Section 2.  The undersigned agrees to execute, acknowledge and deliver such further documents as it is required to pursuant to Section 5.16 of the Credit Agreement. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated, except as provided pursuant to the Credit Agreement.  Any notice or other communication herein required or permitted to be given shall be given pursuant to Section 10.01 of the Credit Agreement, and for all purposes thereof, the notice address of the undersigned shall be the address as set forth on the signature page hereof.  In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

[Remainder of page intentionally left blank]

EXHIBIT F-1-2

IN WITNESS WHEREOF, the undersigned has caused this Counterpart Agreement to be duly executed and delivered by its duly authorized officer as of the date above first written.

[NAME OF SUBSIDIARY]

By:______________________

Name:

Title:

Address for Notices:

______________

______________

______________

Attention:

Telecopier

with a copy to:

______________

______________

______________

Attention:

Telecopier

ACKNOWLEDGED AND ACCEPTED,

as of the date above first written:

BARCLAYS BANK PLC, 

as Administrative Agent and Collateral Agent

By:_____________________

Name:

Title:

EXHIBIT F-1-3

EXHIBIT F-2 TO

CREDIT AND GUARANTY AGREEMENT

COUNTERPART AGREEMENT 

(Ancillary Borrower)

This COUNTERPART AGREEMENT, dated [mm/dd/yy] (this “Counterpart Agreement”) is delivered pursuant to that certain Credit and Guaranty Agreement, dated as of May 6, 2010 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”), Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), certain subsidiaries of the U.S. Borrower, as Guarantors, the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents.

Section 1.  Pursuant to Sections 2.26 and 10.26 of the Credit Agreement, the undersigned hereby:

(a) 

agrees that this Counterpart Agreement may be attached to the Credit Agreement and that by the execution and delivery hereof, the undersigned becomes a Borrower, an Ancillary Borrower [and a Guarantor]1 under the Credit Agreement and agrees to be bound by all of the terms thereof as though it had executed the Credit Agreement as a Borrower [and a Guarantor];

(b)

represents and warrants that each of the representations and warranties set forth in the Credit Agreement and each other Loan Document and applicable to the undersigned is true and correct both before and after giving effect to this Counterpart Agreement, except to the extent that any such representation and warranty relates solely to any earlier date, in which case such representation and warranty is true and correct as of such earlier date;

(c)

[hereby irrevocably and unconditionally guarantees the due and punctual payment in full of all Foreign Obligations when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)) and in accordance with Article VII of the Credit Agreement (subject to the limitations applicable to certain Foreign Loan Parties set forth in the Credit Agreement or as set forth below [insert relevant guarantee limitation language for any jurisdictions not referenced in the Credit Agreement]);]1 and 

(d)

[acknowledges that it has delivered to the Administrative Agent and, if applicable, executed, or is, simultaneously with the execution of this Counterpart Agreement, delivering to the Administrative Agent and, if applicable, executing (i) all information required by the Administrative Agent or the relevant Ancillary Lender with respect to the regulations described in Sections 10.21 and 10.22 of the Credit Agreement, (ii) documents and certificates similar to those described in Sections 3.01(b), 3.01(h) and 3.01(n) of the Credit Agreement and (iii) such other Security Documents (and such other documents and instruments) as shall be required pursuant to the Credit Agreement.]1

Section 2.  The undersigned agrees to execute, acknowledge and deliver such further documents as it is required to pursuant to Section 5.16 of the Credit Agreement. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated, except as provided pursuant to the Credit Agreement.  Any notice or other communication herein required or permitted to be given shall be given pursuant to Section 10.01 of the Credit 

1 To be included if the signing party is not already party to the Credit Agreement as a Guarantor.

Exhibit F-2-1

Agreement, and for all purposes thereof, the notice address of the undersigned shall be the address as set forth on the signature page hereof.  In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

[Remainder of page intentionally left blank]

Exhibit F-2-2

IN WITNESS WHEREOF, the undersigned has caused this Counterpart Agreement to be duly executed and delivered by its duly authorized officer as of the date above first written.

[NAME OF ANCILLARY BORROWER]

By:______________________

Name:

Title:

Address for Notices:

______________

______________

______________

Attention:

Telecopier

with a copy to:

______________

______________

______________

Attention:

Telecopier

ACKNOWLEDGED AND ACCEPTED,

as of the date above first written:

BARCLAYS BANK PLC, 

as Administrative Agent and Collateral Agent

By:_____________________

Name:

Title:

Exhibit F-2-3

EXHIBIT G TO

CREDIT AND GUARANTY AGREEMENT

EXECUTION VERSION

U.S. PLEDGE AND SECURITY AGREEMENT

dated as of May 6, 2010

between

EACH OF THE GRANTORS PARTY HERETO

and

BARCLAYS BANK PLC,

as Collateral Agent

EXHIBIT G-1

TABLE OF CONTENTS

PAGE

SECTION 1.

DEFINITIONS; GRANT OF SECURITY.

1

1.1

General Definitions

1

1.2

Definitions; Interpretation

7

SECTION 2.

GRANT OF SECURITY.

8

2.1

Grant of Security

8

2.2

Certain Limited Exclusions

8

SECTION 3.

SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.

9

3.1

Security for Obligations

9

3.2

Continuing Liability under Collateral

9

SECTION 4.

CERTAIN PERFECTION REQUIREMENTS

10

4.1

Delivery Requirements

10

4.2

Control Requirements

10

4.3

Intellectual Property Recording Requirements

11

4.4

Other Actions

12

4.5

Timing and Notice

12

SECTION 5.

REPRESENTATIONS AND WARRANTIES.

12

5.1

Grantor Information & Status

12

5.2

Collateral Identification, Special Collateral

13

5.3

Ownership of Collateral and Absence of Other Liens

13

5.4

Status of Security Interest.

14

5.5

Pledged Equity Interests, Investment Related Property

14

SECTION 6.

COVENANTS AND AGREEMENTS.

15

6.1

Grantor Information & Status

15

6.2

Collateral Identification; Special Collateral; Defense of Collateral

15

6.3

Status of Security Interest

16

6.4

Goods & Receivables

16

6.5

Pledged Equity Interests, Investment Related Property

16

6.6

Liens on Foreign Material Intellectual Property

17

SECTION 7.

THE 2023 DEBENTURES OBLIGATIONS.

17

7.1

Equal and Ratable Security

17

7.2

Application of Proceeds

18

7.3

Application of Funds Distributable to 2023 Debentures Holders; Delivery of 2023 Debentures Indenture  18

7.4

Information as to the Debenture Trustee

19

7.5

Termination of Equal and Ratable Security Provisions

19

7.6

Agreements with the Debenture Trustee

19

EXHIBIT G-2

SECTION 8.

FURTHER ASSURANCES; ADDITIONAL GRANTORS.

20

8.1

Further Assurances

20

8.2

Additional Grantors

21

SECTION 9.

COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.

21

9.1

Power of Attorney

21

9.2

No Duty on the Part of Collateral Agent, Secured Parties, Debenture Trustee or 2023 Debentures Holders  22

9.3

Appointment  Pursuant to  Credit  Agreement

22

SECTION 10.

REMEDIES.

22

10.1

Generally

22

10.2

Application of Proceeds

24

10.3

Sales on Credit

24

10.4

Investment Related Property

24

10.5

Grant of Intellectual Property License

25

10.6

Intellectual Property

25

10.7

Cash Proceeds

27

10.8

Waiver of Certain Defenses

27

SECTION 11.

COLLATERAL AGENT.

27

SECTION 12.

CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.

27

SECTION 13.

STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM.

28

SECTION 14.

MISCELLANEOUS.

28

SCHEDULE 5.1 — GENERAL INFORMATION

SCHEDULE 5.2 — COLLATERAL IDENTIFICATION

SCHEDULE 5.4 — FINANCING STATEMENTS

EXHIBIT A — PLEDGE SUPPLEMENT

EXHIBIT B — UNCERTIFICATED SECURITIES CONTROL AGREEMENT

EXHIBIT C — TRADEMARK SECURITY AGREEMENT

EXHIBIT D — PATENT SECURITY AGREEMENT

EXHIBIT E — COPYRIGHT SECURITY AGREEMENT

EXHIBIT F — FORM OF NOTICE OF SECURED HEDGE AGREEMENT

EXHIBIT G-3

This U.S. PLEDGE AND SECURITY AGREEMENT, dated as of May 6, 2010 (as it may be amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), between Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”) and each of the U.S. subsidiaries of the U.S. Borrower party hereto from time to time, whether as an original signatory hereto or as an Additional Grantor (as herein defined) (together with the U.S. Borrower, each a “Grantor”), and Barclays Bank PLC, as collateral agent for the Secured Parties (as herein defined) and, to the extent provided in Section 7.1, the Debenture Trustee (as herein defined) on behalf of the 2023 Debentures Holders (as herein defined) (Barclays Bank PLC, in such capacity as collateral agent, together with its successors and permitted assigns, the “Collateral Agent”).

RECITALS:

WHEREAS, reference is made to that certain Credit and Guaranty Agreement, dated as of the date hereof (as it may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the U.S. Borrower, Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands, certain subsidiaries of the U.S. Borrower party thereto, as Guarantors, the lenders party thereto from time to time (the “Lenders”), Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents;

WHEREAS, pursuant to that certain indenture, dated as of November 1, 1993 (the “2023 Debentures Indenture”), by and between the U.S. Borrower and The Bank of New York Mellon (formerly known as The Bank of New York), as Trustee (in such capacity, together with its successors and permitted assigns, the “Debenture Trustee”), the U.S. Borrower issued a series of 7-3/4% Debentures due 2023 (the “2023 Debentures”) and agreed, in certain circumstances, to secure the 2023 Debentures Obligations (as defined herein) equally and ratably with future secured obligations of the U.S. Borrower or any of its Subsidiaries;

WHEREAS, subject to the terms and conditions of the Credit Agreement, certain Grantors may enter into one or more Hedge Agreements, Cash Management Agreements and the Treasury Transactions with one or more Lender Counterparties; and

WHEREAS, in consideration of the extensions of credit and other accommodations of Lenders and Lender Counterparties as set forth in the Credit Agreement, the Hedge Agreements, the Cash Management Agreements and the Treasury Transactions, respectively, each Grantor has agreed to secure such Grantor’s obligations under the Loan Documents, the Hedge Agreements, the Cash Management Agreements and the Treasury Transactions as set forth herein;

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, each Grantor and the Collateral Agent agree as follows:

SECTION 1.

DEFINITIONS; GRANT OF SECURITY.

1.1

General Definitions

.  In this Agreement, the following terms shall have the following meanings:

“2023 Debentures” shall have the meaning set forth in the recitals.

EXHIBIT G-4

“2023 Debentures Holders” shall mean the holders from time to time of the 2023 Debentures.

“2023 Debentures Indenture” shall have the meaning set forth in the recitals.

“2023 Debentures Obligations” shall mean the prompt and complete payment of any unpaid principal amount, any premium, any interest and any other amounts payable in respect of the 2023 Debentures in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. §362(a) (and any successor provision thereof)).

“Additional Grantors” shall have the meaning assigned in Section 8.3.

“Agreement” shall have the meaning set forth in the preamble.

“Benelux” shall mean the union entered into by the countries of Belgium, the Netherlands and Luxembourg.

“Benelux Trademark Register” shall mean the official office for the registration of trademarks, designs and drawings within Benelux.

“Cash Proceeds” shall have the meaning assigned in Section 10.7.

“CKI Related Assets Pledge and Security Agreement” shall mean that certain U.S. CKI Related Assets Pledge and Security Agreement, dated as of the date hereof, by and among the U.S. Borrower, Calvin Klein, Inc., CK Service Corp. and Barclays Bank PLC, as collateral agent.

“Collateral” shall have the meaning assigned in Section 2.1.

“Collateral Agent” shall have the meaning set forth in the preamble.

“Collateral Records” shall mean books, records, ledger cards, files, correspondence, customer lists, supplier lists, blueprints, technical specifications, manuals, computer software and related documentation, computer printouts, tapes, disks and other electronic storage media and related data processing software and similar items that at any time evidence or contain information relating to any of the Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon.

“Collateral Support” shall mean all property (real or personal) assigned, hypothecated or otherwise securing any Collateral and shall include any security agreement or other agreement granting a lien or security interest in such real or personal property.

“Control” shall mean:  (i) with respect to any Deposit Accounts, control within the meaning of Section 9-104 of the UCC, (ii) with respect to any Securities Accounts, Security Entitlements, Commodity Contract or Commodity Account, control within the meaning of Section 9-106 of the UCC, (iii) with respect to any Uncertificated Securities, control within the meaning of Section 8-106(c) of the UCC, (iv) with respect to any Certificated Security, control within the meaning of Section 8-106(a) or (b) of the UCC, (v) with respect to any Electronic Chattel Paper, control within the meaning of Section 9-105 of the UCC, (vi) with respect to Letter of Credit Rights, control within the meaning of Section 9-107 of the UCC and (vii) with respect to any “transferable 

EXHIBIT G-5

record”(as that term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction), control within the meaning of Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in the jurisdiction relevant to such transferable record.

“Copyright Licenses” shall mean any and all agreements, licenses and covenants providing for the granting of any right in or to any Copyright or otherwise providing for a covenant not to sue for infringement or other violation of any Copyright (whether such Grantor is licensee or licensor thereunder) including, without limitation, each agreement required to be listed in Schedule 5.2(II) under the heading “Copyright Licenses” (as such schedule may be amended or supplemented from time to time).

“Copyrights” shall mean all United States, and foreign copyrights (whether or not the underlying works of authorship have been published), including but not limited to copyrights in software and all rights in and to databases, all designs (including but not limited to industrial designs, Protected Designs within the meaning of 17 U.S.C. 1301 et. Seq. and Community designs), and all Mask Works (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, as well as all moral rights, reversionary interests, and termination rights, and, with respect to any and all of the foregoing: (i) all registrations and applications therefor including, without limitation, the registrations and applications required to be listed in Schedule 5.2(II) under the heading “Copyrights” (as such schedule may be amended or supplemented from time to time), (ii) all extensions and renewals thereof, (iii) all rights to sue or otherwise recover for any past, present and future infringement or other violation thereof, (iv) all Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages and proceeds of suit now or hereafter due and/or payable with respect thereto, and (v) all other rights of any kind accruing thereunder or pertaining thereto throughout the world.

“Credit Agreement” shall have the meaning set forth in the recitals.

“Debenture Trustee” shall have the meaning set forth in the recitals.

“Grantors” shall have the meaning set forth in the preamble.

“Insurance” shall mean all insurance policies covering any or all of the Collateral (regardless of whether the Collateral Agent is the loss payee thereof).

“Intellectual Property” shall mean, the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under the United States, multinational or foreign laws or otherwise, including without limitation, all inventions or discoveries (whether patentable or unpatentable and whether or not reduced to practice), all Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks, Trademark Licenses, Trade Secrets, and Trade Secret Licenses, and all rights to sue or otherwise recover for any past, present and future infringement, dilution, misappropriation, or other violation or impairment thereof, including the right to receive all Proceeds therefrom, including without limitation license fees, royalties, income, payments, claims, damages and proceeds of suit, now or hereafter due and/or payable with respect thereto.

“Intellectual Property Security Agreement” shall mean each intellectual property security agreement executed and delivered by the applicable Grantors, substantially in the form set forth in Exhibit E, Exhibit F and Exhibit G, as applicable.

EXHIBIT G-6

“Investment Accounts” shall mean the Securities Accounts, Commodity Accounts and Deposit Accounts.

“Investment Related Property” shall mean:  (i) all “investment property” (as such term is defined in Article 9 of the UCC) and (ii) all of the following (regardless of whether classified as investment property under the UCC): all Pledged Equity Interests, Pledged Debt, the Investment Accounts and certificates of deposit.

“Lender” shall have the meaning set forth in the recitals.

“Material Registered Exclusive Copyright License” shall mean any and all agreements, licenses and covenants constituting Material Intellectual Property providing for the granting of any exclusive grant to such Grantor, in or to any registered Copyright.

“Patent Licenses” shall mean all agreements, licenses and covenants providing for the granting of any right in or to any Patent or otherwise providing for a covenant not to sue for infringement or other violation of any Patent (whether such Grantor is licensee or licensor thereunder) including, without limitation, each agreement required to be listed in Schedule 5.2(II) under the heading “Patent Licenses” (as such schedule may be amended or supplemented from time to time).

“Patents” shall mean all United States and foreign patents and certificates of invention, or similar industrial property rights, and applications for any of the foregoing, including, without limitation: (i) each patent and patent application required to be listed in Schedule 5.2(II) under the heading “Patents” (as such schedule may be amended or supplemented from time to time), (ii) all reissues, divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations thereof, (iii) all patentable inventions and improvements thereto, (iv) all rights to sue or otherwise recover for any past, present and future infringement or other violation thereof, (v) all Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages, and proceeds of suit now or hereafter due and/or payable with respect thereto, and (vi) all other rights of any kind accruing thereunder or pertaining thereto throughout the world.

“Pledge Supplement” shall mean any supplement to this Agreement in substantially the form of Exhibit A.

“Pledged Debt” shall mean all indebtedness for borrowed money owed to such Grantor, whether or not evidenced by any Instrument, including, without limitation, all indebtedness described on Schedule 5.2(I) under the heading “Pledged Debt” (as such schedule may be amended or supplemented from time to time), issued by the obligors named therein, the instruments, if any, evidencing any of the foregoing, and all interest, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing.

“Pledged Equity Interests” shall mean all Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and any other participation or interests in any equity or profits of any business entity including, without limitation, any trust and all management rights relating to any entity whose equity interests are included as Pledged Equity Interests; provided that, for the avoidance of doubt, in the case of a Foreign Subsidiary or U.S.-Owned DRE, the Pledged Equity Interests (including specifically any Pledged Stock, Pledged LLC Interests and Pledged Partnership Interests) in such entity shall not exceed 66% of the voting power of all classes of capital stock or interests entitled to vote, or 66% of the interests in such Foreign Subsidiary or U.S.-Owned DRE, as the case may be; provided, further, that if the U.S.-Owned DRE owns less than 100% of the Equity 

EXHIBIT G-7

Interest in a Foreign Subsidiary, the Pledged Equity Interests in such U.S.-Owned DRE shall be increased to the maximum extent so that the total Pledged Equity Interests represent, directly or indirectly, not more than 66% of the Equity Interest of any Foreign Subsidiary.

“Pledged LLC Interests” shall mean all interests in any limited liability company and each series thereof including, without limitation, all limited liability company interests listed on Schedule 5.2(I) under the heading “Pledged LLC Interests” (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such limited liability company interests and any interest of such Grantor on the books and records of such limited liability company or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such limited liability company interests and all rights as a member of the related limited liability company.

“Pledged Partnership Interests” shall mean all interests in any general partnership, limited partnership, limited liability partnership or other partnership including, without limitation, all partnership interests listed on Schedule 5.2(I) under the heading “Pledged Partnership Interests” (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such partnership interests and any interest of such Grantor on the books and records of such partnership or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such partnership interests and all rights as a partner of the related partnership.

“Pledged Stock” shall mean all shares of capital stock owned by such Grantor, including, without limitation, all shares of capital stock described on Schedule 5.2(I) under the heading “Pledged Stock” (as such schedule may be amended or supplemented from time to time), and the certificates, if any, representing such shares and any interest of such Grantor in the entries on the books of the issuer of such shares or on the books of any securities intermediary pertaining to such shares, and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares.

“PVH Owned CK Equity Interests” shall have the meaning assigned to such term in the CKI Related Assets Pledge and Security Agreement.

“Receivables” shall mean all rights to payment, whether or not earned by performance, for goods or other property sold, leased, licensed, assigned or otherwise disposed of, or services rendered or to be rendered, including, without limitation all such rights constituting or evidenced by any Account, Chattel Paper, Instrument, General Intangible or Investment Related Property, together with all of Grantor’s rights, if any, in any goods or other property giving rise to such right to payment and all Collateral Support and Supporting Obligations related thereto and all Receivables Records.

“Receivables Records” shall mean (i) all original copies of all documents, instruments or other writings or electronic records or other Records evidencing the Receivables, (ii) all books, correspondence, credit or other files, Records, ledger sheets or cards, invoices, and other papers relating to Receivables, including, without limitation, all tapes, cards, computer tapes, computer discs, computer runs, record keeping systems and other papers and documents relating to 

EXHIBIT G-8

the Receivables, whether in the possession or under the control of Grantor or any computer bureau or agent from time to time acting for Grantor or otherwise, (iii) all evidences of the filing of financing statements and the registration of other instruments in connection therewith, and amendments, supplements or other modifications thereto, notices to other creditors, secured parties or agents thereof, and certificates, acknowledgments, or other writings, including, without limitation, lien search reports, from filing or other registration officers, (iv) all credit information, reports and memoranda relating thereto and (v) all other written or non-written forms of information related in any way to the foregoing or any Receivable.

“Secured Obligations” shall have the meaning assigned in Section 3.1.

“Securities” shall mean any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.

“TH Benelux Registrations” shall have the meaning assigned in Section 4.3(d).

“Trade Secret Licenses” shall mean any and all agreements providing for the granting of any right in or to Trade Secrets (whether such Grantor is licensee or licensor thereunder) including, without limitation, each agreement required to be listed in Schedule 5.2(II) under the heading “Trade Secret Licenses” (as such schedule may be amended or supplemented from time to time).

“Trade Secrets” shall mean all trade secrets and all other confidential or proprietary information and know-how whether or not the foregoing has been reduced to a writing or other tangible form, including all documents and things embodying, incorporating, or referring in any way to the foregoing, and with respect to any and all of the foregoing: (i) all rights to sue or otherwise recover for any past, present and future misappropriation or other violation thereof, (ii) all Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages, and proceeds of suit now or hereafter due and/or payable with respect thereto; and (iii) all other rights of any kind accruing thereunder or pertaining thereto throughout the world.

“Trademark Licenses” shall mean any and all agreements, licenses and covenants providing for the granting of any right in or to any Trademark or otherwise providing for a covenant not to sue for infringement dilution or other violation of any Trademark or permitting co-existence with respect to a Trademark (whether such Grantor is licensee or licensor thereunder) including, without limitation, each agreement required to be listed in Schedule 5.2(II) under the heading “Trademark Licenses” (as such schedule may be amended or supplemented from time to time).

“Trademarks” shall mean all United States, and foreign trademarks, trade names, trade dress, corporate names, company names, business names, fictitious business names, Internet domain names, service marks, certification marks, collective marks, logos, other source or business identifiers, designs and general intangibles of a like nature, whether or not registered, and with respect to any and all of the foregoing: (i) all registrations and applications therefor including, without limitation, the registrations and applications required to be listed in Schedule 5.2(II) under the heading “Trademarks”(as such schedule may be amended or supplemented from time to time), (ii) all extensions or renewals of any of the foregoing, (iii) all of the goodwill of the business connected with 

EXHIBIT G-9

the use of and symbolized by any of the foregoing, (iv) all rights to sue or otherwise recover for any past, present and future infringement, dilution or other violation of any of the foregoing or for any injury to the related goodwill, (v) all Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages, and proceeds of suit now or hereafter due and/or payable with respect thereto, and (vi) all other rights of any kind accruing thereunder or pertaining thereto throughout the world.

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of, or remedies with respect to, any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions hereof relating to such perfection, priority or remedies.

“U.S.” or “United States” shall mean the United States of America.

“U.S. Borrower” shall have the meaning set forth in the preamble.

1.2

Definitions; Interpretation

.

(a)

In this Agreement, the following capitalized terms shall have the meaning given to them in the UCC (and, if defined in more than one Article of the UCC, shall have the meaning given in Article 9 thereof): Account, Account Debtor, As-Extracted Collateral, Bank, Certificated Security, Chattel Paper, Consignee, Consignment, Consignor, Commercial Tort Claims, Commodity Account, Commodity Contract, Commodity Intermediary, Deposit Account, Document, Entitlement Order, Equipment, Electronic Chattel Paper, Farm Products, Fixtures, General Intangibles, Goods, Health-Care-Insurance Receivable, Instrument, Inventory, Letter of Credit Right, Manufactured Home, Money, Payment Intangible, Proceeds, Record, Securities Account, Securities Intermediary, Security Certificate, Security Entitlement, Supporting Obligations, Tangible Chattel Paper and Uncertificated Security.

(b)

All other capitalized terms used herein (including the preamble and recitals hereto) and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.  The incorporation by reference of terms defined in the Credit Agreement shall survive any termination of the Credit Agreement until this Agreement is terminated as provided in Section 12 hereof.  Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference.  References herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided.  The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter.  The terms lease and license shall include sub-lease and sub-license, as applicable.  If any conflict or inconsistency exists between this Agreement and the Credit Agreement, the Credit Agreement shall govern.  All references herein to provisions of the UCC shall include all successor provisions under any subsequent version or amendment to any Article of the UCC.

EXHIBIT G-10

SECTION 2.

GRANT OF SECURITY.

2.1

Grant of Security

.  Each Grantor hereby grants to the Collateral Agent, for the benefit of the Secured Parties (and, to the extent provided in Section 7.1, the Debenture Trustee on behalf of the 2023 Debentures Holders), a security interest in and continuing lien on all of such Grantor’s right, title and interest in, to and under all personal property of such Grantor including, but not limited to the following, in each case whether now or hereafter existing or in which any such Grantor now has or hereafter acquires an interest and wherever the same may be located, except as such may be excluded pursuant to Section 2.2 hereof (all of which being hereinafter collectively referred to as the “Collateral”):

(i)

Accounts;

(ii)

Chattel Paper;

(iii)

Documents;

(iv)

General Intangibles;

(v)

Goods (including, without limitation, Inventory and Equipment);

(vi)

Instruments;

(vii)

Insurance;

(viii)

Intellectual Property (including, without limitation, any Material Registered Exclusive Copyright Licenses);

(ix)

Investment Related Property (including, without limitation, Deposit Accounts);

(x)

Letter of Credit Rights;

(xi)

Money;

(xii)

Receivables and Receivable Records;

(xiii)

Commercial Tort Claims now or hereafter described on Schedule 5.2

(xiv)

to the extent not otherwise included above, all other personal property of any kind and all Collateral Records, Collateral Support and Supporting Obligations relating to any of the foregoing; and

(xv)

to the extent not otherwise included above, all Proceeds, products, accessions, rents and profits of or in respect of any of the foregoing.

2.2

Certain Limited Exclusions

.  Notwithstanding anything herein to the contrary, in no event shall the Collateral include or the security interest granted under Section 2.1 hereof attach to (a) any lease, license, contract, property right or agreement to which any Grantor is a party, and any of its rights or interest thereunder and any other asset, if and to the extent that a security interest is 

EXHIBIT G-11

prohibited by or in violation of (i) any law, rule or regulation applicable to such Grantor, or (ii) a term, provision or condition of any lease, license, contract, property right or agreement (unless such law, rule, regulation, term, provision or condition would be rendered ineffective with respect to the creation of the security interest hereunder pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law (including the Bankruptcy Code) or principles of equity); provided however that the Collateral shall include (and such security interest shall attach) immediately at such time as the contractual or legal prohibition shall no longer be applicable and to the extent severable, shall attach immediately to any portion of such lease, license, contract, property right, agreement or other asset not subject to the prohibitions specified in (i) or (ii) above; provided further that the exclusions referred to in clause (a) of this Section 2.2 shall not include any Proceeds of any such lease, license, contract, property right or agreement; (b) any of the outstanding capital stock of, or interests in, a Foreign Subsidiary or U.S.-Owned DRE in excess of 66% of the voting power of all classes of capital stock or interests entitled to vote of, or 66% of the interests in, such Foreign Subsidiary or U.S.-Owned DRE, as the case may be; provided, however, that if the U.S.-Owned DRE owns less than 100% of the Equity Interest in a Foreign Subsidiary, the Pledged Equity Interests in such U.S.-Owned DRE shall be increased to the maximum extent so that the total Pledged Equity Interests represent, directly or indirectly, not more than 66% of the Equity Interest of any Foreign Subsidiary; (c) any “intent-to-use” application for registration of a Trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect thereto, solely to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of any registration that issues from such intent-to-use trademark application under applicable federal law; (d) the PVH Owned CK Equity Interests; provided, however, that the Collateral shall include (and such security interest shall attach) immediately at such time as the CKI Related Assets Pledge and Security Agreement shall no longer be in effect; (e) directors’ qualifying shares, nominee shares or other similar shares, to the extent legally required to be issued; (f) any Equipment owned by any Grantor that is subject to a purchase money lien or a Capital Lease if the contract or other agreement in which such Lien is granted (or the documentation providing for such Capital Lease) prohibits or requires the consent of any person other than the Loan Parties as a condition to the creation of any other security interest on such Equipment and (g) any Equity Interests of Trumpet C.V.

SECTION 3.

SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.

3.1

Security for Obligations

.  This Agreement secures,  and the  Collateral  is  collateral security for, the prompt and complete payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. §362(a) (and any successor provision thereof)), of all Obligations (the “Secured Obligations”) and, to the extent provided in Section 7.1, the 2023 Debentures Obligations.

3.2

Continuing Liability under Collateral

.  Notwithstanding  anything  herein  to  the contrary, (a) each Grantor shall remain liable for all obligations under the Collateral and nothing contained herein is intended or shall be a delegation of duties to the Collateral Agent, any other Secured Party, any 2023 Debentures Holder or the Debenture Trustee, (b) each Grantor shall remain liable under each of the agreements included in the Collateral, including, without limitation, any agreements relating to Pledged Partnership Interests or Pledged LLC Interests, to perform all of the obligations undertaken by it thereunder all in accordance with and pursuant to the terms and provisions thereof and neither the Collateral Agent, any Secured Party, any 2023 Debentures Holder 

EXHIBIT G-12

nor the Debenture Trustee shall have any obligation or liability under any of such agreements by reason of or arising out of this Agreement or any other document related thereto nor shall the Collateral Agent, any Secured Party, any 2023 Debentures Holder nor the Debenture Trustee have any obligation to make any inquiry as to the nature or sufficiency of any payment received by it or have any obligation to take any action to collect or enforce any rights under any agreement included in the Collateral, including, without limitation, any agreements relating to Pledged Partnership Interests or Pledged LLC Interests, and (c) the exercise by the Collateral Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral.

SECTION 4.

CERTAIN PERFECTION REQUIREMENTS

4.1

Delivery Requirements

.

(a)

With respect to any Certificated Securities included in the Collateral, each Grantor shall deliver to the Collateral Agent the Security Certificates evidencing such Certificated Securities duly indorsed by an effective indorsement (within the meaning of Section 8-107 of the UCC), or accompanied by share transfer powers or other instruments of transfer duly endorsed by such an effective endorsement, in each case, to the Collateral Agent or in blank.  In addition, each Grantor shall cause any certificates evidencing any Pledged Equity Interests included in the Collateral, including, without limitation, any Pledged Partnership Interests or Pledged LLC Interests included in the Collateral, to be similarly delivered to the Collateral Agent regardless of whether such Pledged Equity Interests constitute Certificated Securities.  Notwithstanding the foregoing, no Grantor shall be required to deliver to the Collateral Agent any (i) Certificated Securities evidencing such Grantor’s interests in equity or profits of any business entity that was acquired by such Grantor pursuant to a bankruptcy reorganization and that, in such Grantor’s good faith judgment, have a fair market value of less than $100,000 or (ii) Certificated Securities evidencing such Grantor’s interests in equity or profits of any Person that is not a Subsidiary of any Grantor that, in such Grantor’s good faith judgment, have a fair market value of less than $2,500,000 individually and $5,000,000 in the aggregate.

(b)

With respect to any Instruments or Tangible Chattel Paper included in the Collateral, each Grantor shall deliver to the Collateral Agent all such Instruments or Tangible Chattel Paper to the Collateral Agent duly indorsed in blank; provided, however, that such delivery requirement shall not apply to any Instruments or Tangible Chattel Paper having a face amount of less than $1,000,000 individually or $10,000,000 in the aggregate.  The Collateral Agent shall, upon Grantor’s written request, promptly return any Instrument or Tangible Chattel Paper to such Grantor if necessary for such Grantor to realize on such Instrument or Tangible Chattel Paper unless an Event of Default has occurred and is continuing.

4.2

Control Requirements

.

(a)

With respect to any Uncertificated Security included in the Collateral (other than any Uncertificated Securities credited to a Securities Account or not issued by a Wholly-Owned Subsidiary), each Grantor shall cause the issuer of such Uncertificated Security to either (i) register the Collateral Agent as the registered owner thereof on the books and records of the issuer or (ii) execute an agreement substantially in the form of Exhibit B hereto (or such other agreement in form and substance reasonably satisfactory to the Collateral Agent), pursuant to which such issuer agrees to comply with the Collateral Agent’s instructions with respect to such Uncertificated Security without further consent by such Grantor.

EXHIBIT G-13

(b)

With respect to Letter of Credit Rights in excess of $5,000,000 individually or $10,000,000 in the aggregate included in the Collateral (other than any Letter of Credit Rights constituting a Supporting Obligation for a Receivable in which the Collateral Agent has a valid and perfected security interest), Grantor shall use commercially reasonable efforts to ensure that Collateral Agent has Control thereof by obtaining the written consent of each issuer of each related letter of credit to the assignment of the proceeds of such letter of credit to the Collateral Agent.

(c)

With respect to any Electronic Chattel Paper or “transferable record” (as that term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction) included in the Collateral, Grantor shall use commercially reasonable efforts to ensure that the Collateral Agent has Control thereof; provided, however, that such Control requirement shall not apply to any Electronic Chattel Paper or transferable record having a face amount of less than $5,000,000 individually or $10,000,000 in the aggregate.

4.3

Intellectual Property Recording Requirements

.

(a)

In the case of any Collateral (whether now owned or hereafter acquired) consisting of issued U.S. Patents and applications therefor, each Grantor shall execute and deliver to the Collateral Agent a Patent Security Agreement in substantially the form of Exhibit D hereto (or a supplement thereto) covering all such Patents in appropriate form for recordation with the U.S. Patent and Trademark Office with respect to the security interest of the Collateral Agent.

(b)

In the case of any Collateral (whether now owned or hereafter acquired) consisting of registered U.S. Trademarks and applications therefor, except any “intent to use” application for registration of a Trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect thereto, each Grantor shall execute and deliver to the Collateral Agent a Trademark Security Agreement in substantially the form of Exhibit C hereto (or a supplement thereto) covering all such Trademarks in appropriate form for recordation with the U.S. Patent and Trademark Office with respect to the security interest of the Collateral Agent.

(c)

In the case of any Collateral (whether now owned or hereafter acquired) consisting of registered U.S. Copyrights and exclusive Copyright Licenses in respect of registered U.S. Copyrights for which any Grantor is the licensee (but only to the extent that any such exclusive Copyright License constitutes Material Intellectual Property), each Grantor shall execute and deliver to the Collateral Agent a Copyright Security Agreement in substantially the form of Exhibit E hereto (or a supplement thereto) covering all such Copyrights and Copyright Licenses (but only to the extent that any such exclusive Copyright License constitutes Material Intellectual Property) in appropriate form for recordation with the U.S. Copyright Office with respect to the security interest of the Collateral Agent.

(d)

No later than ninety (90) days following the Closing Date (or such later date acceptable to the Collateral Agent), in the case of any Collateral (whether now owned or hereafter acquired) consisting of registered Benelux Trademarks in the name of Tommy Hilfiger Licensing, LLC (the "TH Benelux Registrations") (or, in the event the TH Benelux Registrations are assigned to another Grantor, any Collateral consisting of the registered Benelux Trademarks relating to the business conducted under the TH Benelux Registrations in the name of any such other Grantor), each such Grantor shall execute and deliver to the Collateral Agent a Dutch Law Security Agreement in a form reasonably acceptable to the Collateral Agent covering all such registered Benelux Trademarks 

EXHIBIT G-14

in appropriate form for recordation with the Benelux Trademark Register with respect to the security interest of the Collateral Agent.

4.4

Other Actions

.

(a)

If any issuer of any Pledged Equity Interest included in the Collateral is organized under a jurisdiction outside of the United States, each Grantor shall take such additional actions, including, without limitation, causing the issuer to register the pledge on its books and records or making such filings or recordings, in each case as may be necessary or advisable, under the laws of such issuer’s jurisdiction to insure the validity, perfection and priority of the security interest of the Collateral Agent.

(b)

With respect to any Pledged Partnership Interests and Pledged LLC Interests included in the Collateral, if the Grantors own less than 100% of the equity interests in any issuer of such Pledged Partnership Interests or Pledged LLC Interests, Grantors shall use their commercially reasonable efforts to obtain the consent of each other holder of partnership interest or limited liability company interests in such issuer to the security interest of the Collateral Agent hereunder and following an Event of Default, the transfer of such Pledged Partnership Interests and Pledged LLC Interests to the Collateral Agent of its designee, and to the substitution of the Collateral Agent or its designee as a partner or member with all the rights and powers related thereto.  Each Grantor consents to the grant by each other Grantor of a Lien in all Investment Related Property to the Collateral Agent and without limiting the generality of the foregoing consents to the transfer of any Pledged Partnership Interest and any Pledged LLC Interest to the Collateral Agent or its designee following an Event of Default and to the substitution of the Collateral Agent or its designee as a partner in any partnership or as a member in any limited liability company with all the rights and powers related thereto.

4.5

Timing and Notice

.  With respect to any Collateral in existence on the Closing Date, except as set forth in Section 5.19 of the Credit Agreement, each Grantor shall comply with the requirements of Section 4 on the date hereof and, with respect to any Collateral hereafter owned or acquired except as set forth in Section 5.14 of the Credit Agreement, each Grantor shall comply with such requirements (including, for the avoidance of doubt, the filing of any applications for, or the issuance or registration of, any Patents, Copyrights or Trademarks) within ninety (90) days following the end of the Fiscal Year during which such Grantor acquired rights therein; and, with respect to any Collateral of any Loan Party that becomes a Grantor after the date hereof, on such date (or such later date acceptable to the Collateral Agent).

SECTION 5.

REPRESENTATIONS AND WARRANTIES.

Each Grantor hereby represents and warrants, on the Closing Date and on each Credit Date, except to the extent that such representations and warranties specifically relate to an earlier date, in which case such representation and warranties shall have been true and correct in all material respects on and as of such earlier date, that:

5.1

Grantor Information & Status

.

(a)

as of the Closing Date, Schedule 5.1(A) & (B) sets forth under the appropriate headings: (1) the full legal name of such Grantor, (2) all trade names or other names under which such Grantor currently conducts business, (3) the type of organization of such Grantor, (4) the jurisdiction of organization of such Grantor, (5) its organizational identification number, if 

EXHIBIT G-15

any, and (6) the jurisdiction where the chief executive office or its sole place of business (or the principal residence if such Grantor is a natural person) is located.

(b)

as of the Closing Date, except as provided on Schedule 5.1(C), it has not changed its name, jurisdiction of organization, chief executive office or sole place of business (or principal residence if such Grantor is a natural person) or its corporate structure in any way (e.g., by merger, consolidation, change in corporate form or otherwise) and has not done business under any other name, in each case, within the five (5) years preceding the Closing Date;

(c)

as of the Closing Date, such Grantor has been duly organized and is validly existing as an entity of the type as set forth opposite such Grantor’s name on Schedule 5.1(A) solely under the laws of the jurisdiction as set forth opposite such Grantor’s name on Schedule 5.1(A) and remains duly existing as such.  As of the Closing Date, such Grantor has not filed any certificates of dissolution or liquidation, any certificates of domestication, transfer or continuance in any other jurisdiction; and

(d)

as of the Closing Date, no Grantor is a “transmitting utility” (as defined in Section 9-102(a) (80) of the UCC).

5.2

Collateral Identification, Special Collateral

.

(a)

Schedule 5.2 sets forth, as of the Closing Date, under the appropriate headings all of such Grantor’s: (1) Pledged Equity Interests included in the Collateral, (2) Pledged Debt, (3) Securities Accounts other than any Securities Accounts holding assets with a market value of less than $1,000,000 individually or $10,000,000 in the aggregate, (4) Deposit Accounts other than any Deposit Accounts holding less than $1,000,000 individually or $10,000,000 in the aggregate, (5) Commodity Contracts and Commodity Accounts, (6) United States and foreign registrations and issuances of and applications for Patents, Trademarks, and Copyrights owned by each Grantor, (7) Patent Licenses, Trademark Licenses, Trade Secret Licenses and Copyright Licenses constituting Material Intellectual Property, (8) Commercial Tort Claims other than any Commercial Tort Claims having a value of less than $1,000,000 individually, (9) Letter of Credit Rights for letters of credit other than any Letters of Credit Rights worth less than $1,000,000 individually or $10,000,000 in the aggregate and (10) the name and address of any warehouseman, bailee or other third party in possession of any Inventory, Equipment and other tangible personal property other than any Inventory, Equipment or other tangible person property having a value less than $1,000,000 individually or $10,000,000 in the aggregate; and

(b)

as of the Closing Date, none of the Collateral constitutes, or is the Proceeds of, (1) Farm Products, (2) As-Extracted Collateral, (3) Manufactured Homes, (4) Health-Care-Insurance Receivables; (5) timber to be cut, or (6) aircraft, aircraft engines, satellites, ships or railroad rolling stock.  As of the Closing Date, no material portion of the collateral consists of motor vehicles or other goods subject to a certificate of title statute of any jurisdiction.

5.3

Ownership of Collateral and Absence of Other Liens

.

(a)

it owns the Collateral purported to be owned by it or otherwise has the rights it purports to have in each item of Collateral and, as to all Collateral whether now existing or hereafter acquired, developed or created (including by way of lease or license), will continue to own or have such rights in each item of the Collateral (except as otherwise permitted by the Credit Agreement), in each case free and clear of any and all Liens, rights or claims of all other Persons, including, without limitation, liens arising as a result of such Grantor becoming bound (as a result of 

EXHIBIT G-16

merger or otherwise) as debtor under a security agreement entered into by another Person other than any Permitted Liens; and

(b)

other than any financing statements filed in favor of the Collateral Agent, no effective financing statement, fixture filing or other instrument similar in effect under any applicable law covering all or any part of the Collateral is on file in any filing or recording office except for (x) financing statements for which duly authorized proper termination statements have been delivered to the Collateral Agent for filing and (y) financing statements filed in connection with Permitted Liens.  Other than the Collateral Agent and any automatic control in favor of a Bank, Securities Intermediary or Commodity Intermediary maintaining a Deposit Account, Securities Account or Commodity Contract, no Person is in Control of any Collateral.

5.4

Status of Security Interest

.

(a)

upon the filing of financing statements naming each Grantor as “debtor” and the Collateral Agent as “secured party” and describing the Collateral in the filing offices set forth opposite such Grantor’s name on Schedule 5.4 hereof (as such schedule may be amended or supplemented from time to time), the security interest of the Collateral Agent in all Collateral that can be perfected by the filing of a financing statement under the Uniform Commercial Code as in effect in the jurisdiction where filed will constitute a valid, perfected, first priority Lien subject in the case of priority only, to any Permitted Liens with respect to Collateral.  Each agreement, if any, purporting to give the Collateral Agent Control over any Collateral is effective to establish the Collateral Agent’s Control of the Collateral subject thereto;

(b)

to the extent perfection or priority of the security interest therein is not subject to Article 9 of the UCC, upon recordation of the security interests granted hereunder in Patents, Trademarks, Copyrights and exclusive Copyright Licenses in the applicable intellectual property registries, including but not limited to the United States Patent and Trademark Office and the United States Copyright Office, the security interests granted to the Collateral Agent hereunder shall constitute valid, perfected, first priority Liens (subject, in the case of priority only, to Permitted Liens);

(c)

no authorization, consent, approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body or any other Person is required for either (i) the pledge or grant by any Grantor of the Liens purported to be created in favor of the Collateral Agent hereunder or (ii) the exercise by Collateral Agent of any rights or remedies in respect of any Collateral (whether specifically granted or created hereunder or created or provided for by applicable law), except (A) for the filings contemplated by clause (a) above and (B) as may be required, in connection with the disposition of any Investment Related Property, by laws generally affecting the offering and sale of Securities;

(d)

each Grantor is in compliance with its obligations under Section 4 hereof; and

(e)

each Material Registered Exclusive Copyright License is listed in Schedule 5.2 (as such schedule may be amended or supplemented from time to time).

5.5

Pledged Equity Interests, Investment Related Property

.

(a)

it is the record and beneficial owner of the Pledged Equity Interests included in the Collateral free of all Liens, rights or claims of other Persons (other than Permitted Liens) and 

EXHIBIT G-17

there are no outstanding warrants, options or other rights to purchase, or shareholder, voting trust or similar agreements outstanding with respect to, or property that is convertible into, or that requires the issuance or sale of, any Pledged Equity Interests;

(b)

no consent of any Person including any other general or limited partner, any other member of a limited liability company, any other shareholder or any other trust beneficiary is necessary or desirable in connection with the creation, perfection or first priority status (subject in the case of priority only to Permitted Liens) of the security interest of the Collateral Agent in any Pledged Equity Interests included in the Collateral or the exercise by the Collateral Agent of the voting or other rights provided for in this Agreement or the exercise of remedies in respect thereof except such as have been obtained; and

(c)

except as set forth on Schedule 5.5 (as such schedule may be amended or supplemented from time to time) the Pledged LLC Interests and Pledged Partnership Interests do not represent interests (i) that by their terms provide that they are securities governed by the uniform commercial code of an applicable jurisdiction, (ii) that are dealt in or traded on securities exchanges or markets or (iii) in issuers that are registered as investment companies.

SECTION 6.

COVENANTS AND AGREEMENTS.

Each Grantor hereby covenants and agrees that:

6.1

Grantor Information & Status

.  Without limiting any prohibitions or restrictions on mergers or other transactions set forth in the Credit Agreement, it shall not change such Grantor’s (i) name, (ii) type of organization, (iii) sole place of business (or principal residence if such Grantor is a natural person), but only if perfection by filing requires such information, (iv) chief executive office, but only if perfection by filing requires such information and (v) jurisdiction of organization unless it (a) promptly notifies the Collateral Agent in writing of such change and provides the Collateral Agent with such other information in connection therewith as the Collateral Agent may reasonably request and (b) has taken (or takes within any applicable statutory period) all actions necessary or advisable to maintain the continuous validity, perfection and the same or better priority of the Collateral Agent’s security interest in the Collateral granted or intended to be granted and agreed to hereby.  In connection with any such change in Grantor’s status set forth above, each Grantor agrees to promptly execute and deliver to the Collateral Agent any supplements to schedules hereto that are reasonably requested by the Collateral Agent.

6.2

Collateral Identification; Special Collateral; Defense of Collateral

.

(a)

In the event that it hereafter acquires any Collateral of a type described in Section 5.2(b) hereof, it shall promptly notify there Collateral Agent thereof in writing and take such actions and execute such documents and make such filings all at Grantor’s expense as the Collateral Agent may reasonably request in order to ensure that the Collateral Agent has a valid, perfected, first priority security interest in such Collateral, subject in the case of priority only, to any Permitted Liens.  Notwithstanding the foregoing, no Grantor shall be required to notify the Collateral Agent or take any such action unless such Collateral is of a material value or is material to such Grantor’s business.

(b)

In the event that it hereafter acquires or has any Commercial Tort Claim in excess of $1,000,000 individually it shall deliver to the Collateral Agent a completed Pledge Supplement together with all Supplements to Schedules thereto, identifying such new Commercial Tort Claims.

EXHIBIT G-18

(c)

Such Grantor shall defend the Collateral against all Persons at any time claiming any interest therein (other than Permitted Liens).

6.3

Status of Security Interest

.

(a)

Subject to the limitations set forth in subsection (b) of this Section 6.3, each Grantor shall maintain the security interest of the Collateral Agent hereunder in all Collateral as valid, perfected, first priority Liens (subject, in the case of priority only, to Permitted Liens).

(b)

Notwithstanding the foregoing, no Grantor shall be required to take any action to perfect any Collateral that can only be perfected by (i) Control, except as and to the extent specified in Section 4 hereof, (ii) foreign filings with respect to Intellectual Property, except as and to the extent specified in Section 4 hereof or (iii) filings with registrars of motor vehicles or similar governmental authorities with respect to goods covered by a certificate of title.

6.4

Goods & Receivables

.

(a)

Following and during the continuation of an Event of Default, such Grantor shall not (w) grant any extension or renewal of the time of payment of any Receivable, (x) compromise or settle any dispute, claim or legal proceeding with respect to any Receivable for less than the total unpaid balance thereof, (y) release, wholly or partially, any Person liable for the payment thereof, or (z) allow any credit or discount thereon.

(b)

At any time following the occurrence and during the continuation of an Event of Default, the Collateral Agent may:  (i) direct the Account Debtors under any Receivables to make payment of all amounts due or to become due to such Grantor thereunder directly to the Collateral Agent; (ii) notify, or require any Grantor to notify, each Person maintaining a lockbox or similar arrangement to which Account Debtors under any Receivables have been directed to make payment to remit all amounts representing collections on checks and other payment items from time to time sent to or deposited in such lockbox or other arrangement directly to the Collateral Agent; and (iii) enforce, at the expense of such Grantor, collection of any such Receivables and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done.  If the Collateral Agent notifies any Grantor that it has elected to collect the Receivables in accordance with the preceding sentence, any payments of Receivables received by such Grantor shall be forthwith (and in any event within two (2) Business Days) delivered by such Grantor in the exact form received, duly indorsed by such Grantor, to the Collateral Agent, and until so turned over, all amounts and proceeds (including checks and other instruments) received by such Grantor in respect of the Receivables, any Supporting Obligation or Collateral Support shall be received in trust for the benefit of the Collateral Agent hereunder and shall be segregated from other funds of such Grantor and such Grantor shall not adjust, settle or compromise the amount or payment of any Receivable, or release wholly or partly any Account Debtor or obligor thereof, or allow any credit or discount thereon.

6.5

Pledged Equity Interests, Investment Related Property

.

(a)

except as provided in the next sentence, in the event such Grantor receives any dividends, interest or distributions on any Pledged Equity Interest or other Investment Related Property, upon the merger, consolidation, liquidation or dissolution of any issuer of any Pledged Equity Interest or Investment Related Property, then (a) such dividends, interest or distributions and securities or other property shall be included in the definition of Collateral without further action and (b) shall comply with the requirements of Section 4 to the extent applicable to such property.  

EXHIBIT G-19

Notwithstanding the foregoing, so long as no Event of Default shall have occurred and be continuing, the Collateral Agent authorizes each Grantor to retain all cash dividends and distributions and all payments of interest.

(b)

Voting.  So long as no Event of Default shall have occurred and be continuing, each Grantor shall be entitled to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Investment Related Property or any part thereof.  Upon the occurrence and during the continuation of an Event of Default and upon two (2) Business Days prior written notice from the Collateral Agent to such Grantor of the Collateral Agent’s intention to exercise such rights:

(i)

all rights of each Grantor to exercise or refrain from exercising the voting and other consensual rights which it would otherwise be entitled to exercise pursuant hereto shall cease and all such rights shall thereupon become vested in the Collateral Agent who shall thereupon have the sole right to exercise such voting and other consensual rights; and

(ii)

in order to permit the Collateral Agent to exercise the voting and other consensual rights which it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions which it may be entitled to receive hereunder: (1) each Grantor shall promptly execute and deliver (or cause to be executed and delivered) to the Collateral Agent all proxies, dividend payment orders and other instruments as the Collateral Agent may from time to time reasonably request and (2) each Grantor acknowledges that the Collateral Agent may utilize the power of attorney set forth in Section 9.1.

(c)

If any issuer of any Pledged Partnership Interests or Pledged LLC Interests which are not securities (for purposes of the UCC) on the date hereof elects to or otherwise takes any action to cause such Pledged Partnership Interests or Pledged LLC Interests to be treated as securities for purposes of the UCC; such Grantor owning such Pledged Partnership Interests or Pledged LLC Interests shall promptly notify the Collateral Agent in writing of any such election or action and, in such event, shall take all steps necessary or advisable to establish the Collateral Agent’s “control” thereof.

6.6

Liens on Foreign Material Intellectual Property

.  Unless it (i) on or prior to such time records a Lien in favor of the Collateral Agent on the same Material Intellectual Property or (ii) obtains the Administrative Agent’s prior written consent to the recordation of such Lien, it shall not record or permit to be recorded any Liens on any foreign applications or registrations for Intellectual Property constituting Material Intellectual Property, whether now owned or hereafter acquired or licensed (with the exception of Liens granted pursuant to any Loan Document in favor of the Collateral Agent), or take any other actions that would perfect such a Lien in such Material Intellectual Property that is registered in a foreign jurisdiction.

SECTION 7.

THE 2023 DEBENTURES OBLIGATIONS.

7.1

Equal and Ratable Security

.

(a)

This Agreement and the other Loan Documents (i) are intended to secure the 2023 Debentures Obligations equally and ratably with all other Obligations to the extent (but only to the extent) required by Section 1008 of the 2023 Debentures Indenture, and (ii) shall be construed and enforced to give effect to such intention.

EXHIBIT G-20

(b)

In furtherance of clause (a) above, to the extent that this Agreement or any other Loan Document grants a security interest in or Lien on any Collateral, then such security interest or Lien secures the 2023 Debentures Obligations equally and ratably with the Secured Obligations, to the extent (but only to the extent) required by Section 1008 of the 2023 Debentures Indenture.

7.2

Application of Proceeds

.

(a)

Notwithstanding any provisions of this Agreement or any other Loan Document to the contrary, the Collateral Agent shall apply any proceeds of Collateral that are to be distributed pursuant to Section 10.2, or the analogous clause of any other Loan Document, to the payment of 2023 Debentures Obligations equally and ratably with the Secured Obligations.

(b)

In making the determinations and allocations required by clause (a) above, the Collateral Agent may conclusively rely upon information supplied by the Debenture Trustee, together with its successors and permitted assigns, as to the amounts of unpaid principal and interest and other amounts outstanding with respect to the 2023 Debentures Obligations under the 2023 Debentures Indenture, and the Collateral Agent shall have no liability to any of the 2023 Debentures Holders for actions taken in reliance on such information, provided that nothing in this sentence shall prevent any Loan Party from contesting any amounts claimed by the Debenture Trustee in any information so supplied.  In addition, for purposes of making the allocations required by clause (a) above, with respect to any amount that is denominated in any currency other than Dollars, the Collateral Agent shall, on the date of the applicable distribution, convert such amount into an amount of Dollars based upon the relevant Exchange Rate as of such date determined by the Collateral Agent in its reasonable discretion.  All distributions made by the Collateral Agent pursuant to Section 10.2 and clause (a) above shall be (subject to any decree of any court of competent jurisdiction) final (absent manifest error), and the Collateral Agent shall have no duty to inquire as to the application by the Debenture Trustee of any amounts distributed to it for distribution to any 2023 Debentures Holders.

7.3

Application of Funds Distributable to 2023 Debentures Holders; Delivery of 2023 Debentures Indenture

.

(a)

The Collateral Agent shall make all payments and distributions that are to be made by it hereunder on account of the 2023 Debentures Obligations to the Debenture Trustee for redistribution to the 2023 Debentures Holders.

(b)

If at any time any funds collected or received by the Collateral Agent pursuant to this Agreement are distributable to the Debenture Trustee, and if the Debenture Trustee shall notify the Collateral Agent in writing that no provision is made under the 2023 Debentures Indenture for the application by the Debenture Trustee of such funds (whether because the obligations issued under the 2023 Debentures Indenture have not become due and payable or otherwise) and that the 2023 Debentures Indenture does not effectively provide for the receipt and the holding by the Debenture Trustee of such funds pending the application thereof, then the Collateral Agent shall hold all such amounts so distributable in trust solely for the Debenture Trustee (in its capacity as trustee) and for no other purpose until such time as the Debenture Trustee shall request in writing the delivery thereof by the Collateral Agent for application pursuant to such 2023 Debentures Indenture.  Notwithstanding the foregoing, if, at any time, all the 2023 Debentures Obligations in respect of which any funds are held in trust by the Collateral Agent pursuant to this clause (b) cease to be outstanding for any reason, then such funds will be applied by the Collateral Agent in accordance with Section 10.2.

EXHIBIT G-21

(c)

On or prior to the Closing Date, the U.S. Borrower shall have delivered to the Collateral Agent a true and complete copy of the 2023 Debentures Indenture, including all amendments thereto entered into on or prior to the Closing Date.  The U.S. Borrower shall deliver to the Collateral Agent, promptly upon the execution thereof, a true and complete copy of any amendment, modification or supplement to the 2023 Debentures Indenture entered into after the Closing Date.

7.4

Information as to the Debenture Trustee

.  The U.S. Borrower shall deliver to the Collateral Agent from time to time after the date hereof upon request of the Collateral Agent a list setting forth as of a date not more than 30 days prior to the date of such delivery, (a) the aggregate unpaid principal amount of the 2023 Debentures Obligations outstanding under the 2023 Debentures Indenture and (b) to the extent known to the U.S. Borrower, the name and address of the Debenture Trustee.  In addition, the U.S. Borrower will promptly notify the Collateral Agent to the extent known to the U.S. Borrower of each change in the identity of the Debenture Trustee.  Promptly following the Closing Date, the U.S. Borrower will request that the Debenture Trustee deliver to the Collateral Agent the names of the officers authorized to give directions hereunder on its behalf.  The U.S. Borrower will request that the Debenture Trustee notify the Collateral Agent of any change of the officers authorized to give directions hereunder on its behalf prior to the date of any such change. If the Collateral Agent does not receive the names of the officers of the Debenture Trustee authorized to give directions hereunder on its behalf, the Collateral Agent may rely on any person purporting to be authorized to give directions hereunder on behalf of such party after two (2) business days prior notice to the Debenture Trustee and the U.S. Borrower of the name of any person purporting to be authorized to give direction on behalf of the Debenture Trustee.  If the Collateral Agent is not informed of changes of the officers of the Debenture Trustee authorized to give directions hereunder on its behalf, the Collateral Agent may rely on the information previously provided to the Collateral Agent.

7.5

Termination of Equal and Ratable Security Provisions

.  This Section 7 shall cease to apply if and when (a) all of the 2023 Debentures Obligations have been fully satisfied and discharged or (b) the 2023 Debentures Indenture shall have been amended such that the 2023 Debentures Obligations are no longer required to be secured equally and ratably with the Obligations.

7.6

Agreements with the Debenture Trustee

.

(a)

By accepting the benefits of this Agreement, the Debenture Trustee on behalf of itself and the 2023 Debentures Holders shall be bound by the terms hereof.

(b)

Neither the Debenture Trustee nor the 2023 Debentures Holders shall be entitled to, and shall not, (i) direct the actions of the Collateral Agent hereunder, (ii) take any action, or commence any legal proceeding seeking, to require, compel or cause the Collateral Agent to enforce any provision of this Agreement against any Grantor or to exercise any remedy hereunder, (iii) take any action, or commence any legal proceeding seeking, to prevent or enjoin the Collateral Agent from taking any action (including, without limitation, the enforcement of any provisions of this Agreement against any Grantor, the exercise of any remedy hereunder, the release of any Collateral hereunder or the consent to any amendment or modification of this Agreement or the grant of any waiver hereunder), or refraining from taking any such action, in accordance with this Agreement or (iv) take any action, or commence any legal proceeding seeking, to delay, hinder or otherwise impair the Collateral Agent in taking any such action in accordance with this Agreement.

EXHIBIT G-22

SECTION 8.

FURTHER ASSURANCES; ADDITIONAL GRANTORS.

8.1

Further Assurances

.

(a)

Each Grantor agrees that from time to time, at the expense of such Grantor, that it shall promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Collateral Agent may reasonably request, in order to create and/or maintain the validity, perfection or priority of and protect any security interest granted or purported to be granted hereby or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Grantor shall:

(i)

file such financing or continuation statements, or amendments thereto, record security interests in Intellectual Property and execute and deliver such other agreements, instruments, endorsements, powers of attorney or notices, as may be necessary or desirable, or as the Collateral Agent may reasonably request, in order to effect, reflect, perfect and preserve the security interests granted or purported to be granted hereby;

(ii)

take all actions necessary to ensure the recordation of appropriate evidence of the liens and security interest granted hereunder in any Intellectual Property with any intellectual property registry located in the United States or the Netherlands in which said Intellectual Property is registered or issued or in which an application for registration or issuance is pending, including, without limitation, the United States Patent and Trademark Office, the United States Copyright Office, the various Secretaries of State, and the Benelux Trademark Register;

(iii)

after the occurrence and during the continuance of an Event of Default, upon request by the Collateral Agent, assemble the Collateral and allow inspection of the Collateral by the Collateral Agent, or persons designated by the Collateral Agent;

(iv)

at the Collateral Agent’s request, appear in and defend any action or proceeding that may affect such Grantor’s title to or the Collateral Agent’s security interest in all or any part of the Collateral; and

(v)

furnish the Collateral Agent with such information regarding the Collateral, including, without limitation, the location thereof, as the Collateral Agent may reasonably request from time to time.

(b)

Each Grantor hereby authorizes the Collateral Agent to file a Record or Records, including, without limitation, financing or continuation statements, Intellectual Property Security Agreements and amendments and supplements to any of the foregoing, in any jurisdictions and with any filing offices as the Collateral Agent may determine, in its sole discretion, are necessary or advisable to perfect or otherwise protect the security interest granted to the Collateral Agent herein.  Such financing statements may describe the Collateral in the same manner as described herein or may contain an indication or description of collateral that describes such property in any other manner as the Collateral Agent may determine, in its sole discretion, is necessary, advisable or prudent to ensure the perfection of the security interest in the Collateral granted to the Collateral Agent herein, including, without limitation, describing such property as “all assets, whether now owned or hereafter acquired, developed or created” or words of similar effect.  Each Grantor shall furnish to the Collateral Agent from time to time statements and schedules further identifying and describing the 

EXHIBIT G-23

Collateral and such other reports in connection with the Collateral as the Collateral Agent may reasonably request, all in reasonable detail.

(c)

Each Grantor hereby authorizes the Collateral Agent to modify this Agreement after obtaining such Grantor’s approval of or signature to such modification by amending Schedule 5.2 (as such schedule may be amended or supplemented from time to time) to include reference to any right, title or interest in any existing Intellectual Property or any Intellectual Property acquired or developed by any Grantor after the execution hereof or to delete any reference to any right, title or interest in any Intellectual Property in which any Grantor no longer has or claims any right, title or interest.

8.2

Additional Grantors

.  From time to time subsequent to the date hereof, additional Persons may become parties hereto as additional Grantors (each, an “Additional Grantor”), by executing a Pledge Supplement.  Upon delivery of any such Pledge Supplement to the Collateral Agent, notice of which is hereby waived by Grantors, each Additional Grantor shall be a Grantor and shall be as fully a party hereto as if Additional Grantor were an original signatory hereto.  Each Grantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Grantor hereunder, nor by any election of Collateral Agent not to cause any Subsidiary of Borrower to become an Additional Grantor hereunder.  This Agreement shall be fully effective as to any Grantor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Grantor hereunder.

SECTION 9.

COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.

9.1

Power of Attorney

.  Each Grantor hereby irrevocably appoints the Collateral Agent (such appointment being coupled with an interest) as such Grantor’s attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor, the Collateral Agent or otherwise, from time to time in the Collateral Agent’s discretion to take any action and to execute any instrument that the Collateral Agent may deem reasonably necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, the following:

(a)

upon the occurrence and during the continuance of any Event of Default, to obtain and adjust insurance required to be maintained by such Grantor or paid to the Collateral Agent pursuant to the Credit Agreement;

(b)

upon the occurrence and during the continuance of any Event of Default, to ask for, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral;

(c)

upon the occurrence and during the continuance of any Event of Default, to receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with clause (b) above;

(d)

upon the occurrence and during the continuance of any Event of Default, to file any claims or take any action or institute any proceedings that the Collateral Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Collateral Agent with respect to any of the Collateral;

(e)

to prepare and file any UCC financing statements against such Grantor as debtor;

EXHIBIT G-24

(f)

to prepare, sign, and file for recordation in any intellectual property registry, appropriate evidence of the lien and security interest granted herein in any Intellectual Property in the name of such Grantor as debtor;

(g)

upon the occurrence and during the continuance of an Event of Default, to take or cause to be taken all actions necessary to perform or comply or cause performance or compliance with the terms of this Agreement, including, without limitation, access to pay or discharge taxes or Liens (other than Permitted Liens) levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by the Collateral Agent in its sole discretion, any such payments made by the Collateral Agent to become obligations of such Grantor to the Collateral Agent, due and payable immediately without demand; and

(h)

generally to sell, transfer, lease, license, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Collateral Agent were the absolute owner thereof for all purposes, and to do, at the Collateral Agent’s option and such Grantor’s expense, at any time or from time to time, all acts and things that the Collateral Agent deems reasonably necessary to protect, preserve or realize upon the Collateral and the Collateral Agent’s security interest therein in order to effect the intent of this Agreement, all as fully and effectively as such Grantor might do.

9.2

No Duty on the Part of Collateral Agent, Secured Parties, Debenture Trustee or 2023 Debentures Holders

.  The powers conferred on the Collateral Agent hereunder are solely to protect the interests of the Secured Parties (and, to the extent provided by Section 7.1, the Debenture Trustee on behalf of the 2023 Debentures Holders) in the Collateral and shall not impose any duty upon the Collateral Agent, any other Secured Party, the Debenture Trustee or any 2023 Debentures Holder to exercise any such powers.  The Collateral Agent, the other Secured Parties, the Debenture Trustee and the 2023 Debentures Holders shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct.

9.3

Appointment  Pursuant to  Credit  Agreement

.  The  Collateral Agent has been appointed as collateral agent pursuant to the Credit Agreement.  The rights, duties, privileges, immunities and indemnities of the Collateral Agent hereunder are subject to the provisions of the Credit Agreement.

SECTION 10.

REMEDIES.

10.1

Generally

.

(a)

If any Event of Default shall have occurred and be continuing, the Collateral Agent may exercise in respect of the Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it at law or in equity, all the rights and remedies of the Collateral Agent on default under the UCC (whether or not the UCC applies to the affected Collateral) to collect, enforce or satisfy any Secured Obligations (and, to the extent provided in Section 7.1, the 2023 Debentures Obligations) then owing, whether by acceleration or otherwise, and also may pursue any of the following separately, successively or simultaneously:

(i)

require any Grantor to, and each Grantor hereby agrees that it shall at its expense and promptly upon request of the Collateral Agent forthwith, assemble all or part 

EXHIBIT G-25

of the Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at a place to be designated by the Collateral Agent that is reasonably convenient to both parties;

(ii)

enter onto the property where any Collateral is located and take possession thereof with or without judicial process;

(iii)

prior to the disposition of the Collateral, store, process, repair or recondition the Collateral or otherwise prepare the Collateral for disposition in any manner to the extent the Collateral Agent deems appropriate; and

(iv)

without notice except as specified below or under the UCC, sell, assign, lease, license (on an exclusive or nonexclusive basis) or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as the Collateral Agent may deem commercially reasonable.

(b)

The Collateral Agent or any other Secured Party may be the purchaser of any or all of the Collateral at any public or private (to the extent that the portion of the Collateral being privately sold is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations) sale in accordance with the UCC and the Collateral Agent, as collateral agent for and representative of the Secured Parties (and, to the extent provided in Section 7.1, the Debenture Trustee on behalf of the 2023 Debentures Holders), shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such sale made in accordance with the UCC, to use and apply any of the Secured Obligations as a credit on account of the purchase price for any Collateral payable by the Collateral Agent at such sale.  Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.  Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification.  The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given.  The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.  Each Grantor agrees that it would not be commercially unreasonable for the Collateral Agent to dispose of the Collateral or any portion thereof by using Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets.  Each Grantor hereby waives any claims against the Collateral Agent arising by reason of the fact that the price at which any Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if the Collateral Agent accepts the first offer received and does not offer such Collateral to more than one offeree.  If the proceeds of any sale or other disposition of the Collateral are insufficient to pay all the Secured Obligations (or, to the extent provided in Section 7.1, the 2023 Debentures Obligations), Grantors shall be liable for the deficiency and the fees of any attorneys employed by the Collateral Agent to collect such deficiency.  Each Grantor further agrees that a breach of any of the covenants contained in this Section will cause irreparable injury to the Collateral Agent, that the Collateral Agent has no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section shall be specifically enforceable against such 

EXHIBIT G-26

Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no default has occurred giving rise to the Secured Obligations becoming due and payable prior to their stated maturities.  Nothing in this Section shall in any way limit the rights of the Collateral Agent hereunder.

(c)

The Collateral Agent may sell the Collateral without giving any warranties as to the Collateral.  The Collateral Agent may specifically disclaim or modify any warranties of title or the like.  This procedure will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

(d)

The Collateral Agent shall have no obligation to marshal any of the Collateral.

10.2

Application of Proceeds

.  Except as expressly provided elsewhere in this Agreement, all proceeds received by the Collateral Agent in respect of any sale of, any collection from, or other realization upon all or any part of the Collateral shall be applied in full or in part by the Collateral Agent against the Secured Obligations (and, to the extent provided in Section 7.1, the 2023 Debentures Obligations) in the following order of priority:  first, to the payment of all costs and expenses of such sale, collection or other realization, including reasonable compensation to the Collateral Agent and its agents and counsel, and all other expenses, liabilities and advances made or incurred by the Collateral Agent in connection therewith, and all amounts for which the Collateral Agent is entitled to indemnification hereunder (in its capacity as the Collateral Agent and not as a Lender) and all advances made by the Collateral Agent hereunder for the account of the applicable Grantor, and to the payment of all costs and expenses paid or incurred by the Collateral Agent in connection with the exercise of any right or remedy hereunder or under the Credit Agreement, all in accordance with the terms hereof or thereof; second, to the extent of any excess of such proceeds, pro rata to the payment of all other Secured Obligations in accordance with Section 2.15 of the Credit Agreement (and, to the extent provided in Section 7.1, the 2023 Debentures Obligations); and third, to the extent of any excess of such proceeds, to the payment to or upon the order of the applicable Grantor or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

10.3

Sales on Credit

.  If Collateral Agent sells any of the Collateral upon credit, Grantor will be credited only with payments actually made by purchaser and received by Collateral Agent and applied to indebtedness of the purchaser.  In the event the purchaser fails to pay for the Collateral, Collateral Agent may resell the Collateral and Grantor shall be credited with proceeds of the sale.

10.4

Investment Related Property

.  Each Grantor recognizes that, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws, the Collateral Agent may be compelled, with respect to any sale of all or any part of the Investment Related Property conducted without prior registration or qualification of such Investment Related Property under the Securities Act and/or such state securities laws, to limit purchasers to those who will agree, among other things, to acquire the Investment Related Property for their own account, for investment and not with a view to the distribution or resale thereof.  Each Grantor acknowledges that any such private sale may be at prices and on terms less favorable than those obtainable through a public sale without such restrictions (including a public offering made pursuant to a registration statement under the Securities Act) and, notwithstanding such circumstances, each Grantor agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that the Collateral Agent shall have no obligation to engage in public sales and no obligation to delay the sale of any Investment Related Property for the period of time necessary to permit the issuer thereof to register it for a form of public sale requiring registration under the Securities Act or under applicable state 

EXHIBIT G-27

securities laws, even if such issuer would, or should, agree to so register it.  If the Collateral Agent determines to exercise its right to sell any or all of the Investment Related Property, upon written request, each Grantor shall and shall cause each issuer of any Pledged Stock to be sold hereunder, each partnership and each limited liability company from time to time to furnish to the Collateral Agent all such information as the Collateral Agent may request in order to determine the number and nature of interest, shares or other instruments included in the Investment Related Property which may be sold by the Collateral Agent in exempt transactions under the Securities Act and the rules and regulations of the Securities and Exchange Commission thereunder, as the same are from time to time in effect.

10.5

Grant of Intellectual Property License

.  For  the purpose of enabling the Collateral Agent, during the continuance of an Event of Default, to exercise rights and remedies under Section 10 hereof at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby grants to the Collateral Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to such Grantor), subject, in the case of Trademarks, to sufficient rights to quality control and inspection in favor of such Grantor to avoid the risk of invalidation of such Trademarks, to use, assign, license or sublicense any of the Intellectual Property now owned or hereafter acquired by such Grantor, wherever the same may be located.  Such license shall include access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout hereof.

10.6

Intellectual Property

.

(a)

Anything contained herein to the contrary notwithstanding, in addition to the other rights and remedies provided herein, upon the occurrence and during the continuation of an Event of Default:

(i)

the Collateral Agent shall have the right (but not the obligation) to bring suit or otherwise commence any action or proceeding in the name of any Grantor, the Collateral Agent or otherwise, in the Collateral Agent’s sole discretion, to enforce any Intellectual Property rights of such Grantor, in which event such Grantor shall, at the request of the Collateral Agent, do any and all lawful acts and execute any and all documents required by the Collateral Agent in aid of such enforcement, and such Grantor shall promptly, upon demand, reimburse and indemnify the Collateral Agent as provided in Section 13 hereof in connection with the exercise of its rights under this Section 10.6, and, to the extent that the Collateral Agent shall elect not to bring suit to enforce any Intellectual Property rights as provided in this Section 10.6, each Grantor agrees to use all reasonable measures, whether by action, suit, proceeding or otherwise, to prevent the infringement, misappropriation, dilution or other violation of any of such Grantor’s rights in the Intellectual Property by others and for that purpose agrees to diligently maintain any action, suit or proceeding against any Person so infringing, misappropriating, diluting or otherwise violating as shall be necessary to prevent such infringement, misappropriation, dilution or other violation;

(ii)

upon written demand from the Collateral Agent, each Grantor shall grant, assign, convey or otherwise transfer to the Collateral Agent or such Collateral Agent’s designee all of such Grantor’s right, title and interest in and to any Intellectual Property and shall execute and deliver to the Collateral Agent such documents as are necessary or appropriate to carry out the intent and purposes of this Agreement;

EXHIBIT G-28

(iii)

each Grantor agrees that such an assignment and/or recording shall be applied to reduce the Secured Obligations (and, to the extent required by Section 7.1, the 2023 Debentures Obligations) outstanding only to the extent that the Collateral Agent (or any other Secured Party) receives cash proceeds in respect of the sale of, or other realization upon, any such Intellectual Property;

(iv)

within five (5) Business Days after written notice from the Collateral Agent, each Grantor shall make available to the Collateral Agent, to the extent within such Grantor’s power and authority, such personnel in such Grantor’s employ on the date of such Event of Default as the Collateral Agent may reasonably designate, by name, title or job responsibility, to permit such Grantor to continue, directly or indirectly, to produce, advertise and sell the products and services sold or delivered by such Grantor under or in connection with any Trademarks or Trademark Licenses, such persons to be available to perform their prior functions on the Collateral Agent’s behalf and to be compensated by the Collateral Agent at such Grantor’s expense on a per diem, pro-rata basis consistent with the salary and benefit structure applicable to each as of the date of such Event of Default; and

(v)

the Collateral Agent shall have the right to notify, or require each Grantor to notify, any obligors with respect to amounts due or to become due to such Grantor in respect of any Intellectual Property of such Grantor, of the existence of the security interest created herein, to direct such obligors to make payment of all such amounts directly to the Collateral Agent, and, upon such notification and at the expense of such Grantor, to enforce collection of any such amounts and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done:

(1)

all amounts and proceeds (including checks and other instruments) received by Grantor in respect of amounts due to such Grantor in respect of the Collateral or any portion thereof shall be received in trust for the benefit of the Collateral Agent hereunder, shall be segregated from other funds of such Grantor and shall be forthwith paid over or delivered to the Collateral Agent in the same form as so received (with any necessary endorsement) to be held as cash Collateral and applied as provided by Section 10.7 hereof; and

(2)

Grantor shall not adjust, settle or compromise the amount or payment of any such amount or release wholly or partly any obligor with respect thereto or allow any credit or discount thereon.

(b)

If (i) an Event of Default shall have occurred and, by reason of cure, waiver, modification, amendment or otherwise, no longer be continuing, (ii) no other Event of Default shall have occurred and be continuing, (iii) an assignment or other transfer to the Collateral Agent of any rights, title and interests in and to any Intellectual Property of such Grantor shall have been previously made and shall have become absolute and effective, and (iv) the Secured Obligations shall not have become immediately due and payable, upon the written request of any Grantor, the Collateral Agent shall promptly execute and deliver to such Grantor, at such Grantor’s sole cost and expense, such assignments or other transfer as may be necessary to reassign to such Grantor any such rights, title and interests as may have been assigned to the Collateral Agent as aforesaid, subject to any disposition thereof that may have been made by the Collateral Agent; provided, after giving effect to such reassignment, the Collateral Agent’s security interest granted pursuant hereto, as well as all other rights and remedies of the Collateral Agent granted hereunder, shall continue to be in full force and effect; and provided further, the rights, title and interests so reassigned shall be free and clear of any other Liens granted by or on behalf of the Collateral Agent and the Secured Parties.

EXHIBIT G-29

10.7

Cash Proceeds

.  If  any Event of  Default  shall  have  occurred  and  be continuing,  in addition to the rights of the Collateral Agent specified in Section 6.5 with respect to payments of Receivables, all proceeds of any Collateral received by any Grantor consisting of cash, checks and other near-cash items (collectively, “Cash Proceeds”) shall be held by such Grantor in trust for the Collateral Agent, segregated from other funds of such Grantor, and shall, forthwith upon receipt by such Grantor be turned over to the Collateral Agent in the exact form received by such Grantor (duly indorsed by such Grantor to the Collateral Agent, if required) and held by the Collateral Agent.  Any Cash Proceeds received by the Collateral Agent (whether from a Grantor or otherwise) may, in the sole discretion of the Collateral Agent, (A) be held by the Collateral Agent for the ratable benefit of the Secured Parties (and, to the extent provided in Section 7.1, the Debenture Trustee on behalf of the 2023 Debentures Holders), as collateral security for the Secured Obligations (whether matured or unmatured) (and, to the extent provided in Section 7.1, the 2023 Debentures Obligations) and/or (B) then or at any time thereafter be applied by the Collateral Agent against the Secured Obligations (and, to the extent provided in Section 7.1, the 2023 Debentures Obligations) then due and owing.

10.8

Waiver of Certain Defenses

.  Each Grantor hereby confirms that the waivers contained in Section 7.05 of the Credit Agreement apply, as if fully set forth herein, with respect to any grant of security provided by such Grantor in respect of the 2023 Debentures Obligations.

SECTION 11.

COLLATERAL AGENT.

The Collateral Agent has been appointed to act as Collateral Agent hereunder by Lenders and, by their acceptance of the benefits hereof, the other Secured Parties and the Debenture Trustee on behalf of the 2023 Debentures Holders. The Collateral Agent shall be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking any action (including, without limitation, the release or substitution of Collateral), solely in accordance with this Agreement and the Credit Agreement.  In furtherance of the foregoing provisions of this Section, each Secured Party, the Debenture Trustee and each 2023 Debentures Holder, by its acceptance of the benefits hereof, agrees that it shall have no right individually to realize upon any of the Collateral hereunder, it being understood and agreed by such Secured Party, the Debenture Trustee and such 2023 Debentures Holder that all rights and remedies hereunder may be exercised solely by the Collateral Agent for the benefit of Secured Parties (and, to the extent provided in Section 7.1, the Debenture Trustee on behalf of the 2023 Debentures Holders) in accordance with the terms of this Section.  The provisions of the Credit Agreement relating to the Collateral Agent including, without limitation, the provisions relating to resignation or removal of the Collateral Agent and the powers and duties and immunities of the Collateral Agent are incorporated herein by this reference and shall survive any termination of the Credit Agreement.

SECTION 12.

CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.

This Agreement shall create a continuing security interest in the Collateral and shall remain in full force and effect until the Payment in Full of all Secured Obligations (subject to the Borrower’s right pursuant to Section 9.08(d) of the Credit Agreement to request termination of the security interest upon Payment in Full of all of the Secured Obligations), the cancellation or termination of the Commitments and the cancellation, expiration or Cash Collateralization of all outstanding Letters of Credit, be binding upon each Grantor, its successors and assigns, and inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent and its successors, transferees and assigns.  Without limiting the generality of the foregoing, but subject to the terms of the Credit Agreement, any Lender may assign or otherwise transfer any Loans held by it to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to Lenders herein or otherwise.  Upon the Payment in Full of all Secured 

EXHIBIT G-30

Obligations, the security interest granted hereby shall automatically terminate hereunder and of record and all rights to the Collateral shall revert to the Grantors.  Upon any such termination the Collateral Agent shall, at the Grantors’ expense, promptly execute and deliver to the Grantors or otherwise authorize the filing of such documents as the Grantors shall reasonably request, including financing statement amendments to evidence such termination.  A Subsidiary shall automatically be released from its Obligations hereunder and the security interest in the Collateral of such Subsidiary shall be automatically released upon the consummation of any transaction permitted by the Credit Agreement, as a result of which such Subsidiary ceases to be a guarantor under the Credit Agreement. Upon any disposition of property, including Equity Interests in Subsidiaries, permitted by the Credit Agreement, the Liens granted herein shall be deemed to be automatically released and such property shall automatically revert to the applicable Grantor with no further action on the part of any Person.  The Collateral Agent shall, at the applicable Grantor’s expense, promptly execute and deliver or otherwise authorize the filing of such documents as such Grantor shall reasonably request, in form and substance reasonably satisfactory to the Collateral Agent, including financing statement amendments to evidence such release.

