Document:

EXHIBIT 10.2

 

CONFIDENTIAL TREATMENT REQUESTED

Certain portions of this document have been omitted pursuant to a request for Confidential Treatment and, where applicable, have been marked with “[***]” to indicate where omissions have been made.

The confidential material has been filed separately with the Securities and Exchange Commission.

 

Execution Version

 

TERM LOAN AND SECURITY AGREEMENT

 

Dated as of June 28, 2018

 

 

SUMMER INFANT, INC., and

 

SUMMER INFANT (USA), INC.,

 

as Borrowers, and

 

THE GUARANTORS FROM TIME TO TIME PARTY HERETO

 

AND

 

CERTAIN FINANCIAL INSTITUTIONS,

 

as Lenders

 

and

 

PATHLIGHT CAPITAL LLC,

 

as Agent

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
SECTION 1.   DEFINITIONS; RULES OF CONSTRUCTION
    	
1
    
	
 
    	
 
    	
 
    
	
1.1.
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
1.2.
    	
ACCOUNTING TERMS
    	
34
    
	
 
    	
 
    	
 
    
	
1.3.
    	
UNIFORM COMMERCIAL   CODE AND PPSA
    	
34
    
	
 
    	
 
    	
 
    
	
1.4.
    	
CERTAIN MATTERS OF   CONSTRUCTION
    	
34
    
	
 
    	
 
    	
 
    
	
1.5.
    	
CERTAIN REVOLVER LOAN   AGREEMENT PROVISIONS
    	
35
    
	
 
    	
 
    	
 
    
	
1.6.
    	
CURRENCY EQUIVALENTS
    	
35
    
	
 
    	
 
    	
 
    
	
SECTION 2.   CREDIT FACILITIES
    	
36
    
	
 
    	
 
    	
 
    
	
2.1.
    	
TERM LOAN COMMITMENTS
    	
36
    
	
 
    	
 
    	
 
    
	
2.2.
    	
[RESERVED]
    	
39
    
	
 
    	
 
    	
 
    
	
2.3.
    	
[RESERVED]
    	
39
    
	
 
    	
 
    	
 
    
	
SECTION 3.   INTEREST, FEES AND CHARGES
    	
39
    
	
 
    	
 
    	
 
    
	
3.1.
    	
INTEREST
    	
39
    
	
 
    	
 
    	
 
    
	
3.2.
    	
FEES
    	
39
    
	
 
    	
 
    	
 
    
	
3.3.
    	
COMPUTATION OF   INTEREST, FEES, YIELD PROTECTION
    	
39
    
	
 
    	
 
    	
 
    
	
3.4.
    	
PREPAYMENT PREMIUM
    	
40
    
	
 
    	
 
    	
 
    
	
3.5.
    	
REIMBURSEMENT   OBLIGATIONS
    	
40
    
	
 
    	
 
    	
 
    
	
3.6.
    	
ILLEGALITY
    	
41
    
	
 
    	
 
    	
 
    
	
3.7.
    	
INABILITY TO DETERMINE   RATES
    	
41
    
	
 
    	
 
    	
 
    
	
3.8.
    	
INCREASED COSTS;   CAPITAL ADEQUACY
    	
42
    
	
 
    	
 
    	
 
    
	
3.9.
    	
MITIGATION
    	
43
    
	
 
    	
 
    	
 
    
	
3.10.
    	
FUNDING LOSSES
    	
43
    
	
 
    	
 
    	
 
    
	
3.11.
    	
MAXIMUM INTEREST
    	
43
    
	
 
    	
 
    	
 
    
	
SECTION 4.   LOAN ADMINISTRATION
    	
44
    
	
 
    	
 
    	
 
    
	
4.1.
    	
MANNER OF BORROWING AND   FUNDING OF TERM LOANS
    	
44
    
	
 
    	
 
    	
 
    
	
4.2.
    	
[RESERVED]
    	
44
    
	
 
    	
 
    	
 
    
	
4.3.
    	
[RESERVED]
    	
44
    
	
 
    	
 
    	
 
    
	
4.4.
    	
BORROWER AGENT
    	
44
    
	
 
    	
 
    	
 
    
	
4.5.
    	
ONE OBLIGATION
    	
44
    
	
 
    	
 
    	
 
    
	
4.6.
    	
EFFECT OF TERMINATION
    	
44
    
	
 
    	
 
    	
 
    
	
SECTION 5.   PAYMENTS
    	
44
    
	
 
    	
 
    	
 
    
	
5.1.
    	
GENERAL PAYMENT   PROVISIONS
    	
44
    
	
 
    	
 
    	
 
    
	
5.2.
    	
[RESERVED]
    	
45
    

 

i

 

	
5.3.
    	
[RESERVED]
    	
45
    
	
 
    	
 
    	
 
    
	
5.4.
    	
PAYMENT OF OTHER   OBLIGATIONS
    	
45
    
	
 
    	
 
    	
 
    
	
5.5.
    	
MARSHALING; PAYMENTS   SET ASIDE
    	
45
    
	
 
    	
 
    	
 
    
	
5.6.
    	
APPLICATION AND   ALLOCATION OF PAYMENTS
    	
45
    
	
 
    	
 
    	
 
    
	
5.7.
    	
DOMINION ACCOUNTS
    	
46
    
	
 
    	
 
    	
 
    
	
5.8.
    	
ACCOUNT STATED
    	
47
    
	
 
    	
 
    	
 
    
	
5.9.
    	
TAXES
    	
47
    
	
 
    	
 
    	
 
    
	
5.10.
    	
LENDER TAX INFORMATION
    	
48
    
	
 
    	
 
    	
 
    
	
5.11.
    	
NATURE AND EXTENT OF   EACH BORROWER’S LIABILITY
    	
50
    
	
 
    	
 
    	
 
    
	
SECTION 6.   CONDITIONS PRECEDENT
    	
52
    
	
 
    	
 
    	
 
    
	
6.1.
    	
CONDITIONS PRECEDENT TO   INITIAL LOANS
    	
52
    
	
 
    	
 
    	
 
    
	
6.2.
    	
[RESERVED]
    	
55
    
	
 
    	
 
    	
 
    
	
SECTION 7.   COLLATERAL
    	
55
    
	
 
    	
 
    	
 
    
	
7.1.
    	
GRANT OF SECURITY   INTEREST
    	
55
    
	
 
    	
 
    	
 
    
	
7.2.
    	
LIEN ON DEPOSIT   ACCOUNTS; CASH COLLATERAL
    	
56
    
	
 
    	
 
    	
 
    
	
7.3.
    	
[RESERVED]
    	
56
    
	
 
    	
 
    	
 
    
	
7.4.
    	
OTHER COLLATERAL
    	
57
    
	
 
    	
 
    	
 
    
	
7.5.
    	
NO ASSUMPTION OF   LIABILITY
    	
57
    
	
 
    	
 
    	
 
    
	
7.6.
    	
FURTHER ASSURANCES
    	
57
    
	
 
    	
 
    	
 
    
	
SECTION 8.   COLLATERAL ADMINISTRATION
    	
57
    
	
 
    	
 
    	
 
    
	
8.1.
    	
BORROWING BASE CERTIFICATES
    	
57
    
	
 
    	
 
    	
 
    
	
8.2.
    	
ADMINISTRATION OF   ACCOUNTS
    	
58
    
	
 
    	
 
    	
 
    
	
8.3.
    	
ADMINISTRATION OF   INVENTORY
    	
58
    
	
 
    	
 
    	
 
    
	
8.4.
    	
ADMINISTRATION OF   EQUIPMENT
    	
59
    
	
 
    	
 
    	
 
    
	
8.5.
    	
ADMINISTRATION OF   DEPOSIT ACCOUNTS
    	
59
    
	
 
    	
 
    	
 
    
	
8.6.
    	
ADMINISTRATION OF   INTELLECTUAL PROPERTY
    	
60
    
	
 
    	
 
    	
 
    
	
8.7.
    	
GENERAL PROVISIONS
    	
60
    
	
 
    	
 
    	
 
    
	
8.8.
    	
POWER OF ATTORNEY
    	
61
    
	
 
    	
 
    	
 
    
	
SECTION 9.   REPRESENTATIONS AND WARRANTIES
    	
61
    
	
 
    	
 
    	
 
    
	
9.1.
    	
GENERAL REPRESENTATIONS   AND WARRANTIES
    	
61
    
	
 
    	
 
    	
 
    
	
9.2.
    	
COMPLETE DISCLOSURE
    	
68
    
	
 
    	
 
    	
 
    
	
SECTION 10.   COVENANTS AND CONTINUING AGREEMENTS
    	
68
    
	
 
    	
 
    	
 
    
	
10.1.
    	
AFFIRMATIVE COVENANTS
    	
68
    
	
 
    	
 
    	
 
    
	
10.2.
    	
NEGATIVE COVENANTS
    	
73
    
	
 
    	
 
    	
 
    
	
10.3.
    	
FINANCIAL COVENANTS
    	
78
    
	
 
    	
 
    	
 
    
	
10.4.
    	
RESTRICTIONS ON   ACTIVITIES OF COMPANY
    	
78
    

 

ii

 

	
10.5.
    	
RESTRICTIONS ON   ACTIVITIES OF FOREIGN SUBSIDIARIES
    	
79
    
	
 
    	
 
    	
 
    
	
SECTION 11.   EVENTS OF DEFAULT; REMEDIES ON DEFAULT
    	
79
    
	
 
    	
 
    	
 
    
	
11.1.
    	
EVENTS OF DEFAULT
    	
79
    
	
 
    	
 
    	
 
    
	
11.2.
    	
REMEDIES UPON DEFAULT
    	
82
    
	
 
    	
 
    	
 
    
	
11.3.
    	
LICENSE
    	
82
    
	
 
    	
 
    	
 
    
	
11.4.
    	
SETOFF
    	
82
    
	
 
    	
 
    	
 
    
	
11.5.
    	
REMEDIES CUMULATIVE; NO   WAIVER
    	
83
    
	
 
    	
 
    	
 
    
	
SECTION 12.   AGENT
    	
83
    
	
 
    	
 
    	
 
    
	
12.1.
    	
APPOINTMENT, AUTHORITY   AND DUTIES OF AGENT
    	
83
    
	
 
    	
 
    	
 
    
	
12.2.
    	
AGREEMENTS REGARDING   COLLATERAL AND BORROWER MATERIALS
    	
84
    
	
 
    	
 
    	
 
    
	
12.3.
    	
RELIANCE BY AGENT
    	
85
    
	
 
    	
 
    	
 
    
	
12.4.
    	
ACTION UPON DEFAULT
    	
85
    
	
 
    	
 
    	
 
    
	
12.5.
    	
RATABLE SHARING
    	
85
    
	
 
    	
 
    	
 
    
	
12.6.
    	
INDEMNIFICATION
    	
85
    
	
 
    	
 
    	
 
    
	
12.7.
    	
LIMITATION ON   RESPONSIBILITIES OF AGENT
    	
85
    
	
 
    	
 
    	
 
    
	
12.8.
    	
SUCCESSOR AGENT AND   CO-AGENTS
    	
86
    
	
 
    	
 
    	
 
    
	
12.9.
    	
DUE DILIGENCE AND   NON-RELIANCE
    	
86
    
	
 
    	
 
    	
 
    
	
12.10.
    	
REMITTANCE OF PAYMENTS   AND COLLECTIONS
    	
87
    
	
 
    	
 
    	
 
    
	
12.11.
    	
INDIVIDUAL CAPACITIES
    	
87
    
	
 
    	
 
    	
 
    
	
12.12.
    	
TITLES
    	
87
    
	
 
    	
 
    	
 
    
	
12.13.
    	
[RESERVED]
    	
87
    
	
 
    	
 
    	
 
    
	
12.14.
    	
NO THIRD PARTY   BENEFICIARIES
    	
88
    
	
 
    	
 
    	
 
    
	
SECTION 13.   BENEFIT OF AGREEMENT; ASSIGNMENTS
    	
88
    
	
 
    	
 
    	
 
    
	
13.1.
    	
SUCCESSORS AND ASSIGNS
    	
88
    
	
 
    	
 
    	
 
    
	
13.2.
    	
PARTICIPATIONS
    	
88
    
	
 
    	
 
    	
 
    
	
13.3.
    	
ASSIGNMENTS
    	
89
    
	
 
    	
 
    	
 
    
	
13.4.
    	
REPLACEMENT OF CERTAIN   LENDERS
    	
89
    
	
 
    	
 
    	
 
    
	
SECTION 14.   THE GUARANTEE
    	
90
    
	
 
    	
 
    	
 
    
	
14.1.
    	
GUARANTEE
    	
90
    
	
 
    	
 
    	
 
    
	
14.2.
    	
OBLIGATIONS   UNCONDITIONAL
    	
90
    
	
 
    	
 
    	
 
    
	
14.3.
    	
REINSTATEMENT
    	
91
    
	
 
    	
 
    	
 
    
	
14.4.
    	
SUBROGATION
    	
91
    
	
 
    	
 
    	
 
    
	
14.5.
    	
REMEDIES
    	
91
    
	
 
    	
 
    	
 
    
	
14.6.
    	
INSTRUMENT FOR THE   PAYMENT OF MONEY
    	
91
    
	
 
    	
 
    	
 
    
	
14.7.
    	
CONTINUING GUARANTEE
    	
91
    

 

iii

 

	
14.8.
    	
GENERAL LIMITATION ON   AMOUNT OF OBLIGATIONS GUARANTEED
    	
91
    
	
 
    	
 
    	
 
    
	
14.9.
    	
JOINT ENTERPRISE
    	
91
    
	
 
    	
 
    	
 
    
	
14.10.
    	
SUBORDINATION
    	
92
    
	
 
    	
 
    	
 
    
	
14.11.
    	
CONFLICTS WITH CANADIAN   GUARANTY OR UK GUARANTY
    	
92
    
	
 
    	
 
    	
 
    
	
SECTION 15.   MISCELLANEOUS
    	
92
    
	
 
    	
 
    	
 
    
	
15.1.
    	
CONSENTS, AMENDMENTS   AND WAIVERS
    	
92
    
	
 
    	
 
    	
 
    
	
15.2.
    	
INDEMNITY
    	
93
    
	
 
    	
 
    	
 
    
	
15.3.
    	
NOTICES AND   COMMUNICATIONS
    	
93
    
	
 
    	
 
    	
 
    
	
15.4.
    	
PERFORMANCE OF   OBLIGORS’ OBLIGATIONS
    	
94
    
	
 
    	
 
    	
 
    
	
15.5.
    	
CREDIT INQUIRIES
    	
94
    
	
 
    	
 
    	
 
    
	
15.6.
    	
SEVERABILITY
    	
94
    
	
 
    	
 
    	
 
    
	
15.7.
    	
CUMULATIVE EFFECT;   CONFLICT OF TERMS
    	
94
    
	
 
    	
 
    	
 
    
	
15.8.
    	
COUNTERPARTS
    	
94
    
	
 
    	
 
    	
 
    
	
15.9.
    	
ENTIRE AGREEMENT
    	
95
    
	
 
    	
 
    	
 
    
	
15.10.
    	
RELATIONSHIP WITH   LENDERS
    	
95
    
	
 
    	
 
    	
 
    
	
15.11.
    	
NO ADVISORY OR   FIDUCIARY RESPONSIBILITY
    	
95
    
	
 
    	
 
    	
 
    
	
15.12.
    	
CONFIDENTIALITY
    	
95
    
	
 
    	
 
    	
 
    
	
15.13.
    	
GOVERNING LAW
    	
96
    
	
 
    	
 
    	
 
    
	
15.14.
    	
CONSENT TO FORUM
    	
96
    
	
 
    	
 
    	
 
    
	
15.15.
    	
WAIVERS BY OBLIGORS
    	
96
    
	
 
    	
 
    	
 
    
	
15.16.
    	
PATRIOT ACT NOTICE
    	
96
    
	
 
    	
 
    	
 
    
	
15.17.
    	
CANADIAN ANTI-MONEY   LAUNDERING LEGISLATION
    	
97
    
	
 
    	
 
    	
 
    
	
15.18.
    	
PUBLICITY
    	
97
    
	
 
    	
 
    	
 
    
	
15.19.
    	
ACKNOWLEDGEMENT AND   CONSENT TO BAIL-IN OF EEA FINANCIAL INSTITUTIONS
    	
97
    
	
 
    	
 
    	
 
    
	
15.20.
    	
INTERCREDITOR AGREEMENT
    	
98
    

 

iv

 

LIST OF EXHIBITS AND SCHEDULES

 

Exhibit A                                                                                        Assignment and Acceptance

Exhibit B                                                                                        Assignment Notice

 

Schedule 1.1                                                                      Commitments of Lenders

Schedule 1.1(b)                                                       Accruals

Schedule 1.1(c)                                                        Existing Letters of Credit

Schedule 8.5                                                                      Deposit Accounts

Schedule 8.7.1                                                            Business Locations

Schedule 9.1.4                                                            Names and Capital Structure

Schedule 9.1.5                                                            Title to Properties; Liens

Schedule 9.1.8                                                            Surety Obligations

Schedule 9.1.10                                                     Brokers

Schedule 9.1.11                                                     Patents, Trademarks, Copyrights and Licenses

Schedule 9.1.13                                                     Compliance with Laws

Schedule 9.1.14                                                     Environmental Matters

Schedule 9.1.15                                                     Restrictive Agreements

Schedule 9.1.16                                                     Litigation

Schedule 9.1.18                                                     Pension Plans

Schedule 9.1.20                                                     Labor Contracts

Schedule 10.2.1                                                     Existing Debt

Schedule 10.2.2                                                     Permitted Liens

Schedule 10.2.17                                              Existing Affiliate Transactions

 

v

 

TERM LOAN AND SECURITY AGREEMENT

 

THIS TERM LOAN AND SECURITY AGREEMENT dated as of June 28, 2018 (this “Agreement”), among SUMMER INFANT, INC., a Delaware corporation (the “Company”), SUMMER INFANT (USA), INC., a Rhode Island corporation (“SI USA”, and together with Company, collectively, “Borrowers”), THE GUARANTORS FROM TIME TO TIME PARTY HERETO, the financial institutions from time to time party to this Agreement from time to time as lenders (collectively, “Lenders”), and PATHLIGHT CAPITAL LLC, as agent for the Lenders (“Agent”).

 

R E C I T A L S:

 

The Borrowers and Bank of America, N.A. (as administrative agent, in such capacity, the “Revolver Agent” as hereinafter further defined) for itself and the other lenders from time to time party thereto (collectively, the “Revolver Lenders” as hereinafter further defined) are parties to a certain Second Amended and Restated Loan and Security Agreement, dated as of June 28, 2018 (as amended to date, and as may be further amended, amended and restated, supplemented, or otherwise modified from time to time, the “Revolver Loan Agreement” as hereinafter further defined), pursuant to which the Revolver Lenders, have made loans and advances and provided other financial accommodations to the Borrowers;

 

The Borrowers have requested, and the Lenders have agreed to make available to the Borrowers, a term loan facility to: (a) refinance certain existing liabilities, (b) fund certain fees and expenses associated with the consummation of the transactions contemplated hereby, and (c) general working capital requirements, in each case on the terms and conditions set forth herein;

 

The Borrowers desire to secure all of their Obligations (as hereinafter defined) under the Term Loan Documents (as hereinafter defined) by granting to the Agent, for the benefit of the Secured Parties (as hereinafter defined), a security interest in and Lien upon all of the Collateral (as hereinafter defined); and

 

Subject to the terms hereof, each Subsidiary (as hereinafter defined) which is not a Borrower (other than any Immaterial Foreign Subsidiary (as hereinafter defined)) is willing to guaranty all of the Obligations of the Borrowers and to grant to the Agent, for the benefit of the Secured Parties, a security interest in and Lien upon all of its Collateral.

 

NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties agree as follows:

 

SECTION 1.                                           DEFINITIONS; RULES OF CONSTRUCTION

 

1.1.                            Definitions.  As used herein, the following terms have the meanings set forth below:

 

Account: as defined in the UCC (or, with respect to any account receivable of any Canadian Guarantor to which the PPSA is applicable, as defined in the PPSA or, with respect to any UK Guarantor, Book Debts), including all rights to payment for goods sold or leased, or for services rendered.

 

Account Debtor: a Person obligated under an Account, Chattel Paper, General Intangible or Intangible.

 

Accounts Formula Amount: 15% of the Value of Eligible Accounts.

 

Acquisition: a transaction or series of transactions resulting in (a) acquisition of a business, division, or substantially all assets of a Person; (b) record or beneficial ownership of 50% or more of the Equity Interests of a Person; or (c) merger, consolidation or combination of a Borrower or Subsidiary

 

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

 

1

 

with another Person.

 

Affiliate: with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.  “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have correlative meanings.

 

Agent Indemnitees: Agent and its officers, directors, employees, Affiliates, agents and attorneys.

 

Agent Professionals: attorneys, accountants, field examiners, appraisers, auditors, business valuation experts, environmental engineers or consultants, turnaround consultants, and other professionals and experts retained by Agent.

 

Agreement Currency: as defined in Section 1.5.

 

Allocable Amount: as defined in Section 5.11.3.

 

Amazon Companies:  collectively, Amazon.com, Inc. and its Affiliates.

 

Anti-Corruption Laws: means Laws relating to anti-bribery or anti-corruption (governmental or commercial) which apply to any Obligor, including Laws that prohibit the corrupt payment, offer, promise, or authorization of the payment or transfer of anything of value (including gifts or entertainment), directly or indirectly, to any foreign government official, foreign government employee or commercial entity to obtain a business advantage; including the FCPA, and all national and international Laws enacted to implement the OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions.

 

Anti-Terrorism Law: any law relating to terrorism or money laundering, including the Patriot Act, the Canadian Anti-Money Laundering & Anti-Terrorism Legislation and the UK Anti-Terrorism Laws.

 

Applicable Law: all laws, rules, regulations and governmental guidelines applicable to the Person, conduct, transaction, agreement or matter in question, including all applicable statutory law, common law and equitable principles, and all provisions of constitutions, treaties, statutes, rules, regulations, orders and decrees of Governmental Authorities, and including, without limitation, the CPSC Regulations.

 

Applicable Margin: means (i) with respect to Term Loans that bear interest at LIBOR, nine percent (9.0%), and (ii) with respect to Term Loans that bear interest at the Base Rate, eight percent (8%).

 

Applicable Percentage:  with respect to any Lender, with respect to Term Loans, Term Overadvance Loans, or Protective Advances, a percentage equal to a fraction the numerator of which is such Lender’s Term Loan Commitment and the denominator of which is the aggregate Term Loan Commitments (provided, that if the Term Commitments have terminated or expired, each Lender’s Applicable Percentage shall be determined based upon such Lender’s share of the aggregate Term Exposure at such time).

 

“Appraised Value” means with respect to (a) Eligible Intellectual Property, the net orderly liquidation value of Eligible Intellectual Property, and (b) Eligible Equipment, the forced liquidation value of Eligible Equipment, in each case as set forth in the most recent appraisal of Eligible Intellectual Property and Eligible Equipment, as the case may be, as determined from time to time by an independent appraiser engaged by the Agent.

 

2

 

Approved Fund: any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in its ordinary course of activities, and is administered or managed by a Lender, an entity that administers or manages a Lender, or an Affiliate of either.

 

Approved Processors:  collectively, Port Erie Plastics, Inc., TNT Plastic Molding, Inc., AMA Plastics, Norco Plastics, Inc., and such other processors as Agent shall approve from time to time in its Permitted Discretion.

 

Asset Disposition: a sale, lease, license, consignment, transfer or other disposition of Property of an Obligor, including a disposition of Property in connection with a sale-leaseback transaction or synthetic lease.

 

Assignment and Acceptance: an assignment agreement between a Lender and Eligible Assignee, in the form of Exhibit A.

 

Availability: at any time, (a) the lesser of (i) the aggregate Term Commitments at such time and (ii) the Term Loan Borrowing Base, at such time (including any Reserves in effect at such time), minus (b) the Term Exposure at such time.

 

Availability Reserve: and all constituent definitions contained in such term as set forth in the Revolver Loan Agreement shall have the meaning set forth in the Revolver Loan Agreement, it being understood and agreed that any Reserve imposed by the Agent in respect of Priority Payables shall not be duplicative of any similar Availability Reserve imposed by the Revolver Agent in respect of such Priority Payables; and such additional reserves, in such amounts and with respect to such matters, as Agent in its Permitted Discretion may elect to impose from time to time.

 

Bail-In Action:  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:  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 of America: Bank of America, N.A., a national banking association, and its successors and assigns.

 

Bank Product: any of the following products, services or facilities extended to any Borrower or Subsidiary by a Lender or any of its Affiliates: (a) Cash Management Services; (b) foreign exchange products or services; (c) products under Hedging Agreements; (d) commercial credit card and merchant card services; and (e) other banking products or services as may be requested by any Borrower or Subsidiary.

 

Bankruptcy Code: Title 11 of the United States Code.

 

Base Rate: for any day, a per annum rate equal to the greater of (a) the Prime Rate for such day; (b) the Federal Funds Rate for such day, plus 0.50%; or (c) LIBOR for a 30 day interest period as determined on such day, plus 1.5%.

 

Beneficial Ownership Certification: a certification regarding beneficial ownership required by the

 

3

 

Beneficial Ownership Regulation.

 

Beneficial Ownership Regulation:  31 C.F.R. §1010.230.

 

Blocked Person: means any Person: (a) listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; (b) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; (c) a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (d) a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224; or (e) a Person that is named on the most current OFAC Lists.

 

Board of Governors: the Board of Governors of the Federal Reserve System.

 

Book Debts:  as defined in the UK Security Agreements.

 

Borrowed Money: with respect to any Obligor, without duplication, its (a) Debt that (i) arises from the lending of money by any Person to such Obligor, (ii) is evidenced by notes, drafts, bonds, debentures, credit documents or similar instruments, (iii) accrues interest or is a type upon which interest charges are customarily paid (excluding trade payables owing in the Ordinary Course of Business), or (iv) was issued or assumed as full or partial payment for Property; (b) Capital Leases; (c) unreimbursed reimbursement obligations with respect to letters of credit; and (d) guaranties of any Debt of the foregoing types owing by another Person.

 

Borrower Agent: as defined in Section 4.4.

 

Borrower Materials: Revolver Borrowing Base and Term Loan Borrowing Base information, reports, financial statements and other materials delivered by Borrowers hereunder, as well as other Reports and information provided by Agent to Lenders.

 

Borrowing: a group of Loans of one type that are made on the same day or are converted into Loans of one type on the same day.

 

Business Day: any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, New York, and (i) if such day relates to a Term Loan that bears interest at LIBOR, any such day on which dealings in Dollar deposits are conducted between banks in the London interbank Eurodollar market or (ii) if the term “Business Day” has a different meaning in the Canadian Security Agreements or the UK Security Agreements, the definition in such other document shall control as to issues covered in both this Agreement and such other document.

 

Canadian Anti-Money Laundering & Anti-Terrorism Legislation: the Criminal Code, R.S.C. 1985, c. C-46, the Proceeds of Crime Act and the United Nations Act, R.S.C. 1985, c. U-2 or any similar Canadian legislation, together with all rules, regulations and interpretations thereunder or related thereto including, without limitation, the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism and the United Nations Al-Qaida and Taliban Regulations promulgated under the United Nations Act.

 

Canadian Defined Benefit Pension Plan: a Canadian Pension Plan with a “defined benefit provision” as such term is defined in the Income Tax Act (Canada).

 

Canadian Dollars:  lawful money of Canada.

 

4

 

Canadian Guarantor: each Canadian Subsidiary that guarantees payment or performance of the Obligations, including, without limitation, Summer Infant Canada, Limited.  The definition of “Canadian Guarantors” means all of such entities collectively.

 

Canadian Guaranty: that certain Guarantee and Indemnity Agreement dated as of the Closing Date made by the Canadian Guarantor, as may be amended, restated, confirmed, replaced, supplemented or otherwise modified from time to time.

 

Canadian MEPP:  any “multi-employer pension plan” as such term is defined in the PBA under which any Obligor or its Subsidiaries has any liability, contingent or otherwise.

 

Canadian Pension Plan:  a pension plan that is required to be registered as a pension plan under the PBA or the Income Tax Act (Canada) under which any Obligor or its Subsidiaries has any liability, contingent or otherwise, but excludes a Canadian MEPP.

 

Canadian Priority Payables Reserve: on any date of determination, reserves established by Agent in its Permitted Discretion for amounts payable by Canadian Guarantors and secured by any Liens, choate or inchoate, which rank or which would reasonably be expected to rank in priority to or pari passu with Agent’s Liens on Collateral in the Revolver Borrowing Base, amounts deemed to be held in trust, or held in trust, pursuant to Applicable Law and/or for amounts which represent costs in connection with the preservation, protection, collection or realization of the Collateral, including, without limitation, any such amounts due and not paid for wages, vacation pay, amounts (including severance pay) payable under the Wage Earner Protection Program Act (Canada) or under the Bankruptcy and Insolvency Act (Canada), amounts due and not paid under any legislation relating to workers’ compensation or to employment insurance, all amounts deducted or withheld and not paid and remitted when due under the Income Tax Act (Canada), sales tax, goods and services tax, value added tax, harmonized tax, excise tax, tax payable pursuant to Part IX of the Excise Tax Act (Canada) or similar applicable provincial legislation, government royalties, amounts currently or past due and not paid for realty, municipal or similar taxes and all solvency deficiencies or wind-up deficiencies under the PBA and all amounts currently or past due and not contributed, remitted or paid to any Canadian Pension Plan or under the Canada Pension Plan or any similar statutory or other claims that would have or would reasonably be expected to have priority over or pari passu with any Liens granted to Agent in the future (“Priority Payables”).

 

Canadian Security Agreements:  (a) the Guarantee and Indemnity and General Security Agreement dated as of the Closing Date, in form and substance reasonably acceptable to Agent, executed by the Canadian Guarantors in favor of Agent, as the same may be amended, restated, confirmed, supplemented or otherwise modified from time to time, and (b) any other Canadian security agreement required to be executed by any Obligor in favor of Agent after the Closing Date, in each case, as the same may be amended, restated, confirmed, supplemented, replaced or otherwise modified from time to time.

 

Canadian Subsidiary:  any Subsidiary of Company that is organized under the federal laws of Canada or any province or territory thereof.

 

Capital Expenditures: all liabilities incurred or expenditures made by a Borrower or Subsidiary for the acquisition of fixed assets, or any improvements, replacements, substitutions or additions thereto with a useful life of more than one year.

 

Capital Lease: any lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, provided, however, notwithstanding anything to the contrary in the financial statements of the Obligors, the Lease dated March 24, 2009 between Faith Realty II, LLC and SI USA shall not constitute a “Capital Lease” for purposes of this Agreement.

 

5

 

Cash Collateral: cash, and any interest or other income earned thereon, that is delivered to Agent to Cash Collateralize any Obligations.

 

Cash Collateral Account: a demand deposit, money market or other account established by Agent at such financial institution as Agent may select in its discretion, which account shall be subject to a Lien in favor of Agent.

 

Cash Collateralize: the delivery of cash to Agent, as security for the payment of Obligations arising form of relating to any inchoate, contingent or other Obligations, an amount equal to Agent’s good faith estimate of the amount that is due or could become due, including all fees and other amounts relating to such Obligations.  “Cash Collateralization” has a correlative meaning.

 

Cash Dominion Period: the period (a) commencing on the day that an Event of Default occurs, or Availability is less than the Cash Dominion Trigger Amount; and (b) continuing until (x) no Event of Default shall have occurred and be continuing and (y) during the preceding 30 consecutive days, Availability shall have been greater than the Cash Dominion Trigger Amount at all times.

 

Cash Dominion Trigger Amount:  at any time, an amount equal to the greater of (a) $5,000,000 and (b) 10% of the lesser of (i) the aggregate Revolver Commitments at such time and (ii) the Revolver Borrowing Base (calculated without giving effect to the Term Loan Push Down Reserve) at such time.

 

Cash Equivalents: (a) marketable obligations issued or unconditionally guaranteed by, and backed by the full faith and credit of, the United States, Canadian, the United Kingdom or English government, maturing within 12 months of the date of acquisition; (b) certificates of deposit, time deposits and bankers’ acceptances maturing within 12 months of the date of acquisition, and overnight bank deposits, in each case which are issued by Bank of America or a commercial bank organized under the laws of the United States, Canada, the United Kingdom or England or any state, province or district thereof, rated A-1 (or better) by S&P or P-1 (or better) by Moody’s at the time of acquisition, and (unless issued by a Lender) not subject to offset rights; (c) repurchase obligations with a term of not more than 30 days for underlying investments of the types described in clauses (a) and (b) entered into with any bank described in clause (b); (d) commercial paper issued by Bank of America or rated A-1 (or better) by S&P or P-1 (or better) by Moody’s, and maturing within nine months of the date of acquisition; and (e) shares of any money market fund that has substantially all of its assets invested continuously in the types of investments referred to above, has net assets of at least $500,000,000 and has the highest rating obtainable from either Moody’s or S&P.

 

Cash Management Services: any services provided from time to time by a Lender or any of its affiliates to any Borrower or Subsidiary in connection with operating, collections, payroll, trust, or other depository or disbursement accounts, including automated clearinghouse, e-payable, electronic funds transfer, wire transfer, controlled disbursement, overdraft, depository, information reporting, lockbox and stop payment services.

 

Casualty Event: means casualty or other insured damage to, or any taking under power of eminent domain or by condemnation, expropriation or similar proceeding of (and payments in lieu thereof), any property or asset of an Obligor.

 

CERCLA: the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. § 9601 et seq.).

 

Change in Law: the occurrence, after the date hereof, of (a) the adoption, taking effect or phasing in of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof; or (c) the making, issuance or application of any request, guideline, requirement or directive (whether or not having the force of law) by any Governmental

 

6

 

Authority; provided, however, that “Change in Law” shall include, regardless of the date enacted, adopted or issued, all requests, guidelines, requirements or directives (i) under or relating to the Dodd-Frank Wall Street Reform and Consumer Protection Act, or (ii) promulgated pursuant to Basel III by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any similar authority) or any other Governmental Authority including CRD IV.

 

Change of Control: an event or series of events by which:

 

(a)                                 any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of 45% or more of the Equity Interests of a Borrower entitled to vote for members of the board of directors or equivalent governing body of such Borrower on a fully-diluted basis (and taking into account all such Equity Interests that such person or group has the right to acquire pursuant to any option right);

 

(b)                                 during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of a Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors);

 

(c)                                  Company ceases to own, directly or indirectly 100% of the Equity Interests of any Subsidiary (other than Subsidiaries that are joint ventures permitted hereunder);

 

(d)                                 a Borrower ceases to own, directly or indirectly 100% of the Equity Interests of any Subsidiary (other than Subsidiaries that are joint ventures permitted hereunder), including, but not limited to, the Canadian Guarantor and/or the UK Guarantor;

 

(e)                                  any “Change of Control” or similar event, as defined in the Revolver Loan Agreement or any other Revolver Loan Document shall have occurred; or

 

(f)                                   the sale or transfer of all or substantially all of an Obligor’s assets except to another Obligor.

 

Claims: all claims, liabilities, obligations, losses, damages, penalties, judgments, proceedings, interest, costs and expenses of any kind (including remedial response costs, reasonable attorneys’ fees and Extraordinary Expenses) at any time (including after Full Payment of the Obligations or replacement of Agent or any Lender) incurred by any Indemnitee or asserted against any Indemnitee by any Obligor or other Person, in any way relating to (a) any Loans, Loan Documents, Borrower Materials, or the use

 

7

 

thereof or transactions relating thereto, (b) any action taken or omitted in connection with any Loan Documents, (c) the existence or perfection of any Liens, or realization upon any Collateral, (d) exercise of any rights or remedies under any Loan Documents or Applicable Law, or (e) failure by any Obligor to perform or observe any terms of any Loan Document, in each case including all costs and expenses relating to any investigation, litigation, arbitration or other proceeding (including an Insolvency Proceeding or appellate proceedings), whether or not the applicable Indemnitee is a party thereto.

 

Closing Date: means the first date all the conditions precedent in Section 6.1 are satisfied or waived.

 

Code: the Internal Revenue Code of 1986, as amended.

 

Collateral: all Property described in Section 7.1, all Property described in any Security Documents as security for any Obligations, and all other Property that now or hereafter secures (or is intended to secure) any Obligations.

 

Commitment: for any Lender, the aggregate amount of such Lender’s Revolver Commitment.  “Commitments” means the aggregate amount of all Revolver Commitments.

 

Commodity Exchange Act: the Commodity Exchange Act (7 U.S.C. § 1 et seq.).

 

Company:  as defined in the Preamble hereto.

 

Competitor:  on any date, (a) any competitor (as reasonably determined by Borrowers) of SI Holdings and its Subsidiaries (other than bona fide fixed income investors or debt funds) that are identified to Agent by Borrower Agent in writing on or prior to the Closing Date; (b) any other Person (other than any bona fide fixed income investor or debt funds) that is a competitor (as reasonably determined by Borrowers) of SI Holdings and its Subsidiaries, which Person has been designated as a “Competitor” by written notice from Borrower Agent to Agent not less than two (2) Business Days prior to such date; and (c) any Affiliate of a “Competitor described in clause (a) or (b) of this definition, which Affiliate has been designated as a “ Competitor” by written notice from Borrower Agent to Agent not less than two (2) Business Days prior to such date; provided, that “Competitors shall exclude any Person that Borrower Agent has designated as no longer being a “Competitor” by written notice to Agent from time to time.  For the avoidance of doubt, to the extent that Persons are identified as Competitors in writing by Borrower Agent after the Closing Date, the inclusion of such Persons as Competitors shall not retroactively apply to prior assignments or participations in respect of any Loan or Term Loan Commitment under this Agreement.

 

Compliance Certificate: a certificate, in form and substance satisfactory to Agent, containing a detailed calculation of the Fixed Charge Coverage Ratio as of the Fiscal Month most recently ended, and, if a Financial Covenant Testing Period shall be in effect, certifying compliance with Section 10.3.1.

 

Connection Income Taxes: Other Connection Taxes that are imposed on or measured by net income (however denominated), or are franchise, capital, or branch profits Taxes.

 

Consolidated EBITDA: shall have the same meaning as “EBITDA”, as such term is defined herein.

 

Consolidated Total Assets:  shall mean, as of any date, the total assets of the Borrowers and their Subsidiaries determined in accordance with GAAP, as of the last day of the Fiscal Quarter ended immediately prior to the date of such determination for which financial statements are required to have been delivered pursuant to Sections 10.1.2(a) or (b).

 

8

 

Contingent Obligation: any obligation of a Person arising from a guaranty, indemnity or other assurance of payment or performance of any Debt, lease, dividend or other obligation (“primary obligations”) of another obligor (“primary obligor”) in any manner, whether directly or indirectly, including any obligation of such Person under any (a) guaranty, endorsement, co-making or sale with recourse of an obligation of a primary obligor; (b) obligation to make take-or-pay or similar payments regardless of nonperformance by any other party to an agreement; and (c) arrangement (i) to purchase any primary obligation or security therefor, (ii) to supply funds for the purchase or payment of any primary obligation, (iii) to maintain or assure working capital, equity capital, net worth or solvency of the primary obligor, (iv) to purchase Property or services for the purpose of assuring the ability of the primary obligor to perform a primary obligation, or (v) otherwise to assure or hold harmless the holder of any primary obligation against loss in respect thereof.  The amount of any Contingent Obligation shall be deemed to be the stated or determinable amount of the primary obligation (or, if less, the maximum amount for which such Person may be liable under the instrument evidencing the Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto.

 

CPSC: means the U.S. Consumer Products Safety Commission.

 

CPSC Regulations: means all laws and regulations enforced by the CPSC.

 

CRD IV: (a) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms; and (b) Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms.

 

CWA: the Clean Water Act (33 U.S.C. §§ 1251 et seq.).

 

Debt: as applied to any Person, without duplication, (a) all items that would be included as liabilities on a balance sheet in accordance with GAAP, including Capital Leases, but excluding trade payables incurred and being paid in the Ordinary Course of Business; (b) all Contingent Obligations; (c) all reimbursement obligations in connection with letters of credit issued for the account of such Person; and (d) in the case of any Obligor, the Obligations.  The Debt of a Person shall include any recourse Debt of any partnership in which such Person is a general partner or joint venturer.

 

Default: an event or condition that, with the lapse of time or giving of notice, would constitute an Event of Default.

 

Default Rate: for any Obligation (including, to the extent permitted by law, interest not paid when due), 2% plus the interest rate otherwise applicable thereto.

 

Deposit Account: all “deposit accounts” as such term is defined in the UCC and/or with respect to any Deposit Account located in Canada, any account with a deposit function.

 

Deposit Account Control Agreements: the Deposit Account control or blocked account agreements to be executed by each institution maintaining a Deposit Account for an Obligor, in favor of Agent, as security for the Obligations.

 

Designated Jurisdiction: a country or territory that is the subject of a Sanction.

 

Dilution Reserve: a reserve in an initial amount as of the Closing Date equal to $1,000,000 established by the Company and reflected on the balance sheet of the Company and its Subsidiaries in respect of the accruals described on Schedule 1.1(b) attached hereto, as the same may be adjusted from time to time by Agent in its Permitted Discretion based upon the most recent field examination conducted by Agent.

 

9

 

Distribution: any declaration or payment of a distribution, interest or dividend on any Equity Interest (other than a rights distribution and/or payment-in-kind by the Company); any distribution, advance or repayment of Debt to a holder of Equity Interests; or any purchase, redemption, or other acquisition or retirement for value of any Equity Interest.

 

Documents: means all “documents” as such term is defined in the UCC and/or with respect to any Documents of an Obligor domiciled in Canada, a ‘document of title’ as defined in the PPSA.

 

Dollars: lawful money of the United States.

 

Dominion Account: a collection or similar account established by an Obligor at Bank of America over which Agent has control for withdrawal purposes.

 

EBITDA: determined on a consolidated basis for Company and Subsidiaries, for each period of twelve consecutive months, equal to the aggregate of (a) net income for such period, calculated before (i) interest expense, (ii) provision for income taxes and (iii) depreciation and amortization expense; plus (b) the sum (without duplication) of the following: (i) expenses, fees and charges incurred in connection with the closing of the transactions contemplated by this Agreement; (ii) non-cash charges resulting from the write-down of goodwill, furniture, fixtures, equipment and software; (iii) non-cash charges associated with the issuance and periodic re-measurement of Equity Interests in the Company; (iv) non-cash losses attributable to deferred financing costs; (v) non-cash losses attributable to fluctuations in currency values; (vi) non-cash charges attributable to the issuance and/or exercise of employee non-cash stock compensation to the extent permitted by this Agreement; (vii) non-cash losses or charges resulting from the impact of purchase accounting adjustments in connection with any Permitted Acquisition; (viii) other non-cash losses or charges deducted in determining net income (including, without limitation, non-cash losses or charges resulting from the application of Statement of Financial Accounting Standards No. 142, Goodwill and other Intangible Assets (FAS-142) and FAS-144, Accounting for Impairment of Long-Lived Assets); (ix) losses attributable to the early retirement of Indebtedness (other than the Obligations); (x) transaction related fees and expenses incurred in connection with any Permitted Asset Disposition or any Permitted Acquisition, all as approved by Agent in its Permitted Discretion; (xi) indemnification payments made by the Obligors and for which the Obligors have received reimbursement from third parties; (xii) fees and expenses of advisors and independent consultants retained by Obligors and approved by Agent in its Permitted Discretion, provided, that the aggregate amount of such fees and expenses added back to EBITDA pursuant to this clause (b)(xii) shall not exceed $250,000 during any Fiscal Quarter; (xiii) fees and expenses paid to members of the Board of Directors of the Company in an aggregate amount not to exceed $500,000 during any twelve-month period; (xiv) restructuring charges; (xv) earn-out payments and severance payments; provided, that, for any period of twelve consecutive months, the sum of the aggregate amounts added back pursuant to clauses (b)(xii), (b)(xiii), (b)(xiv) and (b)(xv) shall not exceed $1,000,000 in the aggregate; and (xvi) losses arising from the sale of fixed or capital assets; minus the sum (without duplication) of the following: (i) non-cash income or gains resulting from the write-up of goodwill, furniture, fixtures, equipment and software; (ii) non-cash income or gains attributable to fluctuations in currency values; (iii) any other non-cash income or gains; (iv) income or gains arising from the sale of fixed or capital assets; (v) income or gains attributable to the early retirement of Indebtedness (other than the Obligations); and (vi) any other non-recurring or extraordinary gains (in each case, to the extent included in determining net income).

 

EBITDA for Company and Subsidiaries for each of the months set forth below shall be deemed to be the amount set forth below opposite such month:

 

	
Monthly Period
    	
 
    	
EBITDA
    
	
 
    	
 
    	
 
    
	
April 2017
    	
 
    	
$
    	
[***]
    

 

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

 

10

 

	
May 2017
    	
 
    	
$
    	
[***]
    
	
June 2017
    	
 
    	
$
    	
[***]
    
	
July 2017
    	
 
    	
$
    	
[***]
    
	
August 2017
    	
 
    	
$
    	
[***]
    
	
September 2017
    	
 
    	
$
    	
[***]
    
	
October 2017
    	
 
    	
$
    	
[***]
    
	
November 2017
    	
 
    	
$
    	
[***]
    
	
December 2017
    	
 
    	
$
    	
[***]
    
	
January 2018
    	
 
    	
$
    	
[***]
    
	
February 2018
    	
 
    	
$
    	
[***]
    
	
March 2018
    	
 
    	
$
    	
[***]
    
	
April 2018
    	
 
    	
$
    	
[***]
    

 

EEA Financial Institution: (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: any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

 

EEA Resolution Authority: 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 Account: an Account owing to an Obligor that arises in the Ordinary Course of Business from the sale of goods, is payable in Dollars, Canadian Dollars or GBP and is deemed by Agent, in its Permitted Discretion, to be an Eligible Account.  Without limiting the foregoing, no Account shall be an Eligible Account if (a) it is unpaid for more than 60 days after the original due date, or more than 120 days after the original invoice date; (b) 50% or more of the Accounts owing by the Account Debtor are not Eligible Accounts as a result of the application of the foregoing clause (a); (c) when aggregated with other Accounts owing by the Account Debtor and its Affiliates, it exceeds 15% of the aggregate Eligible Accounts (or such higher percentage as Agent may establish for the Account Debtor from time to time) (provided that, only the amount of Accounts in excess of the percentage set forth in this clause (c) (or such higher percentage as Agent may establish with respect to any Account Debtor in accordance with this clause (c)) shall be deemed ineligible under this clause (c)), provided, further, that this clause (c) shall not apply to the following Account Debtors: (i) the Amazon Companies, (ii) the Wal-Mart Companies, or (iii) the Target Companies; (d) with respect to any Account owing from the Amazon Companies, when aggregated with other Accounts owing from the Amazon Companies, it exceeds 45% of the aggregate Eligible Accounts, provided, however, that if, at any time, the corporate credit rating of Amazon.com, Inc. falls below “BBB-” (by S&P or Fitch) or “Baa3” (by Moody’s), the Agent shall have the right, in its sole discretion to decrease such maximum percentage (provided further, that only the amount of Accounts in excess of the percentage set forth in this clause (d) (or such lower percentage as shall be specified by Agent in accordance with the foregoing proviso) shall be deemed ineligible under this clause (d)); (e) with respect to any Account owing from the Wal-Mart Companies, when aggregated with other Accounts owing from the Wal-Mart Companies, it exceeds 35% of the aggregate Eligible Accounts, (provided, that only the amount of Accounts in excess of the percentage set forth in this clause (e) shall be deemed ineligible under this clause (e)); (f) with respect to any Account owing by the Target Companies, when aggregated with other Accounts owing by the Target Companies, it exceeds 25% of the aggregate Eligible

 

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

 

11

 

Accounts (provided, that only the amount of Accounts in excess of the percentage set forth in this clause (f) shall be deemed ineligible under this clause (f)); (g) it does not conform with a covenant or representation herein in all material respects, except (A) to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and (B) in the case of any representation and warranty qualified by “materiality”, “Material Adverse Effect”, or similar language, they shall be true and correct in all respects; (h) it is owing by a creditor or supplier, or is otherwise subject to a potential offset, counterclaim, dispute, deduction, discount, recoupment, reserve, defense, chargeback, credit or allowance (but ineligibility shall be limited to the amount thereof); (i) an Insolvency Proceeding has been commenced by or against the Account Debtor or the Account Debtor has failed, has suspended or ceased doing business, is liquidating, dissolving or winding up its affairs, is not Solvent, or is subject to any Sanction or on any specially designated nationals list maintained by OFAC; or the Borrower is not able to bring suit or enforce remedies against the Account Debtor through judicial process; (j) the Account Debtor is organized or has its principal offices or assets outside the United States, Canada or the United Kingdom, unless the Account is (i) supported by a letter of credit (delivered to and directly drawable by Agent) satisfactory in all respects to Agent; or (ii) is a Mexican subsidiary of Target Corporation or Wal-Mart Stores, Inc. and the aggregate amount of all Accounts deemed eligible by this clause (j)(ii) does not exceed $1,000,000 at any time; (k) it is owing by a Governmental Authority, unless the Account Debtor is the United States, Canada or any province or territory thereof or the United Kingdom or any department, agency or instrumentality thereof and the Account has been assigned to and is enforceable by Agent in compliance with the federal Assignment of Claims Act or other Applicable Law (including the Financial Administration Act (Canada)); (l) it is not subject to a duly perfected, first priority Lien in favor of Agent, or is subject to any other Lien, other than Liens permitted under clauses (b), (d), and (h) of Section 10.2 and any other Lien with respect thereto permitted under this Agreement that are subject to an intercreditor agreement in form and substance reasonably satisfactory to Agent between the holder of such Lien and the Agent; (m) the goods giving rise to it have not been delivered to the Account Debtor, or it otherwise does not represent a final sale; (n) it is evidenced by Chattel Paper or an Instrument of any kind unless such Chattel Paper or Instrument is in the possession of the Agent, and to the extent necessary or appropriate, endorsed to Agent, or has been reduced to judgment; (o) its payment has been extended or the Account Debtor has made a partial payment, provided, that, with respect to any Account for which partial payment has been made, only the Account for which a partial payment has been made (and not any other Account owing from the same Account Debtor) shall be deemed ineligible under this clause (o); (p) it arises from a sale to an Affiliate, from a sale on a cash-on-delivery, bill-and-hold, sale-or-return, sale-on-approval, consignment, guaranteed sales, or other repurchase or return basis, or from a sale for personal, family or household purposes; (q) it represents a progress billing or retainage, or relates to services for which a performance, surety or completion bond or similar assurance has been issued; or (r) it includes a billing for interest, fees or late charges, but ineligibility shall be limited to the extent thereof.  In calculating delinquent portions of Accounts under clauses (a) and (b), credit balances more than 120 days old will be excluded.

 

Eligible Assignee: a Person that is (a) a Lender, Affiliate of a Lender or Approved Fund; (b) any other financial institution approved by Borrower Agent (which approval shall not be unreasonably withheld or delayed, and shall be deemed given if no objection is made within two Business Days after notice of the proposed assignment) and Agent, which extends term loan credit facilities of this type in its ordinary course of business; and (c) during any Event of Default, any Person acceptable to Agent in its discretion; provided, that, in no event shall the term “Eligible Assignee” include any Competitor.

 

Eligible Equipment: means Equipment and Fixtures owned by a Borrower; provided, that unless the Agent in its Permitted Discretion otherwise agrees, none of the following shall be deemed to be Eligible Equipment:

 

(a)                                 Any Equipment (including Fixtures) (i) that is not subject to a perfected first-priority security interest in favor of the Agent, or (ii) with respect to which a Borrower does not

 

12

 

have, or have the ability to, convey good and valid title thereto, free and clear of any Lien (other than Liens granted to the Agent pursuant to the Security Documents); and

 

(b)                                 Any Equipment (including Fixtures) has not been appraised by a third party appraiser engaged by the Agent or otherwise reasonably acceptable to the Agent in its discretion exercised in good faith utilizing procedures and criteria acceptable to the Agent for determining the Appraised Value of such Equipment (including Fixtures); and

 

(c)                                  As to which Equipment (including Fixtures), such Borrower is not in compliance with the representations, warranties and covenants set forth in the Security Documents; and

 

(d)                                 Any Equipment (including Fixtures) that is worn out or obsolete, that is not usable in the ordinary course of such Borrower’s business, or is in inoperable condition, excluding, in all accounts with regard to routine maintenance requirements for normal wear and tear, and (i) such condition continues for any period of more than thirty (30) consecutive days or (ii) such worn, obsolete, unusable and/or inoperable Equipment (including Fixtures) is in excess of five percent (5%) of the aggregate Appraised Value of Equipment (including Fixtures), irrespective of the thirty (30) period set forth in the immediately preceding subclause (i);

 

(e)                                  Any Equipment (including Fixtures) that does not meet, in all material respects, all applicable safety or regulatory standards applicable to it for the use for which it is intended or for which it is being used, excluding in all accounts with regard to routine maintenance;

 

(f)                                   In the case of rolling stock that is subject to a certificate of title issued by the appropriate Governmental Authority, (x) the ownership of which is not evidenced by a certificate of title that has the name of a Borrower (or a Person that has executed and delivered a Guaranty) noted thereon as the owner of it or is not otherwise properly registered in one of the States of the United States or provinces or territories of Canada to a Borrower (or such Person that has executed and delivered a Guaranty) in the state, province or territory that has issued such certificate of title in accordance with all applicable Laws; or (y) any rolling stock that does not meet, in all material respects, all applicable standards of all motor vehicle Laws or other statutes and regulations established by any Governmental Authority or is subject to any licensing or similar requirement that would limit the right of Agent to sell or otherwise dispose of such rolling stock.

 

Eligible Intellectual Property: means Intellectual Property deemed by the Agent to be eligible for inclusion in the calculation of the Term Loan Borrowing Base and which, except as otherwise agreed by the Agent in its Permitted Discretion, satisfies all of the following conditions:

 

(a)                                 Such Intellectual Property is validly registered with the U.S. Patent and Trademark Office or the U.S. Copyright Office, Canadian Intellectual Property Office, any applicable UK intellectual property office, European Union Intellectual Property Office, European Patent Office, or such other applicable jurisdiction as Agent shall determine appropriate in its exclusive discretion, as applicable;

 

(b)                                 A Borrower owns such Intellectual Property or exclusively licenses such Intellectual Property from a third party;

 

(c)                                  Such Borrower is in compliance in all material respects with the representations, warranties and covenants set forth in the Security Agreement relating to such Intellectual Property;

 

(d)                                 The Agent shall have received evidence that all actions that the Agent may reasonably deem necessary or appropriate in order to create valid first and subsisting Liens

 

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(subject only to Permitted Liens (other than encumbrances securing Debt (other than with respect to the Revolver Debt) which have priority over the Lien of the Agent by operation of Law) on such Intellectual Property (including, without limitation, filings at the U.S. Patent and Trademark Office or the U.S. Copyright Office, and/or the Canadian Intellectual Property Office, as applicable) has been taken; and

 

(e) The Agent shall have received an appraisal (and periodic updates to such appraisal as set forth herein) of such Intellectual Property by a third party appraiser engaged by the Agent or otherwise reasonably acceptable to the Agent in its discretion exercised in good faith utilizing procedures and criteria acceptable to the Agent for determining the Appraised Value of such Intellectual Property.

 

Eligible In-Transit Inventory: Inventory owned by a Borrower or Guarantor that would be Eligible Inventory if it were not subject to a Document and in transit from a foreign location to a location of the applicable Borrower or Guarantor within the United States, Canada or the United Kingdom, and that Agent, in its Permitted Discretion, deems to be Eligible In-Transit Inventory.  Without limiting the foregoing, no Inventory shall be Eligible In-Transit Inventory unless it (a) is subject to a negotiable Document showing Agent (or, with the consent of Agent, the applicable Borrower or Guarantor) as consignee, which Document is in the possession of Agent or such other Person as Agent shall approve; (b) is fully insured by marine cargo or other similar insurance, in such amounts, with such insurance companies and subject to such deductibles as are reasonably satisfactory to Agent and in respect of which Agent has been named as loss payee; (c) is not sold by a vendor that has a right to reclaim, divert shipment of, repossess, stop delivery, claim any reservation of title or otherwise assert Lien rights against the Inventory, or with respect to whom any Borrower or Guarantor is in default of any obligations; (d) is evidenced by a full set of clean, original negotiable bills of lading consigned to the order of Agent and such original bills of lading are in the possession of Agent or a customs broker from whom Agent has received an executed Customs Broker Agreement with respect to such inventory and title has passed to the applicable Borrower or Guarantor at the time such inventory is delivered to the common carrier; (e) is shipped by a common carrier that is not affiliated with the vendor and is not subject to any Sanction or on any specially designated nationals list maintained by OFAC; and (f) is being handled by a customs broker, freight-forwarder or other handler that has delivered a Lien Waiver.

 

Eligible Inventory: Inventory owned by a Borrower or Guarantor that Agent, in its Permitted Discretion, deems to be Eligible Inventory.  Without limiting the foregoing, no Inventory shall be Eligible Inventory unless it (a) is finished goods or raw materials, and not work-in-process, packaging or shipping materials, labels, samples, display items, bags, replacement parts or manufacturing supplies, provided that component parts and replacement parts shall not be deemed ineligible under this clause (a) to the extent the most recent inventory appraisal delivered to Agent ascribes a value to such component parts and/or replacement parts; (b) is not held on consignment, nor subject to any deposit or down payment; (c) is in saleable condition and is not damaged, defective, shopworn or otherwise unfit for sale; (d) is not slow-moving, perishable, obsolete or unmerchantable, and does not constitute returned or repossessed goods, provided that slow-moving or obsolete inventory shall not be deemed ineligible under this clause (d) to the extent the most recent inventory appraisal delivered to Agent ascribes a value to such slow-moving or obsolete inventory; (e) meets all standards imposed by any Governmental Authority, has not been acquired from a Person subject to any Sanction or on any specially designated nationals list maintained by OFAC, and does not constitute hazardous materials under any Environmental Law; (f) conforms with the covenants and representations herein; (g) is subject to Agent’s duly perfected, first priority Lien, and no other Lien; (h) is within the continental United States, New Brunswick or Ontario, Canada, or the United Kingdom, is not in transit except between locations of Borrowers or Guarantors, unless such inventory constitutes Eligible In-Transit Inventory and is not consigned to any Person; (i) is not subject to any warehouse receipt or negotiable Document (other than Eligible In-Transit Inventory subject to a Lien Waiver); (j) is not subject to any License or other property or property right or other arrangement that restricts such Borrower’s or Agent’s right to dispose of such Inventory, unless Agent has received an

 

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appropriate Lien Waiver or is otherwise satisfied that it could sell such inventory without infringing on the rights of such licensor following an Event of Default; (k) is not located on leased premises or in the possession of a warehouseman, processor, repairman, mechanic, shipper, freight forwarder or other Person, unless the lessor or such Person is an Approved Processor and (i) has delivered a Lien Waiver or (ii) an appropriate Rent and Charges Reserve has been established for such location; and (l) is reflected in the details of a current perpetual inventory report.

 

Enforcement Action: any action to enforce any Obligations or Loan Documents or to exercise any rights or remedies relating to any Collateral (whether by judicial action, self-help, notification of Account Debtors, exercise of setoff or recoupment, exercise of any right to act in an Obligor’s Insolvency Proceeding or to credit bid Obligations, or otherwise).

 

Environmental Laws: all Applicable Laws and agreements with Governmental Authorities (including all programs, permits and guidance promulgated by regulatory agencies), relating to public health and safety matters or conditions (but excluding occupational safety and health, to the extent regulated by OSHA) or the protection or pollution of the environment, including but not limited to CERCLA, RCRA and CWA.

 

Environmental Notice: a notice (whether written or oral) from any Governmental Authority or other Person of any possible noncompliance with, investigation of a possible violation of, litigation relating to, or potential fine or liability under any Environmental Law, or with respect to any Environmental Release, environmental pollution or hazardous materials, including any complaint, summons, citation, order, claim, demand or request for correction, remediation or otherwise.

 

Environmental Release: a release as defined in CERCLA or under any other Environmental Law.

 

Equipment Formula Amount: 50% of the Appraised Value of Eligible Equipment.

 

Equity Interest: the interest of any (a) shareholder in a corporation; (b) partner in a partnership (whether general, limited, limited liability or joint venture); (c) member in a limited liability company; or (d) other Person having any other form of equity security or ownership interest.

 

ERISA: the Employee Retirement Income Security Act of 1974.

 

ERISA Affiliate: any trade or business (whether or not incorporated) under common control with an Obligor within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

 

ERISA Event: (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by any Obligor or ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any Obligor or ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan; (e) the determination that any Pension Plan is considered an at risk plan or a plan in critical or endangered status under the Code, ERISA or the Pension Protection Act of 2006; (f) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Obligor or ERISA Affiliate; or (h) failure by an Obligor or ERISA Affiliate to meet all applicable requirements under the Pension Funding Rules in respect of a Pension Plan, whether or not waived, or to make a required contribution to a Multiemployer Plan.

 

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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: as defined in Section 11.

 

Excluded Deposit Account: a Deposit Account maintained by any Obligor (a) which has been established and is used exclusively for the sole purpose of making payroll and withholding tax payments related thereto and other employee wage and benefit payments to or for the benefit of such Obligor’s employees and accrued and unpaid employee compensation (including salaries, wages, benefits and expense reimbursements), (b) which is a zero balance operational disbursement or similar account, (c) has been established and is used exclusively for the sole purpose of making and remitting sales and use taxes, VAT and/or such Canadian sales and use tax equivalents or (d) which is used for petty cash or similar purposes so long as the amount on deposit (i) in each such individual Deposit Account described in this clause (d) does not exceed $10,000 during any period of seventy-two consecutive hours and (ii) in all Deposit Accounts referred to in this clause (d) does not exceed $50,000 in the aggregate during any period of seventy-two consecutive hours.

 

Excluded Swap Obligation: with respect to an Obligor, each Swap Obligation as to which, and only to the extent that, such Obligor’s guaranty of or grant of a Lien as security for such Swap Obligation is or becomes illegal under the Commodity Exchange Act because the Obligor does not constitute an “eligible contract participant” as defined in the act (determined after giving effect to any keepwell, support or other agreement for the benefit of such Obligor and all guarantees of Swap Obligations by other Obligors) when such guaranty or grant of Lien becomes effective with respect to the Swap Obligation.  If a Hedging Agreement governs more than one Swap Obligation, only the Swap Obligation(s) or portions thereof described in the foregoing sentence shall be Excluded Swap Obligation(s) for the applicable Obligor

 

Excluded Taxes: (a) Taxes imposed on or measured by a Recipient’s net income (however denominated), franchise Taxes and branch profits Taxes (i) as a result of such Recipient being organized under the laws of, or having its principal office or applicable Lending Office located in, the jurisdiction imposing such Tax, or (ii) constituting Other Connection Taxes; (b) U.S. federal and Canadian federal withholding Taxes imposed on amounts payable to or for the account of a Lender with respect to its interest in a Loan or Commitment pursuant to a law in effect when the Lender acquires such interest (except pursuant to an assignment request by Borrower Agent under Section 13.4) or changes its Lending Office, unless the Taxes were payable to its assignor immediately prior to such assignment or to the Lender immediately prior to its change in Lending Office; (c) Taxes attributable to a Recipient’s failure to comply with Section 5.10; and (d) U.S. federal withholding Taxes imposed pursuant to FATCA.  In no event shall “Excluded Taxes” include any U.S. withholding Tax imposed on amounts paid by or on behalf of a foreign Obligor to a Recipient that has complied with Section 5.10.2.

 

Existing Credit Agreement: means that certain Amended and Restated Loan and Security Agreement dated as of April 21, 2015, among the Borrowers, the financial institutions party thereto, and Bank of America, as administrative agent.

 

Extraordinary Expenses: all costs, expenses or advances that Agent or Lenders may incur during a Default or Event of Default, or during the pendency of an Insolvency Proceeding of an Obligor, including those relating to: (a) any audit, inspection, repossession, storage, repair, appraisal, insurance, manufacture, preparation or advertising for sale, sale, collection, or other preservation of or realization upon any Collateral; (b) any action, arbitration or other proceeding (whether instituted by or against Agent, any Lender, any Obligor, any representative of creditors of an Obligor or any other Person) in any way relating to any Collateral (including the validity, perfection, priority or avoidability of Agent’s Liens with respect to any Collateral), Loan Documents, or Obligations, including any lender liability or other Claims; (c) the exercise, protection or enforcement of any rights or remedies of Agent in, or the 

 

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monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of any taxes, charges or Liens with respect to any Collateral; (e) any Enforcement Action; (f) negotiation and documentation of any modification, waiver, workout, restructuring or forbearance with respect to any Loan Documents or Obligations; and (g) Protective Advances.  “Extraordinary Expenses” shall include transfer fees, Other Taxes, storage fees, insurance costs, permit fees, utility reservation and standby fees, legal fees, appraisal fees, brokers’ fees and commissions, auctioneers’ fees and commissions, accountants’ fees, environmental study fees, wages and salaries paid to employees of any Obligor or independent contractors in liquidating any Collateral, and travel expenses.

 

Fair Salable Value: the amount that could be obtained for assets within a reasonable time, either through collection or through sale under ordinary selling conditions by a capable and diligent seller to an interested buyer who is willing (but under no compulsion) to purchase.

 

FATCA: Sections 1471 through 1474 of the Code (including any amended or successor version if substantively comparable and not materially more onerous to comply with), and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

 

Federal Funds Rate: (a) the weighted average of interest rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on the applicable Business Day (or on the preceding Business Day, if the applicable day is not a Business Day), as published by the Federal Reserve Bank of New York on the next Business Day; or (b) if no such rate is published on the next Business Day, the average rate (rounded up, if necessary, to the nearest 1/8 of 1%) charged to Bank of America on the applicable day on such transactions, as determined by Agent.

 

Fee Letter: that certain fee letter dated as of May 25, 2018 among Agent and Company.

