Document:

rvra-ex102_286.htm

Exhibit 10.2

RIVIERA RESOURCES, INC.

SEVERANCE PLAN

EFFECTIVE SEPTEMBER 1, 2019

 

ARTICLE I 

INTRODUCTION AND ESTABLISHMENT OF PLAN

 

The Board of Directors of Riviera Resources, Inc. (the “Company”) hereby ratifies and adopts the Riviera Resources, Inc. Severance Plan (the “Plan”) as of the Effective Date, for eligible employees of the Company and certain participating Subsidiaries.  The Company, as successor to Linn Energy, Inc., assumed the Linn Energy, Inc. Severance Plan (the “Prior Plan”) pursuant to Article VII thereof, and pursuant to Article VIII of the Prior Plan, the Company hereby replaces the Prior Plan in its entirety with the Plan.  The Plan is intended to offer specified severance benefits to eligible employees in the event of certain involuntary terminations of employment from the Company or relevant participating Subsidiary.  The Plan, as a “severance pay arrangement” within the meaning of Section 3(2)(B)(i) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), is intended to be and shall be administered and maintained as an unfunded welfare benefit plan under Section 3(1) of ERISA.   

The Company expressly reserves the right at any time, and from time to time, for any reason in the Company’s sole discretion, to change, modify, alter or amend the Plan in any respect and to terminate the Plan in full.  All provisions of the Plan relating to other employee benefit plans of the Company, or any of the Company’s Affiliates or Subsidiaries, are expressly limited by the provisions of such other employee benefit plans.  The provisions of the Plan may not grant or create any rights other than as expressly provided for under such other employee benefit plans. 

ARTICLE II

DEFINITIONS

2.1Affiliate.  Any entity that controls, is controlled by, or is under common control with the Company.

2.2Base Salary.  The Participant’s annual rate of base salary payable by the Participant’s Employer (exclusive, among other things, of bonuses, overtime pay, and special allowances) as in effect immediately prior to the date of such Participant’s Qualifying Termination.

2.3Board. The Board of Directors of Riviera Resources, Inc. 

2.4Blue Mountain.  The Company’s Subsidiary, Blue Mountain Midstream LLC. 

2.5Blue Mountain Dedicated Employee.  Employees of the Company whose primary responsibility is the support of Blue Mountain, as indicated in such Employee’s offer of employment or otherwise determined by the Board or the Plan Administrator. 

2.6Bonus Amount. 

(a)If the Board or the Participant’s Employer, as applicable, is able to determine actual performance under the Employee Bonus Plan for the performance period in which the Participant’s Qualifying Termination date occurs, the “Bonus Amount” (prior to any applicable 

 

 

proration in accordance with Section 4.2(b)) shall be the amount payable to the Participant for such performance period based on actual performance as determined by the Board or the Participant’s Employer, as applicable; and

(b)If the Board or the Participant’s Employer, as applicable, is unable to determine actual performance under the Employee Bonus Plan for the performance period in which the Participant’s Qualifying Termination date occurs, the “Bonus Amount” (prior to any applicable proration in accordance with Section 4.2(b)) shall be the Participant’s target cash incentive amount for such performance period.

2.7Business Opportunities.  All business ideas, prospects, proposals or other opportunities pertaining to the lease, acquisition, exploration, production, gathering or marketing of hydrocarbons and related products and the exploration potential of geographical areas on which hydrocarbon exploration prospects are located, which are developed by the Participant during his or her employment with the Employer, or originated by any third party and brought to the attention of the Participant during his or her employment with the Employer, together with information relating thereto (including, without limitation, geological and seismic data and interpretations thereof, whether in the form of maps, charts, logs, seismographs, calculations, summaries, memoranda, opinions or other written or charted means). 

2.7Cause.  For purposes of the Plan, the Company or an Employer will have “Cause” to terminate the Participant’s employment by reason of any of the following; provided, however, that determination  of whether one or more of the elements of “Cause” has been met under the Plan shall be in the reasonable discretion of the Board in consultation with the Plan Administrator.

(a)the Participant’s indictment for, conviction of, or plea of guilty or nolo contendere to, any felony or to any crime or offense causing substantial harm to any of the Company or its direct or indirect Subsidiaries (whether or not for personal gain) or involving acts of theft, fraud, embezzlement, moral turpitude or similar conduct; 

(b)the Participant’s repeated intoxication by alcohol or drugs during the performance of his or her duties; 

(c)the Participant’s willful and intentional misuse of any of the funds of the Company or its direct or indirect Subsidiaries; 

(d)the Participant’s embezzlement;

(e)the Participant’s willful and material misrepresentations or concealments on any written reports submitted to any of the Company or its direct or indirect Subsidiaries; 

(f)the Participant’s conduct constituting a material breach of the Company’s then current Code of Business Conduct and Ethics or any other written policy referenced therein, including but not limited to the Riviera Employee Handbook, or any written policy of the Participant’s Employer; provided that, in each case, the Participant knew or should have known such conduct to be a breach; or 

(g)the Participant’s continued failure to meet the reasonable performance expectations of the Company or the Participant’s Employer, after receiving notice of the 

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performance standards not being met and a reasonable opportunity to correct such performance issues. 

2.8COBRA.  The term “COBRA” has the meaning set forth in Section 4.2(c).

2.9Code.  The Internal Revenue Code of 1986, as amended from time to time.

2.10Committee.  The Compensation Committee of the Board.

2.11Company.  The term “Company” has the meaning set forth in Article I.

2.12Effective Date.  March 1, 2019.

2.13Employee.  Any employee of an Employer, regardless of position, who is normally scheduled to work 30 hours per week for such Employer and (i) is an employee of an Employer on the Effective Date or (ii) becomes an employee of an Employer after the Effective Date and has been an employee of an Employer for at least one year; provided, however that, a Blue Mountain Dedicated Employee shall not be an Employee for purposes of the Plan, unless otherwise determined by the Board or the Plan Administrator.

2.14Employee Bonus Plan.  Any cash incentive compensation or other cash bonus plan or arrangement as may be established by the Board from time to time. 

2.15Employer.  The Company and any Subsidiary that participates in the Plan pursuant to Article VI. 

2.16ERISA.  The term “ERISA” has the meaning set forth in Article I. 

2.17Good Reason.  The term “Good Reason” shall have the meaning assigned to such term in any employment agreement between Participant and the Employer, or in the absence of an employment agreement or such term being defined in an employment agreement, “Good Reason” shall mean any of the following to which the Participant will not consent in writing:

(a) a reduction in the Participant’s base salary;

(b)any material reduction in the Participant’s title, authority or responsibilities; or 

(c) relocation of the Participant’s primary place of employment to a location more than 50 miles from the Employer’s then current location. 

In order for the Participant to resign for Good Reason, the Participant must first give the Participant’s Employer written notice, which will identify with reasonable specificity the grounds for the Participant’s resignation and provide the Participant’s Employer with 30 days from the day such notice is received by the Participant’s Employer to cure the alleged grounds for resignation contained in the notice.  A termination will not be for Good Reason if the Participant’s Employer has cured the alleged grounds for resignation contained in the notice within 30 days after the receipt of such notice or if such notice is given by the Participant to the Participant’s Employer more than 30 days after the first occurrence of the event that the Participant alleges is Good Reason for his or her termination hereunder.  In order for a termination to be for “Good Reason,” the Company must fail to remedy the alleged grounds for resignation within the cure period, and the Participant must actually terminate employment with the Company and its Affiliates within 90 days after the expiration of the Cure Period.  

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2.18Participant.  Any Employee who is designated as a participant pursuant to Section 3.1.

2.19Person.  Any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended.

2.20Plan.  The term “Plan” has the meaning set forth in Article I.

2.21Plan Administrator. The named fiduciary of the Plan as described in Section 9.1.

2.22Qualifying Termination.  Any termination of employment of a Participant initiated by the Employer other than for Cause; provided that:

(a) a termination initiated by a Participant for Good Reason shall also constitute a Qualifying Termination for Participants in Tier 1; 

(b) notwithstanding the foregoing, a Qualifying Termination will not have occurred for purposes of the Plan if (i) the Participant is terminated as a result of the sale or other disposition of a plant, facility, division, operating asset(s) or Subsidiary or any similar transaction, and, in connection with such sale, disposition or other transaction, (ii) the Participant is offered continued employment with the purchaser or any of its affiliates or agents with a base salary no less than that in effect as of immediately before such sale, disposition or other transaction and at a location within 50 miles of the primary location at which the Participant worked immediately before such sale, disposition or other transaction, in each case, as determined in the Company’s sole discretion; or (iii) the Participant accepts continued employment with the purchaser or any of its affiliates or agents at any base salary or at any location. 

2.23Release. The term “Release” has the meaning set forth in Section 4.1(c).

2.24Severance Benefits. The benefits described in Article IV that are provided to qualifying Participants under the Plan. 

2.25Subsidiary. Any entity of which the Company owns, directly or indirectly, the majority of such entity’s outstanding units, shares of capital stock or other voting securities. 

2.26Tiers. The terms “Tier 1”, “Tier 2”, “Tier 3”, or “Tier 4” have the meaning set forth in Section 3.2.

ARTICLE III

ELIGIBILITY

3.1 Participants.  An Employee of the Employer shall become a Participant in the Plan as of the later to occur of (i) the Effective Date or (ii) the date he or she first becomes an Employee of an Employer in a position covered by Tier 1, Tier 2, Tier 3, or Tier 4.  

Notwithstanding any provision of the Plan to the contrary, no individual who is designated, compensated or otherwise classified or treated by the Employer as a leased employee, consultant, independent contractor or other non-common law employee shall be eligible to receive benefits under the Plan.  It is expressly intended that individuals not treated as common law employees by the Employer are to be excluded from Plan participation even if a court or administrative agency later determined that such individuals are common law employees.  It is the intent of the Company and the Employer that 

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Employees will not be eligible for duplicate severance benefits under multiple plans, including any employment agreements.  For the avoidance of doubt, no severance benefits will be payable under the Plan to the extent that severance benefits would otherwise be paid to an Employee pursuant to the terms of an employment agreement or other individual agreement with the Employer providing for severance benefits.  In the event of an inconsistency between the severance benefits described in the Plan and a Participant’s individual employment agreement or other individual agreement providing for severance benefits, the terms of the individual Participant’s employment agreement or individual agreement providing for severance, as applicable, will control. 

3.2Tiers.   Employees eligible to participate in the Plan shall be assigned to Tier 1, Tier 2, Tier 3, or Tier 4 as set forth below; provided, however, that in that case of Participants assigned to Tier 2, Tier 3 or Tier 4, the Company may designate, by written notice to such Participant, that a Participant shall be assigned to a different Tier, in which case such designation by the Company shall be controlling when authorized in writing by an executive officer of the Company.   

(a)“Tier 1” means the Employee(s) of the Employer with the title of Chief Executive Officer, Chief Operating Officer, Executive Vice President or similar Executive Officer title.

(b)“Tier 2” means the Employee(s) of the Employer with the title of Vice President. 

(c)“Tier 3” means the Employee(s) of the Employer (i) with the title of Superintendent or Foreman or (ii) whose primary place of employment is the Company’s corporate office in Houston, Texas and who do not otherwise satisfy the definition of Tier 1 or Tier 2.

(d)“Tier 4” means any Employee of the Employer that is not assigned to Tier 1, Tier 2, or Tier 3.

ARTICLE IV

SEVERANCE BENEFITS

4.1Eligibility for Severance Pay. A Participant becomes eligible to receive Severance Benefits under the Plan upon a Qualifying Termination, provided that the Participant:

(a)performs in all material respects all transition and other matters required of the Participant by the Employer prior to his or her Qualifying Termination; 

(b)complies in all material respects with the restrictive covenants in Article V hereof and returns to the Employer any property of the Employer which has come into the Participant’s possession; and 

(c)returns (and does not thereafter revoke), within 53 days after the date of the Participant’s Qualifying Termination, a signed, dated and notarized original agreement and general release of claims in a form acceptable to the Employer, in its sole and absolute discretion (the “Release”).

4.2Amount of Severance Benefits.  A Participant entitled to Severance Benefits under Section 4.1 shall be entitled to the following Severance Benefits as set forth in this Section 4.2: 

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(a)Annual Base Salary

(i)Tier 1.  A Participant in Tier 1 on the date of his or her Qualifying Termination shall be entitled to a payment equal to one times his or her Base Salary.  

(ii)Tier 2.  A Participant in Tier 2 on the date of his or her Qualifying Termination shall be entitled to a payment equal to 0.75 times his or her Base Salary.  

(iii)Tier 3.  A Participant in Tier 3 on the date of his or her Qualifying Termination shall be entitled to a payment equal to 0.5 times his or her Base Salary.  

(iv)Tier 4.  A Participant in Tier 4 on the date of his or her Qualifying Termination shall be entitled to a payment equal to 0.25 times his or her Base Salary.  

(b)Prorated Cash Bonus Incentive.  Each Participant who, as of his or her Qualifying Termination, participates any Employee Bonus Plan shall be entitled to receive a pro-rata portion of the Bonus Amount payable to the Participant under such Employee Bonus Plan, with such pro-ration determined based on the portion of the performance period during which the Participant was an Employee of the Employer.  For example, if the Participant’s performance period is the calendar year and the Participant incurs a Qualifying Termination on March 31, the Participant’s Bonus Amount shall be prorated for the period of January 1 through March 31.

(c)COBRA Coverage.  If the Participant timely and properly elects continuation health care coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) under the Employer’s health care plan, the Employer will pay the “Company’s portion” (as defined below) of the COBRA premiums actually paid by the Participant for such COBRA continuation coverage (“COBRA Coverage”) for a designated period following the date of the Participant’s Qualifying Termination (as set forth in the table below).  The “Company’s portion” of COBRA Coverage shall be the difference between one hundred percent (100%) of the costs of such COBRA Coverage and the dollar amount of medical premium expenses paid for the same type or types of Employer medical benefits by a similarly situated Employee on the date of the Participant’s Qualifying Termination. 

		
	
Tier
	
Period of Continued COBRA Coverage

	
1
	
12 Months

	
2
	
9  Months

	
3
	
6 Months

	
4
	
3 Months

 

(d)Outplacement Assistance.  The Company shall pay, on behalf of the Participant, the fees due to a third-party outplacement services agency to provide outplacement services to the Participant for up to three months following the date of the Participant’s Qualifying Termination (regardless of the Participant’s Tier), which services shall be completed no later than six months following the date of the Participant’s Qualifying Termination. 

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(e)Time and Form of Payment.  The Severance Benefits payable pursuant to Section 4.2(a) and Section 4.2(b) shall be paid in a single lump sum payment on the date that is 60 days after the date of the Participant’s Qualifying Termination, but no later than the regular pay period pay period immediately after two and one half months following the last day of the calendar year that includes the date of the Participant’s Qualifying Termination. The Severance Benefits payable pursuant to Section 4.2(c) and Section 4.2(d) shall be paid directly to the service provider or shall be reimbursed to the Participant promptly, but in any event by no later than December 31st of the calendar year following the calendar year in which such expenses were incurred, shall not affect any payments or reimbursements in any other calendar year, and shall not be subject to liquidation or exchange for any other benefit.  The taxable year in which any Severance Benefit under Section 4.2(c) or Section 4.2(d) is paid shall be determined in the sole discretion of the Employer, and the Participant shall not be permitted, directly or indirectly, to designate the taxable year of the payment.  Notwithstanding the foregoing, the Participant has not timely returned the Release, or subsequently revokes the Release, the Participant shall forfeit all Severance Benefits. 

(f)Withholding.  The Company may withhold and deduct from any benefits and payments made or to be made pursuant to the Plan all federal, state, local and other taxes as may be required pursuant to any law or governmental regulation or ruling. 

  

ARTICLE V

RESTRICTIVE COVENANTS

5.1Non-Compete Obligations. During a Participant’s employment with the Employer and for a period of (i) nine (9) months after the Participant’s termination of employment for a Tier 1 Participant or (ii) six (6) months after the Participant’s termination for a Tier 2 Participant:

(a)the Participant will not, other than on behalf of the Company, engage or participate in any manner, whether directly or indirectly through any family member or as an employee, employer, consultant, agent, principal, partners, more than one percent (1%) shareholder, officer, director, licensor, lender, lessor or in any other individual or representative capacity, in any business or activity which is engaged in leasing, acquiring, exploring, producing, gathering or marketing hydrocarbons and related products in the same counties or parishes in which the Company has active operations or property ownership; provided that the foregoing shall not be deemed to restrain the participation by the Participant‘s spouse in any capacity set forth above in any business or activity engaged in any such activity; and provide, further, that the Company may, in good faith, take such reasonable action with respect to the Participant’s performance of his or her duties, responsibilities and authorities as it deems necessary and appropriate to protect its legitimate business interests with respect to any actual or apparent conflict of interest reasonably arising from or out of the participation by the Participant’s spouse in any such competitive business or activity; and 

(b) all investments made by the Participant (whether in his or her own name or in the name of any family members or other nominees or made by the Participant’s controlled affiliates), which relate to the leasing, acquisition, exploration, production, gathering or marketing 

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of hydrocarbons and related products in the same counties or parishes in which the Company has active operations or property ownership, will be made solely through the Company; and the Participant will not (directly or indirectly through any family members or other persons), and will not permit any of his or her controlled affiliates to: (A) invest or otherwise participate alongside the Company or its direct or indirect Subsidiaries in any Business Opportunities, or (B) invest or otherwise participate in any business or activity relating to a Business Opportunity, regardless of whether any of the Company or its direct or indirect Subsidiaries ultimately participates in such business or activity, in either case, except through the Company.  Notwithstanding the foregoing, nothing in this Section 5.1(b) shall be deemed to prohibit the Participant or any family member from owning, or otherwise having an interest in, less than one percent (1%) of any publically owned entity or three percent (3%) or less of any private equity fund or similar investment fund that invests in any business or activity engaged in any of the activities set forth above, provided that the Participant has no active role with respect to any investment by such fund in any entity. 

5.2Non-Solicitation.  With respect to any Participant in Tier 1, Tier 2 or Tier 3, during such Participant’s employment with the Employer and for a period of one (1) year after the Participant’s termination of employment, the Participant will not, whether for his or her own account or for the account of any other Person (other than the Company or its direct or indirect Subsidiaries), intentionally solicit, endeavor to entice away from the Company or its direct or indirect Subsidiaries, or otherwise interfere with the relationship of the Company or its direct or indirect Subsidiaries with (a) any person who is employed by the Company or its direct or indirect Subsidiaries (including any independent sales representatives or organizations) or (b) any client or customer of the Company or its direct or indirect Subsidiaries. 

ARTICLE VI

EMPLOYERS

Any Subsidiary of the Company is, and any new Subsidiary of the Company shall be, an Employer under the Plan unless the Company makes an affirmative determination that such Subsidiary shall not be an Employer under the Plan.  Pursuant to Section 3.1, the provisions of the Plan shall be fully applicable to the Employees of any such Subsidiary that becomes an Employer. 

ARTICLE VII

SUCCESSOR TO COMPANY

 

The Plan shall bind any successor of the Company, its assets or its businesses (whether direct or indirect, by purchase, merger, consolidation or otherwise), in the same manner and to the same extent that the Company would be obligated under the Plan if no succession had taken place.  For avoidance of doubt, the purchaser of a portion of the Company’s assets or businesses will not be deemed a successor to the Company by reason of the preceding sentence unless such purchase constitutes substantially all of the Company’s assets or businesses. 

In the case of any transaction in which a successor would not be, either by reason of the foregoing provision or operation of law, bound by the Plan, the Company shall require such successor to expressly and unconditionally assume and agree to perform the Company’s obligations under the Plan, in the same manner and to the same extent that the Company would be required to perform if no succession had taken place.  The term “Company,” as used in the Plan, shall mean the Company as hereinbefore defined 

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and any successor or assignee to the business or assets which by reason hereof becomes bound by the Plan.  

ARTICLE VIII

AMENDMENT AND TERMINATION

 

Any extension, amendment or termination of the Plan by the Board in accordance with the foregoing shall be made by action of the Board in accordance with the Company’s organizational documents in effect at the time and applicable law. 

ARTICLE IX

PLAN ADMINISTRATION

 

9.1Named Fiduciary; Administration.  The Company’s Executive Vice President, Finance, Administration and Chief Accounting Officer is the named fiduciary of the Plan and shall be the Plan Administrator.   If no individual is serving as the Company’s Executive Vice President, Finance, Administration and Chief Accounting Officer, the Committee shall appoint a new Plan Administrator or, in the absence of such an appointment, the Company’s Chief Executive Officer shall be the Plan Administrator.  The Plan Administrator shall review and determine all claims for benefits under the Plan. 

9.2Claim Procedure. 

(a)If an Employee or former employee or his or her authorized representative (referred to in this Article IX as a “claimant”) makes a written request alleging a right to receive benefits under the Plan or alleging a right to receive an adjustment in benefits being paid under the Plan, the Company shall treat it as a claim for benefits. 

 (b) All claims and inquiries concerning benefits under the Plan must be submitted to the Plan Administrator in writing and be addressed as follows:

Plan Administrator

Riviera Resources Severance Plan

Riviera Resources, Inc. 

JP Morgan Chase Tower

600 Travis

Houston, Texas 77002

 

With a copy, which shall not constitute notice, to Legal@RVRAresources.com

The Plan Administrator shall have full and complete discretionary authority to administer, to construe, and to interpret the Plan, to decide all questions of eligibility, to determine the amount, manner and time of payment, and to make all other determinations deemed necessary or advisable for the Plan.  The Plan Administrator shall initially deny or approve all claims for benefits under the Plan.  The claimant may submit written comments, documents, records or any other information relating to the claim.  Furthermore, the claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim for benefits.  

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(c)Claims Denial.  If any claim for benefits is denied in whole or in part, the Plan Administrator shall notify the claimant in writing of such denial and shall advise the claimant of his or her right to a review thereof.  Such written notice shall set forth, in a manner calculated to be understood by the claimant, specific reasons for such denial, specific references to the Plan provisions on which such denial is based, a description of any information or material necessary for the claimant to perfect his or her claim, and explanation of why such material is necessary and an explanation of the Plan’s review procedure, and the time limits applicable to such procedures.  Furthermore, the notification shall include a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on review.  Such written notice shall be given to the claimant within a reasonable period of time, which normally shall not exceed 90 days after the claim is received by the Plan Administrator. 

(d)Appeals.  Any claimant whose claim for benefits is denied in whole or in part may appeal, or his or her duly authorized representative may appeal on the claimant’s behalf, such denial by submitting to the Appeals Committee a request for a review of the claim within 60 days after receiving written notice of such denial form the Plan Administrator.  The Appeals Committee shall comprise at least three individuals who serve as officers or managers of the Company.  The Appeals Committee shall give the claimant upon request, and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim of the claimant, in preparing his or her request for review.  The request for review must be in writing and be addressed as follows:

Appeals Committee

Riviera Resources Severance Plan

Riviera Resources, Inc. 

JP Morgan Chase Tower

600 Travis

Houston, Texas 77002

 

With a copy, which shall not constitute notice, to Legal@RVRAresources.com

The request for review shall set forth all of the grounds upon which it is based, all facts in support thereof, and any other matters which the claimant deems pertinent.  The Appeals Committee may require the claimant to submit such additional facts, documents, or other materials as the Appeals Committee may deem necessary or appropriate in making its review. 

(e)Decision on Appeals. The Appeals Committee shall give written notice of its decision to the claimant.  If the Appeals Committee confirms the denial of the application for benefits in whole or in part, such notice shall set forth, in a manner calculated to be understood by the claimant, the specific reasons for such denial, and specific references to the Plan provisions on which such denial is based. The notice shall also contain a statement that the claimant is entitled to receive up on request, and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits. Information is relevant to a claim if it was relied upon in making the benefit determination or was submitted, considered or generated in the course of making the benefit determination, whether it was relied upon or not. The notice shall also contain a statement of the claimant’s right to bring 

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an action under ERISA Section 502 (A).  The Appeal’s Committee’s decision shall be final and not subject to further review within the Company.  There are no voluntary appeals procedures after review by the Appeals Committee. 

(g)Time of Approved Payment. In the event that either the Plan Administrator or the Appeals Committee determines that the claimant is entitled to the payment of all or a portion of the benefits claimed, such payment shall be made to the claimant within 30 days of the date of such determination or such later time as may be required to comply with Section 409A of the Code. 

(h)Determination of Time Periods. If the day on which any of the foregoing time periods is to end is a Saturday, Sunday or a holiday recognized by the Company the period shall extend until the next following business day.  

9.4Exhaustion of Administrative Remedies.  Completion of the claims and appeals procedures described in Sections 9.2 of the Plan will be a condition precedent to the commencement of any legal or equitable action in connection with a claim for benefits under the Plan by a claimant; provided, however, that the Appeals Committee may, in its sole discretion, waive compliance with such claims procedures as a condition precedent to any such action. 

ARTICLE X

MISCELLANEOUS

10.1Employment Status. The Plan does not constitute a contract of employment, nor impose on the Participant or the Participant’s Employer any obligation for the Participant to remain an Employee, nor change the status of the Participant’s employment or the policies of such Employer regarding termination of employment. 

10.2Unfunded Plan Status. All payments pursuant to the Plan shall be made from the general funds of the Company and no special or separate fund shall be established or other segregation of assets made to assure payment.  No Participant or other person shall have under any circumstances any interest in any particular property or assets of the Company as a result of participating in the Plan.  Notwithstanding the forgoing, the Company may (but shall not be obligated to) create one or more grantor trusts, the assets of which are subject to the claims of the Company’s creditors, to assist it in accumulating funds to pay its obligations under the Plan. 

10.3Validity and Severability.  The invalidity or unenforceability of any provision of the Plan shall not affect the validity or enforceability of any other provision of the Plan, which shall remain in full force and effect, and any prohibition on unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 

10.4Anti-Alienation of Benefits.  No amount to be paid hereunder shall be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Employee or the Employee’s beneficiary.

10.5 Governing Law. The validity, interpretation, construction and performance of the Plan shall in all respects be governed by the laws of Texas, without reference to principles of conflicts of law, except to the extent pre-empted by Federal law. 

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10.6Section 409A of the Code.  It is intended that the Severance Benefits hereunder are, to the greatest extent possible, exempt from the application of Section 409A of the Code (“Section 409A”), and the Plan shall be construed and interpreted accordingly. 

IN WITNESS WHEREOF, this Riviera Resources, Inc. Severance Plan has been adopted by the Board to be effective as of the Effective Date. 

 

Riviera Resources, Inc. 

 

By: David B. Rottino

    David B. Rottino

    President and Chief Executive Officer 

 

12a101nautilusablcreditagr

                                                                            Exhibit 10.1                                                                         Execution Version                                    CREDIT AGREEMENT                                        by and among                      WELLS FARGO BANK, NATIONAL ASSOCIATION,                                         as Agent,                        THE LENDERS THAT ARE PARTIES HERETO,                                       as the Lenders,                                      NAUTILUS, INC.,                                 OCTANE FITNESS, LLC,                                            and         THOSE ADDITIONAL PERSONS THAT ARE JOINED AS A PARTY HERETO,                                       as Borrowers                                  Dated as of January 31, 2020    125672876_9 

 

                                  TABLE OF CONTENTS                                                                                    Page   1.     DEFINITIONS AND CONSTRUCTION. ...................................................................................... 1         1.1   Definitions .......................................................................................................................... 1        1.2    Accounting Terms ............................................................................................................. 53        1.3    Code .................................................................................................................................. 53        1.4    Construction ...................................................................................................................... 53        1.5    Time References ............................................................................................................... 54        1.6    Schedules and Exhibits ..................................................................................................... 54        1.7    Divisions ........................................................................................................................... 54  2.    LOANS AND TERMS OF PAYMENT. ....................................................................................... 54        2.1    Revolving Loans ............................................................................................................... 54        2.2    Term Loan......................................................................................................................... 55        2.3    Borrowing Procedures and Settlements ............................................................................ 57        2.4    Payments; Reductions of Commitments; Prepayments .................................................... 64        2.5    Promise to Pay; Promissory Notes .................................................................................... 69        2.6    Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations .................... 69        2.7    Crediting Payments ........................................................................................................... 71        2.8    Designated Account .......................................................................................................... 71        2.9    Maintenance of Loan Account; Statements of Obligations .............................................. 71        2.10   Fees ................................................................................................................................... 71        2.11   Letters of Credit ................................................................................................................ 72        2.12   LIBOR Option .................................................................................................................. 79        2.13   Capital Requirements ........................................................................................................ 82        2.14   Incremental Facilities ........................................................................................................ 83        2.15   Joint and Several Liability of Borrowers .......................................................................... 85  3.     CONDITIONS; TERM OF AGREEMENT. ................................................................................. 88         3.1   Conditions Precedent to the Initial Extension of Credit ................................................... 88        3.2    Conditions Precedent to all Extensions of Credit ............................................................. 88        3.3    Maturity ............................................................................................................................ 88        3.4    Effect of Maturity ............................................................................................................. 88        3.5    Early Termination by Borrowers ...................................................................................... 88  4.     REPRESENTATIONS AND WARRANTIES. ............................................................................. 89         4.1   Due Organization and Qualification; Subsidiaries ............................................................ 89         4.2   Due Authorization; No Conflict ........................................................................................ 89         4.3   Governmental Consents .................................................................................................... 90         4.4   Binding Obligations; Perfected Liens ............................................................................... 90         4.5   Title to Assets; No Encumbrances .................................................................................... 90         4.6   Litigation ........................................................................................................................... 91         4.7   Compliance with Laws ..................................................................................................... 91         4.8   No Material Adverse Effect .............................................................................................. 91         4.9   Solvency............................................................................................................................ 91        4.10   Employee Benefits ............................................................................................................ 91        4.11   Environmental Condition .................................................................................................. 92        4.12   Complete Disclosure ......................................................................................................... 92        4.13   Patriot Act ......................................................................................................................... 92        4.14   Indebtedness ...................................................................................................................... 93        4.15   Payment of Taxes .............................................................................................................. 93                                              i  125672876_9 

 

                                  TABLE OF CONTENTS                                        (continued)                                                                                     Page         4.16   Margin Stock ..................................................................................................................... 93         4.17  Governmental Regulation ................................................................................................. 93         4.18  OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws ...................... 93         4.19  Employee and Labor Matters ............................................................................................ 94         4.20  [Reserved] ......................................................................................................................... 94        4.21   Leases ............................................................................................................................... 94        4.22   Eligible Accounts; Eligible Credit Card Receivables ....................................................... 94        4.23   Eligible Inventory ............................................................................................................. 94        4.24   Eligible IP ......................................................................................................................... 94        4.25   Location of Inventory ....................................................................................................... 95        4.26   Inventory Records ............................................................................................................. 95        4.27   [Reserved] ......................................................................................................................... 95        4.28   [Reserved] ......................................................................................................................... 95        4.29   Immaterial Subsidiary ....................................................................................................... 95        4.30   Hedge Agreements ............................................................................................................ 95        4.31   Credit Card Arrangements ................................................................................................ 95        4.32   Material Contracts ............................................................................................................. 95  5.    AFFIRMATIVE COVENANTS. .................................................................................................. 95        5.1    Financial Statements, Reports, Certificates ...................................................................... 95        5.2    Reporting .......................................................................................................................... 96        5.3    Existence ........................................................................................................................... 96        5.4    Maintenance of Properties ................................................................................................ 96        5.5    Taxes ................................................................................................................................. 96        5.6    Insurance ........................................................................................................................... 96        5.7    Inspection .......................................................................................................................... 97        5.8    Compliance with Laws ..................................................................................................... 98        5.9    Environmental ................................................................................................................... 98        5.10   Disclosure Updates ........................................................................................................... 98        5.11   Formation of Subsidiaries ................................................................................................. 98        5.12   Further Assurances ........................................................................................................... 99        5.13   [Reserved] ....................................................................................................................... 100        5.14   Location of Inventory; Chief Executive Office .............................................................. 100        5.15   Compliance with ERISA and the IRC ............................................................................ 100        5.16   OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws .................... 100        5.17   Material Contracts ........................................................................................................... 101        5.18   Post-Closing Obligations ................................................................................................ 101  6.    NEGATIVE COVENANTS. ....................................................................................................... 101        6.1    Indebtedness .................................................................................................................... 101        6.2    Liens ............................................................................................................................... 101        6.3    Restrictions on Fundamental Changes ............................................................................ 101        6.4    Disposal of Assets ........................................................................................................... 101        6.5    Nature of Business .......................................................................................................... 102        6.6    Prepayments and Amendments ....................................................................................... 102        6.7    Restricted Payments ........................................................................................................ 102        6.8    Accounting Methods ....................................................................................................... 103        6.9    Investments ..................................................................................................................... 103        6.10   Transactions with Affiliates ............................................................................................ 103                                              ii  125672876_9 

 

                                  TABLE OF CONTENTS                                        (continued)                                                                                     Page         6.11   Use of Proceeds .............................................................................................................. 104        6.12   Limitation on Issuance of Equity Interests ..................................................................... 104        6.13   Inventory with Bailees .................................................................................................... 104        6.14   [Reserved] ....................................................................................................................... 104        6.15   Employee Benefits. ......................................................................................................... 104        6.16   Credit Card Agreements ................................................................................................. 105        6.17   Immaterial Subsidiary ..................................................................................................... 105  7.    FINANCIAL COVENANTS. ...................................................................................................... 105        7.1    Minimum EBITDA ......................................................................................................... 105        7.2    Availability ..................................................................................................................... 105  8.    EVENTS OF DEFAULT. ............................................................................................................ 105        8.1    Payments ......................................................................................................................... 105        8.2    Covenants........................................................................................................................ 106        8.3    Judgments ....................................................................................................................... 106        8.4    Voluntary Bankruptcy, etc. ............................................................................................. 106        8.5    Involuntary Bankruptcy, etc. ........................................................................................... 106        8.6    Default Under Other Agreements ................................................................................... 106        8.7    Representations, etc. ....................................................................................................... 107        8.8    Guaranty.......................................................................................................................... 107        8.9    Security Documents ........................................................................................................ 107        8.10   Loan Documents ............................................................................................................. 107        8.11   Change of Control ........................................................................................................... 107        8.12   ERISA ............................................................................................................................. 107        8.13   Credit Card Agreements ................................................................................................. 107  9.     RIGHTS AND REMEDIES. ....................................................................................................... 108         9.1   Rights and Remedies ...................................................................................................... 108         9.2   Remedies Cumulative ..................................................................................................... 109  10.    WAIVERS; INDEMNIFICATION. ............................................................................................ 109         10.1  Demand; Protest; etc. ...................................................................................................... 109         10.2  The Lender Group’s Liability for Collateral ................................................................... 109         10.3  Indemnification ............................................................................................................... 109  11.    NOTICES. .................................................................................................................................... 110  12.    CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE         PROVISION. ............................................................................................................................... 111  13.    ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS. .................................................. 114         13.1  Assignments and Participations ...................................................................................... 114         13.2  Successors ....................................................................................................................... 117  14.    AMENDMENTS; WAIVERS. .................................................................................................... 118         14.1  Amendments and Waivers .............................................................................................. 118         14.2  Replacement of Certain Lenders ..................................................................................... 120         14.3  No Waivers; Cumulative Remedies ................................................................................ 120                                              iii  125672876_9 

 

                                  TABLE OF CONTENTS                                        (continued)                                                                                     Page   15.    AGENT; THE LENDER GROUP. .............................................................................................. 120         15.1  Appointment and Authorization of Agent ...................................................................... 120         15.2  Delegation of Duties ....................................................................................................... 121         15.3  Liability of Agent ............................................................................................................ 121        15.4   Reliance by Agent ........................................................................................................... 122        15.5   Notice of Default or Event of Default ............................................................................. 122        15.6   Credit Decision ............................................................................................................... 122        15.7   Costs and Expenses; Indemnification ............................................................................. 123        15.8   Agent in Individual Capacity .......................................................................................... 123        15.9   Successor Agent .............................................................................................................. 124        15.10  Lender in Individual Capacity ........................................................................................ 124        15.11  Collateral Matters ........................................................................................................... 125        15.12  Restrictions on Actions by Lenders; Sharing of Payments ............................................. 126        15.13  Agency for Perfection ..................................................................................................... 127        15.14  Payments by Agent to the Lenders ................................................................................. 127        15.15  Concerning the Collateral and Related Loan Documents ............................................... 127        15.16  Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other               Reports and Information ................................................................................................. 127        15.17  Several Obligations; No Liability ................................................................................... 128  16.   WITHHOLDING TAXES. .......................................................................................................... 128        16.1   Payments ......................................................................................................................... 128        16.2   Exemptions ..................................................................................................................... 129        16.3   Reductions ...................................................................................................................... 131        16.4   Refunds ........................................................................................................................... 131  17.    GENERAL PROVISIONS. ......................................................................................................... 132         17.1  Effectiveness ................................................................................................................... 132         17.2  Section Headings ............................................................................................................ 132         17.3  Interpretation ................................................................................................................... 132        17.4   Severability of Provisions ............................................................................................... 132        17.5   Bank Product Providers .................................................................................................. 132        17.6   Debtor-Creditor Relationship .......................................................................................... 133        17.7   Counterparts; Electronic Execution ................................................................................ 133        17.8   Revival and Reinstatement of Obligations; Certain Waivers ......................................... 133        17.9   Confidentiality ................................................................................................................ 133        17.10  Survival ........................................................................................................................... 135        17.11  Patriot Act; Due Diligence .............................................................................................. 135        17.12  Integration ....................................................................................................................... 135        17.13  Nautilus as Agent for Borrowers .................................................................................... 136        17.14  Acknowledgement and Consent to Bail-In of EEA Financial Institutions ..................... 136        17.15  Acknowledgment Regarding Any Supported QFCs ....................................................... 137                                              iv  125672876_9 

 

                                   EXHIBITS AND SCHEDULES   Exhibit A-1               Form of Assignment and Acceptance   Exhibit B-1               Form of Borrowing Base Certificate  Exhibit C-1               Form of Compliance Certificate  Exhibit J-1               Form of Joinder  Exhibit L-1               Form of LIBOR Notice   Exhibit N-1               Form of Credit Card Notification  Exhibit P-1               Form of Perfection Certificate    Schedule A-1               Agent’s Account  Schedule A-2               Authorized Persons  Schedule C-1              Commitments  Schedule C-2              Customs Brokers  Schedule D-1               Designated Account  Schedule P-1               Permitted Investments  Schedule P-2               Permitted Liens  Schedule 3.1              Conditions Precedent  Schedule 4.1(b)           Capitalization of Borrowers  Schedule 4.1(c)           Capitalization of Borrowers’ Subsidiaries  Schedule 4.1(d)           Subscriptions, Options, Warrants, Calls  Schedule 4.6(b)           Litigation  Schedule 4.10             Employee Benefits  Schedule 4.11             Environmental Matters  Schedule 4.14              Permitted Indebtedness  Schedule 4.25              Location of Inventory  Schedule 4.31             Credit Card Arrangements  Schedule 4.32             Material Contracts  Schedule 5.1              Financial Statements, Reports, Certificates  Schedule 5.2              Collateral Reporting   Schedule 5.18              Post-Closing Obligations  Schedule 6.5              Nature of Business                                                  v  125672876_9 

 

                                   CREDIT AGREEMENT         THIS CREDIT AGREEMENT is entered into as of January 31, 2020, by and among the lenders  identified on the signature pages hereof (each of such lenders, together with its successors and permitted  assigns, is referred to hereinafter as a “Lender”, as that term is hereinafter further defined), WELLS  FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent  for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its  successors and assigns in such capacity, “Agent”), NAUTILUS, INC., a Washington corporation  (“Nautilus”), OCTANE FITNESS, LLC, a Minnesota limited liability company (“Octane”), and those  additional Persons that are joined as a party hereto by executing the form of Joinder attached hereto as  Exhibit J-1 (each, together with Nautilus and Octane, a “Borrower” and individually and collectively,  jointly and severally, the “Borrowers”).                The parties agree as follows:   1.    DEFINITIONS AND CONSTRUCTION.         1.1    Definitions. As used in this Agreement, the following terms shall have the following  definitions:          “Acceptable Appraisal” means, with respect to an appraisal of Inventory or IP, the most recent  appraisal of such property received by Agent (a) from an appraisal company satisfactory to Agent in Agent’s  Permitted Discretion (including, without limitation, so long as it is satisfactory to Agent in Agent’s  Permitted Discretion, Hilco), (b) the scope and methodology (including, to the extent relevant, any sampling  procedure employed by such appraisal company) of which are satisfactory to Agent in Agent’s Permitted  Discretion, and (c) the results of which are satisfactory to Agent in Agent’s Permitted Discretion.          “Account” means an account (as that term is defined in the Code).         “Account Debtor” means any Person who is obligated on an Account, chattel paper, or a general  intangible, including, without limitation, a Credit Card Issuer or a Credit Card Processor.          “Account Party” has the meaning specified therefor in Section 2.11(h) of this Agreement.         “Accounting Changes” means changes in accounting principles required by the promulgation of  any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the  American Institute of Certified Public Accountants (or successor thereto or any agency with similar  functions).          “Acquired Indebtedness” means Indebtedness of a Person whose assets or Equity Interests are  acquired by a Loan Party or any of its Subsidiaries in a Permitted Acquisition; provided, that such  Indebtedness (a) is either purchase money Indebtedness or a Capital Lease with respect to Equipment or  mortgage financing with respect to Real Property, (b) was in existence prior to the date of such Permitted  Acquisition, and (c) was not incurred in connection with, or in contemplation of, such Permitted  Acquisition.          “Acquisition” means (a) the purchase or other acquisition by a Person or its Subsidiaries of all or  substantially all of the assets of (or any division or business line of) any other Person, or (b) the purchase  or other acquisition (whether by means of a merger, consolidation, or otherwise) by a Person or its  Subsidiaries of all of the Equity Interests of any other Person.          “Additional Documents” has the meaning specified therefor in Section 5.12 of this Agreement.                                              1  125672876_9 

 

         “Administrative Borrower” has the meaning specified therefor in Section 17.13 of this Agreement.         “Administrative Questionnaire” has the meaning specified therefor in Section 13.1(a) of this  Agreement.          “Affected Lender” has the meaning specified therefor in Section 2.13(b) of this Agreement.         “Affiliate” means, as applied to any Person, any other Person who controls, is controlled by, or is  under common control with, such Person. For purposes of this definition, “control” means the possession,  directly or indirectly through one or more intermediaries, of the power to direct the management and  policies of a Person, whether through the ownership of Equity Interests, by contract, or otherwise; provided,  that for purposes of the definition of Eligible Accounts, the definition of Eligible Credit Card Receivables,  and Section 6.10 of this Agreement: (a) if any Person owns directly or indirectly 15% or more of the Equity  Interests having ordinary voting power for the election of directors or other members of the governing body  of a Person or 15% or more of the partnership or other ownership interests of a Person (other than as a  limited partner of such Person), then both such Persons shall be Affiliates of each other, (b) each director  (or comparable manager) of a Person shall be deemed to be an Affiliate of such Person, and (c) each  partnership in which a Person is a general partner shall be deemed an Affiliate of such Person.          “Agent” has the meaning specified therefor in the preamble to this Agreement.         “Agent-Related Persons” means Agent, together with its Affiliates, officers, directors, employees,  attorneys, and agents.          “Agent’s Account” means the Deposit Account of Agent identified on Schedule A-1 to this  Agreement (or such other Deposit Account of Agent that has been designated as such, in writing, by Agent  to Borrowers and the Lenders).          “Agent’s Liens” means the Liens granted by each Loan Party or its Subsidiaries to Agent under the  Loan Documents and securing the Obligations.          “Agreement” means this Credit Agreement, as amended, restated, amended and restated,  supplemented or otherwise modified from time to time.          “Alternative Closing Borrowing Base” has the meaning specified therefor in the definition of  Borrowing Base.           “Anti-Corruption Laws” means the FCPA, the U.K. Bribery Act of 2010, as amended, and all other  applicable laws and regulations or ordinances concerning or relating to bribery or corruption in any  jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business.          “Anti-Money Laundering Laws” means the applicable laws or regulations in any jurisdiction in  which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business that relates to  money laundering, any predicate crime to money laundering, or any financial record keeping and reporting  requirements related thereto.          “Applicable Margin” means (a) in the case of a Base Rate Loan which is a Term Loan, 4.00% (the  “Term Loan Base Rate Margin”); (b) in the case of a LIBOR Rate Loan which is a Term Loan, 5.00% (the  “Term Loan LIBOR Rate Margin”); and (c) with respect to Base Rate Loans or LIBOR Rate Loans that are  Revolving Loans, as applicable, as of any date of determination, the applicable margin set forth in the  following table that corresponds to the Average Availability of Borrowers for the most recently completed                                              2  125672876_9 

 

   quarter; provided, that for the period from the Closing Date through and including December 31, 2020, the  Applicable Margin shall be set at the margin in the row styled “Level III”; provided further, that any time  an Event of Default has occurred and is continuing, the Applicable Margin shall be set at the margin in the  row styled “Level III”:                                     Applicable Margin for        Applicable Margin for                                   Base Rate Loans which are    LIBOR Rate Loans which are                                Revolving Loans (the “Revolving  Revolving Loans (the “Revolving    Level   Average Availability   Loan Base Rate Margin”)     Loan LIBOR Rate Margin”)       I ≥ 20% of the Maximum        0.75 percentage points      1.75 percentage points             Revolver Amount       II   < 20% of the Maximum     1.00 percentage points      2.00 percentage points             Revolver Amount                   but           ≥ 15% of the Maximum             Revolver Amount      III   < 15% of the Maximum     1.25 percentage points      2.25 percentage points             Revolver Amount                 The Applicable Margin shall be re-determined as of the first day of each quarter.         “Application Event” means the occurrence of (a) a failure by Borrowers to repay all of the  Obligations in full on the Maturity Date, or (b) an Event of Default and the election by Agent or the Required  Lenders to require that payments and proceeds of Collateral be applied pursuant to Section 2.4(b)(iii) of  this Agreement.          “Assignee” has the meaning specified therefor in Section 13.1(a) of this Agreement.         “Assignment and Acceptance” means an Assignment and Acceptance Agreement substantially in  the form of Exhibit A-1 to this Agreement.         “Authorized Person” means any one of the individuals identified as an officer of a Borrower on  Schedule A-2 to this Agreement, or any other individual identified by Administrative Borrower as an  authorized person and authenticated through Agent’s electronic platform or portal in accordance with its  procedures for such authentication.          “Availability” means, as of any date of determination, the amount that Borrowers are entitled to  borrow as Revolving Loans under Section 2.1 of this Agreement (after giving effect to the then outstanding  Revolver Usage).          “Available Increase Amount” means, as of any date of determination, an amount equal to the result  of (a) $10,000,000, minus (b) the aggregate principal amount of Increases to the Revolver Commitments  previously made pursuant to Section 2.14 of this Agreement.                                               3  125672876_9 

 

         “Average Availability” means, with respect to any period, the sum of the aggregate amount of  Availability for each day in such period (as calculated by Agent as of the end of each respective day) divided  by the number of days in such period.         “Average Revolver Usage” means, with respect to any period, the sum of the aggregate amount of  Revolver Usage for each day in such period (calculated as of the end of each respective day) divided by the  number of days in such period.          “Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable  EEA Resolution Authority in respect of any liability of an EEA Financial Institution.          “Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55  of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the  implementing law for such EEA Member Country from time to time which is described in the EU Bail-In  Legislation Schedule.          “Bank Product” means any one or more of the following financial products or accommodations  extended to any Loan Party or any of its Subsidiaries by a Bank Product Provider: (a) credit cards (including  commercial cards (including so-called “purchase cards”, “procurement cards” or “p-cards”)), (b) payment  card processing services, (c) debit cards, (d) stored value cards, (e) Cash Management Services, or  (f) transactions under Hedge Agreements.          “Bank Product Agreements” means those agreements entered into from time to time by any Loan  Party or any of its Subsidiaries with a Bank Product Provider in connection with the obtaining of any of the  Bank Products.          “Bank Product Collateralization” means providing cash collateral (pursuant to documentation  reasonably satisfactory to Agent) to be held by Agent for the benefit of the Bank Product Providers (other  than the Hedge Providers) in an amount determined by Agent as sufficient to satisfy the reasonably  estimated credit exposure, operational risk or processing risk with respect to the then existing Bank Product  Obligations (other than Hedge Obligations).          “Bank Product Obligations” means (a) all obligations, liabilities, reimbursement obligations, fees,  or expenses owing by each Loan Party and its Subsidiaries to any Bank Product Provider pursuant to or  evidenced by a Bank Product Agreement and irrespective of whether for the payment of money, whether  direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, (b) all  Hedge Obligations, and (c) all amounts that Agent or any Lender is obligated to pay to a Bank Product  Provider as a result of Agent or such Lender purchasing participations from, or executing guarantees or  indemnities or reimbursement obligations to, a Bank Product Provider with respect to the Bank Products  provided by such Bank Product Provider to a Loan Party or its Subsidiaries.          “Bank Product Provider” means Wells Fargo or any of its Affiliates, including each of the foregoing  in its capacity, if applicable, as a Hedge Provider.          “Bank Product Reserves” means, as of any date of determination, those reserves that Agent deems  necessary or appropriate to establish (based upon the Bank Product Providers’ determination of the  liabilities and obligations of each Loan Party and its Subsidiaries in respect of Bank Product Obligations)  in Agent’s Permitted Discretion in respect of Bank Products then provided or outstanding.          “Bankruptcy Code” means title 11 of the United States Code, as in effect from time to time.                                               4  125672876_9 

 

         “Base Rate” means the greatest of (a) the Federal Funds Rate plus 1⁄2%, (b) the LIBOR Rate (which  rate shall be calculated based upon an Interest Period of one month and shall be determined on a daily  basis), plus one percentage point, and (c) the rate of interest announced, from time to time, within Wells  Fargo at its principal office in San Francisco as its “prime rate”, with the understanding that the “prime  rate” is one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and serves as the basis  upon which effective rates of interest are calculated for those loans making reference thereto and is  evidenced by the recording thereof after its announcement in such internal publications as Wells Fargo may  designate (and, if any such announced rate is below zero, then the rate determined pursuant to this clause (c)  shall be deemed to be zero).          “Base Rate Loan” means each portion of the Revolving Loans or the Term Loan that bears interest  at a rate determined by reference to the Base Rate.          “Base Rate Margin” means the Revolving Loan Base Rate Margin or the Term Loan Base Rate  Margin, as applicable.          “Benchmark Replacement” means the sum of: (a) the alternate benchmark rate (which may include  Term SOFR) that has been selected by Agent and Administrative Borrower giving due consideration to (i)  any selection or recommendation of a replacement rate or the mechanism for determining such a rate by  the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining  a rate of interest as a replacement to the LIBOR Rate for United States dollar-denominated syndicated credit  facilities and (b) the Benchmark Replacement Adjustment; provided that, if the Benchmark Replacement  as so determined would be less than zero, the Benchmark Replacement shall be deemed to be zero for the  purposes of this Agreement.          “Benchmark Replacement Adjustment” means, with respect to any replacement of the LIBOR Rate  with an Unadjusted Benchmark Replacement for each applicable Interest Period, the spread adjustment, or  method for calculating or determining such spread adjustment, (which may be a positive or negative value  or zero) that has been selected by Agent and Administrative Borrower giving due consideration to (i) any  selection or recommendation of a spread adjustment, or method for calculating or determining such spread  adjustment, for the replacement of the LIBOR Rate with the applicable Unadjusted Benchmark  Replacement by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention  for determining a spread adjustment, or method for calculating or determining such spread adjustment, for  the replacement of the LIBOR Rate with the applicable Unadjusted Benchmark Replacement for United  States dollar-denominated syndicated credit facilities at such time.         “Benchmark Replacement Conforming Changes” means, with respect to any Benchmark  Replacement, any technical, administrative or operational changes (including changes to the definition of  “Base Rate”, the definition of “Interest Period”, timing and frequency of determining rates and making  payments of interest and other administrative matters) that Agent decides may be appropriate to reflect the  adoption and implementation of such Benchmark Replacement and to permit the administration thereof by  Agent in a manner substantially consistent with market practice (or, if Agent decides that adoption of any  portion of such market practice is not administratively feasible or if Agent determines that no market  practice for the administration of the Benchmark Replacement exists, in such other manner of  administration as Agent decides is reasonably necessary in connection with the administration of this  Agreement).                                               5  125672876_9 

 

         “Benchmark Replacement Date” means the earlier to occur of the following events with respect to  the LIBOR Rate:                (a)    in the case of clause (a) or (b) of the definition of Benchmark Transition Event, the  later of (i) the date of the public statement or publication of information referenced therein and (ii) the date  on which the administrator of the LIBOR Rate permanently or indefinitely ceases to provide the LIBOR  Rate; or                (b)    in the case of clause (c) of the definition of Benchmark Transition Event, the date  of the public statement or publication of information referenced therein.          “Benchmark Transition Event” means the occurrence of one or more of the following events with  respect to the LIBOR Rate:                (a)    a public statement or publication of information by or on behalf of the  administrator of the LIBOR Rate announcing that such administrator has ceased or will cease to provide  the LIBOR Rate, permanently or indefinitely, provided that, at the time of such statement or publication,  there is no successor administrator that will continue to provide the LIBOR Rate;                (b)    a public statement or publication of information by the regulatory supervisor for  the administrator of the LIBOR Rate, the Federal Reserve System of the United States (or any successor),  an insolvency official with jurisdiction over the administrator for the LIBOR Rate, a resolution authority  with jurisdiction over the administrator for the LIBOR Rate or a court or an entity with similar insolvency  or resolution authority over the administrator for the LIBOR Rate, which states that the administrator of the  LIBOR Rate has ceased or will cease to provide the LIBOR Rate permanently or indefinitely, provided  that, at the time of such statement or publication, there is no successor administrator that will continue to  provide the LIBOR Rate; or                (c)    a public statement or publication of information by the regulatory supervisor for  the administrator of the LIBOR Rate announcing that the LIBOR Rate is no longer representative.          “Benchmark Transition Start Date” means (a) in the case of a Benchmark Transition Event, the  earlier of (i) the applicable Benchmark Replacement Date and (ii) if such Benchmark Transition Event is a  public statement or publication of information of a prospective event, the 90th day prior to the expected date  of such event as of such public statement or publication of information (or if the expected date of such  prospective event is fewer than 90 days after such statement or publication, the date of such statement or  publication) and (b) in the case of an Early Opt-in Election, the date specified by Agent or the Required  Lenders, as applicable, by notice to Administrative Borrower, Agent (in the case of such notice by the  Required Lenders) and the Lenders.         “Benchmark Unavailability Period” means, if a Benchmark Transition Event and its related  Benchmark Replacement Date have occurred with respect to the LIBOR Rate and solely to the extent that  the LIBOR Rate has not been replaced with a Benchmark Replacement, the period (x) beginning at the time  that such Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has  replaced the LIBOR Rate for all purposes hereunder in accordance with Section 2.12(d)(iii) and (y) ending  at the time that a Benchmark Replacement has replaced the LIBOR Rate for all purposes hereunder pursuant  to Section 2.12(d)(iii).         “Beneficial Ownership Certification” means a certification regarding beneficial ownership as  required by the Beneficial Ownership Regulation.          “Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.                                              6  125672876_9 

 

         “BHC Act Affiliate” of a Person means an “affiliate” (as such term is defined under, and interpreted  in accordance with, 12 U.S.C. 1841(k)) of such Person.          “Board of Directors” means, as to any Person, the board of directors (or comparable managers) of  such Person, or any committee thereof duly authorized to act on behalf of the board of directors (or  comparable managers).          “Board of Governors” means the Board of Governors of the Federal Reserve System of the United  States (or any successor).          “Borrower” and “Borrowers” have the respective meanings specified therefor in the preamble to  this Agreement.          “Borrower Materials” has the meaning specified therefor in Section 17.9(c) of this Agreement.         “Borrowing” means a borrowing consisting of Revolving Loans made on the same day by the  Lenders (or Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or by Agent in the  case of an Extraordinary Advance.          “Borrowing Base” means, as of any date of determination, the result of:                (a)    the lesser of                         (i)    $3,500,000, and                         (ii)   90% of the face amount of Eligible Credit Card Receivables, less the  amount, if any, of the Dilution Reserve with respect to such Credit Card Receivables,                 plus                (b)    85% of the amount of Eligible Accounts, less the amount, if any, of the Dilution  Reserve with respect to such Accounts,                 plus                (c)    the lesser of                         (i)    $30,000,000, and                        (ii)   the sum of   (A)   the lesser of          (1)    the product of 70% multiplied by the value (calculated at the lower of cost or market on a               basis consistent with Borrowers’ historical accounting practices) of Eligible Finished               Goods Inventory at such time, and          (2)    the product of 85% multiplied by the Net Recovery Percentage identified in the most recent               Acceptable Appraisal of Inventory, multiplied by the value (calculated at the lower of cost               or market on a basis consistent with Borrowers’ historical accounting practices) of Eligible               Finished Goods Inventory (such determination may be made as to different categories of               Eligible Finished Goods Inventory based upon the Net Recovery Percentage applicable to               such categories) at such time,                                               7  125672876_9 

 

         plus   (B)    the least of           (1)   $7,000,000,           (2)   the result of 70% multiplied by the value (calculated at the lower of cost or market on a               basis consistent with Borrowers’ historical accounting practices) of Eligible In-Transit               Inventory consisting of finished goods, and          (3)    the result of 85% multiplied by the Net Recovery Percentage identified in the most recent               Acceptable Appraisal of Inventory, multiplied by the value (calculated at the lower of cost               or market on a basis consistent with Borrowers’ historical accounting practices) of Eligible               In-Transit Inventory consisting of finished goods (such determination may be made as to               different categories of finished goods Inventory based upon the Net Recovery Percentage               applicable to such categories) at such time,          plus   (C)    the least of           (1)   $1,000,000,           (2)   the result of 70% multiplied by the value (calculated at the lower of cost or market on a               basis consistent with Borrowers’ historical accounting practices) of Eligible Spare Parts               Inventory, and          (3)    the result of 85% multiplied by the Net Recovery Percentage identified in the most recent               Acceptable Appraisal of Inventory, multiplied by the value (calculated at the lower of cost               or market on a basis consistent with Borrowers’ historical accounting practices) of Eligible               Spare Parts Inventory (such determination may be made as to different categories of               Eligible Spare Parts Inventory based upon the Net Recovery Percentage applicable to such               categories) at such time,                 minus                (d)    the aggregate amount of Reserves, if any, established by Agent from time to time  under Section 2.1(c) of this Agreement;   provided, that (i) to the extent that Agent and the Lenders were not able to complete a field examination  (the “Field Exam”) prior to the Closing Date, the Borrowing Base for purposes of any Revolving Loans  and Letters of Credit shall be the Alternative Closing Borrowing Base until the earlier of the date that Agent  shall have received the Field Exam and the 60th day from and including the Closing Date; (ii) if Agent has  not received the Field Exam with respect to assets to be included in the Borrowing Base on or before such  60th day, then the Borrowing Base shall be deemed to be zero on and after such 60th day until Agent’s  receipt and reasonable opportunity to review the results of such Field Exam, but so long as the Loan Parties  and Agent are continuing to diligently work in good faith toward completion of the Field Exam as of and  after such 60th day, Agent will not unreasonably withhold its consent to allowing the Alternative Closing  Borrowing Base to continue until the Field Exam is completed; and (iii) on and after the receipt and review  by Agent of the Field Exam, the Borrowers’ eligible assets shall be included in the Borrowing Base as  provided above and not the Alternative Closing Borrowing Base.                                               8  125672876_9 