SECTION 13.

STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM.

The powers conferred on the Collateral Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers.  Except for the exercise of reasonable care in the custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.  The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Collateral Agent accords its own property.  Neither the Collateral Agent nor any of its directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or otherwise.  If any Grantor fails to perform any agreement contained herein, the Collateral Agent may itself perform, or cause performance of, such agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by each Grantor under Section 10.02 of the Credit Agreement.

SECTION 14.

MISCELLANEOUS.

Any notice required or permitted to be given under this Agreement shall be given in accordance with Section 10.01 of the Credit Agreement.  No failure or delay on the part of the Collateral Agent in the exercise of any power, right or privilege hereunder or under any other Loan Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege.  All rights and remedies existing under this Agreement and the other Loan Documents are cumulative to, and not exclusive of, any rights or remedies otherwise available.  In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.  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 would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists.  This Agreement shall be binding upon and inure to the 

EXHIBIT G-31

benefit of the Collateral Agent and the Grantors and their respective successors and assigns.  No Grantor shall, without the prior written consent of the Collateral Agent given in accordance with the Credit Agreement, assign any right, duty or obligation hereunder.  This Agreement and the other Loan Documents embody the entire agreement and understanding between the Grantors and the Collateral Agent and supersede all prior agreements and understandings between such parties relating to the subject matter hereof and thereof.  Accordingly, the Loan Documents may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties.  There are no unwritten oral agreements between the parties.  This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND ALL CLAIMS AND CONTROVERSIES ARISING OUT OF THE SUBJECT MATTER HEREOF WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PROVISIONS THAT WOULD RESULT IN THE APPLICATION OF ANY OTHER LAW (OTHER THAN ANY MANDATORY PROVISIONS OF THE UCC RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OF THE SECURITY INTEREST).

THE PROVISIONS OF THE CREDIT AGREEMENT UNDER THE HEADINGS “CONSENT TO JURISDICTION” AND “WAIVER OF JURY TRIAL” ARE INCORPORATED HEREIN BY THIS REFERENCE AND SUCH INCORPORATION SHALL SURVIVE ANY TERMINATION OF THE CREDIT AGREEMENT.

[signature pages follow]

EXHIBIT G-32

IN WITNESS WHEREOF, each Grantor and the Collateral Agent have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.

PHILLIPS-VAN HEUSEN CORPORATION,

as Grantor

By: 

Name:

Title:

TOMMY HILFIGER WHOLESALE INC.,

as Grantor

By: 

Name:

Title:

TOMMY HILFIGER LICENSING LLC,

as Grantor

By: 

Name:

Title:

TOMMY HILFIGER RETAIL, LLC,

as Grantor

By: 

Name:

Title:

TOMMY HILFIGER U.S.A., INC.,

as Grantor

By: 

Name:

Title:

[U.S. Pledge and Security Agreement Signature Page]

EXHIBIT G-33

BASSNET, INC.,

as Grantor

By: 

Name:

Title:

CLUETT, PEABODY & CO., INC.,

as Grantor

By: 

Name:

Title:

CLUETT PEABODY RESOURCES CORPORATION,

as Grantor

By: 

Name:

Title:

IZOD.COM INC.,

as Grantor

By: 

Name:

Title:

PHILLIPS-VAN HEUSEN PUERTO RICO LLC,

as Grantor

By: 

Name:

Title:

[U.S. Pledge and Security Agreement Signature Page]

EXHIBIT G-34

PVH FOREIGN HOLDINGS CORP.,

as Grantor

By: 

Name:

Title:

PVH EUROPE, INC.,

as Grantor

By: 

Name:

Title:

PVH PUERTO RICO, INC.,

as Grantor

By: 

Name:

Title:

PVH REALTY CORP.,

as Grantor

By: 

Name:

Title:

PVH RETAIL STORES INC.,

as Grantor

By: 

Name:

Title:

PVH NECKWEAR, INC.,

as Grantor

By: 

Name:

Title:

[U.S. Pledge and Security Agreement Signature Page]

EXHIBIT G-35

PVH WHOLESALE CORP.,

as Grantor

By: 

Name:

Title:

PVH WHOLESALE NEW JERSEY, INC.,

as Grantor

By: 

Name:

Title:

TOMCAN INVESTMENTS INC.,

as Grantor

By: 

Name:

Title:

KARL LAGERFELD LLC,

as Grantor

By: 

Name:

Title:

PVH PRINCE C.V. HOLDING CORPORATION,

as Grantor

By: 

Name:

Title:

[U.S. Pledge and Security Agreement Signature Page]

EXHIBIT G-36

BARCLAYS BANK PLC,

as Collateral Agent

By: 

Name:

Title:

[U.S. Pledge and Security Agreement Signature Page]

EXHIBIT G-37

SCHEDULE 5.1 TO

 U.S. PLEDGE AND SECURITY AGREEMENT

GENERAL INFORMATION

(A)

Full Legal Name, Type of Organization, Jurisdiction of Organization, Jurisdiction of Chief Executive Office/Sole Place of Business (or Residence if such Grantor is a Natural Person) and Organizational Identification Number of each Grantor:

					
	Full Legal Name

	Type of Organization

	Jurisdiction of Organization

	Jurisdiction of Chief Executive

Office/Sole Place of Business (or Residence if Grantor is a Natural Person)

	Organization I.D.#

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

(B)

Other Names (including any Trade Name or Fictitious Business Name) under which each Grantor currently conducts business:

		
	Full Legal Name

	Trade Name or Fictitious Business Name

	 
	 

	 
	 

	 
	 

(C)

Changes in Name, Jurisdiction of Organization, Chief Executive Office or Sole Place of Business (or Principal Residence if Grantor is a Natural Person) and Corporate Structure of Any Grantor and Other Names under which Any Grantor Has Done Business, in each case within the past five (5) years:

			
	Grantor

	Date of Change

	Description of Change

	 
	 
	 

	 
	 
	 

	 
	 
	 

EXHIBIT G – SCH. 5.1-1

SCHEDULE 5.2 TO

 U.S. PLEDGE AND SECURITY AGREEMENT

COLLATERAL IDENTIFICATION

I.  INVESTMENT RELATED PROPERTY

(A)

Pledged Stock:

								
	Grantor

	Stock Issuer

	Class of Stock

	Certificated (Y/N)

	Stock Certificate No. (if any)

	Par Value

	No. of Pledged Stock

	Percentage of Outstanding Stock of the Stock Issuer

	

	

	

	

	

	

	

	

Pledged LLC Interests:

						
	Grantor

	Limited Liability Company

	Certificated (Y/N)

	Certificate No. (if any)

	No. of Pledged Units

	Percentage of Outstanding LLC Interests of the Limited Liability Company

	

	

	

	

	

	

Pledged Partnership Interests:

						
	Grantor

	Partnership

	Type of Partnership Interests (e.g., general or limited)

	Certificated (Y/N)

	Certificate No.

(if any)

	Percentage of Outstanding Partnership Interests of the Partnership

	

	

	

	

	

	

Pledged Equity Interests not listed above:

						
	Grantor

	Entity

	Type of Equity Interests

	Certificated (Y/N)

	Certificate No.

(if any)

	Percentage of Outstanding Equity Interests of the Entity

	

	

	

	

	

	

EXHIBIT G - SCH. 5.2-1

Pledged Debt:

						
	

Grantor

	

Issuer

	Original Principal Amount

	Outstanding Principal Balance

	

Issue Date

	Maturity Date

	

	

	

	

	

	

Securities Account:

				
	Grantor

	Share of Securities Intermediary

	Account Number

	Account Name

	

	

	

	

Deposit Accounts:

				
	

Grantor

	

Name of Depositary Bank

	

Account Number

	

Account Name

	

	

	

	

Commodity Contracts and Commodity Accounts:

				
	Grantor

	Name of Commodity Intermediary

	Account Number

	Account Name

	

	

	

	

II. INTELLECTUAL PROPERTY

(A)

Copyrights:

					
	

Grantor

	

Jurisdiction

	

Title of Work

	

Registration Number (if any)

	

Registration Date (if any)

	

	

	

	

	

(B)

Copyright Licenses:

				
	Grantor

	Description of Copyright License

	Registration Number (if any) of underlying Copyright

	Name of Licensor

	

	

	

	

EXHIBIT G - SCH. 5.2-2

(C)

Patents:

					
	Grantor

	Jurisdiction

	Title of Patent

	Patent Number/(Application Number)

	Issue Date/(Filing Date)

	

	

	

	

	

(D)

Patent Licenses:

				
	Grantor

	

Description of Patent License

	Patent Number of underlying Patent

	Name of Licensor

	

	

	

	

(E)

Trademarks:

					
	Grantor

	Jurisdiction

	Trademark

	Registration Number/(Serial Number)

	Registration Date/(Filing Date)

	

	

	

	

	

(F)

Trademark Licenses:

				
	Grantor

	Description of Trademark License

	Registration Number of underlying Trademark

	Name of Licensor

	

	

	

	

(G)

Trade Secret Licenses:

			
	

Grantor

	

Description of Trade Secret License

	

Name of Licensor

	

	

	

EXHIBIT G - SCH. 5.2-3

III. COMMERCIAL TORT CLAIMS

		
	Grantor

	Commercial Tort Claims

	 
	 

	 
	 

	 
	 

	 
	 

IV. LETTER OF CREDIT RIGHTS

		
	Grantor

	Description of Letters of Credit

	 
	 

	 
	 

	 
	 

V.  WAREHOUSEMAN, BAILEES AND OTHER THIRD PARTIES IN POSSESSION OF COLLATERAL

			
	Grantor

	Description of Property

	Name and Address of Third Party

	 
	 
	 

	 
	 
	 

	 
	 
	 

EXHIBIT G - SCH. 5.2-4

SCHEDULE 5.4 TO

U.S. PLEDGE AND SECURITY AGREEMENT

FINANCING STATEMENTS:

		
	Grantor

	Filing Jurisdiction(s)

	 
	 

	 
	 

	 
	 

EXHIBIT G - SCH. 5.4-1

SUPPLEMENT TO SCHEDULE 5.5 TO

U.S. PLEDGE AND SECURITY AGREEMENT

Certain Pledged LLC Interests and Pledged Partnership Interests

EXHIBIT G - SCH. 5.5-1

EXHIBIT A TO

 U.S. PLEDGE AND SECURITY AGREEMENT

PLEDGE SUPPLEMENT

This PLEDGE SUPPLEMENT, dated [mm/dd/yy], is delivered by [NAME OF GRANTOR] a [NAME OF STATE OF INCORPORATION] [Entity] (the “Additional Grantor”) pursuant to the  U.S. Pledge and Security Agreement, dated as of May 6, 2010 (as it may be from time to time amended, restated, modified or supplemented, the “Security Agreement”), among Phillips-Van Heusen Corporation, a Delaware corporation, the other Grantors named therein, and Barclays Bank PLC, as the Collateral Agent.  Capitalized terms used herein not otherwise defined herein shall have the meanings ascribed thereto in the Security Agreement.

The Additional Grantor hereby confirms the grant to the Collateral Agent set forth in the Security Agreement of, and does hereby grant to the Collateral Agent, a security interest in all of the Additional Grantor’s right, title and interest in, to and under all Collateral to secure the Secured Obligations (and, to the extent provided in Section 7.1 of the Security Agreement, the 2023 Debentures Obligations), in each case whether now or hereafter existing or in which Additional Grantor now has or hereafter acquires an interest and wherever the same may be located.  The Additional Grantor represents and warrants that the attached Supplements to Schedules accurately and completely set forth all additional information required to be provided pursuant to the Security Agreement and hereby agrees that such Supplements to Schedules shall constitute part of the Schedules to the Security Agreement.

THIS PLEDGE SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND ALL CLAIMS AND CONTROVERSIES ARISING OUT OF THE SUBJECT MATTER HEREOF WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PROVISIONS THAT WOULD RESULT IN THE APPLICATION OF ANY OTHER LAW (OTHER THAN ANY MANDATORY PROVISIONS OF THE UCC RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OF THE SECURITY INTEREST).

IN WITNESS WHEREOF, the Additional Grantor has caused this Pledge Supplement to be duly executed and delivered by its duly authorized officer as of [mm/dd/yy].

[NAME OF ADDITIONAL GRANTOR]

By: 

Name:

Title:

EXHIBIT G - EXH. A-1

SUPPLEMENT TO SCHEDULE 5.1 TO

 U.S. PLEDGE AND SECURITY AGREEMENT

Additional Information:

GENERAL INFORMATION

(A)

Full Legal Name, Type of Organization, Jurisdiction of Organization, Jurisdiction of Chief Executive Office/Sole Place of Business (or Residence if such Grantor is a Natural Person) and Organizational Identification Number of each Grantor:

					
	Full Legal Name

	Type of Organization

	Jurisdiction of Organization

	Chief Executive

Office/Sole Place of Business (or Residence if Grantor is a Natural Person)

	Organization I.D.#

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

(B)

Other Names (including any Trade Name or Fictitious Business Name) under which each Grantor currently conducts business:

		
	Full Legal Name

	Trade Name or Fictitious Business Name

	 
	 

	 
	 

	 
	 

(C)

Changes in Name, Jurisdiction of Organization, Chief Executive Office or Sole Place of Business (or Principal Residence if Grantor is a Natural Person) and Corporate Structure of Any Grantor and Other Names under which Any Grantor Has Done Business, in each case within the past five (5) years:

			
	Grantor

	Date of Change

	Description of Change

	 
	 
	 

	 
	 
	 

	 
	 
	 

EXHIBIT G - EXH. A-2

SUPPLEMENT TO SCHEDULE 5.2 TO

 U.S. PLEDGE AND SECURITY AGREEMENT

COLLATERAL IDENTIFICATION

I.  INVESTMENT RELATED PROPERTY

(A)

Pledged Stock:

								
	Grantor

	Stock Issuer

	Class of Stock

	Certificated (Y/N)

	Stock Certificate No.  (if any)

	Par Value

	No. of Pledged Stock

	Percentage of Outstanding Stock of the Stock Issuer

	

	

	

	

	

	

	

	

Pledged LLC Interests:

						
	Grantor

	Limited Liability Company

	Certificated (Y/N)

	Certificate No. (if any)

	No. of Pledged Units

	Percentage of Outstanding LLC Interests of the Limited Liability Company

	

	

	

	

	

	

Pledged Partnership Interests:

						
	Grantor

	Partnership

	Type of Partnership Interests (e.g., general or limited)

	Certificated (Y/N)

	Certificate No.

(if any)

	Percentage of Outstanding Partnership Interests of the Partnership

	

	

	

	

	

	

Pledged Equity Interests not listed above:

						
	Grantor

	Entity

	Type of Equity Interests

	Certificated (Y/N)

	Certificate No.

(if any)

	Percentage of Outstanding Trust Interests of the Trust

	

	

	

	

	

	

Pledged Debt:

						
	Grantor

	Issuer

	Original Principal Amount

	Outstanding Principal Balance

	Issue Date

	Maturity Date

	

	

	

	

	

	

EXHIBIT G - EXH. A-3

Securities Account:

				
	Grantor

	Share of Securities Intermediary

	Account Number

	Account Name

	

	

	

	

Deposit Accounts:

				
	

Grantor

	Name of Depositary Bank

	Account Number

	Account Name

	

	

	

	

Commodities Accounts:

				
	Grantor

	Name of Commodities Intermediary

	Account Number

	Account Name

	

	

	

	

II. INTELLECTUAL PROPERTY

(A)

Copyrights:

					
	Grantor

	Jurisdiction

	Title of Work

	Registration Number (if any)

	

Registration Date (if any)

	

	

	

	

	

(B)

Copyright Licenses:

				
	Grantor

	Description of Copyright License

	Registration Number (if any) of underlying Copyright

	Name of Licensor

	

	

	

	

(C)

Patents:

					
	Grantor

	Jurisdiction

	Title of Patent

	Patent Number/(Application Number)

	Issue Date/(Filing Date)

	

	

	

	

	

EXHIBIT G - EXH. A-4

(D)

Patent Licenses:

				
	Grantor

	Description of Patent License

	

Patent Number of underlying Patent

	Name of Licensor

	

	

	

	

(E)

Trademarks:

					
	Grantor

	Jurisdiction

	Trademark

	Registration Number/(Serial Number)

	Registration Date/(Filing Date)

	

	

	

	

	

(F)

Trademark Licenses:

				
	Grantor

	Description of Trademark License

	Registration Number of underlying Trademark

	Name of Licensor

	

	

	

	

(G)

Trade Secret Licenses:

			
	

Grantor

	Description of Trade Secret License

	Name of Licensor

	

	

	

III. COMMERCIAL TORT CLAIMS

		
	Grantor

	Commercial Tort Claims

	 
	 

	 
	 

	 
	 

	 
	 

IV. LETTER OF CREDIT RIGHTS

		
	Grantor

	Description of Letters of Credit

	 
	 

	 
	 

	 
	 

EXHIBIT G - EXH. A-5

V.  WAREHOUSEMAN, BAILEES AND OTHER THIRD PARTIES IN POSSESSION OF COLLATERAL

			
	Grantor

	Description of Property

	Name and Address of Third Party

EXHIBIT G - EXH. A-6

SUPPLEMENT TO SCHEDULE 5.4 TO

U.S. PLEDGE AND SECURITY AGREEMENT

Financing Statements:

		
	Grantor

	Filing Jurisdiction(s)

	 
	 

	 
	 

	 
	 

EXHIBIT G - EXH. A-7

EXHIBIT B TO

U.S. PLEDGE AND SECURITY AGREEMENT

UNCERTIFICATED SECURITIES CONTROL AGREEMENT

This Uncertificated Securities Control Agreement dated as of [_________], 20[__] among [________________] (the “Pledgor”), Barclays Bank PLC, as collateral agent for the Secured Parties (and, to the extent provided in Section 7.1 of the Security Agreement (as defined below), the Debenture Trustee on behalf of the 2023 Debentures Holders), (the “Collateral Agent”) and [____________], a [________] [corporation] (the “Issuer”).  Capitalized terms used but not defined herein shall have the meaning assigned in the  U.S. Pledge and Security Agreement dated as of May 6, 2010, among Phillips-Van Heusen Corporation, a Delaware corporation, the Pledgor, the other Grantors party thereto and the Collateral Agent (the “Security Agreement”).  All references herein to the “UCC” shall mean the Uniform Commercial Code as in effect in the State of New York.

Section 1.  Registered Ownership of Shares.  The Issuer hereby confirms and agrees that as of the date hereof the Pledgor is the registered owner of [[__________] shares of the Issuer’s [common] stock] [a [__]% limited liability company interest in the issuer] (the “Pledged Shares”) and the Issuer shall not change the registered owner of the Pledged Shares without the prior written consent of the Collateral Agent.

Section 2.  Instructions.  If at any time the Issuer shall receive instructions originated by the Collateral Agent relating to the Pledged Shares, the Issuer shall comply with such instructions without further consent by the Pledgor or any other person.

Section 3.  Additional Representations and Warranties of the Issuer.  The Issuer hereby represents and warrants to the Collateral Agent:

(a)  It has not entered into, and until the termination of this agreement will not enter into, any agreement with any other person relating the Pledged Shares pursuant to which it has agreed to comply with instructions issued by such other person; and

(b)  It has not entered into, and until the termination of this agreement will not enter into, any agreement with the Pledgor or the Collateral Agent purporting to limit or condition the obligation of the Issuer to comply with Instructions as set forth in Section 2 hereof.

(c)  Except for the claims and interest of the Collateral Agent and of the Pledgor in the Pledged Shares, the Issuer does not know of any claim to, or interest in, the Pledged Shares.  If any person asserts any lien, encumbrance or adverse claim (including any writ, garnishment, judgment, warrant of attachment, execution or similar process) against the Pledged Shares, the Issuer will promptly notify the Collateral Agent and the Pledgor thereof.

(d)  This Uncertificated Securities Control Agreement is the valid and legally binding obligation of the Issuer.

Section 4.  Choice of Law.  This Agreement shall be governed by the laws of the State of New York.

EXHIBIT G - EXH. B-1

Section 5.  Conflict with Other Agreements.  In the event of any conflict between this Agreement (or any portion thereof) and any other agreement now existing or hereafter entered into, the terms of this Agreement shall prevail.  No amendment or modification of this Agreement or waiver of any right hereunder shall be binding on any party hereto unless it is in writing and is signed by all of the parties hereto.

Section 6.  Voting Rights.  Until such time as the Collateral Agent shall otherwise instruct the Issuer in writing, the Pledgor shall have the right to vote the Pledged Shares.

Section 7.  Successors; Assignment.  The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective corporate successors or heirs and personal representatives who obtain such rights solely by operation of law.  The Collateral Agent may assign its rights hereunder only with the express written consent of the Issuer and by sending written notice of such assignment to the Pledgor.

Section 8.  Indemnification of Issuer.  The Pledgor and the Collateral Agent hereby agree that (a) the Issuer is released from any and all liabilities to the Pledgor and the Collateral Agent arising from the terms of this Agreement and the compliance of the Issuer with the terms hereof, except to the extent that such liabilities arise from the Issuer’s negligence and (b) the Pledgor, its successors and assigns shall at all times indemnify and save harmless the Issuer from and against any and all claims, actions and suits of others arising out of the terms of this Agreement or the compliance of the Issuer with the terms hereof, except to the extent that such arises from the Issuer’s negligence, and from and against any and all liabilities, losses, damages, costs, charges, counsel fees and other expenses of every nature and character arising by reason of the same, until the termination of this Agreement.

Section 9.  Notices.  Any notice, request or other communication required or permitted to be given under this Agreement shall be in writing and deemed to have been properly given when delivered in person, or when sent by telecopy or other electronic means and electronic confirmation of error free receipt is received or two (2) days after being sent by certified or registered United States mail, return receipt requested, postage prepaid, addressed to the party at the address set forth below.

Pledgor:

[Name and Address of Pledgor]

Attention: [________________]

Telecopier: [________________]

Collateral Agent:

Barclays Bank PLC

[Address]

Attention: [________________]

Telecopier: [________________]

Issuer:

[Insert Name and Address of Issuer]

Attention: [________________]

Telecopier: [________________]

Any party may change its address for notices in the manner set forth above.

Section 10.  Termination.  The obligations of the Issuer to the Collateral Agent pursuant to this Uncertificated Securities Control Agreement shall continue in effect until the security interests of the Collateral Agent in the Pledged Shares have been terminated pursuant to the terms 

EXHIBIT G - EXH. B-2

of the Security Agreement and the Collateral Agent has notified the Issuer of such termination in writing.  The Collateral Agent agrees to provide Notice of Termination in substantially the form of Exhibit A hereto to the Issuer upon the request of the Pledgor on or after the termination of the Collateral Agent’s security interest in the Pledged Shares pursuant to the terms of the Security Agreement.  The termination of this Control Agreement shall not terminate the Pledged Shares or alter the obligations of the Issuer to the Pledgor pursuant to any other agreement with respect to the Pledged Shares.

Section 11.  Counterparts.  This Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Agreement by signing and delivering one or more counterparts.

[NAME OF PLEDGOR],

as Pledgor

By: 

Name:

Title:

BARCLAYS BANK PLC,

as Collateral Agent

By: 

Name:

Title:

[NAME OF ISSUER],

as Issuer

By: 

Name:

Title:

EXHIBIT G - EXH. B-3

Exhibit A

[Letterhead of Collateral Agent]

[Date]

[Name and Address of Issuer]

Attention: [

]

Re:  Termination of Control Agreement

You are hereby notified that the Uncertificated Securities Control Agreement between you, [Name of Pledgor] (the “Pledgor”) and the undersigned (a copy of which is attached) is terminated and you have no further obligations to the undersigned pursuant to such Agreement.  Notwithstanding any previous instructions to you, you are hereby instructed to accept all future directions with respect to Pledged Shares (as defined in the Uncertificated Securities Control Agreement) from the Pledgor.  This notice terminates any obligations you may have to the undersigned with respect to the Pledged Shares; however nothing contained in this notice shall alter any obligations which you may otherwise owe to the Pledgor pursuant to any other agreement.

You are instructed to deliver a copy of this notice by facsimile transmission to the Pledgor.

Very truly yours,

BARCLAYS BANK PLC,

as Collateral Agent

By: 

Name:

Title:

EXHIBIT G - EXH. B-4

EXHIBIT C TO

 U.S. PLEDGE AND SECURITY AGREEMENT

FORM OF TRADEMARK SECURITY AGREEMENT

This TRADEMARK SECURITY AGREEMENT, dated as of [__________], 20[__] (as it may be amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), is made by the entities identified as grantors on the signature pages hereto (collectively, the “Trademark Grantors”) in favor of Barclays Bank PLC, as collateral agent for the Secured Parties (and, to the extent provided in Section 7.1 of the Pledge and Security Agreement (as defined below), the Debenture Trustee on behalf of the 2023 Debentures Holders) (in such capacity, together with its successors and permitted assigns, the “Collateral Agent”).

WHEREAS, the Trademark Grantors are party to a U.S. Pledge and Security Agreement dated as of May 6, 2010 (the “Pledge and Security Agreement”) among Phillips-Van Heusen Corporation, a Delaware corporation, each of the Trademark Grantors and the other Grantors party thereto and the Collateral Agent pursuant to which the Trademark Grantors granted a security interest to the Collateral Agent in the Trademark Collateral (as defined below) and are required to execute and deliver this Agreement.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Trademark Grantors hereby agree with the Collateral Agent as follows:

SECTION 1.

Defined Terms

Unless otherwise defined herein, terms defined in the Pledge and Security Agreement and used herein have the meaning given to them in the Pledge and Security Agreement.

SECTION 2.

Grant of Security Interest in Trademark Collateral

SECTION 2.1 Grant of Security.  Each Grantor hereby grants to the Collateral Agent, for the benefit of the Secured Parties (and, to the extent provided in Section 7.1 of the Pledge and Security Agreement, the Debenture Trustee on behalf of the 2023 Debentures Holders), a security interest in and continuing lien on all of such Trademark Grantor’s right, title and interest in, to and under the following, in each case whether now owned or existing or hereafter acquired and wherever located (collectively, the “Trademark Collateral”):

all United States, and foreign trademarks, trade names, trade dress, corporate names, company names, business names, fictitious business names, Internet domain names, service marks, certification marks, collective marks, logos, other source or business identifiers, designs and general intangibles of a like nature, whether or not registered, and with respect to any and all of the foregoing: (i) all registrations and applications therefor including, without limitation, the registrations and applications listed in Schedule A attached hereto, (ii) all extensions or renewals of any of the foregoing, (iii) all of the goodwill of the business connected with the use of and symbolized by any of the foregoing, (iv) all rights to sue or otherwise recover for any past, present and future infringement, dilution or other violation of any of the foregoing or for any injury to the related goodwill, (v) all Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages, and proceeds of suit now or hereafter 

EXHIBIT G - EXH. C-1

due and/or payable with respect thereto, and (vi) all other rights of any kind accruing thereunder or pertaining thereto throughout the world.

SECTION 2.2 Certain Limited Exclusions.  Notwithstanding anything herein to the contrary, in no event shall the Trademark Collateral include or the security interest granted under Section 2.1 hereof attach to any “intent-to-use” application for registration of a Trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect thereto, solely to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of any registration that issues from such intent-to-use trademark application under applicable federal law.

SECTION 3.  Security Agreement

The security interest granted pursuant to this Agreement is granted in conjunction with the security interest granted to the Collateral Agent for the Secured Parties (and, to the extent provided in Section 7.1 of the Pledge and Security Agreement, the Debenture Trustee), pursuant to the Pledge and Security Agreement, and the Trademark Grantors hereby acknowledge and affirm that the rights and remedies of the Collateral Agent with respect to the security interest in the Trademark Collateral made and granted hereby are more fully set forth in the Pledge and Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.  In the event that any provision of this Agreement is deemed to conflict with the Pledge and Security Agreement, the provisions of the Security Agreement shall control.

SECTION 4.

Governing Law

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND ALL CLAIMS AND CONTROVERSIES ARISING OUT OF THE SUBJECT MATTER HEREOF WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PROVISIONS THAT WOULD RESULT IN THE APPLICATION OF ANY OTHER LAW (OTHER THAN ANY MANDATORY PROVISIONS OF LAW RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OF THE SECURITY INTEREST).

SECTION 5.

Counterparts

This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

[Remainder of page intentionally left blank]

EXHIBIT G - EXH. C-2

IN WITNESS WHEREOF, each Trademark Grantor has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

[NAME OF TRADEMARK GRANTOR]

By:

Name:

Title:

STATE OF 

)

)

ss.

COUNTY OF 

)

On this ____ day of ____________, ____ before me personally appeared ___________________, proved to me on the basis of satisfactory evidence to be the person who executed the foregoing instrument on behalf of ____________________, who being by me duly sworn did depose and say that he/she is an authorized officer of said corporation, that the said instrument was signed on behalf of said corporation as authorized by its Board of Directors and that he/she acknowledged said instrument to be the free act and deed of said corporation.

Notary Public

[ADD SIGNATURE BLOCKS AND NOTARY BLOCKS FOR ANY OTHER TRADEMARK GRANTORS]

EXHIBIT G - EXH. C-3

Accepted and Agreed:

BARCLAYS BANK PLC, 

as Collateral Agent

By: 

Name:

Title:

EXHIBIT G - EXH. C-4

SCHEDULE A

to

TRADEMARK SECURITY AGREEMENT

TRADEMARK REGISTRATIONS AND APPLICATIONS

					
	Mark

	Registration No.

	Registration Date

	Serial No. (if no Registration No.)

	Filing Date (if no Registration Date)

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

EXHIBIT G - EXH. C-5

EXHIBIT D TO

U.S. PLEDGE AND SECURITY AGREEMENT

FORM OF PATENT SECURITY AGREEMENT

This PATENT SECURITY AGREEMENT, dated as of [__________], 20[__] (as it may be amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), is made by the entities identified as grantors on the signature pages hereto (collectively, the “Patent Grantors”) in favor of Barclays Bank PLC, as collateral agent for the Secured Parties (and, to the extent provided in Section 7.1 of the Pledge and Security Agreement (as defined below), the Debenture Trustee on behalf of the 2023 Debentures Holders) (in such capacity, together with its successors and permitted assigns, the “Collateral Agent”).

WHEREAS, the Patent Grantors are party to a U.S. Pledge and Security Agreement dated as of May 6, 2010 (the “Pledge and Security Agreement”) among Phillips-Van Heusen Corporation, a Delaware corporation, each of the Patent Grantors and the other Grantors party thereto and the Collateral Agent pursuant to which the Patent Grantors granted a security interest to the Collateral Agent in the Patent Collateral (as defined below) and are required to execute and deliver this Agreement.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Patent Grantors hereby agree with the Collateral Agent as follows:

SECTION. 1.  Defined Terms

Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

SECTION 2.  Grant of Security Interest

Each Patent Grantor hereby grants to the Collateral Agent, for the benefit of the Secured Parties (and, to the extent provided in Section 7.1 of the Pledge and Security Agreement, the Debenture Trustee on behalf of the 2023 Debentures Holders), a security interest in and continuing lien on all of such Patent Grantor’s right, title and interest in, to and under the following, in each case whether now owned or existing or hereafter acquired and wherever located (collectively, the “Patent Collateral”):

all United States and foreign patents and certificates of invention, or similar industrial property rights, and applications for any of the foregoing, including, but not limited to: (i) each patent and patent application listed in Schedule A attached hereto, (ii) all reissues, divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations thereof, (iii) all patentable inventions and improvements thereto, (iv) all rights to sue or otherwise recover for any past, present and future infringement or other violation thereof, (v) all Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages, and proceeds of suit now or hereafter due and/or payable with respect thereto, and (vi) all other rights of any kind accruing thereunder or pertaining thereto throughout the world.

SECTION 3.

Security Agreement

EXHIBIT G - EXH. D-1

The security interest granted pursuant to this Agreement is granted in conjunction with the security interest granted to the Collateral Agent for the Secured Parties (and, to the extent provided in Section 7.1 of the Pledge and Security Agreement, the Debenture Trustee) pursuant to the Pledge and Security Agreement, and the Patent Grantors hereby acknowledge and affirm that the rights and remedies of the Collateral Agent with respect to the security interest in the Patent Collateral made and granted hereby are more fully set forth in the Pledge and Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.  In the event that any provision of this Agreement is deemed to conflict with the Pledge and Security Agreement, the provisions of the Pledge and Security Agreement shall control.

SECTION 4.

Governing Law

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND ALL CLAIMS AND CONTROVERSIES ARISING OUT OF THE SUBJECT MATTER HEREOF WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PROVISIONS THAT WOULD RESULT IN THE APPLICATION OF ANY OTHER LAW (OTHER THAN ANY MANDATORY PROVISIONS OF LAW RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OF THE SECURITY INTEREST).

SECTION 5.

Counterparts

This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

[Remainder of page intentionally left blank]

EXHIBIT G - EXH. D-2

IN WITNESS WHEREOF, each Patent Grantor has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

[NAME OF PATENT GRANTOR]

By:

Name:

Title:

STATE OF 

)

)

ss.

COUNTY OF 

)

On this ____ day of ____________, ____ before me personally appeared ___________________, proved to me on the basis of satisfactory evidence to be the person who executed the foregoing instrument on behalf of ____________________, who being by me duly sworn did depose and say that he/she is an authorized officer of said corporation, that the said instrument was signed on behalf of said corporation as authorized by its Board of Directors and that he/she acknowledged said instrument to be the free act and deed of said corporation.

Notary Public

[ADD SIGNATURE BLOCKS AND NOTARY BLOCKS FOR ANY OTHER PATENT GRANTORS]

EXHIBIT G - EXH. D-3

Accepted and Agreed:

BARCLAYS BANK PLC, 

as Collateral Agent

By: 

Name:

Title:

EXHIBIT G - EXH. D-4

SCHEDULE A

to

PATENT SECURITY AGREEMENT

PATENTS AND PATENT APPLICATIONS

					
	Title

	Patent No.

	Issue Date

	Application No. (if no Patent No.)

	Filing Date (if no Issue Date)

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

EXHIBIT G - EXH. D-5

EXHIBIT E TO

U.S. PLEDGE AND SECURITY AGREEMENT

FORM OF COPYRIGHT SECURITY AGREEMENT

This COPYRIGHT SECURITY AGREEMENT, dated as of [__________], 20[__] (as it may be amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), is made by the entities identified as grantors on the signature pages hereto (collectively, the “Copyright Grantors”) in favor of Barclays Bank PLC, as collateral agent for the Secured Parties (and, to the extent provided in Section 7.1 of the Pledge and Security Agreement (as defined below), the Debenture Trustee on behalf of the 2023 Debentures Holders) (in such capacity, together with its successors and permitted assigns, the “Collateral Agent”).

WHEREAS, the Copyright Grantors are party to a U.S. Pledge and Security Agreement dated as of May 6, 2010 (the “Pledge and Security Agreement”) between each of the Copyright Grantors and the other Grantors party thereto and the Collateral Agent pursuant to which the Copyright Grantors granted a security interest to the Collateral Agent in the Copyright Collateral (as defined below) and are required to execute and deliver this Agreement.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Copyright Grantors hereby agree with the Collateral Agent as follows:

SECTION 1.

Defined Terms

Unless otherwise defined herein, terms defined in the Pledge and Security Agreement and used herein have the meaning given to them in the Pledge and Security Agreement.

SECTION 2.

Grant of Security Interest

Each Grantor hereby grants to the Collateral Agent, for the benefit of the Secured Parties (and, to the extent provided in Section 7.1 of the Pledge and Security Agreement, the Debenture Trustee), a security interest in and continuing lien on all of such Grantor’s right, title and interest in, to and under the following, in each case whether now owned or existing or hereafter acquired, developed, created or arising and wherever located (collectively, the “Copyright Collateral”):

(a)

all United States, and foreign copyrights (whether or not the underlying works of authorship have been published), including but not limited to copyrights in software and all rights in and to databases, all designs (including but not limited to industrial designs, Protected Designs within the meaning of 17 U.S.C. 1301 et. Seq. and Community designs), and all Mask Works (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, as well as all moral rights, reversionary interests, and termination rights, and, with respect to any and all of the foregoing: (i) all registrations and applications therefor including, without limitation, the registrations and applications listed in Schedule A attached hereto, (ii) all extensions and renewals thereof, (iii) all rights to sue or otherwise recover for any past, present and future infringement or other violation thereof, (iv) all Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages and proceeds of suit now or hereafter due and/or payable with respect thereto, and (v) all other rights of any kind accruing thereunder or pertaining thereto throughout the world; and

EXHIBIT G - EXH. E-1

(b)

any and all agreements, licenses and covenants constituting Material Intellectual Property providing for the granting of any exclusive right to such Copyright Grantor in or to any registered Copyright including, without limitation, each agreement required to be listed in Schedule A attached hereto, and all rights to sue or otherwise recover for past, present and future infringement or other violation or impairment thereof, including the right to receive all Proceeds therefrom, including without limitation license fees, royalties, income, payments, claims, damages and proceeds of suit, now or hereafter due and/or payable with respect thereto.

SECTION 3.

Security Agreement

The security interest granted pursuant to this Agreement is granted in conjunction with the security interest granted to the Collateral Agent for the Secured Parties (and, to the extent provided in Section 7.1 of the Pledge and Security Agreement, the Debenture Trustee on behalf of the 2023 Debentures Holders) pursuant to the Pledge and Security Agreement, and the Copyright Grantors hereby acknowledge and affirm that the rights and remedies of the Collateral Agent with respect to the security interest in the Copyright Collateral made and granted hereby are more fully set forth in the Pledge and Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.  In the event that any provision of this Agreement is deemed to conflict with the Pledge and Security Agreement, the provisions of the Pledge and Security Agreement shall control.

SECTION 4.

Governing Law

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND ALL CLAIMS AND CONTROVERSIES ARISING OUT OF THE SUBJECT MATTER HEREOF WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PROVISIONS THAT WOULD RESULT IN THE APPLICATION OF ANY OTHER LAW (OTHER THAN ANY MANDATORY PROVISIONS OF LAW RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OF THE SECURITY INTEREST).

SECTION 5.

Counterparts

This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

[Remainder of page intentionally left blank]

EXHIBIT G - EXH. E-2

IN WITNESS WHEREOF, each Copyright Grantor has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

[NAME OF COPYRIGHT GRANTOR]

By:

Name:

Title:

STATE OF 

)

)

ss.

COUNTY OF 

)

On this ____ day of ____________, ____ before me personally appeared ___________________, proved to me on the basis of satisfactory evidence to be the person who executed the foregoing instrument on behalf of ____________________, who being by me duly sworn did depose and say that he/she is an authorized officer of said corporation, that the said instrument was signed on behalf of said corporation as authorized by its Board of Directors and that he/she acknowledged said instrument to be the free act and deed of said corporation.

Notary Public

[ADD SIGNATURE BLOCKS AND NOTARY BLOCKS FOR ANY OTHER COPYRIGHT GRANTORS]

EXHIBIT G - EXH. E-3

Accepted and Agreed:

BARCLAYS BANK PLC, 

as Collateral Agent

By: 

Name:

Title:

EXHIBIT G - EXH. E-4

SCHEDULE A

to

COPYRIGHT SECURITY AGREEMENT

COPYRIGHT REGISTRATIONS AND APPLICATIONS

					
	Title

	Registration No.

	Registration Date

	Application No. (if no Registration No.)

	Filing Date (if no Registration Date)

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

EXCLUSIVE COPYRIGHT LICENSES

			
	Description of Copyright License

	Name of Licensor

	Registration Number of underlying Copyright

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

EXHIBIT G - EXH. E-5

EXHIBIT F TO

U.S. PLEDGE AND SECURITY AGREEMENT

FORM OF NOTICE OF SPECIFIED HEDGE AGREEMENT

Barclays Bank PLC

[Address]

Attention: [________________]

Re: Notice of Specified Hedge Agreement1

Ladies and Gentlemen:

Reference is made to the U.S. Pledge and Security Agreement dated as of May 6, 2010 (as amended, supplemented and modified to date, the “Pledge and Security Agreement”), among Phillips-Van Heusen Corporation, a Delaware corporation  (the “U.S. Borrower”) and various affiliates of the Borrower in favor of Barclays Bank PLC, as Collateral Agent.  Capitalized terms used herein have the meaning set forth in the Pledge and Security Agreement or if not defined therein in the Credit Agreement (as defined in the Pledge and Security Agreement).  This is to notify you that we have entered into the following Hedge Agreement:

Date of Hedge Agreement:

Names of Parties:

We hereby confirm that we are a Lender Counterparty (as defined in the Credit Agreement).  We hereby appoint Collateral Agent as our agent for purposes of the Pledge and Security Agreement.  We understand and agree neither the Collateral Agent nor the Administrative Agent shall owe us any fiduciary duly, duty of loyalty, duty of care, duty of disclosure or any other obligations whatsoever by virtue of our status as a secured party under the Pledge and Security Agreement and we agree to be bound by the Loan Documents as a Secured Party.

NAME OF LENDER COUNTERPARTY

By: _______________________

(Name)

________________________

(Title)

1 

While not required for a hedge counterparty to be a secured party, a hedge counterparty may nonetheless decide to deliver this notice to ensure that the Collateral Agent knows it is a secured party and to strengthen its claims as a secured party.

EXHIBIT G - EXH. F-1

EXHIBIT H TO

CREDIT AND GUARANTY AGREEMENT

		
	PREPARED BY AND WHEN RECORDED MAIL TO:

Latham & Watkins LLP

885 Third Avenue

Suite 1000

New York, New York 10022-4802

Attn: Alyssa J. Mayer, Esq.

Tax Parcel Id No.: 27-4398-11-56-9055-B07;

27-4398-11-56-9055-B36

	 

Space above this line for recorder’s use only

OPEN-END MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS

AND LEASES AND FIXTURE FILING

THIS INSTRUMENT IS AN OPEN-END MORTGAGE AND SECURES

PRESENT AND FUTURE INDEBTEDNESS, OBLIGATIONS, AND ADVANCES PURSUANT TO 42 PA.C.S.A. §§ 8143-8144.

THIS INSTRUMENT IS ALSO A FINANCING STATEMENT FILED AS A

FIXTURE FILING PURSUANT TO §§ 9334 AND 9502 OF THE PENNSYLVANIA UNIFORM COMMERCIAL CODE.

This OPEN-END MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING, dated as of April 30, 2010, effective as of  May 6, 2010 (as it may be amended, supplemented or otherwise modified from time to time, this “Mortgage”), by and from PHILLIPS-VAN HEUSEN CORPORATION, a Delaware corporation, with an address at 200 Madison Avenue, New York, NY 10016 (“Mortgagor”) to BARCLAYS BANK PLC,  with an address at 745 Seventh Avenue, New York, NY 10019, as Administrative Agent and Collateral Agent for the benefit of the Secured Parties (in such capacity, together with its successors and assigns, “Mortgagee”).

RECITALS:

WHEREAS, reference is made to that certain Credit and Guaranty Agreement, dated as of  the date hereof (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; all capitalized terms defined therein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement), entered into by and among PHILLIPS-VAN HEUSEN CORPORATION, a Delaware corporation (“U.S. Borrower”), TOMMY HILFIGER B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, 

EXHIBIT H-1

“Borrower”), CERTAIN SUBSIDIARIES OF THE U.S. BORROWER, as Guarantors, the Lenders party thereto from time to time, BARCLAYS BANK PLC (“Barclays Bank”), as Administrative Agent (together with its permitted successors in such capacity, “Administrative Agent”), and as Collateral Agent (together with its permitted successors in such capacity, “Collateral Agent”), DEUTSCHE BANK SECURITIES INC., as Syndication Agent, and BANC OF AMERICA SECURITIES LLC, CREDIT SUISSE SECURITIES (USA) LLC AND ROYAL BANK OF CANADA, as Co-Documentation Agents;

WHEREAS, subject to the terms and conditions of the Credit Agreement, Mortgagor may enter into one or more Hedge Agreements, Cash Management Agreements and Treasury Transactions with one or more Lender Counterparties;

WHEREAS, pursuant to that certain indenture, dated as of November 1, 1993 (the “2023 Debentures Indenture”), by and between the U.S. Borrower and The Bank of New York, as Trustee (the “Debenture Trustee”), the U.S. Borrower issued a series of 7-3/4% Debentures due 2023 (the “2023 Debentures”) and agreed, in certain circumstances, to secure the 2023 Debentures Obligations (as defined herein) equally and ratably with future secured obligations of the U.S. Borrower or any of its Subsidiaries;

WHEREAS, either (a) Mortgagor is the U.S. Borrower or (b) Mortgagor is the wholly owned subsidiary of the U.S. Borrower or (c) the U.S. Borrower directly or indirectly owns a controlling interest in Mortgagor or (d) the U.S. Borrower is the sole member or a member of Mortgagor or (e) the U.S. Borrower is the general or managing partner of Mortgagor, as a result of any of which Mortgagor is a direct or indirect beneficiary of the Loans and other accommodations of Secured Parties as set forth in the Credit Agreement and may receive advances therefrom, whether or not Mortgagor is a party to the Credit Agreement;

WHEREAS, in consideration of the making of the Loans and other accommodations of Secured Parties as set forth in the Credit Agreement and the Hedge Agreements, Cash Management Agreements and Treasury Transactions, respectively, Mortgagor has agreed, subject to the terms and conditions hereof, each other Loan Document and each of the Hedge Agreements, Cash Management Agreements and Treasury Transactions, to secure Mortgagor’s obligations under the Loan Documents (and, to the extent required by the 2023 Indenture, the 2023 Debentures Obligations) and the Hedge Agreements, Cash Management Agreements and Treasury Transactions as set forth herein; and

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, Mortgagee and Mortgagor agree as follows:

SECTION 1.

DEFINITIONS

1.1

Definitions

.  Capitalized terms used herein (including the recitals hereto) not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.  In addition, as used herein, the following terms shall have the following meanings:

“2023 Debentures Obligations” shall mean the prompt and complete payment of any unpaid principal amount, any premium, any interest and any other amounts payable in respect of 

EXHIBIT H-2

the 2023 Debentures in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. §362(a) (and any successor provision thereof)).

“Indebtedness” means (i) with respect to each Borrower, all Obligations (as defined below) and liabilities of every nature of such Borrower (including incremental facilities, if any, that may be advanced on the date hereof or on a later date) now or hereafter existing under or arising out of or in connection with the Credit Agreement and the other Loan Documents and any Hedge Agreement, Cash Management Agreement and Treasury Transaction; and (ii) with respect to each Borrower or Mortgagor, all obligations and liabilities of every nature of such Borrower or Mortgagor now or hereafter existing under or arising out of or in connection with any other Loan Document, in each case together with all extensions or renewals thereof, whether for principal, interest (including interest that, but for the filing of a petition under any Debtor Relief Law with respect to any Borrower, would accrue on such obligations, whether or not a claim is allowed against such Borrower for such interest in the related proceeding under such Debtor Relief Law), payments for early termination of Hedge Agreements, payments in respect of Cash Management Agreements and Treasury Transactions, fees, expenses, indemnities or otherwise, whether voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from Mortgagor, any Lender or Lender Counterparty as a preference, fraudulent transfer or otherwise, and all obligations of every nature of Mortgagor now or hereafter existing under the Credit Agreement.

“Mortgaged Property” means all of Mortgagor’s interest in (i) the real property described in Exhibit A, together with any greater or additional estate therein as hereafter may be acquired by Mortgagor (the “Land”); (ii) all improvements now owned or hereafter acquired by Mortgagor, now or at any time situated, placed or constructed upon the Land subject to the Permitted Liens, (the “Improvements”; the Land and Improvements are collectively referred to as the “Premises”); (iii) all materials, supplies, equipment, apparatus and other items of personal property now owned or hereafter acquired by Mortgagor and which, in either such case, is now or hereafter attached to, installed in or used in connection with any of the Improvements or the Land, and water, gas, electrical, telephone, storm and sanitary sewer facilities and all other utilities used in connection with the Land and the Improvements whether or not situated in easements (the “Fixtures”); (iv) all goods, accounts, general intangibles, instruments, documents, chattel paper and all other personal property of any kind or character, including such items of personal property as defined in the UCC (defined below), now owned or hereafter acquired by Mortgagor and which, in either such case, is now or hereafter affixed to, placed upon, used in connection with, arising from or otherwise related to the Premises (the “Personalty”); (v) all reserves, escrows or impounds required under the Credit Agreement and all deposit accounts maintained by Mortgagor, in each case, with respect to the Mortgaged Property (the “Deposit Accounts”); (vi) all leases, licenses, concessions, occupancy agreements or other agreements (written or oral, now or at any time in effect) which grant to any Person (other than Mortgagor) a possessory interest in, or the right to use, all or any part of the Mortgaged Property, together with 

EXHIBIT H-3

all related security and other deposits subject to depositors rights and requirements of law (the “Leases”); (vii) all of the rents, revenues, royalties, income, proceeds, profits, security and other types of deposits subject to depositors rights and requirements of law, and other benefits paid or payable by parties to the Leases for using, leasing, licensing possessing, operating from, residing in, selling or otherwise enjoying the Mortgaged Property (the “Rents”), (viii) to the extent mortgageable or assignable, all other agreements, such as construction contracts, architects’ agreements, engineers’ contracts, utility contracts, maintenance agreements, management agreements, service contracts, listing agreements, guaranties, warranties, permits, licenses, certificates and entitlements in any way relating to the construction, use, occupancy, operation, maintenance, enjoyment or ownership of the Mortgaged Property (the “Property Agreements”); (ix) to the extent mortgageable or assignable, all rights, privileges, tenements, hereditaments, rights-of-way, easements, appendages and appurtenances appertaining to the foregoing; (x) all property tax refunds payable to Mortgagor with respect to the foregoing (the “Tax Refunds”); (xi) all accessions, replacements and substitutions for any of the foregoing and all proceeds thereof (the “Proceeds”); (xii) all insurance policies, unearned premiums therefor and proceeds from such policies covering any of the above property now or hereafter acquired by Mortgagor (the “Insurance”); and (xiii) any awards, damages, remunerations, reimbursements, settlements or compensation heretofore made or hereafter to be made by any governmental authority pertaining to the Land, Improvements, Fixtures or Personalty (the “Condemnation Awards”).  As used in this Mortgage, the term “Mortgaged Property” shall mean all or, where the context permits or requires, any portion of the above.

“Obligations” means all of the agreements, covenants, conditions, warranties, representations and other obligations of Mortgagor (including, without limitation, the obligation to repay the Indebtedness) under the Credit Agreement, any other Loan Documents (and, to the extent required by the 2023 Indenture, the 2023 Debentures Obligations) or any Hedge Agreement, Cash Management Agreement or Treasury Transaction.

“UCC” means the Uniform Commercial Code of New York or, if the creation, perfection and enforcement of any security interest herein granted is governed by the laws of a state other than New York, then, as to the matter in question, the Uniform Commercial Code in effect in that state.

1.2

Interpretation

.  References to “Sections” shall be to Sections of this Mortgage unless otherwise specifically provided.  Section headings in this Mortgage are included herein for convenience of reference only and shall not constitute a part of this Mortgage for any other purpose or be given any substantive effect.  The rules of construction set forth in Section 1.3 of the Credit Agreement shall be applicable to this Mortgage mutatis mutandis.  If any conflict or inconsistency exists between this Mortgage and the Credit Agreement, the Credit Agreement shall govern.

SECTION 2.

GRANT

To secure the full and timely payment of the Indebtedness and the full performance of the Obligations, Mortgagor MORTGAGES, GRANTS, BARGAINS, ASSIGNS, SELLS and CONVEYS WITH POWER OF SALE (if available under State law), to Mortgagee the Mortgaged Property, subject, however, to the Permitted Liens, TO HAVE AND TO HOLD the 

EXHIBIT H-4

Mortgaged Property to Mortgagee, and Mortgagor does hereby bind itself, its successors and assigns to WARRANT AND FOREVER DEFEND the title to the Mortgaged Property unto Mortgagee, subject to Permitted Liens, for so long as any of the Obligations remain outstanding, upon the trust, terms and conditions contained herein and in the Credit Agreement.  Provided, however, that if the Mortgagor shall pay to the Mortgagee and the Lenders the Obligations, and if the Mortgagor shall keep and perform in all material respects each of its other covenants, conditions and agreements set forth herein and in the other Loan Documents, then, upon the termination of all obligations, duties and commitments of the Mortgagor under the Obligations and this Mortgage, the estate hereby granted and conveyed shall become null and void.

SECTION 3.

WARRANTIES, REPRESENTATIONS AND COVENANTS

3.1

Title

.  Mortgagor represents and warrants to Mortgagee that except for the Permitted Liens, (a) Mortgagor owns the Mortgaged Property free and clear of any liens, claims or interests, and (b) this Mortgage creates valid, enforceable first priority liens and security interests against the Mortgaged Property.

3.2

First Lien Status

.  Subject to Permitted Liens, Mortgagor shall preserve and protect the first lien and security interest status of this Mortgage and the other Loan Documents to the extent related to the Mortgaged Property.  If any lien or security interest other than a Permitted Lien ever exists on the Mortgaged Property, Mortgagor shall promptly, and at its expense, (a) give Mortgagee a detailed written notice of such lien or security interest (including origin, amount and other terms), and (b) pay the underlying claim in full or take such other action so as to cause it to be released.

3.3

Payment and Performance

.  Mortgagor shall pay the Indebtedness when due under the Loan Documents and shall perform the Obligations in full when they are required to be performed as required under the Loan Documents.

3.4

Covenants Running with the Land

.  All Obligations contained in this Mortgage are intended by Mortgagor and Mortgagee to be, and shall be construed as, covenants running with the Mortgaged Property.  As used herein, “Mortgagor” shall refer to the party named in the first paragraph of this Mortgage and to any subsequent owner of all or any portion of the Mortgaged Property.  All Persons who may have or acquire an interest in the Mortgaged Property shall be deemed to have notice of, and be bound by, the terms of the Credit Agreement and the other Loan Documents; however, no such party shall be entitled to any rights thereunder without the prior written consent of Mortgagee.  In addition, all of the covenants of Mortgagor in any Loan Document party thereto are incorporated herein by reference and, together with covenants in this Section, shall be covenants running with the land.

3.5

Change in Tax Law

.  Upon the enactment of or change in (including, without limitation, a change in interpretation of) any applicable law (i) deducting or allowing Mortgagor to deduct from the value of the Mortgaged Property for the purpose of taxation any lien or security interest thereon or (ii) subjecting Mortgagee or any of the Lenders to any tax or changing the basis of taxation of mortgages, deeds of trust, or other liens or debts secured thereby, or the manner of collection of such taxes, in each such case, so as to affect this Mortgage, the Indebtedness or Mortgagee, and the result is to increase the taxes imposed upon or 

EXHIBIT H-5

the cost to Mortgagee of maintaining the Indebtedness, or to reduce the amount of any payments receivable hereunder, then, and in any such event, Mortgagor shall, on demand, pay to Mortgagee and the Lenders additional amounts to compensate for such increased costs or reduced amounts, provided that if any such payment or reimbursement shall be unlawful, or taxable to Mortgagee, or would constitute usury or render the Indebtedness wholly or partially usurious under applicable law, then Mortgagor shall pay or reimburse Mortgagee or the Lenders for payment of the lawful and non-usurious portion thereof.

3.6

Mortgage Tax

.  Mortgagor shall (i) pay  when due any tax imposed upon it or  upon Mortgagee or any Lender or Lender Counterparty pursuant to the tax law of the state in which the Mortgaged Property is located in connection with the execution, delivery and recordation of this Mortgage and any of the other Loan Documents, and (ii) prepare, execute and file any form required to be prepared, executed and filed in connection therewith.

3.7

Reduction Of Secured Amount

.  In the event that the amount secured by the Mortgage is less than the Indebtedness, then the amount secured shall be reduced only by the last and final sums that Borrower repays with respect to the Indebtedness and shall not be reduced by any intervening repayments of the Indebtedness unless arising from the Mortgaged Property.  So long as the balance of the Indebtedness exceeds the amount secured, any payments of the Indebtedness shall not be deemed to be applied against, or to reduce, the portion of the Indebtedness secured by this Mortgage.  Such payments shall instead be deemed to reduce only such portions of the Indebtedness as are secured by other collateral located outside of the state in which the Mortgaged Property is located or as are unsecured.

3.8

Prohibited Transfers

.  Mortgagor shall not, without the prior written consent of Mortgagee, sell, lease or convey all or any part of the Mortgaged Property if and to the extent same is prohibited under the Credit Agreement.

SECTION 4.

DEFAULT AND FORECLOSURE

4.1

Remedies

.  If an Event of Default has occurred and is continuing, Mortgagee may, at Mortgagee’s election, exercise any or all of the following rights, remedies and recourses: (a) to the extent provided in the Credit Agreement, declare the Indebtedness to be immediately due and payable, without further notice, presentment, protest, notice of intent to accelerate, notice of acceleration, demand or action of any nature whatsoever (each of which hereby is expressly waived by Mortgagor), whereupon the same shall become immediately due and payable; (b) enter the Mortgaged Property and take exclusive possession thereof and of all books, records and accounts relating thereto or located thereon.  If Mortgagor remains in possession of the Mortgaged Property after an Event of Default and without Mortgagee’s prior written consent, Mortgagee may invoke any legal remedies to dispossess Mortgagor in accordance with the terms of the Credit Agreement; (c) to the extent provided in the Credit Agreement, hold, lease, develop, manage, operate or otherwise use the Mortgaged Property upon such terms and conditions as Mortgagee may deem reasonable under the circumstances (making such repairs, alterations, additions and improvements and taking other actions, from time to time, as Mortgagee deems necessary or desirable), and apply all Rents and other amounts collected by Mortgagee in connection therewith in accordance with any relevant provisions of the Credit Agreement; (d) institute proceedings for the complete foreclosure of this Mortgage, either by 

EXHIBIT H-6

judicial action or by power of sale, in which case the Mortgaged Property may be sold for cash or credit in one or more parcels.  With respect to any notices required or permitted under the UCC, Mortgagor agrees that ten (10) days’ prior written notice shall be deemed commercially reasonable.  At any such sale by virtue of any judicial proceedings, power of sale, or any other legal right, remedy or recourse, the title to and right of possession of any such property shall pass to the purchaser thereof, and to the fullest extent permitted by law, Mortgagor shall be completely and irrevocably divested of all of its right, title, interest, claim, equity, equity of redemption, and demand whatsoever, either at law or in equity, in and to the property sold and such sale shall be a perpetual bar both at law and in equity against Mortgagor, and against all other Persons claiming or to claim the property sold or any part thereof, by, through or under Mortgagor.  Mortgagee or any of the Lenders may be a purchaser at such sale and if Mortgagee is the highest bidder, Mortgagee shall credit the portion of the purchase price that would be distributed to Mortgagee against the Indebtedness in lieu of paying cash.  In the event this Mortgage is foreclosed by judicial action, appraisement of the Mortgaged Property is waived; (e)  make application to a court of competent jurisdiction for, and obtain from such court as a matter of strict right and without notice to Mortgagor or regard to the adequacy of the Mortgaged Property for the repayment of the Indebtedness, the appointment of a receiver of the Mortgaged Property, and Mortgagor irrevocably consents to such appointment.  Any such receiver shall have all the usual powers and duties of receivers in similar cases, including the full power to rent, maintain and otherwise operate the Mortgaged Property upon such terms as may be approved by the court, and shall apply such Rents in accordance with the provisions hereof; and/or (f)  exercise all other rights, remedies and recourses granted under the Loan Documents or otherwise available at law or in equity.

4.2

Separate Sales

.  The Mortgaged Property may be sold in one or more parcels and in such manner and order as Mortgagee in its sole discretion may elect; the right of sale arising out of any Event of Default shall not be exhausted by any one or more sales.

4.3

Remedies Cumulative, Concurrent and Nonexclusive

.  Mortgagee shall have all rights, remedies and recourses granted in the Loan Documents and available at law or equity (including the UCC), which rights (a) shall be, except to the extent provided in the Credit Agreement to the contrary, cumulated and concurrent, (b) may be pursued separately, successively or concurrently against Mortgagor or others obligated under the Loan Documents, or against the Mortgaged Property, or against any one or more of them, at the sole discretion of Mortgagee or the Lenders, (c) may be exercised as often as occasion therefor shall arise, and the exercise or failure to exercise any of them shall not be construed as a waiver or release thereof or of any other right, remedy or recourse, and (d) are intended to be, and shall be, nonexclusive.  No action by Mortgagee or the Lenders in the enforcement of any rights, remedies or recourses under the Loan Documents or otherwise at law or equity shall be deemed to cure any Event of Default.

4.4

Release of and Resort to Collateral

.  Mortgagee may release, regardless of consideration and without the necessity for any notice to or consent by the holder of any subordinate lien on the Mortgaged Property, any part of the Mortgaged Property without, as to the remainder, in any way impairing, affecting, subordinating or releasing the lien or security interest created in or evidenced by the Loan Documents or their status as a first and prior lien and 

EXHIBIT H-7

security interest in and to the Mortgaged Property.  For payment of the Indebtedness, Mortgagee may resort to any other security in such order and manner as Mortgagee may elect.

4.5

Waiver of Redemption, Notice and Marshalling of Assets

.  To the fullest extent permitted by law, Mortgagor hereby irrevocably and unconditionally waives and releases (a) all benefit that might accrue to Mortgagor by virtue of any present or future statute of limitations or law or judicial decision exempting the Mortgaged Property from attachment, levy or sale on execution or providing for any stay of execution, exemption from civil process, redemption or extension of time for payment, and (b) any right to a marshalling of assets or a sale in inverse order of alienation.  Borrower waives the statutory right of redemption and equity of redemption.

4.6

Discontinuance of Proceedings

.  If Mortgagee or the Lenders shall have proceeded to invoke any right, remedy or recourse permitted under the Loan Documents and shall thereafter elect to discontinue or abandon it for any reason, Mortgagee or the Lenders shall have the unqualified right to do so and, in such an event, Mortgagor and Mortgagee or the Lenders shall be restored to their former positions with respect to the Indebtedness, the Obligations, the Loan Documents, the Mortgaged Property and otherwise, and the rights, remedies, recourses and powers of Mortgagee or the Lenders shall continue as if the right, remedy or recourse had never been invoked, but no such discontinuance or abandonment shall waive any Event of Default which may then exist or the right of Mortgagee or the Lenders thereafter to exercise any right, remedy or recourse under the Loan Documents for such Event of Default.

4.7

Application of Proceeds

.  The proceeds of any sale of, and the Rents and other amounts generated by the holding, leasing, management, operation or other use of the Mortgaged Property, shall be applied by Mortgagee (or the receiver, if one is appointed) in accordance with Section 2.15 of the Credit Agreement and Section 7.2 of the U.S. Pledge and Security Agreement.

4.8

Occupancy After Foreclosure

.  Any sale of the Mortgaged Property or any part thereof will divest all right, title and interest of Mortgagor in and to the property sold.  Subject to applicable law, any purchaser at a foreclosure sale will receive immediate possession of the property purchased.  If Mortgagor retains possession of such property or any part thereof subsequent to such sale, Mortgagor will be considered a tenant at sufferance of the purchaser, and will, if Mortgagor remains in possession after demand to remove, be subject to eviction and removal, forcible or otherwise, with or without process of law.

4.9

Additional Advances and Disbursements

.  If any Event of Default exists, Mortgagee and each of the Lenders shall have the right, but not the obligation, to cure such Event of Default in the name and on behalf of Mortgagor in accordance with the Credit Agreement.

4.10

No Mortgagee in Possession

.  Neither the enforcement of any of the remedies under this Section, the assignment of the Rents and Leases under Section 5, the security interests under Section 6, nor any other remedies afforded to Mortgagee or the Lenders under the Loan Documents, at law or in equity shall cause Mortgagee or any Lender to be deemed or construed 

EXHIBIT H-8

to be a mortgagee in possession of the Mortgaged Property, to obligate Mortgagee or any Lender to lease the Mortgaged Property or attempt to do so, or to take any action, incur any expense, or perform or discharge any obligation, duty or liability whatsoever under any of the Leases or otherwise.

SECTION 5.

ASSIGNMENT OF RENTS AND LEASES

5.1

Assignment

.  In furtherance of and in addition to the assignment made by Mortgagor herein, Mortgagor hereby absolutely and unconditionally assigns, sells, transfers and conveys to Mortgagee all of its right, title and interest in and to all Leases, whether now existing or hereafter entered into, and all of its right, title and interest in and to all Rents.  This assignment is an absolute assignment and not an assignment for additional security only.  So long as no Event of Default shall have occurred and be continuing, Mortgagor shall have a license from Mortgagee to exercise all rights extended to the landlord under the Leases, including the right to receive and collect all Rents and to hold the Rents in trust for use in the payment and performance of the Obligations and to otherwise use the same.  The foregoing license is granted subject to the conditional limitation that no Event of Default shall have occurred and be continuing.  Upon the occurrence and during the continuance of an Event of Default, whether or not legal proceedings have commenced, and without regard to waste, adequacy of security for the Obligations or solvency of Mortgagor, the license herein granted shall automatically expire and terminate, without notice by Mortgagee (any such notice being hereby expressly waived by Mortgagor).

5.2

Perfection Upon Recordation

.  Mortgagor acknowledges that Mortgagee has taken all reasonable actions necessary to obtain, and that upon recordation of this Mortgage Mortgagee shall have, to the extent permitted under applicable law, a valid and fully perfected, first priority, present assignment of the Rents arising out of the Leases and all security for such Leases subject to the Permitted Liens and in the case of security deposits, rights of depositors and requirements of law.  Mortgagor acknowledges and agrees that upon recordation of this Mortgage Mortgagee’s interest in the Rents shall be deemed to be fully perfected, “choate” and enforced as to Mortgagor and all third parties, including, without limitation, any subsequently appointed trustee in any case under Title 11 of the United States Code (the “Bankruptcy Code”), without the necessity of commencing a foreclosure action with respect to this Mortgage, making formal demand for the Rents, obtaining the appointment of a receiver or taking any other affirmative action.

5.3

Bankruptcy Provisions

.  Without limitation of the absolute nature of the assignment of the Rents hereunder, Mortgagor and Mortgagee agree that (a) this Mortgage shall constitute a “security agreement” for purposes of Section 552(b) of the Bankruptcy Code, (b) the security interest created by this Mortgage extends to property of Mortgagor acquired before the commencement of a case in bankruptcy and to all amounts paid as Rents, and (c) such security interest shall extend to all Rents acquired by the estate after the commencement of any case in bankruptcy.

EXHIBIT H-9

SECTION 6.

SECURITY AGREEMENT

6.1

Security Interest

.  This Mortgage constitutes a “security agreement” on personal property within the meaning of the UCC and other applicable law and with respect to the Personalty, Fixtures, Leases, Rents, Deposit Accounts, Property Agreements, Tax Refunds, Proceeds, Insurance and Condemnation Awards.  To this end, Mortgagor grants to Mortgagee a first and prior security interest in the Personalty, Fixtures, Leases, Rents, Deposit Accounts, Property Agreements, Tax Refunds, Proceeds, Insurance, Condemnation Awards and all other Mortgaged Property which is personal property to secure the payment of the Indebtedness and performance of the Obligations subject to the Permitted Liens, and agrees that Mortgagee shall have all the rights and remedies of a secured party under the UCC with respect to such property.  Any notice of sale, disposition or other intended action by Mortgagee with respect to the Personalty, Fixtures, Leases, Rents, Deposit Accounts, Property Agreements, Tax Refunds, Proceeds, Insurance and Condemnation Awards sent to Mortgagor at least ten (10) days prior to any action under the UCC shall constitute reasonable notice to Mortgagor.

6.2

Financing Statements

.  Mortgagor shall execute and deliver to Mortgagee, in form and substance satisfactory to Mortgagee, such financing statements and such further assurances as Mortgagee may, from time to time, reasonably consider necessary to create, perfect and preserve Mortgagee’s security interest hereunder and Mortgagee may cause such statements and assurances to be recorded and filed, at such times and places as may be required or permitted by law to so create, perfect and preserve such security interest.  Mortgagor’s chief executive office is at the address set forth on Appendix B to the Credit Agreement.

6.3

Fixture Filing

.  This Mortgage shall also constitute a “fixture filing” for the purposes of the UCC against all of the Mortgaged Property which is or is to become fixtures.  Information concerning the security interest herein granted may be obtained at the addresses of Debtor (Mortgagor) and Secured Party (Mortgagee) as set forth in the first paragraph of this Mortgage.

SECTION 7.

ATTORNEY-IN-FACT

Mortgagor hereby irrevocably appoints Mortgagee and its successors and assigns, as its attorney-in-fact, which agency is coupled with an interest and with full power of substitution, (a) to execute and/or record any notices of completion, cessation of labor or any other notices that Mortgagee reasonably deems appropriate to protect Mortgagee’s interest, if Mortgagor shall fail to do so within thirty (30) days after written request by Mortgagee, (b) upon the issuance of a deed pursuant to the foreclosure of this Mortgage or the delivery of a deed in lieu of foreclosure, to execute all instruments of assignment, conveyance or further assurance with respect to the Leases, Rents, Deposit Accounts, Fixtures, Personalty, Property Agreements, Tax Refunds, Proceeds, Insurance and Condemnation Awards in favor of the grantee of any such deed and as may be necessary or desirable for such purpose, (c) to prepare, execute and file or record financing statements, continuation statements, applications for registration and like papers necessary to create, perfect or preserve Mortgagee’s security interests and rights in or to any of the Mortgaged Property, and (d) while any Event of Default exists, to perform any obligation of Mortgagor hereunder; provided, (i) Mortgagee shall not under any circumstances be obligated to perform any obligation of Mortgagor; (ii) any sums advanced by Mortgagee in such performance 

EXHIBIT H-10

shall be added to and included in the Indebtedness and shall bear interest at the rate or rates at which interest is then computed on the Indebtedness pursuant to the terms of the Credit Agreement provided that from the date incurred said advance is not repaid within five (5) days demand therefor; (iii) Mortgagee as such attorney-in-fact shall only be accountable for such funds as are actually received by Mortgagee; and (iv) Mortgagee shall not be liable to Mortgagor or any other person or entity for any failure to take any action which it is empowered to take under this Section.

SECTION 8.

MORTGAGEE AS AGENT

Mortgagee has been appointed to act as Mortgagee hereunder by Lenders and, by their acceptance of the benefits hereof, Lender Counterparties.  Mortgagee shall be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking any action (including the release or substitution of Mortgaged Property), solely in accordance with this Mortgage and the Credit Agreement; provided, Mortgagee shall exercise, or refrain from exercising, any remedies provided for herein in accordance with the instructions of (a) Required Lenders, or (b) after payment in full of all Obligations under the Credit Agreement and the other Loan Documents, the holders of a majority of the aggregate notional amount (or, with respect to any Hedge Agreement that has been terminated in accordance with its terms, the amount then due and payable (exclusive of expenses and similar payments but including any early termination payments then due) under such Hedge Agreement) under all Hedge Agreements, Cash Management Agreements and Treasury Transactions.  In furtherance of the foregoing provisions of this Section, each Lender Counterparty, by its acceptance of the benefits hereof, agrees that it shall have no right individually to realize upon any of the Mortgaged Property, it being understood and agreed by such Lender Counterparty that all rights and remedies hereunder may be exercised solely by Mortgagee for the benefit of the Secured Parties in accordance with the terms of this Section.  Mortgagee shall at all times be the same Person that is Administrative Agent under the Credit Agreement.  Written notice of resignation by Administrative Agent pursuant to terms of the Credit Agreement shall also constitute notice of resignation as Mortgagee under this Mortgage; removal of Administrative Agent pursuant to the terms of the Credit Agreement shall also constitute removal as Mortgagee under this Mortgage; and appointment of a successor Administrative Agent pursuant to the terms of the Credit Agreement shall also constitute appointment of a successor Mortgagee under this Mortgage.  Upon the acceptance of any appointment as Administrative Agent under the terms of the Credit Agreement by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Mortgagee under this Mortgage, and the retiring or removed Mortgagee under this Mortgage shall promptly (i) transfer to such successor Mortgagee all sums, securities and other items of Mortgaged Property held hereunder, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Mortgagee under this Mortgage, and (ii) execute and deliver to such successor Mortgagee such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Mortgagee of the security interests created hereunder, whereupon such retiring or removed Mortgagee shall be discharged from its duties and obligations under this Mortgage thereafter accruing.  After any retiring or 

EXHIBIT H-11

removed Administrative Agent’s resignation or removal hereunder as Mortgagee, the provisions of this Mortgage shall continue to enure to its benefit as to any actions taken or omitted to be taken by it under this Mortgage while it was Mortgagee hereunder.

SECTION 9.

LOCAL LAW PROVISIONS

This Mortgage is an “Open-End Mortgage” as defined in 42 Pa.C.S.A. §8143(f).  Without the limiting of any other provisions of this Mortgage, Mortgagee may make future advances, and this Mortgage shall secure repayment of such advances and the interest thereon, for the payment of taxes, assessments, maintenance charges, insurance premiums, or costs similar or dissimilar, incurred for the protection and preservation of the Mortgaged Property or for the lien of this Mortgage, expenses incurred by Mortgagee by reason of default by Mortgagor, or advances made under a construction loan to enable the completion of the improvements for which the construction loan was originally made.

Mortgagor agrees that any notice given by Mortgagor to Mortgagee purportedly pursuant to 42 Pa. C.S.A. §8143 shall be given by registered or certified mail, return receipt requested, to the address of the Mortgagee set forth on the signature page of this Mortgage and only to such address, and such notice shall be deemed to have been received no earlier than the date actually and physically received at such address.

SECTION 10.

MULTI-SITE REAL ESTATE TRANSACTIONS

.  Mortgagor acknowledges that this Mortgage is one of a number of Mortgages and other security documents (“Other Mortgages”) that secure the Obligations.  Mortgagor agrees that, subject to the terms of Section 9 hereof, the lien of this Mortgage shall be absolute and unconditional and shall not in any manner be affected or impaired by any acts or omissions whatsoever of Mortgagee, and without limiting the generality of the foregoing, the lien hereof shall not be impaired by any acceptance by Mortgagee of any security for or guarantees of the Obligations, or by any failure, neglect or omission on the part of Mortgagee to realize upon or protect any Obligation or any collateral security therefor including the Other Mortgages. Subject to the terms of Section 9 hereof,  the lien of this Mortgage shall not in any manner be impaired or affected by any release (except as to the property released), sale, pledge, surrender, compromise, settlement, renewal, extension, indulgence, alteration, changing, modification or disposition of any of the Obligations or of any of the collateral security therefor, including the Other Mortgages or any guarantee thereof, and, to the fullest extent permitted by applicable law, Mortgagee may at its discretion foreclose, exercise any power of sale, or exercise any other remedy available to it under any or all of the Other Mortgages without first exercising or enforcing any of its rights and remedies hereunder.  Such exercise of Mortgagee’s rights and remedies under any or all of the Other Mortgages shall not in any manner impair the indebtedness hereby secured or the lien of this Mortgage and any exercise of the rights and remedies of Mortgagee hereunder shall not impair the lien of any of the Other Mortgages or any of Mortgagee’s rights and remedies thereunder.  To the fullest extent permitted by applicable law, Mortgagor specifically consents and agrees that Mortgagee may exercise its rights and remedies hereunder and under the Other Mortgages separately or concurrently and in any order that it may deem appropriate and waives any right of subrogation.

EXHIBIT H-12

SECTION 11.

MISCELLANEOUS

11.1

Notices

.  Any notice required or permitted to be given under this Mortgage shall be given in accordance with the notice provisions of the Credit Agreement.  No failure or delay on the part of Mortgagee or any Lender in the exercise of any power, right or privilege hereunder or under any other Loan Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege.  All rights and remedies existing under this Mortgage and the other Loan Documents are cumulative to, and not exclusive of, any rights or remedies otherwise available.  In case any provision in or obligation under this Mortgage shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.  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 would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists.  This Mortgage shall be binding upon and inure to the benefit of Mortgagee and Mortgagor and their respective successors and assigns.  Except as permitted in the Credit Agreement, Mortgagor shall not, without the prior written consent of Mortgagee, assign any rights, duties or obligations hereunder.  Upon payment in full of the Indebtedness and performance in full of the Obligations, or upon prepayment of a portion of the Indebtedness equal to the Net Cash Proceeds for the Mortgaged Property in connection with a permitted Asset Sale, subject to and in accordance with the terms and provisions of the Credit Agreement, Mortgagee, at Mortgagor’s expense, shall release the liens and security interests created by this Mortgage or reconvey the Mortgaged Property to Mortgagor or, at the request of Mortgagor, assign this Mortgage without recourse.  This Mortgage and the other Loan Documents embody the entire agreement and understanding between Mortgagee and Mortgagor and supersede all prior agreements and understandings between such parties relating to the subject matter hereof and thereof.  Accordingly, the Loan Documents may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties.  There are no unwritten oral agreements between the parties.

11.2

Governing Law

.  THE PROVISIONS OF THIS MORTGAGE REGARDING THE CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS HEREIN GRANTED SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED.  ALL OTHER PROVISIONS OF THIS MORTGAGE AND THE RIGHTS AND OBLIGATIONS OF MORTGAGOR AND MORTGAGEE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

11.3

Conflicts with Credit Agreement

.  In the event of any conflict or inconsistency between the terms of this Mortgage and the terms of the Credit Agreement, the Credit Agreement shall control.

EXHIBIT H-13

11.4

Time of Essence

.  Time is of the essence of this Mortgage.

11.5

WAIVER OF JURY TRIAL

.  EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF MORTGAGE OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS.  EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 11.5 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER WILL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

11.6

No Waiver

.  Any failure by Mortgagee to insist upon strict performance of any of the terms, provisions or conditions of the Loan Documents shall not be deemed to be a waiver of same, and Mortgagee shall have the right at any time to insist upon strict performance of all of such terms, provisions and conditions.

11.7

Subrogation

.  To the extent proceeds of the Loan have been used to extinguish, extend or renew any indebtedness against the Mortgaged Property, then Mortgagee shall be subrogated to all of the rights, liens and interests existing against the Mortgaged Property and held by the holder of such indebtedness and such former rights, liens and interests, if any, are not waived, but are continued in full force and effect in favor of Mortgagee.

11.8

Waiver of Stay, Moratorium and Similar Rights

.  Mortgagor agrees, to the full extent that it may lawfully do so, that it will not at any time insist upon or plead or in any way take advantage of any appraisement, valuation, stay, marshalling of assets, extension, redemption or moratorium law now or hereafter in force and effect so as to prevent or hinder the 

EXHIBIT H-14

enforcement of the provisions of this Mortgage or the indebtedness secured hereby, or any agreement between Mortgagor and Mortgagee or any rights or remedies of Mortgagee.

[Remainder of page intentionally left blank]

EXHIBIT H-15

IN WITNESS WHEREOF, Mortgagor has on the date set forth in the acknowledgment hereto, effective as of the date first above written, caused this instrument to be duly executed and delivered by authority duly given.

PHILLIPS-VAN HEUSEN CORPORATION

By:

Name:

Title:

EXHIBIT H-16

Certificate of Residence of Mortgagee

BARCLAYS BANK PLC, the Mortgagee herein named, hereby certifies that it has a place of business at 745 Seventh Avenue, New York, NY 10019.

By:

Name:

Title:

EXHIBIT H-17

[APPROPRIATE NOTARY BLOCK]

EXHIBIT H-18

EXHIBIT A TO

MORTGAGE

Legal Description of Premises

Exhibit H – EXH. A-1

  EXHIBIT I TO

 CREDIT AND GUARANTY AGREEMENT

		
	

RECORDING REQUESTED BY:

Latham & Watkins LLP

AND WHEN RECORDED MAIL TO:

Latham & Watkins LLP

885 Third Avenue

New York, New York 10022

Attn:  Melissa S. Alwang, Esq.

Re:  Phillips-Van Heusen Corporation

	

Space above this line for recorder’s use only

LANDLORD WAIVER AND CONSENT AGREEMENT

This LANDLORD WAIVER AND CONSENT AGREEMENT (this “Agreement”) is dated as of  [mm/dd/yy] and entered into by [NAME OF LANDLORD] (“Landlord”), to and for the benefit of BARCLAYS BANK PLC, as collateral agent for Lenders and Lender Counterparties (in such capacity “Collateral Agent”).

RECITALS:

WHEREAS, [NAME OF GRANTOR], a [Type of Person] (“Tenant”), has possession of and occupies all or a portion of the property described on Exhibit A annexed hereto (the “Premises”);

WHEREAS, Tenant’s interest in the Premises arises under the lease agreement (the “Lease”) more particularly described on Exhibit B annexed hereto, pursuant to which Landlord has rights, upon the terms and conditions set forth therein, to take possession of, and otherwise assert control over, the Premises;

WHEREAS, reference is made to that certain Credit and Guaranty Agreement, dated as of May 6, 2010 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”), Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), certain subsidiaries of the U.S. Borrower, as Guarantors, the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents, pursuant to which Tenant has executed a security agreement, mortgages, deeds of trust, deeds to secure debt and assignments of rents and leases, and other collateral documents in relation to the Credit Agreement;

EXHIBIT I-1

WHEREAS, Tenant’s repayment of the extensions of credit made by Lenders under the Credit Agreement will be secured, in part, by all Inventory of Tenant (including all Inventory of Tenant now or hereafter located on the Premises (the “Subject Inventory” or the “Collateral”); and

WHEREAS, Collateral Agent has requested that Landlord execute this Agreement as a condition to the extension of credit to Tenant under the Credit Agreement.