 

Financial Covenant Testing Period:  with respect to the occurrence of any Financial Covenant Trigger Date, the period (a) commencing on the last day of the Fiscal Month for which financial statements have been (or are required to have been) delivered to Agent immediately prior to such Financial Covenant Trigger Date, and (b) continuing thereafter until Availability for sixty (60) consecutive days shall have exceeded the Financial Covenant Trigger Amount.

 

Financial Covenant Trigger Amount:  at any time of determination, if Availability is an amount less than the greater of (a) 10% of the Revolver Borrowing Base as of such date (calculated without giving effect to the Term Loan Push Down Reserve), and (b) $5,000,000.

 

Financial Covenant Trigger Date:  any date on which Availability falls below the Financial Covenant Trigger Amount.

 

Fiscal Month:  any fiscal month of any Fiscal Year, which fiscal month shall consist of either four or five weeks and generally end on the Saturday closest to the last day of each calendar month in accordance with the fiscal accounting calendar of the Company and its Subsidiaries.

 

Fiscal Quarter: any fiscal quarter of any Fiscal Year, which fiscal quarter shall consist of thirteen weeks divided into three Fiscal Months of four, four and five weeks, which fiscal quarters shall generally end on the Saturday closest to the last day of March, June, September and December of each Fiscal Year in accordance with the fiscal accounting calendar of the Company and its Subsidiaries.

 

Fiscal Year: the fiscal year of Company and its Subsidiaries for accounting and tax purposes, generally ending on the Saturday closest to the last day of December of each year.

 

Fixed Charge Coverage Ratio: the ratio, determined on a consolidated basis for Company and its Subsidiaries for the most recent period of twelve consecutive months, of (a) EBITDA minus Capital Expenditures (except those financed with (i) Borrowed Money other than Revolver Loans or (ii) proceeds

 

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of Casualty Events or the issuance of Equity Interests to the extent such Capital Expenditures are made substantially contemporaneously with the receipt of such proceeds) and cash taxes paid for such period, to (b) Fixed Charges paid in cash during such period.

 

Fixed Charges: the sum of cash interest expense (other than payment-in-kind), principal payments made on Borrowed Money (including, without limitation, the Term Debt and the Revolver Loans which result in a permanent reduction in the Revolver Commitments), and Distributions made.  Notwithstanding the foregoing, any principal payments made in respect of any loans under the Existing Credit Agreement prior to, or on, the Closing Date shall not constitute “Fixed Charges” for purposes hereof.

 

FLSA: the Fair Labor Standards Act of 1938.

 

Foreign Lender: any Lender that is not a U.S. Person.

 

Foreign Plan: any employee benefit plan or arrangement (a) maintained or contributed to by any Obligor or Subsidiary that is not subject to the laws of the United States or Canada; or (b) mandated by a government other than the United States, Canada or the United Kingdom for employees of any Obligor or Subsidiary.

 

Foreign Subsidiary: a Subsidiary that is a “controlled foreign corporation” under Section 957 of the Code, such that a guaranty by such Subsidiary of the Obligations or a Lien on the assets of such Subsidiary to secure the Obligations would result in material tax liability to Borrowers; provided, however, that SI Canada and SI UK shall be deemed to not be Foreign Subsidiaries.

 

Full Payment: with respect to any Obligations, (a) the full cash payment thereof, including any interest, fees and other charges accruing during an Insolvency Proceeding (whether or not allowed in the proceeding); and (b) if such Obligations are inchoate or contingent in nature, Cash Collateralization thereof (or delivery of a standby letter of credit acceptable to Agent in its reasonable discretion, in the amount of required Cash Collateral).  No Loans shall be deemed to have been paid in full until all Commitments related to such Loans have expired or been terminated.

 

GAAP: generally accepted accounting principles in effect in the United States from time to time.

 

GBP: means the lawful currency of the United Kingdom of Great Britain and Northern Ireland.

 

Governmental Approvals: all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and required reports to, all Governmental Authorities.

 

Governmental Authority: any federal, state, provincial, territorial, municipal, local, foreign or other agency, authority, body, commission, court, instrumentality, political subdivision, or other entity or officer exercising executive, legislative, judicial, regulatory or administrative functions for any governmental, judicial, investigative, regulatory or self-regulatory authority, in each case whether associated with the United States, a state, district or territory thereof, Canada, a province or territory thereof, the United Kingdom or a country thereof or any other foreign entity or government (including the Financial Conduct Authority, the Prudential Regulation Authority and any supra-national bodies such as the European Union or the European Central Bank).

 

Guarantor Payment: as defined in Section 5.11.3.

 

Guarantors:  SI Canada, SI UK and each other Person who guarantees payment or performance of any Obligations.

 

Guaranty: Section 14 of this Agreement and each guaranty agreement executed by a Guarantor in favor of Agent, including, without limitation, the Canadian Guaranty and the UK Guaranty.

 

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Hedging Agreement: any “swap agreement” as defined in Section 101(53B)(A) of the Bankruptcy Code.

 

Immaterial Foreign Subsidiary: shall mean, at any date of determination after the Closing Date, any Foreign Subsidiary of a Borrower (a) the total assets of which, in the aggregate with all other Immaterial Foreign Subsidiaries, determined as of the Fiscal Quarter most recently ended, were less than 2.0% of the Consolidated Total Assets of the Borrowers and their Subsidiaries as of such date of determination, or (b) the Consolidated EBITDA attributable to such Foreign Subsidiary for the period of four (4) consecutive Fiscal Quarters ending on such date does not exceed, in the aggregate with all other Immaterial Foreign Subsidiaries, 2.0% of the Consolidated EBITDA of the Borrowers and their Subsidiaries for such period, in each case determined in accordance with GAAP; provided, that (i) Borrowers shall not designate any additional Foreign Subsidiary as an Immaterial Foreign Subsidiary if such designation would result in a failure to comply with the provisions set forth in clause (a) or (b) immediately above and (ii) no Foreign Subsidiary that owns any other Foreign Subsidiary that fails to comply with clause (a) or (b) above shall be deemed to be an Immaterial Foreign Subsidiary; and provided, further, if the total assets and/or gross revenues of all Foreign Subsidiaries so designated by the Borrowers as “Immaterial Foreign Subsidiaries” shall at any time exceed the limits set forth in either clause (a) or (b) immediately above, then the Borrowers shall promptly re-designate one or more of such Foreign Subsidiaries as not constituting Immaterial Foreign Subsidiaries, in each case in a written notice to Agent, so that, as result of such re-designation, the total assets and gross revenues of all Foreign Subsidiaries still designated as “Immaterial Foreign Subsidiaries” do not exceed such limits; provided, further, if the gross revenues of Born Free Holdings Ltd. shall at any time exceed $250,000, then the Borrowers shall promptly re-designate such Foreign Subsidiary as not constituting an Immaterial Foreign Subsidiary by written notice to Agent (following which re-designation the provisions of Sections 7 and 10.1.9 shall thereafter be applicable to such Foreign Subsidiary).

 

Increased Field Exam/Appraisal Period:  with respect to the occurrence of any Increased Field Exam/Appraisal Trigger Date, the period (a) commencing on the Increased Field Exam/Appraisal Trigger Date and (b) continuing until Availability for thirty (30) consecutive days shall have exceeded 12.5% of the Revolver Borrowing Base (calculated without giving effect to the Term Loan Push Down Reserve).

 

Increased Field Exam/Appraisal Trigger Date: any date on which Availability shall have been less than 12.5% of the Revolver Borrowing Base (calculated without giving effect to the Term Loan Push Down Reserve).

 

Indebtedness: shall have the same meaning as “Debt”, as such term is defined herein.

 

Indemnified Taxes: (a) Taxes other than Excluded Taxes, imposed on or relating to any payment of an Obligation; and (b) to the extent not otherwise described in clause (a), Other Taxes.

 

Indemnitees: Agent Indemnitees and Lender Indemnitees.

 

Insolvency Law: collectively, the Bankruptcy Code, or any other insolvency, debtor relief, debt adjustment, arrangement, receivership, or similar law (whether state, provincial, territorial, federal or foreign), including, without limitation, the Bankruptcy and Insolvency Act (Canada), the Companies Creditors Arrangement Act (Canada), the Winding Up and Restructuring Act, any applicable governing corporate statutes providing for arrangements, and the Insolvency Act 1986 (UK).

 

Insolvency Proceeding: any case or proceeding commenced by or against a Person under any state, provincial, territorial, federal or foreign law for, or any agreement of such Person to, (a) the seeking or any entry of an order for relief under any Insolvency Law; (b) the appointment of a receiver, interim receiver, monitor, reviewer and manager, trustee, liquidator, administrator, conservator or other custodian for such Person or any part of its Property; or (c) an assignment or trust mortgage for the benefit of

 

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creditors.

 

Intellectual Property: means all present and future: trade secrets, know-how and other proprietary information; trademarks, trademark applications, internet domain names, service marks, trade dress, trade names, business names, designs, logos, slogans (and all translations, adaptations, derivations and combinations of the foregoing) indicia and other source and/or business identifiers, and all registrations or applications for registrations which have heretofore been or may hereafter be issued thereon throughout the world and including the goodwill associated therewith; copyrights, copyrightable works (registered or unregistered) and copyright applications (including copyrights for computer programs) and all tangible and intangible property embodying the copyrights, unpatented inventions (whether or not patentable); patents and patent applications and patent disclosures; industrial design applications and registered industrial designs; license agreements related to any of the foregoing and income therefrom; books, records, writings, computer tapes or disks, flow diagrams, specification sheets, all rights in computer software including source codes, object codes, and executable code, data, databases and other physical manifestations, embodiments or incorporations of any of the foregoing; all other intellectual property and any proceeds and products thereof; and all common law and other rights throughout the world in and to all of the foregoing.

 

Intellectual Property Claim: any claim or assertion (whether in writing or by suit) that a Borrower’s or Subsidiary’s ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property or other Property violates another Person’s Intellectual Property.

 

Intercreditor Agreement: the Intercreditor Agreement dated as of the Closing Date between Agent and the Revolver Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

Interest Payment Date: means (i) the first Business Day of each month, commencing with the first such date to occur after the Closing Date and continuing to the Maturity Date, and (ii) the Maturity Date.

 

Interest Period: means each period commencing on an Interest Payment Date (or, in the case of the initial Interest Period, commencing on the Closing Date) and ending on the subsequent Interest Payment Date.

 

Inventory: as defined in the UCC (or, with respect to any inventory of any Canadian Guarantor to which the PPSA is applicable, as defined in the PPSA), including all goods intended for sale, lease, display or demonstration; all work in process; and all raw materials, and other materials and supplies of any kind that are or could be used in connection with the manufacture, printing, packing, shipping, advertising, sale, lease or furnishing of such goods, or otherwise used or consumed in a Borrower’s or Guarantor’s business (but excluding Equipment).

 

Inventory Formula Amount: 10% of the NOLV Percentage of the Value of Eligible Inventory.

 

Inventory Reserve: reserves established by Agent to reflect factors that may negatively impact the Value of Inventory, including change in salability, obsolescence, seasonality, theft, shrinkage, imbalance, change in composition or mix, markdowns and vendor chargebacks.

 

Investment: an Acquisition; an acquisition of record or beneficial ownership of any Equity Interests of a Person; or an advance or capital contribution to or other investment in a Person.

 

IP Advance Rate: means sixty percent (60%), provided, that the IP Advance Rate shall be reduced (a) by one and one-quarter percent (1.25%) for each $218,0750 in Term Loan principal reduction repayments (whether such repayment made is (i) mandatory or (ii) voluntary) received by the Lenders, and (b) by the IP Advance Rate Reduction Amount, where applicable

 

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IP Assignment: a collateral assignment or security agreement pursuant to which an Obligor grants a Lien on its Intellectual Property to Agent, as security for its Obligations.

 

IP Formula Amount: means, as of each applicable date of determination, the IP Advance Rate multiplied by the Appraised Value of Eligible Intellectual Property.

 

IP Advance Rate Reduction Amount means, as of each applicable date of determination, if EBITDA for the immediately preceding twelve Fiscal Months (such calculation commencing with the Borrowers’ delivery to Agent of the monthly financial statements required under Section 10.1.2(c) for the September 2018 Fiscal Month, and as of each applicable date of determination thereafter) is less than $7,500,000, the IP Advance Rate will reduce by 10.0 percentage points from the then applicable IP Advance Rate; if after an IP Advance Rate Reduction Amount is implemented EBITDA is greater than $7,500,000, for two (2) consecutive measurement periods, the IP Advance Rate will increase by 10.0 percentage points from the then applicable IP Formula Amount for such time as trailing twelve month EBITDA is greater than $7,500,000; provided, that in the event the IP Advance Rate is increased in accordance with the immediately preceding sentence following a prior reduction thereof as provided herein, the IP Advance Rate may be further reduced if at any subsequent measurement date trailing twelve month EBITDA is determined to be less than $7,500,000; provided, further, in no event shall the IP Advance Rate be greater than 60%.

 

IP Reserves: means such reserves as the Agent and the Required Lenders from time to time determines in the Agent’s and the Required Lenders’ Permitted Discretion as being appropriate to reflect the impediments to the Agent’s and the Lenders’ ability to realize upon any Eligible Intellectual Property or to reflect Intellectual Property Claims and liabilities that the Agent and the Required Lenders determine will need to be satisfied in connection with the realization upon any Eligible Intellectual Property, to the extent not taken in to account in the Appraised Value of the Eligible Intellectual Property.

 

IRS: the United States Internal Revenue Service.

 

Judgment Currency: as defined in Section 1.5.

 

Lender Indemnitees: Lenders and their officers, directors, employees, Affiliates, agents and attorneys.

 

Lenders: as defined in the preamble to this Agreement, and any other Person who hereafter becomes a “Lender” pursuant to an Assignment and Acceptance, including any Lending Office of the foregoing.

 

Lending Office: the office designated as such by the applicable Lender at the time it becomes party to this Agreement or thereafter by notice to Agent and Borrower Agent.

 

LIBOR: the per annum rate of interest for deposits of Dollars for an interest period of three months (rounded up to the nearest 1/8th of 1% and in no event less than zero) determined by Agent at or about 11:00 a.m. (London time) two Business Days prior to an interest period, for a term equivalent to such period, equal to the London Interbank Offered Rate, or comparable or successor rate approved by Agent, as published on the applicable Reuters screen page (or other commercially available source designated by Agent from time to time); provided, that any comparable or successor rate shall be applied by Agent, if administratively feasible, in a manner consistent with market practice.

 

LIBOR Screen Rate: the LIBOR quote on the applicable screen page Agent designates to determine LIBOR (or such other commercially available source providing such quotations as may be designated by Agent from time to time).

 

LIBOR Successor Rate: as defined in Section 3.6(b).

 

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LIBOR Successor Rate Conforming Changes:  with respect to any proposed LIBOR Successor Rate, any conforming changes to the definition of Base Rate, Interest Period, timing and frequency of determining rates and making payments of interest and other administrative matters as may be appropriate, in the discretion of Agent, to reflect the adoption of such LIBOR Successor Rate and to permit the administration thereof by Agent in a manner substantially consistent with market practice (or, if Agent determines that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of such LIBOR Successor Rate exists, in such other manner of administration as Agent determines in consultation with Borrower Agent).

 

License: any license or agreement under which an Obligor is authorized to use Intellectual Property in connection with any manufacture, marketing, distribution or disposition of Collateral, any use of Property or any other conduct of its business.

 

Licensor: any Person from whom an Obligor obtains the right to use any Intellectual Property.

 

Lien: any Person’s interest in Property securing an obligation owed to, or a claim by, such Person, including any lien, security interest, pledge, hypothecation, trust, reservation, encroachment, easement, right-of-way, covenant, condition, restriction, leases, or other title exception, adverse right/claim or interest or deemed trust, or encumbrance.

 

Lien Waiver: an agreement, in form and substance reasonably satisfactory to Agent, by which (a) for any material Collateral located on leased premises, the lessor waives or subordinates any Lien it may have on the Collateral, and agrees to permit Agent to enter upon the premises and remove the Collateral or to use the premises to store or dispose of the Collateral; (b) for any Collateral held by a warehouseman, processor, shipper, customs broker or freight forwarder, such Person waives or subordinates any Lien it may have on the Collateral, agrees to hold any Documents in its possession relating to the Collateral as agent for Agent, and agrees to deliver the Collateral to Agent upon request; (c) for any Collateral held by a repairman, mechanic or bailee, such Person acknowledges Agent’s Lien, waives or subordinates any Lien it may have on the Collateral, and agrees to deliver the Collateral to Agent upon request; and (d) for any Collateral subject to a Licensor’s Intellectual Property rights, the Licensor grants to Agent the right, vis-à-vis such Licensor, to enforce Agent’s Liens with respect to the Collateral, including the right to dispose of it with the benefit of the Intellectual Property, whether or not a default exists under any applicable License.

 

Loan: a Term Loan.

 

Loan Documents: this Agreement, Other Agreements and Security Documents.

 

Loan Year: each 12 month period commencing on the Closing Date and on each anniversary of the Closing Date.

 

Margin Stock: as defined in Regulation U of the Board of Governors.

 

Material Adverse Effect: the effect of any event, fact, circumstance or change that, taken alone or in conjunction with other events or circumstances, (a) has a material adverse effect on the business, assets, Properties, liabilities, operations, or financial condition of the Obligors, taken as a whole, on the value of any material Collateral, on the enforceability of any Loan Document, or on the validity or priority of Agent’s Liens on any material portion of the Collateral; (b) that could materially impair the ability of the Obligors, taken as a whole, to perform their obligations under the Loan Documents, including repayment of any Obligations; (c) that could reasonably be expected to materially and adversely affect the Loans or the transactions contemplated by this Agreement and the Loan Documents; or (d) otherwise materially impairs the ability of Agent or any Lender to enforce or collect any Obligations or realize upon any material portion of the Collateral. In determining whether any individual event would 

 

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result in a Material Adverse Effect, notwithstanding that such event in and of itself does not have such effect, a Material Adverse Effect shall be deemed to have occurred if the cumulative effect of such event and all other then-existing events would result in a Material Adverse Effect.

 

Material Contract: any agreement or arrangement to which an Obligor is party (other than the Loan Documents) (a) that is deemed to be a material contract under any securities law applicable to such Person, including the Securities Act of 1933; or (b) that relates to Subordinated Debt, or to Debt in an aggregate amount of $3,000,000 or more.

 

Moody’s: Moody’s Investors Service, Inc., and its successors.

 

Multiemployer Plan: any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which any Obligor or ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

 

Net Proceeds: with respect to an Asset Disposition, proceeds (including, when received, any deferred or escrowed payments) received by a Borrower or Subsidiary in cash from such disposition, net of (a) reasonable and customary costs and expenses actually incurred in connection therewith, including legal fees and sales commissions; (b) amounts applied to repayment of Debt secured by a Permitted Lien senior to Agent’s Liens on Collateral sold; (c) transfer or similar taxes(including any reasonable estimate of taxes to be paid within one (1) year of the date of the relevant transaction as a result of any gain recognized in connection therewith; provided that any such estimated taxes not actually due or payable by the end of such one year period shall constitute Net Proceeds upon the earlier of the date that such taxes are determined by the Borrower or any Subsidiary, as applicable, not to be actually payable and the end of such one year period, and (d) reasonable reserves in accordance with GAAP for any liabilities or indemnification payments (fixed or contingent) attributable to seller’s indemnities and representations and warranties to purchasers and other retained liabilities in respect of such Asset Disposition undertaken by Borrower or any Subsidiary in connection with such Asset Disposition; provided that to the extent that any such amount ceases to be so reserved (other than any reduction in such reserve to make a payment in respect of such liability or indemnification obligations), the amount thereof shall be deemed to be Net Proceeds of such Asset Disposition at such time.

 

NOLV Percentage: the net orderly liquidation value of Inventory of any Borrower or Guarantor, expressed as a percentage, expected to be realized at an orderly, negotiated sale held within a reasonable period of time, net of all liquidation expenses, as determined from the most recent appraisal of such Borrower’s and/or Guarantor’s Inventory performed by an appraiser and on terms satisfactory to Agent (as determined by Agent in its Permitted Discretion). The NOLV Percentage shall be based on the applicable percentage in the most recent acceptable (as determined by Agent in its Permitted Discretion) appraisal conducted as set forth in Section 10.1.1.

 

Obligations: all (a) principal of and premium, if any, on the Loans, (b) interest, expenses, fees, indemnification obligations, Extraordinary Expenses and other amounts payable by Obligors under the Loan Documents (including for the avoidance of doubt any applicable Prepayment Premium (as determined in the manner set forth in the Fee Letter)), (d) [reserved], and (e) other Debts, obligations and liabilities of any kind owing by Obligors pursuant to the Loan Documents, whether now existing or hereafter arising, whether evidenced by a note or other writing, whether allowed in any Insolvency Proceeding, whether arising from an extension of credit, acceptance, loan, guaranty, indemnification or otherwise, and whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, or joint or several; provided, that Obligations of an Obligor shall not include its Excluded Swap Obligations.

 

Obligor: each Borrower, Guarantor, or other Person that is liable for payment of any Obligations or that has granted a Lien in favor of Agent on its assets to secure any Obligations.

 

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OFAC: Office of Foreign Assets Control of the U.S. Treasury Department.

 

OFAC Lists: means, collectively, the SDN List and/or any other list of terrorists or other restricted Persons maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable executive orders.

 

Ordinary Course of Business: the ordinary course of business of any Borrower or Subsidiary, consistent with past practices and undertaken in good faith.

 

Organic Documents: with respect to any Person, its charter, certificate or articles of incorporation, bylaws, articles of organization, articles of amalgamation, limited partnership agreement, limited liability agreement, operating agreement, members agreement, shareholders agreement, partnership agreement, certificate of partnership, certificate of formation, voting trust agreement, or similar agreement or instrument governing the formation or operation of such Person.

 

OSHA: the Occupational Safety and Hazard Act of 1970.

 

Other Agreement: each fee letter, Lien Waiver, Revolver Borrowing Base Certificate, Term Loan Borrowing Base Certificate, Intercreditor Agreement, Deposit Account Control Agreements, Compliance Certificates, Borrower Materials, or other note, document, instrument or agreement (other than this Agreement or a Security Document) now or hereafter delivered by an Obligor or other Person to Agent or a Lender in connection with any transactions relating hereto.

 

Other Connection Taxes: Taxes imposed on a Recipient due to a present or former connection between it and the taxing jurisdiction (other than connections arising from the Recipient having executed, delivered, become party to, performed obligations or received payments under, received or perfected a Lien or engaged in any other transaction pursuant to, enforced, or sold or assigned an interest in, any Loan or Loan Document).

 

Other Taxes: all present or future stamp, court, documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a Lien under, or otherwise with respect to, any Loan Document, except Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 13.4(c)).

 

Participant: as defined in Section 13.2.

 

Patriot Act: the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).

 

Payment Item: each check, draft or other item of payment payable to a Borrower, including those constituting proceeds of any Collateral.

 

PBA: the Pension Benefits Act (Ontario) or any other Canadian federal or provincial pension benefits standards legislation under which any Canadian Pension Plan or Canadian MEPP is registered, as amended.

 

PBGC: the Pension Benefit Guaranty Corporation.

 

Pension Funding Rules: Code and ERISA rules regarding minimum required contributions (including installment payments) to Pension Plans set forth in, for plan years ending prior to the Pension Protection Act of 2006 effective date, Section 412 of the Code and Section 302 of ERISA, both as in effect prior to such act, and thereafter, Sections 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA

 

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Pension Plan: any employee pension benefit plan (as defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by any Obligor or ERISA Affiliate or to which the Obligor or ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the preceding five plan years, but for greater certainty excludes a Canadian Pension Plan and a Canadian MEPP.

 

Permitted Acquisition: any Acquisition (i) consented to by the Agent or the Required Lenders, (ii) for which total consideration is paid entirely in an amount not greater than $1,000,000; or (iii) as long as (a) no Event of Default exists or is caused thereby; (b) the Acquisition is consensual; (c) the assets, business or Person being acquired is useful or engaged in same or similar the business of Borrowers and Subsidiaries, is located and organized within the United States or Canada as applicable (or such other jurisdiction as Agent shall approve in its Permitted Discretion) and had positive EBITDA for the 12 month period most recently ended; (d) no Debt or Liens are incurred, assumed or result from the Acquisition, except Debt permitted under Section 10.2.1(f) or (i); (e) the Person to be acquired (or its board of directors or equivalent governing body) has not (i) announced it will oppose such Acquisition or (ii) commenced any action which alleges that such Acquisition violates, or will violate, any Applicable Law; (f) upon giving pro forma effect thereto, either (i) Availability (calculated without giving effect to the assets acquired in the Acquisition unless Agent has completed its diligence (including a field exam) with respect to such assets) is at least equal to 20% of the aggregate Revolver Commitments for the 30 days preceding and as of the Acquisition and the Fixed Charge Coverage Ratio, determined on a pro forma basis giving effect to the Acquisition, is not less than 1.00 to 1:00 at any time or (ii) Availability (calculated without giving effect to the assets acquired in the Acquisition unless agent has completed its diligence (including a field examination) with respect to such assets) is at least equal to 25% of the aggregate Revolver Commitments for the 30 days preceding and as of the date of the Acquisition; (g) in the case of any Acquisition where the consideration to be paid for such Acquisition equals or exceeds $2,000,000, the Borrower Agent shall have furnished the Agent with thirty (30) days’ prior written notice of such intended Acquisition and shall have furnished the Agent with a current draft of the Acquisition documents (and final copies thereof as and when executed), a summary of any due diligence undertaken by the Obligors in connection with such Acquisition, appropriate financial statements of the Person which is the subject of such Acquisition, pro forma projected financial statements for the twelve (12) month period following such Acquisition after giving effect to such Acquisition (including balance sheets, cash flows and income statements by month for the acquired Person, individually, and on a consolidated basis with all Obligors), and such other information as the Agent may reasonably require, all of which shall be reasonably satisfactory to the Agent; (h) after giving effect to the Acquisition, if the Acquisition is an Acquisition of the Equity Interests, a Borrower shall acquire and own, directly or indirectly, a majority of the Equity Interests in the Person being acquired and shall control a majority of any voting interests or shall otherwise control the governance of the Person being acquired or formed; (i) either (1) the legal structure of the Acquisition shall be acceptable to the Agent in its Permitted Discretion, or (2) the Borrowers shall have provided the Agent with a favorable solvency opinion from an unaffiliated third party valuation firm reasonably satisfactory to the Agent; (j) if the Person which is the subject of such Acquisition will be maintained as a Subsidiary of a Borrower, or if the assets acquired in an acquisition will be transferred to a Subsidiary which is to be an Obligor, such Subsidiary shall have been joined as a “Borrower” hereunder or as a Guarantor, as the Agent shall determine in its Permitted Discretion, and the Agent shall have received a first priority security and/or mortgage interest (except for those Permitted Liens that have priority in such Collateral by operation of law and, subject to the Intercreditor Agreement, the ABL Priority Collateral) in such Subsidiary’s Equity Interests, Inventory, Accounts, Equipment, Intellectual Property and other property of the same nature as constitutes Collateral under the Security Documents; provided, that in the event such Subsidiary is joined as a “Borrower” the assets of such Person will only be eligible for inclusion in the Revolver Borrowing Base and Term Loan Borrowing Base, as the case may be, after a satisfactory field examination, appraisals and legal diligence is conducted by Agent in its Permitted Discretion; (k) the purchase price payable in respect of (i) any single Acquisition or series of related Acquisitions shall not exceed $2,500,000 in the aggregate and (ii) all 

 

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Acquisitions (including the proposed Acquisition) shall not exceed $5,000,000 in the aggregate during the term of this Agreement.

 

Permitted Asset Disposition: as long as no Event of Default exists and at any time a Cash Dominion Period exists, all Net Proceeds are remitted to Agent or Revolver Agent pursuant to the terms of the Intercreditor Agreement, an Asset Disposition that is (i) a sale of Inventory in the Ordinary Course of Business; (ii) Asset Dispositions of property that does not constitute Term Priority Collateral that is no longer used or useful in the conduct of the business of the Obligors, that in the aggregate during any 12 month period has a fair market or net book value (whichever is more) of $750,000 or less; (iii) a disposition of Inventory that is obsolete, surplus, unmerchantable or otherwise unsalable in the Ordinary Course of Business; (iv) [reserved]; (v) termination of a lease of real or personal Property that is not necessary for the Ordinary Course of Business, could not reasonably be expected to have a Material Adverse Effect and does not result from an Obligor’s default; (vi) the disposition of accounts receivable in connection with the collection or compromise thereof; (vii) non-exclusive licenses, sublicenses, leases or subleases of Intellectual Property granted to others in the Ordinary Course of Business or not interfering in any material respect with the business of the Borrower or any Subsidiary; (viii) with prior written notice to the Agent and the Required Lenders, the sale or abandonment of Equipment of an Obligor or any of its Subsidiaries in the Ordinary Course of Business that is not material and is no longer used or useful in the business of any Obligor, is not affixed to or used in connection with any of the Collateral or any of the books and records of such Obligor relating to the Collateral and in the case of abandonment, does not have any material value; provided, that Dispositions of Equipment under this clause (viii) that does not constitute Eligible Equipment shall not exceed $50,000 in the aggregate in any Fiscal Year; (ix) in the case of sales or other Dispositions of assets constituting Eligible Equipment, each of the following conditions is satisfied: (1) the consideration received by such Obligor in respect of the sale or other Asset Disposition of such assets shall be not less than 100% of the Appraised Value of such assets, (2) as of the date of such sale or other Asset Disposition and after giving effect thereto, using the most recent calculation of the Revolver Borrowing Base and Term Loan Borrowing Base prior to the date of any such sale or other Asset Disposition, on a pro forma basis, Availability shall be not less than twenty percent (20%) of the lesser of (A) the Revolver Commitments (as defined in the Revolver Loan Agreement) or (B) the Revolver Borrowing Base (calculated without giving effect to the Term Loan Push Down Reserve), and Agent shall have received an updated Revolver Borrowing Base Certificate and Term Loan Borrowing Base Certificate reflecting the Asset Disposition of such assets, and (3) the Net Proceeds from any such sale or other Asset Disposition, shall be applied to the Obligations (subject to the Intercreditor Agreement) to the extent required herein; (x) in the case of proposed sales, other Dispositions, or abandonment of assets constituting Eligible Intellectual Property, (1) Borrower Agent shall have given not less than ten (10) days’ prior written notice to the Agent and the Required Lenders of such proposed sale, other Disposition or abandonment, and (2) Agent or the Required Lenders shall have given Borrower Agent its/their written consent to such sale, other Disposition or abandonment; (xi) the sale or disposition of Cash Equivalents for fair market value in the ordinary course of business; (xii) solely to the extent not otherwise permitted hereunder, sales, transfers and other dispositions permitted by Section 10.2.9; (xiii) sales, transfers or other dispositions of Investments to the extent not a Restricted Investment in joint ventures to the extent required by, or made pursuant to customary buy/sell arrangements between, the parties set forth in joint venture arrangements and similar binding agreements; or (xiv) approved in writing by Agent and Required Lenders.

 

Permitted Contingent Obligations: Contingent Obligations (a) arising from endorsements of Payment Items for collection or deposit in the Ordinary Course of Business; (b) arising from Hedging Agreements permitted hereunder; (c) existing on the Closing Date, and any extension or renewal thereof that does not increase the amount of such Contingent Obligation when extended or renewed; (d) incurred in the Ordinary Course of Business with respect to surety, appeal or performance bonds, or other similar obligations; (e) arising from customary indemnification obligations in favor of purchasers in connection with dispositions of Equipment permitted hereunder or Acquisitions permitted hereunder; (f) arising under the Loan Documents; or (g) in an aggregate amount of $3,000,000 or less at any time.

 

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Permitted Discretion:  a determination made by Agent, in good faith, in the exercise of reasonable business judgment (from the perspective of a secured, asset-based lender), based upon Agent’s consideration of factors that in the exercise of such reasonable business judgment Agent believes: (a) could be expected to materially and adversely affect the quantity, quality, mix or value of Collateral (including any Applicable Law that may inhibit collection of an Account), the enforceability or priority of Agent’s Liens, or the amount that Agent and Lenders could receive in liquidation of any Collateral; (b) that any collateral report or financial information delivered by any Obligor is incomplete, inaccurate or misleading in any material respect; (c) could materially increase the likelihood of any Insolvency Proceeding involving an Obligor; (d) could increase the credit risk of lending to Borrowers on the security of the Collateral; or (e) could reasonably be expected to result in a Default or Event of Default.

 

Permitted Lien: as defined in Section 10.2.2.

 

Permitted Purchase Money Debt: Purchase Money Debt of Borrowers and Subsidiaries that is unsecured or secured only by a Purchase Money Lien, as long as the aggregate amount does not exceed $2,500,000 at any time when combined with Capital Lease obligations permitted under Section 10.2.1(c).

 

Permitted Restricted Payments: (a) Upstream Payments and (b) other Distributions made by any Obligor or Subsidiary; provided, that (i) at the time such Distribution is made and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing, (ii) on a pro forma basis immediately after giving effect to such Distribution, the financing thereof and the payment of reasonable costs and expenses related thereto (including, without limitation, the funding of any Revolver Loans or incurrence of other Debt to finance such Distribution or the payment of such costs and expenses), either (A) both (1) Availability, calculated as of the day such Distribution is made and for the period of 30 consecutive days ending on the day such Distribution is made, shall equal or exceed 25% of the aggregate Revolver Commitments as of such date and (2) the Fixed Charge Coverage Ratio, determined as if such Distribution has been made, and all Debt related to such Distribution (including, without limitation, any Revolver Loans made or other Debt incurred to finance such Distribution) had been incurred, on the first day of the twelve consecutive month period most recently ended prior to the date such Distribution is made for which financial statements have been (or are required to have been) delivered to Agent pursuant to Section 10.1.2(a) or (b), shall equal or exceed 1.00 to 1.00, or (B) Availability, calculated as of the day such Distribution is made and for the period of 30 consecutive days ending on the day such Distribution is made, shall equal or exceed 30% of the aggregate Revolver Commitments as of such date, and (iii) Agent shall have received a certificate of a Senior Officer of Borrower Representative in form and substance reasonably satisfactory to Agent, dated as of the date of such Distribution, certifying that the conditions set forth in the foregoing clauses (b)(i) and (b)(ii) have been satisfied.

 

Person: any individual, corporation, limited liability company, unlimited liability company, partnership, joint venture, association, trust, unincorporated organization, Governmental Authority or other entity.

 

Plan: any employee benefit plan (as defined in Section 3(3) of ERISA) established by an Obligor or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, an ERISA Affiliate.

 

Platform: as defined in Section 14.3.3.

 

PPSA:  the Personal Property Security Act (Ontario) and/or the Personal Property Security Act (New Brunswick), as applicable, and the regulations thereunder; provided, that, if validity, perfection and effect of perfection and non-perfection of Agent’s security interest in any Collateral of any Canadian Guarantor or any other Obligor are governed by the personal property security laws of any jurisdiction other than Ontario or New Brunswick, PPSA shall mean those personal property security laws and regulations thereunder (including the Civil Code of Quebec in the case of the Province of Quebec) in such 

 

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other jurisdiction for the purposes of the provisions hereof relating to such validity, perfection, and effect of perfection and non-perfection and for the definitions related to such provisions, as from time to time in effect.

 

Prepayment Event means:

 

(i)                                     solely to the extent a Cash Dominion Period then exists or would result therefrom, and subject to the Intercreditor Agreement, any Asset Disposition (including pursuant to a sale and leaseback transaction) of any property or asset of an Obligor (other than as set forth in clause (ii) below);

 

(ii)                                  any Disposition of Term Priority Collateral under clauses (viii), (ix) and/or (x) of the definition of Permitted Asset Disposition;

 

(iii)                               solely to the extent a Cash Dominion Period then exists or would result therefrom, any Casualty Event with respect to Inventory (including the receipt of any Extraordinary Receipts with respect to such Casualty Event);

 

(iv)                              solely to the extent a Cash Dominion Period then exists, the issuance by an Obligor of any Equity Interests, other than any such issuance of Equity Interests (i) to an Obligor, (ii) as consideration for a Permitted Acquisition or other Investment permitted hereunder or (iii) as a compensatory issuance to any employee, director, or consultant (including pursuant to any employee stock or option plans approved by the board of directors of such Obligor); or

 

(v)                                 solely to the extent a Cash Dominion Period then exists, the incurrence by any Obligor, of any Indebtedness for borrowed money issued by any Obligor (other than the incurrence of Permitted Indebtedness described hereof).

 

Prime Rate: the rate of interest announced by Bank of America from time to time as its prime rate.  Such rate is set by Bank of America on the basis of various factors, including its costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such rate.  Any change in such rate publicly announced by Bank of America shall take effect at the opening of business on the day specified in the announcement.

 

Proceeds of Crime Act: means the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada).

 

Properly Contested: with respect to any obligation of an Obligor, (a) the obligation is subject to a bona fide dispute regarding amount or the Obligor’s liability to pay; (b) the obligation is being properly contested in good faith by appropriate proceedings promptly instituted and diligently pursued; (c) appropriate reserves have been established in accordance with GAAP and included in the calculation of the Term Loan Borrowing Base and properly reflected in any Term Loan Borrowing Base Certificate (including, without limitation, with regard to Priority Payables owing by the Canadian Guarantor); (d) non-payment could not have a Material Adverse Effect, nor result in forfeiture or sale of any material assets of the Obligor; (e) no Lien is imposed on assets of the Obligor, unless (i) bonded and stayed to the satisfaction of Agent or (ii) if such assets constitute Collateral, the fair market value of such Collateral does not exceed $2,000,000; and (f) if the obligation results from entry of a judgment or other order, such judgment or order is stayed pending appeal or other judicial review.

 

Property: any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

 

Protective Advances: as defined in Section 2.1.5(b).

 

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Purchase Money Debt: (a) Debt (other than the Obligations) for payment of any of the purchase price of fixed assets; (b) Debt (other than the Obligations) incurred within 10 days before or after acquisition of any fixed assets, for the purpose of financing any of the purchase price thereof; and (c) any renewals, extensions or refinancings (but not increases) thereof.

 

Purchase Money Lien: a Lien that secures Purchase Money Debt, encumbering only the fixed assets acquired with such Debt and constituting a Capital Lease or a purchase money security interest under the UCC or the PPSA.

 

Qualified ECP: an Obligor with total assets exceeding $10,000,000, or that constitutes an “eligible contract participant” under the Commodity Exchange Act and can cause another Person to qualify as an “eligible contract participant” under Section 1a(18)(A)(v)(II) of such act.

 

RCRA: the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).

 

Real Estate: all right, title and interest (whether as owner, lessor or lessee) in any real Property or any buildings, structures, parking areas or other improvements thereon.

 

Recipient: Agent, any Lender or any other recipient of a payment to be made by an Obligor under a Loan Document or on account of an Obligation.

 

Refinancing Conditions: the following conditions for Refinancing Debt:  (i) it is in an aggregate principal amount that does not exceed the principal amount of the Debt being extended, renewed or refinanced; (ii) it has a final maturity no sooner than, a weighted average life no less than, and an interest rate no greater than, the Debt being extended, renewed or refinanced; (iii) it is subordinated to the Obligations at least to the same extent as the Debt being extended, renewed or refinanced; (iv) the representations, covenants and defaults applicable to it are no less favorable to Borrowers than those applicable to the Debt being extended, renewed or refinanced; (v) no additional Lien is granted to secure it; (vi) no additional Person is obligated on such Debt; and (v) upon giving effect to it, no Default or Event of Default exists.

 

Refinancing Debt: Borrowed Money that is the result of an extension, renewal or refinancing of Debt permitted under Section 10.2.1(b), (d) or (f).

 

Reimbursement Date: as defined in Section 2.3.2.

 

Rent and Charges Reserve: the aggregate of (a) all past due rent and other amounts owing by an Obligor to any landlord, warehouseman, processor, repairman, mechanic, shipper, freight forwarder, broker or other Person who possesses any Collateral or could assert a Lien on any Collateral; and (b) a reserve at least equal to three months’ rent and other charges that could be payable to any such Person, unless it has executed a Lien Waiver.

 

Report: as defined in Section 12.2.3.

 

Reportable Event: any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

 

Reporting Frequency Increase Trigger Amount:  an amount equal to 12.5% of the lesser of (A) the aggregate Revolver Commitments and (B) the Revolver Borrowing Base (calculated without giving effect to the Term Loan Push Down Reserve).

 

Required Lenders: Lenders (subject to Section 4.2) having (a) Term Loan Commitments in excess of 50% of the aggregate Term Loan Commitments; and (b) if the Term Loan Commitments have terminated, Loans in excess of 50% of all outstanding Loans; provided, however, that if at any time there 

 

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shall be two or more Lenders, “Required Lenders” shall mean at least two Lenders (subject to Section 4.2) having Term Loan Commitments in excess of 50% of the aggregate Term Loan Commitments (or, if the Term Loan Commitments have terminated, having Loans in excess of 50% of all outstanding Loans).

 

Reserve Percentage: the reserve percentage (expressed as a decimal, rounded up to the nearest 1/8th of 1%) applicable to member banks under regulations issued by the Board of Governors for determining the maximum reserve requirement for Eurocurrency liabilities.

 

Restricted Investment: any Investment by a Borrower or Subsidiary, other than (a) Investments in Subsidiaries to the extent existing on the Closing Date; (b) Cash Equivalents that are subject to Agent’s Lien and control, pursuant to documentation in form and substance satisfactory to Agent; (c) loans and advances permitted under Section 10.2.7; (d) Permitted Acquisitions, (e) subject to the restrictions on intercompany loans set forth in Section 10.2.7(d), Investments in Obligors, (f) Investments in joint ventures not to exceed $1,000,000, and (g) investments in (x) Foreign Subsidiaries (other than SI Asia) in an aggregate amount not to exceed $500,000 per Fiscal Year and (y) SI Asia is an aggregate amount not to exceed $2,000,000 per Fiscal Year.

 

Restrictive Agreement: an agreement (other than a Loan Document) that conditions or restricts the right of any Borrower, Subsidiary or other Obligor to incur or repay Borrowed Money, to grant Liens on any assets, to declare or make Distributions, to modify, extend or renew any agreement evidencing Borrowed Money, or to repay any intercompany Debt.

 

Revolver Borrowing Base: the “Revolver Borrowing Base” as such term is defined in the Revolver Loan Agreement or any equivalent term used to describe the obligations arising thereunder and in connection therewith.

 

Revolver Borrowing Base Certificate: a certificate, in form and substance reasonably satisfactory to Agent, by which Borrowers certify calculation of the Revolver Borrowing Base.

 

Revolver Commitment: for any Revolving Lender, its obligation to make Revolver Loans and to participate in LC Obligations (as defined in the Revolver Loan Agreement).

 

Revolver Commitments: the aggregate Revolver Commitments of all Revolving Lenders.

 

Revolver Debt:  Debt of the Borrowers in an aggregate principal amount not in excess of $60,000,000 incurred on or after the Closing Date pursuant to the Revolver Loan Agreement (and any Refinancing Debt replacing or refinancing such Debt); provided, that (a) the stated maturity date of any such Refinancing Debt shall not be earlier than the Revolver Termination Date (as defined in the Revolver Loan Agreement), (b) the amortization of such Refinancing Debt is not more frequent, and does not result in higher annual payments, than the amortization of the refinanced Debt, (c) any Liens securing such Refinancing Debt shall be subject to the terms of the Intercreditor Agreement, (d) such Refinancing Debt shall not be secured by any assets not constituting Collateral, (e) such Refinancing Debt shall not be guaranteed by any Person that does not provide a Guaranty and (f) the holders of such Refinancing Debt shall have entered into an intercreditor agreement substantially similar to the Intercreditor Agreement.

 

Revolver Loan: a loan made pursuant to the Revolver Loan Agreement.

 

Royalties: all royalties, fees, expense reimbursement and other amounts payable by an Obligor under a License.

 

S&P: Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, and its successors.

 

Sanction: any sanction administered or enforced by the U.S. Government (including OFAC), the

 

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Canadian Government, United Nations Security Council, European Union, Her Majesty’s Treasury or other sanctions authority

 

Scheduled Unavailability Date: as defined in Section 3.6(b).

 

SDN List: means the list of the Specially Designated Nationals and Blocked Persons.

 

Secured Parties: Agent and Lenders.

 

Security Documents: the Guaranties, IP Assignments, Deposit Account Control Agreements, the Canadian Security Agreements, the UK Security Agreements and all other documents, instruments and agreements now or hereafter securing (or given with the intent to secure) any Obligations.

 

Senior Officer: the chairman of the board, president, chief executive officer or chief financial officer of a Borrower or, if the context requires, an Obligor.

 

Settlement Report: a report summarizing Term Loans outstanding as of a given settlement date, allocated to Lenders in accordance with their Applicable Percentages of the Term Loan Commitments.

 

SI Asia: means Summer Infant Asia, Ltd., a Hong Kong Private Limited Company.

 

SI Canada: means Summer Infant Canada, Limited, a corporation formed under the laws of the Province of New Brunswick.

 

SI UK: means Summer Infant Europe Limited, a private company with limited liability incorporated in and registered under the laws of England and Wales with company number 4322137.

 

Solvent: as to any Person, such Person (a) owns Property whose Fair Salable Value is greater than the amount required to pay all of its debts (including contingent, subordinated, unmatured and unliquidated liabilities); (b) owns Property whose present Fair Salable Value is greater than the probable total liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of such Person as they become absolute and matured; (c) is able to pay all of its debts as they mature; (d) has capital that is not unreasonably small for its business and is sufficient to carry on its business and transactions and all business and transactions in which it is about to engage; (e) is not “insolvent” within the meaning of Section 101(32) of the Bankruptcy Code (for SI UK this subsection (e) shall not be applicable); (f) is not an “insolvent person” within the meaning of the Bankruptcy and Insolvency Act (Canada); and (g) has not incurred (by way of assumption or otherwise) any obligations or liabilities (contingent or otherwise) under any Loan Documents, or made any conveyance in connection therewith, with actual intent to hinder, delay or defraud either present or future creditors of such Person or any of its Affiliates.

 

Specified Obligor: an Obligor that is not then an “eligible contract participant” under the Commodity Exchange Act (determined prior to giving effect to Section 5.11).

 

Spot Rate: the exchange rate, as determined by Agent, that is applicable to conversion of one currency into another currency, which is (a) the exchange rate reported by Bloomberg (or other commercially available source designated by Agent) as of the end of the preceding business day in the financial market for the first currency; or (b) if such report is unavailable for any reason, the spot rate for the purchase of the first currency with the second currency as in effect during the preceding business day in Agent’s principal foreign exchange trading office for the first currency.

 

Subordinated Debt: Debt incurred by a Borrower that is expressly subordinate and junior in right of payment to Full Payment of all Obligations, and is on terms (including maturity, interest, fees, repayment, covenants and subordination) satisfactory to Agent in its exclusive discretion.

 

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Subsidiary: any entity at least 50% of whose voting securities or Equity Interests is owned by a Borrower or any combination of Borrowers (including indirect ownership by a Borrower through other entities in which the Borrower directly or indirectly owns 50% of the voting securities or Equity Interests).

 

Swap Obligations: with respect to an Obligor, its obligations under a Hedging Agreement that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act

 

Target Companies: collectively, Target Corporation and its Affiliates.

 

Taxes: all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

Termination Event:  (a) the whole or partial termination of a Canadian Defined Benefit Pension Plan; or (b) the filing of a notice of intent to terminate in whole or in part a Canadian Defined Benefit Pension Plan; or (c) the institution of proceedings by any Governmental Authority to terminate in whole or in part or have a trustee appointed to administer a Canadian Defined Benefit Pension Plan; or (d) any other event or condition provided for in, or prescribed pursuant to, the PBA that would entitle any Governmental Authority to require the termination or winding up or partial termination or winding up of any Canadian Defined Benefit Pension Plan.

 

Term Loan Documents:  collectively, the Term Loan Agreement and all other agreements, instruments, documents and certificates executed and delivered to, or in favor of, the Agent and including, without limitation, all other agreements whether heretofore, now or hereafter executed by or on behalf of any Obligor, or any employee of any Obligor, and delivered to the Agent pursuant to the this Agreement.  Any reference to the this Agreement or any other Term Loan Document shall include all appendices, exhibits and schedules thereto, and all amendments, restatements, replacements, refinancings, supplements or other modifications thereto to the extent permitted hereby.

 

Term Loans: the “Term Loans” under and as defined in the Term Loan Agreement.

 

Term Loan Agent:  Pathlight Capital LLC, as administrative agent and collateral agent for the lenders party to the Term Loan Agreement, together with its successors and assigns.

 

Term Loan Agreement:  that certain Term Loan and Security Agreement dated as of the Closing Date by and among the Borrowers, the guarantors named therein and from time to time party thereto, the lenders named therein and from time to time party thereto and the Agent, as the same may be amended, restated, replaced, refinanced, refunded, supplemented or otherwise modified from time to time in accordance with the terms of the Intercreditor Agreement.

 

Term Loan Borrowing Base: on any date of determination, an amount equal to the sum of (a) the Accounts Formula Amount, plus (b) the Inventory Formula Amount, plus (c) the IP Formula Amount, plus (d) the Equipment Formula Amount; provided, that in no event shall the Equipment Formula Amount exceed $1,000,000 at any one time, minus (e) the IP Reserve.  If any amount in this definition is stated in a currency other than Dollars on any date, then such amount on such date shall be equal to the Dollar Equivalent of such amount in such other currency.

 

Term Loan Borrowing Base Certificate:  a certificate, in form and substance satisfactory to Agent, by which Borrowers certify the calculation of the Term Loan Borrowing Base.

 

Term Loan Commitments: As of the Closing Date the aggregate amount of the Term Loan Commitments is $17,500,000.

 

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Term Loan Exposure:  at any time, the sum of the outstanding principal amount of Term Loans at such time.

 

Term Loan Push Down Reserve: a reserve implemented by the Revolver Agent against the Revolver Borrowing Base in an amount equal to the amount by which, if any, (a) the aggregate outstanding principal amount of the Term Loans exceeds (b) the Term Loan Borrowing Base.  For purposes of the Term Loan Push Down Reserve, Revolver Agent will be entitled to rely solely on the calculation made by Borrowers unless the Revolver Agent is notified by Agent that such calculation is inaccurate.  In such event, the Revolver Agent shall be entitled to rely solely on the calculation of the Term Loan Push Down Reserve by the Agent.

 

Term Loan Termination Date: the earliest to occur of (a) June 28, 2023; (b) the date on which Borrowers terminate the Term Loan Commitments pursuant to Section 2.1.4 hereof; or (c) the date on which the Term Loan Commitments are terminated pursuant to Section 11.2.

 

Transferee: any actual or potential Eligible Assignee, Participant or other Person acquiring an interest in any Obligations.

 

UCC: the Uniform Commercial Code as in effect in the State of New York or, when the laws of any other jurisdiction govern the perfection or enforcement of any Lien, the Uniform Commercial Code of such jurisdiction.

 

UK Anti-Terrorism Laws: the Criminal Justice (Terrorism and Conspiracy) Act 1998, the Terrorism Act 2000, the Anti-Terrorism, Crime and Security Act 2001, the Prevention of Terrorism Act 2005, the Terrorism Act 2006, the Money Laundering Regulations 2007 and the Counter-Terrorism Act 2008.

 

UK Guarantor: collectively, SI UK and each other UK Subsidiary that guarantees payment or performance of the Obligations.  The definition of “UK Guarantors” means all of such entities collectively.

 

UK Guaranty: that certain Guarantee dated on or around the Closing Date made by the UK Guarantor, as may be amended, restated or otherwise modified from time to time.

 

UK Pension Scheme:  any pension, retirement benefits or employee benefit scheme established by any UK Guarantor.

 

UK Priority Payables Reserve:  means (a) the prescribed part of the UK Guarantors’ net property that would be made available for the satisfaction of its unsecured debts pursuant to section 176A of the Insolvency Act 1986 together with the UK Guarantors’ liabilities which constitute preferential debts pursuant to section 386 of the Insolvency Act 1986 and any sums payable as administration or liquidation expenses pursuant to rules 2.67(1) and 4.218(1) of the Insolvency Rules 1986 plus (b) third party claims against the assets of the UK Guarantors ranking or which may rank equal or prior to the claims of Agent (including by way of retention of title); provided that such amounts shall be adjusted from time to time hereafter upon delivery to the Agent of an acceptable waiver.

 

UK Security Agreements:  (a) the Debenture dated on or around the Closing Date, in form and substance reasonably acceptable to Agent, executed by the UK Guarantors in favor of Agent, as the same may be amended, restated or supplemented from time to time, and (b) the charge over shares dated at or around the Closing Date, in form and substance reasonably acceptable to Agent, executed by Summer Infant, Inc. in favor of Agent, as the same may be amended, restated or supplemented from time to time, and (c) any other UK security agreement required to be executed by any Obligor in favor of Agent on, around or after the Closing Date, in each case, as the same may be amended, restated or supplemented from time to time.

 

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UK Subsidiaries: any Subsidiary of Company that is organized under the laws of England and Wales.

 

UK ST Law: the Law of Property Act 1925.

 

Unfunded Pension Liability: the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to the Code, ERISA or the Pension Protection Act of 2006 for the applicable plan year (specifically excluding SI UK from this definition).

 

U.S. Person: “United States Person” as defined in Section 7701(a)(30) of the Code.

 

U.S. Tax Compliance Certificate: as defined in Section 5.10.2(b)(iii).

 

Upstream Payment: a Distribution by a Subsidiary of a Borrower to such Borrower.

 

Value: and all constituent definitions contained in such term as set forth in the Revolver Loan Agreement shall have the meaning set forth in the Revolver Loan Agreement.

 

Wal-Mart Companies: collectively, Wal-Mart Stores, Inc. and its Affiliates.

 

Write-Down and Conversion Powers: 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.  Under the Loan Documents (except as otherwise specified herein), all accounting terms shall be interpreted, all accounting determinations shall be made, and all financial statements shall be prepared, in accordance with GAAP applied on a basis consistent with the most recent audited financial statements of Borrowers delivered to Agent before the Closing Date and using the same inventory valuation method as used in such financial statements, except for any change required or permitted by GAAP if Borrowers’ certified public accountants concur in such change, the change is disclosed to Agent, and Section 10.3 is amended in a manner satisfactory to Required Lenders to take into account the effects of the change.

 

1.3.                            Uniform Commercial Code and PPSA.  As used herein, the following terms are defined in accordance with the UCC in effect in the State of New York from time to time (or, with respect to any such property of Canadian Guarantor to which the PPSA is applicable, in accordance with the PPSA in effect in the Province of Ontario from time to time if defined therein or, if applicable, with respect to any such property of the UK Guarantor to which the UK Security Agreements are applicable, in accordance with the UK Security Agreements):  “Chattel Paper,” “Commercial Tort Claim,” “Commodities Accounts,” “Commodities Contracts,” “Electronic Chattel Paper,” “Equipment,” “Financial Assets,” “Fixtures,” “General Intangibles,” “Goods,” “Instruments,” “Intangibles,” “Investment Property,” “Letter-of-Credit Right,” “Payment Intangibles,” “Proceeds,” “Promissory Notes,” “Records,” “Securities Accounts,” “Security,” “Security Entitlements,” “Supporting Obligations,” and “Tangible Chattel Paper.”

 

1.4.                            Certain Matters of Construction.  The terms “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision.  Any pronoun used shall be deemed to cover all genders.  In the computation of periods of time from a specified date to a later specified date, “from” means “from and including,” and “to” and “until” each mean “to but excluding.”  The terms “including” and “include” shall mean “including, without limitation” and, for purposes of each Loan Document, the parties agree that the rule of ejusdem generis shall not be applicable to limit any provision.  Section titles appear as a matter of convenience 

 

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only and shall not affect the interpretation of any Loan Document.  All references to (a) laws or statutes include all related rules, regulations, interpretations, amendments and successor provisions; (b) any document, instrument or agreement include any amendments, waivers and other modifications, extensions or renewals (to the extent permitted by the Loan Documents); (c) any section mean, unless the context otherwise requires, a section of this Agreement; (d) any exhibits or schedules mean, unless the context otherwise requires, exhibits and schedules attached hereto, which are hereby incorporated by reference; (e) any Person include successors and assigns; (f) time of day mean time of day at Agent’s notice address under Section 14.3.1; or (g) discretion of Agent or any Lender mean the sole and absolute discretion of such Person.  All determinations (including calculations of the Revolver Borrowing Base, Term Loan Borrowing Base and financial covenants) made from time to time under the Loan Documents shall be made in light of the circumstances existing at such time.  Revolver Borrowing Base and Term Loan Borrowing Base calculations shall be consistent with historical methods of valuation and calculation, and otherwise satisfactory to Agent (and not necessarily calculated in accordance with GAAP).  Borrowers shall have the burden of establishing any alleged negligence, misconduct or lack of good faith by Agent or any Lender under any Loan Documents.  No provision of any Loan Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision.  A reference to Borrowers’ “knowledge” or similar concept means actual knowledge of a Senior Officer, or knowledge that a Senior Officer would have obtained if he or she had engaged in good faith and diligent performance of his or her duties, including reasonably specific inquiries of employees or agents and a good faith attempt to ascertain the matter.  To the extent the definition of any category or type of collateral is expanded by any amendment, modification or revision to the Uniform Commercial Code or the PPSA, such expanded definition will apply automatically as of the date of such amendment, modification or revision.

 

Notwithstanding the foregoing, and where the context so requires, (i) any term defined in this Agreement by reference to the “Uniform Commercial Code” shall also have any extended, alternative or analogous meaning given to such term in applicable Canadian personal property security and other laws (including, without limitation, the Personal Property Security Act of Ontario and New Brunswick, the Bills of Exchange Act (Canada) and the Depository Bills and Notes Act (Canada)), in all cases for the extension, preservation or betterment of the security and rights of the Collateral, (ii) all references in this Agreement to “Article 7”, “Article 8” or “Article 9” shall be deemed to refer also to applicable Canadian securities transfer laws, (iii) all references in this Agreement to a financing statement, continuation statement, amendment or termination statement shall be deemed to refer also to the analogous documents used under applicable Canadian personal property security laws, including, without limitation, where applicable, financing change statements, (iv) all references to the United States, or to any subdivision, department, agency or instrumentality thereof shall be deemed to refer also to Canada, or to any subdivision, department, agency or instrumentality thereof, and (v) all references to federal or state securities law of the United States shall be deemed to refer also to analogous federal and provincial securities laws in Canada.

 

1.5.                            Certain Revolver Loan Agreement Provisions.  In the event that the Revolver Documents shall terminate and be of no further force and effect, the following defined terms and Sections shall be incorporated into this Term Loan Agreement in the form existing in the Revolver Loan Agreement immediately prior to such termination: “Eligible Inventory”, “Eligible In-Transit Inventory”, “Eligible Accounts”.

 

1.6.                            Currency Equivalents.

 

1.6.1.                        Calculations.  All references in the Loan Documents to Loans, Letters of Credit, Obligations, Revolver Borrowing Base components, Term Loan Borrowing Base components and other amounts shall be denominated in Dollars, unless expressly provided otherwise.  The “Dollar Equivalent” of any amounts denominated or reported under a Loan Document in a currency other than Dollars shall be determined by Agent on a daily basis, based on the current Spot Rate.  Borrowers shall report Value and 

 

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other Revolver Borrowing Base and Term Loan Borrowing Base components to Agent in the currency invoiced by Borrowers or shown in Borrowers’ financial records, and unless expressly provided otherwise, shall deliver financial statements and calculate financial covenants in Dollars.  Notwithstanding anything herein to the contrary, if any Obligation is funded and expressly denominated in a currency other than Dollars, Borrowers shall repay such Obligation in such other currency.

 

1.6.2.                        Judgments.                             If, for purposes of obtaining judgment in any court, it is necessary to convert a sum from the currency provided under a Loan Document (“Agreement Currency”) into another currency, the Spot Rate shall be used as the rate of exchange.  Notwithstanding any judgment in a currency (“Judgment Currency”) other than the Agreement Currency, a Borrower shall discharge its obligation in respect of any sum due under a Loan Document only if, on the Business Day following receipt by Agent of payment in the Judgment Currency, Agent can use the amount paid to purchase the sum originally due in the Agreement Currency.  If the purchased amount is less than the sum originally due, such Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify Agent and Lenders against such loss.  If the purchased amount is greater than the sum originally due, Agent shall return the excess amount to such Borrower (or to the Person legally entitled thereto).

 

SECTION 2.                                           CREDIT FACILITIES

 

2.1.                            Term Loan Commitments.

 

2.1.1.                        Term Loans; Reserves.

 

(a)                                 On the Closing Date, the Lenders agree, on the terms and conditions hereinafter set forth, to make a term loan (the “Term Loan”) to the Borrowers, in Dollars, in an aggregate amount equal to $17,500,000. The Term Loan shall be made in a single draw in the Closing Date.

 

(b)                                 As of the Closing Date, (i) the Availability Reserves are as set forth in the most recent Revolver Borrowing Base Certificate delivered in connection with the Revolver Loan Agreement and (ii) the IP Reserves are as set forth on the Term Loan Borrowing Base Certificate delivered on the Closing Date.

 

(c)                                        The Agent shall have the right, at any time and from time to time after the Closing Date in its discretion to establish, modify or eliminate the IP Reserve against the Term Loan Borrowing Base. The Agent shall give three (3) Business Days prior notice to the Borrower Agent with respect to the establishment of any new IP Reserves or changes in the methodology of the calculation of an existing category of IP Reserves (during which period the Agent shall be available to discuss any such proposed changes to methodology with Borrowers and Borrowers may take such action as may be required so that the event, condition or matter that is the basis for such reserve or change no longer exists in a manner and to the extent reasonably satisfactory to Agent); provided, that no such prior notice shall be required (i) at any time that an Event of Default is continuing, (ii) for changes to any IP Reserves resulting solely by virtue of mathematical calculations of the amount of the IP Reserves in accordance with the methodology of calculation previously utilized, or (iii) for changes to IP Reserves or establishment of additional IP Reserves if a Material Adverse Effect has occurred or it would be reasonably likely that a Material Adverse Effect to the Lenders would occur were such IP Reserves not changed or established prior to the expiration of such three (3) Business Day period. The amount of any IP Reserves established by the Agent shall have a reasonable relationship to the event, condition or other matter which is the basis for such reserve as determined by the Agent in its Permitted Discretion. The Agent shall not establish any IP Reserves that are duplicative of any other Availability Reserves (as defined in the Revolver Loan Agreement) or items that are otherwise addressed or excluded through eligibility criteria.

 

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(d)                                       Each Lender agrees severally, up to its Term Loan Commitment and on the terms set forth herein, to make Term Loans to Borrowers on the Closing Date.  Term Loans may be repaid but shall not be reborrowed.

 

(e)                                  If any Term Loan Borrowing Base Certificate delivered to Agent shows that the then outstanding principal balance of the Term Loans is in excess of the Term Loan Borrowing Base, then, pursuant to the terms of the Intercreditor Agreement, the Term Loan Push Down Reserve in an amount equal to such excess shall be implemented. Once implemented in accordance with the terms of the Intercreditor Agreement, the Term Loan Push Down Reserve shall not be released or adjusted except (i) in accordance with the terms of the Intercreditor Agreement, or (ii) as may be agreed by the Agent in its exclusive discretion.

 

2.1.2.                  Term Loan Notes.  The Term Loans made by each Lender and interest accruing thereon shall be evidenced by the records of Agent and such Lender.  At the request of any Lender, Borrowers shall deliver to such Lender a promissory note evidencing such Lender’s Term Loans.

 

2.1.3.                  Use of Proceeds.  The proceeds of the Term Loans shall be used by Borrowers solely (a) to satisfy existing Debt; (b) to pay fees and transaction expenses associated with the closing of this credit facility; (c) to pay Obligations in accordance with this Agreement; and (d) for lawful corporate purposes of Borrowers, including working capital.  Borrowers shall not, directly or indirectly, use any Loan proceeds, nor use, lend, contribute or otherwise make available any Loan proceeds to any Subsidiary, joint venture partner or other Person, (i) to fund any activities of or business with any Person, or in any Designated Jurisdiction, that, at the time of funding of the Loan, is the subject of any Sanction; or (ii) in any manner that would result in a violation of a Sanction by any Person (including any Secured Party or other individual or entity participating in a transaction).

 

2.1.4.                  [Reserved]

 

2.1.5.                  Prepayments.

 

(a)                                 Provided no Cash Dominion Period is then in effect, the Borrowers may upon irrevocable notice from the Borrower Agent to the Agent, at any time or from time to time voluntarily prepay the Term Loans in whole or in part; provided, that any such voluntary prepayment shall also be accompanied by Borrowers’ payment of any applicable Prepayment Premium determined as set forth in the Fee Letter; provided, further, that (i) such notice must be received by the Agent not later than 11:00 a.m. three Business Days prior to any date of prepayment; and (ii) such notice shall specify the amount of such prepayment of the Term Loans to be prepaid, which shall be in a minimum amount of $2,500,000 or a whole multiple of $1,000,000 in excess thereof. The Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment. If such notice is given by the Borrower Agent, the Borrowers shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment shall be accompanied by all accrued interest on the amount prepaid together with any applicable Prepayment Premium. Each such prepayment shall be applied to the Term Loans of the Lenders in accordance with their respective Applicable Percentage, and shall be applied to the scheduled principal installments on a pro rata basis.

 

(b)                           Subject to the terms of the Intercreditor Agreement, the Borrowers shall prepay the Term Loans in an amount equal to the Net Proceeds received by an Obligor on account of a Prepayment Event, unless the Net Proceeds therefrom are required to be paid to the holder of a Lien on such property or asset having priority over the Lien of the Agent and no Net Proceeds remain after such application; provided, that the application of proceeds of certain transactions, including, without limitation, Asset Dispositions, shall not be deemed to constitute consent of the Agent or any Lender to 

 

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transactions that are not otherwise permitted by the terms hereof, the other Loan Documents, or the Intercreditor Agreement.

 

(c)                                  The Borrower Agent shall cause any Foreign Subsidiary which sells any licenses or otherwise makes any Disposition of Intellectual Property (excluding the receipt of royalties in respect of the lease or license of Intellectual Property) to pay 100% of the Net Proceeds of such Disposition (excluding the receipt of royalties in respect of the lease or license of Intellectual Property) to the Agent as a mandatory prepayment.