 

   For purposes hereof, the “Alternative Closing Borrowing Base” means, as of any date of determination, the  result of (a) the lesser of (i) $35,000,000, and (ii) the sum of (A) 55% of the net book value of Borrowers’  consolidated balance sheet Accounts, plus (B) the product of 35% multiplied by the net book value of  Borrowers’ consolidated balance sheet Inventory, minus (b) the aggregate amount of Reserves, if any,  established by Agent from time to time under Section 2.1(c) of this Agreement;   provided, that, (1) the net book value shall be based on the most recent financial statements received by  Agent and (2) Agent will adjust the Alternative Closing Borrowing Base as to applicable Reserves and as  to Eligible Accounts and Eligible Credit Card Receivables based on any field examination results with  respect thereto at the time that it receives such field examination results (but using the advance rate and  terms as to such Eligible Accounts or such Eligible Credit Card Receivables, as applicable, set forth in the  definition of Borrowing Base) and as to applicable Reserves and as to the Eligible Inventory and the Eligible  In-Transit Inventory at the time that it receives any field examination results with respect thereto at the time  that it receives such field examination results (but using the advance rate and terms as to such Eligible  Inventory or such Eligible In-Transit Inventory, as applicable, set forth in the definition of Borrowing Base).          “Borrowing Base Certificate” means a certificate substantially in the form of Exhibit B-1 to this  Agreement, which such form of Borrowing Base Certificate may be amended, restated, supplemented or  otherwise modified from time to time (including without limitation, changes to the format thereof), as  satisfactory to Agent in Agent’s Permitted Discretion.          “Business Day” means any day that is not a Saturday, Sunday, or other day on which banks are  authorized or required to close in the State of Illinois or the State of Washington, except that, if a  determination of a Business Day shall relate to a LIBOR Rate Loan, the term “Business Day” also shall  exclude any day on which banks are closed for dealings in Dollar deposits in the London interbank market.          “Capital Expenditures” means, with respect to any Person for any period, the amount of all  expenditures by such Person and its Subsidiaries during such period that are capital expenditures as  determined in accordance with GAAP, whether such expenditures are paid in cash or financed, but  excluding, without duplication (a) expenditures made during such period in connection with the  replacement, substitution, or restoration of assets or properties pursuant to Section 2.4(e)(iii) of this  Agreement, (b) with respect to the purchase price of assets that are purchased substantially  contemporaneously with the trade-in of existing assets during such period, the amount that the gross amount  of such purchase price is reduced by the credit granted by the seller of such assets for the assets being traded  in at such time, and (c) expenditures made during such period to consummate one or more Permitted  Acquisitions.          “Capital Lease” means a lease that is required to be capitalized for financial reporting purposes in  accordance with GAAP.          “Capitalized Lease Obligation” means that portion of the obligations under a Capital Lease that is  required to be capitalized in accordance with GAAP.          “Cash Equivalents” means (a) marketable direct obligations issued by, or unconditionally  guaranteed by, the United States or issued by any agency thereof and backed by the full faith and credit of  the United States, in each case maturing within one year from the date of acquisition thereof, (b) marketable  direct obligations issued or fully guaranteed by any state of the United States or any political subdivision  of any such state or any public instrumentality thereof maturing within one year from the date of acquisition  thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard  & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”), (c) commercial paper  maturing no more than 270 days from the date of creation thereof and, at the time of acquisition, having a                                              9  125672876_9 

 

   rating of at least A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit, time deposits,  overnight bank deposits or bankers’ acceptances maturing within one year from the date of acquisition  thereof issued by any bank organized under the laws of the United States or any state thereof or the District  of Columbia or any United States branch of a foreign bank having at the date of acquisition thereof  combined capital and surplus of not less than $1,000,000,000, (e) Deposit Accounts maintained with (i) any  bank that satisfies the criteria described in clause (d) above, or (ii) any other bank organized under the laws  of the United States or any state thereof so long as the full amount maintained with any such other bank is  insured by the Federal Deposit Insurance Corporation, (f) repurchase obligations of any commercial bank  satisfying the requirements of clause (d) of this definition or of any recognized securities dealer having  combined capital and surplus of not less than $1,000,000,000, having a term of not more than seven days,  with respect to securities satisfying the criteria in clauses (a) or (d) above, (g) debt securities with maturities  of six months or less from the date of acquisition backed by standby letters of credit issued by any  commercial bank satisfying the criteria described in clause (d) above, and (h) Investments in money market  funds substantially all of whose assets are invested in the types of assets described in clauses (a) through  (g) above.         “Cash Management Services” means any cash management or related services including treasury,  depository, return items, overdraft, controlled disbursement, merchant store value cards, e-payables  services, electronic funds transfer, interstate depository network, automatic clearing house transfer  (including the Automated Clearing House processing of electronic funds transfers through the direct Federal  Reserve Fedline system) and other cash management arrangements.          “CFC” means a controlled foreign corporation (as that term is defined in the IRC) in which any  Loan Party is a “United States shareholder” within the meaning of Section 951(b) of the IRC.          “Change in Law” means the occurrence after the date of this Agreement of: (a) the adoption or  effectiveness of any law, rule, regulation, judicial ruling, judgment or treaty, (b) any change in any law,  rule, regulation, judicial ruling, judgment or treaty or in the administration, interpretation, implementation  or application by any Governmental Authority of any law, rule, regulation, guideline or treaty, or (c) the  making or issuance by any Governmental Authority of any request, rule, guideline or directive, whether or  not having the force of law; provided, that notwithstanding anything in this Agreement to the contrary, (i)  the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or  directives thereunder or issued in connection therewith, and (ii) all requests, rules, guidelines or directives  concerning capital adequacy promulgated by the Bank for International Settlements, the Basel Committee  on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory  authorities shall, in each case, be deemed to be a “Change in Law,” regardless of the date enacted, adopted  or issued.          “Change of Control” means that:                (a)    any Person or two or more Persons acting in concert shall have acquired beneficial  ownership, directly or indirectly, of Equity Interests of Administrative Borrower (or other securities  convertible into such Equity Interests) representing 35% or more of the combined voting power of all Equity  Interests of Administrative Borrower entitled (without regard to the occurrence of any contingency) to vote  for the election of members of the Board of Directors of Administrative Borrower,                (b)    any Person or two or more Persons acting in concert shall have acquired by contract  or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof, will  result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over  the management or policies of Administrative Borrower or control over the Equity Interests of such Person  entitled to vote for members of the Board of Directors of Administrative Borrower on a fully-diluted basis                                             10  125672876_9 

 

   (and taking into account all such Equity Interests that such Person or group has the right to acquire pursuant  to any option right) representing 35% or more of the combined voting power of such Equity Interests,                (c)    occupation at any time of a majority of the seats (other than vacant seats) on the  Board of Directors of Administrative Borrower by Persons who were not (i) directors of Administrative  Borrower on the date of this Agreement, nominated, appointed or approved for consideration by  shareholders for election by the Board of Directors of Administrative Borrower, (ii) approved by the Board  of Directors of Administrative Borrower as director candidates prior to their election, nor (iii) appointed by  directors so nominated, appointed or approved, or                (d)    Borrowers fail to own and control, directly or indirectly, 100% of the Equity  Interests of each other Loan Party.          “Closing Date” means the date of the making of the Term Loan (or other initial extension of credit)  under this Agreement.          “Code” means the Illinois Uniform Commercial Code, as in effect from time to time.         “Collateral” means all assets and interests in assets and proceeds thereof now owned or hereafter  acquired by any Loan Party or its Subsidiaries in or upon which a Lien is granted by such Person in favor  of Agent or the Lenders under any of the Loan Documents. For the avoidance of doubt, “Collateral” shall  not include Excluded Assets or any other assets expressly excluded from the Collateral (as defined in the  Guaranty and Security Agreement).          “Collateral Access Agreement” means a landlord waiver, bailee letter, or acknowledgement  agreement of any lessor, warehouseman, processor, consignee, or other Person in possession of, having a  Lien upon, or having rights or interests in any Loan Party’s or its Subsidiaries’ books and records,  Equipment, or Inventory, in each case, in form and substance reasonably satisfactory to Agent.         “Collections” means, all cash, checks, notes, instruments, and other items of payment (including  insurance proceeds, cash proceeds of asset sales, rental proceeds and tax refunds).          “Commitment” means, with respect to each Lender, its Revolver Commitment or its Term Loan  Commitment, as the context requires, and, with respect to all Lenders, their Revolver Commitments or their  Term Loan Commitments, as the context requires, in each case as such Dollar amounts are set forth beside  such Lender’s name under the applicable heading on Schedule C-1 to this Agreement or in the Assignment  and Acceptance pursuant to which such Lender became a Lender under this Agreement, as such amounts  may be reduced or increased from time to time pursuant to assignments made in accordance with the  provisions of Section 13.1 of this Agreement.         “Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as  amended from time to time, and any successor statute.          “Compliance Certificate” means a certificate substantially in the form of Exhibit C-1 to this  Agreement delivered by the chief financial officer or treasurer of Administrative Borrower to Agent.          “Confidential Information” has the meaning specified therefor in Section 17.9(a) of this  Agreement.          “Control Agreement” means a control agreement, in form and substance reasonably satisfactory to  Agent, executed and delivered by a Loan Party or one of its Subsidiaries, Agent, and the applicable  securities intermediary (with respect to a Securities Account) or bank (with respect to a Deposit Account).                                             11  125672876_9 

 

         “Copyright Security Agreement” has the meaning specified therefor in the Guaranty and Security  Agreement.          “Covered Entity” means any of the following:                (a)    a “covered entity” as that term is defined in, and interpreted in accordance with,  12 C.F.R. § 252.82(b);                (b)    a “covered bank” as that term is defined in, and interpreted in accordance with,  12 C.F.R. § 47.3(b); or                (c)    a “covered FSI” as that term is defined in, and interpreted in accordance with,  12 C.F.R. § 382.2(b).          “Covered Party” has the meaning specified therefor in Section 17.15 of this Agreement.         “Credit Card Agreements” means all agreements now or hereafter entered into by any Borrower or  for the benefit of any Borrower, in each case with any Credit Card Issuer or any Credit Card Processor with  respect to sales transactions involving credit card, debit card, or charge card purchases, including, without  limitation, the agreements set forth on Schedule 4.31 to this Agreement.         “Credit Card Issuer” means any Person (other than a Loan Party) who issues or whose members  issue credit cards, including, without limitation, MasterCard or VISA bank credit or debit cards or other  bank credit, debit, or charge cards issued through MasterCard International, Inc., Visa, U.S.A., Inc., or Visa  International and American Express, Discover, Diners Club, Carte Blanche, and other non-bank credit,  debit, or charge cards, including, without limitation, credit or debit cards issued by or through American  Express Travel Related Services Company, Inc., Novus Services, Inc., PayPal, Synchrony, and other issuers  approved by Agent in its Permitted Discretion.         “Credit Card Notification” means a notification substantially in the form of Exhibit N-1 to this  Agreement or otherwise in form and substance reasonably satisfactory to Agent executed by a Loan Party  and delivered to a Credit Card Issuer or Credit Card Processor of such Loan Party.          “Credit Card Processor” means any servicing or processing agent or any factor or financial  intermediary who facilitates, services, processes or manages the credit authorization, billing transfer and/or  payment procedures with respect to any Borrower’s sales transactions involving credit card, debit card, or  charge card purchases by customers using credit cards, debit cards, or charge cards issued by any Credit  Card Issuer.          “Credit Card Receivables” means each “payment intangible” (as defined in the Code), together  with all income, payments and proceeds thereof, owed by a Credit Card Issuer or Credit Card Processor to  a Loan Party resulting from charges by a customer of a Loan Party on credit, debit, or charge cards issued  by such Credit Card Issuer or processed by such Credit Card Processor in connection with the sale of goods  by a Loan Party, or services performed by a Loan Party, in each case in the ordinary course of its business.          “Customs Brokers” shall mean the persons listed on Schedule C-2 hereto or such other person or  persons as may be selected by Administrative Borrower after the date hereof and after written notice by  Administrative Borrower to Agent who are reasonably acceptable to Agent to handle the receipt of  Inventory within the United States or to clear Inventory through the Bureau of Customs and Border  Protection or other domestic or foreign export control authorities or otherwise perform port of entry services  to process Inventory imported by a Borrower from outside the United States (such persons sometimes being  referred to herein individually as a “Customs Broker”), provided, that, as to each such person, (a) Agent                                             12  125672876_9 

 

   shall have received a customs broker agreement by such person in favor of Agent (in form and substance  satisfactory to Agent) duly authorized, executed and delivered by such person, (b) such agreement shall be  in full force and effect and (c) such person shall be in compliance in all material respects with the terms  thereof.          “Default” means an event, condition, or default that, with the giving of notice, the passage of time,  or both, would be an Event of Default.          “Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance  with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.          “Defaulting Lender” means any Lender that (a) has failed to (i) fund all or any portion of its Loans  within two Business Days of the date such Loans were required to be funded hereunder unless such Lender  notifies Agent and Administrative Borrower in writing that such failure is the result of such Lender’s  determination that one or more conditions precedent to funding (each of which conditions precedent,  together with any applicable Default or Event of Default, shall be specifically identified in such writing)  has not been satisfied, or (ii) pay to Agent, Issuing Bank, or any other Lender any other amount required to  be paid by it hereunder (including in respect of its participation in Letters of Credit) within two Business  Days of the date when due, (b) has notified any Borrower, Agent or Issuing Bank in writing that it does not  intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless  such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states  that such position is based on such Lender’s determination that a condition precedent to funding (which  condition precedent, together with any applicable Default or Event of Default, shall be specifically  identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business  Days after written request by Agent or Administrative Borrower, to confirm in writing to Agent and  Administrative Borrower that it will comply with its prospective funding obligations hereunder (provided,  that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such  written confirmation by Agent and Administrative Borrower), or (d) has, or has a direct or indirect parent  company that has, (i) become the subject of any Insolvency Proceeding, (ii) had appointed for it a receiver,  custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged  with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance  Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) become the  subject of a Bail-in Action; provided, that a Lender shall not be a Defaulting Lender solely by virtue of the  ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company  thereof by a Governmental Authority so long as such ownership interest does not result in or provide such  Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of  judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to  reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any  determination by Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through  (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a  Defaulting Lender upon delivery of written notice of such determination to Administrative Borrower,  Issuing Bank, and each Lender.          “Defaulting Lender Rate” means (a) for the first three days from and after the date the relevant  payment is due, the Base Rate, and (b) thereafter, the interest rate then applicable to Revolving Loans that  are Base Rate Loans (inclusive of the Base Rate Margin applicable thereto).          “Deposit Account” means any deposit account (as that term is defined in the Code).                                              13  125672876_9 

 

         “Designated Account” means the Deposit Account of Administrative Borrower identified on  Schedule D-1 to this Agreement (or such other Deposit Account of Administrative Borrower located at  Designated Account Bank that has been designated as such, in writing, by Borrowers to Agent).          “Designated Account Bank” has the meaning specified therefor in Schedule D-1 to this Agreement  (or such other bank that is located within the United States that has been designated as such, in writing, by  Administrative Borrower to Agent).          “Dilution” means (a) with respect to Accounts (other than Credit Card Receivables), as of any date  of determination, a percentage, based upon the experience of the immediately prior 12 months, that is the  result of dividing the Dollar amount of (i) bad debt write-downs, discounts, advertising allowances, credits,  or other dilutive items with respect to Borrowers’ Accounts during such period, by (ii) Borrowers’ gross  billings with respect to Accounts during such period, and (b) with respect to Credit Card Receivables, as of  any date of determination, a percentage, based upon the experience of the immediately prior 12 months,  that is the result of dividing the Dollar amount of (i) bad debt write-downs, discounts, advertising  allowances, credits, or other dilutive items with respect to Borrowers’ Credit Card Receivables during such  period, by (ii) Borrowers’ gross billings with respect to Credit Card Receivables during such period.          “Dilution Reserve” means, as of any date of determination, an amount sufficient to reduce the  advance rate against Eligible Accounts or Eligible Credit Card Receivables, as applicable, by the extent to  which Dilution is in excess of 5%.          “Disqualified Equity Interests” means any Equity Interests that, by their terms (or by the terms of  any security or other Equity Interests into which they are convertible or for which they are exchangeable),  or upon the happening of any event or condition (a) matures or are mandatorily redeemable (other than  solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result  of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a  change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other  Obligations that are accrued and payable and the termination of the Commitments), (b) are redeemable at  the option of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part, (c)  provide for the scheduled payments of dividends in cash, or (d) are or become 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 Maturity Date.          “Disqualified Institution” means, on any date, (a) any Person designated by Administrative  Borrower as a “Disqualified Institution” by written notice delivered to Agent prior to the date hereof, and  (b) those Persons who are direct competitors of the Borrowers identified in writing by Administrative  Borrower to Agent from time to time, subject to the written consent of Agent; provided, that “Disqualified  Institutions” shall exclude any Person that Administrative Borrower has designated as no longer being a  “Disqualified Institution” by written notice delivered to Agent from time to time; provided further, that in  connection with any assignment or participation, the Assignee or Participant with respect to such proposed  assignment or participation that is an investment bank, a commercial bank, a finance company, a fund, or  other Person which merely has an economic interest in any such direct competitor, and is not itself such a  direct competitor of Borrower or its Subsidiaries, shall not be deemed to be a Disqualified Institution for  the purposes of this definition.           “Dollars” or “$” means United States dollars.         “Domestic Subsidiary” means any Subsidiary of any Loan Party that is not a Foreign Subsidiary.                                              14  125672876_9 

 

         “Drawing Document” means any Letter of Credit or other document presented for purposes of  drawing under any Letter of Credit, including by electronic transmission such as SWIFT, electronic mail,  facsimile or computer generated communication.          “Early Opt-in Election” means the occurrence of:                (a)    (i) a determination by Agent or (ii) a notification by the Required Lenders to Agent  (with a copy to Administrative Borrower) that the Required Lenders have determined that United States  dollar-denominated syndicated credit facilities being executed at such time, or that include language similar  to that contained in Section 2.12(d)(iii) are being executed or amended, as applicable, to incorporate or  adopt a new benchmark interest rate to replace the LIBOR Rate, and                (b)    (i) the election by Agent or (ii) the election by the Required Lenders to declare that  an Early Opt-in Election has occurred and the provision, as applicable, by Agent of written notice of such  election to Administrative Borrower and the Lenders or by the Required Lenders of written notice of such  election to Agent.          “Earn-Outs” means unsecured liabilities of a Loan Party arising under an agreement to make any  deferred payment as a part of the Purchase Price for a Permitted Acquisition, including performance  bonuses or consulting payments in any related services, employment or similar agreement, in an amount  that is subject to or contingent upon the revenues, income, cash flow or profits (or the like) of the target of  such Permitted Acquisition.          “EBITDA” means, with respect to any fiscal period and with respect to Borrowers determined, in  each case, on a consolidated basis in accordance with GAAP:                (a)    the consolidated net income (or loss),                              minus                (b)    without duplication, the sum of the following amounts for such period to the extent  included in determining consolidated net income (or loss) for such period:                        (i)    unusual or non-recurring gains, and                        (ii)   interest income,                               plus                (c)    without duplication, the sum of the following amounts for such period to the extent  deducted in determining consolidated net income (or loss) for such period:                        (i)    non-cash unusual or non-recurring losses,                        (ii)   Interest Expense,                        (iii)  income taxes,                        (iv)   depreciation and amortization,                        (v)    cash severance payments,                        (vi)   non-recurring restructuring charges,                                             15  125672876_9 

 

                        (vii)  professional fees, including Board of Directors fees and expenses, and                        (viii) transaction costs and expenses related to the consummation of the  financing transaction contemplated by this Agreement.   For the purposes of calculating EBITDA for any period of twelve consecutive months (each, a “Reference  Period”), if at any time during such Reference Period (and after the Closing Date), any Loan Party or any  of its Subsidiaries shall have made a Permitted Acquisition, EBITDA for such Reference Period shall be  calculated after giving pro forma effect thereto (including pro forma adjustments arising out of events  which are directly attributable to such Permitted Acquisition, are factually supportable, and are expected to  have a continuing impact, in each case to be mutually and reasonably agreed upon by Borrowers and Agent)  or in such other manner acceptable to Agent as if any such Permitted Acquisition or adjustment occurred  on the first day of such Reference Period.         “EBITDA Covenant” has the meaning specified therefor in the Fee Letter.         “EEA Financial Institution” means (a) any credit institution or investment firm established in any  EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity  established in an EEA Member Country which is a parent of an institution described in clause (a) of this  definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of  an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with  its parent.          “EEA Member Country” means any of the member states of the European Union, Iceland,  Liechtenstein, and Norway.          “EEA Resolution Authority” means any public administrative authority or any person entrusted  with public administrative authority of any EEA Member Country (including any delegee) having  responsibility for the resolution of any EEA Financial Institution.          “Eligible Accounts” means those Accounts (other than Credit Card Receivables) created by a  Borrower in the ordinary course of its business, that arise out of such Borrower’s sale of goods or rendition  of services, that comply with each of the representations and warranties respecting Eligible Accounts made  in the Loan Documents, and that are not excluded as ineligible by virtue of one or more of the excluding  criteria set forth below; provided, that such criteria may be revised from time to time by Agent in Agent’s  Permitted Discretion to address the results of any information with respect to the Borrowers’ business or  assets of which Agent becomes aware after the Closing Date, including any field examination performed  by (or on behalf of) Agent from time to time after the Closing Date. In determining the amount to be  included, Eligible Accounts shall be calculated net of customer deposits, unapplied cash, taxes, finance  charges, service charges, discounts, credits, allowances, and rebates. Eligible Accounts shall not include  Credit Card Receivables or the following:                (a)    Accounts that the Account Debtor has failed to pay within 120 days of original  invoice date or 60 days of due date,                (b)    Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of all  Accounts owed by that Account Debtor (or its Affiliates) are deemed ineligible under clause (a) above,                (c)    Accounts with selling terms of more than 75 days,                (d)    Accounts with respect to which the Account Debtor is an Affiliate of any Borrower  or an employee or agent of any Borrower or any Affiliate of any Borrower,                                             16  125672876_9 

 

                (e)    Accounts (i) arising in a transaction wherein goods are placed on consignment or  are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill and hold, or any other terms  by reason of which the payment by the Account Debtor may be conditional, or (ii) with respect to which  the payment terms are “C.O.D.”, cash on delivery or other similar terms,                (f)    Accounts that are not payable in Dollars,                (g)    Accounts with respect to which the Account Debtor either (i) does not maintain its  chief executive office in the United States or Canada, or (ii) is not organized under the laws of the United  States or Canada or any state or province thereof, or (iii) is the government of any foreign country or  sovereign state, or of any state, province, municipality, or other political subdivision thereof, or of any  department, agency, public corporation, or other instrumentality thereof, unless (A) the Account is  supported by an irrevocable letter of credit reasonably satisfactory to Agent (as to form, substance, and  issuer or domestic confirming bank) that has been delivered to Agent and, if requested by Agent, is directly  drawable by Agent, or (B) the Account is covered by credit insurance in form, substance, and amount, and  by an insurer, reasonably satisfactory to Agent,                (h)    Accounts with respect to which the Account Debtor is either (i) the United States  or any department, agency, or instrumentality of the United States (exclusive, however, of Accounts with  respect to which Borrowers have complied, to the reasonable satisfaction of Agent, with the Assignment of  Claims Act, 31 USC §3727), or (ii) any state of the United States or any other Governmental Authority,                (i)    Accounts with respect to which the Account Debtor is a creditor of a Borrower,  has or has asserted a right of recoupment or setoff, or has disputed its obligation to pay all or any portion  of the Account, to the extent of such claim, right of recoupment or setoff, or dispute,                (j)    Accounts with respect to an Account Debtor whose Eligible Accounts owing to  Borrowers exceed (i) for Dick’s Sporting Goods, Inc., and its Affiliates, on a consolidated basis, 50% of all  Eligible Accounts, (ii) for Amazon.com, Inc., and its Affiliates, on a consolidated basis, 50% of all Eligible  Accounts, (iii) for Walmart.com and its Affiliates, on a consolidated basis, 25% of all Eligible Accounts,  and (iv) for any other Account Debtor, 15% of all Eligible Accounts (any such percentage under clauses (i),  (ii), (iii), or (iv), as applied to a particular Account Debtor or consolidated group of Account Debtors, being  subject to reduction by Agent in its Permitted Discretion if the creditworthiness of such Account Debtor or  consolidated group of Account Debtors deteriorates), to the extent of the obligations owing by such Account  Debtor in excess of such percentage; provided, that in each case, the amount of Eligible Accounts that are  excluded because they exceed the foregoing percentage shall be determined by Agent based on all of the  otherwise Eligible Accounts prior to giving effect to any eliminations based upon the foregoing  concentration limit,                (k)    Accounts with respect to which the Account Debtor is subject to an Insolvency  Proceeding, is not Solvent, has gone out of business, or as to which any Borrower has received notice of an  imminent Insolvency Proceeding or a material impairment of the financial condition of such Account  Debtor,                (l)    Accounts, the collection of which, Agent, in its Permitted Discretion, believes to  be doubtful, including by reason of the Account Debtor’s financial condition,                (m)    Accounts that are not subject to a valid and perfected first-priority Agent’s Lien,                (n)    Accounts with respect to which (i) the goods giving rise to such Account have not  been shipped and billed to the Account Debtor, or (ii) the services giving rise to such Account have not  been performed and billed to the Account Debtor,                                             17  125672876_9 

 

                (o)    Accounts with respect to which the Account Debtor is a Sanctioned Person or  Sanctioned Entity,                (p)    Accounts (i) that represent the right to receive progress payments or other advance  billings that are due prior to the completion of performance by the applicable Borrower of the subject  contract for goods or services, or (ii) that represent credit card sales, or                (q)    Accounts owned by a target acquired in connection with a Permitted Acquisition  or Permitted Investment, or Accounts owned by a Person that is joined to this Agreement as a Borrower  pursuant to the provisions of this Agreement, until the completion of a field examination with respect to  such Accounts, in each case, satisfactory to Agent in its Permitted Discretion.          “Eligible Credit Card Receivables” means those Credit Card Receivables of a Borrower that arise  out of such Borrower’s sale of goods or rendition of services, that comply with each of the representations  and warranties respecting Eligible Credit Card Receivables made in the Loan Documents, and that are not  excluded as ineligible by virtue of one or more of the excluding criteria set forth below; provided, that such  criteria may be revised from time to time by Agent in Agent’s Permitted Discretion to address the results  of any information with respect to the Borrowers’ business or assets of which Agent becomes aware after  the Closing Date, including any field examination performed by (or on behalf of) Agent from time to time  after the Closing Date. In determining the amount to be included, Eligible Credit Card Receivables shall be  calculated net of customer deposits, unapplied cash, taxes, finance charges, service charges, discounts,  credits, allowances, and rebates. Eligible Credit Card Receivables shall not include the following:                (a)    any Credit Card Receivable that does not constitute a “payment intangible” (as  defined in the Code) or an Account,                (b)    any Credit Card Receivable that has been outstanding for more than five days from  the date of sale,                (c)    any Credit Card Receivable with respect to which the Account Debtor is an  Affiliate of any Borrower or an employee or agent of any Borrower or any Affiliate of any Borrower,                (d)    any Credit Card Receivable arising in a transaction wherein goods are placed on  consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill and hold,  or any other terms by reason of which the payment by the Account Debtor may be conditional,                (e)    any Credit Card Receivable that is not payable in Dollars,                (f)    any Credit Card Receivable with respect to which the Account Debtor is a creditor  of a Borrower, has or has asserted a right of recoupment or setoff, or has disputed its obligation to pay all  or any portion of the Account, to the extent of such claim, right of recoupment or setoff, or dispute,                (g)    any Credit Card Receivable with respect to which the applicable Credit Card Issuer  or Credit Card Processor is subject to an Insolvency Proceeding, is not Solvent, has gone out of business,  or as to which any Borrower has received notice of an imminent Insolvency Proceeding or a material  impairment of the financial condition of such Credit Card Issuer or Credit Card Processor,                (h)    any Credit Card Receivable, the collection of which, Agent, in its Permitted  Discretion, believes to be doubtful, including by reason of the financial condition of the applicable Credit  Card Issuer or the Credit Card Processor,                                              18  125672876_9 

 

                (i)    any Credit Card Receivable (i) that is not subject to a valid and perfected first- priority Agent’s Lien, or (ii) with respect to which a Borrower does not have good, valid, and marketable  title thereto, free and clear of any Lien (other than Agent’s Lien),                (j)    any Credit Card Receivable with respect to which the applicable Credit Card Issuer  or Credit Card Processor is a Sanctioned Person or Sanctioned Entity,                (k)    any Credit Card Receivable that represents the right to receive progress payments  or other advance billings that are due prior to the completion of performance by the applicable Borrower of  the subject contract for goods or services,                (l)    any Credit Card Receivable where such Credit Card Receivable or the underlying  contract contravenes any laws, rules or regulations applicable thereto, including, without limitation, rules  and regulations relating to truth-in-lending, fair credit billing, fair credit reporting, equal credit opportunity,  fair debt collection practices and privacy or any Person party to the underlying contract is in violation of  any such laws, rules or regulations,                (m)    any Credit Card Receivable that is not a valid, legally enforceable obligation of the  applicable Credit Card Issuer or Credit Card Processor with respect thereto,                (n)    any Credit Card Receivable as to which the applicable Credit Card Issuer or Credit  Card Processor has the right under certain circumstances to require a Loan Party to repurchase the Credit  Card Receivables from such Credit Card Issuer or Credit Card Processor                (o)    any Credit Card Receivable that is disputed or with recourse or with respect to  which a claim, chargeback, offset, deduction or counterclaim, dispute or other defense has been asserted  (to the extent of such claim, chargeback, offset, deduction or counterclaim, dispute or other defense);                (p)    any Credit Card Receivable that is evidenced by “chattel paper” or an “instrument”  of any kind unless such “chattel paper” or “instrument” is in the possession of Agent, and to the extent  necessary or appropriate, endorsed to Agent,                (q)    any Credit Card Receivable that is subject to any accrued and actual discounts,  claims, credits or credits pending, promotional program allowances, price adjustments, finance charges or  other allowances (including any amount that a Borrower may be obligated to rebate to a customer, Credit  Card Issuer or Credit Card Processor pursuant to the terms of any agreement or understanding (written or  oral)) (to the extent of such discounts, claims, credits or credits pending, promotional program allowances,  price adjustments, finance charges or other allowances),                (r)    any Credit Card Receivable for which cash has been received in respect of such  Credit Card Receivable but not yet applied by the applicable Borrower to reduce the amount of such Credit  Card Receivable (but only to the extent of the aggregate amount of cash that has been received in respect  of such Credit Card Receivable but not yet applied by the applicable Borrower to reduce the amount of such  Credit Card Receivable),                (s)    any portion of Credit Card Receivables that reflect a reasonable reserve for  warranty claims or returns or amounts which are owed to Account Debtors, including those for rebates,  allowances, co-op advertising, or other deductions, or                (t)    Credit Card Receivables owned by a target acquired in connection with a Permitted  Acquisition or Permitted Investment, or Credit Card Receivables owned by a Person that is joined to this  Agreement as a Borrower pursuant to the provisions of this Agreement, until the completion of a field                                             19  125672876_9 

 

   examination with respect to such Credit Card Receivables, in each case, satisfactory to Agent in its  Permitted Discretion.          “Eligible Finished Goods Inventory” means Inventory that qualifies as Eligible Inventory and  consists of first-quality finished goods held for sale in the ordinary course of Borrowers’ business.          “Eligible In-Transit Inventory” means those items of Inventory that do not qualify as Eligible  Inventory solely because (i)(A) they are not located at one of the locations in the continental United States  set forth on Schedule 4.25 to this Agreement (as such Schedule 4.25 may be amended from time to time in  accordance with Section 5.14) (or in-transit from one such location to another such location), or (B) they  are in transit from a location other than a location set forth on Schedule 4.25 to this Agreement (as such  Schedule 4.25 may be amended from time to time in accordance with Section 5.14)) and (ii) a Borrower  does not have actual and exclusive possession thereof, but as to which,                (a)    such Inventory currently is in transit (whether by vessel, air, or land) from an origin  location outside of the continental United States to a location set forth on Schedule 4.25 to this Agreement  (as such Schedule 4.25 may be amended from time to time in accordance with Section 5.14),                (b)    title to such Inventory has passed to a Borrower and Agent shall have received  such evidence thereof as it may from time to time require,                (c)    such Inventory is insured against types of loss, damage, hazards, and risks, and in  amounts, satisfactory to Agent in its Permitted Discretion, and Agent shall have received a copy of the  certificate of marine cargo or casualty insurance in connection therewith in which it has been named as an  additional insured and loss payee in a manner acceptable to Agent,                (d)    unless Agent otherwise agrees in writing with respect to any such Inventory with  regards to Inventory that is in transit (whether by vessel, air, or land) from an origin location outside of the  continental United States to a location set forth on Schedule 4.25 to this Agreement (as such Schedule 4.25  may be amended from time to time in accordance with Section 5.14), such Inventory either:                        (i)    is the subject of a negotiable bill of lading governed by the laws of a state  within the United States (A) that is consigned to Agent or one of its Customs Brokers (either directly or by  means of endorsements), (B) that was issued by the carrier (including a non-vessel operating common  carrier) in possession of the Inventory that is subject to such bill of lading, and (C) that either is in the  possession of Agent or a Customs Broker (in each case in the continental United States), or                        (ii)   is the subject of a negotiable forwarder’s cargo receipt governed by the  laws of a state within the United States and is not the subject of a bill of lading (other than a negotiable bill  of lading consigned to, and in the possession of, a consolidator or Agent, or their respective agents) and  such negotiable cargo receipt on its face indicates the name of the Customs Broker as a carrier or multimodal  transport operator and has been signed or otherwise authenticated by it in such capacity or as a named agent  for or on behalf of the carrier or multimodal transport operator, in any case respecting such Inventory  (A) consigned to Agent or one of its Customs Brokers that is handling the importing, shipping and delivery  of such Inventory (either directly or by means of endorsements), (B) that was issued by a consolidator  respecting the subject Inventory, and (C) that is in the possession of Agent or a Customs Broker (in each  case in the continental United States),                (e)    such Inventory is in the possession of a common carrier (including on behalf of  any non-vessel operating common carrier) that has issued the bill of lading or other document of title with  respect thereto or the Customs Broker handling the importing, shipping and delivery of such Inventory,                                             20  125672876_9 

 

                (f)    the documents of title related thereto are subject to the valid and perfected first- priority Lien of Agent,                (g)    Agent determines that such Inventory is not subject to (i) any Person’s right of  reclamation, repudiation, stoppage in transit or diversion or (ii) any other right or claim of any other Person  which is (or is capable of being) senior to, or pari passu with, the Lien of Agent or Agent determines that  any Person’s right or claim impairs, or interferes with, directly or indirectly, the ability of Agent to realize  on, or reduces the amount that Agent may realize from the sale or other disposition of such Inventory,  unless, in the case of unpaid freight forwarder fees and expenses or customer duties and custom fees  associated with such Inventory, Administrative Borrower has provided an estimate of same to Agent in  order for Agent to establish an appropriate Reserve with respect thereto,                (h)    Administrative Borrower has provided (i) a certificate to Agent that certifies that,  to the best knowledge of such Borrower, such Inventory meets all of Borrowers’ representations and  warranties contained in the Loan Documents concerning Eligible In-Transit Inventory, that it knows of no  reason why such Inventory would not be accepted by such Borrower when it arrives in the continental  United States and that the shipment as evidenced by the documents conforms to the related order  documents, and (ii) upon Agent’s request, a copy of the invoice, packing slip and manifest with respect  thereto, and                (i)    such Inventory shall not have been in transit for more than 45 days.         “Eligible Inventory” means Inventory of a Borrower that complies with each of the representations  and warranties respecting Eligible Inventory made in the Loan Documents, and that is not excluded as  ineligible by virtue of one or more of the excluding criteria set forth below; provided, that such criteria may  be revised from time to time by Agent in Agent’s Permitted Discretion to address the results of any  information with respect to the Borrowers’ business or assets of which Agent becomes aware after the  Closing Date, including any field examination or appraisal performed or received by Agent from time to  time after the Closing Date. In determining the amount to be so included, Inventory shall be valued at the  lower of cost or market on a basis consistent with Borrowers’ historical accounting practices. An item of  Inventory shall not be included in Eligible Inventory if:                (a)    a Borrower does not have good, valid, and marketable title thereto,                (b)    a Borrower does not have actual and exclusive possession thereof (either directly  or through a bailee or agent of a Borrower),                (c)    it is not located at one of the locations in the continental United States set forth on  Schedule 4.25 to this Agreement (as such Schedule 4.25 may be amended from time to time in accordance  with Section 5.14) (or in-transit from one such location to another such location),                (d)    it is stored at locations holding less than $100,000 of the aggregate value of such  Borrower’s Inventory,                 (e)    it is in-transit to or from a location of a Borrower (other than in-transit from one  location set forth on Schedule 4.25 to this Agreement to another location set forth on Schedule 4.25 to this  Agreement (as such Schedule 4.25 may be amended from time to time in accordance with Section 5.14)),                (f)    it is located on real property leased by a Borrower or in a contract warehouse or  with a bailee, in each case, unless either (i) it is subject to a Collateral Access Agreement executed by the  lessor or warehouseman, as the case may be, and it is segregated or otherwise separately identifiable from  goods of others, if any, stored on the premises, or (ii) either (A) Agent has established a Landlord Reserve                                             21  125672876_9 

 

   with respect to such location, or (B) Agent, in its Permitted Discretion, has determined to not establish a  Landlord Reserve with respect to such location at such time (which determination shall not limit Agent’s  ability to establish a Landlord Reserve with respect to such location at any other time, in its Permitted  Discretion and otherwise in accordance with this Agreement),                (g)    it is the subject of a bill of lading or other document of title,                (h)    it is not subject to a valid and perfected first-priority Agent’s Lien,                (i)    it consists of goods returned or rejected by a Borrower’s customers,                (j)    it consists of goods that are obsolete, slow moving, spoiled or are otherwise past  the stated expiration, “sell-by” or “use by” date applicable thereto, restrictive or custom items or otherwise  is manufactured in accordance with customer-specific requirements, work-in-process, raw materials, or  goods that constitute packaging and shipping materials, supplies used or consumed in Borrowers’ business,  bill and hold goods, defective goods, “seconds,” or Inventory acquired on consignment,                (k)    it is subject to third-party intellectual property, licensing or other proprietary rights,  unless Agent is satisfied that such Inventory can be freely sold by Agent on and after the occurrence of an  Event of a Default despite such third party rights, or                (l)    it was acquired in connection with a Permitted Acquisition or Permitted  Investment, or such Inventory is owned by a Person that is joined to this Agreement as a Borrower pursuant  to the provisions of this Agreement, until the completion of an Acceptable Appraisal of such Inventory and  the completion of a field examination with respect to such Inventory that is satisfactory to Agent in its  Permitted Discretion.          “Eligible IP” means IP of a Borrower that complies with each of the representations and warranties  respecting IP made in the Loan Documents, and that is not excluded as ineligible by virtue of one or more  of the excluding criteria set forth below; provided, that such criteria may be revised from time to time by  Agent in Agent’s Permitted Discretion to address the results of any information with respect to the  Borrowers’ business or assets of which Agent becomes aware after the Closing Date, including any field  examination or appraisal performed or received by Agent from time to time after the Closing Date. An item  of IP shall not be included in Eligible IP if:                (a)    it is not subject to a valid and perfected first priority Agent’s Lien,                (b)    such Intellectual Property (or, in the case of IP consisting of an Intellectual  Property License, the Intellectual Property subject to such Intellectual Property License) is not validly  registered with the U.S. Patent and Trademark Office or the U.S. Copyright Office, as applicable,                (c)    (i) in the case of Intellectual Property, a Borrower does not have good, valid, and  marketable title thereto or (ii) in the case of Intellectual Property Licenses, a Borrower does not exclusively  license such IP from another Person, or                (d)    an Acceptable Appraisal of such IP has not been completed.          “Eligible Spare Parts Inventory” means Inventory that qualifies as Eligible Inventory and consists  of goods that are first-quality spare parts and that are not located in open pallets or containers.         “Eligible Transferee” means (a) any Lender (other than a Defaulting Lender), any Affiliate of any  Lender and any Related Fund of any Lender; (b)(i) a commercial bank organized under the laws of the                                             22  125672876_9 

 

   United States or any state thereof, and having total assets in excess of $1,000,000,000; (ii) a savings and  loan association or savings bank organized under the laws of the United States or any state thereof, and  having total assets in excess of $1,000,000,000; (iii) a commercial bank organized under the laws of any  other country or a political subdivision thereof; provided, that (A)(x) such bank is acting through a branch  or agency located in the United States, or (y) such bank is organized under the laws of a country that is a  member of the Organization for Economic Cooperation and Development or a political subdivision of such  country, and (B) such bank has total assets in excess of $1,000,000,000; (c) any other entity (other than a  natural person) that is” an “accredited investor” (as defined in Regulation D under the Securities Act) that  extends credit or buys loans as one of its businesses including insurance companies, investment or mutual  funds and lease financing companies, and having total assets in excess of $1,000,000,000; and (d) during  the continuation of an Event of Default, any other Person approved by Agent.          “Employee Benefit Plan” means any employee benefit plan within the meaning of Section 3(3) of  ERISA, whether or not subject to ERISA, (a) that is or within the preceding six (6) years has been  sponsored, maintained or contributed to by any Loan Party or ERISA Affiliate or (b) to which any Loan  Party or ERISA Affiliate has, or has had at any time within the preceding six (6) years, any liability,  contingent or otherwise.          “Environmental Action” means any written complaint, summons, citation, notice, directive, order,  claim, litigation, investigation, judicial or administrative proceeding, judgment, letter, or other written  communication from any Governmental Authority, or any third party involving violations of Environmental  Laws or releases of Hazardous Materials (a) from any assets, properties, or businesses of any Borrower,  any Subsidiary of any Borrower, or any of their predecessors in interest, (b) from adjoining properties or  businesses, or (c) from or onto any facilities which received Hazardous Materials generated by any  Borrower, any Subsidiary of any Borrower, or any of their predecessors in interest.          “Environmental Law” means any applicable federal, state, provincial, foreign or local statute, law,  rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written  policy, or rule of common law now or hereafter in effect and in each case as amended, or any judicial or  administrative interpretation thereof, including any judicial or administrative order, consent decree or  judgment, in each case, to the extent binding on any Loan Party or its Subsidiaries, relating to the  environment, the effect of the environment on employee health, or Hazardous Materials, in each case as  amended from time to time.         “Environmental Liabilities” means all liabilities, monetary obligations, losses, damages, costs and  expenses (including all reasonable fees, disbursements and expenses of counsel, experts, or consultants,  and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result  of any claim or demand, or Remedial Action required, by any Governmental Authority or any third party,  and which relate to any Environmental Action.          “Environmental Lien” means any Lien in favor of any Governmental Authority for Environmental  Liabilities.          “Equipment” means equipment (as that term is defined in the Code).         “Equity Interests” means, with respect to a Person, all of the shares, options, warrants, interests,  participations, or other equivalents (regardless of how designated) of or in such Person, whether voting or  nonvoting, including capital stock (or other ownership or profit interests or units), preferred stock, or any  other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations  promulgated by the SEC under the Exchange Act).                                              23  125672876_9 

 

         “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any  successor statute thereto.          “ERISA Affiliate” means (a) any Person subject to ERISA whose employees are treated as  employed by the same employer as the employees of any Loan Party under IRC Section 414(b), (b) any  trade or business subject to ERISA whose employees are treated as employed by the same employer as the  employees of any Loan Party under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA  and Section 412 of the IRC, any organization subject to ERISA that is a member of an affiliated service  group of which any Loan Party is a member under IRC Section 414(m), or (d) solely for purposes of Section  302 of ERISA and Section 412 of the IRC, any Person subject to ERISA that is a party to an arrangement  with any Loan Party and whose employees are aggregated with the employees of such Loan Party under  IRC Section 414(o).          “EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the  Loan Market Association (or any successor person), as in effect from time to time.         “Event of Default” has the meaning specified therefor in Section 8 of this Agreement.         “Exchange Act” means the Securities Exchange Act of 1934, as in effect from time to time.         “Excluded Assets” has the meaning specified therefor in the Guaranty and Security Agreement.         “Excluded Swap Obligation” means, with respect to any Loan Party, any Swap Obligation if, and  to the extent that, all or a portion of the guaranty of such Loan Party of (including by virtue of the joint and  several liability provisions of Section 2.15), or the grant by such Loan Party of a security interest to secure,  such Swap Obligation (or any guaranty thereof) is or becomes illegal under the Commodity Exchange Act  or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or  official interpretation of any thereof) by virtue of such Loan Party’s failure for any reason to constitute an  “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder  at the time the guaranty of such Loan Party or the grant of such security interest becomes effective with  respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more  than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable  to swaps for which such guaranty or security interest is or becomes illegal.          “Excluded Taxes” means (i) any tax imposed on the net income or net profits of any Lender or any  Participant (including any branch profits taxes), in each case imposed by the jurisdiction (or by any political  subdivision or taxing authority thereof) in which such Lender or such Participant is organized or the  jurisdiction (or by any political subdivision or taxing authority thereof) in which such Lender’s or such  Participant’s principal office is located in or as a result of a present or former connection between such  Lender or such Participant and the jurisdiction or taxing authority imposing the tax (other than any such  connection arising solely from such Lender or such Participant having executed, delivered or performed its  obligations or received payment under, or enforced its rights or remedies under this Agreement or any other  Loan Document), (ii) withholding taxes that would not have been imposed but for a Lender’s or a  Participant’s failure to comply with the requirements of Section 16.2 of this Agreement, (iii) any United  States federal withholding taxes that would be imposed on amounts payable to a Foreign Lender based upon  the applicable withholding rate in effect at the time such Foreign Lender becomes a party to this Agreement  (or designates a new lending office, other than a designation made at the request of a Loan Party), except  that Excluded Taxes shall not include (A) any amount that such Foreign Lender (or its assignor, if any) was  previously entitled to receive pursuant to Section 16.1 of this Agreement, if any, with respect to such  withholding tax at the time such Foreign Lender becomes a party to this Agreement (or designates a new  lending office), and (B) additional United States federal withholding taxes that may be imposed after the                                             24  125672876_9 

 

   time such Foreign Lender becomes a party to this Agreement (or designates a new lending office), as a  result of a change in law, rule, regulation, treaty, order or other decision or other Change in Law with  respect to any of the foregoing by any Governmental Authority, and (iv) any United States federal  withholding taxes imposed under FATCA.          “Existing Credit Facility” means Borrowers’ existing credit facility governed by that certain Credit  Agreement, dated as of March 29, 2019, by and among Nautilus and Octane, as borrowers, the other Persons  party thereto as “Loan Parties,” the lenders party thereto, and JPMorgan Chase Bank, N.A., a national  banking association, as administrative agent, and the other related loan documentation.          “Extraordinary Advances” has the meaning specified therefor in Section 2.3(d)(iii) of this  Agreement.          “Extraordinary Receipts” means (a) so long as no Event of Default has occurred and is continuing,  proceeds of judgments, proceeds of settlements, or other consideration of any kind received in connection  with any cause of action or claim, and (b) if an Event of Default has occurred and is continuing, any  payments received by any Loan Party or any of its Subsidiaries not in the ordinary course of business (and  not consisting of proceeds described in Section 2.4(e)(iii) of this Agreement) consisting of (i) proceeds of  judgments, proceeds of settlements, or other consideration of any kind received in connection with any  cause of action or claim (and not consisting of proceeds described in Section 2.4(e)(iii) of this Agreement,  but including proceeds of business interruption insurance), (ii) indemnity payments (other than to the extent  such indemnity payments are immediately payable to a Person that is not an Affiliate of any Loan Party or  any of its Subsidiaries, and (iii) any purchase price adjustment received in connection with any purchase  agreement.          “FATCA” means Sections 1471 through 1474 of the IRC, as of the date of this Agreement (or any  amended or successor version that is substantively comparable and not materially more onerous to comply  with), and (a) any current or future regulations or official interpretations thereof, (b) any agreements entered  into pursuant to Section 1471(b)(1) of the IRC, and (c) any intergovernmental agreement entered into by  the United States (or any fiscal or regulatory legislation, rules, or practices adopted pursuant to any such  intergovernmental agreement entered into in connection therewith).          “FCPA” means the Foreign Corrupt Practices Act of 1977, as amended, and the rules and  regulations thereunder.          “Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal to, for each  day during such period, the weighted average of the rates on overnight Federal funds transactions with  members of the Federal Reserve System, as published on the next succeeding Business Day by the Federal  Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the  average of the quotations for such day on such transactions received by Agent from three Federal funds  brokers of recognized standing selected by it (and, if any such rate is below zero, then the rate determined  pursuant to this definition shall be deemed to be zero).          “Federal Reserve Bank of New York’s Website” means the website of the Federal Reserve Bank  of New York at http://www.newyorkfed.org, or any successor source.           “Fee Letter” means that certain fee letter, dated as of even date with this Agreement, among  Borrowers and Agent, in form and substance reasonably satisfactory to Agent.          “Fixed Charges” means, with respect to any fiscal period and with respect to Borrowers determined  on a consolidated basis in accordance with GAAP, the sum, without duplication, of (a) Interest Expense                                             25  125672876_9 

 

   required to be paid (net of interest income of such Person during such period and excluding interest paid- in-kind, amortization of financing fees, costs, and expenses, and other non-cash Interest Expense) during  such period, (b) scheduled principal payments in respect of Indebtedness for borrowed money that are  required to be paid during such period (including any required payments or prepayments from excess cash  flow during such period, but excluding, for the avoidance of doubt, principal payments relating to  outstanding Revolving Loans), (c) all federal, state, and local income taxes required to be paid in cash  during such period (net receipt of tax refunds paid in cash), provided, that any tax refunds received shall be  applied in the inverse order for, and in amounts actually paid in, the period in which the applicable cash  outlay for such taxes was made, (d) all Restricted Payments paid (whether in cash or other property, other  than common Equity Interests) during such period, and (e) to the extent not otherwise deducted from  EBITDA for such period, all payments required to be made during such period in respect of any funding  deficiency or funding shortfall with respect to any Pension Plan or for any Withdrawal Liability.          “Fixed Charge Coverage Ratio” means, with respect to any fiscal period and with respect to  Borrowers determined on a consolidated basis in accordance with GAAP, the ratio of (a) EBITDA for such  period minus Unfinanced Capital Expenditures made (to the extent not already incurred in a prior period)  or incurred during such period, to (b) Fixed Charges for such period. For the purposes of calculating Fixed  Charge Coverage Ratio for any Reference Period, if at any time during such Reference Period (and after  the Closing Date), any Loan Party or any of its Subsidiaries shall have made a Permitted Acquisition, Fixed  Charges and Unfinanced Capital Expenditures for such Reference Period shall be calculated after giving  pro forma effect thereto or in such other manner acceptable to Agent as if any such Permitted Acquisition  occurred on the first day of such Reference Period.         “Flood Laws” means the National Flood Insurance Act of 1968, Flood Disaster Protection Act of  1973, and related laws, rules and regulations, including any amendments or successor provisions.          “Flow of Funds Agreement” means a flow of funds agreement, dated as of even date with this  Agreement, in form and substance reasonably satisfactory to Agent, executed and delivered by Borrowers  and Agent.         “FMV” means, as of any date of determination, the fair market value of Borrowers’ Eligible IP that  is estimated to be recoverable in an orderly sale of such Eligible IP, net of all associated costs and expenses  of such sale, such value (a) to be as specified in the most recent Acceptable Appraisal of IP and (b) to be  determined in a manner substantially consistent, as determined by Agent in its Permitted Discretion, with  the determination of “Fair Market Value” in that certain Hilco intellectual-property appraisal report dated  November 18, 2019.         “Foreign Lender” means any Lender or Participant that is not a United States person within the  meaning of IRC section 7701(a)(30).         “Foreign Subsidiary” means any direct or indirect subsidiary of any Loan Party that is organized  under the laws of any jurisdiction other than the United States, any state thereof or the District of Columbia.         “Funding Date” means the date on which a Borrowing occurs.         “Funding Losses” has the meaning specified therefor in Section 2.12(b)(ii) of this Agreement.         “GAAP” means generally accepted accounting principles as in effect from time to time in the United  States, consistently applied.                                              26  125672876_9 

 

         “Governing Documents” means, with respect to any Person, the certificate or articles of  incorporation, by-laws, or other organizational documents of such Person.         “Governmental Authority” means the government of any nation or any political subdivision thereof,  whether at the national, state, territorial, provincial, county, municipal or any other level, and any agency,  authority, instrumentality, regulatory body, court, central bank or other entity exercising executive,  legislative, judicial, taxing, regulatory or administrative powers or functions of, or pertaining to,  government (including any supra-national bodies such as the European Union or the European Central  Bank).         “Guarantor” means (a) each Person that guaranties all or a portion of the Obligations, including any  Person that is a “Guarantor” under the Guaranty and Security Agreement, and (b) each other Person that  becomes a guarantor after the Closing Date pursuant to Section 5.11 of this Agreement.         “Guaranty and Security Agreement” means a guaranty and security agreement, dated as of even date  with this Agreement, in form and substance reasonably satisfactory to Agent, executed and delivered by  each of the Loan Parties to Agent.          “Hazardous Materials” means (a) substances that are defined or listed in, or otherwise classified  pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardous materials,”  “hazardous wastes,” “toxic substances,” or any other formulation intended to define, list, or classify  substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity,  reproductive toxicity, or “EP toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,  natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the  exploration, development, or production of crude oil, natural gas, or geothermal resources, (c) any  flammable substances or explosives or any radioactive materials, and (d) asbestos in any form or electrical  equipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess  of 50 parts per million.         “Hedge Agreement” means a “swap agreement” as that term is defined in Section 101(53B)(A) of  the Bankruptcy Code.         “Hedge Obligations” means any and all obligations or liabilities, whether absolute or contingent,  due or to become due, now existing or hereafter arising, of each Loan Party and its Subsidiaries arising  under, owing pursuant to, or existing in respect of Hedge Agreements entered into with one or more of the  Hedge Providers.         “Hedge Provider” means Wells Fargo or any of its Affiliates.         “Hilco” means Hilco Enterprise Valuation Services, LLC.         “Increase” has the meaning specified therefor in Section 2.14.         “Increase Date” means, with respect to any Increase, the date of the effectiveness of the increased  Revolver Commitments and the Maximum Revolver Amount.         “Increase Joinder” has the meaning specified therefor in Section 2.14.         “Increased Reporting Event” means if at any time Availability is less than the greater of (a) 15% of  the Maximum Revolver Amount, and (b) $8,250,000.                                              27  125672876_9 

 

         “Increased Reporting Period” means the period commencing after the continuance of an Increased  Reporting Event and continuing until the date when no Increased Reporting Event has occurred for  30 consecutive days.         “Indebtedness” as to any Person means (a) all obligations of such Person for borrowed money, (b) all  obligations of such Person evidenced by bonds, debentures, notes, or other similar instruments and all  reimbursement or other obligations in respect of letters of credit, bankers acceptances, or other financial  products, (c) all obligations of such Person as a lessee under Capital Leases, (d) all obligations or liabilities  of others secured by a Lien on any asset of such Person, irrespective of whether such obligation or liability  is assumed, (e) all obligations of such Person to pay the deferred purchase price of assets (other than trade  payables incurred in the ordinary course of business and repayable in accordance with customary trade  practices and, for the avoidance of doubt, other than royalty payments payable in the ordinary course of  business in respect of non-exclusive licenses) and any earn-out or similar obligations, (f) all monetary  obligations of such Person owing under Hedge Agreements (which amount shall be calculated based on the  amount that would be payable by such Person if the Hedge Agreement were terminated on the date of  determination), (g) any Disqualified Equity Interests of such Person, and (h) any obligation of such Person  guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made,  discounted, or sold with recourse) any obligation of any other Person that constitutes Indebtedness under  any of clauses (a) through (g) above. For purposes of this definition, (i) the amount of any Indebtedness  represented by a guaranty or other similar instrument shall be the lesser of the principal amount of the  obligations guaranteed and still outstanding and the maximum amount for which the guaranteeing Person  may be liable pursuant to the terms of the instrument embodying such Indebtedness, and (ii) the amount of  any Indebtedness which is limited or is non-recourse to a Person or for which recourse is limited to an  identified asset shall be valued at the lesser of (A) if applicable, the limited amount of such obligations, and  (B) if applicable, the fair market value of such assets securing such obligation.         “Indemnified Liabilities” has the meaning specified therefor in Section 10.3 of this Agreement.         “Indemnified Person” has the meaning specified therefor in Section 10.3 of this Agreement.         “Indemnified Taxes” means, (a) Taxes, other than Excluded Taxes, imposed on or with respect to  any payment made by, or on account of any obligation of, any Loan Party under any Loan Document, and  (b) to the extent not otherwise described in the foregoing clause (a), Other Taxes.         “Insolvency Proceeding” means any proceeding commenced by or against any Person under any  provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law,  assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally  with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.         “Intellectual Property” has the meaning specified therefor in the Guaranty and Security Agreement.         “Intellectual Property Licenses” has the meaning specified therefor in the Guaranty and Security  Agreement.         “Intercompany Subordination Agreement” means an intercompany subordination agreement, dated  as of even date with this Agreement, executed and delivered by each Loan Party and each of its Subsidiaries,  and Agent, the form and substance of which is reasonably satisfactory to Agent.         “Interest Expense” means, for any period, the aggregate of the interest expense of Borrowers for  such period, determined on a consolidated basis in accordance with GAAP.                                              28  125672876_9 