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord hereby represents and warrants to, and covenants and agrees with, Collateral Agent as follows:

1.  Landlord hereby (a) waives and releases unto Collateral Agent and its successors and assigns any and all rights granted by or under any present or future laws to levy or distraint for rent or any other charges which may be due to Landlord against the Collateral, and any and all other claims, liens and demands of every kind which it now has or may hereafter have against the Collateral, and (b) agrees that any rights it may have in or to the Collateral, no matter how arising (to the extent not effectively waived pursuant to clause (a) of this paragraph 1), shall be second and subordinate to the rights of Collateral Agent in respect thereof.  Landlord acknowledges that the Collateral is and will remain personal property and not fixtures even though it may be affixed to or placed on the Premises.

2.  Landlord consents to the placement of the Collateral on the Premises, and Landlord grants to Collateral Agent a revocable license to enter upon and into the Premises to do any or all of the following with respect to the Collateral:  assemble, have appraised, display, remove, maintain, prepare for sale or lease, repair, transfer, or sell (at public or private sale).  In entering upon or into the Premises, Collateral Agent hereby agrees to indemnify, defend and hold Landlord harmless from and against any and all claims, judgments, liabilities, costs and expenses incurred by Landlord caused solely by Collateral Agent’s entering upon or into the Premises and taking any of the foregoing actions with respect to the Collateral.  Such costs shall include any damage to the Premises made by Collateral Agent in severing and/or removing the Collateral therefrom.

3.  Landlord agrees that it will not prevent Collateral Agent or its designee from entering upon the Premises at all reasonable times to inspect or remove the Collateral.  In the event that Landlord has the right to, and desires to, obtain possession of the Premises due to the default of Tenant thereunder, Landlord will deliver to Collateral Agent a copy of the notice (the “Landlord’s Notice”) that it delivered to the Tenant to that effect.  Within the 30 day period after Collateral Agent receives the Landlord’s Notice, Collateral Agent shall have the right, but not the obligation, to cause the Collateral to be removed from the Premises.  During such 30 day period, Landlord will not remove the Collateral from the Premises nor interfere with Collateral Agent’s actions in removing the Collateral from the Premises or Collateral Agent’s actions in otherwise enforcing its security interest in the Collateral.  Notwithstanding anything to the contrary in this paragraph, Collateral Agent shall at no time have any obligation to remove the Collateral from the Premises.

4.  Landlord shall send to Collateral Agent a copy of any notice of default under the Lease sent by Landlord to Tenant. 

5.  All notices to Collateral Agent under this Agreement shall be in writing and sent to Collateral Agent at its address set forth on the signature page hereof by telefacsimile, by United States mail, or by overnight delivery service.

6.  The provisions of this Agreement shall continue in effect until Landlord shall have received Collateral Agent’s written certification that all amounts advanced under the Credit Agreement have been paid in full.

EXHIBIT I-2

7.  This Agreement and the rights and obligations of the parties hereunder shall be governed by, and shall be construed and enforced in accordance with, the internal laws of the State of New York, without regard to conflicts of laws principles.

[Remainder of page intentionally left blank]

EXHIBIT I-3

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed and delivered as of the day and year first set forth above.

[NAME OF LANDLORD]

By: _________________________

Name:

Title:

____________________________

____________________________

____________________________

Attention:

Telecopier:

By its acceptance hereof, as of the day and year first set forth above, Collateral Agent agrees to be bound by the provisions hereof.

BARCLAYS BANK PLC, 

as Collateral Agent

By: _________________________

Name:

Title:

____________________________

____________________________

____________________________

Attention:

Telecopier:

[APPROPRIATE NOTARY BLOCKS]

EXHIBIT I-4

EXHIBIT A TO

LANDLORD WAIVER AND CONSENT

Legal Description of Premises:

EXHIBIT I-A-1

EXHIBIT B TO

LANDLORD WAIVER AND CONSENT

Description of Lease:

EXHIBIT I-B-1

EXHIBIT J TO

CREDIT AND GUARANTY AGREEMENT

JOINDER AGREEMENT

THIS JOINDER AGREEMENT, dated as of [mm/dd/yy] (this “Agreement”), by and among Phillips-Van Heusen Corporation, a Delaware corporation (the “U.S. Borrower”), Tommy Hilfiger B.V., a Dutch private limited liability company with its corporate seat in Amsterdam, The Netherlands (the “Foreign Borrower” and, together with the U.S. Borrower, the “Borrowers”), certain subsidiaries of the U.S. Borrower, as Guarantors, the financial institution[s] party hereto as [Incremental Revolving Lender[s]] [Incremental Term Loan Lender[s]] (the “Incremental Lender[s]”), and Barclays Bank PLC, as Administrative Agent and Collateral Agent.

RECITALS:

WHEREAS, reference is hereby made to the Credit and Guaranty Agreement, dated as of May 6, 2010 (as it may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among the Borrowers, the Guarantors, the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Deutsche Bank Securities Inc., as Syndication Agent, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC and Royal Bank of Canada, as Co-Documentation Agents.

WHEREAS, subject to the terms and conditions of the Credit Agreement, the Borrowers  may increase the existing Revolving Loan Commitments and/or provide Incremental Term Loan Commitments by entering into one or more Joinder Agreements with the Incremental Term Loan Lenders and/or Incremental Revolving Loan Lenders, as applicable.

NOW, THEREFORE, in consideration of the premises and agreements, provisions and covenants herein contained, the parties hereto agree as follows:

Each Incremental Lender party hereto hereby agrees to commit to provide its respective Commitment as set forth on Schedule A annexed hereto, on the terms and subject to the conditions set forth below:

Each Incremental Lender (i) confirms that it has received a copy of the Credit Agreement and the other Loan Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Joinder Agreement (this “Agreement”); (ii) agrees that it will, independently and without reliance upon the Administrative Agent or any other Lender or Agent 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; (iii) appoints and authorizes Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents as are delegated to Administrative Agent, as the case may be, by the terms thereof, together with such powers as are reasonably incidental thereto; and (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.

Each Incremental Lender hereby agrees to make its Commitment on the following terms and conditions1:

1.

Incremental Term Loan Maturity Date.  The Incremental Term Loan Maturity Date for the Series [__] Incremental Term Loan shall be [   ].

1 Insert completed items 1-7 as applicable, with respect to Incremental Term Loans with such modifications as may be agreed to by the parties hereto to the extent consistent with Section 2.24 of the Credit Agreement.

EXHIBIT J-1

2.

Applicable Margin.  

i.

Base Rate Loans: The Applicable Margin for each Series [__] Incremental Term Loan that is a Base Rate Loan shall mean, as of any date of determination, [___]% per annum.

ii.

Eurodollar Rate Loans: The Applicable Margin for each Series [__] Incremental Term Loan that is a Eurodollar Rate Loan shall mean, as of any date of determination, [___]% per annum.

3.

Principal Payments.  [U.S. Borrower] [Foreign Borrower] shall make principal payments on the Series [__] Incremental Term  Loans in accordance with Section 2.12 of the Credit Agreement in installments on the dates and in the amounts set forth below:

		
	

(A)

Payment

Date

	

(B)

Scheduled

Repayment of

Series [__] Incremental Term Loans

	

	

      [$] [€]__________

	

	

      [$] [€]__________

	

	

      [$] [€]__________

	

	

      [$] [€]__________

	

	

      [$] [€]__________

	

	

      [$] [€]__________

	

	

      [$] [€]__________

	

	

      [$] [€]__________

	

	

      [$] [€]__________

	

	

      [$] [€]__________

	

	

      [$] [€]__________

	

	

      [$] [€]__________

	

	

      [$] [€]__________

	

	

      [$] [€]__________

	

TOTAL

	

      [$] [€]__________

4.

Voluntary and Mandatory Prepayments.  Scheduled installments of principal of the [Series [__]] Incremental Term Loans set forth above shall be reduced in connection with any voluntary or mandatory prepayments of the [Series [__]] Incremental Term Loans in accordance with Sections 2.13, 2.14 and 2.15 of the Credit Agreement as applicable.  

EXHIBIT J-2

5.

Other Fees.  [U.S. Borrower] [Foreign Borrower] agrees to pay each [Incremental Term Loan Lender] [Incremental Revolving Lender] party hereto its Pro Rata Share of an aggregate fee equal to [________ __, ____] on [_________ __, ____].

6.

Proposed Borrowing.  This Agreement represents [U.S. Borrower’s] [Foreign Borrower’s] request to borrow [Series [__] Incremental Term Loans] from the Incremental Term Loan Lenders party hereto as follows (the “Proposed Borrowing”):

a.

Business Day of Proposed Borrowing:  ___________, ____

b.

Amount of Proposed Borrowing:  [$][€]___________________

c.

Interest rate option:

 ̈

a.  Base Rate Loan(s)

 ̈

b.  Eurocurrency Rate Loans

with an initial Interest

Period of ____ month(s)

7.

[Incremental Lenders.  Each [Incremental Term Loan Lender] [Incremental Revolving Loan Lender] party hereto acknowledges and agrees that upon its execution of this Agreement [and the making of [Series [__] Incremental Term Loans][ Incremental Revolving Loans]] that such [Incremental Term Loan Lender] [Incremental Revolving Loan Lender] shall become a “Lender” under, and for all purposes of, the Credit Agreement and the other Loan Documents, and shall be subject to and bound by the terms thereof, and shall perform all the obligations of and shall have all rights of a Lender thereunder.]1

8.

Credit Agreement Governs.  Except as set forth in this Agreement, [Series [__] Incremental Term Loans] [Incremental Revolving Loans] shall otherwise be subject to the provisions of the Credit Agreement and the other Loan Documents.

9.

[U.S. Borrower’s] [Foreign Borrower’s] Certifications.  By its execution of this Agreement, the undersigned officer, to the best of his or her knowledge, and [U.S. Borrower] [Foreign Borrower] hereby certifies that:

i.

The representations and warranties contained in the Credit Agreement and in the other Loan Documents are true and correct in all material respects on and as of the date hereof to the same extent as though made on and as of the date hereof, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties were true and correct in all material respects on and as of such earlier date; provided, that to the extent any such representation or warranty is already qualified by materiality or Material Adverse Effect, such representation or warranty is true and correct in all respects;

ii.

No Default or Event of Default exists on the Increased Amount Date before or after giving effect to the Incremental Revolving Commitments or Incremental Term Loan Commitments, as applicable, provided for hereby; and

10.

[U.S. Borrower] [Foreign Borrower] Covenants.  By its execution of this Agreement, [U.S. Borrower] [Foreign Borrower] hereby covenants that:

1 Insert bracketed language if the lending institution is not already a Lender.

EXHIBIT J-3

i.

[[U.S. Borrower] [Foreign Borrower] shall make any payments required pursuant to Section 2.11[(a)][(b)] of the Credit Agreement in connection with the Incremental Revolving Loan Commitments;]1

ii.

[U.S. Borrower] [Foreign Borrower] shall deliver or cause to be delivered the following legal opinions and documents: [___________], together with all other legal opinions and other documents reasonably requested by Administrative Agent in connection with this Agreement; and

iii.

Set forth on the attached Officers’ Certificate are the calculations (in reasonable detail) demonstrating that the U.S. Borrower is in pro forma compliance with each of the covenants set forth in Section 6.07 of the Credit Agreement as of the last day of the most recently ended Fiscal Quarter after giving effect to the Incremental Revolving Commitments or Incremental Term Loan Commitments, as applicable, provided for hereby.

11.

Eligible Assignee.  By its execution of this Agreement, each Incremental Lender represents and warrants that it is an Eligible Assignee.

12.

Notice.  For purposes of the Credit Agreement, the initial notice address of each [Incremental Term Loan Lender] [Incremental Revolving Loan Lender] shall be as set forth below its signature below.

13.

Non-US Lenders.  For each Incremental Lender that is a Non-U.S. Lender, delivered herewith to Administrative Agent are such forms, certificates or other evidence with respect to United States federal income tax withholding matters as such Incremental Lender may be required to deliver to Administrative Agent pursuant to subsection 2.20(c) of the Credit Agreement.

14.

Recordation of the Incremental Loans.  Upon execution and delivery hereof, Administrative Agent will record the  [Series [__] Incremental Term Loans] [Incremental Revolving Loans] made by the Incremental Lenders in the Register.

15.

Amendment, Modification and Waiver.  This Agreement may not be amended, modified or waived except by an instrument or instruments in writing signed and delivered on behalf of each of the parties hereto.

16.

Entire Agreement.  This Agreement, the Credit Agreement and  the other Loan Documents constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and verbal, among the parties or any of them with respect to the subject matter hereof.

17.

GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

18.

Severability.  Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.  If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as would be enforceable.

1 Select this provision in the circumstance where Loans are Incremental Revolving Loans.

EXHIBIT J-4

19.

Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.

[Remainder of page intentionally left blank]

EXHIBIT J-5

IN WITNESS WHEREOF, each of the undersigned has caused its duly authorized officer to execute and deliver this Joinder Agreement as of [_____________, ______].

[NAME OF INCREMENTAL LENDER]

By:______________________________

Name: 

Title:

Notice Address:

Attention:

Telephone:

Facsimile:

PHILLIPS-VAN HEUSEN CORPORATION

By: __________________________

Name:

Title:

TOMMY HILFIGER B.V.

By: __________________________

Name:

Title:

[GUARANTORS]

By: __________________________

Name:

Title:

EXHIBIT J-6

Consented to by:

BARCLAYS BANK PLC

as Administrative Agent

By: _____________________________

Name:

Title:

EXHIBIT J-7

 SCHEDULE A

 TO JOINDER AGREEMENT

			
	

Name of Lender

	

Type of Commitment

	

Amount

	

[___________________]

	

[Incremental Term Loan Commitment] [Incremental Revolving Loan Commitment]

	

[$][€]____________________

	

	

	

	

	

	

Total: [$][€]_________________

EXHIBIT J-8exhibit10-1.htm

 

 

 

TRANSMISSION USE AND CAPACITY

 

 

EXCHANGE AGREEMENT

 

 

 

 

by and among

 

 

 

 

NEVADA POWER COMPANY

(d/b/a NV Energy)

 

 

 

 

SIERRA PACIFIC POWER COMPANY

(d/b/a NV Energy)

 

 

 

 

and

 

 

 

 

GREAT BASIN TRANSMISSION, LLC

 

 

 

 

Dated as of

 

 

August 20, 2010

 

 

 

 

 

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

TABLE OF CONTENTS

 

 

	
ARTICLE I  DEFINITIONS..............................................................................................................................................................................................................

	
2

	  	
1.01

	
Definitions........................................................................................................................................................................................

	
2

	  	
1.02

	
Interpretations.....................................................................................................................................................................................

	
31

	  	  	  	  
	
ARTICLE II  ACQUISITIONS OF ON LINE..........................................................................................................................................................................................

	
32

	  	
2.01

	
Acquisition; Purchase Price....................................................................................................................................................................

	
32

	  	
2.02

	
Closing Payments; Closing Payment Adjustments.........................................................................................................................................

	
32

	  	
2.03

	
Conditions Precedent to Acquisition Closing...............................................................................................................................................

	
34

	  	
2.04

	
Acquisition Closing Deliverables.............................................................................................................................................................

	
36

	  	
2.05

	
Timing and Location of Acquisition Closing................................................................................................................................................

	
36

	  	
2.06

	
Efforts to Close..................................................................................................................................................................................

	
36

	  	
2.07

	
Disclosure Schedule Update...................................................................................................................................................................

	
36

	  	
2.08

	
Allocation of Purchase Price....................................................................................................................................................................

	
37

	  	  	  	  
	
ARTICLE III  OWNERSHIP AND CAPACITY RIGHTS; MONTHLY PAYMENT............................................................................................................................................

	
38

	  	
3.01

	
Ownership Rights................................................................................................................................................................................

	
38

	  	
3.02

	
Electrical Capacity Rights......................................................................................................................................................................

	
39

	  	
3.03

	
Microwave and Fiber Optic Capacity Rights.................................................................................................................................................

	
43

	  	
3.04

	
Revenue Rights..................................................................................................................................................................................

	
43

	  	
3.05

	
Relationship of the Parties......................................................................................................................................................................

	
43

	  	
3.06

	
Monthly Payment................................................................................................................................................................................

	
43

	  	
3.07

	
Great Basin Segment Abandonment or Delay Buyout Right................................................................................................................................

	
45

	  	
3.08

	
30th Anniversary Buyout Right................................................................................................................................................................

	
46

	  	
3.09

	
41st Anniversary Buyout Right or Renewable Term.........................................................................................................................................

	
46

	  	
3.10

	
Force Majeure....................................................................................................................................................................................

	
47

	  	
3.11

	
Transmission Systems...........................................................................................................................................................................

	
48

	  	
3.12

	
Additional Uses..................................................................................................................................................................................

	
48

	  	  	  	  
	
ARTICLE IV  DEVELOPMENT AND CONSTRUCTION OF ON LINE...........................................................................................................................................................

	
48

	  	
4.01

	
Pursuit and Management of ON Line..........................................................................................................................................................

	
48

	  	
4.02

	
ON Line Managers..............................................................................................................................................................................

	
49

	  	
4.03

	
Access to ON Line and ON Line ROW.......................................................................................................................................................

	
49

	  	
4.04

	
Standard of Performance.........................................................................................................................................................................

	
50

	  	
4.05

	
Government Approvals; Cooperation..........................................................................................................................................................

	
50

	  	
4.06

	
Interconnection and Construction..............................................................................................................................................................

	
51

	  	
4.07

	
Consultants.......................................................................................................................................................................................

	
52

	  	
4.08

	
Change of Name..................................................................................................................................................................................

	
52

	  	
4.09

	
Robinson Summit Substation...................................................................................................................................................................

	
52

	  	  	  	  
	
ARTICLE V  PROJECT BUDGET AND PAYMENT OF COSTS...................................................................................................................................................................

	
52

	  	
5.01

	
Project Budget....................................................................................................................................................................................

	
52

	  	
5.02

	
Compliance with Project Budget; Amendments..............................................................................................................................................

	
53

	  	
5.03

	
Funding ON Line Costs.........................................................................................................................................................................

	
54

	  	
5.04

	
Funding of Capital Repair Costs...............................................................................................................................................................

	
56

 

 

 

 

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5.05

	
Cost Reductions..............................................................................................................................................................................

	
57

	  	
5.06

	
Invoicing and Payment.......................................................................................................................................................................

	
58

	  	
5.07

	
Defaulted Contributions......................................................................................................................................................................

	
58

	  	
5.08

	
Payment on Non-Business Day.............................................................................................................................................................

	
58

	  	
5.09

	
Project Accounts..............................................................................................................................................................................

	
59

	  	  	  	  
	
ARTICLE VI  DEVELOPMENT AND CONSTRUCTION OF GREAT BASIN SEGMENTS......................................................................................................................................

	
59

	  	
6.01

	
Transmission Improvements.................................................................................................................................................................

	
59

	  	
6.02

	
Development and Construction.............................................................................................................................................................

	
59

	  	
6.03

	
Compliance with Laws and Conduct........................................................................................................................................................

	
60

	  	
6.04

	
Quarterly Reports.............................................................................................................................................................................

	
60

	  	
6.05

	
SNIP Option...................................................................................................................................................................................

	
60

	  	  	  	  
	
ARTICLE VII  OPERATION OF THE TRANSMISSION LINE.......................................................................................................................................................................

	
63

	  	
7.01

	
Transmission Line Operation; ON Line Maintenance....................................................................................................................................

	
63

	  	
7.02

	
Great Basin Segment Management..........................................................................................................................................................

	
64

	  	
7.03

	
Operational and Maintenance Standards...................................................................................................................................................

	
64

	  	
7.04

	
Balancing Authority; Balancing Authority Area.........................................................................................................................................

	
65

	  	
7.05

	
Ancillary Services............................................................................................................................................................................

	
65

	  	
7.06

	
Transmission Losses..............................................................................................................................................................................

	
65

	  	
7.07

	
Dynamic Transfers............................................................................................................................................................................

	
66

	  	  	  	  
	
ARTICLE VIII  MANAGEMENT COMMITTEE; PROJECT COMPANY...........................................................................................................................................................

	
66

	  	
8.01

	
Management Committee.......................................................................................................................................................................

	
66

	  	
8.02

	
Non-Delegable Actions......................................................................................................................................................................

	
69

	  	
8.03

	
Project Company..............................................................................................................................................................................

	
70

	  	
8.04

	
Time is of the Essence........................................................................................................................................................................

	
70

	  	  	  	  
	
ARTICLE IX  REPORTING; RECORDKEEPING........................................................................................................................................................................................

	
70

	  	
9.01

	
Monthly/Quarterly Report...................................................................................................................................................................

	
70

	  	
9.02

	
Notification of ON Line Events..............................................................................................................................................................

	
71

	  	
9.03

	
Recordkeeping.................................................................................................................................................................................

	
71

	  	
9.04

	
Inspection and Audit Rights................................................................................................................................................................

	
71

	  	
9.05

	
Information.....................................................................................................................................................................................

	
72

	  	
9.06

	
Access to Financial Information.............................................................................................................................................................

	
72

	  	  	  	  
	
ARTICLE X  TAXES AND ASSESSMENTS............................................................................................................................................................................................

	
72

	  	
10.01

	
Management of Tax Matters.................................................................................................................................................................

	
72

	  	
10.02

	
Sharing of Taxes and Related Payments....................................................................................................................................................

	
73

	  	
10.03

	
Payment of Taxes.............................................................................................................................................................................

	
73

	  	
10.04

	
Non-Creation of Taxable Entity..............................................................................................................................................................

	
73

	  	
10.05

	
Transfer Taxes................................................................................................................................................................................

	
74

	  	
10.06

	
Duties Regarding Assessments.............................................................................................................................................................

	
74

	  	
10.07

	
Periodic Payments.............................................................................................................................................................................

	
75

	  	  	  	  
	
ARTICLE XI  TERM AND TERMINATION............................................................................................................................................................................................

	
75

 

 

 

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11.01

	
Term.............................................................................................................................................................................................

	
75

	  	
11.02

	
Winding-Up....................................................................................................................................................................................

	
75

	  	
11.03

	
Termination.....................................................................................................................................................................................

	
77

	  	  	  	  
	
ARTICLE XII  INDEMNIFICATION: LIMITATION OF LIABILITY.....................................................................................................................................................................

	
78

	  	
12.01

	
Indemnification.......................................................................................................................................................................................

	
78

	  	
12.02

	
Contribution of Parties..............................................................................................................................................................................

	
80

	  	
12.03

	
Waiver of Damages..................................................................................................................................................................................

	
80

	  	
12.04

	
Survival of Representations and Warranties......................................................................................................................................................

	
83

	  	  	  	  
	
ARTICLE XIII  INSURANCE AND EVENTS OF LOSS......................................................................................................................................................................................

	
83

	  	
13.01

	
Insurance..............................................................................................................................................................................................

	
83

	  	
13.02

	
Damage or Destruction...............................................................................................................................................................................

	
83

	  	
13.03

	
Distribution of Insurance Proceeds.................................................................................................................................................................

	
84

	  	
13.04

	
Payment of Restoration Costs.......................................................................................................................................................................

	
84

	  	
13.05

	
Rebuild or Repair by a Single Party; Fair Market Value..........................................................................................................................................

	
85

	  	
13.06

	
Great Basin Segment Event of Loss................................................................................................................................................................

	
86

	  	
13.07

	
Event of Loss Threshold Deadlock................................................................................................................................................................

	
86

	  	  	  	  
	
ARTICLE XIV  CONDEMNATION...............................................................................................................................................................................................................

	
87

	  	
14.01

	
Participation in Condemnation Action.............................................................................................................................................................

	
87

	  	
14.02

	
Taking..................................................................................................................................................................................................

	
87

	  	
14.03

	
Distribution of Condemnation Awards............................................................................................................................................................

	
87

	  	
14.04

	
Payment of Restoration Costs......................................................................................................................................................................

	
88

	  	
14.05

	
Rebuild or Repair by a Single Party................................................................................................................................................................

	
88

	  	
14.06

	
Great Basin Segment Condemnation...............................................................................................................................................................

	
89

	  	
14.07

	
Condemnation Action Threshold Deadlock.......................................................................................................................................................

	
89

	  	  	  	  
	
ARTICLE XV  TRANSFERS AND CHANGES OF CONTROL..............................................................................................................................................................................

	
90

	  	
15.01

	
Transfers..............................................................................................................................................................................................

	
90

	  	
15.02

	
Right of First Refusal and Right of First Offer....................................................................................................................................................

	
90

	  	
15.03

	
Permitted Transfers...................................................................................................................................................................................

	
92

	  	
15.04

	
Other Transfer Restrictions..........................................................................................................................................................................

	
94

	  	
15.05

	
Change of Control....................................................................................................................................................................................

	
96

	  	  	  	  
	
ARTICLE XVI  DEFAULT AND REMEDIES..................................................................................................................................................................................................

	
96

	  	
16.01

	
Events of Default.....................................................................................................................................................................................

	
96

	  	
16.02

	
Remedies...............................................................................................................................................................................................

	
97

	  	
16.03

	
Additional Obligations..............................................................................................................................................................................

	
103

	  	
16.04

	
Interest on Overdue Payments and Contributions; Setoff........................................................................................................................................

	
103

	  	
16.05

	
Mitigation.............................................................................................................................................................................................

	
103

	  	  	  	  
	
ARTICLE XVII  REPRESENTATIONS AND WARRANTIES..............................................................................................................................................................................

	
104

	  	
17.01

	
Representations and Warranties....................................................................................................................................................................

	
104

	  	
17.02

	
Special Representations and Warranties of Great Basin.........................................................................................................................................

	
105

	  	
17.03

	
MOU...................................................................................................................................................................................................

	
107

	  	
17.04

	
Non-Severable Improvements.......................................................................................................................................................................

	
108

 

 

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17.05

	
Knowledge............................................................................................................................................................................................

	
108

	  	
17.06

	
Exclusivity of Representations.....................................................................................................................................................................

	
108

	  	  	  	  
	
ARTICLE XVIII  LIENS; FINANCING MATTERS............................................................................................................................................................................................

	
108

	  	
18.01

	
Liens...................................................................................................................................................................................................

	
108

	  	
18.02

	
Financing.............................................................................................................................................................................................

	
110

	  	
18.03

	
Non-Disturbance Agreement........................................................................................................................................................................

	
110

	  	
18.04

	
Security Interest.......................................................................................................................................................................................

	
112

	  	  	  	  
	
ARTICLE XIX  GOVERNING LAW; DISPUTE RESOLUTION.............................................................................................................................................................................

	
117

	  	
19.01

	
Governing  Law.......................................................................................................................................................................................

	
117

	  	
19.02

	
Dispute Resolution; Binding Arbitration..........................................................................................................................................................

	
117

	  	  	  	  
	
ARTICLE XX  MISCELLANEOUS...............................................................................................................................................................................................................

	
120

	  	
20.01

	
Notices................................................................................................................................................................................................

	
120

	  	
20.02

	
Waivers................................................................................................................................................................................................

	
121

	  	
20.03

	
No Third-Person Beneficiaries......................................................................................................................................................................

	
121

	  	
20.04

	
Severability............................................................................................................................................................................................

	
121

	  	
20.05

	
Independent Counsel...............................................................................................................................................................................

	
121

	  	
20.06

	
Further Assurances.................................................................................................................................................................................

	
121

	  	
20.07

	
No Fiduciary Relationship...........................................................................................................................................................................

	
121

	  	
20.08

	
Confidential Information..............................................................................................................................................................................

	
122

	  	
20.09

	
Other Transmission Lines and Exclusivity........................................................................................................................................................

	
123

	  	
20.10

	
Survival of Obligations..............................................................................................................................................................................

	
124

	  	
20.11

	
Construction..........................................................................................................................................................................................

	
124

	  	
20.12

	
Amendment............................................................................................................................................................................................

	
125

	  	
20.13

	
Entire Agreement......................................................................................................................................................................................

	
125

	  	
20.14

	
Successors and Assigns............................................................................................................................................................................

	
125

	  	
20.15

	
Headings..............................................................................................................................................................................................

	
125

	  	
20.16

	
Counterparts...........................................................................................................................................................................................

	
125

	  	
20.17

	
Running with the Land; Memorandums of this Agreement.....................................................................................................................................

	
125

	  	
20.18

	
Dedication............................................................................................................................................................................................

	
125

	  	
20.19

	
Integrity Clause; Gratuity............................................................................................................................................................................

	
125

	  	
20.20

	
Expiration of Options................................................................................................................................................................................

	
126

	  	
20.21

	
Mobile Sierra..........................................................................................................................................................................................

	
126

	  	  	  	  
	  	  	  	  
	
EXHIBITS

	  
	  	  	  	  
	
Exhibit A

	
ON Line Budget

	  
	
Exhibit B

	
Delegated Responsibilities

	  
	
Exhibit C

	
ON Line Schedule

	  
	
Exhibit D

	
Insurance Plan

	  
	
Exhibit E

	
Form of Bill of Sale and Assignment and Assumption Agreement

	  
	
Exhibit F

	
Form of Assignment and Consent Agreement

	  
	
Exhibit G

	
Form of Grant, Bargain and Sale Deed

	  
	
Exhibit H

	
Applicable Transfer Representations and Warranties

	  

 

 

 

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Exhibit I

	
Legal Opinion Provisions

	  
	  	  	  	  
	  	  	  	  
	
SCHEDULES

	  
	  	  	  	  
	
Schedule 1

	
Description of Transmission Line

	  
	
Schedule 2

	
Monthly Payment Factors

	  
	
Schedule 3

	
Operating Activities

	  
	
Schedule 4

	
Primary ON Line Agreements

	  
	
Schedule 5

	
Buyout Prices

	  
	
Schedule 6

	
Governmental Approval Status

	  
	
Schedule 7

	
Great Basin Segments Specifications Deviations

	  
	  	  	  	  
	  	  	  	  
	
ANNEXES

	  
	  	  	  	  
	
Annex A

	
Ownership Percentages of the Parties

	  

 

 

 

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TRANSMISSION USE AND CAPACITY

 

EXCHANGE AGREEMENT

 

THIS TRANSMISSION USE AND CAPACITY EXCHANGE AGREEMENT, dated as of August 20, 2010 (the “Effective Date”), is made and entered into by and among NEVADA POWER COMPANY, a Nevada corporation, d/b/a NV Energy (“NPC”), SIERRA PACIFIC POWER COMPANY, a Nevada corporation, d/b/a NV Energy (“SPPC” and, collectively with NPC, the “NVE Parties”) and GREAT BASIN TRANSMISSION, LLC, a Delaware limited liability company (“Great Basin”).  NPC, SPPC and Great Basin are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, the NVE Parties are investor-owned electric utilities serving customers in both northern and southern Nevada and have been developing a major transmission project in eastern Nevada to interconnect the two utilities known, as of the Effective Date, as the “One Nevada Transmission Line Project” or “ON Line”, which is an above-ground 500 kV AC transmission line from a substation to be located at the Robinson Summit Location to the Harry Allen Substation (the “NVE Project”);

 

WHEREAS, Great Basin currently owns and is developing the Transmission Line, which is an above-ground 500 kV AC transmission line comprising three segments extending from the Midpoint Substation to the Eldorado Substation;

 

WHEREAS, the northernmost and central segments of the Transmission Line are collectively known as the Southwest Intertie Project, with the northernmost segment extending from the Midpoint Substation to a substation located at the Thirtymile Location (“SWIP-N”) and the central segment extending from such substation to the Harry Allen Substation (“SWIP-S”), and the southernmost segment of the Transmission Line, which is known as the Southern Nevada Intertie Project, extends from the Harry Allen Substation to the Eldorado Substation (“SNIP”);

 

WHEREAS, the NVE Parties desire to purchase from Great Basin and Great Basin desires to sell certain undivided ownership interests in SWIP-S on the terms and conditions set forth herein and, in furtherance of the transactions contemplated in this Agreement, SWIP-S will be renamed the “One Nevada Transmission Line” and “ON Line;”

 

WHEREAS, SNIP and SWIP-N comprise the Great Basin Segments, as further described in this Agreement; and

 

WHEREAS, the Parties desire to set forth in this Agreement the terms and conditions upon which the Parties shall jointly develop, construct, own, manage and use ON Line and jointly use the Great Basin Segments.

 

NOW THEREFORE, in consideration of the premises and mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

 

Transmission Use and Capacity Exchange Agreement

  

 

  

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ARTICLE I

DEFINITIONS

 

                                         1.01 Definitions. As used in this Agreement, the following terms shall have the following meanings:

 

“AAA” has the meaning set forth in Section 19.02(b)(i).

 

“AC” means alternating current.

 

“Acquiring Party” has the meaning set forth in Section 15.02(c).

 

“Acquisition Closing” means the sale by Great Basin and the purchase by the NVE Parties of Ownership Interests in the amount of their respective Ownership Percentages.

 

“Acquisition Closing Date” means the date upon which the Acquisition Closing occurs, which shall be the day before the Acquisition Closing is effective in accordance with Section 2.05.

 

“Acquisition Closing Deadline” has the meaning set forth in Section 2.06.

 

“Advance” has the meaning set forth in Section 5.07(a).

 

“Affiliate” means any Person that, directly or indirectly through one or more other Persons, Controls, is Controlled by or is under common Control with the Person specified.  For the purposes of this Agreement (except Sections 12.01(c) and 20.08), the NVE Parties shall not be considered Affiliates of one another.

 

“Affiliated Assignee” has the meaning set forth in Section 15.03(e).

 

“Affiliated Lender” means any Person that is an Affiliate of Great Basin or holds greater than a ten percent (10%) direct or indirect equity interest in Great Basin other than any agency or other instrumentality of the United States of America in its capacity as an ON Line Lender or GB Segment Lender that becomes an Affiliate of Great Basin as a result of a foreclosure or other exercise of its remedies under the ON Line Financing Agreements or the GB Segment Financing Agreements, as applicable.

 

“Agreed Rate” means the lesser of (a) the “Prime rate” for the “U.S.” as published in the “Money Rates” table of The Wall Street Journal from time to time and (b) the maximum rate of interest permitted by Applicable Law.

 

“Agreement” means this Transmission Use and Capacity Exchange Agreement.

 

“Allocation” has the meaning set forth in Section 2.08.

 

“Alternate Representative” has the meaning set forth in Section 8.01(a).

 

 

 

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“Amortization Period” means (a) with respect to Capital Repairs, Event of Loss Costs and Condemnation Action Costs, the useful life (in months) of the applicable reconstructed or restored asset (consistent with a depreciation schedule approved by the PUCN and used by the NVE Parties for similar assets) depreciated on a straight line basis and (b) with respect to any Incremental Cost Differential, six hundred twenty-four (624) months on a straight line basis.

 

“Ancillary Services” means any of the services that are necessary to support the transmission of capacity and energy from resources to loads while maintaining reliable operation of the transmission system in accordance with Prudent Utility Practices, including scheduling, system control and dispatch service, reactive supply and voltage control, regulation and frequency response, energy imbalance, generator imbalance, operating reserve-spinning, operating reserve-supplemental and loss compensation.

 

“Anticipated Investment” means (a) with respect to SWIP-N, six hundred sixteen million nine hundred ten thousand Dollars ($616,910,000), (b) with respect to ON Line, five hundred nine million six hundred twenty-one thousand Dollars ($509,621,000) and (c) with respect to SNIP, two hundred fourteen million five hundred seventy-seven thousand Dollars ($214,577,000).  For the avoidance of doubt, the foregoing Anticipated Investment amounts shall not be subject to adjustment for any reason, including in respect of any Carrying Costs, interest or allowance for funds used during construction.

 

“Applicable Centennial Phase 3 Facilities” has the meaning set forth in the SNIP Agreement.

 

“Applicable Centennial Phase 3 Rights” has the meaning set forth in Section 6.05(a).

 

“Applicable Law” means any law, statute, common law, treaty, code, rule, ordinance, binding directive, regulation, order, judgment, decree, ruling, determination or Governmental Approval of any Governmental Authority, including Environmental Laws, in each case, which is binding on the Transmission Line (any portion thereof), any Party or any Project Company, as applicable.

 

“Applicable Transfer Representations and Warranties” means, with respect to a Transfer, the representations and warranties and related limits on liability in form and substance similar to those set out in Exhibit H.

 

“Assignment and Assumption Agreement” has the meaning set forth in Section 15.04(b).

 

“Authorized Representative” has the meaning set forth in Section 8.01(a).

 

“Balancing Authority” means the responsible entity that integrates resource plans ahead of time, maintains load-interchange-generation balance within the Balancing Authority Area and supports interconnection frequency in real time.

 

 

 

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“Balancing Authority Area” means the collection of generation, transmission and loads within the metered boundaries of the NVE Parties.

 

“Balancing Authority Area Services Agreement” means a Balancing Authority Area Services Agreement entered into by and between Great Basin and one or both of the NVE Parties for the provision of certain Ancillary Services; provided, however, that such Balancing Authority Area Services Agreement shall not provide for any (a) generator imbalance service for generators directly interconnected to the Great Basin Segments within the Balancing Authority Area outside of a bandwidth of: (i) plus or minus one and one-half percent (1.5%) of such generator’s capacity or (ii) a maximum of plus or minus two (2) MWs, (b) energy imbalance services or (c) operating reserves (either spinning or supplemental) or back-up for resources associated with schedules from generators delivering their output from or outside of the NVE Parties’ Balancing Authority Area.

 

“Bankruptcy Event” means, with respect to any Person, if such Person (a) voluntarily files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar law, (b) has any such petition filed or proceeding or action commenced against it by its creditors and such petition, proceeding or action is not dismissed within sixty (60) days after the filing or commencement; (c) makes an assignment or any general arrangement for the benefit of creditors; (d) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets; or (e) is generally unable to pay its debts as they fall due.

 

“BLM” means the United States Department of Interior’s Bureau of Land Management.

 

“BLM SNIP License Consent” means a final decision issued by the BLM, not subject to rehearing or administrative appeal, providing any and all BLM approvals necessary to provide the license and transfer of assets by NPC to Great Basin as contemplated by the SNIP Agreement, on terms and conditions reasonably acceptable to the NVE Parties and Great Basin.

 

“Books and Records” has the meaning set forth in Section 9.03(a).

 

“Business Day” means any day other than Saturday, Sunday and any day that banks are required to close in the State of Nevada or the State of New York.

 

“CA” means the Confidentiality Agreement, dated May 18, 2009, by and between Great Basin and NVE Parent.

 

“Capacity Entitlement” means, with respect to a Party, the portion of the Electrical Capacity to which such Party is entitled pursuant to Section 3.02, as may be adjusted pursuant to Sections 16.02(f), (g) or (h).

 

“Capital Repair” means (a) any and all work reasonably necessary or appropriate to repair, restore, refurbish or replace any equipment, structure or any other component of ON Line (or any portion thereof) after ON Line COD necessitated by (i) any defect in design, 

 

 

 

 

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construction or installation, (ii) physical or functional obsolescence or (iii) modifications required by any Applicable Law or (b) the substitution, replacement, enlargement or improvement of any structure, facility, equipment, property, land or land rights constituting part of ON Line after ON Line COD, in each case with respect to clauses (a) and (b), the associated costs of which would be capitalized in accordance with GAAP; provided, however, that Capital Repairs do not include any Operating Activities or work resulting from any Event of Loss or any Condemnation Action.

 

“Capital Repair Account” has the meaning set forth in Section 5.04(a).

 

“Capital Repair Budget” means each budget for Capital Repairs approved by the Management Committee, which shall include line item estimates of the cost of all Capital Repairs expected for the five-year operation period immediately following its preparation.

 

“Capital Repair Costs” means costs and expenses incurred to complete any Capital Repairs, including each Party’s (a) direct internal labor costs for employees directly engaged in completing Capital Repairs insofar as such costs are subject to reimbursement pursuant to Section 5.01(d), (b) all direct costs for supplies, materials, equipment property, land and land rights and the cost of removal, salvage, or disposal of any structure, facility, equipment or property, (c) third-Person costs, directly incurred for permitting and licensing activities, engineering, surveying, project management, legal, and other professional services incurred in respect of the completion of Capital Repairs, (d) costs and expenses directly incurred pursuant to ON Line Agreements entered into in respect of Capital Repairs and (e) costs and expenses required during an emergency to protect human life in connection with ON Line, protect against or mitigate serious loss or damage to ON Line, comply with Applicable Law for ON Line and prevent or mitigate damage to the environment or to the property of others caused by ON Line, which, in the case of clauses (a) through (e) above, would be capitalized in accordance with GAAP; provided, however, that Capital Repair Costs shall not include the following: (n) any costs or expenses incurred under the Balancing Authority Area Services Agreement or in providing Balancing Area Authority services thereunder, (o) Event of Loss Costs or Condemnation Action Costs, (p) any lobbying costs, (q) any legal fees associated with Great Basin’s participation in regulatory proceedings where such participation has not been approved in advance by the Management Committee or the NVE Parties’ participation in regulatory proceedings where the NVE Parties are not the applicant/petitioner or are not required to participate, (r) any gift of items, money or entertainment in connection with ON Line, including political or campaign contributions, (s) Personal Taxes or Transfer Taxes, (t) third-Person costs, expenses and fees for lawyers, other consultants, financing parties and agents (including application and other fees and expenses in connection with any loan guarantee or other program provided by the U.S. Department of Energy), in each case, incurred by any Party in connection with the ON Line Financing, its financing of Capital Repair Costs, all other Excluded Agreements and the costs associated with any Party’s auditing and reporting requirements under this Agreement, the ON Line Financing Agreements and its other financing agreements, including all Up-Front GBT Costs and On-Going GBT Costs, (u) costs and expenses incurred in the preparation, negotiation, execution or delivery of this Agreement, (v) any amounts attributable to general administrative costs or overhead costs not associated with direct internal labor for employees directly engaged in the completion of Capital Repairs, (w) any amounts 

 

 

 

 

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incurred by Great Basin in connection with the Great Basin Segments, (x) any interest or penalty imposed by any Governmental Authority, (y) any interest or costs associated with carrying such costs and expenses, including Carrying Costs and (z) other than as described in clause (d) above, any costs or expenses arising, incurred or committed to by a Party without the consent of the Management Committee and not in accordance with the Capital Repair Budget.

 

“Capitalized Costs” means an amount equal to the aggregate sum of the (a) lesser of Net Actual Costs and the aggregate amount of ON Line Costs set forth in the ON Line Budget, plus Carrying Costs in respect of such costs, (b) Initial Cost Differential, plus Carrying Costs in respect of such costs and (c) Carrying Cost up to ON Line COD in respect of any Incremental Cost Differential, Net Event of Loss Costs and Net Condemnation Action Costs.

 

“Carrying Cost” means the cost of carrying any ON Line Costs, Event of Loss Costs and Condemnation Action Costs less any applicable Cost Reductions, in each case, from the date such costs were incurred to ON Line COD at a rate equal to (a) eight and fifty-eight hundredths percent (8.58%) per annum prior to ON Line Financial Closing and (b) eight and eight hundredths percent (8.08%) per annum thereafter; provided, however, that (x) Carrying Costs on Great Basin’s Development Costs from January 1, 2010 to Acquisition Closing shall not exceed an amount equal to, when added to such Development Costs and Carrying Costs of Great Basin through December 31, 2009, fifteen million eight hundred thousand Dollars ($15,800,000) and (y) Carrying Costs on the Development Costs of the NVE Parties from January 1, 2010 to Acquisition Closing shall not exceed an amount equal to, when added to such Development Costs and Carrying Costs of the NVE Parties through December 31, 2009, fifteen million eight hundred thousand Dollars ($15,800,000).  For the avoidance of doubt, any Development Costs and Pre-Closing Costs incurred prior to ON Line Financial Closing shall be carried at a rate of eight and fifty-eight hundredths percent (8.58%) per annum from the date such costs were incurred to the date of ON Line Financial Closing and then at a rate of eight and eight hundredths percent (8.08%) per annum from the date of ON Line Financial Closing to the ON Line COD.  For purposes of calculating Carrying Costs hereunder, all ON Line Costs, Event of Loss Costs and Condemnation Action Costs, in each case, shall be deemed incurred, and Cost Reductions, Insurance Proceeds and Condemnation Awards shall be deemed received, on the last day of the month in which such costs are incurred or reductions are received.

 

“Chair” has the meaning set forth in Section 8.01(e).

 

“Claiming Party” has the meaning set forth in Section 3.10.

 

“Claims” means any and all claims, demands, suits, obligations, payments, liabilities, costs, fines, penalties, sanctions, taxes, judgments, damages, losses and expenses, including reasonable attorneys’ fees and expenses.

 

“Closing Payment” has the meaning set forth in Section 2.02(b).

 

“Closing Statement” has the meaning set forth in Section 2.02(b).

 

“Code” means the Internal Revenue Code of 1986.

 

 

 

 

 

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“Complete Taking” has the meaning set forth in Section 14.02.

 

“Condemnation Action” means the taking of all or any portion of the Transmission Line as a result of the exercise of the power of eminent domain or condemnation for public or quasi-public use or the sale or conveyance of all or any portion of the Transmission Line under the threat or in lieu of condemnation.

 

“Condemnation Action Budget” has the meaning set forth in Section 14.04.

 

“Condemnation Action Costs” has the meaning set forth in Section 14.04.

 

“Condemnation Award” means any compensation received in respect of a Condemnation Action.

 

“Confidential Information” has the meaning set forth in Section 20.08(a).

 

“Contributing Party” has the meaning set forth in Section 5.07(a).

 

“Contribution” has the meaning set forth in Section 5.07(a).

 

“Control” means the ownership, directly or indirectly, of fifty percent (50%) or more of the voting securities of a Person or the power to direct the management or policies of such Person, whether by operation of law, by contract or otherwise.

 

“Cost Detail Reconciliation Statement” has the meaning set forth in Section 2.02(d).

 

“Cost Detail Statement” has the meaning set forth in Section 2.02(a).

 

“Cost Reduction” means any (a) damages, liquidated damages, indemnity payments or other amounts recovered pursuant to any ON Line Agreement or in settlement of any claim or dispute arising under any ON Line Agreement, (b) Insurance Proceeds (other than Excess Insurance Proceeds) and Condemnation Awards (other than Excess Condemnation Awards) recovered in respect of ON Line (including for delay-in-start up) and (c) proceeds received in respect of the disposition of any assets of ON Line.

 

“Counterparty Code of Conduct” means the Counterparty Code of Conduct promulgated by the NVE Parties and as in effect on (and disclosed in writing to Great Basin prior to) the Effective Date, setting forth requirements for Persons engaging in business transactions with the NVE Parties.

 

“Critical Capital Repairs” means Capital Repairs that NPC reasonably deems are required in order to operate ON Line in a safe and reliable manner in accordance with Prudent Utility Practices.

 

“Critical Change Orders” means change orders under Material Construction Contracts that the Managing Party reasonably deems are required in order for ON Line to operate in a safe and reliable manner in accordance with Prudent Utility Practices.

 

 

 

 

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“Deadlock” has the meaning set forth in Section 8.01(h).

 

“Default Purchase Notice” has the meaning set forth in Section 16.02(d).

 

“Default Rate” means the lesser of (a) four percent (4%) per annum above the Agreed Rate and (b) the maximum rate of interest permitted by Applicable Law.

 

“Demand” has the meaning set forth in Section 19.02(b)(i).

 

“Development Costs” means all ON Line Costs incurred by a Party prior to January 1, 2010, which are, with respect to (a) NPC, twelve million four hundred thirty-six thousand two hundred seventy-one Dollars ($12,436,271), (b) SPPC, six hundred fifty-four thousand five hundred forty Dollars ($654,540) and (c) Great Basin, fifteen million Dollars ($15,000,000).

 

“Direct Pay Amounts” means Post-Closing Costs due under Material Construction Contracts that are to be invoiced directly to, and paid directly by, NPC and Great Basin in accordance with this Agreement.

 

“Disclosing Party” has the meaning set forth in Section 20.08(a).

 

“Disclosure Schedules” has the meaning set forth in Section 17.01.

 

“Disclosure Schedule Update” has the meaning set forth in Section 2.07.

 

“Dispute” has the meaning set forth in Section 19.02(a).

 

“Dollars” means the lawful currency of the United States of America.

 

“Double Circuit Towers” means the ON Line double circuit transmission towers and associated appurtenances designed and constructed to support two (2) 500kV 3-phase AC circuits located between (and including) that certain HMD3 double circuit dead end structure number 617 located at latitude 37 ̊ 15’ 20.99” North, longitude 114 ̊ 57’ 45.87” West and that certain HMD3 double circuit dead end structure number 627 located at latitude 37 ̊ 14’ 11.95” North, longitude 114 ̊ 58’ 37.03 West.

 

“Effective Date” has the meaning set forth in the preface to this Agreement.

 

“Effective Tax Rate” means (a) the then current Federal corporate statutory income tax rate plus (b) the product of (i) the then current State of Nevada corporate statutory income tax rate times (ii) an amount equal to one (1) minus the Federal corporate statutory income tax rate.

 

“Eldorado Substation” means the substation jointly owned by Southern California Edison, NPC, Salt River Project and Los Angeles Department of Water and Power located south of Las Vegas in Clark County, Nevada and commonly known as the “Eldorado Substation.”

 

 

 

 

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“Electrical Capacity” means the maximum electrical rating of the Transmission Line (or applicable portion thereof) expressed in MWs, as such rating is determined and approved by WECC (or such other regulatory authority responsible for rating the Transmission Line) from time to time.

 

“Electric Reliability Organization” means the organization certified by FERC to propose and enforce mandatory standards for the reliable operation and planning of the bulk power system throughout the United States of America.

 

“Eligible Assignee” means any Person that (a) has (or is Affiliated with a Person that has) at least four (4) years’ experience owning and operating transmission lines comparable to the Transmission Line, (b) is (or is Affiliated with a Person that is) subject to regulation by FERC at the time the applicable Transfer is first proposed and (c) has (or its parent has) a credit rating at the time of the applicable Transfer equal to or better than an Investment Grade Credit Rating or, if such Person does not have an Investment Grade Credit Rating, a net worth at the time of the applicable Transfer equal to or greater than three hundred fifty million Dollars ($350,000,000).

 

“Eligible Control Party” means (a) any Eligible Assignee, (b) following ON Line COD and provided that Great Basin holds no material assets other than Ownership Interests, any Experienced Operator and (c) following ON Line COD and the occurrence of the earlier of (i) GB Segment COD and (ii) the GB Segment Financial Closing Deadline without achieving GB Segment Financial Closing, any Experienced Operator.

 

“Environmental Law” means any federal, state, local or other law, common law, regulation, rule, ordinance, code, decree, judgment, binding directive, or judicial or administrative order relating to the protection, preservation or restoration of human health, the environment, wildfire, natural resources or cultural, archaeological or historic resources, including (a) any law relating to the releases or threatened releases of Hazardous Substances into any medium (including ambient air, surface water, groundwater, land, surface and subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, release, transport and handling of Hazardous Substances; (b) the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. § 1471 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 through 2629; the Oil Pollution Act, 33 U.S.C. § 2701 et seq.; the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq.; the National Environmental Policy Act, 42 U.S.C. §4321 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f through 300j; and (c) all other Applicable Laws addressing pollution or protection of human health, safety or the environment.

 

“Event of Default” has the meaning set forth in Section 16.01.

 

“Event of Loss” means damage to, destruction of, or other property casualty to the Transmission Line (or any part thereof), whether or not covered by insurance.

 

 

 

 

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“Event of Loss Budget” has the meaning set forth in Section 13.04.

 

“Event of Loss Costs” has the meaning set forth in Section 13.04.

 

“Excess Condemnation Award” has the meaning set forth in Section 14.03.

 

“Excess Insurance Proceeds” has the meaning set forth in Section 13.03.

 

“Excluded Agreements” means (a) agreements between a Party and its transmission and other customers regarding such customers’ rights to transmit electricity on or otherwise utilize such Party’s Capacity Entitlement, Microwave Capacity or Fiber Optic Capacity, (b) agreements only between NPC and SPPC, (c) the ON Line Financing Agreements, (d) the financing agreements with the NVE Lenders and (e) any Balancing Authority Area Services Agreement.

 

“Excluded Lien” means any of the following:

 

(a)           a Permitted Lien;

 

(b)           provided that Sections 18.03 and 18.04 are satisfied, a Lien granted on the Ownership Interests or other assets of a Party (excluding the Great Basin Segments prior to GB Segment COD, except if the Parties agree in writing otherwise), given by such Party as security for the obligations of such Party to the ON Line Lenders or the NVE Lenders, as applicable, and enforceable only against the Ownership Interests or such other assets of such Party;

 

(c)           provided that Sections 18.03 and 18.04 are satisfied, a Lien granted on the ownership interests of Great Basin in the Great Basin Segments or other assets of Great Basin (excluding ON Line prior to GB Segment COD, except if the Parties agree in writing otherwise), given by Great Basin as security for its obligations to the GB Segment Lenders;

 

(d)           (i) with respect to Liens on ON Line, Liens for any tax, assessment or other governmental charge (including Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods for ON Line) arising in the ordinary course of business for ON Line, and (ii) with respect to Liens on the Great Basin Segments, Liens for any tax, assessment or other governmental charge (including Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods for the Great Basin Segments) arising in the ordinary course of business for the Great Basin Segments, in each case (A) which are for amounts not yet due or amounts being contested in good faith by appropriate proceedings and reserved against in accordance with GAAP and (B) so long as such Liens shall not involve any reasonable likelihood of the sale, forfeiture or loss of any material interest in the Transmission Line and shall not interfere in any material respect with the use or disposition of any material part of the Transmission Line, the GB Segment Security Interest or the ON Line Security Interest;

 

 

 

 

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(e)           (i) with respect to ON Line, materialmen’s, mechanics’, workers, repairmen’s, employees’ or other like Liens on ON Line and any statutory lien, rights of setoff or similar rights on ON Line arising in the ordinary course of business of ON Line or in connection with the construction, operation or maintenance of ON Line, and (ii) with respect to the Great Basin Segments, materialmen’s, mechanics’, workers’, repairmen’s, employees’ or other like Liens on the Great Basin Segments and any statutory lien, rights of setoff or similar rights on the Great Basin Segments arising in the ordinary course of business of the Great Basin Segments or in connection with the construction, operation or maintenance of the Great Basin Segments, in each case (A) which (in the aggregate) do not materially detract from the value of the property or assets to which they are attached, or which are for amounts not yet due or amounts which are being contested in good faith by appropriate proceedings and are reserved against in accordance with GAAP or bonded over, and (B) so long as such Liens shall not involve any reasonable likelihood of the sale, forfeiture or loss of any material interest in the Transmission Line and shall not interfere in any material respect with the use or disposition of any material part of the Transmission Line, the GB Segment Security Interest or the ON Line Security Interest;

 

(f)           Liens arising out of judgments or awards so long as enforcement of such Liens have been stayed and an appeal or proceeding for review is being prosecuted in good faith by appropriate proceedings and are reserved against in accordance with GAAP or are fully covered by insurance;

 

(g)           (i) with respect to ON Line, Liens on ON Line to secure (A) mandatory statutory obligations or (B) provided that Section 18.03 is satisfied with respect to Liens securing amounts in excess of two hundred fifty thousand Dollars ($250,000), performance of bids, tenders, contracts (other than for the repayment of indebtedness for borrowed money) or leases, or for purposes of like general nature, in the ordinary course of business for ON Line, and having an aggregate value with respect to all Liens contemplated by this clause (g)(i)(B) at any one time outstanding not greater than one million Dollars ($1,000,000), and (ii) with respect to the Great Basin Segments, Liens on the Great Basin Segments to secure (A) mandatory statutory obligations or (B) provided that Section 18.03 is satisfied with respect to Liens securing amounts in excess of two hundred fifty thousand Dollars ($250,000), performance of bids, tenders, contracts (other than for the repayment of indebtedness for borrowed money) or leases, or for purposes of like general nature, in the ordinary course of business for the Great Basin Segments, and having an aggregate value with respect to all Liens contemplated by this clause (g)(ii)(B) at any one time outstanding not greater than one million Dollars ($1,000,000), in each case, so long as such Liens shall not involve any reasonable likelihood of the sale, forfeiture or loss of any material interest in the Transmission Line and shall not interfere in any material respect with the use or disposition of any material part of the Transmission Line, the GB Segment Security Interest or the ON Line Security Interest;

 

(h)           (i) with respect to ON Line, involuntary Liens (including a lien of an attachment, judgment or execution) not existing for more than thirty (30) days on ON Line securing a charge or obligation for ON Line on any of ON Line’s property, either real or personal, in the aggregate sum of less than two hundred thousand Dollars ($200,000) at any one time outstanding, and (ii) with respect to the Great Basin Segments, involuntary Liens (including a lien of an attachment, judgment or execution) not existing for more than thirty (30) days on the 

 

  

 

 

 

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Great Basin Segments securing a charge or obligation for the Great Basin Segments on any of the Great Basin Segments’ property, either real or personal, in the aggregate sum of less than two hundred thousand Dollars ($200,000) at any one time outstanding, in each case, so long as such Liens shall not involve any reasonable likelihood of the sale, forfeiture or loss of any material interest in the Transmission Line and shall not interfere in any material respect with the use or disposition of any material part of the Transmission Line, the GB Segment Security Interest or the ON Line Security Interest;

 

(i)           any other Liens approved by the Parties;

 

(j)           with respect to (i) Great Basin, any Lien on the Ownership Interests of Great Basin or the Great Basin Segments arising as a result of a breach by one or both of the NVE Parties of any of their respective obligations under this Agreement or any agreement executed in connection herewith and (ii) the NVE Parties, any Lien on the Ownership Interests of such Parties arising as a result of a breach by Great Basin of any of its obligations under this Agreement or any agreement executed in connection herewith;

 

(k)           with respect to Great Basin, Liens that are subordinated to the ON Line Security Interest or the GB Segment Security Interest pursuant to a subordination agreement acceptable to the NVE Parties in their sole discretion; and

 

(l)           provided that Section 18.03 is satisfied with respect to Liens securing amounts in excess of (i) two hundred fifty thousand Dollars ($250,000) individually or (ii) when added to the aggregate amount secured by other Liens permitted by this subsection (l) and not subject to a Non-Disturbance Agreement, one million Dollars ($1,000,000), Liens existing only on the Great Basin Segments prior to GB Segment Financial Closing in favor of unaffiliated lenders, construction contractors, equipment providers or any other unaffiliated Persons providing financing for the development, engineering, procurement or construction of the Great Basin Segments.

 

“Experienced Operator” means any Person that has (or is Affiliated with a Person that has) at least four (4) years’ experience owning and operating transmission lines comparable to the Transmission Line or hires a project manager that has such experience.

 

“Extended Payment Default” has the meaning set forth in Section 16.02(h).

 

“Fair Market Value” has the meaning set forth in Section 13.05(b).

 

“FERC” means the Federal Energy Regulatory Commission.

 

“FERC Approval” means one or more final orders issued by FERC under Section 205 of the Federal Power Act, without substantial condition or modification and that is not subject to rehearing or appeal, accepting this Agreement and each Interconnection Agreement for filing (including a determination by FERC that no further filing of the SNIP Agreement is required), in each case, on terms reasonably acceptable to the NVE Parties and Great Basin.

 

 

 

 

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“Fiber Optic Capacity” means the maximum fiber optic line capacity of the Transmission Line (or applicable portion thereof).

 

“Final NVE Capacity Entitlement” means (a) the NVE Parties’ total Capacity Entitlement expressed as MWs, divided by (b) the Electrical Capacity.

 

“Force Majeure” means any of the following enumerated events that occur subsequent to the Effective Date that delays or prevents a Party’s performance of its obligations under this Agreement, but only to the extent that (a) such event is not attributable to the fault or negligence on the part of such Party, (b) such event is caused by factors beyond such Party’s reasonable control and (c) despite taking all reasonable technical and commercial precautions and measures to prevent, avoid, mitigate or overcome such event and the consequences thereof, such Party has been unable to prevent, avoid, mitigate or overcome such event or consequences:

 

(i)           Acts of God, such as storms, hurricanes, droughts, tornados, avalanches, epidemics, land slides, floods, lightning, fire, explosion, quarantine, earthquakes, and other natural disasters;

 

(ii)           Sabotage or destruction by a third Person of facilities and equipment relating to the performance by the affected Party of its obligations under this Agreement;

 

(iii)           War (declared or undeclared), insurrection, acts of terrorism, rebellion, blockades, embargoes, fires, explosions, adverse geological or underground conditions, riot, acts of a public enemy or other civil disturbance;

 

(iv)           Strike, walkout, lockout or other significant labor dispute;

 

(v)           (A) Loss or damage of materials or equipment in transit or inability to procure materials or equipment, (B) chemical or radioactive contamination of materials, equipment or sites or (C) inability to conduct studies or interconnect or test facilities due to delay by any third Person;

 

(vi)           (A) Action or inaction of a Governmental Authority (including a Party’s failure or delay in receiving or renewing any Governmental Approval), (B) changes in any Governmental Approval or the conditions imposed thereunder or (C) any material legislative, judicial or administrative change in any Applicable Law existing as of the Effective Date, any material change in the enforcement, interpretation or application of any Applicable Law existing as of the Effective Date by the relevant Governmental Authority, or the enactment of any Applicable Law on or after the Effective Date;

 

(vii)           A material adverse change or effect in the banking, institutional or capital markets in general; and

 

(viii)           Action or inaction in connection with requirements from an Electric Reliability Organization applicable to the Transmission Line.

 

 

 

 

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Notwithstanding anything to the contrary in this definition, (x) Force Majeure shall not include economic hardship of a Party unless such hardship is a direct result of the event described in clause (vii) above and (y) no Party shall be prevented from claiming Force Majeure to the extent that such Party’s performance is delayed or prevented by its unwillingness to settle or otherwise resolve a strike, walkout, lockout or other significant labor dispute of its own workforce, and the settlement or resolution of such strike, walkout, lockout or significant labor dispute shall be in such Party’s sole discretion.

 

“GAAP” means generally accepted accounting principles for financial reporting in the United States of America, applied on a consistent basis.

 

“GB Segment COD” means the date that (a) the Great Basin Segments have both commenced commercial operations and satisfied the requirements for “substantial completion” (or words of similar import) as defined in and in accordance with the requirements of the applicable material construction agreements, (b) all transmission upgrades and interconnection facilities necessary to interconnect SWIP-N with the Midpoint Substation and Robinson Summit Substation have been completed and successfully tested in accordance with Prudent Utility Practices, (c) all transmission upgrades and interconnection facilities necessary to interconnect SNIP with the Harry Allen Substation and Eldorado Substation have been completed and successfully tested in accordance with Prudent Utility Practices and (d) the Great Basin Segments have both been safely and reliably energized and energy may be delivered across the interconnection facilities to the interconnection providers’ transmission systems in accordance with the applicable interconnection agreements.

 

“GB Segment COD Deadline” means the sixth (6th) anniversary of the GB Segment Financial Closing or such later date as may be determined in accordance with Section 3.07(b).

 

“GB Segment Development Costs” means (a) the aggregate sum of costs and expenses incurred by Great Basin to complete the development of the Great Basin Segments, including (i) Great Basin’s direct internal labor costs for employees directly engaged in development efforts associated with the Great Basin Segments, (ii) third-Person costs for permitting and licensing activities, engineering, surveying, project management, legal, accounting and other professional services incurred in respect of development efforts associated with the Great Basin Segments, (iii) interest on all such costs at a rate equal to eight and fifty-eight hundredths percent (8.58%) per annum calculated from when such costs were incurred to GB Segment Financial Closing and (iv) the use of any liquidated damages, proceeds, awards or payments described in clause (b) below to pay any costs or expenses incurred by Great Basin to complete the development of the Great Basin Segments, minus (b) any liquidated damages recovered as a result of a failure of the Great Basin Segments to achieve their performance or schedule guarantees, any Insurance Proceeds, Condemnation Awards or damage or indemnity payments received in respect of the Great Basin Segments, and any proceeds for the disposition of any assets of the Great Basin Segments (together with the reduction in carrying costs resulting from the receipt of such liquidated damages, Insurance Proceeds, Condemnation Awards, damage or indemnity payments or other proceeds, as applicable); provided, however, that GB Segment Development Costs shall not include the following: (q) any lobbying costs, (r) any legal 

 

 

 

 

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fees associated with Great Basin’s participation in regulatory proceedings where Great Basin is not the applicant or petitioner, (s) any gift of items, money or entertainment in connection with the Great Basin Segments, including political or campaign contributions, (t) Personal Taxes or Transfer Taxes, (u) third-Person costs, expenses and fees for lawyers, other consultants, financing parties and agents (including application and other fees and expenses in connection with any loan guarantee or other program provided by the U.S. Department of Energy), in each case, incurred by Great Basin in connection with the GB Segment Financing and the costs associated with Great Basin’s auditing and reporting requirements under this Agreement and the GB Segment Financing Agreements, (v) costs and expenses incurred in the preparation, negotiation, execution or delivery of this Agreement, (w) any amounts attributable to general administrative costs or overhead costs not associated with direct internal labor for employees directly engaged in development efforts associated with Great Basin Segments, (x) any interest or penalty imposed by any Governmental Authority, (y) any amounts incurred by Great Basin in connection with ON Line or (z) costs or expenses incurred pursuant to procurement or construction agreements or other agreements for the purchase of equipment or materials for any of the Great Basin Segments.

 

“GB Segment Financial Closing” means the occurrence of each of the following: (a) the GB Segment Security Interest has been granted to the NVE Parties and is valid, legal, perfected, in full force and effect and has the priority contemplated by Section 18.04, each Security Document for the GB Segment Security Interest has been properly executed and delivered, and has been duly filed, registered and recorded, and Uniform Commercial Code financing statements have been duly filed, in each case in each jurisdiction as required by Applicable Law or as reasonably requested by the NVE Parties in order to grant and maintain a valid, legal and perfected Lien with the priority contemplated by Section 18.04 in respect of the GB Segment Security Interest, and each such Security Document is in full force and effect, (b) a Non-Disturbance Agreement has been delivered by each GB Segment Lender (or an agent thereof) in favor of the NVE Parties, (c) legal opinions addressing the matters set forth on Exhibit I attached hereto and otherwise in form and substance reasonably acceptable to the NVE Parties have been delivered to the NVE Parties regarding the GB Segment Security Interest and the associated Security Documents, (d) Great Basin has obtained financing for the expected full cost of the Great Basin Segments plus a reasonable contingency, (e) all GB Segment Financing Agreements required in order to obtain the financing referred to in clause (d) above have been executed and delivered by all parties thereto to each other and are in full force and effect, (f) all conditions precedent (other than customary draw conditions) under such GB Segment Financing Agreements have been satisfied or permanently waived necessary to allow Great Basin to fund the expected full cost of the Great Basin Segments, (g) the first drawdown of loans pursuant to such GB Segment Financing Agreements has occurred, (h) the GB Segment Lenders (other than any Affiliated Lender) have delivered a certificate stating or Great Basin has delivered such other evidence demonstrating, in each case that is reasonably satisfactory to the NVE Parties, that each of clauses (d)-(g) above has occurred, and (i) full notice to proceed has been issued under all critical construction contracts for either Great Basin Segment.

 

“GB Segment Financial Closing Deadline” means March 31, 2014 or such later date as may be determined in accordance with the terms set forth in this Agreement.

 

 

 

 

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“GB Segment Financing” means the financing or refinancing (including working capital facilities not to exceed fifteen million Dollars ($15,000,000) and interest rate hedging facilities and related letters of credit) for the construction, operation or capital repairs of the Great Basin Segments.

 

“GB Segment Financing Agreements” means all financing and equity contribution agreements for the GB Segment Financing.

 

“GB Segment Intercreditor Agreement” means an intercreditor agreement to be executed and delivered by the NVE Parties, Great Basin and the GB Segment Lenders (or an agent thereof).

 

“GB Segment Lenders” means the Persons providing loans or other credit or interest rate hedging facilities under the GB Segment Financing Agreements; provided, however, that no Affiliated Lender shall be a GB Segment Lender, unless (for so long as such GB Segment Lender is an Affiliated Lender) (a) such Affiliated Lender (i) has no voting, approval or consent rights with respect to any provision of this Agreement that is subject to the GB Segment Lenders’ vote, approval or consent under the terms of this Agreement, (ii) has no voting, approval or consent rights with respect to the exercising of any remedy under any security document in connection with the GB Segment Financing, and (iii) has no voting, approval or consent rights, and does not participate, with respect to any decision to issue any certificate contemplated by clause (h) of the definition GB Segment Financial Closing, and (b) the aggregate amount of the GB Segment Financing held directly or indirectly by all Affiliated Lenders is equal to or less than one-third (1/3) of the principal amount of the GB Segment Financing; provided, further, however, that any Affiliated Lender that is a GB Segment Lender shall be entitled to benefit from any and all waivers, consents, amendments and remedies granted or exercised by the other GB Segment Lenders on a pro rata and pari passu basis.

 

“GB Segment Security Interest” has the meaning set forth in Section 18.04(a).

 

“GB Segment Security Interest Cap” has the meaning set forth in Section 18.04(a).

 

“Governmental Approvals” means any licenses, approvals, consents, exemptions, agreements, authorizations or permits of, notifications to or filings or registrations with, any Governmental Authority relating to the Transmission Line (or any portion thereof).

 

“Governmental Authority” means any executive branch, legislature, court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States of America or other country or any domestic state, county, city or other political subdivision or similar governing entity.

 

“Gratuity” means any gift of items, money or entertainment intended to improperly influence the award of a contract or to improperly obtain favorable treatment under a contract in a manner that violates Applicable Law.

 

“Great Basin” has the meaning set forth in the preface to this Agreement.

 

 

 

 

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“Great Basin Manager” has the meaning set forth in Section 4.02(a).

 

“Great Basin O&M Costs” means all costs and expenses under the Balancing Authority Area Services Agreement and the aggregate sum of all costs and expenses for all Operating Activities, maintenance, capital repairs, BLM lease payments, property taxes, payments for utilities, costs of obtaining and maintaining any required Governmental Approvals, insurance premiums, licensing fees and other fees, consulting and professional fees and expenses necessary for management and operation, in each case, in respect of any Great Basin Segment.

 

“Great Basin Segments” means the SWIP-N and SNIP collectively, including, in each case, any fiber optic line comprising SWIP-N and SNIP, any microwave communication system comprising SWIP-N and SNIP and any and all assets, interests and property rights (real and personal and tangible and intangible) comprising SWIP-N and SNIP and any and all leasehold and other possessory interest in the rights-of-way, agreements, Governmental Approvals for the Great Basin Segments, and books and records, work product, depreciation and other tax benefits, in each case, comprising SWIP-N and SNIP, as further described in Schedule 1.

 

“Harry Allen Substation” means the substation owned by NPC located just north of Las Vegas in Clark County, Nevada and commonly known as the “Harry Allen Substation.”

 

“Hazardous Substance” means: (a) any petroleum or petroleum products, flammable materials, explosives, radioactive materials, friable asbestos, urea formaldehyde foam insulation and transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls (PCBs) in regulated concentrations; (b) any chemicals or other materials or substances which are now or hereafter become defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “contaminants,” “pollutants” or words of similar import under any Environmental Law; and (c) any other chemical or other material or substance, exposure to which is now or hereafter prohibited, limited or regulated as such under any Environmental Law, including the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. Section 9601 et seq, or any similar state statute.

 

“Incremental Cost Differential” means an amount (if any) equal to any Net Actual Costs in excess of the greater of (a) the ON Line Budget and (b) the Anticipated Investment for ON Line.

 

“Indemnified Persons” has the meaning set forth in Section 12.01(a).

 

“Indemnifying Party” has the meaning set forth in Section 12.01(b).

 

“Independent Auditor” has the meaning set forth in Section 2.02(e).

 

“Independent Contractor” means any independent contractor retained pursuant to a Maintenance Agreement to maintain the Transmission Line (or any portion thereof).

 

 

 

 

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“Initial Cost Differential” means the lesser of (a) any amount by which the Anticipated Investment for ON Line exceeds the ON Line Budget and (b) any amount by which the Net Actual Costs exceed the ON Line Budget.

 

“Insurance Plan” means the insurance plan set forth as Exhibit D, as such plan may be amended from time to time and approved by the Management Committee.

 

“Insurance Proceeds” means any insurance proceeds paid pursuant to insurance policies maintained in accordance with the Insurance Plan.

 

“Interconnection Agreements” means the Robinson Summit Substation Transmission Interconnection Agreement, effective as of the date approved by FERC, entered into by and among SPPC (in its capacity as the interconnection provider), Great Basin, SPPC (in its capacity as an owner of ON Line) and NPC (in its capacity as an owner of ON Line) and the Harry Allen Transmission Interconnection Agreement, effective as of the date approved by FERC, entered into by and among NPC (in its capacity as the interconnection provider), Great Basin and NPC (in its capacity as an owner of ON Line) and SPPC (in its capacity as an owner of ON Line), in each case, as approved by FERC.

 

“Intercreditor Agreements” means the ON Line Intercreditor Agreement and the GB Segment Intercreditor Agreement.

 

“Investment Grade Credit Rating” means, with respect to a Person, a then assigned credit rating of such Person based on its long-term, senior, secured or unsecured non-credit-enhanced, indebtedness equal to “Baa3” or above from Moody’s Investor Services, Inc. (or any successor) or “BBB-” or above from Standard & Poor’s Ratings Group, a division of McGraw Hill, Inc. (or any successor); provided, however, that if neither of such credit ratings is published for such Person, then the Investment Grade Credit Rating for such Person means a then assigned credit rating of such Person based on its long-term, senior, secured or unsecured non-credit-enhanced, indebtedness equal to “BBB-” or above as determined by, in the case of an Eligible Assignee, the NVE Parties and, in the case of Section 11.02(c), each other Party, in each case, in accordance with its internal policies and procedures for determining implied credit ratings.

 

“IP License Agreement” means the Intellectual Property License Agreement, dated as of the date hereof, by and among the NVE Parties and Great Basin.

 

“kV” means kilovolt.

 

“Land Contracts” means the easements, leases, licenses, instruments, agreements, and documents that grant rights in the ON Line ROW necessary or desirable for the development, construction, ownership and management of ON Line, including ingress to and egress from the ON Line ROW.

 

“Las Vegas Courts” has the meaning set forth in Section 19.02(b)(v).

 

 

 

 

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“Lien” means any mortgage, lien, pledge, charge, claim, security interest or other encumbrance, including any liens for taxes and assessments, builder, mechanic, warehouseman, materialman, contractor, workman, repairman or carrier liens or other similar liens or claims.

 

“Loss Threshold” means any Event of Loss or Condemnation Action occurring in respect of (a) ON Line (or any portion thereof) with an estimated cost to repair or replace the affected portion of eighty million Dollars ($80,000,000) or, if the estimated cost to repair or replace exceeds twenty million Dollars ($20,000,000), with an estimated period of time required to repair or replace the affected portion of three (3) years, (b) SNIP (or any portion thereof) with an estimated cost to repair or replace the affected portion of thirty-two million Dollars ($32,000,000) or, if the estimated cost to repair or replace exceeds eight million Dollars ($8,000,000), with an estimated period of time required to repair or replace the affected portion of three (3) years or (c) SWIP-N (or any portion thereof) with an estimated cost to repair or replace the affected portion of eighty million Dollars ($80,000,000) or, if the estimated cost to repair or replace exceeds twenty million Dollars ($20,000,000), with an estimated period of time required to repair or replace the affected portion of three (3) years (such Dollar thresholds to be adjusted upward annually by a factor of two percent (2%) per annum from and after the first (1st) anniversary of ON Line COD).

 

“Loss Threshold Deadlock” means the Parties are unable to reach agreement regarding any determination of whether an Event of Loss or Condemnation Action exceeded a Loss Threshold.

 

“Maintenance Agreement” means any separate agreement between a Party and an Independent Contractor, relating to the maintenance of the Transmission Line (or any portion thereof) as may be in effect from time to time.

 

“Management Committee” means the management committee established pursuant to Section 8.01(a).

 

“Managing Party” means, subject to Section 16.02(e), (a) through the Acquisition Closing Date, Great Basin and (b) after the Acquisition Closing Date to ON Line COD, NPC.

 

“Material Adverse Effect” means a material adverse effect on (a) ON Line or the development, construction, ownership, management, operation, maintenance, use or economic viability thereof, (b) the ability of the Parties to perform their respective material obligations under this Agreement, (c) the ability of any party to enter into any ON Line Agreement or perform its material obligations under any ON Line Agreement, (d) the ability to obtain, maintain or comply in any material respect with any material Governmental Approval for ON Line or (e) the validity or enforceability of this Agreement or any of the ON Line Agreements, or the rights or remedies of the parties hereunder or thereunder.

 

“Material Construction Contract” means each of the Substation Construction Contract, the Transmission Line Construction Contract, the Tower Supply Agreements and the Other Supply Agreements.

 

 

 

 

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“Material Construction Contractor” means each of the Substation Construction Contractor, the Transmission Line Construction Contractor, the Tower Suppliers and the Other Suppliers.

 

“Material Event” means any breach of or default under, or notice of force majeure or other material communication with respect to, any ON Line Agreement, any litigation pending or threatened in writing or proceeding of a Governmental Authority pending or threatened in writing affecting the Transmission Line, any material Condemnation Action or Event of Loss and any citation or notice of material noncompliance with Applicable Law.

 

“Microwave Capacity” means the maximum microwave communication system capacity of the Transmission Line (or applicable portion thereof).

 

“Midpoint Substation” means the substation owned by Idaho Power Company located north of Twin Falls in Jerome County, Idaho and commonly known as the “Midpoint Substation.”

 

“Monthly Payment” has the meaning set forth in Section 3.06(a).

 

“Monthly Payment Period” has the meaning set forth in Section 3.06(a).

 

“Monthly/Quarterly Report” has the meaning set forth in Section 9.01.

 

“MOU” means the Memorandum of Understanding Regarding Potential Transmission Use Agreement, dated as of December 30, 2009, by and among the Parties.

 

“MW” means megawatt.

 

“NERC” means the North American Electric Reliability Corporation.

 

“Net Actual Costs” means an amount equal to the aggregate of all Development Costs, all Pre-Closing Costs and all Post-Closing Costs, minus an aggregate amount equal to all Cost Reductions received by a Party in respect of ON Line Activities.

 

“Net Capital Repair Costs” means all Capital Repair Costs incurred by a Party, minus an aggregate amount equal to all Cost Reductions received by a Party in respect of Capital Repairs.

 

“Net Condemnation Action Costs” means all Condemnation Action Costs incurred by a Party, minus an aggregate amount equal to all Cost Reductions received by a Party in respect of any Condemnation Action.

 

“Net Event of Loss Costs” means all Event of Loss Costs incurred by a Party, minus an aggregate amount equal to all Cost Reductions received by a Party in respect of any Event of Loss.

 

“Non-Contributing Party” has the meaning set forth in Section 5.07(a).

 

 

 

 

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“Non-Disturbance Agreement” has the meaning set forth in Section 18.03.

 

“Notice” has the meaning set forth in Section 19.02(a).

 

“NPC” has the meaning set forth in the preface to this Agreement.

 

“NPC Manager” has the meaning set forth in Section 4.02(b).

 

“NPC Purchase Price” has the meaning set forth in Section 2.01(b).

 

“NVE Lenders” means the Persons making available funds to the NVE Parties (or any one of them individually) or any of their respective Affiliates through loans, debt securities or other credit facilities before or after the Effective Date, including holders of securities issued under their respective General and Refunding Mortgage Indentures, dated as of May 1, 2001.

 

“NVE Parent” means NV Energy, Inc., a Nevada corporation.

 

“NVE Parties” has the meaning set forth in the preface to this Agreement.

 

“NVE Project” has the meaning set forth in the recitals of this Agreement.

 

“NVE WACC” means the weighted average cost of capital for NPC as of the first day of the calendar year in which the relevant expenditure occurred, as determined in NPC’s regulatory case that sets such cost for the first day of the applicable year, with the return on equity component grossed up for income taxes by dividing the return on equity component by an amount equal to one (1) minus the Effective Tax Rate.

 

“Offer Notice” means any ROFR Offer Notice or ROFO Offer Notice, as applicable.

 

“Offered Interest” means any ROFR Offered Interest or ROFO Offered Interest, as applicable.

 

“On-Going GBT Costs” means costs, expenses and fees paid to unaffiliated third-Persons reasonably incurred by Great Basin after ON Line COD associated with (i) Great Basin’s auditing and reporting requirements under this Agreement or (ii) the ON Line Financing Agreements, which are, in each case, actual, verifiable costs paid to unaffiliated third-Persons in a single fiscal year, but shall not include any costs of carrying such third-Person costs; provided, however, that On-Going GBT Costs shall not include any costs that, in the aggregate, exceed in a single fiscal year an amount equal to the product of (a) one hundred twenty-five thousand Dollars ($125,000) and (b) the Price Index.