 

(d)                                 All amounts prepaid pursuant to Sections 2.1.5(b) and (c) shall be applied to scheduled principal installments of the Obligations in the inverse order of maturity to reduce the outstanding principal balance of the Term Loans and shall be accompanied by (x) the amount of the Prepayment Premium (if any) required pursuant to Sections 3.2.3 and 3.4 and the Fee Letter and (y) all accrued interest on the amount prepaid, and in the case of a prepayment in full, all other Obligations then due and owing. Each such prepayment shall be applied to the Term Loans of the Lenders in accordance with their respective Applicable Percentage.

 

2.1.6.                  Repayment of Term Loans.

 

(a)                           On the first Business Day of each December, March, June and September, Borrowers shall make quarterly principal reduction payments in respect of the Term Loans to the Agent for the ratable account of the Lenders, in the amount of $218,750.00. The first such quarterly principal reduction payments shall be due on December 1, 2018.

 

(b)                                 On the Term Loan Termination Date, Borrowers shall repay any remaining principal of the Term Loans outstanding on such date, together with any other outstanding Obligations. In addition, the Borrowers shall repay to the Agent all outstanding Permitted Agent Advances within three (3) Business Days of written demand therefor.

 

2.1.7.                  Term Loan Overadvances; Protective Advances.

 

(a)                                 If the aggregate Term Loans exceed the Term Loan Borrowing Base (a “Term Loan Overadvance”) at any time, the excess amount shall be payable by Borrowers on demand by Agent, but all such Term Loan Overadvance shall nevertheless constitute Obligations secured by the Collateral and entitled to all benefits of the Loan Documents.

 

(b)                                 Agent shall be authorized, in its discretion, notwithstanding that (i) a Term Loan Overadvance exists or thereby would be created, (ii) a Default or Event of Default has occurred and is continuing, and/or (iii) any conditions in Section 6.2 are not satisfied, to knowingly and intentionally, continue to make Base Rate Term Loans if Agent, in its Permitted Discretion, deems such Base Rate Term Loans necessary or desirable (x) to preserve or protect Collateral, (y) to enhance the collectability or repayment of the Obligations, or (z) to pay costs, fees and expenses then owing to Agent or any other amount (other than principal) chargeable to Borrowers in respect of the Obligations (such Loans, “Protective Advances”), so long as (A) after giving effect to such Protective Advances, the Term Exposure does not exceed the Term Loan Borrowing Base by more than ten percent (10%), and (B) after giving effect to such Protective Advances, the Term Loan Exposure does not exceed the aggregate Term Loan Commitments.  Each Lender shall participate in each Protective Advance in accordance with such Lender’s Applicable Percentage of the Term Loan Commitments.  Required Lenders may at any time revoke Agent’s authority to make further Protective Advances under this clause (b) by written notice to Agent.  Absent such revocation, Agent’s determination that funding of a Protective Advance is appropriate shall be conclusive.

 

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2.2.                            [Reserved].

 

2.3.                            [Reserved].

 

SECTION 3.                                           INTEREST, FEES AND CHARGES

 

3.1.                            Interest.

 

3.1.1.                  Rates and Payment of Interest.

 

(a)                                 Subject to the provisions of Section 3.1.1(b), Section 3.6 and Section 3.7 below, the Term Loans shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the LIBOR (or the Successor LIBOR Rate, where applicable) in effect from time to time plus the Applicable Margin..

 

(b)                                 During an Insolvency Proceeding with respect to any Obligor, or during any other Event of Default if Agent or Required Lenders in their discretion so elect, Obligations shall bear interest at the Default Rate (whether before or after any judgment).  Each Obligor acknowledges that the cost and expense to Agent and Lenders due to an Event of Default are difficult to ascertain and that the Default Rate is fair and reasonable compensation for this.

 

(c)                                  Interest shall accrue from the date a Loan is advanced or Obligation is incurred or payable, until paid in full by Borrowers.  Interest on each Term Loan shall be due and payable in arrears (i) on each Interest Payment Date, and (ii) if not previously paid in full, on the Termination Date, and at such other times as may be specified herein Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Insolvency Law.

 

3.2.                            Fees.

 

3.2.1.                  [Reserved].

 

3.2.2.                  [Reserved].

 

3.2.3.                  Fee Letters Borrowers shall pay all fees set forth in any fee letter executed in connection with this Term Loan Agreement, including the Fee Letter.

 

3.3.                            Computation of Interest, Fees, Yield Protection.  All interest, as well as fees and other charges calculated on a per annum basis, shall be computed for the actual days elapsed, based on a year of 365 days with respect to amounts denominated in GBP and 360 days with respect to all other amounts.  For purposes of the Interest Act (Canada), if applicable, (i) whenever any interest or fee under this Agreement is calculated using a rate based on a year of 360 days, the rate determined pursuant to such calculation, when expressed as an annual rate, is equivalent to (x) the applicable rate based on a year of 360 days, multiplied by (y) the actual number of days in the calendar year in which the period for which such interest or fee is payable (or compounded) ends, and divided by (z) 360, (ii) the principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement, and (iii) the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields.  Each Obligor confirms that it understands and is able to calculate the rate of interest applicable to advances based on the methodology for calculating per annum rates provided for herein.  Each Obligor irrevocably agrees not to plead or assert, whether by way of defense or otherwise, in any proceeding relating to this Agreement or any Loan Documents, that the interest payable hereunder and the calculation thereof has not been adequately disclosed to the Obligors as required pursuant to Section 4 of the Interest Act (Canada).  Each determination by Agent of any interest, fees or interest rate hereunder shall be final, conclusive and binding for all purposes, absent manifest error.  All fees shall be fully earned when due and shall not be subject to rebate, refund or proration. All fees payable under Section 3.2 are compensation for services and are not, and shall not be deemed to be, interest or any other charge for the 

 

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use, forbearance or detention of money.  A certificate as to amounts payable by Borrowers under Section 3.4, 3.5, 3.6, 3.7, 3.9, 3.10 or 5.9, submitted to Borrower Agent by Agent or the affected Lender, as applicable, shall be final, conclusive and binding for all purposes, absent manifest error, and Borrowers shall pay such amounts to the appropriate party within 10 days following receipt of the certificate.

 

3.4.                            Prepayment Premium.  Without limiting the generality of the foregoing or anything appearing in the Fee Letter, it is understood and agreed that if the Obligations are accelerated for any reason, including because of default, the commencement of any Insolvency Proceeding or other proceeding pursuant to any Insolvency Law, sale, disposition or encumbrance (including that by operation of law or otherwise), the Prepayment Premium, if any, determined as provided in the Fee Letter and as of the date of acceleration will also be due and payable as though said Debt was voluntarily prepaid as of such date and shall constitute part of the Obligations, in view of the impracticability and extreme difficulty of ascertaining actual damages and by mutual agreement of the parties as to a reasonable calculation of each Lender’s lost profits as a result thereof. Any Prepayment Premium payable in accordance with the immediately preceding sentence shall be presumed to be the liquidated damages sustained by each Lender as the result of the early termination and the Borrowers agree that it is reasonable under the circumstances currently existing. The Prepayment Premium, if any, shall also be payable (i) in the event the Obligations (and/or this Agreement or the Notes evidencing the Obligations) are satisfied or released by foreclosure or sale/liquidation (whether by power of judicial proceeding), deed in lieu of foreclosure or by any other means and/or (ii) upon the satisfaction, release, payment, restructuring, reorganization, replacement, reinstatement, defeasance or compromise of any of the Obligations (and/or this Agreement or the Notes evidencing the Obligations) in any Insolvency Proceeding or other proceeding pursuant to any Insolvency Law, foreclosure or sale/liquidation (whether by power of judicial proceeding or otherwise), deed in lieu of foreclosure or by any other means or the making of a distribution of any kind in any Insolvency Proceeding to the Agent, for the account of the Lenders, in full or partial satisfaction of the Obligations. THE BORROWERS EXPRESSLY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING PREPAYMENT PREMIUM IN CONNECTION WITH ANY SUCH ACCELERATION INCLUDING IN CONNECTION WITH ANY VOLUNTARY OR INVOLUNTARY ACCELERATION OF THE OBLIGATIONS PURSUANT TO ANY INSOLVENCY PROCEEDING OR OTHER PROCEEDING PURSUANT TO ANY INSOLVENCY LAW OR PURSUANT TO A PLAN OF REORGANIZATION. The Borrowers expressly agree that: (A) the Prepayment Premium is reasonable and is the product of an arm’s length transaction between sophisticated business people, ably represented by counsel; (B) the Prepayment Premium shall be payable notwithstanding the then prevailing market rates at the time payment is made; (C) there has been a course of conduct between Lenders and the Borrowers giving specific consideration in this transaction for such agreement to pay the Prepayment Premium; and (D) the Borrowers shall be estopped hereafter from claiming differently than as agreed to in this paragraph. The Borrowers expressly acknowledge that their agreement to pay the Prepayment Premium to Lenders as herein described is a material inducement to Lenders to provide the Term Loan Commitments and make the Term Loans.

 

3.5.                            Reimbursement Obligations.  Borrowers shall reimburse Agent and Lenders for all Extraordinary Expenses.  Borrowers shall also reimburse Agent for all reasonable and documented legal, accounting, appraisal, consulting, and other fees, costs and expenses incurred by it in connection with (a) negotiation and preparation of any Loan Documents, including any amendment or other modification thereof; (b) administration of and actions relating to the term loan credit facility provided for herein generally, including, without limitation, as concerns any Collateral, the Loan Documents and transactions contemplated hereby and thereby, including any actions taken to perfect or maintain priority of Agent’s Liens on any Collateral, to maintain any insurance required hereunder or to verify Collateral; (c) subject to the limits of Section 10.1.1(b) and (c), each inspection, audit or appraisal with respect to any Obligor or Collateral, whether prepared by Agent’s personnel or a third party, and (d) and expenses incurred in connection with preparation for and attendance at any Lender meeting(s) scheduled and held pursuant to Section 10.1.16 (in the case of this clause (d) only, in an amount not in excess of $1,000 per Fiscal Year).

 

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If, for any reason (including inaccurate reporting on financial statements or a Compliance Certificate), it is determined that a higher Applicable Margin should have applied to a period than was actually applied, then the proper margin shall be applied retroactively and Borrowers shall promptly pay to Agent, for the pro rata benefit of Lenders, an amount equal to the difference between the amount of interest and fees that would have accrued using the proper margin and the amount actually paid.  All amounts payable by Borrowers under this Section shall be due on demand.

 

3.6.                            Illegality.  If any Lender determines that any Applicable Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Term Loans that bear interest at LIBOR, or to determine or charge interest rates based upon LIBOR, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to Agent, any obligation of such Lender to make or continue Term Loans that bear interest at LIBOR or to convert Term Loans that bear interest at the Base Rate to Term Loans that bear interest at LIBOR shall be suspended until such Lender notifies Agent that the circumstances giving rise to such determination no longer exist.  Upon delivery of such notice, Borrowers shall prepay or, if applicable, convert all Term Loans that bear interest at LIBOR of such Lender to Term Loans that bear interest at the Base Rate, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Term Loans that bear interest at LIBOR to such day, or immediately, if such Lender may not lawfully continue to maintain such Term Loans that bear interest at LIBOR.  Upon any such prepayment or conversion, Borrowers shall also pay accrued interest on the amount so prepaid or converted.

 

3.7.                            Inability to Determine Rates.(a)               If Agent determines (which determination shall be conclusive absent manifest error), or Borrower Agent or Required Lenders notify Agent (with, in the case of the Required Lenders, a copy to Borrower Agent) that Borrower Agent or Required Lenders (as applicable) have determined, that for any reason in connection with a request for a Borrowing of, or conversion to or continuation of, a Term Loan that bears interest at LIBOR that (a) Dollar deposits are not being offered to banks in the London interbank Eurodollar market for the applicable amount and Interest Period of such Loan, (b) adequate and reasonable means do not exist for determining LIBOR for the requested Interest Period, or (c) LIBOR for the requested Interest Period does not adequately and fairly reflect the cost to such Lenders of funding such Loan, then Agent will promptly so notify Borrower Agent and each Lender.  Thereafter, the obligation of Lenders to make or maintain Term Loans that bear interest at LIBOR shall be suspended until Agent (upon instruction by Required Lenders) revokes such notice.

 

(b)                                 Notwithstanding anything to the contrary in this Agreement or any other Loan Documents, if Agent determines (which determination shall be conclusive absent manifest error), or Borrower Agent or Required Lenders notify Agent (with, in the case of the Required Lenders, a copy to Borrower Agent) that Borrower Agent or Required Lenders (as applicable) have determined, that:

 

(i)                                     adequate and reasonable means do not exist for ascertaining LIBOR for any requested Interest Period, including, without limitation, because the LIBOR Screen Rate is not available or published on a current basis and such circumstances are unlikely to be temporary; or

 

(ii)                                  the administrator of the LIBOR Screen Rate or a Governmental Authority having jurisdiction over Agent has made a public statement identifying a specific date after which LIBOR or the LIBOR Screen Rate shall no longer be made available, or used for determining the interest rate of loans (such specific date, the “Scheduled Unavailability Date”), or

 

(iii)                               syndicated loans currently being executed, or that include language similar to that contained in this Section, are being executed or amended (as applicable) to incorporate or adopt a new benchmark interest rate to replace LIBOR,

 

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then, reasonably promptly after such determination by the Agent or receipt by Agent of such notice, as applicable, Agent and the Borrowers may amend this Agreement to replace LIBOR with an alternate benchmark rate (including any mathematical or other adjustments to the benchmark (if any) incorporated therein), giving due consideration to any evolving or then existing convention for similar U.S. dollar denominated syndicated credit facilities for such alternative benchmarks (any such proposed rate, a “LIBOR Successor Rate”), together with any proposed LIBOR Successor Rate Conforming Changes (as defined below) and any such amendment shall become effective at 5:00 p.m. (New York time) on the fifth Business Day after Agent shall have posted such proposed amendment to all Lenders and Borrower Agent unless, prior to such time, Lenders comprising the Required Lenders have delivered to Agent written notice that such Required Lenders do not accept such amendment.

 

If no LIBOR Successor Rate has been determined and the circumstances under clause (b)(i) above exist or the Scheduled Unavailability Date has occurred (as applicable), Agent will promptly so notify Borrower Agent and each Lender.  Thereafter, (x) the obligation of Lenders to make or maintain Term Loans that bear interest at LIBOR shall be suspended, (to the extent of the affected Term Loans that bear interest at LIBOR or Interest Periods), and (y) the LIBOR component shall no longer be utilized in determining the Base Rate.  Upon receipt of such notice, Borrower Agent may revoke any pending request for a Borrowing of, conversion to or continuation of Term Loans that bear interest at LIBOR (to the extent of the affected Term Loans that bear interest at LIBOR or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a committed Borrowing of Term Loans that bear interest at the Base Rate (subject to the foregoing clause (y)) in the amount specified therein.

 

Notwithstanding anything to the contrary in this Agreement, any definition of LIBOR Successor Rate shall provide that in no event shall such LIBOR Successor Rate be less than zero for purposes of this Agreement.  For the avoidance of doubt, implementation of a LIBOR Successor Rate shall not include a reduction of the Applicable Margin.

 

3.8.                            Increased Costs; Capital Adequacy.

 

3.8.1.                  Change in Law.  If any Change in Law shall:

 

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

 

(b)                                 subject any Recipient to Taxes (other than (i) Indemnified Taxes, (ii) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes, and (iii) Connection Income Taxes) with respect to any Loan, Commitment or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

 

(c)                                  impose on any Lender or interbank market any other condition, cost or expense affecting any Loan, Loan Document or Commitment;

 

and the result thereof shall be to increase the cost to such Lender of making or maintaining any Loan or Commitment, or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Lender Borrowers will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

 

3.8.2.                  Capital Adequacy.  If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such 

 

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Lender’s or holding company’s capital as a consequence of this Agreement, or such Lender’s Commitments, or Loans to a level below that which such Lender or holding company could have achieved but for such Change in Law (taking into consideration such Lender’s and holding company’s policies with respect to capital adequacy), then from time to time Borrowers will pay to such Lender such additional amount or amounts as will compensate it or its holding company for any such reduction suffered.

 

3.8.3.                  LIBOR Loan Reserves.  If any Lender is required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits, Borrowers shall pay additional interest to such Lender on each Term Loan that bears interest at LIBOR equal to the costs of such reserves allocated to the Loan by the Lender (as determined by it in good faith, which determination shall be conclusive).  The additional interest shall be due and payable on each interest payment date for the Loan; provided, however, that if the Lender notifies Borrowers (with a copy to Agent) of the additional interest less than 10 days prior to the interest payment date, then such interest shall be payable 10 days after Borrowers’ receipt of the notice.

 

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

 

3.9.                            Mitigation.  If any Lender gives a notice under Section 3.6 or requests compensation under Section 3.8, or if Borrowers are required to pay any Indemnified Taxes or additional amounts with respect to a Lender under Section 5.9, then such Lender shall use reasonable efforts to designate a different Lending Office or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (a) would eliminate the need for such notice or reduce amounts payable or to be withheld in the future, as applicable; and (b) would not subject the Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to it or unlawful.  Borrowers shall pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

3.10.                     Funding Losses.  If for any reason (other than default by a Lender) (a) any repayment or conversion of a Term Loan that bears interest at LIBOR occurs on a day other than the end of its Interest Period, (b) Borrowers fail to repay a Term Loan that bears interest at LIBOR when required hereunder, or (c) a Lender is required to assign a Term Loan that bears interest at LIBOR prior to the end of its Interest Period pursuant to Section 13.4, then Borrowers shall pay to Agent its customary administrative charge and to each Lender all resulting losses and expenses, including loss of anticipated profits and any loss or expense arising from liquidation or redeployment of funds or from fees payable to terminate deposits of matching funds.  Lenders shall not be required to purchase Dollar deposits in any interbank or offshore Dollar market to fund any Term Loan that bears interest at LIBOR, but this Section shall apply as if each Lender had purchased such deposits.

 

3.11.                     Maximum Interest.  Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by Applicable Law (“maximum rate”).  If Agent or any Lender shall receive interest in an amount that exceeds the maximum rate, the excess interest shall be applied to the principal of the Obligations or, if it exceeds such unpaid principal, refunded to Borrowers.  In determining whether the interest contracted for, charged or received by Agent or a Lender exceeds the maximum rate, such Person may, to the extent permitted by Applicable Law, (a) characterize any 

 

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payment that is not principal as an expense, fee or premium rather than interest; (b) exclude voluntary prepayments and the effects thereof; and (c) amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

 

SECTION 4.                                           LOAN ADMINISTRATION

 

4.1.                            Manner of Borrowing and Funding of Term Loans.

 

4.1.1.                  [Reserved].

 

4.1.2.                  [Reserved].

 

4.1.3.                  [Reserved].

 

4.1.4.                  [Reserved].

 

4.2.                            [Reserved].

 

4.3.                            [Reserved].

 

4.4.                            Borrower Agent.  Each Borrower and Obligor hereby designates SI USA (“Borrower Agent”) as its representative and agent for all purposes under the Loan Documents, designation of interest rates, delivery or receipt of communications, preparation and delivery of Term Loan Borrowing Base Certificates and financial reports, receipt and payment of Obligations, requests for waivers, amendments or other accommodations, actions under the Loan Documents (including in respect of compliance with covenants), and all other dealings with Agent or any Lender.  Borrower Agent hereby accepts such appointment.  Agent and Lenders shall be entitled to rely upon, and shall be fully protected in relying upon, any notice or communication (including any notice of borrowing) delivered by Borrower Agent on behalf of any Borrower or another Obligor.  Agent and Lenders may give any notice or communication with a Borrower or another Obligor hereunder to Borrower Agent on behalf of such Borrower or another Obligor.  Each of Agent and Lenders shall have the right, in its discretion, to deal exclusively with Borrower Agent for any or all purposes under the Loan Documents.  Each Borrower and Obligor agrees that any notice, election, communication, representation, agreement or undertaking made on its behalf by Borrower Agent shall be binding upon and enforceable against it.

 

4.5.                            One Obligation.  The Loans and other Obligations constitute one general obligation of Borrowers and are secured by Agent’s Lien on all Collateral; provided, however, that Agent and each Lender shall be deemed to be a creditor of, and the holder of a separate claim against, each Borrower to the extent of any Obligations jointly or severally owed by such Borrower.

 

4.6.                            Effect of Termination.  On the effective date of the termination of all Commitments, the Obligations shall be immediately due and payable. Until Full Payment of the Obligations, all undertakings of Borrowers contained in the Loan Documents shall continue, and Agent shall retain its Liens in the Collateral and all of its rights and remedies under the Loan Documents.  Agent shall not be required to terminate its Liens unless it receives Cash Collateral or a written agreement, in each case satisfactory to it, protecting Agent and Lenders from the dishonor or return of any Payment Items previously applied to the Obligations.  Sections 2.3, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 5.5, 5.9, 5.10, 12, 14.2, this Section, and each indemnity or waiver given by an Obligor or Lender in any Loan Document, shall survive Full Payment of the Obligations.

 

SECTION 5.                                           PAYMENTS

 

5.1.                            General Payment Provisions.  All payments of Obligations shall be made in Dollars, without offset, counterclaim or defense of any kind, free of (and without deduction for) any Taxes, except 

 

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as required by Applicable Law, and in immediately available funds, not later than 12:00 noon on the due date.  Any payment after such time shall be deemed made on the next Business Day.  Any payment of a Term Loan that bears interest at LIBOR prior to the end of its Interest Period shall be accompanied by all amounts due under Section 3.10.  Borrowers agree that Agent shall have the continuing, exclusive right to apply and reapply payments and proceeds of Collateral against the Obligations, in such manner as Agent deems advisable, but whenever possible, any prepayment of Loans shall be applied first to Term Loans that bear interest at the Base Rate and then to Term Loans that bear interest at LIBOR.

 

5.2.                            [Reserved].

 

5.3                               [Reserved].

 

5.4.                            Payment of Other Obligations.  Obligations other than Loans, including Extraordinary Expenses, shall be paid by Borrowers as provided in the Loan Documents or, if no payment date is specified, on demand.

 

5.5.                            Marshaling; Payments Set Aside.  None of Agent or Lenders shall be under any obligation to marshal any assets in favor of any Obligor or against any Obligations.  If any payment by or on behalf of Borrowers is made to Agent or any Lender, or Agent or any Lender exercises a right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other Person, then to the extent of such recovery, the Obligation originally intended to be satisfied, and all Liens, rights and remedies relating thereto, shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.

 

5.6.                            Application and Allocation of Payments.

 

5.6.1.                  Application.  Payments made by Borrowers hereunder shall be applied (a) first, as specifically required hereby; (b) second, to Obligations then due and owing; (b) third, to other Obligations specified by Borrowers; and (c) fourth, as determined by Agent in its discretion.

 

5.6.2.                  Post-Default Allocation.

 

(a)                                 Notwithstanding anything in any Loan Document to the contrary, during an Event of Default, monies to be applied to the Obligations, whether arising from payments by Obligors, realization on the Collateral, setoff or otherwise, shall be allocated as follows:

 

(i)                                     first, to all Extraordinary Expenses owing to Agent and Lenders, and to all other costs and expenses owing to Agent;

 

(ii)                                  second, to all Obligations constituting fees owing or related to the Term Loans;

 

(iii)                               third, to all Obligations constituting interest in respect of the Term Loans;

 

(iv)                              fourth, to all Term Loans; and

 

(v)                                 last, to all remaining Obligations.

 

(b)                                 Subject to the priorities set forth in clause (a) above, amounts shall be applied to payment of each category of Obligations only after Full Payment of amounts payable from time to time under all preceding categories.  If amounts are insufficient to satisfy a category, they shall be paid ratably 

 

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among outstanding Obligations in the category.  Monies and proceeds obtained from an Obligor shall not be applied to its Excluded Swap Obligations, but appropriate adjustments shall be made with respect to amounts obtained from other Obligors to preserve the allocations in any applicable category.  If the provider fails to deliver the calculation within five days following request, Agent may assume the amount is zero.  The allocations set forth in this Section 5.6.2 are solely to determine the rights and priorities among Secured Parties, and may be changed by agreement of the affected Secured Parties, without the consent of any Obligor.  This Section is not for the benefit of or enforceable by any Obligor, and each Borrower irrevocably waives the right to direct the application of any payments or Collateral proceeds subject to this Section 5.6.2.

 

(c)                                  Notwithstanding the order of application of proceeds of Collateral set forth in this Section 5.6.2, the Collateral shall secure all Obligations.

 

5.6.3.                  Erroneous Application.  Agent shall not be liable for any application of amounts made by it in good faith and, if any such application is subsequently determined to have been made in error, the sole recourse of any Lender or other Person to which such amount should have been made shall be to recover the amount from the Person that actually received it (and, if such amount was received by any Lender, such Lender hereby agrees to return it).

 

5.7.                            Dominion Accounts.  Until the Discharge of ABL Obligations (as defined in the Intercreditor Agreement), and subject to the Intercreditor Agreement, during any Cash Dominion Period, and the ledger balances in the Dominion Accounts as of the end of each Business Day shall be applied to the Obligations arising under the Revolver Loan Agreement at the beginning of the next Business Day; provided, that notwithstanding anything to contrary set forth herein, at all times (regardless of whether a Cash Dominion Period is in effect), the ledger balances in all Dominion Accounts maintained by the UK Guarantor shall be applied to the Obligations arising under the Revolver Loan Agreement at the beginning of the next Business Day.  If, as a result of such application, a credit balance exists, the balance shall not accrue interest in favor of Borrowers and shall be made available to Borrowers as long as no Default or Event of Default exists.  If, at any time a Cash Dominion Period shall not be in effect, the aggregate balance of all cash held in all Deposit Accounts of Obligors (including all Dominion Accounts and all Excluded Deposit Accounts (other than Deposit Accounts described in clause (a) of the definition of “Excluded Deposit Accounts”), shall exceed $2,000,000 for more than five Business Days, until the Discharge of ABL Obligations, and subject to the Intercreditor Agreement, the Obligors shall remit to Revolver Agent to be applied to the Obligations arising under the Revolver Loan Agreement an amount sufficient to cause such aggregate balance in all Deposit Accounts to be less than $2,000,000.  For the avoidance of doubt, the Agent hereby agrees that except as may otherwise be provided in the Intercreditor Agreement, a notice regarding the commencement of a Cash Dominion Period shall not be delivered to the applicable depository bank under a Deposit Account Control Agreement until such time as a Cash Dominion Period has occurred; provided, until the Discharge of ABL Obligations, and subject to the Intercreditor Agreement, that Deposit Accounts of the UK Guarantor shall be subject to the dominion and control of Revolver Agent at all times as set forth in Section 8.2.4. The parties hereto hereby acknowledge, confirm and agree that the implementation of the cash management arrangements is a contractual right provided to the Agent and the Lenders hereunder in order for the Agent and the Lenders to manage and monitor their collateral position and not a proceeding for enforcement or recovery of a claim, or pursuant to, or an enforcement of, any security or remedies whatsoever, that the cash management arrangements contemplated herein are critical to the structure of the lending arrangements contemplated herein, that the Agent and the Lenders are relying on the Obligors’ acknowledgement, confirmation and agreement with respect to such cash management arrangements in making accommodations of credit available to the Borrowers and in particular that any accommodations of credit are being provided by the Agent and the Lenders to the Borrowers strictly on the basis of a borrowing base calculation to fully support and collateralize any such accommodations of credit hereunder.

 

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5.8.                            Account Stated.  The Agent shall maintain in accordance with its usual and customary practices account(s) evidencing the Debt of Borrowers hereunder.  Any failure of Agent to record anything in a loan account, or any error in doing so, shall not limit or otherwise affect the obligation of Borrowers to pay any amount owing hereunder.  Entries made in a loan account shall constitute presumptive evidence of the information contained therein.  If any information contained in a loan account is provided to or inspected by any Person, the information shall be conclusive and binding on such Person for all purposes absent manifest error, except to the extent such Person notifies Agent in writing within 30 days after receipt or inspection that specific information is subject to dispute.

 

5.9.                            Taxes.

 

5.9.1.                  Payments Free of Taxes; Obligation to Withhold; Tax Payment.

 

(a)                                 All payments of Obligations by Obligors shall be made without deduction or withholding for any Taxes, except as required by Applicable Law.  If Applicable Law (as determined by Agent in its discretion) requires the deduction or withholding of any Tax from any such payment by Agent or an Obligor, then Agent or such Obligor shall be entitled to make such deduction or withholding. The Agent or such Obligor, as applicable, may take into account any applicable information and documentation provided pursuant to Section 5.10.

 

(b)                                 If Agent or any Obligor is required by the Code or the Income Tax Act (Canada) to withhold or deduct Taxes, including backup withholding and withholding taxes, from any payment, then (i) Agent shall pay the full amount that it determines is to be withheld or deducted to the relevant Governmental Authority pursuant to the Code or the Income Tax Act (Canada), and (ii) to the extent the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Obligor shall be increased as necessary so that the Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.

 

(c)                                  If Agent or any Obligor is required by any Applicable Law other than the Code or the Income Tax Act (Canada) to withhold or deduct Taxes from any payment, then (i) Agent or such Obligor, to the extent required by Applicable Law, shall timely pay the full amount to be withheld or deducted to the relevant Governmental Authority, and (ii) to the extent the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Obligor shall be increased as necessary so that the Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.

 

5.9.2.                  Payment of Other Taxes.  Without limiting the foregoing, Borrowers shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at Agent’s option, timely reimburse Agent for payment of, any Other Taxes.

 

5.9.3.                  Tax Indemnification.

 

(a)                                 Each Obligor shall indemnify and hold harmless, on a joint and several basis, each Recipient against any Indemnified Taxes (including those imposed or asserted on or attributable to amounts payable under this Section) payable or paid by a Recipient or required to be withheld or deducted from a payment to a Recipient, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  Each Obligor shall indemnify and hold harmless Agent against any amount that a Lender fails for any reason to pay indefeasibly to Agent as required pursuant to this Section.  Each Obligor shall make payment within 10 days after demand for any amount or liability payable under this Section.  A certificate as to the amount of such payment or liability delivered to Borrowers by a Lender (with a copy to Agent), or by Agent on its own behalf or on behalf of any Recipient, shall be conclusive absent manifest error.

 

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(b)                                 Each Lender shall indemnify and hold harmless, on a several basis, (i) Agent against any Indemnified Taxes attributable to such Lender (but only to the extent Borrowers have not already paid or reimbursed Agent therefor and without limiting Borrowers’ obligation to do so), (ii) Agent and Obligors, as applicable, against any Taxes attributable to such Lender’s failure to maintain a Participant register as required hereunder, and (iii) Agent and Obligors, as applicable, against any Excluded Taxes attributable to such Lender that are payable or paid by Agent or an Obligor in connection with any Obligations, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  Each Lender shall make payment within 10 days after demand for any amount or liability payable under this Section.  A certificate as to the amount of such payment or liability delivered to any Lender by Agent shall be conclusive absent manifest error.

 

5.9.4.                  Evidence of Payments.  If Agent or an Obligor pays any Taxes pursuant to this Section, then upon request, Agent shall deliver to Borrower Agent or Borrower Agent shall deliver to Agent, respectively, a copy of a receipt issued by the appropriate Governmental Authority evidencing the payment, a copy of any return required by Applicable Law to report the payment, or other evidence of payment reasonably satisfactory to Agent or Borrower Agent, as applicable.

 

5.9.5.                  Treatment of Certain Refunds.  Unless required by Applicable Law, at no time shall Agent have any obligation to file for or otherwise pursue on behalf of a Lender, nor have any obligation to pay to any Lender, any refund of Taxes withheld or deducted from funds paid for the account of a Lender.  If a Recipient determines in its discretion that it has received a refund of any Taxes as to which it has been indemnified by Obligors or with respect to which an Obligor has paid additional amounts pursuant to this Section, it shall pay such Obligor(s) an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by such Obligor(s) with respect to the Taxes giving rise to such refund), net of all reasonable out-of-pocket expenses (including Taxes) incurred by such Recipient, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that such Obligor(s) agrees, upon request by the Recipient, to repay the amount paid over to such Obligor(s) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Recipient if the Recipient is required to repay such refund to the Governmental Authority.  Notwithstanding anything herein to the contrary, no Recipient shall be required to pay any amount to such Obligor(s) if such payment would place the Recipient in a less favorable net after-Tax position than it 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.  In no event shall Agent or any Recipient be required to make its tax returns (or any other information relating to its taxes that it deems confidential) available to any Obligor or other Person.

 

5.9.6.                  Survival.  Each party’s obligations under Sections 5.9 and 5.10 shall survive the resignation or replacement of Agent or any assignment of rights by or replacement of a Lender, the termination of the Commitments, and the repayment, satisfaction, discharge or Full Payment of any Obligations.

 

5.10.                     Lender Tax Information.

 

5.10.1.           Status of Lenders.  Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments of Obligations shall deliver to Borrowers and Agent properly completed and executed documentation reasonably requested by Borrowers or Agent as will permit such payments to be made without or at a reduced rate of withholding.  In addition, any Lender, if reasonably requested by Borrowers or Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by Borrowers or Agent to enable them to determine whether such Lender is subject to backup withholding or information reporting requirements.  Notwithstanding the foregoing, such documentation (other than documentation described in Sections 5.10.2(a), (b) and (d)) 

 

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shall not be required if a Lender reasonably believes delivery of the documentation would subject it to any material unreimbursed cost or expense or would materially prejudice its legal or commercial position.

 

5.10.2.           Documentation.  Without limiting the foregoing, if any Borrower is a U.S. Person,

 

(a)                                 Any Lender that is a U.S. Person shall deliver to Borrowers and Agent on or prior to the date on which such Lender becomes a Lender hereunder (and from time to time thereafter upon reasonable request of Borrowers or Agent), executed originals of IRS Form W-0, certifying that such Lender is exempt from U.S. federal backup withholding Tax;

 

(b)                                 Any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrowers and Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender hereunder (and from time to time thereafter upon reasonable request of Borrowers or Agent), whichever of the following is applicable:

 

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

 

(ii)                                  executed originals of IRS Form W-8ECI;

 

(iii)                               in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate in form satisfactory to Agent to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of a Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (“U.S. Tax Compliance Certificate”), and (y) executed originals of IRS Form W-8BEN-E; or

 

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

 

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

 

(d)                                 if payment of an Obligation to a Lender would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code), such 

 

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Lender shall deliver to Borrowers and Agent at the time(s) prescribed by law and otherwise as reasonably requested by Borrowers or Agent such documentation prescribed by Applicable Law (including Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrowers or Agent as may be necessary for them to comply with their obligations under FATCA and to determine that such Lender has complied with its obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (d), “FATCA” shall include any amendments made to FATCA after the date hereof.

 

5.10.3.           Redelivery of Documentation.  If any form or certification previously delivered by a Lender pursuant to this Section expires or becomes obsolete or inaccurate in any respect, such Lender shall promptly update the form or certification or notify Borrowers and Agent in writing of its inability to do so.

 

5.11.                     Nature and Extent of Each Borrower’s Liability.

 

5.11.1.           Joint and Several Liability.  Each Borrower agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Agent and Lenders the prompt payment and performance of, all Obligations, except its Excluded Swap Obligations.  Each Borrower agrees that its guaranty obligations hereunder constitute a continuing guaranty of payment and not of collection, that such obligations shall not be discharged until Full Payment of the Obligations, and that such obligations are absolute and unconditional, irrespective of (a) the genuineness, validity, regularity, enforceability, subordination or any future modification of, or change in, any Obligations or Loan Document, or any other document, instrument or agreement to which any Obligor is or may become a party or be bound; (b) the absence of any action to enforce this Agreement (including this Section) or any other Loan Document, or any waiver, consent or indulgence of any kind by Agent or any Lender with respect thereto; (c) the existence, value or condition of, or failure to perfect a Lien or to preserve rights against, any security or guaranty for the Obligations or any action, or the absence of any action, by Agent or any Lender in respect thereof (including the release of any security or guaranty); (d) the insolvency of any Obligor; (e) any election by Agent or any Lender in an Insolvency Proceeding for the application of Section 1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Obligor, as debtor-in-possession under Section 364 of the Bankruptcy Code or any other Insolvency Law or otherwise; (g) the disallowance of any claims of Agent or any Lender against any Obligor for the repayment of any Obligations under Section 502 of the Bankruptcy Code or any other Insolvency Law or otherwise; or (h) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, except Full Payment of all Obligations.

 

5.11.2.           Waivers.

 

(a)                                 Each Obligor expressly waives all rights that it may have now or in the future under any statute, at common law, in equity or otherwise, to compel Agent or Lenders to marshal assets or to proceed against any Obligor, other Person or security for the payment or performance of any Obligations before, or as a condition to, proceeding against such Obligor.  Each Obligor waives all defenses available to a surety, guarantor or accommodation co-obligor other than Full Payment of all Obligations and waives, to the maximum extent permitted by law, any right to revoke any guaranty of any Obligations as long as it is a Obligor.  It is agreed among each Obligor, Agent and Lenders that the provisions of this Section 5.11 are of the essence of the transaction contemplated by the Loan Documents and that, but for such provisions, Agent and Lenders would decline to make Loans.  Each Obligor acknowledges that its guaranty pursuant to this Section is necessary to the conduct and promotion of its business, and can be expected to benefit such business.

 

(b)                                 Agent and Lenders may, in their discretion, pursue such rights and remedies as they deem appropriate, including realization upon Collateral or any Real Estate by judicial foreclosure or nonjudicial sale or enforcement, without affecting any rights and remedies under this Section 5.11.  If, in

 

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taking any action in connection with the exercise of any rights or remedies, Agent or any Lender shall forfeit any other rights or remedies, including the right to enter a deficiency judgment against any Borrower or other Person, whether because of any Applicable Laws pertaining to “election of remedies” or otherwise, each Borrower consents to such action and waives any claim based upon it, even if the action may result in loss of any rights of subrogation that any Borrower might otherwise have had.  Any election of remedies that results in denial or impairment of the right of Agent or any Lender to seek a deficiency judgment against any Borrower shall not impair any other Borrower’s obligation to pay the full amount of the Obligations.  Each Borrower waives all rights and defenses arising out of an election of remedies, such as nonjudicial foreclosure with respect to any security for the Obligations, even though that election of remedies destroys such Borrower’s rights of subrogation against any other Person.  Agent may bid all or a portion of the Obligations at any foreclosure, trustee or other sale, including any private sale, and the amount of such bid need not be paid by Agent but shall be credited against the Obligations.  The amount of the successful bid at any such sale, whether Agent or any other Person is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral, and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under this Section 5.11, notwithstanding that any present or future law or court decision may have the effect of reducing the amount of any deficiency claim to which Agent or any Lender might otherwise be entitled but for such bidding at any such sale.

 

5.11.3.           Extent of Liability; Contribution.

 

(a)                                 Notwithstanding anything herein to the contrary, each Borrower’s liability under this Section 5.11 shall be limited to the greater of (i) all amounts for which such Borrower is primarily liable, as described below, and (ii) such Borrower’s Allocable Amount.

 

(b)                                 If any Borrower makes a payment under this Section 5.11 of any Obligations (other than amounts for which such Borrower is primarily liable) (a “Guarantor Payment”) that, taking into account all other Guarantor Payments previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payments in the same proportion that such Borrower’s Allocable Amount bore to the total Allocable Amounts of all Borrowers, then such Borrower shall be entitled to receive contribution and indemnification payments from, and to be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment.  The “Allocable Amount” for any Borrower shall be the maximum amount that could then be recovered from such Borrower under this Section 5.11 without rendering such payment voidable under Section 548 of the Bankruptcy Code or under any applicable state fraudulent transfer or conveyance act, or similar statute or common law.

 

(c)                                  Nothing contained in this Section 5.11 shall limit the liability of any Borrower to pay Loans made directly or indirectly to that Borrower (including Loans advanced to any other Borrower and then re-loaned or otherwise transferred to, or for the benefit of, such Borrower), and all accrued interest, fees, expenses and other related Obligations with respect thereto, for which such Borrower shall be primarily liable for all purposes hereunder.  Agent and Lenders shall have the right, at any time in their discretion, to condition Loans upon a separate calculation of borrowing availability for each Borrower and to restrict the disbursement and use of such Loans to such Borrower.

 

(d)                                 Each Obligor that is a Qualified ECP when its guaranty of or grant of Lien as security for a Swap Obligation becomes effective hereby jointly and severally, absolutely, unconditionally and irrevocably undertakes to provide funds or other support to each Specified Obligor with respect to such Swap Obligation as may be needed by such Specified Obligor from time to time to honor all of its obligations under the Loan Documents in respect of such Swap Obligation (but, in each case, only up to the maximum amount of such liability that can be hereby incurred without rendering such Qualified ECP’s obligations and undertakings under this Section 5.11 voidable under any applicable fraudulent

 

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transfer or conveyance act).  The obligations and undertakings of each Qualified ECP under this Section shall remain in full force and effect until Full Payment of all Obligations.  Each Obligor intends this Section to constitute, and this Section shall be deemed to constitute, a guarantee of the obligations of, and a “keepwell, support or other agreement” for the benefit of, each Obligor for all purposes of the Commodity Exchange Act.

 

5.11.4.           Joint Enterprise.  Each Borrower has requested that Agent and Lenders make this credit facility available to Borrowers on a combined basis, in order to finance Borrowers’ business most efficiently and economically.  Borrowers’ business is a mutual and collective enterprise, and the successful operation of each Borrower is dependent upon the successful performance of the integrated group.  Borrowers believe that consolidation of their credit facility will enhance the borrowing power of each Borrower and ease administration of the facility, all to their mutual advantage.  Borrowers acknowledge that Agent’s and Lenders’ willingness to extend credit and to administer the Collateral on a combined basis hereunder is done solely as an accommodation to Borrowers and at Borrowers’ request.

 

5.11.5.           Subordination.  Each Obligor hereby subordinates any claims, including any rights at law or in equity to payment, subrogation, reimbursement, exoneration, contribution, indemnification or set off, that it may have at any time against any other Obligor, howsoever arising, to the Full Payment of all Obligations.

 

SECTION 6.                                           CONDITIONS PRECEDENT

 

6.1.                            Conditions Precedent to Initial Loans. Lenders shall not be required to fund any requested Loan or otherwise extend credit to Borrowers hereunder, until the date (“Closing Date”) that each of the following conditions has been satisfied:

 

(a)                                 Each Loan Document shall have been duly executed and delivered to Agent by each of the signatories thereto, and each Obligor shall be in compliance with all terms thereof.

 

(b)                                 Each UK Security Agreement shall have been duly executed and delivered to Agent by each of the signatories thereto, and each Obligor shall be in compliance with all terms thereof.

 

(c)                                  Agent shall have received acknowledgments of all filings or recordations necessary to perfect its Liens in the Collateral, as well as UCC, PPSA and Lien searches and other evidence satisfactory to Agent that such Liens are the only Liens upon the Collateral, except Permitted Liens.

 

(d)                                 Agent shall have received in respect of the UK Guarantor, a clear search at the Companies Court at the Royal Court of Justice in London and at Companies House.

 

(e)                                  Agent shall have received certificates, in form and substance satisfactory to it, from a knowledgeable Senior Officer of each Obligor certifying that, after giving effect to the initial Loans and transactions hereunder, (i) the Company and its Subsidiaries, taken as a whole, are Solvent; (ii) no Default or Event of Default exists; (iii) the representations and warranties set forth in Section 9 are true and correct; and (iv) such Obligor has complied with all agreements and conditions to be satisfied by it under the Loan Documents.

 

(f)                                   Agent shall have received a certificate of a duly authorized officer of each Obligor, certifying (i) that attached copies of such Obligor’s Organic Documents are true and complete, and in full force and effect, without amendment except as shown; (ii) that an attached copy of resolutions authorizing execution and delivery of the Loan Documents is true and complete, and that such resolutions are in full force and effect, were duly adopted, have not been amended, modified or revoked, and constitute all resolutions adopted with respect to this credit facility; (iii) to the title, name and signature of each Person authorized to sign the Loan Documents.  Agent may conclusively rely on this certificate until

 

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it is otherwise notified by the applicable Obligor in writing; (iv) with respect to any UK Guarantor, (A) that the Company and each of its Subsidiaries has complied within the relevant timeframe with any notice it has received pursuant to Part 21A of the Companies Act 2006 from that UK Guarantor; and no “warning notice” or “restrictions notice” (in each case as defined in Schedule 1B of the Companies Act 2006) has been issued in respect of shares in that UK Guarantor and (B) that the attached copy of its “PSC register” (within the meaning of section 790C(10) of the Companies Act 2006) is true and complete, and in full force and effect, without amendment except as shown; and (v) with respect to any UK Guarantor, the solvency of such UK Guarantor and the ability of such UK Guarantor to pay its debts as they fall due.

 

(g)                                  Agent shall have received a written opinion of (i) Greenberg Traurig LLP, US counsel to the Obligors, (ii) Stewart McKelvey, special New Brunswick counsel to the Canadian Guarantor, (iii) Stikeman Elliott LLP, special Ontario counsel to the Canadian Guarantor, and (iv) FieldfisherLLP, special UK counsel to Agent, as well as any local counsel to Borrowers or Agent, in form and substance satisfactory to Agent.

 

(h)                                 Agent shall have received good standing certificates (or their equivalents) for each Obligor, issued by the Secretary of State or other appropriate official of such Obligor’s jurisdiction of organization and each jurisdiction where such Obligor’s conduct of business or ownership of Property necessitates qualification.

 

(i)                                     (i) Agent shall have received copies of all documents, instruments and agreements related to the Revolver Debt and shall be reasonably satisfied with all of the terms and conditions of the Revolver Debt, (ii) Agent shall have received evidence reasonably satisfactory to Agent that Borrower, Revolving Lenders and Revolver Agent shall have consummated the transactions contemplated by the Revolver Loan Agreement, and (iii) Agent and the Revolver Agent shall have entered into the Intercreditor Agreement.

 

(j)                                    Agent shall have received copies of policies or certificates of insurance for the insurance policies carried by each Obligor, together with loss payable endorsements naming Agent as loss payee and as additional insured (in the case of Canadian insurance policies, first mortgagee (with respect to the Term Priority Collateral), and in the case of UK Insurance policies, first loss payee), all in compliance with the Loan Documents.

 

(k)                                 Agent shall have completed its business, financial and legal due diligence of Obligors.  No material adverse change, in the good faith opinion of Agent, in the business, assets, Properties, liabilities, operations, condition (financial or otherwise) of the Borrowers and the Guarantors, taken as a whole, financial condition of any Obligor or in the quality, quantity or value of any Collateral has occurred since March 31, 2018.

 

(l)                                     Borrowers shall have paid all fees and expenses to be paid to Agent and Lenders on the Closing Date.

 

(m)                             Agent shall have received appraisals (performed under such methodologies as are acceptable to Agent in its discretion) by a third party appraiser acceptable to the Agent of all Term Priority Collateral.

 

(n)                                 Agent shall have received a Revolver Borrowing Base Certificate and a Term Loan Borrowing Base Certificate, each prepared as of June 23, 2018.  Upon giving effect to the initial funding of Term Loans and Revolver Loans, and the payment by Borrowers of all fees and expenses incurred in connection herewith as well as any payables stretched beyond their customary payment practices, Availability shall be at least $9,500,000.

 

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(o)                                 Agent shall have received reasonably satisfactory evidence that all principal, interest, and other amounts owing in respect of all indebtedness for borrowed money of Obligors (other than indebtedness listed on Schedule 10.2.1 hereto) will be repaid in full on the Closing Date with the proceeds of the initial Loans hereunder on the Closing Date and the proceeds of the Revolver Debt funded on the Closing Date and any and all Liens securing such indebtedness will be terminated and released on the Closing Date.

 

(p)                                 With respect to each leased property or warehouse of each Obligor, Agent shall have either (i) received a Lien Waiver with respect to such leased property or warehouse or (ii) the Revolver Agent shall have established a Rent and Charges Reserve with respect to such leased property or warehouse; provided, that Agent agrees that all Lien Waivers entered into prior to the date hereof in favor of the Revolver Agent (as agent or bailee for the Agent and Lenders pursuant to the Intercreditor Agreement) are reasonably satisfactory in form and substance to the Agent pending the Lead Borrower’s delivery of new Lien Waivers among Agent, the relevant Obligor and each applicable lessor, warehouseman, freight forwarder and/or customs broker.

 

(q)                                 Agent shall have received (i) audited financial statements of the Company and its Subsidiaries for the fiscal year ended December 30, 2017, (ii) the internally prepared monthly divisional financial statements of the Company and its Subsidiaries for the months ended January 31, 2018, February 28, 2018, March 31, 2018 and April 30, 2018, (iii) a pro forma balance sheet of the Company and its Subsidiaries dated as of the Closing Date after giving pro forma effect to the funding of the Term Debt, the repayment in full of existing Debt on the Closing Date and (iv) projections of the consolidated balance sheets, results of operations, cash flow and Availability for the 2018 Fiscal Year on a Fiscal Month basis and for each other Fiscal Year ending prior to the Term Loan Termination Date on a Fiscal Year basis.

 

(r)                                    No action, suit, investigation, litigation or proceeding shall be threatened or pending in any court or before any arbitrator or governmental instrumentality that in Agent’s judgment could reasonably be expected to have a Material Adverse Effect.

 

(s)                                   Agent shall have received satisfactory evidence that the Obligors have received all governmental and third party consents and approvals as may be appropriate in connection with the Loans and the transactions contemplated by this Agreement.

 

(t)                                    Agent shall have received results of searches or other evidence reasonably satisfactory to the Agent (in each case dated as of a date reasonably satisfactory to the Agent) indicating the absence of Liens on the assets of the Obligors, except for Permitted Liens and Liens for which termination statements and releases, satisfactions and discharges of any mortgages, and releases or subordination agreements reasonably satisfactory to the Agent are being tendered concurrently with such extension of credit or other arrangements reasonably satisfactory to the Agent for the delivery of such termination statements and releases, satisfactions and discharges have been made.

 

(u)                                 KYC Information.

 

(i)                                     Upon the reasonable request of any Lender, Obligors shall have provided to Lenders, and Lenders shall be reasonably satisfied with, the documentation and other information so requested in connection with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act and the Canadian Anti-Money Laundering & Anti-Terrorism Legislation.

 

(ii)                                  At least five (5) days prior to the Closing Date, any Obligor that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation shall deliver, to each Lender that so requests, a Beneficial Ownership Certification in relation to such Obligor.

 

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6.2.                            [Reserved].

 

SECTION 7.                                           COLLATERAL

 

7.1.                            Grant of Security Interest.  To secure the prompt payment and performance of all Obligations, each Obligor (other than any UK Guarantor) hereby grants to Agent, for the benefit of Secured Parties, a continuing security interest in and Lien upon all Property of such Obligor, including all of the following Property, whether now owned or hereafter acquired, and wherever located:

 

(a)                                 all Accounts;

 

(b)                                 all Chattel Paper, including all Tangible Chattel Paper and all Electronic Chattel Paper;

 

(c)                                  all Commercial Tort Claims, including those shown on Schedule 9.1.16;

 

(d)                                 all Deposit Accounts, Securities Accounts and Commodities Accounts (and all money, cash and Cash Equivalents, checks, other negotiable instruments, funds, evidences of payment, Commodities Contracts, Security Entitlements, Securities and other assets (including Financial Assets) contained in, or credited to, such Deposit Accounts, Securities Accounts and Commodities Accounts);

 

(e)                                  all Documents (including, if applicable, electronic documents);

 

(f)                                   all General Intangibles and Intangibles, including Intellectual Property, Payment Intangibles, intercompany Debt and customer lists;

 

(g)                                  all Goods, including Inventory, Equipment and Fixtures;

 

(h)                                 all Instruments, including Promissory Notes;

 

(i)                                     all Investment Property (including all Securities and Equity Interests);

 

(j)                                    all Letters of Credit (which, for purposes of this clause (j) only, shall have the meaning given to such term in the UCC) and Letter-of-Credit Rights;

 

(k)                                 all Supporting Obligations;

 

(l)                                     all monies, cash and Cash Equivalents, whether or not in the possession or under the control of Agent, a Lender, or a bailee or Affiliate of Agent or a Lender, including any Cash Collateral;

 

(m)                             all books and records (including databases, customer lists, files, correspondence, tapes, and other records, whether tangible or electronic, computer programs, print-outs and computer records) pertaining to the foregoing clauses (a) through (l) above; and

 

(n)                                 to the extent not covered by clauses (a) through (m) above, (i) all other Property of such Obligor, whether tangible or intangible and (ii) all Proceeds, Supporting Obligations and products of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, any and all insurance claims, proceeds of any insurance, indemnity, warranty or guaranty payable to such Obligor from time to time with respect to any of the foregoing and any other contract rights or rights to the payment of money or tort claims.

 

In no event shall the grant of the security interest in this Agreement or in any other Loan Document attach to, or the term “Collateral” be deemed to include, (a) any of the outstanding Equity Interests in (x) an

 

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Immaterial Foreign Subsidiary or (y) a Foreign Subsidiary (i) in excess of 65% of the voting power of all classes of equity interests of such Foreign Subsidiary entitled to vote in the election of directors or other similar body of such Foreign Subsidiary or (ii) to the extent that the pledge thereof is prohibited by the laws of the jurisdiction of such foreign subsidiary’s organization; (b) any equity interest in any Foreign Subsidiary that is not a first-tier subsidiary of an Borrower; (c) any lease, license, contract, property rights or agreement to which Debtor is a party or any of such Debtor’s rights or interests thereunder, if, and for so long as and to the extent that, the grant of the security interest would constitute or result in (i) the abandonment, invalidation or unenforceability of any material right, title or interest of such Debtor therein or (ii) a breach or termination pursuant to the terms of, or a default under, any such lease, license, contract, property rights or agreement (other than to the extent that any such breach, termination or default would be rendered ineffective pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code of the applicable jurisdiction (or any successor provision or provisions), any other applicable law or principles of equity), provided, however, that the security interest (x) shall attach immediately when the condition causing such abandonment, invalidation or unenforceability is remedied, (y) shall attach immediately to any severable term of such lease, license, contract, property rights or agreement to the extent that such attachment does not result in any of the consequences specified in (i) or (ii) above and (z) shall attach immediately to any such lease, license, contract, property rights or agreement to which the account debtor or such Obligor’s counterparty has consented to such attachment; (d) any equity interest acquired after the date hereof that is an equity interest in an entity other than a subsidiary of an Obligor, if the terms of the organizational documents of the issuer of such equity interests do not permit the grant of the security interest in such equity interests by the owner thereof or Obligor; (e) any application to register any trademark or service mark prior to the filing under applicable law of a verified statement of use (or the equivalent) for such trademark or service mark to the extent the creation of a security interest therein or the grant of a mortgage thereon would void or invalidate such trademark or service mark; and (f) except as may be mutually agreed by the Borrowers and Agent, any fee-owned Real Estate or leasehold interests in Real Estate (other than, for the avoidance of doubt, Fixtures) (collectively, the “Excluded Property”); provided, however, that any Collateral (or any portion thereof) that ceases to satisfy the criteria for Excluded Property (whether as a result of an Obligor obtaining any necessary consent, any change in any rule of law, statute or regulation or otherwise) shall no longer be Excluded Property and the security interest shall attach immediately to such Collateral (or portion thereof) at such time.

 

7.2.                            Lien on Deposit Accounts; Cash Collateral.

 

7.2.1.                  Deposit Accounts.  To further secure the prompt payment and performance of all Obligations, each Obligor (other than a UK Guarantor) hereby grants to Agent a continuing security interest in and Lien upon all amounts credited to any Deposit Account of such Obligor, including any sums in any lockbox or Dominion Account.

 

7.2.2.                  Cash Collateral.  Cash Collateral may be invested, at Agent’s discretion (and with the consent of Borrower Agent, as long as no Event of Default exists), but Agent shall have no duty to do so, regardless of any agreement or course of dealing with any Obligor, and shall have no responsibility for any investment or loss.  Each Obligor (other than a UK Guarantor) hereby grants to Agent, as security for the Obligations, a security interest in all Cash Collateral held from time to time and all proceeds thereof, whether held in a Cash Collateral Account or otherwise.  Agent may apply Cash Collateral to the payment of Obligations as they become due, in such order as Agent may elect.  Each Cash Collateral Account and all Cash Collateral shall be under the sole dominion and control of Agent, and no Obligor or other Person shall have any right to any Cash Collateral, until Full Payment of all Obligations.

 

7.3.                            [Reserved].

 

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7.4.                            Other Collateral.

 

7.4.1.                  Commercial Tort Claims.  Obligors shall promptly notify Agent in writing if any Obligor has a Commercial Tort Claim (other than, as long as no Default or Event of Default exists, a Commercial Tort Claim for less than $100,000), shall promptly amend Schedule 9.1.16 to include such claim, and shall take such actions as Agent deems appropriate to subject such claim to a duly perfected, first priority Lien in favor of Agent.

 

7.4.2.                  Certain After-Acquired Collateral.  Obligors shall promptly notify Agent in writing if, after the Closing Date, any Obligor obtains any interest in any Collateral consisting of Deposit Accounts, Chattel Paper, Documents, Instruments, Intellectual Property, Investment Property or Letter-of-Credit Rights and, upon Agent’s request, shall promptly take such actions as Agent deems appropriate to effect Agent’s duly perfected, first priority Lien (subject to Permitted Liens) upon such Collateral, including obtaining any appropriate possession, control agreement or Lien Waiver.  If any Collateral is in the possession of a third party, at Agent’s request, Obligors shall obtain an acknowledgment that such third party holds the Collateral for the benefit of Agent.

 

7.5.                            No Assumption of Liability.  The Lien on Collateral granted hereunder is given as security only and shall not subject Agent or any Lender to, or in any way modify, any obligation or liability of Obligors relating to any Collateral.  In no event shall the grant of any Lien under any Loan Document secure an Excluded Swap Obligation of the granting Obligor.

 

7.6.                            Further Assurances.  All Liens granted to Agent under the Loan Documents are for the benefit of Secured Parties.  Promptly upon reasonable request, Obligors shall deliver such instruments and agreements, and shall take such actions, as Agent reasonably deems necessary and appropriate under Applicable Law to evidence or perfect its Lien on any Collateral, or otherwise to give effect to the intent of this Agreement.  Each Obligor authorizes Agent to file any financing statement that describes the Collateral as “all assets” or “all personal property” of such Obligor, or words to similar effect, and ratifies any action taken by Agent before the Closing Date to effect or perfect its Lien on any Collateral.

 

SECTION 8.                                           COLLATERAL ADMINISTRATION

 

8.1.                            Borrowing Base Certificates.  Obligors shall deliver to Agent (and Agent shall promptly deliver same to Lenders) (i) by the fifteenth (15th) day of each calendar month, and at such other times as Agent may request, a Revolver Borrowing Base Certificate and a Term Loan Borrowing Base Certificate setting forth the amounts of Accounts, Inventory, Eligible Accounts, Eligible Inventory, the Accounts Formula Amount, the Inventory Formula Amount, the IP Formula Amount, the Equipment Formula Amount, the Term Loan Push Down Reserve, the Availability Reserve, the Revolver Borrowing Base, the Term Loan Borrowing Base, the Revolver Exposure, the Term Loan Exposure, Availability as of the most recently ended Fiscal Month, and the status of Priority Payables, and (ii) at any time Availability falls below the Reporting Frequency Increase Trigger Amount, by Wednesday of each week, an updated Revolver Borrowing Base Certificate and Term Loan Borrowing Base Certificate (which updated Revolver Borrowing Base Certificate and Term Loan Borrowing Base Certificate shall include updated calculations of the Revolver Borrowing Base, Term Loan Borrowing Base, the Term Loan Push Down Reserve, Availability as of the end of the most recently ended week based solely upon sales, collections and Loan activity since the last day of the Fiscal Month for which a monthly Revolver Borrowing Base Certificate and a monthly Term Loan Borrowing Base shall have been prepared), and the status of Priority Payables.  All calculations of Availability in any Revolver Borrowing Base Certificate and/or Term Loan Borrowing Base Certificate shall originally be made by Obligors and certified by a Senior Officer; provided, that Agent may from time to time review and, in its Permitted Discretion, adjust any such calculation (a) to reflect its estimate of declines in value of any Collateral, due to collections received or otherwise; (b) to the extent Agent believes that the calculation was not made in accordance with this Agreement or does not accurately reflect the Availability Reserve; or (c) to the extent the Agent has advised Borrower Agent and Revolver Agent that the calculation does not accurately reflect the Term Loan Push Down Reserve.

 

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8.2.                            Administration of Accounts.

 

8.2.1.                  Records and Schedules of Accounts.  Each Obligor shall keep accurate and complete records of its Accounts, including all payments and collections thereon, and shall submit to Agent sales, collection, reconciliation and other reports in form satisfactory to Agent, on such periodic basis as Agent may request.  Each Obligor shall also provide to Agent, on or before the 15th day of each month, a detailed aged trial balance of all Accounts as of the end of the most recent Fiscal Month, specifying each Account’s Account Debtor name and address, amount, invoice date and due date, showing any discount, allowance, credit, authorized return or dispute, and including such proof of delivery, copies of invoices and invoice registers, copies of related documents, repayment histories, status reports and other information as Agent may reasonably request.  If Accounts in an aggregate face amount of $250,000 or more cease to be Eligible Accounts, Obligors shall notify Agent of such occurrence promptly (and in any event within one Business Day) after any Obligor has knowledge thereof.

 

8.2.2.                  Taxes.  If an Account of any Obligor includes a charge for any Taxes, Agent is authorized, in its discretion, to pay the amount thereof to the proper taxing authority for the account of such Obligor and to charge Obligors therefor; provided, however, that neither Agent nor Lenders shall be liable for any Taxes that may be due from Obligors or with respect to any Collateral.

 

8.2.3.                  Account Verification.  Whether or not a Default or Event of Default exists, Agent shall have the right at any time, in the name of Agent, any designee of Agent or any Obligor, to verify the validity, amount or any other matter relating to any Accounts of Obligors by mail, telephone or otherwise.  Obligors shall cooperate fully with Agent in an effort to facilitate and promptly conclude any such verification process.

 

8.2.4.                  Maintenance of Dominion Accounts.  Obligors shall maintain Dominion Accounts pursuant to lockbox or other arrangements acceptable to Agent.  On or prior to the Closing Date, Obligors shall have entered into agreements (in form and substance reasonably satisfactory to Agent) with Bank of America, in its capacity as lockbox servicer and Dominion Account bank, establishing Agent’s Lien on and dominion and control over all lockboxes and Dominion Accounts and which provide (i) in case of lockboxes and Dominion Accounts of the UK Guarantor, following the Discharge of ABL Obligations, and subject to the Intercreditor Agreement, that Agent have exclusive dominion and control at all times (regardless of whether a Cash Dominion Period is in effect), and (ii) in the case of lockboxes and Dominion Accounts of any Obligor other than the UK Guarantor, that subject to the Intercreditor Agreement Agent may exercise dominion and control at any time during a Cash Dominion Period and that during a Cash Dominion Period all remittances received in a lockbox be immediately deposited to a Dominion Account.  Agent and Lenders assume no responsibility to Obligors for any lockbox arrangement or Dominion Account, including any claim of accord and satisfaction or release with respect to any Payment Items accepted by any bank.

 

8.2.5.                  Proceeds of Collateral.  Borrowers shall request in writing and otherwise take all necessary steps to ensure that at all times from and after the Closing Date, all payments on Accounts or otherwise relating to Collateral are made directly to a Dominion Account (or a lockbox relating to a Dominion Account).  If any Obligor or Subsidiary receives cash or Payment Items with respect to any Collateral, it shall hold same in trust for Agent and promptly (not later than the next Business Day) deposit same into a Dominion Account (or a lockbox which is swept into a Dominion Account).

 

8.3.                            Administration of Inventory.

 

8.3.1.                  Records and Reports of Inventory.  Each Obligor shall keep accurate and complete records of its Inventory, including costs and daily withdrawals and additions, and, prior to the 15th day after the end of each month, shall submit to Agent inventory and reconciliation reports for the most recently ended Fiscal Month in form satisfactory to Agent.  Each Obligor shall conduct a physical

 

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inventory at least once per calendar year (and on a more frequent basis if requested by Agent when an Event of Default exists) and periodic cycle counts consistent with historical practices, and shall provide to Agent a report based on each such inventory and count promptly upon completion thereof, together with such supporting information as Agent may request.  Agent may participate in and observe each physical count.

 

8.3.2.                  Returns of Inventory.  No Obligor shall return any Inventory to a supplier, vendor or other Person, whether for cash, credit or otherwise, unless (a) such return is in the Ordinary Course of Business; (b) no Default, Event of Default or Revolver Overadvance exists or would result therefrom; (c) Agent is promptly notified if the aggregate Value of all Inventory returned in any month exceeds $375,000; and (d) any payment received by an Obligor for a return is promptly remitted to Agent for application to the Obligations.

 

8.3.3.                  Acquisition, Sale and Maintenance.  No Obligor shall acquire or accept any Inventory on consignment or approval, and shall take all steps to assure that all Inventory is produced in accordance with Applicable Law, including the FLSA.  No Obligor shall sell any Inventory on consignment or approval or any other basis under which the customer may return or require an Obligor to repurchase such Inventory.  Obligors shall use, store and maintain all Inventory with reasonable care and caution, in accordance with applicable standards of any insurance and in conformity with all Applicable Law, and shall make current rent payments (within applicable grace periods provided for in leases) at all locations where any Collateral is located.

 

8.4.                            Administration of Equipment.

 

8.4.1.                  Records and Schedules of Equipment.  Each Obligor shall keep accurate and complete records of its Equipment, including kind, quality, quantity, cost, acquisitions and dispositions thereof, and shall submit to Agent, on such periodic basis as Agent may request, a current schedule thereof, in form satisfactory to Agent.  Promptly upon request, Obligors shall deliver to Agent evidence of their ownership or interests in any Equipment.

 

8.4.2.                  Dispositions of Equipment.  No Obligor shall sell, lease or otherwise dispose of any Equipment, without the prior written consent of Agent, other than (a) a Permitted Asset Disposition; and (b) replacement of Equipment that is worn, damaged or obsolete with Equipment of like function and value, if the replacement Equipment is acquired substantially contemporaneously with such disposition and is free of Liens (other than Permitted Liens).