 

         “Interest Period” means, with respect to each LIBOR Rate Loan, a period commencing on the date  of the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or the conversion of  a Base Rate Loan to a LIBOR Rate Loan) and ending 1 month or 3 months thereafter; provided, that (a)  interest shall accrue at the applicable rate based upon the LIBOR Rate from and including the first day of  each Interest Period to, but excluding, the day on which any Interest Period expires, (b) any Interest Period  that would end on a day that is not a Business Day shall be extended to the next succeeding Business Day  unless such Business Day falls in another calendar month, in which case such Interest Period shall end on  the next preceding Business Day, (c) with respect to an Interest Period 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), the Interest Period shall end on the last Business Day of the calendar  month that is 1 month or 3 months after the date on which the Interest Period began, as applicable, and (d)  Borrowers may not elect an Interest Period which will end after the Maturity Date.         “Inventory” means inventory (as that term is defined in the Code).         “Inventory Reserves” means, as of any date of determination, (a) Landlord Reserves in respect of  Inventory, (b) in the case of Eligible Inventory, to be consistent with and not duplicative of the calculation  of the Net Recovery Percentage with respect to such Inventory, those reserves that Agent deems necessary  or appropriate, in its Permitted Discretion and subject to Section 2.1(c), to establish and maintain (including  reserves for slow moving Inventory and Inventory shrinkage) with respect to Eligible Inventory or the  Maximum Revolver Amount, including based on the results of appraisals, and (c) in the case of Eligible In- Transit Inventory, to be consistent with and not duplicative of the calculation of the Net Recovery  Percentage with respect to such Inventory, those reserves that Agent deems necessary or appropriate, in its  Permitted Discretion and subject to Section 2.1(c), to establish and maintain with respect to Eligible In- Transit Inventory or the Maximum Revolver Amount (i) to the extent not already included in the Net  Recovery Percentage with respect to such Inventory, for the estimated costs relating to unpaid freight  charges, warehousing or storage charges, taxes, duties, and other similar unpaid costs associated with the  acquisition of such Eligible In-Transit Inventory, plus (ii) for the estimated reclamation claims of unpaid  sellers of such Eligible In-Transit Inventory.         “Investment” means, with respect to any Person, any investment by such Person in any other Person  (including Affiliates) in the form of loans, guarantees, advances, capital contributions (excluding (a)  commission, travel, and similar advances to officers and employees of such Person made in the ordinary  course of business, and (b) bona fide accounts receivable arising in the ordinary course of business), or  acquisitions of Indebtedness, Equity Interests, or all or substantially all of the assets of such other Person  (or of any division or business line of such other Person), and any other items that are or would be classified  as investments on a balance sheet prepared in accordance with GAAP. The amount of any Investment shall  be the original cost of such Investment plus the cost of all additions thereto, without any adjustment for  increases or decreases in value, or write-ups, write-downs, or write-offs with respect to such Investment.         “IP” means, with respect to any Borrower, Intellectual Property of such Borrower and Intellectual  Property Licenses provided to such Borrower in or with respect to Intellectual Property owned or controlled  by any other Person.         “IRC” means the Internal Revenue Code of 1986, as in effect from time to time.         “ISP” means, with respect to any Letter of Credit, the International Standby Practices 1998  (International Chamber of Commerce Publication No. 590) and any version or revision thereof accepted by  the Issuing Bank for use.                                              29  125672876_9 

 

         “Issuer Document” means, with respect to any Letter of Credit, a letter of credit application, a letter  of credit agreement, or any other document, agreement or instrument entered into (or to be entered into) by  a Borrower in favor of Issuing Bank and relating to such Letter of Credit.         “Issuing Bank” means Wells Fargo or any other Lender that, at the request of Borrowers and with  the consent of Agent, agrees, in such Lender’s sole discretion, to become an Issuing Bank for the purpose  of issuing Letters of Credit pursuant to Section 2.11 of this Agreement, and Issuing Bank shall be a Lender.         “Joinder” means a joinder agreement substantially in the form of Exhibit J-1 to this Agreement.         “Landlord Reserve” means, as to each location at which a Borrower has Inventory or books and  records located and as to which a Collateral Access Agreement has not been received by Agent, a reserve  in an amount equal to 3 months’ rent, storage charges, fees or other amounts under the lease or other  applicable agreement relative to such location or, if greater and Agent so elects, the number of months’  rent, storage charges, fess or other amounts for which the landlord, bailee, warehouseman or other property  owner will have, under applicable law, a Lien in the Inventory of such Borrower to secure the payment of  such amounts under the lease or other applicable agreement relative to such location.         “Lender” has the meaning set forth in the preamble to this Agreement, shall include Issuing Bank  and the Swing Lender, and shall also include any other Person made a party to this Agreement pursuant to  the provisions of Section 13.1 of this Agreement and “Lenders” means each of the Lenders or any one or  more of them.         “Lender Group” means each of the Lenders (including Issuing Bank and the Swing Lender) and  Agent, or any one or more of them.         “Lender Group Expenses” means all (a) reasonable and documented costs or expenses (including  taxes and insurance premiums) required to be paid by any Loan Party or its Subsidiaries under any of the  Loan Documents that are paid, advanced, or incurred by the Lender Group in accordance with the Loan  Documents, (b) reasonable and documented out-of-pocket fees or charges paid or incurred by Agent in  connection with the Lender Group’s transactions with each Loan Party and its Subsidiaries under any of  the Loan Documents, including, photocopying, notarization, couriers and messengers, telecommunication,  public record searches, filing fees, recording fees, publication, real estate surveys, real estate title policies  and endorsements, and environmental audits, (c) Agent’s customary fees and charges imposed or incurred  in connection with any background checks or OFAC/PEP searches related to any Loan Party or its  Subsidiaries, (d) Agent’s reasonable and documented customary fees and charges (as adjusted from time to  time) with respect to the disbursement of funds (or the receipt of funds) to or for the account of any  Borrower (whether by wire transfer or otherwise), together with any reasonable and documented out-of- pocket costs and expenses incurred in connection therewith, (e) customary charges imposed or incurred by  Agent resulting from the dishonor of checks payable by or to any Loan Party, (f) reasonable, documented  out-of-pocket costs and expenses paid or incurred by the Lender Group to correct any default or enforce  any provision of the Loan Documents, or during the continuance of an Event of Default, in gaining  possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or  advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated,  (g) field examination, appraisal, and valuation fees and expenses of Agent related to any field examinations,  appraisals, or valuation to the extent of the fees and charges (and up to the amount of any limitation)  provided in Section 5.7(c) of this Agreement, (h) subject to the limitations in Section 10.3, Agent’s and  Lenders’ reasonable, documented costs and expenses (including reasonable and documented attorneys’ fees  and expenses) relative to third party claims or any other lawsuit or adverse proceeding paid or incurred,  whether in enforcing or defending the Loan Documents or otherwise in connection with the transactions  contemplated by the Loan Documents, Agent’s Liens in and to the Collateral, or the Lender Group’s                                             30  125672876_9 

 

   relationship with any Loan Party or any of its Subsidiaries, (i) Agent’s reasonable and documented costs  and expenses (including reasonable and documented attorneys’ fees and due diligence expenses) incurred  in advising, structuring, drafting, reviewing, administering (including travel, meals, and lodging),  syndicating (including reasonable costs and expenses relative to the rating of the Term Loan, CUSIP,  DXSyndicateTM, SyndTrak or other communication costs incurred in connection with a syndication of the  loan facilities), or amending, waiving, or modifying the Loan Documents, and (j) Agent’s and each  Lender’s reasonable and documented costs and expenses (including reasonable and documented attorneys,  accountants, consultants, and other advisors fees and expenses) incurred in terminating, enforcing  (including attorneys, accountants, consultants, and other advisors fees and expenses incurred in connection  with a “workout,” a “restructuring,” or an Insolvency Proceeding concerning any Loan Party or any of its  Subsidiaries or in exercising rights or remedies under the Loan Documents), or defending the Loan  Documents, irrespective of whether a lawsuit or other adverse proceeding is brought, or in taking any  enforcement action or any Remedial Action with respect to the Collateral (provided, that the fees and  expenses of counsel that shall constitute Lender Group Expenses shall in any event be limited to one  primary counsel to Agent and one primary counsel to the Lenders, one local counsel to Agent in each  reasonably necessary jurisdiction, one specialty counsel to Agent in each reasonably necessary specialty  area (including insolvency law), and one or more additional counsel to Lenders if one or more conflicts of  interest arise).         “Lender Group Representatives” has the meaning specified therefor in Section 17.9 of this  Agreement.         “Lender-Related Person” means, with respect to any Lender, such Lender, together with such  Lender’s Affiliates, officers, directors, employees, attorneys, and agents.         “Letter of Credit” means a letter of credit (as that term is defined in the Code) issued by Issuing  Bank.         “Letter of Credit Collateralization” means either (a) providing cash collateral (pursuant to  documentation reasonably satisfactory to Agent (including that Agent has a first-priority perfected Lien in  such cash collateral), including provisions that specify that the Letter of Credit Fees and all commissions,  fees, charges and expenses provided for in Section 2.11(k) of this Agreement (including any fronting fees)  will continue to accrue while the Letters of Credit are outstanding) to be held by Agent for the benefit of  the Revolving Lenders in an amount equal to 103% of the then existing Letter of Credit Usage, (b)  delivering to Agent documentation executed by all beneficiaries under the Letters of Credit, in form and  substance reasonably satisfactory to Agent and Issuing Bank, terminating all of such beneficiaries’ rights  under the Letters of Credit, or (c) providing Agent with a standby letter of credit, in form and substance  reasonably satisfactory to Agent, from a commercial bank acceptable to Agent (in its sole discretion) in an  amount equal to 103% of the then existing Letter of Credit Usage (it being understood that the Letter of  Credit Fee and all fronting fees set forth in this Agreement will continue to accrue while the Letters of  Credit are outstanding and that any such fees that accrue must be an amount that can be drawn under any  such standby letter of credit).         “Letter of Credit Disbursement” means a payment made by Issuing Bank pursuant to a Letter of  Credit.         “Letter of Credit Exposure” means, as of any date of determination with respect to any Lender, such  Lender’s participation in the Letter of Credit Usage pursuant to Section 2.11(e) on such date.         “Letter of Credit Fee” has the meaning specified therefor in Section 2.6(b) of this Agreement.                                              31  125672876_9 

 

         “Letter of Credit Indemnified Costs” has the meaning specified therefor in Section 2.11(f) of this  Agreement.         “Letter of Credit Related Person” has the meaning specified therefor in Section 2.11(f) of this  Agreement.         “Letter of Credit Sublimit” means $7,500,000.         “Letter of Credit Usage” means, as of any date of determination, the sum of (a) the aggregate  undrawn amount of all outstanding Letters of Credit, plus (b) the aggregate amount of outstanding  reimbursement obligations with respect to Letters of Credit which remain unreimbursed or which have not  been paid through a Revolving Loan.          “LIBOR Deadline” has the meaning specified therefor in Section 2.12(b)(i) of this Agreement.         “LIBOR Notice” means a written notice in the form of Exhibit L-1 to this Agreement.         “LIBOR Option” has the meaning specified therefor in Section 2.12(a) of this Agreement.         “LIBOR Rate” means the rate per annum as published by ICE Benchmark Administration Limited  (or any successor page or other commercially available source as the Agent may designate from time to  time) as of 11:00 a.m., London time, two Business Days prior to the commencement of the requested  Interest Period, for a term, and in an amount, comparable to the Interest Period and the amount of the  LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR Rate  Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrowers in accordance with this  Agreement (and, if any such published rate is below zero, then the LIBOR Rate shall be deemed to be zero).  Each determination of the LIBOR Rate shall be made by the Agent and shall be conclusive in the absence  of manifest error.         “LIBOR Rate Loan” means each portion of a Revolving Loan or the Term Loan that bears interest  at a rate determined by reference to the LIBOR Rate.         “LIBOR Rate Margin” means the Revolving Loan LIBOR Rate Margin or the Term Loan LIBOR  Rate Margin, as applicable.         “Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit  arrangement, encumbrance, easement, lien (statutory or other), security interest, or other security  arrangement and any other preference, priority, or preferential arrangement of any kind or nature  whatsoever, including any conditional sale contract or other title retention agreement, the interest of a lessor  under a Capital Lease and any synthetic or other financing lease having substantially the same economic  effect as any of the foregoing.         “Loan” means any Revolving Loan, Swing Loan, Extraordinary Advance, or Term Loan made (or  to be made) hereunder.         “Loan Account” has the meaning specified therefor in Section 2.9 of this Agreement.         “Loan Documents” means this Agreement, the Control Agreements, the Copyright Security  Agreement, any Borrowing Base Certificate, the Credit Card Notifications, the Fee Letter, the Guaranty  and Security Agreement, the Intercompany Subordination Agreement, any Issuer Documents, the Letters  of Credit, the Loan Manager Side Letter, the Mortgages, the Pacific Direct Collateral Assignment, the                                             32  125672876_9 

 

   Patent Security Agreement, the Trademark Security Agreement, any note or notes executed by Borrowers  in connection with this Agreement and payable to any member of the Lender Group, and any other  instrument or agreement entered into, now or in the future, by any Loan Party or any of its Subsidiaries and  any member of the Lender Group in connection with this Agreement (but specifically excluding Bank  Product Agreements).         “Loan Manager Side Letter” means, as applicable, that certain letter agreement between the  Borrowers and Wells Fargo regarding the terms under which Wells Fargo will provide services to the  Borrowers in respect of Wells Fargo’s proprietary automated loan management program.         “Loan Party” means any Borrower or any Guarantor.         “Margin Stock” as defined in Regulation U of the Board of Governors as in effect from time to time.         “Material Adverse Effect” means (a) a material adverse effect in the business, operations, results of  operations, assets, liabilities or financial condition of the Loan Parties and their Subsidiaries, taken as a  whole, (b) a material impairment of the Loan Parties’ and their Subsidiaries’ ability, taken as a whole, to  perform their obligations under the Loan Documents to which they are parties or of the Lender Group’s  ability to enforce the Obligations or realize upon the Collateral (other than as a result of as a result of an  action taken or not taken that is solely in the control of Agent), or (c) a material impairment of the  enforceability or priority of Agent’s Liens with respect to all or a material portion of the Collateral.         “Material Contract” means, with respect to any Person, (a) the Pacific Direct License Agreement,  and (b) all other contracts or agreements, the loss of which could reasonably be expected to result in a  Material Adverse Effect.         “Maturity Date” means January 31, 2025.          “Maximum Revolver Amount” means $55,000,000, decreased by the amount of reductions in the  Revolver Commitments made in accordance with Section 2.4(c) of this Agreement and increased by the  amount of any Increase made in accordance with Section 2.14 of this Agreement.         “Moody’s” has the meaning specified therefor in the definition of Cash Equivalents.         “Mortgages” means, individually and collectively, one or more mortgages, deeds of trust, or deeds  to secure debt, executed and delivered by a Loan Party or one of its Subsidiaries in favor of Agent, in form  and substance reasonably satisfactory to Agent, that encumber the Real Property Collateral.         “Multiemployer Plan” means any multiemployer plan within the meaning of Section 3(37) or  4001(a)(3) of ERISA with respect to which any Loan Party or ERISA Affiliate has an obligation to  contribute or has any liability, contingent or otherwise or could be assessed withdrawal liability assuming  a complete withdrawal from any such multiemployer plan.         “Nautilus Shanghai Fitness” means Nautilus (Shanghai) Fitness Co., Ltd., a company with limited  liability organized under the law of the People’s Republic of China and a wholly-owned Subsidiary of  Nautilus.         “Net Cash Proceeds” means:                (a)    with respect to any sale or disposition by any Loan Party or any of its Subsidiaries  of assets, the amount of cash proceeds received (directly or indirectly) from time to time (whether as initial                                             33  125672876_9 

 

   consideration or through the payment of deferred consideration) by or on behalf of such Loan Party or such  Subsidiary, in connection therewith after deducting therefrom only (i) the amount of any Indebtedness  secured by any Permitted Lien on any asset (other than (A) Indebtedness owing to Agent or any Lender  under this Agreement or the other Loan Documents and (B) Indebtedness assumed by the purchaser of such  asset) which is required to be, and is, repaid in connection with such sale or disposition, (ii) reasonable fees,  commissions, and expenses related thereto and required to be paid by such Loan Party or such Subsidiary  in connection with such sale or disposition, (iii) taxes paid or payable to any taxing authorities by such  Loan Party or such Subsidiary in connection with such sale or disposition, in each case to the extent, but  only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid or  payable to a Person that is not an Affiliate of any Loan Party or any of its Subsidiaries, and are properly  attributable to such transaction, and (iv) all amounts that are set aside as a reserve (A) for adjustments in  respect of the purchase price of such assets, (B) for any liabilities associated with such sale or casualty, to  the extent such reserve is required by GAAP, and (C) for the payment of unassumed liabilities relating to  the assets sold or otherwise disposed of at the time of, or within 30 days after, the date of such sale or other  disposition, to the extent that in each case the funds described above in this clause (iv) are (x) deposited  into escrow with a third party escrow agent or set aside in a separate Deposit Account that is subject to a  Control Agreement in favor of Agent, and (y) paid to Agent as a prepayment of the applicable Obligations  in accordance with Section 2.4(e) of this Agreement at such time when such amounts are no longer required  to be set aside as such a reserve; and                (b)    with respect to the issuance or incurrence of any Indebtedness by any Loan Party  or any of its Subsidiaries, or the issuance by any Loan Party or any of its Subsidiaries of any Equity Interests,  the aggregate amount of cash received (directly or indirectly) from time to time (whether as initial  consideration or through the payment or disposition of deferred consideration) by or on behalf of such Loan  Party or such Subsidiary in connection with such issuance or incurrence, after deducting therefrom only  (i) reasonable fees, commissions, and expenses related thereto and required to be paid by such Loan Party  or such Subsidiary in connection with such issuance or incurrence, and (ii) taxes paid or payable to any  taxing authorities by such Loan Party or such Subsidiary in connection with such issuance or incurrence,  in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of  such cash, actually paid or payable to a Person that is not an Affiliate of any Loan Party or any of its  Subsidiaries, and are properly attributable to such transaction.         “Net Recovery Percentage” means, as of any date of determination, the percentage of the book  value of Borrowers’ Inventory that is estimated to be recoverable in an orderly liquidation of such Inventory  net of all associated costs and expenses of such liquidation, such percentage to be determined as to each  category of Inventory and to be as specified in the most recent Acceptable Appraisal of Inventory.          “Non-Consenting Lender” has the meaning specified therefor in Section 14.2(a) of this Agreement.         “Non-Defaulting Lender” means each Lender other than a Defaulting Lender.         “Notification Event” means (a) the occurrence of a “reportable event” described in Section 4043 of  ERISA for which the 30-day notice requirement has not been waived by applicable regulations issued by  the PBGC, (b) the withdrawal of any Loan Party or ERISA Affiliate from a Pension Plan during a plan year  in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, (c) the termination of  a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan  amendment as a termination, under Section 4041 of ERISA, if the plan assets are not sufficient to pay all  plan liabilities, (d) the institution of proceedings to terminate, or the appointment of a trustee with respect  to, any Pension Plan by the PBGC or any Pension Plan or Multiemployer Plan administrator, (e) any other  event or condition that would constitute grounds under Section 4042(a) of ERISA for the termination of, or  the appointment of a trustee to administer, any Pension Plan, (f) the imposition of a Lien pursuant to the                                             34  125672876_9 

 

   IRC or ERISA in connection with any Pension Plan or the existence of any facts or circumstances that could  reasonably be expected to result in the imposition of a Lien, (g) the partial or complete withdrawal of any  Loan Party or ERISA Affiliate from a Multiemployer Plan (other than any withdrawal that would not  constitute an Event of Default under Section 8.12 of this Agreement), (h) any event or condition that results  in the insolvency of a Multiemployer Plan under Sections of ERISA, (i) any event or condition that results  in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC  of proceedings to terminate or to appoint a trustee to administer a Multiemployer Plan under ERISA, (j) any  Pension Plan being determined to be in “at risk status” within the meaning of IRC Section 430(i), (k) any  Multiemployer Plan being determined to be in “endangered status” or “critical status” within the meaning  of IRC Section 432(b) or the written determination that any Multiemployer Plan is or is expected to be  insolvent within the meaning of Title IV of ERISA, (l) with respect to any Pension Plan, any Loan Party or  ERISA Affiliate incurring a substantial cessation of operations within the meaning of ERISA  Section 4062(e), (m) an “accumulated funding deficiency” within the meaning of the IRC or ERISA  (including Section 412 of the IRC or Section 302 of ERISA) or the failure of any Pension Plan or  Multiemployer Plan to meet the minimum funding standards within the meaning of the IRC or ERISA  (including Section 412 of the IRC or Section 302 of ERISA), in each case, whether or not waived, (n) the  filing of an application for a waiver of the minimum funding standards within the meaning of the IRC or  ERISA (including Section 412 of the IRC or Section 302 of ERISA) with respect to any Pension Plan or  Multiemployer Plan, (o) the failure to make by its due date a required payment or contribution with respect  to any Pension Plan or Multiemployer Plan, (p) any event that results in or could reasonably be expected to  result in a liability by a Loan Party pursuant to Title I of ERISA or the excise tax provisions of the IRC  relating to Employee Benefit Plans or any event that results in or could reasonably be expected to result in  a liability to any Loan Party or ERISA Affiliate pursuant to Title IV of ERISA or Section 401(a)(29) of the  IRC, or (q) any of the foregoing is reasonably likely to occur in the following 30 days; provided, that in  each of above clauses (a) through (q), it either individually or in the aggregate could reasonably be expected  to result in a Material Adverse Effect.          “Obligations” means (a) all loans (including the Term Loan and the Revolving Loans (inclusive of  Extraordinary Advances and Swing Loans)), debts, principal, interest (including any interest that accrues  after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole  or in part as a claim in any such Insolvency Proceeding), reimbursement or indemnification obligations  with respect to Letters of Credit (irrespective of whether contingent), premiums, liabilities (including all  amounts charged to the Loan Account pursuant to this Agreement), obligations (including indemnification  obligations), fees (including the fees provided for in the Fee Letter), Lender Group Expenses (including  any fees or expenses that accrue after the commencement of an Insolvency Proceeding, regardless of  whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), guaranties,  and all covenants and duties of any other kind and description owing by any Loan Party arising out of,  under, pursuant to, in connection with, or evidenced by this Agreement or any of the other Loan Documents  and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent,  due or to become due, now existing or hereafter arising, and including all interest not paid when due and  all other expenses or other amounts that any Loan Party is required to pay or reimburse by the Loan  Documents or by law or otherwise in connection with the Loan Documents, and (b) all Bank Product  Obligations; provided that, anything to the contrary contained in the foregoing notwithstanding, the  Obligations shall exclude any Excluded Swap Obligation. Without limiting the generality of the foregoing,  the Obligations of Borrowers under the Loan Documents include the obligation to pay (i) the principal of  the Revolving Loans and the Term Loan, (ii) interest accrued on the Revolving Loans and the Term Loan,  (iii) the amount necessary to reimburse Issuing Bank for amounts paid or payable pursuant to Letters of  Credit, (iv) Letter of Credit commissions, fees (including fronting fees) and charges, (v) Lender Group  Expenses, (vi) fees payable under this Agreement or any of the other Loan Documents, and (vii) indemnities  and other amounts payable by any Loan Party under any Loan Document. Any reference in this Agreement                                             35  125672876_9 

 

   or in the Loan Documents to the Obligations shall include all or any portion thereof and any extensions,  modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding.          “OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.         “Originating Lender” has the meaning specified therefor in Section 13.1(e) of this Agreement.         “Other Taxes” means all present or future stamp, court, excise, value added, or documentary,  intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution,  delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest  under, or otherwise with respect to, any Loan Document.          “Overadvance” means, as of any date of determination, that the Revolver Usage is greater than any  of the limitations set forth in Section 2.1 or Section 2.11 of this Agreement.         “Pacific Direct” means Pacific Direct, LLC, a Delaware limited liability company.         “Pacific Direct Collateral Assignment” means that certain Collateral Assignment (including any  and all supplements thereto), dated as of the date hereof, by and among Nautilus, Pacific Direct, and Agent,  as the same may be amended, restated, supplemented or otherwise modified from time to time.          “Pacific Direct License Agreement” means that certain Trademark License Agreement, dated as of  September 20, 2001, by and among Nautilus, Pacific Direct, and Schwinn Acquisition LLC, a Delaware  limited liability company, as the same may be amended, restated, supplemented or otherwise modified from  time to time as permitted pursuant to the terms of the Pacific Direct Collateral Assignment.          “Participant” has the meaning specified therefor in Section 13.1(e) of this Agreement.         “Participant Register” has the meaning set forth in Section 13.1(i) of this Agreement.         “Patent Security Agreement” has the meaning specified therefor in the Guaranty and Security  Agreement.          “Patriot Act” has the meaning specified therefor in Section 4.13 of this Agreement.         “Payment Conditions” means, at the time of determination with respect to a proposed payment to  fund a Specified Transaction, that:                (a)    no Default or Event of Default then exists or would arise as a result of the  consummation of such Specified Transaction,                 (b)    either                        (i)    Availability, (A) at all times during the 30 consecutive days immediately  preceding the date of such proposed payment and the consummation of such Specified Transaction,  calculated on a pro forma basis as if such proposed payment was made, and the Specified Transaction was  consummated, on the first day of such period, and (B) after giving effect to such proposed payment and  Specified Transaction, in each case, is not less than 20% of the Maximum Revolver Amount, or                        (ii)   both (A) the Fixed Charge Coverage Ratio of the Loan Parties and their  Subsidiaries is equal to or greater than 1.10:1.00 for the trailing 12-month period most recently ended for  which financial statements are required to have been delivered to Agent pursuant to Schedule 5.1 to this                                             36  125672876_9 

 

   Agreement (calculated on a pro forma basis as if such proposed payment is a Fixed Charge made on the  last day of such 12-month period (it being understood that such proposed payment shall also be a Fixed  Charge made on the last day of such 12-month period for purposes of calculating the Fixed Charge  Coverage Ratio under this clause (ii) for any subsequent proposed payment to fund a Specific Transaction)),  and (B) Availability, (1) at all times during the 30 consecutive days immediately preceding the date of such  proposed payment and the consummation of such Specified Transaction, calculated on a pro forma basis  as if such proposed payment was made, and the Specified Transaction was consummated, on the first day  of such period, and (2) after giving effect to such proposed payment and Specified Transaction, in each  case, is not less than 15% of the Maximum Revolver Amount, and                (c)    Administrative Borrower has delivered a certificate to Agent certifying that all  conditions described in clauses (a) and (b) above have been satisfied.          “PBGC” means the Pension Benefit Guaranty Corporation or any successor agency.         “Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is  subject to the provisions of Title IV or Section 302 of ERISA or Sections 412 or 430 of the Code sponsored,  maintained, or contributed to by any Loan Party or ERISA Affiliate or to which any Loan Party or ERISA  Affiliate has any liability, contingent or otherwise.          “Perfection Certificate” means a certificate in the form of Exhibit P-1 to this Agreement.         “Permitted Acquisition” means any Acquisition so long as:                (a)    no Default or Event of Default shall have occurred and be continuing or would  result from the consummation of the proposed Acquisition and the proposed Acquisition is consensual,                (b)    no Indebtedness will be incurred, assumed, or would exist with respect to any Loan  Party or its Subsidiaries as a result of such Acquisition, other than Indebtedness permitted under clauses (f)  or (g) of the definition of Permitted Indebtedness and no Liens will be incurred, assumed, or would exist  with respect to the assets of any Loan Party or its Subsidiaries as a result of such Acquisition other than  Permitted Liens,                (c)    Borrowers have provided Agent with written confirmation, supported by  reasonably detailed calculations, that on a pro forma basis (including pro forma adjustments arising out of  events which are directly attributable to such proposed Acquisition, are factually supportable, and are  expected to have a continuing impact, in each case, determined as if the combination had been accomplished  at the beginning of the relevant period; such eliminations and inclusions to be mutually and reasonably  agreed upon by Borrowers and Agent) created by adding the historical combined financial statements of  Borrowers (including the combined financial statements of any other Person or assets that were the subject  of a prior Permitted Acquisition during the relevant period) to the historical consolidated financial  statements of the Person to be acquired (or the historical financial statements related to the assets to be  acquired) pursuant to the proposed Acquisition, the Loan Parties and their Subsidiaries (i) would have been  in compliance with the financial covenant(s) in Section 7 of this Agreement for the fiscal month ended  immediately prior to the proposed date of consummation of such proposed Acquisition regardless of  whether such financial covenant(s) are required to be tested for such fiscal month, and (ii) are projected to  be in compliance with the financial covenant(s) in Section 7 of this Agreement for each of the twelve fiscal  months in the period ended one year after the proposed date of consummation of such proposed Acquisition  assuming that such financial covenant(s) will be required to be tested in each such fiscal month,                (d)    Borrowers have provided Agent with its due diligence package relative to the  proposed Acquisition, including forecasted balance sheets, profit and loss statements, and cash flow                                             37  125672876_9 

 

   statements of the Person or assets to be acquired, all prepared on a basis consistent with such Person’s (or  assets’) historical financial statements, together with appropriate supporting details and a statement of  underlying assumptions for the one year period following the date of the proposed Acquisition, on a quarter  by quarter basis), in form and substance (including as to scope and underlying assumptions) reasonably  satisfactory to Agent,                (e)    the assets being acquired or the Person whose Equity Interests are being acquired  did not have negative EBITDA during the 12 consecutive month period most recently concluded prior to  the date of the proposed Acquisition,                (f)    Borrowers have provided Agent with written notice of the proposed Acquisition at  least 15 Business Days prior to the anticipated closing date of the proposed Acquisition and, not later than  five Business Days prior to the anticipated closing date of the proposed Acquisition, copies of the  acquisition agreement and other material documents relative to the proposed Acquisition, which agreement  and documents must be reasonably acceptable to Agent,                (g)    the assets being acquired (other than a de minimis amount of assets in relation to  Borrowers’ and their Subsidiaries’ total assets), or the Person whose Equity Interests are being acquired,  are useful in or engaged in, as applicable, the business of the Loan Parties and their Subsidiaries or a  business reasonably related thereto,                (h)    the assets being acquired (other than a de minimis amount of assets in relation to  the assets being acquired) are located within the United States or the Person whose Equity Interests are  being acquired is organized in a jurisdiction located within the United States,                (i)    the subject assets or Equity Interests, as applicable, are being acquired directly by  a Borrower or one of its Subsidiaries that is a Loan Party, and, in connection therewith, the applicable Loan  Party shall have complied with Section 5.11 or 5.12 of this Agreement, as applicable, of this Agreement  and, in the case of an acquisition of Equity Interests, the Person whose Equity Interests are acquired shall  become a Loan Party and the applicable Loan Party shall have demonstrated to Agent that the new Loan  Parties have received consideration sufficient to make the joinder documents binding and enforceable  against such new Loan Parties, and                (j)    the Payment Conditions are satisfied.          “Permitted Discretion” means a determination made in the exercise of reasonable (from the  perspective of a secured asset-based lender) business judgment.          “Permitted Dispositions” means:                (a)    sales, abandonment, or other dispositions of Equipment that is substantially worn,  damaged, or obsolete or no longer used or useful in the ordinary course of business and leases or subleases  of Real Property not useful in the conduct of the business of the Loan Parties and their Subsidiaries,                (b)    sales of Inventory to buyers in the ordinary course of business,                (c)    the use or transfer of money or Cash Equivalents and Permitted Policy Investments  in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents,                (d)    the licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and  other intellectual property rights in the ordinary course of business,                                              38  125672876_9 

 

                (e)    the granting of Permitted Liens,                (f)    the sale or discount, in each case without recourse, of accounts receivable (other  than Eligible Accounts and Eligible Credit Card Receivables) arising in the ordinary course of business,  but only in connection with the compromise or collection thereof,                (g)    any involuntary loss, damage or destruction of property,                (h)    any involuntary condemnation, seizure or taking, by exercise of the power of  eminent domain or otherwise, or confiscation or requisition of use of property,                (i)    the leasing or subleasing of assets of any Loan Party or its Subsidiaries in the  ordinary course of business,                (j)    the sale or issuance of Equity Interests (other than Disqualified Equity Interests)  of Administrative Borrower,                (k)    (i) the lapse of registered patents, trademarks, copyrights and other intellectual  property of any Loan Party or any of its Subsidiaries to the extent not economically desirable in the conduct  of its business, or (ii) the abandonment of patents, trademarks, copyrights, or other intellectual property  rights in the ordinary course of business so long as (in each case under clauses (i) and (ii)), (A) with respect  to copyrights, such copyrights are not material revenue generating copyrights, and (B) such lapse is not  materially adverse to the interests of the Lender Group,                (l)    the making of Restricted Payments that are expressly permitted to be made  pursuant to this Agreement,                (m)    the making of Permitted Investments,                (n)    sales, transfers or other dispositions of assets (i) from a Borrower to another  Borrower, (ii) from any Loan Party or any of its Subsidiaries (other than any Borrower) to a Loan Party,  and (iii) from any Subsidiary of any Loan Party that is not a Loan Party to any other Subsidiary of any Loan  Party,                (o)    dispositions of Equipment or Real Property to the extent that (i) such property is  exchanged for credit against the purchase price of similar replacement property, or (ii) the proceeds of such  disposition are promptly applied to the purchase price of such replacement property; provided, that to the  extent the property being transferred constitutes Collateral, such replacement property shall constitute  Collateral,                (p)    dispositions of assets acquired by the Loan Parties and their Subsidiaries pursuant  to a Permitted Acquisition consummated within 12 months of the date of the proposed disposition so long  as (i) the consideration received for the assets to be so disposed is at least equal to the fair market value of  such assets, (ii) the assets to be so disposed are not necessary or economically desirable in connection with  the business of the Loan Parties and their Subsidiaries, and (iii) the assets to be so disposed are readily  identifiable as assets acquired pursuant to the subject Permitted Acquisition,                (q)    dispositions of property pursuant to a Sale–Leaseback that (i) is made for cash  consideration in an amount not less than the fair market value of such fixed or capital asset and is  consummated within 90 days after such Loan Party or such Subsidiary acquires or completes the  construction of such fixed or capital asset, and (ii) the aggregate fair market value of all assets disposed of  pursuant to this clause (q) would not exceed $750,000, and                                             39  125672876_9 

 

                (r)    sales or dispositions of fixed assets (including intangible property related to such  fixed assets) not otherwise permitted in clauses (a) through (q) above so long as made at fair market value  and the aggregate fair market value of all assets disposed of in fiscal year (including the proposed  disposition) would not exceed $5,000,000;   provided, that if, as of any date of determination, sales or dispositions by the Loan Parties during the period  of time from the first day of the month in which such date of determination occurs until such date of  determination, either individually or in the aggregate, involve $1,000,000 or more of assets included in the  Borrowing Base (based on the fair market value of the assets so disposed) (the “Threshold Amount”), then  Borrowers shall have, prior to consummation of the sale or disposition that causes the assets included in the  Borrowing Base that are disposed of during such period to exceed the Threshold Amount, delivered to  Agent an updated Borrowing Base Certificate that reflects the removal of the applicable assets from the  Borrowing Base.          “Permitted Indebtedness” means:                (a)    Indebtedness in respect of the Obligations,                (b)    Indebtedness as of the Closing Date set forth on Schedule 4.14 to this Agreement  and any Refinancing Indebtedness in respect of such Indebtedness,                (c)    (i) Permitted Purchase Money Indebtedness, (ii) Indebtedness (other than  Indebtedness for borrowed money) arising out of Sale–Leaseback permitted under clause (q) of the  definition of Permitted Dispositions, and (iii) any Refinancing Indebtedness in respect of any such  Indebtedness under the immediately preceding clauses (i) and (ii),                (d)    Indebtedness arising in connection with the endorsement of instruments or other  payment items for deposit,                (e)    Indebtedness consisting of (i) unsecured guarantees incurred in the ordinary course  of business with respect to surety and appeal bonds, performance bonds, bid bonds, appeal bonds,  completion guarantee and similar obligations; (ii) unsecured guarantees arising with respect to customary  indemnification obligations to purchasers in connection with Permitted Dispositions; and (iii) unsecured  guarantees with respect to Indebtedness of any Loan Party or one of its Subsidiaries, to the extent that the  Person that is obligated under such guaranty could have incurred such underlying Indebtedness,                (f)    unsecured Indebtedness of any Loan Party that is incurred on the date of the  consummation of a Permitted Acquisition solely for the purpose of consummating such Permitted  Acquisition so long as (i) no Event of Default has occurred and is continuing or would result therefrom, (ii)  such unsecured Indebtedness is not incurred for working capital purposes, (iii) such unsecured Indebtedness  does not mature prior to the date that is 12 months after the Maturity Date, (iv) such unsecured Indebtedness  does not amortize until 12 months after the Maturity Date, (v) such unsecured Indebtedness does not provide  for the payment of interest thereon in cash or Cash Equivalents prior to the date that is 12 months after the  Maturity Date, and (vi) such Indebtedness is subordinated in right of payment to the Obligations on terms  and conditions reasonably satisfactory to Agent and is otherwise on terms and conditions (including  economic terms and absence of covenants) reasonably satisfactory to Agent,                (g)    Acquired Indebtedness in an amount not to exceed $1,000,000 outstanding at any  one time,                (h)    Indebtedness incurred in the ordinary course of business under performance, bid,  surety, statutory, or appeal bonds,                                             40  125672876_9 

 

                (i)    Indebtedness owed to any Person providing worker’s compensation, health,  disability, or other employee benefits or property, casualty, liability, or other insurance to any Loan Party  or any of its Subsidiaries, so long as the amount of such Indebtedness is not in excess of the amount of the  unpaid cost of, and shall be incurred only to defer the cost of, such insurance for the year in which such  Indebtedness is incurred and such Indebtedness is outstanding only during such year,                (j)    the incurrence by any Loan Party or its Subsidiaries of Indebtedness under Hedge  Agreements that is incurred for the bona fide purpose of hedging the interest rate, commodity, or foreign  currency risks associated with such Loan Party’s or such Subsidiary’s operations and not for speculative  purposes,                (k)    Indebtedness incurred in the ordinary course of business in respect of credit cards,  credit card processing services, debit cards, stored value cards, commercial cards (including so-called  “purchase cards”, “procurement cards” or “p-cards”), or Cash Management Services,                (l)    unsecured Indebtedness of any Loan Party owing to employees, former employees,  former officers, directors, or former directors (or any spouses, ex-spouses, or estates of any of the foregoing)  incurred in connection with the repurchase or redemption by such Loan Party of the Equity Interests of  Administrative Borrower that has been issued to such Persons as of the Closing Date, so long as (i) no  Default or Event of Default has occurred and is continuing or would result from the incurrence of such  Indebtedness, (ii) the aggregate amount of all such Indebtedness outstanding at any one time does not  exceed $250,000, and (iii) such Indebtedness is subordinated in right of payment to the Obligations on  terms and conditions reasonably acceptable to Agent,                (m)    contingent liabilities in respect of any indemnification obligation, adjustment of  purchase price, non-compete, or similar obligation of any Loan Party incurred in connection with the  consummation of one or more Permitted Acquisitions,                (n)    Indebtedness comprising Permitted Investments,                (o)    unsecured Indebtedness incurred in respect of netting services, overdraft  protection, and other like services, in each case, incurred in the ordinary course of business,                (p)    unsecured Indebtedness of any Loan Party or its Subsidiaries in respect of Earn- Outs owing to sellers of assets or Equity Interests to such Loan Party or its Subsidiaries that is incurred in  connection with the consummation of one or more Permitted Acquisitions so long as (i) such unsecured  Indebtedness is on terms and conditions reasonably acceptable to Agent, and (ii) the principal amount of  such unsecured Indebtedness does not exceed $1,000,000 with respect to any Permitted Acquisition or  $5,000,000 with respect to all Permitted Acquisitions,                (q)    Indebtedness in an aggregate outstanding principal amount not to exceed  $2,500,000 at any time outstanding for all Subsidiaries of each Loan Party that are CFCs; provided, that  such Indebtedness is not directly or indirectly recourse to any of the Loan Parties or of their respective  assets,                (r)    accrual of interest, accretion or amortization of original issue discount, or the  payment of interest in kind, in each case, on Indebtedness that otherwise constitutes Permitted Indebtedness,  and                (s)    any other unsecured Indebtedness incurred by any Loan Party or any of its  Subsidiaries in an aggregate outstanding amount not to exceed $5,000,000 at any one time.                                              41  125672876_9 

 

         “Permitted Intercompany Advances” means loans made by (a) a Loan Party to another Loan Party,  (b) a Subsidiary of a Loan Party that is not a Loan Party to another Subsidiary of a Loan Party that is not a  Loan Party, (c) a Subsidiary of a Loan Party that is not a Loan Party to a Loan Party, so long as the parties  thereto are party to the Intercompany Subordination Agreement, and (d) a Loan Party to a Subsidiary of a  Loan Party that is not a Loan Party so long as, solely for purposes of this clause (d), (i) the aggregate amount  of all such loans (by type, not by the borrower) does not exceed $2,500,000 outstanding at any one time,  (ii) at the time of the making of such loan, no Event of Default has occurred and is continuing or would  result therefrom, and (iii) Borrowers have Availability of $40,000,000 or greater immediately after giving  effect to each such loan.         “Permitted Policy Investments” means Investments permitted in accordance with Administrative  Borrower’s investment policy delivered to Agent prior to the Closing Date and adopted by the Board of  Directors of Administrative Borrower as in effect as of the Closing Date and otherwise reasonably  satisfactory to Agent.          “Permitted Investments” means:                (a)    Investments in cash and Cash Equivalents,                (b)    Investments in negotiable instruments deposited or to be deposited for collection  in the ordinary course of business,                (c)    advances made in connection with purchases of goods or services in the ordinary  course of business,                (d)    Investments received in settlement of amounts due to any Loan Party or any of its  Subsidiaries effected in the ordinary course of business or owing to any Loan Party or any of its Subsidiaries  as a result of Insolvency Proceedings involving an account debtor or upon the foreclosure or enforcement  of any Lien in favor of a Loan Party or its Subsidiaries,                (e)    Investments owned by any Loan Party or any of its Subsidiaries on the Closing  Date and set forth on Schedule P-1 to this Agreement,                (f)    guarantees permitted under the definition of Permitted Indebtedness,                (g)    Permitted Intercompany Advances,                (h)    Equity Interests or other securities acquired in connection with the satisfaction or  enforcement of Indebtedness or claims due or owing to a Loan Party or its Subsidiaries (in bankruptcy of  customers or suppliers or otherwise outside the ordinary course of business) or as security for any such  Indebtedness or claims,                (i)    deposits of cash made in the ordinary course of business to secure performance of  operating leases,                (j)    (i) non-cash loans and advances to employees, officers, and directors of a Loan  Party or any of its Subsidiaries for the purpose of purchasing Equity Interests in Administrative Borrower  so long as the proceeds of such loans are used in their entirety to purchase such Equity Interests in  Administrative Borrower, and (ii) loans and advances to employees and officers of a Loan Party or any of  its Subsidiaries in the ordinary course of business for any other business purpose and in an aggregate amount  not to exceed $250,000 at any one time,                                              42  125672876_9 

 

                (k)    Permitted Acquisitions,                (l)    Investments in the form of capital contributions and the acquisition of Equity  Interests made by any Loan Party in any other Loan Party (other than capital contributions to or the  acquisition of Equity Interests of Administrative Borrower),                (m)    Investments resulting from entering into (i) Bank Product Agreements, or  (ii) agreements relative to obligations permitted under clause (j) of the definition of Permitted Indebtedness,                (n)    equity Investments by any Loan Party in any Subsidiary of such Loan Party which  is required by law to maintain a minimum net capital requirement or as may be otherwise required by  applicable law,                (o)    Investments held by a Person acquired in a Permitted Acquisition to the extent that  such Investments were not made in contemplation of or in connection with such Permitted Acquisition and  were in existence on the date of such Permitted Acquisition,                 (p)    Permitted Policy Investments, and                (q)    so long as no Event of Default has occurred and is continuing or would result  therefrom, any other Investments in an aggregate amount not to exceed $5,000,000 during the term of this  Agreement.           “Permitted Liens” means:                (a)    Liens granted to, or for the benefit of, Agent to secure the Obligations,                (b)    Liens for unpaid taxes, assessments, or other governmental charges or levies that  either (i) are not yet delinquent, or (ii) do not have priority over Agent’s Liens and the underlying taxes,  assessments, or charges or levies are the subject of Permitted Protests,                (c)    judgment Liens arising solely as a result of the existence of judgments, orders, or  awards that do not constitute an Event of Default under Section 8.3 of this Agreement,                (d)    Liens set forth on Schedule P-2 to this Agreement; provided, that to qualify as a  Permitted Lien, any such Lien described on Schedule P-2 to this Agreement shall only secure the  Indebtedness that it secures on the Closing Date and any Refinancing Indebtedness in respect thereof,                (e)    the interests of lessors under operating leases and non-exclusive licensors under  license agreements,                (f)    purchase money Liens on fixed assets or the interests of lessors under Capital  Leases to the extent that such Liens or interests secure Permitted Purchase Money Indebtedness and so long  as (i) such Lien attaches only to the fixed asset purchased or acquired and the proceeds thereof, and (ii)  such Lien only secures the Indebtedness that was incurred to acquire the fixed asset purchased or acquired  or any Refinancing Indebtedness in respect thereof,                (g)    Liens arising by operation of law in favor of warehousemen, landlords, carriers,  mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course of business and not in  connection with the borrowing of money, and which Liens either (i) are for sums not yet delinquent, or (ii)  are the subject of Permitted Protests,                                              43  125672876_9 

 

                (h)    Liens on amounts deposited to secure any Borrower’s and its Subsidiaries’  obligations in connection with worker’s compensation or other unemployment insurance,                (i)    Liens on amounts deposited to secure any Borrower’s and its Subsidiaries’  obligations in connection with the making or entering into of bids, tenders, or leases in the ordinary course  of business and not in connection with the borrowing of money,                (j)    Liens on amounts deposited to secure any Borrower’s and its Subsidiaries’  reimbursement obligations with respect to surety or appeal bonds obtained in the ordinary course of  business,                (k)    with respect to any Real Property, easements, rights of way, and zoning restrictions  that do not materially interfere with or impair the use or operation thereof,                (l)    non-exclusive licenses of patents, trademarks, copyrights, and other intellectual  property rights in the ordinary course of business,                (m)    Liens that are replacements of Permitted Liens to the extent that the original  Indebtedness is the subject of permitted Refinancing Indebtedness and so long as the replacement Liens  only encumber those assets that secured the original Indebtedness,                (n)    rights of setoff or bankers’ liens upon deposits of funds in favor of banks or other  depository institutions, solely to the extent incurred in connection with the maintenance of such Deposit  Accounts in the ordinary course of business,                (o)    Liens granted in the ordinary course of business on the unearned portion of  insurance premiums securing the financing of insurance premiums to the extent the financing is permitted  under the definition of Permitted Indebtedness,                (p)    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,                (q)    Liens solely on any cash earnest money deposits made by a Loan Party or any of  its Subsidiaries in connection with any letter of intent or purchase agreement with respect to a Permitted  Acquisition,                (r)    Liens assumed by any Loan Party or its Subsidiaries in connection with a Permitted  Acquisition that secure Acquired Indebtedness that is Permitted Indebtedness,                 (s)    Liens or rights of setoff against credit balances of Borrowers with Credit Card  Issuers or Credit Card Processors or amounts owing by such Credit Card Issuers or Credit Card Processors  to Borrowers in the ordinary course of business, but not Liens on or rights of setoff against any other  property or assets of Borrowers, pursuant to the Credit Card Agreements to secure the obligations of  Borrowers to the Credit Card Issuers or Credit Card Processors as a result of fees and chargebacks,                 (t)    Liens arising out of Sale–Leaseback permitted under clause (q) of the definition of  Permitted Dispositions, and                (u)    other Liens which do not secure Indebtedness for borrowed money or letters of  credit and as to which the aggregate amount of the obligations secured thereby does not exceed $1,000,000.         “Permitted Protest” means the right of any Loan Party or any of its Subsidiaries to protest any Lien  (other than any Lien that secures the Obligations), taxes (other than payroll taxes or taxes that are the subject                                             44  125672876_9 

 

   of a United States federal tax lien), or rental payment; provided, that (a) a reserve with respect to such  obligation is established on such Loan Party’s or its Subsidiaries’ books and records in such amount as is  required under GAAP, (b) any such protest is instituted promptly and prosecuted diligently by such Loan  Party or its Subsidiary, as applicable, in good faith, and (c) Agent is reasonably satisfied that, while any  such protest is pending, there will be no impairment of the enforceability, validity (unless Agent has taken  a Reserve (or has elected to not take a Reserve at a time that Borrowers have sufficient Availability therefor)  for the amount of tax or rental payment), or priority of any of Agent’s Liens.          “Permitted Purchase Money Indebtedness” means, as of any date of determination, Indebtedness  (other than the Obligations, but including Capitalized Lease Obligations), incurred after the Closing Date  and at the time of, or within 90 days after, the acquisition of any fixed assets for the purpose of financing  all or any part of the acquisition cost thereof, in an aggregate principal amount outstanding at any one time  not in excess of $2,500,000.          “Person” means natural persons, corporations, limited liability companies, limited partnerships,  general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other  organizations, irrespective of whether they are legal entities, and governments and agencies and political  subdivisions thereof.          “Platform” has the meaning specified therefor in Section 17.9(c) of this Agreement.         “Post-Increase Revolver Lenders” has the meaning specified therefor in Section 2.14 of this  Agreement.          “Pre-Increase Revolver Lenders” has the meaning specified therefor in Section 2.14 of this  Agreement.          “Projections” means Borrowers’ forecasted (a) balance sheets, (b) profit and loss statements, and  (c) cash flow statements, all prepared on a basis consistent with Borrowers’ historical financial statements,  together with appropriate supporting details and a statement of underlying assumptions.          “Pro Rata Share” means, as of any date of determination:                (a)    with respect to a Lender’s obligation to make all or a portion of the Revolving  Loans, with respect to such Lender’s right to receive payments of interest, fees, and principal with respect  to the Revolving Loans, and with respect to all other computations and other matters related to the Revolver  Commitments or the Revolving Loans, the percentage obtained by dividing (i) the Revolving Loan  Exposure of such Lender, by (ii) the aggregate Revolving Loan Exposure of all Lenders,                (b)    with respect to a Lender’s obligation to participate in the Letters of Credit, with  respect to such Lender’s obligation to reimburse Issuing Bank, and with respect to such Lender’s right to  receive payments of Letter of Credit Fees, and with respect to all other computations and other matters  related to the Letters of Credit, the percentage obtained by dividing (i) the Revolving Loan Exposure of  such Lender, by (ii) the aggregate Revolving Loan Exposure of all Lenders; provided, that if all of the  Revolving Loans have been repaid in full and all Revolver Commitments have been terminated, but Letters  of Credit remain outstanding, Pro Rata Share under this clause shall be the percentage obtained by dividing  (A) the Letter of Credit Exposure of such Lender, by (B) the Letter of Credit Exposure of all Lenders,                 (c)    with respect to a Lender’s obligation to make all or a portion of the Term Loan,  with respect to such Lender’s right to receive payments of interest, fees, and principal with respect to the  Term Loan, and with respect to all other computations and other matters related to the Term Loan                                             45  125672876_9 

 

   Commitments or the Term Loan, the percentage obtained by dividing (i) the Term Loan Exposure of such  Lender, by (ii) the aggregate Term Loan Exposure of all Lenders, and                (d)    with respect to all other matters and for all other matters as to a particular Lender  (including the indemnification obligations arising under Section 15.7 of this Agreement), the percentage  obtained by dividing (i) the Revolving Loan Exposure and Term Loan Exposure of such Lender, by (ii) the  aggregate Revolving Loan Exposure and Term Loan Exposure of all Lenders, in any such case as the  applicable percentage may be adjusted by assignments permitted pursuant to Section 13.1; provided, that if  all of the Loans have been repaid in full and all Commitments have been terminated, Pro Rata Share under  this clause shall be the percentage obtained by dividing (A) the Letter of Credit Exposure of such Lender,  by (B) the Letter of Credit Exposure of all Lenders.          “Protective Advances” has the meaning specified therefor in Section 2.3(d)(i) of this Agreement.         “Public Lender” has the meaning specified therefor in Section 17.9(c) of this Agreement.         “Purchase Price” means, with respect to any Acquisition, an amount equal to the aggregate  consideration, whether cash, property or securities (including the fair market value of any Equity Interests  of Administrative Borrower issued in connection with such Acquisition and including the maximum amount  of Earn-Outs), paid or delivered by a Loan Party or one of its Subsidiaries in connection with such  Acquisition (whether paid at the closing thereof or payable thereafter and whether fixed or contingent), but  excluding therefrom (a) any cash of the seller and its Affiliates used to fund any portion of such  consideration, and (b) any cash or Cash Equivalents acquired in connection with such Acquisition.          “QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be  interpreted in accordance with, 12 U.S.C. § 5390(c)(8)(D).          “QFC Credit Support” has the meaning specified therefor in Section 17.15 of this Agreement.         “Qualified Cash” means, as of any date of determination, the amount of unrestricted cash and Cash  Equivalents of the Loan Parties and their Subsidiaries that is in Deposit Accounts or in Securities Accounts,  or any combination thereof, and which such Deposit Account or Securities Account is the subject of a  Control Agreement and is maintained by a branch office of the bank or securities intermediary located  within the United States.          “Qualified Equity Interests” means and refers to any Equity Interests issued by Administrative  Borrower (and not by one or more of its Subsidiaries) that is not a Disqualified Equity Interest.          “Real Property” means any estates or interests in real property now owned or hereafter acquired by  any Loan Party or one of its Subsidiaries and the improvements thereto.          “Real Property Collateral” means any Real Property hereafter acquired by any Loan Party or one  of its Subsidiaries with a fair market value in excess of $1,000,000.          “Receivable Reserves” means, as of any date of determination, those reserves that Agent deems  necessary or appropriate, in its Permitted Discretion and subject to Section 2.1(c), to establish and maintain  with respect to the Eligible Accounts, the Eligible Credit Card Receivables, or the Maximum Revolver  Amount.          “Record” means information that is inscribed on a tangible medium or that is stored in an electronic  or other medium and is retrievable in perceivable form.                                             46  125672876_9 

 

         “Reference Period” has the meaning set forth in the definition of EBITDA.         “Refinancing Indebtedness” means refinancings, renewals, or extensions of Indebtedness so long  as:                (a)    such refinancings, renewals, or extensions do not result in an increase in the  principal amount of the Indebtedness so refinanced, renewed, or extended, other than by the amount of  premiums paid thereon and the fees and expenses incurred in connection therewith and by the amount of  unfunded commitments with respect thereto,                (b)    such refinancings, renewals, or extensions do not result in a shortening of the final  stated maturity or the average weighted maturity (measured as of the refinancing, renewal, or extension) of  the Indebtedness so refinanced, renewed, or extended, nor are they on terms or conditions that, taken as a  whole, are or could reasonably be expected to be materially adverse to the interests of the Lenders,                (c)    if the Indebtedness that is refinanced, renewed, or extended was subordinated in  right of payment to the Obligations, then the terms and conditions of the refinancing, renewal, or extension  must include subordination terms and conditions that are at least as favorable to the Lender Group as those  that were applicable to the refinanced, renewed, or extended Indebtedness,                (d)    the Indebtedness that is refinanced, renewed, or extended is not recourse to any  Person that is liable on account of the Obligations other than those Persons which were obligated with  respect to the Indebtedness that was refinanced, renewed, or extended,                (e)    if the Indebtedness that is refinanced, renewed or extended was unsecured, such  refinancing, renewal or extension shall be unsecured, and                (f)    if the Indebtedness that is refinanced, renewed, or extended was secured (i) such  refinancing, renewal, or extension shall be secured by substantially the same or less collateral as secured  such refinanced, renewed or extended Indebtedness on terms no less favorable to Agent or the Lender Group  and (ii) the Liens securing such refinancing, renewal or extension shall not have a priority more senior than  the Liens securing such Indebtedness that is refinanced, renewed or extended.          “Register” has the meaning set forth in Section 13.1(h) of this Agreement.         “Registered Loan” has the meaning set forth in Section 13.1(h) of this Agreement.         “Related Fund” means any Person (other than a natural person) that is engaged in making,  purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course and  that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender, or (c) an entity or an  Affiliate of an entity that administers, advises or manages a Lender.          “Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank  of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the  Federal Reserve Bank of New York or any successor thereto.          “Remedial Action” means all actions taken to (a) clean up, remove, remediate, contain, treat,  monitor, assess, evaluate, or in any way address Hazardous Materials in the indoor or outdoor environment,  (b) prevent or minimize a release or threatened release of Hazardous Materials so they do not migrate or  endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (c) restore  or reclaim natural resources or the environment, (d) perform any pre-remedial studies, investigations, or                                             47  125672876_9 