 

“ON Line” means any and all assets, interests and property rights (real and personal and tangible and intangible) comprising SWIP-S (to be renamed the “One Nevada Transmission Line” pursuant to Section 4.08), including any fiber optic line comprising SWIP-S, any microwave communication system comprising SWIP-S  and any and all leasehold or other possessory interest in the ON Line ROW, ON Line Agreements, Governmental Approvals for ON Line, Books and Records, Work Product and depreciation and other tax benefits, as further 

 

 

 

 

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described in Schedule 1.  For the avoidance of doubt, ON Line does not include the NVE Project, Excluded Agreements or any information licensed to Great Basin under the IP License Agreement.

 

“ON Line Account” has the meaning set forth in Section 5.03(b).

 

“ON Line Activities” means all activities undertaken in connection with (a) the development, construction, testing and starting up of ON Line prior to the commencement of the Operating Period and (b) the development of the NVE Project through the Acquisition Closing; provided, however, that ON Line Activities shall not include any activities contemplated by the Excluded Agreements or any activities undertaken in connection with Capital Repairs, an Event of Loss or Condemnation Action.

 

“ON Line Agreement” means an agreement (other than this Agreement) entered into by a Party in connection with the ON Line Activities (excluding development of the NVE Project), Capital Repairs or work resulting from any Event of Loss or Condemnation Action on ON Line, including each Material Construction Contract, Interconnection Agreement, Land Contract and the IP License Agreement; provided, however, that ON Line Agreements do not include any Excluded Agreements.

 

“ON Line Budget” means the budget attached hereto as Exhibit A (as amended from time to time in accordance with the provisions hereof) consisting of line item estimates of all ON Line Costs required to be funded by the Parties hereunder, including allowances for escalation (where applicable) and contingency, in each case, that are calculated in accordance with prudent estimating practices, but shall not include any Carrying Costs.

 

“ON Line COD” means the date that (a) ON Line commences commercial operation and satisfies the requirements for “substantial completion” (or words of similar import) as defined in and in accordance with each Material Construction Contract, (b) all additions, modifications and changes to the NVE Parties’ transmission systems necessary to interconnect ON Line with the Robinson Summit Substation and the Harry Allen Substation have been completed and successfully tested in accordance with Prudent Utility Practices and (c) ON Line is safely and reliably energized and energy may be delivered across such interconnection facilities to the NVE Parties’ transmission systems in accordance with the Interconnection Agreements.

 

“ON Line Costs” means costs and expenses incurred to complete the ON Line Activities, including each Party’s (a) direct internal labor costs for employees directly engaged in performing the ON Line Activities insofar as such costs are subject to reimbursement pursuant to Section 5.01(d), (b) third-Person costs for permitting and licensing activities, engineering, surveying, project management, legal, accounting and other professional services incurred in respect of the performance of ON Line Activities, (c) costs and expenses incurred pursuant to ON Line Agreements entered into in respect of ON Line Activities, (d) costs and expenses required during an emergency to protect human life in connection with ON Line, protect against or mitigate serious loss or damage to ON Line, comply with Applicable Law for ON Line and prevent or mitigate damage to the environment or to the property of others caused by ON Line and (e) amounts payable prior to ON Line COD for BLM lease payments, property Taxes and 

 

 

 

 

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sales Taxes; provided, however, that ON Line Costs shall not include the following: (n) any costs or expenses incurred under the Balancing Authority Area Services Agreement or in providing Balancing Area services thereunder, (o) Event of Loss Costs or Condemnation Action Costs, (p) any costs or expenses incurred to complete the ON Line Activities prior to January 1, 2010 other than Development Costs, (q) any lobbying costs, (r) any legal fees associated with Great Basin’s participation in regulatory proceedings where such participation has not been approved in advance by the Management Committee or the NVE Parties’ participation in regulatory proceedings where the NVE Parties are not the applicant/petitioner or are not required to participate, (s) any gift of items, money or entertainment in connection with ON Line, including political or campaign contributions, (t) Personal Taxes or Transfer Taxes, (u) third-Person costs, expenses and fees for lawyers, other consultants, financing parties and agents (including application and other fees and expenses in connection with any loan guarantee or other program provided by the U.S. Department of Energy), in each case, incurred by any Party in connection with the ON Line Financing, its financing of Capital Repair Costs, all other Excluded Agreements and the costs associated with any Party’s auditing and reporting requirements under this Agreement, the ON Line Financing Agreements and its other financing agreements, including all Up-Front GBT Costs and On-Going GBT Costs, (v) costs and expenses incurred in the preparation, negotiation, execution or delivery of this Agreement, (w) any amounts attributable to general administrative costs or overhead costs not associated with direct internal labor for employees directly engaged in the performance of ON Line Activities, (x) any amounts incurred by Great Basin in connection with the Great Basin Segments, (y) any interest or penalty imposed by any Governmental Authority and (z) any interest or costs associated with carrying such costs and expenses, including Carrying Costs.

 

“ON Line Financial Closing” means the occurrence of the following:  (a) Great Basin has obtained debt and equity financing in an amount equal to at least seventy-five percent (75%) of the expected Post-Closing Costs as set forth in the ON Line Budget, (b) all ON Line Financing Agreements required in order to obtain the financing referred to in clause (a) above have been executed and delivered by all parties thereto to each other and are in full force and effect, (c) all conditions precedent (other than customary draw conditions) under such ON Line Financing Agreements have been satisfied or permanently waived necessary to allow Great Basin to fund at least seventy-five percent (75%) of the expected Post-Closing Costs as set forth in the ON Line Budget, (d) the first drawdown of loans pursuant to such ON Line Financing Agreements has occurred and (e) the ON Line Lenders (other than any Affiliated Lender) have delivered a certificate stating or Great Basin has delivered such other evidence demonstrating, in each case reasonably satisfactory to the NVE Parties, that each of the foregoing has occurred.

 

“ON Line Financing” means the financing or refinancing (including working capital facilities not to exceed five million Dollars ($5,000,000) and interest rate hedging facilities and related letters of credit) obtained by Great Basin for the construction of ON Line or Capital Repairs or the working capital needs of Great Basin in respect of ON Line.

 

“ON Line Financing Agreements” means all financing and equity contribution agreements for the ON Line Financing.

 

 

 

 

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“ON Line Intercreditor Agreement” means an intercreditor agreement to be executed and delivered by the NVE Parties, Great Basin and the ON Line Lenders (or an agent thereof).

 

“ON Line Lenders” means the Persons (including the U.S. Department of Energy, as a loan guarantor) providing loans, other credit facilities or interest rate hedging facilities under the ON Line Financing Agreements; provided, however, that no Affiliated Lender shall be an ON Line Lender, unless (for so long as such ON Line Lender is an Affiliated Lender) (a) such Affiliated Lender (i) has no voting, approval or consent rights with respect to any provision of this Agreement that is subject to the ON Line Lenders’ vote, approval, or consent under the terms of this Agreement, (ii) has no voting, approval or consent rights with respect to the exercising of any remedy under any security document in connection with the ON Line Financing, and (iii) has no voting, approval or consent rights, and does not participate, with respect to any decision to issue any certificate contemplated by clause (e) of the definition of ON Line Financial Closing, and (b) the amount of the ON Line Financing held directly or indirectly by such Affiliated Lender is used only for funding Capital Repair Costs, Initial Cost Differentials or Incremental Cost Differentials; provided, further, however, that any Affiliated Lender that is an ON Line Lender shall be entitled to benefit from any and all waivers, consents, amendments and remedies granted or exercised by the other ON Line Lenders on a pro rata and pari passu basis.

 

“ON Line Manager” means the Great Basin Manager or the NPC Manager, as applicable.

 

“ON Line ROW” means the parcel(s) of real estate on which ON Line will be constructed and situated, including that which is more fully described in Schedule 1.

 

“ON Line Schedule” means that certain detailed Level II schedule for the ON Line Activities, attached hereto as Exhibit C (as amended from time to time in accordance with the provisions hereof), which shall include the expected sequence of activities, durations and milestones for the construction of ON Line and incorporate the Level II critical path method schedules that represent the schedules for accomplishing, and that is the baseline schedule that forms the basis of progress for, the work to be performed under each Material Construction Contract.

 

“ON Line Security Interest” has the meaning set forth in Section 18.04(a).

 

“Operating Activities” means all activities reasonably necessary or advisable in connection with the day-to-day (a) management, operation, inspection, cleaning and upkeep of ON Line (or any portion thereof) during the Operating Period and (b) operation of the Great Basin Segments, as further specified, but not limited to the activities set forth, in Schedule 3; provided, however, that Operating Activities do not include any Ancillary Services or any work resulting from any Capital Repair, Event of Loss or any Condemnation Action.

 

“Operating Costs” means the aggregate sum of all costs and expenses for all Operating Activities, BLM lease payments, property Taxes, payments for utilities, costs of obtaining and maintaining any required Governmental Approvals, insurance premiums, licensing 

 

 

 

 

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fees and other fees, consulting and professional fees, and expenses necessary for the day-to-day management and operation, in each case, in respect of ON Line; provided, however, that Operating Costs shall not include (a) any amounts owing pursuant to Sections 12.01 or 12.02, (b) any amounts paid under any Monthly Payment, (c) with regard to Great Basin, any costs that would not have been reimbursed under Section 5.01(d), (d) any costs incurred by any Party in connection with its individual (as opposed to common) ownership or use (as opposed to operation and maintenance) of ON Line, including any costs associated with Great Basin’s Open Access Transmission Tariff, (e) any Capital Repair Costs, Event of Loss Cost or Condemnation Action Cost, (f) On-Going GBT Costs, (g) Personal Taxes or Transfer Taxes, (h) any interest or penalty imposed by any Governmental Authority and caused by Great Basin or (i) any costs incurred in connection with the operation of any Great Basin Segment.

 

“Operating Period” means the period of time commencing on the ON Line COD and ending on the date the Transmission Line is retired in accordance with this Agreement.

 

“Operating Plan” means a plan submitted to the Management Committee for review and discussion, but not approval, covering the following activities: (a) with respect to ON Line, activities related to operations and maintenance of ON Line, in accordance with Prudent Utility Practices, the NVE Parties’ transmission operating procedures and policies, and applicable NERC and/or WECC requirements, such as line patrols, vegetation management, equipment testing and inspection, insulator washing, and electric system control center coordinated operating protocols; and (b) with respect to the Great Basin Segments, activities related to operation of the Great Basin Segments, in accordance with Prudent Utility Practices, the NVE Parties’ transmission operating procedures and policies, and applicable NERC and/or WECC requirements, including electric system control center coordinated operating protocols, outage coordination, and line monitoring.

 

“Operator” means the entity responsible for operating the Transmission Line in accordance with the requirements of the Balancing Authority.

 

“Option Exercise Price” has the meaning set forth in Section 6.05(a).

 

“Other Supply Agreements” means the agreements among NPC, Great Basin and the Other Suppliers pursuant to which the Other Suppliers will supply the balance of plant supplies, equipment and materials for ON Line.

 

“Other Suppliers” means the suppliers under the Other Supply Agreements.

 

“Owners’ Engineer” means an independent engineer selected by the Management Committee to provide assistance to any Party in connection with ON Line, including the design, engineering, construction, commissioning and start-up of ON Line.

 

“Ownership Interest” means an undivided ownership interest in ON Line.

 

“Ownership Percentage” means (a) with respect to Great Basin, seventy-five percent (75%), (b) with respect to NPC, twenty-three and seventy-five hundredths percent (23.75%) and (c) with respect to SPPC, one and twenty-five hundredths percent (1.25%), in each 

 

 

 

 

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case, as such Ownership Percentage may be adjusted from time to time in accordance with Sections 5.03(d), 5.04(c), 13.04, 14.04, and 16.02(f) and set forth opposite each Party’s name on Annex A. For the avoidance of doubt, in the event one Party (or the NVE Parties) acquires all of the Ownership Interests of the other Party(ies) pursuant to this Agreement, then such Party’s (or the NVE Parties’) aggregate Ownership Percentage shall be one hundred percent (100%).

 

“Partial Taking” has the meaning set forth in Section 14.02.

 

“Party” and “Parties” have the meaning set forth in the preface to this Agreement.

 

“Permitted Liens” means (a) all matters filed of record, validly existing and affecting a particular asset or property as of the Effective Date (together with such other Liens as are (i) acceptable to the NVE Parties in their sole discretion as of Acquisition Closing in the case of ON Line, and (ii) reasonably acceptable to the NVE Parties as of GB Segment Financial Closing in the case of the Great Basin Segments), (b) any Lien for Taxes not yet due or delinquent, (c) any statutory Lien (including any Liens of carriers, warehousemen, mechanics and materialmen arising in the ordinary course of business by operation of law) with respect to a liability not yet due or delinquent, (d) zoning, entitlement, conservation restriction and other land use and environmental regulations by any Governmental Authority, (e) any minor imperfection of title or other Lien which, individually or in the aggregate, would not be reasonably expected to be material, and (f) the ON Line Security Interest and the GB Segment Security Interest.

 

“Permitted Transfer” has the meaning set forth in Section 15.03.

 

“Person” means any natural person, corporation, general partnership, limited partnership, proprietorship, limited liability company, other business organization, trust, union, association or Governmental Authority.

 

“Personal Taxes” has the meaning set forth in Section 10.01.

 

“Post-Closing Costs” means all ON Line Costs incurred by a Party after the Acquisition Closing Date (a) in accordance with the ON Line Budget, (b) with the consent of the Management Committee or (c) that are required during an emergency to protect human life in connection with ON Line, protect against or mitigate serious loss or damage to ON Line, comply with Applicable Law for ON Line and prevent or mitigate damage to the environment or to the property of others caused by ON Line.

 

“Pre-Closing Costs” means all ON Line Costs incurred by a Party from January 1, 2010 through the Acquisition Closing Date (a) in accordance with the ON Line Budget, (b) with the consent of the Management Committee or (c) that are required during an emergency to protect human life in connection with ON Line, protect against or mitigate serious loss or damage to ON Line, comply with Applicable Law for ON Line and prevent or mitigate damage to the environment or to the property of others caused by ON Line.

 

“Price Index” means the ratio of the Gross Domestic Product – Implicit Price Deflator published in the National Income and Product Account by the U.S. Department of 

 

 

 

 

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Commerce on the date of determination relative to such Gross Domestic Product – Implicit Price Deflator value on January 1, 2013.

 

“Project Account” means, as applicable, the ON Line Account, the Capital Repair Account and any other accounts approved by the Management Committee.  For the avoidance of doubt, any Wind-Up Reserve Account or account that is only holding funds for Operating Costs shall not be a Project Account.

 

“Project Budget” means the ON Line Budget, each Capital Repair Budget, any Event of Loss Budget and any Condemnation Action Budget.

 

“Project Company” has the meaning set forth in Section 8.03(a).

 

“Prudent Utility Practices” shall mean any of the acts, practices, methods, equipment, materials, specifications and standards engaged in or approved in connection with a significant portion of the electric utility industry which, as applicable, in the exercise of professional judgment in light of the facts known at the time a decision was made, could have been expected to accomplish the desired result in a manner consistent with Applicable Laws, Electric Reliability Organization requirements, reliability, safety, performance, dependability, efficiency, environmental protection, economy and expedition.  Prudent Utility Practices are not intended to be limited to the optimum practice or method to the exclusion of other practices or methods, but rather to be a spectrum of possible but reasonable practices and methods.

 

“PUCN” means the Public Utilities Commission of Nevada.

 

“PUCN Approval” means that the PUCN has issued an order on terms that are acceptable to the NVE Parties in their sole discretion approving (a) in the case of the initial PUCN approval, this Agreement and all transactions and payments contemplated herein and (b) in the case of any PUCN approval associated with any subsequent Transfer to or by the NVE Parties (or any one of them individually) of Ownership Interests pursuant to the terms of this Agreement, the acquisition of, and purchase price paid for, such Ownership Interests and the NVE Parties’, as applicable, additional investment in ON Line.

 

“Receiving Party” has the meaning set forth in Section 20.08(a).

 

“Reconciliation Statement” has the meaning set forth in Section 2.02(d).

 

“Representative” has the meaning set forth in Section 8.01(a).

 

“Required Consents” means any consents required to assign to NPC an interest in any ON Line Agreement, as contemplated hereby, which are set forth in the Disclosure Schedules.

 

“Robinson Summit Location” means a proposed location for the construction of the Robinson Summit Substation, which is generally described as Section 12, Township 17 North, Range 60 East, MDB&M, White Pine County, Nevada, it being understood that such 

 

 

 

 

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location will be more specifically described in BLM right-of-way grant and/or serial number N-82076 when issued by BLM.

 

“Robinson Summit Substation” means a proposed substation to be located near Ely in White Pine County, Nevada, which will be originally constructed as part of ON Line and upgraded as part of the Great Basin Segments, as further described in Schedule 1.

 

“ROFO Offer Deadline” has the meaning set forth in Section 15.02(b)(ii).

 

“ROFO Offer Notice” has the meaning set forth in Section 15.02(b)(i).

 

“ROFO Offered Interest” has the meaning set forth in Section 15.02(b)(i).

 

“ROFO Return Notice” has the meaning set forth in Section 15.02(b)(ii).

 

“ROFR Offer Deadline” has the meaning set forth in Section 15.02(a)(i).

 

“ROFR Offer Notice” has the meaning set forth in Section 15.02(a)(i).

 

“ROFR Offered Interest” has the meaning set forth in Section 15.02(a)(i).

 

“ROFR Return Notice” has the meaning set forth in Section 15.02(a)(ii).

 

“Rules” has the meaning set forth in Section 19.02(b)(i).

 

“SEC” means the United States Securities and Exchange Commission.

 

“Security Documents” has the meaning set forth in Section 18.04(f).

 

“Shared Liability” has the meaning set forth in Section 12.02.

 

“SNIP” has the meaning set forth in the recitals to this Agreement.

 

“SNIP Agreement” has the meaning set forth in Section 6.05(b)(iv)(1).

 

“SNIP Option” has the meaning set forth in Section 6.05(a).

 

“SNIP Option Closing” means the Transfer by NPC and the purchase by Great Basin of the Applicable Centennial Phase 3 Rights.

 

“SNIP Option Closing Date” means the date upon which the SNIP Option Closing occurs.

 

“SNIP Option Right Transfer” has the meaning set forth in Section 6.05(d).

 

“SPPC” has the meaning set forth in the preface to this Agreement.

 

“SPPC Purchase Price” has the meaning set forth in Section 2.01(b).

 

 

 

 

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“Step-In Party” means either Great Basin or NPC, whichever is stepping-in to take over the responsibilities of the non-performing Party at the applicable time.

 

“Substation Construction Contract” means the agreement among NPC, Great Basin and the Substation Construction Contractor pursuant to which the Substation Construction Contractor will perform procurement and construction services for the Robinson Summit Substation and pursuant to the Interconnection Agreement for the Robinson Summit Substation.

 

“Substation Construction Contractor” means the contractor under the Substation Construction Contract.

 

“SWIP-N” has the meaning set forth in the recitals to this Agreement.

 

“SWIP-S” has the meaning set forth in the recitals to this Agreement.

 

“Taxes” has the meaning set forth in Section 10.01.

 

“Term” has the meaning set forth in Section 11.01.

 

“Terminated Capacity” has the meaning set forth in Section 16.02(h).

 

“Termination Date” has the meaning set forth in Section 11.01.

 

“Termination Payment” has the meaning set forth in Section 16.02(h).

 

“Thirtymile Location” means a proposed location for the construction of the Robinson Summit Substation described in BLM right-of-way grant number N-85210.

 

“Total Costs” means an amount equal to the sum of Net Actual Costs, Net Capital Repair Costs, Net Event of Loss Costs and Net Condemnation Action Costs.

 

“Tower Suppliers” means the tower suppliers under the Tower Supply Agreements.

 

“Tower Supply Agreements” means the agreements among NPC, Great Basin and the Tower Suppliers pursuant to which the Tower Suppliers will supply the towers for ON Line.

 

“Transfer” means to offer, sell, transfer, assign or dispose of (by operation of law or otherwise), or make any exchange, gift, assignment or pledge of, or grant any Lien on, all or any part of (a) with respect to a Party, such Party’s Ownership Interests or the Applicable Centennial Phase 3 Rights or any of such Party’s rights or obligations under this Agreement or any ON Line Agreement and (b) with respect to Great Basin, Great Basin’s ownership interests in the Great Basin Segments; provided, however, that a Transfer shall not include any transaction contemplated by Section 15.01(c).

 

“Transfer Taxes” has the meaning set forth in Section 10.05.

 

 

 

 

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“Transferring Party” means a Party making or contemplating making a Transfer in accordance with this Agreement.

 

“Transmission Improvement” has the meaning set forth in Section 6.01.

 

“Transmission Line” means ON Line and the Great Basin Segments, collectively.

 

“Transmission Line Construction Contract” means the agreement among NPC, Great Basin and the Transmission Line Construction Contractor pursuant to which the Transmission Line Construction Contractor will provide all procurement and construction services for ON Line (except to the extent that such services will be provided by the Substation Construction Contractor, the Tower Suppliers or the Other Suppliers).

 

“Transmission Line Construction Contractor” means the contractor under the Transmission Line Construction Contract.

 

“Transmission Losses” has the meaning set forth in Section 7.06.

 

“Uniform System of Accounts” means the uniform system of accounts as adopted by FERC for electric utilities.

 

“Unpaid Contribution” has the meaning set forth in Section 5.07(a).

 

“Up-Front GBT Costs” means third-Person costs, expenses and fees for lawyers, other consultants, financing parties and agents reasonably incurred by Great Basin in connection with closing the ON Line Financing that are actual, verifiable costs paid to unaffiliated, third-Persons in respect of the ON Line Financing (in each case, other than any costs (i) included in Development Costs or (ii) incurred prior to January 1, 2010 in excess of one million Dollars ($1,000,000) in the aggregate) plus Great Basin’s cost of carrying such costs from the date incurred through ON Line COD at a rate equal to eight and eight hundredths percent (8.08%) per annum; provided, that such Up-Front GBT Costs shall be no greater than the lesser of (a) the amount (if any) by which the Anticipated Investment for ON Line is greater than the Net Actual Costs and (b) seven million Dollars ($7,000,000).  For the avoidance of doubt, if the Net Actual Costs are equal to or greater than the Anticipated Investment for ON Line, then Up-Front GBT Costs shall equal zero.

 

“WECC” means Western Electricity Coordinating Council.

 

“Willful Misconduct/Gross Negligence” means any action taken or not taken by the Managing Party, either NVE Party or Great Basin in its performance or non-performance of its obligation as the Managing Party, as the Operator of the Transmission Line or maintainer of ON Line or in connection with its obligations under Sections 13.04 and 14.04 and as maintainer of the Great Basin Segments, respectively, under this Agreement or any ON Line Agreement, which action:

 

 

 

 

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(a)           (i) is knowingly or intentionally taken or not taken with conscious indifference to the consequences thereof or with intent that injury or damage would result or would probably result therefrom or (ii) constitutes gross negligence; and

 

(b)           has been determined by final arbitration award or final judgment or judicial decree to be a default under this Agreement or any ON Line Agreement and which action occurs or continues beyond the time specified in such arbitration award or judgment or judicial decree for curing such default.

 

For the avoidance of doubt, the phrase “Willful Misconduct/Gross Negligence” does not include any act or failure to act which is merely involuntary, accidental or negligent or which is caused by Force Majeure.

 

“Wind-Up Events” has the meaning set forth in Section 11.02(b).

 

“Wind-Up Reserve Account” has the meaning set forth in Section 11.02(c).

 

“Withdrawing Party” has the meaning set forth in Section 13.05(a).

 

“Work Product” means all the plans, drawings, designs, data, information, studies, analyses, work product and reports (in any form) developed by any Party or its Affiliates in connection with ON Line and developed under any ON Line Agreement (subject to the terms thereof), other than studies, reports, analyses, models, internal projections and other similar documentation licensed to Great Basin pursuant to the IP License Agreement or that is solely for a Party’s internal analysis, reporting or management purposes or that is prepared in connection with the role of the NVE Parties as transmission providers or as generation owners.

 

1.02 Interpretations

 

.  In this Agreement, unless a clearly contrary intention appears (a) the singular number includes the plural number and vice versa; (b) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity; (c) reference to any gender includes each other gender; (d) reference to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof; (e) reference to any Article, Section, Schedule, Annex or Exhibit means such Article, Section, Schedule, Annex or Exhibit to this Agreement and references in any Article, Section, Schedule, Annex, Exhibit or definition to any clause means such clause of such Article, Section, Schedule, Annex, Exhibit or definition; (f) “hereunder”, “hereof”, “hereto”, “herein”, “herefrom” and words of similar import are reference to this Agreement as a whole and not to any particular Article, Section, Schedule, Annex or Exhibit or other provision hereof; (g) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”; (h) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term; (i) reference to any Applicable Law means such Applicable Law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time, and includes any rules and regulations promulgated thereunder; and (j) Total Costs, Net Actual Costs, Net 

 

 

 

 

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Capital Repair Costs, Net Event of Loss Costs and Net Condemnation Action Costs, as applicable, paid or funded by a Party shall mean such costs as reduced by Cost Reductions received by such Party (but without duplication, in the event any such Cost Reductions have already been taken into account by virtue of the definition thereof or any of the subcomponents thereof) and after giving effect to the Closing Payments and any related adjustment received pursuant to Section 2.02(d).

 

ARTICLE II

 

ACQUISITION OF ON LINE

 

2.01 Acquisition; Purchase Price

 

(a) On the Acquisition Closing Date and on the terms and subject to the conditions set forth in this Agreement, NPC shall purchase from Great Basin, and Great Basin shall sell to NPC, an Ownership Interest in the amount of NPC’s Ownership Percentage and SPPC shall purchase from Great Basin, and Great Basin shall sell to SPPC, an Ownership Interest in the amount of SPPC’s Ownership Percentage, in each case free and clear of all Liens (other than Permitted Liens).

 

(b) The purchase price of the Ownership Interest acquired at Acquisition Closing by (i) NPC shall be equal to the aggregate of all costs set forth on the Cost Detail Statements (as adjusted by the Cost Detail Reconciliation Statements) of the Parties multiplied by NPC’s Ownership Percentage (the “NPC Purchase Price”) and (ii) SPPC shall be equal to the aggregate of all costs set forth on the Cost Detail Statements (as adjusted by the Cost Detail Reconciliation Statements) of the Parties multiplied by SPPC’s Ownership Percentage (the “SPPC Purchase Price”).

 

2.02 Closing Payments; Closing Payment Adjustments

 

(a) Cost Detail Statements.  No less than twenty (20) Business Days before the anticipated Acquisition Closing Date, each Party shall deliver to the other Parties a detailed statement (each, a “Cost Detail Statement”) setting forth all of such Party’s (i) Development Costs, (ii) Pre-Closing Costs incurred prior to the date of such Cost Detail Statement (which shall be no more than five (5) days prior to the date of delivery), (iii) good faith estimate of the Pre-Closing Costs that will be incurred by such Party from the date of such Cost Detail Statement through the Acquisition Closing Date and (iv) Carrying Costs associated with all such Development Costs and Pre-Closing Costs through the Acquisition Closing Date; provided, however, that the aggregate amount of such costs set forth on the Cost Detail Statement shall be reduced by the amount of any Cost Reductions received (or expected to be received) by a Party prior to Acquisition Closing.  Each Party shall promptly provide the other Parties with access to, and copies of, all reasonably requested documentation in support of such Party’s Cost Detail Statement.  The Parties shall work in good faith to promptly resolve any Dispute concerning any Cost Detail Statement, and shall revise any disputed Cost Detail Statement to account for the resolution of the applicable Dispute.

 

(b) Closing Statement.  No less than the later of (i) five (5) Business Days before the anticipated Acquisition Closing Date and (ii) ten (10) Business Days after 

 

 

 

 

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receipt of Great Basin’s Cost Detail Statement and resolution of any timely made Disputes regarding any Cost Detail Statement, NPC shall deliver a statement (the “Closing Statement”) to the Parties setting forth the aggregate of all costs and Cost Reductions set forth on the Cost Detail Statements of the Parties and each payment (each, a “Closing Payment”) to be made by a Party (if any) such that, after the making of each such payment, each Party will have borne an amount equal to the aggregate of all costs set forth on the Cost Detail Statements of the Parties (after accounting for the effect of any Cost Reductions) multiplied by such Party’s Ownership Percentage.

 

(c) Closing Payments.  At the Acquisition Closing, and in consideration for consummating the Acquisition Closing, each Party shall make any Closing Payment required by it on the Closing Statement (if any) to the Parties required by the Closing Statement.

 

(d) Reconciliation.  No more than fifteen (15) Business Days following the Acquisition Closing Date, each Party shall deliver to the other Parties a detailed statement of the Pre-Closing Costs, Carrying Costs associated with such Pre-Closing Costs and Cost Reductions that it incurred or received from the date of such Party’s Cost Detail Statement through the Acquisition Closing Date (each, a “Cost Detail Reconciliation Statement”).  Each Party shall promptly provide the other Parties with access to, and copies of, all reasonably requested documentation in support of such Party’s Cost Detail Reconciliation Statement.  No more than fifteen (15) Business Days after the receipt of the last Cost Detail Reconciliation Statement, NPC shall deliver a statement (the “Reconciliation Statement”) to the Parties setting forth the amount that any Party owes to any other Party so that each Party will have borne an amount equal to the aggregate of all costs set forth on the Cost Detail Statements (after accounting for the effect of any Cost Reductions) of the Parties (adjusted by the difference in the amounts set forth in each Party’s Cost Detail Reconciliation Statement and the corresponding amount set forth in such Party’s Cost Detail Statement) multiplied by such Party’s Ownership Percentage.  The Parties shall work in good faith to promptly resolve any Dispute concerning any Cost Detail Reconciliation Statement or the Reconciliation Statement.  All portions of the Reconciliation Statement (other than portions being disputed by a Party in good faith) shall be paid within twenty (20) Business Days following receipt of the Reconciliation Statement.  Any disputed portion of the Reconciliation Statement that is later resolved shall be paid within five (5) Business Days after the resolution of such Dispute or within twenty (20) Business Days following receipt of the Reconciliation Statement, whichever occurs later.

 

(e) Audit Rights.  Each Party shall keep reasonably detailed records of its Pre-Closing Costs, the Carrying Costs associated with the Development Costs and Pre-Closing Costs and any Cost Reductions and shall provide such records to the other Parties upon request.  All such costs and reductions giving rise to any amounts paid under this Section 2.02 shall be subject to audit by internal auditors or an independent third-Person expert payable by the requesting Party at reasonable times and upon reasonable prior written notice to the other Parties at any time prior to the eighth (8th) anniversary of ON Line COD; provided, however, that if the amount owed by the audited Party exceeds one hundred thousand Dollars ($100,000), the audited Party shall pay all reasonable audit costs.  If a Dispute arises in connection with any audit conducted pursuant to this Section 2.02(e) and such Dispute remains outstanding for thirty (30) days following the conclusion of such audit, such Dispute may be referred to Ernst & Young 

 

 

 

 

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LLP, or, if Ernst & Young LLP is unable or unwilling to act or is providing services to a Party and/or its Affiliates at such time or during the three (3) years immediately preceding such time, such other independent auditing firm agreeable by all Parties (in either case, the “Independent Auditor”) by any Party and the Party requesting the Independent Auditor shall bear the costs of the Independent Auditor; provided, however, that if the amount owed by the audited Party exceeds one hundred thousand Dollars ($100,000), the audited Party shall pay all costs of the Independent Auditor.  The Parties shall reasonably cooperate with the Independent Auditor, and their agreement to submit Disputes under this Section 2.02(e) to an Independent Auditor shall be enforceable as an agreement to arbitrate.  The decision of the Independent Auditor shall be final, binding and conclusive upon the Parties, shall not be subject to challenge or appeal, and may be enforced in any court having jurisdiction in the same manner as an arbitral award.  If it is determined at any time pursuant to such audit or Independent Auditor that an amount previously paid by a Party under this Section 2.02 did not constitute a due and payable item, such Party may recover such amount plus interest at the Agreed Rate from any other Party that received such payment or deduct, or cause to be deducted, such amount from any payment that may be due to such receiving Party, and the Parties shall revise the Cost Detail Statements and the Cost Detail Reconciliation Statements to account for the overpayment.  Each Party acknowledges and agrees that the making of any payment under this Section 2.02 shall be without prejudice to the audit rights of each Party under this Section 2.02(e).

 

2.03 Conditions Precedent to Acquisition Closing

 

.  At Acquisition Closing, Great Basin’s obligation to sell Ownership Interests to the NVE Parties, and the NVE Parties’ obligation to purchase such Ownership Interests from Great Basin, are each subject to satisfaction of the following conditions, except to the extent waived in writing by the NVE Parties with respect to the conditions set forth in Sections 2.03(a)-(n) and by Great Basin with respect to the conditions set forth in Sections 2.03(a)-(g), (j)-(k) and (m)-(n):

 

(a) The initial PUCN Approval has been duly obtained, made or given and shall be in full force and effect.

 

(b) ON Line Financial Closing has occurred or shall occur simultaneously with the Acquisition Closing.

 

(c) The FERC Approval has been duly obtained, made or given and shall be in full force and effect.

 

(d) Each other Party shall have paid or executed and delivered, or caused to be executed and delivered to the other Parties, as applicable, the items set forth in Section 2.04.

 

(e) Each of the representations and warranties made by each other Party in this Agreement shall be true and correct in all material respects on and as of the Acquisition Closing Date as though made on and as of the Acquisition Closing Date or, in the case of representations and warranties expressly made as of a specified date, on and as of such date, except to the extent that such representations and warranties contain a materiality qualifier, in which case they shall be true and correct in all respects.

 

 

 

 

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(f) Each other Party shall have performed and complied in all material respects with the agreements, covenants and obligations required by this Agreement to be so performed or complied with by it at or before the Acquisition Closing.

 

(g) (i) Each agreement listed in Schedule 4 has been executed and delivered and is in full force and effect, (ii) Great Basin has obtained all non-ministerial Governmental Approvals required for the construction and operation of ON Line (other than Governmental Approvals customarily obtained at a later point in time in light of the then current stage of construction of ON Line and related to the construction of the Robinson Summit Substation at the Robinson Summit Location) and such Governmental Approvals are in full force and effect and shall not be subject to any pending or threatened challenge and (iii) full notice to proceed has been issued under each Material Construction Contract.

 

(h) (i) The ON Line Security Interest has been granted to the NVE Parties and is valid, legal, perfected, in full force and effect and has the priority contemplated by Section 18.04, each Security Document for the ON Line Security Interest has been (A) properly executed and delivered by Great Basin and (B) duly filed, registered and recorded and Uniform Commercial Code financing statements have been duly filed, in each case, in each jurisdiction as required by Applicable Law or as reasonably requested by the NVE Parties in order to grant and maintain a valid, legal and perfected Lien that has the priority contemplated by Section 18.04, contemplated hereby in respect of the ON Line Security Interest, and each such Security Document is in full force and effect and (ii) legal opinions addressing the matters set forth on Exhibit I and in form and substance reasonably acceptable to the NVE Parties have been delivered to the NVE Parties regarding the ON Line Security Interest and the associated Security Documents.

 

(i) A Non-Disturbance Agreement has been executed and delivered by each ON Line Lender and the NVE Parties.

 

(j) The ON Line Intercreditor Agreement has been executed and delivered by the NVE Parties, Great Basin and each ON Line Lender (or an agent thereof).

 

(k) The Interconnection Agreements have been executed and delivered by the Parties (in their capacities as owners of ON Line), NPC (in its capacity as the interconnection provider) and SPPC (in its capacity as the interconnection provider), as applicable.

 

(l) Great Basin has delivered to the NVE Parties fully executed releases for any Liens on the Ownership Interests being transferred to NPC and SPPC that are not Permitted Liens, in a form reasonably acceptable to the NVE Parties.

 

(m) The Parties have executed an amendment to this Agreement to incorporate a form of consent to collateral assignment to be in favor of ON Line Lenders, GB Segment Lenders and NVE Lenders (if required) and a form of SNIP Agreement.

 

(n) The Parties have agreed on a revised ON Line Budget reflecting all anticipated ON Line Costs necessary to achieve ON Line COD.

 

 

 

 

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2.04 Acquisition Closing Deliverables

 

.  On the Acquisition Closing Date, the Parties shall take the following actions:

 

(a) Each Party shall pay the Closing Payments required by Section 2.02(c).

 

(b) The Parties shall execute and deliver a bill of sale and assignment and assumption agreement for NPC’s undivided ownership interest in ON Line in the amount of NPC’s Ownership Percentage and SPPC’s undivided ownership interest in ON Line in the amount of SPPC’s Ownership Percentage, in each case substantially in the form of Exhibit E.

 

(c) Great Basin shall deliver to NPC the Required Consents substantially in the form of Exhibit F or such other form as is reasonably acceptable to NPC.

 

(d) Great Basin shall cause the entity for which Great Basin is treated as a disregarded entity separate from its owner pursuant to Treasury Regulations Section 301.7701-3 to execute and deliver to each of the NVE Parties a certificate under Section 1445(b)(2) of the Code, in form and substance reasonably satisfactory to the NVE Parties, providing that such entity is not a foreign Person.

 

(e) Great Basin shall execute and deliver to the NVE Parties (i) a State of Nevada Declaration of Value in the form required by Nevada Revised Statutes Section 375.060, (ii) a grant, bargain and sale deed substantially in the form of Exhibit G, (iii) any other documentation necessary or appropriate to convey and record title to the ON Line ROW and any other real property comprising ON Line to the extent that Great Basin holds record title to interests in the ON Line ROW or any such other real property and (iv) any documentation necessary or appropriate to record any other real property interests in the ON Line ROW.

 

2.05 Timing and Location of Acquisition Closing.  The Acquisition Closing shall take place on a date within ten (10) Business Days after satisfaction or waiver of the conditions set forth in Section 2.03.  The Acquisition Closing shall take place at NPC’s offices in Las Vegas, Nevada at a time mutually acceptable to the Parties.  The Acquisition Closing shall be deemed effective as of 12:01 A.M. Las Vegas time on the day after the Acquisition Closing Date.

 

2.06 Efforts to Close.  Between the Effective Date and the Acquisition Closing, each Party shall use its reasonable efforts to take all actions and to do all things necessary, proper or advisable to satisfy the conditions set forth in Section 2.03 and consummate the Acquisition Closing.  Each Party shall promptly notify the other Parties of any event arising after the Effective Date that could reasonably be expected to result in the Acquisition Closing occurring after December 31, 2010 (the “Acquisition Closing Deadline”).

 

       2.07 Disclosure Schedule Update.  From time to time prior to the Acquisition Closing Date, any Party, as applicable, may amend or supplement the Disclosure Schedules attached to this Agreement relating to any representation or warranty contained in Article XVII, with respect to any fact, event or circumstance occurring after the Effective Date that, if existing or occurring at or prior to the Acquisition Closing Date, would have been required to be set forth 

 

 

 

 

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or described on such a Disclosure Schedule or that is necessary to complete or correct any information in any representation or warranty contained in Article XVII (a “Disclosure Schedule Update”); provided, that (a) the facts, events or circumstances disclosed in such amendment or supplement could not reasonably be expected to have a Material Adverse Effect and (b) if such facts, events or circumstances result from a breach of this Agreement by the amending or supplementing Party or its negligence, willful misconduct or fraud, such Party shall indemnify the other Parties and their respective Indemnified Persons for all Claims in connection with such facts, events or circumstances.  The Parties acknowledge that no such indemnification obligation shall be deemed waived by the consummation of the Acquisition Closing.  Each Disclosure Schedule Update delivered to the Parties shall be deemed to modify the representations and warranties herein for all purposes hereunder (except for purposes described in clause (b) above), and as modified and updated shall constitute the applicable Disclosure Schedule for purposes of Article XVII.

 

       2.08 Allocation of Purchase Price.  Within sixty (60) days after the Acquisition Closing Date, NPC shall deliver to Great Basin for its review and approval a draft allocation of the NPC Purchase Price and SPPC Purchase Price (and all other capitalized costs) among the ON Line assets (based on the final Cost Detail Statement and the Cost Detail Reconciliation Statement) and in accordance with section 1060 of the Code (and treasury regulations thereunder) and any similar provisions of Applicable Law.  Within twenty (20) Business Days after its receipt of NPC’s draft allocation of the NPC Purchase Price and SPPC Purchase Price, Great Basin shall propose to NPC any changes thereto or otherwise NPC’s draft allocation shall be deemed to have agreed thereto.  If Great Basin proposes changes to NPC’s proposed allocation of the NPC Purchase Price or SPPC Purchase Price within such twenty (20) Business Day period described above, NPC and Great Basin shall cooperate in good faith to mutually agree upon a revised allocation as soon as practicable (such allocation of the NPC Purchase Price and the SPPC Purchase Price, as finally agreed to by the Parties, the “Allocation”).  If the Parties cannot agree upon the legal basis on which NPC has made the Allocation within sixty (60) days after delivery of such proposed changes (if any), NPC shall secure a legal opinion of a nationally recognized tax counsel that the basis on which NPC made such proposed Allocation is more likely than not correct.  If NPC secures such opinion, then the Allocation shall be made on the legal basis proposed by NPC, and Great Basin shall pay all reasonable costs associated with such legal opinion.  If NPC fails to secure such opinion, then NPC shall be responsible for the costs of such opinion, and Great Basin shall then secure a legal opinion of a nationally recognized tax counsel that the basis on which Great Basin made such proposed Allocation is more likely than not correct.  If Great Basin secures such opinion, then the Allocation shall be made on the legal basis proposed by Great Basin, and NPC shall pay all reasonable costs associated with such legal opinion.  If Great Basin fails to secure such opinion, then Great Basin shall be responsible for the costs of such opinion, and then the Parties shall work together to secure a tax opinion that supports a proposed Allocation.  If the Parties cannot agree upon the valuations in the Allocation within thirty (30) days after delivery of such proposed changes (if any), the Parties shall mutually select the Independent Auditor or another external auditor or appraiser, as determined based on the nature of the valuation dispute, which shall be instructed to resolve such disagreement within thirty (30) days after such disagreement is submitted to it for resolution and shall notify Great Basin and NPC in writing of its resolution.  Such auditor’s or appraiser’s resolution of the disagreement shall be final and binding on the Parties.  Each Party shall, and each Party shall 

 

 

 

 

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cause their Affiliates to, report, act, and file all Tax returns, forms or reports in all respects and for all purposes consistent with the Allocation.  No Party shall take any position (whether in audit, Tax returns, or otherwise or with any Governmental Authority) that is inconsistent with the Allocation except as may be adjusted by subsequent written agreement following an audit by the Internal Revenue Service or by court decision.

 

ARTICLE III

 

OWNERSHIP AND CAPACITY RIGHTS; MONTHLY PAYMENT

 

3.01 Ownership Rights.

 

(a) ON Line Ownership; Waiver of Partition Rights.  After the Acquisition Closing Date, the Parties shall own ON Line as tenants-in-common with each Party owning an Ownership Interest in the amount of its Ownership Percentage.  The Parties recognize that the physical partition of ON Line or any part thereof, whether by partition in kind or sale and division of the proceeds thereof, would be impossible and impractical and wholly inconsistent with the purposes for which this Agreement is made.  As such, each Party agrees that it shall not take any action at any time by judicial proceedings, arbitration or otherwise, to partition ON Line or any part thereof, in any way, whether by partition in kind or by sale and division of the proceeds thereof.  Each Party further irrevocably waives the right of partition and the benefit of all statutory or common law that may now or hereafter authorize such partition of ON Line or any part thereof.  In the event any such right of partition shall hereafter accrue, each Party shall from time to time upon the written request of any other Party execute and deliver such further instruments as may be necessary to confirm the foregoing waiver and release of its right to partition.  The Parties shall amend this Agreement to update Annex A upon any change in Ownership Percentages pursuant to the terms hereof such that, at any time, Annex A accurately reflects each Party’s Ownership Percentage.

 

(b) After-Acquired ON Line Property and Rights.  Unless otherwise determined by the Parties, any Party which acquires in its own name, or an Affiliate’s name, an interest in any real or personal property (whether tangible or intangible), contractual right or any other asset that is part of ON Line shall acquire and hold the same subject in all respects to this Agreement and for the benefit of the Parties in proportion to their respective Ownership Percentages, and subject to Section 3.01(c), any such Party shall transfer and assign an ownership interest therein to the other Parties equal to such other Parties’ respective Ownership Percentages (a) within fifteen (15) days after such acquisition and (b) at the Acquisition Closing, whichever occurs later, and do all things necessary or appropriate to register or record on any appropriate register the property in the names of the Parties.

 

(c) ON Line Agreements and Governmental Approvals.  Except as otherwise agreed by the Management Committee, all ON Line Agreements entered into after the Acquisition Closing Date shall be in the name of Great Basin and NPC and Governmental Approvals for ON Line applied for after the Acquisition Closing Date shall be in the name of the Parties and the Parties shall use their commercially reasonable efforts to ensure that all ON Line Agreements shall allow for assignment, without consent, to Persons holding an Ownership Interest.  Unless otherwise agreed by the Parties, each ON Line Agreement shall expressly provide that, after the Acquisition Closing Date, the obligations and undertakings of the Parties 

 

 

 

 

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thereunder are several and not joint and that each Party is and shall be liable and responsible only for its Ownership Percentage of such obligations and undertakings; provided, however, that, with respect to any ON Line Agreement to which SPPC is not a party and, as between NPC and SPPC, NPC shall be liable to any counterparty (other than Great Basin) under any such ON Line Agreement for SPPC’s Ownership Percentage of obligations and undertakings under any such ON Line Agreement, and NPC shall provide SPPC with the benefit of five percent (5%) of its rights under any such ON Line Agreement and SPPC shall promptly reimburse NPC for five percent (5%) of any liability or obligation incurred by NPC under any such ON Line Agreement.  If required by a counterparty (other than a Party) under an ON Line Agreement, the Parties shall use commercially reasonable efforts to provide credit support in a form acceptable to such counterparty, such that the Parties’ obligations under such ON Line Agreement are several and not joint.

 

(d) Great Basin Segment Ownership.  Great Basin shall (i) own one hundred percent (100%) of the ownership interests in the Great Basin Segments and (ii) be solely responsible for the development, construction, ownership, management and maintenance of the Great Basin Segments and all costs and liabilities related to development, construction, ownership, management, operation and maintenance of the Great Basin Segments, including all Great Basin O&M Costs and the costs of any Transmission Improvements as provided in Section 6.01; provided, however, that, while the Parties, as of the Effective Date, expect that the Great Basin Segments will be fully developed and constructed, nothing contained in this Agreement (other than Great Basin’s obligation set forth in Section 3.02(b)) shall be construed to obligate Great Basin or any of its Affiliates to complete the development and/or construction of the Great Basin Segments (or any portion thereof), such decision being in the sole discretion of Great Basin and its Affiliates.

 

3.02 Electrical Capacity Rights.

 

(a) Prior to the Commercial Operation of Either Great Basin Segment.  During the period commencing immediately after the Acquisition Closing Date to the date of commercial operation of the first Great Basin Segment to achieve commercial operation, the NVE Parties’ Capacity Entitlement shall be one hundred percent (100%).  For the avoidance of doubt, Great Basin shall not be entitled to any Electrical Capacity after the Acquisition Closing Date and prior to the date of commercial operation of the first Great Basin Segment to achieve commercial operation.

 

(b) Prior to GB Segment COD.  During the period commencing on the date of commercial operation of the first Great Basin Segment to achieve commercial operation to GB Segment COD, the NVE Parties’ Capacity Entitlement shall be as follows (and Great Basin’s Capacity Entitlement shall be all remaining Electrical Capacity):

 

                (i) If SWIP-N is the first Great Basin Segment to achieve commercial operation, the NVE Parties’ Capacity Entitlement shall be forty-five and two tenths percent (45.2%) of the electrical Capacity; and

 

 

 

 

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                (ii) If SNIP is the first Great Basin Segment to achieve commercial operation, the NVE Parties’ Capacity Entitlement shall be seventy and four tenths percent (70.4%) of the Electrical Capacity.

 

If Great Basin achieves commercial operation of one of the Great Basin Segments but is prevented from achieving GB Segment COD as a result of a Force Majeure event that is reasonably expected to prevent continued progress on the Great Basin Segment that has not achieved commercial operation for more than two hundred forty (240) days and, as a result, Great Basin suspends performance under all material construction contracts associated with such Great Basin Segment pending resolution of the Force Majeure event, then for the period extending from the commencement of the Force Majeure event to the third (3rd) anniversary thereof, Great Basin shall use commercially reasonable efforts to overcome the Force Majeure event and achieve GB Segment COD as expeditiously as possible.  Notwithstanding Sections 3.02(b)(i) and (ii), during the period extending from such two hundred fortieth (240th) day to GB Segment COD, Great Basin’s Capacity Entitlement shall be determined in accordance with the following formula (and the NVE Parties’ Capacity Entitlement shall be all remaining Electrical Capacity):

 

Capacity Entitlement = (AI Comm + [AI Not Comm * % Comp] - DC) / AI Total

 

Where:

 

AI Comm = the Anticipated Investment of the Great Basin Segment that has achieved commercial operation;

 

AI Not Comm = the Anticipated Investment of the Great Basin Segment that has not achieved commercial operation;

 

% Comp = the aggregate percentage complete of the construction of the Great Basin Segment that has not achieved commercial operation at the time of the suspension of work, as reasonably determined by the Parties; and

 

AI Total = the sum of (i) the Anticipated Investment of the Great Basin Segment that has achieved commercial operation, (ii) the Anticipated Investment for ON Line and (iii) AI Not Comm * % Comp; and

 

DC = to the extent the Parties consummate the SNIP Option Closing, the amount set forth in  Section 6.05(b)(iv)(2)(B).

 

(c) Following GB Segment COD.  From and after the GB Segment COD, the Parties shall be entitled to Electrical Capacity as follows:

 

                (i) If the Electrical Capacity of the Transmission Line is equal to or less than 2,000 MW, then the NVE Parties’ Capacity Entitlement shall be thirty-eight percent (38%) of such Electrical Capacity and Great Basin’s Capacity Entitlement shall be all Electrical Capacity other than the Electrical Capacity to which the NVE Parties are entitled.

 

 

 

 

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                (ii) If the Electrical Capacity of the Transmission Line is greater than 2,000 MW but equal to or less than 2,080 MW, then the NVE Parties’ Capacity Entitlement shall be thirty-eight percent (38%) of 2,000 MW of such Electrical Capacity and one hundred percent (100%) of all Electrical Capacity in excess of 2,000 MW, and Great Basin’s Capacity Entitlement shall be all Electrical Capacity other than the Electrical Capacity to which the NVE Parties are entitled.

 

                (iii) If the Electrical Capacity of the Transmission Line is greater than 2,080 MW but equal to or less than 2,100 MW, then the NVE Parties’ Capacity Entitlement shall be thirty-eight percent (38%) of 2,000 MW of such Electrical Capacity and one hundred percent (100%) of 80 MW of such Electrical Capacity, and Great Basin’s Capacity Entitlement shall be all Electrical Capacity other than the Electrical Capacity to which the NVE Parties are entitled.

 

                (iv) If the Electrical Capacity of the Transmission Line is greater than 2,100 MW, then the NVE Parties’ Capacity Entitlement shall be thirty-eight percent (38%) of 2,000 MW of such Electrical Capacity, one hundred percent (100%) of 80 MW of such Electrical Capacity and thirty-eight percent (38%) of all Electrical Capacity in excess of 2,100 MW, and Great Basin’s Capacity Entitlement shall be all Electrical Capacity other than the Electrical Capacity to which the NVE Parties are entitled.

 

(d) Unavailability of Transmission Line.  Notwithstanding Sections 3.02(b) or (c):

 

                (i) if after commercial operation of a Great Basin Segment but prior to GB Segment COD, such Great Basin Segment becomes unavailable (A) for a period in excess of one hundred twenty (120) consecutive days, due to Force Majeure, an Event of Loss, Condemnation Action or any change in Applicable Law commencing after such one hundred twentieth (120th) day, and (B) commencing immediately, due to any negligent act or omission or any Willful Misconduct/Gross Negligence of or breach of this Agreement by Great Basin, then from such date to the date the unavailable Great Basin Segment again becomes available, the NVE Parties’ Capacity Entitlement shall be one-hundred percent (100%) of the Electrical Capacity.

 

                (ii) if after commercial operation of a Great Basin Segment, ON Line becomes unavailable (A) for a period in excess of one hundred twenty (120) consecutive days, due to Force Majeure, an Event of Loss, Condemnation Action or any change in Applicable Law commencing after such one hundred twentieth (120th) day, and (B) commencing immediately, due to any negligent act or omission or any Willful Misconduct/Gross Negligence of or breach of this Agreement by the NVE Parties, in each case unless such availability is caused by the withholding by Great Basin (including any of Great Basin’s Authorized Representatives) of any consent to any action proposed by NPC in good faith, consistent with Prudent Utility Practices and not in violation of any Applicable Law and for which the NVE Parties are obligated to fund all costs thereof under this Agreement directly or through an adjustment to the Monthly Payment, then from such date to the date ON Line again becomes available, Great 

 

 

 

 

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Basin’s Capacity Entitlement shall be one hundred percent (100%) of the Electrical Capacity.

 

                (iii) if after GB Segment COD, SWIP-N or SNIP becomes unavailable (A) for a period in excess of one hundred twenty (120) consecutive days, due to Force Majeure, an Event of Loss, Condemnation Action or any change in Applicable Law commencing after such one hundred twentieth (120th) day, and (B) commencing immediately, due to any negligent act or omission or any Willful Misconduct/Gross Negligence of or breach of this Agreement by Great Basin, then from such date to the date the unavailable Great Basin Segment again becomes available, the NVE Parties’ Capacity Entitlement shall be the following (and Great Basin’s Capacity Entitlement shall be all remaining Electrical Capacity): (A) forty-five and two tenths percent (45.2%) of the Electrical Capacity while SWIP-N is available but SNIP is not, (B) seventy and four tenths percent (70.4%) of the Electrical Capacity while SNIP is available but SWIP-N is not, and (C) one hundred percent (100%) of the Electrical Capacity while both SNIP and SWIP-N are unavailable.

 

(e) From and After the 41st Anniversary of the ON Line COD.  Notwithstanding anything to the contrary in Sections 3.02(a) through (d), in the event the NVE Parties do not (i) purchase all of Great Basin’s Ownership Interests or (ii) renew their Capacity Entitlements pursuant to Section 3.09(b), from and after the forty-first (41st) anniversary of the ON Line COD, the NVE Parties’ Capacity Entitlement with respect to Electrical Capacity on ON Line shall be equal to the NVE Parties’ Ownership Percentage, as adjusted pursuant to the terms of this Agreement, and the NVE Parties shall not be entitled to any Electrical Capacity on the Great Basin Segments.  In the event the NVE Parties renew their Capacity Entitlements pursuant to Section 3.09(b), then during the period commencing on the date of such renewal and ending upon the expiration of such renewal, the Parties shall have the Capacity Entitlements set forth in Sections 3.02(a) through (d), subject to Sections 16.02(f), (g) and (h).  Upon expiration of any such renewal, the NVE Parties’ Capacity Entitlement with respect to Electrical Capacity on ON Line shall be equal to the NVE Parties’ Ownership Percentage, and the NVE Parties shall not be entitled to any Electrical Capacity on the Great Basin Segments.

 

(f) From and After Exercise of Buyout of Ownership Interests.  Subject to Section 11.03(b), the Parties shall have the Capacity Entitlements set forth in Sections 3.02(a) through (d) in the event the NVE Parties purchase all of Great Basin’s Ownership Interests; provided, however, that NVE Parties’ Capacity Entitlement on ON Line shall be one hundred percent (100%) and the NVE Parties shall have no Capacity Entitlement on the Great Basin Segments if such purchase occurs prior to GB Segment Financial Closing or prior to the Capacity Entitlement adjustment contemplated by Section 3.02(b).  In the event Great Basin purchases all of the NVE Parties’ Ownership Interests and unless and until the NVE Parties do not renew their Capacity Entitlements pursuant to Section 3.09(b), the Parties shall have the Capacity Entitlements on the Great Basin Segments set forth in Sections 3.02(a) through (d), and notwithstanding Sections 3.02(a) through (d), the NVE Parties shall have a Capacity Entitlement on ON Line equal to its ON Line Capacity Entitlement immediately prior to such buyout minus its Ownership Percentage immediately prior to such buyout (and Great Basin’s Capacity Entitlement with respect to ON Line shall be all remaining Electrical Capacity).

 

 

 

 

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           3.03 Microwave and Fiber Optic Capacity Rights.  Commencing immediately after the Acquisition Closing Date, the NVE Parties shall be entitled to one hundred percent (100%) of the Microwave Capacity and Fiber Optic Capacity on ON Line and Great Basin shall be entitled to one hundred percent (100%) of the Microwave Capacity and Fiber Optic Capacity on the Great Basin Segments; provided that (a) Great Basin shall provide the NVE Parties access to the Microwave Capacity and Fiber Optic Capacity on the Great Basin Segments to the extent necessary for the NVE Parties to operate the Great Basin Segments and (b) in the event Great Basin exercises its step-in rights under Section 16.02(e)(iii), the NVE Parties shall provide Great Basin access to the Microwave Capacity and Fiber Optic Capacity on ON Line to the extent necessary for Great Basin to operate the Transmission Line.

 

           3.04 Revenue Rights.  The NVE Parties and Great Basin shall be entitled to the revenue associated with (a) their respective Capacity Entitlements, as provided under the provisions of each Parties’ respective FERC-approved open access transmission tariff and (b) all of their respective rights to Microwave Capacity and Fiber Optic Capacity as set forth in Section 3.03.

 

           3.05 Relationship of the Parties.  Except as otherwise expressly provided herein, each Party shall bear only its Ownership Percentage of all obligations and liabilities of ON Line arising after the Acquisition Closing Date.  The covenants, obligations and liabilities of the Parties in connection with this Agreement are several and not joint.  Neither the execution nor delivery of this Agreement, nor the consummation of the transactions contemplated hereunder, shall create or constitute a partnership, joint venture, trust, limited liability company, corporate or any other form of business organization or arrangement among the Parties.

 

3.06 Monthly Payment.

 

(a) Subject to Sections 3.06(b) and (c), commencing in the month in which the ON Line COD occurs but terminating in the month during which the forty-first (41st) anniversary of the ON Line COD occurs (the “Monthly Payment Period”), a monthly amount in Dollars equal to the following (the “Monthly Payment”) shall be due and payable to Great Basin; provided, however, that the first Monthly Payment and the last Monthly Payment shall be adjusted on a pro rata basis based on the number of days between ON Line COD and the end of the first month in the Monthly Payment Period and the beginning of the last month in the Monthly Payment Period through the forty-first (41st) anniversary of ON Line COD, respectively:

 

Monthly Payment = Capitalized Component + On-Going GBT Costs incurred in such month + Incremental Cost Differential Component + Capital Repair Component + Event of Loss Component + Condemnation Action Component + any Operating Costs incurred by Great Basin in accordance with Section 7.01(a)

 

Where:

 

Capitalized Component = (Capitalized Costs funded by Great Basin + Up-Front GBT Costs) * the factor set forth on Schedule 2 corresponding to the period of which such month is a part;

 

 

 

 

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Incremental Cost Differential Component = (the Incremental Cost Differential funded by Great Basin / applicable Amortization Period) + interest accruing during such month on any unamortized portion of the Incremental Cost Differential at a rate equal to the NVE WACC as of ON Line COD with the return on equity component discounted by seventy-five (75) basis points;

 

Capital Repair Component = the aggregate sum of the following calculated in respect of each Capital Repair: (the applicable Net Capital Repair Cost funded by Great Basin / applicable Amortization Period) + interest accruing during such month on any unamortized portion of such Net Capital Repair Cost at a rate equal to the NVE WACC as of the time of the relevant Capital Repair Cost was incurred with the return on equity component discounted by fifty (50) basis points;

 

Event of Loss Component = the aggregate sum of the following calculated in respect of each Event of Loss: (the applicable Net Event of Loss Cost funded by Great Basin / applicable Amortization Period) + interest accruing during such month on any unamortized portion of such Net Event of Loss Costs at a rate equal to the NVE WACC as of the time of the relevant Event of Loss Cost was incurred with the return on equity component discounted by fifty (50) basis points; and

 

Condemnation Action Component = the aggregate sum of the following calculated in respect of each Condemnation Action: (the applicable Net Condemnation Action Cost funded by Great Basin / applicable Amortization Period) + interest accruing during such month on any unamortized portion of such Net Condemnation Action Cost at a rate equal to the NVE WACC as of the time of the relevant Condemnation Action Cost was incurred with the return on equity component discounted by fifty (50) basis points.

 

Great Basin shall deliver an invoice by the tenth (10th) day of each month during the Monthly Payment Period setting the Monthly Payment owed for such month along with reasonable supporting documentation, and on the last Business Day of each month (but extended by a day for each day that the invoice is late) during the Monthly Payment Period, NPC shall pay ninety-five percent (95%) of the undisputed portions of the Monthly Payment to Great Basin and SPPC shall pay five percent (5%) of the undisputed portions of the Monthly Payment to Great Basin.

 

(b) The Monthly Payment shall be proportionally reduced: (i) to the extent ON Line becomes unavailable to one or both of the NVE Parties for a period in excess of one hundred twenty (120) consecutive days due to Force Majeure, an Event of Loss, Condemnation Action or any change in Applicable Law commencing after such one hundred twentieth (120th) day, and (ii) commencing immediately, to the extent that ON Line becomes unavailable to one or both of the NVE Parties due to (A) any negligent act or omission or any Willful Misconduct/Gross Negligence of, or breach of this Agreement by, Great Basin or (B) unless the Management Committees agrees to alternative action, the withholding by Great Basin (including any of Great Basin’s Authorized Representatives) of any consent to any action proposed by NPC in good faith, consistent with Prudent Utility Practices and not in violation of any Applicable Law and for which the NVE Parties are obligated to fund all costs thereof under 

 

 

 

 

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this Agreement directly or through an adjustment to the Monthly Payment.  In the event, during any calendar month, ON Line has become unavailable to one or both of the NVE Parties under the circumstances described in clauses (i) and (ii) above, the Monthly Payment payable at the end of such month shall be adjusted to reflect the number of hours during which ON Line was so unavailable to one or both of the NVE Parties as compared to the number of hours in such month  (it being understood that, if ON Line becomes unavailable to only one of the NVE Parties, the other NVE Party shall continue to be obligated to pay its portion of the Monthly Payment).  For the avoidance of doubt, for any given calendar month, the Monthly Payment in respect of such month shall not be due and payable, and shall be forever waived in its entirety, if ON Line is completely unavailable for the entire month for any reason described in clauses (i) or (ii) above.

 

(c) NPC’s and SPPC’s obligation to pay its portion of the Monthly Payment shall cease upon (i) consummation of any purchase by the NVE Parties (or any one of them individually) of all of Great Basin’s Ownership Interests or (ii) the effectiveness of a notice terminating the Terminated Capacity as set forth in Section 16.02(h).  The Monthly Payment shall not be subject to escalation or other adjustment (including following GB Segment COD), except as expressly set forth herein.

 

           3.07 Great Basin Segment Abandonment or Delay Buyout Right.

 

(a) If Great Basin (i) has not achieved GB Segment Financial Closing on or before the GB Segment Financial Closing Deadline, (ii) ceases development or construction of any Great Basin Segment for a period of ninety (90) consecutive days at any time and expresses its intent in writing or makes a public announcement of its intent not to complete development or construction of any Great Basin Segment or (iii) has not achieved GB Segment COD before GB Segment COD Deadline, and, as of the GB Segment COD Deadline, either of the following is true:  Great Basin (A) does not have financing arrangements available to achieve GB Segment COD and complete construction of the Great Basin Segments or (B) is not actively constructing the Great Basin Segments, in each case, for reasons other than a pending formal proceeding challenging the Great Basin Segments or any Governmental Approvals for the Great Basin Segments, for any other event of Force Majeure or as a result of an Event of Default by a NVE Party, then the NVE Parties shall have the right to purchase all (but not less than all) of Great Basin’s Ownership Interests for a price determined in accordance with Schedule 5; provided that written notice of their election to exercise such right is provided to Great Basin by the fourteenth (14th) anniversary of the ON Line COD.  If such purchase right arises and the NVE Parties timely elect to exercise such right, then Great Basin shall Transfer all of its Ownership Interests to the NVE Parties free and clear of any Liens other than Permitted Liens upon the latest to occur of (i) the fifteenth (15th) anniversary of the ON Line COD, (ii) fifteen (15) days after receipt of PUCN Approval and all required Governmental Approvals on terms acceptable to the NVE Parties and (iii) the date set forth in such notice (which shall not be more than one hundred eighty (180) days after the fifteenth (15th) anniversary of the ON Line COD).  Great Basin shall make Applicable Transfer Representations and Warranties to the NVE Parties in connection with such Transfer.  At any time after the sixth (6th) anniversary of GB Segment Financial Closing, upon Great Basin’s request, the NVE Parties shall state in writing whether in their view the circumstances described in Section 3.07(a)(iii) existed as of the GB Segment COD Deadline (such that, in the NVE Parties’ view, the NVE Parties’ right to elect to so purchase all 

 

 

 

 

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of Great Basin’s Ownership Interests had been triggered) and Great Basin shall be entitled to rely on such written statement (but shall not be bound by such statement in the event of a Dispute among the Parties), it being understood that such a written statement by the NVE Parties shall under no circumstances operate as a notice of the NVE Parties’ election to exercise any purchase right that may have been triggered (such election by the NVE Parties requiring a separate written notice, timely delivered as provided in this Section 3.07(a)).

 

(b) The GB Segment Financial Closing Deadline and the GB Segment COD Deadline shall be subject to extension for any event of Force Majeure to the extent that such event causes a delay in an activity required for Great Basin to achieve GB Segment Financial Closing or for GB Segment COD to occur which activity cannot, despite the exercise of commercially reasonable efforts, be delayed without extending the day on which GB Segment Financial Closing or GB Segment COD, as applicable, will occur.

 

           3.08 30th Anniversary Buyout Right.  The NVE Parties shall have the right to purchase all (but not less than all) of Great Basin’s Ownership Interests for a price determined in accordance with Schedule 5; provided that written notice of their election to exercise such right is provided to Great Basin by the twenty-ninth (29th) anniversary of the ON Line COD (but not earlier than the twenty-seventh (27th) anniversary of the ON Line COD).  If the NVE Parties timely elect to exercise such right, then Great Basin shall Transfer all of its Ownership Interests to the NVE Parties free and clear of any Liens other than Permitted Liens upon the latest to occur of (a) the thirtieth (30th) anniversary of the ON Line COD, (b) fifteen (15) days after receipt of PUCN Approval and all required Governmental Approvals on terms acceptable to the NVE Parties and (c) the date set forth in such notice (which shall not be after the thirty-third (33rd) anniversary of the ON Line COD).  Great Basin shall make Applicable Transfer Representations and Warranties to the NVE Parties in connection with such Transfer.

 

           3.09 41st Anniversary Buyout Right or Renewal Term.

 

(a) The NVE Parties shall have the right to purchase all (but not less than all) of Great Basin’s Ownership Interests for a price determined in accordance with Schedule 5; provided, that written notice of their election to exercise such right is provided to Great Basin by the fortieth (40th) anniversary of the ON Line COD (but not earlier than the thirty-eighth (38th) anniversary of the ON Line COD).  If the NVE Parties timely elect to exercise such right, subject to obtaining PUCN Approval and all required Governmental Approvals on terms acceptable to the NVE Parties (which approvals the NVE Parties will timely seek prior to or upon their election to exercise such right), then Great Basin shall Transfer all of its Ownership Interests to the NVE Parties free and clear of any Liens other than Permitted Liens on the forty-first (41st) anniversary of the ON Line COD.  If such PUCN Approval and Governmental Approvals are not received by the date that is six (6) months prior to the forty-first (41st) anniversary of the ON Line COD, then, unless the parties otherwise agree in writing, the NVE Parties shall be deemed to have withdrawn their election to exercise such right; provided, that on or prior to such date, the NVE Parties may elect (such election being irrevocable) to renew their Capacity Entitlements pursuant to Section 3.09(b); and, provided, further, that it is understood and agreed that (i) neither Great Basin nor any of its Affiliates will intervene in any regulatory proceeding of the NVE Parties relating to the PUCN Approval or any Governmental 

 

 

 

 

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Approvals (notwithstanding Section 4.05(a)) unless requested to do so by the NVE Parties and if the NVE Parties so request, Great Basin or its Affiliate, as applicable, will support the NVE Parties’ request to acquire Great Basin’s Ownership Interests pursuant to this Section 3.09(a) in such proceeding and (ii) in no event shall the Transfer of all of Great Basin’s Ownership Interests to the NVE Parties occur after the forty-first (41st) anniversary of the ON Line COD.  In the event the NVE Parties do not make such renewal election, then the NVE Parties shall permanently revoke their election to acquire Great Basin’s Ownership Interests and forever waive all of their rights under this Section 3.09.  Great Basin shall make Applicable Transfer Representations and Warranties to the NVE Parties in connection with such Transfer.

 

(b) The NVE Parties shall have the right to renew all (but not less than all) of each Party’s Capacity Entitlements for a period of one year or more commencing as of the forty-first (41st) anniversary of ON Line COD for a fixed rental payment calculated in accordance with Schedule 5; provided that (i) such renewal period when added to the forty-one (41) year initial term commencing on the ON Line COD does not extend for more than eighty percent (80%) of the then re-estimated useful life of Great Basin’s Ownership Interest subject to such renewal measured from the ON Line COD and (ii) Great Basin’s Ownership Interest subject to such renewal will have a value at the termination of such renewal equal to at least twenty percent (20%) of the initial value of such interests measured as of the ON Line COD (without giving effect to inflation or deflation), in each case determined at the time of such renewal.  If Great Basin and the NVE Parties cannot agree as to the calculations of the estimated value or useful life of Great Basin’s Ownership Interest subject to such renewal, then the Parties shall mutually select the Independent Auditor or another external auditor or appraiser, as determined based on the nature of the dispute, which shall be instructed to resolve such disagreement within thirty (30) days after such disagreement is submitted to it for resolution and shall notify Great Basin and NPC in writing of its resolution.  Such auditor’s or appraiser’s resolution of the disagreement shall be final and binding on the Parties.

 

(c) Notwithstanding anything herein to the contrary, in the event the NVE Parties do not (i) purchase all of Great Basin’s Ownership Interests or (ii) renew their Capacity Entitlements pursuant to Section 3.09(b), then from and after the forty-first (41st) anniversary of ON Line COD, the Parties shall have the Capacity Entitlements set forth in the first sentence of Section 3.02(e) and all Operating Costs, Event of Loss Costs, Condemnation Action Costs and Capital Repair Costs, in each case, in respect of ON Line shall be funded by the Parties in accordance with their respective Ownership Percentages and Great Basin shall have no right to recover Great Basin’s Ownership Percentage of any such costs from the NVE Parties.

 

3.10 Force Majeure.  To the extent a Party is prevented or delayed by Force Majeure from performing, in whole or in part, its obligations under this Agreement and such Party (a “Claiming Party”) gives written notice and details of such Force Majeure to the other Parties as soon as reasonably practicable after such Party becomes aware of the occurrence of such Force Majeure, then the Claiming Party shall be excused from the performance of its obligations under this Agreement (other than Great Basin’s obligation to use commercially reasonable efforts to achieve GB Segment COD as set forth in Sections 3.02(b) and the obligation to make payments, except as otherwise provided in this Agreement where such Force 

 

  

 

 

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Majeure event causes ON Line to become unavailable to one or both of the NVE Parties) during such Force Majeure but for no longer period and only to the extent performance of such obligations are prevented or delayed by such Force Majeure.  The Claiming Party shall exercise due diligence to remedy the Force Majeure within a reasonable period.  Force Majeure shall not entitle any Party to terminate this Agreement.

 

           3.11 Transmission Systems.  Nothing in this Agreement shall prevent a Party from making any additions, modifications or changes to its respective transmission system.  Each Party shall provide reasonable notice to the other Parties, to the extent required by the PUCN, FERC, NERC, WECC, or their successors in interest, of such additions, modifications or changes to its transmission systems.

 

           3.12 Additional Uses.  Notwithstanding anything to the contrary in this Agreement, (a) the NVE Parties shall have all of the rights associated with any additional uses arising with respect to ON Line, and Great Basin shall have all of the rights associated with any additional uses of the Great Basin Segments, in each case, prior to the adjustment of Great Basin’s Capacity Entitlement pursuant to Section 3.02(b) or 3.02(e) (and any rights arising prior to such adjustment shall not be impacted thereby) and (b) the Parties shall share all of the rights associated with any additional uses arising with respect to the Transmission Line thereafter in proportion to their respective Capacity Entitlements; provided, however, that the NVE Parties shall be entitled to the exclusive rights associated with any additional uses of the Double Circuit Towers regardless of whether arising before or after the adjustment of Great Basin’s Capacity Entitlement pursuant to Section 3.02(b) or 3.02(e).  Notwithstanding anything herein to the contrary (other than as provided hereunder in respect of the NVE Parties’ exclusive rights associated with any additional uses of the Double Circuit Towers), in the event the NVE Parties do not (i) purchase all of Great Basin’s Ownership Interests or (ii) renew their Capacity Entitlements pursuant to Section 3.09(b), from and after the forty-first (41st) anniversary of the ON Line COD, the Parties shall share all of the rights associated with any additional uses with respect to ON Line in proportion to their respective Ownership Percentages and Great Basin shall have all of the rights associated with any additional uses arising with respect to the Great Basin Segments; provided, however, that if, prior to the forty-first (41st) anniversary of the ON Line COD, the NVE Parties shall have committed all or any part of the rights associated with any additional uses to one or more third parties in one or more transactions having a term that extends beyond such anniversary, then (x) the rights of Great Basin with respect to such additional uses shall be subject to the rights of such third parties and (y) from and after such anniversary, any revenues payable to the NVE Parties under such transactions shall be shared between the NVE Parties and Great Basin in proportion to their respective Ownership Interests.

 

ARTICLE IV

 

DEVELOPMENT AND CONSTRUCTION OF ON LINE

 

           4.01 Pursuit and Management of ON Line.  Subject to the control and oversight of the Management Committee and through the Acquisition Closing Date, Great Basin shall have primary responsibility for the overall pursuit and management of all aspects of ON Line, including the day-to-day management of ON Line, the administration of all ON Line Agreements and the performance of all ON Line Activities not set forth on Exhibit B or 

 

 

 

 

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specifically delegated to the NVE Parties by the Management Committee.  Subject to the control and oversight of the Management Committee and after the Acquisition Closing Date, NPC shall have primary responsibility for the overall pursuit and management of all aspects of ON Line, including the day-to-day management of ON Line, the administration of the ON Line Agreements and the performance of all ON Line Activities not specifically delegated to Great Basin or SPPC by the Management Committee.  Each of NPC and Great Basin shall cooperate with each other in transitioning primary responsibility for the overall pursuit and management of ON Line to NPC as contemplated by this Section 4.01.  It is the intent of the Parties to develop ON Line for the lowest reasonable cost (taking into account safety, quality and schedule).

 

4.02 ON Line Managers.

 

(a) On the Effective Date, Great Basin shall appoint one of its (or its Affiliates’) employees (the “Great Basin Manager”) to be responsible for the day-to-day oversight and coordination of Great Basin’s responsibilities in respect of ON Line, including managing and directing construction of ON Line through the Acquisition Closing Date and issuing and receiving communications regarding ON Line.  The Great Basin Manager must be approved by the Management Committee.  Great Basin may remove the Great Basin Manager at any time, but shall promptly appoint a replacement subject to Management Committee approval.

 

(b) On the Effective Date, NPC shall appoint an employee of NPC or SPPC (the “NPC Manager”) to be responsible for the day-to-day oversight and coordination of NPC’s responsibilities in respect of ON Line, including managing and directing construction of ON Line after the Acquisition Closing Date, managing and directing the operation and maintenance of ON Line, and issuing and receiving communications regarding ON Line.  The NPC Manager must be approved by the Management Committee.  NPC may remove the NPC Manager at any time, but shall promptly appoint a replacement subject to Management Committee approval.

 

           4.03 Access to ON Line and ON Line ROW.

 

(a) Except with respect to Great Basin’s financial information, which is addressed by Section 9.06, each Party and its representatives and consultants shall have (i) physical access to ON Line (including the ON Line ROW) to the extent that such access does not unreasonably interfere with ON Line, subject to reasonable safety and security requirements of which such Party has been provided advance written notice, (ii) the independent right to (A) monitor the development, construction, management, operation, maintenance and use of ON Line and (B) review and comment on draft copies of ON Line Agreements, applications for Governmental Approvals for ON Line and material communications regarding ON Line and (iii) if requested by a Party, copies of all Governmental Approvals for ON Line (including applications therefor), ON Line Agreements (including drafts thereof), material communications regarding ON Line and all information related to land rights, expected development, construction, management, operation, maintenance or use costs, constructability, creditworthiness, records, operating data, accounts, organizational documents, copies of studies, reports and data and any other information regarding ON Line, in each case as reasonably requested by the requesting Party.

 

 

 

 

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(b) No Party (or any of its agents, officers or employees) shall be an agent or employee of any other Party, nor shall any Party (or any of its agents, officers or employees) have any power to bind, assume or create any obligation on behalf of any other Party, except as provided in the ON Line Agreements and in separate agreements between the NVE Parties.

 

           4.04 Standard of Performance.  The Parties shall comply with all Applicable Laws, all Governmental Approvals for ON Line and all ON Line Agreements.  ON Line shall be developed, designed, constructed and managed to comply with all Applicable Laws, all Governmental Approvals for ON Line and all ON Line Agreements and in accordance with Prudent Utility Practices, and each Party shall own and use ON Line in accordance with Prudent Utility Practices, all Applicable Laws, all Governmental Approvals for ON Line and all ON Line Agreements.

 

           4.05 Government Approvals; Cooperation.

 

(a) Great Basin shall provide such information and assistance in the preparation of the application for any PUCN Approval as is reasonably requested by the NVE Parties and is within the reasonable control of Great Basin or its Affiliates.  The NVE Parties shall provide Great Basin with (i) notice as promptly as practicable to allow Great Basin to request confidential treatment from the PUCN for such information and (ii) such assistance as Great Basin may reasonably request in connection with attaining confidential treatment from the PUCN for such information.  Great Basin shall participate as reasonably requested from time to time in connection with obtaining any PUCN Approval.  Great Basin shall timely file a petition for leave to intervene in the PUCN proceeding(s) related to obtaining any PUCN Approval, retain counsel to represent Great Basin in such proceeding(s) in accordance with NAC 703.510, and actively support the regulatory approval process.  No costs incurred by Great Basin in connection with such filing, retaining and support shall be included in the Pre-Closing Costs incurred by Great Basin.

 

(b) The Parties shall use commercially reasonable efforts to file for the FERC Approval as soon as reasonably practicable after the Effective Date.  Each Party shall participate as reasonably required from time to time in connection with the FERC Approval, and actively support the regulatory approval process.

 

(c) Each Party shall coordinate and cooperate in good faith with the other Parties on all material ON Line-related matters, in order to facilitate development, construction, ownership, management, operation, maintenance and use of ON Line in an effective and cost-efficient manner.  Not limiting the generality of the foregoing sentence, the Parties shall cooperate with each other by providing documents and information, participating in meetings and hearings, and performing such other acts, in each case as may be reasonably requested by any other Party in connection with any Governmental Approvals for ON Line, including maximizing ON Line’s Electrical Capacity, Microwave Capacity and Fiber Optic Capacity.

 

(d) To the extent practicable in the NVE Parties’ sole discretion and as reasonably requested by Great Basin, the NVE Parties will coordinate and cooperate in good 

 

 

 

 

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faith with Great Basin on Great Basin Segment-related matters; provided that such cooperation and coordination shall be at Great Basin’s sole cost and expense (and shall not in any event require either NVE Party to hire additional staff) and could not be expected to burden or adversely impact the NVE Parties or the operation of their businesses or transmission systems, in each case as determined by the NVE Parties in their sole discretion.

 

(e) Subject to Sections 3.09(a) and 4.05(a), nothing in this Agreement shall prohibit a Party from intervening in any regulatory proceeding, and taking any position in such proceeding, that it deems appropriate in its sole discretion; provided, however, that to the extent reasonably practicable, each Party will provide the other Parties written notice of its intention to seek to intervene in any proceeding initiated by a Party in connection with this Agreement no less than five (5) days prior to filing its request to intervene.

 

(f) Each Party shall provide any other Party with information related to ON Line and copies of any Work Product reasonably requested by any such other Party.

 

(g) Each Party agrees that, in carrying out its obligations under this Agreement, it shall:

 

                (i) appoint qualified personnel (including a qualified person as its ON Line Manager, who may or may not be an Authorized Representative of such Party), as necessary, that have the time and requisite skills to devote to such Party’s assigned responsibilities, in order to perform its responsibilities hereunder;

 

                (ii) use commercially reasonable efforts to perform its respective obligations in order to meet the ON Line Schedule, in accomplishing its assigned tasks, and to provide updated information regarding its progress in respect thereof upon request of the other Parties or as circumstances warrant; and

 

                (iii) act as the interface with, and supervise, all third Persons with which such Party has directly contracted to perform work related to its assigned responsibilities.