 

8.4.3.                  Condition of Equipment.  The Equipment is in good operating condition and repair, and all necessary replacements and repairs have been made so that the value and operating efficiency of the Equipment is preserved at all times, reasonable wear and tear excepted.  Each Obligor shall ensure that the Equipment is mechanically and structurally sound, and capable of performing the functions for which it was designed, in accordance with manufacturer specifications.  No Obligor shall permit any Equipment to become affixed to real Property unless any landlord or mortgagee delivers a Lien Waiver.

 

8.5.                            Administration of Deposit Accounts.  Schedule 8.5 sets forth all Deposit Accounts maintained by Obligors, including all Dominion Accounts.  Each Obligor shall take all actions necessary to establish Agent’s control over each such Deposit Account (other than Excluded Deposit Accounts).  Each Obligor shall be the sole account holder of each Deposit Account and shall not allow any Person (other than Agent) to have control over a Deposit Account or any Property deposited therein.  Each Obligor shall promptly notify Agent of any opening or closing of a Deposit Account and, with the consent of Agent, will amend Schedule 8.5 to reflect same.

 

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8.6.                            Administration of Intellectual Property.

 

8.6.1.                  Records and Schedules of Intellectual Property.  Each Obligor shall keep accurate and complete records of its Intellectual Property, including registrations, terminations, licenses, acquisitions and dispositions thereof, and shall submit to Agent, on such periodic basis as Agent may request, a current schedule thereof, in form reasonably satisfactory to Agent.  Promptly upon request (and in any event within three (3) Business Days), Obligors shall deliver to Agent evidence of their ownership or interests in any Intellectual Property, including proof of registrations thereof.

 

8.6.2.                  Dispositions of Intellectual Property.  No Obligor or Subsidiary (including any Foreign Subsidiary) shall sell, lease or otherwise dispose of any Intellectual Property, without the prior written consent of Agent, other than a Permitted Asset Disposition.

 

8.7.                            General Provisions.

 

8.7.1.                  Location of Collateral.  All tangible items of Collateral, other than Inventory in transit, shall at all times be kept by Obligors at the business locations set forth in Schedule 8.7.1, except that Obligors may (a) make sales or other dispositions of Collateral in accordance with Section 10.2.6; and (b) move Collateral to another location in the United States or Canada, as applicable, upon 30 Business Days prior written notice to Agent.

 

8.7.2.                  Insurance of Collateral; Condemnation Proceeds.

 

(a)                                 Each Obligor shall maintain insurance with respect to the Collateral, covering casualty, hazard, theft, malicious mischief, flood and other risks, in amounts, with endorsements and with insurers (with a Best’s Financial Strength Rating of at least A_, unless otherwise approved by Agent) satisfactory to Agent.  All proceeds under each policy shall be payable to Agent.  From time to time upon request, Obligors shall deliver to Agent the originals or certified copies of its insurance policies and updated flood plain searches.  Unless Agent shall agree otherwise, each policy shall include satisfactory endorsements (i) showing Agent as loss payee; (ii) requiring 30 days prior written notice to Agent in the event of cancellation of the policy for any reason whatsoever; and (iii) specifying that the interest of Agent shall not be impaired or invalidated by any act or neglect of any Obligor or the owner of the Property, nor by the occupation of the premises for purposes more hazardous than are permitted by the policy.  If any Obligor fails to provide and pay for any insurance, Agent may, at its option, but shall not be required to, procure the insurance and charge Obligors therefor.  Each Obligor agrees to deliver to Agent, promptly as rendered, copies of all reports made to insurance companies.  While no Event of Default exists, Obligors may settle, adjust or compromise any insurance claim, as long as the proceeds are delivered to Agent.  If an Event of Default exists, only Agent shall be authorized to settle, adjust and compromise such claims.

 

(b)                                 Any proceeds of insurance (other than proceeds from workers’ compensation or D&O insurance) and any awards arising from condemnation of any Collateral shall be paid to Revolver Agent or to Agent in accordance with the Intercreditor Agreement.

 

(c)                                  If requested by Obligors in writing within 15 days after Agent’s receipt of any insurance proceeds or condemnation awards relating to any loss or destruction of Term Priority Collateral (as such term is defined in the Intercreditor Agreement), Obligors may use such proceeds or awards to repair or replace such Term Priority Collateral (and until so used, the proceeds shall be held by Revolver Agent or Agent as Cash Collateral) as long as (i) no Event of Default exists; (ii) such repair or replacement is undertaken and concluded within 180 days, in accordance with plans reasonably satisfactory to Agent; (iii) replacement buildings are constructed on the sites of the original casualties and are of comparable size, quality and utility to the destroyed buildings; (iv) the repaired or replaced Property is free of Liens, other than Permitted Liens that are not Purchase Money Liens; (v) Borrowers comply with disbursement procedures for such repair or replacement as Agent may reasonably require;

 

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and (vi) the aggregate amount of such proceeds or awards from any single Casualty Event or condemnation does not exceed $250,000.

 

8.7.3.                  Protection of Collateral.  All expenses of protecting, storing, warehousing, insuring, handling, maintaining and shipping any Collateral, all Priority Payables and Taxes payable with respect to any Collateral (including any sale thereof), and all other payments required to be made by Agent to any Person to realize upon any Collateral, shall be borne and paid by Obligors.  Agent shall not be liable or responsible in any way for the safekeeping of any Collateral, for any loss or damage thereto (except for reasonable care in its custody while Collateral is in Agent’s actual possession), for any diminution in the value thereof, or for any act or default of any warehouseman, carrier, forwarding agency or other Person whatsoever, but the same shall be at Obligors’ sole risk.

 

8.7.4.                  Defense of Title.  Each Obligor shall defend its title to Collateral and Agent’s Liens therein against all Persons, claims and demands, except Permitted Liens.

 

8.8.                            Power of Attorney.  Each Obligor hereby irrevocably constitutes and appoints Agent (and all Persons designated by Agent) as such Obligor’s true and lawful attorney (and agent-in-fact) for the purposes provided in this Section.  Agent, or Agent’s designee, may, without notice and in either its or an Obligor’s name, but at the cost and expense of Obligors:

 

(a)                                 Endorse an Obligor’s name on any Payment Item remitted to or deposited in any lockbox or Dominion Account; and

 

(b)                                 During an Event of Default, (i) notify any Account Debtors of the assignment of their Accounts, demand and enforce payment of Accounts by legal proceedings or otherwise, and generally exercise any rights and remedies with respect to Accounts; (ii) settle, adjust, modify, compromise, discharge or release any Accounts or other Collateral, or any legal proceedings brought to collect Accounts or Collateral; (iii) sell or assign any Accounts and other Collateral upon such terms, for such amounts and at such times as Agent deems advisable; (iv) collect, liquidate and receive balances in Deposit Accounts or investment accounts, and take control, in any manner, of proceeds of Collateral; (v) prepare, file and sign an Obligor’s name to a proof of claim or other document in a bankruptcy of an Account Debtor, or to any notice, assignment or satisfaction of Lien or similar document; (vi) receive, open and dispose of mail addressed to an Obligor, and notify postal authorities to deliver any such mail to an address designated by Agent; (vii) endorse any Chattel Paper, Document, Instrument, bill of lading, or other document or agreement relating to any Accounts, Inventory or other Collateral; (viii) use an Obligor’s stationery and sign its name to verifications of Accounts and notices to Account Debtors; (ix) use information contained in any data processing, electronic or information systems relating to Collateral; (x) make and adjust claims under insurance policies; (xi) take any action as may be necessary or appropriate to obtain payment under any letter of credit, banker’s acceptance or other instrument for which an Obligor is a beneficiary; and (xii) take all other actions as Agent deems appropriate to fulfill any Borrower’s obligations under the Loan Documents.

 

SECTION 9.                                           REPRESENTATIONS AND WARRANTIES

 

9.1.                            General Representations and Warranties.  To induce Agent and Lenders to enter into this Agreement and to make available the Commitments and Loans, each Obligor represents and warrants that:

 

9.1.1.                  Organization and Qualification.  Each Obligor and Subsidiary (other than any Immaterial Foreign Subsidiary) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization or formation.  Each Obligor and Subsidiary is duly qualified, authorized to do business and in good standing as a foreign corporation in each jurisdiction where failure to be so qualified could reasonably be expected to have a Material Adverse Effect.

 

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9.1.2.                  Power and Authority.  Each Obligor is duly authorized to execute, deliver and perform its obligations under the Loan Documents.  The execution, delivery and performance of the Loan Documents have been duly authorized by all necessary action, and do not (a) require any consent or approval of any holders of Equity Interests of any Obligor, except those already obtained; (b) contravene the Organic Documents of any Obligor; (c) violate or cause a default under any Applicable Law or Material Contract; or (d) result in or require the imposition of any Lien (other than Permitted Liens) on any Obligor’s Property.

 

9.1.3.                  Enforceability.  Each Loan Document is a legal, valid and binding obligation of each Obligor party thereto, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.

 

9.1.4.                  Capital Structure.  Schedule 9.1.4 shows (a) for each Obligor and Subsidiary, its name, jurisdiction of organization or formation and any agreement binding on the holders of its Equity Interests with respect to such Equity Interests, and (b) for each Subsidiary of the Company, its authorized and issued Equity Interests and the names of the holders of its Equity Interests.  Except as disclosed on Schedule 9.1.4, in the five years preceding the Closing Date, no Obligor or Subsidiary has acquired any substantial assets from any other Person nor been the surviving entity in a merger or combination.  Each Obligor has good title to its Equity Interests in its Subsidiaries, subject only to Permitted Liens, and all such Equity Interests are duly issued, fully paid and non-assessable.  Except for the Equity Interests issued under the Company’s 2006 Performance Equity Plan, the Company’s 2012 Incentive Compensation Plan, and inducement grants to new employees approved by the Compensation Committee of the Company’s Board of Directors, there are no outstanding purchase options, warrants, subscription rights, agreements to issue or sell, convertible interests, phantom rights or powers of attorney relating to Equity Interests of any Obligor or Subsidiary.

 

9.1.5.                  Title to Properties; Priority of Liens.  Each Obligor and Subsidiary has good and marketable title to (or valid leasehold interests in) all of its Real Estate, and good title to all of its personal Property, including all Property reflected in any financial statements delivered to Agent or Lenders, in each case free of Liens except Permitted Liens.  Except as otherwise indicated on Schedule 9.1.5, each Obligor and Subsidiary has paid and discharged all lawful claims that, if unpaid, could become a Lien on its Properties, other than Permitted Liens.  The provisions of the Security Documents, together with such filings and other actions required to be taken hereby or by the applicable Security Documents (including the delivery to the Agent of any pledged securities (as may be required to be delivered pursuant to the applicable Security Documents together with stock powers or other appropriate instruments of transfer executed in blank form), are effective to create in favor of the Agent, for the benefit of the Secured Parties referred to therein, a legal, valid and enforceable security interest in and first priority Lien (except for those Permitted Liens that have priority in such Collateral by operation of law and except as to the ABL Priority Collateral, for the Liens of the Revolver Agent to the extent provided in the Intercreditor Agreement) on all right title and interest of the respective Obligors in the Collateral described therein, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law, except (a) as otherwise contemplated hereby or under any other Loan Documents, and (b) except as to specific items of Collateral as to which Agent may determine, in consultation with the Borrower Agent, not to perfect its security interest therein based on the value thereof relative to the costs of such perfection.

 

9.1.6.                  Accounts.  Agent may rely, in determining which Accounts are Eligible Accounts, on all statements and representations made by Obligors with respect thereto.  Obligors warrant, with respect to each Account at the time it is shown as an Eligible Account in a Revolver Borrowing Base Certificate and Term Loan Borrowing Base Certificate, that:

 

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(a)                                 it is genuine and in all respects what it purports to be, and is not evidenced by a judgment;

 

(b)                                 it arises out of a completed, bona fide sale and delivery of goods in the Ordinary Course of Business, and substantially in accordance with any purchase order, contract or other document relating thereto;

 

(c)                                  it is for a sum certain, maturing as stated in the invoice covering such sale, a copy of which has been furnished or is available to Agent on request;

 

(d)                                 it is not subject to any offset, Lien (other than Agent’s Lien), defense, dispute, counterclaim or other adverse condition except as arising in the Ordinary Course of Business and disclosed to Agent and is not subject to any discount or deduction except discounts and deductions arising in the Ordinary Course of Business consistent with past practices or otherwise disclosed in writing to Agent; and it is absolutely owing by the Account Debtor, without contingency in any respect;

 

(e)                                  no purchase order, agreement, document or Applicable Law restricts assignment of the Account to Agent (regardless of whether, under the UCC and/or PPSA, as applicable, the restriction is ineffective), and the applicable Obligor is the sole payee or remittance party shown on the invoice;

 

(f)                                   no extension, compromise, settlement, modification, credit, deduction or return has been authorized with respect to the Account, except discounts or allowances granted in the Ordinary Course of Business for prompt payment that are reflected on the face of the invoice related thereto and in the reports submitted to Agent hereunder; and

 

(g)                                  to the best of Obligors’ knowledge, (i) there are no facts or circumstances that are reasonably likely to impair the enforceability or collectibility of such Account; (ii) the Account Debtor had the capacity to contract when the Account arose, continues to meet the applicable Obligor’s customary credit standards, is Solvent, is not contemplating or subject to an Insolvency Proceeding, and has not failed, or suspended or ceased doing business; and (iii) there are no proceedings or actions threatened or pending against any Account Debtor that could reasonably be expected to have a material adverse effect on the Account Debtor’s financial condition.

 

9.1.7.                  Financial Statements.  The consolidated and consolidating balance sheets, and related statements of income, cash flow and shareholder’s equity, of Company and Subsidiaries that have been and are hereafter delivered to Agent and Lenders, are prepared in accordance with GAAP (or in the case of the Canadian Guarantor, GAAP as in effect in Canada, as and to the extent applicable)(except as otherwise noted therein and, in the case of unaudited financial statements, subject to the absence of footnotes and normal year-end adjustments), and fairly present the financial positions and results of operations of Company and Subsidiaries at the dates and for the periods indicated.  All projections delivered from time to time to Agent and Lenders have been prepared in good faith, based on reasonable assumptions in light of the circumstances at such time provided, that, with respect to projected financial information, it being understood and agreed that (a) any financial or business projections furnished by the Borrowers are subject to significant uncertainties and contingencies, which may be beyond the control of the Borrowers, (b) no assurance is given by the Borrowers that the results of such projections will be realized and (c) the actual results may differ from the results of such projections and such differences may be material.  Except as otherwise disclosed by the Company in its filings with the Securities and Exchange Commission, or any other similar applicable Governmental Authority in any other applicable jurisdiction, since December 30, 2017, there has been no change in the business, assets, Properties, liabilities, operations or financial condition of the Obligors, taken as a whole, that could reasonably be expected to have a Material Adverse Effect.  No financial statement delivered to Agent or Lenders at any

 

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time contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make such statement not materially misleading.  The Obligors, taken as a whole, are Solvent.

 

9.1.8.                  Surety Obligations.  Except as disclosed on Schedule 9.1.8, no Obligor or Subsidiary is obligated as surety or indemnitor under any bond or other Material Contract that assures payment or performance of any obligation of any Person, except as permitted hereunder.

 

9.1.9.                  Taxes.  Each Obligor and Subsidiary (other than any Immaterial Foreign Subsidiary) has filed all federal, state, provincial, territorial, and other material tax returns and other reports that it is required by law to file, and has paid, or made provision for the payment of, all material Taxes and Priority Payables upon it, its income and its Properties that are due and payable, except to the extent being Properly Contested.  The provision for Taxes on the books of each Obligor and Subsidiary is adequate for all years not closed by applicable statutes, and for its current Fiscal Year.

 

9.1.10.           Brokers.  Except as disclosed on Schedule 9.1.10, there are no brokerage commissions, finder’s fees or investment banking fees payable in connection with any transactions contemplated by the Loan Documents.

 

9.1.11.           Intellectual Property. Each Obligor and Subsidiary owns or has the lawful right to use all Intellectual Property, licenses, permits and other authorizations reasonably necessary for the conduct of its business as currently conducted, and does not infringe upon misuse, misappropriate or violate any rights held by any other Person except for such infringements, misuses, misappropriations or violations that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.  Except as disclosed on Schedule 9.1.11, there is no pending or, to any Obligor’s or Subsidiary’s knowledge, threatened Intellectual Property Claim with respect to any Obligor, any Subsidiary or any of their Property (including any Intellectual Property) that, if adversely determined, could reasonably be expected to have a Material Adverse Effect.  Except as disclosed on Schedule 9.1.11, no Obligor or Subsidiary pays or owes any Royalty or other compensation to any Person with respect to any Intellectual Property.  All Intellectual Property owned, licensed by, or otherwise subject to any interests of, any Obligor or Subsidiary is shown on Schedule 9.1.11.

 

9.1.12.           Governmental Approvals.  Each Obligor and Subsidiary has, is in compliance with, and is in good standing with respect to, all Governmental Approvals necessary to conduct its business and to own, lease and operate its Properties, except where noncompliance could not reasonably be expected to have a Material Adverse Effect.  All necessary import, export or other licenses, permits or certificates for the import or handling of any goods or other Collateral have been procured and are in effect, and Obligors and Subsidiaries have complied with all foreign and domestic laws with respect to the shipment and importation of any goods or Collateral, except where noncompliance could not reasonably be expected to have a Material Adverse Effect.

 

9.1.13.           Compliance with Laws.

 

(a)                                 Each Obligor and Subsidiary has duly complied, and its Properties and business operations are in compliance, in all material respects with all Applicable Law, except where noncompliance could not reasonably be expected to have a Material Adverse Effect.  There have been (i) no citations, notices of noncompliance or requests for information issued to any Obligor by the CPSC within the immediately preceding three years other than those described on Schedule 9.1.13, and (ii) no notices or orders of material noncompliance issued to any Obligor by any other Governmental Authority under any Applicable Law.  To the best knowledge of the Obligors, no Inventory has been produced by Obligors in violation of the FLSA or in violation of any CPSC Regulations.  The Obligors have current and effective certificates of compliance for each children’s product and each children’s toy that the Obligors sell, manufacture or distribute.  The Obligors conduct current testing of all children’s products and children’s toys that the Obligors sell, manufacture or distribute in accordance with

 

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Applicable Law.  Except as described on Schedule 9.1.13, there are no pending or, to the knowledge of the Obligors, threatened (in writing), recalls, or regulatory actions or investigations by the CPSC with respect to the Obligors or any of the products or toys that the Obligors sell, manufacture or distribute.  To the best knowledge of the Obligors, none of the products or toys that the Obligors sell, manufacture or distribute contains a defect that could create a substantial product hazard or could create an unreasonable risk of serious injury or death.  The Obligors have complied in a timely manner with all reporting requirements under the CPSC Regulations.  To the best knowledge of the Obligors, the Obligors have not materially misrepresented in any report filed by the Obligors with the CPSC, the scope of the hazards posed by any toys or products that the Obligors sell, manufacture or distribute or the numbers of incidents or injuries that have been caused by or that have been alleged to have been caused by such toys and products.

 

(b)                           Anti-Terrorism Laws, Etc. Without limiting the foregoing, no Obligor or, to the knowledge of the Borrowers, any of their respective Affiliates (i) is in violation of any Anti-Terrorism Law, (ii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, any of the prohibitions set forth in any Anti-Terrorism Law, or (iii) is a Blocked Person. No Obligor or, to the knowledge of the Borrowers, any of their respective Affiliates (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (y) deals in, or otherwise engages in any transaction relating to, any property or interest in property blocked pursuant to Executive Order No. 13224, any similar executive order or other Anti- Terrorism Law.

 

(c)                            Anti-Corruption Laws, Etc. No Obligor or, to the knowledge of the Borrowers, any of their respective Affiliates or any officer, director, or employee, or agent, representative, sales intermediary of such Person, in each case, acting on behalf of any Obligor or any of its Restricted Subsidiaries in violation of any applicable Anti-Corruption Law. None of the Obligors or any of their Affiliates has been convicted of violating any Anti-Corruption Laws or subjected to any investigation by a Governmental Authority for violation of any applicable Anti-Corruption Laws. There is no material suit, litigation, arbitration, claim, audit, action, proceeding or investigation pending or, to the knowledge of any executive officer of the Borrowers, threatened (in writing) against or affecting the Obligors or any of their Affiliates related to any applicable Anti-Corruption Law, before or by any Governmental Authority. None of the Obligors has conducted or initiated any internal investigation or made a voluntary, directed, or involuntary disclosure to any Governmental Authority with respect to any alleged act or omission arising under or relating to any noncompliance with any Anti-Corruption Law. In the three (3) years prior to the Closing Date, none of the Obligors has received any written notice, request or citation for any actual or potential noncompliance with any of the foregoing.

 

9.1.14.           Compliance with Environmental Laws.  Except with respect to any matters that, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect and disclosed on Schedule 9.1.14, no Obligor’s or Subsidiary’s past or present operations, Real Estate or other Properties are subject to any federal, state, provincial, municipal or local investigation to determine whether any remedial action is needed to address any environmental pollution, hazardous material or environmental clean-up.  No Obligor or Subsidiary has received any Environmental Notice.  No Obligor or Subsidiary has any contingent liability with respect to any Environmental Release, environmental pollution or hazardous material on any Real Estate now or previously owned, leased or operated by it, except where such liability could not reasonably be expected to result in a Material Adverse Effect.

 

9.1.15.           Burdensome Contracts.  No Obligor or Subsidiary is party or subject to any Restrictive Agreement, except as shown on Schedule 9.1.15.  No such Restrictive Agreement prohibits the execution, delivery or performance of any Loan Document by an Obligor.

 

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9.1.16.           Litigation.  Except as shown on Schedule 9.1.16, there are no proceedings or investigations pending or, to any Obligor’s knowledge, threatened in writing against any Obligor or Subsidiary, or any of their businesses, operations, Properties, prospects or conditions, that (a) relate to any Loan Documents or transactions contemplated thereby; or (b) could reasonably be expected to have a Material Adverse Effect if determined adversely to any Obligor or Subsidiary.  Except as shown on such Schedule, no Obligor has a Commercial Tort Claim (other than, as long as no Default or Event of Default exists, a Commercial Tort Claim for less than $100,000).  No Obligor or Subsidiary is in default with respect to any order, injunction or judgment of any Governmental Authority.

 

9.1.17.           No Defaults.  No event or circumstance has occurred or exists that constitutes a Default or Event of Default.  No Obligor or Subsidiary is in default, and, to the knowledge of the Obligors and each of their Subsidiaries, no event or circumstance has occurred or exists that with the passage of time or giving of notice would constitute a material default, under any Material Contract or in the payment of any Borrowed Money in excess of $500,000.  To the best knowledge of the Obligors, there is no basis upon which any party (other than an Obligor or Subsidiary) could terminate a Material Contract prior to its scheduled termination date.

 

9.1.18.           ERISA.  Except as disclosed on Schedule 9.1.18:

 

(a)                                 Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code, and other federal and state laws.  Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the knowledge of Borrowers, nothing has occurred which would prevent, or cause the loss of, such qualification.  Each Obligor and ERISA Affiliate has met all applicable requirements under the Code, ERISA and the Pension Protection Act of 2006, and no application for a waiver of the minimum funding standards or an extension of any amortization period has been made with respect to any Plan.

 

(b)                                 There are no pending or, to the knowledge of Borrowers, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect.  There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted in or could reasonably be expected to have a Material Adverse Effect.

 

(c)                                  (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) no Obligor or ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) no Obligor or ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; (v) no Obligor or ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA; and (vi) as of the most recent valuation date for any Pension Plan or Multiemployer Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is at least 60%, and no Obligor or ERISA Affiliate knows of any fact or circumstance that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below 60% as of such date.

 

(d)                                 With respect to any Foreign Plan, (i) all employer and employee contributions required by law or by the terms of the Foreign Plan have been made, or, if applicable, accrued, in accordance with normal accounting practices; (ii) the fair market value of the assets of each funded Foreign Plan, the liability of each insurer for any Foreign Plan funded through insurance, or the book reserve established for any Foreign Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations with respect to all current and former participants in such

 

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Foreign Plan according to the actuarial assumptions and valuations most recently used to account for such obligations in accordance with applicable generally accepted accounting principles; and (iii) it has been registered as required and has been maintained in good standing with applicable regulatory authorities.

 

(e)                                  (i) each Obligor is in compliance with the requirements of the PBA and other Applicable Laws with respect to each Canadian Pension Plan, except where the failure to so comply would not have a Material Adverse Effect, (ii) to the knowledge of the Obligors, no fact or situation exists that may reasonably be expected to adversely affect the registered status any Canadian Pension Plan which could reasonably be expected to result in a Material Adverse Effect, (iii) no Obligor maintains, sponsors or contributes to any Canadian Defined Benefit Pension Plan other than those consented to pursuant to Section 10.2.18 hereof, (iv) no Termination Event has occurred in respect of which a Canadian Priority Payables Reserve has not been taken; (v) no Lien has arisen in respect of Obligors or their property in connection with any Canadian Pension Plan (save for contribution amounts not yet due) which could reasonably be expected to result in a Material Adverse Effect; and (vi) all required contributions of any Obligor to each Canadian Pension Plan have been made when due under Applicable Laws (except for contributions, the outstanding status of which cannot be reasonably expected to result in a Material Adverse Effect).

 

(f)                                   Neither SI UK nor any of its Subsidiaries is or has at any time been (i) an employer (for the purposes of sections 38 to 51 of the Pensions Act 2004) of an occupational pension scheme which is not a money purchase scheme (both terms as defined in the Pensions Schemes Act 1993); or (ii) “connected” with or an “associate” of (as those terms are used in sections 38 and 43 of the Pensions Act 2004) such an employer.

 

9.1.19.           Trade Relations.  Except as set forth on the Company’s filings with the Securities and Exchange Commission, there exists no actual or threatened (in writing) termination, limitation or modification of any business relationship between any Obligor or Subsidiary and any customer or supplier, or any group of customers or suppliers, who individually or in the aggregate are material to the business of such Obligor or Subsidiary.  There exists no condition or circumstance that could reasonably be expected to materially impair the ability of any Obligor or Subsidiary to conduct its business at any time hereafter in substantially the same manner as conducted on the Closing Date.

 

9.1.20.           Labor Relations.  Except as described on Schedule 9.1.20, no Obligor or Subsidiary is party to or bound by any collective bargaining agreement, management agreement or consulting agreement (other than design services consulting agreements and other consulting agreements that have been disclosed to Agent).  Except as would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, there are no material grievances, disputes or controversies with any union or other organization of any Obligor’s or Subsidiary’s employees, or, to any Obligor’s knowledge, any asserted or threatened strikes, work stoppages or demands for collective bargaining.

 

9.1.21.           Payable Practices.  No Obligor or Subsidiary has made any material change in its historical accounts payable practices from those in effect on the Closing Date.

 

9.1.22.           Not a Regulated Entity.  No Obligor is (a) an “investment company” or a “person directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of the Investment Company Act of 1940; or (b) subject to regulation under the Federal Power Act, the Interstate Commerce Act, any public utilities code or any other Applicable Law regarding its authority to incur Debt.

 

9.1.23.           Margin Stock.  No Obligor or Subsidiary 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 Loan proceeds or Letters of Credit will be used by Obligors to purchase or carry, or to

 

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reduce or refinance any Debt incurred to purchase or carry, any Margin Stock or for any related purpose governed by Regulations T, U or X of the Board of Governors.

 

9.1.24.           OFAC.  None of (i) Borrower, Subsidiary or any director, officer, or employee, or (ii) to the knowledge of the Borrower, any agent, affiliate or representative thereof, is or is owned or controlled by any individual or entity that is currently the subject or target of any Sanction or is located, organized or resident in a Designated Jurisdiction.

 

9.1.25.           Beneficial Ownership Certification.  As of the Closing Date, the information included in the Beneficial Ownership Certification, if applicable, is true and correct in all respects.

 

9.1.26.           Centre of Main Interests and Establishments.  For the purposes of regulation (EU) 2015/848 of 20 May 2015 on insolvency proceedings (recast) (the “Regulation”), each of the UK Guarantors’ centre of main interest (as that term is used in Article 3(l) of the Regulation) is situated in its jurisdiction of incorporation and none of them have an “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction.

 

9.1.27.           EEA Financial Institutions.  No Obligor is an EEA Financial Institution.

 

9.2.                            Complete Disclosure.  No Loan Document contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not materially misleading.  There is no fact or circumstance that any Obligor has failed to disclose to Agent in writing that could reasonably be expected to have a Material Adverse Effect.

 

SECTION 10.                                    COVENANTS AND CONTINUING AGREEMENTS

 

10.1.                     Affirmative Covenants.  As long as any Commitments or Obligations are outstanding, each Obligor shall, and shall cause each Subsidiary to:

 

10.1.1.           Inspections; Appraisals.

 

(a)                                 Permit Agent from time to time, subject (except when an Event of Default exists) to reasonable notice and normal business hours, to visit and inspect the Properties of any Obligor or Subsidiary, inspect, audit and make extracts from any Obligor’s or Subsidiary’s books and records, and discuss with its officers, employees, agents, advisors and independent accountants such Obligor’s or Subsidiary’s business, financial condition, assets, prospects and results of operations.  Lenders may participate in any such visit or inspection, at their own expense.  Neither Agent nor any Lender shall have any duty to any Obligor to make any inspection, nor to share any results of any inspection, appraisal or report with any Obligor.  Obligors acknowledge that all inspections, appraisals and reports are prepared by Agent and Lenders for their purposes, and Obligors shall not be entitled to rely upon them.  This Section 10.1.1(a) shall not apply to Immaterial Foreign Subsidiaries unless an Event of Default has occurred and is continuing.

 

(b)                                 Upon the request of the Agent after reasonable prior notice, permit the Agent or professionals (including investment bankers, consultants, accountants and lawyers) retained by the Agent to conduct field examinations and other evaluations, including, without limitation, of (1) the Borrower Agent’s practices in the computation of the Revolver Borrowing Base and Term Loan Borrowing Base, (2) the assets included in the Revolver Borrowing Base and Term Loan Borrowing Base and related financial information such as, but not limited to, sales, gross margins, payables, accruals and reserves, and (3) the Obligors’ business plan and cash flows; provided, that so long as Revolver Agent conducts field examinations and Inventory appraisals at the times and with the frequency provided in the Revolver Loan Agreement, and thereafter promptly provides Agent with copies of such examinations and appraisals, then Agent shall not conduct its own field examinations and/or appraisals of Inventory (it being understood

 

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and agreed that the Agent and Lenders shall receive and may rely on any such appraisals conducted pursuant to the Revolver Loan Agreement); provided, further in the event Revolver Agent fails to conduct field examinations and Inventory appraisals at the times and with the frequency provided in the Revolver Loan Agreement, and/or fails to promptly provide Agent with copies of such examinations and appraisals, then Agent shall be permitted to conduct its own field examinations and/or appraisals of Inventory (in each case subject to the Intercreditor Agreement).  Borrowers further agree to pay Agent’s then standard charges for examination activities, including the standard charges of Agent’s internal examination and appraisal groups, as well as the reasonable and documented charges of any third party used for such purposes. Borrowers shall also reimburse Agent for all reasonable charges, costs and expenses of Agent in connection with the conduct of independent third party appraisals of Term Priority Collateral, as follows: two (2) Intellectual Property appraisals per Loan Year, and two (2) Equipment appraisals per Loan Year; provided, however, that during any Increased Field Exam/Appraisal Period, the Borrowers shall reimburse Agent for up to: three (3) appraisals of Intellectual Property, and three (3) appraisals of Equipment per Loan Year, and (ii) if a field examination or appraisal is initiated during an Event of Default, all charges, costs and expenses therefor shall be reimbursed by Borrowers without regard to any such limits.  Notwithstanding the foregoing, in addition to the field examinations and appraisals described above, the Agent may have additional field examinations and appraisals conducted (x) as it in its discretion deems necessary or appropriate at its own expense, and (y) if required by Law or if an Event of Default shall have occurred and be continuing, at the Borrowers’ expense. No calculation of the Revolver Borrowing Base shall include Collateral acquired in a Permitted Acquisition or otherwise outside the Ordinary Course of Business until completion of applicable field examinations and appraisals reasonably satisfactory to Agent.

 

10.1.2.           Financial and Other Information.  Keep adequate records and books of account with respect to its business activities, in which proper entries are made in accordance with GAAP reflecting all financial transactions; and furnish to Agent and Lenders:

 

(a)                                 as soon as available, and in any event within 90 days after the close of each Fiscal Year, balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year, on consolidated and consolidating bases for Obligors and Subsidiaries, which consolidated statements shall be audited and certified (without qualification except to the extent any qualification results solely from a current maturity of any Indebtedness) by a firm of independent certified public accountants of recognized standing selected by Borrowers and reasonably acceptable to Agent, it being agreed that RSM US, LLP is acceptable to Agent, and shall set forth in comparative form corresponding figures for the preceding Fiscal Year and other information reasonably acceptable to Agent;

 

(b)                                 as soon as available, and in any event within 45 days after the end of each Fiscal Quarter ending thereafter, unaudited balance sheets as of the end of such quarter and the related statements of income and cash flow for such Fiscal Quarter and for the portion of the Fiscal Year then elapsed, on consolidated and, to the extent applicable, consolidating bases for Obligors and Subsidiaries, setting forth in comparative form corresponding figures for the preceding Fiscal Year and certified by a Senior Officer of Obligors as prepared in accordance with GAAP and fairly presenting in all material respects the financial position and results of operations for such Fiscal Quarter and period, subject to normal year-end adjustments and the absence of footnotes;

 

(c)                                  as soon as available, and in any event within 30 days after the end of each month, unaudited balance sheets as of the end of the most recent Fiscal Month and the related statements of income and cash flow for such Fiscal Month and for the portion of the Fiscal Year then elapsed, on consolidated and, to the extent applicable, consolidating bases for Obligors and Subsidiaries, setting forth in each case in comparative form the figures for (A) such period set forth in the projections (i) delivered to Agent in the course of its pre-Closing Date underwriting, and (ii) delivered following the Closing Date pursuant to Section 10.1.2(f) of this Agreement, (B) the corresponding Fiscal Month of the previous

 

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Fiscal Year and (C) the corresponding portion of the previous Fiscal Year, all in reasonable detail, such consolidated statements to be certified by a Senior Officer of the Borrower Agent as fairly presenting in all material respects the financial condition, results of operations and cash flows of the Borrower Agent and its Subsidiaries as of the end of such Fiscal Month in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes;

 

(d)                                 concurrently with delivery of financial statements under clauses (a), (b) and (c) above, or more frequently if requested by Agent while a Default or Event of Default exists, a Compliance Certificate executed by the chief financial officer of Borrower Agent (for the avoidance of doubt, regardless of whether a Financial Covenant Testing Period shall be in effect, Obligors shall be required to deliver a Compliance Certificate concurrently with the delivery of all financial statements under clauses (a), (b) and (c) above, which Compliance Certificate shall contain a detailed calculation of the EBITDA and the Fixed Charge Coverage Ratio as of the Fiscal Month most recently ended, which calculation shall be deemed to have been provided solely for informational purposes if a Financial Covenant Testing Period shall not be in effect at such time);

 

(e)                                  concurrently with delivery of financial statements under clause (a) above, copies of all management letters and other material reports submitted to any Obligor(s) by their accountants in connection with such financial statements;

 

(f)                                   as soon as available, but in any event no later than thirty (30) days after the last day of each Fiscal Year, projections of Borrowers’ consolidated balance sheets, results of operations, cash flow and Availability for such Fiscal Year, on a Fiscal Month by Fiscal Month basis;

 

(g)                                  at Agent’s request, a listing of each Obligor’s trade payables, specifying the trade creditor and balance due, and a detailed trade payable aging, all in form reasonably satisfactory to Agent;

 

(h)                                 promptly after the sending or filing thereof, copies of any proxy statements, financial statements or reports that any Borrower has made generally available to its shareholders; copies of any regular, periodic and special reports or registration statements or prospectuses that any Borrower files with the Securities and Exchange Commission or any other Governmental Authority, or any securities exchange; and copies of any press releases or other statements made available by a Borrower to the public concerning material changes to or developments in the business of such Borrower;

 

(i)                                     promptly after the sending or filing thereof, copies of any annual report to be filed in connection with each Plan and, on the request of the Agent, the most recently filed actuarial valuation report in respect of a Canadian Defined Benefit Pension Plan;

 

(j)                                    as soon as available an in any event with 30 days after the end of each month, a written report containing an analysis by management of the financial results of most recent Fiscal Month;

 

(k)                                 as soon as available, but in any event within thirty (30) days after the end of each Fiscal Year, a report summarizing the insurance coverage (specifying type, amount and carrier) in effect for each Obligor and containing such additional information as the Agent, or any Lender through the Agent, may reasonably specify;

 

(l)                                     promptly upon receipt, copies of any notices and documents received in connection with the Revolver Debt Documents; and

 

(m)                             such other reports and information (financial or otherwise) as Agent may reasonably request from time to time in connection with any Collateral or any Borrower’s, Subsidiary’s or other Obligor’s financial condition or business.

 

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10.1.3.           Notices.  Notify Agent and Lenders in writing, promptly, and in any event within two Business Days, after an Obligor’s obtaining knowledge thereof, of any of the following that affects an Obligor:  (a) the threat in writing or commencement of any proceeding or investigation, whether or not covered by insurance, if an adverse determination could have a Material Adverse Effect; (b) any pending or threatened labor dispute, strike or walkout, or the expiration of any material labor contract; (c) any material default under or termination of a Material Contract; (d) the existence of any Default or Event of Default; (e) any judgment in an amount exceeding $1,000,000; (f) the assertion of any Intellectual Property Claim, if an adverse resolution could have a Material Adverse Effect; (g) any violation or asserted violation (in writing) of any Applicable Law (including ERISA, OSHA, FLSA or any Environmental Laws), if an adverse resolution could have a Material Adverse Effect; (h) any Environmental Release which could reasonably be expected to have a Material Adverse Effect, by an Obligor or on any Property owned, leased or occupied by an Obligor; or receipt of any Environmental Notice; (i) the occurrence of any ERISA Event or Termination Event; (j) the discharge of or any withdrawal or resignation by Borrowers’ independent accountants; (k) any opening of a new office or place of business, at least 30 days prior to such opening; (l) the threat (in writing) or commencement of any regulatory action or investigation by the CPSC with respect to any Obligor or with respect to any product or toy sold, manufactured or distributed by any Obligor; (m) the receipt by any Obligor of any Epidemiological Report, the posting of any notice on SaferProducts.gov, or request for information issued to any Obligor by the CPSC, all with respect to any product or toy sold, manufactured or distributed by any Obligor; (n) the commencement of any voluntary or involuntary recall of any product or toy that the Obligors sell, manufacture or distribute; (o) of any material change in accounting policies or financial reporting practices by any Obligor(s); (p) the filing and/or the enforcement against the Obligors of any Lien for unpaid Taxes or Priority Payables that in the aggregate for all such occurrences exceed $1,000,000; (q) any sale, disposition, or abandonment of any Intellectual Property and/or Equipment, including any such sale, disposition, or abandonment that constitutes a Permitted Asset Disposition hereunder; (r) any sale or transfer of Equity Interest that would constitute a Change of Control under clause (a), (c), (d) or (e) of the definition of Change of Control not less than thirty (30) days prior to the consummation of such sale or transfer, (s) any sale or transfer of a material portion of the assets of any Subsidiary that would constitute a Change of Control under clause (f) of the definition of Change of Control not less than thirty (30) days prior to the consummation of such sale or transfer, (t) any loss, theft, damage or destruction of any Term Priority Collateral in the amount of $50,000 in any single occurrence or $200,000 in the aggregate until the Term Loan Closing Date.

 

Each notice pursuant to this Section 10.1.3 shall be accompanied by a statement of a Senior Officer of the Borrower Agent setting forth details of the occurrence referred to therein and stating what action the Borrower Agent has taken and proposes to take with respect thereto. Each notice pursuant to this Section 10.1.3 shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

 

10.1.4.           Landlord and Storage Agreements.  Upon request, provide Agent with copies of all existing agreements, and promptly after execution thereof provide Agent with copies of all future agreements, between an Obligor and any landlord, warehouseman, processor, shipper, bailee or other Person that owns any premises at which any Collateral may be kept or that otherwise may possess or handle any Collateral.

 

10.1.5.           Compliance with Laws.  Comply with all Applicable Laws, including ERISA, PBA, Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, Anti-Corruption Laws, OFAC, CPSC Regulations and laws regarding collection and payment of Taxes, and maintain all Governmental Approvals necessary to the ownership of its Properties or conduct of its business, unless failure to comply (other than failure to comply with Anti-Terrorism Laws, Anti-Corruption Laws, or OFAC) or maintain could not reasonably be expected to have a Material Adverse Effect.  Without limiting the generality of the foregoing, if any Environmental Release, which could reasonably be expected to have a Material Adverse Effect, occurs at or on any Properties of any Obligor or Subsidiary, it shall act promptly and

 

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diligently to investigate and report to Agent and all appropriate Governmental Authorities the extent of, and to make appropriate remedial action to eliminate, such Environmental Release, whether or not directed to do so by any Governmental Authority.  Maintain adequate testing and other procedures to ensure the safety of all products and toys that the Obligors sell, manufacture or distribute.

 

10.1.6.           Taxes.  Pay and discharge all Priority Payables and Taxes prior to the date on which they become delinquent or penalties attach, unless such Taxes are being Properly Contested.

 

10.1.7.           Insurance.  In addition to the insurance required hereunder with respect to Collateral, maintain insurance with insurers (with a Best Rating of at least A-, unless otherwise approved by Agent) reasonably satisfactory to Agent, (a) with respect to the Properties and business of Obligors and Subsidiaries (other than the Immaterial Foreign Subsidiaries) of such type (including product liability, workers’ compensation, larceny, embezzlement, or other criminal misappropriation insurance), in such amounts, and with such coverages and deductibles as are customary for companies similarly situated; and (b) business interruption insurance in an amount not less than $20,000,000, with deductibles and subject to an insurance assignment reasonably satisfactory to Agent, which shall provide for the proceeds of business interruption insurance to be payable to Agent for application to the Obligations.

 

10.1.8.           Licenses.  Keep each License which constitutes a Material Contract affecting any Collateral (including the manufacture, distribution or disposition of Inventory) or any other material Property of Obligors and Subsidiaries, including any Intellectual Property, in full force and effect; promptly notify Agent of any proposed modification to any such License, or entry into any new License which constitutes a Material Contract, in each case at least 30 days prior to its effective date; pay all Royalties when due; and notify Agent of any material default or breach asserted in writing by any Person to have occurred under any License which constitutes a Material Contract.

 

10.1.9.           Future Subsidiaries.  Promptly (not later than 5 Business Days) notify Agent upon any Person becoming a Subsidiary and, if such Person is not a Foreign Subsidiary (other than a Foreign Subsidiary that is no longer designated a Immaterial Foreign Subsidiary), cause it to guaranty the Obligations in a manner satisfactory to Agent, and to execute and deliver such documents, instruments and agreements and to take such other actions as Agent shall require to evidence and perfect a Lien in favor of Agent on all assets of such Person, including delivery of such legal opinions, in form and substance reasonably satisfactory to Agent, as it shall deem appropriate.

 

10.1.10.    UK Pension Schemes.  Ensure that neither SI UK nor any of its Subsidiaries is or has been at any time an employer (for the purposes of sections 38 to 51 of the Pensions Act 2004) of an occupational pension scheme which is not a money purchase scheme (both terms as defined in the Pension Schemes Act 1993) or “connected” with or an “associate” of (as those terms are used in sections 38 or 43 of the Pensions Act 2004) such an employer.

 

10.1.11.    Ongoing Obligation. Promptly following any request therefor, provide information and documentation reasonably requested by the Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act and the Beneficial Ownership Regulation.

 

10.1.12.    People with Significant Control regime.  The Company and its Subsidiaries shall (a) within the relevant timeframe, comply with any notice it receives pursuant to Part 21A of the Companies Act 2005 from any company incorporated in the United Kingdom whose shares are subject of a Lien in favor of the Agent, and (b) promptly (not later than 5 Business Days) provide the Agent with a copy of that notice.

 

10.1.13.    Centre of Main Interests.  Each UK Guarantor shall maintain its centre of main interests in England and Wales for the purposes of the Regulation.

 

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10.1.14.    Actions Regarding Intellectual Property. If any Event of Default shall have occurred and be continuing, within five (5) Business Days of written notice thereafter from Agent, each Obligor shall make available to Agent, to the extent within such Obligor’s power and authority, such personnel in such Obligor’s employ on the date of the Event of Default as Agent may reasonably designate to permit such Obligor to continue, directly or indirectly, to produce, advertise and sell the products and services sold by such Obligor under the registered Patents, Trademarks and/or Copyrights, and such Persons shall be available to perform their prior functions on Agent’s behalf.

 

10.1.15.    Maintenance of Term Loan Push Down Reserve. At any time the aggregate principal balance of the Term Loans exceeds the Term Loan Borrowing Base, the Borrowers shall take such steps as shall be required under Section 3.9 of the Intercreditor Agreement, including, without limitation, delivery of such Revolver Borrowing Base Certificate(s) and Term Loan Borrowing Base Certificate(s) as may be required by the Revolver Agent and the Agent, to enable the Revolver Agent to implement and maintain the Term Loan Push Down Reserve.

 

10.1.16.    Lender Meetings.  At the request of Agent or of the Required Lenders and upon reasonable prior notice, hold a meeting (at a mutually agreeable location and time or, at the option of the Required Lenders, by conference call; including conduct a meeting within sixty (60) days after the receipt by Agent of the audited financial statements pursuant to Section 10.1.2 for the then most recently ended Fiscal Year of Borrower Agent or on such other date as the Required Lenders and Borrower Agent may agree) with all Lenders who choose to attend such meeting at which meeting shall be reviewed the financial results of the previous Fiscal Year and the financial condition of the Borrower Agent and its Subsidiaries and the projections presented for the current Fiscal Year of Borrower Agent and its Subsidiaries.

 

10.2.                     Negative Covenants.  As long as any Commitments or Obligations are outstanding, each Obligor shall not and shall not permit any Subsidiary (other than Foreign Subsidiaries) to:

 

10.2.1.           Permitted Debt.  Create, incur, guarantee or suffer to exist any Debt, except:

 

(a)                                 the Obligations;

 

(b)                                 the Revolver Debt so long as the principal amount thereunder does not exceed the Maximum ABL Facility Amount (as defined in the Intercreditor Agreement), subject to the limitations set forth in the Intercreditor Agreement;

 

(c)                                  Permitted Purchase Money Debt and obligations with respect to Capital Leases so long as the aggregate amount outstanding under this clause (c) does not exceed $2,500,000 at any time;

 

(d)                                 Borrowed Money listed on Schedule 10.2.1 (other than the Obligations, Subordinated Debt and Permitted Purchase Money Debt), but only to the extent outstanding on the Closing Date and not satisfied with proceeds of Loans funded on the Closing Date;

 

(e)                                  Debt with respect to Bank Products incurred in the ordinary course of business;

 

(f)                                   Debt that is in existence when a Person becomes a Subsidiary or that is secured by an asset when acquired by a Borrower or Subsidiary, as long as such Debt was not incurred in contemplation of such Person becoming a Subsidiary or such acquisition, and does not exceed $1,000,000 in the aggregate at any time;

 

(g)                                  Permitted Contingent Obligations;

 

(h)                                 Refinancing Debt as long as each Refinancing Condition is satisfied;

 

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(i)                                     Subordinated Debt;

 

(j)                                    Debt of the Obligors owing to any Subsidiary and of any Subsidiary owing to an Obligor or any other Subsidiary; provided, that any such Debt that is owed by a Subsidiary that is not an Obligor shall be subject to Sections 10.2.5 and 10.2.7;

 

(k)                                 Debt owed to any Person (including obligations in respect of letters of credit for the benefit of such Person) providing workers’ compensation, health, disability or other employee benefits or property, casualty, liability insurance, self-insurance, pursuant to reimbursement or indemnification obligations to such Person or to finance insurance premiums, in each case incurred in the Ordinary Course of Business;

 

(l)                                     Debt consisting of cash earnout obligations owed to the seller of any business or assets acquired in a Permitted Acquisition; provided that the aggregate amount of Debt outstanding at any one time permitted under this Section 10.2.1(l) shall not exceed $1,500,000; and

 

(m)                             Debt that is not included in any of the preceding clauses of this Section, is not secured by a Lien and does not exceed $1,000,000 in the aggregate at any time.

 

For purposes of determining compliance with this Section 10.2.1, in the event that an item of Debt (or any portion thereof, but excluding any Indebtedness incurred pursuant to Section 10.2.1(a) at any time meets the criteria of more than one of the categories described above in Section 10.2.1, the Borrower, in its sole discretion, may classify or reclassify (or later divide, classify or reclassify) such item of Debt (or any portion thereof) and shall only be required to include the amount and type of such Debt in one of the above clauses.  Accrual of interest or dividends, the accretion of accreted value, the accretion or amortization of original issue discount and the payment of interest, premium, fees or expenses, in the form of additional Debt (in each case so long as such additional Debt is in the same form and on the same terms as the Debt to which such payment relates) shall not be deemed to be an incurrence of Debt for purposes of this Section 10.2.1.

 

10.2.2.           Permitted Liens.  Create or suffer to exist any Lien upon any of its Property, except the following (collectively, “Permitted Liens”):

 

(a)                                 Liens in favor of Agent;

 

(b)                                 Liens in favor of the Revolver Loan Agent securing the Revolver Debt to the extent such Liens are subject to the Intercreditor Agreement;

 

(c)                                  Purchase Money Liens securing Permitted Purchase Money Debt;

 

(d)                                 Liens for Taxes not yet overdue or being Properly Contested;

 

(e)                                  inchoate statutory Liens (other than Liens for Priority Payables, Taxes or imposed under ERISA) arising in the Ordinary Course of Business, but only if (i) payment of the obligations secured thereby is not yet due or is being Properly Contested, and (ii) such Liens do not materially impair the value or use of the Property or materially impair operation of the business of any Borrower or Subsidiary;

 

(f)                                   Liens incurred or deposits made in the Ordinary Course of Business to secure the performance of tenders, bids, leases, contracts (except those relating to Borrowed Money), statutory obligations and other similar obligations, or arising as a result of progress payments under government contracts, as long as such Liens are at all times junior to Agent’s Liens;

 

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(g)                                  Liens arising in the Ordinary Course of Business that are subject to Lien Waivers;

 

(h)                                 Liens arising by virtue of a judgment or judicial order against any Borrower or Subsidiary, or any Property of a Borrower or Subsidiary, as long as such Liens do not give rise to a Default or an Event of Default hereunder and are being Properly Contested;

 

(i)                                     easements, rights-of-way, restrictions, covenants or other agreements of record, and other similar charges or encumbrances on Real Estate, that do not secure any monetary obligation and do not interfere with the Ordinary Course of Business;

 

(j)                                    normal and customary rights of setoff upon deposits in favor of depository institutions, and Liens of a collecting bank on Payment Items in the course of collection;

 

(k)                                 Liens securing Debt permitted by Section 10.2.1(c) so long as such Lien does not cover more than the property subject to such Capital Lease;

 

(l)                                     with respect to any Collateral covered by the UK Security Agreements, any Security (as such term is defined in the UK Security Agreements) arising solely by operation of law or in the ordinary course of trading securing amounts not more than 30 days overdue and not arising as a result of any default or omission of an Obligor or its Subsidiaries;

 

(m)                             statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen and other Liens imposed by Applicable Law in the Ordinary Course of Business for amounts not yet due or which are being Properly Contested;

 

(n)                                 pledges and deposits made in the Ordinary Course of Business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;

 

(o)                                 any Lien existing on any property or asset (other than Accounts or Inventory in favor of the Revolver Agent) prior to the acquisition thereof by the Borrower or any Subsidiary or existing on any property or asset of any Person that became or becomes a Subsidiary after the Closing Date prior to the time such Person became or becomes a Subsidiary; provided, that (i) such Lien is not created in contemplation of such acquisition or such Person becoming a Subsidiary as the case may be, (ii) such Lien shall not apply to any other property or asset of the Borrower or any Obligor (other than any replacements of such property or assets and additions and accessions thereto, after-acquired property subject to a Lien securing Debt and other obligations incurred prior to such time and which Debt and other obligations are permitted hereunder that require, pursuant to their terms at such time, a pledge of after-acquired property, and the proceeds and the products thereof and customary security deposits in respect thereof and in the case of multiple financings of equipment provided by any lender, other equipment financed by such lender), (iii) such Lien shall secure only those obligations and unused commitments (and to the extent such obligations and commitments constitute Debt, such Debt is permitted hereunder) that it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be, and extensions, renewals and replacements thereof so long as the principal amount of such extensions, renewals and replacements does not exceed the principal amount of the obligations being extended, renewed or replaced (plus any accrued but unpaid interest (including any portion thereof which is payable in kind in accordance with the terms of such extended, renewed or replaced Debt) and premium payable by the terms of such obligations thereon and fees and expenses associated therewith) and (iv) the Debt secured by such Lien is incurred pursuant to and in accordance with the terms of Section 10.2.1(f);

 

(p)                                 Liens representing (i) any interest or title of a licensor, lessor or sublicensor or sublessor under any lease or license permitted by this Agreement, (ii) any Lien or restriction that the

 

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interest or title of such lessor, licensor, sublessor or sublicensor may be subject to, or (iii) the interest of a licensee, lessee, sublicensee or sublessee arising by virtue of being granted a license or lease permitted by this Agreement, in each case not interfering in any material respect with the ordinary conduct of the business of the Borrowers and the Subsidiaries, taken as a whole;

 

(q)                                 any Lien in connection with debt permitted under Section 10.2.1(h);

 

(r)                                    Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the Ordinary Course of Business;

 

(s)                                   the filing of UCC financing statements solely as a precautionary measure or required notice in connection with operating leases or consignment of goods;

 

(t)                                    Liens not otherwise permitted by this Section10.2.2 to the extent that the aggregate outstanding amount of the obligations secured thereby at any time outstanding does not exceed $500,000;

 

(u)                                 Liens in favor of customs and revenue authorities to secure payment of customs duties in connection with the importation of goods;

 

(v)                                 Liens of bailees in the Ordinary Course of Business;

 

(w)                               utility and similar deposits in the Ordinary Course of Business;

 

(x)                                 non-exclusive licenses and sublicenses granted by a Borrower or any of its Subsidiaries and leases and subleases by a Borrower or any Subsidiary to third parties in the Ordinary Course of Business not interfering with the business of a Borrower or any of its Subsidiaries; and

 

(y)                                 existing Liens shown on Schedule 10.2.2.

 

For purposes of determining compliance with this Section 10.2.2, (x) a Lien need not be incurred solely by reference to one category of Liens described above but may be incurred under any combination of such categories (including in part under one such category and in part under any other such category) and (y) in the event that a Lien (or any portion thereof) meets the criteria of one or more of such categories of Liens described above, the Borrowers, in their sole discretion, may classify or may subsequently reclassify at any time such Lien (or any portion thereof) in any manner that complies with this covenant.

 

Notwithstanding anything to the contrary contained in this Agreement or any other Loan Document (including any provision for, reference to, or acknowledgement of, any Lien or Permitted Lien), nothing herein and no approval by the Agent or any Lender of any Lien or Permitted Lien (whether such approval is oral or in writing) shall be construed as or deemed to constitute a subordination by the Agent or such Lender of any security interest or other right, interest or Lien in or to the Collateral or any part thereof in favor of any Lien or Permitted Lien or any holder of any Lien or Permitted Lien.

 

10.2.3.           [Intentionally Deleted].

 

10.2.4.           Distributions; Upstream Payments.  Other than with respect to Upstream Payments, (a) prior to the third anniversary of the Closing Date, declare or make, directly or indirectly, any Permitted Restricted Payment (or enter into any agreement which obligates any Borrower or Subsidiary to make any Permitted Restricted Payment unless such agreement is conditioned upon either obtaining the consent of the Agent and Required Lenders to such transaction or the payment in full of the Obligations upon the making of such Permitted Restricted Payment); or create or suffer to exist any encumbrance or restriction on the ability of a Subsidiary to make any Upstream Payment, or (b) following the third anniversary of the Closing Date, declare or make any Distributions, except Permitted Restricted

 

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Payments; or create or suffer to exist any encumbrance or restriction on the ability of a Subsidiary to make any Upstream Payment, except for restrictions under the Loan Documents, under Applicable Law or in effect on the Closing Date as shown on Schedule 9.1.15.

 

10.2.5.           Restricted Investments.  Make any Restricted Investment.

 

10.2.6.           Disposition of Assets.  Make any Asset Disposition, except a Permitted Asset Disposition, a disposition of Equipment under Section 8.4.2, or a transfer of Property by a Subsidiary or Obligor to a Borrower.

 

10.2.7.           Loans.  Make any loans or advances, except (a) to officers, directors, partners and employees of the Obligors in the Ordinary Course of Business in an amount greater than $200,000 to any individual at any time or in an aggregate amount greater than $500,000 at any time outstanding, for travel, entertainment, relocation and analogous ordinary business purposes; (b) prepaid expenses and extensions of trade credit made in the Ordinary Course of Business; (c) deposits with financial institutions permitted hereunder; (d) as long as no Default or Event of Default exists, intercompany loans by an Obligor to another Obligor, provided that intercompany loans from the US Borrowers (i) to the Canadian Guarantors shall not exceed $500,000 in the aggregate at any time and (ii) to the UK Guarantors shall not exceed $1,000,000 in the aggregate at any time.

 

10.2.8.           Restrictions on Payment of Certain Debt.  Except in connection with any Refinancing permitted under Section 10.2.1, make any payments (whether voluntary or mandatory, or a prepayment, redemption, retirement, defeasance or acquisition) with respect to any (a) Subordinated Debt, except regularly scheduled payments of principal, interest and fees, but only to the extent permitted under any subordination agreement relating to such Debt (and a Senior Officer of Borrower Agent shall certify to Agent, not less than five Business Days prior to the date of payment, that all conditions under such agreement have been satisfied); or (b) Borrowed Money (other than the Obligations or the Revolver Debt, subject in all respects tot eh terms of the Intercreditor Agreement) prior to its due date under the agreements evidencing such Debt as in effect on the Closing Date (or as amended thereafter with the consent of Agent).

 

10.2.9.           Fundamental Changes.  (a) Change its name or conduct business under any fictitious name; change its tax, charter or other organizational identification number; change its form or state of organization, without, in the case of any such change described in this clause (a), providing not less than ten (10) days prior written notice to Agent, (b) liquidate, wind up its affairs or dissolve itself; or (c) merge, combine or consolidate with any Person, whether in a single transaction or in a series of related transactions, except for (i) mergers or consolidations of a wholly-owned Subsidiary with another wholly-owned Subsidiary or into a Borrower; or (ii) Permitted Acquisitions.

 

10.2.10.    Subsidiaries.  Form or acquire any Subsidiary after the Closing Date, except in accordance with Sections 10.1.9, 10.2.5 and 10.2.9; or permit any existing Subsidiary to issue any additional Equity Interests except director’s qualifying shares.

 

10.2.11.    Organic Documents.  Amend, modify or otherwise change any of its Organic Documents in any manner adverse to the Lenders, except in connection with either a rights distribution by the Company or a transaction permitted under Section 10.2.9.

 

10.2.12.    Tax Consolidation.  File or consent to the filing of any consolidated income tax return with any Person other than Obligors and Subsidiaries.

 

10.2.13.    Accounting Changes.  Make any material change in accounting treatment or reporting practices, except as required by GAAP and in accordance with Section 1.2; or change its Fiscal Year.

 

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10.2.14.    Restrictive Agreements.  Become a party to any Restrictive Agreement, except a Restrictive Agreement (a) in effect on the Closing Date; and (b) following the Closing Date, subject to Agent’s prior consent.

 

10.2.15.    Hedging Agreements.  Enter into any Hedging Agreement, except to hedge risks arising in the Ordinary Course of Business and not for speculative purposes.

 

10.2.16.    Conduct of Business.  Engage in any business, other than (i) the businesses conducted by the Obligors on the Closing Date and activities incidental or supplemental thereto, and (ii) businesses similar to the business conducted by the Obligors on the Closing Date or other businesses approved by Agent in its Permitted Discretion.  This Section 10.2.16 shall not apply to Immaterial Foreign Subsidiaries.

 

10.2.17.    Affiliate Transactions.  Enter into or be party to any transaction with an Affiliate, except (a) transactions expressly permitted by the Loan Documents; (b) payment of reasonable compensation to officers and employees for services actually rendered, and payment of customary directors’ fees and indemnities; (c) transactions solely among Obligors; (d) transactions with Affiliates that were consummated prior to the Closing Date, as shown on Schedule 10.2.17; and (e) intercompany loans permitted under Section 10.2.7, and (f) subject to Agent’s prior consent (such consent not to be unreasonably withheld, denied delayed, or conditioned), transactions with Affiliates in the Ordinary Course of Business, upon fair and reasonable terms and which are no less favorable than would be obtained in a comparable arm’s length transaction with a non-Affiliate.

 

10.2.18.    Plans.  Become party to (including by way of acquisition of any Person), without the consent of the Agent (acting reasonably), any Multiemployer Plan, Canadian Defined Benefit Pension Plan or Foreign Plan, other than any in existence on the Closing Date.

 

10.2.19.    Amendments to Revolver Debt and Subordinated Debt.  (a) Amend, restate, supplement or otherwise modify the Revolver Loan Agreement (or any document or instrument executed in connection therewith)  if such amendment, restatement, supplement or other modification would not be permitted under the Intercreditor Agreement or (b) amend, restate, supplement or otherwise modify any document, instrument or agreement relating to the Subordinated Debt, if such modification (i) increases the principal balance of such Debt, or increases any required payment of principal or interest; (ii) accelerates the date on which any installment of principal or any interest is due, or adds any additional redemption, put or prepayment provisions; (iii) shortens the final maturity date or otherwise accelerates amortization; (iv) increases the interest rate; (v) materially increases or adds any fees or charges; (vi) modifies any covenant in a manner or adds any representation, covenant or default that is more onerous or restrictive in any material respect for any Obligor or Subsidiary, or that is otherwise materially adverse to any Obligor, any Subsidiary or Lenders; or (vii) results in the Obligations not being fully benefited by the subordination provisions thereof.

 

10.3.                     Financial Covenants.

 

10.3.1.           Fixed Charge Coverage Ratio.  If a Financial Covenant Testing Period shall be continuing, Obligors and their Subsidiaries shall maintain a Fixed Charge Coverage Ratio as of the last day of each Fiscal Month, commencing on the first day of such Financial Covenant Testing Period and continuing until such Financial Covenant Testing Period shall no longer be continuing, for each period of twelve consecutive Fiscal Months then most recently ended, of at least 1.00 to 1.00.

 

10.4.                     Restrictions on Activities of Company.  Obligors covenant and agree that Company shall not (i) hold any assets other than the Equity Interests of SI USA, SI UK or SI Asia and cash and Cash Equivalents, (ii) have any material liabilities other than liabilities under the Loan Documents, tax liabilities in the Ordinary Course of Business, liabilities under employment agreements and written

 

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employment arrangements, and corporate, administrative and operating expenses in the Ordinary Course of Business, or (iii) engage in any business other than owning the Equity Interests of SI USA and activities incidental to such ownership, acting as a co-borrower in respect of the Obligations hereunder, and granting to Agent for the benefit of Lenders, security interests in and Liens upon its assets pursuant to the Security Documents to which it is a party.

 

10.5.                     Restrictions on Activities of Foreign Subsidiaries.  Obligors covenant and agree that (a) no Obligor shall guaranty any liabilities or obligations of any Foreign Subsidiary; (b) no Obligor shall make any Investment in, or transfer any properties or assets to, any Foreign Subsidiary, other than as permitted under Sections 10.2.5 and 10.2.17; (c) no Foreign Subsidiary shall create or suffer to exist any encumbrance or restriction on the ability of a Subsidiary to make any Upstream Payment, except for restrictions under the Loan Documents, under Applicable Law or in effect on the Closing Date as shown on Schedule 9.1.15 and (d) the aggregate outstanding Debt owed by Foreign Subsidiaries (excluding Debt owed to Obligors that is permitted under Section 10.2.7) shall not at any time exceed the foreign currency equivalent of $250,000. Obligors further agree if the total gross revenues of Born Free Holdings Ltd. shall at any time exceed $250,000, then the Borrowers shall promptly re-designate such Foreign Subsidiary as no longer constituting an Immaterial Foreign Subsidiary by written notice to Agent (following such re-designation the provisions of Sections 7 and 10.1.9 shall thereafter be applicable to such Foreign Subsidiary).