 

   post-remedial operation and maintenance activities, or (e) conduct any other actions with respect to  Hazardous Materials required by Environmental Laws.          “Replacement Lender” has the meaning specified therefor in Section 2.13(b) of this Agreement.         “Report” has the meaning specified therefor in Section 15.16 of this Agreement.         “Required Lenders” means, at any time, Lenders having or holding more than 50% of the sum of  (a) the aggregate Revolving Loan Exposure of all Lenders, plus (b) the aggregate Term Loan Exposure of  all Lenders; provided, that (i) the Revolving Loan Exposure and Term Loan Exposure of any Defaulting  Lender shall be disregarded in the determination of the Required Lenders, and (ii) at any time there are two  or more Lenders (who are not Affiliates of one another or Defaulting Lenders), “Required Lenders” must  include at least two Lenders (who are not Affiliates of one another).          “Reserves” means, as of any date of determination, Inventory Reserves, Receivable Reserves, Bank  Product Reserves, and those other reserves that Agent deems necessary or appropriate, in its Permitted  Discretion and subject to Section 2.1(c), to establish and maintain (including reserves with respect to (a)  sums that any Loan Party or its Subsidiaries are required to pay under any Section of this Agreement or any  other Loan Document (such as taxes, assessments, insurance premiums, or, in the case of leased assets,  rents or other amounts payable under such leases) and has failed to pay, and (b) amounts owing by any  Loan Party or its Subsidiaries to any Person to the extent secured by a Lien on, or trust over, any of the  Collateral (other than a Permitted Lien), which Lien or trust, in the Permitted Discretion of Agent likely  would have a priority superior to the Agent’s Liens (such as Liens or trusts in favor of landlords,  warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad valorem,  excise, sales, or other taxes where given priority under applicable law) in and to such item of the Collateral)  with respect to the Borrowing Base or the Maximum Revolver Amount.          “Restricted Payment” means (a) any declaration or payment of any dividend or the making of any  other payment or distribution, directly or indirectly, on account of Equity Interests issued by Administrative  Borrower or any of its Subsidiaries (including any payment in connection with any merger or consolidation  involving Administrative Borrower) or to the direct or indirect holders of Equity Interests issued by  Administrative Borrower or any of its Subsidiaries in their capacity as such (other than dividends or  distributions payable in Qualified Equity Interests issued by Administrative Borrower or any of its  Subsidiaries, or (b) any purchase, redemption, making of any sinking fund or similar payment, or other  acquisition or retirement for value (including in connection with any merger or consolidation involving  Administrative Borrower) any Equity Interests issued by Administrative Borrower or any of its  Subsidiaries, or (c) any making of any payment to retire, or to obtain the surrender of, any outstanding  warrants, options, or other rights to acquire Equity Interests of Administrative Borrower now or hereafter  outstanding.          “Revolver Commitment” means, with respect to each Revolving Lender, its Revolver  Commitment, and, with respect to all Revolving Lenders, their Revolver Commitments, in each case as  such Dollar amounts are set forth beside such Revolving Lender’s name under the applicable heading on  Schedule C-1 to this Agreement or in the Assignment and Acceptance or Increase Joinder pursuant to which  such Revolving Lender became a Revolving Lender under this Agreement, as such amounts may be reduced  or increased from time to time pursuant to assignments made in accordance with the provisions of  Section 13.1 of this Agreement, and as such amounts may be decreased by the amount of reductions in the  Revolver Commitments made in accordance with Section 2.4(c) hereof.                                              48  125672876_9 

 

         “Revolver Usage” means, as of any date of determination, the sum of (a) the amount of outstanding  Revolving Loans (inclusive of Swing Loans and Protective Advances), plus (b) the amount of the Letter of  Credit Usage.          “Revolving Lender” means a Lender that has a Revolving Loan Exposure or Letter of Credit  Exposure.          “Revolving Loan Base Rate Margin” has the meaning set forth in the definition of Applicable  Margin.           “Revolving Loan Exposure” means, with respect to any Revolving Lender, as of any date of  determination (a) prior to the termination of the Revolver Commitments, the amount of such Lender’s  Revolver Commitment, and (b) after the termination of the Revolver Commitments, the aggregate  outstanding principal amount of the Revolving Loans of such Lender.          “Revolving Loan LIBOR Rate Margin” has the meaning set forth in the definition of Applicable  Margin.           “Revolving Loans” has the meaning specified therefor in Section 2.1(a) of this Agreement.         “Sale–Leaseback” means any transaction or series of related transactions pursuant to which  Administrative Borrower or any of its Subsidiaries (a) disposes of any property, real or personal (other than  Accounts, Credit Card Receivables, Inventory, or IP), used or useful in its business, whether now owned or  hereafter acquired, and (b) as part of such transaction or such series of related transactions, thereafter rents  or leases such property or other property that it intends to use for substantially the same purpose or purposes  as the property so disposed of.          “Sanctioned Entity” means (a) a country or territory or a government of a country or territory, (b) an  agency of the government of a country or territory, (c) an organization directly or indirectly controlled by  a country or territory or its government, or (d) a Person resident in or determined to be resident in a country  or territory, in each case of clauses (a) through (d) that is a target of Sanctions, including a target of any  country sanctions program administered and enforced by OFAC.          “Sanctioned Person” means, at any time (a) any Person named on the list of Specially Designated  Nationals and Blocked Persons maintained by OFAC, OFAC’s consolidated Non-SDN list or any other  Sanctions-related list maintained by any Governmental Authority, (b) a Person or legal entity that is a target  of Sanctions, (c) any Person operating, organized or resident in a Sanctioned Entity, or (d) any Person  directly or indirectly owned or controlled (individually or in the aggregate) by or acting on behalf of any  such Person or Persons described in clauses (a) through (c) above.         “Sanctions” means individually and collectively, respectively, any and all economic sanctions,  trade sanctions, financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes anti-terrorism  laws and other sanctions laws, regulations or embargoes, including those imposed, administered or enforced  from time to time by: (a) the United States of America, including those administered by OFAC, the U.S.  Department of State, the U.S. Department of Commerce, or through any existing or future executive order,  (b) the United Nations Security Council, (c) the European Union or any European Union member state, (d)  Her Majesty’s Treasury of the United Kingdom, or (d) any other Governmental Authority with jurisdiction  over any member of Lender Group or any Loan Party or any of their respective Subsidiaries or Affiliates.           “S&P” has the meaning specified therefor in the definition of Cash Equivalents.                                              49  125672876_9 

 

         “SEC” means the United States Securities and Exchange Commission and any successor thereto.          “Securities Account” means a securities account (as that term is defined in the Code).         “Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor  statute.          “Settlement” has the meaning specified therefor in Section 2.3(e)(i) of this Agreement.         “Settlement Date” has the meaning specified therefor in Section 2.3(e)(i) of this Agreement.         “SOFR” with respect to any day means the secured overnight financing rate published for such day  by the Federal Reserve Bank of New York, as the administrator of the benchmark, (or a successor  administrator) on the Federal Reserve Bank of New York’s Website.          “Solvent” means, with respect to any Person as of any date of determination, that (a) at fair  valuations, the sum of such Person’s debts (including contingent liabilities) is less than all of such Person’s  assets, (b) such Person is not engaged or about to engage in a business or transaction for which the remaining  assets of such Person are unreasonably small in relation to the business or transaction or for which the  property remaining with such Person is an unreasonably small capital, (c) such Person has not incurred and  does not intend to incur, or reasonably believe that it will incur, debts beyond its ability to pay such debts  as they become due (whether at maturity or otherwise), and (d) such Person is “solvent” or not “insolvent”,  as applicable within the meaning given those terms and similar terms under applicable laws relating to  fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability  at 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).          “Specified Transaction” means any Permitted Acquisition or Restricted Payment (or declaration of  any Restricted Payment).          “Standard Letter of Credit Practice” means, for Issuing Bank, any domestic or foreign law or letter  of credit practices applicable in the city in which Issuing Bank issued the applicable Letter of Credit or, for  its branch or correspondent, such laws and practices applicable in the city in which it has advised, confirmed  or negotiated such Letter of Credit, as the case may be, in each case, (a) which letter of credit practices are  of banks that regularly issue letters of credit in the particular city, and (b) which laws or letter of credit  practices are required or permitted under ISP or UCP, as chosen in the applicable Letter of Credit.          “Subject Holder” has the meaning specified therefor in Section 2.4(e)(v) of this Agreement.         “Subsidiary” of a Person means a corporation, partnership, limited liability company, or other entity  in which that Person directly or indirectly owns or controls the Equity Interests having ordinary voting  power to elect a majority of the Board of Directors of such corporation, partnership, limited liability  company, or other entity.          “Supermajority Lenders” means, at any time, Revolving Lenders having or holding more than  66-2/3% of the aggregate Revolving Loan Exposure of all Revolving Lenders; provided, that (i) the  Revolving Loan Exposure of any Defaulting Lender shall be disregarded in the determination of the  Supermajority Lenders, and (ii) at any time there are two or more Revolving Lenders (who are not Affiliates                                              50  125672876_9 

 

   of one another), “Supermajority Lenders” must include at least two Revolving Lenders (who are not  Affiliates of one another or Defaulting Lenders).          “Supported QFC” has the meaning specified therefor in Section 17.15 of this Agreement.          “Swap Obligation” means, with respect to any Loan Party, any obligation to pay or perform under  any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the  Commodity Exchange Act.           “Swing Lender” means Wells Fargo or any other Lender that, at the request of Borrowers and with  the consent of Agent agrees, in such Lender’s sole discretion, to become the Swing Lender under  Section 2.3(b) of this Agreement.         “Swing Loan” has the meaning specified therefor in Section 2.3(b) of this Agreement.         “Swing Loan Exposure” means, as of any date of determination with respect to any Lender, such  Lender’s Pro Rata Share of the Swing Loans on such date.          “Tax Lender” has the meaning specified therefor in Section 14.2(a) of this Agreement.         “Taxes” means any taxes, levies, imposts, duties, fees, assessments or other charges of whatever  nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority  thereof or therein, and all interest, penalties or similar liabilities with respect thereto.          “Term Loan” has the meaning specified therefor in Section 2.2 of this Agreement.          “Term Loan Amount” means $15,000,000.         “Term Loan Base Rate Margin” has the meaning set forth in the definition of Applicable Margin.          “Term Loan Borrowing Base” means the result of (a) the lesser of (i) the Term Loan Maximum  Amount, and (ii) 25% of the FMV of Eligible IP identified in the most recent Acceptable Appraisal of  Eligible IP, minus (b) the aggregate amount of Reserves, if any, established by Agent from time to time  under Section 2.1(c) of this Agreement.                  “Term Loan Commitment” means, with respect to each Lender, its Term Loan Commitment, and,  with respect to all Lenders, their Term Loan Commitments, in each case as such Dollar amounts are set  forth beside such Lender’s name under the applicable heading on Schedule C-1 to this Agreement or in the  Assignment and Acceptance pursuant to which such Lender became a Lender Term under this Agreement,  as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance  with the provisions of Section 13.1 of this Agreement.         “Term Loan Exposure” means, with respect to any Term Loan Lender, as of any date of  determination (a) prior to the funding of the Term Loan, the amount of such Lender’s Term Loan  Commitment, and (b) after the funding of the Term Loan, the outstanding principal amount of the Term  Loan held by such Lender.          “Term Loan Lender” means a Lender that has a Term Loan Commitment or that has a portion of  the Term Loan.                                             51  125672876_9 

 

         “Term Loan LIBOR Rate Margin” has the meaning set forth in the definition of Applicable Margin.         “Term Loan Maximum Amount” means the Term Loan Amount; provided, that such amount shall  be permanently reduced (i) by an amount equal to each payment of the Term Loan made or required to be  made pursuant to Section 2.2 of this Agreement, each prepayment of the Term Loan made pursuant to  Section 2.4(d)(ii), and each prepayment of the Term Loan made or required to be made pursuant to  Section 2.4(e) of this Agreement, in each case as of the date of such payment or such prepayment (or, if  any payment of the Term Loan required to made pursuant to Section 2.2 of this Agreement or any  prepayment of the Term Loan required to be made pursuant to this Section 2.4(e) of this Agreement is not  made when required to be made, as of the date that such payment or such prepayment is required to be  made), and (ii) on the date Agent notifies Borrowers of Agent's receipt of an Acceptable Appraisal of IP,  by the amount, if any, by which the Term Loan Maximum Amount on such date is in excess of 25% of the  FMV of Eligible IP based on such appraisal.          “Term SOFR” means the forward-looking term rate based on SOFR that has been selected or  recommended by the Relevant Governmental Body.          “Trademark Security Agreement” has the meaning specified therefor in the Guaranty and Security  Agreement.          “TTM EBITDA” means, as of any date of determination, EBITDA of Borrowers determined on a  consolidated basis in accordance with GAAP, for the 12 month period most recently ended.          “UCP” means, with respect to any Letter of Credit, the Uniform Customs and Practice for  Documentary Credits 2007 Revision, International Chamber of Commerce Publication No. 600 and any  version or revision thereof accepted by Issuing Bank for use.           “Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the  Benchmark Replacement Adjustment.           “Unfinanced Capital Expenditures” means Capital Expenditures (a) not financed with the proceeds  of any incurrence of Indebtedness (other than the incurrence of any Revolving Loans), the proceeds of any  sale or issuance of Equity Interests or equity contributions, the proceeds of any asset sale (other than the  sale of Inventory in the ordinary course of business) or any insurance proceeds, and (b) that are not  reimbursed by a third person (excluding any Loan Party or any of its Affiliates) in the period such  expenditures are made pursuant to a written agreement.          “United States” means the United States of America.         “Unused Line Fee” has the meaning specified therefor in Section 2.10(b) of this Agreement.         “U.S. Special Resolution Regimes” has the meaning specified therefor in Section 17.15 of this  Agreement.          “Voidable Transfer” has the meaning specified therefor in Section 17.8 of this Agreement.         “Wells Fargo” means Wells Fargo Bank, National Association, a national banking association.         “Withdrawal Liability” means liability with respect to a Multiemployer Plan as a result of a  complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part 1 of  Subtitle E of Title IV of ERISA.                                             52  125672876_9 

 

         “Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the  write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In  Legislation for the applicable EEA Member Country, which write-down and conversion powers are  described in the EU Bail-In Legislation Schedule.          1.2   Accounting Terms. All accounting terms not specifically defined herein shall be construed  in accordance with GAAP; provided, that if Administrative Borrower notifies Agent that Borrowers request  an amendment to any provision hereof to eliminate the effect of any Accounting Change occurring after the  Closing Date or in the application thereof on the operation of such provision (or if Agent notifies  Administrative Borrower that the Required Lenders request an amendment to any provision hereof for such  purpose), regardless of whether any such notice is given before or after such Accounting Change or in the  application thereof, then Agent and Borrowers agree that they will negotiate in good faith amendments to  the provisions of this Agreement that are directly affected by such Accounting Change with the intent of  having the respective positions of the Lenders and Borrowers after such Accounting Change conform as  nearly as possible to their respective positions immediately before such Accounting Change took effect  and, until any such amendments have been agreed upon and agreed to by the Required Lenders, the  provisions in this Agreement shall be calculated as if no such Accounting Change had occurred. When used  herein, the term “financial statements” shall include the notes and schedules thereto. Whenever the term  “Borrowers” is used in respect of a financial covenant or a related definition, it shall be understood to mean  the Loan Parties and their Subsidiaries on a consolidated basis, unless the context clearly requires otherwise.  Notwithstanding anything to the contrary contained herein, (a) all financial statements delivered hereunder  shall be prepared, and all financial covenants contained herein shall be calculated, without giving effect to  any election under the Statement of Financial Accounting Standards Board’s Accounting Standards  Codification Topic 825 (or any similar accounting principle) permitting a Person to value its financial  liabilities or Indebtedness at the fair value thereof, (b) without giving effect to any treatment of Indebtedness  in respect of convertible debt instruments under Financial Accounting Standards Board’s Accounting  Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting  Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner  as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount  thereof, and (c) the term “unqualified opinion” as used herein to refer to opinions or reports provided by  accountants shall mean an opinion or report that is (i) unqualified, and (ii) does not include any explanation,  supplemental comment, or other comment concerning the ability of the applicable Person to continue as a  going concern or concerning the scope of the audit.          1.3   Code. Any terms used in this Agreement that are defined in the Code shall be construed  and defined as set forth in the Code unless otherwise defined herein; provided, that to the extent that the  Code is used to define any term herein and such term is defined differently in different Articles of the Code,  the definition of such term contained in Article 9 of the Code shall govern.          1.4   Construction. Unless the context of this Agreement or any other Loan Document clearly  requires otherwise, references to the plural include the singular, references to the singular include the plural,  the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise  indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,”  “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan Document refer to this  Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision  of this Agreement or such other Loan Document, as the case may be. Section, subsection, clause, schedule,  and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this  Agreement or in any other Loan Document to any agreement, instrument, or document shall include all  alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions,  joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations,  amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and                                             53  125672876_9 

 

   supplements set forth herein). The words “asset” and “property” shall be construed to have the same  meaning and effect and to refer to any and all tangible and intangible assets and properties. Any reference  herein or in any other Loan Document to the satisfaction, repayment, or payment in full of the Obligations  shall mean (a) the payment or repayment in full in immediately available funds of (i) the principal amount  of, and interest accrued and unpaid with respect to, all outstanding Loans, together with the payment of any  premium applicable to the repayment of the Loans, (ii) all Lender Group Expenses that have accrued and  are unpaid regardless of whether demand has been made therefor, and (iii) all fees or charges that have  accrued hereunder or under any other Loan Document (including the Letter of Credit Fee and the Unused  Line Fee) and are unpaid, (b) in the case of contingent reimbursement obligations with respect to Letters of  Credit, providing Letter of Credit Collateralization, (c) in the case of obligations with respect to Bank  Products (other than Hedge Obligations), providing Bank Product Collateralization, (d) the receipt by Agent  of cash collateral in order to secure any other contingent Obligations for which a claim or demand for  payment has been made on or prior to such time or in respect of matters or circumstances known to Agent  or a Lender at such time that are reasonably expected to result in any loss, cost, damage, or expense  (including attorneys’ fees and legal expenses), such cash collateral to be in such amount as Agent  reasonably determines is appropriate to secure such contingent Obligations, (e) the payment or repayment  in full in immediately available funds of all other outstanding Obligations (including the payment of any  termination amount then applicable (or which would or could become applicable as a result of the  repayment of the other Obligations) under Hedge Agreements provided by Hedge Providers) other than (i)  unasserted contingent indemnification Obligations, (ii) any Bank Product Obligations (other than Hedge  Obligations) that, at such time, are allowed by the applicable Bank Product Provider to remain outstanding  without being required to be repaid or cash collateralized, and (iii) any Hedge Obligations that, at such time,  are allowed by the applicable Hedge Provider to remain outstanding without being required to be repaid,  and (f) the termination of all of the Commitments of the Lenders. Any reference herein to any Person shall  be construed to include such Person’s successors and assigns. Any requirement of a writing contained  herein or in any other Loan Document shall be satisfied by the transmission of a Record.          1.5   Time References. Unless the context of this Agreement or any other Loan Document  clearly requires otherwise, all references to time of day refer to Central standard time or Central daylight  saving time, as in effect in Chicago, Illinois, on such day. For purposes of the computation of a period of  time from a specified date to a later specified date, unless otherwise expressly provided, the word “from”  means “from and including” and the words “to” and “until” each means “to and including”; provided, that  with respect to a computation of fees or interest payable to Agent or any Lender, such period shall in any  event consist of at least one full day.          1.6   Schedules and Exhibits. All of the schedules and exhibits attached to this Agreement shall  be deemed incorporated herein by reference.          1.7   Divisions. For all purposes under the Loan Documents, in connection with any division or  plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if  any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a  different Person, then it shall be deemed to have been transferred from the original Person to the subsequent  Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been  organized on the first date of its existence by the holders of its Equity Interests at such time.   2.     LOANS AND TERMS OF PAYMENT.          2.1   Revolving Loans.                (a)    Subject to the terms and conditions of this Agreement, and during the term of this  Agreement, each Revolving Lender agrees (severally, not jointly or jointly and severally) to make revolving                                             54  125672876_9 

 

   loans (“Revolving Loans”) to Borrowers in an amount at any one time outstanding not to exceed the lesser  of:                        (i)    such Lender’s Revolver Commitment, or                        (ii)   such Lender’s Pro Rata Share of an amount equal to the lesser of:   (A)   the amount equal to (1) the Maximum Revolver Amount, less (2) the sum of (y) the Letter of Credit        Usage at such time, plus (z) the principal amount of Swing Loans outstanding at such time, and   (B)    the amount equal to (1) the Borrowing Base as of such date (based upon the most recent Borrowing         Base Certificate delivered by Borrowers to Agent, as adjusted for Reserves established by Agent         in accordance with Section 2.1(c)), less (2) the sum of (x) the Letter of Credit Usage at such time,        plus (y) the principal amount of Swing Loans outstanding at such time.                (b)    Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to the  terms and conditions of this Agreement, reborrowed at any time during the term of this Agreement. The  outstanding principal amount of the Revolving Loans, together with interest accrued and unpaid thereon,  shall constitute Obligations and shall be due and payable on the Maturity Date or, if earlier, on the date on  which they otherwise become due and payable pursuant to the terms of this Agreement.                (c)    Anything to the contrary in this Section 2.1 notwithstanding, Agent shall have the  right (but not the obligation) at any time, in the exercise of its Permitted Discretion, to establish and increase  or decrease Reserves and against the Borrowing Base, the Term Loan Borrowing Base, or the Maximum  Revolver Amount; provided, that Agent shall notify Borrowers at the time any such Reserve in a material  amount is to be established or increased, but a non-willful failure of Agent to so notify Borrowers shall not  be a breach of this Agreement and shall not cause such establishment or increase of any such Reserve to be  ineffective. The amount of any Reserve established by Agent, and any changes to the eligibility criteria set  forth in the definitions of Eligible Accounts, Eligible Credit Card Receivables, Eligible Inventory, Eligible  Finished Goods Inventory, Eligible Spare Parts Inventory, Eligible In-Transit Inventory, and Eligible IP,  shall have a reasonable relationship to the event, condition, other circumstance, or fact that is the basis for  such reserve or change in eligibility and shall not be duplicative of any other reserve established and  currently maintained or eligibility criteria. Upon notice of or establishment or increase in Reserves, Agent  agrees to make itself available to discuss the Reserve or increase, and Borrowers may take such action as  may be required so that the event, condition, circumstance, or fact that is the basis for such Reserve or  increase no longer exists, in a manner and to the extent reasonably satisfactory to Agent in the exercise of  its Permitted Discretion. In no event shall such notice and opportunity limit the right of Agent to establish  or change such Reserve, unless Agent shall have determined, in its Permitted Discretion, that the event,  condition, other circumstance, or fact that was the basis for such Reserve or such change no longer exists  or has otherwise been adequately addressed by Borrowers.           2.2   Term Loan. Subject to the terms and conditions of this Agreement, on the Closing Date  each Lender with a Term Loan Commitment agrees (severally, not jointly or jointly and severally) to make  term loans (collectively, the “Term Loan”) to Borrowers in an amount equal to the lesser of (a) such  Lender’s Term Loan Commitment, and (b) such Lender’s Pro Rata Share of the lesser of (i) the Term Loan  Amount and (ii) the Term Loan Borrowing Base (based upon the Borrowing Base Certificate delivered by  Borrowers to Agent on the Closing Date). The principal of the Term Loan shall be repaid on the following  dates and in the following amounts:                                              55  125672876_9 

 

                             Date                     Installment Amount                        February 29, 2020                  $125,000                         March 31, 2020                    $125,000                         April 30, 2020                    $125,000                         May 31, 2020                      $125,000                         June 30, 2020                     $125,000                          July 31, 2020                    $125,000                        August 31, 2020                    $125,000                       September 30, 2020                  $125,000                        October 31, 2020                   $125,000                       November 30, 2020                   $125,000                       December 31, 2020                   $125,000                        January 31, 2021                   $125,000                        February 28, 2021                  $250,000                         March 31, 2021                    $250,000                         April 30, 2021                    $250,000                         May 31, 2021                      $250,000                         June 30, 2021                     $250,000                          July 31, 2021                    $250,000                        August 31, 2021                    $250,000                       September 30, 2021                  $250,000                        October 31, 2021                   $250,000                       November 30, 2021                   $250,000                       December 31, 2021                   $250,000                                              56  125672876_9 

 

                             Date                     Installment Amount                        January 31, 2022                   $250,000                        February 28, 2022                 $291,666.67                March 31, 2022, and the last day of                     each month thereafter               $291,666.67   The outstanding unpaid principal balance and all accrued and unpaid interest on the Term Loan shall be  due and payable on the earlier of (i) the Maturity Date, and (ii) the date on which the Term Loan otherwise  becomes due and payable pursuant to the terms of this Agreement. Any principal amount of the Term Loan  that is repaid or prepaid may not be reborrowed. All principal of, interest on, and other amounts payable in  respect of the Term Loan shall constitute Obligations hereunder.          2.3   Borrowing Procedures and Settlements.                (a)    Procedure for Borrowing Revolving Loans. Each Borrowing shall be made by  a written request by an Authorized Person delivered to Agent (which may be delivered through Agent’s  electronic platform or portal) and received by Agent no later than 1:00 p.m. (i) on the Business Day that is  the requested Funding Date in the case of a request for a Swing Loan, (ii) on the Business Day that is  one Business Day prior to the requested Funding Date in the case of a request for a Base Rate Loan, and  (iii) on the Business Day that is three Business Days prior to the requested Funding Date in the case of all  other requests, specifying (A) the amount of such Borrowing, and (B) the requested Funding Date (which  shall be a Business Day); provided, that Agent may, in its sole discretion, elect to accept as timely requests  that are received later than 1:00 p.m. on the applicable Business Day. All Borrowing requests which are not  made on-line via Agent’s electronic platform or portal shall be subject to (and unless Agent elects otherwise  in the exercise of its sole discretion, such Borrowings shall not be made until the completion of) Agent’s  authentication process (with results satisfactory to Agent) prior to the funding of any such requested  Revolving Loan.                (b)    Making of Swing Loans. In the case of a Revolving Loan and so long as any of  (i) the aggregate amount of Swing Loans made since the last Settlement Date, minus all payments or other  amounts applied to Swing Loans since the last Settlement Date, plus the amount of the requested Swing  Loan does not exceed the greater of 10% of the Maximum Revolver Amount and $5,500,000, or (ii) Swing  Lender, in its sole discretion, agrees to make a Swing Loan notwithstanding the foregoing limitation, Swing  Lender shall make a Revolving Loan (any such Revolving Loan made by Swing Lender pursuant to this  Section 2.3(b) being referred to as a “Swing Loan” and all such Revolving Loans being referred to as  “Swing Loans”) available to Borrowers on the Funding Date applicable thereto by transferring immediately  available funds in the amount of such Borrowing to the Designated Account. Each Swing Loan shall be  deemed to be a Revolving Loan hereunder and shall be subject to all the terms and conditions (including  Section 3) applicable to other Revolving Loans, except that all payments (including interest) on any Swing  Loan shall be payable to Swing Lender solely for its own account. Subject to the provisions of  Section 2.3(d)(ii), Swing Lender shall not make and shall not be obligated to make any Swing Loan if  Swing Lender has actual knowledge that (i) one or more of the applicable conditions precedent set forth in  Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing, or (ii) the  requested Borrowing would exceed the Availability on such Funding Date. Swing Lender shall not  otherwise be required to determine whether the applicable conditions precedent set forth in Section 3 have  been satisfied on the Funding Date applicable thereto prior to making any Swing Loan. The Swing Loans                                             57  125672876_9 

 

   shall be secured by Agent’s Liens, constitute Revolving Loans and Obligations, and bear interest at the rate  applicable from time to time to Revolving Loans that are Base Rate Loans.                (c)    Making of Revolving Loans.                        (i)    In the event that Swing Lender is not obligated to make a Swing Loan,  then after receipt of a request for a Borrowing pursuant to Section 2.3(a)(i), Agent shall notify the Lenders  by telecopy, telephone, email, or other electronic form of transmission, of the requested Borrowing; such  notification to be sent on the Business Day that is (A) in the case of a Base Rate Loan, at least one Business  Day prior to the requested Funding Date, or (B) in the case of a LIBOR Rate Loan, prior to 1:00 p.m. at  least three Business Days prior to the requested Funding Date. If Agent has notified the Lenders of a  requested Borrowing on the Business Day that is one Business Day prior to the Funding Date, then each  Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available to  Agent in immediately available funds, to Agent’s Account, not later than noon on the Business Day that is  the requested Funding Date. After Agent’s receipt of the proceeds of such Revolving Loans from the  Lenders, Agent shall make the proceeds thereof available to Borrowers on the applicable Funding Date by  transferring immediately available funds equal to such proceeds received by Agent to the Designated  Account; provided, that subject to the provisions of Section 2.3(d)(ii), no Lender shall have an obligation  to make any Revolving Loan, if (1) one or more of the applicable conditions precedent set forth in Section 3  will not be satisfied on the requested Funding Date for the applicable Borrowing unless such condition has  been waived, or (2) the requested Borrowing would exceed the Availability on such Funding Date.                        (ii)   Unless Agent receives notice from a Lender prior to 11:30 a.m. on the  Business Day that is the requested Funding Date relative to a requested Borrowing as to which Agent has  notified the Lenders of a requested Borrowing that such Lender will not make available as and when  required hereunder to Agent for the account of Borrowers the amount of that Lender’s Pro Rata Share of  the Borrowing, Agent may assume that each Lender has made or will make such amount available to Agent  in immediately available funds on the Funding Date and Agent may (but shall not be so required), in reliance  upon such assumption, make available to Borrowers a corresponding amount. If, on the requested Funding  Date, any Lender shall not have remitted the full amount that it is required to make available to Agent in  immediately available funds and if Agent has made available to Borrowers such amount on the requested  Funding Date, then such Lender shall make the amount of such Lender’s Pro Rata Share of the requested  Borrowing available to Agent in immediately available funds, to Agent’s Account, no later than noon on  the Business Day that is the first Business Day after the requested Funding Date (in which case, the interest  accrued on such Lender’s portion of such Borrowing for the Funding Date shall be for Agent’s separate  account). If any Lender shall not remit the full amount that it is required to make available to Agent in  immediately available funds as and when required hereby and if Agent has made available to Borrowers  such amount, then that Lender shall be obligated to immediately remit such amount to Agent, together with  interest at the Defaulting Lender Rate for each day until the date on which such amount is so remitted. A  notice submitted by Agent to any Lender with respect to amounts owing under this Section 2.3(c)(ii) shall  be conclusive, absent manifest error. If the amount that a Lender is required to remit is made available to  Agent, then such payment to Agent shall constitute such Lender’s Revolving Loan for all purposes of this  Agreement. If such amount is not made available to Agent on the Business Day following the Funding  Date, Agent will notify Administrative Borrower of such failure to fund and, upon demand by Agent,  Borrowers shall pay such amount to Agent for Agent’s account, together with interest thereon for each day  elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the  time to the Revolving Loans composing such Borrowing.                (d)    Protective Advances and Optional Overadvances.                                              58  125672876_9 

 

                        (i)    Any contrary provision of this Agreement or any other Loan Document  notwithstanding (but subject to Section 2.3(d)(iv)), at any time (A) after the occurrence and during the  continuance of a Default or an Event of Default, or (B) that any of the other applicable conditions precedent  set forth in Section 3 are not satisfied, Agent hereby is authorized by Borrowers and the Lenders, from time  to time, in Agent’s sole discretion, to make Revolving Loans to, or for the benefit of, Borrowers, on behalf  of the Revolving Lenders, that Agent, in its Permitted Discretion, deems necessary or desirable (1) to  preserve or protect the Collateral, or any portion thereof, or (2) to enhance the likelihood of repayment of  the Obligations (other than the Bank Product Obligations) (the Revolving Loans described in this  Section 2.3(d)(i) shall be referred to as “Protective Advances”).                         (ii)   Any contrary provision of this Agreement or any other Loan Document  notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as applicable, and either Agent or  Swing Lender, as applicable, may, but is not obligated to, knowingly and intentionally, continue to make  Revolving Loans (including Swing Loans) to Borrowers notwithstanding that an Overadvance exists or  would be created thereby, so long as (A) after giving effect to such Revolving Loans, the outstanding  Revolver Usage does not exceed the Borrowing Base by more than 10% of the Borrowing Base, and  (B) subject to Section 2.3(d)(iv) below, after giving effect to such Revolving Loans, the outstanding  Revolver Usage (except for and excluding amounts charged to the Loan Account for interest, fees, or Lender  Group Expenses) does not exceed the Maximum Revolver Amount. In the event Agent obtains actual  knowledge that the Revolver Usage exceeds the amounts permitted by this Section 2.3(d), regardless of the  amount of, or reason for, such excess, Agent shall notify the Lenders as soon as practicable (and prior to  making any (or any additional) intentional Overadvances (except for and excluding amounts charged to the  Loan Account for interest, fees, or Lender Group Expenses) unless Agent determines that prior notice would  result in imminent harm to the Collateral or its value, in which case Agent may make such Overadvances  and provide notice as promptly as practicable thereafter), and the Lenders with Revolver Commitments  thereupon shall, together with Agent, jointly determine the terms of arrangements that shall be implemented  with Borrowers intended to reduce, within a reasonable time, the outstanding principal amount of the  Revolving Loans to Borrowers to an amount permitted by the preceding sentence. In such circumstances,  if any Lender with a Revolver Commitment objects to the proposed terms of reduction or repayment of any  Overadvance, the terms of reduction or repayment thereof shall be implemented according to the  determination of the Required Lenders.                        (iii)  Each Protective Advance and each Overadvance (each, an  “Extraordinary Advance”) shall be deemed to be a Revolving Loan hereunder, except that no Extraordinary  Advance shall be eligible to be a LIBOR Rate Loan. Prior to Settlement of any Extraordinary Advance, all  payments with respect thereto, including interest thereon, shall be payable to Agent solely for its own  account. Each Revolving Lender shall be obligated to settle with Agent as provided in Section 2.3(e) (or  Section 2.3(g), as applicable) for the amount of such Lender’s Pro Rata Share of any Extraordinary  Advance. The Extraordinary Advances shall be repayable on demand, secured by Agent’s Liens, constitute  Obligations hereunder, and bear interest at the rate applicable from time to time to Revolving Loans that  are Base Rate Loans. The provisions of this Section 2.3(d) are for the exclusive benefit of Agent, Swing  Lender, and the Lenders and are not intended to benefit Borrowers (or any other Loan Party) in any way.                        (iv)   Notwithstanding anything contained in this Agreement or any other Loan  Document to the contrary, no Extraordinary Advance may be made by Agent if such Extraordinary Advance  would cause the aggregate Revolver Usage to exceed the Maximum Revolver Amount or any Lender’s Pro  Rata Share of the Revolver Usage to exceed such Lender’s Revolver Commitments; provided that Agent  may make Extraordinary Advances in excess of the foregoing limitations so long as such Extraordinary  Advances that cause the aggregate Revolver Usage to exceed the Maximum Revolver Amount or a Lender’s  Pro Rata Share of the Revolver Usage to exceed such Lender’s Revolver Commitments are for Agent’s sole  and separate account and not for the account of any Lender. No Lender shall have an obligation to settle                                             59  125672876_9 

 

   with Agent for such Extraordinary Advances that cause the aggregate Revolver Usage to exceed the  Maximum Revolver Amount or a Lender’s Pro Rata Share of the Revolver Usage to exceed such Lender’s  Revolver Commitments as provided in Section 2.3(e) (or Section 2.3(g), as applicable).                (e)    Settlement. It is agreed that each Lender’s funded portion of the Revolving Loans  is intended by the Lenders to equal, at all times, such Lender’s Pro Rata Share of the outstanding Revolving  Loans. Such agreement notwithstanding, Agent, Swing Lender, and the other Lenders agree (which  agreement shall not be for the benefit of Borrowers) that in order to facilitate the administration of this  Agreement and the other Loan Documents, settlement among the Lenders as to the Revolving Loans  (including Swing Loans and Extraordinary Advances) shall take place on a periodic basis in accordance  with the following provisions:                        (i)    Agent shall request settlement (“Settlement”) with the Lenders on a  weekly basis, or on a more frequent basis if so determined by Agent in its sole discretion (1) on behalf of  Swing Lender, with respect to the outstanding Swing Loans, (2) for itself, with respect to the outstanding  Extraordinary Advances, and (3) with respect to any Loan Party’s or any of their Subsidiaries’ payments or  other amounts received, as to each by notifying the Lenders by telecopy, telephone, or other similar form  of transmission, of such requested Settlement, no later than 4:00 p.m. on the Business Day immediately  prior to the date of such requested Settlement (the date of such requested Settlement being the “Settlement  Date”). Such notice of a Settlement Date shall include a summary statement of the amount of outstanding  Revolving Loans (including Swing Loans and Extraordinary Advances) for the period since the prior  Settlement Date. Subject to the terms and conditions contained herein (including Section 2.3(g)): (y) if the  amount of the Revolving Loans (including Swing Loans and Extraordinary Advances) made by a Lender  that is not a Defaulting Lender exceeds such Lender’s Pro Rata Share of the Revolving Loans (including  Swing Loans and Extraordinary Advances) as of a Settlement Date, then Agent shall, by no later than  2:00 p.m. on the Settlement Date, transfer in immediately available funds to a Deposit Account of such  Lender (as such Lender may designate), an amount such that each such Lender shall, upon receipt of such  amount, have as of the Settlement Date, its Pro Rata Share of the Revolving Loans (including Swing Loans  and Extraordinary Advances), and (z) if the amount of the Revolving Loans (including Swing Loans and  Extraordinary Advances) made by a Lender is less than such Lender’s Pro Rata Share of the Revolving  Loans (including Swing Loans and Extraordinary Advances) as of a Settlement Date, such Lender shall no  later than 2:00 p.m. on the Settlement Date transfer in immediately available funds to Agent’s Account, an  amount such that each such Lender shall, upon transfer of such amount, have as of the Settlement Date, its  Pro Rata Share of the Revolving Loans (including Swing Loans and Extraordinary Advances). Such  amounts made available to Agent under clause (z) of the immediately preceding sentence shall be applied  against the amounts of the applicable Swing Loans or Extraordinary Advances and, together with the  portion of such Swing Loans or Extraordinary Advances representing Swing Lender’s Pro Rata Share  thereof, shall constitute Revolving Loans of such Lenders. If any such amount is not made available to  Agent by any Lender on the Settlement Date applicable thereto to the extent required by the terms hereof,  Agent shall be entitled to recover for its account such amount on demand from such Lender together with  interest thereon at the Defaulting Lender Rate.                        (ii)   In determining whether a Lender’s balance of the Revolving Loans  (including Swing Loans and Extraordinary Advances) is less than, equal to, or greater than such Lender’s  Pro Rata Share of the Revolving Loans (including Swing Loans and Extraordinary Advances) as of a  Settlement Date, Agent shall, as part of the relevant Settlement, apply to such balance the portion of  payments actually received in good funds by Agent with respect to principal, interest, fees payable by  Borrowers and allocable to the Lenders hereunder, and proceeds of Collateral.                        (iii)  Between Settlement Dates, Agent, to the extent Extraordinary Advances  or Swing Loans are outstanding, may pay over to Agent or Swing Lender, as applicable, any payments or                                             60  125672876_9 

 

   other amounts received by Agent, that in accordance with the terms of this Agreement would be applied to  the reduction of the Revolving Loans, for application to the Extraordinary Advances or Swing Loans.  Between Settlement Dates, Agent, to the extent no Extraordinary Advances or Swing Loans are outstanding,  may pay over to Swing Lender any payments or other amounts received by Agent, that in accordance with  the terms of this Agreement would be applied to the reduction of the Revolving Loans, for application to  Swing Lender’s Pro Rata Share of the Revolving Loans. If, as of any Settlement Date, payments or other  amounts of the Loan Parties or their Subsidiaries received since the then immediately preceding Settlement  Date have been applied to Swing Lender’s Pro Rata Share of the Revolving Loans other than to Swing  Loans, as provided for in the previous sentence, Swing Lender shall pay to Agent for the accounts of the  Lenders, and Agent shall pay to the Lenders (other than a Defaulting Lender if Agent has implemented the  provisions of Section 2.3(g)), to be applied to the outstanding Revolving Loans of such Lenders, an amount  such that each such Lender shall, upon receipt of such amount, have, as of such Settlement Date, its Pro  Rata Share of the Revolving Loans. During the period between Settlement Dates, Swing Lender with  respect to Swing Loans, Agent with respect to Extraordinary Advances, and each Lender with respect to  the Revolving Loans other than Swing Loans and Extraordinary Advances, shall be entitled to interest at  the applicable rate or rates payable under this Agreement on the daily amount of funds employed by Swing  Lender, Agent, or the Lenders, as applicable.                        (iv)   Anything in this Section 2.3(e) to the contrary notwithstanding, in the  event that a Lender is a Defaulting Lender, Agent shall be entitled to refrain from remitting settlement  amounts to the Defaulting Lender and, instead, shall be entitled to elect to implement the provisions set  forth in Section 2.3(g).                (f)    Notation. Consistent with Section 13.1(h), Agent, as a non-fiduciary agent for  Borrowers, shall maintain a register showing the principal amount and stated interest of the Revolving  Loans (and portion of the Term Loan, as applicable) owing to each Lender, including the Swing Loans  owing to Swing Lender, and Extraordinary Advances owing to Agent, and the interests therein of each  Lender, from time to time and such register shall, absent manifest error, conclusively be presumed to be  correct and accurate.                (g)    Defaulting Lenders.                        (i)    Notwithstanding the provisions of Section 2.4(b)(iii), Agent shall not be  obligated to transfer to a Defaulting Lender any payments made by Borrowers to Agent for the Defaulting  Lender’s benefit or any proceeds of Collateral that would otherwise be remitted hereunder to the Defaulting  Lender, and, in the absence of such transfer to the Defaulting Lender, Agent shall transfer any such  payments (A) first, to Agent to the extent of any Extraordinary Advances that were made by Agent and that  were required to be, but were not, paid by Defaulting Lender, (B) second, to Swing Lender to the extent of  any Swing Loans that were made by Swing Lender and that were required to be, but were not, paid by the  Defaulting Lender, (C) third, to Issuing Bank, to the extent of the portion of a Letter of Credit Disbursement  that was required to be, but was not, paid by the Defaulting Lender, (D) fourth, to each Non-Defaulting  Lender ratably in accordance with their Commitments (but, in each case, only to the extent that such  Defaulting Lender’s portion of a Revolving Loan (or other funding obligation) was funded by such other  Non-Defaulting Lender), (E) fifth, in Agent’s sole discretion, to a suspense account maintained by Agent,  the proceeds of which shall be retained by Agent and may be made available to be re-advanced to or for the  benefit of Borrowers (upon the request of Borrowers and subject to the conditions set forth in Section 3.2)  as if such Defaulting Lender had made its portion of Revolving Loans (or other funding obligations)  hereunder, and (F) sixth, from and after the date on which all other Obligations have been paid in full, to  such Defaulting Lender in accordance with tier (L) of Section 2.4(b)(iii). Subject to the foregoing, Agent  may hold and, in its discretion, re-lend to Borrowers for the account of such Defaulting Lender the amount  of all such payments received and retained by Agent for the account of such Defaulting Lender. Solely for                                             61  125672876_9 

 

   the purposes of voting or consenting to matters with respect to the Loan Documents (including the  calculation of Pro Rata Share in connection therewith) and for the purpose of calculating the fee payable  under Section 2.10(b), such Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s  Commitment shall be deemed to be zero; provided, that the foregoing shall not apply to any of the matters  governed by Section 14.1(a)(i) through (iii). The provisions of this Section 2.3(g) shall remain effective  with respect to such Defaulting Lender until the earlier of (y) the date on which all of the Non-Defaulting  Lenders, Agent, Issuing Bank, and Borrowers shall have waived, in writing, the application of this  Section 2.3(g) to such Defaulting Lender, or (z) the date on which such Defaulting Lender makes payment  of all amounts that it was obligated to fund hereunder, pays to Agent all amounts owing by Defaulting  Lender in respect of the amounts that it was obligated to fund hereunder, and, if requested by Agent,  provides adequate assurance of its ability to perform its future obligations hereunder (on which earlier date,  so long as no Event of Default has occurred and is continuing, any remaining cash collateral held by Agent  pursuant to Section 2.3(g)(ii) shall be released to Borrowers). The operation of this Section 2.3(g) shall not  be construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the  performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to  relieve or excuse the performance by any Borrower of its duties and obligations hereunder to Agent, Issuing  Bank, or to the Lenders other than such Defaulting Lender. Any failure by a Defaulting Lender to fund  amounts that it was obligated to fund hereunder shall constitute a material breach by such Defaulting Lender  of this Agreement and shall entitle Borrowers, at their option, upon written notice to Agent, to arrange for  a substitute Lender to assume the Commitment of such Defaulting Lender, such substitute Lender to be  reasonably acceptable to Agent. In connection with the arrangement of such a substitute Lender, the  Defaulting Lender shall have no right to refuse to be replaced hereunder, and agrees to execute and deliver  a completed form of Assignment and Acceptance in favor of the substitute Lender (and agrees that it shall  be deemed to have executed and delivered such document if it fails to do so) subject only to being paid its  share of the outstanding Obligations (other than Bank Product Obligations, but including (1) all interest,  fees, and other amounts that may be due and payable in respect thereof, and (2) an assumption of its Pro  Rata Share of its participation in the Letters of Credit); provided, that any such assumption of the  Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Lender  Groups’ or Borrowers’ rights or remedies against any such Defaulting Lender arising out of or in relation  to such failure to fund. In the event of a direct conflict between the priority provisions of this Section 2.3(g)  and any other provision contained in this Agreement or any other Loan Document, it is the intention of the  parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in  concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as  aforesaid, the terms and provisions of this Section 2.3(g) shall control and govern.                        (ii)   If any Swing Loan or Letter of Credit is outstanding at the time that a  Lender becomes a Defaulting Lender then:   (A)   such Defaulting Lender’s Swing Loan Exposure and Letter of Credit Exposure shall be reallocated        among the Non-Defaulting Lenders in accordance with their respective Pro Rata Shares but only        to the extent (x) the sum of all Non-Defaulting Lenders’ Pro Rata Share of Revolver Usage plus        such Defaulting Lender’s Swing Loan Exposure and Letter of Credit Exposure does not exceed the        total of all Non-Defaulting Lenders’ Revolver Commitments and (y) the conditions set forth in        Section 3.2 are satisfied at such time;    (B)   if the reallocation described in clause (A) above cannot, or can only partially, be effected,        Borrowers shall within one Business Day following notice by the Agent (x) first, prepay such        Defaulting Lender’s Swing Loan Exposure (after giving effect to any partial reallocation pursuant        to clause (A) above), and (y) second, cash collateralize such Defaulting Lender’s Letter of Credit        Exposure (after giving effect to any partial reallocation pursuant to clause (A) above), pursuant to        a cash collateral agreement to be entered into in form and substance reasonably satisfactory to the                                             62  125672876_9 

 

         Agent, for so long as such Letter of Credit Exposure is outstanding; provided, that Borrowers shall        not be obligated to cash collateralize any Defaulting Lender’s Letter of Credit Exposure if such        Defaulting Lender is also Issuing Bank;   (C)   if Borrowers cash collateralize any portion of such Defaulting Lender’s Letter of Credit Exposure        pursuant to this Section 2.3(g)(ii), Borrowers shall not be required to pay any Letter of Credit Fees        to Agent for the account of such Defaulting Lender pursuant to Section 2.6(b) with respect to such        cash collateralized portion of such Defaulting Lender’s Letter of Credit Exposure during the period        such Letter of Credit Exposure is cash collateralized;   (D)   to the extent the Letter of Credit Exposure of the Non-Defaulting Lenders is reallocated pursuant        to this Section 2.3(g)(ii), then the Letter of Credit Fees payable to the Non-Defaulting Lenders        pursuant to Section 2.6(b) shall be adjusted in accordance with such Non-Defaulting Lenders’        Letter of Credit Exposure;   (E)   to the extent any Defaulting Lender’s Letter of Credit Exposure is neither cash collateralized nor        reallocated pursuant to this Section 2.3(g)(ii), then, without prejudice to any rights or remedies of        Issuing Bank or any Lender hereunder, all Letter of Credit Fees that would have otherwise been        payable to such Defaulting Lender under Section 2.6(b) with respect to such portion of such Letter        of Credit Exposure shall instead be payable to Issuing Bank until such portion of such Defaulting        Lender’s Letter of Credit Exposure is cash collateralized or reallocated;   (F)   so long as any Lender is a Defaulting Lender, the Swing Lender shall not be required to make any        Swing Loan and Issuing Bank shall not be required to issue, amend, or increase any Letter of Credit,        in each case, to the extent (x) the Defaulting Lender’s Pro Rata Share of such Swing Loans or Letter        of Credit cannot be reallocated pursuant to this Section 2.3(g)(ii), or (y) the Swing Lender or        Issuing Bank, as applicable, has not otherwise entered into arrangements reasonably satisfactory to        the Swing Lender or Issuing Bank, as applicable, and Borrowers to eliminate the Swing Lender’s        or Issuing Bank’s risk with respect to the Defaulting Lender’s participation in Swing Loans or        Letters of Credit; and   (G)   Agent may release any cash collateral provided by Borrowers pursuant to this Section 2.3(g)(ii) to        Issuing Bank and Issuing Bank may apply any such cash collateral to the payment of such        Defaulting Lender’s Pro Rata Share of any Letter of Credit Disbursement that is not reimbursed by        Borrowers pursuant to Section 2.11(d). Subject to Section 17.14, no reallocation hereunder shall        constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender        arising from that Lender having become a Defaulting Lender, including any claim of a Non-       Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such        reallocation.                (h)    Independent Obligations. All Revolving Loans (other than Swing Loans and  Extraordinary Advances) shall be made by the Lenders contemporaneously and in accordance with their  Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by any other Lender  to perform its obligation to make any Revolving Loan (or other extension of credit) hereunder, nor shall  any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to  perform its obligations hereunder, and (ii) no failure by any Lender to perform its obligations hereunder  shall excuse any other Lender from its obligations hereunder.                                              63  125672876_9 

 

         2.4    Payments; Reductions of Commitments; Prepayments.                (a)    Payments by Borrowers.                        (i)    Except as otherwise expressly provided herein, all payments by  Borrowers shall be made to Agent’s Account for the account of the Lender Group and shall be made in  immediately available funds, no later than 3:30 p.m. on the date specified herein; provided that, for the  avoidance of doubt, any payments deposited into a Controlled Account shall be deemed not to be received  by Agent on any Business Day unless immediately available funds have been credited to Agent’s Account  prior to 3:30 p.m. on such Business Day. Any payment received by Agent in immediately available funds  in Agent’s Account later than 3:30 p.m. shall be deemed to have been received (unless Agent, in its sole  discretion, elects to credit it on the date received) on the following Business Day and any applicable interest  or fee shall continue to accrue until such following Business Day.                        (ii)   Unless Agent receives notice from Borrowers prior to the date on which  any payment is due to the Lenders that Borrowers will not make such payment in full as and when required,  Agent may assume that Borrowers have made (or will make) such payment in full to Agent on such date in  immediately available funds and Agent may (but shall not be so required), in reliance upon such assumption,  distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to  the extent Borrowers do not make such payment in full to Agent on the date when due, each Lender  severally shall repay to Agent on demand such amount distributed to such Lender, together with interest  thereon at the Defaulting Lender Rate for each day from the date such amount is distributed to such Lender  until the date repaid.                (b)    Apportionment and Application.                        (i)    So long as no Application Event has occurred and is continuing and  except as otherwise provided herein with respect to Defaulting Lenders, all principal and interest payments  received by Agent shall be apportioned ratably among the Lenders (according to the unpaid principal  balance of the Obligations to which such payments relate held by each Lender) and all payments of fees  and expenses received by Agent (other than fees or expenses that are for Agent’s separate account or for  the separate account of Issuing Bank) shall be apportioned ratably among the Lenders having a Pro Rata  Share of the type of Commitment or Obligation to which a particular fee or expense relates.                        (ii)   Subject to Section 2.4(b)(v), Section 2.4(d)(ii), and Section 2.4(e), all  payments to be made hereunder by Borrowers shall be remitted to Agent and all such payments, and all  proceeds of Collateral received by Agent, shall be applied, so long as no Application Event has occurred  and is continuing and except as otherwise provided herein with respect to Defaulting Lenders, to reduce the  balance of the Revolving Loans outstanding and, thereafter, to Borrowers (to be wired to the Designated  Account) or such other Person entitled thereto under applicable law.                        (iii)  At any time that an Application Event has occurred and is continuing and  except as otherwise provided herein with respect to Defaulting Lenders, all payments remitted to Agent and  all proceeds of Collateral received by Agent shall be applied as follows:   (A)   first, to pay any Lender Group Expenses (including cost or expense reimbursements) or indemnities        then due to Agent under the Loan Documents and to pay interest and principal on Extraordinary        Advances that are held solely by Agent pursuant to the terms of Section 2.3(d)(iv), until paid in        full,   (B)   second, to pay any fees or premiums then due to Agent under the Loan Documents, until paid in        full,                                             64  125672876_9 

 

   (C)    third, to pay interest due in respect of all Protective Advances, until paid in full,   (D)   fourth, to pay the principal of all Protective Advances, until paid in full,   (E)    fifth, ratably, to pay any Lender Group Expenses (including cost or expense reimbursements) or         indemnities then due to any of the Lenders under the Loan Documents, until paid in full,   (F)   sixth, ratably, to pay any fees or premiums then due to any of the Lenders under the Loan        Documents, until paid in full,   (G)   seventh, to pay interest accrued in respect of the Swing Loans, until paid in full,   (H)   eighth, to pay the principal of all Swing Loans, until paid in full,   (I)   ninth, ratably, to pay interest accrued in respect of the Revolving Loans (other than Protective        Advances and Swing Loans) and the Term Loan, until paid in full,   (J)   tenth, ratably         (1)    ratably, to pay the principal of all Revolving Loans (other than Protective Advances and               Swing Loans) and the Term Loan, until paid in full,         (2)    to Agent, to be held by Agent, for the benefit of Issuing Bank (and for the ratable benefit               of each of the Lenders that have an obligation to pay to Agent, for the account of Issuing               Bank, a share of each Letter of Credit Disbursement), as cash collateral in an amount up to               103% of the Letter of Credit Usage (to the extent permitted by applicable law, such cash               collateral shall be applied to the reimbursement of any Letter of Credit Disbursement as               and when such disbursement occurs and, if a Letter of Credit expires undrawn, the cash               collateral held by Agent in respect of such Letter of Credit shall, to the extent permitted by               applicable law, be reapplied pursuant to this Section 2.4(b)(iii), beginning with tier (A)               hereof),         (3)    ratably to (y) the Bank Product Providers based upon amounts then certified by each               applicable Bank Product Provider to Agent (in form and substance satisfactory to Agent)               to be due and payable to such Bank Product Provider on account of Bank Product               Obligations, and (z) with any balance to be paid to Agent, to be held by Agent, for the               ratable benefit of the Bank Product Providers, as cash collateral (which cash collateral may               be released by Agent to the applicable Bank Product Provider and applied by such Bank               Product Provider to the payment or reimbursement of any amounts due and payable with               respect to Bank Product Obligations owed to the applicable Bank Product Provider as and               when such amounts first become due and payable and, if and at such time as all such Bank               Product Obligations are paid or otherwise satisfied in full, the cash collateral held by Agent               in respect of such Bank Product Obligations shall be reapplied pursuant to this               Section 2.4(b)(iii), beginning with tier (A) hereof,    (K)   eleventh, to pay any other Obligations other than Obligations owed to Defaulting Lenders,   (L)   twelfth, ratably to pay any Obligations owed to Defaulting Lenders; and   (M)   thirteenth, to Borrowers (to be wired to the Designated Account) or such other Person entitled        thereto under applicable law.                                              65  125672876_9 

 

                        (iv)   Agent promptly shall distribute to each Lender, pursuant to the  applicable wire instructions received from each Lender in writing, such funds as it may be entitled to  receive, subject to a Settlement delay as provided in Section 2.3(e).                        (v)    In each instance, so long as no Application Event has occurred and is  continuing, Section 2.4(b)(ii) shall not apply to any payment made by Borrowers to Agent and specified by  Borrowers to be for the payment of specific Obligations then due and payable (or prepayable) under any  provision of this Agreement or any other Loan Document.                        (vi)   For purposes of Section 2.4(b)(iii), “paid in full” of a type of Obligation  means payment in cash or immediately available funds of all amounts owing on account of such type of  Obligation, including interest accrued after the commencement of any Insolvency Proceeding, default  interest, interest on interest, and expense reimbursements, irrespective of whether any of the foregoing  would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding.                        (vii)  In the event of a direct conflict between the priority provisions of this  Section 2.4 and any other provision contained in this Agreement or any other Loan Document, it is the  intention of the parties hereto that such provisions be read together and construed, to the fullest extent  possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be  resolved as aforesaid, (A) if the conflict relates to the provisions of Section 2.3(g) and this Section 2.4, then  the provisions of Section 2.3(g) shall control and govern, and (B) if otherwise, then the terms and provisions  of this Section 2.4 shall control and govern.                (c)    Reduction of Commitments.                        (i)    Revolver Commitments. The Revolver Commitments shall terminate  on the Maturity Date or earlier termination thereof pursuant to the terms of this Agreement. Borrowers may  reduce the Revolver Commitments, without premium or penalty, to an amount not less than the greater of  (A) $10,000,000 and (B) the sum of (1) the Revolver Usage as of such date, plus (2) the principal amount  of all Revolving Loans not yet made as to which a request has been given by Borrowers under  Section 2.3(a), plus (3) the amount of all Letters of Credit not yet issued as to which a request has been  given by Borrowers pursuant to Section 2.11(a). Each such reduction shall be in an amount which is not  less than $5,000,000 and integral multiples of $1,000,000 in excess thereof (unless the Revolver  Commitments are being reduced to $10,000,000 and the amount of the Revolver Commitments in effect  immediately prior to such reduction are less than $15,000,000), shall be made by providing not less than  five Business Days prior written notice to Agent, and shall be irrevocable. The Revolver Commitments,  once reduced, may not be increased. Each such reduction of the Revolver Commitments shall reduce the  Revolver Commitments of each Lender proportionately in accordance with its ratable share thereof. In  connection with any reduction in the Revolver Commitments prior to the Maturity Date, if any Loan Party  or any of its Subsidiaries owns any Margin Stock, Borrowers shall deliver to Agent an updated Form U-1  (with sufficient additional originals thereof for each Lender), duly executed and delivered by the Borrowers,  together with such other documentation as Agent shall reasonably request, in order to enable Agent and the  Lenders to comply with any of the requirements under Regulations T, U or X of the Federal Reserve Board.                        (ii)   Term Loan Commitments. The Term Loan Commitments shall  terminate upon the making of the Term Loan.                (d)    Optional Prepayments.                        (i)    Revolving Loans. Borrowers may prepay the principal of any Revolving  Loan at any time in whole or in part, without premium or penalty.                                             66  125672876_9 