 

           4.06 Interconnection and Construction.

 

(a) ON Line shall be interconnected to the electric transmission systems of the NVE Parties pursuant to the Interconnection Agreements.  Each Interconnection Agreement shall contain terms consistent with this Agreement.  The Parties shall cooperate and work expeditiously to complete the Interconnection Agreements on a schedule that supports the ON Line Schedule.

 

(b) Following the Effective Date, the Parties shall discuss and approve the terms and conditions upon which each Material Construction Contract shall be let, it being understood that, unless the Parties otherwise agree, each Material Construction Contract shall, to the extent customary, (i) be lump sum, fixed price contracts, (ii) contain provisions relating to guaranteed performance levels, if applicable, and guaranteed completion dates and, in each case, corresponding liquidated damages and (iii) require each Material Construction Contractor to 

 

 

 

 

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provide credit support for its obligations under the applicable Material Construction Contract in the form of a parent guarantee, bonds, letter of credit or retainage.

 

           4.07 Consultants.  Each Project Budget will allow for NPC to engage one or more engineering and other consultants to advise it in the review of all matters relating to ON Line, acceptable to the Management Committee.  Additionally, each Party shall have the right to engage one or more Owners’ Engineers and other consultants to advise it with respect to any matters in connection with ON Line, and the cost of such Owners’ Engineers and other consultants shall be borne by such Party, except to the extent such costs are expressly included in a Project Budget or consented to by the Management Committee.

 

           4.08 Change of Name.  The Parties shall take such actions required to rename SWIP-S as the “One Nevada Transmission Line” or “ON Line” effective as of the Acquisition Closing Date, and following the Acquisition Closing Date through the Term, the NVE Parties hereby grant a royalty free, irrevocable license in such names to Great Basin only to be used in connection with ON Line; provided, however, that if the NVE Parties do not own an Ownership Interest, then the NVE Parties may revoke such license at no cost.

 

           4.09 Robinson Summit Substation.  The Parties shall use commercially reasonable efforts to expeditiously obtain all necessary non-ministerial Government Approvals on terms reasonably acceptable to the Parties to construct the Robinson Summit Substation at the Robinson Summit Location rather than the Thirtymile Location.  Upon receipt of all such non-ministerial Government Approvals, the Parties agree not to construct the Robinson Summit Substation at the Thirtymile Location and instead construct such substation at the Robinson Summit Location and such change shall not require modification of, or otherwise impact, any of the terms of this Agreement.  If such non-ministerial Governmental Approvals have not been obtained by March 1, 2011, then, unless the Management Committee determines otherwise, the Robinson Summit Substation shall be constructed at the Thirtymile Location rather than the Robinson Summit Location.

 

ARTICLE V                                

 

PROJECT BUDGET AND PAYMENT OF COSTS

           5.01 Project Budget.

 

(a) Submission of Proposed Project Budget.  The Managing Party or NPC, as applicable, shall use reasonable efforts to prepare any new or revised Project Budget on the basis of firm pricing obtained from vendors, suppliers and contractors and shall submit such Project Budget to the Management Committee from time to time for its prompt review.  If a Party so requests, the Managing Party or NPC, as applicable, shall provide to the Management Committee copies of the data, invoices, price sheets and other information utilized in the preparation of any such Project Budget and shall make the personnel responsible for preparing such Project Budget available to discuss the proposed Project Budget with the Management Committee.

 

(b) Management Committee Review and Approval.  The Management Committee shall promptly review any new or revised Project Budget proposed by the Managing 

 

 

 

 

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Party or NPC, as applicable, and shall complete its review, taking into account any comments and revisions as it may request of the Managing Party or NPC, as applicable.  The Management Committee may approve a proposed Project Budget in whole or in part.  Each Party acknowledges and agrees that the approval of any new or revised Project Budget and the making of any payment hereunder shall be without prejudice to the audit rights of each Party hereunder.  Prior to the Operating Period, the Management Committee shall periodically, but no less frequently than monthly, review (i) the status of the ON Line Activities against the ON Line Budget and ON Line Schedule, (ii) the anticipated, committed and incurred ON Line Costs from and after the Effective Date against the ON Line Budget and (iii) the funding requirements for ON Line Costs forecast for the following month.  During the Operating Period, the Management Committee shall periodically, but no less frequently than quarterly, review (i) the status of the Capital Repairs against the applicable Capital Repair Budget, (ii) the anticipated, committed and incurred Capital Repair Costs against the applicable Capital Repair Budget and (iii) the funding requirements for Capital Repair Costs forecast for the following quarter.

 

(c) Failure to Approve a Proposed Project Budget.  If the Management Committee fails to approve a proposed Project Budget or any part thereof, then until the Management Committee approves the proposed Project Budget or disputed part thereof, the unapproved Project Budget or part thereof proposed shall not be implemented; provided that the Project Budget or part thereof most recently approved by the Management Committee shall remain in full force and effect until a new Project Budget or the applicable part thereof is approved, subject to Section 8.01(h)(ii), and NPC shall be entitled to incur costs for Critical Capital Repairs and the other Parties shall pay their Ownership Percentage share thereof to the extent required by Section 5.04.

 

(d) Internal Labor Cost.  Each Project Budget may include amounts for the reimbursement of direct internal labor costs incurred by any Party or its Affiliates for employees directly engaged in the performance of ON Line Activities or Capital Repairs, as applicable (other than any costs of either Party with respect to its Authorized Representatives); provided, however, that such internal labor costs shall: (i) not include any amounts attributable to general administrative costs or overhead costs not associated with direct internal labor for employees directly engaged in the performance of ON Line Activities or Capital Repairs, as applicable, and (ii) only include internal labor costs directly attributable to ON Line that would not have been incurred if work was not being performed for ON Line Activities or Capital Repairs, as applicable.  A Party seeking reimbursement for direct internal labor costs incurred in accordance with the applicable Project Budget and this Section 5.01(d) shall keep reasonably detailed records of such costs and shall provide such records to the other Parties upon request.

 

          5.02 Compliance with Project Budget; Amendments.  The Managing Party and NPC, as applicable, shall use commercially reasonable efforts to manage, or cause to be managed, the commitment of funds so that costs will not exceed funds committed or to be committed by the Parties pursuant to the applicable Project Budget.  If, in the reasonable judgment of the Managing Party or NPC, as applicable, any Project Budget, or any material expense category or line item therein, is determined to be materially greater or less than the actual costs of performing the ON Line Activities or Capital Repairs, as applicable, or any material expense category or line item therein, the Managing Party or NPC, as applicable, shall 

 

 

 

 

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prepare an amended Project Budget for approval by the Management Committee at the next regular meeting or at a special meeting called by a Party for such purpose as soon as reasonably practicable following such determination.

 

           5.03 Funding ON Line Costs.

 

(a) Each Party shall be solely responsible for funding, and shall timely fund, all of its own Development Costs and all of its own Pre-Closing Costs, in each case subject to Section 2.02, and Great Basin shall be solely responsible for funding, and shall timely fund, all other liabilities and obligations in respect of ON Line arising through the Acquisition Closing Date.  Commencing after the Acquisition Closing Date, each Party shall pay for its Ownership Percentage of all Post-Closing Costs arising thereafter in accordance with this Agreement to the extent that, when added to any Development Costs and Pre-Closing Costs funded by such Party (as adjusted by any Closing Payments), such Party has funded up to its respective Ownership Percentage of the ON Line Budget.  No Party shall charge a fee to any other Party for performance of its responsibilities as the Managing Party under this Agreement.  Subject to Section 16.02(e)(i) and (ii), respectively, (i) Great Basin, in its capacity as the Managing Party, shall be responsible for reviewing invoices for Pre-Closing Costs (other than costs incurred in respect of the NVE Project) and, from and after the Effective Date, reconciling the payments for such costs to the ON Line Budget on a monthly basis and (ii) NPC, in its capacity as the Managing Party, shall be responsible for reviewing invoices for Post-Closing Costs (including invoices for Direct Pay Amounts) and reconciling the payments for such costs to the ON Line Budget on a monthly basis.  Great Basin shall be responsible for timely paying amounts payable in respect of Pre-Closing Costs (other than costs incurred in respect of the NVE Project).  NPC shall be responsible for timely paying amounts payable by the Parties in respect of Post-Closing Costs (other than Direct Pay Amounts) from the amounts on deposit in the ON Line Account.

 

(b) NPC shall establish (on or before the Acquisition Closing Date) and maintain a depositary account (the “ON Line Account”) in its name at a financial institution to be selected with the consent of the Management Committee, into which each Party shall deposit its Ownership Percentage of the funds to pay for all Post-Closing Costs (other than Direct Pay Amounts) in accordance with this Agreement.  In any period during which Great Basin is exercising its remedy set forth in Section 16.02(e)(i), NPC shall cause the payments to be made from the ON Line Account as directed by Great Basin.

 

(c) After the Acquisition Closing Date:

 

                (i) Subject to Section 5.03(d), NPC and Great Basin shall pay their respective Ownership Percentages (and, in the case of NPC, SPPC’s Ownership Percentage) of all Direct Pay Amounts when due in accordance with the ON Line Budget and the applicable Material Construction Contract and each Party shall fund into the ON Line Account on a monthly basis its Ownership Percentage of all Post-Closing Costs (other than Direct Pay Amounts) in accordance with Section 5.03(c)(ii).

 

                (ii) On a monthly basis but in any event no later than the fifth (5th) Business Day of each month, the Managing Party shall submit to the other Parties (A) an invoice of funds that each Party is liable for under this Agreement for the 

 

 

 

 

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previous month and (B) a statement reconciling the prior invoice or invoices in the event the actual amount(s) for which each Party was liable during such month changed as a result of refunds, credits, change orders or other adjustments made to such invoices by the counterparty to the underlying contract.  Each invoice and reconciliation statement shall be accompanied by reasonable supporting documentation showing the amounts properly due and payable, a breakdown of the Post-Closing Costs (other than Direct Pay Amounts) represented in such invoice or reconciliation statement, copies of the underlying invoices and supporting materials, and such other supporting documentation as may be reasonably requested by Great Basin in order to submit requisitions and obtain funds under the ON Line Financing Agreements.  Any amounts due pursuant to an invoice or reconciliation statement shall be due and payable two (2) Business Days prior to the current month end, or on such later date as may be otherwise set forth in the invoice or reconciliation statement.  If a reconciliation statement shows that prior payments by a Party exceeded the actual amount for which such Party was liable, such excess amount shall be credited against the amounts due by such Party in the invoice accompanying such reconciliation statement, or in the event that such excess amount exceeds such Party’s payment obligations under such invoice, the difference between the excess amount determined by such reconciliation statement and the payment obligations of such Party under such invoice shall be paid to such Party no later than two (2) Business Days prior to the current month end.

 

(d) The Managing Party shall provide the other Parties written notice of any expected Initial Cost Differential or Incremental Cost Differential as soon as reasonably practicable upon receiving notice of any such costs.  If, within ten (10) days after receipt of such notice, Great Basin does not elect to fund any such Initial Cost Differential or Incremental Cost Differential, Great Basin shall have no right or obligation to fund its Ownership Percentage of any such Initial Cost Differential or Incremental Cost Differential.  If Great Basin does timely elect (such election being irrevocable) to fund its Ownership Percentage (and, in the circumstances described in Section 5.03(e), the NVE Parties’ Ownership Percentage) of any such Initial Cost Differential or Incremental Cost Differential, then Great Basin shall timely fund any such Initial Cost Differential or Incremental Cost Differential, as applicable, and the amount of any such Initial Cost Differential or Incremental Cost Differential funded by Great Basin shall be reflected in the Monthly Payment as provided in Section 3.06.  To the extent that Great Basin does not timely fund its Ownership Percentage of any Initial Cost Differential or Incremental Cost Differential, the NVE Parties may fund any such portion, and upon (i) the earliest to occur of (A) ON Line COD, (B) an Event of Default by Great Basin, (C) a Condemnation Action or Event of Loss related to ON Line, (D) an election of a right to purchase Ownership Interests under this Agreement and (E) any other material event regarding ON Line as reasonably determined by the NVE Parties and (ii) fifteen (15) days after such earliest date and receipt of PUCN Approval and all required Governmental Approvals on terms acceptable to the NVE Parties, each Party’s Ownership Percentage shall be adjusted such that, following the adjustment, such Party’s Ownership Percentage shall equal a ratio (A) the numerator of which is equal to the portion of the Total Costs paid by such Party and (B) the denominator of which equals the aggregate amount of the Total Costs, and Great Basin shall Transfer the portion of its Ownership Interest corresponding to its excess above its revised Ownership Percentage to the NVE Parties free and clear of any Liens other than Permitted Liens.  Great Basin shall execute and record any 

 

 

 

 

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bills of sale, deeds, certificates, memorandum and other documentation as reasonably requested by the NVE Parties to evidence the re-allocation of such interests.  Great Basin shall make Applicable Transfer Representations and Warranties in connection with such Transfer.

 

(e) Notwithstanding anything herein to the contrary, to the extent that the NVE Parties do not timely fund their aggregate Ownership Percentage of any Initial Cost Differential or Incremental Cost Differential, Great Basin shall have the right, but not the obligation, to (A) fund the entire amount of such Initial Cost Differential or Incremental Cost Differential and (B) take over primary responsibility for managing and directing the completion of construction of ON Line as provided in Section 16.02(e)(i).

 

           5.04 Funding of Capital Repair Costs.

 

(a) NPC shall establish (on or before the ON Line COD) and maintain a depositary account (the “Capital Repair Account”) in its name at a financial institution to be selected with the consent of the Management Committee, in to which each Party shall deposit its Ownership Percentage of the funds to pay for all Capital Repair Costs in accordance with the Capital Repair Budget and this Agreement.

 

(b) After ON Line COD:

 

                (i) Subject to Section 5.04(c), each Party shall fund into the Capital Repair Account on a monthly basis its Ownership Percentage of all Capital Repair Costs (other than Direct Pay Amounts) in accordance with Section 5.04(b)(ii).

 

                (ii) On a monthly basis but in any event no later than the fifth (5th) Business Day of each month, NPC shall submit to the other Parties (A) an invoice of funds that each Party is liable for under this Agreement for the previous month and (B) a statement reconciling the prior invoice or invoices in the event the actual amount(s) for which each Party was liable during such month changed as a result of refunds, credits, change orders or other adjustments made to such invoices by the counterparty to the underlying contract.  Each invoice may also include any actual costs for which a Party is liable under this Agreement arising prior to the time such invoice is issued in respect of prior month(s).  Each invoice and reconciliation statement shall be accompanied by reasonable supporting documentation showing the amounts properly due and payable, a breakdown of the Capital Repair Costs represented in such invoice or reconciliation statement, copies of the underlying invoices and supporting materials, and such other supporting documentation as may be reasonably requested by Great Basin in order to submit requisitions and obtain funds under the ON Line Financing Agreements.  Any amounts due pursuant to an invoice or reconciliation statement shall be due and payable two (2) Business Days prior to the current month end, or on such later date as may be otherwise set forth in the invoice or reconciliation statement.  If a reconciliation statement shows that prior payments by a Party exceeded the actual amount for which such Party was liable, such excess amount shall be credited against the amounts due by such Party in the invoice accompanying such reconciliation statement, or in the event that such excess amount exceeds such Party’s payment obligations under such invoice, the difference between the excess amount determined by such reconciliation statement 

 

  

 

 

 

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and the payment obligations of such Party under such invoice shall be paid to such Party two (2) Business Days prior to the current month end.

 

                (iii) NPC shall be responsible for reviewing invoices for Capital Repair Costs.  NPC shall be responsible for timely paying amounts payable by the Parties in connection with any Capital Repairs from the amounts on deposit in the Capital Repair Account.  NPC shall be responsible for reconciling the payments for Capital Repair Costs to the applicable Capital Repair Budget on a monthly basis.  In any period during which Great Basin is exercising its remedy set forth in Section 16.02(e), NPC shall cause the payments to be made from the Capital Repair Account as directed by Great Basin.

 

(c) NPC shall provide the other Parties written notice of any Capital Repair Costs as soon as reasonably practicable upon receiving notice of any such costs.  If, within ten (10) days after receipt of such notice, Great Basin does not elect to fund any such Capital Repair Costs, Great Basin shall have no right or obligation to fund its Ownership Percentage of any such Capital Repair Costs.  If Great Basin does timely elect (such election being irrevocable) to fund its Ownership Percentage of any such Capital Repair Costs, then Great Basin shall timely fund its Ownership Percentage of any such Capital Repair Costs, and the amount funded by Great Basin in respect of Capital Repair Costs be reflected in the Monthly Payment as provided in Section 3.06.  To the extent that Great Basin does not timely fund its Ownership Percentage of any Capital Repair Costs, but subject to Section 5.04(d), the NVE Parties shall fund any such portion, and upon (i) the earliest to occur of (A) any anniversary of the ON Line COD, (B) an Event of Default by Great Basin, (C) a Condemnation Action or Event of Loss related to ON Line, (D) an election of a right to purchase Ownership Interests under this Agreement, and (E) any other material event regarding ON Line as reasonably determined by the NVE Parties and (ii) fifteen (15) days after such earliest date and receipt of PUCN Approval and all required Governmental Approvals on terms acceptable to the NVE Parties, each Party’s Ownership Percentage shall be adjusted such that, following the adjustment, such Party’s Ownership Percentage shall equal a ratio (x) the numerator of which is equal to the portion of the Total Costs paid by such Party and (y) the denominator equals the Total Costs, and Great Basin shall Transfer the portion of its Ownership Interest corresponding to its excess above its revised Ownership Percentage to the NVE Parties free and clear of any Liens other than Permitted Liens.  Great Basin shall execute and record any bills of sale, deeds, certificates, memorandum and other documentation as reasonably requested by the NVE Parties to evidence the re-allocation of such interests.  Great Basin shall make Applicable Transfer Representations and Warranties in connection with such Transfer.

 

(d) Notwithstanding anything to the contrary in this Agreement, no Party shall be required to pay for any Capital Repair Costs that are not in accordance with the applicable Capital Repair Budget.

 

           5.05 Cost Reductions.  Except as set forth in Section 13.03 or Section 14.03, all Cost Reductions shall be applied to the particular ON Line Cost, Capital Repair Cost, Event of Loss Cost or Condemnation Action Cost that gave rise to such Cost Reduction and shall be shared among the Parties in proportion to the amounts funded by the Parties in respect of the 

 

  

 

 

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costs giving rise to such Cost Reduction (it being understood for the avoidance of doubt that such Cost Reductions shall be paid solely to, and for the account of, the NVE Parties to the extent they were received in respect of Capital Repairs, an Event of Loss in respect of ON Line or Condemnation Action in respect of ON Line, in each case, not funded by Great Basin).

 

           5.06 Invoicing and Payment.

 

(a) All payments made by a Party under Sections 5.03(c)(ii) and 5.04(b)(ii) shall be made in Dollars by electronic funds transfer or wire transfer in immediately available funds for receipt by the due date to the applicable Project Account or to such other Person(s) as the Management Committee may determine.

 

(b) Each Party shall make all Contributions required hereunder as and when due, without demand, counterclaim, setoff, deduction or defense, and each Party waives, to the extent permitted by Applicable Law, all rights now or hereafter conferred by statute or otherwise with respect to any such demand, counterclaim, setoff, deduction or defense to the applicable account or accounts.

 

5.07 Defaulted Contributions.

 

(a) If a Party fails to pay the full amount of any payments when required to do so pursuant to Sections 5.03(c) or 5.04(b) (each, a “Contribution” and such Party, the “Non-Contributing Party”), then any Party that has paid its Contribution (the “Contributing Party”) shall have the right, but not the obligation, to make an advance (an “Advance”) on behalf of the Non-Contributing Party in respect of the unpaid Contribution of the Non-Contributing Party (the “Unpaid Contribution”).  Such Advance shall bear interest at a rate equal to the Default Rate from the date such Advance was made until the date such Advance is fully repaid in cash by the Non-Contributing Party.  Advances shall be repaid, with interest at the Default Rate, by the Non-Contributing Party at any time after the date the Advance is made upon written demand therefor by the Contributing Party.  Each Advance shall be an obligation of the Non-Contributing Party to the Contributing Party and the Contributing Party may enforce and recover from the Non-Contributing Party the Advance in accordance with any of its remedies hereunder or at equity or in law.  If either of the NVE Parties is the Non-Contributing Party, then the other NVE Party, as applicable, shall have the first right to be the Contributing Party, which right must be exercised within five (5) Business Days after the date the Unpaid Contribution was required to be made.  Each Advance for an Unpaid Obligation shall cure any Event of Default therefor with respect to the Party that is not the Contributing Party or the Non-Contributing Party.

 

(b) The election by a Party to make or not to make an Advance in respect of an Unpaid Contribution shall not operate as waiver of the rights of such Party under this Agreement or at law or in equity, including the right to claim damages as a result of such Unpaid Contribution, and Advances made in respect of an Unpaid Contribution shall not relieve the Non-Contributing Party of its obligations hereunder.

 

           5.08 Payment on Non-Business Day.  If any Contribution under this Agreement is required to be made on a day other than a Business Day, the due date for such 

 

  

 

 

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Contribution shall be extended to the next Business Day, unless provided otherwise in the Material Construction Contracts.

 

           5.09 Project Accounts.  All Project Accounts established pursuant to this Agreement shall be in the name of NPC and used solely for the purposes set forth in this Agreement.  Funds on deposit in each Project Account shall be kept in or swept into interest-bearing accounts to the extent reasonably practicable but in no event shall any such funds be commingled with any other funds of NPC or its Affiliates.  All interest accrued on the amounts in each Project Account shall accrue to the benefit of the NVE Parties; provided, that to the extent any amounts funded by Great Basin are kept in any Project Account for more than thirty (30) days, Great Basin shall be entitled to interest accrued on such amounts from the date such amounts are deposited into the Project Account until they are disbursed.

 

ARTICLE VI

 

DEVELOPMENT AND CONSTRUCTION OF GREAT BASIN SEGMENTS

 

           6.01 Transmission Improvements.  If any improvements on the transmission systems of the NVE Parties are undertaken for any reason prior to GB Segment Financial Closing (including as specified in Schedule 1) that would otherwise be made as part of the construction of the Great Basin Segments (each, a “Transmission Improvement”), then NPC or SPPC, as applicable, shall initially bear the full cost of any such Transmission Improvement and Great Basin shall pay to NPC or SPPC, as applicable, at GB Segment Financial Closing an amount for any such Transmission Improvement equal to the lesser of (a) the actual cost (adjusted for depreciation) incurred by NPC or SPPC, as applicable, for any such Transmission Improvement and (b) any avoided cost to the Great Basin Segments by reason of any such Transmission Improvement.  If Great Basin pays to NPC or SPPC, as applicable, at GB Segment Financial Closing for any such Transmission Improvement, then, NPC or SPPC, as applicable, shall transfer title to such Transmission Improvement (to the extent owned by the NVE Parties) to Great Basin at GB Segment Financial Closing pursuant to documentation reasonably satisfactory to Great Basin, and NPC or SPPC, as applicable, shall make the Applicable Transfer Representations and Warranties to Great Basin in connection with such transfer.  Notwithstanding anything herein to the contrary, the NVE Parties shall have the right to operate and maintain the Transmission Improvements prior to GB Segment Financial Closing, which operation and maintenance shall be in accordance with Prudent Utility Practices (including any Electric Reliability Organization requirements), Governmental Approvals for the Transmission Line (or applicable portion thereof) and Applicable Law; provided, that Great Basin shall be solely responsible for, and shall pay, all costs and expenses associated with capital repairs, replacements and maintenance of the Transmission Improvements after GB Segment Financial Closing.  NPC or SPPC, as applicable, shall provide Great Basin with such information and documentation as may be within its reasonable control and as may be reasonably requested by Great Basin in order for Great Basin to determine or verify the actual cost of any such Transmission Improvement.

 

           6.02 Development and Construction.  Great Basin shall be solely responsible for the development and construction of the Great Basin Segments and any costs or liabilities in respect thereof; provided, however, that the following shall be subject to the prior 

 

 

 

 

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review and written consent, not to be unreasonably withheld, conditioned or delayed, of the NVE Parties: (a) the design of the Great Basin Segments, (b) the design and construction activities related to the Great Basin Segments interconnection upgrades insofar as such activities involve the Robinson Summit Substation or the Harry Allen Substation and (c) the use or crossing of any of the NVE Parties’ facilities or rights-of-way (other than as permitted in Section 6.05 and the SNIP Agreement); provided, further, that (i) with respect to clause (a) above, no approval of the NVE Parties shall be required if the design of the Great Basin Segments is consistent with the design of ON Line, with such deviations as set forth in Schedule 7, and the requirements of the NVE Parties’ transmission systems, (ii) the NVE Parties shall have the right to review the Great Basin Segment design to ensure consistency with the ON Line design and the requirements of the NVE Parties’ transmission systems and (iii) nothing in this Agreement shall limit the review of the Great Basin Segment design by any NVE Party in connection with the negotiation or administration of the Interconnection Agreements or in such Party’s role as Balancing Authority.  Notwithstanding the foregoing, no review of, or comments about, any information provided to the NVE Parties in respect of the Great Basin Segments, and no failure by the NVE Parties to review or comment on any such information, shall cause a transfer of responsibility for such information to the NVE Parties, nor imply the NVE Parties’ agreement with any assumption upon which such information is based or any matter underlying or contained therein.

 

           6.03 Compliance with Laws and Conduct.  Great Basin shall comply with all Applicable Laws, all Governmental Approvals for the Great Basin Segments and all agreements for the Great Basin Segments.  Great Basin shall cause the Great Basin Segments to be developed, designed, constructed and managed to comply with all Applicable Laws, all Governmental Approvals for the Great Basin Segments, all agreements for the Great Basin Segments and in accordance with Prudent Utility Practices.

 

           6.04 Quarterly Reports.  Great Basin shall provide the NVE Parties with quarterly progress reports detailing all material issues relating to the Great Basin Segments’ development, construction, management, operating and maintenance activities and will promptly notify the NVE Parties of any Material Event that occurs regarding the Great Basin Segments, subject in each case to compliance by Great Basin with any applicable confidentiality restrictions and Applicable Law; provided, that Great Basin shall use commercially reasonable efforts to ensure that any agreements entered into by Great Basin in connection with development, construction, management, operating and maintenance activities in respect of the Great Basin Segments shall allow the disclosure of information by Great Basin to the NVE Parties under this Section 6.04.

 

           6.05 SNIP Option.

 

(a) NPC hereby grants Great Basin the option (the “SNIP Option”) to acquire certain rights with respect to the Applicable Centennial Phase 3 Facilities as described in the SNIP Agreement (the “Applicable Centennial Phase 3 Rights”) for a payment to NPC equal to thirty-eight million eight-hundred thousand Dollars ($38,800,000) (the “Option Exercise Price”), provided, that (i) Great Basin shall provide NPC with at least ninety (90) days’ prior written notice of its election to exercise the SNIP Option, and (ii) in exercising the Applicable Centennial Phase 3 Rights (A) Great Basin shall not interfere with the operation of any NPC 

 

 

 

 

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facilities (except as may be agreed to by NPC in writing in connection with the construction of the SNIP) and (B) all material aspects of the design and construction of any elements to be constructed on NPC’s facilities or in its right-of-way shall be subject to NPC’s prior review and written approval, including with respect to the impact on the operation or any potential expansion (other than any potential expansion to the extent that it is mutually exclusive with Great Basin’s construction of a portion of the SNIP on the Applicable Centennial Phase 3 Facilities to the extent provided in the SNIP Agreement) or modification of NPC’s facilities or use of its rights-of-way, not to be unreasonably withheld, conditioned or delayed.  Notwithstanding the foregoing in this Section 6.05(a), including the provision of such exercise notice, the SNIP Option shall expire, and shall no longer be exercisable, if any of the following occur: (1) the Environmental Assessment for the SNIP has not been issued for public review on or before June 1, 2012, (2) the Decision Record/Finding of No Significant Impact for the SNIP has not been issued on or before February 1, 2013 or (3) GB Segment Financial Closing has not occurred prior to the GB Segment Financial Closing Deadline; provided, however, that (A) the foregoing dates under clauses (1)-(3) above shall be extended to the extent that the applicable events did not occur due to Force Majeure (but in no event shall the date set forth in clause (3) above be extended beyond March 31, 2019) and (B) the foregoing dates under clauses (1) and (2) above shall be extended so long as Great Basin has previously provided NPC with a reasonably detailed cure plan that demonstrates to NPC’s reasonable satisfaction that the GB Segment Financial Closing will occur by the GB Segment Financial Closing Deadline and Great Basin diligently pursues such cure plan.

 

(b) If the SNIP Option is exercised in accordance with Section 6.05(a), NPC and Great Basin shall take the actions set forth in Section 6.05(b)(iv) on the SNIP Option Closing Date.  NPC’s obligation to Transfer the Applicable Centennial Phase 3 Rights to Great Basin, and the Great Basin’s obligation to purchase the Applicable Centennial Phase 3 Rights from NPC, are each subject to satisfaction of the following conditions, except to the extent waived in writing by NPC with respect to the conditions set forth in Sections 6.05(b)(i)-(viii) and by Great Basin with respect to the conditions set forth in Sections 6.05(b)(ii)-(v) and (vii)-(viii):

 

                (i) Great Basin shall be in compliance with Sections 6.05(a)(i)-(ii) and each of the deadlines in Sections 6.05(a)(1)-(2) has been satisfied.

 

                (ii) GB Segment Financial Closing has occurred or shall occur simultaneously with the SNIP Option Closing.

 

                (iii) The FERC Approval and the BLM SNIP License Consent has been duly obtained, made or given and shall be in full force and effect and no change to the form of SNIP Agreement agreed by the Parties has been made as to require further FERC approval of the SNIP Option Closing.

 

                (iv) The other Party shall have paid or executed and delivered, or caused to be executed and delivered to it, as applicable, the items set forth below:

 

                   (1) Great Basin and NPC shall execute the SNIP License and Sale Agreement substantially in the form attached hereto pursuant to Section 2.03(m) (the “SNIP Agreement”).

 

 

 

 

 

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                   (2) Great Basin shall pay NPC an amount equal (A) to the Option Exercise Price, minus (B) one-seventh (1/7) of up to fifteen million Dollars ($15,000,000) of the GB Segment Development Costs incurred prior to GB Segment Financial Closing;

 

                   (3) NPC and Great Basin shall execute and deliver any documentation reasonably requested by the other that is necessary or appropriate to record the SNIP Agreement.

 

                (v) Each of the representations and warranties made by the other Party in the SNIP Agreement shall be true and correct in all material respects on and as of the SNIP Option Closing Date as though made on and as of the SNIP Option Closing Date except to the extent that such representations and warranties contain a materiality qualifier, in which case they shall be true and correct in all respects.

 

                (vi) There shall not be an Event of Default by Great Basin continuing unless Great Basin has presented a plan for remedying such Event of Default that is reasonably acceptable to NPC.

 

                (vii) No Governmental Authority has issued a final, non-appealable order preventing the consummation of the SNIP Option Closing.

 

                (viii) The Parties have agreed upon the disclosure schedules to be attached to the SNIP Agreement for purposes of Section 8 of the SNIP Agreement.

 

(c) Great Basin shall keep reasonably detailed records of its GB Segment Development Costs and shall promptly provide such records to NPC upon request.

 

(d) If (i) NPC Transfers the Applicable Centennial Phase 3 Rights to Great Basin and (ii) prior to GB Segment COD, Great Basin seeks to Transfer any SNIP Option Right or any right, interest or asset associated with SNIP construction on or in the Applicable Centennial Phase 3 Facilities (such Transfer to be subject to Article XV) (a “SNIP Option Right Transfer”), NPC shall have the right to repurchase the Applicable Centennial Phase 3 Rights and the improvements on the Applicable Centennial Phase 3 Facilities for an amount equal to (i) the sum of (A) the Option Exercise Price and (B) the fair market value of any improvements to the Applicable Centennial Phase 3 Facilities made by Great Basin, minus (ii) the amount set forth in Section 6.05(b)(iv)(2)(B) (for the avoidance of doubt, the Option Exercise Price and GB Segment Development Costs used to calculate the amount to be paid by NPC under this Section 6.05(d) shall not be subject to escalation or other adjustment notwithstanding the date on which it is paid); provided, however, that the provisions of this Section 6.05(d) shall not apply to any SNIP Option Right Transfer made in connection with a Transfer of all of the assets of both Great Basin Segments pursuant to Article XV, any Transfer pursuant to Section 15.03(f) or a one-time Transfer of an undivided interest in all of the assets of both Great Basin Segments to the Western Area Power Administration pursuant to Article XV.  Great Basin shall give NPC prior written notice of such Transfer, and NPC shall have thirty (30) days after the receipt of such notice to exercise such right, after which such right shall terminate; provided, however, that such termination shall only apply with respect to the proposed Transfer (and not subsequent 

 

 

 

 

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Transfers) and if such Transfer is not consummated within ninety (90) days after delivery of such notice, NPC’s purchase right shall be reinstated, and Great Basin shall be required to again give NPC prior written notice of such Transfer.  Subject to the approval of any GB Segment Lender then foreclosing on Great Basin’s assets (including any deed-in-lieu of foreclosure) under the GB Segment Financing Agreements with the Great Basin Lenders, Great Basin shall Transfer all of the Applicable Centennial Phase 3 Rights to NPC free and clear of any Liens other than Permitted Liens within fifteen (15) days after the later of the receipt of such notice and receipt of PUCN Approval and all required Governmental Approvals on terms acceptable to NPC, and Great Basin shall make Applicable Transfer Representations and Warranties in connection with such Transfer.

 

ARTICLE VII

 

OPERATION OF THE TRANSMISSION LINE

 

           7.01 Transmission Line Operation; ON Line Maintenance.

 

(a) One or both of the NVE Parties shall be the Operator of the Transmission Line and have sole responsibility for the performance of all Operating Activities and Capital Repairs, including all activities reasonably necessary or advisable in connection with the management, operation and maintenance of ON Line, the administration of the ON Line Agreements and the operation of the Great Basin Segments.  Notwithstanding anything in this Agreement to the contrary, the NVE Parties shall have sole discretion over the performance of the Operating Activities, subject to (i) Prudent Utility Practices (including any Electric Reliability Organization requirements), (ii) Governmental Approvals for the Transmission Line (or applicable portion thereof) and (iii) Applicable Law.  Subject to Sections 3.09(c) and 10.02, the NVE Parties are solely responsible for Operating Costs, and the NVE Parties shall reimburse Great Basin within thirty (30) days after receipt of an invoice from Great Basin for Operating Costs that Great Basin incurs in the performance of Operating Activities for ON Line undertaken in response to a request from NPC or the Management Committee; provided, however, that Great Basin shall not be entitled to be reimbursed for any of the following: (i) any lobbying costs, (ii) any legal fees associated with Great Basin’s participation in regulatory proceedings where such participation has not been approved in advance by the Management Committee, (iii) any gift of items, money or entertainment in connection with ON Line, including political or campaign contributions, (iv) third-Person costs, expenses and fees for lawyers, other consultants, financing parties and agents incurred by Great Basin in connection with the ON Line Financing (including application and other fees and expenses in connection with any loan guarantee or other program provided by the U.S. Department of Energy) and the costs associated with Great Basin’s auditing and reporting requirements under this Agreement and the ON Line Financing Agreements, (v) costs and expenses incurred in the preparation, negotiation, execution or delivery of this Agreement, (vi) any amounts attributable to general administrative costs or overhead costs not associated with direct internal labor for employees directly engaged in the performance of Operating Activities, (vii) any amounts incurred by Great Basin in connection with the Great Basin Segments or (viii) any interest or costs associated with carrying such costs and expenses.  Great Basin shall be solely responsible for Great Basin O&M Costs, including any such costs incurred by any NVE Party in its role as Operator of the Great Basin Segments, and Great Basin shall reimburse the NVE Parties within thirty (30) days after receipt of an invoice from the NVE 

 

 

 

 

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Parties for any costs incurred by any NVE Party in performing its duties as Operator of the Great Basin Segments.

 

(b) At least six (6) months prior to the anticipated ON Line COD, as set forth in the ON Line Schedule, and thereafter at least ninety (90) days prior to each anniversary of the ON Line COD, the NVE Parties shall prepare and submit an annual Operating Plan and Capital Repair Budget for the Management Committee’s review and discussion, but (only with respect to the Operating Plan) not approval.  Within two (2) months after receipt of such proposed initial Capital Repair Budget, and within thirty (30) days after receipt of each subsequent Capital Repair Budget, the Management Committee shall adopt or reject such Capital Repair Budget.  If the Management Committee rejects the proposed Capital Repair Budget, then the Management Committee and the NVE Parties will work together in good faith to seek to adopt an agreed Capital Repair Budget, as applicable, within four (4) months after the original receipt of the initial Capital Repair Budget, and within sixty (60) days after the original receipt of each subsequent Capital Repair Budget.

 

(c) At least six (6) months prior to the anticipated GB Segment Financial Closing, the NVE Parties shall submit to Great Basin an indicative estimate of the annual costs and expenses to be incurred by the NVE Parties to operate the Great Basin Segments.  At least six (6) months prior to the anticipated date of commercial operation of each Great Basin Segment, and thereafter at least ninety (90) days prior to each anniversary of the commercial operation date of each Great Basin Segment, the NVE Parties shall prepare and submit an annual Operating Plan for the Management Committee’s review and discussion, but not approval.

 

           7.02 Great Basin Segment Maintenance.  Great Basin shall be solely responsible for the maintenance of the Great Basin Segments and shall cause such Great Basin Segments to be maintained and used in accordance with (a) Prudent Utility Practices (including any Electric Reliability Organization requirements), (b) Governmental Approvals for the Transmission Line (or applicable portion thereof) and (c) Applicable Law, and Great Basin shall be solely responsible for any Great Basin O&M Costs.  In order to enable the NVE Parties to monitor and operate the Great Basin Segments, Great Basin shall provide, at the request of the NVE Parties, its annual maintenance and proposed outage schedules for its facilities; provided, that Great Basin’s provision of such schedules shall not constitute acceptance or approval by the NVE Parties of such schedules.

 

           7.03 Operational and Maintenance Standards.

 

(a)           The NVE Parties shall cause the Transmission Line to be operated, and ON Line to be maintained, in accordance with (i) Prudent Utility Practices (including any Electric Reliability Organization requirements), (ii) Governmental Approvals for the Transmission Line (or applicable portion thereof) and (iii) Applicable Law.

 

(b) The NVE Parties may, in accordance with the following provisions, direct the other Parties to interrupt or reduce deliveries of electrical power on the Transmission Line (i) when necessary in order to maintain, repair, replace, remove, investigate, inspect or test any part of the Transmission Line or any meters for the Transmission Line, (ii) if 

 

  

 

 

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the NVE Parties determine, in their sole discretion, that interruption or reduction is necessary for safety or emergencies or reasonably conclude that the energy delivered to or transmitting on the Transmission Line does not conform to Prudent Utility Practices or this Agreement or jeopardizes the integrity or use of the transmissions system or Transmission Line or (iii) if it is otherwise required to do so in accordance with Electric Reliability Organization requirements.  With respect to any interruption or reduction of deliveries of electrical power pursuant to clauses (i)-(iii) of the preceding sentence, the NVE Parties shall limit the length of any such interruption or reduction to that time reasonably necessary to correct the problem or comply with the Electric Reliability Organization requirements, as applicable.  In any of these events, the curtailment shall be accomplished in proportion to each Party’s Capacity Entitlement and/or use, as applicable, on the Transmission Line, except where curtailing in such a manner is not consistent with Prudent Utility Practices.  Each Party shall promptly effect such interruption in, or reduction of, delivery as the NVE Parties shall direct pursuant to this Section 7.03(b) upon notice from the NVE Parties.  In the event notice is impracticable or a Party fails to promptly comply therewith, the NVE Parties may effect the same by direct action.  If any NVE Party becomes aware that a Party is using the Transmission Line in excess of its Capacity Entitlement or its rights to Fiber Optic Capacity or Microwave Capacity as set forth in Section 3.03, then the NVE Parties shall have the authority to cause the excess usage to be curtailed.

 

(c) Notwithstanding anything to the contrary in this Agreement, any Party may subcontract any or all of its maintenance obligations under this Article VII to an Independent Contractor pursuant to a Maintenance Agreement; provided, however, that (i) no such agreement shall relieve such Party from its obligations under any related provisions of this Agreement and (ii) such Independent Contractor is reasonably acceptable to the other Parties.

 

           7.04 Balancing Authority; Balancing Authority Area.  Subject to Section 16.02(e)(iii), the Transmission Line shall be within one or both of the NVE Parties’ Balancing Authority Area and one or both of the NVE Parties shall be the Balancing Authority for the Transmission Line.  Great Basin shall negotiate balancing area agreements with the NVE Parties for the Great Basin Segments on terms and conditions reasonably acceptable to the Parties.  Great Basin shall reimburse the NVE Parties for any services provided pursuant to the Balancing Authority Area Services Agreement in accordance with the requirements of such agreement.

 

           7.05 Ancillary Services.  Neither of the NVE Parties shall be required to provide any Ancillary Services to Great Basin, except to the extent set forth in a separate agreement (including any Balancing Authority Area Services Agreement) for the provision of such Ancillary Services (if any) between NPC and Great Basin or SPPC and Great Basin, as applicable.

 

           7.06 Transmission Losses.  On and after the date of commercial operation of the first Great Basin Segment to achieve commercial operation, losses on the Transmission Line (“Transmission Losses”) shall be allocated as follows: (a) Transmission Losses on ON Line associated with the NVE Parties’ Capacity Entitlement on ON Line shall be calculated first, as if the Great Basin Segments had not been built (i.e., line loading will be at a minimum 600MW) and such losses will be borne solely by the NVE Parties; and (b) all subsequent or additional Transmission Losses associated with the remaining Electrical Capacity over ON Line and over 

 

 

 

 

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each of the Great Basin Segments, calculated individually, shall be borne on a pro rata basis by the Parties based on their usage.

 

           7.07 Dynamic Transfers.  The NVE Parties shall consider, on a case-by-case basis and in good faith, the implementation of dynamic schedules and pseudo-tie services that are reasonably requested by Great Basin on behalf of generation interconnection customers directly interconnecting to the Transmission Line that are utilizing some portion or all of Great Basin’s Capacity Entitlement.

 

ARTICLE VIII

 

MANAGEMENT COMMITTEE; PROJECT COMPANY

 

           8.01 Management Committee.

 

(a) Composition.  The Parties hereby establish the Management Committee, which is and shall be composed of one (1) representative from the NVE Parties and one (1) representative from Great Basin (each, a “Representative”).  The Management Committee will have general oversight over the development, construction, ownership and management of ON Line.  Each Representative shall have the right and authority to bind the Party or Parties it represents.  In addition, Great Basin shall designate an alternate to its Representative and the NVE Parties shall designate an alternate to their Representative (each, an “Alternate Representative”) with the authority to serve in place of, and with the authority of, such Representative if such Representative is absent from or not available to attend a Management Committee meeting.  The NVE Parties and Great Basin shall notify the other in writing of its Representative and Alternative Representative within fifteen (15) days after the Effective Date.  Each of Great Basin and the NVE Parties may remove and replace its or their Representative or Alternate Representative (collectively, its “Authorized Representatives”) at any time, with or without cause and without the approval of the other Parties, upon written notice to the other Parties.  Each of Great Basin and the NVE Parties shall promptly give written notice to the other Parties of any change in the business address or business telephone of either of its or their Authorized Representatives.  Each Authorized Representative shall be an agent of the Party or Parties that designated such Authorized Representative.  Accordingly, (i) each Authorized Representative shall have power to act (or refrain from acting) solely in accordance with the wishes of the Party or Parties that designated such Authorized Representative, (ii) the acts of an Authorized Representative in respect of any matter shall be deemed to be the acts of the Party or Parties that designated such Authorized Representative and (iii) no Authorized Representative shall owe (or be deemed to owe) any duty (fiduciary or otherwise) to any Party other than the Party or Parties that designated such Authorized Representative.  Each of Great Basin and the NVE Parties shall be responsible for the compensation and expenses of its or their Authorized Representatives.  Notwithstanding the foregoing, no Authorized Representative, in such capacity, shall have the authority to amend, waive, revise, modify or terminate this Agreement or any portion thereof, serve any notice alleging breach of this Agreement, enter into, settle or otherwise dismiss any arbitration proceeding under Section 19.02 or claim or accept a claim of Force Majeure as an excuse to performance under this Agreement.

 

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Committee, and no Party shall withhold the presence or participation of its Representative or Alternate Representative to prevent, delay or forestall decisions on matters under consideration by the Management Committee.  The Parties shall cause their respective Authorized Representatives not to unreasonably withhold, condition or delay any actions of the Management Committee. A reasonable number of other employees or agents of the Parties may attend meetings of the Management Committee.  Meetings may be conducted in person, by telephone or video conference call, or by other means which permit an Authorized Representative of each Party to be verified and to hear and be heard by the other Authorized Representative and which are acceptable to both Authorized Representatives.  Attendees who are not Representatives, or in the case that a Representative is not in attendance, who are not the applicable Alternate Representative, shall be identified at the commencement of such meeting and shall have no power to vote on any matters, but may participate in discussions in accordance with the Management Committee’s rules of order, which may limit the amount of time that the employees or other agents may participate.

 

(c) Meeting; Notice.  Unless the Parties agree otherwise, the Management Committee shall meet as necessary or appropriate (i) but no less frequently than monthly from the Effective Date until the commencement of the Operating Period and quarterly thereafter and (ii) at special meetings called by any Party following five (5) Business Days’ prior written notice of such a special meeting to the other Party’s Representative and so long as such meeting is reasonable under the circumstances.  The Chair of the Management Committee shall provide written notice to the other Authorized Representatives stating the place (or means if by telephone conference or other means), date and hour of each meeting of the Management Committee, together with a detailed agenda for the meeting, not less than five (5) days before the date of the meeting (unless such notice is waived by an Authorized Representative of each Party either at the meeting or by written consent before or after the meeting).  Any Party may submit an item for inclusion on the agenda of any Management Committee meeting.  Attendance of an Authorized Representative of a Party at a meeting of the Management Committee shall constitute a waiver of notification of the meeting by such Party.

 

(d) Rules.  The Management Committee may adopt such rules of order, policy statements and directives as it considers necessary or appropriate for the conduct of its business and the exercise of its powers, none of which shall conflict with this Agreement or any ON Line Agreement.

 

(e) Chair.  The Representative of the NVE Parties shall serve as the initial chairperson of the Management Committee (the “Chair”).  Unless the Management Committee decides otherwise, commencing on the first day of each calendar year following the Effective Date, the Chair of the Management Committee shall rotate between (i) the Representative for the NVE Parties and (ii) the Representative for Great Basin.  The Chair shall be responsible for the maintenance of minutes of each Management Committee meeting and the recordation of the results of each vote taken and shall promptly provide a copy of such minutes and voting records to the other Authorized Representatives.  The Chair shall have no powers or duties other than those specifically conferred by this Agreement, and shall have no voting or veto power in addition to the right to vote as a Representative.  In the absence of the Chair at any 

 

  

 

 

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Management Committee meeting, the applicable Alternative Representative shall be the Chair for such meeting.

 

(f) Quorum and Voting.  Except as provided in Section 16.02(c), meetings of the Management Committee shall require a quorum consisting of (i) an Authorized Representative of the NVE Parties and (ii) an Authorized Representative of Great Basin.  If a quorum is not present at the commencement of any meeting, the Chair will reschedule the meeting to take place within the following ten (10) days and will give notice of such rescheduled meeting to the Representatives and Alternate Representatives.  If at two successive meetings following the originally scheduled meeting a quorum is not present due to the same Party’s Authorized Representative not being present at such meetings, then, if such Party’s Authorized Representative is not present for the last such meeting, the attendance of the other Party’s Authorized Representative at such meeting shall constitute a quorum.  Subject to Sections 8.01(f) and 16.02(c), all decisions of the Management Committee shall require the affirmative vote of (i) an Authorized Representative of the NVE Parties and (ii) an Authorized Representative of Great Basin.

 

(g) Action by Written Consent.  Any action which may be taken by the Management Committee under this Agreement may be taken without a meeting if each Representative and Alternate Representative is given prior notice in writing or by telephone or facsimile transmission and a copy of the proposed consent, and a consent setting forth the action taken is executed by (i) an Authorized Representative of the NVE Parties and (ii) an Authorized Representative of Great Basin.

 

(h) Deadlocks.  If the Authorized Representatives participating in a meeting of the Management Committee are unable to reach agreement on a matter put to vote (a “Deadlock”), the Parties shall attempt to resolve such Deadlock through negotiations of the Authorized Representatives.  If such Deadlock is not resolved within seven (7) days, the Deadlock shall be referred to a panel consisting of a senior executive (President or Vice President) of each Party with the authority to resolve the matter causing such Deadlock.  Such panel shall convene within seven (7) days after the expiration of the aforementioned seven (7)- day period and the members of such panel shall attempt in good faith to promptly resolve such Deadlock.  Notwithstanding a Deadlock regarding the use of contingency in the ON Line Budget, the Managing Party may utilize contingency in the ON Line Budget to fund any Critical Change Order.

 

                (i) If a Deadlock occurs prior to ON Line Financial Closing and the Parties are unable to achieve a resolution of such Deadlock within seventy-five (75) days after the panel of senior executives has convened or ninety (90) days after the Deadlock occurred, whichever occurs sooner, then any Party may elect to terminate this Agreement pursuant to Section 11.03(a)(v).

 

                (ii) If a Deadlock arises regarding the approval of any amount in a Capital Repair Budget or any Capital Repair, the remainder of the Capital Repair Budget approved shall take effect.  Notwithstanding such Deadlock, the NPC may carry out Critical Capital Repairs.

 

 

 

 

 

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           8.02 Non-Delegable Actions.  Notwithstanding the delegation of authority granted to the Parties in this Agreement, but subject to Sections 7.01(a) and 8.01(h)(ii), the following actions shall be performed by, and shall require the affirmative approval of, the Management Committee in accordance with the requirements of Section 8.01:

 

(a) The adoption of, and modifications to, any Project Budget, including the establishment of any reserve accounts;

 

(b) The submission of any initial application for any non-ministerial Governmental Approval for ON Line, the application for renewal or material modification of any such Governmental Approval or the acceptance of any such Governmental Approval or material modification thereof;

 

(c) The selection of any Material Construction Contractor and any other major contractor or vendor or any subcontractor to any major contractor or vendor (to the extent the right to approve subcontractors of any such major contractor or vendor is granted to any Party in the relevant ON Line Agreement);

 

(d) Finalization of the detailed design for ON Line, material modifications to such design, modifications to such design that could be reasonably expected to adversely affect the Electrical Capacity, Microwave Capacity or Fiber Optic Capacity or WECC rating of the Transmission Line;

 

(e) The approval of, or modifications to, the ON Line Schedule;

 

(f) The execution, termination of, material amendment to, issuing a material change order under, or waiver of a material provision of any ON Line Agreement or the exercise of remedies under any ON Line Agreement;

 

(g) The initiation of litigation, arbitration or other dispute resolution mechanism relating to ON Line under any ON Line Agreement or otherwise;

 

(h) The settlement of any litigation, arbitration or other dispute relating to ON Line under any ON Line Agreement or otherwise or any insurance or warranty claims relating to ON Line;

 

(i) The disposition of any ON Line assets (other than dispositions in the ordinary course of business to Persons not Affiliated with the Parties of surplus or obsolete assets having a value of less than one hundred thousand Dollars ($100,000));

 

(j) The approval of any public announcements relating to ON Line, except as set forth in Section 20.08(d);

 

(k) The adoption and implementation of the Insurance Plan and any modifications thereto;

 

(l) The approval of the appointment of any ON Line Manager and any replacement thereof;

 

 

 

 

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(m) The determination to commence Wind-Up Events;

 

(n) The issuance of a notice to proceed or any completion or similar certificate or the acceptance of any performance tests under any Material Construction Contract;

 

(o) The decision to form or dissolve a Project Company and all decisions with respect to the ownership and governance of such Project Company, except to the extent governance is otherwise provided for in such Project Company’s organizational documents; and

 

(p) The approval of community outreach and government relations programs for ON Line.

 

           8.03 Project Company.

 

(a) Organization.  The Management Committee may cause the formation of one or more limited liability companies (each, a “Project Company”) in connection with the development, construction or maintenance of ON Line.  The organizational documents of any Project Company shall be approved by the Management Committee.  Any Project Company shall be owned by the Parties in proportion to their respective Ownership Percentages.

 

(b) Duties.  If so determined by the Management Committee, a Project Company may, as agent for and on behalf of the Parties, (i) apply for or accept one or more Governmental Approvals for ON Line, (ii) enter into one or more ON Line Agreements, (iii) open and maintain Project Accounts and (iv) conduct such other activities as agent for, and on behalf of, the Parties, as the Management Committee may determine.

 

(c) Disposition.  Any disposition or acquisition of a Party’s Ownership Interests shall proportionally include such Party’s interests in each Project Company.

 

           8.04 Time is of the Essence.  Time is of the essence with respect to all actions to be taken by the Management Committee hereunder.

 

ARTICLE IX

 

REPORTING; RECORDKEEPING

 

           9.01 Monthly/Quarterly Report.  Once a month prior to the commencement of the Operating Period and quarterly thereafter, on a schedule to be determined by the Management Committee, the Managing Party prior to the Operating Period and NPC during the Operating Period shall provide the Management Committee with a report (the “Monthly/Quarterly Report”).  Each Monthly/Quarterly Report shall contain updates and all material issues with respect to ON Line, except that the Managing Party or NPC, as applicable, shall not be required to include in any Monthly/Quarterly report any information (i) the disclosure of which is prohibited by any contractual agreement or legal or ethical obligation or company policy, (ii) about the finances or business plans of any Party, that is publicly available, or that is proprietary or (iii) that is not obtained by the Authorized Representatives of the relevant Parties in the performance of the ON Line Activities or Operating Activities.  Subject to the 

 

 

 

 

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immediately preceding sentence, each Monthly/Quarterly Report shall contain (a) prior to the Operating Period, updates and all material issues with respect to the ON Line Activities, the status of the ON Line Schedule, ON Line Costs compared to the ON Line Budget and any anticipated changes to or cost overruns with respect to the ON Line Budget, and the progress of all ON Line Activities (including the negotiation of ON Line Agreements, land rights acquisition, permitting, design, engineering and procurement, and all other material issues related to the ON Line Activities), (b) during the Operating Period, updates and all material issues with respect to the Operating Activities, the status of the Operating Plan and the operating status of ON Line (including Electrical Capacity, availability, forced outages, safety statistics and outage status for planned outages) and (c) at any time, such other information reasonably requested by any Party.

 

           9.02 Notification of ON Line Events  Each Party shall promptly notify the Management Committee and the other Parties of any Material Events that occur regarding ON Line of which such Party has knowledge acquired by such Party in the performance of the ON Line Activities or Operating Activities assigned to such Party under this Agreement (including any event that could reasonably be expected to result in a milestone set forth in the ON Line Schedule not being met); provided, however, that (a) such notification obligation shall not apply to information (i) disclosure of which is prohibited by any contractual agreement or legal or ethical obligation or company policy or (ii) about the finances or business plans of any Party, that is publicly available, or that is proprietary and (b) for purposes of this Section 9.02, knowledge means the actual knowledge of any of the Authorized Representatives of the relevant Parties obtained in the performance of the ON Line Activities or Operating Activities.

 

9.03 Recordkeeping.

 

(a) Each Party shall keep and maintain proper books, records, accounts, ledgers, estimates, invoices, schedules, correspondence and other documents (whether in physical or electronic form) related to ON Line (collectively, the “Books and Records”), including reasonably detailed records of ON Line Costs, each in conformity with any Applicable Laws and GAAP.  Each Party shall ensure that a Person with appropriate accounting experience is responsible for maintaining its Books and Records.  Each Party shall maintain its Books and Records for at least seven (7) years, or such longer period required by Applicable Law, following the creation thereof.

 

(b) Great Basin shall provide, and the ON Line Agreements shall require, that ON Line contractors provide NPC with cost and accounting information in accordance with GAAP with detail sufficient to allow the NVE Parties to comply with the Uniform System of Accounts.

 

           9.04 Inspection and Audit Rights.  Each Party and its consultants shall have the right, from time to time during the Term, to inspect and audit any other Party’s Books and Records, insofar as such Books and Records pertain to ON Line Costs.  Each Party may undertake such inspection or audit directly or through independent certified public accountants of its choice.  Any audit or inspection conducted by a Party shall be subject to reasonable notice, and shall be conducted at reasonable times during the normal business hours of the applicable other Party and unless otherwise agreed, at the offices of the applicable other Party.  The costs of 

 

 

 

 

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any such audit shall be borne by the Party conducting the audit.  Each Party acknowledges and agrees that the making of any payment hereunder, including payments by a Party in respect of the Closing Payment and the Monthly Payment, shall be without prejudice to the audit rights of each Party hereunder.

 

           9.05 Information.  Upon request from a Party, the other Parties, as applicable, shall furnish information, data, records, certificates or documents related to the Transmission Line as are required in order to comply with the requirements of any Governmental Authority.

 

           9.06 Access to Financial Information.  The Parties agree that GAAP and the rules of the SEC require the NVE Parties to evaluate if they must consolidate Great Basin’s financial information.  The NVE Parties shall have the right to request, access and copy Great Basin’s financial records and to access Great Basin’s personnel, in each case, upon reasonable advance notice and during regular business hours, in order to determine if consolidated financial reporting is required.  If the NVE Parties and their independent auditor reasonably determine that such consolidation is required (as confirmed in a letter provided to Great Basin by the NVE Parties), the NVE Parties may require that Great Basin deliver within a reasonable period of time the following during each applicable fiscal quarter for the Term: (a) either (i) unaudited financial statements of Great Basin on an interim quarterly basis and  audited financial statements of Great Basin on an annual basis, including notes with respect to annual audited financial statements or (ii) unaudited financial statements of Great Basin on an interim quarterly basis and annually if annual audited financial statements are not otherwise available, (b) financial schedules underlying the financial statements needed to comply with GAAP disclosure requirements and (c) a certificate, duly executed by an authorized officer of Great Basin, stating that the financial statements provided hereunder are materially true and correct representations of Great Basin for the relevant period and have been prepared in accordance with GAAP, as applicable to Great Basin. It is understood that Great Basin shall not under any circumstances, solely as a result of this Agreement, be required by the NVE Parties to comply with SEC rules or the Sarbanes Oxley Act of 2002 or any successor legislation, in each case, beyond the express obligations of Great Basin set forth in this Agreement.

 

ARTICLE X

 

TAXES AND ASSESSMENTS

 

           10.01 Management of Tax Matters.  Except for any payments of Personal Taxes or payments in lieu thereof which are directly billed to a Party by any taxing authority and which a Party shall pay directly, and subject to the oversight of the Management Committee, the Managing Party prior to the Operating Period and NPC during the Operating Period shall have the authority and responsibility for administering, coordinating, filing returns, making property tax declarations, paying, seeking official tax rulings or determinations, and other related functions pertaining to all taxes, payments in lieu of taxes, assessments, impositions, charges, and related costs of every kind and nature, ordinary, or extraordinary, general or special, foreseen or unforeseen, settled or pending settlement connected with or arising out of the development, construction, ownership, operation, maintenance, alteration, repair, rebuilding, use or retirement of ON Line or any part thereof, including sales taxes and excise taxes (collectively “Taxes”) 

 

 

 

 

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which are or may be imposed by any Governmental Authority; provided, however, that unless specifically authorized in writing by the Parties, such authority shall not extend to any act or action affecting any exemption from Taxes or special tax treatment arising out of ON Line to which one Party may be entitled on a basis that is different from the other Parties.  As used herein, the term “Taxes” shall not include any taxes associated with the Great Basin Segments or net income taxes or franchise taxes relating to ON Line that are assessed or imposed against any Party (collectively, “Personal Taxes”), the payment of which is and shall remain the responsibility of any such Party so assessed or on whom imposed.  Each Party may contest the validity or amount of any Personal Taxes, in each case provided that the contested Personal Taxes shall not remain unpaid for such length of time as shall permit any part or all of ON Line to be sold or foreclosed or any interest of any Party therein to be subject to a Lien for the nonpayment of the same.

 

           10.02 Sharing of Taxes and Related Payments.  All Taxes whether Pre-Closing Costs, Post-Closing Costs or Operating Costs, as applicable, after the Acquisition Closing Date, shall be shared and borne by the Parties in proportion to their respective Ownership Percentages; provided, however, that to the extent that the aggregate amount of the Taxes are reduced because a Party is entitled to specific tax benefits resulting from its status apart from ON Line, such Party shall be entitled to the entire benefit, to the extent of actual realization, of any exemptions from and reductions of Taxes connected with or arising out of the ownership, operation, maintenance, alteration, repair, rebuilding, use or retirement of ON Line or any part thereof.  Unless agreed upon by the Parties, in no event shall a Party entitled to any exemption or reduction in Taxes be liable, directly or indirectly, for any payment in lieu of taxes that any other Party has agreed to make.  Further, it is the express intention of the Parties that, for Federal income tax purposes, (a) Great Basin be treated as the owner of an undivided ownership interest in ON Line equal to its Ownership Percentage, (b) NPC be treated as the owner of an undivided ownership interest in ON Line equal to its Ownership Percentage and (c) SPPC be treated as the owner of an undivided ownership interest in ON Line equal to its Ownership Percentage, with each Party entitled to the respective tax benefits attributable thereto.

 

           10.03 Payment of Taxes.  Subject to Section 10.02, the Managing Party prior to the Operating Period and NPC during the Operating Period shall be responsible for paying and discharging all Taxes imposed by any Governmental Authority before the same become delinquent, except (a) those that are directly billed to a Party by any taxing authority and which such Party is responsible to pay directly and (b) those subject to a good faith contest and for which appropriate reserves have been established in accordance with GAAP.

 

           10.04 Non-Creation of Taxable Entity.  Notwithstanding any other provision of this Agreement, the Parties do not intend to create hereby at law any joint venture, partnership, association taxable as a corporation, trust, limited liability company or other entity for the conduct of any business for profit.  The Parties agree to timely elect under Section 761(a) of the Code to exclude the transactions created by this Agreement from the application of Subchapter K, Chapter 1 of the Code, and the Parties agree to revise the terms of this Agreement to the extent and in a manner necessary to permit such election.  If it is ultimately determined by an appropriate taxing authority that this Agreement is not eligible for an election out of Subchapter K, Chapter 1 of the Code, then the Management Committee shall make all Federal 

 

 

 

 

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and state income Tax elections.  Each Party agrees to report on such Party’s separate return in a manner consistent with such exclusion election any items of revenue and expenditure attributable to such Party’s share of any revenue received and any expenditures made under this Agreement. Nothing in this Agreement will be construed as an undertaking by any Party to jointly sell any electrical transmission or other services or property.  Each Party agrees to execute and deliver such additional documentation, including the statement required by Treasury Regulation 1.761-2(b)(2), as may be required from time to time to effect such exclusion to the extent permitted by law.

 

           10.05 Transfer Taxes.  Each Party shall be responsible for the timely payment of, and shall indemnify and hold harmless each other Party from and against, its respective Ownership Percentage (as existing immediately prior to such Transfer) of all transfer taxes (excluding taxes measured in whole or in part by net income), including sales, use, excise, stock, stamp, documentary, filing, recording, permit, license, authorization and similar taxes, fees, duties, levies, customs, tariffs, imposts, assessments, obligations and charges (collectively, “Transfer Taxes”) (if any) arising out of or in connection with the transactions contemplated by this Agreement related to ON Line; provided, however, that in connection with a Transfer (a) pursuant to Section 16.02(d) or (f), then the defaulting Party shall be responsible for one hundred percent (100%) of any Transfer Taxes resulting therefrom, (b) pursuant to Section 15.02(a), then each Party shall be responsible for Transfer Taxes in accordance with the terms of the ROFR Offer Notice, (c) to a third Person, such Transfer Taxes shall be borne one hundred percent (100%) by the Transferring Party, (d) pursuant to Sections 15.03(e) or (f), such Transfer Taxes shall be borne one hundred percent (100%) by Great Basin, (e) pursuant to Section 15.03(g) between Great Basin and its Affiliates or among the Affiliates of Great Basin, such Transfer Taxes shall be borne one hundred percent (100%) by Great Basin, (f) pursuant to Sections 15.03(a) or (d), such Transfer Taxes shall be borne one hundred percent (100%) by the NVE Parties and (g) pursuant to Section 15.03(g) (but only with respect to a Transfer to the NVE Parties), such Transfer Taxes shall be shared equally by Great Basin, on the one hand, and the NVE Parties, on the other hand.  Each Party shall prepare and file all necessary documentation and tax returns with respect to such Transfer Taxes, and each Party shall cooperate with each other Party and take any action reasonably requested by each other Party, which does not cause the non-requesting Party to incur any cost or inconvenience, in order to minimize such Transfer Taxes.  For the avoidance of doubt, any Taxes (including Transfer Taxes) payable in connection with the procurement of assets from third parties in connection with the construction, maintenance, repair and/or replacement of ON Line (or any portion thereof) shall be treated as Development Costs, Pre-Closing Costs, Post-Closing Costs and/or Capital Repair Costs, as applicable, and shall not be subject to this Section 10.05.

 

           10.06 Duties Regarding Assessments.  With respect to property Taxes, the Parties will use their reasonable best efforts to have any taxing or other Governmental Authority levying any such Taxes or payments in lieu thereof, or making any valuations of ON Line (or any portion thereof) for the purpose of levying any such Taxes or payments in lieu thereof or any beneficial interest or rights therein, assess and levy such Taxes or payments in lieu thereof directly against the Ownership Interest of each Party.  All such Taxes or payments in lieu thereof levied against each Party’s Ownership Interest, excepting those Taxes or payments in lieu thereof levied against an individual Party on behalf of any other Party, will be the sole responsibility of 

 

 

 

 

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the Party upon whose Ownership Interest such Taxes or payments in lieu thereof are levied.  If any property Taxes or payments in lieu thereof, are levied or assessed in a manner other than as specified in this Section 10.06, or if an individual Party is levied or assessed on behalf of ON Line or any other Party, the Management Committee will establish equitable practices and procedures for the apportionment among the Parties of such Taxes or payments in lieu thereof.

 

           10.07 Periodic Payments.  The Parties shall account for Monthly Payments for Federal income tax purposes in accordance with the allocation of such payments in Section 3.06.

 

ARTICLE XI

 

TERM AND TERMINATION

 

           11.01 Term.  Unless the Parties agree otherwise, the term of this Agreement (the “Term”) shall commence on the Effective Date and, unless earlier terminated in accordance with the provisions of this Agreement, continue until the retirement from service of the Transmission Line and the Wind-Up Events have been completed, including the payment of all costs associated with the Wind-Up Events and the distribution of any proceeds of the sale of ON Line’s assets in accordance herewith (the date of such retirement and completion or earlier termination being referred to herein as the “Termination Date”).  Except as may be agreed to by the Parties in writing, upon the occurrence of the Termination Date, any funds in Project Accounts on the Termination Date, after payment of all amounts owing from Project Accounts in accordance herewith, shall be assets of ON Line, which assets shall be distributed to Parties in accordance with Section 11.02(b)(vi).

 

           11.02 Winding-Up.  On the retirement of ON Line from service, the Parties shall promptly wind-up ON Line in accordance with this Section 11.02 and termination of this Agreement shall not be effective until the provisions of this Section 11.02 have been satisfied.

 

(a) All costs and payments (less salvage credits, if any) associated with the retirement of ON Line (including the Wind-Up Events) shall be shared by the Parties in proportion to their respective Ownership Percentages.

 

(b) In connection with winding-up ON Line, the Parties shall perform the following actions (the “Wind-Up Events”):

 

                (i) Dismantling, demolishing and removing ON Line equipment, facilities and structures (including the cost of transportation and handling incidental thereto);

 

                (ii) Terminating any ON Line Agreement in accordance with the terms thereof;

 

                (iii) Securing, maintaining and disposing of debris with respect to ON Line;

 

 

 

 

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                (iv) Performing any activities necessary to comply with Applicable Law and Prudent Utility Practices and that are otherwise prudent to retire ON Line and protect the Parties from liability;

 

                (v) Remedying and restoring the ON Line ROW; and

 

                (vi) Directly or through agents, brokers or other Persons selected by the Management Committee (A) timely disposing of any remaining assets of ON Line by sale, auction, partition or otherwise, (B) depositing any proceeds of the disposition of assets of ON Line in a new bank account, and (C) undertaking other necessary steps for the winding-up of ON Line, including disbursing of any balance remaining in (1) the account referenced in clause (B) above, to the Parties in proportion to their respective Ownership Percentages and (2) any Project Account, to Great Basin to the extent any amount paid into such Project Account by Great Basin has not been disbursed, and otherwise, to the NVE Parties.

 

(c) Commencing thirty-five (35) years after the Effective Date, each Party shall establish and maintain a depositary account on terms reasonably acceptable to the other Parties (each, a “Wind-Up Reserve Account”); provided, that if, on the thirty-fifth (35th) anniversary of the Effective Date, the remaining useful life of ON Line is reasonably estimated to be in excess of seventeen (17) years, the Parties shall delay the establishment of the Wind-Up Reserve Account until a date that is reasonably estimated to be seventeen (17) years prior to the expiration of the useful life of ON Line.  Simultaneously with the establishment of each Wind-Up Reserve Account, and each subsequent year thereafter, the Party establishing such account shall deposit an amount in its Wind-Up Reserve Account equal to (i) (A) such Party’s Ownership Percentage of the current estimated costs to implement the Wind-Up Events, as determined by the Management Committee (on an annual basis) less (B) the amount on deposit in the Wind-Up Reserve Account; divided by (ii) the estimated number of years, as determined by the Management Committee (on an annual basis), until commencement of the Wind-Up Events.  Each Party may draw on the amounts deposited in its Wind-Up Reserve Account to fund its Ownership Percentage of the costs to implement the Wind-Up Events.  Each Party may draw on the amounts deposited in the Wind-Up Reserve Accounts set up by any other Party to fund any such other Party’s share of costs incurred in respect of the Wind-Up Events to the extent such costs are not paid by any such other Party.  After completion of the Wind-Up Events, any amounts remaining in a Wind-Up Reserve Account shall be paid to the Party establishing such account.  If a Party does not have an Investment Grade Credit Rating on or at anytime after the later of (x) the thirty-fifth (35th) anniversary of the Effective Date, and (y) the date that is seventeen (17) years prior to the expiration of the useful life of ON Line, such Party shall grant a security interest to the other Parties in all of the right, title and interest in, to and under such Party’s Wind-Up Reserve Account, in form and substance acceptable to the other Parties, which security interest shall be maintained in full force and effect at all times thereafter until such Party obtains an Investment Grade Credit Rating; provided, however, that (1) any such security requirements impacting Great Basin shall be subject to the rights of the GB Segment Lenders and (2) in the case of Great Basin’s Wind-Up Reserve Account, such security interest may only be subordinated to (i) any ON Line Lender and (ii) Excluded Liens arising by operation of law after such security interest is granted and required by Applicable Law to be senior to such 

 

 

 

 

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security interest and, in the case of the Wind-Up Reserve Accounts of the NVE Parties, such security interest may only be subordinated to (A) any NVE Lender and (B) Excluded Liens arising by operation of law after such security interest is granted and required by Applicable Law to be senior to such security interest.

 

           11.03 Termination.

 

(a) Prior to the Acquisition Closing, this Agreement may only be terminated by (i) mutual written agreement of the Parties, (ii) any Party, if Acquisition Closing has not occurred by or on the Acquisition Closing Deadline; provided, however, that a Party may not terminate this Agreement pursuant to this Section 11.03(a)(ii) if such Party has failed to comply with its obligations hereunder and such failure resulted in the Acquisition Closing not occurring on or by the Acquisition Closing Deadline, (iii) any Party, if any Governmental Authority shall have issued a final, non-appealable order preventing the consummation of Acquisition Closing, (iv) any non-defaulting Party, in the event of an Event of Default under Section 16.01(f) or, if such termination occurs prior to ON Line Financial Closing, any other Event of Default, in each case, if such Event of Default is continuing at the time notice to terminate is provided to the defaulting Party, (v) any Party, upon the occurrence of the event described in Section 8.01(h)(i) if such termination occurs prior to ON Line Financial Closing, (vi) any Party, upon the occurrence of an event that could reasonably be expected to have a Material Adverse Effect if such termination occurs prior to ON Line Financial Closing, and (vii) Great Basin, if it has not received acceptable terms for the ON Line Financial Closing by the Acquisition Closing Deadline.  If this Agreement is terminated pursuant to this Section 11.03(a), without prejudice to any other rights or remedies any Party may have under this Agreement or Applicable Law or in equity as a result of such termination or the underlying facts thereof and subject to Section 20.10, (1) neither of the NVE Parties shall have any further interest in the Transmission Line, (2) this Agreement shall forthwith become of no further force or effect and become void and (3) there shall be no liability or obligation hereunder on the part of any Party or any of their respective Affiliates.

 

(b) After the Acquisition Closing, no Party may terminate this Agreement, except that upon consummation of an acquisition by one Party (or by the NVE Parties together) of all of the Ownership Interests prior to GB Segment Financial Closing or the consummation of an acquisition prior to the Capacity Entitlement adjustment contemplated by Section 3.02(b) by the NVE Parties of all of Great Basin’s Ownership Interests under Section 3.07(a) as a result of Great Basin not achieving GB Segment COD before the GB Segment COD Deadline, without prejudice to any other rights or remedies any Party may have under this Agreement or Applicable Law or in equity as a result of such termination or the underlying facts thereof and subject to Section 20.10, this Agreement may be terminated by any Party and upon such termination this Agreement shall forthwith become of no further force or effect and become void, and there shall be no liability or obligation hereunder on the part of any Party or any of their respective Affiliates.

 

(c) Except as provided in Section 11.03(b), if:

 

                (i) the NVE Parties purchase all of Great Basin’s Ownership Interests, then, unless agreed otherwise by the Parties, upon consummation of such 

 

 

 

 

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purchase (A) the following provisions shall cease to be of further force or effect: (1) Sections 3.01(c), 3.06, 3.07, 3.08, 3.09, 11.02, 16.02(c), 16.02(e)(i) and 16.02(f) and (2) except as provided in clause (B) below, Articles II, IV, V, VIII, IX (other than Section 9.05), XIII and XIV and (B) Sections 6.04, 7.02, 13.06 and 14.06 shall be hereby amended such that the NVE Parties have reciprocal obligations regarding ON Line as Great Basin has with respect to the Great Basin Segments (it being understood that any notice under such Sections will be given to the Parties and not the Management Committee).

 

                (ii) Great Basin purchases all of the NVE Parties’ Ownership Interests, then, unless agreed otherwise by the Parties, upon consummation of such purchase (A) the following provisions shall cease to be of further force or effect: (1) Sections 3.01(c), 3.07, 3.08, 3.09, 11.02, 16.02(c), 16.02(e)(i) and 16.02(f) and (2) except as provided in clause (B) below, Articles II, IV, V, VIII, IX (other than Section 9.05), XIII and XIV, (B) Sections 6.04, 7.02, 13.06 and 14.06 shall be hereby amended such that Great Basin has the same obligations with respect to ON Line as it has with respect to the Great Basin Segments in such sections (it being understood that any notice under such Sections will be given to the Parties and not the Management Committee) and (C) Great Basin shall be responsible for all Operating Costs and Capital Repair Costs arising after the consummation of such purchase.

 

(d) Nothing in this Section 11.03 shall (i) relieve or release any Party of any liability or damages arising out of such Party’s breach of any provision of this Agreement prior to the effectiveness of the termination or (ii) impair the right of any Party to compel specific performance by another Party or the other Parties, as the case may be, of such Party’s obligations under this Agreement to the extent that such obligations have not become void and of no further force or effect as a result of the termination.

 

ARTICLE XII

 

INDEMNIFICATION; LIMITATION OF LIABILITY

 

           12.01 Indemnification.

 

(a) Agreements to Indemnify. Subject to Sections 12.03 and 12.04, each Party, to the maximum extent permitted by Applicable Law, shall defend, protect, indemnify and hold each other Party, its Affiliates and their respective officers, directors, employees and agents (“Indemnified Persons”) harmless from and against any and all Claims resulting from, arising out of or in connection with (i) the gross negligence, intentional misconduct or fraudulent acts of such Party, its Affiliates or its or their respective officers, directors, employees or agents, arising in connection with this Agreement or the Transmission Line, (ii) such Party’s breach of any provision of this Agreement, (iii) the Personal Taxes of such Party and (iv) subject to Section 18.01(a), Liens in respect of an obligation of such Party that are placed on the Ownership Interests or other property of an Indemnified Person.  Each Party shall use reasonable efforts to include in its Open Access Transmission Tariff an indemnity from such Party’s customers for the benefit of the Parties that is consistent with the indemnity provided by such Party’s customer to such Party; provided, however, that to the extent that such an indemnity has not been included or is ineffective (and except for Claims resulting from Willful 

 

 

 

 

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Misconduct/Gross Negligence of a Party), NPC and Great Basin shall, to the maximum extent permitted by Applicable Law, defend, protect, indemnify and hold, in the case of NPC, Great Basin and, in the case of Great Basin, the NVE Parties and, in each case their respective Indemnified Persons harmless from and against any Claims by such non-indemnifying Party’s electric, transmission and other customers resulting from, arising out of or in connection with the delivery of, interruption to or curtailment of electric, transmission or other service caused by the failure of the indemnifying Party to properly, in the case of NPC, operate the Transmission Line and maintain ON Line and, in the case of Great Basin, maintain the Great Basin Segments; provided, further, however, that in no event shall the liability of Great Basin, or the liability of the NVE Parties collectively, pursuant to this sentence exceed ten million Dollars ($10,000,000) in the aggregate for any Claims arising in any three-year period.

 

(b) Conduct of Claims.  Each Indemnified Person shall, promptly after the receipt of notice of any Claim against such Indemnified Person in respect of which indemnification may be sought pursuant to this Section 12.01, notify any other Party from whom it seeks indemnity (“Indemnifying Party”) of any such Claim.  No Indemnifying Party shall be obligated to indemnify such Indemnified Person with respect to any such Claim if such Indemnified Person fails to notify the Indemnifying Party thereof in accordance with the provisions of this Section 12.01(b) in sufficient time to permit the Indemnifying Party to defend against any such Claim and to make a timely response thereto, including any responsive motion or answer to a complaint, petition, notice or other legal, equitable or administrative process relating to any such Claim, but only insofar as such failure to notify the Indemnifying Party has actually resulted in material prejudice or damage to the Indemnifying Party.  In case any Claim shall be made or brought against an Indemnified Person, the Indemnifying Party may, or if so requested by such Indemnified Person shall, assume the defense thereof with competent counsel of its selection to defend such Indemnified Person.  In such circumstances, such Indemnified Person shall (i) at no cost or expense to such Indemnified Person, cooperate with the Indemnifying Party and provide the Indemnifying Party with such information and assistance as the Indemnifying Party shall reasonably request in connection with any such Claim and (ii) at its own cost and expense (unless a conflict would exist if the same counsel represented both the Indemnifying Party and the Indemnified Party or the Indemnified Party is or may be reasonably expected to be exposed to criminal liability, in which case the Indemnifying Party shall pay the cost and expense of separate counsel for the Indemnified Party), have the right to participate and be represented by counsel of its own choice with respect to any such Claim.

 

(c) Defense of Claims.  If the Indemnifying Party assumes the defense of the relevant Claim, (i) the Indemnifying Party shall not be liable for any settlement thereof that is made without its written consent and (ii) the Indemnifying Party shall control the settlement of such Claim; provided, however, that the Indemnifying Party shall not conclude any settlement that requires any action or forbearance from action or payment or admission by the Indemnified Person or any of its Affiliates without the prior written approval of the Indemnified Person.  The obligations of an Indemnifying Party shall not extend to any loss, damage or expense of whatever kind and nature (including all related costs and expenses) to the extent the same results from, after the receipt of notice of a Claim against an Indemnified Person, the taking by the Indemnified Person of any action (unless required by Applicable Law or applicable legal process) which prejudices the successful defense of such Claim, without, in any such case, the 

 

 

 

 

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prior written consent of the Indemnifying Party (such consent not to be required in a case where the Indemnifying Party has not assumed the defense of such Claim).  The Indemnified Person shall afford the Indemnifying Party and its counsel the opportunity to be present at, and to participate in, conferences with all Persons, including Governmental Authorities, asserting any Claim against the Indemnified Person covered by the indemnities contained in this Section 12.01 or conferences with representatives of, or counsel for, such Indemnified Person held in connection with such indemnities.

 

(d) Any Claim indemnified against pursuant to this Section 12.01 shall be net of, but not limited to, any tax benefit actually recognized by an Indemnified Person and any Insurance Proceeds.