 

SECTION 11.                                    EVENTS OF DEFAULT; REMEDIES ON DEFAULT

 

11.1.                     Events of Default.  Each of the following shall be an “Event of Default” if it occurs for any reason whatsoever, whether voluntary or involuntary, by operation of law or otherwise:

 

(a)                                 Any Obligor fails to pay (i) its Obligations under the Loan Documents constituting principal, interest, or any fees payable under Section 3.2.3 when due (whether at stated maturity, on demand, upon acceleration or otherwise) or (ii) solely with respect to any Obligations not constituting principal, interest, or any fees payable under Section 3.2.3;

 

(b)                                 Any representation, warranty or other written statement of an Obligor made in connection with any Loan Documents or transactions contemplated thereby is incorrect or misleading in any material respect when given;

 

(c)                                  An Obligor breaches or fail to perform any covenant contained in Section 7.4, 8.1, 8.2.4, 8.2.5, 8.5, 8.6, 8.7.2, 10.1.1(a) or (b), 10.1.2, 10.1.3, 10.1.6, 10.2 or 10.3;

 

(d)                                 An Obligor breaches or fails to perform any other covenant contained in any Loan Documents, and such breach or failure is not cured within 20 days after a Senior Officer of such Obligor has knowledge thereof or receives notice thereof from Agent, whichever is sooner; provided, however, that such notice and opportunity to cure shall not apply if the breach or failure to perform is not capable of being cured within such period or is a willful breach by an Obligor;

 

(e)                                  A Guarantor repudiates, revokes or attempts to revoke in writing its Guaranty; an Obligor or third party denies or contests the validity or enforceability of any Loan Documents or Obligations, or the perfection or priority of any Lien granted to Agent; or any Loan Document ceases to be in full force or effect for any reason (other than a waiver or release by Agent and Lenders);

 

(f)                                   Any (i) breach or default of an Obligor occurs under any Hedging Agreement, (ii) any “Event of Default” (as defined in the Revolver Loan Agreement) occurs under the Revolver Loan Agreement, or (iii) any breach or default of an Obligor occurs under any instrument or agreement to which it is a party or by which it or any of its Properties is bound, relating to any Debt (other than the Obligations or the Revolver Debt) in excess of $2,000,000 (if, with respect to this clause (iii), the maturity

 

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of or any payment with respect to such Debt may be accelerated or demanded due to such breach); provided, that so long as the Agent has not exercised any remedies under this Section 11, any Default or Event of Default under this Section 11.1(f) shall be immediately cured and no longer continuing (without any action on the part of the Agent, any Lender or otherwise) as and when any such failure (x) is remedied by the Borrowers or applicable Subsidiary or (y) is waived (including in the form of amendment) by the requisite holders of the applicable foregoing;

 

(g)                                  Any final non-appealable judgment or order for the payment of money is entered against an Obligor in an amount that exceeds, individually or cumulatively with all unsatisfied judgments or orders against all Obligors, $1,000,000 (net of insurance coverage therefor that has not been denied by the insurer) and has not been paid, satisfied, discharged, or vacated and there is a period of 30 calendar days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect;

 

(h)                                 A loss, theft, damage or destruction occurs with respect to any Term Priority Collateral if the amount not covered by insurance exceeds $2,000,000;

 

(i)                                     An Obligor is enjoined, restrained or in any way prevented by any Governmental Authority from conducting any material part of its business; an Obligor suffers the loss, revocation or termination of any material license, permit, lease or agreement necessary to its business; there is a cessation of any material part of an Obligor’s business for a material period of time; any material Collateral or Property of an Obligor is taken or impaired through condemnation; an Obligor agrees to or commences any liquidation, dissolution or winding up of its affairs; or an Obligor is not Solvent;

 

(j)                                    An Insolvency Proceeding is commenced by an Obligor; an Obligor makes an offer of settlement, extension or composition to its unsecured creditors generally; any Obligor becomes unable or admits in writing its inability or fails generally to pay its debts as they become due in the Ordinary Course of Business; a trustee, a receiver, an interim receiver, monitor, liquidator or similar official is appointed to take possession of any substantial Property of or to operate any of the business of an Obligor; or an Insolvency Proceeding or proceeding applicable to bankruptcy or insolvency is commenced against an Obligor and:  the Obligor consents to institution of the proceeding, the petition or notice commencing the proceeding is not timely contested by the Obligor, the petition or notice is not, in respect of an Obligor (other than a UK Guarantor, dismissed within 45 days after filing, an order for relief is entered in the proceeding, or in respect of a UK Guarantor, the petition is a winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within 14 days of commencement;

 

(k)                                 (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan that has resulted or could reasonably be expected to result in liability of an Obligor to a Pension Plan, Multiemployer Plan or PBGC or that constitutes grounds for appointment of a trustee for or termination by the PBGC of any Pension Plan or Multiemployer Plan; an Obligor or ERISA Affiliate fails to pay when due any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan; (ii) a Termination Event occurs with respect to a Canadian Defined Benefit Pension Plan in respect of which a Canadian Priority Payables Reserve has not been taken or any Lien arises in respect of Obligors (save for contribution amounts not yet due) in connection with any Canadian Pension Plan which Lien would reasonably be expected to result in a Material Adverse Effect; (iii) an event occurs which constitutes grounds for the termination of any UK Pension Scheme or for the appointment of a receiver, liquidator, administrator or trustee in bankruptcy of any UK Pension Scheme or if any Obligor is in default with respect to the terms of payment or the performance of its obligations under any UK Pension Scheme or any Lien arises in respect of any Obligor in connection with any UK Pension Scheme; or (iv) any event similar to the foregoing occurs or exists with respect to a Foreign Plan;

 

(l)                                     An Obligor or any of its Senior Officers is criminally indicted or convicted for (i) a felony committed in the conduct of the Obligor’s business, or (ii) violating any state, provincial or

 

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federal law (including the Controlled Substances Act, Money Laundering Control Act of 1986, Proceeds of Crime Act and Illegal Exportation of War Materials Act) that could lead to forfeiture of any material Property or any Collateral;

 

(m)                             A Change of Control, or a “Change of Control” or similar event occurs under the Term Loan Agreement, occurs;

 

(n)                                 A Change of Control, or a “Change of Control” or similar event occurs under the Revolver Loan Agreement, occurs;

 

(o)                                 Any fine is issued against any Obligors by the CPSC in an amount that exceeds, individually or cumulatively with all other fines issued by the CPSC against the Obligors within the prior 12 months, $1,500,000;

 

(p)                                 Obligors institute a recall of products or toys constituting Inventory which: (i) is unsaleable or unable to be repaired and has an aggregate Value in excess of $2,000,000, (ii) results in, or could reasonably be expected to result in, the Obligors expending in excess of $2,000,000 in connection with the recall, repair, remediation or replacement of such Inventory, or (iii) results in, or could reasonably be expected to result in, the Obligors incurring claims, losses, liabilities or damages in excess of $5,000,000 in the aggregate (net of insurance coverage therefor that has not been denied by the insurer);

 

(q)                                 (i) the Intercreditor Agreement shall for any reason be revoked or invalidated, or otherwise cease to be in full force and effect, or any party to such Intercreditor Agreement shall contest in writing, the validity or enforceability thereof or deny that it has any further liability or obligation thereunder, or the Liens securing the Obligations, for any reason shall not have the priority contemplated by the Intercreditor Agreement; or (ii) the subordination provisions of any agreement or instrument relating to any Subordinated Debt shall for any reason be revoked or invalidated, or otherwise cease to be in full force and effect, or any Person party thereto (other than Agent or the Lenders) shall contest in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder, or the Obligations, for any reason shall not have the priority contemplated by this Agreement or such subordination provisions;

 

(r)                                    (i) Any provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Obligor or any other Person contests in any manner the validity or enforceability of any provision of any Loan Document; or any Obligor denies that it has any or further liability or obligation under any provision of any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document or seeks to avoid, limit or otherwise adversely affect any Lien purported to be created under any Security Document; or (ii) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Obligor or any other Person not to be, a valid and perfected Lien on any Collateral, with the priority required by the applicable Security Document and/or the Intercreditor Agreement; or

 

(s)                                   Except as otherwise expressly permitted hereunder, an Obligor shall take any action to either: (i) suspend the operation of all or a material portion of its business in the ordinary course, (ii) suspend the payment of any material obligations in the ordinary course or suspend the performance under Material Contracts in the ordinary course, (iii) solicit proposals for the liquidation of, or undertake to liquidate, all or a material portion of its assets, or (iv) solicit proposals for the employment of, or employ, an agent or other third party to conduct a program of liquidation sales of any material portion of its business, taken as a whole.

 

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11.2.                     Remedies upon Default.  If an Event of Default described in Section 11.1(j) occurs with respect to any Borrower, then to the extent permitted by Applicable Law, shall become automatically due and payable and all Commitments shall terminate, without any action by Agent or notice of any kind.  In addition, or if any other Event of Default exists, Agent may in its discretion (and shall upon written direction of Required Lenders) do any one or more of the following from time to time:

 

(a)                                 declare any Obligations immediately due and payable, whereupon they shall be due and payable without diligence, presentment, demand, protest or notice of any kind, all of which are hereby waived by Borrowers to the fullest extent permitted by law;

 

(b)                                 terminate, reduce or condition any Commitment, or make any adjustment to the Term Loan Borrowing Base;

 

(c)                                  require Obligors to Cash Collateralize Obligations that are contingent or not yet due and payable, and, if Obligors fail promptly to deposit such Cash Collateral, Agent may (and shall upon the direction of Required Lenders) advance the required Cash Collateral as additional Term Loans (whether or not a Term Loan Overadvance exists or is created thereby, or the conditions in Section 6 are satisfied); and

 

(d)                                 exercise any other rights or remedies afforded under any agreement, by law, at equity or otherwise, including the rights and remedies of a secured party under the UCC, PPSA or UK ST Law.  Such rights and remedies include the rights to (i) take possession of any Collateral; (ii) require Obligors to assemble Collateral, at Obligors’ expense, and make it available to Agent at a place designated by Agent; (iii) enter any premises where Collateral is located and store Collateral on such premises until sold (and if the premises are owned or leased by an Obligor, Obligors agree not to charge for such storage); and (iv) sell or otherwise dispose of any Collateral in its then condition, or after any further manufacturing or processing thereof, at public or private sale, with such notice as may be required by Applicable Law, in lots or in bulk, at such locations, all as Agent, in its discretion, deems advisable.  Each Obligor agrees that 10 days’ notice of any proposed sale or other disposition of Collateral by Agent shall be reasonable, and that any sale conducted on the internet or to a licensor of Intellectual Property shall be commercially reasonable.  Agent may conduct sales on any Obligor’s premises, without charge, and any sale may be adjourned from time to time in accordance with Applicable Law.  Agent shall have the right to sell, lease or otherwise dispose of any Collateral for cash, credit or any combination thereof, and Agent may purchase any Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of the purchase price, may credit bid and set off the amount of such price against the Obligations.

 

11.3.                     License.  Agent is hereby granted an irrevocable, non-exclusive license or other right to use, license or sub-license (without payment of royalty or other compensation to any Person) any or all Intellectual Property of Obligors, computer hardware and software, trade secrets, brochures, customer lists, promotional and advertising materials, labels, packaging materials and other Property, in advertising for sale, marketing, selling, collecting, completing manufacture of, or otherwise exercising any rights or remedies with respect to, any Collateral.  Each Obligor’s rights and interests under Intellectual Property shall inure to Agent’s benefit.

 

11.4.                     Setoff.  At any time during an Event of Default, Agent, Lenders, and any of their Affiliates are authorized, to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by Agent, such Lender or such Affiliate to or for the credit or the account of an Obligor against any Obligations, irrespective of whether or not Agent, such Lender or such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such Obligations may be contingent or unmatured or are owed to a branch or office of Agent, such Lender or such Affiliate different from the branch or office holding such 

 

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deposit or obligated on such indebtedness.  The rights of Agent, each Lender and each such Affiliate under this Section are in addition to other rights and remedies (including other rights of setoff) that such Person may have.

 

11.5.                     Remedies Cumulative; No Waiver.

 

11.5.1.           Cumulative Rights.  All agreements, warranties, guaranties, indemnities and other undertakings of Obligors under the Loan Documents are cumulative and not in derogation of each other.  The rights and remedies of Agent and Lenders are cumulative, may be exercised at any time and from time to time, concurrently or in any order, and are not exclusive of any other rights or remedies available by agreement, by law, at equity or otherwise.  All such rights and remedies shall continue in full force and effect until Full Payment of all Obligations.

 

11.5.2.           Waivers.  No waiver or course of dealing shall be established by (a) the failure or delay of Agent or any Lender to require strict performance by Obligors with any terms of the Loan Documents, or to exercise any rights or remedies with respect to Collateral or otherwise; (b) the making of any Loan during a Default, Event of Default or other failure to satisfy any conditions precedent; or (c) acceptance by Agent or any Lender of any payment or performance by an Obligor under any Loan Documents in a manner other than that specified therein.  It is expressly acknowledged by Obligors that any failure to satisfy a financial covenant on a measurement date shall not be cured or remedied by satisfaction of such covenant on a subsequent date.

 

SECTION 12.                                    AGENT

 

12.1.                     Appointment, Authority and Duties of Agent.

 

12.1.1.           Appointment and Authority.  Each Secured Party appoints and designates Pathlight Capital LLC as Agent under all Loan Documents and to hold the security interests constituted by the UK Security Agreements on trust for the Secured Parties in accordance with their terms and the Agent accepts that appointment.  Agent may, and each Secured Party authorizes Agent to, enter into all Loan Documents to which Agent is intended to be a party and accept all Security Documents, for the benefit of Secured Parties.  Any action taken by Agent in accordance with the provisions of the Loan Documents, and the exercise by Agent of any rights or remedies set forth therein, together with all other powers reasonably incidental thereto, shall be authorized by and binding upon all Secured Parties.  Without limiting the generality of the foregoing, Agent shall have the sole and exclusive authority to (a) act as the disbursing and collecting agent for Lenders with respect to all payments and collections arising in connection with the Loan Documents; (b) execute and deliver as Agent each Loan Document, including any intercreditor or subordination agreement, and accept delivery of each Loan Document; (c) act as collateral agent for Secured Parties for purposes of perfecting and administering Liens under the Loan Documents, and for all other purposes stated therein; (d) manage, supervise or otherwise deal with Collateral; and (e) take any Enforcement Action or otherwise exercise any rights or remedies with respect to any Collateral or under any Loan Documents, Applicable Law or otherwise.  The duties of Agent are ministerial and administrative in nature only, and Agent shall not have a fiduciary relationship with any Secured Party, Participant or other Person, by reason of any Loan Document or any transaction relating thereto.  Agent alone shall be authorized to determine whether any Account or Inventory constitutes an Eligible Account, Eligible In-Transit Inventory or Eligible Inventory, whether to impose or release any reserve, or whether any conditions to funding have been satisfied, which determinations and judgments, if exercised in good faith, shall exonerate Agent from liability to any Secured Party or other Person for any error in judgment.

 

12.1.2.           Duties.  Agent shall not have any duties except those expressly set forth in the Loan Documents.  The conferral upon Agent of any right shall not imply a duty to exercise such right, unless instructed to do so by Lenders in accordance with this Agreement.

 

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12.1.3.           Agent Professionals.  Agent may perform its duties through agents and employees.  Agent may consult with and employ Agent Professionals, and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by an Agent Professional.  Agent shall not be responsible for the negligence or misconduct of any agents, employees or Agent Professionals selected by it with reasonable care.

 

12.1.4.           Instructions of Required Lenders.  The rights and remedies conferred upon Agent under the Loan Documents may be exercised without the necessity of joinder of any other party, unless required by Applicable Law. In determining compliance with a condition for any action hereunder, including satisfaction of any condition in Section 6, Agent may presume that the condition is satisfactory to a Secured Party unless Agent has received notice to the contrary from such Secured Party before Agent takes the action.  Agent may request instructions from Required Lenders or other Secured Parties with respect to any act (including the failure to act) in connection with any Loan Documents or Collateral, and may seek assurances to its satisfaction from Secured Parties of their indemnification obligations against Claims that could be incurred by Agent.  Agent may refrain from any act until it has received such instructions or assurances, and shall not incur liability to any Person by reason of so refraining.  Instructions of Required Lenders shall be binding upon all Secured Parties, and no Secured Party shall have any right of action whatsoever against Agent as a result of Agent acting or refraining from acting pursuant to instructions of Required Lenders.  Notwithstanding the foregoing, instructions by and consent of specific parties shall be required to the extent provided in Section 14.1.1.  In no event shall Agent be required to take any action that, in its opinion, is contrary to Applicable Law or any Loan Documents or could subject any Agent Indemnitee to personal liability.

 

12.2.                     Agreements Regarding Collateral and Borrower Materials.

 

12.2.1.           Lien Releases; Care of Collateral.  Secured Parties authorize Agent to release any Lien with respect to any Collateral (a) upon Full Payment of the Obligations; (b) that is the subject of a disposition or Lien that Borrowers certify in writing is a Permitted Asset Disposition or a Permitted Lien entitled to priority over Agent’s Liens (and Agent may rely conclusively on any such certificate without further inquiry); (c) that does not constitute a material part of the Collateral; or (d) subject to Section 14.1, with the consent of Required Lenders.  Secured Parties authorize Agent to subordinate its Liens to any Purchase Money Lien or other Lien entitled to priority hereunder.  Agent shall have no obligation to assure that any Collateral exists or is owned by an Obligor, or is cared for, protected or insured, nor to assure that Agent’s Liens have been properly created, perfected or enforced, or are entitled to any particular priority, nor to exercise any duty of care with respect to any Collateral.

 

12.2.2.           Possession of Collateral.  Agent and Secured Parties appoint each Lender as agent (for the benefit of Secured Parties) for the purpose of perfecting Liens in any Collateral held or controlled by such Lender, to the extent such Liens are perfected by possession or control.  If any Lender obtains possession or control of any Collateral, it shall notify Agent thereof and, promptly upon Agent’s request, deliver such Collateral to Agent or otherwise deal with it in accordance with Agent’s instructions.

 

12.2.3.           Reports.  Agent shall promptly provide to Lenders, when complete, any field audit, examination or appraisal report prepared for Agent with respect to any Obligor or Collateral (“Report”).  Reports and other Borrower Materials may be made available to Lenders by providing access to them on the Platform, but Agent shall not be responsible for system failures or access issues that may occur from time to time.  Each Lender agrees (a) that Reports are not intended to be comprehensive audits or examinations, and that Agent or any other Person performing an audit or examination will inspect only specific information regarding the Obligations or Collateral and will rely significantly upon Obligors’ books, records and representations; (b) that Agent makes no representation or warranty as to the accuracy or completeness of any Borrower Materials and shall not be liable for any information contained in or omitted from any Borrower Materials, including any Report; and (c) to keep all Borrower Materials confidential and strictly for such Lender’s internal use, not to distribute any Report or other Borrower 

 

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Materials (or the contents thereof) to any Person (except to such Lender’s Participants, attorneys and accountants), and to use all Borrower Materials solely for administration of the Obligations.  Each Lender shall indemnify and hold harmless Agent and any other Person preparing a Report from any action such Lender may take as a result of or any conclusion it may draw from any Borrower Materials, as well as from any Claims arising as a direct or indirect result of Agent furnishing same to such Lender, via the Platform or otherwise.

 

12.3.                     Reliance By Agent.  Agent shall be entitled to rely, and shall be fully protected in relying, upon any certification, notice or other communication (including those by telephone, telex, telegram, telecopy or e-mail) believed by it to be genuine and correct and to have been signed, sent or made by the proper Person.  Agent shall have a reasonable and practicable amount of time to act upon any instruction, notice or other communication under any Loan Document, and shall not be liable for any delay in acting.

 

12.4.                     Action Upon Default.  Agent shall not be deemed to have knowledge of any Default or Event of Default, or of any failure to satisfy any conditions in Section 6, unless it has received written notice from a Borrower or Required Lenders specifying the occurrence and nature thereof.  If any Lender acquires knowledge of a Default, Event of Default or failure of such conditions, it shall promptly notify Agent and the other Lenders thereof in writing.  Each Secured Party agrees that, except as otherwise provided in any Loan Documents or with the written consent of Agent and Required Lenders, it will not take any Enforcement Action, accelerate Obligations, or exercise any right that it might otherwise have under Applicable Law to credit bid at foreclosure sales, UCC sales or PPSA sales other dispositions of Collateral, or to assert any rights relating to any Collateral.

 

12.5.                     Ratable Sharing.  If any Lender obtains any payment or reduction of any Obligation, whether through set-off or otherwise, in excess of its share of such Obligation, determined in accordance with each Lender’s Applicable Percentage of such Obligation (or in accordance with Section 5.6.2, as applicable), such Lender shall forthwith purchase from Agent, and the other Lenders such participations in the affected Obligation as are necessary to share the excess payment or reduction in accordance with each Lender’s Applicable Percentage thereof (or in accordance with Section 5.6.2, as applicable).  If any of such payment or reduction is thereafter recovered from the purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.  No Lender shall set off against any Dominion Account without Agent’s prior consent.

 

12.6.                     Indemnification.  EACH SECURED PARTY SHALL INDEMNIFY AND HOLD HARMLESS AGENT INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY OBLIGORS, ON A PRO RATA BASIS, AGAINST ALL CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY SUCH INDEMNITEE, PROVIDED THAT ANY CLAIM AGAINST AN AGENT INDEMNITEE RELATES TO OR ARISES FROM ITS ACTING AS OR FOR AGENT (IN THE CAPACITY OF AGENT).  In Agent’s discretion, it may reserve for any Claims made against an Agent Indemnitee, and may satisfy any judgment, order or settlement relating thereto, from proceeds of Collateral prior to making any distribution of Collateral proceeds to Secured Parties.  If Agent is sued by any receiver, trustee or other Person for any alleged preference or fraudulent transfer, then any monies paid by Agent in settlement or satisfaction of such proceeding, together with all interest, costs and expenses (including attorneys’ fees) incurred in the defense of same, shall be promptly reimbursed to Agent by each Lender to the extent of its Applicable Percentage.  Notwithstanding anything to the contrary set forth herein, no Indemnitee shall be entitled to indemnification from any Lender for a claim that is directly and solely attributable to the gross negligence or willful misconduct of such Indemnitee.

 

12.7.                     Limitation on Responsibilities of Agent.  Agent shall not be liable to any Secured Party for any action taken or omitted to be taken under the Loan Documents, except for losses directly and solely caused by Agent’s gross negligence or willful misconduct.  Agent does not assume any 

 

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responsibility for any failure or delay in performance or any breach by any Obligor, Lender or other Secured Party of any obligations under the Loan Documents.  Agent does not make any express or implied representation, warranty or guarantee to Secured Parties with respect to any Obligations, Collateral, Loan Documents or Obligor.  No Agent Indemnitee shall be responsible to Secured Parties for any recitals, statements, information, representations or warranties contained in any Loan Documents or Borrower Materials; the execution, validity, genuineness, effectiveness or enforceability of any Loan Documents; the genuineness, enforceability, collectibility, value, sufficiency, location or existence of any Collateral, or the validity, extent, perfection or priority of any Lien therein; the validity, enforceability or collectibility of any Obligations; or the assets, liabilities, financial condition, results of operations, business, creditworthiness or legal status of any Obligor or Account Debtor.  No Agent Indemnitee shall have any obligation to any Secured Party to ascertain or inquire into the existence of any Default or Event of Default, the observance by any Obligor of any terms of the Loan Documents, or the satisfaction of any conditions precedent contained in any Loan Documents.  Agent shall not be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor the list or identities of, or enforce, compliance with the provisions hereof relating to Competitors.  Without limiting the generality of the foregoing, Agent shall not (x) be obligated to ascertain, monitor or inquire as to whether any Lender (other than a Lender which is an Affiliate of Agent) or Participant (other than a Participant which is an Affiliate of Agent) or prospective Lender or Participant (other than a prospective Lender or a Participant which is an Affiliate of Agent) is a Competitor or (y) have any liability with respect to or arising out of any assignment or participation of Loans, or disclosure of confidential information, to any Competitor.

 

12.8.                     Successor Agent and Co-Agents.

 

12.8.1.           Resignation; Successor Agent.  Subject to the appointment and acceptance of a successor Agent as provided below, Agent may resign at any time by giving at least 30 days written notice thereof to Lenders and Borrower Agent.  Upon receipt of such notice, Required Lenders shall have the right to appoint a successor Agent which shall be (a) a Lender or an Affiliate of a Lender; or (b) a financial institution reasonably acceptable to Required Lenders and (provided no Default or Event of Default exists) Borrower Agent.  If no successor agent is appointed prior to the effective date of Agent’s resignation, then Agent may appoint a successor agent that is a financial institution acceptable to it, which shall be a Lender unless no Lender accepts the role.  Upon acceptance by a successor Agent of its appointment hereunder, such successor Agent shall thereupon succeed to and become vested with all the powers and duties of the retiring Agent without further act, and the retiring Agent shall be discharged from its duties and obligations hereunder but shall continue to have the benefits of the indemnification set forth in Sections 12.6 and 14.2.  Notwithstanding any Agent’s resignation, the provisions of this Section 12 shall continue in effect for its benefit with respect to any actions taken or omitted to be taken by it while Agent.  Any successor to Pathlight Capital LLC by merger or acquisition of stock or this loan shall continue to be Agent hereunder without further act on the part of any Secured Party or Obligor.

 

12.8.2.           Co-Collateral Agent.  If necessary or appropriate under Applicable Law, Agent may appoint a Person to serve as a co-collateral agent or separate collateral agent under any Loan Document.  Each right and remedy intended to be available to Agent under the Loan Document shall also be vested in such agent.  Secured Parties shall execute and deliver any instrument or agreement that Agent may request to effect such appointment.  If the agent shall die, dissolve, become incapable of acting, resign or be removed, then all the rights and remedies of such agent, to the extent permitted by Applicable Law, shall vest in and be exercised by Agent until appointment of a new agent.

 

12.9.                     Due Diligence and Non-Reliance.  Each Lender acknowledges and agrees that it has, independently and without reliance upon Agent or any other Lenders, and based upon such documents, information and analyses as it has deemed appropriate, made its own credit analysis of each Obligor and its own decision to enter into this Agreement and to fund Loans hereunder.  Each Secured Party has made such inquiries as it feels necessary concerning the Loan Documents, Collateral and Obligors.  Each Secured Party acknowledges and agrees that the other Secured Parties have made no representations or

 

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warranties concerning any Obligor, any Collateral or the legality, validity, sufficiency or enforceability of any Loan Documents or Obligations.  Each Secured Party will, independently and without reliance upon any other Secured Party, and based upon such financial statements, documents and information as it deems appropriate at the time, continue to make and rely upon its own credit decisions in making Loans, and in taking or refraining from any action under any Loan Documents.  Except for notices, reports and other information expressly requested by a Lender, Agent shall have no duty or responsibility to provide any Secured Party with any notices, reports or certificates furnished to Agent by any Obligor or any credit or other information concerning the affairs, financial condition, business or Properties of any Obligor (or any of its Affiliates) which may come into possession of Agent or its Affiliates.

 

12.10.              Remittance of Payments and Collections.

 

12.10.1.          Remittances Generally.  All payments by any Lender to Agent shall be made by the time and on the day set forth in this Agreement, in immediately available funds.  If no time for payment is specified or if payment is due on demand by Agent and request for payment is made by Agent by 11:00 a.m. on a Business Day, payment shall be made by Lender not later than 2:00 p.m. on such day, and if request is made after 11:00 a.m., then payment shall be made by 11:00 a.m. on the next Business Day.  Payment by Agent to any Secured Party shall be made by wire transfer, in the type of funds received by Agent.  Any such payment shall be subject to Agent’s right of offset for any amounts due from such payee under the Loan Documents.

 

12.10.2.          Failure to Pay.  If any Secured Party fails to pay any amount when due by it to Agent pursuant to the terms hereof, such amount shall bear interest, from the due date until paid in full, at the rate determined by Agent as customary for interbank compensation for two Business Days and thereafter at the Default Rate for Term Loans that bear interest at the Base Rate.  In no event shall Borrowers be entitled to receive credit for any interest paid by a Secured Party to Agent.

 

12.10.3.          Recovery of Payments.  If Agent pays an amount to a Secured Party in the expectation that a related payment will be received by Agent from an Obligor and such related payment is not received, then Agent may recover such amount from the Secured Party.  If Agent determines that an amount received by it must be returned or paid to an Obligor or other Person pursuant to Applicable Law or otherwise, then, notwithstanding any other term of any Loan Document, Agent shall not be required to distribute such amount to any Secured Party.  If any amounts received and applied by Agent to any Obligations are later required to be returned by Agent pursuant to Applicable Law, each Lender shall pay to Agent, on demand, such Lender’s Applicable Percentage of the amounts required to be returned.

 

12.11.              Individual Capacities.  As a Lender, Pathlight Capital LLC shall have the same rights and remedies under the Loan Documents as any other Lender, and the terms “Lenders,” “Required Lenders,” or any similar term shall include Pathlight Capital LLC in its capacity as a Lender.  Agent, Lenders and their Affiliates may accept deposits from, lend money to, provide Bank Products to, act as financial or other advisor to, and generally engage in any kind of business with, Obligors and their Affiliates, as if they were not Agent or Lenders hereunder, without any duty to account therefor to any Secured Party.  In their individual capacities, Agent, Lenders and their Affiliates may receive information regarding Obligors, their Affiliates and their Account Debtors (including information subject to confidentiality obligations), and shall have no obligation to provide such information to any Secured Party.

 

12.12.              Titles.  Each Lender, other than Pathlight Capital LLC, that is designated (on the cover page of this Agreement or otherwise) by Pathlight Capital LLC as an “Arranger,” “Bookrunner” or “Agent” of any type shall have no right, power or duty under any Loan Documents other than those applicable to all Lenders, and shall in no event have any fiduciary duty to any Secured Party.

 

12.13.              [Reserved].

 

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12.14.              No Third Party Beneficiaries.  This Section 12 is an agreement solely among Secured Parties and Agent, and shall survive Full Payment of the Obligations.  This Section 12 does not confer any rights or benefits upon Borrowers or any other Person.  As between Obligors and Agent, any action that Agent may take under any Loan Documents or with respect to any Obligations shall be conclusively presumed to have been authorized and directed by Secured Parties.

 

SECTION 13.                                    BENEFIT OF AGREEMENT; ASSIGNMENTS

 

13.1.                     Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of Obligors, Agent, Lenders, Secured Parties, and their respective successors and assigns, except that (a) no Obligor shall have the right to assign its rights or delegate its obligations under any Loan Documents; (b) any assignment by a Lender must be made in compliance with Section 13.3.  Agent may treat the Person which made any Loan as the owner thereof for all purposes until such Person makes an assignment in accordance with Section 13.3; and (c) no Lender may assign any Term Loans or any portion of its Term Loan Commitments to any Competitor without the prior written consent of Borrower Agent.  Any authorization or consent of a Lender shall be conclusive and binding on any subsequent transferee or assignee of such Lender.

 

13.2.                     Participations.

 

13.2.1.           Permitted Participants; Effect.  Subject to Section 13.3.3, any Lender may sell to a financial institution (“Participant”) a participating interest in the rights and obligations of such Lender under any Loan Documents; provided, that no Lender shall sell any participating interest to any Competitor without the prior written consent of Borrower Agent.  Despite any sale by a Lender of participating interests to a Participant, such Lender’s obligations under the Loan Documents shall remain unchanged, it shall remain solely responsible to the other parties hereto for performance of such obligations, it shall remain the holder of its Loans and Commitments for all purposes, all amounts payable by Obligors shall be determined as if it had not sold such participating interests, and Obligors and Agent shall continue to deal solely and directly with such Lender in connection with the Loan Documents.  Each Lender shall be solely responsible for notifying its Participants of any matters under the Loan Documents, and Agent and the other Lenders shall not have any obligation or liability to any such Participant.  A Participant shall not be entitled to the benefits of Section 5.9 unless Borrower Agent agrees otherwise in writing and such Participant shall not be entitled to receive any greater payment under Section 5.9 than its participating Lender would have been entitled to receive.

 

13.2.2.           Voting Rights.  Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, waiver or other modification of a Loan Document other than that which forgives principal, interest or fees, reduces the stated interest rate or fees payable with respect to any Loan or Commitment in which such Participant has an interest, postpones the Term Loan Termination Date or any date fixed for any regularly scheduled payment of principal, interest or fees on such Loan or Commitment, or releases any Borrower, Guarantor or substantially all Collateral.

 

13.2.3.           Participant Register.  Each Lender that sells a participation shall, acting as a non-fiduciary agent of Borrowers (solely for tax purposes), maintain a register in which it enters the Participant’s name, address and interest in Commitments and Loans (and stated interest).  Entries in the register shall be conclusive, absent manifest error, and such Lender shall treat each Person recorded in the register as the owner of the participation for all purposes, notwithstanding any notice to the contrary.  No Lender shall have an obligation to disclose any information in such register except to the extent necessary to establish that a Participant’s interest is in registered form under the Code.

 

13.2.4.           Benefit of Set-Off.  Obligors agree that each Participant shall have a right of set-off in respect of its participating interest to the same extent as if such interest were owing directly to a Lender, and each Lender shall also retain the right of set-off with respect to any participating interests

 

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sold by it.  By exercising any right of set-off, a Participant agrees to share with Lenders all amounts received through its set-off, in accordance with Section 12.5 as if such Participant were a Lender.

 

13.3.                     Assignments.

 

13.3.1.           Permitted Assignments.  A Lender may assign to an Eligible Assignee any of its rights and obligations under the Loan Documents, as long as (a) each assignment is of a constant, and not a varying, percentage of the transferor Lender’s rights and obligations under the Loan Documents and, in the case of a partial assignment, is in a minimum principal amount of $5,000,000 (unless otherwise agreed by Agent in its discretion) and integral multiples of $500,000 in excess of that amount; (b) except in the case of an assignment in whole of a Lender’s rights and obligations, the aggregate amount of the Commitments retained by the transferor Lender is at least $7,500,000 (unless otherwise agreed by Agent in its discretion); and (c) the parties to each such assignment shall execute and deliver to Agent, for its acceptance and recording, an Assignment and Acceptance.  Nothing herein shall limit the right of a Lender to pledge or assign any rights under the Loan Documents to secure obligations of such Lender, including a pledge or assignment to a Federal Reserve Bank; provided, however, that no such pledge or assignment shall release the Lender from its obligations hereunder nor substitute the pledge or assignee for such Lender as a party hereto.

 

13.3.2.           Effect; Effective Date.  Upon delivery to Agent of an assignment notice in the form of Exhibit B and a processing fee of $3,500 (unless otherwise agreed by Agent in its discretion), the assignment shall become effective as specified in the notice, if it complies with this Section 13.3.  From such effective date, the Eligible Assignee shall for all purposes be a Lender under the Loan Documents, and shall have all rights and obligations of a Lender thereunder.  Upon consummation of an assignment, the transferor Lender, Agent and Borrowers shall make appropriate arrangements for issuance of replacement and/or new notes, if applicable.  The transferee Lender shall comply with Section 5.10 and deliver, upon request, an administrative questionnaire satisfactory to Agent.

 

13.3.3.           Certain Assignees.  No assignment or participation may be made to an Obligor, Affiliate of an Obligor, or natural person. Agent shall have no obligation to determine whether any assignee is permitted under the Loan Documents.

 

13.3.4.           Register.  Agent, acting as a non-fiduciary agent of Obligors (solely for tax purposes), shall maintain (a) a copy of each Assignment and Acceptance delivered to it, and (b) a register for recordation of the names, addresses and Commitments of, the Loans, and interest owing to, each Lender.  Entries in the register shall be conclusive, absent manifest error, and Obligors, Agent and Lenders shall treat each lender recorded in such register as a Lender for all purposes under the Loan Documents, notwithstanding any notice to the contrary.  Agent may choose to show only one Borrower as the borrower in the register, without any effect on the liability of any Obligor with respect to the Obligations.  The register shall be available for inspection by Obligors or any Lender, from time to time upon reasonable notice.

 

13.4.                     Replacement of Certain Lenders.  If a Lender fails to give its consent to any amendment, waiver or action for which consent of all Lenders was required and Required Lenders consented, then, in addition to any other rights and remedies that any Person may have, Agent or Borrower Agent may, by notice to such Lender within 120 days after such event, require such Lender to assign all of its rights and obligations under the Loan Documents to Eligible Assignee(s), pursuant to appropriate Assignment and Acceptance(s), within 20 days after the notice.  Agent is irrevocably appointed as attorney-in-fact to execute any such Assignment and Acceptance if the Lender fails to execute it.  Such Lender shall be entitled to receive, in cash, concurrently with such assignment, all amounts owed to it under the Loan Documents through the date of assignment.

 

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SECTION 14.                                    THE GUARANTEE

 

14.1.                     Guarantee.  The Guarantors hereby guarantee to each Lender and Agent, and their respective successors and permitted assigns, the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the Obligations.  The Guarantors hereby further agree that if the Borrowers shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the obligations, the Guarantors will promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal.

 

14.2.                     Obligations Unconditional.  The obligations of the Guarantors under Section 14.1 are absolute and unconditional irrespective of the value, genuineness, validity, regularity or enforceability of this Agreement, the other Loan Documents or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of or security for any of the obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section 14.2 that the obligations of the Guarantors hereunder shall be absolute and unconditional under any and all circumstances.  Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Guarantors hereunder, which shall remain absolute and unconditional as described above:

 

(I)                                   AT ANY TIME OR FROM TIME TO TIME, WITHOUT NOTICE TO SUCH GUARANTORS, THE TIME FOR ANY PERFORMANCE OF OR COMPLIANCE WITH ANY OF THE OBLIGATIONS SHALL BE EXTENDED, OR SUCH PERFORMANCE OR COMPLIANCE SHALL BE WAIVED;

 

(II)                              ANY OF THE ACTS MENTIONED IN ANY OF THE PROVISIONS HEREOF OR OF THE OTHER LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR INSTRUMENT REFERRED TO HEREIN OR THEREIN SHALL BE DONE OR OMITTED;

 

(III)                         THE MATURITY OF ANY OF THE OBLIGATIONS SHALL BE ACCELERATED, OR ANY OF THE OBLIGATIONS SHALL BE MODIFIED, SUPPLEMENTED OR AMENDED IN ANY RESPECT, OR ANY RIGHT HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR INSTRUMENT REFERRED TO HEREIN OR THEREIN SHALL BE WAIVED OR ANY OTHER GUARANTEE OF ANY OF THE OBLIGATIONS OR ANY SECURITY THEREFOR SHALL BE RELEASED OR EXCHANGED IN WHOLE OR IN PART OR OTHERWISE DEALT WITH; OR

 

(IV)                          ANY LIEN OR SECURITY INTEREST GRANTED TO, OR IN FAVOR OF, AGENT OR ANY LENDER OR LENDERS AS SECURITY FOR ANY OF THE OBLIGATIONS SHALL FAIL TO BE PERFECTED.

 

EACH GUARANTOR HEREBY EXPRESSLY WAIVES DILIGENCE, PRESENTMENT, DEMAND OF PAYMENT, PROTEST AND ALL NOTICES WHATSOEVER, AND ANY REQUIREMENT THAT AGENT OR ANY LENDER EXHAUST ANY RIGHT, POWER OR REMEDY OR PROCEED AGAINST BORROWERS OR ANY OTHER GUARANTOR HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR INSTRUMENT REFERRED TO HEREIN OR THEREIN, OR AGAINST ANY OTHER PERSON UNDER ANY OTHER GUARANTEE OF, OR SECURITY FOR, ANY 

 

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OF THE OBLIGATIONS, AND HEREBY WAIVE THE BENEFITS OF DIVISION AND DISCUSSION.

 

14.3.                     Reinstatement.  The obligations of the Guarantors under this Section 14 shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of any Borrower in respect of the Obligations is rescinded or must be otherwise restored by any holder of any of the Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and each Guarantor agrees that it will indemnify Agent and each Lender on demand for all reasonable costs and expenses (including fees and expenses of counsel) incurred by Agent or any Lender in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law.

 

14.4.                     Subrogation.  Until Full Payment of the Obligations, each of the Guarantors hereby waives all rights of subrogation or contribution, whether arising by contract or operation of law (including, without limitation, any such right arising under the Bankruptcy Code, or any other Insolvency Law, as amended) or otherwise by reason of any payment by it pursuant to the provisions of this Section 14 and further agrees with each Borrower for the benefit of each creditor of such Borrower (including Agent and each Lender) that any such payment by it shall constitute a contribution of capital by such Guarantor to such Borrower.

 

14.5.                     Remedies.  The Guarantors agree that, as between the Guarantors and the Lenders, the Obligations of Borrowers hereunder may be declared to be forthwith due and payable as provided in Section 11.2 (and shall be deemed to have become automatically due and payable in the circumstances provided in Section 11.2) for purposes of Section 14.1 notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against Borrowers and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such Obligations (whether or not due and payable by Borrowers) shall forthwith become due and payable by the Guarantor for purposes of, and, in the case of the Canadian Guarantors, subject to the limitations set forth in, Section 14.1.

 

14.6.                     Instrument for the Payment of Money.  Each of the Guarantors hereby acknowledges that the guarantee in this Section 14 constitutes an instrument for the payment of money only, and consents and agrees that Agent or any Lender, at its sole option, in the event of a dispute by such Guarantor in the payment of any moneys due hereunder, shall have the right to summary judgment or such other expedited procedure as may be available for a suit on a note or other instrument for the payment of money only.

 

14.7.                     Continuing Guarantee.  The guarantee in this Section 14 is a continuing guarantee and shall apply to all Obligations whenever arising.

 

14.8.                     General Limitation on Amount of Obligations Guaranteed.   In any action or proceeding involving any state or non-U.S. corporate law, or any state or federal or non-U.S. bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of the Guarantors under Section 14.1 would otherwise be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 14.1, then, notwithstanding any other provision hereof to the contrary, the amount of such liability shall, without any further action by the Guarantors, any Lender, Agent or other Person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

 

14.9.                     Joint Enterprise.  Each Guarantor acknowledges that (a) the Obligors’ business is a mutual and collective enterprise, and the successful operation of each Obligor is dependent upon the 

 

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successful performance of the integrated group and (b) such Guarantor shall derive direct and indirect economic and other benefits from the establishment by the Secured Parties of the credit facility under this Agreement in favor of Borrowers.

 

14.10.              Subordination.  Each Borrower and each Guarantor hereby subordinates any claims, including any right of payment, subrogation, contribution and indemnity that it may have at any time against any other Obligor, howsoever arising, to the Full Payment of the Obligations.

 

14.11.              Conflicts with Canadian Guaranty or UK Guaranty.  In the event that any of the terms of this Section 14 conflict with (i) the Canadian Guaranty as they relate to the Canadian Guarantors and/or (ii) the UK Guaranty as they relate to the UK Guarantors, the terms of the Canadian Guaranty and/or the UK Guaranty (as applicable) shall control.

 

SECTION 15.                                    MISCELLANEOUS

 

15.1.                     Consents, Amendments and Waivers.

 

15.1.1.           Amendment.  No modification of any Loan Document, including any extension or amendment of a Loan Document or any waiver of a Default or Event of Default, shall be effective without the prior written agreement of Agent (with the consent of Required Lenders) and each Obligor party to such Loan Document; provided, however, that

 

(a)                                 without the prior written consent of Agent, no modification shall be effective with respect to any provision in a Loan Document that relates to any rights, duties or discretion of Agent;

 

(b)                                 [reserved];

 

(c)                                  without the prior written consent of each affected Lender, no modification shall be effective that would (i) increase the Commitment of such Lender; (ii) reduce the amount of, or waive or delay payment of, any principal, interest or fees payable to such Lender (except as provided in Section 4.2); (iii) extend the Term Loan Termination Date applicable to such Lender’s Obligations; or (iv) amend this clause (c);

 

(d)                                 without the prior written consent of all Lenders having Term Loan Commitments (or if the Term Loan Commitments have terminated, all Lenders having outstanding Term Loans), amend the definition of the term “Term Loan Borrowing Base” (or any defined term used in the definition of “Term Loan Borrowing Base”, provided that the Agent may in its Permitted Discretion, without the necessity of obtaining the consent of any Lender, increase or decrease the amount of the IP Reserve, or increase, decrease, add or eliminate any of the components thereof, or reduce the percentages used in the definitions of Accounts Formula Amount, Inventory Formula Amount, Equipment Formula Amount, and IP Formula Amount);

 

(e)                                  [Reserved];

 

(f)                                   without the prior written consent of all Lenders, no modification shall be effective that would (i) alter Sections 5.6.2, 7.1 (except to add Collateral) or 15.1.1; (ii) amend the definitions of the terms “Applicable Percentage” or “Required Lenders”; (iii) release all or substantially all of the Collateral; (iv) subordinate the Liens in favor of Agent securing the Obligations to Liens in favor of any other Person (other than (x) Purchase Money Liens securing Permitted Purchase Money Debt, and (y) Liens securing obligations with respect to Capital Leases permitted by Section 10.2.1(b), which Liens do not cover more than the property subject to the applicable Capital Leases);  or (v) except in connection with a merger, disposition or similar transaction expressly permitted hereby, release any Obligor from liability for any Obligations; and

 

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(g)                                  [Reserved].

 

15.1.2.           Limitations.  The agreement of Obligors shall not be necessary to the effectiveness of any modification of a Loan Document that deals solely with the rights and duties of Lenders and/or Agent as among themselves.  Only the consent of the parties to any agreement relating to fees or a Bank Product shall be required for modification of such agreement, and no Bank Product provider (in such capacity) shall have any right to consent to modification of any Loan Document other than its Bank Product agreement.  Any waiver or consent granted by Agent or Lenders hereunder shall be effective only if in writing and only for the matter specified.

 

15.1.3.           Payment for Consents.  No Obligor will, directly or indirectly, pay any remuneration or other thing of value, whether by way of additional interest, fee or otherwise, to any Lender (in its capacity as a Lender hereunder) as consideration for agreement by such Lender with any modification of any Loan Documents, unless such remuneration or value is concurrently paid, on the same terms, to all Lenders providing their consent, in accordance with each such Lender’s Applicable Percentage.

 

15.2.                     Indemnity.  EACH OBLIGOR SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, INCLUDING CLAIMS ASSERTED BY ANY OTHER OBLIGOR OR OTHER PERSON OR ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE.  In no event shall any party to a Loan Document have any obligation thereunder to indemnify or hold harmless an Indemnitee with respect to a Claim that is determined in a final, non-appealable judgment by a court of competent jurisdiction to result from the gross negligence or willful misconduct of such Indemnitee.

 

15.3.                     Notices and Communications.

 

(a)                                 Notice Address.  Subject to Section 4.1.4, all notices and other communications by or to a party hereto shall be in writing and shall be given to any Obligor, at Borrower Agent’s address shown on the signature pages hereof, and to any other Person at its address shown on the signature pages hereof (or, in the case of a Person who becomes a Lender after the Closing Date, at the address shown on its Assignment and Acceptance), or at such other address as a party may hereafter specify by notice in accordance with this Section 15.3.  Each communication shall be effective only (a) if given by facsimile transmission, when transmitted to the applicable facsimile number, if confirmation of receipt is received; (b) if given by mail, three Business Days after deposit in the U.S. mail, with first-class postage pre-paid, addressed to the applicable address; or (c) if given by personal delivery, when duly delivered to the notice address with receipt acknowledged.  Notwithstanding the foregoing, no notice to Agent pursuant to Section 2.1.4, 3.1.2, or 4.1.1 shall be effective until actually received by the individual to whose attention at Agent such notice is required to be sent.  Any written communication that is not sent in conformity with the foregoing provisions shall nevertheless be effective on the date actually received by the noticed party.  Any notice received by Borrower Agent shall be deemed received by all Obligors.

 

(b)                                 Electronic Communications; Voice Mail.  Electronic mail and internet websites may be used only for routine communications, such as delivery of Borrower Materials, administrative matters, distribution of Loan Documents, and matters permitted under Section 4.1.4.  Agent and Lenders make no assurances as to the privacy and security of electronic communications.  Electronic and voice mail may not be used as effective notice under the Loan Documents.

 

(c)                                  Platform.  Borrower Materials shall be delivered pursuant to procedures approved by Agent, including electronic delivery (if possible) upon request by Agent to an electronic system maintained by Agent (“Platform”).  Borrowers shall notify Agent of each posting of Borrower Materials on the Platform and the materials shall be deemed received by Agent only upon its receipt of 

 

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such notice.  Borrower Materials and other information relating to this credit facility may be made available to Secured Parties on the Platform.  The Platform is provided “as is” and “as available.”  Agent does not warrant the accuracy or completeness of any information on the Platform nor the adequacy or functioning of the Platform, and expressly disclaims liability for any errors or omissions in the Borrower Materials or any issues involving the Platform.  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 WITH RESPECT TO BORROWER MATERIALS OR THE PLATFORM.  Lenders acknowledge that Borrower Materials may include material non-public information of Obligors and should not be made available to any personnel who do not wish to receive such information or who may be engaged in investment or other market-related activities with respect to any Obligor’s securities.  No Agent Indemnitee shall have any liability to Borrowers, Secured Parties or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) relating to use by any Person of the Platform or delivery of Borrower Materials and other information through the Platform.

 

(d)                                 Non-Conforming Communications.  Agent and Lenders may rely upon any communications purportedly given by or on behalf of any Obligor even if they were not made in a manner specified herein, were incomplete or were not confirmed, or if the terms thereof, as understood by the recipient, varied from a later confirmation.  Each Obligor shall indemnify and hold harmless each Indemnitee from any liabilities, losses, costs and expenses arising from any electronic or telephonic communication purportedly given by or on behalf of an Obligor.

 

15.4.                     Performance of Obligors’ Obligations.  Agent may, in its discretion at any time and from time to time, at Obligors’ expense, pay any amount or do any act required of an Obligor under any Loan Documents or otherwise lawfully requested by Agent to (a) enforce any Loan Documents or collect any Obligations; (b) protect, insure, maintain or realize upon any Collateral; or (c) defend or maintain the validity or priority of Agent’s Liens in any Collateral, including any payment of a judgment, insurance premium, warehouse charge, finishing or processing charge, or landlord claim, or any discharge of a Lien.  All payments, costs and expenses (including Extraordinary Expenses) of Agent under this Section shall be reimbursed to Agent by Borrowers, on demand, with interest from the date incurred until paid in full, at the Default Rate applicable to Term Loans that bear interest at the Base Rate.  Any payment made or action taken by Agent under this Section shall be without prejudice to any right to assert an Event of Default or to exercise any other rights or remedies under the Loan Documents.

 

15.5.                     Credit Inquiries.  Agent and Lenders may (but shall have no obligation) to respond to usual and customary credit inquiries from third parties concerning any Obligor or Subsidiary.

 

15.6.                     Severability.  Wherever possible, each provision of the Loan Documents shall be interpreted in such manner as to be valid under Applicable Law.  If any provision is found to be invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity and the remaining provisions of the Loan Documents shall remain in full force and effect.

 

15.7.                     Cumulative Effect; Conflict of Terms.  The provisions of the Loan Documents are cumulative.  The parties acknowledge that the Loan Documents may use several limitations or measurements to regulate similar matters, and they agree that these are cumulative and that each must be performed as provided.  Except as otherwise provided in another Loan Document (by specific reference to the applicable provision of this Agreement), if any provision contained herein is in direct conflict with any provision in another Loan Document, the provision herein shall govern and control.

 

15.8.                     Counterparts.  Any Loan Document may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement shall become effective when Agent has received counterparts bearing the signatures of all 

 

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parties hereto.  Agent may (but shall have no obligation to) accept any signature, contract formation or record-keeping through electronic means, which shall have the same legal validity and enforceability as manual or paper-based methods, to the fullest extent permitted by Applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any similar state law based on the Uniform Electronic Transactions Act.

 

15.9.                     Entire Agreement.  Time is of the essence with respect to all Loan Documents and Obligations.  The Loan Documents constitute the entire agreement, and supersede all prior understandings and agreements, among the parties relating to the subject matter thereof.

 

15.10.              Relationship with Lenders.  The obligations of each Lender hereunder are several, and no Lender shall be responsible for the obligations or Commitments of any other Lender.  Amounts payable hereunder to each Lender shall be a separate and independent debt.  It shall not be necessary for Agent or any other Lender to be joined as an additional party in any proceeding for such purposes.  Nothing in this Agreement and no action of Agent, Lenders or any other Secured Party pursuant to the Loan Documents or otherwise shall be deemed to constitute Agent and any Secured Party to be a partnership, joint venture or similar arrangement, nor to constitute control of any Obligor.

 

15.11.              No Advisory or Fiduciary Responsibility.  In connection with all aspects of each transaction contemplated by any Loan Document, Obligors acknowledge and agree that (a)(i) this credit facility and any related arranging or other services by Agent, any Lender, any of their Affiliates or any arranger are arm’s-length commercial transactions between Obligors and such Person; (ii) Obligors have consulted their own legal, accounting, regulatory and tax advisors to the extent they have deemed appropriate; and (iii) Obligors are capable of evaluating, and understand and accept, the terms, risks and conditions of the transactions contemplated by the Loan Documents; (b) each of Agent, Lenders, their Affiliates and any arranger is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for Obligors, any of their Affiliates or any other Person, and has no obligation with respect to the transactions contemplated by the Loan Documents except as expressly set forth therein; and (c) Agent, Lenders, their Affiliates and any arranger may be engaged in a broad range of transactions that involve interests that differ from those of Obligors and their Affiliates, and have no obligation to disclose any of such interests to Obligors or their Affiliates.  To the fullest extent permitted by Applicable Law, each Obligor hereby waives and releases any claims that it may have against Agent, Lenders, their Affiliates and any arranger with respect to any breach of agency or fiduciary duty in connection with any transaction contemplated by a Loan Document.

 

15.12.              Confidentiality.  Each of Agent and Lenders shall maintain the confidentiality of all Information (as defined below), except that Information may be disclosed (a) to its Affiliates, and to its and their partners, directors, officers, employees, agents, advisors and representatives (provided such Persons are informed of the confidential nature of the Information and instructed to keep it confidential); (b) to the extent requested by any governmental, regulatory or self-regulatory authority purporting to have jurisdiction over it or its Affiliates; (c) to the extent required by Applicable Law or by any subpoena or other legal process; (d) to any other party hereto; (e) in connection with any action or proceeding relating to any Loan Documents or Obligations; (f) subject to an agreement containing provisions substantially the same as this Section, to any Transferee or any actual or prospective party (or its advisors) to any Bank Product or to any swap, derivative or other transaction under which payments are to be made by reference to an Obligor or Obligor’s obligations; (g) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) is available to Agent, any Lender, or any of their Affiliates on a nonconfidential basis from a source other than Borrowers; (h) on a confidential basis to a provider of a Platform; or (i) with the consent of Borrower Agent.  Notwithstanding the foregoing, Agent and Lenders may publish or disseminate general information concerning this credit facility for league table, tombstone and advertising purposes, and may use Obligors’ logos, trademarks or product photographs in advertising materials.  As used herein, “Information” means all information received from 

 

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an Obligor or Subsidiary relating to it or its business that is identified as confidential when delivered.  Any Person required to maintain the confidentiality of Information pursuant to this Section shall be deemed to have complied with this Section if such Person exercises a degree of care similar to that which such Person accords its own confidential information.  Each of Agent and Lenders acknowledges that (i) Information may include material non-public information; (ii) it has developed compliance procedures regarding the use of material non-public information; and (iii) it will handle such material non-public information in accordance with Applicable Law.

 

15.13.              GOVERNING LAW.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS).

 

15.14.              Consent to Forum.                                        EACH OBLIGOR HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN OR WITH JURISDICTION OVER NEW YORK, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT.  EACH OBLIGOR IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 14.3.1.  Nothing herein shall limit the right of Agent or any Lender to bring proceedings against any Obligor in any other court, nor limit the right of any party to serve process in any other manner permitted by Applicable Law.  Nothing in this Agreement shall be deemed to preclude enforcement by Agent of any judgment or order obtained in any forum or jurisdiction.

 

15.15.              Waivers by Obligors.  To the fullest extent permitted by Applicable Law, each Obligor waives (a) the right to trial by jury (which Agent and each Lender hereby also waives) in any proceeding or dispute of any kind relating in any way to any Loan Documents, Obligations or Collateral; (b) presentment, demand, protest, notice of presentment, default, non-payment, maturity, release, compromise, settlement, extension or renewal of any commercial paper, accounts, documents, instruments, chattel paper and guaranties at any time held by Agent on which an Obligor may in any way be liable, and hereby ratifies anything Agent may do in this regard; (c) notice prior to taking possession or control of any Collateral; (d) any bond or security that might be required by a court prior to allowing Agent to exercise any rights or remedies; (e) the benefit of all valuation, appraisement and exemption laws; (f) any claim against Agent or any Lender, on any theory of liability, for special, indirect, consequential, exemplary or punitive damages (as opposed to direct or actual damages) in any way relating to any Enforcement Action, Obligations, Loan Documents or transactions relating thereto; and (g) notice of acceptance hereof.  Each Obligor acknowledges that the foregoing waivers are a material inducement to Agent and Lenders entering into this Agreement and that they are relying upon the foregoing in their dealings with Obligors.  Each Obligor has reviewed the foregoing waivers with its legal counsel and has knowingly and voluntarily waived its jury trial and other rights following consultation with legal counsel.  In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.

 

15.16.              Patriot Act Notice.  Agent and Lenders hereby notify Obligors that pursuant to the Patriot Act, Agent and Lenders are required to obtain, verify and record information that identifies each Obligor, including its legal name, address, tax ID number and other information that will allow Agent and Lenders to identify it in accordance with the Patriot Act.  Agent and Lenders will also require information regarding each personal guarantor, if any, and may require information regarding Obligors’ management and owners, such as legal name, address, social security number and date of birth.  Borrowers shall, 

 

96

 

promptly upon request, provide all documentation and other information as Agent or any Lender may request from time to time in order to comply with any obligations under any “know your customer,” anti-money laundering or other requirements of Applicable Law.

 

15.17.              Canadian Anti-Money Laundering Legislation.

 

(a)                                 Each Obligor acknowledges that, pursuant to the Proceeds of Crime Act and other applicable anti-money laundering, anti-terrorist financing, government sanction and “know your client” laws (collectively, including any guidelines or orders thereunder, “AML Legislation”), the Lenders may be required to obtain, verify and record information regarding the Obligors and their respective directors, authorized signing officers, direct or indirect shareholders or other Persons in control of the Obligors, and the transactions contemplated hereby. Each Obligor shall promptly provide all such information, including supporting documentation and other evidence, as may be reasonably requested by any Lender or any prospective assignee or participant of a Lender or any Agent, in order to comply with any applicable AML Legislation, whether now or hereafter in existence.

 

(b)                                 If the Agent has ascertained the identity of any Obligor or any authorized signatories of the Obligors for the purposes of applicable AML Legislation, then the Agent:

 

(i)                                     shall be deemed to have done so as an agent for each Lender, and this Agreement shall constitute a “written agreement” in such regard between each Lender and the Agent within the meaning of the applicable AML Legislation; and

 

(ii)                                  shall provide to each Lender copies of all information obtained in such regard without any representation or warranty as to its accuracy or completeness.

 

Notwithstanding the preceding sentence and except as may otherwise be agreed in writing, each of the Lenders agrees that neither the Agent nor any other Agent has any obligation to ascertain the identity of the Obligors or any authorized signatories of the Obligors on behalf of any Lender, or to confirm the completeness or accuracy of any information it obtains from any Obligor or any such authorized signatory in doing so.

 

15.18.              Publicity.  Subject to Obligors’ consent (such consent not to be unreasonably withheld, denied, delayed or conditioned), Agent and/or any Lender shall be permitted to publish advertising material relating to the financing transactions contemplated by this Agreement using any Obligor’s name, product photographs, logo or trademark.  Agent or such Lender shall provide a draft reasonably in advance of any advertising material to the Borrower Agent for review and comment prior to the publication thereof.  The Borrower Agent shall be deemed to have granted its approval of the use of such photographs, logos, trademarks or other insignia upon the passage of three (3) Business Days from receipt of written notice to the Borrower Agent from Agent or such Lender without the Borrower Agent giving Agent or such Lender written notice of the Borrower Agent’s objection.  Agent reserves the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements.

 

15.19.              Acknowledgement and Consent to Bail-In of EEA Financial Institutions.  Notwithstanding any provision to the contrary set forth in this Agreement, 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 Lender that is an 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:

 

97

 

(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 Lender 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.

 

15.20.              Intercreditor Agreement.

 

(a)                                 Each Lender party hereto (i) understands, acknowledges and agrees that it (and each of its successors and assigns) and each other Lender (and each of their successors and assigns) shall be bound by the Intercreditor Agreement, (ii) authorizes and directs Agent to enter into the Intercreditor Agreement on its behalf, and (iii) agrees that any action taken by Agent pursuant to the Intercreditor Agreement shall be binding upon such Lender.

 

(b)                                 The provisions of this Section 15.20 are not intended to summarize or fully describe the provisions of the Intercreditor Agreement.  Reference must be made to the Intercreditor Agreement itself to understand all terms and conditions thereof.  Each Lender is responsible for making its own analysis and review of the Intercreditor Agreement and the terms and provisions thereof, and neither Agent nor any of its Affiliates makes any representation to any Lender as to the sufficiency or advisability of the provisions contained in the Intercreditor Agreement. A copy of the Intercreditor Agreement may be obtained from Agent.

 

(c)                                  The Intercreditor Agreement is an agreement solely amongst the Secured Parties (as defined in the Intercreditor Agreement) and their respective agents (including their successors and assigns) and is acknowledged and agreed to by the Obligors as party thereto.  As more fully provided therein, the Intercreditor Agreement can only be amended by the parties thereto in accordance with the provisions thereof.

 

(d)                                 In the event of any conflict between this Agreement and the Intercreditor Agreement, the Intercreditor Agreement shall govern.

 

[Remainder of page intentionally left blank; signatures begin on following page]

 

98

 

IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date set forth above.

 

	
 
    	
BORROWERS:
    
	
 
    	
 
    
	
 
    	
SUMMER INFANT, INC.
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ William E.   Mote, Jr.
    
	
 
    	
Title: 
    	
Chief Financial Officer
    
	
 
    	
Address:
    
	
 
    	
 
    	
1275 Park East Drive
    
	
 
    	
 
    	
Woonsocket, Rhode   Island 02895
    
	
 
    	
 
    	
Attn: William E.   Mote, Jr.
    
	
 
    	
 
    	
Telecopy: 401-671-6572
    
	
 
    	
 
    	
Telephone: 401-671-6550
    
	
 
    	
 
    	
Email:   wmote@summerinfant.com
    
	
 
    	
 
    
	
 
    	
SUMMER INFANT (USA), INC.
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ William E.   Mote, Jr.
    
	
 
    	
Title: 
    	
Chief Financial Officer
    
	
 
    	
Address:
    
	
 
    	
 
    	
1275 Park East Drive
    
	
 
    	
 
    	
Woonsocket, Rhode   Island 02895
    
	
 
    	
 
    	
Attn: William E.   Mote, Jr.
    
	
 
    	
 
    	
Telecopy: 401-671-6572
    
	
 
    	
 
    	
Telephone: 401-671-6550
    
	
 
    	
 
    	
Email:   wmote@summerinfant.com
    

 

[Signature Page to Term Loan and Security Agreement]

 

 

	
 
    	
GUARANTORS:
    
	
 
    	
 
    
	
 
    	
SUMMER INFANT CANADA, LIMITED
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ William E.   Mote, Jr.
    
	
 
    	
Title: 
    	
Chief Financial Officer
    
	
 
    	
Address:
    
	
 
    	
 
    	
1275 Park East Drive
    
	
 
    	
 
    	
Woonsocket, Rhode   Island 02895
    
	
 
    	
 
    	
Attn: William E.   Mote, Jr.
    
	
 
    	
 
    	
Telecopy: 401-671-6572
    
	
 
    	
 
    	
Telephone: 401-671-6550
    
	
 
    	
 
    	
Email:   wmote@summerinfant.com
    
	
 
    	
 
    
	
 
    	
SUMMER INFANT EUROPE LIMITED
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ William E.   Mote, Jr.
    
	
 
    	
Title: 
    	
Chief Financial Officer
    
	
 
    	
Address:
    
	
 
    	
 
    	
1275 Park East Drive
    
	
 
    	
 
    	
Woonsocket, Rhode   Island 02895
    
	
 
    	
 
    	
Attn: William E.   Mote, Jr.
    
	
 
    	
 
    	
Telecopy: 401-671-6572
    
	
 
    	
 
    	
Telephone: 401-671-6550
    
	
 
    	
 
    	
Email:   wmote@summerinfant.com
    

 

[Signature Page to Term Loan and Security Agreement]

 

 

	
 
    	
AGENT:
    
	
 
    	
 
    
	
 
    	
PATHLIGHT CAPITAL LLC,   as Agent
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Katie Hendricks
    
	
 
    	
Title: 
    	
Managing Director
    
	
 
    	
Address:
    
	
 
    	
 
    	
18 Shipyard Drive,   Suite 2C
    
	
 
    	
 
    	
Hingham, Massachusetts   02043
    
	
 
    	
 
    	
Attn: Katie Hendricks,   Managing Director
    
	
 
    	
 
    	
Telecopy:
    
	
 
    	
 
    	
Telephone: 617-830-7052
    
	
 
    	
 
    	
Email: khendricks@pathlightcapital.com
    
	
 
    	
 
    
	
 
    	
LENDER:
    
	
 
    	
 
    
	
 
    	
PATHLIGHT CAPITAL LLC,   as a Lender
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Katie Hendricks
    
	
 
    	
Title: 
    	
Managing Director
    
	
 
    	
Address:
    
	
 
    	
 
    	
18 Shipyard Drive,   Suite 2C
    
	
 
    	
 
    	
Hingham, Massachusetts   02043
    
	
 
    	
 
    	
Attn: Katie Hendricks,   Managing Director
    
	
 
    	
 
    	
Telecopy:
    
	
 
    	
 
    	
Telephone: 617-830-7052
    
	
 
    	
 
    	
Email:   khendricks@pathlightcapital.com
    

 

[Signature Page to Term Loan and Security Agreement]

 

 

Exhibit A

to

Term Loan and Security Agreement

 

ASSIGNMENT AND ACCEPTANCE

 

Reference is made to the Term Loan and Security Agreement dated as of June 28, 2018, as amended (“Loan Agreement”), among SUMMER INFANT, INC., and SUMMER INFANT (USA), INC. (collectively, “Borrowers”), the Guarantors party thereto from time to time, PATHLIGHT CAPITAL LLC, as agent (“Agent”) for the financial institutions from time to time party to the Loan Agreement (“Lenders”), and such Lenders.  Terms are used herein as defined in the Loan Agreement.

 

(“Assignor”) and                                         (“Assignee”) agree as follows:

 

1.             Assignor hereby assigns to Assignee and Assignee hereby purchases and assumes from Assignor (a) a principal amount of $         of Assignor’s outstanding Term Loans, and (b) the amount of $           of Assignor’s Term Loan Commitment (which represents     % of the total Term Loan Commitments) (the foregoing items being, collectively, the “Assigned Interest”), together with an interest in the Loan Documents corresponding to the Assigned Interest.  This Agreement shall be effective as of the date (“Effective Date”) indicated in the corresponding Assignment Notice delivered to Agent, provided such Assignment Notice is executed by Assignor, Assignee, Agent and Borrower Agent, if applicable.  From and after the Effective Date, Assignee hereby expressly assumes, and undertakes to perform, all of Assignor’s obligations in respect of the Assigned Interest, and all principal, interest, fees and other amounts which would otherwise be payable to or for Assignor’s account in respect of the Assigned Interest shall be payable to or for Assignee’s account, to the extent such amounts accrue on or after the Effective Date.