 

                        (ii)   Term Loan. Borrowers may, upon at least five Business Days prior  written notice to Agent, prepay the principal of the Term Loan, in whole or in part, without premium or  penalty. Each prepayment made pursuant to this Section 2.4(d)(ii) shall be accompanied by the payment of  accrued interest to the date of such payment on the amount prepaid. Each such prepayment shall be applied  against the remaining installments of principal due on the Term Loan in the inverse order of maturity (for  the avoidance of doubt, any amount that is due and payable on the Maturity Date shall constitute an  installment).                (e)    Mandatory Prepayments.                        (i)    Borrowing Base. If, at any time, (A) the Revolver Usage on such date  exceeds (B) the lesser of (x) the Borrowing Base reflected in the Borrowing Base Certificate most recently  delivered by Borrowers to Agent, or (y) the Maximum Revolver Amount, in all cases as adjusted for  Reserves established by Agent in accordance with Section 2.1(c), then Borrowers shall promptly, but in  any event, within one Business Day, prepay the Obligations in accordance with Section 2.4(f)(i)(A) in an  aggregate amount equal to the amount of such excess.                        (ii)   Term Loan Borrowing Base. If, at any time, the outstanding principal  balance of the Term Loan on such date exceeds the Term Loan Borrowing Base reflected in the Borrowing  Base Certificate most recently delivered by Borrowers to Agent, as adjusted for Reserves established by  Agent in accordance with Section 2.1(c), then Borrowers shall promptly, but in any event, within  one Business Day, prepay the outstanding principal balance of the Term Loan in accordance with  Section 2.4(f)(i)(B) in an aggregate amount equal to the amount of such excess.                        (iii)  Dispositions. Within one Business Day of the date of receipt by any  Loan Party or any of its Subsidiaries of the Net Cash Proceeds of any voluntary or involuntary sale or  disposition of assets of any Loan Party or any of its Subsidiaries (including Net Cash Proceeds of insurance  or arising from casualty losses or condemnations and payments in lieu thereof, but excluding Net Cash  Proceeds from sales or dispositions which qualify as Permitted Dispositions under clauses (a), (b), (c), (d),  (e), (j), (k), (l), (m), (n), or (o) of the definition of Permitted Dispositions), Borrowers shall prepay the  outstanding principal amount of the Obligations in accordance with Section 2.4(f)(ii) in an amount equal to  100% of such Net Cash Proceeds received by such Person in connection with such sales or dispositions;  provided, that    (A)   so long as (1) no Default or Event of Default shall have occurred and is continuing or would result        therefrom, (2) Borrowers shall have given Agent prior written notice of Borrowers’ intention to        apply such monies to the costs of replacement of the properties or assets that are the subject of such        sale or disposition or the cost of purchase or construction of other assets useful in the business of        such Loan Party or its Subsidiaries, (3) the monies are held in a Deposit Account in which Agent        has a perfected first-priority security interest, and (4) such Loan Party or its Subsidiary, as        applicable, completes such replacement, purchase, or construction within 180 days after the initial        receipt of such monies, then the Loan Party or such Loan Party’s Subsidiary whose assets were the        subject of such disposition shall have the option to apply such monies to the costs of replacement        of the assets that are the subject of such sale or disposition or the costs of purchase or construction        of other assets useful in the business of such Loan Party or such Subsidiary unless and to the extent        that such applicable period shall have expired without such replacement, purchase, or construction        being made or completed, in which case, any amounts remaining in the Deposit Account referred        to in clause (3) above shall be paid to Agent and applied in accordance with Section 2.4(f)(ii);        provided, that no Loan Party nor any of its Subsidiaries shall have the right to use such Net Cash        Proceeds to make such replacements, purchases, or construction in excess of $5,000,000 in any        given fiscal year; and                                             67  125672876_9 

 

   (B)    nothing contained in this Section 2.4(e)(iii) shall permit any Loan Party or any of its Subsidiaries        to sell or otherwise dispose of any assets other than in accordance with Section 6.4.                        (iv)   Extraordinary Receipts. Within one Business Day of the date of receipt  by any Loan Party or any of its Subsidiaries of any Extraordinary Receipts, Borrowers shall prepay the  outstanding principal amount of the Obligations in accordance with Section 2.4(f)(ii) in an amount equal to  100% of such Extraordinary Receipts, net of any reasonable expenses incurred in collecting such  Extraordinary Receipts.                        (v)    Indebtedness. Within one Business Day of the date of incurrence by any  Loan Party or any of its Subsidiaries of any Indebtedness (other than Permitted Indebtedness), Borrowers  shall prepay the outstanding principal amount of the Obligations in accordance with Section 2.4(f)(ii) in an  amount equal to 100% of the Net Cash Proceeds received by such Person in connection with such  incurrence. The provisions of this Section 2.4(e)(v) shall not be deemed to be implied consent to any such  incurrence otherwise prohibited by the terms of this Agreement.                        (vi)   Equity. Within one Business Day of the date of the issuance by any Loan  Party or any of its Subsidiaries of any Equity Interests (other than (A) in the event that any Loan Party or  any of its Subsidiaries forms any Subsidiary in accordance with the terms hereof, the issuance by such  Subsidiary of Equity Interests to such Loan Party or such Subsidiary, as applicable, (B) the issuance of  Equity Interests by Administrative Borrower to any Person that is an equity holder of Administrative  Borrower prior to such issuance (a “Subject Holder”) so long as such Subject Holder did not acquire any  Equity Interests of Administrative Borrower so as to become a Subject Holder concurrently with, or in  contemplation of, the issuance of such Equity Interests to such Subject Holder, (C) the issuance of Equity  Interests of Administrative Borrower to directors, officers and employees of Administrative Borrower and  its Subsidiaries pursuant to employee stock option plans (or other employee incentive plans or other  compensation arrangements) approved by the Board of Directors, (D) the issuance of Equity Interests of  Administrative Borrower in order to finance the purchase consideration (or a portion thereof) in connection  with a Permitted Acquisition, and (E) the issuance of Equity Interests by a Subsidiary of a Loan Party to its  parent or member in connection with the contribution by such parent or member to such Subsidiary of the  proceeds of an issuance described in clauses (A) through (E) above), Borrowers shall prepay the  outstanding principal amount of the Obligations in accordance with Section 2.4(f)(ii) in an amount equal to  100% of the Net Cash Proceeds received by such Person in connection with such issuance. The provisions  of this Section 2.4(e)(vi) shall not be deemed to be implied consent to any such issuance otherwise  prohibited by the terms of this Agreement.                (f)    Application of Payments.                         (i)    (A) Each prepayment pursuant to Section 2.4(e)(i) shall, (1) so long as  no Application Event shall have occurred and be continuing, be applied, first, to the outstanding principal  amount of the Revolving Loans until paid in full, and second, to cash collateralize the Letters of Credit in  an amount equal to 103% of the then outstanding Letter of Credit Usage, and (2) if an Application Event  shall have occurred and be continuing, be applied in the manner set forth in Section 2.4(b)(iii), and (B) each  prepayment pursuant to Section 2.4(e)(ii) shall (1) so long as no Application Event shall have occurred and  be continuing, be applied to the outstanding principal amount of the Term Loan until paid in full, and (2) if  an Application Event shall have occurred and be continuing, be applied in the manner set forth in  Section 2.4(b)(iii). Each such prepayment of the Term Loan shall be applied against the remaining  installments of principal of the Term Loan in the inverse order of maturity (for the avoidance of doubt, any  amount that is due and payable on the Maturity Date shall constitute an installment).                        (ii)   Each prepayment pursuant to Section 2.4(e)(iii), 2.4(e)(iv), 2.4(e)(v), or  2.4(e)(vi) shall (A) so long as no Application Event shall have occurred and be continuing, be applied, first,                                             68  125672876_9 

 

   to the outstanding principal amount of the Term Loan until paid in full, second, to the outstanding principal  amount of the Revolving Loans (without a corresponding permanent reduction in the Maximum Revolver  Amount), until paid in full, and third, to cash collateralize the Letters of Credit in an amount equal to 103%  of the then outstanding Letter of Credit Usage (without a corresponding permanent reduction in the  Maximum Revolver Amount), and (B) if an Application Event shall have occurred and be continuing, be  applied in the manner set forth in Section 2.4(b)(iii). Each such prepayment of the Term Loan shall be  applied against the remaining installments of principal of the Term Loan in the inverse order of maturity  (for the avoidance of doubt, any amount that is due and payable on the Maturity Date shall constitute an  installment).          2.5   Promise to Pay; Promissory Notes.                (a)    Borrowers agree to pay the Lender Group Expenses on the earlier of (i) the first  day of the month following the date on which the applicable Lender Group Expenses were first incurred,  or (ii) the date on which demand therefor is made by Agent (it being acknowledged and agreed that any  charging of such costs, expenses or Lender Group Expenses to the Loan Account pursuant to the provisions  of Section 2.6(d) shall be deemed to constitute a demand for payment thereof for the purposes of this  subclause (ii)). Borrowers promise to pay all of the Obligations (including principal, interest, premiums, if  any, fees, costs, and expenses (including Lender Group Expenses)) in full on the Maturity Date or, if earlier,  on the date on which the Obligations (other than the Bank Product Obligations) become due and payable  pursuant to the terms of this Agreement. Borrowers agree that their obligations contained in the first  sentence of this Section 2.5(a) shall survive payment or satisfaction in full of all other Obligations.                (b)    Any Lender may request that any portion of its Commitments or the Loans made  by it be evidenced by one or more promissory notes. In such event, Borrowers shall execute and deliver to  such Lender the requested promissory notes payable to the order of such Lender in a form furnished by  Agent and reasonably satisfactory to Borrowers. Thereafter, the portion of the Commitments and Loans  evidenced by such promissory notes and interest thereon shall at all times be represented by one or more  promissory notes in such form payable to the order of the payee named therein.         2.6    Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.                (a)    Interest Rates. Except as provided in Section 2.6(c) and Section 2.12(d), all  Obligations (except for undrawn Letters of Credit) that have been charged to the Loan Account pursuant to  the terms hereof shall bear interest as follows:                        (i)    if the relevant Obligation is a LIBOR Rate Loan, at a per annum rate  equal to the LIBOR Rate plus the LIBOR Rate Margin, and                        (ii)   otherwise, at a per annum rate equal to the Base Rate plus the Base Rate  Margin.                (b)    Letter of Credit Fee. Borrowers shall pay Agent (for the ratable benefit of the  Revolving Lenders), a Letter of Credit fee (the “Letter of Credit Fee”) (which fee shall be in addition to the  fronting fees and commissions, other fees, charges and expenses set forth in Section 2.11(k)) that shall  accrue at a per annum rate equal to the Revolving Loan LIBOR Rate Margin times the average amount of  the Letter of Credit Usage during the immediately preceding month.                (c)    Default Rate. (i) Automatically upon the occurrence and during the continuation  of an Event of Default under Section 8.4 or 8.5 and (ii) upon the occurrence and during the continuation of  any other Event of Default (other than an Event of Default under Section 8.4 or 8.5), at the direction of  Agent or the Required Lenders, and upon written notice by Agent to Borrowers of such direction (provided,                                             69  125672876_9 

 

   that such notice shall not be required for any Event of Default under Section 8.1), (A) all Loans and all  Obligations (except for undrawn Letters of Credit) that have been charged to the Loan Account pursuant to  the terms hereof shall bear interest at a per annum rate equal to two percentage points above the per annum  rate otherwise applicable thereunder, and (B) the Letter of Credit Fee shall be increased to two percentage  points above the per annum rate otherwise applicable hereunder.                (d)    Payment. Except to the extent provided to the contrary in Section 2.10,  Section 2.11(k), or Section 2.12(a), (i) all interest and all other fees payable hereunder or under any of the  other Loan Documents (other than Letter of Credit Fees) shall be due and payable, in arrears, on the first  day of each month, (ii) all Letter of Credit Fees payable hereunder, and all fronting fees and all  commissions, other fees, charges and expenses provided for in Section 2.11(k) shall be due and payable, in  arrears, on the first Business Day of each month, and (iii) all costs and expenses payable hereunder or under  any of the other Loan Documents, and all other Lender Group Expenses shall be due and payable on (x) with  respect to Lender Group Expenses outstanding as of the Closing Date, the Closing Date, and (y) otherwise,  the earlier of (A) the first day of the month following the date on which the applicable costs, expenses, or  Lender Group Expenses were first incurred, or (B) the date on which demand therefor is made by Agent (it  being acknowledged and agreed that any charging of such costs, expenses or Lender Group Expenses to  the Loan Account pursuant to the provisions of the following sentence shall be deemed to constitute a  demand for payment thereof for the purposes of this subclause (B)). Borrowers hereby authorize Agent,  from time to time without prior notice to Borrowers, to charge to the Loan Account (A) on the first day of  each month, all interest accrued during the prior month on the Revolving Loans or the Term Loan  hereunder, (B) on the first Business Day of each month, all Letter of Credit Fees accrued or chargeable  hereunder during the prior month, (C) as and when incurred or accrued, all fees and costs provided for in  Section 2.10(a) or (c), (D) on the first day of each month, the Unused Line Fee accrued during the prior  month pursuant to Section 2.10(b), (E) as and when due and payable, all other fees payable hereunder or  under any of the other Loan Documents, (F) on the Closing Date and thereafter as and when incurred or  accrued, all other Lender Group Expenses, and (G) as and when due and payable all other payment  obligations payable under any Loan Document or any Bank Product Agreement (including any amounts  due and payable to the Bank Product Providers in respect of Bank Products). All amounts (including  interest, fees, costs, expenses, Lender Group Expenses, or other amounts payable hereunder or under any  other Loan Document or under any Bank Product Agreement) charged to the Loan Account shall thereupon  constitute Revolving Loans hereunder, shall constitute Obligations hereunder, and shall initially accrue  interest at the rate then applicable to Revolving Loans that are Base Rate Loans (unless and until converted  into LIBOR Rate Loans in accordance with the terms of this Agreement).                (e)    Computation. All interest and fees chargeable under the Loan Documents shall  be computed on the basis of a 360-day year, in each case, for the actual number of days elapsed in the  period during which the interest or fees accrue. In the event the Base Rate is changed from time to time  hereafter, the rates of interest hereunder based upon the Base Rate automatically and immediately shall be  increased or decreased by an amount equal to such change in the Base Rate.                (f)    Intent to Limit Charges to Maximum Lawful Rate. In no event shall the interest  rate or rates payable under this Agreement, plus any other amounts paid in connection herewith, exceed the  highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination,  deem applicable. Borrowers and the Lender Group, in executing and delivering this Agreement, intend  legally to agree upon the rate or rates of interest and manner of payment stated within it; provided, that  anything contained herein to the contrary notwithstanding, if such rate or rates of interest or manner of  payment exceeds the maximum allowable under applicable law, then, ipso facto, as of the date of this  Agreement, Borrowers are and shall be liable only for the payment of such maximum amount as is allowed  by law, and payment received from Borrowers in excess of such legal maximum, whenever received, shall  be applied to reduce the principal balance of the Obligations to the extent of such excess.                                             70  125672876_9 

 

         2.7    Crediting Payments. The receipt of any payment item by Agent shall not be required to  be considered a payment on account unless such payment item is a wire transfer of immediately available  funds made to Agent’s Account or unless and until such payment item is honored when presented for  payment. Should any payment item not be honored when presented for payment, then Borrowers shall be  deemed not to have made such payment. Anything to the contrary contained herein notwithstanding, any  payment item shall be deemed received by Agent only if it is received into Agent’s Account on a Business  Day on or before 3:30 p.m. If any payment item is received into Agent’s Account on a non-Business Day  or after 3:30 p.m. on a Business Day (unless Agent, in its sole discretion, elects to credit it on the date  received), it shall be deemed to have been received by Agent as of the opening of business on the  immediately following Business Day.          2.8   Designated Account. Agent is authorized to make the Revolving Loans and the Term  Loan, and Issuing Bank is authorized to issue the Letters of Credit, under this Agreement based upon  telephonic or other instructions received from anyone purporting to be an Authorized Person or, without  instructions, if pursuant to Section 2.6(d). Borrowers agree to establish and maintain the Designated  Account with the Designated Account Bank for the purpose of receiving the proceeds of the Revolving  Loans requested by Borrowers and made by Agent or the Lenders hereunder. Unless otherwise agreed by  Agent and Borrowers, any Revolving Loan or Swing Loan requested by Borrowers and made by Agent or  the Lenders hereunder shall be made to the Designated Account.          2.9   Maintenance of Loan Account; Statements of Obligations. Agent shall maintain an  account on its books in the name of Borrowers (the “Loan Account”) on which Borrowers will be charged  with the Term Loan, all Revolving Loans (including Extraordinary Advances and Swing Loans) made by  Agent, Swing Lender, or the Lenders to Borrowers or for Borrowers’ account, the Letters of Credit issued  or arranged by Issuing Bank for Borrowers’ account, and with all other payment Obligations hereunder or  under the other Loan Documents, including, accrued interest, fees and expenses, and Lender Group  Expenses. In accordance with Section 2.7, the Loan Account will be credited with all payments received  by Agent from Borrowers or for Borrowers’ account. Agent shall make available to Borrowers monthly  statements regarding the Loan Account, including the principal amount of the Term Loan and the Revolving  Loans, interest accrued hereunder, fees accrued or charged hereunder or under the other Loan Documents,  and a summary itemization of all charges and expenses constituting Lender Group Expenses accrued  hereunder or under the other Loan Documents, and each such statement, absent manifest error, shall be  conclusively presumed to be correct and accurate and constitute an account stated between Borrowers and  the Lender Group unless, within 30 days after Agent first makes such a statement available to Borrowers,  Borrowers shall deliver to Agent written objection thereto describing the error or errors contained in such  statement.          2.10  Fees.                (a)    Certain Fees. Borrowers shall pay to Agent, for the account of Agent, as and when  due and payable under the terms of the Fee Letter, the fees set forth in the Fee Letter.                (b)    Unused Line Fee. Borrowers shall pay to Agent, for the ratable account of the  Revolving Lenders, an unused line fee (the “Unused Line Fee”) in an amount equal to 0.50% per annum  times the result of (i) the aggregate amount of the Revolver Commitments, less (ii) the Average Revolver  Usage during the immediately preceding month (or portion thereof), which Unused Line Fee shall be due  and payable, in arrears, on the first day of each month from and after the Closing Date up to the first day of  the month prior to the date on which the Obligations are paid in full and on the date on which the Obligations  are paid in full.                (c)    Field Examination and Other Fees. Subject to any limitations set forth in  Section 5.7(c), Borrowers shall pay to Agent, field examination, appraisal, and valuation fees and charges,                                             71  125672876_9 

 

   as and when incurred or chargeable, as follows (i) a fee of $1,000 per day, per examiner, plus out-of-pocket  expenses (including travel, meals, and lodging) for each field examination of any Loan Party or its  Subsidiaries performed by or on behalf of Agent, and (ii) the fees, charges or expenses paid or incurred by  Agent if it elects to employ the services of one or more third Persons to appraise the Collateral, or any  portion thereof.          2.11  Letters of Credit.                (a)    Subject to the terms and conditions of this Agreement, upon the request of  Borrowers made in accordance herewith, and prior to the Maturity Date, Issuing Bank agrees to issue a  requested standby Letter of Credit or a sight commercial Letter of Credit for the account of Borrowers. By  submitting a request to Issuing Bank for the issuance of a Letter of Credit, Borrowers shall be deemed to  have requested that Issuing Bank issue the requested Letter of Credit. Each request for the issuance of a  Letter of Credit, or the amendment or extension of any outstanding Letter of Credit, shall be (i) irrevocable  and made in writing by an Authorized Person, (ii) delivered to Agent and Issuing Bank via telefacsimile or  other electronic method of transmission reasonably acceptable to Agent and Issuing Bank and reasonably  in advance of the requested date of issuance, amendment or extension, and (iii) subject to Issuing Bank’s  authentication procedures with results satisfactory to Issuing Bank. Each such request shall be in form and  substance reasonably satisfactory to Agent and Issuing Bank and (i) shall specify (A) the amount of such  Letter of Credit, (B) the date of issuance, amendment or extension of such Letter of Credit, (C) the proposed  expiration date of such Letter of Credit, (D) the name and address of the beneficiary of the Letter of Credit,  and (E) such other information (including, the conditions to drawing, and, in the case of an amendment or  extension, identification of the Letter of Credit to be so amended or extended) as shall be necessary to  prepare, amend or extend such Letter of Credit, and (ii) shall be accompanied by such Issuer Documents as  Agent or Issuing Bank may request or require, to the extent that such requests or requirements are consistent  with the Issuer Documents that Issuing Bank generally requests for Letters of Credit in similar  circumstances. Issuing Bank’s records of the content of any such request will be conclusive. Anything  contained herein to the contrary notwithstanding, Issuing Bank may, but shall not be obligated to, issue a  Letter of Credit that supports the obligations of a Loan Party or one of its Subsidiaries in respect of x) a  lease of real property, or (y) an employment contract.                (b)    Issuing Bank shall have no obligation to issue a Letter of Credit if any of the  following would result after giving effect to the requested issuance:                        (i)    the Letter of Credit Usage would exceed the Letter of Credit Sublimit,  or                        (ii)   the Letter of Credit Usage would exceed the Maximum Revolver  Amount less the outstanding amount of Revolving Loans (including Swing Loans), or                        (iii)  the Letter of Credit Usage would exceed the Borrowing Base at such  time less the outstanding principal balance of the Revolving Loans (inclusive of Swing Loans) at such time.                (c)    In the event there is a Defaulting Lender as of the date of any request for the  issuance of a Letter of Credit, Issuing Bank shall not be required to issue or arrange for such Letter of Credit  to the extent (i) the Defaulting Lender’s Letter of Credit Exposure with respect to such Letter of Credit may  not be reallocated pursuant to Section 2.3(g)(ii), or (ii) Issuing Bank has not otherwise entered into  arrangements reasonably satisfactory to it and Borrowers to eliminate Issuing Bank’s risk with respect to  the participation in such Letter of Credit of the Defaulting Lender, which arrangements may include  Borrowers cash collateralizing such Defaulting Lender’s Letter of Credit Exposure in accordance with  Section 2.3(g)(ii). Additionally, Issuing Bank shall have no obligation to issue or extend a Letter of Credit  if (A) any order, judgment, or decree of any Governmental Authority or arbitrator shall, by its terms, purport                                             72  125672876_9 

 

   to enjoin or restrain Issuing Bank from issuing such Letter of Credit, or any law applicable to Issuing Bank  or any request or directive (whether or not having the force of law) from any Governmental Authority with  jurisdiction over Issuing Bank shall prohibit or request that Issuing Bank refrain from the issuance of letters  of credit generally or such Letter of Credit in particular, (B) the issuance of such Letter of Credit would  violate one or more policies of Issuing Bank applicable to letters of credit generally, or (C) if amounts  demanded to be paid under any Letter of Credit will not or may not be in United States Dollars.                (d)    Any Issuing Bank (other than Wells Fargo or any of its Affiliates) shall notify  Agent in writing no later than the Business Day prior to the Business Day on which such Issuing Bank  issues any Letter of Credit. In addition, each Issuing Bank (other than Wells Fargo or any of its Affiliates)  shall, on the first Business Day of each week, submit to Agent a report detailing the daily undrawn amount  of each Letter of Credit issued by such Issuing Bank during the prior calendar week. Each Letter of Credit  shall be in form and substance reasonably acceptable to Issuing Bank, including the requirement that the  amounts payable thereunder must be payable in Dollars. If Issuing Bank makes a payment under a Letter  of Credit, Borrowers shall pay to Agent an amount equal to the applicable Letter of Credit Disbursement  on the Business Day such Letter of Credit Disbursement is made and, in the absence of such payment, the  amount of the Letter of Credit Disbursement immediately and automatically shall be deemed to be a  Revolving Loan hereunder (notwithstanding any failure to satisfy any condition precedent set forth in  Section 3) and, initially, shall bear interest at the rate then applicable to Revolving Loans that are Base Rate  Loans. If a Letter of Credit Disbursement is deemed to be a Revolving Loan hereunder, Borrowers’  obligation to pay the amount of such Letter of Credit Disbursement to Issuing Bank shall be automatically  converted into an obligation to pay the resulting Revolving Loan. Promptly following receipt by Agent of  any payment from Borrowers pursuant to this paragraph, Agent shall distribute such payment to Issuing  Bank or, to the extent that Revolving Lenders have made payments pursuant to Section 2.11(e) to reimburse  Issuing Bank, then to such Revolving Lenders and Issuing Bank as their interests may appear.                (e)    Promptly following receipt of a notice of a Letter of Credit Disbursement pursuant  to Section 2.11(d), each Revolving Lender agrees to fund its Pro Rata Share of any Revolving Loan deemed  made pursuant to Section 2.11(d) on the same terms and conditions as if Borrowers had requested the  amount thereof as a Revolving Loan and Agent shall promptly pay to Issuing Bank the amounts so received  by it from the Revolving Lenders. By the issuance of a Letter of Credit (or an amendment or extension of  a Letter of Credit) and without any further action on the part of Issuing Bank or the Revolving Lenders,  Issuing Bank shall be deemed to have granted to each Revolving Lender, and each Revolving Lender shall  be deemed to have purchased, a participation in each Letter of Credit issued by Issuing Bank, in an amount  equal to its Pro Rata Share of such Letter of Credit, and each such Revolving Lender agrees to pay to Agent,  for the account of Issuing Bank, such Revolving Lender’s Pro Rata Share of any Letter of Credit  Disbursement made by Issuing Bank under the applicable Letter of Credit. In consideration and in  furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay  to Agent, for the account of Issuing Bank, such Revolving Lender’s Pro Rata Share of each Letter of Credit  Disbursement made by Issuing Bank and not reimbursed by Borrowers on the date due as provided in  Section 2.11(d), or of any reimbursement payment that is required to be refunded (or that Agent or Issuing  Bank elects, based upon the advice of counsel, to refund) to Borrowers for any reason. Each Revolving  Lender acknowledges and agrees that its obligation to deliver to Agent, for the account of Issuing Bank, an  amount equal to its respective Pro Rata Share of each Letter of Credit Disbursement pursuant to this  Section 2.11(e) shall be absolute and unconditional and such remittance shall be made notwithstanding the  occurrence or continuation of an Event of Default or Default or the failure to satisfy any condition set forth  in Section 3. If any such Revolving Lender fails to make available to Agent the amount of such Revolving  Lender’s Pro Rata Share of a Letter of Credit Disbursement as provided in this Section, such Revolving  Lender shall be deemed to be a Defaulting Lender and Agent (for the account of Issuing Bank) shall be  entitled to recover such amount on demand from such Revolving Lender together with interest thereon at  the Defaulting Lender Rate until paid in full.                                             73  125672876_9 

 

                (f)    Each Borrower agrees to indemnify, defend and hold harmless each member of the  Lender Group (including Issuing Bank and its branches, Affiliates, and correspondents) and each such  Person’s respective directors, officers, employees, attorneys and agents (each, including Issuing Bank, a  “Letter of Credit Related Person”) (to the fullest extent permitted by law) from and against any and all  claims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and damages,  and all reasonable fees and disbursements of attorneys, experts, or consultants and all other costs and  expenses actually incurred in connection therewith or in connection with the enforcement of this  indemnification (as and when they are incurred and irrespective of whether suit is brought), which may be  incurred by or awarded against any such Letter of Credit Related Person (other than Taxes, which shall be  governed by Section 16) (the “Letter of Credit Indemnified Costs”), and which arise out of or in connection  with, or as a result of:                        (i)    any Letter of Credit or any pre-advice of its issuance;                        (ii)   any transfer, sale, delivery, surrender or endorsement (or lack thereof) of  any Drawing Document at any time(s) held by any such Letter of Credit Related Person in connection with  any Letter of Credit;                        (iii)  any action or proceeding arising out of, or in connection with, any Letter  of Credit (whether administrative, judicial or in connection with arbitration), including any action or  proceeding to compel or restrain any presentation or payment under any Letter of Credit, or for the wrongful  dishonor of, or honoring a presentation under, any Letter of Credit;                        (iv)   any independent undertakings issued by the beneficiary of any Letter of  Credit;                        (v)    any unauthorized instruction or request made to Issuing Bank in  connection with any Letter of Credit or requested Letter of Credit, or any error, omission, interruption or  delay in such instruction or request, whether transmitted by mail, courier, electronic transmission, SWIFT,  or any other telecommunication including communications through a correspondent;                        (vi)   an adviser, confirmer or other nominated person seeking to be  reimbursed, indemnified or compensated;                        (vii)  any third party seeking to enforce the rights of an applicant, beneficiary,  nominated person, transferee, assignee of Letter of Credit proceeds or holder of an instrument or document;                        (viii) the fraud, forgery or illegal action of parties other than the Letter of  Credit Related Person;                        (ix)   any prohibition on payment or delay in payment of any amount payable  by Issuing Bank to a beneficiary or transferee beneficiary of a Letter of Credit arising out of Anti-Corruption  Laws, Anti-Money Laundering Laws, or Sanctions;                         (x)    Issuing Bank’s performance of the obligations of a confirming institution  or entity that wrongfully dishonors a confirmation;                         (xi)   any foreign language translation provided to Issuing Bank in connection  with any Letter of Credit;                                               74  125672876_9 

 

                        (xii)  any foreign law or usage as it relates to Issuing Bank’s issuance of a  Letter of Credit in support of a foreign guaranty including the expiration of such guaranty after the related  Letter of Credit expiration date and any resulting drawing paid by Issuing Bank in connection therewith; or                         (xiii) the acts or omissions, whether rightful or wrongful, of any present or  future de jure or de facto governmental or regulatory authority or cause or event beyond the control of the  Letter of Credit Related Person;   provided, that such indemnity shall not be available to any Letter of Credit Related Person claiming  indemnification under clauses (i) through (xiii) above to the extent that such Letter of Credit Indemnified  Costs may be finally determined in a final, non-appealable judgment of a court of competent jurisdiction to  have resulted directly from the gross negligence or willful misconduct of the Letter of Credit Related Person  claiming indemnity. Borrowers hereby agree to pay the Letter of Credit Related Person claiming indemnity  on demand from time to time all amounts owing under this Section 2.11(f). If and to the extent that the  obligations of Borrowers under this Section 2.11(f) are unenforceable for any reason, Borrowers agree to  make the maximum contribution to the Letter of Credit Indemnified Costs permissible under applicable  law. This indemnification provision shall survive termination of this Agreement and all Letters of Credit.                (g)    The liability of Issuing Bank (or any other Letter of Credit Related Person) under,  in connection with or arising out of any Letter of Credit (or pre-advice), regardless of the form or legal  grounds of the action or proceeding, shall be limited to direct damages suffered by Borrowers that are  caused directly by Issuing Bank’s gross negligence or willful misconduct in (i) honoring a presentation  under a Letter of Credit that on its face does not at least substantially comply with the terms and conditions  of such Letter of Credit, (ii) failing to honor a presentation under a Letter of Credit that strictly complies  with the terms and conditions of such Letter of Credit, or (iii) retaining Drawing Documents presented  under a Letter of Credit. Borrowers’ aggregate remedies against Issuing Bank and any Letter of Credit  Related Person for wrongfully honoring a presentation under any Letter of Credit or wrongfully retaining  honored Drawing Documents shall in no event exceed the aggregate amount paid by Borrowers to Issuing  Bank in respect of the honored presentation in connection with such Letter of Credit under Section 2.11(d),  plus interest at the rate then applicable to Base Rate Loans hereunder. Borrowers shall take action to avoid  and mitigate the amount of any damages claimed against Issuing Bank or any other Letter of Credit Related  Person, including by enforcing its rights against the beneficiaries of the Letters of Credit. Any claim by  Borrowers under or in connection with any Letter of Credit shall be reduced by an amount equal to the sum  of (x) the amount (if any) saved by Borrowers as a result of the breach or alleged wrongful conduct  complained of, and (y) the amount (if any) of the loss that would have been avoided had Borrowers taken  all reasonable steps to mitigate any loss, and in case of a claim of wrongful dishonor, by specifically and  timely authorizing Issuing Bank to effect a cure.                (h)    Borrowers are responsible for the final text of the Letter of Credit as issued by  Issuing Bank, irrespective of any assistance Issuing Bank may provide such as drafting or recommending  text or by Issuing Bank’s use or refusal to use text submitted by Borrowers. Borrowers understand that the  final form of any Letter of Credit may be subject to such revisions and changes as are deemed necessary or  appropriate by Issuing Bank, and Borrowers hereby consent to such revisions and changes not materially  different from the application executed in connection therewith. Borrowers are solely responsible for the  suitability of the Letter of Credit for Borrowers’ purposes. If Borrowers request Issuing Bank to issue a  Letter of Credit for an affiliated or unaffiliated third party (an “Account Party”), (i) such Account Party  shall have no rights against Issuing Bank; (ii) Borrowers shall be responsible for the application and  obligations under this Agreement; and (iii) communications (including notices) related to the respective  Letter of Credit shall be among Issuing Bank and Borrowers. Borrowers will examine the copy of the Letter  of Credit and any other documents sent by Issuing Bank in connection therewith and shall promptly notify  Issuing Bank (not later than three (3) Business Days following Borrowers’ receipt of documents from                                             75  125672876_9 

 

   Issuing Bank) of any non-compliance with Borrowers’ instructions and of any discrepancy in any document  under any presentment or other irregularity. Borrowers understand and agree that Issuing Bank is not  required to extend the expiration date of any Letter of Credit for any reason. With respect to any Letter of  Credit containing an “automatic amendment” to extend the expiration date of such Letter of Credit, Issuing  Bank, in its sole and absolute discretion, may give notice of non-extension of such Letter of Credit and, if  Borrowers do not at any time want the then current expiration date of such Letter of Credit to be extended,  Borrowers will so notify Agent and Issuing Bank at least 30 calendar days before Issuing Bank is required  to notify the beneficiary of such Letter of Credit or any advising bank of such non-extension pursuant to  the terms of such Letter of Credit.                (i)    Borrowers’ reimbursement and payment obligations under this Section 2.11 are  absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this  Agreement under any and all circumstances whatsoever, including:                        (i)    any lack of validity, enforceability or legal effect of any Letter of Credit,  any Issuer Document, this Agreement, or any Loan Document, or any term or provision therein or herein;                        (ii)   payment against presentation of any draft, demand or claim for payment  under any Drawing Document that does not comply in whole or in part with the terms of the applicable  Letter of Credit or which proves to be fraudulent, forged or invalid in any respect or any statement therein  being untrue or inaccurate in any respect, or which is signed, issued or presented by a Person or a transferee  of such Person purporting to be a successor or transferee of the beneficiary of such Letter of Credit;                        (iii)  Issuing Bank or any of its branches or Affiliates being the beneficiary of  any Letter of Credit;                        (iv)   Issuing Bank or any correspondent honoring a drawing against a  Drawing Document up to the amount available under any Letter of Credit even if such Drawing Document  claims an amount in excess of the amount available under the Letter of Credit;                        (v)    the existence of any claim, set-off, defense or other right that any Loan  Party or any of its Subsidiaries may have at any time against any beneficiary or transferee beneficiary, any  assignee of proceeds, Issuing Bank or any other Person;                        (vi)   Issuing Bank or any correspondent honoring a drawing upon receipt of  an electronic presentation under a Letter of Credit requiring the same, regardless of whether the original  Drawing Documents arrive at Issuing Bank’s counters or are different from the electronic presentation;                         (vii)  any other event, circumstance or conduct whatsoever, whether or not  similar to any of the foregoing that might, but for this Section 2.11(i), constitute a legal or equitable defense  to or discharge of, or provide a right of set-off against, any Borrower’s or any of its Subsidiaries’  reimbursement and other payment obligations and liabilities, arising under, or in connection with, any Letter  of Credit, whether against Issuing Bank, the beneficiary or any other Person; or                        (viii) the fact that any Default or Event of Default shall have occurred and be  continuing;   provided, that subject to Section 2.11(f) above, the foregoing shall not release Issuing Bank from such  liability to Borrowers as may be finally determined in a final, non-appealable judgment of a court of  competent jurisdiction against Issuing Bank following reimbursement or payment of the obligations and  liabilities, including reimbursement and other payment obligations, of Borrowers to Issuing Bank arising  under, or in connection with, this Section 2.11 or any Letter of Credit.                                             76  125672876_9 

 

                (j)    Without limiting any other provision of this Agreement, Issuing Bank and each  other Letter of Credit Related Person (if applicable) shall not be responsible to Borrowers for, and Issuing  Bank’s rights and remedies against Borrowers and the obligation of Borrowers to reimburse Issuing Bank  for each drawing under each Letter of Credit shall not be impaired by:                        (i)    honor of a presentation under any Letter of Credit that on its face  substantially complies with the terms and conditions of such Letter of Credit, even if the Letter of Credit  requires strict compliance by the beneficiary;                        (ii)   honor of a presentation of any Drawing Document that appears on its  face to have been signed, presented or issued (A) by any purported successor or transferee of any beneficiary  or other Person required to sign, present or issue such Drawing Document or (B) under a new name of the  beneficiary;                        (iii)  acceptance as a draft of any written or electronic demand or request for  payment under a Letter of Credit, even if nonnegotiable or not in the form of a draft or notwithstanding any  requirement that such draft, demand or request bear any or adequate reference to the Letter of Credit;                        (iv)   the identity or authority of any presenter or signer of any Drawing  Document or the form, accuracy, genuineness or legal effect of any Drawing Document (other than Issuing  Bank’s determination that such Drawing Document appears on its face substantially to comply with the  terms and conditions of the Letter of Credit);                        (v)    acting upon any instruction or request relative to a Letter of Credit or  requested Letter of Credit that Issuing Bank in good faith believes to have been given by a Person authorized  to give such instruction or request;                        (vi)   any errors, omissions, interruptions or delays in transmission or delivery  of any message, advice or document (regardless of how sent or transmitted) or for errors in interpretation  of technical terms or in translation or any delay in giving or failing to give notice to any Borrower;                        (vii)  any acts, omissions or fraud by, or the insolvency of, any beneficiary,  any nominated person or entity or any other Person or any breach of contract between any beneficiary and  any Borrower or any of the parties to the underlying transaction to which the Letter of Credit relates;                        (viii) assertion or waiver of any provision of the ISP or UCP that primarily  benefits an issuer of a letter of credit, including any requirement that any Drawing Document be presented  to it at a particular hour or place;                        (ix)   payment to any presenting bank (designated or permitted by the terms of  the applicable Letter of Credit) claiming that it rightfully honored or is entitled to reimbursement or  indemnity under Standard Letter of Credit Practice applicable to it;                        (x)    acting or failing to act as required or permitted under Standard Letter of  Credit Practice applicable to where Issuing Bank has issued, confirmed, advised or negotiated such Letter  of Credit, as the case may be;                        (xi)   honor of a presentation after the expiration date of any Letter of Credit  notwithstanding that a presentation was made prior to such expiration date and dishonored by Issuing Bank  if subsequently Issuing Bank or any court or other finder of fact determines such presentation should have  been honored;                                              77  125672876_9 

 

                        (xii)  dishonor of any presentation that does not strictly comply or that is  fraudulent, forged or otherwise not entitled to honor; or                        (xiii) honor of a presentation that is subsequently determined by Issuing Bank  to have been made in violation of international, federal, state or local restrictions on the transaction of  business with certain prohibited Persons.                (k)    Borrowers shall pay immediately upon demand to Agent for the account of Issuing  Bank as non-refundable fees, commissions, and charges (it being acknowledged and agreed that any  charging of such fees, commissions, and charges to the Loan Account pursuant to the provisions of  Section 2.6(d) shall be deemed to constitute a demand for payment thereof for the purposes of this  Section 2.11(k)): (i) a fronting fee which shall be imposed by Issuing Bank equal to 0.125% per annum  times the average amount of the Letter of Credit Usage during the immediately preceding month, plus  (ii) any and all other customary commissions, fees and charges then in effect imposed by, and any and all  expenses incurred by, Issuing Bank, or by any adviser, confirming institution or entity or other nominated  person, relating to Letters of Credit, at the time of issuance of any Letter of Credit and upon the occurrence  of any other activity with respect to any Letter of Credit (including transfers, assignments of proceeds,  amendments, drawings, extensions or cancellations).                (l)    If by reason of (x) any Change in Law, or (y) compliance by Issuing Bank or any  other member of the Lender Group with any direction, request, or requirement (irrespective of whether  having the force of law) of any Governmental Authority or monetary authority including, Regulation D of  the Board of Governors as from time to time in effect (and any successor thereto):                        (i)    any reserve, deposit, or similar requirement is or shall be imposed or  modified in respect of any Letter of Credit issued or caused to be issued hereunder or hereby, or any Loans  or obligations to make Loans hereunder or hereby, or                        (ii)   there shall be imposed on Issuing Bank or any other member of the  Lender Group any other condition regarding any Letter of Credit, Loans, or obligations to make Loans  hereunder,   and the result of the foregoing is to increase, directly or indirectly, the cost to Issuing Bank or any other  member of the Lender Group of issuing, making, participating in, or maintaining any Letter of Credit or to  reduce the amount receivable in respect thereof, then, and in any such case, Agent may, at any time within  a reasonable period after the additional cost is incurred or the amount received is reduced, notify Borrowers,  and Borrowers shall pay within 30 days after demand therefor, such amounts as Agent may specify to be  necessary to compensate Issuing Bank or any other member of the Lender Group for such additional cost  or reduced receipt, together with interest on such amount from the date of such demand until payment in  full thereof at the rate then applicable to Base Rate Loans hereunder; provided, that (A) Borrowers shall  not be required to provide any compensation pursuant to this Section 2.11(l) for any such amounts incurred  more than 180 days prior to the date on which the demand for payment of such amounts is first made to  Borrowers, and (B) if an event or circumstance giving rise to such amounts is retroactive, then the 180-day  period referred to above shall be extended to include the period of retroactive effect thereof. The  determination by Agent of any amount due pursuant to this Section 2.11(l), as set forth in a certificate  setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable  error, be final and conclusive and binding on all of the parties hereto.                (m)    Each standby Letter of Credit shall expire not later than the date that is 12 months  after the date of the issuance of such Letter of Credit; provided, that any standby Letter of Credit may  provide for the automatic extension thereof for any number of additional periods each of up to one year in  duration; provided further, that with respect to any Letter of Credit which extends beyond the Maturity                                             78  125672876_9 

 

   Date, Letter of Credit Collateralization shall be provided therefor on or before the date that is five Business  Days prior to the Maturity Date. Each commercial Letter of Credit shall expire on the earlier of (i) 120 days  after the date of the issuance of such commercial Letter of Credit and (ii) five Business Days prior to the  Maturity Date.                (n)    If (i) any Event of Default shall occur and be continuing, or (ii) Availability shall  at any time be less than zero, then on the Business Day following the date when the Administrative  Borrower receives notice from Agent or the Required Lenders (or, if the maturity of the Obligations has  been accelerated, Revolving Lenders with Letter of Credit Exposure representing greater than 50% of the  total Letter Credit Exposure) demanding Letter of Credit Collateralization pursuant to this Section 2.11(n)  upon such demand, Borrowers shall provide Letter of Credit Collateralization with respect to the then  existing Letter of Credit Usage. If Borrowers fail to provide Letter of Credit Collateralization as required  by this Section 2.11(n), the Revolving Lenders may (and, upon direction of Agent, shall) advance, as  Revolving Loans the amount of the cash collateral required pursuant to the Letter of Credit Collateralization  provision so that the then existing Letter of Credit Usage is cash collateralized in accordance with the Letter  of Credit Collateralization provision (whether or not the Revolver Commitments have terminated, an  Overadvance exists or the conditions in Section 3 are satisfied).                (o)    Unless otherwise expressly agreed by Issuing Bank and Borrowers when a Letter  of Credit is issued, (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of  the UCP shall apply to each commercial Letter of Credit.                (p)    Issuing Bank shall be deemed to have acted with due diligence and reasonable care  if Issuing Bank’s conduct is in accordance with Standard Letter of Credit Practice or in accordance with  this Agreement.                 (q)    In the event of a direct conflict between the provisions of this Section 2.11 and any  provision contained in any Issuer Document, it is the intention of the parties hereto that such provisions be  read together and construed, to the fullest extent possible, to be in concert with each other. In the event of  any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this  Section 2.11 shall control and govern.                (r)    The provisions of this Section 2.11 shall survive the termination of this Agreement  and the repayment in full of the Obligations with respect to any Letters of Credit that remain outstanding.                (s)    At Borrowers’ costs and expense, Borrowers shall execute and deliver to Issuing  Bank such additional certificates, instruments and/or documents and take such additional action as may be  reasonably requested by Issuing Bank to enable Issuing Bank to issue any Letter of Credit pursuant to this  Agreement and related Issuer Document, to protect, exercise and/or enforce Issuing Banks’ rights and  interests under this Agreement or to give effect to the terms and provisions of this Agreement or any Issuer  Document. Each Borrower irrevocably appoints Issuing Bank as its attorney-in-fact and authorizes Issuing  Bank, without notice to Borrowers, to execute and deliver ancillary documents and letters customary in the  letter of credit business that may include but are not limited to advisements, indemnities, checks, bills of  exchange and issuance documents. The power of attorney granted by the Borrowers is limited solely to  such actions related to the issuance, confirmation or amendment of any Letter of Credit and to ancillary  documents or letters customary in the letter of credit business. This appointment is coupled with an interest.         2.12   LIBOR Option.                (a)    Interest and Interest Payment Dates. In lieu of having interest charged at the  rate based upon the Base Rate, Borrowers shall have the option, subject to Section 2.12(b) below (the  “LIBOR Option”) to have interest on all or a portion of the Revolving Loans or the Term Loan be charged                                             79  125672876_9 

 

   (whether at the time when made (unless otherwise provided herein), upon conversion from a Base Rate  Loan to a LIBOR Rate Loan, or upon continuation of a LIBOR Rate Loan as a LIBOR Rate Loan) at a rate  of interest based upon the LIBOR Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of  (i) the last day of the Interest Period applicable thereto; provided, that subject to the following clauses (ii)  and (iii), in the case of any Interest Period greater than three months in duration, interest shall be payable  at three month intervals after the commencement of the applicable Interest Period and on the last day of  such Interest Period), (ii) the date on which all or any portion of the Obligations are accelerated pursuant to  the terms hereof, or (iii) the date on which this Agreement is terminated pursuant to the terms hereof. On  the last day of each applicable Interest Period, unless Borrowers have properly exercised the LIBOR Option  with respect thereto, the interest rate applicable to such LIBOR Rate Loan automatically shall convert to  the rate of interest then applicable to Base Rate Loans of the same type hereunder. At any time that an Event  of Default has occurred and is continuing, Borrowers no longer shall have the option to request that  Revolving Loans or any portion of the Term Loan bear interest at a rate based upon the LIBOR Rate.                (b)    LIBOR Election.                        (i)    Borrowers may, at any time and from time to time, so long as no Event  of Default has occurred and is continuing, elect to exercise the LIBOR Option by notifying Agent prior to  1:00 p.m. at least three Business Days prior to the commencement of the proposed Interest Period (the  “LIBOR Deadline”). Notice of Borrowers’ election of the LIBOR Option for a permitted portion of the  Revolving Loans or the Term Loan and an Interest Period pursuant to this Section 2.12(b) shall be made by  delivery to Agent of a LIBOR Notice received by Agent before the LIBOR Deadline. Promptly upon its  receipt of each such LIBOR Notice, Agent shall provide a copy thereof to each of the affected Lenders.                        (ii)   Each LIBOR Notice shall be irrevocable and binding on Borrowers. In  connection with each LIBOR Rate Loan, each Borrower shall indemnify, defend, and hold Agent and the  Lenders harmless against any loss, cost, or expense actually incurred by Agent or any Lender as a result of  (A) the payment or required assignment of any principal of any LIBOR Rate Loan other than on the last  day of an Interest Period applicable thereto (including as a result of an Event of Default), (B) the conversion  of any LIBOR Rate Loan other than on the last day of the Interest Period applicable thereto, or (C) the  failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date specified in any LIBOR  Notice delivered pursuant hereto (such losses, costs, or expenses, “Funding Losses”). A certificate of Agent  or a Lender delivered to Borrowers setting forth in reasonable detail any amount or amounts that Agent or  such Lender is entitled to receive pursuant to this Section 2.12 shall be conclusive absent manifest error.  Borrowers shall pay such amount to Agent or the Lender, as applicable, within 30 days of the date of its  receipt of such certificate. If a payment of a LIBOR Rate Loan on a day other than the last day of the  applicable Interest Period would result in a Funding Loss, Agent may, in its sole discretion at the request  of Borrowers, hold the amount of such payment as cash collateral in support of the Obligations until the  last day of such Interest Period and apply such amounts to the payment of the applicable LIBOR Rate Loan  on such last day, it being agreed that Agent has no obligation to so defer the application of payments to any  LIBOR Rate Loan and that, in the event that Agent does not defer such application, Borrowers shall be  obligated to pay any resulting Funding Losses.                        (iii)  Unless Agent, in its sole discretion, agrees otherwise, Borrowers shall  have not more than five LIBOR Rate Loans in effect at any given time. Borrowers may only exercise the  LIBOR Option for proposed LIBOR Rate Loans of at least $1,000,000.                (c)    Conversion; Prepayment. Borrowers may convert LIBOR Rate Loans to Base  Rate Loans or prepay LIBOR Rate Loans at any time; provided, that in the event that LIBOR Rate Loans  are converted or prepaid on any date that is not the last day of the Interest Period applicable thereto,  including as a result of any prepayment through the required application by Agent of any payments or                                             80  125672876_9 

 

   proceeds of Collateral in accordance with Section 2.4(b) or for any other reason, including early termination  of the term of this Agreement or acceleration of all or any portion of the Obligations pursuant to the terms  hereof, each Borrower shall indemnify, defend, and hold Agent and the Lenders and their Participants  harmless against any and all Funding Losses in accordance with Section 2.12(b)(ii).                (d)    Special Provisions Applicable to LIBOR Rate.                        (i)    The LIBOR Rate may be adjusted by Agent with respect to any Lender  on a prospective basis to take into account any additional or increased costs to such Lender of maintaining  or obtaining any eurodollar deposits or increased costs (other than Taxes which shall be governed by  Section 16), in each case, due to changes in applicable law occurring subsequent to the commencement of  the then applicable Interest Period, including any Changes in Law and changes in the reserve requirements  imposed by the Board of Governors, which additional or increased costs would increase the cost of funding  or maintaining loans bearing interest at the LIBOR Rate. In any such event, the affected Lender shall give  Borrowers and Agent notice of such a determination and adjustment and Agent promptly shall transmit the  notice to each other Lender and, upon its receipt of the notice from the affected Lender, Borrowers may, by  notice to such affected Lender (A) require such Lender to furnish to Borrowers a statement setting forth in  reasonable detail the basis for adjusting such LIBOR Rate and the method for determining the amount of  such adjustment, or (B) repay the LIBOR Rate Loans of such Lender with respect to which such adjustment  is made (together with any amounts due under Section 2.12(b)(ii)).                        (ii)   Subject to the provisions set forth in Section 2.12(d)(iii) below, in the  event that any change in market conditions or any Change in Law shall at any time after the date hereof, in  the reasonable opinion of any Lender, make it unlawful or impractical for such Lender to fund or maintain  LIBOR Rate Loans or to continue such funding or maintaining, or to determine or charge interest rates at  the LIBOR Rate, such Lender shall give notice of such changed circumstances to Agent and Borrowers and  Agent promptly shall transmit the notice to each other Lender and (A) in the case of any LIBOR Rate Loans  of such Lender that are outstanding, the date specified in such Lender’s notice shall be deemed to be the  last day of the Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such  Lender thereafter shall accrue interest at the rate then applicable to Base Rate Loans, and (B) Borrowers  shall not be entitled to elect the LIBOR Option until such Lender determines that it would no longer be  unlawful or impractical to do so.                        (iii)  Effect of Benchmark Transition Event.    (A)   Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan        Document, upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, as        applicable, Agent and Administrative Borrower may amend this Agreement to replace the LIBOR        Rate with a Benchmark Replacement. Any such amendment with respect to a Benchmark         Transition Event will become effective at 5:00 p.m. on the fifth (5th) Business Day after Agent has         posted such proposed amendment to all Lenders and Administrative Borrower so long as Agent has         not received, by such time, written notice of objection to such amendment from Lenders comprising         the Required Lenders. Any such amendment with respect to an Early Opt-in Election will become         effective on the date that Lenders comprising the Required Lenders have delivered to Agent written         notice that such Required Lenders accept such amendment. No replacement of the LIBOR Rate         with a Benchmark Replacement pursuant to this Section 2.12(d)(iii) will occur prior to the        applicable Benchmark Transition Start Date.   (B)   Benchmark Replacement Conforming Changes. In connection with the implementation of a        Benchmark Replacement, Agent will have the right to make Benchmark Replacement Conforming        Changes from time to time and, notwithstanding anything to the contrary herein or in any other        Loan Document, any amendments implementing such Benchmark Replacement Conforming                                             81  125672876_9 

 

         Changes will become effective without any further action or consent of any other party to this        Agreement.   (C)   Notices; Standards for Decisions and Determinations. Agent will promptly notify Administrative        Borrower and the Lenders of (1) any occurrence of a Benchmark Transition Event or an Early Opt-       in Election, as applicable, and its related Benchmark Replacement Date and Benchmark Transition        Start Date, (2) the implementation of any Benchmark Replacement, (3) the effectiveness of any        Benchmark Replacement Conforming Changes and (4) the commencement or conclusion of any        Benchmark Unavailability Period. Any determination, decision or election that may be made by        Agent or Lenders pursuant to this Section 2.12(d)(iii) including any determination with respect to        a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date        and any decision to take or refrain from taking any action, will be conclusive and binding absent        manifest error and may be made in its or their sole discretion and without consent from any other        party hereto, except, in each case, as expressly required pursuant to this Section 2.12(d)(iii).   (D)   Benchmark Unavailability Period. Upon Administrative Borrower’s receipt of notice of the        commencement of a Benchmark Unavailability Period, Administrative Borrower may revoke any        request for a LIBOR Borrowing of, conversion to or continuation of LIBOR Rate Loans to be made,        converted or continued during any Benchmark Unavailability Period and, failing that,        Administrative Borrower will be deemed to have converted any such request into a request for a        Borrowing of or conversion to Base Rate Loans. During any Benchmark Unavailability Period, the        component of Base Rate based upon the LIBOR Rate will not be used in any determination of the        Base Rate.                (e)    No Requirement of Matched Funding. Anything to the contrary contained herein  notwithstanding, neither Agent, nor any Lender, nor any of their Participants, is required actually to acquire  eurodollar deposits to fund or otherwise match fund any Obligation as to which interest accrues at the  LIBOR Rate.         2.13   Capital Requirements.                (a)    If, after the date hereof, Issuing Bank or any Lender determines that (i) any Change  in Law regarding capital, liquidity or reserve requirements for banks or bank holding companies, or (ii)  compliance by Issuing Bank or such Lender, or their respective parent bank holding companies, with any  guideline, request or directive of any Governmental Authority regarding capital adequacy or liquidity  requirements (whether or not having the force of law), has the effect of reducing the return on Issuing  Bank’s, such Lender’s, or such holding companies’ capital or liquidity as a consequence of Issuing Bank’s  or such Lender’s commitments, Loans, participations or other obligations hereunder to a level below that  which Issuing Bank, such Lender, or such holding companies could have achieved but for such Change in  Law or compliance (taking into consideration Issuing Bank’s, such Lender’s, or such holding companies’  then existing policies with respect to capital adequacy or liquidity requirements and assuming the full  utilization of such entity’s capital) by any amount deemed by Issuing Bank or such Lender to be material,  then Issuing Bank or such Lender may notify Borrowers and Agent thereof. Following receipt of such  notice, Borrowers agree to pay Issuing Bank or such Lender on demand the amount of such reduction of  return of capital as and when such reduction is determined, payable within 30 days after presentation by  Issuing Bank or such Lender of a statement in the amount and setting forth in reasonable detail Issuing  Bank’s or such Lender’s calculation thereof and the assumptions upon which such calculation was based  (which statement shall be deemed true and correct absent manifest error). In determining such amount,  Issuing Bank or such Lender may use any reasonable averaging and attribution methods. Failure or delay  on the part of Issuing Bank or any Lender to demand compensation pursuant to this Section shall not  constitute a waiver of Issuing Bank’s or such Lender’s right to demand such compensation; provided, that                                             82  125672876_9 

 