 

           12.02 Contribution of Parties.  Except as otherwise expressly set forth herein, if, after the Acquisition Closing Date, a Party bears more than its Ownership Percentage of any liability or obligation arising in connection with ON Line (other than any liability or obligation arising (a) under an Excluded Agreement, (b) from a Party’s business activities that are independent of ON Line and not attributable to ON Line or (c) that is to be borne in a manner other than in accordance with Ownership Percentages by the express terms of this Agreement) and such Party would not be required to indemnify any other Party under this Agreement for any Claim related to such liability or obligation (a “Shared Liability”), the other Parties (proportionally based on their respective Ownership Percentages) shall reimburse the Party that incurred the Shared Liability within ten (10) Business Days after written demand therefor, to the extent of such excess so that the Parties bear that liability or obligation in proportion to their respective Ownership Percentages.  No Party shall have the right to settle or compromise any Claim with respect to a Shared Liability without the written approval of each other Party.  For the avoidance of doubt, this Section 12.02 shall not require the NVE Parties to make payments for costs or expenses attributable to the Great Basin Segments.

 

           12.03 Waiver of Damages.

 

(a) EXCEPT FOR DAMAGES PAID TO THIRD PERSONS TO WHICH AN INDEMNITY OR CONTRIBUTION OBLIGATION UNDER SECTIONS 12.01 OR 12.02 APPLIES, IN NO EVENT, WHETHER BASED ON CONTRACT, INDEMNITY, WARRANTY, STATUTE, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE, SHALL ANY PARTY BE LIABLE FOR SPECIAL, INCIDENTAL, EXEMPLARY, INDIRECT, PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROFITS OR REVENUE, LOSS OF USE OF THE TRANSMISSION LINE OR ANY ASSOCIATED EQUIPMENT, COST OF CAPITAL, COSTS IN EXCESS OF ESTIMATES, COST OF PURCHASED POWER OR TRANSMISSION, COST OF SUBSTITUTE EQUIPMENT, FACILITIES OR SERVICES, DOWNTIME COSTS OR CLAIMS OF CUSTOMERS OR LENDERS.  THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES SHALL BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY.  FOR THE AVOIDANCE OF DOUBT, NOTHING IN THIS SECTION 12.03(a) SHALL IN ANY MANNER LIMIT OR OTHERWISE RESTRICT (i) THE OBLIGATION OF THE NVE 

 

 

 

 

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PARTIES TO PAY THE MONTHLY PAYMENT IN ACCORDANCE WITH SECTION 3.06 OR (ii) A PARTY FROM COLLECTING ANY AMOUNT VALIDLY OWING UNDER AND CALCULATED IN ACCORDANCE WITH SECTIONS 2.02(e), 5.07, 16.02(d), (e), (g) AND (h), AND 16.04.

 

(b) IN NO EVENT SHALL THE MANAGING PARTY (IN RESPECT OF ON LINE), EITHER NVE PARTY (IN RESPECT OF THE TRANSMISSION LINE) OR GREAT BASIN (IN RESPECT OF THE GREAT BASIN SEGMENTS) BE LIABLE UNDER THIS AGREEMENT FOR ANY LOSS OR DAMAGE WHATSOEVER ARISING FROM THE FAILURE TO DISCOVER DEFECTS INHERENT IN THE DESIGN OF ON LINE OR THE EQUIPMENT COMPRISING ON LINE (IN THE CASE OF THE MANAGING PARTY OR EITHER NVE PARTY) OR THE GREAT BASIN SEGMENTS OR THE EQUIPMENT COMPRISING THE GREAT BASIN SEGMENTS (IN THE CASE OF GREAT BASIN OR EITHER NVE PARTY).

 

(c) EXCEPT FOR ANY JUDGMENT DEBT FOR DAMAGE RESULTING FROM WILLFUL MISCONDUCT/GROSS NEGLIGENCE OR EXCEPT TO THE EXTENT ANY JUDGMENT DEBT IS COLLECTIBLE FROM INSURANCE PROCEEDS, NONE OF THE MANAGING PARTY (IN ITS CAPACITY AS SUCH), EITHER NVE PARTY (IN ITS CAPACITY AS OPERATOR OF THE TRANSMISSION LINE, MAINTAINER OF ON LINE OR IN CONNECTION WITH ITS OBLIGATIONS UNDER SECTIONS 13.04 AND 14.04) AND GREAT BASIN (IN ITS CAPACITY AS MAINTAINER OF THE GREAT BASIN SEGMENTS OR IN CONNECTION WITH ITS OBLIGATIONS UNDER SECTIONS 13.06 AND 14.06) SHALL BE LIABLE FOR ANY CLAIMS WHETHER OR NOT RESULTING FROM SUCH PERSON’S NEGLIGENCE, OR THE NEGLIGENCE OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS, OR ANY PERSON OR ENTITY WHOSE NEGLIGENCE WOULD BE IMPUTED TO SUCH PERSON, ARISING IN CONNECTION WITH THE PERFORMANCE OR NON-PERFORMANCE OF ANY OF ITS OBLIGATIONS AS THE MANAGING PARTY, AS THE OPERATOR OF THE TRANSMISSION LINE OR AS MAINTAINER OF ON LINE OR UNDER SECTIONS 13.04 OR 14.04, OR AS THE MAINTAINER OF THE GREAT BASIN SEGMENTS OR UNDER SECTIONS 13.06 OR 14.06 (AS APPLICABLE) UNDER THIS AGREEMENT OR ANY ON LINE AGREEMENT OR ANY MAINTENANCE AGREEMENT IN RESPECT OF THE GREAT BASIN SEGMENTS, EXCEPT THE OBLIGATION TO PROVIDE EACH PARTY WITH ITS CAPACITY ENTITLEMENT (SUBJECT TO THE TERMS OF THIS AGREEMENT) FOLLOWING THE RESOLUTION OF ANY DISPUTE UNDER SECTION 19.02 REGARDING SUCH OBLIGATION.

 

(d) A CLAIM BASED ON WILLFUL MISCONDUCT/GROSS NEGLIGENCE MUST BE PERFECTED BY SUBMITTING A NOTICE UNDER SECTION 19.02(a) WITHIN TWO (2) YEARS AFTER THE LATER OF (A) THE DATE ON WHICH THE WILLFUL MISCONDUCT/GROSS NEGLIGENCE OCCURS, AND (B) THE DATE ON WHICH THE CLAIMING PARTY FIRST DISCOVERS OR OUGHT REASONABLY TO HAVE FIRST DISCOVERED THE OCCURRENCE OF THE WILLFUL MISCONDUCT/GROSS NEGLIGENCE.  ALL CLAIMS MADE AFTER 

 

 

 

 

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SUCH TIME RELATING TO THE SAME WILLFUL MISCONDUCT/GROSS NEGLIGENCE WILL BE BARRED BY THIS SECTION 12.03(d).  IF A JUDGMENT DEBT AGAINST THE MANAGING PARTY (IN ITS CAPACITY AS SUCH), EITHER NVE PARTY (IN ITS CAPACITY AS OPERATOR OF THE TRANSMISSION LINE, MAINTAINER OF ON LINE OR IN CONNECTION WITH ITS OBLIGATIONS UNDER SECTIONS 13.04 AND 14.04) OR GREAT BASIN (IN ITS CAPACITY AS MAINTAINER OF THE GREAT BASIN SEGMENTS OR IN CONNECTION WITH ITS OBLIGATIONS UNDER SECTIONS 13.06 AND 14.06) IS OBTAINED BY A PARTY AND IS COLLECTIBLE FROM INSURANCE PROCEEDS, SUCH PARTY SHALL NOT EXECUTE, LEVY OR OTHERWISE ENFORCE THE JUDGMENT (INCLUDING RECORDING OR EFFECTING A JUDGMENT LIEN) AGAINST SUCH PERSON (IN SUCH CAPACITY) OR ITS OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS AGAINST WHOM THE JUDGMENT WAS OBTAINED TO THE EXTENT OF SUCH COLLECTABILITY.

 

(e) NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, IN NO EVENT SHALL ANY NVE PARTY BE LIABLE OR IN DEFAULT UNDER THIS AGREEMENT FOR ANY ACT OR OMISSION UNDERTAKEN IN ITS CAPACITY AS A TRANSMISSION OR INTERCONNECTION PROVIDER OR A GENERATION OWNER.

 

(f) NONE OF THE MANAGING PARTY (IN ITS CAPACITY AS SUCH), EITHER NVE PARTY (IN ITS CAPACITY AS OPERATOR OF THE TRANSMISSION LINE, MAINTAINER OF ON LINE OR IN CONNECTION WITH ITS OBLIGATIONS UNDER SECTIONS 13.04 AND 14.04) AND GREAT BASIN (IN ITS CAPACITY AS MAINTAINER OF THE GREAT BASIN SEGMENTS OR IN CONNECTION WITH ITS OBLIGATIONS UNDER SECTIONS 13.06 AND 14.06) SHALL BE IN BREACH OF THIS AGREEMENT TO THE EXTENT IT RESULTS FROM ANOTHER PARTY’S BREACH OF THIS AGREEMENT.

 

(g) NO IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY SHALL APPLY IN CONNECTION WITH THE MANAGING PARTY’S (IN ITS CAPACITY AS SUCH), EITHER NVE PARTY’S (IN ITS CAPACITY AS OPERATOR OF THE TRANSMISSION LINE, MAINTAINER OF ON LINE OR IN CONNECTION WITH ITS OBLIGATIONS UNDER SECTIONS 13.04 AND 14.04) OR GREAT BASIN’S (IN ITS CAPACITY AS MAINTAINER OF THE GREAT BASIN SEGMENTS OR IN CONNECTION WITH ITS OBLIGATIONS UNDER SECTIONS 13.06 AND 14.06) PERFORMANCE OR NON-PERFORMANCE OF ITS OBLIGATIONS AS MANAGING PARTY, AS OPERATOR OF THE TRANSMISSION LINE OR AS MAINTAINER OF ON LINE OR UNDER SECTIONS 13.04 OR 14.04, OR AS MAINTAINER OF THE GREAT BASIN SEGMENTS OR UNDER SECTIONS 13.06 OR 14.06, RESPECTIVELY, UNDER THIS AGREEMENT OR ANY ON LINE AGREEMENT OR ANY MAINTENANCE AGREEMENT IN RESPECT OF THE GREAT BASIN SEGMENTS AND ARE EXPRESSLY WAIVED BY THE OTHER PARTIES.  IT IS UNDERSTOOD AND AGREED THAT NONE OF THE MANAGING PARTY (IN ITS CAPACITY AS 

 

 

 

 

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SUCH), EITHER NVE PARTY (IN ITS CAPACITY AS OPERATOR OF THE TRANSMISSION LINE, MAINTAINER OF ON LINE OR IN CONNECTION WITH ITS OBLIGATIONS UNDER SECTIONS 13.04 AND 14.04) AND GREAT BASIN (IN ITS CAPACITY AS MAINTAINER OF THE GREAT BASIN SEGMENTS OR IN CONNECTION WITH ITS OBLIGATIONS UNDER SECTIONS 13.06 AND 14.06) IS GUARANTEEING OR UNDERTAKING TO PROCURE ANY FINANCIAL OR OTHER OUTCOME WITH RESPECT TO ON LINE OR THE GREAT BASIN SEGMENTS.

 

 

           12.04 Survival of Representations and Warranties.

 

             (a) Except as otherwise set forth in the Security Documents, the SNIP Agreement, the Intercreditor Agreements and any consent to assignment executed pursuant to Section 18.02(b), the respective representations and warranties of the Parties contained in this Agreement or in any schedule, exhibit or certificate attached hereto or delivered pursuant to Section 2.04 shall survive the Acquisition Closing as follows:  (a) the representations and warranties in Sections 17.01(a)-(g) and 17.02(a) shall survive forever, (b) the representations and warranties in Section 17.02(d)(vi) shall survive for five (5) years after the Acquisition Closing, and (c) all other representations and warranties shall survive for three (3) years after the Acquisition Closing.  No Party shall have any liability whatsoever with respect to any representation and warranty unless a claim is made hereunder prior to the expiration of the applicable survival period for such representation and warranty, in which case such representation and warranty shall survive as to such claim until such claim has been finally resolved.

         

             (b) Notwithstanding anything to the contrary contained in this Agreement, Great Basin’s maximum aggregate liability for Claims which may be recovered for breaches of representations or warranties contained in Sections 17.02(b)-(d) pursuant to Section 12.01(a)(ii) shall be an amount equal to the net amount set forth on the Closing Statement; provided, however, that there shall be no maximum aggregate liability in connection with Claims for gross negligence, willful misconduct or fraud.

 

ARTICLE XIII

 

INSURANCE AND EVENTS OF LOSS

 

           13.01 Insurance.  Each Party shall maintain or cause to be maintained insurance of the types, in the amounts and with the deductibles specified in the Insurance Plan, as it may be amended by the Management Committee from time to time.

 

           13.02 Damage or Destruction.  The Parties shall, promptly after any Event of Loss, determine whether the Event of Loss exceeds the applicable Loss Threshold.  If the Parties reasonably determine that the estimated cost or cost and time, as applicable, to repair or replace the Transmission Line (or the applicable portion thereof) following an Event of Loss will exceed any applicable Loss Threshold, then, with respect to an Event of Loss affecting ON Line, the Parties shall initiate the Wind-Up Events unless the Parties decide to repair or replace ON Line (or the applicable portion thereof).

 

 

 

 

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           13.03 Distribution of Insurance Proceeds.  If the Parties reasonably determine that the estimated cost or cost and time to repair or replace ON Line (or any portion thereof) following an Event of Loss will not exceed any applicable Loss Threshold, or if the Parties reasonably determine that the estimated cost or cost and time to repair or replace ON Line (or the applicable portion thereof) following an Event of Loss will exceed an applicable Loss Threshold but the Parties agree to repair or replace ON Line (or the applicable portion thereof), then any Insurance Proceeds received by a Party in respect of such Event of Loss with respect to ON Line, to the extent there are any, shall be used to repair or replace ON Line (or the applicable portion thereof); provided that in the event the Insurance Proceeds exceed the actual repair and replacement costs (the “Excess Insurance Proceeds”), such Excess Insurance Proceeds shall be distributed to the NVE Parties.  If (a) the Parties initiate the Wind-Up Events under Section 13.02 or (b) one Party purchases the Ownership Interests of any other Party under Section 13.05(a), any Insurance Proceeds shall be distributed to each Party in proportion to the aggregate percentage of Total Costs paid by such Party as of the time such Insurance Proceeds are received (prior to giving effect to any Transfer contemplated by Section 13.05(a)) to the extent (if applicable) any such Insurance Proceeds are not needed to pay any costs incurred in connection with the retirement of ON Line.  If any Insurance Proceeds related to ON Line are received by a Party after termination of this Agreement, then any such Insurance Proceeds shall be promptly paid to the other Parties to the extent contemplated by this Section 13.03; provided, however, that (a) if this Agreement is terminated following consummation of a transaction whereby the NVE Parties have purchased Great Basin’s Ownership Interests for a price determined in accordance with Section 16.02(d) or Schedule 5, Great Basin shall promptly pay any Insurance Proceeds it receives following such termination to the NVE Parties, and (b) if this Agreement is terminated following consummation of any other transaction involving the purchase by Great Basin of all of the NVE Parties’ Ownership Interests or the purchase by one or both of the NVE Parties of all of Great Basin’s Ownership Interests, and the Insurance Proceeds in question are reflected in the purchase price, then the selling Party or Parties shall promptly pay any such Insurance Proceeds received following such termination to the acquiring Party or Parties.

 

           13.04 Payment of Restoration Costs.  If the Parties reasonably determine that the estimated cost or cost and time, as applicable, to repair or replace ON Line (or any portion thereof) following an Event of Loss will not exceed any applicable Loss Threshold, or if the Parties reasonably determine that the estimated cost or cost and time, as applicable, to repair or replace ON Line (or the applicable portion thereof) following an Event of Loss will exceed an applicable Loss Threshold but the Parties agree to repair or replace ON Line (or the applicable portion thereof), then (a) NPC shall promptly create a new budget for the reconstruction of ON Line consistent with the determination by the Parties of the estimated cost or time to repair or replace ON Line (or any portion thereof), subject to the approval of the Management Committee (the “Event of Loss Budget”), (b) NPC shall proceed under the Management Committee’s supervision to cause the repair and replacement of ON Line (or the applicable portion thereof) and (c) the NVE Parties shall pay for any repair and replacement costs not otherwise paid for by Insurance Proceeds (“Event of Loss Costs”) in accordance with the Event of Loss Budget.  Great Basin shall elect or not elect to fund the Event of Loss Costs at or before Management Committee approval of the Event of Loss Budget.  If Great Basin does not timely elect to fund any such Event of Loss Costs, Great Basin shall have no right or obligation to fund its Ownership Percentage of any such Event of Loss Costs.  If Great Basin does timely elect (such 

 

 

 

 

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election being irrevocable) to fund its Ownership Percentage of any such Event of Loss Costs, then Great Basin shall timely fund its Ownership Percentage of any such Event of Loss Costs, and the amount funded by Great Basin in respect of Event of Loss Costs shall be reflected in the Monthly Payment, as provided in Section 3.06.  To the extent that Great Basin does not timely fund its Ownership Percentage of any Event of Loss Costs, the NVE Parties may fund any such portion, and, within fifteen (15) days after receipt of PUCN Approval and all required Governmental Approvals on terms acceptable to the NVE Parties, each Party’s Ownership Percentage shall be adjusted such that, following the adjustment, such Party’s Ownership Percentage shall equal a ratio (x) the numerator of which is equal to the portion of the Total Costs paid by such Party and (y) the denominator of which equals the Total Costs, and Great Basin shall Transfer the portion of its Ownership Interest corresponding to its excess above its revised Ownership Percentage to the NVE Parties free and clear of any Liens other than Permitted Liens.  Great Basin shall execute and record any bills of sale, deeds, certificates, memorandum and other documentation as reasonably requested by the NVE Parties to evidence the re-allocation of such interests.  Great Basin shall make Applicable Transfer Representations and Warranties in connection with such Transfer.  Notwithstanding anything to the contrary in this Agreement, neither NPC nor SPPC shall be required to pay for any Event of Loss Costs that are not in accordance with the applicable Event of Loss Budget.

 

           13.05 Rebuild or Repair by a Single Party; Fair Market Value.

 

(a) If, following an Event of Loss with respect to ON Line that the Parties reasonably determine will exceed any applicable Loss Threshold, any Party (a “Withdrawing Party”) desires to retire ON Line (or the applicable portion thereof) and any other Party desires to rebuild, repair or replace ON Line (or the applicable portion thereof), then any Party desiring to rebuild, repair or replace ON Line (or the applicable portion thereof) shall have the right to purchase any Withdrawing Party’s Ownership Interests by delivery to the Parties of written notice within thirty (30) days after such determination.  Upon receiving such written notice from a Party, each Withdrawing Party shall Transfer its Ownership Interests to such continuing Party free and clear of any Liens other than Permitted Liens on a date no later than fifteen (15) days from receipt of such written notice and receipt of PUCN Approval and all required Governmental Approvals on terms acceptable to the NVE Parties, and such continuing Party shall pay to each Withdrawing Party an amount equal to the Fair Market Value of such Withdrawing Party’s Ownership Interest.  Each Withdrawing Party shall make Applicable Transfer Representations and Warranties to each continuing Party in connection with such Transfer.

 

(b) For the purposes of this Agreement, “Fair Market Value” means the cash price at which a willing seller would sell and a willing buyer would buy the applicable Ownership Interests, each being apprised of all relevant facts, as determined pursuant to the provisions of this Section 13.05(b).  In order to determine the Fair Market Value, the NVE Parties and Great Basin shall each, within fifteen (15) Business Days after the transferring Party’s receipt of the notice of the acquisition, designate a qualified appraiser.  A qualified appraiser shall be an appraiser with at least five (5) years of experience in the appraisal of properties similar to ON Line.  If the NVE Parties or Great Basin fails to select an appraiser within such fifteen (15)-Business Day period, then the selected appraiser shall, within fifteen 

 

 

 

 

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(15) days thereafter, appoint a second appraiser with similar qualifications (who shall not have performed any work for the Party having selected the selected appraiser or its Affiliates within the five (5)-year period immediately prior to his or her appointment) who shall be deemed to have been appointed by the Party that failed to select an appraiser.  Each of the two (2) appraisers shall be directed to determine the Fair Market Value of the transferring Party’s Ownership Interests within thirty (30) days of the appointment of the second appraiser and to notify each Party of his or her determination.  If the lower of the two (2) determinations is not less than ninety-five percent (95%) of the higher of the two (2) determinations, then the Fair Market Value shall be the average of the two (2) determinations and such amount shall be binding upon the Parties.  If the lower of the two (2) determinations is less than ninety-five percent (95%) of the higher of the two (2) determinations, then the two (2) appraisers shall, within fifteen (15) days thereafter, appoint a third appraiser with similar qualifications (who shall not have performed any work for any Party or its Affiliates within the five (5)-year period immediately prior to his or her appointment) and shall each furnish to such third appraiser a written report of his or her respective determination.  Within thirty (30) days of his or her appointment, the third appraiser shall select the Fair Market Value of one or the other of the original appraisers and shall notify each Party of his or her determination, which shall be binding upon the Parties.  The third appraiser must select one (1) of the two (2) appraisals and shall not have the right to establish a different Fair Market Value determination.  The NVE Parties and Great Basin shall bear the cost of the appraiser appointed by each such Party (or deemed appointed by each such Party), and the NVE Parties and Great Basin shall each bear fifty percent (50%) of the cost of the third appraiser (if any).  Notwithstanding anything to the contrary herein, the NVE Parties or Great Basin may request a new determination for Fair Market Value if the Transfer of Ownership Interest occurs nine (9) months or more after the completion of any appraisal previously used by the Parties to determine Fair Market Value.

 

           13.06 Great Basin Segment Event of Loss.  Great Basin shall promptly after any Event of Loss affecting all or any portion of the Great Basin Segments notify the Management Committee of such Event of Loss.  If such Event of Loss does not exceed a Loss Threshold for the Great Basin Segments, then Great Basin shall promptly repair and replace the Great Basin Segments (or the applicable portion thereof) at its own cost.  If such Event of Loss does exceed a Loss Threshold for the Great Basin Segments, as reasonably determined by the Parties, then Great Basin may rebuild and replace the Great Basin Segments (or any applicable portion thereof) at its own expense.  Any Insurance Proceeds paid in respect of the Great Basin Segments shall be paid to Great Basin.

 

           13.07 Event of Loss Threshold Deadlock.  If a Loss Threshold Deadlock arises regarding any Event of Loss, such Loss Threshold Deadlock shall be referred to a panel consisting of a senior executive (President or Vice President) of each Party with the authority to resolve the Loss Threshold Deadlock.  If such Loss Threshold Deadlock is not resolved for any reason within fifteen (15) days after the panel of senior executives has convened or within thirty (30) days after the Loss Threshold Deadlock occurred, whichever occurs sooner, then resolution of such Loss Threshold Deadlock shall be determined using the procedures in this Section 13.07.  The Loss Threshold Deadlock shall be determined by a qualified independent engineer selected by the Parties.  If the Parties are unable to select a qualified independent engineer within fifteen (15) days after any Party has proposed a qualified independent engineer, any Party may submit 

 

 

 

 

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the selection of such qualified independent engineer to the AAA.  The qualified independent engineer shall have significant experience regarding the Loss Threshold Deadlock matter and shall not have worked for any Party or an Affiliate thereof within five (5) years preceding appointment thereof and shall make the determination within thirty (30) days after appointment, or as soon thereafter as is practicable.  The Parties shall reasonably cooperate with the qualified independent engineer, and their agreement to submit Loss Threshold Deadlocks under this Section 13.07 to the qualified independent engineer shall be enforceable as an agreement to arbitrate.  The decision of the qualified independent engineer shall be final, binding and conclusive upon the Parties, shall not be subject to challenge or appeal, and may be enforced in any court having jurisdiction in the same manner as an arbitral award.

 

ARTICLE XIV

 

CONDEMNATION

 

           14.01 Participation in Condemnation Action.  Each Party shall have the right, at its own cost and expense, to appear in any Condemnation Action and to participate in any and all hearings, trials and appeals therein.  No Party shall accept or agree to any conveyance in lieu of any Condemnation Action unless agreed upon by the Parties.

 

           14.02 Taking.  If title to all or any part of the Transmission Line shall be taken in any Condemnation Action, other than for a temporary use or occupancy, the Parties shall, promptly after such Condemnation Action, determine whether the Condemnation Action exceeds the applicable Loss Threshold.  If the Parties reasonably determine that the estimated cost or cost and time, as applicable, to replace the Transmission Line (or any portion thereof) following a Condemnation Action will exceed any applicable Loss Threshold (a “Complete Taking”), then, with respect to a Condemnation Action affecting ON Line, the Parties shall initiate the Wind-Up Events unless the Parties decide to replace the affected ON Line assets.  ON Line shall not be wound-up as a result of a Condemnation Action that does not give rise to a Complete Taking (a “Partial Taking”).

 

           14.03 Distribution of Condemnation Awards.  Upon the occurrence of a Partial Taking or upon the occurrence of a Complete Taking and the agreement of the Parties to continue ON Line activities, then any Condemnation Awards received by a Party in respect of such Partial Taking or Complete Taking, as applicable, shall be used to replace ON Line (or the applicable portion thereof); provided that in the event the Condemnation Award exceeds the actual restoration cost (the “Excess Condemnation Award”), such Excess Condemnation Award shall be distributed to the NVE Parties.  If (a) the Parties initiate the Wind-Up Events under Section 14.02 or (b) one Party elects to purchase the Ownership Interests of any other Party under Section 14.05, any Condemnation Award shall be distributed to each Party in proportion to the aggregate percentage of Total Costs paid by such Party as of the time such Condemnation Award is received (prior to giving effect to any Transfer contemplated by Section 14.05) to the extent (if applicable) any such Condemnation Award is not needed to pay any costs incurred in connection with the retirement of ON Line.  If any Condemnation Award with respect to ON Line is received by a Party after termination of this Agreement, then any such Condemnation Award shall be promptly paid to the other Parties to the extent contemplated by this Section 14.03; provided, however, that (a) if this Agreement is terminated following consummation of a 

 

 

 

 

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transaction whereby the NVE Parties have purchased Great Basin’s Ownership Interests for a price determined in accordance with Section 16.02(d) or Schedule 5, Great Basin shall promptly pay any Condemnation Award it receives following such termination to the NVE Parties, and (b) if this Agreement is terminated following consummation of any other transaction involving the purchase by Great Basin of all of the NVE Parties’ Ownership Interests or the purchase by one or both of the NVE Parties of all of Great Basin’s Ownership Interests, and the Condemnation Award in question is reflected in the purchase price, then the selling Party or Parties shall promptly pay any such Condemnation Award received following such termination to the acquiring Party or Parties.

 

           14.04 Payment of Restoration Costs.  Upon the occurrence of a Partial Taking or upon the occurrence of a Complete Taking and the agreement of the Parties to continue ON Line activities, then (a) NPC shall promptly create a new budget for the reconstruction of ON Line consistent with the determination by the Parties of the estimated cost or cost and time to replace ON Line (or any portion thereof), subject to the approval of the Management Committee (the “Condemnation Action Budget”), (b) NPC shall proceed under the Management Committee’s supervision to cause the replacement of the affected portion of ON Line and (c) the NVE Parties shall pay for any replacement costs not otherwise paid for by Condemnation Award (“Condemnation Action Costs”) in accordance with the Condemnation Action Budget.  Great Basin shall elect or not elect to fund the Condemnation Action Costs at or before Management Committee approval of the Condemnation Action Budget.  If Great Basin does not timely elect to fund any such Condemnation Action Costs, Great Basin shall have no right or obligation to fund its Ownership Percentage of any such Condemnation Action Costs.  If Great Basin does timely elect (such election being irrevocable) to fund its Ownership Percentage of any such Condemnation Action Costs, then Great Basin shall timely fund its Ownership Percentage of any such Condemnation Action Costs, and the amount funded by Great Basin in respect of Condemnation Action Costs shall be reflected in the Monthly Payment, as provided in Section 3.06.  To the extent that Great Basin does not timely fund its Ownership Percentage of any Condemnation Action Costs, the NVE Parties may fund any such portion, and, within fifteen (15) days after receipt of PUCN Approval and all required Governmental Approvals on terms acceptable to the NVE Parties, each Party’s Ownership Percentage shall be adjusted such that, following the adjustment, such Party’s Ownership Percentage shall equal a ratio (x) the numerator of which is equal to the portion of the Total Costs paid by such Party and (y) the denominator of which equals the Total Costs, and Great Basin shall Transfer the portion of its Ownership Interest corresponding to its excess above its revised Ownership Percentage to the NVE Parties free and clear of any Liens other than Permitted Liens.  Great Basin shall execute and record any bills of sale, deeds, certificates, memorandum and other documentation as reasonably requested by the NVE Parties to evidence the re-allocation of such interests.  Great Basin shall make Applicable Transfer Representations and Warranties in connection with such Transfer.  Notwithstanding anything to the contrary in this Agreement, neither NPC nor SPPC shall be required to pay for any Condemnation Action Costs that are not in accordance with the applicable Condemnation Action Budget.

 

           14.05 Rebuild or Repair by a Single Party.  If, following a Complete Taking as reasonably determined by the Parties, any Party desires to retire ON Line and any other Party desires to rebuild or replace the condemned portion of ON Line, then the Party 

 

 

 

 

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desiring to rebuild or replace the condemned portion of ON Line shall have the right to purchase any Withdrawing Party’s Ownership Interests by delivery to the other Parties of written notice within thirty (30) days after such Management Committee determination.  Upon receiving written notice from any Party desiring to rebuild or replace the condemned portion of ON Line exercising such right, each Withdrawing Party shall Transfer its Ownership Interests to such continuing Party free and clear of any Liens other than Permitted Liens on a date no later than fifteen (15) days from receipt of such written notice and receipt of PUCN Approval and all required Governmental Approvals on terms acceptable to the NVE Parties, and such continuing Party shall pay to each Withdrawing Party an amount equal to the Fair Market Value of such Withdrawing Party’s Ownership Interest.  Each Withdrawing Party shall make Applicable Transfer Representations and Warranties to each continuing Party in connection with such Transfer.

 

           14.06 Great Basin Segment Condemnation.  Great Basin shall promptly after any Condemnation Action affecting all or any portion of the Great Basin Segments notify the Management Committee of such Condemnation Action.  If such Condemnation Action does not exceed a Loss Threshold for the Great Basin Segments, then Great Basin shall promptly rebuild and replace the Great Basin Segments (or the applicable portion thereof) at its own cost.  If such Condemnation Action does exceed a Loss Threshold for the Great Basin Segments, as reasonably determined by the Parties, then Great Basin may rebuild and replace the Great Basin Segments (or any applicable portion thereof) at its own expense.  Any Condemnation Awards paid in respect of the Great Basin Segments shall be paid to Great Basin.

 

           14.07 Condemnation Action Threshold Deadlock.  If a Loss Threshold Deadlock arises regarding any Condemnation Action, such Loss Threshold Deadlock shall be referred to a panel consisting of a senior executive (President or Vice President) of each Party with the authority to resolve the Loss Threshold Deadlock.  If such Loss Threshold Deadlock is not resolved for any reason within fifteen (15) days after the panel of senior executives has convened or within thirty (30) days after the Loss Threshold Deadlock occurred, whichever occurs sooner, then resolution of such Loss Threshold Deadlock shall be determined using the procedures in this Section 14.07.  The Loss Threshold Deadlock shall be determined by a qualified independent engineer selected by the Parties.  If the Parties are unable to select a qualified independent engineer within fifteen (15) days after any Party has proposed a qualified independent engineer, any Party may submit the selection of such qualified independent engineer to the AAA.  The qualified independent engineer shall have significant experience regarding the Loss Threshold Deadlock matter and shall not have worked for any Party or an Affiliate thereof within five (5) years preceding appointment thereof and shall make the determination within thirty (30) days after appointment, or as soon thereafter as is practicable.  The Parties shall reasonably cooperate with the qualified independent engineer, and their agreement to submit Loss Threshold Deadlocks under this Section 14.07 to the qualified independent engineer shall be enforceable as an agreement to arbitrate.  The decision of the qualified independent engineer shall be final, binding and conclusive upon the Parties, shall not be subject to challenge or appeal, and may be enforced in any court having jurisdiction in the same manner as an arbitral award.

 

 

 

 

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ARTICLE XV

 

TRANSFERS AND CHANGES OF CONTROL

 

           15.01 Transfers.

 

(a) Except for Permitted Transfers, no Party may Transfer all or any portion of its Ownership Interests or its rights or obligations under this Agreement without the prior written approval of the other Parties, which approval shall not be unreasonably withheld, conditioned or delayed.  Except for Permitted Transfers, Great Basin shall not Transfer any ownership interest in the Great Basin Segments without the prior written approval of the other Parties, which approval shall not be unreasonably withheld, conditioned or delayed.  For purposes of this Section 15.01, any grounds that are reasonably likely to have a material adverse effect on a non-Transferring Party, any proposed Transfer of less than all of a Party’s Ownership Interests and any proposed Transfer of less than all of Great Basin’s ownership interests in the Great Basin Segments, in each case shall constitute reasonable grounds for withholding or conditioning approval and shall be described to the Transferring Party in reasonable detail if such approval is withheld or conditioned.

 

(b) No Transfer of Ownership Interests or any rights or obligations under this Agreement shall be permitted, or shall become effective, unless such Transfer includes a corresponding and equivalent Transfer of all associated rights and obligations of the Transferring Party in its Ownership Interests and this Agreement.  No Transfer of ownership interests in the Great Basin Segments or any rights or obligations under this Agreement with respect thereto shall be permitted, or shall become effective, unless such Transfer includes a corresponding and equivalent Transfer of all associated rights and obligations of Great Basin in its ownership interests in the Great Basin Segments and this Agreement.

 

(c) Any Party may allow any of its transmission or other customers to transmit electricity on or otherwise utilize its Electrical Capacity, Fiber Optic Capacity or Microwave Capacity pursuant to ordinary course transactions entered into in accordance with such Party’s Open Access Transmission Tariff without the prior written consent of the other Parties; provided, that such customers utilize such capacity in accordance with the terms of this Agreement.  Any exercise by a Party of its rights under this Section 15.01(c) shall not relieve such Party of its obligations under this Agreement.

 

(d) Any Transfer that is made in violation of this Agreement shall be void ab initio.

 

15.02 Right of First Refusal and Right of First Offer.

 

(a) ROFR.

 

                (i)  If any Party receives an unsolicited offer (other than an offer that, if consummated, would constitute a Permitted Transfer pursuant to Sections 15.03(a)-(g)) from a non-Affiliated third-Person to Transfer all or part of its Ownership Interests, the Transferring Party may make such Transfer only if it has complied with the provisions of this Section 15.02 and such Transfer is made in accordance with the other 

 

 

 

 

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requirements of this Article XV.  Prior to making such Transfer, the Transferring Party shall give to the other Parties written notice (except a Party that, at the time, is in default under Sections 16.01(a), (f) or (g)) of the proposed transaction (the “ROFR Offer Notice”), which notice shall fully disclose (A) the terms of the proposed transaction, (B) the Ownership Interests subject to the ROFR Offer Notice (the “ROFR Offered Interest”), (C) the identity of the proposed transferee and (D) the date on which the offer shall expire if not accepted, which shall be at least thirty (30) days after each other Party has received the ROFR Offer Notice (the “ROFR Offer Deadline”).

 

                (ii)  Upon receipt of a ROFR Offer Notice, any Party receiving such notice shall have a right to acquire all (but not less than all) of the ROFR Offered Interest, upon the same terms and conditions that are set forth in the ROFR Offer Notice, by giving written notice to the Transferring Party on or prior to the ROFR Offer Deadline stating that it elects to acquire the ROFR Offered Interest (the “ROFR Return Notice”), which election may be subject to receipt of PUCN Approval and any required Governmental Approvals on terms acceptable to the NVE Parties.  A failure to give the ROFR Return Notice by the ROFR Offer Deadline shall be deemed to be an election not to acquire the ROFR Offered Interest and, if both other Parties elect not to acquire the ROFR Offered Interest, subject to the Transferring Party’s compliance with the provisions of Section 15.01, Sections 15.02(a) and (d) and Section 15.04, the ROFR Offered Interest may be thereafter Transferred to the non-Affiliated third-Person as long as the terms of such Transfer are the same as, or more favorable to the Transferring Party than, those described in the ROFR Offer Notice.

 

(b) ROFO.

 

                (i)  Except with respect to any Transfer that, if consummated, would constitute a Permitted Transfer pursuant to Sections 15.03(a)-(g) and any Transfer subject to Section 15.02(a), a Transferring Party may make a Transfer of any Ownership Interests only if it has complied with the requirements of this Section 15.02 and such Transfer is made in accordance with the other requirements of this Article XV.  Prior to initiating any auction or sales process, the Transferring Party shall give to the other Parties written notice (except a Party that, at the time, is in default under Sections 16.01(a), (f) or (g)) of the proposed transaction (the “ROFO Offer Notice”) setting forth the Ownership Interests the Transferring Party proposes to Transfer (the “ROFO Offered Interest”).

 

                (ii)  Upon receipt of an ROFO Offer Notice, any Party receiving such notice shall have a right to negotiate with the Transferring Party for the purchase of the ROFO Offered Interests by giving written notice to the Transferring Party within thirty (30) days after receipt of the ROFO Offer Notice (the “ROFO Offer Deadline”) stating that it elects to negotiate to acquire the ROFO Offered Interest (the “ROFO Return Notice”).  Upon any timely delivery of a ROFO Return Notice by any Party, such Party and the Transferring Party shall negotiate exclusively and in good faith for forty-five (45) days, unless otherwise agreed by those Parties, the terms of the Transfer of the ROFO Offered Interests.  A failure to give the ROFO Return Notice by the ROFO 

 

 

 

 

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Offer Deadline shall be deemed to be an election not to negotiate to acquire the ROFO Offered Interest and, if both other Parties elect not to negotiate to acquire the ROFO Offered Interest or the applicable Parties do not agree on the Transfer of the ROFO Offered Interests within such forty-five (45) day period, subject to the Transferring Party’s compliance with the provisions of Section 15.01, Sections 15.02(b) and (d) and Section 15.04, the ROFO Offered Interest may be thereafter Transferred.

 

(c) Acquisition.  If a Party elects to exercise its right to acquire any ROFR Offered Interest or the Transferring Party and any other Party agree to a Transfer of any ROFO Offered Interest to any such other Party, then the acquiring Party (the “Acquiring Party”) and the Transferring Party shall execute such instruments as may be necessary and appropriate to effectuate the Transfer of the applicable Offered Interests as soon as practicable to the Acquiring Party, free and clear of all Liens (i) in the case of ROFR Offered Interests, which are not by the terms of the ROFR Offer Notice specifically identified as surviving the Transfer of the ROFR Offered Interest and (ii) in the case of ROFO Offered Interest, other than Permitted Liens.  The Acquiring Party shall close on the acquisition of the applicable Offered Interests within fifteen (15) days after (i) in the case of ROFR Offered Interests, the Transferring Party has satisfied all conditions precedent contained in the ROFR Offer Notice and (ii) the Acquiring Party has received PUCN Approval and all required Governmental Approvals on terms acceptable to the NVE Parties.  The Transferring Party shall make the following representations and warranties to the Acquiring Party in connection with such Transfer: (i) in the case of ROFR Offered Interests, the representations and warranties set forth in the applicable ROFR Offer Notice, and (ii) in the case of ROFO Offered Interests, Applicable Transfer Representations and Warranties.  Failure to close on the acquisition of the applicable Offered Interests within such time period shall be deemed to be a rejection of the ROFR Offer Notice or ROFO Offer Notice, as applicable, if such failure is solely attributable to the Acquiring Party.

 

(d) Reattachment of Transfer Restrictions.  The right of the Transferring Party to Transfer Offered Interests shall once again be subject to the requirements of this Section 15.02 as if the Transferring Party had never offered the Offered Interests to any non-Transferring Party if the Transferring Party (i) fails to consummate the Transfer of the Offered Interests to a third Person within (A) one hundred eighty (180) days after the date of the applicable Offer Notice or (B) if both Parties elect not to acquire the applicable Offered Interest, ninety (90) days after the later of such election or (ii) in the case of the ROFR Offered Interests, undertakes to, without the written consent of each other Party, Transfer such ROFR Offered Interests to Persons other than those Persons whose identity was disclosed in the ROFR Offer Notice, which consent will not be unreasonably withheld, conditioned or delayed, or upon terms and conditions less favorable to the Transferring Party than the terms and conditions than were contained in the ROFR Offer Notice.

 

           15.03 Permitted Transfers.  Although the following shall constitute a Transfer under this Agreement, no consent of any other Party shall be required for any of the following Transfers or corresponding and equivalent Transfers of this Agreement (each, a “Permitted Transfer”):

 

 

 

 

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(a) A Transfer by SPPC to NPC of all or part of its Ownership Interests, or any Transfer by SPPC or NPC by way of a merger or consolidation with each other, an Affiliate or any other Person;

 

(b) Subject to Article XVIII, (i) a Party’s collateral assignment, mortgage, hypothecation, pledge or other encumbrance of its Ownership Interests in favor of the ON Line Lenders or NVE Lenders, as applicable and (ii) any such lender(s)’ foreclosure on such Ownership Interests, or assignment of such Ownership Interests to any subsequent assignee in connection with the sale, transfer or exchange of its rights, in connection with the exercise of its rights and enforcement of its remedies under the applicable financing and security instruments;

 

(c) Subject to Article XVIII, (i) Great Basin’s collateral assignment, mortgage, hypothecation, pledge or other encumbrance of its ownership interests in the Great Basin Segments in favor of the GB Segment Lenders and (ii) any such lender(s)’ foreclosure on such ownership interests, or assignment of such ownership interests to any subsequent assignee in connection with the sale, transfer or exchange of its rights, in connection with the exercise of its rights and enforcement of its remedies under the applicable financing and security instruments;

 

(d) A Transfer (other than by operation of law) by NPC or SPPC of its Ownership Interests to any successor to NPC or SPPC if such successor is a public utility holding a certificate of public convenience and necessity granted by the PUCN pursuant to Chapter 704 of the Nevada Revised Statutes;

 

(e) A one-time Transfer by Great Basin of either all of its Ownership Interests or all of its ownership interests in the Great Basin Segments to one Affiliate which is controlled by or under Common Control with Great Basin (the “Affiliated Assignee”) prior to or concurrently with GB Segment Financial Closing; provided, that, except with the NVE Parties’ prior written consent: (i) such Transfer has no effect on the NVE Parties’ rights nor increases the NVE Parties’ obligations under this Agreement, the Security Documents, any other agreement in connection herewith or otherwise and (ii) Great Basin and any such Affiliated Assignee remain jointly and severally liable for all of their obligations under this Agreement, the Security Documents and any other agreement in connection herewith;

 

(f) One-time, simultaneous Transfers (or capacity right exchanges) between Great Basin and the Affiliated Assignee at the achievement of GB Segment COD such that, upon consummation of such Transfers, (or capacity right exchanges) either:

 

                (i) Great Basin or the Affiliated Assignee will own sixty-two percent (62%) of all Ownership Interests and an undivided sixty-two percent (62%) ownership interest in the Great Basin Segments and the other party will own thirteen percent (13%) of all Ownership Interests and an undivided thirty-eight percent (38%) ownership interest in the Great Basin Segments; provided that such percentages may be subject to adjustment as determined by Great Basin in proportion to any adjustment of a Party’s Capacity Entitlement pursuant to Section 16.02(f) or Ownership Percentages pursuant to this Agreement so long as the ON Line Security Interest and GB Segment Security Interest are not affected by such adjustment; or

 

 

 

 

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                (ii) Great Basin or the Affiliated Assignee will own seventy-five percent (75%) of all Ownership Interests (subject to the capacity rights in favor of the other party and adjusted in connection with any adjustment of Ownership Percentages pursuant to this Agreement) and the other party will own one hundred percent (100%) of the Great Basin Segments (subject to capacity rights in favor of the first party);

 

provided, that (x) such Transfers have no effect on the NVE Parties’ rights or increase the NVE Parties’ obligations under this Agreement, the Security Documents, any other agreement in connection herewith or otherwise and (y) Great Basin and the Affiliated Assignee remain jointly and severally liable for all of their obligations under this Agreement, the Security Documents and any other agreement in connection herewith; and

 

(g) Transfers of Great Basin’s Ownership Interests to its Affiliates and the NVE Parties solely for the purpose of satisfying Great Basin’s obligation to the NVE Parties in connection with the NVE Parties’ exercise of a purchase option pursuant to this Agreement; and

 

(h) A Transfer by Great Basin of all of its Ownership Interests and/or all of its ownership interests in the Great Basin Segments to an Eligible Assignee.

 

           15.04 Other Transfer Restrictions.  Notwithstanding anything to the contrary, no Transfer (except Transfers under Sections 15.03(b)(i) or 15.03(c)(i)) shall be valid unless:

 

(a) The Transferring Party has notified the other Parties of the name, address, phone number, tax identification number and contact person of the transferee;

 

(b) The proposed transferee has assumed responsibility for performance of all of the liabilities and obligations of the Transferring Party under this Agreement, each ON Line Agreement, each Security Document, the Balancing Authority Area Services Agreement and otherwise relating to the Ownership Interests that the transferee acquires arising on and after the date of the Transfer pursuant to a written instrument of assignment and assumption in a form approved by the other Parties acting reasonably, which approval shall be limited to the question of whether such instrument, when duly executed, will accomplish the purposes intended under this Agreement (an “Assignment and Assumption Agreement”).  Each Assignment and Assumption Agreement shall (i) provide that the other Parties are each a third-Person beneficiary thereof, (ii) require that the transferee becomes a party to this Agreement, each ON Line Agreement (with respect to a Transfer of Ownership Interests) and each Security Document and agrees to be bound by the terms hereof and, if applicable, thereof, (iii) reflect, among other things, that the transferee’s Ownership Interests or ownership interests in the Great Basin Segments, as applicable, are subject to the terms and provisions of this Agreement, each ON Line Agreement (with respect to a Transfer of Ownership Interests ) and each Security Document and that such transferee has no greater rights in ON Line or the Great Basin Segments, as applicable, than the Transferring Party prior to the Transfer and (iv) contain representations and warranties from the transferee substantially similar to those set forth in Section 17.01.  The Transferring Party’s obligations under this Agreement, each ON Line 

 

 

 

 

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Agreement (with respect to a Transfer of Ownership Interests) and each Security Document shall be valid and binding obligations of the transferee enforceable in accordance with the terms hereof and, if applicable, thereof;

 

(c) Except as otherwise agreed in the consent to collateral assignment between the NVE Parties and the ON Line Lenders, all amounts due and owing by the Transferring Party under this Agreement shall have been paid in full;

 

(d) Such Transfer shall not result in (i) a breach or event of default under any ON Line Agreement or any Security Document or an Event of Default or breach of this Agreement, or (ii) this Agreement, any ON Line Agreement or any Security Document not being in full force and effect;

 

(e) After such Transfer, the GB Segment Security Interest and the ON Line Security Interest shall be valid, legal, perfected, in full force and effect and have the priority contemplated by Section 18.04;

 

(f) Such Transfer shall not cause ON Line or a Party to be subject to any Applicable Law to which it was not previously subject and which constitutes a Material Adverse Effect;

 

(g) Such Transfer complies with all Applicable Laws, the transferee has all necessary Governmental Approvals to comply with its obligations under this Agreement and such Transfer complies with Section 15.01(b);

 

(h) Such Transfer will not cause any portion of a non-Transferring Party’s Ownership Interests or ownership interests in the Great Basin Segments to be “tax-exempt use property” as defined in Section 168(h) of the Code (without giving effect to paragraphs (1)(c) and (3) thereof) based on an opinion from nationally-recognized tax counsel selected by the Transferring Party and reasonably acceptable to the non-Transferring Parties, delivered to each of the Parties on or prior to such Transfer, stating that such Transfer will, more likely than not, not cause the Ownership Interest of a non-Transferring Party in any portion of ON Line or the ownership interest of any non-Transferring Party in any of the Great Basin Segments to be “tax-exempt use property” as defined in Section 168(h) of the Code (without giving effect to paragraphs (1)(c) and (3) thereof);

 

(i) If the Transferee relied on its parent to satisfy the creditworthiness requirements (as set forth in the definition of Eligible Assignee), then the Transferee’s parent shall, as a condition to the effectiveness of the Transfer, deliver a guaranty in favor of the non-Transferring Parties guaranteeing all of the Transferee’s obligations under this Agreement on terms reasonably acceptable to the NVE Parties; and

 

(j) If the Transferee relied on its Affiliate to satisfy the requirement to have sufficient experience (as set forth in the definitions of Eligible Assignee and Experienced Operator) and/or to be regulated by FERC (as set forth in the definition of Eligible Assignee), then, as a condition to the effectiveness of the Transfer, the Transferee and its applicable Affiliate shall agree in writing, in a form reasonably acceptable to the NVE Parties, to remain 

 

 

 

 

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under common Control for a period of no less than four (4) years following the date of such Transfer.

 

           15.05 Change of Control.  Prior to undertaking any transaction or series of transactions that will result in a direct or indirect change of Control of Great Basin (other than (i) a change in Control of any parent of Great Basin which has material assets other than its direct or indirect ownership interest in the Transmission Line, (ii) a change in the direct or indirect ownership of Great Basin that does not result in the change in the Person that ultimately Controls Great Basin, or (iii) any transaction or series of transactions that results in an Eligible Control Party assuming Control of Great Basin), Great Basin shall promptly provide the NVE Parties with information about such transaction or transactions and the parties thereto (subject to the NVE Parties executing a confidentiality agreement with respect thereto containing customary terms) and shall cause its applicable parent company to obtain the written consent of the NVE Parties prior to consummating such transaction or transactions, not to be unreasonably withheld, conditioned or delayed; provided, however, that the consent of the NVE Parties is not required under this Section 15.05 with respect to the exercise of remedies by the ON Line Lenders under the ON Line Financing Agreements or the GB Segment Lenders under the GB Segment Financing Agreements.  As a condition to the effectiveness of any transaction or series of transactions that results in an Eligible Control Party assuming Control of Great Basin, if the Eligible Control Party relied on its parent to satisfy the creditworthiness requirements (as set forth in the definition of Eligible Assignee), then the Eligible Control Party’s parent shall, as a condition to the effectiveness of the change of Control, deliver a guaranty in favor of the NVE Parties guaranteeing all of the Eligible Control Party’s obligations under this Agreement on terms reasonably acceptable to the NVE Parties, and if the Eligible Control Party relied on its Affiliate to satisfy the requirement to have sufficient experience (as set forth in the definitions of Eligible Assignee and Experienced Operator) and/or to be regulated by FERC (as set forth in the definition of Eligible Assignee), then, as a condition to the effectiveness of the change of Control, the Eligible Control Party and its applicable Affiliate shall agree in writing, in a form reasonably acceptable to the NVE Parties, to remain under common Control for a period of no less than four (4) years following the date of such change of Control.

 

ARTICLE XVI 

 

DEFAULT AND REMEDIES

 

           16.01 Events of Default.  Each of the following events shall be an “Event of Default” under this Agreement:

 

(a) Failure to Make Payment.  Failure by a Party to make any Contribution or payment required under this Agreement that is not being disputed in good faith within the later of (i) thirty (30) days after the date on which such Contribution or payment becomes due (or for disputed payments, the date on which it is determined that the amount is owing) and (ii) three (3) Business Days after receipt of written notice of the failure to pay is provided to such Party.

 

(b) Failure to Perform.  Failure by a Party to perform, in any material respect not otherwise identified as an Event of Default, any material obligation, duty or responsibility in accordance with the provisions of this Agreement where such failure is not 

 

 

 

 

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remedied within thirty (30) days after written notice thereof is provided to such Party or such longer period if the failure to perform is not susceptible to cure within such thirty (30)-day period and such Party diligently pursues the cure of such default to completion within such additional period as may be reasonably required to cure such failure to perform; provided, however, that such default, if not cured within ninety (90) days after such written notice is provided to such Party, shall constitute an Event of Default.

 

(c) Breach of a Representation and Warranty.  A Party breaches a representation or warranty it has made hereunder in any material respect and such breach is not remedied within thirty (30) days after written notice thereof is provided to such Party.

 

(d) Insurance.  A Party fails to obtain and maintain the insurance required by the Insurance Plan and such failure is not remedied within thirty (30) days after written notice thereof is provided to such Party.

 

(e) Great Basin Change in Control.  A breach by Great Basin of Section 15.05.

 

(f) Bankruptcy Event.  The occurrence of a Bankruptcy Event with respect to a Party.

 

(g) Failure of Security Interests, Security Documents and Non-Disturbance Agreements.  (i) Failure of the ON Line Security Interest or GB Segment Security Interest to (A) be valid, legal, perfected, in full force and effect or (B) have the priority contemplated by Section 18.04 for fifteen (15) days, (ii) failure of any associated Security Document to be in full force and effect, (iii) any breach of Section 18.03 or (iv) any breach by Great Basin under any Security Document (accounting for any notice requirement and/or cure period provided in the applicable Security Document).  Each such event shall constitute an Event of Default by Great Basin.

 

           16.02 Remedies.

 

(a) Remedies Not Exclusive.  Except as provided in Section 11.03(b) or any other provision of this Agreement that expressly provides for a specific remedy in the event of a breach of such provision, upon the occurrence of an Event of Default by a Party, the non-defaulting Parties shall have available all remedies hereunder, as well as all legal and equitable remedies, including those available in order to enforce payment of any amounts or performance of any obligations, and no remedy conferred upon or reserved by a Party is intended to be exclusive of any other remedy or remedies available hereunder or that now or hereafter exists at law or in equity, each and every such remedy shall be cumulative and shall be in addition to every other such remedy.

 

(b) Injunctive Relief and Specific Performance.  Each Party acknowledges and agrees that the failure to perform any of its respective obligations under this Agreement would cause irreparable harm to the other Parties and that the remedy at law for any violation or threatened violation thereof would be inadequate, and further agrees that the other Parties shall be entitled to a temporary or permanent injunction, specific performance or other 

 

 

 

 

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equitable relief specifically to enforce such obligations without the necessity of proving the inadequacy of its legal remedies.  No Party shall be required to post any guaranty, letter of credit, bond or other security to obtain an order or decree of specific performance.

 

(c) Loss of Voting Rights. If an Event of Default by a Party has occurred under Section 16.01(a), Section 16.01(g) due to the failure of the ON Line Security Interest or GB Segment Security Interest to be valid, legal, perfected and in full force and effect, or Section 16.01(b) with respect to the failure to provide the other Parties with their respective Capacity Entitlements, without limiting any other rights that the non-defaulting Parties might have, for so long as such Event of Default remains outstanding (i) the defaulting Party’s Authorized Representatives shall not have any right to decide, approve, authorize or vote on any matters before the Management Committee and (ii) the other Party’s Authorized Representatives shall be entitled to represent the defaulting Party with respect to all matters before the Management Committee and the quorum requirements under Section 8.01(f) shall be deemed satisfied.

 

(d) Purchase Right Upon Default.  If (i) an Event of Default by a Party has occurred under Section 16.01(a) and the aggregate amount that remains unpaid by such Party exceeds five million Dollars ($5,000,000), (ii) an Event of Default has occurred by a Party under Section 16.01(b) with respect to the failure to provide the other Parties’ their respective Capacity Entitlements, (iii) an Event of Default has occurred under Section 16.01(g) due to the failure of the ON Line Security Interest or GB Segment Security Interest to be valid, legal, perfected and in full force and effect, in either case, and such event has occurred after the Acquisition Closing Date and is continuing, then, without limiting any other rights that the non-defaulting Parties might have, a non-defaulting Party may, upon written notice to the defaulting Party (the “Default Purchase Notice”) delivered while such Event of Default remains outstanding, purchase all of the Ownership Interests of the defaulting Party.  Upon a non-defaulting Party providing the defaulting Party with the Default Purchase Notice, and, as the case may be, subject to the consent of the NVE Lenders to the extent required under the NVE Lenders’ financing and security agreements or the consent of the ON Line Lenders if the proceeds of the Transfer are less than the obligations owed by Great Basin to the ON Line Lenders, then the defaulting Party shall Transfer its Ownership Interest to such non-defaulting Party free and clear of any Liens other than Permitted Liens within fifteen (15) days after receipt of such notice and receipt of PUCN Approval and all required Governmental Approvals on terms acceptable to the NVE Parties.  At the time such Transfer occurs, such non-defaulting Party shall pay to the defaulting Party an amount equal to the lower of (A) book value of the defaulting Party’s Ownership Interest on the date of the Default Purchase Notice and (B) the Fair Market Value of the defaulting Party’s Ownership Interest on the date of the Default Purchase Notice.  The defaulting Party shall make Applicable Transfer Representations and Warranties in connection with such Transfer.

 

(e) Step-In Rights.

 

                (i) Construction Step-In.  If an action by the Managing Party undertaken in connection with its management responsibilities results in an Event of Default or, upon the occurrence of the circumstances described in Section 5.03(e), then, without limiting any other rights that the Step-In Party might otherwise have, the Step-In 

 

 

 

 

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Party may, upon written notice to the Managing Party delivered at any time prior to the Managing Party having cured such default or, in the case of Section 5.03(e), at any time prior to the NVE Parties committing to fund their Ownership Percentage of such Initial Cost Differential or Incremental Cost Differential, assume the management of all ON Line Activities.  If the Step-In Party exercises its rights provided in this Section 16.02(e)(i), the Step-In Party shall appoint its ON Line Manager in charge of the Managing Party’s responsibilities hereunder, and may retain such managerial responsibilities until ON Line COD or relinquish all or any part thereof from time to time to the Managing Party; provided, however, that the Managing Party may elect to reacquire management of the ON Line Activities, to the extent such management was the Managing Party’s responsibility prior to the exercise of the Step-In Party’s rights under this Section 16.02(e)(i), once the Managing Party has no Events of Default outstanding or commits to fund its Ownership Percentage of the Initial Cost Differential or Incremental Cost Differential, as applicable.  Notwithstanding anything herein to the contrary, (A) any reasonable costs and expenses related to the Step-In Party’s exercise of its rights provided in this Section 16.02(e)(i) and (B) any reasonable incremental costs and expenses related to the Step-In Party’s assumption of the Managing Party’s responsibilities hereunder, shall be borne by the Managing Party.

 

                (ii) Maintenance Step-In.  If (A) after ON Line COD, ON Line (or a portion thereof) or (B) after the commercial operation of a Great Basin Segment, any Great Basin Segment (or a portion thereof), in either case, is materially impaired due to an Event of Default under Section 16.01(b) constituting Willful Misconduct/Gross Negligence by NPC or Great Basin in its role as maintainer of ON Line or the Great Basin Segments, as applicable, then, without limiting any other rights that the Step-In Party might otherwise have, the Step-In Party may, upon written notice to the defaulting Party delivered at any time prior to the defaulting Party having cured such Event of Default, assume management of the maintenance responsibilities on any portion of the Transmission Line for which the defaulting Party has maintenance responsibility and all responsibilities set forth in this Agreement related thereto.  If the Step-In Party exercises its rights provided in this Section 16.02(e)(ii), the Step-In Party may retain such managerial responsibilities throughout the Term or relinquish all or any part thereof from time to time to the defaulting Party; provided, however, that the defaulting Party may elect to reacquire such management responsibility, to the extent such management was the defaulting Party’s responsibility prior to the exercise of the Step-In Party’s rights under this Section 16.02(e)(ii), once the defaulting Party has corrected the material impairment.  Notwithstanding anything herein to the contrary, (X) any reasonable costs and expenses related to the Step-In Party’s exercise of its rights provided in this Section 16.02(e)(ii) and (Y) any reasonable incremental costs and expenses related to the Step-In Party’s assumption of the defaulting Party’s responsibilities hereunder, shall be borne by the defaulting Party; provided, that, in the event the Step-In Party retains an Independent Contractor or other third party to assume management of the maintenance responsibilities on any portion of the Transmission Line for which the defaulting Party has maintenance responsibility, such Independent Contractor or other third party shall be reasonably acceptable to the defaulting Party (such acceptance being without prejudice to the defaulting Party’s right to dispute the 

 

 

 

 

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amounts charged by such Independent Contractor or other third party).  If a Step-In Party takes over the management of maintenance obligations from the defaulting Party pursuant to this Section 16.02(e)(ii), the Step-In Party shall indemnify the defaulting Party and its Affiliates for any fines, penalties or other charges levied against the defaulting Party and its Affiliates as a result of a failure to properly maintain the portion of the Transmission Line for which the Step-In Party assumed maintenance responsibility pursuant to this Section 16.02(e)(ii) during the period the Step-In Party has taken over the management of such maintenance (except to the extent such fines, penalties or other charges arise as a result of the Willful Misconduct/Gross Negligence of the defaulting Party and/or any of its Affiliates).

 

                (iii) Operations Step-In.  If, at any time after ON Line COD, the NVE Parties no longer qualify as public utilities under Nevada law and ON Line is materially impaired due to an Event of Default under Section 16.01(b) constituting Willful Misconduct/Gross Negligence by NPC, then, without limiting any other rights that Great Basin might otherwise have, Great Basin may, upon written notice to the NVE Parties delivered at any time prior to the defaulting Party having cured such Event of Default, assume management of the operation of the Transmission Line, including all Operating Activities, and all responsibilities set forth in this Agreement related thereto.  If Great Basin exercises its rights provided in this Section 16.02(e)(iii), Great Basin may retain such managerial responsibilities throughout the Term or relinquish all or any part thereof from time to time to the NVE Parties.  Notwithstanding anything herein to the contrary, (X) any reasonable costs and expenses related to Great Basin’s exercise of its rights provided in this Section 16.02(e)(ii) and (Y) any reasonable incremental costs and expenses related to the Great Basin’s assumption of the NVE Party’s responsibilities hereunder, shall be borne by the NVE Party; provided, that, in the event Great Basin retains a third party to assume management of the operation of the Transmission Line, such third party shall be reasonably acceptable to the defaulting Party (such acceptance being without prejudice to the defaulting Party’s right to dispute the amounts charged by such third party).

 

(f) Ownership Adjustment.  If an Event of Default has occurred under Section 16.01(a), then, without limiting any other rights that the non-defaulting Parties might have, to the extent such Event of Default has not otherwise been satisfied in full upon the exercise by the non-defaulting Party of its rights under Section 16.02(g), a non-defaulting Party may, after the Acquisition Closing, upon written notice to the Parties delivered while such Event of Default remains outstanding, cause a reduction in the defaulting Party’s Ownership Percentage within fifteen (15) days after receipt of such notice and receipt of PUCN Approval and all required Governmental Approvals on terms acceptable to the NVE Parties, such that the defaulting Party’s Ownership Percentage equals a ratio (i) the numerator of which is equal to the portion of the Total Costs paid by the defaulting Party and (ii) the denominator of which equals the Total Costs, and the defaulting Party shall Transfer the portion of its Ownership Interest corresponding to its excess above its revised Ownership Percentage to each non-defaulting Party free and clear of any Liens other than Permitted Liens.  Thereafter, each Party’s Capacity Entitlement shall automatically and proportionately increase or decrease, as applicable, with such Party’s increase or decrease of Ownership Interest.  The defaulting Party shall execute and 

 

 

 

 

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record any bills of sale, deeds, certificates or other documentation as reasonably requested by any non-defaulting Party to evidence the re-allocation of such interests.  The defaulting Party shall make Applicable Transfer Representations and Warranties in connection with such Transfer.

 

(g) Loss of Right to Revenue or Electrical Capacity.  If an Event of Default has occurred under Section 16.01(a), then, without limiting any other rights that the non-defaulting Parties might have, to the extent such Event of Default has not otherwise been satisfied in full upon the exercise by the non-defaulting Party of its rights under Section 16.02(f), a non-defaulting Party may, upon fifteen (15) days’ prior written notice to the defaulting Party delivered while such Event of Default remains outstanding, recover the defaulted payments by temporarily receiving all or any part of the defaulting Party’s Capacity Entitlement.  Receipt of the defaulting Party’s Capacity Entitlement shall continue until such time as the non-defaulting Party has received an amount equal to the payment default plus interest at the Default Rate, determined based on amounts that would otherwise be payable for such Capacity Entitlement under the applicable open access transmission tariff of the non-defaulting Party.  Once such non-defaulting Party has received such additional amount, the defaulting Party shall immediately, and without further action by the Parties, be entitled to fully receive its Capacity Entitlement.  In the event receipt of the defaulting Party’s Capacity Entitlement is not practicable due to regulatory requirements or the rights of third Persons, the defaulting Party shall pay over to the non-defaulting Party all proceeds, promptly upon the defaulting Party’s receipt of such proceeds, of the defaulting Party’s Capacity Entitlement until such time as the non-defaulting Party has received an amount equal to the payment default plus interest at the Default Rate.

 

(h) If an Event of Default of NPC has occurred under Section 16.01(a) in respect of one or more Contributions or payments and has continued for a period of one hundred twenty (120) days and the aggregate amount due and payable from NPC to Great Basin in respect of such Contributions or payments exceeds (x) from ON Line COD to the thirtieth (30th) anniversary of such date, five million Dollars ($5,000,000) and (y) from the thirtieth (30th) anniversary of ON Line COD to the forty-first (41st) anniversary of ON Line COD, one million Dollars ($1,000,000) (an “Extended Payment Default”), Great Basin shall possess the right to terminate the NVE Parties’ Capacity Entitlement other than the portion of their Capacity Entitlement on ON Line corresponding to their aggregate Ownership Interest (the “Terminated Capacity”) by sending written notice (by facsimile or other reasonable means) to NPC, which notice of termination shall become effective thirty (30) days after receipt if the NVE Parties fail to cure the Extended Payment Default prior to such thirtieth (30th) day.  If Great Basin fails to exercise this right of termination within thirty (30) days following the time when the Extended Payment Default first accrues (or more than thirty (30) days if the Parties agree to an extension), then such right of termination shall no longer be available to Great Basin as a remedy for the defaulted Contributions and payments constituting such Extended Payment Default, but shall be available for subsequent defaulted Contributions and payments to the extent they satisfy the requirements for an Extended Payment Default.  The termination of the Terminated Capacity and payment of the Termination Payment (if any) shall be the sole and exclusive remedy for Great Basin for the Extended Payment Default for the time period beginning at the time notice of termination under this Section 16.02(h) is transmitted; provided, however, that Great Basin may exercise any remedies available to it under this Section 16.02 prior to its transmittal of such 

 

 

 

 

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notice of termination.  Great Basin shall calculate the payment associated with termination (“Termination Payment”) as follows:

 

                (i) Any Loss shall be determined by comparing the value of the Terminated Capacity had it not been terminated plus Costs to the equivalent quantities and relevant market prices for the remaining term of the Monthly Payment Period either quoted by a bona fide third-party offer or which are reasonably expected to be available in the market under a replacement contract or contracts for such Terminated Capacity.  To ascertain the market prices of a replacement contracts, Great Basin may consider, among other valuations, quotations from dealers in transmission capacity and other bona fide third party offers, all adjusted for the length of the remaining term.  It is expressly agreed that Great Basin shall not be required to enter into replacement transactions in order to determine the Termination Payment.

 

                (ii) Any Loss calculated under clause (i) shall be discounted to present value using the Present Value Rate as of the time of termination (to take account to the period between the time the termination was effective and when such amount would have otherwise been due pursuant to this Agreement).  The “Present Value Rate” shall mean the sum of 0.50% plus the yield reported on page “USD” of the Bloomberg Financial Markets Services Screen (or, if not available, any other nationally recognized trading screen reporting on-line intraday trading in United States government securities) at 11:00 a.m. (New York City, New York time) for the United States government securities having a maturity that matches the average remaining term of the Monthly Payment Period; and

 

                (iii) Great Basin shall aggregate any Loss with Outstanding Payments and notify NPC of such amount and the NVE Parties shall, within three (3) Business Days of receipt of such notice, pay to Great Basin an amount equal to the aggregate sum of the Loss (if any) and Outstanding Payments as the Termination Payment.  The Termination Payment shall bear interest at the Present Value Rate from the time notice of termination was received until paid.

 

                (iv) For purposes of this Section 16.02(h):

 

                   (A) “Loss” means the economic loss (inclusive of Costs), if any, resulting from the termination of the Terminated Capacity, determined in a commercially reasonable manner as calculated in accordance with this Section 16.02(h);

 

                   (B) “Costs” means brokerage fees, commissions and other similar transaction costs and expenses reasonably incurred in terminating any specifically related arrangements which replace the Terminated Capacity and reasonable attorneys’ fees, if any, incurred in connection with Great Basin enforcing its rights under this Section 16.02(h).  Great Basin shall use reasonable efforts to mitigate or eliminate these Costs.

 

                   (C) “Outstanding Payments” means the aggregate 

 

 

 

 

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amount of payments due and owing under this Agreement (and not otherwise paid) by the NVE Parties to Great Basin as of the date on which the termination of the Terminated Capacity becomes effective (it being understood that payment of the Outstanding Payments to Great Basin shall be in satisfaction of the NVE Parties’ obligation to make such payments under this Agreement);

 

                   (D) In no event, however, shall a Party’s Loss, Costs or Outstanding Payments include any penalties or similar charges imposed by Great Basin.

   

                (v) Notwithstanding anything in this Agreement to the contrary, upon the effectiveness of the notice terminating the Terminated Capacity (A) the NVE Parties’ Capacity Entitlement with respect to Electrical Capacity on ON Line shall be equal to the NVE Parties’ Ownership Percentage and the NVE Parties shall not be entitled to any Electrical Capacity on the Great Basin Segments, (B) all Operating Costs, Event of Loss Costs, Condemnation Action Costs and Capital Repair Costs shall be funded by the Parties in accordance with their respective Ownership Percentages and Great Basin shall have no right to recover Great Basin’s Ownership Percentage of any such costs from the NVE Parties and (C) the NVE Parties’ obligation to pay the Monthly Payment shall cease as provided in Section 3.06(c).  Payment of the Termination Payment pursuant to this Section 16.02(h) shall cure any Event of Default and Extended Payment Default giving rise to Great Basin’s rights under this Section 16.02(h).

 

(i) Other Remedies.  Prior to the Acquisition Closing Date and in the event the Acquisition Closing does not occur, breaches of representations and warranties and covenants shall be exclusively governed by Section 11.03.  After the Acquisition Closing Date, breaches of representations and warranties shall be exclusively governed by Article XII, subject to the limitations set forth therein.

 

           16.03 Additional Obligations.  With respect to a Party as to which an Event of Default has occurred, such Party shall take any and all such further actions and shall execute and file where appropriate any and all such further legal documents and papers as may be reasonable under the circumstances resulting from such Event of Default in order to facilitate the carrying out of this Agreement or otherwise effectuate its purpose, including action to seek any required Governmental Approval and to obtain any other required consent, release, amendment or other similar document.

 

           16.04 Interest on Overdue Payments and Contributions; Setoff.  If any sum due hereunder is not paid or contributed by the due date thereof, the Party owing such obligation shall pay to the other Parties or to a Project Account, as applicable, interest thereon at the Default Rate concurrently with the payment of the amount, such interest to begin to accrue as of the due date of such payment or Contribution.  Further, each non-defaulting Party shall have the right to setoff any amount owed to it by a defaulting Party hereunder against any amounts owed by it to such defaulting Party hereunder.

 

           16.05 Mitigation.  Each Party shall use commercially reasonable efforts to mitigate all of its damages and losses resulting from an Event of Default by any other Party.

 

 

 

 

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ARTICLE XVII

 

REPRESENTATIONS AND WARRANTIES

 

           17.01 Representations and Warranties.  Each Party represents and warrants to each other Party, as of the Effective Date and again as of the Acquisition Closing Date (as though made on and as of such date), except as set forth in the disclosure schedules delivered among the Parties prior to the Effective Date (the “Disclosure Schedules”) and the Disclosure Schedule Update:

 

(a) Due Organization.  Such Party is a duly organized, validly existing entity of the type described in the preface to this Agreement and is in good standing under the laws of the jurisdiction of its formation and is duly qualified to do business and in good standing as a foreign entity in the jurisdiction of its principal place of business (if not formed in that jurisdiction).

 

(b) Power and Authority.  Such Party has the full corporate or limited liability company, as applicable, legal right, power and authority to enter into this Agreement and perform its obligations under this Agreement.

 

(c) Due Authorization.  Such Party has taken all appropriate and necessary corporate or limited liability company, as applicable, action to authorize its execution, delivery and performance of this Agreement and the transactions contemplated hereunder.

 

(d) Consents.  Except for, in the case of Great Basin, the Required Consents, such Party has obtained all consents, approvals, permits and other authorizations in connection with the execution, delivery and performance of this Agreement required to be obtained by it; provided, however, that no Party makes any representation or warranty under this Section 17.01(d) with respect to any consents, approvals, permits or other authorizations necessary for the development, construction, operation or maintenance of the Transmission Line or, except with respect to the Acquisition Closing, any consents, approvals, permits or other authorizations necessary in connection with the acquisition by one Party of any other Party’s Ownership Interests pursuant to the terms of this Agreement.

 

(e) Binding Obligation.  This Agreement constitutes a legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms (subject to the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other Applicable Laws now or hereafter in effect relating to creditors’ rights generally and general principles of equity).

 

(f) No Violation.  The execution, delivery and performance by such Party of this Agreement, the compliance with the terms and provisions hereof and the carrying out of the transactions contemplated hereby, (i) do not conflict with and will not result in a breach or violation of any of the terms or provisions of the organizational documents of such Party, (ii) do not conflict with and will not result in a material breach or violation of any of the terms or provisions of any existing Applicable Law to which such Party is subject or by which it or any of its material property is bound, or any material agreement or instrument to which such Party is a party or by which it or any of its material property is bound, or constitutes or will 

 

 

 

 

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constitute a default thereunder or (iii) in the case of Great Basin, will not result in the imposition of any Lien (other than under any financing or security agreements with the NVE Lenders or a Permitted Lien) upon any of the Ownership Interests being Transferred to NPC and SPPC at the Acquisition Closing.

 

(g) Brokers.  All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by each Party directly with each other Party without the intervention of any Person on behalf of such Party in such manner as to give rise to any valid claim by any Person against each other Party for a finder’s fee, brokerage commission or similar payment.

 

(h) No Litigation and Compliance with Law.  There is no litigation pending or, to such Party’s knowledge, threatened to which such Party or any of its Affiliates is a party that could reasonably be expected to have a Material Adverse Effect.  Such Party is not in violation of any Applicable Law where the effect of which to such Party, individually or in the aggregate, could be reasonably expected to have a Material Adverse Effect.

 

           17.02 Special Representations and Warranties of Great Basin.  On and as of the Acquisition Closing Date (as though made on and as of such date), Great Basin represents and warrants to each of the NVE Parties as follows, except as set forth in the Disclosure Schedules attached to this Agreement and the Disclosure Schedule Update:

 

(a) Title to ON Line.  Great Basin possesses good, valid and marketable title to all of the personal property comprising ON Line (tangible and intangible assets) and good, valid, marketable and indefeasible title to the rights granted to Great Basin pursuant to the ON Line ROW (subject to the BLM restrictions in the ON Line ROW) and Land Contracts, in each case, free and clear of all Liens except Excluded Liens, and, effective upon the Acquisition Closing, (i) upon payment of the NVE Parties’ Closing Payment (if any), NPC and SPPC shall own and hold good, valid and marketable title to an undivided ownership interest equal to their respective Ownership Percentages in all of ON Line constituting personal property (tangible and intangible assets) and (ii) NPC and SPPC shall own and hold good, valid, marketable and indefeasible title to an undivided ownership interest equal to their respective Ownership Percentages in the real property comprising ON Line (including the ON Line ROW and Land Contracts) or a good, valid and marketable leasehold interest in the real property comprising ON Line (including the ON Line ROW and Land Contracts) equal to their respective Ownership Percentages, in each case, free and clear of all Liens except Permitted Liens.

 

(b) Agreements.  Great Basin is a party to all ON Line Agreements and it has delivered true, correct and complete copies of each ON Line Agreement (including any amendment thereto) to the NVE Parties as of the Acquisition Closing Date and any other agreement to which ON Line may be subject.  Each ON Line Agreement is in full force and effect against Great Basin and, to Great Basin’s knowledge, the other parties thereto and (i) Great Basin is not in material breach of its obligations under any such agreement, (ii) to Great Basin’s knowledge, no counterparty to any such agreement is in material default of its obligations under any such agreement and (iii) each such agreement is an enforceable and binding obligation of Great Basin and, to Great Basin’s knowledge, the other parties thereto (subject to the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent 

 

 

 

 

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conveyance or other Applicable Laws now or hereafter in effect relating to creditors’ rights generally and general principles of equity).

 

(c) Real Property.

 

                (i) Neither the whole nor any portion of the real property comprising ON Line (including the ON Line ROW and Land Contracts) is subject to any governmental decree or order to be sold or is being condemned, expropriated or otherwise taken by any public authority with or without payment of compensation therefor, nor, to Great Basin’s knowledge, has any such condemnation, expropriation or taking been proposed.

 

                (ii)  Great Basin has not received any written notice of, or has any knowledge of, any action, proceeding or litigation pending or threatened to modify the zoning of, or other governmental rules or restrictions applicable to, the real property comprising ON Line (including the ON Line ROW and Land Contracts) or the use or development thereof.

 

                (iii)  There are no agreements with any Governmental Authority affecting the use or ownership of the real property comprising ON Line (including the ON Line ROW and Land Contracts), true, correct and complete copies of which (including any amendment thereto) have not been provided to the NVE Parties.

 

(d) Governmental Approvals; Compliance with Laws; Hazardous Substances.

 

                (i)  Great Basin has obtained all Governmental Approvals that are necessary or customarily obtained for the current stage of ON Line and necessary or customarily obtained for Great Basin to perform its obligations under this Agreement and each ON Line Agreement as of Acquisition Closing Date (other than any Governmental Approvals related to the construction of the Robinson Summit Substation at the Robinson Summit Location).

 

                (ii)  Great Basin has provided true, correct and complete copies of each Governmental Approval for ON Line that has been obtained by Great Basin, and all applications for any pending Governmental Approval, to the NVE Parties and the status of each Governmental Approval for ON Line is set forth in Schedule 6 (it being understood that Schedule 6: (A) includes some Governmental Approvals that would not be customarily obtained as of the Acquisition Closing Date in light of the then-current stage of construction of ON Line (which are identified on Schedule 6 with an asterisk) and therefore will not necessarily be obtained by the Acquisition Closing Date and (B) is true and correct only as of the Effective Date, but will be modified via the Disclosure Schedule Update to set forth the status of each Governmental Approval listed on Schedule 6 as of the Acquisition Closing Date).

 

                (iii)  No application submitted by or on behalf of Great Basin or any of its Affiliates in connection with any Governmental Approval for ON Line 

 

 

 

 

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contains any intentional misrepresentation.  Great Basin is in compliance with each Governmental Approval for ON Line in all material respects and each Governmental Approval for ON Line (A) is in full force and effect, (B) is not subject to any legal proceeding or to any unsatisfied condition that is not reasonably expected to be satisfied or could reasonably be expected to allow material modification or revocation thereof and (C) is final and all applicable appeal periods have expired or terminated.

 

                (iv)  Except for modifications to Governmental Approvals for ON Line that have already been made, no modification to a Governmental Approval is required for the conveyance or acquisition of the undivided ownership interests in ON Line to NPC and SPPC equal to their respective Ownership Percentages.  No further action is required for each Governmental Approval for ON Line to be properly in the name of the Parties.

 

                (v)  Great Basin is in compliance with all Applicable Laws in all material respects with respect to ON Line.

 

                (vi)  Great Basin is in compliance with all Environmental Laws in all material respects with respect to ON Line.  To the knowledge of Great Basin, Hazardous Substances have not been released, spilled, leaked or disposed of on, at, or under the ON Line ROW, or on, at, or under any property adjacent to the ON Line ROW, in any amount or concentration that is likely to require investigation or remediation pursuant to applicable Environmental Laws or in connection with the development, construction or operation of ON Line.

 

                (vii) Great Basin has obtained the Required Consents.

 

           17.03 MOU.  Great Basin represents and warrants as of the Effective Date that it has not, prior to the Effective Date, to the extent inconsistent with the MOU: (a) sold, assigned, encumbered, transferred, allowed a Lien to exist upon or otherwise disposed of any interest in or rights to ON Line, (b) directly or indirectly negotiated, discussed in any material respect, or entered into any agreement or participated in any inquiries or proposals in any material respect regarding the purchase of any interest in or rights to ON Line (other than the right to use Great Basin’s Capacity Entitlement with respect to ON Line from and after GB Segment COD), (c) made any public announcement regarding this Agreement or the transactions contemplated hereby without prior consultation with the NVE Parties, (d) assigned the MOU without the prior written consent of the NVE Parties, or (e) done any of the following without the written consent of the NVE Parties: submitted an application for or accepted any required Governmental Approval in respect of ON Line, selected a material contractor or vendor for ON Line, made any material modification to ON Line’s conceptual design, executed, terminated or amended any ON Line Agreement or waived any of the material terms thereof or exercised any remedies thereunder, initiated or settled any material litigation, arbitration or other dispute regarding ON Line or any ON Line Agreement, or adopted any material community outreach or government relations programs for ON Line.  Great Basin further represents and warrants as of the Effective Date that it has, prior to the Effective Date, promptly (x) provided the NVE Parties with all Governmental Approvals (including applications therefor), ON Line Agreements (including drafts thereof), and material communications regarding ON Line, and all material 

 

 

 

 

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information regarding land rights, expected development, construction and operation costs, constructability, copies of studies, reports, and data, and any other information regarding ON Line and Great Basin and its Affiliates providing services under any ON Line Agreement,  in each case to the extent reasonably requested by the NVE Parties and (y) notified the NVE Parties of all material events in connection with ON Line of which Great Basin has knowledge, including any dispute under an ON Line Agreement and any litigation or arbitration in connection with ON Line.