 

2.             Assignor (a) represents that as of the date hereof, prior to giving effect to this assignment, its Term Loan Commitment is $           and the outstanding balance of its Term Loans is $          ; (b) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Agreement or any other instrument or document furnished pursuant thereto, other than that Assignor is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; and (c) makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrowers or the performance by Borrowers of their obligations under the Loan Documents.  [Assignor is attaching the Note[s] held by it and requests that Agent exchange such Note[s] for new Notes payable to Assignee [and Assignor].]

 

3.             Assignee (a) represents and warrants that it is legally authorized to enter into this Assignment and Acceptance; (b) confirms that it has received copies of the Loan Agreement and such other Loan Documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (c) agrees that it shall, independently and without reliance upon Assignor and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents; (d) confirms that it is an Eligible Assignee; (e) appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under the Loan Agreement as are delegated to Agent by the terms thereof, together with such powers as are incidental thereto; (f) agrees that it will observe and perform all obligations that are required to be performed by it as a “Lender” under the Loan Documents; and (g) represents and warrants that the assignment evidenced hereby will not result in a non-exempt “prohibited transaction” under Section 406 of ERISA.

 

4.             This Agreement shall be governed by the laws of the State of New York.  If any provision is found to be invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity and the remaining provisions of this Agreement shall remain in full force and effect.

 

5.             Each notice or other communication hereunder shall be in writing, shall be sent by messenger, by telecopy or facsimile transmission, or by first-class mail, shall be deemed given when sent and shall be sent as follows:

 

A-1

 

(a)                                 If to Assignee, to the following address (or to such other address as Assignee may designate from time to time):

 

 

(b)                                 If to Assignor, to the following address (or to such other address as Assignor may designate from time to time):

 

 

Payments hereunder shall be made by wire transfer of immediately available Dollars as follows:

 

If to Assignee, to the following account (or to such other account as Assignee may designate from time to time):

 

 

ABA No.

 

Account No.

Reference:

 

If to Assignor, to the following account (or to such other account as Assignor may designate from time to time):

 

 

ABA No.

 

Account No.

Reference:

 

A-2

 

IN WITNESS WHEREOF, this Assignment and Acceptance is executed as of              .

 

	
 
    	
 
    
	
 
    	
(“Assignee”)
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(“Assignor”)
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Title:
    

 

A-3

 

 

EXHIBIT B

to

Term Loan and Security Agreement

 

ASSIGNMENT NOTICE

 

Reference is made to (1) the Term Loan and Security Agreement dated as of June 28, 2018, as amended (“Loan Agreement”), among SUMMER INFANT, INC., and SUMMER INFANT (USA), INC. (collectively, “Borrowers”), the Guarantors party thereto from time to time, PATHLIGHT CAPITAL LLC, as agent (“Agent”) for the financial institutions from time to time party to the Loan Agreement (“Lenders”), and such Lenders; and (2) the Assignment and Acceptance dated as of             , 20   (“Assignment Agreement”), between                    (“Assignor”) and                      (“Assignee”).  Terms are used herein as defined in the Loan Agreement.

 

Assignor hereby notifies Borrowers and Agent of Assignor’s intent to assign to Assignee pursuant to the Assignment Agreement (a) a principal amount of $         of Assignor’s outstanding Term Loans and (b) the amount of $           of Assignor’s Term Loan Commitment (which represents     % of the total Term Loan Commitments) (the foregoing items being, collectively, the “Assigned Interest”), together with an interest in the Loan Documents corresponding to the Assigned Interest.  This Agreement shall be effective as of the date (“Effective Date”) indicated below, provided this Assignment Notice is executed by Assignor, Assignee, Agent and Borrower Agent, if applicable.  Pursuant to the Assignment Agreement, Assignee has expressly assumed all of Assignor’s obligations under the Loan Agreement to the extent of the Assigned Interest, as of the Effective Date.

 

For purposes of the Loan Agreement, Agent shall deem Assignor’s Term Loan Commitment to be reduced by $         , and Assignee’s Term Loan Commitment to be increased by $         .

 

The address of Assignee to which notices and information are to be sent under the terms of the Loan Agreement is:

 

 

The address of Assignee to which payments are to be sent under the terms of the Loan Agreement is shown in the Assignment and Acceptance.

 

This Notice is being delivered to Borrowers and Agent pursuant to Section 13.3 of the Loan Agreement.  Please acknowledge your acceptance of this Notice by executing and returning to Assignee and Assignor a copy of this Notice.

 

B-1

 

IN WITNESS WHEREOF, this Assignment Notice is executed as of              .

 

	
 
    	
 
    
	
 
    	
(“Assignee”)
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(“Assignor”)
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Title:
    

 

ACKNOWLEDGED AND AGREED,

AS OF THE DATE SET FORTH ABOVE:

 

BORROWER AGENT:*

 

SUMMER INFANT (USA), INC.

 

	
By
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

* No signature required if Assignee is a Lender, U.S.-based Affiliate of a Lender or Approved Fund, or if an Event of Default exists.

 

PATHLIGHT CAPITAL LLC,

as Agent

 

	
By
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

B-2

 

SCHEDULE 1.1

to

Term Loan and Security Agreement

 

COMMITMENTS OF LENDERS

 

	
Lender
    	
 
    	
Term Loan 
   Commitment
    	
 
    	
Applicable 
   Percentage
    	
 
    
	
PATHLIGHT CAPITAL   LLC
    	
 
    	
$
    	
17,500,000
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
TOTALS:
    	
 
    	
$
    	
17,500,000
    	
 
    	
100
    	
%EX-10.1

 Exhibit 10.1 
  

 
 $2,500,000,000 

REVOLVING CREDIT AGREEMENT 
 among

 AVANGRID, INC., 
 NEW YORK
STATE ELECTRIC & GAS CORPORATION, 
 ROCHESTER GAS AND ELECTRIC CORPORATION, 

CENTRAL MAINE POWER COMPANY, 
 THE
UNITED ILLUMINATING COMPANY, 
 CONNECTICUT NATURAL GAS CORPORATION, 

THE SOUTHERN CONNECTICUT GAS COMPANY and 

THE BERKSHIRE GAS COMPANY, 
 as
Borrowers, 
 The Several Lenders 

from Time to Time Parties Hereto, 

JPMORGAN CHASE BANK, N.A., 
 as
Administrative Agent, 
 MUFG BANK, LTD. and SANTANDER BANK, N.A. 

As Co-Documentation Agents, 

BANK OF AMERICA, N.A., 
 as
Syndication Agent 
 and 
 BANCO
BILBAO VIZCAYA ARGENTARIA, S.A. NEW YORK BRANCH 
 as Sustainability Agent 

Dated as of June 29, 2018 
  

 
 JPMORGAN CHASE BANK, N.A., 

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, 

MUFG BANK, LTD. 
 SANTANDER BANK,
N.A. and 
 BBVA SECURITIES INC. 

as Joint Lead Arrangers and Joint Bookrunners 
  

 

 TABLE OF CONTENTS 

 

					
	 	  	Page	 
	 SECTION 1. METHOD OF BORROWING AND PAYMENT OF FEES
	  	 	1	 
		
	 1.01. Commitments; Loans
	  	 	1	 
	 1.02. Borrowings
	  	 	2	 
	 1.03. Termination and Reduction of Commitments; Sublimits
	  	 	2	 
	 1.04. Extensions of Commitments
	  	 	3	 
	 1.05. Additional Commitments
	  	 	4	 
	 1.06. Adjustments of Sublimits
	  	 	5	 
		
	 SECTION 2. THE LOANS
	  	 	6	 
		
	 2.01. Notice and Provision of Loans
	  	 	6	 
	 2.02. Repayment of Loans
	  	 	7	 
	 2.03. Facility Fees, etc.
	  	 	7	 
	 2.04. Interest Rates and Payment Dates
	  	 	7	 
	 2.05. Computation of Interest and Fees
	  	 	8	 
	 2.06. Alternate Rate of Interest
	  	 	8	 
	 2.07. Continuation and Conversion of Loans
	  	 	9	 
	 2.08. Prepayments
	  	 	11	 
	 2.09. Reserve Requirements; Change in Circumstances
	  	 	11	 
	 2.10. Change in Legality
	  	 	12	 
	 2.11. New Office or Agency; Replacement of Lenders
	  	 	13	 
	 2.12. Indemnity
	  	 	14	 
	 2.13. Pro Rata Treatment
	  	 	15	 
	 2.14. Sharing of Setoffs
	  	 	15	 
	 2.15. Payments
	  	 	16	 
	 2.16. Taxes
	  	 	16	 
		
	 SECTION 3. [RESERVED]
	  	 	19	 
		
	 SECTION 4. REPRESENTATIONS AND WARRANTIES
	  	 	19	 
		
	 4.01. Corporate Existence and Power
	  	 	19	 
	 4.02. Due Authorization, Compliance with Law, Enforceable Obligations, etc.
	  	 	20	 
	 4.03. Financial Condition
	  	 	20	 
	 4.04. Litigation
	  	 	21	 
	 4.05. Tax Returns
	  	 	21	 
	 4.06. Investment Company Act
	  	 	21	 
	 4.07. Other Agreements
	  	 	21	 
	 4.08. Federal Reserve Regulations
	  	 	21	 
	 4.09. No Material Misstatements
	  	 	21	 
	 4.10. Employee Benefit Plans
	  	 	22	 
	 4.11. Environmental and Safety Matters
	  	 	22	 
	 4.12. Ownership of Property; Liens
	  	 	22	 

  
 ii 

					
	 4.13. Use of Proceeds
	  	 	22	 
	 4.14. Anti-Corruption Laws and Sanctions
	  	 	22	 
	 4.15. EEA Financial Institutions
	  	 	22	 
		
	 SECTION 5. CONDITIONS PRECEDENT
	  	 	23	 
		
	 5.01. Conditions Precedent to Effectiveness of Agreement
	  	 	23	 
	 5.02. Conditions to All Extensions of Credit
	  	 	24	 
		
	 SECTION 6. AFFIRMATIVE COVENANTS
	  	 	25	 
		
	 6.01. Financial Statements; Certificates; Reports
	  	 	25	 
	 6.02. ERISA
	  	 	27	 
	 6.03. Payment of Obligations
	  	 	27	 
	 6.04. Maintenance of Existence; Compliance
	  	 	27	 
	 6.05. Inspection of Property and Operations; Books and Records
	  	 	27	 
	 6.06. Environmental Laws
	  	 	27	 
	 6.07. Further Assurances
	  	 	28	 
	 6.08. Maintenance of Ownership of Significant Subsidiaries
	  	 	28	 
		
	 SECTION 7. NEGATIVE COVENANTS
	  	 	28	 
		
	 7.01. Financial Condition Covenant
	  	 	28	 
	 7.02. Sale of Assets; Merger
	  	 	28	 
	 7.03. Limitation on Liens
	  	 	28	 
	 7.04. Limitation on Transactions with Affiliates
	  	 	30	 
	 7.05. Sales and Leasebacks
	  	 	30	 
	 7.06. Limitation on Changes in Lines of Business
	  	 	30	 
	 7.07. Use of Proceeds
	  	 	30	 
	 7.08. Fiscal Year
	  	 	31	 
	 7.09. Limitation on Restrictions on Distributions from Subsidiaries
	  	 	31	 
		
	 SECTION 8. EVENTS OF DEFAULT
	  	 	31	 
		
	 SECTION 9. DEFINITIONS
	  	 	33	 
		
	 9.01. Defined Terms
	  	 	33	 
	 9.02. Terms Generally
	  	 	50	 
		
	 SECTION 10. THE ADMINISTRATIVE AGENT
	  	 	50	 
		
	 10.01. Appointment and Authority of Administrative Agent
	  	 	50	 
	 10.02. Reliance by Administrative Agent; Delegation by Administrative Agent
	  	 	50	 
	 10.03. No Amendment to Administrative Agent’s Duties Without Consent
	  	 	52	 
	 10.04. Responsibilities of Administrative Agent
	  	 	53	 
	 10.05. Proofs of Claim
	  	 	53	 
	 10.06. Rights as a Lender
	  	 	53	 
	 10.07. Credit Decision
	  	 	54	 
	 10.08. Resignation of Administrative Agent
	  	 	54	 
	 10.09. No Other Duties
	  	 	55	 

  
 iii 

					
	 SECTION 11. MISCELLANEOUS
	  	 	55	 
		
	 11.01. Notices
	  	 	55	 
	 11.02. Successors and Assigns; Participations, Assignments and Designations
	  	 	56	 
	 11.03. Expenses; Indemnity
	  	 	59	 
	 11.04. Effectiveness
	  	 	61	 
	 11.05. Survival of Agreement; Benefit to Successors and Assigns
	  	 	61	 
	 11.06. Right of Setoff
	  	 	61	 
	 11.07. Waivers; Amendment
	  	 	62	 
	 11.08. Severability
	  	 	63	 
	 11.09. Headings
	  	 	63	 
	 11.10. Governing Law; Jurisdiction
	  	 	63	 
	 11.11. Counterparts
	  	 	64	 
	 11.12. Interest Rate Limitation
	  	 	64	 
	 11.13. Entire Agreement
	  	 	64	 
	 11.14. Waiver of Jury Trial
	  	 	64	 
	 11.15. USA PATRIOT Act
	  	 	65	 
	 11.16. Defaulting Lenders
	  	 	65	 
	 11.17. Certain Acknowledgements
	  	 	66	 
	 11.18. Acknowledgement and Consent to Bail-In of EEA
Financial Institutions
	  	 	67	 

  
 iv 

 REVOLVING CREDIT AGREEMENT, dated as of June 29, 2018, among AVANGRID, INC., a New York
corporation (“Avangrid”), NEW YORK STATE ELECTRIC & GAS CORPORATION, a New York corporation (“NYSEG”), ROCHESTER GAS AND ELECTRIC CORPORATION, a New York corporation (“RGE”), CENTRAL MAINE
POWER COMPANY, a Maine corporation (“CMP”), THE UNITED ILLUMINATING COMPANY, a specially chartered Connecticut corporation (“UI”), CONNECTICUT NATURAL GAS CORPORATION, a Connecticut corporation
(“CNG”), THE SOUTHERN CONNECTICUT GAS COMPANY, a Connecticut corporation (“SCG”), and THE BERKSHIRE GAS COMPANY, a Massachusetts gas company (“BGC”; together with Avangrid, NYSEG, RGE, CMP, UI, CNG
and SCG, the “Borrowers”; each, a “Borrower”), the Lenders (as defined herein), JPMORGAN CHASE BANK, N.A., as administrative agent (the “Administrative Agent”), MUFG BANK, LTD. and SANTANDER BANK,
N.A., as co-documentation agents (the “Co-Documentation Agents”), the BANK OF AMERICA, N.A., as syndication agent (the “Syndication
Agent”) and BANCO BILBAO VIZCAYA ARGENTARIA, S.A. NEW YORK BRANCH, as sustainability agent (the “Sustainability Agent”, and together with the Syndication Agent and the
Co-Documentation Agents, the “Other Agents”). 
 W I T N E S S E T H: 

WHEREAS, each Borrower has requested, and, subject to the terms and conditions hereof, the Administrative Agent and the Lenders have agreed,
to extend certain credit facilities to the Borrowers on the terms and conditions of this Agreement; 
 NOW, THEREFORE, in consideration of
the premises and the agreements hereinafter set forth, such parties hereby agree as follows: 
 SECTION 1. METHOD OF BORROWING AND
PAYMENT OF FEES 
 1.01. Commitments; Loans. 

(a) Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender agrees, severally and
not jointly, to make revolving loans (“Loans”) in Dollars to each Borrower at any time and from time to time from and including the date hereof to but excluding the Termination Date, or until the earlier termination of its
Commitment, in an aggregate principal amount at any one time outstanding not to exceed the amount of its Commitment; provided that (i) the aggregate principal amount of all Loans to any Borrower outstanding at any time shall not exceed
such Borrower’s Sublimit and (ii) the Total Extensions of Credit shall not exceed the Total Commitments. Loans made to any Borrower shall be the several obligations of such Borrower. 

(b) The Loans made by the Lenders on any Borrowing Date that are ABR Loans shall be (i) in a minimum aggregate principal amount of
$1,000,000, (ii) in an integral multiple of $500,000 in excess of the amount provided in clause (i) above or (iii) in an aggregate principal amount equal to the remaining balance of the Total Commitment, as the case may be. The Loans
made by the Lenders on any Borrowing Date that are Eurodollar Loans shall be (A) in a minimum aggregate principal amount of $3,000,000 (or, if less, in the amount of the Total Commitments less the Total Extensions of Credit) or (B) in an
integral multiple of $1,000,000 in excess of the amount provided in clause (A) above, as the case may be. 

 1.02. Borrowings. 

(a) Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective
Commitments; provided, however, that the failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the
failure of any other Lender to make any Loan required to be made by such other Lender). 
 (b) Each Loan shall be an ABR Loan or a Eurodollar
Loan, as such Borrower may request, subject to and in accordance with Section 2.01. Each Lender may at its option fulfill its Commitment with respect to any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of such Borrower to repay such Loan in accordance with the terms of this Agreement. Borrowings of more than one Type may be
outstanding at the same time; provided, however, that no Borrower shall be entitled to request any Borrowing that, if made, would result in an aggregate of more than ten separate Eurodollar Loans of any Lender being outstanding to such
Borrower hereunder at any one time. For purposes of the foregoing, Eurodollar Loans having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Loans. 

1.03. Termination and Reduction of Commitments; Sublimits. 

(a) Upon at least three Business Days’ prior irrevocable written or facsimile notice to the Administrative Agent (which shall promptly be
communicated by the Administrative Agent to the Lenders), the Borrowers may at any time permanently terminate in whole, or from time to time permanently reduce in part, the Commitment of each Lender in respect of each Borrower, ratably in accordance
with the proportion that each Lender’s Commitment bears to the Total Commitment; provided that such termination or reduction of Commitments shall have the effect of reducing or terminating each Borrower’s Sublimit in a pro rata
amount; provided further that at no time shall the Extensions of Credit of any Lender exceed the Commitment of such Lender. Each such partial reduction of the Commitments of the Lenders shall be in the aggregate principal amount of
$5,000,000 or an integral multiple of $1,000,000 in excess of $5,000,000. 
 (b) Each of the Borrowers shall pay to the Administrative Agent
for the account of the Lenders, on the date of each termination or reduction, the applicable Facility Fee on the amount of the Commitments so terminated or reduced accrued through the date of such termination or reduction. 

(c) The Commitments shall be automatically terminated on the Termination Date, unless sooner terminated pursuant to any other provision of
this Section 1.03 or Section 8. 

  
 2 

 1.04. Extensions of Commitments. 

(a) The Borrowers may, by sending an Extension Letter in substantially the form of Exhibit E to the Administrative Agent (in
which case the Administrative Agent shall promptly deliver a copy to each of the Lenders), not less than 30 days and not more than 60 days prior to each anniversary of the Closing Date, request that the Lenders extend the Termination Date then in
effect (the “Current Termination Date”) so that it will occur one year after the Current Termination Date. Each Lender, acting in its sole discretion, shall advise in response to such extension request, by written notice to the
Administrative Agent given not less than 15 days and not more than 30 days prior to the Current Termination Date or the next occurring anniversary of the Closing Date, as the case may be (such date on which a Lender may give notice of its intention
to extend the Current Termination Date being referred to herein as the “Final Election Date”), whether or not such Lender agrees to such extension (each Lender that so advises the Administrative Agent that it will not extend the
Current Termination Date being referred to herein as a “Non-Extending Lender”). Any Lender that does not advise the Administrative Agent by the Final Election Date shall be deemed to be a Non-Extending Lender. The election of any Lender to agree to such extension shall not obligate any other Lender to agree. 

(b) (i) In response to such extension request under Section 1.04(a), if Lenders holding Commitments that
aggregate 50% or more of the Total Commitments of the Lenders on or prior to the Final Election Date have not agreed to extend the Termination Date, then the Current Termination Date shall not be so extended and the outstanding principal balance of
all loans and other amounts payable hereunder shall be due and payable on the Current Termination Date. 
 (ii) In response
to such extension request under Section 1.04(a), if Lenders holding Commitments that aggregate more than 50% of the Total Commitments on or immediately prior to the Final Election Date have agreed to extend the Current
Termination Date, the Administrative Agent shall notify each Borrower of such agreement in writing no later than five days after the Final Election Date, and effective on the Current Termination Date or the next occurring anniversary of the Closing
Date, as the case may be (the “Extension Date”), the Termination Date applicable to the Lenders that have agreed to such extension (such Lenders being referred to herein as “Continuing Lenders”) shall be the day
that is one year after the Current Termination Date. In the event of such extension, the Commitments of each Non-Extending Lender shall terminate on the Current Termination Date applicable to such Non-Extending Lender, all Loans and other amounts payable hereunder to such Non-Extending Lender shall become due and payable on such Current Termination Date and the Total
Commitments of the Lenders hereunder shall be reduced by the aggregate Commitments of Non-Extending Lenders so terminated on and after such Current Termination Date. Each
Non-Extending Lender shall be required to maintain its original Commitments up to the Termination Date, or Current Termination Date, as applicable, to which such
Non-Extending Lender had previously agreed. 
 (c) In the event that the conditions
in Section 1.04(b)(ii) have been satisfied, the Borrowers shall have the right on or before the Extension Date, at their own expense, to require any Non-Extending Lender to
transfer and assign without recourse or representation (except as to title and the absence of Liens created by it) (in accordance with and subject to the restrictions contained in Section 11.02) all its interests,
rights and obligations under the Loan Documents to one or more banks, financial institutions or other entities (which may include any Lender) (each, an “Extension Lender”); provided that (w) such Extension Lender agrees
that the Termination 

  
 3 

 
Date applicable to it shall be the day that is one year after the Current Termination Date, (x) such Extension Lender, if not already a Lender hereunder, shall be subject to the approval of
the Administrative Agent (which consent shall not be unreasonably withheld), (y) such assignment shall become effective as of the Extension Date and (z) such Extension Lender shall pay to such
Non-Extending Lender in immediately available funds on the effective date of such assignment the principal of and interest accrued to the date of payment on the Loans made by such Non-Extending Lender hereunder and all other amounts accrued for such Non-Extending Lender’s account or owed to it hereunder. Notwithstanding the foregoing, no extension
of the Termination Date shall become effective unless, on the Extension Date, the conditions set forth in Section 5.02 shall be satisfied (with all references in such paragraphs to the making of a Loan being
deemed to be references to the extension of the Commitments on the Extension Date) and the Administrative Agent shall have received certificates to that effect with respect to each Borrower dated the Extension Date and executed by a responsible
officer of such Borrower. 
 (d) Notwithstanding anything to the contrary in this Section 1.04, the
Termination Date shall not be extended unless the aggregate Commitments of the Continuing Lenders and any other Extension Lenders are greater than or equal to the Total Extensions of Credit as of the Extension Date. 

(e) There shall be no more than two extensions under this Section 1.04. 

1.05. Additional Commitments. 

(a) In the event that the Borrowers wish to increase the Commitments at any time when no Event of Default has occurred and is continuing, they
shall notify the Administrative Agent in writing of the amount (the “Proposed Increase Amount”) of such proposed increase (such notice, a “Commitment Increase Notice”); provided that the aggregate amount of
any such increase in Commitments shall be at least $10,000,000. The Borrowers may offer to the existing Lenders and, with the consent of the Administrative Agent (which consent shall not be unreasonably withheld), one or more additional banks,
financial institutions or other entities the opportunity to participate in all or a portion of the Proposed Increase Amount pursuant to Section 1.05(b). 

(b) Any Lender that accepts an offer to it by the Borrowers to increase its Commitment pursuant
to Section 1.05(a) shall, in each case, execute a Commitment Increase Supplement with each Borrower and the Administrative Agent, substantially in the form of Exhibit F, whereupon such Lender shall be
bound by and entitled to the benefits of this Agreement with respect to the full amount of its Commitment as so increased, and Schedule 1.01 shall be deemed to be amended to so increase the Commitment of such Lender. 

(c) Any additional bank, financial institution or other entity which the Borrowers select to offer participation in the increased Commitment
and which elects to become a party to this Agreement and provide a Commitment in an amount so offered and accepted by it pursuant to Section 1.05(a) shall execute an Additional Lender Supplement with each Borrower
and the Administrative Agent, substantially in the form of Exhibit G, whereupon such bank, financial institution or other entity (herein called an “Additional Lender”) shall become a Lender for all purposes and to the
same extent as if originally a party hereto and shall be bound by and entitled to the benefits of this Agreement, and Schedule 1.01 shall be deemed to be amended to add the name and Commitment of such Additional Lender;
provided that the Commitment of any such Additional Lender shall be in an amount not less than $5,000,000. 

  
 4 

 (d) Notwithstanding anything to the contrary in this Section 1.05,
(i) in no event shall any transaction effected pursuant to this Section 1.05 cause the Total Commitments to exceed $3,250,000,000, (ii) in no event shall the aggregate principal amount of Loans owed by
any Borrower exceed such Borrower’s Sublimit, (iii) no Lender shall have any obligation to increase its Commitment unless it agrees to do so in its sole discretion and (iv) any increase of Commitments pursuant to
this Section 1.05 shall be subject to the satisfaction of the conditions set forth in Section 5.02(a) (as modified as for extensions of credit made after the Closing
Date) and Section 5.02(b) on the applicable Accordion Effective Date. 
 (e) Subject to the terms and
conditions hereof, each Additional Lender and each Lender that executes a Commitment Increase Supplement or Additional Lender Supplement, as the case may be, pursuant to Section 1.05(b) (each, an
“Accordion Lender”) shall, on the date upon which its Commitment or increased Commitment, as the case may be, becomes effective (its “Accordion Effective Date”), make Loans to each Borrower, and each Borrower shall
prepay outstanding Loans owing to the Lenders other than such Accordion Lender(s), in amounts such that, after giving effect to the making of such Loans by such Accordion Lender and the prepayment of outstanding Loans owing to Lenders other than
such Accordion Lender(s), the aggregate principal amount of Loans owing to each Lender shall equal such Lender’s Commitment Percentage (determined after giving effect to the new or increased Commitment of such Accordion Lender(s)) of the
aggregate amount of the Loans outstanding on such Accordion Effective Date. On such Accordion Effective Date, each Borrower shall pay to the Administrative Agent, for the account of the Lenders, any amounts owing to such Lenders pursuant
to Section 2.12 in respect of Loans prepaid on such Accordion Effective Date pursuant to this Section 1.05(e). 

(f) At the time the Borrowers submit a Commitment Increase Notice, they shall advise the Lenders of the proposed new Sublimits. 

1.06. Adjustments of Sublimits. The Borrowers may from time to time so long as no Event of Default exists with respect to any
Borrower, upon not less than five Business Days’ notice to the Administrative Agent in a Sublimit Adjustment Letter in substantially the form of Exhibit H (in which case the Administrative Agent shall promptly deliver a
copy to each of the Lenders), change their respective Sublimits; provided that (i) the aggregate amount of the Sublimits shall equal but not exceed the Total Commitments, (ii) each Sublimit shall be an
integral multiple of $5,000,000 and (iii) the Sublimit of each Borrower shall not exceed such Borrower’s Maximum Sublimit. 

  
 5 

 SECTION 2.  

THE LOANS 
 2.01. Notice
and Provision of Loans. 
 (a) Each Borrower shall give the Administrative Agent written or facsimile notice (or telephone notice
promptly confirmed in writing or by facsimile) (x) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York time, three Business Days before a proposed Borrowing by such Borrower, or (y) in the case of an ABR Borrowing,
not later than 11:00 a.m., New York time, on the day of a proposed Borrowing by such Borrower. Such notice shall be irrevocable and shall in each case refer to this Agreement and specify (i) whether such Borrowing is to be a Eurodollar
Borrowing or an ABR Borrowing; (ii) the date of such Borrowing (which shall be a Business Day) and the amount thereof; and (iii) if such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect thereto. If no election as
to the Type of Borrowing is specified in any such notice, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period with respect to any Eurodollar Borrowing is specified in any such notice, or with respect to any notice provided
for under Section 2.07(a) hereof, then such Borrower shall be deemed to have selected an Interest Period of one month’s duration. Upon receipt of any such notice from a Borrower, the Administrative Agent
shall promptly notify each Lender thereof. 
 (b) Each Lender shall make a Loan in the amount required, as determined
under Section 2.13, with respect to each Borrowing hereunder on the Borrowing Date by wire transfer of immediately available funds to the Administrative Agent in New York, New York, not later than 12:00 noon, New York
time, and the Administrative Agent shall by 3:00 p.m., New York time, credit the amounts so received to the general deposit account of such Borrower with the Administrative Agent or such other general deposit account of such Borrower designated in
writing to the Administrative Agent or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders. Unless the Administrative Agent
shall have received notice from a Lender (x) in the case of a Eurodollar Loan, prior to the date of any such Borrowing, and (y) in the case of an ABR Loan, not later than 12:00 noon, New York time, on the date of any Borrowing, that such
Lender will not make available to the Administrative Agent such Lender’s portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing
in accordance with this Section 2.01(b) and the Administrative Agent may, in reliance upon such assumption, make available to such Borrower on such date a corresponding amount. If and to the extent that such
Lender shall not have made such portion available to the Administrative Agent, such Lender and such Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each
day from and including the date such amount is made available to such Borrower to but excluding the date such amount is paid to the Administrative Agent, at (i) in the case of a payment to be made by such Borrower, the interest rate applicable
at the time to the Loans comprising such Borrowing, and (ii) in the case of a payment to be made by such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation. If such Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to such Borrower the amount of such
interest paid by such Borrower for such period. If such Lender pays its portion of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan as part of such Borrowing for purposes of this
Agreement and such Borrower’s obligation under this Section 2.01(b) to pay to the Administrative Agent such corresponding amount shall be deemed terminated. Any payment by such Borrower shall be without
prejudice to any claim such Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent. 

  
 6 

 (c) Notwithstanding any other provisions of this Agreement, no Borrower shall be entitled to
request any Borrowing if the Interest Period requested with respect thereto would end after the Termination Date. 
 2.02. Repayment
of Loans. The outstanding principal balance of each Loan shall be payable on the Interest Payment Date with respect thereto unless such Loan is continued or converted in accordance with Section 2.07;
provided that in any event the outstanding principal balance of each Loan shall be payable not later than the earlier of (i) the one-year anniversary of the Borrowing Date with respect to
such Loan and (ii) the Termination Date. Each Loan shall bear interest on the outstanding principal balance thereof from the applicable Borrowing Date as set forth in Section 2.04. 

2.03. Facility Fees, etc. 

(a) Each Borrower agrees to pay to the Administrative Agent for the account of each Lender a facility fee (a “Facility Fee”)
for the period from and including the Closing Date until all of the Loans have been repaid and the Commitments have been terminated, computed at such Borrower’s Facility Fee Rate then in effect on the Commitment Percentage of such Lender of the
total amount of the Facility (drawn or undrawn) multiplied by such Borrower’s Fee Percentage, payable quarterly in arrears on the last day of each March, June, September and December, on the Termination Date, (and if applicable, thereafter on
demand), commencing on the first of such dates to occur after the Closing Date. If any Commitment shall be reduced in part, the Facility Fee shall be paid in accordance with Section 1.03(b). 

(b) Each Borrower agrees to pay to the Administrative Agent the Fees in the amounts and on the dates previously agreed to in writing by such
Borrower and the Administrative Agent. 
 (c) All Fees shall be paid on the dates due, in immediately available funds, to the Administrative
Agent for distribution, if and as appropriate, among the Lenders. Once paid, none of the Fees shall be refundable under any circumstances. 

2.04. Interest Rates and Payment Dates. 

(a) Each Eurodollar Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the
Eurodollar Rate determined for such day plus the Applicable Margin. 
 (b) Each ABR Loan shall bear interest at a rate per annum equal
to the ABR plus the Applicable Margin. 
 (c) (i) If all or a portion of the principal amount of any Loan shall not be paid when
due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of
this Section 2.04 plus 2%; and (ii) if all or a portion of any interest 

  
 7 

 
payable on any Loan or any Fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum equal to the rate then applicable to ABR Loans plus 2%; in each case, with respect to clauses (i) and (ii) above, from the date of such non-payment until such amount is
paid in full. 
 (c) Interest shall be payable in arrears on each Interest Payment Date; provided that interest accruing pursuant
to Section 2.04(c) shall be payable from time to time on demand. 
 2.05. Computation of Interest
and Fees. 
 (a) Interest and Fees payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to ABR Loans the rate of interest on which is calculated on the basis of the Prime Rate, the interest thereon shall be calculated on the
basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify each Borrower and the
Lenders of each determination of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a change in the ABR or Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such
change becomes effective. The Administrative Agent shall as soon as practicable notify each Borrower and the Lenders of the effective date and the amount of each such change in interest rate. 

(b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and
binding on each Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of any Borrower, deliver to such Borrower a statement showing the quotations used by the Administrative Agent in determining
any interest rate pursuant to Section 2.09(a). 
 (c) If, as a result of any restatement of public disclosure, inaccuracy in any
certificate delivered pursuant to the foregoing or similar miscalculation of the Sustainability Amount and an increase in the Applicable Margins for such period would result from proper calculations based thereon, the Borrowers shall retroactively
be obligated to pay (or, after the occurrence of an actual or deemed entry of an order for relief with respect to a Borrower Debtor Relief Laws, automatically and without further action by the Administrative Agent or any Lender), an amount equal to
the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period. 

2.06. Alternate Rate of Interest. If prior to the first day of any Interest Period the Administrative Agent shall have determined
(which determination shall be conclusive and binding upon the relevant Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest
Period, or that such Eurodollar Rate is not available, the Administrative Agent shall give telecopy or telephonic notice thereof to such Borrower and the Lenders as soon as practicable thereafter. If such notice is given, then (x) any
Eurodollar Loans requested to be made on the first day of such Interest Period shall be made as ABR Loans, (y) any Loans that were to have been converted on the first day of such Interest Period to Eurodollar Loans shall be continued as
ABR Loans and (z) any outstanding Eurodollar Loans shall be converted, on the last day of the 

  
 8 

 
then-current Interest Period, to ABR Loans. Until such notice has been withdrawn by the Administrative Agent, no further Eurodollar Loans shall be made or continued as such, nor shall such
Borrower have the right to convert Loans to Eurodollar Loans. If at any time the Administrative Agent determines (which determination shall be conclusive absent manifest error) that (i) the circumstances set forth in above are unlikely
to be temporary or (ii) the circumstances set forth above have not arisen but either (w) the supervisor for the administrator of the Screen Rate has made a public statement that the administrator of the Screen
Rate is insolvent (and there is no successor administrator that will continue publication of the Screen Rate), (x) the administrator of the Screen Rate has made a public statement identifying a specific date after which the Screen Rate will
permanently or indefinitely cease to be published by it (and there is no successor administrator that will continue publication of the Screen Rate), (y) the supervisor for the administrator of the Screen Rate has made a public statement identifying
a specific date after which the Screen Rate will permanently or indefinitely cease to be published or (z) the supervisor for the administrator of the Screen Rate or a Governmental Authority having jurisdiction over the Administrative
Agent has made a public statement identifying a specific date after which the Screen Rate may no longer be used for determining interest rates for loans, then the Administrative Agent and the Borrowers shall endeavor to establish an alternate rate
of interest to the Eurodollar Base Rate and/or Eurodollar Rate that gives due consideration to the then prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time, and shall enter into an
amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable (but for the avoidance of doubt, such related changes shall not include a reduction of the Applicable
Margin); provided that, if such alternate rate of interest as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement. Notwithstanding anything to the contrary in
Section 11.07, such amendment shall become effective without any further action or consent of any other party to this Agreement so long as the Administrative Agent shall not have received, within five Business Days of the date notice of
such alternate rate of interest is provided to the Lenders, a written notice from the Required Lenders stating that such Required Lenders object to such amendment. Until an alternate rate of interest shall be determined in accordance with this
Section 2.06, (x) any notice provided under Section 2.07 that requests the conversion of any Loan to, or continuation of any Loan as, a Eurodollar Loan shall be ineffective and (y) if any notice provided pursuant to
Section 2.01 requests a Eurodollar Loan, such Loan shall be made as an ABR Loan. 
 2.07. Continuation and
Conversion of Loans. 
 (a) Each Borrower shall have the right, with respect to any Eurodollar Loan made to such Borrower, at the end of
any Interest Period, on three Business Days’ prior telephonic notice to the Administrative Agent (which shall be confirmed in writing on the next Business Day thereafter) (i) to continue such Loan into a subsequent Interest Period
(provided that no Loan shall be continued into an Interest Period that ends on a date that is later than the earlier to occur of the one-year anniversary of the Borrowing Date with respect to such
Loan and the Termination Date) or (ii) to convert such Loan into an ABR Loan. 
 (b) Each Borrower shall have the right, with respect to
any ABR Loan made to such Borrower, at any time, on three Business Days’ prior telephonic notice to the Administrative Agent (which shall be confirmed in writing on the next Business Day thereafter), to convert such Loan into a Eurodollar Loan.

  
 9 

 (c) Any notice required to be given by any Borrower to the Administrative Agent pursuant to
this Section 2.07 shall be irrevocable. Any notice given by any Borrower to the Administrative Agent hereunder shall be promptly communicated by the Administrative Agent to the Lenders. 

(d) In addition to the above notice requirements, any continuation or conversion by such Borrower pursuant to
this Section 2.07 shall be subject to the following: 
 (i) no Event of Default shall
have occurred and be continuing at the time of such continuation or conversion; 
 (ii) if less than all the Loans at the
time outstanding shall be continued or converted, such continuation or conversion shall be made pro rata among the Lenders in accordance with the respective principal amounts of the Loans of the Type being continued or converted held by the Lenders
immediately prior to such continuation or conversion; 
 (iii) each conversion shall be effected by each Lender by applying
the proceeds of the new ABR Loan or Eurodollar Loan, as the case may be, to the Loan being converted; 
 (iv) upon each
conversion of an ABR Loan into a Eurodollar Loan, and upon the conversion of a Eurodollar Loan into an ABR Loan, such Borrower shall pay all accrued interest on such Loan being converted at the time of conversion; 

(v) if the new Loan made in respect of a conversion shall be a Eurodollar Loan, the first Interest Period with respect thereto
shall commence on the date of conversion; 
 (vi) any Loan which may not be continued as or converted into a Eurodollar Loan
shall be automatically continued as or converted to an ABR Loan; provided that each Loan shall be paid in full not later than the earlier to occur of the one-year anniversary of the Borrowing Date with
respect to such Loan and the Termination Date; 
 (vii) (vii) a Eurodollar Loan may be converted to an ABR Loan only on the
last day of an Interest Period; and (viii) any conversion shall be subject to Section 1.01(b) hereof. 

In the event that any Borrower shall not give notice to continue any Eurodollar Loan as a Eurodollar Loan into a subsequent Interest Period,
or to convert any such Loan, such Loan (unless repaid) shall automatically become an ABR Loan at the expiration of the then current Interest Period. 

  
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 2.08. Prepayments. 

(a) Each Borrower shall have the right, upon notice to the Administrative Agent, at any time and from time to time to prepay any Borrowing, in
whole or in part, provided that such notice must be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Loans and (B) on the date of prepayment of ABR
Loans); provided, however, that each partial prepayment shall be in an amount that is (i) an integral multiple of $500,000 and not less than $1,000,000, for any ABR Loan, or (ii) an integral multiple of $1,000,000 and not
less than $3,000,000, for any Eurodollar Loan. 
 (b) If, on the date of any termination or reduction of the Commitments pursuant
to Section 1.03, or any adjustment of Sublimits pursuant to Section 1.06, the aggregate principal amount of all Loans to any Borrower outstanding at any time exceeds such Borrower’s
Sublimit (such excess, an “Over-Advance”), then such Borrower shall pay or prepay so much of the Loans in an amount equal to the lesser of such Over-Advance and the aggregate principal amount of all Loans outstanding to such
Borrower. 
 (c) Each notice of prepayment shall specify the prepayment date and the principal amount of each Borrowing (or portion thereof)
to be prepaid, shall be irrevocable and shall commit such Borrower to prepay such Borrowing by the amount stated therein on the date stated therein. All prepayments under this Section 2.08 shall be subject
to Section 2.12 but otherwise without premium or penalty. All prepayments under this Section 2.08 shall be accompanied by accrued interest on the principal amount being prepaid
to the date of payment. Each prepayment shall be made to the Administrative Agent, to be distributed to the Lenders, pro rata in accordance with the proportion that each Lender’s Loans of the Type prepaid bears to the aggregate amount of all
Lenders’ Loans of such Type outstanding. 
 2.09. Reserve Requirements; Change in Circumstances. 

(a) Notwithstanding any other provision herein, if any Change in Law shall (i) subject any Lender to any tax of any kind whatsoever with
respect to this Agreement or any Eurodollar Loan made by it, or change the basis of taxation of payments to any Lender of the principal of or interest on any Eurodollar Loan made by such Lender or any Fees or other amounts payable hereunder (other
than (A) changes in respect of taxes imposed on the overall net income of such Lender by the jurisdiction in which such Lender has its principal office or by any political subdivision or taxing authority therein and (B) Taxes or Other
Taxes, which shall be governed by Section 2.16); (ii) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or
for the account of, or credit extended or participated in by any Lender (except any reserve requirement reflected in the Eurodollar Rate hereunder); or (iii) impose on any Lender or the interbank eurodollar market any other condition, cost or
expense affecting this Agreement or Eurodollar Loans made by such Lender; and the result of any of the foregoing shall be to increase the cost to such Lender of making, converting to, continuing or maintaining any Eurodollar Loan or of maintaining
its obligation to make any such Loan, or to increase the cost to such Lender, or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then, upon prompt request of such Lender,
such Borrower will pay to such Lender as provided in Section 2.09(c) such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered. 

  
 11 

 (b) If any Lender determines that any Change in Law affecting such Lender or any Lending Office
of such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding
company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by such Lender, to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law
(taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy and liquidity), then from time to time, each Borrower shall pay as provided
in Section 2.09(c) to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered. 

(c) (c) A certificate of each Lender signed by an officer of the respective Lender setting forth in reasonable detail such amount or amounts
necessary to compensate such Lender or its holding company as specified in paragraph Section 2.09(a) or 2.09(b), as the case may be, shall be delivered to the relevant Borrower and shall be conclusive
absent manifest error. Such Borrower shall pay each Lender the amount shown as due on any such certificate delivered by it within 10 days after its receipt of the same. 

(d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section 2.09 shall
not constitute a waiver of such Lender’s right to demand such compensation. The protection of this Section 2.09 shall be available to each Lender regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or other change or condition which shall have occurred or been imposed. 

2.10. Change in Legality. 

(a) Notwithstanding any other provision herein, if any Lender determines that any Change in Law shall make it unlawful for such Lender to make
or maintain any Eurodollar Loan or to give effect to its obligations as contemplated hereby with respect to any Eurodollar Loan, then, by prompt written notice to each Borrower and to the Administrative Agent, such Lender may: 

(i) declare that Eurodollar Loans will not thereafter be made by such Lender hereunder, whereupon any request by any Borrower
for a Eurodollar Borrowing shall, as to such Lender only, be deemed a request for an ABR Loan unless and until such declaration shall be subsequently withdrawn; and 

(ii) require that all outstanding Eurodollar Loans made by it be converted to ABR Loans, in which event all such Eurodollar
Loans shall be automatically converted to ABR Loans as of the effective date of such notice as provided in Section 2.10(c). 

(b) In the event any Lender shall give notice pursuant to Section 2.10(a), all payments and prepayments of
principal that would otherwise have been applied to repay the Eurodollar Loans that would have been made by such Lender or the converted Eurodollar Loans of such Lender shall instead be applied to repay the ABR Loans made by such Lender in lieu of,
or resulting from the conversion of, such Eurodollar Loans. 

  
 12 

 (c) For purposes of this Section 2.10, a notice to any Borrower by
any Lender shall be effective as to each Eurodollar Loan, if lawful, on the last day of the Interest Period currently applicable to such Eurodollar Loan; in all other cases such notice shall be effective on the date of receipt by such Borrower. 

2.11. New Office or Agency; Replacement of Lenders. 

(a) If any Lender (i) requests compensation under Section 2.09, (ii) gives notice pursuant
to Section 2.10(a) or (iii) requires the Borrower to pay additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16,
then in each case such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (x) would eliminate or reduce amounts payable pursuant to Section 2.09 or 2.16 or cause
such Lender to withdraw its notice pursuant to Section 2.10(a), as the case may be, in the future, and (y) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. Each Borrower hereby agrees to pay its pro rata share of the reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. 

(b) If any Lender requests compensation under Section 2.09, or if any Borrower is required to pay additional
amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16 and, in each case, such Lender has declined or is unable to designate a different Lending Office in
accordance with Section 2.11(a), or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrowers may, at their sole expense and effort, upon notice to such
Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse or representation (except as to title and the absence of any Liens created by it) (in accordance with and subject to the restrictions contained in, and
consents required by, Section 11.02), all of its interests, rights and obligations under this Agreement and the other Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be
another Lender, if a Lender accepts such assignment); provided that: 
 (i) the Borrowers shall have paid to the
Administrative Agent the assignment fee (if any) specified in Section 11.02; 
 (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts
under Section 2.12) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the applicable Borrower (in the case of all other amounts); 

(iii) in the case of any such assignment resulting from a claim for compensation
under Section 2.09 or payments required to be made pursuant to Section 2.16, such assignment will result in a reduction in such compensation or payments thereafter; 

  
 13 

 (iv) such assignment does not conflict with applicable law; and 

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

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

2.12. Indemnity. 
 (a)
Each Borrower shall indemnify each Lender against any loss or expense which such Lender may sustain or incur as a consequence of (i) any failure by such Borrower to fulfill on the date of any Borrowing hereunder the applicable conditions set
forth in Section 4, (ii) any failure by such Borrower to borrow or to refinance, convert, continue or prepay any Loan hereunder after irrevocable notice of such borrowing, refinancing, conversion, continuation or
prepayment has been given pursuant to Section 2.01, 2.07 or 2.08, (iii) any payment, prepayment or conversion by such Borrower of a Eurodollar Loan required by any other provision of
this Agreement or otherwise made or deemed made on a date other than the last day of the Interest Period applicable thereto, (iv) any default in payment or prepayment of the principal amount of any Loan or any part thereof or interest accrued
thereon by such Borrower, as and when due and payable (at the due date thereof, whether by scheduled maturity, acceleration, irrevocable notice of prepayment or otherwise) or (v) the occurrence of any Event of Default with respect to such
Borrower; including, in each case, any loss or reasonable expense sustained or incurred or to be sustained or incurred in liquidating or employing deposits from third parties acquired to effect or maintain such Loan or any part thereof as a
Eurodollar Loan. Such loss or reasonable expense shall include an amount equal to the excess, if any, as reasonably determined by such Lender, of (x) its cost of obtaining the funds for the Loan being paid, prepaid, converted or not borrowed,
converted or continued (assumed to be the Eurodollar Rate applicable thereto) for the period from the date of such payment, prepayment, conversion or failure to borrow, convert or continue to the last day of the Interest Period for such Loan (or, in
the case of a failure to borrow, convert or continue, the Interest Period for such Loan which would have commenced on the date of such failure) over (y) the amount of interest (as reasonably determined by such Lender) that would be realized by
such Lender in reemploying the funds so paid, prepaid, converted or not borrowed, converted or continued for such period or Interest Period, as the case may be. A certificate of any Lender setting forth in reasonable detail any amount or amounts
which such Lender is entitled to receive pursuant to this Section 2.12 shall be delivered to the relevant Borrower and shall be conclusive absent manifest error. Such Borrower shall pay each Lender the amount
shown as due on any certificate within 15 days after its receipt of same. 
 (b) Payments made by any Borrower under
this Section 2.12 shall be the several obligation of such Borrower and no Borrower shall have any liability for, or shall guarantee any obligation of, any other Borrower. 

  
 14 

 (c) The obligations of each Borrower pursuant to this Section shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable hereunder. 
 2.13. Pro Rata Treatment. Each Borrowing,
each payment or prepayment of principal of any Borrowing, each payment of interest on the Loans, each payment on account of any Facility Fee, each reduction of the Commitments and each refinancing of any Borrowing with, conversion of any Borrowing
to, or continuation of any Borrowing as, a Borrowing of any Type shall be allocated pro rata among the Lenders in accordance with their respective applicable Commitments (or, if such Commitments shall have expired or been terminated, in accordance
with the respective principal amounts of their outstanding Loans), except in each case (i) as otherwise expressly contemplated by this Agreement and (ii) as required to give effect to the provisions of Sections
2.09, 2.10, 2.11 and 2.12. Each Lender agrees that in computing such Lender’s portion of any Borrowing to be made hereunder, the Administrative Agent may, in its discretion, round each
Lender’s Percentage of such Borrowing, to the next higher or lower whole Dollar amount. 
 2.14. Sharing of Setoffs. If any
Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender receiving payment of a proportion of
the aggregate amount of its Loans and accrued interest thereon or other such obligations greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative
Agent of such fact and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that: 

(i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and (ii) the provisions of this Section 2.14 shall not be construed to apply to (x) any
payment made by a Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender) or (y) any payment obtained by a Lender as consideration
for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to a Borrower or any Subsidiary thereof (as to which the provisions of this paragraph shall apply). 

Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Borrower in the amount of such
participation. 

  
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 2.15. Payments. 

(a) Each Borrower shall make each payment (including principal of or interest on any Borrowing of such Borrower or any Fees or other amounts
owing by such Borrower) hereunder not later than 12:00 p.m., New York time, on the date when due in Dollars to the Administrative Agent, for the account of the Lenders, at the Funding Office, in immediately available funds, without condition or
deduction for any counterclaim, deduction, recoupment or setoff. 
 (b) Whenever any payment (including principal of or interest on any
Borrowing of such Borrower or any Fees or other amounts owing by such Borrower) hereunder shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of interest or Fees, if applicable. 
 2.16. Taxes. 

(a) Any and all payments by or on account of any obligation of any Borrower hereunder or under any other Loan Document shall be made, in
accordance with Section 2.15, free and clear of and without reduction or withholding for any and all present or future taxes, levies, imposts, duties, deductions, assessments, fees, withholdings or other charges
imposed by any Governmental Authority, and all liabilities with respect thereto, including interest, additions to tax and penalties, excluding taxes imposed on the net income of the Administrative Agent or any Lender (or any
transferee or assignee thereof, including a participation holder (any such entity being called a “Transferee”)) and any branch profits or franchise taxes imposed on the Administrative Agent or any Lender (or Transferee) by the
United States or any jurisdiction under the laws of which the Administrative Agent or any such Lender (or Transferee) is organized or doing business in or any political subdivision thereof (all such nonexcluded taxes, levies, imposts, duties,
deductions, assessments, fees, withholdings, charges and liabilities hereinafter referred to as “Taxes”). If any Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender (or
any Transferee) or the Administrative Agent, then (i) the sum payable shall be increased by the amount necessary so that after making all required deductions (including deductions applicable to additional sums payable under
this Section 2.16) such Lender (or Transferee) or the Administrative Agent (as the case may be) shall receive an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower
shall make such deductions and (iii) such Borrower shall timely pay the full amount deducted to the relevant taxing authority or other Governmental Authority in accordance with applicable law; provided that no Borrower shall be
required to pay any additional amounts to any Lender (or Transferee) pursuant to this Section 2.16(a) or to provide indemnification pursuant to Section 2.16(c) to the extent the
obligation to pay such additional amounts or to provide such indemnification relates to U.S. federal withholding taxes imposed pursuant to FATCA. 

(b) Without limiting the provisions of Section 2.16(a), each Borrower shall timely pay to the relevant
Governmental Authority in accordance with applicable law all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies (hereinafter referred to as “Other Taxes”) that arise from
any payment made by such Borrower hereunder or under any other Loan Document or from the execution, delivery, enforcement or registration of, or otherwise with respect to, this Agreement or any other Loan Document. 

  
 16 

 (c) Each Borrower will indemnify each Lender (or Transferee) and the Administrative Agent, within
10 Business Days after written demand therefor, for the full amount of any Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.16) paid by such Lender
(or Transferee) or the Administrative Agent, as the case may be, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant taxing authority or other Governmental Authority. If any Lender (or Transferee) or the Administrative Agent determines, in its sole discretion, that is has received a refund in respect of any Taxes or Other Taxes as to which
it has been indemnified by any Borrower or with respect to which any Borrower has paid additional amounts pursuant to this Section 2.16, it shall promptly notify such Borrower of such refund and shall, within 30 days
after receipt of a request by such Borrower (or promptly upon receipt, if such Borrower has requested application for such refund pursuant hereto), pay such refund to such Borrower (but only to the extent of amounts that have been paid by such
Borrower under this Section 2.16 with respect to such refund), net of all out-of-pocket expenses of such Lender (or Transferee) or
the Administrative Agent, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that such Borrower, upon the request of such Lender (or
Transferee) or the Administrative Agent, agrees to repay such refund (plus penalties, interest or other charges imposed by the relevant Governmental Authority) to such Lender (or Transferee) or the Administrative Agent in the event such Lender (or
Transferee) or the Administrative Agent is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (c), in no event will the indemnified party be required to pay any amount to an
indemnifying party pursuant to this paragraph (c) the payment of which would place the indemnified party in a less favorable net after-tax position than the indemnified party would have been in if the Tax
subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. Nothing contained in
this Section 2.16(c) shall require any Lender (or Transferee) or the Administrative Agent to make available any of its tax returns (or any other information relating to taxes that it deems to be confidential) to any Borrower or any
other Person. 
 (d) As soon as practicable, and in any event within 30 days, after the date of any payment of Taxes or Other Taxes by any
Borrower to a Governmental Authority, such Borrower will furnish to the Administrative Agent, at its address referred to in Section 11.01, the original or a certified copy of a receipt issued by such Governmental
Authority evidencing payment thereof, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. 

(e) Without prejudice to the survival of any other agreement contained herein, the agreements and obligations contained in
this Section 2.16 shall survive the payment in full of the principal of and interest on all Loans made hereunder. 

(f) Upon the written request of any Borrower, each Lender (or Transferee) that is not a “U.S. Person” as defined in
Section 7701(a)(30) of the Code (a “Non-U.S. Lender”) shall deliver to each of the Borrowers and the Administrative Agent (or, in the case of a Participant, to the Lender from which the
related participation shall have been purchased) two copies of either 

  
 17 

 
U.S. Internal Revenue Service Form W-8BEN, Form W-8BEN-E or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of
“portfolio interest”, a statement substantially in the form of Exhibit D and a Form W-8BEN or Form
W-8BEN-E, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Lender
claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrowers under this Agreement and the other Loan Documents. In addition, each Non-U.S. Lender shall
deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify each
of the Borrowers at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrowers (or any other form of certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant to this paragraph that such Non-U.S. Lender
is not legally able to deliver. 
 (g) A Lender that is entitled to an exemption from or reduction of withholding tax under the law of the
jurisdiction in which such Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement or any other Loan Document shall deliver to each of the Borrowers (with a copy to
the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by any Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if requested by any Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably
requested by such Borrower or the Administrative Agent as will enable such Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. 

(h) If a payment made to a Lender under any Loan Document would be subject to Federal withholding Tax imposed by FATCA if such Lender were to
fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrowers and the Administrative Agent at the time or
times prescribed by law and at such time or times reasonably requested by the Borrowers or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by the Borrowers or the Administrative Agent as may be necessary for the Borrowers and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied
with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (h), “FATCA” shall include any amendments made to FATCA after the date of this
Agreement 
 (i) No Borrower shall be required to pay any additional amounts to any Lender (or Transferee) in respect of United States
Federal withholding tax pursuant to Section 2.16(a) or to provide indemnification pursuant to Section 2.16(c) if the obligation to pay such additional amounts or to provide such
indemnification would not have arisen but for a failure by such 

  
 18 

 
Lender (or Transferee) to comply with the provisions of Sections 2.16(f), 2.16(g) and 2.16(h); provided, however, that each Borrower shall be required to
pay those amounts or provide such indemnification to any Lender (or Transferee) that it was required to pay or indemnify hereunder prior to the failure of such Lender (or Transferee) to comply with the provisions of Sections
2.16(f) and 2.16(g). 
 (j) Each Lender shall severally indemnify the Administrative Agent, within 10 Business Days
after written demand therefor, for (i) any taxes attributable to such Lender (but only to the extent that the Borrowers have not already indemnified the Administrative Agent for such taxes and without limiting the obligations of the Borrowers
to do so) and (ii) any taxes attributable to such Lender’s failure to comply with the provisions of Section 11.02(b) relating to the maintenance of a Participant Register, in either case, that are payable or paid by the Administrative
Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (j). 

(k) The obligations of the Borrowers under this Section 2.16 shall be the several obligations of each
Borrower and no Borrower shall have any liability for, or shall guarantee any obligation of, any other Borrower. 
 (l) Each party’s
obligations under this Section 2.16 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and
the repayment, satisfaction or discharge of all obligations under the Loan Documents. 
 SECTION 3.  

[RESERVED] 
 SECTION 4.  

REPRESENTATIONS AND WARRANTIES 

Each Borrower hereby severally represents and warrants that: 

4.01. Corporate Existence and Power. Each of such Borrower and its Significant Subsidiaries (i) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization, (ii) is duly qualified to do business and is in good standing as a foreign corporation under the laws of each material jurisdiction where its
ownership, lease or operation of property or the conduct of its business requires such qualification and (iii) has all requisite corporate power and authority and the legal right (A) to own its assets and carry on the
business in which it is engaged and (B) in the case of such Borrower, to execute and deliver this Agreement and the other Loan Documents to which it is a party and perform its obligations under this Agreement and the other Loan Documents
to which it is a party. 

  
 19 

 4.02. Due Authorization, Compliance with Law, Enforceable Obligations, etc. 

(a) The execution and delivery of this Agreement and the other Loan Documents to which it is a party by such Borrower and the performance by
such Borrower of its obligations under this Agreement and the other Loan Documents to which it is a party have been duly authorized by all necessary corporate action (including any necessary stockholder action) on the part of such Borrower, and do
not and will not (i) violate (A) any provision of any law, rule, regulation (including any applicable public service or public utility law of New York, Maine, Connecticut, Massachusetts or any other state, the Federal Power Act, and
Regulation U and Regulation X of the Board of Governors of the Federal Reserve System), order, writ, judgment, decree, determination or award presently in effect having applicability to such Borrower, (B) the Certificate of Incorporation, as
amended, or By-laws of such Borrower or (C) any material indenture, agreement or other instrument to which such Borrower is a party, or by which such Borrower or any of its property is bound, (ii) be
in conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument or (iii) result in or require the creation or imposition of any lien of any
nature upon any of the assets or properties of such Borrower or its Subsidiaries. 
 (b) This Agreement and the other Loan Documents to which
such Borrower is a party have been duly executed and delivered by such Borrower and constitute the legal, valid and binding obligations of such Borrower, enforceable against such Borrower in accordance with their respective terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other laws or principles of equity relating to or affecting the enforcement of creditors’ rights or contractual obligations
generally. 
 (c) Such Borrower has obtained from all Governmental Authorities with jurisdiction all approvals, authorizations and consents
and has made, or will make when due, all filings with such Governmental Authorities required in connection with the execution and delivery of this Agreement and the other Loan Documents to which it is a party by such Borrower and the performance by
such Borrower of its obligations under this Agreement and the other Loan Documents to which it is a party (including approvals, authorizations, consents and filings (if any) required under any applicable public service or public utility law of New
York, Maine, Connecticut or Massachusetts or any other state and the Federal Power Act, each as amended from time to time, and the rules, orders and regulations issued in connection therewith), and all such approvals, authorizations and consents are
final and in full force and effect. 
 4.03. Financial Condition. (Each Borrower has heretofore provided the Lenders with
(i) audited consolidated financial statements of such Borrower and its Subsidiaries consisting of a consolidated balance sheet as at December 31, 2017, and the related consolidated statements of income, changes in common
stock equity and cash flows audited by KPMG LLP, independent certified public accountants and (ii) unaudited consolidated financial statements for the quarterly periods ended March 31, 2018, together with related consolidated
statements of income, changes in common stock equity and cash flows for the respective periods ending on such dates. All such consolidated financial statements, including the related schedules and any notes thereto, fairly present the consolidated
financial position of such Borrower and its Subsidiaries as of the dates thereof and the results of its operations and changes in its common stock equity and cash flows for the periods then ended, all in accordance with GAAP applied on a consistent
basis. Since 

  
 20 

 
December 31, 2017, there has not occurred any event, development or circumstance that has had or could reasonably be expected to have a Material Adverse Effect, except as may have been
disclosed in Avangrid’s Registration Statement on Form S-4, Avangrid’s Annual Report on Form 10-K for the year ended December 31, 2017, Avangrid’s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2018, or Current Report and any Current Report on Form 8-K of Avangrid or UIL Holdings Corporation, in each case as filed with the SEC prior to the Closing Date. 

4.04. Litigation. Except as disclosed on Schedule 4.04 and in Avangrid’s Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 2018 and Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC prior to the Closing Date, there are
no actions, suits or proceedings pending or, to the knowledge of such Borrower, threatened against or affecting such Borrower or any of its properties by or before any court or any Federal, state, local, foreign or other governmental agency or
regulatory authority which, if determined adversely to such Borrower, would have a material adverse effect on the financial condition or business of such Borrower or would materially impair the ability of such Borrower to perform its obligations
under this Agreement or the other Loan Documents to which it is a party. 
 4.05. Tax Returns. Such Borrower has filed or caused
to be filed all Federal, state, local and foreign tax returns which, to its knowledge, are required to be filed and has paid or caused to be paid all taxes as shown on such returns or on any assessment received by it to the extent that such taxes
have become due, except taxes the validity of which is being contested in good faith by appropriate proceedings and with respect to which such Borrower shall have set aside on its books such reserves as are required in accordance with generally
accepted accounting principles with respect to any such tax. 
 4.06. Investment Company Act. Such Borrower is not an
“investment company” as that term is defined in, and is not otherwise subject to regulation under, the Investment Company Act of 1940, as amended. 

4.07. Other Agreements. Such Borrower is not in default with respect to any material indenture, mortgage, loan agreement or
evidence of indebtedness to which it is a party or by which it or any of its properties may be bound, which default would materially adversely affect such Borrower’s financial condition. 

4.08. Federal Reserve Regulations. No part of the proceeds of any Loans will be used for “buying” or “carrying”
any “margin stock” within the respective meanings of each of the quoted terms under Regulation U as now and from time to time hereafter in effect or for any purpose that violates the provisions of the Regulations of the Board. 

4.09. No Material Misstatements. No information, report, financial statement, exhibit, annual certificate, including, without
limitation, with respect to the Sustainability Amount and information and calculations related thereto, or schedule furnished by or on behalf of such Borrower to the Administrative Agent or any Lender in connection with the negotiation of this
Agreement or the other Loan Documents or included therein or delivered pursuant thereto contained, contains or will contain any material misstatement of fact or omitted, omits or will 

  
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omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not misleading; provided
that, with respect to any financial projections, such Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time. 

4.10. Employee Benefit Plans. Such Borrower is in compliance in all material respects with the applicable provisions of ERISA and
the regulations and published interpretations thereunder. No Reportable Event has occurred as to which such Borrower was required to file a report with the PBGC. 

4.11. Environmental and Safety Matters. Except as disclosed on Schedule 4.11, such Borrower complies in all material
respects with all, and has not violated in any material respects any, Environmental Laws, and is aware of no events, conditions or circumstances involving liability under or continued compliance with such Environmental Laws, or environmental
pollution or contamination or human health or safety that could reasonably be expected to have a material adverse effect on the financial condition or business of such Borrower or would materially impair the ability of such Borrower to perform its
obligations under this Agreement or the other Loan Documents to which it is a party. 
 4.12. Ownership of Property; Liens. Such
Borrower and its Significant Subsidiaries has good title to, or a valid leasehold interest in, all its real property, and good title to, or a valid leasehold interest in, all its other property, except to the extent failure to have such title could
not reasonably be expected to have a Material Adverse Effect, and none of such property is subject to any Lien except as permitted by Section 7.03. 

4.13. Use of Proceeds. The proceeds of the Loans shall be used for general corporate purposes of such Borrower (including to fund
working capital needs). 
 4.14. Anti-Corruption Laws and Sanctions. Such Borrower has implemented and maintains in effect
policies and procedures designed to ensure compliance by such Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and such Borrower, its Subsidiaries and their
respective officers and directors and, to the knowledge of such Borrower, its employees and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) such Borrower, any of its
Subsidiaries or any of their respective directors, officers or employees, or (b) to the knowledge of such Borrower, any agent of such Borrower or any of its Subsidiaries that will act in any capacity in connection with or benefit from
the Facility established hereby, is a Sanctioned Person. No Borrowing, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions. None of the representations and warranties given
in this Section 4.14 shall be made to any Lender incorporated in or organized under the laws of the Federal Republic of Germany to the extent that they would result in a violation of or conflict with the German Foreign Trade Regulation
(Außenwirtschaftsverordnung), council regulation (EC) No 2271/1996 (EU Blocking Regulation) or any similar applicable anti-boycott law or regulation. 

4.15. EEA Financial Institutions. Such Borrower is not an EEA Financial Institution. 

  
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 SECTION 5.  