   Borrowers shall not be required to compensate Issuing Bank or a Lender pursuant to this Section for any  reductions in return incurred more than 180 days prior to the date that Issuing Bank or such Lender notifies  Borrowers of such Change in Law giving rise to such reductions and of such Lender’s intention to claim  compensation therefor; provided further, that if such claim arises by reason of the Change in Law that is  retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive  effect thereof.                (b)    If Issuing Bank or any Lender requests additional or increased costs referred to in  Section 2.11(l) or Section 2.12(d)(i) or amounts under Section 2.13(a) or sends a notice under  Section 2.12(d)(ii) relative to changed circumstances (such Issuing Bank or Lender, an “Affected Lender”),  then, at the request of Administrative Borrower, such Affected Lender shall use reasonable efforts to  promptly designate a different one of its lending offices or to assign its rights and obligations hereunder to  another of its offices or branches, if (i) in the reasonable judgment of such Affected Lender, such  designation or assignment would eliminate or reduce amounts payable pursuant to Section 2.11(l),  Section 2.12(d)(i) or Section 2.13(a), as applicable, or would eliminate the illegality or impracticality of  funding or maintaining LIBOR Rate Loans, and (ii) in the reasonable judgment of such Affected Lender,  such designation or assignment would not subject it to any material unreimbursed cost or expense and  would not otherwise be materially disadvantageous to it. Borrowers agree to pay all reasonable out-of- pocket costs and expenses incurred by such Affected Lender in connection with any such designation or  assignment. If, after such reasonable efforts, such Affected Lender does not so designate a different one of  its lending offices or assign its rights to another of its offices or branches so as to eliminate Borrowers’  obligation to pay any future amounts to such Affected Lender pursuant to Section 2.11(l), Section 2.12(d)(i)  or Section 2.13(a), as applicable, or to enable Borrowers to obtain LIBOR Rate Loans, then Borrowers  (without prejudice to any amounts then due to such Affected Lender under Section 2.11(l),  Section 2.12(d)(i) or Section 2.13(a), as applicable) may, unless prior to the effective date of any such  assignment the Affected Lender withdraws its request for such additional amounts under Section 2.11(l),  Section 2.12(d)(i) or Section 2.13(a), as applicable, or indicates that it is no longer unlawful or impractical  to fund or maintain LIBOR Rate Loans, may designate a different Issuing Bank or substitute a Lender or  prospective Lender, in each case, reasonably acceptable to Agent to purchase the Obligations owed to such  Affected Lender and such Affected Lender’s commitments hereunder (a “Replacement Lender”), and if  such Replacement Lender agrees to such purchase, such Affected Lender shall assign to the Replacement  Lender its Obligations and commitments, and upon such purchase by the Replacement Lender, which such  Replacement Lender shall be deemed to be “Issuing Bank” or a “Lender” (as the case may be) for purposes  of this Agreement and such Affected Lender shall cease to be “Issuing Bank” or a “Lender” (as the case  may be) for purposes of this Agreement.                (c)    Notwithstanding anything herein to the contrary, the protection of Sections 2.11(l),  2.12(d), and 2.13 shall be available to Issuing Bank and each Lender (as applicable) regardless of any  possible contention of the invalidity or inapplicability of the law, rule, regulation, judicial ruling, judgment,  guideline, treaty or other change or condition which shall have occurred or been imposed, so long as it shall  be customary for issuing banks or lenders affected thereby to comply therewith. Notwithstanding any other  provision herein, neither Issuing Bank nor any Lender shall demand compensation pursuant to this  Section 2.13 if it shall not at the time be the general policy or practice of Issuing Bank or such Lender (as  the case may be) to demand such compensation in similar circumstances under comparable provisions of  other credit agreements, if any.          2.14  Incremental Facilities.                (a)    At any time during the period from and after the Closing Date through but  excluding the date that is the four-year anniversary of the Closing Date, at the option of Borrowers (but  subject to the conditions set forth in clause (b) below), the Revolver Commitments and the Maximum                                             83  125672876_9 

 

   Revolver Amount may be increased by an amount in the aggregate for all such increases of the Revolver  Commitments and the Maximum Revolver Amount not to exceed the Available Increase Amount (each  such increase, an “Increase”). Agent shall invite each Lender to increase its Revolver Commitments (it  being understood that no Lender shall be obligated to increase its Revolver Commitments) in connection  with a proposed Increase at the interest margin proposed by Borrowers, and if sufficient Lenders do not  agree to increase their Revolver Commitments in connection with such proposed Increase, then Agent or  Borrowers may invite any prospective lender who is an Eligible Transferee or otherwise reasonably  satisfactory to Agent and Borrowers to become a Lender in connection with a proposed Increase. Any  Increase shall be in an amount of at least $5,000,000 and integral multiples of $1,000,000 in excess thereof.  In no event may the Revolver Commitments and the Maximum Revolver Amount be increased pursuant to  this Section 2.14 on more than two occasions in the aggregate for all such Increases. Additionally, for the  avoidance of doubt, it is understood and agreed that in no event shall the aggregate amount of the Increases  to the Revolver Commitments exceed $10,000,000.                (b)    Each of the following shall be conditions precedent to any Increase of the Revolver  Commitments and the Maximum Revolver Amount:                        (i)    Agent or Borrowers have obtained the commitment of one or more  Lenders (or other prospective lenders who are Eligible Transferees or otherwise reasonably satisfactory to  Agent and Borrowers) reasonably satisfactory to Agent and Borrowers to provide the applicable Increase  and any such Lenders (or such prospective lenders), Borrowers, and Agent have signed a joinder agreement  to this Agreement (an “Increase Joinder”), in form and substance reasonably satisfactory to Agent, to which  such Lenders (or prospective lenders), Borrowers, and Agent are party,                        (ii)   each of the conditions precedent set forth in Section 3.2 are satisfied,                        (iii)  in connection with any Increase, if any Loan Party or any of its  Subsidiaries owns or will acquire any Margin Stock, Borrowers shall deliver to Agent an updated Form U-1  (with sufficient additional originals thereof for each Lender), duly executed and delivered by the Borrowers,  together with such other documentation as Agent shall reasonably request, in order to enable Agent and the  Lenders to comply with any of the requirements under Regulations T, U or X of the Federal Reserve Board,                        (iv)   Borrowers have delivered to Agent updated pro forma Projections (after  giving effect to the applicable Increase) for the Loan Parties and their Subsidiaries evidencing compliance  on a pro forma basis with Section 7 for the twelve months (on a month-by-month basis) immediately  following the proposed date of the applicable Increase, and                        (v)    The interest rate margins with respect to the Revolving Loans to be made  pursuant to the increased Revolver Commitments shall be the same as the interest rate margin applicable to  Revolving Loans hereunder immediately prior to the applicable Increase Date (as defined below). Any  Increase Joinder may, with the consent of Agent, Borrowers and the Lenders or prospective lenders agreeing  to the proposed Increase, effect such amendments to this Agreement and the other Loan Documents as may  be necessary to effectuate the provisions of this Section 2.14.                (c)    Unless otherwise specifically provided herein, (i) all references in this Agreement  and any other Loan Document to Revolving Loans shall be deemed, unless the context otherwise requires,  to include Revolving Loans made pursuant to the increased Revolver Commitments and Maximum  Revolver Amount pursuant to this Section 2.14.                (d)    Each of the Lenders having a Revolver Commitment prior to the Increase Date (the  “Pre-Increase Revolver Lenders”) shall assign to any Lender which is acquiring a new or additional  Revolver Commitment on the Increase Date (the “Post-Increase Revolver Lenders”), and such                                             84  125672876_9 

 

   Post-Increase Revolver Lenders shall purchase from each Pre-Increase Revolver Lender, at the principal  amount thereof, such interests in the Revolving Loans and participation interests in Letters of Credit on  such Increase Date as shall be necessary in order that, after giving effect to all such assignments and  purchases, such Revolving Loans and participation interests in Letters of Credit will be held by Pre-Increase  Revolver Lenders and Post-Increase Revolver Lenders ratably in accordance with their Pro Rata Share after  giving effect to such increased Revolver Commitments.                (e)    The Revolving Loans, Revolver Commitments, and Maximum Revolver Amount  established pursuant to this Section 2.14 shall constitute Revolving Loans, Revolver Commitments, and  Maximum Revolver Amount under, and shall be entitled to all the benefits afforded by, this Agreement and  the other Loan Documents, and shall, without limiting the foregoing, benefit equally and ratably from any  guarantees and the security interests created by the Loan Documents. Borrowers shall take any actions  reasonably required by Agent to ensure and demonstrate that the Liens and security interests granted by the  Loan Documents continue to be perfected under the Code or otherwise after giving effect to the  establishment of any such new Revolver Commitments and Maximum Revolver Amount.          2.15   Joint and Several Liability of Borrowers.                (a)    Each Borrower is accepting joint and several liability hereunder and under the  other Loan Documents in consideration of the financial accommodations to be provided by the Lender  Group under this Agreement, for the mutual benefit, directly and indirectly, of each Borrower and in  consideration of the undertakings of the other Borrowers to accept joint and several liability for the  Obligations.                (b)    Each Borrower, jointly and severally, hereby irrevocably and unconditionally  accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers,  with respect to the payment and performance of all of the Obligations (including any Obligations arising  under this Section 2.15), it being the intention of the parties hereto that all the Obligations shall be the joint  and several obligations of each Borrower without preferences or distinction among them. Accordingly, each  Borrower hereby waives any and all suretyship defenses that would otherwise be available to such Borrower  under applicable law.                 (c)    If and to the extent that any Borrower shall fail to make any payment with respect  to any of the Obligations as and when due, whether upon maturity, acceleration, or otherwise, or to perform  any of the Obligations in accordance with the terms thereof, then in each such event the other Borrowers  will make such payment with respect to, or perform, such Obligations until such time as all of the  Obligations are paid in full, and without the need for demand, protest, or any other notice or formality.                (d)    The Obligations of each Borrower under the provisions of this Section 2.15  constitute the absolute and unconditional, full recourse Obligations of each Borrower enforceable against  each Borrower to the full extent of its properties and assets, irrespective of the validity, regularity or  enforceability of the provisions of this Agreement (other than this Section 2.15(d)) or any other  circumstances whatsoever.                (e)    Without limiting the generality of the foregoing and except as otherwise expressly  provided in this Agreement, each Borrower hereby waives presentments, demands for performance, protests  and notices, including notices of acceptance of its joint and several liability, notice of any Revolving Loans,  any portion of the Term Loan or any Letters of Credit issued under or pursuant to this Agreement, notice  of the occurrence of any Default, Event of Default, notices of nonperformance, notices of protest, notices  of dishonor, notices of acceptance of this Agreement, notices of the existence, creation, or incurring of new  or additional Obligations or other financial accommodations or of any demand for any payment under this                                             85  125672876_9 

 

   Agreement, notice of any action at any time taken or omitted by Agent or Lenders under or in respect of  any of the Obligations, any right to proceed against any other Borrower or any other Person, to proceed  against or exhaust any security held from any other Borrower or any other Person, to protect, secure, perfect,  or insure any security interest or Lien on any property subject thereto or exhaust any right to take any action  against any other Borrower, any other Person, or any collateral, to pursue any other remedy in any member  of the Lender Group’s or any Bank Product Provider’s power whatsoever, any requirement of diligence or  to mitigate damages and, generally, to the extent permitted by applicable law, all demands, notices and  other formalities of every kind in connection with this Agreement (except as otherwise provided in this  Agreement), any right to assert against any member of the Lender Group or any Bank Product Provider,  any defense (legal or equitable), set-off, counterclaim, or claim which each Borrower may now or at any  time hereafter have against any other Borrower or any other party liable to any member of the Lender Group  or any Bank Product Provider, any defense, set-off, counterclaim, or claim, of any kind or nature, arising  directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of  the Obligations or any security therefor, and any right or defense arising by reason of any claim or defense  based upon an election of remedies by any member of the Lender Group or any Bank Product Provider  including any defense based upon an impairment or elimination of such Borrower’s rights of subrogation,  reimbursement, contribution, or indemnity of such Borrower against any other Borrower. Without limiting  the generality of the foregoing, each Borrower hereby assents to, and waives notice of, any extension or  postponement of the time for the payment of any of the Obligations, the acceptance of any payment of any  of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or  acquiescence by Agent or Lenders at any time or times in respect of any default by any Borrower in the  performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all  other indulgences whatsoever by Agent or Lenders in respect of any of the Obligations, and the taking,  addition, substitution or release, in whole or in part, at any time or times, of any security for any of the  Obligations or the addition, substitution or release, in whole or in part, of any Borrower. Without limiting  the generality of the foregoing, each Borrower assents to any other action or delay in acting or failure to act  on the part of any Agent or Lender with respect to the failure by any Borrower to comply with any of its  respective Obligations, including any failure strictly or diligently to assert any right or to pursue any remedy  or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of  this Section 2.15 afford grounds for terminating, discharging or relieving any Borrower, in whole or in part,  from any of its Obligations under this Section 2.15, it being the intention of each Borrower that, so long as  any of the Obligations hereunder remain unsatisfied, the Obligations of each Borrower under this  Section 2.15 shall not be discharged except by performance and then only to the extent of such performance.  The Obligations of each Borrower under this Section 2.15 shall not be diminished or rendered  unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar  proceeding with respect to any other Borrower or any Agent or Lender. Each of the Borrowers waives, to  the fullest extent permitted by law, the benefit of any statute of limitations affecting its liability hereunder  or the enforcement hereof. Any payment by any Borrower or other circumstance which operates to toll any  statute of limitations as to any Borrower shall operate to toll the statute of limitations as to each of the  Borrowers. Each of the Borrowers waives any defense based on or arising out of any defense of any  Borrower or any other Person, other than payment of the Obligations to the extent of such payment, based  on or arising out of the disability of any Borrower or any other Person, or the validity, legality, or  unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of  the liability of any Borrower other than payment of the Obligations to the extent of such payment. Agent  may, at the election of the Required Lenders, foreclose upon any Collateral held by Agent by one or more  judicial or nonjudicial sales or other dispositions, whether or not every aspect of any such sale is  commercially reasonable or otherwise fails to comply with applicable law or may exercise any other right  or remedy Agent, any other member of the Lender Group, or any Bank Product Provider may have against  any Borrower or any other Person, or any security, in each case, without affecting or impairing in any way  the liability of any of the Borrowers hereunder except to the extent the Obligations have been paid.                                              86  125672876_9 

 

                (f)    Each Borrower represents and warrants to Agent and Lenders that such Borrower  is currently informed of the financial condition of Borrowers and of all other circumstances which a diligent  inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each Borrower further  represents and warrants to Agent and Lenders that such Borrower has read and understands the terms and  conditions of the Loan Documents. Each Borrower hereby covenants that such Borrower will continue to  keep informed of Borrowers’ financial condition and of all other circumstances which bear upon the risk  of nonpayment or nonperformance of the Obligations.                (g)    The provisions of this Section 2.15 are made for the benefit of Agent, each member  of the Lender Group, each Bank Product Provider, and their respective successors and assigns, and may be  enforced by it or them from time to time against any or all Borrowers as often as occasion therefor may  arise and without requirement on the part of Agent, any member of the Lender Group, any Bank Product  Provider, or any of their successors or assigns first to marshal any of its or their claims or to exercise any  of its or their rights against any Borrower or to exhaust any remedies available to it or them against any  Borrower or to resort to any other source or means of obtaining payment of any of the Obligations hereunder  or to elect any other remedy. The provisions of this Section 2.15 shall remain in effect until all of the  Obligations shall have been paid in full or otherwise fully satisfied. If at any time, any payment, or any part  thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned  by Agent or any Lender upon the insolvency, bankruptcy or reorganization of any Borrower, or otherwise,  the provisions of this Section 2.15 will forthwith be reinstated in effect, as though such payment had not  been made.                (h)    Each Borrower hereby agrees that it will not enforce any of its rights that arise  from the existence, payment, performance or enforcement of the provisions of this Section 2.15, including  rights of subrogation, reimbursement, exoneration, contribution or indemnification and any right to  participate in any claim or remedy of Agent, any other member of the Lender Group, or any Bank Product  Provider against any Borrower, whether or not such claim, remedy or right arises in equity or under contract,  statute or common law, including the right to take or receive from any Borrower, directly or indirectly, in  cash or other property or by set-off or in any other manner, payment or security solely on account of such  claim, remedy or right, unless and until such time as all of the Obligations have been paid in full in cash.  Any claim which any Borrower may have against any other Borrower with respect to any payments to any  Agent or any member of the Lender Group hereunder or under any of the Bank Product Agreements are  hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in  the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations and,  in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or other similar  proceeding under the laws of any jurisdiction relating to any Borrower, its debts or its assets, whether  voluntary or involuntary, all such Obligations shall be paid in full in cash before any payment or distribution  of any character, whether in cash, securities or other property, shall be made to any other Borrower therefor.  If any amount shall be paid to any Borrower in violation of the immediately preceding sentence, such  amount shall be held in trust for the benefit of Agent, for the benefit of the Lender Group and the Bank  Product Providers, and shall forthwith be paid to Agent to be credited and applied to the Obligations and  all other amounts payable under this Agreement, whether matured or unmatured, in accordance with the  terms of this Agreement, or to be held as Collateral for any Obligations or other amounts payable under this  Agreement thereafter arising. Notwithstanding anything to the contrary contained in this Agreement, no  Borrower may exercise any rights of subrogation, contribution, indemnity, reimbursement or other similar  rights against, and may not proceed or seek recourse against or with respect to any property or asset of, any  other Borrower (the “Foreclosed Borrower”), including after payment in full of the Obligations, if all or  any portion of the Obligations have been satisfied in connection with an exercise of remedies in respect of  the Equity Interests of such Foreclosed Borrower whether pursuant to this Agreement or otherwise.                                              87  125672876_9 

 

   3.     CONDITIONS; TERM OF AGREEMENT.          3.1   Conditions Precedent to the Initial Extension of Credit. The obligation of each Lender  to make the initial extensions of credit provided for hereunder is subject to the fulfillment, to the satisfaction  of Agent and each Lender, of each of the conditions precedent set forth on Schedule 3.1 to this Agreement  (the making of such initial extensions of credit by a Lender being conclusively deemed to be its satisfaction  or waiver of the conditions precedent).         3.2    Conditions Precedent to all Extensions of Credit. The obligation of the Lender Group  (or any member thereof) to make any Revolving Loans hereunder (or to extend any other credit hereunder)  at any time shall be subject to the following conditions precedent:                (a)    the representations and warranties of each Loan Party or its Subsidiaries contained  in this Agreement or in the other Loan Documents shall be true and correct in all material respects (except  that such materiality qualifier shall not be applicable to any representations and warranties that already are  qualified or modified by materiality in the text thereof) on and as of the date of such extension of credit, as  though made on and as of such date (except to the extent that such representations and warranties relate  solely to an earlier date, in which case such representations and warranties shall be true and correct in all  material respects (except that such materiality qualifier shall not be applicable to any representations and  warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date);  and                (b)    no Default or Event of Default shall have occurred and be continuing on the date  of such extension of credit, nor shall either result from the making thereof.          3.3   Maturity. The Commitments shall continue in full force and effect for a term ending on  the Maturity Date (unless terminated earlier in accordance with the terms hereof).          3.4   Effect of Maturity. On the Maturity Date, all commitments of the Lender Group to provide  additional credit hereunder shall automatically be terminated and all of the Obligations (other than Hedge  Obligations) immediately shall become due and payable without notice or demand and Borrowers shall be  required to repay all of the Obligations (other than Hedge Obligations) in full. No termination of the  obligations of the Lender Group (other than payment in full of the Obligations and termination of the  Commitments) shall relieve or discharge any Loan Party of its duties, obligations, or covenants hereunder  or under any other Loan Document and Agent’s Liens in the Collateral shall continue to secure the  Obligations and shall remain in effect until all Obligations have been paid in full. When all of the  Obligations have been paid in full, Agent will, at Borrowers’ sole expense, execute and deliver any  termination statements, lien releases, discharges of security interests, and other similar discharge or release  documents (and, if applicable, in recordable form) as are reasonably necessary to release, as of record,  Agent’s Liens and all notices of security interests and liens previously filed by Agent.          3.5   Early Termination by Borrowers.  Borrowers have the option, at any time upon  five Business Days prior written notice to Agent, to repay all of the Obligations in full and terminate the  Commitments. The foregoing notwithstanding, (a) Borrowers may rescind termination notices relative to  proposed payments in full of the Obligations with the proceeds of third party Indebtedness if the closing  for such issuance or incurrence does not happen on or before the date of the proposed termination (in which  case, a new notice shall be required to be sent in connection with any subsequent termination), and (b)  Borrowers may extend the date of termination at any time with the consent of Agent (which consent shall  not be unreasonably withheld or delayed).                                              88  125672876_9 

 

   4.     REPRESENTATIONS AND WARRANTIES.          In order to induce the Lender Group to enter into this Agreement, each Borrower makes the  following representations and warranties to the Lender Group which shall be true, correct, and complete,  in all material respects (except that such materiality qualifier shall not be applicable to any representations  and warranties that already are qualified or modified by materiality in the text thereof), as of the Closing  Date, and shall be true, correct, and complete, in all material respects (except that such materiality qualifier  shall not be applicable to any representations and warranties that already are qualified or modified by  materiality in the text thereof), as of the date of the making of each Revolving Loan (or other extension of  credit) made thereafter, as though made on and as of the date of such Revolving Loan (or other extension  of credit) (except to the extent that such representations and warranties relate solely to an earlier date, in  which case such representations and warranties shall be true and correct in all material respects (except that  such materiality qualifier shall not be applicable to any representations and warranties that already are  qualified or modified by materiality in the text thereof) as of such earlier date), and such representations  and warranties shall survive the execution and delivery of this Agreement:          4.1   Due Organization and Qualification; Subsidiaries.                (a)    Each Loan Party and each of its Subsidiaries (i) is duly organized and existing and  in good standing under the laws of the jurisdiction of its organization, (ii) is qualified to do business in any  state where the failure to be so qualified could reasonably be expected to result in a Material Adverse Effect,  and (iii) has all requisite power and authority to own and operate its properties, to carry on its business as  now conducted and as proposed to be conducted, to enter into the Loan Documents to which it is a party  and to carry out the transactions contemplated thereby.                (b)    Set forth on Schedule 4.1(b) to this Agreement (as such Schedule may be updated  from time to time to reflect changes resulting from transactions permitted under this Agreement) is a  complete and accurate description of the authorized Equity Interests of each Loan Party, by class, and, as  of the Closing Date, a description of the number of shares of each such class that are issued and outstanding.                 (c)    Set forth on Schedule 4.1(c) to this Agreement (as such Schedule may be updated  from time to time to reflect changes resulting from transactions permitted under this Agreement), is a  complete and accurate list of the Loan Parties’ direct and indirect Subsidiaries, showing: (i) the number of  shares of each class of common and preferred Equity Interests authorized for each of such Subsidiaries, and  (ii) the number and the percentage of the outstanding shares of each such class owned directly or indirectly  by Administrative Borrower. All of the outstanding Equity Interests of each such Subsidiary has been  validly issued and is fully paid and non-assessable.                (d)    Except as set forth on Schedule 4.1(d) to this Agreement, there are no  subscriptions, options, warrants, or calls relating to any shares of any Loan Party’s or any of its Subsidiaries’  Equity Interests, including any right of conversion or exchange under any outstanding security or other  instrument. No Loan Party is subject to any obligation (contingent or otherwise) to repurchase or otherwise  acquire or retire any shares of its Equity Interests or any security convertible into or exchangeable for any  of its Equity Interests.          4.2   Due Authorization; No Conflict.                (a)    As to each Loan Party, the execution, delivery, and performance by such Loan  Party of the Loan Documents to which it is a party have been duly authorized by all necessary action on the  part of such Loan Party.                                              89  125672876_9 

 

                (b)    As to each Loan Party, the execution, delivery, and performance by such Loan  Party of the Loan Documents to which it is a party do not and will not (i) violate any material provision of  federal, state, or local law or regulation applicable to any Loan Party or its Subsidiaries, the Governing  Documents of any Loan Party or its Subsidiaries, or any order, judgment, or decree of any court or other  Governmental Authority binding on any Loan Party or its Subsidiaries, (ii) conflict with, result in a breach  of, or constitute (with due notice or lapse of time or both) a default under any Material Contract or any  other material agreement of any Loan Party or its Subsidiaries where any such conflict, breach or default  could individually or in the aggregate reasonably be expected to have a Material Adverse Effect, (iii) result  in or require the creation or imposition of any Lien of any nature whatsoever upon any assets of any Loan  Party, other than Permitted Liens, or (iv) require any approval of any holder of Equity Interests of a Loan  Party or any approval or consent of any Person under any Material Contract or any other material agreement  of any Loan Party, other than consents or approvals that have been obtained and that are still in force and  effect and except, in the case of Material Contracts or other material agreements, for consents or approvals,  the failure to obtain could not individually or in the aggregate reasonably be expected to cause a Material  Adverse Effect.         4.3    Governmental Consents. The execution, delivery, and performance by each Loan Party  of the Loan Documents to which such Loan Party is a party and the consummation of the transactions  contemplated by the Loan Documents do not and will not require any registration with, consent, or approval  of, or notice to, or other action with or by, any Governmental Authority, other than registrations, consents,  approvals, notices, or other actions that have been obtained and that are still in force and effect and except  for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Agent for  filing or recordation, as of the Closing Date.         4.4    Binding Obligations; Perfected Liens.                (a)    Each Loan Document has been duly executed and delivered by each Loan Party  that is a party thereto and is the legally valid and binding obligation of such Loan Party, enforceable against  such Loan Party in accordance with its respective terms, except as enforcement may be limited by equitable  principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting  creditors’ rights generally.                (b)    Agent’s Liens are validly created, perfected (other than (i) in respect of motor  vehicles that are subject to a certificate of title, (ii) money, (iii) letter-of-credit rights (other than supporting  obligations), (iv) commercial tort claims (other than those that, by the terms of the Guaranty and Security  Agreement, are required to be perfected), and (v) any Deposit Accounts and Securities Accounts not subject  to a Control Agreement as permitted by Section 7(k)(iv) of the Guaranty and Security Agreement, and  subject only to the filing of financing statements, the recordation of the Copyright Security Agreement (if  any), and the recordation of the Mortgages, in each case, in the appropriate filing offices), and first-priority  Liens, subject only to Permitted Liens which are non-consensual Permitted Liens, permitted purchase  money Liens, or the interests of lessors under Capital Leases.         4.5    Title to Assets; No Encumbrances. Each of the Loan Parties and its Subsidiaries has  (a) good, sufficient and legal title to (in the case of fee interests in Real Property), (b) valid leasehold  interests in (in the case of leasehold interests in real or personal property), and (c) good and, as applicable,  marketable title to (in the case of all other personal property), all of their respective assets reflected in their  most recent financial statements delivered pursuant to Section 5.1, in each case except for assets disposed  of since the date of such financial statements to the extent permitted hereby. All of such assets are free and  clear of Liens except for Permitted Liens.                                              90  125672876_9 

 

         4.6    Litigation.                (a)    There are no actions, suits, or proceedings pending or, to the knowledge of any  Borrower, after due inquiry, threatened in writing against a Loan Party or any of its Subsidiaries that either  individually or in the aggregate could reasonably be expected to result in a Material Adverse Effect.                (b)    Schedule 4.6(b) to this Agreement sets forth a complete and accurate description  of each of the actions, suits, or proceedings with asserted liabilities in excess of, or that could reasonably  be expected to result in liabilities in excess of, $1,000,000 that, as of the Closing Date, is pending or, to the  knowledge of any Borrower, after due inquiry, threatened against a Loan Party or any of its Subsidiaries.          4.7   Compliance with Laws. No Loan Party nor any of its Subsidiaries (a) is in violation of  any applicable laws, rules, regulations, executive orders, or codes (including Environmental Laws) that,  individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect, or  (b) is subject to or 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, could  reasonably be expected to result in a Material Adverse Effect.          4.8   No Material Adverse Effect. All historical financial statements relating to the Loan  Parties and their Subsidiaries that have been delivered by Borrowers to Agent have been prepared in  accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes and  being subject to year-end audit adjustments) and present fairly in all material respects, the Loan Parties’  and their Subsidiaries’ consolidated financial condition as of the date thereof and results of operations for  the period then ended. Since December 31, 2018, no event, circumstance, or change has occurred that has  or could reasonably be expected to result in a Material Adverse Effect.          4.9   Solvency.                (a)    Each Loan Party is Solvent.                (b)    No transfer of property is being made by any Loan Party and no obligation is being  incurred by any Loan Party in connection with the transactions contemplated by this Agreement or the other  Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of such Loan  Party.          4.10  Employee Benefits.                 (a)    Except as set forth on Schedule 4.10, no Loan Party, none of their Subsidiaries,  nor any of their ERISA Affiliates maintains or contributes to any Pension Plan.                (b)    Except as would not reasonably be expected to result in a Material Adverse Effect,  individually or in the aggregate, each Loan Party has complied in all material respects with ERISA, the IRC  and all applicable laws regarding each Employee Benefit Plan.                (c)    Except as would not reasonably be expected to result in a Material Adverse Effect,  individually or in the aggregate, each Employee Benefit Plan is, and has been, maintained in substantial  compliance with ERISA, the IRC, all applicable laws and the terms of each such Employee Benefit Plan.                (d)    Except as would not reasonably be expected to result in a Material Adverse Effect,  individually or in the aggregate, no liability to the PBGC (other than for the payment of current premiums                                              91  125672876_9 

 

   which are not past due) by any Loan Party or ERISA Affiliate has been incurred or is expected by any Loan  Party or ERISA Affiliate to be incurred with respect to any Pension Plan.                (e)    Except as would not reasonably be expected to result in a Material Adverse Effect,  individually or in the aggregate, no Notification Event exists or has occurred in the past six years.                (f)    Except as would not reasonably be expected to result in a Material Adverse Effect,  individually or in the aggregate, no Loan Party or ERISA Affiliate has provided any security under Section  436 of the IRC.          4.11  Environmental Condition. Except as set forth on Schedule 4.11 to this Agreement, (a) to  each Borrower’s knowledge, no Loan Party’s nor any of its Subsidiaries’ properties or assets has ever been  used by a Loan Party, its Subsidiaries, or by previous owners or operators in the disposal of, or to produce,  store, handle, treat, release, or transport, any Hazardous Materials, where such disposal, production, storage,  handling, treatment, release or transport was in violation, in any material respect, of any applicable  Environmental Law, (b) to each Borrower’s knowledge, after due inquiry, no Loan Party’s nor any of its  Subsidiaries’ properties or assets has ever been designated or identified in any manner pursuant to any  environmental protection statute as a Hazardous Materials disposal site, (c) no Loan Party nor any of its  Subsidiaries has received notice that a Lien arising under any Environmental Law has attached to any  revenues or to any Real Property owned or operated by a Loan Party or its Subsidiaries, and (d) no Loan  Party nor any of its Subsidiaries nor any of their respective facilities or operations is subject to any  outstanding written order, consent decree, or settlement agreement with any Person relating to any  Environmental Law or Environmental Liability that, individually or in the aggregate, could reasonably be  expected to result in a Material Adverse Effect.          4.12  Complete Disclosure. All factual information taken as a whole (other than forward- looking information and projections and information of a general economic nature and general information  about the industry of any Loan Party or its Subsidiaries) furnished by or on behalf of a Loan Party or its  Subsidiaries in writing to Agent or any Lender (including all information contained in the Schedules hereto  or in the other Loan Documents) for purposes of or in connection with this Agreement or the other Loan  Documents, and all other such factual information taken as a whole (other than forward-looking information  and projections and information of a general economic nature and general information about the industry  of any Loan Party or its Subsidiaries) hereafter furnished by or on behalf of a Loan Party or its Subsidiaries  in writing to Agent or any Lender will be, true and accurate, in all material respects, on the date as of which  such information is dated or certified and not incomplete by omitting to state any fact necessary to make  such information (taken as a whole) not misleading in any material respect at such time in light of the  circumstances under which such information was provided. The Projections delivered to Agent on  January 16, 2020, represent, and as of the date on which any other Projections are delivered to Agent, such  additional Projections represent, Borrowers’ good faith estimate, on the date such Projections are delivered,  of the Loan Parties’ and their Subsidiaries’ future performance for the periods covered thereby based upon  assumptions believed by Borrowers to be reasonable at the time of the delivery thereof to Agent (it being  understood that such Projections are subject to significant uncertainties and contingencies, many of which  are beyond the control of the Loan Parties and their Subsidiaries, and no assurances can be given that such  Projections will be realized, and although reflecting Borrowers’ good faith estimate, projections or forecasts  based on methods and assumptions which Borrowers believed to be reasonable at the time such Projections  were prepared, are not to be viewed as facts, and that actual results during the period or periods covered by  the Projections may differ materially from projected or estimated results). As of the Closing Date, the  information included in the Beneficial Ownership Certification is true and correct in all respects.          4.13  Patriot Act. To the extent applicable, each Loan Party is in compliance, in all material  respects, with the (a) Trading with the Enemy Act, as amended, and each of the foreign assets control                                             92  125672876_9 

 

   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, and (b) Uniting and Strengthening  America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act  of 2001, as amended) (the “Patriot Act”).         4.14   Indebtedness. Set forth on Schedule 4.14 to this Agreement is a true and complete list of  all Indebtedness of each Loan Party and each of its Subsidiaries outstanding immediately prior to the  Closing Date that is to remain outstanding immediately after giving effect to the closing hereunder on the  Closing Date and such Schedule accurately sets forth the aggregate principal amount of such Indebtedness  as of the Closing Date.          4.15  Payment of Taxes. Except as otherwise permitted under Section 5.5, all Tax returns and  reports of each Loan Party and its Subsidiaries required to be filed by any of them have been timely filed,  and all Taxes shown on such Tax returns to be due and payable and all other Taxes upon a Loan Party and  its Subsidiaries and upon their respective assets, income, businesses and franchises that are due and payable  have been paid when due and payable. Each Loan Party and each of its Subsidiaries have made adequate  provision in accordance with GAAP for all Taxes not yet due and payable. No Borrower knows of any  proposed Tax assessment against a Loan Party or any of its Subsidiaries that is not being actively contested  by such Loan Party or such Subsidiary diligently, in good faith, and by appropriate proceedings; provided,  that such reserves or other appropriate provisions, if any, as shall be required in conformity with GAAP  shall have been made or provided therefor.          4.16  Margin Stock. Neither any Loan Party nor any of its Subsidiaries owns any Margin Stock  or 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 made to  Borrowers 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 the provisions of Regulation  T, U or X of the Board of Governors. Neither any Loan Party nor any of its Subsidiaries expects to acquire  any Margin Stock.          4.17  Governmental Regulation. No Loan Party nor any of its Subsidiaries is subject to  regulation under the Federal Power Act or the Investment Company Act of 1940 or under any other federal  or state statute or regulation which may limit its ability to incur Indebtedness or which may otherwise render  all or any portion of the Obligations unenforceable. No Loan Party nor any of its Subsidiaries is a “registered  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.          4.18  OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws. No Loan  Party or any of its Subsidiaries is in violation of any Sanctions. No Loan Party nor any of its Subsidiaries  nor, to the knowledge of such Loan Party, any director, officer, employee, agent or Affiliate of such Loan  Party or such Subsidiary (a) is a Sanctioned Person or a Sanctioned Entity, (b) has any assets located in  Sanctioned Entities, or (c) derives revenues from investments in, or transactions with Sanctioned Persons  or Sanctioned Entities. Each of the Loan Parties and its Subsidiaries has implemented and maintains in  effect policies and procedures reasonably designed to ensure compliance with Sanctions, Anti-Corruption  Laws and Anti-Money Laundering Laws. Each of the Loan Parties and its Subsidiaries, and to the  knowledge of each such Loan Party, each director, officer, employee, agent and Affiliate of each such Loan  Party and each such Subsidiary, is in compliance with all Sanctions, Anti-Corruption Laws and Anti-Money  Laundering Laws. No proceeds of any Loan made or Letter of Credit issued hereunder will be used to fund  any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person  or a Sanctioned Entity, or otherwise used in any manner that would result in a violation of any Sanction,                                             93  125672876_9 

 

   Anti-Corruption Law or Anti-Money Laundering Law by any Person (including any Lender, Bank Product  Provider, or other individual or entity participating in any transaction).          4.19  Employee and Labor Matters. There is (i) no unfair labor practice complaint pending or,  to the knowledge of any Borrower, threatened against any Loan Party or its Subsidiaries before any  Governmental Authority and no grievance or arbitration proceeding pending or threatened against any Loan  Party or its Subsidiaries which arises out of or under any collective bargaining agreement and that could  reasonably be expected to result in a material liability, (ii) no strike, labor dispute, slowdown, stoppage or  similar action or grievance pending or threatened in writing against any Loan Party or its Subsidiaries that  could reasonably be expected to result in a material liability, or (iii) to the knowledge of any Borrower,  after due inquiry, no union representation question existing with respect to the employees of any Loan Party  or its Subsidiaries and no union organizing activity taking place with respect to any of the employees of  any Loan Party or its Subsidiaries. None of any Loan Party or its Subsidiaries has incurred any liability or  obligation under the Worker Adjustment and Retraining Notification Act or similar state law, which  remains unpaid or unsatisfied. The hours worked and payments made to employees of each Loan Party and  its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable legal  requirements, except to the extent such violations could not, individually or in the aggregate, reasonably be  expected to result in a Material Adverse Effect. All material payments due from any Loan Party or its  Subsidiaries on account of wages and employee health and welfare insurance and other benefits have been  paid or accrued as a liability on the books of Borrowers, except where the failure to do so could not,  individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.          4.20  [Reserved].          4.21  Leases. Each Loan Party and its Subsidiaries enjoy peaceful and undisturbed possession  under all leases material to their business and to which they are parties or under which they are operating,  and, subject to Permitted Protests, all of such material leases are valid and subsisting and no material default  by the applicable Loan Party or its Subsidiaries exists under any of them.         4.22   Eligible Accounts; Eligible Credit Card Receivables. As to each Account that is  identified by Borrowers as an Eligible Account or an Eligible Credit Card Receivable in a Borrowing Base  Certificate submitted to Agent, such Account or Credit Card Receivable is (a) a bona fide existing payment  obligation of the applicable Account Debtor created by the sale and delivery of Inventory or the rendition  of services to such Account Debtor in the ordinary course of a Borrower’s business, (b) owed to a Borrower  without any known defenses, disputes, offsets, counterclaims, or rights of return or cancellation, other than  any portion thereof reflected as being ineligible to the extent of any defenses, disputes, offsets,  counterclaims, or rights of return or cancellation reflected in such Borrowing Base Certificate, (c) in the  case of Accounts, not excluded as ineligible by virtue of one or more of the excluding criteria (other than  any Agent-discretionary criteria) set forth in the definition of Eligible Accounts, and (d) in the case of Credit  Card Receivables, not excluded as ineligible by virtue of one or more of the excluding criteria (other than  any Agent-discretionary criteria) set forth in the definition of Eligible Credit Card Receivables.           4.23  Eligible Inventory. As to each item of Inventory that is identified by Borrowers as Eligible  Finished Goods Inventory, Eligible Spare Parts Inventory, or Eligible In-Transit Inventory in a Borrowing  Base Certificate submitted to Agent, such Inventory is (a) of good and merchantable quality, free from  known defects, and (b) not excluded as ineligible by virtue of one or more of the excluding criteria (other  than any Agent-discretionary criteria) set forth in the definition of Eligible Inventory (in the case of Eligible  In-Transit Inventory, after giving effect to any exclusions therefrom specified in the definition of Eligible  In-Transit Inventory).          4.24  Eligible IP. As to each item of IP that is identified by Borrowers as Eligible IP in a  Borrowing Base Certificate submitted to Agent, such IP is not excluded as ineligible by virtue of one or                                             94  125672876_9 

 

   more of the excluding criteria (other than any Agent-discretionary criteria) set forth in the definition of  Eligible IP.          4.25  Location of Inventory. Except as set forth in Schedule 4.25, the Inventory of Borrowers  and their Subsidiaries is not stored with a bailee, warehouseman, or similar party and is located only at, or  in-transit between, the locations identified on Schedule 4.25 to this Agreement (as such Schedule may be  updated pursuant to Section 5.14).         4.26   Inventory Records. Each Loan Party keeps correct and accurate records itemizing and  describing the type, quality, and quantity of its and its Subsidiaries’ Inventory and the book value thereof.         4.27   [Reserved].         4.28   [Reserved].         4.29   Immaterial Subsidiary. Nautilus Shanghai Fitness (a) does not own any assets (other than  assets of a de minimis nature), (b) does not have any liabilities (other than liabilities of a de minimis nature),  and (c) does not engage in any business activity.          4.30  Hedge Agreements. On each date that any Hedge Agreement is executed by any Hedge  Provider, Borrower and each other Loan Party satisfy all eligibility, suitability and other requirements under  the Commodity Exchange Act (7 U.S.C. § 1, et seq., as in effect from time to time) and the Commodity  Futures Trading Commission regulations.          4.31  Credit Card Arrangements. Set forth on Schedule 4.31 is a reasonably detailed  description of all arrangements (including, without limitation, all Credit Card Agreements) as of the Closing  Date to which any Loan Party is a party with respect to the processing and/or payment to such Loan Party  of the proceeds of any credit card charges, debit card charges, and charge card charges for sales made by  such Loan Party.          4.32  Material Contracts. Set forth on Schedule 4.32 (as such Schedule may be updated from  time to time in accordance with this Agreement) is a reasonably detailed description of the Material  Contracts of each Loan Party and its Subsidiaries as of the most recent date on which Borrowers provided  the Compliance Certificate pursuant to Section 5.1; provided, that Borrowers may amend Schedule 4.32 to  add additional Material Contracts so long as such amendment occurs by written notice to Agent on the date  that Borrowers provide the Compliance Certificate. Except for matters which, either individually or in the  aggregate, could not reasonably be expected to result in a Material Adverse Effect, each Material Contract  (other than those that have expired at the end of their normal terms) (a) is in full force and effect and is  binding upon and enforceable against the applicable Loan Party or its Subsidiary and, to each Borrower’s  knowledge, after due inquiry, each other Person that is a party thereto in accordance with its terms, (b) has  not been otherwise amended or modified (other than amendments or modifications permitted by  Section 6.6(b)), and (c) is not in default due to the action or inaction of the applicable Loan Party or its  Subsidiary.   5.     AFFIRMATIVE COVENANTS.          Each Borrower covenants and agrees that, until the termination of all of the Commitments and  payment in full of the Obligations:          5.1   Financial Statements, Reports, Certificates. Borrowers (a) will deliver to Agent, with  copies to each Lender, each of the financial statements, reports, and other items set forth on Schedule 5.1  to this Agreement no later than the times specified therein, (b) agree that no Subsidiary of a Loan Party will                                             95  125672876_9 

 

   have a fiscal year different from that of Administrative Borrower, (c) agree to maintain a system of  accounting that enables Borrowers to produce financial statements in accordance with GAAP, and (d) agree  that they will, and will cause each other Loan Party to, (i) keep a reporting system that shows all additions,  sales, claims, returns, and allowances with respect to their and their Subsidiaries’ sales, and (ii) maintain  their billing systems and practices substantially as in effect as of the Closing Date and shall only make  material modifications thereto with notice to, and with the consent of, Agent.          5.2   Reporting. Borrowers (a) will deliver to Agent (and if so requested by Agent, with copies  for each Lender) each of the reports set forth on Schedule 5.2 to this Agreement at the times specified  therein, and (b) agree to use commercially reasonable efforts in cooperation with Agent to facilitate and  implement a system of electronic collateral reporting in order to provide electronic reporting of each of the  items set forth on such Schedule. Borrowers and Agent hereby agree that the delivery of the Borrowing  Base Certificate through the Agent’s electronic platform or portal, subject to Agent’s authentication  process, by such other electronic method as may be approved by Agent from time to time in its sole  discretion, or by such other electronic input of information necessary to calculate the Borrowing Bases or  the Term Loan Borrowing Bases as may be approved by Agent from time to time in its sole discretion, shall  in each case be deemed to satisfy the obligation of Borrowers to deliver such Borrowing Base Certificate,  with the same legal effect as if such Borrowing Base Certificate had been manually executed by Borrowers  and delivered to Agent.          5.3   Existence. Except as otherwise permitted under Section 6.3 or Section 6.4, each Loan  Party will, and will cause each of its Subsidiaries to, at all times preserve and keep in full force and effect  such Person’s valid existence and good standing in its jurisdiction of organization and, except as could not  reasonably be expected to result in a Material Adverse Effect, good standing with respect to all other  jurisdictions in which it is qualified to do business and any rights, franchises, permits, licenses,  accreditations, authorizations, or other approvals material to their businesses.          5.4   Maintenance of Properties. Each Loan Party will, and will cause each of its Subsidiaries  to, maintain and preserve all of its assets that are necessary or useful in the proper conduct of its business  in good working order and condition, ordinary wear, tear, casualty, and condemnation and Permitted  Dispositions excepted (and except where the failure to so maintain and preserve assets could not reasonably  be expected to result in a Material Adverse Effect).          5.5   Taxes. Each Loan Party will, and will cause each of its Subsidiaries to, pay in full before  delinquency or before the expiration of any extension period all Taxes imposed, levied, or assessed against  it, or any of its assets or in respect of any of its income, businesses, or franchises, other than Taxes not in  excess of $1,000,000 outstanding at any time and other than to the extent that the validity of such Tax is  the subject of a Permitted Protest.          5.6   Insurance.                 (a)    Each Loan Party will, and will cause each of its Subsidiaries to, at Borrowers’  expense, maintain insurance respecting each of each Loan Party’s and its Subsidiaries’ assets wherever  located, covering liabilities, losses or damages as are customarily are insured against by other Persons  engaged in same or similar businesses and similarly situated and located. All such policies of insurance  shall be with financially sound and reputable insurance companies acceptable to Agent (it being agreed  that, as of the Closing Date, the Loan Parties’ existing insurance providers as set forth in the certificates of  insurance delivered to Agent on or about the Closing Date shall be deemed to be acceptable to Agent) and  in such amounts as is carried generally in accordance with sound business practice by companies in similar  businesses similarly situated and located and, in any event, in amount, adequacy, and scope reasonably  satisfactory to Agent (it being agreed that the amount, adequacy, and scope of the policies of insurance of  Borrowers in effect as of the Closing Date are acceptable to Agent). All property insurance policies are to                                             96  125672876_9 

 

   be made payable to Agent for the benefit of Agent and the Lenders, as their interests may appear, in case  of loss, pursuant to a standard lender’s loss payable endorsement with a standard non-contributory “lender”  or “secured party” clause and are to contain such other provisions as Agent may reasonably require to fully  protect the Lenders’ interest in the Collateral and to any payments to be made under such policies. All  certificates of property and general liability insurance are to be delivered to Agent, with the lender’s loss  payable and additional insured endorsements in favor of Agent and shall provide for not less than thirty  days (ten days in the case of non-payment) prior written notice to Agent of the exercise of any right of  cancellation. If any Loan Party or its Subsidiaries fails to maintain such insurance, Agent may arrange for  such insurance, but at Borrowers’ expense and without any responsibility on Agent’s part for obtaining the  insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of  claims.                 (b)    Borrowers shall give Agent prompt notice of any loss exceeding $500,000 covered  by the casualty or business interruption insurance of any Loan Party or its Subsidiaries. Upon the occurrence  and during the continuance of an Event of Default, Agent shall have the sole right to file claims under any  property and general liability insurance policies in respect of the Collateral, to receive, receipt and give  acquittance for any payments that may be payable thereunder, and to execute any and all endorsements,  receipts, releases, assignments, reassignments or other documents that may be necessary to effect the  collection, compromise or settlement of any claims under any such insurance policies.                (c)    If at any time the area in which any Real Property that is subject to a Mortgage is  located is designated a “flood hazard area” in any Flood Insurance Rate Map published by the Federal  Emergency Management Agency (or any successor agency), obtain flood insurance in such total amount  and on terms that are satisfactory to Agent and all Lenders from time to time, and otherwise comply with  the Flood Laws or as is otherwise satisfactory to Agent and all Lenders.          5.7   Inspection.                (a)    Each Loan Party will, and will cause each of its Subsidiaries to, permit Agent, any  Lender, and each of their respective duly authorized representatives or agents to visit any of its properties  and inspect any of its assets or books and records, to examine and make copies of its books and records,  and to discuss its affairs, finances, and accounts with, and to be advised as to the same by, its officers and  employees (provided, that an authorized representative of a Borrower shall be allowed to be present) at  such reasonable times and intervals as Agent or any Lender, as applicable, may designate and, so long as  no Default or Event of Default has occurred and is continuing, with reasonable prior notice to Borrowers  and during regular business hours, at Borrowers’ expense in accordance with this Agreement and the  provisions of the Fee Letter, subject to the limitations set forth below in Section 5.7(c).                (b)    Each Loan Party will, and will cause each of its Subsidiaries to, permit Agent and  each of its duly authorized representatives or agents to conduct field examinations, appraisals or valuations  at such reasonable times and intervals as Agent may designate, at Borrowers’ expense in accordance with  this Agreement and the provisions of the Fee Letter, subject to the limitations set forth below in  Section 5.7(c).                (c)    So long as no Event of Default shall have occurred and be continuing during a  calendar year, Borrowers shall not be obligated to reimburse Agent for more than (i) 1 field examination in  such calendar year (increasing to 2 field examinations if either (A) an Increased Reporting Event has  occurred during such calendar year or (B) Borrowers have negative EBITDA during any rolling 12-month  period ended during such calendar year), (ii) 1 inventory appraisal in such calendar year (increasing to  2 inventory appraisals if either (A) an Increased Reporting Event has occurred during such calendar year  or (B) Borrowers have negative EBITDA during any rolling 12-month period ended during such calendar  year), and (iii) 1 appraisal of intellectual property in such calendar year (increasing to 2 appraisals of                                             97  125672876_9 

 

   intellectual property if either (A) an Increased Reporting Event has occurred during such calendar year or  (B) Borrowers have negative EBITDA during any rolling 12-month period ended during such calendar  year), in each case under this Section 5.7(c), except for the Field Exam (as defined in the definition of  Borrowing Base) and field examinations and appraisals conducted in connection with a proposed Permitted  Acquisition (whether or not consummated).          5.8   Compliance with Laws. Each Loan Party will, and will cause each of its Subsidiaries to,  comply with the requirements of all applicable laws, rules, regulations, and orders of any Governmental  Authority, other than laws, rules, regulations, and orders the non-compliance with which, individually or  in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.          5.9   Environmental. Each Loan Party will, and will cause each of its Subsidiaries to,                (a)    Keep any property either owned or operated by any Loan Party or its Subsidiaries  free of any Environmental Liens or post bonds or other financial assurances sufficient to satisfy the  obligations or liability evidenced by such Environmental Liens,                (b)    Comply, in all material respects, with Environmental Laws and provide to Agent  documentation of such compliance which Agent reasonably requests,                (c)    Promptly notify Agent of any release of which any Loan Party has knowledge of  a Hazardous Material in any reportable quantity from or onto property owned or operated by any Loan  Party or its Subsidiaries and take any Remedial Actions required to abate said release or otherwise to come  into compliance, in all material respects, with applicable Environmental Law, and                (d)    Promptly, but in any event within five Business Days of its receipt thereof, provide  Agent with written notice of any of the following: (i) notice that an Environmental Lien has been filed  against any of the real or personal property of a Loan Party or its Subsidiaries, (ii) commencement of any  Environmental Action or written notice that an Environmental Action will be filed against a Loan Party or  its Subsidiaries, and (iii) written notice of a violation, citation, or other administrative order from a  Governmental Authority.         5.10   Disclosure Updates. Each Loan Party will, promptly and in no event later than five  Business Days after obtaining knowledge thereof, notify Agent if any written information, exhibit, or report  furnished to Agent or the Lenders contained, at the time it was furnished, any untrue statement of a material  fact or omitted to state any material fact necessary to make the statements contained therein not misleading  in light of the circumstances in which made. The foregoing to the contrary notwithstanding, any notification  pursuant to the foregoing provision will not cure or remedy the effect of the prior untrue statement of a  material fact or omission of any material fact nor shall any such notification have the effect of amending or  modifying this Agreement or any of the Schedules hereto.          5.11  Formation of Subsidiaries. Each Loan Party will, at the time that any Loan Party forms  any direct or indirect Subsidiary, acquires any direct or indirect Subsidiary after the Closing Date, within  ten days of such event (or such later date as permitted by Agent in its sole discretion) (a) cause such new  Subsidiary (i) if such Subsidiary is a Domestic Subsidiary and Administrative Borrower requests, subject  to the consent of Agent, that such Domestic Subsidiary be joined as a Borrower hereunder, to provide to  Agent a Joinder to this Agreement, and (ii) to provide to Agent a joinder to the Guaranty and Security  Agreement, in each case, together with such other security agreements (including Mortgages with respect  to any Real Property owned in fee of such new Subsidiary with a fair market value of greater than  $1,000,000), as well as appropriate financing statements (and with respect to all property subject to a  Mortgage, fixture filings), all in form and substance reasonably satisfactory to Agent (including being  sufficient to grant Agent a first-priority Lien (subject to Permitted Liens) in and to the assets of such newly                                             98  125672876_9 

 

   formed or acquired Subsidiary (other than any assets expressly excluded from the Collateral (as defined in  the Guaranty and Security Agreement)); provided, that the Joinder, the joinder to the Guaranty and Security  Agreement, and such other security agreements shall not be required to be provided to Agent with respect  to any Subsidiary of any Loan Party that is a CFC if providing such agreements would result in adverse tax  consequences or the costs to the Loan Parties of providing such guaranty or such security agreements are  unreasonably excessive (as determined by Agent in consultation with Borrowers) in relation to the benefits  to Agent and the Lenders of the security or guarantee afforded thereby, (b) provide, or cause the applicable  Loan Party to provide, to Agent a pledge agreement (or an addendum to the Guaranty and Security  Agreement) and appropriate certificates and powers or financing statements, pledging all of the direct or  beneficial ownership interest in such new Subsidiary in form and substance reasonably satisfactory to  Agent; provided, that only 65% of the total outstanding voting Equity Interests of any first tier Subsidiary  of a Loan Party that is a CFC (and none of the Equity Interests of any Subsidiary of such CFC) shall be  required to be pledged if pledging a greater amount would result in adverse tax consequences or the costs  to the Loan Parties of providing such pledge are unreasonably excessive (as determined by Agent in  consultation with Borrowers) in relation to the benefits to Agent and the Lenders of the security afforded  thereby (which pledge, if reasonably requested by Agent, shall be governed by the laws of the jurisdiction  of such Subsidiary), and (c) provide to Agent all other documentation, including the Governing Documents  of such Subsidiary and one or more opinions of counsel reasonably satisfactory to Agent, which, in its  opinion, is appropriate with respect to the execution and delivery of the applicable documentation referred  to above (including policies of title insurance, flood certification documentation or other documentation  with respect to all Real Property owned in fee and subject to a Mortgage). Any document, agreement, or  instrument executed or issued pursuant to this Section 5.11 shall constitute a Loan Document.         5.12   Further Assurances. Each Loan Party will, and will cause each of the other Loan Parties  to, at any time upon the reasonable request of Agent, execute or deliver to Agent any and all financing  statements, fixture filings, security agreements, pledges, assignments, Mortgages, deeds of trust, opinions  of counsel, and all other documents (the “Additional Documents”) that Agent may reasonably request in  form and substance reasonably satisfactory to Agent, to create, perfect, and continue perfected or to better  perfect Agent’s Liens in all of the assets of each of the Loan Parties (whether now owned or hereafter  arising or acquired, tangible or intangible, real or personal) (other than any assets expressly excluded from  the Collateral (as defined in the Guaranty and Security Agreement) pursuant to Section 3 of the Guaranty  and Security Agreement), to create and perfect Liens in favor of Agent in any Real Property acquired and  owned in fee by any other Loan Party with a fair market value in excess of $1,000,000, and in order to fully  consummate all of the transactions contemplated hereby and under the other Loan Documents; provided,  that the foregoing shall not apply to any Subsidiary of a Loan Party that is a CFC if providing such  documents would result in adverse tax consequences or the costs to the Loan Parties of providing such  documents are unreasonably excessive (as determined by Agent in consultation with Borrowers) in relation  to the benefits to Agent and the Lenders of the security afforded thereby. To the maximum extent permitted  by applicable law, if any Borrower or any other Loan Party refuses or fails to execute or deliver any  reasonably requested Additional Documents within a reasonable period of time not to exceed 5 Business  Days following the request to do so, each Borrower and each other Loan Party hereby authorizes Agent to  execute any such Additional Documents in the applicable Loan Party’s name and authorizes Agent to file  such executed Additional Documents in any appropriate filing office. In furtherance of, and not in limitation  of, the foregoing, each Loan Party shall take such actions as Agent may reasonably request from time to  time to ensure that the Obligations are guaranteed by the Guarantors and are secured by substantially all of  the assets of the Loan Parties, including all of the outstanding capital Equity Interests of each Borrower and  its Subsidiaries (in each case, other than with respect to any assets expressly excluded from the Collateral  (as defined in the Guaranty and Security Agreement) pursuant to Section 3 of the Guaranty and Security  Agreement). Notwithstanding anything to the contrary contained herein (including Section 5.11 hereof and  this Section 5.12) or in any other Loan Document, (x) Agent shall not accept delivery of any Mortgage  from any Loan Party unless each of the Lenders has received 45 days prior written notice thereof and Agent                                             99  125672876_9 

 

   has received confirmation from each Lender that such Lender has completed its flood insurance diligence,  has received copies of all flood insurance documentation and has confirmed that flood insurance  compliance has been completed as required by the Flood Laws or as otherwise satisfactory to such Lender  and (y) Agent shall not accept delivery of any joinder to any Loan Document with respect to any Subsidiary  of any Loan Party that is not a Loan Party, if such Subsidiary that qualifies as a “legal entity customer”  under the Beneficial Ownership Regulation unless such Subsidiary has delivered a Beneficial Ownership  Certification in relation to such Subsidiary and Agent has completed its Patriot Act searches, OFAC/PEP  searches and customary individual background checks for such Subsidiary, the results of which shall be  satisfactory to Agent.          5.13  [Reserved].          5.14   Location of Inventory; Chief Executive Office. Each Loan Party will, and will cause  each of its Subsidiaries to, keep (a) their Inventory only at the locations identified on Schedule 4.25 to this  Agreement (provided that Borrowers may amend Schedule 4.25 to this Agreement so long as such  amendment occurs by written notice to Agent not less than ten days prior to the date on which such  Inventory is moved to such new location and so long as Agent has consented to such amendment and such  new location is within the continental United States), and (b) their respective chief executive offices only  at the locations identified on Schedule 7 to the Guaranty and Security Agreement. Subject to Section 5.18,  each Loan Party will, and will cause each of its Subsidiaries to, use their commercially reasonable efforts  to obtain Collateral Access Agreements for each of the locations identified on Schedule 7 to the Guaranty  and Security Agreement and Schedule 4.25 to this Agreement.         5.15   Compliance with ERISA and the IRC. In addition to and without limiting the generality  of Section 5.8, (a) comply in all material respects with applicable provisions of ERISA and the IRC with  respect to all Employee Benefit Plans, (b) without the prior written consent of Agent and the Required  Lenders, not take any action or fail to take action the result of which could result in a Loan Party or ERISA  Affiliate incurring a material liability to the PBGC or to a Multiemployer Plan (other than to pay  contributions or premiums payable in the ordinary course), (c) allow any facts or circumstances to exist  with respect to one or more Employee Benefit Plans that, in the aggregate, reasonably could be expected to  result in a Material Adverse Effect, (d) not participate in any prohibited transaction that could result in other  than a non-material civil penalty excise tax, fiduciary liability or correction obligation under ERISA or the  IRC, (e) operate each Employee Benefit Plan in such a manner that will not incur any material tax liability  under the IRC (including Section 4980B of the IRC), and (e) furnish to Agent upon Agent’s written request  such additional reasonable information about any Employee Benefit Plan for which any Loan Party or  ERISA Affiliate could reasonably expect to incur any material liability. With respect to each Pension Plan,  except as could not reasonably be expected to result in a Material Adverse Effect, individually or in the  aggregate, the Loan Parties and the ERISA Affiliates shall (i) satisfy in full and in a timely manner, without  incurring any late payment or underpayment charge or penalty and without giving rise to any Lien, all of  the contribution and funding requirements of the IRC and of ERISA, and (ii) pay, or cause to be paid, to  the PBGC in a timely manner, without incurring any late payment or underpayment charge or penalty, all  premiums required pursuant to ERISA.          5.16  OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws. Each Loan  Party will, and will cause each of its Subsidiaries to comply with all applicable Sanctions, Anti-Corruption  Laws and Anti-Money Laundering Laws. Each of the Loan Parties and its Subsidiaries shall implement and  maintain in effect policies and procedures reasonably designed to ensure compliance by the Loan Parties  and their Subsidiaries and their respective directors, officers, employees, agents and Affiliates with  Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.                                              100  125672876_9 