 

           17.04 Non-Severable Improvements.  Each NVE Party represents and warrants to Great Basin, that as of the Effective Date, the NVE Parties do not currently have any plan to make any material, non-severable (a) improvement, (b) modification or (c) addition to ON Line that will be paid for by the NVE Parties after the ON Line COD, other than any such non-severable improvements described in Section 3.04(3) of Internal Revenue Service Revenue Procedure 2001-28, 2001-1 C.B. 1156; provided, however, that the Parties recognize that the NVE Parties are public utilities regulated by the PUCN and FERC and may be required at any time to accommodate transmission service requests and interconnection requests that may require modifications to ON Line or its interconnected transmission system(s).

 

           17.05 Knowledge.  When used in this Article XVII, the term “knowledge”, when used in reference to Great Basin shall mean the actual knowledge of any of Jason Hochberg, Paul Thessen, Joseph Esteves, Richard Roloff, Mark Milburn and Andrew Dera, and when used in reference to the NVE Parties shall mean the actual knowledge of any of Roberto Denis, Mario Villar, Ryan Smith and John Berdrow.

 

           17.06 Exclusivity of Representations.  The representations and warranties made by each Party in this Article XVII are the exclusive representations and warranties made by such Party with respect to itself and the Transmission Line and the transactions contemplated in this Agreement.  Each Party hereby disclaims any other express or implied representations or warranties with respect to itself or the Transmission Line.  Except as expressly set forth in this Agreement, the condition of the assets of the Parties shall be “as is” and “where is” and each Party makes no warranty of merchantability, suitability, fitness for a particular purpose or quality with respect to any of the tangible assets of such Party (including the Transmission Line or any portion thereof) or as to the condition or workmanship thereof or the absence of any defects therein, whether latent or patent.

 

ARTICLE XVIII

 

LIENS; FINANCING MATTERS

 

           18.01 Liens.

 

(a) Without the prior written consent of the Parties, (i) no Party may create or permit to exist a Lien (other than an Excluded Lien) on its Ownership Interests (from and after the Effective Date), (ii) Great Basin may not create or permit to exist a Lien (other than an Excluded Lien) on the Great Basin Segments (from and after the Effective Date), provided that this clause (ii) and clause (i) above shall not apply to the excluded assets referred to in the first proviso set forth in Section 18.04(a), (iii) no Party may take any action that would either cause or permit a Lien to exist on the Ownership Interests of any other Party and (iv) neither 

 

 

 

 

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NVE Party may take any action that would either cause or permit a Lien to exist on Great Basin’s ownership interests in the Great Basin Segments; provided, however, that without the consent of any Party, in the course of performing ON Line Activities or Operating Activities, the Managing Party or NPC, as applicable, may, to the extent approved by the Parties (unless NPC is solely responsible, whether directly or through the payment of the Monthly Payment, for the payment of any amount referred to in clause (i) or (ii) below), create or permit to exist on the Ownership Interests: (i) any Lien for Taxes being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP and (ii) any statutory Lien (including any Liens of carriers, warehousemen, mechanics and materialmen arising in the ordinary course of business by operation of law) with respect to a liability which is being contested in good faith, in each case in (i) and (ii) above, only so long as such Liens shall not involve any reasonable likelihood of the sale, forfeiture or loss of any material interest in the Transmission Line and shall not interfere in any material respect with the use or disposition of any material part of the Transmission Line, the GB Segment Security Interest or the ON Line Security Interest.  Great Basin shall directly acquire and continue to directly own all of the Transmission Line, except with respect to the NVE Parties’ Ownership Interests and the Transfer of ownership interests in the Transmission Line permitted by this Agreement.  Each Party shall promptly notify the other Parties of the attachment or imposition of any Lien not permitted by this Agreement.  Great Basin may not take any action to either create or permit to exist a Lien on any Applicable Centennial Phase 3 Facilities without NPC’s prior written consent; provided, however, that nothing contained herein shall prevent Great Basin from creating or permitting to exist an Excluded Lien on the Applicable Centennial Phase 3 Rights during the effectiveness of the SNIP Agreement.  Notwithstanding anything in this Section 18.01(a) to the contrary, any Party may obtain a judgment Lien against any other Party based on any such other Party’s breach under this Agreement, any Security Document, the SNIP Agreement or any other agreement, and the NVE Parties may create or permit to exist the ON Line Security Interest and GB Segment Security Interest.

 

(b) If (i) any Lien (other than an Excluded Lien) is filed against the Transmission Line by reason of any services or materials supplied or claimed to have been supplied on or to all or part of the Transmission Line and (ii) such Lien has not been satisfied or discharged of record, or its enforcement precluded, to the reasonable satisfaction of the Management Committee, by injunction, payment, deposit, bond, order of court or otherwise as soon as is reasonably practicable and, in any event, no later than the earlier of (i) ninety (90) days after the creation of such Lien and (ii) ninety (90) days prior to the first date on which foreclosure of such Lien is permitted under Applicable Laws, then a Party shall have the right, but not the obligation, to satisfy, bond or discharge such Lien and the amount incurred by such Party shall be promptly reimbursed by the other Parties in proportion to their respective Ownership Percentages; provided, however, that (A) in the event such Lien has been imposed as a consequence of an unauthorized act or omission, negligence, gross negligence or willful misconduct of a Party, such Party shall pay all costs in connection with satisfying, bonding and discharging such Lien and (B) except as provided in clause (A) above, in the event such Lien has been imposed on the Great Basin Segments, Great Basin shall pay all costs in connection with satisfying, bonding and discharging such Lien.

 

 

 

 

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(c) If (i) at any time there exists a Lien to which the NVE Parties are not senior (except as permitted by Section 18.04(e)) and (ii) such Lien has not been satisfied or discharged of record, or its enforcement precluded, to the reasonable satisfaction of the NVE Parties, by injunction, payment, deposit, bond, order of court or otherwise as soon as is reasonably practicable and, in any event, no later than fifteen (15) days after the NVE Parties first failed to have seniority with respect to such Lien (except as permitted by Section 18.04(e)), then the NVE Parties shall have the right, but not the obligation, to satisfy, bond or discharge such Lien and any costs incurred by any such NVE Party in connection therewith shall be promptly paid to such Party or Parties by Great Basin.

 

           18.02 Financing.

 

(a) Great Basin acknowledges that the NVE Parties intend to enter into discussions with certain U.S. governmental entities regarding providing financing for their share of the ON Line Costs, and each of the NVE Parties acknowledges that Great Basin intends to enter into discussions with certain U.S. governmental entities regarding such Persons providing financing for its share of the ON Line Costs.  At the requesting Party’s cost, each Party agrees to cooperate with the other Parties in their efforts to obtain financing from the NVE Lenders, ON Line Lenders and GB Segment Lenders, as applicable, and provide such other support as may be reasonably required in connection therewith.

 

(b) At the requesting Party’s cost, each other Party agrees to execute and deliver to and in favor of the ON Line Lenders, GB Segment Lenders or NVE Lenders, as applicable, a consent to assignment and such other documents customary for finance transactions of the types contemplated hereby (including customary legal opinions of the NVE Parties’ outside counsel) and reasonably requested by the ON Line Lenders, GB Segment Lenders or NVE Lenders, respectively, and reasonably acceptable to the NVE Parties or Great Basin, respectively.

 

           18.03 Non-Disturbance Agreement.

 

(a) As a condition to (i) granting any Lien over any part of the Transmission Line to an ON Line Lender or a GB Segment Lender or (ii) granting any Lien over any part of the Transmission Line as contemplated under Section (g)(i)(B), (g)(ii)(B) or (l) of the definition of Excluded Lien (in the case of this clause (ii), only to the extent a Non-Disturbance Agreement is required under Section (g)(i)(B), (g)(ii)(B) or (l) of the definition of Excluded Lien to constitute an Excluded Lien), Great Basin shall cause such ON Line Lender (or its agent), GB Segment Lender (or its agent) or other Person (any such ON Line Lender, GB Segment Lender, agent or other Person, a “Designated Secured Party”) to enter into and maintain in full force and effect a non-disturbance agreement containing the principles set forth below (except as the parties thereto otherwise agree in such non-disturbance agreement in their respective sole discretion) and otherwise in form and substance reasonably satisfactory to the NVE Parties  (a “Non-Disturbance Agreement”):

 

                (i) except in connection with the exercise of remedies for (A) the NVE Parties’ default under this Agreement to the extent such remedy is exercised in accordance with this Agreement or (B) default by the NVE Parties’ or other 

 

 

 

 

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counterparty’s default under any other ON Line Agreement assigned to such Designated Secured Party (collectively with this Agreement, the “Assigned Agreements”) to the extent such remedy is exercised in accordance with such other ON Line Agreement, none of either of the NVE Parties or any other counterparty’s rights under such Assigned Agreement shall be disturbed in connection with the exercise of any right of such Designated Secured Party under any loan or security agreement or otherwise, and such Designated Secured Party shall agree not to take any action or request any relief or remedy that would terminate such Assigned Agreement or otherwise impair the NVE Parties or such counterparty’s rights under such Assigned Agreement or in connection with the Transmission Line;

 

                (ii) without prejudice to any remedies against the NVE Parties for their default under this Agreement or any other Assigned Agreement, if such Designated Secured Party (or its designee) forecloses on, takes title to, sells or otherwise assigns (such purchaser or assignee, a “Transferee”) any interest in the Transmission Line (whether by judicial or non-judicial foreclosure sale, any conveyance in lieu of foreclosure or otherwise), then (A) such Designated Secured Party (or such designee) shall simultaneously foreclose on or take title to or sell or otherwise assign to such Transferee all of the interests of Great Basin in the Transmission Line, (B) the Transmission Line shall remain subject to the terms of each Assigned Agreement and (C) such Designated Secured Party (or its designee) or Transferee (as the case may be) shall assume and be bound by all obligations of Great Basin under each Assigned Agreement arising after such foreclosure, taking title to, sale or other assignment (as the case may be) and each Assigned Agreement shall continue in full force and effect against such Designated Secured Party (or its designee) or Transferee; and

 

                (iii) without prejudice to any remedies against the NVE Parties for their default under this Agreement or any other Assigned Agreement, if (A) such Designated Secured Party (or its designee) forecloses on, takes title to, sells or otherwise assigns any interest in the Transmission Line (whether by judicial or non-judicial foreclosure sale, any conveyance in lieu of foreclosure or otherwise) and (B) any Assigned Agreement is rejected or terminated as a result of any bankruptcy or similar proceeding affecting Great Basin, then, at the NVE Parties request received within sixty (60) days after the occurrence of such an event, such Designated Secured Party (or its designee) or Transferee, as the case may be, shall execute and deliver a new agreement having identical terms as such Assigned Agreement (subject to any conforming changes necessitated by the substitution of parties); provided, that the term under the new agreement shall be no longer than the remaining balance of the term specified in such Assigned Agreement.

 

(b) Section 18.03(a) shall not apply to any Lien permitted under clause (1) of the definition of Excluded Lien to the extent such Lien secures vendor financing provided by an equipment vendor and such Lien is solely on the equipment provided by such vendor.

 

(c) No Party is responsible for the payment of principal and interest on indebtedness solely encumbering the ownership interests of any other Party.

 

 

 

 

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           18.04 Security Interest.

 

(a) Pre-GB Segment COD Security Interests.  To secure Great Basin’s obligations under this Agreement, the SNIP Agreement and all other agreements executed and delivered herewith (but only if and to the extent any such other agreements provide that they are to be so secured), unless the Parties agree in writing otherwise in their respective sole discretion, (i) at the Acquisition Closing, Great Basin shall grant to the NVE Parties a security interest in (A) all of Great Basin’s right, title and interest in, to and under ON Line (which shall initially constitute a seventy-five percent (75%) interest) and (B) all of its rights under this Agreement to the Monthly Payment and any rights related to ON Line (collectively, the “ON Line Security Interest”) and (ii) at GB Segment Financial Closing, Great Basin shall grant to the NVE Parties either (A) a security interest in all right, title and interest in, to and under the Great Basin Segments, provided that the amount that may be realized with respect to such security interest shall not exceed thirty-eight percent (38%) of the Anticipated Investments in the Great Basin Segments (the “GB Segment Security Interest Cap”) or (B) if Great Basin has made the Transfer contemplated by Section 15.03(f)(i), or such security interest can be granted under Applicable Law without such transfer and the NVE Parties consent in writing, a security interest in thirty-eight (38%) of all right, title and interest, in, to and under the Great Basin Segments and (C) a security interest in Great Basin’s rights under this Agreement related to the Great Basin Segments that corresponds to the security interest granted in clauses (A) and (B) above (collectively, the “GB Segment Security Interest”), in each case pursuant to the Security Documents; provided, however, that, for the avoidance of doubt, neither the ON Line Security Interest nor the GB Segment Security Interest shall include a Lien on any of Great Basin’s cash, accounts, securities, books and records (other than in respect of ON Line Agreements, corresponding agreements required for the construction and operation of the Great Basin Segments and Governmental Approvals), as more specifically described and agreed in such Security Documents; provided, further that prior to GB Segment COD, the GB Segment Security Interest shall only secure the obligations of Great Basin under this Agreement, the SNIP Agreement and all agreements executed and delivered herewith, in each case that relate to the Great Basin Segments (but only if and to the extent any such other agreements provide that they are to be so secured), all as more specifically described and agreed in such Security Documents.

 

(b) Post-GB Segment COD GB Segment Security Interest.  Upon GB Segment COD and if the Final NVE Capacity Entitlement (expressed as a percentage) is greater than thirty-eight percent (38%), unless the Parties agree in writing otherwise in their respective sole discretion, Great Basin shall either (i) increase the GB Segment Security Interest Cap to equal the product of (A) the Final NVE Capacity Entitlement (expressed as a percentage) and (B) the Anticipated Investments for the Great Basin Segments or (ii) if Great Basin has made the Transfer contemplated by Section 15.03(f)(i) or such security interest can be granted under Applicable Law without such transfer and the NVE Parties consent in writing, grant the NVE Parties an increase in the GB Segment Security Interest so that the GB Segment Security Interest shall provide the NVE Parties with a security interest in a percentage of all right, title and interest in, to and under the Great Basin Segments equal to the Final NVE Capacity Entitlement (expressed as a percentage); provided, that if Great Basin has granted the NVE Parties the security interest contemplated by Section 18.04(a)(ii)(A) and subsequently Great Basin has made (or is making as of GB Segment COD) the Transfer contemplated by Section 15.03(f)(i) or the 

 

 

 

 

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security interest referred to below can be granted under Applicable Law without such transfer and the NVE Parties consent in writing, then Great Basin may (or, in the case of the Transfer contemplated by Section 15.03(f)(i), shall) grant the NVE Parties the security interest contemplated by this Section 18.04(b)(ii) and, in such event, the NVE Parties shall release the residual security interest granted by Great Basin under Section 18.04(a)(ii)(A) pursuant to release documentation reasonably satisfactory to the NVE Parties, Great Basin and the GB Segment Lenders.  The NVE Parties’ security interest in Great Basin’s rights in this Agreement related to the Great Basin Segments shall be adjusted to the extent necessary to be consistent with the adjustments contemplated by this Section 18.04(b).

 

(c) Post-GB Segment COD ON Line Security Interest.  Upon GB Segment COD and if the GB Segment Security Interest is then valid, legal, perfected, in full force and effect and has the priority contemplated by Section 18.04, and upon the written request of Great Basin, unless the Parties agree in writing otherwise in their respective sole discretion, the NVE Parties shall release a portion of the ON Line Security Interest pursuant to release documentation reasonably satisfactory to the NVE Parties, Great Basin and the ON Line Lenders so that the ON Line Security Interest shall provide the NVE Parties with (i) either (A) a security interest in all of Great Basin’s right, title and interest in, to and under ON Line, provided that the amount that may be realized with respect to such security interest shall not exceed an amount equal to the product of (1) the positive difference of (x) the Final NVE Capacity Entitlement (expressed as a percentage) minus (y) the NVE Parties’ aggregate Ownership Percentages and (2) the Anticipated Investments in ON Line or (B) if Great Basin has made the Transfer contemplated by Section 15.03(f)(i) or such security interest can be granted under Applicable Law without such transfer and the NVE Parties consent in writing, a security interest in a percentage of all right, title and interest in, to and under ON Line equal to (1) the positive difference of (x) the Final NVE Capacity Entitlement (expressed as a percentage) minus (y) the NVE Parties’ aggregate Ownership Percentages and (ii) all right, title and interest of Great Basin in, to and under the Fiber Optic Capacity and Microwave Capacity for ON Line.  The NVE Parties’ security interest in Great Basin’s rights in this Agreement related to ON Line shall be adjusted to the extent necessary to be consistent with the adjustments contemplated by this Section 18.04(c).

 

(d) Ownership Adjustment.  In the event that the NVE Parties’ Ownership Percentages increase or decrease in accordance with this Agreement, then, after GB Segment COD and upon the written request of a Party, unless the Parties agree in writing otherwise in their respective sole discretion, the NVE Parties shall release a portion of the ON Line Security Interest pursuant to documentation reasonably satisfactory to Great Basin and the ON Line Lenders, or Great Basin shall grant the NVE Parties an increase in the ON Line Security Interest, in either case, so that the ON Line Security Interest shall provide the NVE Parties with (i) either (A) a security interest in all of Great Basin’s right, title and interest in, to and under ON Line, provided that the amount that may be realized with respect to such security interest shall not exceed an amount equal to the product of (1) the positive difference between (x) the Final NVE Capacity Entitlement (expressed as a percentage) minus (y) the NVE Parties’ aggregate Ownership Percentages and (2) the Anticipated Investment in ON Line or (B) if Great Basin has made the Transfer contemplated by Section 15.03(f)(i) or such security interest can be granted under Applicable Law without such transfer and the NVE Parties consent in writing, a 

 

 

 

 

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security interest in a percentage of all right, title and interest in, to and under ON Line equal to (1) the positive difference between (x) the Final NVE Capacity Entitlement (expressed as a percentage) minus (y) the NVE Parties’ aggregate Ownership Percentages and (ii) all right, title and interest of Great Basin in, to and under the Fiber Optic Capacity and Microwave Capacity for ON Line (which shall initially constitute a seventy-five percent (75%) interest).

 

(e) Priority of Security Interests.  The ON Line Security Interest and the GB Segment Security Interest shall at all times be senior to all Liens; provided, however, that the ON Line Security Interest and the GB Segment Security Interest shall be subordinated only to the following:

 

                (i) Liens described in clause (a) of the definition of Permitted Liens;

 

                (ii) Excluded Liens arising by operation of law that are required by Applicable Law to be senior to the ON Line Security Interest or the GB Segment Security Interest, as applicable;

 

                (iii) Liens described in clause (j) of the definition of Excluded Liens;

 

                (iv) Pre-GB Segment COD, GB Segment Security Interest over Great Basin Segments Capped at 38% and ON Line Security Interest over ON Line.  Prior to GB Segment COD, unless the Parties agree in writing otherwise in their respective sole discretion, Liens described in clauses (b) and (c) of the definition of Excluded Liens in favor of the ON Line Lenders and the GB Segment Lenders, respectively, for (A) with respect to the ON Line Security Interest, the sum of (1) three hundred thirty-four million Dollars ($334,000,000) plus eighty percent (80%) of the portion of any Initial Cost Differential and Incremental Cost Differential paid by Great Basin plus all fees, interest and other amounts (other than principal repayments) payable to the ON Line Lenders under the ON Line Financing Agreements, plus (2) eighty percent (80%) of the portion of the Net Capital Repair Costs paid by Great Basin in respect of ON Line plus (3) in each case, without duplication, indebtedness associated with interest rate protection agreements permitted by the ON Line Lenders related to such indebtedness, entered into in accordance with Prudent Utility Practices and not for speculative purposes and (B) with respect to the GB Segment Security Interest if the NVE Parties have been granted the security interest contemplated by Section 18.04(a)(ii)(A), the sum of (1) eighty percent (80%) of the cost of developing, constructing, completing and starting-up the Great Basin Segments, plus all fees, interest and other amounts (other than principal repayments) payable to the GB Segment Lenders under the GB Segment Financing Agreements, plus (2) eighty percent (80%) of the portion of the capital repair costs paid by Great Basin in respect of the Great Basin Segments, plus (3) in each case, without duplication, indebtedness associated with interest rate protection agreements permitted by the GB Segment Lenders related to such indebtedness, entered into in accordance with Prudent Utility Practices and not for speculative purposes;

 

 

 

 

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                (v) Pre-GB Segment COD, GB Segment Security Interest over 38% of Great Basin Segments and ON Line Security Interest over ON Line.  Prior to GB Segment COD, unless the Parties agree in writing otherwise in their respective sole discretion, Liens described in clauses (b) and (c) of the definition of Excluded Liens in favor of the ON Line Lenders and the GB Segment Lenders, respectively, for (A) with respect to the ON Line Security Interest, the sum of (1) three hundred thirty-four million Dollars ($334,000,000) plus eighty percent (80%) of the portion of any Initial Cost Differential and Incremental Cost Differential paid by Great Basin plus all fees, interest and other amounts (other than principal repayments) payable to the ON Line Lenders under the ON Line Financing Agreements, plus (2) eighty percent (80%) of the portion of the Net Capital Repair Costs paid by Great Basin in respect of ON Line plus (3) in each case, without duplication, indebtedness associated with interest rate protection agreements permitted by the ON Line Lenders related to such indebtedness, entered into in accordance with Prudent Utility Practices and not for speculative purposes and (B) with respect to the GB Segment Security Interest if the NVE Parties have been granted the security interest contemplated by Section 18.04(a)(ii)(B), thirty-eight percent (38%) of the sum of (1) eighty percent (80%) of the cost of developing, constructing, completing and starting-up the Great Basin Segments, plus all fees, interest and other amounts (other than principal repayments) payable to the GB Segment Lenders under the GB Segment Financing Agreements, plus (2) eighty percent (80%) of the portion of the capital repair costs paid by Great Basin in respect of the Great Basin Segments, plus (3) in each case, without duplication, indebtedness associated with interest rate protection agreements permitted by the GB Segment Lenders related to such indebtedness, entered into in accordance with Prudent Utility Practices and not for speculative purposes;

 

                (vi) Post-GB Segment COD, GB Segment Security Interest over Great Basin Segments Capped at Final NVE Capacity Entitlement and ON Line Security Interest  over ON Line Capped at Final NVE Capacity Entitlement less NVE Ownership Percentage.  On and after GB Segment COD, unless the Parties agree in writing otherwise in their respective sole discretion, if the NVE Parties have been granted the security interests contemplated by Sections 18.04(a)(ii)(A) and 18.04(c)(i)(A), Liens described in clauses (b) and (c) of the definition of Excluded Liens in favor of the ON Line Lenders and the GB Segment Lenders, respectively, for the sum of (A) three hundred thirty-four million Dollars ($334,000,000) plus eighty percent (80%) of the portion of any Initial Cost Differential and Incremental Cost Differential paid by Great Basin plus (B) eighty percent (80%) of the cost of developing, constructing, completing and starting-up the Great Basin Segments, plus (C) all fees, interest and other amounts (other than principal repayments) payable to the GB Segment Lenders under the GB Segment Financing plus (D) all fees, interest and other amounts (other than principal repayments) payable to the ON Line Lenders under the ON Line Financing Agreements, plus (E) eighty percent (80%) of the portion of the Net Capital Repair Costs paid by Great Basin in respect of ON Line, plus (F) eighty percent (80%) of the portion of the capital repair costs paid by Great Basin in respect of the Great Basin Segments plus (G) in each case, without duplication, indebtedness associated with interest rate protection agreements permitted by the ON Line Lenders or the GB Segment Lenders related to 

 

 

 

 

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such indebtedness, entered into in accordance with Prudent Utility Practices and not for speculative purposes;

 

                (vii) Post-GB Segment COD, GB Segment Security Interest over Final NVE Capacity Entitlement of Great Basin Segments and ON Line Security Interest over Final NVE Capacity Entitlement less NVE Ownership Percentage.  On and after GB Segment COD, unless the Parties agree in writing otherwise in their respective sole discretion, if the NVE Parties have been granted the security interests contemplated by Section 18.04(a)(ii)(B) or Section 18.04(b)(ii) and Section 18.04(c)(i)(B), Liens described in clauses (b) and (c) of the definition of Excluded Liens in favor of the ON Line Lenders and the GB Segment Lenders, respectively, for the sum of (A) three hundred thirty-four million Dollars ($334,000,000) plus eighty percent (80%) of the portion of any Initial Cost Differential and Incremental Cost Differential paid by Great Basin, plus (B) all fees, interest and other amounts (other than principal repayments) payable to the ON Line Lenders under the ON Line Financing Agreements, plus (C) eighty percent (80%) of portion of the Net Capital Repair Costs paid by Great Basin in respect of ON Line plus (D) in each case, without duplication, indebtedness associated with interest rate protection agreements permitted by the ON Line Lenders related to such indebtedness, entered into in accordance with Prudent Utility Practices and not for speculative purposes; and

 

                (viii) as otherwise may be provided in the Intercreditor Agreements.

 

(f) Security Documents.  Great Basin shall authorize, execute and deliver separate security agreements, mortgages and other agreements, documents, fixture filings, financing statements and instruments, as reasonably requested by the NVE Parties, to grant to the NVE Parties and maintain the ON Line Security Interest and the GB Segment Security Interest (the “Security Documents”) and, simultaneously with the execution of the applicable Security Documents, the NVE Parties shall execute and deliver the applicable Intercreditor Agreements.  The NVE Parties may file and record such Security Documents as may be appropriate or required under Applicable Law to perfect the ON Line Security Interest and the GB Segment Security Interest, as applicable, and (i) Great Basin shall take such further actions and execute such further documents and instruments, all as reasonably required by the NVE Parties, to confirm and continue the validity, priority, and perfection of any such security interest in accordance with this Agreement and (ii) the NVE Parties shall take such further actions and execute such further documents and instruments, all as reasonably required by Great Basin, to confirm the subordination provisions set forth in this Agreement.  The granting of the ON Line Security Interest and the GB Segment Security Interest shall not limit any further Claims or other rights accruing to the NVE Parties under this Agreement or otherwise.  The NVE Parties may exercise any right provided in this Agreement or in any Security Document to recover any amount owing to the NVE Parties.  The NVE Parties may exercise their rights to all or any part of the ON Line Security Interest and the GB Segment Security Interest or in any Security Document in such amount, form and sequence as the NVE Parties may elect in their sole discretion.  Any failure to exercise any right provided to the NVE Parties under this Section 

 

 

 

 

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18.04 or in any Security Document shall not prejudice the NVE Parties’ rights to recover damages or amounts in any manner.

 

(g) Transfer.  If Great Basin makes a Transfer contemplated by Section 15.03(e) or (f), references to Great Basin shall be deemed to be references to either Great Basin or the Affiliated Assignee, or to both Great Basin and the Affiliated Assignee, as the context may require.

 

ARTICLE XIX

 

GOVERNING LAW; DISPUTE RESOLUTION

 

           19.01 Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH, THE SUBSTANTIVE LAW OF THE STATE OF NEVADA WITHOUT REFERENCE TO ANY PRINCIPLES OF CONFLICTS OF LAWS THEREOF THAT REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

 

           19.02 Dispute Resolution; Binding Arbitration.

 

(a) Negotiation.  Any dispute or claim arising under or relating to this Agreement, or the breach, termination or validity hereof (a “Dispute”), which cannot be resolved by the Parties through negotiation by the Parties’ Authorized Representatives within ten (10) days after receipt by a Party of written referral thereto by any other Party (a “Notice”) shall be referred to a panel consisting of a senior executive (President or a Vice President) of each Party, with authority to decide or resolve the Dispute, for review and resolution.  Such senior executives shall meet and attempt in good faith to resolve the Dispute within twenty-five (25) days after receipt of a Notice.  If, for any reason, a Dispute has not been resolved within forty-five (45) days after receipt of the Notice, then any Party may refer such Dispute to arbitration for final resolution in accordance with Section 19.02(b).

 

(b) Arbitration.

 

                (i) At the request of any Party following the expiration of the period for senior executives to seek to resolve a Dispute set forth in Section 19.02(a), upon written notice to that effect to the other Parties (a “Demand”), the Dispute shall be finally settled by binding arbitration before a panel of three (3) arbitrators in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) then in effect (the “Rules”), except as modified herein and unless the Parties agree otherwise in writing; provided, however, that any Dispute regarding Contributions or other payments required hereunder shall be resolved on an expedited basis (regardless of the amount in Dispute) by a single arbitrator (but such single arbitrator is still referred to in this Section 19.02(b) as the “arbitral panel”) in accordance with the expedited procedures provided for by the Rules.  The Demand must include statements of the facts and circumstances surrounding the Dispute, the legal obligation breached, the amount in controversy and the requested relief accompanied by documents supporting the Demand.

 

 

 

 

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                (ii) The arbitration shall be held and the award shall be issued in Las Vegas, Nevada.  The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§ 1 et seq.

 

                (iii) If there is a single arbitrator, the Parties shall have fifteen (15) days from receipt by a Party of a Demand to agree on the single arbitrator.  If there are three (3) arbitrators, the NVE Parties collectively shall select one (1) arbitrator and Great Basin shall select one (1) arbitrator, in each case within fifteen (15) days after the receipt of the Demand.  Within fifteen (15) days after the selection of the second arbitrator, the two (2) arbitrators thus appointed shall select the third arbitrator, who shall act as the chairman of the panel.  If any arbitrator is not timely appointed, the AAA shall make such appointment in accordance with the listing, ranking and striking procedures in the Rules, with each of the NVE Parties and Great Basin having a limited number of strikes (to be agreed by the Parties or, failing such agreement, determined by the AAA) except for cause.

 

                (iv) The award shall be in writing (stating the award and the reasons, findings of fact and conclusions of law on which it is based), shall be final and binding upon the Parties and shall be the sole and exclusive remedy among the Parties regarding any Disputes, counterclaims, or accountings presented to the arbitral panel.  The arbitral panel shall be authorized in its discretion to grant pre-award and post-award interest at commercial rates, except to the extent that applicable interest rates are otherwise provided herein.  Judgment upon any award may be entered in any court having jurisdiction.

 

                (v) For purposes of a pre-arbitral injunction, pre-arbitral attachment or other order in aid of arbitration proceedings, the Parties hereby agree to submit to the exclusive jurisdiction of the federal courts of the United States located in Las Vegas, Nevada, and the courts of the State of Nevada located in Las Vegas, Nevada (collectively, the “Las Vegas Courts”) and to the non-exclusive jurisdiction of the Las Vegas Courts for the enforcement of any arbitral award rendered hereunder.  Each of the Parties irrevocably waives, to the fullest extent permitted by Applicable Law, any objection it may now or hereafter have to the jurisdiction of such courts or the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.  Each of the Parties hereby consents to service of process by registered mail or receipted courier at its address set forth in Section 20.01 and agrees that its submission to jurisdiction and its consent to service of process by mail are made for the express benefit of the other Parties.

 

                (vi) This Agreement and the rights and obligations of the Parties hereunder shall remain in full force and effect pending the award in any arbitration proceeding hereunder.

   

                (vii) Each Party shall bear its own costs and fees, including attorneys’ fees and expenses.  The Parties expressly agree that the arbitrators shall have no power to consider or award any form of damages barred by Section 12.03.

 

 

 

 

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                (viii) The Parties, to the fullest extent permitted by Applicable Law, hereby irrevocably waive and exclude any recourse to the court system other than to enforce the agreement to arbitrate pursuant to this Section 19.02, for pre-arbitral injunction or pre-arbitral attachment or other order in aid of arbitration proceedings or to prevent irreparable harm prior to the appointment of the arbitral tribunal or enforce the award of the arbitral panel.

 

                (ix) If two or more Disputes arise in connection with this Agreement, then any or all such Disputes may be brought in a single arbitration.  If one or more arbitrations are already pending in connection with this Agreement, then any Party to a new Dispute in connection with this Agreement or any subsequently filed arbitration brought in connection with this Agreement may request that such new Dispute or any subsequently filed arbitration be consolidated into any prior pending arbitration.  The new Dispute or subsequently filed arbitration shall be so consolidated, provided that the arbitral panel for the arbitration so selected determines that: (A) the new Dispute or subsequently filed arbitration presents significant issues of law or fact common with those in the prior pending arbitration, (B) no Party to the new Dispute or prior pending arbitration would be unduly prejudiced and (C) consolidation under these circumstances would not result in undue delay for the prior pending arbitration.  Any such order of consolidation issued by the arbitral tribunal shall be final and binding upon the Parties to the new Dispute, and the prior pending and subsequently filed arbitrations.  The Parties waive any right they have to appeal or to seek interpretation, revision or annulment of such order of consolidation under the Rules or in any court.  The arbitral tribunal for the prior pending arbitration into which a new Dispute or subsequently filed arbitration is consolidated shall serve as the arbitral tribunal for the consolidated arbitration.  The Parties agree that, upon such an order of consolidation, they will promptly discontinue any arbitration brought in connection with this Agreement, the subject of which has been consolidated into another arbitral proceeding in connection with this Agreement.

 

                (x) This Section 19.02(b) shall not apply to the resolution of any Deadlock, audit or allocation Disputes to be resolved by the Independent Auditor or other external auditor or appraiser under Sections 2.02(e) or 2.08, any appraisal to be made under Section 13.05(b), or any Loss Threshold Deadlock to be resolved under Section 13.07 or Section 14.07; provided, however, that Sections 19.02(b)(v) and (viii) shall apply to audit and allocation Disputes to be resolved by the Independent Auditor or other external auditor or appraiser under Sections 2.02(e) and 2.08, any appraisal to be made under Section 13.05(b), and any Loss Threshold Deadlock to be resolved under Section 13.07 or Section 14.07.  For the avoidance of doubt, the limitation set forth in this Section 19.02(b)(x) shall not preclude the use of the provisions set forth in Section 19.02(b) for determining a breach of, or interpreting, this Agreement.

 

 

 

 

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ARTICLE XX

 

MISCELLANEOUS

 

           20.01 Notices.  Unless this Agreement specifically requires otherwise, any notice, demand or request provided for in this Agreement, or served, given or made in connection with it, shall be in writing and shall be deemed properly served, given or made if delivered by (a) hand delivery or (b) nationally recognized overnight courier to the applicable Party at the address set forth below with a copy of such correspondence delivered by e-mail, in each case, which shall be effective upon the physical receipt thereof:

 

To Great Basin:                     LS Power Development, LLC

1700 Broadway, 35th Floor

New York, NY 10019

Attention:  Jason Hochberg

E-Mail:  JHochberg@LSPower.com

 

With copy to:

LS Power Development, LLC

400 Chesterfield Center, Suite 110

St. Louis, MO 63017

Attention:  Paul Thessen

E-Mail:  PThessen@LSPower.com

LS Power Development, LLC

1700 Broadway, 35th Floor

New York, NY 10019

Attention:  Ron Fischer

E-Mail:  RFischer@LSPower.com

To NPC:                                NV Energy

6100 Neil Road

Reno, NV 89511

Attention:  Mario Villar

E-Mail:  MVillar@NVEnergy.com

With copy to:

Renee Lequerica, Deputy General Counsel

NV Energy

6100 Neil Road

Reno, NV 89511

E-Mail:  RLequerica@NVEnergy.com

To SPPC:                                NV Energy

6100 Neil Road

Reno, NV 89511

Attention:  Mario Villar

 

 

 

 

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E-Mail:  MVillar@NVEnergy.com

With copy to:

Renee Lequerica, Deputy General Counsel

NV Energy

6100 Neil Road

Reno, NV 89511

E-Mail:  RLequerica@NVEnergy.com

 

           20.02 Waivers.  No provision of this Agreement may be waived except in writing.  No failure by a Party to exercise, and no delay in exercising, short of the statutory period, any right, power or remedy under this Agreement shall operate as a waiver thereof.  Any waiver at any time by a Party of any right with respect to an Event of Default under this Agreement, or with respect to any other matter arising in connection therewith, shall not be deemed a waiver with respect to any subsequent Event of Default or any other matter.

 

           20.03 No Third-Person Beneficiaries.  Except as expressly provided otherwise herein, none of the promises, rights or obligations contained in this Agreement shall inure to the benefit of any Person that is not a Party, and no action may be commenced or prosecuted against any Party by any third Person claiming to be a third-Person beneficiary of this Agreement or the transactions contemplated hereby.

 

           20.04 Severability.  If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future Applicable Law, and if the rights or obligations of any Party under this Agreement will not be materially and adversely affected thereby, (a) such provision will be fully severable, (b) this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Agreement shall remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible.

 

           20.05 Independent Counsel  The Parties acknowledge that they have been represented by independent counsel in connection with this Agreement, they fully understand the terms of this Agreement and they voluntarily agree to such terms for the purposes of making a full compromise and settlement of the subject matter of this Agreement.

 

           20.06 Further Assurances.  Each Party shall promptly and with all due diligence take all necessary action in aid of obtaining all Governmental Approvals necessary to carry out its obligations under this Agreement.  Each Party hereby agrees that it will, at any time and from time to time, and without further consideration, take all such further actions, and execute and deliver all such further instruments or documents, as may be reasonably requested by any other Party to effectuate the purposes of this Agreement.

 

           20.07 No Fiduciary Relationship.  IN THEIR RELATIONS WITH EACH OTHER UNDER THIS AGREEMENT, NO PARTY (WHETHER AS AN OWNER 

 

 

 

 

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OR IN ANY OTHER CAPACITY IN CONNECTION WITH THIS AGREEMENT) SHALL HAVE ANY FIDUCIARY DUTY TO ANY OTHER PARTY, BUT RATHER SHALL BE FREE TO ACT ON AN ARM’S-LENGTH BASIS IN ACCORDANCE WITH THEIR OWN RESPECTIVE SELF-INTERESTS, SUBJECT, HOWEVER, TO THE OBLIGATIONS OF THE PARTIES TO ACT IN GOOD FAITH IN THEIR DEALINGS WITH EACH OTHER WITH RESPECT TO ACTIVITIES HEREUNDER.

 

           20.08 Confidential Information.

 

(a) Confidential Information.  “Confidential Information” means information provided by one Party (the “Disclosing Party”) to any other Party (the “Receiving Party”) regarding the Disclosing Party that is clearly labeled or designated as “confidential” or “proprietary” or with words of like meaning or, if disclosed orally, clearly identified as confidential with the status confirmed promptly thereafter in writing, excluding the information described in Section 20.08(c).  Notwithstanding the foregoing sentence, the Books and Records of any Party, any information provided pursuant to Section 9.06 and the terms of this Agreement shall be Confidential Information.

 

(b) Treatment of Confidential Information.  The Receiving Party shall treat any Confidential Information with at least the same degree of care regarding its secrecy and confidentiality as the Receiving Party’s similar information is treated within the Receiving Party’s organization.  The Receiving Party shall keep confidential and not disclose the Confidential Information of the Disclosing Party to third Persons, nor use it for any purpose, without the express prior written consent of the Disclosing Party, except the Receiving Party is permitted to disclose Confidential Information without consent as follows:

 

                (i)  Disclosure shall be restricted solely to (A) its agents, consultants and representatives as may be necessary to perform its obligations under this Agreement, (B) its Affiliates, shareholders, directors, officers, employees, advisors, NVE Lenders, ON Line Lenders and GB Segment Lenders (as the case may be), rating agencies, and representatives as necessary, (C) any Governmental Authority in connection with seeking any PUCN Approval, FERC Approval or any other required Governmental Approval, (D) as required by Applicable Law or any stock exchange rules or, with respect to any information provided under Section 9.06, financial statements of the NVE Parties if any such information is aggregated with information of other Persons and (E) potential transferees of this Agreement, any Ownership Interests or any ownership interests in the Great Basin Segments (together with their agents, advisors and representatives), as may be necessary in connection with any Transfer (which Transfer shall be in compliance with Article XV) or in furtherance of the resolution of any Dispute pursuant to Article XIX, in each case after advising those Persons of their obligations under this Section 20.08.

 

                (ii)  In the event that the Receiving Party is requested or required by Applicable Law to disclose any Confidential Information, the Receiving Party shall provide the Disclosing Party with prompt notice of such request or requirement in order to enable the Disclosing Party to seek an appropriate protective order or other remedy and to consult with the Disclosing Party with respect to the 

 

 

 

 

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Disclosing Party taking steps to resist or narrow the scope of such request or legal process.  This Section 20.08(b)(ii) shall not apply to the disclosure of this Agreement in connection with any disclosure pursuant to Section 20.08(b)(i)(C) or to comply with any stock exchange rules.

 

(c) Excluded Information.  Confidential Information shall not include the following:

 

                (i)  Information which is or becomes generally available to the public other than as a result of a disclosure by the Receiving Party in breach of this Section 20.08;

 

                (ii)  Information which was available to the Receiving Party on a non-confidential basis prior to its disclosure by the Disclosing Party;

 

                (iii)  Information which becomes available to the Receiving Party on a non-confidential basis from a Person other than the Disclosing Party or its representative who is not otherwise bound by a confidentiality agreement with the Disclosing Party or its representative or is otherwise not under any obligation to the Disclosing Party or its representative not to disclose the information to the Receiving Party; and

 

                (iv)  Information that is independently developed by the Receiving Party.

 

(d) Public Statements.  The Parties shall consult with each other prior to issuing any public announcement, statement or other disclosure with respect to this Agreement, ON Line or the transactions contemplated hereby and no Party shall issue any such public announcement, statement or other disclosure without having first received Management Committee approval, except as may be required by Applicable Law.  Notwithstanding the foregoing, each Party acknowledges and agrees that the other Parties may, without consent, advertise, issue brochures and make other announcements, statements and disclosures regarding the Transmission Line for educational, promotional or informational purposes.  It shall not be deemed a violation of this Section 20.08(d) to file, without consent, this Agreement with the PUCN, FERC or any other Governmental Authority for approval as required by Applicable Law.

 

(e) Specific Performance.  Each Party acknowledges and agrees that the failure to perform any of its respective obligations under this Section 20.08 would cause irreparable harm to the other Parties and that the remedy at law for any violation or threatened violation thereof would be inadequate, and further agrees that the other Parties shall be entitled to a temporary or permanent injunction, specific performance or other equitable relief specifically to enforce such obligations without the necessity of proving the inadequacy of its legal remedies.  No Party shall be required to post any guaranty, letter of credit, bond or other security to obtain an order or decree of specific performance.

 

           20.09 Other Transmission Lines and Exclusivity.

 

 

 

 

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(a) None of the Parties shall have any obligation to refrain from (i) owning, operating, maintaining, modifying, expanding, using or developing transmission lines that compete, directly or indirectly, with the Transmission Line, including the NVE Project or any similar project, (ii) investing or owning any interest publicly or privately in, or developing a business relationship with, any Person engaged in owning, operating, maintaining, modifying, expanding, using or developing transmission lines that compete, directly or indirectly, with the Transmission Line, including the NVE Project or any similar project or (iii) doing business with any client or customer of the Transmission Line, and no Party shall have any right by virtue of this Agreement in or to any income or profits derived therefrom.

 

(b) During the period commencing on the Effective Date and expiring at the Acquisition Closing, except to the extent that this Agreement is otherwise terminated earlier in accordance with the terms herein, Great Basin may not, and shall cause its Affiliates not to, directly or indirectly, including through any agent, employee or other representative, negotiate, discuss in any material respect, or enter into any agreement or participate in any inquiries or proposals in any material respect regarding the purchase of any interest in or rights to the Ownership Interests contemplated by this Agreement to be Transferred to NPC and SPPC at the Acquisition Closing.  Great Basin acknowledges that the NVE Parties and their respective Affiliates are incurring substantial costs in reliance on their rights under this Agreement and that this exclusivity is essential for the integrity and viability of the Transmission Line.

 

           20.10 Survival of Obligations.  The following shall survive the termination or expiration of this Agreement:

 

(a) All obligations under this Agreement owed to a Party arising prior to or resulting from the termination or expiration of, or on account of the breach of, this Agreement;

 

(b) Sections 12.01 and 12.02, which shall survive to the full extent of the statute of limitations period applicable to any third-Person claim;

 

(c) For a period of one (1) year after the termination or expiration date of this Agreement, the right to submit a payment Dispute;

 

(d) The resolution of any Dispute submitted pursuant to this Agreement prior to, or resulting from, the termination or expiration of this Agreement;

 

(e) Sections 9.05, 12.03, 13.03, 14.03 and 16.02 and Article XIX; and

 

(f) This Article XX, except that (i) the provisions of Section 20.08 shall only survive for one (1) year after the expiration or termination of this Agreement and (ii) the provisions of Sections 20.17, 20.18 and 20.19 shall not survive the expiration or termination of this Agreement.

 

           20.11 Construction.  The Parties acknowledge that this Agreement has been jointly prepared by each Party and shall not be strictly construed against any Party.  No presumption will apply in favor of any Party in the interpretation of this Agreement or in the 

 

 

 

 

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resolution of any ambiguity of any provision hereof based on the preparation, substitution, submission or other event of negotiation, drafting or execution hereof.

 

           20.12 Amendment.  This Agreement may be amended, supplemented, or modified only by a written instrument duly executed by or on behalf of each Party.

 

           20.13 Entire Agreement.  This Agreement, including all schedules, attachments and exhibits hereto, constitutes the complete and entire expression of agreement among the Parties and supersedes all prior and contemporaneous offers, promises, representations, negotiations, discussions and communications, whether written or oral, which may have been made in connection with the subject matter of this Agreement, including the MOU.  Any such representations or claims are hereby disclaimed.  Great Basin shall, and the NVE Parties shall cause NVE Parent to, execute documentation terminating the CA as of the Effective Date.

 

           20.14 Successors and Assigns.  This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns.

 

           20.15 Headings. Headings are solely for the Parties’ convenience, are not a part of this Agreement and shall not be used to interpret this Agreement.

 

           20.16 Counterparts .  This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same instrument.

 

           20.17 Running with the Land; Memorandums of this Agreement .  To the extent permitted under Applicable Law, the obligations of each Party under this Agreement shall constitute covenants running with the Ownership Interest of such Party (insofar as such Ownership Interest constitutes an interest in real property) it being understood, for the avoidance of doubt, that such covenants shall be subject to all of the terms and conditions of this Agreement.  Upon request of any Party from time to time, the Parties shall execute and deliver one or more memorandums of this Agreement sufficient to set forth this Agreement as a matter of record; provided, however, that such memorandum(s) shall be acceptable to the Parties and in the event of any conflict between such memorandum(s) and this Agreement (or any other document filed in connection herewith), the terms of this Agreement (or other document filed in connection herewith) shall control.  Any Party may, at its sole cost and expense, record any such memorandum in any county in which the Transmission Line is located.

 

           20.18 Dedication.  No Party dedicates, and nothing in this Agreement shall be construed as constituting a dedication by any Party, of any of its properties or facilities to any other Party, to any customer of any Party or to the public.

 

           20.19 Integrity Clause; Gratuity.

 

(a) Great Basin shall comply with the Counterparty Code of Conduct (but, for the avoidance of doubt, the Parties’ Affiliates shall not have any obligations under the Counterparty Code of Conduct unless and until any such Affiliate becomes bound by the terms 

 

 

 

 

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hereof).  Great Basin represents and warrants that it is, and Great Basin shall remain throughout the Term, familiar with its own business practices and the business practices of any third Person subcontractor and its agents and will ensure Great Basin and its third Person subcontractors and its agents operate within the guidelines of the Counterparty Code of Conduct.

 

(b) If Great Basin does not already have a copy, Great Basin may obtain a free copy of the Counterparty Code of Conduct by contacting the Ethics and Compliance Office of the NVE Parties at ethics-compliance@nvenergy.com or accessing the information at www.nvenergy.com.  The Counterparty Code of Conduct is hereby incorporated into this Agreement by this reference; provided, however, that where such Counterparty Code of Conduct and the requirements of this Agreement conflict the terms of this Agreement shall govern.

 

(c) Great Basin must notify the NVE Parties’ Representative immediately of any illegal or unethical activities or violations of the Counterparty Code of Conduct.  Great Basin should direct any questions or concerns about compliance or ethics issues while working for and/or on behalf of the NVE Parties to the NVE Parties’ Representative.  Great Basin may also call the NVE Parties’ toll-free Integrity Line at 1-888-256-5819 with any questions or concerns or to report illegal or unethical activities or any violation of the Counterparty Code of Conduct.  The Integrity Line is available 24 hours a day, 7 days a week.

 

(d) Great Basin shall not give or accept a Gratuity in connection with this Agreement or the subject matter hereof.

 

           20.20 Expiration of Options.  The options in Sections 3.07(a), 3.08, 3.09 and 6.05 shall expire immediately prior to three hundred sixty-five (365) years after the Effective Date, subject to the requirements of those Sections.

 

           20.21 Mobile Sierra.  The Parties agree that all rates, terms and conditions as specified in this Agreement shall remain in effect in accordance with their terms and shall not be subject to change through application to FERC pursuant to the provisions of Section 205 or Section 206 of the Federal Power Act of 1935, as amended, 16 U.S.C. §§ 792 et seq.  Absent agreement of the Parties to a proposed change, the standard of review for changes to any section of this Agreement by a Party, a non-Party or FERC acting sue sponte, shall be the “public interest” standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956), or will be the most stringent standard permissible under then-Applicable Law.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

 

 

 

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representative as of the Effective Date.

 

 

NEVADA POWER COMPANY

(d/b/a NV Energy)

 

	
By:

	
/s/ Michael W. Yackira

	
Name:

	
Michael W. Yackira

	
Title:

	
President and CEO

SIERRA PACIFIC POWER COMPANY

(d/b/a NV Energy)

 

 

	
By:

	
/s/ Michael W. Yackira

	
Name:

	
Michael W. Yackira

	
Title:

	
CEO

GREAT BASIN TRANSMISSION, LLC

 

	
By:

	
/s/ Paul G. Thessen

	
Name:

	
Paul G. Thessen

	
Title:

	
President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Page - Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

Exhibit A

 

 

ON LINE BUDGET

 

 

 

 

 

Exhibit A-1

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

	
SWIP South Construction Costs

	  	  
	
Exhibit A

	  	  
	
All amounts are in USD 000s unless otherwise indicated

	  	  
	 	 	 
	Construction Costs	 	 
	
Transmission Line Construction

	  	  
	
Engineering

	
[$]

	
1,300

	 	 	 
	
Owner Furnished Material

	  	  
	
Tubular Structures

	
[$]

	
46,234

	
Lattice Structures

	
[$]

	
2,142

	
Conductor (incl ACSR shield wire)

	
[$]

	
29,942

	
OPGW (incl hardware)

	
[$]

	
2,992

	
Subtotal OFM

	
[$]

	
81,310

	 	 	 
	
Construction contract

	
[$]

	
118,706

	 	 	 
	
Contractor Furnished Material

	  	  
	
Shield wire (non ACSR)

	
[$]

	
incl above

	
Conductor spacer - dampers / compression fittings

	
[$]

	
incl above

	
Conductor insulator & hardware

	
[$]

	
incl above

	
Shield wire hardware

	
[$]

	
incl above

	
Structure grounding material

	
[$]

	
incl above

	
Bird flight deterrent

	
[$]

	
incl above

	
Signs

	
[$]

	
incl above

	
Guy wire

	
[$]

	
incl above

	
Anchors

	
[$]

	
incl above

	
Foundation material

	
[$]

	
incl above

	 	 	 
	
Construction

	  	  
	
Foundation

	
[$]

	
incl above

	
Line

	
[$]

	
incl above

	
Roads

	
[$]

	
incl above

	
Lincoln County Construction Bids

	
[$]

	
incl above

	 	 	 
	
Environmental (including reclamation and dust control

	
[$]

	
incl above

	 	 	 
	
Subtotal construction contract

	
[$]

	
118,706

	 	 	 
	
Compliance Inspection Contractor

	
[$]

	
1,600

	
Environmental monitor

	
[$]

	
13,700

	
Line construction QA/QC

	
[$]

	
8,170

	
Cultural Resource Mitigation

	
[$]

	
1,600

	
Fiber optic misc. + Regen Sites

	
[$]

	
3,107

	
Road closure

	
[$]

	
2,000

	
Line Spares

	
[$]

	
500

	
NVE Proj/Const Management

	
[$]

	
4,000

	
GBT Proj Management

	
[$]

	
3,000

	
Environmental

	
[$]

	
3,131

	
BLM Bond

	
[$]

	
1,100

	
BLM Cost Recovery

	
[$]

	
300

	
Land Acquisition

	
[$]

	
191

	
Subtotal other scopes/contractors

	
[$]

	
42,399

	 	 	 
	
Transmission Line Subtotal

	
[$]

	
243,715

	 	 	 
	
Robinson Summit Substation

	  	  
	
Engineering

	
[$]

	
1,122

	 	 	 
	
Owner Funished Material

	  	  
	
345kV Series Capacitors

	
[$]

	
14,545

	
Transformers

	
[$]

	
6,700

	
Shunt reactor

	
[$]

	
2,920

	
Neutral reactor

	
[$]

	
600

	
Breakers

	
[$]

	
3,980

	
Disconnects

	
[$]

	
979

	
Support structures

	
[$]

	
4,500

	
Subtotal OFM

	
[$]

	
34,224

	 	 	 
	
Construction contract (incl balance of equipment/material)

	
[$]

	
38,329

	 	 	 
	
NVE Construction Scope at Robinson Summit

	
[$]

	
7,175

	 	 	 
	
Substation Spares

	
[$]

	
400

	 	 	 
	
Robinson Total

	
[$]

	
81,250

	 	 	 
	
Owner Insurance

	
[$]

	
2,500

	 	 	 
	
NVE Equipment Scope

	  	  
	
Falcon Substation Expansion

	
[$]

	
22,285

	
Harry Allen Substation Interconnection

	
[$]

	
14,879

	
Gonder, Falcon, Valmy, Coyote, Tracy Relay Upgrades

	
[$]

	
4,102

	
Microwave communications

	
[$]

	
24,261

	
Subtotal

	
[$]

	
65,527

	 	 	 
	Taxes	 	 
	
Sales and Use Tax

	
[$]

	
16,111

	
Property Taxes

	
[$]

	
4,855

	
Total Taxes

	
[$]

	
20,965

	 	 	 
	Pre-Closing Costs	 	 
	
NVE Pre-Closing Costs Through October 2010

	
[$]

	
6,722

	
GB Pre-Closing Costs Through October 2010

	
[$]

	
4,565

	
Total Pre-Closing Costs (excluding carry)

	
[$]

	
11,287

	 	 	 
	Development Costs	 	 
	
NVE Development Costs Through December 2009

	
[$]

	
11,747

	
GB Development Costs Through December 2009

	
[$]

	
15,000

	
Total Development Costs (excluding carry)

	
[$]

	
26,747

	 	 	 
	Contingency	 	 
	
Contingency Percentage

	
[%]

	
10.00%

	 	 	 
	Exhibit A	 	 
	
Sub-Total

	
[$]

	
451,992

	
Contingency Amount

	
[$]

	
45,199

	
TOTAL w/ Contingency

	
[$]

	
497,191

 

 

 

 

 

  

  

  

 

 

Exhibit B

 

 

DELEGATED RESPONSIBILITIES

 

 

Secure permits required for the microwave communications system for ON Line

 

 

Secure permits required for the Falcon substation upgrades for ON Line

 

 

Secure permits required for the construction of the Robinson Summit Substation at the Robinson Summit Location

 

Exhibit B-1

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

Exhibit C

 

 

ON LINE SCHEDULE

 

 

The ON Line Schedule will be attached upon approval of the Management Committee, which the Management Committee will endeavor to finalize within five (5) Business Days of the Effective Date.

 

 

The ON Line Schedule attached hereto was approved by the Management Committee on August 27, 2010 and is hereby deemed incorporated as of the Effective Date.

 

 

Exhibit C-1

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

	
Exhibit C - ON Line Schedule

	 	  
	
Line No.

	 	
Activity ID

	 	
Activity Name

	 	
OD

	 	
Start

	 	
Finish

	 	
Comment

	  	 	  	 	  	 	  	 	  
	
ExC.PRJ PROJECT MILESTONES

	 	
1015

	 	
12-30-09 A

	 	
2-28-13

	 	  
	
1

	 	
AB0005

	 	
Project Initiation

	 	
0

	 	
12-30-09 A

	 	  	 	  
	
2

	 	
AB0015

	 	
Acquisition / Financial Closing

	 	
25

	 	
11-29-10

	 	
12-31-10

	 	  
	
3

	 	
AB0030

	 	
ON Line COD

	 	
0

	 	  	 	
11-16-12*

	 	  
	
4

	 	
AB0080

	 	
Project Complete

	 	
0

	 	  	 	
2-28-13*

	 	  
	
ExC.ENV ENVIRONMENTAL APPROVALS

	 	
238

	 	
7-20-10 A

	 	
1-14-11

	 	  
	
5

	 	
ABENV10

	 	
BLM Revised COM Plan Approval

	 	
0

	 	
8-18-10 A

	 	
8-18-10 A

	 	  
	
6

	 	
ABENV20

	 	
BLM Final Approval of HPTP

	 	
0

	 	
7-20-10 A

	 	
7-20-10 A

	 	  
	
7

	 	
ABENV30

	 	
BLM Notice to Proceed

	 	
0

	 	
8-19-10 A

	 	
8-19-10 A

	 	  
	
8

	 	
ABENV40

	 	
PUCN Permit to Construct - SWIP South

	 	
0

	 	
8-31-10*

	 	
8-31-10

	 	  
	
9

	 	
ABENV50

	 	
Robinson Summit Sub Site B UEPA EIS

	 	
0

	 	  	 	
10-15-10

	 	  
	
10

	 	
ABENV60

	 	
Robinson Summit Sub Site B UEPA Permit Review

	 	
62

	 	
10-18-10

	 	
1-14-11

	 	  
	
11

	 	
ABENV70

	 	
Robinson Summit Sub Site B PUCN Permit to Constr

	 	
0

	 	  	 	
1-14-11

	 	  
	
ExC.AGR MAJOR AGREEMENTS AND APPROVAL

	 	
210

	 	
2-2-10 A

	 	
11-29-10

	 	  
	
ExC.AGR.1 Public Utilities Commission

	 	
129

	 	
2-2-10 A

	 	
7-28-10 A

	 	  
	
12

	 	
ABAGR100

	 	
NPC IRP Filing Review

	 	
129

	 	
2-2-10 A

	 	
7-28-10 A

	 	  
	
13

	 	
ABAGR110

	 	
SPPC IRP Amendment Filing Review

	 	
99

	 	
3-16-10 A

	 	
7-28-10 A

	 	  
	
14

	 	
ABAGR120

	 	
PUCN Hearings IRP's

	 	
10

	 	
6-1-10 A

	 	
6-11-10 A

	 	  
	
15

	 	
ABAGR130

	 	
PUCN Order IRP's

	 	
30

	 	
7-28-10 A

	 	
7-28-10 A

	 	  
	
ExC.AGR.2 Transmission Use Agreement

	 	
204

	 	
2-10-10 A

	 	
11-29-10

	 	  
	
16

	 	
ABAGR200

	 	
TUA Negotiations

	 	
5

	 	
2-10-10 A

	 	
8-19-10

	 	  
	
17

	 	
ABAGR210

	 	
Execution of TUA

	 	
0

	 	
8-20-10

	 	
8-20-10

	 	  
	
18

	 	
ABAGR220

	 	
PUCN - Prepare Filing of TUA

	 	
11

	 	
8-23-10

	 	
9-7-10

	 	  
	
19

	 	
ABAGR230

	 	
PUCN - TUA Review and Approval

	 	
28

	 	
9-8-10

	 	
10-15-10

	 	
Footnote 1

	
20

	 	
ABAGR240

	 	
FERC - Prepare draft filing of TUA

	 	
13

	 	
8-27-10

	 	
9-15-10

	 	  
	
21

	 	
ABAGR245

	 	
FERC - Staff review/comment

	 	
5

	 	
9-16-10

	 	
9-22-10

	 	  
	
22

	 	
ABAGR247

	 	
FERC - Prepare filling

	 	
6

	 	
9-22-10

	 	
9-29-10

	 	  
	
23

	 	
ABAGR250

	 	
FERC - Review and Approval of TUA

	 	
40

	 	
9-30-10

	 	
11-29-10

	 	
Footnote 1

	
ExC.AGR.3 Interconnection Agreement / SNIP Agreement

	 	
64

	 	
8-26-10

	 	
11-29-10

	 	  
	
24

	 	
ABAGR300

	 	
IA/SNIP Negotiations

	 	
20

	 	
8-26-10*

	 	
9-23-10

	 	  
	
25

	 	
ABAGR310

	 	
Execution of IA/SNIP

	 	
0

	 	
9-24-10

	 	
9-24-10

	 	  
	
26

	 	
ABAGR320

	 	
FERC Prepare Filing of IA/SNIP

	 	
6

	 	
9-22-10

	 	
9-29-10

	 	  
	
27

	 	
ABAGR330

	 	
FERC IA/SNIP Review and Approval

	 	
40

	 	
9-30-10

	 	
11-29-10

	 	
Footnote 1

	
ExC.DSN PLANNING AND DESIGN

	 	
1275

	 	
1-1-07 A

	 	
6-30-11

	 	  
	
28

	 	
ABDSN10

	 	
Transmission Line Design

	 	
768

	 	
1-1-07 A

	 	
12-31-10

	 	  
	
29

	 	
ABDSN20

	 	
Robinson Summit Substation Design

	 	
253

	 	
1-2-09 A

	 	
3-30-11

	 	  
	
30

	 	
ABDSN30

	 	
Harry Allen Substation Design

	 	
485

	 	
2-1-08 A

	 	
11-30-10

	 	  
	
31

	 	
ABDSN40

	 	
Falcon Substation Design

	 	
100

	 	
2-10-11

	 	
6-30-11

	 	  
	
32

	 	
ABDSN50

	 	
Microwave and Mobile Radio Design

	 	
507

	 	
1-2-08 A

	 	
11-19-10

	 	  
	
ExC.TRN TRANSMISSION MATERIAL CONTRACTS

	 	
572

	 	
1-4-10 A

	 	
4-2-12

	 	  
	
ExC.TRN Tubular V Towers

	 	
434

	 	
1-4-10 A

	 	
9-15-11

	 	  
	
33

	 	
ABTRN100

	 	
Tubular V Towers - Design and Test

	 	
85

	 	
1-4-10 A 5

	 	
5-19-10 A

	 	  
	
34

	 	
ABTRN110

	 	
Tubular V Towers - Contract

	 	  	 	
6-14-10 A

	 	
9-30-10

	 	  

 

Footnote 1 - The parties acknowledge that the dates provided for these approvals are estimates and the ability to meet these dates is solely within the control of the respective regulatory agencies.

Footnote 2 - The Notice to Proceed and successor dates are dependent upon the actual Acquistion/Financial Closing date.

  

  

  

 

	
Exhibit C - ON Line Schedule

	 	  
	
Line No.

	 	
Activity ID

	 	
Activity Name

	 	
OD

	 	
Start

	 	
Finish

	 	
Comment

	  	 	  	 	  	 	  	 	  	 	  	 	  
	
35

	 	
ABTRN120

	 	
Tubular V Towers - Fabricate and Deliver

	 	
156

	 	
2-7-11

	 	
9-15-11

	 	  
	
ExC.TRN.2 Tubular H-Fram/3-Pole

	 	
408

	 	
6-14-10 A

	 	
9-15-11

	 	  
	
36

	 	
ABTRN200

	 	
Contract

	 	
5

	 	
6-14-10 A

	 	
9-30-10

	 	  
	
37

	 	
ABTRN210

	 	
Fabricate and Deliveries

	 	
151

	 	
2-14-11

	 	
9-15-11

	 	  
	
ExC.TRN.3 Lattice Towers

	 	
288

	 	
7-1-10 A

	 	
6-17-11

	 	  
	
38

	 	
ABTRN300

	 	
Contract

	 	
170

	 	
7-1-10 A

	 	
9-30-10

	 	  
	
39

	 	
ABTRN310

	 	
Fabricate and Deliveries

	 	
94

	 	
2-7-11

	 	
6-17-11

	 	  
	
ExC.TRN.4 Conductor

	 	
546

	 	
6-1-10 A

	 	
4-2-12

	 	  
	
40

	 	
ABTRN400

	 	
Contract

	 	
161

	 	
6-1-10 A

	 	
9-30-10

	 	  
	
41

	 	
ABTRN410

	 	
Fabricate and Deliveries

	 	
254

	 	
4-4-11

	 	
4-2-12

	 	  
	
ExC.TRN.5 OPGW & Hardware

	 	
546

	 	
6-1-10 A

	 	
4-2-12

	 	  
	
42

	 	
ABTRN500

	 	
Contract

	 	
161

	 	
6-1-10 A

	 	
9-30-10

	 	  
	
43

	 	
ABTRN510

	 	
Fabricate and Deliveries

	 	
254

	 	
4-4-11

	 	
4-2-12

	 	  
	
ExC.SUB SUBSTATION MATERIAL CONTRACTS

	 	
672

	 	
6-1-10 A

	 	
9-28-12

	 	  
	
ExC.SUB.1 Autotransformers

	 	
589

	 	
6-1-10 A

	 	
6-4-12

	 	  
	
44

	 	
ABSUB100

	 	
Contract

	 	
5

	 	
6-1-10 A

	 	
9-30-10

	 	  
	
45

	 	
ABSUB110

	 	
Delivery Complete

	 	
0

	 	
6-4-12

	 	
6-4-12

	 	  
	
ExC.SUB.2 500kV Shunt Reactors

	 	
594

	 	
6-1-10 A

	 	
6-11-12

	 	  
	
46

	 	
ABSUB200

	 	
Contract

	 	
5

	 	
6-1-10 A

	 	
9-30-10

	 	  
	
47

	 	
ABSUB210

	 	
Delivery Complete

	 	
0

	 	
6-11-12

	 	
6-11-12

	 	  
	
ExC.SUB.3 345kV Falcon-Robinson Series Caps (NVE)

	 	
507

	 	
10-1-10

	 	
9-28-12

	 	  
	
48

	 	
ABSUB300

	 	
Contract

	 	
83

	 	
10-1-10*

	 	
1-31-11

	 	  
	
49

	 	
ABSUB310

	 	
Design, Manufacture, Install

	 	
424

	 	
2-1-11

	 	
9-28-12

	 	  
	
ExC.SUB.4 Circuit Breakers

	 	
570

	 	
6-1-10 A

	 	
5-7-12

	 	  
	
50

	 	
ABSUB400

	 	
Contract

	 	
5

	 	
6-1-10 A

	 	
9-30-10

	 	  
	
51

	 	
ABSUB410

	 	
Delivery Complete

	 	
0

	 	
5-7-12

	 	
5-7-12

	 	  
	
ExC.SUB.5 Disconnect Switches

	 	
414

	 	
6-1-10 A

	 	
9-23-11

	 	  
	
52

	 	
ABSUB500

	 	
Contract

	 	
5

	 	
6-1-10 A

	 	
9-30-10

	 	  
	
53

	 	
ABSUB510

	 	
Delivery Complete

	 	
1

	 	
9-23-11*

	 	
9-23-11

	 	  
	
ExC.SUB.7 Support Steel

	 	
408

	 	
6-1-10 A

	 	
9-15-11

	 	  
	
54

	 	
ABSUB700

	 	
Contract

	 	
5

	 	
6-1-10 A

	 	
9-30-10

	 	  
	
55

	 	
ABSUB705

	 	
Delivery - Anchor Bolts

	 	
11

	 	
6-1-11*

	 	
6-15-11

	 	  
	
56

	 	
ABSUB710

	 	
Delivery - Structures

	 	
33

	 	
8-1-11*

	 	
9-15-11

	 	  
	
ExC.SRV CONSTRUCTION AND SERVICE CONTRACTS

	 	
459

	 	
1-1-10 A

	 	
12-1-11

	 	  
	
ExC.SRV.1 Transmission Line Construction

	 	
203

	 	
5-3-10 A

	 	
11-29-10

	 	  
	
57

	 	
ABSRV100

	 	
Bid Process/Contract Negotiation

	 	
86

	 	
5-3-10 A

	 	
9-30-10

	 	  
	
58

	 	
ABSRV120

	 	
Notice to Proceed

	 	
0

	 	
11-29-10

	 	
11-29-10

	 	
Footnote 2

	
ExC.SRV.2 Robinson Summit Substation Construction

	 	
146

	 	
5-3-10 A

	 	
3-1-11

	 	  
	
59

	 	
ABSRV200

	 	
Bid Process/Contract Negotiation

	 	
5

	 	
5-3-10 A

	 	
9-30-10

	 	  
	
60

	 	
ABSRV220

	 	
Notice to Proceed

	 	
0

	 	
3-1-11*

	 	
3-1-11

	 	  
	
ExC.SRV.3 Harry Allen Substation Construction (NVE)

	 	
40

	 	
10-3-11

	 	
12-1-11

	 	  
	
61

	 	
ABSRV300

	 	
Bid Process/Contract Negotiation

	 	
40

	 	
10-3-11*

	 	
11-30-11

	 	  
	
62

	 	
ABSRV310

	 	
Notice to Proceed

	 	
0

	 	
12-1-11

	 	
12-1-11

	 	  
	
ExC.SRV.4 Compliance Inspection Contractor

	 	
31

	 	
1-1-10 A

	 	
9-15-10

	 	  
	
63

	 	
ABSRV400

	 	
Bid Process/Contract Negotiation

	 	  	 	
5 1-1-10 A

	 	
6-15-10 A

	 	  

 

Footnote 1 - The parties acknowledge that the dates provided for these approvals are estimates and the ability to meet these dates is solely within the control of the respective regulatory agencies.

Footnote 2 - The Notice to Proceed and successor dates are dependent upon the actual Acquistion/Financial Closing date.

  

  

  

 

	
Exhibit C - ON Line Schedule

	
Line No.

	 	
Activity ID

	 	
Activity Name

	 	
OD

	 	
Start

	 	
Finish

	 	
Comment

	  	 	  	 	  	 	  	 	  	 	  	 	  
	
64

	 	
ABSRV410

	 	
Notice to Proceed

	 	
0

	 	
9-15-10*

	 	
9-15-10

	 	  
	
ExC.SRV.5 Environmental Monitoring Services

	 	
81

	 	
6-1-10 A

	 	
11-29-10

	 	  
	
65

	 	
ABSRV500

	 	
Bid Process/Contract Negotiation

	 	
5

	 	
6-1-10 A

	 	
9-30-10

	 	  
	
66

	 	
ABSRV510

	 	
Notice to Proceed

	 	
0

	 	
11-29-10

	 	
11-29-10

	 	
Footnote 2

	
ExC.SRV.6 Quality Assurance Services

	 	
81

	 	
7-1-10 A

	 	
11-29-10

	 	  
	
67

	 	
ABSRV600

	 	
Bid Process/Contract Negotiation

	 	
5

	 	
7-1-10 A

	 	
9-30-10

	 	  
	
68

	 	
ABSRV610

	 	
Notice to Proceed

	 	
0

	 	
11-29-10

	 	
11-29-10

	 	
Footnote 2

	
ExC.SRV.7 Archaeological Data Recovery Services

	 	
187

	 	
1-1-10 A

	 	
4-26-11

	 	  
	
69

	 	
ABSRV700

	 	
Bid Process/Contract Negotiation

	 	
5

	 	
1-1-10 A

	 	
9-30-10

	 	  
	
70

	 	
ABSRV710

	 	
Notice to Proceed

	 	
0

	 	
11-29-10

	 	
11-29-10

	 	
Footnote 2

	
71

	 	
ABSRV720

	 	
Fieldwork - Data Collection

	 	
84

	 	
12-29-10

	 	
4-26-11

	 	  
	
ExC.CNST CONSTRUCTION

	 	
573

	 	
11-29-10

	 	
2-28-13

	 	  
	
ExC.CNST.1 TRANSMISSION LINE CONSTRUCTION

	 	
573

	 	
11-29-10

	 	
2-28-13

	 	  
	
72

	 	
ABCNST100

	 	
Mobilization

	 	
18

	 	
11-29-10

	 	
12-22-10

	 	  
	
73

	 	
ABCNST110

	 	
Pre-Construction Material Receipt

	 	
18

	 	
11-29-10

	 	
12-22-10

	 	  
	
74

	 	
ABCNST120

	 	
Access Roads and Below Grade

	 	
449

	 	
12-27-10*

	 	
9-28-12

	 	  
	
75

	 	
ABCNST130

	 	
Tower Assembly and Erection

	 	
398

	 	
2-14-11

	 	
9-5-12

	 	  
	
76

	 	
ABCNST140

	 	
Wire Stringing

	 	
394

	 	
5-2-11

	 	
11-15-12

	 	  
	
77

	 	
ABCNST150

	 	
Commercial Operation Date

	 	
1

	 	
11-16-12

	 	
11-16-12

	 	  
	
78

	 	
ABCNST160

	 	
Reclamation and Close Out

	 	
129

	 	
8-24-12

	 	
2-28-13

	 	  
	
ExC.CNST.2 ROBINSON SUMMIT SUBSTATION

	 	
508

	 	
3-1-11

	 	
2-28-13

	 	  
	
79

	 	
ABCNST200

	 	
Site Work - Grading and Fencing

	 	
100

	 	
3-1-11

	 	
7-20-11

	 	  
	
80

	 	
ABCNST210

	 	
Civil and Electrical Construction

	 	
280

	 	
7-28-11

	 	
8-31-12

	 	  
	
81

	 	
ABCNST220

	 	
Equipment Installation and Commissioning

	 	
213

	 	
1-19-12

	 	
11-15-12

	 	  
	
82

	 	
ABCNST230

	 	
Commercial Operation Date

	 	
1

	 	
11-16-12

	 	
11-16-12

	 	  
	
83

	 	
ABCNST240

	 	
Demobilization and Close Out

	 	
89

	 	
10-22-12

	 	
2-28-13

	 	  
	
ExC.CNST.3 HARRY ALLEN SUBSTATION

	 	
277

	 	
1-27-12

	 	
2-28-13

	 	  
	
84

	 	
ABCNST300

	 	
Civil and Electrical Construction

	 	
129

	 	
1-27-12

	 	
7-27-12

	 	  
	
85

	 	
ABCNST310

	 	
Equipment Installation and Commissioning

	 	
147

	 	
4-20-12

	 	
11-15-12

	 	  
	
86

	 	
ABCNST320

	 	
Commercial Operation Date

	 	
1

	 	
11-16-12

	 	
11-16-12

	 	  
	
87

	 	
ABCNST330

	 	
Demobilization and Close Out

	 	
89

	 	
10-22-12

	 	
2-28-13

	 	  
	
ExC.CNST.4 FALCON SUBSTATION

	 	
381

	 	
8-29-11

	 	
2-28-13

	 	  
	
88

	 	
ABCNST400

	 	
Site Work - Grading and Fencing

	 	
70

	 	
8-29-11

	 	
12-8-11

	 	  
	
89

	 	
ABCNST410

	 	
Civil and Electrical Construction

	 	
163

	 	
2-13-12

	 	
10-1-12

	 	  
	
90

	 	
ABCNST420

	 	
Equipment Installation and Commissioning

	 	
116

	 	
6-5-12

	 	
11-15-12

	 	  
	
91

	 	
ABCNST430

	 	
Commercial Operation Date

	 	
1

	 	
11-16-12

	 	
11-16-12

	 	  
	
92

	 	
ABCNST440

	 	
Demobilization and Close Out

	 	
89

	 	
10-22-12

	 	
2-28-13

	 	  
	
ExC.CNST.5 COMMUNICATIONS

	 	
374

	 	
6-1-11

	 	
11-16-12

	 	  
	
93

	 	
ABCNST500

	 	
Site Work, Civil, and Electrical Construction

	 	
191

	 	
6-1-11*

	 	
3-1-12

	 	  
	
94

	 	
ABCNST510

	 	
Equipment Installation and Commissioning

	 	
299

	 	
7-28-11

	 	
9-28-12

	 	  
	
95

	 	
ABCNST520

	 	
Commercial Operation Date

	 	
1

	 	
11-16-12*

	 	
11-16-12

	 	  

 

Footnote 1 - The parties acknowledge that the dates provided for these approvals are estimates and the ability to meet these dates is solely within the control of the respective regulatory agencies.

Footnote 2 - The Notice to Proceed and successor dates are dependent upon the actual Acquistion/Financial Closing date.

 

 

 

 

 

 

 

  

  

  

Exhibit D

 

 

INSURANCE PLAN

 

	
I.

	
Coverage specific to ON Line and the Great Basin Segments

 

	
  

	
A.

	
Property Insurance covering ON Line:  From ON Line Financial Closing to the earlier of (a) ON Line COD and (b) the date that operational insurance becomes effective, the Managing Party shall require each contractor and subcontractor performing work on the ON Line ROW, as part of its price, to procure and maintain the following coverages from the date of the notice to proceed under the applicable contract to the final completion thereof:

 

	
  

	
1.

	
All coverages described in Part II below (as modified by Part II(E))

 

	
  

	
2.

	
Delay in Start-up insurance with coverage of $110,000 per day of delay

 

	
  

	
3.

	
Builders All Risk insurance with limits no less than the full replacement cost, or an acceptable loss limit, of ON Line

 

	
  

	
4.

	
Marine and Air Cargo insurance, to the extent that any major equipment requires overseas transport, with limits sufficient to cover the property at risk, and Marine and Air Cargo Delay in Start-up insurance with limit and indemnity period equal to the amounts for the Delay in Start-up insurance

 

	
  

	
B.

	
Property Insurance covering Robinson Summit Substation: From ON Line COD, and thereafter throughout the Term, the NVE Parties shall provide the following Property Insurance coverage on the Robinson Summit Substation:

 

	
  

	
1.

	
All risk physical loss or damage coverage equivalent to the replacement value of the substation, subject to coverage limits and exclusions

 

	
  

	
C.

	
Property Insurance covering the Great Basin Segments:

 

	
  

	
1.

	
In the period between GB Segment Financial Closing and commercial operation of each Great Basin Segment, Great Basin shall procure, or require each contractor and subcontractor performing work on the right-of-way for the Great Basin Segments to procure, and maintain the following coverages from the date of the notice to proceed under the applicable contract to the final completion thereof:

 

	
  

	
(a)

	
All coverages described in Part II below (as modified by Part II(E))

 

	
  

	
(b)

	
Builders All Risk insurance

 

	
  

	
2.

	
From the commercial operation of each Great Basin Segment, and thereafter throughout the Term, Great Basin shall provide the following Property Insurance coverages on the Great Basin Segments:

 

 

 

Exhibit D-1

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

	
  

	
(a)

	
To the extent that the GB Segments include the ownership of any substation, all risk physical loss or damage coverage equivalent to the replacement value of the substation, subject to coverage limits and exclusions

 

	
II.

	
Coverage specific to the Parties

 

Commencing on the Effective Date the Parties shall obtain and maintain the following insurance policies:

 

	
  

	
A.

	
Automobile Liability:

 

	
  

	
Coverage:

	
Bodily injury and property damage for all owned, hired and non-owned automobiles, trucks and trailers, including coverage for contractual liability.  Coverage shall be provided not less than that of an ISO Business Auto Policy CA 00 01 or similar:

 

	
  

	
$1,000,000

	
Combined Single Limit Each Occurrence for Bodily Injury & Property Damage.

 

	
  

	
B.

	
Workers' Compensation and Employers' Liability:

 

	
  

	
Coverage:

	
Statutory limits required by the Workers' Compensation laws of the applicable jurisdiction, including United States Longshoreman’s and Harbor Workers’ Act (USL&HW and Maritime Employers Liability), if applicable, with Employer's Liability.

 

	
  

	
Part One:

	
Workers' Compensation:

	
Statutory Limits

 

	
  

	
Part Two:

	
Employer's Liability:

	
Required Annual Limits:

USL&HW & MEL                                $1,000,000 policy limit

Bodily Injury by Accident:                 $1,000,000 each accident

Bodily Injury by Disease:                    $1,000,000 each employee

Bodily Injury by Disease:                    $1,000,000 policy limit

 

	
  

	
C.

	
General Liability Insurance:

 

	
  

	
Coverage:

	
Third party personal injury, bodily injury and property damage liability written on an occurrence form (including products liability for any product manufactured, assembled or otherwise worked upon away from the project site) including coverage for contractual liability, actions over and wildfire.