CONDITIONS PRECEDENT 

5.01. Conditions Precedent to Effectiveness of Agreement. The effectiveness of this Agreement and the obligations of the Lenders
to make the initial extension of credit hereunder are subject to the following conditions precedent: 
 (a) Loan Documents. The
Administrative Agent shall have received (i) this Agreement, executed and delivered by the Administrative Agent, each Borrower and each Lender listed on Schedule 1.01 and (ii) duly executed copies of the other Loan
Documents. 
 (b) Existing Facility. All amounts outstanding, accrued or payable under the Existing Facility shall be repaid in full
and the Existing Facility and the respective commitments thereunder shall be terminated and any letters of credit thereunder shall be terminated or cash collateralized in full, and the Administrative Agent shall have received a pay-off letter in form and substance satisfactory to it evidencing such repayment and termination. 
 (c)
Representations and Warranties; No Default. On the Closing Date, (i) the representations and warranties set forth in Section 4 qualified as to materiality shall be true and correct and those not so
qualified shall be true and correct in all material respects on and as of such time with the same effect as though such representations and warranties had been made on and as of such time, (ii) no Event of Default, nor any event which upon
notice or lapse of time or both would constitute an Event of Default, shall have occurred and be continuing on and as of such time and (iii) the Administrative Agent shall have received a certificate, dated the Closing Date and signed by a
Financial Officer of each Borrower, confirming compliance with the foregoing clauses (i) and (ii). 
 (d) Charter Documents;
Bylaws. The Administrative Agent shall have received a certificate of a secretary or assistant secretary of Avangrid certifying as to the incumbency and genuineness of the signature of each officer or authorized representative of the Borrowers
executing Loan Documents to which it is a party and certifying that attached thereto is a true, correct and complete copy of (i) the articles or certificate of incorporation or formation of such Borrower and all amendments thereto, certified as
of a recent date by the appropriate Governmental Authority in its jurisdiction of incorporation or formation, (ii) the bylaws or other governing document of each Borrower as in effect on the Closing Date, (iii) resolutions duly adopted by
the board of directors of each Borrower authorizing and approving the transactions contemplated hereunder and the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party and (iv) each
certificate required to be delivered pursuant to Section 5.01(e)(i). 
 (e) Good Standing. The
Administrative Agent shall have received copies of (i) certificates of good standing, existence or its equivalent with respect to each Borrower certified as of a recent date by the appropriate Governmental Authorities of its jurisdiction of
incorporation or formation and (ii) such “bring-down” good standing certificates dated the Closing Date or the Business Day immediately preceding the Closing Date as the Administrative Agent shall reasonably require. 

  
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 (f) Approvals. All governmental and third party approvals (including approvals (if any)
required under any applicable public service or public utility law of New York, Maine, Connecticut or Massachusetts or any other state or commonwealth and the Federal Power Act, as amended from time to time, and the rules, orders and regulations
issued in connection therewith) necessary in connection with the continuing operations of each Borrower and the transactions contemplated hereby shall have been obtained and be in full force and effect, and all applicable waiting periods shall have
expired without any action being taken or threatened by any competent authority that would restrain, prevent, invalidate or otherwise impose adverse conditions related to this Agreement (including the rights and remedies of the Lenders hereunder).

 (g) Financial Statements. On or prior to the Closing Date, the Lenders shall have received (i) audited consolidated financial
statements of each Borrower for the 2017 and 2016 fiscal years and (ii) unaudited interim consolidated financial statements of each Borrower for the quarterly period ended March 31, 2018. 

(h) Opinions. The Administrative Agent shall have received an opinion, or opinions, satisfactory in form and content to the
Administrative Agent and the Lenders, addressed to the Administrative Agent and each of the Lenders and dated as of the Closing Date, from (a) legal counsel to the Borrowers, which legal counsel may be
in-house counsel to the Borrowers and (b) Vigeo Eiris. 
 (i) Fees. The Lenders, the
Other Agents, the Arrangers and the Administrative Agent shall have received all fees required to be paid, and all expenses for which invoices have been presented (including the reasonable fees and expenses of legal counsel). 

(j) PATRIOT Act. Each Borrower shall have provided to the Administrative Agent and the Lenders the documentation and other information
requested by the Administrative Agent and the Lenders under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the PATRIOT Act. 

5.02. Conditions to All Extensions of Credit. The obligations of the Lenders to make any extensions of credit (including the
initial extension of credit) hereunder are subject to the satisfaction of the following conditions precedent on the relevant borrowing, continuation or conversion date: 

(a) Representations and Warranties. On the date of each Borrowing hereunder, the representations and warranties of the applicable
Borrower set forth in Section 4 (other than, in the case of extensions of credit made after the Closing Date, the representations and warranties made in (i) the last sentence
of Section 4.03, (ii) Section 4.04 and (iii) Section 4.11) qualified as to materiality shall be true and correct and those not so qualified shall be
true and correct in all material respects on and as of such time with the same effect as though such representations and warranties had been made on and as of such time. 

(b) No Default. On the date of each Borrowing hereunder, no Event of Default, nor any event which upon notice or lapse of time or both
would constitute an Event of Default, shall have occurred and be continuing at such time or after giving effect to any such extension of credit with respect to the applicable Borrower. 

  
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 (c) Notices. The Administrative Agent shall have received a notice of borrowing or notice
of conversion or continuation, as applicable, from the Borrower in accordance with Section 2.01(a) or Section 2.07(a), as applicable. 

Each Borrowing by any Borrower hereunder shall constitute a representation and warranty by such Borrower as of the date of such extension of
credit that the conditions contained in this Section 5.02 hereof have been satisfied. 
 SECTION 6. 

 AFFIRMATIVE COVENANTS 
 Each
Borrower, severally but not jointly, covenants and agrees that from the date hereof and until payment in full of the principal of and interest on the Loans and the termination of the Commitments, unless such Borrower, acting through the
Administrative Agent, shall obtain the written consent of the Required Lenders, each Borrower shall: 
 6.01. Financial Statements;
Certificates; Reports. Furnish to the Lenders: 
 (a) promptly upon becoming available, but in any event within 105 days after the end of
each fiscal year of Avangrid, a copy of the audited consolidated balance sheet of such Borrower as at the end of such year and the related audited consolidated statements of income and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without a “going concern” or like qualification or exception, or qualification arising out of the scope of the audit, by KPMG LLP or other independent certified public
accountants of nationally recognized standing; 
 (b) promptly upon becoming available, but in any event not later than 60 days after the end
of each of the first three quarterly periods of each fiscal year of such Borrower, the unaudited consolidated balance sheet of such Borrower as at the end of such quarter and the related unaudited consolidated statements of income and of cash flows
for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by the principal financial officer of such Borrower as being fairly
stated in all material respects (subject to normal year-end audit adjustments); 
 (c) concurrently
with the delivery of any financial statements pursuant to Section 6.01(a) and (b), in each case, a Compliance Certificate of such Borrower executed by the principal financial officer of such Borrower
(i) stating that to the best of such principal financial officer’s knowledge, such Borrower during such period has observed or performed in all material respects all of its covenants and other agreements, and satisfied every condition
contained in this Agreement to be observed, performed or satisfied by it, and that such principal financial officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate and (ii) containing
information and calculations for determining compliance by such Borrower with the provisions of this Agreement referred to therein (including Section 7.01) as of the last day of the fiscal quarter or fiscal year of
such Borrower, as the case may be; 

  
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 (d) on or prior to the date that is 30 days prior to each anniversary of the Closing Date, a
certificate of the Borrowers executed by a Financial Officer of Avangrid stating the Sustainability Amount for such prior fiscal year and the Applicable Margin determined therefrom, which certificate shall contain all information and calculations
reasonably required to demonstrate the Sustainability Amount for such prior fiscal year. If, for whatever reason, it is not possible to determine the Sustainability Amount, the Borrower and the Sustainability Agent, acting on the instructions of the
Lenders, will use reasonable efforts to agree on the selection of an alternative measure that is customarily applied by persons carrying out similar businesses or being subject to similar environmental incentives, independent of the Lenders, to
calculate and assign an equivalent score to be used for the purposes of the above calculation. If, after 20 Business Days, the Borrower and the Sustainability Agent are unable to agree on the selection of such alternative party, the Applicable
Margin applicable to each type of Loan shall apply without any discount or premium (and if such discount or premium was already applied at that point in time, it will then be discontinued as of the end of such 20 Business Day period); 

(e) as soon as possible, and in any event within five Business Days after a Financial Officer of such Borrower knows or has reason to know that
any Reportable Event has occurred with respect to any Plan maintained in whole or in part for the employees of such Borrower or any Significant Subsidiary, a statement of such Financial Officer, setting forth details as to such Reportable Event and
the action which is proposed to be taken with respect thereto, and as soon as possible, and in any event within five Business Days after filing or receipt thereof, a copy of the notice of such Reportable Event filed with or received from the PBGC;

 (f) copies of each annual and other report with respect to any Plan requested by any Lender; 

(g) promptly after receipt thereof, a copy of any notice which such Borrower or, to the knowledge of such Borrower, any Significant Subsidiary,
may receive from the PBGC relating to the intention of the PBGC to terminate any Plan maintained in whole or in part for the benefit of employees of such Borrower or any Significant Subsidiary or to appoint a trustee to administer any such Plan;

 (h) promptly, from time to time, such other information regarding the operations, business, affairs and financial condition of such
Borrower and any Significant Subsidiary as any of the Lenders may reasonably request, including such information and documentation as may reasonably be requested by the Administrative Agent or any Lender from time to time for purposes of compliance
by the Administrative Agent or such Lender with applicable laws (including without limitation the USA Patriot Act, the Financial Crimes Enforcement Network of the U.S. Department of the Treasury and other “know your customer” and
anti-money laundering rules and regulations, including the PATRIOT Act), and any policy or procedure implemented by the Administrative Agent or such Lender to comply therewith; and 

(i) as soon as possible, and in any event within five Business Days after a Financial Officer of such Borrower knows or has reason to know that
any Event of Default, or any event which, upon notice or lapse of time or both, would constitute an Event of Default, has occurred, a statement of such Financial Officer, setting forth details as to such Event of Default or event. 

  
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 6.02. ERISA. Comply in all material respects with the applicable provisions of ERISA.

 6.03. Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as
the case may be, all its material obligations of whatever nature, except where (i) the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto
have been provided on the books of such Borrower or its Subsidiaries, as the case may be, or (ii) the failure to do so could not reasonably be expected to have a Material Adverse Effect. 

6.04. Maintenance of Existence; Compliance. Except as otherwise required by a Governmental Authority having jurisdiction over such
Borrower or any of its Subsidiaries, (a) (i) preserve, renew and keep in full force and effect its corporate existence and (ii) take all reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business, except, in each case, as otherwise permitted by Section 7.02 and except, in the case of clause (ii) above, to the extent that
failure to do so could not reasonably be expected to have a Material Adverse Effect; (b) comply with all Contractual Obligations and Requirements of Law except to the extent that failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect; and (c) maintain in effect and enforce policies and procedures designed to ensure compliance by such Borrower, its Subsidiaries and their respective directors, officers, employees
and agents with Anti-Corruption Laws and applicable Sanctions. None of the covenants given in Section 6.04(c) shall be made to any Lender incorporated in or organized under the laws of the Federal Republic of Germany to the extent that
they would result in a violation of or conflict with the German Foreign Trade Regulation (Außenwirtschaftsverordnung), council regulation (EC) No 2271/1996 (EU Blocking Regulation) or any similar applicable anti-boycott law or
regulation. 
 6.05. Inspection of Property and Operations; Books and Records. (a) Keep proper books of records and account
in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities and (b) upon the reasonable request of any Lender,
permit representatives of any Lender to visit and inspect any of its properties and examine and make abstracts from any of its books and records and to discuss the business, operations, properties and financial and other condition of such Borrower
with officers and employees of such Borrower and with their independent certified public accountants. 
 6.06. Environmental
Laws. Comply in all material respects with, and ensure compliance in all material respects by all tenants and subtenants, if any, with, all applicable Environmental Laws and with all lawful orders and directives of all Governmental Authorities
regarding Environmental Laws, and obtain and comply in all material respects with and maintain, and ensure that all tenants and subtenants obtain and comply in all material respects with and maintain, any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws. 

  
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 6.07. Further Assurances. Execute any and all further documents, agreements and
instruments, and take all such further actions, that may be required under any applicable law, or which the Administrative Agent or the Required Lenders may reasonably request, to effectuate the transactions contemplated by the Loan Documents, all
at the expense of such Borrower. 
 6.08. Maintenance of Ownership of Significant Subsidiaries. In the case of Avangrid, take
such action from time to time as shall be necessary to ensure that it at all times owns, directly or indirectly, all of the issued and outstanding shares of common stock of each of its Significant Subsidiaries. 

SECTION 7.  
 NEGATIVE
COVENANTS 
 Each Borrower, severally but not jointly, covenants and agrees that from the date hereof and until payment in full of the
principal of and interest on the Loans and the termination of the Commitments, unless such Borrower, acting through the Administrative Agent, shall obtain the written consent of the Required Lenders, or except as otherwise required by a Governmental
Authority having jurisdiction over such Borrower, such Borrower shall not, and shall not permit any of its Significant Subsidiaries to, directly or indirectly: 

7.01. Financial Condition Covenant. Permit the ratio of Consolidated Indebtedness to Consolidated Total Capitalization of such
Borrower to exceed 0.65 to 1.00 at any time. 
 7.02. Sale of Assets; Merger. (a) Sell, lease, transfer or otherwise dispose
of (whether in one transaction or a series of transactions) (i) all or materially all of its respective properties or assets, whether now owned or hereafter acquired, (ii) in the case of Avangrid, (A) the primary
natural gas, transmission and/or energy services business, as applicable, of any Significant Subsidiary or (B) any common stock of any Significant Subsidiary (other than to Avangrid or a Significant Subsidiary, or any directors or
employees thereof), or (iii) any of its properties or assets, whether now owned or hereafter acquired, if the effect of such sale, lease, transfer or disposition would (A) after giving effect to such transaction, result in
such Borrower’s senior unsecured long-term debt rating issued by S&P or Moody’s to fall below BBB- or Baa3, respectively (or, if senior unsecured debt ratings are unavailable for such Borrower, the senior secured long-term debt rating
issued by S&P or Moody’s to fall below BBB or Baa2, respectively) or (B) materially impair the ability of such Borrower to perform its obligations under this Agreement or under any other Loan Document or
(b) consolidate with or merge with another corporation, except where such Borrower (or the Significant Subsidiary, as the case may be) is the surviving corporation and that, after giving effect to such consolidation or merger, no breach
of Section 7.01, when calculated on a pro forma basis, would result therefrom, and no other Event of Default, nor any event which upon notice or lapse of time or both would constitute an Event of Default
shall have occurred and be continuing. 
 7.03. Limitation on Liens. Create, incur, assume or suffer to exist any Lien upon any
of its property, whether now owned or hereafter acquired, except for Liens created under its applicable primary first mortgage bond indenture or equivalent instrument set forth on Schedule 7.03, as in effect on the Closing Date,
and except for: 

  
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 (a) Liens for taxes not yet due or that are being contested in good faith by appropriate
proceedings, provided that adequate reserves with respect thereto are maintained on the books of such Borrower, in conformity with GAAP; 

(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary
course of business that are not overdue for a period of more than 90 days or that are being contested in good faith by appropriate proceedings; 

(c) pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation; 

(d) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; 
 (e) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business that, in the aggregate, do not in any case materially detract from the
value of the property subject thereto or materially interfere with the ordinary conduct of the business of such Borrower or any of its Significant Subsidiaries; 

(f) Liens in existence on the date hereof, securing any Indebtedness outstanding on the date hereof and extensions, renewals or replacements
thereof; provided that no such Lien is spread to cover any additional property after the Closing Date (other than pursuant to any Borrower Senior Secured Indebtedness) and that the amount of Indebtedness secured thereby is not increased; 

(g) Liens securing Indebtedness, in an aggregate principal amount not to exceed $250,000,000 (in the case of Avangrid), $50,000,000 (in the
case of NYSEG, RGE, CMP and UI) or $25,000,000 (in the case of CNG, SCG and BGC) at any one time outstanding, incurred to finance the acquisition or construction of fixed or capital assets (including Capital Lease Obligations) and extensions,
renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; provided that (i) such Liens shall be created substantially simultaneously with or within 120 days after such acquisition
or completion of such construction of such fixed or capital assets and (ii) such Liens do not at any time encumber any property other than the property financed by such indebtedness; 

(h) any interest or title of a lessor under any lease entered into in the ordinary course of business and covering only the assets so leased;

 (i) Liens existing upon any property acquired by such Borrower in the ordinary course of business; provided that (i) such Lien is not
created in contemplation of or in connection with such acquisition, (ii) such Lien shall not apply to any other property or assets and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition and
extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof; 
 (j) Liens arising in
connection with sales or transfers of, or financings secured by, accounts receivable or related contracts; 

  
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 (k) Liens created by or resulting from litigation or legal proceedings that are currently being
contested in good faith by appropriate proceedings and do not involve amounts that in the aggregate would exceed $50,000,000; 
 (l) Liens
incidental to the normal conduct of the business of any Borrower or any Subsidiary of such Borrower or the ownership of its property that are not incurred in connection with the incurrence of Indebtedness and that do not in the aggregate materially
impair the use of such property in the operation of the business of such Borrower and its Subsidiaries taken as a whole or the value of such property for the purposes of such business; and 

(m) Liens created under any Loan Document. 

7.04. Limitation on Transactions with Affiliates. Enter into any transaction, including any purchase, sale, lease or exchange of
property, the rendering of any service or the payment of any management, advisory or similar fees, with any Affiliate unless such transaction is (a) subject to the jurisdiction of, and approved by, the Federal Energy Regulatory Commission under
the Federal Power Act, as amended, or any state regulatory commission or (b) upon fair and reasonable terms no less favorable to such Borrower or such Significant Subsidiary, as the case may be, than it would obtain in a comparable
arm’s length transaction with a Person that is not an Affiliate. 
 7.05. Sales and Leasebacks. Enter into any arrangement
with any Person providing for the leasing by such Borrower or any Significant Subsidiary of real or personal property that has been or is to be sold or transferred by such Borrower or such Significant Subsidiary to such Person or any other Person to
whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of such Borrower or such Significant Subsidiary, except to the extent such arrangement would not, collectively with all similar
arrangements, reasonably be expected to materially impair the ability of such Borrower to perform its obligations under this Agreement. 

7.06. Limitation on Changes in Lines of Business. Enter into any business, either directly or through any Subsidiary, except for
those businesses in which such Borrower and its Subsidiaries are engaged on the date of this Agreement or that are reasonably related thereto. 

7.07. Use of Proceeds. Request any Borrowing or use (and such Borrower shall procure that its Subsidiaries and its or their
respective directors, officers, employees and agents shall not use) the proceeds of the Loans, directly or indirectly, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person (A) in
furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or
facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto. None of the
covenants given in this Section 7.07 shall be made to any Lender incorporated in or organized under the laws of the Federal Republic of Germany to the extent that they would result in a violation of or conflict with the German Foreign
Trade Regulation (Außenwirtschaftsverordnung), council regulation (EC) No 2271/1996 (EU Blocking Regulation) or any similar applicable anti-boycott law or regulation. 

  
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 7.08. Fiscal Year. Permit the fiscal year of such Borrower to end on a day other than
December 31 or change such Borrower’s method of determining fiscal quarters. 
 7.09. Limitation on Restrictions on
Distributions from Subsidiaries. Create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Significant Subsidiary to pay dividends or make any other distribution
on its Capital Stock to such Borrower, other than any encumbrance or restriction pursuant to an agreement or instrument in effect at the Closing Date, or imposed by any Governmental Authority. 

SECTION 8.  
 EVENTS OF
DEFAULT 
 With respect to each Borrower, each of the following events shall constitute an event of default hereunder (hereinafter called an
Event of Default) with respect to such Borrower: 
 (a) failure by such Borrower to pay any amount of principal of any of the Loans, as and
when due and payable; failure by such Borrower to pay any interest on any of the Loans, any Fee or any other amount owed under this Agreement, within five days after any such interest, Fee or other amount becomes due and payable; 

(b) such Borrower shall fail to perform or observe any of its other covenants or agreements contained in this Agreement or any other Loan
Document and such failure shall continue unremedied for 30 days (or in the case of failure to observe Section 7.01, for five Business Days) after the earlier of (i) a Financial Officer of such Borrower obtaining
knowledge thereof and (ii) receipt by such Borrower of written notice thereof from the Administrative Agent or any Lender; 
 (c) any
representation or warranty made by such Borrower herein or in any certificate or other instrument furnished in connection with this Agreement that is qualified as to materiality shall be incorrect or any such representation or warranty not so
qualified shall be incorrect in any material respect when made or deemed made; 
 (d) default beyond any applicable grace period with respect
to any Borrower Senior Secured Indebtedness of such Borrower, or the performance of any obligation incurred in connection with any such Indebtedness, if the effect of such default is to permit the holder thereof, or a trustee or agent on its behalf,
to cause such Indebtedness to become due prior to its stated maturity or any such Indebtedness shall not be paid at maturity; 
 (e) default
beyond any applicable grace period with respect to any Indebtedness of such Borrower and/or any Significant Subsidiary, the outstanding principal amount of which exceeds in the aggregate $50,000,000 (or, in the case of CNG, SCG and BGC,
$25,000,000), or the performance of any obligation incurred in connection with such Indebtedness if the effect of such default is to accelerate the maturity of such indebtedness or to permit the holder thereof, or a trustee or agent on its behalf,
to cause such indebtedness to become due prior to its stated maturity or (in the case of any such Indebtedness constituting a Guarantee Obligation) to become payable, or if any such Indebtedness shall not be paid at maturity; 

  
 31 

 (f) the entry of a decree or order by a court having jurisdiction in the premises for relief in
respect of such Borrower or any Significant Subsidiary under any Debtor Relief Law, or appointing a receiver, liquidator, assignee, trustee, custodian or sequestrator (or similar official) such Borrower or any Significant Subsidiary, or of any
substantial part of their respective properties, or ordering the winding-up of or liquidation of the affairs of such Borrower or any Significant Subsidiary and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; 
 (g) the filing by such Borrower or any Significant Subsidiary of a petition or
answer or consent seeking relief under any Debtor Relief Law, or the consent by such Borrower or any Significant Subsidiary to the institution of proceedings thereunder or to the filing of any such petition or to the appointment or taking possession
by a receiver, liquidator, assignee, trustee, custodian or sequestrator (or other similar official) of such Borrower or any Significant Subsidiary or of any substantial part of their respective properties, or the failure of such Borrower or any
Significant Subsidiary generally to pay its debts as such debts become due, or the taking of corporate action by such Borrower or any Significant Subsidiary in furtherance of any such action; 

(h) final judgment for the payment of money exceeding an aggregate of $50,000,000 (or, in the case of CNG, SCG and BGC, $25,000,000) shall be
rendered or entered against such Borrower and/or any Significant Subsidiary and the same shall remain undischarged for a period of 60 days during which execution shall not be effectively stayed or contested in good faith; 

(i) (i) a Reportable Event shall have occurred with respect to any Plan that reasonably could be expected to result in a liability of such
Borrower to the PBGC or to a Plan in an aggregate amount exceeding $50,000,000 (or, in the case of CNG, SCG and BGC, $25,000,000) and, within 30 days after the reporting of any such Reportable Event to the Administrative Agent, the Administrative
Agent shall have notified such Borrower in writing that (i) the Required Lenders have made a determination that, on the basis of such Reportable Event, there are reasonable grounds (A) for the termination of such Plan by the PBGC,
(B) for the appointment by the appropriate United States District Court of a trustee to administer such Plan or (C) for the imposition of a lien in favor of such Plan and (ii) as a result thereof an Event of Default exists hereunder;
or a trustee shall be appointed by a United States District Court to administer any such Plan; or the PBGC shall institute proceedings to terminate any Plan; 

(j) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) (except for Iberdrola, S.A. and, in the case of the Subsidiary Borrowers, Avangrid) shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 20% of the outstanding common stock of such Borrower; or

 (k) any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or
thereunder or satisfaction in full of all the obligations hereunder or thereunder, ceases to be in full force and effect; or any Borrower contests in any manner the validity or enforceability of any Loan Document; 

  
 32 

 then, and in every such event and at any time thereafter during the continuance of such event, the Administrative
Agent, shall, at the request of, or may, with the consent of, the Required Lenders, by written notice to such Borrower, take any or all of the following actions, at the same or different times: (A) terminate or reduce, as provided below,
forthwith the Commitments of the Lenders hereunder with respect to such Borrower and (B) declare the Loans made to such Borrower and all other amounts accrued or owing by such Borrower under this Agreement to be forthwith due and payable,
whereupon such Loans and such other amounts shall become forthwith due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything contained herein to the contrary
notwithstanding; provided, however, that upon the occurrence of the events in paragraph (f) or (g) of this Section 8 both of the preceding actions will automatically take place without any
notice to such Borrower or any action by the Administrative Agent or any Lender; and provided further that if an Event of Default shall have occurred and be continuing with respect to one Borrower, but not the other Borrowers (the
“Non-Defaulting Borrowers”), the Administrative Agent shall reduce the total outstanding Commitments of the Lenders hereunder to an amount which is not less than the aggregate Sublimits of the
Non-Defaulting Borrowers, as described in Section 1.01(a). For the avoidance of doubt, provisions in this Agreement including the term “Event of Default” are intended
to refer to Events of Default with respect to the Borrower affected by such provision. 
 SECTION 9.  

DEFINITIONS 

9.01. Defined Terms. As used in this Agreement, the terms listed in
this Section 9.01 shall have the respective meanings set forth in this Section 9.01. 

“ABR” shall mean, for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus 0.5% (provided that if the Prime Rate or NYFRB Rate shall be less than zero, such rate shall be deemed to be zero) and (c) the
Eurodollar Rate on such day (or, if such day is not a Business Day, the next preceding Business Day) for a deposit in Dollars with a maturity of one month plus 1.0%. Any change in the ABR due to a change in the Prime Rate, the Federal Funds
Effective Rate or such Eurodollar Rate shall be effective as of the opening of business on the day of such change in the Prime Rate, the Federal Funds Effective Rate or such Eurodollar Rate, respectively. 

“ABR Borrowing” shall mean a Borrowing comprised of ABR Loans. 

“ABR Loan” shall mean a Loan bearing interest at the ABR. 

“Accordion Effective Date” shall have the meaning assigned to it in Section 1.05(e). 

“Accordion Lender” shall have the meaning assigned to it in Section 1.05(e). 

“Additional Lender” shall have the meaning assigned to it in Section 1.05(c). 

  
 33 

 “Administrative Agent” shall have the meaning assigned to it in the recitals
hereof. 
 “Administrative Questionnaire” shall mean an administrative questionnaire in a form supplied by the
Administrative Agent. 
 “Affiliate” shall mean, when used with respect to a specified person, another person that
directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the person specified. For purposes of this definition, “control” of a Person means the power, directly or indirectly,
either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise. “Controlled” shall have a meaning correlative thereto. 

“Agreement” shall mean this Revolving Credit Agreement, as amended, supplemented or otherwise modified from time to time.

 “Anti-Corruption Laws” shall mean all laws, rules, and regulations of any jurisdiction applicable to the Borrowers and
their respective Subsidiaries concerning or relating to bribery or corruption and anti-money laundering rules and regulations, including the Patriot Act. 

“Applicable Margin” shall mean for each Type of Loan, the rate per annum set forth under the relevant column heading below
which corresponds with the most current rating of such Borrower’s senior unsecured long-term debt issued by Moody’s and S&P, respectively. Such Applicable Margin may be increased or decreased pursuant to the Applicable Sustainability
Adjustment. 
  

									
	 Ratings
	  	Applicable Margin for
Eurodollar Loans	 	 	Applicable Margin for
ABR Loans	 
	 >A1/A+
	  	 	0.800	% 	 	 	0.000	% 
	 A2/A
	  	 	0.900	% 	 	 	0.000	% 
	 A3/A-
	  	 	1.000	% 	 	 	0.000	% 
	 Baa1/BBB+
	  	 	1.075	% 	 	 	0.075	% 
	 Baa2/BBB
	  	 	1.275	% 	 	 	0.275	% 
	 Baa3/BBB-
	  	 	1.475	% 	 	 	0.475	% 
	 <Baa3/BBB-
	  	 	1.650	% 	 	 	0.650	% 

  
 34 

 Changes in the Applicable Margin shall become effective on the date on which Moody’s and/or
S&P changes the rating it has issued for such Borrower’s senior unsecured long-term debt. If both agencies issue a rating and the two ratings fall in different levels, the Applicable Margin shall be based upon the level indicated by the
higher rating; provided that if the higher rating is two or more levels above the lower rating, the Applicable Margin shall be based upon the next level below the higher of the two. If only one of such two agencies issues a rating, such
rating shall apply. If a Borrower (a) does not have a senior unsecured long-term debt rating, the Applicable Margin shall be based on the level one level below such Borrower’s senior secured long-term debt rating, and (b) does not
have a senior unsecured long-term debt rating or a senior secured long-term debt rating, pricing shall be at such Borrower’s issuer rating. 

“Applicable Sustainability Adjustment”: means, for any fiscal year (beginning with fiscal year 2018): (a) if the annual
Sustainability Amount is greater than or equal to 110% of the Baseline Sustainability Amount, a 0.05% increase in the specified Applicable Margins; and (b) if the annual Sustainability Amount is less than or equal to 90% of the Baseline
Sustainability Amount, a 0.05% decrease in the specified Applicable Margins. 
 “Approved Fund” shall mean any Person
(other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. 

“Arrangers” shall mean JPMorgan Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, MUFG Bank,
Ltd., Santander Bank, N.A. and BBVA Securities Inc., in their respective capacities as exclusive joint lead arrangers and exclusive joint bookrunners. 

“Assignee” shall have the meaning assigned to it in Section 11.02(c). 

“Assignment and Acceptance” shall mean an assignment and acceptance, substantially in the form of Exhibit A. 

“Assignor” shall have the meaning assigned to it in Section 11.02(c). 

“Avangrid” shall have the meaning assigned to it in the recitals hereof. 

“Bail-In Action” shall mean 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” shall mean, 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. 

“Baseline Sustainability Amount” means 58.4g CO2/kWh, as contained in the opinion of Vigeo Eiris delivered to the Borrowers
and furnished to the Lenders. 

  
 35 

 “BGC” shall have the meaning assigned to it in the recitals hereof. 

“Board” shall mean the Board of Governors of the Federal Reserve System of the United States. 

“Borrower” shall have the meaning assigned to it in the recitals hereof. 

“Borrower Senior Secured Indebtedness” shall mean any Indebtedness of the Borrowers secured by any Lien on property owned or
acquired by them; provided that the aggregate principal amount of Indebtedness secured by such Liens shall not exceed $250,000,000 for Avangrid, $250,000,000 for NYSEG, $175,000,000 for RGE, $100,000,000 for CMP, $75,000,000 for UI,
$25,000,000 for CNG, $25,000,000 for SCG and $10,000,000 for BGC at any one time outstanding. 
 “Borrowing” shall mean a
group of Loans of a single Type made by the Lenders on a single date and as to which a single Interest Period is in effect. 

“Borrowing Date” shall mean, with respect to any Loan, the date on which such Loan is disbursed. 

“Business Day” shall mean any day (other than a day which is a Saturday, Sunday or legal holiday in the State of New York) on
which Lenders are open for business in New York City; provided, however, that, when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which Lenders are not open for dealings in
Dollar deposits in the London interbank market. 
 “Capital Lease Obligations” shall mean as to any Person, the obligations
of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases
on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP. 

“Capital Stock” shall mean any and all shares, interests, participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing. 

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

  
 36 

 “Closing Date” shall mean the first date all the conditions precedent
in Section 5.01 are satisfied or waived in accordance with Section 11.07. 

“CMP” shall have the meaning assigned to it in the recitals hereof. 

“CNG” shall have the meaning assigned to it in the recitals hereof. 

“Co-Documentation Agents” shall have the meaning assigned to it in the recitals
hereof. 
 “Code” shall mean the Internal Revenue Code of 1986, as the same may be amended from time to time. 

“Commitment” shall mean, as to any Lender, the obligation of such Lender, if any, to make Loans in an aggregate principal
amount not to exceed the amount set forth under the heading “Commitment” opposite such Lender’s name on Schedule 1.01 or in the Assignment and Acceptance pursuant to which such Lender became a party hereto, as the
same may be changed from time to time pursuant to the terms hereof. 
 “Commitment Increase Notice” shall have the meaning
assigned to it in Section 1.05(a). 
 “Commitment Percentage” shall mean, as to any Lender
at any time, the percentage that such Lender’s Commitment then constitutes of the Total Commitments or, at any time after the Commitments shall have expired or terminated, the percentage that the aggregate principal amount of such Lender’s
Loans then outstanding constitutes of the aggregate principal amount of the Loans then outstanding; provided that, in the event that the Loans are paid in full prior to the reduction to zero of the Total Extensions of Credit, the Commitment
Percentages shall be determined in a manner designed to ensure that the other outstanding Extensions of Credit shall be held by the Lenders on a comparable basis. 

“Compliance Certificate” shall mean a certificate duly executed by the principal financial officer of such Borrower
substantially in the form of Exhibit B. 
 “Consolidated Indebtedness” shall mean, with respect to any Borrower
at any date, all Indebtedness of such Borrower and its Subsidiaries at such date, determined on a consolidated basis in accordance with GAAP, excluding debt and interest expense arising from the application of Financial Interpretation Number
45 or 46 of the Financial Accounting Standards Board. 
 “Consolidated Net Income” shall mean, with respect to any Borrower
at any date, the consolidated net income, if any, after taxes, of such Borrower and its Subsidiaries for such period determined in accordance with GAAP; provided that Consolidated Net Income shall not be reduced or increased by the amount of
any non-cash extraordinary charges or credits that would otherwise be deducted from or added to revenue in determining such Consolidated Net Income. 

  
 37 

 “Consolidated Net Worth” shall mean, with respect to any Borrower at any date,
all amounts that would, in conformity with GAAP, be included on a consolidated balance sheet of such Borrower and its Subsidiaries under stockholders’ equity determined at such date; provided, however, that in any
event (and notwithstanding a change in GAAP subsequent to the date of this Agreement) amounts attributable to such Borrower’s and its Subsidiaries’ preferred stock shall be included in Consolidated Net Worth. 

“Consolidated Total Capitalization” shall mean, with respect to any Borrower at any date, the sum of the Consolidated Net
Worth of such Borrower and the Consolidated Indebtedness of such Borrower. 
 “Continuing Lenders” shall have the meaning
assigned to it in Section 1.04(b). 
 “Contractual Obligation” shall mean, as to any Person,
any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. 

“Current Termination Date” shall have the meaning assigned to it in Section 1.04(a). 

“Debtor Relief Laws” shall mean the Bankruptcy Code of the United States of America, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in
effect. 
 “Default” shall mean any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been satisfied. 
 “Defaulting Lender” shall mean,
subject to Section 11.16(b), 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 the Administrative Agent and the applicable 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, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent or any Lender any other amount required to be paid by it hereunder within two Business Days of the date when
due; (b) has notified any Borrower or the Administrative Agent 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 Lenders’ 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, shall be
specifically identified in such writing or public statement) cannot be satisfied); (c) has failed, within three Business Days after written request by the Administrative Agent or any Borrower, to confirm in writing to the Administrative Agent
and each 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 the
Administrative Agent and each Borrower); or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a (A) proceeding under any Debtor Relief Law or
(B) Bail-In Action or (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 

  
 38 

 
Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; 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 equity 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 the Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a
Defaulting Lender (subject to Section 11.16(b)) upon delivery of written notice of such determination to each Borrower and each Lender. 

“Dollars” or “$” shall mean lawful money of the United States of America. 

“EEA Financial Institution” shall mean (a) any institution 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 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” shall mean any of the member states of the European Union, Iceland, Liechtenstein, and Norway. 

“EEA Resolution Authority” shall mean 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 Assignee” shall mean any Person that meets the requirements to be an Assignee
under Section 11.02 (subject to such consents, if any, as may be required thereunder). 

“Environmental Laws” shall mean any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the
environment (including natural resources, wetlands, flora and fauna), as now or may at any time hereafter be in effect. 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time. 

“EU Bail-In Legislation Schedule” shall mean the EU
Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time. 

  
 39 

 “Eurocurrency Reserve Requirements” shall mean, for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including basic, supplemental, marginal and emergency reserves) under any regulations of the
Board or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board)
maintained by a member bank of the Federal Reserve System. 
 “Eurodollar Base Rate” shall mean with respect to any
Eurodollar Loan for any Interest Period, a rate per annum equal to the London interbank offered rate as administered by the ICE Benchmark Administration (or any other Person that takes over the administration of such rate) for Dollars for a period
equal in length to such Interest Period as displayed on pages LIBOR01 or LIBOR02 of the Reuters Screen that displays such rate (or, in the event such rate does not appear on either of such Reuters pages, on any successor or substitute page on such
screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion; in each case, the “Screen
Rate”) as of the Specified Time on the Quotation Day for such Interest Period; provided that if the Screen Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement; provided,
further, that if the Screen Rate shall not be available at such time for such Interest Period (an “Impacted Interest Period”) with respect to Dollars, then the Eurodollar Base Rate shall be the Interpolated Rate at such time
(provided that if the Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement). 

“Eurodollar Borrowing” shall mean a Borrowing comprised of Eurodollar Loans. 

“Eurodollar Loan” shall mean any Loan bearing interest at the Eurodollar Rate. 

“Eurodollar Rate” shall mean, with respect to each day during each Interest Period pertaining to a Eurodollar Loan, a rate
per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%): 
  

	
	             Eurodollar Base
Rate            
  

1.00 - Eurocurrency Reserve

Requirements

 “Event of Default” shall mean any of the events specified
in Section 8, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied. 

“Exchange Act” shall have the meaning assigned to it in Section 8(j). 

“Existing Facility” shall mean that certain Revolving Credit Agreement, dated as of April 5, 2016, among the Borrowers,
the several banks and other financial institutions or entities from time to time parties thereto (as defined therein), JPMorgan Chase Bank, N.A., as administrative agent and Bank of America, N.A., as syndication agent. 

  
 40 

 “Extension Date” shall have the meaning assigned to it
in Section 1.04(b). 
 “Extension Lender” shall have the meaning assigned to it
in Section 1.04(c). 
 “Extensions of Credit” shall mean as to any Lender at any time, an
amount equal to the sum of the aggregate principal amount of all Loans held by such Lender then outstanding. 
 “Facility”
shall mean the Commitments and the Loans made thereunder. 
 “Facility Fee” shall have the meaning assigned to it
in Section 2.03(a). 
 “Facility Fee Rate” shall mean, as to any Borrower, the rate per annum set forth below
which corresponds with the most current rating of such Borrower’s senior unsecured long-term debt issued by Moody’s and S&P, respectively. 
  

					
	 Ratings
	  	Facility Fee Rate	 
	 3A1/A+
	  	 	0.075	% 
	 A2/A
	  	 	0.100	% 
	 A3/A-
	  	 	0.125	% 
	 Baa1/BBB+
	  	 	0.175	% 
	 Baa2/BBB
	  	 	0.225	% 
	 Baa3/BBB-
	  	 	0.275	% 
	 <Baa3/BBB-
	  	 	0.350	% 

 Changes in the Facility Fee Rate shall become effective on the date on which Moody’s and/or S&P
changes the rating it has issued for such Borrower’s senior unsecured long-term debt. If both agencies issue a rating and the two ratings fall in different levels, the Facility Fee Rate shall be based upon the level indicated by the higher
rating; provided that if the higher rating is two or more levels above the lower rating, the Facility Fee Rate shall be based upon the next level below the higher of the two. If only one of such two agencies issues a rating, such rating shall
apply. If such Borrower (a) does not have a senior unsecured long-term debt rating, the Facility Fee Rate shall be based on the level one level below such Borrower’s senior secured long-term debt rating, and (b) does not have a senior
unsecured long-term debt rating or a senior secured long-term debt rating, pricing shall be at such Borrower’s issuer rating. 

  
 41 

 “FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of
this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to
Section 1471(b)(1) of the Code. 
 “Federal Funds Effective Rate” shall mean, for any day, the weighted average of the
rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of the quotations for the day of such transactions received by JPMorgan Chase Bank, N.A. from three federal funds brokers of recognized standing selected by it; provided that if the
Federal Funds Effective Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement. 
 “Fee
Percentage” shall mean, with respect to each Borrower, a fraction the numerator of which is such Borrower’s Maximum Sublimit and the denominator of which is the aggregate amount of the Maximum Sublimits. 

“Fees” shall mean the Facility Fees and other fees separately agreed to in writing by the Borrowers and the Administrative
Agent. 
 “Final Election Date” shall have the meaning assigned to it in Section 1.04(a).

 “Financial Officer” of a Borrower shall mean the principal financial officer, principal accounting officer, treasurer or
controller of such Borrower or any vice president of such Borrower whose primary responsibility is for financial matters. For purposes of this Agreement, “Financial Officer” shall include the Vice President – Treasurer of Avangrid
Management Company, LLC who has authority to act on such Borrower’s behalf. 
 “Funding Office” shall mean the office
of the Administrative Agent specified in Schedule 11.01 or such other office as may be specified from time to time by the Administrative Agent as its funding office by written notice to each Borrower and the Lenders. 

“GAAP” shall mean generally accepted accounting principles, applied on a consistent basis. 

“Governmental Authority” shall mean any Federal, state, local or foreign court or governmental agency, authority,
instrumentality or regulatory body. 
 “Guarantee Obligation” shall mean, as to any Person (the “guaranteeing
person”), any obligation of (a) the guaranteeing person or (b) another Person (including any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or
similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any
manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor,

  
 42 

 
(ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation
shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated
or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum
reasonably anticipated liability in respect thereof as determined by the such Borrower in good faith. 
 “Hedge Agreements”
shall mean all interest rate swaps, caps or collar agreements or similar arrangements dealing with interest rates or currency exchange rates or the exchange of nominal interest obligations, either generally or under specific contingencies. 

“Impacted Interest Period” has the meaning assigned to it in the definition of “Eurodollar Base Rate.” 

“Indebtedness” shall mean of any Person at any date, without duplication, (a) all indebtedness of such Person for
borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables not overdue more than 60 days incurred in the ordinary course of such Person’s business), (c) all
obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations of such Person, (f) all liabilities
of such Person as an account party under acceptances, letters of credit (other than trade letters of credit), surety bonds or similar arrangements, (g) the liquidation value of all preferred Capital Stock of such Person that is redeemable at
the option of the holder thereof or that has any mandatory dividend, redemption or other required payment that could be required thereunder prior to the date that is one year after the Termination Date, (h) all Guarantee Obligations of such
Person in respect of obligations of the kind referred to in clauses (a) through (g) above, (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation
has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation, and
(j) for the purposes of Section 8(e) only, all obligations of such Person in respect of Hedge Agreements. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the

  
 43 

 
terms of such Indebtedness expressly provide that such Person is not liable therefor. Indebtedness shall not include Indebtedness of a Borrower arising from the application of Financial
Interpretation Number 45 of the Financial Accounting Standards Board, Financial Interpretation Number 46 of the Financial Accounting Standards Board or Issue No. 01-08 of the Emerging Issues Task Force
(EITF). 
 “Interest Payment Date” shall mean (a) as to any ABR Loan, the last day of each March, June, September and
December to occur while such Loan is outstanding and the Termination Date, (b) as to any Eurodollar Loan having an Interest Period of three months or less, the last day of such Interest Period, (c) as to any Eurodollar Loan having an
Interest Period longer than three months, each day that is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period and (d) as to any Eurodollar Loan, the date of any
repayment or prepayment made in respect thereof. 
 “Interest Period” shall mean (a) as to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as the case may be, and ending one week or one, two, three or six months thereafter, as each Borrower
may elect, and (b) as to any ABR Borrowing, the period commencing on the date of such Borrowing and ending on the earliest of (i) the next succeeding March 31, June 30, September 30 or December 31,
(ii) the Termination Date and (iii) the date such Borrowing is repaid or prepaid in accordance with Sections 2.02 or 2.08; provided, however, that (i) if any Interest Period would end on a day other
than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a calendar month. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period. 

“Interpolated Rate” shall mean, at any time, the rate per annum (rounded to the same number of decimal places as the Screen
Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the Screen Rate (for the longest
period for which that Screen Rate is available in Dollars) that is shorter than the Impacted Interest Period and (b) the Screen Rate (for the shortest period for which that Screen Rate is available for Dollars) that exceeds the Impacted
Interest Period, in each case, as of the Specified Time on the Quotation Day for such Interest Period. When determining the rate for a period which is less than the shortest period for which the Screen Rate is available, the Screen Rate for purposes
of clause (a) above shall be deemed to be the overnight rate for Dollars determined by the Administrative Agent from such service as the Administrative Agent may select. 

“Lenders” shall have the meaning as defined in the preamble hereto. 

  
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 “Lending Office” shall mean (a) initially, for each Lender, its branch
office or offices located as of the date hereof at its address set forth in such Lender’s Administrative Questionnaire and (b) subsequently, such other branch (or affiliate) of each Lender as such Lender may designate by notice in writing
to the Borrowers and the Administrative Agent as the branch (or affiliate) from which ABR Loans or Eurodollar Loans will thereafter be made hereunder and for the account of which all payments by the Administrative Agent of principal of, and interest
on, ABR Loans or Eurodollar Loans, as the case may be, will thereafter be made. 
 “Lien” shall mean any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including
any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing). 

“Loan Documents” shall mean this Agreement and the Notes. 

“Loans” shall have the meaning assigned to it in Section 1.01(a). 

“Material Adverse Effect” shall mean a material adverse effect on (a) the business, property, operations or condition
(financial or otherwise) of each Borrower and its Subsidiaries taken as a whole or (b) the validity or enforceability of the Loan Documents or the rights and remedies of the Administrative Agent and the Lenders thereunder. 

“Maximum Rate” shall have the meaning assigned to it in Section 11.12. 

“Maximum Sublimit” shall mean, as to any Borrower, the amount set forth opposite such Borrower’s name in the table
below. 
  

					
	 Borrower
	  	Maximum Sublimit	 
	 Avangrid
	  	$	2,000,000,000	 
	 NYSEG
	  	$	400,000,000	 
	 RGE
	  	$	400,000,000	 
	 CMP
	  	$	400,000,000	 
	 UI
	  	$	400,000,000	 
	 CNG
	  	$	150,000,000	 
	 SCG
	  	$	150,000,000	 
	 BGC
	  	$	40,000,000	 

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

  
 45 

 “Non-Consenting Lender” shall mean any
Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all affected Lenders in accordance with the terms of Section 11.07 and (ii) has been approved by the
Required Lenders. 
 “Non-Defaulting Borrowers” shall have the meaning assigned to
it in Section 8. 
 “Non-Defaulting Lender” shall
mean, at any time, each Lender that is not a Defaulting Lender at such time. 

“Non-Extending Lender” shall have the meaning assigned to it
in Section 1.04(a). 
 “Non-U.S. Lender” shall have
the meaning assigned to it in Section 2.16(f). 
 “Note” shall mean, if requested by any
Lender, the promissory note of a Borrower in favor of the Lender in substantially the form of Exhibit C, together with any amendments, modifications and supplements thereto, substitutions therefor and restatements thereof. 

“NYFRB Rate” means for any day, the greater of (a) the federal funds effective rate in effect on such day and
(b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a banking day, for the immediately preceding banking day); provided that if none of such rates are published for any day that is a business day, the term
“NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m. (New York time) on such day received to the Administrative Agent from a federal funds broker of recognized standing selected by it; provided further, that
each such rate shall not be less than zero. 
 “NYSEG” shall have the meaning assigned to it in the recitals hereof. 

“Other Agents” shall have the meaning assigned to it in the recitals hereof. 

“Other Lenders” shall have the meaning assigned to it in the recitals hereof. 

“Other Taxes” shall have the meaning assigned to it in Section 2.16(b). 

“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight eurodollar
borrowings by U.S. managed banking offices of depository institutions (as such composite rate shall be determined by the Federal Reserve Bank of New York as set forth on its public website from time to time) and published on the next succeeding
business day by the Federal Reserve Bank of New York as an overnight bank funding rate (from and after such date as the Federal Reserve Bank of New York shall commence to publish such composite rate). 

“Participant” shall have the meaning assigned to it in Section 11.02(b). 

“Participant Register” shall have the meaning assigned to it in Section 11.02(b). 

“PATRIOT Act” shall have the meaning assigned to in in Section 11.15. 

  
 46 

 “PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA. 
 “Person” shall mean any natural person, corporation, business trust, joint venture, association,
company, partnership or government, or any agency or political subdivision thereof. 
 “Plan” shall mean any pension plan
subject to the provisions of Title IV of ERISA or Section 412 of the Code which is maintained for employees of a Borrower or any Significant Subsidiary. 

“Prime Rate” shall mean the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as
its prime rate in effect at its principal office in New York City (the Prime Rate not being intended to be the lowest rate of interest charged by JPMorgan Chase Bank, N.A. in connection with extensions of credit to debtors). 

“Proposed Increase Amount” shall have the meaning assigned to it in Section 1.05(a). 

“Quotation Day” shall mean, with respect to any Eurodollar Loan for any Interest Period, two Business Days prior to the
commencement of such Interest Period. 
 “Register” shall have the meaning assigned to it
in Section 11.02(d). 
 “Regulation U” shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or thereof. 
 “Related Party” shall mean, with
respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates. 

“Reportable Event” shall mean any reportable event as defined in Section 4043(b) of ERISA or the regulations issued
thereunder with respect to a Plan. 
 “Required Lenders” shall mean at any time, the holders of more than 50% of the
Commitments then in effect, or, at any time the Commitments have terminated, the holders of more than 50% of the Total Extensions of Credit. The Commitment and the Total Extensions of Credit of any Defaulting Lender shall be disregarded in
determining Required Lenders at any time. 
 “Requirement of Law” shall mean, as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. 

“RGE” shall have the meaning assigned to it in the recitals hereof. 

“S&P” shall mean Standard & Poor’s Rating Services, a division of McGraw-Hill, Inc. 

  
 47 

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

“Sanctioned Country” means, at any time, a country, region or territory which is itself, or whose government is, the subject
or target of any Sanctions (at the time of this Agreement, Crimea, Cuba, Iran, North Korea, Sudan and Syria). 
 “Sanctioned
Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, by the
United Nations Security Council, the European Union, any European Union member state, Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority, (b) any Person operating, organized or resident in a Sanctioned
Country or (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b). 

“SCG” shall have the meaning assigned to it in the recitals hereof. 

“Screen Rate” has the meaning assigned to it in the definition of “Eurodollar Base Rate.” 

“Specified Time” shall mean 11:00 a.m., London time. 

“Significant Subsidiary” shall mean, as to any Borrower, at any particular time, any Subsidiary of such Borrower that would
be a “significant subsidiary” of such Borrower within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC, including without limitation in the
case of Avangrid, Iberdrola Renewables Holdings, Inc., Iberdrola Renewables, LLC and each of the Subsidiary Borrowers. 

“Sublimit” shall mean, as to any Borrower, the amount set forth opposite such Borrower’s name in the table below, as
such amount may be adjusted from time to time pursuant to Section 1.06. 
  

					
	 Borrower
	  	Sublimit	 
	 Avangrid
	  	$	1,360,000,000	 
	 NYSEG
	  	$	200,000,000	 
	 RGE
	  	$	200,000,000	 
	 CMP
	  	$	200,000,000	 
	 UI
	  	$	200,000,000	 
	 CNG
	  	$	150,000,000	 
	 SCG
	  	$	150,000,000	 
	 BGC
	  	$	40,000,000	 

  
 48 

 “Subsidiary” shall mean, as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by
such Person. 
 “Subsidiary Borrowers” shall mean NYSEG, RGE, CMP, UI, CNG, SCG and BGC. 

“Sustainability Amount” means the greenhouse gas emissions intensity resulting from the Borrowers’ and their
Subsidiaries’ operations, calculated in the manner set forth by Global Reporting Initiative 305-4 (previous G4-EN18) based on direct emissions from production
facilities divided by the net production, including steam, and expressed as a ratio of grams of carbon dioxide to kilowatt hour (g CO2/kWh), as certified by the Borrowers, with such certificate attaching or, in lieu thereof, otherwise
contemporaneously furnishing a satisfactory opinion of Vigeo Eiris. 
 “Syndication Agent” shall have the meaning assigned
to it in the recitals hereof. 
 “Sustainability Agent” shall have the meaning assigned to it in the recitals hereof. 

“Taxes” shall have the meaning assigned to it in Section 2.16(a). 

“Termination Date” shall mean June 29, 2023, as such date may be extended from time to time with respect to some or all
of the Lenders pursuant to Section 1.04. 
 “Total Commitments” shall mean, as of a given
date, the aggregate Commitments of the Lenders on such date. 
 “Total Extensions of Credit” shall mean, at any time, the
aggregate amount of the Extensions of Credit of the Lenders outstanding at such time. 
 “Transferee” shall have the
meaning assigned to it in Section 2.16(a). 
 “Type”, when used in respect of any Loan or
Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, “Rate” shall include the Eurodollar Rate and the ABR. 

“UI” shall have the meaning assigned to it in the recitals hereof. 

  
 49 

 “Vigeo Eiris” shall mean Vigeo Eiris or any successor thereto or replacement rating and
research agency reasonably acceptable to the Administrative Agent. 
 “Write-Down and Conversion Powers” shall mean, 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. 

9.02. Terms Generally. The definitions in Section 9.01 shall apply equally
to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and
“including” shall be deemed to be followed by the phrase “without limitation”. All references herein to Sections, Exhibits and Schedules shall be deemed references to Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time, including the word
“consolidated,” as such term is applicable to such Borrower. 
 SECTION 10.  

THE ADMINISTRATIVE AGENT 
 The
Lenders and the Administrative Agent agree among themselves as follows: 
 10.01. Appointment and Authority of Administrative
Agent. Each of the Lenders hereby irrevocably appoints JPMorgan Chase Bank, N.A. to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. Except as set forth
in Section 10.08, the provisions of this Section 10 are solely for the benefit of the Administrative Agent and the Lenders, and no Borrower shall
have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent
is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used as a matter of market custom, and is intended to create or reflect only an
administrative relationship between contracting parties. 
 10.02. Reliance by Administrative Agent; Delegation by Administrative
Agent. 
 (a) The Administrative Agent shall, in the absence of knowledge to the contrary, be entitled to rely upon, and shall not incur
any liability for relying upon, any notice, request, certificate, consent, statement, communication, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it
in good faith to be genuine and correct and to have been signed, sent or otherwise authenticated by the proper Person(s). The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been
made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder 

  
 50 

 
to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the
Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel for a Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. 

(b) The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan
Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its
duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Section 10 shall apply to any such sub-agent and
to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the Facility as well as activities as
Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and
nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents. Neither the Administrative Agent nor any of its directors, officers,
employees or agents shall be liable as such for any action taken or omitted by any of them except for its or his own gross negligence or willful misconduct, or be responsible for any recitals, statements, representations or warranties herein or the
contents of any document delivered in connection herewith, or be liable for failing to ascertain or to make any inquiry concerning the performance or observance by the Borrowers of any of the terms, conditions, covenants or agreements contained in
this Agreement or any other Loan Documents. The Administrative Agent shall not be responsible to the Lenders or the holders of any Notes for the due execution, genuineness, validity, enforceability or effectiveness of this Agreement or such Notes.
The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof until it shall have received from the payee of such Note notice, given as provided herein, of the transfer thereof in compliance
with Section 11.02. The Administrative Agent shall in all cases be fully protected in acting, or refraining from acting, in accordance with written instructions signed by the Required Lenders and, except as otherwise
specifically provided herein, such instructions and any action or inaction pursuant thereto shall be binding on all the Lenders and each subsequent holder of any Note. Neither the Administrative Agent nor any of its directors, officers, employees or
agents shall have any responsibility to the Borrowers on account of the failure of or delay in performance or breach by any Lender of any of its obligations hereunder or to any Lender on account of the failure of or delay in performance or breach by
any other Lender or the Borrowers of any of their respective obligations hereunder or under the other Loan Documents. 
 The Lenders hereby
acknowledge that the Administrative Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement unless it shall be requested in writing to do so by the Required Lenders. 

  
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 10.03. No Amendment to Administrative Agent’s Duties Without
Consent. 
 (a) The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the
other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent: 

(i) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is
continuing; 
 (ii) shall not have any duty to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as
shall be expressly provided for herein or in the other Loan Documents); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to
liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or
termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and (iii) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure
to disclose, any information relating to the Borrowers or any of their respective Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity. 

(b) The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections
8 or 11.07) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. The Administrative Agent shall be deemed not to
have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent in writing by the applicable Borrower or a Lender. 

(c) The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any
other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Section 5 or elsewhere herein, other than to confirm receipt of items expressly
required to be delivered to the Administrative Agent. 
 (d) The Administrative Agent shall not be bound by any waiver, amendment, supplement
or modification of this Agreement that affects its duties as Administrative Agent under this Agreement unless it shall have given its prior written consent as Administrative Agent thereto. 

  
 52 

 10.04. Responsibilities of Administrative Agent. The Administrative Agent is hereby
expressly authorized by the Lenders, without hereby limiting any implied authority, (i) to receive on behalf of the Lenders all payments of principal of and interest on the Loans and all other amounts due to the Lenders hereunder, and promptly
to distribute to each Lender its proper share of each payment so received in like funds, and (ii) to promptly distribute to each Lender copies of all notices, financial statements and other materials delivered by the Borrowers pursuant to this
Agreement as received by the Administrative Agent. In the event that (x) a Borrower fails to pay when due the principal of or interest on any Loan or any Fees or (y) the Administrative Agent receives notice from a Borrower or any Lender of the
occurrence of an Event of Default or other condition or event, in each case the Administrative Agent shall promptly give written notice thereof to the Lenders and shall take such action with respect to such Event of Default or other condition or
event as it shall be directed in writing to take by the Required Lenders; provided, however, that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may take such action or
refrain from taking such action with respect to such Event of Default or other condition or event as it shall deem advisable in the best interests of the Lenders. The Administrative Agent shall promptly deliver any bill required to be delivered by
the Administrative Agent to the relevant Borrower. 
 10.05. Proofs of Claim. In case of the pendency of any proceeding under any
Debtor Relief Law, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any
demand on any Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise: 
 (a) to file
and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the
claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts
due the Lenders and the Administrative Agent under Sections 2.03 and 11.03) allowed in such judicial proceeding; and 

(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the
Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its
agents and counsel, and any other amounts due the Administrative Agent under Sections 2.03 and 11.03. 

10.06. Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and the term “Lender” or 

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

10.07. Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or
any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in
taking or not taking any action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder. Each of the Lenders agrees that the Administrative Agent shall not have any
responsibility for the accuracy or adequacy of any information contained in any document, or any oral information, supplied to such Lender by the Borrowers directly or through the Administrative Agent. 

10.08. Resignation of Administrative Agent. 

(a) The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrowers. Upon receipt of any such notice
of resignation, the Required Lenders shall have the right, in consultation with the Borrowers, to appoint a successor, which shall be a bank with an office in New York, New York, having a combined capital and surplus of at least $500,000,000, or an
Affiliate of any such bank with an office in New York, New York. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring Administrative Agent may (but shall not be obligated to), on behalf of the Lenders, appoint a
successor Administrative Agent meeting the qualifications set forth above. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date. 

(b) With effect from the Resignation Effective Date (i) the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents and (ii) except for any indemnity payments owed to the retiring Administrative Agent, all payments, communications and determinations provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders or the retiring Administrative Agent appoint a successor Administrative Agent as provided for
in Section 10.08(a). Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of
the retiring Administrative Agent (other than any rights to indemnity payments owed to the retiring Administrative Agent), and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other
Loan Documents. The fees payable by each Borrower to a successor 

  
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Administrative Agent shall be the same as those payable by such Borrower to its predecessor unless otherwise agreed between such Borrower and such successor. After the retiring Administrative
Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Section 10 and Section 11.03 shall continue in effect for the benefit of such
retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as
Administrative Agent. 
 10.09. No Other Duties. Anything herein to the contrary notwithstanding, none of the Arrangers or Other
Agents listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder. 

SECTION 11.  
 MISCELLANEOUS

 11.01. Notices. 

(a) Any notice shall be conclusively deemed to have been received by a party hereto and be effective on the day on which delivered to such
party at the address set forth below (or at such other address as such party shall specify to the other parties in writing): 

(i) if to the Administrative Agent or any Borrower, at the address thereof set forth in Schedule 11.01; and
(ii) if to any of the Lenders, at the address specified in its Administrative Questionnaire, or if a Lender is a Lender by virtue of an assignment, to it at its address (or facsimile number) set forth in the Assignment and Acceptance pursuant
to which such Lender shall have become a party hereto. 
 All notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by facsimile or other telegraphic communications equipment of the sender, or on the date five
Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 11.01 or in accordance with the latest
unrevoked direction from such party given in accordance with this Section 11.01. 
 (b) Notices and other
communications to the Lenders hereunder may be delivered or furnished by electronic communications (including email and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing
shall not apply to notices to any Lender pursuant to Section 2 if such Lender has notified the Administrative Agent that it is incapable of receiving notices
under Section 2 by electronic communication. The Administrative Agent or the relevant Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. 

  
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 Unless the Administrative Agent otherwise prescribes, (i) notices and other communications
sent to an email address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return email or other written
acknowledgement) and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its email address as described in the foregoing clause (i), of
notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal
business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient. 

(c) Any party hereto may change its address (including email address) or facsimile number for notices and other communications hereunder by
notice to the other parties hereto. 
 (d) Each Borrower agrees that the Administrative Agent may, but shall not be obligated to, make the
Communications (as defined below) available to the Lenders by posting the Communications on Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system (the “Platform”). The Platform is provided
“as is” and “as available.” The Agent Parties (as defined below) do not warrant the adequacy of the Platform and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express,
implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is
made by any Agent Party in connection with the Communications or the Platform. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to any Borrower, any
Lender or any other Person or entity for damages of any kind, including direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of such Borrower’s or the
Administrative Agent’s transmission of communications through the Platform. “Communications” means, collectively, any notice, demand, communication, information, document or other material that any Borrower provides to the
Administrative Agent pursuant to any Loan Document or the transactions contemplated therein which is distributed to the Administrative Agent any Lender by means of electronic communications pursuant to
this Section 11.01, including through the Platform. 
 11.02. Successors and Assigns; Participations,
Assignments and Designations. 
 (a) This Agreement shall be binding upon and inure to the benefit of each Borrower, the Lenders, the
Administrative Agent, all future holders of the Loans and their respective successors and assigns, except that no Borrower may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the
Administrative Agent and each Lender, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of Section 11.02(c),
(ii) by way of participation in accordance with the provisions of Section 11.02(b) or (iii) by way of pledge or assignment of a security interest subject to the restrictions
of Section 11.02(f) (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other
than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in Section 11.02(b) and, to the extent expressly contemplated hereby, the Related Parties of
each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. 

  
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 (b) (i) Any Lender may, without the consent of or notice to the Borrowers or the
Administrative Agent, in accordance with applicable law, at any time sell participations to any Person (other than a natural person or any Borrower or any Affiliate or Subsidiary of any Borrower) (each, a “Participant”) in all or a
portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible for the performance thereof, (iii) such Lender shall remain the holder of any such Loan for all purposes under this Agreement and the other
Loan Documents and (iv) the Borrowers, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and the other Loan
Documents. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant
and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to
disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans or its other obligations under any Loan Document)
except to the extent that such disclosure is necessary to establish that such Commitment, Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury
Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this
Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register. 

(ii) Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall
retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of
the Participant, agree to any amendment, modification or waiver that requires the consent of all Lenders pursuant to Section 11.07 that affects such Participant. Each Borrower agrees that each Participant shall be
entitled to the benefits of Sections 2.09, 2.10, 2.12 and 2.16 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant
to Section 11.02(c); provided that such Participant agrees to be subject to the provisions of Section 2.11 as if it were an Assignee
under Section 11.02(c); provided further that no Participant shall be entitled to receive any greater amount pursuant
to Section 2.09, 2.10, 2.12 or 2.16 than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such
transferor Lender to such Participant had no such transfer occurred, unless the sale of the participation to such Participant is made with the Borrowers’ prior written consent. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 11.06 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.14 as though it were a Lender. 

  
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 (c) (i) Any Lender (an “Assignor”) may, in accordance with applicable law,
at any time and from time to time assign to any Lender, any Affiliate of any Lender or any Approved Fund or, with the consent (which shall not be unreasonably withheld or delayed) of the Borrowers and the Administrative Agent (provided that
each Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five Business Days after having received notice thereof), to any other Person (other than any
Borrower, any Subsidiary or Affiliate of any Borrower, any Defaulting Lender or any other Person who, upon becoming a Lender hereunder, would constitute any of the foregoing, or any natural person) (an “Assignee”) all or any part of
its rights and obligations under this Agreement pursuant to an Assignment and Acceptance, executed by such Assignee, such Assignor and any other Person whose consent is required pursuant to this Section 11.02(c), and
delivered to the Administrative Agent for its acceptance and recording in the Register; provided that no such assignment to an Assignee (other than any Lender, any affiliate of any Lender or any Approved Fund) shall be in an aggregate
principal amount of less than $5,000,000 (other than in the case of an assignment of all of a Lender’s interests under this Agreement), unless otherwise agreed by the Borrowers and the Administrative Agent. For purposes of the proviso contained
in the preceding sentence, the amount described therein shall be aggregated in respect of each Lender and its related Approved Funds, if any. Upon such execution, delivery, acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender hereunder with a
Commitment and/or Loans as set forth therein, and (y) the Assignor thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of an Assignor’s rights and obligations under this Agreement, such Assignor shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.09, 2.12,
2.16 and 11.03. Notwithstanding any provision of this Section 11.02, the consent of any Borrower shall not be required for any assignment that occurs when an Event of Default shall have occurred and be
continuing with respect to such Borrower. 
 (ii) In connection with any assignment of rights and obligations of any
Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an
aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations or other compensating actions, including funding, with the consent of each
Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable Assignee and Assignor hereby irrevocably consent), to (x) pay and
satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent and each other Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all
Loans in accordance with its Commitment Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting 

  
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Lender hereunder shall become effective under applicable law without compliance with the provisions of this Section 11.02(c)(ii), then the Assignee of such interest
shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs. 
 (d) The Administrative Agent
shall, acting solely for this purpose as a non-fiduciary agent of the Borrowers, maintain at its address referred to in Schedule 11.01 a copy of each Assignment and Acceptance delivered to it
and a register (the “Register”) for the recordation of the names and addresses of the Lenders and the Commitment of, and the principal amount of the Loans owing to, each Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrowers, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. Any assignment of any
Loan, whether or not evidenced by a Note, shall be effective only upon appropriate entries with respect thereto being made in the Register (and each Note shall expressly so provide). Any assignment or transfer of all or part of a Loan evidenced by a
Note shall be registered on the Register only upon surrender for registration of assignment or transfer of the Note evidencing such Loan, accompanied by a duly executed Assignment and Acceptance, and thereupon one or more new Notes shall be issued
to the designated Assignee. 
 (e) Upon its receipt of an Assignment and Acceptance executed by an Assignor, an Assignee and any other Person
whose consent is required by Section 11.02(c), together with payment to the Administrative Agent of a registration and processing fee of $3,500, the Administrative Agent shall (i) promptly accept such Assignment
and Acceptance and (ii) record the information contained therein in the Register on the effective date determined pursuant thereto. 