 

         5.17   Material Contracts. Contemporaneously with the delivery of each Compliance Certificate  pursuant to Section 5.1, Borrowers will provide Agent with copies of (a) each Material Contract entered  into since the delivery of the previous Compliance Certificate, and (b) each material amendment or  modification of any Material Contract entered into since the delivery of the previous Compliance  Certificate.          5.18  Post-Closing Obligations. The Loan Parties will complete each of the tasks and other  items set forth on Schedule 5.18 no later than the times specified therein or such later date as Agent may  agree in writing.   6.     NEGATIVE COVENANTS.          Each Borrower covenants and agrees that, until the termination of all of the Commitments and the  payment in full of the Obligations:          6.1   Indebtedness. Each Loan Party will not, and will not permit any of its Subsidiaries to,  create, incur, assume, suffer to exist, guarantee, or otherwise become or remain, directly or indirectly, liable  with respect to any Indebtedness, except for Permitted Indebtedness.          6.2   Liens. Each Loan Party will not, and will not permit any of its Subsidiaries to, create, incur,  assume, or suffer to exist, directly or indirectly, any Lien on or with respect to any of its assets, of any kind,  whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens.          6.3   Restrictions on Fundamental Changes. Each Loan Party will not, and will not permit  any of its Subsidiaries to,                (a)    Other than in order to consummate a Permitted Acquisition, enter into any merger,  consolidation, reorganization, or recapitalization, or reclassify its Equity Interests, except for (i) any merger  between Loan Parties; provided, that a Borrower must be the surviving entity of any such merger to which  it is a party, (ii) any merger between a Loan Party and a Subsidiary of such Loan Party that is not a Loan  Party so long as such Loan Party is the surviving entity of any such merger, and (iii) any merger between  Subsidiaries of any Loan Party that are not Loan Parties,                (b)    liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution),  except for (i) the liquidation or dissolution of non-operating Subsidiaries of any Loan Party with nominal  assets and nominal liabilities, (ii) the liquidation or dissolution of a Loan Party (other than any Borrower)  or any of its wholly-owned Subsidiaries so long as all of the assets (including any interest in any Equity  Interests) of such liquidating or dissolving Loan Party or Subsidiary are transferred to a Loan Party that is  not liquidating or dissolving, or (iii) the liquidation or dissolution of a Subsidiary of any Loan Party that is  not a Loan Party (other than any such Subsidiary the Equity Interests of which (or any portion thereof) is  subject to a Lien in favor of Agent) so long as all of the assets of such liquidating or dissolving Subsidiary  are transferred to a Subsidiary of a Loan Party that is not liquidating or dissolving,                (c)    suspend or cease operating a substantial portion of its or their business, except as  permitted pursuant to clauses (a) or (b) above or in connection with a transaction permitted under  Section 6.4, or                (d)    change its classification/status for U.S. federal income tax purposes.         6.4    Disposal of Assets. Other than Permitted Dispositions or transactions expressly permitted  by Sections 6.3 or 6.9, each Loan Party will not, and will not permit any of its Subsidiaries to, convey, sell,  lease, license, assign, transfer, or otherwise dispose of any of its or their assets (including by an allocation                                             101  125672876_9 

 

   of assets among newly divided limited liability companies pursuant to a “plan of division” or pursuant to a  Sale–Leaseback or other sale-and-leaseback transaction).          6.5   Nature of Business. Each Loan Party will not, and will not permit any of its Subsidiaries  to, make any change in the nature of its or their business as described in Schedule 6.5 to this Agreement or  acquire any properties or assets that are not reasonably related to the conduct of such business activities;  provided, that the foregoing shall not prevent any Loan Party and its Subsidiaries from engaging in any  business that is reasonably related or ancillary to its or their business.          6.6   Prepayments and Amendments. Each Loan Party will not, and will not permit any of its  Subsidiaries to,                (a)    Except in connection with Refinancing Indebtedness permitted by Section 6.1,                        (i)    optionally prepay, redeem, defease, purchase, or otherwise acquire any  Indebtedness of any Loan Party or its Subsidiaries, other than (A) the Obligations in accordance with this  Agreement, (B) Hedge Obligations, or (C) to the extent not otherwise prohibited by the Intercompany  Subordination Agreement, Permitted Intercompany Advances, or                        (ii)   make any payment on account of Indebtedness that has been  contractually subordinated in right of payment to the Obligations if such payment is not permitted at such  time under the subordination terms and conditions, or                (b)    Directly or indirectly, amend, modify, or change any of the terms or provisions of:                        (i)    any agreement, instrument, document, indenture, or other writing  evidencing or concerning Permitted Indebtedness other than (A) the Obligations in accordance with this  Agreement, (B) Hedge Obligations, (C) subject to the Intercompany Subordination Agreement, Permitted  Intercompany Advances, and (D) Indebtedness permitted under clauses (c), (h) , (j) and (k) of the definition  of Permitted Indebtedness,                        (ii)   any Material Contract (other than the Pacific Direct License Agreement)  except to the extent that such amendment, modification, or change could not, individually or in the  aggregate, reasonably be expected to be materially adverse to the interests of the Lenders,                         (iii)  any Credit Card Agreement except to the extent that such amendment,  modification, or change could not, individually or in the aggregate, reasonably be expected to be materially  adverse to the interests of the Lenders,                         (iv)   the Governing Documents of any Loan Party or any of its Subsidiaries if  the effect thereof, either individually or in the aggregate, could reasonably be expected to be materially  adverse to the interests of the Lenders, or                        (v)    the Pacific Direct License Agreement, unless such amendment,  modification, or change is permitted pursuant to the terms of the Pacific Direct Collateral Assignment.         6.7    Restricted Payments. Each Loan Party will not, and will not permit any of its Subsidiaries  to, make any Restricted Payment; provided, that so long as it is permitted by law,                (a)    Administrative Borrower may make distributions to former employees, officers,  or directors of Administrative Borrower (or any spouses, ex-spouses, or estates of any of the foregoing) on  account of redemptions of Equity Interests of Administrative Borrower held by such Persons; provided,                                             102  125672876_9 

 

   that the aggregate amount of such redemptions made by Administrative Borrower during the term of this  Agreement plus the amount of Indebtedness outstanding under clause (l) of the definition of Permitted  Indebtedness, does not exceed $250,000 in the aggregate,                (b)    Administrative Borrower may make distributions to former employees, officers,  or directors of Administrative Borrower (or any spouses, ex-spouses, or estates of any of the foregoing),  solely in the form of forgiveness of Indebtedness of such Persons owing to Administrative Borrower on  account of repurchases of the Equity Interests of Administrative Borrower held by such Persons; provided,  that such Indebtedness was incurred by such Persons solely to acquire Equity Interests of Administrative  Borrower,                (c)    Administrative Borrower’s Subsidiaries may make distributions to Administrative  Borrower (i) in an amount sufficient to pay franchise taxes and other fees required to maintain the legal  existence of the Loan Parties and their Subsidiaries to the extent actually used by Administrative Borrower  to pay such taxes, costs and expenses, and (ii) in an amount sufficient to pay out-of-pocket legal, accounting  and filing costs and other expenses in the nature of overhead in the ordinary course of business of the Loan  Parties and their Subsidiaries,                (d)    each of the Borrowers may declare and pay dividends with respect to its common  stock payable solely in additional shares of its common stock, and, with respect to its preferred stock,  payable solely in additional shares of such preferred stock or in shares of its common stock,                (e)    any Subsidiary may make a Restricted Payment to a Borrower and any Subsidiary  which is not a Loan Party may make a Restricted Payment to another Subsidiary, or                (f)    other Restricted Payments so long as the Payment Conditions are satisfied.          6.8   Accounting Methods. Each Loan Party will not, and will not permit any of its Subsidiaries  to, modify or change its fiscal year or its method of accounting (other than as may be required to conform  to GAAP).          6.9   Investments. Each Loan Party will not, and will not permit any of its Subsidiaries to,  directly or indirectly, make or acquire any Investment or incur any liabilities (including contingent  obligations) for or in connection with any Investment except for Permitted Investments.          6.10  Transactions with Affiliates. Each Loan Party will not, and will not permit any of its  Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction with any Affiliate of any  Loan Party or any of its Subsidiaries except for:                (a)    transactions (other than the payment of management, consulting, monitoring, or  advisory fees) between such Loan Party or its Subsidiaries, on the one hand, and any Affiliate of such Loan  Party or its Subsidiaries, on the other hand, so long as such transactions (i) are fully disclosed to Agent prior  to the consummation thereof, if they involve one or more payments by such Loan Party or its Subsidiaries  to an Affiliate that is not a Loan Party in excess of $2,500,000 for any single transaction or series of related  transactions, and (ii) are no less favorable, taken as a whole, to such Loan Party or its Subsidiaries, as  applicable, than would be obtained in an arm’s length transaction with a non-Affiliate,                (b)    any indemnity provided for the benefit of directors (or comparable managers) of a  Loan Party or one of its Subsidiaries so long as it has been approved by such Loan Party’s or such  Subsidiary’s board of directors (or comparable governing body) in accordance with applicable law,                                              103  125672876_9 

 

                (c)    the payment of reasonable compensation, severance, or employee benefit  arrangements to employees, officers, and outside directors of a Loan Party or one of its Subsidiaries in the  ordinary course of business and consistent with industry practice so long as it has been approved by such  Loan Party’s or such Subsidiary’s board of directors (or comparable governing body) in accordance with  applicable law,                (d)    (i) transactions solely among the Loan Parties, and (ii) transactions solely among  Subsidiaries of Loan Parties that are not Loan Parties,                (e)    transactions permitted by Section 6.3, Section 6.7, or Section 6.9, or                (f)    agreements for the non-exclusive licensing of intellectual property, or distribution  of products, in each case, among the Loan Parties and their Subsidiaries for the purpose of the counterparty  thereof operating its business, and agreements for the assignment of intellectual property from any Loan  Party or any of its Subsidiaries to any Loan Party.         6.11   Use of Proceeds. Each Loan Party will not, and will not permit any of its Subsidiaries to,  use the proceeds of any Loan made hereunder for any purpose other than (a) on the Closing Date, (i) to  repay, in full, the outstanding principal, accrued interest, and accrued fees and expenses owing under or in  connection with the Existing Credit Facility, and (ii) to pay the fees, costs, and expenses incurred in  connection with this Agreement, the other Loan Documents, and the transactions contemplated hereby and  thereby, in each case, as set forth in the Flow of Funds Agreement, and (b) thereafter, consistent with the  terms and conditions hereof, for their lawful and permitted purposes; provided that (x) no part of the  proceeds of the Loans will be used to purchase or carry any such Margin Stock or to extend credit to others  for the purpose of purchasing or carrying any such Margin Stock or for any purpose that violates the  provisions of Regulation T, U or X of the Board of Governors, (y) no part of the proceeds of any Loan or  Letter of Credit will be used, directly or, to Borrowers’ knowledge after due care and inquiry, indirectly, to  make any payments to a Sanctioned Entity or a Sanctioned Person, to fund any investments, loans or  contributions in, or otherwise make such proceeds available to, a Sanctioned Entity or a Sanctioned Person,  to fund any operations, activities or business of a Sanctioned Entity or a Sanctioned Person, or in any other  manner that would result in a violation of Sanctions by any Person, and (z) that no part of the proceeds of  any Loan or Letter of Credit will be used, directly or, to Borrowers’ knowledge after due care and inquiry,  indirectly, in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of  money, or anything else of value, to any Person in violation of any Sanctions, Anti-Corruption Laws or  Anti-Money Laundering Laws.          6.12  Limitation on Issuance of Equity Interests. Except for the issuance or sale of Qualified  Equity Interests by Administrative Borrower, each Loan Party will not, and will not permit any of its  Subsidiaries to, issue or sell any of its Equity Interests.          6.13  Inventory with Bailees. Each Borrower will not, and will not permit any of its Subsidiaries  to, store its Inventory at any time with a bailee, warehouseman, or similar party except as set forth on  Schedule 4.25 (as such Schedule may be amended in accordance with Section 5.14).         6.14   [Reserved].          6.15   Employee Benefits.                (a)    Terminate, or permit any ERISA Affiliate to terminate, any Pension Plan in a  manner, or take any other action with respect to any Plan, which could reasonably be expected to result in  any material liability of any Loan Party or ERISA Affiliate to the PBGC.                                              104  125672876_9 

 

                (b)    Fail to make, or permit any ERISA Affiliate to fail to make, full payment when  due of all amounts which, under the provisions of any Pension Plan, agreement relating thereto or applicable  Law, any Loan Party or ERISA Affiliate is required to pay if such failure could reasonably be expected to  have a Material Adverse Effect.                (c)    Permit to exist, or allow any ERISA Affiliate to permit to exist, any accumulated  funding deficiency within the meaning of section 302 of ERISA or section 412 of the Code, whether or not  waived, with respect to any Plan which exceeds $1,000,000 with respect to all Pension Plans in the  aggregate.                (d)    [Reserved].                (e)    Contribute to or assume an obligation to contribute to, or permit any ERISA  Affiliate to contribute to or assume an obligation to contribute to, any Multiemployer Plan not set forth on  Schedule 4.10.                (f)    Amend, or permit any ERISA Affiliate to amend, a Pension Plan resulting in a  material increase in current liability such that a Loan Party is required to provide security to such Pension  Plan under the IRC.         6.16   Credit Card Agreements. Each Loan Party will not, and will not permit any of its  Subsidiaries to, enter into any arrangements (including, without limitation, Credit Card Agreements) after  the Closing Date with respect to the processing and/or payment to such Loan Party or such Subsidiary of  the proceeds of any credit card charges, debit card charges, and charge card charges for sales made by such  Loan Party or such Subsidiary other than those listed Schedule 4.31 unless Agent has received a Credit  Card Notification with respect thereto.          6.17  Immaterial Subsidiary. Each Loan Party will not permit Nautilus Shanghai Fitness to  (a) own any assets (other than assets of a de minimis nature), (b) have any liabilities (other than liabilities  of a de minimis nature), or (c) engage in any business activity.   7.     FINANCIAL COVENANTS.          Each Borrower covenants and agrees that, until the termination of all of the Commitments and the  payment in full of the Obligations:          7.1   Minimum EBITDA. Borrowers will achieve the EBITDA Covenant, on a rolling 12- month basis, set forth in the Fee Letter, which covenant will not be tested prior to January 31, 2022.         7.2    Availability. Borrowers will have Availability of at least (a) $7,500,000 at all times  immediately after the Closing Date through and including the end of the month ending January 31, 2022,  and (b) $5,000,000 at all times thereafter.   8.     EVENTS OF DEFAULT.                Any one or more of the following events shall constitute an event of default (each, an  “Event of Default”) under this Agreement:         8.1    Payments. If Borrowers fail to pay when due and payable, or when declared due and  payable, (a) all or any portion of the Obligations consisting of interest, fees, or charges due the Lender  Group, reimbursement of Lender Group Expenses, or other amounts (other than any portion thereof  constituting principal) constituting Obligations (including any portion thereof that accrues after the                                             105  125672876_9 

 

   commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in  part as a claim in any such Insolvency Proceeding), and such failure continues for a period of three Business  Days, (b) all or any portion of the principal of the Loans, or (c) any amount payable to Issuing Bank in  reimbursement of any drawing under a Letter of Credit;         8.2    Covenants. If any Loan Party or any of its Subsidiaries:                (a)    fails to perform or observe any covenant or other agreement contained in any of  (i) Sections 5.1, 5.2, 5.3 (solely if any Borrower is not in good standing in its jurisdiction of organization),  5.6, 5.7 (solely if any Borrower refuses to allow Agent or its representatives or agents to visit any  Borrower’s properties, inspect its assets or books or records, examine and make copies of its books and  records, or discuss Borrowers’ affairs, finances, and accounts with officers and employees of any  Borrower), 5.10, 5.11, 5.13, 5.16, or 5.18 of this Agreement, (ii) Section 6 of this Agreement, (iii) Section 7  of this Agreement, or (iv) Section 7 of the Guaranty and Security Agreement;                (b)    fails to perform or observe any covenant or other agreement contained in any of  Sections 5.3 (other than if any Borrower is not in good standing in its jurisdiction of organization), 5.4, 5.5,  5.8, 5.12, or 5.17 of this Agreement and such failure continues for a period of ten days after the earlier of  (i) the date on which such failure shall first become known to any officer of any Borrower, or (ii) the date  on which written notice thereof is given to Borrowers by Agent; or                (c)    fails to perform or observe any covenant or other agreement contained in this  Agreement, or in any of the other Loan Documents, in each case, other than any such covenant or agreement  that is the subject of another provision of this Section 8 (in which event such other provision of this  Section 8 shall govern), and such failure continues for a period of thirty days after the earlier of (i) the date  on which such failure shall first become known to any officer of any Borrower, or (ii) the date on which  written notice thereof is given to Borrowers by Agent;          8.3   Judgments. If one or more judgments, orders, or awards for the payment of money  involving an aggregate amount of $1,500,000, or more (except to the extent fully covered (other than to the  extent of customary deductibles) by insurance pursuant to which the insurer has not denied coverage) is  entered or filed against a Loan Party or any of its Subsidiaries, or with respect to any of their respective  assets, and either (a) there is a period of thirty consecutive days at any time after the entry of any such  judgment, order, or award during which (i) the same is not discharged, satisfied, vacated, or bonded pending  appeal, or (ii) a stay of enforcement thereof is not in effect, or (b) enforcement proceedings are commenced  upon such judgment, order, or award;          8.4   Voluntary Bankruptcy, etc. If an Insolvency Proceeding is commenced by a Loan Party  or any of its Subsidiaries;          8.5   Involuntary Bankruptcy, etc. If an Insolvency Proceeding is commenced against a Loan  Party or any of its Subsidiaries and any of the following events occur: (a) such Loan Party or such  Subsidiary consents to the institution of such Insolvency Proceeding against it, (b) the petition commencing  the Insolvency Proceeding is not timely controverted, (c) the petition commencing the Insolvency  Proceeding is not dismissed within sixty calendar days of the date of the filing thereof, (d) an interim trustee  is appointed to take possession of all or any substantial portion of the properties or assets of, or to operate  all or any substantial portion of the business of, such Loan Party or its Subsidiary, or (e) an order for relief  shall have been issued or entered therein;          8.6   Default Under Other Agreements. If there is (a) a default in one or more agreements to  which a Loan Party or any of its Subsidiaries is a party with one or more third Persons relative to a Loan  Party’s or any of its Subsidiaries’ Indebtedness involving an aggregate amount of $1,000,000 or more, and                                             106  125672876_9 

 

   such default (i) occurs at the final maturity of the obligations thereunder, or (ii) results in a right by such  third Person, irrespective of whether exercised, to accelerate the maturity of such Loan Party’s or its  Subsidiary’s obligations thereunder, or (b) a default in or an involuntary early termination of one or more  Hedge Agreements to which a Loan Party or any of its Subsidiaries is a party;         8.7    Representations, etc. If any warranty, representation, certificate, statement, or Record  made herein or in any other Loan Document or delivered in writing to Agent or any Lender in connection  with this Agreement or any other Loan Document proves to be untrue in any material respect (except that  such materiality qualifier shall not be applicable to any representations and warranties that already are  qualified or modified by materiality in the text thereof) as of the date of issuance or making or deemed  making thereof;          8.8   Guaranty. If the obligation of any Guarantor under the guaranty contained in the Guaranty  and Security Agreement is limited or terminated by operation of law or by such Guarantor (other than in  accordance with the terms of this Agreement) or if any Guarantor repudiates or revokes or purports to  repudiate or revoke any such guaranty;          8.9   Security Documents. If the Guaranty and Security Agreement or any other Loan  Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and perfected  and, (except to the extent of Permitted Liens which are non-consensual Permitted Liens, permitted purchase  money Liens or the interests of lessors under Capital Leases) first-priority Lien on the Collateral covered  thereby, except (a) as a result of a disposition of the applicable Collateral in a transaction permitted under  this Agreement, or (b) with respect to Collateral the aggregate value of which, for all such Collateral, does  not exceed at any time, $1,000,000;          8.10  Loan Documents. The validity or enforceability of any Loan Document shall at any time  for any reason (other than solely as the result of an action or failure to act on the part of Agent) be declared  to be null and void, or a proceeding shall be commenced by a Loan Party or its Subsidiaries, or by any  Governmental Authority having jurisdiction over a Loan Party or its Subsidiaries, seeking to establish the  invalidity or unenforceability thereof, or a Loan Party or its Subsidiaries shall deny that such Loan Party or  its Subsidiaries has any liability or obligation purported to be created under any Loan Document; or         8.11   Change of Control. A Change of Control shall occur, whether directly or indirectly.         8.12   ERISA. The occurrence of any of the following events: (a) any Loan Party or ERISA  Affiliate fails to make full payment when due of all amounts which any Loan Party or ERISA Affiliate is  required to pay as contributions, installments, or otherwise to or with respect to a Pension Plan or  Multiemployer Plan, and such failure could reasonably be expected to result in liability of any Loan Party  in excess of $1,000,000, (b) an accumulated funding deficiency or funding shortfall in excess of $1,000,000  occurs or exists, whether or not waived, with respect to any Pension Plan, individually or in the aggregate,  (c) a Notification Event, which could reasonably be expected to result in liability of any Loan Party in  excess of $1,000,000, either individually or in the aggregate, or (d) any Loan Party or ERISA Affiliate  completely or partially withdraws from one or more Multiemployer Plans and incurs Withdrawal Liability  in excess of $1,000,000 in the aggregate, or fails to make any Withdrawal Liability payment when due.          8.13  Credit Card Agreements. The occurrence of any of the following events: (a) any Credit  Card Issuer or Credit Card Processor shall send notice to any Borrower that it is ceasing to make or  suspending payments to such Borrower of amounts due or to become due to such Borrower or shall cease  or suspend such payments, or shall send notice to such Borrower that it is terminating its arrangements with  such Borrower or such arrangements shall terminate as a result of any event of default under such  arrangements, which continues for more than the applicable cure period, if any, with respect thereto, unless  such Borrower shall have entered into arrangements with another Credit Card Issuer or Credit Card                                             107  125672876_9 

 

   Processor, as the case may be, within 60 days after the date of any such notice, or (b) any Credit Card Issuer  or Credit Card Processor withholds payment of amounts otherwise payable to a Borrower to fund a reserve  account or otherwise hold as collateral, or shall require a Borrower to pay funds into a reserve account or  for such Credit Card Issuer or Credit Card Processor to otherwise hold as collateral, or any Borrower shall  provide a letter of credit, guarantee, indemnity or similar instrument to or in favor of such Credit Card  Issuer or Credit Card Processors such that in the aggregate all of such funds in the reserve account, other  than amounts held as collateral and the amount of such letters of credit, guarantees, indemnities or similar  instruments shall exceed an amount equal to or exceeding 10% of the Credit Card Receivables processed  by such Credit Card Issuer or Credit Card Processor in the immediately preceding fiscal year.   9.     RIGHTS AND REMEDIES.          9.1   Rights and Remedies. Upon the occurrence and during the continuation of an Event of  Default, Agent may, and, at the instruction of the Required Lenders, shall, in addition to any other rights or  remedies provided for hereunder or under any other Loan Document or by applicable law, do any one or  more of the following:                (a)    by written notice to Borrowers, (i) declare the principal of, and any and all accrued  and unpaid interest and fees in respect of, the Loans and all other Obligations (other than the Bank Product  Obligations), whether evidenced by this Agreement or by any of the other Loan Documents to be  immediately due and payable, whereupon the same shall become and be immediately due and payable and  Borrowers shall be obligated to repay all of such Obligations in full, without presentment, demand, protest,  or further notice or other requirements of any kind, all of which are hereby expressly waived by each  Borrower, and (ii) direct Borrowers to provide (and Borrowers agree that upon receipt of such notice  Borrowers will provide) Letter of Credit Collateralization to Agent to be held as security for Borrowers’  reimbursement obligations for drawings that may subsequently occur under issued and outstanding Letters  of Credit;                (b)    by written notice to Borrowers, declare the Commitments terminated, whereupon  the Commitments shall immediately be terminated together with (i) any obligation of any Revolving Lender  to make Revolving Loans, (ii) the obligation of the Swing Lender to make Swing Loans, and (iii) the  obligation of Issuing Bank to issue Letters of Credit; and                (c)    exercise all other rights and remedies available to Agent or the Lenders under the  Loan Documents, under applicable law, or in equity.   The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default described in  Section 8.4 or Section 8.5, in addition to the remedies set forth above, without any notice to Borrowers or  any other Person or any act by the Lender Group, the Commitments shall automatically terminate and the  Obligations (other than the Bank Product Obligations), inclusive of the principal of, and any and all accrued  and unpaid interest and fees in respect of, the Loans and all other Obligations (other than the Bank Product  Obligations), whether evidenced by this Agreement or by any of the other Loan Documents, shall  automatically become and be immediately due and payable and Borrowers shall automatically be obligated  to repay all of such Obligations in full (including Borrowers being obligated to provide (and Borrowers  agree that they will provide) (1) Letter of Credit Collateralization to Agent to be held as security for  Borrowers’ reimbursement obligations in respect of drawings that may subsequently occur under issued  and outstanding Letters of Credit and (2) Bank Product Collateralization to be held as security for  Borrowers’ or their Subsidiaries’ obligations in respect of outstanding Bank Products), without  presentment, demand, protest, or notice or other requirements of any kind, all of which are expressly waived  by Borrowers.                                              108  125672876_9 

 

         9.2    Remedies Cumulative.  The rights and remedies of the Lender Group under this  Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Lender Group  shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in  equity. No exercise by the Lender Group of one right or remedy shall be deemed an election, and no waiver  by the Lender Group of any Default or Event of Default shall be deemed a continuing waiver. No delay by  the Lender Group shall constitute a waiver, election, or acquiescence by it.   10.    WAIVERS; INDEMNIFICATION.          10.1  Demand; Protest; etc. Each Borrower waives demand, protest, notice of protest, notice of  default or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise,  settlement, extension, or renewal of documents, instruments, chattel paper, and guarantees at any time held  by the Lender Group on which any Borrower may in any way be liable.          10.2  The Lender Group’s Liability for Collateral. Each Borrower hereby agrees that: (a) so  long as Agent complies with its obligations, if any, under the Code, the Lender Group shall not in any way  or manner be liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto  occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof, or  (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all  risk of loss, damage, or destruction of the Collateral shall be borne by the Loan Parties.          10.3  Indemnification. Each Borrower shall pay, indemnify, defend, and hold the Agent-Related  Persons, the Lender-Related Persons, the Issuing Bank, and each Participant (each, an “Indemnified  Person”) harmless (to the fullest extent permitted by law) from and against any and all claims, demands,  suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and damages, and all reasonable  fees and disbursements of attorneys, experts, or consultants and all other costs and expenses actually  incurred in connection therewith or in connection with the enforcement of this indemnification (as and  when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed  upon, or incurred by any of them (a) in connection with or as a result of or related to the execution and  delivery (provided, that Borrowers shall not be liable for costs and expenses (including attorneys’ fees) of  any Lender (other than Wells Fargo) incurred in advising, structuring, drafting, reviewing, administering  or syndicating the Loan Documents), enforcement, performance, or administration (including any  restructuring or workout with respect hereto) of this Agreement, any of the other Loan Documents, or the  transactions contemplated hereby or thereby or the monitoring of the Loan Parties’ and their Subsidiaries’  compliance with the terms of the Loan Documents (provided, that the indemnification in this clause (a)  shall not extend to (i) disputes solely between or among the Lenders that do not involve any acts  or omissions of any Loan Party, or (ii) disputes solely between or among the Lenders and their respective  Affiliates that do not involve any acts or omissions of any Loan Party; it being understood and agreed that  the indemnification in this clause (a) shall extend to Agent (but not the Lenders unless the dispute involves  an act or omission of a Loan Party) relative to disputes between or among Agent on the one hand, and one  or more Lenders, or one or more of their Affiliates, on the other hand, or (iii) any claims for Taxes, which  shall be governed by Section 16, other than Taxes which relate to primarily non-Tax claims), (b) with  respect to any actual or prospective investigation, litigation, or proceeding related to this Agreement, any  other Loan Document, the making of any Loans or issuance of any Letters of Credit hereunder, or the use  of the proceeds of the Loans or the Letters of Credit provided hereunder (irrespective of whether any  Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner related  thereto, and (c) in connection with or arising out of any presence or release of Hazardous Materials at, on,  under, to or from any assets or properties owned, leased or operated by any Loan Party or any of its  Subsidiaries or any Environmental Actions, Environmental Liabilities or Remedial Actions related in any  way to any such assets or properties of any Loan Party or any of its Subsidiaries (each and all of the  foregoing, the “Indemnified Liabilities”). The foregoing to the contrary notwithstanding, no Borrower shall                                             109  125672876_9 

 

   have any obligation to any Indemnified Person under this Section 10.3 with respect to any Indemnified  Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence  or willful misconduct of such Indemnified Person or its officers, directors, employees, attorneys, or agents.  This provision shall survive the termination of this Agreement and the repayment in full of the Obligations.  If any Indemnified Person makes any payment to any other Indemnified Person with respect to an  Indemnified Liability as to which Borrowers were required to indemnify the Indemnified Person receiving  such payment, the Indemnified Person making such payment is entitled to be indemnified and reimbursed  by Borrowers with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY  SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED  LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY  NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER  PERSON.   11.    NOTICES.          Unless otherwise provided in this Agreement, all notices or demands relating to this Agreement or  any other Loan Document shall be in writing and (except for financial statements and other informational  documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by  registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at  such email addresses as a party may designate in accordance herewith), or telefacsimile. In the case of  notices or demands to any Loan Party or Agent, as the case may be, they shall be sent to the respective  address set forth below:           If to any Loan Party:    c/o Administrative Borrower                                   Nautilus, Inc.                                   17750 S.E. 6th Way                                   Vancouver, Washington 98963                                    Attn: Dave Wachsmuth, Senior Director of Finance                                   Email: dwachsmuth@nautilus.com                                   Fax no.: 360-859-8357                                    Attn: Wayne Bolio, Senior Vice President Law &                                   Human Resources                                    Email: wbolio@nautilus.com                                   Fax no.: 360-859-2511           with copies to:          Sidley Austin LLP                                   787 Seventh Avenue                                   New York, New York 10019                                   Attn: Leslie Plaskon                                   Email: lplaskon@sidley.com                                   Fax No.: 212-839-5599           If to Agent:             Wells Fargo Bank, National Association                                   10 S. Wacker Drive, 26th Floor                                   Chicago, Illinois 60606                                   Attn: Loan Portfolio Manager (Nautilus)                                   Fax No.: 312-332-0424                                              110  125672876_9 

 

          with copies to:           McGuireWoods LLP                                   77 W. Wacker Drive, Suite 4100                                   Chicago, Illinois 60601                                   Attn: Philip J. Perzek                                   Fax No.: 312-698-4555   Any party hereto may change the address at which they are to receive notices hereunder, by notice in writing  in the foregoing manner given to the other party. All notices or demands sent in accordance with this  Section 11, shall be deemed received on the earlier of the date of actual receipt or three Business Days after  the deposit thereof in the mail; provided, that (a) notices sent by overnight courier service shall be deemed  to have been given when received, (b) notices by facsimile shall be deemed to have been given when sent  (except that, if not given during normal business hours for the recipient, shall be deemed to have been given  at the opening of business on the next Business Day for the recipient) and (c) notices by electronic mail  shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such  as by the “return receipt requested” function, as available, return email or other written acknowledgment).   12.    CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE  PROVISION.                (a)    THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN  DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN  DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,  INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, THE RIGHTS OF THE  PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING  HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO, AND ANY  CLAIMS, CONTROVERSIES OR DISPUTES ARISING HEREUNDER OR THEREUNDER OR  RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND  CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.                (b)    THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS  ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN  DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE  EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE  COUNTY OF COOK, STATE OF ILLINOIS; PROVIDED, THAT ANY SUIT SEEKING  ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE  BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE  AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER  PROPERTY MAY BE FOUND. EACH BORROWER AND EACH MEMBER OF THE LENDER  GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT  EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO  OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE  WITH THIS SECTION 12(b).                (c)    TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,  EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE  THEIR RESPECTIVE RIGHTS, IF ANY, TO A JURY TRIAL OF ANY CLAIM,  CONTROVERSY, DISPUTE OR CAUSE OF ACTION DIRECTLY OR INDIRECTLY BASED  UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE  TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT  CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY                                             111  125672876_9 

 

   CLAIMS (EACH A “CLAIM”). EACH BORROWER AND EACH MEMBER OF THE LENDER  GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH  KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING  CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF  THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE  COURT.                (d)    EACH BORROWER HEREBY IRREVOCABLY AND  UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND  FEDERAL COURTS LOCATED IN THE COUNTY OF COOK AND THE STATE OF ILLINOIS,  IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN  DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT. EACH  OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION  OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER  JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED  BY LAW. NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL  AFFECT ANY RIGHT THAT AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR  PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT  AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY  JURISDICTION.                (e)    NO CLAIM MAY BE MADE BY ANY LOAN PARTY AGAINST THE  AGENT, THE SWING LENDER, ANY OTHER LENDER, ISSUING BANK, OR ANY  AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, REPRESENTATIVE, AGENT,  OR ATTORNEY-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT,  CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OR LOSSES IN RESPECT OF  ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY  ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS  AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION, OR EVENT  OCCURRING IN CONNECTION THEREWITH, AND EACH LOAN PARTY HEREBY WAIVES,  RELEASES, AND AGREES NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES,  WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO  EXIST IN ITS FAVOR.                (f)    IN THE EVENT ANY LEGAL PROCEEDING IS FILED IN A COURT OF  THE STATE OF CALIFORNIA (THE “COURT”) BY OR AGAINST ANY PARTY HERETO IN  CONNECTION WITH ANY CLAIM AND THE WAIVER SET FORTH IN CLAUSE (c) ABOVE  IS NOT ENFORCEABLE IN SUCH PROCEEDING, THE PARTIES HERETO AGREE AS  FOLLOWS:                        (i)    WITH THE EXCEPTION OF THE MATTERS SPECIFIED IN  SUBCLAUSE (ii) BELOW, ANY CLAIM SHALL BE DETERMINED BY A GENERAL  REFERENCE PROCEEDING IN ACCORDANCE WITH THE PROVISIONS OF CALIFORNIA  CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1. THE PARTIES INTEND  THIS GENERAL REFERENCE AGREEMENT TO BE SPECIFICALLY ENFORCEABLE.  VENUE FOR THE REFERENCE PROCEEDING SHALL BE IN THE COUNTY OF LOS  ANGELES, CALIFORNIA.                        (ii)   THE FOLLOWING MATTERS SHALL NOT BE SUBJECT TO A  GENERAL REFERENCE PROCEEDING: (A) NON-JUDICIAL FORECLOSURE OF ANY  SECURITY INTERESTS IN REAL OR PERSONAL PROPERTY, (B) EXERCISE OF SELF-                                            112  125672876_9 

 

   HELP REMEDIES (INCLUDING SET-OFF OR RECOUPMENT), (C) APPOINTMENT OF A  RECEIVER, AND (D) TEMPORARY, PROVISIONAL, OR ANCILLARY REMEDIES  (INCLUDING WRITS OF ATTACHMENT, WRITS OF POSSESSION, TEMPORARY  RESTRAINING ORDERS, OR PRELIMINARY INJUNCTIONS). THIS AGREEMENT DOES  NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY OF THE RIGHTS  AND REMEDIES DESCRIBED IN CLAUSES (A) THROUGH (D) AND ANY SUCH EXERCISE  OR OPPOSITION DOES NOT WAIVE THE RIGHT OF ANY PARTY TO PARTICIPATE IN A  REFERENCE PROCEEDING PURSUANT TO THIS AGREEMENT WITH RESPECT TO ANY  OTHER MATTER.                        (iii)  UPON THE WRITTEN REQUEST OF ANY PARTY, THE  PARTIES SHALL SELECT A SINGLE REFEREE, WHO SHALL BE A RETIRED JUDGE OR  JUSTICE. IF THE PARTIES DO NOT AGREE UPON A REFEREE WITHIN TEN DAYS OF  SUCH WRITTEN REQUEST, THEN, ANY PARTY SHALL HAVE THE RIGHT TO REQUEST  THE COURT TO APPOINT A REFEREE PURSUANT TO CALIFORNIA CODE OF CIVIL  PROCEDURE SECTION 640(b). THE REFEREE SHALL BE APPOINTED TO SIT WITH ALL  OF THE POWERS PROVIDED BY LAW. PENDING APPOINTMENT OF THE REFEREE, THE  COURT SHALL HAVE THE POWER TO ISSUE TEMPORARY OR PROVISIONAL  REMEDIES.                        (iv)   EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT,  THE REFEREE SHALL DETERMINE THE MANNER IN WHICH THE REFERENCE  PROCEEDING IS CONDUCTED INCLUDING THE TIME AND PLACE OF HEARINGS, THE  ORDER OF PRESENTATION OF EVIDENCE, AND ALL OTHER QUESTIONS THAT ARISE  WITH RESPECT TO THE COURSE OF THE REFERENCE PROCEEDING. ALL  PROCEEDINGS AND HEARINGS CONDUCTED BEFORE THE REFEREE, EXCEPT FOR  TRIAL, SHALL BE CONDUCTED WITHOUT A COURT REPORTER, EXCEPT WHEN ANY  PARTY SO REQUESTS A COURT REPORTER AND A TRANSCRIPT IS ORDERED, A COURT  REPORTER SHALL BE USED AND THE REFEREE SHALL BE PROVIDED A COURTESY  COPY OF THE TRANSCRIPT. THE PARTY MAKING SUCH REQUEST SHALL HAVE THE  OBLIGATION TO ARRANGE FOR AND PAY THE COSTS OF THE COURT REPORTER;  PROVIDED, THAT SUCH COSTS, ALONG WITH THE REFEREE’S FEES, SHALL  ULTIMATELY BE BORNE BY THE PARTY WHO DOES NOT PREVAIL, AS DETERMINED  BY THE REFEREE.                        (v)    THE REFEREE MAY REQUIRE ONE OR MORE PREHEARING  CONFERENCES. THE PARTIES HERETO SHALL BE ENTITLED TO DISCOVERY, AND THE  REFEREE SHALL OVERSEE DISCOVERY IN ACCORDANCE WITH THE RULES OF  DISCOVERY, AND SHALL ENFORCE ALL DISCOVERY ORDERS IN THE SAME MANNER  AS ANY TRIAL COURT JUDGE IN PROCEEDINGS AT LAW IN THE STATE OF  CALIFORNIA.                        (vi)   THE REFEREE SHALL APPLY THE RULES OF EVIDENCE  APPLICABLE TO PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA AND SHALL  DETERMINE ALL ISSUES IN ACCORDANCE WITH CALIFORNIA SUBSTANTIVE AND  PROCEDURAL LAW. THE REFEREE SHALL BE EMPOWERED TO ENTER EQUITABLE AS  WELL AS LEGAL RELIEF AND RULE ON ANY MOTION WHICH WOULD BE AUTHORIZED  IN A TRIAL, INCLUDING MOTIONS FOR DEFAULT JUDGMENT OR SUMMARY  JUDGMENT. THE REFEREE SHALL REPORT HIS OR HER DECISION, WHICH REPORT  SHALL ALSO INCLUDE FINDINGS OF FACT AND CONCLUSIONS OF LAW. THE REFEREE  SHALL ISSUE A DECISION AND PURSUANT TO CALIFORNIA CODE OF CIVIL                                             113  125672876_9 

 

   PROCEDURE, SECTION 644, THE REFEREE’S DECISION SHALL BE ENTERED BY THE  COURT AS A JUDGMENT IN THE SAME MANNER AS IF THE ACTION HAD BEEN TRIED  BY THE COURT. THE FINAL JUDGMENT OR ORDER FROM ANY APPEALABLE DECISION  OR ORDER ENTERED BY THE REFEREE SHALL BE FULLY APPEALABLE AS IF IT HAS  BEEN ENTERED BY THE COURT.                        (vii)  THE PARTIES RECOGNIZE AND AGREE THAT ALL CLAIMS  RESOLVED IN A GENERAL REFERENCE PROCEEDING PURSUANT HERETO WILL BE  DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD  THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACH  PARTY HERETO KNOWINGLY AND VOLUNTARILY AND FOR THEIR MUTUAL BENEFIT  AGREES THAT THIS REFERENCE PROVISION SHALL APPLY TO ANY DISPUTE  BETWEEN THEM THAT ARISES OUT OF OR IS RELATED TO THIS AGREEMENT OR THE  OTHER LOAN DOCUMENTS.   13.    ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.          13.1  Assignments and Participations.                (a)    (i) Subject to the conditions set forth in clause (a)(ii) below, any Lender may assign  and delegate all or any portion of its rights and duties under the Loan Documents (including the Obligations  owed to it and its Commitments) to one or more assignees so long as such prospective assignee is an Eligible  Transferee (each, an “Assignee”), with the prior written consent (such consent not be unreasonably withheld  or delayed) of:   (A)   Borrowers; provided, that no consent of Borrowers shall be required (1) if a Default or Event of        Default has occurred and is continuing, or (2) in connection with an assignment to a Person that is        a Lender or an Affiliate (other than natural persons) of a Lender; provided further, that Borrowers        shall be deemed to have consented to a proposed assignment unless they object thereto by written        notice to Agent within five Business Days after having received notice thereof; and   (B)   Agent, Swing Lender, and Issuing Bank.                        (ii)   Assignments shall be subject to the following additional conditions:   (A)   no assignment may be made (I) so long as no Event of Default has occurred and is continuing, to a        Disqualified Institution, or (II) to a natural person,   (B)   no assignment may be made to a Loan Party or an Affiliate of a Loan Party,   (C)   the amount of the Commitments and the other rights and obligations of the assigning Lender        hereunder and under the other Loan Documents subject to each such assignment (determined as of        the date the Assignment and Acceptance with respect to such assignment is delivered to Agent)        shall be in a minimum amount (unless waived by Agent) of $5,000,000 (except such minimum        amount shall not apply to (I) an assignment or delegation by any Lender to any other Lender, an        Affiliate of any Lender, or a Related Fund of such Lender, or (II) a group of new Lenders, each of        which is an Affiliate of each other or a Related Fund of such new Lender to the extent that the        aggregate amount to be assigned to all such new Lenders is at least $5,000,000),   (D)   each partial assignment shall be made as an assignment of a proportionate part of all the assigning        Lender’s rights and obligations under this Agreement,                                              114  125672876_9 

 

   (E)    the parties to each assignment shall execute and deliver to Agent an Assignment and Acceptance;         provided, that Borrowers and Agent may continue to deal solely and directly with the assigning        Lender in connection with the interest so assigned to an Assignee until written notice of such        assignment, together with payment instructions, addresses, and related information with respect to        the Assignee, have been given to Borrowers and Agent by such Lender and the Assignee,   (F)   unless waived by Agent, the assigning Lender or Assignee has paid to Agent, for Agent’s separate        account, a processing fee in the amount of $3,500, and   (G)   the assignee, if it is not a Lender, shall deliver to Agent an Administrative Questionnaire in a form        approved by Agent (the “Administrative Questionnaire”).                (b)    From and after the date that Agent receives the executed Assignment and  Acceptance and, if applicable, payment of the required processing fee, (i) the Assignee thereunder shall be  a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to  such Assignment and Acceptance, shall be a “Lender” and shall have the rights and obligations of a Lender  under the Loan Documents, and (ii) the assigning Lender shall, to the extent that rights and obligations  hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and  Acceptance, relinquish its rights (except with respect to Section 10.3) and be released from any future  obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the  remaining portion of an assigning Lender’s rights and obligations under this Agreement and the other Loan  Documents, such Lender shall cease to be a party hereto and thereto); provided, that nothing contained  herein shall release any assigning Lender from obligations that survive the termination of this Agreement,  including such assigning Lender’s obligations under Section 15 and Section 17.9(a).                (c)    By executing and delivering an Assignment and Acceptance, the assigning Lender  thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto  as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no  representation or warranty and assumes no responsibility with respect to any statements, warranties or  representations made in or in connection with this Agreement or the execution, legality, validity,  enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished  pursuant hereto, (ii) such assigning Lender makes no representation or warranty and assumes no  responsibility with respect to the financial condition of any Loan Party or the performance or observance  by any Loan Party of any of its obligations under this Agreement or any other Loan Document furnished  pursuant hereto, (iii) such Assignee confirms that it has received a copy of this Agreement, together with  such other documents and information as it has deemed appropriate to make its own credit analysis and  decision to enter into such Assignment and Acceptance, (iv) such Assignee will, independently and without  reliance upon Agent, such assigning Lender or any other Lender, and based on such documents and  information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or  not taking action under this Agreement, (v) such Assignee appoints and authorizes Agent to take such  actions and to exercise such powers under this Agreement and the other Loan Documents as are delegated  to Agent, by the terms hereof and thereof, together with such powers as are reasonably incidental thereto,  and (vi) such Assignee agrees that it will perform all of the obligations which by the terms of this Agreement  are required to be performed by it as a Lender.                (d)    Immediately upon Agent’s receipt of the required processing fee, if applicable, and  delivery of notice to the assigning Lender pursuant to Section 13.1(b), this Agreement shall be deemed to  be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the  resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee  shall reduce such Commitments of the assigning Lender pro tanto.                                              115  125672876_9 

 

                (e)    Any Lender may at any time sell to one or more commercial banks, financial  institutions, or other Persons (a “Participant”) participating interests in all or any portion of its Obligations,  its Commitment, and the other rights and interests of that Lender (the “Originating Lender”) hereunder and  under the other Loan Documents; provided, that (i) the Originating Lender shall remain a “Lender” for all  purposes of this Agreement and the other Loan Documents and the Participant receiving the participating  interest in the Obligations, the Commitments, and the other rights and interests of the Originating Lender  hereunder shall not constitute a “Lender” hereunder or under the other Loan Documents and the Originating  Lender’s obligations under this Agreement shall remain unchanged, (ii) the Originating Lender shall remain  solely responsible for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders shall  continue to deal solely and directly with the Originating Lender in connection with the Originating Lender’s  rights and obligations under this Agreement and the other Loan Documents, (iv) no Lender shall transfer  or grant any participating interest under which the Participant has the right to approve any amendment to,  or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent  such amendment to, or consent or waiver with respect to this Agreement or any other Loan Document  would (A) extend the final maturity date of the Obligations hereunder in which such Participant is  participating, (B) reduce the interest rate applicable to the Obligations hereunder in which such Participant  is participating, (C) release all or substantially all of the Collateral or guaranties (except to the extent  expressly provided herein or in any of the Loan Documents) supporting the Obligations hereunder in which  such Participant is participating, (D) postpone the payment of, or reduce the amount of, the interest or fees  payable to such Participant through such Lender (other than a waiver of default interest), or (E) decrease  the amount or postpone the due dates of scheduled principal repayments or prepayments or premiums  payable to such Participant through such Lender, (v) no participation shall be sold to a natural person,  (vi) no participation shall be sold to a Loan Party or an Affiliate of a Loan Party, and (vii) all amounts  payable by Borrowers hereunder shall be determined as if such Lender had not sold such participation,  except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared  or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall  be deemed to have the right of set off in respect of its participating interest in amounts owing under this  Agreement to the same extent as if the amount of its participating interest were owing directly to it as a  Lender under this Agreement. The rights of any Participant only shall be derivative through the Originating  Lender with whom such Participant participates and no Participant shall have any rights under this  Agreement or the other Loan Documents or any direct rights as to the other Lenders, Agent, Borrowers, the  Collateral, or otherwise in respect of the Obligations. No Participant shall have the right to participate  directly in the making of decisions by the Lenders among themselves.                (f)    In connection with any such assignment or participation or proposed assignment  or participation or any grant of a security interest in, or pledge of, its rights under and interest in this  Agreement, a Lender may, subject to the provisions of Section 17.9, disclose all documents and information  which it now or hereafter may have relating to any Loan Party and its Subsidiaries and their respective  businesses.                (g)    Any other provision in this Agreement notwithstanding, any Lender may at any  time create a security interest in, or pledge, all or any portion of its rights under and interest in this  Agreement to secure obligations of such Lender, including any pledge in favor of any Federal Reserve Bank  in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR §203.24,  and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under  applicable law; provided, that no such pledge shall release such Lender from any of its obligations  hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.                (h)    Agent (as a non-fiduciary agent on behalf of Borrowers) shall maintain, or cause  to be maintained, a register (the “Register”) on which it enters the name and address of each Lender as the  registered owner of the Revolver Commitments or of the Term Loan (and the principal amount thereof and                                             116  125672876_9 

 

   stated interest thereon) held by such Lender (each, a “Registered Loan”). Other than in connection with an  assignment by a Lender of all or any portion of its Revolver Commitments or of any portion of the Term  Loan to an Affiliate of such Lender or a Related Fund of such Lender (i) a Registered Loan (and the  registered note, if any, evidencing the same) may be assigned or sold in whole or in part only by registration  of such assignment or sale on the Register (and each registered note shall expressly so provide) and (ii) any  assignment or sale of all or part of such Registered Loan (and the registered note, if any, evidencing the  same) may be effected only by registration of such assignment or sale on the Register, together with the  surrender of the registered note, if any, evidencing the same duly endorsed by (or accompanied by a written  instrument of assignment or sale duly executed by) the holder of such registered note, whereupon, at the  request of the designated assignee(s) or transferee(s), one or more new registered notes in the same  aggregate principal amount shall be issued to the designated assignee(s) or transferee(s). Prior to the  registration of assignment or sale of any Registered Loan (and the registered note, if any evidencing the  same), Borrowers shall treat the Person in whose name such Registered Loan (and the registered note, if  any, evidencing the same) is registered as the owner thereof for the purpose of receiving all payments  thereon and for all other purposes, notwithstanding notice to the contrary. In the case of any assignment by  a Lender of all or any portion of its Revolver Commitments or of any portion of the Term Loan to an  Affiliate of such Lender or a Related Fund of such Lender, and which assignment is not recorded in the  Register, the assigning Lender, on behalf of Borrowers, shall maintain a register comparable to the Register.                (i)    In the event that a Lender sells participations in the Registered Loan, such Lender,  as a non-fiduciary agent on behalf of Borrowers, shall maintain (or cause to be maintained) a register on  which it enters the name of all participants in the Registered Loans held by it (and the principal amount  (and stated interest thereon) of the portion of such Registered Loans that is subject to such participations)  (the “Participant Register”). A Registered Loan (and the Registered Note, if any, evidencing the same) may  be participated in whole or in part only by registration of such participation on the Participant Register (and  each registered note shall expressly so provide). Any participation of such Registered Loan (and the  registered note, if any, evidencing the same) may be effected only by the registration of such participation  on the Participant Register. No Lender shall have any obligation to disclose all or any portion of the  Participant Register (including the identity of any Participant or any information relating to a Participant’s  interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to  any Person except to the extent that such disclosure is necessary to establish that such commitment, loan,  letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States  Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and  such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such  participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the  avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a  Participant Register.                 (j)    Agent shall make a copy of the Register (and each Lender shall make a copy of its  Participant Register to the extent it has one) available for review by Borrowers from time to time as  Borrowers may reasonably request.         13.2   Successors. This Agreement shall bind and inure to the benefit of the respective successors  and assigns of each of the parties; provided, that no Borrower may assign this Agreement or any rights or  duties hereunder without the Lenders’ prior written consent and any prohibited assignment shall be  absolutely void ab initio. No consent to assignment by the Lenders shall release any Borrower from its  Obligations. A Lender may assign this Agreement and the other Loan Documents and its rights and duties  hereunder and thereunder pursuant to Section 13.1 and, except as expressly required pursuant to  Section 13.1, no consent or approval by any Borrower is required in connection with any such assignment.                                              117  125672876_9 

 

   14.    AMENDMENTS; WAIVERS.          14.1  Amendments and Waivers.                (a)    No amendment, waiver or other modification of any provision of this Agreement  or any other Loan Document (other than the Fee Letter), and no consent with respect to any departure by  any Borrower therefrom, shall be effective unless the same shall be in writing and signed by the Required  Lenders (or by Agent at the written request of the Required Lenders) and the Loan Parties that are party  thereto and then any such waiver or consent shall be effective, but only in the specific instance and for the  specific purpose for which given; provided, that no such waiver, amendment, or consent shall, unless in  writing and signed by all of the Lenders directly affected thereby and all of the Loan Parties that are party  thereto, do any of the following:                        (i)    increase the amount of or extend the expiration date of any Commitment  of any Lender or amend, modify, or eliminate the last sentence of Section 2.4(c)(i),                        (ii)   postpone or delay any date fixed by this Agreement or any other Loan  Document for any payment of principal, interest, fees, or other amounts due hereunder or under any other  Loan Document,                        (iii)  reduce the principal of, or the rate of interest on, any loan or other  extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under any other  Loan Document (except (A) in connection with the waiver of applicability of Section 2.6(c) (which waiver  shall be effective with the written consent of the Required Lenders), and (B) that any amendment or  modification of defined terms used in the financial covenants in this Agreement shall not constitute a  reduction in the rate of interest or a reduction of fees for purposes of this clause (iii)),                        (iv)   amend, modify, or eliminate this Section or any provision of this  Agreement providing for consent or other action by all Lenders,                        (v)    amend, modify, or eliminate Section 3.1 or 3.2,                        (vi)   amend, modify, or eliminate Section 15.11,                        (vii)  other than as permitted by Section 15.11, release or contractually  subordinate Agent’s Lien in and to any of the Collateral,                        (viii) amend, modify, or eliminate the definitions of “Required Lenders,”  “Supermajority Lenders,” or “Pro Rata Share”,                        (ix)   other than in connection with a merger, liquidation, dissolution or sale  of such Person expressly permitted by the terms hereof or the other Loan Documents, release any Borrower  or any Guarantor from any obligation for the payment of money or consent to the assignment or transfer by  any Borrower or any Guarantor of any of its rights or duties under this Agreement or the other Loan  Documents,                        (x)    amend, modify, or eliminate any of the provisions of Section 2.4(b)(i),  (ii) or (iii) or Section 2.4(e) or 2.4(f),                         (xi)   at any time that any Real Property is included in the Collateral, add,  increase, renew or extend any Loan, Letter of Credit or Commitment hereunder until the completion of                                              118  125672876_9 

 

   flood due diligence, documentation and coverage as required by the Flood Laws or as otherwise satisfactory  to all Lenders, or                        (xii)  amend, modify, or eliminate any of the provisions of Section 13.1 with  respect to assignments to, or participations with, Persons who are Loan Parties or Affiliates of a Loan Party;                 (b)    No amendment, waiver, modification, or consent shall amend, modify, waive, or  eliminate,                        (i)    the definition of, or any of the terms or provisions of, the Fee Letter (in  each case, other than the EBITDA Covenant or any of the terms or provisions thereof, with respect to which,  for the avoidance  of doubt, any amendment, waiver, modification or consent will require the written  consent of Agent, Borrowers, and the Required Lenders), without the written consent of Agent and  Borrowers (and shall not require the written consent of any of the Lenders),                        (ii)   any provision of Section 15 pertaining to Agent, or any other rights or  duties of Agent under this Agreement or the other Loan Documents, without the written consent of Agent,  Borrowers, and the Required Lenders;                (c)    No amendment, waiver, modification, elimination, or consent shall amend, without  written consent of Agent, Borrowers and the Supermajority Lenders, do any of the following: (i) amend,  modify, or eliminate the definition of Borrowing Base or any of the defined terms (including the definitions  of Eligible Accounts, Eligible Credit Card Receivables, Eligible Inventory, Eligible Finished Goods  Inventory, Eligible Spare Parts Inventory, Eligible In-Transit Inventory, and Eligible IP) that are used in  such definition to the extent that any such change results in more credit being made available to Borrowers  based upon the Borrowing Base or the Term Loan Borrowing Base, but not otherwise; (ii) amend, modify,  or eliminate the definition of Maximum Revolver Amount; or (iii) change Section 2.1(c);                (d)    No amendment, waiver, modification, elimination, or consent shall amend,  modify, or waive any provision of this Agreement or the other Loan Documents pertaining to Issuing Bank,  or any other rights or duties of Issuing Bank under this Agreement or the other Loan Documents, without  the written consent of Issuing Bank, Agent, Borrowers, and the Required Lenders;                (e)    No amendment, waiver, modification, elimination, or consent shall amend,  modify, or waive any provision of this Agreement or the other Loan Documents pertaining to Swing Lender,  or any other rights or duties of Swing Lender under this Agreement or the other Loan Documents, without  the written consent of Swing Lender, Agent, Borrowers, and the Required Lenders; and                (f)    Anything in this Section 14.1 to the contrary notwithstanding, (i) any amendment,  modification, elimination, waiver, consent, termination, or release of, or with respect to, any provision of  this Agreement or any other Loan Document that relates only to the relationship of the Lender Group among  themselves, and that does not affect the rights or obligations of any Loan Party, shall not require consent  by or the agreement of any Loan Party, (ii) any amendment, waiver, modification, elimination, or consent  of or with respect to any provision of this Agreement or any other Loan Document may be entered into  without the consent of, or over the objection of, any Defaulting Lender other than any of the matters  governed by Section 14.1(a)(i) through (iii) that affect such Lender, and (iii) any amendment contemplated  by Section 2.12(d)(iii) of this Agreement in connection with a Benchmark Transition Event or an Early  Opt-in Election shall be effective as contemplated by such Section 2.12(d)(iii) hereof.                                              119  125672876_9 

 