 

Minimum Requirements:                                                                Annual Limits of Liability:

General Aggregate                                                                          $ 2,000,000

Products/Completed Operations Aggregate                         $ 1,000,000

Personal/Advertising Injury Aggregate                                      $ 1,000,000

Each Occurrence Limit                                                                    $ 2,000,000

 

 

Exhibit D-2

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

Fire Damage Legal Liability (any one fire)                                   $    100,000

Medical Expense                                                                              $        5,000

 

	
  

	
D.

	
Excess/Umbrella Liability Insurance:

 

	
  

	
Coverage:

	
Occurrence form written on a following form basis over the primary policies/coverages required above.

 

	  	
Minimum Limits of Liability:

	
All Insureds Combined:

	  	
Combined Single Limit

	
$25,000,000 each occurrence

	  	
General Aggregate

	
$25,000,000

 

	
  

	
E.

	
Aircraft/Aviation Liability (If required by Contract or if applicable):

 

Should aircraft of any kind be used by anyone on behalf of the Parties, such party using the aircraft shall maintain or cause the operator of the aircraft to maintain aviation liability insurance with the following requirements:

 

Combined Single Limit:

(Bodily Injury and Property Damage)                $10,000,000       each occurrence (as required)

 

Notes:

	
(a)  

	
Waiver of hull damage shall be provided in favor of the Parties

 

	
(b)  

	
If any lifts are preformed, a slung cargo endorsement shall be attached to the policy to cover the full replacement value of any equipment or material being lifted

 

	
  

	
F.

	
Railroad Protective Liability: (if required by contract)

 

Should the work involve any activities in the vicinity of a railroad, Railroad Protective Insurance as may be required by the affected railroad, written for not less than the limits required by such railroad.

 

	
III.

	
Requirements Applicable to all Insurance Policies

 

	
  

	
A.

	
All policies, binders or interim insurance contracts with respect to insurance maintained by the Parties, contractors, subcontractors or sub-subcontractors pursuant to this Exhibit D shall:

 

	
  

	
1.

	
be placed with responsible and reputable insurance companies which are licensed or authorized to do business in the State of Nevada and are rated by A.M. Best’s Key Rating Guide as “A-”, Financial Size “VIII”, or better;

 

	
  

	
2.

	
state that Great Basin, the NVE Parties, ON Line Lenders and GB Segment Lenders (as applicable) are named as additional insureds, with the exception of Workers Compensation/Employers Liability;

 

Exhibit D-3

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

	
  

	
3.

	
state that it is primary, or in excess only with respect to the specific primary policy provided by the same party for such coverage, and not excess or contributing as with respect to any other insurance (or self-insurance) available to the Parties, ON Line Lenders, GB Segment Lenders (as applicable) or the additional insureds and that all provisions thereof, except the limits of liability, shall operate in the same manner as if there were a separate policy covering each insured under each such policy;

 

	
  

	
4.

	
provide that there will be no recourse against any additional insured for the payment of premiums or commissions (if such policies provide for the payment thereof), additional premiums or assessments, it being understood that such are obligations of the named insured providing such insurance pursuant to this Agreement;

 

	
  

	
5.

	
with respect to the insurance described in Section II waive any right of subrogation of the insurers thereunder against the Parties, ON Line Lenders, GB Segment Lenders (as applicable) and the officers, directors and employees of each of them, and any right of the insurers to any set-off or counterclaim or any other deduction, whether by attachment or otherwise, with respect to any liability of any such person insured under such policy;

 

	
  

	
6.

	
with respect to the interests of the additional insured, provide that such insurance shall not be invalidated by any action or inaction of the additional named insured and shall insure the additional named insured regardless of any breach or violation of any warranty, declaration or condition contained in such insurance by the primary named insured;

 

	
  

	
7.

	
provide that it may not be canceled or materially changed without giving the Parties sixty (60) days prior written notification thereof, except for ten (10) days for non-payment of premium.

 

	
  

	
8.

	
Such policies shall include a separation of insured clause.

 

	
  

	
9.

	
Operator and any subcontractor shall be responsible for any loss of or damage to their own property, including tools, equipment and vehicles or other property which does not form part of the project.

 

	
  

	
B.

	
Within thirty (30) days after the Acquisition Closing Date, and from time to time thereafter as reasonably requested by a Party, each Party shall provide the other Parties with certificates of insurance evidencing the placement of the coverages required (i) under this Exhibit D and (ii) by the GB Segment Lenders, together with information regarding any reserves required to be established by the GB Segment Lenders in respect of such coverages.  Each Party shall deliver replacement certificates evidencing replaced or renewed coverage to the other Parties on or before the expiration date of the expiring policies.

 

Exhibit D-4

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

	
  

	
C.

	
Great Basin, the NVE Parties, the ON Line Lenders and the GB Segment Lenders shall be named as insured parties and loss payees, as their interests appear, for all insurance policies contemplated herein.  Notwithstanding the above, all insurance proceeds received by the Parties shall be shared as set forth in this Agreement.

 

 

 

 

Exhibit D-5

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

Exhibit E

FORM OF BILL OF SALE

AND

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

THIS BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Assignment”) is entered into as of _____________, 2010 by and among Great Basin Transmission, LLC, a Delaware limited liability company (“Great Basin”), Nevada Power Company, a Nevada corporation, d/b/a NV Energy (“NPC”) and Sierra Pacific Power Company, a Nevada corporation, d/b/a NV Energy (“SPPC”).  Great Basin, NPC and SPPC may sometimes be referred to herein individually as a “Party” and collectively as the “Parties”.

 

RECITALS

 

WHEREAS, reference is made to the Transmission Use and Capacity Exchange Agreement (the “Transmission Use Agreement”), dated as of August 20, 2010, by and among the Parties.  All capitalized terms used but not otherwise defined herein shall have the same meaning as set forth in the Transmission Use Agreement.

 

WHEREAS, each Party desires to carry out, in part, the intent and purpose of the Transmission Use Agreement by such Party’s execution and delivery of this Assignment evidencing the vesting in NPC of an undivided twenty-three and seventy-five hundredths percent (23.75%) ownership interest in all right, title and interest in ON Line and SPPC of an undivided one and twenty-five hundredths percent (1.25%) ownership interest in all right, title and interest in ON Line.

 

WHEREAS, “ON Line” means any and all assets, interests and property rights (real and personal and tangible and intangible) comprising SWIP-S (to be renamed the “One Nevada Transmission Line” pursuant to Section 4.08 of the Transmission Use Agreement), including any fiber optic line comprising SWIP-S, any microwave communication system comprising SWIP-S  and any and all leasehold or other possessory interest in the ON Line ROW, ON Line Agreements, Governmental Approvals for ON Line, Books and Records, Work Product and depreciation and other tax benefits, as further described in Schedule 1.  For the avoidance of doubt, ON Line does not include the NVE Project, Excluded Agreements or any information licensed to Great Basin under the License Agreement.

 

WHEREAS, NPC will receive certain rights, and assume certain obligations, from Great Basin under the ON Line Agreements of which it will provide the benefit of those rights, and the burdens of the obligations, to SPPC pursuant to Section 3.01(c) of the Transmission Use Agreement.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:

 

 

Exhibit E-1

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

Section 1. Bill of Sale.

 

(a) Great Basin hereby assigns, transfers, conveys and delivers to NPC an undivided twenty-three and seventy-five hundredths percent (23.75%) ownership interest in all right, title and interest in ON Line and to SPPC an undivided one and twenty-five hundredths percent (1.25%) ownership interest in all right, title and interest in ON Line.

 

(b) Great Basin hereby recognizes the receipt of the NPC Purchase Price, in part, for the assignment and transfer of an undivided twenty-three and seventy-five hundredths percent (23.75%) ownership interest in ON Line to NPC and the SPPC Purchase Price, in part, for the assignment and transfer of an undivided one and twenty-five hundredths percent (1.25%) ownership interest in ON Line to SPPC.

 

Section 2. Assignment and Assumption of ON Line Agreements.  Great Basin hereby assigns to NPC an undivided twenty-five percent (25%) ownership interest in all right, title and interest in and to each ON Line Agreement.  NPC hereby assumes and agrees to perform twenty-five percent (25%) of Great Basin’s obligations arising after the Acquisition Closing Date under each ON Line Agreement.  For the avoidance of doubt, with respect to indemnity obligations under any ON Line Agreement, NPC shall assume no liability for events that occurred through the Acquisition Closing Date and shall only assume twenty-five percent (25%) of liability for events that occur after the Acquisition Closing Date with respect to each ON Line Agreement.  SPPC assumes no obligations under this Agreement with respect to any ON Line Agreement.

 

Section 3. Successors and Assigns.  This Assignment shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns.

 

Section 4. Governing Law.  THIS ASSIGNMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA (WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF THAT REQUIRE THE APPLICATION OF ANOTHER JURISDICTION’S

 

Section 5. Severability. If any provision of this Assignment shall be held invalid or unenforceable, the validity or enforceability of the remaining provisions shall not in any way be impaired thereby.

 

Exhibit E-2

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

Section 6. Construction. Headings are solely for the Parties’ convenience, are not a part of this Assignment and shall not be used to interpret this Assignment.  The Parties acknowledge that this Assignment has been jointly prepared by each Party and shall not be strictly construed against any Party.  No presumption will apply in favor of any Party in the interpretation of this Assignment or in the resolution of any ambiguity of any provision hereof based on the preparation, substitution, submission or other event of negotiation, drafting or execution hereof.  In the event of a conflict between the terms of this Assignment and the terms of the Transmission Use Agreement, the terms of the Transmission Use Agreement shall prevail.  The Parties hereby acknowledge and agree that the only remedies of the Parties and their respective Affiliates, successors and assigns with respect to the consummation of the transactions contemplated by this Assignment shall be those remedies specifically provided for in the Transmission Use Agreement.

 

Section 7. Counterparts. This Assignment may be executed in one or more counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same instrument.

 

Section 8. Amendment. This Assignment may be amended, supplemented, or modified only by a written instrument duly executed by or on behalf of each Party.

 

Section 9. Further Assurances.  Each Party hereby agrees that it will, at any time and from time to time, and without further consideration, take all such further actions and execute and deliver all such further instruments or documents, as may be reasonably requested by any other Party to effectuate the purposes of this Assignment.

 

Section 10. Exclusivity of Representations.  THE REPRESENTATIONS AND WARRANTIES MADE IN ARTICLE XVII OF THE TRANSMISSION USE AGREEMENT ARE THE EXCLUSIVE REPRESENTATIONS AND WARRANTIES MADE BY SELLER WITH RESPECT TO ITSELF AND ON LINE AND THE TRANSACTIONS CONTEMPLATED IN THIS ASSIGNMENT.  SELLER HEREBY DISCLAIMS ANY OTHER EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES WITH RESPECT TO ITSELF OR ON LINE.  EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE XII OF THE TRANSMISSION USE AGREEMENT, THE CONDITION OF ON LINE AND ANY PORTION THEREOF SHALL BE “AS IS” AND “WHERE IS” AND SELLER MAKES NO WARRANTY OF MERCHANTABILITY, SUITABILITY, FITNESS FOR A PARTICULAR PURPOSE OR QUALITY WITH RESPECT TO ANY OF THE TANGIBLE ASSETS OF SELLER (INCLUDING ON LINE OR ANY PORTION THEREOF) OR AS TO THE CONDITION OR WORKMANSHIP THEREOF OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT.

 

Section 11. Several Liability. The covenants, obligations and liabilities of the Parties in connection with this Assignment are several and not joint.

 

Exhibit E-3

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

Section 12. Security Interest.  Great Basin shall cause the GB Segment Security Interest and ON Line Security Interest to secure the performance of Great Basin’s obligations under this Assignment and shall execute and deliver to NPC and SPPC the appropriate Security Documents.  NPC and SPPC may file and record such Security Documents as may be appropriate or required under Applicable Law to perfect the ON Line Security Interest and the GB Segment Security Interest, as applicable, and Great Basin shall take such further actions and execute such further documents and instruments, all as reasonably required by NPC or SPPC, to confirm and continue the validity, priority, and perfection of any such security interest in accordance with the Transmission Use Agreement.  The granting of the ON Line Security Interest and the GB Segment Security Interest shall not limit any further Claims or other rights accruing to NPC or SPPC under this Assignment or otherwise.  NPC and SPPC may exercise any right provided in this Assignment or in any Security Document to recover any amount owing to NPC or SPPC, as applicable.  NPC and SPPC may exercise its rights to all or any part of the ON Line Security Interest and the GB Segment Security Interest or in any Security Document in such amount, form and sequence as NPC or SPPC, as applicable, may elect in its sole discretion.  Any failure to exercise any right provided to NPC or SPPC under this Section 11 or in any Security Document shall not prejudice NPC’s or SPPC’s rights to recover damages or amounts in any manner.

 

[SIGNATURE PAGE FOLLOWS]

 

 

Exhibit E-4

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

IN WITNESS WHEREOF, the Parties have caused this Assignment to be executed by their duly authorized representative as of the date first written above.

 

NEVADA POWER COMPANY

(d/b/a NV Energy)

By:  ________________________

Name:

Title:

SIERRA PACIFIC POWER COMPANY

(d/b/a NV Energy)

By:  ________________________

Name:

Title:

GREAT BASIN TRANSMISSION, LLC

By:  _________________________

Name:

Title:

Exhibit E-5

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

	
State of

	  	
}

	  	  	
} ss:

	
County of

	  	
}

This instrument was acknowledged before me on  ___________________________ by ______________________________ as ______________________________________ of ________________________________________________.                                                                                                                      

 

 

              NOTARY PUBLIC

              My Commission Expires:

Exhibit E-6

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

	
State of

	  	
}

	  	  	
} ss:

	
County of

	  	
}

This instrument was acknowledged before me on  ___________________________ by ______________________________ as ______________________________________ of ________________________________________________.                                                                                                                      

 

 

              NOTARY PUBLIC

              My Commission Expires:

Exhibit E-7

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

	
State of

	  	
}

	  	  	
} ss:

	
County of

	  	
}

This instrument was acknowledged before me on  ___________________________ by ______________________________ as ______________________________________ of ________________________________________________.                                                                                                                      

 

 

              NOTARY PUBLIC

              My Commission Expires:

Exhibit E-8

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

SCHEDULE 1

 

 

ON LINE

 

Exhibit E-9

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

Exhibit F

FORM OF ASSIGNMENT AND CONSENT AGREEMENT

 

 

This ASSIGNMENT AND CONSENT AGREEMENT (this “Agreement”) is entered into as of [_____________], 2010, by and among Nevada Power Company, a Nevada corporation, d/b/a/ NV Energy (“Purchaser”), Great Basin Transmission, LLC, a Delaware limited liability company (“Seller”), and [_____], a [_____] (“Company”).  Purchaser, Seller and Company may be referred to individually herein as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, Seller and Company have entered into that certain [_______], dated as of [____] (the “Assigned Agreement”);

 

WHEREAS, Purchaser, Sierra Pacific Power Company, d/b/a NV Energy, and Seller have entered into that certain Transmission Use and Capacity Exchange Agreement, dated as of August 20, 2010 (the “Transmission Use Agreement”), pursuant to which Seller has agreed to assign an undivided twenty-five percent (25%) ownership interest in its rights, title and interest under the Assigned Agreement to Purchaser, and Purchaser has agreed to assume twenty-five percent (25%) of Seller’s obligations arising under the Assigned Agreement after the closing date of the acquisition under the Transmission Use Agreement (the “Transaction Closing Date”); and

 

WHEREAS, Seller requests consent from Company to transfer an undivided twenty-five percent (25%) ownership interest in Seller’s rights, title, interest and obligations under the Assigned Agreement to Purchaser in accordance herewith.

 

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, the Parties hereby agree as follows:

 

1. Consent and Agreement.  Company hereby consents to (a) the assignment of an undivided twenty-five percent (25%) ownership interest in Seller’s rights, title and interest in the Assigned Agreement to Purchaser and (b) the assumption by Purchaser of twenty-five percent (25%) of Seller’s obligations arising under the Assigned Agreement, in each case, effective immediately after the Acquisition Closing Date, except with respect to indemnity obligations under the Assigned Agreement for which Purchaser shall assume no liability for events that occurred through the Transaction Closing Date and shall only assume twenty-five percent (25%) of the liability for events that occur after the Transaction Closing Date, in each case, effective immediately after the Transaction Closing Date.  Company further hereby consents to (a) the 

 

Exhibit F-1

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

assignment of additional undivided ownership interests in the Assigned Agreement between Seller and Purchaser from time to time effective as of the date set forth in a notice from Seller and Purchaser to the Company and (b) the corresponding assumption by Purchaser or Seller, as the case may be, of such assigned interest.

 

2. Novation of Assigned Agreement and Acknowledgment.  Effective immediately after the Transaction Closing Date, Company hereby fully and unconditionally releases Seller and its affiliates of all obligations under the Assigned Agreement assumed by Purchaser under Paragraph 1.  Company acknowledges and agrees that the obligations of Purchaser and Seller under the Assigned Agreement are several and not joint.

 

3. Representations.

 

Company represents and warrants to NPC that: (a) the Assigned Agreement is in full force and effect and constitutes the legal, valid and binding obligation of Company, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights or by equitable principles, (b) neither Company nor, to Company’s knowledge, Seller is in default of any obligation under the Assigned Agreement and neither has any existing counterclaims, offsets or defenses against the other, (c) to Company’s knowledge, no event or condition exists which would either immediately or with the passage of any applicable grace period or the giving of notice, or both, enable Company or Seller to terminate or suspend its obligations under the Assigned Agreement, (d) to Company’s knowledge, no event or condition exists or has occurred which would give rise to any obligation of Seller to indemnify Company pursuant to the Assigned Agreement, (e) Seller has no payment amount under the Assigned Agreement outstanding or overdue and there are no pending claims for any payment amount related to the Assigned Agreement, (f) the Assigned Agreement has not been amended or otherwise modified, (g) Company is a [____] duly formed and validly existing under the laws of the State of [____], (h) Company has power and authority to execute and deliver this Agreement and the execution and delivery of which by Company has been duly and validly authorized and (i) this Agreement constitutes the legal, valid and binding obligation of Company, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights or by equitable principles.  NPC represents and warrants to Company that: (a) NPC is a corporation duly formed and validly existing under the laws of the State of Nevada, (b) NPC has power and authority to execute and deliver this Agreement and the execution and delivery of which by NPC has been duly and validly authorized and (c) this Agreement constitutes the legal, valid and binding obligation of NPC, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights or by equitable principles.

 

4. Miscellaneous.

 

(i) This Agreement shall be binding upon the Parties and their respective successors and assigns, and may be executed in one or more counterparts, each of which shall be an original, but all of which shall together constitute one and the same instrument.

 

Exhibit F-2

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

(ii) If any provision of this Agreement shall be invalid or unenforceable, the validity or enforceability of the remaining provisions shall not in any way be impaired thereby.  In the event of a conflict between this Agreement and the Assigned Agreement, the terms of this Agreement shall control.

 

(iii) THIS ASSIGNMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF [INSERT “THE STATE OF NEVADA” UNLESS OTHERWISE AGREED BY PURCHASER AND SELLER] (WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF THAT REQUIRE THE APPLICATION OF ANOTHER JURISDICTION’S LAWS).

 

(iv) This Agreement embodies the complete agreement among the Parties with respect to the subject matter hereof and supersedes all other oral or written understandings or agreements.

 

(v) Company agrees to execute and deliver such instruments and take such further actions as may be reasonably necessary to effectuate the purposes of this Agreement.

 

(vi) This Agreement may be amended, supplemented, or modified only by a written instrument duly executed by or on behalf of each Party.

 

[Signature Page Follows]

 

 

Exhibit F-3

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

IN WITNESS WHEREOF, the Parties have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written.

 

[COMPANY]

By:  ________________________

Name:

Title:

GREAT BASIN TRANSMISSION, LLC

By:  ________________________

Name:

Title:

NEVADA POWER COMPANY

(d/b/a NV Energy)

By:  ________________________

Name:

Title:

Exhibit F-4

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

Exhibit G

 

 

FORM OF GRANT, BARGAIN AND SALE DEED

 

A.P.N.:

 

 

 

                            RECORDING REQURED BY,

                            WHEN RECORDED MAIL TO, AND

                            MAIL TAX STATEMENTS TO:

 

	
The undersigned hereby affirm(s) that this document, including any exhibits, submitted for recording does

not contain the social security number of any person or persons.  (Per NRS 239B.030)

	  	
 

 

NV Energy

P.O. Box 98910

Las Vegas, NV  89151-0001

	  	  	
Attn: [                               ]

 

GRANT, BARGAIN, AND SALE DEED

 

 

THIS DEED (“Deed”) WITNESSETH, that Great Basin Transmission, LLC, a Delaware limited liability company (“Grantor”), for a valuable consideration, the receipt and sufficiency of which are hereby acknowledged, does hereby grant, bargain, and sell to [Nevada Power Company]/[Sierra Pacific Power Company], a Nevada corporation, d/b/a NV Energy (“Grantee”) (whose address is ___________________________ __________________), its successors and assigns forever, an undivided [twenty-three and seventy-five hundredths percent (23.75%)]/[one and twenty-five hundredths percent (1.25%)] ownership interest in all right, title and interest in that real property and real property rights situated in the County of [_____], State of Nevada, bounded and described as follows (the “Property”):

 

 

SEE LEGAL DESCRIPTION ATTACHED HERETO

 

 

AND MADE A PART HEREOF AS ANNEX “A”.

 

 

TOGETHER WITH an undivided [twenty-three and seventy-five hundredths percent (23.75%)]/[one and twenty-five hundredths percent (1.25%)] ownership interest in all right, title and interest in all the following additional land rights:

 

 

SEE ADDITIONAL LAND RIGHTS ATTACHED HERETO

 

 

AND MADE A PART HEREOF AS ANNEX “B”.

 

 

AND TOGETHER WITH an undivided [twenty-three and seventy-five hundredths percent (23.75%)]/[one and twenty-five hundredths percent (1.25%)]  ownership interest in all right, title 

 

Exhibit G-1

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

and interest in all improvements situated thereon and all and singular the tenements, hereditaments and appurtenances thereunto belonging or in anywise appertaining to the Property, and the reversion and reversions, remainder and remainders, rents, issues and profits of the Property.

 

SUBJECT TO:

 

	
(1)

	
Those matters more particularly described in Annex “C” attached to this Deed;

 

 

	
(2)

	
All restrictions, conditions, reservations, prior reservations (if any), rights, rights of way and easements now of record or otherwise apparent from a visual inspection of the Property; and

 

 

	
(3)

	
Any applicable zoning or land use regulations or restrictions.

 

Grantor warrants that it shall execute, acknowledge, deliver, or cause to be executed, acknowledged, or delivered, all documents or instruments granting security interests to the Grantee in order to secure the performance of Grantor’s obligations under this Deed.  Grantee may file and record all documents or instruments as may be appropriate or required to perfect such security interests, and Grantor shall take such further actions and execute such further documents and instruments, all as reasonably required by Grantee, to confirm and continue the validity, priority, and perfection of any such security interests.  Grantee may exercise any and all rights provided in this Deed or in any security agreement related to the foregoing security interest to recover any amount owning to Grantee, in such amount, form and sequence as Grantee may elect in its sole discretion.  Any failure to exercise any right provided to Grantee under this paragraph shall not prejudice Grantee’s rights to recover damages or amounts in any manner.

 

[Signature Page Follows]

 

Exhibit G-2

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

IN WITNESS WHEREOF, this instrument has been executed this ________ day of __________, 2010, to be effective as of the _______ day of _________, 2010.

 

GREAT BASIN TRANSMISSION, LLC, a Delaware limited liability company

By:  ______________________________                                                              

Print Name: ________________________      

Title: _____________________________

	
State of

	  	
}

	  	  	
} ss:

	
County of

	  	
}

This instrument was acknowledged before me on  ___________________________ by ______________________________ as ______________________________________ of ________________________________________________.                                                                                                                      

 

                                          

 

                                     NOTARY PUBLIC

             My Commission Expires:

 

 

 

 

Exhibit G-3

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

ANNEX “A”

 

 

LEGAL DESCRIPTION

 

[Legal Description to come when finalized]

 

Exhibit G-4

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

ANNEX “B”

 

 

ADDITIONAL LAND RIGHTS

 

[Additional Land Rights to come when finalized]

 

 

Exhibit G-5

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

ANNEX “C”

 

 

PERMITTED EXCEPTIONS

 

[Permitted Exceptions to come when finalized]

 

Exhibit G-6

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

Exhibit H

APPLICABLE TRANSFER REPRESENTATIONS

AND WARRANTIES

 

 

Bracketed capitalized terms below shall have customary meanings set forth in the agreement for the applicable Transfer, including that references in this Exhibit H to “[this Agreement]” shall mean the agreement regarding the applicable Transfer.

 

 

	
1.  

	
With respect to a Transfer under Section 3.07(a), 3.08, 3.09(a), 5.03(d), 5.04(c), 13.04, 13.05(a), 14.04, 14.05, 15.02(b), 16.02(d) or 16.02(f), the Transferring Party shall make the following representations and warranties to [Great Basin]/[the NVE Parties] as of the date of the Transfer substantially in the form set forth below:

 

 

	
(a)  

	
Due Organization.  The Transferring Party is a duly organized, validly existing entity of the type described in the preface to [this Agreement] and is in good standing under the laws of the jurisdiction of its formation and is duly qualified to do business and in good standing as a foreign entity in the jurisdiction of its principal place of business (if not formed in that jurisdiction).

 

 

	
(b)  

	
Power and Authority.  The Transferring Party has the full [corporate]/[limited liability company] legal right, power and authority to enter into [this Agreement] and perform its obligations under [this Agreement].

 

 

	
(c)  

	
Due Authorization.  The Transferring Party has taken all appropriate and necessary [corporate]/[limited liability company] action to authorize its execution, delivery and performance of [this Agreement] and the transactions contemplated hereunder.

 

 

	
(d)  

	
Consents.  The Transferring Party has obtained all consents, approvals, permits and other authorizations in connection with the execution, delivery and performance of [this Agreement] required to be obtained by it; provided, however, that the Transferring Party makes no representation or warranty under this Section (d) with respect to any consents, approvals, permits or other authorizations necessary for the development, construction, operation or maintenance of the Transmission Line.

 

 

	
(e)  

	
Binding Obligation.  [This Agreement] constitutes a legal, valid and binding obligation of the Transferring Party, enforceable against the Transferring Party in accordance with its terms (subject to the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other Applicable Laws now

 

 

Exhibit H-1

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

	
 

	
or hereafter in effect relating to creditors’ rights generally and general principles of equity).

 

 

	
(f)  

	
No Violation.  The execution, delivery and performance by the Transferring Party of [this Agreement], the compliance with the terms and provisions of [this Agreement] and the carrying out of the transactions contemplated by [this Agreement], (i) do not conflict with and will not result in a breach or violation of any of the terms or provisions of the organizational documents of the Transferring Party, (ii) do not conflict with and will not result in a material breach or violation of any of the terms or provisions of any existing Applicable Law to which the Transferring Party is subject or by which it or any of its material property is bound, or any material agreement or instrument to which the Transferring Party is a party or by which it or any of its material property is bound, or constitutes or will constitute a default thereunder or (iii) will not result in the imposition of any Lien upon any of the Ownership Interests being Transferred to [Great Basin]/[the NVE Parties].

 

 

	
(g)  

	
Brokers.  All negotiations relative to [this Agreement] and the transactions contemplated by [this Agreement] have been carried out by the Transferring Party directly with [Great Basin]/[the NVE Parties] without the intervention of any Person on behalf of the Transferring Party in such manner as to give rise to any valid claim by any Person against [Great Basin]/[the NVE Parties] for a finder’s fee, brokerage commission or similar payment.

 

 

	
(h)  

	
No Litigation and Compliance with Law.  There is no litigation pending or, to the Transferring Party’s knowledge, threatened to which the Transferring Party or any of its Affiliates is a party that could reasonably be expected to have a [Material Adverse Effect] on the resulting transfer.  The Transferring Party is not in violation of any Applicable Law where the effect of which to the Transferring Party, individually or in the aggregate, could be reasonably expected to have a [Material Adverse Effect].

 

 

	
(i)  

	
Title to ON Line.  The Transferring Party possesses good, valid and marketable title to a [__]% Ownership Interest free and clear of all Liens except Excluded Liens, and, effective upon the Transfer and the payment of the Applicable Purchase Price by the non-Transferring Party(ies), (i) [Great Basin] shall Transfer to [NPC and SPPC] a [__]% Ownership Interest and a [__]% Ownership Interest, respectively, in each case, free and clear of all Liens except Permitted Liens.

 

 

	
(j)  

	
Agreements and Governmental Approvals.  The Transferring Party has delivered true, correct and complete copies of each agreement (other than an ON Line Agreement to which [Great Basin]/[the NVE Parties] is a party) (including any amendment thereto) to [Great Basin]/[the NVE Parties] as of the date of the

 

 

Exhibit H-2

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

	
 

	
Transfer to which the Ownership Interests being Transferred may be subject.  [NPC]/[Great Basin] is not in material breach of its obligations under any ON Line Agreement, to [NPC]/[Great Basin]’s knowledge, no counterparty (other than [Great Basin]/[the NVE Parties]) to any such agreement is in material default of its obligations under any such agreement and each such agreement is an enforceable and binding obligation of it, and to its knowledge, the other parties (other than [Great Basin/[the NVE Parties]) thereto (subject to the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other Applicable Laws now or hereafter in effect relating to creditors’ rights generally and general principles of equity).  The Transferring Party is in compliance with each Governmental Approval for ON Line in all material respects.

 

When used in Sections (a)-(j) above, the term “knowledge” shall be limited to the actual knowledge of specified persons as reasonably agreed by the Parties.  The representations and warranties of the Transferring Party described in Sections (a)-(j) above shall survive the date of the Transfer as follows: (a) the representations and warranties in Sections (a)-(g) and (i) shall survive forever, and (b) all other representations and warranties shall survive for three (3) years after the date of the Transfer.  The Transferring Party’s maximum aggregate liability for Claims which may be recovered for breaches of representations or warranties contained in Section (j) shall be an amount equal to the purchase price for the applicable Transfer (or other amount being paid in respect of the applicable transfer, as applicable) in accordance with this Agreement (the “Applicable Purchase Price”); provided, however, that (a) there shall be no maximum aggregate liability in connection with Claims for gross negligence, willful misconduct or fraud and (b) the Applicable Purchase Price (but only for purposes of determining the maximum aggregate liability in this sentence) for a Transfer under (i) Sections 5.03(d), 5.04(c), 13.04 and 14.04 shall equal the costs not funded by Great Basin that give rise to such Transfer and (ii) Section 16.02(f) shall equal the amount of the applicable Event(s) of Default.

 

 

	
2.  

	
With respect to the Transfer contemplated by Section 6.01, [NPC]/[SPPC] shall make the following representations and warranties to Great Basin as of the date of the Transfer substantially in the form set forth below:

 

 

	
(a)  

	
Due Organization.  [NPC]/[SPPC] is a duly organized, validly existing entity of the type described in the preface to [this Agreement] and is in good standing under the laws of the jurisdiction of its formation and is duly qualified to do business and in good standing as a foreign entity in the jurisdiction of its principal place of business (if not formed in that jurisdiction).

 

 

	
(b)  

	
Power and Authority.  [NPC]/[SPPC] has the full corporate legal right, power and authority to enter into [this Agreement] and perform its obligations under [this Agreement].

 

 

Exhibit H-3

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

	
(c)  

	
Due Authorization.  [NPC]/[SPPC] has taken all appropriate and necessary corporate action to authorize its execution, delivery and performance of [this Agreement] and the transactions contemplated hereunder.

 

 

	
(d)  

	
Consents.  [NPC]/[SPPC] has obtained all consents, approvals, permits and other authorizations in connection with the execution, delivery and performance of [this Agreement] required to be obtained by it; provided, however, that [NPC]/[SPPC] makes no representation or warranty under this Section (d) with respect to any consents, approvals, permits or other authorizations necessary for the development, construction, operation or maintenance of the Transmission Line.

 

 

	
(e)  

	
Binding Obligation.  [This Agreement] constitutes a legal, valid and binding obligation of [NPC]/[SPPC], enforceable against [NPC]/[SPPC] in accordance with its terms (subject to the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other Applicable Laws now or hereafter in effect relating to creditors’ rights generally and general principles of equity).

 

 

	
(f)  

	
No Violation.  The execution, delivery and performance by [NPC]/[SPPC] of [this Agreement], the compliance with the terms and provisions of [this Agreement] and the carrying out of the transactions contemplated by [this Agreement], (i) do not conflict with and will not result in a material breach or violation of any of the terms or provisions of the organizational documents of [NPC]/[SPPC], (ii) do not conflict with and will not result in a breach or violation of any of the terms or provisions of any existing Applicable Law to which [NPC]/[SPPC] is subject or by which it or any of its material property is bound, or any material agreement or instrument to which [NPC]/[SPPC] is a party or by which it or any of its material property is bound, or constitutes or will constitute a default thereunder and (iii) will not result in the imposition of any Lien (other under any GB Segment Financing Agreement or a [Permitted Lien]) upon the Transmission Improvements being Transferred to Great Basin.

 

 

	
(g)  

	
Brokers.  All negotiations relative to [this Agreement] and the transactions contemplated by [this Agreement] have been carried out by [NPC]/[SPPC] directly with Great Basin without the intervention of any Person on behalf of [NPC]/[SPPC] in such manner as to give rise to any valid claim by any Person against Great Basin for a finder’s fee, brokerage commission or similar payment.

 

 

	
(h)  

	
No Litigation and Compliance with Law.  There is no litigation pending or, to [NPC]/[SPPC]’s knowledge, threatened to which [NPC]/[SPPC] or any of its Affiliates is a party that could reasonably be expected to have a [Material Adverse Effect] on the resulting transfer.  [NPC]/[SPPC] is not in violation of any Applicable Law where the effect of which to [NPC]/[SPPC], individually or in the aggregate, could be reasonably expected to have a [Material Adverse Effect].

 

 

Exhibit H-4

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

	
(i)  

	
Title.  [NPC]/[SPPC] possesses good, valid and marketable title to all of the personal property comprising the Transmission Improvements and good, valid, marketable and indefeasible fee title to all of the real property comprising the Transmission Improvements or good, valid and marketable leasehold interests in the real property comprising the Transmission Improvements, and, effective upon the Transfer and the payment of the Transmission Improvement Purchase Price by Great Basin, (i) Great Basin shall own and hold good, valid and marketable title to the Transmission Improvements constituting personal property (tangible and intangible assets) and (ii) Great Basin shall own and hold good, valid, marketable and indefeasible title to the real property comprising the Transmission Improvements or a good, valid and marketable leasehold interest in the real property comprising the Transmission Improvements, in each case, free and clear of all Liens except [Permitted Liens].

 

 

	
(j)  

	
Governmental Approvals; Compliance with Laws; Hazardous Substances.

 

 

	
(i)  

	
[NPC]/[SPPC] has provided true, correct and complete copies of each Governmental Approval for the Transmission Improvements, and all applications for any pending Governmental Approval for the Transmission Improvements, to Great Basin and the status of each Governmental Approval for Transmission Improvements is set forth in Schedule [___].

 

 

	
(ii)  

	
No application submitted by or on behalf of [NPC]/[SPPC] or any of its Affiliates in connection with any Governmental Approval for the Transmission Improvements contains any intentional misrepresentation.  [NPC]/[SPPC] is in compliance with each Governmental Approval for the Transmission Improvements in all material respects and each Governmental Approval for the Transmission Improvements (A) is in full force and effect, (B) is not subject to any legal proceeding or to any unsatisfied condition that is not reasonably expected to be satisfied or could reasonably be expected to allow material modification or revocation thereof and (C) is final and all applicable appeal periods have expired or terminated.

 

 

	
(iii)  

	
Except for modifications to Governmental Approvals for the Transmission Improvements that have already been made, no modification to a Governmental Approval is required for the conveyance or acquisition of the Transmission Improvements.  No further action is required for each Governmental Approval for the Transmission Improvements to be properly in the name of Great Basin.

 

 

	
(iv)  

	
[NPC]/[SPPC] is in compliance with all Applicable Laws in all material respects with respect to the Transmission Improvements.

 

 

Exhibit H-5

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

	
(v)  

	
[NPC]/[SPPC] is in compliance with all Environmental Laws in all material respects with respect to the Transmission Improvements.  To the knowledge of [NPC]/[SPPC], Hazardous Substances have not been released, spilled, leaked or disposed of on, at, or under the real property comprising the Transmission Improvements, or on, at, or under any property adjacent to the real property comprising the Transmission Improvements, resulting from the construction, operation or maintenance of the Transmission Improvements in any amount or concentration that is likely to require investigation or remediation pursuant to applicable Environmental Laws or in connection with the operation or maintenance of the Transmission Improvements.

 

 

When used in Sections (a)-(j) above, the term “knowledge” shall be limited to the actual knowledge of specified persons as reasonably agreed by [NPC]/[SPPC] and Great Basin.  The representations and warranties of [NPC]/[SPPC] in Sections (a)-(j) above shall survive the date of the Transfer as follows: (a) the representations and warranties in Sections (a)-(g) and (i) shall survive forever, (b) all representations and warranties in Section (j)(v) shall survive for five (5) years after the date of the Transfer and (c) all other representations and warranties shall survive for three (3) years after the date of the Transfer.  [NPC]/[SPPC]’s maximum aggregate liability for Claims which may be recovered for breaches of representations or warranties contained in Section (j) shall be the amount paid by Great Basin for the Transmission Improvements in accordance with Section 6.01 (the “Transmission Improvement Purchase Price”); provided, however, that there shall be no maximum aggregate liability in connection with Claims for gross negligence, willful misconduct or fraud.

 

 

	
3.  

	
With respect to the Transfer contemplated by Section 6.05(d), Great Basin shall make the following representations and warranties to NPC as of the date of the Transfer substantially in the form set forth below:

 

 

	
(a)  

	
Due Organization.  Great Basin is a duly organized, validly existing entity of the type described in the preface to [this Agreement] and is in good standing under the laws of the jurisdiction of its formation and is duly qualified to do business and in good standing as a foreign entity in the jurisdiction of its principal place of business (if not formed in that jurisdiction).

 

 

	
(b)  

	
Power and Authority.  Great Basin has the full limited liability company legal right, power and authority to enter into [this Agreement] and perform its obligations under [this Agreement].

 

 

	
(c)  

	
Due Authorization.  Great Basin has taken all appropriate and necessary limited liability company action to authorize its execution, delivery and performance of [this Agreement] and the transactions contemplated hereunder.

 

 

Exhibit H-6

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

	
(d)  

	
Consents.  Great Basin has obtained all consents, approvals, permits and other authorizations in connection with the execution, delivery and performance of [this Agreement] required to be obtained by it; provided, however, that Great Basin makes no representation or warranty under this Section (d) with respect to any consents, approvals, permits or other authorizations necessary for the development, construction, operation or maintenance of the Transmission Line.

 

 

	
(e)  

	
Binding Obligation.  [This Agreement] constitutes a legal, valid and binding obligation of Great Basin, enforceable against Great Basin in accordance with its terms (subject to the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other Applicable Laws now or hereafter in effect relating to creditors’ rights generally and general principles of equity).

 

 

	
(f)  

	
No Violation.  The execution, delivery and performance by Great Basin of [this Agreement], the compliance with the terms and provisions of [this Agreement] and the carrying out of the transactions contemplated by [this Agreement], (i) do not conflict with and will not result in a breach or violation of any of the terms or provisions of the organizational documents of Great Basin, (ii) do not conflict with and will not result in a material breach or violation of any of the terms or provisions of any existing Applicable Law to which Great Basin is subject or by which it or any of its material property is bound, or any material agreement or instrument to which Great Basin is a party or by which it or any of its material property is bound, or constitutes or will constitute a default thereunder and (iii) will not result in the imposition of any Lien (other than under any financing or security agreements with the NVE Lenders or a [Permitted Lien]).upon any of [the Transferred Assets] being Transferred to NPC.

 

 

	
(g)  

	
Brokers.  All negotiations relative to [this Agreement] and the transactions contemplated by [this Agreement] have been carried out by Great Basin directly with NPC without the intervention of any Person on behalf of Great Basin in such manner as to give rise to any valid claim by any Person against NPC for a finder’s fee, brokerage commission or similar payment.

 

 

	
(h)  

	
No Litigation and Compliance with Law.  There is no litigation pending or, to Great Basin’s knowledge, threatened to which Great Basin or any of its Affiliates is a party that could reasonably be expected to have a [Material Adverse Effect] on the resulting transfer.  Great Basin is not in violation of any Applicable Law where the effect of which to Great Basin, individually or in the aggregate, could be reasonably expected to have a [Material Adverse Effect].

 

 

	
(i)  

	
Title and no Liens.  [___________________]  At the Transfer, Great Basin has not created or permitted to exist any Liens on any of the Applicable Centennial Phase 3 Facilities or any other NPC asset.

 

 

Exhibit H-7

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

	
(j)  

	
Governmental Approvals; Compliance with Laws; Hazardous Substances.

 

 

	
(i)  

	
Great Basin has provided true, correct and complete copies of each Governmental Approval obtained by Great Basin for the Applicable Centennial Phase 3 Facilities (to which NPC is not a Party) and [the Transferred Assets], and all applications for any pending Governmental Approval for the Applicable Centennial Phase 3 Facilities (to which NPC is not a Party) and [the Transferred Assets], to NPC and the status of each Governmental Approval for the Applicable Centennial Phase 3 Facilities (to which NPC is not a Party) and [the Transferred Assets] is set forth in Schedule [___].

 

 

	
(ii)  

	
No application submitted by or on behalf of Great Basin or any of its Affiliates in connection with any Governmental Approval for the Applicable Centennial Phase 3 Facilities and [Transferred Assets] contains any intentional misrepresentation.  Great Basin is in compliance with each Governmental Approval for the Applicable Centennial Phase 3 Facilities and [Transferred Assets] in all material respects and each Governmental Approval for Applicable Centennial Phase 3 Facilities (to which NPC is not a party) and [Transferred Assets] (A) is in full force and effect, (B) is not subject to any legal proceeding or to any unsatisfied condition that is not reasonably expected to be satisfied or could reasonably be expected to allow material modification or revocation thereof and (C) is final and all applicable appeal periods have expired or terminated.

 

 

	
(iii)  

	
Except for modifications to Governmental Approvals for [the Transferred Assets] that have already been made, no modification to a Governmental Approval is required for the conveyance or acquisition of [the Transferred Assets].  No further action is required for each Governmental Approval for the Applicable Centennial Phase 3 Facilities (to which NPC is not a Party) or [the Transferred Asset] to be properly in the name of NPC.

 

 

	
(iv)  

	
Great Basin is in compliance with all Applicable Laws in all material respects with respect to the Applicable Centennial Phase 3 Facilities and [the Transferred Assets].

 

 

	
(v)  

	
Great Basin is in compliance with all Environmental Laws in all material respects with respect to the Applicable Centennial Phase 3 Facilities and [the Transferred Assets].  To the knowledge of Great Basin, Hazardous Substances have not been released, spilled, leaked or disposed of on, at, or under the Applicable Centennial Phase 3 Facilities or [the Transferred Assets], or on, at, or under any property adjacent to the Applicable Centennial Phase 3 Facilities or [the Transferred Assets], resulting from

 

 

Exhibit H-8

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

	
 

	
the installation, construction, operation or maintenance of the Applicable Centennial Phase 3 Facilities or the [the Transferred Assets] in any amount or concentration that is likely to require investigation or remediation pursuant to applicable Environmental Laws or in connection with the installation, construction or maintenance of the Applicable Centennial Phase 3 Facilities or [the Transferred Assets].

 

 

When used in Sections (a)-(j) above, the term “knowledge” shall be limited to the actual knowledge of specified persons as reasonably agreed by NPC and Great Basin.  The representations and warranties of Great Basin in Sections (a)-(j) above shall survive the date of the Transfer as follows: (a) the representations and warranties in Sections (a)-(g) and (i) shall survive forever, (b) all representations and warranties in Section (j)(v) shall survive for five (5) years after the date of the Transfer and (c) all other representations and warranties shall survive for three (3) years after the date of the Transfer.  Great Basin’s maximum aggregate liability for Claims which may be recovered for breaches of representations or warranties contained in Section (j) shall be an amount equal to the sum of (A) the Option Exercise Price and (B) the fair market value of any improvements to the Applicable Centennial Phase 3 Facilities made by Great Basin, minus (ii) the amount set forth in Section 6.05(b)(iv)(2)(B); provided, however, that there shall be no maximum aggregate liability in connection with Claims for gross negligence, willful misconduct or fraud.

 

 

Exhibit H-9

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

Exhibit I

 

 

FORM OF LEGAL OPINION

 

The legal opinions required by this Agreement shall contain the following opinions subject to customary assumptions and qualifications.  For purposes of this Exhibit I, the following terms have the meanings set forth below.  To the extent not defined below, bracketed terms below shall have customary meanings set forth in the applicable legal opinions.

 

“Applicable Laws” shall mean those laws, rules and regulations which in the experience of the counsel rendering such opinion are normally applicable to transactions of the type contemplated by the Security Documents, without having made any special investigation as to the applicability of any specific law, rule or regulation, and which are not the subject of a specific opinion referring expressly to a particular law or laws.

 

“Applicable Orders” means those orders or decrees of governmental authorities identified on Schedule[__] to the Certificate.

 

“Certificate” means the certificate of Great Basin, dated the date of the applicable legal opinion, a copy of which is attached to such legal option.

 

“Delaware Filing Office” means the Secretary of State of the State of Delaware.

 

“Delaware UCC” means the Uniform Commercial Code as in effect on the date of the applicable legal opinion in the State of Delaware (without regard to laws referenced in Section 9-201 thereof and without regard to any case law or any administrative rulings thereunder).

 

“Financing Statement” means an unfiled copy of a financing statement bearing file date [__] and file number [__] identifying “Great Basin Transmission, LLC” as debtor and “Nevada Power Company” and “Sierra Pacific Power Company” as secured parties, which was filed in the Delaware Filing Office, [Nevada Filing Office] or [Idaho Filing Office], as applicable.

 

“Governmental Approval” means any consent, approval, license, authorization or validation of, or filing, recording or registration with, any governmental authority pursuant to the Applicable Laws of the State of Delaware, Idaho, Nevada or New York or United States of America.

 

“Idaho UCC” means the Uniform Commercial Code as in effect on the date of the applicable legal opinion in the State of Idaho (without regard to laws referenced in Section 9-201 thereof).

 

“Letter of Credit Rights” has the meaning set forth in the [[identify state of issuer’s jurisdiction within the meaning of the New York UCC] UCC] with respect to the [identify letter(s) of credit provided pursuant to any Material Construction Contract].

 

 

Exhibit I-1

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

“Nevada UCC” means the Uniform Commercial Code as in effect on the date of the applicable legal opinion in the State of Nevada (without regard to laws referenced in Section 9-201 thereof).

 

“New York UCC” means the Uniform Commercial Code as in effect on the date of the applicable legal opinion in the State of New York (without regard to laws referenced in Section 9-201 thereof).

 

“Obligations” has the meaning set forth in the [Security Agreement].

 

“UCC” means the New York UCC, the Delaware UCC, the Nevada UCC and the Idaho UCC, as applicable.

 

1. Great Basin is validly existing and in good standing under the Applicable Laws of the State of Delaware.

 

2. Great Basin is qualified to do business and in good standing as a foreign limited liability company under the Applicable Laws of the States of Nevada and Idaho.

 

3. Great Basin has the limited liability company power and authority to execute, deliver and perform all of its obligations under each Security Document to which it is a party under the Applicable Laws of the State of Delaware.  The execution and delivery of each of the Security Documents and the consummation by Great Basin of the transactions contemplated thereby have been duly authorized by all requisite limited liability company action on the part of Great Basin under the Applicable Laws of the State of Delaware.  Each of the Security Documents has been duly executed and delivered by Great Basin under the Applicable Laws of the State of Delaware.

 

4. Each of the Security Documents constitutes the valid and binding obligation of Great Basin enforceable against Great Basin in accordance with its terms under the Applicable Laws of the States of New York, Nevada and Idaho.

 

5. The execution and delivery by Great Basin of each of the Security Documents and the performance by Great Basin of its obligations under each of the Security Documents, each in accordance with its terms, do not (i) conflict with the [Certificate of Formation] or [Limited Liability Company Operating Agreement] of Great Basin, (ii) constitute a violation of, or a default under, any agreement to which Great Basin is a party or its assets are subject or (iii) cause the creation of any security interest or lien upon any of the property of Great Basin pursuant to any agreement to which Great Basin is a party or its assets are subject (other than the security interests and liens created in favor of the NVE Parties under the Security Documents or a Permitted Lien).

 

6. Neither the execution, delivery or performance by Great Basin of the Security Documents nor the compliance by Great Basin with the terms and provisions thereof will contravene any provision of any Applicable Law of the States of New York, Nevada or Idaho or any Applicable Law of the United States of America which in the experience of 

 

 

Exhibit I-2

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

the counsel rendering such opinion is normally applicable to transactions of the type contemplated by such Security Documents.

 

7. No Governmental Approval, which has not been obtained or taken and is not in full force and effect, is required to authorize, or is required in connection with, the execution or delivery of any of the Security Documents by Great Basin or the enforceability of any of the Security Documents against Great Basin.

 

8. Neither the execution, delivery or performance by Great Basin of its obligations under the Security Documents nor compliance by Great Basin with the terms thereof will contravene any Applicable Order.

 

9. The provisions of [the Security Agreement] are effective to create a valid security interest in favor of the NVE Parties in Great Basin’s rights in the Collateral (as defined in [the Security Agreement]) in which a security interest may be created under Article 9 of the New York UCC (the “Article 9 Collateral”) to secure the Obligations.

 

10. Under the Delaware UCC, pursuant to the provisions of the [Security Agreement], Great Basin has authorized the filing of the Financing Statement for purposes of Section 9-509 of the Delaware UCC.  Under the Nevada UCC, pursuant to the provisions of the [Security Agreement], Great Basin has authorized the filing of the Financing Statement for purposes of Section 9-509 of the Nevada UCC.  Under the Idaho UCC, pursuant to the provisions of the [Security Agreement], Great Basin has authorized the filing of the Financing Statement for purposes of Section 9-509 of the Idaho UCC.

 

11. Under the New York UCC, the location of Great Basin, for purposes of Section 9-307(e) of the New York UCC, is Delaware.  Each Delaware Financing Statement is in appropriate form for filing in the Delaware Filing Office.  Upon the proper filing of the Delaware Financing Statements in the Delaware Filing Office, the security interest of the NVE Parties in the Article 9 Collateral will be perfected to the extent that a security interest in such Article 9 Collateral can be perfected by the filing of a financing statement under the Delaware UCC.

 

12. The [Mortgage/Deed of Trust] is in appropriate form for filing in the [Official Public Records of Real Property] of [_________] County, [Nevada]/[Idaho] and creates a valid lien upon, and security interest in, Great Basin’s rights in the [Mortgaged Property] as defined in the [Mortgage/Deed of Trust] (“Mortgaged Property”) that constitutes real property, or fixtures attached thereto, located in [Nevada]/[Idaho].

 

13. Except for the filing of the [Mortgage/Deed of Trust] in the [Official Public Records of Real Property] of [_________] County, [Nevada]/[Idaho], and with respect to fixtures, subject to the terms of paragraph 14 below, no documents or instruments need be recorded, registered or filed in any public office in the State of [Nevada]/[Idaho] to perfect the liens and security interests in the real property and fixtures of Great Basin located in [______] County, [Nevada]/[Idaho] which constitute part of the Mortgaged Property.

 

 

Exhibit I-3

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

14. The [Fixture Financing Statement] is in appropriate form for filing in the UCC records of the [Nevada]/[Idaho] Secretary of State.  If Great Basin is deemed not to be a [Transmitting Utility], then the proper recordation of the [Mortgage/Deed of Trust] in the [Official Public Records of Real Property] of [______] County, [Nevada]/[Idaho] will perfect the security interest created under the [Mortgage/Deed of Trust] in the fixtures of Great Basin located in [______] County, [Nevada]/[Idaho] constituting part of the Mortgaged Property.  If, however, Great Basin is deemed to be a [Transmitting Utility], the proper filing of the [Fixture Financing Statement] in the UCC records of the [Nevada]/[Idaho] Secretary of State will perfect such security interest in the fixtures of Great Basin located in [_______] County, [Nevada]/[Idaho] constituting part of the Mortgaged Property described in the [Fixture Financing Statement], and so long as the [Fixture Financing Statement] continues to identify Great Basin as a [Transmitting Utility], it will remain effective until a termination statement is filed pursuant to Section [9.515(f)] of the [Nevada UCC]/[Idaho UCC].

 

15. Upon the proper recordation of the [Mortgage/Deed of Trust] in the [Official Public Records of Real Property] of [_________] County, [Nevada]/[Idaho], the liens and security interests created by the [Mortgage/Deed of Trust] in Great Basin’s rights in the real property and, subject to paragraph 14 above, fixtures described therein located in [________] County, [Nevada]/[Idaho] will be perfected.

 

16. Under the [[identify state of issuer’s jurisdiction within the meaning of the New York UCC] UCC], the provisions of the [Letter of Credit Consent(s)] are effective to perfect the security interest of the NVE Parties in Great Basin’s rights in the Letter of Credit Rights.

 

 

Exhibit I-4

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

Schedule 1

DESCRIPTION OF TRANSMISSION LINE

 

 

The Transmission Line is an above-ground 500 kV AC transmission project in Nevada and Southern Idaho consisting of three segments.  The northernmost and central segments of the Transmission Line are collectively known as the Southwest Intertie Project.  The northernmost segment extends approximately 275 miles from the Midpoint Substation near Jerome, Idaho to a new substation near Ely, Nevada to be known as the Robinson Summit Substation and includes BLM right-of-way grants N-85211, N-49781, and I-26446 (“SWIP-N”).  The central segment extends approximately 235 miles from the new Robinson Summit Substation to the Harry Allen Substation just north of Las Vegas in Clark County, Nevada, and includes BLM right-of-way grant N-85210 (“SWIP-S” or “ON Line”).  The southernmost segment of the Transmission Line, which is known as the Southern Nevada Intertie Project, extends approximately 58 miles from the Harry Allen Substation to the Eldorado Substation located southwest of Boulder City, Nevada (“SNIP”).

 

 

The Transmission Line project will be executed in two phases.  Phase 1 will extend from Robinson Summit to Harry Allen and will consist of the SWIP-S project assets, and the following assets provided by NVE:  microwave communications system, Falcon substation expansion,  permits to locate the Robinson Summit Substation at the Robinson Summit Location, and NVE relay replacements.  The Phase 1 assets shall be renamed the “One Nevada Transmission Line” (abbreviated as “ON Line”) pursuant to Section 4.08 of this Agreement.

 

 

Phase 2 is comprised of two segments:  (i) SWIP-N, extending from Midpoint to Robinson Summit and (ii) SNIP, extending from Harry Allen to Eldorado.  Phase 2 will include a number of equipment additions to the Phase 1 assets including the following (each of which if undertaken prior to GB Segment Financial Closing shall be considered a “Transmission Improvement” for purposes of Section 6.01 of this Agreement):

 

	
·  

	
2 – 345 kV phase shifting transformers at the Robinson Summit Substation

	
·  

	
Static Var compensator(s) at the Robinson Summit Substation on the 500 kV and/or 345 kV side of the substation

	
·  

	
500 kV terminal equipment at Midpoint and Robinson Summit Substations with line reactors for the SWIP-N facilities

	
·  

	
500 kV series compensation for Phase 1

	
·  

	
500 kV series compensation for SWIP-N

	
·  

	
500 kV series compensation for SNIP

	
·  

	
500 kV terminal equipment at Harry Allen and Eldorado Substations for the SNIP facilities

	
·  

	
500 kV and 230 kV breaker upgrades at various Eldorado Valley substations as required to accommodate fault duty as a result of the addition of the Phase 2 facilities (such breakers to be more fully described in the interconnection studies associated with Phase 2based on the existing transmission system configuration as of December 31, 2009 and 

 

 

Schedule 1-1

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

	  	
ignoring other transmission or interconnection requests ahead of Great Basin or its affiliates received after such date.)

	  ·   	
Fiber communications equipment for the SWIP-N

	  ·   	
Fiber communications equipment for the SNIP facilities

 

For purposes of this Agreement, the term “ON Line” shall be deemed to include (a) a single circuit, above-ground 500 kV AC transmission line that extends approximately 235 miles from the new Robinson Summit Substation located northwest of Ely, Nevada in White Pine County, Nevada to the existing Harry Allen Substation located northeast of Las Vegas in Clark County, Nevada, (b) the new Robinson Summit Substation, (c) interconnection facilities required at the existing Harry Allen Substation, (d) expansion of the existing Falcon Substation, (e) communication facilities and (f) system relay upgrades.  Each of these components is further described below.

 

	
·  

	
ON Line (SWIP-S) 500 kV Transmission Line - The transmission line will be constructed within BLM right-of-way grant N-85210 in a 200 foot wide right-of-way extending from Robinson Summit Substation to the Harry Allen Substation.  The transmission line is configured with three bundles of three ACSR “Lapwing” conductors and is protected from lightning with two overhead shield wires, one of which will be an optical ground wire containing twenty four fiber optic wires.  The primary structure will be a horizontal configuration, tubular guyed-v with a weathering steel finish.

 

	
·  

	
Robinson Summit Substation – Robinson Summit Substation for Phase 1 will initially be configured as a four terminal 345 kV ring bus and a three (3) terminal 500 kV ring bus.  The 500/345 kV substation will serve as the northern terminus of the ON Line and the southern terminus of the SWIP-N.  The substation will also interconnect to the existing NVE 345 kV Falcon-to-Gonder transmission line.  Two potential sites are being considered for the construction of the Robinson Summit Substation (i) the Thirtymile Location that is approximately 18 miles northwest of Ely, Nevada, at the northern terminus of BLM right-of-way grant N-85210 and (ii) the Robinson Summit Location that is approximately four miles south of the Thirtymile Location (as will be described in BLM right-of-way grant N-82076).  The Robinson Summit Substation will initially contain two (2) 500/345 kV auto transformers, two (2) 500 kV shunt reactors, ten (10) 500 kV circuit breakers (five (5) to be operated at 345 kV), three (3) 500 kV metering voltage transformers, three (3) 500 kV metering current transformers, one (1) 345 kV shunt reactor, one (1) 345 kV fixed and/or TCSC (Thyristor Controlled) series capacitor bank or other facilities as required for SSR mitigation, and all necessary disconnect switches, Capacitive Coupled Voltage Transformers (“CCVT”), arresters and other appurtenant facilities (e.g., meter house, trenches, control cables, and other equipment).

 

	
·  

	
Harry Allen substation interconnection – Harry Allen is an existing NVE-owned breaker and a half configured 500 kV switchyard located approximately 21 miles northeast of Las Vegas, Nevada.  The new interconnection facilities for ON Line will be contained within the existing Harry Allen fenceline and will include the addition of a new breaker and a half bay, two (2) 500 kV shunt reactors, four (4) 500 kV circuit breakers, and all necessary  disconnect switches, CCVT’s, arresters, and other appurtenant facilities (e.g., meter house, trenches, control cables, and other equipment).

 

 

Schedule 1-2

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

	
·  

	
Falcon substation expansion – Falcon Substation is an existing NVE-owned 345 kV switchyard located in Boulder Valley approximately 40 miles northeast of Battle Mountain, Nevada.  The expansion would require approximately seven (7) acres of additional land outside the existing fenced boundary (four acres on NV Energy property and three acres to be obtained from the adjacent private landowner).  The new equipment would consist of 345 kV fixed and/or TCSC (Thyristor Controlled) series capacitor bank or other facilities as required for SSR mitigation, along with associated disconnect switches, CCVTs, arrestors, and any other appurtenant facilities required for control and protection of the newly installed equipment.

 

	
·  

	
Communication facilities - Communication facilities include a twenty-four (24) fiber optical ground wire (OPGW) installed on the 500kV transmission line, two regeneration sites for the OPGW, and a microwave and mobile radio communications system including sixteen (16) new microwave sites, the expansion of and additions to three (3) existing sites located in eastern Nevada, and some fiber connectivity additions within NVE’s existing network.

	
·  

	
System relay upgrades – Various relays and associated communications equipment will need to be upgraded at five (5) NVE-owned switchyards including Gonder, Falcon, Valmy, Coyote, and Tracy.

 

For purposes of this Agreement, the term “Great Basin Segments” shall be deemed to include (a) SWIP-N, a single circuit, above-ground 500 kV AC transmission line that extends from the new Robinson Summit Substation to the existing Idaho Power Midpoint Substation near Jerome, Idaho, (b) expansion of the Robinson Summit Substation, (c) Midpoint Substation interconnection and (d) SNIP, a single or double circuit above-ground 500 kV AC transmission line that extends from the Harry Allen Substation to the Eldorado Substation.  Each of these components is further described below.

 

	
·  

	
SWIP-N 500 kV Transmission Line – SWIP-N is an approximately 275 mile 500 kV transmission line to be constructed within a 200-foot right-of-way grant defined by BLM serial numbers N-85211, N-49781, and I-26446.  The transmission line will extend north from the Robinson Summit Substation to Idaho Power’s existing Midpoint Substation near Jerome, Idaho.  Numerous private and state owned lands will also be crossed.  The transmission line is configured with three bundles of three ACSR “Lapwing” conductors and is protected from lightning with two overhead shield wires one of which will be an optical ground wire.  The primary structure will be a horizontal configuration, tubular guyed-v with a weathering steel finish.  Microwave communication facilities may also be required.

	
·  

	
Robinson Summit Substation Expansion – The Robinson Summit substation constructed for the ON Line project, as described above, will ultimately be expanded to include additional facilities to accommodate SWIP-N.  Final configuration details will be defined in an interconnection agreement between Great Basin and NV Energy.  Currently, it is expected that the following equipment may be necessary: the addition of two (2) 500 kV 

 

 

 

Schedule 1-3

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

	  ·   	
breaker and a half bays, two (2) 500 kV fixed and/or TCSC (Thyristor Controlled) series capacitor banks or other facilities as required for SSR mitigation, two (2) 500 kV shunt reactors, two (2) 500 kV shunt capacitor banks, 500 and/or 345 kV static var compensator(s), twenty-four (24) 500 kV circuit breakers, , two (2) 345 kV phase shifting transformers, two (2) 345 kV shunt capacitor banks, , , and all necessary metering voltage transformers, metering current transformers, disconnect switches, CCVTs, , arresters, and other appurtenant facilities (e.g., meter house, trenches, control cables, and other equipment) .  The expansion will be within BLM right-of-way grant N-85210 or within an NVE obtained right-of-way grant to be described in N-82076, as applicable.

	
·  

	
Midpoint Substation interconnection - Midpoint is an existing Idaho Power substation that will be expanded to accommodate the SWIP-N transmission line.  Details of the expansion have not been finalized but will likely include the addition of a breaker and a half bay, two (2) 500 kV shunt reactors, four (4) 500 kV circuit breakers, all necessary disconnect switches, CCVT’s and arresters.  Final configuration details will be defined in an interconnection agreement between Great Basin and Idaho Power.

 

	
·  

	
SNIP 500 kV Transmission Line - the Southern Nevada Intertie Project (SNIP), a single or double circuit 500kV transmission project that extends approximately 58 miles from the Harry Allen Substation to the Eldorado Substation located southwest of Boulder City, Nevada.  The project will be constructed within right-of-way grants and easements to be secured from BLM, Bureau of Reclamation, local governmental entities, and private landowners.  A portion of the line may be constructed on existing NVE Centennial Phase 3 facilities.  The SNIP will include communications facilities.  In addition, both the Harry Allen and Eldorado substations will be modified to accommodate interconnection of the SNIP transmission line and associated series compensation.

 

Schedule 1-4

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

Schedule 2

MONTHLY PAYMENT FACTORS

 

	
Period

	
Factor

	
From the ON Line COD to the fifteenth (15th) anniversary of the ON Line COD

	
0.00838275

	
From the fifteenth (15th) anniversary of the ON Line COD to the thirtieth (30th) anniversary of the ON Line COD

	
0.00503158

	
From the thirtieth (30th) anniversary of the ON Line COD to the forty-first (41st) anniversary of the ON Line COD

	
0.00118325

 

Schedule 2-1

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

Schedule 3

OPERATING ACTIVITIES

 

 

The following shall constitute Operating Activities hereunder:

 

1. Monitoring the performance of, and making operating adjustments to, the Transmission Line, as necessary, in accordance with Prudent Utility Practices and all applicable reliability standards, as amended from time to time, set forth by NERC and/or WECC or their successors;

 

2. Reviewing routine, preventative, outage and maintenance programs, and coordinating maintenance activities, with Great Basin in respect of the Great Basin Segments;

 

3. Performing, managing and coordinating technical support as is commercially reasonable and necessary for the operation of the Transmission Line in the ordinary course;

 

4. Coordinating schedules of any transmission use of the Transmission Line and all outages in accordance with Prudent Utility Practice, including NERC e-Tag standards, WECC scheduling protocols and the business practices of the NVE Parties, and all other applicable reliability standards;

 

5. Maintaining ON Line, including work (including all labor, supplies, materials and equipment) that is reasonably necessary or advisable for the day-to-day inspection, cleaning, or upkeep of any structure, component, surface, machinery, equipment, fixture or other component of ON Line (or any portion thereof); and

 

6. To the extent not already addressed by the existing practices or procedures of the NVE Parties, creating operating practices and procedures for the following: (i) operating emergencies; (ii) metering; (iii) scheduling; (iv) losses; (v) inadvertent flows; (vi) curtailment operations; (vii) delivery and accounting of energy; and (viii) coordinating scheduled uses of capacity over the Transmission Line.

 

 

Schedule 3-1

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

Schedule 4

PRIMARY ON LINE AGREEMENTS

 

 

	
A.  

	
Material Construction Contracts

 

	
1.  

	
Transmission Line Construction Services Agreement dated as of __________, 2010 by and between Great Basin Transmission, LLC and [      ]

 

	
2.  

	
Substation Construction Services Agreement dated as of __________, 2010 by and between Great Basin Transmission, LLC and [      ]

 

	
3.  

	
Agreement for the Purchase and Sale of Equipment dated as of __________, 2010 by and between Great Basin Transmission, LLC and Thomas & Betts Corporation for tubular guyed V transmission towers

 

	
4.  

	
Agreement for the Purchase and Sale of Equipment dated as of __________, 2010 by and between Great Basin Transmission, LLC and Thomas & Betts Corporation for tubular self supporting transmission towers

 

	
5.  

	
Agreement for the Purchase and Sale of Equipment dated as of __________, 2010 by and between Great Basin Transmission, LLC and SAE Towers for lattice transmission towers

 

	
6.  

	
Agreement for the Purchase and Sale of Equipment dated as of __________, 2010 by and between Great Basin Transmission, LLC and [      ] for transmission line conductor

 

	
7.  

	
Agreement for the Purchase and Sale of Equipment dated as of __________, 2010 by and between Great Basin Transmission, LLC and [      ] for fiber optic ground wire

 

	
8.  

	
Agreement for the Purchase and Sale of Equipment dated as of __________, 2010 by and between Great Basin Transmission, LLC and [      ] for 500/345 kV autotransformers

 

	
9.  

	
Agreement for the Purchase and Sale of Equipment dated as of __________, 2010 by and between Great Basin Transmission, LLC and [      ] for 500 kV power circuit breakers

 

	
10.  

	
Agreement for the Purchase and Sale of Equipment dated as of __________, 2010 by and between Great Basin Transmission, LLC and [      ] for 500 kV shunt reactors

 

	
11.  

	
Agreement for the Purchase and Sale of Equipment dated as of __________, 2010 by and between Great Basin Transmission, LLC and [      ] for 500 kV and 345 kV disconnect switches

 

	
12.  

	
Agreement for the Purchase and Sale of Equipment dated as of __________, 2010 by and between Great Basin Transmission, LLC and [      ] for 500 kV and 345 kV substation structural steel

 

 

Schedule 4-1

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

	
13.  

	
Agreement for services of Compliance Inspection Contractor (CIC) dated as of __________, 2010 by and between Great Basin Transmission, LLC and Tetra Tech EC, Inc.

 

	
14.  

	
Agreement for services for Cultural Treatment Services dated as of __________, 2010 by and between Great Basin Transmission, LLC and SWCA Environmental Consultants

 

	
15.  

	
Agreement for services for Environmental and Biological Monitors dated as of __________, 2010 by and between Great Basin Transmission, LLC and HDR, Inc.

 

	
16.  

	
Agreement for services for Quality Assurance Services dated as of __________, 2010 by and between Great Basin Transmission, LLC and [      ]

 

 

	
B.  

	
Interconnection Agreements

 

	
1.  

	
Robinson Summit Transmission Interconnection Agreement dated as of __________, 2010 by and among SPPC (in its capacity as the transmission provider), Great Basin Transmission, LLC, SPPC (in its capacity as an owner of ON Line) and NPC (in its capacity as owner of ON Line)

 

	
2.  

	
Harry Allen Transmission Interconnection Agreement dated as of __________, 2010 by and among NPC (in its capacity as the transmission provider), Great Basin Transmission, LLC, SPPC (in its capacity as an owner of ON Line) and NPC (in its capacity as owner of ON Line)

 

 

	
C.  

	
Land Contracts

 

	
1.  

	
Option to Purchase Easement dated as of April 10, 2006, as amended February 17, 2009, between Bruce A. and Pamela G. Jensen, on the one hand, and Great Basin Transmission, LLC, on the other hand

 

	
2.  

	
Grant of Easement dated as of August 2, 2010, between Bruce A. and Pamela G. Jensen, on the one hand, and Great Basin Transmission, LLC, on the other hand

 

	
3.  

	
United States Department of the Interior, Bureau of Land Management, Right-of-Way Grant Serial No. NVN-85210

 

 

	
D.  

	
Other Agreements

 

	
1.  

	
Cost Recovery Agreement for Construction of BLM Right-of-Way Grant NVN-85210 dated as of __________, 20__, by and between Bureau of Land Management and Great Basin Transmission, LLC  [Note: The existing Cost Recovery Agreement is in the process of being separated into two agreements, one relating to ON Line and the other relating to the Great Basin Segments.]

 

 

Schedule 4-2

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

Schedule 5

BUYOUT PRICES

 

Section 3.07 (Great Basin Abandonment or Delay Buyout Right):

The purchase price for the NVE Parties purchase of Great Basin’s Ownership Interests pursuant to Section 3.07 shall be determined in accordance with the following formula:

(0.706 * (Capitalized Costs funded by Great Basin + $5,500,000)) + Breakage Costs + Undepreciated Balance

Section 3.08 (30th Anniversary Buyout Right)

The purchase price for the NVE Parties purchase of Great Basin’s Ownership Interests pursuant to Section 3.08 shall be determined in accordance with the following formula:

(0.766 * (Capitalized Costs funded by Great Basin + $5,500,000)) + Undepreciated Balance

Section 3.09(a) (41st Anniversary Buyout Right)

The purchase price for the NVE Parties purchase of Great Basin’s Ownership Interests pursuant to Section 3.09(a) shall be determined in accordance with the following formula:

(0.476 * (Capitalized Costs funded by Great Basin + $5,500,000)) + Undepreciated Balance

Section 3.09(b) (Renewal Right)

In the event the NVE Parties exercise their right to renew all (but not less than all) of each Party’s Capacity Entitlements pursuant to Section 3.09(b), then the following changes shall be deemed to have been made to this Agreement as of the forty-first (41st) anniversary of the ON Line COD (but this Agreement, and all terms and conditions hereof, shall otherwise remain in full force and effect):

	
(a)  

	
The formula for Capitalized Component set out in Section 3.06 shall be amended and restated to read in its entirety as follows:  “Capitalized Component = (0.476 * (Capitalized Costs funded by Great Basin + $5,500,000)) * a factor of 0.00729125”.

 

	
(b)  

	
The portion of Section 3.06(a) that is before the proviso shall be amended and restated as follows:  “Subject to Sections 3.06(b) and (c), commencing in the month in which the forty-first (41st) anniversary of the ON Line COD occurs but terminating in the month during which the last day of the renewal period established pursuant to Section 3.09(b) occurs (the “Monthly Payment Period”), a monthly amount in Dollars equal to the following (the “Monthly Payment”) shall be due and payable to Great Basin”.

 

 

Schedule 5-1

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

Where (in each applicable case):

Breakage Costs = the aggregate amount of any premiums, penalties, fees and other breakage costs (in each case, based on the difference between U.S. Treasury interest rates in effect at the time of any such buyout and Great Basin’s interest rate or rates under the ON Line Financing Agreements) paid or payable by Great Basin to the ON Line Lenders in connection with the early repayment of the debt portion of any financing provided to Great Basin (or guaranteed) by Western Area Power Administration or the U.S. Department of Energy;

Undepreciated Balance = the sum of the undepreciated balances for (a) any Incremental Cost Differential, (b) Net Capital Repair Costs, (c) Net Event of Loss Costs and (d) Net Condemnation Action Costs, in each case, as funded by Great Basin and determined based on a straight line depreciation schedule over the applicable amortization periods outlined in this Agreement.

 

Schedule 5-2

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

Schedule 6

GOVERNMENTAL APPROVAL STATUS

 

 

Note:  Governmental Approvals listed here are those provided by GBT, not by NVE or any contractor, and does not include FERC approval of IA or this TUA.

 

	
Permit/Review

	
Authority

	
Description

	
Completion Date

	
FEDERAL

	
NEPA Review and

Right-of-Way Grant

	
USDI

Bureau of Land Management (BLM)

	
NEPA review completed and final EIS issued

	
July 1993

	
Record of Decision issued

	
Nov. 1994

	
ROW grant issued

	
Dec. 1994

	
EA completed & ROW amendment granted

	
July 2008

	
COM Plan approved

	
Mar. 2009

	
COM Plan update approved

	
Dec. 2009, Aug. 2010

	
Notice to Proceed with construction

	
Aug. 2010

	
Partial assignment of ROW grant to NV Energy

	
Upon Acquisition Closing

	
Endangered Species Act Section 7 Compliance

	
US Fish & Wildlife Service

	
Biological Opinions issued

	
May 1993,

Mar. 1994,

Dec. 2007,

Amended Jun. 2010,

Jul. 2010

	
National Historic Preservation Act

Section 106 Compliance

	
BLM & Nevada SHPO

	
Programmatic Agreement signed

	
Feb. 1990

	
Historic Properties Inventory Plan approved

	
Sept. 2006

	
Class III surveys complete

	
Nov. 2006

	
Cultural inventory report filed

	
May 2007

	
Historic Properties Treatment Plan (HPTP) Vol. 1a approval

	
Dec. 2009

	
HPTP Vol. 1b approval

	
Mar. 2010

	
HPTP Vol. 1c approval

	
Jul. 2010

	
Determination of No Hazard to Air Navigation

	
Federal Aviation Administration (FAA)

	
Submitted notifications for all project features exceeding 200 feet above ground level

	
Jun. 2010

	
Determinations issued

	
Jul. 2010

	
Clean Water Act Section 404, Nationwide Permit No. 12

	
U.S. Army Corps of Engineers

	
Impacts to waters (if any)  insufficient to trigger Corps notification requirement; permit coverage is automatic

	
Aug. 2007

	
STATE OF NEVADA

	
Utility Environmental Protection Act (UEPA) – Permit to Construct

	
Public Utilities Commission of Nevada

	
UEPA Permit approved

	
Dec. 2008

	
Final permit to construct

	
Expected

Aug. 2010

	
Clean Water Act - Construction Stormwater Permit  (NPDES), including Stormwater Pollution Prevention Plan

	
Nevada Division of Environmental Protection,

Bureau of Water Pollution Control

	
SWPPP complete, NOI and fee accepted by NDEP, coverage effective under General Permit NVR100000

	
Apr. 2009

 

 

 

Schedule 6-1

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

 

 

	 	 	 	 
	 Permit/Review	 Authority	 Description	 Completion Date
	
Surface Area Disturbance Permit/Dust Control Plan

	
Nevada Division of Environmental Protection,

Bureau of Air Pollution Control

	
Final Class II Air Quality Operating Permit for Surface Area Disturbance Permit No.

AP1629-2551 issued

	
May 2009

	
Permit for Occupancy of Nevada Department of Transportation Right-of-Way

	
Nevada Department of Transportation

	
Final permits issued for aerial crossings of US-6 and SR-318

	
May. 2009, renewed May 2010

	
Final permits issued for aerial crossings of US-93

	
Oct. 2009

	
Permit for Highway 50 access

	
Expected

Aug. 2010*

	
LOCAL

	
Special Use Permit

	
White Pine County Regional

Planning Commission

	
Special Use Permit approved

	
Dec. 2008

	
Special Use Permit

	
Lincoln County

Planning Commission

	
Special Use Permit approved

	
Feb. 2009

	
Special Use Permit

	
Clark County

Planning Commission

	
Special Use Permit approved

	
Dec. 2008

	
Amendment for alignment shifts at Pardee Homes and Harry Allen

	
Jul. 2010

	
Dust Control Permit

	
Clark County Department of Air Quality and Environmental Management

	
Dust Control Permit issued

	
Sept. 2009

 

	
*

	
Denotes items that, pursuant to Section 17.02(d)(ii)(A), would not be customarily obtained as of the Acquisition Closing Date in light of the then-current stage of construction of ON Line and therefore will not necessarily be obtained by the Acquisition Closing date.

 

 

 

Schedule 6-2

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

Schedule 7

GREAT BASIN SEGMENTS

SPECIFICATION DEVIATIONS

 

 

It is hereby confirmed that the SWIP-N (Southwest Intertie Project - North) and SNIP (Southern Nevada Intertie Project) 500kV transmission lines shall be designed to comply with the same parameters and specification used for the joint transmission line project between NVE and Great Basin Transmission, (i.e. ON Line/SWIP-S), except as indicated below:

 

Mechanical Design Criteria

SWIP-N

The SWIP-North line will not have loads for NESC Rule 250B Light condition.

SNIP

The SNIP line will not have loads neither for NESC Rule 250B Medium condition, nor for NESC Rule 250D wind and ice condition.

Electrical Design Criteria

The SNIP and SWIP North lines will be designed to the same electrical performance criteria as the ON Line/SWIP-S. These are:

 

	
·  

	
Predicted lightning outage rate of no more than 0.8 insulation failures per 100 mile-years

 

 

	
·  

	
Predicted switching surge flashover rate (SSFOR) of no more than one insulation failure per 100 breaker operations

 

 

	
·  

	
Minimum clearances as defined in the 2007 edition of the National Electrical Safety Code (NESC)

 

 

	
·  

	
Working clearances that include minimum approach distances calculated in accordance with IEEE Std 516-2003, IEEE Guide for Maintenance Methods of Energized Power Lines plus space for line workers in accordance with the requirements of the entity maintaining and operating the line.

 

 

 

 

Schedule 7-1

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

Annex A

 

 

OWNERSHIP PERCENTAGES OF THE PARTIES

 

	
Party

	
Ownership Percentage

	
Great Basin

	
75%

	
NPC

	
23.75%

	
SPPC

	
1.25%

	  	
100%

 

Annex A-1

Transmission Use and Capacity Exchange Agreement

  

  

  

Privileged and Confidential

Execution Version

 

 

 

GREAT BASIN

DISCLOSURE SCHEDULE

    Reference is made to that certain Transmission Use and Capacity Exchange Agreement dated as of August 20, 2010 between Nevada Power Company, d/b/a NV Energy, Sierra Pacific Power Company, d/b/a NV Energy, and Great Basin Transmission, LLC (the “TUA”).  Capitalized terms used herein and not otherwise defined have the meanings specified in the TUA.  This Disclosure Schedule constitutes Great Basin’s initial “Disclosure Schedule” for purposes of the TUA:

In connection with Section 17.01(d) of the TUA, it is noted that, in order to consummate the Acquisition Closing, Great Basin will need to obtain (a) the consent of each third party that is party to each ON Line Agreement listed on Schedule 4 attached to the TUA to the assignment of an interest in such ON Line Agreement by Great Basin to NPC, in each case to the extent such consent is required pursuant to the terms and conditions of such ON Line Agreement (such consents being the “Required Consents” for purposes of the TUA), and (b) in connection with each Governmental Approval listed on Schedule 6 attached to the TUA, the consent or approval of each relevant Governmental Authority to (i) the consummation of the Acquisition Closing and (ii) the issuance of such Governmental Approval in the name of the Parties, in each case to the extent the relevant Governmental Authority requires such consent or approval to be obtained.

 

    With respect to each of the ON Line Agreements listed on Schedule 4 that has not been entered into as of the Effective Date, Great Basin’s ability to assign an interest in such ON Line Agreement to NPC as part of the Acquisition Closing may be addressed within such ON Line Agreement, thereby eliminating the need for a separate Required Consent in connection with such ON Line Agreement.

The Parties acknowledge that FERC Approval and PUCN Approval are required as contemplated by Article II of the TUA.

 

    Regarding Section 17.04 of the TUA, one of more Persons has filed for an interconnection request as listed on the Open Access Same-Time Information System (OASIS) of the NVE Parties.

 

 

 

 

 

Great Basin Disclosure Schedule

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