(f) For avoidance of doubt, the parties to this Agreement acknowledge that the provisions of
this Section 11.02 concerning assignments of Loans and Notes relate only to absolute assignments and that such provisions do not prohibit assignments creating security interests, including any pledge or assignment
by a Lender of any Loan or Note to any Federal Reserve Bank or any other central bank having jurisdiction over such Lender in accordance with applicable law. The parties to this Agreement further acknowledge that any such pledge or assignment shall
not release such Lender from any of its obligations hereunder or substitute any pledge or assignee for such Lender as a party hereto. 
 (g)
Each Borrower, upon receipt of written notice from the relevant Lender, agrees to issue Notes to any Lender requiring Notes to facilitate transactions of the type described in Section 11.02(f). 

11.03. Expenses; Indemnity. 

(a) Each Borrower, severally but not jointly, agrees to pay all reasonable
out-of-pocket expenses incurred (i) by the Administrative Agent in connection with the preparation of this Agreement or in connection with any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the transactions hereby contemplated shall be consummated), including the reasonable fees and disbursements of counsel to the Administrative

  
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Agent, and (ii) by the Administrative Agent or any Lender in connection with the enforcement or protection of their rights in connection with this Agreement or in connection with the Loans
made or any Notes issued hereunder, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent and the Lenders. 

(b) Each Borrower, severally but not jointly, agrees to indemnify the Administrative Agent, each Lender, the Other Agents, the Arrangers and
each Related Party of any of the foregoing Persons (each such person being called an “Indemnitee”) against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees, charges and disbursements, incurred by any Indemnitee or asserted against any Indemnitee by any Person (including any Borrower) other than such Indemnitee and its Related Parties arising out of, in any connection with, or as
a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or
the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or the use or proposed use of the proceeds of therefrom, (iii) any violation of, or noncompliance with, any Environmental Law, any actual or alleged
presence or release of hazardous materials on or from any property owned or operated by such Borrower or any of its Subsidiaries, or any environmental liability related in any way to such Borrower or any of its Subsidiaries, or (iv) any actual
or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by such Borrower and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by a Borrower against an Indemnitee for breach in bad faith of such Indemnitee’s obligations
hereunder or under any other Loan Document, if such Borrower has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction. 

(c) The provisions of this Section 11.03 shall remain operative and in full force and effect regardless of
the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the invalidity or unenforceability of any term or provision of this Agreement or any of the other Loan
Documents, or any investigation made by or on behalf of the Administrative Agent or any Lender. All amounts due under this Section 11.03 shall be payable on written demand therefor. 

(d) To the extent that any Borrower for any reason fails to indefeasibly pay any amount required under
Section 11.03(a) or 11.03(b) to be paid by it to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of the foregoing, each Lender severally
agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed
expense or indemnity payment is sought based on each Lender’s share of the aggregate Extensions of Credit at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender); provided that
the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) in its
capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) in connection with such capacity. 

  
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 (e) To the fullest extent permitted by applicable law, no Borrower shall assert, and each of them
hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any
other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof. No Indemnitee referred to
in Section 11.03(b) shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other
information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby. 

11.04. Effectiveness. This Agreement shall become effective on the Closing Date, and thereafter shall be binding upon and inure to
the benefit of each Borrower, the Administrative Agent and each Lender. 
 11.05. Survival of Agreement; Benefit to Successors and
Assigns. All covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive the making by the Lenders of the Loans herein contemplated and the execution and delivery to the
Lenders of any Notes evidencing such Loans and shall continue in full force and effect so long as any portion of any of such Notes is outstanding and unpaid and the Commitments have not been terminated. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors and assigns of such party and all covenants, promises and agreements by or on behalf of each Borrower which are contained in this Agreement shall bind and inure to the
benefit of the successors and assigns of the Lenders; provided, however, that no interest, rights or duties herein may be assigned by the Borrowers without the prior written approval of all the Lenders. 

11.06. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time
owing by such Lender or any such Affiliate to or for the credit or the account of such Borrower against any of and all the obligations of such Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender or its
Affiliates, irrespective of whether or not such Lender or such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations may be contingent or unmatured or are owed to a branch, office or
Affiliate of such Lender different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff,
(x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 11.16 and, pending such
payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative

  
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Agent a statement describing in reasonable detail the obligations owing to such Defaulting Lender as to which it is exercising such right of setoff. The rights of each Lender and its Affiliates
under this Section 11.06 are in addition to other rights and remedies (including other rights of setoff) that such Lender or its Affiliates may have. Each Lender agrees to notify the
applicable Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application. 

11.07. Waivers; Amendment. 

(a) No failure or delay of the Administrative Agent or any Lender in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Administrative Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies which they would otherwise have. No waiver of any provision of this Agreement
or any other Loan Document or consent to any departure by any Borrower therefrom shall in any event be effective unless the same shall be permitted by Section 11.07(b), and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. 
 (b) Except for increasing the Commitments in accordance with
the procedures specified in Section 1.05 and replacing any Lender in accordance with the procedures specified in Section 2.11, neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrowers and the Required Lenders; provided, however, that no such agreement shall (i) decrease the principal
amount of, or extend the maturity of, or any scheduled principal payment date or date for the payment of any interest on, any Loan, or waive or excuse any such payment or any part thereof, or decrease rate of interest on any Loan, without the prior
written consent of each Lender directly affected thereby, (ii) change or extend the Commitment or decrease the Facility Fee of any Lender without the prior written consent of such Lender, (iii) amend or modify the provisions
of Section 2.13, Section 2.14, this Section 11.07 or the definition of “Required Lenders,” or any other provision hereof specifying
the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the prior written consent of each Lender, or (iv) amend the last sentences of Sections
4.14, 6.04 or 7.07 without the prior written consent of Required Lenders and each Lender incorporated or organized under the laws of the Federal Republic of Germany; provided further that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent hereunder without the prior written consent of the Administrative Agent. Any waiver, amendment or modification authorized by
this Section 11.07 shall apply equally to each of the Lenders and shall be binding upon the Borrowers, the Lenders, the Administrative Agent and all future holders of the Loans. 

(c) Any request by any Borrower for a modification, amendment or waiver of any provision of this Agreement or any other Loan Document shall be
made in writing to the Administrative Agent and the Administrative Agent shall promptly communicate such request to the Lenders. Any such waiver, consent or approval granted by the Required Lenders (and such

  
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other Persons as may be required under this Section 11.07) shall be effective only in the specific instance and for the purpose for which given. No notice to or
demand on any Borrower in any case shall entitle such Borrower to any other or further notice or demand in the same, similar or other circumstances. 

(d) No waiver by the Administrative Agent or any Lender of any breach or default of or by any Borrower under this Agreement shall be deemed a
waiver of any other previous breach or default or any thereafter occurring. 
 (e) In connection with any waiver, determination or direction
relating to any part of Sections 4.14, 6.04(c) or 7.07 of which a Lender does not have the benefit, the Commitment and Loans of that Lender will be excluded for the purpose of determining whether the consent of the requisite Lenders has been
obtained or whether the determination or direction by the requisite Lenders has been made. 
 11.08. Severability. In the event
any one or more provisions contained in this Agreement or any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions. 
 11.09. Headings. The Section headings in this Agreement are for
convenience only and shall not affect the construction hereof. 
 11.10. Governing Law; Jurisdiction. 

(a) This Agreement and the other Loan Documents and any claims, controversy, dispute or cause of action (whether in contract or tort or
otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be construed in
accordance with and governed by the laws of the State of New York. 
 (b) Each Borrower irrevocably and unconditionally agrees that it will
not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, any Lender or any Related Party of the foregoing in any way
relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in New York County, and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or
proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or in any other Loan Document shall affect any right that the Administrative Agent or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Borrower or its properties in the courts of any jurisdiction. 

  
 63 

 (c) Each Borrower irrevocably and unconditionally waives, to the fullest extent permitted by
applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to
in Section 11.10(b). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any
such court. 
 (d) Each party hereto irrevocably consents to service of process in the manner provided for notices
in Section 11.01. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable law 

11.11. Counterparts. This Agreement may be executed in two or more counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when taken together shall constitute but one agreement. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (e.g.
“.pdf” or “.tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement. 

11.12. Interest Rate Limitation. Notwithstanding anything herein or in any other Loan Document to the contrary, if at any time the
applicable interest rate, together with all Fees and charges which are treated as interest under applicable law (collectively the “Charges”), as provided for herein or in any other document executed in connection herewith, or
otherwise contracted for, charged, received, taken or reserved by any Lender, shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by such Lender in accordance
with applicable law, the rate of interest payable under the Loan held by such Lender, together with all Charges payable to such Lender, shall be limited to the Maximum Rate. 

11.13. Entire Agreement. This Agreement, the other Loan Documents, any separate letter agreements with respect to fees payable to
the Administrative Agent and any Assignment and Acceptance (executed pursuant to Section 11.02 of this Agreement) constitute the entire contract between each Borrower, the Administrative Agent and
the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein
or in the other Loan Documents. 
 11.14. Waiver of Jury Trial. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any right it may have to a trial by jury in any legal proceeding directly or indirectly arising out of or relating to this Agreement or any other Loan Document or the transactions contemplated hereby or thereby
(whether based on contract, tort or any other theory). Each party hereto (i) certifies that no representative, agent or attorney of any other Person has represented, expressly or otherwise, that such other Person would not, in the event of
litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other parties hereto have been induced to enter into this Agreement and the other Loan Documents by, among other things, the mutual waivers and
certifications in this Section 11.14. 

  
 64 

 11.15. USA PATRIOT Act. Each Lender hereby notifies each Borrower that pursuant to
the requirements of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act of 2001), as amended from time to time (the “PATRIOT Act”), it is required to
obtain, verify and record information that identifies such Borrower, which information includes the name and address of such Borrower and other information that will allow such Lender to identify such Borrower in accordance with the PATRIOT Act.

 11.16. Defaulting Lenders. 

(a) Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as
such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law: 
 (i) Such Defaulting Lender’s
right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders. 

(ii) Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 8 or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant
to Section 11.06 shall be applied at such time or times as may be determined by the Administrative Agent as follows: 

(A) first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; 

(B) second, as the applicable Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in
respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; 

(C) third, if so determined by the Administrative Agent and the applicable Borrower, to be held in a deposit account and released pro
rata in order to satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement; 

(D) fourth, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained
by any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; 

(E) fifth, so long as no Default or Event of Default exists, to the payment of any amounts owing to any Borrower as a result of any
judgment of a court of competent jurisdiction obtained by such Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and 

  
 65 

 (F) sixth, to such Defaulting Lender or as otherwise directed by a court of competent
jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made at a time
when the conditions set forth in Section 5.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of all Non-Defaulting Lenders on a pro rata
basis prior to being applied to the payment of any Loans of such Defaulting Lender until such time as all Loans are held by the Lenders pro rata in accordance with the Commitments. Any payments, prepayments or other amounts paid or payable to a
Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender pursuant to this Section 11.16(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender
irrevocably consents hereto. 
 (iii) Each Defaulting Lender shall be entitled to receive a Facility Fee for any period
during which that Lender is a Defaulting Lender only to extent allocable to the sum of the outstanding principal amount of the Loans funded by it. 

(b) If each Borrower and the Administrative Agent agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent
will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the
other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans to be held pro rata by the Lenders in accordance with the Commitments, whereupon such Lender will cease to be a Defaulting Lender;
provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of any Borrower while that Lender was a Defaulting Lender; provided further that except to the extent
otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Non-Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that
Lender’s having been a Defaulting Lender. 
 11.17. Certain Acknowledgements. Each of the Borrowers hereby acknowledges and
agrees that (a) no fiduciary, advisory or agency relationship between the Borrowers and the Credit Parties is intended to be or has been created in respect of any of the transactions contemplated by this Agreement or the other Loan Documents,
irrespective of whether the Credit Parties have advised or are advising the Borrowers on other matters, and the relationship between the Credit Parties, on the one hand, and the Borrowers, on the other hand, in connection herewith and therewith is
solely that of creditor and debtor, (b) the Credit Parties, on the one hand, and the Borrowers, on the other hand, have an arm’s length business relationship that does not directly or indirectly give rise to, nor do the Borrowers rely on,
any fiduciary duty to the Borrowers or their affiliates on the part of the Credit Parties, (c) the Borrowers are capable of evaluating and understanding, and the Borrowers understand and accept, the terms, risks and conditions of the
transactions contemplated by this Agreement and the other Loan Documents, (d) the Borrowers have been advised that the Credit Parties are engaged in a broad range of transactions that may involve interests that differ from the
Borrowers’ interests and that the Credit Parties have no obligation to disclose such interests and transactions to the Borrowers, (e) the Borrowers have consulted their own legal, accounting, regulatory and tax advisors to the
extent the Borrowers have deemed appropriate in the negotiation, execution and delivery of this Agreement and the other Loan Documents, (f) each Credit Party has been, is, and will be acting

  
 66 

 
solely as a principal and, except as otherwise expressly agreed in writing by it and the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the
Borrowers, any of their affiliates or any other Person, (g) none of the Credit Parties has any obligation to the Borrowers or their Affiliates with respect to the transactions contemplated by this Agreement or the other Loan Documents
except those obligations expressly set forth herein or therein or in any other express writing executed and delivered by such Credit Party and the Borrowers or any such Affiliate and (h) no joint venture is created hereby or by the other
Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Credit Parties or among the Borrowers and the Credit Parties. For purposes of this Section 11.17, “Credit Party” means each
of the Lenders, the Administrative Agent, the Other Agents and the Arrangers. 
 11.18. 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 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 entity, 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 (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. 
  

  
 67 

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

			
	AVANGRID, INC.
		
	By:	 	 /s/ Howard A. Coon

	Name:	 	Howard A. Coon
	Title:	 	 Vice President – Treasurer
 Avangrid
Management Company, LLC

		
	By:	 	 /s/ Scott Tremble

	Name:	 	Scott Tremble
	Title:	 	Senior Vice President – Controller
	
	NEW YORK STATE ELECTRIC & GAS CORPORATION
		
	By:	 	 /s/ Howard A. Coon

	Name:	 	Howard A. Coon
	Title:	 	 Vice President – Treasurer
 Avangrid
Management Company, LLC

		
	By:	 	 /s/ Scott Tremble

	Name:	 	Scott Tremble
	Title:	 	 Senior Vice President – Controller

Avangrid, Inc.

 [Signature Page to Revolving Credit Agreement] 

			
	ROCHESTER GAS AND ELECTRIC CORPORATION
		
	By:	 	 /s/ Howard A. Coon

	Name:	 	Howard A. Coon
	Title:	 	 Vice President – Treasurer
 Avangrid
Management Company, LLC

		
	By:	 	 /s/ Scott Tremble

	Name:	 	Scott Tremble
	Title:	 	 Senior Vice President – Controller

Avangrid, Inc.

  

			
	CENTRAL MAINE POWER COMPANY
		
	By:	 	 /s/ Howard A. Coon

	Name:	 	Howard A. Coon
	Title:	 	 Vice President – Treasurer
 Avangrid
Management Company, LLC

		
	By:	 	 /s/ Scott Tremble

	Name:	 	Scott Tremble
	Title:	 	 Senior Vice President – Controller

Avangrid, Inc.

[Signature Page to Revolving Credit Agreement] 

			
	THE UNITED ILLUMINATING COMPANY
		
	By:	 	 /s/ Howard A. Coon

	Name:	 	Howard A. Coon
	Title:	 	 Vice President – Treasurer
 Avangrid
Management Company, LLC

		
	By:	 	 /s/ Scott Tremble

	Name:	 	Scott Tremble
	Title:	 	 Senior Vice President – Controller

Avangrid, Inc.

  

			
	CONNECTICUT NATURAL GAS CORPORATION
		
	By:	 	 /s/ Howard A. Coon

	Name:	 	Howard A. Coon
	Title:	 	 Vice President – Treasurer
 Avangrid
Management Company, LLC

		
	By:	 	 /s/ Scott Tremble

	Name:	 	Scott Tremble
	Title:	 	 Senior Vice President – Controller

Avangrid, Inc.

[Signature Page to Revolving Credit Agreement] 

			
	
	THE SOUTHERN CONNECTICUT GAS COMPANY
		
	By:	 	 /s/ Howard A. Coon

	Name:	 	Howard A. Coon
	Title:	 	 Vice President – Treasurer
 Avangrid
Management Company, LLC

		
	By:	 	 /s/ Scott Tremble

	Name:	 	Scott Tremble
	Title:	 	 Senior Vice President – Controller

Avangrid, Inc.

	
	THE BERKSHIRE GAS COMPANY
		
	By:	 	 /s/ Howard A. Coon

	Name:	 	Howard A. Coon
	Title:	 	 Vice President – Treasurer
 Avangrid
Management Company, LLC

		
	By:	 	 /s/ Scott Tremble

	Name:	 	Scott Tremble
	Title:	 	 Senior Vice President – Controller

Avangrid, Inc.

 [Signature Page to Revolving Credit Agreement] 

			
	JPMORGAN CHASE BANK, N.A., as Administrative Agent and as a Lender
		
	By:	 	 /s/ Tasvir Hasan

	Name:	 	Tasvir Hasan
	Title:	 	Executive Director

  

			
	BANK OF AMERICA, N.A., as Syndication Agent and as a Lender
		
	By:	 	 /s/ Maggie Hallenland

	Name:	 	Maggie Hallenland
	Title:	 	Vice President

  

			
	MUFG BANK, LTD., as a Lender
		
	By:	 	 /s/ Robert MacFarlane

	Name:	 	Robert MacFarlane
	Title:	 	Director

  

			
	SANTANDER BANK, N.A., as a Lender
		
	By:	 	 /s/ Xavier Ruiz Sena

	Name:	 	Xavier Ruiz Sena
	Title:	 	Managing Director

 [Signature Page to Revolving Credit Agreement] 

			
	BANCO BILBAO VIZCAYA ARGENTARIA S.A., NEW YORK BRANCH, as a Lender
		
	By:	 	 /s/ Cara Younger

	Name:	 	Cara Younger
	Title:	 	Director
		
	By:	 	 /s/ Luis Ruigomez

	Name:	 	Luis Ruigomez
	Title:	 	Executive Director

  

			
	BNP PARIBAS, as a Lender
		
	By:	 	 /s/ Francis DeLaney

	Name:	 	Francis DeLaney
	Title:	 	Managing Director
		
	By:	 	 /s/ Theodore Sheen

	Name:	 	Theodore Sheen
	Title:	 	Director

 [Signature Page to Revolving Credit Agreement] 

			
	CITIBANK, N.A., as a Lender
		
	By:	 	 /s/ Lei Zeng

	Name:	 	Lei Zeng
	Title:	 	Vice President

  

			
	MIZUHO BANK, LTD., as a Lender
		
	By:	 	 /s/ Donna DeMagistris

	Name:	 	Donna DeMagistris
	Title:	 	Authorized Signatory

  

			
	MORGAN STANLEY BANK, N.A., as a Lender
		
	By:	 	 /s/ Michael King

	Name:	 	Michael King
	Title:	 	Authorized Signatory

 [Signature Page to Revolving Credit Agreement] 

			
	ROYAL BANK OF CANADA, as a Lender
		
	By:	 	 /s/ Justin Painter

	Name:	 	Justin Painter
	Title:	 	Authorized Signatory

  

			
	TD BANK, N.A., as a Lender
		
	By:	 	 /s/ Shannon Batchman

	Name:	 	Shannon Batchman
	Title:	 	Senior Vice President

 [Signature Page to Revolving Credit Agreement] 

			
	WELLS FARGO BANK, National Association, as a Lender
		
	By:	 	 /s/ Patrick Engel

	Name:	 	Patrick Engel
	Title:	 	Managing Director

  

			
	CAIXABANK, as a Lender
		
	By:	 	 /s/ Javier Garcia Faubel

	Name:	 	Javier Garcia Faubel
	Title:	 	Corporate and Acquisition Financing
		
	By:	 	 /s/ Diego Aguinaga

	Name:	 	Diego Aguinaga
	Title:	 	Client relationship manager - Energy

  

			
	CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH, as a Lender
		
	By:	 	 /s/ Robert Casey

	Name:	 	Robert Casey
	Title:	 	Authorized Signatory
		
	By:	 	 /s/ Anju Abraham

	Name:	 	Anju Abraham
	Title:	 	Authorized Signatory

 [Signature Page to Revolving Credit Agreement] 

			
	CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, as a Lender
		
	By:	 	 /s/ Lucie Campos Caresmel

	Name:	 	Lucie Campos Caresmel
	Title:	 	Director
		
	By:	 	 /s/ Gordon Yip

	Name:	 	Gordon Yip
	Title:	 	Director

  

			
	DEUTSCHE BANK AG NEW YORK BRANCH, as a Lender
		
	By:	 	 /s/ Ming K. Chu

	Name:	 	Ming K. Chu
	Title:	 	Director
		
	By:	 	 /s/ Virginia Cosenza

	Name:	 	Virginia Cosenza
	Title:	 	Vice President

 [Signature Page to Revolving Credit Agreement] 

			
	HSBC BANK USA, NATIONAL ASSOCIATION, as a Lender
		
	By:	 	 /s/ Christopher M. Samms

	Name:	 	Christopher M. Samms
	Title:	 	Senior Vice President, #9426

  

	
	PEOPLE’S UNITED BANK, N.A., as a Lender
	
	By:     /s/ Darci
Buchanan                            
	Name: Darci Buchanan
	Title: Senior Vice President

  

			
	THE BANK OF NEW YORK MELLON, as a Lender
		
	By:	 	 /s/ Richard K. Fronapfel, Jr.

	Name:	 	Richard K. Fronapfel, Jr.
	Title:	 	Director

 [Signature Page to Revolving Credit Agreement] 

			
	THE BANK OF NEW YORK MELLON, as a Lender
		
	By:	 	 /s/ Richard K. Fronapfel, Jr.

	Name:	 	Richard K. Fronapfel, Jr.
	Title:	 	Director

  

			
	COMMERZBANK AG, Filiale Luxemburg, as a Lender
		
	By:	 	 /s/ James Boyle

	Name:	 	James Boyle
	Title:	 	Director
		
	By:	 	 /s/ Barbara Stacks

	Name:	 	Barbara Stacks
	 Title:
	 	 Director

  

			
	SUMITOMO MITSUI BANKING CORPORATION, as a Lender
		
	By:	 	 /s/ James D. Weinstein

	Name:	 	James D. Weinstein
	Title:	 	Managing Director

 [Signature Page to Revolving Credit Agreement] 

 Schedule 1.01 
  

					
	Lender	  	Commitment	 
	 JPMorgan Chase Bank, N.A.
	  	$	160,000,000.00	 
	 Bank of America, N.A.
	  	$	160,000,000.00	 
	 MUFG Bank, Ltd.
	  	$	160,000,000.00	 
	 Santander Bank, N.A.
	  	$	160,000,000.00	 
	 Banco Bilbao Vizcaya Argentaria S.A., New York Branch
	  	$	160,000,000.00	 
	 BNP Paribas
	  	$	122,000,000.00	 
	 CaixaBank, S.A.
	  	$	122,000,000.00	 
	 Canadian Imperial Bank of Commerce, New York Branch
	  	$	122,000,000.00	 
	 Citibank, N.A.
	  	$	122,000,000.00	 
	 Commerzbank AG, Filiale Luxemburg
	  	$	122,000,000.00	 
	 Credit Agricole Corporate and Investment Bank
	  	$	122,000,000.00	 
	 Mizuho Bank, Ltd.
	  	$	122,000,000.00	 
	 Morgan Stanley Bank, N.A.
	  	$	122,000,000.00	 
	 Royal Bank of Canada
	  	$	122,000,000.00	 
	 Sumitomo Mitsui Banking Corporation
	  	$	122,000,000.00	 
	 TD Bank, N.A.
	  	$	122,000,000.00	 
	 Wells Fargo Bank, National Association
	  	$	122,000,000.00	 
	 Deutsche Bank AG New York Branch
	  	$	59,000,000.00	 
	 HSBC Bank USA, National Association
	  	$	59,000,000.00	 
	 People’s United Bank, National Association
	  	$	59,000,000.00	 
	 The Bank of New York Mellon
	  	$	59,000,000.00	 
	 Total Commitment
	  	$	2,500,000,000.00	 

  

 Schedule 4.04 

Litigation 
 New York State Department
of Public Service Investigation of the Preparation for and Response to the March 2017 Windstorm 
 On March 11, 2017 the New York State Department
of Public Service (the “Department”) commenced an investigation of NYSEG’s and RG&E’s preparation for and response to a March 2017 windstorm, which affected more than 219,000 NYSEG and RG&E customers. The Department Staff
issued a report of the findings from their investigation on November 16, 2017 (the “Staff Report”). The Staff Report made several recommendations for future storm response and also alleged that NYSEG and RG&E had violated their
own emergency response plan in a number of respects. Also on November 16, 2017, the New York State Public Service Commission (the “Commission”) issued an Order Instituting Proceeding and to Show Cause (the “Order”) requiring
the companies to address whether the Commission should mandate, reject or modify, in whole or in part the recommendations made in the Staff Report. The Order also required the companies to show cause why the NYPSC should not commence an
administrative penalty proceeding. On May 18, 2018, NYSEG and RG&E filed a settlement joint proposal and investment joint proposal before the Commission to settle potential penalties and avoid litigation related to the March 2017 windstorm,
pursuant to which, among other things, NYSEG and RG&E has agreed to make $3.9 million in investments designed to increase resiliency and improve emergency response in the areas impacted by the storm. The investments will not be reflected in
rate base or operating expenses in establishing future delivery rates. The joint proposals are subject to public comment and NYPSC approval. The companies responded to the Order regarding the recommendations in the Staff Report and the Companies and
Department Staff entered into and continue settlement discussions in an effort to avoid an administrative penalty proceeding. The Company cannot predict the final outcome of this matter. 

 Schedule 4.11 

Environmental and Safety Matters 

Waste Sites 
 The Environmental Protection Agency and
various state environmental agencies, as appropriate, have notified us that we are among the potentially responsible parties that may be liable for costs incurred to remediate certain hazardous substances at twenty-five waste sites, which do not
include sites where gas was manufactured in the past. Fifteen of the twenty-five sites are included in the New York State Registry of Inactive Hazardous Waste Disposal Sites; six sites are included in Maine’s Uncontrolled Sites Program and one
site is included on the Massachusetts Non- Priority Confirmed Disposal Site list. The remaining sites are not included in any registry list. Finally, nine of the twenty-five sites are also included on the
National Priorities list. Any liability may be joint and severable for certain sites. 
 We have recorded an estimated liability of $5 million related
to ten of the twenty-five sites. We have paid remediation costs related to the remaining fourteen sites and do not expect to incur additional liabilities. Additionally, we have recorded an estimated liability of $8 million related to another
ten sites where we believe it is probable that we will incur remediation costs and or monitoring costs, although we have not been notified that we are among the potentially responsible parties or that we are regulated under State Resource
Conservation and Recovery Act programs. It is possible the ultimate cost to remediate these sites may be significantly more than the accrued amount. Our estimate for costs to remediate these sites ranges from $12 million to $21 million as
of March 31, 2018.Factors affecting the estimated remediation amount include the remedial action plan selected, the extent of site contamination, and the portion of remediation attributed to us. 

Manufactured Gas Plants 
 We have a program to investigate
and perform necessary remediation at our fifty-three sites where gas was manufactured in the past (Manufactured Gas Plants, or MGPs). Eight sites are included in the New York State Registry; twelve sites are included in the New York Voluntary
Cleanup Program; three sites are part of Maine’s Voluntary Response Action Program and of those, two sites are a part of Maine’s Uncontrolled Sites Program. The remaining sites are not included in any registry list. We have entered into
consent orders with various environmental agencies to investigate and where necessary remediate forty-nine of the fifty-three sites. 
 Our estimate for all
costs related to investigation and remediation of the fifty-three sites ranges from a minimum of $213 million to $442 million as of March 31, 2018. Our estimate could change materially based on facts and circumstances derived from
site investigations, changes in required remedial actions, changes in technology relating to remedial alternatives, and changes to current laws and regulations. 

Certain Connecticut and Massachusetts regulated gas companies own or have previously owned properties where MGPs had historically operated. MGP operations
have led to contamination of soil and groundwater with petroleum hydrocarbons, benzene and metals, among other things, at these properties, the regulation and cleanup of which is regulated by the federal Resource Conservation and Recovery Act as
well as other federal and state statutes and regulations. Each 

 
of the companies has or had an ownership interest in one or more such properties contaminated as a result of MGP-related activities. Under the existing
regulations, the cleanup of such sites requires state and at times, federal, regulators’ involvement and approval before cleanup can commence. In certain cases, such contamination has been evaluated, characterized and remediated. In other
cases, the sites have been evaluated and characterized, but not yet remediated. Finally, at some of these sites, the scope of the contamination has not yet been fully characterized; no liability was recorded in respect of these sites as of
March 31, 2018 and no amount of loss, if any, can be reasonably estimated at this time. In the past, the companies have received approval for the recovery of MGP-related remediation expenses from
customers through rates and will seek recovery in rates for ongoing MGP-related remediation expenses for all of their MGP sites. 

As of March 31, 2018, the liability associated with other MGP sites in Connecticut, the remediation costs of which could be significant and will be
subject to a review by the Connecticut Public Utilities Regulatory Authority (PURA) as to whether these costs are recoverable in rates, was $99 million. 

The total liability to investigate and perform remediation at the known inactive MGP sites and other sites was $387 million as of March 31, 2018 We
recorded a corresponding regulatory asset, net of insurance recoveries and the amount collected from FirstEnergy, as described below, because we expect to recover the net costs in rates. Our environmental liability accruals are recorded on an
undiscounted basis and are expected to be paid through the year 2054. 
 FirstEnergy—NYSEG 

NYSEG sued FirstEnergy under the Comprehensive Environmental Response, Compensation, and Liability Act to recover environmental cleanup costs at sixteen former
MGP sites, which are included in the discussion above. In July 2011, the District Court issued a decision and order in NYSEG’s favor. Based on past and future clean-up costs at the sixteen sites in
dispute, FirstEnergy would be required to pay NYSEG approximately $60 million if the decision were upheld on appeal. On September 9, 2011, FirstEnergy paid NYSEG $30 million, representing their share of past costs of $27 million
and pre-judgment interest of $3 million. 
 FirstEnergy appealed the decision to the Second Circuit Court of
Appeals. On September 11, 2014, the Second Circuit Court of Appeals affirmed the District Court’s decision in NYSEG’s favor, but modified the decision for nine sites, reducing NYSEG’s damages for incurred costs from
$27 million to $22 million, excluding interest, and reducing FirstEnergy’s allocable share of future costs at these sites. NYSEG refunded FirstEnergy the excess $5 million in November 2014. 

FirstEnergy remains liable for a substantial share of clean up expenses at nine MPG Energy sites. 

Based on current projections, FirstEnergy’s share is estimated at approximately $22 million. This amount is being treated as a contingent asset and
has not been recorded as either a receivable or a decrease to the environmental provision. Any recovery will be flowed through to NYSEG ratepayers. 

  
 17 

 Century Indemnity and OneBeacon—NYSEG 

On August 14, 2013, NYSEG filed suit in federal court against two excess insurers, Century Indemnity and OneBeacon, who provided excess liability coverage
to NYSEG. NYSEG seeks payment for clean-up costs associated with contamination at twenty-two former manufactured gas plants. Based on estimated clean-up costs of $282 million, the carriers’ allocable share is approximately $89 million, excluding pre-judgment interest although this amount may change
substantially depending upon the determination of various factual matters and legal issues during the case. Century and One Beacon have answered admitting issuance of the excess policies, but contesting coverage and providing documentation proving
they received notice of the claims in the 1990s.On March 31, 2017, the District Court granted motions filed by Century Indemnity and One Beacon dismissing all of NYSEG’s claims against both defendants on the grounds of late notice. NYSEG
filed a motion with the District Court on April 14, 2017 seeking reconsideration of the Court’s decision, which was denied by an order dated March 27, 2018. NYSEG filed a notice appealing the District Court’s dismissal on
April 9, 2018. We cannot predict the outcome of this matter. 
 English Station—UI 

In January 2012, Evergreen Power, LLC (Evergreen Power) and Asnat Realty LLC (Asnat), then and current owners of a former generation site on the Mill River in
New Haven (the English Station site) that UI sold to Quinnipiac Energy in 2000, filed a lawsuit in federal district court in Connecticut against UI seeking, among other things: (i) an order directing UI to reimburse the plaintiffs for costs
they have incurred and will incur for the testing, investigation and remediation of hazardous substances at the English Station site and (ii) an order directing UI to investigate and remediate the site. This proceeding had been stayed in 2014
pending resolutions of other proceedings before the Connecticut Department of Energy and Environmental Protection (DEEP) concerning the English Station site. In December 2016, the court administratively closed the file without prejudice to reopen
upon the filing of a motion to reopen by any party. In December 2013, Evergreen Power and Asnat filed a subsequent lawsuit in Connecticut state court seeking among other things: (i) remediation of the English Station site;
(ii) reimbursement of remediation costs; (iii) termination of UI’s easement rights; (iv) reimbursement for costs associated with securing the property; and (v) punitive damages. This lawsuit had been stayed in May 2014
pending mediation. Due to lack of activity in the case, the court terminated the stay and scheduled a status conference for July 6, 2017. On July 5, 2017, Asnat filed a pretrial memorandum claiming damages of $10 million for
“environmental remediation activities” and lost use of the property. In December 2017 Plaintiffs filed a Request for Leave to Amend Complaint and Motion to Cite-In Additional Parties, including
former UIL officers and employees and other UI officers, which motion was approved in February 2018. We cannot predict the outcome of this matter. On April 8, 2013, the Connecticut Department of Energy and Environmental Protection (DEEP) issued
an administrative order addressed to UI, Evergreen Power, Asnat and others, ordering the parties to take certain actions related to investigating and remediating the English Station site. Mediation of the matter began in the fourth quarter of 2013
and concluded unsuccessfully in April of 2015. This proceeding was stayed while DEEP and UI continue to work through the remediation process pursuant to the consent order described below. Status reports are periodically filed with the DEEP. 

  
 18 

 On August 4, 2016, DEEP issued a partial consent order (the consent order), that, subject to its terms and
conditions, requires UI to investigate and remediate certain environmental conditions within the perimeter of the English Station site. Under the consent order, to the extent that the cost of this investigation and remediation is less than
$30 million, UI will remit to the State of Connecticut the difference between such cost and $30 million to be used for a public purpose as determined in the discretion of the Governor of the State of Connecticut, the Attorney General of
the State of Connecticut, and the Commissioner of DEEP. UI is obligated to comply with the terms of the consent order even if the cost of such compliance exceeds $30 million. Under the terms of the consent order, the State will discuss options
with UI on recovering or funding any cost above $30 million such as through public funding or recovery from third parties; however, it is not bound to agree to or support any means of recovery or funding. UI has initiated its process to
investigate and remediate the environmental conditions within the perimeter of the English Station site pursuant to the consent order. 
 As of
December 31, 2017, we reserved $25 million for this matter. As of March 31, 2018, the reserve amount remained unchanged. We cannot predict the outcome of this matter. 

  
 19 

 Schedule 7.03 

First Mortgage Bond Indentures 
 Indenture
of Mortgage Dated as of May 1, 2009 from Central Maine Power Company to The Bank of New York Mellon Trust Company, N.A., as Trustee (as supplemented and amended) 

Indenture dated September 1, 1918 from Rochester Gas and Electric Corporation to Bankers Trust Company (as supplemented and amended) 

Indenture between The Southern Connecticut Gas Company (formerly, The Bridgeport Gas Light Company) and The Bridgeport City Trust Company, as Trustee, dated
as of March 1, 1948 (as supplemented and amended) 
 First Mortgage Indenture and Deed of Trust, dated as of July 1, 1954, from The Berkshire Gas
Company (formerly, Pittsfield Coal Gas Company) to Chemical Bank & Trust Company, as Trustee 

 Notice Addresses 
  

			
	Administrative Agent	  	 Primary Contact:

 
 JPMorgan Chase Bank, N.A.

JPM Loan & Agency Services

500 Stanton Christiana Rd

Ops 2, 3rd Floor

Newark, DE 19713-2107

Attn: Jessie Jiang

Phone: (302) 634-2426

Fax: (302) 634-3301

Email: qian.jiang@chase.com

		
		  	 Secondary Contact:

 
 JPMorgan Chase Bank, N.A.

JPM Loan & Agency Services

500 Stanton Christiana Rd

Ops 2, 3rd Floor

Newark, DE 19713-2107

Attn: Gene Tull

Phone: (302) 634-5881

Fax: (302) 634-3301

Email: Eugene.H.Tulliii@chase.com

		
	Borrowers	  	 Primary Contact:

 
 One City Center, 5th Floor

Portland, ME 04101

Attn: Howard Coon

Phone: (207) 629-1280

Email: howard.coon@avangrid.com

		
		  	 Secondary Contact:

 
 180 Marsh Hill Road

Orange, CT 06477

Attn: Doris Bernardi

Phone: (203) 499-2230

Email: doris.bernardi@uinet.com

 EXHIBIT A 

FORM OF 
 ASSIGNMENT AND ACCEPTANCE

 , 20 
 Reference is made to
the Revolving Credit Agreement, dated as of June 29, 2018 (the “Credit Agreement”), among Avangrid, Inc., a New York corporation (“Avangrid”), New York State Electric & Gas Corporation, a New York
corporation (“NYSEG”), Rochester Gas and Electric Corporation, a New York corporation (“RGE”), Central Maine Power Company, a Maine corporation (“CMP”), The United Illuminating Company, a specially
chartered Connecticut corporation (“UI”), Connecticut Natural Gas Corporation, a Connecticut corporation (“CNG”), The Southern Connecticut Gas Company, a Connecticut corporation (“SCG”), and The
Berkshire Gas Company, a Massachusetts gas company (“BGC”; together with Avangrid, NYSEG, RGE, CMP, UI, CNG and SCG, the “Borrowers”; each, a “Borrower”), the Lenders (as defined herein), JPMorgan
Chase Bank, N.A., as administrative agent (the “Administrative Agent”), MUFG Bank, Ltd. and Santander Bank, N.A., as co-documentation agents (the
“Co-Documentation Agents”), the Bank of America, N.A., as syndication agent (the “Syndication Agent”) and Banco Bilbao Vizcaya Argentaria, S.A. New York Branch, as
sustainability agent (the “Sustainability Agent”, and together with the Syndication Agent and the Co-Documentation Agents, the “Other Agents”). Terms defined in the Credit
Agreement are used herein with the same meanings. 
 [•] (the “Assignor”) and [•] (the
“Assignee”) agree as follows: 
 1. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases
and assumes from the Assignor, a [•]% interest in and to all the Assignor’s rights and obligations under the Credit Agreement as of the Effective Date (as defined below) (including, without limitation, such percentage interest in the
Commitment of the Assignor on the Effective Date and such percentage interest in each Loan owing to the Assignor outstanding on the Effective Date together with such percentage interest in all unpaid interest and Facility Fees accrued to the
Effective Date). 
 2. The Assignor (i) represents that as of the date hereof, its Commitment (without giving effect to assignments
thereof which have not yet become effective) is $[•] and the outstanding principal balance of its Loans (unreduced by any assignments thereof which have not yet become effective) is $[•]; (ii) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto, other than that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; and
(iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrowers or the performance or observance by the Borrowers of any of their respective obligations under the Credit
Agreement, any Note or any other instrument or document furnished pursuant hereto or thereto. 

  
 A-1 

 3. The Assignee (i) represents and warrants that it is legally authorized to enter into this
Assignment and Acceptance; (ii) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 6.01 thereof and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Administrative Agent, the Assignor or any other Person
which has become a Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; and (iv) agrees that it will be
bound by the provisions of the Credit Agreement and will perform in accordance with their terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender. 

4. The effective date of this Assignment and Acceptance shall be [•] (the “Effective Date”). 

5. Upon acceptance and recording pursuant to paragraph (e) of Section 11.02 of the Credit Agreement, from and after the Effective
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and under the Notes or any other instrument or document
furnished pursuant hereto or thereto and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 

6. This Assignment and Acceptance shall be governed by and construed in accordance with the laws of State of New York. 

[Remainder of Page Intentionally Left Blank] 

  
 A-2 

 
			
	[NAME OF ASSIGNOR], as Assignor
		
	By:	 	  

	Name:	 	
	Title:	 	
	
	[Address of Assignor]

  

			
	[NAME OF ASSIGNEE], as Assignee
		
	By:	 	  

	Name:	 	
	Title:	 	
	
	[Address of Assignee]

  
 A-3 

 [Acknowledged and consented to this     day of
        ,         .]1 

[NAME OF CONSENTING PARTY] 
  

			
	By:	 	  

		 	Name:
		 	Title:

  

	1 	Insert if required pursuant to Section 11.02(c) of the Credit Agreement. 

  
 A-4 

 EXHIBIT B 

FORM OF 
 COMPLIANCE CERTIFICATE

 [Date] 
 This Compliance
Certificate is delivered pursuant to Section 6.01(c) of the Revolving Credit Agreement, dated as of June 29, 2018 (the “Credit Agreement”), among Avangrid, Inc., a New York corporation (“Avangrid”), New
York State Electric & Gas Corporation, a New York corporation (“NYSEG”), Rochester Gas and Electric Corporation, a New York corporation (“RGE”), Central Maine Power Company, a Maine corporation
(“CMP”), The United Illuminating Company, a specially chartered Connecticut corporation (“UI”), Connecticut Natural Gas Corporation, a Connecticut corporation (“CNG”), The Southern Connecticut Gas
Company, a Connecticut corporation (“SCG”), and The Berkshire Gas Company, a Massachusetts gas company (“BGC”; together with Avangrid, NYSEG, RGE, CMP, UI, CNG and SCG, the “Borrowers”; each, a
“Borrower”), the Lenders (as defined herein), JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), MUFG Bank, Ltd. and Santander Bank, N.A., as
co-documentation agents (the “Co-Documentation Agents”), the Bank of America, N.A., as syndication agent (the “Syndication Agent”) and
Banco Bilbao Vizcaya Argentaria, S.A. New York Branch, as sustainability agent (the “Sustainability Agent”, and together with the Syndication Agent and the Co-Documentation Agents, the
“Other Agents”). 
 Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement. 
 1. I am a duly elected, qualified and acting Financial Officer certifying on behalf of
[Avangrid][[NYSEG] [RGE] [CMP] [UI] [CNG] [SCG] [BGC]. 
 2. I have reviewed and am familiar with the contents of this Certificate. 

3. I have reviewed the terms of the Credit Agreement and the other Loan Documents and have made or caused to be made under my supervision, a
review in reasonable detail of the transactions and condition of [Avangrid] [NYSEG] [RGE] [CMP] [UI] [CNG] [SCG] [BGC] during the accounting period covered by the financial statements attached hereto as Attachment 1 (the
“Financial Statements”). Such review did not disclose the existence during or at the end of the accounting period covered by the Financial Statements, and I have no knowledge of the existence, as of the date of this Certificate, of
any condition or event which constitutes a Default or Event of Default[, except as set forth below]. 
 4. To the best of my knowledge,
[Avangrid] [NYSEG] [RGE] [CMP] [UI] [CNG] [SCG] [BGC] during such accounting period has observed or performed in all material respects all of its covenants and other agreements, and has satisfied every condition contained in the Credit Agreement and
the other Loan Documents to which it is party to be observed, performed or satisfied by it. 
 5. Attached hereto as Attachment
2 are the computations showing compliance with the covenant set forth in Section 7.01 of the Credit Agreement as of the last day of the fiscal [quarter] [year]. 

[Remainder of Page Intentionally Left Blank] 

  
 B-1 

 IN WITNESS WHEREOF, I have executed this Certificate as of the day and year first written above.

  

	
	  
 Name:

	Title:

  
 B-2 

 Attachment 1 

to Compliance Certificate 
 [Attach
Financial Statements] 

 Attachment 2 

to Compliance Certificate 
 The
information described herein is as of         ,         , and pertains to the period from        
        ,         to         ,         . 

[Set forth Covenant Calculations] 

 EXHIBIT C 

FORM OF NOTE 
  

			
	 $
	  	[Date]

 FOR VALUE RECEIVED, the undersigned, [Avangrid, Inc., a New York corporation] [New York State
Electric & Gas Corporation, a New York corporation] [Rochester Gas and Electric Corporation, a New York corporation] [Central Maine Power Company, a Maine corporation] [The United Illuminating Company, a specially chartered Connecticut
corporation] [Connecticut Natural Gas Corporation, a Connecticut corporation] [The Southern Connecticut Gas Company, a Connecticut corporation] [The Berkshire Gas Company, a Massachusetts gas company] (the “Borrower”), hereby
promises to pay to the order of [•] (the “Lender”) on the Termination Date at the Funding Office, in lawful money of the United States and in immediately available funds, the principal amount of the lesser of (a) [•]
DOLLARS ($[•]) and (b) the aggregate unpaid principal amount of all Loans of the Lender made to the Borrower outstanding under the Credit Agreement. 

The Borrower further agrees to pay interest in like money at such office on the unpaid principal amount hereof from time to time from the date
hereof at the rates, and on the dates, specified in the Credit Agreement. 
 The holder of this Note is authorized to record the Borrowing
Date, Type and amount of each Loan of the Lender outstanding under the Credit Agreement, the date and amount of each payment or prepayment of principal hereof, and the date of each interest rate conversion or continuation pursuant to
Section 2.07 of the Credit Agreement and the principal amount subject thereto, on the schedules annexed hereto and made a part hereof and any such recordation shall constitute prima facie evidence of the accuracy of
the information so recorded; provided that the failure of the Lender to make any such recordation (or any error in such recordation) shall not affect the obligations of the Borrower hereunder or under the Credit Agreement. 

This Note is one of the Notes referred to in the Revolving Credit Agreement, dated as of June 29, 2018 (the “Credit
Agreement”), among, inter alia, the Borrower, [Avangrid, Inc., New York State Electric & Gas Corporation, Rochester Gas and Electric Corporation, Central Maine Power Company, The United Illuminating Company, Connecticut Natural Gas
Corporation, The Southern Connecticut Gas Company, The Berkshire Gas Company], the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent, and is subject to the provisions thereof and is subject to optional
and mandatory prepayment in whole or in part as provided therein. Terms used herein which are defined in the Credit Agreement shall have such defined meanings unless otherwise defined herein or unless the context otherwise requires. 

Upon the occurrence of any one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on this
Note shall become, or may be declared to be, immediately due and payable, all as provided therein. 
 All parties now and hereafter liable
with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment, demand, protest and all other notices of any kind. 

  
 C-1 

 THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE CREDIT
AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF THE CREDIT AGREEMENT. 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 

 

			
	[AVANGRID, INC.]
	
	[NEW YORK STATE ELECTRIC & GAS CORPORATION]
	
	[ROCHESTER GAS AND ELECTRIC CORPORATION]
	
	[CENTRAL MAINE POWER COMPANY]
	
	[THE UNITED ILLUMINATING COMPANY]
	
	[CONNECTICUT NATURAL GAS CORPORATION]
	
	[THE SOUTHERN CONNECTICUT GAS COMPANY]
	
	[THE BERKSHIRE GAS COMPANY]
		
	By:	 	  

		 	Name:
		 	Title:

  
 C-2 

 Schedule A to 

Note 
 LOANS, CONVERSIONS
AND REPAYMENTS OF ABR LOANS 
  

													
	 Date
	 	Amount of
ABR Loans	 	Amount
Converted to
ABR Loans	 	Amount of
Principal Repaid	 	Amount Converted to
Eurodollar Loans	 	Unpaid Principal
Balance of
ABR Loans	 	Notation
Made By

 Schedule B to 

Note 
 EURODOLLAR LOANS

 AND REPAYMENTS OF EURODOLLAR LOANS 
  

															
	 Date
	 	Amount of
Eurodollar Loans	 	Amount
Converted to
Eurodollar Loans	 	Interest Period and
Eurodollar Rate
with
Respect Thereto	 	Amount of
Principal Repaid	 	Amount Converted
to ABR Loans	 	Unpaid Principal
Balance of
Eurodollar Loans	 	Notation
Made By

 EXHIBIT D 

FORM OF EXEMPTION CERTIFICATE 

Reference is made to the Revolving Credit Agreement, dated as of [ ], 2018 (the “Credit Agreement”), among Avangrid, Inc., a
New York corporation (“Avangrid”), New York State Electric & Gas Corporation, a New York corporation (“NYSEG”), Rochester Gas and Electric Corporation, a New York corporation (“RGE”),
Central Maine Power Company, a Maine corporation (“CMP”), The United Illuminating Company, a specially chartered Connecticut corporation (“UI”), Connecticut Natural Gas Corporation, a Connecticut corporation
(“CNG”), The Southern Connecticut Gas Company, a Connecticut corporation (“SCG”), and The Berkshire Gas Company, a Massachusetts gas company (“BGC”; together with Avangrid, NYSEG, RGE, CMP, UI, CNG
and SCG, the “Borrowers”; each, a “Borrower”), the Lenders (as defined herein), JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), MUFG Bank, Ltd. and Santander Bank,
N.A., as co-documentation agents (the “Co-Documentation Agents”), the Bank of America, N.A., as syndication agent (the “Syndication
Agent”) and Banco Bilbao Vizcaya Argentaria, S.A. New York Branch, as sustainability agent (the “Sustainability Agent”, and together with the Syndication Agent and the
Co-Documentation Agents, the “Other Agents”). Terms defined in the Credit Agreement are used herein with the same meanings. 

(the “Non-U.S. Lender”) is providing this certificate pursuant to
Section 2.16(f) of the Credit Agreement. The Non-U.S. Lender hereby represents and warrants that: 

1. the Non-U.S. Lender (and its direct or indirect partners/members, if applicable) is the sole record
and beneficial owner of the Loans or the obligations evidenced by Note(s) in respect of which it is providing this certificate (or, if the Non-U.S. Lender is a Participant, such
Non-U.S. Lender (and its direct or indirect partners/members, if applicable) is the sole record and beneficial owner of the participation in respect of which it is providing this certificate); 

2. the Non-U.S. Lender (and its direct or indirect partners/members, if applicable) is not a
“bank” for purposes of Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the “Code”). In this regard, the Non-U.S. Lender further represents and warrants
that: 
 (a) the Non-U.S. Lender (and its direct or indirect partners/members, if
applicable) is not subject to regulatory or other legal requirements as a bank in any jurisdiction; and 
 (b) the Non-U.S. Lender (and its direct or indirect partners/members, if applicable) has not been treated as a bank for purposes of any tax, securities law or other filing or submission made to any Governmental Authority,
any application made to a rating agency or qualification for any exemption from tax, securities law or other legal requirements; 
 3. the Non-U.S. Lender (and its direct or indirect partners/members, if applicable) is not a 10-percent shareholder of a Borrower within the meaning of Section 881(c)(3)(B) of
the Code; and 

  
 D-1 

 4. the Non-U.S. Lender (and its direct or indirect
partners/members, if applicable) is not a controlled foreign corporation related to a Borrower within the meaning of Section 881(c)(3)(C) of the Code. 

  
 D-2 

 IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date set forth below.

  

			
	[NAME OF NON-U.S. LENDER]
		
	By:	 	  

		 	Name:
		 	Title:

 Date:
                             

  
 D-3 

 EXHIBIT E 

FORM OF EXTENSION LETTER 
 JPMorgan Chase Bank,
N.A., as Administrative Agent 
 500 Stanton Christiana Road, Ops 2, Floor 3 

Newark, DE, 19713 
 Attention:
        Jessie Q. Jiang 

                         Eugene H.
Tull 
 Ladies and Gentlemen: 
 This notice
shall constitute a request pursuant to Section 1.04(a) of the Revolving Credit Agreement, dated as of June 29, 2018 (the “Credit Agreement”), among Avangrid, Inc., a New York corporation (“Avangrid”), New
York State Electric & Gas Corporation, a New York corporation (“NYSEG”), Rochester Gas and Electric Corporation, a New York corporation (“RGE”), Central Maine Power Company, a Maine corporation
(“CMP”), The United Illuminating Company, a specially chartered Connecticut corporation (“UI”), Connecticut Natural Gas Corporation, a Connecticut corporation (“CNG”), The Southern Connecticut Gas
Company, a Connecticut corporation (“SCG”), and The Berkshire Gas Company, a Massachusetts gas company (“BGC”; together with Avangrid, NYSEG, RGE, CMP, UI, CNG and SCG, the “Borrowers”; each, a
“Borrower”), the Lenders (as defined herein), JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), MUFG Bank, Ltd. and Santander Bank, N.A., as
co-documentation agents (the “Co-Documentation Agents”), the Bank of America, N.A., as syndication agent (the “Syndication Agent”) and
Banco Bilbao Vizcaya Argentaria, S.A. New York Branch, as sustainability agent (the “Sustainability Agent”, and together with the Syndication Agent and the Co-Documentation Agents, the
“Other Agents”). Terms defined in the Credit Agreement are used herein with the same meanings. 
 The Borrowers hereby
request that the Lenders extend the Termination Date to [•]. 
 [Remainder of Page Intentionally Left Blank] 

  
 E-1 

			
	AVANGRID, INC.
		
	By:	 	  

		 	Name:
		 	Title:
	
	NEW YORK STATE ELECTRIC & GAS CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:
	
	ROCHESTER GAS AND ELECTRIC CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:
	
	CENTRAL MAINE POWER COMPANY
		
	By:	 	  

		 	Name:
		 	Title:
	
	THE UNITED ILLUMINATING COMPANY
		
	By:	 	  

		 	Name:
		 	Title:
	
	CONNECTICUT NATURAL GAS CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:
	
	THE SOUTHERN CONNECTICUT GAS COMPANY
		
	By:	 	  

		 	Name:
		 	Title:
	
	THE BERKSHIRE GAS COMPANY
		
	By:	 	  

		 	Name:
		 	Title:

  
 E-2 

 EXHIBIT F 

FORM OF COMMITMENT INCREASE SUPPLEMENT 

[Date] 
 COMMITMENT INCREASE
SUPPLEMENT (this “Supplement”), dated [•], to the Revolving Credit Agreement, dated as of June 29, 2018 (the “Credit Agreement”), among Avangrid, Inc., a New York corporation (“Avangrid”),
New York State Electric & Gas Corporation, a New York corporation (“NYSEG”), Rochester Gas and Electric Corporation, a New York corporation (“RGE”), Central Maine Power Company, a Maine corporation
(“CMP”), The United Illuminating Company, a specially chartered Connecticut corporation (“UI”), Connecticut Natural Gas Corporation, a Connecticut corporation (“CNG”), The Southern Connecticut Gas
Company, a Connecticut corporation (“SCG”), and The Berkshire Gas Company, a Massachusetts gas company (“BGC”; together with Avangrid, NYSEG, RGE, CMP, UI, CNG and SCG, the “Borrowers”; each, a
“Borrower”), the Lenders (as defined herein), JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), MUFG Bank, Ltd. and Santander Bank, N.A., as
co-documentation agents (the “Co-Documentation Agents”), the Bank of America, N.A., as syndication agent (the “Syndication Agent”) and
Banco Bilbao Vizcaya Argentaria, S.A. New York Branch, as sustainability agent (the “Sustainability Agent”, and together with the Syndication Agent and the Co-Documentation Agents, the
“Other Agents”). 
 W I T N E S
S E T H : 
 WHEREAS, pursuant to the provisions of Section 1.05(b) of the Credit
Agreement, the undersigned may increase the amount of its Commitment in accordance with the terms thereof by executing and delivering to the Borrowers and the Administrative Agent a supplement to the Credit Agreement in substantially the form of
this Supplement; and WHEREAS, the undersigned now desires to increase the amount of its Commitment under the Credit Agreement; 
 NOW
THEREFORE, the undersigned hereby agrees as follows: 
 1. The undersigned agrees, subject to the terms and conditions of the Credit
Agreement, that on the date this Supplement is accepted by each Borrower and the Administrative Agent its Commitment shall be increased by $[•], thereby making the amount of its Commitment $[•]. 

2. Terms defined in the Credit Agreement shall have their defined meanings when used herein. 

[Remainder of Page Intentionally Left Blank] 

  
 F-1 

 IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed and delivered by a
duly authorized officer on the date first above written. 
  

			
	[INSERT NAME OF LENDER], as Lender
		
	By:	 	  

		 	Name:
		 	Title:

  
 F-2 

 Agreed and accepted this         day of
        ,         . 
  

			
	AVANGRID, INC.
		
	By:	 	  

		 	Name:
		 	Title:
	
	NEW YORK STATE ELECTRIC & GAS CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:
	
	ROCHESTER GAS AND ELECTRIC CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:
	
	CENTRAL MAINE POWER COMPANY
		
	By:	 	  

		 	Name:
		 	Title:
	
	THE UNITED ILLUMINATING COMPANY
		
	By:	 	  

		 	Name:
		 	Title:
	
	CONNECTICUT NATURAL GAS CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:
	
	THE SOUTHERN CONNECTICUT GAS COMPANY
		
	By:	 	  

		 	Name:
		 	Title:
	
	THE BERKSHIRE GAS COMPANY
		
	By:	 	  

		 	Name:
		 	Title:

  
 F-3 

 Acknowledged this         day
of         ,         . 
 JPMORGAN CHASE BANK, N.A., 

as Administrative Agent 
  

			
	By:	 	  

		 	Name:
		 	Title:

  
 F-4 

 EXHIBIT G 

FORM OF ADDITIONAL LENDER SUPPLEMENT 

ADDITIONAL LENDER SUPPLEMENT, dated [•] (this “Supplement”), to the Revolving Credit Agreement, dated as of
June 29, 2018 (the “Credit Agreement”), among Avangrid, Inc., a New York corporation (“Avangrid”), New York State Electric & Gas Corporation, a New York corporation (“NYSEG”),
Rochester Gas and Electric Corporation, a New York corporation (“RGE”), Central Maine Power Company, a Maine corporation (“CMP”), The United Illuminating Company, a specially chartered Connecticut corporation
(“UI”), Connecticut Natural Gas Corporation, a Connecticut corporation (“CNG”), The Southern Connecticut Gas Company, a Connecticut corporation (“SCG”), and The Berkshire Gas Company, a
Massachusetts gas company (“BGC”; together with Avangrid, NYSEG, RGE, CMP, UI, CNG and SCG, the “Borrowers”; each, a “Borrower”), the Lenders (as defined herein), JPMorgan Chase Bank, N.A., as
administrative agent (the “Administrative Agent”), MUFG Bank, Ltd. and Santander Bank, N.A., as co-documentation agents (the “Co-Documentation
Agents”), the Bank of America, N.A., as syndication agent (the “Syndication Agent”) and Banco Bilbao Vizcaya Argentaria, S.A. New York Branch, as sustainability agent (the “Sustainability Agent”, and
together with the Syndication Agent and the Co-Documentation Agents, the “Other Agents”). Terms defined in the Credit Agreement are used herein with the same meanings. 

W I T N E S S E T H : 

WHEREAS, the Credit Agreement provides in Section 1.05(c) thereof that a bank, financial institution or other entity, selected by the
Borrowers and with the consent of the Administrative Agent (which consents shall not be unreasonably withheld), although not originally a party thereto, may become a party to the Credit Agreement, by executing and delivering to each Borrower and the
Administrative Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and WHEREAS, the undersigned Additional Lender was not an original party to the Credit Agreement but now desires to become a party thereto; 

NOW, THEREFORE, each of the parties hereto hereby agrees as follows: 

The undersigned Additional Lender agrees to be bound by the provisions of the Credit Agreement and agrees that it shall, on the date this
Supplement is accepted by each Borrower and acknowledged by the Administrative Agent, become a Lender for all purposes of the Credit Agreement to the same extent as if originally a party thereto, with a Commitment of $[•]. 

The undersigned Additional Lender (a) represents and warrants that it is legally authorized to enter into this Supplement;
(b) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 6.01 thereof, and has reviewed such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into this Supplement; (c) agrees that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement or any other instrument or document furnished pursuant hereto or thereto; (d) appoints and
authorizes the Administrative Agent to take such action as agent on its behalf and to 

  
 G-1 

 
exercise such powers and discretion under the Credit Agreement or any other instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent by the terms
thereof, together with such powers as are incidental thereto; and (e) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender. 
 The undersigned’s address for notices for the purposes of the Credit
Agreement is as follows: 

[                    ] 

[                    ] 

[                    ] 

Each Borrower hereby represents and warrants that no Default or Event of Default has occurred and is continuing on and as of the date hereof.

 This Supplement shall be governed by, and construed in accordance with, the laws of the State of New York. 

This Supplement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and the same document. 
 [Remainder of Page
Intentionally Left Blank] 

  
 G-2 

 IN WITNESS WHEREOF, each of the undersigned has caused this Supplement to be executed and
delivered by a duly authorized officer on the date first above written. 
  

			
	 [INSERT NAME OF ADDITIONAL LENDER],

as Additional Lender

		
	By:	 	  

		 	Name:
		 	Title:

  
 G-3 

 Agreed and accepted this         day
of         ,         . 
  

			
	AVANGRID, INC.
		
	By:	 	  

		 	Name:
		 	Title:
	
	NEW YORK STATE ELECTRIC & GAS CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:
	
	ROCHESTER GAS AND ELECTRIC CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:
	
	CENTRAL MAINE POWER COMPANY
		
	By:	 	  

		 	Name:
		 	Title:
	
	THE UNITED ILLUMINATING COMPANY
		
	By:	 	  

		 	Name:
		 	Title:
	
	CONNECTICUT NATURAL GAS CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:
	
	THE SOUTHERN CONNECTICUT GAS COMPANY
		
	By:	 	  

		 	Name:
		 	Title:
	
	THE BERKSHIRE GAS COMPANY
		
	By:	 	  

		 	Name:
		 	Title:

  
 G-4 

 Acknowledged this          day
of         ,         . 
 JPMORGAN CHASE BANK, N.A., 

as Administrative Agent 
  

			
	By:	 	  

		 	Name:
		 	Title:

  
 G-5 

 EXHIBIT H 

FORM OF SUBLIMIT ADJUSTMENT LETTER 
 JPMorgan
Chase Bank, N.A., as Administrative Agent 
 500 Stanton Christiana Road, Ops 2, Floor 3 

Newark, DE, 19713 
 Attention:
        Jessie Qian Jiang 

                         Eugene H.
Tull 
 Ladies and Gentlemen: 
 This notice
shall constitute a request pursuant to Section 1.06 of the Revolving Credit Agreement, dated as of June 29, 2018 (the “Credit Agreement”), among Avangrid, Inc., a New York corporation (“Avangrid”), New
York State Electric & Gas Corporation, a New York corporation (“NYSEG”), Rochester Gas and Electric Corporation, a New York corporation (“RGE”), Central Maine Power Company, a Maine corporation
(“CMP”), The United Illuminating Company, a specially chartered Connecticut corporation (“UI”), Connecticut Natural Gas Corporation, a Connecticut corporation (“CNG”), The Southern Connecticut Gas
Company, a Connecticut corporation (“SCG”), and The Berkshire Gas Company, a Massachusetts gas company (“BGC”; together with Avangrid, NYSEG, RGE, CMP, UI, CNG and SCG, the “Borrowers”; each, a
“Borrower”), the Lenders (as defined herein), JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), MUFG Bank, Ltd. and Santander Bank, N.A., as
co-documentation agents (the “Co-Documentation Agents”), the Bank of America, N.A., as syndication agent (the “Syndication Agent”) and
Banco Bilbao Vizcaya Argentaria, S.A. New York Branch, as sustainability agent (the “Sustainability Agent”, and together with the Syndication Agent and the Co-Documentation Agents, the
“Other Agents”). Terms defined in the Credit Agreement are used herein with the same meanings. 
 1. Avangrid agrees,
subject to the terms and conditions of the Credit Agreement, that as of [•], its Sublimit shall be $[•]. 
 2. NYSEG agrees,
subject to the terms and conditions of the Credit Agreement, that as of [•], its Sublimit shall be $[•]. 
 3. RGE agrees, subject
to the terms and conditions of the Credit Agreement, that as of [•], its Sublimit shall be $[•]. 
 4. CMP agrees, subject to the
terms and conditions of the Credit Agreement, that as of [•], its Sublimit shall be $[•]. 
 5. UI agrees, subject to the terms and
conditions of the Credit Agreement, that as of [•], its Sublimit shall be $[•]. 
 6. CNG agrees, subject to the terms and
conditions of the Credit Agreement, that as of [•], its Sublimit shall be $[•]. 
 7. SCG agrees, subject to the terms and
conditions of the Credit Agreement, that as of [•], its Sublimit shall be $[•]. 

  
 H-1 

 8. BGC agrees, subject to the terms and conditions of the Credit Agreement, that as of [•],
its Sublimit shall be $[•]. 
 [Remainder of Page Intentionally Left Blank] 

  
 H-2 

			
	Very truly yours,
	
	AVANGRID, INC.
		
	By:	 	  

		 	Name:
		 	Title:
	
	NEW YORK STATE ELECTRIC & GAS CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:
	
	ROCHESTER GAS AND ELECTRIC CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:
	
	CENTRAL MAINE POWER COMPANY
		
	By:	 	  

		 	Name:
		 	Title:
	
	THE UNITED ILLUMINATING COMPANY
		
	By:	 	  

		 	Name:
		 	Title:
	
	CONNECTICUT NATURAL GAS CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:
	
	THE SOUTHERN CONNECTICUT GAS COMPANY
		
	By:	 	  

		 	Name:
		 	Title:
	
	THE BERKSHIRE GAS COMPANY
		
	By:	 	  

		 	Name:
		 	Title:

  
 H-3

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