         14.2   Replacement of Certain Lenders.                (a)    If (i) any action to be taken by the Lender Group or Agent hereunder requires the  consent, authorization, or agreement of all Lenders or all Lenders affected thereby and if such action has  received the consent, authorization, or agreement of the Required Lenders but not of all Lenders or all  Lenders affected thereby, or (ii) any Lender makes a claim for compensation under Section 16, then  Borrowers or Agent, upon at least five Business Days prior irrevocable notice, may permanently replace  any Lender that failed to give its consent, authorization, or agreement (a “Non-Consenting Lender”) or any  Lender that made a claim for compensation (a “Tax Lender”) with one or more Replacement Lenders, and  the Non-Consenting Lender or Tax Lender, as applicable, shall have no right to refuse to be replaced  hereunder. Such notice to replace the Non-Consenting Lender or Tax Lender, as applicable, shall specify  an effective date for such replacement, which date shall not be later than 15 Business Days after the date  such notice is given.                (b)    Prior to the effective date of such replacement, the Non-Consenting Lender or Tax  Lender, as applicable, and each Replacement Lender shall execute and deliver an Assignment and  Acceptance, subject only to the Non-Consenting Lender or Tax Lender, as applicable, being repaid in full  its share of the outstanding Obligations (without any premium or penalty of any kind whatsoever, but  including (i) all interest, fees and other amounts that may be due in payable in respect thereof, (ii) an  assumption of its Pro Rata Share of participations in the Letters of Credit), and (iii) Funding Losses). If the  Non-Consenting Lender or Tax Lender, as applicable, shall refuse or fail to execute and deliver any such  Assignment and Acceptance prior to the effective date of such replacement, Agent may, but shall not be  required to, execute and deliver such Assignment and Acceptance in the name or and on behalf of the Non- Consenting Lender or Tax Lender, as applicable, and irrespective of whether Agent executes and delivers  such Assignment and Acceptance, the Non-Consenting Lender or Tax Lender, as applicable, shall be  deemed to have executed and delivered such Assignment and Acceptance. The replacement of any Non- Consenting Lender or Tax Lender, as applicable, shall be made in accordance with the terms of  Section 13.1. Until such time as one or more Replacement Lenders shall have acquired all of the  Obligations, the Commitments, and the other rights and obligations of the Non-Consenting Lender or Tax  Lender, as applicable, hereunder and under the other Loan Documents, the Non-Consenting Lender or Tax  Lender, as applicable, shall remain obligated to make the Non-Consenting Lender’s or Tax Lender’s, as  applicable, Pro Rata Share of Revolving Loans and to purchase a participation in each Letter of Credit, in  an amount equal to its Pro Rata Share of participations in such Letters of Credit.         14.3   No Waivers; Cumulative Remedies. No failure by Agent or any Lender to exercise any  right, remedy, or option under this Agreement or any other Loan Document, or delay by Agent or any  Lender in exercising the same, will operate as a waiver thereof. No waiver by Agent or any Lender will be  effective unless it is in writing, and then only to the extent specifically stated. No waiver by Agent or any  Lender on any occasion shall affect or diminish Agent’s and each Lender’s rights thereafter to require strict  performance by Borrowers of any provision of this Agreement. Agent’s and each Lender’s rights under this  Agreement and the other Loan Documents will be cumulative and not exclusive of any other right or remedy  that Agent or any Lender may have.   15.    AGENT; THE LENDER GROUP.          15.1  Appointment and Authorization of Agent. Each Lender hereby designates and appoints  Wells Fargo as its agent under this Agreement and the other Loan Documents and each Lender hereby  irrevocably authorizes (and by entering into a Bank Product Agreement, each Bank Product Provider shall  be deemed to designate, appoint, and authorize) Agent to execute and deliver each of the other Loan  Documents on its behalf and to take such other action on its behalf under the provisions of this Agreement  and each other Loan Document and to exercise such powers and perform such duties as are expressly                                             120  125672876_9 

 

   delegated to Agent by the terms of this Agreement or any other Loan Document, together with such powers  as are reasonably incidental thereto. Agent agrees to act as agent for and on behalf of the Lenders (and the  Bank Product Providers) on the conditions contained in this Section 15. Any provision to the contrary  contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not  have any duties or responsibilities, except those expressly set forth herein or in the other Loan Documents,  nor shall Agent have or be deemed to have any fiduciary relationship with any Lender (or Bank Product  Provider), and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be  read into this Agreement or any other Loan Document or otherwise exist against Agent. Without limiting  the generality of the foregoing, the use of the term “agent” in this Agreement or the other Loan Documents  with reference to Agent is not intended to connote any fiduciary or other implied (or express) obligations  arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market  custom, and is intended to create or reflect only a representative relationship between independent  contracting parties. Each Lender hereby further authorizes (and by entering into a Bank Product Agreement,  each Bank Product Provider shall be deemed to authorize) Agent to act as the secured party under each of  the Loan Documents that create a Lien on any item of Collateral. Except as expressly otherwise provided  in this Agreement, Agent shall have and may use its sole discretion with respect to exercising or refraining  from exercising any discretionary rights or taking or refraining from taking any actions that Agent expressly  is entitled to take or assert under or pursuant to this Agreement and the other Loan Documents. Without  limiting the generality of the foregoing, or of any other provision of the Loan Documents that provides  rights or powers to Agent, Lenders agree that Agent shall have the right to exercise the following powers  as long as this Agreement remains in effect: (a) maintain, in accordance with its customary business  practices, ledgers and records reflecting the status of the Obligations, the Collateral, payments and proceeds  of Collateral, and related matters, (b) execute or file any and all financing or similar statements or notices,  amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written  agreements with respect to the Loan Documents, or to take any other action with respect to any Collateral  or Loan Documents which may be necessary to perfect, and maintain perfected, the security interests and  Liens upon Collateral pursuant to the Loan Documents, (c) make Revolving Loans, for itself or on behalf  of Lenders, as provided in the Loan Documents, (d) exclusively receive, apply, and distribute payments and  proceeds of the Collateral as provided in the Loan Documents, (e) open and maintain such bank accounts  and cash management arrangements as Agent deems necessary and appropriate in accordance with the Loan  Documents for the foregoing purposes, (f) perform, exercise, and enforce any and all other rights and  remedies of the Lender Group with respect to any Loan Party or its Subsidiaries, the Obligations, the  Collateral, or otherwise related to any of same as provided in the Loan Documents, and (g) incur and pay  such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and  fulfillment of its functions and powers pursuant to the Loan Documents.          15.2  Delegation of Duties. Agent may execute any of its duties under this Agreement or any  other Loan Document by or through agents, employees or attorneys in fact and shall be entitled to advice  of counsel concerning all matters pertaining to such duties. Agent shall not be responsible for the negligence  or misconduct of any agent or attorney in fact that it selects as long as such selection was made without  gross negligence or willful misconduct.          15.3  Liability of Agent. None of the Agent-Related Persons shall (a) be liable for any action  taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan  Document or the transactions contemplated hereby (except for its own gross negligence or willful  misconduct), or (b) be responsible in any manner to any of the Lenders (or Bank Product Providers) for any  recital, statement, representation or warranty made by any Loan Party or any of its Subsidiaries or Affiliates,  or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any  certificate, report, statement or other document referred to or provided for in, or received by Agent under  or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness,  genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure                                             121  125672876_9 

 

   of any Loan Party or its Subsidiaries or any other party to any Loan Document to perform its obligations  hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lenders (or Bank  Product Providers) to ascertain or to inquire as to the observance or performance of any of the agreements  contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the books and  records or properties of any Loan Party or its Subsidiaries. No Agent-Related Person shall have any liability  to any Lender, and Loan Party or any of their respective Affiliates if any request for a Loan, Letter of Credit  or other extension of credit was not authorized by the applicable Borrower. Agent shall not be required to  take any action that, in its opinion or in the opinion of its counsel, may expose it to liability or that is  contrary to any Loan Document or applicable law or regulation.         15.4   Reliance by Agent. Agent shall be entitled to rely, and shall be fully protected in relying,  upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, telefacsimile or other  electronic method of transmission, telex or telephone message, statement or other document or conversation  believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or  Persons, and upon advice and statements of legal counsel (including counsel to Borrowers or counsel to  any Lender), independent accountants and other experts selected by Agent. Agent shall be fully justified in  failing or refusing to take any action under this Agreement or any other Loan Document unless Agent shall  first receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions  are received, Agent shall act, or refrain from acting, as it deems advisable. If Agent so requests, it shall first  be indemnified to its reasonable satisfaction by the Lenders (and, if it so elects, the Bank Product Providers)  against any and all liability and expense that may be incurred by it by reason of taking or continuing to take  any such action. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this  Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders  and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the  Lenders (and Bank Product Providers).          15.5  Notice of Default or Event of Default. Agent shall not be deemed to have knowledge or  notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment  of principal, interest, fees, and expenses required to be paid to Agent for the account of the Lenders and,  except with respect to Events of Default of which Agent has actual knowledge, unless Agent shall have  received written notice from a Lender or Borrowers referring to this Agreement, describing such Default  or Event of Default, and stating that such notice is a “notice of default.” Agent promptly will notify the  Lenders of its receipt of any such notice or of any Event of Default of which Agent has actual knowledge.  If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the  other Lenders and Agent of such Event of Default. Each Lender shall be solely responsible for giving any  notices to its Participants, if any. Subject to Section 15.4, Agent shall take such action with respect to such  Default or Event of Default as may be requested by the Required Lenders in accordance with Section 9;  provided, that unless and until Agent has received any such request, Agent may (but shall not be obligated  to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as  it shall deem advisable.          15.6  Credit Decision. Each Lender (and Bank Product Provider) acknowledges that none of the  Agent-Related Persons has made any representation or warranty to it, and that no act by Agent hereinafter  taken, including any review of the affairs of any Loan Party and its Subsidiaries or Affiliates, shall be  deemed to constitute any representation or warranty by any Agent-Related Person to any Lender (or Bank  Product Provider). Each Lender represents (and by entering into a Bank Product Agreement, each Bank  Product Provider shall be deemed to represent) to Agent that it has, independently and without reliance  upon any Agent-Related Person and based on such due diligence, documents and information as it has  deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations,  property, financial and other condition and creditworthiness of each Borrower or any other Person party to  a Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated hereby,                                             122  125672876_9 

 

   and made its own decision to enter into this Agreement and to extend credit to Borrowers. Each Lender also  represents (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed  to represent) that it will, independently and without reliance upon any Agent-Related Person and based on  such documents and information as it shall deem appropriate at the time, continue to make its own credit  analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan  Documents, and to make such investigations as it deems necessary to inform itself as to the business,  prospects, operations, property, financial and other condition and creditworthiness of each Borrower or any  other Person party to a Loan Document. Except for notices, reports, and other documents expressly herein  required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide  any Lender (or Bank Product Provider) with any credit or other information concerning the business,  prospects, operations, property, financial and other condition or creditworthiness of any Borrower or any  other Person party to a Loan Document that may come into the possession of any of the Agent-Related  Persons. Each Lender acknowledges (and by entering into a Bank Product Agreement, each Bank Product  Provider shall be deemed to acknowledge) that Agent does not have any duty or responsibility, either  initially or on a continuing basis (except to the extent, if any, that is expressly specified herein) to provide  such Lender (or Bank Product Provider) with any credit or other information with respect to any Borrower,  its Affiliates or any of their respective business, legal, financial or other affairs, and irrespective of whether  such information came into Agent’s or its Affiliates’ or representatives’ possession before or after the date  on which such Lender became a party to this Agreement (or such Bank Product Provider entered into a  Bank Product Agreement).         15.7   Costs and Expenses; Indemnification. Agent may incur and pay Lender Group Expenses  to the extent Agent reasonably deems necessary or appropriate for the performance and fulfillment of its  functions, powers, and obligations pursuant to the Loan Documents, including court costs, attorneys’ fees  and expenses, fees and expenses of financial accountants, advisors, consultants, and appraisers, costs of  collection by outside collection agencies, auctioneer fees and expenses, and costs of security guards or  insurance premiums paid to maintain the Collateral, whether or not Borrowers are obligated to reimburse  Agent or Lenders for such expenses pursuant to this Agreement or otherwise. Agent is authorized and  directed to deduct and retain sufficient amounts from payments or proceeds of the Collateral received by  Agent to reimburse Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts  to Lenders (or Bank Product Providers). In the event Agent is not reimbursed for such costs and expenses  by the Loan Parties and their Subsidiaries, each Lender hereby agrees that it is and shall be obligated to pay  to Agent such Lender’s ratable share thereof. Whether or not the transactions contemplated hereby are  consummated, each of the Lenders, on a ratable basis, shall indemnify and defend the Agent-Related  Persons (to the extent not reimbursed by or on behalf of Borrowers and without limiting the obligation of  Borrowers to do so) from and against any and all Indemnified Liabilities; provided, that no Lender shall be  liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting  solely from such Person’s gross negligence or willful misconduct nor shall any Lender be liable for the  obligations of any Defaulting Lender in failing to make a Revolving Loan or other extension of credit  hereunder. Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such  Lender’s ratable share of any costs or out of pocket expenses (including attorneys, accountants, advisors,  and consultants fees and expenses) incurred by Agent in connection with the preparation, execution,  delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal  proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement  or any other Loan Document to the extent that Agent is not reimbursed for such expenses by or on behalf  of Borrowers. The undertaking in this Section shall survive the payment of all Obligations hereunder and  the resignation or replacement of Agent.          15.8  Agent in Individual Capacity. Wells Fargo and its Affiliates may make loans to, issue  letters of credit for the account of, accept deposits from, provide Bank Products to, acquire Equity Interests  in, and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business                                             123  125672876_9 

 

   with any Loan Party and its Subsidiaries and Affiliates and any other Person party to any Loan Document  as though Wells Fargo were not Agent hereunder, and, in each case, without notice to or consent of the  other members of the Lender Group. The other members of the Lender Group acknowledge (and by entering  into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that,  pursuant to such activities, Wells Fargo or its Affiliates may receive information regarding a Loan Party or  its Affiliates or any other Person party to any Loan Documents that is subject to confidentiality obligations  in favor of such Loan Party or such other Person and that prohibit the disclosure of such information to the  Lenders (or Bank Product Providers), and the Lenders acknowledge (and by entering into a Bank Product  Agreement, each Bank Product Provider shall be deemed to acknowledge) that, in such circumstances (and  in the absence of a waiver of such confidentiality obligations, which waiver Agent will use its reasonable  best efforts to obtain), Agent shall not be under any obligation to provide such information to them. The  terms “Lender” and “Lenders” include Wells Fargo in its individual capacity.         15.9   Successor Agent. Agent may resign as Agent upon 30 days (ten days if an Event of Default  has occurred and is continuing) prior written notice to the Lenders (unless such notice is waived by the  Required Lenders) and Borrowers (unless such notice is waived by Borrowers or a Default or Event of  Default has occurred and is continuing) and without any notice to the Bank Product Providers. If Agent  resigns under this Agreement, the Required Lenders shall be entitled, with (so long as no Event of Default  has occurred and is continuing) the consent of Borrowers (such consent not to be unreasonably withheld,  delayed, or conditioned), appoint a successor Agent for the Lenders (and the Bank Product Providers). If,  at the time that Agent’s resignation is effective, it is acting as Issuing Bank or the Swing Lender, such  resignation shall also operate to effectuate its resignation as Issuing Bank or the Swing Lender, as  applicable, and it shall automatically be relieved of any further obligation to issue Letters of Credit, or to  make Swing Loans. If no successor Agent is appointed prior to the effective date of the resignation of  Agent, Agent may appoint, after consulting with the Lenders and Borrowers, a successor Agent. If Agent  has materially breached or failed to perform any material provision of this Agreement or of applicable law,  the Required Lenders may agree in writing to remove and replace Agent with a successor Agent from  among the Lenders with (so long as no Event of Default has occurred and is continuing) the consent of  Borrowers (such consent not to be unreasonably withheld, delayed, or conditioned). In any such event, upon  the acceptance of its appointment as successor Agent hereunder, such successor Agent shall succeed to all  the rights, powers, and duties of the retiring Agent and the term “Agent” shall mean such successor Agent  and the retiring Agent’s appointment, powers, and duties as Agent shall be terminated. After any retiring  Agent’s resignation hereunder as Agent, the provisions of this Section 15 shall inure to its benefit as to any  actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor Agent  has accepted appointment as Agent by the date which is 30 days following a retiring Agent’s notice of  resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the Lenders  shall perform all of the duties of Agent hereunder until such time, if any, as the Lenders appoint a successor  Agent as provided for above.          15.10 Lender in Individual Capacity. Any Lender and its respective Affiliates may make loans  to, issue letters of credit for the account of, accept deposits from, provide Bank Products to, acquire Equity  Interests in and generally engage in any kind of banking, trust, financial advisory, underwriting, or other  business with any Loan Party and its Subsidiaries and Affiliates and any other Person party to any Loan  Documents as though such Lender were not a Lender hereunder without notice to or consent of the other  members of the Lender Group (or the Bank Product Providers). The other members of the Lender Group  acknowledge (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed  to acknowledge) that, pursuant to such activities, such Lender and its respective Affiliates may receive  information regarding a Loan Party or its Affiliates or any other Person party to any Loan Documents that  is subject to confidentiality obligations in favor of such Loan Party or such other Person and that prohibit  the disclosure of such information to the Lenders, and the Lenders acknowledge (and by entering into a  Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that, in such                                             124  125672876_9 

 

   circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver such Lender  will use its reasonable best efforts to obtain), such Lender shall not be under any obligation to provide such  information to them.          15.11 Collateral Matters.                (a)    The Lenders hereby irrevocably authorize (and by entering into a Bank Product  Agreement, each Bank Product Provider shall be deemed to authorize) Agent to release any Lien on any  Collateral (i) upon the termination of the Commitments and payment and satisfaction in full by the Loan  Parties and their Subsidiaries of all of the Obligations, (ii) constituting property being sold or disposed of  if a release is required or desirable in connection therewith and if Borrowers certify to Agent that the sale  or disposition is permitted under Section 6.4 (and Agent may rely conclusively on any such certificate,  without further inquiry), (iii) constituting property in which no Loan Party or any of its Subsidiaries owned  any interest at the time Agent’s Lien was granted nor at any time thereafter, (iv) constituting property leased  or licensed to a Loan Party or its Subsidiaries under a lease or license that has expired or is terminated in a  transaction permitted under this Agreement, or (v) in connection with a credit bid or purchase authorized  under this Section 15.11. The Loan Parties and the Lenders hereby irrevocably authorize (and by entering  into a Bank Product Agreement, each Bank Product Provider shall be deemed to authorize) Agent, based  upon the instruction of the Required Lenders, to (a) consent to the sale of, credit bid, or purchase (either  directly or indirectly through one or more entities) all or any portion of the Collateral at any sale thereof  conducted under the provisions of the Bankruptcy Code, including Section 363 of the Bankruptcy Code,  (b) credit bid or purchase (either directly or indirectly through one or more entities) all or any portion of  the Collateral at any sale or other disposition thereof conducted under the provisions of the Code, including  pursuant to Sections 9-610 or 9-620 of the Code, or (c) credit bid or purchase (either directly or indirectly  through one or more entities) all or any portion of the Collateral at any other sale or foreclosure conducted  or consented to by Agent in accordance with applicable law in any judicial action or proceeding or by the  exercise of any legal or equitable remedy. In connection with any such credit bid or purchase, (i) the  Obligations owed to the Lenders and the Bank Product Providers shall be entitled to be, and shall be, credit  bid on a ratable basis (with Obligations with respect to contingent or unliquidated claims being estimated  for such purpose if the fixing or liquidation thereof would not impair or unduly delay the ability of Agent  to credit bid or purchase at such sale or other disposition of the Collateral and, if such contingent or  unliquidated claims cannot be estimated without impairing or unduly delaying the ability of Agent to credit  bid at such sale or other disposition, then such claims shall be disregarded, not credit bid, and not entitled  to any interest in the Collateral that is the subject of such credit bid or purchase) and the Lenders and the  Bank Product Providers whose Obligations are credit bid shall be entitled to receive interests (ratably based  upon the proportion of their Obligations credit bid in relation to the aggregate amount of Obligations so  credit bid) in the Collateral that is the subject of such credit bid or purchase (or in the Equity Interests of  the any entities that are used to consummate such credit bid or purchase), and (ii) Agent, based upon the  instruction of the Required Lenders, may accept non-cash consideration, including debt and equity  securities issued by any entities used to consummate such credit bid or purchase and in connection therewith  Agent may reduce the Obligations owed to the Lenders and the Bank Product Providers (ratably based upon  the proportion of their Obligations credit bid in relation to the aggregate amount of Obligations so credit  bid) based upon the value of such non-cash consideration; provided, that Bank Product Obligations not  entitled to the application set forth in Section 2.4(b)(iii)(J) shall not be entitled to be, and shall not be, credit  bid, or used in the calculation of the ratable interest of the Lenders and Bank Product Providers in the  Obligations which are credit bid. Except as provided above, Agent will not execute and deliver a release of  any Lien on any Collateral without the prior written authorization of (y) if the release is of all or  substantially all of the Collateral, all of the Lenders (without requiring the authorization of the Bank Product  Providers), or (z) otherwise, the Required Lenders (without requiring the authorization of the Bank Product  Providers). Upon request by Agent or Borrowers at any time, the Lenders will (and if so requested, the  Bank Product Providers will) confirm in writing Agent’s authority to release any such Liens on particular                                             125  125672876_9 

 

   types or items of Collateral pursuant to this Section 15.11; provided, that (1) anything to the contrary  contained in any of the Loan Documents notwithstanding, Agent shall not be required to execute any  document or take any action necessary to evidence such release on terms that, in Agent’s opinion, could  expose Agent to liability or create any obligation or entail any consequence other than the release of such  Lien without recourse, representation, or warranty, and (2) such release shall not in any manner discharge,  affect, or impair the Obligations or any Liens (other than those expressly released) upon (or obligations of  Borrowers in respect of) any and all interests retained by any Borrower, including, the proceeds of any sale,  all of which shall continue to constitute part of the Collateral. Each Lender further hereby irrevocably  authorizes (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed  to irrevocably authorize) Agent, at its option and in its sole discretion, to subordinate (by contract or  otherwise) any Lien granted to or held by Agent on any property under any Loan Document (a) to the holder  of any Permitted Lien on such property if such Permitted Lien secures purchase money Indebtedness  (including Capitalized Lease Obligations) which constitute Permitted Indebtedness and (b) to the extent  Agent has the authority under this Section 15.11 to release its Lien on such property. Notwithstanding the  provisions of this Section 15.11, the Agent shall be authorized, without the consent of any Lender and  without the requirement that an asset sale consisting of the sale, transfer or other disposition having  occurred, to release any security interest in any building, structure or improvement located in an area  determined by the Federal Emergency Management Agency to have special flood hazards provided that  such building, structure or improvement has an immaterial fair market value.                (b)    Agent shall have no obligation whatsoever to any of the Lenders (or the Bank  Product Providers) (i) to verify or assure that the Collateral exists or is owned by a Loan Party or any of its  Subsidiaries or is cared for, protected, or insured or has been encumbered, (ii) to verify or assure that  Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or  are entitled to any particular priority, (iii) to verify or assure that any particular items of Collateral meet the  eligibility criteria applicable in respect thereof, (iv) to impose, maintain, increase, reduce, implement, or  eliminate any particular reserve hereunder or to determine whether the amount of any reserve is appropriate  or not, or (v) to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity,  or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant  to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act,  omission, or event related thereto, subject to the terms and conditions contained herein, Agent may act in  any manner it may deem appropriate, in its sole discretion given Agent’s own interest in the Collateral in  its capacity as one of the Lenders and that Agent shall have no other duty or liability whatsoever to any  Lender (or Bank Product Provider) as to any of the foregoing, except as otherwise expressly provided  herein.          15.12 Restrictions on Actions by Lenders; Sharing of Payments.                (a)    Each of the Lenders agrees that it shall not, without the express written consent of  Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the written request of Agent, set  off against the Obligations, any amounts owing by such Lender to any Loan Party or its Subsidiaries or any  deposit accounts of any Loan Party or its Subsidiaries now or hereafter maintained with such Lender. Each  of the Lenders further agrees that it shall not, unless specifically requested to do so in writing by Agent,  take or cause to be taken any action, including, the commencement of any legal or equitable proceedings to  enforce any Loan Document against any Borrower or any Guarantor or to foreclose any Lien on, or  otherwise enforce any security interest in, any of the Collateral.                (b)    If, at any time or times any Lender shall receive (i) by payment, foreclosure, setoff,  or otherwise, any proceeds of Collateral or any payments with respect to the Obligations, except for any  such proceeds or payments received by such Lender from Agent pursuant to the terms of this Agreement,  or (ii) payments from Agent in excess of such Lender’s Pro Rata Share of all such distributions by Agent,                                             126  125672876_9 

 

   such Lender promptly shall (A) turn the same over to Agent, in kind, and with such endorsements as may  be required to negotiate the same to Agent, or in immediately available funds, as applicable, for the account  of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of  this Agreement, or (B) purchase, without recourse or warranty, an undivided interest and participation in  the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as  among the Lenders in accordance with their Pro Rata Shares; provided, that to the extent that such excess  payment received by the purchasing party is thereafter recovered from it, those purchases of participations  shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid  therefor shall be returned to such purchasing party, but without interest except to the extent that such  purchasing party is required to pay interest in connection with the recovery of the excess payment.          15.13 Agency for Perfection. Agent hereby appoints each other Lender (and each Bank Product  Provider) as its agent (and each Lender hereby accepts (and by entering into a Bank Product Agreement,  each Bank Product Provider shall be deemed to accept) such appointment) for the purpose of perfecting  Agent’s Liens in assets which, in accordance with Article 8 or Article 9, as applicable, of the Code can be  perfected by possession or control. Should any Lender obtain possession or control of any such Collateral,  such Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor shall deliver  possession or control of such Collateral to Agent or in accordance with Agent’s instructions.          15.14 Payments by Agent to the Lenders. All payments to be made by Agent to the Lenders  (or Bank Product Providers) shall be made by bank wire transfer of immediately available funds pursuant  to such wire transfer instructions as each party may designate for itself by written notice to Agent.  Concurrently with each such payment, Agent shall identify whether such payment (or any portion thereof)  represents principal, premium, fees, or interest of the Obligations.         15.15  Concerning the Collateral and Related Loan Documents. Each member of the Lender  Group authorizes and directs Agent to enter into this Agreement and the other Loan Documents. Each  member of the Lender Group agrees (and by entering into a Bank Product Agreement, each Bank Product  Provider shall be deemed to agree) that any action taken by Agent in accordance with the terms of this  Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent of its powers  set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be  binding upon all of the Lenders (and such Bank Product Provider).          15.16 Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports  and Information. By becoming a party to this Agreement, each Lender:                (a)    is deemed to have requested that Agent furnish such Lender, promptly after it  becomes available, a copy of each field examination report respecting any Loan Party or its Subsidiaries  (each, a “Report”) prepared by or at the request of Agent, and Agent shall so furnish each Lender with such  Reports,                (b)    expressly agrees and acknowledges that Agent does not (i) make any  representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any information  contained in any Report,                (c)    expressly agrees and acknowledges that the Reports are not comprehensive audits  or examinations, that Agent or other party performing any field examination will inspect only specific  information regarding the Loan Parties and their Subsidiaries and will rely significantly upon Borrowers’  and their Subsidiaries’ books and records, as well as on representations of Borrowers’ personnel,                                              127  125672876_9 

 

                (d)    agrees to keep all Reports and other material, non-public information regarding the  Loan Parties and their Subsidiaries and their operations, assets, and existing and contemplated business  plans in a confidential manner in accordance with Section 17.9, and                (e)    without limiting the generality of any other indemnification provision contained in  this Agreement, agrees: (i) to hold Agent and any other Lender preparing a Report harmless from any action  the indemnifying Lender may take or fail to take or any conclusion the indemnifying Lender may reach or  draw from any Report in connection with any loans or other credit accommodations that the indemnifying  Lender has made or may make to Borrowers, or the indemnifying Lender’s participation in, or the  indemnifying Lender’s purchase of, a loan or loans of Borrowers, and (ii) to pay and protect, and indemnify,  defend and hold Agent, and any such other Lender preparing a Report harmless from and against, the claims,  actions, proceedings, damages, costs, expenses, and other amounts (including, attorneys’ fees and costs)  incurred by Agent and any such other Lender preparing a Report as the direct or indirect result of any third  parties who might obtain all or part of any Report through the indemnifying Lender.   In addition to the foregoing, (x) any Lender may from time to time request of Agent in writing that Agent  provide to such Lender a copy of any report or document provided by any Loan Party or its Subsidiaries to  Agent that has not been contemporaneously provided by such Loan Party or such Subsidiary to such Lender,  and, upon receipt of such request, Agent promptly shall provide a copy of same to such Lender, (y) to the  extent that Agent is entitled, under any provision of the Loan Documents, to request additional reports or  information from any Loan Party or its Subsidiaries, any Lender may, from time to time, reasonably request  Agent to exercise such right as specified in such Lender’s notice to Agent, whereupon Agent promptly shall  request of Borrowers the additional reports or information reasonably specified by such Lender, and, upon  receipt thereof from such Loan Party or such Subsidiary, Agent promptly shall provide a copy of same to  such Lender, and (z) any time that Agent renders to Borrowers a statement regarding the Loan Account,  Agent shall send a copy of such statement to each Lender.          15.17 Several Obligations; No Liability. Notwithstanding that certain of the Loan Documents  now or hereafter may have been or will be executed only by or in favor of Agent in its capacity as such,  and not by or in favor of the Lenders, any and all obligations on the part of Agent (if any) to make any  credit available hereunder shall constitute the several (and not joint) obligations of the respective Lenders  on a ratable basis, according to their respective Commitments, to make an amount of such credit not to  exceed, in principal amount, at any one time outstanding, the amount of their respective Commitments.  Nothing contained herein shall confer upon any Lender any interest in, or subject any Lender to any liability  for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall  be solely responsible for notifying its Participants of any matters relating to the Loan Documents to the  extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any  Participant of any other Lender. Except as provided in Section 15.7, no member of the Lender Group shall  have any liability for the acts of any other member of the Lender Group. No Lender shall be responsible to  any Borrower or any other Person for any failure by any other Lender (or Bank Product Provider) to fulfill  its obligations to make credit available hereunder, nor to advance for such Lender (or Bank Product  Provider) or on its behalf, nor to take any other action on behalf of such Lender (or Bank Product Provider)  hereunder or in connection with the financing contemplated herein.   16.    WITHHOLDING TAXES.         16.1   Payments. All payments made by any Loan Party under any Loan Document will be made  free and clear of, and without deduction or withholding for, any Taxes, except as otherwise required by  applicable law, and in the event any deduction or withholding of Taxes is required, the applicable Loan  Party shall make the requisite withholding, promptly pay over to the applicable Governmental Authority  the withheld tax, and furnish to Agent as promptly as possible after the date the payment of any such Tax                                             128  125672876_9 

 

   is due pursuant to applicable law, certified copies of tax receipts evidencing such payment by the Loan  Parties. Furthermore, if any such Tax is an Indemnified Taxes or an Indemnified Tax is so levied or  imposed, the Loan Parties agree to pay the full amount of such Indemnified Taxes and such additional  amounts as may be necessary so that every payment of all amounts due under this Agreement, any note, or  Loan Document, including any amount paid pursuant to this Section 16.1 after withholding or deduction  for or on account of any Indemnified Taxes, will not be less than the amount provided for herein. The Loan  Parties will promptly pay any Other Taxes or reimburse Agent for such Other Taxes upon Agent’s demand.  The Loan Parties shall jointly and severally indemnify each Indemnified Person (as defined in Section 10.3)  (collectively a “Tax Indemnitee”) for the full amount of Indemnified Taxes arising in connection with this  Agreement or any other Loan Document or breach thereof by any Loan Party (including any Indemnified  Taxes imposed or asserted on, or attributable to, amounts payable under this Section 16) imposed on, or  paid by, such Tax Indemnitee and all reasonable costs and expenses related thereto (including fees and  disbursements of attorneys and other tax professionals), as and when they are incurred and irrespective of  whether suit is brought, whether or not such Indemnified Taxes were correctly or legally imposed or  asserted by the relevant Governmental Authority (other than Indemnified Taxes and additional amounts  that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful  misconduct of such Tax Indemnitee). The obligations of the Loan Parties under this Section 16 shall survive  the termination of this Agreement, the resignation and replacement of the Agent, and the repayment of the  Obligations.          16.2  Exemptions.                (a)    If a Lender or Participant is entitled to claim an exemption or reduction from  United States withholding tax, such Lender or Participant agrees with and in favor of Agent, to deliver to  Agent (or, in the case of a Participant, to the Lender granting the participation only) and the Administrative  Borrower on behalf of all Borrowers one of the following before receiving its first payment under this  Agreement:                        (i)    if such Lender or Participant is entitled to claim an exemption from  United States withholding tax pursuant to the portfolio interest exception, (A) a statement of the Lender or  Participant, signed under penalty of perjury, that it is not a (I) a “bank” as described in Section 881(c)(3)(A)  of the IRC, (II) a 10% shareholder of any Borrower (within the meaning of Section 871(h)(3)(B) of the  IRC), or (III) a controlled foreign corporation related to Borrowers within the meaning of Section 864(d)(4)  of the IRC, and (B) a properly completed and executed IRS Form W-8BEN, Form W-8BEN-E or Form W- 8IMY (with proper attachments as applicable);                        (ii)   if such Lender or Participant is entitled to claim an exemption from, or a  reduction of, withholding tax under a United States tax treaty, a properly completed and executed copy of  IRS Form W-8BEN or Form W-8BEN-E, as applicable;                        (iii)  if such Lender or Participant is entitled to claim that interest paid under  this Agreement is exempt from United States withholding tax because it is effectively connected with a  United States trade or business of such Lender, a properly completed and executed copy of IRS Form W- 8ECI;                        (iv)   if such Lender or Participant is entitled to claim that interest paid under  this Agreement is exempt from United States withholding tax because such Lender or Participant serves as  an intermediary, a properly completed and executed copy of IRS Form W-8IMY (including a withholding  statement and copies of the tax certification documentation for its beneficial owner(s) of the income paid  to the intermediary, if required based on its status provided on the Form W-8IMY); or                                              129  125672876_9 

 

                        (v)    a properly completed and executed copy of any other form or forms,  including IRS Form W-9, as may be required under the IRC or other laws of the United States as a condition  to exemption from, or reduction of, United States withholding or backup withholding tax.                (b)    Each Lender or Participant shall provide new forms (or successor forms) upon the  expiration or obsolescence of any previously delivered forms and promptly notify Agent and Administrative  Borrower (or, in the case of a Participant, to the Lender granting the participation only) of any change in  circumstances which would modify or render invalid any claimed exemption or reduction.                (c)    If a Lender or Participant claims an exemption from withholding tax in a  jurisdiction other than the United States, such Lender or such Participant agrees with and in favor of Agent  and Borrowers, to deliver to Agent and Administrative Borrower (or, in the case of a Participant, to the  Lender granting the participation only) any such form or forms, as may be required under the laws of such  jurisdiction as a condition to exemption from, or reduction of, foreign withholding or backup withholding  tax before receiving its first payment under this Agreement, but only if such Lender or such Participant is  legally able to deliver such forms, or the providing of or delivery of such forms in the Lender’s reasonable  judgment would not subject such Lender to any material unreimbursed cost or expense or materially  prejudice the legal or commercial position of such Lender (or its Affiliates); provided, further, that nothing  in this Section 16.2(c) shall require a Lender or Participant to disclose any information that it deems to be  confidential (including its tax returns). Each Lender and each Participant shall provide new forms (or  successor forms) upon the expiration or obsolescence of any previously delivered forms and promptly  notify Agent and Administrative Borrower (or, in the case of a Participant, to the Lender granting the  participation only) of any change in circumstances which would modify or render invalid any claimed  exemption or reduction.                (d)    If a Lender or Participant claims exemption from, or reduction of, withholding tax  and such Lender or Participant sells, assigns, grants a participation in, or otherwise transfers all or part of  the Obligations of Borrowers to such Lender or Participant, such Lender or Participant agrees to notify  Agent and Administrative Borrower (or, in the case of a sale of a participation interest, to the Lender  granting the participation only) of the percentage amount in which it is no longer the beneficial owner of  Obligations of Borrowers to such Lender or Participant. To the extent of such percentage amount, Agent  and Administrative Borrower will treat such Lender’s or such Participant’s documentation provided  pursuant to Section 16.2(a) or 16.2(c) as no longer valid. With respect to such percentage amount, such  Participant or Assignee may provide new documentation, pursuant to Section 16.2(a) or 16.2(c), if  applicable. Borrowers agree that each Participant shall be entitled to the benefits of this Section 16 with  respect to its participation in any portion of the Commitments and the Obligations so long as such  Participant complies with the obligations set forth in this Section 16 with respect thereto.                (e)    If a payment made to a Lender under any Loan Document would be subject to U.S.  federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable due  diligence and reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b)  of the IRC, as applicable), such Lender shall deliver to Agent (or, in the case of a Participant, to the Lender  granting the participation only) at the time or times prescribed by law and at such time or times reasonably  requested by Agent (or, in the case of a Participant, the Lender granting the participation) such  documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the  IRC) and such additional documentation reasonably requested by Agent (or, in the case of a Participant, the  Lender granting the participation) as may be necessary for Agent or Borrowers to comply with their  obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations  under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes  of this clause (e), “FATCA” shall include any amendments made to FATCA after the date of this  Agreement.                                             130  125672876_9 

 

         16.3   Reductions.                (a)    If a Lender or a Participant is subject to an applicable withholding tax, Agent (or,  in the case of a Participant, the Lender granting the participation) may withhold from any payment to such  Lender or such Participant an amount equivalent to the applicable withholding tax. If the forms or other  documentation required by Section 16.2(a) or 16.2(c) are not delivered to Agent (or, in the case of a  Participant, to the Lender granting the participation), then Agent (or, in the case of a Participant, to the  Lender granting the participation) may withhold from any payment to such Lender or such Participant not  providing such forms or other documentation an amount equivalent to the applicable withholding tax.                (b)    If the IRS or any other Governmental Authority of the United States or other  jurisdiction asserts a claim that Agent (or, in the case of a Participant, to the Lender granting the  participation) did not properly withhold tax from amounts paid to or for the account of any Lender or any  Participant due to a failure on the part of the Lender or any Participant (because the appropriate form was  not delivered, was not properly executed, or because such Lender failed to notify Agent (or such Participant  failed to notify the Lender granting the participation) of a change in circumstances which rendered the  exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall  indemnify and hold Agent harmless (or, in the case of a Participant, such Participant shall indemnify and  hold the Lender granting the participation harmless) for all amounts paid, directly or indirectly, by Agent  (or, in the case of a Participant, to the Lender granting the participation), as tax or otherwise, including  penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to Agent  (or, in the case of a Participant, to the Lender granting the participation only) under this Section 16, together  with all costs and expenses (including attorneys’ fees and expenses). The obligation of the Lenders and the  Participants under this subsection shall survive the payment of all Obligations and the resignation or  replacement of Agent.          16.4  Refunds. If Agent or a Lender determines, in its sole discretion, that it has received a  refund of any Indemnified Taxes to which the Loan Parties have paid additional amounts pursuant to this  Section 16, so long as no Default or Event of Default has occurred and is continuing, it shall pay over such  refund to the Administrative Borrower on behalf of the Loan Parties (but only to the extent of payments  made, or additional amounts paid, by the Loan Parties under this Section 16 with respect to Indemnified  Taxes giving rise to such a refund), net of all out-of-pocket expenses of Agent or such Lender and without  interest (other than any interest paid by the applicable Governmental Authority with respect to such a  refund); provided, that the Loan Parties, upon the request of Agent or such Lender, agrees to repay the  amount paid over to the Loan Parties (plus any penalties, interest or other charges, imposed by the  applicable Governmental Authority, other than such penalties, interest or other charges imposed as a result  of the willful misconduct or gross negligence of Agent or Lender hereunder as finally determined by a court  of competent jurisdiction) to Agent or such Lender in the event Agent or such Lender is required to repay  such refund to such Governmental Authority. Notwithstanding anything in this Agreement to the contrary,  this Section 16 shall not be construed to require Agent or any Lender to make available its tax returns (or  any other information which it deems confidential) to Loan Parties or any other Person or require Agent or  any Lender to pay any amount to an indemnifying party pursuant to Section 16.4, the payment of which  would place Agent or such Lender (or their Affiliates) in a less favorable net after-Tax position than such  Person would have been in if the Tax subject to indemnification and giving rise to such refund had not been  deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with  respect to such Tax had never been paid.                                              131  125672876_9 

 

   17.    GENERAL PROVISIONS.          17.1  Effectiveness. This Agreement shall be binding and deemed effective when executed by  each Borrower, Agent, and each Lender whose signature is provided for on the signature pages hereof.          17.2  Section Headings. Headings and numbers have been set forth herein for convenience only.  Unless the contrary is compelled by the context, everything contained in each Section applies equally to  this entire Agreement.          17.3  Interpretation. Neither this Agreement nor any uncertainty or ambiguity herein shall be  construed against the Lender Group or any Borrower, whether under any rule of construction or otherwise.  On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted  according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions  of all parties hereto.          17.4  Severability of Provisions. Each provision of this Agreement shall be severable from  every other provision of this Agreement for the purpose of determining the legal enforceability of any  specific provision.          17.5  Bank Product Providers. Each Bank Product Provider in its capacity as such shall be  deemed a third party beneficiary hereof and of the provisions of the other Loan Documents for purposes of  any reference in a Loan Document to the parties for whom Agent is acting. Agent hereby agrees to act as  agent for such Bank Product Providers and, by virtue of entering into a Bank Product Agreement, the  applicable Bank Product Provider shall be automatically deemed to have appointed Agent as its agent and  to have accepted the benefits of the Loan Documents. It is understood and agreed that the rights and benefits  of each Bank Product Provider under the Loan Documents consist exclusively of such Bank Product  Provider’s being a beneficiary of the Liens and security interests (and, if applicable, guarantees) granted to  Agent and the right to share in payments and collections out of the Collateral as more fully set forth herein.  In addition, each Bank Product Provider, by virtue of entering into a Bank Product Agreement, shall be  automatically deemed to have agreed that Agent shall have the right, but shall have no obligation, to  establish, maintain, relax, or release reserves in respect of the Bank Product Obligations and that if reserves  are established there is no obligation on the part of Agent to determine or insure whether the amount of any  such reserve is appropriate or not. In connection with any such distribution of payments or proceeds of  Collateral, Agent shall be entitled to assume no amounts are due or owing to any Bank Product Provider  unless such Bank Product Provider has provided a written certification (setting forth a reasonably detailed  calculation) to Agent as to the amounts that are due and owing to it and such written certification is received  by Agent a reasonable period of time prior to the making of such distribution. Agent shall have no obligation  to calculate the amount due and payable with respect to any Bank Products, but may rely upon the written  certification of the amount due and payable from the applicable Bank Product Provider. In the absence of  an updated certification, Agent shall be entitled to assume that the amount due and payable to the applicable  Bank Product Provider is the amount last certified to Agent by such Bank Product Provider as being due  and payable (less any distributions made to such Bank Product Provider on account thereof). Borrowers  may obtain Bank Products from any Bank Product Provider, although Borrowers are not required to do so.  Each Borrower acknowledges and agrees that no Bank Product Provider has committed to provide any  Bank Products and that the providing of Bank Products by any Bank Product Provider is in the sole and  absolute discretion of such Bank Product Provider. Notwithstanding anything to the contrary in this  Agreement or any other Loan Document, no provider or holder of any Bank Product shall have any voting  or approval rights hereunder (or be deemed a Lender) solely by virtue of its status as the provider or holder  of such agreements or products or the Obligations owing thereunder, nor shall the consent of any such  provider or holder be required (other than in their capacities as Lenders, to the extent applicable) for any                                              132  125672876_9 

 

   matter hereunder or under any of the other Loan Documents, including as to any matter relating to the  Collateral or the release of Collateral or Guarantors.          17.6  Debtor-Creditor Relationship. The relationship between the Lenders and Agent, on the  one hand, and the Loan Parties, on the other hand, is solely that of creditor and debtor. No member of the  Lender Group has (or shall be deemed to have) any fiduciary relationship or duty to any Loan Party arising  out of or in connection with the Loan Documents or the transactions contemplated thereby, and there is no  agency or joint venture relationship between the members of the Lender Group, on the one hand, and the  Loan Parties, on the other hand, by virtue of any Loan Document or any transaction contemplated therein.          17.7  Counterparts; Electronic Execution. This Agreement may be executed in any number of  counterparts and by different parties on separate counterparts, each of which, when executed and delivered,  shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the  same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic  method of transmission shall be equally as effective as delivery of an original executed counterpart of this  Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other  electronic method of transmission also shall deliver an original executed counterpart of this Agreement but  the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and  binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis.          17.8  Revival and Reinstatement of Obligations; Certain Waivers. If any member of the  Lender Group or any Bank Product Provider repays, refunds, restores, or returns in whole or in part, any  payment or property (including any proceeds of Collateral) previously paid or transferred to such member  of the Lender Group or such Bank Product Provider in full or partial satisfaction of any Obligation or on  account of any other obligation of any Loan Party under any Loan Document or any Bank Product  Agreement, because the payment, transfer, or the incurrence of the obligation so satisfied is asserted  or declared to be void, voidable, or otherwise recoverable under any law relating to creditors’ rights,  including provisions of the Bankruptcy Code relating to fraudulent transfers, preferences, or other voidable  or recoverable obligations or transfers (each, a “Voidable Transfer”), or because such member of the  Lender Group or Bank Product Provider elects to do so on the reasonable advice of its counsel in connection  with a claim that the payment, transfer, or incurrence is or may be a Voidable Transfer, then, as to any such  Voidable Transfer, or the amount thereof that such member of the Lender Group or Bank Product Provider  elects to repay, restore, or return (including pursuant to a settlement of any claim in respect thereof), and as  to all reasonable costs, expenses, and attorneys’ fees of such member of the Lender Group or Bank Product  Provider related thereto, (i) the liability of the Loan Parties with respect to the amount or property paid,  refunded, restored, or returned will automatically and immediately be revived, reinstated, and restored and  will exist, and (ii) Agent’s Liens securing such liability shall be effective, revived, and remain in full force  and effect, in each case, as fully as if such Voidable Transfer had never been made. If, prior to any of the  foregoing, (A) Agent’s Liens shall have been released or terminated, or (B) any provision of this Agreement  shall have been terminated or cancelled, Agent’s Liens, or such provision of this Agreement, shall be  reinstated in full force and effect and such prior release, termination, cancellation or surrender shall not  diminish, release, discharge, impair or otherwise affect the obligation of any Loan Party in respect of such  liability or any Collateral securing such liability. This provision shall survive the termination of this  Agreement and the repayment in full of the Obligations.         17.9   Confidentiality.                (a)    Agent and Lenders each individually (and not jointly or jointly and severally) agree  that material, non-public information regarding the Loan Parties and their Subsidiaries, their operations,  assets, and existing and contemplated business plans (“Confidential Information”) shall be treated by Agent  and the Lenders in a confidential manner, and shall not be disclosed by Agent and the Lenders to Persons                                             133  125672876_9 

 

   who are not parties to this Agreement, except: (i) to attorneys for and other advisors, accountants, auditors,  and consultants to any member of the Lender Group and to employees, directors and officers of any member  of the Lender Group (the Persons in this clause (i), “Lender Group Representatives”) on a “need to know”  basis in connection with this Agreement and the transactions contemplated hereby and on a confidential  basis, (ii) to Subsidiaries and Affiliates of any member of the Lender Group (including the Bank Product  Providers); provided, that any such Subsidiary or Affiliate shall have agreed to receive such information  hereunder subject to the terms of this Section 17.9, (iii) as may be required by regulatory authorities so long  as such authorities are informed of the confidential nature of such information, (iv) as may be required by  statute, decision, or judicial or administrative order, rule, or regulation; provided, that (x) prior to any  disclosure under this clause (iv), the disclosing party agrees to provide Borrowers with prior notice thereof,  to the extent that it is practicable to do so and to the extent that the disclosing party is permitted to provide  such prior notice to Borrowers pursuant to the terms of the applicable statute, decision, or judicial or  administrative order, rule, or regulation and (y) any disclosure under this clause (iv) shall be limited to the  portion of the Confidential Information as may be required by such statute, decision, or judicial or  administrative order, rule, or regulation, (v) as may be agreed to in advance in writing by Borrowers, (vi) as  requested or required by any Governmental Authority pursuant to any subpoena or other legal process;  provided, that (x) prior to any disclosure under this clause (vi) the disclosing party agrees to provide  Borrowers with prior written notice thereof, to the extent that it is practicable to do so and to the extent that  the disclosing party is permitted to provide such prior written notice to Borrowers pursuant to the terms of  the subpoena or other legal process and (y) any disclosure under this clause (vi) shall be limited to the  portion of the Confidential Information as may be required by such Governmental Authority pursuant to  such subpoena or other legal process, (vii) as to any such information that is or becomes generally available  to the public (other than as a result of prohibited disclosure by Agent or the Lenders or the Lender Group  Representatives), (viii) in connection with any assignment, participation or pledge of any Lender’s interest  under this Agreement; provided, that prior to receipt of Confidential Information any such assignee,  participant, or pledgee shall have agreed in writing to receive such Confidential Information either subject  to the terms of this Section 17.9 or pursuant to confidentiality requirements substantially similar to those  contained in this Section 17.9 (and such Person may disclose such Confidential Information to Persons  employed or engaged by them as described in clause (i) above), (ix) in connection with any litigation or  other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves  claims related to the rights or duties of such parties under this Agreement or the other Loan Documents;  provided, that prior to any disclosure to any Person (other than any Loan Party, Agent, any Lender, any of  their respective Affiliates, or their respective counsel) under this clause (ix) with respect to litigation  involving any Person (other than any Borrower, Agent, any Lender, any of their respective Affiliates, or  their respective counsel), the disclosing party agrees to provide Borrowers with prior written notice thereof,  and (x) in connection with, and to the extent reasonably necessary for, the exercise of any secured creditor  remedy under this Agreement or under any other Loan Document.                (b)    Anything in this Agreement to the contrary notwithstanding, Agent may disclose  information concerning the terms and conditions of this Agreement and the other Loan Documents to loan  syndication and pricing reporting services or in its marketing or promotional materials, with such  information to consist of deal terms and other information customarily found in such publications or  marketing or promotional materials and may otherwise use the name, logos, and other insignia of any  Borrower or the other Loan Parties and the Commitments provided hereunder in any “tombstone” or other  advertisements, on its website or in other marketing materials of the Agent.                (c)    Each Loan Party agrees that Agent may make materials or information provided  by or on behalf of Borrowers hereunder (collectively, “Borrower Materials”) available to the Lenders by  posting the Communications on IntraLinks, SyndTrak or a substantially similar secure electronic  transmission system (the “Platform”). The Platform is provided “as is” and “as available.” Agent does not  warrant the accuracy or completeness of the Borrower Materials, or the adequacy of the Platform and                                             134  125672876_9 

 

   expressly disclaim liability for errors or omissions in the communications. No warranty of any kind,  express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose,  non-infringement of third party rights or freedom from viruses or other code defects, is made by Agent in  connection with the Borrower Materials or the Platform. In no event shall Agent or any of the Agent-Related  Persons have any liability to the Loan Parties, any Lender or any other person for damages of any kind,  including direct or indirect, special, incidental or consequential damages, losses or expenses (whether in  tort, contract or otherwise) arising out of any Loan Party’s or Agent’s transmission of communications  through the Internet, except to the extent the liability of such person is found in a final non-appealable  judgment by a court of competent jurisdiction to have resulted from such person’s gross negligence or  willful misconduct. Each Loan Party further agrees that certain of the Lenders may be “public-side” Lenders  (i.e., Lenders that do not wish to receive material non-public information with respect to the Loan Parties  or their securities) (each, a “Public Lender”). The Loan Parties shall be deemed to have authorized Agent  and its Affiliates and the Lenders to treat Borrower Materials marked “PUBLIC” or otherwise at any time  filed with the SEC as not containing any material non-public information with respect to the Loan Parties  or their securities for purposes of United States federal and state securities laws. All Borrower Materials  marked “PUBLIC” are permitted to be made available through a portion of the Platform designated as  “Public Investor” (or another similar term). Agent and its Affiliates and the Lenders shall be entitled to treat  any Borrower Materials that are not marked “PUBLIC” or that are not at any time filed with the SEC as  being suitable only for posting on a portion of the Platform not marked as “Public Investor” (or such other  similar term).          17.10 Survival. All representations and warranties made by the Loan Parties in the Loan  Documents and in the certificates or other instruments delivered in connection with or pursuant to this  Agreement or any other Loan Document shall be considered to have been relied upon by the other parties  hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans  and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on  its behalf and notwithstanding that Agent, Issuing Bank, or any Lender may have had notice or knowledge  of any Default or Event of Default or incorrect representation or warranty at the time any credit is extended  hereunder, and shall continue in full force and effect as long as the principal of, or any accrued interest on,  any Loan or any fee or any other amount payable under this Agreement is outstanding or unpaid or any  Letter of Credit is outstanding and so long as the Commitments have not expired or been terminated.          17.11 Patriot Act; Due Diligence. Each Lender that is subject to the requirements of the Patriot  Act hereby notifies the Loan Parties 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 will allow such Lender to identify each Loan  Party in accordance with the Patriot Act. In addition, Agent and each Lender shall have the right to  periodically conduct due diligence on all Loan Parties, their senior management and key principals and  legal and beneficial owners. Each Loan Party agrees to cooperate in respect of the conduct of such due  diligence and further agrees that the reasonable costs and charges for any such due diligence by Agent shall  constitute Lender Group Expenses hereunder and be for the account of Borrowers.          17.12 Integration. This Agreement, together with the other Loan Documents, reflects the entire  understanding of the parties with respect to the transactions contemplated hereby and shall not be  contradicted or qualified by any other agreement, oral or written, before the date hereof. The foregoing to  the contrary notwithstanding, all Bank Product Agreements, if any, are independent agreements governed  by the written provisions of such Bank Product Agreements, which will remain in full force and effect,  unaffected by any repayment, prepayments, acceleration, reduction, increase, or change in the terms of any  credit extended hereunder, except as otherwise expressly provided in such Bank Product Agreement.                                              135  125672876_9 

 

         17.13  Nautilus as Agent for Borrowers. Each Borrower hereby irrevocably appoints Nautilus  as the borrowing agent and attorney-in-fact for all Borrowers (the “Administrative Borrower”) which  appointment shall remain in full force and effect unless and until Agent shall have received prior written  notice signed by each Borrower that such appointment has been revoked and that another Borrower has  been appointed Administrative Borrower. Each Borrower hereby irrevocably appoints and authorizes the  Administrative Borrower (a) to provide Agent with all notices with respect to Revolving Loans and Letters  of Credit obtained for the benefit of any Borrower and all other notices and instructions under this  Agreement and the other Loan Documents (and any notice or instruction provided by Administrative  Borrower shall be deemed to be given by Borrowers hereunder and shall bind each Borrower), (b) to receive  notices and instructions from members of the Lender Group (and any notice or instruction provided by any  member of the Lender Group to the Administrative Borrower in accordance with the terms hereof shall be  deemed to have been given to each Borrower), and (c) to take such action as the Administrative Borrower  deems appropriate on its behalf to obtain Revolving Loans and Letters of Credit and to exercise such other  powers as are reasonably incidental thereto to carry out the purposes of this Agreement. It is understood  that the handling of the Loan Account and Collateral in a combined fashion, as more fully set forth herein,  is done solely as an accommodation to Borrowers in order to utilize the collective borrowing powers of  Borrowers in the most efficient and economical manner and at their request, and that Lender Group shall  not incur liability to any Borrower as a result hereof. Each Borrower expects to derive benefit, directly or  indirectly, from the handling of the Loan Account and the Collateral in a combined fashion since the  successful operation of each Borrower is dependent on the continued successful performance of the  integrated group. To induce the Lender Group to do so, and in consideration thereof, each Borrower hereby  jointly and severally agrees to indemnify each member of the Lender Group and hold each member of the  Lender Group harmless against any and all liability, expense, loss or claim of damage or injury, made  against the Lender Group by any Borrower or by any third party whosoever, arising from or incurred by  reason of (i) the handling of the Loan Account and Collateral of Borrowers as herein provided, or (ii) the  Lender Group’s relying on any instructions of the Administrative Borrower, except that Borrowers will  have no liability to the relevant Agent-Related Person or Lender-Related Person under this Section 17.13  with respect to any liability that has been finally determined by a court of competent jurisdiction to have  resulted solely from the gross negligence or willful misconduct of such Agent-Related Person or Lender- Related Person, as the case may be.          17.14 Acknowledgement and Consent to Bail-In of EEA Financial Institutions.  Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement  or understanding among any such parties, each party hereto acknowledges that any liability of any EEA  Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be  subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents  to, and acknowledges and agrees to be bound by:                 (a)    the application of any Write-Down and Conversion Powers by an EEA Resolution  Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an  EEA Financial Institution; and                (b)    the effects of any Bail-in Action on any such liability, including, if applicable:                        (i)    a reduction in full or in part or cancellation of any such liability;                        (ii)   a conversion of all, or a portion of, such liability into shares or other  instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution  that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership  will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any  other Loan Document; or                                             136  125672876_9 

 

                        (iii)  the variation of the terms of such liability in connection with the exercise  of the write-down and conversion powers of any EEA Resolution Authority.          17.15 Acknowledgment Regarding Any Supported QFCs.    To the extent that the Loan  Documents provide support, through a guarantee or otherwise, for Hedge Agreements or any other  agreement or instrument that is a QFC (such support, “QFC Credit Support” and each such QFC a  “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of  the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the  Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated  thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit  Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported  QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States  or any other state of the United States): In the event a Covered Entity that is party to a Supported QFC  (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the  transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation  in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such  Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent  as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such  QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws  of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of  a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights  under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support  that may be exercised against such Covered Party are permitted to be exercised to no greater extent than  such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC  and the Loan Documents were governed by the laws of the United States or a state of the United States.  Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with  respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a  Supported QFC or any QFC Credit Support.                                   [Signature pages to follow.]                                              137  125672876_9

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